Case Studies details
Hurricane Force Majeure or Poor Standard of Care?
Litigation, North America
October 1, 2016
A refinery on the U.S. Gulf Coast was directly in the path of a hurricane and ultimately decided to completely shut the facility down due to a pending loss of utilities, and as a preemptive move to allow their employees time to evacuate the area. The hurricane shifted course and caused only minor, incidental damage at the refinery. However, due to various causes (including a cold shutdown of the entire steam system and headers, which hadn’t been done in a long time), it took an extended period of time for all of the refinery’s process units to be operating at full rates - as they were prior to the storm.
A company that served as a supplier to the refinery later filed suit, claiming that the refinery’s inability to accept its product during the extended downtime exceeded the initial force majeure provisions of the supply contract, and claimed damages for lost profits due to the refiner’s inability to honor the contract. More specifically, the claim asserted that the refiner’s poor standard of care, and not the hurricane, was the cause of the extended outage.
Baker & O’Brien was engaged to investigate the series of events leading to the refinery’s extended outage, including examining refinery management’s conformance with standard industry protocols, laws and regulations. Our consultants assessed several factors, such as refinery complexity and process unit integration, which may have impacted the refinery operator’s ability to restart the facility and whether the refinery operator acted in a reasonably prudent manner necessary to safely restart the facility as soon as possible. We provided an expert report and deposition testimony in the matter prior to settlement.