Ouch! SNP Scottish Government forced to pay over £5m after humbling court defeat

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The Scottish Government has lost a case at the Court of Session brought by HCC International Insurance Company Plc over money paid to nationalised ferry firm Caledonian Maritime Assets Limited (Cmal). In October 2015, Cmal ordered two ferries to be built by Ferguson Marine in Port Glasgow.

Delays and overrunning costs led to Ferguson Marine entering administration and being taken over by the Scottish Government in 2019.

HCC, the guarantor of the Ferguson Marine group, sought reimbursement by Scottish ministers of sums it paid to settle debts of the firm controlled by the Scottish Government.

In a ruling known as an opinion, Lord Tyre said HCC is entitled to payment from the Scottish Government.

But, the judge suspended payment until separate legal proceedings in England were completed.

He 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.

“As I have noted, however, it would not be appropriate to grant decree for payment until the conclusion of the English rectification proceedings, and this action will now require to be sisted.”

In 2015, Ferguson Marine was awarded a contract to deliver two vessels for Arran and the Hebrides.

The ships were to be a new hybrid design and powered by marine diesel oil and liquefied natural gas, however, construction fell behind schedule.

The court case involved refund guarantees taken out in 2016 by Ferguson Marine with HCC.

They were taken out as financial security for substantial advance payments made by Cmal for construction costs in the event of the shipbuilder not completing the order.

Ferguson Marine also indemnified HCC over any payments made to Cmal under these refund guarantees.

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

In August 2019, Ferguson Marine went bust and was taken over by Scottish ministers, with its business and assets transferred to a new entity owned by the Scottish ministers.

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Agreements involving “certain payments” by HCC to Cmal and for HCC liabilities under the refund guarantees were 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, of £5,047,775.79.
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