Construction of gas-fired power and desalination plant

Facts

Client: Engineering, procurement and construction contractor

Region: Korean contractor – project in Kuwait

Industry: Construction – gas-fired combined cycle power station (800MW) and multi-stage flash desalination plant (270,000 m3/day)

Services provided:

• International Arbitration
• Dispute Resolution Advice

Issues

Issues as to liability for delay and disruption arose between consortium partners as a result of delays during the construction of a USD1.2 billion gas-fired combined cycle power station and multi-stage flash desalination plant in Kuwait.

Disputes arose as to causes of delay, responsibility for those causes of delay, the period of critical delay, the presence of any concurrent delay and the implications of concurrency on liability and the proper interpretation of the relevant clauses of the consortium agreement.

Solutions

We worked with our client to identify the causes of delay, the activities impacted and the extent of delay. We prepared and submitted detailed claims, advised our client on prospects and strategy and prepared key letters and advice on contractual clauses.

When matters remained unresolved, we commenced ICC arbitration proceedings (London seat). The parties were subsequently able to achieve a negotiated solution.

Benefits

Working closely with our client and calling upon our extensive experience of Independent Power and Water Projects (IWPPs) in particular we were able to develop a sound claims position and defend that entitlement in early inter-party exchanges. Having developed an understanding of the project and the relationship between parties, we were, in close consultation with our client, able to provide strategic advice which led to the decision to escalate the dispute via the commencement of arbitration proceedings. The commencement of proceedings based on strong and well developed claims position created circumstances for the early negotiated settlement could be achieved. Importantly, our client was able to achieve a settlement before significant arbitration costs had been incurred.