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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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Thursday, 14 May 20
NEW COVID-19 GUIDELINES FOCUS ON SAFE INTERFACE BETWEEN SHIP AND SHORE STAFF - GARD
At a time when the COVID-19 pandemic is affecting the global population, it is important that ships’ crew and port workers protect each other ...
Wednesday, 13 May 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.4 PCT - XINHUA
China Taiyuan coal transaction price index stood at 124.93 points Monday, down 0.4 percent week on week.
The index, released by Chin ...
Tuesday, 12 May 20
IN THE FIRST 4 MONTHS OF 2020, SOUTH KOREA IMPORTED 46.6 MLN TONNES OF CRUDE OIL BY SEA, A NET DECLINE OF 14.1% YOY - BC
South Korea is certainly one of the countries which has handled better the current Covid-19 crisis. In the first week of May 2020, new cases of ...
Tuesday, 12 May 20
OIL MARKET TURBULENCE PIVOTS FOCUS ON FLOATING STORAGE TECHNICAL NEEDS - LLOYD'S REGISTER
KNOWLEDGE TO ELEVATE
Negative oil prices and off-the-scale volatility in crude markets are positive for floating storage, as the next chapter ...
Tuesday, 12 May 20
A GLOBAL ECONOMIC RESTART HAS SLOWLY BEGUN AS COUNTRIES AROUND THE WORLD GRADUALLY - ALLIED
A global economic restart has slowly begun as countries around the world gradually set their return back to “normality”. Yet by all mea ...
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- SN Aboitiz Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- Ministry of Transport, Egypt
- Wood Mackenzie - Singapore
- Gujarat Sidhee Cement - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Orica Australia Pty. Ltd.
- Altura Mining Limited, Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- GAC Shipping (India) Pvt Ltd
- Wilmar Investment Holdings
- GVK Power & Infra Limited - India
- Romanian Commodities Exchange
- Madhucon Powers Ltd - India
- Bhoruka Overseas - Indonesia
- Australian Commodity Traders Exchange
- Larsen & Toubro Limited - India
- Rio Tinto Coal - Australia
- The University of Queensland
- Thai Mozambique Logistica
- Eastern Energy - Thailand
- New Zealand Coal & Carbon
- Mercator Lines Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Savvy Resources Ltd - HongKong
- Barasentosa Lestari - Indonesia
- Sical Logistics Limited - India
- Globalindo Alam Lestari - Indonesia
- Mercuria Energy - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Commonwealth Bank - Australia
- Toyota Tsusho Corporation, Japan
- Bank of Tokyo Mitsubishi UFJ Ltd
- Central Java Power - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Minerals Council of Australia
- Vedanta Resources Plc - India
- Makarim & Taira - Indonesia
- Port Waratah Coal Services - Australia
- ICICI Bank Limited - India
- Vizag Seaport Private Limited - India
- Trasteel International SA, Italy
- Tamil Nadu electricity Board
- Xindia Steels Limited - India
- Baramulti Group, Indonesia
- Indika Energy - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Miang Besar Coal Terminal - Indonesia
- Global Business Power Corporation, Philippines
- MS Steel International - UAE
- Interocean Group of Companies - India
- Semirara Mining and Power Corporation, Philippines
- Australian Coal Association
- Kepco SPC Power Corporation, Philippines
- Kaltim Prima Coal - Indonesia
- Siam City Cement - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- Kobexindo Tractors - Indoneisa
- Sree Jayajothi Cements Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Kumho Petrochemical, South Korea
- Energy Link Ltd, New Zealand
- Antam Resourcindo - Indonesia
- Agrawal Coal Company - India
- Karaikal Port Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Chettinad Cement Corporation Ltd - India
- OPG Power Generation Pvt Ltd - India
- Posco Energy - South Korea
- Uttam Galva Steels Limited - India
- Indian Energy Exchange, India
- Kideco Jaya Agung - Indonesia
- Merrill Lynch Commodities Europe
- Orica Mining Services - Indonesia
- Banpu Public Company Limited - Thailand
- Marubeni Corporation - India
- Africa Commodities Group - South Africa
- CIMB Investment Bank - Malaysia
- Goldman Sachs - Singapore
- Star Paper Mills Limited - India
- Kartika Selabumi Mining - Indonesia
- Ambuja Cements Ltd - India
- Coal and Oil Company - UAE
- Chamber of Mines of South Africa
- Bharathi Cement Corporation - India
- PNOC Exploration Corporation - Philippines
- Aboitiz Power Corporation - Philippines
- Anglo American - United Kingdom
- Timah Investasi Mineral - Indoneisa
- Carbofer General Trading SA - India
- Jorong Barutama Greston.PT - Indonesia
- Bangladesh Power Developement Board
- Parliament of New Zealand
- The Treasury - Australian Government
- Neyveli Lignite Corporation Ltd, - India
- Essar Steel Hazira Ltd - India
- GMR Energy Limited - India
- Bhushan Steel Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Electricity Authority, New Zealand
- Energy Development Corp, Philippines
- Oldendorff Carriers - Singapore
- TeaM Sual Corporation - Philippines
- Therma Luzon, Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Intertek Mineral Services - Indonesia
- Cement Manufacturers Association - India
- Economic Council, Georgia
- Lanco Infratech Ltd - India
- Ind-Barath Power Infra Limited - India
- Bayan Resources Tbk. - Indonesia
- Riau Bara Harum - Indonesia
- White Energy Company Limited
- Gujarat Mineral Development Corp Ltd - India
- European Bulk Services B.V. - Netherlands
- Asmin Koalindo Tuhup - Indonesia
- Thiess Contractors Indonesia
- Dalmia Cement Bharat India
- Heidelberg Cement - Germany
- Salva Resources Pvt Ltd - India
- Deloitte Consulting - India
- IHS Mccloskey Coal Group - USA
- Petron Corporation, Philippines
- ASAPP Information Group - India
- Georgia Ports Authority, United States
- Sojitz Corporation - Japan
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- International Coal Ventures Pvt Ltd - India
- Bhatia International Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Singapore Mercantile Exchange
- Standard Chartered Bank - UAE
- Coalindo Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Mjunction Services Limited - India
- Indogreen Group - Indonesia
- Price Waterhouse Coopers - Russia
- Pendopo Energi Batubara - Indonesia
- Maheswari Brothers Coal Limited - India
- Meenaskhi Energy Private Limited - India
- Jindal Steel & Power Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Formosa Plastics Group - Taiwan
- AsiaOL BioFuels Corp., Philippines
- Indo Tambangraya Megah - Indonesia
- South Luzon Thermal Energy Corporation
- Mintek Dendrill Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bulk Trading Sa - Switzerland
- PowerSource Philippines DevCo
- Bukit Baiduri Energy - Indonesia
- Iligan Light & Power Inc, Philippines
- Malabar Cements Ltd - India
- VISA Power Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Sarangani Energy Corporation, Philippines
- Indian Oil Corporation Limited
- Edison Trading Spa - Italy
- Bukit Makmur.PT - Indonesia
- Power Finance Corporation Ltd., India
- Jaiprakash Power Ventures ltd
- Central Electricity Authority - India
- Maharashtra Electricity Regulatory Commission - India
- Medco Energi Mining Internasional
- London Commodity Brokers - England
- Global Coal Blending Company Limited - Australia
- Tata Chemicals Ltd - India
- Sindya Power Generating Company Private Ltd
- PetroVietnam Power Coal Import and Supply Company
- The State Trading Corporation of India Ltd
- Aditya Birla Group - India
- LBH Netherlands Bv - Netherlands
- SMG Consultants - Indonesia
- Straits Asia Resources Limited - Singapore
- Simpson Spence & Young - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Planning Commission, India
- Videocon Industries ltd - India
- Semirara Mining Corp, Philippines
- Karbindo Abesyapradhi - Indoneisa
- India Bulls Power Limited - India
- Leighton Contractors Pty Ltd - Australia
- Ministry of Finance - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- PTC India Limited - India
- Ceylon Electricity Board - Sri Lanka
- Manunggal Multi Energi - Indonesia
- Electricity Generating Authority of Thailand
- McConnell Dowell - Australia
- Latin American Coal - Colombia
- Independent Power Producers Association of India
- Sakthi Sugars Limited - India
- Renaissance Capital - South Africa
- Eastern Coal Council - USA
- Indonesian Coal Mining Association
- Rashtriya Ispat Nigam Limited - India
- Ministry of Mines - Canada
- Sinarmas Energy and Mining - Indonesia
- Grasim Industreis Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Borneo Indobara - Indonesia
- SMC Global Power, Philippines
- San Jose City I Power Corp, Philippines
- Global Green Power PLC Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Attock Cement Pakistan Limited
- CNBM International Corporation - China
- Holcim Trading Pte Ltd - Singapore
- Siam City Cement PLC, Thailand
- Metalloyd Limited - United Kingdom
- IEA Clean Coal Centre - UK
- Meralco Power Generation, Philippines
- Parry Sugars Refinery, India
- Coastal Gujarat Power Limited - India
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