Sabic UK Petrochemicals Ltd v Punj Lloyd Ltd [2013] EWHC 2916 (TCC) (10 October 2013)

Sabic UK Petrochemicals Ltd v Punj Lloyd Ltd [2013] EWHC 2916 (TCC) (10 October 2013)

SABIC was entitled to terminate the contract under clause 27.2.10 due to SCL's persistent failure to proceed with due diligence and under clause 27.2.5 due to SCL's financial deterioration. The warning letter was sufficient. SCL was not in repudiatory breach. SABIC's claim for costs to complete was established, but claims for lost revenue were excluded by clause 35.1. The proceeds of the performance and advance payment guarantees were to be brought into account before applying the contractual cap.

Citation
[2013] EWHC 2916 (TCC)
Parties
Claimant: SABIC UK Petrochemicals Limited (formerly Huntsman Petrochemicals (UK) Limited); Defendant/first Claimant (by Counterclaim): Punj Lloyd Limited; Second Claimant (by Counterclaim): Simon Carves Limited (In Administration)
Jurisdiction
England and Wales
Judgment Date
10 October 2013
Procedural Posture
Commercial Construction Dispute (technology and Construction Court) / First Instance Judgment
Outcome
Judgment for SABIC (Claimant)
Legal Topics
Termination of Contract, Due Diligence in Construction Contracts, Performance Guarantees, Liquidated Damages, Implied Terms, Contractual Interpretation
Construction Law Contract Law Commercial Law Termination of Contract Due Diligence in Construction Contracts Performance Guarantees Liquidated Damages Implied Terms +1 more

Case Brief

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Parties

SABIC UK Petrochemicals Limited (formerly Huntsman Petrochemicals (UK) Limited)

Claimant

Punj Lloyd Limited

Defendant/first Claimant (by Counterclaim)

Simon Carves Limited (In Administration)

Second Claimant (by Counterclaim)

Procedural Posture

Commercial Construction Dispute (technology and Construction Court) / First Instance Judgment

Legal Issues

  1. 1 Whether SABIC was entitled to terminate the contract for lack of due diligence and/or financial deterioration of SCL
  2. 2 Whether the warning letter of 3 October 2008 was sufficient under the contract
  3. 3 Whether SCL failed to proceed with due diligence during the warning period

Ratio Decidendi

SABIC was entitled to terminate the contract under clause 27.2.10 due to SCL's persistent failure to proceed with due diligence and under clause 27.2.5 due to SCL's financial deterioration. The warning letter was sufficient. SCL was not in repudiatory breach. SABIC's claim for costs to complete was established, but claims for lost revenue were excluded by clause 35.1. The proceeds of the performance and advance payment guarantees were to be brought into account before applying the contractual cap.

Court Disposition

Judgment for SABIC (Claimant)

Orders

  • PLL/SCL's counterclaim dismissed
  • SABIC awarded £11,797,514 (subject to separate judgment on statutory interest)