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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, 18 May 20
THERMAL COAL SPOT PRICE TUMBLES 25 PER CENT, PUTTING PRESSURE ON SOME PRODUCERS - ABC RURAL
The spot price for thermal coal has fallen 25 per cent per cent in the past month with one leading analyst saying it is because of a reduction in d ...
Monday, 18 May 20
CHINA'S COAL OUTPUT UP 1.3 PCT IN JANUARY-APRIL: XINHUA
Output of raw coal in China rose 1.3 percent year on year to 1.15 billion tonnes in the first four months this year, official data showed.
&nbs ...
Sunday, 17 May 20
A 55,000 OPEN ILIGAN FIXING AT $6,500 VIA INDONESIA REDELIVERY INDIA - BALTIC BRIEFING
Capesize
A precipitous fall in the market this week had the Capesize 5TC shedding over 50 per cent in value. A small rebound at the end of the ...
Friday, 15 May 20
CHINA'S COAL CONSUMPTION TO FALL Y/Y IN SECOND QUARTER, IMPROVEMENT EXPECTED IN SECOND HALF - INDUSTRY BODY: REUTERS
China’s coal consumption is expected to decline in the second quarter from a year earlier, but will see an improvement in the second half of ...
Thursday, 14 May 20
OPEC REVISES DOWN GLOBAL OIL DEMAND FORECAST AGAIN
Crude Oil Price Movements
Crude oil prices recorded a second sharp monthly drop in April, amid an increasing oil surplus in the spot market. Th ...
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- Tata Chemicals Ltd - India
- Sojitz Corporation - Japan
- Barasentosa Lestari - Indonesia
- Economic Council, Georgia
- New Zealand Coal & Carbon
- Coalindo Energy - Indonesia
- Indian Oil Corporation Limited
- Makarim & Taira - Indonesia
- Vedanta Resources Plc - India
- PowerSource Philippines DevCo
- Kaltim Prima Coal - Indonesia
- Anglo American - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Tamil Nadu electricity Board
- Bahari Cakrawala Sebuku - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- PTC India Limited - India
- IEA Clean Coal Centre - UK
- Bukit Asam (Persero) Tbk - Indonesia
- Independent Power Producers Association of India
- Sinarmas Energy and Mining - Indonesia
- Australian Coal Association
- Straits Asia Resources Limited - Singapore
- Carbofer General Trading SA - India
- Sarangani Energy Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Agrawal Coal Company - India
- Posco Energy - South Korea
- Chettinad Cement Corporation Ltd - India
- McConnell Dowell - Australia
- Bukit Makmur.PT - Indonesia
- Mintek Dendrill Indonesia
- Cement Manufacturers Association - India
- Leighton Contractors Pty Ltd - Australia
- Thiess Contractors Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Formosa Plastics Group - Taiwan
- Essar Steel Hazira Ltd - India
- Orica Mining Services - Indonesia
- GVK Power & Infra Limited - India
- Kobexindo Tractors - Indoneisa
- Rashtriya Ispat Nigam Limited - India
- Kumho Petrochemical, South Korea
- Indogreen Group - Indonesia
- Rio Tinto Coal - Australia
- Deloitte Consulting - India
- GN Power Mariveles Coal Plant, Philippines
- Coastal Gujarat Power Limited - India
- Toyota Tsusho Corporation, Japan
- SMG Consultants - Indonesia
- Banpu Public Company Limited - Thailand
- Bukit Baiduri Energy - Indonesia
- Bhatia International Limited - India
- IHS Mccloskey Coal Group - USA
- Sical Logistics Limited - India
- GAC Shipping (India) Pvt Ltd
- Semirara Mining and Power Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Samtan Co., Ltd - South Korea
- Ministry of Finance - Indonesia
- Power Finance Corporation Ltd., India
- Kepco SPC Power Corporation, Philippines
- Therma Luzon, Inc, Philippines
- Siam City Cement - Thailand
- Standard Chartered Bank - UAE
- Electricity Authority, New Zealand
- Savvy Resources Ltd - HongKong
- Romanian Commodities Exchange
- Antam Resourcindo - Indonesia
- Jaiprakash Power Ventures ltd
- Binh Thuan Hamico - Vietnam
- Bayan Resources Tbk. - Indonesia
- Metalloyd Limited - United Kingdom
- Eastern Coal Council - USA
- TNB Fuel Sdn Bhd - Malaysia
- PetroVietnam Power Coal Import and Supply Company
- Thai Mozambique Logistica
- Commonwealth Bank - Australia
- Ceylon Electricity Board - Sri Lanka
- Goldman Sachs - Singapore
- OPG Power Generation Pvt Ltd - India
- Australian Commodity Traders Exchange
- Energy Link Ltd, New Zealand
- Heidelberg Cement - Germany
- Simpson Spence & Young - Indonesia
- Meralco Power Generation, Philippines
- London Commodity Brokers - England
- Mercuria Energy - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Oldendorff Carriers - Singapore
- Meenaskhi Energy Private Limited - India
- Vizag Seaport Private Limited - India
- Wood Mackenzie - Singapore
- Larsen & Toubro Limited - India
- Trasteel International SA, Italy
- Interocean Group of Companies - India
- Parry Sugars Refinery, India
- Sakthi Sugars Limited - India
- PNOC Exploration Corporation - Philippines
- Bharathi Cement Corporation - India
- TeaM Sual Corporation - Philippines
- Price Waterhouse Coopers - Russia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Asmin Koalindo Tuhup - Indonesia
- Central Electricity Authority - India
- Aditya Birla Group - India
- International Coal Ventures Pvt Ltd - India
- LBH Netherlands Bv - Netherlands
- GMR Energy Limited - India
- South Luzon Thermal Energy Corporation
- Medco Energi Mining Internasional
- Miang Besar Coal Terminal - Indonesia
- Global Business Power Corporation, Philippines
- Chamber of Mines of South Africa
- Maheswari Brothers Coal Limited - India
- Ind-Barath Power Infra Limited - India
- The Treasury - Australian Government
- Holcim Trading Pte Ltd - Singapore
- Videocon Industries ltd - India
- MS Steel International - UAE
- Indo Tambangraya Megah - Indonesia
- Ministry of Transport, Egypt
- Kideco Jaya Agung - Indonesia
- Lanco Infratech Ltd - India
- Indian Energy Exchange, India
- Uttam Galva Steels Limited - India
- Intertek Mineral Services - Indonesia
- Iligan Light & Power Inc, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Mjunction Services Limited - India
- Directorate Of Revenue Intelligence - India
- Indika Energy - Indonesia
- Riau Bara Harum - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Star Paper Mills Limited - India
- VISA Power Limited - India
- Krishnapatnam Port Company Ltd. - India
- Coal and Oil Company - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Salva Resources Pvt Ltd - India
- Altura Mining Limited, Indonesia
- Edison Trading Spa - Italy
- Malabar Cements Ltd - India
- ASAPP Information Group - India
- Gujarat Electricity Regulatory Commission - India
- Vijayanagar Sugar Pvt Ltd - India
- Borneo Indobara - Indonesia
- Orica Australia Pty. Ltd.
- CIMB Investment Bank - Malaysia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Semirara Mining Corp, Philippines
- Pendopo Energi Batubara - Indonesia
- ICICI Bank Limited - India
- Siam City Cement PLC, Thailand
- The State Trading Corporation of India Ltd
- Petrochimia International Co. Ltd.- Taiwan
- Sindya Power Generating Company Private Ltd
- European Bulk Services B.V. - Netherlands
- AsiaOL BioFuels Corp., Philippines
- Bangladesh Power Developement Board
- San Jose City I Power Corp, Philippines
- Merrill Lynch Commodities Europe
- White Energy Company Limited
- Sree Jayajothi Cements Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Gujarat Mineral Development Corp Ltd - India
- Port Waratah Coal Services - Australia
- Timah Investasi Mineral - Indoneisa
- Latin American Coal - Colombia
- Petron Corporation, Philippines
- Mercator Lines Limited - India
- Planning Commission, India
- Karaikal Port Pvt Ltd - India
- The University of Queensland
- Kapuas Tunggal Persada - Indonesia
- SMC Global Power, Philippines
- Global Coal Blending Company Limited - Australia
- Directorate General of MIneral and Coal - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Manunggal Multi Energi - Indonesia
- Globalindo Alam Lestari - Indonesia
- Marubeni Corporation - India
- SN Aboitiz Power Inc, Philippines
- Georgia Ports Authority, United States
- Baramulti Group, Indonesia
- Indonesian Coal Mining Association
- Gujarat Sidhee Cement - India
- Ministry of Mines - Canada
- Energy Development Corp, Philippines
- Madhucon Powers Ltd - India
- Bhushan Steel Limited - India
- Electricity Generating Authority of Thailand
- Xindia Steels Limited - India
- Dalmia Cement Bharat India
- Central Java Power - Indonesia
- CNBM International Corporation - China
- Africa Commodities Group - South Africa
- Global Green Power PLC Corporation, Philippines
- Eastern Energy - Thailand
- Bhoruka Overseas - Indonesia
- Ambuja Cements Ltd - India
- India Bulls Power Limited - India
- Minerals Council of Australia
- Renaissance Capital - South Africa
- Parliament of New Zealand
- Jindal Steel & Power Ltd - India
- Aboitiz Power Corporation - Philippines
- Attock Cement Pakistan Limited
- Wilmar Investment Holdings
- Grasim Industreis Ltd - India
- Bulk Trading Sa - Switzerland
- Billiton Holdings Pty Ltd - Australia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Singapore Mercantile Exchange
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