French company Alstom will pay NIS 21.5 million in compensation to Darie Energy and Aviv Darie for transactions involving the construction of power stations in which Aviv Darie was Alstom's representative in Israel, Tel Aviv District Court Judge Tamar Abrahami ruled last November. At the end of a legal proceeding lasting five years, the judge ruled that Alstom had violated a contract with Darie in bad faith, and was therefore obligated to pay him commissions for success.
Following Alstom's appeal to the Supreme Court, the parties entered mediation, and will notify the Court in a week whether they have succeeded in reaching agreement. Advocates Eyal Doron, Ohad Ben-Yehuda, and Hadas Twito from the S. Horowitz & Co. law firm are representing Darie, and Advocates Zohar Lande, Ronit Offir, and Gal Livshits from the Barnea & Co. law firm are representing Alstom.
The judge's verdict involves Alstom's headquarters in France and its energy division, which was sold to General Electric in 2014.
Relations between Darie and Alstom began in 2003, when he offered his services to the company in finding suitable projects in Israel for Alstom and in representing Alstom in these projects. The two sides had contractual relations throughout the entire period, as proven by a great deal of evidence and many documents, including correspondence concerning remuneration. Alstom nevertheless avoided signing a binding contrast with Darie for a long time, and officially notified him in 2009 that it was severing relations between them, without having paid him commissions.
"The overall web of evidence, as emerges from many elements, paints a picture in which Darie constituted in effect, as known and agreed, a kind of representative or agent of Alstom in the independent power producer (IPP) sector in Israel," the judge wrote in her verdict. "This is not a matter of any single document setting forth terms of the agreement; it is a status reflected in regular actions expressed in both behavior and in writing."
The legal proceedings dealt separately with a series of projects, in some of which payment of commissions to Darie was halted. In some of them, Judge Abrahami accepted Alstom's argument that no contractual relations had been proved. In other projects being heard, it was agreed that Darie was not entitled to success commission, because Alstom had not won contracts in them, including the Israel Power Management (IPM) power station in Be'er Tuvia, the OPC Rotem power station in Mishor Rotem, and the Afcon Power Systems wind energy project.
With respect to Electra Ltd.'s (TASE: ELTR) pumped-storage hydroelectricity project in Gilboa, the judge ruled that Darie's involvement was significant, and that he was entitled to a 0.75% commission on the $120 million contract won by Alstom. Abrahami also awarded Darie a 0.2% commission on the value of the estimated €200 million 18-year operation and maintenance agreement, a commission amounting to NIS 5.2 million.
The judge awarded much larger compensation for the thermo-solar power station in Ashelim, where Alstom received a €450 million contract: a 0.75% commission amounting to nearly €3.4 million. The judge also awarded a 0.2% commission on Alstom's 25-year operating contract for Ashelim, estimated at $300 million, a commission amounting to $600,000. Abrahami also ruled that Darie would receive a 0.5% commission on the multi-million dollar sale of a turbine to Dead Sea Works.
Darie had complaints about projects in which he asserted that he had taken part, but had been excluded before agreements were reached. A case in point is the Dalia power station, in which Abrahami did not award Darie a commission, even though it accepted his claim that he had first presented the project to Alstom in November 2005.
Alstom headquarters said in response, "This matter is now relevant to General Electric, which acquired Alstom's energy business, not to Alstom. Alstom is unable to respond for this reason."
The verdict explicitly establishes the liability of Alstom SA, the French parent company, as well as the liability of Alstom Power, the energy arm whose business was sold to General Electric, but which has not been closed down.
Published by Globes [online], Israel Business News - www.globes-online.com - on February 8, 2017
© Copyright of Globes Publisher Itonut (1983) Ltd. 2017