THE legal spat between Sembcorp Marine (SembMarine) and Marco Polo Marine is now under arbitration, after efforts to resolve it through the senior management and mediation failed.

SembMarine said its subsidiary PPL Shipyard had on April 7 served a notice on Marco Polo Drilling, a subsidiary of Marco Polo Marine, to start arbitration proceedings. It has also, after that, received a notice from Marco Polo Drilling and Marco Polo Marine.

Marco Polo has alleged that SembMarine's PPL Shipyard had failed to comply with certain contractual obligations, and hence decided to terminate its contract. PPL Shipyard, which initially rejected the termination, took the same action after it said Marco Polo failed to pay a progress payment plus interest.

Both companies "referred the dispute to their senior management and to mediation but the dispute between the parties remains unresolved", SembMarine said in an update on Thursday morning.

The company added the issue is not expected to have any material impact on its net tangible assets and earnings per share for the current financial year.