On February 10th, the relevant department of the Legislative Work Committee of the National People's Congress addressed legal questions of general public concern regarding epidemic prevention and control. In response to the question, "Recently, many companies have reported that they are affected by the epidemic, and many contractual obligations cannot be performed normally. Are there any specific legal provisions for this?" Zang Tiewei, spokesperson and director of the Research Office of the Legislative Work Committee of the Standing Committee of the National People's Congress, answered: "Currently, China has experienced the sudden public health event of the COVID-19 epidemic. To protect public health, the government has taken corresponding epidemic prevention and control measures. For parties unable to fulfill a contract due to this, it constitutes force majeure, which is unforeseeable, unavoidable, and insurmountable. According to the relevant provisions of the Contract Law, if a contract cannot be performed due to force majeure, liability shall be partially or completely exempted based on the impact of the force majeure, unless otherwise stipulated by law."

The above authoritative answer needs to be correctly understood: the parties who cannot perform the contract because they are affected by the corresponding epidemic prevention and control measures taken by the government may claim “partial or complete exemption from liability” in accordance with force majeure. Article 117, Paragraph 1 of the Contract Law stipulates: “If a contract cannot be performed due to force majeure, the liability shall be partially or completely exempted according to the impact of the force majeure, unless otherwise provided by law. If force majeure occurs after a party delays performance, the liability shall not be exempted.” Therefore, what the contracting party can claim exemption from is the corresponding liability for breach of contract for failure to perform the contract, rather than other contractual obligations. Moreover, if the performance of the contractual obligations has been delayed before the government takes corresponding epidemic prevention and control measures, it cannot be claimed to be exempted from liability for breach of contract.

When it is necessary to use “COVID-19 epidemic force majeure” to claim exemption from liability, attention should be paid to collecting documents issued by local government departments regarding epidemic prevention and control measures to clarify the time of the force majeure impact. For example, the Notice of the Guangxi Zhuang Autonomous Region Housing and Urban-Rural Development Department on Further Strengthening the Prevention and Control of Pneumonia Caused by Novel Coronavirus Infection in the Housing and Urban-Rural Development System of the Region (Gui Jian Ban [2020] No. 5) stipulates that except for projects involving ensuring the necessary operation of the city, the necessary epidemic prevention and control, and other projects involving the national economy and people's livelihood and approved by the housing and urban-rural development authorities to start or resume work, all other new and existing housing construction and municipal infrastructure projects in the region shall not start (including pile foundation projects) or resume work earlier than 24:00 on February 9, 2020. Projects that do need to start or resume work after February 9 must meet the prescribed conditions and be approved by the local headquarters and the housing and urban-rural development authorities before they can start or resume work. Obviously, the start and resumption time of new and existing projects shall be subject to the time approved by the local headquarters and the housing and urban-rural development authorities.