Force Majeure and frustration of contract from Malaysian Civil Law and Shariah Law Perspective

The current COVID-19 outbreak which has been declared a global pandemic by the World Health Organization since March 2020 has given rise to commercial challenges in the business world. One of the primary concerns is the contractual obligations imposed on both parties, whether they could be absolved from such obligations. Force majeure which is intertwined with the doctrine of frustration may open up to commercial disputes arising from non-performance of impossibility of performance due the Covid-19 outbreak. Malaysian law seems to provide a flexible approach as there is neither clear nor fixed rule of force majeure. In comparison with Islamic law, the classical view reveals that no such equivalent principle is in place but interestingly, the traditional Islamic legal system has an established method which could be traced in the form of the concept of intervening contingencies (nazariyyat al-jawa’ih) and Quwa Qahira or Quwat al-Qanun as reflected in the Civil Codes of some selected Arab states. This paper aims to examine the current legislation governing force majeure and the doctrine of frustration in Malaysia by special reference to Contracts Act 1950 and case-law, as well as relevant principle under Shariah. It employs doctrinal analysis and comparative approach in making relevant comparison with similar concept available under Islamic law, by referring to the current Civil Codes of some Arab states. The paper observes that there is nothing in Malaysian law that prohibits parties from providing for force majeure events, that certain external events may have the effect of suspending performance, or releasing the parties from performance altogether. It finally concludes that both Malaysian law and Islamic law have some similarities in the sense that a force majeure event does not terminate the contract but merely suspends its applicability until performance becomes possible again