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The disruption caused by the COVID-19 outbreak is having a major impact on projects both in development and operation. What started the year as an epidemic threatening a loss of supply from China has broadened to a global pandemic impacting on our deals, employees and practices.

As dynamic as the impacts of the outbreak are, assessing how specific risks may affect your business is challenging. We gathered market intelligence from the 250+ lawyers in Baker McKenzie’s Projects Practice to share this insight in a conference call on Wednesday, March 25, 2020 with our clients. Industry-focused practitioners from the Beijing, Chicago, Houston, London, Singapore and Sydney offices spoke about navigating the COVID-19 implications for major projects and provided practical tips on what they are seeing in the global markets. The following topics were covered:

  • global supply chain issues
  • force majeure: major projects and disputes
  • considerations for M&A transactions
  • oil and gas market
  • debt financing
  • China update

Download the summary of the conference call here.

If you would like to listen to a recording of the conference call, please contact Joshua Rosales or Joanna Hanvey.

Summary of the conference call

Global Supply Chains

  • The importance of China as a hub of global trade has increased substantially since the 2002-2003 SARS epidemic and the COVID-19 disruption to supply from China has been substantial. Most global companies have been blindsided by the full effects on their supply chains.
  • While China has commenced its recovery, Europe, Middle East, Africa and the Americas are just starting to experience COVID-19. Impacts have shifted from supply shock to demand shock (the full scope of which we are yet to realize).
  • For companies dealing with a supply shock there are three key questions: (1) who has supply chain risk, (2) what are the issues with alternative supply, and (3) who is most affected.
  • Ultimately, we expect buyers will worry more about their supply chains (notwithstanding that sellers should bear supply chain risk) and will look deeper into the whole supply chain considering sub-supplier diversity as well as price.

Major Projects and Force Majeure

  • We are seeing considerable attention on the issue of force majeure (“FM”) for major projects both in development and under operation. FM rights fall into two general categories depending on whether the governing law of the contract is a civil law jurisdiction (i.e., China, Taiwan) or a common law jurisdiction (i.e., England, New York, Australia).
  • There are three key questions: (1) is the COVID-19 impact a FM event, (2) is there an actual obligation that has been impacted, (3) does the FM regime require that the impact “prevent” performance or merely “hinder” or “delay” performance.
  • The claiming party must normally take at least reasonable steps to mitigate the impact and this critical aspect of FM is often ignored.

M&A Transactions

  • Global economies are experiencing extreme levels of volatility and the short-term viability of some infrastructure assets is extremely challenged. Some major transactions at early stages have been suspended. However, there remains liquidity in terms of private institutional capital and we see opportunities opening up.
  • M&A “playbooks are being rewritten” and core assumptions underlying typical valuation models are no longer valid. Moving forward, there is likely to be a reassessment of valuations, a shift in how we conduct due diligence to address COVID-19 risks, further shifts to unlisted assets, less auctions and more bilateral deals being done on an exclusive basis.
  • Public equity and debt markets have been affected and we expect to see emergency capital raisings and private placements to repair balance sheets through short bespoke processes.
  • Notwithstanding government and central bank interventions, we expect to see pressure on credit. Some corporates will draw down existing lines, but others (particularly listed corporates) are avoiding increasing leverage.

Oil and Gas Market

  • We are experiencing the perfect storm of COVID-19-related demand reductions and dramatic price collapse. If history is a guide, the price war between Saudi Arabia and Russia could be a long one. It is not yet clear how long the demand reductions will reverberate.
  • Major products, including LNG, are at risk for financing and FM claims. Almost 20 proposed LNG terminals are vying for a shrinking pool of capital. With significant downward pressure on oil prices (and spot LNG), some of these projects may be shelved. On the customer side, we are already seeing FM claims from major Chinese buyers.
  • CapEx fallout and layoffs have begun. Numerous oil and gas companies have announced significant reductions in capital spending as a result of COVID-19 and commodity price volatility. We have also started to see mass layoffs and employee furlough programs being put in place. These are likely to continue as liquidity concerns will be heightened as companies with secured debt face asset base redeterminations on April 1.

Debt Financing

  • We have seen extensive discussion as to whether COVID-19 impacts will constitute a Material Adverse Effect (“MAE”) under finance documents, although lenders have traditionally looked for more demonstrable matters of fact before taking steps to accelerate or enforce on a capital structure.
  • For deals not yet signed, we expect new provisions directly addressing COVID-19 risk allocation although this is largely unchartered territory. Solutions that balance the risks of all parties are likely to be most productive in terms of getting the deal to financial close.
  • For deals that have closed, it is important to identify notice requirements that may be triggered and potential default triggers. Communication between the parties is key.
  • Looking forward, the market is rethinking how finance documents should deal with future outbreaks. New “standard” terms are likely to emerge.

Disputes and Force Majeure

  • FM claims are an obvious area of dispute, but consider also alternative claims. Your bargaining power to try to resolve the dispute will be greater if you have supplementary claims available.
  • Given the impact it is having on our lives, it is easy to fall into the trap of viewing COVID-19 as a clear FM event, without paying close enough attention to the multiple elements of the relevant clause/law which need to not only be met, but evidenced.
  • Counterintuitively, if you are in the middle of supply chain, you may actually need to push your subcontractor to provide you with evidence of performance being affected to allow you to succeed in your claim up the chain.
  • Notice requirements are boring, but important since non-compliance can be a total bar to relief if such requirements are drafted as a condition precedent. Remember, it is about form and content, as well as timeliness.

China Update

  • Most parts of China are experiencing a slow, but steady return to normalcy, although, much depends on whether there is a second wave of infection. Practically, and due to local government policies, it is difficult for businesses to resume full operations.
  • However, there is a clear and growing voice for life to return to normal as soon as possible to mitigate the impact of the pandemic on the Chinese economy.
  • Many Chinese companies are dealing with supply chain issues and contractual claims arising from FM. There has been a shift to a more proactive management of risks, including via restructuring of debt and seeking alternative sources of financing. Companies are also alert to counterparty insolvency risks.
  • Outbound investment activities are continuing, albeit at a slower pace. The current view is that key strategic deals, particularly “Belt and Road Initiative” (BRI) deals, will continue to be pushed forward.



Bee Chun heads the Firm's Energy, Mining & Infrastructure Practice Group in Asia Pacific and co-heads the Mergers and Acquisitions practice in Singapore. She has worked in the Firm’s offices in Hong Kong, Shanghai, Taipei and Beijing. Bee Chun practices mainly in the areas of M&A, venture capital and private equity. She was named as one of China's Top 15 Female Lawyers in 2020 by Asian Legal Business (ALB). She is also consistently recognised as a leading lawyer by IFLR1000 in the areas of mergers and acquisitions, private equity and project finance.


Kate Corby is a partner in Baker McKenzie’s Dispute Resolution team in London. Kate has over two decades' experience of representing clients in complex litigation and arbitration, with a focus on arbitration of construction, engineering and infrastructure related disputes. She has handled arbitrations under the rules of all of the major arbitral institutions and ad hoc, seated in London and around the world and under a wide range of governing laws. Kate also has significant experience in advising on product liability, safety and regulatory compliance. Kate co-leads the firm's Industrials, Manufacturing and Transportation Industry Group in EMEA.
Kate is also well-known for her inclusion, diversity & equity work, particularly for organising the London chapter of #Arbitration Lunch Match, sitting on the Global Executive Committee of the Equal Representation of Experts Pledge, and she is co-chair of the London office's BakerWomen Affinity Group.
Kate is ranked as a Leading Individual in Legal 500 UK in both her practice areas in which she is described as “hugely impressive, extremely bright and on-the-ball, and has a deep understanding of the client’s needs and what really matters on the case. She is simply brilliant.” Kate is also individually ranked by Chambers, which notes she has “excellent commercial awareness and vision” and “provides excellent industry insight and customer service.” Kate is also recognised in Who’s Who Legal.


Martin David is a principal in the Finance and Projects Practice Group at Baker McKenzie Wong & Leow and heads the Projects practice in Asia Pacific and Singapore. He is a former civil engineer and has market-leading experience in relation to greenfield IPPs in Asia, particularly in the renewables sector (wind and geothermal).


Michael Kunstler is a partner in the Sydney office of Baker McKenzie. He is a leading infrastructure and energy lawyer, advising governments and key industry participants on mergers and acquisitions. Michael has led a range of major trade sale transactions in Australia, the US and Europe.


James P. O’ Brien chairs the Firm’s Global Projects Practice Group. He serves as counsel in major project and infrastructure transactions such as power generation and waste recycling facilities. Both on behalf of project sponsors and lenders, Mr. O’Brien has led moving complex projects through development, project financing and operation. He has also been lead counsel on limited recourse project financings, using traditional bank debt, leveraged leases and Rule 144A capital markets issues. And during project development, he has successfully managed complex siting, permitting and transaction issues.


Denmon chairs the Firm’s North American Oil & Gas Practice. She is a top-rated energy attorney whose practice concentrates on complex, frequently cross-border, transactions involving the oil and gas, midstream, refining, chemical, petrochemical and energy industry more broadly, including public and private company mergers, acquisitions, divestitures, and joint ventures. She also advises clients on corporate governance matters. Denmon is a member of the Firm’s Texas Offices Management Team and chairs the Houston office chapter of BakerWomen.