Case 1:12-cv-00232-SM Document 26 Filed 01/18/13 Page 1 of 8
UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
Hong Kong Juno International Company, Ltd., Plaintiff
v. Case N o . 12-cv-232-SM Opinion N o . 2013 DNH 008 Advanced RenewableEnergy Company, LLC, Defendant
O R D E R
Hong Kong Juno International Company, Ltd. (“Hong Kong
Juno”) and Advanced RenewableEnergy Company, LLC, (“ARC”) entered
into an agreement under the general terms of which ARC would sell
industrial sapphire crystal growing systems (furnaces) meeting
certain specifications to Hong Kong Juno, and would license Hong
Kong Juno’s use of relevant ARC technology. After a time, Hong
Kong Juno began to have some doubts about ARC’s ability to
perform and asked to visit its production facilities to see for
itself. ARC says it was not categorically opposed, but raised a
number of issues requiring negotiations, agreement, etc., before
any such visit could take place. Unsatisfied, Hong Kong Juno
filed this suit seeking, in the alternative, an order compelling
mediation and arbitration as provided in the agreement, o r ,
failing that, a declaration that the agreement is void or
voidable. Case 1:12-cv-00232-SM Document 26 Filed 01/18/13 Page 2 of 8
ARC acknowledges the mediation and arbitration provisions in
the agreement, and does not challenge their validity. Rather, it
seeks to avoid them, principally on grounds that, by filing this
suit and seeking alternative relief, Hong Kong Juno has waived
its contractual rights to mediation and arbitration. A hearing
was held, and after carefully considering the parties’ memoranda
and argument, the motion to compel mediation and arbitration
(document n o . 11) is granted.
Discussion
The Dispute is Subject to Mediation/Arbitration
The agreement between the parties is unambiguous in
providing, in Paragraph 2 2 , entitled “Further Assurances,” that:
At any time, and from time to time after Effective Date, each party will . . . take such additional actions as may be reasonably requested by the other party . . . to carry out the intent and purposes of this Agreement.
The agreement also provides for mediation and arbitration of
disputes arising under the agreement. Under paragraph 24.2, 1 a
1 24.2 Mediation. Except with respect to a claim for injunctive relief, which may be maintained a set forth in Section 2 5 , below, in the event that a party proposes to maintain a legal claim against the other party, prior to initiating arbitration proceedings with respect to such claim, the parties shall submit such claim (and all related claims and counterclaims) to non- binding mediation before a mutually agreeable mediator qualified to mediate disputes in Hong Kong. Such mediation shall be conducted in Hong Kong within forty-five (45) days of written
2 Case 1:12-cv-00232-SM Document 26 Filed 01/18/13 Page 3 of 8
party proposing to maintain a legal claim against the other is
first required to submit the claim (and related claims) to non-
binding mediation, within forty-five (45) days of written notice
of the claim. And, the parties agreed (paragraph 24.3 2 ) that
arbitration is the “sole and exclusive means of resolving any
dispute under or relating to the agreement.”3
notice of a claim and the principal management officers of the parties shall attend such mediation. No arbitration proceedings shall be brought until the parties have made a bona fide and good faith effort to mediate all disputes. 2 24.3 Arbitration. The parties hereby waive any right to institute a court or other dispute resolution proceeding and acknowledge that arbitration in accordance with this Article 24 is the sole and exclusive means of resolving any dispute hereunder or relating to this Agreement, except that the parties may initiate other formal proceedings to the extent necessary in order to avoid the expiration of any applicable limitations period, or as provided herein. All disputes shall be referred to the Hong Kong International Arbitration Centre for final and binding resolution under its rules and shall be held in Hong Kong by an arbitration board consisting of three arbitrators. Each party shall appoint one arbitrator and the two appointed arbitrators shall appoint a third arbitrator who shall serve as the chairman of the arbitration board. Each arbitrator shall be experienced in the sapphire production industry. Each party consents to service of process with respect to any such dispute by any method of notice specified herein. The decision of a majority of the arbitrators shall be final and binding on the parties, may be enforced by any court of competent jurisdiction and cannot be the subject of any appeal. The arbitrators shall not have the authority to award punitive or special damages (including any lost profits) and awards shall be consistent with the limitations on liability set out in this Agreement. In the absence of a contrary ruling by the arbitrators, each party shall pay its own costs and fees in connection with the arbitration. 3 The agreement permits “other formal proceedings to the extent necessary in order to avoid the expiration of any applicable limitations period, or as provided herein.” Paragraph 24.3. Paragraph 25 permits actions for injunctive relief in
3 Case 1:12-cv-00232-SM Document 26 Filed 01/18/13 Page 4 of 8
While the facts could have been more fully developed, it i s ,
nevertheless, plain that Hong Kong Juno, with reasons, sought
“further assurances” of ARC’s continuing ability to deliver
conforming goods under the agreement and that a genuine dispute
arose as to the “reasonableness” of its request of ARC to “take
. . . additional actions” to satisfy Hong Kong Juno’s concern
about a potential anticipatory breach of the agreement’s delivery
requirements. That dispute falls squarely within the mediation
(Paragraph 24.2) and arbitration (Paragraph 24.3) provisions and
entitles Hong Kong Juno to the resolution procedures described in
the agreement. ARC’s contention that mediation would be
“premature” because it is willing to talk is not persuasive. ARC
is free to present its positions and arguments regarding what
constitutes a reasonable request for further assurances during
mediation, and, if necessary, arbitration. But it cannot require
continuous negotiation i f , as is the case, Hong Kong Juno has
expressed its dissatisfaction and demanded mediation.
The court finds that: 1 ) there is a written agreement
between the parties to mediate and to arbitrate, and 2 ) the
dispute (Hong Kong Juno’s request for further assurances
regarding ARC’s ability to perform) falls squarely within the
limited circumstances, e.g., to enforce the terms of the agreements.
4 Case 1:12-cv-00232-SM Document 26 Filed 01/18/13 Page 5 of 8
scope of the mediation/arbitration agreement. See Gove v . Career
Systems Dev. Corp., 689 F.3d 1 , 4 (1st Cir. 2012); see also
Mitsubishi Motors Corp. v . Soler Chrysler-Plymouth, Inc., 473
U.S. 6 1 4 , 626 (“any doubts concerning the scope of arbitrable
issues should be resolved in favor of arbitration”) (quoting
Moses H . Cone Mem’l Hosp. v . Mercury Constr. Corp., 460 U.S. 1 ,
24-25 (1983). To the extent ARC argues that allowing Hong Kong
Juno to seek “further assurances” now with respect to its ability
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Case 1:12-cv-00232-SM Document 26 Filed 01/18/13 Page 1 of 8
UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
Hong Kong Juno International Company, Ltd., Plaintiff
v. Case N o . 12-cv-232-SM Opinion N o . 2013 DNH 008 Advanced RenewableEnergy Company, LLC, Defendant
O R D E R
Hong Kong Juno International Company, Ltd. (“Hong Kong
Juno”) and Advanced RenewableEnergy Company, LLC, (“ARC”) entered
into an agreement under the general terms of which ARC would sell
industrial sapphire crystal growing systems (furnaces) meeting
certain specifications to Hong Kong Juno, and would license Hong
Kong Juno’s use of relevant ARC technology. After a time, Hong
Kong Juno began to have some doubts about ARC’s ability to
perform and asked to visit its production facilities to see for
itself. ARC says it was not categorically opposed, but raised a
number of issues requiring negotiations, agreement, etc., before
any such visit could take place. Unsatisfied, Hong Kong Juno
filed this suit seeking, in the alternative, an order compelling
mediation and arbitration as provided in the agreement, o r ,
failing that, a declaration that the agreement is void or
voidable. Case 1:12-cv-00232-SM Document 26 Filed 01/18/13 Page 2 of 8
ARC acknowledges the mediation and arbitration provisions in
the agreement, and does not challenge their validity. Rather, it
seeks to avoid them, principally on grounds that, by filing this
suit and seeking alternative relief, Hong Kong Juno has waived
its contractual rights to mediation and arbitration. A hearing
was held, and after carefully considering the parties’ memoranda
and argument, the motion to compel mediation and arbitration
(document n o . 11) is granted.
Discussion
The Dispute is Subject to Mediation/Arbitration
The agreement between the parties is unambiguous in
providing, in Paragraph 2 2 , entitled “Further Assurances,” that:
At any time, and from time to time after Effective Date, each party will . . . take such additional actions as may be reasonably requested by the other party . . . to carry out the intent and purposes of this Agreement.
The agreement also provides for mediation and arbitration of
disputes arising under the agreement. Under paragraph 24.2, 1 a
1 24.2 Mediation. Except with respect to a claim for injunctive relief, which may be maintained a set forth in Section 2 5 , below, in the event that a party proposes to maintain a legal claim against the other party, prior to initiating arbitration proceedings with respect to such claim, the parties shall submit such claim (and all related claims and counterclaims) to non- binding mediation before a mutually agreeable mediator qualified to mediate disputes in Hong Kong. Such mediation shall be conducted in Hong Kong within forty-five (45) days of written
2 Case 1:12-cv-00232-SM Document 26 Filed 01/18/13 Page 3 of 8
party proposing to maintain a legal claim against the other is
first required to submit the claim (and related claims) to non-
binding mediation, within forty-five (45) days of written notice
of the claim. And, the parties agreed (paragraph 24.3 2 ) that
arbitration is the “sole and exclusive means of resolving any
dispute under or relating to the agreement.”3
notice of a claim and the principal management officers of the parties shall attend such mediation. No arbitration proceedings shall be brought until the parties have made a bona fide and good faith effort to mediate all disputes. 2 24.3 Arbitration. The parties hereby waive any right to institute a court or other dispute resolution proceeding and acknowledge that arbitration in accordance with this Article 24 is the sole and exclusive means of resolving any dispute hereunder or relating to this Agreement, except that the parties may initiate other formal proceedings to the extent necessary in order to avoid the expiration of any applicable limitations period, or as provided herein. All disputes shall be referred to the Hong Kong International Arbitration Centre for final and binding resolution under its rules and shall be held in Hong Kong by an arbitration board consisting of three arbitrators. Each party shall appoint one arbitrator and the two appointed arbitrators shall appoint a third arbitrator who shall serve as the chairman of the arbitration board. Each arbitrator shall be experienced in the sapphire production industry. Each party consents to service of process with respect to any such dispute by any method of notice specified herein. The decision of a majority of the arbitrators shall be final and binding on the parties, may be enforced by any court of competent jurisdiction and cannot be the subject of any appeal. The arbitrators shall not have the authority to award punitive or special damages (including any lost profits) and awards shall be consistent with the limitations on liability set out in this Agreement. In the absence of a contrary ruling by the arbitrators, each party shall pay its own costs and fees in connection with the arbitration. 3 The agreement permits “other formal proceedings to the extent necessary in order to avoid the expiration of any applicable limitations period, or as provided herein.” Paragraph 24.3. Paragraph 25 permits actions for injunctive relief in
3 Case 1:12-cv-00232-SM Document 26 Filed 01/18/13 Page 4 of 8
While the facts could have been more fully developed, it i s ,
nevertheless, plain that Hong Kong Juno, with reasons, sought
“further assurances” of ARC’s continuing ability to deliver
conforming goods under the agreement and that a genuine dispute
arose as to the “reasonableness” of its request of ARC to “take
. . . additional actions” to satisfy Hong Kong Juno’s concern
about a potential anticipatory breach of the agreement’s delivery
requirements. That dispute falls squarely within the mediation
(Paragraph 24.2) and arbitration (Paragraph 24.3) provisions and
entitles Hong Kong Juno to the resolution procedures described in
the agreement. ARC’s contention that mediation would be
“premature” because it is willing to talk is not persuasive. ARC
is free to present its positions and arguments regarding what
constitutes a reasonable request for further assurances during
mediation, and, if necessary, arbitration. But it cannot require
continuous negotiation i f , as is the case, Hong Kong Juno has
expressed its dissatisfaction and demanded mediation.
The court finds that: 1 ) there is a written agreement
between the parties to mediate and to arbitrate, and 2 ) the
dispute (Hong Kong Juno’s request for further assurances
regarding ARC’s ability to perform) falls squarely within the
limited circumstances, e.g., to enforce the terms of the agreements.
4 Case 1:12-cv-00232-SM Document 26 Filed 01/18/13 Page 5 of 8
scope of the mediation/arbitration agreement. See Gove v . Career
Systems Dev. Corp., 689 F.3d 1 , 4 (1st Cir. 2012); see also
Mitsubishi Motors Corp. v . Soler Chrysler-Plymouth, Inc., 473
U.S. 6 1 4 , 626 (“any doubts concerning the scope of arbitrable
issues should be resolved in favor of arbitration”) (quoting
Moses H . Cone Mem’l Hosp. v . Mercury Constr. Corp., 460 U.S. 1 ,
24-25 (1983). To the extent ARC argues that allowing Hong Kong
Juno to seek “further assurances” now with respect to its ability
to deliver systems that meet contractual specifications later
would undermine other contractual provisions setting dates by
which performance must be met is an issue that, itself, is
subject to mediation and arbitration under the agreement — for it
directly relates to the proper scope of the mediation/arbitration
clauses.
Hong Kong Juno Did Not Waive its Contractual Right to Mediation/Arbitration
Finally, ARC says that by filing suit in the form it did —
seeking to enforce the mediation/arbitration agreement, but also
seeking alternative relief, should it fail to obtain an order to
compel — Hong Kong Juno waived its contractual right to have
disputes under the agreement resolved through non-binding
mediation and, if necessary, binding arbitration.
5 Case 1:12-cv-00232-SM Document 26 Filed 01/18/13 Page 6 of 8
The court of appeals has “‘repeatedly held that a party may,
by engaging in litigation, implicitly waive its contractual right
to arbitrate.’” Creative Solutions Group, Inc. v . Pentzer Corp.,
252 F.3d 2 8 , 32 (1st Cir. 2001) (quoting Navieros Inter-
Americanor v . N/V Vasilla Express, 120 F.3d 3 0 4 , 316 (1st Cir.
1997). But, to prevail, the party asserting waiver must show
prejudice. Id.; Menorah Ins. C o . Ltd. v . INX Reinsurance Corp.,
72 F.3d 2 1 8 , 221 (1st Cir. 1995).
The factors to be considered in determining whether a waiver
has occurred include whether the party has participated in
litigation or taken other action inconsistent with his
contractual arbitration rights; whether the “litigation machinery
has been substantially invoked and the parties were well into
litigation efforts before an intention to arbitrate was
communicated”; whether there was “a long delay” in seeking
enforcement of the right to arbitrate; whether judicial discovery
procedures not available in arbitration have been employed; and
whether the party asserting waiver was misled or prejudiced by
any delay. Creative Solutions, 252 F.3d. at 32 (quotation
omitted).
None of the relevant factors counsels in favor of finding a
waiver by Hong Kong Juno. The litigation was initiated for the
6 Case 1:12-cv-00232-SM Document 26 Filed 01/18/13 Page 7 of 8
principal purpose of enforcing the mediation and arbitration
provisions. ARC was hardly misled or prejudiced — it cannot
possibly have thought Hong Kong Juno had embarked upon a
litigation strategy in lieu of arbitration. The suit is in aid
o f , not inconsistent with, Hong Kong Juno’s arbitration rights.
The litigation machinery has hardly been “substantially invoked”
— a motion to compel was heard and no other activity of substance
has occurred (except that generated by ARC itself — e.g., filing
counterclaims, e t c . ) . There has been no delay in seeking
arbitration — as is self-evident from the nature of the suit to
compel arbitration (and, indeed, ARC’s own claim that mediation
is “premature”).
This is simply not a case in which waiver can be found on
any reasonable grounds — unless it can be said that instituting
litigation to compel contractual arbitration rights can somehow
operate to waive those very rights. Under this agreement, and
under these circumstances, it is plain that Hong Kong Juno has
not waived its contractual rights to mediation and, if necessary,
arbitration of disputes arising under or related to the
agreement.4
4 The parties do not suggest that Hong Kong law, which controls, would lead to any difference in result and the court assumes that to be the case.
7 Case 1:12-cv-00232-SM Document 26 Filed 01/18/13 Page 8 of 8
Conclusion
ARC is hereby ordered to mediate the pending dispute between
the parties related to the further assurances requested by Hong
Kong Juno under the agreement, in accordance with the terms of
the agreement. See 9 U.S.C. § 4 . The case is stayed. The Clerk
shall administratively close the case, subject to reopening at
the request of either party, as appropriate, following mediation
and/or arbitration.
SO ORDERED.
Steven J. McAuliffe Jnited States District Judge
January 1 8 , 2013
cc: R. Matthew Cairns, Esq. Peter S . Cowan, Esq. Peter Santos, Esq.