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