EM Law force majeure

Force Majeure – Not Easy To Rely On

In a recent case (Seadrill Ghana Operations Ltd v Tullow Ghana Ltd [2018] EWHC 1640 (Comm)) the High Court ruled that although a force majeure event had arisen, that event was not the sole reason for Tullow’s failure to perform. As such Tullow could not rely on the force majeure clause to avoid liability for its failure to perform.

Background

Tullow had interests in two offshore petroleum licences off the coast of Ghana granted by the Government of Ghana. Tullow hired a large and expensive drilling rig from Seadrill to extract the oil – operating costs for the rig were USD 600,000 per day.

The contract between Tullow and Seadrill contained a force majeure clause that specifically included a “drilling moratorium imposed by the government” as an example of a force majeure event.

After the contract had been entered into, the Government of Ghana and the Government of Cote d’Ivoire entered into arbitration to resolve an offshore boundary dispute. This led to the arbitration tribunal making a Provisional Measures Order ("PMO") pursuant to which the tribunal ordered that "Ghana shall take all necessary steps to ensure that no new drilling either by Ghana or under its control takes place in the disputed area. As a result of this order, the Government of Ghana imposed a moratorium on drilling in one of the concessions. Tullow was also prevented from drilling in its other concession because the Government of Ghana refused to approve its project plan for that area.

Tullow terminated its contract with Seadrill relying on the force majeure clause.

Seadrill claimed that Tullow terminated the contract for convenience deciding that the contract had become too expensive. Due to the collapse in oil prices by the time that Tullow terminated the contract similar rigs were being hired out for around USD 200,000 per day.

Decision

The High Court found that the drilling moratorium was a force majeure event while the Government of Ghana’s failure to approve the project plan for the other concession was not. Citing the Court of Appeal's decision in Intertradex v Lesieur [1978] 2 Lloyd's Reports 509, which establishes the proposition that a force majeure event must be the sole cause of the failure to perform an obligation, Teare J concluded that there was no sole cause here.

Tullow was ordered to make payment to Seadrill of approximately USD 254 million.

Conclusions

As a clause often found at the back of a contract, it is easy to forget how important the force majeure clause can be. Careful consideration needs to be given as to how it is drafted. If a party wants to be able to vary or terminate a contract if adverse economic conditions arise then specific provisions should be built in to address this – a standard force majeure clause would probably not be sufficient.

Terminating a contract on grounds of force majeure is not straightforward. The relevant force majeure event must actually cause the failure to perform and must be the sole cause.

Remember that emails you send can end up in court. In this case the court was presented with an email from a director of Tullow who had written to a colleague asking whether "with a bit of manipulation" it was possible to use the PMO "to call FM” (force majeure) on either the West Leo or Drillmax." (West Leo was the name of Seadrill’s rig.) That email certainly can’t have helped Tullow’s cause.

If you have any questions around force majeure or you need support with drafting force majeure clauses contact Neil Williamson.


Privacy Breach EM Law Data Protection

Data Protection – Our First Enquiry About A Privacy Breach

According to a recent ITV report, the number of privacy breach complaints reported to the Information Commissioner has nearly doubled since GDPR came into force in May. Apparently, 4214 complaints were made in July.

Here at EM Law we are receiving our first enquiries from individuals who want to know whether they can bring a claim against their employers for privacy breach. We predicted that claims of this nature would start appearing more often, driven by new claims factories bringing actions on behalf of clients who probably weren’t as distressed about their data not being handled correctly as they were making out. The very first enquiry we received, though, gave our cynical outlook a bit of a knocking and reminded us why GDPR has been introduced - to protect individuals from organisations who fail to look after their data properly. Below is an outline of that enquiry.

An individual (let’s call her Miss A) contacted me to say that a work colleague of hers had got hold of her employment contract along with the contracts of other employees in their organisation. She’d done so by replicating a key for the filing cabinet in which the employment contracts were held. Miss A told me that she felt very distressed by the fact that her colleague knew what she earned. I asked Mis A why her colleague was behaving in this way. Miss A thought it was because her colleague was showing off – thinking it was clever to have access to all this information.

I asked Miss A about her employer – what changes had they made as a result of GDPR coming into force? Had they made any announcements to staff or provided any training? Turns out the employer had done nothing about GDPR.

I advised Miss A that her employer should be contacting the Information Commissioner to advise them that there had been a data privacy breach and writing to staff to explain what had happened and how their personal data had been wrongly accessed. I advised Miss A that she had a potential claim against the employer for failing to put adequate measures in place to protect her personal data from being disclosed improperly. No one should be keeping employment contracts in hard copy in a filing cabinet. I can’t understand why anyone would want to anyway – data protection aside. You’re just clogging up space with items that can be kept in softcopy on a database.

Miss A didn’t contact me to be aggressive or because she saw a way of making some money. She contacted me because she was upset that a colleague of hers knew what she was earning. I totally understand why that would be upsetting. I think her intention is to go back to her employer and tell them that they need to do something about data protection and her privacy breach and take notice of GDPR. I wonder what their reaction will be.

Miss A’s story was a useful reminder to me of how individuals can be hurt when their personal data isn’t looked after properly leading to a privacy breach. EM Law usually supports organisations who are implementing measures to be compliant with data protection law. So we’re usually on the employer side, sympathising with them about the hoops they need to jump through. Next time I’m doing some training though, I’ll mention Miss A’s story and hopefully this will bring it home why putting in place appropriate measures and systems is the right (as well as the lawful) thing to do.

If you would like more information on data protection, GDPR requirements or if you are concerned about a personal data breach contact Neil Williamson at EM Law.