Notice Concerning Receipt of Award Handed Down in Arbitration Relating to San Onofre Nuclear Generation Station (SONGS)
|MHI Disclosure Date||Content of Disclosure|
|October 17, 2013||Arbitration demand is filed by SCE and EMS. Claim amount: not less than US$4 billion.|
|May 19, 2014||SDG&E and COR, minority co-owners of SONGS, proclaim their intent to participate in the arbitration case.|
|July 22, 2014||ICC approves the participation of SDG&E and COR in the arbitration case. Both entities submit their arbitration demand documents to ICC.|
|August 1, 2014||SDG&E and COR, in response to ICC, advise that their respective claim amounts are based on their ownership percentage shares of SONGS and that their claims are included in the amount earlier cited by SCE and EMS.|
|July 28, 2015||Claimants submit documents to ICC as evidence to support their claims against Mitsubishi. The projected claim value is revealed to be US$7.57 billion.|
|October 26, 2015||Claimants file a US$7.57 billion damages report against Mitsubishi.|
|July 15, 2016||Claimants revise their combined claim value to US$6.667 billion.|
|March 13, 2017 (JST)||Mitsubishi receives arbitration award handed down by ICC.|
2. Outline of Arbitration Award
Mitsubishi did not dispute the allegation made by the Claimants that the replacement steam generators in Unit 3 experienced unacceptable wear, but Mitsubishi did argue that it fulfilled its warranty obligations under the Purchase Order, and that the limitation of liability contained in the Purchase Order - approximately US$137 million (approx. ¥15.5 billion, calculated at an exchange rate of US$1=¥113) – should be upheld. The ICC tribunal agreed, and accordingly ordered Mitsubishi to pay US$124,999,828.74 (approx. ¥14.1 billion, calculated at an exchange rate of US$1=¥113) for costs incurred by Claimants up to the liability cap, which includes adjustments as a result of payments already made by Mitsubishi and accrued interest.
The ICC tribunal also rejected claims made by the Claimants alleging that Mitsubishi had committed fraud and gross negligence. Due to the fact that the vast majority of the Claimants' claimed damages were not accepted, the ICC tribunal ordered the Claimants to pay US$58,137,105.17 (approx. ¥6.5 billion, calculated at an exchange rate of US$1=¥113) of Mitsubishi's fees and costs for the arbitration.
The content of the ICC's ruling will be released by the Claimants in one to two months from now, excluding items corresponding to confidential information. Until such time, no disclosure of details will be made, so that confidentiality obligations between the parties can be fulfilled.
3. Future Outlook
Based on the arbitration award outlined above, and the fact that Mitsubishi has already reserved certain funds, the financial impact of the damages award on the Company's FY 2016 financial results will be minimal.
Note 1: Mitsubishi Nuclear Energy System, Inc. serves as MHI's nuclear power systems business base in the United States.
Note 2: SONGS is co-owned by SCE (78.2%), SDG&E (20%) and COR (1.8%).
Note 3: In the disclosure titled "SDG&E and COR submitted pleadings to ICC" announced on July 22, 2014, MHI noted that ICC approved SDG&E and COR's joining into the arbitration on June 16, 2014.