SolarWorld set to lose US$770 million Hemlock case

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The judge has now called on Hemlock to propose a “judgement listing the amount of accrued damages” before 22 July. Source: SolarWorld.

SolarWorld looks set to lose its dispute in US courts with Hemlock Semiconductor.

A decision issued on Wednesday evening is in favour of the polysilicon supplier, which alleged breach of supply contracts worth US$770 million, with an official 1st instance ruling now expected.

The judge has called on Hemlock to propose a “judgement listing the amount of accrued damages” before 22 July and indicates the his intention to file . 

SolarWorld has stressed that the decision is not a final judgement but does mean that there will be no jury trial. The judge alone will make a decision on the case.

“A date on which such judgement will be announced has not yet been set by the court,” SolarWorld said in a statement.

“If the court should decide in favor of the plaintiff, SolarWorld Industries Sachsen GmbH will appeal against this judgment of the first instance in the United States.

“Inspite of this court decision, SolarWorld AG continues to assume that Hemlock will not be able to actually enforce any claims in Germany. There are anti-trust concerns under European law regarding the effectiveness of the underlying supply contracts. If a potential ruling by a US court was to be enforced in Germany, Hemlock would have to initiate a recognition process at German courts according to Sec. 722 (1) of the German code of civil procedure,” the company said.

Last month the judge declined a request by SolarWorld to reopen oral evidence gathering, instead giving it the chance to submit no more than 10 pages of written evidence. The move was interpreted by some in the industry as a sign that the judge was minded to find against SolarWorld, an interpretation that would seem consistent with the granting of summary judgement.

The judge’s ruling includes a detailed discussion on how to calculate the scale of damages taking ito account that the contract was on a take-or-pay basis and that Hemlock did save some costs by not producing the polysilicon it would have sold to Deutsche Solar.

“Deutsche Solar has not carried its burden of demonstrating that the provisions are actually penalties and the fact that the contracts are take-or-pay supports the indeterminacy of damages at the time the Supply Agreements were formed. Hemlock will be awarded the damages it requests,” the ruling states.

Trade

Last month, PV Tech reported that Swedbank had told investors that a ruling in favour of Hemlock would increase the chances of a settlement in the trade case. This was confirmation of industry speculation that Hemlock was willing to alter its position in return for SolarWorld dropping its trade complaints in the US. Hemlock would then benefit from China dropping its actions on US-produced polysilicon.

Court documents show that this was indeed the case as early as 2012. Dow Corning VP Joseph Rinaldi, writing in an email to Solarworld chief Frank Asbeck, said that if he signed a letter to the US department of trade dropping the case, the status of the legal action would change:

“You have my word that if you sign [the letter] we can have productive discussion tomorrow and I will be prepared [to] offer you a [sic] multistep relief you need, including some immediate relief,” SolarWorld was told.

A letter was indeed sent by Solarworld with some changes and ultimately, negotiations broke down.

The companies remain in contact however.

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