Clients complain of defective equipment, seek damages
Chinese wind power equipment manufacturer Sinovel Wind Group said Sunday that it has received a request to enter into an arbitration process to resolve disputes with two business partners in Italy, who are seeking more than 43.65 million euros ($46.43 million) in total in compensation from Sinovel.
The company is not currently able to assess the negative impact of the case on its businesses because the process has yet to start, but it will actively respond to the case and defend its legal rights, Sinovel said in a statement to the Shanghai Stock Exchange (SSE).
The arbitration case would be processed at the International Chamber of Commerce's arbitration court, which, according to the court's website, is a consensual process used by companies as an alternative to litigation for reaching final binding resolutions for disputes in international deals.
The two Italian companies - Margherita Srl and Daunia Deliceto Srl - claim Sinovel engaged in a breach of contract, alleging wind power equipment it provided did not meet standards set in initial contracts, according to the Sinovel statement.
Sinovel and the Italian companies signed multiple deals in 2012 under which the Chinese company agreed to supply wind power equipment, maintenance and other services.
The two Italian companies asked Sinovel and its subsidiary in Italy to pay compensation of more than 25.42 million euros to cover the cost of repairing and replacing the allegedly unqualified equipment, read the statement.
They also asked for more than 18 million euros for losses due to Sinovel's breach of contract, the statement said.
Sinovel has reported losses in two consecutive years and is facing the risk of suspension of its shares trading on the SSE.
Last year, Sinovel reported a loss of more than 288 million yuan ($41.88 million), following a loss of 445 million yuan in the previous year, the company said in a statement to the SSE on January 23.
In the statement, Sinovel also warned that it might face suspension of trading of its shares on the SSE due to the losses.
