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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, 07 August 20
PEABODY'S $1.42 BILLION WRITE-DOWN CONCEDES COAL MINES HAVE LITTLE VALUE AND DIM FUTURE - IEEFA
Trouble at biggest mine in Powder River Basin speaks volumes about state of industry
Peabody Energy, the world’s largest priva ...
Thursday, 06 August 20
SUPRAMAX MARKET CONTINUED SIDEWAYS TREND, AND LITTLE INSPIRING NEWS APPEAR - FEARNLEYS
Capesize
There is presently a small correction in rates, but overall levels are up from previous week mainly due to increased demand in the Eas ...
Thursday, 06 August 20
KOREA SOUTH-EAST POWER INVITING BIDS FOR MIN 3,600-MAX 3,800 NCV COAL
COALspot.com: South Korea’s KOREA SOUTH-EAST POWER CO., LTD. (KOEN) inviting bids for 80,000 Tons (MT) Min 3,600~Max 3,800 kcal/kg NCV coal f ...
Wednesday, 05 August 20
NO NEW MINING LICENSES - A REMINDER TO GOVERNORS IN INDONESIA - SSEK
Indonesia’s acting Director General of Mining and Coal (“DGMC”) has issued a letter to the country’s provincial Governors t ...
Wednesday, 05 August 20
AUGUST 2020 HBA HITTING ITS LOWEST LEVELS IN HISTORY
COALspot.com: The Indonesia Coal Price Reference for the month of August plunged 30.73% YoY, hitting its lowest levels in history and highlighting ...
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- IEA Clean Coal Centre - UK
- Bhushan Steel Limited - India
- LBH Netherlands Bv - Netherlands
- Orica Australia Pty. Ltd.
- Bank of Tokyo Mitsubishi UFJ Ltd
- Tata Chemicals Ltd - India
- Grasim Industreis Ltd - India
- Eastern Coal Council - USA
- Sinarmas Energy and Mining - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Vijayanagar Sugar Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Trasteel International SA, Italy
- Leighton Contractors Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- Intertek Mineral Services - Indonesia
- Eastern Energy - Thailand
- Marubeni Corporation - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Altura Mining Limited, Indonesia
- Vizag Seaport Private Limited - India
- Central Electricity Authority - India
- PetroVietnam Power Coal Import and Supply Company
- CNBM International Corporation - China
- Mintek Dendrill Indonesia
- Wood Mackenzie - Singapore
- Holcim Trading Pte Ltd - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Medco Energi Mining Internasional
- Krishnapatnam Port Company Ltd. - India
- VISA Power Limited - India
- Electricity Generating Authority of Thailand
- Simpson Spence & Young - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Global Business Power Corporation, Philippines
- The State Trading Corporation of India Ltd
- Heidelberg Cement - Germany
- Parliament of New Zealand
- Bangladesh Power Developement Board
- Bahari Cakrawala Sebuku - Indonesia
- Sakthi Sugars Limited - India
- Anglo American - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- Bulk Trading Sa - Switzerland
- Aditya Birla Group - India
- Power Finance Corporation Ltd., India
- Carbofer General Trading SA - India
- Singapore Mercantile Exchange
- South Luzon Thermal Energy Corporation
- Bukit Baiduri Energy - Indonesia
- Georgia Ports Authority, United States
- Banpu Public Company Limited - Thailand
- Semirara Mining and Power Corporation, Philippines
- Interocean Group of Companies - India
- Petrochimia International Co. Ltd.- Taiwan
- Edison Trading Spa - Italy
- Central Java Power - Indonesia
- Indo Tambangraya Megah - Indonesia
- Wilmar Investment Holdings
- Sree Jayajothi Cements Limited - India
- London Commodity Brokers - England
- Latin American Coal - Colombia
- Malabar Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Star Paper Mills Limited - India
- Antam Resourcindo - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Baramulti Group, Indonesia
- SN Aboitiz Power Inc, Philippines
- Mercator Lines Limited - India
- Commonwealth Bank - Australia
- Ministry of Transport, Egypt
- Directorate Of Revenue Intelligence - India
- Price Waterhouse Coopers - Russia
- Posco Energy - South Korea
- Timah Investasi Mineral - Indoneisa
- Thiess Contractors Indonesia
- ASAPP Information Group - India
- Metalloyd Limited - United Kingdom
- Kobexindo Tractors - Indoneisa
- Global Coal Blending Company Limited - Australia
- Mercuria Energy - Indonesia
- Uttam Galva Steels Limited - India
- Bayan Resources Tbk. - Indonesia
- Xindia Steels Limited - India
- White Energy Company Limited
- Vedanta Resources Plc - India
- Coalindo Energy - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- GMR Energy Limited - India
- Port Waratah Coal Services - Australia
- Energy Link Ltd, New Zealand
- Karbindo Abesyapradhi - Indoneisa
- Tamil Nadu electricity Board
- San Jose City I Power Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Sical Logistics Limited - India
- SMG Consultants - Indonesia
- Coal and Oil Company - UAE
- Parry Sugars Refinery, India
- Miang Besar Coal Terminal - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Essar Steel Hazira Ltd - India
- Bukit Makmur.PT - Indonesia
- Jaiprakash Power Ventures ltd
- Salva Resources Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Kideco Jaya Agung - Indonesia
- Africa Commodities Group - South Africa
- Oldendorff Carriers - Singapore
- Kumho Petrochemical, South Korea
- TeaM Sual Corporation - Philippines
- Romanian Commodities Exchange
- OPG Power Generation Pvt Ltd - India
- The University of Queensland
- Pipit Mutiara Jaya. PT, Indonesia
- Binh Thuan Hamico - Vietnam
- Ambuja Cements Ltd - India
- AsiaOL BioFuels Corp., Philippines
- MS Steel International - UAE
- McConnell Dowell - Australia
- Electricity Authority, New Zealand
- Standard Chartered Bank - UAE
- Sindya Power Generating Company Private Ltd
- Gujarat Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- Australian Commodity Traders Exchange
- Indika Energy - Indonesia
- PTC India Limited - India
- Australian Coal Association
- Independent Power Producers Association of India
- Neyveli Lignite Corporation Ltd, - India
- Bhatia International Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Dalmia Cement Bharat India
- Pendopo Energi Batubara - Indonesia
- Semirara Mining Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Madhucon Powers Ltd - India
- IHS Mccloskey Coal Group - USA
- GAC Shipping (India) Pvt Ltd
- Meralco Power Generation, Philippines
- Kepco SPC Power Corporation, Philippines
- Makarim & Taira - Indonesia
- Cement Manufacturers Association - India
- Siam City Cement PLC, Thailand
- Jindal Steel & Power Ltd - India
- Larsen & Toubro Limited - India
- SMC Global Power, Philippines
- Siam City Cement - Thailand
- PowerSource Philippines DevCo
- Cigading International Bulk Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Kohat Cement Company Ltd. - Pakistan
- Bukit Asam (Persero) Tbk - Indonesia
- Savvy Resources Ltd - HongKong
- GVK Power & Infra Limited - India
- Formosa Plastics Group - Taiwan
- Thai Mozambique Logistica
- Chamber of Mines of South Africa
- Kartika Selabumi Mining - Indonesia
- Ministry of Finance - Indonesia
- Indonesian Coal Mining Association
- Sarangani Energy Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Goldman Sachs - Singapore
- Billiton Holdings Pty Ltd - Australia
- Samtan Co., Ltd - South Korea
- Sojitz Corporation - Japan
- Gujarat Mineral Development Corp Ltd - India
- Coastal Gujarat Power Limited - India
- Agrawal Coal Company - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indogreen Group - Indonesia
- Indian Energy Exchange, India
- Karaikal Port Pvt Ltd - India
- New Zealand Coal & Carbon
- Aboitiz Power Corporation - Philippines
- Economic Council, Georgia
- Gujarat Sidhee Cement - India
- Renaissance Capital - South Africa
- Petron Corporation, Philippines
- Rio Tinto Coal - Australia
- Globalindo Alam Lestari - Indonesia
- Barasentosa Lestari - Indonesia
- Ministry of Mines - Canada
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Attock Cement Pakistan Limited
- Rashtriya Ispat Nigam Limited - India
- International Coal Ventures Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Kaltim Prima Coal - Indonesia
- Videocon Industries ltd - India
- India Bulls Power Limited - India
- Kapuas Tunggal Persada - Indonesia
- Toyota Tsusho Corporation, Japan
- CIMB Investment Bank - Malaysia
- Iligan Light & Power Inc, Philippines
- The Treasury - Australian Government
- Deloitte Consulting - India
- Merrill Lynch Commodities Europe
- Borneo Indobara - Indonesia
- Mjunction Services Limited - India
- Ind-Barath Power Infra Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhoruka Overseas - Indonesia
- Energy Development Corp, Philippines
- Maheswari Brothers Coal Limited - India
- ICICI Bank Limited - India
- Indian Oil Corporation Limited
- Therma Luzon, Inc, Philippines
- Bharathi Cement Corporation - India
- Planning Commission, India
- Minerals Council of Australia
- Orica Mining Services - Indonesia
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