China Supreme Court Opinions on Cases with Foreign Elements Involving COVID 19 Epidemic (3)
In order to properly handle cases involving COVID-19 foreign-related commercial and maritime disputes in accordance with the law, equally protect the legitimate rights and interests of Chinese and foreign parties, and create a more stable, fair, transparent and predictable business environment under the rule of law, the following guidelines are proposed in accordance with relevant laws and judicial interpretations and in light of trial practice experience.
IV.About applicable laws
6.As to the laws applicable to the commercial & maritime disputes involving foreign elements related to the epidemic situation, the people's court shall, in accordance with the Law of the People's Republic of China on the Application of Law in Civil Relations Involving Foreign Elements and other laws and relevant judicial interpretations, determine the applicable laws.
Where Chinese laws should be applied, the specific application of the force majeure rules shall be implemented in accordance with the Guidance of the Supreme People's Court on the Proper Trial of Civil COVID-19 Cases in accordance with law (I).
If a foreign law should be applied, the people's court shall accurately understand the contents of the statutory provisions or case law in the foreign law which are similar to the force majeure rules and correctly apply them, and shall not, of course, understand the similar provisions in the foreign law by referring to the provisions on force majeure in Chinese law.
7.The people's court shall determine the application of international treaties in accordance with Article 4 of the Supreme People's Court's Interpretation of certain issues concerning the application of law of the People's Republic of China on civil relations involving foreign elements (I). For matters not subject to treaty adjustment, the applicable law shall be determined through the guidelines on conflict norms of Chinese laws.
When applying the United Nations Convention on Contracts for the International Sale of Goods, the people's court should note that in 2013, China withdrew the declaration that it is not bound by Article 11 of the Convention and the contents of Article 11 of the Convention, and still retains the declaration that it is not bound by Article 1, paragraph 1 (b) of the Convention.Whether a state is a party to the Convention and whether it has made a reservation may be determined by referring to the status of states parties to the Convention on the official website of the United Nations Commission on International Trade Law. Furthermore, in accordance with Article 4 of the Convention, the Convention does not adjust the validity of the contract or its possible effect on the ownership of the goods sold. For these two kinds of matters, the applicable laws should be determined and determined according to the guidelines on conflict norms of Chinese laws.
If a party, on the grounds that it is affected by the epidemic situation or the epidemic prevention and control measures, claims for partial or total exemption from contractual liability, the people's court shall examine the case in accordance with the relevant provisions of Article 79 of the Convention and strictly observe the applicable conditions set forth in that article. The provisions of the Convention shall be interpreted in good faith in the light of their terms, in the context in which they are used and in the light of the general meaning of the object and purpose of the Convention. It should also be noted that the Summary of Case Law of the United Nations Convention on Contracts for the International Sale of Goods is not an integral part of the Convention and can be used as a reference in the course of the trial, but not as a legal basis.
V.About trial of foreign-related commercial cases
8.In handling cases of disputes over Letters of Credit, the people's court shall follow the principle of independence and abstraction of Letters of Credit and the principle of strict conformity. Accurately distinguish don't deliver the goods on purpose and can't deliver the goods as a result of outbreak or epidemic prevention and control measures, strictly according to Article 11 of the Supreme People's Court on some issues of Letter of Credit dispute cases, review if it is supportive to suspend the payment under the L/C on the grounds that the existence of the L/C fraud.
Where the Uniform Customs and Practice for Documentary Credits (UCP600) of the International Chamber of Commerce is applicable, the people's court shall correctly apply the specific provisions of Article 36 of the customs concerning the bank's no longer undertaking or negotiating. If the party concerned claims that the business of the bank is interrupted due to the epidemic situation or the epidemic prevention and control measures, the people's court shall determine whether it constitutes force majeure as stipulated in the article.Unless the parties have otherwise agreed on force majeure and their liabilities.
9.The people's court shall abide by the principle of independence of guarantee and the principle of strict conformity when trying the dispute case of independent guarantee. According to Article 12 Supreme People's Court on some issues of Independent Guarantee Disputes, it shall strictly identify the circumstances constituting the fraud of the independent guarantee, and according to Article 14 of the judicial explanation, review if it is supportive to suspend the payment under the independent guarantee on the grounds of independent guarantee fraud.
Where the independent Guarantee is subject to the Uniform Rules of Demand Guarantee (URDG758) of the International Chamber of Commerce, the people's court shall correctly apply the provisions of Article 26 of these rules that the presentation or payment under the independent guarantee or counter-guarantee cannot be performed due to force majeure and the provisions of the corresponding renewal system. If the party concerned claims that the relevant business is interrupted due to the epidemic situation or the epidemic prevention and control measures, the people's court shall determine whether it constitutes force majeure as stipulated in the article. Unless the parties have otherwise agreed on force majeure and their liabilities.
To be continued.