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Bringing a Legal Action before the ICAC to Recover an Unearned Advance Payment from an Oilfield Service Company

Task

Providing legal advice in a dispute to recover an unjustified enrichment in the form of an unearned advance payment for drilling from an international leading oilfield service company

Client
Russian oil company
Industry
Oil production

Background

The parties entered into a contractor agreement and the client made advance payment for the works to be subsequently performed by the respondent.

However, the parties ceased working together for an uncertain period of time shortly after the drilling was started. The agreement was not terminated as the terminating party would incur a significant penalty comparable to the advance amount paid to it.

Since the effective period of the agreement was specified in very ambiguous terms, the agreement remained in force despite the fact that the client completed the drilling by its own efforts.

Outcome

We managed to prove that the agreement was not terminated early, so the court collected the advance payment in part and refused to collect any penalty as the imposition of such penalty would constitute an abuse on the part of the respondent.