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 .

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

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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

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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.

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scope of the mediation/arbitration agreement. See Gove v . Career

Systems Dev. Corp.,

, 4 (1st Cir. 2012); see also

Mitsubishi Motors Corp. v . Soler Chrysler-Plymouth, Inc.,

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.,

,

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.

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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.,

8 , 32 (1st Cir. 2001) (quoting Navieros Inter-

Americanor v . N/V Vasilla Express,

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.,

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

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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.

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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

. 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.

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