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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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Friday, 29 May 20
KOMIPO ON BEHALF FIVE KOREAN GENCOS INVITED COAL BIDS FOR 5,700 & 4999 NCV COAL FOR AUGUST 2020 LOADING
COALspot.com: South Korea’s Korea Midland Power Co.,Ltd (KOMIPO) on behalf five (5) Korean Gencos has Issued an International Tender for tota ...
Friday, 29 May 20
DRY BULK SHIPPING: NO QUICK RECOVERY FOR THE DRY BULK MARKET AS COVID-19 DIGS DEEPER
The outlook is poor for dry bulk, as the negative demand shock and overcapacity come together to send rates to multi-year lows, even a return to wo ...
Thursday, 28 May 20
OIL DEMAND RECOVERED BY 20% IN MAY AGAINST APRIL: RUSSIAN ENERGY MINISTER - TASS
Oil demand remains at a low level but the demand in May increased by 20% against April, Russian Energy Minister Alexander Novak said, cited by the ...
Thursday, 28 May 20
MARKET INSIGHT - INTERMODAL
Earlier in May, China’s top leaders convened for the annual National People's Congress, following over two months of delays due to the co ...
Wednesday, 27 May 20
CHINA TAIYUAN COAL TRANSACTION PRICE INDEX UP 0.94 PCT - XINHUA
China Taiyuan coal transaction price index stood at 125.03 points Monday, up 0.94 percent week on week.
The index, released by China ...
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- Barasentosa Lestari - Indonesia
- Maheswari Brothers Coal Limited - India
- PTC India Limited - India
- Minerals Council of Australia
- Rashtriya Ispat Nigam Limited - India
- Jorong Barutama Greston.PT - Indonesia
- Electricity Generating Authority of Thailand
- SMG Consultants - Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Bukit Makmur.PT - Indonesia
- Malabar Cements Ltd - India
- Eastern Energy - Thailand
- Gujarat Sidhee Cement - India
- Karaikal Port Pvt Ltd - India
- Wood Mackenzie - Singapore
- Ministry of Mines - Canada
- Africa Commodities Group - South Africa
- Semirara Mining Corp, Philippines
- Indian Energy Exchange, India
- Jaiprakash Power Ventures ltd
- McConnell Dowell - Australia
- Mjunction Services Limited - India
- Sindya Power Generating Company Private Ltd
- OPG Power Generation Pvt Ltd - India
- Iligan Light & Power Inc, Philippines
- Grasim Industreis Ltd - India
- Orica Australia Pty. Ltd.
- Economic Council, Georgia
- Trasteel International SA, Italy
- Tata Chemicals Ltd - India
- PNOC Exploration Corporation - Philippines
- Kartika Selabumi Mining - Indonesia
- Samtan Co., Ltd - South Korea
- Mercuria Energy - Indonesia
- IEA Clean Coal Centre - UK
- European Bulk Services B.V. - Netherlands
- Global Green Power PLC Corporation, Philippines
- Kideco Jaya Agung - Indonesia
- India Bulls Power Limited - India
- Riau Bara Harum - Indonesia
- Globalindo Alam Lestari - Indonesia
- Meenaskhi Energy Private Limited - India
- Thiess Contractors Indonesia
- Sarangani Energy Corporation, Philippines
- Directorate Of Revenue Intelligence - India
- Central Java Power - Indonesia
- CIMB Investment Bank - Malaysia
- Tamil Nadu electricity Board
- Therma Luzon, Inc, Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Indo Tambangraya Megah - Indonesia
- Georgia Ports Authority, United States
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Binh Thuan Hamico - Vietnam
- Thai Mozambique Logistica
- Commonwealth Bank - Australia
- Toyota Tsusho Corporation, Japan
- Rio Tinto Coal - Australia
- Heidelberg Cement - Germany
- Bhatia International Limited - India
- GN Power Mariveles Coal Plant, Philippines
- Kobexindo Tractors - Indoneisa
- Neyveli Lignite Corporation Ltd, - India
- San Jose City I Power Corp, Philippines
- Bayan Resources Tbk. - Indonesia
- Ind-Barath Power Infra Limited - India
- Kaltim Prima Coal - Indonesia
- Antam Resourcindo - Indonesia
- Global Coal Blending Company Limited - Australia
- Bharathi Cement Corporation - India
- Latin American Coal - Colombia
- London Commodity Brokers - England
- Essar Steel Hazira Ltd - India
- Sinarmas Energy and Mining - Indonesia
- Chettinad Cement Corporation Ltd - India
- Orica Mining Services - Indonesia
- Larsen & Toubro Limited - India
- Petrochimia International Co. Ltd.- Taiwan
- Bhushan Steel Limited - India
- VISA Power Limited - India
- Billiton Holdings Pty Ltd - Australia
- Coal and Oil Company - UAE
- Merrill Lynch Commodities Europe
- Electricity Authority, New Zealand
- The University of Queensland
- GMR Energy Limited - India
- Chamber of Mines of South Africa
- Formosa Plastics Group - Taiwan
- Sical Logistics Limited - India
- Dalmia Cement Bharat India
- Australian Commodity Traders Exchange
- Ceylon Electricity Board - Sri Lanka
- PowerSource Philippines DevCo
- Attock Cement Pakistan Limited
- Bhoruka Overseas - Indonesia
- Eastern Coal Council - USA
- Karbindo Abesyapradhi - Indoneisa
- Kumho Petrochemical, South Korea
- Oldendorff Carriers - Singapore
- Simpson Spence & Young - Indonesia
- Xindia Steels Limited - India
- Madhucon Powers Ltd - India
- Videocon Industries ltd - India
- Marubeni Corporation - India
- Central Electricity Authority - India
- South Luzon Thermal Energy Corporation
- Coastal Gujarat Power Limited - India
- New Zealand Coal & Carbon
- Star Paper Mills Limited - India
- SMC Global Power, Philippines
- Parry Sugars Refinery, India
- Kepco SPC Power Corporation, Philippines
- Directorate General of MIneral and Coal - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Standard Chartered Bank - UAE
- CNBM International Corporation - China
- Agrawal Coal Company - India
- Price Waterhouse Coopers - Russia
- Ambuja Cements Ltd - India
- Siam City Cement - Thailand
- Goldman Sachs - Singapore
- Holcim Trading Pte Ltd - Singapore
- Mintek Dendrill Indonesia
- Indonesian Coal Mining Association
- Siam City Cement PLC, Thailand
- Medco Energi Mining Internasional
- Carbofer General Trading SA - India
- Vizag Seaport Private Limited - India
- Port Waratah Coal Services - Australia
- Indogreen Group - Indonesia
- White Energy Company Limited
- Aditya Birla Group - India
- Asmin Koalindo Tuhup - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Bukit Asam (Persero) Tbk - Indonesia
- Makarim & Taira - Indonesia
- GAC Shipping (India) Pvt Ltd
- Miang Besar Coal Terminal - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Savvy Resources Ltd - HongKong
- AsiaOL BioFuels Corp., Philippines
- Singapore Mercantile Exchange
- Vedanta Resources Plc - India
- Kalimantan Lumbung Energi - Indonesia
- Petron Corporation, Philippines
- Parliament of New Zealand
- Meralco Power Generation, Philippines
- Posco Energy - South Korea
- Lanco Infratech Ltd - India
- The State Trading Corporation of India Ltd
- Power Finance Corporation Ltd., India
- Global Business Power Corporation, Philippines
- Sojitz Corporation - Japan
- Altura Mining Limited, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Wilmar Investment Holdings
- Maharashtra Electricity Regulatory Commission - India
- Bukit Baiduri Energy - Indonesia
- Manunggal Multi Energi - Indonesia
- Mercator Lines Limited - India
- TeaM Sual Corporation - Philippines
- Interocean Group of Companies - India
- Anglo American - United Kingdom
- IHS Mccloskey Coal Group - USA
- Ministry of Transport, Egypt
- Salva Resources Pvt Ltd - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Pipit Mutiara Jaya. PT, Indonesia
- Coalindo Energy - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Sakthi Sugars Limited - India
- LBH Netherlands Bv - Netherlands
- Ministry of Finance - Indonesia
- Intertek Mineral Services - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Sree Jayajothi Cements Limited - India
- Borneo Indobara - Indonesia
- Independent Power Producers Association of India
- TNB Fuel Sdn Bhd - Malaysia
- Deloitte Consulting - India
- Renaissance Capital - South Africa
- Cigading International Bulk Terminal - Indonesia
- Edison Trading Spa - Italy
- Planning Commission, India
- GVK Power & Infra Limited - India
- Gujarat Mineral Development Corp Ltd - India
- SN Aboitiz Power Inc, Philippines
- Bangladesh Power Developement Board
- Indika Energy - Indonesia
- Romanian Commodities Exchange
- The Treasury - Australian Government
- Timah Investasi Mineral - Indoneisa
- Banpu Public Company Limited - Thailand
- Indian Oil Corporation Limited
- Australian Coal Association
- Uttam Galva Steels Limited - India
- Aboitiz Power Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Energy Link Ltd, New Zealand
- Straits Asia Resources Limited - Singapore
- MS Steel International - UAE
- Cement Manufacturers Association - India
- ICICI Bank Limited - India
- Leighton Contractors Pty Ltd - Australia
- International Coal Ventures Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- ASAPP Information Group - India
- Jindal Steel & Power Ltd - India
- Baramulti Group, Indonesia
- PetroVietnam Power Coal Import and Supply Company
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Pendopo Energi Batubara - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Bank of Tokyo Mitsubishi UFJ Ltd
- Energy Development Corp, Philippines
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