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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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Sunday, 16 April 23
CHINA JUGGLES FOUR MAJOR ECONOMIC CHANGES IN 2023 - WOOD MACKENZIE
Change is afoot in China. Economic growth is slowing, while rising political tensions between China and the US, coupled with global supply chain re ...
Sunday, 16 April 23
CHINA'S MARCH COAL IMPORTS JUMP TO 3-YEAR HIGH - REUTERS
China’s coal imports surged in March to their highest in any month over the past three years as utilities increased purchases on expectations ...
Sunday, 16 April 23
OPEC KEEPS WORLD OIL DEMAND GROWTH OUTLOOK UNCHANGED
The OPEC Reference Basket (ORB) declined in March by $3.43, or 4.2%, m-o-m to average $78.45/b. The ICE Brent first-month contract fell by $4.33, o ...
Sunday, 16 April 23
CHEAPER SPOT LNG PRICES TEMPT SOME ASIAN BUYERS AMID SUPPLY GAINS - REUTERS
Cheaper spot prices for liquefied natural gas (LNG) are luring price-sensitive buyers back in Asia, with China and India recording rising imports i ...
Tuesday, 11 April 23
COAL USE CLIMBS WORLDWIDE DESPITE PROMISES TO SLASH IT - AAP
The burning of coal for electricity, cement, steel and other uses went up in 2022 despite global promises to phase down the fuel that is the bigges ...
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- Edison Trading Spa - Italy
- Binh Thuan Hamico - Vietnam
- Bhoruka Overseas - Indonesia
- Directorate Of Revenue Intelligence - India
- Agrawal Coal Company - India
- Kalimantan Lumbung Energi - Indonesia
- Attock Cement Pakistan Limited
- VISA Power Limited - India
- Metalloyd Limited - United Kingdom
- Therma Luzon, Inc, Philippines
- Intertek Mineral Services - Indonesia
- Georgia Ports Authority, United States
- Coalindo Energy - Indonesia
- San Jose City I Power Corp, Philippines
- GAC Shipping (India) Pvt Ltd
- Altura Mining Limited, Indonesia
- Neyveli Lignite Corporation Ltd, - India
- Antam Resourcindo - Indonesia
- Trasteel International SA, Italy
- PetroVietnam Power Coal Import and Supply Company
- GVK Power & Infra Limited - India
- Merrill Lynch Commodities Europe
- PTC India Limited - India
- PNOC Exploration Corporation - Philippines
- Wood Mackenzie - Singapore
- SMG Consultants - Indonesia
- Mercator Lines Limited - India
- Bayan Resources Tbk. - Indonesia
- Rio Tinto Coal - Australia
- Riau Bara Harum - Indonesia
- Kartika Selabumi Mining - Indonesia
- Australian Coal Association
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Kapuas Tunggal Persada - Indonesia
- Sojitz Corporation - Japan
- Jaiprakash Power Ventures ltd
- Sarangani Energy Corporation, Philippines
- Price Waterhouse Coopers - Russia
- GN Power Mariveles Coal Plant, Philippines
- Cigading International Bulk Terminal - Indonesia
- Gujarat Sidhee Cement - India
- Singapore Mercantile Exchange
- Kobexindo Tractors - Indoneisa
- Cement Manufacturers Association - India
- MS Steel International - UAE
- Indonesian Coal Mining Association
- Thiess Contractors Indonesia
- Essar Steel Hazira Ltd - India
- Semirara Mining Corp, Philippines
- The State Trading Corporation of India Ltd
- Grasim Industreis Ltd - India
- Bahari Cakrawala Sebuku - Indonesia
- Ind-Barath Power Infra Limited - India
- Bank of Tokyo Mitsubishi UFJ Ltd
- Petron Corporation, Philippines
- Global Business Power Corporation, Philippines
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- SN Aboitiz Power Inc, Philippines
- Globalindo Alam Lestari - Indonesia
- Chamber of Mines of South Africa
- Petrochimia International Co. Ltd.- Taiwan
- TNB Fuel Sdn Bhd - Malaysia
- Mercuria Energy - Indonesia
- Commonwealth Bank - Australia
- Straits Asia Resources Limited - Singapore
- Baramulti Group, Indonesia
- Coal and Oil Company - UAE
- Global Green Power PLC Corporation, Philippines
- Pipit Mutiara Jaya. PT, Indonesia
- Gujarat Electricity Regulatory Commission - India
- Indo Tambangraya Megah - Indonesia
- Malabar Cements Ltd - India
- Pendopo Energi Batubara - Indonesia
- PowerSource Philippines DevCo
- Orica Mining Services - Indonesia
- Alfred C Toepfer International GmbH - Germany
- Heidelberg Cement - Germany
- Kepco SPC Power Corporation, Philippines
- Xindia Steels Limited - India
- AsiaOL BioFuels Corp., Philippines
- Maheswari Brothers Coal Limited - India
- International Coal Ventures Pvt Ltd - India
- Latin American Coal - Colombia
- Mintek Dendrill Indonesia
- Timah Investasi Mineral - Indoneisa
- The Treasury - Australian Government
- Maharashtra Electricity Regulatory Commission - India
- Economic Council, Georgia
- Vizag Seaport Private Limited - India
- Independent Power Producers Association of India
- Oldendorff Carriers - Singapore
- Ministry of Mines - Canada
- Bharathi Cement Corporation - India
- Directorate General of MIneral and Coal - Indonesia
- Mjunction Services Limited - India
- Toyota Tsusho Corporation, Japan
- Meenaskhi Energy Private Limited - India
- Standard Chartered Bank - UAE
- White Energy Company Limited
- Borneo Indobara - Indonesia
- Leighton Contractors Pty Ltd - Australia
- LBH Netherlands Bv - Netherlands
- Indian Energy Exchange, India
- Krishnapatnam Port Company Ltd. - India
- Kohat Cement Company Ltd. - Pakistan
- Power Finance Corporation Ltd., India
- Bhushan Steel Limited - India
- Wilmar Investment Holdings
- Bukit Baiduri Energy - Indonesia
- European Bulk Services B.V. - Netherlands
- Jindal Steel & Power Ltd - India
- Karbindo Abesyapradhi - Indoneisa
- Lanco Infratech Ltd - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Central Java Power - Indonesia
- Coastal Gujarat Power Limited - India
- Semirara Mining and Power Corporation, Philippines
- Banpu Public Company Limited - Thailand
- IHS Mccloskey Coal Group - USA
- Indian Oil Corporation Limited
- Anglo American - United Kingdom
- Kumho Petrochemical, South Korea
- Vedanta Resources Plc - India
- Jorong Barutama Greston.PT - Indonesia
- Interocean Group of Companies - India
- Electricity Authority, New Zealand
- McConnell Dowell - Australia
- Iligan Light & Power Inc, Philippines
- Ministry of Transport, Egypt
- Sinarmas Energy and Mining - Indonesia
- South Luzon Thermal Energy Corporation
- Larsen & Toubro Limited - India
- Orica Australia Pty. Ltd.
- Uttam Galva Steels Limited - India
- Deloitte Consulting - India
- TeaM Sual Corporation - Philippines
- Sical Logistics Limited - India
- Tata Chemicals Ltd - India
- Meralco Power Generation, Philippines
- Miang Besar Coal Terminal - Indonesia
- Parry Sugars Refinery, India
- CNBM International Corporation - China
- India Bulls Power Limited - India
- Kaltim Prima Coal - Indonesia
- Bulk Trading Sa - Switzerland
- Chettinad Cement Corporation Ltd - India
- Sree Jayajothi Cements Limited - India
- Central Electricity Authority - India
- SMC Global Power, Philippines
- New Zealand Coal & Carbon
- Ambuja Cements Ltd - India
- Thai Mozambique Logistica
- Bangladesh Power Developement Board
- Global Coal Blending Company Limited - Australia
- Goldman Sachs - Singapore
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Formosa Plastics Group - Taiwan
- GMR Energy Limited - India
- Holcim Trading Pte Ltd - Singapore
- Electricity Generating Authority of Thailand
- Star Paper Mills Limited - India
- Eastern Energy - Thailand
- ASAPP Information Group - India
- Sindya Power Generating Company Private Ltd
- Aboitiz Power Corporation - Philippines
- Dalmia Cement Bharat India
- Sakthi Sugars Limited - India
- Medco Energi Mining Internasional
- Asmin Koalindo Tuhup - Indonesia
- Manunggal Multi Energi - Indonesia
- Siam City Cement - Thailand
- Siam City Cement PLC, Thailand
- Rashtriya Ispat Nigam Limited - India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- Salva Resources Pvt Ltd - India
- Energy Link Ltd, New Zealand
- Karaikal Port Pvt Ltd - India
- Indogreen Group - Indonesia
- Simpson Spence & Young - Indonesia
- Africa Commodities Group - South Africa
- Parliament of New Zealand
- Billiton Holdings Pty Ltd - Australia
- ICICI Bank Limited - India
- CIMB Investment Bank - Malaysia
- Carbofer General Trading SA - India
- Marubeni Corporation - India
- Planning Commission, India
- Posco Energy - South Korea
- Energy Development Corp, Philippines
- Bukit Makmur.PT - Indonesia
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Renaissance Capital - South Africa
- Kideco Jaya Agung - Indonesia
- IEA Clean Coal Centre - UK
- Madhucon Powers Ltd - India
- Romanian Commodities Exchange
- Bhatia International Limited - India
- The University of Queensland
- London Commodity Brokers - England
- Australian Commodity Traders Exchange
- Eastern Coal Council - USA
- Makarim & Taira - Indonesia
- Port Waratah Coal Services - Australia
- Ministry of Finance - Indonesia
- Minerals Council of Australia
- Savvy Resources Ltd - HongKong
- Vijayanagar Sugar Pvt Ltd - India
- Tamil Nadu electricity Board
- Bukit Asam (Persero) Tbk - Indonesia
- Barasentosa Lestari - Indonesia
- Videocon Industries ltd - India
- Samtan Co., Ltd - South Korea
- Ceylon Electricity Board - Sri Lanka
- Indika Energy - Indonesia
- Gujarat Mineral Development Corp Ltd - India
- OPG Power Generation Pvt Ltd - India
- Aditya Birla Group - India
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