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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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Sunday, 10 September 23
CHINA AUGUST COAL IMPORTS OF 44.3 MLN T HIT RECORD - REUTERS
China, the world’s top coal consumer, imported 44.3 million metric tons of the fuel last month, customs data showed, the highest amount in an ...
Tuesday, 22 August 23
CHINA'S COAL PRODUCTION LOGS STEADY GROWTH IN JANUARY-JULY: XINHUA
China’s output of raw coal went up 3.6 percent year on year in the first seven months of this year, official data showed.
The ...
Sunday, 13 August 23
THE COMMODITIES FEED: LNG SUPPLY RISKS LINGER - ING
Energy – OPEC sees deficit over remainder of 2023
Oil prices came under some pressure yesterday with ICE Brent settling a litt ...
Wednesday, 09 August 23
COAL TRADE TO RETURN TO 2019 LEVELS - BALTIC EXCHANGE
The International Energy Agency’s mid-year Coal Market Update for 2023 brings both positive and concerning news for the global coal industry. ...
Sunday, 23 July 23
ANALYSIS-INDIA'S COAL MINING BET STUMBLES AS WARY BANKS WEIGH RISING RISKS - REUTERS
India’s drive to ramp up coal output to meet growing energy demand is faltering due to banks’ reluctance to finance newly auctioned min ...
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- Jindal Steel & Power Ltd - India
- Orica Australia Pty. Ltd.
- Bharathi Cement Corporation - India
- Timah Investasi Mineral - Indoneisa
- SMG Consultants - Indonesia
- Marubeni Corporation - India
- Indika Energy - Indonesia
- Kaltim Prima Coal - Indonesia
- Sree Jayajothi Cements Limited - India
- European Bulk Services B.V. - Netherlands
- Deloitte Consulting - India
- Kumho Petrochemical, South Korea
- Metalloyd Limited - United Kingdom
- Indogreen Group - Indonesia
- GAC Shipping (India) Pvt Ltd
- Energy Development Corp, Philippines
- Therma Luzon, Inc, Philippines
- Medco Energi Mining Internasional
- IHS Mccloskey Coal Group - USA
- Miang Besar Coal Terminal - Indonesia
- Port Waratah Coal Services - Australia
- India Bulls Power Limited - India
- Intertek Mineral Services - Indonesia
- PowerSource Philippines DevCo
- Samtan Co., Ltd - South Korea
- Cigading International Bulk Terminal - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Coastal Gujarat Power Limited - India
- Directorate General of MIneral and Coal - Indonesia
- GMR Energy Limited - India
- Semirara Mining Corp, Philippines
- Uttam Galva Steels Limited - India
- OPG Power Generation Pvt Ltd - India
- Bangladesh Power Developement Board
- Indian Energy Exchange, India
- Singapore Mercantile Exchange
- Thiess Contractors Indonesia
- Edison Trading Spa - Italy
- Central Java Power - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Asmin Koalindo Tuhup - Indonesia
- CNBM International Corporation - China
- Madhucon Powers Ltd - India
- Mercuria Energy - Indonesia
- Agrawal Coal Company - India
- Gujarat Electricity Regulatory Commission - India
- Antam Resourcindo - Indonesia
- Standard Chartered Bank - UAE
- Eastern Energy - Thailand
- Chettinad Cement Corporation Ltd - India
- Mintek Dendrill Indonesia
- Global Green Power PLC Corporation, Philippines
- New Zealand Coal & Carbon
- Star Paper Mills Limited - India
- Aboitiz Power Corporation - Philippines
- Vedanta Resources Plc - India
- Kobexindo Tractors - Indoneisa
- Kepco SPC Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- Kapuas Tunggal Persada - Indonesia
- Ind-Barath Power Infra Limited - India
- Cement Manufacturers Association - India
- Manunggal Multi Energi - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- San Jose City I Power Corp, Philippines
- Posco Energy - South Korea
- International Coal Ventures Pvt Ltd - India
- SMC Global Power, Philippines
- Altura Mining Limited, Indonesia
- Ministry of Finance - Indonesia
- Bukit Makmur.PT - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Eastern Coal Council - USA
- Merrill Lynch Commodities Europe
- Bukit Asam (Persero) Tbk - Indonesia
- Grasim Industreis Ltd - India
- Bhoruka Overseas - Indonesia
- Bhushan Steel Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Australian Coal Association
- Siam City Cement PLC, Thailand
- Interocean Group of Companies - India
- Wood Mackenzie - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Sarangani Energy Corporation, Philippines
- Salva Resources Pvt Ltd - India
- Karaikal Port Pvt Ltd - India
- MS Steel International - UAE
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Directorate Of Revenue Intelligence - India
- Commonwealth Bank - Australia
- Meralco Power Generation, Philippines
- Africa Commodities Group - South Africa
- IEA Clean Coal Centre - UK
- Rio Tinto Coal - Australia
- ASAPP Information Group - India
- Sical Logistics Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kideco Jaya Agung - Indonesia
- Larsen & Toubro Limited - India
- White Energy Company Limited
- Latin American Coal - Colombia
- Goldman Sachs - Singapore
- Simpson Spence & Young - Indonesia
- Central Electricity Authority - India
- VISA Power Limited - India
- Tata Chemicals Ltd - India
- Bhatia International Limited - India
- Global Business Power Corporation, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- Lanco Infratech Ltd - India
- Petron Corporation, Philippines
- Indo Tambangraya Megah - Indonesia
- Orica Mining Services - Indonesia
- Thai Mozambique Logistica
- Global Coal Blending Company Limited - Australia
- Dalmia Cement Bharat India
- Indian Oil Corporation Limited
- Romanian Commodities Exchange
- GVK Power & Infra Limited - India
- Anglo American - United Kingdom
- Essar Steel Hazira Ltd - India
- Kartika Selabumi Mining - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Jaiprakash Power Ventures ltd
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wilmar Investment Holdings
- Barasentosa Lestari - Indonesia
- TeaM Sual Corporation - Philippines
- Heidelberg Cement - Germany
- GN Power Mariveles Coal Plant, Philippines
- Straits Asia Resources Limited - Singapore
- Sinarmas Energy and Mining - Indonesia
- PNOC Exploration Corporation - Philippines
- Energy Link Ltd, New Zealand
- Kalimantan Lumbung Energi - Indonesia
- Globalindo Alam Lestari - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Indonesian Coal Mining Association
- Bahari Cakrawala Sebuku - Indonesia
- Aditya Birla Group - India
- Formosa Plastics Group - Taiwan
- Baramulti Group, Indonesia
- Sojitz Corporation - Japan
- Malabar Cements Ltd - India
- Meenaskhi Energy Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- Minerals Council of Australia
- ICICI Bank Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- The University of Queensland
- Sindya Power Generating Company Private Ltd
- Planning Commission, India
- Pendopo Energi Batubara - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Iligan Light & Power Inc, Philippines
- Krishnapatnam Port Company Ltd. - India
- Attock Cement Pakistan Limited
- AsiaOL BioFuels Corp., Philippines
- Jorong Barutama Greston.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- PTC India Limited - India
- Carbofer General Trading SA - India
- Kohat Cement Company Ltd. - Pakistan
- PetroVietnam Power Coal Import and Supply Company
- London Commodity Brokers - England
- Chamber of Mines of South Africa
- Binh Thuan Hamico - Vietnam
- Coal and Oil Company - UAE
- Electricity Generating Authority of Thailand
- Bukit Baiduri Energy - Indonesia
- South Luzon Thermal Energy Corporation
- Vijayanagar Sugar Pvt Ltd - India
- Vizag Seaport Private Limited - India
- Independent Power Producers Association of India
- Ambuja Cements Ltd - India
- Parliament of New Zealand
- Bulk Trading Sa - Switzerland
- Price Waterhouse Coopers - Russia
- Gujarat Sidhee Cement - India
- Riau Bara Harum - Indonesia
- Rashtriya Ispat Nigam Limited - India
- Coalindo Energy - Indonesia
- LBH Netherlands Bv - Netherlands
- Parry Sugars Refinery, India
- Xindia Steels Limited - India
- Videocon Industries ltd - India
- Leighton Contractors Pty Ltd - Australia
- Power Finance Corporation Ltd., India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Borneo Indobara - Indonesia
- Electricity Authority, New Zealand
- Georgia Ports Authority, United States
- Makarim & Taira - Indonesia
- Renaissance Capital - South Africa
- Tamil Nadu electricity Board
- Semirara Mining and Power Corporation, Philippines
- Ministry of Transport, Egypt
- Savvy Resources Ltd - HongKong
- Mercator Lines Limited - India
- Toyota Tsusho Corporation, Japan
- Siam City Cement - Thailand
- Maheswari Brothers Coal Limited - India
- Mjunction Services Limited - India
- The Treasury - Australian Government
- Economic Council, Georgia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Trasteel International SA, Italy
- Ministry of Mines - Canada
- Australian Commodity Traders Exchange
- Oldendorff Carriers - Singapore
- CIMB Investment Bank - Malaysia
- Sakthi Sugars Limited - India
- Bayan Resources Tbk. - Indonesia
- The State Trading Corporation of India Ltd
- McConnell Dowell - Australia
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