Coastal Con­tracts unit served with no­tice of ar­bi­tra­tion

The Sun (Malaysia) - - SUNBIZ -

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.

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