Team Code - TC 30A

AUAP-JLU INTERNATIONAL MOOT COURT

COMPETITION, 2022

MEMORIAL FOR CLAIMANT

IN THE MATTER OF ARBITRATION

CONDUCTED BEFORE THE ARBITRAL TRIBUNAL
BETWEEN:

BILL TURNER CONSTRUCTION CO. CLAIMANT

AND

ROAD DEVELOPMENT
CORPORATION OF BORDURIA RESPONDNET

1
 TABLE OF CONTENTS

TABLE OF ABBREVIATIONS ............................................................................................... 3

INDEX OF AUTHORITIES...................................................................................................... 5
STATUTES ............................................................................................................................ 5
BOOKS .................................................................................................................................. 5
CASES REFERRED .............................................................................................................. 5
OFFICE MEMORANDUMS CITED .................................................................................... 6
ONLINE LEGAL DATABASES .......................................................................................... 6
ANNEXURES OF MOOT PROBLEM REFERRED ........................................................... 7

STATEMENT OF JURISDICTION.......................................................................................... 8

STATEMENT OF FACTS ........................................................................................................ 9

ISSUES RAISED ..................................................................................................................... 11

SUMMARY OF ARGUMENTS ............................................................................................. 12

ARGUMENTS ADVANCED ................................................................................................. 13

ISSUE A ............................................................................................................................... 13
ISSUE B ............................................................................................................................... 21
ISSUE C ............................................................................................................................... 25

PRAYER .................................................................................................................................. 33

2
 TABLE OF ABBREVIATIONS

ABBREVIATIONS EXPANSIONS

% Percentage
& And
§ Section
§ Section
AIR All India Reporter
Anr. Another
BTC Bill Tuner Construction Co.
Del Delhi
EBC Eastern Book Company
EOT Extension of Time
EPC The Engineering Procurement and Construction
FMC Force Majeure Clause
Guj Gujarat
HC High Court
i.e. That is
LJ Law Journal
Ltd. Limited
Moot Problem MOOT PROPOSITION INTERNATIONAL MOOT
COURT COMPETITION, 2022 AUAP-JLU
NHAI National Highways Authority of India
No. Number
O.M.P.( Comm.) Commercial Arbitration Under Section 34
Ors. Others
Para Paragraph
RDC Road Development Corporation of Borduria
Ref. Reference
ROW Right of Way
SC Supreme Court
SCC Supreme Court Cases

3
SCR Supreme Court Reporter
UK United Kingdom
US United States
USD United States Dollar
UTs Union Territories
WHO World Health Organization

4
 INDEX OF AUTHORITIES

STATUTES

1. 7th Manual for Procurement of Goods, 2017, Government of Borduria, Ministry of

Finance
2. Arbitration and Conciliation Act, 1996
3. Bordurian Contract Act, 1872
4. Disaster Management Act, 2005
5. General Financial Rules, 2017, Ministry of Finance

BOOKS

1. Avtar Singh, Contract and Specific Relief.

2. Dr. Kailash Rai, Contract-1 General Principles of Contract & Specific Relief Act.
3. Dr. S.C. Tripathi, Alternate Dispute Resolution (ADR).

CASES REFERRED

1. Abir Infrastructure Pvt Ltd v Teestavalley Power Lransmission limited & ors, O.M.P.
(I)(COMM.) 163/2020. ----------------------------------------------------------------------- 17
2. Aslhing v L.S. John, (1984) 1 SCC 205, AIR 1984 SC 988. ---------------------------- 20
3. Chief Secy, State of Gujarat v Kothari &Associates, (2003) 1GCD 372 (Guj) 1270 15
4. Chye Fook v Teh Teng Seng Realty, (1989) 1 Mal LJ 308 (Ipoh HC). ---------------- 23
5. Continental Construction Co Ltd v State of M.P, (1988) 3 SCC 82, 87: AIR 1988 SC
1166. --------------------------------------------------------------------------------------------- 31
6. Cricklewood Property & Investment Trust Ltd v Leighton's Investment Trust Ltd, 1945
AC 221 (HL) ----------------------------------------------------------------------------------- 30
7. Energy Watchdog v. CERC, (2017) 14 SCC 80. ------------------------------------------ 29
8. M/s Halliburton Offshore Services Inc v. Vedanta Ltd & Anr, (2020) SCC Online Del
542. ---------------------------------------------------------------------------------------------- 28
9. National Highways Authority Of India V Irb Goa Tollway Private Ltd, O.M.P.
(COMM.) 349/2016 & I.A. 9043/2016. ---------------------------------------------------- 18

5
 10. Nutting v Baldwin, (1995) 1 WLR 201. ---------------------------------------------------- 19
11. Pannalal Jankidas v Mohanlal, AIR 1951 SC144, 153: 1950 SCR 979. --------------- 14
12. Satyabrata Ghosh v. Mugneeram Bangur, 1954 SCR 310.------------------------------- 29
13. South Delhi Municipal Corporation v. MEP Infrastructure Developers Ltd., LPA
165/2020. --------------------------------------------------------------------------------------- 28
14. Viscount Maugham in Joseph Constantine Steamship Line Ltd v Imperial Smelting
Corpn Ltd, 1942 AC 154 (HL). ------------------------------------------------------------ 31

OFFICE MEMORANDUMS CITED

1. Circular No. COVID-19/RoadMap/JS(H)/2020/, The Ministry of Road Transport &

Highways (Highways Section) dated 18.05.2020.---------------------------------------28
2. Office memorandum F. 18/4/2020-PPD, The Ministry of Finance, Department of
Expenditure Procurement Policy Division dated 13th May, 2020------------------------.21
3. Office Memorandum No.F.18/4/2020-PPD, Ministry of Finance, dated 19.02.2020--
-------------------------------------------------------------------------------------------------27
4. Order No. 1-29/2020-PP (Pt. II), The National Disaster Management Authority dated
24th March.----------------------------------------------------------------------------26,29,31

ONLINE LEGAL DATABASES

1. Hein Online
2. Live Law
3. Manupatra
4. SCC Online
5. West law

6
ANNEXURES OF MOOT PROBLEM REFERRED

1. ANNEXURE B - REPLY TO NOTICE INVOKING ARBITRATION.-----------15, 24

2. ANNEXURE C –RELEVANT EXTRACTS FROM THE ENGINEERING

PROCUREMENT AND CONSTRUCTION (EPC) CONTRACT FOR
CONSTRUCTION OF THE MOLVANIA - LATVERIA EXPRESSWAY--------------
-----------------------------------------------------------------------------------------13,15,22,23

7
 STATEMENT OF JURISDICTION

All dispute or differences whatsoever arising between the parties out of or relating to the
construction, meaning and operation or effect of this contract or the breach thereof shall be
settled by arbitration in accordance with the Section 2(1) (b) read with Section 7 of
Bordurian Arbitration and Conciliation Act, 1996.

Governing Law: The contract shall be governed by The Bordurian Contract Act, 1872.

Note: All laws of Borduria are pari materia to Indian Laws.

8
 STATEMENT OF FACTS

1. The claimant, Bill Turner Construction Co. is a limited liability company registered in
the country of Syldavia, while the respondent- Road Development Corporation of
Borduria, is a statutory body in the country of Borduria, responsible for construction
and maintenance of all inter-state expressways in Borduria.

2. The Respondent released a tender dated 10 February 2018 for construction of a high-
speed white top expressway connecting the cities of Latveria and Molvenia. The
respondent accepted the bid of the claimant on 30 April 2018, and the claimant was
directed to furnish performance security in the form of bank guarantee.

3. The formal EPC contract was duly executed between the parties on 24 May 2018, and
the commencement date was decided to be 1 month from signing of EPC contract. The
term of contract was decided to be of 32 months.

4. As per tender, 75% of the Right of Way in non-forest area was to be handed over within
1 month from the commencement date and the entire stretch within 6 months. While
after one month of commencement 67.5% of the Right of Way in non- forest area was
provided and rest of the stretch of land was provided by 15 March 2019.

5. Eventually certain disputes arose between the parties After the commencement of the
contract The claimant sought for 12 months’ worth of extension for various reasons out
of which extension of 5 months was granted by the respondent, but the independent
engineer appointed by it stated that the contractor was also responsible for the delays
and slow progress of work due to inadequate deployment of plant and machinery.

6. After imposition of lockdown by government of Borduria due to COVID 19, the

claimant terminated the contract in ground of force majeure by its letter dated 17 July
2020.

9
7. While on 17 august 2020, the respondent also issued a termination notice on ground of
contractor's default and encashed the performance security submitted in form of bank
guarantee.

8. The independent engineer by its letter dated 30 September 2020, shared the status report
of project, which contained that milestone I and II were completed while rest are under
progress.

9. The claimant sent it's notice invoking arbitration to the respondent, a reply of which
was sent by the respondent on 17 October 2020.

10
 ISSUES RAISED

ISSUE A: Whether the Claimant is entitled to damages from the Respondent for delay in
handing over of the site and delay in receiving permission from the forest department for the
cutting of the trees? If yes to what extent?

ISSUE B: Whether the Claimant is entitled to re-imbursement of the value of the bank
guarantee encashed by the Respondent.?

ISSUE C: Whether the Claimant has exercised its right of termination of the contract for Force
Majeure correctly. If yes, what amount is the Claimant entitled to receive.

11
 SUMMARY OF ARGUMENTS

ISSUE A

That the claimant humbly submits that, there was a default at the end of respondent to provide
Right of Way as their obligation under clause 8.1 of EPC. Further, the respondents also did not
comply with the obligation under article 3.1(iii). Furthermore, as per Section 73 of the
Bordurian Contract Act, 1872 and Article 3.1(iv) of EPC, due to authority’s default, claimant
is entitled to claim damages in accordance to provision of clause 8.3 of EPC.

ISSUE B

That the claimant humbly submits that the claimant is entitled to get re-imbursement of Bank
guarantee, since the contract is terminated on account of authority’s default and application of
force majeure clause under clause 21.1. Thus, the claimant is entitled to claim re-imbursement
of Bank guarantee under clause 21.8.

ISSUE C

That the claimant humbly submits that, it is its right to terminate the contract on basis of force
majeure under clause 21.1, as COVID 19 is covered under the definition of pandemic, thus the
situation in hand will be a non- political event under clause 21.2. Furthermore Covid-19 has
been declared as Pandemic by various government authorities as cited by the claimants below.
Further, the claimant duly followed the provision of clause 21.7, by issuing termination notice
only after the force majeure event had subsided for more than 60 days entitling it to claim return
of performance security and termination payment under clause 21.8 of EPC.

12
 ARGUMENTS ADVANCED

ISSUE A

Whether the claimant is entitled to damages from the respondent for delay in handing
over of the site and delay in receiving permission from the forest department for the
cutting of the tress? If yes to what extent?

1. Right of way as defined under the EPC contract means and refers to the total land
required and acquired for the project, both in its width and length, together with all way
leaves, easements, unrestricted access and other rights of way, howsoever described,
necessary for construction and maintenance of the Project Highway in accordance with
this Agreement.

2. As per of clause 8.11, it was the responsibility of the Authority to acquire and provide
Right of Way on the Site in accordance with the alignment finalised by the it, free from
all encroachments and encumbrances, and free access thereto for the execution of this
agreement, the site of the Project Highway comprises of the site described in Schedule-
A2 in respect of which the Right of Way was supposed to be provided by the Authority
to the Contractor.

3. It is pertinent to throw light on the respondent’s claim that there is no delay in providing
right of way, as they have provided 67.5% of non-forest land which in-fact is still 7.5%
less than the stipulated amount and thus the claimant is right to hold the respondent
accountable for delay in providing ROW as according to the clause3.1(iii)(a) 3it was
the obligation of authority to provide to contractor not less than 75% (Seventy Five per
cent) of the required Right of Way of the Construction Zone of the non-forest land within
a period of 1 month from the Commencement date and the total land including forest
land within 6 months from the Commencement Date, but in reality however after one
month of the commencement of the contract only 67.5% of the land was provided while

1
EPC contract.
2
Annexure C of the Moot problem.
3
EPC contract.

13
 the rest of the land was provided in March 2019 which was supposed to be provided in
the month of January of 2019.

Further, it is pertinent to note that, the above stated facts will attract the provisions of
clause 3.1 (iv) 4which states the important concept of Obligation of Authority that
“Delay in providing the Right of Way ……………… in accordance with the provisions
of Clause 3.1 (iii) shall entitle the Contractor to Damages in a sum calculated in
accordance with the provisions of Clause 8.3 of this Agreement and Time Extension in
accordance with the provisions of Clause 10.5 of this Agreement.”
Thus, even solely on the basis of EPC Contract the claimant is entitled to receive
damages.

Further it is submitted that, there was no negligence or lack of due diligence at the part
of the claimant. The claimants have utilized the available land to minimize the delay
and the same can be seen in the report of July 2018 where the work was not much far
behind than the schedule, hence it is right on part of claimant to demand compensation
for the delay in providing ROW and underutilization of machinery caused by delay in
providing ROW.

4. The claimant also stands entitled to receive the damages stipulated by the provision of
Section 735, "according to which the party in breach must make compensation in respect
of the direct consequences flowing from the breach and not in respect of loss or damage
indirectly or remotely caused". 6

The section7 clearly lays down two rules8. Compensation is recoverable for any loss or
damage—
i. arising naturally in the usual course of things from the breach, or
ii. which the parties knew at the time of the contract as likely to result from
the breach.

4
EPC contract.
5
Bordurian Contract Act, 1872, No. 9, Acts of Parliament, 1872 (Borduria).
6
Pannalal Jankidas v Mohanlal, AIR 1951 SC144, 153: 1950 SCR 979.
7
Bordurian Contract Act, 1872, § 73, No. 9, Acts of Parliament, 1872 (Borduria).
8
Avtar Singh, Contract and Specific Relief 477 (EBC publishing 2018).

14
 Here, delay in providing ROW has directly resulted in loss, thus the claimant is entitled
to claim for damage under section 73 9.

5. It is important to refer the landmark case Chief Secy, State of Gujarat v Kothari
&Associates,10 which is quite similar to the claimant’s case, where the builder suffered
itemized damages, due to delay caused by department the work took 27 months instead
of 18 months which he proved by leading oral evidence. The court while granting relief
have applied the principle of section 73 11 and decreed the amount of claim as well the
interest.

6. Further it is contended by the claimant that the Respondent in his reply 12 to the notice
invoking arbitration in its Para 11 about the hypothetical situation of completion of the
work is completely false. It is pertinent to note that the lockdown was announced on
March 2020, while as per Schedule J13 of EPC Contract, the time limit given for
completion of 80% of project was 26 months, i.e., September 2020. If we add in the 5
months extension provided by the respondent authority, the new deadline for
completion of 80% of the project would be February 2021, which is almost an year later
than the date alleged by the respondent. Thus, it is clear that on lack of any solid basis,
the respondent is wrongly making false claims to defame claimant and terminate the
contract unlawfully.

7. Further, the respondent also alleged in his reply 14 to the notice invoking arbitration in
its Para 2, that the claimant does not actually have the expertise and experience
required. On this remark of Respondent, it is pertinent to submit that, as per the
conditions of the tender issued by the respondent on 10 February 2018, the interested
companies were required to have a prior experience of 10 years. It is an undisputed fact
that the claimant is one of the leading construction companies in the world in field of

9
Bordurian Contract Act, 1872, § 73, No. 9, Acts of Parliament, 1872 (Borduria).
10
(2003) 1GCD 372 (Guj), 1270.
11
Bordurian Contract Act, 1872, No. 9, Acts of Parliament, 1872 (Borduria).
12
Annexure-B of the Moot Problem.
13
Annexure- C of the Moot Problem.
14
Annexure-B of the Moot Problem.

15
 road construction and has worked in over 45 countries with an experience of 28 years
which is more than twice than the requirement of the Respondent, this clarification
alone is sufficient to refute the allegations raised by the respondents against the
expertise of claimant on the matter. Further, as the respondents deem the project to be
of great magnitude and importance, they should have had the tenacity to conduct a
background check of the company to ensure their expertise on the matter, instead of
later making baseless allegations.

8. In Annexure-B15, the respondent has alleged multiple times that the claimant did not
deploy adequate manpower and machinery claiming it to be the primary cause of delay.
Here, it is pertinent to note that, as per the progress report of July 2019, 27% of the
work was already finished, while work was going on the rest of the stretch of land, the
nearest milestone was of 40% which was due for September 2019. The land was handed
over to the claimant on 25 July 2018, while the progress report was published on 1 July
2019, providing a time period of 10 months. Thus, on an average the claimant was
finishing 2.7% of the project and till September they must have finished 35% of the
project which is not significantly less than the milestone of 40% and could have been
finished in the next 2 months. Keeping in mind, that, there was a significant delay on
part of the respondent in providing ROW and Environmental clearance, a mere delay
of 2 months cannot be termed significant enough to hold the claimant liable for
contractor’s default. It is not important that how much manpower and machinery is
deployed, but how much work is finished. The amount of work done should be the
deciding factor. The claimant is an expert in the matter and the question as “how much
deployment is necessary” is best if left on the discretion of the claimant.

9. It is submitted that, deployment of more workers at initial stage, at time when the
stipulated land was not provided would have resulted in irreparable loss which the
claimant would have to bear at their own expense, and claimant cannot be forced to
obey the contract that will result in his own loss.

15
Moot Problem.

16
 Further, it is pertinent to mention that, the respondent is holding the claimant liable for
improper planning on basis of delay in deployment of plant and machinery, alleging
that the claimant had a period of two months before handing over of land. In this regard
it is submitted that, since no environmental clearance or ROW was provided to the
claimant, there was a chance of incurring loss if any delay occurred in getting the ROW,
which actually happened. Furthermore, the claimant cannot be held liable for less
deployment of manpower and machinery as the claimant was not obliged to do so
before commencement of work under clause 10.116.

10. It is submitted that, as per the assessment of the Respondent the project is termed, ‘of
great magnitude and importance’, but somehow, they deem it acceptable to indulge in
breach of contract from the very beginning. Providing Right of Way is the foremost
obligation of the respondents as per clause3.1(iii)17, which they are in breach of, since
the start, there was a significant delay in providing the promised land.

11. It is important to refer the case of of Abir Infrastructure Pvt Ltd v Teestavalley Power
Lransmission limited & ors18 Justice Mohan state that “I find that prima facie perusal
of the letters and communications exchanged between the parties reveal that the
petitioner plea it is the respondent who is completely at fault for the petitioner's delay
in discharging the works under the contract by not providing the right of the way and
forest clearances is also a disputed question under the agreement.”

12. It is submitted that, the respondent expects the claimant to bear all the default, carried
out by the authority, without enabling them to exercise the right guaranteed to them
under the provision of the same contract.

On asking for the compensation for delay in providing ROW and forest clearance, the
authority wrongly accused the claimant of contractor’s default. This shows the
inconsiderate and hypocritical nature of the respondents.

16
EPC contract.
17
EPC contract.
18
O.M.P. (I) (COMM.) 163/2020.

17
 13. The facts here are quite identical to the case of, National Highways Authority Of India
V Irb Goa Tollway Private Ltd,19 where claim of amount of ₹ 4.71 crores was raised by
respondent, towards damages sustained on account of delay by NHAI in providing
Right of Way as provided for under Clause 10.3.2 read with Clause 4.1.2 of their
contract (CA). Clause 4.2 of the same was invoked by the respondent for the said
purpose. The respondent contended that Clause 4.1.2 required NHAI to satisfy all
Conditions Precedent within 60 days of providing of Performance Security by the
respondent. Performance Security was provided by the respondent on 2nd August 2010.
60 days, therefrom, expired on 10th October 2010. As NHAI had failed to provide Right
of Way by the said date, the respondent claimed damages in terms of Clause 4.2 of the
CA. As against this, NHAI contended that the respondent had failed to fulfil its
contractual obligations under the CA. The learned Arbitral Tribunal observed that no
specific contractual obligation, which remained to be fulfilled by the respondent, had
been pointed out by NHAI. The defence of NHAI was, therefore, rejected as
unsustainably general and vague. Resultantly, the learned Arbitral Tribunal awarded,
to the respondent, the claim of ₹ 4.71 crores.

Similarly, the claimant is entitled to receive the damages for the loss incurred by him
due to delay caused by the respondent.

14. It is submitted that, even after the Right to Way was provided for the entire stretch of
the land, the permission for forest clearance was granted 4 months later, i.e., on July
17, 2019. Firstly, there was a delay of 3 months in providing ROW, then there was
delay in receiving the forest clearance for no apparent reason. Thus, causing
unnecessary delay to the claimant’s work, which resulted in underutilization of
machinery and manpower, which otherwise, would have been deployed on the provided
land to commence the work for road building.

19
O.M.P.(COMM.) 349/2016 & I.A. 9043/2016.

18
 Further, it is submitted that, the claimant holds the Respondent responsible for delay
in acquiring forest clearance from the Forest officer, as it is the duty of respondent to
provide all environmental clearances under clause3.1(iii)(c)20, it is also responsible for
obtaining various licenses and permit for environmental clearance under clause
8.1(b)21 and is also obliged to provide reasonable support to the contractor in procuring
applicable permits(which as per definition clause includes all sorts of clearances)
under clause 3.1(vi)(a) 22.Thus, it is prerogative of the claimant, to claim for the
damages payable to him under clause 3.1(v) of the same contract, as the rule is that
where a sum is named in a contract as the amount to be paid in case of breach, regardless
of whether it is, a penalty or not, the party suffering from breach is entitled to receive
reasonable compensation not exceeding the amount so named. 23

Furthermore, it is submitted that, when a contract has been broken, and if a sum is
named in the contract as the amount to be paid in case of such breach, or if the contract
contains any other stipulation by way of penalty, the party complaining of the breach is
entitled, whether or not actual damage or loss is proved to have been caused thereby, to
receive from the party who has broken the contract reasonable compensation not
exceeding the amount so named or, as the case may be, the penalty stipulated for. 24

15. It is submitted that, the amount demanded by claimant, i.e., USD 35 million for
underutilization of manpower and machinery due to delay in handing over of land
quantified will not be barred by the provisions of clause3.1(v)25, as it only talks about
the damages for delay in providing Right of way, but the claimant is claiming damages
for delay in providing Right of way as well as for underutilization of machinery.

Further perusal of the same article makes it clear, that only payment of damages is the
final cure for the contractor against delays of the authority, and since there is no

20
EPC contract.
21
EPC contract.
22
EPC contract.
23
Avtar Singh, Contract and Specific Relief 477 (EBC publishing 2018).
24
Nutting v Baldwin, (1995) 1 WLR 201.
25
EPC contract.

19
 prescribed limitation period, the demand of claimant stands valid as there is abundant
evidence that there was delay on part of the respondent, both, in providing ROW and
Forest clearance. And even though termination of contract has been initiated by the
respondent, the claimant cannot be barred from claiming the damages for delay as even
though repudiation by one party puts an end to the contract the right to sue for damages
survives.26

16. In light of the aforesaid facts, It is submitted that, the claimant is entitled for USD 35
Million for delay in handing over of land along with USD 2 Million for delay in cutting
of trees totaling to USD 37 Millions.

26
Aslhing v L.S. John, (1984) 1 SCC 205, AIR 1984 SC 988.

20
ISSUE B

Whether the claimant is entitled to reimbursement of the value of the bank guarantee
encashed by the Respondent?

1. It is submitted that, after acceptance of the claimant’s bid, submission of performance

security equivalent to 5% of the bid amount was required by the respondent, which was
submitted by the claimant within stipulated time.

The usual provision is, that the entire amount of performance security is returned to the
contractor, as soon as the finished project is handed over to the offeree, but in the case
of claimant, the performance security is claimed by it before the completion of project,
on the basis of clause 21.8 27Contract, which lays down that, if the agreement is termed
on account of a non- political event, the contractor will be entitled to performance
security.

It is pertinent to note that, the claimant terminated the contract under clause 21.228on
account of non- political force majeure event and conveyed the same to the respondent
as required by clause 21.7 29vide letter dated 17 July 2020.

Since, the termination is based on a non- political force majeure event, the claimant is
entitled to termination payment (including the return of performance security), under
clause 21.830.

2. It is pertinent to note that, vide an Office memorandum dated 13 th May, 202031, The
Ministry of Finance, Department of Expenditure Procurement Policy Division
published guidelines regarding ‘Performance Security in terms of Rule 171’ 32, which

27
EPC contract.
28
EPC contract.
29
EPC contract.
30
EPC contract.
31
F.18/4/2020-PPD.
32
General Financial Rules, 2017, Ministry of Finance, 2017 (Borduria).

21
 laid down the instructions that, “In some cases, it may not have been possible for a
contractor/supplier to fulfil all his contractual obligations in terms of the contract.
Public interest lies in quick resumption of economic activity.

4. Therefore, in the following circumstances:

a) where an application is made by a contractor who is not in default any

contractual obligations; or

b) where Force Majeure Clause is invoked by a contractor and the

requirements of the same are fulfilled,

the contractee (Government Department/Agency) may return the value of performance

security to the contractor/supplier as is proportional to the supplies made/contract work
completed to the total contract value.”

In the light of the above stated facts, it is submitted that, due to epidemic, it was difficult
for the claimant to retain its workforce and due to lockdown imposed by the
Government of Borduria, it was even tougher to procure the construction materials.
And since an unnecessary delay was being caused, the cost for underutilisation of
machinery was increasing day by day, and since the clause 21.6 (i)(a) requires the
parties to bear their own costs during force majeure event, the claimant was bearing all
the loss by itself during the entire lockdown period. Thus, the claimant concluded
terminating the agreement on account of force majeure.

3. It is pertinent to mention that the reason given by the respondent for encashment of
performance security is contractor’s default, which he has claimed on the basis of delay
in finishing the milestones as laid down in schedule J 33. The claimant, in this regard,
submits that, clause 23.1 (i)34lays down that the contractor will be in default if it fails

33
Annexure C of the Moot problem.
34
EPC contract.

22
 to cure the default, laid down in clause 23.1(i)(c)35, i.e., not achieving the latest
outstanding project milestones in accordance with schedule J 36 for more than 45 days
continuously, within the cure period. While, as per clause 23.1(iii)(a) the cure period
shall commence form the date of notice by the authority to the contractor asking the
latter to cure the breach or default, however no such notice was provided by the
authority and since the contractor was never asked to cure the breach, it was simply
implied that the respondent has accepted the performance at an extended time. And
since time schedule in a construction contract is likely to be of essence because
construction is a commercial service 37, and in case of a contract voidable on account of
the promisor's failure to perform his promise at the time agreed, the promisee accepts
performance of such promise at any time other than that agreed, the promisee cannot
claim compensation for any loss occasioned by the non-performance of the promise at
the time agreed, unless, at the time of such acceptance, he gives notice to the promisor
of his intention to do so.38

Since no notice asking to cure default was published to the contractor, it was prerogative
of the claimant to assume that there was no default on his side and same was impliedly
accepted by the respondent as no action in response was taken by them in reasonable
time, thus the respondent has no right to terminate the contract and encash the bank
guarantee.

4. It is pertinent to note that, the respondent cannot claim that the contractor was in default
of contract due to delay in achieving the milestones during the lockdown period, as the
clause 23.1(i)39clearly exempts the default occurred solely due to force majeure.

5. It is pertinent to note that, after a month of contract being terminated by the claimant
on account of force majeure, the respondent terminated the contract vide letter dated
17th August 2020, on account of contractor’s default however, in para 11 of

35
EPC contract.
36
Annexure C of the Moot Problem.
37
Chye Fook v Teh Teng Seng Realty, (1989) 1 Mal LJ 308 (Ipoh HC).
38
Avtar Singh, Contract and Specific Relief 377 (EBC publishing 2018).
39
EPC contract.

23
 respondent’s reply to notice invoking arbitration 40, it was stated by the respondent that,
“we would have adequately arranged for extra privileges to BTC to complete the
construction at a later date and provided for extra compensation for its men and
machinery”. A bare perusal of the above statement makes it clear, that the respondent
was willing to arrange for extra amenities which implies it was quite satisfied with the
work of claimant. This is prima facie evidence that, the contractor was not involved in
any sort of default and was doing its work as per the contract and is satisfaction of the
respondent. It is clear that, the respondent is only alleging that the contractor is in
default, only to escape from his own liability of payment of performance security.

Thus, it is right of the claimant to get reimbursement of the performance security

encashed by the respondent, as the respondent can only do so when the contract is
terminated on the basis of contractor’s default and aforesaid facts makes clear that the
contractor was not in default.

40
Annexure B of the Moot Problem.

24
ISSUE C

Whether the Claimant has exercised its right of termination of the contract for Force
Majeure correctly. If yes, what amount is the Claimant entitled to receive?

1. That the EPC contract entered between both the parties is valid and binding as per the
Bordurian Contract Act, 1872.

2. It is submitted that, to realize if the claimant has exercised its right of termination of
contract on basis of Force Majeure correctly, it is required to peruse the Clause21.141

Clause 21.1 contains that “ the expression “Force Majeure” or “Force Majeure Event”
shall mean occurrence in Borduria of any or all of Non-Political Event,…. if it affects
the performance by the Party claiming the benefit of Force Majeure (the “Affected
Party”) of its obligations under this Agreement and which act or event

(i) Is beyond the reasonable control of the Affected Party, and

(ii) the Affected Party could not have prevented or overcome by exercise of due
diligence and following Good Industry Practice, and
(iii) Has Material Adverse Effect on the Affected Party.

3. The claimant is claiming the lockdown situation prevailing in the country as a Non-
Political event.

4. Furthermore, Non- Political Event is defined in clause21.242which provides an

inclusive definition, that mentions various acts and events that can be termed as Force
Majeure, according to it, Epidemic is a non-political event and thus a reasonable factor
to claim the benefits of Force Majeure.

Hence, it is prerogative of the Claimant to claim the benefit of Force Majeure due to
COVID 19 which has already been declared Pandemic/Epidemic.

41
EPC contract.
42
EPC contract.

25
 5. It is further submitted that, The WHO defines pandemic as “An epidemic occurring
worldwide over a very wide area, crossing international boundaries, and usually
affecting a large number of people”. 43 Hence it is safe to say that, a pandemic has
much wider scope than an epidemic, and Epidemic in included within the definition
of pandemic, if pandemic is genus epidemic is its species.

The WHO in its official statement on 11th March 202044 declared that they have made
an assessment that COVID 19 can be Characterized as Pandemic. Thus, classifying
COVID 19 as an epidemic, and giving legal backing to claimants right to invoke the
Force Majeure clause.

6. Thus, it is evident and established that COVID-19 situation is epidemic and is covered
under the Force Majeure clause.

7. It is submitted that, The National Disaster Management Authority through an Order

dated 24th March45, stated that it is satisfied that the country is threatened by the
spread of covid 19, which has been declared as a pandemic by WHO, and it is
necessary to take effective measures.

The directions for lockdown were issued under section 10(2)(l)46 which contains
“lay down guidelines for, or give directions to, the concerned Ministries or Departments
of the Government of India, the State Governments and the State Authorities regarding
measures to be taken by them in response to any threatening disaster situation or
disaster;”

43
publichealth.com, https://www.publichealth.com.ng/world-health-organization-who-pandemic-definition/
(last visited July 10, 2020).
44
World health organization, virtual press conference on Covid-19- 11 March 2020, www.who.int (Mar 11,
2020), https://www.who.int/docs/default-source/coronaviruse/transcripts/who-audio-emergencies-coronavirus-
press-conference-full-and-final-11mar2020.pdf.
45
no 1-29/2020-PP (Pt. II).
46
Disaster Management Act, 2005, No. 53, Acts of Parliament, 2005 (Borduria).

26
 Following this, the Centre’s Ministry of Home Affairs issued an order to all
government departments and all States/UTs to take “effective measures”. In
pursuance of which lockdown was imposed by the government to tackle the spread
of COVID 19.

Furthermore, it is submitted that, the imposition of Lockdown in itself is substantial

evidence that neither the circumstances were in control of the Claimant nor he could
have prevented or overcome it by exercise of due diligence and following Good
Industry Practice, as it was required by the provisions of clause21.147for claiming the
Force Majeure Clause.

8. It is submitted that; various Government Authorities had already declared COVID-

19 to be a Force Majeure event. Furthermore, It is pertinent to note that, one of the
earliest instances of COVID-19 getting recognised in the realm of contractual law
was by, Ministry of Finance, and through the Office Memorandum dated
19.02.202048. The office memorandum interprets para 9.7.49 (which did not contain
“epidemics” or “pandemics” as a force majeure event), and specifically adds
COVID-19 under the bracket of force majeure, terming it as a “natural calamity”.
Under the clause 2 of the same Memorandum, The Ministry of Finance Department
stated that “…. if the disruption of the supply chains due to spread of corona virus in
China or any other country will be covered in the Force Majeure Clause (FMC). In
this regard it is clarified that it should be considered as a case of natural calamity and
Force Majeure Clause may be invoked, wherever considered appropriate, following
the due procedure as above.”.

Thus, the right to invoke FMC was provided by the Ministry of Finance given that
appropriate procedure has been followed, which was indeed followed by the
claimant.

47
EPC contract.
48
No.F. 18/4/2020-PPD.
49 th
7 Manual for Procurement of Goods, 2017, Government of Borduria Ministry of Finance.

27
 9. Furthermore, regarding road projects, The Ministry of Road Transport & Highways
(Highways Section) through its circular dated 18.05.2020 50 allowed extension of
time to contractors under Force Majeure Clause due to COVID 19 pandemic as per
instructions in Ref. No. F.18/4/2020-PPD of Department of Expenditure and in
accordance with the contract.

Furthermore, under the same circular, stated that the unprecedented COVID 19
epidemic outbreak, maybe treated as Force Majeure of Contract agreement.
Thus, assenting to invoking of Force Majeure clause for all national Highway works
under EPC model.

10. It is submitted that, along with various Government Authorities, several courts had
deemed COVID 19 to be a Force Majeure event. In South Delhi Municipal
Corporation v. MEP Infrastructure Developers Ltd 51., the Delhi High Court cited the
Ministry of Road Transport and Highways (MoRTH) circular of May 18, 2020 52 ,
The contractor, in this case, had to fulfil the payments to the employer for the toll
collected. The judgement granted relief to the respondent South Delhi Municipal
Corporation by invoking the force majeure clause.

Similarly, in the case of In M/s Halliburton Offshore Services Inc v. Vedanta Ltd &
Anr53, the petitioner Halliburton was obliged under a contract to develop three blocks
in Rajasthan for Vedanta Ltd. Due to the lockdown, Halliburton was not in a position
to complete the work in the given time frame. Thus, the company decided to invoke
the force majeure clause, but Vedanta Ltd objected to this. As a result, Vedanta
threatened to terminate the contract, forcing Halliburton Offshore Services Inc to
move to the Delhi High Court.

The Delhi High Court tended towards granting an ad-interim injunction to the
invocation of bank guarantees given by Halliburton to Vedanta. The court held that
the lockdown caused due to COVID-19 was prima facie a force majeure event.

50
No. COVID-19/RoadMap/JS(H)/2020.
51
South Delhi Municipal Corporation v. MEP Infrastructure Developers Ltd., LPA 165/2020.
52
No. COVID-19/RoadMap/JS(H)/2020.
53
(2020) SCC Online Del 542.

28
 11. It is submitted that, Black's Law Dictionary defines "force majeure" as "an event or
effect that can be neither anticipated nor controlled." The Bordurian Contract Act,
1872 does not define or contain any specific provision for Force Majeure. The
Supreme Court has observed that Section 32 and Section 56 of the Bordurian contract
Act, 1972 apply to the clause of force majeure. Section 32 of the Act would apply when
the event is related to the force majeure clause whereas, Section 56 would come into
picture if the event is out of the scope of the force majeure clause 54, i.e., it dehors the
contract55. As per section 32,56 a party to a contract which contains a Force Majeure
clause must prove the following: 57

a) that the event which caused non-performance must be included in the

force majeure clause.

b) the non-performance was caused due to the said event.

c) the non-performance was beyond the party's control and

d) that there existed no alternative mode of performance.

In the Claimant’s case, the event causing non-performance, i.e., epidemic was
included in the Force Majeure clause under clause21.158, which in claimant’s case
was the sole reason of non-performance, the epidemic was declared a natural disaster
by the order of The National Disaster Management Authority 59 and thus was beyond
party’s control. Further, the lockdown lasted nearly for 90 days, and in the mean time
the claimant was unable to retain its labour forces and they had to be were released,

54
Satyabrata Ghosh v. Mugneeram Bangur, 1954 SCR 310.
55
Energy Watchdog v. CERC, (2017) 14 SCC 80.
56
Bordurian Contract Act, 1872, § 32, No. 9, Acts of Parliament, 1872 (Borduria).
57
Prithviraj Senthil Nathan, India: Legal Principles In Invoking Force Majeure Clauses – Case Law Analysis,
mondaq.com (May 01, 2020),https://www.mondaq.com/india/litigation-contracts-and-force-
majeure/926356/legal-principles-in-invoking-force-majeure-clauses-case-law-analysis.

58
EPC contract.
59
Order No. 1-29/2020-PP (Pt. II), The National Disaster Management Authority dated 24 th March.

29
 the economic impact of lockdown was devastating and rendered the claimant unable
to resume the construction work. On top of which, adhering to the clause21.6(i)(a)
and 21.6(ii)60, the claimant was bearing it own cost and was solely liable for the
damage or expense caused due to underutilisation of machinery which was resulting
in a huge loss to the claimant who in absence of any alternative mode of performance
invoked the force majeure clause.

12. It is submitted that, the provision envisaged in section 56 61 deals with doctrine of
frustration under which impossibility of a party to perform its obligations under a
contract is linked to occurrence of an event/circumstance subsequent to the execution
of a contract and which was not contemplated at the time of execution of the contract.
For invoking section 5662, there needs to be a valid contract, the performance of the
contract has not been completed or must have been partially completed, the said
performance becomes impossible by way of facts or law, the subsequent event is
beyond the control of the party who intends to claim frustration and no reasonable
steps could mitigate subsequent event.

All these factors were present in the case of claimant and thus the contract can to be
revoked on the basis of Doctrine of Frustration.

The concept of "frustration of the contract" is well explained in Cricklewood Property

& Investment Trust Ltd v Leighton's Investment Trust Ltd 63 , Viscount Simon LC said
that it means "occurrence of an intervening event or change of circumstances so
fundamental as to be regarded by the law both as striking at the root of the agreement,
and as entirely beyond what was contemplated by the parties when they entered into
the contract".

To the same effect is the following statement of Lord Wright: "The word frustration is
here used in a technical legal sense. It is a sort of shorthand: it means that a contract has

60
EPC contract.
61
Bordurian Contract Act, 1872, No. 9, Acts of Parliament, 1872 (Borduria).
62
Bordurian Contract Act, 1872, No. 9, Acts of Parliament, 1872 (Borduria).
63
1945 AC 221 (HL).

30
 ceased to bind the parties because the common basis on which by mutual understanding
it was based has failed. It would be more accurate to say, not that the contract has been
frustrated, but that there has been a failure of what in the contemplation of both parties
would be the essential condition or purpose of the performance."

A contract will frustrate "where circumstances arise ‘which make the performance of
the contract impossible in the manner and at the time contemplated. 64

Continental Construction Co Ltd v State of M.P.65, explained the principle thus: "It is
clear that if there is entirely unanticipated change of circumstances the question will
have to be considered whether this change of circumstances has affected the
performance of the contract to such an extent as to make it virtually impossible or even
extremely difficult or hazardous. If that be the case, the change of circumstances not
having been brought about by the fault of either party, the courts will not enforce the
contract.
Therefore, on the light of the above-mentioned pleadings it is submitted that, COVID
19 was indeed a Force Majeure event on basis of which termination of EPC Contract
can be sought.

13. It is submitted that, in order to claim the benefit of Force Majeure under clause21.166,
the act or event on basis of which force majeure clause is being invoked, should be
beyond the reasonable control of the Affected Party, and the Affected Party could not
have prevented or overcome by exercise of due diligence and following Good Industry
Practice, and has Material Adverse Effect on the Affected Party.

A bare Perusal of above mentioned arguments, makes it clear that the event (the
epidemic) was beyond control of the affected party and was termed a natural calamity
by The National Disaster Management Authority 67 and there is nothing the claimant

64
Viscount Maugham in Joseph Constantine Steamship Line Ltd v Imperial Smelting Corpn Ltd, 1942 AC 154
(HL).
65
(1988) 3 SCC 82, 87: AIR 1988 SC 1166.
66
EPC contract.
67
Order No. 1-29/2020-PP (Pt. II), The National Disaster Management Authority dated 24 th March.

31
 could have done to overcome the losses incurred to him and resume the construction
work he was already facing heavy loss due to the inability to retain the labour force.

Thus, in light of the above made arguments, it is clear the claimant was right to invoke
Force Majeure as he has rightly adhered to the provisions of clause2168. And is thus
entitled for the termination payment under clause 21.8

14. It is an undisputed fact that lockdown was imposed by the Bordurian Government on
15th March 2020 and as stated by the claimant no construction activities could be
resumed till 15 June, it is safe to say that the lockdown lasted for 3 months constituting
90 days , hence it is prerogative of the claimant to send Termination of Notice for Force
Majeure according to the provisions of clause 21.769, which gives right to either Party
to terminate the EPC Contract by issuing a Termination Notice to the other Party if one
or more Force Majeure events subsists for a period of 60 (Sixty) days or more.

15. Since the claimant has made no error in terminating the EPC Contract as per the
provisions of clause 21.770, which lays down the provision for sending a termination
notice in case of force majeure event, he is entitled for the termination payment under
clause21.8(i) 71under which he is entitled for return of Performance Security amounting
to USD 9.85 Million along with compound interest of 10% per annum on the uncashed
bank guarantee. He is also entitled for the termination payment which is supposed to be
an amount equal to the sum payable under clause 23.572 along with post award interest.

68
EPC contract.
69
EPC contract.
70
EPC contract.
71
EPC contract.
72
EPC contract.

32
 PRAYER

Wherefore, in light of the issues raised, arguments advanced and authorities cited it is most
humbly submitted and prayed before this honourable tribunal that it may graciously be pleased
to pass:

a) An order directing the respondent to pay the damages caused due to authorities’ default.
b) An order directing the respondents to re-imburse the amount of bank guarantee along
with interest to the claimant.
c) An order declaring the validity of the leftover contract as void on ground of
applicability of force majeure clause.
d) Any other order the tribunal may deem fit.

All of the above is humbly submitted to the tribunal on behalf of the claimant. The honourable
tribunal is requested to pass any other order in light of justice, equity and good conscience.

33