A sinking feeling

A naval architect was approached by a research and development company who had produced a prototype “wave power generator” (WPG), a floating device used to convert ocean wave energy into electricity using air pressure created by waves. The naval architect was engaged to provide the necessary design and stability approval for the prototype, as required by local regulations.

Prior to accepting the instruction, the architect provided to his client his Standard Trading Conditions (STCs). Those included various liability exclusions and a clause limiting the liability of the architect to the amount of his fees.

Designs and drawings were approved by the architect, on the condition that the device was to be operated in “inshore and partially smooth areas” and was to be removed from service six months after being launched.

The scope of work continued to evolve and the architect was involved in re-designing the device to the client’s budget constraints. Eventually, the device was launched and operated successfully for two months before partially sinking in heavy weather. The maritime authorities required the device to be removed before it sank completely and became a navigational hazard.

The client subsequently issued proceedings against the naval architect alleging that the architect had failed to comply with terms of the design agreement, and claimed over USD 500,000 in damages. Lawyers were appointed by ITIC to act for the naval architect.

The lawyer’s advice was that the naval architect had strong grounds on which to defend the claim and that his STCs would stand up to limit his liability to around USD 10,000.

ITIC put up a robust defence for the architect, and the onus was put on the claimant to properly set out and evidence their claim. After some months of silence, the claimant’s solicitors advised that the claimant had no further funds to pursue their claim, and would therefore be withdrawing it.

The incurred legal costs of USD 40,000 were covered by ITIC.

This is another claim which illustrates the importance of contracting under well drafted STCs, particularly where, as in this case, the work involves cutting-edge designs.