Delhi HC: Price escalation and change in foreign law are not force majeure events
The Delhi High Court (“HC”) in the case of Coastal Andhra Power Limited v. Andhra Pradesh Central Power Distribution Co. Ltd. has held that price escalation and change in foreign law cannot be considered a force majeure event.
The judgment was delivered in the context of a power purchase agreement between the parties and Coastal Andhra Power Limited had claimed that the increase in price of coal in Indonesia which happened as a result of an amendment to Indonesian Law would qualify as a force majeure event and would entitle it to rescind the contract without any liability.
The HC held that such changes in price and change in foreign law cannot be held to be a force majeure event, as it was not an event which could render the performance of the contract impossible. Further, it also held that change in prices of coal is risk that the parties knowingly undertook before entering the contract. Consequently it held that, alternative arrangements, at higher prices, could be made and the performance of the contract could be carried on.
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- Force Majeure events are events that are beyond the control of the parties that renders the performance of the contract impossible. Any and every change in the circumstances surrounding the performance of the contract cannot be held to be a force majeure event, as it will allow parties to not perform their obligations under a contract without attracting any liabilities.
- The performance of a contract cannot be avoided just because it becomes onerous on of the parties to the contract. The HC has rightly held that an unexpected rise in the price of coal is something is a risk that the parties knew they were undertaking when they entered into the contract and consequently such price rise as a result of change in foreign law cannot be considered to be a force majeure event.
Drone Policy 2.0 to bolster the growth of drones in the country
The Civil Aviation Ministry has made public the draft note for Drone policy 2.0 in the country. The Drone policy 2.0 would aim to make India a leader in drone operations with the intent of using drones majorly for operations where the drones fly beyond the visual line of sight. As part of the policy, the government also proposes to setup a dedicated drone corridor and allow 100% foreign direct investment in manufacturing the drones.
The government also envisages the usage of drone for delivery of goods and other temperature sensitive commodities like bodily organs, emergency delivery of life saving medicines etc.
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- While India was one of the few nations to have a drone policy when it announced one in August last year, it remains to be seen if Drone policy 2.0 will also cover usage of the drones for other activities like delivery of goods. Usage of drones for such activities will definitely require a lot of regulatory oversight before such services can be allowed.
Disclaimer: This post has been prepared for informational purposes only. The information/or observations contained in this post does not constitute legal advice and should not be acted upon in any specific situation without seeking proper legal advice from a practicing attorney.