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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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Sunday, 07 June 20
A SCRUBBER FITTED 61,000 ULTRAMAX WAS FIXED DELIVERY PHILIPPINES TRIP VIA SOUTH AFRICA REDELIVERY VIETNAM AT $9,500 - BALTIC BRIEFING
Capesize
The small flicker of hope at the beginning of this week has kindled a small fire under the Capesize market. At a paltry $3369 from the ...
Saturday, 06 June 20
KOREA SOUTH-EAST POWER CO INVITED COAL BIDS FOR MIN 5600 NCV COAL
COALspot.com: South Korea’s KOREA SOUTH-EAST POWER CO., LTD. (KOEN) has issued an international tender for 270,000 Tons (MT) min. 5600 NCV co ...
Friday, 05 June 20
COAL INDIA ESTIMATES PRODUCTION GROWTH BY OVERBURDEN REMOVAL - FINANCIAL EXPRESS
PSU miner Coal India (CIL) has now limited mining only to Overburden Removal (OBR) with falling demand of coal. The mining behemoth is now keeping ...
Friday, 05 June 20
U.S. SANCTIONS COMPLIANCE GUIDANCE RELEASED FOR THE GLOBAL MARITIME, ENERGY AND METALS SECTORS - AKIN GUMP
Key Points
On May 14, 2020, OFAC, the Department of State and the U.S. Coast Guard jointly released guidance for persons involved in the ma ...
Friday, 05 June 20
IN THE FIRST 5 MONTHS OF 2020 AUSTRALIA SHIPPED 6.8 MLN TONNES TO VIETNAM - BANCHERO COSTA
In the first 5 months of 2020, global seaborne coal trade declined by as much as -8% year-on-year, according to vessel tracking data from Ref ...
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- ICICI Bank Limited - India
- Deloitte Consulting - India
- Essar Steel Hazira Ltd - India
- Trasteel International SA, Italy
- Banpu Public Company Limited - Thailand
- Bulk Trading Sa - Switzerland
- Medco Energi Mining Internasional
- Sindya Power Generating Company Private Ltd
- Bank of Tokyo Mitsubishi UFJ Ltd
- Karbindo Abesyapradhi - Indoneisa
- Kohat Cement Company Ltd. - Pakistan
- Standard Chartered Bank - UAE
- Anglo American - United Kingdom
- Samtan Co., Ltd - South Korea
- Vizag Seaport Private Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Metalloyd Limited - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- IHS Mccloskey Coal Group - USA
- Antam Resourcindo - Indonesia
- Chettinad Cement Corporation Ltd - India
- London Commodity Brokers - England
- Sojitz Corporation - Japan
- PowerSource Philippines DevCo
- Larsen & Toubro Limited - India
- Toyota Tsusho Corporation, Japan
- Ministry of Finance - Indonesia
- Indo Tambangraya Megah - Indonesia
- Romanian Commodities Exchange
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ministry of Mines - Canada
- Dalmia Cement Bharat India
- IEA Clean Coal Centre - UK
- SN Aboitiz Power Inc, Philippines
- Minerals Council of Australia
- Renaissance Capital - South Africa
- Energy Link Ltd, New Zealand
- Maharashtra Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Karaikal Port Pvt Ltd - India
- Cement Manufacturers Association - India
- Bayan Resources Tbk. - Indonesia
- Central Java Power - Indonesia
- Chamber of Mines of South Africa
- Eastern Energy - Thailand
- Bhatia International Limited - India
- Bhoruka Overseas - Indonesia
- Economic Council, Georgia
- Australian Coal Association
- Orica Australia Pty. Ltd.
- VISA Power Limited - India
- Indonesian Coal Mining Association
- Savvy Resources Ltd - HongKong
- PTC India Limited - India
- TeaM Sual Corporation - Philippines
- Power Finance Corporation Ltd., India
- Riau Bara Harum - Indonesia
- Edison Trading Spa - Italy
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Goldman Sachs - Singapore
- Indian Oil Corporation Limited
- Merrill Lynch Commodities Europe
- Sinarmas Energy and Mining - Indonesia
- Bharathi Cement Corporation - India
- Rashtriya Ispat Nigam Limited - India
- Directorate Of Revenue Intelligence - India
- Borneo Indobara - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Parry Sugars Refinery, India
- Siam City Cement PLC, Thailand
- Wilmar Investment Holdings
- Thiess Contractors Indonesia
- Mercuria Energy - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Global Business Power Corporation, Philippines
- Petron Corporation, Philippines
- Kumho Petrochemical, South Korea
- Meenaskhi Energy Private Limited - India
- Miang Besar Coal Terminal - Indonesia
- Pendopo Energi Batubara - Indonesia
- PNOC Exploration Corporation - Philippines
- Mintek Dendrill Indonesia
- Videocon Industries ltd - India
- Tamil Nadu electricity Board
- Cigading International Bulk Terminal - Indonesia
- Mjunction Services Limited - India
- Sakthi Sugars Limited - India
- Jindal Steel & Power Ltd - India
- Australian Commodity Traders Exchange
- Petrochimia International Co. Ltd.- Taiwan
- Barasentosa Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- The Treasury - Australian Government
- Latin American Coal - Colombia
- Global Green Power PLC Corporation, Philippines
- GVK Power & Infra Limited - India
- Wood Mackenzie - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Agrawal Coal Company - India
- Bhushan Steel Limited - India
- Asmin Koalindo Tuhup - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Grasim Industreis Ltd - India
- Singapore Mercantile Exchange
- New Zealand Coal & Carbon
- Malabar Cements Ltd - India
- The University of Queensland
- Indogreen Group - Indonesia
- CNBM International Corporation - China
- Makarim & Taira - Indonesia
- Formosa Plastics Group - Taiwan
- Uttam Galva Steels Limited - India
- Kartika Selabumi Mining - Indonesia
- International Coal Ventures Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Posco Energy - South Korea
- San Jose City I Power Corp, Philippines
- Ind-Barath Power Infra Limited - India
- Parliament of New Zealand
- Kepco SPC Power Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- Vedanta Resources Plc - India
- Krishnapatnam Port Company Ltd. - India
- Kalimantan Lumbung Energi - Indonesia
- Eastern Coal Council - USA
- The State Trading Corporation of India Ltd
- Ambuja Cements Ltd - India
- European Bulk Services B.V. - Netherlands
- AsiaOL BioFuels Corp., Philippines
- South Luzon Thermal Energy Corporation
- Jaiprakash Power Ventures ltd
- Simpson Spence & Young - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Indian Energy Exchange, India
- Leighton Contractors Pty Ltd - Australia
- Central Electricity Authority - India
- Bukit Baiduri Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Coal and Oil Company - UAE
- Aditya Birla Group - India
- Salva Resources Pvt Ltd - India
- Interocean Group of Companies - India
- Kobexindo Tractors - Indoneisa
- Semirara Mining Corp, Philippines
- Intertek Mineral Services - Indonesia
- Maheswari Brothers Coal Limited - India
- Meralco Power Generation, Philippines
- Electricity Generating Authority of Thailand
- Manunggal Multi Energi - Indonesia
- White Energy Company Limited
- Xindia Steels Limited - India
- Ministry of Transport, Egypt
- India Bulls Power Limited - India
- Bangladesh Power Developement Board
- McConnell Dowell - Australia
- Tata Chemicals Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Vijayanagar Sugar Pvt Ltd - India
- Attock Cement Pakistan Limited
- Holcim Trading Pte Ltd - Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Madhucon Powers Ltd - India
- Port Waratah Coal Services - Australia
- Indika Energy - Indonesia
- Alfred C Toepfer International GmbH - Germany
- LBH Netherlands Bv - Netherlands
- Heidelberg Cement - Germany
- Aboitiz Power Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Global Coal Blending Company Limited - Australia
- Therma Luzon, Inc, Philippines
- Electricity Authority, New Zealand
- SMG Consultants - Indonesia
- Iligan Light & Power Inc, Philippines
- Gujarat Sidhee Cement - India
- Kaltim Prima Coal - Indonesia
- Energy Development Corp, Philippines
- Coastal Gujarat Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Sical Logistics Limited - India
- Gujarat Electricity Regulatory Commission - India
- CIMB Investment Bank - Malaysia
- Bahari Cakrawala Sebuku - Indonesia
- GAC Shipping (India) Pvt Ltd
- Siam City Cement - Thailand
- Binh Thuan Hamico - Vietnam
- SMC Global Power, Philippines
- Thai Mozambique Logistica
- Georgia Ports Authority, United States
- Carbofer General Trading SA - India
- Bukit Makmur.PT - Indonesia
- Mercator Lines Limited - India
- Orica Mining Services - Indonesia
- Baramulti Group, Indonesia
- ASAPP Information Group - India
- Oldendorff Carriers - Singapore
- GMR Energy Limited - India
- Lanco Infratech Ltd - India
- Planning Commission, India
- Rio Tinto Coal - Australia
- Africa Commodities Group - South Africa
- Independent Power Producers Association of India
- Sree Jayajothi Cements Limited - India
- Marubeni Corporation - India
- Star Paper Mills Limited - India
- MS Steel International - UAE
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Altura Mining Limited, Indonesia
- Timah Investasi Mineral - Indoneisa
- Commonwealth Bank - Australia
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