Sembcorp Marine, Marco Polo seek arbitration as blame game continues

Sembcorp Marine, a Singapore-based rig builder, has yet to resolve a contractual dispute which began in November 2015, when its client, Marco Polo Drilling, broke off a rig construction deal.

At the time, Marco Polo said it would terminate the $214 million rig construction deal it had signed in February 2014, with Sembcorp’s subsidiary PPL Shipyard, citing cracks found on the jack-up unit’s legs.

Marco Polo then sought a $21.4 million refund from the yard, which was a 10% instalment it had paid to the shipyard.

On the other hand, the shipyard said it disagreed with the allegations adding Marco Polo was in a repudiatory breach of contract, saying the reason was Marco Polo’s attempt to avoid paying second disbursement of 10% of the contract price (21.4 million).

PPL however did not deny the existence of the cracks on the rig leg, but said: “Any defect discovered will be made good and retested to the satisfaction of the Classification Society and MP Drilling before delivery.” According to the shipyard, the rig had been 98% completed at the time when the dispute started.

Days later, the shipyard itself, on December 1, served its own termination notice on Marco Polo Drilling terminating the contract after MP Drilling failed to pay the second disbursement of 10% of the contract price by November 30, 2015. It still maintained that Marco Polo owed it 21.4 million, plus interest.

Additionally, Sembcorp Marine’s PPL Shipyard on Tuesday, December 1, started a court action in the Singapore High Court against Marco Polo Marine, a parent company of Marco Polo Drilling.

According to PPL, the parent company, as a guarantor, as guarantor, should have paid for Marco Polo Drilling’s obligations in full under the contract and pay the second disbursement and the November interest (amounting to $77,399.80). As Marco Polo Marine did not pay the sums by the stipulated deadline, PPL Shipyard started the court action against it.

In line with its previous statements, Marco Polo Drilling in December dismissed the yard’s move, saying that neither it, not its parent company were under any obligation to make the payments claimed by PPL.

Arbitration

After months of silence, the dispute is back on the table again. Namely, Sembcorp Marine on Thursday said the dispute between the parties remained unresolved.

On that note, Sembcorp has informed that PPL Shipyard has on April 7, 2016 served a Notice of Arbitration to start arbitration proceedings against Marco Polo Drilling.

The company also acknowledged that PPL Shipyard has also separately received a Notice of Arbitration from Marco Polo Drilling and Marco Polo Marine purporting to start arbitration proceedings against PPLS.

Offshore Energy Today Staff

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