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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, 21 June 23
CHINA'S MAY COAL IMPORTS FROM AUSTRALIA RECOVER TO PRE-BAN LEVELS - REUTERS
Australian coal sales to China increased in May, as trade resumed between them even as overall coal demand weakened against an uncertain macroecono ...
Monday, 19 June 23
DROUGHT-DEPLETED HYDROPOWER DRIVES CHINA TO TURN TO COAL - REUTERS
China has leant hard on coal-fired power plants as well as wind and solar generators to make up for a shortfall in hydroelectric generation as a re ...
Monday, 19 June 23
CHINA COAL OUTPUT UP 4.2 PCT IN MAY - XINHUA
China’s raw coal output posted steady growth in May, official data showed.
The country produced 390 million tonnes of raw coal ...
Wednesday, 24 May 23
AMMONIA-FUELLED BULK CARRIERS WITHIN FIVE YEARS - BALTIC EXCHANGE
Within five years, ships powered by clean ammonia could be a feature on the iron ore trade routes between West Australia and East Asia.
A study ...
Tuesday, 23 May 23
CHINA'S APRIL COAL OUTPUT LEAPS 11% ON YEAR, BUT DEMAND DOWNTURN LOOMS - REUTERS
China’s daily coal output in April jumped 11% from the same month a year earlier, boosted by Beijing’s order to increase supply to ensu ...
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- Holcim Trading Pte Ltd - Singapore
- Mjunction Services Limited - India
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- Krishnapatnam Port Company Ltd. - India
- GN Power Mariveles Coal Plant, Philippines
- Borneo Indobara - Indonesia
- Bangladesh Power Developement Board
- Jindal Steel & Power Ltd - India
- Power Finance Corporation Ltd., India
- Oldendorff Carriers - Singapore
- Standard Chartered Bank - UAE
- Miang Besar Coal Terminal - Indonesia
- Formosa Plastics Group - Taiwan
- Salva Resources Pvt Ltd - India
- Trasteel International SA, Italy
- SN Aboitiz Power Inc, Philippines
- Indo Tambangraya Megah - Indonesia
- VISA Power Limited - India
- Global Coal Blending Company Limited - Australia
- Manunggal Multi Energi - Indonesia
- CIMB Investment Bank - Malaysia
- Sindya Power Generating Company Private Ltd
- Chamber of Mines of South Africa
- Eastern Energy - Thailand
- Electricity Authority, New Zealand
- PowerSource Philippines DevCo
- Essar Steel Hazira Ltd - India
- Wood Mackenzie - Singapore
- Mercator Lines Limited - India
- Maharashtra Electricity Regulatory Commission - India
- Coastal Gujarat Power Limited - India
- Global Green Power PLC Corporation, Philippines
- Intertek Mineral Services - Indonesia
- Sinarmas Energy and Mining - Indonesia
- Orica Mining Services - Indonesia
- IEA Clean Coal Centre - UK
- Central Electricity Authority - India
- Mintek Dendrill Indonesia
- Therma Luzon, Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Ceylon Electricity Board - Sri Lanka
- Vijayanagar Sugar Pvt Ltd - India
- Eastern Coal Council - USA
- Semirara Mining Corp, Philippines
- Maheswari Brothers Coal Limited - India
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Heidelberg Cement - Germany
- Attock Cement Pakistan Limited
- Indika Energy - Indonesia
- Globalindo Alam Lestari - Indonesia
- OPG Power Generation Pvt Ltd - India
- GMR Energy Limited - India
- Energy Development Corp, Philippines
- PNOC Exploration Corporation - Philippines
- White Energy Company Limited
- Kapuas Tunggal Persada - Indonesia
- Directorate Of Revenue Intelligence - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Semirara Mining and Power Corporation, Philippines
- Petrochimia International Co. Ltd.- Taiwan
- Pendopo Energi Batubara - Indonesia
- Indonesian Coal Mining Association
- Siam City Cement PLC, Thailand
- Xindia Steels Limited - India
- Ind-Barath Power Infra Limited - India
- Siam City Cement - Thailand
- Ministry of Finance - Indonesia
- Kumho Petrochemical, South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Malabar Cements Ltd - India
- Kaltim Prima Coal - Indonesia
- Electricity Generating Authority of Thailand
- Alfred C Toepfer International GmbH - Germany
- Thiess Contractors Indonesia
- Orica Australia Pty. Ltd.
- IHS Mccloskey Coal Group - USA
- Bank of Tokyo Mitsubishi UFJ Ltd
- Savvy Resources Ltd - HongKong
- Jaiprakash Power Ventures ltd
- Kohat Cement Company Ltd. - Pakistan
- Africa Commodities Group - South Africa
- Bhoruka Overseas - Indonesia
- Makarim & Taira - Indonesia
- Bhatia International Limited - India
- Grasim Industreis Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Aditya Birla Group - India
- Thai Mozambique Logistica
- Sree Jayajothi Cements Limited - India
- Georgia Ports Authority, United States
- Romanian Commodities Exchange
- Singapore Mercantile Exchange
- Sojitz Corporation - Japan
- Metalloyd Limited - United Kingdom
- Karaikal Port Pvt Ltd - India
- PTC India Limited - India
- Planning Commission, India
- Economic Council, Georgia
- Goldman Sachs - Singapore
- Indian Oil Corporation Limited
- Deloitte Consulting - India
- LBH Netherlands Bv - Netherlands
- Meenaskhi Energy Private Limited - India
- Bukit Baiduri Energy - Indonesia
- Tamil Nadu electricity Board
- Baramulti Group, Indonesia
- Tata Chemicals Ltd - India
- Toyota Tsusho Corporation, Japan
- Anglo American - United Kingdom
- Energy Link Ltd, New Zealand
- Banpu Public Company Limited - Thailand
- London Commodity Brokers - England
- Rashtriya Ispat Nigam Limited - India
- South Luzon Thermal Energy Corporation
- CNBM International Corporation - China
- SMC Global Power, Philippines
- Iligan Light & Power Inc, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- GAC Shipping (India) Pvt Ltd
- GVK Power & Infra Limited - India
- Carbofer General Trading SA - India
- Gujarat Sidhee Cement - India
- Bharathi Cement Corporation - India
- Leighton Contractors Pty Ltd - Australia
- Sakthi Sugars Limited - India
- Neyveli Lignite Corporation Ltd, - India
- Larsen & Toubro Limited - India
- Samtan Co., Ltd - South Korea
- Parry Sugars Refinery, India
- PetroVietnam Power Coal Import and Supply Company
- AsiaOL BioFuels Corp., Philippines
- Ambuja Cements Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- India Bulls Power Limited - India
- The University of Queensland
- McConnell Dowell - Australia
- Ministry of Mines - Canada
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Java Power - Indonesia
- Uttam Galva Steels Limited - India
- Dalmia Cement Bharat India
- Indian Energy Exchange, India
- Price Waterhouse Coopers - Russia
- Jorong Barutama Greston.PT - Indonesia
- Parliament of New Zealand
- Port Waratah Coal Services - Australia
- Renaissance Capital - South Africa
- Altura Mining Limited, Indonesia
- TNB Fuel Sdn Bhd - Malaysia
- Chettinad Cement Corporation Ltd - India
- The State Trading Corporation of India Ltd
- Billiton Holdings Pty Ltd - Australia
- Australian Commodity Traders Exchange
- MS Steel International - UAE
- Kobexindo Tractors - Indoneisa
- Ministry of Transport, Egypt
- Agrawal Coal Company - India
- Gujarat Mineral Development Corp Ltd - India
- Timah Investasi Mineral - Indoneisa
- SMG Consultants - Indonesia
- Kideco Jaya Agung - Indonesia
- Sical Logistics Limited - India
- TeaM Sual Corporation - Philippines
- Commonwealth Bank - Australia
- Meralco Power Generation, Philippines
- Vedanta Resources Plc - India
- Global Business Power Corporation, Philippines
- Australian Coal Association
- Aboitiz Power Corporation - Philippines
- Marubeni Corporation - India
- Star Paper Mills Limited - India
- Vizag Seaport Private Limited - India
- Independent Power Producers Association of India
- Kartika Selabumi Mining - Indonesia
- ICICI Bank Limited - India
- Wilmar Investment Holdings
- Simpson Spence & Young - Indonesia
- Bulk Trading Sa - Switzerland
- Bhushan Steel Limited - India
- The Treasury - Australian Government
- Binh Thuan Hamico - Vietnam
- Rio Tinto Coal - Australia
- Cement Manufacturers Association - India
- Coalindo Energy - Indonesia
- Madhucon Powers Ltd - India
- Bukit Makmur.PT - Indonesia
- Edison Trading Spa - Italy
- Cigading International Bulk Terminal - Indonesia
- Minerals Council of Australia
- Mercuria Energy - Indonesia
- Kalimantan Lumbung Energi - Indonesia
- New Zealand Coal & Carbon
- Latin American Coal - Colombia
- Asmin Koalindo Tuhup - Indonesia
- Videocon Industries ltd - India
- Petron Corporation, Philippines
- Antam Resourcindo - Indonesia
- Interocean Group of Companies - India
- Barasentosa Lestari - Indonesia
- Lanco Infratech Ltd - India
- Bayan Resources Tbk. - Indonesia
- Posco Energy - South Korea
- Coal and Oil Company - UAE
- ASAPP Information Group - India
- Kepco SPC Power Corporation, Philippines
- Merrill Lynch Commodities Europe
- Bukit Asam (Persero) Tbk - Indonesia
- Gujarat Electricity Regulatory Commission - India
- International Coal Ventures Pvt Ltd - India
- Straits Asia Resources Limited - Singapore
- Indogreen Group - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- European Bulk Services B.V. - Netherlands
- San Jose City I Power Corp, Philippines
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