Fincantieri Sues Citing $100M in Damages from Fraudulent Fire Insulation
Italian shipbuilder Fincantieri is suing the manufacturer of fire insulation panels it used in the construction of three cruise ships and eight military ships, alleging fraud and misrepresentation that it says caused over $100 million in economic damages as well as reputational harm. The shipbuilder is alleging that Paroc Group, which is owned by Owens Corning, obtained safety certificates under “false pretenses by submitting altered materials for testing,” and conspired to maintain the fraud and sell a defective product which endangered safety.
Paroc Group, which was acquired by Owens Corning in 2018, launched a new line of stonewool insulation products sold as fire safety panels for marine applications. The Navis line was promoted as a lighter-weight, fire-safe marine insulation for use in steel decks and bulkheads. Fincantieri reports that it and its subcontractors selected and began using the product in 2019 for both cruise ships and military vessels that required materials meeting the Class A-60 fire integrity standard.
A-60 is the highest-rated fire insulation material under the SOLAS regs and is designed to prevent the transfer of heat for a minimum of 60 minutes. It is typically used for steel bulkheads, such as with galleys or casings, to provide protection from the potential to transfer heat and fire aboard a vessel.
Fincantieri reports that it relied on the certification and the repeated assurances of the supplier for the integrity of the material. In 2023, a competitor of Owens Corning Paroc reported that it tested certain of the Navis products and found that they “did not in fact meet the fire integrity standards for Class A-60 products.” The competitor lodged a complaint, and independent testing by the Danish Institute of Fire and Security Technology in April 2023 confirmed the products were not compliant.
They allege in the suit that it required a deliberate effort to undermine the initial testing process leading to the certification. They further state that the fraud required manipulation of testing materials and repeated and coordinated falsification.
The product was recalled in May 2023, but Fincantieri writes in the lawsuit complaint that it “did not advise or instruct that any remedial actions be taken for completed vessels in service.” The Navis line was discontinued as of May 31, 2024.
Fincantieri identified that it used the product on a total of 11 ships, including the already delivered Discovery Princess, which went into service for Carnival Corporation’s Princess Cruises in March 2022, as well as two luxury cruise ships, Explora I and Explora II, under construction for MSC’s Explora Journeys. The other eight vessels, including two under construction, are military vessels.
Delivery of MSC’s Explora I was postponed for 21 days due to the need to replace the defective products. Fincantieri says it also delayed the delivery of Explora II in 2024 and Carnival Corporation’s Sun Princess being built for Princess Cruises.
Fincantieri says that it is incurring over $100 million in harm. It says the direct costs include to investigate, repair, and remediate affected vessels, as well as increasing construction costs. It also incurred liquidated damages and other costs resulting from delayed deliveries.
The suit was filed in U.S. District Court in Ohio, where Owens Corning is headquartered. The corporation, a leader in building materials, was involved in more than 20 years of litigation related to the use of asbestos in shipbuilding materials before filing for bankruptcy and settling those suits in 2000.