Hess Corporation v Stena Drillmax III Ltd & Ors

Hess Corporation v Stena Drillmax III Ltd & Ors

The operating cost element of the Operating Rate is variable and subject to adjustment based on actual costs incurred, including currency conversion at the current Financial Times exchange rate for the entire sterling component. The Day Rate Adjustment is a process that adjusts the Operating Rate itself, not a separate sum. The contract language and structure require the Operating Rate to change as operating costs change, and the current exchange rate applies to the whole adjusted sterling component.

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
Civil Appeal / Court of Appeal Judgment
Outcome
Appeal dismissed
Legal Topics
Contract Interpretation, Remuneration Calculation, Currency Conversion, Day Rate Adjustment, Exchange Rate Mechanism
Commercial Law Contract Law Contract Interpretation Remuneration Calculation Currency Conversion Day Rate Adjustment Exchange Rate Mechanism

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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

Civil Appeal / Court of Appeal Judgment

Legal Issues

  1. 1 Whether the operating cost element of the Operating Rate under the MODU contract is variable and subject to adjustment.
  2. 2 Whether the sterling components of the operating cost element should be converted at the current exchange rate for the whole element or only for the adjustment amount.
  3. 3 Whether the Day Rate Adjustment is a process affecting the Operating Rate or a separate sum.

Ratio Decidendi

The operating cost element of the Operating Rate is variable and subject to adjustment based on actual costs incurred, including currency conversion at the current Financial Times exchange rate for the entire sterling component. The Day Rate Adjustment is a process that adjusts the Operating Rate itself, not a separate sum. The contract language and structure require the Operating Rate to change as operating costs change, and the current exchange rate applies to the whole adjusted sterling component.

Court Disposition

Appeal dismissed

Orders

  • Stena's appeal is dismissed.
  • Hess's interpretation of the contract is upheld.