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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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Wednesday, 22 November 23
INDIA: GOVERNMENT PLANS 1.4 BILLION TONNE COAL OUTPUT BY 2027 - LIVEMINT
The Union coal ministry on Monday announced plans to increase India’s coal production to 1.404 billion tonne by 2027, with an eye to further ...
Wednesday, 22 November 23
OBLIGATION. INDONESIA AIMS TO START COLLECTING LEVIES FROM COAL MINERS IN JANUARY - REUTERS
Indonesia plans to start collecting levies from coal miners in January to be used to compensate miners who sell coal to the state utility at lower ...
Tuesday, 21 November 23
INDIAN COAL POWER PLANTS’ CAPACITY UTILISATION WILL IMPROVE TO 65% THIS FISCAL: - CRISIL
Coal-based thermal power units’ plant load factor (PLF) or capacity utilisation will improve to 65 percent in the current fiscal year despite ...
Tuesday, 14 November 23
CAPITAL PRODUCT PARTNERS L.P. ANNOUNCES TRANSFORMATIVE TRANSACTION INCLUDING THE ACQUISITION OF 11 NEWBUILD LNG CARRIERS FOR $3.1 BILLION
Capital Product Partners L.P. announced that it has entered into an umbrella agreement (the “Umbrella Agreement”) with Capital Maritime ...
Tuesday, 14 November 23
COAL INDIA BEATS Q2 PROFIT VIEW ON HIGH POWER DEMAND AMID WEAK MONSOON - REUTERS
Coal India on Friday reported better-than-expected second-quarter profit, helped by high power demand and boosted production amid a weak monsoon.
...
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- Manunggal Multi Energi - Indonesia
- GMR Energy Limited - India
- London Commodity Brokers - England
- Bulk Trading Sa - Switzerland
- Parry Sugars Refinery, India
- Minerals Council of Australia
- MS Steel International - UAE
- Jindal Steel & Power Ltd - India
- Coal and Oil Company - UAE
- Coastal Gujarat Power Limited - India
- IHS Mccloskey Coal Group - USA
- Central Electricity Authority - India
- Commonwealth Bank - Australia
- Karaikal Port Pvt Ltd - India
- Mintek Dendrill Indonesia
- Indian Energy Exchange, India
- Energy Link Ltd, New Zealand
- International Coal Ventures Pvt Ltd - India
- Independent Power Producers Association of India
- Simpson Spence & Young - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Timah Investasi Mineral - Indoneisa
- Bhatia International Limited - India
- Planning Commission, India
- Bhoruka Overseas - Indonesia
- Mjunction Services Limited - India
- Pendopo Energi Batubara - Indonesia
- Barasentosa Lestari - Indonesia
- Lanco Infratech Ltd - India
- Thiess Contractors Indonesia
- GVK Power & Infra Limited - India
- ICICI Bank Limited - India
- Romanian Commodities Exchange
- Wood Mackenzie - Singapore
- Bukit Makmur.PT - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Oldendorff Carriers - Singapore
- Agrawal Coal Company - India
- Binh Thuan Hamico - Vietnam
- Tamil Nadu electricity Board
- Borneo Indobara - Indonesia
- Maheswari Brothers Coal Limited - India
- Trasteel International SA, Italy
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Indo Tambangraya Megah - Indonesia
- Sical Logistics Limited - India
- Aboitiz Power Corporation - Philippines
- Kepco SPC Power Corporation, Philippines
- San Jose City I Power Corp, Philippines
- Electricity Authority, New Zealand
- Thai Mozambique Logistica
- Sojitz Corporation - Japan
- Star Paper Mills Limited - India
- Indonesian Coal Mining Association
- Wilmar Investment Holdings
- Posco Energy - South Korea
- Iligan Light & Power Inc, Philippines
- Indika Energy - Indonesia
- Marubeni Corporation - India
- Bhushan Steel Limited - India
- Semirara Mining Corp, Philippines
- Tata Chemicals Ltd - India
- Chettinad Cement Corporation Ltd - India
- Essar Steel Hazira Ltd - India
- Holcim Trading Pte Ltd - Singapore
- Savvy Resources Ltd - HongKong
- Vedanta Resources Plc - India
- Ministry of Finance - Indonesia
- Chamber of Mines of South Africa
- Globalindo Alam Lestari - Indonesia
- Global Coal Blending Company Limited - Australia
- Sree Jayajothi Cements Limited - India
- Singapore Mercantile Exchange
- CIMB Investment Bank - Malaysia
- LBH Netherlands Bv - Netherlands
- The University of Queensland
- Gujarat Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- Malabar Cements Ltd - India
- Cement Manufacturers Association - India
- Africa Commodities Group - South Africa
- Energy Development Corp, Philippines
- Standard Chartered Bank - UAE
- Parliament of New Zealand
- Sarangani Energy Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- SN Aboitiz Power Inc, Philippines
- Samtan Co., Ltd - South Korea
- Goldman Sachs - Singapore
- Vijayanagar Sugar Pvt Ltd - India
- Power Finance Corporation Ltd., India
- Gujarat Sidhee Cement - India
- Petron Corporation, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Ceylon Electricity Board - Sri Lanka
- Bayan Resources Tbk. - Indonesia
- Mercuria Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
- SMC Global Power, Philippines
- Merrill Lynch Commodities Europe
- GN Power Mariveles Coal Plant, Philippines
- Jorong Barutama Greston.PT - Indonesia
- OPG Power Generation Pvt Ltd - India
- Bharathi Cement Corporation - India
- Indian Oil Corporation Limited
- IEA Clean Coal Centre - UK
- Australian Coal Association
- Attock Cement Pakistan Limited
- Indogreen Group - Indonesia
- Medco Energi Mining Internasional
- Kaltim Prima Coal - Indonesia
- Bukit Baiduri Energy - Indonesia
- Ministry of Mines - Canada
- Latin American Coal - Colombia
- Rashtriya Ispat Nigam Limited - India
- Kalimantan Lumbung Energi - Indonesia
- TeaM Sual Corporation - Philippines
- Semirara Mining and Power Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- White Energy Company Limited
- The State Trading Corporation of India Ltd
- Kideco Jaya Agung - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Alfred C Toepfer International GmbH - Germany
- Directorate General of MIneral and Coal - Indonesia
- Carbofer General Trading SA - India
- Global Green Power PLC Corporation, Philippines
- Mercator Lines Limited - India
- GAC Shipping (India) Pvt Ltd
- Toyota Tsusho Corporation, Japan
- Karbindo Abesyapradhi - Indoneisa
- Krishnapatnam Port Company Ltd. - India
- PowerSource Philippines DevCo
- CNBM International Corporation - China
- VISA Power Limited - India
- India Bulls Power Limited - India
- Bangladesh Power Developement Board
- Billiton Holdings Pty Ltd - Australia
- Kohat Cement Company Ltd. - Pakistan
- Price Waterhouse Coopers - Russia
- Dalmia Cement Bharat India
- Eastern Coal Council - USA
- Anglo American - United Kingdom
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Riau Bara Harum - Indonesia
- Videocon Industries ltd - India
- Interocean Group of Companies - India
- Therma Luzon, Inc, Philippines
- Electricity Generating Authority of Thailand
- European Bulk Services B.V. - Netherlands
- Ministry of Transport, Egypt
- Grasim Industreis Ltd - India
- Kartika Selabumi Mining - Indonesia
- Ambuja Cements Ltd - India
- Banpu Public Company Limited - Thailand
- Georgia Ports Authority, United States
- PNOC Exploration Corporation - Philippines
- Edison Trading Spa - Italy
- Ind-Barath Power Infra Limited - India
- Global Business Power Corporation, Philippines
- Coalindo Energy - Indonesia
- New Zealand Coal & Carbon
- Siam City Cement PLC, Thailand
- Intertek Mineral Services - Indonesia
- Port Waratah Coal Services - Australia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Jaiprakash Power Ventures ltd
- The Treasury - Australian Government
- Bukit Asam (Persero) Tbk - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Sindya Power Generating Company Private Ltd
- Rio Tinto Coal - Australia
- Renaissance Capital - South Africa
- Orica Australia Pty. Ltd.
- Economic Council, Georgia
- Xindia Steels Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Orica Mining Services - Indonesia
- Altura Mining Limited, Indonesia
- Australian Commodity Traders Exchange
- McConnell Dowell - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Antam Resourcindo - Indonesia
- Heidelberg Cement - Germany
- Aditya Birla Group - India
- PTC India Limited - India
- Vizag Seaport Private Limited - India
- Miang Besar Coal Terminal - Indonesia
- SMG Consultants - Indonesia
- Baramulti Group, Indonesia
- Sinarmas Energy and Mining - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Formosa Plastics Group - Taiwan
- ASAPP Information Group - India
- Meenaskhi Energy Private Limited - India
- AsiaOL BioFuels Corp., Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Uttam Galva Steels Limited - India
- Eastern Energy - Thailand
- Larsen & Toubro Limited - India
- Siam City Cement - Thailand
- Neyveli Lignite Corporation Ltd, - India
- Metalloyd Limited - United Kingdom
- Madhucon Powers Ltd - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sakthi Sugars Limited - India
- Kobexindo Tractors - Indoneisa
- Deloitte Consulting - India
- Makarim & Taira - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Meralco Power Generation, Philippines
- Salva Resources Pvt Ltd - India
- South Luzon Thermal Energy Corporation
- Straits Asia Resources Limited - Singapore
- Kumho Petrochemical, South Korea
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