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Pemex Loses Arbitration Award Appeal

Thursday, August, 11, 2016

A US appeals court recently upheld a decision confirming a judgement won through arbitration by a unit of KBR Inc. in the company’s contract dispute with Mexico’s national oil company, Pemex. The award was for $465 million.


The decision came from the second US Circuit Court of Appeals in New York and allowed the $300 million arbitration award for KBR’s unit is Mexico, even though a Mexican court had previously nullified the award. The US court also upheld a ruling in a lower court that added more than $100 million to the judgment and included $59 million in interest.


Pemex has not officially decided yet whether it will make a further appeal. The company has also not yet responded to requests for a comment concerning the upholding of the ruling.


According to KBR Chief Executive Stuart Bradie, the engineering and construction company is pleased with the decision. They also believe the amount is long overdue for work that was performed several decades ago.


The ruling came years after litigation began between Pemex and COMMISA and had already resulted in court challenges in two other countries. It stemmed from agreements reached between COMMISA and Pemex in 1997 regarding the building of oil platforms in the Gulf of Mexico. As the project moved forward, Pemex insisted the platforms be fully constructed before being placed in the Gulf, while COMMISA believed this impractical and wanted the platforms built onsite.


In 2004, Pemex decided to rescind the contract, claiming COMMISA failed to meet certain terms. The project was then abandoned and Pemex seized the platforms, which were nearly complete.