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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, 17 June 20
MARKET INSIGHT - INTERMODAL
After experiencing record earnings during the first half of the year, the focus of headlines concerning the tanker market has shifted from the deve ...
Wednesday, 17 June 20
KOREA SOUTHERN POWER CO INVITED 80000 MT OF LOW CALORIFIC VALUE COAL FOR AUGUST 1H, 2020 LOADING
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for 80,000 Metric Tons (MT) Min 4,200 kcal/kg - Max. ...
Tuesday, 16 June 20
A GLOBAL ECONOMIC SLUMP: WHAT WILL IT MEAN FOR METALS AND MINING? - WOOD MACKENZIE
Back before coronavirus knocked “normal” out cold, the key issues for miners were sub-investment prices, rising requirements for ESG an ...
Tuesday, 16 June 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.58 PCT - XINHUA
China Taiyuan coal transaction price index stood at 124.43 points Monday, up 0.58 percent week on week.
The index, released by China ...
Tuesday, 16 June 20
HIGHER IRON ORE PRICES OFFSET CORONAVIRUS-DRIVEN PRODUCTION RISK - FITCH RATINGS
Lower iron ore production in Brazil, resulting from rising coronavirus infections, should only marginally affect the cash flow of Vale and other gl ...
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- Petron Corporation, Philippines
- GMR Energy Limited - India
- Kaltim Prima Coal - Indonesia
- Bukit Makmur.PT - Indonesia
- Central Electricity Authority - India
- PowerSource Philippines DevCo
- AsiaOL BioFuels Corp., Philippines
- Port Waratah Coal Services - Australia
- Kapuas Tunggal Persada - Indonesia
- Kumho Petrochemical, South Korea
- Ministry of Mines - Canada
- Medco Energi Mining Internasional
- Kohat Cement Company Ltd. - Pakistan
- Indian Energy Exchange, India
- Madhucon Powers Ltd - India
- TeaM Sual Corporation - Philippines
- Standard Chartered Bank - UAE
- Tamil Nadu electricity Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bhatia International Limited - India
- The University of Queensland
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- Dalmia Cement Bharat India
- Bangladesh Power Developement Board
- Gujarat Sidhee Cement - India
- Economic Council, Georgia
- Salva Resources Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- IEA Clean Coal Centre - UK
- Barasentosa Lestari - Indonesia
- India Bulls Power Limited - India
- Videocon Industries ltd - India
- MS Steel International - UAE
- Trasteel International SA, Italy
- Asmin Koalindo Tuhup - Indonesia
- International Coal Ventures Pvt Ltd - India
- VISA Power Limited - India
- SMC Global Power, Philippines
- White Energy Company Limited
- Mintek Dendrill Indonesia
- Indika Energy - Indonesia
- Power Finance Corporation Ltd., India
- Bulk Trading Sa - Switzerland
- TNB Fuel Sdn Bhd - Malaysia
- Manunggal Multi Energi - Indonesia
- Bukit Baiduri Energy - Indonesia
- SMG Consultants - Indonesia
- Cement Manufacturers Association - India
- Miang Besar Coal Terminal - Indonesia
- Coal and Oil Company - UAE
- Coastal Gujarat Power Limited - India
- Posco Energy - South Korea
- OPG Power Generation Pvt Ltd - India
- GN Power Mariveles Coal Plant, Philippines
- Global Green Power PLC Corporation, Philippines
- Larsen & Toubro Limited - India
- Mercuria Energy - Indonesia
- Parliament of New Zealand
- London Commodity Brokers - England
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Energy Link Ltd, New Zealand
- Krishnapatnam Port Company Ltd. - India
- Indonesian Coal Mining Association
- Grasim Industreis Ltd - India
- Price Waterhouse Coopers - Russia
- Timah Investasi Mineral - Indoneisa
- Global Business Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Baramulti Group, Indonesia
- Minerals Council of Australia
- The State Trading Corporation of India Ltd
- ASAPP Information Group - India
- Bayan Resources Tbk. - Indonesia
- Savvy Resources Ltd - HongKong
- Renaissance Capital - South Africa
- Alfred C Toepfer International GmbH - Germany
- Sojitz Corporation - Japan
- Africa Commodities Group - South Africa
- Antam Resourcindo - Indonesia
- Sree Jayajothi Cements Limited - India
- Star Paper Mills Limited - India
- Borneo Indobara - Indonesia
- Edison Trading Spa - Italy
- Holcim Trading Pte Ltd - Singapore
- Latin American Coal - Colombia
- Bharathi Cement Corporation - India
- Globalindo Alam Lestari - Indonesia
- Ambuja Cements Ltd - India
- Maheswari Brothers Coal Limited - India
- Chettinad Cement Corporation Ltd - India
- Riau Bara Harum - Indonesia
- SN Aboitiz Power Inc, Philippines
- Bhoruka Overseas - Indonesia
- Parry Sugars Refinery, India
- Georgia Ports Authority, United States
- Meralco Power Generation, Philippines
- New Zealand Coal & Carbon
- San Jose City I Power Corp, Philippines
- Carbofer General Trading SA - India
- Indo Tambangraya Megah - Indonesia
- Siam City Cement PLC, Thailand
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vizag Seaport Private Limited - India
- Thiess Contractors Indonesia
- Aboitiz Power Corporation - Philippines
- Electricity Authority, New Zealand
- Attock Cement Pakistan Limited
- Wilmar Investment Holdings
- Semirara Mining Corp, Philippines
- Essar Steel Hazira Ltd - India
- Australian Coal Association
- Orica Mining Services - Indonesia
- Eastern Energy - Thailand
- PTC India Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Sakthi Sugars Limited - India
- Kideco Jaya Agung - Indonesia
- Heidelberg Cement - Germany
- European Bulk Services B.V. - Netherlands
- Independent Power Producers Association of India
- Singapore Mercantile Exchange
- Energy Development Corp, Philippines
- Marubeni Corporation - India
- Uttam Galva Steels Limited - India
- Vedanta Resources Plc - India
- Planning Commission, India
- Ministry of Finance - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Cigading International Bulk Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- Makarim & Taira - Indonesia
- Tata Chemicals Ltd - India
- Jindal Steel & Power Ltd - India
- Aditya Birla Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bahari Cakrawala Sebuku - Indonesia
- Straits Asia Resources Limited - Singapore
- Bukit Asam (Persero) Tbk - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Leighton Contractors Pty Ltd - Australia
- Meenaskhi Energy Private Limited - India
- Sindya Power Generating Company Private Ltd
- Toyota Tsusho Corporation, Japan
- LBH Netherlands Bv - Netherlands
- Semirara Mining and Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Iligan Light & Power Inc, Philippines
- Wood Mackenzie - Singapore
- Interocean Group of Companies - India
- Directorate Of Revenue Intelligence - India
- Siam City Cement - Thailand
- McConnell Dowell - Australia
- Orica Australia Pty. Ltd.
- Bhushan Steel Limited - India
- Chamber of Mines of South Africa
- IHS Mccloskey Coal Group - USA
- Gujarat Electricity Regulatory Commission - India
- Metalloyd Limited - United Kingdom
- Indian Oil Corporation Limited
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Coal Council - USA
- Samtan Co., Ltd - South Korea
- Jaiprakash Power Ventures ltd
- Electricity Generating Authority of Thailand
- Romanian Commodities Exchange
- Kobexindo Tractors - Indoneisa
- Binh Thuan Hamico - Vietnam
- Altura Mining Limited, Indonesia
- Sarangani Energy Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Australian Commodity Traders Exchange
- Thai Mozambique Logistica
- ICICI Bank Limited - India
- GVK Power & Infra Limited - India
- Banpu Public Company Limited - Thailand
- Merrill Lynch Commodities Europe
- Neyveli Lignite Corporation Ltd, - India
- Jorong Barutama Greston.PT - Indonesia
- Deloitte Consulting - India
- Formosa Plastics Group - Taiwan
- Oldendorff Carriers - Singapore
- Anglo American - United Kingdom
- Mjunction Services Limited - India
- Commonwealth Bank - Australia
- Central Java Power - Indonesia
- South Luzon Thermal Energy Corporation
- Global Coal Blending Company Limited - Australia
- Petrochimia International Co. Ltd.- Taiwan
- Ministry of Transport, Egypt
- Xindia Steels Limited - India
- CNBM International Corporation - China
- Rashtriya Ispat Nigam Limited - India
- Mercator Lines Limited - India
- Ind-Barath Power Infra Limited - India
- Agrawal Coal Company - India
- Intertek Mineral Services - Indonesia
- GAC Shipping (India) Pvt Ltd
- Lanco Infratech Ltd - India
- CIMB Investment Bank - Malaysia
- Kepco SPC Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Goldman Sachs - Singapore
- PetroVietnam Power Coal Import and Supply Company
- PNOC Exploration Corporation - Philippines
- Indogreen Group - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Rio Tinto Coal - Australia
- Vijayanagar Sugar Pvt Ltd - India
- Kartika Selabumi Mining - Indonesia
- Sical Logistics Limited - India
- Therma Luzon, Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Malabar Cements Ltd - India
- The Treasury - Australian Government
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