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 event.
  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 the consequences of anything over which he has no control."2
  4. The important point raised by the honourable justices when referencing Mr. Justice M.L. Singhal's book is that the purpose of force majeure is to "save the performing party" from consequences. So while the purpose of the Force Majeure clause can be seen from precedents, the courts have left the definition of the event that triggers a "force majeure" clause as that which is typically stated in the contract in question.
  5. Force Majeure in the Red Book: It should be noted at the outset that the Red Book does not have a specific "force majeure" clause mentioned. However, the two closest clauses treating events in the same manner as a typical "force majeure" clause, that is to say have the effect of 'saving the performing party', are Sub-Clause 20.4, and Sub-Clause 66.1
    1. Sub-Clause 20.4 "Employer's Risks" lists events the commercial risk of which does not lay with the contractor. These are:
      (a) war, hostilities (whether war be declared or not), invasion, act of foreign enemies,
      (b) rebellion, revolution, insurrection, or military or usurped power, or civil war,
      (c) ionizing radiations, or contamination by radio-activity from any nuclear fuel, or from any nuclear waste from the combustion of nuclear fuel, radio-active toxic explosive or other hazardous properties of any explosive nuclear assembly or nuclear component thereof.
      (d) pressure waves caused by aircraft or other aerial devices travelling at sonic or supersonic speeds,
      (c) riot commotion or disorder, unless solely restricted to employees of the Contractor or of his Subcontractors and arising from the conduct of the Works,
      (f) loss or damage due to the use or occupation by the Employer of any Section or part of the Permanent Works, except as may be provided for in the Contract,
      (g) loss or damage to the extent that it is due to the design of the Works, other than any part of the design provided by the Contractor or for which the Contractor is responsible, and
      (h) any operation of the forces of nature against which an experienced contractor could not reasonably have been expected to take precautions."
    2. Sub-Clause 66.1 goes over release from performance, and payment in the event of release from performance, while saving the performing party, i.e. contractor from any commercial risk. Clause 66.1 requires "If any circumstance outside the control of both parties arises after the issue of the Letter of Acceptance which renders it impossible or unlawful for either or both parties to fulfil his or their contractual obligations, or under the law governing the Contract the parties are released from further performance, then the parties shall be discharged from the Contract, except as to their rights under this Clause and Clause 67 and without prejudice to the rights of either party in respect of any antecedent breach of the Contract, and the sum payable by the Employer to the Contractor in respect of the work executed shall be the same as that which would have been payable under Clause 65 if the Contract had been terminated under the provisions of Clause 65"
  6. Interestingly the Particular Conditions of Contract in the Red Book which have been adopted by the Pakistan Engineering Council Standard Bidding Documents includes a specific clause in relation to outbreak of illnesses in the form of epidemic but not pandemic. It may be argued though that an epidemic by its definition includes a pandemic and the only difference would be the scale at which it has affected the world, that is to say that a localize outbreak of illness is known as an epidemic, whereas should it extend beyond borders and have a more global reach it will be termed as a pandemic. The language contained is as follows:
    "Epidemics 34. In the event of any outbreak of illness of an epidemic nature, the Contractor shall comply with and carry out such regulations, orders and requirements as may be made by the Government, or the local medical or sanitary authorities, for the purpose of dealing with and overcoming the same."
  7. Force Majeure in the Pink Book: In contrast to the Red Book, Clause 19 of the Pink Book specifically addresses the issue of "force majeure" in great detail by listing events and then setting out generic conditions for an event to qualify as a force majeure event. Sub-Clause 19.1 states the following:
    1. "In this Clause, "Force Majeure" means an exceptional event or circumstance:
      (a) which is beyond a Party's control,
      (b) which such Party could not reasonably have provided against before entering into the Contract,
      (c) which, having arisen, such Party could not reasonably have avoided or overcome, and
      (d) which is not substantially attributable to the other Party.
      Force Majeure may include, but is not limited to, exceptional events or circumstances of the kind listed below, so long as conditions (a) to (d) above are satisfied:
      (i) war, hostilities (whether war be declared or not), invasion, act of foreign enemies,
      (ii) rebellion, terrorism, sabotage by persons other than the Contractor's Personnel, revolution, insurrection, military or usurped power, or civil war,
      (iii) riot, commotion, disorder, strike or lockout by persons other than the Contractor's Personnel,
      (iv) munitions of war, explosive materials, ionising radiation or contamination by radio-activity, except as may be attributable to the Contractor's use of such munitions, explosives, radiation or radio-activity, and
      (v) natural catastrophes such as earthquake, hurricane, typhoon or volcanic activity."
  8. It is important to note that Sub-Clause 19.1 of the Pink Book does not limit the events that amount to "force majeure" as those listed between sub-paras (i)-(v) of Sub-Clause 19.1, but only requires that such events shall be considered as "force majeure" if they fulfil the conditions listed between sub paras (a)-(d) of Sub-Clause 19.1. The list of events is also not exhaustive and may include other events that fulfil the conditions. This means that the particular event must be beyond a party's control, that could not have been reasonably foreseen by either party to the contract, which could not have been avoided or overcome, and are not substantially attributable to the other party. Interestingly, events listed in sub-paras (i)-(v) of Sub-Clause 19.1 of the Pink Book, are very similar to the events listed in sub-clause 20.4 of the Red Book.
  9. COVID-19 Pandemic and Force Majeure: Now that we have established that the Red Book, and the Pink Book contain force majeure clauses (even if not expressly stated as such), can the COVID-19 Pandemic, or any events/circumstance as a result of the COVID-19 Pandemic (e.g. lockdown, strike by workers, lack of availability of work materials/machinery) fall under the definition of a "force majeure" event?
  10. It should be noted that in reference to the above stated contracts, viruses/pandemics are not listed as events that fall under Employer's Risks (as per the Red Book), or as "force majeure" events (as per the Pink Book). However, Sub-Clause 20.4(h) of the Red Book lists "any operation of the forces of nature against which an experienced contractor could not reasonably have been expected to take precautions" as a triggering event. If the COVID-19 Pandemic is interpreted as an operation of the forces of nature, then it, or any event/circumstance caused by it that is causing a delay or rendering it impossible to continue with operation of the works, can fall under Employer's Risks as stated in Sub-Clause 20.4(h). As the COVID-19 Pandemic is not something that could have been predicted by any contractor, or even any employer, it is reasonable to assume that it, and its effects would fall under the category of Employer's Risks as per Sub-Clause 20.4 (h). Interestingly COVID-19 Pandemic has till date not been held to be on account of any human endeavor therefore till such time it shall be covered as an operation of the forces of nature.
  11. When it comes to the Pink Book, the matter is simpler to look at, as even though pandemics/viruses are not listed as "force majeure" events, the list of events in Sub-Clause 19.1 are not exhaustive. Rather, Sub-Clause 19.1 requires that any event is a "force majeure" event if it is an event:
    (a) which is beyond a Party's control,
    (b) which such Party could not reasonably have provided against before entering into the Contract,
    (c) which, having arisen, such Party could not reasonably have avoided or overcome, and
    (d) which is not substantially attributable to the other Party.
  12. Thus, in the case of COVID-19 Pandemic, it is clear that the pandemic was beyond the control of the contractor, it could not have been reasonably foreseen (especially so if the particular contracts in question were signed before the pandemic even hit China) by the contractor, it is one that the contractor could not reasonably have avoided or overcome, especially in the context of a lockdown, and its spread cannot be substantially attributable to the employer. As such for the territory of Pakistan COVID-19 Pandemic shall be given special treatment with the purpose being to 'save the performing party' from suffering any losses that may arise from it.


1. 2013 CLD 1451

2. ibid

Originally published by Farooq, Khan & Mirza, Advocates & Corporate Counsel, October 2020

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