Harland & Wolff shipyard in Belfast is facing further uncertainty after the High Court in London yesterday overturned an arbitration award for more than £20 million sterling (€33.45 million) against a customer.

Mr Justice Tomlinson allowed an application by BMBF over the construction of a shipbuilding contract which means that it is under no obligation to pay any amount to the yard.

Lawyers for Harland & Wolff Shipbuilding and Heavy Industries Ltd, which claimed that 500 jobs hung on the decision, immediately indicated it would appeal the ruling as soon as possible.

The judge said the arbitration award, of September this year - that the buyer must pay the yard $27 million and £3.3 million within 14 days - must be set aside.

The dispute arose over the construction and delivery of a deepwater drill ship, known as the Glomar Jack Ryan.

BMBF, which took possession of the vessel in August and sailed it to Texas, alleged there was a list of items which needed rectification by the builder before it could be in a deliverable state.

Harland & Wolff contended that the vessel was ready for delivery, or alternatively was ready apart from items for which the owner was responsible.

The arbitration turned on a clause in a March 1998 contract which, the arbitrators concluded, brought about the result that the buyer's right to take possession of the vessel in its unfinished state carried with it an obligation to complete the vessel in accordance with the contract and specifications.

It also concluded that the buyer exercising his entitlement would remain liable to pay to the builder such instalments of the contract price as were unpaid at the date when possession was taken.

The owner argued that this was a novel construction.

But Harland & Wolff said that it could not have been the intention of the parties that the owner should be able to take possession of a vessel which was 98 per cent complete and yet escape liability to pay the final, delivery, instalment which comprised 20 per cent of the contract price.

The judge said he had reached the "clear view" that the arbitrators' analysis was unsustainable.

Harland & Wolff, which was ordered to pay the costs of the court hearing, was granted permission to appeal.

The judge said the relevant question of construction was one of public importance.