Our client, a US based heavy equipment manufacturer, was a parts supplier in a major industry. The existing supply contract prevented our client from earning a profit on the equipment it produced. The contract was so onerous that our client was losing millions of dollars each year. The contract had been negotiated by previous management based on the expectation of a joint venture to introduce robotics and other cost-saving measures into the manufacturing process. However, the joint venture did not proceed. Relying on the arbitration clause in the supply agreement, each party advanced claims involving millions of dollars. A three-member panel of distinguished arbitrators was appointed. After nearly a year of negotiations and document exchange, the parties reached a resolution on the eve of the arbitration hearing. The settlement provided for a substantial increase in the prices to be paid to our client in exchange for increased production and faster timelines. A lengthy arbitration hearing was successfully avoided. Igor Ellyn, QC and Belinda Schubert acted as counsel on this matter.
