Member Firm Collaboration on Outstanding Victory in International Arbitration
Two Interact Law firms, on opposite sides of the Atlantic, joined together to obtain an outstanding victory in an International Arbitration. German member ljh Lindlbauer RechtsanwalteLJH Lindlbauer PartmbB, located in Munich, and American member Shook Hardy & Bacon, with offices throughout the U.S., jointly represented a German heavy equipment manufacturer (the “Manufacturer”) before an International Chamber of Commerce Arbitration Tribunal.
The Tribunal rendered a final award rejecting all claims against the Manufacturer and awarded the client more than $500,000 for fees and costs.
The German client designs and manufactures heavy machinery for the forestry industry, including self-propelled wood chippers and tree-trimming cranes. They designed and built a custom mobile tree-trimmer that was delivered through an independent seller (the “Distributor”) to a New England tree removal company (the “Buyer”). The sales and distribution contract was signed by the Buyer and the Distributor, and included several commitments made by the Distributor (but not the Manufacturer) to pay royalties to the Buyer on future tree-trimmer sales. The Buyer contended that the Distributor repeatedly breached the contract with the Buyer, by not paying royalties and flouting the agreed exclusivity zones. The distributor also demanded an extra $500,000 payment from the Buyer (unbeknownst to the Manufacturer) before the final delivery.
The Buyer initiated ICC arbitration under the contract against both the Distributor and the Manufacturer for breach of contract, fraud, and a Massachusetts statutory claim of unfair and deceptive trade practices. The Buyer alleged about $16 million in damages, including treble damages for the statutory claim.
After two years of briefing and document exchanges, ending in a two-day hearing in Boston, the Manufacturer’s case theme was simple— the Tribunal did not have jurisdiction over the Manufacturer and therefore the Manufacturer did not belong in this arbitration. The Manufacturer never signed the arbitration agreement and did not even know about the agreement until well after the crane was delivered. And the Manufacturer never granted the seller actual or apparent authority to act on the Manufacturer’s behalf, under any aspect of contract or agency law. The Tribunal agreed with the Manufacturer’s jurisdictional argument, holding that it had no jurisdiction over the Manufacturer, while also holding that the Distributor was liable for over $9 million in damages. Further, the Tribunal awarded the Manufacturer a 50% recovery of its costs, including attorney fees.
Attorneys for both Interact firms worked closely together throughout the proceedings to submit legal briefs and related material and to determine strategy. Markus Munzenmaier, from ljh Lindlbauer, collaborated extensively with Bill Vita and Giovanni Angles from Shook Hardy. Both firms shared in the preparation of testimony by the Manufacturer’s principal and shared in the presentations and cross-examination of witnesses during the two-day hearing. Together, the joint team combined their deep knowledge of International Arbitration law and procedures, as well as relevant laws in Massachusetts, Germany and Austria, to convince the three person Tribunal to dismiss the claims against their mutual client.
The result in this case epitomizes the ability of Interact member firms to act in concert, based on friendship and trust, to achieve tremendous outcomes for their mutual clients.
