On 20 April 2020, the Supreme People’s Court released Guidelines about Lawfully and Properly Handling Civil Cases Related to the Coronavirus Epidemic (No.1).
The guidance regulates the trial of civil cases involving the epidemic with regards to 10 aspects, such as the accurate application of force majeure rules, the proper handling of contract disputes and the handling of labor cases in accordance with the law. The highlights are as follows:
1. Accurately applying the rules of force majeure in accordance with the law. When hearing civil cases involving the epidemic, the courts shall accurately apply the specific provisions of force majeure and strictly understand the conditions for its application ( You may check our previous posts: Can I Terminate My Contract due to the NCP outbreak? and Force Majeure? – To be, or not to be, that is the question! for more information)
Civil disputes directly affected by epidemic situations or epidemic prevention and control measures which meet the statutory requirements of force majeure shall be properly dealt with in accordance with related laws and regulations.
If a party claims partial or total exemption due to force majeure, it shall bear the burden of proof for the fact that force majeure directly results in partial or total failure to perform its obligations.
2. Contract disputes directly affected by the epidemic or epidemic prevention and control measures shall, unless otherwise agreed by the parties, be handled in accordance with the following rules based on a comprehensive consideration of the impact of the epidemic situation in different regions, different industries and different cases when the law is applied to accurately understand the causal relationship and the extent of the causal force between the epidemic situation or the epidemic prevention and control measures and the failure to perform the contract:
(I) If the epidemic situation or the epidemic prevention and control measures directly caused the failure to perform the contract, the provisions of force majeure shall apply in accordance with the law, and a party shall be exempted in part or in whole from liability based upon the extent to which the epidemic situation or the epidemic prevention and control measures had an impact on discharging its obligations.
(II) If the epidemic situation or the epidemic prevention and control measures only lead to difficulties in the performance of the contract, the parties concerned may renegotiate.
The court shall deny the request to rescind a contract because of difficulty in performance of the contract.
In case that the objectives of a contract cannot be achieved due to the epidemic or the epidemic prevention and control measures, and a party concerned requests for rescission of the contract, the court shall support the request.
3. Support companies in adopting flexible working methods in accordance with laws and regulations during the epidemic prevention and control period.
In hearing the cases of labor disputes involving the epidemic, Article 26 of the Labor Law of the People’s Republic of China, Article 40 of the Labor Contract Law of the People’s Republic of China and other provisions shall be applied accurately.
The court shall not uphold a company’s claim to rescind the employment relation with an employee on the grounds that the employee is a confirmed positive patient of COVID-19, suspected of COVID-19, asymptomatic carrier, isolated person according to the law or because the employee stems from a region with relatively serious epidemic problems.
4. Applying punitive damages in accordance with the law where an operator illegally operates masks ( You may check our previous post: Medical Masks & the Law to know related provisions) goggles, protective suits, disinfectants and other anti-epidemic articles, or food or drugs.
Note:
The provisions in Article 26 of the Labor Law of the PRC and Article 40 of the Labor Contract Law of the PRC are similar, we quoted related provisions in Article 40 of the Labor Contract Law of the PRC (you may check our case study: Does a Company Has the Right to Transfer an Employee’s Position? for more information ) as below for your reference:
In the case of any of the following circumstances, the employer may discharge the labor contract after it notifies the worker himself in writing 30 days in advance or after it pays the worker an extra month’s salary:
(1) The employee falls ill or is injured for a non-work-related reason, who is not able to bear the original post after the expiration of the medical treatment period as prescribed, nor can he assume any other position as arranged by the company;…
(3) The objective circumstance has altered significantly, on which the conclusion of the labor contract is based, which results in that the labor contract is unable to be performed. And no agreement concerning the modification of contents of the labor contract is reached after consultations between the company and the employee.
Useful link:
Ministry of Justice of the People’s Republic of China
