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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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Thursday, 27 August 20
BANGLADESH POWER MINISTRY SEEKING AUTHORITY TO CANCEL 13,000 MW OF PROPOSED COAL-FIRED CAPACITY - BUSINESS STANDARD
In a bid to move away from dirty energy, the Ministry of Power, Energy and Mineral Resources is seeking the prime minister’s approval to conv ...
Wednesday, 26 August 20
ASIAN COAL PRICES LIKELY TO REMAIN DEPRESSED SAY TRADERS, ANALYSTS - REUTERS
Asian coal prices, which have fallen around 25% this year as power demand slumped due to the coronavirus outbreak, are unlikely to move higher befo ...
Wednesday, 26 August 20
WORLD COAL EXPORTS: INDONESIAN THERMAL COAL EXPORTS HAVE COME UNDER PRESSURE AS THERMAL COAL PRICES WEAKEN - REPORT
Indonesia’s exports to decline sharply from record highs
Indonesia is the world’s largest thermal coal exporter, sellin ...
Wednesday, 26 August 20
JAPAN'S COAL IMPORTS ARE BEING AFFECTED BY COMPETING INFLUENCES - REPORT
Japan is the world’s third largest thermal coal importer, importing an estimated 135 million tonnes of thermal coal in 2019. The country&rsqu ...
Wednesday, 26 August 20
PENDING SOUTH KOREA LEGISLATION COULD FORCE HALT TO COUNTRY’S COAL PLANT EXPORT DEALS - KOREA ECONOMIC DAILY
South Korea’s parliament looks set to pass new legislation to ban financing on foreign coal power projects, putting all overseas coal-fired p ...
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- White Energy Company Limited
- Attock Cement Pakistan Limited
- Manunggal Multi Energi - Indonesia
- Parry Sugars Refinery, India
- Xindia Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- South Luzon Thermal Energy Corporation
- Petrochimia International Co. Ltd.- Taiwan
- Indo Tambangraya Megah - Indonesia
- Price Waterhouse Coopers - Russia
- Ambuja Cements Ltd - India
- Madhucon Powers Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Indonesian Coal Mining Association
- MS Steel International - UAE
- Directorate Of Revenue Intelligence - India
- Latin American Coal - Colombia
- Orica Australia Pty. Ltd.
- GN Power Mariveles Coal Plant, Philippines
- Planning Commission, India
- Economic Council, Georgia
- Globalindo Alam Lestari - Indonesia
- Sical Logistics Limited - India
- Global Green Power PLC Corporation, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Merrill Lynch Commodities Europe
- Maheswari Brothers Coal Limited - India
- Aboitiz Power Corporation - Philippines
- Coalindo Energy - Indonesia
- Eastern Coal Council - USA
- Vijayanagar Sugar Pvt Ltd - India
- Therma Luzon, Inc, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Sree Jayajothi Cements Limited - India
- Georgia Ports Authority, United States
- GAC Shipping (India) Pvt Ltd
- Antam Resourcindo - Indonesia
- Borneo Indobara - Indonesia
- Electricity Generating Authority of Thailand
- Central Java Power - Indonesia
- Mercuria Energy - Indonesia
- Uttam Galva Steels Limited - India
- Baramulti Group, Indonesia
- New Zealand Coal & Carbon
- Rashtriya Ispat Nigam Limited - India
- Port Waratah Coal Services - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Heidelberg Cement - Germany
- Global Business Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Indian Oil Corporation Limited
- GMR Energy Limited - India
- Straits Asia Resources Limited - Singapore
- Lanco Infratech Ltd - India
- Metalloyd Limited - United Kingdom
- Chamber of Mines of South Africa
- Power Finance Corporation Ltd., India
- Bangladesh Power Developement Board
- Mercator Lines Limited - India
- Thai Mozambique Logistica
- Neyveli Lignite Corporation Ltd, - India
- Commonwealth Bank - Australia
- Karaikal Port Pvt Ltd - India
- Larsen & Toubro Limited - India
- Vizag Seaport Private Limited - India
- GVK Power & Infra Limited - India
- Bhatia International Limited - India
- Bulk Trading Sa - Switzerland
- Holcim Trading Pte Ltd - Singapore
- Singapore Mercantile Exchange
- Kohat Cement Company Ltd. - Pakistan
- The State Trading Corporation of India Ltd
- Riau Bara Harum - Indonesia
- ICICI Bank Limited - India
- Toyota Tsusho Corporation, Japan
- Electricity Authority, New Zealand
- Africa Commodities Group - South Africa
- Bharathi Cement Corporation - India
- Ministry of Finance - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Ceylon Electricity Board - Sri Lanka
- Bhushan Steel Limited - India
- Leighton Contractors Pty Ltd - Australia
- Anglo American - United Kingdom
- Meralco Power Generation, Philippines
- AsiaOL BioFuels Corp., Philippines
- Jorong Barutama Greston.PT - Indonesia
- Orica Mining Services - Indonesia
- Banpu Public Company Limited - Thailand
- Kaltim Prima Coal - Indonesia
- Tamil Nadu electricity Board
- Asmin Koalindo Tuhup - Indonesia
- Gujarat Sidhee Cement - India
- The University of Queensland
- Carbofer General Trading SA - India
- Bhoruka Overseas - Indonesia
- Kartika Selabumi Mining - Indonesia
- Sarangani Energy Corporation, Philippines
- Coastal Gujarat Power Limited - India
- Parliament of New Zealand
- Sinarmas Energy and Mining - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- San Jose City I Power Corp, Philippines
- Deloitte Consulting - India
- Kapuas Tunggal Persada - Indonesia
- Energy Development Corp, Philippines
- Savvy Resources Ltd - HongKong
- Energy Link Ltd, New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Sojitz Corporation - Japan
- PTC India Limited - India
- PowerSource Philippines DevCo
- Wood Mackenzie - Singapore
- Timah Investasi Mineral - Indoneisa
- Cigading International Bulk Terminal - Indonesia
- Simpson Spence & Young - Indonesia
- Bukit Makmur.PT - Indonesia
- SMC Global Power, Philippines
- Agrawal Coal Company - India
- Barasentosa Lestari - Indonesia
- ASAPP Information Group - India
- VISA Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Ministry of Mines - Canada
- LBH Netherlands Bv - Netherlands
- Semirara Mining Corp, Philippines
- Rio Tinto Coal - Australia
- Sindya Power Generating Company Private Ltd
- Jindal Steel & Power Ltd - India
- Oldendorff Carriers - Singapore
- Chettinad Cement Corporation Ltd - India
- SMG Consultants - Indonesia
- Renaissance Capital - South Africa
- Binh Thuan Hamico - Vietnam
- Gujarat Electricity Regulatory Commission - India
- Bukit Baiduri Energy - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Mjunction Services Limited - India
- Iligan Light & Power Inc, Philippines
- Standard Chartered Bank - UAE
- Aditya Birla Group - India
- Vedanta Resources Plc - India
- Australian Commodity Traders Exchange
- Kumho Petrochemical, South Korea
- Thiess Contractors Indonesia
- Australian Coal Association
- Medco Energi Mining Internasional
- Pendopo Energi Batubara - Indonesia
- Meenaskhi Energy Private Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Central Electricity Authority - India
- Kobexindo Tractors - Indoneisa
- Altura Mining Limited, Indonesia
- European Bulk Services B.V. - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Interocean Group of Companies - India
- Posco Energy - South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- India Bulls Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tata Chemicals Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Coal and Oil Company - UAE
- International Coal Ventures Pvt Ltd - India
- Grasim Industreis Ltd - India
- Salva Resources Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Siam City Cement PLC, Thailand
- SN Aboitiz Power Inc, Philippines
- Petron Corporation, Philippines
- IEA Clean Coal Centre - UK
- Ministry of Transport, Egypt
- Independent Power Producers Association of India
- Indian Energy Exchange, India
- Dalmia Cement Bharat India
- PetroVietnam Power Coal Import and Supply Company
- Trasteel International SA, Italy
- Makarim & Taira - Indonesia
- Eastern Energy - Thailand
- Karbindo Abesyapradhi - Indoneisa
- Kideco Jaya Agung - Indonesia
- Star Paper Mills Limited - India
- Romanian Commodities Exchange
- Wilmar Investment Holdings
- Kalimantan Lumbung Energi - Indonesia
- Minerals Council of Australia
- Global Coal Blending Company Limited - Australia
- Formosa Plastics Group - Taiwan
- Edison Trading Spa - Italy
- Essar Steel Hazira Ltd - India
- Malabar Cements Ltd - India
- Ind-Barath Power Infra Limited - India
- Goldman Sachs - Singapore
- Jaiprakash Power Ventures ltd
- Kepco SPC Power Corporation, Philippines
- The Treasury - Australian Government
- CNBM International Corporation - China
- IHS Mccloskey Coal Group - USA
- McConnell Dowell - Australia
- Cement Manufacturers Association - India
- CIMB Investment Bank - Malaysia
- London Commodity Brokers - England
- Samtan Co., Ltd - South Korea
- Videocon Industries ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Indika Energy - Indonesia
- Intertek Mineral Services - Indonesia
- Marubeni Corporation - India
- Indogreen Group - Indonesia
- TeaM Sual Corporation - Philippines
- Siam City Cement - Thailand
- Sakthi Sugars Limited - India
- PNOC Exploration Corporation - Philippines
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