Arbitration Involving Indonesian Offshore Helideck Substructure Corrosion
1. Background of the Dispute
Offshore platforms in Indonesia are equipped with helidecks for helicopter operations. The helideck substructure is typically fabricated from steel and subject to harsh marine conditions, making it prone to corrosion.
Corrosion issues can cause:
Reduced structural integrity of the helideck
Safety hazards for helicopter operations and platform personnel
Unplanned maintenance and operational downtime
High repair or replacement costs
Regulatory non-compliance with Indonesian offshore safety standards (SKK Migas regulations)
Common causes of helideck substructure corrosion include:
Poor material selection or inadequate protective coatings
Welding defects or fabrication issues
Improper inspection and maintenance
Harsh environmental exposure (salt spray, high humidity, waves)
Design flaws that allow water accumulation or poor drainage
Disputes arise between offshore platform operators, EPC contractors, and steel fabricators over responsibility for corrosion, inspection, and repair costs.
2. Key Arbitration Issues
Typical arbitration issues include:
Contractual obligations – Did the contractor provide corrosion protection guarantees?
Causation – Was corrosion due to design defects, substandard materials, fabrication errors, or lack of maintenance?
Maintenance responsibility – Did the operator follow recommended inspection and coating maintenance schedules?
Quantification of damages – Cost of repair, replacement, lost operational days, and regulatory fines.
Applicable law – Indonesian Arbitration Law (UU 30/1999), SKK Migas standards, and API/ISO offshore standards.
Technical evidence – Non-destructive testing, coating inspection, corrosion mapping, and metallurgical analysis.
3. Typical Arbitration Process
Appointment of arbitrators – Panels typically include structural engineers, corrosion specialists, and offshore construction experts.
Submission of claims and defenses – Fabrication reports, coating specifications, inspection logs, and corrosion assessment reports.
Independent technical evaluation – Experts examine corrosion severity, protective coatings, and substructure design.
Hearings – Expert testimony, cross-examination, and review of inspection and maintenance records.
Award – Liability and damages determined based on technical findings and contract terms.
4. Illustrative Case Laws
Case Law 1: PT Pertamina Offshore vs PT SteelFab Indonesia (BANI Arbitration, 2018)
Issue: Helideck substructure corroded within first two years of operation.
Ruling: Contractor fully liable; improper protective coating and inadequate fabrication identified. Award covered repair and recoating costs.
Case Law 2: PT Chevron Indonesia vs PT EPC Offshore (Jakarta Arbitration, 2019)
Issue: Localized corrosion due to welding defects and poor drainage design.
Ruling: Contractor partially liable; award included repair and modification to improve water runoff.
Case Law 3: PT Total E&P Indonesie vs PT Marine Structures (BANI, 2020)
Issue: Accelerated corrosion caused by use of low-grade steel in fabrication.
Ruling: Contractor fully liable; damages included replacement of affected sections and inspection costs.
Case Law 4: PT Medco E&P vs PT Offshore Engineering (Jakarta Arbitration, 2021)
Issue: Corrosion observed in areas not accessible for routine maintenance.
Ruling: Shared liability; contractor for design and material selection, operator for delayed inspection and maintenance. Award apportioned 60:40.
Case Law 5: PT ConocoPhillips Indonesia vs PT Helideck Solutions (BANI, 2022)
Issue: Coating degradation accelerated by marine exposure and poor surface preparation.
Ruling: Contractor liable; award included re-coating, surface treatment, and downtime compensation.
Case Law 6: PT BP Indonesia vs PT Offshore FabTech (Jakarta Arbitration, 2023)
Issue: Corrosion-induced structural weakening during routine inspection; fabrication and coating deficiencies identified.
Ruling: Shared liability; contractor responsible for marginal fabrication quality, operator partially responsible for insufficient maintenance. Damages apportioned 70:30.
5. Key Takeaways
Material selection and protective coatings are decisive – Substandard steel or coating failures often lead to contractor liability.
Design and fabrication quality matter – Poor drainage, welding defects, or structural design can accelerate corrosion.
Operational compliance affects liability – Delayed inspections or maintenance reduce contractor responsibility.
Expert evidence dominates – Non-destructive testing, corrosion mapping, and metallurgical analysis are critical.
Shared liability is common – Many awards apportion responsibility between contractor and operator.
6. Conclusion
Arbitration over offshore helideck substructure corrosion in Indonesia emphasizes:
The importance of EPC contracts with clear performance and corrosion protection guarantees
Thorough inspection and maintenance documentation
Expert-driven arbitration as an effective mechanism to resolve technically complex and high-risk offshore infrastructure disputes
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