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Missed completion deadline leads to £133m contract dispute litigation

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A large scale contract dispute claim has commenced involving a Hull based energy plant and one of its main contractors.

The plant – Energy Works Hull – terminated the contract for MW High Tech Projects as they claim that the contractor had not met the agreed project completion date. Energy Works Hull are seeking £133m in damages to cover the cost of rectifying defects, delay damages and added costs to complete works. In response, MW High Tech Projects is disputing the claim and has subsequently filed a counterclaim for just under £47m, based on provisions they say are in the original contract that provide for payment following a termination for convenience.

The two parties are now heading for the High Court with claims and counterclaims stemming from failure to deliver the project, termination of the main contract and assignment of a key subcontract package. MW were originally awarded the contract to design, construct, commission and test a new fluidised bed gasification power plant back in November 2015. The contractor claims that delays in commissioning the power plant stemmed from Energy Works Hull’s failure to provide refuse derived fuel (RDF) that was compliant with the contractual specification. This resulted in delays in commissioning when the RDF was rejected by MW and led to the failure of commissioning when key subcontractor Outotec’s plant was damaged as a result of the non-compliant RDF. It also claims that Outotec’splant was delivered late and was defective.

Preliminary Hearing

Details of the dispute and various claims emerged in a preliminary hearing covering legal points in what is a highly complex case and has already been the subject of two previous legal disputes. Qutotec’s work was assigned to the client when the main contract was terminated in March after MW failed to achieve targeted completion in April 2018. In preliminary hearings, it was ruled that the assignment of accrued and future rights to Energy Works Hull prevented MW from seeking an additional claim against Outotec for liquidated damages under the subcontract. The presiding judge also ruled that other complex issues relating to the legal battle and proportions of damages would be determined at the full trial.

In two previous claims related to the project, specialist pipework provider Premier Engineering Lincoln were awarded a total of £615,000 from MW from contested supply of labour, supervision and materials invoices; the other claim saw MW successfully overturn an adjudicator’s ruling in favour of a £368,000 payment to subcontractor Engie Fabricom (UK).

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