Coastal Contracts unit served with notice of arbitration
PETALING JAYA: Coastal Contracts Bhd’s subsidiary has been served with a notice of arbitration from one of its suppliers (builders) for alleged wrongful termination of a shipbuilding contract.
In a filing with Bursa Malaysia last Friday, the company said its “major subsidiary” had, in July 2016, terminated a shipbuilding contract with the builders due to failure to deliver the vessel on time and in accordance with the terms and conditions of the contract.
Further to the termination of the contract, the subsidiary had also written to the builders seeking refund of all sums paid to the builders under the contract and payment of liquidated damages in accordance with the terms and conditions of the contract.
“Rather than complying with their obligations under the shipbuilding contract, the builders filed a notice of arbitration against the subsidiary alleging that the subsidiary’s termination of the shipbuilding contract was wrongful,” the company said.
It said the builders had not quantified their claim under the notice of arbitration until after the subsidiary had filed its response to the notice of arbitration (and counter-claim). The builders’ current and provisional quantification of their claim is at US$37.4 million (RM155.3 million). The value directly reflects the subsidiary’s counter-claim against the builders in its response to the notice of arbitration.
Apart from the amounts claimed and counter-claimed by the subsidiary and the builders respectively, the arbitration proceedings are not expected to have any other potential financial or operational impact on the subsidiary and/or Coastal group of companies.
Coastal said the subsidiary has engaged external legal counsel to represent and assist in the arbitration proceedings, and is “strenuously resisting” the builders’ “meritless” claim while also pursuing its counter-claim.