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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, 01 July 20
COLOMBIA'S COAL EXPORT VOLUMES HAVE STEADILY DECLINED IN RECENT YEARS - BANCHERO COSTA
Colombia is the world’s fifth largest seaborne exporter of coal, coming after Australia, Indonesia, Russia and the USA.
Export ...
Wednesday, 01 July 20
MARKET INSIGHT - INTERMODAL
It was beginning of 2020 – close to 6 months from now – when we first experienced the huge impact of the COVID 19 outbreak on Ship Repa ...
Monday, 29 June 20
INDONESIAN COAL AT THE MERCY OF THE DRAGON AND TIGER - GHEE PEH | IEEFA
Coal sector analysts have been busy in recent months mapping the negative impact of low coal prices from the COVID-19 pandemic on Indonesian coal c ...
Monday, 29 June 20
FALLING DEMAND IN CHINA AND INDIA SIGNAL TOUGH TIMES AHEAD FOR INDONESIAN EXPORTS - GHEE PEH | EEFA
Assessing the Impact on Indonesian Coal Companies
The bad news for Indonesia’s coal companies is that they are likely to have ...
Monday, 29 June 20
INDIA COAL IMPORT OUTLOOK: WEAK DEMAND, IMPORT SUBSTITUTION, EXPECT 20% YOY DECLINE - GHEE PEH | IEEFA
For India, the coal demand indicators have clearly turned negative.
According to Argus Media, since the government declared a ...
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- PNOC Exploration Corporation - Philippines
- Indian Oil Corporation Limited
- PowerSource Philippines DevCo
- Mercuria Energy - Indonesia
- Sakthi Sugars Limited - India
- Deloitte Consulting - India
- The Treasury - Australian Government
- Africa Commodities Group - South Africa
- Electricity Generating Authority of Thailand
- Orica Mining Services - Indonesia
- Ambuja Cements Ltd - India
- Trasteel International SA, Italy
- Gujarat Mineral Development Corp Ltd - India
- Sojitz Corporation - Japan
- Mjunction Services Limited - India
- Star Paper Mills Limited - India
- Cigading International Bulk Terminal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Meralco Power Generation, Philippines
- Pendopo Energi Batubara - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Interocean Group of Companies - India
- IEA Clean Coal Centre - UK
- McConnell Dowell - Australia
- Kartika Selabumi Mining - Indonesia
- Mercator Lines Limited - India
- Altura Mining Limited, Indonesia
- Ministry of Transport, Egypt
- India Bulls Power Limited - India
- Madhucon Powers Ltd - India
- Vedanta Resources Plc - India
- Meenaskhi Energy Private Limited - India
- Savvy Resources Ltd - HongKong
- Kalimantan Lumbung Energi - Indonesia
- Economic Council, Georgia
- Siam City Cement PLC, Thailand
- Oldendorff Carriers - Singapore
- Krishnapatnam Port Company Ltd. - India
- Gujarat Sidhee Cement - India
- Uttam Galva Steels Limited - India
- Romanian Commodities Exchange
- Riau Bara Harum - Indonesia
- Renaissance Capital - South Africa
- Singapore Mercantile Exchange
- Videocon Industries ltd - India
- Tamil Nadu electricity Board
- GAC Shipping (India) Pvt Ltd
- Antam Resourcindo - Indonesia
- Anglo American - United Kingdom
- Directorate General of MIneral and Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bhatia International Limited - India
- Agrawal Coal Company - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Manunggal Multi Energi - Indonesia
- Thai Mozambique Logistica
- New Zealand Coal & Carbon
- Minerals Council of Australia
- Malabar Cements Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- South Luzon Thermal Energy Corporation
- Ministry of Mines - Canada
- Australian Commodity Traders Exchange
- Holcim Trading Pte Ltd - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sical Logistics Limited - India
- Aditya Birla Group - India
- Power Finance Corporation Ltd., India
- Global Business Power Corporation, Philippines
- Indogreen Group - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Global Coal Blending Company Limited - Australia
- Metalloyd Limited - United Kingdom
- Central Java Power - Indonesia
- Essar Steel Hazira Ltd - India
- Siam City Cement - Thailand
- Timah Investasi Mineral - Indoneisa
- Maheswari Brothers Coal Limited - India
- London Commodity Brokers - England
- Rio Tinto Coal - Australia
- Directorate Of Revenue Intelligence - India
- Globalindo Alam Lestari - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Thiess Contractors Indonesia
- Bayan Resources Tbk. - Indonesia
- Bukit Makmur.PT - Indonesia
- TeaM Sual Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- International Coal Ventures Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Lanco Infratech Ltd - India
- The University of Queensland
- Ind-Barath Power Infra Limited - India
- Coastal Gujarat Power Limited - India
- GMR Energy Limited - India
- Price Waterhouse Coopers - Russia
- Iligan Light & Power Inc, Philippines
- Dalmia Cement Bharat India
- Commonwealth Bank - Australia
- Barasentosa Lestari - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Wilmar Investment Holdings
- Electricity Authority, New Zealand
- Indika Energy - Indonesia
- Ministry of Finance - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Formosa Plastics Group - Taiwan
- Georgia Ports Authority, United States
- Makarim & Taira - Indonesia
- Heidelberg Cement - Germany
- Jindal Steel & Power Ltd - India
- Planning Commission, India
- Simpson Spence & Young - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Port Waratah Coal Services - Australia
- Indian Energy Exchange, India
- Sindya Power Generating Company Private Ltd
- The State Trading Corporation of India Ltd
- SMG Consultants - Indonesia
- Jaiprakash Power Ventures ltd
- Sree Jayajothi Cements Limited - India
- Intertek Mineral Services - Indonesia
- VISA Power Limited - India
- CIMB Investment Bank - Malaysia
- ASAPP Information Group - India
- Eastern Energy - Thailand
- Goldman Sachs - Singapore
- SMC Global Power, Philippines
- Leighton Contractors Pty Ltd - Australia
- Semirara Mining and Power Corporation, Philippines
- PTC India Limited - India
- Coalindo Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Binh Thuan Hamico - Vietnam
- Vijayanagar Sugar Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Bukit Asam (Persero) Tbk - Indonesia
- Banpu Public Company Limited - Thailand
- Energy Link Ltd, New Zealand
- Eastern Coal Council - USA
- Tata Chemicals Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- IHS Mccloskey Coal Group - USA
- Salva Resources Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Xindia Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- GVK Power & Infra Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Attock Cement Pakistan Limited
- White Energy Company Limited
- Cement Manufacturers Association - India
- Posco Energy - South Korea
- Semirara Mining Corp, Philippines
- Miang Besar Coal Terminal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Carbofer General Trading SA - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bhoruka Overseas - Indonesia
- Grasim Industreis Ltd - India
- Kobexindo Tractors - Indoneisa
- Australian Coal Association
- PetroVietnam Power Coal Import and Supply Company
- SN Aboitiz Power Inc, Philippines
- Merrill Lynch Commodities Europe
- Bulk Trading Sa - Switzerland
- Central Electricity Authority - India
- LBH Netherlands Bv - Netherlands
- Independent Power Producers Association of India
- Larsen & Toubro Limited - India
- Borneo Indobara - Indonesia
- Toyota Tsusho Corporation, Japan
- Bharathi Cement Corporation - India
- Jorong Barutama Greston.PT - Indonesia
- Coal and Oil Company - UAE
- Mintek Dendrill Indonesia
- Energy Development Corp, Philippines
- Parry Sugars Refinery, India
- Edison Trading Spa - Italy
- Straits Asia Resources Limited - Singapore
- Chamber of Mines of South Africa
- Latin American Coal - Colombia
- Medco Energi Mining Internasional
- Baramulti Group, Indonesia
- Standard Chartered Bank - UAE
- Indonesian Coal Mining Association
- Kideco Jaya Agung - Indonesia
- Wood Mackenzie - Singapore
- Ceylon Electricity Board - Sri Lanka
- OPG Power Generation Pvt Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Kumho Petrochemical, South Korea
- MS Steel International - UAE
- Neyveli Lignite Corporation Ltd, - India
- Bangladesh Power Developement Board
- European Bulk Services B.V. - Netherlands
- ICICI Bank Limited - India
- San Jose City I Power Corp, Philippines
- Samtan Co., Ltd - South Korea
- CNBM International Corporation - China
- Bhushan Steel Limited - India
- Aboitiz Power Corporation - Philippines
- Orica Australia Pty. Ltd.
- Chettinad Cement Corporation Ltd - India
- Therma Luzon, Inc, Philippines
- Karaikal Port Pvt Ltd - India
- Parliament of New Zealand
- Indo Tambangraya Megah - Indonesia
- Vizag Seaport Private Limited - India
- Petron Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- GN Power Mariveles Coal Plant, Philippines
- Global Green Power PLC Corporation, Philippines
- Sarangani Energy Corporation, Philippines
- Marubeni Corporation - India
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