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High Court rejects indemnity claims in Gwynt-y-Môr court judgement

By: Rameeza Haq Duggal 20/04/2020 4C Offshore

Cables General Interconnectors

In Lord Justice Philips’ ruling on 8 April 2020, the developer of the Gwynt-y-Môr offshore windfarm was not held responsible for the repair costs of the two failed export cables in a long running case.

Gwynt y Mȏr OFTO plc, a consortium of Balfour Beatty and Equitix, took the case against the Innogy-led consortium that developed the project, following the two cables failures in March and September 2015. According to the engineers, the failures were caused by manufacturing faults but the insurers of the cables refused to pay out.

The export cables were sold by the developers to the OFTO by means of a sale and purchase agreement dated 11 February 2015, with the sale completing six days later on 17 February 2015. The first export cable failed two weeks later on 2 March 2015 and the second failed on 25 September 2015.

The High Court London has dismissed OFTO’s £15m claim on several grounds. Firstly, the cables failed due to severe corrosion caused by damage to part of the polyethylene sheath during the cable manufacture, permitting seawater to penetrate through the puncture to the aluminium armour wires, and manifested itself over months and months.

Secondly, the indemnity was limited to damage occurring in the period between signing of the agreement and completion.

Lord Justice Philips concluded: “I find that the claimant is not entitled to an indemnity under clause 8.2 of the SPA. The claim must therefore be dismissed.”
However, as the judgement came from the High Court, OFTO might like to take it to the Court of Appeal, said HFW partner Richard Booth.

Previously, Ofgem had also rejected OFTO’s claim for compensation for outage for the cable failure. Ofgem said that OFTO should have priced in the risk of a latent cable defect from the beginning. In addition, it would not be fair with consumers to pass through costs for foreseeable type of damage.

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High Court rejects indemnity claims in Gwynt-y-Môr court judgement

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