Respondent 6 27

TEAM CODE: ‘YALUNG KHANG’
FOURTH BRU FOUNDATION MOOT COURT COMPETITION

(ARBITRATION), 2023
BANGLADESH POWER DEVELOPMENT BOARD (BPDB)
CLAIMANT
v.
HIMALAYAN HYDRO NEPAL LTD (HH NEPAL)
RESPONDENT
MEMORIAL FOR THE RESPONDENT

JUNE 2023
On submission to the Singapore International Arbitration Centre (SIAC)

(6th Edition, 1 August 2016)
TABLE OF CONTENTS
LIST OF ABBREVIATIONS.........................................................................................................4
INDEX OF AUTHORITIES...........................................................................................................7
STATEMENT OF JURISDICTION.............................................................................................18
SUMMARY OF THE FACTS......................................................................................................19
ISSUES RAISED...........................................................................................................................22
SUMMARY OF ARGUMENTS...................................................................................................23
ARGUMENTS ADVANCED........................................................................................................25
ISSUE I- WHETHER OR NOT THE CLAIMANT WAS REQUIRED TO JOIN GRID

POWER CORPORATION OF INDIA (“GPC INDIA”) AS A RESPONDENT IN THE
PRESENT ARBITRATION?........................................................................................................25
1. PRESENCE OF MAJOR EVENTS CONNECTING GPC INDIA TO THE EVENT OF

HARDSHIP..............................................................................................................................25
A. GPC INDIA HAS OWNERSHIP IN THE RESPONDENT’S STAKE HOLDING

DIVISION.............................................................................................................................25
B. GPC INDIA IS THE MAJOR PARTY OF PSA AGREEMENT..........................................26
C. GPC INDIA HAS TRANSMISSION OBLIGATION UNDER P.S.A..................................27
D. GPC INDIA VIOLATED THE PRINCIPLE OF GOOD FAITH AND FAILED TO

MAINTAIN THE SANCTITY OF CONTRACT.................................................................27
2. GPC INDIA DID NOT HONOR THE POWER TRANSMISSION AGREEMENT.........28
3. GPC INDIA DID NOT FULFIL ITS OBLIGATION UNDER ELECTRICITY ACT-2003.
28
4. GPC INDIA FULFILS JOINDER REQUIREMENT UNDER SIAC.................................29
A. THE ADDITIONAL PARTY TO BE JOINED IS PRIMA FACIE BOUND BY THE

ARBITRATION AGREEMENT..........................................................................................30
B. ALL PARTIES, INCLUDING THE ADDITIONAL PARTY TO BE JOINED, HAVE

CONSENTED TO THE JOINDER OF THE ADDITIONAL PARTY.................................30
ISSUE II: WHETHER OR NOT THERE EXISTED SITUATION OF FORCE MAJEURE

THAT PREVENTED THE RESPONDENT FROM DISCHARGING ITS OBLIGATIONS
UNDER THE POWER SALES AGREEMENT DATED 16 JULY 2020?..................................32
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1. THE EVENTS AND CIRCUMSTANCES FULFILLS THE PREREQUISITIES OF THE
FORCE-MAJEURE....................................................................................................................32
A. THE AMMENDMENT IN ELECTRICITY ACT FULFILLS THE CHANGE IN LAW.....33
B. THE AMMENDMENT WAS UNFORESEEABLE DURING THE CONSTRUCTION OF

CONTRACT.........................................................................................................................34
2. THERE IS CASUAL RELATION BETWEEN CHANGE IN LAW AND PARTY’S NON-

PERFORMANCE.......................................................................................................................35
A. THE CONTRACTUAL TERMS PROVIDE RESPONDENT UNDENIABLE

OPPORTUNITY TO EXEMPT FROM PERFORMANCE..................................................36
3. THE UNFAVOURABLE SITUATION FULFILS THE DEFINITORY CRITERIA OF

FORCE MAJEURE OF THE CONTRACT.............................................................................37
A. THE CONTRACTUAL LANGUAGE OF FORCE MAJEURE...........................................37
B. DETERMINATION OF "CHANGE IN LAW " ARE EXPRESSLY STATED UNDER PSA.

38
4. PROLONGED FORCE MAJEURE CONSTITUTES A LEGAL RIGHT TO THE

RESPONDENT FOR THE TERMINATION OF CONTRACT.............................................38
A. THE RESPONDENT HAS DULY FULFILLED THE LEGITIMATE PROCEDURE FOR

SERVING THE NOTICE OF FORCE MAJEURE EVENT.................................................39
ISSUE III: IF SUCH A SITUATION EXISTED, THEN WHETHER OR NOT THE SAID
SITUATION IMPACTED THE RESPONDENT’S ABILITY TO DISCHARGE ITS
CONTRACTUAL OBLIGATIONS UNDER THE POWER SALES AGREEMENT DATED 16
JULY 2020?...................................................................................................................................39
1. THE SITUATION OF FORCE MAJEURE EXISTED...........................................................39
A. THE SITUATION WAS BEYOND THE REASONABLE CONTROL OF THE PARTY.. 41
B. ABSENCE OF FAULT OR NEGLIGENCE ON THE PART OF THE RESPONDENT IN

THE ORIGINATION OF SAID CIRCUMSTANCES..........................................................42
C. NO MUTUAL COURSE OF CONTACT WITH GPC INDIA AFTER THE COMMISSION

OF EVENT...........................................................................................................................43
2. ADHERENCE TO PROCEDURAL REQUIREMENTS IN SEEKING THE BENEFITS OF

FORCE MAJEURE....................................................................................................................44
A. SERVING OF THE ADVANCE NOTICE WITHIN 2 DAYS.............................................44
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B. NON- FULFILMENT OF THE OBLIGATION BY TRANSMISSION LISENCEE UNDER
PSA.......................................................................................................................................45
3. EMERGENCE OF THE SITUATION OF IMPOSSIBILITY OF PERFORMANCE..........45
A. CREATION OF FRUSTRATION OF PURPOSE FOR RESPONDENT IN FULILMENT

OF THE CONTRACTUAL OBLIGATIONS.......................................................................46
B. NO OBLIGATION OF THE RESPONDENT TO PURSUE ALTERNATIVES FOR THE

TRANSMISSION OF ELECTRICITY.................................................................................48
ISSUE IV: WHETHER OR NOT THE RESPONDENT IS LIABLE TO PAY DAMAGES TO

THE CLAIMANTAND RESUME COMPLIANCE WITH ITS OBLIGATIONS UNDER THE
POWER SALES AGREEMENT DATED 16 JULY 2020?..........................................................49
1. RESPONDENT IS NOT LIABLE TO PAY DAMAGES UNDER THE PSA....................49
2. THE RESPONDENT IS NOT LIABLE TO RESUME COMPLIANCE WITH ITS

OBLIGATIONS UNDER THE POWER SALES AGREEMENT......................................50
PRAYERS OF RELIEF................................................................................................................53
iv | P a g e
LIST OF ABBREVIATIONS
& And
AAA American Arbitration Association
art. Article
BOD Board Of Directors
BPDB Bangladesh Power Development Board
CEO Chief Executive Officer
CISG Convention on Contracts for the International Sale of Goods
Claimant Bangladesh Power Development Board
ed, edn Edition
GPC India Grid Power Corporation of India Ltd.
HH Nepal Himalyan Hydro Nepal Ltd.
ICC International Chamber of Commerce
ICSID International Centre for Settlement of Investment Disputes
v|Page
INC Incorporation
KWHr KiloWatt Hour
LCIA London Court of International Arbitration
MW Mega Watt
NEA Nepal Electric Authority
NEPSE Nepal Stock Exchange
NOA Notice of Arbitration
¶, para Paragraph
pg, p Page
PSA Power Sales Agreement
PTA Power Trade Agreement
Respondent Himalyan Hydro Nepal Ltd.
SIAC Singapore International Arbitration Centre
SIAC Rules Singapore International Arbitration Centre Rules(6th edition, 2016)
vi | P a g e
USD United State Dollar
v. Versus
VCLT Vienna Convention on the Law of Treaties
INDEX OF AUTHORITIES
INTERNATIONAL CONVENTIONS &, TREATIES
S.N NAME PAGENO
1 United Nations Convention on the Recognition and Enforcement of 31
Foreign Arbitral Awards art. II, New York, Jun. 10, 1958
2 Vienna Convention on Law of Treaties [VCLT], 1969 34, 46, 48
vii | P a g e
WEBSITES REFERRED
S.N NAME PAGE

NO
1 41
Emily Seiderman West William C. Lawrence :Force Majeure judgments
available at https://www.venable.com/insights/publications/2020/04/
2 Practical Law available at https://www.reuters.com/practical-law-the- 44
journal/transactional/notice-force-majeure
3 rebus sic stantibus available at 46

https://www.law.cornell.edu/wex/rebus_sic_stantibus
4 Breach of Contract and Force Majeure in the Age of COVID-19 available at 49

https://feldman.law/news/breach-of-contract-and-force-majeure-in-the-age-of-
covid-19/
5 Contract performance in a coronavirus world: Force majeure clauses and the 49, 51
doctrine of frustration available at https://www.nortonrosef
ulbright.com/en/knowledge/publications/844d7cf4/contract-performance-in-a-
coronavirus-world-force-majeure-clauses-and-the-doctrine-of-frustration (Last
Visited: May 26, 2023)
6 Force Majeure Clause available at 49
https://www.contractscounsel.com/g/37/us/force-majeure-clause
7 Excuses for Non performance: Conditions Preceding Contract Formation 50

available at
https://www.lexisnexis.com/supp/largelaw/no-index/coronavirus/commercial-
transactions/commercial-transactions-excuses-for-nonperformance.pdf
viii | P a g e
ARTICLES
S.N NAME PAGE

NO
1 FED. R. Civ. P. 19(a) 25
2 JohnChoong,MarkMangan&NicholasLingard,AGuidetotheSIACArbitration 30
Rules117,120(2ed.2018)
3 GaryBorn,Consolidation,JoinderandIntervention,inInternationalCommercia 30
lArbitration2793(GaryBorn3 ed.2021) 2777-2778
4 Gary Born, Parties to International Arbitration Agreements, in International 31
Commercial Arbitration 1525( Gary Born 3 ed. 2021)
LAWS
S.N NAME Section PAGE

NO
1 Civil code 2074 s 532(1) 26
s 532(2) 26
s. 531 40
2 Electricity act-2003 s 40(a) 29

s 40(s) 29
s 38(3) 51
3 Electricity (Supply) Act, 1948 s 17 (1) 36
ix | P a g e
4 SIAC Rules (7th edn, 2016) r7 29
7.1 and 7.8 30
5 Arbitration Act, 2055 s3 30
6 ELECTRICITY ACT, 2049 s 19 (b) 52
7 United Nations Commission on International Trade Law, Rules 17(5) 29

Arbitration Rules (2021)
JUDGMENTS
S.N CASES PAG
ENO
1 Cementownia “Nowa Huta” S.A. v. Republic of Turkey, ICSID Case No. 25
ARB(AF)/06/2,17 September 2009, para. 128
2 Nepal Bangladesh Bank Ltd. Sudeep Kumar Sharma, Authorized Management 25

Committee Member of the Management Committee of Bijulibazar, Kathmandu vs.
Himalayan Distillery Ltd. Authority received on behalf of A.A. Raj Bahadur Shah
Dno. 8451
3 Universal Compression v. Venezuela, ICSID Case No. ARB/10/9, 2 August 2012, 25
para. 207
4 Vivendi Universal v. Argentina, ICSID Case No. ARB/97/3, Decision on 26, 31

Annulment dated 3 July 2002, para. 96
x|Page
5 BTR Nylex Clough Engineering Ltd v The Oriental Republic of Uruguay [1992] 1 26
WLR 382
6 Smith v Hughes (1871) LR 6 QB 597, para 607 (Cockburn CJ) 26
7 Wintershall v Argentina, Award, 8 December 2008, at para 78 26
8 Fraport v Philippines I, Decision on Annulment, 23 December 2010, paras 197–208, 26

218–247;
Tulip v Turkey, Decision on Annulment, 30 December 2015, paras 80–83, 145
9 State Bank of India v M/s. Shree Ram Urban Infrastructure Ltd., (2019) SCC 27
OnLine SC 1540, para 21
10 Lac Lanoux Arbitration (France v Spain) (Award) [1957] XII RIAA 281 27
11 Redpath Industries Ltd. V. Cisco (1993), 163 N.R. 161 (FCA) 28
12 CMS Gas Transmission Co. v. Argentina, ICSID Case No. ARB/01/8, Award, 12 28
May 2005, Para 279
13 Himpresit GE v. Pakistan [ICSID Case No. ARB/03/8], para 24 28
14 McGregor v. National Surety Co., 219 N.Y. 311 (1927) 30
15 Yakshyadhoj Karki v. High Court Patan and others, NKP (2076), No.10, D.N. 30
10369
16 Attorney General of Belize v. Belize Telecom Ltd, [2009] UKPC 10, para. 17 31
xi | P a g e
17 Methanex Motunui v. Spellman, [2004] 3 NZLR 95 (CA) (N.Z.), para. 43 31
18 Taylor vs. Caldwell (1861-73) All ER Rep 24 33
19 AES Summit Generation Limited and AES-Tisza ErömüKft v. The Republic of 34

Hungary, ICSID Case No. ARB/07/22
20 General Construction Limited v Chue Wing [2013] UKPC 30 35, 41
21 Okta Crude Oil Refinery AD v Mamidoil-Jetoil Greek Petroleum Co SA [2003] 42
EWCA Civ 1031
22 Parkerings v. Lithuania, ICSID, Case No. ARB/05/08, para. 344 42
23 Home Devco/Tivoli Isles LLC v. Silver, 26 So.3d 718, 722 42
24 Chisholm v. Georgia, 2 Dall. 455, 1 L. Ed. 440: Union Bank v. Hill, 3 Cold. 42
(Tenn.) 325
25 Taxation v Silverton Tramway Co Ltd[1953] 88 CLR 559, per Dixon CJ at 565 and 43
566
26 Mamidoil-Jetoil Greek Petroleum Company SA, Moil-Coal Trading Company Ltd v 43

Okta Crude Oil Refinery AD [2002] EWHC 2210 (Comm)
27 Alfred C Toepfer v Peter Cremer [1975] 2 Lloyd’s Rep 118, per Lord Denning MR 45
at 123 and
Scarman LJ at 128
xii | P a g e
28 Panitz v. Panitz, 144 Md. App. 627, 639 47
29 Brohawn v. Transamerica Ins. Co., 276 Md. 396, 410 (1975) 47
30 Wal-Mart Stores, Inc. V. AIG Life Ins. Co., 872 A.2d 611, 620 (Del. Ch. 2005), 901 47
A.2d 106 (Del 2006)
31 Washington State Hop Producers, Inc. Liquidation Trust v. Goschie Farms, Inc., 112 47
Wash. 2d 694, 704, 773 P.2d 70 (1989).
32 Chase Precast Corp. V. John J. Paonessa Co., Inc., 409 Mass. 371 (1991) 48
33 Akorn, Inc. V. Fresenius Kabi AG, No. CV 2018-0300-JTL, 2018 WL 4719347, at 48

*87 (Del. Ch. Oct. 1, 2018)
34 Watson Labs., Inc. V. Rhone-Poulenc Rorer, Inc. , 178 F. Supp. 2d 1099, 1109 48
(C.D. Cal. 2001)
35 Brooke Homes (Bicester) v Portfolio Property Partners 48
36 Tandrin Aviation Holdings Ltd v Aero Toy Store LLC [2010] EWHC 40 48
37 Arbitration CAS 2018/A/5779 Zamalek Sporting Club v. Fédération Internationale 50

de Football Association (FIFA), award of 31 October 2018
xiii | P a g e
38 ES Summit Generation Limited and AES-Tisza ErömüKft v Hungary, ICSID Case 52
No ARB/07/22 (ICSID, September 30th 2010) para [408]
39 State of Hungary v. Slovak Republic (ICSID Case No. ARB/14/3), Award, 17 52

September 2018, para 263
40 Duke Energy International Peru Investments No.1 Ltd v. Republic of Peru (ICSID 52
Case No. ARB/03/28), Award, 18 August 2008, para 253
BOOKS AND COMMENTARIES
S.N NAME PAGENO
1 M. DOMKE, DOMKE ON COMMERCIAL ARBITRATION, § 1:01, at 26
1-2 (rev. ed. 1984)
2 Voser & Schellenberg 2009, p. 346 29, 31
3 32, 33, 37, 41

Black’s Law Dictionary (9th Ed.)
4 FIDIC red book 2017 32, 40
5 Bryan A Garner (ed), Black’s Law Dictionary (11th edn, West 2019). 33, 41
6 Symons Ben, Force Majeure and Frustration in Commercial Contract, 35
2022, BPL pg.83
xiv | P a g e
7 Nijhoff investment law, page no: 8 43
8 Ewan McKendrick, Force Majeure and Frustration of Contract (2nd edn, 44
1995) 60
9 Dolzer, R., Kriebaum, U., &Schreuer, C. (2022). Principles of international 48, 51

investment law (3rd ed.). Oxford University Press.Pg no. 303-304
OTHER DOCUMENTS
S.N NAME PAGE

NO
1 UNCITRAL Model Law on International Commercial Arbitration, UNDoc 31
A/40/17,art.7 (2006)
2 UNCITRAL Secretariat Guide on the Convention on the Recognition and 31
Enforcement of Foreign Arbitral Awards (New York, 1958), 43-47 (2016)
3 Nzabonimana’s Reply [CallixteNzabonimana’s Reply to Prosecutor’s Response to 46
Nzabonimana’s Interlocutory Appeal on the Order Rescinding the 4 March 2010
Decision, 21 June 2010], paras. 9-11
xv | P a g e
xvi | P a g e
STATEMENT OF JURISDICTION
This Arbitral Tribunal, under Dr. Mary Oliver, derives its jurisdiction from Clause 48 of
the Power Sales Agreement entered into between the parties, read along with the Rules of
Arbitration of the Singapore International Arbitration Centre (hereinafter SIAC). All
parties involved are from states that are party to the Convention on the Recognition and
Enforcement of Foreign Arbitral Awards 1958 (“New York Convention”).
1|Page
SUMMARY OF THE FACTS
Parties
Bangladesh Power Development Board (“BPDB”). [hereinafter referred to as

“CLAIMANT”] is a state-owned power distribution company in Bangladesh. The
CLAIMANT is responsible for the power distribution and supply in Bangladesh.
Himalayan Hydro Nepal Ltd. (“HH Nepal”). [hereinafter referred to as “RESPONDENT”]

is a listed company in Nepal. The main objective of HH Nepal is to generate electricity for
use in Nepal and export the surplus electricity. RESPONDENT has been engaged in the
supply of surplus electricity outside Nepal through the transmission lines in agreement with
the GPC India.
Grid Power Corporation of India Ltd [herein after referred as GPC India] is a majority
Indian state-owned entity that owns and manages electricity transmission lines in India. It is a
deemed transmission licensee in terms of the Indian Electricity Act, 2003, being the Central
Transmission Utility.
Agreement
RESPONDENT entered into an agreement named Tri-partie Power Sales Agreement [herein
after PSA] on 16th of July, 2020. The GPC India is a major state owned company and also
central transmission utility as per the Electricity Act 2003. The GPC India and
RESPONDENT entered into a PTA agreement to transmit surplus electricity from Nepal to
India and other countries for a consideration, vide a joint press conference dated 13 February
2016. The PTA agreement was entered in order for the reciprocal growth and prosperity of
both the companies in the field of electricity transmission. The RESPONDENT agreed to
supply 60% of the electricity generated from the “UPPER BISHNU KHOLA
HYDROPOWER PROJECT” on monthly basis to CLAIMANT in blended power purchase
rate of USD 0.09 per Kwhr of electricity. The installed generation capacity of the Project is
5000 MW.
2|Page
Ensuing Events
The GPC India is governed by the Indian Electricity Authority Act 2003 which is the parent
legislation for electricity in India. Amid the heated debate in the parliament the amendment
of the Act was passed on 20 th of March 2023. The major amendment on act was made on Sec
38(3). The amendment stated that “The Central Transmission Utility shall not authorize the
use of any Indian transmission lines by a foreign seller of electricity which is not
substantially owned or effectively controlled by Indian(s) or an Indian entity”.
RESPONDENT as aforementioned is a company enlisted and incorporate under the laws of
Nepal. RESPONDENT had 50% of its share subscribed by the transmission licensee but the
general rule of majority is (50%+1) which is absent in the context of share division of
RESPONDENT. The CLAIMANT has maliciously intended to interpret the amendment in
its favour but the RESPONDENT is in the state that no any India entity controls or
substantially owns the company.
After the amendment of the Act the RESPONDENT was in no position to supply the
electricity to CLAIMANT in good faith because the rights of transmission licensee is with
transmission licensee who as aforementioned is a central transmission license authority and
halted to deliver the supply of the electricity from 21st March as per the latest amendment.
The ensuing event of change in law as mentioned in clause 22 of the PSA agreement and the
criteria for the force majeure of clause 21 rendered impossibility for the RESPONDENT to
maintain the sanctity and performance of the contract. The RESPONDENT as responsible
party notified the CLAIMANT on the matter of event of force majeure via email dated 22 nd
March 2023 which was within the 5 business days of the occurrence of such event as per the
clause 21.3.2 (b) of the PSA agreement.
The transmission licensee who is also a major stakeholder in the agreement had the obligation
to inform both the CLAIMANT and RESPONDENT about the changing circumstances
which it failed to do as per the clause 20.2 of the PSA agreement. Despite of the failure of the
transmission licensee the RESPONDENT was in continuous contact with the CLAIMANT
via: phone call regarding the update of the situation. The RESPONDENT didn’t have the
contractual obligation of arranging the deliverable in the interstate connection to
CLAIMANT via alternative. The CLAIMANT irrelevantly presented the matter of its
3|Page
internal mismanagement of the electricity and it’s supply within the jurisdiction of own in the
hands of RESPONDENT. In February 2023, the Government of Bangladesh opened a
tender process in connection with the construction and use of commercial ports in
Bangladesh, for import and export purposes which was tendered to China and India was also
the party of the bidding war. The claim of CLAIMANT stating this matter in regarding the
amendment is wholly irrelevant.
Despite the continuous efforts made by the RESPONDENT in regard to mitigate the
hindrance of force-majeure event the CLAIMANT invoked the notice of arbitration as per
the Clause 48 of the PSA.
4|Page
ISSUES RAISED
ISSUE I:
WHETHER OR NOT THE CLAIMANT WAS REQUIRED TO JOIN GRID POWER
CORPORATION OF INDIA (“GPC INDIA”) AS A RESPONDENT IN THE PRESENT
ARBITRATION?
ISSUE II:
WHETHER OR NOT THERE EXISTED A SITUATION OF FORCE MAJEURE THAT
PREVENTED THE RESPONDENT FROM DISCHARGING ITS OBLIGATIONS UNDER
THE POWER SALES AGREEMENT DATED 16 JULY 2020?
ISSUE III:
IF SUCH A SITUATION EXISTED, THEN WHETHER OR NOT THE SAID SITUATION
IMPACTED THE RESPONDENT’S ABILITY TO DISCHARGE ITS CONTRACTUAL
OBLIGATIONS UNDER THE POWER SALES AGREEMENT DATED 16 JULY 2020?
ISSUE IV:
WHETHER OR NOT THE RESPONDENT IS LIABLE TO PAY DAMAGES TO THE
CLAIMANTAND RESUME COMPLIANCE WITH ITS OBLIGATIONS UNDER THE
POWER SALES AGREEMENT DATED 16 JULY 2020?
5|Page
SUMMARY OF ARGUMENTS
ISSUE I: WHETHER OR NOT THE CLAIMANT WAS REQUIRED TO JOIN GRID

PRESENT ARBITRATION?
GPC India being major party to the PTA and PSA is involved in negotiation and preparation
and has obligations to fulfil under them. Absence of GPC India may impair or impede its
ability to protect its interest, complete relief cannot be accorded among parties to the
arbitration, may lead to double or repeated arbitration on same matter and outcome of the
arbitration is relevant not GPC India. GPC India fulfils joinder requirements under SIAC.
Rights and interests of GPC India are closely connected with both parties to the arbitration,
failure to join them risks rendering the proceeding inefficient and threatens the enforceability
of any decision. The issue being raised by the claimant is in relation to non-transmission of
electricity and not non-supply of electricity Hence, claimant was required to join GPC India
as a respondent in the present arbitration.
ISSUE II: WHETHER OR NOT THERE EXISTED A SITUATION OF FORCE

MAJEURE THAT PREVENTED THE RESPONDENT FROM DISCHARGING ITS
OBLIGATIONS UNDER THE POWER SALES AGREEMENT DATED 16 JULY
2020?
The change in the interpretation of application of law of India is beyond party’s control
which was not foreseeable during the formation of contract. It fulfils the definitory criteria of
Force Majeure pursuant to Force Majeure clause of contract since clause 21.1.3 clearly
imbeds “Change in the interpretation of application of any law of India or Nepal after the date
of this agreement” as a Force Majeure event. As far as duty to mitigate is concerned,
defendant had in its fullest sense, tried to reasonably avoid and overcome from the effect of
6|Page
such situation. The before and after facts of situation meets the conditions provisioned in
section 531 of country civil code-2074 i.e. circumstances beyond the control of the parties.
ISSUE III: IF SUCH A SITUATION EXISTED, THEN WHETHER OR NOT THE

SAID SITUATION IMPACTED THE RESPONDENT’S ABILITY TO DISCHARGE
ITS CONTRACTUAL OBLIGATIONS UNDER THE POWER SALES AGREEMENT
DATED 16 JULY 2020?
Force majeure is a provision in a contract that frees both parties from obligation if an
extraordinary event directly prevents one or both parties from performing. A non-performing
party may use a force majeure clause as excuse for non-performance for circumstances
beyond the party's control and not due to any fault or negligence by the non-performing
party. The change in law under Indian Electricity Authority Act, 2003 has subsequently
affected the respondent’s ability to fulfil the contractual obligation as transmission lines were
under the control of GPC India who exempted from the fulfilment of its obligation as
mentioned under the clause 20 of the PSA. The situation of force majeure couldn’t be
exempted because of the failure in acting with diligence and reasonable mind by GPC India.
Thus the said situation impacted the respondent’s performance under the contract.
ISSUE IV: WHETHER OR NOT THE RESPONDENT IS LIABLE TO PAY

DAMAGES TO THE CLAIMANTAND RESUME COMPLIANCE WITH ITS
2020?
The halted supply of the electricity by respondent was solely the result of the action taken by
GPC India due to the change in law, which fulfils the criteria of the force majeure event.
Muluki Civil Code 2074 under S. 536 mentions Indivisible nature of the authority to rescind
contract: If either party of a contract consists of two or more persons, the contract may be
rescinded only if all of such persons rescind it or if the rescission is applicable to all of them.
GPC India has several obligations under PSA: to transmit electricity from the Buyer and the
Seller in good faith and by ensuring minimum transmission loss, to immediately
7|Page
communicate to both Buyer and Seller in the event any hindrance to transmission of the
deliverables occurs, & to immediately undertake mitigation measures in order to minimize
transmission loss of deliverables, which it didn’t fulfil. Thus, the respondent is not liable to
pay the damages in ‘Quantum Meruit’ and resume the compliance in according to PSA.
ARGUMENTS ADVANCED
ISSUE I- WHETHER OR NOT THE CLAIMANT WAS REQUIRED TO JOIN GRID

PRESENT ARBITRATION?
An existing party is said to have a claim to join a third party into an arbitration as of right
when (1) in the third party's absence, complete relief cannot be accorded among those already
parties to the arbitration or (2) the third party asserts an interest relating to the subject of the
arbitration and is so situated that the disposition of the arbitration in the third party's absence
may (a) as a practical matter impair or impede the third party's ability to protect that interest
or (b) leave any of the persons already parties to the arbitration subject to a substantial risk of
incurring double, multiple, or otherwise inconsistent obligations by reason of the claimed
interest.1 Which clearly is the case in this arbitration. When the main party who does not
fulfil the agreement according to the contract is not the opponent, full treatment cannot be
expected from it. Those who make mistakes in the way of getting treatment should suffer the
consequences themselves.2
Where a contractual relationship exists between claimants and a non-party, and that non-party
owns an interest in one of the claimants, the non-party's interests are likely to be directly
affected by any decision of the Tribunal. 3When the rights and interests of non-parties are
closely connected with those of either party because of ownership or control, failure to join
them risks rendering the proceeding inefficient and threatens the enforceability of any
decision.4 Hence, claimant was required to join GPC India as a respondent in the present
arbitration. It can be justified under four-fold arguments:
1. PRESENCE OF MAJOR EVENTS CONNECTING GPC INDIA TO THE EVENT
OF HARDSHIP.
There is series of crucial events linking GPC India to the events of arbitration. To address the
issue of hardship the presence GPC India is must. These events help in understanding the
1
See FED. R. Civ. P. 19(a). Opponents to joinder of third parties in arbitration might note that Rule 19 only
allows joinder of persons "whose joinder will not deprive the court of jurisdiction," see id., and might therefore
claim that Rule 19 cannot provide a model for joinder of parties in arbitration, since to do so would deprive the
arbitral tribunal of jurisdiction.
2
Nepal Bangladesh Bank Ltd. Sudeep Kumar Sharma, Authorized Management Committee Member of the
Management Committee of Bijulibazar, Kathmandu vs. Himalayan Distillery Ltd. Authority received on behalf
of A.A. Raj Bahadur Shah DNo. 8451.
3
Cementownia "Nowa Huta" S.A. v. Republic of Turkey, ICSID Case No. ARB(AF)/06/2, 17 September 2009,
para. 128.
4
Universal Compression v. Venezuela, ICSID Case No. ARB/10/9, 2 August 2012, para. 207.
8|Page
overall context of the dispute and assessing the impact they had on the respondent's ability to
fulfil its obligations under the PSA. By examining the factual circumstances and legal
framework surrounding these major events, it becomes evident that GPC India's involvement
is essential for a comprehensive and fair resolution of the dispute.
A. GPC INDIA HAS OWNERSHIP IN THE RESPONDENT’S STAKE HOLDING

DIVISION.
GPC India holds 50% ownership of the Respondent.5 GPC India, a majority Indian state-
owned entity, is deemed a transmission licensee in terms of the Indian Electricity Act, 2003,
as the Central Transmission Utility.6 GPC India being majority owner of the Respondent.
Two out of five Members of board of directors are directly appointed by GPC India. Mr.
Rastra Premi Prasad was the first CEO of Respondent and was succeeded by Mr. Binod KKR
in the year 2021.7 Both being directly appointed member of BOD by GPC India. Interests of
GPC India are at stake in this arbitration. Ownership of a party gives rise to direct economic
interests in the outcome of a dispute, so the owner should have an opportunity to participate
to protect those interests.8 Hence, GPC India is required party to this arbitration.
B. GPC INDIA IS THE MAJOR PARTY OF PSA AGREEMENT.
Power Sales Agreement was signed on 16 July 2020. Claimant, Respondent and GPC India
Ltd. are involved as buyer, seller and transmission licensee respectively. PSA is a tri-partite
agreement for the export of 60% of total generated electricity from the Project. 9 This
Agreement was negotiated and prepared by all Parties with advice of counsel to the extent
deemed necessary by each Party.10 The duty of the court in hearing and determining an
application under is to ensure that the parties have had a fair opportunity to plead their case
and an even-handed hearing.11 An arbitration can validly take place only if the parties have
specifically and expressly agreed to use this method for the settlement of their disputes….The
voluntary nature of arbitration is based on the principle that the agreement to arbitrate has not
been compelled by a third party.12 This arbitration derives its jurisdiction from the PSA
agreement to which GPC India is a major party. The Tribunal in Wintershall v Argentina
said: The text must be presumed to be the authentic expression of the intention of the
parties.13
5
Notice of Arbitration (Herein after NoA) para 2.
6
NoA, Para 3.
7
NoA, Para 4.
8
Vivendi Universal v. Argentina, ICSID Case No. ARB/97/3, Decision on Annulment dated 3 July 2002, para.
96.
9
NoA, para 8.
10
PSA, 2020, Clause 1.1.12.
11
BTR Nylex Clough Engineering Ltd v The Oriental Republic of Uruguay [1992] 1 WLR 382.
12
M. DOMKE, DOMKE ON COMMERCIAL ARBITRATION, § 1:01, at 1-2 (rev. ed. 1984).
13
Wintershall v Argentina, Award, 8 December 2008, at para 78.
9|Page
A man who engages in a course of negotiation for a contract, and, whether wisely or
foolishly, omits to make provision for circumstances which subsequently arise, cannot be
permitted to complain that those with whom he chooses to deal, believing he has deliberately
abandoned what he now insists on, have acted on that belief and placed themselves in a
position from which they cannot retreat without loss or inconvenience. 14 The parties to a
contract shall provide to each other such facilities as may be needed to perform the contract
from their respective sides.15 The principle of right to be heard originates from the Latin
maxim audi alteram partem which means 'no one should be condemned unheard. The right to
be heard is considered sine qua non of every civilized society. 16 If the contract cannot be
performed due to the failure to provide such facilities, the party in default of the performance
shall not be held liable responsible. 17 GPC India being major party to the PSA should be
joined as respondent in this arbitration.
C. GPC INDIA HAS TRANSMISSION OBLIGATION UNDER P.S.A.
The law is well settled that parties to a contract are bound by its terms and conditions which
they have agreed upon.18 Involvement of GPC India is essential to determine any breaches
and failure to meet obligations by any party as it is the key party to this arbitration and has
been involved in key decisions making. Obligations of the Transmission Licensee GPC India
under the PSA19 1) To transmit electricity from the Buyer and the Seller in good faith and by
ensuring minimum transmission loss.20 2) To immediately communicate to both Buyer and
Seller in the event any hindrance to transmission of the deliverables occurs. 21 3) To
immediately undertake mitigation measures in order to minimize transmission loss of
deliverables.22 GPC India didn’t honour its obligation under the PSA. It didn’t complete its
transmission obligation of electricity from Nepal to Bangladesh. GPC India didn’t
communicate to both buyer and seller the problem it faced regarding transmission and it
didn’t take any measures to mitigate the problem. Hence GPC India didn’t meet its obligation
under the PSA.
The issue being raised by the Claimant is in relation to non-transmission of electricity and not
non-supply of electricity, and as such GPC India was a necessary and proper party in the
present Arbitration being the Transmission Licensee in terms of the PSA. 23 . The respondent
is under no contractual obligation to arrange for the delivery of electricity at an inter-
connection facility at the border of Bangladesh. 24 It is evident from the PSA that the
transmission obligations were with GPC India and not with the Respondent. Since, the
dispute arose as a result of GPC India’s failure to meet its obligation under the PSA, claimant
was required to join it as a respondent to this arbitration.
14
Smith v Hughes (1871) LR 6 QB 597, para 607 (Cockburn CJ).
15
Civil code 2074, s 532(1).
16
Fraport v Philippines I, Decision on Annulment, 23 December 2010, paras 197–208, 218–247;
Tulip v Turkey, Decision on Annulment, 30 December 2015, paras 80–83, 145.
17
Civil code 2074, s 532(2).
18
State Bank of India v M/s. Shree Ram Urban Infrastructure Ltd., (2019) SCC OnLine SC 1540, para 21.
19
PSA, 2020, clause 20.
20
PSA, 2020, Clause 20.1.
21
PSA, 2020, Clause 20.2.
22
PSA, 2020, Clause 20.15.
23
Response to the NoA, Para 16.
24
10 | P a g e
D. GPC INDIA VIOLATED THE PRINCIPLE OF GOOD FAITH AND FAILED TO
MAINTAIN THE SANCTITY OF CONTRACT.
One of the cornerstones of contract law, Pacta Sunt Servanda, referred as a sanctity of
contract, entails those obligations in terms of must be honoured because the contract was
entered into voluntarily. It, on the reference of contract law, implies that the clause and
provisions of contract must be abided, and agreement must be kept in a good faith. In giving
effect to this principle, the courts are required to recognize the sanctity of a contract and
therefore, they must strictly rely on the provisions of the contract when determining the
enforceability of the contract. The principle requires parties “to deal honestly and fairly with
each other (…) and to refrain from taking unfair advantage”. Unjustifiably breaking off the
negotiations, creating abnormal delays, disregarding the agreed procedures, or systematic
refusal to take into consideration adverse proposals or interests can amount to breaches of
good faith.25 Two elements make up this obligation: the determination of the object to be
performed in good faith, as well as the manner in which the obligation is performed. Being
fundamental party to the PSA and the PTA, GPC India was required to fulfil its obligations
mentioned in these agreement in the manner set forth in them.
2. GPC INDIA DID NOT HONOR THE POWER TRANSMISSION AGREEMENT.
In February 2016, Respondent signed a PTA to transmit surplus electricity from Nepal to
India and other countries for a consideration.26 The parties have agreed to jointly undertake
the development of necessary infrastructure to facilitate the transmission of electricity. 27 In
accordance with applicable law, the transmission of electricity under this Agreement is
subject to the ownership and control requirements of the transmission facilities within each
Party's respective jurisdiction.28
Each Party shall be responsible for complying with all laws and regulations governing the
ownership and control of the transmission facilities within their respective jurisdiction. 29 As
the company from Nepal, Respondent does not have ownership or control over the
transmission facilities in India, which fall within the purview of GPC India's responsibilities.
It is the responsibility of GPC India to adhere to the laws of India as well. It is well
established that a party who suffers damages as a result of a breach of contract has a duty to
mitigate those damages, that is to say that the wrongdoer cannot be called upon to pay for
avoidable losses which would result in an increase in the quantum of damages payable to the
injured party.30
In the event that a change in law affects the ownership or control of the transmission
facilities, the Parties shall negotiate in good faith to amend this Agreement accordingly to
comply with the new requirements 31 which hasn’t been initiated. The principle of good faith
requires the parties to a contract to deal honestly and fairly with each other, and to act in a
25
Lac Lanoux Arbitration (France v Spain) (Award) [1957] XII RIAA 281.
26
NoA, para 5.
27
Claimant exhibit 1, Para 3.
28
PTA, 2016, Clause 7.6.1.
29
PTA, 2016, Clause 7.6.2.
30
Redpath Industries Ltd. v. Cisco (1993), 163 N.R. 161 (FCA).
31
PTA, 2016, Clause 7.6.3.
11 | P a g e
consistent and equitable manner.32 It binds the parties to cooperate, comply with reasonable
demands, and provide all information required for each party to exercise its rights and
perform its obligations.33 The event of force majeure happened within the jurisdiction of GPC
India. GPC India’s failure to meet its obligations under the PTA agreement has resulted to
this force majeure event. Hence. GPC India should be joined as a respondent in this
arbitration.
3. GPC INDIA DID NOT FULFIL ITS OBLIGATION UNDER ELECTRICITY

ACT-2003.
GPC India is a deemed transmission licensee in terms of the Indian Electricity Act, 2003,
being the Central Transmission Utility.34 Each Contracting Party shall observe any
obligations it has entered into with an Investment of an Investor of any other Contracting
Party.35 Under Section 40 of electricity act 2003 transmission licensee’s duties are mentioned.
It shall be the duty of a transmission licensee - (a) to build, maintain and operate an efficient,
co-ordinated and economical inter-State transmission system or intra-State transmission
system, as the case may be36 (c) to provide non-discriminatory open access to its transmission
system for use by- (i) any licensee or generating company on payment of the transmission
charges; or (ii) any consumer as and when such open access is provided by the State
Commission under sub-section (2) of section 42, on payment of the transmission charges and
a surcharge thereon, as may be specified by the State Commission: 37 It shall be the duty of the
holder of a transmission licence in respect of a particular area to develop, maintain and
provide to the consumers or the licensees as the case may be or any other person an efficient,
co-ordinated and economical system of electricity transmission.38
As a transmission licensee under electricity act-2003, GPC India have the duties to maintain
and operate the transmission network in an efficient and economical manner, provide non-
discriminatory open access to the transmission system to the seller, arrange for metering and
energy accounting, dispatch power as directed by the Load Despatch Centres, share
information with seller for secure grid operation, ensure adequate transmission capacity for
power flow from seller and comply with directions of Load Despatch Centres for grid
stability and security, which it failed to fulfilled.
4. GPC INDIA FULFILS JOINDER REQUIREMENT UNDER SIAC.
SIAC under its rule 7 setups the joinder requirement for a party to an arbitration. The joinder
provisions under the 2021 UNCITRAL Rules are found at Article 17(5), which provides that
the arbitral tribunal may, at the request of any party, ‘allow one or more third persons’ to join
an ongoing arbitration provided that the person is also a party to the arbitration agreement.
32
CMS Gas Transmission Co. v. Argentina, ICSID Case No. ARB/01/8, Award, 12 May 2005, Para 279.
33
Himpresit GE v. Pakistan [ICSID Case No. ARB/03/8], para 24.
34
NoA, para 3.
35
ECT 1995, Art. 10(1).
36
Electricity act-2003, s 40(a).
37
Electricity act 2003, s 40(s).
38
Electricity (Supply) Act, 1948 s 17(1).
12 | P a g e
The tribunal may deny joinder if it finds that joinder will cause prejudice to any of the
parties.39 Joinder may also occur when, at a later stage of the proceedings, the claimant
decides that a third party should become an additional respondent.40
Prior to the constitution of the Tribunal, a party or non-party to the arbitration may file an
application with the Registrar for one or more additional parties to be joined in an arbitration
pending under these Rules as a Claimant or a Respondent, provided that any of the following
criteria is satisfied:41
a. the additional party to be joined is prima facie bound by the arbitration agreement; or
b. all parties, including the additional party to be joined, have consented to the joinder of the
additional party.
A. THE ADDITIONAL PARTY TO BE JOINED IS PRIMA FACIE BOUND BY THE

ARBITRATION AGREEMENT.
This arbitration derives its jurisdiction from the clause 48 of the PSA. Any dispute arising out
of or in connection with this contract, including any question regarding its existence, validity
or termination, shall be referred to and finally resolved by arbitration administered by the
Singapore International Arbitration Centre ("SIAC") in accordance with the Arbitration Rules
of the Singapore International Arbitration Centre, 6th Edition, 1 August 2016 ("SIAC Rules
2016") for the time being in force, which rules are deemed to be incorporated by reference in
this clause.42
GPC India is the party to the PSA as a transmission licensee and was involved in negotiation
and preparation of this agreement. 43 A party who signs a contract is bound to fulfil its terms,
even if they later change their mind.44 When an arbitration clause is included in a contract, the
same is severable from the main contract and remains enforceable until disputes pertaining to
the contract or performance of the contract have been resolved.45
In case any agreement provides for the settlement of disputes through arbitration, the
disputes connected with that agreement or with issues coming under that agreement shall be
settled through arbitration according to the procedure prescribed in that agreement. 46 Being
the party to the PSA, GPC India is bound by it. For the prima facie test the institution does
not need to determine the existence and scope of the arbitration agreement but only to
establish the existence of a valid arbitration clause covering the issue at dispute and the third
party.47 Hence, GPC India meets the additional party to be joined is prima facie bound by the
arbitration agreement requirement under SIAC.
39
United Nations Commission on International Trade Law, Arbitration Rules (2021), Article 17(5).
40
Voser & Schellenberg 2009, p. 346
41
SIAC Rules (6th edn, 2016) r 7.
42
PSA, 2020, Clause 48.
43
PSA, 2020, Clause 1.1.12.
44
McGregor v. National Surety Co., 219 N.Y. 311 (1927).
45
Yakshyadhoj Karki v. High Court Patan and others, NKP (2076), No.10, D.N. 10369.
46
Arbitration Act, 2055, s 3.
47
John Choong, Mark Mangan & Nicholas Lingard, A Guide to the SIAC Arbitration Rules 117, 120 (2 ed.
2018).
13 | P a g e
B. ALL PARTIES, INCLUDING THE ADDITIONAL PARTY TO BE JOINED,
HAVE CONSENTED TO THE JOINDER OF THE ADDITIONAL PARTY.
Under SIAC rules, parties can be joined either prior to or following constitution of the
tribunal with the consent of all parties (including the additional party sought to be joined) or,
in the absence of consent, where the additional party is prima facie bound by the arbitration
agreement.48
The main idea behind the joinder of either consenting or non- consenting third parties to an
arbitral proceeding is to increase the procedural efficiency and ensure the consistency of
arbitration.49 Article II of the New York Convention defines the arbitration agreement as an
agreement between parties agreed to resolve possible future disputes between parties
regarding defined legal relationships that could be contractual or non-contractual.50 The same
rule is reflected in Article 7 of UNCITRAL Model Law on International Commercial
Arbitration.51 The existence of the consent to arbitrate arising disputes is determined by the
courts on a case basis. Overall, the various jurisdictions applied New York Convention to
find the consent in cases where a party participated in negotiations of the contract,
performance of the contract, both negotiation or performance of the contract, had a
knowledge of the arbitration agreement, or participated in arbitral proceeding without
objection.52
The issue being raised by the Claimant is in relation to non-transmission of electricity and
not non-supply of electricity, and as such GPC India was a necessary and proper party in the
present Arbitration being the Transmission Licensee in terms of the PSA. 53 Under the
dispute resolution clause of the PSA, GPC India has agreed for arbitration for any dispute
arising out of or in connection with this contract, including any question regarding its
existence, validity or termination.54
Where additional parties are sole parties to some of the arrangements from which the
dispute arises, they should be joined to avoid multiplicity of proceedings and enable all
connected issues to be determined in one arbitration. 55 Joinder may also occur when, at a
later stage of the proceedings, the claimant decides that a third party should become an
additional respondent.56
A party is considered necessary if its rights and obligations are so closely connected to those
of the actual parties that a binding adjudication cannot be made in its absence.57 Joinder
should be permitted when the presence of other parties is "necessary to enable the Tribunal to
SIAC Rules 2016, Rules 7.1 and 7.8.
48
49
Gary Born, Consolidation, Joinder and Intervention, in International Commercial Arbitration 2793 (Gary
Born 3 ed. 2021) 2777-2778.
50
United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards art. II, New
York, Jun. 10, 1958.
UNCITRAL Model Law on International Commercial Arbitration, UN Doc A/40/17, art. 7 (2006).
51
52
UNCITRAL Secretariat Guide on the Convention on the Recognition and Enforcement of Foreign
Arbitral Awards (New York, 1958), 43-47 (2016).
53
54
PSA, 2020, Clause 48.
55
Attorney General of Belize v. Belize Telecom Ltd, [2009] UKPC 10, para. 17.
56
Voser & Schellenberg 2009, p. 346.
57
Vivendi v. Argentina, ICSID Case No. ARB/97/3, 2002, para. 96.
14 | P a g e
effectually and completely resolve all matters in dispute."58 The execution of the joinder is
left to the discretion of the arbitral tribunal and further review of the decision by the national
courts.59 Therefore, we respectfully request this tribunal to declare claimant was required to
join GPC India as a party to this present arbitration and recognize GPC India as a party.
ISSUE II: WHETHER OR NOT THERE EXISTED SITUATION OF FORCE

MAJEURE THAT PREVENTED THE RESPONDENT FROM DISCHARGING ITS
2020?
As per the Black Law Dictionary, Force Majeure constitutes, “contractual provision
allocating the risk of loss if performance becomes impossible or impracticable, especially as a
result of an event or effect that the parties could not have anticipated or controlled.”60
Force majeure is a French term that literally means “greater force.” It is related to the concept
of an act of God, an event for which no party can be held accountable, such as a hurricane or
a tornado. However, force majeure also encompasses human actions, such as armed
conflict.61 Generally speaking, for events to constitute force majeure, they must be
unforeseeable, external to the parties of the contract, and unavoidable.
The ICC Force Majeure Clause 2020 provides the following general definition of force
majeure:62
“Force Majeure” means the occurrence of an event or circumstance (“Force Majeure Event”)
that prevents or impedes a party from performing one or more of its contractual obligations
under the contract, if and to the extent that the party affected by the impediment (“the
Affected Party”) proves:
a) that such impediment is beyond its reasonable control; and
b) that it could not reasonably have been foreseen at the time of the conclusion of the
contract; and
c) that the effects of the impediment could not reasonably have been avoided or overcome by
the Affected Party.
Force majeure clauses typically include a list of qualifying events 63 that establish when the
clause can be relied on, such as also those mentioned above. Thus, determining whether
change in the interpretation and application of any law would be considered a Force Majeure
event which is clearly stated on Power Sales Agreement, such as whether the contract
58
Methanex Motunui v. Spellman, [2004] 3 NZLR 95 (CA) (N.Z.), para. 43.
59
Gary Born, Parties to International Arbitration Agreements, in International Commercial Arbitration 1525
(Gary Born 3 ed. 2021).
60
Black’s Law Dictionary (9th Ed.).
61
https://www.investopedia.com/terms/f/forcemajeure.asp (last visited: June 2, 2023).
62
The ICC Force Majeure Clause 2020 Page 1 & 2.
63
FIDIC, Conditions of Contract for Construction, 2nd ed., 2017 (FIDIC Red Book); Clause 18.1.
15 | P a g e
specifically states that the clause applies in change in the interpretation of application of any
law of India or Nepal after the date of this Agreement.
Accordingly, it is advisable that the Agreement need to be interpretated by the tribunal at
such in the writing agreement between Applicant and Respondent contain a Force Majeure
clause that is sufficiently drafted in clear and concisely to protect a business’s interests in the
face of such an event to both parties.
1. THE EVENTS AND CIRCUMSTANCES FULFILLS THE PREREQUISITIES OF

THE FORCE-MAJEURE.
A Force Majeure event generally have been defined as an event which is out of control,
unforeseeable and the events which cannot be contemplated or provided for by the party to a
contract of the party claiming it. The term “Control” as per the Black’s Law Dictionary has
been defined as “To exercise restraining or directing influence over; regulate; restrain;
dominate; curb; to hold from action; overpower; court, teract; govern” or “Power or authority
to manage, direct, superintend, restrict, regulate, direct, govern, administer, or oversee64. By
itself, the term force majeure has been construed to cover acts of God; war and strikes, even
where the strike is anticipated; embargoes, refusals to grant licenses; and abnormal weather
conditions.65.
It is submitted that the definition of Force Majeure as provided under the Clause 21.1 of the
contract is an inclusive definition enumerating the essentials of a Force Majeure event66. The
change in law in the form of an amendment to the Electricity Act 2003 on March 2023, by
the Government of India regarding the transmission service provided by Indian entities to
foreigners greatly impeded the performance of our contractual agreement. This concept
denotes change in law that can neither be controlled nor anticipated. Force majeure is often
considered beyond a party’s control, such as enumerated during the construction of contract
as well as which contains unforseeability.
Prior to the decision in Taylor vs. Caldwell,67 the law in England was extremely rigid. A
contract had to be performed, notwithstanding the fact that it had become impossible of
performance, owing to some unforeseen event, after it was made, which was not the fault of
either of the parties to the contract. This rigidity of the common law in which the absolute
sanctity of contract was upheld (Pacta sunt servanda) was loosened somewhat by the
decision in Taylor vs. Caldwell in which it was held that if some unforeseen event occurs
during the performance of a contract which makes it impossible of performance, in the sense
that the fundamental basis of the contract goes, it need not be further performed, as insisting
upon such performance would be unjust.
In the instant case, the examples of Force Majeure as provided in the Clause 21.1 of the
contract includes events such as any act of war, events attributable to radiation or
64
Bryan A Garner(ed), Black’s Law Dictionary (11th edn, West 2019).
65
Matsoukis v Priestman & Co [1915] 1 KB 681; Lebeaupin v Richard Crispin [1920] 2 KB 714; Coloniale
Import Export v Loumidis Sons [1978] 2 Lloyd’s Rep 560; Toepfer v Cremer [1975] 2 Lloyd’s Rep 118.
66
cf Baker (n 35) 499.
67
Taylor vs. Caldwell (1861-73) All ER Rep 24.
16 | P a g e
contamination, etc. evidently which are neither controllable nor avoidable. Similar is the
change in law done by Government of India is unforeseeable and out of control.
Thus, it can be clearly held that the changes in law in the form of amendment to Electricity
Act, 2003 constitute events of exceptional nature and cannot be controlled by the defendant.
A. THE AMMENDMENT IN ELECTRICITY ACT FULFILLS THE CHANGE IN

LAW.
In any commercial contract, ideally, the contract price is fixed keeping in mind the current
legal rights and obligations of the parties. However, a long-term contract is more susceptible
to the risk of an unexpected change in the legal or regulatory framework which was not
foreseeable by the parties at the time of execution of the contract. Such changes might impact
the operating cost or capital expenditure of the project execution and render the project
execution under the contract commercially unviable.
To account for such unforeseeable contingencies, a traditional commercial contract usually
contains a Change in Law clause to safeguard the interests of the contractor by restoring it to
the same position as it would have been if such a change would not have occurred. Generally,
the change in law clause would deal with the enactment of any law including repeal,
modification or re-enactment, change in interpretation or application of any law by a final
judgment of a court of record or any change in rates under Tax law.
The change in law sometime beyond the reasonable control of the parties involved and can
significantly alter the economic and legal landscape under which contracts were initially
formed. When such changes occur and have a severe impact on contractual performance, the
principal allows for the possibility of invoking force majeure to protect the affected party
right and mitigate the adverse effects of change in law.68
Considering the situation, it’s evident from the bare reading of the case study itself that the
change in the law in the form of an amendment to the Electricity Act, 2003 regarding
transmission services provided by Indian entities to foreigners could not reasonably be
foreseen as the concern of sovereign nation cannot be foresighted. Thus, it can clearly be said
that the aforesaid events and circumstances were not force able making it impossible for the
defendant to fulfil contractual terms.
B. THE AMMENDMENT WAS UNFORESEEABLE DURING THE

CONSTRUCTION OF CONTRACT
The terms ‘unforeseen circumstance,’ and ‘unforeseeability,’ may be evaluated together or

separately. Unforeseen circumstance may be considered as the occurrence of a situation that
was unforeseeable at the moment of execution of the contract, or it can be seen as the
occurrence of a certain unpredictable event or situation. Thus, unforeseen circumstances that
the parties would never imagine to have occurred during the execution phase of the contract,
and unforeseen circumstances where there was a possibility for something to come up, but
AES Summit Generation Limited and AES-Tisza Erömü Kft v. The Republic of Hungary, ICSID Case No.
68
ARB/07/22.
17 | P a g e
the manner of its occurrence, and its effects upon the operations carried out was unexpected,
may both be considered within the scope of the term unforeseen circumstance.69
It is generally argued that a party is entitled to relief under a force majeure clause in respect
of an exceptional event if, when such party entered into the contract, could reasonably have
been expected to take the risk of that event into account and to have made contingency plans
to deal with it.70According to French law, one of the necessary elements of force majeure is
imprévisibilité—the event must not be reasonably foreseeable, for the relevant party ought
then to have taken steps to prevent or avoid it.71 Thus, it can be said that an event of
exceptional nature which was not force able to a party can be claimed as a Force Majeure
event.
In Great Elephant Corp v Trafigura Beheer BV (‘The Crudesky’)47 Article 21 of the General
Conditions of the Nigerian National Petroleum Corporation (‘NNPC’), the force majeure
clause, stated: ‘Neither the Seller nor the Buyer shall be held liable for failure or delay in the
performance of its obligations under this Contract, if such performance is delayed or hindered
by the occurrence of an unforeseeable act or event which is beyond the reasonable control of
either party (“Force Majeure”) …72
Considering this case in relation to change in interpretation of application of law of India, do
not qualify as normal and foreseeable condition. The change in law in the form of an
amendment to the Electricity Act, 2003 regarding the transmission services provided by
Indian entities to foreigners constitutes as an event that has arisen without any expectations or
have not foreseen at the time of agreement.
2. THERE IS CASUAL RELATION BETWEEN CHANGE IN LAW AND PARTY’S

NON-PERFORMANCE.
The celebrated judgment of Wilson vs Tenants (1917)73 where Wilson entered into a contract
with Tenants for a supply of large amount of Magnesium Chloride. Tenants were whole seller
of Magnesium chloride and they obtained Magnesium chloride from major supplying country
Germany. In 1914 war broke out between England and Germany. As a result, it was illegal in
England to trade with Germany. Tenants then wrote to Wilson suspending the deliveries
under the contract.
Wilson then sued Tenants for not delivering Magnesium chloride saying that the deliveries
should not have been suspended because performance was possible. However, the clause in
contract said that deliveries could be suspended if supply was prevented or hindered by cause
of war. The house of Lord by a six to one majority said yes, the appellants could not have
trade with Germany and hence Force Majeure clause suspends or ends the contract in case of
a disaster can protect a party from the duty to meet its obligations under a contract.
69
Schneider, Micheal E.: “A Typology of Risk Allocation – The Example of FIDIC Suite of Contracts”, in
Atamer, Yeşim M./ Süzer Baş, Ece/Geisinger, Elliott: Uluslararası İnşaat Sözleşmelerinde Beklenmeyen Hal
Kavramı, On İki Levha, p. 17.
70
Vienna Convention on Law of Treaties (signed 23 May 1969, effective 27 January 1980) VCLT art 79; Judah
Philip Benjamin, Sale of Goods (4th edn, 1992) para 8.
71
General Construction Limited v Chue Wing [2013] UKPC 30.
72
Symons Ben, Force Majeure and Frustration in Commercial Contract, 2022, BPL, Pg No.4
73
Tennants (Lancashire) Ltd v CS Wilson & Co Ltd [1917] A.C. 495 (21 June 1917).
18 | P a g e
Where a contracting party fails to perform one or more of its contractual obligations because
of default by a third party whim it has engaged to perform the whole or part of the contract,
the contracting party may involve Force Majeure only to the extent that the requirements are
established both for the contracting party and for the third party 74. Impossibility excuses a
party’s performance only when the destruction of the subject matter of the contract or the
means of performance makes performance objectively impossible.75
Since the respondent has been dependent to GPC India (Grid Power Corporation) for the
transmission of electricity which couldn’t be done due to the change in law. Hence, the
defendant has an advantage to invoke Force Majeure.
In Seadrill Ghana v Tullow Ghana,76 it was stated that, the party relying on a force majeure
clause must establish a causal link between the force majeure event and the delay or
impediment to performance. Further, depending on the terms of the contract, a party might
only be entitled to relief where the force majeure event was the sole cause of the delay or
impediment—i.e. relief may not be available if the force majeure event was only a concurrent
cause of delay/impediment.
A. THE CONTRACTUAL TERMS PROVIDE RESPONDENT UNDENIABLE

OPPORTUNITY TO EXEMPT FROM PERFORMANCE.
A failure of performance only in the case of breach of condition entitles the innocent party to
treat himself as discharged from further liability under the contract. Where a contractual term
is on the proper interpretation of the contract, a warranty, it can never give rise to a right to
repudiate the contract.77 To be qualified as a condition precedent, the necessity must "go to
the root of the contract", "frustrate the commercial purpose" of the contract or "deprive the
party not in default of substantially the whole benefit" of the contract.78
The Force Majeure clause in a contract exists to exclude liability where unforeseen events
beyond a party's control prevent the performance of its contractual obligations through legal
or physical restraint79.
The principle of “substantial performance” may be relevant when a contractor’s performance
is in some way deficient, through no wilful act of the contractor or due to reasons for which
the contractor is not responsible yet is so nearly equivalent that it would be unreasonable for
the other party to deny the payment agreed upon. If a contractor successfully demonstrates
“substantial performance”, the other party may remain obliged by a court to comply with its
payment obligations, deducted however with damages incurred as a result of the deficiencies
in the performance of the other party80
74
ICC Force Majeure Clause 2020, para.2.
75
Broadway LLC v. Bold Food, LLC, 2020 N.Y. Slip Op. 34017 (N.Y. Sup. Ct. Dec. 3, 2020).
76
Seadrill Ghana Offshore Ltd v Tullow Ghana Ltd [2018] EWHC 1640 (Comm), 179 ConLR 51
77
Emden, Building Contracts and Practice (9th edn, Lexis Nexis 2014) 552.
78
Federal Commerce and Navigation Co Ltd v Molena Alpha Inc [1979] AC 757 (HL); Hong Kong Fir
Shipping Co Ltd v Kawasaki Kisen Kaisha Ltd [1962] 2 QB 26.
79
Yrazu v Astral Shipping Company (1904) 20 TLR 153.
80
(Club Atlético Mineiro v. FC Dynamo Kyiv, Arbitration CAS 2015/A/3909, Award of October 9, 2015)
19 | P a g e
Clause 20 there is the provision related to the obligation of Transmission license which
includes but are not limited to:
20.2. To immediately communicate to both Buyer and Seller in the event any hindrance to
transmission of the deliverables occurs. [......]
The transmission licensee being a responsible party to the contract has exempted from
fulfilling its aforementioned obligations which has substantially affected the flexibility and
ability of claimant to fulfil the obligation in good faith. The transmission obligation under the
PSA was with the GPC India but the party failed to deliver according to the contractual terms
even after the recipient of the advance payment which intends the malicious and fraudulent
intention of the transmission licensee.
Under French law, the defendant would not have been subject to claims of damages "when,
by means of a superior force (force majeure) or an accident, the obligor has been prevented
from giving or doing that which he was bound to give or do".81
On the fact of the case, the defendant due to Change in Law to Electricity Act, 2003
regarding the transaction services provided by Indian entities to foreigners, was not able to
transmit power to claimant.
Thus, from the deductive reasoning of a fore mentioned cause and effect thereof constitutes a
situation of Force majeure, which excuses defendant form the non- performance of
obligation. The defendant derives the right to be excused from the performance of obligation
by the Clause 21.1 of contract. So, the act of suspension due to force majeure event seems
valid and lawful.
3. THE UNFAVOURABLE SITUATION FULFILS THE DEFINITORY CRITERIA

OF FORCE MAJEURE OF THE CONTRACT.
Though there is no any precise legal definition of force majeure, and so the question of what
constitutes a force majeure event will turn on interpretation of the contract. However,
National Civil Code 2074 defines it as a fundamental change in circumstances 82, upon which
a party can discharge from its duty. Additionally, the code has provisioned that at the time of
creation of contract, any obligation of such nature as is impossible for fulfilment has been
created, such an obligation shall not be required to be fulfilled 83. The arbitral tribunal derives
its authority to declare any event as a force majeure from the contractual clause.
A. THE CONTRACTUAL LANGUAGE OF FORCE MAJEURE
In English law, Force Majeure is an event which constitutes a legal or physical restraint on
the performance of the contract (whether or not occurring through human intervention) which
is both unforeseen and irresistible84. In re Comptoir Commerciale Anversois and Power, Son
81
Jacobs v Credit Lyonnaise (1884) 12 QBD 589, 601 (CA).
82
Civil Code, 2074, s.531.
83
Civil Code,2074, s.502.
84
Clive M Schmitthoff, Export Trade: The Law and Practice of International Trade (9th edn, 1990) 199.
20 | P a g e
& Co85. where the clause in issue provided: “In case of prohibition of export, force majeure,
blockade or hostilities preventing shipment, this contract . . . shall be at an end.” The Court of
Appeal held that, as used in that clause, “prevention” meant either physical or legal
prevention of shipment.
While originally read into contracts, force majeure clauses are now written into contracts for
the purpose of allocating risk in circumstances where there is an event or effect the parties
could not have anticipated or controlled.86 One of the canons of construction, the ejusdem
generis principle, provides that where a contractual term contains a list of specific words with
some common characteristic and these words are followed by a general word the meaning of
the general word will be confined to cover the same type of subject matter as that covered by
the specific words.87
“According to the general rules and principles of law, facts pleaded have to be proven by
those who plead them, i.e. the proof of facts, which prevent the exercise, or extinguish, the
right invoked, must be proven by those against whom the right in question is invoked. This
means, in practice, that when a party invokes a specific right it is required to prove such facts
as normally comprise the right invoked, while the other party is required to prove such facts
as exclude, or prevent, the efficacy of the facts proved, upon which the right in question is
based.88
Thus, considering the “Change in Law” as general word, the change in the interpretation of
application of India as amendment to the Electricity Act, 2003 regarding the transmission
services provided by India entities to foreigners could be constituted as a special word
establishing the situation as Force Majeure.
In Energydog v CERC89, the honourable judge, when defining force majeure, referred to a
statement in English Common Law which stated that change in law are cases of force
majeure.
B. DETERMINATION OF "CHANGE IN LAW " ARE EXPRESSLY STATED

UNDER PSA.
The Presumed Force Majeure Events commonly qualify as Force Majeure. It is therefore
presumed that in the presence of one or more of these events the conditions of Force Majeure
are fulfilled, and the Affected Party need not prove the conditions (i.e., that the event was out
of its control and unforeseeable), leaving to the other party the burden of proving the
contrary. The party invoking Force Majeure must in any case prove the existence of condition
i.e., that the effects of the impediment could not reasonably have been avoided or overcome.
Determine of "Change in law” are expressly stated as events of force majeure in contract 90 .
Contract embodies a clause drafted so that the change in Electricity Act, 2003 of India could
constitute an event of force majeure (e.g. simple indicative list of events constituting force
85
Geddling v Marsh [1920] 1 KB 668; Tsakiroglou & Co Limited v Noblee Thorl GmbH [1962] AC 93.
86
FORCE-MAJEURE CLAUSE, Black's Law Dictionary (11th ed. 2019).
87
SS Magnhild v McIntrye Bros & Co [1920] 3 KB 321.
88
Ibid.
89
Energydog v Central Electricity Regulatory Commission and Ors. Etc. [2017].
90
PSA, 2020, Clause 21.1.
21 | P a g e
majeure). The parties to a contract may therefore validly modify the definition provided in
Clause 21.1 of the contract, and explain extending its definition by clearly stated as “ Force
majeure event shall be a Political Force Majeure Event or and other force Majeure Event but
only to the extent that events or circumstances satisfies the requirements of clause 21.191.
4. PROLONGED FORCE MAJEURE CONSTITUTES A LEGAL RIGHT TO THE

RESPONDENT FOR THE TERMINATION OF CONTRACT.
Ordinarily, construction contracts will outline the grounds upon which either party may
terminate and the steps that ought to be taken to achieve lawful termination 92. Since force
majeure is a contractually defined right, the options available in the event of a force majeure
event is too specified in the contract concluded between the parties. 93. Where the duration of
the impediment invoked has the effect of substantially depriving the contracting parties of
what they were reasonably entitled to expect under the contract, either party has the right to
terminate the contract by notification within a reasonable period to the other party. 94 It
includes suspension of the obligation to perform for a given period (usually the period that
the force majeure subsists) as well as right to terminate if the force majeure event continues
beyond a specified period. i.e., prolonged force majeure.
The unforseability of the situation by the respondent also indicates upon the ‘doctrine of
frustration’ which renders that whenever the element and condition required for the
performance to be executed if exhausts then the party required to fulfil the obligation shall
get the exemption from it. The doctrine of frustration shall not be used as the defence for the
performance by the obliged party but requires that the impossibility matches with the
scenario so generated.
A. THE RESPONDENT HAS DULY FULFILLED THE LEGITIMATE

PROCEDURE FOR SERVING THE NOTICE OF FORCE MAJEURE EVENT.
Pursuant to clause 21.3.2 of PSA agreement, the DEFENDENT has served the notice of force
majeure vide its email to CLAIMANT dated on March 22, 2023 within stipulated time period
after the DEFENDENT has become aware of the force majeure event. As far as contest on
validity on notice to force majeure is concerned, it has embedded the criteria required for the
notice of force majeure.
In a case of MUR Shipping BV v RTI Ltd 95, it was stated that, the force majeure notice – A
final important consideration concerns the content of the force majeure notice, which both the
arbitral award and judgment considered. In the present case, the notice claimed force majeure
and identified the impact of sanctions on both loading and payment. The judgment confirms
91
PSA, 2020, Clause 21.1.
92
Holland v Wiltshire (1954) 90 CLR 409.
93
PSA, 2020, Clause 21.3.
94
ICC FORCE MAJEURE AND HARDSHIP CLAUSES, Para. 8, MARCH 2020.
95
EWHC 467 (Comm) [2022].
22 | P a g e
that a force majeure notice is not required to spell out the detailed case against the other
party, particularly as there is ordinarily a short timeframe in which force majeure must be
invoked. It simply needs to fulfil the purpose of a force majeure notice: to enable the
counterparty to investigate the alleged force majeure and its impact, and to challenge whether
it did in fact prevent or delay performance or whether there are other means of enabling
performance.”
ISSUE III: IF SUCH A SITUATION EXISTED, THEN WHETHER OR NOT THE

SAID SITUATION IMPACTED THE RESPONDENT’S ABILITY TO DISCHARGE
ITS CONTRACTUAL OBLIGATIONS UNDER THE POWER SALES AGREEMENT
DATED 16 JULY 2020?
1. THE SITUATION OF FORCE MAJEURE EXISTED.
The ICC Force Majeure Clause 2020 provides the following general definition of force
majeure:96
“Force Majeure” means the occurrence of an event or circumstance (“Force Majeure Event”)
that prevents or impedes a party from performing one or more of its contractual obligations
under the contract, if and to the extent that the party affected by the impediment (“the
Affected Party”) proves:
a) that such impediment is beyond its reasonable control; and
b) that it could not reasonably have been foreseen at the time of the conclusion of the
contract; and
c) that the effects of the impediment could not reasonably have been avoided or overcome
by the Affected Party.
Force majeure clauses typically include a list of qualifying events 97 that establish when the
clause can be relied on, such as also those mentioned above. Thus, determining whether a
change in law would be considered a force majeure event which is clearly stated on the
drafting and interpretation of a particular contract, such as whether the contract specifically
states that the clause applies in the situation of change in law. Accordingly, it is advisable that
contract need to be interpretated by the tribunal at such in the writing, contract between
Applicant and Respondent contain a force majeure clause that is sufficiently drafted in clear
and concisely to protect a business’s interests in the face of such an event to both parties.
The Muluki Civil Code 2074 states Discharge of contracts in the event of fundamental
changes in circumstances:98
(1) If it becomes impossible to perform a contract as a result of fundamental change in the
circumstance existed at the time of conclusion of the contract, the act according to the
contract need not be performed.
96
The ICC Force Majeure Clause 2020 Pg. 1 & 2.
97
FIDIC, Conditions of Contract for Construction, 2nd ed., 2017 (FIDIC Red Book).
98
Civil Code 2074, s. 531.
23 | P a g e
(2) Without prejudice to the generality of sub-section (1), emergence of any of the following
circumstances shall be deemed to constitute a fundamental change in the circumstance
existed at the time of conclusion of a contract:
(a) If the contract becomes illegal and thereby it cannot be performed,
(b) If it becomes impossible to perform the contract due to emergence of situations
beyond human control such as war, flood, landslide, fire, earthquake and volcanic
eruption,
(c) If the subject matter essential for the performance of the contract is destroyed or
damaged, or exists no longer, or such a subject matter could not be obtained,
(d) If the contract is so concluded that its performance depends on the personal ability,
skill or talent of a person, and the performance of the contract becomes impossible by the
reason that such a person dies or becomes insane or is incapable of performing the
contract because of physical or mental disability.
Force majeure is a provision in a contract that frees both parties from obligation if an
extraordinary event directly prevents one or both parties from performing. A non-performing
party may use a force majeure clause as excuse for non-performance for circumstances
beyond the party's control and not due to any fault or negligence by the non-performing
party. However, mere impracticality or unanticipated difficulty is not enough to excuse
performance. The clauses of force majeure are designed to absolve one or more parties from
performing contracts when the Unthinkable happens, they typically list specific events from a
"parade of horrible" and sometimes even provide a catch-all provision to cover unforeseeable
crises99.
The term “Force Majeure Event”, as used in this Agreement, shall, subject to Clause 21.2,
mean any event, circumstance or combination of events or circumstances beyond the
reasonable control of, and without the fault or negligence of, a Party occurring on or after the
date of this Agreement that materially and adversely affects the performance by that Party of
its obligations under or pursuant to this Agreement, provided that such material and adverse
effect could not have been prevented, overcome or remedied in whole or in part by the
affected Party through the exercise of diligence and reasonable care. 100 According to French
law, one of the necessary elements of force majeure is imprévisibilité—the event must not be
reasonably foreseeable, for the relevant party ought then to have taken steps to prevent or
avoid it.101
Henceforth the Change in law mentioned under Clause 22 also fulfils every necessary and
required characteristics of the event so the situation of force-majeure occurred which made it
difficult for the respondent to fulfil its obligations.
A. THE SITUATION WAS BEYOND THE REASONABLE CONTROL OF THE

PARTY.
The change in law sometime beyond the reasonable control of the parties involved and can
significantly alter the economic and legal landscape under which contracts were initially
99
https://www.venable.com/insights/publications/2020/04/five-interesting-force-majeure-cases-from (Last
visited: May 24, 2023).
100
PSA Agreement, Clause 21.1.1.
101
General Construction Limited v Chue Wing [2013] UKPC 30.
24 | P a g e
formed. When such changes occur and have a severe impact on contractual performance, the
principal allows for the possibility of invoking force majeure to protect the affected party
right and mitigate the adverse effects of change in law.102 A Force Majeure event generally
have been defined as an event which is out of control, unforeseeable and the events which
cannot be contemplated or provided for by the party to a contract of the party claiming it. The
term “Control” as per the Black’s Law Dictionary has been defined as “To exercise
restraining or directing influence over; regulate; restrain; dominate; curb; to hold from action;
overpower; court, teract; govern” or “Power or authority to manage, direct, superintend,
restrict, regulate, direct, govern, administer, or oversee”103
The Indian parliament on 20th March 2023 passed the heated Electricity Bill amendment
whereby the Sec. 38(3) of the act was amended. The amendment consisted that the central
transmission utility shall not authorize the use of any Indian transmission lines by a foreign
seller of electricity which is not substantially owned or effectively controlled by Indian(s) or
an Indian entity A force majeure clause referring to compliance with government requests
required such requests to be independent of the affected party and beyond its control. 104The
Respondent is a company incorporated under the companies act 2063 in Nepal. The share
division of the company is 50% with the transmission licensee GPC India, 10% with the
NEPSE and 40% with NEA.
The facts are silent upon the criteria and provision required to maintain the effective control.
The value of percentage cannot be taken as sole criteria for lightning up the effective control
by any party. The majority in general is (50%+1). So, as far as the claim of the claimant is
concerned regarding the effective control and ownership it is based upon the unmatched and
undisclosed facts and statements which simply can’t be undertaken.
“Acts of God, acts of governmental authority, hurricanes, strikes, labour conditions beyond
seller's control, or 'any other similar causes not within Seller's control.” 105 Indian
governmental authority is the sovereign and independent government authority. “The
freedom of the nation has its correlate in the sovereignty of the nation. Political sovereignty is
the assertion of the self-determinate will of the organic people, and in this there is the
manifestation of its freedom. It is in and through the determination of its sovereignty that the
order of the nation is constituted and maintained.” 106. A State has the right to enact, modify
or cancel a law at its own discretion. Save for the existence of an agreement, in the form of a
stabilization clause or otherwise, there is nothing objectionable about the amendment brought
to the regulatory framework existing at the time an investor made its investment.107
The main case in the common law world to have considered the meaning of ‘authority’ was
the Australian High Court decision of Federal Commission of Taxation v Silverton Tramway
Co Ltd.28 Dixon CJ espoused that: ‘The word “authority” has long been used to describe a
body or person exercising power or command. No doubt this has come about by a transfer of
meaning from the abstract conception of power or command to the body or person possessing
it. But in relation to such a public affair as public transport the use of the word “authority” as
a description of a person or body implies he or it is an agency or instrument set up to exercise
control or execute a function in the public interest whether as an emanation of the general
102
Ibid
103
Bryan A Garner(ed), Black’s Law Dictionary (11th edn, West 2019).
104
Okta Crude Oil Refinery AD v Mamidoil- Jetoil Greek Petroleum Co SA [2003] EWCA Civ 1031.
105
Home Devco/Tivoli Isles LLC v. Silver, 26 So.3d 718, 722.
106
Chisholm v. Georgia, 2 Dall. 455, 1 L. Ed. 440: Union Bank v. Hill, 3 Cold. (Tenn.) 325;
107
Parkerings v. Lithuania, ICSID, Case No. ARB/05/08, para. 344
25 | P a g e
government or as an adjunct of local government or as a specially constituted officer or
body’108
A supreme and sovereign legislation of a country has every bits and pieces of right to amend,
alter or repeal the law as per the need. The claimant’s claim of the creation of amendment
was the situation aroused after the biding is irrelevant and just some wordplay to constitute
the claim. States enjoy regulatory freedom, stemming from their very identity as sovereign
actors on the international scene.109 In Mamidoil-Jetoil Greek Petroleum Company SA, Moil-
Coal Trading Company Ltd v Okta Crude Oil Refinery AD 110 Okta largely defended the
matter on the basis that this alleged direction constituted a force majeure event under an
annex in the contract that neither party would be responsible for damage caused by a failure
to perform the contract if the failure to perform is attributable to ‘acts or compliance with
requests of any governmental authority’
So, the acts of a sovereign and supreme legislation cannot be within the scope and control of
the foreign company so the said situation of change in law was beyond the reasonable
country.
B. ABSENCE OF FAULT OR NEGLIGENCE ON THE PART OF THE

RESPONDENT IN THE ORIGINATION OF SAID CIRCUMSTANCES.
The affected Party shall give the non-affected Party notice, as soon as is reasonably
practicable after it has occurred (but in any event no later than 5 Business Days after it has
occurred), of the Force Majeure Event and as soon as is reasonably practicable give further
notice containing information adequate to justify the claim and advise the steps and time
necessary to overcome such Force Majeure Event.111
The respondent had provided the notice of occurrence of the force majeure event within two
days. The event occurred on 20th March and Respondent halted the supply from the next day
and mailed the same of on 22nd March.
No relief, including the extension of performance deadlines and the term of this Agreement,
shall be granted to the affected Party pursuant to Clause 21.3.1:112
(a) unless and until the affected Party has given the non-affected Party notice of the
occurrence of the Force Majeure Event in accordance with Clause 21.3.2(b);
The respondent has made no default in the fulfilment of the obligation under the claim benefit
of force-majeure and endeavoured upon the steps completely in respective manner. The said
situation wasn’t the result of the sheer negligence and fault of the respondent as afore
mentioned the bill it’s amendment and debate falls within the concern and jurisdiction of the
concerned legislature so the respondent can’t relate to it for the communication and
negotiation.
The respondent had the PSA agreement with the GPC India and Claimant in common but the
PTA was signed between the GPC India and respondent whereby the supply of the electricity
108
Taxation v Silverton Tramway Co Ltd [1953] 88 CLR 559, per Dixon CJ at 565 and 566.
109
Nijhoff investment law, page no: 8
110
Mamidoil-Jetoil Greek Petroleum Company SA, Moil-Coal Trading Company Ltd v Okta Crude Oil
Refinery AD [2002] EWHC 2210 (Comm).
111
PSA, Clause 21.3.2.
112
PSA, Clause 21.3.3 (a).
26 | P a g e
outside Nepal was to be facilitated by the transmission licensee GPC India. The term
“affected party” plays significant role in this context. Clause 18.9 of the PSA sets out “To pay
50% advance of the projected transmission cost to the Transmission Licensee at the
beginning of every Nepalese Financial Year” as an obligation which duly has been fulfilled
by the respondent. So, the respondent cannot solely be tagged as non-affected party who have
the sole responsibility to mitigate the situation using reasonable and diligence care.
The situation of force majeure was created all of a sudden in behind the act amendment
where the respondent didn’t have any intention or fault to create the said situation as
respondent was in benefit from the agreement selling the surplus electricity from the project
after fulfilling the Nepalese demand.
C. NO MUTUAL COURSE OF CONTACT WITH GPC INDIA AFTER THE

COMMISSION OF EVENT.
Under clause 20 there is the provision related to the obligation of Transmission license which
includes but are not limited to:
transmission of the deliverables occurs. [......]
The respondent hasn’t recorded anything from the transmission licensee in relation to these
aforementioned obligations. The claimant hasn’t related GPC India who was a major party to
the PSA agreement because the licensee acts as bridge between the buyer and seller. The
obligation of the respondent is solely dependent upon the act and good faith of the
transmission licensee. If, in the case of a contract containing reciprocal promises, and
performance of one promise depends on the performance of the other promise, one party
cannot perform the contract because of the failure of the other party to perform his or her
promise may recover the loss or damage caused by the failure of the other party to perform
the contract113.
From the nature and circumstance of the PSA agreement it is precise and clear that the
performance of obligation by the respondent is solely dependent upon the transmission
licensee who is also a major party to a tri-partie agreement. The claimant has mentioned
about the Sec 531(3) where certain situations are mentioned whereby they exist as an
exception of the change in circumstances which includes but is not limited to: If any party to
the contract is dependent upon any third party who is not a party to the contract for its
performance, and the third party makes a default or becomes incompetent.
The sub-section here glorifies on the term third party who is not a party to contract which
stands in contrary to the Claimant Exhibit C 2 (Page no. 10 of the problem) where the buyer
is claimant and seller is the respondent and transmission licensee is GPC India who has
defaulted in the fulfilment of its obligation without any further notice and information
regarding the same. So, the lack of mutual course of contact and information about the said
situation is enough to exempt the respondent from fulfilling its contractual obligations.
2. ADHERENCE TO PROCEDURAL REQUIREMENTS IN SEEKING THE

BENEFITS OF FORCE MAJEURE.
113
Civil Code 2074, s.522(3).
27 | P a g e
To invoke an event of prolonged force majeure, the pre-requisites to termination must be
fulfilled in a fullest sense. Hereinafter, the pre-requisites of termination refer to a duly notice
of force majeure, and the requirement to meet conditioned prolonged date. The Claimant by
fulfilling such requirement has terminated the contract. Moreover, in practical terms, prime
reasoning behind insertion of such a provision is to negate illicit claims and to promptly
investigate the true extent of the Force Majeure event rather examining it several years
later.114
The PSA agreement has also quoted out some specific performance to be rendered before
claiming the benefit of force majeure under clause 21.3.2 which respondent is in belief of due
and reasonable fulfilment.
A. SERVING OF THE ADVANCE NOTICE WITHIN 2 DAYS.
The notice of force majeure can be defined as, “ A model notice that a party whose
performance under a sale of goods or services agreement has been delayed or halted by a
force majeure event can use to notify the other party under the terms of the agreement, with
explanatory notes and drafting tips.115”The extent to which a disruption that impacts
performance under the contract and is outside the parties’ control constitutes a
qualifying force majeure event is highly fact-specific and depends on the terms of the
contract, the specific facts, governing law and how courts in the relevant jurisdiction(s)
interpret force majeure provisions, among other things. In most instances, in order to excuse
a party’s performance in whole or in part, a party will be required to provide written notice of
a force majeure event.
The party affected by Force Majeure is usually obligated to provide prompt written notice to
the counterparty of the occurrence of the Force Majeure event (in reasonable detail) and the
expected duration of the event’s effect on the party. The analysis becomes fact-intensive and
dependent upon the choice of law and contract language. However, the basic principle is a
constant courts or arbitrations will hold parties to the contracts they made, and force majeure
is an exception to that rule, excusing performance in whole or in part, forever or for a limited
period, under its terms. Whether the event fits the terms becomes a primary source of
contention. If a party serves a notice and the other party accepts it, and the party who issued
the notice continues to represent that the notice is a good notice, in the words of Lord
Denning MR that party ‘cannot (later) blow hot and cold’ and seek to impugn the validity of
the notice.116
Timely notice has historically been an important contracting principle. Timely notice allows a
counterparty to attempt to mitigate, or prepare for, its own damages. Importantly, failure to
provide timely notice of a force majeure event may act as a waiver of the defence. As a result,
it is important to notify counterparties of anticipated defaults as soon as they are known. The
respondent has clearly notified the claimant via email dated 22 nd March 2023 ( Claimant
Exhibit C 4) which is within the criteria “to serve notice of force-majeure event as soon as the
event has occurred to non-affected party if reasonably possible( but in any event no later than
5 business days)”117
114
Ewan McKendrick, Force Majeure and Frustration of Contract (2nd edn, 1995) 60.
115
https://www.reuters.com/practical-law-the-journal/transactional/notice-force-majeure (Last Visited: May 24,
2023).
116
Alfred C Toepfer v Peter Cremer [1975] 2 Lloyd’s Rep 118, per Lord Denning MR at 123 and
Scarman LJ at 128.
117
PSA, Clause 21.3.2(b).
28 | P a g e
B. NON- FULFILMENT OF THE OBLIGATION BY TRANSMISSION LISENCEE
UNDER PSA
Any obligation of any party to any other party under any Agreement, of which obligation
must be performed, satisfied or fulfilled by an affiliate of such party, shall be deemed to have
been performed, satisfied or fulfilled by such party. The Parties shall take all necessary
measures to ensure the achievement of the objectives of the agreement and the fulfilment of
their obligations under the agreement.
The defendant’s performance of the contract is solely based on the performance and
assistance of the transmission licensee as aforementioned. The transmission licensee has
certain obligation under the PSA:118
20.1. To transmit electricity from the Buyer and the Seller in good faith and by ensuring
minimum transmission loss.
transmission of the deliverables occurs.
20.15. To immediately undertake mitigation measures in order to minimize transmission loss
of deliverables.
The clause 20.1 clearly resembles about maintaining the sanctity and purity of contract based
on Art.26 of the VCLT (i.e, Pacta Sunt Servenda). The transmission licensee has failed in
maintaining so by breaching the clause 20.1 and 20.2 respectively. The notice of any
hindrance to the deliverable needs to be provided to both of the buyer and seller for which the
transmission licensee has defaulted. The default of transmission licensee in providing the
claimant as the claimant hasn’t highlighted the notice hasn’t enforced the arbitration notice
against the licensee. Documents do not constitute a “material change” in circumstances as
they do not change the fact that parties “has failed” to cooperate and subsequent cooperation
does not remedy past non-cooperation.119
In Atcor Ltd v Continental Energy Marketing Ltd Kearns JA giving judgment for the Alberta
Court of Appeal, considered that the matter in issue was ‘causation’. That is, Atcor had to
show that there was a ‘causal tie’ in a substantial way between the event and Atcor’s non-
performance. Taking a broad high level view of the purpose of the force majeure clause,
Kearns JA considered that: ‘A supplier need not show that the event made it impossible to
carry out the contract, but it must show that the event created, in commercial terms a real and
substantial problem, one that makes performance commercially unfeasible.120
The failure in fulfilling the due obligation as per the agreement resembles an anticipatory
breach of contract by the transmission licensee. Anticipatory contract breach happens when
one contracting party stops performing his or her contractual obligations, causing the other
party to assume he or she does not intend to fulfil his or her part of the agreement. The
defaulting party might express this intention through his or her actions or inability or refusal
to act, such as; Obvious indication of his or her intent not to fulfil the agreement's terms
which is certain in the case of non-fulfilment of the due and reasonable step to notify about
118
PSA, Clause 20.
119
Nzabonimana’s Reply [Callixte Nzabonimana’s Reply to Prosecutor’s Response to Nzabonimana’s
Interlocutory Appeal on the Order Rescinding the 4 March 2010 Decision, 21 June 2010], paras. 9-11.
120
Symons Ben, Force Majeure and Frustration in Commercial Contract, 2022, BPL, 155.
29 | P a g e
the event by GPC India which is itself a majority state owned company and central
transmission utility under the Electricity Act 2003.
3. EMERGENCE OF THE SITUATION OF IMPOSSIBILITY OF PERFORMANCE.
In Shakespeare’s Macbeth, the three witches greet Banquo with the observation that “Thou
shalt get kings, though thou be none.” And so it proves. Not everyone, of course, can predict
the future with such unerring accuracy.121
A fundamental change of circumstances which has occurred with regard to those existing at
the time of the conclusion of a treaty, and which was not foreseen by the parties, may not be
invoked as a ground for terminating or withdrawing from the treaty unless:
(a) The existence of those circumstances constituted an essential basis of the consent of the
parties to be bound by the treaty; and
(b) The effect of the change is radically to transform the extent of obligations still to be
performed under the treaty.122
Similarly, The International Court of Justice (‘ICJ’) in its Gabcikovo/Nagymaros Project
judgment [1997] ICJ Reports 7 (Judgment of 25 September 1997) cited with approval its
judgment in the Fisheries Jurisdiction case, [1973] ICJ Reports 63, [36], in support of the
proposition that “Article 62 of the Vienna Convention on the Law of Treaties . . . may in
many respects be considered as a codification of existing customary law on the subject of the
termination of a treaty relationship on account of change of circumstances.” The learning
suggests that the principle of rebus sic stantibus operates as an exception, in limited and
exceptional circumstances, to the general principle of pacta sunt servanda.
Impossibility to perform a treaty under Article 61 of the VCLT would require the disappearance
or destruction of an object indispensable for the treaty’s performance. A strict interpretation of
the term ‘object’ in the sense of a physical object would drastically reduce the use of
impossibility of performance in the context of investment law. A more flexible interpretation that
would also look at the disappearance of the objectives or the means for the treaty’s performance,
might lead to a different result. Moreover, any use of the doctrines of impossibility of
performance and fundamental change of circumstances would be subject to the procedural
requirements of the VCLT (Articles 65–68) for the termination or suspension of treaties. 123
Clausula rebus sic stantibus is a clause in international conventions (international agreements
or treaties) that provides for the unenforceability of a treaty due to fundamentally changed
circumstances. The doctrine is one of the oldest norms of customary international law. 124 A
party may invoke the impossibility of performing a treaty as a ground for terminating or
withdrawing from it if the impossibility results from the permanent disappearance or
destruction of an object indispensable for the execution of the treaty.
121
Article 62 of the Vienna Convention on the Law of Treaties: foreseeing the unforeseen? By Kieron Beal KC.
122
VCLT, Art. 62(1).
123
Dolzer, R., Kriebaum, U., & Schreuer, C. (2022). Principles of international investment law (3rd ed.). Oxford
University Press. Pg no. 303-304
124
https://www.law.cornell.edu/wex/rebus_sic_stantibus (Last Visited: May 26, 2023).
30 | P a g e
If the impossibility is temporary, it may be invoked only as a ground for suspending the
operation of the treaty. 125 The performance of the respondent is based upon the fulfilment of
the obligation by the transmission licensee which invokes the ground for the impossibility of
performance for respondent.
A. CREATION OF FRUSTRATION OF PURPOSE FOR RESPONDENT IN

FULILMENT OF THE CONTRACTUAL OBLIGATIONS.
Acc. to Black’s law dictionary (9th E.d) Frustration means something that “occurs when
stifled from succeeding due to forces beyond one’s control. These forces are sometimes
malicious or deliberate acts to inhibit progress or success”. “The principle underlying the
frustration of purpose doctrine ‘is that where the purpose of a contract is completely
frustrated and rendered impossible of performance by a supervening event or circumstance,
the contract will be discharged.”126
Frustration of purpose is a doctrine in contract law that provides a defence to the enforcement
of a contract. The doctrine of frustration is usually invoked when either party has been
substantially inconvenienced by an unforeseeable event, whereby that inconvenience has
caused the contract to become impossible to perform or has undermined the initial
justification of entering into the contract in the first place. The doctrine of frustration could
rarely be invoked by a party who had been impeded in their contractual performance by an
unforeseen event and wanted to be excused from contractual performance127.
In Montauk, the Supreme Court of Maryland outlined three factors that courts should
consider when determining whether the frustration of purpose doctrine applies:
(1) whether the intervening act was reasonably foreseeable;
(2) whether the act was an exercise of sovereign power; and
(3) whether the parties were instrumental in bringing about the intervening event.
The doctrine of frustration of purpose was first recognized in the early twentieth century in
the English case of Krell v. Henry, 2 K.B. 740 (C.A. 1903). Henry had entered into a contract
with Krell to rent Krell’s apartment during the daytime hours of June 26 and 27, 1902 to
observe the coronation procession of King Edward VII. After King Edward fell ill, the
coronation was postponed, and Henry refused to pay for the rental. Krell sued, and the court
was tasked with determining whether Henry was obligated to pay the rent despite the fact that
the coronation did not take place as planned. The court held that Henry’s performance under
the contract was excused, holding that the “coronation procession was the foundation of this
contract” and that “the object of the contract was frustrated by the non-happening of the
coronation and its procession on the days proclaimed.
“Pursuant to the doctrine of legal impossibility, ‘[i]f a contract is legal when made, and no
fault on the part of the promisor exists, the promisor has no liability for failing to perform the
promised act, after the law itself subsequently forbids or prevents the performance of the
promise.”128 The defence is only available to excuse the performance of a contract, not to
125
VCLT, Art. 61(1).
126
Panitz v. Panitz, 144 Md. App. 627, 639.
127
Symons Ben, Force Majeure and Frustration in Commercial Contract, 2022, BPL, pg.V
128
Brohawn v. Transamerica Ins. Co., 276 Md. 396, 410 (1975).Pg .V
31 | P a g e
compel performance by another party; i.e., the doctrine can only be used as a shield, and not
as a sword.129
Discharge by Supervening Frustration," states: Where, after a contract is made, a party's

principal purpose is substantially frustrated without his fault by the occurrence of an event the
non-occurrence of which was a basic assumption on which the contract was made, his
remaining duties to render performance are discharged, unless the language or the
circumstances indicate the contrary.130 The respondent was also not in the foreseeability of
the amendment in the Electricity Act which created the situation of frustration of
performance to fulfil the obligation under the PSA.
The contractual defence of impossibility may be applied where a particular condition, which
both parties to the contract assumed would continue when the contract was signed, ceases to
exist as a result of an unforeseeable supervening event occurring without the fault of either
party. “The doctrine of impossibility and the doctrine of frustration of purpose “differ only in
the effect of the fortuitous supervening event.”131 The resumption of continue supply of the
electricity by respondent would have been granted in course of lack of the supervening event.
B. NO OBLIGATION OF THE RESPONDENT TO PURSUE ALTERNATIVES FOR

THE TRANSMISSION OF ELECTRICITY.
In times of uncertainty and disruption, setting expectations for performance with business
partners and contractual counterparties can be more complicated than ever. commercially
reasonable efforts (CRE) indicates clause take all reasonable steps” to meet the contract’s
goals.132 The CRE clauses are need to be presented or strictly mentioned in the contract in
order to be relied on and performed upon. When a contract has both a CRE clause and a force
majeure clause, and circumstances change so substantially that they materially impact an
ongoing project, the party that is required to use commercially reasonable efforts must
consider whether the changed circumstances constitute a force majeure event, or if they alter
the picture of what efforts are commercially reasonable, or both.133
The affected Party shall use its reasonable endeavours to: 134
(i) mitigate and/or overcome the effects of any of Force Majeure Event, including by
recourse to mutually acceptable (which acceptance shall not be
unreasonably withheld or delayed by either Party) alternative sources of services,
equipment and material, and construction equipment; and
(ii) ensure resumption of normal performance of this Agreement as soon as reasonably

practicable.
129
Wal-Mart Stores, Inc. v. AIG Life Ins. Co., 872 A.2d 611, 620 (Del. Ch. 2005), 901 A.2d 106 (Del 2006).
130
Washington State Hop Producers, Inc. Liquidation Trust v. Goschie Farms, Inc., 112 Wash. 2d 694, 704, 773
P.2d 70 (1989).
131
Chase Precast Corp. v. John J. Paonessa Co., Inc., 409 Mass. 371 (1991).
132
Akorn, Inc. v. Fresenius Kabi AG, No. CV 2018-0300-JTL, 2018 WL 4719347, at *87 (Del. Ch. Oct. 1,
2018),
133
Watson Labs., Inc. v. Rhone-Poulenc Rorer, Inc. , 178 F. Supp. 2d 1099, 1109 (C.D. Cal. 2001).
134
PSA, Clause 21.3.2 (c).
32 | P a g e
The term “reasonable endeavours” has been defined as, which might mean if one reasonable
path is taken then the obligation is discharged. 135, the respondent in the email dated 22nd
March( Claimant Exhibit C 4) has clearly intended to strive the problem through reasonable
means which satisfies the term of reasonable endeavours.
Claimant claims that under the PSA, agreement the respondent had an obligation to arrange
for delivery of electricity at an interconnection facility at the border of Bangladesh136 but the
WHEREAS [E] of the PSA agreement mentions that “The Seller intends to transmit the
surplus electricity to the Buyer through India by utilizing the services of the Transmission
Licensee in India” the obligation clause no.18 of the PSA doesn’t mention such events to
manage the interconnection facility as claimed by the claimant.
In case of Tandrin Aviation Holdings Ltd v Aero Toy Store LLC [2010] EWHC 40 the
principle was established that, in absent of a clear contractual provision, the innocent party is
not obligated to seek alternative performance or mitigate their losses by finding a
replacement party to fulfil the contract. The burden of finding a replacement party falls on the
defaulting party or breaching party.
The respondent here is not liable for the breach or non-performance of the contract the force
majeure event and lack of communication from the side of the transmission licensee has been
a major stake force to hold respondent back from its fulfilment of the obligation in the good
faith. So, the respondent isn’t liable to seek alternative method or means for the resumption
of supply of electricity.
ISSUE IV: WHETHER OR NOT THE RESPONDENT IS LIABLE TO PAY

DAMAGES TO THE CLAIMANTAND RESUME COMPLIANCE WITH ITS
2020?
The halted supply of the electricity by respondent was solely the result of the action taken by
GPC India (transmission licensee) due to the change in law, which fulfils the criteria of the
force majeure event. Muluki Civil Code 2074 under Sec. 536 mentions Indivisible nature of
the authority to rescind contract: If either party of a contract consists of two or more persons,
the contract may be rescinded only if all of such persons rescind it or if the rescission is
applicable to all of them.
The claimant is in the stand of excluding the transmission licensee as respondent which states
that claimant isn’t in the point of exercising the recission of contract against the licensee. The
transmission licensee and respondent both are the party to the contract as per the PSA
agreement so the recission doesn’t fulfil the criteria as stipulated in aforementioned clause so
respondent shall not be made liable to pay damages.
135
Brooke Homes (Bicester) Ltd v Portfolio Property Partners Ltd [2021] EWHC 3015 (Ch) (11 November
2021).
136
NoA, Para 10.
33 | P a g e
1. RESPONDENT IS NOT LIABLE TO PAY DAMAGES UNDER THE PSA.
Remedy is to be exercised only when the breach is malicious and willingly against the
sanctity and clauses of the contract 137. The purpose of force majeure clauses is to protect the
parties from events that are agreed to be outside normal business risk. Force majeure clauses
excuse the performance of contractual obligations if specified events outside the parties’
control have prevented such performance 138. If successfully invoked, the clause would excuse
a party’s performance of its obligations under the contract, thereby avoiding a breach.139
Neither party shall be held responsible for any delay or failure to perform any part of this
Agreement to the extent such delay or failure results from any cause beyond its reasonable
control and without the fault or negligence of the party claiming excusable delay or failure to
perform, such as acts of God, acts of war or terrorism, acts of government. 140 A supervening
event can also serve to dismiss a party’s performance obligation. A supervening event is one
that occurs after an agreement has been fully executed but prior to the time performance is
due.141
As a general rule it could be said that, under some extraordinary and limited circumstances, a
party that does not fulfil a contractual obligation could be excused for its breach if it can
prove that the breach is due to the occurrence of an event or an impediment that is not only
beyond its control (and that it cannot avoid to get over) but also that it could not have been
reasonably expected to have taken into account when it assumed the relevant obligation that
was breached. Force majeure takes place in the presence of extraordinary and unforeseeable
events that occur beyond the sphere of activity of the person concerned and that impose
themselves on him/her in an irresistible manner. Force majeure implies an objective (rather
than a personal) impediment, beyond the control of the “obliged party”, that is unforeseeable,
that cannot be resisted, and that renders the performance of the obligation impossible142
Commercial contracts generally incorporate force majeure clauses. Such provisions serve to
allocate the risk of supervening events outside the parties’ control (such as inclement
weather, war, terrorism, government acts, and labour strikes), which render performance
either impossible, impracticable, or not serving the agreement’s primary purpose. Contractual
risk in general can also be allocated by some or all of the following provisions:
indemnifications, warranties, limitation-of-liability clauses, insurance clauses, and/or
termination provisions, among other methods. Once the parties to a contract have allocated
the risk of supervening events by incorporating a force majeure clause, the parties are bound
by its terms.143
137
https://feldman.law/news/breach-of-contract-and-force-majeure-in-the-age-of-covid-19/ (Last Visited: May
26, 2023).
138
Dolzer, R., Kriebaum, U., & Schreuer, C. (2022). Principles of international investment law (3rd ed.). Oxford
University Press. Page no. 123
139
https://www.nortonrosef ulbright.com/en/knowledge/publications/844d7cf4/contract-performance-in-a-
coronavirus-world-force-majeure-clauses-and-the-doctrine-of-frustration (Last Visited: May 26, 2023).
140
https://www.contractscounsel.com/g/37/us/force-majeure-clause (Last Visited: May 26, 2023).
141
https://www.lexisnexis.com/supp/largelaw/no-index/coronavirus/commercial-transactions/commercial-
transactions-excuses-for-nonperformance.pdf (Last Visited: May 26, 2023).
142
Arbitration CAS 2018/A/5779 Zamalek Sporting Club v. Fédération Internationale de Football Association
(FIFA), award of 31 October 2018.
143
Ibid.
34 | P a g e
The act of the government to amend the Electricity Act was also unforeseen by the
respondent which made the contract impracticable so the question of breach and remedy
shouldn’t arise. When a supervening event temporarily causes impossibility, impracticability,
or frustration of purpose, the affected party may suspend its performance during the change
in circumstances. Once the situation clears, however, performance obligations generally
resume, and the affected party is provided with a reasonable time extension to fulfil its duties.
Subject to Clauses 21.3.2 and 21.3.3, upon the occurrence and during the continuance of a
Force Majeure Event:144
a) the affected Party shall not be liable for any failure or delay in performing its obligations
(other than an obligation to make a payment) under or pursuant to this Agreement to the
extent that such failure or delay in performance has been caused or contributed to by one or
more Force Majeure Events or its or their effects or by any combination thereof.
b) any time limits and deadlines for the performance by the affected Party of its obligations
under this Agreement which are affected by such Force Majeure Event shall be extended for
as long as the affected Party is unable to comply, or is delayed in complying, with its
obligations under this Agreement because of the occurrence of a Force Majeure Event, or the
effects of that Force Majeure Event.
The event so rendered has substantially affected the respondent’s ability to confer and
comply upon the obligation of contract so the respondent shall not be made liable to pay the
damages as the breach cannot be constructed upon the force majeure event and rendering of
an impossibility.
2. THE RESPONDENT IS NOT LIABLE TO RESUME COMPLIANCE WITH ITS

OBLIGATIONS UNDER THE POWER SALES AGREEMENT.
Respondent signed a PTA with GPC India to transmit surplus electricity from Nepal to India
and other countries in February 2016.145 The parties have agreed to jointly undertake the
development of necessary infrastructure to facilitate the transmission of electricity. 146
Respondent, GPC India, and the Claimant entered a tri-partite PSA for the export of 60% of
total generated electricity from the Project on 16 July 2020. 147 Delivery shall take place
through the transmission lines owned and operated by the transmission licensee in India. 148
The Project was designed to be connected with the Indian grid through dedicated
transmission lines, developed by GPC India. Under the PSA, the Respondent had an
obligation to arrange for delivery of electricity at an inter-connection facility at the border of
Bangladesh.149
The issue being raised by the Claimant is in relation to non-transmission of electricity and not
non-supply of electricity, and as such GPC India was a necessary and proper party in the
present Arbitration being the Transmission Licensee in terms of Claimant Exhibit C 2. 150 The
Respondent is under no contractual obligation to arrange for the delivery of electricity at an
144
PSA, Clause 21.3.1.
145
NoA, para 5.
146
Claimant exhibit C1.
147
NoA, para 8.
148
PSA, 2020, clause 3.
149
NoA, para 10.
150
Response to NoA, para 16.
35 | P a g e
inter-connection facility at the border of Bangladesh. 151 It is evident from Claimant Exhibit C
2 that the transmission obligations were with GPC India and not with the Respondent. 152 GPC
India has several obligations under PSA: to transmit electricity from the Buyer and the Seller
in good faith and by ensuring minimum transmission loss153, to immediately communicate to
both Buyer and Seller in the event any hindrance to transmission of the deliverables occurs154,
& to immediately undertake mitigation measures in order to minimize transmission loss of
deliverables155 Which it didn’t fulfil.
The change in law in India has created a situation of Force Majeure for the Respondent, as a
result of which the Respondent has been unable to supply electricity to the Claimant for the
time being. 156 The Central Transmission Utility shall not authorize the use of any Indian
transmission lines by a foreign seller of electricity which is not substantially owned or
effectively controlled by Indian(s) or an Indian entity. 157 Until and unless the situation of
force majeure ends, respondent is unable to resume its compliance with the agreement.
Changes in regulatory framework governing electricity sector and affecting investors’
legitimate expectations could amount to Force Majeure.158 Any changes in the legal and
regulatory framework that were unforeseen at the time the investment was made can qualify
as changes in law.159
A measure will qualify as a change in law if it brings about a major change that could not
reasonably have been anticipated and that has a significant economic impact. 160 The
amendments to the Electricity Act 2003 in India could not have reasonably been anticipated
at the time of signing the PSA, and has had a significant economic impact on the Respondent
by depriving it of access to transmission infrastructure. Under section 19 of electricity act-
1992 provisions electricity service may be stopped if there occurs natural calamities like
flood, landslide, fire, earthquake or strike, lockout, riot or any other extraordinary
circumstances which are beyond one's control.161 Change in law clause of PSA mentions- If a
Party suffers (or will suffer) delay and/ or incurs additional costs as a result of a Change of
Law, then the affected party is entitled to an adjustment to the consideration, payment of
damages, or an extension of time, as applicable. 162 If a Change of Law occurs, then the non-
affected Party is obliged to take all reasonable steps to mitigate the adverse impact of such
Change of Law upon the present Agreement.163
The change in law was not foreseeable by respondent, the change in law has a significant
impact on respondent's ability to perform its obligations under the PSA, and claimant has not
suffered any damages as a result of respondent's non-compliance with the PSA. Hence, it is
151
152
153
PSA, 2020, clause 20.1.
154
PSA, 2020, clause 20.2.
155
PSA, 2020, clause 20.15.
156
157
Electricity act-2003, s 38(3).
158
ES Summit Generation Limited and AES-Tisza Erömü Kft v Hungary, ICSID Case No ARB/07/22 (ICSID,
September 30th 2010) para [408].
159
State of Hungary v. Slovak Republic (ICSID Case No. ARB/14/3), Award, 17 September 2018, para 263.
160
Duke Energy International Peru Investments No.1 Ltd v. Republic of Peru (ICSID Case No. ARB/03/28),
Award, 18 August 2008, para 253.
161
ELECTRICITY ACT, 2049, s 19(b).
162
PSA, 2020, clause 22.2.
163
PSA, 2020, clause 22.2(1).
36 | P a g e
our submission that respondent is not liable for resuming compliance with its obligations
under PSA until and unless force majeure event is eradicated.
PRAYERS OF RELIEF
In light of the legal precedents and principles cited; and in light of the General conditions of
contract Clauses to be applied and arguments advanced; and in light of the scientific studies
relating to the issue r on the basis of prior and foregoing written submissions, the
RESPONDENT humbly prays and requests that the Tribunal to ADJUDGE and
DECLARE that:
1. CLAIMANT was required to join GPC India as a party to the Arbitration.

2. There existed a situation of force-majeure which prevented the RESPONDENT from
fulfilling its obligation under the PSA Agreement.
3. The said situation impacted the RESPONDENT’S ability to discharge its contractual
obligations under the PSA.
4. RESPONDENT is not liable to pay damages to the CLAIMANT.
5. RESPONDENT is not liable to resume compliance with its obligations under the PSA.
Or any other
order and/or declaration that the Tribunal may deem fit in light of justice, equity and good
conscience.
Respectfully submitted
Counsels for
Respondent
37 | P a g e

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TEAM CODE: ‘YALUNG KHANG’

FOURTH BRU FOUNDATION MOOT COURT COMPETITION

BANGLADESH POWER DEVELOPMENT BOARD (BPDB)

HIMALAYAN HYDRO NEPAL LTD (HH NEPAL)

MEMORIAL FOR THE RESPONDENT

On submission to the Singapore International Arbitration Centre (SIAC)

SUMMARY OF THE FACTS......................................................................................................19

ISSUE I- WHETHER OR NOT THE CLAIMANT WAS REQUIRED TO JOIN GRID

1. PRESENCE OF MAJOR EVENTS CONNECTING GPC INDIA TO THE EVENT OF

A. GPC INDIA HAS OWNERSHIP IN THE RESPONDENT’S STAKE HOLDING

B. GPC INDIA IS THE MAJOR PARTY OF PSA AGREEMENT..........................................26

C. GPC INDIA HAS TRANSMISSION OBLIGATION UNDER P.S.A..................................27

D. GPC INDIA VIOLATED THE PRINCIPLE OF GOOD FAITH AND FAILED TO

2. GPC INDIA DID NOT HONOR THE POWER TRANSMISSION AGREEMENT.........28

4. GPC INDIA FULFILS JOINDER REQUIREMENT UNDER SIAC.................................29

A. THE ADDITIONAL PARTY TO BE JOINED IS PRIMA FACIE BOUND BY THE

B. ALL PARTIES, INCLUDING THE ADDITIONAL PARTY TO BE JOINED, HAVE

ISSUE II: WHETHER OR NOT THERE EXISTED SITUATION OF FORCE MAJEURE

A. THE AMMENDMENT IN ELECTRICITY ACT FULFILLS THE CHANGE IN LAW.....33

B. THE AMMENDMENT WAS UNFORESEEABLE DURING THE CONSTRUCTION OF

2. THERE IS CASUAL RELATION BETWEEN CHANGE IN LAW AND PARTY’S NON-

A. THE CONTRACTUAL TERMS PROVIDE RESPONDENT UNDENIABLE

3. THE UNFAVOURABLE SITUATION FULFILS THE DEFINITORY CRITERIA OF

A. THE CONTRACTUAL LANGUAGE OF FORCE MAJEURE...........................................37

B. DETERMINATION OF "CHANGE IN LAW " ARE EXPRESSLY STATED UNDER PSA.

4. PROLONGED FORCE MAJEURE CONSTITUTES A LEGAL RIGHT TO THE

A. THE RESPONDENT HAS DULY FULFILLED THE LEGITIMATE PROCEDURE FOR

1. THE SITUATION OF FORCE MAJEURE EXISTED...........................................................39

A. THE SITUATION WAS BEYOND THE REASONABLE CONTROL OF THE PARTY.. 41

B. ABSENCE OF FAULT OR NEGLIGENCE ON THE PART OF THE RESPONDENT IN

C. NO MUTUAL COURSE OF CONTACT WITH GPC INDIA AFTER THE COMMISSION

2. ADHERENCE TO PROCEDURAL REQUIREMENTS IN SEEKING THE BENEFITS OF

A. SERVING OF THE ADVANCE NOTICE WITHIN 2 DAYS.............................................44

3. EMERGENCE OF THE SITUATION OF IMPOSSIBILITY OF PERFORMANCE..........45

A. CREATION OF FRUSTRATION OF PURPOSE FOR RESPONDENT IN FULILMENT

B. NO OBLIGATION OF THE RESPONDENT TO PURSUE ALTERNATIVES FOR THE

ISSUE IV: WHETHER OR NOT THE RESPONDENT IS LIABLE TO PAY DAMAGES TO

1. RESPONDENT IS NOT LIABLE TO PAY DAMAGES UNDER THE PSA....................49

2. THE RESPONDENT IS NOT LIABLE TO RESUME COMPLIANCE WITH ITS

AAA American Arbitration Association

BOD Board Of Directors

BPDB Bangladesh Power Development Board

CEO Chief Executive Officer

CISG Convention on Contracts for the International Sale of Goods

Claimant Bangladesh Power Development Board

ed, edn Edition

GPC India Grid Power Corporation of India Ltd.

HH Nepal Himalyan Hydro Nepal Ltd.

ICC International Chamber of Commerce

ICSID International Centre for Settlement of Investment Disputes

KWHr KiloWatt Hour

LCIA London Court of International Arbitration

NEA Nepal Electric Authority

NEPSE Nepal Stock Exchange

NOA Notice of Arbitration

PSA Power Sales Agreement

PTA Power Trade Agreement

Respondent Himalyan Hydro Nepal Ltd.

SIAC Singapore International Arbitration Centre

SIAC Rules Singapore International Arbitration Centre Rules(6th edition, 2016)

VCLT Vienna Convention on the Law of Treaties

INTERNATIONAL CONVENTIONS &, TREATIES