Hess Corporation v Stena Drillmax III Ltd & Ors [2012] EWCA Civ 522 (26 April 2012)

Hess Corporation v Stena Drillmax III Ltd & Ors [2012] EWCA Civ 522 (26 April 2012)

The operating cost element of the daily rate is not fixed but subject to adjustment based on actual costs incurred, and the sterling components of this element must be converted to USD at the current exchange rate for the whole amount, not just the adjustment, as required by the contract's language and business sense.

Citation
[2012] EWCA Civ 522
Parties
Claimant / Respondent: Hess Corporation; Defendant / Appellant: Stena Drillmax III Ltd; Defendant / Appellant: Stena Carron (Hungary) KFT; Defendant / Appellant: The "Stena Forth"
Jurisdiction
England and Wales
Judgment Date
26 April 2012
Procedural Posture
Appeal (civil) / Court of Appeal Judgment on Appeal From High Court (queen's Bench Division)
Outcome
Appeal dismissed
Legal Topics
Contract Interpretation, Remuneration Adjustment, Exchange Rate Application, Offshore Drilling Contracts
Commercial Law Contract Law Maritime Law Contract Interpretation Remuneration Adjustment Exchange Rate Application Offshore Drilling Contracts

Case Brief

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Parties

Hess Corporation

Claimant / Respondent

Stena Drillmax III Ltd

Defendant / Appellant

Stena Carron (Hungary) KFT

Defendant / Appellant

The "Stena Forth"

Defendant / Appellant

Procedural Posture

Appeal (civil) / Court of Appeal Judgment on Appeal From High Court (queen's Bench Division)

Legal Issues

  1. 1 Whether the operating cost element of the daily rate under the MODU contract is fixed or variable and subject to adjustment based on actual costs and exchange rates.
  2. 2 Whether the sterling components of the operating cost element should be converted to USD at the current exchange rate for the whole amount or only for the adjustment amount.

Ratio Decidendi

The operating cost element of the daily rate is not fixed but subject to adjustment based on actual costs incurred, and the sterling components of this element must be converted to USD at the current exchange rate for the whole amount, not just the adjustment, as required by the contract's language and business sense.

Court Disposition

Appeal dismissed

Orders

  • The judgment of the High Court is affirmed.
  • Stena's appeal is dismissed.