Legal Risks Of Cross Border Transactions Of China'S Textile And Garment Enterprises In The Context Of Outbreaks

1. The spread of epidemic situation abroad has a new impact on the performance of international trade contracts of China's textile and garment enterprises.

At the beginning of the new year, the outbreak of the new coronavirus swept through. When our epidemic prevention and control achieved obvious results and all kinds of economic activities recovered orderly and vigorously, the epidemic spread rapidly overseas, adding to the uncertainty and complexity of China's foreign trade situation. As a large import and export trade of textile and garment industry, China's domestic related enterprises, which are mainly cross-border transactions, will suffer two shocks.

According to the epidemic report released by WHO (WHO) in March 22, 2020, there are more than 210 thousand confirmed cases of new crown pneumonia outside China, and at least 48 countries worldwide have declared a state of emergency. Due to the impact of the epidemic, the Consumption Willingness and consumption ability of the global textile and apparel consumers have dropped significantly. The apparel and textile industry around the world is facing many challenges from purchasing to retailing. Brands including Chanel, Hermes, Gucci and so on have announced batch closing of stores, while suspending the normal operation of factories in key epidemic areas.

Along with the escalation of overseas epidemic and epidemic prevention measures, the risk of customers refusing to accept goods, refusing to pay goods or even cancelling orders is being aggravated by the force majeure contract terms or relevant laws and regulations. In this regard, this article intends to focus on the new changes and coping strategies of the new legal risks arising from the implementation of the new crown outbreak in China's textile and garment enterprises, and discuss the applicable rules of the force majeure in different jurisdictions, so as to provide legal and practical reference for the relevant enterprises in China to make timely and effective legal responses, and strive to avoid or lighten the loss to the maximum extent.

Two, whether the overseas customers can quote the exemption from force majeure.

As a legal concept, force majeure (ForceMajeure) first appeared in the French Civil Code of 1804, and was introduced into the German civil code. China has also established a force majeure system in civil legislation. The 180th provision of the general principles of civil law of the people's Republic of China stipulates: "if a force majeure fails to perform its civil obligations, it shall not bear civil liability. Where there are other provisions of the law, such provisions shall be followed. Force majeure is an objective situation that cannot be foreseen, unavoidable and insurmountable. The 117th provision of the contract law of the People's Republic of China stipulates: "if a force majeure fails to perform the contract, it shall be partially or totally exempt from liability under the influence of force majeure, except otherwise provided by law." If a party has acted with force majeure after his delay in performance, he shall not be exempted from liability. The term "force majeure" as mentioned in this Law refers to the objective situation that cannot be foreseen, unavoidable and insurmountable. However, the concept and specific contents of force majeure are not exactly the same under different national laws. If the epidemic situation and corresponding control measures can trigger the relevant clauses of force majeure in international trade contracts, we must judge the specific stipulations of the force majeure clause and the applicable law applicable to the contract.

1. contract agreement

If an overseas client maintains that the epidemic constitutes a force majeure exemption, the terms of the international trade contract signed by both parties shall first be examined. If the contract is agreed on the force majeure, if the clause determines whether the major epidemic situation or government related control acts shall be classified as force majeure, the relevant achievement conditions for the contract modification or termination of the epidemic should be clearly identified.

2. legal provisions of various countries

If the applicable law is applicable to the contract, it is also possible to determine whether the new crown epidemic constitutes a force majeure according to the corresponding applicable law. If the contract applies to the relevant laws of China, according to the 180th provisions of the general law of the people's Republic of China and the 117th provision of the contract law of the People's Republic of China, the new crown epidemic is in conformity with the constitutive requirements of force majeure unforeseeable, unavoidable and insurmountable. In the legal system of civil law countries, the force majeure is generally recognized as the defense reason for the parties to the contract to be exempted from their responsibility. For example, the 1148th provision of the French Civil Code stipulates that if a force majeure or an accident prevents the debtor from hindering the performance of the obligation to pay, as a debt or a non performing obligation, the 1218th provision of the Italy Civil Code stipulates that the debtor who fails to perform the obligor's obligations shall bear the responsibility for the consequential loss, unless it can prove that it is unable to perform. Attributed to it. Therefore, as long as the contract applies to the law of the Chinese or continental law countries as the applicable law of contract, the overseas customers affected by the epidemic can be invoked by force majeure. In contrast to the principle of fault in continental law system, Anglo American law system pursues the absolute principle of contractual obligation, so it does not directly invoke the relevant provisions of force majeure exemption. Instead, it falls into the principle of similar contract failure (FrustrationofContract), that is, the objective situation after the conclusion of a contract has made it impossible for the performance of the contract to become impossible or a contract. If the principal is bound by the original agreement, it will be terminable if the contract fails, and the liability of the relevant body will be relieved. However, under the spirit of common law contract which needs to be strictly performed, the claim that contracts fail is often difficult to establish.

3. international conventions

If there is neither a force majeure exemption clause nor a applicable law applicable to the contract, the institution responsible for dispute settlement will generally determine the applicable law applicable to the contract according to the conflict rules, and judge whether the overseas customers can be exempted from the epidemic according to the specific contents of the contract and the specific provisions of the applicable law. In practice, if both parties belong to the Contracting Party of the United Nations Convention on Contracts for the international sale of goods (CISG), CISG can be applied to settle disputes. According to the provisions of the first paragraph of article seventy-ninth of CISG, the parties concerned are irresponsible for their failure to perform their obligations. If he can prove that such a failure is due to some obstacle that he can not control, there is no reason for him to consider or avoid or overcome it or its consequences when concluding a contract. Therefore, if the provisions of CISG are applied, it is also necessary for overseas customers to take the epidemic as a cause of exemption, and ask for delay in performance or even rescind the risk of the contract.

Three. Suggestions on adopting effective legal measures for Chinese enterprises.

The first is to conduct a comprehensive review and evaluation of the contract. If an overseas customer takes the case of the epidemic as a reason, he refuses to accept payment or even cancels the order. It is suggested that Chinese enterprises promptly clarify the contracts signed by both parties, focus on reviewing the force majeure and the applicable provisions of law, and comprehensively judge and deal with the specific conditions of the contract implementation. At the same time, we must seriously assess the performance obstacles caused by the epidemic, and analyze the conditions for the contract to be completely unable to perform, partially unable to perform or delay in performance.

Two is to require overseas customers to provide relevant supporting materials. If it is considered that the epidemic may trigger force majeure regulations after examination, our enterprises should ask overseas customers to further provide relevant mandatory provisions of their governments in regard to the actual outbreak of the epidemic, or the other contracting or statutory reasons for the termination or modification of the contract. Otherwise, the other party has no right to request the termination or modification of the contract on the grounds of the epidemic.

Three, friendly consultation is timely derogation. China's textile and garment trade has a deep foundation and has a pivotal position in the global market. Over the years, a good cooperative relationship has been established between Chinese enterprises and overseas customers. In view of the delayed performance or even rescission of contracts made by foreign clients, our enterprises can communicate with each other in a timely manner according to their own circumstances, negotiate and reach a new contract plan, and actively seek the possibility of other cooperation between the two sides in the future.

The four is to collect fixed evidence and claim in time. If judged, our enterprises refuse to accept the force majeure exemption proposal from overseas customers. It is suggested that lawyers can send a lawyer's letter to help negotiate and urge the other party to accept payment. At the same time, if a Chinese enterprise decides to seek other new buyers in time, it is suggested that, with the help of professional legal experts, attention should be paid to collecting and retaining evidence related to breach of contract by overseas customers and consequential losses caused by Chinese enterprises, and timely lodge a claim against the other party.

(author: Zhao Jieqiong, Jiangsu Bo Shi Da law firm)