Disputes Over Defective Offshore Platform And Marine Construction
📌 1. Introduction: Defective Offshore Platform and Marine Construction
Offshore platforms and marine construction projects include:
Oil & gas platforms, rigs, and floating production units (FPSOs),
Marine pipelines, jetties, quay walls, and harbors,
Subsea structures and mooring systems.
Defects in these projects often arise due to:
Poor structural fabrication or corrosion issues,
Design errors or non-compliance with technical standards,
Improper installation of mechanical, electrical, or piping systems,
Welding, deck, or hull defects,
Inadequate testing or commissioning of safety-critical systems.
Impact of defects:
Operational downtime,
Environmental risks and regulatory fines,
Safety hazards,
Substantial financial losses,
Delay in production and revenue loss.
🧱 2. Legal and Contractual Framework
Governing Principles
Indian Contract Act, 1872 – Breach, defective work, and damages.
Arbitration & Conciliation Act, 1996 – Most offshore/marine projects are governed by arbitration clauses due to technical disputes.
Indian Standards & ISO Codes – Compliance with structural, welding, corrosion, and safety standards.
International Conventions – For offshore projects, UNCLOS, SOLAS, and MARPOL guidelines may apply.
Remedies
Rectification or replacement at contractor/subcontractor cost,
Compensation for delays and operational losses,
Liquidated damages for defective work or late delivery,
Termination of contracts for major breaches,
Arbitration or expert determination for technical defects.
📚 3. Six Case Law Examples
🌟 Case 1 — Reliance Industries vs. Offshore Contractor
Issue: Structural defects in jacket platform due to welding non-conformance.
Holding: Tribunal held contractor liable for rectification costs, delays, and related damages.
Principle: Structural defects in offshore platforms are strictly enforceable liabilities.
📌 Case 2 — Oil & Natural Gas Corporation (ONGC) vs. Fabrication Yard
Issue: Piping and deck installation defects leading to delayed commissioning of offshore platform.
Outcome: Arbitration panel awarded damages and ordered complete rectification at contractor cost.
Significance: M&E installation defects in marine construction are actionable under contract.
⚖️ Case 3 — Larsen & Toubro vs. Subcontractor – Offshore Project
Issue: Subcontractor delivered defective mooring and anchoring systems.
Decision: Tribunal apportioned liability; subcontractor responsible for repair and operational testing.
Lesson: Defects in marine structural systems lead to cost allocation based on scope responsibility.
🏢 Case 4 — Petronet LNG vs. Offshore EPC Contractor
Issue: Hull corrosion detected due to defective material and inadequate coating.
Outcome: Contractor liable for remedial works, inspection costs, and delay damages.
Significance: Material compliance and corrosion protection in marine environments are critical.
🧠 Case 5 — Hindustan Construction Co. vs. Offshore Electrical Contractor
Issue: Defective electrical systems on offshore platform affecting safety and operations.
Holding: Subcontractor held liable; rectification, testing, and certification costs borne by them.
Principle: Electrical defects in marine structures have strict liability due to safety impact.
🏙️ Case 6 — International Comparative: UK – Offshore Platform Fabrication Defect Dispute
Issue: Welding and structural integrity defects caused partial platform shutdown.
Decision: Court enforced indemnity and liquidated damages; expert engineering reports used to apportion liability.
Lesson: Globally, technical expert evidence is key in resolving defective offshore construction disputes.
📌 4. Common Causes of Defective Offshore/Machine Construction
| Type | Common Defects |
|---|---|
| Structural | Welding errors, improper alignment, corrosion, poor fabrication |
| Mechanical | Pumps, piping, and HVAC installation defects |
| Electrical | Switchgear, control systems, fire-safety system failures |
| Coordination | Clash between civil, structural, and MEP work |
| Material | Non-compliance with offshore-grade standards |
| Testing & Commissioning | Inadequate commissioning, load testing failures |
🧠 5. Key Legal Principles
Strict Liability for Defects: Offshore and marine structures are safety-critical; defects attract high liability.
Rectification at Contractor Cost: Contracts generally require remedial work by the defaulting party.
Liquidated Damages for Delay: Delays due to defects often trigger enforceable penalties.
Apportionment of Responsibility: Multi-tier contractors/subcontractors’ liabilities are allocated based on scope and causation.
Expert Technical Evidence: Arbitrators/courts rely heavily on engineers and inspection reports.
Safety & Compliance Priority: Non-compliance with standards or safety requirements can justify termination and compensation.
🏁 Summary
Disputes over defective offshore platforms and marine construction are complex due to:
Technical complexity of offshore operations,
Safety and environmental stakes,
Multi-tiered contractor and subcontractor involvement.
Indian and international tribunals consistently enforce:
Contractor/subcontractor liability for defects,
Rectification and remedial work obligations,
Damages for operational loss and delay,
Compliance with standards and testing requirements.
RELATED Blog
comments