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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, 02 June 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.86 PCT - XINHUA
China Taiyuan coal transaction price index stood at 123.95 points Monday, down 0.86 percent week on week.
The index, released by Chi ...
Monday, 01 June 20
SUPRAMAX: IN SOUTH EAST ASIA RATES TRADED SIDEWAYS - BALTIC BRIEFING
Capesize
A sober end to the week, with the market seemingly ready for the weekend. After a steady week of rate declines a small flurry of Atlan ...
Friday, 29 May 20
COVID-19: COAL SUPPLY BY CIL TO POWER SECTOR DIPS 22% TO 32 MT IN APRIL DUE TO DEMAND SLUMP - PTI
Over 95% of CIL’s production comes from its 171 open cast mines.
The supply of coal to the power sector by state-owned Coal In ...
Friday, 29 May 20
AUSTRALIA'S NEW HOPE WARNS OF HIT FROM COAL PRICE SLUMP - REUTERS
Australia’s New Hope Corp Ltd said on Thursday that a sudden drop in thermal coal prices and lower output from its Queensland operations woul ...
Friday, 29 May 20
GOVT MAY LAUNCH COAL BLOCKS AUCTION PROCESS UNDER COMMERCIAL MINING ON JUN 11 - PTI
The Centre is likely to launch the process of coal blocks auction under commercial mining on June 11 and around 50 mines are expected to go under t ...
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- Ind-Barath Power Infra Limited - India
- GMR Energy Limited - India
- PetroVietnam Power Coal Import and Supply Company
- IHS Mccloskey Coal Group - USA
- Grasim Industreis Ltd - India
- McConnell Dowell - Australia
- Kohat Cement Company Ltd. - Pakistan
- Bangladesh Power Developement Board
- Meralco Power Generation, Philippines
- Borneo Indobara - Indonesia
- The State Trading Corporation of India Ltd
- Medco Energi Mining Internasional
- Heidelberg Cement - Germany
- Price Waterhouse Coopers - Russia
- Cigading International Bulk Terminal - Indonesia
- Tata Chemicals Ltd - India
- Toyota Tsusho Corporation, Japan
- Jindal Steel & Power Ltd - India
- Eastern Coal Council - USA
- Ministry of Mines - Canada
- San Jose City I Power Corp, Philippines
- Romanian Commodities Exchange
- Parliament of New Zealand
- Port Waratah Coal Services - Australia
- Coastal Gujarat Power Limited - India
- Madhucon Powers Ltd - India
- Mercator Lines Limited - India
- Essar Steel Hazira Ltd - India
- Videocon Industries ltd - India
- VISA Power Limited - India
- Rashtriya Ispat Nigam Limited - India
- Mjunction Services Limited - India
- OPG Power Generation Pvt Ltd - India
- Indika Energy - Indonesia
- Parry Sugars Refinery, India
- Global Business Power Corporation, Philippines
- Bhatia International Limited - India
- Pendopo Energi Batubara - Indonesia
- Formosa Plastics Group - Taiwan
- Petron Corporation, Philippines
- Interocean Group of Companies - India
- Ceylon Electricity Board - Sri Lanka
- Orica Australia Pty. Ltd.
- Australian Commodity Traders Exchange
- Jaiprakash Power Ventures ltd
- Kepco SPC Power Corporation, Philippines
- Rio Tinto Coal - Australia
- Gujarat Sidhee Cement - India
- Dalmia Cement Bharat India
- Miang Besar Coal Terminal - Indonesia
- Siam City Cement - Thailand
- Semirara Mining and Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Ambuja Cements Ltd - India
- Thiess Contractors Indonesia
- Vizag Seaport Private Limited - India
- Chettinad Cement Corporation Ltd - India
- Indonesian Coal Mining Association
- Ministry of Finance - Indonesia
- Lanco Infratech Ltd - India
- Timah Investasi Mineral - Indoneisa
- Latin American Coal - Colombia
- Larsen & Toubro Limited - India
- Commonwealth Bank - Australia
- Sree Jayajothi Cements Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Iligan Light & Power Inc, Philippines
- PowerSource Philippines DevCo
- Indian Oil Corporation Limited
- Standard Chartered Bank - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- Planning Commission, India
- Uttam Galva Steels Limited - India
- Wood Mackenzie - Singapore
- Manunggal Multi Energi - Indonesia
- Merrill Lynch Commodities Europe
- Indian Energy Exchange, India
- CIMB Investment Bank - Malaysia
- Billiton Holdings Pty Ltd - Australia
- Attock Cement Pakistan Limited
- Vijayanagar Sugar Pvt Ltd - India
- Siam City Cement PLC, Thailand
- Directorate Of Revenue Intelligence - India
- Petrochimia International Co. Ltd.- Taiwan
- Goldman Sachs - Singapore
- Karbindo Abesyapradhi - Indoneisa
- Georgia Ports Authority, United States
- International Coal Ventures Pvt Ltd - India
- Riau Bara Harum - Indonesia
- Central Electricity Authority - India
- Independent Power Producers Association of India
- Globalindo Alam Lestari - Indonesia
- Bukit Baiduri Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Energy Link Ltd, New Zealand
- Kumho Petrochemical, South Korea
- European Bulk Services B.V. - Netherlands
- Makarim & Taira - Indonesia
- Malabar Cements Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Bhoruka Overseas - Indonesia
- Sindya Power Generating Company Private Ltd
- Carbofer General Trading SA - India
- Africa Commodities Group - South Africa
- PNOC Exploration Corporation - Philippines
- Metalloyd Limited - United Kingdom
- Oldendorff Carriers - Singapore
- Electricity Authority, New Zealand
- GAC Shipping (India) Pvt Ltd
- Leighton Contractors Pty Ltd - Australia
- Intertek Mineral Services - Indonesia
- London Commodity Brokers - England
- Kapuas Tunggal Persada - Indonesia
- Xindia Steels Limited - India
- Mercuria Energy - Indonesia
- GVK Power & Infra Limited - India
- Agrawal Coal Company - India
- Electricity Generating Authority of Thailand
- Bulk Trading Sa - Switzerland
- Eastern Energy - Thailand
- Sinarmas Energy and Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Power Finance Corporation Ltd., India
- The University of Queensland
- Sojitz Corporation - Japan
- Orica Mining Services - Indonesia
- SMC Global Power, Philippines
- Bayan Resources Tbk. - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- MS Steel International - UAE
- New Zealand Coal & Carbon
- TeaM Sual Corporation - Philippines
- CNBM International Corporation - China
- Binh Thuan Hamico - Vietnam
- Edison Trading Spa - Italy
- Maharashtra Electricity Regulatory Commission - India
- Tamil Nadu electricity Board
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Alfred C Toepfer International GmbH - Germany
- Renaissance Capital - South Africa
- Minerals Council of Australia
- Economic Council, Georgia
- Kartika Selabumi Mining - Indonesia
- Banpu Public Company Limited - Thailand
- Salva Resources Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Aditya Birla Group - India
- Samtan Co., Ltd - South Korea
- Posco Energy - South Korea
- Trasteel International SA, Italy
- LBH Netherlands Bv - Netherlands
- ASAPP Information Group - India
- Therma Luzon, Inc, Philippines
- Barasentosa Lestari - Indonesia
- Indo Tambangraya Megah - Indonesia
- Aboitiz Power Corporation - Philippines
- White Energy Company Limited
- Chamber of Mines of South Africa
- Global Coal Blending Company Limited - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- South Luzon Thermal Energy Corporation
- Offshore Bulk Terminal Pte Ltd, Singapore
- Meenaskhi Energy Private Limited - India
- Savvy Resources Ltd - HongKong
- TNB Fuel Sdn Bhd - Malaysia
- Bharathi Cement Corporation - India
- Semirara Mining Corp, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Deloitte Consulting - India
- Jorong Barutama Greston.PT - Indonesia
- Mintek Dendrill Indonesia
- Karaikal Port Pvt Ltd - India
- Sakthi Sugars Limited - India
- Baramulti Group, Indonesia
- Wilmar Investment Holdings
- Thai Mozambique Logistica
- Holcim Trading Pte Ltd - Singapore
- Energy Development Corp, Philippines
- Central Java Power - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Vedanta Resources Plc - India
- Bahari Cakrawala Sebuku - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Global Green Power PLC Corporation, Philippines
- Straits Asia Resources Limited - Singapore
- Indogreen Group - Indonesia
- PTC India Limited - India
- Coal and Oil Company - UAE
- SN Aboitiz Power Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- SMG Consultants - Indonesia
- Coalindo Energy - Indonesia
- Singapore Mercantile Exchange
- Altura Mining Limited, Indonesia
- Antam Resourcindo - Indonesia
- The Treasury - Australian Government
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asmin Koalindo Tuhup - Indonesia
- ICICI Bank Limited - India
- India Bulls Power Limited - India
- Simpson Spence & Young - Indonesia
- Marubeni Corporation - India
- Sical Logistics Limited - India
- AsiaOL BioFuels Corp., Philippines
- Kideco Jaya Agung - Indonesia
- Anglo American - United Kingdom
- Maheswari Brothers Coal Limited - India
- Kaltim Prima Coal - Indonesia
- Bhushan Steel Limited - India
- Australian Coal Association
- Neyveli Lignite Corporation Ltd, - India
- Cement Manufacturers Association - India
- Star Paper Mills Limited - India
- Kobexindo Tractors - Indoneisa
- Ministry of Transport, Egypt
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