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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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Thursday, 11 June 20
JAN-MAY, INDONESIA SHIPPED 175.15 MILLION TONS OF COAL TO ITS OVERSEAS BUYERS
Indonesia's coal production for the first 5 months of this year have reached 228 million tons. January – May 2020, Indonesia shipped US$ ...
Thursday, 11 June 20
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Wednesday, 10 June 20
OPEC+ CUTS EXTENSION TO ACCELERATE MARKET REBALANCING - FITCH RATINGS
Fitch Ratings-London-08 June 2020: The OPEC+ agreement to extend by one month record oil production cuts should accelerate market rebalancing, Fitc ...
Wednesday, 10 June 20
MARKET INSIGHT - INTERMODAL
In contrast to the economic projections of the past two years for the first half of 2020, the oil & gas industry and those involved in it faced ...
Wednesday, 10 June 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.19 PCT - XINHUA
China Taiyuan coal transaction price index stood at 123.71 points Monday, down 0.19 percent week on week.
The index, released by Chi ...
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- Tata Chemicals Ltd - India
- Sindya Power Generating Company Private Ltd
- Indika Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Electricity Authority, New Zealand
- Madhucon Powers Ltd - India
- Ambuja Cements Ltd - India
- IEA Clean Coal Centre - UK
- Sarangani Energy Corporation, Philippines
- Ministry of Transport, Egypt
- Merrill Lynch Commodities Europe
- TNB Fuel Sdn Bhd - Malaysia
- Uttam Galva Steels Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Timah Investasi Mineral - Indoneisa
- Savvy Resources Ltd - HongKong
- Kumho Petrochemical, South Korea
- Asmin Koalindo Tuhup - Indonesia
- Billiton Holdings Pty Ltd - Australia
- IHS Mccloskey Coal Group - USA
- GN Power Mariveles Coal Plant, Philippines
- Barasentosa Lestari - Indonesia
- Independent Power Producers Association of India
- Energy Link Ltd, New Zealand
- LBH Netherlands Bv - Netherlands
- Planning Commission, India
- Vizag Seaport Private Limited - India
- Toyota Tsusho Corporation, Japan
- Vedanta Resources Plc - India
- Petrochimia International Co. Ltd.- Taiwan
- SN Aboitiz Power Inc, Philippines
- Iligan Light & Power Inc, Philippines
- Agrawal Coal Company - India
- Makarim & Taira - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- CIMB Investment Bank - Malaysia
- Mercuria Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Manunggal Multi Energi - Indonesia
- Edison Trading Spa - Italy
- Rashtriya Ispat Nigam Limited - India
- Indian Oil Corporation Limited
- Orica Mining Services - Indonesia
- McConnell Dowell - Australia
- Larsen & Toubro Limited - India
- Sinarmas Energy and Mining - Indonesia
- Jaiprakash Power Ventures ltd
- Coalindo Energy - Indonesia
- Pendopo Energi Batubara - Indonesia
- Orica Australia Pty. Ltd.
- Global Coal Blending Company Limited - Australia
- GMR Energy Limited - India
- Power Finance Corporation Ltd., India
- Electricity Generating Authority of Thailand
- Latin American Coal - Colombia
- Banpu Public Company Limited - Thailand
- Oldendorff Carriers - Singapore
- Bhushan Steel Limited - India
- Semirara Mining and Power Corporation, Philippines
- Central Electricity Authority - India
- Coal and Oil Company - UAE
- The State Trading Corporation of India Ltd
- Tamil Nadu electricity Board
- International Coal Ventures Pvt Ltd - India
- Attock Cement Pakistan Limited
- Chamber of Mines of South Africa
- Economic Council, Georgia
- Sakthi Sugars Limited - India
- Kaltim Prima Coal - Indonesia
- Samtan Co., Ltd - South Korea
- Heidelberg Cement - Germany
- Posco Energy - South Korea
- Grasim Industreis Ltd - India
- PowerSource Philippines DevCo
- Kepco SPC Power Corporation, Philippines
- Thiess Contractors Indonesia
- Energy Development Corp, Philippines
- Jindal Steel & Power Ltd - India
- Meralco Power Generation, Philippines
- Petron Corporation, Philippines
- Bulk Trading Sa - Switzerland
- Gujarat Sidhee Cement - India
- Videocon Industries ltd - India
- Baramulti Group, Indonesia
- Standard Chartered Bank - UAE
- Eastern Coal Council - USA
- Semirara Mining Corp, Philippines
- Star Paper Mills Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Thai Mozambique Logistica
- Medco Energi Mining Internasional
- PTC India Limited - India
- Sree Jayajothi Cements Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Commonwealth Bank - Australia
- European Bulk Services B.V. - Netherlands
- Wilmar Investment Holdings
- Sical Logistics Limited - India
- Bhoruka Overseas - Indonesia
- Salva Resources Pvt Ltd - India
- Kobexindo Tractors - Indoneisa
- GAC Shipping (India) Pvt Ltd
- Gujarat Mineral Development Corp Ltd - India
- Therma Luzon, Inc, Philippines
- Mjunction Services Limited - India
- Africa Commodities Group - South Africa
- Pipit Mutiara Jaya. PT, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Australian Commodity Traders Exchange
- Parliament of New Zealand
- Siam City Cement - Thailand
- Rio Tinto Coal - Australia
- Chettinad Cement Corporation Ltd - India
- Indo Tambangraya Megah - Indonesia
- Xindia Steels Limited - India
- Romanian Commodities Exchange
- White Energy Company Limited
- Sojitz Corporation - Japan
- Ind-Barath Power Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- PNOC Exploration Corporation - Philippines
- OPG Power Generation Pvt Ltd - India
- Minerals Council of Australia
- Neyveli Lignite Corporation Ltd, - India
- Marubeni Corporation - India
- Karaikal Port Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Holcim Trading Pte Ltd - Singapore
- ASAPP Information Group - India
- Riau Bara Harum - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Kartika Selabumi Mining - Indonesia
- Binh Thuan Hamico - Vietnam
- ICICI Bank Limited - India
- Siam City Cement PLC, Thailand
- Central Java Power - Indonesia
- Indonesian Coal Mining Association
- San Jose City I Power Corp, Philippines
- Meenaskhi Energy Private Limited - India
- Lanco Infratech Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Offshore Bulk Terminal Pte Ltd, Singapore
- South Luzon Thermal Energy Corporation
- New Zealand Coal & Carbon
- Kohat Cement Company Ltd. - Pakistan
- Parry Sugars Refinery, India
- Port Waratah Coal Services - Australia
- The Treasury - Australian Government
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Energy - Thailand
- Global Business Power Corporation, Philippines
- Price Waterhouse Coopers - Russia
- Intertek Mineral Services - Indonesia
- CNBM International Corporation - China
- Kalimantan Lumbung Energi - Indonesia
- Formosa Plastics Group - Taiwan
- Miang Besar Coal Terminal - Indonesia
- Mintek Dendrill Indonesia
- Bukit Baiduri Energy - Indonesia
- India Bulls Power Limited - India
- TeaM Sual Corporation - Philippines
- Kapuas Tunggal Persada - Indonesia
- Dalmia Cement Bharat India
- Coastal Gujarat Power Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Bhatia International Limited - India
- Indian Energy Exchange, India
- Cigading International Bulk Terminal - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bharathi Cement Corporation - India
- Globalindo Alam Lestari - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- SMC Global Power, Philippines
- Ministry of Finance - Indonesia
- Cement Manufacturers Association - India
- Singapore Mercantile Exchange
- Bangladesh Power Developement Board
- Goldman Sachs - Singapore
- Interocean Group of Companies - India
- Essar Steel Hazira Ltd - India
- Trasteel International SA, Italy
- SMG Consultants - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Wood Mackenzie - Singapore
- The University of Queensland
- MS Steel International - UAE
- Indogreen Group - Indonesia
- Aditya Birla Group - India
- AsiaOL BioFuels Corp., Philippines
- Bukit Makmur.PT - Indonesia
- Simpson Spence & Young - Indonesia
- Aboitiz Power Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Altura Mining Limited, Indonesia
- Renaissance Capital - South Africa
- VISA Power Limited - India
- Anglo American - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Georgia Ports Authority, United States
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ministry of Mines - Canada
- Karbindo Abesyapradhi - Indoneisa
- Directorate Of Revenue Intelligence - India
- Maheswari Brothers Coal Limited - India
- GVK Power & Infra Limited - India
- Mercator Lines Limited - India
- Kideco Jaya Agung - Indonesia
- Borneo Indobara - Indonesia
- Global Green Power PLC Corporation, Philippines
- Antam Resourcindo - Indonesia
- London Commodity Brokers - England
- Australian Coal Association
- Deloitte Consulting - India
- Malabar Cements Ltd - India
- Carbofer General Trading SA - India
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