A dispute arose following a refinery acquisition, when the buyer identified defects in a storage tank and alleged the condition resulted from non-compliant inspections and repairs. Baker & O’Brien applied its expertise in terminal and refinery operations, tank integrity, industry standards, and asset condition assessments to evaluate technical and operational issues. We prepared expert reports and provided testimony during arbitration addressing the tank condition, repair history, and impacts to refinery operations.

During a refinery purchase-and-sale transaction, buyers typically rely on seller-provided maintenance records and asset condition information to assess the condition of major equipment before closing. These representations often become contractual commitments that may continue after the transaction is completed.

In this matter, prior to finalizing the transaction, the buyer identified defects in a primary storage tank that required significant repairs and environmental remediation. The buyer alleged that the tank’s condition reflected deficiencies in prior inspections and repairs and claimed that the seller had breached representations and warranties contained in the purchase and sale agreement. The seller disagreed, maintaining that the tank condition resulted from normal wear and tear and that prior inspection intervals and repair activities complied with applicable standards and industry practices.

Baker & O’Brien was retained to evaluate technical issues related to the tank's condition, including applicable standards and codes, historical inspection records, and prior repair activities. Our team assessed whether the inspection and maintenance history was consistent with accepted industry practices for steel storage tanks, and evaluated the technical basis for the parties’ differing interpretations of the tank’s condition.

In addition to evaluating tank integrity issues, Baker & O’Brien assessed the operational impact associated with taking the tank out of service for repairs. This included evaluating the tank’s importance to refinery operations, potential impacts during extended outages, and the economic consequences of vessel delays and exposure to demurrage.

Baker & O’Brien applied its experience in terminal and refinery operations, steel storage tank construction and maintenance, pipeline and vessel operations, and industry standards governing inspection and repair practices. This combination of technical and operational knowledge enabled the team to evaluate both the asset’s condition and the potential consequences to refinery operations.

Baker & O’Brien prepared an expert and a rebuttal report addressing the opposing expert’s opinions. During the arbitration hearing, our expert presented testimony regarding the technical evaluation of the tank condition, inspection practices, repair history, and operational impacts.