Chinese vertically integrated solar company JA Solar has agreed to settle a lawsuit brought by U.S. polysilicon producer Hemlock Semiconductor, in the Supreme Court of the State of New York.
The lawsuit was originally filed by Hemlock in January 2015 but earlier this year the complaint was updated, pertaining to an alleged breach of polysilicon supply contracts. JA Solar was on the hook for close to $1 billion, but today’s settlement saves the firm the hassle and expense of becoming embroiled in the type of legal battle currently facing SolarWorld, which was hit by Hemlock for a similar claim.
Details on JA Solar’s settlement are scant, but suffice to say an agreement has been struck that suits both parties: the Chinese firm avoids the threat of a $1 billion payout, while Hemlock has tied JA Solar in to a solar grade polysilicon supply agreement until October 31, 2026.
pv magazine understands that polysilicon is currently selling at around $15 per kilogram (kg) on the market, and it is highly likely that Hemlock has locked JA Solar in to a commitment to purchase polysilicon above that price. However, given that polysilicon prices can fluctuate wildly, locking in a price for the next decade may in fact be a sensible step by the Chinese firm.
Hemlock’s legal complaint centered on allegations that JA Solar had failed to pay seven of eight advanced payment installments for polysilicon to the amount of $103.5 million under an agreement signed in 2011. JA Solar, Hemlock said, made just one payment instalment of $10.3 million.
The updated complaint brought this year sought to encompass all of the polysilicon JA Solar has not ordered or taken delivery of under the terms of the “take-or-pay” contract between the two firms.
As stated in the updated complaint: “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”.
Hemlock’s ongoing complaint against SolarWorld amounts to $770 million for similar alleged breaches of a take-or-pay polysilicon supply contract. SolarWorld is preparing to appeal the lawsuit, claiming that Hemlock’s contracts are in violation of European antitrust law.