Viewpoint... Can government policy adjustments during the performance of the contract claim force majeure exemption?
Published:
2024-07-31
After the establishment of the contract, the basic conditions of the contract have undergone major changes that the parties could not foresee at the time of the conclusion of the contract and are not commercial risks. If the continued performance of the contract is obviously unfair to one of the parties, the party adversely affected may renegotiate with the other party; If the negotiation fails within a reasonable period of time, the parties may request the people's court or arbitration institution to modify or terminate the contract.
1. brief
In 2021, a village bank and Shenzhou Technology Company signed the Bank Information System Custody Service Contract (the "Custody Contract"). In August 2023, the State Council's inspection team inspected, and the Municipal Supervision Bureau, on behalf of the municipal government, submitted the plan for the reform of rural banks to the State Council's inspection team. The State Council approved in principle the idea of reforming the insurance of small and medium-sized financial institutions-appropriately advancing the time limit for the completion of the risk disposal target of rural banks, striving to complete the disposal of minority shareholders' equity by the end of 2023, and converting the rural banks into branches by the main sponsors by the end of June 2024. In September 2023, the State Administration of Financial Supervision and Administration said that the plan of the main sponsoring bank to acquire and rebuild the sub-branch is different from the simple equity acquisition, so there is no need to change the equity. The administrative licensing matters shall be implemented in accordance with Articles 31 and 32 of Decree No. 5 of 2022 of the Decision of the China Banking and Insurance Regulatory Commission on Amending Some Administrative Licensing Regulations. The examination and approval procedures for the reform of chemical insurance work of village and town banks are as follows: the territorial supervision bureau shall submit it to the agricultural and banking department of the general administration, the agricultural and banking department of the general administration shall countersign the joint-stock department after approval, and the plan shall be submitted to the leaders of the general administration for approval after countersigning, and shall be implemented by the territorial supervision bureau after approval.
In view of the above background, according to Article 22.2 of the Escrow Contract."If this contract cannot be performed normally due to national laws, regulations and regulatory agencies, the parties shall not be liable for breach of contract."The village bank believes that it has the right to terminate the contract and there is no breach of contract, and should not pay liquidated damages to Shenzhou Company.
Shenzhou believes that: First, the Regulation No. 61 document mentioned in the Notice on Requesting the Main Originating Bank to Actively Participate in Matters Related to the High-Quality Development of Village Banks does not force the originating banks to carry out reform through absorption and merger. The reason for the merger of the village bank is entirely due to the regulatory agency's issuance, Shenzhou Company does not recognize. Second, the "Minutes of the Special Meeting on Reform of chemical Insurance" provided by the village banks cannot explain whether the merger of the village banks is a government-led requirement or whether the village banks are approved by the government after they initiate their own initiative. Therefore, the minutes of the meeting do not constitute sufficient evidence of the merger due to regulatory reasons. Third, the Notice on Requesting the Main Originating Bank to Actively Participate in Matters Related to the High-Quality Development of Village Banks clarifies that matters such as cooperation between village banks and outsourcing companies should be included in the scope of discussion and approval by the Board of Directors and filed with the Main Originating Bank. The document does not prohibit village banks from cooperating with outsourcing companies, and should properly handle matters related to outsourcing companies even if the contract is terminated. To sum up, Shenzhou Company believes that the reasons advocated by the village bank to terminate the contract due to regulatory reasons are not sufficient, and does not agree with the village bank to terminate the contract without paying liquidated damages.
2. Core Views
Policy changes are not of course recognized as force majeure, and the court is more inclined to conduct refined review. Macro policy changes are unavoidable objective events, but whether they can be recognized as force majeure needs to be judged based on the facts of the case. Only those that meet the three elements of force majeure The macro policy change may be recognized as force majeure. At the same time, only a change in policy is the main cause of delay in performance, and a causal relationship between the two and no impediments can constitute an exemption.
3. practice analysis
There are two main forms of force majeure. One is force majeure stipulated by law, that is, "unforeseeable, unavoidable and insurmountable objective circumstances" according to Article 180 of the Civil Code ". The other is the force majeure agreed by the parties through the contract. The parties to the agreement list the specific circumstances of force majeure. The common ones are "natural disasters such as earthquakes and tsunamis; social anomalies such as wars and armed conflicts", and usually "government control expropriation, Changes in government planning and other government actions and changes in laws and regulations" are listed as force majeure situations.
However, it should be noted that no matter how the contract lists the specific circumstances, it should still meet the three statutory elements of "force majeure", namely "unforeseen", "unavoidable" and "insurmountable", otherwise it should be a special exemption agreed by both parties to the contract, and cannot constitute the legal concept of "force majeure.
Absorption merger is one of the forms of merger of companies, which refers to the merger of two or more enterprises into one enterprise, one of which absorbs the other enterprises to continue to exist, and the remaining enterprise subject is dissolved and canceled due to absorption, and the qualification is eliminated. The behavior of the main sponsoring bank to absorb and merge the village bank is analyzed from the perspective of the Company Law, which is a way of merger and reorganization of enterprises, and it is also a way of integration that enterprises often choose in the process of reform in recent years for the purpose of adjusting and optimizing the management structure and realizing the company's integration strategy. The merger by absorption is not a force majeure situation under the law.
In summary, in the course of the performance of the project contract, no natural disasters, expropriation or social abnormal events occurred, the village bank can not apply the statutory force majeure clause to terminate the "custody contract" and exempt from liability for breach of contract.
Advice from 4. lawyers
Article 533 of the Civil Code: After the establishment of the contract, the basic conditions of the contract have undergone major changes that the parties could not foresee at the time of the conclusion of the contract and did not belong to commercial risks. The adversely affected party may renegotiate with the other party; if the negotiation fails within a reasonable period of time, the parties may request the people's court or arbitration institution to modify or terminate the contract.
The people's court or the arbitration institution shall, in light of the actual circumstances of the case, modify or rescind the contract in accordance with the principle of fairness.
The system of change of circumstances refers to the system of changing the contract after the effective establishment of the contract, due to the reasons that are not attributable to the parties, which are not foreseeable and do not belong to commercial risks, resulting in the foundation of the contract being shaken or lost, and it would be unfair to continue to perform the contract, therefore, the system of allowing the contract to be changed or terminated. After the contract is dissolved due to the change of circumstances, the parties do not need to bear the liability for breach of contract. Since the purpose of the change of circumstances rules is to re-share the interests and risks of the contract, balance the interests of both parties and make the performance of the contract more reasonable and fair, the judicial practice still needs to consider the consequences of the termination of the contract, comprehensively consider the normal expected loss of interests and the profits obtained by the subject matter of the contract, and distribute the fair.
In this case, when the contract was signed, the main body was the village bank and Shenzhou Company, and both parties agreed that the liability for breach of contract was not applicable. Now that the village bank has been acquired and dissolved, the main body of the contract will soon cease to exist. Lawyers tend to believe that the basic conditions of the contract have undergone major changes that the parties could not foresee at the time of the conclusion of the contract and do not belong to commercial risks, which can be identified as changes in the situation. In the event of a change of circumstances, if the village bank continues to perform the Custody Contract, it will directly lead to its lack of the subject qualification to continue to perform, let alone the practical significance of continuing to perform, the services provided by the system service company outsourced by the village bank in the early stage no longer have the basis and premise for continued performance, so the village bank or the main originating bank has the right to terminate the contract by applying the principle of change of circumstances stipulated by law. According to the law, the contract can be rescinded through renegotiation with the other party; if the negotiation fails within a reasonable period of time, the village bank or the main originating bank may request the people's court or the arbitration institution to change or rescind the contract, but the court will generally consider the consequences of the rescission of the contract, comprehensively consider the normal expected loss of interests and the profits obtained by the subject matter of the contract, and fairly distribute the benefits and losses. Therefore, it is recommended that your bank, in the process of negotiating with Shenzhou to terminate the contract, require Shenzhou to provide relevant evidence to prove the normal expected loss of benefits under the actual performance of the contract. Refer to the gain and loss situation and then sign a written agreement with Shenzhou Company to negotiate compensation matters.
5. Law Link
the People's Republic of China Civil Code
Article 180 If a person is unable to perform his civil obligations due to force majeure, he shall not bear civil liability. Where the law provides otherwise, such provisions shall prevail.
Force majeure is an objective situation that cannot be foreseen, avoided and overcome.
Article 533 After the establishment of the contract, the basic conditions of the contract have undergone major changes that the parties could not foresee at the time of the conclusion of the contract and are not commercial risks. If the continued performance of the contract is obviously unfair to one of the parties, the adversely affected party may Renegotiate with the other party; if the negotiation fails within a reasonable period of time, the parties may request the people's court or arbitration institution to modify or terminate the contract.
The people's court or the arbitration institution shall, in light of the actual circumstances of the case, modify or rescind the contract in accordance with the principle of fairness.
Article 563 The parties may rescind a contract under any of the following circumstances:
The (I) is unable to achieve the purpose of the contract due to force majeure;
(II), before the expiration of the performance period, one of the parties expressly expresses or indicates by its own conduct that it will not perform its main obligation;
(III) one of the parties delays in performance of the main obligation and fails to perform within a reasonable period of time after being urged to do so;
(IV) one of the parties delays the performance of its obligations or has other breach of contract, resulting in the failure to achieve the purpose of the contract;
(V) other circumstances prescribed by law.
The parties may terminate the contract at any time for an indefinite contract with the content of the debt for continuous performance, but shall notify the other party before a reasonable period of time.
Article 590 If one of the parties is unable to perform the contract due to force majeure, it shall be exempted from liability in part or in whole according to the effect of force majeure, except as otherwise provided by law. If the contract cannot be performed due to force majeure, the other party shall be notified in time to mitigate the losses that may be caused to the other party, and proof shall be provided within a reasonable period of time. If force majeure occurs after the party's delay in performance, it shall not be exempted from its liability for breach of contract.
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