GLOBAL PANDEMIC: CORONAVIRUS, THE LAW AND ECONOMY

             GOBIR HABEEB BOLAJI

 Over the years, the course of human history has been shaped by infectious diseases with a record number of deaths across the globe. Historically, there are multitudes of global pandemic in the history of human race which has overtime claimed millions of lives and left devastating effects on economies around the world. Notable among these global diseases are the 1918 “Spanish Flu” pandemic leading to over 50 million deaths. The Asian Flu which originated from China in 1956 and lasted until 1958 caused a total number of 1.5 millions deaths. The Sixth Cholera Pandemic of 1910-1911, the black death virus of 1346-1353, the Hong Kung flu of 1968-1969 to list but a few.  

The term pandemic is derived from two Greek words ( “Pan” meaning “All” and “Demos” meaning “people”). Technically, when used in relation to diseases, it is an epidemic occurring on a scale that crosses international boundaries, usually affecting people on a worldwide scale. A disease is not a pandemic merely because it is widespread or kills many people; it must also be infectious. There are, of course, many international organizations established specifically to tackle global pandemic nationwide. Among these organizations are the World health Organization (WHO), CARE International, Population Services International, and many others. Commendably, these organizations have been at the forefront in fighting global pandemic since their inception, leading to the total eradication of some of these diseases. Regrettably, however, despite all these mechanisms available to tackle global pandemic,  it never ceases to unleash its terror on humans. This is evident in the recent outbreak of Coronavirus.

Coronavirus commonly known as covid-19 is a novel global pandemic firstly identified in Wuhan, the capital city of China in December, 2019, and has since then spread globally, resulting in the ongoing 2019-2020 global pandemic. According to the world health organization, coronavirus emanated from wildlife animals, and the first  victim of this virus contacted it as a result of exposure to wildlife animals at the huanan seafood wholesale market in China, where snakes, poultry, bats and other farm animals were sold. As of 21st of  April 2020, more than 2.47 million cases have been reported across 185 countries and territories, resulting in more than 170,000 deaths. More than 646,000 people have however recovered. 

Common symptoms of covid-19 include fever,cough , and shortness of breath. Other symptoms may include fatigue, muscle pain , diarrhea, sore throat, loss of smell , and abdominal pain.  Funny enough, there are also people who carry the virus but are asymptomatic, thereby making it difficult to curb the spread. 

Apart from the devastating impacts that covid-19 continues to have on human beings and countries worldwide, its effects has also reached commerce and business. Just like it counterparts, the recent outbreak of covid-19 has tremendously affected the global economy. Its negative impact on economy of many nations can be felt in all ramifications. 

The pandemic has resulted in a very large cut in international trade as a result of falling global demand, both for consumption as well for investments.  For example, in China,  surveys of China’s manufacturing and services sector plunged to record low in February, automobile sales, and China’s exports fell 17.2 percent in January and February. 

In addition to this, analysts have sharply revised down estimates of Chinese growth, with many now predicting a drop in first quarter GDP, the first contraction since China began reporting quarterly data in 1992. 

Europe and Japan are likely already in recession territory given their weak fourth quarter performance and high reliance on trade. While the United States entered the crisis with a tailwind, some analysts are forecasting a contraction in U.S. GDP in the second quarter. As a result of depressed activity caused by covid-19, the United Nations projects that foreign direct investment flows could fall between 5 and 15 percent to their lowest levels since the 2008-2009 global financial crisis. 

Similarly, Sectors such as travel, tourism and construction have been greatly affected as authorities encourage social distancing, and consumers stay indoors. The International Air Transport Association equally warns that, COVID-19 could cost global air carriers between $63 billion and $113 billion in revenue in 2020, and the international film market could lose over $5 billion in lower box office sales. 

Last week, members of the Organization of the Petroleum Exporting Countries (OPEC) and a few other major oil producers met to discuss an additional cut of 1.5 million barrels per day through the end of June in response to the outbreak. When the agreement collapsed, Saudi Arabia cut prices and lifted output, ostensibly to harm Russia for refusing to agree to production cuts. Following the Saudi decision, Brent Crude fell more than 20 percent , the sharpest one-day drop since 1991, with analysts predicting further declines ahead. In response to the price shock, large oil producers, including U.S. firms, could pare back investment and production, with heavily indebted firms in particular at risk of layoffs, consolidations, and even bankruptcy. 

Undoubtedly, flowing from the above analysis, one will see that covid-19 as posed to be inimical to the growth and development of global economy. Its damaging impact can be felt both in the domestic and international trade negotiations. Countless  number of contracts have been frustrated due to the total lockdown and restrictions of movement worldwide. A lot of problems are visible at the end of this pandemic. Some countries  may result into legal action for breach of agreements and for economic loss as a result of the pandemic. Same is also visible at the domestic level.  Private companies which as a result of the pandemic have been rendered incapable to carry out their responsibilities  in transactions  may be faced with legal action in court. 

However, in a bid to find a lasting solution to  these future contingencies, the law has many roles to play in restoring the dilapidated global and domestic economies.  Truth be told, it will be of tremendous help if most of these issues can be taken to court for resolution. By so doing, it will not only bring an amicable settlement between disputing parties, but will go a long way in rehabilitating global economy. This will be discussed below. 

THE LAW AND ECONOMY 

 Universally, there are, of course, rules and regulations that regulates both bilateral and unilateral trade agreements between nations at the international level. Traditionally, trade was regulated through bilateral treaties between two nations. However, after World War II, as free trade emerged as the dominant doctrine, multilateral treaties like the GATT and World Trade Organization (WTO) became the principal regime for regulating global trade. The world trade organization created in 1995 as the successor to the General Agreement on Tariffs and Trade (GATT), is an international organization charged with overseeing and adjudicating international trade. The WTO which deals with the rules of trade between nations is responsible for negotiating and implementing new trade agreements. Similarly, WTO is in charge of ensuring members adhere  to all the WTO agreements, signed by the majority of the world’s trading nations and ratified in their parliaments. 

Additionally, it is the WTO’s duty to review the national trade policies and to ensure the coherence and transparency of trade policies through surveillance in global economic policy making. World trade organization is governed by five essential principles that must be complied with by member states. These principles serve as guiding philosophy for the smooth running of the organization. These principles are:

1. The principle of Nondiscrimination

2. Principle of Reciprocity

3. Binding and enforceable commitments principle

4. Transparency principle

5. Safety valves principle

An undeniable reality regarding these principles is that, they have been playing a leading role in preventing the global economy from  tearing apart by ensuring fairness in bilateral and multilateral trade agreements between members states. However, for the purpose of analyzing  how the law can help in restoring the shattered global economy, only binding and enforceable commitment principle will be discussed in this article in brief.  

This principle is to the effect that, , any agreement made by WTO members in a multilateral trade negotiation can be changed by any involved countries. This can, however, be done only after such a country has negotiated with its trading partners, which could mean compensating them for loss of trade. This, invariably is an important mechanism that can be adopted by some countries who might be faced with legal action after the end of the pandemic. Rather than engaging upon fruitless negotiations which may result into cutting of ties between disputing parties, they can opt in for this principle. Many cases will be resolve with amicable settlement by this, and same will foster mutual corporation between the countries involved in the trade negotiations. 

Apart from the principles of WTO discussed above, there is another mechanism that can be relied upon by parties in contract as a defence to any legal action. This defence in legal parlance is referred to as doctrine of force majuer. 

According to Blacks law dictionary, the term force majuer is defined “as an event or effect that can be neither anticipated nor controlled”. It is a contracting provision allocating the risk of loss if performance is impossible or impracticable, especially as a result of an event that both parties could not have anticipated nor controlled. Force majeure may be acts of God/nature or acts of the people/government. It may also take the form of epidemic or pandemic diseases such as Ebola, Coronavirus and the likes. This, invariably can be relied upon by parties  who were rendered incapable to perform their obligations in contract as a result of the lockdown. 

Under English law, there is no automatic presumption of Force Majeure, and for contracting parties to invoke Force Majeure, it must be expressly provided for in the contract. This clearly shows that, this defence is only available for a party who is diligent enough to include force majuer in their dealings. More importantly, for a party to rightly invoke the doctrine of Force Majeure, he or she must show that they have taken adequate steps to mitigate the impact of the said event. However, the above position is different in some countries like Nigeria  where force majeure has become standard in commercial contracts. In fact, although there is no specific legislation on Force Majeure in the country, parties can invoke the doctrine of Force Majeure in their contract irrespective of the fact that it is not expressly included in the said contract. Where a party can establish the above requirements, it will serve as a defence in case of any legal action after the pandemic.

The next thing we are going to consider is whether at the end of this global pandemic, affected countries can institute a legal action against China for loss of economy. Bearing in mind the grudges pre-existing between China and some countries like U.S, Spain, and Russia, they may take a legal action against China for loss of economy. The justification or otherwise of this will be discussed  with reference to the existing laws relating to States responsibility at the international parlance. 

Under international law, there are rules and regulations that provides for environmental protection and states responsibility at the international level. As a cardinal principles of law under international law,  Customary international law as a source of international law imposes several important and fundamental obligations upon States in the area of environmental protection. In the case of Canada v United state popularly known as the trial smelter case, the tribunal that entertained the matter noted thus:

As a general rule, States are accountable for breach of international law, and such a breach of treaty and customary international law enables the injured state to maintain a claim against the violating state, whether by way of diplomatic action or by way of recourse to international mechanism where such are in place with regard to the subject matter in issue. In addition to this, Article 5 of ILA Montreal rules provides for what is known as doctrine of prior consultation. Under this doctrine, states planning to carry out activities which might entail a significant risk of transfrontier harm shall give early notice to states likely to be affected. Where a state failed to comply with this, it will entitle the injured state to seek redress for any lose or injury that may arise therefrom. 

Now, if we are to apply the above principle of international law to the recent outbreak of covid-19, will it be right to sum up a conclusion that China being the state where this virus emanated from is in breach of the rules of international law on environmental protection as to justify any legal action against them? Put in other words, relying on the principle of state responsibility stated above, did China have any obligation to prevent the widespread of covid-19? From all indication, prior to the outbreak of this virus, China must have foreseen the danger other countries might encounter if same is allow to go viral. 

This notwithstanding, they failed to make any public notification to  other states of the danger ahead before the outbreak. This, invariably is a deviation from the standard of conduct expected from a state as required under international law. China having violated this principle, holding them liable may be inevitable. As a result of this, any legal action against China for economic loss maybe justifiable.

Undoubtedly, the recent outbreak of covid-19 has one way or the other caused a substantial damage to global economy. As a result of this, a lot of issues will definitely surface at the end of the pandemic. The need to restore back the depleted global economy, the need to set back on track, some contracts which have been frustrated due to the lockdown,  the desire to reclaim economic loss due to the pandemic among other things will all surface at the end of the global pandemic. As it is, the law has many role to play in ensuring mutual and amicable settlements of these future or expected disputes. Adopting the instrumentality of the law discussed above will be of tremendous help.  But then, we all need to stay strong and obey the directives issued by the authorities in our various location. Stay safe and take responsibility. This too shall pass.

1.Stephanie segal and Dylan Gerstel, the global Economic Impacts of COVID-19

2. Erin duffin, Impact of the coronavirus pandemic on the global economy – Statistics & Facts

3. Daud Khan and Leila Yasmine KhanKhan, the Economic Impact of COVID-19 on Developing Countries – Part 2

  

Gobir Habeeb Bolaji is a  law student of Usman Danfodiyo university, Sokoto. A seasoned legal scholar and researcher. He can be reach via- [email protected] or 08108527278

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