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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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Wednesday, 02 September 20
MARKET INSIGHT - INTERMODAL
The imminent global shift towards eco-friendliness has caused divide among the shipping community because there is no outlined, clear-cut way via w ...
Wednesday, 02 September 20
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Subdued demand & global oversupply pushed down this month's HBA
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Tuesday, 01 September 20
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5-10% annual decline in tariffs estimated for the next decade
A number of countries in the Gulf region have set record-low prices for solar in ...
Tuesday, 01 September 20
COVID-19 PUSHES US LNG INTO A TIGHT SPOT - DREWRY
The pandemic-led weak projections for economic growth will derail US LNG exports in full-year 2020 with the country also losing ground in the long ...
Monday, 31 August 20
DEFECTIVE PASSAGE PLANNING: UNSEAWORTHINESS OR A NAVIGATIONAL DECISION? THE CMA CGM LIBRA QUESTION SAILS ON TO THE UK SUPREME COURT - GARD
KNOWLEDGE TO ELEVATE
The UK Supreme Court has granted leave to appeal the recent decision in Alize 1954 v Allianz Elementar Versicherungs AG ( ...
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- GAC Shipping (India) Pvt Ltd
- India Bulls Power Limited - India
- Kumho Petrochemical, South Korea
- Australian Coal Association
- Miang Besar Coal Terminal - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- CIMB Investment Bank - Malaysia
- GMR Energy Limited - India
- Bulk Trading Sa - Switzerland
- Edison Trading Spa - Italy
- Ambuja Cements Ltd - India
- IEA Clean Coal Centre - UK
- European Bulk Services B.V. - Netherlands
- Sarangani Energy Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Ministry of Transport, Egypt
- ICICI Bank Limited - India
- SMC Global Power, Philippines
- Xindia Steels Limited - India
- Anglo American - United Kingdom
- Pipit Mutiara Jaya. PT, Indonesia
- Grasim Industreis Ltd - India
- Coal and Oil Company - UAE
- Electricity Generating Authority of Thailand
- International Coal Ventures Pvt Ltd - India
- Banpu Public Company Limited - Thailand
- Interocean Group of Companies - India
- Manunggal Multi Energi - Indonesia
- Bhatia International Limited - India
- Medco Energi Mining Internasional
- Planning Commission, India
- Mercator Lines Limited - India
- Uttam Galva Steels Limited - India
- Wilmar Investment Holdings
- Offshore Bulk Terminal Pte Ltd, Singapore
- PetroVietnam Power Coal Import and Supply Company
- Iligan Light & Power Inc, Philippines
- Meralco Power Generation, Philippines
- Agrawal Coal Company - India
- Carbofer General Trading SA - India
- Samtan Co., Ltd - South Korea
- Minerals Council of Australia
- Leighton Contractors Pty Ltd - Australia
- Merrill Lynch Commodities Europe
- Pendopo Energi Batubara - Indonesia
- Goldman Sachs - Singapore
- Bukit Makmur.PT - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Rashtriya Ispat Nigam Limited - India
- Holcim Trading Pte Ltd - Singapore
- London Commodity Brokers - England
- LBH Netherlands Bv - Netherlands
- Jorong Barutama Greston.PT - Indonesia
- PNOC Exploration Corporation - Philippines
- Ministry of Mines - Canada
- Mjunction Services Limited - India
- Jaiprakash Power Ventures ltd
- Straits Asia Resources Limited - Singapore
- Borneo Indobara - Indonesia
- Tata Chemicals Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Energy Development Corp, Philippines
- Cement Manufacturers Association - India
- Essar Steel Hazira Ltd - India
- Salva Resources Pvt Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- ASAPP Information Group - India
- Bukit Baiduri Energy - Indonesia
- Kobexindo Tractors - Indoneisa
- Mercuria Energy - Indonesia
- OPG Power Generation Pvt Ltd - India
- Australian Commodity Traders Exchange
- Wood Mackenzie - Singapore
- San Jose City I Power Corp, Philippines
- Coastal Gujarat Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Independent Power Producers Association of India
- Directorate Of Revenue Intelligence - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indonesian Coal Mining Association
- Marubeni Corporation - India
- Thai Mozambique Logistica
- Sical Logistics Limited - India
- McConnell Dowell - Australia
- Makarim & Taira - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Bhushan Steel Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Metalloyd Limited - United Kingdom
- Bayan Resources Tbk. - Indonesia
- SMG Consultants - Indonesia
- Timah Investasi Mineral - Indoneisa
- Standard Chartered Bank - UAE
- Videocon Industries ltd - India
- Ministry of Finance - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Kapuas Tunggal Persada - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Parliament of New Zealand
- Cigading International Bulk Terminal - Indonesia
- MS Steel International - UAE
- Maheswari Brothers Coal Limited - India
- GVK Power & Infra Limited - India
- Economic Council, Georgia
- Riau Bara Harum - Indonesia
- Central Electricity Authority - India
- Mintek Dendrill Indonesia
- New Zealand Coal & Carbon
- Star Paper Mills Limited - India
- IHS Mccloskey Coal Group - USA
- Simpson Spence & Young - Indonesia
- Romanian Commodities Exchange
- Binh Thuan Hamico - Vietnam
- Sojitz Corporation - Japan
- Kalimantan Lumbung Energi - Indonesia
- Barasentosa Lestari - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Altura Mining Limited, Indonesia
- Global Green Power PLC Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Commonwealth Bank - Australia
- Petron Corporation, Philippines
- Eastern Energy - Thailand
- GN Power Mariveles Coal Plant, Philippines
- Kideco Jaya Agung - Indonesia
- Intertek Mineral Services - Indonesia
- Siam City Cement PLC, Thailand
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Malabar Cements Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Latin American Coal - Colombia
- Georgia Ports Authority, United States
- Eastern Coal Council - USA
- AsiaOL BioFuels Corp., Philippines
- Sakthi Sugars Limited - India
- Vizag Seaport Private Limited - India
- Africa Commodities Group - South Africa
- Semirara Mining Corp, Philippines
- Global Business Power Corporation, Philippines
- Chamber of Mines of South Africa
- PTC India Limited - India
- Bharathi Cement Corporation - India
- Oldendorff Carriers - Singapore
- Therma Luzon, Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Orica Australia Pty. Ltd.
- Electricity Authority, New Zealand
- Toyota Tsusho Corporation, Japan
- Indian Oil Corporation Limited
- Larsen & Toubro Limited - India
- Parry Sugars Refinery, India
- White Energy Company Limited
- Asmin Koalindo Tuhup - Indonesia
- Coalindo Energy - Indonesia
- Meenaskhi Energy Private Limited - India
- Energy Link Ltd, New Zealand
- Central Java Power - Indonesia
- Indogreen Group - Indonesia
- Lanco Infratech Ltd - India
- Sree Jayajothi Cements Limited - India
- The State Trading Corporation of India Ltd
- Dalmia Cement Bharat India
- Trasteel International SA, Italy
- Indian Energy Exchange, India
- Karaikal Port Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Antam Resourcindo - Indonesia
- Aboitiz Power Corporation - Philippines
- Bangladesh Power Developement Board
- Bhoruka Overseas - Indonesia
- Savvy Resources Ltd - HongKong
- VISA Power Limited - India
- Singapore Mercantile Exchange
- Vedanta Resources Plc - India
- PowerSource Philippines DevCo
- Power Finance Corporation Ltd., India
- Heidelberg Cement - Germany
- Tamil Nadu electricity Board
- Directorate General of MIneral and Coal - Indonesia
- The Treasury - Australian Government
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Baramulti Group, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Siam City Cement - Thailand
- Kaltim Prima Coal - Indonesia
- South Luzon Thermal Energy Corporation
- Formosa Plastics Group - Taiwan
- Renaissance Capital - South Africa
- Globalindo Alam Lestari - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- SN Aboitiz Power Inc, Philippines
- Deloitte Consulting - India
- Indika Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Attock Cement Pakistan Limited
- Price Waterhouse Coopers - Russia
- Kohat Cement Company Ltd. - Pakistan
- CNBM International Corporation - China
- Madhucon Powers Ltd - India
- Ind-Barath Power Infra Limited - India
- Gujarat Sidhee Cement - India
- TeaM Sual Corporation - Philippines
- Sindya Power Generating Company Private Ltd
- Ceylon Electricity Board - Sri Lanka
- Thiess Contractors Indonesia
- Kartika Selabumi Mining - Indonesia
- Port Waratah Coal Services - Australia
- Alfred C Toepfer International GmbH - Germany
- The University of Queensland
- Posco Energy - South Korea
- Rio Tinto Coal - Australia
- Orica Mining Services - Indonesia
- Jindal Steel & Power Ltd - India
- Kepco SPC Power Corporation, Philippines
- Aditya Birla Group - India
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