United States District Court, D. New Jersey
Gabriel Hertzberg, Esq. CURTIS MALLET-PREVOST COLT &
MOSIE LLP Attorney for Plaintiff
Lurie, Esq. LINKLATERS LLP Attorney for Defendant
HONORABLE JEROME B. SIMANDLE, DISTRICT JUDGE.
case involves a business dispute between Plaintiff, an
engineering, procurement, and commissioning contractor, and
Defendant, a manufacturer of (inter alia) steam condensers.
The parties entered into a contract for the purchase by
Plaintiff of steam condensers manufactured by Defendant.
After certain business disputes, described in more detail
infra, Plaintiff filed the instant suit, alleging defamation
by Defendant to Plaintiff's client and business partners.
before the Court is Defendant's Motion to Dismiss [Docket
Item 12]. The principal issue to be decided is whether the
arbitration clause contained in the contract between the
parties mandates the dismissal of this suit and a referral to
arbitration in its stead. For the reasons described herein,
the Court concludes that it does, and will grant
Defendant's Motion to as it relates to the Arbitration
Clause, and will stay the case pending arbitration.
Tecnimont S.p.A. is an engineering, procurement and
commissioning contractor, based in Milan, Italy, that engaged
in work on a project to build a large thermoelectric power
plant in Punta Catalina, Dominican Republic (the “Power
Plant”). [Docket Item 1 at 2.] Plaintiff's client
and the owner of the Power Plant is Corporación
Dominicana de Empresas Eléctricas Estales
[“CDEEE”). Id. at 5. On April 14, 2014,
CDEEE, Plaintiff, and Plaintiff's business partners,
Constructora Norberto Odebrecht and Ingenieria Estrella,
S.R.L. (collectively the “Consortium”), executed
an Engineering, Procurement and Construction Contract (the
“EPC Contract”) that governs the design and
construction of the Power Plant. Id. Plaintiff
estimates that the value of the EPC Contract is worth
hundreds of millions of dollars. Id. Pursuant to the
EPC Contract, Plaintiff is responsible for the design,
construction, and commissioning of two Steam Condensers for
the Power Plant. Id.
October 29, 2014, Plaintiff placed an order (“Purchase
Order”)[Docket Item 12-2] with Defendant, Holtec
International, a manufacturer of heat transfer equipment, to
purchase a pair of steam condensers
(“Condensers”) for the Power Plant. [Docket Item
1 at 2.]
the Purchase Order, Defendant was to deliver the first fully
tested Condenser in October 2015 and the second in December
2015. Id. However, Defendant did not manufacture the
Condensers. Instead, Defendant subcontracted the manufacture
of the Condensers to Godrej, a firm located in Mumbai, India.
Id. Godrej had never manufactured the steam
condenser of the type required for the Power Plant, so
Defendant was supposed to provide qualified, skilled
personnel from the United States to supervise and assist
Godrej during the manufacturing process. Id.
Plaintiff asserts that delivery of the Condensers was
significantly delayed due to problems with Defendant's
supply chain and gross incompetence in connection with its
subcontracting to Godrej. Id. at 6. Plaintiff
alleges that as a result of Defendant's gross
incompetence, the first Condenser was not delivered until
October 2016 - a year behind schedule. Id. Defendant
tendered the second Condenser on November 2016. Id.
asserts that the delay in tendering of the Condensers was due
to a “Change Order.” The Purchase Order is
governed by the General Purchase Conditions
(“GPC”). [Docket Item 12-2 at 38.] Article 5.1 of
the GPC confers the right on the Respondent (Plaintiff
Tecnimont S.p.A.) to request the Claimant (Defendant Holtec
International) implement changes with respect to any goods
and/or works supplied under the Purchase Order. Article 5.2
of the GPC provides that in the event of such a change, an
equitable adjustment to the relevant price and/or time of
performance mutually satisfactory to both Parties shall be
discussed and negotiated by the Parties. Article 5.2 of the
GPC requires the Respondent Tecnimont S.p.A. to make any such
change request in the form of a “Change Order.”
[Docket Item 12-2 at 8.]
asserts that on May 2015, Plaintiff requested an alteration
of the design provided for under the Purchase Order.
Id. Defendant states that Defendant notified
Plaintiff that the request changes would jeopardize the
agreed performance schedule and that Plaintiff failed to
submit a Change Order as required by Article 5.3 of the GPC.
Id. Defendant argues that Plaintiff “attempted
to shift responsibility for the delays” on to Defendant
by asserting that Defendant's management of the
manufacturing process at Godrej was inadequate. Id.
As a result of the dispute, Defendant alleges, Plaintiff has
failed to comply with its obligations to settle four invoices
issued by Defendant pursuant to the Purchase Order.
33.1 of the GPC states that “Any dispute between the
PARTIES in connection with or arising out of the PURCHASE
ORDER which cannot be settled amicably shall be finally
settled by means of the proceeding specified in the SPECIAL
PURCHASE CONDITIONS[.]” [Docket Item 12-2 at 63.]
Article 32 of the GPC states that “The PURCHASE ORDER
shall be governed by and construed in accordance with the
Laws of the Country specified in the [Special Purchase
Conditions (‘SPC')].” Id. Article 32
of the SPC states that the Purchase Order shall be governed
by the Law of England and Wales. [Docket Item 12-2 at 76.]
33.1 (the “Arbitration Clause”) of the SPC
provides as follows:
Any question, dispute, or difference arising from or
connected with the PURCHASE ORDER which cannot be settled in
accordance amicable shall be finally settled by means of
Arbitration in London.
Id. (emphasis in original).
October 11, 2016, the parties made an Amendment Agreement.
Id. at 126. Within that agreement, Article 8 of
Amendment No. 3 (“Claim Waiver”) provides in
pertinent part: “With the exception of the remaining
payment obligations of TCM and the remaining performance
obligations of Holtec under the Purchase Order, the Parties
hereby acknowledge and agree to release the other party from
any and all claims, counterclaims, demands, rights or causes
of action of any kind . . . ” Id. at 128.
January 12, 2017, Defendant sent a letter to CDEEE,
Plaintiff's client. The letter was circulated to the
Consortium. Id. The letter generally characterizes
Plaintiff as difficult to work with and specifically refers
to a “myriad of non-payment, contract amendment and
change order issues” associated with working with
Plaintiff on the delivery of the Steam Condensers. [Docket
Item 1-1 at 2.]
receipt of the letter, various members of the Consortium have
advised Plaintiff to resolve the situation with ...