James H. Carter, Esq. (Chairman)
Wilmer Cutler Pickering Hale and Dorr LLP
399 Park Avenue
New York, NY 10022
William C. Brown, III, Esq.
Jones Hirsch Connors & Bull P.C.
1 Battery Park Plaza, 28th Floor
New York, NY 10004
Stephen P. Younger, Esq.
Patterson Belknap Webb & Tyler LLP
1133 Avenue of the Americas
New York, NY 10036
(a) This Agreement shall be governed and construed in accordance with law of the State of New York including section 5-1401 of the New York General Obligations Law but excluding any other conflict of law rules that would lead to the application of the law of another jurisdiction.
(b) Any controversy or claim arising out of or relating to this Agreement, or breach thereof, shall be determined by arbitration administered by the American Arbitration Association (the "AAA") in accordance with its International Arbitration Rules. The place of arbitration shall be New York, New York, United States. The language of the arbitration shall be English. The arbitrators shall be three. AAC and the Client shall each appoint one arbitrator and the two arbitrators shall select the third arbitrator, who will act as the presiding arbitrator. If either AAC or the Client fails to appoint an arbitrator within 45 days of commencement of the arbitration, the AAA shall appoint the arbitrator upon written request of either AAC or the Client. Within 30 days of appointment of the two arbitrators, if the arbitrators have failed to agree on the appointment of the third arbitrator, the AAA shall appoint the third arbitrator upon written request of any party to the arbitration. ACC and the Client shall submit to the non-exclusive jurisdiction of any New York State court or Federal court sitting in the City and County of New York for the purpose of enforcement of any arbitral award and waive any defenses to the lack of convenience of proceedings brought in these courts for this purpose.
(a) Any inconsistency between the quality of workmanship performed by AAC, its agents, servants or contractors on the Aircraft and the quality of workmanship required by the FAA or any specifications and drawings agreed to by AAC and the Client in Exhibit E or in connection with any AWR or Non-Conforming Task Card, (b) any other inconsistency or defect in workmanship as compared to the quality required by the Client, (c) any defects in design (except for any design provided by the Client without collaboration with AAC) including selection of materials by AAC or its subcontractors, having regard to the state of art on the date of design and normal use and service or (d) any defect in the quality of any cabin furnishings, equipment, components, accessories, materials, units or parts which are made or built by AAC or its subcontractors; and "Defective" shall be construed accordingly.
18. Limited Warranty
(a) AAC hereby warrants, until the Warranty Expiry Date, that the Work was performed and conforms to all relevant FAA standards and is free from Defects. No warranty is given (except to the extent of any installation and workmanship provided by AAC or its subcontractors) with respect to any unit or part furnished by the Client or for any equipment, component, accessory, material, or part which is not manufactured by AAC or its subcontractors; provided that AAC has ensured (and provided Client with written evidence) that all warranties, if any, of manufacturers of such other equipment, components, accessories, and parts have been assigned to the Client. To the extent AAC receives the benefit of any warranty from a manufacturer that AAC is prohibited from assigning to Client, AAC agrees that, upon request of Client, it will diligently pursue any claims it may have under such warranty on behalf of Client. For the avoidance of doubt, AAC shall be deemed to be the manufacturer of all cabin furnishings and other units or parts which are made or built by AAC or its subcontractors.
(b) The sole and exclusive remedy and responsibility of AAC under this warranty is to correct, repair, or replace without charge to Client any article or part of the Work found by AAC after inspection to require repair or replacement under part (a) of this paragraph 18. The anticipated location for any such repair is the Love Field Facility. If such repair or replacement cannot be performed at the Love Field Facility due to location and Client’s service need of the Aircraft, or due to the unavailability of required hangar space at the Love Field Facility, AAC shall either (i) endeavor to deliver to the location of the aircraft the required replacement items or parts and appropriate personnel to perform such task at AAC expense (ii) Client and AAC shall mutually agree on a third party repair location to perform such repair and AAC shall agree with such third party the labor hours required to perform the repair and AAC shall pay the standard AAC labor rates for the negotiated hours and AAC shall supply the required replacement items or parts to such third party unless to do so would delay the repair or replacement of the Aircraft, in which case such third party or another vendor mutually agreed by the Client and AAC will supply such items or parts. AAC shall pay the cost to acquire such items or parts, up to the amount that AAC would charge on an arms length basis for the sale and delivery of the same or substantially comparable items or parts. All associated costs in addition to items or parts supplied by AAC and labor shall be the responsibility of Client; provided that the Client has advised AAC in writing of any claim prior to the later of the Warranty Expiry Date or the date which is thirty (30) days after the date of discovery of the Defect (so long as the Defect is discovered on or before the Warranty Expiry Date).
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(e) THE PROVISIONS OF THIS PARAGRAPH 18, CONSTITUTE AAC’s ONLY WARRANTY WITH RESPECT TO WORK BY AAC HEREUNDER, AND THIS WARRANTY IS ACCEPTED BY CLIENT IN LIEU OF ALL OTHER WARRANTIES, WHICH ARE EXPRESSLY DISCLAIMED AND EXCLUDED, INCLUDING WITHOUT LIMITATION WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND ANY IMPLIED WARRANTY OF GOOD AND WORKMANLIKE PERFORMANCE, WHETHER WRITTEN, ORAL, EXPRESS, IMPLIED OR STATUTORY, AND OF ANY OTHER OBLIGATION ON THE PART OF AAC. AAC NEITHER ASSUMES NOR AUTHORIZES ANY PERSON TO ASSUME FOR IT ANY OTHER LIABILITIES WITH RESPECT TO THE WORK, EXCEPT AS SET FORTH IN THIS AGREEMENT.
IN NO EVENT SHALL AAC BE LIABLE FOR NORMAL WEAR AND TEAR, OR FOR ANY LOSS OF USE OR INDIRECT, SPECIAL, CONTINGENT, INCIDENTAL, OR CONSEQUENTIAL DAMAGE OR EXPENSE TO CLIENT OR ANY THIRD PARTY DUE TO PARTIAL OR COMPLETE INOPERABILITY FOR ANY REASON WHATSOEVER (OTHER THAN AAC’S GROSS NEGLIGENCE OR WILFUL MISCONDUCT), OF THE WORK OR PARTY INSTALLED OR REPAIRED PURSUANT TO THIS AGREEMENT.
(a) In the case of termination by the Client [Celestial] (other than under [provisions not relevant here]), the Client shall be entitled to procure the completion of the Work by such third party contractor as it may in its discretion select and AAC shall be entitled to be paid for the part of the Work it completed, in an amount equal to:
(i) the Partial Work Value; less
(ii) the difference between the cost to the Client of procuring the completion of the Work by such third party contractor and the cost that the Client would have incurred had the Work been completed by AAC in accordance with this Agreement. The Client will notify AAC of that amount together with the details supporting the calculation
If the amount calculated under sub-clauses (i) and (ii) above is less than the amount paid to AAC under clause 8, AAC will repay the difference to the Client within five (5) days of being required by the Client to do so.
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(d) In the event of termination of this Agreement under Clause 23(1), the party which has given valid notice to terminate this Agreement may, in its sole and absolute discretion exercise any right, power, privilege or remedy provided by applicable law of the Agreement.
(e) No remedy referred to in this Clause 23 herein or in any part of this Agreement is intended to be exclusive, but each shall be cumulative and in addition to any other legal remedy referred to above or otherwise available to either party.
(f) "Partial Work Value" means, at any time that this Agreement is terminated prior to the completion of the Work, the value of the portion of Work that has been completed by AAC as such value is determined by a firm of internationally recognized appraisers experienced in the aircraft industry and agreed by the parties. If the parties are unable to agree on one such firm of internationally recognized appraisers, each party will select one firm of internationally recognized appraisers experienced in the aircraft industry to each value the partially completed Work, and the Partial Work Value will be the average of these two values. The determination of the Partial Work Value will be conclusive and binding and its costs borne equally by the parties in respect of termination under Clauses 21(d) or 23(1)(a)(iv)), and otherwise by the defaulting party.
(g) In the event this Agreement is terminated and another facility is retained to complete the Work, AAC shall cooperate with all reasonable requests of the Client or such other facility for purposes of coordinating a smooth transfer of the Work.
a. The sum of $11,798,556.38 as damages;
b. The sum of $600,000.00 as a portion of Celestial’s attorneys’ fees and costs; and
c. Simple interest from a date thirty (30) days after the delivery of this Award on $12,398,556.38 at a rate of five (5) percent per annum until the date of payment.