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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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Wednesday, 20 May 20
ADARO ENERGY BOOKED A 5% INCREASE IN COAL PRODUCTION VOLUME Y-O-Y IN 1Q2020
PT. Adaro Energy Tbk, Indonesia’s one of the largest coal miner, booked a 5% increase in coal production volume year-over-year in 1Q2020. The ...
Wednesday, 20 May 20
BRAZIL SOYBEAN EXPORTS HAVE BEEN SURGING THIS YEAR - BANCHERO COSTA
Brazil soybean exports have been surging this year, thanks to a combination of strong demand from China, a bumper crop, and favourable exchange rat ...
Wednesday, 20 May 20
MARKET INSIGHT
Seafarers keep maritime trade going so that the food, raw materials, energy and manufactured goods on which so many depend can continue moving arou ...
Tuesday, 19 May 20
AMENDMENT OF THE INDONESIAN MINING LAW: TYING UP LOOSE ENDS - UMBRA
KNOWLEDGE TO ELEVATE
The finalized draft of Law on the amendment of the Mining Law (Bill) was publicly released on 11 May 2020 and was then ap ...
Monday, 18 May 20
TAKING ADVANTAGE OF VIRUS DISTRACTION - BALTIC EXCHANGE
As the industry grapples to deal with exceptional Covid-19-related challenges, a deeper threat is coming to the fore. At this time of crisis, more ...
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- Interocean Group of Companies - India
- Holcim Trading Pte Ltd - Singapore
- Orica Australia Pty. Ltd.
- Petrochimia International Co. Ltd.- Taiwan
- Cigading International Bulk Terminal - Indonesia
- Global Coal Blending Company Limited - Australia
- SMC Global Power, Philippines
- Posco Energy - South Korea
- Petron Corporation, Philippines
- Eastern Energy - Thailand
- IEA Clean Coal Centre - UK
- Bukit Baiduri Energy - Indonesia
- Australian Commodity Traders Exchange
- Vedanta Resources Plc - India
- Economic Council, Georgia
- Commonwealth Bank - Australia
- Aboitiz Power Corporation - Philippines
- Siam City Cement PLC, Thailand
- Wood Mackenzie - Singapore
- Toyota Tsusho Corporation, Japan
- Georgia Ports Authority, United States
- Global Business Power Corporation, Philippines
- PowerSource Philippines DevCo
- Borneo Indobara - Indonesia
- LBH Netherlands Bv - Netherlands
- The University of Queensland
- Parry Sugars Refinery, India
- Essar Steel Hazira Ltd - India
- Coalindo Energy - Indonesia
- CIMB Investment Bank - Malaysia
- The State Trading Corporation of India Ltd
- Alfred C Toepfer International GmbH - Germany
- Kepco SPC Power Corporation, Philippines
- Meralco Power Generation, Philippines
- Bukit Asam (Persero) Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Chamber of Mines of South Africa
- Asmin Koalindo Tuhup - Indonesia
- Orica Mining Services - Indonesia
- Krishnapatnam Port Company Ltd. - India
- TeaM Sual Corporation - Philippines
- Baramulti Group, Indonesia
- SN Aboitiz Power Inc, Philippines
- Lanco Infratech Ltd - India
- Ceylon Electricity Board - Sri Lanka
- Iligan Light & Power Inc, Philippines
- Bangladesh Power Developement Board
- Malabar Cements Ltd - India
- Sojitz Corporation - Japan
- Semirara Mining and Power Corporation, Philippines
- Ind-Barath Power Infra Limited - India
- SMG Consultants - Indonesia
- Latin American Coal - Colombia
- Deloitte Consulting - India
- Indika Energy - Indonesia
- Ministry of Finance - Indonesia
- Manunggal Multi Energi - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Port Waratah Coal Services - Australia
- Attock Cement Pakistan Limited
- Thai Mozambique Logistica
- Ambuja Cements Ltd - India
- Jorong Barutama Greston.PT - Indonesia
- GN Power Mariveles Coal Plant, Philippines
- PNOC Exploration Corporation - Philippines
- Larsen & Toubro Limited - India
- McConnell Dowell - Australia
- Ministry of Transport, Egypt
- Banpu Public Company Limited - Thailand
- Directorate Of Revenue Intelligence - India
- Leighton Contractors Pty Ltd - Australia
- TNB Fuel Sdn Bhd - Malaysia
- Sical Logistics Limited - India
- Kideco Jaya Agung - Indonesia
- European Bulk Services B.V. - Netherlands
- Tata Chemicals Ltd - India
- Africa Commodities Group - South Africa
- Gujarat Mineral Development Corp Ltd - India
- Parliament of New Zealand
- Anglo American - United Kingdom
- Vizag Seaport Private Limited - India
- Meenaskhi Energy Private Limited - India
- Gujarat Electricity Regulatory Commission - India
- Sinarmas Energy and Mining - Indonesia
- Star Paper Mills Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Uttam Galva Steels Limited - India
- Electricity Generating Authority of Thailand
- Mjunction Services Limited - India
- Gujarat Sidhee Cement - India
- Standard Chartered Bank - UAE
- Timah Investasi Mineral - Indoneisa
- Globalindo Alam Lestari - Indonesia
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Billiton Holdings Pty Ltd - Australia
- Therma Luzon, Inc, Philippines
- Pendopo Energi Batubara - Indonesia
- The Treasury - Australian Government
- Metalloyd Limited - United Kingdom
- Marubeni Corporation - India
- Agrawal Coal Company - India
- London Commodity Brokers - England
- Price Waterhouse Coopers - Russia
- Kapuas Tunggal Persada - Indonesia
- Ministry of Mines - Canada
- Indogreen Group - Indonesia
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Romanian Commodities Exchange
- IHS Mccloskey Coal Group - USA
- Bhatia International Limited - India
- Kobexindo Tractors - Indoneisa
- Semirara Mining Corp, Philippines
- Kumho Petrochemical, South Korea
- Power Finance Corporation Ltd., India
- PTC India Limited - India
- Maheswari Brothers Coal Limited - India
- Minerals Council of Australia
- GVK Power & Infra Limited - India
- Makarim & Taira - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Indian Oil Corporation Limited
- Mercator Lines Limited - India
- Electricity Authority, New Zealand
- New Zealand Coal & Carbon
- Cement Manufacturers Association - India
- Planning Commission, India
- CNBM International Corporation - China
- Antam Resourcindo - Indonesia
- ASAPP Information Group - India
- Central Java Power - Indonesia
- Offshore Bulk Terminal Pte Ltd, Singapore
- Wilmar Investment Holdings
- Vijayanagar Sugar Pvt Ltd - India
- India Bulls Power Limited - India
- VISA Power Limited - India
- Simpson Spence & Young - Indonesia
- Savvy Resources Ltd - HongKong
- Dalmia Cement Bharat India
- Indo Tambangraya Megah - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Coastal Gujarat Power Limited - India
- Bhushan Steel Limited - India
- Xindia Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- Medco Energi Mining Internasional
- Bukit Makmur.PT - Indonesia
- Pipit Mutiara Jaya. PT, Indonesia
- Siam City Cement - Thailand
- Karaikal Port Pvt Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Heidelberg Cement - Germany
- GMR Energy Limited - India
- Indian Energy Exchange, India
- Binh Thuan Hamico - Vietnam
- Madhucon Powers Ltd - India
- Tamil Nadu electricity Board
- Altura Mining Limited, Indonesia
- Edison Trading Spa - Italy
- Riau Bara Harum - Indonesia
- Straits Asia Resources Limited - Singapore
- Aditya Birla Group - India
- OPG Power Generation Pvt Ltd - India
- Bulk Trading Sa - Switzerland
- Barasentosa Lestari - Indonesia
- Eastern Coal Council - USA
- Grasim Industreis Ltd - India
- Salva Resources Pvt Ltd - India
- Samtan Co., Ltd - South Korea
- Sakthi Sugars Limited - India
- Indonesian Coal Mining Association
- International Coal Ventures Pvt Ltd - India
- Carbofer General Trading SA - India
- Intertek Mineral Services - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Bhoruka Overseas - Indonesia
- Formosa Plastics Group - Taiwan
- Jindal Steel & Power Ltd - India
- Sree Jayajothi Cements Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Sindya Power Generating Company Private Ltd
- Jaiprakash Power Ventures ltd
- Miang Besar Coal Terminal - Indonesia
- Global Green Power PLC Corporation, Philippines
- PetroVietnam Power Coal Import and Supply Company
- Independent Power Producers Association of India
- Goldman Sachs - Singapore
- Trasteel International SA, Italy
- ICICI Bank Limited - India
- GAC Shipping (India) Pvt Ltd
- White Energy Company Limited
- Rashtriya Ispat Nigam Limited - India
- Central Electricity Authority - India
- San Jose City I Power Corp, Philippines
- Kartika Selabumi Mining - Indonesia
- Mintek Dendrill Indonesia
- Bharathi Cement Corporation - India
- Kaltim Prima Coal - Indonesia
- Thiess Contractors Indonesia
- Singapore Mercantile Exchange
- Bayan Resources Tbk. - Indonesia
- Merrill Lynch Commodities Europe
- Renaissance Capital - South Africa
- Mercuria Energy - Indonesia
- Videocon Industries ltd - India
- South Luzon Thermal Energy Corporation
- Kohat Cement Company Ltd. - Pakistan
- Rio Tinto Coal - Australia
- Australian Coal Association
- Sarangani Energy Corporation, Philippines
- Oldendorff Carriers - Singapore
- Maharashtra Electricity Regulatory Commission - India
- MS Steel International - UAE
- Coal and Oil Company - UAE
- Energy Development Corp, Philippines
- Chettinad Cement Corporation Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Energy Link Ltd, New Zealand
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