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Fifth Circuit Affirms Arbitration Award of Nearly $7 Million to Petrofac, Inc.

The American Arbitration Association (AAA) award in favor of Petrofac, Inc., in its construction claim against DynMcDermott Petroleum Operations Company (DM), was affirmed by the Fifth Circuit Court of Appeals in its July 17, 2012, filing

Damages expert Frank G. Adams, PE, of Interface Consulting International, Inc., testified before the arbitration panel as to Petrofac’s engineering and field labor productivity losses due to design and construction issues on a transportable degasification plant at two US Department of Energy Strategic Petroleum Reserve sites in Texas. The panel awarded Petrofac over 90% of the damages outlined in Interface Consulting’s damage analysis, in addition to attorneys’ fees and interest, amounting to nearly $7 million.

Adams, who is president of Interface Consulting, was brought in by lead counsel for Petrofac, Andrews Myers, PC, and co-counsel Kent, Anderson & Bush, PC, to provide expert services. Andrews Myers shareholder William “Bill” K. Andrews and David J. Bush of Kent, Anderson & Bush, represented Petrofac throughout the five weeks of arbitration hearings occurring between 2009 and 2010.

DM first tried to collaterally attack the AAA panel award in district court and, failing that, it appealed, asserting that the claim award was not covered by the parties’ agreement for arbitration under AAA rules. On appeal, the Fifth Circuit affirmed the district court’s confirmation. DM received no award on its counterclaim.

The Fifth Circuit stated in its filing, “We agree with most of our sister circuits that the express adoption of these rules presents clear and unmistakable evidence that the parties agreed to arbitrate arbitrability….Therefore, the arbitration panel properly made the decision that the damages calculations in the Adams report fell within the agreement to arbitrate.”

About Interface Consulting:

Interface Consulting International, Inc. (www.interface-consulting.com), providing expert services to the engineering and construction industries since 1986, is a leading authority on construction claims and construction management. Clients have entrusted Interface Consulting on over 875 projects spanning a variety of industries, including oil and gas, power, infrastructure, and commercial and government facilities. Serving as experts in litigation and arbitration matters on a global basis, Interface Consulting has assisted clients involving engineering and construction issues in over 60 countries.