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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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Friday, 08 May 20
THE COLLAPSE OF THE OIL AND BUNKER FUEL MARKETS IN EARLY 2020 - PETER SAND
The sulphur regulation from the International Maritime Organization (IMO) that came into force on 1 January 2020 took the centre stage in the shipp ...
Friday, 08 May 20
LNG DEMAND FACED SEVERAL HEADWINDS IN THE FIRST QUARTER OF 2020 - GASLOG
LNG demand faced several headwinds in the first quarter of 2020 including a warmer than average winter in the northern hemisphere, high inventory l ...
Thursday, 07 May 20
IEEFA UPDATE: THE OUTLOOK FOR THERMAL COAL IN SOUTHEAST ASIA AND SOUTH ASIA
Seven headwinds are building to sustained growth in coal in Asia
The medium term outlook for thermal coal in Southeast Asia is posit ...
Thursday, 07 May 20
IMO 2020: BUNKER CLAIMS HANDLING GUIDE FOR A NEW DECADE - THE STANDARD CLUB
KNOWLEDGE TO ELEVATE
IMO 2020 is the term generally used to describe the following regulations under Annex VI of the International Convention ...
Thursday, 07 May 20
CRUDE OIL TANKER EARNINGS DROP 68% IN NINE DAYS - BIMCO
Crude oil tanker earnings have come down sharply in recent weeks with Very Large Crude Carrier (VLCC) earnings from the Middle East Gulf to China d ...
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- TeaM Sual Corporation - Philippines
- Edison Trading Spa - Italy
- Karbindo Abesyapradhi - Indoneisa
- Electricity Generating Authority of Thailand
- PNOC Exploration Corporation - Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- SN Aboitiz Power Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Aditya Birla Group - India
- PTC India Limited - India
- Holcim Trading Pte Ltd - Singapore
- Therma Luzon, Inc, Philippines
- Global Green Power PLC Corporation, Philippines
- SMG Consultants - Indonesia
- India Bulls Power Limited - India
- Parliament of New Zealand
- Rashtriya Ispat Nigam Limited - India
- Bharathi Cement Corporation - India
- Electricity Authority, New Zealand
- Manunggal Multi Energi - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Banpu Public Company Limited - Thailand
- Kumho Petrochemical, South Korea
- AsiaOL BioFuels Corp., Philippines
- Indonesian Coal Mining Association
- Vedanta Resources Plc - India
- Madhucon Powers Ltd - India
- Kohat Cement Company Ltd. - Pakistan
- Neyveli Lignite Corporation Ltd, - India
- Thiess Contractors Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Borneo Indobara - Indonesia
- Indian Oil Corporation Limited
- Deloitte Consulting - India
- Bhatia International Limited - India
- Singapore Mercantile Exchange
- Energy Link Ltd, New Zealand
- PetroVietnam Power Coal Import and Supply Company
- Tamil Nadu electricity Board
- Bangladesh Power Developement Board
- Ministry of Finance - Indonesia
- Gujarat Sidhee Cement - India
- GAC Shipping (India) Pvt Ltd
- CNBM International Corporation - China
- Ministry of Mines - Canada
- McConnell Dowell - Australia
- Altura Mining Limited, Indonesia
- Renaissance Capital - South Africa
- Karaikal Port Pvt Ltd - India
- Toyota Tsusho Corporation, Japan
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Eastern Energy - Thailand
- Energy Development Corp, Philippines
- Semirara Mining Corp, Philippines
- Power Finance Corporation Ltd., India
- Commonwealth Bank - Australia
- Kartika Selabumi Mining - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Binh Thuan Hamico - Vietnam
- Ambuja Cements Ltd - India
- White Energy Company Limited
- Uttam Galva Steels Limited - India
- Georgia Ports Authority, United States
- Siam City Cement PLC, Thailand
- Heidelberg Cement - Germany
- Price Waterhouse Coopers - Russia
- OPG Power Generation Pvt Ltd - India
- Essar Steel Hazira Ltd - India
- Metalloyd Limited - United Kingdom
- SMC Global Power, Philippines
- San Jose City I Power Corp, Philippines
- Siam City Cement - Thailand
- London Commodity Brokers - England
- Leighton Contractors Pty Ltd - Australia
- Kideco Jaya Agung - Indonesia
- Carbofer General Trading SA - India
- Ind-Barath Power Infra Limited - India
- Billiton Holdings Pty Ltd - Australia
- Directorate General of MIneral and Coal - Indonesia
- Intertek Mineral Services - Indonesia
- Global Business Power Corporation, Philippines
- Kobexindo Tractors - Indoneisa
- Sojitz Corporation - Japan
- Baramulti Group, Indonesia
- Chettinad Cement Corporation Ltd - India
- MS Steel International - UAE
- Alfred C Toepfer International GmbH - Germany
- Rio Tinto Coal - Australia
- Cement Manufacturers Association - India
- Mjunction Services Limited - India
- The State Trading Corporation of India Ltd
- Asmin Koalindo Tuhup - Indonesia
- Riau Bara Harum - Indonesia
- Samtan Co., Ltd - South Korea
- Timah Investasi Mineral - Indoneisa
- Gujarat Mineral Development Corp Ltd - India
- Sakthi Sugars Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Australian Commodity Traders Exchange
- Meralco Power Generation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Anglo American - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Makmur.PT - Indonesia
- Vizag Seaport Private Limited - India
- Petron Corporation, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Merrill Lynch Commodities Europe
- Dalmia Cement Bharat India
- Bhushan Steel Limited - India
- Latin American Coal - Colombia
- Meenaskhi Energy Private Limited - India
- Directorate Of Revenue Intelligence - India
- Mercator Lines Limited - India
- Orica Mining Services - Indonesia
- ASAPP Information Group - India
- Kalimantan Lumbung Energi - Indonesia
- Interocean Group of Companies - India
- Australian Coal Association
- Bank of Tokyo Mitsubishi UFJ Ltd
- Independent Power Producers Association of India
- Sree Jayajothi Cements Limited - India
- Aboitiz Power Corporation - Philippines
- Africa Commodities Group - South Africa
- Kepco SPC Power Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Mintek Dendrill Indonesia
- Mercuria Energy - Indonesia
- Malabar Cements Ltd - India
- Sical Logistics Limited - India
- Antam Resourcindo - Indonesia
- CIMB Investment Bank - Malaysia
- Planning Commission, India
- Maheswari Brothers Coal Limited - India
- Coal and Oil Company - UAE
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Videocon Industries ltd - India
- Jaiprakash Power Ventures ltd
- Trasteel International SA, Italy
- Xindia Steels Limited - India
- Bukit Baiduri Energy - Indonesia
- Medco Energi Mining Internasional
- Oldendorff Carriers - Singapore
- IEA Clean Coal Centre - UK
- Indian Energy Exchange, India
- Grasim Industreis Ltd - India
- Bayan Resources Tbk. - Indonesia
- ICICI Bank Limited - India
- Miang Besar Coal Terminal - Indonesia
- Ministry of Transport, Egypt
- Parry Sugars Refinery, India
- Ceylon Electricity Board - Sri Lanka
- Marubeni Corporation - India
- Orica Australia Pty. Ltd.
- Straits Asia Resources Limited - Singapore
- South Luzon Thermal Energy Corporation
- Minerals Council of Australia
- Kaltim Prima Coal - Indonesia
- New Zealand Coal & Carbon
- Tata Chemicals Ltd - India
- Formosa Plastics Group - Taiwan
- Indo Tambangraya Megah - Indonesia
- Sarangani Energy Corporation, Philippines
- Eastern Coal Council - USA
- Cigading International Bulk Terminal - Indonesia
- PowerSource Philippines DevCo
- Economic Council, Georgia
- Krishnapatnam Port Company Ltd. - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- TNB Fuel Sdn Bhd - Malaysia
- Standard Chartered Bank - UAE
- International Coal Ventures Pvt Ltd - India
- Wilmar Investment Holdings
- Pendopo Energi Batubara - Indonesia
- Sindya Power Generating Company Private Ltd
- Global Coal Blending Company Limited - Australia
- Agrawal Coal Company - India
- GVK Power & Infra Limited - India
- The University of Queensland
- Coalindo Energy - Indonesia
- Star Paper Mills Limited - India
- LBH Netherlands Bv - Netherlands
- Thai Mozambique Logistica
- Central Electricity Authority - India
- Port Waratah Coal Services - Australia
- Bulk Trading Sa - Switzerland
- Chamber of Mines of South Africa
- Wood Mackenzie - Singapore
- Iligan Light & Power Inc, Philippines
- VISA Power Limited - India
- The Treasury - Australian Government
- Makarim & Taira - Indonesia
- Central Java Power - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- European Bulk Services B.V. - Netherlands
- GN Power Mariveles Coal Plant, Philippines
- Indika Energy - Indonesia
- Indogreen Group - Indonesia
- GMR Energy Limited - India
- Gujarat Electricity Regulatory Commission - India
- Larsen & Toubro Limited - India
- Romanian Commodities Exchange
- Lanco Infratech Ltd - India
- Globalindo Alam Lestari - Indonesia
- Attock Cement Pakistan Limited
- IHS Mccloskey Coal Group - USA
- Posco Energy - South Korea
- Savvy Resources Ltd - HongKong
- Jindal Steel & Power Ltd - India
- Coastal Gujarat Power Limited - India
- Simpson Spence & Young - Indonesia
- Goldman Sachs - Singapore
- Barasentosa Lestari - Indonesia
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