Marco Polo sets sail on legal action against SembMarine on contract cancellation scuffle

It’s asking for a US$21.4m refund.

What seems to be a brutal feud stemming from an apparent contract breach between Marco Polo and Sembcorp Marine has been raised to a legal dispute.

According to a press release by Marco Polo, its subsidiary MP Drilling had issued SembMarine’s PPL, the builder of the New Rig, a notice of termination of the Rig Construction Contract following the latter's failure to comply with certain of its material contractual obligations.

“In arriving at this decision to terminate the Rig Construction Contract, MP Drilling has taken into account various factors including cracks found on all three legs of the New Rig during two rounds of tests, notwithstanding repair works carried out by PPL after the first round of tests,” the press release said.

Along with stating that MP Drilling will not be taking delivery of the new rig, the press release also said Marco Polo is seeking a refund of the initial amount of 10% of the contract price, which is approximately US$21.4m.

The press release also said it will also refund all other payments made by MP Drilling under the contract.

“The consequence of termination is that MP Drilling is discharged from its obligations under the Rig Construction Contract and is under no further obligation to perform the same. This includes a discharge of its obligation to make any further payment of the contract price or any other sum under the Contract to PPL,” the press release added.