Rare TCC ruling on recurring themes and risks in the offshore construction sector in Pharos Offshore Group Limited v Keynvor Morlift Limited [2025]

It is relatively rare for a dispute in the offshore construction sector to go to trial in the High Court of England and Wales. The recent case of Pharos Offshore Group Limited v Keynvor Morlift Limited [2025] EWHC 1764 (TCC) was one such case and the judgment touches upon several of the recurring themes and risks to contracting parties within this sector. In this, the first in a series of articles, we will examine the first of those recurring themes: navigating projects delays and the status of the programme.

Background

This case concerned the Viking Link Project, which is a 1400MW high voltage direct current electricity link which transports power between the United Kingdom and Denmark.

The Claimant was Pharos Offshore Group Limited (Pharos), a provider of subsea equipment, offshore personnel hire, and engineering consultancy services to the offshore oil, gas and renewable energy markets. The Defendant was Keynvor Morlift Limited (KML), a marine contractor.

Pharos provided jet trenching equipment and personnel to operate the equipment to KML, which was itself engaged as a contractor to Prysmian Powerlink Srl (Prysmian). Amongst the services which KML had been subcontracted by Prysmian to provide was carrying out the burial or embedment of the cable, to a depth of 2m (the Embedment Works). Central to the equipment supplied by Pharos was a remotely operated underwater jet trenching vehicle, sometimes referred to as a TROV (a tracked remotely operated vehicle).

Issues in dispute

The works suffered significant delays, experiencing significant downtime. The causes of the downtime, and legal responsibility for the delays attributable to those causes lay at the heart of the judgment.

As with many offshore construction disputes, the facts of the dispute are lengthy and complicated.  However, one of the principal issues in dispute was whether there was a contractually agreed mobilisation date. 

In this first article we will:

• examine the contractual status of the programme;
• look at the judge’s findings that Pharos was required to carry out the Works within a reasonable time;
• examine whether there was a contractually binding mobilisation date; and
• discuss the lessons learned from this case and the practical steps parties should always be alive to when negotiating offshore construction contracts.

Contract

A series of purchase orders dated 5 May 2022, 10 May 2022 and 23 May 2022 (the Purchase Orders) were issued by KML. The Purchase Orders were supplemented by KML’s terms and conditions (the T&Cs).

The relationship between the parties was therefore governed by the amalgamated Purchase Orders and T&Cs (the Contract).

Status of the programme

During the negotiations, various discussions took place around the programme for the Embedment Works: on 4 February 2022, KML circulated a programme which proposed 5 days for trenching, as part of a total programme of 62 days.  The next month a costs breakdown spreadsheet was prepared (although not circulated) by KML which showed 6 days for cable burial and 2 days for mobilisation / demobilisation (with an overall allowance of 10 days accounting for weather); and two months later, KML issued an updated version of its Project Method Statement, which suggested 4.5 (subsequently 5) days for cable burial (rather than the 6 days previously indicated).

The Purchase Orders (culminating in the purchase order of 23 May 2022) provided as follows:

              “Description                                                                                             Unit

              …                                                                                                                …

              UTV670 and supporting tooling and equipment per day                         10

              Personnel per day                                                                                      10

              …                                                                                                                …

             Scope of Work

              …

• Burial of cable bundle … in accordance with specifications provided by KML and indicative programme provided by [Pharos]”

One of the points disputed by the parties was whether Pharos could claim payment for more than 10 days.  The implication of the Purchase Orders, according to KML, was that the Embedment Works were to be completed within 10 days of mobilisation and that therefore Pharos could not claim for more than 10 days.

Pharos’s position was that the number of days referred in the Purchase Orders did not operate as a cap and there was no fixed period for completing the works - rather, it was under an obligation to carry out and complete the works with reasonable skill and care within a reasonable period of time. In particular, Pharos relied upon the reference within the Purchase Orders to an “indicative programme”.

A reasonable time to complete

One of the terms incorporated into the Purchase Orders was that Pharos was obliged to “…deliver the Goods or Services by the date specified in the Purchase Order”, but it appears to have been common ground that no such date was expressly stated in the Purchase Order so this clause could not apply.

The Court determined that, objectively, the number “10” referenced in the Purchase Orders was an indicative number representing the understanding of the parties of the likely duration of the works at the time they were issued. It was not a fixed number of days within which Pharos was obliged to complete the works and therefore its entitlement to payment was not capped at the 10 days referred to.

The Court arrived at this conclusion based on a holistic reading of the Contract, including but not limited to:

• Reference in the Purchase Orders to the works being carried out in accordance with an “indicative programme”.
• Pharos’s proposal which included “indicative” trenching speeds.
• Pharos’s Rental Proposal which included “indicative” pricing.
• The draft programme of 4 February 2022 which showed 5 days anticipated trenching time (excluding mobilisation / demobilisation).
• The durations in the agreed Method Statement.
• KML’s internal documents which were based upon Pharos’s “indicative” trenching speeds.

In the Court’s view, this demonstrated a shared understanding that the works would take around 10 days (weather exclusive) when carried out with reasonable skill and care but that this was not a fixed or guaranteed programme.

Consequently, Pharos was required to carry out the works within a reasonable time. In the Court’s view, this was to be assessed by consideration, with the benefit of hindsight, of what would, in all the circumstances, have been a reasonable time for performance. This would need to take into account matters such as the “indicative programme”, whether that has been exceeded, the causes (including weather) of it being exceeded and the extent to which those causes were in Pharos’s control, and by when the UTV-670 was actually needed.

Mobilisation Date

A significant part of the dispute focussed on whether there was a contractually binding mobilisation date.

No commencement / mobilisation date was specified in the Contract. However, two revisions of an “Action Tracker” created by KML noted the mobilisation date to be 8 June 2022, subsequently revised to 9 June 2022, as also noted in other correspondence and actions.

It was effectively argued by KML that there was an implied contractual mechanism for fixing the delivery date of the UTV-670 and the parties’ obligations therefrom it (including mobilisation by KML of the UTV-670 onto the salvage vessel), pursuant to which the date was agreed and became binding. However, the Court determined that this did not meet the test for the implication of terms.

In circumstances where the date of 9 June 2022 was not agreed pursuant to an implied contractual machinery, the only obligation upon Pharos was to carry out the overall works, of which delivery of the TROV was a part, within a reasonable time (for the reasons discussed above).

Commentary

Although the concept of time at large has been considered in various decisions of the Technology and Construction Court (TCC), it remains relatively rare for a court to make a definitive finding that time is, in fact, at large. The doctrine means that a contractor is not bound by a fixed completion date and is instead required to complete the works within a reasonable time. This doctrine is typically argued for when the employer has caused delay and the contract lacks an effective extension of time (EOT) mechanism to account for that delay.

In this case, of course, the question of the effectiveness of the EOT machinery did not arise directly, as there was no contractually binding completion date to start with and the programme/number of days specified was found to be merely indicative. However, the absence of any effective EOT machinery within the Purchase Orders may have made the court’s finding of an obligation to complete within a reasonable time to complete more straightforward.

The Embedment Works in this case were carried out under a wholly bespoke contract, rather than an amended standard form such as FIDIC or LOGIC. The decision was reached on a highly fact-specific basis, which limits its value as a precedent to rely on. However, the judgment highlights a critical risk area and, in particular, serves as a cautionary example of the potential pitfalls that arise when insufficient care is taken to ensure that appropriate contractual mechanisms are in place to manage delay risk.