The Canadian subsidiary of Italian multinational major construction company, Astaldi, is asking a judge to throw out an order for C$437,000 (US$332,000) in legal fees to the Muskrat Falls Corporation, a subsidiary of provincial energy utility Nalcor.

Astaldi Canada claims that it has already said the legal fees should be deducted from performance guarantees and letters of credit (L/Cs) that it has already provided to the Canadian energy utility.

L/Cs duly posted

At the time of its Muskrat Falls contract award, Astaldi Canada posted the required C$350 million in L/Cs and performance bonds.

But as the project became mired in time and cost overruns, principal contractor Astaldi says that in mid-2017 Nalcor ceased payments.

Performance guarantees

The performance guarantees and L/Cs meant that if Astaldi failed to perform its duties, Nalcor could draw on two L/Cs issued by the National Bank of Canada.

In November 2018, Astaldi failed to prevent Nalcor from drawing on the L/Cs when it went to the Supreme Court of Newfoundland and Labrador to seek an injunction.

Legal claims

Nalcor now claims its legal fees for obtaining the court's permission to draw on the L/Cs amounted to C$437,000 and the judge ordered Astaldi to pay up.

The Canadian energy utility for Newfoundland and Labrador claims the money was never paid, but Astaldi says it told Nalcor them to deduct the legal fees from the performance L/Cs.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.