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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, 25 May 20
NON-OPEC OIL SUPPLY DEVELOPMENT - OPEC
Non-OPEC oil supply continued to increase by 2.0 mb/d in 2019, driven by US shale production, which rose by 1.7 mb/d, amounting to 84% of total non ...
Sunday, 24 May 20
A 63,000 FIXED DELIVERY VIETNAM TRIP VIA INDONESIA REDELIVERY KOSICHANG AT $8,500 - BALTIC BRIEFING
Capesize
After a week of bounce momentum the market appears to have stalled out once again. The Capesize 5TC has more than doubled since last F ...
Saturday, 23 May 20
COLOMBIA COAL OUTPUT DOWN 7.2% IN Q1 ON LOW PRICES, CORONAVIRUS LOCKDOWN - REUTERS
Coal production in Colombia, the world’s fifth-largest coal exporter, fell 7.2% in the first quarter because of low prices and coronavirus qu ...
Saturday, 23 May 20
EWP INVITES BIDS FOR 840,000 METRIC TONS OF MIN 5700 NAR COAL
COALspot.com: South Korea’s Korea East-West Power Co. Ltd (EWP) has Issued an International Tender for total Max 840,000 Metric Tons of min 5 ...
Thursday, 21 May 20
KOMIPO INVITED BIDS FOR TOTAL 610000 MT OF LCV AND HCV COAL FOR 2H 2020
COALspot.com: South Korea’s Korea Midland Power Co. Ltd. (KOMIPO) has Issued an International Tender for 130,000 mt of 5700 NCV coal an ...
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- Banpu Public Company Limited - Thailand
- GAC Shipping (India) Pvt Ltd
- Binh Thuan Hamico - Vietnam
- Carbofer General Trading SA - India
- Kaltim Prima Coal - Indonesia
- Oldendorff Carriers - Singapore
- Star Paper Mills Limited - India
- Rashtriya Ispat Nigam Limited - India
- Madhucon Powers Ltd - India
- GMR Energy Limited - India
- Toyota Tsusho Corporation, Japan
- Maheswari Brothers Coal Limited - India
- Singapore Mercantile Exchange
- Economic Council, Georgia
- Attock Cement Pakistan Limited
- Kideco Jaya Agung - Indonesia
- Australian Coal Association
- Vizag Seaport Private Limited - India
- Orica Australia Pty. Ltd.
- Global Coal Blending Company Limited - Australia
- Electricity Generating Authority of Thailand
- Vedanta Resources Plc - India
- Coal and Oil Company - UAE
- Grasim Industreis Ltd - India
- Interocean Group of Companies - India
- Bulk Trading Sa - Switzerland
- Maharashtra Electricity Regulatory Commission - India
- IHS Mccloskey Coal Group - USA
- Edison Trading Spa - Italy
- Asmin Koalindo Tuhup - Indonesia
- Aboitiz Power Corporation - Philippines
- New Zealand Coal & Carbon
- Mjunction Services Limited - India
- Trasteel International SA, Italy
- European Bulk Services B.V. - Netherlands
- Independent Power Producers Association of India
- Anglo American - United Kingdom
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Coastal Gujarat Power Limited - India
- Tata Chemicals Ltd - India
- Barasentosa Lestari - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Krishnapatnam Port Company Ltd. - India
- Kapuas Tunggal Persada - Indonesia
- Merrill Lynch Commodities Europe
- Bayan Resources Tbk. - Indonesia
- Planning Commission, India
- Miang Besar Coal Terminal - Indonesia
- Karaikal Port Pvt Ltd - India
- Salva Resources Pvt Ltd - India
- PowerSource Philippines DevCo
- Sarangani Energy Corporation, Philippines
- Bhoruka Overseas - Indonesia
- Manunggal Multi Energi - Indonesia
- Medco Energi Mining Internasional
- Wilmar Investment Holdings
- South Luzon Thermal Energy Corporation
- MS Steel International - UAE
- Central Java Power - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Bhatia International Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Power Finance Corporation Ltd., India
- SMG Consultants - Indonesia
- Ministry of Transport, Egypt
- Kumho Petrochemical, South Korea
- PTC India Limited - India
- Chamber of Mines of South Africa
- Indonesian Coal Mining Association
- Mintek Dendrill Indonesia
- Parry Sugars Refinery, India
- Baramulti Group, Indonesia
- Savvy Resources Ltd - HongKong
- Sakthi Sugars Limited - India
- Holcim Trading Pte Ltd - Singapore
- Antam Resourcindo - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Borneo Indobara - Indonesia
- Price Waterhouse Coopers - Russia
- Siam City Cement PLC, Thailand
- Altura Mining Limited, Indonesia
- Intertek Mineral Services - Indonesia
- OPG Power Generation Pvt Ltd - India
- Heidelberg Cement - Germany
- ASAPP Information Group - India
- Jaiprakash Power Ventures ltd
- Kobexindo Tractors - Indoneisa
- Meralco Power Generation, Philippines
- Formosa Plastics Group - Taiwan
- Bukit Makmur.PT - Indonesia
- Electricity Authority, New Zealand
- Bharathi Cement Corporation - India
- Cement Manufacturers Association - India
- Renaissance Capital - South Africa
- Gujarat Sidhee Cement - India
- San Jose City I Power Corp, Philippines
- McConnell Dowell - Australia
- Kartika Selabumi Mining - Indonesia
- PNOC Exploration Corporation - Philippines
- Indogreen Group - Indonesia
- Ministry of Finance - Indonesia
- Posco Energy - South Korea
- The University of Queensland
- Essar Steel Hazira Ltd - India
- Chettinad Cement Corporation Ltd - India
- PetroVietnam Power Coal Import and Supply Company
- Petron Corporation, Philippines
- India Bulls Power Limited - India
- Sical Logistics Limited - India
- Pendopo Energi Batubara - Indonesia
- Straits Asia Resources Limited - Singapore
- Marubeni Corporation - India
- Energy Development Corp, Philippines
- Indian Oil Corporation Limited
- Indika Energy - Indonesia
- Siam City Cement - Thailand
- Larsen & Toubro Limited - India
- Goldman Sachs - Singapore
- Bhushan Steel Limited - India
- Bukit Baiduri Energy - Indonesia
- White Energy Company Limited
- Thiess Contractors Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- Neyveli Lignite Corporation Ltd, - India
- Georgia Ports Authority, United States
- Deloitte Consulting - India
- Bahari Cakrawala Sebuku - Indonesia
- Uttam Galva Steels Limited - India
- Port Waratah Coal Services - Australia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Ind-Barath Power Infra Limited - India
- Vijayanagar Sugar Pvt Ltd - India
- Semirara Mining Corp, Philippines
- Coalindo Energy - Indonesia
- Gujarat Electricity Regulatory Commission - India
- Eastern Coal Council - USA
- Dalmia Cement Bharat India
- Therma Luzon, Inc, Philippines
- Kalimantan Lumbung Energi - Indonesia
- Makarim & Taira - Indonesia
- Ministry of Mines - Canada
- The Treasury - Australian Government
- Wood Mackenzie - Singapore
- Directorate Of Revenue Intelligence - India
- GN Power Mariveles Coal Plant, Philippines
- TNB Fuel Sdn Bhd - Malaysia
- SMC Global Power, Philippines
- Minerals Council of Australia
- Romanian Commodities Exchange
- Bangladesh Power Developement Board
- Thai Mozambique Logistica
- Sindya Power Generating Company Private Ltd
- Aditya Birla Group - India
- The State Trading Corporation of India Ltd
- Indo Tambangraya Megah - Indonesia
- Jindal Steel & Power Ltd - India
- CNBM International Corporation - China
- Karbindo Abesyapradhi - Indoneisa
- Energy Link Ltd, New Zealand
- Indian Energy Exchange, India
- Mercuria Energy - Indonesia
- Ambuja Cements Ltd - India
- ICICI Bank Limited - India
- Global Business Power Corporation, Philippines
- Billiton Holdings Pty Ltd - Australia
- VISA Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Leighton Contractors Pty Ltd - Australia
- Xindia Steels Limited - India
- Metalloyd Limited - United Kingdom
- Ceylon Electricity Board - Sri Lanka
- Mercator Lines Limited - India
- Samtan Co., Ltd - South Korea
- Africa Commodities Group - South Africa
- Kohat Cement Company Ltd. - Pakistan
- Sree Jayajothi Cements Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- IEA Clean Coal Centre - UK
- Sojitz Corporation - Japan
- Agrawal Coal Company - India
- Videocon Industries ltd - India
- CIMB Investment Bank - Malaysia
- Kepco SPC Power Corporation, Philippines
- Malabar Cements Ltd - India
- Parliament of New Zealand
- Orica Mining Services - Indonesia
- Riau Bara Harum - Indonesia
- Timah Investasi Mineral - Indoneisa
- LBH Netherlands Bv - Netherlands
- Cigading International Bulk Terminal - Indonesia
- Rio Tinto Coal - Australia
- Standard Chartered Bank - UAE
- Bank of Tokyo Mitsubishi UFJ Ltd
- Latin American Coal - Colombia
- Iligan Light & Power Inc, Philippines
- Central Electricity Authority - India
- Bukit Asam (Persero) Tbk - Indonesia
- AsiaOL BioFuels Corp., Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Tamil Nadu electricity Board
- TeaM Sual Corporation - Philippines
- Globalindo Alam Lestari - Indonesia
- Semirara Mining and Power Corporation, Philippines
- Meenaskhi Energy Private Limited - India
- SN Aboitiz Power Inc, Philippines
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- London Commodity Brokers - England
- Directorate General of MIneral and Coal - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Lanco Infratech Ltd - India
- International Coal Ventures Pvt Ltd - India
- GVK Power & Infra Limited - India
- Australian Commodity Traders Exchange
- Gujarat Mineral Development Corp Ltd - India
- Commonwealth Bank - Australia
- Simpson Spence & Young - Indonesia
- Eastern Energy - Thailand
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