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Court finds OHL liable in Gibraltar tunnel case

London’s Construction and Technology Court has found in favour of the Gibraltar government in a case brought by Spain-based contractor Obrascon Huarte Lain (OHL) over termination of its contract to construct a new tunnel in Gibraltar.

OHL was aiming to claim £20M and £6.5M in damages for the breach of contract on the Airport Access Tunnel Works project.

Work on the tunnel started in 2010 and would have diverted traffic entering and leaving the sovereign state away from the current route across the airport runway. The work on the scheme was initially due to be completed in 2010. The government terminated OHL’s contract on 20 August 2011.

Following OHL court claim for breach of contract the Gibraltar government lodged a counter claim for the damages suffered by Gibraltar as a result of OHL’s failure to complete the contracted works on time and on budget.

Justice Akenhead yesterday found in favour of the government on the central issue of how the contract between OHL and the Government was terminated in the summer of 2011. As a result, Gibraltar is entitled to recover all costs associated with the termination and the completion costs of the project which are over and above OHL’s original contract price, which was £30M.   

Although the financial judgement on the case will not be decided by the court until a later date, the Gibraltar government has said that it has already started a tender pre-qualification process to determine what companies might be able to undertake the works from the state in which they are at present.

“We expect that process will now start to make more headway so that the works to complete the tunnel and access road‎s will restart in earnest as soon as possible,” said Gibraltar chief minister Fabian Picardo.

One industry expert, who asked not to be named, told GE that he didn’t believe many companies would be interested in bidding for the work due to the high risks involved. “Few companies would want to guarantee the diaphragm walls constructed by OHL but there is limited space to start the construction at an adjacent site,” he explained.

OHL has yet to issue a response to the judgement but the Gibraltar government has said that it expect the contractor to appeal the decision.

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