Details have emerged of a lawsuit against Chinese company JA Solar, by polysilicon producer Hemlock Semiconductor Corporation. The amount is for close to $1bn and is the latest in a string of lawsuits put forth by U.S. firm Hemlock against solar module producers for breaching polysilicon supply contracts.
The original lawsuit, filed on 20 January 2015 with the Supreme Court of the State of New York, highlighted JA Solars failure to pay seven out of eight advance payment installments, which breached a polysilicon supply agreement, effective from May 4 2011 until December 2020. The advance payment was for the amount of $103.5 million, set to be paid in eight installments, of which JA Solar only made one in the amount of $10.3 million in 2011.
As a result, Hemlock sought damages not less than $115,425,000.00. However, an updated complaint now encompasses damages for all of the polysilicon that JA Solar has not ordered or taken delivery of under the take-or-pay contract that exists between the two companies.
The complaint highlighted Hemlocks obligations to manufacture the solar grade polycrystalline silicon and JA Solars obligations to purchase it. Pursuant to the Supply Agreement, JA Solar agreed to purchase specified annual quantities of Product for a period of years, pursuant to a specific schedule, at specific prices, read the complaint. It also highlighted a non-refundable, unconditional, irrevocable advance payment to Hemlock. All in all, the lawsuit is now seeking damages no less than $921,165,075.00, including interest.
JA Solar is reviewing the claim and will provide further updates when developments happen. JA Solar told pv magazine that it will provide information about the claim, which shall be reported as soon as it is received.
Pending Hemlock lawsuits
The lawsuit brought forth against JA Solar has a similar taste to that which Hemlock filed against German module manufacturer SolarWorld in 2013. That particular lawsuit was against SolarWorlds subsidiary Deutsche Solar for $676 million, claiming the company had breached four take-or-pay polysilicon supply agreements.
The amount has now increased to $770 million, which, if ordered to pay, may threaten the existence of SolarWorld. SolarWorld had tried to argue that the contracts violated European antitrust laws, but the court ruled in November that SolarWorld could not use this as a defense.
SolarWorld still maintains that it has various other defenses it can use, plus other avenues of legal proceedings should the court rule against it. SolarWorld said in 2015 that it aims to reach an agreement with Hemlock to continue delivery; however the two parties could not reach an agreement during a settlement conference on 3 March.
Hemlock had previously made similar out-of-court settlements with Yingli Green Energy and Trina Solar over breaches of supply contracts.