Original Article: https://globalarbitrationreview.com/settlements/us-korean-fuel-cell-dispute-settles#:~:text=A%20US%20fuel%20cell%20manufacturer,arbitrations%2C%20following%20a%20successful%20mediation.
A US fuel cell manufacturer has settled a billion-dollar technology dispute with South Korea’s largest private energy producer that had been playing out in five ICC arbitrations, following a successful mediation.
Connecticut-based FuelCell Energy announced on 27 December that it has entered into a settlement agreement with Korea’s POSCO Energy and a subsidiary. The agreement has been published in a stock exchange ling.
The settlement brings to an end three ICC claims led by POSCO and two brought by FCE, in which claims and counterclaims had exceeded US$1 billion.
Korean counsel appeared in all five cases, POSCO using Kim & Chang and FuelCell retaining Shin & Kim. In the two cases in which it was claimant, FCE also retained Wiley Rein in Washington, DC; while POSCO used Arnold & Porter in Seoul, San Francisco, Washington, DC and Shanghai.
The dispute arose from a series of technology transfer and licensing agreements signed between 2007 and 2012 that gave POSCO exclusive rights to manufacture and sell FuelCell’s proprietary “SureSource” fuel cell technology in Asia. The fuel cells convert by-products into electricity without harmful emissions and are used in renewable power plants.
FuelCell accused POSCO of breaching their licence agreements by spinning off its fuel cell business into subsidiary Korean Fuel Cell (KFC) in 2019. The following year, POSCO launched three ICC arbitrations seeking a combined US$3.3 million for breach of warranty over alleged defects at its facility in Pohang on South Korea’s east coast. It also obtained provisional attachments against FuelCell revenues in the Korean courts.
Three different tribunals were formed to hear those ICC cases, which were seated in Singapore and Seoul. POSCO appointed Chiann Bao of Arbitration Chambers as arbitrator in all three cases.
The first panel was chaired by Anneliese Day QC of Fountain Court and featured Peter Rees QC of 39 Essex Chambers; the second was chaired by Philippa Charles of Stewarts Law and included Canadian Craig Chiasson of Borden Ladner Gervais; and the third featured Dan Tan as president and Ekwan Rhow of Los Angeles rm Bird Marella as co-arbitrator.
Later in 2020, FuelCell said it terminated the licence agreements and led two further ICC arbitrations, seeking US$200 million from POSCO and KFC. It sought a declaration that POSCO’s licence to market its products in Asia was void. The US company said it retained outside counsel on a contingency basis and that counsel entered into an agreement with a litigation nance provider to fund the arbitration.
POSCO led counterclaims in both those cases exceeding US$880 million, alleging that FuelCell had misrepresented the capabilities of its technology to induce it to enter the licence agreements and had failed to turn over know- how sufficient for the Korean company to operate its business. It also sought a declaration that the licence agreement remained in effect.
Two tribunals were formed to hear those claims. One panel was seated in Singapore and consisted of Albert Jan van den Berg as chair, US judge Rosemary Barkett of the Iran-US Claims Tribunal as FuelCell’s appointee and Duncan Matthews QC of Twenty Essex, appointed by POSCO.
James Castello of King & Spalding chaired the final panel, seated in London, which also included Barkett and Julian Lew QC of Twenty Essex as POSCO’s nominee.
POSCO also sued FuelCell in the Southern District of New York for more than US$1 million but the case was summarily dismissed. The Delaware Chancery Court also denied a statutory demand by POSCO to inspect FuelCell’s books and records.
The parties’ settlement follows a Singapore International Mediation Centre process conducted by mediator George Lim SC.
FuelCell says POSCO agreed to dismiss its claims with prejudice and that all disputes affecting market access are finally settled.
The company says the settlement agreement “conrms its exclusivity” to sell its own technology throughout Asia. The licence agreements have been amended rather than terminated, and POSCO will retain the right to service existing companies.
The US company will withdraw its objection to POSCO’s spin-off and the settlement also contemplates KFC ordering 22 additional SureSource modules from FuelCell worth a total of US$66 million.
Jason Few, president of FuelCell, says: “We are extremely pleased to have reached a favourable agreement with POSCO which conrms our access to the Asian market.” He says it also clears the way for FuelCell to resume supporting “the growing energy transition within South Korea as well as the broader Asian marketplace.”
Gregory Williams of Wiley Rein, counsel to FuelCell, says: “We are glad that FuelCell Energy was able to conrm its exclusive rights to the critical Korean and wider Asian markets moving forward.”
The Korean company said in a statement: “POSCO is pleased that the parties were able through mediation to reach an amicable settlement and achieve a mutually benecial outcome.”
In the rst arbitration (seated in Singapore)
Tribunal
Anneliese Day QC (UK) (chair)
Peter Rees QC (UK) (appointed by FCE) Chiann Bao (US) (appointed by POSCO)
In the second arbitration (seated in Singapore)
Tribunal
Philippa Charles (Ireland) (chair)
Craig Chiasson (Canada) (appointed by FCE) Chiann Bao (US) (appointed by POSCO)
In the third arbitration (seated in Seoul)
Tribunal
Dan Tan (Singapore) (chair)
Ekwan Rhow (US) (appointed by FCE) Chiann Bao (US) (appointed by POSCO)
Counsel to POSCO Kim & Chang
Saeyoun Kim, Sungjean Seo, Joel Richardson, Seokchun Yun and HyeSung Kim, Theodore Weisman and Kang Kim in Seoul
FCE Counsel Shin & Kim
Partners Jae Min Jeon and Youngwon Yoon and senior foreign attorney Rockey Yoo, foreign attorney Jihyuk Song, associate Ja Young Kim, and Kimberly Kim in Seoul