EA Technique starts arbitration against MMHE, claims US$21.7m

PETALING JAYA: EA Technique (M) Bhd has started arbitration proceedings against Malaysia Marine Heavy Engineering Sdn Bhd (MMHE), a wholly owned subsidiary of Malaysia Marine and Heavy Engineering Holdings Bhd, claiming a sum of US$21.74 million (RM90 million).
In a filing with Bursa Malaysia today, EA Technique said the arbitration proceedings and claims are in relation to the conversion contract entered into by both parties for the provision of demolition, refurbishment and conversion of a donor vessel into a floating storage and offloading (FSO) facility dated June 9, 2015.
Pursuant to the conversion contract, EA Technique said, MMHE agreed to undertake the demolition, refurbishment and conversion of the vessel into the FSO facility, which formed a portion of the scope of works under the engineering, procurement, construction installation and commissioning contract.
"Disputes arose relating to change orders (variations) under the conversion agreement," EA Technique added, noting it has appointed a law firm in Malaysia for the arbitration proceedings.
The US$21.74 million claim comprises US$8.7 million for recovery of overpayment in respect of contract price for the conversion contract, US$4 million being the backcharges under the conversion contract and US$9 million for recovery of payment pursuant to the letter of undertaking due to unsubstantiated change orders.
EA Technique said that at this juncture, it is unable to determine reliably the financial impact of the arbitration proceedings as it is subject to any counterclaim that may be raised by MMHE in the course of the proceedings.