IM Skaugen Claims Victory in Arbitration Case against MAN

Image Courtesy: University of California

Norway based transportation company IM Skaugen said that it has won around USD 15 million in damages in the arbitration case against MAN Diesel & Turbo SE, the German diesel propulsion manufacturing company.

The dispute relates to the company’s agreement with MAN to purchase 12 marine diesel propulsion systems comprising engines and propellers.

According to Skaugen, MAN has “misrepresented the fuel consumption on many, or all of, the 12 marine diesel propulsion systems” sold to the company.

“We believe that the engines consume more fuel than was promised, agreed/warranted and subsequently documented by MAN in the official and required Factory Acceptance Tests (FATS). MAN has admitted to manipulating the FATs when it comes to 3 of our 12 marine diesel engines and this was done to conceal the excess fuel consumption,” the company said.

Furthermore, the Norwegian shipowner pointed out that it has secured documents showing that the manipulations had been performed by MAN on a regular basis for more than 10 years at their company – and for many of their clients.

As disclosed, MAN has since then stated that the said activities had been discontinued by spring 2011, and accepted a fine in Augsburg local court in 2013.

“However, MAN refuses to compensate our company for any of our losses despite the admitted fraud, and MAN also refuses to repay our company for prepayment made for engines not delivered and that we cannot take delivery of due to their fraud,” the company added.

The latest arbitration, which is part of a larger complex of cases on the matter, concerned whether or not Skaugen was entitled to terminate the contract for the purchase and sale of two sets of marine diesel engines of the type 6L 48/60B (with related propellers), which MAN had produced and tested in 2008-2009.

As determined by the ICC International Court of arbitration, the two engines did have a substantially higher fuel consumption than stated in the official FATs and a substantial higher consumption than the maximum lever warranted by MAN. In addition, the tribunal held that MAN had violated its obligation to loyally disclose to Skaugen all information about the engines in dispute, the company further noted.

On this basis, the tribunal concluded that Skaugen was entitled to terminate the contract, which the company did in 2012, and compelled MAN to refund Skaugen its down-payment for the engines in the amount of around EUR 5.3 million as well as reimburse Skaugen for its legal costs and other costs of around EUR 1.4 million in total.

“By year-end 2016, we had USD 8.3 mill on our balance sheet as prepayment made for diesel propulsion systems from MAN (not yet delivered), and we await recovery of all the prepaid funds that we seek from MAN,” the company concluded.

In addition, Skaugen said that it also has pending litigation ongoing in Norway regarding its purchase of marine propulsion systems from MAN, within which the company is claiming recovery of additional/excessive fuel costs on vessels currently in operation, and other losses incurred.

Share this article

Follow World Maritime News

In Depth>

Events>

<< Jun 2017 >>
MTWTFSS
29 30 31 1 2 3 4
5 6 7 8 9 10 11
12 13 14 15 16 17 18
19 20 21 22 23 24 25
26 27 28 29 30 1 2

DSM17

Donsö Shipping Meet 2017 is an all inclusive exhibition. Meals, electricity, meeting schedule and banquette dinner is included…

read more >

TOC Europe

TOC (The Terminal Operations Conference) has long been considered best in class by container terminal operators and their suppliers…

read more >

Marine Philippines 2017

The 4th edition of PHILIPPINES MARINE 2017, SHIPBUILD PHILIPPINES 2017 and OFFSHORE PHILIPPINES 2017 is the only specialized Shipbuilding…

read more >

Bunkering Week 2017

IBC’s biennial Bunkering Week is back with its successful series of 3 co-located events: 8th Bunkering in Asia, 4th LNG Bunkering and EMTECH: Ship Emissions Technology Conference.

With a proven track record of bringing together top decision makers from various industry sectors, this remains the go to event for ship owners, fuel suppliers, traders and technology solution providers. Get in-depth and detailed market insights from experts who are taking the decisions, assess peer strategies and give shape to your own in this unrivalled gathering of shipping and marine fuel industry leaders.

Key Highlights for 2017:

* 3 Co-located Conferences

* 12+ Hours of Networking Time

* In-depth Review of Shipping Markets by Segment

* Ship Owner Positions on Emissions Compliance Scenarios

* Pricing Differentials and Availability across Different Fuels

* Technology and Analytics in Fuel Management and Emissions MRV

More info

read more >