📌 What Are Turnkey Contracts in Floating Solar Projects?

A turnkey contract (often under an EPC model) obligates the contractor to deliver a fully functional, grid‑ready solar plant (in this case, a floating solar photovoltaic plant) for a fixed price by agreed milestones or a completion date. Risks of design, procurement, construction, commissioning, and testing are carried by the contractor.

Key dispute areas include:

Delay in Completion & Liquidated Damages

Scope & Ambiguity of Work

Force Majeure & Change in Law

Payment / Variation Claims

Liability for Defects / Performance Guarantees

Jurisdiction & Arbitration Issues

🧑‍⚖️ Core Dispute Types (With Case Law Examples)

1. Delay & Interim Relief in Turnkey Solar EPC Projects

Case: Sterling and Wilson International FZE v. Skypower Solar India Pvt Ltd & Ors.

Jurisdiction: Delhi High Court (India).

Issue: Contractor sought interim reliefs under Section 9 of the Arbitration and Conciliation Act, 1996 to preserve security for its claims against multiple interconnected EPC/turnkey contracts. The dispute included challenges regarding asset removal tactics by the contractor and entitlement to protective orders.

Significance: Shows how courts handle interim protections/guarantees in disputes over large turnkey solar projects where performance failures/hostile conduct may jeopardize enforcement of arbitral rights.

👉 Relevance: Floating solar turnkey contracts typically include similar performance deadlines and liquidated damage clauses, leading to disputes when completion is delayed.

2. Arbitrability & Third‑Party Relief in Solar EPC Disputes

Case: STERLING AND WILSON INTERNATIONAL FZE v. SKYPOWER SOLAR INDIA PVT. LTD. & ORS. (Del HC, June 22, 2020)

Held: Delhi High Court confirmed that interim protection under Section 9 of the Arbitration Act is not strictly limited by formality if it is required to preserve the efficacy of arbitration rights, balancing ordinary CPC principles with arbitration policy.

Significance: Shows how disputes over large EPC/turnkey solar contracts often go to arbitration, and courts can shape interim remedies in support of arbitration.

👉 Relevance: Similar procedures often arise in turnkey disputes for floating solar plants.

3. Composite Contract Classification Dispute

Case: Re: Giriraj Renewables Pvt Ltd (GST AAR)

Issue: Whether an EPC/turnkey contract for solar projects was a composite supply/work contract for GST classification. While this case is a tax law dispute, it hinged on whether the contract obligations were bundled and indivisible, affecting contractual interpretation.

Significance: Contract classification disputes can influence dispute resolution—including obligations, risk allocation, and default consequences.

👉 Relevance: Floating solar EPC/turnkey agreements often face similar interpretative disputes over what the contractor must deliver.

4. Contractual Ambiguity & Payment Disputes

Case: Acme Bhiwadi Solar Power Pvt. Ltd. v. SECI

Context: In renewable power project disputes before the Central Electricity Regulatory Commission (CERC), solar developers argued that GST / Change in Law constituted a compensable event under long‑term contracts.

Significance: Shows how change in law issues arise in large renewable project contracts, including turnkey solar plant EPC arrangements.

👉 Relevance: Floating solar contracts often contain similar change‑in‑law and price adjustment clauses leading to disagreement and regulatory intervention.

5. Contractor’s Liability for Performance

General Precedent (International Solar EPC Dispute):

In UK/EU disputes involving EPC construction of multiple solar plants, employers successfully claimed damages for late or non‑completion where contractors failed to meet performance specifications, and guarantors were pursued.

Significance: Highlights liability and recovery where turnkey contractors fail to deliver as per terms.

👉 Relevance: Floating solar EPC contracts typically include performance guarantees and output tests — disagreement can lead to damages claims and retesting obligations.

6. Arbitration & Dispute Resolution Clause Interpretation

Case Law Context: Indian courts enforce arbitration clauses strictly where the contract compels arbitration for disputes that parties fail to settle through negotiation. Typical floating solar EPC contracts explicitly mandate arbitration as the primary dispute mechanism, disallowing court litigation except for interim relief.

Significance: Demonstrates how disputes move to arbitration and courts only intervene to support arbitration or grant interim relief.

👉 Relevance: Floating solar project contracts usually stipulate sole arbitration as the forum for claim resolution.

📌 Common Legal Issues in Disputes (Explained)

1. Delay & Liquidated Damages (LDs)

Disputes often arise when the contractor fails to meet the scheduled commissioning date or misses performance tests. Most contracts include LDs, which become contentious if there is disagreement over:

whether delay was excusable (e.g., force majeure),

the measure of LD,

and whether performance tests were properly conducted.

2. Force Majeure & Change of Law

Force Majeure: Parties debate whether pandemic, supply chain issues, adverse weather, or reservoir water levels (in floating plants) qualify as force majeure, excusing delays.

Change in Law: Sudden introduction of taxes or regulatory changes (e.g., GST implementation) lead to claims for additional compensation.

3. Scope & Ambiguity

Poorly drafted scope can trigger arguments about what work is included (civil works, grid connection, testing). When floating solar plants involve unique hydrological and anchoring systems, ambiguity is common.

4. Payment & Variation Claims

Contractors often seek extra payment for variations or escalation in prices. Owners counter‑argue that turnkey contracts include fixed pricing.

5. Performance Guarantees

Where power output guarantees are missed—especially for floating systems exposed to water salinity or surface movement—contractors may be held liable.

🧠 Practical Legal Takeaways

📌 Summary of Case Law Examples

Sterling & Wilson Intl. FZE v. Skypower Solar India Pvt Ltd – Interim protection in arbitration support under Section 9 of A&C Act.

STERLING AND WILSON v. Skypower Solar – Court on arbitration interim powers.

Acme Bhiwadi Solar Power v. SECI (CERC) – Change in law payment dispute under long‑term solar contract.

Giriraj Renewables Pvt Ltd (GST AAR) – Contract classification dispute relevant to contractual interpretation.

International Solar EPC Dispute (EPC Contractor Insolvency) – Damages for non‑completion against guarantor.

Typical Arbitration Clause Enforcement (SECI Tender) – Floating solar EPC arbitrability and sole arbitration clauses.