The Indemnity clause in the fight against the Pandemic

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The Indemnity Clause in the fight against the Pandemic. As the world is fighting its way back to normal against the Covid pandemic, vaccine is the prominent arsenal to slay the crisis. However the question which could be often considered is how the government is going to deal with acute shortage of Covid-19 vaccines for which Centre is already receiving slurs. Another question of significant consideration is to vaccinate the 70 percent of the population to attain herd immunity which at current pace would take 8 years at least[1]. Thus the government has substantial task in hand to take care of in the coming years and to tackle the same the government is consistently functioning towards launching several other vaccines approved in other subcontinents in the Indian market. One of such case is with Pfizer, one of the world’s giant biopharmaceutical companies, which has approached India with a handful of vaccines but in lieu of indemnity from the Indian government which has become a thorny issue. Now in the legal parlance, what does Indemnity means is the question which this article is going to deal along with the repercussions of the clause, if granted.

Indemnity Clause

To begin, simply, Indemnity could be said to compensate for the loss. Broadly, Indemnity is a relation between the two parties wherein one party has reasonable apprehension of suffering loss, therefore to avoid it, the party who has such apprehension enters into an indemnity agreement with the other party, who promises to make good or to remunerate or to repay any loss caused to the former party. The loss for which the indemnity is given could be caused due to the conduct of the promisor himself or it may be due to the conduct of any other person. Thus, indemnity is analogous to a shield which is usually put in front by a party to avoid the loss and suffering, usually monetary in nature.

Under the Indian Law, the concept of Indemnity is governed by the Indian Contract Act, 1872. The Concept has been expressly provided under Section 124 of the said Act. The text of the act reads- A contract, by which one party promises to save the other from the loss caused to him by the conduct of the promisor himself, or by the conduct of any other person, is called a “contract of indemnity”.

The analysis of this definition reveals that there are two parties in a contract of indemnity, first, the Indemnifier, who promises to protect from the loss and second, the indemnified or the indemnity-holder, whom the promise of protection is made. In the instant scenario, the government of India, if agrees, will be regarded as the indemnifier and the Pfizer will be regarded as the indemnity-holder. Now once the indemnity is granted the Indemnity-holder becomes entitled of certain rights which he could enforce against the indemnifier. These rights are specifically provided under Section 125 however indemnity-holder could enforce these rights only when he is sued and not otherwise. These rights are summarized below:

The right to recover all damages from the indemnifier which the indemnity-holder may be compelled to pay in a suit for recovery of damages, in respect of all matters for which the indemnity is given.

The right to recover all the costs from the indemnifier paid by the indemnity-holder during the institution of any suit.

The right to recover the entire amount paid by indemnity-holder under the terms of compromise which may be reached at the closure of the suit.

The act is silent about the rights of the Indemnity-holder and therefore their rights depend upon the judicial discretion or interpretation.

The Loggerhead between the government and the Pfizer.

When we subsume this concept in the present scenario it may be proper to say that once the indemnity is given, the Pfizer would be obliged of no liability towards any person who if takes its vaccine and consequently suffers any adverse effect. It means a person would be unable to bring a legal action against the pharma giant for the injury caused to him and such liability would be incurred by the government of India. This concept could be regarded identical to no fault liability as the person from whose fault the consequence is ensued couldn’t be brought to Justice rather the other is liable for him and hence it would be proper to say that the person actually liable would ultimately escape from liability.

Another important aspect which could be considered is that generally a party’s willingness for an indemnity bond arises when such party has reasons to believe that there may be some loss caused to him. Now if the Pfizer is stressing upon the indemnity clause then it could be quite rightly said that it may be unconfident about its product or maybe acquainted with the dire consequences which may ensue. The Pfizer company states that it has been granted indemnity whatsoever in the USA and UK wherein its vaccines have rolled out previously. However this cannot be the basis to fulfill the wants of the company as the difference between the inhabitants of both the regions, when and if compared, to that of Indians, is huge. That’s why there is a loggerhead between the company and the government but Pfizer is consistent on its stand on the indemnity clause and it has no plans to improvise its position.

Conclusion

We undoubtedly are in a dire need of vaccines to avoid any further havoc by the pandemic but it is pertinent to understand that if a vaccine enters the Indian market, first without proper clinical trial on the local inhabitants and secondly, with an indemnity bond then it is not untrue to believe that we will be left at a great peril to suffer, firstly from the pandemic and subsequently by an untested vaccine as the government would only be liable to incur the monetary damages to the aggrieved party but who will be liable, if due to any adverse effect of the vaccine, there is a loss of even a single life, whose going to compensate for the love and affection towards the departed soul, is a big question mark. The way forward for the government could be to negotiate on the indemnity clause to confer the liability upon the Pfizer as if once the vaccines are purchased and inoculated, in case of any adverse effect, the government could not run behind Pfizer for a clarification, thus it is proper to be cautious initially rather to regret later.


[1] https://www.indiatoday.in/coronavirus-outbreak/story/india-will-take-12-years-to-vaccinate-all-8-years-for-herd-immunity-1793746-2021-04-22

Written By

Aman Pandey

Faculty of Law, University of Lucknow

1 thought on “The Indemnity clause in the fight against the Pandemic”

  1. This article is thought provoking. Perhaps India should emphasize on bargaining on indemnity contract with the pharma giant otherwise it will rather hamper this whole herd immunity building process.

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