DOVER, Del (Reuters) - Westinghouse Electric Co LLC and Chicago Bridge & Iron Co NV CBI.N squared off in Delaware Supreme Court on Wednesday in a $2 billion dispute over the huge nuclear power plant cost overruns that led Westinghouse to file for bankruptcy in March.
The two sides are sparring over a 2015 deal in which Chicago Bridge & Iron, or CB&I, sold Westinghouse its Shaw nuclear construction business. Westinghouse paid nothing up front, but agreed to accept all liabilities related to cost overruns at two power plants Shaw was building in partnership with Westinghouse in Georgia and South Carolina.
The deal was meant to get the two power plant projects back on schedule.
Shaw was spending millions of dollars weekly on construction, and between the deal signing and closing, the two sides agreed to adjust the purchase price after closing. The price would account for changes in Shaw’s cash position, among other fluctuations in the business.
Westinghouse said last year CB&I owed it $2 billion. CB&I, on the other hand, estimated it was owed $428 million and in July sued Westinghouse, which is majority owned by Toshiba Corp of Japan (6502.T). CB&I argued Westinghouse was improperly lowering the purchase price by citing liabilities that were disclosed when the deal was agreed.
Westinghouse disagreed and convinced a judge on the lower Court of Chancery the case had to be dismissed and heard by an independent auditor. CB&I appealed.
CB&I argued on Wednesday that even if the dispute goes to an independent auditor, a judge should determine if Westinghouse can bring the claims for billions of dollars. It has argued that Westinghouse is essentially trying to recut the deal.
Chief Justice Leo Strine pressed the parties several times to explain why the case should not be returned to the lower court for discovery and a possible trial to determine the intent of the parties when they drafted the Shaw sale agreement.
“Could it be argued you both have reasonable positions and we should consider the negotiation history?” Strine asked.
Westinghouse blamed its March bankruptcy filing on spiraling costs at the nuclear power projects, which the Pittsburgh-based company said only became completely clear after the Shaw deal.
The nuclear power plants are estimated to be $13 billion over budget and at least three years behind schedule, and may not be completed.
The Delaware Supreme Court often takes months to rule.
Reporting by Tom Hals in Wilmington, Delaware; editing by Grant McCool