Council faces paying €50m damages to company

LIMERICK City Council faces financial ruin after losing a High Court bid to save it from having to pay damages of around €50 million to a construction company.

An arbitrator ruled last June that Uniform Construction was wrongly fired by the council from Limerick's €140m Main Drainage scheme four years ago.

In a last ditch effort, the council went to the High Court. But the court this week refused to interfere in the arbitrator's award.

Industry sources say that due to the damage caused to the company, it should be in line for compensation of around €50m, which would represent 80% of the council's annual budget.

While the dispute continued, Uniform, which had built a number of major motorways, was prohibited from tendering for public contracts, costing it tens of millions of euro.

Prior to the arbitrator's ruling five months ago, the dispute had gone to conciliation where the decision also went in favour of Uniform Construction.

The conciliator awarded it damages of €25m, but this was not binding.

But the council decided to appeal to an arbitrator whose decision is binding and lost again.

One source said the council's plea to the courts was a "last throw of the dice" to stave off financial disaster.

In a judgment this week, the High Court said the issues raised by Limerick City Council were not sufficient "to warrant the exercise by the court of its jurisdiction to interfere with the arbitrator's award".

The arbitrator has yet to decide on a final figure for damages.

The findings at both conciliation and arbitration confirmed that Uniform was progressing all sections of the work with due diligence and was not in breach of contract.

At the time, Uniform Construction said the arbitrator had vindicated its professional competence and confirmed that Uniform had carried out their tunnelling operations in a competent manner.

The arbitrator found that the company was justified in suspending tunnelling to carry out further ground investigation and that they should have been granted an extension of time.

Uniform Construction won a €9.5m contract in 2000 for work on the Limerick Main Drainage Scheme.

Uniform encountered site difficulties, which were not anticipated in the original tender.

The contract has now cost in excess of €20m.

Differences between Uniform Construction and the council delayed work on the scheme and in November 2001 Limerick City Council terminated the contract with the company.

Uniform, which was established in 1977, has been involved in some of the biggest State infrastructure contracts including the Dunleer-Dundalk motorway, the Northern Motorway and the Athlone Bridge.

A spokesman for Limerick City Council said they would not comment until they have had an opportunity to study a full transcript of the High Court ruling.

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