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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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Monday, 20 July 20
COAL INDIA LAUNCHES SPECIAL CATEGORY OF E-AUCTION FOR COAL IMPORTERS - BUSINESS STANDARD
Coal India (CIL) on Friday launched a special category of e-auction for importers of coal. This is in line with the government’s declaration ...
Monday, 20 July 20
OIL PRICE OF $40-43 PER BARREL MORE OR LESS BALANCED - NOVAK | TASS
The Russian Ministry of Energy considers the current oil price of $40-43 per barrel more or less balanced and does not expect price changes after t ...
Monday, 20 July 20
SUPRAMAX: A 63,000 OPEN NORTH CHINA FIXING AN AUSTRALIAN ROUND IN THE LOW $10,000S - BALTIC BRIEFING
Capesize
The capesize market showed some resistance this week to recent losses as all routes saw a small uptick in value to end the week. With ...
Friday, 17 July 20
MISC MALAYSIA ENTERS INTO PURCHASE AGREEMENTS AND TIME CHARTER PARTIES FOR SIX VLECS
MISC Berhad (MISC) has entered into Memorandum of Agreements (MOAs) with six indirect wholly-owned subsidiaries of Zhejiang Satellite Petrochem ...
Wednesday, 15 July 20
HOW MEANINGFUL ARE SOME ESTIMATES FOR INDIA’S COAL CONSUMPTION DATA? - IEEFA
In recent years, BP's estimates for India have contained what appears to be a record of over-optimistic projections
BP’s a ...
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- Grasim Industreis Ltd - India
- Mercuria Energy - Indonesia
- AsiaOL BioFuels Corp., Philippines
- SMC Global Power, Philippines
- London Commodity Brokers - England
- Therma Luzon, Inc, Philippines
- Sindya Power Generating Company Private Ltd
- Global Green Power PLC Corporation, Philippines
- Kartika Selabumi Mining - Indonesia
- Carbofer General Trading SA - India
- Coalindo Energy - Indonesia
- PowerSource Philippines DevCo
- Maheswari Brothers Coal Limited - India
- Petron Corporation, Philippines
- ASAPP Information Group - India
- GMR Energy Limited - India
- VISA Power Limited - India
- ICICI Bank Limited - India
- Jaiprakash Power Ventures ltd
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kobexindo Tractors - Indoneisa
- TeaM Sual Corporation - Philippines
- Gujarat Sidhee Cement - India
- Energy Link Ltd, New Zealand
- Standard Chartered Bank - UAE
- Ministry of Transport, Egypt
- European Bulk Services B.V. - Netherlands
- South Luzon Thermal Energy Corporation
- Sojitz Corporation - Japan
- Ministry of Mines - Canada
- Larsen & Toubro Limited - India
- Barasentosa Lestari - Indonesia
- Indogreen Group - Indonesia
- Posco Energy - South Korea
- Jorong Barutama Greston.PT - Indonesia
- Agrawal Coal Company - India
- Anglo American - United Kingdom
- Marubeni Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- CIMB Investment Bank - Malaysia
- Global Business Power Corporation, Philippines
- Iligan Light & Power Inc, Philippines
- Star Paper Mills Limited - India
- Riau Bara Harum - Indonesia
- Orica Australia Pty. Ltd.
- Electricity Generating Authority of Thailand
- Uttam Galva Steels Limited - India
- Thai Mozambique Logistica
- Rio Tinto Coal - Australia
- Antam Resourcindo - Indonesia
- Commonwealth Bank - Australia
- Mercator Lines Limited - India
- Miang Besar Coal Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Central Java Power - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Binh Thuan Hamico - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- Oldendorff Carriers - Singapore
- Maharashtra Electricity Regulatory Commission - India
- Heidelberg Cement - Germany
- Bangladesh Power Developement Board
- Xindia Steels Limited - India
- Pendopo Energi Batubara - Indonesia
- Intertek Mineral Services - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Directorate Of Revenue Intelligence - India
- Orica Mining Services - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Sree Jayajothi Cements Limited - India
- LBH Netherlands Bv - Netherlands
- Kaltim Prima Coal - Indonesia
- Samtan Co., Ltd - South Korea
- San Jose City I Power Corp, Philippines
- India Bulls Power Limited - India
- Simpson Spence & Young - Indonesia
- Australian Commodity Traders Exchange
- Cigading International Bulk Terminal - Indonesia
- Meenaskhi Energy Private Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Indian Oil Corporation Limited
- Singapore Mercantile Exchange
- Medco Energi Mining Internasional
- Price Waterhouse Coopers - Russia
- Economic Council, Georgia
- Globalindo Alam Lestari - Indonesia
- Bhatia International Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bharathi Cement Corporation - India
- Bukit Baiduri Energy - Indonesia
- Power Finance Corporation Ltd., India
- CNBM International Corporation - China
- New Zealand Coal & Carbon
- Lanco Infratech Ltd - India
- Latin American Coal - Colombia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Merrill Lynch Commodities Europe
- Ambuja Cements Ltd - India
- Straits Asia Resources Limited - Singapore
- Indo Tambangraya Megah - Indonesia
- Planning Commission, India
- Kumho Petrochemical, South Korea
- Chettinad Cement Corporation Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Baramulti Group, Indonesia
- Global Coal Blending Company Limited - Australia
- Videocon Industries ltd - India
- Wilmar Investment Holdings
- GVK Power & Infra Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Metalloyd Limited - United Kingdom
- Borneo Indobara - Indonesia
- White Energy Company Limited
- Ceylon Electricity Board - Sri Lanka
- Makarim & Taira - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indika Energy - Indonesia
- Coastal Gujarat Power Limited - India
- Central Electricity Authority - India
- Gujarat Electricity Regulatory Commission - India
- Petrochimia International Co. Ltd.- Taiwan
- Interocean Group of Companies - India
- The State Trading Corporation of India Ltd
- Malabar Cements Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Tata Chemicals Ltd - India
- Sical Logistics Limited - India
- Energy Development Corp, Philippines
- Eastern Energy - Thailand
- Bhoruka Overseas - Indonesia
- Karaikal Port Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- The Treasury - Australian Government
- Vijayanagar Sugar Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Aboitiz Power Corporation - Philippines
- SN Aboitiz Power Inc, Philippines
- Attock Cement Pakistan Limited
- The University of Queensland
- Asmin Koalindo Tuhup - Indonesia
- Altura Mining Limited, Indonesia
- PTC India Limited - India
- Neyveli Lignite Corporation Ltd, - India
- IEA Clean Coal Centre - UK
- Essar Steel Hazira Ltd - India
- Romanian Commodities Exchange
- Manunggal Multi Energi - Indonesia
- Parliament of New Zealand
- Sarangani Energy Corporation, Philippines
- Eastern Coal Council - USA
- Jindal Steel & Power Ltd - India
- Bukit Makmur.PT - Indonesia
- Thiess Contractors Indonesia
- Bukit Asam (Persero) Tbk - Indonesia
- Meralco Power Generation, Philippines
- GAC Shipping (India) Pvt Ltd
- Africa Commodities Group - South Africa
- Wood Mackenzie - Singapore
- Electricity Authority, New Zealand
- Rashtriya Ispat Nigam Limited - India
- Ind-Barath Power Infra Limited - India
- Billiton Holdings Pty Ltd - Australia
- Vizag Seaport Private Limited - India
- Tamil Nadu electricity Board
- Chamber of Mines of South Africa
- Madhucon Powers Ltd - India
- Coal and Oil Company - UAE
- Trasteel International SA, Italy
- Australian Coal Association
- Vedanta Resources Plc - India
- SMG Consultants - Indonesia
- Indian Energy Exchange, India
- Timah Investasi Mineral - Indoneisa
- Minerals Council of Australia
- Mintek Dendrill Indonesia
- Dalmia Cement Bharat India
- IHS Mccloskey Coal Group - USA
- Ministry of Finance - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Mjunction Services Limited - India
- Aditya Birla Group - India
- Independent Power Producers Association of India
- Cement Manufacturers Association - India
- Edison Trading Spa - Italy
- Bulk Trading Sa - Switzerland
- Renaissance Capital - South Africa
- Siam City Cement - Thailand
- Formosa Plastics Group - Taiwan
- Kapuas Tunggal Persada - Indonesia
- Parry Sugars Refinery, India
- PNOC Exploration Corporation - Philippines
- PetroVietnam Power Coal Import and Supply Company
- Savvy Resources Ltd - HongKong
- McConnell Dowell - Australia
- International Coal Ventures Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Salva Resources Pvt Ltd - India
- Goldman Sachs - Singapore
- Bhushan Steel Limited - India
- Semirara Mining Corp, Philippines
- Kepco SPC Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Georgia Ports Authority, United States
- Toyota Tsusho Corporation, Japan
- Deloitte Consulting - India
- Leighton Contractors Pty Ltd - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Banpu Public Company Limited - Thailand
- Sakthi Sugars Limited - India
- Indonesian Coal Mining Association
- MS Steel International - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Port Waratah Coal Services - Australia
- Kideco Jaya Agung - Indonesia
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