Skaugen wins refund from VW’s MAN Diesel

Norwegian owner sees arbitral tribune compel German company to pay around $15.5m in prolonged, bitter row.

IM Skaugen has recorded a victory in its ongoing dispute with Volkswagen-owned MAN Diesel & Turbo as the latter has been compelled to pay a refund of $15.5m.

The Norwegian owner said an arbitration tribunal found that two engines produced in 2008 and 2009 had “a substantially higher consumption than the maximum level warranted by MAN”.

The ICC International Court of arbitration has ordered MAN to refund IM Skaugen its down-payment for the engines of EUR 5.3m ($5.9m).

The engine manufacturer will also have to pay EUR 1.4m for Skaugen’s legal costs and another $8m as a recovery of prepaid funds.

IM Skaugen filed a $20m compensation claim in Singapore in 2015.

But MAN spokesman Jan Mueller tells TradeWinds that the latest decision by the ICC is the latest in a series of awards in the dispute. 

"The majority of these proceedings were decided in favour of MAN Diesel & Turbo," he said.

He said MAN is also pursuing substantial claims against Skaugen on different supply contracts.

"MAN Diesel & Turbo SE had tried to amicably settle these issues out of court and had been negotiating with this customer for several months," Mueller said. "The customer had canceled the negotiations unilaterally."

The two companies have been ensnared in a prolonged dispute which stems from an agreement for 12 marine diesels propulsion systems.

IM Skaugen argues that the engines consume more fuel than was promised by MAN.

The German manufacturer has admitted wrongdoing for three out of the 12 engines, IM Skaugen said.

It also added that it has secured documents showing that these allegedly fraudulent manipulations have been performed systematically for more than 10 years and for other clients as well.

Volkswagen has been a shareholder in MAN since 2006 and currently owns a majority stake but it was not involved in the company when the Skaugen units were built.

When IM Skaugen filed its claims two years ago, Volkswagen was in the middle of a major car engine scandal, which forced the chief executive to step down.

IM Skaugen added that there is pending litigation ongoing in Norway as well.

MAN Diesel & Turbo has been contacted for comment.