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Defending client in ICC Arbitration proceedings

Facts

Client: Asian chemical production company

Region: UK

Industry: Petrochemical and plastics manufacturing

Issues:

Acting on behalf of an Asian chemical production company defending claims brought by its EPC contractor in ICC arbitration proceedings. The contractor was seeking over £20 million of additional costs in relation to the construction of a process plant in the North of England.

The ICC arbitration involved giving legal, cultural (Western dispute processes were new to our client) and tactical advice throughout the process of three hearings before the arbitrator.

The contractor brought claims for acceleration costs, variations, adjustment of the Contract Price and extensions of time, including industrial relations issues under the National Agreement for the Engineering Construction Industry (NAECI) Blue Book. Our client counterclaimed in relation to the costs of remedying defects in the civil works and plant.

The EPC contracts (there were three back-to-back amended by a further Memorandum of Agreement) were bespoke. There were also multiple currency issues to grapple with over computation of the Contract Price and force majeure.

Solutions

Despite the deploying of conventional Western and Eastern ADR techniques, it was evident that this was a case that would fight.

Therefore Fenwick Elliott’s focus was to gain command of the vast volume of project data, much of which was electronic, and the key issues in order to demonstrate by the evidence that the contractor's claims were highly overstated and lacking in both legal/contractual and evidential merit. Our team worked together with the client and its own consultancy team, in-house and externally, to the benefit of everyone concerned.

Ultimately there were three full hearings (with preliminary issues) and contentious cross-applications over document production and costs.

Our client was successful on all the principal issues and was awarded substantial costs by the arbitrator.

Benefits

This was an example of an international case that ran the full distance despite attempts at ADR, and how we can and do work with major corporations to bring them the result they deserve when at first blush everything looks insuperable. It demonstrates how our command of the issues and evidence enabled us to bring a defensive full win for the client to their great satisfaction.

There were huge benefits of team working with the client and its consultant team in-house and externally.

A number of lessons learnt were discussed at a subsequent debrief meeting:

  • how to improve the client’s contractual platform on future projects by using a standard contract form or similar;
  • how to ensure site logistics are thoroughly tested on process plant sites;
  • the importance of having clear procedures such as working restrictions in order to avoid uncertainty and ambiguity in future contracts; and
  • the importance of records and notices under English law contracts and of resident engineer competence, which here was excellent.