Marine Link
Friday, March 23, 2018

Songa Offshore Wins in DSME Arbitrations

Maritime Activity Reports, Inc.

July 23, 2017

Songa Equinox. Photo: Songa Offshore

Songa Equinox. Photo: Songa Offshore

 Songa Offshore had submitted its defence to the claims asserted by Daewoo Shipbuilding & Marine Engineering (DSME) in arbitrations related to the Songa Equinox, the first Cat D rig, and the Songa Endurance, the second Cat D rig, in which DSME asserted aggregate claims of USD 329 million, along with a request for repayment of liquidated damages in a total amount of USD 43.8 million, totalling to USD 372.8 million. 

The claims asserted related to alleged cost overruns and additional work in relation to the Rigs due to what DSME alleges were inherent errors and omissions in the design documents (as often referred to as the FEED package). 
A question as to the legal interpretation of the rig building contracts was put to the arbitral tribunal constituted in respect of the arbitrations on a preliminary basis. That question was to ascertain which party had responsibility for the FEED package and what the consequences of that would be. 
A two day arbitration hearing took place before the arbitral tribunal on 2 and 3 May 2017 in London and the Tribunal's interim final award has been published.  
The tribunal has ruled in favour of Songa Offshore. 
Songa Offshore considers that the Tribunal's interim final award should be determinative of DSME's claims in respect of the Rigs (and in respect of any similar claims that DSME might assert in respect of the Songa Encourage, the third Cat D rig, and the Songa Enabler, the fourth Cat D rig) with an outcome that no payment will be due by Songa Offshore to DSME. 
It is possible that DSME may seek permission to appeal the tribunal's award but if it is determinative of the claims and if no appeal is pursued then this will resolve DSME's claims leaving Songa Offshore to pursue its counterclaim against DSME in respect of the Rigs for the aggregate amount of USD 65.8 million.
Songa Offshore will also evaluate the pursuit of its counterclaims in respect to the Songa Encourage and the Songa Enabler.
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