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Arbitration Demand was filed against Mitsubishi Heavy Industries, Ltd.
and Mitsubishi Nuclear Energy Systems, Inc.

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Mitsubishi Heavy Industries, Ltd.

Mitsubishi Heavy Industries, Ltd. and Mitsubishi Nuclear Energy System, Inc. (Mitsubishi) announce that a demand for arbitration was filed against both companies in the United States.
This arbitration demand is filed under the dispute resolution procedure specified in the contract (Purchase Order) for the supply of Replacement Steam Generators for San Onofre Nuclear Generating Station (SONGS). The procedure was described in the announcement of Mitsubishi on July 19, 2013, and the demand for arbitration is not a new dispute. Details of the arbitration are as below:
    1. Place of arbitration statement filing, etc.
    (1)
    Place: San Francisco, California, USA
    (2)
    Arbitration Rules: International Chamber of Commerce arbitration rules
    (3)
    Applicable Law: Laws of the State of California, United States
    (4)
    Date of the filing: October 16, 2013 (U.S. Time)
    2. The entity filed the arbitration
    (1)
    Name:
    a) Southern California Edison Company (SCE)
    b) Edison Material Supply LLC (Note.1) (EMS)
    (2)
    Location:
    Both SCE and EMS are located at 2244 Walnut Grove Avenue, Rosemead, California 91770
    3. Background of the demand for arbitration and description of its contents
    (1)
    Background:
    On July 18, 2013, Mitsubishi received from SCE a notice of dispute, as specified in the article on dispute resolution in the contract. After receiving the notice, Mitsubishi timely submitted a written response to SCE as set forth in the contract. However, SCE and EMS have now filed an arbitration demand in accordance with the same dispute resolution article because the discussions by both companies did not reach a resolution of the dispute.
    (2)
    Contents of the arbitration:
    SCE and EMS demand the compensation for damages arising out of the contract for the following amount of money.
    4. Amount claimed

    Not less than 4 billion dollars (approximately 392 billion yen)

    5. Prospect of the arbitration

    As announced on July 19, 2013, the allegations and demands made by SCE disregard the history of the contract negotiations and performance and are factually incorrect, legally unsound, and inappropriate. Through the arbitration process, Mitsubishi will aggressively defend itself by accurately representing the facts involved and the applicable legal principles. At the same time, Mitsubishi will take actions for its counterclaims because it has been damaged by inappropriate actions by SCE regarding the restart of SONGS and the repairs of the steam generators.

    Mitsubishi's liability to SCE is limited by the contractual provisions to which the parties agreed, as SCE has discussed in its filing with the U.S. Security and Exchange Commission, and includes an overall limitation of liability (approximately $137 U.S. million) as well as a preclusion of consequential damages, including the cost of replacement power. Accordingly, at this moment, Mitsubishi does not expect there to be an impact by its dispute with SCE on the results of our operations based on the limitation of liability and our belief that Mitsubishi has fulfilled its obligations under the contract.

    Additionally, the co-owners of SONGS, San Diego Gas & Electric Company and City of Riverside (Note.2), have filed lawsuits against Mitsubishi alleging breach of the warranty obligations of the contract, tort liability etc. (These lawsuits are now pending at U.S. District Court in Southern District of California). Mitsubishi believes that all disputes pertaining to the contract should be resolved by the arbitration and has filed motions requesting the Court for a stay of the suits.

    If there are any new matters which require disclosure, Mitsubishi will update the information promptly.

    Note.1 Edison Material Supply LLC is a wholly-owned subsidiary of SCE.
    Note.2 SONGS is co-owned by SCE (78.2%), San Diego Gas & Electric Company (20%), and City of Riverside (1.8%).