Founding Partner
April 5, 2026
15 minutes
Contracts are premised on the assumption that parties will perform their obligations as agreed. However, this assumption is often disrupted by unforeseen and uncontrollable events that fundamentally alter the circumstances under which the contract was formed. The doctrine of force majeure provides a contractual mechanism to address such disruptions by excusing or suspending performance where it becomes impossible or impracticable due to extraordinary events.
In recent years, the importance of force majeure has significantly increased, particularly in light of global crises such as the COVID-19 pandemic and ongoing geopolitical conflicts. The 2026 escalation of tensions between the United States, Israel, and Iran, leading to disruptions in the Strait of Hormuz, represents a contemporary example of how force majeure operates in practice. The declaration of force majeure by several major energy companies has brought renewed attention to the legal principles governing such clauses.
The term force majeure, derived from French law, refers to “superior force” or events beyond human control that prevent contractual performance. In common law jurisdictions such as India, force majeure does not exist as an independent doctrine but is instead rooted in contractual agreement. Consequently, the applicability and scope of force majeure depend entirely on the wording of the clause incorporated into the contract.
Such events may render performance not only physically impossible but also commercially or practically impracticable, depending on the contractual framework.
A typical force majeure clause enumerates specific events such as war, natural disasters, governmental actions or regulatory interventions, and epidemics, while also including a residual clause to cover analogous circumstances. The underlying rationale is to allocate risk between the parties in the event of unforeseen disruptions. Such clauses generally provide for consequences including suspension of obligations, extension of time, or termination of the contract.
The effectiveness of a force majeure clause lies in its precision. Courts have consistently emphasised that such clauses must be construed strictly, and parties seeking to rely on them must demonstrate that the event in question falls squarely within the scope of the clause and has directly caused the inability to perform.
Although the Indian Contract Act, 1872 does not expressly define force majeure, the concept is recognised through Sections 32 and 56, which together form the legal framework governing impossibility and contingent contracts.
Section 32 deals with contingent contracts, where the performance of a contract is dependent on the occurrence or non-occurrence of an uncertain future event. Where a contract contains a force majeure clause, it is treated as a contingent contract, and the rights and liabilities of the parties are determined by the terms of the clause itself.
Section 56, on the other hand, embodies the doctrine of frustration. It provides that a contract becomes void when an act becomes impossible or unlawful after the contract is made. However, the application of Section 56 is limited to situations where the contract does not contain an express provision dealing with the supervening event. Indian courts have repeatedly held that where a force majeure clause exists, Section 56 has no application, and the matter must be resolved within the framework of the contract.
The distinction between Sections 32 and 56 is of critical importance. While Section 32 gives effect to the intention of the parties as expressed in the contract, Section 56 operates as a rule of positive law, discharging the contract where performance has become fundamentally impossible.
This distinction is not merely academic rather it determines whether the contract survives subject to agreed contingencies or stands discharged by operation of law.
The Indian judiciary has played a pivotal role in shaping the legal principles of force majeure and frustration. The Supreme Court’s decision in Satyabrata Ghose v. Mugneeram Bangur & Co., AIR 1954 SC 44, established that the doctrine of frustration applies when the performance of the contract becomes impracticable in a practical sense, rather than strictly impossible. However, the Court cautioned that the doctrine must be applied within narrow limits.
In Naihati Jute Mills Ltd. v. Hyaliram Jagannath, AIR 1968 SC 522, the Court held that where parties have expressly provided for contingencies in the contract, such provisions must prevail, thereby limiting the scope of frustration. This principle reinforces the primacy of contractual terms in determining the applicability of force majeure.
The decision in Energy Watchdog v. Central Electricity Regulatory Commission, (2017) 14 SCC 80, further clarified that force majeure clauses must be interpreted strictly and that mere commercial hardship or increase in cost does not constitute force majeure. The Court also reaffirmed that Section 56 does not apply where the contract contains a force majeure clause.
More recently, in Chamundeshwari Electricity Supply Corporation Ltd. v. Saisudhir Energy Ltd., (2025) SCC OnLine SC, the importance of strict compliance with procedural requirements, particularly notice provisions, was emphasised. The Court observed that failure to adhere to contractual notice requirements can invalidate a force majeure claim, regardless of the merits of the underlying event.
Collectively, these decisions demonstrate that Indian courts adopt a conservative approach, prioritising contractual certainty and strict interpretation, with limited judicial appetite to dilute agreed risk allocation under the guise of equity.
Force majeure is also recognised in various international legal frameworks, which provide valuable comparative insights. Article 79 of CISG exempts a party from liability for damages if it can prove that the failure to perform was due to an impediment beyond its control that was unforeseeable and unavoidable (United Nations Convention on Contracts for the International Sale of Goods, 1980, Art. 79). However, the provision does not automatically terminate the contract and primarily affects liability rather than the existence of the obligation.
The UNIDROIT Principles of International Commercial Contracts distinguish between force majeure and hardship. While force majeure relates to impossibility of performance, hardship refers to situations where performance becomes excessively onerous. In cases of hardship, the principles encourage renegotiation rather than termination (UNIDROIT Principles of International Commercial Contracts, 2016).
The International Chamber of Commerce (ICC) has also developed model force majeure clauses, most recently in 2020, which provide a standardized framework for drafting such provisions. These clauses include a list of presumed force majeure events and allow for termination in cases of prolonged disruption (International Chamber of Commerce, ICC Force Majeure and Hardship Clauses, 2020).
Notably, Indian law does not recognise hardship as a standalone doctrine. This creates a structural gap where renegotiation remains a matter of commercial discretion rather than legal entitlement.
The escalation of tensions between the United States, Israel, and Iran in early 2026 led to significant disruptions in the Gulf region, particularly in the Strait of Hormuz, a critical artery for global energy supply. Military strikes, drone attacks on infrastructure, and heightened security risks rendered shipping routes unsafe and disrupted production and transportation of oil and liquefied natural gas.
In response, several major energy companies, including QatarEnergy, Kuwait Petroleum Corporation, and Bahrain’s BAPCO, declared force majeure under their supply contracts. These declarations were based on factors such as physical damage to facilities, inability to ensure safe transportation, government advisories, and withdrawal of war-risk insurance coverage.
The crisis provides a real-world illustration of the application of force majeure. It highlights the importance of demonstrating a direct causal link between the event and the inability to perform, as well as the necessity of complying with contractual requirements such as notice and mitigation.
Such declarations are likely to withstand legal scrutiny only where supported by demonstrable operational impossibility, rather than mere escalation of risk or cost.
The invocation of force majeure in the context of the Gulf crisis raises several important legal issues. One key question is whether the existence of alternative means of performance, such as rerouting shipments, defeats a force majeure claim. Courts are likely to examine whether such alternatives were reasonable and commercially viable. The relevant threshold, therefore, is not theoretical possibility but reasonable commercial viability in the circumstances.
Another issue relates to the role of insurance. The withdrawal of war-risk insurance can significantly impact the ability of parties to perform their obligations and may strengthen a force majeure claim, particularly in maritime contracts.
The crisis also underscores the limitations of force majeure in addressing purely economic hardship. While prices of commodities surged during the disruption, such increases alone do not constitute force majeure under Indian law or most international frameworks.
The events of 2026 highlight the need for carefully drafted force majeure clauses that address contemporary risks. Contracts should include comprehensive definitions of force majeure events, clear notice requirements, and provisions dealing with mitigation and prolonged disruption. Particular attention must be paid to notice timelines, form, and evidentiary support, as non-compliance can independently defeat a force majeure claim.
Parties should also consider expressly incorporating provisions addressing geopolitical risks, cyber threats, and supply chain disruptions. The inclusion of termination rights in cases of extended force majeure can provide flexibility and reduce uncertainty.
From a practical perspective, parties invoking force majeure must maintain detailed documentation and ensure strict compliance with contractual procedures. Similarly, counterparties must carefully scrutinise such claims and assess whether the conditions for invocation have been satisfied.
Force majeure occupies a central position in modern contract law, providing a mechanism to address unforeseen disruptions while preserving the integrity of contractual relationships. Under Indian law, its application is primarily governed by the terms of the contract, with the doctrine of frustration serving as a limited fallback.
Judicial decisions have consistently emphasised strict interpretation, high thresholds for invocation, and adherence to procedural requirements. International frameworks offer additional guidance, particularly in cross-border transactions.
The 2026 Gulf crisis serves as a compelling case study of the practical operation of force majeure in a complex and dynamic environment. It underscores the importance of precise drafting, careful risk allocation, and proactive contract management.
As global uncertainties continue to rise, the role of force majeure will only become more significant. Legal practitioners and commercial parties must therefore approach this doctrine not as a safety net, but as a calibrated tool of contractual risk allocation.
