The coronavirus (“COVID-19”), a public health threat recently labeled as a pandemic,[1] is now at the center of the world’s attention and has brought accelerating disruptions to the global business community, including entrepreneurs doing business in Taiwan.  The COVID-19 pandemic (the “Pandemic”) that we are witnessing across the globe is compromising the ability of many businesses worldwide to perform their contractual obligations during this challenging time.  The disruptions brought by the Pandemic not only significantly affect many businesses worldwide, but also ripple into those connected with the affected businesses in the global market, such as their customers, subsidiaries, affiliates, or suppliers.  In anticipation of any potential disputes which may arise out of the disruptions brought by the Pandemic, many businesses are exploring strategies to cope with current risks, including, without limitation, navigating possible legal bases to excuse non-performance (including partial performance) or delay in performance of contractual obligations caused by the Pandemic. 
 
For businesses who are facing or will likely be facing disruptions to contractual performance caused by the Pandemic (the “Affected Business(es)”[2]), this article briefly explores some possible legal doctrines under the laws in Taiwan which may be applicable for excusable non-performance or delay in performance of contractual obligations.  Also, a few general tips are provided herein for the consideration of Affected Businesses to mitigate the impact of the Pandemic on their performance of contractual obligations.
 
I.  Legal Doctrines under the Laws in Taiwan
 
Taiwan was hard hit by the outbreak and spread of the severe acute respiratory syndrome (“SARS”) worldwide during the period between 2002 and 2004.  A bunch of cases filed in the courts in Taiwan then involving contractual performance allegedly disrupted by the SARS epidemic (each, a “SARS case,” and collectively, the “SARS cases”) show that the “non-attributability” doctrine and the “change of circumstances” doctrine under the Civil Code in Taiwan (the “Civil Code”)[3] are two common legal grounds raised by defendants to excuse non-performance or delay in performance of contractual obligations.[4]
 
1.  Non-attributability
 
Generally speaking, a contracting party is liable for his intentional or negligently breach of contract, including non-performance and delay in performance of contractual obligations.[5]  Nevertheless, a contracting party is excused for his non-performance or delay in performance of contractual obligations if the said non-performance or delay in performance of contractual obligations is not caused by any reason attributable to himself.[6]  In other words, a non-performance or delay in performance of contractual obligations resulted from “a cause not attributable to a contracting party” constitutes an excusable non-performance or delay in performance.[7]  In one of the SARS cases, the Taiwan High Court held that the abovementioned “cause not attributable to a contracting party” should be a “direct” cause rendering it impossible for a contracting party (or the contracting parties) to perform contractual obligations.[8]
 
In some cases involving contractual performance disputes, defendants would argue that a force majeure event constitutes a cause not attributable to defendants but rendering it impossible for the defendants to perform their contractual obligations.[9]  The courts in Taiwan have held that a force majeure event refers to an unusual incident (1) which is beyond the control of human beings; (2) which occurs as a result of the operation of natural force free from human intervention; and (3) which could not have been avoided by the exercise of due care or due diligence of anyone.[10]  For instance, thunderbolt, flood, typhoon, war, and so forth.[11]
 
2.  Change of Circumstances
 
In addition to the non-attributability doctrine, the change of circumstances doctrine is another often-raised legal ground for supporting the argument of excusable non-performance or delay in performance of contractual obligations.  The change of circumstances doctrine may be applicable to a contract entered into between the contracting parties when all following elements are met: (1) a change of circumstances occurs after the contracting parties have entered into the said contract (i.e., the circumstances on which a contract was based change after the contracting parties entered into the contract); (2) the occurrence of a change of circumstances is unforeseeable at the time the contract was entered into; and (3) the occurrence of a change of circumstances makes contractual performance excessively unfair (for one of the contracting parties).[12]  In determining whether a change of circumstances takes place, Taiwan courts will look at the particular facts and all surrounding circumstances of each case, regardless of whether the occurrence of a change of circumstances is attributable to any of the contracting parties.[13]
 
3.  Case by Case
 
In those SARS cases, many defendants argued that the outbreak of the SARS epidemic then suffices to justify their non-performance or delay in performance of contractual obligations.  However, the outcome of those SARS cases tells that, in the opinion of the courts in Taiwan, not every non-performance or delay in performance of contractual obligations caused by a public health emergency (e.g., SARS) constitutes an excuse for non-performance or delay in performance of contractual obligations.  Rather, the courts in Taiwan tend to look into relevant factors in the circumstances of each case and then decide on a case-by-case basis as to whether those relevant factors in the circumstances of each case constitute a sufficient justification for excusable non-performance or delay in performance of contractual obligations.
 
II.  General Tips
 
The following provides some general tips for the consideration of Affected Businesses to minimize the potential risks which may arise from non-performance or delay in performance of contractual obligations caused by a Disruption.  Please note that these general tips are not inclusive because the situation of non-performance or delay in performance of contractual obligations by any contracting party in each case varies from one to another.  Moreover, these general tips are not intended to address any particular concern of business in any specific sector or industry. 
 
1.  Contract Review
 
In anticipation of any future contractual performance disputes which may arise out of a disruption caused by the Pandemic (a “Disruption”), an Affected Business would be wise to immediately review those contracts to which an Affected Business is a party to understand the scope and applicability of clauses contained in those contracts.  An Affected Business should not assume that a Disruption would undoubtedly constitute an excuse for non-performance or delay in performance of contractual obligations. 
 
When reviewing a contract in light of a Disruption, an Affected Business should look into whether the contract contains any clause which expressly covers a Disruption.  For instance, whether the contract contains a list of enumerated excuses for non-performance or delay in performance of contractual obligations.  If a contract contains a list of enumerated excuses for non-performance or delay in performance of contractual obligations, then the following question is whether a Disruption constitutes any excuse enumerated in the contract.  In the event that the relevant facts of a Disruption do not meet the requirements of any enumerated excuses in a contract, an Affected Business should consider whether it is possible to characterize a Disruption as an event sharing the same character with an enumerated excuse in the contract.  In the absence of any enumerated excuse in a contract that may cover a Disruption, an Affected Business may inquire about whether the catch-all wording of any clause in the contract is broad enough to capture a Disruption.  It is worth noting that the interpretation of the catch-all wording of a clause in a contract may depend on the governing law of the contract chosen by the contracting parties (see below).
 
2.  Observing the Notice Requirements (and other Prerequisites, if any)
 
Some contracts may contain clauses requiring certain measures or actions to be undertaken upon the occurrence of certain incidents, including, without limitation, events compromising the ability of a contracting party to perform its contractual obligations.  The required measures or actions[14] contained in these clauses may vary from one contract to another.  If an Affected Business identifies any of these prerequisites in a contract following its contract review, the Affected Business should act accordingly to meet all those prerequisites before asserting any excuse for non-performance or delay in performance of contractual obligations. 
 
3.  Approaching for Viable Advice
 
Do not assume that the parties to a contract are only bound by those written on the face of the contract.  In addition to those expressed terms and conditions contained in a contract, other factors beyond the four corners of a contract can come into play.  The agreed-upon governing law of a contract plays a significant role in the construction and interpretation of the contractual wording of the contract.  The concept and effect of those terms and conditions contained in a contract may vary under the laws of different jurisdictions.  It is also possible that some legal doctrines[15] under the governing law of a contract may apply without being expressly stated in the contract.  In addition, the dispute resolution clause of a contract may be of concern to the contracting parties, especially when the contracting parties disagree as to whether a Disruption constitutes an excuse for non-performance or delay in performance of contractual obligations.  To obtain an accurate understanding of its rights, obligations, potential risks, and available remedies under a contract to which it is a party, an Affected Business would be wise to approach and consult legal counsels for viable advice following a review of its contracts, and analysis of (1) related applicable laws (including, without limitation, (i) the governing law of the contract, (ii) applicable laws which may apply to the Affected Business, and (iii) applicable laws which may apply to other contracting parties), as well as (2) the cost and effectiveness of available mechanisms for the resolution of disputes between the contracting parties.
 
4.  Immediate Response
 
Simply exploring strategies without taking any action is of no help to an Affected Business.  To mitigate the impact and risks of a Disruption, an Affected Business should take actions following its contract review, observation of the contract requirements, and approaching for viable advice.  Moreover, it would be wise for an Affected Business to collect and document clear evidence of a Disruption’s impact on its ability to perform contractual obligations.  Furthermore, to take advantage of any relief that might be available, an Affected Business should pay attention to any interventions by the government or international authorities[16] in response to the Pandemic.  The aforementioned evidence and interventions by the government or international authorities would support an Affected Business’ claim of excuse for non-performance or delay in performance of contractual obligations caused by a Disruption.
 
5.  Utmost Sincerity
 
Communication matters.  A good faith communication with your business partners is an essential component for lasting business relationships.  In the time of the ongoing Pandemic crisis, an Affected Business would be wise to make efforts with utmost sincerity to communicate with other contracting parties to jointly explore agreeable solutions or alternatives for non-performance or delay in performance of contractual obligations caused by a Disruption.  For instance, a modification to the previously agreed business arrangements between the contracting parties or an amendment to the existing contract, where feasible.  Such an approach may help the contracting parties meet their goals without wasting too much time, money, and effort in fighting each other through litigation.
 
III.  Conclusion
 
As of today, the ultimate impact of the Pandemic on the global business community remains unpredictable.  The ongoing Pandemic crisis is not likely to abate in a flash.  Since the Pandemic spreads faster than expected and continues disrupting the contractual performance of various businesses in different sectors, many Affected Businesses are taking drastic measures and making adjustments in a short time to mitigate the Pandemic’s impact on their business.
 
Under the laws in Taiwan, the non-attributability doctrine and the change of circumstances doctrine are two possible legal grounds for an Affected Business to claim excuse for non-performance or delay in performance of contractual obligations caused by a Disruption.  Nonetheless, an Affected Business should be aware that the courts in Taiwan will look into relevant factors in the circumstances of each case to decide whether there is a sufficient justification for an Affected Business’ excusable non-performance or delay in performance of contractual obligations.
 
For an Affected Business assessing whether and how its contractual performance may be excused forasmuch as a Disruption, some general, but not inclusive, tips are: (1) carefully reviewing the contractual wording of contracts; (2) complying with all requirements set forth in the contracts; (3) consulting legal counsels for viable advice and in-depth legal analysis; (4) taking actions to cope with the said Disruption; and (5) communicating with the other contracting party with utmost sincerity to seek mutually agreeable solutions. 
 
With more and more infected cases confirmed every day in different corners of the world, the unfolding situation of the Pandemic seems to be rapidly evolving.  The Pandemic’s unprecedented uncertainty and profound challenges facing us are besetting our global community.  In this stressful time of the Pandemic, we should take care of one another because now we need each other more than ever.  Let us look after not only our loved ones but also those who are miles away from us in our global community.  By standing together, we will get through this Pandemic crisis.
 

This article, including the information contained herein, has been prepared only for educational and general information purposes to contribute to the understanding of the subject matters addressed herein.  This article does not and is not intended to constitute, offer, or convey individual legal advice, legal opinion, or any other professional advice on any subject matters covered herein.  Please obtain specific legal advice before acting on any matters discussed herein.  While the author makes every attempt to ensure that the information enclosed herein is accurate, the author disclaims any liability for any omissions or errors that may be contained in this article.