Kuhendran, Michael Koh and J. Agesh from ZUL RAFIQUE & Partners’ Construction Dispute Resolution Practice Group, acting for a company (“Claimant”) in an arbitration proceeding, have successfully obtained a Final Award in favour of the Claimant in the sum of RM27 million against the contractor (“Respondent”).

The dispute between the Claimant and Respondent involved the supply of 2” & below and 3” & above manual ball valves (collectively known as “manual valves”) for an oil and gas field.

Under the contract with the Claimant (“Contract”), the Respondent was required to amongst others, supply material which included the manual valves that were to be manufactured by a certain manufacturer (“Manufacturer”). Upon conducting investigations, the Claimant discovered that the manual valves supplied by the Respondent were in fact not manufactured by the Manufacturer.

Amongst the issues to be determined by the Tribunal were:-

  1. Whether there was a contractual obligation on the part of the Respondent to ensure that the manual valves supplied to the Claimant were manufactured and purchased from the Manufacturer; and
  2. Whether the manual valves supplied by the Respondent were manufactured by the Manufacturer.

On the first issue, upon examining all the available evidence, the Tribunal found that the supply of the manual valves under the Contract by the Respondent had to be manufactured by the Manufacturer.

On the second issue, the Tribunal found that the Respondent, in breach of the Contract, delivered manual valves to the Claimant which were not in accordance with the Contract, in that, they were not manufactured by the Manufacturer and is consequently liable in damages to the Claimant.

The Tribunal based on amongst others, documentary evidence and expert assessments awarded a total sum of RM27 million for (1) the costs incurred by the Claimant for assessment, procurement and replacement of the manual valves and (2) damages suffered by the Claimant in having to procure and install valves in the future.

For more insight into this area of law, please contact our Partners in the Construction Dispute Resolution Practice Group:

Kuhendran Thanapalasingam
Susan Tan Shu Shuen

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