Thursday, April 26, 2007

Qualcomm and Nokia in binding arbitration

OK, so I guessed right — in this case no great accomplishment. As Qualcomm CEO Paul Jacobs said Wednesday:
Regarding Nokia, there is really nothing new to discuss. As you know, we commenced arbitration a few weeks ago to resolve certain issues under our existing agreement.
Qualcomm’s CFO Bill Keitel made it clear:
David Wong - A.G. Edwards. Thank you very much. On the subject of the arbitration you have with Nokia. Is this mutually agreed to binding arbitration or not?

Bill Keitel. Yes, it is. It's an arbitration relating to the existing agreement and that agreement specifies that any disputes about the agreement have to be arbitrated in a particular place under the rules of the American Arbitration Association.
In other words, the Nokia-Qualcomm agreement has one of the very standard arbitration clauses. Here is one that we used to use in our contracts:
Any, dispute, controversy or claim arising out of or related to this agreement, or the breach, termination or invalidity thereof, shall be settled by arbitration in accordance with the UNCITRAL Arbitration Rules in effect on the date of this agreement. The appointing authority shall be the American Arbitration Association. … The prevailing party in any such action will be entitled to reasonable attorney fees. The award thereof shall be final and binding upon the parties hereto.
The right for one party to unilaterally request arbitration is no great surprise, since unless one side can unilaterally demand arbitration, the side with the weaker hand can bluff and stall and threaten to drag the case out in court in hopes of convincing the other side to settle.

The website 24/7 Wall Street (which I never heard of before) has a great summary of the he-said, he-said account of the two sides being forced to answer analysts’ questions.

I don’t think the accounts tell us who’s going to win, but I think it will provide a record we can check in a few months to say which account was more accurate.

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