The Delhi High Court on Friday dismissed Halliburton's request to restrain Vedanta Limited from conjuring the bank guarantees, on the ground of Force Majeure provision summoned because of the COVID19 pandemic. The single bench of Justice Prathiba M Singh observed a petition filed by Halliburton under Section 9 of the Arbitration and Conciliation Act, 1996, trying to limit the summon of bank guarantees. The Court, on prima facie assessment of the matter, noticed that the claimed non-execution of the agreement can't be pardoned on the ground of force majeure due to COVID-19. The Court stated that COVID-19 is a Force Majeure event, yet its application will rely upon the realities and conditions of each case. It said:
"There is no doubt that COVID-19 is a Force Majeure event. But was this event the cause of the non-performance?"
The Court further observed that the question as to whether the global pandemic of COVID-19 can be held as a valid ground for justifying the non-execution or breach of any contractual obligation has to be assessed on the basis of facts and circumstances of each case. The ground of Covid-19 as a force majeure event cannot be held as a valid ground for each and every non-performance of any contractual obligation on the part of the contractual entities. The Court mentioned that the conduct of the parties prior to the Covid-19 outbreak needs to be paid due attention. Moreover, the deadlines mentioned in the contract, the actions taken to meet the deadlines, the various compliances that were required to be made and only then a critical assessment as to whether a party was genuinely prevented from delivering it's duty due to the epidemic/pandemic is to be made.
The Court propounded that the concept of force majeure events should be understood in a very narrow manner. Parties in a contract must abide by the terms and conditions mentioned in the agreement and non-performance, on part of either of the two, can be justified only in exceptional situations.