Pipes being coated at one of Wah Seong Corp Bhd's plants.
KUALA LUMPUR: The Wah Seong Corp Bhd (WSC) group will have to fork out more than RM50mil in a dispute with Italy-based Socotherm SpA, having failed to get the Singapore High Court to cancel parts of the final award issued by an arbitral tribunal.
In a filing with Bursa Malaysia, the oil and gas services company said the court in the republic had dismissed its application to set aside parts of the final award issued by the arbitral tribunal in the International Court of Arbitration of the International Chamber of Commerce (ICC) in Paris.
The ICC had consolidated and heard both the case brought by Socotherm SpA against WSC and its indirect subsidiary Wasco Coatings Ltd and the case initiated by Wasco Coatings Malaysia Sdn Bhd (formerly PPSC Industries Sdn Bhd) against Socotherm.
Socotherm, which is also in the business of providing pipe coating services for the energy industry, claimed that the transfer of 25.51 million shares in PPSC Industrial Holdings Sdn Bhd -- an investment holding company where Socotherm held 32.52% and the WSC group the rest -- from WSC to Wasco Coatings Ltd as part of an internal restructuring was in breach of their joint-venture agreement dated Dec 16, 1991 and supplemental agreement dated July 14, 1997.
The tribunal, meanwhile, found Socotherm liable to Wasco Coatings Malaysia for breach of the territorial restrictions in the supplemental agreement with regards to certain projects undertaken by Socotherm in Vietnam and China.
The ICC had in May last year, among others, ordered WSC and Wasco Coatings Ltd to pay US$11.2mil (RM50.02mil) to Socotherm and WSC’s indirect subsidiary Wasco Coatings Malaysia to pay US$1.82mil (RM8.13mil) as well to Socotherm.
In addition, WSC and Wasco Coatings Ltd would have to pay Socotherm its costs and expenses totalling S$1.74mil (RM5.44mil).
Socotherm, meanwhile, was ordered to pay Wasco Coatings Malaysia US$2.37mil (RM10.59mil) and 599,168 euros (RM2.68mil).
Based on this -- and excluding the 3.5% interest rate per annum payable on the sum awarded to Socotherm from Dec 1, 2008, as well as the arbitration fees and expenses -- the WSC group would have to pay about RM50mil after subtracting the sum that Socotherm has to pay to the group.
In its statement to the bourse on Wednesday, WSC said the dismissal of the setting aside application and the payment of the final award would not have any significant financial impact on the net profits attributable to WSC's owners for the financial year ending Dec 31, 2016.
This is because the WSC group has accruals to cover a substantial portion of the claim.
The company added that it was assessing the next course of action.
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