AUTHOR DETAILS: This article is written by Raunak Kumar Singh, BA.LLB , 3rd year, University of Lucknow, during his internship at LeDroit India.
KEY WORDS:
- Force majeure.
- Covid-19.
- Pandemic.
- Judicial interpretation.
- Contract law.
- Indian courts.
ABSTRACT:
The COVID-19 pandemic has rendered force majeure clauses legally significant and has significantly impacted contractual responsibilities worldwide. In India, this unprecedented crisis has raised questions about when and how force majeure clauses will be applied, as well as their legal validity. This article analyses decisions of Indian courts since the pandemic to show how courts are balancing strict contractual interpretation and equitable considerations. Key decisions and approaches from other countries are studied to understand whether decisions during the pandemic have broadened or restricted the interpretation of force majeure, and what impact this will have on future commercial contracts. In particular, the scope has expanded from merely unforeseen “acts of God” to broader socio-economic conditions, interventions in law, and the allocation of risk in contracts.
INTRODUCTION:
The COVID-19 pandemic has posed unprecedented challenges to contractual performance across the world and has raised questions about the extent and applicability of force majeure clauses. Traditionally, force majeure clauses are used in contracts that excuse the parties’ liability in the event of an extraordinary event, such as natural disasters, war, or government action. In India, the concept is primarily governed by Sections 32 and 56 of the Indian Contract Act, 1872, which address prospective contracts and the doctrine of frustration, respectively (Energy Watchdog v. CERC, (2017) 14 SCC 80).
Prior to the pandemic, Indian courts took a fairly narrow approach to interpreting force majeure clauses, emphasising the need for clear contract language and a strict burden of proof on the claiming party. Judicial decisions made it clear that mere economic hardship or business loss would not be considered a force majeure event unless expressly mentioned in the contract (Dhanrajamal Gobindram v. Shamji Kalidas, AIR 1961 SC 1285). But the sudden impact of COVID-19 and lockdown disrupted supply chains, halted industrial production, and made it commercially or physically impossible to perform many contracts.
In response to this, the Government of India issued an Office Memorandum on 19 February 2020 declaring COVID-19 as a force majeure event for public procurement contracts, thereby marking a policy shift towards wider recognition of pandemic-related disruptions. This was reflected in subsequent judicial decisions, such as Standard Retail Pvt. Ltd. v. M/s G.S. Global Corp., 2020 SCC OnLine Bom 846, where the Bombay High Court acknowledged the impact of the pandemic on contracts, and Halliburton Offshore Services Inc. v. Vedanta Ltd., 2020 SCC OnLine Del 542, where the Delhi High Court granted temporary relief to a contractor who was unable to perform the contract due to the lockdown.
In the post-pandemic era, the key question facing Indian jurisprudence is whether the judicial approach will revert to the pre-pandemic conservative policy or evolve into a more flexible and equitable framework, taking into account the socio-economic disruptions. This article critically analyses how courts have interpreted force majeure clauses post COVID-19, makes a comparative study of international practices, and makes practical suggestions for future contracts. By understanding this evolution, the article sheds light on the balance between contractual certainty and equity in times of global crisis.
FORCE MAJEURE IN INDIAN LAW: LEGAL FRAMEWORK:
In Indian jurisprudence, force majeure is not clearly defined in the Indian Contract Act, 1872, but its legal basis is found in Section 32 and Section 56. Section 32 governs contingent contracts, stating that if an event on which the contract depends becomes impossible, the contract becomes void. Section 56 applies the doctrine of frustration, stating that if an act becomes impossible, the contract based on it shall be void, and the contract becomes void if it is impossible or unlawful (Satyabrata Ghose v. Mugneeram Bangur & Co., AIR 1954 SC 44).
While Section 56 applies to situations where the contract does not explicitly contain a force majeure clause, Section 32 governs cases where such a clause is present in the contract. The Supreme Court held in Energy Watchdog v. CERC (2017) 14 SCC 80,clarified that if a contract contains a force majeure provision, it will be enforced as per the terms in the contract, and the parties cannot use Section 56 in its place. Thus, the language in the contract is paramount, and courts always apply strict interpretation, including only those events that are clearly described.
Internationally, force majeure has been widely recognised in the UNIDROIT Principles of International Commercial Contracts (2016), which covers obstacles that are beyond a party’s control, such as pandemics, if they are unforeseeable and unavoidable. The International Chamber of Commerce (ICC) Force Majeure Clause 2020 also includes public health emergencies as force majeure events, indicating a trend towards broader risk allocation.
In India, there is no specific law for force majeure apart from the general provisions of the Contract Act, so the importance of judicial interpretation is enormous. The COVID-19 pandemic exposed the limitations of force majeure clauses, as many contracts did not explicitly mention the pandemic, lockdown, or government restrictions. Taking this into account, the Ministry of Finance issued an Office Memorandum on 19 February 2020, declaring COVID-19 as a force majeure event for public procurement contracts.
Thus, the legal framework of force majeure in India is a mix of statutory doctrine, clear terms in contracts, and judicial interpretation. The litigation following the pandemic has shown that it is necessary to draft contracts more clearly and comprehensively, so as to adequately address foreseeable and unforeseen disruptions in the future and ensure equitable relief in extraordinary circumstances.
JUDICIAL INTERPRETATION BEFORE THE PANDEMIC:
Before COVID-19 struck, Indian courts used to take a fairly conservative and strict approach in interpreting force majeure clauses, with an emphasis on contractual certainty and minimal judicial intervention. The main principle was that force majeure provisions, being part of a private agreement, would be enforced only in accordance with their express terms, and no extension could be made (Dhanrajamal Gobindram v. Shamji Kalidas, AIR 1961 SC 1285). Unless an event is expressly mentioned in the clause, courts did not excuse performance merely on the ground of hardship, economic problems or market fluctuations.
The Supreme Court reiterated this view in Energy Watchdog v. CERC (2017) 14 SCC 80 and held that if the contract contains a specific force majeure clause, relief will be granted only in accordance with it, and the general frustration doctrine of Section 56 cannot be used to alter it. The Court also held that “mere increase in cost or expense” would not be a force majeure event unless it was expressly spelled out.
Similarly, in Naihati Jute Mills Ltd. v. Khyaliram Jagannath, AIR 1968 SC 522, the Court emphasised that the impossibility must be such as to affect the root of the contract, i.e., performance must be physically or legally impossible, not merely inconvenient or not beneficial. This high standard ensured that force majeure applies only in truly exceptional circumstances.
Pre-pandemic decisions also observed that objective evidence of the effect of the event was required. For instance, in Alopi Parshad & Sons Ltd. v. Union of India, AIR 1960 SC 588, the Court held that mere economic hardship or a change in circumstances does not frustrate the contract unless performance is impossible due to unforeseen events.
The judicial landscape prior to 2020 featured three main features:
- Narrow interpretation of the clause.
- The burden on the claiming party to prove that there is a causal link between the event and the performance is impossible.
- A distinction between inconvenience and impossibility, whereby only impossibility was eligible for relief.
This strict interpretive approach meant that pandemic-type events such as COVID-19 if not expressly included would not trigger force majeure protection. But the pandemic challenged this strict doctrine and forced courts to reconsider the balance between contractual certainty and equitable relief.
JUDICIAL TRENDS POST PANDEMIC:
Immediately after COVID-19, Indian courts showed greater contextual sensitivity in the interpretation of force majeure clauses. However, as contract disputes moved from pandemic-era disruptions to more recent events, courts tended to re-examine the balance between flexibility and contractual certainty.
Decisions after 2022 make it clear that courts do not always take a liberal approach. Contracts made post-pandemic placed a greater emphasis on foreseeability. This is because the disruptive impact of the pandemic was now known, so parties were expected to explicitly incorporate this risk into their contracts. For example, Rohit Ferro-Tech Ltd. v. In Bharat Coking Coal Ltd., 2022 SCC Online Cal 1503, the Calcutta High Court held that if COVID-19 was a foreseeable event at the time of the contract, it was necessary to explicitly include it in the clause for the force majeure clause to be enforceable.
At the same time, the courts also reiterated the burden of proof. In GAIL (India) Ltd. v. Gujarat State Petroleum Corp. Ltd., 2023 SCC Online Del 204, the Delhi High Court held that the party making the claim would not only have to prove the existence of the force majeure event but also show that it had a direct and inevitable effect on performance. This decision signals the enforcement of pre-pandemic judicial discipline.
Still, flexibility has not completely disappeared. In long-term infrastructure or supply contracts, courts sometimes extend the doctrine of pandemic relief where performance is affected by COVID-19-related disruptions such as global shipping delays and supply chain disruptions. These nuanced decisions show that the doctrine is now shifting from a rigid rule to a scrutiny of actual circumstances.
A new trend is the inclusion of hardship clauses in commercial contracts alongside force majeure provisions. While force majeure addresses impossibility, hardship clauses facilitate reconsideration and renegotiation in the event of extreme hardship. This concept is gaining judicial recognition in the UNIDROIT Principles and international arbitration decisions.
In summary, post-pandemic Indian jurisprudence is evolving in a twofold direction:
- Emphasis on strict scrutiny, predictability, and precise drafting in pandemic-informed contracts.
- Contextual leniency for older contracts and in situations where disruptions are still ongoing.
This change reflects an attempt by the courts to recognize the need to grant equitable relief in exceptional circumstances while maintaining contractual sanctity a balance that will determine the future of the interpretation of force majeure in India.
COMPARATIVE APPROACH:
The interpretation of force majeure clauses after the pandemic has varied considerably across countries, reflecting their legal traditions and judicial approaches. Comparing India’s approach to the United States (US), the United Kingdom (UK), and Singapore reveals both similarities and differences that may be useful for future contract construction.
In the United States (US), force majeure clauses are interpreted primarily based on the language and structure of the contract. Courts look at whether a direct causal link exists between the event and the failure to perform the contract. Results during the pandemic have been mixed. For example, in JN Contemporary Art LLC v. Phillips Auctioneers LLC, 29 F.4th 118 (2d Cir. 2022), the court upheld the termination of the contract because the clause clearly included “natural disasters” and “government restrictions” that applied to COVID-19 lockdowns. But where clauses did not mention the pandemic, US courts tended to dismiss claims, finding economic hardship alone was not sufficient.
In the United Kingdom (UK), the doctrine of frustration is more applicable if there is no explicit force majeure clause. UK courts apply this doctrine narrowly, i.e., performance is only excused if an event changes the fundamental nature of the contract (Davis Contractors Ltd v. Fareham UDC [1956] AC 696). During COVID-19, contracts that included “epidemics” or “government action” were more easily able to obtain relief, while others could not meet the higher frustration standard. This is similar to India’s interpretation of Section 56, but UK courts are less inclined to grant relief without clear terms.
In Singapore, there is a mix of common law and international, commercially focused approaches. There, the COVID-19 (Temporary Measures) Act 2020 temporarily suspended the performance of certain contracts and provided statutory relief that complements existing force majeure provisions. This is different from India, where pandemic-time relief has been provided primarily through government memorandums and judicial interpretation, rather than binding legislation.
India’s post-pandemic approach is similar to the US, with an emphasis on contract language, while reliance on Section 56 resembles the UK’s frustration doctrine. But unlike legislative intervention like in Singapore, relief in India has been judicial, case-specific, and interpretive.
Comparative analysis indicates that it may be beneficial for India to broadly apply force majeure principles statutorily, especially for systemic disruptions like the pandemic. Adopting a mix of
Singapore’s legislative model and the US’s clear drafting could create a more predictable and favourable environment for international business transactions.
PRACTICAL CONTRACT DRAFTING LESSONS FOR THE FUTURE:
The pandemic has had a lasting impact on contract drafting practices, especially force majeure provisions. Post-COVID-19 litigation has made clear that accuracy and comprehensiveness are of utmost importance in drafting, so that contracts remain enforceable and predictable in times of unforeseen disruptions.
First, parties must clearly state the events that would be considered force majeure, such as pandemics, government lockdowns, travel restrictions, and supply chain disruptions. General terms such as “act of God” or “natural disaster” alone are not sufficient, as courts—in India and abroad give these a narrow meaning, unless specific examples are given (Energy Watchdog v. CERC, (2017) 14 SCC 80).
Second, the contract must define the circumstances under which force majeure applies. It is important to clarify whether the event will make performance impossible, unlawful, or merely practically difficult, and whether partial performance is possible. Ambiguity between “impossibility” and “commercial impossibility” often leads to disputes, which can be avoided with accurate drafting.
Third, it is essential to include mitigation obligations. Courts have repeatedly held that the affected party must make reasonable efforts to mitigate the effect of the force majeure event (Halliburton Offshore Services Inc. v. Vedanta Ltd., 2020 SCC Online Del 542). The clause should clarify what would be considered “reasonable efforts” and whether alternative performance methods must be adopted before seeking relief.
Fourth, combining a herdship clause with force majeure can provide additional flexibility. Force majeure generally applies to impossibility, while a hardship clause allows the contract to be reconsidered or adapted when performance becomes extremely difficult. This concept is recognised in the UNIDROIT Principles and is being adopted in international contracts, which can also be applied in Indian contracts.
Fifth, notice requirements should be detailed, including deadlines, form, and content of notices. Courts often dismiss claims if procedures are not followed.
Finally, given the trend toward reality-based judicial analysis post-pandemic, contracts should include dispute resolution mechanisms such as expedited arbitration provisions for force majeure disputes.
By adopting these drafting best practices, parties can better distribute risk, increase contractual certainty, and reduce the likelihood of protracted legal battles during future disruptions.
CONCLUSION:
The evolution of force majeure jurisprudence in India during and after the COVID-19 pandemic reflects the courts’ attempt to strike a balance between contractual certainty and equitable relief in extraordinary circumstances. Pre-pandemic decisions, which were based on strict contract interpretation (Dhanrajamal Gobindram, AIR 1961 SC 1285; Energy Watchdog, (2017) 14 SCC 80), considered force majeure as merely extraordinary measures, applicable only when expressly mentioned in the contract and the events make performance physically or legally impossible.
The pandemic challenged this age-old doctrine. Courts now had to consider widespread, systemic disruptions that did not fall into the traditional “act of God” categories. The Office Memorandum of 19 February 2020 and Halliburton Offshore Services Inc. v. Vedanta Ltd. Decisions such as (2020 SCC Online Del 542) indicated that courts may lean towards contextual interpretation, and treat public health emergencies and lockdowns as force majeure events when they directly affect performance.
Post-pandemic, judicial trends have begun to distinguish between contracts entered into before and after the pandemic. Courts have been more lenient in contracts entered into before the pandemic, recognising the unforeseen nature of COVID-19. In contrast, the criteria for applying force majeure have become more stringent in contracts entered into after the pandemic became known, with foreseeability, clear clause drafting, and proof of direct causation having greater weightage (Rohit Ferro-Tech Ltd., 2022 SCC Online Cal 1503).
International comparisons show that India is similar to the US in contract language precision, matches the UK in the frustration doctrine in the absence of a clause, but does not have statutory intervention like Singapore, which would have provided more predictable relief during the pandemic.
Looking ahead, the pandemic experience shows that clarity, risk allocation, and procedural safeguards in force majeure clauses are extremely important. Explicit mention of pandemic-related events, clear triggering thresholds, responsibility to mitigate impact, and herdship clauses are no longer optional but essential for future-oriented contracts.
Ultimately, the post-pandemic judicial approach in India appears to be taking a balanced middle path providing flexibility in exceptional circumstances while maintaining strict contract interpretation discipline. This balanced trend can enhance contractual robustness, encourage careful drafting, and strengthen India’s commercial law framework for future global disruptions.
REFERENCES:
- INDIAN CASE LAW:
- https://indiankanoon.org/doc/859839/
- https://indiankanoon.org/doc/29719380/
- https://indiankanoon.org/doc/123403504/
- https://www.casemine.com/judgement/in/624f4235b50db98f9bb30a43
- https://indiankanoon.org/doc/191369911/
- INTERNATIONAL CASE LAW:
- https://law.justia.com/cases/federal/appellate-courts/ca2/21-32/21-32-2022-03-23.html
- https://en.wikipedia.org/wiki/Davis_Contractors_Ltd_v_Fareham_UDC
- GOVERNMENT NOTIFICATIONS & MEMORANDA:
BOOKS AND ACADEMIC ARTICLES:
- McKendrick, E., Force Majeure and Frustration of Contract, Oxford University Press, 2020.
- Goyal, A., “Force Majeure in the Age of COVID-19: Indian and Global Perspectives,” Indian Journal of Arbitration Law, Vol. 9, No. 2, 2020.
- Sharma, R., “Contractual Risk Allocation Post-COVID-19: A Comparative Analysis,” National Law School Journal, Vol. 33, 2021.
- Bennett, H., “Frustration, Force Majeure, and Impossibility in the Pandemic Era,” Law Quarterly Review, Vol. 137, 2021.
