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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 ...
Monday, 01 June 20
SUPRAMAX: IN SOUTH EAST ASIA RATES TRADED SIDEWAYS - BALTIC BRIEFING
Capesize
A sober end to the week, with the market seemingly ready for the weekend. After a steady week of rate declines a small flurry of Atlan ...
Friday, 29 May 20
COVID-19: COAL SUPPLY BY CIL TO POWER SECTOR DIPS 22% TO 32 MT IN APRIL DUE TO DEMAND SLUMP - PTI
Over 95% of CIL’s production comes from its 171 open cast mines.
The supply of coal to the power sector by state-owned Coal In ...
Friday, 29 May 20
AUSTRALIA'S NEW HOPE WARNS OF HIT FROM COAL PRICE SLUMP - REUTERS
Australia’s New Hope Corp Ltd said on Thursday that a sudden drop in thermal coal prices and lower output from its Queensland operations woul ...
Friday, 29 May 20
GOVT MAY LAUNCH COAL BLOCKS AUCTION PROCESS UNDER COMMERCIAL MINING ON JUN 11 - PTI
The Centre is likely to launch the process of coal blocks auction under commercial mining on June 11 and around 50 mines are expected to go under t ...
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- Global Coal Blending Company Limited - Australia
- Interocean Group of Companies - India
- Romanian Commodities Exchange
- Timah Investasi Mineral - Indoneisa
- Semirara Mining and Power Corporation, Philippines
- Tamil Nadu electricity Board
- Salva Resources Pvt Ltd - India
- GVK Power & Infra Limited - India
- The Treasury - Australian Government
- ICICI Bank Limited - India
- LBH Netherlands Bv - Netherlands
- Orica Mining Services - Indonesia
- Petron Corporation, Philippines
- Essar Steel Hazira Ltd - India
- Bayan Resources Tbk. - Indonesia
- Global Green Power PLC Corporation, Philippines
- Wilmar Investment Holdings
- Bukit Baiduri Energy - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Petrochimia International Co. Ltd.- Taiwan
- CIMB Investment Bank - Malaysia
- Maheswari Brothers Coal Limited - India
- Gujarat Mineral Development Corp Ltd - India
- Chettinad Cement Corporation Ltd - India
- Marubeni Corporation - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Jorong Barutama Greston.PT - Indonesia
- Electricity Authority, New Zealand
- AsiaOL BioFuels Corp., Philippines
- Commonwealth Bank - Australia
- Asmin Koalindo Tuhup - Indonesia
- Thiess Contractors Indonesia
- Coalindo Energy - Indonesia
- Bukit Makmur.PT - Indonesia
- Orica Australia Pty. Ltd.
- Karaikal Port Pvt Ltd - India
- Deloitte Consulting - India
- Mercuria Energy - Indonesia
- Trasteel International SA, Italy
- GN Power Mariveles Coal Plant, Philippines
- CNBM International Corporation - China
- Energy Development Corp, Philippines
- Bharathi Cement Corporation - India
- Simpson Spence & Young - Indonesia
- Malabar Cements Ltd - India
- Lanco Infratech Ltd - India
- Energy Link Ltd, New Zealand
- Georgia Ports Authority, United States
- Thai Mozambique Logistica
- Offshore Bulk Terminal Pte Ltd, Singapore
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Pipit Mutiara Jaya. PT, Indonesia
- Miang Besar Coal Terminal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Indogreen Group - Indonesia
- Mintek Dendrill Indonesia
- Metalloyd Limited - United Kingdom
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Latin American Coal - Colombia
- Therma Luzon, Inc, Philippines
- Power Finance Corporation Ltd., India
- Independent Power Producers Association of India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Vedanta Resources Plc - India
- Holcim Trading Pte Ltd - Singapore
- Chamber of Mines of South Africa
- European Bulk Services B.V. - Netherlands
- Makarim & Taira - Indonesia
- Oldendorff Carriers - Singapore
- Neyveli Lignite Corporation Ltd, - India
- Baramulti Group, Indonesia
- Cement Manufacturers Association - India
- Uttam Galva Steels Limited - India
- India Bulls Power Limited - India
- London Commodity Brokers - England
- ASAPP Information Group - India
- Renaissance Capital - South Africa
- Bhushan Steel Limited - India
- Mercator Lines Limited - India
- Xindia Steels Limited - India
- Anglo American - United Kingdom
- Gujarat Sidhee Cement - India
- Coal and Oil Company - UAE
- Grasim Industreis Ltd - India
- VISA Power Limited - India
- San Jose City I Power Corp, Philippines
- Rashtriya Ispat Nigam Limited - India
- Borneo Indobara - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Australian Coal Association
- Aboitiz Power Corporation - Philippines
- Gujarat Electricity Regulatory Commission - India
- South Luzon Thermal Energy Corporation
- Videocon Industries ltd - India
- Antam Resourcindo - Indonesia
- GAC Shipping (India) Pvt Ltd
- Jaiprakash Power Ventures ltd
- Standard Chartered Bank - UAE
- Binh Thuan Hamico - Vietnam
- Edison Trading Spa - Italy
- Formosa Plastics Group - Taiwan
- Bangladesh Power Developement Board
- Wood Mackenzie - Singapore
- Central Electricity Authority - India
- Meralco Power Generation, Philippines
- Kaltim Prima Coal - Indonesia
- Dalmia Cement Bharat India
- Coastal Gujarat Power Limited - India
- Bhatia International Limited - India
- Toyota Tsusho Corporation, Japan
- Samtan Co., Ltd - South Korea
- New Zealand Coal & Carbon
- Sakthi Sugars Limited - India
- Riau Bara Harum - Indonesia
- Sree Jayajothi Cements Limited - India
- Billiton Holdings Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- Siam City Cement - Thailand
- TNB Fuel Sdn Bhd - Malaysia
- The University of Queensland
- Medco Energi Mining Internasional
- Maharashtra Electricity Regulatory Commission - India
- Krishnapatnam Port Company Ltd. - India
- Eastern Energy - Thailand
- Kideco Jaya Agung - Indonesia
- Central Java Power - Indonesia
- PTC India Limited - India
- PetroVietnam Power Coal Import and Supply Company
- Bulk Trading Sa - Switzerland
- The State Trading Corporation of India Ltd
- Posco Energy - South Korea
- Directorate Of Revenue Intelligence - India
- Minerals Council of Australia
- Rio Tinto Coal - Australia
- TeaM Sual Corporation - Philippines
- Star Paper Mills Limited - India
- OPG Power Generation Pvt Ltd - India
- Goldman Sachs - Singapore
- Global Business Power Corporation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- Karbindo Abesyapradhi - Indoneisa
- Bahari Cakrawala Sebuku - Indonesia
- SN Aboitiz Power Inc, Philippines
- Ministry of Mines - Canada
- Indian Oil Corporation Limited
- International Coal Ventures Pvt Ltd - India
- MS Steel International - UAE
- Indo Tambangraya Megah - Indonesia
- Vizag Seaport Private Limited - India
- Carbofer General Trading SA - India
- Cigading International Bulk Terminal - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- SMG Consultants - Indonesia
- Intertek Mineral Services - Indonesia
- Straits Asia Resources Limited - Singapore
- Banpu Public Company Limited - Thailand
- Vijayanagar Sugar Pvt Ltd - India
- Sarangani Energy Corporation, Philippines
- McConnell Dowell - Australia
- Semirara Mining Corp, Philippines
- Kapuas Tunggal Persada - Indonesia
- Larsen & Toubro Limited - India
- Kartika Selabumi Mining - Indonesia
- Merrill Lynch Commodities Europe
- Planning Commission, India
- Indonesian Coal Mining Association
- Electricity Generating Authority of Thailand
- Globalindo Alam Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Sical Logistics Limited - India
- Parliament of New Zealand
- GMR Energy Limited - India
- Alfred C Toepfer International GmbH - Germany
- IHS Mccloskey Coal Group - USA
- Kobexindo Tractors - Indoneisa
- Eastern Coal Council - USA
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kepco SPC Power Corporation, Philippines
- Manunggal Multi Energi - Indonesia
- Ministry of Finance - Indonesia
- Tata Chemicals Ltd - India
- Ministry of Transport, Egypt
- Madhucon Powers Ltd - India
- Price Waterhouse Coopers - Russia
- Australian Commodity Traders Exchange
- Indika Energy - Indonesia
- PNOC Exploration Corporation - Philippines
- Attock Cement Pakistan Limited
- Iligan Light & Power Inc, Philippines
- IEA Clean Coal Centre - UK
- Pendopo Energi Batubara - Indonesia
- Singapore Mercantile Exchange
- Heidelberg Cement - Germany
- Aditya Birla Group - India
- PowerSource Philippines DevCo
- Port Waratah Coal Services - Australia
- White Energy Company Limited
- Kumho Petrochemical, South Korea
- SMC Global Power, Philippines
- Africa Commodities Group - South Africa
- Sojitz Corporation - Japan
- Sindya Power Generating Company Private Ltd
- Siam City Cement PLC, Thailand
- Parry Sugars Refinery, India
- Jindal Steel & Power Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Ind-Barath Power Infra Limited - India
- Agrawal Coal Company - India
- Mjunction Services Limited - India
- Economic Council, Georgia
- Savvy Resources Ltd - HongKong
- Directorate General of MIneral and Coal - Indonesia
- Ambuja Cements Ltd - India
- Bhoruka Overseas - Indonesia
- Indian Energy Exchange, India
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