Court of Arbitration rules on contract dispute between Neste Oil and YIT
The Finnish Court of Arbitration has issued Arbitration Award on the contract dispute between Neste Oil and YIT Industrial and Network Services. The Court has found that the contract was not completed according to the agreed timetable for reasons attributable to YIT and has ruled as a result that YIT must pay Neste Oil the full delay penalties specified in the contract between the two companies, a total of some EUR 6.5 million. The Court has limited YIT's liability for delay, however, to the maximum amount of the delay penalties. This limitation was based on the General Terms for Building Contracts in Finland.
The Court of Arbitration has also ruled that YIT must pay damages to Neste Oil in the sum of EUR 500,000 for failing to inform Neste Oil of the delays affecting the contract that YIT was aware of. Under the terms of the ruling, YIT will also be required to pay Neste Oil a total of some EUR 370,000 in respect of other breaches of contract.
The Court of Arbitration rejected all the claims lodged by YIT related to prolongation of the contract period.
The Court has also ruled that Neste Oil must pay a total of approximately EUR 5.1 million to YIT in respect of contested contractual payments due to YIT. Neste Oil had also thus far withheld uncontested contractual payments due to YIT, totaling some EUR 3.6 million.
The dispute between Neste Oil and YIT relates to disagreements linked to the final financial settlement of mechanical installation work on diesel production line 4 at Neste Oil's Porvoo refinery, which was completed and came on stream in summer 2007. The dispute was put before the Court of Arbitration in April 2008.
Neste Oil claimed total damages of EUR 107 million from YIT, of which EUR 38.5 million related to contract delays and some EUR 68.5 million to subsequent lost production. YIT lodged counter claims against Neste Oil totaling some EUR 25 million, primarily based on work carried out under the contract and additional costs incurred due to prolongation of the project. Both parties contested each other's claims.
The Arbitration Award is final.
Neste Oil Corporation
Hanna Maula
Director, Corporate Communications
Director, Corporate Communications
Further information: General Counsel Matti Hautakangas, tel. +358 (0)10 458 5350
Neste Oil in brief
Neste Oil Corporation is a refining and marketing company concentrating on low-emission, high-quality traffic fuels. The company is the world's leading supplier of renewable diesel. Neste Oil's refineries are located in Porvoo and Naantali in Finland and have a combined crude oil refining capacity of approx. 260,000 bbl/d. The company had net sales of EUR 15 billion in 2008 and employs around 5,300 people. Neste Oil's share is listed on NASDAQ OMX Helsinki.
Neste Oil is included in the Dow Jones Sustainability World Index and the Ethibel Pioneer Investment Register. The company has also been awarded 'Best in Class' recognition for its social accountability by Storebrand and is included in Innovest's Global 100 list of the world's most sustainable corporations. For further information, see www.nesteoil.com.
Neste Oil is included in the Dow Jones Sustainability World Index and the Ethibel Pioneer Investment Register. The company has also been awarded 'Best in Class' recognition for its social accountability by Storebrand and is included in Innovest's Global 100 list of the world's most sustainable corporations. For further information, see www.nesteoil.com.