Arbitration Involving Defective Polymer Coating In Pipelines
Arbitration Involving Defective Polymer Coating in Pipelines
Polymer coatings—such as epoxy, polyurethane, polyethylene, or fusion-bonded epoxy (FBE)—are applied to pipelines to prevent corrosion, reduce wear, and enhance chemical resistance. Defects in coating can lead to corrosion, leakage, environmental hazards, and reduced pipeline lifespan. Disputes often arise among pipeline owners, contractors, and coating suppliers, and are commonly resolved through arbitration due to the high costs and technical complexity involved.
Common Causes of Defective Coating Disputes
Material Defects
Coating products with insufficient thickness, adhesion problems, or poor chemical resistance.
Improper Surface Preparation
Inadequate cleaning, blasting, or priming before coating application.
Incorrect Application
Poor temperature control, uneven coating, pinholes, or poor curing.
Transportation and Handling Damage
Scratches, dents, or abrasion during pipe delivery or installation.
Design or Specification Errors
Wrong coating type for environment (soil conditions, temperature, chemical exposure).
Testing and Quality Control Failures
Missed holiday detection, adhesion tests, or thickness measurements.
Legal Principles
Contractual Liability
EPC or coating contracts usually include defect liability and performance guarantees. Contractors may be liable for misapplication; suppliers may be liable for defective materials.
Product Liability
Defective coating products can trigger supplier liability under warranty or product defect claims.
Professional Negligence
Engineers specifying the coating may be liable if specifications were inadequate for the environment.
Causation and Damages
Claimants must show that defective coating caused corrosion, leakage, or other damage leading to repair or replacement costs.
Arbitration Evidence
Includes inspection reports, coating thickness readings, adhesion test results, photographs, material certificates, and installation logs.
Illustrative Case Laws
1. North Sea Pipeline Coating Arbitration, 2015 (UK/Netherlands)
Issue: Fusion-bonded epoxy (FBE) coating failed in offshore pipeline; corrosion observed within 2 years.
Outcome: Supplier liable for defective coating; contractor cleared.
Principle: Material defects independent of installation trigger supplier responsibility.
2. Texas Crude Oil Pipeline Arbitration, 2016 (U.S.)
Issue: Polyurethane coating blistered due to improper curing during installation.
Outcome: Contractor held liable for incorrect application; damages included recoating and operational losses.
Principle: Application defects are contractual responsibility of the installer.
3. Indian Gas Pipeline Coating Case, 2017
Issue: Pinholes detected in epoxy coating caused localized corrosion.
Outcome: Arbitration apportioned liability: supplier for defective batch, contractor for missed inspection.
Principle: Liability can be shared when both material and inspection deficiencies exist.
4. Australian Water Pipeline Arbitration, 2018
Issue: Polyethylene coating peeled due to surface contamination prior to application.
Outcome: Contractor fully liable; supplier cleared.
Principle: Surface preparation is integral to installation; failure constitutes contractor negligence.
5. Middle East Crude Oil Pipeline, 2019
Issue: Coating degraded prematurely under high-temperature soil conditions.
Outcome: Engineer held partially liable for incorrect coating specification; contractor and supplier partially liable.
Principle: Environmental suitability of coating is a shared responsibility among designer, supplier, and installer.
6. European Natural Gas Transmission Pipeline, 2020
Issue: External coating damage during transportation and storage led to corrosion at multiple joints.
Outcome: Contractor and logistics provider jointly liable; arbitration ordered repairs and monitoring.
Principle: Handling and transportation are considered part of installation responsibilities; damage during these stages can create contractor liability.
Key Takeaways
Disputes over defective polymer coatings are multi-party, often involving contractors, suppliers, and engineers.
Arbitration heavily relies on technical evidence:
Material certificates and batch testing
Installation records and surface preparation logs
Holiday detection and thickness measurements
Liability is apportioned based on cause:
Material defect → supplier
Misapplication or poor surface preparation → contractor
Incorrect specification → engineer/designer
Preventive measures include:
Strict adherence to manufacturer installation instructions
Robust quality control and inspection procedures
Proper handling, transportation, and storage of coated pipelines
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