India has been on lockdown for over a month. Initially, this lockdown was meant to be for a three-week period, scheduled to end on 14 April 2020. This period was then extended till 3 May 2020 and though we are soon approaching the end of this second phase, it is unclear what the coming few days will bring.

In the interregnum, with effect from 20 April 2020, however, the Central Government notified certain relaxations, permitting activities to restart in certain sectors, albeit subject to prescribed guidelines. One such sector was the construction industry.

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While, no doubt, this appear to be a positive and beneficial step for the industry, opening up of the construction sector in the existing circumstances does pose some peculiar challenges, particularly with respect to large infrastructure projects commissioned by the government and Public Sector Undertakings.

Primary among these challenges are those relating to (i) getting the workforce back to site; (ii) ensuring that pre-existing supply chains still provide a viable option to source equipment and material; and (iii) ensuring the continuance of work, particularly on labour intensive sites, while keeping in mind social distancing norms and other legal requirements.

Undoubtedly, like for every other sector, the construction industry will have to evolve a new normal. The question, however, arises as to who in this developmental stage as well as for some time after will bear the risks of time and cost associated with the project. A large number of construction/ infrastructure contracts contain a ‘force majeure’ clause.

Where, the definition of ‘force majeure’ is not exhaustive or restrictive, effectively, such a clause will permit one or both parties to the contract to suspend or postpone the performance of those obligations which cannot be performed on account of the lockdown. For example, most FIDIC based contracts contain a ‘force majeure’ clause, setting out a detailed procedure to be followed, stipulating notice requirements, obligating parties to take necessary mitigation measures and so on.

These clauses also provide that in case the ‘force majeure’ event persists beyond a stipulated number of days, either party may terminate the contract. Even where the contract contains a ‘force majeure’ clause, unless they are sufficiently detailed, questions will arise, notwithstanding the existence of the clause, regarding who bears the excess cost resulting from the suspension and/or slowdown of work.

If costs are found to be recoverable by the contractor, the follow-up issue will be the time period for which such costs can be recovered; as an example, only till 20 April or till the contractor completely recovered from the effects of the lockdown? These are just examples of questions that may arise in contracts with ‘force majeure’ clauses.

In addition, there are certain standard form contracts used in the construction / infrastructure sector, which do not contain a force majeure clause and may not provide for any relaxation of timelines on the occurrence of a pandemic. If parties are looking to exercise legal remedies in the context of such clauses, recourse may then have to be had to other contractual clauses (e.g. a change in law clause) or, absent any such clause, at the law relating to frustration of contract, as set out under Section 56 of the Indian Contract Act, 1872.

This latter argument is, however, not foolproof given the nature of construction/ infrastructure contracts. If one were to proceed as per our pre-Covid notions, it would be correct to assume that upon lockdown being lifted arbitrators and courts would be inundated with matters, where these and other issues in relation to infrastructure projects would call for a decision.

The arbitral process would take at least between twelve and eighteen months and would be subject to a challenge process as well. In the meanwhile, however, contractors would have to continue executing work, possibly with higher costs to bear and lower revenues on account of a reduced workforce being available. In other words, therefore, there would be multiple fronts to deal with, viz., execution of work, managing litigation and not to forget dealing with sub-contracts and suppliers.

Employers will be called upon to multi-task in a similar manner. This begs the question, whether it isn’t time to move to a new normal, particularly with respect to a sector that was beleaguered even prelockdown; and in a world where the law was not drafted in contemplation of the kind of situation the industry finds itself in today? The smart answer would be that we need to evolve.

Rather than relying on the strict letter of the law, or the contract, parties need to renegotiate the terms of their agreements. Rather than focusing on battling each other, they need to focus on the battle to complete projects and then generate revenue from these projects. Rather than arbitrate, maybe it’s time to look at amicably settling issues that arise, possibly even with the intervention and assistance of a neutral third party.

To achieve this wish list, however, what is most important is a change in mindset. Firstly, parties need to realize and accept that an all or nothing game may be a thing of the past. It is a time to be collaborative, not combative. Secondly, for renegotiation to take place with an equitable allocation of risk going forward, especially since uncertainties will continue to exist even after the lockdown is lifted.

Each contract has its own requirements and peculiarities. Representatives of state entities must, therefore, be empowered to take fair decisions on these aspects while overseeing execution of contracts, and not just convenient ones, without the fear of being questioned on a post facto basis. It is time for all stakeholders to develop new best practices.

(The writer is Partner at J. Sagar & Associates, Advocates and Solicitors. The views expressed are personal)