CMS Guide to Consequential Loss in Mauritius

Mauritian law does not provide specific definitions for “consequential loss” or direct or indirect loss. Losses are generally recoverable when caused by a breach of contract, subject to establishing causation between the breach and the loss.

Mauritian contract law being largely based on the French civil law, the courts often refer to French jurisprudence for guidance on interpretation.

Consequential loss would be included within the scope of damages as defined by Article 1149 of the Mauritius Code Civil (CCM), encompassing both the loss suffered and the profit deprived as a direct result of the non-performance of the contract.

Exclusion of liability clauses are commonly used in contracts in the Mauritian context and it is common practice across the industry to exclude certain types of losses, often in conjunction with limiting liability to cases of gross negligence or by imposing a liability cap.

In the local energy sector dominated by a handful of large power producers, where large-scale operations and infrastructure projects are common, such clauses are routinely included in contracts to manage risk, shield against speculative or excessive claims, and ensure clarity in the allocation of responsibility. These exclusion clauses aim to avoid liability for indirect or secondary consequences of a breach, which can be difficult to predict and quantify.

Given the lack of statutory interpretation, the meaning of the term “consequential losses” would vary depending on the context and the type of contract. The court shall consider the essence of the contract in dispute, the intentions of the parties and guidance from domestic or French jurisprudence.

Mauritian caselaw highlights that an exclusion of liability clause will generally be interpreted strictly against the party relying on the exclusion clause. In The Hong Kong & Shanghai Banking Corporation v. Sairally Mamad Safii 2002 SCJ 227, the court stated that “an exclusion clause must not be drawn up in such a way that it empties the contract of its very essence” and that the exclusion clause cannot provide the appellant with a blanket cover which would exclude its liability in every situation.  Similarly, numerous decisions have highlighted that an exclusion clause will be of no avail where there is a “faute lourde”(gross negligence).

In interpreting the term “consequential loss” within contractual exclusion clauses, the court will align its approach with the principles set out in Article 1150 and Article 1151 of the CCM.

The element of foreseeability of the damages at the time of the contract is paramount in Mauritian contract law.  Article 1150 of the CCM provides that a party is only entitled to damages which had been foreseen or was foreseeable at the time of the contract when it is not through such party’s fraud that the contract was not executed, while article 1151 of the CCM limits recoverability of such losses which are the immediate and direct result of a breach of contract.

As mentioned above, due to the lack of statutory interpretation, the scope of consequential losses may often lead parties to specify, through an illustrative and non-exhaustive list, the types of losses they wish to exclude.

Pursuant to Article 1134 of the CCM, contracts have the force of law between the parties, and the court will first seek to ascertain and give effect to the true intention of the parties when construing the clauses of a contract.

The claim for consequential loss must therefore be clearly established to exist and it must be laid down that the parties intended for the defaulting party to provide compensation for such type of loss.  As held in the case of Gottfried Fahrni v. Desjoyaux (Maurice) Ltee 2012 SCJ 479, ‘the eventuality of such loss as is alleged appears not to have been within the reasonable contemplation of the parties on account of its remoteness, and their having made provision only for a fixed penalty per day on account of delay attributable to the defendant. The claim for alleged consequential loss has therefore not only not been clearly established to exist, or to belong to the plaintiff, but it has also not been otherwise made out to have been intended by the parties to be the subject of any eventual compensation by the defendant’.

Loss of commercial reputation is one type of consequential loss awarded by the court. [1]

On the other hand, it is essential that the claimant party does not exceed the terms of the contract or disregard it entirely (thus bypassing the limitation and exclusion clauses) by claiming an excessive amount as damages. [2]   

Damages for which a party in breach of contract may be made liable, are as provided by Article 1151 of the CCM, and confined to those not remotely, but directly resulting from the inexecution of the contract. [3]

Firstly, the breach of contract has to be established on a balance of probabilities, giving rise to the plaintiff’s entitlement to damages for such breach and compensation for foreseeable consequential loss flowing therefrom. [4]

In Mooraghen v. SBI (Mauritius) Ltd 2021 SCJ 221, it was held that once the court found that the ‘faute’ has been proved, the court has to determine whether the plaintiff has also established in evidence that he is entitled to each claim of damage, including in this case, damages for “loss of profits on potential investments, loss of revenue and loss of business opportunities.”

In Up To Ten v. Barclays Bank Plc 2020 SCJ 57, the court denied compensation for loss of profit, as the plaintiff failed to establish that the loss was a direct consequence of the alleged breach, especially considering the company's pre-existing losses. However, the court upheld the breach of contract claim and awarded material and moral damages to the plaintiff.

Exclusion clauses would not generally have an impact on non-damages claims (such as claims for specific performance, cancellation of contract or restitution), as these types of remedies do not involve proving the quantum compensation for financial loss. Non-damages claims will be focused on enforcing contractual obligations or remedying any breach of such obligations. Consequently, while exclusion clauses may limit the scope of compensatory damages, they do not typically affect claims that do not seek financial compensation.