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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, 14 November 23
CHINA'S BELT AND ROAD INITIATIVE TURNS AWAY FROM COAL - WOOD MACKENZIE
Ambitious, contentious and big spending, China’s Belt and Road Initiative (BRI) is 10 years old. In that time, China has splashed more than U ...
Friday, 10 November 23
THE COMMODITIES FEED: OIL UNDER PRESSURE - ING
Energy – Brent plummets
The oil market came under significant pressure yesterday. ICE Brent settled 4.19% lower on the day and ...
Friday, 10 November 23
COAL USE AT U.S. POWER PLANTS CONTINUES DOWNWARD SPIRAL; FULL IMPACT ON MINES TO BE FELT IN 2024 - IEEFA
This year, the use of coal by the U.S.’s power producers has been so anemic that the fuel has not achieved a 20% market share in any month so ...
Friday, 10 November 23
INDIA: NATIONAL COAL INDEX RISES 3.83 POINTS IN SEPTEMBER AMID HIGHER DEMAND - LIVEMINT
The National Coal Index (NCI) rose 3.83 points to 143.91 in September amid growing demand for coal.
The union coal ministry on Tuesd ...
Thursday, 09 November 23
WE'RE PRODUCING TOO MUCH COAL, OIL AND GAS, REPORT SAYS - WSJ
World leaders pledged in 2015 to reduce emissions in a combined effort to limit climate change.
Now they are stepping up production ...
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- Samtan Co., Ltd - South Korea
- Borneo Indobara - Indonesia
- Ministry of Mines - Canada
- The Treasury - Australian Government
- Energy Link Ltd, New Zealand
- Semirara Mining Corp, Philippines
- PowerSource Philippines DevCo
- Jaiprakash Power Ventures ltd
- Australian Commodity Traders Exchange
- Savvy Resources Ltd - HongKong
- Neyveli Lignite Corporation Ltd, - India
- Renaissance Capital - South Africa
- Standard Chartered Bank - UAE
- Siam City Cement - Thailand
- Kapuas Tunggal Persada - Indonesia
- Formosa Plastics Group - Taiwan
- Jindal Steel & Power Ltd - India
- Wilmar Investment Holdings
- Central Electricity Authority - India
- Malabar Cements Ltd - India
- SMG Consultants - Indonesia
- Bhoruka Overseas - Indonesia
- Bulk Trading Sa - Switzerland
- Dalmia Cement Bharat India
- Price Waterhouse Coopers - Russia
- Bahari Cakrawala Sebuku - Indonesia
- GMR Energy Limited - India
- PTC India Limited - India
- Petron Corporation, Philippines
- South Luzon Thermal Energy Corporation
- Sindya Power Generating Company Private Ltd
- London Commodity Brokers - England
- Xindia Steels Limited - India
- Indogreen Group - Indonesia
- Karaikal Port Pvt Ltd - India
- Australian Coal Association
- Holcim Trading Pte Ltd - Singapore
- Edison Trading Spa - Italy
- Simpson Spence & Young - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Therma Luzon, Inc, Philippines
- International Coal Ventures Pvt Ltd - India
- Barasentosa Lestari - Indonesia
- Marubeni Corporation - India
- Orica Mining Services - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- Meenaskhi Energy Private Limited - India
- Asmin Koalindo Tuhup - Indonesia
- Merrill Lynch Commodities Europe
- Vijayanagar Sugar Pvt Ltd - India
- Sical Logistics Limited - India
- Indika Energy - Indonesia
- Coalindo Energy - Indonesia
- Goldman Sachs - Singapore
- Offshore Bulk Terminal Pte Ltd, Singapore
- Bharathi Cement Corporation - India
- Sinarmas Energy and Mining - Indonesia
- Antam Resourcindo - Indonesia
- Tamil Nadu electricity Board
- Planning Commission, India
- Rashtriya Ispat Nigam Limited - India
- Krishnapatnam Port Company Ltd. - India
- Lanco Infratech Ltd - India
- Maheswari Brothers Coal Limited - India
- Attock Cement Pakistan Limited
- Indo Tambangraya Megah - Indonesia
- Videocon Industries ltd - India
- Global Green Power PLC Corporation, Philippines
- Metalloyd Limited - United Kingdom
- Oldendorff Carriers - Singapore
- Meralco Power Generation, Philippines
- LBH Netherlands Bv - Netherlands
- GVK Power & Infra Limited - India
- ASAPP Information Group - India
- The State Trading Corporation of India Ltd
- Indonesian Coal Mining Association
- Alfred C Toepfer International GmbH - Germany
- Romanian Commodities Exchange
- Tata Chemicals Ltd - India
- Sree Jayajothi Cements Limited - India
- Aditya Birla Group - India
- Riau Bara Harum - Indonesia
- Semirara Mining and Power Corporation, Philippines
- McConnell Dowell - Australia
- Straits Asia Resources Limited - Singapore
- Miang Besar Coal Terminal - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- ICICI Bank Limited - India
- Power Finance Corporation Ltd., India
- PNOC Exploration Corporation - Philippines
- Salva Resources Pvt Ltd - India
- Leighton Contractors Pty Ltd - Australia
- Ind-Barath Power Infra Limited - India
- Uttam Galva Steels Limited - India
- Interocean Group of Companies - India
- Larsen & Toubro Limited - India
- Manunggal Multi Energi - Indonesia
- Kartika Selabumi Mining - Indonesia
- CNBM International Corporation - China
- Maharashtra Electricity Regulatory Commission - India
- Port Waratah Coal Services - Australia
- Directorate General of MIneral and Coal - Indonesia
- European Bulk Services B.V. - Netherlands
- Commonwealth Bank - Australia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Banpu Public Company Limited - Thailand
- Orica Australia Pty. Ltd.
- VISA Power Limited - India
- Bayan Resources Tbk. - Indonesia
- Global Coal Blending Company Limited - Australia
- Eastern Energy - Thailand
- Cigading International Bulk Terminal - Indonesia
- Vizag Seaport Private Limited - India
- Central Java Power - Indonesia
- Heidelberg Cement - Germany
- Kumho Petrochemical, South Korea
- MS Steel International - UAE
- Karbindo Abesyapradhi - Indoneisa
- Mercuria Energy - Indonesia
- Bhatia International Limited - India
- Bhushan Steel Limited - India
- Minerals Council of Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Makarim & Taira - Indonesia
- Singapore Mercantile Exchange
- Deloitte Consulting - India
- Georgia Ports Authority, United States
- Kobexindo Tractors - Indoneisa
- Electricity Authority, New Zealand
- Medco Energi Mining Internasional
- Iligan Light & Power Inc, Philippines
- Parry Sugars Refinery, India
- Electricity Generating Authority of Thailand
- Carbofer General Trading SA - India
- Baramulti Group, Indonesia
- SN Aboitiz Power Inc, Philippines
- Posco Energy - South Korea
- Independent Power Producers Association of India
- Intertek Mineral Services - Indonesia
- New Zealand Coal & Carbon
- San Jose City I Power Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Globalindo Alam Lestari - Indonesia
- Toyota Tsusho Corporation, Japan
- Indian Energy Exchange, India
- The University of Queensland
- Sakthi Sugars Limited - India
- Ceylon Electricity Board - Sri Lanka
- Latin American Coal - Colombia
- Mintek Dendrill Indonesia
- TeaM Sual Corporation - Philippines
- Star Paper Mills Limited - India
- Parliament of New Zealand
- Gujarat Sidhee Cement - India
- Kaltim Prima Coal - Indonesia
- OPG Power Generation Pvt Ltd - India
- Mjunction Services Limited - India
- Bangladesh Power Developement Board
- Trasteel International SA, Italy
- Vedanta Resources Plc - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Anglo American - United Kingdom
- Global Business Power Corporation, Philippines
- Ministry of Finance - Indonesia
- Binh Thuan Hamico - Vietnam
- Kohat Cement Company Ltd. - Pakistan
- Altura Mining Limited, Indonesia
- Ministry of Transport, Egypt
- Energy Development Corp, Philippines
- Agrawal Coal Company - India
- Pendopo Energi Batubara - Indonesia
- GAC Shipping (India) Pvt Ltd
- Chamber of Mines of South Africa
- Thiess Contractors Indonesia
- Grasim Industreis Ltd - India
- IHS Mccloskey Coal Group - USA
- Eastern Coal Council - USA
- India Bulls Power Limited - India
- Gujarat Electricity Regulatory Commission - India
- Bukit Asam (Persero) Tbk - Indonesia
- Sojitz Corporation - Japan
- Wood Mackenzie - Singapore
- Siam City Cement PLC, Thailand
- Sarangani Energy Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Kideco Jaya Agung - Indonesia
- Aboitiz Power Corporation - Philippines
- Timah Investasi Mineral - Indoneisa
- CIMB Investment Bank - Malaysia
- Directorate Of Revenue Intelligence - India
- Rio Tinto Coal - Australia
- Mercator Lines Limited - India
- Cement Manufacturers Association - India
- AsiaOL BioFuels Corp., Philippines
- Ambuja Cements Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Oil Corporation Limited
- Bukit Baiduri Energy - Indonesia
- Kepco SPC Power Corporation, Philippines
- IEA Clean Coal Centre - UK
- Coal and Oil Company - UAE
- Billiton Holdings Pty Ltd - Australia
- Chettinad Cement Corporation Ltd - India
- Thai Mozambique Logistica
- Madhucon Powers Ltd - India
- Coastal Gujarat Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Pipit Mutiara Jaya. PT, Indonesia
- Bukit Makmur.PT - Indonesia
- PetroVietnam Power Coal Import and Supply Company
- White Energy Company Limited
- TNB Fuel Sdn Bhd - Malaysia
- SMC Global Power, Philippines
- Economic Council, Georgia
- GN Power Mariveles Coal Plant, Philippines
- Africa Commodities Group - South Africa
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