Damen seeks hundreds of millions from Germany after frigate order cancellation

Dutch shipbuilder Damen is seeking hundreds of millions of euros in damages from the German government after Defense Minister Boris Pistorius canceled an order for six F126 frigates at the end of June, the company says.

The cancellation came as a complete surprise to Damen, according to the company. Pistorius justified the move by citing years of expected delays and escalating costs that created what he called "immeasurable" risks.

The original contract had been awarded to Damen. A year ago, however, Germany shifted the role of main contractor to the German shipbuilder NVL, a subsidiary of Rheinmetall, while keeping Damen involved in the project. Pistorius ended Damen's participation last month.

Germany now plans to order eight frigates from ThyssenKrupp Marine Systems instead. The price for those vessels is expected to total 11.6 billion euros, compared with projected costs of up to 18 billion euros for the six F126 frigates.

Damen has promised to carry out work on German shipyards in cooperation with German, French, and other European suppliers. Parts of the ships have already been completed for assembly but will now go unused, which the company says accounts for most of the damage.

In a letter to Pistorius and other officials, Damen's lawyer rejected the minister's reasoning, according to Der Spiegel. The lawyer stated that the contract was terminated "due to a hasty and arbitrary political decision and without legal basis." The lawyer added that there had been no "prior notification of a deadline, warning or similar reprimand."

As a result, the lawyer argued, Damen is entitled to compensation.

The Financial Times reported the potential compensation amount in the hundreds of millions of euros, though Damen itself has not confirmed the figure.