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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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Wednesday, 20 May 20
ADARO ENERGY BOOKED A 5% INCREASE IN COAL PRODUCTION VOLUME Y-O-Y IN 1Q2020
PT. Adaro Energy Tbk, Indonesia’s one of the largest coal miner, booked a 5% increase in coal production volume year-over-year in 1Q2020. The ...
Wednesday, 20 May 20
BRAZIL SOYBEAN EXPORTS HAVE BEEN SURGING THIS YEAR - BANCHERO COSTA
Brazil soybean exports have been surging this year, thanks to a combination of strong demand from China, a bumper crop, and favourable exchange rat ...
Wednesday, 20 May 20
MARKET INSIGHT
Seafarers keep maritime trade going so that the food, raw materials, energy and manufactured goods on which so many depend can continue moving arou ...
Tuesday, 19 May 20
AMENDMENT OF THE INDONESIAN MINING LAW: TYING UP LOOSE ENDS - UMBRA
KNOWLEDGE TO ELEVATE
The finalized draft of Law on the amendment of the Mining Law (Bill) was publicly released on 11 May 2020 and was then ap ...
Monday, 18 May 20
TAKING ADVANTAGE OF VIRUS DISTRACTION - BALTIC EXCHANGE
As the industry grapples to deal with exceptional Covid-19-related challenges, a deeper threat is coming to the fore. At this time of crisis, more ...
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- London Commodity Brokers - England
- PNOC Exploration Corporation - Philippines
- Electricity Generating Authority of Thailand
- Wood Mackenzie - Singapore
- PowerSource Philippines DevCo
- Aboitiz Power Corporation - Philippines
- Formosa Plastics Group - Taiwan
- Semirara Mining Corp, Philippines
- McConnell Dowell - Australia
- Bayan Resources Tbk. - Indonesia
- The University of Queensland
- India Bulls Power Limited - India
- Oldendorff Carriers - Singapore
- Baramulti Group, Indonesia
- Bhoruka Overseas - Indonesia
- Bharathi Cement Corporation - India
- Makarim & Taira - Indonesia
- Toyota Tsusho Corporation, Japan
- Vedanta Resources Plc - India
- Altura Mining Limited, Indonesia
- Sarangani Energy Corporation, Philippines
- Power Finance Corporation Ltd., India
- International Coal Ventures Pvt Ltd - India
- Romanian Commodities Exchange
- Gujarat Mineral Development Corp Ltd - India
- Standard Chartered Bank - UAE
- Coalindo Energy - Indonesia
- Lanco Infratech Ltd - India
- Minerals Council of Australia
- GAC Shipping (India) Pvt Ltd
- Savvy Resources Ltd - HongKong
- Port Waratah Coal Services - Australia
- Antam Resourcindo - Indonesia
- Intertek Mineral Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Simpson Spence & Young - Indonesia
- Siam City Cement PLC, Thailand
- Indonesian Coal Mining Association
- Riau Bara Harum - Indonesia
- TeaM Sual Corporation - Philippines
- CIMB Investment Bank - Malaysia
- CNBM International Corporation - China
- Eastern Coal Council - USA
- The State Trading Corporation of India Ltd
- Medco Energi Mining Internasional
- Sakthi Sugars Limited - India
- Tata Chemicals Ltd - India
- Ministry of Finance - Indonesia
- South Luzon Thermal Energy Corporation
- GN Power Mariveles Coal Plant, Philippines
- Meenaskhi Energy Private Limited - India
- Mintek Dendrill Indonesia
- Leighton Contractors Pty Ltd - Australia
- Metalloyd Limited - United Kingdom
- AsiaOL BioFuels Corp., Philippines
- VISA Power Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Wilmar Investment Holdings
- Samtan Co., Ltd - South Korea
- Jindal Steel & Power Ltd - India
- Ministry of Transport, Egypt
- Kaltim Prima Coal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Electricity Authority, New Zealand
- Latin American Coal - Colombia
- Carbofer General Trading SA - India
- Central Electricity Authority - India
- PTC India Limited - India
- Malabar Cements Ltd - India
- Manunggal Multi Energi - Indonesia
- Videocon Industries ltd - India
- Meralco Power Generation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Java Power - Indonesia
- Merrill Lynch Commodities Europe
- Borneo Indobara - Indonesia
- Bukit Baiduri Energy - Indonesia
- Vizag Seaport Private Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- White Energy Company Limited
- Posco Energy - South Korea
- Maheswari Brothers Coal Limited - India
- Uttam Galva Steels Limited - India
- Renaissance Capital - South Africa
- Australian Coal Association
- Australian Commodity Traders Exchange
- Heidelberg Cement - Germany
- Vijayanagar Sugar Pvt Ltd - India
- Orica Australia Pty. Ltd.
- ASAPP Information Group - India
- Miang Besar Coal Terminal - Indonesia
- Cement Manufacturers Association - India
- Asmin Koalindo Tuhup - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Kobexindo Tractors - Indoneisa
- Sical Logistics Limited - India
- Parry Sugars Refinery, India
- MS Steel International - UAE
- Coastal Gujarat Power Limited - India
- Kideco Jaya Agung - Indonesia
- Thiess Contractors Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Alfred C Toepfer International GmbH - Germany
- Mercator Lines Limited - India
- Salva Resources Pvt Ltd - India
- SMG Consultants - Indonesia
- Singapore Mercantile Exchange
- Globalindo Alam Lestari - Indonesia
- Ministry of Mines - Canada
- The Treasury - Australian Government
- Sinarmas Energy and Mining - Indonesia
- Energy Development Corp, Philippines
- Ceylon Electricity Board - Sri Lanka
- Agrawal Coal Company - India
- Interocean Group of Companies - India
- Therma Luzon, Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Dalmia Cement Bharat India
- Kohat Cement Company Ltd. - Pakistan
- Goldman Sachs - Singapore
- San Jose City I Power Corp, Philippines
- Grasim Industreis Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Global Coal Blending Company Limited - Australia
- Holcim Trading Pte Ltd - Singapore
- Thai Mozambique Logistica
- Sindya Power Generating Company Private Ltd
- Africa Commodities Group - South Africa
- Economic Council, Georgia
- ICICI Bank Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Madhucon Powers Ltd - India
- Essar Steel Hazira Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- SN Aboitiz Power Inc, Philippines
- Independent Power Producers Association of India
- IEA Clean Coal Centre - UK
- Jorong Barutama Greston.PT - Indonesia
- Iligan Light & Power Inc, Philippines
- Ind-Barath Power Infra Limited - India
- Global Business Power Corporation, Philippines
- Tamil Nadu electricity Board
- Edison Trading Spa - Italy
- Banpu Public Company Limited - Thailand
- Bulk Trading Sa - Switzerland
- Orica Mining Services - Indonesia
- Sree Jayajothi Cements Limited - India
- Pendopo Energi Batubara - Indonesia
- GVK Power & Infra Limited - India
- Kepco SPC Power Corporation, Philippines
- Jaiprakash Power Ventures ltd
- Xindia Steels Limited - India
- Karbindo Abesyapradhi - Indoneisa
- Siam City Cement - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- IHS Mccloskey Coal Group - USA
- Marubeni Corporation - India
- Indo Tambangraya Megah - Indonesia
- Kumho Petrochemical, South Korea
- Ambuja Cements Ltd - India
- OPG Power Generation Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- LBH Netherlands Bv - Netherlands
- Parliament of New Zealand
- Chettinad Cement Corporation Ltd - India
- SMC Global Power, Philippines
- Price Waterhouse Coopers - Russia
- Bangladesh Power Developement Board
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Global Green Power PLC Corporation, Philippines
- Mercuria Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- GMR Energy Limited - India
- New Zealand Coal & Carbon
- Rio Tinto Coal - Australia
- Gujarat Electricity Regulatory Commission - India
- Billiton Holdings Pty Ltd - Australia
- Straits Asia Resources Limited - Singapore
- Indian Oil Corporation Limited
- Bhushan Steel Limited - India
- Directorate Of Revenue Intelligence - India
- Indian Energy Exchange, India
- Barasentosa Lestari - Indonesia
- Chamber of Mines of South Africa
- Larsen & Toubro Limited - India
- Aditya Birla Group - India
- Star Paper Mills Limited - India
- Mjunction Services Limited - India
- Rashtriya Ispat Nigam Limited - India
- Georgia Ports Authority, United States
- Eastern Energy - Thailand
- Karaikal Port Pvt Ltd - India
- Bhatia International Limited - India
- Trasteel International SA, Italy
- Cigading International Bulk Terminal - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Kartika Selabumi Mining - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Sojitz Corporation - Japan
- European Bulk Services B.V. - Netherlands
- Gujarat Sidhee Cement - India
- Indika Energy - Indonesia
- Attock Cement Pakistan Limited
- Deloitte Consulting - India
- Krishnapatnam Port Company Ltd. - India
- Binh Thuan Hamico - Vietnam
- Anglo American - United Kingdom
- Coal and Oil Company - UAE
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indogreen Group - Indonesia
- Petron Corporation, Philippines
- Commonwealth Bank - Australia
- Planning Commission, India
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