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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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Tuesday, 23 May 23
INDIA: COAL OUTPUT UP 8.9%, SUPPLY RISES 11.7% IN APRIL - FINANCIAL EXPRESS
India’s coal production jumped 8.85% to 73.14 million tonne (MT) in April 2023 and the total coal despatch during the month went up 11.66% to ...
Tuesday, 23 May 23
CHINA COAL OUTPUT UP 4.5 PCT IN APRIL - XINHUA
China’s raw coal output posted stable expansion in April, official data showed.
The country produced 380 million tonnes of raw ...
Saturday, 20 May 23
NON-OPEC OIL SUPPLY DEVELOPMENT - OPEC
In 2022, non-OPEC supply is estimated to have increased by 1.9 mb/d y-o-y. Out of this, US liquids production increased by 1.2 mb/d, mainly on the ...
Saturday, 20 May 23
GLOBAL COAL TRADE HAS REALLY PICKED UP PACE IN RECENT MONTHS, NOW FULLY BACK TO PRE-COVID LEVELS - BANCHERO COSTA
Global coal trade has really picked up pace in recent months, and is now fully back to pre-Covid levels. In Jan-Apr 2023, total global seaborne coa ...
Saturday, 20 May 23
MARKET INSIGHT - INTERMODAL
India is one of the world's largest coal producers and one of the world's largest importers of coal. The country uses coal mainly for power ...
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- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Chettinad Cement Corporation Ltd - India
- Krishnapatnam Port Company Ltd. - India
- Bulk Trading Sa - Switzerland
- Meenaskhi Energy Private Limited - India
- Billiton Holdings Pty Ltd - Australia
- Renaissance Capital - South Africa
- Kepco SPC Power Corporation, Philippines
- Tamil Nadu electricity Board
- Wilmar Investment Holdings
- PTC India Limited - India
- Toyota Tsusho Corporation, Japan
- Pendopo Energi Batubara - Indonesia
- Ambuja Cements Ltd - India
- Carbofer General Trading SA - India
- ASAPP Information Group - India
- International Coal Ventures Pvt Ltd - India
- Ministry of Mines - Canada
- IHS Mccloskey Coal Group - USA
- Leighton Contractors Pty Ltd - Australia
- Rio Tinto Coal - Australia
- Marubeni Corporation - India
- Borneo Indobara - Indonesia
- Central Java Power - Indonesia
- Jindal Steel & Power Ltd - India
- Price Waterhouse Coopers - Russia
- Ministry of Finance - Indonesia
- Economic Council, Georgia
- Sindya Power Generating Company Private Ltd
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Essar Steel Hazira Ltd - India
- PowerSource Philippines DevCo
- Romanian Commodities Exchange
- Larsen & Toubro Limited - India
- GN Power Mariveles Coal Plant, Philippines
- MS Steel International - UAE
- Formosa Plastics Group - Taiwan
- San Jose City I Power Corp, Philippines
- Bhoruka Overseas - Indonesia
- Maharashtra Electricity Regulatory Commission - India
- Sree Jayajothi Cements Limited - India
- Vedanta Resources Plc - India
- Cement Manufacturers Association - India
- Planning Commission, India
- Bukit Makmur.PT - Indonesia
- Aboitiz Power Corporation - Philippines
- European Bulk Services B.V. - Netherlands
- The State Trading Corporation of India Ltd
- Indian Oil Corporation Limited
- Sojitz Corporation - Japan
- Salva Resources Pvt Ltd - India
- Parry Sugars Refinery, India
- GAC Shipping (India) Pvt Ltd
- Sical Logistics Limited - India
- Coal and Oil Company - UAE
- Thai Mozambique Logistica
- Orica Mining Services - Indonesia
- Global Business Power Corporation, Philippines
- New Zealand Coal & Carbon
- Global Green Power PLC Corporation, Philippines
- Malabar Cements Ltd - India
- Petron Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Commonwealth Bank - Australia
- Trasteel International SA, Italy
- Gujarat Sidhee Cement - India
- LBH Netherlands Bv - Netherlands
- Latin American Coal - Colombia
- Bukit Asam (Persero) Tbk - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Iligan Light & Power Inc, Philippines
- Attock Cement Pakistan Limited
- Binh Thuan Hamico - Vietnam
- Therma Luzon, Inc, Philippines
- Sarangani Energy Corporation, Philippines
- Indian Energy Exchange, India
- CNBM International Corporation - China
- The Treasury - Australian Government
- Xindia Steels Limited - India
- Ceylon Electricity Board - Sri Lanka
- Bharathi Cement Corporation - India
- Straits Asia Resources Limited - Singapore
- SMC Global Power, Philippines
- Vijayanagar Sugar Pvt Ltd - India
- Australian Coal Association
- Indika Energy - Indonesia
- Bhushan Steel Limited - India
- Pipit Mutiara Jaya. PT, Indonesia
- Mercuria Energy - Indonesia
- Bhatia International Limited - India
- ICICI Bank Limited - India
- Global Coal Blending Company Limited - Australia
- Metalloyd Limited - United Kingdom
- Semirara Mining and Power Corporation, Philippines
- Edison Trading Spa - Italy
- VISA Power Limited - India
- Standard Chartered Bank - UAE
- Siam City Cement - Thailand
- Mercator Lines Limited - India
- Mjunction Services Limited - India
- Coastal Gujarat Power Limited - India
- PNOC Exploration Corporation - Philippines
- Offshore Bulk Terminal Pte Ltd, Singapore
- Karbindo Abesyapradhi - Indoneisa
- Samtan Co., Ltd - South Korea
- Oldendorff Carriers - Singapore
- Port Waratah Coal Services - Australia
- Energy Development Corp, Philippines
- Posco Energy - South Korea
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Electricity Authority, New Zealand
- McConnell Dowell - Australia
- Bank of Tokyo Mitsubishi UFJ Ltd
- Bangladesh Power Developement Board
- Mintek Dendrill Indonesia
- Savvy Resources Ltd - HongKong
- Vizag Seaport Private Limited - India
- Aditya Birla Group - India
- IEA Clean Coal Centre - UK
- Chamber of Mines of South Africa
- Gujarat Mineral Development Corp Ltd - India
- Videocon Industries ltd - India
- Wood Mackenzie - Singapore
- Eastern Energy - Thailand
- London Commodity Brokers - England
- Baramulti Group, Indonesia
- Rashtriya Ispat Nigam Limited - India
- Meralco Power Generation, Philippines
- Barasentosa Lestari - Indonesia
- Antam Resourcindo - Indonesia
- Indogreen Group - Indonesia
- Riau Bara Harum - Indonesia
- Petrochimia International Co. Ltd.- Taiwan
- South Luzon Thermal Energy Corporation
- Deloitte Consulting - India
- Medco Energi Mining Internasional
- Karaikal Port Pvt Ltd - India
- Bayan Resources Tbk. - Indonesia
- Kartika Selabumi Mining - Indonesia
- Kaltim Prima Coal - Indonesia
- Orica Australia Pty. Ltd.
- Sinarmas Energy and Mining - Indonesia
- SN Aboitiz Power Inc, Philippines
- Simpson Spence & Young - Indonesia
- Miang Besar Coal Terminal - Indonesia
- Africa Commodities Group - South Africa
- Singapore Mercantile Exchange
- Kumho Petrochemical, South Korea
- Thiess Contractors Indonesia
- Kohat Cement Company Ltd. - Pakistan
- Madhucon Powers Ltd - India
- Tata Chemicals Ltd - India
- Kobexindo Tractors - Indoneisa
- The University of Queensland
- TNB Fuel Sdn Bhd - Malaysia
- Uttam Galva Steels Limited - India
- Star Paper Mills Limited - India
- Australian Commodity Traders Exchange
- India Bulls Power Limited - India
- TeaM Sual Corporation - Philippines
- Anglo American - United Kingdom
- Semirara Mining Corp, Philippines
- Jorong Barutama Greston.PT - Indonesia
- Lanco Infratech Ltd - India
- Kalimantan Lumbung Energi - Indonesia
- Ind-Barath Power Infra Limited - India
- Merrill Lynch Commodities Europe
- Indonesian Coal Mining Association
- Banpu Public Company Limited - Thailand
- Coalindo Energy - Indonesia
- Bahari Cakrawala Sebuku - Indonesia
- Jaiprakash Power Ventures ltd
- GMR Energy Limited - India
- Energy Link Ltd, New Zealand
- Maheswari Brothers Coal Limited - India
- Agrawal Coal Company - India
- GVK Power & Infra Limited - India
- OPG Power Generation Pvt Ltd - India
- Eastern Coal Council - USA
- SMG Consultants - Indonesia
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- AsiaOL BioFuels Corp., Philippines
- Grasim Industreis Ltd - India
- Gujarat Electricity Regulatory Commission - India
- Georgia Ports Authority, United States
- Indo Tambangraya Megah - Indonesia
- Manunggal Multi Energi - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Siam City Cement PLC, Thailand
- Heidelberg Cement - Germany
- Interocean Group of Companies - India
- White Energy Company Limited
- Directorate Of Revenue Intelligence - India
- Kideco Jaya Agung - Indonesia
- Ministry of Transport, Egypt
- PetroVietnam Power Coal Import and Supply Company
- Sakthi Sugars Limited - India
- Kapuas Tunggal Persada - Indonesia
- Central Electricity Authority - India
- Independent Power Producers Association of India
- Electricity Generating Authority of Thailand
- Goldman Sachs - Singapore
- Makarim & Taira - Indonesia
- Altura Mining Limited, Indonesia
- Parliament of New Zealand
- Dalmia Cement Bharat India
- CIMB Investment Bank - Malaysia
- Minerals Council of Australia
- Neyveli Lignite Corporation Ltd, - India
- Asmin Koalindo Tuhup - Indonesia
- Intertek Mineral Services - Indonesia
- Timah Investasi Mineral - Indoneisa
- Power Finance Corporation Ltd., India
- Holcim Trading Pte Ltd - Singapore
- Bukit Baiduri Energy - Indonesia
- Cigading International Bulk Terminal - Indonesia
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