Part I - Force Majeure And Covid-19 Pandemic In Construction Contracts In Pakistan ' Contractors Perspective

• Published date: 16 October 2020
• Subject Matter: Corporate/Commercial Law, Real Estate and Construction, Coronavirus (COVID-19), Contracts and Commercial Law, Construction & Planning, Litigation, Contracts and Force Majeure
• Law Firm: Farooq, Khan & Mirza, Advocates & Corporate Counsel
• Author: Babbar A. Khan and Suleman Zeb

This is a two-part article, which will firstly deal with how the Covid-19 Pandemic is treated under the FIDIC regime in Pakistan and its assimilation with the generally understood concept of Force Majeure. In the second part we will discuss what possible claims may arise out of the Covid-19 Pandemic under the FIDIC regime for contractors to pursue.

1. The COVID-19 Pandemic which brought most businesses to a stand-still at the beginning of 2020, left few industries unharmed, including the construction industry. Most civil works construction projects were halted, as lock-downs were imposed in various countries and jurisdictions. Projects being halted result in extra costs being incurred by contractors however, with uncertainty regarding how long the pandemic could last, not only were contractors unsure whether they could claim costs from employers, but whether the pandemic itself could qualify as a force majeure

2. In examining whether the pandemic could amount to a force majeure event, or whether relief can be claimed in the form of extension of time or additional costs by contractors in government funded civil works projects, we will look at the situation in Pakistan, where the two main contracts used for civil works contracts are (1) the FIDIC Conditions of Contract for Works of Civil Engineering Construction 1987 (amended upto 1992) (the 'Red Book') used in government funded projects and (2) the FIDIC Construction Contract MDB Harmonized Edition 2010 (the 'Pink Book') used in projects funded by multi-lateral development banks.

3. Force Majeure in Pakistani Jurisprudence: Before we conclude whether the Red Book and/or the Pink book have force majeure clauses, we need to understand how force majeure has been understood in Pakistani courts. The term 'force majeure' was examined in Messrs Sadat Business Group Ltd versus Federation of Pakistan (2013 CLD 1451), in which the honourable Judges of the Sindh High Court used Black's Law Dictionary's definition, which stated, 'Such clause is common in construction contracts to protect the parties in the event that a part of the contract cannot be performed due to causes which are outside the control of the parties and could not be avoided by exercise of due care'.¹ The honourable Judges also used a definition in Mr. Justice M.L. Singhal's book titled 'Supreme Court on Words and Phrases', in which it states 'Difficulties have arisen in the past as to what could legitimately be included in 'force majeure' Judges have agreed that strikes, breakdown of machinery, which though normally not included in 'vis major' are included in 'force majeure'. Where reference is made to 'force majeure', the intention is to save the performing party from...