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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, 18 August 20
BLACKBALLED: WILL COAL BOUNCE BACK FROM SLUMP OR IS IT TERMINAL? - SYDNEY MORNING HERALD
Even by the standards of this miserable year, 2020 has been a shocker for the global coal industry.
As the lockdown kicked in demand ...
Friday, 14 August 20
EIA: COAL PLANTS UNECONOMICAL IN MOST REGIONS - IEEFA
U.S. coal power generation plunged by 30 percent in the first half of 2020 off an already-depressed base, shoved out by natural gas and renewables ...
Thursday, 13 August 20
INDIA SHOULD RECORD A SLIGHT DECREASE IN THERMAL COAL IMPORTS, REACHING A VOLUME OF 167 MILLION TONS BY THE END OF 2020 - ASSOCARBONI
Regarding 2020 thermal coal imports forecasts, Vietnam’s coal imports showed a very strong growth in the first half of 2020 and it is believe ...
Thursday, 13 August 20
INDONESIA REMAINS THE LARGEST EXPORTER OF COAL IN THE WORLD - ASSOCARBONI
According to the last Assocarboni data for 2019, Indonesia remains the largest exporter in the world. Thermal coal exports have in fact reached 456 ...
Wednesday, 12 August 20
VIETNAM WAS THE PROTAGONIST OF A SIGNIFICANT INCREASE IN COAL IMPORTS IN 2019 - ASSOCARBONI
The latest Assocarboni data for 2019 also provide a detailed picture on the trend of the global coal import.
According to Assocarbon ...
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- Eastern Coal Council - USA
- Eastern Energy - Thailand
- Leighton Contractors Pty Ltd - Australia
- Deloitte Consulting - India
- Indo Tambangraya Megah - Indonesia
- Edison Trading Spa - Italy
- San Jose City I Power Corp, Philippines
- The Treasury - Australian Government
- International Coal Ventures Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Kepco SPC Power Corporation, Philippines
- Anglo American - United Kingdom
- Wilmar Investment Holdings
- Lanco Infratech Ltd - India
- McConnell Dowell - Australia
- Parliament of New Zealand
- Bhushan Steel Limited - India
- Cigading International Bulk Terminal - Indonesia
- CNBM International Corporation - China
- PetroVietnam Power Coal Import and Supply Company
- London Commodity Brokers - England
- Maharashtra Electricity Regulatory Commission - India
- Makarim & Taira - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Karaikal Port Pvt Ltd - India
- Sical Logistics Limited - India
- Simpson Spence & Young - Indonesia
- Indogreen Group - Indonesia
- Singapore Mercantile Exchange
- Minerals Council of Australia
- White Energy Company Limited
- Gujarat Sidhee Cement - India
- Alfred C Toepfer International GmbH - Germany
- Bukit Asam (Persero) Tbk - Indonesia
- Videocon Industries ltd - India
- Borneo Indobara - Indonesia
- Siam City Cement - Thailand
- Intertek Mineral Services - Indonesia
- New Zealand Coal & Carbon
- Salva Resources Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Banpu Public Company Limited - Thailand
- Renaissance Capital - South Africa
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Samtan Co., Ltd - South Korea
- Global Business Power Corporation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Wood Mackenzie - Singapore
- Port Waratah Coal Services - Australia
- Aboitiz Power Corporation - Philippines
- Orica Mining Services - Indonesia
- Trasteel International SA, Italy
- Chamber of Mines of South Africa
- IEA Clean Coal Centre - UK
- Sakthi Sugars Limited - India
- Price Waterhouse Coopers - Russia
- SMG Consultants - Indonesia
- Tata Chemicals Ltd - India
- Antam Resourcindo - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Dalmia Cement Bharat India
- Romanian Commodities Exchange
- Economic Council, Georgia
- Metalloyd Limited - United Kingdom
- GVK Power & Infra Limited - India
- Jaiprakash Power Ventures ltd
- Asmin Koalindo Tuhup - Indonesia
- Ministry of Transport, Egypt
- Bulk Trading Sa - Switzerland
- Thai Mozambique Logistica
- Carbofer General Trading SA - India
- The State Trading Corporation of India Ltd
- Billiton Holdings Pty Ltd - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Marubeni Corporation - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- The University of Queensland
- Uttam Galva Steels Limited - India
- Coal and Oil Company - UAE
- GAC Shipping (India) Pvt Ltd
- Rashtriya Ispat Nigam Limited - India
- Formosa Plastics Group - Taiwan
- Bangladesh Power Developement Board
- India Bulls Power Limited - India
- Sinarmas Energy and Mining - Indonesia
- Directorate Of Revenue Intelligence - India
- Mjunction Services Limited - India
- Essar Steel Hazira Ltd - India
- Mercator Lines Limited - India
- Krishnapatnam Port Company Ltd. - India
- TeaM Sual Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Thiess Contractors Indonesia
- Petron Corporation, Philippines
- PowerSource Philippines DevCo
- Interocean Group of Companies - India
- Indonesian Coal Mining Association
- Ceylon Electricity Board - Sri Lanka
- Global Coal Blending Company Limited - Australia
- Cement Manufacturers Association - India
- Electricity Authority, New Zealand
- MS Steel International - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Electricity Generating Authority of Thailand
- Siam City Cement PLC, Thailand
- Central Electricity Authority - India
- Chettinad Cement Corporation Ltd - India
- Aditya Birla Group - India
- Petrochimia International Co. Ltd.- Taiwan
- Tamil Nadu electricity Board
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Altura Mining Limited, Indonesia
- Coalindo Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Vizag Seaport Private Limited - India
- Sree Jayajothi Cements Limited - India
- Power Finance Corporation Ltd., India
- Kideco Jaya Agung - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- ASAPP Information Group - India
- Sarangani Energy Corporation, Philippines
- Meralco Power Generation, Philippines
- IHS Mccloskey Coal Group - USA
- Bukit Makmur.PT - Indonesia
- Toyota Tsusho Corporation, Japan
- TNB Fuel Sdn Bhd - Malaysia
- PNOC Exploration Corporation - Philippines
- Australian Coal Association
- Straits Asia Resources Limited - Singapore
- Savvy Resources Ltd - HongKong
- Planning Commission, India
- Central Java Power - Indonesia
- Ind-Barath Power Infra Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Mercuria Energy - Indonesia
- PTC India Limited - India
- Goldman Sachs - Singapore
- Therma Luzon, Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- Vedanta Resources Plc - India
- Kartika Selabumi Mining - Indonesia
- ICICI Bank Limited - India
- Semirara Mining and Power Corporation, Philippines
- Latin American Coal - Colombia
- LBH Netherlands Bv - Netherlands
- Global Green Power PLC Corporation, Philippines
- Energy Development Corp, Philippines
- South Luzon Thermal Energy Corporation
- Riau Bara Harum - Indonesia
- Commonwealth Bank - Australia
- Semirara Mining Corp, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Standard Chartered Bank - UAE
- GN Power Mariveles Coal Plant, Philippines
- Meenaskhi Energy Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Indika Energy - Indonesia
- Sindya Power Generating Company Private Ltd
- Jindal Steel & Power Ltd - India
- Bukit Baiduri Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Kumho Petrochemical, South Korea
- Indian Energy Exchange, India
- Coastal Gujarat Power Limited - India
- Independent Power Producers Association of India
- Posco Energy - South Korea
- Gujarat Electricity Regulatory Commission - India
- Ministry of Finance - Indonesia
- Larsen & Toubro Limited - India
- Kapuas Tunggal Persada - Indonesia
- Parry Sugars Refinery, India
- Madhucon Powers Ltd - India
- VISA Power Limited - India
- Grasim Industreis Ltd - India
- Medco Energi Mining Internasional
- Miang Besar Coal Terminal - Indonesia
- Australian Commodity Traders Exchange
- Heidelberg Cement - Germany
- Rio Tinto Coal - Australia
- Bharathi Cement Corporation - India
- Pendopo Energi Batubara - Indonesia
- Maheswari Brothers Coal Limited - India
- Ministry of Mines - Canada
- Malabar Cements Ltd - India
- Africa Commodities Group - South Africa
- Sojitz Corporation - Japan
- Barasentosa Lestari - Indonesia
- Baramulti Group, Indonesia
- Agrawal Coal Company - India
- Bhatia International Limited - India
- Ambuja Cements Ltd - India
- CIMB Investment Bank - Malaysia
- Neyveli Lignite Corporation Ltd, - India
- Indian Oil Corporation Limited
- Kaltim Prima Coal - Indonesia
- Mintek Dendrill Indonesia
- Merrill Lynch Commodities Europe
- Manunggal Multi Energi - Indonesia
- Attock Cement Pakistan Limited
- Georgia Ports Authority, United States
- Globalindo Alam Lestari - Indonesia
- Star Paper Mills Limited - India
- Bhoruka Overseas - Indonesia
- Oldendorff Carriers - Singapore
- Bayan Resources Tbk. - Indonesia
- OPG Power Generation Pvt Ltd - India
- Orica Australia Pty. Ltd.
- SN Aboitiz Power Inc, Philippines
- Binh Thuan Hamico - Vietnam
- SMC Global Power, Philippines
- GMR Energy Limited - India
- Xindia Steels Limited - India
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