The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Baha Mar’s major contractor has launched a $65,000 damages counter-claim against one of its former US sub-contractors, alleging that it failed to perform on two contracts relating to the project’s convention centre.

China Construction America (Bahamas) has thus hit back at Novum Structures for its $555,000 demand in an earlier lawsuit, levelling exactly the same allegations that Baha Mar’s former developer, Sarkis Izmirlian, made against itself.

And cynical observers may also view CCA’s defence as something of a ‘playbook’ for how the Chinese state-owned contractor may deal with its Bahamian sub-contractors if it is unable to resolve their claims to its satisfaction.

Novum Structures, a specialist contractor that provides architectural and structural services, initiated a lawsuit against CCA (Bahamas) in early August 2016 to recover the outstanding $555,000 it claims to be owed for work on the Baha Mar project.

But, in its defence, which was filed with the southern New York federal court on Friday, CCA is alleging that Novum’s recovery claim is “barred” because it failed to follow the procedure for dealing with construction-related disputes at Baha Mar.

In particular, CCA (Bahamas) is alleging that Novum failed to first take its complaint to a Dispute Resolution Board (DRB), which it described as an “explicit condition precedent to the commencement of any legal proceeding”.

Given that CCA’s Bahamian sub-contractors all have arbitration clauses in their contracts, according to Bahamian Contractors Association (BCA) president Leonard Sands, it is highly likely that the Chinese company will insist that any local firm go first to the DRB if it is unhappy with the settlement offered.

CCA (Bahamas) is understood to owe its Bahamian sub-contractors a collective $58 million, with the latter forced to negotiate for their outstanding payments directly with the Chinese state-owned firm.

They have been excluded from the Baha Mar creditor payouts on the grounds that CCA (Bahamas), as a solvent company, has assets against which they can claim if it fails to provide a satisfactory settlement.

Prime Minister Perry Christie also reassured that as part of the agreement to complete Baha Mar’s construction, CCA (Bahamas) is to settle with its Bahamian sub-contractors and vendors.

However, he may wish to note another element of CCA (Bahamas) defence in the Novum action, which is that it is “not required to make any payments under the sub-contract until after CCA (Bahamas) receives payment from the owner”.

CCA (Bahamas) insistence that it cannot pay its US sub-contractors until it receives monies owed to it by Baha Mar’s “owner”, presumably Mr Izmirlian or its affiliate, the China Export-Import Bank, triggers an immediate warning signal for its Bahamian sub-contractors.

It is unclear whether CCA (Bahamas) will be paid what it is owed, said to be between $72 million and $140 million, by the China Export-Import Bank and, if it is, whether these funds will be used to compensate the Bahamian sub-contractors.

Some local firms will, though, have leverage to ensure they at least obtain a significant percentage of what is owed to them if their presence is required to complete Baha Mar.

But CCA (Bahamas) defence in the Novum matter is almost an exact replica of the one filed against the other US sub-contractor that had the courage to sue it in the New York courts, Controlled Demolition Inc.

Meanwhile, in its counterclaim against Novum, CCA (Bahamas) alleged that it was hired to do the specialist glazing and canopy glass/fittings on Baha Mar’s convention centre via contracts issued in February 2013 and April 2014, respectively.

“Novum represented to CCA Bahamas that, for one aspect of the work, it would take 12 weeks to complete its installation work on the Convention Centre,” the Chinese contractor alleged.

“This work was scheduled to be performed from July 15, 2014, through October 14, 2014. Work was delayed, and certain materials needed for Novum to complete its work were delivered on or about September 18, 2014.”

CCA (Bahamas) alleged that after Novum seemingly failed to restart work, it inquired when the latter’s glass installer would return, and how the US sub-contractor would make up for lost time.

It claimed that Novum took almost one month to respond with details of the manpower resources it was devoting to the project, and the work schedule.

Ironically, given its own failure to complete Baha Mar on time and on budget, CCA (Bahamas) then alleged: “CCA Bahamas responded the same day by informing Novum that a December 23 completion date would not support CCA Bahamas’ commitment to the owner of the project, reminding Novum that it was supposed to complete the work over three months prior, and repeating its request for Novum to provide a manpower plan. CCA Bahamas also asked Novum to add another crew to maintain the work schedule, to which Novum agreed.

“On October 30, 2014, CCA Bahamas informed Novum again that it was waiting for a revised schedule because a December 23 completion date was not acceptable. CCA Bahamas asked when it could expect the revised schedule and the date for Novum to add another crew. Novum failed to respond, and CCA Bahamas had to request this information many times.”

CCA (Bahamas) alleged that Novum failed to provide a work completion plan before the scheduled date, and “failed to progress the work in a diligent and timely manner”.

Levelling the same allegations against Novum that Mr Izmirlian made against it, CCA (Bahamas) further claimed that it “expressed concerns” about its US sub-contractor’s “lack of manpower and lack of supervision”.

After expressing fears that Novum was “abandoning the project”, CCA (Bahamas) claimed: “Novum’s delays continued, and Novum was still working to complete the job in March 2015.

“CCA Bahamas suffered additional costs as a result of Novum’s repeated delays and failures to progress the works. CCA Bahamas ultimately was forced to provide equipment to Novum to complete the work, even though Novum had agreed, and was being paid, to provide the equipment.

“CCA Bahamas also was forced to supply its own labour to install glass, pay another contractor that performed some of Novum’s work, replace damaged glass, and incur clean-up costs.”