Bluewater Energy Services BV v Mercon Steel Structures BV and Others
| Jurisdiction | England & Wales |
| Judge | Mr Justice Ramsey |
| Judgment Date | 30 June 2014 |
| Neutral Citation | [2014] EWHC 2132 (TCC) |
| Docket Number | Case No: HT-10-355 |
| Court | Queen's Bench Division (Technology and Construction Court) |
| Date | 30 June 2014 |
162
Other Variations
162
Issue 14. Did Mercon fail to comply with the notice requirements in clause 14.3 to 14.7 in respect of any claimed variations and, if so, what effect does this have (if any) on its right to payment?
162
Clause 14 of the Contract
162
Variation Orders and Variation Order Requests
168
Issue 15: What is the value of the variation account (excluding VOR 8), including discount (if any)?
168
VORs agreed between the parties
168
Fabrication of main bearing support rings (option O6.1) [VOR 126]
169
Additional E&I works [VORs 128, 129, 227, 228, 230, 239, 243, 256, 258, 270]
169
Costs to execute Site Instruction 21 [VOR 148]
169
Fabricating slotted holes in cover ring [VOR 235]
169
Unloading of platforms and supports [VOR 236]
169
Costs to execute Site Instruction 43 [VOR 250]
169
Disputed VORs
169
VO-003 – Resubmission of Drawings
169
Increased size of contract scope, including 5th leg to the substructure (800T mooring loadcase) [VOR-004]
171
Change of material specification to PCFW36S [VOR 6]
175
Extra cutting and welding costs for adding Type 1 steel [VOR 34]
176
Increased size and required number of guides in pile sleeves [VOR 87]
177
Additional machining and cladding [VOR 144]
177
New design main bearing [VOR 147]
178
Additional Cost for Shipments 1 (VOR-161 Rev 2), 2 (VOR-229 Rev 1) and 3 (VOR-266 Rev 2)
179
Costs for turntable rotation/clash test [VOR 162]
181
Additional piping fabrication and materials [VORs 172, 174, 185, 186, 187, 188, 189, 190, 191, 192, 193, 194, 195, 196, 197, 198, 199, 200, 203, 204, 205, 206, 207, 208, 209, 210, 211, 212, 213, 214, 215, 216, 217, 218, 219, 220, 221, 222, 223, 224, 225, 226, 244, 245, 254]
182
Removal of top part of end plates to comply with transport restrictions [VOR 241]
185
Painting repair Central Column Gorinchem [VOR 247]
186
Yoke Hinge House rotation test [VOR 248]
186
Installation Yoke Hinge House on to Yoke Hinge Body [VOR 249]
186
Temporary placing FMS structures on quay [VOR 255]
187
Preheating of thick plates [VOR 267]
187
Summary
187
Discount on Total Value of VOs
190
Other Bluewater Claims
190
Issue 21(a): What sums are due, if any, in respect of LADs for Key Personnel?
190
Introduction
190
Contractual provisions
191
Submissions
191
Decision
194
Exchange of the Project Manager from P van Daele to R. de Jong (€50,000)
195
Removal of the Site Construction Manager Astrakhan, P. Van den Brule, without replacement (€50,000)
196
Exchange of Transportation and Logistics Manager from J. Marijnissen to M. Hoep (€30,000)
196
Exchange of Mechanical Completion and (pre) Commissioning Manager from T Jordaans to a person unknown to the Claimant and then to E. van Leliveld (€30,000)
196
Removal of the HSE Engineer J Koning, without replacement, €20,000.
. 197
Summary
197
Compensation of Expenses – Custom Duties and Charges
198
Additional Sailing costs for optimisation of FMS stowage and shipment of piles
199
Engineering Costs for relocation of Drain Tank due to Changed Transport Split
199
Failure to deal with Customs clearance for "free issue" equipment temporarily Imported
200
Sorting mix-up of Project Materials in Container
200
Management & Engineering Costs
200
Loss of Profit on Management & Engineering Costs
201
Steve Osmond Costs — Remeasure Database
201
Bluewater Welding Expert Costs
202
J Glazenburg Costs — Remeasure Database
202
Costs for provision of HSE Plan
202
Personnel at SEC — Additional involvement
203
Costs for provision of Commissioning Plan
203
Chairing "kick-off" meeting at EEW in Germany
203
Welding Procedures — Costs of specific advice
204
Chairing "kick-off" meeting at MRC, Schiedam
204
Chairing "kick-off" meeting at SIF, Roermond
204
DNV Additional and extended costs — Fabrication Witness
204
DNV Additional and extended costs — Design Review
205
Failure to return surplus free-issue steel
205
Additional Costs to Make Pendulums transportable by Rail and Additional Costs for Transportation of Pendulums
207
Additional Procurement Costs, Ballast Tank Materials
208
Summary
208
Issue 21(c): What sums are due, if any, in respect of post-termination damages?
208
Sums paid to ASPO
211
Sums paid to Mercon not for properly reimbursable work
212
Insulation work
212
Issue 21(d): What sums are due, if any, in respect of NCRs?
212
Miscellaneous NCRs (NCR-2, 4, 5, 6, 8, 9, 10, 55, 64, 66, 69, 71, 72, 73)
212
NCR 1 – Rectification Work Ice Resistant Zone
215
NCR 051 – Missing Stud Bolts / Gaskets to Pipework
216
NCR 077 – Non-Supply and Installation of Connection between Swivel Leak Tank and Grease System / Bearing
217
NCR 012 – Non Conforming Bolting of Grating of Chain Stopper and Non-Conforming Bolting and Grating of Hose Connection Tower
217
NCR 055 – Warning Signs
217
NCR 014 – Non-Conforming Tubing, Braces, Handrailing of Yoke Arm, Platforms
218
NCR 015 – Non-conforming Sheave Supports and Keep Plates on Chain Stopper (CS) Platform
. 219
NCR 016 – Ballast Tank Openings
220
NCR 017 — Non-Conforming Connection between Winch arm and HPU (Yoke Arm)
220
NCR 060 – Non-Supply of Lighting Materials
221
NCR 076 and 003 – Non supply and Installation of Hydraulic Connections between the HPU (FMS) and Winch (HCT)
221
NCR 052 – Incorrect Orientation of Substructure at Quay ASPO
222
Additional Costs for ASPO office facilities
224
Additional Costs for ASPO Progress Reporting
224
Costs of Bluewater Project Management and Engineering
224
Loss of Profit on Bluewater Project Management
225
NCRs 7, 20, 21, 53, 54 & 79 Failure to provide the MRB/As-Built documentation
225
Summary
226
Issue 21(e): What sums are due, if any, in respect of other costs to complete?
227
Incentive Payment
228
Seafastenings (certificates 1,5,6,14,17 and 21)
228
Customs Charges and Duties (certificates 7, 13, 15, 18 and 26)
229
Provision of Warranty Services
229
Area Rent
229
Delivery of Load Out Procedure
230
Conclusion
230
Issue 21(f): What sums are due, if any, in respect of Russian Federation VAT?
230
RFVAT on the Payment Contract
233
Payment Contract: Reimbursable cost invoices
233
Payment Contract: Ransom Payment
235
RFVAT on the Work Contract
235
Invoice 2008–73
237
Invoice 2008–56
237
RFVAT paid to Mercon but not paid to ASPO
237
Summary: RFVAT Claims
237
Other Mercon Claims
237
Issue 22: Is Mercon entitled to claim for lost profit (if Bluewater wrongly terminated the contract) and, if so, in what sum?
237
237
Unpaid Balance of RFVAT
239
Overall summary and conclusion
239
Mr Justice RamseyIntroduction
These proceedings relate to claims arising under a sub-contract ("the Contract") made between the Claimant ("Bluewater") and the Defendant ("Mercon") for the fabrication of a tower based soft yoke mooring system ("SYMS") for installation as part of the development of the Yuri Korchagin Field in the Caspian Sea.
Bluewater was a company in the Bluewater Group. Companies
within that group entered into a contract with the Russian oil company, Lukoil, for the design, construction and installation of the SYMS.Mercon in turn sub-contracted parts of the Contract work to a number of companies, including Astrakhan Shipbuilding Production Association LLC ("ASPO"), based in Astrakhan.
The SYMS
The SYMS consisted of various components which included the sub ? structure which was pre ?fabricated by ASPO under its subcontract with Mercon. There was then a Central Column which was a tubular section. This was manufactured by SIF, a subcontractor to Mercon based in Holland. The Central Column was delivered to Mercon for the fitting of stiffeners/trunnions before being transported to Astrakhan where it was integrated with the sub-structure. Together they formed the Jacket. Another component was the piles on which the Jacket was to be installed. These were fabricated by another subcontractor to Mercon, EEW in Rostock, Germany. The piles were also transported to Astrakhan.
A further component was the Topsides. These consisted of a number of elements such as the turntable, pig receiver deck, hose connection deck and tower. They were fabricated by Mercon at its yard in Gorinchem. The Topsides were transported in two parts from Gorinchem to ASPO's yard and integrated there. Another component was the Yoke assemblies, the principal parts of which were the Yoke End, the Yoke Hinge body or 'casting' and the Yoke Hinge house or 'housing'. These were shipped to Astrakhan together with the Crane Structure.
Brief Chronology
After tendering, a Letter of Intent for the work was provided by Bluewater and signed by Mercon in December 2006.
The Contract was made on 26 March 2007. It contained various Options, some of which in due course were exercised. Option 5 was exercised on 29 March 2007, immediately after the Contract was made, although it was not formalised into a Variation Order until VO-005 in March 2008. This Option related to the...
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