Seadrill Ghana Operations Ltd v Tullow Ghana Ltd 2018 EWHC 1640 Comm - 3 July 2018
Drilling for oil is a risky business. Oil companies seek to protect themselves against the financial consequences of risk by appropriate clauses in their contracts, for example, by a force majeure clause. This case concerns a contract for the hire of an expensive oil rig which contained such a clause. During the course of a territorial sea dispute between neighbouring states the arbitration tribunal determining that dispute required drilling to cease in the disputed sea where drilling was to take place. Other, perhaps more usual, risks also materialised: a technical problem occurred with a related marine structure, a Floating Production Storage and Offloading unit (a converted vessel used for the processing and storage of oil, an "FPSO"), which significantly affected the amount of oil which could be extracted from the well; a government failed to give approval for drilling in a particular location; and there was a fall in the market value of oil which changed the economic landscape of the oil business. After these risks had materialised the oil company decided to bring the contract to an end, relying upon the order of the arbitration tribunal as a force majeure. The question to which this case gives rise is whether the oil company was entitled to rely upon the force majeure clause in that way....