Subsea cable firm must pay $3m for lost connection
High speed ‘quant trader’ sought refund when cable suffered cut
THE Irish arm of Susquehanna International (SIG), a global quantitative trading firm or quat trader, has petitioned a New York court to confirm a near $3m (€2.5m) arbitration award made to the company against Dublin-based transatlantic cable business Hibernia Express.
The award was made by the International Centre for Dispute Resolution following an outage on the Hibernia Express cable between February and March 2019.
High-speed connections are hugely important for many financial companies where rapid execution of transactions such as share trading can provide a significant competitive edge to the firms and their clients.
Hibernia is a unit of US firm GTT. The Irish cable company was originally founded by US lawyer and investor Ken Petersen in 2003, when he bought a transatlantic cable for just $17m from bankrupt 360Networks.
It had spent $800m laying the cable. GTT acquired Hibernia in 2017.
In 2015, Hibernia connected its flagship Express cable via a spur to a landing station in Cork. The Express cable is a 4,600km transatlantic network that links Nova Scotia and the UK.
“This dispute arises from an interruption in the high-speed, low-latency cable transport service supplied by Hibernia to SIG under the master service agreement (MSA),” New York court filings note.
A master agreement inked between Susquehanna and Hibernia in 2015 would see SIG pay up to $21.75m over up to five years for use of the Hibernia Express Cable. The money was payable in instalments.
“The interruption in service began on February 17, 2019 and continued until March 21, 2019,” according to the legal documents. “SIG claimed a refund for interruption in service under the terms of the MSA in the amount of $729,166.”
Hibernia rejected the refund claim, asserting that the outage was caused by a catastrophic event within the meaning of force majeure in the service agreement.
The cable was impacted by a subsea cut.
SIG terminated its agreement with Hibernia and commenced arbitration at the International Centre for Dispute Resolution.
Hibernia vigorously contested SIG’s right to terminate the master service agreement or its entitlement to any refund.
Hibernia had told its customers in 2019 that its cable had suffered a full cut.
“Initially and for some time, Hibernia did not disclose that it suspected the outage was caused by a ship’s anchor accidentally damaging its subsea cable,” noted the arbitration centre.
In June 2019, Hibernia told SIG “the outage was attributable to a fishing vessel severing the subsea cable”, it added.
“The fact that full cable cuts may be statistically less common than partial cable cuts does not establish that the former was unforeseeable,” noted the arbitration centre.
Last November, the dispute centre awarded SIG just over $2.5m plus pre-award interest of almost $311,000. SIG and Hibernia squabbled over attorney fees, but last week the arbitration centre made a final order on those costs.