Scottish Government facing £5m bill to insurers over ferries shipyard takeover

The High Court case centered on the shipyard constructing ferries which have been delayed by several years.

Neil Pooran
Friday 28 January 2022 19:19
The ferry MV Glen Sannox travels down slipway at its launch ceremony for the liquefied natural gas passenger ferry, the UK’s first LNG ferry, at Ferguson Marine Engineering in Port Glasgow.
The ferry MV Glen Sannox travels down slipway at its launch ceremony for the liquefied natural gas passenger ferry, the UK’s first LNG ferry, at Ferguson Marine Engineering in Port Glasgow.

The Scottish Government is facing a £5 million bill to an insurance company after losing a High Court case related to its takeover of the Ferguson Marine ferries shipyard.

Caledonian Maritime Assets Limited (CMAL), the government-owned company which commissioned the ferries, sought to rectify an agreement with HCC International Insurance Company.

The Texas-based insurance company says it is owed the multi-million windfall as a result of the way the government bought the troubled shipyard when it was in administration during 2019.

The shipyard is constructing two ferries which were originally meant to enter service in 2018 but are still unfinished, with costs spiralling.

On Friday, a decision from deputy High Court Judge Simon Gleeson was published.

The case related to the purchase of Ferguson Marine shipyard (Lewis McKenzie/PA)

His ruling came after the government lost another case against HCC International Insurance Company at the Court of Session in May last year.

Judge Gleeson said: “It is easy to see why this decision seems to have caused so much anger and irritation amongst the Scottish Ministers.

“In paying for the business of FMEL (Ferguson Marine) by reducing FMEL’s liabilities to them, they believed that they were simply transferring their own money from one pocket to another, with the transaction having no impact on their overall obligations.

“The discovery that the choice of transaction structure had resulted in their being required to pay a little over £5 million to a third party must have been highly unwelcome.”

Scottish Ministers, through CMAL, sought to rectify a commercial agreement known as a deed of settlement with HCC.

However Judge Gleeson refused this and granted a summary judgment in favour of HCC.

He noted: “As a result of a series of subsequent developments, the terms of this deed produced an outcome which came as a surprise to all those involved in its negotiation, producing a significant windfall gain for one party at the expense of the owner of the other.”

The judge also noted that CMAL was wholly owned by Scottish Ministers at all relevant times.

The Glen Sannox is expected to enter service this year (Andrew Milligan/PA)

A Scottish Government spokesman said: “We are aware of a summary judgment that has been made in the English courts in relation to the claim brought by CMAL against HCCI.”

The first of the Ferguson Marine ferries, the Glen Sannox, is currently expected to be ready until some time between July and September 2022.

The second is not due for completion until April to July 2023.

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