On behalf of Western Digital's SanDisk subsidiaries, Hueston Hennigan attorneys have filed a request for arbitration with the ICC International Court of Arbitration, asserting Toshiba has breached and is threatening additional breaches of the parties' joint venture agreements. The move comes in response to Toshiba's purported transfer of its joint venture interests to an affiliate and the threatened transfer of that affiliate to a third party, both without Western Digital's consent. The agreements governing the JVs, which involve the manufacture and development of NAND flash-memory chips used in some of today's most popular electronic devices, include provisions that require one party's consent before the other party can sell its stake.
The arbitration demand seeks an order requiring Toshiba to undo the purported transfer to an affiliate, and injunctive relief preventing Toshiba from further breaching the JV agreements. Per the provisions of the JV agreements, the arbitration will take place in San Francisco, California.
In a statement , Western Digital chief executive officer Steve Milligan said “Joint ventures are inherently intimate commercial relationships, and in order to protect against being forced into such a relationship with parties not of their choosing, SanDisk and Toshiba agreed to protect their interests in the joint ventures by prohibiting transfers without the consent of the other party. Toshiba’s attempt to spin out its joint venture interests into an affiliate and then sell that affiliate is explicitly prohibited without SanDisk’s consent.”
Seeking relief through mandatory arbitration was a last resort after multiple attempts to work with Toshiba, according to Milligan. “However, all of our other efforts to achieve a resolution to date have been unsuccessful, and so we believe legal action is now a necessary next step. We are confident in our ability to protect our rights and interests and to improve our value creation opportunities.”