"Delhi High Court Rules Delhi Airport Need Not Pay Fees During COVID"
The Delhi High Court upheld an arbitral award exempting DIAL from paying annual fees to AAI during COVID-19. Justice Dinesh Kumar Sharma also extended the OMDA term by two years, citing the pandemic's impact on aviation. The Court found no irregularity in the arbitral tribunal's decision, which considered contractual terms, industry practices, and business realities.
3/9/20251 min read
In response to the COVID-19 pandemic's severe impact on aviation, Delhi International Airport Limited (DIAL) invoked the force majeure clause of its 2006 agreement with the Airports Authority of India (AAI). This clause allowed DIAL to temporarily suspend its obligation to pay 45.99% of its annual revenue as concession fees to AAI, citing drastically reduced air traffic and revenue during the pandemic.
The arbitral tribunal examined the unprecedented challenges faced by the aviation sector due to COVID-19. It acknowledged that the pandemic's impact on air travel constituted a force majeure event under the agreement. Consequently, the tribunal ruled that DIAL was justified in suspending its revenue-sharing payments during this period.
The tribunal's decision mandated AAI to refund ₹500 crore to DIAL and waived an additional ₹1,800 crore in payments for the period between March 19, 2020, and February 28, 2022. Furthermore, the tribunal extended DIAL's concession agreement by nearly two years, allowing it to operate the airport until 2036.
The Delhi High Court's ruling reinforces the principle that unprecedented disruptions like the COVID-19 pandemic can justify invoking force majeure clauses in contracts. By upholding the arbitral award in favor of DIAL, the Court acknowledged the severe impact of the pandemic on aviation operations and validated the temporary suspension of financial obligations. This decision sets a precedent for similar disputes in industries affected by force majeure events, ensuring that contractual fairness and commercial realities are considered in legal assessments