Media Contract Dispute – COVID-19 Pandemic Was a ‘Force Majeure Event’
The suspension of live sporting events during the COVID-19 pandemic was a force majeure event that justified early termination of a media rights contract. The High Court so ruled in a case of great significance to the business community.
After a tendering process, the organiser of two major sporting competitions entered into a high-value contract by which it granted live coverage rights in respect of four seasons to a television company. When the pandemic hit, the organiser was obliged to suspend the competitions. Important matches were postponed and were not played until the start of the following season.
The company’s response was to terminate the deal in reliance on a force majeure clause in the contract. The clause provided that, if a force majeure event prevented, hindered or delayed a party’s performance of its contractual obligations for a continuous period of more than 60 days, the contract could be terminated by the party not affected by the force majeure event. The organiser launched proceedings, seeking damages from the company.
The Court, however, rejected the organiser’s claim that the company had wrongfully repudiated the contract. It noted that the organiser was bound to stage each of the competitions during each season and that the outstanding matches had been postponed for well in excess of 60 days prior to the cancellation of the contract. The organiser, which had not at that stage informed anyone of the dates on which the matches would be played, had throughout that period been hindered and delayed in performing its obligations.
The company had not acted prematurely and, given the impact of the pandemic, it had an unqualified entitlement to take advantage of the force majeure clause and terminate the contract. After ruling on other issues in the case, the Court heard further argument on the precise financial consequences of its decision.