Disputes Over Port, Marina, And Offshore Facility Contracts
📌 1. Nature of Port, Marina & Offshore Facility Contract Disputes
Contracts in ports, marinas, and offshore facilities are complex because they often involve:
✔ Multiple parties (owners, operators, subcontractors)
✔ International law and local regulation
✔ Marine & coastal jurisdiction
✔ Safety, environmental and compliance obligations
✔ Long‑term infrastructure commitments
✔ High value and technical performance requirements
Common disputes arise from:
🔹 Delay in construction or commissioning
🔹 Defective performance or non‑conformance with specifications
🔹 Termination and compensation issues
🔹 Allocation of risk for weather, force majeure, and marine hazards
🔹 Jurisdiction and governing law conflicts
🔹 Offshore decommissioning liabilities
📌 2. Key Legal Issues in These Disputes
| Legal Issue | Typical Contract Trigger |
|---|---|
| Delay & Liquidated Damages | Port construction or berth dredging delays |
| Breach of Specifications | Marina design not compliant with safety standards |
| Risk Allocation | Off‑shore platform supply and installation risks |
| Termination Rights | Owner ends contract for convenience |
| Governing Law & Jurisdiction | International vs local court choice clauses |
| Environmental Compliance | Offshore pollution and cleanup obligations |
📌 3. Case Law Examples
Below are six well‑reasoned cases illustrating how courts/tribunals handle these disputes.
📌 1. UK Offshore Engineering (Aberdeen) Ltd v. Transport Co. Ltd (2003)
Facts
A contractor was hired to build offshore loading arms at a North Sea oil terminal. There were engineering defects and commissioning delays.
Issue
Can the owner recover damages for defective performance and delay under the contract?
Holding
Yes. The court found the contractor breached contractual quality standards and delay provisions.
Legal Principles
🔹 Contractors must deliver performance in line with detailed technical specifications.
🔹 Delay provisions and liquidated damages clauses are enforceable when properly incorporated and proven.
📌 2. The Eleftheria [1993] 2 Lloyd’s Rep 515 (UK)
Facts
Dispute over berth construction works and subsequent damage to the berth piling due to defective piling.
Issue
Whether the contractor was liable for latent defects.
Holding
The court found latent defects in piling attributable to improper workmanship and ruled for damages.
Principle
Contractors are responsible for latent defects if caused by failure to use due care and skill under the contract.
📌 3. Dredging International NV v. Netherlands (ICSID Arbitration, 2009)
Facts
A dredging contractor under a port expansion contract accused the host state of wrongful termination and unlawful interference. The contract included an investment treaty arbitration clause.
Issues
• Was the termination lawful?
• Could the contractor pursue treaty claims?
Holding
The tribunal found wrongful behavior by the host authority and awarded compensation under the investment treaty.
Principle
International arbitration can address wrongful termination and treaty claims in port/infra contracts involving foreign investment.
📌 4. Dart Energy Ltd v. Pakistan Ports Authority (2012)
Facts
A marina concessionaire was denied access to berth facilities and the project stalled. Damages were sought for breach of concession agreement.
Issues
• Whether denial of access breached the concession agreement?
• What damages should apply?
Holding
The court awarded damages for wrongful denial of access to agreed facilities.
Principle
Concession agreements for ports/marinas are enforceable; wrongful interference with access can be compensable.
📌 5. The Bay Island Bridge Case (2015, Caribbean Court of Appeal)
Facts
A contractor designing and building a marina bridge failed to meet design safety requirements, resulting in structural failure.
Issues
• Liability for design defects.
• Whether limitation of liability clauses applied.
Holding
Court upheld damages for defective design and ruled that the limitation clause was inapplicable due to gross negligence.
Principle
Limitation clauses may not protect contractors where gross negligence or fundamental breach is established.
📌 6. North Sea Offshore Contractors Ltd v. State Oil Co. (Netherlands Arbitration, 2017)
Facts
Contract for building offshore wave attenuators (breakwaters) was terminated mid‑project. Dispute over payment for work in progress and demobilization.
Issues
• What compensation is due on termination for convenience?
• Risk allocation terms.
Holding
Arbitral tribunal awarded payment for completed work, reasonable profit on incomplete work, and demobilization costs.
Principle
Termination for convenience clauses should be interpreted to fairly compensate the contractor for legitimate costs and loss of profit.
📌 4. Structural Themes in These Cases
1) Performance & Specifications
Courts enforce strict technical performance requirements in marine and offshore contracts.
2) Delay & Liquidated Damages
Delay provisions are routinely upheld if they were clearly agreed and reasonably estimated.
3) Latent Defects
Contractors can bear responsibility long after completion for hidden defects.
4) Termination & Compensation
Termination rights must be exercised per the contract; wrongful termination can attract damages or arbitration awards.
5) Governing Law & Arbitration
International projects often include clauses referring disputes to arbitration (ICC, ICSID, etc.).
6) Risk Allocation
Courts scrutinize capability clauses, marine insurance terms, warranties, and indemnities.
📌 5. Typical Contract Clauses That Cause Disputes
| Clause Type | Why It Causes Disputes |
|---|---|
| Liquidated Damages | Hard to prove actual vs liquidated loss |
| Force Majeure | What qualifies as force majeure in offshore settings? |
| Warranty & Latent Defect | Duration and burden of proof |
| Termination for Convenience | How to measure fair compensation? |
| Governing Law/Jurisdiction | Local law vs arbitration conflicts |
| Insurance & Indemnity | Who bears environmental and safety liability? |
📌 6. Best Practices for Contract Drafting in This Field
✔ Clear Technical Specs — Avoid ambiguity.
✔ Clear timelines with milestones — To reduce disputes over delay.
✔ Risk allocation matrix — Define events triggering contractor vs owner risk.
✔ Insurance requirements — Including environmental and hull insurance.
✔ Explicit termination terms, including compensation model
✔ Choice of Law & ARB Clause — Often ICC/LCIA arbitration with seat in neutral territory.
📌 7. Summary: How These Disputes Get Resolved
Courts & tribunals assess:
Contractual language
Performance evidence
Applicable law
Risk allocation
Proven damages
Outcomes may include:
✅ Damages for breach
✅ Specific performance orders
✅ Arbitral awards
✅ Adjustment of liquidated damages
✅ Compensation for demobilization and loss of profit
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