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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, 07 June 20
A SCRUBBER FITTED 61,000 ULTRAMAX WAS FIXED DELIVERY PHILIPPINES TRIP VIA SOUTH AFRICA REDELIVERY VIETNAM AT $9,500 - BALTIC BRIEFING
Capesize
The small flicker of hope at the beginning of this week has kindled a small fire under the Capesize market. At a paltry $3369 from the ...
Saturday, 06 June 20
KOREA SOUTH-EAST POWER CO INVITED COAL BIDS FOR MIN 5600 NCV COAL
COALspot.com: South Korea’s KOREA SOUTH-EAST POWER CO., LTD. (KOEN) has issued an international tender for 270,000 Tons (MT) min. 5600 NCV co ...
Friday, 05 June 20
COAL INDIA ESTIMATES PRODUCTION GROWTH BY OVERBURDEN REMOVAL - FINANCIAL EXPRESS
PSU miner Coal India (CIL) has now limited mining only to Overburden Removal (OBR) with falling demand of coal. The mining behemoth is now keeping ...
Friday, 05 June 20
U.S. SANCTIONS COMPLIANCE GUIDANCE RELEASED FOR THE GLOBAL MARITIME, ENERGY AND METALS SECTORS - AKIN GUMP
Key Points
On May 14, 2020, OFAC, the Department of State and the U.S. Coast Guard jointly released guidance for persons involved in the ma ...
Friday, 05 June 20
IN THE FIRST 5 MONTHS OF 2020 AUSTRALIA SHIPPED 6.8 MLN TONNES TO VIETNAM - BANCHERO COSTA
In the first 5 months of 2020, global seaborne coal trade declined by as much as -8% year-on-year, according to vessel tracking data from Ref ...
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- Anglo American - United Kingdom
- Kepco SPC Power Corporation, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Sindya Power Generating Company Private Ltd
- Jaiprakash Power Ventures ltd
- Ind-Barath Power Infra Limited - India
- Leighton Contractors Pty Ltd - Australia
- Posco Energy - South Korea
- Standard Chartered Bank - UAE
- Petrochimia International Co. Ltd.- Taiwan
- GAC Shipping (India) Pvt Ltd
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coalindo Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Heidelberg Cement - Germany
- Toyota Tsusho Corporation, Japan
- LBH Netherlands Bv - Netherlands
- Eastern Coal Council - USA
- Latin American Coal - Colombia
- Vedanta Resources Plc - India
- Videocon Industries ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bukit Makmur.PT - Indonesia
- Bangladesh Power Developement Board
- Barasentosa Lestari - Indonesia
- Globalindo Alam Lestari - Indonesia
- Central Java Power - Indonesia
- Chamber of Mines of South Africa
- Malabar Cements Ltd - India
- Ministry of Finance - Indonesia
- Manunggal Multi Energi - Indonesia
- Minerals Council of Australia
- Riau Bara Harum - Indonesia
- Grasim Industreis Ltd - India
- Petron Corporation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Ministry of Transport, Egypt
- Altura Mining Limited, Indonesia
- VISA Power Limited - India
- Thiess Contractors Indonesia
- Eastern Energy - Thailand
- Meralco Power Generation, Philippines
- Directorate Of Revenue Intelligence - India
- Iligan Light & Power Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Australian Coal Association
- Siam City Cement PLC, Thailand
- Formosa Plastics Group - Taiwan
- Ceylon Electricity Board - Sri Lanka
- Indika Energy - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Maharashtra Electricity Regulatory Commission - India
- Bukit Asam (Persero) Tbk - Indonesia
- Antam Resourcindo - Indonesia
- Kobexindo Tractors - Indoneisa
- Bayan Resources Tbk. - Indonesia
- India Bulls Power Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Rashtriya Ispat Nigam Limited - India
- Maheswari Brothers Coal Limited - India
- Miang Besar Coal Terminal - Indonesia
- Mercuria Energy - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Lanco Infratech Ltd - India
- Pendopo Energi Batubara - Indonesia
- Kideco Jaya Agung - Indonesia
- Gujarat Sidhee Cement - India
- Attock Cement Pakistan Limited
- Semirara Mining Corp, Philippines
- Orica Australia Pty. Ltd.
- Krishnapatnam Port Company Ltd. - India
- Chettinad Cement Corporation Ltd - India
- Singapore Mercantile Exchange
- IHS Mccloskey Coal Group - USA
- Global Coal Blending Company Limited - Australia
- Coal and Oil Company - UAE
- Trasteel International SA, Italy
- Goldman Sachs - Singapore
- South Luzon Thermal Energy Corporation
- Therma Luzon, Inc, Philippines
- Agrawal Coal Company - India
- The University of Queensland
- IEA Clean Coal Centre - UK
- Price Waterhouse Coopers - Russia
- McConnell Dowell - Australia
- Makarim & Taira - Indonesia
- Global Green Power PLC Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Bharathi Cement Corporation - India
- CNBM International Corporation - China
- PTC India Limited - India
- Bhushan Steel Limited - India
- Sree Jayajothi Cements Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Samtan Co., Ltd - South Korea
- White Energy Company Limited
- Mintek Dendrill Indonesia
- Uttam Galva Steels Limited - India
- Sical Logistics Limited - India
- Parry Sugars Refinery, India
- Bulk Trading Sa - Switzerland
- Jindal Steel & Power Ltd - India
- Metalloyd Limited - United Kingdom
- Global Business Power Corporation, Philippines
- Siam City Cement - Thailand
- Wood Mackenzie - Singapore
- Mercator Lines Limited - India
- Directorate General of MIneral and Coal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Electricity Generating Authority of Thailand
- GMR Energy Limited - India
- San Jose City I Power Corp, Philippines
- Kaltim Prima Coal - Indonesia
- Commonwealth Bank - Australia
- Deloitte Consulting - India
- SN Aboitiz Power Inc, Philippines
- Orica Mining Services - Indonesia
- Vizag Seaport Private Limited - India
- PNOC Exploration Corporation - Philippines
- Wilmar Investment Holdings
- AsiaOL BioFuels Corp., Philippines
- Ministry of Mines - Canada
- Vijayanagar Sugar Pvt Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bhatia International Limited - India
- Central Electricity Authority - India
- Kalimantan Lumbung Energi - Indonesia
- Indo Tambangraya Megah - Indonesia
- Kumho Petrochemical, South Korea
- Electricity Authority, New Zealand
- CIMB Investment Bank - Malaysia
- Oldendorff Carriers - Singapore
- Edison Trading Spa - Italy
- ASAPP Information Group - India
- Sakthi Sugars Limited - India
- Renaissance Capital - South Africa
- Karaikal Port Pvt Ltd - India
- The State Trading Corporation of India Ltd
- OPG Power Generation Pvt Ltd - India
- Ambuja Cements Ltd - India
- Bhoruka Overseas - Indonesia
- SMG Consultants - Indonesia
- Economic Council, Georgia
- Indian Energy Exchange, India
- Australian Commodity Traders Exchange
- Africa Commodities Group - South Africa
- Aditya Birla Group - India
- Marubeni Corporation - India
- Medco Energi Mining Internasional
- PowerSource Philippines DevCo
- Offshore Bulk Terminal Pte Ltd, Singapore
- Parliament of New Zealand
- Borneo Indobara - Indonesia
- European Bulk Services B.V. - Netherlands
- New Zealand Coal & Carbon
- Gujarat Mineral Development Corp Ltd - India
- Aboitiz Power Corporation - Philippines
- Dalmia Cement Bharat India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Banpu Public Company Limited - Thailand
- Thai Mozambique Logistica
- Cement Manufacturers Association - India
- SMC Global Power, Philippines
- Larsen & Toubro Limited - India
- Savvy Resources Ltd - HongKong
- Carbofer General Trading SA - India
- Sojitz Corporation - Japan
- Georgia Ports Authority, United States
- Binh Thuan Hamico - Vietnam
- Simpson Spence & Young - Indonesia
- Star Paper Mills Limited - India
- Merrill Lynch Commodities Europe
- Port Waratah Coal Services - Australia
- Independent Power Producers Association of India
- Indogreen Group - Indonesia
- Holcim Trading Pte Ltd - Singapore
- Tata Chemicals Ltd - India
- Bukit Baiduri Energy - Indonesia
- Indonesian Coal Mining Association
- Planning Commission, India
- Kapuas Tunggal Persada - Indonesia
- The Treasury - Australian Government
- Romanian Commodities Exchange
- Sarangani Energy Corporation, Philippines
- GVK Power & Infra Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Madhucon Powers Ltd - India
- Baramulti Group, Indonesia
- Rio Tinto Coal - Australia
- Straits Asia Resources Limited - Singapore
- Xindia Steels Limited - India
- Power Finance Corporation Ltd., India
- Essar Steel Hazira Ltd - India
- Semirara Mining and Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Coastal Gujarat Power Limited - India
- Cigading International Bulk Terminal - Indonesia
- Asmin Koalindo Tuhup - Indonesia
- Interocean Group of Companies - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- International Coal Ventures Pvt Ltd - India
- Meenaskhi Energy Private Limited - India
- Tamil Nadu electricity Board
- MS Steel International - UAE
- London Commodity Brokers - England
- ICICI Bank Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Timah Investasi Mineral - Indoneisa
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Energy Development Corp, Philippines
- TeaM Sual Corporation - Philippines
- Alfred C Toepfer International GmbH - Germany
- Salva Resources Pvt Ltd - India
- Mjunction Services Limited - India
- Kartika Selabumi Mining - Indonesia
- Indian Oil Corporation Limited
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