Hess Corp v Stena Drillmax III Ltd. & Anor

Hess Corp v Stena Drillmax III Ltd. & Anor

The contract requires that, both at the Commencement Date and in subsequent invoices, the operating cost element (including sterling expenses) must be recalculated and converted to dollars at the prevailing exchange rate as specified in Clause 13.3.5, resulting in an adjusted Operating Rate. The Operating Rate is not fixed for the contract term but is subject to adjustment in line with actual costs and exchange rates.

Parties
Claimant: Hess Corporation; Defendant: Stena Drillmax III Ltd; Defendant: Stena Carron (Hungary) KFT
Jurisdiction
England and Wales
Judgment Date
27 May 2011
Procedural Posture
Commercial Contract Dispute / Judgment on Preliminary Issues
Outcome
Judgment for the Claimant on preliminary issues
Legal Topics
Interpretation of Contract Terms, Currency Conversion in Contracts, Remuneration Clauses, Day Rate Adjustments
Contract Law Commercial Law Interpretation of Contract Terms Currency Conversion in Contracts Remuneration Clauses Day Rate Adjustments

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Parties

Hess Corporation

Claimant

Stena Drillmax III Ltd

Defendant

Stena Carron (Hungary) KFT

Defendant

Procedural Posture

Commercial Contract Dispute / Judgment on Preliminary Issues

Legal Issues

  1. 1 Whether the operating cost element and thus the Operating Rate should be recalculated at each invoice date to reflect current exchange rates or remain fixed with only variations separately invoiced
  2. 2 Whether the applicable exchange rate for sterling cost elements is that prevailing at the invoice date or fixed at contract date
  3. 3 Whether the contract mechanism requires adjustment of the Operating Rate or only a separate Day Rate Adjustment

Ratio Decidendi

The contract requires that, both at the Commencement Date and in subsequent invoices, the operating cost element (including sterling expenses) must be recalculated and converted to dollars at the prevailing exchange rate as specified in Clause 13.3.5, resulting in an adjusted Operating Rate. The Operating Rate is not fixed for the contract term but is subject to adjustment in line with actual costs and exchange rates.

Court Disposition

Judgment for the Claimant on preliminary issues

Orders

  • Sterling expenses must be converted to dollars at the prevailing exchange rate per Clause 13.3.5 for each invoice and the Operating Rate adjusted accordingly.
  • Questions 1.2, 2.2, 3.1, and 4.1 answered Yes; all other questions answered No.