Seadrill Ghana Operations Ltd v Tullow Ghana Ltd

Seadrill Ghana Operations Ltd v Tullow Ghana Ltd

Tullow was not entitled to rely on the force majeure clause because its inability to perform was caused by two factors: the drilling moratorium and the Government’s failure to approve the Greater Jubilee Plan. The force majeure event was not the sole cause. Tullow also failed to exercise reasonable endeavours to avoid or circumvent force majeure by not instructing work on certain wells. VAT was not due on standby invoices after the rig left Ghana, but was due on termination for convenience invoices. Withholding tax was due on services supplied in Ghana.

Parties
Claimant: Seadrill Ghana Operations Limited; Defendant: Tullow Ghana Limited
Jurisdiction
England and Wales
Judgment Date
03 July 2018
Procedural Posture
Commercial Contract Dispute / Final Judgment
Outcome
Judgment for Seadrill Ghana Operations Limited
Legal Topics
Force Majeure, Termination for Convenience, Reasonable Endeavours, VAT, Withholding Tax
Contract Law Oil and Gas Law Tax Law Force Majeure Termination for Convenience Reasonable Endeavours VAT Withholding Tax

Case Brief

Summary, issues, holding and outcome

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Parties

Seadrill Ghana Operations Limited

Claimant

Tullow Ghana Limited

Defendant

Procedural Posture

Commercial Contract Dispute / Final Judgment

Legal Issues

  1. 1 Whether Tullow was entitled to rely on the force majeure clause to terminate the contract
  2. 2 Whether Tullow exercised reasonable endeavours to avoid or circumvent force majeure
  3. 3 Whether VAT and withholding tax were properly charged or deducted

Ratio Decidendi

Tullow was not entitled to rely on the force majeure clause because its inability to perform was caused by two factors: the drilling moratorium and the Government’s failure to approve the Greater Jubilee Plan. The force majeure event was not the sole cause. Tullow also failed to exercise reasonable endeavours to avoid or circumvent force majeure by not instructing work on certain wells. VAT was not due on standby invoices after the rig left Ghana, but was due on termination for convenience invoices. Withholding tax was due on services supplied in Ghana.

Court Disposition

Judgment for Seadrill Ghana Operations Limited

Orders

  • Tullow Ghana Limited to pay contractual sums to Seadrill Ghana Operations Limited, including standby and termination for convenience payments, subject to VAT and withholding tax as determined.
  • VAT not due on standby invoices after 10 November 2016.