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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, 09 June 20
BUNKER SUPPLY CONTRACTS - KEY CONSIDERATIONS FOR THE BUYER - GARD
KNOWLEDGE TO ELEVATE
Regardless of whether a buyer purchases fuel directly from physical suppliers or via brokers or traders and whether sale ...
Tuesday, 09 June 20
INDIA: COAL IMPORT DROPS BY 20% TO NEARLY 19 MILLION TONNES IN MAY, SAYS REPORT - HINDUSTAN TIMES
The country’s coal import dropped by 20 per cent to 18.93 million tonnes (MT) last month, industry data showed.
The government ...
Monday, 08 June 20
WOOD MACKENZIE: THE INDISPENSABLE OPEC+
Rumours of “the death of OPEC” have been circulating for almost as long as the organisation has existed. Just three years after the car ...
Monday, 08 June 20
CHINA'S COAL IMPORTS FALL NEARLY 20% IN MAY EVEN AS DEMAND RISES - REUTERS
China’s coal imports in May fell nearly 20% compared with a year earlier even as demand recovered at power plants and industrial users, custo ...
Monday, 08 June 20
JUNE 2020 INDONESIAN COAL PRICE REFERENCE HIT US$ 52.98 A TON, ITS LOWEST LEVEL SINCE AT LEAST AUGUST 2016
COALspot.com: The Ministry of Energy and Mineral Resources of the Republic of Indonesia has revised down again the benchmark price of Indonesian th ...
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- Bukit Makmur.PT - Indonesia
- Global Coal Blending Company Limited - Australia
- San Jose City I Power Corp, Philippines
- Formosa Plastics Group - Taiwan
- Anglo American - United Kingdom
- Vizag Seaport Private Limited - India
- IEA Clean Coal Centre - UK
- Mercuria Energy - Indonesia
- Australian Commodity Traders Exchange
- Singapore Mercantile Exchange
- Bulk Trading Sa - Switzerland
- Indo Tambangraya Megah - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Sakthi Sugars Limited - India
- Chettinad Cement Corporation Ltd - India
- Kartika Selabumi Mining - Indonesia
- Carbofer General Trading SA - India
- Petrochimia International Co. Ltd.- Taiwan
- Xindia Steels Limited - India
- London Commodity Brokers - England
- Mercator Lines Limited - India
- Tata Chemicals Ltd - India
- Essar Steel Hazira Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- SMG Consultants - Indonesia
- Metalloyd Limited - United Kingdom
- OPG Power Generation Pvt Ltd - India
- Romanian Commodities Exchange
- Gujarat Electricity Regulatory Commission - India
- ASAPP Information Group - India
- SN Aboitiz Power Inc, Philippines
- Thiess Contractors Indonesia
- Indogreen Group - Indonesia
- Georgia Ports Authority, United States
- CNBM International Corporation - China
- Cigading International Bulk Terminal - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Indian Energy Exchange, India
- Semirara Mining and Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Standard Chartered Bank - UAE
- Rashtriya Ispat Nigam Limited - India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Edison Trading Spa - Italy
- Renaissance Capital - South Africa
- Maheswari Brothers Coal Limited - India
- Malabar Cements Ltd - India
- Kideco Jaya Agung - Indonesia
- Simpson Spence & Young - Indonesia
- Economic Council, Georgia
- Baramulti Group, Indonesia
- Heidelberg Cement - Germany
- GMR Energy Limited - India
- Oldendorff Carriers - Singapore
- Bahari Cakrawala Sebuku - Indonesia
- Directorate Of Revenue Intelligence - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coal and Oil Company - UAE
- Krishnapatnam Port Company Ltd. - India
- Therma Luzon, Inc, Philippines
- Banpu Public Company Limited - Thailand
- Antam Resourcindo - Indonesia
- Indonesian Coal Mining Association
- Vijayanagar Sugar Pvt Ltd - India
- Timah Investasi Mineral - Indoneisa
- India Bulls Power Limited - India
- Pendopo Energi Batubara - Indonesia
- Sarangani Energy Corporation, Philippines
- PTC India Limited - India
- TNB Fuel Sdn Bhd - Malaysia
- Altura Mining Limited, Indonesia
- Savvy Resources Ltd - HongKong
- Planning Commission, India
- Global Business Power Corporation, Philippines
- Ministry of Transport, Egypt
- Iligan Light & Power Inc, Philippines
- PowerSource Philippines DevCo
- White Energy Company Limited
- Kalimantan Lumbung Energi - Indonesia
- Jindal Steel & Power Ltd - India
- Sical Logistics Limited - India
- European Bulk Services B.V. - Netherlands
- Karaikal Port Pvt Ltd - India
- Jaiprakash Power Ventures ltd
- Siam City Cement PLC, Thailand
- Agrawal Coal Company - India
- Coalindo Energy - Indonesia
- Energy Link Ltd, New Zealand
- Bhatia International Limited - India
- Eastern Coal Council - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- Medco Energi Mining Internasional
- Goldman Sachs - Singapore
- Kohat Cement Company Ltd. - Pakistan
- Billiton Holdings Pty Ltd - Australia
- Lanco Infratech Ltd - India
- Thai Mozambique Logistica
- Deloitte Consulting - India
- VISA Power Limited - India
- Globalindo Alam Lestari - Indonesia
- Kumho Petrochemical, South Korea
- Ministry of Finance - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- PNOC Exploration Corporation - Philippines
- GAC Shipping (India) Pvt Ltd
- South Luzon Thermal Energy Corporation
- Aditya Birla Group - India
- Bhushan Steel Limited - India
- Sree Jayajothi Cements Limited - India
- Electricity Authority, New Zealand
- Bhoruka Overseas - Indonesia
- Cement Manufacturers Association - India
- Miang Besar Coal Terminal - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Vedanta Resources Plc - India
- Bangladesh Power Developement Board
- TeaM Sual Corporation - Philippines
- LBH Netherlands Bv - Netherlands
- Madhucon Powers Ltd - India
- ICICI Bank Limited - India
- Makarim & Taira - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Larsen & Toubro Limited - India
- Siam City Cement - Thailand
- Central Electricity Authority - India
- Power Finance Corporation Ltd., India
- Wood Mackenzie - Singapore
- Wilmar Investment Holdings
- Parry Sugars Refinery, India
- Semirara Mining Corp, Philippines
- Attock Cement Pakistan Limited
- Kepco SPC Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Tamil Nadu electricity Board
- GN Power Mariveles Coal Plant, Philippines
- McConnell Dowell - Australia
- Sindya Power Generating Company Private Ltd
- CIMB Investment Bank - Malaysia
- Posco Energy - South Korea
- MS Steel International - UAE
- Parliament of New Zealand
- Indika Energy - Indonesia
- Sojitz Corporation - Japan
- Uttam Galva Steels Limited - India
- Alfred C Toepfer International GmbH - Germany
- Riau Bara Harum - Indonesia
- Ambuja Cements Ltd - India
- Australian Coal Association
- Orica Australia Pty. Ltd.
- Bukit Baiduri Energy - Indonesia
- Central Java Power - Indonesia
- Intertek Mineral Services - Indonesia
- Minerals Council of Australia
- Kobexindo Tractors - Indoneisa
- Latin American Coal - Colombia
- SMC Global Power, Philippines
- Kapuas Tunggal Persada - Indonesia
- Indian Oil Corporation Limited
- Coastal Gujarat Power Limited - India
- Commonwealth Bank - Australia
- Barasentosa Lestari - Indonesia
- The State Trading Corporation of India Ltd
- The Treasury - Australian Government
- Aboitiz Power Corporation - Philippines
- Manunggal Multi Energi - Indonesia
- Energy Development Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Price Waterhouse Coopers - Russia
- Gujarat Sidhee Cement - India
- Interocean Group of Companies - India
- Grasim Industreis Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- Straits Asia Resources Limited - Singapore
- Directorate General of MIneral and Coal - Indonesia
- New Zealand Coal & Carbon
- Africa Commodities Group - South Africa
- Ministry of Mines - Canada
- Binh Thuan Hamico - Vietnam
- Meralco Power Generation, Philippines
- Mintek Dendrill Indonesia
- Videocon Industries ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Marubeni Corporation - India
- Mjunction Services Limited - India
- Ind-Barath Power Infra Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Electricity Generating Authority of Thailand
- Karbindo Abesyapradhi - Indoneisa
- Samtan Co., Ltd - South Korea
- Orica Mining Services - Indonesia
- Star Paper Mills Limited - India
- Global Green Power PLC Corporation, Philippines
- Port Waratah Coal Services - Australia
- Rio Tinto Coal - Australia
- Bharathi Cement Corporation - India
- Neyveli Lignite Corporation Ltd, - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Sinarmas Energy and Mining - Indonesia
- International Coal Ventures Pvt Ltd - India
- Eastern Energy - Thailand
- Dalmia Cement Bharat India
- Petron Corporation, Philippines
- Trasteel International SA, Italy
- Salva Resources Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- AsiaOL BioFuels Corp., Philippines
- The University of Queensland
- Merrill Lynch Commodities Europe
- Chamber of Mines of South Africa
- GVK Power & Infra Limited - India
- Borneo Indobara - Indonesia
- Toyota Tsusho Corporation, Japan
- IHS Mccloskey Coal Group - USA
- Independent Power Producers Association of India
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