HSM Offshore BV v Aker Offshore Partner Ltd

A modifying agreement must be construed in its contractual context. An obligation to use “fullest endeavours” to achieve a stage by a date is not an absolute completion obligation and does not, without more, trigger liquidated damages. Interim payments under a construction contract are not ordinarily final valuations. Clear contractual provisions preserving the payer’s right to review payments prevent an estoppel by convention arising from approval and payment. A contract remains a remeasurement or lump-sum arrangement unless the modifying agreement clearly makes it reimbursable. Claims for additional labour, management or third-party costs require a contractual basis and adequate evidence linking the costs to the relevant contractual provision.

HSM was engaged by Aker under a LOGIC Sub-Contract to fabricate and load out offshore process modules. Delays led to a Memorandum of Understanding under which HSM promised to use its fullest endeavours to achieve Mechanical Completion by 1 July 2015 in return for specified remuneration concessions. The modules sailed away on 10 August 2015.

HSM claimed sums under the Sub-Contract and MOU. Aker counterclaimed liquidated damages and disputed HSM’s claims for materials, labour positions, management positions and third-party costs. HSM also argued that Aker’s approval and payment of interim invoices created an estoppel. The central issues concerned the effect of the MOU on the completion obligation, the finality of interim payments, and the contractual and evidential basis for the additional claims.

The claim and counterclaim were determined as follows.

1. Liquidated damages. The original 10 May 2015 Ready for Sail Away date had been superseded. The MOU contained no replacement contractual date of 19 July 2015. Its obligation that HSM use its “fullest endeavours” to achieve Mechanical Completion by 1 July 2015 was an enforceable but non-absolute obligation. It did not preserve an absolute obligation carrying liquidated damages. Aker’s liquidated damages counterclaim therefore failed.
2. Alternatively, if a binding date and liquidated damages mechanism remained, the parties had agreed, or Aker had instructed, that the relevant date be extended to 10 August 2015. Aker was consequently not entitled to liquidated damages in any event.
3. Estoppel. The approval and payment of interim invoices did not create an estoppel by convention. Clause 17.9 preserved Aker’s right to correct or revisit payments that were incorrect or not properly payable. Clauses 34.1 and 34.2 likewise preserved contractual rights and required written waiver. The payments were made on a “without prejudice” basis, the parties had materially different views about entitlement, and no clear shared assumption crossed between them. No relevant reliance, detriment or unconscionability was established.
4. Remuneration claims. The MOU did not convert the Sub-Contract into a fully reimbursable contract. Materials remained subject to remeasurement under the Sub-Contract, subject to the specified MOU rates and exceptions. The claims for labour and management positions failed because the relevant provisions did not cover the claimed resources, or because they were already included in lump sums or daywork schedules. Third-party costs had no express contractual basis. In each category HSM also failed to present sufficient evidence linking the items and quantum to the MOU or Sub-Contract.
5. The claims for materials, labour positions, management positions and third-party costs were rejected. The detailed financial consequences were to be addressed after judgment.

not stated in the judgment.