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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, 25 January 24
THE RED SEA ESCALATION IMPLICATIONS ON GLOBAL SEABORNE TRADE - MARIA BERTZELETOU
In recent days, discussions have intensified about the potential impact on the seaborne trade and ton-miles due to the evolving dynamics of market ...
Thursday, 25 January 24
RED SEA SHIPPING DISRUPTIONS KEEP GEOPOLITICAL PREMIUM FOR COMMODITIES - FITCH RATINGS
Shipping disruptions and re-routing away from the Red Sea will maintain the geopolitical premium in the main commodity markets, including for oil a ...
Friday, 19 January 24
INDONESIA TARGETS 710 MLN METRIC TONS COAL OUTPUT IN 2024 AFTER RECORD 2023 - REUTERS
Indonesia, a major thermal coal exporter, aims to produce 710 million metric tons of coal in 2024, its mining minister said on Monday, after postin ...
Friday, 19 January 24
DRUMMOND COLOMBIA COAL OUTPUT ROSE 7.1% IN 2023 - REUTERS
Coal production from miner Drummond’s Colombia operations rose 7.1% in 2023 to 29.5 million metric tons, while exports declined by 2.6% to 27 ...
Friday, 19 January 24
CHINA'S 2023 COAL OUTPUT HITS RECORD HIGH - REUTERS
China’s coal output reached a record high in 2023, data from the statistics bureau showed on Wednesday, amid an ongoing focus on energy secur ...
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- Africa Commodities Group - South Africa
- Riau Bara Harum - Indonesia
- Mintek Dendrill Indonesia
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- Kideco Jaya Agung - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Oil Corporation Limited
- SN Aboitiz Power Inc, Philippines
- Global Business Power Corporation, Philippines
- Sinarmas Energy and Mining - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indian Energy Exchange, India
- Orica Australia Pty. Ltd.
- Pipit Mutiara Jaya. PT, Indonesia
- Meralco Power Generation, Philippines
- Siam City Cement - Thailand
- Petrochimia International Co. Ltd.- Taiwan
- VISA Power Limited - India
- Ambuja Cements Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Globalindo Alam Lestari - Indonesia
- Port Waratah Coal Services - Australia
- Thiess Contractors Indonesia
- Bharathi Cement Corporation - India
- Salva Resources Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Binh Thuan Hamico - Vietnam
- Merrill Lynch Commodities Europe
- Banpu Public Company Limited - Thailand
- South Luzon Thermal Energy Corporation
- Standard Chartered Bank - UAE
- PTC India Limited - India
- Mercator Lines Limited - India
- Semirara Mining Corp, Philippines
- PowerSource Philippines DevCo
- Leighton Contractors Pty Ltd - Australia
- Bulk Trading Sa - Switzerland
- Aditya Birla Group - India
- Coalindo Energy - Indonesia
- Renaissance Capital - South Africa
- Edison Trading Spa - Italy
- Samtan Co., Ltd - South Korea
- Lanco Infratech Ltd - India
- Cigading International Bulk Terminal - Indonesia
- Planning Commission, India
- Romanian Commodities Exchange
- Vedanta Resources Plc - India
- Central Java Power - Indonesia
- Aboitiz Power Corporation - Philippines
- Bangladesh Power Developement Board
- Kalimantan Lumbung Energi - Indonesia
- Carbofer General Trading SA - India
- Madhucon Powers Ltd - India
- Ministry of Finance - Indonesia
- OPG Power Generation Pvt Ltd - India
- Neyveli Lignite Corporation Ltd, - India
- Formosa Plastics Group - Taiwan
- Interocean Group of Companies - India
- Larsen & Toubro Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Directorate Of Revenue Intelligence - India
- San Jose City I Power Corp, Philippines
- Trasteel International SA, Italy
- Bhoruka Overseas - Indonesia
- Bhatia International Limited - India
- Mercuria Energy - Indonesia
- Altura Mining Limited, Indonesia
- Parliament of New Zealand
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Therma Luzon, Inc, Philippines
- PNOC Exploration Corporation - Philippines
- IHS Mccloskey Coal Group - USA
- Malabar Cements Ltd - India
- ICICI Bank Limited - India
- Singapore Mercantile Exchange
- White Energy Company Limited
- Heidelberg Cement - Germany
- GMR Energy Limited - India
- Pendopo Energi Batubara - Indonesia
- Timah Investasi Mineral - Indoneisa
- The State Trading Corporation of India Ltd
- Star Paper Mills Limited - India
- MS Steel International - UAE
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ministry of Mines - Canada
- Independent Power Producers Association of India
- Meenaskhi Energy Private Limited - India
- Commonwealth Bank - Australia
- Agrawal Coal Company - India
- GVK Power & Infra Limited - India
- India Bulls Power Limited - India
- Parry Sugars Refinery, India
- Energy Development Corp, Philippines
- Kobexindo Tractors - Indoneisa
- Rio Tinto Coal - Australia
- Sojitz Corporation - Japan
- Indonesian Coal Mining Association
- Kartika Selabumi Mining - Indonesia
- Thai Mozambique Logistica
- Ind-Barath Power Infra Limited - India
- Price Waterhouse Coopers - Russia
- Borneo Indobara - Indonesia
- IEA Clean Coal Centre - UK
- Medco Energi Mining Internasional
- International Coal Ventures Pvt Ltd - India
- Semirara Mining and Power Corporation, Philippines
- London Commodity Brokers - England
- Tata Chemicals Ltd - India
- SMC Global Power, Philippines
- Straits Asia Resources Limited - Singapore
- Kapuas Tunggal Persada - Indonesia
- Videocon Industries ltd - India
- Rashtriya Ispat Nigam Limited - India
- The Treasury - Australian Government
- Sical Logistics Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Xindia Steels Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Wood Mackenzie - Singapore
- TeaM Sual Corporation - Philippines
- Latin American Coal - Colombia
- Savvy Resources Ltd - HongKong
- Iligan Light & Power Inc, Philippines
- Kumho Petrochemical, South Korea
- Bhushan Steel Limited - India
- Power Finance Corporation Ltd., India
- Holcim Trading Pte Ltd - Singapore
- GN Power Mariveles Coal Plant, Philippines
- Orica Mining Services - Indonesia
- Goldman Sachs - Singapore
- Manunggal Multi Energi - Indonesia
- Mjunction Services Limited - India
- Coastal Gujarat Power Limited - India
- Simpson Spence & Young - Indonesia
- Sindya Power Generating Company Private Ltd
- Maharashtra Electricity Regulatory Commission - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Krishnapatnam Port Company Ltd. - India
- SMG Consultants - Indonesia
- Global Coal Blending Company Limited - Australia
- Eastern Energy - Thailand
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dalmia Cement Bharat India
- Georgia Ports Authority, United States
- Economic Council, Georgia
- Grasim Industreis Ltd - India
- CIMB Investment Bank - Malaysia
- Miang Besar Coal Terminal - Indonesia
- Indika Energy - Indonesia
- Makarim & Taira - Indonesia
- CNBM International Corporation - China
- Vizag Seaport Private Limited - India
- GAC Shipping (India) Pvt Ltd
- Bukit Asam (Persero) Tbk - Indonesia
- Cement Manufacturers Association - India
- Australian Commodity Traders Exchange
- Indogreen Group - Indonesia
- Oldendorff Carriers - Singapore
- Eastern Coal Council - USA
- Gujarat Sidhee Cement - India
- Wilmar Investment Holdings
- Sarangani Energy Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- The University of Queensland
- Coal and Oil Company - UAE
- Maheswari Brothers Coal Limited - India
- LBH Netherlands Bv - Netherlands
- Australian Coal Association
- Electricity Authority, New Zealand
- Jindal Steel & Power Ltd - India
- Antam Resourcindo - Indonesia
- McConnell Dowell - Australia
- ASAPP Information Group - India
- Baramulti Group, Indonesia
- Jaiprakash Power Ventures ltd
- Kohat Cement Company Ltd. - Pakistan
- Kepco SPC Power Corporation, Philippines
- Alfred C Toepfer International GmbH - Germany
- Intertek Mineral Services - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Tamil Nadu electricity Board
- Asmin Koalindo Tuhup - Indonesia
- Deloitte Consulting - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Central Electricity Authority - India
- Anglo American - United Kingdom
- Barasentosa Lestari - Indonesia
- Bayan Resources Tbk. - Indonesia
- Attock Cement Pakistan Limited
- Kaltim Prima Coal - Indonesia
- Sakthi Sugars Limited - India
- Energy Link Ltd, New Zealand
- Uttam Galva Steels Limited - India
- Electricity Generating Authority of Thailand
- Bukit Baiduri Energy - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Marubeni Corporation - India
- Ministry of Transport, Egypt
- AsiaOL BioFuels Corp., Philippines
- Bukit Makmur.PT - Indonesia
- Metalloyd Limited - United Kingdom
- Petron Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Global Green Power PLC Corporation, Philippines
- New Zealand Coal & Carbon
- Posco Energy - South Korea
- Sree Jayajothi Cements Limited - India
- Minerals Council of Australia
- Chamber of Mines of South Africa
- Vijayanagar Sugar Pvt Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Gujarat Electricity Regulatory Commission - India
- European Bulk Services B.V. - Netherlands
- Toyota Tsusho Corporation, Japan
- PetroVietnam Power Coal Import and Supply Company
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