Awilco Drilling is moving to recoup millions of pounds over a cancelled contract for a new rig build with Keppel FELS as the dispute between the two firms deepens.
Two weeks ago the Singapore-based shipbuilder issued Aberdeen-based Awilco with notice of cancellation for the $425million deal for the Nordic Spring vessel, claiming Awilco would not be able to make its second instalment payment, due in March.
With that, Keppel issued a notice of arbitration and said it had the right to “retain the amounts already paid by Awilco to date” of $43m (£32million).
Awilco, who said at the time it considered the contract still active and “vigorously denied” Keppel’s claims, has now announced it is the one cancelling the deal “as a result of breaches under the Vessel Construction Contract”, though it did not elaborate on what these breaches were.
At the same time, Awilco said it has given Keppel notice of the termination as a result of Force Majeure – a contractual clause which frees parties of their liabilities due to an extraordinary event.
As a result, the firm said the contract cancellation means Awilco is entitled to the £32m refund plus interest, contrary to Keppel’s assessment.
Both companies have said further announcements would be made in due course.
Steel was cut on this rig, Nordic Spring, in the third quarter of 2019 and contractual delivery is meant to be in March 2022.
This is the second contract in dispute between Keppel and the Oslo-listed firm. An arbitration process over the first, for the Nordic Winter newbuild rig, was still underway as of last month, according to Awilco.
That process started in June, with Keppel challenging Awilco’s decision to terminate and its claims to be entitled to a $54m refund plus interest.
Keppel denied the allegations and said it intended to keep all payments received to date, while also seeking compensation if Awilco defaulted on payments.
It claimed Awilco served the termination notice shortly before a payment of $32m was due June 9 — a payment which was previously deferred with Keppel’s consent.