[The Editors' Verdict] Aftermath of the COVID-19 Crisis: Preparing for Litigation Wars

Published 26 Mar.2020 13:48(KST)

The novel coronavirus infection (COVID-19) crisis has escalated into a pandemic (global outbreak). Now, we must prepare for another war that could spread like a virus: international litigation. Efforts made by countries worldwide to prevent the spread of the virus?such as information provision, entry bans, travel restrictions, quarantine measures, and citizen isolation?may come under scrutiny in international lawsuits.

The United States, severely impacted, may choose international arbitration to pressure China. Ahead of elections, President Donald Trump might rally his support base by directing public animosity outward under the slogan "Death by China."

According to the principle of state responsibility under international law, every country has an obligation to prevent or minimize risks of harmful elements spreading beyond its borders. The source country of the harmful element must immediately notify neighboring countries of the risk and provide assessment information and technical support. Information about international public health emergencies must also be reported to the World Health Organization (WHO). Detailed information sharing is especially crucial in the early response to new infectious diseases. Countries failing to fulfill these obligations may be requested to consult, have facts investigated, or resolve disputes through arbitration between parties under the encouragement of the WHO Director-General according to the International Health Regulations (2005). If the cause of the virus and the specific containment efforts by the Chinese government come under international litigation, it could exert pressure on China’s governing system.

Jurisdiction for arbitration requires the consent of the disputing parties, so whether the Chinese government agrees to arbitration is critical. If public opinion between the U.S. and China worsens and the U.S. applies pressure by resuming trade retaliation, China might opt to consent to arbitration. South Korea is also one of the most affected countries. It could participate in U.S.-China arbitration or file an independent lawsuit?even under the current government, which pursues a pro-China stance. If it is confirmed that the virus spread globally through South Korea, there is no guarantee Korea will not be sued. Whether the measures taken by the Korean government minimized the risk of virus transmission across borders could be subject to review. Among the Korean government’s defense arguments, the claim of "force majeure" is important.

However, it should be noted that a country that voluntarily assumes risks arising from a force majeure event is not exempt from liability. Although the government decided at the Central Disaster and Safety Countermeasures Headquarters meeting on the 2nd of last month to block entry from China early and impose a travel ban on all of China, it reduced enforcement two hours later to ban entry only from Hubei Province. Whether this constitutes voluntarily assuming risks arising from a force majeure event could become a critical issue.

Individual lawsuits are also inevitable. Many people have suffered loss of life and economic damage, and contracts have become unenforceable. Parties unable to fulfill contractual obligations must prepare arguments to avoid liability by citing force majeure. To be exempt, all three conditions must be met: an unforeseeable event occurred at the time of contract formation, unavoidable impacts arose, and despite best efforts to overcome them, performance became impossible.

Special requirements stipulated by the domestic law of the country designated as the governing law in the contract must also be confirmed. According to Chinese law, exemption due to force majeure is not allowed for contracts concluded after the force majeure event, force majeure events occurring after non-performance has already happened, and cases of non-payment of money. Does the government recognize the need to provide domestic and international legal support related to the COVID-19 crisis for small businesses and individuals?

Choi Wonmok, Professor, Ewha Womans University Law School