Industrial Gas Dispute Resolution
Disputes concerning the administration of an industrial gas contract typically occur because something has changed with respect to the client’s requirements or the underlying economics of the supplier’s costs. Because contracts tend to be long term in nature (years, not months) and obligate the client to purchase from a specific supplier, it is not unusual for a dispute to arise during the term of the agreement. Examples include the client’s needs increasing or decreasing. The client may require a different industrial gas supply system or may even require a completely different industrial gas than originally contemplated. Although such changes may impact the industrial gas company’s cost to supply, it probably should not result in a blank check from the client’s perspective. Additionally, pricing escalation administered in the contract may not reflect actual costs of production or distribution.
With over thirty-five years of experience in the industrial gas industry, our founder, John Peterson, has a firm grasp on industrial gas dispute resolutions, serving as an expert witness and consultant for matters related to the production and procurement of atmospheric gases and process gases such as hydrogen. With extensive knowledge of industrial gas contracts and the practices of the industry, IGCA can help our clients understand what is commercially reasonable and what is not, helping to facilitate the resolution of the underlying dispute.
Methods for Industrial Gas Dispute Resolution
There are several procedures in which industrial gas contractual disputes are typically resolved. IGCA will tailor its efforts based upon the nature of the dispute and the procedure involved.
Negotiation is usually the first option in which the parties approach a disagreement. This method involves both parties coming together “at the table” and attempting to negotiate a compromise or better yet, a win-win outcome. By doing so, the parties can avoid legal proceedings and resolve matters expeditiously. Unfortunately, the client may be at a disadvantage since the IGS has probably seen the issue before and dealt with it as a part of the boilerplate agreement. After all, oxygen and nitrogen supply via cryogenic distillation has been around since the early 1900s, so the industrial gas community has significant commercial history and expertise to draw upon. Hence, they may first attempt to push back or diminish the client’s concern. IGCA can help in those situations to understand when such arguments are off point or inconsistent with industry practices.
The goal of a mediator is to act as a neutral party that will jointly assist the parties in resolving a dispute and reaching an agreement. A good mediator can help to diffuse volatile situations and bring focus on the key issues and both parties’ objectives. If the mediator has a general handle on the industrial gas supplier’s economics, he can also push the IGS when appropriate if he suspects their position is commercially unreasonable. IGCA is familiar with the production and distribution economics of most on-site and merchant-supplied industrial gases. Such insight can be valuable in achieving settlement rather than to incur the additional time and costs spent on arbitration.
Most industrial gas contracts specify binding arbitration, rather than jury trial, to settle an agreement if senior management negotiations and mediation are unsuccessful. An arbitrator, or panel of arbitrators, essentially determines the resolution based upon the facts and cases presented by the IGS and client. Acting as an expert witness, our founder has testified directly in arbitration or presented white papers to facilitate settlement prior to the arbitration’s conclusion. In fact, John has experience in over $350 million worth of potential exposure with respect to arbitration and is therefore well versed in the process and perhaps more importantly, helping the parties settle prior to spending the time and money on a full-scale arbitration.
Our industrial gas dispute resolution services will review your specific situation and offer advisement to help you reach a settlement. Contact us today for additional information. The first consultation is provided at no charge.