Expedite Chemical Shipping Ltd. ships toxic chemicals around the world for use in research. In May 2015,

Question:

Expedite Chemical Shipping Ltd. ships toxic chemicals around the world for use in research. In May 2015, one of its transport vehicles was involved in an accident causing a chemical spill near a residential development. Expedite Chemical Shipping is being sued for $7,000,000 by the local residents who claim their health is at risk as a result of the chemical spill. The lawyer acting on behalf of Expedite Chemical Shipping is arguing that the company requires its customers to sign a waiver stating that the customer assumes responsibility for properly sealing all transportation containers and releases Expedite Chemical Shipping from all liability in the event of chemical leakage.
In a private conversation between the lawyer and the CEO of Expedite Chemical Shipping, the lawyer suggests that the company has a good case but four similar cases recently settled in favour of the injured party (the local residents), and the courts are leaning toward protecting the environment. If Expedite Chemical Shipping loses, the lawyer believes the company will have to pay 50% of the claim based on the four recent court cases. Expedite Chemical Shipping prepares their using IFRS.
Does this lawsuit meet the criteria of a provision or a contingent liability? Explain your answer.
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