Machinery dispute to crank up a gear

Kidwell Vietnam alleges General Electric Energy Rental Group (GEER) sold it  below spec and damaged power generators and equipment which had stalled its power generation plant for years.

The company has petitioned southern Ba Ria-Vung Tau People’s Court to sue GEER and a trial will go ahead in June if no other solution can be found.

Kidwell Vietnam, which has its parent company operating in the United States, received an investment licence from the Ministry of Planning and Investment in August, 1999 to build a power plant with an initially installed capacity of 20-40 megawatts in the Phu My 1 Industrial Park. The company hoped to provide electricity for all households in the park within 20 years.

Kidwell Vietnam then signed a purchasing deal with GEER in August 2002 in which it agreed to buy 20 gas-fired dynamos and 29 other pieces of electrical equipment. Under the conditions of the deal, the dynamos being sold were to have seen operational time of no more than 500 hours at delivery.

GEER was also responsible for installing this equipment in the Kidwell Vietnam’s power plant.

Under the contract signed by the two companies, the plant would start commercial operation on January 15, 2003. The plant, however, did not start basic trial operations until seven months after that date.

During this process, Kidwell Vietnam said it found that almost the dynamos supplied by GEER had seen between 925 hours and 1,014 hours of use before delivery. The company also claim that many were damaged. The Vietnam-based firm said GEER’s actions led to a total loss of $8.3 billion for its power project and demanded the latter cover this amount.

Kidwell Vietnam also demanded GEER replace the damaged machinery but they say the latter refused.

For its part, GEER refused paying for the claimed loss  and requested Kidwell Vietnam return the equipment in question back to the group.

GEER, which has so far failed to respond to VIR’s questions about any upcoming move to resolve the issue, insisted at a meeting with Kidwell Vietnam at the Ba Ria-Vung Tau People’s Court in May it had no responsibility for the matter.

The company said the case between the two US firms was not within the purview of the southern provincial court and had to be solved under US commercial law.

In October 2008, GEER brought the case to the New York-based American Arbitration Association’s court which then ruled that Kidwell Vietnam would have to return the equipment in question to GEER. The court also ruled GEER was not liable for Kidwell Vietnam’s losses.

According to the Ba Ria-Vung Tau People’s Court, Kidwell has the right to sue GEER in accordance with  Vietnamese law.