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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, 19 August 20
COAL INDIA TRADE UNIONS DEFER DAY-LONG STRIKE: PTI
The unions had decided to go on strike against the commercial mining and the proposed divestment or buyback of shares of Coal India Ltd (CIL).
...
Wednesday, 19 August 20
MISC MARKS ITS MAIDEN FORAY INTO MAJOR DEEP-WATER PROJECT IN LATIN AMERICA WITH MERO 3 FPSO
MISC Berhad (MISC) is pleased to announce its acceptance of Letter of Intent (LOI) from Petróleo Brasileiro S.A. (Petrobras) for the provisi ...
Wednesday, 19 August 20
MARKET INSIGHT - GEORGE LAIOS | INTERMODAL
Since the Covid-19 outbreak, governments and central banks around the globe have been using their ammunition and stimulus packages to keep their ec ...
Wednesday, 19 August 20
INDIA SAW A SHARP DECLINE IN ENERGY COAL IMPORTS IN JANUARY - JUNE 2020; –27 PER CENT YOY - BHP
Energy coal prices were weak in the second half of financial year 2020, BHP says in its Economic and Commodity Outlook FY20.
Accordi ...
Wednesday, 19 August 20
COAL PRICES TO REMAIN SUBDUED THIS FISCAL AMID WEAK DEMAND, HIGH INVENTORY - THE HINDU BUSINESS LINE
Coal offtake is improving gradually as lockdown eases
Coal prices are expected to remain subdued to weak demand and high inventory l ...
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- London Commodity Brokers - England
- GVK Power & Infra Limited - India
- Vizag Seaport Private Limited - India
- Commonwealth Bank - Australia
- Ambuja Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- Electricity Generating Authority of Thailand
- Cigading International Bulk Terminal - Indonesia
- Goldman Sachs - Singapore
- Chamber of Mines of South Africa
- Ind-Barath Power Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Uttam Galva Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- ASAPP Information Group - India
- Edison Trading Spa - Italy
- Malabar Cements Ltd - India
- Anglo American - United Kingdom
- Power Finance Corporation Ltd., India
- Asmin Koalindo Tuhup - Indonesia
- Meenaskhi Energy Private Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Indo Tambangraya Megah - Indonesia
- Bhoruka Overseas - Indonesia
- Madhucon Powers Ltd - India
- Romanian Commodities Exchange
- Vedanta Resources Plc - India
- Kumho Petrochemical, South Korea
- Merrill Lynch Commodities Europe
- Ministry of Transport, Egypt
- Indian Oil Corporation Limited
- Cement Manufacturers Association - India
- Australian Commodity Traders Exchange
- PTC India Limited - India
- GMR Energy Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Kapuas Tunggal Persada - Indonesia
- Jaiprakash Power Ventures ltd
- Standard Chartered Bank - UAE
- Semirara Mining Corp, Philippines
- Formosa Plastics Group - Taiwan
- McConnell Dowell - Australia
- Riau Bara Harum - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Iligan Light & Power Inc, Philippines
- Latin American Coal - Colombia
- Bahari Cakrawala Sebuku - Indonesia
- Heidelberg Cement - Germany
- Xindia Steels Limited - India
- PowerSource Philippines DevCo
- Semirara Mining and Power Corporation, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Mercuria Energy - Indonesia
- Africa Commodities Group - South Africa
- Siam City Cement - Thailand
- Parliament of New Zealand
- Thai Mozambique Logistica
- Bhatia International Limited - India
- Planning Commission, India
- Star Paper Mills Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Indogreen Group - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- International Coal Ventures Pvt Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Grasim Industreis Ltd - India
- Directorate Of Revenue Intelligence - India
- The University of Queensland
- Electricity Authority, New Zealand
- Deloitte Consulting - India
- Meralco Power Generation, Philippines
- Baramulti Group, Indonesia
- CNBM International Corporation - China
- Price Waterhouse Coopers - Russia
- Independent Power Producers Association of India
- Videocon Industries ltd - India
- Holcim Trading Pte Ltd - Singapore
- Mercator Lines Limited - India
- Siam City Cement PLC, Thailand
- Gujarat Mineral Development Corp Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Aboitiz Power Corporation - Philippines
- Wilmar Investment Holdings
- Rio Tinto Coal - Australia
- Tamil Nadu electricity Board
- India Bulls Power Limited - India
- CIMB Investment Bank - Malaysia
- European Bulk Services B.V. - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Sakthi Sugars Limited - India
- Bharathi Cement Corporation - India
- VISA Power Limited - India
- Binh Thuan Hamico - Vietnam
- PNOC Exploration Corporation - Philippines
- Tata Chemicals Ltd - India
- Samtan Co., Ltd - South Korea
- Timah Investasi Mineral - Indoneisa
- Global Business Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- GAC Shipping (India) Pvt Ltd
- Energy Link Ltd, New Zealand
- Trasteel International SA, Italy
- Economic Council, Georgia
- Pipit Mutiara Jaya. PT, Indonesia
- Sree Jayajothi Cements Limited - India
- Ministry of Mines - Canada
- Attock Cement Pakistan Limited
- Sojitz Corporation - Japan
- Vijayanagar Sugar Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Bukit Baiduri Energy - Indonesia
- Medco Energi Mining Internasional
- Manunggal Multi Energi - Indonesia
- Orica Australia Pty. Ltd.
- Eastern Coal Council - USA
- Port Waratah Coal Services - Australia
- Maheswari Brothers Coal Limited - India
- Sarangani Energy Corporation, Philippines
- Central Java Power - Indonesia
- Georgia Ports Authority, United States
- TNB Fuel Sdn Bhd - Malaysia
- Barasentosa Lestari - Indonesia
- Gujarat Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- San Jose City I Power Corp, Philippines
- Essar Steel Hazira Ltd - India
- Ministry of Finance - Indonesia
- Altura Mining Limited, Indonesia
- IHS Mccloskey Coal Group - USA
- Coastal Gujarat Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Global Coal Blending Company Limited - Australia
- Intertek Mineral Services - Indonesia
- Kepco SPC Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Lanco Infratech Ltd - India
- Posco Energy - South Korea
- Central Electricity Authority - India
- Indika Energy - Indonesia
- MS Steel International - UAE
- Bukit Asam (Persero) Tbk - Indonesia
- Petron Corporation, Philippines
- Borneo Indobara - Indonesia
- TeaM Sual Corporation - Philippines
- Bhushan Steel Limited - India
- Indian Energy Exchange, India
- Sical Logistics Limited - India
- The Treasury - Australian Government
- New Zealand Coal & Carbon
- Kartika Selabumi Mining - Indonesia
- Antam Resourcindo - Indonesia
- Karaikal Port Pvt Ltd - India
- Eastern Energy - Thailand
- Makarim & Taira - Indonesia
- Aditya Birla Group - India
- Larsen & Toubro Limited - India
- PetroVietnam Power Coal Import and Supply Company
- SMG Consultants - Indonesia
- Parry Sugars Refinery, India
- Minerals Council of Australia
- Energy Development Corp, Philippines
- Simpson Spence & Young - Indonesia
- Metalloyd Limited - United Kingdom
- Therma Luzon, Inc, Philippines
- Bukit Makmur.PT - Indonesia
- Jindal Steel & Power Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Ceylon Electricity Board - Sri Lanka
- Savvy Resources Ltd - HongKong
- Orica Mining Services - Indonesia
- Interocean Group of Companies - India
- Dalmia Cement Bharat India
- Renaissance Capital - South Africa
- Billiton Holdings Pty Ltd - Australia
- LBH Netherlands Bv - Netherlands
- Australian Coal Association
- Singapore Mercantile Exchange
- Mintek Dendrill Indonesia
- Bayan Resources Tbk. - Indonesia
- Mjunction Services Limited - India
- Salva Resources Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Maharashtra Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- Miang Besar Coal Terminal - Indonesia
- Kideco Jaya Agung - Indonesia
- Coal and Oil Company - UAE
- Straits Asia Resources Limited - Singapore
- Leighton Contractors Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- IEA Clean Coal Centre - UK
- Bank of Tokyo Mitsubishi UFJ Ltd
- Indonesian Coal Mining Association
- Chettinad Cement Corporation Ltd - India
- Wood Mackenzie - Singapore
- Petrochimia International Co. Ltd.- Taiwan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Krishnapatnam Port Company Ltd. - India
- Coalindo Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Offshore Bulk Terminal Pte Ltd, Singapore
- Oldendorff Carriers - Singapore
- Bangladesh Power Developement Board
- SN Aboitiz Power Inc, Philippines
- Marubeni Corporation - India
- Agrawal Coal Company - India
- White Energy Company Limited
- Sindya Power Generating Company Private Ltd
- SMC Global Power, Philippines
- The State Trading Corporation of India Ltd
- Kaltim Prima Coal - Indonesia
- ICICI Bank Limited - India
- Carbofer General Trading SA - India
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