Italian firm Ansaldo Energia successfully defended an arbitration case brought by Siemens in the International Chamber of Commerce (ICC) Arbitral Tribunal regarding its right to use Siemens gas turbine technology under a license agreement, the company said on Aug. 1.
The dispute stemmed from an agreement that ran from 1991 through October 2004 under which Siemens licensed certain heavy-duty gas turbine technology to Ansaldo Energia. The agreement stated that the Italian company could continue to use and improve the licensed Siemens technology in the future.
In May 2014, Shanghai Electric Group purchased a minority share of Ansaldo Energia after a spirited bidding war that included Siemens and Doosan Heavy Industries. Siemens had made an offer of €1.3 billion for the entire firm in 2012 that was not accepted, while a 2013 deal with Doosan was blocked by the Italian government. Instead, Shanghai Electric paid Italian sovereign private equity fund Fondo Strategico Italiano SpA €400 million ($555 million) for a 40% share of the company. The move gave the Chinese firm access to gas turbine technology that it did not previously have.
With the deal, Ansaldo Energia announced several cooperation agreements with Shanghai Electric and Doosan. With the Chinese firm, it would produce gas turbines in China for Asian markets, while the Doosan agreement would cover 60-Hz models for North America, Brazil, Saudi Arabia and South Korea.
Following that announcement, Siemens filed an arbitration action to block the agreements and terminate the license with Ansaldo Energia. Siemens claimed the agreements were outside the original license and allowing them to go forward would damage its gas turbine business and its position in the market.
On July 29, the ICC tribunal dismissed Siemens’ action and held that Ansaldo Energia was free to continue using the licensed technology and sub-license it to third parties.
“The arbitral award is a landmark decision for the heavy duty gas turbine market,” the company said in a statement. “It will preserve more innovation and competitiveness in the global market for a technology vital to meeting climate change goals. It notably strengthens AEN’s worldwide position in such market and dwarfs Siemens’ efforts to limit further strong competition by AEN and its cooperation partners.”
The decision is another setback in the gas turbine market for Siemens, which sought to block GE’s acquisition of Alstom in 2014 with its own bid for the French firm. That deal with GE finally cleared regulatory approval last September.
[Update: 8/3/16] Reached for comment, Siemens spokesman Alfons Benzinger said, “It is important to note that the Siemens technology in dispute was technology licensed to Ansaldo Energia between 1991 and 2004 and not Siemens’ latest, state-of-the-art gas turbine technology. For Siemens, the award does not have any significant practical implications. Siemens has seen the combined Shanghai Electric/Ansaldo Energia as a competitor ever since their cooperation had been announced in May 2014 and has acted accordingly in the market place.”
—Thomas W. Overton, JD is a POWER associate editor (@thomas_overton, @POWERmagazine).
[updated to add comments from Siemens]