ICC Announces Financial Arbitration Findings in Dow vs. PIC
On May 24, the International Chamber of Commerce's (ICC) International Court of Arbitration revealed its decision regarding the financial arbitration between Petrochemical Industries Company of Kuwait (aka PIC) and The Dow Chemical Company. The ICC ruled in favor of Dow in this case regarding the K-Dow joint venture flop.
Why Contract Arbitration was Necessary Between Dow and PIC
K-Dow was supposed to be a joint multinational corporation between Dow and PIC of Kuwait founded in the summer of 2008. The focus of the company was the manufacture of plastics. It cost $11 billion to get started, and according to the third quarter earnings conference in 2008, representatives of Dow announced that all was going as planned, and that December, the two companies signed a memorandum of understanding that outlined the details of the transaction. Everything was set to close in January of 2009.
Then PIC jumped ship on December 28, 2008, claiming that the global recession affected their ability to close the joint venture. Dow responded by initiating arbitration. The memorandum of understanding allowed for them to collect up to $2.5 billion in damages, but Dow claimed that they may be seeking damages beyond that amount.
The Findings of this Commercial Arbitration
The ICC held that PIC was liable for damages to Dow to the amount of $2.16 billion. This ruling is binding and final. This financial arbitration does not affect other joint ventures between Dow and Kuwait, existing or in the future. Dow claims that their relationship with Kuwait remains strong.
According to Dow's CEO, Andrew Liveris, “"This outcome brings resolution and closure to the issue. We remain focused on continuing to move forward with our transformation and profitable business partnerships -- both in Kuwait and around the world."