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SCE and three other claimants submitted documents to ICC

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Mitsubishi Heavy Industries, Ltd.

On October 17, 2013, Mitsubishi Heavy Industries, Ltd. (MHI) announced that Southern California Edison (SCE) and Edison Material Supply LLC (EMS) filed a demand for arbitration against MHI and Mitsubishi Nuclear Energy Systems, Inc., (Note 1) a wholly-owned subsidiary of MHI (together, Mitsubishi) 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) (Note 2).

In the arbitration, SCE and three other companies (Note 3) claimed an amount of not less than $4billion in compensation for damages against Mitsubishi alleging breach of the warranty obligation of the contract. On July 27, 2015, SCE and other three companies have submitted the evidence that allegedly supports their compensation request to the International Chamber of Commerce (ICC), the arbitral institution on this matter. The claim value is now estimated to be US$7.57 billion (approximately 930 billion yen at the rate of US$1 = 123 yen).

As previously announced, the allegations and demands made by those parties disregard the history of the contract negotiations and performance and are factually incorrect, legally unsound, and inappropriate. Through the arbitration process, Mitsubishi has aggressively defended itself by accurately presenting the facts involved and the applicable legal principles and firmly maintain its position continuously.

Mitsubishi's liability to SCE is limited by the contractual provisions to which the parties agreed, as SCE has discussed in its filings with the U.S. Security and Exchange Commission, and includes an overall limitation of liability (approximately US$137 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 the four parties including 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.

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

    Note 1. Mitsubishi Nuclear Energy Systems, Inc. is a wholly-owned subsidiary of MHI and MHI's nuclear power system business base in the U.S.
    Note 2. SONGS is co-owned by SCE (78.2%), SDG&E. (20%), and COR. (1.8%).
    Note 3. In the "SDG&E and COR submitted pleadings to ICC" disclosed on July 22, 2014, MHI has notified that the ICC approved joining of SDG&E and COR into the arbitration on June 16, 2014. MHI also notified in "SDG&E and COR provided the estimate of monetary value of their claims to ICC" disclosed on August 1, 2014, that monetary value claimed by SDG&E and COR were based on their percentage ownership shares of SONGS and were each included in the earlier claim value of "not less than US$4 billion."