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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, 05 August 20
SLUMP IN OIL REVENUE CHALLENGES MIDDLE EAST OIL EXPORTERS - INTERMODAL
The Covid-19 pandemic has had far-reaching consequences on the global capital markets. Despite the US government’s efforts for a quick and de ...
Tuesday, 04 August 20
KOEN INVITED BIDS FOR TOTAL 900K MT OF MIN 5600 NCV COAL FOR 3 YEARS
COALspot.com: South Korea’s KOREA SOUTH-EAST POWER CO., LTD. (KOEN) has issued an international tender for 260,000 to 300,000 Tons (MT) min. ...
Tuesday, 04 August 20
THE WORLD’S FLEET OF COAL-FIRED POWER STATIONS HAS GOT SMALLER FOR THE FIRST TIME ON RECORD, WITH MORE CAPACITY RETIRED IN THE FIRST HALF OF 2020 THAN THE AMOUNT OPENED - IEA
This is according to the latest Global Coal Plant Tracker (GCPT) results by Global Energy Monitor (GEM), which we completed last month and report f ...
Monday, 03 August 20
U.S. COAL CONSUMPTION, WHICH HAS DECLINED SINCE ITS 2007 PEAK, FELL TO ITS LOWEST POINT IN APRIL 2020 - EIA
According to the U.S. Energy Information Administration’s (EIA) most recent Monthly Energy Review, the United States consumed 6.5 quadrillion ...
Monday, 03 August 20
LOW OIL PRICE AND CORONA VIRUS HIT SUB-SAHARAN AFRICA OIL PRODUCERS - FITCH RATINGS
The collapse in oil prices and the coronavirus shock is worsening the fiscal and external balances of sub-Saharan African oil producers, Fitch Rati ...
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- Power Finance Corporation Ltd., India
- Banpu Public Company Limited - Thailand
- Siam City Cement PLC, Thailand
- Central Java Power - Indonesia
- Straits Asia Resources Limited - Singapore
- Star Paper Mills Limited - India
- Indian Oil Corporation Limited
- Bulk Trading Sa - Switzerland
- Kumho Petrochemical, South Korea
- Jindal Steel & Power Ltd - India
- London Commodity Brokers - England
- Standard Chartered Bank - UAE
- Maharashtra Electricity Regulatory Commission - India
- Mercator Lines Limited - India
- Orica Mining Services - Indonesia
- Directorate Of Revenue Intelligence - India
- Madhucon Powers Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Attock Cement Pakistan Limited
- Global Green Power PLC Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Tata Chemicals Ltd - India
- Malabar Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- Coal and Oil Company - UAE
- Indian Energy Exchange, India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- International Coal Ventures Pvt Ltd - India
- Siam City Cement - Thailand
- TeaM Sual Corporation - Philippines
- MS Steel International - UAE
- Formosa Plastics Group - Taiwan
- Merrill Lynch Commodities Europe
- Eastern Coal Council - USA
- Bukit Baiduri Energy - Indonesia
- PTC India Limited - India
- Grasim Industreis Ltd - India
- Wood Mackenzie - Singapore
- Central Electricity Authority - India
- Therma Luzon, Inc, Philippines
- Posco Energy - South Korea
- Thiess Contractors Indonesia
- Port Waratah Coal Services - Australia
- Bahari Cakrawala Sebuku - Indonesia
- ASAPP Information Group - India
- Ministry of Mines - Canada
- Parliament of New Zealand
- Edison Trading Spa - Italy
- Billiton Holdings Pty Ltd - Australia
- Lanco Infratech Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- SMG Consultants - Indonesia
- Global Coal Blending Company Limited - Australia
- Cement Manufacturers Association - India
- Cigading International Bulk Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Wilmar Investment Holdings
- The University of Queensland
- Pipit Mutiara Jaya. PT, Indonesia
- Ministry of Finance - Indonesia
- Karaikal Port Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Sinarmas Energy and Mining - Indonesia
- Mjunction Services Limited - India
- IHS Mccloskey Coal Group - USA
- ICICI Bank Limited - India
- Sindya Power Generating Company Private Ltd
- Semirara Mining Corp, Philippines
- McConnell Dowell - Australia
- Gujarat Mineral Development Corp Ltd - India
- Bangladesh Power Developement Board
- Globalindo Alam Lestari - Indonesia
- CNBM International Corporation - China
- Rashtriya Ispat Nigam Limited - India
- Africa Commodities Group - South Africa
- Altura Mining Limited, Indonesia
- LBH Netherlands Bv - Netherlands
- Barasentosa Lestari - Indonesia
- Makarim & Taira - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Vedanta Resources Plc - India
- Dalmia Cement Bharat India
- Oldendorff Carriers - Singapore
- Agrawal Coal Company - India
- Sakthi Sugars Limited - India
- Indogreen Group - Indonesia
- Economic Council, Georgia
- OPG Power Generation Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- Holcim Trading Pte Ltd - Singapore
- Rio Tinto Coal - Australia
- Tamil Nadu electricity Board
- Independent Power Producers Association of India
- Kideco Jaya Agung - Indonesia
- Kobexindo Tractors - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Pendopo Energi Batubara - Indonesia
- Uttam Galva Steels Limited - India
- Georgia Ports Authority, United States
- Ministry of Transport, Egypt
- Intertek Mineral Services - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Heidelberg Cement - Germany
- Aditya Birla Group - India
- India Bulls Power Limited - India
- European Bulk Services B.V. - Netherlands
- Energy Link Ltd, New Zealand
- Parry Sugars Refinery, India
- Coalindo Energy - Indonesia
- Salva Resources Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- IEA Clean Coal Centre - UK
- White Energy Company Limited
- GMR Energy Limited - India
- Alfred C Toepfer International GmbH - Germany
- Karbindo Abesyapradhi - Indoneisa
- Antam Resourcindo - Indonesia
- Price Waterhouse Coopers - Russia
- Bhatia International Limited - India
- Bhushan Steel Limited - India
- CIMB Investment Bank - Malaysia
- Videocon Industries ltd - India
- Asmin Koalindo Tuhup - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Bukit Asam (Persero) Tbk - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Binh Thuan Hamico - Vietnam
- GAC Shipping (India) Pvt Ltd
- Directorate General of MIneral and Coal - Indonesia
- Meralco Power Generation, Philippines
- Sical Logistics Limited - India
- Australian Coal Association
- GVK Power & Infra Limited - India
- Bharathi Cement Corporation - India
- Toyota Tsusho Corporation, Japan
- AsiaOL BioFuels Corp., Philippines
- Metalloyd Limited - United Kingdom
- Vizag Seaport Private Limited - India
- Renaissance Capital - South Africa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Kapuas Tunggal Persada - Indonesia
- Carbofer General Trading SA - India
- Australian Commodity Traders Exchange
- Meenaskhi Energy Private Limited - India
- Romanian Commodities Exchange
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kaltim Prima Coal - Indonesia
- The State Trading Corporation of India Ltd
- Chamber of Mines of South Africa
- Savvy Resources Ltd - HongKong
- Kohat Cement Company Ltd. - Pakistan
- Indika Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Bukit Makmur.PT - Indonesia
- Indonesian Coal Mining Association
- Sojitz Corporation - Japan
- SMC Global Power, Philippines
- Borneo Indobara - Indonesia
- Aboitiz Power Corporation - Philippines
- Electricity Generating Authority of Thailand
- Xindia Steels Limited - India
- New Zealand Coal & Carbon
- Trasteel International SA, Italy
- Thai Mozambique Logistica
- Interocean Group of Companies - India
- Kartika Selabumi Mining - Indonesia
- Singapore Mercantile Exchange
- Sree Jayajothi Cements Limited - India
- Petron Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- PNOC Exploration Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Simpson Spence & Young - Indonesia
- Baramulti Group, Indonesia
- Medco Energi Mining Internasional
- Timah Investasi Mineral - Indoneisa
- Bhoruka Overseas - Indonesia
- Goldman Sachs - Singapore
- Electricity Authority, New Zealand
- Ambuja Cements Ltd - India
- Mintek Dendrill Indonesia
- Bayan Resources Tbk. - Indonesia
- Indo Tambangraya Megah - Indonesia
- Global Business Power Corporation, Philippines
- Mercuria Energy - Indonesia
- Marubeni Corporation - India
- Essar Steel Hazira Ltd - India
- Orica Australia Pty. Ltd.
- PowerSource Philippines DevCo
- VISA Power Limited - India
- Ind-Barath Power Infra Limited - India
- Anglo American - United Kingdom
- The Treasury - Australian Government
- Semirara Mining and Power Corporation, Philippines
- Krishnapatnam Port Company Ltd. - India
- Maheswari Brothers Coal Limited - India
- Deloitte Consulting - India
- Planning Commission, India
- Energy Development Corp, Philippines
- Minerals Council of Australia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Iligan Light & Power Inc, Philippines
- Commonwealth Bank - Australia
- Eastern Energy - Thailand
- Latin American Coal - Colombia
- SN Aboitiz Power Inc, Philippines
- Kepco SPC Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Samtan Co., Ltd - South Korea
- Kalimantan Lumbung Energi - Indonesia
- Coastal Gujarat Power Limited - India
- Jorong Barutama Greston.PT - Indonesia
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