COVID-19 Impact on Commercial Contracts, Judicial Delivery System & Tax Administration

Episode Duration:
90 minutes.

Episode Background:
The wizard of financial & capital markets Ray Dalio (Bridgewaters) is forecasting that Coronavirus Pandemic induced losses for US Corporates could top $4 trillion and a jaw dropping figure of $12 trillion for Corporations globally! As someone presciently commented, " It is the blackest of black swans..."

Given the massive supply chain disruption caused by the COVID-19 pandemic w.r.t businesses all around the world, it is highly likely that performances under many contracts will be delayed, interrupted, or even cancelled. It is thus inevitable that, in extraordinary times like these, a spotlight is cast on legal and contractual issues that, in the normal course of events do not arise! Well, which is why maybe we have a clause in many contracts that is rarely invoked but is now the buzzword in Corporate World - 'Force Majeure'!

The concept of “Force Majeure” [governed by the Indian Contract Act, 1872],  allows one party to renege on a contract due to unforeseen events outside of the party’s control. While many corporates are relying on a government notification [issued in February 2020] that says firms can invoke the clause as coronavirus can be considered a major “natural calamity”, yet, there is a lot of ambiguity amongst experts whether this will prove to be a panacea, considering different contracts and governing laws stipulate different requirements for different situations. Furthermore, another term that has also come into limelight recently, is that of “Doctrine of Frustration” [embodied in Sec 56 of the said Act], which in common parlance translates to an act outside the contract due to which the completion of a contract becomes impossible.

What will this episode cover?
In this special episode, Adv. Rohah Shah has discussed the “three-fold impact of COVID-19” on, (i) contractual issues in the light of global jurisprudence, (ii) the judicial delivery system, as also the (iii) tax administration system. Moreover, Mr. Shah has also dwelled on interesting historic details on how epidemics/pandemics were dealt with in the past and has shared insights on what this beholds for the future, while also highlighting the legal ramifications of the same for the Industry/taxpayers.