3 - Force Majeure or Change of Circumstances

Summary

This chapter explores the unbalanced interrelationship between the twin doctrines of force majeure and change of circumstances under Chinese law. It examines key judicial documents and cases, as well as legislative materials (including the Chinese Civil Code), and identifies two factors which not only have contributed to Chinese courts’ excessive reliance on the doctrine of force majeure, but have also plagued this area of Chinese law with dogmatism, arbitrariness and utter whimsy. Such factors comprise a general tendency to categorically characterise a supervening event as force majeure and Chinese courts’ misinterpretation and unwarranted extension of the ‘cannot perform’ test. Through a comparison of the differing judicial approaches to SARS and COVID-19 cases, this chapter suggests that the above tendency should give way to an approach which places the impact of the event on contract performance at the centre of the inquiry and that a broad interpretation of ‘cannot perform’ should be adopted with ‘exemption of liability’ being restored to its proper meaning.