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