Clough's G1 dispute worsens with US$1.2bn counterclaim

Engineering company Clough Ltd's contract dispute over the G1 project in India has deepened after its client ONGC submitted a counterclaim worth US$1.2 billion (A$1.3 billion), a figure Clough insists ignores the limits of liability.

G1 was one of two big contractual disputes that pushed Clough into making a loss last financial year.

It has been pursuing an arbitration process to resolve the matter, which involed Clough submitting a claim and ONGC lodging a counterclaim.

"The ONGC counterclaim of US$1.2 billion ignores the limits of liability contained in the contract and is substantially for the recovery of consequential damages which are explicity excluded by the contract," Clough said in a statement.

Clough believes its performance liability is limited in the contract, with completion costs capped at 20 per cent of the contract value (US$43 million) and liquidated damages for delay capped at 10 per cent of the contract value (US$21 million).

"After careful consideration, the company maintains its previous guidance on this matter."