Acciona to pay $38.6m security

ACCIONA has been ordered to provide a $39 million security over its legal row with East Rockingham waste project in the Federal Court of Australia.

In a judgment delivered yesterday, Federal Court judge Michael Feutrill allowed Acciona to progress its legal defence but with a security of $38.6 million.

East Rockingham Waste to Energy plant sued Acciona, alleging the Spanish multinational breached the engineering contract over the project, which was initially estimated to cost $511 million.

In his, Justice Feutrill said the better course was for Acciona to provide a separate form of security as a condition of allowing their defence in trial.

The legal matter has been ongoing for some time, with East Rockingham alleging Acciona breached the contract by failing to provide replacement bank guarantees when they expired.

East Rockingham sought a mandatory injunction to force the Acciona parties to provide replacement bank guarantees, a previous court judgment revealed.

In defence, Acciona claimed East Rockingham, as the employer, was insolvent and was not entitled to equitable relief.

Justice Feutrill said court orders should strike a balance between the risk of injustice to East Rockingham as the employer or the inevitable delay caused by permitting the issues raised in Acciona’s defence proceeding to trial.

“I was satisfied that the Acciona parties had no reasonable prospects of defending the Employer’s claim that they had breached the [engineering, procurement and construction] contract,” his judgment reads.

“However, I was not satisfied, on the assumption that the employer was insolvent, that the Acciona parties had no reasonable prospects of defending the employer’s claim for a mandatory injunction.

“As a consequence of the potential injustice that would result from the time it would take to determine the issues the Acciona parties have raised in their defence, I foreshadowed exercising power … to make orders that would have the effect of requiring the Acciona parties to provide the Employer with replacement bank guarantees.

“But, to preserve the status quo, placing conditions on the employer’s right to call on the replacement bank guarantees and obtain legal ownership of the funds demanded, pending determination of the question of whether it is entitled to the claimed mandatory injunction and provision of the replacement bank guarantees.”

Under the court orders, Acciona has until the end of the month to provide the $38.6 million security.

Acciona also owns the Kwinana waste-to-energy plant, after it bought out the former owners for $365 million in March.