Government of Gibraltar wins tunnel dispute

Posted: 14th May 2014

PlansThe High Court has ruled that the Government of Gibraltar (GoG) was entitled to and did effectively terminate a very substantial contract for the design and construction of a road and tunnel under British Overseas Territory’s airport runway after the project was hit by extreme delays.

GoG had engaged leading Spanish civil engineering company Obrascon Huarte Lain (OHL) to carry out the work but, two and a half years into a project which should have lasted only two years, little more than 25 per cent of the work was complete.

The project had been seriously affected by the discovery of contaminated materials on the site and, in suing for alleged breach of contract, the OHL argued that it had been ready, willing and able to complete the work and would have done so but for ‘various obstacles’ placed in its path by GoG.

But the Court found that OHL had been given reasonable time to remedy its defaults and that GoG’s actions had not prevented it from doing so. There had been no reasonable excuse for the company’s failures and the eventual departure of its workforce from the site amounted to a repudiatory breach of contract.

In those circumstances, GoG had lawfully and effectively brought the contract to an end and was entitled to financial relief against the company, calculated in accordance with the relevant provisions of the contract, plus interest.