Covid-19 And Its Impact On International Trade: A Force Majeure Clause Analysis

Chippa Sowmya, LL.M., Intellectual Property and Trade Law, Christ Deemed to Be University

ABSTRACT

The COVID-19 outbreak has led to a severe impact on international trade with the lockdown taking place all around the world. The countries have taken several other measures to tackle the pandemic; however, this has led to the disruption of businesses and the parties’ performance of the obligations of the contract has been affected. This has led to a question on the Force majeure clause and its application in the current situation. The study aims to analyze the clause of Force majeure and its application to international commercial contracts. The paper further studies the effect of the COVID-19 pandemic on the clause. It further evaluates the change in policy or application of the clause in different countries after the outbreak. The study aims are limited to the effect of COVID-19 on international trade with regards to the force majeure clause. The COVID-19 pandemic has disrupted international trade. It has drastically affected the economies worldwide. The ban on import and export and various other measures taken by the Governments to fight the pandemic has seen a negative effect on the parties involved in international trade. Not only are they hindered from doing trade but it is impossible in this situation to fulfill their contractual obligations. Non-fulfillment of contractual obligations in the usual case is a breach of contract but the Hardship clauses are present in the contract to remove the liability of unforeseeable situations from the involved parties. COVID-19 is not the first pandemic the world has faced but the complexity in today’s international trade is not the same as earlier. The major problem arises with the question of the COVID-19 pandemic to be included under the force majeure clause as not a single country has provided a proper law or precedent on the situation. International trade has been affected the most by the pandemic and one of the biggest effects the COVID-19 has on international trade is the difference in the interpretation of force majeure clause.