Force Majeure Clause In Case Of Commodities Dispute

Introduction

In a recent decision handed down on 8 April 2020 in Standard Retail Private Ltd v Gs Global Corporation¹, the Bombay High Court refused to stay the encashment of Irrevocable Letters of Credit ("LCs") sought by an Indian Importer, Standard Retail Private Ltd ("Buyer") who had terminated its contracts, with a South Korean Commodity Trader, GS Global Corporation ("Seller"), and revoked the acceptance of the LCs opened under these contracts, on grounds of Force Majeure, as well as frustration, impracticability and impossibility of performance owing to the COVID-19 Pandemic.

Background Facts

The Buyer is an Indian entity involved in importing steel products. The Buyer had entered into a number of contracts with the Seller to import these steel products. The terms of payment provided were by way of certain confirmed and Irrevocable LCs, which were payable at sight.