Unaoil Ltd v Leighton Offshore Offshore Pte Ltd
| Jurisdiction | England & Wales |
| Judge | Mr Justice Eder |
| Judgment Date | 12 September 2014 |
| Neutral Citation | [2014] EWHC 2965 (Comm) |
| Docket Number | Case No: 2012 Folio 564 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 12 September 2014 |
[2014] EWHC 2965 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Royal Courts of Justice, Rolls Building
Fetter Lane, London, EC4A 1NL
Mr Justice Eder
Case No: 2012 Folio 564
Huw Davies QC (instructed by Jones Day) for the Claimant
Ian Gatt QC and Graeme Robertson (Solicitor Advocate) (instructed by Herbert Smith Freehills LLP) for the Defendant
Hearing dates: 25, 26, 30 June & 2 July 2014
Approved Judgment
I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
Introduction
The claimant ("Unaoil") is a company incorporated in the British Virgin Islands and is part of the Unaoil Group of companies ("Unaoil Group"), the holding company of which is UNAEnergy (Holdings) Pte Ltd. Its head offices are in Monte Carlo. The Unaoil Group was founded in 1991. It provides oil and gas services in the Middle East, Central Asia and Africa and now has approximately 200 employees (excluding temporary and project based employees and contractors). Unaoil provides a wide range of services across the oil and gas sector, principally in challenging locations such as Iraq. Those services include engineering and construction, provision of specialist technical workforces, camp solutions, equipment and aftermarket services and business advisory services.
The defendant ("Leighton Offshore") is a company incorporated in Singapore and is a leading engineering, procurement, construction, commissioning and life of field services constructor.
The disputes between Unaoil and Leighton Offshore arise against the background of a substantial oil infrastructure project, known as the Iraq Crude Oil Expansion Project (also known as the "Phase I Project" or "ICOEEP"). The Phase I Project was part of a series of projects undertaken as part of the Government of Iraq's efforts to rebuild Iraq's oil export infrastructure.
The present proceedings concern various claims made by Unaoil against Leighton Offshore under a Memorandum of Agreement between the parties dated 10 December 2010 ("JICA MOA") as amended pursuant to which Unaoil says that Leighton Offshore appointed Unaoil as its sub-contractor for the onshore works component of the installation of an oil pipeline in the Al-Basra South region of Iraq and the northern Arabian/Persian Gulf referred to variously as the "JICA Project", "Phase III" and the "Sealine Project". Unaoil advances three main claims viz:
i) A debt claim in the aggregate sum of US$12,577,500 pursuant to Exhibit 3 of the JICA MOA.
ii) A claim for liquidated damages in the sum of US$40 million pursuant to Article 8 of the JICA MOA.
iii) A claim for damages for Leighton Offshore's repudiatory breach of the JICA MOA quantified in the sum of US$29,847,167 alternatively US$26,720,297.
The Evidence
On behalf of Unaoil, the following individuals provided signed written statements and gave oral evidence:
i) Mr Ata Ahsani. He is the Chairman of the Board of the Unaoil Group His involvement in operational matters is limited. Rather, his main role is to provide guidance and generally assist the Board with achieving its vision for the Unaoil Group.
ii) Mr Cyrus Ahsani. He is the CEO of the Board of the Unaoil. His role includes general oversight and strategic involvement in all of the Unaoil Group's larger projects but generally not day to day operational matters.
iii) Mr Peter Willimont. He joined the Unaoil Group in 1991 and is the Executive Vice President of the Advisory Division of the Unaoil Group. At all material times, he was responsible for the Unaoil Group's largest accounts and the development of its major projects.
iv) Mr Richard Lyndon. He joined the Unaoil Group in April 2010 and became Executive Vice President, Contracts for the Unaoil Group with responsibility for negotiating and drafting many of the Unaoil Group's contracts for major projects. In addition, he was also responsible for commercial management of the P&L of the JICA Project (amongst other projects) and additionally provided counsel and mentoring to the operational and project teams on both the contract administration and operational delivery management.
v) Mr Martin Worrall. He was originally employed by Leighton Offshore from October 2010 to work from Dubai for the Middle East division of its international offshore project office. He acted as Project Director for the first phase of the ICOEEP and continued in this role until he left Leighton Offshore at the end of November 2011. He then joined Unaoil in January 2012 until he left in September 2013.
On behalf of Leighton Offshore, the following individuals provided signed witness statements and gave oral evidence:
i) Mr Roy Timms. He was the Manager of DPS Leighton Offshore Engineering in Kuala Lumpur for a short period from September 2011 until January 2012 when he was appointed as Leighton Offshore's first Project Director of the JICA Project. His replacement in this role was Timothy Douglass who was appointed in July 2012 although he stayed on for an additional 6 months sharing the role of Project Director but concentrating on managing Leighton Offshore's relationship with the funders and ultimate developers of the JICA Project.
ii) Mr Timothy Douglass. As stated above, he became Project Director for Leighton Offshore in July 2012.
As appears below, there were three other individuals who appear to have played important roles on behalf of Leighton Offshore in relation to the JICA Project viz. Mr Russell Waugh, the original CEO of Leighton Offshore, Mr Peter Cox who took over the role of CEO of Leighton Offshore from Mr Waugh in about the end of 2010 and Mr Michael Pearce who was Leighton Offshore's General Manager, Projects. However, these individuals subsequently left Leighton Offshore. They did not provide statements and did not give evidence.
Summary of Main Events
Before turning to consider the three main claims advanced by Unaoil, it is convenient to summarise an outline of the main events – although it is worth mentioning at the outset that certain aspects of the story are, to say the least, somewhat obscure.
In about April 2010 Mr Willimont, on behalf of Unaoil, approached Mr Waugh, on behalf of Leighton Offshore, to suggest that the two companies work together to pitch for the original Phase 1 Project. As with the later JICA Project which is the subject of these proceedings, the ultimate client for the Phase I Project was the Iraqi state-owned oil company South Oil Company ("SOC"). Unaoil proposed to Leighton Offshore that Unaoil carry out all of the onshore works with regard to the Phase I Project and that Leighton Offshore carry out the offshore works. To Leighton Offshore, the attraction was that Unaoil had experience operating in Iraq and the expertise, local knowledge and personnel to carry out the onshore element of the Phase I Project.
Mr Willimont's approach to Leighton Offshore led to detailed negotiations between the parties following which the parties entered into a Memorandum of Understanding dated 31 May 2010 ("Phase I MOU"). At this date, Leighton Offshore had not yet been appointed as contractor by SOC. However, the Phase I MOU anticipated such appointment and recorded that in the event that Leighton Offshore was successful in securing the Phase I Project from SOC, Unaoil would be appointed as Leighton Offshore's sub-contractor for the execution of the onshore construction works in relation to that project.
The Phase I MOU was superseded by a Memorandum of Agreement dated 26 June 2010 (although signed on 30 June 2010) ("Phase I MOA"). Pursuant to the Phase I MOA, Leighton Offshore appointed Unaoil as its sub-contractor for the execution of the onshore construction activities in connection with the Phase I Project for an all inclusive price of US$77.5 million.
In October 2010, SOC awarded Leighton Offshore the main contract for the Phase I Project. Thereafter, and as envisaged by the Phase I MOA, Leighton Offshore and Unaoil entered into a back-to-back formal sub-contract dated 13 December 2010 with regard to the onshore works. This superseded the Phase I MOA.
Meanwhile, in about November 2010, Mr Willimont and Mr Waugh discussed the potential for Leighton Offshore and Unaoil to collaborate on a separate project involving the construction of a further parallel oil pipeline. This project benefited from funding from the Japan International Cooperation Agency ("JICA") and hence became known as the JICA Project. The project management company ("PMC") for the JICA Project was Japan Engineering Co. Ltd ("JOE").
In the event, the JICA MOA, dated 10 December 2010, was signed by Mr Saman Ahsani on behalf of Unaoil and by Mr Waugh on behalf of Leighton Offshore. It consisted of 9 type-written pages and provided in material part as follows:
" MEMORANDUM OF AGREEMENT
…
WHEREAS
LEIGHTON OFFSHORE and UNAOIL respectively wish to record their irrevocable and binding agreement relating to their collaboration and co-operation in connection with the "IRAQ CRUDE OIL EXPORT FACILITY RECONSTRUCTION PROJECT reference EFP 0910100 (hereinafter referred to as the "PROJECT" and or "JICA") for SOUTH OIL COMPANY (hereinafter referred to as the "CLIENT") in Iraq.
NOW THEREFORE, it is on the basis of the foregoing premise being an integral part this MOA that the Parties hereto agree as follows:
ARTICLE 1 – PURPOSE OF THE MOA
In consideration of the mutual undertakings each Party gives to the other under this MOA, the Parties agree as follows:
1.1 To freely enter into this MOA, in collaboration and co-operation, whereby the Parties agree that such collaboration and cooperation is...
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