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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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Thursday, 11 June 20
JAN-MAY, INDONESIA SHIPPED 175.15 MILLION TONS OF COAL TO ITS OVERSEAS BUYERS
Indonesia's coal production for the first 5 months of this year have reached 228 million tons. January – May 2020, Indonesia shipped US$ ...
Thursday, 11 June 20
CHINA'S BENCHMARK POWER COAL PRICE EDGES UP - XINHUA
China’s benchmark power coal price rose slightly during the past week.
The Bohai-Rim Steam-Coal Price Index (BSPI), a gauge of ...
Wednesday, 10 June 20
OPEC+ CUTS EXTENSION TO ACCELERATE MARKET REBALANCING - FITCH RATINGS
Fitch Ratings-London-08 June 2020: The OPEC+ agreement to extend by one month record oil production cuts should accelerate market rebalancing, Fitc ...
Wednesday, 10 June 20
MARKET INSIGHT - INTERMODAL
In contrast to the economic projections of the past two years for the first half of 2020, the oil & gas industry and those involved in it faced ...
Wednesday, 10 June 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.19 PCT - XINHUA
China Taiyuan coal transaction price index stood at 123.71 points Monday, down 0.19 percent week on week.
The index, released by Chi ...
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- Billiton Holdings Pty Ltd - Australia
- Riau Bara Harum - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Grasim Industreis Ltd - India
- Vedanta Resources Plc - India
- Mjunction Services Limited - India
- Price Waterhouse Coopers - Russia
- Star Paper Mills Limited - India
- Xindia Steels Limited - India
- Timah Investasi Mineral - Indoneisa
- Jorong Barutama Greston.PT - Indonesia
- Pendopo Energi Batubara - Indonesia
- Interocean Group of Companies - India
- Videocon Industries ltd - India
- Ministry of Mines - Canada
- PNOC Exploration Corporation - Philippines
- Bhushan Steel Limited - India
- Latin American Coal - Colombia
- Kapuas Tunggal Persada - Indonesia
- Sojitz Corporation - Japan
- Kobexindo Tractors - Indoneisa
- Agrawal Coal Company - India
- Tamil Nadu electricity Board
- Indian Oil Corporation Limited
- CIMB Investment Bank - Malaysia
- Merrill Lynch Commodities Europe
- SN Aboitiz Power Inc, Philippines
- Energy Development Corp, Philippines
- Malabar Cements Ltd - India
- Sindya Power Generating Company Private Ltd
- Semirara Mining and Power Corporation, Philippines
- Coalindo Energy - Indonesia
- Marubeni Corporation - India
- Therma Luzon, Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Trasteel International SA, Italy
- Kideco Jaya Agung - Indonesia
- Eastern Coal Council - USA
- Planning Commission, India
- Vijayanagar Sugar Pvt Ltd - India
- McConnell Dowell - Australia
- Global Coal Blending Company Limited - Australia
- Bahari Cakrawala Sebuku - Indonesia
- Kaltim Prima Coal - Indonesia
- Meenaskhi Energy Private Limited - India
- Miang Besar Coal Terminal - Indonesia
- Altura Mining Limited, Indonesia
- Meralco Power Generation, Philippines
- ICICI Bank Limited - India
- Posco Energy - South Korea
- Iligan Light & Power Inc, Philippines
- Essar Steel Hazira Ltd - India
- White Energy Company Limited
- Electricity Authority, New Zealand
- Gujarat Mineral Development Corp Ltd - India
- VISA Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Chettinad Cement Corporation Ltd - India
- Savvy Resources Ltd - HongKong
- Directorate Of Revenue Intelligence - India
- SMC Global Power, Philippines
- Karbindo Abesyapradhi - Indoneisa
- Kalimantan Lumbung Energi - Indonesia
- Bayan Resources Tbk. - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- Ceylon Electricity Board - Sri Lanka
- Africa Commodities Group - South Africa
- Wood Mackenzie - Singapore
- Manunggal Multi Energi - Indonesia
- London Commodity Brokers - England
- Directorate General of MIneral and Coal - Indonesia
- Formosa Plastics Group - Taiwan
- Indika Energy - Indonesia
- Bhatia International Limited - India
- Bukit Makmur.PT - Indonesia
- Oldendorff Carriers - Singapore
- GAC Shipping (India) Pvt Ltd
- Krishnapatnam Port Company Ltd. - India
- Economic Council, Georgia
- Bulk Trading Sa - Switzerland
- Edison Trading Spa - Italy
- Independent Power Producers Association of India
- Bharathi Cement Corporation - India
- Samtan Co., Ltd - South Korea
- Mercator Lines Limited - India
- Jindal Steel & Power Ltd - India
- New Zealand Coal & Carbon
- Renaissance Capital - South Africa
- Bhoruka Overseas - Indonesia
- Attock Cement Pakistan Limited
- Banpu Public Company Limited - Thailand
- Siam City Cement - Thailand
- Aditya Birla Group - India
- Simpson Spence & Young - Indonesia
- Salva Resources Pvt Ltd - India
- Kumho Petrochemical, South Korea
- Anglo American - United Kingdom
- South Luzon Thermal Energy Corporation
- Rashtriya Ispat Nigam Limited - India
- Heidelberg Cement - Germany
- Mercuria Energy - Indonesia
- Port Waratah Coal Services - Australia
- Petron Corporation, Philippines
- Indian Energy Exchange, India
- Commonwealth Bank - Australia
- Mintek Dendrill Indonesia
- Globalindo Alam Lestari - Indonesia
- Electricity Generating Authority of Thailand
- Central Electricity Authority - India
- Cement Manufacturers Association - India
- Medco Energi Mining Internasional
- Australian Commodity Traders Exchange
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Orica Australia Pty. Ltd.
- Barasentosa Lestari - Indonesia
- Global Business Power Corporation, Philippines
- Parry Sugars Refinery, India
- Asmin Koalindo Tuhup - Indonesia
- Antam Resourcindo - Indonesia
- IEA Clean Coal Centre - UK
- Makarim & Taira - Indonesia
- Sakthi Sugars Limited - India
- Cigading International Bulk Terminal - Indonesia
- Toyota Tsusho Corporation, Japan
- Eastern Energy - Thailand
- Baramulti Group, Indonesia
- Lanco Infratech Ltd - India
- Tata Chemicals Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Straits Asia Resources Limited - Singapore
- Bukit Baiduri Energy - Indonesia
- Georgia Ports Authority, United States
- Kartika Selabumi Mining - Indonesia
- Australian Coal Association
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- International Coal Ventures Pvt Ltd - India
- Romanian Commodities Exchange
- Borneo Indobara - Indonesia
- Minerals Council of Australia
- GVK Power & Infra Limited - India
- Alfred C Toepfer International GmbH - Germany
- Sinarmas Energy and Mining - Indonesia
- The Treasury - Australian Government
- Goldman Sachs - Singapore
- Wilmar Investment Holdings
- IHS Mccloskey Coal Group - USA
- Energy Link Ltd, New Zealand
- Chamber of Mines of South Africa
- Larsen & Toubro Limited - India
- Madhucon Powers Ltd - India
- Uttam Galva Steels Limited - India
- Kepco SPC Power Corporation, Philippines
- MS Steel International - UAE
- Ambuja Cements Ltd - India
- Orica Mining Services - Indonesia
- LBH Netherlands Bv - Netherlands
- Coal and Oil Company - UAE
- Thiess Contractors Indonesia
- Singapore Mercantile Exchange
- Sical Logistics Limited - India
- Jaiprakash Power Ventures ltd
- Pipit Mutiara Jaya. PT, Indonesia
- Dalmia Cement Bharat India
- Kohat Cement Company Ltd. - Pakistan
- Indo Tambangraya Megah - Indonesia
- Power Finance Corporation Ltd., India
- GMR Energy Limited - India
- Coastal Gujarat Power Limited - India
- Semirara Mining Corp, Philippines
- ASAPP Information Group - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Gujarat Electricity Regulatory Commission - India
- Central Java Power - Indonesia
- PTC India Limited - India
- PetroVietnam Power Coal Import and Supply Company
- India Bulls Power Limited - India
- Deloitte Consulting - India
- Bukit Asam (Persero) Tbk - Indonesia
- Metalloyd Limited - United Kingdom
- San Jose City I Power Corp, Philippines
- CNBM International Corporation - China
- TeaM Sual Corporation - Philippines
- The State Trading Corporation of India Ltd
- Neyveli Lignite Corporation Ltd, - India
- Standard Chartered Bank - UAE
- SMG Consultants - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Maheswari Brothers Coal Limited - India
- Parliament of New Zealand
- Bangladesh Power Developement Board
- European Bulk Services B.V. - Netherlands
- Sree Jayajothi Cements Limited - India
- OPG Power Generation Pvt Ltd - India
- Thai Mozambique Logistica
- Aboitiz Power Corporation - Philippines
- Vizag Seaport Private Limited - India
- Karaikal Port Pvt Ltd - India
- Intertek Mineral Services - Indonesia
- PowerSource Philippines DevCo
- Rio Tinto Coal - Australia
- Petrochimia International Co. Ltd.- Taiwan
- AsiaOL BioFuels Corp., Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Indonesian Coal Mining Association
- Binh Thuan Hamico - Vietnam
- Siam City Cement PLC, Thailand
- The University of Queensland
- Carbofer General Trading SA - India
- Ministry of Transport, Egypt
- Ministry of Finance - Indonesia
- Gujarat Sidhee Cement - India
- Indogreen Group - Indonesia
- Sarangani Energy Corporation, Philippines
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