Court finds Helsinki had right to scrap Siemens contract in metro dispute

HELSINKI (Reuters) - The city of Helsinki had the right to scrap its contract with Siemens <SIEGn.DE> over the failed automation of the Finnish capital's metro, but both sides broke agreements, a Helsinki district court ruled on Tuesday in a long-running legal dispute.

The dispute dates back to Helsinki's decision in 2008 to pick the German technology firm to automate its existing metro network, in order to make it faster and driverless by the time a new westward line to neighbouring Espoo was added in 2017.

But the project quickly ran into trouble, with both sides accusing each other of delays and cost overruns, leading Helsinki's public transport company HKL to eventually ditch the whole contract in 2015.

The failed automation plan has resulted in crowded conditions on the capital region's metro at peak hours after the new line opened and the problem is expected to worsen in the coming years as increasing the frequency of services is not possible without automated doors.

In its interim decision on Tuesday, the court made no decision on the roughly 200 million euros ($220 million) of damages both sides are seeking from each other.

It said Helsinki had the right to cancel the order, but found the city also broke the agreement by continuing to use parts Siemens had already delivered to it.

The court also said HKL did not have the right to cancel a separate agreement over the automation of a metro depot, as it did.

Several of the claims the city has made over technical changes required for the existing metro network were not included in the original contract and should have been treated as additional orders, the court said, in Siemens' favour.

"HKL is extremely pleased that the district court's ruling on the question of right to cancellation has now been delivered," HKL's chief executive Ville Lehmuskoski said in a statement.

Siemens said the verdict did not reflect its view "for all parts of the dispute" and reiteraited it would have had the necessary know-how and resources to finish the project.

"The testimonies stated clearly that HKL's understanding of contract's contents was incorrect and that HKL tried to include in the project matters that exceeded Siemens' delivery terms," Siemens Mobility's chief executive Juha Lehtonen said in a statement.

Lehtonen added the most important issues had already been resolved by the time Helsinki scrapped the contract in 2015.

The district court will continue to hear the case to decide on the damages.

(Reporting by Anne Kauranen; Editing by Mark Potter and Alison Williams)