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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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Monday, 17 July 23
APPROVED AMMONIA-FUELED CONTAINERSHIP - BENEFITS AND RISKS: REED SMITH
Following the news in Offshore Energy that Korea Maritime Consultants has secured approval in principle from the American Bureau of Shipping for it ...
Friday, 14 July 23
CLEAN COAL USE KEY TO DEEP CUTS IN EMISSIONS, STABLE ELECTRICITY SUPPLY - CHINA DAILY
China must push for the clean use of coal and step up integration of the dirty fuel with carbon capture, utilization and storage to achieve sustain ...
Thursday, 13 July 23
VIETNAM'S COAL EMISSIONS PRIMED FOR SURGE AFTER IMPORTS JUMP - REUTERS
Vietnam’s thermal power emissions are primed for a steep climb this summer after the country’s imports of thermal coal soared to their ...
Monday, 26 June 23
COAL PRODUCTION AND CONSUMPTION UP IN 2022 - EUROSTAT
In 2022, EU coal production and consumption continued to increase, reaching 349 million tonnes (+5% compared with the previous year) and 454 millio ...
Wednesday, 21 June 23
QATAR STRIKES SECOND BIG LNG SUPPLY DEAL WITH CHINA - REUTERS
Qatar on Tuesday secured its second large gas supply deal with a Chinese state-controlled company in less than a year, putting Asia clearly ahead i ...
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- Interocean Group of Companies - India
- Star Paper Mills Limited - India
- Bharathi Cement Corporation - India
- Samtan Co., Ltd - South Korea
- Metalloyd Limited - United Kingdom
- Vizag Seaport Private Limited - India
- Anglo American - United Kingdom
- Sree Jayajothi Cements Limited - India
- Georgia Ports Authority, United States
- PTC India Limited - India
- Kohat Cement Company Ltd. - Pakistan
- Grasim Industreis Ltd - India
- Tamil Nadu electricity Board
- Ceylon Electricity Board - Sri Lanka
- Jorong Barutama Greston.PT - Indonesia
- PowerSource Philippines DevCo
- Salva Resources Pvt Ltd - India
- White Energy Company Limited
- Pipit Mutiara Jaya. PT, Indonesia
- Jaiprakash Power Ventures ltd
- Trasteel International SA, Italy
- Parliament of New Zealand
- Goldman Sachs - Singapore
- GAC Shipping (India) Pvt Ltd
- Rio Tinto Coal - Australia
- Maheswari Brothers Coal Limited - India
- Posco Energy - South Korea
- Siam City Cement PLC, Thailand
- The State Trading Corporation of India Ltd
- South Luzon Thermal Energy Corporation
- Sarangani Energy Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Pendopo Energi Batubara - Indonesia
- Ind-Barath Power Infra Limited - India
- The Treasury - Australian Government
- Oldendorff Carriers - Singapore
- Indonesian Coal Mining Association
- Miang Besar Coal Terminal - Indonesia
- Chettinad Cement Corporation Ltd - India
- Directorate Of Revenue Intelligence - India
- Power Finance Corporation Ltd., India
- Bukit Makmur.PT - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Bukit Baiduri Energy - Indonesia
- Eastern Energy - Thailand
- Sical Logistics Limited - India
- Orica Mining Services - Indonesia
- CIMB Investment Bank - Malaysia
- Straits Asia Resources Limited - Singapore
- Borneo Indobara - Indonesia
- London Commodity Brokers - England
- Ministry of Finance - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Kideco Jaya Agung - Indonesia
- Tata Chemicals Ltd - India
- Independent Power Producers Association of India
- Energy Development Corp, Philippines
- Mjunction Services Limited - India
- Vedanta Resources Plc - India
- Binh Thuan Hamico - Vietnam
- Aditya Birla Group - India
- Malabar Cements Ltd - India
- Indian Energy Exchange, India
- Bayan Resources Tbk. - Indonesia
- Central Electricity Authority - India
- Asmin Koalindo Tuhup - Indonesia
- European Bulk Services B.V. - Netherlands
- Madhucon Powers Ltd - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coal and Oil Company - UAE
- Baramulti Group, Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Sindya Power Generating Company Private Ltd
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Deloitte Consulting - India
- Bhushan Steel Limited - India
- Bukit Asam (Persero) Tbk - Indonesia
- Edison Trading Spa - Italy
- GVK Power & Infra Limited - India
- Thiess Contractors Indonesia
- Therma Luzon, Inc, Philippines
- Kumho Petrochemical, South Korea
- Attock Cement Pakistan Limited
- Petron Corporation, Philippines
- SMC Global Power, Philippines
- Riau Bara Harum - Indonesia
- Timah Investasi Mineral - Indoneisa
- Barasentosa Lestari - Indonesia
- Karaikal Port Pvt Ltd - India
- Indo Tambangraya Megah - Indonesia
- Xindia Steels Limited - India
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Siam City Cement - Thailand
- Electricity Authority, New Zealand
- Ministry of Mines - Canada
- Antam Resourcindo - Indonesia
- Agrawal Coal Company - India
- Africa Commodities Group - South Africa
- Bahari Cakrawala Sebuku - Indonesia
- Formosa Plastics Group - Taiwan
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Altura Mining Limited, Indonesia
- Electricity Generating Authority of Thailand
- Semirara Mining and Power Corporation, Philippines
- Indika Energy - Indonesia
- Videocon Industries ltd - India
- AsiaOL BioFuels Corp., Philippines
- ASAPP Information Group - India
- Intertek Mineral Services - Indonesia
- LBH Netherlands Bv - Netherlands
- Jindal Steel & Power Ltd - India
- Eastern Coal Council - USA
- Meenaskhi Energy Private Limited - India
- Latin American Coal - Colombia
- Carbofer General Trading SA - India
- IEA Clean Coal Centre - UK
- Globalindo Alam Lestari - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Australian Coal Association
- Marubeni Corporation - India
- Port Waratah Coal Services - Australia
- India Bulls Power Limited - India
- GMR Energy Limited - India
- Banpu Public Company Limited - Thailand
- Coastal Gujarat Power Limited - India
- Aboitiz Power Corporation - Philippines
- SMG Consultants - Indonesia
- Kepco SPC Power Corporation, Philippines
- PNOC Exploration Corporation - Philippines
- Bhatia International Limited - India
- The University of Queensland
- Parry Sugars Refinery, India
- Thai Mozambique Logistica
- New Zealand Coal & Carbon
- Simpson Spence & Young - Indonesia
- Ministry of Transport, Egypt
- PetroVietnam Power Coal Import and Supply Company
- Medco Energi Mining Internasional
- Chamber of Mines of South Africa
- Global Coal Blending Company Limited - Australia
- Merrill Lynch Commodities Europe
- OPG Power Generation Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Cement Manufacturers Association - India
- Minerals Council of Australia
- Mercuria Energy - Indonesia
- Commonwealth Bank - Australia
- VISA Power Limited - India
- Kobexindo Tractors - Indoneisa
- ICICI Bank Limited - India
- Global Business Power Corporation, Philippines
- Mintek Dendrill Indonesia
- Kapuas Tunggal Persada - Indonesia
- International Coal Ventures Pvt Ltd - India
- Kaltim Prima Coal - Indonesia
- IHS Mccloskey Coal Group - USA
- Sinarmas Energy and Mining - Indonesia
- Orica Australia Pty. Ltd.
- Gujarat Electricity Regulatory Commission - India
- TeaM Sual Corporation - Philippines
- Global Green Power PLC Corporation, Philippines
- Bangladesh Power Developement Board
- Larsen & Toubro Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Wood Mackenzie - Singapore
- Gujarat Sidhee Cement - India
- Lanco Infratech Ltd - India
- Heidelberg Cement - Germany
- Wilmar Investment Holdings
- Karbindo Abesyapradhi - Indoneisa
- Bulk Trading Sa - Switzerland
- Alfred C Toepfer International GmbH - Germany
- Bhoruka Overseas - Indonesia
- SN Aboitiz Power Inc, Philippines
- Kartika Selabumi Mining - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Petrochimia International Co. Ltd.- Taiwan
- Meralco Power Generation, Philippines
- Rashtriya Ispat Nigam Limited - India
- Romanian Commodities Exchange
- TNB Fuel Sdn Bhd - Malaysia
- Indian Oil Corporation Limited
- Savvy Resources Ltd - HongKong
- Energy Link Ltd, New Zealand
- Neyveli Lignite Corporation Ltd, - India
- Billiton Holdings Pty Ltd - Australia
- MS Steel International - UAE
- Coalindo Energy - Indonesia
- Dalmia Cement Bharat India
- Ambuja Cements Ltd - India
- Singapore Mercantile Exchange
- Uttam Galva Steels Limited - India
- Holcim Trading Pte Ltd - Singapore
- Semirara Mining Corp, Philippines
- Australian Commodity Traders Exchange
- San Jose City I Power Corp, Philippines
- McConnell Dowell - Australia
- Mercator Lines Limited - India
- CNBM International Corporation - China
- Makarim & Taira - Indonesia
- Renaissance Capital - South Africa
- Sojitz Corporation - Japan
- Price Waterhouse Coopers - Russia
- Cigading International Bulk Terminal - Indonesia
- Planning Commission, India
- Sakthi Sugars Limited - India
- Standard Chartered Bank - UAE
- Central Java Power - Indonesia
- Economic Council, Georgia
- GN Power Mariveles Coal Plant, Philippines
- Manunggal Multi Energi - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Indogreen Group - Indonesia
- Essar Steel Hazira Ltd - India
- Toyota Tsusho Corporation, Japan
- Gujarat Mineral Development Corp Ltd - India
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