Shipbuilder Fincantieri sues US supplier over faulty fire panels
Company allegedly sold ‘fraudulently represented’ and ‘unsafe’ products to Italian group causing over $100mn in damages
Italian shipbuilder Fincantieri is suing a US supplier after allegedly suffering more than $100mn in damages from “fraudulently” certified insulation panels for its ships.
According to a claim filed in Ohio last month, New York-listed Owens Corning’s Helsinki-based subsidiary Paroc sold “fraudulently represented and inherently unsafe” products to the Italian group, which it had fitted into several ships, including Switzerland-based MSC’s luxury cruise liner whose maiden voyage was delayed in 2023 because of the safety hazard.
Fincantieri was forced to halt delivery on ships after Owens Corning and Paroc recalled the faulty panels “to prevent potentially serious injury or death resulting from the sale and use of a defective and unsafe line of stonewool insulation products”.
In 2023 the Financial Times reported that the launch of MSC’s 248-metre-long Explora I luxury cruise ship had been delayed at the eleventh-hour because of faulty fire-resistant panels fitted to the vessel as well as to 45 others belonging to several global cruise operators. Paroc’s insulation panels were designed to resist flames for 60 minutes, as required by EU law, but the revelation that the panels had lost their safety certification following a retest had sent shockwaves across the industry.
Fincantieri claimed that Paroc, backed by its owner Owens Corning, had initially obtained the safety certifications “under false pretences by submitting altered materials for testing that had been manipulated to better meet the testing requirements” despite the products being different from those which were actually being manufactured for sale.
Tests carried out by Danish maritime authorities in 2023, following a complaint lodged by another panel manufacturer, caused Paroc to lose its safety certifications after it emerged the panels did not meet the standards and could only resist flames for 45 minutes.
Following the delayed launch of the MSC vessel, Fincantieri found another 10 of its ships, including several military ones, some of which already in service, that carried faulty insulation panels. Their replacement caused delivery delays and the payment of penalties, Fincantieri said in the complaint.
Delivery of the newly completed MSC cruise ship Explora I, which had been set for June 29, 2023, was postponed by 21 days while delivery of another ship Explora II was also postponed, according to the claim, resulting in significant costs and damages. The delay also led to the shipbuilder postponing the delivery of a third cruise ship, resulting in further costs and damages.
“In addition to causing over $100mn in economic damages, the product safety recall has caused Fincantieri to bear the brunt of considerable harm to its reputation and goodwill in the industry making headlines in the Financial Times and elsewhere after launches of new cruise ships that had already been booked [by customers] had to be delayed,” the shipbuilder said in the complaint.
It also alleged that Owens Corning did not instruct shipbuilders to put remedies in place for the faulty products fitted on the dozens of ships already in service in spite of the outcome of an independent risk assessment it had commissioned which highlighted the “high risk for safety on board the ships”.
Fincantieri declined to comment on the case. Owens Corning said it was aware of the legal matter involving Paroc, but declined to comment on pending litigation.