UK Decision – Important Lessons For Employers

The recent UK Court of Appeal decision in the case of MT Holgaard A/S v E.ON Climate and Renewables (2015) EWCA Civ 407 illustrates the ultimate catastrophe if there isn't sufficient interface between legal and technical teams.

The case involved the interpretation of a contract for the construction of the foundations for an offshore wind farm known as Robin Rigg on Solway Firth in Scotland. An offshore wind farm is basically a cluster of turbines standing on monopiles that are driven into the seabed. A steel cylinder known as a transition piece sits on top of each monopile, and the tower that supports the electricity generator fits on to the transition piece. The gap between the transition piece and the monopile is filled with grout, although shear keys can be inserted into the grouted connections to increase the shear strength. Such shear keys can, however, also have the effect of creating stress lines that cause failure of the grout.

There is an International Standard for offshore wind farms called J101. This says that if the service life is not specified in the contract, 20 years should be used. It goes on to say that a "grouted connection can be established with or without shears." It provides parametric equations to be used in the design. But unfortunately, as we now know, one of these equations is wrong, and relying on it can cause serious problems.

In this case, E.ON ("the employer") appointed MT Holgaard ("the contractor") to construct the foundations for Robin Rigg following a tender process. There was a written contract, but, as always, there was a great deal of other documentation that was attached to it. The contract, however, made it clear that there was a hierarchy, with the contract being at the top of the pile, and the tender return submitted by the contractor at the bottom.

The contract said that the contractor's work would be "in accordance with internationally recognised standards". The expression "Fit for Purpose" appeared in the contract, and this was linked to the "Employer's Requirements".

The Employer's Requirement's spoke of a "design life" of 20 years, and said that "the design of the foundations shall ensure a lifetime of 20 years." It also referred to a "minimum service life" of 20 years. The document required the contractor to determine if shear keys should be used and said that, if the contractor decided against them, it needed to demonstrate with test data that the grouted connection was sufficient. The...