Seatrium, taking a view that a customer is trying to walk away from a US$475 million contract, has filed a notice of arbitration.
On Oct 9, Maersk Offshore Wind, a unit of the Danish shipping giant, terminated the contract given to Seatrium to build a wind turbine installation vessel, putting forward "allegations" which were not specified.
The contract was awarded in March 2022 and the vessel, already 98.9% built, is to be used in the US offshore wind farm Empire Wind 1.
On Oct 12, Seatrium rejected the termination notice from Maersk and on Oct 20 gave notice that it would deliver the vessel by Jan 30 2026.
The following day, Seatrium received a notice of arbitration from Maersk, asserting that "disputes" have arisen between the two parties.
The disputes are to be referred to arbitration in London to be conducted in accordance with the current London Maritime Arbitrators Association terms.
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According to Seatrium, the notice did not contain any particulars of the alleged disputes or the buyer’s claims or the reliefs sought.
Seatrium, citing Maersk's conduct, is of the view that this customer has "clearly evinced an intention to abandon the contract and not perform any of its contractual obligations," says Seatrium in an SGX filing on Nov 29.
On Nov 28, Seatrium issued its own notice of arbitration in London on Maersk.
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Among others, Seatrium wants a declaration that Maersk has wrongfully terminated the contract; a declaration that the contract is valid and subsisting, and to take delivery on Jan 30 2026 and pay up.
For a good measure, Seatrium wants to tack on additional damages to be assessed over the episode.
Under the contract, 80% of the contract price of US$475 million is to be paid by the buyer on delivery.
Seatrium has already collected 20% as the down payment.
Seatrium explains that this particular contract pre-dates the merger of Sembcorp Marine and Keppel Offshore and Marine and is the only remaining contract in its order book that is not structured with progressive milestone payments.
Impact of the contractual dispute, "in view of this developing situation", is "highly dependent on the final outcome".
Therefore, Seatrium can only ascertain the financial impact when it has more visibility on the final outcome.
Seatrium shares closed at $2.15, up 0.47% on Nov 28. Year to date, it is up 3.86%.
