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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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Saturday, 25 March 23
COAL INDIA HAS STRONG CASE TO INCREASE PRICES, TALKS ON: CMD AGRAWAL - BUSINESS STANDARD
Coal India (CIL) Chairman and Managing Director Pramod Agrawal said on Monday there is a “strong case” for increasing coal prices, and ...
Saturday, 25 March 23
ASIAN CRUDE PALM OIL WATCH 1Q23 - FITCH RATINGS
Malaysian benchmark crude palm oil (CPO) spot prices have averaged around USD915 per tonne (t) so far in 1Q23, sharply lower than the average of ar ...
Saturday, 25 March 23
INDONESIA’S COAL EXPORT INCREASED BY 21.0% YOY TO 388.4 MLN T IN 2022 - BANCHERO COSTA
After a slow start in the first quarter, global coal trade has really picked up pace last year, and is now fully back to pre-Covid levels. In the f ...
Saturday, 25 March 23
GLOBAL LNG-ASIA SPOT PRICES SLIP AS WEAK NORTHERN DEMAND REMAINS - REUTERS
Asian spot prices of liquefied natural gas (LNG) declined this week, falling to a 21-month low, as weak demand in the northeast Asia region continu ...
Wednesday, 22 March 23
OIL PRICE FALL SPECULATIVE, TO HIT $140 BY YEAR-END -ANDURAND: REUTERS
The recent fall in oil prices due to banking jitters is speculative and oil will hit $140 a barrel by the end of the year, hedge fund manager Pierr ...
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- Energy Development Corp, Philippines
- ICICI Bank Limited - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Bank of Tokyo Mitsubishi UFJ Ltd
- Australian Commodity Traders Exchange
- Meenaskhi Energy Private Limited - India
- Tata Chemicals Ltd - India
- Wood Mackenzie - Singapore
- Kaltim Prima Coal - Indonesia
- Attock Cement Pakistan Limited
- Trasteel International SA, Italy
- Miang Besar Coal Terminal - Indonesia
- The State Trading Corporation of India Ltd
- Kohat Cement Company Ltd. - Pakistan
- SMC Global Power, Philippines
- Star Paper Mills Limited - India
- Offshore Bulk Terminal Pte Ltd, Singapore
- Kepco SPC Power Corporation, Philippines
- Globalindo Alam Lestari - Indonesia
- Indika Energy - Indonesia
- Orica Mining Services - Indonesia
- GMR Energy Limited - India
- Chettinad Cement Corporation Ltd - India
- Jaiprakash Power Ventures ltd
- Billiton Holdings Pty Ltd - Australia
- Altura Mining Limited, Indonesia
- Siam City Cement PLC, Thailand
- TeaM Sual Corporation - Philippines
- ASAPP Information Group - India
- European Bulk Services B.V. - Netherlands
- Kumho Petrochemical, South Korea
- OPG Power Generation Pvt Ltd - India
- Bhatia International Limited - India
- Kalimantan Lumbung Energi - Indonesia
- Parliament of New Zealand
- Petron Corporation, Philippines
- Mercator Lines Limited - India
- Posco Energy - South Korea
- Indian Oil Corporation Limited
- Coal and Oil Company - UAE
- Bukit Baiduri Energy - Indonesia
- Siam City Cement - Thailand
- Ind-Barath Power Infra Limited - India
- PNOC Exploration Corporation - Philippines
- Sakthi Sugars Limited - India
- Mercuria Energy - Indonesia
- Economic Council, Georgia
- International Coal Ventures Pvt Ltd - India
- Bukit Asam (Persero) Tbk - Indonesia
- IEA Clean Coal Centre - UK
- India Bulls Power Limited - India
- Bhoruka Overseas - Indonesia
- Sindya Power Generating Company Private Ltd
- Simpson Spence & Young - Indonesia
- Renaissance Capital - South Africa
- Petrochimia International Co. Ltd.- Taiwan
- CIMB Investment Bank - Malaysia
- Bangladesh Power Developement Board
- Bulk Trading Sa - Switzerland
- Truba Alam Manunggal Engineering.Tbk - Indonesia
- Semirara Mining Corp, Philippines
- Eastern Energy - Thailand
- Sree Jayajothi Cements Limited - India
- VISA Power Limited - India
- London Commodity Brokers - England
- Meralco Power Generation, Philippines
- Heidelberg Cement - Germany
- Uttam Galva Steels Limited - India
- SMG Consultants - Indonesia
- Cigading International Bulk Terminal - Indonesia
- Jorong Barutama Greston.PT - Indonesia
- Borneo Indobara - Indonesia
- PTC India Limited - India
- GAC Shipping (India) Pvt Ltd
- Aboitiz Power Corporation - Philippines
- Krishnapatnam Port Company Ltd. - India
- Chamber of Mines of South Africa
- Independent Power Producers Association of India
- Dr Ramakrishna Prasad Power Pvt Ltd - India
- Cement Manufacturers Association - India
- Karaikal Port Pvt Ltd - India
- Mintek Dendrill Indonesia
- Holcim Trading Pte Ltd - Singapore
- Indo Tambangraya Megah - Indonesia
- Manunggal Multi Energi - Indonesia
- Binh Thuan Hamico - Vietnam
- Parry Sugars Refinery, India
- Energy Link Ltd, New Zealand
- Directorate Of Revenue Intelligence - India
- Oldendorff Carriers - Singapore
- Asmin Koalindo Tuhup - Indonesia
- Maheswari Brothers Coal Limited - India
- Africa Commodities Group - South Africa
- Timah Investasi Mineral - Indoneisa
- GN Power Mariveles Coal Plant, Philippines
- Port Waratah Coal Services - Australia
- Sarangani Energy Corporation, Philippines
- Ambuja Cements Ltd - India
- Georgia Ports Authority, United States
- Edison Trading Spa - Italy
- Ministry of Transport, Egypt
- The University of Queensland
- Tamil Nadu electricity Board
- Aditya Birla Group - India
- TNB Fuel Sdn Bhd - Malaysia
- Australian Coal Association
- MS Steel International - UAE
- Banpu Public Company Limited - Thailand
- Maharashtra Electricity Regulatory Commission - India
- Merrill Lynch Commodities Europe
- Mjunction Services Limited - India
- Therma Luzon, Inc, Philippines
- Wilmar Investment Holdings
- McConnell Dowell - Australia
- Bharathi Cement Corporation - India
- Central Electricity Authority - India
- Savvy Resources Ltd - HongKong
- Standard Chartered Bank - UAE
- Salva Resources Pvt Ltd - India
- Formosa Plastics Group - Taiwan
- Antam Resourcindo - Indonesia
- Orica Australia Pty. Ltd.
- Dong Bac Coal Mineral Investment Coporation - Vietnam
- Makarim & Taira - Indonesia
- Baramulti Group, Indonesia
- Kartika Selabumi Mining - Indonesia
- Essar Steel Hazira Ltd - India
- Kideco Jaya Agung - Indonesia
- Gujarat Electricity Regulatory Commission - India
- San Jose City I Power Corp, Philippines
- Metalloyd Limited - United Kingdom
- Jindal Steel & Power Ltd - India
- Iligan Light & Power Inc, Philippines
- Lanco Infratech Ltd - India
- Gujarat Sidhee Cement - India
- Pendopo Energi Batubara - Indonesia
- Malabar Cements Ltd - India
- Eastern Coal Council - USA
- Coalindo Energy - Indonesia
- Indian Energy Exchange, India
- Global Business Power Corporation, Philippines
- Grasim Industreis Ltd - India
- Bhushan Steel Limited - India
- Rio Tinto Coal - Australia
- Central Java Power - Indonesia
- Vijayanagar Sugar Pvt Ltd - India
- Kapuas Tunggal Persada - Indonesia
- Minerals Council of Australia
- Rashtriya Ispat Nigam Limited - India
- Vizag Seaport Private Limited - India
- Romanian Commodities Exchange
- Bukit Makmur.PT - Indonesia
- Directorate General of MIneral and Coal - Indonesia
- Electricity Authority, New Zealand
- Gujarat Mineral Development Corp Ltd - India
- LBH Netherlands Bv - Netherlands
- Straits Asia Resources Limited - Singapore
- Karbindo Abesyapradhi - Indoneisa
- AsiaOL BioFuels Corp., Philippines
- Price Waterhouse Coopers - Russia
- Alfred C Toepfer International GmbH - Germany
- Pipit Mutiara Jaya. PT, Indonesia
- Kobexindo Tractors - Indoneisa
- Agrawal Coal Company - India
- Neyveli Lignite Corporation Ltd, - India
- SN Aboitiz Power Inc, Philippines
- Vedanta Resources Plc - India
- Thai Mozambique Logistica
- Toyota Tsusho Corporation, Japan
- Semirara Mining and Power Corporation, Philippines
- Carbofer General Trading SA - India
- Electricity Generating Authority of Thailand
- Sinarmas Energy and Mining - Indonesia
- Samtan Co., Ltd - South Korea
- CNBM International Corporation - China
- GVK Power & Infra Limited - India
- Madhucon Powers Ltd - India
- Ministry of Mines - Canada
- Indogreen Group - Indonesia
- Ceylon Electricity Board - Sri Lanka
- Goldman Sachs - Singapore
- Riau Bara Harum - Indonesia
- Intertek Mineral Services - Indonesia
- White Energy Company Limited
- Deloitte Consulting - India
- Medco Energi Mining Internasional
- Barasentosa Lestari - Indonesia
- Leighton Contractors Pty Ltd - Australia
- PetroVietnam Power Coal Import and Supply Company
- Xindia Steels Limited - India
- Sojitz Corporation - Japan
- Bayan Resources Tbk. - Indonesia
- IHS Mccloskey Coal Group - USA
- PowerSource Philippines DevCo
- Larsen & Toubro Limited - India
- Bahari Cakrawala Sebuku - Indonesia
- Dalmia Cement Bharat India
- Videocon Industries ltd - India
- Ministry of Finance - Indonesia
- Marubeni Corporation - India
- Thiess Contractors Indonesia
- Coastal Gujarat Power Limited - India
- Interocean Group of Companies - India
- Indonesian Coal Mining Association
- Sical Logistics Limited - India
- Commonwealth Bank - Australia
- Power Finance Corporation Ltd., India
- Global Coal Blending Company Limited - Australia
- Planning Commission, India
- Asia Pacific Energy Resources Ventures Inc, Philippines
- The Treasury - Australian Government
- South Luzon Thermal Energy Corporation
- Anglo American - United Kingdom
- Singapore Mercantile Exchange
- New Zealand Coal & Carbon
- Latin American Coal - Colombia
- Global Green Power PLC Corporation, Philippines
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