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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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- Truba Alam Manunggal Engineering.Tbk - Indonesia
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- CIMB Investment Bank - Malaysia
- MS Steel International - UAE
- Essar Steel Hazira Ltd - India
- Billiton Holdings Pty Ltd - Australia
- Uttam Galva Steels Limited - India
- Kaltim Prima Coal - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- GMR Energy Limited - India
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- Toyota Tsusho Corporation, Japan
- Medco Energi Mining Internasional
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- Xindia Steels Limited - India
- Krishnapatnam Port Company Ltd. - India
- Kumho Petrochemical, South Korea
- Simpson Spence & Young - Indonesia
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- Kepco SPC Power Corporation, Philippines
- Borneo Indobara - Indonesia
- IHS Mccloskey Coal Group - USA
- Standard Chartered Bank - UAE
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- Dalmia Cement Bharat India
- Central Electricity Authority - India
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- Power Finance Corporation Ltd., India
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- Ministry of Transport, Egypt
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- Petrochimia International Co. Ltd.- Taiwan
- Rashtriya Ispat Nigam Limited - India
- San Jose City I Power Corp, Philippines
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- Tata Chemicals Ltd - India
- Grasim Industreis Ltd - India
- Baramulti Group, Indonesia
- Thai Mozambique Logistica
- IEA Clean Coal Centre - UK
- Savvy Resources Ltd - HongKong
- Karbindo Abesyapradhi - Indoneisa
- Mercator Lines Limited - India
- OPG Power Generation Pvt Ltd - India
- Metalloyd Limited - United Kingdom
- Parliament of New Zealand
- Vijayanagar Sugar Pvt Ltd - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Global Green Power PLC Corporation, Philippines
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- Bukit Makmur.PT - Indonesia
- Global Business Power Corporation, Philippines
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- Altura Mining Limited, Indonesia
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- Lanco Infratech Ltd - India
- Siam City Cement - Thailand
- Timah Investasi Mineral - Indoneisa
- Bukit Asam (Persero) Tbk - Indonesia
- CNBM International Corporation - China
- Carbofer General Trading SA - India
- Marubeni Corporation - India
- Georgia Ports Authority, United States
- Meralco Power Generation, Philippines
- Kohat Cement Company Ltd. - Pakistan
- Bayan Resources Tbk. - Indonesia
- Leighton Contractors Pty Ltd - Australia
- Australian Coal Association
- The Treasury - Australian Government
- Bhoruka Overseas - Indonesia
- Mjunction Services Limited - India
- London Commodity Brokers - England
- GN Power Mariveles Coal Plant, Philippines
- Africa Commodities Group - South Africa
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- Sinarmas Energy and Mining - Indonesia
- Goldman Sachs - Singapore
- Mercuria Energy - Indonesia
- Merrill Lynch Commodities Europe
- Siam City Cement PLC, Thailand
- Alfred C Toepfer International GmbH - Germany
- Straits Asia Resources Limited - Singapore
- Planning Commission, India
- Romanian Commodities Exchange
- Renaissance Capital - South Africa
- ASAPP Information Group - India
- Makarim & Taira - Indonesia
- Ind-Barath Power Infra Limited - India
- Bangladesh Power Developement Board
- Economic Council, Georgia
- The University of Queensland
- Australian Commodity Traders Exchange
- LBH Netherlands Bv - Netherlands
- Sree Jayajothi Cements Limited - India
- AsiaOL BioFuels Corp., Philippines
- International Coal Ventures Pvt Ltd - India
- Mintek Dendrill Indonesia
- Cement Manufacturers Association - India
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- Indonesian Coal Mining Association
- Independent Power Producers Association of India
- South Luzon Thermal Energy Corporation
- Singapore Mercantile Exchange
- Wilmar Investment Holdings
- Jaiprakash Power Ventures ltd
- Chamber of Mines of South Africa
- Thiess Contractors Indonesia
- GVK Power & Infra Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Cigading International Bulk Terminal - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Riau Bara Harum - Indonesia
- New Zealand Coal & Carbon
- Antam Resourcindo - Indonesia
- Samtan Co., Ltd - South Korea
- Sakthi Sugars Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Jindal Steel & Power Ltd - India
- Bhatia International Limited - India
- Minerals Council of Australia
- Sojitz Corporation - Japan
- Electricity Generating Authority of Thailand
- Videocon Industries ltd - India
- Coalindo Energy - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- ICICI Bank Limited - India
- Sindya Power Generating Company Private Ltd
- Oldendorff Carriers - Singapore
- Central Java Power - Indonesia
- Energy Development Corp, Philippines
- Banpu Public Company Limited - Thailand
- Coal and Oil Company - UAE
- SN Aboitiz Power Inc, Philippines
- Chettinad Cement Corporation Ltd - India
- Ministry of Mines - Canada
- Ambuja Cements Ltd - India
- Orica Mining Services - Indonesia
- PowerSource Philippines DevCo
- White Energy Company Limited
- Directorate General of MIneral and Coal - Indonesia
- Vizag Seaport Private Limited - India
- Holcim Trading Pte Ltd - Singapore
- SMG Consultants - Indonesia
- Indogreen Group - Indonesia
- Rio Tinto Coal - Australia
- Star Paper Mills Limited - India
- Malabar Cements Ltd - India
- Trasteel International SA, Italy
- Indo Tambangraya Megah - Indonesia
- Kartika Selabumi Mining - Indonesia
- Globalindo Alam Lestari - Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Kalimantan Lumbung Energi - Indonesia
- Energy Link Ltd, New Zealand
- Agrawal Coal Company - India
- Binh Thuan Hamico - Vietnam
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ministry of Finance - Indonesia
- Indian Oil Corporation Limited
- Madhucon Powers Ltd - India
- Edison Trading Spa - Italy
- GAC Shipping (India) Pvt Ltd
- Bulk Trading Sa - Switzerland
- Iligan Light & Power Inc, Philippines
- Bahari Cakrawala Sebuku - Indonesia
- Anglo American - United Kingdom
- Price Waterhouse Coopers - Russia
- Indian Energy Exchange, India
- Therma Luzon, Inc, Philippines
- Gujarat Electricity Regulatory Commission - India
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- European Bulk Services B.V. - Netherlands
- Intertek Mineral Services - Indonesia
- Wood Mackenzie - Singapore
- Maheswari Brothers Coal Limited - India
- Petron Corporation, Philippines
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- The State Trading Corporation of India Ltd
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- Pipit Mutiara Jaya. PT, Indonesia
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