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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, 21 August 20
BHP COMMITS TO SELLING ITS THERMAL COALMINES WITHIN TWO YEARS - THE GUARDIAN
Move follows pressure from investors but company stops short of full exit from coalmining
BHP has announced it plans to sell off its ...
Thursday, 20 August 20
MINER BHP CONFIRMS PLANS TO EXIT THERMAL COAL SECTOR - THE SYDNEY MORNING HERALD
The head of mining giant BHP has laid out plans for a reshaping of its global operations by seeking to quit thermal coal mining, offload some cokin ...
Thursday, 20 August 20
LONDON RETAINS ARBITER CROWN - BALTIC EXCHANGE | HFW
Fears that the UK’s decision to leave the European Union would dent the reputation of the nation’s capital as the leader in maritime ar ...
Wednesday, 19 August 20
U.S. COAL STOCKPILES STEADILY INCREASE AFTER REACHING LOWEST LEVEL IN A DECADE IN 2019 - EIA
After reaching their lowest level in more than a decade in March 2019, U.S. coal stockpiles steadily increased to 152 million tons in April 2020, r ...
Wednesday, 19 August 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.26 PCT - XINHUA
China Taiyuan coal transaction price index stood at 124.92 points Monday, down 0.26 percent week on week.
The index, released by Chi ...
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- Pipit Mutiara Jaya. PT, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Xindia Steels Limited - India
- Medco Energi Mining Internasional
- Kepco SPC Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Cigading International Bulk Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- Intertek Mineral Services - Indonesia
- South Luzon Thermal Energy Corporation
- Anglo American - United Kingdom
- Sree Jayajothi Cements Limited - India
- Trasteel International SA, Italy
- Bhatia International Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Sical Logistics Limited - India
- IHS Mccloskey Coal Group - USA
- Salva Resources Pvt Ltd - India
- White Energy Company Limited
- European Bulk Services B.V. - Netherlands
- Timah Investasi Mineral - Indoneisa
- Eastern Energy - Thailand
- AsiaOL BioFuels Corp., Philippines
- Miang Besar Coal Terminal - Indonesia
- Central Java Power - Indonesia
- Jindal Steel & Power Ltd - India
- Merrill Lynch Commodities Europe
- Rio Tinto Coal - Australia
- Antam Resourcindo - Indonesia
- New Zealand Coal & Carbon
- OPG Power Generation Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Economic Council, Georgia
- McConnell Dowell - Australia
- Vizag Seaport Private Limited - India
- Singapore Mercantile Exchange
- The University of Queensland
- Romanian Commodities Exchange
- San Jose City I Power Corp, Philippines
- Global Business Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Formosa Plastics Group - Taiwan
- Sojitz Corporation - Japan
- Wilmar Investment Holdings
- Altura Mining Limited, Indonesia
- Dalmia Cement Bharat India
- Planning Commission, India
- Barasentosa Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Eastern Coal Council - USA
- Attock Cement Pakistan Limited
- Carbofer General Trading SA - India
- Alfred C Toepfer International GmbH - Germany
- Baramulti Group, Indonesia
- Chettinad Cement Corporation Ltd - India
- Directorate Of Revenue Intelligence - India
- Coastal Gujarat Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- CIMB Investment Bank - Malaysia
- Coal and Oil Company - UAE
- Tata Chemicals Ltd - India
- Iligan Light & Power Inc, Philippines
- Toyota Tsusho Corporation, Japan
- Coalindo Energy - Indonesia
- Gujarat Sidhee Cement - India
- Siam City Cement - Thailand
- Kohat Cement Company Ltd. - Pakistan
- Simpson Spence & Young - Indonesia
- Ministry of Mines - Canada
- The Treasury - Australian Government
- Renaissance Capital - South Africa
- MS Steel International - UAE
- Tamil Nadu electricity Board
- Bhoruka Overseas - Indonesia
- Agrawal Coal Company - India
- Posco Energy - South Korea
- Bulk Trading Sa - Switzerland
- VISA Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Kobexindo Tractors - Indoneisa
- Sakthi Sugars Limited - India
- Gujarat Electricity Regulatory Commission - India
- Billiton Holdings Pty Ltd - Australia
- Malabar Cements Ltd - India
- Siam City Cement PLC, Thailand
- Kideco Jaya Agung - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Semirara Mining and Power Corporation, Philippines
- London Commodity Brokers - England
- Bayan Resources Tbk. - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Lanco Infratech Ltd - India
- Riau Bara Harum - Indonesia
- SMG Consultants - Indonesia
- Deloitte Consulting - India
- Indian Oil Corporation Limited
- Manunggal Multi Energi - Indonesia
- ICICI Bank Limited - India
- Parry Sugars Refinery, India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Coal Blending Company Limited - Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- IEA Clean Coal Centre - UK
- Petron Corporation, Philippines
- The State Trading Corporation of India Ltd
- Energy Development Corp, Philippines
- Commonwealth Bank - Australia
- Bukit Baiduri Energy - Indonesia
- Port Waratah Coal Services - Australia
- Borneo Indobara - Indonesia
- Maheswari Brothers Coal Limited - India
- Binh Thuan Hamico - Vietnam
- Heidelberg Cement - Germany
- Minerals Council of Australia
- Sindya Power Generating Company Private Ltd
- Aboitiz Power Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Mintek Dendrill Indonesia
- Electricity Authority, New Zealand
- Bhushan Steel Limited - India
- PTC India Limited - India
- Larsen & Toubro Limited - India
- PNOC Exploration Corporation - Philippines
- Cement Manufacturers Association - India
- TeaM Sual Corporation - Philippines
- Australian Coal Association
- Power Finance Corporation Ltd., India
- Interocean Group of Companies - India
- Goldman Sachs - Singapore
- Semirara Mining Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Essar Steel Hazira Ltd - India
- Bharathi Cement Corporation - India
- Ambuja Cements Ltd - India
- Ministry of Finance - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Energy Link Ltd, New Zealand
- Pendopo Energi Batubara - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Electricity Generating Authority of Thailand
- Standard Chartered Bank - UAE
- Australian Commodity Traders Exchange
- Vedanta Resources Plc - India
- LBH Netherlands Bv - Netherlands
- Leighton Contractors Pty Ltd - Australia
- Maharashtra Electricity Regulatory Commission - India
- Africa Commodities Group - South Africa
- GAC Shipping (India) Pvt Ltd
- Kapuas Tunggal Persada - Indonesia
- Sarangani Energy Corporation, Philippines
- Thiess Contractors Indonesia
- Aditya Birla Group - India
- Parliament of New Zealand
- Meralco Power Generation, Philippines
- Edison Trading Spa - Italy
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Indika Energy - Indonesia
- SMC Global Power, Philippines
- Meenaskhi Energy Private Limited - India
- India Bulls Power Limited - India
- Chamber of Mines of South Africa
- Star Paper Mills Limited - India
- Wood Mackenzie - Singapore
- Madhucon Powers Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Makarim & Taira - Indonesia
- SN Aboitiz Power Inc, Philippines
- Mercuria Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Bangladesh Power Developement Board
- Jaiprakash Power Ventures ltd
- ASAPP Information Group - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Price Waterhouse Coopers - Russia
- Kartika Selabumi Mining - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Mjunction Services Limited - India
- Latin American Coal - Colombia
- Thai Mozambique Logistica
- Samtan Co., Ltd - South Korea
- CNBM International Corporation - China
- Indian Energy Exchange, India
- Straits Asia Resources Limited - Singapore
- Indogreen Group - Indonesia
- Independent Power Producers Association of India
- Georgia Ports Authority, United States
- Videocon Industries ltd - India
- Sinarmas Energy and Mining - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Savvy Resources Ltd - HongKong
- PetroVietnam Power Coal Import and Supply Company
- Therma Luzon, Inc, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Orica Australia Pty. Ltd.
- Indonesian Coal Mining Association
- Holcim Trading Pte Ltd - Singapore
- Kaltim Prima Coal - Indonesia
- Central Electricity Authority - India
- Oldendorff Carriers - Singapore
- PowerSource Philippines DevCo
- GMR Energy Limited - India
- Metalloyd Limited - United Kingdom
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Mercator Lines Limited - India
- Grasim Industreis Ltd - India
- Kumho Petrochemical, South Korea
- Ind-Barath Power Infra Limited - India
- Orica Mining Services - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Ministry of Transport, Egypt
- Marubeni Corporation - India
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