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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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- Coalindo Energy - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Sakthi Sugars Limited - India
- LBH Netherlands Bv - Netherlands
- Star Paper Mills Limited - India
- Latin American Coal - Colombia
- GMR Energy Limited - India
- Gujarat Sidhee Cement - India
- Xindia Steels Limited - India
- Chamber of Mines of South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Directorate General of MIneral and Coal - Indonesia
- Globalindo Alam Lestari - Indonesia
- The Treasury - Australian Government
- Bahari Cakrawala Sebuku - Indonesia
- Rio Tinto Coal - Australia
- Eastern Coal Council - USA
- Semirara Mining and Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Tamil Nadu electricity Board
- Ministry of Transport, Egypt
- Karbindo Abesyapradhi - Indoneisa
- Petrochimia International Co. Ltd.- Taiwan
- South Luzon Thermal Energy Corporation
- Straits Asia Resources Limited - Singapore
- Intertek Mineral Services - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Aditya Birla Group - India
- Posco Energy - South Korea
- Asmin Koalindo Tuhup - Indonesia
- New Zealand Coal & Carbon
- Gujarat Mineral Development Corp Ltd - India
- Ind-Barath Power Infra Limited - India
- The State Trading Corporation of India Ltd
- Krishnapatnam Port Company Ltd. - India
- Central Java Power - Indonesia
- Kartika Selabumi Mining - Indonesia
- Singapore Mercantile Exchange
- Meenaskhi Energy Private Limited - India
- Altura Mining Limited, Indonesia
- Energy Development Corp, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Commonwealth Bank - Australia
- Bulk Trading Sa - Switzerland
- Madhucon Powers Ltd - India
- Bukit Baiduri Energy - Indonesia
- McConnell Dowell - Australia
- Thai Mozambique Logistica
- Sree Jayajothi Cements Limited - India
- Sindya Power Generating Company Private Ltd
- Rashtriya Ispat Nigam Limited - India
- Kepco SPC Power Corporation, Philippines
- Siam City Cement PLC, Thailand
- Gujarat Electricity Regulatory Commission - India
- Thiess Contractors Indonesia
- Coal and Oil Company - UAE
- Kapuas Tunggal Persada - Indonesia
- Orica Australia Pty. Ltd.
- Price Waterhouse Coopers - Russia
- Lanco Infratech Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Indian Oil Corporation Limited
- Savvy Resources Ltd - HongKong
- VISA Power Limited - India
- Mjunction Services Limited - India
- Mintek Dendrill Indonesia
- Minerals Council of Australia
- Leighton Contractors Pty Ltd - Australia
- White Energy Company Limited
- Essar Steel Hazira Ltd - India
- GVK Power & Infra Limited - India
- Electricity Authority, New Zealand
- IHS Mccloskey Coal Group - USA
- Carbofer General Trading SA - India
- Parliament of New Zealand
- Electricity Generating Authority of Thailand
- Metalloyd Limited - United Kingdom
- Directorate Of Revenue Intelligence - India
- Economic Council, Georgia
- Therma Luzon, Inc, Philippines
- Siam City Cement - Thailand
- Australian Coal Association
- MS Steel International - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Salva Resources Pvt Ltd - India
- Makarim & Taira - Indonesia
- Mercator Lines Limited - India
- Alfred C Toepfer International GmbH - Germany
- Power Finance Corporation Ltd., India
- Kalimantan Lumbung Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- Medco Energi Mining Internasional
- Antam Resourcindo - Indonesia
- Attock Cement Pakistan Limited
- GAC Shipping (India) Pvt Ltd
- Vijayanagar Sugar Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- SMC Global Power, Philippines
- Indika Energy - Indonesia
- PTC India Limited - India
- CIMB Investment Bank - Malaysia
- TeaM Sual Corporation - Philippines
- Kaltim Prima Coal - Indonesia
- Indo Tambangraya Megah - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Semirara Mining Corp, Philippines
- Jaiprakash Power Ventures ltd
- Kobexindo Tractors - Indoneisa
- Oldendorff Carriers - Singapore
- Riau Bara Harum - Indonesia
- Jindal Steel & Power Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Heidelberg Cement - Germany
- Larsen & Toubro Limited - India
- Indogreen Group - Indonesia
- Grasim Industreis Ltd - India
- Parry Sugars Refinery, India
- Vedanta Resources Plc - India
- Central Electricity Authority - India
- PNOC Exploration Corporation - Philippines
- Baramulti Group, Indonesia
- Videocon Industries ltd - India
- Meralco Power Generation, Philippines
- Port Waratah Coal Services - Australia
- SMG Consultants - Indonesia
- European Bulk Services B.V. - Netherlands
- Bukit Asam (Persero) Tbk - Indonesia
- Indian Energy Exchange, India
- Banpu Public Company Limited - Thailand
- Africa Commodities Group - South Africa
- Borneo Indobara - Indonesia
- Planning Commission, India
- Independent Power Producers Association of India
- Coastal Gujarat Power Limited - India
- Global Coal Blending Company Limited - Australia
- Georgia Ports Authority, United States
- Indonesian Coal Mining Association
- London Commodity Brokers - England
- Marubeni Corporation - India
- Merrill Lynch Commodities Europe
- Wood Mackenzie - Singapore
- India Bulls Power Limited - India
- IEA Clean Coal Centre - UK
- Aboitiz Power Corporation - Philippines
- Kumho Petrochemical, South Korea
- Cement Manufacturers Association - India
- Energy Link Ltd, New Zealand
- Bharathi Cement Corporation - India
- Simpson Spence & Young - Indonesia
- Global Business Power Corporation, Philippines
- Ministry of Mines - Canada
- Holcim Trading Pte Ltd - Singapore
- Samtan Co., Ltd - South Korea
- Deloitte Consulting - India
- Vizag Seaport Private Limited - India
- Ministry of Finance - Indonesia
- Edison Trading Spa - Italy
- The University of Queensland
- Agrawal Coal Company - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Neyveli Lignite Corporation Ltd, - India
- Bukit Makmur.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Toyota Tsusho Corporation, Japan
- PowerSource Philippines DevCo
- Iligan Light & Power Inc, Philippines
- Uttam Galva Steels Limited - India
- Trasteel International SA, Italy
- Orica Mining Services - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karaikal Port Pvt Ltd - India
- Kideco Jaya Agung - Indonesia
- Timah Investasi Mineral - Indoneisa
- Malabar Cements Ltd - India
- Mercuria Energy - Indonesia
- Bhatia International Limited - India
- Ambuja Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- ICICI Bank Limited - India
- Bhushan Steel Limited - India
- SN Aboitiz Power Inc, Philippines
- Petron Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Romanian Commodities Exchange
- Pendopo Energi Batubara - Indonesia
- ASAPP Information Group - India
- Cigading International Bulk Terminal - Indonesia
- Bangladesh Power Developement Board
- Australian Commodity Traders Exchange
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ceylon Electricity Board - Sri Lanka
- San Jose City I Power Corp, Philippines
- Wilmar Investment Holdings
- Goldman Sachs - Singapore
- Sarangani Energy Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Renaissance Capital - South Africa
- Anglo American - United Kingdom
- Interocean Group of Companies - India
- Binh Thuan Hamico - Vietnam
- Chettinad Cement Corporation Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Tata Chemicals Ltd - India
- Manunggal Multi Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- International Coal Ventures Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Sojitz Corporation - Japan
- Miang Besar Coal Terminal - Indonesia
- Dalmia Cement Bharat India
- PetroVietnam Power Coal Import and Supply Company
- Standard Chartered Bank - UAE
- Eastern Energy - Thailand
- Sical Logistics Limited - India
- OPG Power Generation Pvt Ltd - India
- CNBM International Corporation - China
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