2.40.2  Abatement as sole remedy (clause 34.2)

Subject to the exceptions discussed below, Abatement of the Service Payments in accordance with the Payment Schedule will be the only financial Liability that Project Co will incur to the State for a Performance Failure. 

However, the principle above does not limit or affect any other right or remedy of the State under any State Project Document or at Law, including: 

•  Project Co's Liability for any cost or expenses incurred by the State in engaging a party to rectify a Defect;

•  the State's rights in respect of the event that caused or contributed to the Performance Failure (as opposed to the Performance Failure itself);

•  the State's rights under damage, Major Default and termination provisions;

•  any entitlement of the State to recover any Liabilities suffered or incurred by the State as a consequence of exercising its rights to step-in; and

•  any Liability that Project Co may have for a Liability (including reasonably foreseeable economic loss) suffered or incurred by the State as a result of any:

-  fraudulent, reckless, unlawful or malicious act or omission; or

-  Wilful Misconduct,

by Project Co to the extent that the State has not been fully compensated for that Liability by the Abatement of the Service Payment.

The rationale underpinning these exceptions is to preserve the State's rights in relation to Project Co's Liabilities under the Project Deed for losses which have not been included in the Abatement calculations. For instance, if a Performance Failure gives rise to a Default Termination Event, the State expressly preserves its right to terminate and Claim the Termination Payment for a Default Termination Event. 

Project Co gives acknowledgments in relation to the application, operation and enforceability of the Abatement regime. 

Further, the State may unilaterally waive any Abatement (in whole or in part).