Team  SoOLEGAL

Not every non-performance, breach or failure can be covered under the umbrella of COVID-19 as a force majeure condition

Team SoOLEGAL 1 Jun 2020 4:34pm

Not every non-performance, breach or failure can be covered under the umbrella of COVID-19 as a force majeure condition

The High Court of Delhi held on Friday that the Force Majeure clause does not allow the Contractor, to request restraint against the encashing of the Bank Guarantees in a petition seeking interim protection, by way of restraint against the respondent / Vedanta Limited, by injuncting the Vedanta from invoking or encashing bank guarantees.

A single-judge bench of Justice Pratibha M. Singh from the High Court of Delhi noted that “the Court would have to assess the conduct of the parties prior to the outbreak, the deadlines that were imposed in the contract, the steps that were to be taken, the various compliances that were required to be made and only then assess as to whether, genuinely, a party was prevented or is able to justify its nonperformance due to the epidemic/pandemic.” 

The Court handed down its judgment in an application filed by M / s Halliburton Offshore Services Inc. pursuant to Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim protection, by way of restraint against the respondent / Vedanta Limited, requiring the respondent to invoke or enclose eight bank guarantees, five of which are due to expire on 30 June 2020, and the remaining three on 24th November 2020, issued by the ICICI Bank, under the instruction of Petitioner/ M/s Halliburton Offshore Services Inc. 

The court has concluded that no judicial body can allow parties to refrain from performing their part in a contract and that no court can provide a shield to any party for non performance. The court has further observed that unless the parties have real reason to justify non-performance they cannot abstain from performing their part and cannot invoke Force Majeure clause. 

Further, the court has also stated that in the present case the contractor has not been performing his part even before the issues of COVID-19 arose, hence the outbreak of the pandemic can definitely not be used as an excuse to not perform within the scheduled guidelines. 

Furthermore, the court observed that the claims and counterclaims will be decided on merits and without any leverage granted for COVId-19. 



Tagged: COVID-19   force majeure   High Court   Delhi   Justice Pratibha M. Singh  
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