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