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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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Saturday, 20 June 20
NO ESCAPING GLOBAL TRADE SLUMP - BALTIC EXCHANGE
Those hoping for a decent recovery in trade in the second half of the year should prepare for disappointment.
New data from the Unit ...
Friday, 19 June 20
INDIA'S COAL CONSUMPTION GROWTH IN 2019 SLOWEST SINCE 2001: BP STATS REVIEW - HINDU BUSINESS LINE
Growth in global energy markets slowed in 2019 in line with weaker economic growth, according to the bp Statistical Review of World Energy 2020. Th ...
Friday, 19 June 20
KOWEPO TO IMPORT 1,050,000 MT OF MIN 5300 NCV COAL FOR THREE YEARS
COALspot.com: Korera Western Power Co., Ltd. (KOWEPO) has issued an International tender for Total 1,050k MT Min.5,300 kcal/kg NCV coal for t ...
Thursday, 18 June 20
INDIA: GOVT'S PLAN TO CUT COAL IMPORT GOES FOR A TOSS AS FY20 BREAKS LOGISTICS CHAIN; LOCAL OUTPUT STAGNANT - FINANCIAL EXPRESS
Weak logistics support and disrupted supply chain towards the end of the last financial year 2019-20 hit the government’s plan to cut coal im ...
Thursday, 18 June 20
INDIA: THERMAL PLANTS TO OPERATE BELOW 53% CAPACITY IN FY21 AS POWER DEMAND DIPS - BUSINESS STANDARD
The Plant Load Factor (PLF) of thermal power stations across the country is projected to dip below 53 per cent in this fiscal. Muted power demand f ...
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- Pipit Mutiara Jaya. PT, Indonesia
- Global Green Power PLC Corporation, Philippines
- Videocon Industries ltd - India
- Siam City Cement PLC, Thailand
- Meralco Power Generation, Philippines
- Cigading International Bulk Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- Leighton Contractors Pty Ltd - Australia
- AsiaOL BioFuels Corp., Philippines
- Larsen & Toubro Limited - India
- Orica Mining Services - Indonesia
- Sakthi Sugars Limited - India
- Energy Development Corp, Philippines
- Iligan Light & Power Inc, Philippines
- Dalmia Cement Bharat India
- Kartika Selabumi Mining - Indonesia
- Bhatia International Limited - India
- Baramulti Group, Indonesia
- Bhoruka Overseas - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Planning Commission, India
- Bahari Cakrawala Sebuku - Indonesia
- Bharathi Cement Corporation - India
- Alfred C Toepfer International GmbH - Germany
- Kobexindo Tractors - Indoneisa
- Heidelberg Cement - Germany
- Ministry of Finance - Indonesia
- McConnell Dowell - Australia
- Parry Sugars Refinery, India
- Kepco SPC Power Corporation, Philippines
- Vedanta Resources Plc - India
- Billiton Holdings Pty Ltd - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- European Bulk Services B.V. - Netherlands
- Semirara Mining Corp, Philippines
- Cement Manufacturers Association - India
- Coastal Gujarat Power Limited - India
- Salva Resources Pvt Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Maharashtra Electricity Regulatory Commission - India
- Indian Energy Exchange, India
- IEA Clean Coal Centre - UK
- Chettinad Cement Corporation Ltd - India
- White Energy Company Limited
- Indian Oil Corporation Limited
- Bhushan Steel Limited - India
- Karaikal Port Pvt Ltd - India
- Bukit Makmur.PT - Indonesia
- SN Aboitiz Power Inc, Philippines
- Energy Link Ltd, New Zealand
- Simpson Spence & Young - Indonesia
- Jindal Steel & Power Ltd - India
- Merrill Lynch Commodities Europe
- Central Java Power - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Sindya Power Generating Company Private Ltd
- Sical Logistics Limited - India
- Independent Power Producers Association of India
- Thiess Contractors Indonesia
- SMG Consultants - Indonesia
- Georgia Ports Authority, United States
- Mintek Dendrill Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bangladesh Power Developement Board
- Banpu Public Company Limited - Thailand
- Ceylon Electricity Board - Sri Lanka
- Chamber of Mines of South Africa
- Australian Commodity Traders Exchange
- Jaiprakash Power Ventures ltd
- Deloitte Consulting - India
- Orica Australia Pty. Ltd.
- Samtan Co., Ltd - South Korea
- Eastern Energy - Thailand
- Minerals Council of Australia
- New Zealand Coal & Carbon
- Kaltim Prima Coal - Indonesia
- Posco Energy - South Korea
- Holcim Trading Pte Ltd - Singapore
- Semirara Mining and Power Corporation, Philippines
- Coalindo Energy - Indonesia
- PTC India Limited - India
- Wood Mackenzie - Singapore
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Asmin Koalindo Tuhup - Indonesia
- SMC Global Power, Philippines
- Kumho Petrochemical, South Korea
- Carbofer General Trading SA - India
- Altura Mining Limited, Indonesia
- TeaM Sual Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- Intertek Mineral Services - Indonesia
- The University of Queensland
- Bukit Asam (Persero) Tbk - Indonesia
- Parliament of New Zealand
- Jorong Barutama Greston.PT - Indonesia
- Oldendorff Carriers - Singapore
- MS Steel International - UAE
- Rashtriya Ispat Nigam Limited - India
- Sarangani Energy Corporation, Philippines
- Power Finance Corporation Ltd., India
- The Treasury - Australian Government
- Kapuas Tunggal Persada - Indonesia
- Port Waratah Coal Services - Australia
- PNOC Exploration Corporation - Philippines
- GVK Power & Infra Limited - India
- Australian Coal Association
- Marubeni Corporation - India
- Star Paper Mills Limited - India
- GMR Energy Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Barasentosa Lestari - Indonesia
- Tamil Nadu electricity Board
- GAC Shipping (India) Pvt Ltd
- Savvy Resources Ltd - HongKong
- San Jose City I Power Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Madhucon Powers Ltd - India
- OPG Power Generation Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Straits Asia Resources Limited - Singapore
- CIMB Investment Bank - Malaysia
- South Luzon Thermal Energy Corporation
- Latin American Coal - Colombia
- Tata Chemicals Ltd - India
- Indo Tambangraya Megah - Indonesia
- Uttam Galva Steels Limited - India
- Ministry of Mines - Canada
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Romanian Commodities Exchange
- VISA Power Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- TNB Fuel Sdn Bhd - Malaysia
- International Coal Ventures Pvt Ltd - India
- Grasim Industreis Ltd - India
- Aditya Birla Group - India
- Singapore Mercantile Exchange
- Therma Luzon, Inc, Philippines
- Binh Thuan Hamico - Vietnam
- Formosa Plastics Group - Taiwan
- Mjunction Services Limited - India
- Renaissance Capital - South Africa
- Manunggal Multi Energi - Indonesia
- Standard Chartered Bank - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- Ambuja Cements Ltd - India
- Agrawal Coal Company - India
- Global Business Power Corporation, Philippines
- Indogreen Group - Indonesia
- Medco Energi Mining Internasional
- Sinarmas Energy and Mining - Indonesia
- Anglo American - United Kingdom
- Petrochimia International Co. Ltd.- Taiwan
- Maheswari Brothers Coal Limited - India
- Eastern Coal Council - USA
- Toyota Tsusho Corporation, Japan
- Wilmar Investment Holdings
- Ind-Barath Power Infra Limited - India
- Rio Tinto Coal - Australia
- Kideco Jaya Agung - Indonesia
- Riau Bara Harum - Indonesia
- Sree Jayajothi Cements Limited - India
- Metalloyd Limited - United Kingdom
- PetroVietnam Power Coal Import and Supply Company
- Karbindo Abesyapradhi - Indoneisa
- ASAPP Information Group - India
- Electricity Authority, New Zealand
- Commonwealth Bank - Australia
- ICICI Bank Limited - India
- Siam City Cement - Thailand
- Gujarat Sidhee Cement - India
- Bukit Baiduri Energy - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Electricity Generating Authority of Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Indonesian Coal Mining Association
- Essar Steel Hazira Ltd - India
- CNBM International Corporation - China
- Central Electricity Authority - India
- Malabar Cements Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- India Bulls Power Limited - India
- Interocean Group of Companies - India
- Mercuria Energy - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Goldman Sachs - Singapore
- Aboitiz Power Corporation - Philippines
- Miang Besar Coal Terminal - Indonesia
- Directorate Of Revenue Intelligence - India
- Edison Trading Spa - Italy
- Africa Commodities Group - South Africa
- PowerSource Philippines DevCo
- Globalindo Alam Lestari - Indonesia
- Thai Mozambique Logistica
- Borneo Indobara - Indonesia
- Timah Investasi Mineral - Indoneisa
- London Commodity Brokers - England
- Antam Resourcindo - Indonesia
- The State Trading Corporation of India Ltd
- Attock Cement Pakistan Limited
- Ministry of Transport, Egypt
- Sojitz Corporation - Japan
- IHS Mccloskey Coal Group - USA
- Meenaskhi Energy Private Limited - India
- Trasteel International SA, Italy
- Neyveli Lignite Corporation Ltd, - India
- Indika Energy - Indonesia
- Lanco Infratech Ltd - India
- Xindia Steels Limited - India
- Economic Council, Georgia
- Vizag Seaport Private Limited - India
- Pendopo Energi Batubara - Indonesia
- Mercator Lines Limited - India
- Makarim & Taira - Indonesia
- Price Waterhouse Coopers - Russia
- Coal and Oil Company - UAE
- Petron Corporation, Philippines
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