China’s Approach to the Principle of Change of Circumstances under the New Chinese Civil Code: from the CISG model to the PICC model

The principle of change of circumstances was officially added into the new Chinese Civil Code after a gradual development in judicial practices over the past 30 years. Article 533 of the Civil Code abandons the unary approach of the CISG that deals with force majeure and change of circumstances collectively, and adopts the binary approach of the PICC which treats them separately. This new provision both keeps the valuable experiences accumulated in judicial practices, such as the recognition of differences between a commercial risk and a change of circumstances, and innovatively requires the parties to renegotiate their contract upon the occurrence of a change of circumstances before the court adapts or terminates the contract. However, there are still ambiguities and gaps awaiting further clarification from the Supreme People’s Court, ideally before the code comes into force in 2021.