Wind energy in China: Sinovel versus AMSC

Sinovel and AMSC, a global solutions provider serving wind turbines and grid leaders, respectively confirmed Wednesday that the Beijing Arbitration Commission opened a court session last Friday to hear a contractual arbitration between Sinovel and AMSC.

Although a final verdict has yet to be reached, Sinovel is optimistic about the final outcome.

"The core of the arbitration lies in whether the goods supplied by AMSC have quality problems and whether they meet the standards stipulated in the contracts. We have evidence showing the goods do not meet the contractual standards," said Tao Gang, Sinovel’s vice president.

AMSC Vice President Jason Fredette responded, saying "we are pushing forward with our arbitration and civil cases in China as we seek fair compensation for the contracts that our former customer has broken and the intellectual property they have stolen."

"Arbitration proceedings are now underway, and we expect our copyright and trade secret cases to be heard later this year. We have gotten assurance from the Chinese government that this will be a fair process, and we continue to expect that the actions we are taking will lead to a favorable outcome for our company," Fredette said.

Legal sources say that such a case would normally last for several months, as it involves large-sum compensation and multiple legal disputes relating to many contracts and projects.

This is the second case in a series of legal maneuvers AMSC has taken against Sinovel concerning intellectual property infringement.

In early February, the First Intermediate People’ s Court of south China’ s Hainan Province chose to reject a lawsuit by AMSC against Sinovel over computer software copyright infringement.

Sinovel was AMSC’s largest client. Sinovel accounted for 67 percent, 70 percent and 68 percent of AMSC’ s sales in 2008, 2009 and 2010, respectively.

In March 2011, Sinovel refused to accept a component shipment from AMSC, saying the shipment did not conform to contractual stipulations or China’s grid-access requirements.

AMSC then filed for arbitration and lodged three civil lawsuits in Chinese courts against Sinovel, alleging the illegal use of its intellectual property and also asking Sinovel to accept and pay for all contracted products. In total, AMSC is seeking to recover more than 1.2 billion U.S. dollars for contracted shipments and damages from Sinovel.

According to AMSC’ s third-quarter report for the 2011 fiscal year, released on Feb. 10, AMSC had spent 6.5 million U.S. dollars to cover litigation costs for its legal action against Sinovel.

In September 2011, Sinovel filed a counterclaim with the Beijing Arbitration Commission, asking the arbitration tribunal to reject all arbitration claims made by AMSC and to order AMSC to pay Sinovel 1.2 billion yuan (191 million U.S. dollars) to compensate for economic losses resulting from breach of contract.