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China Sunergy and REC Wafer have spent the last few years to-ing and fro-ing between courts in Norway and China in the hope of reaching a settlement over the termination of a supply contract by REC Wafer.
China Sunergy, a specialized solar cell and module manufacturer has announced that it has agreed to settle all disputes with REC Wafer and that REC Wafer has released the US$50 million bank guarantees.
Stephen Cai, CEO of China Sunergy commented, "We are glad to put this dispute with REC Wafer behind us and China Sunergy is satisfied with the settlement terms. The released US$50 million bank guarantees go straight back into our working capital and will strengthen the company's ability to weather the current tough solar market."
In 2009, REC Wafer entered into an agreement with China Sunergy to supply it with 156mm wafers over a seven-year period from early 2009 to 2015. China Sunergy paid in excess of US$400 million for the wafers.
The complication occurred when REC Wafer dissolved REC’s SiTech unit, with which China Sunergy had the original contract, resulting in REC Wafer's being served a writ for claiming rights to the contract. In 2009, these events were commonplace due to the dramatic drop in polysilicon prices and an increase in poly supply changing the market's supply-demand dynamics. REC Wafer then cancelled the contract following a non-payment by China Sunergy.
2010 saw both companies appeal against rulings passed in their respective countries. In parallel to the main dispute, China Sunergy was granted an injunction with regard to a US$50 million bank guarantee raised according to the contract between China Sunergy and the dissolved REC SiTech AS. The Court of Appeal decided that the injunction was to remain in force until the Court of Appeal passed the judgment on the main case in June 2011.
On October 28, China Sunergy made a settlement payment to REC Wafer. The settlement amount is not being disclosed.