Shanghai Zhenhua sued by UK firm Fluor for £250m

Engineering contractor Fluor has sued Shanghai Zhenhua Heavy Industry over an escalating dispute in a wind farm project in Britain and is demanding £250 million (HK$3.2 billion) in compensation as the Chinese firm warned it may file a counterclaim over the matter.

Shanghai-listed Zhenhua, the world's largest crane builder, said in a stock market filing yesterday it received a writ from the High Court of Justice in London. Fluor is a subsidiary of Texas-based Fluor Corp, which has a market capitalisation of US$10.6 billion.

"It is very clear to us that Fluor tried to recover losses from us after it lost the legal action against the project owner," a Zhenhua spokesman told the South China Morning Post.

The lawsuit is the second legal action related to the Greater Gabbard project, the world's biggest offshore wind farm off the Suffolk coast in England. In operation since September 2012, it cost £1.6 billion to build and can generate 500 megawatts of electricity for 530,000 households.

Zhenhua signed a €234 million (HK$2.3 billion) contract with Fluor in 2008 to build and deliver all 140 steel monopiles used to support the wind turbines for the project, which later experienced delays and cost overruns.

Fluor, the project contractor, lost an arbitration case in November 2012 over defects in 52 of the 140 monopile foundations and failed to recoup US$400 million it demanded from the project company, jointly owned by British utility firm SSE and Germany's RWE. Fluor subsequently took a US$400 million pre-tax charge in its 2012 financial statement. The two sides reached a settlement last year.