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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, 04 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 ...
Thursday, 04 June 20
DON'T FORGET THE REAL PURPOSE OF RISK ASSESSMENTS - GARD
KNOWLEDGE TO ELEVATE
When doing a risk assessment, we often overcomplicate it and forget its real purpose.
Rather than ensuring that crew ...
Wednesday, 03 June 20
MARKET INSIGHT - INTERMODAL
Once again shipping is about to venture into uncharted waters and before the challenges of the past decade are forgotten, shipowners will have to o ...
Tuesday, 02 June 20
KOSPO LOOKING FOR 80000 MT OF 4200 NCV COAL FOR JULY
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for 80,000 Metric Tons (MT) 4200 NCV coal for 12 - 21, July ...
Tuesday, 02 June 20
INDONESIAN COAL MINER BUMI RESOURCES Q1 OUTPUT UP 5% - REUTERS
Indonesia’s largest coal miner Bumi Resources posted a 5% increase in first-quarter output at 20.8 million tonnes, the company said in a stat ...
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- Kideco Jaya Agung - Indonesia
- PTC India Limited - India
- Planning Commission, India
- Attock Cement Pakistan Limited
- Carbofer General Trading SA - India
- White Energy Company Limited
- Manunggal Multi Energi - Indonesia
- MS Steel International - UAE
- AsiaOL BioFuels Corp., Philippines
- Savvy Resources Ltd - HongKong
- Rio Tinto Coal - Australia
- Kepco SPC Power Corporation, Philippines
- PowerSource Philippines DevCo
- Meenaskhi Energy Private Limited - India
- Anglo American - United Kingdom
- Marubeni Corporation - India
- IEA Clean Coal Centre - UK
- GVK Power & Infra Limited - India
- Globalindo Alam Lestari - Indonesia
- Mercuria Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Energy Development Corp, Philippines
- ASAPP Information Group - India
- The Treasury - Australian Government
- Gujarat Sidhee Cement - India
- Alfred C Toepfer International GmbH - Germany
- Electricity Authority, New Zealand
- Indian Oil Corporation Limited
- Minerals Council of Australia
- Grasim Industreis Ltd - India
- Siam City Cement - Thailand
- Asmin Koalindo Tuhup - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Indian Energy Exchange, India
- ICICI Bank Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- Altura Mining Limited, Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kapuas Tunggal Persada - Indonesia
- Rashtriya Ispat Nigam Limited - India
- SMG Consultants - Indonesia
- Thiess Contractors Indonesia
- The State Trading Corporation of India Ltd
- Pendopo Energi Batubara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Agrawal Coal Company - India
- Bhoruka Overseas - Indonesia
- Bulk Trading Sa - Switzerland
- Banpu Public Company Limited - Thailand
- Bhushan Steel Limited - India
- Samtan Co., Ltd - South Korea
- Ambuja Cements Ltd - India
- Medco Energi Mining Internasional
- Coal and Oil Company - UAE
- Orica Australia Pty. Ltd.
- Makarim & Taira - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Offshore Bulk Terminal Pte Ltd, Singapore
- Holcim Trading Pte Ltd - Singapore
- Bangladesh Power Developement Board
- Mjunction Services Limited - India
- Eastern Energy - Thailand
- Lanco Infratech Ltd - India
- Star Paper Mills Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Xindia Steels Limited - India
- Interocean Group of Companies - India
- European Bulk Services B.V. - Netherlands
- PetroVietnam Power Coal Import and Supply Company
- Kalimantan Lumbung Energi - Indonesia
- Economic Council, Georgia
- Bukit Baiduri Energy - Indonesia
- Jindal Steel & Power Ltd - India
- IHS Mccloskey Coal Group - USA
- TNB Fuel Sdn Bhd - Malaysia
- Larsen & Toubro Limited - India
- Mercator Lines Limited - India
- Gujarat Electricity Regulatory Commission - India
- Kobexindo Tractors - Indoneisa
- Cement Manufacturers Association - India
- Jorong Barutama Greston.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- Semirara Mining Corp, Philippines
- Ministry of Transport, Egypt
- Renaissance Capital - South Africa
- Directorate Of Revenue Intelligence - India
- Ministry of Finance - Indonesia
- Deloitte Consulting - India
- Timah Investasi Mineral - Indoneisa
- Parry Sugars Refinery, India
- Posco Energy - South Korea
- Pipit Mutiara Jaya. PT, Indonesia
- India Bulls Power Limited - India
- Vedanta Resources Plc - India
- Goldman Sachs - Singapore
- The University of Queensland
- Indika Energy - Indonesia
- Electricity Generating Authority of Thailand
- Sical Logistics Limited - India
- Kartika Selabumi Mining - Indonesia
- Kumho Petrochemical, South Korea
- GMR Energy Limited - India
- Merrill Lynch Commodities Europe
- Global Coal Blending Company Limited - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Siam City Cement PLC, Thailand
- Latin American Coal - Colombia
- Iligan Light & Power Inc, Philippines
- Madhucon Powers Ltd - India
- New Zealand Coal & Carbon
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Bharathi Cement Corporation - India
- CNBM International Corporation - China
- Gujarat Mineral Development Corp Ltd - India
- Oldendorff Carriers - Singapore
- PNOC Exploration Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Independent Power Producers Association of India
- Romanian Commodities Exchange
- Kohat Cement Company Ltd. - Pakistan
- Australian Coal Association
- Essar Steel Hazira Ltd - India
- TeaM Sual Corporation - Philippines
- Wood Mackenzie - Singapore
- Aboitiz Power Corporation - Philippines
- Bukit Makmur.PT - Indonesia
- International Coal Ventures Pvt Ltd - India
- Georgia Ports Authority, United States
- Videocon Industries ltd - India
- Kaltim Prima Coal - Indonesia
- Chamber of Mines of South Africa
- Indogreen Group - Indonesia
- Sarangani Energy Corporation, Philippines
- Singapore Mercantile Exchange
- Port Waratah Coal Services - Australia
- Barasentosa Lestari - Indonesia
- Simpson Spence & Young - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Antam Resourcindo - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Bayan Resources Tbk. - Indonesia
- Wilmar Investment Holdings
- Australian Commodity Traders Exchange
- Orica Mining Services - Indonesia
- Meralco Power Generation, Philippines
- Commonwealth Bank - Australia
- Leighton Contractors Pty Ltd - Australia
- Sinarmas Energy and Mining - Indonesia
- Central Java Power - Indonesia
- Trasteel International SA, Italy
- Sindya Power Generating Company Private Ltd
- Mintek Dendrill Indonesia
- Ministry of Mines - Canada
- Energy Link Ltd, New Zealand
- Petron Corporation, Philippines
- GN Power Mariveles Coal Plant, Philippines
- Power Finance Corporation Ltd., India
- London Commodity Brokers - England
- CIMB Investment Bank - Malaysia
- Therma Luzon, Inc, Philippines
- Standard Chartered Bank - UAE
- Global Business Power Corporation, Philippines
- Uttam Galva Steels Limited - India
- Baramulti Group, Indonesia
- Vizag Seaport Private Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Parliament of New Zealand
- Edison Trading Spa - Italy
- Price Waterhouse Coopers - Russia
- Malabar Cements Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Central Electricity Authority - India
- Maheswari Brothers Coal Limited - India
- Aditya Birla Group - India
- McConnell Dowell - Australia
- Krishnapatnam Port Company Ltd. - India
- Riau Bara Harum - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Coalindo Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Eastern Coal Council - USA
- Tamil Nadu electricity Board
- Sojitz Corporation - Japan
- Sakthi Sugars Limited - India
- Heidelberg Cement - Germany
- Thai Mozambique Logistica
- South Luzon Thermal Energy Corporation
- Ind-Barath Power Infra Limited - India
- Toyota Tsusho Corporation, Japan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indonesian Coal Mining Association
- Chettinad Cement Corporation Ltd - India
- San Jose City I Power Corp, Philippines
- Salva Resources Pvt Ltd - India
- Tata Chemicals Ltd - India
- Borneo Indobara - Indonesia
- Billiton Holdings Pty Ltd - Australia
- VISA Power Limited - India
- Jaiprakash Power Ventures ltd
- Africa Commodities Group - South Africa
- Dalmia Cement Bharat India
- Global Green Power PLC Corporation, Philippines
- Bhatia International Limited - India
- Metalloyd Limited - United Kingdom
- Karaikal Port Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- GAC Shipping (India) Pvt Ltd
- LBH Netherlands Bv - Netherlands
- Coastal Gujarat Power Limited - India
- Binh Thuan Hamico - Vietnam
- Sree Jayajothi Cements Limited - India
- Miang Besar Coal Terminal - Indonesia
- SMC Global Power, Philippines
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