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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, 01 December 23
COAL MINERS GROUP EXPECTS INDONESIA’S 2023 COAL OUTPUT TO SURPASS TARGET - REUTERS
The Indonesian Coal Mining Association (ICMA) expects the country’s 2023 coal output to surpass the official target of 695 million metric ton ...
Friday, 24 November 23
COAL IMPORTS TO INDIA IN OCTOBER 2023 REACHED HIGHEST LEVELS IN NEARLY A YEAR AND A HALF - VESSELSVALUE, VESON NAUTICAL
In October, coal imports to India reached 13.8 mt in October 2023, according to Oceanbolt, a Veson Nautical solution, the highest level since May 2 ...
Friday, 24 November 23
COAL SHIPMENTS TO ADVANCED ECONOMIES DOWN 17% SO FAR IN 2023 - BIMCO
In the first ten months of 2023, coal shipments to advanced economies fell by 17% y/y, as demand for electricity declined and the share of electric ...
Friday, 24 November 23
INTELLIGENT COAL MINES CONTRIBUTE TO IMPROVING SAFETY STANDARDS - CHINA DAILY
Mechanization, automation and intelligent upgrades have contributed to improved safety in coal mines, though the level of development of intelligen ...
Friday, 24 November 23
WHY AUSTRALIA'S COAL MINES ARE GETTING BIGGER - IEEFA
Australia’s largest coal mines are getting larger. Mines in New South Wales (NSW) are ramping up production following the state’s recov ...
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- San Jose City I Power Corp, Philippines
- Jindal Steel & Power Ltd - India
- Orica Mining Services - Indonesia
- Simpson Spence & Young - Indonesia
- Global Coal Blending Company Limited - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vizag Seaport Private Limited - India
- Formosa Plastics Group - Taiwan
- Alfred C Toepfer International GmbH - Germany
- Medco Energi Mining Internasional
- Indika Energy - Indonesia
- Marubeni Corporation - India
- Kapuas Tunggal Persada - Indonesia
- Planning Commission, India
- New Zealand Coal & Carbon
- Singapore Mercantile Exchange
- South Luzon Thermal Energy Corporation
- MS Steel International - UAE
- Ministry of Transport, Egypt
- Chettinad Cement Corporation Ltd - India
- Mjunction Services Limited - India
- Kartika Selabumi Mining - Indonesia
- Wilmar Investment Holdings
- Metalloyd Limited - United Kingdom
- IHS Mccloskey Coal Group - USA
- Cement Manufacturers Association - India
- Romanian Commodities Exchange
- Star Paper Mills Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- Deloitte Consulting - India
- Petron Corporation, Philippines
- Tata Chemicals Ltd - India
- Energy Link Ltd, New Zealand
- IEA Clean Coal Centre - UK
- Power Finance Corporation Ltd., India
- Kepco SPC Power Corporation, Philippines
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Kideco Jaya Agung - Indonesia
- Trasteel International SA, Italy
- Rashtriya Ispat Nigam Limited - India
- Sakthi Sugars Limited - India
- AsiaOL BioFuels Corp., Philippines
- LBH Netherlands Bv - Netherlands
- Therma Luzon, Inc, Philippines
- Meralco Power Generation, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Carbofer General Trading SA - India
- Interocean Group of Companies - India
- Bhoruka Overseas - Indonesia
- Standard Chartered Bank - UAE
- ICICI Bank Limited - India
- Maheswari Brothers Coal Limited - India
- Rio Tinto Coal - Australia
- Pipit Mutiara Jaya. PT, Indonesia
- Iligan Light & Power Inc, Philippines
- SMG Consultants - Indonesia
- Thai Mozambique Logistica
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Meenaskhi Energy Private Limited - India
- Bukit Makmur.PT - Indonesia
- Global Green Power PLC Corporation, Philippines
- Indian Energy Exchange, India
- TNB Fuel Sdn Bhd - Malaysia
- Goldman Sachs - Singapore
- Semirara Mining Corp, Philippines
- Lanco Infratech Ltd - India
- Port Waratah Coal Services - Australia
- Agrawal Coal Company - India
- Manunggal Multi Energi - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Karaikal Port Pvt Ltd - India
- Antam Resourcindo - Indonesia
- White Energy Company Limited
- Indo Tambangraya Megah - Indonesia
- Merrill Lynch Commodities Europe
- Toyota Tsusho Corporation, Japan
- Xindia Steels Limited - India
- SMC Global Power, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Georgia Ports Authority, United States
- Posco Energy - South Korea
- Holcim Trading Pte Ltd - Singapore
- Sinarmas Energy and Mining - Indonesia
- Ministry of Finance - Indonesia
- Bukit Baiduri Energy - Indonesia
- Madhucon Powers Ltd - India
- Kumho Petrochemical, South Korea
- Aditya Birla Group - India
- Electricity Authority, New Zealand
- Siam City Cement - Thailand
- Ministry of Mines - Canada
- Parry Sugars Refinery, India
- Essar Steel Hazira Ltd - India
- Chamber of Mines of South Africa
- Wood Mackenzie - Singapore
- Bank of Tokyo Mitsubishi UFJ Ltd
- Uttam Galva Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- Heidelberg Cement - Germany
- Attock Cement Pakistan Limited
- TeaM Sual Corporation - Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Grasim Industreis Ltd - India
- Bulk Trading Sa - Switzerland
- Gujarat Mineral Development Corp Ltd - India
- Indogreen Group - Indonesia
- Eastern Coal Council - USA
- Price Waterhouse Coopers - Russia
- Mintek Dendrill Indonesia
- Siam City Cement PLC, Thailand
- Australian Coal Association
- Coal and Oil Company - UAE
- Leighton Contractors Pty Ltd - Australia
- Borneo Indobara - Indonesia
- Aboitiz Power Corporation - Philippines
- Intertek Mineral Services - Indonesia
- Latin American Coal - Colombia
- Semirara Mining and Power Corporation, Philippines
- ASAPP Information Group - India
- McConnell Dowell - Australia
- Anglo American - United Kingdom
- The Treasury - Australian Government
- Billiton Holdings Pty Ltd - Australia
- GMR Energy Limited - India
- GVK Power & Infra Limited - India
- Global Business Power Corporation, Philippines
- PTC India Limited - India
- Mercator Lines Limited - India
- Timah Investasi Mineral - Indoneisa
- Bangladesh Power Developement Board
- Cigading International Bulk Terminal - Indonesia
- International Coal Ventures Pvt Ltd - India
- Ambuja Cements Ltd - India
- Eastern Energy - Thailand
- Sical Logistics Limited - India
- The State Trading Corporation of India Ltd
- Parliament of New Zealand
- Oldendorff Carriers - Singapore
- VISA Power Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Sarangani Energy Corporation, Philippines
- SN Aboitiz Power Inc, Philippines
- Australian Commodity Traders Exchange
- Kaltim Prima Coal - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Bhatia International Limited - India
- Orica Australia Pty. Ltd.
- Makarim & Taira - Indonesia
- Salva Resources Pvt Ltd - India
- Edison Trading Spa - Italy
- Videocon Industries ltd - India
- Globalindo Alam Lestari - Indonesia
- Dalmia Cement Bharat India
- India Bulls Power Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Bharathi Cement Corporation - India
- Altura Mining Limited, Indonesia
- Sree Jayajothi Cements Limited - India
- Riau Bara Harum - Indonesia
- CIMB Investment Bank - Malaysia
- Bayan Resources Tbk. - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Savvy Resources Ltd - HongKong
- Larsen & Toubro Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Directorate Of Revenue Intelligence - India
- Ind-Barath Power Infra Limited - India
- Mercuria Energy - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- GAC Shipping (India) Pvt Ltd
- Gujarat Electricity Regulatory Commission - India
- Bhushan Steel Limited - India
- Central Java Power - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kobexindo Tractors - Indoneisa
- PowerSource Philippines DevCo
- Samtan Co., Ltd - South Korea
- Straits Asia Resources Limited - Singapore
- Directorate General of MIneral and Coal - Indonesia
- Indonesian Coal Mining Association
- European Bulk Services B.V. - Netherlands
- Renaissance Capital - South Africa
- Africa Commodities Group - South Africa
- Electricity Generating Authority of Thailand
- Sindya Power Generating Company Private Ltd
- Jaiprakash Power Ventures ltd
- Central Electricity Authority - India
- Malabar Cements Ltd - India
- Thiess Contractors Indonesia
- PNOC Exploration Corporation - Philippines
- Coalindo Energy - Indonesia
- Binh Thuan Hamico - Vietnam
- OPG Power Generation Pvt Ltd - India
- CNBM International Corporation - China
- The University of Queensland
- Pendopo Energi Batubara - Indonesia
- Barasentosa Lestari - Indonesia
- Economic Council, Georgia
- Baramulti Group, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Coastal Gujarat Power Limited - India
- Independent Power Producers Association of India
- Energy Development Corp, Philippines
- Sojitz Corporation - Japan
- Commonwealth Bank - Australia
- Gujarat Sidhee Cement - India
- Kohat Cement Company Ltd. - Pakistan
- Indian Oil Corporation Limited
- Tamil Nadu electricity Board
- Banpu Public Company Limited - Thailand
- London Commodity Brokers - England
- Minerals Council of Australia
- Bahari Cakrawala Sebuku - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Vedanta Resources Plc - India
- Jorong Barutama Greston.PT - Indonesia
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