JGC Corp said a lawsuit has been filed against it and engineering partners, Chiyoda Corp. and KBR of the US, in the Yokohama District Court by the Ichthys LNG project in Australia, led by Japan’s Inpex Corp., claiming around A$758 million (US$595M) in a long-running dispute.
JGC had formed a joint venture company with Chiyoda and KBR, called JKC Australia, and was awarded a project for the engineering, procurement and construction (EPC) services of the onshore LNG plant at Bladin Point near Darwin in the Northern Territory in 2012 by Ichthys LNG, led by Inpex.
“All plant facilities were completed and delivered,” explained JGC.
“However, in the course of the execution of the project, sub-contractors requested additional payments to cover their increased costs,” it added.
JGC said that a funding deed for the sum of A$757.7M was agreed and payment was made by the Plaintiff (Ichthys LNG-Inpex) to the EPC joint venture for the additional costs.
Subsequently, a dispute concerning the settlement of the additional costs arose, and an arbitration process was conducted in Singapore.
Analysts said that the Yokohama court showdown follows on from the failed arbitration and previous legal cases.
During the course of the arbitration, the Plaintiff (Ichthys LNG-Inpex) demanded that the joint venture returns the full amount of the funds by the end of December 2020, but the JGC, KBR, Chiyoda joint venture refused on the grounds that the correct settlement procedures under the signed deed had not been followed and the arbitration award to determine this had not been made.
Having considered this, the Ichthys LNG-Inpex delivered a letter to the joint venture in January 2021.
The letter requested that the JGC, KBR and Chiyoda venture repay the full amount to the Plaintiff.
However, the EPC joint venture declined the request. The liability share of the partners in the venture are JGC 40 percent, KBR 30 percent and Chiyoda 30 percent.
In the lawsuit just filed in Yokohama by the Plaintiff seeks “subrogation” against the EPC firms for the full amount of the funds provided by the Plaintiff, plus legal costs.
JGC said it was examining the details of this lawsuit and would take appropriate action.
