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Reficar Columbia v. CB&I Co. (ICC)

Why it matters

This ICC award is one of the largest ever in a commercial arbitration, awarding over USD 937 million to the claimant. It clarifies the standard for gross negligence (culpa grave) under New York law in the context of limitation of liability clauses, and demonstrates the consequences of breaching cost control and schedule commitments in large EPC contracts. The case also addresses joint and several liability of parent companies under parent guarantees.

Summary

Reficar, a Colombian state-owned refinery, contracted with CB&I entities to expand its Cartagena refinery under a cost-reimbursable EPC contract. The project suffered massive cost overruns and delays. Reficar claimed CB&I breached its cost control and schedule commitments by failing to control costs and causing delays. CB&I counterclaimed for unpaid invoices. The ICC tribunal, seated in New York, found CB&I breached its cost control commitments, awarding Reficar USD 845.4 million for improper costs and USD 152.75 million for delay liquidated damages, plus USD 10.3 million for defects. The tribunal held that CB&I's breaches amounted to gross negligence (culpa grave) under New York law, piercing the contractual liability cap. CB&I was awarded COP 28.3 million on its counterclaim. The total net award to Reficar was USD 937,495,061 plus interest and costs. The award also declared joint and several liability of the parent company CB&I N.V. under parent guarantees.

The detail

Parties: Reficar Columbia v. CB&I Co.

Case number: ICC Case No. 21747/RD

Outcome: Reficar awarded USD 937,495,061 plus interest and costs; CB&I awarded COP 28,256,049 on counterclaim.

Quantum: USD 937,495,061 (net after set-off)

Applicable law: EPC Contracts governed by New York law (Offshore) and Colombian law (Onshore); ICC Rules 2012; New York law as governing law for Offshore Contract and Parent Guarantees.

Issues in play: Contractual cost control and schedule commitments vs. limitation of liability clauses; New York law on gross negligence (culpa grave) and contractual interpretation.

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