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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, 02 June 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX DOWN 0.86 PCT - XINHUA
China Taiyuan coal transaction price index stood at 123.95 points Monday, down 0.86 percent week on week.
The index, released by Chi ...
Tuesday, 02 June 20
THE HISTORIC DECLINE OF US COAL - WOOD MACKENZIE
The first commercial power plant in the US was Thomas Edison’s coal-fired Pearl Street station in lower Manhattan, which started operating in ...
Tuesday, 02 June 20
COAL INDIA'S MAY SALES DRIVEN SHARPLY LOWER BY SLUMP IN POWER DEMAND - REUTER
Coal India’s sales fell 23.3% in May as utilities refrained from purchases amid record stockpiles and tepid demand because of a nationwide lo ...
Tuesday, 02 June 20
TUAH TURANGGA AGUNG RECORDED 4.54 MILLION TONS OF COAL SALES IN THE FIRST FOUR MONTHS OF 2020
PT United Tractors Tbk through its subsidiary, PT Tuah Turangga Agung recorded 4.54 million tons of coal sales in the first four months of 2020, up ...
Tuesday, 02 June 20
SOURING SINO-AUSTRALIA TRADE RELATIONS - BALTIC EXCHANGE
Cooling relations between the commodity powerhouses of China and Australia may point to trade troubles ahead when the world emerges from the Covid- ...
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- Globalindo Alam Lestari - Indonesia
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- The State Trading Corporation of India Ltd
- Makarim & Taira - Indonesia
- Singapore Mercantile Exchange
- Ministry of Mines - Canada
- Wood Mackenzie - Singapore
- Rashtriya Ispat Nigam Limited - India
- Ministry of Finance - Indonesia
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- White Energy Company Limited
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- Commonwealth Bank - Australia
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- London Commodity Brokers - England
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- Indo Tambangraya Megah - Indonesia
- CNBM International Corporation - China
- Parliament of New Zealand
- India Bulls Power Limited - India
- Latin American Coal - Colombia
- Georgia Ports Authority, United States
- Sical Logistics Limited - India
- Baramulti Group, Indonesia
- Vizag Seaport Private Limited - India
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- Eastern Coal Council - USA
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- Bulk Trading Sa - Switzerland
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- Parry Sugars Refinery, India
- Simpson Spence & Young - Indonesia
- Gujarat Electricity Regulatory Commission - India
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- Directorate General of MIneral and Coal - Indonesia
- Africa Commodities Group - South Africa
- LBH Netherlands Bv - Netherlands
- Bhatia International Limited - India
- Bukit Baiduri Energy - Indonesia
- Minerals Council of Australia
- Tata Chemicals Ltd - India
- IHS Mccloskey Coal Group - USA
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- TeaM Sual Corporation - Philippines
- Altura Mining Limited, Indonesia
- Karbindo Abesyapradhi - Indoneisa
- PTC India Limited - India
- Electricity Authority, New Zealand
- Economic Council, Georgia
- Bayan Resources Tbk. - Indonesia
- Star Paper Mills Limited - India
- Edison Trading Spa - Italy
- McConnell Dowell - Australia
- Leighton Contractors Pty Ltd - Australia
- Kobexindo Tractors - Indoneisa
- Carbofer General Trading SA - India
- Chamber of Mines of South Africa
- Global Business Power Corporation, Philippines
- Global Coal Blending Company Limited - Australia
- Medco Energi Mining Internasional
- Power Finance Corporation Ltd., India
- Straits Asia Resources Limited - Singapore
- Independent Power Producers Association of India
- Kohat Cement Company Ltd. - Pakistan
- Posco Energy - South Korea
- Renaissance Capital - South Africa
- Riau Bara Harum - Indonesia
- Romanian Commodities Exchange
- Petron Corporation, Philippines
- Bharathi Cement Corporation - India
- Pipit Mutiara Jaya. PT, Indonesia
- IEA Clean Coal Centre - UK
- Mercator Lines Limited - India
- Videocon Industries ltd - India
- Meralco Power Generation, Philippines
- Directorate Of Revenue Intelligence - India
- Port Waratah Coal Services - Australia
- GAC Shipping (India) Pvt Ltd
- Sree Jayajothi Cements Limited - India
- Antam Resourcindo - Indonesia
- Energy Link Ltd, New Zealand
- Lanco Infratech Ltd - India
- AsiaOL BioFuels Corp., Philippines
- Goldman Sachs - Singapore
- Australian Commodity Traders Exchange
- Billiton Holdings Pty Ltd - Australia
- Kaltim Prima Coal - Indonesia
- Price Waterhouse Coopers - Russia
- Malabar Cements Ltd - India
- Xindia Steels Limited - India
- International Coal Ventures Pvt Ltd - India
- Bhushan Steel Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Interocean Group of Companies - India
- Planning Commission, India
- Metalloyd Limited - United Kingdom
- Cement Manufacturers Association - India
- Global Green Power PLC Corporation, Philippines
- Toyota Tsusho Corporation, Japan
- Sarangani Energy Corporation, Philippines
- Gujarat Mineral Development Corp Ltd - India
- Petrochimia International Co. Ltd.- Taiwan
- Central Electricity Authority - India
- ASAPP Information Group - India
- Thai Mozambique Logistica
- Grasim Industreis Ltd - India
- Attock Cement Pakistan Limited
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- Siam City Cement PLC, Thailand
- CIMB Investment Bank - Malaysia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Sinarmas Energy and Mining - Indonesia
- New Zealand Coal & Carbon
- MS Steel International - UAE
- Madhucon Powers Ltd - India
- TNB Fuel Sdn Bhd - Malaysia
- Iligan Light & Power Inc, Philippines
- South Luzon Thermal Energy Corporation
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Orica Mining Services - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Holcim Trading Pte Ltd - Singapore
- Binh Thuan Hamico - Vietnam
- Karaikal Port Pvt Ltd - India
- Heidelberg Cement - Germany
- Sojitz Corporation - Japan
- Thiess Contractors Indonesia
- Dalmia Cement Bharat India
- VISA Power Limited - India
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- Savvy Resources Ltd - HongKong
- Timah Investasi Mineral - Indoneisa
- Bangladesh Power Developement Board
- SN Aboitiz Power Inc, Philippines
- Indian Oil Corporation Limited
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- Orica Australia Pty. Ltd.
- Bank of Tokyo Mitsubishi UFJ Ltd
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- Offshore Bulk Terminal Pte Ltd, Singapore
- Larsen & Toubro Limited - India
- Chettinad Cement Corporation Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- Kumho Petrochemical, South Korea
- Manunggal Multi Energi - Indonesia
- Pendopo Energi Batubara - Indonesia
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- Coal and Oil Company - UAE
- Aboitiz Power Corporation - Philippines
- Energy Development Corp, Philippines
- ICICI Bank Limited - India
- Semirara Mining and Power Corporation, Philippines
- European Bulk Services B.V. - Netherlands
- Ministry of Transport, Egypt
- GMR Energy Limited - India
- Eastern Energy - Thailand
- GVK Power & Infra Limited - India
- Miang Besar Coal Terminal - Indonesia
- Jaiprakash Power Ventures ltd
- Bukit Asam (Persero) Tbk - Indonesia
- OPG Power Generation Pvt Ltd - India
- Maharashtra Electricity Regulatory Commission - India
- PetroVietnam Power Coal Import and Supply Company
- Central Java Power - Indonesia
- Coastal Gujarat Power Limited - India
- Banpu Public Company Limited - Thailand
- Indonesian Coal Mining Association
- Australian Coal Association
- Aditya Birla Group - India
- Bahari Cakrawala Sebuku - Indonesia
- Standard Chartered Bank - UAE
- Samtan Co., Ltd - South Korea
- Deloitte Consulting - India
- Kartika Selabumi Mining - Indonesia
- SMG Consultants - Indonesia
- The Treasury - Australian Government
- Merrill Lynch Commodities Europe
- Kideco Jaya Agung - Indonesia
- Mjunction Services Limited - India
- Wilmar Investment Holdings
- Trasteel International SA, Italy
- Borneo Indobara - Indonesia
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