The first two weeks of February - which followed on from the original public holiday period for the Chinese New Year - have seen numerous Chinese businesses unable to resume manufacturing, or unable to take shipments of exports. As the spread of the coronavirus outbreak continued, and likewise its severity remained insufficiently determined, many levels of government across China ordered delays to return to work locations, or even imposed local movement lockdowns. At the same time, numerous foreign countries have implemented travel bans, substantially impacting the capacity to ship goods by air (though surface shipments have largely remained unaffected). Amid this backdrop, Chinese companies of varying scale are increasingly facing tough decisions and asserting force majeure to seek excusal from contractual performance duties or penalties, which in turn is posing major challenges for foreign counterparts. This client alert advises options available to businesses on both sides.
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