Decision time: To challenge or not first rig arbitration case ruling in favour of Keppel shipyard
UK-based offshore drilling contractor Awilco Drilling has made up its mind about a potential appeal of the arbitration tribunal ruling in the first arbitration case, which marked a win for Singapore’s Keppel shipyard.
When April 2023 came, it brought news about the arbitration tribunal ruling regarding the termination of a newbuilding contract between the firm’s Awilco Rig 1 Pte. Ltd. (AR1) and Keppel FELS for the construction of a first semi-submersible drilling rig, as a result of breaches under the vessel construction contract.
As disclosed at the time, the ruling was awarded in favour of KFELS while Awilco said that AR1 was “disappointed with the Tribunal’s decision” and was reviewing its options to establish whether there were grounds for appeal and the merits of such an appeal.
In an update on Thursday, 11 May 2023, Awilco Drilling revealed that a decision had been made to forgo the appeal process for the ruling in the first arbitration case. According to the company, although AR1 is “disappointed” with the ruling, it has “determined that no appeal will be made.”
As a reminder, the two players have been in dispute since 2020 over two rigs – Nordic Winter and Nordic Spring – after Awilco cancelled both orders in 2020 due to an alleged breach of contracts, which Keppel FELS denied. The rigs were ordered in 2018 and 2019, respectively. The tribunal hearing for Rig 1 was scheduled to begin in October 2022 with an award expected in 1Q 2023 while the hearing for Rig 2 was likely to follow in May 2023.
Furthermore, Keppel FELS submitted claims concerning amounts recoverable due to termination provisions in the contracts for both Nordic Winter and Nordic Spring, thus, a statement of claims was received from the firm in the amount of $424.9 million for the first rig and $268.9 million for the second one. However, Awilco vehemently denied these claims.
Awilco Drilling has no rigs in its fleet, following the completion of the sale of the stacked WilHunter rig in June 2022. As a result, the firm’s operations only encompass the arbitration proceedings against Keppel FELS.