Kennedys and Integra secure double win for Borealis

Law firm Kennedys and loss adjusters Integra Technical Services have successfully defended chemical and plastics provider Borealis in a second landmark legal victory over UK Oil Tank Manufacturers, handed down today.

The action, brought by Irish building materials giant Kingspan Group, was confidently tabled in excess of £101m, but its claims have been dismissed in their entirety.

In 2006, Borealis successfully defeated a £70m-plus lawsuit in the London Commercial Court by the Scottish oil tank manufacturer Balmoral Group, in which Balmoral claimed that deficiencies in Borealis' third-generation metallocene polymer Borecene had caused the failure of more than 5000 rotationally moulded kerosene oil tanks while in service.

After a three-month trial in the same court, between May and July 2011, Borealis has now defeated a second assault on Borecene, by Kingspan, four of which subsidiaries manufactured some 115 000 oil storage tanks in four different factories using Borecene, suffering some 25,000 failures, many within only two or three years of manufacture.

Kennedys partner Anthony Greenwood and senior solicitor Leanna Mailer, together with David Allen QC of 7 King's Bench Walk as leading counsel, and assisted by loss adjusters Integra Technical Services, made up the successful legal team.

Balmoral alleged that Borecene was unfit for purpose owing to its inability to withstand 'environmental stress cracking' when used to store kerosene, a case Kingspan originally adopted.

After Balmoral had failed to establish this at trial, Kingspan changed its approach, and instead alleged that the ultra violet protection package within the polymer provided an inadequate defence against heat and light, causing the tanks to crack.

Together, the legal actions involved scientific evidence of complexity given by 16 technical experts in polymer science, rotational moulding and ultra violet degradation.

In his decision today, Mr Justice Christopher Clarke, who presided in both cases, agreed with Borealis that:

• the sales of Borecene were made on Borealis' terms of trade
• those terms were effective to make Danish law the applicable law
• the contracts were International Supply Agreements to which the Unfair Contract Terms Act 1977 does not apply
• Borealis was guilty of no misrepresentations as to the capability of Borecene, whether under English or Danish law
• Kingspan had failed to establish that the UV package within the Borecene was defective
• Kingspan had failed to establish that the package was the effective cause of tank failure. In fact the tank failures had been caused by inadequate manufacturing procedures, the use of inappropriate pigments, the adoption of poor tank designs, and poor quality assurance practices on the part of Kingspan.

Kingspan is now faced with a legal costs burden which may exceed £20m.

For product liability and general commercial lines insurers, the cases provide a leading exposition of the balance of risk, and the legal and practical dynamics which exist between raw materials suppliers, and product manufacturers.

For insurers and legal practitioners, the outcome of two such complex and wide ranging claims confirms the clear value in tailoring a robust, intelligent approach when defending major litigation.

Key steps include the appointment and coordination of the correct representative teams and expert witnesses, and the deployment of appropriate strategic planning.