A series of unfortunate events

An offshore surveying firm signed a contract with an oil company, for the provision of geophysical surveys and geotechnical surveys over certain gas fields.

The gas extraction in that field had been interrupted some time before and the oil company was looking at re-starting extraction and further developing the field. The purpose of the survey was to provide an assessment on the condition of the seabed and fields before new drilling operations could commence.

During the provision of the surveys several events occurred, delaying the commencement and completion of the services by approximately 281 days.

The oil company claimed that the delay was caused by, amongst others, failure of equipment, issues with the ships that had been chartered by the surveyors, defective work, and non-completion of obligations and rectifications.

Therefore, it was clear that some delays claimed were not caused by the negligence of the surveyor, for example, those caused by operational issues with the ships or delays caused by bad weather. However, some delays were caused by the negligence of the surveyor and/or their subcontractors, for example failure to ensure the correct equipment was on board the vessel.

Furthermore, the contract contained a liquidated damages clause, which capped the surveyor’s liability for delays at 10% of the contract price (approx. US$ 900,000). Originally, the claimant viewed all the delays as one event and claimed one cap. However, they subsequently advised that they were entitled to claim under three separate limitation caps of US$ 2,700,000. The claim eventually settled at US$ 1,200,000. This was covered by ITIC.