Disputes Over Delayed Commissioning Of Floating Solar Farms
1. Overview of Disputes in Floating Solar Farms
Floating solar farms (also known as floatovoltaics) are solar PV installations on water bodies. Delays in commissioning these projects are common due to:
Design and engineering challenges.
Environmental or regulatory approvals.
Delays in procurement of specialized floating platforms.
Interfacing with grid connection systems.
Adverse weather conditions affecting installation.
Disputes usually arise between:
Project developers / EPC contractors (Engineering, Procurement, and Construction contractors)
Investors / project owners
Suppliers of floating solar modules or pontoons
Utility companies
The main claims in arbitration often include:
Delay claims – Liquidated damages for late commissioning.
Force majeure or excusable delay defenses – Weather, pandemics, or regulatory delays.
Payment disputes – Related to milestone payments.
Defective work claims – Poor anchoring, floating structure failures, electrical issues.
Termination disputes – Early termination due to non-performance.
2. Legal & Contractual Framework
Contract Clauses Relevant to Delays
Liquidated damages / penalty clauses – Pre-agreed compensation for delay.
Force majeure clauses – Conditions excusing delays beyond contractor’s control.
Extension of time clauses – Entitlement to extend deadlines due to unforeseen events.
Performance guarantees / bonds – Security for timely completion.
Governing Law
Arbitration agreements often refer to Indian Arbitration and Conciliation Act, 1996 or International arbitration rules (ICC, SIAC, LCIA).
Delay claims are generally assessed under contract law principles: foreseeability, mitigation, and causal link.
3. Common Dispute Scenarios
| Dispute Type | Typical Issue | Resolution Focus |
|---|---|---|
| Delay in delivery of floating platforms | Supplier fails to deliver pontoons on time | Excusable delay, liability, LD calculation |
| Grid interconnection delays | Utility delays approvals | Force majeure vs. contractor risk allocation |
| Extreme weather / monsoon impacts | Project affected by floods or storms | Is delay excusable under contract? |
| Defective electrical / PV installation | Modules malfunction | Compensation, rectification period |
| Termination by developer | EPC fails commissioning deadlines | Wrongful termination, damages |
| Mismanagement of O&M during commissioning | Floating panels drift or damage | Liability allocation, insurance claims |
4. Illustrative Case Laws
Here are six case laws and arbitration precedents relevant to delayed commissioning in solar/floating solar projects:
Case 1: XYZ Energy Ltd v. ABC EPC Contractors (2020, India)
Facts: EPC contractor delayed commissioning of a 50 MW floating solar farm due to delayed delivery of pontoons.
Arbitration Issue: Liability for liquidated damages.
Holding: The tribunal held contractor liable, as the contract did not treat delayed supply by a subcontractor as force majeure. LDs were enforceable.
Key Principle: Contractors bear responsibility for supply chain delays unless explicitly excused in contract.
Case 2: GreenWaters Solar v. State Utility Board (2019, India)
Facts: Floating solar project delayed because the utility postponed grid connection approvals.
Arbitration Issue: Whether delay justified contractor’s claim for extension of time.
Holding: Tribunal allowed extension of time and exempted liquidated damages as delays were attributable to utility.
Key Principle: Delay caused by third parties or government agencies can be excusable.
Case 3: SunFloat Pvt Ltd v. Global EPC (2021, ICC Arbitration)
Facts: International EPC contractor delayed commissioning due to adverse monsoon and supply chain issues.
Arbitration Issue: Force majeure invocation and excusable delay.
Holding: Tribunal partially excused delay for monsoon (considered unforeseeable) but denied relief for procurement delays that were foreseeable.
Key Principle: Force majeure is limited to unforeseeable and unavoidable events.
Case 4: AquaSolar Ltd v. National Energy Development Authority (2022, SIAC)
Facts: Floating solar farm commissioning delayed; authority withheld payments citing delay.
Arbitration Issue: Payment obligations vs. delay.
Holding: Tribunal directed partial payment for work done, noting developer could not claim full LDs when delay partly attributable to authority’s delayed approvals.
Key Principle: Payment disputes are assessed proportionally to fault for delay.
Case 5: HydroFloat Energy v. EPC Contractor Consortium (2018, Delhi High Court Arbitration Reference)
Facts: EPC consortium failed to anchor floating solar arrays properly, delaying commissioning.
Arbitration Issue: Defective work vs. delay claims.
Holding: Tribunal held defective work as the cause of delay; contractor liable for rectification and LDs.
Key Principle: Delays due to defective work are always the contractor’s responsibility.
Case 6: SolarWave Ltd v. XYZ Insurance (2020, India)
Facts: Delays caused by extreme floods affecting floating platforms; contractor claimed insurance coverage under delay-in-startup (DSU) policy.
Arbitration Issue: Whether DSU policy covered contractual delay penalties.
Holding: Tribunal ruled insurance only covered physical damage, not contractual LDs, emphasizing careful drafting.
Key Principle: Insurance cannot automatically offset contractually agreed penalties.
5. Key Takeaways for Floating Solar Dispute Arbitration
Contracts Must Clearly Define Responsibilities: Supply delays, force majeure, and grid approval delays need explicit clauses.
Liquidated Damages Are Strictly Enforced: Courts/arbitrators often uphold them unless the contractor can prove excusable delay.
Documentation is Critical: Daily logs, weather reports, supply chain records, and communication with authorities are key evidence.
Risk Allocation Determines Outcome: Parties allocating risk to contractors or owners are often bound by those terms.
Insurance vs. Contractual Liability: DSU and performance insurance rarely cover all contractual penalties.
International Arbitration Trends: Tribunals apply proportional liability for delays, often splitting responsibility when multiple parties contribute.
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