COVID-19 Roundtable at Allard Law

Written by Christina Ma

Posted on March 28, 2020

At a recent roundtable discussion at the Centre for Asian Legal Studies, three Allard law professors examined the Chinese and Japanese response to COVID-19, and the implication of the virus on international trade law.

Professor Jie Cheng introduced the framework of China’s authoritarian paternalism in emergency control and management. Authoritarian paternalism does not rely on public choice but, instead, requires public compliance that is either voluntary or forced. Paternalistic actions are given legal grounds in the 2004 Prevention and Control of Contagious Disease Law, the 2007 Emergency Response Law and the 2003 Regulations on Public Health Emergency Management.

In the context of a public emergency response, the Chinese government has legal power to control practically everything including expropriation and market regulation. Surveillance is widely deployed to ensure compliance and mobilization. China also maintains full control over all charitable donations and on January 26, 2020, the Ministry of Civil Affairs required all charitable gifts to be sent to five specified institutions.

Government also plays an important role in public opinion formation through censorship and the use of experts. Dr. Li Wenliang, for example, was initially deemed a whistleblower by the Chinese government and received a disciplinary notice for the intent to spread information because he did not have the requisite authority. At the same time, the Communist Part of China (CCP) uses expert persuasion through official spokespersons to mobilize medical workers and to encourage self-quarantine.

Overall, when faced with a public health emergency, the Chinese government’s authoritarian paternalism allows the government to take swift actions under centralized power. Professor Cheng argues that this explains issues related to timing, local passivity and proportionality in government responses. According to Professor Cheng, this epidemic will likely not lead to regime change or collapse but will likely change China’s public health system and slow down China’s economic growth.

Professor Shige Matsui examined the Japanese response, which is grounded by legal authority of the Infectious Diseases Prevention Act and the Quarantine Act. The law includes detailed classification of infectious diseases and is premised on the principle that any government measures should be limited as minimally necessary. The five stipulated categories range from dangerous (Ebola in category five) to mild (Influenza in category one) and specify government regulatory powers for each. COVID-19 has been treated as category two. Moreover, the Quarantine Act empowers the government to deny entry to foreigners based on criteria such as where their passport has been issued and where they have last visited.

With the rise of public panic in Japan, the government was forced to take additional measures including the closure of public schools and highly publicized quarantine of the Diamond Princess Cruise Ship. An amendment bill has been submitted to the legislature to revise the new influenza special measures act which stipulate government response to health emergencies. Until that bill is passed, there is legal ambiguity on whether the Prime Minister Shinzo Abe had power to impose some of the additional measures thus far. Comparatively, Canadian law on emergency response is very broad (the Quarantine Act, Immigration Refugee and Protection Act (IRPA), Provincial Public Health Acts). According to Professor Matsui, there are no limitations on what kind of measures can be adapted by governments in Canada. Infectious disease is left to the jurisdiction of each province.

Lastly, Professor Ljiljana Biukovic discussed emerging legal issues in international trade caused by the spread of COVID-19. Governments can seek exemption from violating World Trade Organization (WTO) rules when introducing legislation that can be interpreted as a discriminatory barrier to trade. The exemption is found in Article XX of General Agreements on Tariffs and Trade (GATT). Regional agreements, bilateral agreements and trade agreements have similar provisions. States which have signed the Vienna Convention on the Sale of Goods can refer to Article 79 for an excuse from obligations of the contract: nonperformance of a contract due to the virus could qualify as an unforeseen circumstance at the formation of the contract.

For long-term supply chain contracts, most sophisticated contracts include epidemics as an extenuating circumstance for the non-performance of obligations. Even if these contracts do not explicitly state pandemics or epidemics, the doctrines of interpretation of contract would allow for broader interpretation for similar terms, such as “supervening change of law”. Parties under these provisions would likely tolerate delay for a certain period of time and would allow the affected party to modify and reallocate risk differently from the time they made the contract.

If there is no provision as the above, then the applicable national law of the country under the contract would govern the situation. In China, the law of frustration is similar to UK law and the French Civil Code. To be excused for nonperformance, a company operating in China would need force majeure certification issued by China Council for International Trade. As of March 5, 2020, the value of this avoidance applied through these certificates is $35.8 billion dollars.