United States District Court, D. Maryland
L. Russell, III United States District Judge.
MATTER is before the Court on Defendants Hybrid Kinetic Group
Limited (“Hybrid Kinetic”) and Billion Energy
Holdings Limited's (“Billion”) (collectively
with Hybrid Kinetic, “HKG”) Motion to Stay
Proceedings and Compel Arbitration. (ECF No. 5). The Motion
is fully briefed and ripe for disposition. No hearing is
necessary. See Local Rule 105.6 (D.Md. 2016). For
the reasons that follow, the Court will grant the
Townsend Ventures, LLC (“Townsend”) is a
Maryland-based investment company that invests in emerging
energy technologies. (Compl. ¶ 15, ECF No. 1).
is the majority owner of Plaintiffs XALT Energy, LLC
(“XALT Energy”) and XALT Energy MI, LLC
(“XALT Energy MI”). (Id. ¶ 7). XALT
Energy and XALT Energy MI (collectively with XALT Energy and
Townsend, “XALT”) are Delaware limited liability
companies “engaged in the business of the design,
development, manufacture, sales, and service of advanced
lithium-based energy storage systems and battery
cells.” (Id. ¶¶ 1, 8, 9). XALT
Energy MI is a wholly owned subsidiary of XALT Energy.
(Id. ¶ 9). XALT Energy and XALT Energy MI have
their principal places of business in Midland, Michigan.
(Id. ¶¶ 8-9).
Kinetic is “a limited company formed in Bermuda and
headquartered in Hong Kong.” (Xu Decl. ¶ 2, ECF
No. 5-1). Billion is a “limited company formed and
based in Hong Kong.” (Id. ¶ 4). Billion
is a wholly owned subsidiary of Hybrid Kinetic.
(Id.). HKG “is an electric vehicle
manufacturer that purports to manufacture electric transit
buses, electric commercial delivery vehicles, and hybrid
automobiles.” (Compl. ¶ 1).
The Proposed Joint Venture
Memorandum of Understanding
November 2014, the Parties executed a memorandum of
understanding (the “MOU”). (Id. ¶
28). According to the MOU, the Parties would establish a
“strategic partnership” under which they would
“collaborate on the development and manufacture of a
Lithium Titanate Oxide (LTO) based cell and battery
pack.” (Id.). The MOU further provides that
“HKG shall utilize all XALT battery capacity
in Midland exclusively.” (Id. ¶ 30);
(Pls.' Opp'n Defs.' Mot. Stay Ex. 1
[“MOU”] § 2.3, ECF No. 13-1). The MOU does
not contain an arbitration provision. (See MOU).
March 10 and 20, 2015, the Parties negotiated a supply
agreement under which “HK[G] would provide XALT with
capital funding through deposits and letters of credit, and
XALT would manufacture and supply battery cells to
HK[G].” (Id. ¶ 39). During the
negotiations, “it was contemplated that XALT would
supply battery cells exclusively to HK[G], XALT's Midland
manufacturing plant would run at or above full capacity
(requiring additional personnel and substantial overtime),
and HK[G] would purchase every battery cell manufactured at
that plant.” (Id.).
about March 20, 2015, the Parties executed an
“Agreement for the Supply of Battery Cells” (the
“Supply Agreement”), under which XALT formally
agreed to manufacture and supply LTO battery cells to HKG.
(Id. ¶ 40). The Supply Agreement memorialized
HKG's earlier proposal that in addition to the $13
million it already paid XALT, HKG would pay XALT $16 million
by March 31, 2015. (Id. ¶ 41).
Supply Agreement further addressed letters of credit and
purchase quantities. (Id. ¶¶ 42-43). The
first letter of credit would be for approximately $95 million
and HKG would provide it by May 1, 2015 to cover expenses
from March 20, 2015 through the end of the calendar year.
(Id. ¶ 42). Then, through calendar year 2020,
HKG would provide $240 million letters of credit by January 1
to cover that calendar year's expenses. (Id.).
HKG “agreed to purchase a minimum of 972, 800 LTO
battery cells from XALT between March 20, 2015 and December
31, 2015, and 2, 560, 000 LTO battery cells during each year
from 2016 through 2020.” (Id. ¶ 43). The
Parties also “agreed that XALT's Midland plant
would operate at more than 100% capacity and that HK[G] would
purchase battery cells exclusively from XALT.”
(Id. ¶ 44).
Supply Agreement also contains the following arbitration
provision (the “Arbitration Provision”):
Any dispute, controversy or claim arising out of or relating
to this Agreement shall be submitted to the Hong Kong
International Arbitration Centre for arbitration in
accordance with its then effective arbitration rules. The
arbitral award shall be binding and final, and any Party may