With the coronavirus outbreak that originated in Hubei province, China, showing no signs of abating any time soon, some companies that buy and sell goods in the Chinese market are taking interest in the legal defense of “force majeure.”
Legal experts said that the coronavirus likely qualifies, but any company invoking force majeure would need to show that it is effectively impossible to perform their contractual duties as a result of the outbreak. Force majeure clauses rarely mention diseases, but more frequently provide relief in the event of unforeseen “acts of government,” Miller said. Chinese authorities have ordered lockdowns and closed factories in the wake of the coronavirus, so the “act of government” language could allow some firms to invoke force majeure, she said.Cross-border deals often stipulate that disputes arising out of the contract will be decided by a particular court or arbitration body.