Songa Offshore wins rig arbitration case with Daewoo

An arbitration tribunal has ruled in favor of Songa Offshore and against the Korean rig builder Daewoo in a rig spat stemming from 2015.

Daewoo Shipbuilding and Marine Engineering, DSME, which built four Cat D semi-submersible drilling rigs for Songa Offshore, in 2015 launched arbitration proceedings in respect of the construction contracts for the two first Cat D rigs, Songa Equinox and Songa Endurance.

The rig builder was seeking damages of $373 million including repayment on liquidated damages of $44 million.

The claims were related to alleged cost overruns and additional work on the rigs due to what DSME alleged were inherent errors and omissions in the design documents.

According to a statement by Songa Offshore on Friday, a question as to the legal interpretation of the rig building contracts was put to the arbitral tribunal constituted in respect of the arbitrations on a preliminary basis. That question was to ascertain which party had responsibility for the FEED package and what the consequences of that would be.

A two day arbitration hearing took place before the arbitral tribunal on May 2 and 3, 2017 in London and the Tribunal’s interim final award was published on Friday.

“The tribunal has ruled in favour of Songa Offshore,“ the driller said.

Songa Offshore said in considered that the Tribunal’s interim final award should be determinative of DSME’s claims in respect of the Rigs with an outcome that no payment will be due by Songa Offshore to DSME.

“It is possible that DSME may seek permission to appeal the tribunal’s award but if it is determinative of the claims and if no appeal is pursued then this will resolve DSME’s claims leaving Songa Offshore to pursue its counterclaim against DSME in respect of the Rigs for the aggregate amount of USD 65.8 million. Songa Offshore will also evaluate the pursuit of its counterclaims in respect to the Songa Encourage and the Songa Enabler,” the driller added.

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