The Delhi High Court upheld an arbitral award ordering Steel Authority of India Limited (SAIL) to pay demurrage — a penalty for ships delayed beyond the agreed loading period. SAIL invoked force majeure, arguing COVID-19 lockdowns prevented cargo operations. The court rejected this, finding the government had specifically designated cargo loading and unloading as essential services during the pandemic. Because operations were not legally prevented, the contractual excuse of force majeure did not apply.

Demurrage is a contractual penalty paid by a charterer (here, SAIL) when a ship is detained at port beyond the agreed free time for loading or unloading. It compensates the shipowner for the delay. Force majeure is a contractual doctrine — codified in spirit under Section 56 of the Indian Contract Act, 1872 (doctrine of frustration) and expressly in commercial contracts as a clause — that excuses a party from performance when an extraordinary event beyond their control makes performance impossible or illegal.

The critical distinction the Delhi High Court drew is between impossibility and inconvenience. Force majeure (and Section 56 frustration) requires that performance become impossible or illegal — not merely more difficult or commercially inconvenient. Since the Government of India's lockdown orders under the Disaster Management Act, 2005 expressly kept port and cargo operations in the 'essential services' category, SAIL could not claim legal prevention of performance.

This reflects the classical rule: a self-induced impossibility, or one that the law itself carves out an exception to, cannot ground a force majeure plea. The court's reasoning also reinforces the principle that arbitral awards on mixed questions of fact and law receive deference under Section 34 of the Arbitration and Conciliation Act, 1996 — courts will not re-examine factual findings unless they violate public policy. For CLAT PG aspirants, this case sits at the intersection of frustration of contract, force majeure clauses, and the limits of judicial interference in arbitration.