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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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Tuesday, 25 August 20
INDIA'S IMPORTS FALL AS LOCKDOWNS IMPACT THE POWER AND INDUSTRIAL SECTORS - REPORT
India is the world’s second largest thermal coal consumer and importer, importing an estimated 211 million tonnes of thermal coal in 2019.&nb ...
Monday, 24 August 20
A COMBINATION OF DEVELOPMENTS DROVE THE FALLOFF COAL PRICES - CHIEF ECONOMIST’ OFFICE, AUSTRALIA
China, rising domestic production combined with subdued power demand;
India, a lockdown coupled with government directives that fav ...
Monday, 24 August 20
AUSTRALIA'S THERMAL COAL EXPORTS ARE FORECAST TO DROP FROM AN ESTIMATED $20 BILLION IN 2019-20 TO $16 BILLION IN 2020-21: REPORT
Thermal coal spot prices have fallen sharply as the impact of COVID-19 drives a contraction in seaborne trade for only the second time this century ...
Saturday, 22 August 20
REPORT SEES INDIA’S RELIANCE ON THERMAL POWER DROPPING TO 50% IN 2021, 43% IN 2026 - ET ENERGY | IEEFA
India’s dependence on thermal power will reduce to 50 per cent by 2021-22 and 43 per cent by 2026-27 on the back of renewable energy (RE) cap ...
Friday, 21 August 20
323 MILLION ELECTRIC VEHICLES WILL BE ON THE ROADS BY 2040 - WOOD MACKENZIE
Electric vehicle (EV) sales are expected to reach 45 million units per year by 2040, with a total global EV stock of 323 million, according to new ...
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- Bahari Cakrawala Sebuku - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Latin American Coal - Colombia
- Indo Tambangraya Megah - Indonesia
- Price Waterhouse Coopers - Russia
- Lanco Infratech Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Global Coal Blending Company Limited - Australia
- Australian Commodity Traders Exchange
- Cigading International Bulk Terminal - Indonesia
- Edison Trading Spa - Italy
- Binh Thuan Hamico - Vietnam
- Ministry of Finance - Indonesia
- Ambuja Cements Ltd - India
- India Bulls Power Limited - India
- Cement Manufacturers Association - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Coal Council - USA
- Tata Chemicals Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Minerals Council of Australia
- OPG Power Generation Pvt Ltd - India
- Siam City Cement - Thailand
- Bulk Trading Sa - Switzerland
- Videocon Industries ltd - India
- Medco Energi Mining Internasional
- Star Paper Mills Limited - India
- Kepco SPC Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Interocean Group of Companies - India
- Pendopo Energi Batubara - Indonesia
- Parliament of New Zealand
- Kohat Cement Company Ltd. - Pakistan
- Commonwealth Bank - Australia
- Maheswari Brothers Coal Limited - India
- Barasentosa Lestari - Indonesia
- Parry Sugars Refinery, India
- PowerSource Philippines DevCo
- Gujarat Electricity Regulatory Commission - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- CIMB Investment Bank - Malaysia
- Billiton Holdings Pty Ltd - Australia
- Australian Coal Association
- PNOC Exploration Corporation - Philippines
- Directorate Of Revenue Intelligence - India
- Leighton Contractors Pty Ltd - Australia
- Mjunction Services Limited - India
- SN Aboitiz Power Inc, Philippines
- McConnell Dowell - Australia
- Alfred C Toepfer International GmbH - Germany
- Jindal Steel & Power Ltd - India
- GMR Energy Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Kideco Jaya Agung - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- South Luzon Thermal Energy Corporation
- Thai Mozambique Logistica
- Ministry of Mines - Canada
- Indonesian Coal Mining Association
- Eastern Energy - Thailand
- Vedanta Resources Plc - India
- Bhoruka Overseas - Indonesia
- SMC Global Power, Philippines
- The University of Queensland
- Deloitte Consulting - India
- MS Steel International - UAE
- IEA Clean Coal Centre - UK
- Aboitiz Power Corporation - Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Independent Power Producers Association of India
- Energy Link Ltd, New Zealand
- Orica Mining Services - Indonesia
- Economic Council, Georgia
- Oldendorff Carriers - Singapore
- Madhucon Powers Ltd - India
- Electricity Authority, New Zealand
- Singapore Mercantile Exchange
- Trasteel International SA, Italy
- Gujarat Mineral Development Corp Ltd - India
- Bukit Makmur.PT - Indonesia
- International Coal Ventures Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Global Business Power Corporation, Philippines
- Wood Mackenzie - Singapore
- Antam Resourcindo - Indonesia
- Bayan Resources Tbk. - Indonesia
- Sarangani Energy Corporation, Philippines
- Altura Mining Limited, Indonesia
- Marubeni Corporation - India
- Bharathi Cement Corporation - India
- Sakthi Sugars Limited - India
- Essar Steel Hazira Ltd - India
- Orica Australia Pty. Ltd.
- Holcim Trading Pte Ltd - Singapore
- Indogreen Group - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Salva Resources Pvt Ltd - India
- Thiess Contractors Indonesia
- Gujarat Sidhee Cement - India
- PTC India Limited - India
- The State Trading Corporation of India Ltd
- Mercuria Energy - Indonesia
- Siam City Cement PLC, Thailand
- Kapuas Tunggal Persada - Indonesia
- Kaltim Prima Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Sojitz Corporation - Japan
- Mintek Dendrill Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bhatia International Limited - India
- Dalmia Cement Bharat India
- Metalloyd Limited - United Kingdom
- Tamil Nadu electricity Board
- Straits Asia Resources Limited - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Port Waratah Coal Services - Australia
- Malabar Cements Ltd - India
- Baramulti Group, Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Coal and Oil Company - UAE
- Miang Besar Coal Terminal - Indonesia
- European Bulk Services B.V. - Netherlands
- Larsen & Toubro Limited - India
- Posco Energy - South Korea
- Manunggal Multi Energi - Indonesia
- Therma Luzon, Inc, Philippines
- Iligan Light & Power Inc, Philippines
- White Energy Company Limited
- Semirara Mining Corp, Philippines
- Central Electricity Authority - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- AsiaOL BioFuels Corp., Philippines
- Makarim & Taira - Indonesia
- CNBM International Corporation - China
- TeaM Sual Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- ASAPP Information Group - India
- Kalimantan Lumbung Energi - Indonesia
- Power Finance Corporation Ltd., India
- Bukit Baiduri Energy - Indonesia
- Aditya Birla Group - India
- Petron Corporation, Philippines
- Sindya Power Generating Company Private Ltd
- Indian Energy Exchange, India
- Simpson Spence & Young - Indonesia
- Carbofer General Trading SA - India
- The Treasury - Australian Government
- Vizag Seaport Private Limited - India
- Anglo American - United Kingdom
- Bukit Asam (Persero) Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- Standard Chartered Bank - UAE
- Jaiprakash Power Ventures ltd
- Uttam Galva Steels Limited - India
- London Commodity Brokers - England
- Sinarmas Energy and Mining - Indonesia
- Globalindo Alam Lestari - Indonesia
- Attock Cement Pakistan Limited
- Ceylon Electricity Board - Sri Lanka
- Global Green Power PLC Corporation, Philippines
- Africa Commodities Group - South Africa
- Mercator Lines Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Samtan Co., Ltd - South Korea
- LBH Netherlands Bv - Netherlands
- Wilmar Investment Holdings
- Sical Logistics Limited - India
- VISA Power Limited - India
- Borneo Indobara - Indonesia
- GAC Shipping (India) Pvt Ltd
- Bangladesh Power Developement Board
- Grasim Industreis Ltd - India
- Romanian Commodities Exchange
- Banpu Public Company Limited - Thailand
- Krishnapatnam Port Company Ltd. - India
- Indian Oil Corporation Limited
- Chamber of Mines of South Africa
- Coastal Gujarat Power Limited - India
- Meralco Power Generation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- Kartika Selabumi Mining - Indonesia
- Timah Investasi Mineral - Indoneisa
- Bhushan Steel Limited - India
- New Zealand Coal & Carbon
- Agrawal Coal Company - India
- Heidelberg Cement - Germany
- Coalindo Energy - Indonesia
- SMG Consultants - Indonesia
- Rio Tinto Coal - Australia
- Karaikal Port Pvt Ltd - India
- Goldman Sachs - Singapore
- Central Java Power - Indonesia
- Xindia Steels Limited - India
- San Jose City I Power Corp, Philippines
- Indika Energy - Indonesia
- Georgia Ports Authority, United States
- Energy Development Corp, Philippines
- Intertek Mineral Services - Indonesia
- Planning Commission, India
- Formosa Plastics Group - Taiwan
- Kobexindo Tractors - Indoneisa
- Riau Bara Harum - Indonesia
- Renaissance Capital - South Africa
- TNB Fuel Sdn Bhd - Malaysia
- ICICI Bank Limited - India
- Electricity Generating Authority of Thailand
- Ministry of Transport, Egypt
- Merrill Lynch Commodities Europe
- Ind-Barath Power Infra Limited - India
- Kumho Petrochemical, South Korea
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