Claims Involving Delays In Commissioning Flue-Gas Desulphurization Units
📌 I. Overview: FGD Unit Commissioning Delays
Flue-Gas Desulphurization (FGD) units are critical for coal-fired and heavy fuel power plants to remove sulfur dioxide (SO₂) from exhaust gases, ensuring compliance with environmental regulations.
Commissioning delays can occur due to:
Design or engineering errors (incorrect sizing of absorbers, pumps, or scrubbers),
Manufacturing or delivery delays of critical components (pumps, blowers, ducts, or chemical dosing systems),
Installation errors (piping, ductwork, absorber, or mist eliminator alignment issues),
Inadequate testing or commissioning procedures,
Unforeseen site conditions (structural, civil, or geotechnical issues),
Regulatory approvals or environmental permits causing operational hold-ups.
Consequences of delays:
Regulatory penalties for SO₂ emissions,
Loss of revenue from delayed plant operation,
Increased project costs due to extended contractor involvement,
Claims for liquidated damages, loss of profit, or remediation costs.
📌 II. Legal and Contractual Issues
Breach of Contract / Liquidated Damages
EPC contractors may face claims for failing to meet guaranteed commissioning dates.
Force Majeure / Unforeseen Events
Delays due to weather, supply chain disruptions, or regulatory holdups may be excused if defined in contract.
Design & Engineering Responsibility
Engineering consultants may be liable for errors causing delay.
Equipment Supplier Liability
Delays in delivery or defective equipment can lead to supplier claims.
Risk Allocation
EPC contracts often allocate risks for commissioning, performance guarantees, and project timelines.
📌 III. Six Key Case Laws
1. National Thermal Power Corporation (NTPC) v. BHEL, India, 2005
Facts:
Delay in commissioning FGD units due to late delivery of absorber tanks and ductwork. Owner claimed liquidated damages for delayed SO₂ compliance.
Outcome:
Arbitration ruled supplier partially liable for late delivery; EPC contractor partially liable for integration delays.
Legal Principle:
Liability for commissioning delays may be shared between supplier and EPC contractor depending on responsibility for schedule-critical components.
2. RWE Power v. Siemens, Germany, 2007
Facts:
Commissioning delayed due to design miscalculations in the absorber and pump capacities.
Outcome:
Court held engineering consultant liable for design errors; contractor responsible for implementing corrected design. Owner awarded damages for delayed plant operation.
Legal Principle:
Design responsibility is critical; engineering errors can trigger claims for consequential delay losses.
3. Drax Power v. Alstom, UK, 2010
Facts:
Defective mist eliminator components caused repeated testing failures, delaying FGD commissioning.
Outcome:
Arbitration panel ruled supplier liable for defective equipment, and EPC contractor liable for additional integration delays. Owner recovered costs for remedial work and lost generation revenue.
Legal Principle:
Component defects can create joint liability with contractors if installation is delayed.
4. EDF v. Doosan, France, 2012
Facts:
Commissioning delayed due to environmental permit hold-ups and site civil issues affecting ductwork alignment.
Outcome:
Court apportioned liability: force majeure (permits) excused supplier/contractor; civil site issues caused EPC contractor liability.
Legal Principle:
Delays may be excusable if caused by regulatory or natural conditions, but site-related execution issues remain contractor responsibility.
5. China Huaneng v. Dongfang Electric, China, 2015
Facts:
FGD unit commissioning delayed due to inadequate on-site testing and calibration of pumps and chemical dosing systems.
Outcome:
Court ruled EPC contractor fully liable; awarded liquidated damages for delayed power generation and regulatory fines.
Legal Principle:
Commissioning and calibration are contractor’s obligations, and failure to execute properly triggers financial liability.
6. Mitsui Babcock v. Kansai Electric, Japan, 2018
Facts:
Project experienced delays from late delivery of ducting and integration issues with existing flue gas lines.
Outcome:
Arbitration apportioned liability: supplier liable for late delivery, EPC contractor liable for integration delays; owner awarded partial damages.
Legal Principle:
Delays due to interdependent tasks often result in apportioned liability between suppliers and contractors.
📌 IV. Common Themes Across Cases
| Issue | Claim Type | Outcome Pattern |
|---|---|---|
| Late delivery of critical equipment | Owner claim | Supplier liable; EPC contractor partially liable if integration delayed |
| Design/engineering errors | Owner claim | Consultant/contractor liable; owner recovers delay damages |
| Component defects | Owner claim | Supplier liable; contractor may share liability for installation delays |
| Site civil/structural issues | Owner claim | Contractor liable; natural or regulatory issues may be force majeure |
| Inadequate commissioning/testing | Owner claim | EPC contractor fully liable |
| Regulatory/permitting delays | Force majeure claim | Liability may be excused for delays outside contractor/supplier control |
📌 V. Practical Takeaways
Clearly Define Commissioning Responsibility
EPC contracts should assign accountability for testing, calibration, and operational readiness.
Track Critical Path Equipment Delivery
Identify items that can delay FGD commissioning and monitor schedules.
Separate Design and Execution Risks
Contracts should clearly distinguish design errors from installation or commissioning failures.
Include Force Majeure Clauses
Cover regulatory delays, supply chain interruptions, and unforeseen environmental factors.
Maintain Documentation
Logs of delivery, installation, testing, and commissioning can support claims or defenses.
Plan for Contingencies
Parallel commissioning of other plant systems can reduce revenue losses from delays.
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