Chinese firms use obscure legal tactics to stem virus losses

Chinese firms use obscure legal tactics to stem virus losses

• obscure
  • 鲜为人知的
• tactic
  • [usually pl.] 策略，手段
• stem
  • : to stop sth that is flowing from spreading or increasing 阻止，封堵

“It is going to be an almighty legal mess for months and years to come.” That grim prognosis of the potential legal and business consequences of the viral outbreak in China comes from a veteran of the country’s business scene. Dan Harris of Harris Bricken, an American law firm, worries that today’s trickle of mainland suppliers declaring force majeure (FM), an obscure legal manoeuvre used to get out of contracts, could turn into a tidal wave.

• almighty
  • [only before noun] 十分严重的
• grim
  • 令人沮丧/不快的
• prognosis
  • n. 预测
• veteran
  • 老手，经验丰富的人
• the business scene
  • 商业界
  • the (…) scene: [sing.] 界，坛，圈子
• trickle
  • n. [usually sing.] a small amount or number of sth, coming or going slowly 稀稀疏疏缓慢来往的东西
• force majeure
  • (law) unexpected circumstances, such as war, that can be used as an excuse when they prevent sb from doing sth that is written in a contract 不可抗力
• manoeuvre
  • 策略，花招
• tidal wave
  • （情感或事物发展的）高潮，热潮

The crisis has certainly put many firms in a bind. If this were a normal year, most factories would have shut for a week or so in early February so that migrant workers could return to their villages to celebrate Chinese new year. By now, plants would be roaring at full capacity. But because of a lockdown of a large area around Wuhan, the outbreak’s centre, and ongoing restrictions on travel, workers are only slowly trickling back. Morgan Stanley, an investment bank, reckons that production may reach only 60% to 80% of normal levels by the end of February.

• bind
  • 窘境
    • double bind: [usually sing.] 两难境地
• or so
  • 大约
• migrant worker
  • 流动工人
• roar
  • v. 咆哮，吼叫
• capacity
  • [sing., U] 生产量，生产能力

The result is that the supply chains of global firms, which often rely on “just in time” deliveries of stocks, are being disrupted. Chinese buyers of imported commodities are also hurt, thanks to weak local demand. Nomura, a Japanese bank, thinks Chinese year-on-year economic growth could plunge to 3% in the first quarter, down from 6% the previous quarter.

• just in time
  • 适时制（只有在需要时才将零部件或原材料送货到厂）
• commodity
  • a product or a raw material that can be bought and sold 商品
• year-on-year
  • 与去年同期比较
• plunge
  • （价格、温度等）暴跌，骤降

China Inc is panicking. Firms are starting to invoke FM to avoid paying non-performance penalties on contracts. On February 17th, the China Council for the Promotion of International Trade (CCPIT), an official body, revealed that it had already issued over 1,600 “FM certificates” to firms in 30 sectors covering contracts worth over $15bn. These give official support to its invocation. More are likely to come.

• panic（现在分词panicking）
  • （使）惊慌失措
• invoke
  • 援引，援用（法律、规则等）
• non-performance
  • [law] failure to perform a task in a reasonable manner 违约
• penalty
  • a punishment for breaking a law, rule or contract 惩罚，处罚
• issue
  • （正式）发给
    • to issue passports/visas
• sector
  • （尤指一国经济的）领域，行业
    • the manufacturing sector 制造业
    • service sector 服务员
• invocation
  • an act of legal or moral implementation (法规、条文等)援引，（法权的）行使
  • （向神或权威人士的）求助，祈祷

All this raises several questions. First, since this clause typically refers to “acts of God” like earthquakes and hurricanes, does it really apply to an epidemic probably caused by humans eating exotic animals and to the heavy-handed government response to it? Second, even if deemed relevant, will FM really work in practice? And finally, is a lengthy legal tangle inevitable?

• clause
  • （法律文件的）条款
• hurricane
  • （尤指西大西洋的）飓风
• exotic
  • 来自异国（尤指热带国家）的，异国风味的
• heavy-handed
  • 笨手笨脚的；专断的，暴虐的
• deem
  • (formal) to have a particular opinion about sth 认为，视为
• lengthy
  • 漫长的，冗长的
• tangle
  • a state of confusion or lack of order 混乱，纷乱

On the first question, common sense suggests no but precedent and officialdom say yes. David Buxbaum of Anderson & Anderson, a lawyer who has worked in China since 1972, reports that some suppliers successfully invoked FM in local courts in the wake of the SARS virus outbreak of 2003. On February 10th, the National People’s Congress ruled that policies implemented to control the virus (such as production curbs and city lockdowns) that interfere with contracts should be considered FM.

• precedent
  • 先例；可援用参考的范例；常规
• officialdom
  • 官僚，当官的人
• in the wake of
  • coming after or following sb/sth 跟随在……后
• rule
  • to give an official decision about sth 判决，裁定
• implement
  • 使生效，实施
• curb
  • 控制，限制

On whether invoking this clause will really work, legal opinion is divided. Many trading contracts fall under international jurisdictions less friendly to this claim than China with courts not overly impressed by FM certificates. Earlier this month, CNOOC, a Chinese state-run oil firm, invoked FM in refusing to accept a shipment of liquefied natural gas from Royal Dutch Shell and Total — a claim rejected by the European oil giants. Traders whisper that mainland firms are using the viral outbreak to try to renegotiate terms, a tactic they deride as “price majeure.”

• jurisdiction
  • 司法权；管辖区域
• overly
  • (before an adjective) too; very 很，十分
• shipment
  • 运输的货物
• liquefied natural gas
  • 液化天然气
• Total
  • 道尔达，一家法国石油公司
• renegotiate
  • 重新谈判，重新协商
• deride
  • (formal) to treat sb/sth as ridiculous and not worth considering seriously 揶揄，嘲笑

“FM is a recognised doctrine in civil-law systems like that of China but is not a doctrine of common-law systems, like English law,” observes Simmons+Simmons, a British law firm. It is typically only respected by courts in London and Hong Kong if the contract has a specific FM clause. So local firms are likely to get a more sympathetic hearing in mainland courts. Mr Harris thinks that even if a foreign firm gets a favourable ruling overseas, it may still need to get it enforced by a Chinese court. That court will see the FM certificate and likely rule for the mainland firm.

• doctrine
  • a belief or set of beliefs held and taught by a Church, a political party, etc. 教义，学说，信条
• civil-law
  • 民法
• common-law
  • the body of law based on judicial decisions and custom, not created by parliament, as distinct from statute law（英格兰）习惯法（不同于成文法）
• sympathetic
  • 同情的；支持的
• hearing
  • 审讯，听证会
• ruling
  • 裁决，判决
• rule for
  • : to deliver a judgment that is in favor of sb. or sth.

Tobias Larsson of Resilience360, a German supply-chain consultancy, thinks that invocation of FM could help make the fallout from the virus the “biggest supply-chain disruption since Japan’s earthquake.” Mayer Brown, an American law firm, worries that use of FM and other legal tactics “may be passed along supply chains around the world, causing firms based in other jurisdiction to seek similar relief.”

• consultancy
  • 咨询公司
• fallout
  • the bad results of a situation or an action （不良）后果，余波

Still, there is a reason to think legal chaos might be avoided. Unlike during the SARS epidemic, when multinationals could easily shift sourcing, Chinese firms are now critical (and sometimes the only) suppliers of vital parts to many industries. John Hoffecker of Alix Partners, a consultancy, says that his clients are more concerned about being the first to receive parts as factories restart than about FM. So foreign bosses may agree to renegotiate terms with certificate-waving vendors through gritted teeth rather than risk losing them altogether through bitter legal battles.

• sourcing
  • [business] the act of obtaining goods or components from a specified source （从……）获得
• vendor
  • （某种产品的）销售公司；摊贩
    • software vendors
• through gritted teeth
  • 咬紧牙关
• bitter
  • （争论、分歧等）激烈而不愉快的
  • （食物等）味苦的：a bitter taste
  • （天气）严寒的：a bitter wind