Force Majeure Enters Thai Hotel Fray

Posted: 21 Feb 2011 | 6:00 am

Webster's dictionary defines the term "force majeure" as - 'an unanticipated or uncontrollable event or effect which releases one from fulfillment of a contractual obligation'.

While for international hotel chains the inclusion into management agreements is a given, Thailand's continued political stress is seeing contractual conflicts start to surface over its interpretation.

A case in point is the high profile dispute being played out in the financial press over the Six Senses Hideaway Yao Noi's LUXF property fund. At the heart of the dispute has been a shortfall in the guaranteed returns promised by the funds guarantor Pakoh Hotel to investors.

Financial institution TMB Asset Management have been caught in the middle with Pakoh now invoking 'force majeure' for its inability to provided the promised returns to fund subscribers.

Both the global financial crises i.e. sub-prime and ongoing rifts in the Thai government are being branded as key drivers.

At the same time both hotel chains and owners throughout the country have been revisiting performance clauses and contractual guarantees which could bring about disputes and in time litigation.

It's apparent that "force majeure" will be become a wider bone of contention in months ahead.

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