Scottish Government loses court battle over £5m Ferguson shipyard insurance payout

Ministers have lost a case at the Court of Session brought by HCC International Insurance over money paid to Scottish Government-owned ferries owner Caledonian Maritime Assets Limited (Cmal).

In 2015, Cmal ordered two ferries for CalMac to be built by Ferguson’s Port Glasgow shipyard, but major delays and cost overruns led to the firm going into administration and being taken over by the Scottish Government.

The first, Glen Sannox is not now expected to start operating on the main Arran route until summer 2022 – more than three years late.

Glen Sannox and a sister ferry are being built at Ferguson's shipyard in Port Glasgow. Picture: John Devlin

Her unnamed sister vessel is due to enter service early in 2023 on the Skye-Harris-North Uist routes.

Their combined cost has increased from £97m to £192.8m- £196.8m.

In a ruling, known as an opinion, Lord Tyre, said: “I hold that HCC has proved that it is entitled, in terms of the documentation as it stands, to payment of the sums sued for.”

However, the judge suspended, or “sisted”, payment until separate legal proceedings in England were concluded.

The case involved refund guarantees taken out in 2016 by Fergusons with HCC as security for substantial advance payments made by Cmal for construction costs in case the shipbuilder defaulted on the order.

Fergusons also indemnified HCC over any payments made to CMal under these refund guarantees.

In February 2019, an agreement was made between HCC, the Scottish Government and others over the respective rights of Ferguson’s creditors, with debts due to HCC having first priority.

The shipyard went into administration six months later and was subsequently taken over by Scottish ministers.

A deal was agreed involving “certain payments” by HCC to CMal, and HCC’s liabilities under the refund guarantees being terminated.

HCC brought the Court of Session case to seek reimbursement from the Scottish Government for the money it paid to Cmal, along with costs and expenses, of £5,047,775.79.

An inquiry by MSPs into the ferries debacle concluded in December that management of the process had been a “catastrophic failure” and called for a “root and branch overhaul” of how new vessels were procured.

A Scottish Government spokesperson said: “As this claim is ongoing, we are unable to say anything further at this stage.”

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