After the Infectious Disease Battle, a 'Legal Battle' Remains... Companies Begin Legal Review

'Even After COVID-19 Ends, It's Not Over' Anticipated Wave of Lawsuits Between Nations and Companies
Legal Community: "Surge in Requests for Advice and Opinions... Lawsuits Related to Olympic Postponement Are a Flashpoint"
China, the Origin of COVID-19, Begins Procedures to Protect Domestic Companies

[Asia Economy Reporters Kim Hyewon and Lee Gimin] #A leading domestic conglomerate's legal department recently held an emergency meeting with external law firm attorneys who provide consultation. This was in response to the potential for various legal disputes domestically and internationally due to the impact of the novel coronavirus infection (COVID-19). Various questions and answers were exchanged, such as "Who should be held responsible for the massive losses caused by forcibly shutting down a fully operational factory in accordance with foreign government guidelines?" and conversely, "If we fail to meet delivery deadlines and cannot fulfill contracts with the other party, where does the liability lie?"

The ongoing COVID-19 situation is increasingly likely to escalate into legal disputes between countries and companies in the future. According to business and legal circles on the 1st, domestic companies have begun legal reviews of various disputes that may arise after the COVID-19 crisis. A senior business official stated, "After the fight against infectious diseases, various legal disputes are anticipated," adding, "Currently, internal legal personnel are conducting legal reviews on multiple fronts, including breaches of contract obligations between countries and companies."

Restrictions such as bans on Korean nationals entering certain countries and forced shutdowns of local factories have caused significant disruptions to business, making simultaneous legal disputes across multiple sectors inevitable, prompting preparations for countermeasures. Another company official said, "Many companies have requested prior consultations with their trading partners regarding force majeure before legal disputes arise."

The legal community also expects that once the global spread of COVID-19 significantly decreases and companies' receivables and payment deadlines come due, related disputes will intensify. Kim Sejin, a foreign attorney at the law firm Bae, Kim & Lee who handles international dispute litigation and consultation, said, "Recently, requests for COVID-19 consultations and opinion letters have been increasing," adding, "In the near future, as receivables and deadlines come due, these will increase explosively, and lawsuits related to the postponement of the Tokyo Summer Olympics, which has many sponsors, are like a powder keg."

Most future disputes will hinge on where the responsibility lies for the direct or indirect impact of COVID-19 on corporate business activities. In particular, the key issue in COVID-19-related disputes is the clause concerning 'force majeure.' Most countries worldwide have laws recognizing war, disasters, natural calamities, or similar force majeure situations, allowing for full or partial exemption from liability.

However, the scope of force majeure recognition is a complex equation that must be approached on a case-by-case basis, considering contract contents between companies, specific causes of contract non-performance, applicable governing law, and the environment and policies of the contracting party's country, according to legal experts. Attorney Bae Seongjin of the law firm Jipyung explained, "This time, many international disputes will arise over whether it is force majeure or not," adding, "For example, there is room for dispute over whether a shutdown was unavoidable or preventive."

China, known as the initial outbreak site of COVID-19, acted swiftly at the government agency level. The China Council for the Promotion of International Trade (CCPIT) issues force majeure certificates to Chinese companies struggling to fulfill international trade contracts. This is intended to help overseas companies that suffer damages due to contract non-performance by Chinese companies during COVID-19 to claim exemption from liability.

Domestically, the Korea International Trade Association, together with the Korean Commercial Arbitration Board, serves as a support channel by providing guidance on trade dispute resolution procedures in preparation for invoking force majeure. Attorney Jeon Woojung of the law firm Jeongryul, who serves as an arbitrator at the Korean Commercial Arbitration Board, said, "Having a CCPIT force majeure certificate does not automatically exempt liability," but added, "It will be important evidence in court judgments."

This content was produced with the assistance of AI translation services.