Arbitration Law Alert – Arbitration Proceedings and Force Majeure

Vaish Associates Advocates had earlier issued Frequently Asked Questions on Force Majeure and Contractual Obligations due to the impact of Covid-19 on on-going contracts.

In continuation of the same, along with a recent judgement clarifying the extent to which the parties can validly invoke the doctrine of frustration under the Indian Contract Act, 1872, we attach herewith a compilation of some recent judgments in cases wherein the parties sought to invoke force majeure clause / doctrine of frustration on account of COVID-19 outbreak and lockdown.

Following conclusions emerge out of the judgments:

• Every contract will strictly be governed by its terms and there cannot be a straight-jacket formula applied to ascertain whether the contractual obligations will be suspended/terminated/continued.
• In the event the contract provides for the force majeure clause and the recourse to be adopted in the event of force majeure, then parties cannot allege frustration of contract and have to be strictly bound by terms of the contract.
• If the contract provides for an alternative mode of performance, it has to be resorted before alleging an event of force majeure.
• Merely because the contract has become onerous/inconvenient, that in itself would not render the contract impossible/unlawful.
• Payment obligations arising out of the executed contract cannot be delayed/waived off due to the present COVID-19/lockdown situation.

In case of you require further clarification or information with regard to the issues covered, please feel free to write to:
Mr. Gaurav Varma, Principal Associate [email protected]

Arbitration Proceedings: Force Majeure and Frustration of Contracts

Vaish Associates Advocates had earlier issued Frequently Asked Questions on Force Majeure and Contractual Obligations due to the impact of Covid-19 on on-going contracts.

In continuation of the same, along with a recent judgement clarifying the extent to which the parties can validly invoke the doctrine of frustration under the Indian Contract Act, 1872, we attach herewith a compilation of some recent judgments in cases wherein the parties sought to invoke force majeure clause / doctrine of frustration on account of COVID-19 outbreak and lockdown.

Following conclusions emerge out of the judgments:

1. Every contract will strictly be governed by its terms and there cannot be a straight-jacket formula applied to ascertain whether the contractual obligations will be suspended/terminated/continued.
2. In the event the contract provides for the force majeure clause and the recourse to be adopted in the event of force majeure, then parties cannot allege frustration of contract and have to be strictly bound by terms of the contract.
3. If the contract provides for an alternative mode of performance, it has to be resorted before alleging an event of force majeure.
4. Merely because the contract has become onerous/inconvenient, that in itself would not render the contract impossible/unlawful.
5. Payment obligations arising out of the executed contract cannot be delayed/waived off due to the present COVID-19/lockdown situation.

Please feel free to write to us, in case of you require further clarification or information with regard to the issues covered.

For more info, please contact Mr. Gaurav Varma at [email protected]