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