CLAT 2020 UG

In the middle of a pandemic, the geopolitics of the world‘s most troubled region took a historic turn this week, when the UAE and Israel, under the benevolent gaze of US President Donald Trump, signed an agreement to ―normalise" relations. The deal opens up new opportunities for India to play a much larger role in the regional security and stability in the Gulf, where New Delhi enjoys special relations with both Abu Dhabi and Jerusalem. The barebones of the deal envisages establishing regular diplomatic relations between the UAE, the rising influential power in the Gulf, and Israel, the ―Incredible Hulk" of the region, but a country officially not on speaking terms with most of its Arab neighbours. In his first tweet, Crown Prince Mohammed bin Zayed said: 'During a call with President Trump and Prime Minister Netanyahu, an agreement was reached to stop further Israeli annexation of Palestinian territories. The UAE and Israel also agreed to cooperation and setting a roadmap towards establishing a bilateral relationship." In return, Israel agreed to "suspend" its annexation plans for West Bank that would have been deeply destabilising. Benjamin Netanyahu gets a diplomatic victory, which may be short-lived, given the nature of Israeli politics. But Israel gets a diplomatic and economic opening with the big power in the Gulf that could open other doors, give its security interests legitimacy and, perhaps, open the door to Middle East peace.

Many of the other Arab powers, such as Oman, Bahrain, Egypt and Jordan, apart from the big global powers, and India, have welcomed the deal. Iran has slammed it, as have Turkey and Syria. Saudi Arabia has been very quiet. Given the close ties between Mohammed bin Zayed and Mohammed bin Salman, it is unthinkable that KSA was not consulted, particularly when the US is the third pole in this agreement. The deal gives UAE pole position as the premier Gulf Arab power, with diplomatic leverage with Israel and the US. ―This deal is about positioning in Washington, DC," said James Dorsey, Gulf and Middle East expert.
Source: Excerpt from the Economic Times, written by Indrani Bagchi. (Dated - 16 th August, 2020)

The COVID-19 pandemic has taken the entire world hostage in less than four months, and the global economy has been hit the hardest with governments across the globe implementing stringent policies including lockdown to control the coronavirus outbreak. The pandemic today presents unprecedented challenges and impediments to businesses in conducting their normal operations. The lockdown across the world has caused delays in the performance of contracts and transactions. Now, the question that arises is whether the current situation can enable parties to a contract to alter their obligations with non-compliance of terms neither being regarded as a "default committed by any party" nor a "breach of contract"? There are certain well-accepted practices for dealing with such extraordinary situations in commercial transactions by the inclusion of force majeure & material adverse effect (MAE) clauses. Determination of the types of circumstances so covered by the force majeure clause contained in a contract is essential. Provisions of force majeure often cover natural disasters like hurricanes, floods, and earthquakes as "acts of God." Other covered events may include war, terrorism, civil disorder, fire, disease medical epidemics or by reasons of applicable laws or regulations. Broadly, the Courts have interpreted the term "Force Majeure" as an event that can neither be anticipated nor controlled by either of the contracting parties. A force majeure clause applies in the context of ongoing contractual arrangements, whereas, an MAE or material adverse change (MAc: clause applies to the allocation of risk in transactions before their closure or completion. Pandemic and related consequences such as government action is a type of event covered by a force majeure clause, however, its impact on the affected party's ability to perform its contractual obligations may vary depending upon contractual terms. It is common for force majeure clauses to specify the impact that the event or circumstances in question must have, in order for the clause to be triggered. References may be made, for example, to the event or circumstances having "prevented", "hindered" or "delayed" performance. These terms require different levels of impact on performance before a party can claim recourse to these clauses. In other words, the force majeure and MAC clauses act as an exception to what would otherwise be treated as a breach of contract. Certain contracts may state that, if a force majeure clause is applied, the contract may automatically be terminated. On the other hand, some contracts may even state that the duty to fulfil the contractual obligation may be suspended for a certain period of time and if the force majeure event is not curbed or treated even after such time, then eventually the contract may be terminated. Though there cannot be a one-size-fits-all solution to this question, and it depends upon how the force majeure clause is worded in a specific contract; and in the absence of the same, applicable laws related to the same will be required to be taken into consideration.

[Excerpt from Business Today, by Ranjana Roy Gawai, April 17, 2020]