Seadrill Management Services Ltd & Anor v OAO Gazprom

Seadrill Management Services Ltd & Anor v OAO Gazprom

Seadrill's breach of contract by negligent operation of the rig was not repudiatory; Gazprom's termination was wrongful and amounted to repudiation, entitling Seadrill to accept and terminate. The contract's risk allocation and indemnity clauses did not exclude liability for negligent breach. Seadrill is entitled to hire up to the incident; claims for uninsured losses and hire after the incident fail for circuity of action. Gazprom is entitled to damages for wasted costs caused by Seadrill's breach, but not for costs relating to the GALAXY DRILLER that would have been incurred in any event.

Parties
Claimant: Seadrill Management Services Limited; Claimant: Seadrill Larissa Limited; Defendant: OAO Gazprom
Jurisdiction
England and Wales
Judgment Date
01 July 2009
Procedural Posture
Commercial Contract Dispute / Judgment After Trial on Issues of Principle
Outcome
Seadrill's claim for hire succeeds up to the incident; claims for uninsured losses and hire after the incident fail. Gazprom's counterclaim for damages for non-repudiatory breach succeeds in principle for wasted costs, subject to further determination of quantum. Claims for damages relating to GALAXY DRILLER and for...
Legal Topics
Risk Allocation, Repudiatory Breach, Indemnity Clauses, Damages, Termination of Contract, Construction of Standard Form Contracts
Contract Law Commercial Law Risk Allocation Repudiatory Breach Indemnity Clauses Damages Termination of Contract Construction of Standard Form Contracts

Case Brief

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Parties

Seadrill Management Services Limited

Claimant

Seadrill Larissa Limited

Claimant

OAO Gazprom

Defendant

Procedural Posture

Commercial Contract Dispute / Judgment After Trial on Issues of Principle

Legal Issues

  1. 1 Whether Seadrill breached the contract by negligent operation of the rig
  2. 2 Whether such breach was repudiatory and entitled Gazprom to terminate
  3. 3 Correct construction of risk allocation and indemnity clauses

Ratio Decidendi

Seadrill's breach of contract by negligent operation of the rig was not repudiatory; Gazprom's termination was wrongful and amounted to repudiation, entitling Seadrill to accept and terminate. The contract's risk allocation and indemnity clauses did not exclude liability for negligent breach. Seadrill is entitled to hire up to the incident; claims for uninsured losses and hire after the incident fail for circuity of action. Gazprom is entitled to damages for wasted costs caused by Seadrill's breach, but not for costs relating to the GALAXY DRILLER that would have been incurred in any event.

Court Disposition

Seadrill's claim for hire succeeds up to the incident; claims for uninsured losses and hire after the incident fail. Gazprom's counterclaim for damages for non-repudiatory breach succeeds in principle for wasted costs, subject to further determination of quantum. Claims for damages relating to GALAXY DRILLER and for...

Orders

  • Seadrill awarded hire from 1800 hours on 23 November 2005 to 0600 hours on 9 January 2006, subject to deductions for periods without Class certification.
  • Seadrill awarded mobilisation and demobilisation payments.