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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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Monday, 25 May 20
NON-OPEC OIL SUPPLY DEVELOPMENT - OPEC
Non-OPEC oil supply continued to increase by 2.0 mb/d in 2019, driven by US shale production, which rose by 1.7 mb/d, amounting to 84% of total non ...
Sunday, 24 May 20
A 63,000 FIXED DELIVERY VIETNAM TRIP VIA INDONESIA REDELIVERY KOSICHANG AT $8,500 - BALTIC BRIEFING
Capesize
After a week of bounce momentum the market appears to have stalled out once again. The Capesize 5TC has more than doubled since last F ...
Saturday, 23 May 20
COLOMBIA COAL OUTPUT DOWN 7.2% IN Q1 ON LOW PRICES, CORONAVIRUS LOCKDOWN - REUTERS
Coal production in Colombia, the world’s fifth-largest coal exporter, fell 7.2% in the first quarter because of low prices and coronavirus qu ...
Saturday, 23 May 20
EWP INVITES BIDS FOR 840,000 METRIC TONS OF MIN 5700 NAR COAL
COALspot.com: South Korea’s Korea East-West Power Co. Ltd (EWP) has Issued an International Tender for total Max 840,000 Metric Tons of min 5 ...
Thursday, 21 May 20
KOMIPO INVITED BIDS FOR TOTAL 610000 MT OF LCV AND HCV COAL FOR 2H 2020
COALspot.com: South Korea’s Korea Midland Power Co. Ltd. (KOMIPO) has Issued an International Tender for 130,000 mt of 5700 NCV coal an ...
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- Standard Chartered Bank - UAE
- Pendopo Energi Batubara - Indonesia
- Global Coal Blending Company Limited - Australia
- Bukit Makmur.PT - Indonesia
- Siam City Cement - Thailand
- Malabar Cements Ltd - India
- Global Green Power PLC Corporation, Philippines
- The State Trading Corporation of India Ltd
- The Treasury - Australian Government
- Port Waratah Coal Services - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Toyota Tsusho Corporation, Japan
- Indian Oil Corporation Limited
- SMC Global Power, Philippines
- Holcim Trading Pte Ltd - Singapore
- Bangladesh Power Developement Board
- Mercator Lines Limited - India
- Indonesian Coal Mining Association
- GVK Power & Infra Limited - India
- San Jose City I Power Corp, Philippines
- Planning Commission, India
- Meralco Power Generation, Philippines
- Bhatia International Limited - India
- Essar Steel Hazira Ltd - India
- GMR Energy Limited - India
- Sical Logistics Limited - India
- Latin American Coal - Colombia
- Krishnapatnam Port Company Ltd. - India
- PetroVietnam Power Coal Import and Supply Company
- Anglo American - United Kingdom
- Energy Link Ltd, New Zealand
- Ministry of Mines - Canada
- Rio Tinto Coal - Australia
- Ministry of Transport, Egypt
- Alfred C Toepfer International GmbH - Germany
- White Energy Company Limited
- PTC India Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Singapore Mercantile Exchange
- PowerSource Philippines DevCo
- GN Power Mariveles Coal Plant, Philippines
- Lanco Infratech Ltd - India
- Interocean Group of Companies - India
- Timah Investasi Mineral - Indoneisa
- Salva Resources Pvt Ltd - India
- Eastern Coal Council - USA
- Banpu Public Company Limited - Thailand
- Meenaskhi Energy Private Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Ceylon Electricity Board - Sri Lanka
- Goldman Sachs - Singapore
- Xindia Steels Limited - India
- Altura Mining Limited, Indonesia
- Price Waterhouse Coopers - Russia
- Coalindo Energy - Indonesia
- Videocon Industries ltd - India
- Karaikal Port Pvt Ltd - India
- OPG Power Generation Pvt Ltd - India
- McConnell Dowell - Australia
- Bulk Trading Sa - Switzerland
- Miang Besar Coal Terminal - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Indo Tambangraya Megah - Indonesia
- Africa Commodities Group - South Africa
- Independent Power Producers Association of India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Attock Cement Pakistan Limited
- Kartika Selabumi Mining - Indonesia
- Indogreen Group - Indonesia
- Orica Mining Services - Indonesia
- Ministry of Finance - Indonesia
- Aditya Birla Group - India
- Australian Coal Association
- Simpson Spence & Young - Indonesia
- Australian Commodity Traders Exchange
- Maharashtra Electricity Regulatory Commission - India
- Therma Luzon, Inc, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Commonwealth Bank - Australia
- Carbofer General Trading SA - India
- Sindya Power Generating Company Private Ltd
- Kobexindo Tractors - Indoneisa
- Baramulti Group, Indonesia
- Mercuria Energy - Indonesia
- Posco Energy - South Korea
- Karbindo Abesyapradhi - Indoneisa
- Asmin Koalindo Tuhup - Indonesia
- Vizag Seaport Private Limited - India
- Coal and Oil Company - UAE
- VISA Power Limited - India
- Energy Development Corp, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Georgia Ports Authority, United States
- Petrochimia International Co. Ltd.- Taiwan
- Thiess Contractors Indonesia
- GAC Shipping (India) Pvt Ltd
- Grasim Industreis Ltd - India
- MS Steel International - UAE
- Borneo Indobara - Indonesia
- Eastern Energy - Thailand
- Tata Chemicals Ltd - India
- Bhushan Steel Limited - India
- Deloitte Consulting - India
- ICICI Bank Limited - India
- Barasentosa Lestari - Indonesia
- CNBM International Corporation - China
- Sinarmas Energy and Mining - Indonesia
- Wood Mackenzie - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Makarim & Taira - Indonesia
- Billiton Holdings Pty Ltd - Australia
- Jindal Steel & Power Ltd - India
- Agrawal Coal Company - India
- Sakthi Sugars Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SMG Consultants - Indonesia
- New Zealand Coal & Carbon
- Orica Australia Pty. Ltd.
- Metalloyd Limited - United Kingdom
- Formosa Plastics Group - Taiwan
- Samtan Co., Ltd - South Korea
- Oldendorff Carriers - Singapore
- Indian Energy Exchange, India
- Mjunction Services Limited - India
- Savvy Resources Ltd - HongKong
- South Luzon Thermal Energy Corporation
- Trasteel International SA, Italy
- Tamil Nadu electricity Board
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Vedanta Resources Plc - India
- Parliament of New Zealand
- Thai Mozambique Logistica
- Riau Bara Harum - Indonesia
- Iligan Light & Power Inc, Philippines
- European Bulk Services B.V. - Netherlands
- Global Business Power Corporation, Philippines
- Medco Energi Mining Internasional
- Kapuas Tunggal Persada - Indonesia
- Kaltim Prima Coal - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Minerals Council of Australia
- Gujarat Mineral Development Corp Ltd - India
- Power Finance Corporation Ltd., India
- Indika Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- The University of Queensland
- Chamber of Mines of South Africa
- Parry Sugars Refinery, India
- Semirara Mining Corp, Philippines
- Bukit Baiduri Energy - Indonesia
- Marubeni Corporation - India
- Bukit Asam (Persero) Tbk - Indonesia
- Siam City Cement PLC, Thailand
- Ind-Barath Power Infra Limited - India
- Kideco Jaya Agung - Indonesia
- Edison Trading Spa - Italy
- Sojitz Corporation - Japan
- Aboitiz Power Corporation - Philippines
- CIMB Investment Bank - Malaysia
- Petron Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Romanian Commodities Exchange
- Central Electricity Authority - India
- Ambuja Cements Ltd - India
- Electricity Generating Authority of Thailand
- Star Paper Mills Limited - India
- Kumho Petrochemical, South Korea
- Kepco SPC Power Corporation, Philippines
- Binh Thuan Hamico - Vietnam
- London Commodity Brokers - England
- Jorong Barutama Greston.PT - Indonesia
- Gujarat Sidhee Cement - India
- International Coal Ventures Pvt Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Bharathi Cement Corporation - India
- Bayan Resources Tbk. - Indonesia
- Sree Jayajothi Cements Limited - India
- Globalindo Alam Lestari - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Kalimantan Lumbung Energi - Indonesia
- Maheswari Brothers Coal Limited - India
- ASAPP Information Group - India
- Central Java Power - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Madhucon Powers Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- IEA Clean Coal Centre - UK
- Manunggal Multi Energi - Indonesia
- Electricity Authority, New Zealand
- Wilmar Investment Holdings
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Antam Resourcindo - Indonesia
- TeaM Sual Corporation - Philippines
- Heidelberg Cement - Germany
- Straits Asia Resources Limited - Singapore
- Jaiprakash Power Ventures ltd
- Larsen & Toubro Limited - India
- IHS Mccloskey Coal Group - USA
- Merrill Lynch Commodities Europe
- Cement Manufacturers Association - India
- Leighton Contractors Pty Ltd - Australia
- Sarangani Energy Corporation, Philippines
- India Bulls Power Limited - India
- LBH Netherlands Bv - Netherlands
- Coastal Gujarat Power Limited - India
- Bhoruka Overseas - Indonesia
- Uttam Galva Steels Limited - India
- Directorate Of Revenue Intelligence - India
- Economic Council, Georgia
- Mintek Dendrill Indonesia
- Intertek Mineral Services - Indonesia
- PNOC Exploration Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- SN Aboitiz Power Inc, Philippines
- Renaissance Capital - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Dalmia Cement Bharat India
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