Siemens 2009 Annual Report Download - page 273

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 Managing Board statements, Independent auditors’ report, Additional information
 Notes to Consolidated Financial Statements
(in millions of €, except where otherwise
stated and per share amounts)
the reasons for the delay are disputed, the supplier consortium
filed a request for arbitration against TVO in December 2008.
The supplier consortium has demanded an extension of the
construction time and the payment of approximately €1 billion
in outstanding down payments, as well as additional compen-
sation. In its response to the request for arbitration, TVO re-
jected the demand for an extension of time and made counter-
claims for damages relating to the delay, and interest on pur-
portedly prematurely made down payments. Based on a delay
of 38 months, TVO estimates that its total counterclaims
against the supplier consortium amount to up to €1.4 billion.
In early 2009 Siemens terminated its joint venture with Areva
S.A. (Areva). Thereafter Siemens entered into negotiations with
the State Atomic Energy Corporation Rosatom (Rosatom) with
a view to forming a new partnership active in the construction
of nuclear power plants, in which it would be a minority share-
holder. In April 2009, Areva filed a request for arbitration with
the ICC against Siemens. Areva seeks an order enjoining
Siemens from pursuing such negotiations with Rosatom, a
declaration that Siemens is in material breach of its contrac-
tual obligations, a reduction of the price payable to Siemens
for its stake in the Areva NP S.A.S. joint venture and damages
in an amount to be ascertained. Siemens filed its answer in
June 2009, primarily seeking a dismissal of Areva’s claims and
a price increase. The arbitral tribunal has been constituted and
the main proceedings have commenced. On November 17,
2009, the arbitral tribunal issued an interim order which im-
poses certain provisional restrictions on Siemens with respect
to the negotiation process and the planned partnership with
Rosatom; the order does not preclude Siemens from continu-
ing its discussions with Rosatom during the arbitration.
As previously reported, a Mexican governmental control au-
thority had barred Siemens S.A. de C.V. Mexico ( Siemens Mex-
ico) from bidding on public contracts for a period of three
years and nine months beginning November 30, 2005. This
proceeding arose from allegations that Siemens Mexico did
not disclose alleged minor tax discrepancies when it was sign-
ing a public contract in 2002. Upon several appeals by Siemens
Mexico, the execution of the debarment was stayed, the de-
barment subsequently reduced to a period of four months,
and in June 2009 the Company was finally informed by the
demnify the Company for any losses. The Company ’s request
for arbitration was filed with the International Chamber of
Commerce in Paris (ICC). The seat of arbitration is Zurich, Swit-
zerland. In March 2007, Qisda raised a counterclaim alleging
that the Company made misrepresentations in connection
with the sale of the mobile devices business and asserted
claims for the adjustment of the purchase price. In November
2007, the Company expanded its claims that Qisda indemnify
the Company in relation to any losses suffered as a result of
Qisda’s failure to perform its obligations and/or the obligations
of its locally incorporated subsidiaries. Qisda amended its
counterclaim in March 2008 by (i) changing its request for de-
claratory relief with regard to the alleged misrepresentations
to a request for substantial damages, and (ii) raising further
claims for substantial damages and declaratory relief. The par-
ties have resolved their disputes relating to Qisda Corp.’s pur-
chase of the mobile device business. Upon joint request of the
parties, the ICC issued an Award by Consent in March 2009.
On November 25, 2008, Siemens announced that the Company
and the insolvency administration of BenQ Mobile GmbH & Co.
OHG had reached a settlement after constructive discussions
that began in 2006. In the settlement agreement, Siemens
agreed to a gross payment of €300, which was paid in Decem-
ber 2008. However, the settlement is expected to result in a net
payment of approximately €255 after taking into account
Siemens’ claims as creditor. Since Siemens had made a suffi-
cient provision for the expected settlement, the settlement
does not have a material negative impact on Siemens’ results
of operations for fiscal 2009.
As reported, the Company is member of a supplier consortium
contracted by Teollisuuden Voima Oyj (TVO) for the construc-
tion of the nuclear power plant “Olkiluoto 3” in Finland. The
Company ’s share in the contract price payable to the supplier
consortium is approximately 27%. The other member of the
supplier consortium is a further consortium consisting of
Areva NP S.A.S. and its wholly-owned affiliate Areva NP GmbH.
The agreed completion date for the nuclear power plant was
April 30, 2009. The supplier consortium announced in January
2009 that it expected the project to be delayed by 38 months in
total. Now, there are discussions about further delays due to
new requirements imposed by the approval authorities. Since