Force majeure

2 Entertain Video Ltd & Ors v Sony DADC Europe Ltd [2020] EWHC 972 (TCC)

Facts

The defendants owned a warehouse which was destroyed in an arson attack by rioters in the disturbances which followed the shooting of Mark Duggan in 2011. The warehouse burned for ten days and the claimant’s stock, DVDs and CDs worth around GBP40 million, was destroyed.

The force majeure clause at the heart of this case was set out in a logistics contract between the parties and expressly mentioned fire and riots:

“Neither party shall be liable for its failure or delay in performing any of its obligations hereunder if such failure or delay is caused by circumstances beyond the reasonable control of the party affected including but not limited to industrial action (at either party), fire, flood, wars, armed conflict, terrorist act, riot, civil commotion, malicious damage, explosion, unavailability of fuel, pandemic or governmental or other regulatory action.”

Held

The fire and resulting loss of the stock did not amount to circumstances beyond the reasonable control of the warehouse owner. O’Farrell J said:

“…adequate security measures that could have been taken by [the warehouse owner] probably would have deterred or delayed the attack on the warehouse and prevented the youths from gaining entry. Reasonable fire precautions, namely, the installation of sprinklers, probably would have suppressed the fire and significantly reduced any damage to the warehouse and its stock.”

It was also held that the loss of profit and business interruption costs claimed did not constitute indirect or consequential loss or damage but rather were direct and natural results of the fire. The claimants were therefore entitled to damages, albeit limited to the contractual cap of GBP5 million.