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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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Tuesday, 09 June 20
BUNKER SUPPLY CONTRACTS - KEY CONSIDERATIONS FOR THE BUYER - GARD
KNOWLEDGE TO ELEVATE
Regardless of whether a buyer purchases fuel directly from physical suppliers or via brokers or traders and whether sale ...
Tuesday, 09 June 20
INDIA: COAL IMPORT DROPS BY 20% TO NEARLY 19 MILLION TONNES IN MAY, SAYS REPORT - HINDUSTAN TIMES
The country’s coal import dropped by 20 per cent to 18.93 million tonnes (MT) last month, industry data showed.
The government ...
Monday, 08 June 20
WOOD MACKENZIE: THE INDISPENSABLE OPEC+
Rumours of “the death of OPEC” have been circulating for almost as long as the organisation has existed. Just three years after the car ...
Monday, 08 June 20
CHINA'S COAL IMPORTS FALL NEARLY 20% IN MAY EVEN AS DEMAND RISES - REUTERS
China’s coal imports in May fell nearly 20% compared with a year earlier even as demand recovered at power plants and industrial users, custo ...
Monday, 08 June 20
JUNE 2020 INDONESIAN COAL PRICE REFERENCE HIT US$ 52.98 A TON, ITS LOWEST LEVEL SINCE AT LEAST AUGUST 2016
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down again the benchmark price of Indonesian th ...
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- Coastal Gujarat Power Limited - India
- Rio Tinto Coal - Australia
- Madhucon Powers Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Asmin Koalindo Tuhup - Indonesia
- SN Aboitiz Power Inc, Philippines
- Meralco Power Generation, Philippines
- IEA Clean Coal Centre - UK
- Metalloyd Limited - United Kingdom
- South Luzon Thermal Energy Corporation
- Singapore Mercantile Exchange
- Meenaskhi Energy Private Limited - India
- Banpu Public Company Limited - Thailand
- Posco Energy - South Korea
- Global Business Power Corporation, Philippines
- Goldman Sachs - Singapore
- MS Steel International - UAE
- Sinarmas Energy and Mining - Indonesia
- San Jose City I Power Corp, Philippines
- Siam City Cement PLC, Thailand
- Sarangani Energy Corporation, Philippines
- Wilmar Investment Holdings
- Bharathi Cement Corporation - India
- VISA Power Limited - India
- CNBM International Corporation - China
- Ambuja Cements Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Planning Commission, India
- McConnell Dowell - Australia
- Malabar Cements Ltd - India
- Videocon Industries ltd - India
- Tamil Nadu electricity Board
- Mercator Lines Limited - India
- Bayan Resources Tbk. - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Aditya Birla Group - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Latin American Coal - Colombia
- Essar Steel Hazira Ltd - India
- Vizag Seaport Private Limited - India
- Heidelberg Cement - Germany
- Indian Oil Corporation Limited
- TNB Fuel Sdn Bhd - Malaysia
- Indian Energy Exchange, India
- Trasteel International SA, Italy
- CIMB Investment Bank - Malaysia
- Xindia Steels Limited - India
- IHS Mccloskey Coal Group - USA
- Billiton Holdings Pty Ltd - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Miang Besar Coal Terminal - Indonesia
- Semirara Mining Corp, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Thiess Contractors Indonesia
- GMR Energy Limited - India
- Holcim Trading Pte Ltd - Singapore
- Bhushan Steel Limited - India
- Sojitz Corporation - Japan
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Therma Luzon, Inc, Philippines
- Sree Jayajothi Cements Limited - India
- Price Waterhouse Coopers - Russia
- Toyota Tsusho Corporation, Japan
- Independent Power Producers Association of India
- Karaikal Port Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Eastern Coal Council - USA
- Ministry of Transport, Egypt
- Edison Trading Spa - Italy
- GAC Shipping (India) Pvt Ltd
- Sical Logistics Limited - India
- Kumho Petrochemical, South Korea
- Leighton Contractors Pty Ltd - Australia
- OPG Power Generation Pvt Ltd - India
- Indonesian Coal Mining Association
- Petron Corporation, Philippines
- Jaiprakash Power Ventures ltd
- PowerSource Philippines DevCo
- Siam City Cement - Thailand
- Lanco Infratech Ltd - India
- Formosa Plastics Group - Taiwan
- LBH Netherlands Bv - Netherlands
- Borneo Indobara - Indonesia
- Ministry of Mines - Canada
- Kalimantan Lumbung Energi - Indonesia
- Kartika Selabumi Mining - Indonesia
- Makarim & Taira - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Thai Mozambique Logistica
- Kideco Jaya Agung - Indonesia
- The Treasury - Australian Government
- Mercuria Energy - Indonesia
- Central Java Power - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Parliament of New Zealand
- Chettinad Cement Corporation Ltd - India
- Ind-Barath Power Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- India Bulls Power Limited - India
- Commonwealth Bank - Australia
- Baramulti Group, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Eastern Energy - Thailand
- Krishnapatnam Port Company Ltd. - India
- Indika Energy - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Samtan Co., Ltd - South Korea
- Altura Mining Limited, Indonesia
- Bhatia International Limited - India
- Medco Energi Mining Internasional
- Cement Manufacturers Association - India
- Larsen & Toubro Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Merrill Lynch Commodities Europe
- ASAPP Information Group - India
- Marubeni Corporation - India
- SMC Global Power, Philippines
- Parry Sugars Refinery, India
- Energy Development Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- Australian Commodity Traders Exchange
- Kepco SPC Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Minerals Council of Australia
- Orica Australia Pty. Ltd.
- London Commodity Brokers - England
- Attock Cement Pakistan Limited
- Globalindo Alam Lestari - Indonesia
- Kaltim Prima Coal - Indonesia
- Aboitiz Power Corporation - Philippines
- Coalindo Energy - Indonesia
- Simpson Spence & Young - Indonesia
- Vedanta Resources Plc - India
- Semirara Mining and Power Corporation, Philippines
- Tata Chemicals Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Interocean Group of Companies - India
- Kapuas Tunggal Persada - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Electricity Generating Authority of Thailand
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- ICICI Bank Limited - India
- Pendopo Energi Batubara - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- White Energy Company Limited
- Energy Link Ltd, New Zealand
- Africa Commodities Group - South Africa
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Carbofer General Trading SA - India
- Intertek Mineral Services - Indonesia
- Georgia Ports Authority, United States
- Barasentosa Lestari - Indonesia
- Oldendorff Carriers - Singapore
- Cigading International Bulk Terminal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Romanian Commodities Exchange
- Gujarat Sidhee Cement - India
- Savvy Resources Ltd - HongKong
- New Zealand Coal & Carbon
- Jorong Barutama Greston.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- The State Trading Corporation of India Ltd
- Star Paper Mills Limited - India
- Port Waratah Coal Services - Australia
- Jindal Steel & Power Ltd - India
- SMG Consultants - Indonesia
- Bangladesh Power Developement Board
- Economic Council, Georgia
- Mintek Dendrill Indonesia
- Coal and Oil Company - UAE
- TeaM Sual Corporation - Philippines
- Iligan Light & Power Inc, Philippines
- Sakthi Sugars Limited - India
- Manunggal Multi Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Agrawal Coal Company - India
- Dalmia Cement Bharat India
- Grasim Industreis Ltd - India
- Gujarat Mineral Development Corp Ltd - India
- Gujarat Electricity Regulatory Commission - India
- GVK Power & Infra Limited - India
- Bulk Trading Sa - Switzerland
- Uttam Galva Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- Central Electricity Authority - India
- Ministry of Finance - Indonesia
- Sindya Power Generating Company Private Ltd
- Power Finance Corporation Ltd., India
- Deloitte Consulting - India
- The University of Queensland
- Chamber of Mines of South Africa
- Renaissance Capital - South Africa
- Maheswari Brothers Coal Limited - India
- Orica Mining Services - Indonesia
- Standard Chartered Bank - UAE
- Kobexindo Tractors - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- Bhoruka Overseas - Indonesia
- Anglo American - United Kingdom
- Antam Resourcindo - Indonesia
- Riau Bara Harum - Indonesia
- Mjunction Services Limited - India
- Global Coal Blending Company Limited - Australia
- Indo Tambangraya Megah - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Australian Coal Association
- Straits Asia Resources Limited - Singapore
- Alfred C Toepfer International GmbH - Germany
- Timah Investasi Mineral - Indoneisa
- Electricity Authority, New Zealand
- Indogreen Group - Indonesia
- Directorate Of Revenue Intelligence - India
- PTC India Limited - India
- Bukit Makmur.PT - Indonesia
- Wood Mackenzie - Singapore
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