OHL to sue Qatar Foundation after Sidra hospital contract terminated
International construction company OHL has announced that it will sue Qatar Foundation (QF) after it was sacked as one of the main contractors of the unfinished Sidra Medical and Research Center this week.
The Spain-based company had been leading the design and build of Sidra Medical and Research Center in a QR8.79 million joint venture with Contrack International since February 2008.
However, earlier this week QF, which is funding Sidra with an endowment of QR28.75 billion ($7.9 billion), terminated the JV’s contracts.
Hundreds of staff were escorted by security from the site, as it was closed just ahead of the Eid holidays.
Reasons for termination
QF has not publicly revealed the reasons behind its decision to fire the contractors.
However, in an official letter to the London Stock Exchange (LSE) this week, the Vice Secretary of OHL’s Board of Directors, Jose Maria del Cuvillo Peman, wrote that QF is claiming the project was late and the contractors missed deadlines.
OHL is publicly listed on the LSE, and as such is required to issue a notification of any event that could be considered to have an impact on their share price or profitability.
The under-construction hospital, billed as “an ultramodern academic medical center” dedicated to the care of women and children, was originally supposed to open in 2011.
In the letter, Peman disputed QF claims that the consortium had breached its contract, particularly with regard to “the pace of works and delivery deadlines.”
He acknowledged that the contract was awarded in 2008, but said:
“According to the current estimations, the degree of completion in the execution of the Contract is of around 95%, with the final delivery to the Client being scheduled in the first quarter of 2015.”
Peman also announced OHL’s intention to seek legal action against QF, saying:
“OHL considers that the reasons given by the Client lack of any legitimate grounds, and consequently intends to activate through the Consortium the mechanisms set out in the Contract to claim before the International Chamber of Commerce (ICC) based in London, through arbitration the effective protection of its interests.”
Finally, he assured the stock exchange that OHL would not suffer a financial hit as a result of the contract termination or legal action.
New contractor after Eid
The sacking of OHL and Contrack this week left many employees flummoxed. Some told Doha News that they were given no notice about what was happening, and only told at 8am on Tuesday to pack up their desks before being escorted by security from the site.
Many colleagues were also out of town on summer break at the time.
It is understood a new, as yet unnamed, main contractor will be appointed to restart work on the hospital after Eid.
But the fate of those working on Sidra who are not directly connected to OHL and Contrack remains unclear.
On big projects, a new main contractor will often rehire existing sub-contractors who already know the site to finish the job. When asked for comment, QF was not able to provide any further official details for now.