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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, 24 July 20
IPA: THERMAL COAL IMPORTS AT MAJOR PORTS DECLINE 35 PC TO 17.71 MT IN APR TO JUNE - ECONOMIC TIMES
These ports had handled 27.13 MT of thermal coal and 14.95 MT of coking coal in the April-June period of the previous financial year
...
Thursday, 23 July 20
KOREAN GENCOS INVITED BIDS FOR TOTAL 1.36 MILLION TONS OF BITUMINOUS COAL FOR OCTOBER 2020 LOADING
COALspot.com: Korea Midland Power Co., Ltd (KOMIPO) on behalf of EWP, KOSPO, KOSEP and KOWEPO has issued an international tender for total 1,360,00 ...
Wednesday, 22 July 20
CIL'S COAL SUPPLY TO POWER SECTOR DROPS OVER 21% TO 93.5 MT IN APR-JUN QUARTER - PTI
The supply of coal by state-owned Coal India Ltd to the power sector fell 21.7 percent to 93.5 million tonnes (MT) in the first quarter of the ongo ...
Monday, 20 July 20
KOREA MIDLAND POWER INVITED BIDS FOR TOTAL 2.520 MILLION MT OF BITUMINOUS COAL FOR THREE YEARS
COALspot.com: Korea Midland Power Co., Ltd (KOMIPO), has issued an international tender for total 840,000 of Bituminous Coal to be used at Bo ...
Monday, 20 July 20
CHINA'S JUNE COAL OUTPUT FALLS 1.2% YEAR-ON-YEAR OVER ILLEGAL MINING CHECKS - REUTERS
China’s coal output dropped 1.2% in June on the year to 330 million tonnes, official data showed, as major coal mining areas cracked down on ...
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- Kepco SPC Power Corporation, Philippines
- Marubeni Corporation - India
- Ministry of Finance - Indonesia
- The State Trading Corporation of India Ltd
- Semirara Mining and Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Simpson Spence & Young - Indonesia
- Karaikal Port Pvt Ltd - India
- Chamber of Mines of South Africa
- Jindal Steel & Power Ltd - India
- Iligan Light & Power Inc, Philippines
- Altura Mining Limited, Indonesia
- VISA Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- GVK Power & Infra Limited - India
- Chettinad Cement Corporation Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Wilmar Investment Holdings
- Kapuas Tunggal Persada - Indonesia
- Bayan Resources Tbk. - Indonesia
- Bulk Trading Sa - Switzerland
- Manunggal Multi Energi - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Kideco Jaya Agung - Indonesia
- Ambuja Cements Ltd - India
- Xindia Steels Limited - India
- Parliament of New Zealand
- Directorate General of MIneral and Coal - Indonesia
- Jaiprakash Power Ventures ltd
- London Commodity Brokers - England
- Coalindo Energy - Indonesia
- Therma Luzon, Inc, Philippines
- LBH Netherlands Bv - Netherlands
- Maharashtra Electricity Regulatory Commission - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- MS Steel International - UAE
- The Treasury - Australian Government
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Thai Mozambique Logistica
- Anglo American - United Kingdom
- Port Waratah Coal Services - Australia
- Indonesian Coal Mining Association
- Bhoruka Overseas - Indonesia
- Riau Bara Harum - Indonesia
- Parry Sugars Refinery, India
- Sindya Power Generating Company Private Ltd
- Indian Oil Corporation Limited
- GAC Shipping (India) Pvt Ltd
- Electricity Generating Authority of Thailand
- Bhushan Steel Limited - India
- Savvy Resources Ltd - HongKong
- AsiaOL BioFuels Corp., Philippines
- Borneo Indobara - Indonesia
- Uttam Galva Steels Limited - India
- Grasim Industreis Ltd - India
- Bukit Makmur.PT - Indonesia
- Gujarat Sidhee Cement - India
- Holcim Trading Pte Ltd - Singapore
- Billiton Holdings Pty Ltd - Australia
- Tamil Nadu electricity Board
- Star Paper Mills Limited - India
- OPG Power Generation Pvt Ltd - India
- Mjunction Services Limited - India
- Bangladesh Power Developement Board
- Mintek Dendrill Indonesia
- Toyota Tsusho Corporation, Japan
- GMR Energy Limited - India
- Mercuria Energy - Indonesia
- Minerals Council of Australia
- Thiess Contractors Indonesia
- Central Electricity Authority - India
- Sree Jayajothi Cements Limited - India
- Deloitte Consulting - India
- Essar Steel Hazira Ltd - India
- Merrill Lynch Commodities Europe
- Renaissance Capital - South Africa
- Sical Logistics Limited - India
- Antam Resourcindo - Indonesia
- Binh Thuan Hamico - Vietnam
- Romanian Commodities Exchange
- Maheswari Brothers Coal Limited - India
- Salva Resources Pvt Ltd - India
- Energy Development Corp, Philippines
- Indian Energy Exchange, India
- Interocean Group of Companies - India
- Ind-Barath Power Infra Limited - India
- South Luzon Thermal Energy Corporation
- ICICI Bank Limited - India
- Georgia Ports Authority, United States
- Ministry of Transport, Egypt
- Jorong Barutama Greston.PT - Indonesia
- Africa Commodities Group - South Africa
- Cigading International Bulk Terminal - Indonesia
- IEA Clean Coal Centre - UK
- Metalloyd Limited - United Kingdom
- Energy Link Ltd, New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Barasentosa Lestari - Indonesia
- European Bulk Services B.V. - Netherlands
- Agrawal Coal Company - India
- Attock Cement Pakistan Limited
- Kartika Selabumi Mining - Indonesia
- Petron Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- SN Aboitiz Power Inc, Philippines
- Alfred C Toepfer International GmbH - Germany
- Coal and Oil Company - UAE
- Planning Commission, India
- Asmin Koalindo Tuhup - Indonesia
- Indika Energy - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Leighton Contractors Pty Ltd - Australia
- Sinarmas Energy and Mining - Indonesia
- Videocon Industries ltd - India
- Ceylon Electricity Board - Sri Lanka
- Singapore Mercantile Exchange
- Latin American Coal - Colombia
- GN Power Mariveles Coal Plant, Philippines
- India Bulls Power Limited - India
- Ministry of Mines - Canada
- Coastal Gujarat Power Limited - India
- Heidelberg Cement - Germany
- Makarim & Taira - Indonesia
- Formosa Plastics Group - Taiwan
- Power Finance Corporation Ltd., India
- Carbofer General Trading SA - India
- Global Coal Blending Company Limited - Australia
- Bhatia International Limited - India
- Independent Power Producers Association of India
- Trasteel International SA, Italy
- Bharathi Cement Corporation - India
- The University of Queensland
- PetroVietnam Power Coal Import and Supply Company
- Central Java Power - Indonesia
- Madhucon Powers Ltd - India
- Meralco Power Generation, Philippines
- PowerSource Philippines DevCo
- Neyveli Lignite Corporation Ltd, - India
- International Coal Ventures Pvt Ltd - India
- ASAPP Information Group - India
- CNBM International Corporation - China
- Siam City Cement - Thailand
- Bukit Baiduri Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Krishnapatnam Port Company Ltd. - India
- Eastern Energy - Thailand
- Kobexindo Tractors - Indoneisa
- Aboitiz Power Corporation - Philippines
- Australian Coal Association
- White Energy Company Limited
- Sakthi Sugars Limited - India
- Edison Trading Spa - Italy
- Gujarat Electricity Regulatory Commission - India
- Semirara Mining Corp, Philippines
- Sarangani Energy Corporation, Philippines
- Malabar Cements Ltd - India
- PNOC Exploration Corporation - Philippines
- Orica Mining Services - Indonesia
- Commonwealth Bank - Australia
- Globalindo Alam Lestari - Indonesia
- Banpu Public Company Limited - Thailand
- Cement Manufacturers Association - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Baramulti Group, Indonesia
- Sojitz Corporation - Japan
- Rashtriya Ispat Nigam Limited - India
- Straits Asia Resources Limited - Singapore
- Larsen & Toubro Limited - India
- Vizag Seaport Private Limited - India
- Timah Investasi Mineral - Indoneisa
- Posco Energy - South Korea
- Goldman Sachs - Singapore
- Mercator Lines Limited - India
- Kumho Petrochemical, South Korea
- Siam City Cement PLC, Thailand
- Indogreen Group - Indonesia
- Directorate Of Revenue Intelligence - India
- Dalmia Cement Bharat India
- Pendopo Energi Batubara - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Tata Chemicals Ltd - India
- Orica Australia Pty. Ltd.
- PTC India Limited - India
- Global Green Power PLC Corporation, Philippines
- SMC Global Power, Philippines
- IHS Mccloskey Coal Group - USA
- TNB Fuel Sdn Bhd - Malaysia
- Pipit Mutiara Jaya. PT, Indonesia
- Vedanta Resources Plc - India
- Medco Energi Mining Internasional
- Global Business Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Eastern Coal Council - USA
- Aditya Birla Group - India
- Oldendorff Carriers - Singapore
- Lanco Infratech Ltd - India
- San Jose City I Power Corp, Philippines
- TeaM Sual Corporation - Philippines
- Australian Commodity Traders Exchange
- CIMB Investment Bank - Malaysia
- Standard Chartered Bank - UAE
- Miang Besar Coal Terminal - Indonesia
- Economic Council, Georgia
- Karbindo Abesyapradhi - Indoneisa
- McConnell Dowell - Australia
- Wood Mackenzie - Singapore
- Electricity Authority, New Zealand
- SMG Consultants - Indonesia
- New Zealand Coal & Carbon
- Samtan Co., Ltd - South Korea
- Intertek Mineral Services - Indonesia
- Rio Tinto Coal - Australia
- Kohat Cement Company Ltd. - Pakistan
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