Trams firm faces legal battle after sack from Canadian job

Published on Wednesday 18 March 2009 09:06

THE firm at the centre of Edinburgh's trams row is embroiled in a legal battle after being thrown off a job in Canada.

The company has been fired from a contract to dig two tunnels for a water filtration scheme in Vancouver – after demanding extra cash to complete the job.

Now, after Canadian authorities decided to pump more money in to rescue the scheme, Bilfinger Berger Canada has taken legal action, claiming that it was right all along.

Deputy council leader Steve Cardownie today said the "aggressive" ethos of Bilfinger suggested the chances of reaching an agreement over the work in Princes Street were not good.

The German-based firm has refused to proceed with work on laying the tracks for the 512 million project because of a cash wrangle. Crisis talks between it and trams firm TIE must reach a compromise by tomorrow or the matter will go to adjudication.

In the Canadian case, Bilfinger Berger Canada is arguing the local authority's injection of 200 million Canadian dollars – about 112m – to complete the construction is proof that it was right to demand extra cash.

Cllr Cardownie said: "I'm quite sure TIE's lawyers will be looking very carefully at these matters and Bilfinger Berger's reaction to these kind of disputes.

"It does indicate this company is prepared to play hardball.

"It looks as if the whole question of going to arbitration is all the more likely.

"While the circumstances might be different, the ethos of the company is quite clear – they are very aggressive and robust and that does not augur well for a solution.

"It shows we are dealing with a fairly bullish company and that might mean the resolution of the dispute cannot be achieved between the two parties.

"However, the resolve of the council is very strong – it believes the case is watertight and we will resist the claims made by Bilfinger Berger."

Meanwhile, Bilfinger Berger shares fell amid investor concerns the company could face damage claims from a building collapse in Cologne near where it is digging a tube line.

Two people died when the city's multi-storey city archive containing thousands of historical records and two neighbouring buildings collapsed near the building site of the underground train line earlier this month.

Chief executive Herbert Bodner was quoted saying the firm was appropriately insured should damages arise from the incident and shareholders had "no need to worry".

A spokesman for TIE said it had signed a confidentiality agreement and could not make a comment on the dispute over the trams cash.

But a source close to the project said: "The council, TIE and the government are all watching what is happening abroad with interest."

Bilfinger Berger declined to comment.

SNP HINTS AT CALL FOR HALT TO PROJECT

DEPUTY council leader Steve Cardownie today gave the strongest signal yet that his SNP group could call for the trams project to be scrapped.

He said: "I'm concerned about reports that the project is likely to go over budget. If it does, we in the SNP will be taking a close look at whether we should scrap it and not throw good money after bad.

"We've already spent 230m and although people say that's half the total, if the cost goes up to 850m or more, it's nearly a quarter."

He said the SNP group had backed the stance taken by coalition partners the Liberal Democrats in the Bilfinger dispute because it wanted to defend the public purse.

But he added: "We were opposed to the trams scheme in the first place.

"Our worst fears are beginning to come true."