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E.On wins multi-million pound dispute over wind farm repairs

Posted: 14th September 2017   In: Corporate Commercial

The energy company E.On has won a longstanding dispute over who should bear the costs for repairs to an offshore wind farm.

The issue arose because of seemingly conflicting clauses in the contract to construct the Robin Rigg wind farm in the North Sea.

The contractor, the Danish company MT Højgaard (MTH), was required to prepare the foundations in accordance with an international design standard known as J101.

However, another clause stated: "The design ... shall ensure a lifetime of 20 years ... without planned replacement. The choice of structure, materials, corrosion protection system operation and inspection programme shall be made accordingly."

Following construction, it was discovered that J101's calculations had been wrong and remedial work would be needed to bring the foundations up to the required standard.

E.On sought the £23m repair costs from MTH.

The Court of Appeal held that although clauses in the contract appeared to be a warranty that the foundations would function for 20 years, that was inconsistent with the other contractual terms, including the need to comply with J101.

It described those clauses as "too slender a thread upon which to hang a finding" that the contractor had given a 20-year warranty.

However, the Supreme Court has overturned that ruling.

Lord Neuberger said it was up to the contractor to identify areas where the works needed to be designed differently to meet the required standard.

He said: “The contractor is expected to take the risk if he agreed to work to a design which would render the item incapable of meeting the criteria to which he has agreed.

“The foundations neither had a lifetime of 20 years, nor was their design fit to ensure one.

“The technical requirements expressly prescribe only a minimum standard. It was the contractor – ie, MTH’s – responsibility to identify areas where the works needed to be designed in a more rigorous way.”

Please contact Simon Porter if you would like more information about the issues raised in this article or any aspect of contract law.