BuildLaw Issue 36 July 2019 | Page 20

payments, but during the course of the project, Valla Yachts made a number of payments to certain specialist subcontractors who had brought claims against Nobiskrug.
Nobiskrug contested most of the claims and the subcontractors threatened to cease work. Valla Yachts wished to avoid this result, and the considerable disruption it would entail, and expressly reserved its right to recover the payments from Nobiskrug.
Valla Yachts subsequently commenced arbitration proceedings against Nobiskrug to recover the payments. Among other things, it claimed that Nobiskrug had breached certain co-ordination and project management obligations contained in the main contract, which required Nobiskrug to manage and investigate claims made against it by the specialist subcontractors.
The arbitral tribunal emphasised the reservation of rights made by Valla Yachts, but its award was unclear as to whether the payments could be recovered without proving that Nobiskrug was obliged to make those payments to the subcontractors. Valla Yachts had not been able to submit evidence to the tribunal proving such an obligation.
The tribunal nevertheless accepted Valla Yachts’ case as to project management failings. The tribunal held that Nobiskrug had effectively abandoned its project management responsibilities. That had caused the subcontractor claims to escalate and had placed Valla Yachts in an “extremely difficult position”, given that the subcontractors in question were critical for the completion of the works. However, Valla Yachts would only be entitled to damages for such breaches if they "were an effective cause” of the additional costs claimed by the subcontractors. The tribunal did not go on to determine that issue, but nonetheless ordered Nobiskrug to reimburse certain of the payments made by Valla Yachts on grounds which were not clear from the award.