MHWirth, a subsidiary of the Norwegian oil services investment company Akastor, has received a favorable ruling from the arbitral tribunal in an arbitration case against Jurong Shipyard, a subsidiary of Singaporean offshore giant Seatrium (formerly Sembcorp Marine). The case involved a dispute over the termination of contracts for four drilling rigs.
Seatrium lost the case and will pay a fine of nearly $101 million
According to the tribunal’s partial award, Seatrium’s Jurong Shipyard will pay MHW $101 million in damages as a termination fee. MHW is also eligible for legal fees and certain suspension costs (totaling approximately $7 million), as well as interest compensation.
Notably, while the rig contract is held by MHW, a wholly-owned subsidiary of HMH Holding, Akastor has a full financial interest in the contract. The reason for this is that MHW was formed in 2021, which did not include the four rigs at issue in the case. MHW is a global offshore drilling equipment company formed by the merger of Baker Hughes’ Subsea Drilling Systems business and Akastor’s MHWirth. Baker Hughes and Akastor hold equal stakes in HMH.
It is understood that the four rigs in question were initially signed in 2012, and after years of suspension, Jurong Shipyard announced the termination of the contract in 2021 and 2022. The contract is part of the expected deliverables under Jurong Shipyard’s rig contract with Brazilian offshore energy company Sete Brasil, for which a full and final settlement agreement was reached in 2019.
In accordance with the rules of the Singapore International Arbitration Centre (SIAC), the award is complete and final. However, Akastor noted that a party may, within 30 days of receipt of the award, request the arbitral tribunal to correct any miscalculation, any clerical or typographical error or any error of a similar nature.
