Doosan wins Interserve legal row over £5m payment

Aaron Morby 8 months ago
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Water treatment plant specialist Doosan Enpure has won a legal row with Interserve Construction to release £5.3m held in a joint venture account.

Horsley Water Treatment Works project in Northumberland
Horsley Water Treatment Works project in Northumberland

The dispute between the joint venture partners arose on a £38m contract to upgrade the 1970s Horsley Water Treatment Works in Northumberland.

The pair started work on the project in March 2016 with regular monthly payments being made from client Northumbrian Water to the joint venture account which was then passed to both firms.

But in October 2018, Interserve refused to sign off the 31st monthly payment share amid concerns about a potential project delay and cost overruns, which would impact on the ultimate JV pain-share/gain-share arrangements.

The decision to stop payment release came as Interserve group faced mounting debt problems as it battled for survival.

Legal documents revealed that Doosan was projecting a significant delay to the completion of the works of 34 weeks.

Interserve told Doosan that it would not sign-off payments until the firm claimed against Northumbrian Water for delay and disruption associated with compensation events and a programme was set out to control to limit ongoing costs and exposure to increasing associated damages.

Doosan argued that payments could only be suspended from the joint venture with the unanimous agreement of both sides.

In the High Court, Mrs Justice Jefford ruled in favour of Doosan Enpure on several legal points arising from the joint venture agreement, specifically that Interserve was not entitled to withhold payments on an interim basis if the firm caused Interserve additional costs.

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