Time for force majeure?

There are reports that the PTI government is facing calls to declare force majeure in its LNG (liquefied natural gas) deal with Qatar considering how the coronavirus-related lockdown has compressed domestic demand. With industry, the bulk consumer, now offline and no telling yet just when it would be able to resume full capacity, there is a sharp drop in demand for gas that just does not justify expensive LNG import. Yet, by contract, we must still make idle capacity payments to the LNG terminals and cost of guaranteed off-take to the Qatari suppliers (in case of not importing LNG) that will place an unnecessary and perhaps unbearable burden on the country's reserves, especially now when the government must save all the money it can in view of significant setback to exports in time. IPPs (Independent Power Producers)-related contractual issues present similar problems for the government that is bound to make idle capacity payments.
There are suggestions that the government must, therefore, immediately examine whether the present circumstances allow for a legal case of invoking force majeure or not. As things stand, it will have to spend many millions of dollars (that it can ill afford) for LNG and power that it will not use. And considering how small economies like ours face not just slowdown but possible capitulation in the case of a protracted global recession, which seems imminent and Pakistan may well face the prospect of declaring force majeure on the IPP and LNG deals. Legal technicalities will, of course, have to be accounted for because these cases will no doubt lead to litigation/arbitration and to international courts. And it must be carefully examined whether such a step needs to be preceded by imposition of a national financial emergency. If so, we will also have to factor in all the domestic implications of such an emergency as well.
Interestingly, the coronavirus pandemic already has a couple of examples of a country exercising the right of force majeure; with vague results so far. According to a Feb 6 report, China's biggest LNG importer, China National Offshore Oil Corp (CNOOC), invoked force majeure to suspend contracts with at least three suppliers; though the report did not specifically mention if coronavirus triggered the action. Just the next day, French oil major Total announced that it had rejected a force majeure notice from a Chinese LNG buyer, which remained unnamed. In late January, though, the Chinese International Trade Promotion Agency offered force majeure certificates to companies struggling with the impact of coronavirus on their business with overseas partners.
Most legal experts are of the opinion that the coronavirus likely qualifies as a force majeure event because while legal clauses rarely mention diseases and require unforeseen "acts of government" as justification, government ordered lockdowns tend to fall in the latter category. Either way, it seems a flurry of renegotiations of contracts, and of course litigation, will dominate the next phase of this pandemic as countries across the world scramble to consolidate their balance sheets. And while any country stuck with unviable contracts would only be doing the sensible thing by opting out, even if such matters are dragged into courts, counter-parties cannot exactly be expected to happily cancel perfectly legal deals just because someone else's interests have changed. It's not as if they, too, are not feeling the effects of the slowdown. Pakistan could, of course, try a diplomatic gambit and use its friendship with the Qatari royalty to get things going. But it should also be mindful that nothing can turn a friendship sour quite like a good deal gone bad.
It would be advisable that all legal aspects and ramifications be examined by experts minutely. On the face of it the reason of loss does not constitute 'force majeure'. Be that as it may, the agreement is confidential and we are not privy to all its stipulations and therefore it would be inappropriate to hazard a view on this issue other than to say that it would be advisable to make an iron-clad legal case for perusal at appropriate forums. The matter is made that much more urgent by the extraordinary nature of the emergency that the country is faced with. Even now, nobody can tell just when any shutdown in any country might end so that normal economic activity can begin again. And only the countries that protect their finances can ensure steady supply of essential items and protect their people in the medium to long term.