Shipyard wins battle over £20m claim

The future of Belfast shipyard Harland and Wolff looked brighter today after it won its appeal over an arbitration claim for more than £20m.

The future of Belfast shipyard Harland and Wolff looked brighter today after it won its appeal over an arbitration claim for more than £20m.

In November, Mr Justice Tomlinson allowed an application by BMBF (no12) Ltd - a special-purpose English company indirectly wholly-owned by Barclays Bank plc - over the construction of a shipbuilding contract which meant that it is under no obligation to pay any amount to the yard.

The judge, in the High Court in London, said the arbitration award of September last year - involving a payment within 14 days of 27 million dollars and £3.3m - must be set aside.

In March, Dominic Kendrick QC, for Harland and Wolff Shipbuilding and Heavy Industries Ltd, told the Court of Appeal that the judge had made errors in his analysis of the March 1998 contract.

Today, Lord Justice Potter, Lord Justice Clarke and Sir Martin Nourse agreed that the construction adopted by the arbitrators was to be preferred and restored the award.

Leave to appeal to the House of Lords was refused but BMBF (no 12) Ltd can apply to the Lords directly.

The shipyard’s solicitor Tim Addis-Jones said afterwards that it was ‘‘absolutely delighted’’ with the ruling. He said that it would be of ‘‘enormous assistance in helping to secure a good future’’.

Mr Kendrick had told the judges that the case was being played ‘‘for high stakes’’.

‘‘The survival of Harland and Wolff depends upon the outcome of this appeal.

‘‘The builder is now in the hands of its bank and there is every chance that if the cash flow can’t be improved by the amount of the interim award, the bank will not be prepared to await the outcome of a full shipbuilding arbitration.

‘‘The yard’s workforce needs to be paid now - not in one to two years’ time.’’

Harland and Wolff, one of the longest established yards in Europe, has said that 500 jobs hang on the litigation.

The dispute arose over the construction and delivery of a deep-water drill ship, known as the Glomar Jack Ryan.

BMBF, which took possession of the vessel in August and sailed it across to Texas, alleged there was a list of items which needed rectifying by the builder before it could be in a deliverable state.

Harland and Wolff contended that the vessel was ready for delivery, or alternatively was ready apart from items for which the owner was responsible.

The arbitration turned on a clause which, the arbitrators concluded, brought about the result that the buyer’s right to take possession of the vessel in its unfinished state carried with it an obligation to complete the vessel in accordance with the contract and specifications.

It also concluded that the buyer exercising his entitlement would remain liable to pay to the builder such instalments of the contract price as were unpaid as at the date when possession was taken.

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