19/02/2021 - 15:27

Tianqi dispute returns to court

19/02/2021 - 15:27

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The state’s Supreme Court has ruled that Chinese-owned Tianqi Lithium should have to repay its $35.8 million debt to Perth-based engineering consultancy MSP Engineering.

Tianqi dispute returns to court
The state’s Supreme Court has ruled that Chinese-owned Tianqi Lithium should have to repay its $35.8 million debt to Perth-based engineering consultancy MSP Engineering.

The state’s Supreme Court has ruled that Chinese-owned Tianqi Lithium should have to repay its $35.8 million debt to Perth-based engineering consultancy MSP Engineering, ending a year-long dispute.

The dispute, which was reviewed by the court yesterday, relates to two contracts MSP held for the design and construction of Tianqi’s Kwinana lithium hydroxide processing plants.

Under the two contracts, Tianqi paid the company $9 million between August 2019 and January 2020.

But the parties were forced to negotiate a payment plan in November 2019 after Tianqi began experiencing financial difficulties and was unable to repay what it owed.

The company failed to pay the remaining balance, which stands at more than $35.8 million inclusive of GST.

In March last year, Tianqi issued notices of dispute under the contract regarding matters that have now been referred to arbitration.

As per the contract, Tianqi issued a show cause notice before issuing a termination notice in August 2020 because the company had failed to comply.

MSP Engineering disputed that the termination notice was effective, claiming that the company had no grounds to issue the initial show cause notice and that the defendant was not entitled to terminate the contract.

As a result, the company maintained that the agreement was still in place.

Tianqi argued that the contracts were liable to be set aside and that any contractual rights MSP may have could not be enforced prior to a determination by arbitration.

Yesterday, Supreme Court Master Craig Sanderson ruled that he was not satisfied that the contracts would be set aside and that MSP was entitled to the relief it was seeking.

Given that progress certificates had been issued under the contract and Tianqi had agreed to repay the debts, Master Sanderson ruled that it was not offensive in equity to require that to be honoured. 

“The parties agreed that when progress claims were made and certified, the amounts due and payable by the defendant (Tianqi) and the plaintiff (MSP) would be paid and if they were not paid could be recovered summarily,” he said.

“That is an important aspect of construction contracts.”

Master Sanderson said that a number of summary judgment applications concerning the case had failed because the matters between the parties were complex in nature and suggested that the proper course would be to have a full trial.

The court judgement comes just months after Tianqi's shareholders backed a $1.4 billion deal allowing Australian nickel producer IGO to aquire a 49 per cent stake in the company's Australian operations.

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