Seadrill Ghana Operations Limited v Tullow Ghana Limited  EWHC 1640 (Comm)
The defendant contracted to pay the claimant $600,000 per day to hire an oil rig. The defendant intended to develop an oilfield off the coast of Ghana which required a licence from the government.
The defendant was entitled to end the contract if a force majeure event arose which prevented it from fulfilling its contractual obligations, and the event continued for 60 consecutive days. The contract specified a number of force majeure events, one of which was a “drilling moratorium imposed by the government”.
Following a territorial dispute between the Ivory Coast and Ghana, Ghana prohibited any new drilling in the disputed waters, which included the defendant’s proposed offshore oilfield (“the Moratorium”).
Unexpectedly, a major technical problem was discovered with one of the defendant’s existing offshore oilfields (“the Technical Event”). The defendant said that this resulted in the Ghanaian government’s refusal to approve its plan to develop the proposed oilfield.
The defendant argued that the force majeure clause had been triggered by the Moratorium event. It stopped paying the claimant and terminated the contract. The claimant claimed $277.4M for the defendant’s early termination of the contract.
The court held:
The court will scrutinise the express wording of the contract and all the circumstances of the case. It is important that both parties therefore understand the mechanics of the force majeure clause.
Where multiple events are concurrent causes of a contractual breach, it is crucial that each event is recognised as force majeure event pursuant to the contract. A force majeure event must be the sole cause of the failure to perform a contractual obligation, not one of them.
The following should be noted when parties negotiate force majeure clauses:
If you require any assistance with negotiating a force majeure clause or reviewing the implications of such a clause, then please contact: