On February 3rd, 2017, CEELM reported that the Estonian Supreme Court ruled in favor of If P&C Insurance’s claims regarding professional liability involving a construction project for Skanska AS. We reached out to Heinar Olak, the Head of Legal at If P&C, to clarify the grounds of the dispute and its finale.
CEELM: In your view, what were the most complex aspects of this dispute?
H.O: The core of the dispute was which architectural firm should be liable for mistakes in the project documentation where the project was prepared by one architectural firm (in this case Pello IB OU) but officially signed and presented by another architectural firm (in this case Sweco OU) as its own work. Our aim was to prove that liability lies on the firm that signed and officially presented the documentation that eventually led to the damage.
CEELM: What were Skanska’s specific claims in the matter?
H.O: Skanska AS claimed compensation of the cost for rebuilding a methane tank necessitated by the mistakes in the project documentation in amount of EUR 895,549 and compensation of contractual penalties it paid due to the delay of construction in the amount of EUR 790,059.
CEELM: And what arguments did the court find most persuasive?
H.O: In this case the customer of Skanska AS had specific qualification requirements toward the architectural firms that Pello IB OU was not compliant with. That was, in our understanding, the reason why another architectural firm was hired to sign the project. On one hand we emphasized that by doing so Skanska had created a wrongful picture to its customer about compliance with the qualification requirements that was not not nice but also dangerous in these circumstances. On the other hand we stressed the fact that the person signing the project documentation gives the “go” to the project, and therefore must be liable for the consequences.
CEELM: Why did you opt to use Nove as your counsel?
H.O: Although we as an insurance company manage number of litigations in-house, in specific cases are look for support from law offices with relevant experience and knowledge. We believe that legal service is very much a people business where the outcome depends first of all on the persons involved. Therefore when we are looking for support, we target specific attorneys rather than law offices in general. Andrus Kattel, as a Partner at the Nove law office, is a well-known litigation lawyer in Estonia who has also remarkable experience in insurance-related litigation. We have used his services in several cases in the past.
As the Head of Legal At If P&C Insurance AS I’m responsible for ensuring that the company gets relevant and high quality legal service either from its in-house legal team or from external advisers. In this case my role was to coordinate the process and ensure the necessary assistance from my in-house colleagues to the external adviser.
CEELM: What effect do you foresee this Supreme Court judgement will have on construction and insurance contracts in the market?
H.O: We hope this will support honesty and transparency in construction field and thereby protect the customers of construction companies.