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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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Tuesday, 12 May 20
CAN INDONESIA'S COAL INDUSTRY SURVIVE COVID-19? : IEEFA
Pandemic Lockdown and Slumping Prices Put Extreme Pressure on Coal Miners
Executive Summary
While attention has been focused on th ...
Tuesday, 12 May 20
INDIA'S COAL PRODUCTION TO CLOCK RECORD 700 MILLION TONNES IN FY21: COAL SECRETARY - PTI
Coal Secretary Anil Jain said FY20 coal production was lower than the target of 660 million tonnes because of flooding of a key coal mine.
&nbs ...
Monday, 11 May 20
CHINA'S BENCHMARK POWER COAL PRICE DROPS SLIGHTLY - XINHUA
China’s benchmark power coal price dropped slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge ...
Monday, 11 May 20
CORONAVIRUS PUTS MORE THAN A THIRD OF SEABORNE COAL SUPPLY AT RISK - WOOD MACKENZIE
The full impact of the coronavirus outbreak on the global economy is yet unclear. However, the demand destruction is already becoming evident, with ...
Saturday, 09 May 20
ANGLO AMERICAN CONSIDERS SPINNING OFF SOUTH AFRICAN COAL OPERATIONS - REUTERS
Diversified miner Anglo American said on Thursday it prefers unbundling and listing its thermal coal operations in South Africa on the Johannesburg ...
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- Jorong Barutama Greston.PT - Indonesia
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- Indonesian Coal Mining Association
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- IEA Clean Coal Centre - UK
- Heidelberg Cement - Germany
- Petrochimia International Co. Ltd.- Taiwan
- Edison Trading Spa - Italy
- Interocean Group of Companies - India
- Sojitz Corporation - Japan
- Chamber of Mines of South Africa
- Merrill Lynch Commodities Europe
- Economic Council, Georgia
- Globalindo Alam Lestari - Indonesia
- McConnell Dowell - Australia
- Gujarat Mineral Development Corp Ltd - India
- Miang Besar Coal Terminal - Indonesia
- Eastern Coal Council - USA
- Ceylon Electricity Board - Sri Lanka
- Australian Coal Association
- SN Aboitiz Power Inc, Philippines
- Baramulti Group, Indonesia
- Karaikal Port Pvt Ltd - India
- Meralco Power Generation, Philippines
- Larsen & Toubro Limited - India
- European Bulk Services B.V. - Netherlands
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- South Luzon Thermal Energy Corporation
- Port Waratah Coal Services - Australia
- Aditya Birla Group - India
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- SMG Consultants - Indonesia
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- Iligan Light & Power Inc, Philippines
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- Banpu Public Company Limited - Thailand
- Petron Corporation, Philippines
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- TeaM Sual Corporation - Philippines
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- Global Coal Blending Company Limited - Australia
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- Singapore Mercantile Exchange
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- Ministry of Mines - Canada
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Coastal Gujarat Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Deloitte Consulting - India
- Thiess Contractors Indonesia
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- Indika Energy - Indonesia
- Price Waterhouse Coopers - Russia
- Bangladesh Power Developement Board
- Vedanta Resources Plc - India
- LBH Netherlands Bv - Netherlands
- Kideco Jaya Agung - Indonesia
- Mercuria Energy - Indonesia
- Vizag Seaport Private Limited - India
- Siam City Cement - Thailand
- Indian Energy Exchange, India
- Agrawal Coal Company - India
- Sree Jayajothi Cements Limited - India
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- Lanco Infratech Ltd - India
- Videocon Industries ltd - India
- The State Trading Corporation of India Ltd
- Thai Mozambique Logistica
- Energy Development Corp, Philippines
- PNOC Exploration Corporation - Philippines
- Cigading International Bulk Terminal - Indonesia
- IHS Mccloskey Coal Group - USA
- Oldendorff Carriers - Singapore
- Medco Energi Mining Internasional
- Parliament of New Zealand
- Maheswari Brothers Coal Limited - India
- PTC India Limited - India
- Planning Commission, India
- Intertek Mineral Services - Indonesia
- CIMB Investment Bank - Malaysia
- Goldman Sachs - Singapore
- Sindya Power Generating Company Private Ltd
- Electricity Authority, New Zealand
- Savvy Resources Ltd - HongKong
- Carbofer General Trading SA - India
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- Metalloyd Limited - United Kingdom
- Ministry of Transport, Egypt
- Siam City Cement PLC, Thailand
- Grasim Industreis Ltd - India
- Vijayanagar Sugar Pvt Ltd - India
- Billiton Holdings Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- Dalmia Cement Bharat India
- Toyota Tsusho Corporation, Japan
- Indian Oil Corporation Limited
- London Commodity Brokers - England
- ICICI Bank Limited - India
- Straits Asia Resources Limited - Singapore
- Altura Mining Limited, Indonesia
- Kapuas Tunggal Persada - Indonesia
- Leighton Contractors Pty Ltd - Australia
- GMR Energy Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Parry Sugars Refinery, India
- Tata Chemicals Ltd - India
- Timah Investasi Mineral - Indoneisa
- Africa Commodities Group - South Africa
- Central Java Power - Indonesia
- Kartika Selabumi Mining - Indonesia
- Trasteel International SA, Italy
- San Jose City I Power Corp, Philippines
- International Coal Ventures Pvt Ltd - India
- SMC Global Power, Philippines
- The University of Queensland
- The Treasury - Australian Government
- Kepco SPC Power Corporation, Philippines
- Barasentosa Lestari - Indonesia
- Coalindo Energy - Indonesia
- Semirara Mining Corp, Philippines
- Maharashtra Electricity Regulatory Commission - India
- Semirara Mining and Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Electricity Generating Authority of Thailand
- PowerSource Philippines DevCo
- Tamil Nadu electricity Board
- Standard Chartered Bank - UAE
- Renaissance Capital - South Africa
- Bukit Makmur.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Manunggal Multi Energi - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Mintek Dendrill Indonesia
- Jaiprakash Power Ventures ltd
- Minerals Council of Australia
- Posco Energy - South Korea
- GVK Power & Infra Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Gujarat Sidhee Cement - India
- Wood Mackenzie - Singapore
- Power Finance Corporation Ltd., India
- Indo Tambangraya Megah - Indonesia
- MS Steel International - UAE
- Riau Bara Harum - Indonesia
- Borneo Indobara - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bhoruka Overseas - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Cement Manufacturers Association - India
- Directorate Of Revenue Intelligence - India
- GN Power Mariveles Coal Plant, Philippines
- Sakthi Sugars Limited - India
- Sical Logistics Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Samtan Co., Ltd - South Korea
- CNBM International Corporation - China
- Commonwealth Bank - Australia
- Rio Tinto Coal - Australia
- Sinarmas Energy and Mining - Indonesia
- Salva Resources Pvt Ltd - India
- Independent Power Producers Association of India
- ASAPP Information Group - India
- Eastern Energy - Thailand
- Formosa Plastics Group - Taiwan
- Ind-Barath Power Infra Limited - India
- Bukit Baiduri Energy - Indonesia
- Georgia Ports Authority, United States
- Bank of Tokyo Mitsubishi UFJ Ltd
- India Bulls Power Limited - India
- Holcim Trading Pte Ltd - Singapore
- Kobexindo Tractors - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- Simpson Spence & Young - Indonesia
- GAC Shipping (India) Pvt Ltd
- Central Electricity Authority - India
- VISA Power Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kumho Petrochemical, South Korea
- Coal and Oil Company - UAE
- Mercator Lines Limited - India
- Australian Commodity Traders Exchange
- Wilmar Investment Holdings
- New Zealand Coal & Carbon
- Orica Australia Pty. Ltd.
- Mjunction Services Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Essar Steel Hazira Ltd - India
- Marubeni Corporation - India
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