Complete victory for electrode manufacturer GrafTech in ICC arbitration on Long-Term Agreements

Compass Lexecon acted for GrafTech and certain of its subsidiaries in the preparation of an International Chamber of Commerce (‘ICC’) arbitration proceeding related to a number of long-term graphite electrode supply agreements (‘LTAs’). The customers to those agreements argued that they did not need to comply with the terms of the LTAs and claimed damages of $188 million. In March 2024, the arbitrator entirely dismissed the claims and also ordered the claimants to reimburse the defendant’s fees.

Situation

GrafTech is a manufacturer of graphite electrodes, a key component in the production of steel using electric arc furnaces. Between 2017 and 2019, GrafTech entered into a number of LTAs to sell its electrodes. In 2020, some of GrafTech’s customers argued they did no longer need to comply with the terms of the fixed price LTAs, due to an alleged drop in market prices for graphite electrodes in January 2020, or, alternatively, due to the alleged market circumstances at the time of signing the LTAs. They initiated an arbitration proceeding in the International Chamber of Commerce in June 2020.

Our Role

We assisted GrafTech and its external legal counsel from Jones Day and Schellenberg Wittmer with the economic and financial aspects of the dispute. We prepared a number of expert reports on the alleged breach of Article 102 TFEU and rebutted the claimants’ estimate of damages. During the arbitration hearing in March 2023, Lorenzo Coppi, co-Head of Compass Lexecon’s EMEA practice, provided expert witness testimony on the topic of competition economics (alleged abuse of dominance), and Executive Vice President Julian Delamer provided expert testimony on the financial pricing of the LTAs and the quantum of damages.

Outcome

In March 2024, the sole arbitrator appointed by the ICC issued the final award in which he entirely dismissed all of the Claimants’ claims against GrafTech (with damages then valued at $188 million), and also ordered them to pay approximately $9.2 million in legal fees and other related expenses.

The Team

EMEA Co-Head Lorenzo Coppi and Executive Vice President Julian Delamer led the Compass Lexecon team advising GrafTech. The team assisting Julian Delamer on the quantum of damages included Federico Gonzalez Loray, Isaac Chilcott and Gurmehar Singh Sethi, while the team assisting Lorenzo Coppi on the competitive effects included Stefano Trento, Benjamin Roux, Kadambari Prasad, Sebastian Theuer, Ria Abichandani, Xinyan Lao, Joonas Roos, and Sebastian Veijola.

Compass Lexecon assisted GrafTech’s external counsel from Jones Day, with a team comprising Stephen Pearson, Marta Delgado Echevarría, James Egerton-Vernon, and Margaret Toohey. We also worked with GrafTech’s counsel from Schellenberg Wittmer including Elliott Geisinger, Benjamin Gottlieb, Janine Häsler.