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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, 15 July 20
CHINA'S JUNE COAL IMPORTS FALL 6.7% Y/Y ON PORT CURBS - REUTERS
China’s coal imports dropped 6.7% in June from the same period last year, as stringent import restrictions at ports impeded purchases by trad ...
Wednesday, 15 July 20
MARKET INSIGHT - INTERMODAL
The Covid-19 virus spread around the world has obviously impacted the global oil demand while the situation remains fluid. The overall constraint ...
Tuesday, 14 July 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.75 PCT - XINHUA
China Taiyuan coal transaction price index stood at 126.01 points Monday, up 0.75 percent week on week.
The index, released by China ...
Tuesday, 14 July 20
TURKEY - A CASE OF UNDECLARED BUNKER - GARD
KNOWLEDGE TO ELEVATE
Undeclared/excess bunkers can be considered a criminal act by Turkish customs officials with the ship's crew being ac ...
Monday, 13 July 20
PANAMAX: A TUMULTUOUS WEEK IN THE PANAMAX MARKET ENSURED ALL MARKETS GAINED VALUE ON THE WEEK - BALTIC BRIEFING
Capesize
This week witnessed the dreaded correction in the Capesize market, with the time charter average shedding almost 18 per cent to close ...
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- Indogreen Group - Indonesia
- Meralco Power Generation, Philippines
- Barasentosa Lestari - Indonesia
- Mintek Dendrill Indonesia
- Binh Thuan Hamico - Vietnam
- Global Coal Blending Company Limited - Australia
- Anglo American - United Kingdom
- Banpu Public Company Limited - Thailand
- Eastern Coal Council - USA
- Dalmia Cement Bharat India
- Kalimantan Lumbung Energi - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Jaiprakash Power Ventures ltd
- Sree Jayajothi Cements Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Mercuria Energy - Indonesia
- Tamil Nadu electricity Board
- Larsen & Toubro Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Billiton Holdings Pty Ltd - Australia
- Aboitiz Power Corporation - Philippines
- Holcim Trading Pte Ltd - Singapore
- Sarangani Energy Corporation, Philippines
- Coal and Oil Company - UAE
- Economic Council, Georgia
- Metalloyd Limited - United Kingdom
- Standard Chartered Bank - UAE
- Videocon Industries ltd - India
- Coastal Gujarat Power Limited - India
- Power Finance Corporation Ltd., India
- Bhushan Steel Limited - India
- Port Waratah Coal Services - Australia
- Kideco Jaya Agung - Indonesia
- Ministry of Mines - Canada
- Kumho Petrochemical, South Korea
- SN Aboitiz Power Inc, Philippines
- Merrill Lynch Commodities Europe
- Makarim & Taira - Indonesia
- Cement Manufacturers Association - India
- Global Business Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Central Electricity Authority - India
- Renaissance Capital - South Africa
- Riau Bara Harum - Indonesia
- Parry Sugars Refinery, India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- OPG Power Generation Pvt Ltd - India
- Xindia Steels Limited - India
- Sojitz Corporation - Japan
- Bukit Baiduri Energy - Indonesia
- Australian Coal Association
- Thiess Contractors Indonesia
- Therma Luzon, Inc, Philippines
- Siam City Cement PLC, Thailand
- Vizag Seaport Private Limited - India
- Indo Tambangraya Megah - Indonesia
- Ministry of Finance - Indonesia
- Salva Resources Pvt Ltd - India
- Energy Development Corp, Philippines
- Ministry of Transport, Egypt
- ASAPP Information Group - India
- Central Java Power - Indonesia
- Altura Mining Limited, Indonesia
- Bukit Makmur.PT - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Siam City Cement - Thailand
- Wood Mackenzie - Singapore
- Kepco SPC Power Corporation, Philippines
- Bhatia International Limited - India
- Kaltim Prima Coal - Indonesia
- PNOC Exploration Corporation - Philippines
- Electricity Generating Authority of Thailand
- Medco Energi Mining Internasional
- Krishnapatnam Port Company Ltd. - India
- Ind-Barath Power Infra Limited - India
- The Treasury - Australian Government
- Manunggal Multi Energi - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Baramulti Group, Indonesia
- Romanian Commodities Exchange
- Wilmar Investment Holdings
- Interocean Group of Companies - India
- Vedanta Resources Plc - India
- Heidelberg Cement - Germany
- Aditya Birla Group - India
- Straits Asia Resources Limited - Singapore
- ICICI Bank Limited - India
- Coalindo Energy - Indonesia
- Chamber of Mines of South Africa
- Malabar Cements Ltd - India
- Deloitte Consulting - India
- Bhoruka Overseas - Indonesia
- Mercator Lines Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Rio Tinto Coal - Australia
- India Bulls Power Limited - India
- Mjunction Services Limited - India
- Indian Oil Corporation Limited
- Madhucon Powers Ltd - India
- GVK Power & Infra Limited - India
- Indonesian Coal Mining Association
- Edison Trading Spa - Italy
- Latin American Coal - Colombia
- PTC India Limited - India
- Singapore Mercantile Exchange
- Minerals Council of Australia
- Chettinad Cement Corporation Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Tata Chemicals Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Kobexindo Tractors - Indoneisa
- Trasteel International SA, Italy
- Independent Power Producers Association of India
- Karaikal Port Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Global Green Power PLC Corporation, Philippines
- The University of Queensland
- VISA Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Samtan Co., Ltd - South Korea
- CNBM International Corporation - China
- Posco Energy - South Korea
- McConnell Dowell - Australia
- Thai Mozambique Logistica
- SMC Global Power, Philippines
- GAC Shipping (India) Pvt Ltd
- Semirara Mining and Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Miang Besar Coal Terminal - Indonesia
- TeaM Sual Corporation - Philippines
- GMR Energy Limited - India
- Agrawal Coal Company - India
- Sindya Power Generating Company Private Ltd
- San Jose City I Power Corp, Philippines
- Indika Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- New Zealand Coal & Carbon
- Cigading International Bulk Terminal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Meenaskhi Energy Private Limited - India
- Planning Commission, India
- White Energy Company Limited
- SMG Consultants - Indonesia
- Directorate Of Revenue Intelligence - India
- LBH Netherlands Bv - Netherlands
- AsiaOL BioFuels Corp., Philippines
- Bangladesh Power Developement Board
- GN Power Mariveles Coal Plant, Philippines
- Jindal Steel & Power Ltd - India
- Simpson Spence & Young - Indonesia
- CIMB Investment Bank - Malaysia
- Ambuja Cements Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Bharathi Cement Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Oldendorff Carriers - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Orica Mining Services - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- European Bulk Services B.V. - Netherlands
- IHS Mccloskey Coal Group - USA
- Africa Commodities Group - South Africa
- South Luzon Thermal Energy Corporation
- Kohat Cement Company Ltd. - Pakistan
- Semirara Mining Corp, Philippines
- Timah Investasi Mineral - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Petron Corporation, Philippines
- Sakthi Sugars Limited - India
- Gujarat Sidhee Cement - India
- Price Waterhouse Coopers - Russia
- Goldman Sachs - Singapore
- MS Steel International - UAE
- Electricity Authority, New Zealand
- Pipit Mutiara Jaya. PT, Indonesia
- The State Trading Corporation of India Ltd
- Sinarmas Energy and Mining - Indonesia
- Essar Steel Hazira Ltd - India
- Maheswari Brothers Coal Limited - India
- Georgia Ports Authority, United States
- Borneo Indobara - Indonesia
- PowerSource Philippines DevCo
- Formosa Plastics Group - Taiwan
- Ceylon Electricity Board - Sri Lanka
- Commonwealth Bank - Australia
- Attock Cement Pakistan Limited
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Marubeni Corporation - India
- Savvy Resources Ltd - HongKong
- Antam Resourcindo - Indonesia
- Uttam Galva Steels Limited - India
- Parliament of New Zealand
- Carbofer General Trading SA - India
- Indian Energy Exchange, India
- Sical Logistics Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Kartika Selabumi Mining - Indonesia
- Pendopo Energi Batubara - Indonesia
- Eastern Energy - Thailand
- Globalindo Alam Lestari - Indonesia
- Lanco Infratech Ltd - India
- Intertek Mineral Services - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Orica Australia Pty. Ltd.
- Star Paper Mills Limited - India
- International Coal Ventures Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Toyota Tsusho Corporation, Japan
- Alfred C Toepfer International GmbH - Germany
- London Commodity Brokers - England
- Leighton Contractors Pty Ltd - Australia
- Australian Commodity Traders Exchange
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