Comment by tiffanyh
3 days ago
I realize there’s a lot of hate in this thread, but I think there’s another side to this.
Force majeure is basically there for situations where something outside a company’s control prevents them from delivering on a contract.
I can see Oracle’s argument here. A number of states and local governments that were originally very supportive of new data centers, including places like Texas and Pennsylvania, have since started blocking or restricting new construction.
If Oracle signed these contracts and the government later changed the rules and have stopped those projects from moving forward, it’s hard to argue they should still be held to the same delivery commitments.
(That seems pretty close to the type of situation force majeure is meant for.)
> the government later changed the rules
Did they, or was it found that they had ignored them and are now being forced to follow the law? Those state and local governments were so supportive that the processes for approvals and reviews was all done in secret and without necessary inputs. You know, the things the laws in those areas said you had to do.
In this particular project, it looks like Oracle and Blue Owl Capital singed the contract before state regulators reviewed and provided necessary approvals.
https://www.datacenterdynamics.com/en/news/new-mexico-regula...
And not seeking necessary regulatory approval doesn't really seem like things 'beyond their control.'
Maybe some are not as familiar with this, but I'll use Texas as an example.
In 2025, Texas state government announces a $40B infrastructure investment specifically calling out building data centers for AI as a key part of that package.
https://gov.texas.gov/news/post/governor-abbott-google-annou...
Then, just this week, Texas government reverse their position and halts permits for all data centers:
https://gov.texas.gov/news/post/governor-abbott-directs-tceq...
I'm not trying to defend Oracle, but I can understand their perspective on this.
If the state government is only now blocking what their contract commits them to deliver, it's unreasonable.
Seems like Oracle didn't have anything in writing. Looks more like a risk of doing business and over promising.
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If I contract with a construction company to build a house, and they can’t get permits because the local government turned anti-housing, would that be force majeure and allow the construction company to get out of the contract without big penalties? (Actual question here, not rhetorical.)
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In that case, would the people caught unemployed and with upside down loans in the 2008 financial crisis would have a reasonable argument for "force majeure" to cancel their mortgages? ... After all, they had a reasonable expectation that the economy would continue to support their employment, either with their current employer or by finding a new job that paid just as well?
at some point the phrases loses its meaning if it becomes applicable to pretty much anything.
Cancel their mortgages and keep their houses?
I don’t think Oracle is proposing they get a data center they didn’t finish paying for.
In your example, governments we not enacting new regulation that banned you from getting a new job.
In this situation, governments are now enacting new regulation that ban companies like Oracle from building new data centers.
No, but the economic situation is banning you from getting a job, which is even more powerful than the government, especially when the government does not support a rising economy which will create jobs, people can build wealth with.
so the argument is even stronger than for oracle.
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I mean yeah it's a political choice. Big firms get to call force majeure. Households do not.
A hurricane wipes out your data center and someone sues you for it not being finished on time. Thats what force majeure is for.
You made a series of bad business decisions != force majeure.
As the AI bubble starts to pop we’re going to see a lot of creative claims as everyone rushes for the exits and the debt bomb behind all this infra lights off.
force majeure may not cover you even in the case of hurricanes.
the idea is that force majeure is for things that you could not forsee, could not plan for, and could not stop even if you were aware.
if your company sets up shop in a hurricane prone area but then fails to keep servers in other colo / cloud locations -- and then goes down cuz a hurricane inevitably hits Florida, you absolutely can get sued and lose.
My recollection from law school is that force majeure is more like a specific subset of "impossibility of performance", which is to say it's not generally the same as "something outside a company's control."
I can’t see what the event that has caused a force majeure claim is, though local opposition is not unexpected in any infrastructure buildout - I would be surprised if that is permitted / accepted.
All the reporting is about delaying payments, not a good look, and definitely undermines the FM claim. FM generally speaking needs something truly in expected and outside of control - COVID / maybe a literal war in the region your a working in. Increased cost exposure and push back from local opposition would not clear the FM bar in my experience.
A reasonably-written contract would have weasel words in it - something like "subject to zoning approval, and approval of the needed power and water and etcetera". Oracle has very expensive lawyers; they should have had those clauses in there.
Still, you write those for the known possible obstacles. Having the state government change the ground rules may not have been one of your known possibles. So, yeah, I could see force majeure being at least possibly reasonable.
If developer's lawyers were better than Oracle's lawyers and stopped those weasel-words in the contract - that would be poetic justice for Oracle.
Contracts are nothing more than programs
Reuters is reporting that it is due to difficulty getting power. Which, if correct, should have been a foreseeable risk.
"Force majeure is basically there for situations where something outside a company’s control prevents them from delivering on a contract."
More broadly, Force majeure refers to an act of God or such outside of human control.
It’s so well known that Oracle is such a hostile and predatory company, it’s sooo hard for me to look at this objectively.
Be careful, you're in danger of anthropomorphizing the lawnmower. [1]
[1] https://www.youtube.com/watch?v=-zRN7XLCRhc&t=2308s
Ah, so eloquently stated.
There's zero reason why a company, who failed to account for regulatory risk, should be able to call that to avoid consequences.
We have to stop shielding and bailing out companies(ans banks) when their bet fails.
Maybe they should have negotiated legal deals from the get go?
No special rules for billionaires.