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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, 04 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 ...
Thursday, 04 June 20
DON'T FORGET THE REAL PURPOSE OF RISK ASSESSMENTS - GARD
KNOWLEDGE TO ELEVATE
When doing a risk assessment, we often overcomplicate it and forget its real purpose.
Rather than ensuring that crew ...
Wednesday, 03 June 20
MARKET INSIGHT - INTERMODAL
Once again shipping is about to venture into uncharted waters and before the challenges of the past decade are forgotten, shipowners will have to o ...
Tuesday, 02 June 20
KOSPO LOOKING FOR 80000 MT OF 4200 NCV COAL FOR JULY
COALspot.com: Korea Southern Power Co., Ltd. (KOSPO) has issued an International tender for 80,000 Metric Tons (MT) 4200 NCV coal for 12 - 21, July ...
Tuesday, 02 June 20
INDONESIAN COAL MINER BUMI RESOURCES Q1 OUTPUT UP 5% - REUTERS
Indonesia’s largest coal miner Bumi Resources posted a 5% increase in first-quarter output at 20.8 million tonnes, the company said in a stat ...
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- SN Aboitiz Power Inc, Philippines
- Marubeni Corporation - India
- Kumho Petrochemical, South Korea
- Miang Besar Coal Terminal - Indonesia
- Aditya Birla Group - India
- Star Paper Mills Limited - India
- Sakthi Sugars Limited - India
- ICICI Bank Limited - India
- Bukit Makmur.PT - Indonesia
- GMR Energy Limited - India
- Wood Mackenzie - Singapore
- Orica Mining Services - Indonesia
- Wilmar Investment Holdings
- Ambuja Cements Ltd - India
- Ministry of Mines - Canada
- Ministry of Transport, Egypt
- Asmin Koalindo Tuhup - Indonesia
- Standard Chartered Bank - UAE
- Cigading International Bulk Terminal - Indonesia
- Chamber of Mines of South Africa
- PTC India Limited - India
- GVK Power & Infra Limited - India
- Aboitiz Power Corporation - Philippines
- CIMB Investment Bank - Malaysia
- PetroVietnam Power Coal Import and Supply Company
- OPG Power Generation Pvt Ltd - India
- Gujarat Sidhee Cement - India
- Parliament of New Zealand
- Siam City Cement - Thailand
- Thiess Contractors Indonesia
- ASAPP Information Group - India
- Indian Energy Exchange, India
- Neyveli Lignite Corporation Ltd, - India
- Antam Resourcindo - Indonesia
- Dalmia Cement Bharat India
- Essar Steel Hazira Ltd - India
- Indo Tambangraya Megah - Indonesia
- Pendopo Energi Batubara - Indonesia
- Kideco Jaya Agung - Indonesia
- The State Trading Corporation of India Ltd
- Gujarat Electricity Regulatory Commission - India
- Indian Oil Corporation Limited
- Petrochimia International Co. Ltd.- Taiwan
- Port Waratah Coal Services - Australia
- Planning Commission, India
- Kalimantan Lumbung Energi - Indonesia
- Samtan Co., Ltd - South Korea
- The Treasury - Australian Government
- Ceylon Electricity Board - Sri Lanka
- Maharashtra Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Timah Investasi Mineral - Indoneisa
- Kartika Selabumi Mining - Indonesia
- Meralco Power Generation, Philippines
- Deloitte Consulting - India
- Bukit Asam (Persero) Tbk - Indonesia
- Edison Trading Spa - Italy
- Directorate General of MIneral and Coal - Indonesia
- TeaM Sual Corporation - Philippines
- Gujarat Mineral Development Corp Ltd - India
- Karaikal Port Pvt Ltd - India
- Coalindo Energy - Indonesia
- Independent Power Producers Association of India
- Electricity Generating Authority of Thailand
- Meenaskhi Energy Private Limited - India
- European Bulk Services B.V. - Netherlands
- Iligan Light & Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- VISA Power Limited - India
- Tamil Nadu electricity Board
- Bhatia International Limited - India
- Energy Development Corp, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Bharathi Cement Corporation - India
- Metalloyd Limited - United Kingdom
- Jorong Barutama Greston.PT - Indonesia
- Thai Mozambique Logistica
- Economic Council, Georgia
- Kobexindo Tractors - Indoneisa
- SMG Consultants - Indonesia
- Eastern Energy - Thailand
- PNOC Exploration Corporation - Philippines
- Interocean Group of Companies - India
- Mjunction Services Limited - India
- Sical Logistics Limited - India
- McConnell Dowell - Australia
- Semirara Mining Corp, Philippines
- Globalindo Alam Lestari - Indonesia
- Merrill Lynch Commodities Europe
- Barasentosa Lestari - Indonesia
- Goldman Sachs - Singapore
- Malabar Cements Ltd - India
- Renaissance Capital - South Africa
- Global Business Power Corporation, Philippines
- Energy Link Ltd, New Zealand
- Bahari Cakrawala Sebuku - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- GAC Shipping (India) Pvt Ltd
- IEA Clean Coal Centre - UK
- Georgia Ports Authority, United States
- Agrawal Coal Company - India
- Madhucon Powers Ltd - India
- India Bulls Power Limited - India
- Australian Commodity Traders Exchange
- Tata Chemicals Ltd - India
- Parry Sugars Refinery, India
- Formosa Plastics Group - Taiwan
- Vedanta Resources Plc - India
- AsiaOL BioFuels Corp., Philippines
- Orica Australia Pty. Ltd.
- Xindia Steels Limited - India
- LBH Netherlands Bv - Netherlands
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bhoruka Overseas - Indonesia
- Kepco SPC Power Corporation, Philippines
- Power Finance Corporation Ltd., India
- Jaiprakash Power Ventures ltd
- Sree Jayajothi Cements Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Vizag Seaport Private Limited - India
- Kapuas Tunggal Persada - Indonesia
- Savvy Resources Ltd - HongKong
- The University of Queensland
- Billiton Holdings Pty Ltd - Australia
- Siam City Cement PLC, Thailand
- Heidelberg Cement - Germany
- Manunggal Multi Energi - Indonesia
- Larsen & Toubro Limited - India
- Central Java Power - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- MS Steel International - UAE
- Indika Energy - Indonesia
- Mercator Lines Limited - India
- Coal and Oil Company - UAE
- Rashtriya Ispat Nigam Limited - India
- Sinarmas Energy and Mining - Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Commonwealth Bank - Australia
- Mercuria Energy - Indonesia
- Ind-Barath Power Infra Limited - India
- Bhushan Steel Limited - India
- Krishnapatnam Port Company Ltd. - India
- Leighton Contractors Pty Ltd - Australia
- White Energy Company Limited
- Maheswari Brothers Coal Limited - India
- Cement Manufacturers Association - India
- Grasim Industreis Ltd - India
- Makarim & Taira - Indonesia
- Bulk Trading Sa - Switzerland
- Trasteel International SA, Italy
- San Jose City I Power Corp, Philippines
- Semirara Mining and Power Corporation, Philippines
- Jindal Steel & Power Ltd - India
- Africa Commodities Group - South Africa
- Altura Mining Limited, Indonesia
- Oldendorff Carriers - Singapore
- Mintek Dendrill Indonesia
- Ministry of Finance - Indonesia
- Banpu Public Company Limited - Thailand
- Intertek Mineral Services - Indonesia
- Central Electricity Authority - India
- PowerSource Philippines DevCo
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Baramulti Group, Indonesia
- Bayan Resources Tbk. - Indonesia
- Petron Corporation, Philippines
- Medco Energi Mining Internasional
- Eastern Coal Council - USA
- Directorate Of Revenue Intelligence - India
- Uttam Galva Steels Limited - India
- Lanco Infratech Ltd - India
- Chettinad Cement Corporation Ltd - India
- Sojitz Corporation - Japan
- Riau Bara Harum - Indonesia
- Kaltim Prima Coal - Indonesia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Rio Tinto Coal - Australia
- Therma Luzon, Inc, Philippines
- SMC Global Power, Philippines
- London Commodity Brokers - England
- Carbofer General Trading SA - India
- Sindya Power Generating Company Private Ltd
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- CNBM International Corporation - China
- Holcim Trading Pte Ltd - Singapore
- Minerals Council of Australia
- International Coal Ventures Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Bukit Baiduri Energy - Indonesia
- Straits Asia Resources Limited - Singapore
- Electricity Authority, New Zealand
- Singapore Mercantile Exchange
- Australian Coal Association
- Latin American Coal - Colombia
- Pipit Mutiara Jaya. PT, Indonesia
- Sarangani Energy Corporation, Philippines
- Global Green Power PLC Corporation, Philippines
- Indonesian Coal Mining Association
- Posco Energy - South Korea
- Indogreen Group - Indonesia
- Price Waterhouse Coopers - Russia
- IHS Mccloskey Coal Group - USA
- Kohat Cement Company Ltd. - Pakistan
- Videocon Industries ltd - India
- Salva Resources Pvt Ltd - India
- Bangladesh Power Developement Board
- Attock Cement Pakistan Limited
- Alfred C Toepfer International GmbH - Germany
- Toyota Tsusho Corporation, Japan
- Borneo Indobara - Indonesia
- Romanian Commodities Exchange
- New Zealand Coal & Carbon
- Anglo American - United Kingdom
- Global Coal Blending Company Limited - Australia
- South Luzon Thermal Energy Corporation
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