Force majure

Introduction
Force majeure — a Latin phrase meaning “superior force” — is a central contractual and doctrinal concept in commercial practice. In India it operates both as a creature of contract (the “force majeure clause”) and as a gateway to the statutory doctrine of frustration under Section 56 of the Indian Contract Act, 1872. Practitioners confront force majeure daily: in supply chains, construction and EPC contracts, power purchase agreements, lease and service contracts, and in arbitration. Mastery of how courts and tribunals treat force majeure — how to plead it, document it, and draft around it — is indispensable for effective client advocacy.

Core Legal Framework
– Indian Contract Act, 1872 — Section 56:
– Text (key portion): “Agreement to do impossible act.—A contract to do an act which, after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful.”
– Practical import: Section 56 addresses supervening impossibility/unlawfulness (doctrine of frustration) where performance is discharged by law, but it is not a substitute for an express force majeure clause.
– Contractual Law and Interpretation:
– There is no standalone statute entitled “force majeure.” It is governed primarily by the express wording of the parties’ contract and by judicial principles of contractual interpretation, supplemented by Section 56 where appropriate.
– Arbitration and Procedural Context:
– Arbitration and Conciliation Act, 1996: tribunals decide disputes under the contract and law; force majeure disputes commonly arise in arbitration. Courts will not lightly displace parties’ allocation of risk where the contract expressly deals with force majeure.
– Evidential and remedial framework:
– Remedies flow from the contract (time extension, suspension, termination, price adjustment) or, absent a binding clause, from Section 56 (discharge due to impossibility). Courts construe force majeure clauses strictly; the claimant bears the burden of proof.

Practical Application and Nuances
How force majeure is used day-to-day
– As a contractual relief mechanism: Parties typically draft clauses to suspend performance, extend time for performance, excuse non-performance, or provide for termination/renegotiation if the force majeure event lasts beyond a stipulated period.
– As a statutory escape valve: When contracts are silent, Section 56 may be invoked to plead impossibility or illegality of performance.

Key practical elements to establish a force majeure claim
1. Existence of a qualifying event:
– Natural events: floods, earthquakes, cyclones.
– Human acts: war, riots, strikes, embargoes, governmental orders including lockdowns.
– Modern practice: include epidemics/pandemics, cyber-attacks, supply-chain interruptions.
– Drafting note: whether the contract uses an inclusive list, exhaustive list, or a broad catch-all (“other causes beyond the reasonable control of the parties”) is determinative.
2. Causal nexus (causation):
– The party claiming force majeure must prove a direct causal link between the event and the inability to perform. Mere correlation or consequential hardship is insufficient.
– Example: A supplier must show that floods destroyed factory machinery, or government export bans physically prevented shipment — not merely that sales declined.
3. Impossibility vs. hardship:
– Indian courts distinguish between impossibility (discharge under Section 56) and mere commercial hardship/ increased cost. Force majeure does not cover increased cost of performance unless the clause so provides.
4. Foreseeability and assumption of risk:
– If the event was foreseeable and allocated to a party (e.g., included in risk allocation), the claimant cannot successfully rely on force majeure.
– Example: a contract entered after press reports of imminent embargoes — a court may find the risk was foreseeable.
5. Notice and procedural compliance:
– Most force majeure clauses require prompt notice with particulars and supporting documentation. Failure to comply can bar relief irrespective of the merits.
6. Duty to mitigate and continue performance:
– The claimant must show attempts to mitigate and use reasonable alternatives. Partial performance where possible should be shown, and alternatives (alternate suppliers, routes) considered.
7. Remedies sought:
– Time extension is the most common relief; suspension of obligations, price revision, or termination (if extended interruption) follow contract wording.
– If the clause is silent or inadequate, plead frustration under Section 56 as a last resort.

Concrete examples
– Construction contract delayed by monsoon floods:
– Evidence: photos, site reports, engineer’s certificates, daily progress reports, weather reports, contractor’s mitigation steps, notices given to employer. Claimant seeks extension of time and avoid liquidated damages.
– Supplier prevented from exporting due to government ban:
– Evidence: government notification, shipping manifests, customs refusal, inquiries to alternative government offices, attempts to reroute cargo. Relief: suspension or termination with allocation of losses per clause.
– Power Purchase Agreement invoking change in law vs force majeure:
– Distinguish events that change economics (change in law) from force majeure which physically prevents performance. Proof requires demonstration that the event precluded supply of electricity (e.g., grid closure) rather than mere change in tariff economics.

Documentary evidence checklist practitioners should assemble
– Contractual provisions, annexures and correspondence.
– Contemporaneous notices served and any replies.
– Government orders, official circulars, lockdown notifications, media reports.
– Operational logs: progress reports, attendance registers, bills of lading, shipping manifests, customs communications.
– Financial documents: invoices, bank statements, insurance correspondence, attempts to secure alternate supplies.
– Expert reports where appropriate (chartered engineers, logistics experts).

Burden of proof and standard of proof
– The claimant bears the onus to establish the event, causal connection and compliance with clause requirements. Courts/tribunals apply a preponderance of probability standard — but require cogent, contemporaneous evidence given the commercial character of disputes.

Landmark Judgments
– ONGC Ltd. v. Saw Pipes Ltd., (2003) 5 SCC 705
– Principle: Supreme Court emphasised that invocation of force majeure must be strictly based on the language of the contract. The party invoking it must show that performance was prevented by the event and that the event was beyond the party’s control and without its default. The Court applied a narrow construction where the contract allocated risk.
– Practical takeaway: tribunals will look to the clause wording and factual causal link — not equitable relief.
– Satyabrata Ghose v. Mugneeram Bangur & Co., AIR 1954 SC 44
– Principle: Landmark exposition of doctrine of frustration under Section 56 — the contract must become impossible to perform or its obligation radically changed. Mere hardship or additional expense does not suffice.
– Practical takeaway: Section 56 is a high threshold; courts will not declare contracts void simply because performance has become onerous or commercially unattractive.
– Energy Watchdog v. Central Electricity Regulatory Commission, (2017) 14 SCC 80
– Principle: The Supreme Court clarified that clauses labelled “change in law” and “force majeure” must be interpreted with care; “change in law” is not ipso facto a force majeure event. The Court emphasised that allocation of risk for regulatory changes depends on contractual language and context.
– Practical takeaway: Drafting must separately address “change in law” and force majeure; courts will not conflate the two.

Strategic Considerations for Practitioners
For claimant counsel (party invoking force majeure)
– First 48 hours: preserve evidence. Save electronic records, physical logs, photographs, contemporaneous correspondence, and any government orders.
– Notice compliance: ensure strict observance of notice timelines and content. If notice was imperfect, cure it immediately and document reasons.
– Build causal chain: connect the event to the specific clause and to the particular obligation. Show why alternatives were infeasible.
– Mitigation record: demonstrably attempt alternatives; obtain third-party quotations showing unavailability or prohibitive cost.
– Seek interim relief early: where suspension would avert irreparable loss (e.g., injunct relief from liquidated damages), apply to arbitral tribunal/court for interim orders.
– Insurance claims: pursue insurance coverage in parallel and disclose details to tribunal/court.

For defending counsel (party resisting invocation)
– Attack locus classicus: challenge the causal nexus and foreseeability; argue the event did not prevent performance but only rendered it commercially difficult.
– Scrutinise notice compliance: plead and prove prejudice arising from late or defective notice.
– Point to alternatives: identify viable alternatives the claimant failed to pursue (third-party suppliers, temporary measures).
– Interpret clause strictly: press for narrow construction of catch-all phrases and insist on strict compliance with evidentiary preconditions.
– If possible, rely on allocation of risk: show clause expressly assigns the risk to the claimant or excludes certain events.

Drafting checklist — clauses and red flags
– Define “Force Majeure” with clarity: use a combination of specific enumerated events and a narrowly tailored catch-all (“malicious damage, acts of state, embargoes, epidemics/pandemics, government restrictions”).
– Include examples of excluded events: financial distress, market fluctuations, ordinary labor disputes unless they are widespread and external.
– Notice: provide strict notice content and timelines (e.g., 7-14 days) and state consequences of non-compliance.
– Burden of proof: require certificate/evidence (government orders, certifications) and contemporaneous documentary proof.
– Mitigation: include an express obligation to mitigate and use reasonable endeavours.
– Remedies: specify graduated remedies — suspension with time extension; price renegotiation; termination after X days of continuous interruption (e.g., 90/120/180 days).
– Allocation of costs: specify whether costs during suspension are borne by whom (e.g., storage costs, demobilisation costs).
– Insurance: require parties to maintain specified insurance and cooperate in claims.
– Dispute resolution: determine whether the dispute goes to arbitration, and whether interim measures are available.

Common pitfalls to avoid
– Vague or overly broad catch-alls that courts may construe against the drafter.
– Failure to spell out consequences — is relief limited to extension of time or does it include waiver of payment obligations?
– Confusing “change in law” with force majeure.
– Relying on Section 56 without first examining whether the contract adequately allocates risk.
– Failing to preserve contemporaneous evidence — retrospective affidavits alone seldom suffice.

Conclusion
Force majeure in India is a hybrid doctrinal/contractual construct: the contract’s wording is decisive, and Section 56 provides a narrow statutory fallback where performance becomes impossible or unlawful. Courts and tribunals require a strict causal link between the supervening event and non-performance, strict compliance with notice and mitigation obligations, and are reluctant to relieve parties merely for commercial hardship. For practitioners, success depends on meticulous clause drafting, prompt and comprehensive evidence preservation, precise pleadings of causation and mitigation, and anticipating the opponent’s attack on foreseeability and notice. In short: draft tightly, document contemporaneously, and plead with a clear causal and evidential map.