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“EPCIC Contracts Management and

Essential Elements of International Contracts Laws”

References for Discussion & Explanation

Conducted By:

Jayems Dhingra Principal Consultant

Tiberias Management Consultants Pte. Ltd.

Contrast between English and Common Law Jurisdictions

Court of Appeal and Supreme Courts are mostly combined as one, Court of Final Appeal or Appellate Court is formed within the Supreme Court depending on the cases.

23 to 25 May 2016 (c) Copyrights Reserved in Tiberias Management Consultants - EPCIC Contracts Management Workshop Notes 2

English Court System

Key Differences in Contracts Under Civil Law Regime

Contracts

• The common law of contracts generally awards damages for breach of contract and does not hold parties to their contractual obligations unless damages are inadequate or where the subject matter is unique or irreplaceable, with specific performance being the exception.

Civil law, by contrast, provides mechanisms for judicial enforcement of performance obligations unless this is impracticable.

For example, in the case of debts in kind, specific performance may be restricted to situations of fundamental breach. Consequently, there are mechanisms for the judicial resolution of contracts in civilian jurisdictions, whereas the general rule in contracts in common law is automatic annulment when there is a claim for damages.

Civil law also allows a buyer to unilaterally reduce the price of nonconforming goods to the degree of deficiency, whereas common law resorts to damages in this case.



Civ

il La

w C

on

trac

ts Civil-law contracts are usually

less detailed than contracts under common law.

This is a consequence of the abstract character of the Code which is more comprehensive as to circumstances that may possibly affect the execution of contractual obligations.

The Code determines the contractual obligations unless the parties modify them.

Consequently, parties are not required to take responsibility for any possible difficulty that might develop over the course of contractual relationship but may adjust contractual obligations in the long run.

Co

mm

on

Law

Co

ntr

acts

In Common Law Contracts the parties are required to take responsibilities into their own hands.

Hence, common-law contracts in which every word counts are generally more elaborate.

It would appear easier to contract out of mandatory provisions in common law than in civil law, where more rules of public order may limit contractual freedom.


Sharia Law (the Shari’a or law of God)

Usul al-fiqh (Shari’a

Law)

The Qura’n

The Hadith

The Ijma

Qiyas


Usul al-fiqh (Shari’a Law)

The Qura’n

The Hadith

Hanafi

Shafii

Maliki

Hanbali

Shii

Ibadi

Zaydi

Other Schools of Thoughts

Sunni Schools of Thoughts

Core Principles of Islamic Law

Formation of Contract in Shariah Law

Stipulating an Option to Annul a Sale after the Buyer Has Accepted the Original Offer

Question:

Is it sufficient to stamp a purchase order with a note asserting the right of KFH to revoke the purchase order within seven days of its date?


: السؤال

إلغاء في التمويل بيت حق على النص يتضمن الشراء طلبات على ختم وضع يكفي هل ؟تاريخه من أيام سبعة خالل الشراء طلب

:الجواب

أن حيث البيع لعقد قبوال يعتبر محددة فترة خالل أسعار عرض سبقه إذا الشراء طلب حق اشتراط فإن وعليه ،العقد ينعقد وبهما إيجاب هو بفترة المحدد األسعار عرض لم األسعار عرض أن وبما .الشراء لطلب وليس كله للعقد فسخ حق يعتبر الخيار مخالفا (القبول) أصبح الشراء طلب في الشرط أدرج فإذا الحق هذا يتضمن أن بد ال وحينئذ جديدا إيجابا فيعتبر (األسعار عرض في عنه المعبر) لإليجاب العقد فإن األسعار عرض في أدرج إن لكن .اآلخر الطرف من جديد قبول يحصل .له اشترط لمن الخيار حق ثبوت مع الشراء بطلب ينعقد

:المصدر

الكويتي التمويل بيت

• Published in Fundamental Principles in Islamic Finance

• Tagged underKuwait Finance House

Answer:

A purchase order which was preceded by a price quotation valid for a certain period of time is considered an acceptance of the sale contract. This is because the time-bounded price quotation is considered an offer, and with the existence of an offer and its acceptance the contract is formed. Thus, a stipulated option right is considered an option to revoke the whole contract and not [just] the purchase order. Since the price quotation did not include such a right, including it in the purchase order afterwards would result in the acceptance being at variance with the offer (expressed by the price quotation), which means it would be considered a new offer, which would require obtaining a new acceptance from the other party. However, if the option right is stipulated in the price quotation, then the contract can be formed with the issuance of the purchase order, and the option right would remain to the party who stipulated it.

Issuer:

Kuwait Finance House

http://www.isra.my/fatwas/topics/general/fundamental-principles.htmlhttp://www.isra.my/fatwas/organisation/kuwait-finance-house.htmlhttp://www.isra.my/fatwas/organisation/kuwait-finance-house.htmlhttp://www.isra.my/fatwas/organisation/kuwait-finance-house.html

Principle Clause of ITB Invitation

Sample of Government ITB’s

EPC Project ITB Sample


• The Government reserves the right not to accept

the lowest cost proposal or any proposal, or to

appoint any party who has submitted proposals

in response to this invitation for the whole or

any part of the project. All proposals are

submitted on the understanding that the

Government will not be liable to pay any costs

arising out of their preparation and submission

or in explaining or clarifying any proposals. The

Government is under no obligation to discuss the

evaluation or evaluations result of any proposal

with any person.

• The Government has the right to amend the

terms of this Brief in its sole discretion at any

time prior to entering into a binding agreement

with the Contractor.

• FPG reserves the right to award

the business or reject any or all

bids, and will award the business

on FPG’s assessment of total

value, with price being an

important (but not controlling)

factor.

• FPG may elect to award the

business to someone other than

the low bidder, based on total

value offered.

Principle Clause of ITB Invitation

Sample of Government ITB’s EPC Project ITB Sample


• The Government reserves the right not to

accept the lowest cost proposal or any

proposal, or to appoint any party who has

submitted proposals in response to this

invitation for the whole or any part of the

project. All proposals are submitted on the

understanding that the Government will not

be liable to pay any costs arising out of their

preparation and submission or in explaining

or clarifying any proposals. The Government

is under no obligation to discuss the

evaluation or evaluations result of any

proposal with any person.

• The Government has the right to amend the

terms of this Brief in its sole discretion at any

time prior to entering into a binding

agreement with the Contractor.

• FPG reserves the right to award

the business or reject any or all

bids, and will award the business

on FPG’s assessment of total

value, with price being an

important (but not controlling)

factor.

• FPG may elect to award the

business to someone other than

the low bidder, based on total

value offered.

Conditions Precedent for Formation of a Contract

Sample 1 Sample – 2 (FIDIC Form)


This Contract shall become effective on the date when all the following conditions are fulfilled:

a) Payment of the Fist Installment as per Article 2 hereof is effected by the Owner;

b) The execution of the performance of this Contract being approved by the board of directors of the Owner and if necessary by the shareholders of the Owner’s parent company;

c) Such other consents or approvals (if any) as may be necessary from any third party, government or regulatory body or relevant competent authority having jurisdiction over the transactions contemplated under this Contract;

d) Corporate or Bank Guarantee for the refund of payment of installments in the form as set out in the Exhibit …

In the event of any of the conditions set out above is not settled within fourteen (14) days from the signing of this Contract, this Contract will be considered null and void unless the Parties come to new agreement.

The Contract shall come into full force and effect on the date when the following conditions are satisfied:

(List of Conditions)

• Aa

• Bb

• Cc

• Dd

• Ee

The employer shall promptly confirm to the Contractor the date on which all these conditions have been satisfied. If any of these conditions has not been satisfied within … days of the above-mentioned date on which this Agreement is made, this Agreement shall be void and ineffective and any securities issued in relation to the above Works shall be returned.

Bid not Evaluated after ITB and Submission of Bids


Blackpool and Fylde Aero Club Limited v. Blackpool Borough Council [1990] EWCA Civ 13 Project / Contract Scope

• ITB is issued for granting a concession to operate the airport for pleasure crafts • Bids received were not treated by the invitee in accordance with the ITB procedure

Case Brief • Council issued ITB to Club and six other parties for granting concession to operate the Airport to be used for pleasure Aircrafts. The concession will be for 3 years w.e.f. 18th April 1983.

• Form of Tender in a sealed envelope is received by 12 Noon on Thursday, 17th March 1983. Three tenderers responded to the ITB. • Club posted the tender in Town Hall letterbox, at about 11:00AM on 17th March 1983. • Town clerk staff were supposed to empty the letter box by 12 Noon daily but failed to do so. On 18 Match 1983, letter box was

cleared and the envelope taken out and date stamped 18th March 1983. • At sometime thereafter the word “LATE” was written on the envelope. Club’s tender recorded as “LATE”, was excluded from

consideration. On 29th March 1983 Chairman of the Council’s relevant committee considered which tenders to accept. Club’s tender marked as LATE was excluded from consideration. Chairman accordingly made a decision based on two tenders believed to be in time.

• Town clerk wrote to the Club that its tender was not received until 18th March and was therefore late for consideration. • On 30th March Airport Director wrote to the Club’s director saying “Due to an error in the administration of the term of tender,

tenders received recently have been declared invalid. • Amended tender documents were sent for a rescheduled tendering procedure. • Red Rose contended that council was courteously bound as its tender has been accepted. • Council then decided to disregard the tenders received in the second ITB exercise.

Issues • Breach of Contract – was there any contract between the parties? • Common Law Negligence – whether the Council owed any duty of care in tort claim?

Contentions of Appellant

• Invitation to tender to be no more than a proclamation of willingness to receive offers. Invitation to tender was an invitation to treat and no contract come into existence

• The statement that late tenders would not be considered did not mean that timely tenders will be considered. • A term would not be implied simply because it was reasonable to do so. • There was a vital distinction between expectations, however reasonable ,and contractual obligations.

Contentions of Respondent

Council owed a fiduciary duty to act with reasonable prudence in managing its financial affairs; If there was no contract at all between the parties, the Council nonetheless owed the Club a duty to take reasonable care to see to it that if the Club submitted a tender by the deadline, it would be considered along with other tenders duly returned.

Judgment / Decision

Appeal on the judgment of lower court that Council is liable for breach of contract and common law negligence, was dismissed.

Latest Affirmation of Effect of term “Subject to”


Norwest Holdings v. Newport Mining [2011] SGCA 42

Project / Contract Scope

• Case is concerning the sale by the liquidator of Norwest of the entire share capital of its wholly-owned subsidiary Norwest Chemicals Pte Ltd (“Norwest Chemicals”) to Newport

Case Brief The Liquidator invited offers for sale of shares of “ Sichuan Mianzhu Norwest Phosphate Chemical Company Limited “ in PRC, a subsidiary of the holding company in Singapore. After exchanges of negotiations and two offers for purchase, the final offer was accepted subject to negotiation and execution of the contract. After acceptance of offer by the liquidator, an earthquake in Sichuan destroyed the whole plant. Buyer didn’t proceed with the execution of the contract. The liquidator claims damages and asserts that contract was formed, but Buyer contends there is no contract so counterclaims refund of the deposit paid.

Issues • The Second Firm Letter of Offer was “subject to contract” and was not a legally binding offer that could be accepted by Norwest;

• Even if the Second Firm Letter of Offer constituted a legally binding offer, it lapsed after the underlying business of Norwest China was destroyed by the Sichuan Earthquake, and could no longer be capable of acceptance;

• Even if there was a binding contract between the parties, Norwest was unable to perform the contract as the Production Facilities and the Mines had been severely damaged by the Sichuan Earthquake; and/or

• Even if parties had reached any form of agreement, such contract was void by reason of common mistake between the parties as to the subject matter of the contract at the time of contract.

Contentions of Claimant

• Offer has been accepted and contract is in place but Buyer failed to make the payment.


No binding contract was formed as the offer was “subject to” negotiation and execution of the contract.

Judgment / Decision

No binding contract was formed. Deposit to be refunded to the Buyer.

Legal Principles “It is well settled that the phrase “subject to contract” makes it clear that the intention of the parties is that neither of them is to be contractually bound until a contract is signed. The negotiations remain subject to and dependent upon the preparation of a formal contract. Either party may withdraw from the negotiations before a final agreement has been concluded”.

Breach of Gas Sale Agreement with Power Plant


Scottish Power PLC (Claimant / Appellant)

BRITOIL (Exploration) Limited & Ors

(Respondent s/ Defendant)

Jurisdiction Court of Appeal,

London [1997]

Facts

• Five Contracts for GSA with 5 operators, for 25 Years from Andrew Field in North Sea on “Take or Pay” basis with price, DCQ and ACQ as agreed;

• Seller shall maintain a capacity to deliver from 0% to 130% of the TDCQ, not withstanding that Buyer has a right to make daily requirements such that the aggregate in any Contract year may exceed ACQ;

• “Delivery Capacity” means capacity to deliver at a rate 130% of the TDCQ

• NG is used in production of oil also as the field is primarily for production of oil.

Issues

• To what extent Sellers are entitled to sell Gas to others?

• Grant an injunction on Sellers from selling gas to others

• The reasoning given in the judgment by the Judge of the court of first instance was not put forward by either side.

1. GSA is a contract to sell all the natural gas in the Andrew Field,

subject to some limited exceptions.

2. If Buyer fails to take either due to force majeure or for any other

reason, the Sellers may sell to others.

1. Sellers have extensive power to sell gas from the field to others.

2. In any case where Sellers have gas available and the Buyer takes

less than the DCQ, they may sell to others.

3. Sellers are not entitled to sell gas to others.

Interpretation of Clauses of (GSA) Contract, in Dispute

In the body of the agreement there are these two clauses:

"3.1 Subject to the reservations contained in Clause 5.1 the Seller agrees to sell, tender for delivery and deliver at the Delivery Point and the Buyer agrees to accept and pay for, or, subject to Clause 6.2, if not accepted to pay for (pursuant to Articles 9 and 10), all Natural Gas tendered for delivery by the Seller and produced from the Seller's Interest in the Andrew field, and/or produced by the Seller for delivery to the Buyer by virtue of the rights contained in Clause 5.2 during the Contract Period. The quantities, prices, times and manner in which such Natural Gas shall be sold, tendered for delivery, accepted and/or paid for shall be established under this Agreement."

3.3 The Seller covenants with the Buyer that it will not by virtue of its Seller's Interest produce its entitlement to Natural Gas from the Andrew Field (nor permit such Natural Gas to be so produced) otherwise that for the purposes of deliveries to the Buyer under this Agreement or for the purposes specified in article 5."


One finds at once that the contract is not always drafted with the precision which a

lawyer would use. Thus clause 3.1, on a closer look, does not appear to

specify any quantity of natural gas which the Seller is obliged to tender, whilst

the Buyer is apparently obliged to accept or at any rate pay for all natural gas which the

Seller chooses to tender.

Clause 3.3 provides that the Seller shall not produce natural gas from

the field other than for the purposes of (i) delivery to the Buyer or (ii) the

purposes specified in Article 5.

This too presents a difficulty.

"9.4(1) Notwithstanding anything to the contrary expressed or implied in this Agreement, the Buyer shall in respect of each Contract Year and in addition to the sums to be paid for the Natural Gas actually delivered, pay the Seller for the quantity, if any, by which deliveries to the Buyer under this Agreement during the relevant Contract Year fall short of the Take or Pay Quantity for that Contract Year. Such quantity paid for but not taken is herein called "Take or Pay Gas"."

Legal Principles Discussed (GSA – Dispute)

“Admissibility of the Background or Surrounding Circumstances for Interpretation of the Terms of a Contract”

Some key Considerations

It has been the established law that the contracts are not construed in a vacuum;

The court is entitled to know the surrounding circumstances which prevailed when the contract was made;

It is established law first, that subjective evidence of intention by either party is not admissible;

It is justified because the court is looking for common intention of the parties, and not what intention each had in pectoral;

Evidence of negotiations is not admissible;

"The boundary of what may be considered surrounding circumstances ... is unfortunately not easy to draw. All too often a great deal of evidence is produced under that head which is of little or no help in interpretation.“

"The notion is [that] what the parties had in mind, and the Court is entitled to know, [is] what was going on around them at the time when they were making the contract. This applies to circumstances which were known to both parties, and to what each might reasonably have expected the other to know.“

For Granting Injunction

"In my opinion (AL Smith LJ), it may be stated as a good working rule that

(1) if the injury to the plaintiff's legal rights is small,

(2) and is one which is capable of being estimated in money,

(3) and is one which can be adequately compensated by a small money payment

(4) and the case is one in which it would be oppressive to the defendant to grant an injunction:-

then damages in substitution for an injunction may be given.” (Shelfer v. City of London Electric Lighting Co. (1895)


Judgment (GSA - Scottish Power v Britoil)

• It was held that “Sellers are not entitled to sell gas to third parties save and to the extent that the Buyer has failed to take delivery of gas nominated by the Buyer in accordance with the contractual terms.

• It was held that it is a breach of contract for the Sellers to sell gas to others otherwise than as permitted by clause 5.1(11) (and perhaps by clause 5.1(10) in limited circumstances). In doing so LJ Staughton expressed his view on the meaning of clause 3.3, in the context of other provisions in the contract.

• It was held that injunction should not be granted.


Uneconomic to Perform a GSA – as a Force Majeure Case (Thames Valley Power Limited v. Total Gas & Power Limited)


The Parties to the Contract

Thames Valley Power Limited

(TVPL)

ATCO

EDF

Heathrow Airport Limited (HAL)

BAA

Contract to Operate Heat

& Power at Heathrow

Airport for 15 Yrs

Total Gas & Power Limited

(TGP)

Total Marketing

GSA – Take or Pay Basis

Event TGP served notice on 5th July

2005 that due to uneconomical conditions and pursuant to

Force Majeure Clause, TGP will be unable to supply gas under

the GSA.

Issues 1. Whether FME

notice can be served on economic grounds?

2. Whether circumstances were sufficiently exceptional to amount to impracticability of performance?

3. If no, then whether Claimant is entitled for damages or specific performance?

Questions before the

Court

1. Should the stay be granted in favour of Arbitration?

2. Should the Summary Judgment be given under O.14 if no stay is granted?

Outcome 1. Refuse a stay and to dismiss Total’s application; 2. Total was not entitled to serve on TVPL the notice pursuant to special condition 15; 3. To declare that in the event that in reliance on that notice Total were to fail to supply TVPL with

any gas pursuant to the GSA, TVPL would be entitled to damages and an order by way of specific performance.

Force Majeure Clause (Thames Valley Power Limited v. Total Gas & Power Limited)

“15.1 if either party is by reason of force majeure rendered unable wholly or in part to carry out any of its obligations under this agreement then upon notice in writing of such force majeure from the party affected to the other party as soon as possible after the occurrence of the cause relied on, the party affected shall be released from its obligations and suspended from the exercise of its rights hereunder to the extent to which they are affected by the circumstances of force majeure and for the period during which those circumstances exist, provided that

(a) The party seeking relief under this standard condition shall advise the other party as soon as practicable of the force majeure together with its estimate of the likely effect of the force majeure on its ability to perform its obligations hereunder and of the likely period of such force majeure having regard to the matters referred to in paragraph (b) of this standard condition 15.1.

(b) The party affected shall use all reasonable endeavours to terminate the circumstances of force majeure if and to the extent reasonably practicable and with all reasonable speed and at reasonable cost having regard inter alia to the unexpired term of the contract period (but nothing in this proviso shall limit the absolute discretion of the party affected in regard to the settlement of any labour dispute constituting circumstances of force majeure); and

(c) nothing in this condition shall relieve either party of its obligations to indemnify or to make any payments due hereunder.

15.2, in this standard condition “force majeure” means any event or circumstances beyond the control of the party concerned resulting in the failure by that party in the fulfilment of any of its obligations under this agreement and which notwithstanding the exercise by it of reasonable diligence and foresight it was or would have been unable to prevent or overcome. Without limitation to the generality of this standard condition 15.2 it is acknowledged that any event or circumstance which qualifies as force majeure under the supplier’s carriage agreement with British Gas shall be deemed to be a force majeure hereunder. In assessing the circumstances of force majeure affecting the customer, the price of gas under this agreement shall be excluded.

15.3, in the event of a circumstance of force majeure affecting the supplier’s ability to supply gas hereunder, the supplier will, in so far as reasonably practicable, treat all its customers including the customer fairly and equally in determining the extent to which supplies are to be reduced, suspended or terminated”.


Dispute Resolution Clause (Thames Valley Power Limited v. Total Gas & Power Limited)

11. DISPUTES

11.1 Notice of Dispute or Difference In the event of any dispute or disagreement between the parties regarding this Agreement or failure to agree matters contemplated herein as being subject to mutual agreement, either party may serve written notice thereof on the other.

11.2.1 Good Faith Dispute Resolution In all cases where a dispute or disagreement is notified pursuant to special condition 11.1, the provisions of Special Condition 11.2.2 shall apply in priority to the other provisions of this Special Condition 11.

11.2.2 The Parties shall, as soon as practicable after service of a written notice pursuant to Special Condition 11.1 and in any event within seven days following the service of such notice meet and use all reasonable endeavours to resolve that dispute or difference in good faith and, if on the expiry of a period of 30 calendar days following the service of the notice the parties shall have failed to resolve that dispute or difference, this Special Condition 11.2.2. shall cease to apply and Special Condition 11.3 shall then apply.

11.3 Appointment of an expert

11.3.1 Subject to Special Condition 11.2, where notice is served pursuant to Special Condition 11.1 and where it is provided in this agreement that a dispute or disagreement between the parties should be referred for decision to an independent expert, that expert will be chosen by agreement between the parties or failing agreement within the 21 calendar days following service of notice pursuant to Special Condition 11.1 or expiry of the period referred to in Special Condition 11.2.2 (where applicable) by the President of The Law Society of England & Wales (“the President”) who shall be requested to select an appropriate expert. The expert will decide the matter referred to him as an expert and not as an arbitrator, and the Arbitration Acts shall not apply.

The parties will afford to the expert every assistance in deciding any matters referred to him and will provide him with all information he may reasonably request. The expert shall be entitled to call for such evidence and arguments from the parties and any other persons as he shall in his absolute discretion see fit in the course of making his determination. The expert shall in his absolute discretion determine the apportionment of his costs in so acting as between the parties. The parties will be bound by and comply with any decision of the expert. The determination of the expert will be final and finding upon the parties except in the event of fraud mistake or manifest error.

11.4 Arbitration In the event that notwithstanding the procedures set out in Special Condition 11.2, no expert can reasonably be appointed or for any other reason such procedures cannot be implemented, any dispute or difference arising under any of the provisions of this agreement may be referred by either party to arbitration pursuant to the Arbitration Acts”.


Battle of Forms

British Steel Corp v Cleveland Bridge [1984] 1 All E.R. 504.



• Supply and Purchase of Steel Cast nodes for a building construction project . • LOI issued in Feb 1979

Case Brief LOI stated :

1. Intention to place a contract based on prices quoted;

2. Proposed that the contract to incorporate Buyer’s standard form of sub-contract,(which provides unlimited liability on part of the seller for consequential loss out of late delivery;

3. Required the seller “to proceed immediately with the works pending the preparation of the official form of the sub-contract”;

4. The seller didn’t reply the LOI; Further the Buyer changed the specifications and required the seller to deliver in certain sequence. There was

no agreement on the progress payment and liability for late delivery.

Issues 1. Claim for payment: Seller delivered all but one node by Dec 1979 but received no payment.

2. Counterclaim for damages: Buyer claims damages for late delivery and refuse to make any payment.


• Seller claims there was no Contract.

• Standard Terms of BSC to apply


Standard Terms of CB to apply and there was a contract and breach of contract.

Judgment / Decision There was no contract.

Legal Principle “Parties are still in a state of negotiation, it is impossible to predicate what liability (if any) will be assumed by the seller for e.g. defective goods or late delivery, if a formal contract should be entered into.

Battle of Forms


Mitsui Babcock Energy v John Brown Engineering (1996) 51 Con. L.R. 129


Case Brief

Issues



Judgment / Decision

Legal Principles

Time at Large – what are the pre-requisites?


LW Infrastructure v Lim Chin San Contractors (LCS) [2011] SGHC 162 & 163


• Design and Construct an Industrial Building called “LW Technocentre, at Singapore. • Dispute between Main Contractor and Nominated Subcontractor due to delays beyond the extended completion date.

Case Brief

• LCS was required to complete the sub-contract works within 15 months from the commencement date of the sub-contract. As this was 2 May 2001, LCS was required to complete the works by 2 August 2002. Clause 16.1 provided that the works would be deemed to have been practically completed upon receipt of a Temporary Occupation Permit (“TOP”) from the relevant authorities.

• On 22 May 2002, both parties agreed that an extension of time of some three months would be given to LCS. The precise duration of the agreed extension was disputed, which was finally determined in Arbitration, the extended completion date as 4th Nov 2002.

• Around 12 May 2003, LW terminated the contract and engaged alternative subcontractors to complete the works and obtained TOP on 1st Aug 2003.

• On 22 June 2004, LW served a notice of arbitration on LCS. The Arbitrator issued his award on 29 June 2010. • LW appealed on points of law and LCS also appealed on different points of law to the High Court in accordance with Arbitration Act

(Cap 10) s49.

Issues 1. Yes 2. NA 3. NA 1. No 2. No 3. NA

LCS in an appeal raised the following questions of law: 1. where there were acts of prevention which caused delay in the progress of the works and which were not extendable [sic] under the sub-

contract, whether it was necessary for LCS to have been prevented from completing the works by a prescribed date in order for time to be set at large (“the first question of law”);

2. where there were acts of prevention which caused delay in the progress of the works and which were not extendable [sic] under the sub-contract, whether LW was entitled to exercise its contractual right of termination under cl 27.1 of the sub-contract or if LW was so entitled, whether it could only do so by reference to a reasonable time for completion of the works (“the second question of law”); and

3. where there were acts of prevention which caused delay in the progress of the works and which were not extendable [sic] under the sub-contract, whether LW was entitled to exercise its contractual right under cl 27.4 of the sub-contract to claim for costs incurred in engaging other contractors to carry out the works under the sub-contract (“the third question of law”).

LW, the main contractor, raised the following questions of law in a separate appeal: 1. Whether the contractual right of LW to claim for liquidated damages against LCS under the provisions of the sub-contract for delay to the

completion of the works by LCS, which accrued prior to termination of the sub-contract, had been extinguished or rendered inapplicable following termination of the sub-contract (“the first question of law”);

2. Whether the contractual right of LW to claim for liquidated damages against LCS under the provisions of the sub-contract for delay to the completion of the works by LCS, which accrued prior to termination of the sub-contract, had been extinguished or rendered inapplicable following completion of the works by others after termination of the sub-contract (“the second question of law”); and

3. Whether, in a claim for liquidated damages incurred or suffered by LW prior to the termination of the sub-contract for delay in completion by LCS, LW was required to prove the extent of damages incurred or suffered and attributable to LCS’s breach of contract arising out of their delay in completing the works (“the third question of law”).

Time at Large – what are the pre-requisites?


LW Infrastructure v Lim Chin San Contractors (LCS) [2011] SGHC 162 & 163


• Design and Construct an Industrial Building called “LW Technocentre, at Singapore. • Dispute between Main Contractor and Nominated Subcontractor due to delays beyond the extended completion date.

Time at Large – Pre-requisites

• A delay, or a likelihood of delay to progress is not the same as a delay, or a likelihood of delay to completion. It is unfortunate that the words are easily connected and, in using them in the same clauses of contracts, the draftsmen have caused much confusion. A delay to progress is an adverse shift in the intended timing of the start and/or finish of a discrete activity; it can occur at any time. ...

• On the other hand, a delay to the completion date occurs only when the completion date has passed and can only be caused by a delay to the progress of an activity which is on the critical path to completion.

• It is well-settled that if a contract clearly provides that the date of completion will not be set at large even if the completion date of the works is delayed, this bargain will be upheld by the courts: Jones and another v The President and Scholars of St John’s College, Oxford (1870-71) LR 6 QB 115; Dodd v Churton at 568. This may occur, for instance, where the contract clearly obliges the contractor to complete the works within the stipulated time even if extras are ordered and no extension of time is granted.

Application of LD

• A claim to liquidated damages may still be brought even where the sub-contract has been terminated, provided that the liquidated damages claimed relate only to the period between the agreed completion date and the termination date (in the absence of express contractual stipulation to the contrary).

• A claim to liquidated damages for that period, being the period after the extended contractual completion date but before termination of the sub-contract, is not excluded by termination or the fact that control over the works had passed out of subcontractor’s hands.

• The right to claim liquidated damages is accrued as soon as the agreed completion date has passed.

Point vs. Error of Law

• A question of law means a point of law in controversy which has to be resolved after opposing views and arguments have been considered. It is a matter of substance the determination of which will decide the rights between the parties. …

• If the point of law is settled and not something novel and it is contended that the arbitrator made an error in the application of the law there lies no appeal against that error for there is no question of law which calls for an opinion of the court. …

JOA, JDA vs. Consortium Agreement Case Example

Company Name Role Location / Remarks

BHP BILLITON PETROLEUM LIMITED (FORMERLY KNOWN AS BHP PETROLEUM LIMITED)

Operator Liverpool Bay Douglas Field

BHP BILLITON PETROLEUM GREAT BRITAIN LIMITED (FORMERLY KNOWN AS BHP PETROLEUM GREAT BRITAIN LIMITED)

JDA Venturer Liverpool Bay Development in Irish Sea 4 Oil & Gas Fields

LASMO (ULX) LIMITED JDA Venturer

MONUMENT RESOURCES LIMITED JDA Venturer

MONUMENT EXPLORATION AND PRODUCTION LIMITED

JDA Venturer

MONUMENT (LIVERPOOL BAY) PETROLEUM LIMITED

JDA Venturer

CENTRICA RESOURCES LIMITED JDA Venturer

British Steel PLC Supplier Procured pipes from Dalmine, Italy


Case of Subsea Pipeline Failure in Liverpool Bay Oil & Gas Field

BHP Petroleum Limited & 6 Ors v Dalmine SpA [2002] QBD EWHC 970 (Comm)



• Supply and Purchase of 12” Steel Pipes for Gas Reinjection pipeline between Platforms. • Oil & Gas field was developed between 1993 to 1996. Gas and Oil Produced in Jan and April 1996

Case Brief Pipeline Failure:

1. British Steel purchased pipes from Dalmine and supplied to the Consortium of Field Operators;

2. Pipeline was laid between April and June 1994 and put into service in April 1996 and leaks were observed in June 1996;

3. After checking whole pipeline, leaks were detected at six failure points (A – F);

4. Pipes at leak sites were tested and found the material not in compliance with the data sheet and CEV was in excess of the contractual maximum;

5. Claimants took action for a claim in tort/negligence and second action in deceit, for fraudulent misrepresentation. Dalmine admitted fraudulent misrepresentation.

Issues 1. Causation: Did the non-compliant pipe caused the leaks or it would have occurred anyway?

2. Liability with damages to be assessed


• Dalmine contends WPS caused excessive hardness at the weld roots between pipes

• Liability for the costs of replacement of pipes is denied and avers that it was not necessary to replace


• Claimants contend that high CEV caused the excessive hardness • Dalimne is liable in tort and in deceit for all damages

Judgment / Decision It was held that on the balance of probabilities non-compliant pipe caused the failure. On the balance of probabilities the pipeline would not have failed anyway.

Legal Principle • Fraudulent Misrepresentation • Tort due to gross negligence • Causation analysis • Liability for consequential Losses

Definition of Due Diligence

Golden Fleece Maritime & another v ST Shipping, "ELLI" & "FRIXOS" [2007] Samples of use of the term “Good Faith”


Due Diligence Definition In a useful commentary on the "due diligence" nature of the

Owners' maintenance obligation, the Court held the following:

• "due diligence" is equivalent to the common law duty of care and contains no limit on the expense involved in exercising that duty. Due diligence requires the exercising of reasonable care and skill so that, once the Owners become aware of a deficiency or, more accurately, once they should have become aware of a deficiency, the duty to exercise reasonable skill and care to remedy the position arises. There may be some element of latitude about when, where and how the work is done but there cannot be a financial limit to the obligation, unless issues of frustration arise, which is not here suggested. There are many situations where a vessel may suffer a serious breakdown which necessitates substantial repairs or replacement of major parts which can run into millions of dollars.

• Reasonable steps must be taken within a reasonable time, using reasonable skill and care to put right any deficiency which is identified or which ought to be identified - see Snia v Suzuki (1924) 17 LLR 78 at page 88, per Greer J. No question of "proportionality in terms of financial expenditure arises".

• “The adjustments, if any, in the Contract Price and/or Delivery Date shall be agreed in writing, and signed for identification by authorized representatives of both Parties. Such adjustments in the Contract Price and/or the Delivery Date shall be negotiated in good faith between Owner and Contractor. (No definition of good faith provided in the Contract)

• Seller shall do his utmost to reduce the delay and damage resulting there from. If the Seller invokes force majeure, satisfactory documentation to the effect must be submitted. (What is the limit of “utmost”?)

Definition of Due Diligence

Samples of use of the term “Good Faith”


• “The adjustments, if any, in the Contract Price and/or Delivery Date shall be agreed in writing, and signed for identification by authorized representatives of both Parties. Such adjustments in the Contract Price and/or the Delivery Date shall be negotiated in good faith between Owner and Contractor. (No definition of good faith provided in the Contract)

• Seller shall do his utmost to reduce the delay and damage resulting there from. If the Seller invokes force majeure, satisfactory documentation to the effect must be submitted. (What is the limit of “utmost”?)

Golden Fleece Maritime & another v ST Shipping, "ELLI"

& "FRIXOS" [2007] Due Diligence Definition

In a useful commentary on the "due diligence" nature of the Owners' maintenance obligation, the Court held the following:

•"due diligence" is equivalent to the common law duty of care and contains no limit on the expense involved in exercising that duty. Due diligence requires the exercising of reasonable care and skill so that, once the Owners become aware of a deficiency or, more accurately, once they should have become aware of a deficiency, the duty to exercise reasonable skill and care to remedy the position arises. There may be some element of latitude about when, where and how the work is done but there cannot be a financial limit to the obligation, unless issues of frustration arise, which is not here suggested. There are many situations where a vessel may suffer a serious breakdown which necessitates substantial repairs or replacement of major parts which can run into millions of dollars.

•Reasonable steps must be taken within a reasonable time, using reasonable skill and care to put right any deficiency which is identified or which ought to be identified - see Snia v Suzuki (1924) 17 LLR 78 at page 88, per Greer J. No question of "proportionality in terms of financial expenditure arises".

JVA Case with “All Reasonable Endeavours” Clause

BR Energy (M) Sdn Bhd v KS Energy Services Limited [2013] SGHC 64

Case Background

1. The parties entered into a JVA on Dec 13, 2005 which was amended on April 28, 2006, involving the deployment of a Workover Pulling Unit Rig (“WPU”) under a time charter to an NOC, Petronas Carigali Sdn. Bhd. (“PCSB”).

2. Under the JVA, a JV Company BRO was to be incorporated in Labuan for the purpose of managing the Charter of WPU, with both BRE and KSE as shareholders of BRO.

3. PCSB awarded the contract for two years charter to BRE on Nov 21, 2005 for delivery of WPU within 120 days. Based on the request from BRE the delivery date was changed to within 180 days from the date of award, which was to be by May 21, 2006. There was LD of $4,000/day subject to a maximum of 30 days i.e. till June 20, 2006. Thereafter PCSB had a right to terminate the contract.

4. The role of KSE was to procure the construction and delivery of a custom built WPU within six months for delivery of PCSB as per the Contract.

5. KSE contracted on Dec 21, 2005 with a yard ODERCO in Abu Dhabi for construction and delivery of the WPU within 165 days on June 4, 2006, at Abu Dhabi.

6. ODERCO failed to deliver the WPU on time and faced massive delays. This resulted in termination of the Contract by PCSB on April 12, 2007 after giving three extensions to BRE till Oct 26, 2006.

7. BRE terminated the JVA on Dec 27, 2007 due to repudiatory breach by KSE and claimed losses due to loss of contract with PCSB.

8. KSE denies liability and counterclaims for wrongful termination and breach of obligations to pay $400,000 towards shareholder’s loan to BRO, a JVC.

9. BRE contends that KSE did not use all reasonable endeavours to provide a WPU as per the Clause 6.2 of the JVA.

10. KSE contends that it has discharged its obligations and used all reasonable endeavours.


All Reasonable Endeavours Clause


“6. PROCUREMENT OF WPU, CHARTER AGREEMENT AND PETRONAS CONTRACT [ie, the PCSB Contract]

6.1 After Completion and after the financing in clause 7.1 is available for immediate drawdown, BRE and [KSE] shall procure that a charter agreement for the WPU is executed between the JVC and BRE. Upon the Charter Agreement being executed, [KSE] shall proceed to arrange for the construction of the WPU, on terms acceptable to [KSE]. The specifications, equipment and inventory of the WPU is as set-out in the Charter Agreement.

6.2 [KSE] shall use all reasonable endeavours to procure [that] the WPU is constructed and ready for delivery in Abu Dhabi or another location specified by [KSE] within six months after the Charter Agreement is executed.”

Contentions of the Parties

BRE

KSE had not discharged its obligation to use all reasonable endeavours to procure the construction and delivery of the WPU by reason of the following matters:7.

a) the entire rig building project was poorly organised, mismanaged, and lacked proper professional supervision by KSE;

b) in recommending Oderco as the builder of the WPU, KSE failed to take reasonable steps to select an appropriate rig builder;

c) KSE failed to take reasonable steps to monitor and ensure that the necessary equipment for the WPU (“WPU equipment”) was ordered by Oderco and delivered in a timely manner;

d) KSE failed to take reasonable steps to ensure that the WPU manager whom it appointed was getting the necessary information and updates from Oderco regarding the progress of the project;

e) KSE failed to take reasonable steps to ensure that adequate or qualified staff were sent to monitor or supervise Oderco;

f) KSE failed to use reasonable endeavours to ensure that Oderco provided the necessary manpower and resources to support the rig building project in a timely manner;

g) KSE failed to take reasonable steps to require Oderco to catch up on or otherwise remedy its delays; and

h) KSE failed to take reasonable steps to find another rig builder to construct and deliver the WPU when it became obvious that Oderco was not likely to deliver the WPU on time.

KSE • There was no absolute obligation on the part

of KSE to deliver the WPU by certain dates;

• Parties entered the JVA fully aware of the risks including the risk of non-delivery of the rig;

• Legal test for best endeavours was not the same as that for “all reasonable endeavours;”

• The obligation of KSE did not require to procure a rig at all costs;

• KSE had done more than what was required of it under the “all reasonable endeavours” clause;

• Even if KSE were in breach of the JVA, the breach did not cause BRE’s alleged loss in that there was no causal link between alleged breach and the cancellation of PCSB contract;

• BRE’s termination was wrongful.


Issues as per the Judgment Report


Issues

36. The issues which arise for determination are as follows:

a) Was KSE in breach of clause 6.2 of the JVA in the manner pleaded by BRE?

b) If so, was KSE’s breach repudiatory?

c) If BRE was not entitled to rescind the JVA, would BRE be liable to KSE on the latter’s counterclaim?

Judgment was in favour of BRE and counterclaims of KSE failed with

costs awarded to BRE.

Other Issues Considered

Differentiate between:

a) All reasonable endeavours;

b) Best endeavours;

c) Reasonable endeavours; and

d) All reasonable but commercially prudent endeavours.

Lessons Learned

1. Court’s View: It is ultimately a question of fact as to whether an obligation couched in terms of “all reasonable endeavours” is as onerous as a “best endeavours” obligation.

2. A Systematic Analysis of the Best Endeavours Clause includes:

• Identify the objectives of the clause;

• Delineate obligors role in achieving that objective;

• Review factual context to determine:

a) Role of the obligor;

b) The degree of responsibility it has undertaken;

c) Whether ultimately it discharged its obligations;

The drafters of the contracts may err on the side of specificity of the meaning of a “best endeavours” clause.

“Where the contract actually specifies certain steps to be taken as part of the exercise of reasonable endeavours, those steps will have to be taken, even if that could in one’s view be said to involve the sacrificing of a party’s commercial interests. (Flaux, QC)


5.13:Negotiations – Significance of Communications Titled as “Without Prejudice”

23 to 25 May 2016

(c) Copyrights Reserved in Tiberias Management Consultants - EPCIC Contracts Management Workshop Notes 40

Meaning of the Phrase

Rule or Traditional

Practice Application Exceptions

Exclusions or Invalid

• The writer is stating

his position to the

addressee without

prejudicing his

position, should the

recipient disagree or

reject the proposal.

• Can be oral or in

writing or in a

meeting.

• Meant to be kept

confidential and not

for disclosure before

a court or any

tribunal as evidence.

Used in Context of:

• Claims negotiations

• Dispute Resolution

• A Genuine attempt to settle

conflict and not as a

fraudulent act

• It is a rule of

evidence;

• Objective is to allow

the parties to settle

their disputes

without resorting to

litigation;

• It is based partly on

the public policy

and partly by

agreement between

the parties;

• Case Law supports

the practice of

maintaining

confidentiality

Used in Context of:

• Commercial disputes

• Contractual Negotiations

• Purpose must be to settle

differences

• Rule covers not

only documents

which constitute

offers but also

documents which

form part of

discussion on

offers, i.e.

negotiations.

• It covers all

discussions.

• It does not cover

situations where

there is no dispute

but only debtor is

making debt

settlement

proposals.

Applied on:

• Correspondences'

• Negotiation Meetings

stated in advance to be

“without prejudice”

• There must be a dispute for

privilege to be valid

• Confidentiality and

privileged

protection can be

waived by consent

of both parties;

• Concluded

agreement or

compromise of any

issue is required as

evidence for other

matters before a

court or tribunal;

• If alleged that

compromise

reached was based

on

misrepresentation,

fraud or undue

influence;

Used in Context of: • Allegations of impropriety by

a Party

• Court investigation into

agreements reached;

• Evidence points towards

something Contrary to public

Policy

• In case of right of

estoppels asserted by

a party;

• When it will act as a

cloak for perjury,

blackmail etc.;

• Evidence of

negotiations is needed

to explain apparent

delay or

acquiescence;

• Third party claims that

the negotiating party

failed to mitigate its

loss;

• If negotiations were

expressed to be

“without prejudice

save as to costs”.

Used in Context of:

• Litigation in progress

• Disputes unresolved

• Third party suspects

foul play

5.13:Negotiations – Significance of Communications Titled as “Without Prejudice”

23 to 25 May 2016

(c) Copyrights Reserved in Tiberias Management Consultants - EPCIC Contracts Management Workshop Notes 41

Meaning of the Phrase

Rule or Traditional

Practice Application Exceptions

Exclusions or Invalid

• The writer is stating

his position to the

addressee without

prejudicing his

position, should the

recipient disagree or

reject the proposal.

• Can be oral or in

writing or in a

meeting.

• Meant to be kept

confidential and not

for disclosure before

a court or any

tribunal as evidence.

Used in Context of:

• Claims negotiations

• Dispute Resolution

• A Genuine attempt to settle

conflict and not as a

fraudulent act

• It is a rule of

evidence;

• Objective is to allow

the parties to settle

their disputes

without resorting to

litigation;

• It is based partly on

the public policy

and partly by

agreement between

the parties;

• Case Law supports

the practice of

maintaining

confidentiality

Used in Context of:

• Commercial disputes

• Contractual Negotiations

• Purpose must be to settle

differences

• Rule covers not

only documents

which constitute

offers but also

documents which

form part of

discussion on

offers, i.e.

negotiations.

• It covers all

discussions.

• It does not cover

situations where

there is no dispute

but only debtor is

making debt

settlement

proposals.

Applied on:

• Correspondences'

• Negotiation Meetings

stated in advance to be

“without prejudice”

• There must be a dispute for

privilege to be valid

• Confidentiality and

privileged

protection can be

waived by consent

of both parties;

• Concluded

agreement or

compromise of any

issue is required as

evidence for other

matters before a

court or tribunal;

• If alleged that

compromise

reached was based

on

misrepresentation,

fraud or undue

influence;

Used in Context of: • Allegations of impropriety by

a Party

• Court investigation into

agreements reached;

• Evidence points towards

something Contrary to public

Policy

• In case of right of

estoppels asserted by

a party;

• When it will act as a

cloak for perjury,

blackmail etc.;

• Evidence of

negotiations is needed

to explain apparent

delay or

acquiescence;

• Third party claims that

the negotiating party

failed to mitigate its

loss;

• If negotiations were

expressed to be

“without prejudice

save as to costs”.

Used in Context of:

• Litigation in progress

• Disputes unresolved

• Third party suspects

foul play

Reference Cases related to “Without Prejudice” Evidences

Case Brief Analysis in Judgment Report Outcome

Daintrey Ex p, Holt, Re [1893] 2 QB 116 (Q.B Div

Ct)

Debtor sent a letter titled as “without prejudice”

stating that he was suspending payment of his

debts. The creditor commenced court action and

produced the letter as evidence.

“The rule which excludes documents marked “without

prejudice” has no application unless some person is in

dispute or negotiation with another and terms are offered for

settlement or negotiation.

Document was

admissible as evidence

BNP Paribas v Mezzotero [2004] I.R.L.R, 508

The claimant went on maternity leave and when

returned was discouraged to return to her old job

and was placed on less favorable conditions. She

sex discrimination grievance was lodged,

employers called her for a without prejudice

meeting. She was informed that her job is gone

and she could accept “redundancy payment”

instead.

There was no dispute between the parties to which the

“without prejudice meeting” applied. It was to deal with an

offer by the employer to terminate the employment.

Employment Appeal

Tribunal rejected the

employer’s claim for

excluding the “without

prejudice meeting”

evidence.

Underwood v Cox (19120 D.L.R., 66

The plaintiff was contesting his father’s will and

wrote to his sister “without prejudice ” threatening

to reveal embarrassing personal secrets. Sister

succumbed to the threat and agreed to split of the

property as desired by the brother.

The agreement to split the father’s property in this manner,

disadvantageous to the daughter, was unenforceable since it

had been obtained by threats. The rule is founded on public

policy and can’t be used as a cloak to cover and protect a

communication such as the letter in question, which contains

no offer of compromise, but a dishonorable threat.

The evidence was

allowed.


Source: Suter, Erich; (2011) 77 Arbitration, Issue 1, CIArb, pp. 147 -154.

Impact of Causation Analysis – a Power Plant Project

Contextual Background of the Contract

Subsequent Developments from 1997


Alstom Group companies were engaged to provide various scope of

supply and works, jointly with SCC and CEPAS, under complicated set of

contracts.

SCC was incorporated to undertake construction scope in Philippines

In 1995, the Parent Company as Turnkey EPCIC Contractor

CEPA

Sual Slipform Construction Company (Sual Construction

Company from 1997) (“SSCC” or “SCC”)

Pangasinan Electric Corporation (“PEC”) for Offshore Supply

Scope

Consortium of CEPAS and GEC Alstom for Offshore

Works (GECA)

GEC Stein for erection works of Boilers

CEPAS (Consolidated Electric Power Asia

Limited)

International Finance Corporation (IFC) and

Commonwealth Development Corporation

8% stake as investors

• On 29 January 1997 a division of Southern Corporation (a US Corporation) acquired an 80% shareholding in CEPA. On about 14 July 1997 Southern acquired the remaining shares in the companies.

• On 14 June 1997 Mr Elliott, the Managing Director who had remained in post after Southern’s acquisition, was required to resign. Southern then put in its own management team.

• In early 2001 there was a demerger between Southern and the companies which became Mirant. On 1 February 2001 Southern divested itself of its interest in CEPA (Southern Energy Asia-Pacific Construction) Limited (SEAPCL) and the name was changed to MAP Construction (Hong Kong) Limited.

Mirant Asia-Pacific (Hong Kong) Limited v. Ove Arup & Partners Hong Kong Limited [2007] EWHC 918 (TCC) – A Case for claims of damages for breach of contract and negligence in relation to a power station constructed at Sual in the Philippines,

Engagement of Arup CEPAS employed the Arup companies as consulting engineers for the design of the Unit 1 boiler foundations. The agreement was made between CEPAS on about 29 May 1995 by the signing of the Letter of Intent and was contained in that letter (the Revision C offer) and the payment schedules . The Revision C offer from Arup contained the following preamble: “A consortium comprising CEPA Slipform Engineering Limited (Slipform) and GEC Alstom (GECA) has been established to undertake the construction of a 2 x 600 MW capacity coal fired power station to be constructed at Sual in the Philippines. Slipform has requested Ove Arup & Partners (Arup) to submit technical proposals and a commercial bid for the design of the civil engineering works which will be fabricated and constructed by Slipform. This document constitutes Arup’s offer.”

Impact of Causation Analysis – a Power Plant Project

The Event Leading to a Dispute

Claims


• In April 1997 the failure of two of the main foundations of Boiler House Unit 1, referred to as G2 and G5 occurred. The boiler house is a very large structure measuring 40 metres x 50 metres in area and 75 metres in height.

• There is no dispute that the two foundations settled by 46 mm and 66 mm respectively at a time when the steelwork which they were to support was being erected or that between late June and early September 1997 remedial works were carried out. This involved dismantling the partially erected steelwork, carrying out the remedial works and re-erecting the steelwork.

• The action was commenced by CEPAS and SCC against Arup in 2002. The first hearing before me took place in the spring of 2003 on preliminary issues. My judgment was reviewed by the Court of Appeal which varied it on one issue in relation to the ground investigation by Arup. This issue is not directly relevant to this judgment.

• The preliminary hearing decided that an agreement for design of the power plant at Sual was made between CEPAS and Arup on 29 May 1995 and that Arup owed CEPAS a duty of care and skill in relation to the work which it carried out under the contract.

• The second hearing took place in November and December 2003 and was concerned with the remaining issues of liability. The judgment was given in July 2004. The matter was taken to the Court of Appeal and the judgment was upheld in a judgment dated 29 December 2005.

• It was decided inter alia:

(a) Arup owed a duty to CEPAS in contract and tort not to cause economic loss to CEPAS

(b) Arup did not owe a duty to SCC in tort not to cause economic loss to SCC

(c) Arup failed to discharge that duty in relation to

(i) the design of the Unit 1 Boiler foundation

(ii) the verification of the assumptions on which the design was based.

• Mirant now claim the losses which they claim were incurred by CEPAS and/or SCC

• Direct rectification costs: $ 1,552,889

• Liquidated damages: $39,731,428

• Additional preliminaries and disruption costs paid to Alstom Turbine/GEC Electro and their subsidiaries: $15,799,777

• The cost of extended insurance: $621,607

• Additional time related costs incurred by SCC: $5,727,000

• Additional time related costs incurred by CEPAS : $1,467,180

• Acceleration payments made to Alstom Turbine/GEC Electro: $10,273,060

• Acceleration costs incurred by SCC: $3,724,428

• Total: US$7

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