Albemarle ‘shocked’ about $600m ruling in Huntsman dispute, mulls appeal

HOUSTON (ICIS)–US specialty chemicals company Albemarle is “shocked” by an arbitration panel’s decision to award Huntsman $600m in a legacy dispute over Huntsman’s 2014 acquisition of Rockwood’s pigments business, it said on Friday.

The Huntsman-Rockwood pigments deal closed before Albemarle acquired Rockwood in 2015.

“Albemarle is shocked by the arbitration panel’s decision,” it said in a brief statement, reacting to the arbitration decision announced earlier on Friday.

The company said that it “firmly believes” that the award is not supported by the evidence and is contrary to state law in New York, where the case was heard.

Albemarle is currently assessing all its legal rights and options, including seeking to have the award vacated, it added.

The dispute is over a technology, called Bluebird, that involves reactors used to make red and yellow pigment out of low-cost iron feedstock, reducing the need for higher cost iron oxide powders, according to previous court filings.

Huntsman has said Bluebird never worked as described by Rockwood, and that without Bluebird it would have never closed on the pigments acquisition.

On 28 October a panel of three former federal judges sitting as arbitrators found that Albemarle, and its predecessor Rockwood, had defrauded Huntsman in connection with the sale of the pigments business in 2014, and breached the contract under which the business was sold.

The panel awarded Huntsman in excess of $600m for fraud and breach of contract, inclusive of punitive damages and statutory interest at 9%.

After attorney’s and other fees, the award should net Huntsman more than $400m, Huntsman said in its Q3 earning filing. The award is subject to confirmation and court appeal.

During Huntsman’s Q3 earnings call on Friday, CEO Peter Huntsman said Huntsman will now begin a process, expected to take several months, to have the arbitration panel’s award confirmed in the New York state supreme court.

The company is confident the award will be confirmed as the court would likely be “hesitant to disturb” the arbitration award, he said.

He added that from what he understands the bar for appealing an arbitration ruling is higher than that for a typical court ruling.

In 2016, Huntsman spun off its pigments business, which now operates as Venator Materials.

Additional reporting by Al Greenwood

Thumbnail shows paint, which can use the type of pigments that were the subject of a legal dispute between Huntsman and Albemarle. Image by Shutterstock