This article first appeared in The Edge Financial Daily on July 7, 2017 - July 13, 2017

KUALA LUMPUR: Scomi Engineering Bhd is dragging government-owned rail transport operator Prasarana Malaysia Bhd to the court again — this time to stop the latter from appointing a new party to supply the remaining six trains needed to complete the upgrade works under the Kuala Lumpur Monorail Fleet Expansion Project.

Its unit Scomi Transit Projects Sdn Bhd (STP) filed the court action on Monday after Prasarana nullified the third supplemental contract (TSC) inked between the two parties in March after claiming that the last condition in the TSC was not met.

The TSC, signed on March 3 between Prasarana and STP — the two had earlier gone to court over a dispute over the project — was aimed at amicably determining the legal proceedings between the two parties to resolve the RM494 million monorail contract dispute, while they move forward to complete the project.

But Prasarana alleged in May that the TSC had lapsed and become null and void after a condition in the TSC — the execution by STP’s financiers of a deed of reassignment and revocation that unconditionally and irrevocably revokes the assignment of contract proceeds dated May 30, 2011 — had not been met within the stipulated time frame.

Yesterday, Scomi Engineering told Bursa Malaysia that Prasarana, in maintaining that STP had failed to fulfil that condition of the TSC, informed STP of the nullification of the TSC in a letter dated June 28.

However, Scomi Engineering noted that STP earlier issued a dispute notice on June 14 to Prasarana to refer their dispute to an adjudication board, and that both STP and Prasarana had agreed to dispense reference of the alleged nullification dispute to the board.

Hence, it said STP is asking the court to restrain Prasarana from appointing a new party to complete the remaining works under the TSC, until their dispute is resolved by way of arbitration. STP is also seeking costs and other relief the court deems fit via the legal action.

Scomi Engineering said the court action is scheduled for hearing on July 31.

At the centre of the dispute between Scomi Engineering and Prasarana is the contract to upgrade the stations and systems at the Kuala Lumpur Monorail, and to replace the old trains with 12 new four-car trains.

In June 2016, Prasarana terminated the contract it awarded to Scomi Engineering — sparking the first Scomi Engineering lawsuit against Prasarana — after Prasarana alleged it had failed to deliver 10 sets of the new four-car trains, including seven sets for revenue service by Dec 31, 2015, which was stipulated in the second supplemental agreement.

Scomi Engineering, however, said it had delivered six new trains, five of which were in successful revenue service. And that despite extensive delays and the ongoing dispute, it said 83% of the project works had been completed.