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Thursday, 28 May 20
COVID-19: A FORCE MAJEURE EVENT? - KYPRIANOU
KNOWLEDGE TO ELEVATE
While seeing the unexpected COVID-19 outbreak expanding worldwide and the first cases being identified in Cyprus, the commercial sector does not remain unaffected. Emergency measures such as travel restrictions, citizens placed on quarantine and self-isolation are only some of the factors that started to impact parties to commercial transactions that render contract performance physically or commercially impossible. May a party invoke contractually agreed force majeure clauses or, the doctrine of frustration in an attempt to protect themselves from being unable to meet its contractual obligations?
Force Majeure
The concept of “force majeure” (meaning "superior force"), is used commonly in contracts as a clause that essentially releases both parties from liability or obligation when an unexpected event or circumstance beyond the control of the parties, prevents one or both parties from fulfilling their obligations under the contract.
Determining whether the Corona-virus outbreak constitutes a force majeure event, is a matter of construction and will depend on the specific wording and the scope of the clause.
It is the case that force majeure clauses often contain a list of events that qualify as force majeure events. For instance, terms such as “epidemic”, “pandemic”, or more generic terms such as “disease” and “illness” are often expressly listed as events of force majeure. In such cases, it will be easier to claim force majeure protection, as COVID-19 is likely to qualify as a force majeure event. Also, terms such as “acts of government” or “national or regional emergency” may be listed so as to cover emergency measures taken by the government such as travel bans or placing citizens in quarantine in case of this novel outbreak.
Additionally, under common law, a party seeking to invoke that its ability to perform the contract has been prevented by a force-majeure event, has the burden to prove certain elements. These are:
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that the event was unforeseeable;
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that it has taken all reasonable steps to avoid or mitigate the effects of the force majeure event; and
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that the event was beyond its control and thus impossible to overcome.
Most importantly, there must be a causal connection between the force majeure event that made it physically or legally impossible to perform the contractual obligations. With the COVID-19 case, the affected party has to show that due to the outbreak of Corona-virus and its resulting governmental measures, no alternative measures exist for performing its duties under the contract.
Frustration
In case the contract does not include any force majeure clause, the affected party may attempt to excuse its failure to perform its contractual obligations under the doctrine of frustration. Subject to Section 56(2) of the Contract Law Cap.149, as amended, “a contract to do an act which, after the contract is made, becomes impossible, or, by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful. As interpreted by Cyprus courts, section 56(2) is only applicable to an impossibility which destroys the foundation of the contract, which requires a high threshold for proof of frustration of a contractual undertaking.
Recommended actions
If you have executed a contract or are considering entering into new contract during this period, you should review the force majeure clauses carefully in order to understand the circumstances under which you can declare a force majeure and whether the Corona-virus outbreak and the resulting emergency measures may fall under its scope.
By Andria Kouloumi
Further, notification processes and deadlines should be also reviewed carefully, in order to ensure that your ability to claim force majeure protection is not precluded. Importantly, if you intend to enforce such force majeure clauses, you should consider your obligation to take all the reasonable measures to mitigate the effect of non-performance, otherwise your failure to perform your obligation may not be excused. If in doubt regarding how a force majeure provision applies and whether force majeure protection may cover you, it is recommended to seek legal advice prior to taking any action or sending notices.
Michael Kyprianou & Co LLC is ready to assist and advise you in relation to issues you may face, including by providing advice as to your options and requested objectives, enabling you to make an informed decision.
The content of this article is valid as at the date of its first publication. It is intended to provide a general guide to the subject matter and does not constitute legal advice. We recommend that you seek professional advice on your specific matter before acting on any information provided. For further information or advice, please contact Andria Kouloumi, Associate, at Andria.Kouloumi (at) kyprianou.com
If you believe an article violates your rights or the rights of others, please contact us.
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Friday, 04 September 20
IN A DEEPENING DEBT HOLE OF $34 BILLION, INDONESIA’S PLN MUST STOP DIGGING - IEEFA
The utility has added IDR100 trillion in debt annually for the last five years
Utilities globally started changing the way they do business ye ...
Friday, 04 September 20
KOMIPO INVITED BIDS FOR AUSTRALIAN MIN 5,700 NCV COAL FOR NOVEMBER
COALspot.com: Korea Midland Power Co. Ltd, has issued an International tender for 260,000 MT Min.5,700 kcal/kg NCV coal November, 2020 loading. Acc ...
Thursday, 03 September 20
BRINGING SERVICES OF FTCCI CLOSER TO THE EXPORTERS AT GMR AIR CARGO COMPLEX AT SHAMSHABAD
Press Release: “FTCCI Trade Facilitation Services at your doorstep now” says J.S. Chandrashekar, IRS., Principal Commissioner of Custom ...
Thursday, 03 September 20
CHINA'S BENCHMARK POWER COAL PRICE REMAINS FLAT - XINHUA
China’s benchmark power coal price remained flat during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Wednesday, 02 September 20
COAL PRODUCTION FALLS 7% IN APR-AUG; OFF TAKE DIPS 13.4% - FINANCIAL EXPRESS
In the month of August coal off take also increased 9.3% y-o-y to 44.34 MT as compared with 40.57 MT in the same period last year.
C ...
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- Renaissance Capital - South Africa
- Georgia Ports Authority, United States
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Finance - Indonesia
- Vedanta Resources Plc - India
- SN Aboitiz Power Inc, Philippines
- Goldman Sachs - Singapore
- SMC Global Power, Philippines
- Economic Council, Georgia
- Kohat Cement Company Ltd. - Pakistan
- Power Finance Corporation Ltd., India
- Jorong Barutama Greston.PT - Indonesia
- Timah Investasi Mineral - Indoneisa
- Kumho Petrochemical, South Korea
- Sindya Power Generating Company Private Ltd
- Semirara Mining Corp, Philippines
- Central Electricity Authority - India
- Orica Mining Services - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Banpu Public Company Limited - Thailand
- Posco Energy - South Korea
- Latin American Coal - Colombia
- Siam City Cement - Thailand
- Kapuas Tunggal Persada - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Oldendorff Carriers - Singapore
- India Bulls Power Limited - India
- Mintek Dendrill Indonesia
- Petron Corporation, Philippines
- Indian Oil Corporation Limited
- Price Waterhouse Coopers - Russia
- Therma Luzon, Inc, Philippines
- Ceylon Electricity Board - Sri Lanka
- Uttam Galva Steels Limited - India
- Jaiprakash Power Ventures ltd
- Billiton Holdings Pty Ltd - Australia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Dalmia Cement Bharat India
- Commonwealth Bank - Australia
- Jindal Steel & Power Ltd - India
- Bukit Baiduri Energy - Indonesia
- Madhucon Powers Ltd - India
- ASAPP Information Group - India
- Essar Steel Hazira Ltd - India
- Orica Australia Pty. Ltd.
- GN Power Mariveles Coal Plant, Philippines
- The Treasury - Australian Government
- Australian Coal Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Central Java Power - Indonesia
- SMG Consultants - Indonesia
- Merrill Lynch Commodities Europe
- Karbindo Abesyapradhi - Indoneisa
- Energy Link Ltd, New Zealand
- Tata Chemicals Ltd - India
- Indian Energy Exchange, India
- Mercator Lines Limited - India
- Sojitz Corporation - Japan
- Directorate General of MIneral and Coal - Indonesia
- Karaikal Port Pvt Ltd - India
- Mjunction Services Limited - India
- Kartika Selabumi Mining - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Chamber of Mines of South Africa
- Medco Energi Mining Internasional
- Neyveli Lignite Corporation Ltd, - India
- Ministry of Mines - Canada
- Aditya Birla Group - India
- LBH Netherlands Bv - Netherlands
- Electricity Authority, New Zealand
- Bhatia International Limited - India
- Kaltim Prima Coal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Iligan Light & Power Inc, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Meenaskhi Energy Private Limited - India
- Baramulti Group, Indonesia
- Barasentosa Lestari - Indonesia
- Manunggal Multi Energi - Indonesia
- VISA Power Limited - India
- Port Waratah Coal Services - Australia
- Thiess Contractors Indonesia
- Altura Mining Limited, Indonesia
- Bangladesh Power Developement Board
- Lanco Infratech Ltd - India
- Xindia Steels Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Mercuria Energy - Indonesia
- Global Business Power Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Samtan Co., Ltd - South Korea
- IEA Clean Coal Centre - UK
- Toyota Tsusho Corporation, Japan
- Pipit Mutiara Jaya. PT, Indonesia
- Planning Commission, India
- Agrawal Coal Company - India
- Sree Jayajothi Cements Limited - India
- Bulk Trading Sa - Switzerland
- Aboitiz Power Corporation - Philippines
- Deloitte Consulting - India
- Makarim & Taira - Indonesia
- Indogreen Group - Indonesia
- Africa Commodities Group - South Africa
- PTC India Limited - India
- Globalindo Alam Lestari - Indonesia
- Formosa Plastics Group - Taiwan
- San Jose City I Power Corp, Philippines
- European Bulk Services B.V. - Netherlands
- Kepco SPC Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Metalloyd Limited - United Kingdom
- Offshore Bulk Terminal Pte Ltd, Singapore
- IHS Mccloskey Coal Group - USA
- Borneo Indobara - Indonesia
- Ind-Barath Power Infra Limited - India
- Minerals Council of Australia
- Cigading International Bulk Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Maheswari Brothers Coal Limited - India
- Star Paper Mills Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Cement Manufacturers Association - India
- Rio Tinto Coal - Australia
- Asmin Koalindo Tuhup - Indonesia
- Singapore Mercantile Exchange
- Australian Commodity Traders Exchange
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Gujarat Mineral Development Corp Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- CNBM International Corporation - China
- Salva Resources Pvt Ltd - India
- McConnell Dowell - Australia
- Trasteel International SA, Italy
- Simpson Spence & Young - Indonesia
- Coastal Gujarat Power Limited - India
- Eastern Coal Council - USA
- Kideco Jaya Agung - Indonesia
- Coalindo Energy - Indonesia
- Electricity Generating Authority of Thailand
- GMR Energy Limited - India
- Bayan Resources Tbk. - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Meralco Power Generation, Philippines
- CIMB Investment Bank - Malaysia
- Ministry of Transport, Egypt
- Standard Chartered Bank - UAE
- Attock Cement Pakistan Limited
- AsiaOL BioFuels Corp., Philippines
- New Zealand Coal & Carbon
- Videocon Industries ltd - India
- Larsen & Toubro Limited - India
- Malabar Cements Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Marubeni Corporation - India
- International Coal Ventures Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Heidelberg Cement - Germany
- Eastern Energy - Thailand
- Edison Trading Spa - Italy
- Grasim Industreis Ltd - India
- PowerSource Philippines DevCo
- South Luzon Thermal Energy Corporation
- Straits Asia Resources Limited - Singapore
- Energy Development Corp, Philippines
- Parry Sugars Refinery, India
- Carbofer General Trading SA - India
- Ambuja Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Vizag Seaport Private Limited - India
- TeaM Sual Corporation - Philippines
- Kobexindo Tractors - Indoneisa
- Gujarat Sidhee Cement - India
- Semirara Mining and Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Bhushan Steel Limited - India
- Pendopo Energi Batubara - Indonesia
- Wilmar Investment Holdings
- Independent Power Producers Association of India
- Global Coal Blending Company Limited - Australia
- White Energy Company Limited
- Coal and Oil Company - UAE
- Siam City Cement PLC, Thailand
- Bukit Makmur.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- Thai Mozambique Logistica
- Sakthi Sugars Limited - India
- OPG Power Generation Pvt Ltd - India
- Krishnapatnam Port Company Ltd. - India
- ICICI Bank Limited - India
- Rashtriya Ispat Nigam Limited - India
- Parliament of New Zealand
- PNOC Exploration Corporation - Philippines
- MS Steel International - UAE
- Anglo American - United Kingdom
- Interocean Group of Companies - India
- Wood Mackenzie - Singapore
- Indonesian Coal Mining Association
- Sarangani Energy Corporation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Tamil Nadu electricity Board
- The State Trading Corporation of India Ltd
- Savvy Resources Ltd - HongKong
- GAC Shipping (India) Pvt Ltd
- The University of Queensland
- Petrochimia International Co. Ltd.- Taiwan
- Sical Logistics Limited - India
- Indika Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Global Green Power PLC Corporation, Philippines
- Romanian Commodities Exchange
- London Commodity Brokers - England
- Antam Resourcindo - Indonesia
- Bharathi Cement Corporation - India
- Intertek Mineral Services - Indonesia
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