The pandemic of 2019 novel coronavirus disease (COVID-19) has led many financial market participants to reexamine the force majeure or illegality clauses in their financial contracts to determine the impact by COVID-19 related interruptions. COVID-19 pandemic has impacted on contractual duties and obligations and raised some questions on possible remedies under these agreements. Because of the huge impact on businesses and individuals, many governments also provided emergency financial assistance through emergency financing or debt relief. In addition, some international organizations also provided international emergency financing and debt relief. All of such situations raised legal issues as well as policy issues. This article reviewed the COVID-19 impact on the legal issues and its implications to the financial contract and pandemic emergency financing or debt relief.
<br>During COVID-19 pandemic, the applicability of force majeure was debated because traditional force majeure clause has not included pandemic as an example of force majeure events. However, from the experience of COVID-19, there is need to specify pandemic as a force majeure even to prepare any future huge pandemic situation. Since the courts have been very stringent to allow force majeure defense to excuse the obligation, considering the uncertainty of court’s decision in any jurisdiction it will be a better contractual solution for the parties to prepare the disputes of failure of performance in any pandemics to include a pandemic in the definition of the force majeure clause in the international financial contract.
<br>Various pandemic emergency financing and debt relief measures by the government of each country or global organization like IMF, was very helpful to respond COVID-19 financial crisis in relevant area. However, emergency financing resulted in the huge increase of debt ratio of individuals and businesses, which was heavily impacted by the closure and restriction of operation. Extension of loan or interest maturity is only for the temporary relief. If the COVID-19 pandemic continues and it takes some time to recover after the pandemic, non-performing loans will be huge burden for the financial institutions. Even credit crunch may be expected in such situation. To handle such situation, it is urgent to prepare legal measures before such problem become advent.
