• A Sinovel Wind Turbine

A Sinovel Wind Turbine (Photo : Getty Images)

Italian companies Margherita Srl and Daunia Deliceto Srl are seeking more than 43.65 million euros ($46.43 million) in compensation business partners of Chinese wind power equipment manufacturer Sinovel Wind Group for breach of contract.

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A request to enter into an arbitration process to resolve disputes has been sent to Sinovel.

The two Italian companies who are business partners of Sinovel claimed that the wind power equipment that the latter provided did not meet standards agreed upon.

They asked Sinovel and its subsidiary in Italy to pay over 25.42 million euros to cover repairs and replacements of the equipment and more than 18 million euros for losses due to breach of contract.

While Sinovel admitted that it could not currently assess the implications of the case since the process is yet to start, it announced that it will actively respond to the case and defend its legal rights.The deals under which the Chinese company agreed to supply wind power equipment and related services were signed in 2012.

Sinovel reported a loss of more than 288 million yuan ($41.88 million) last years after losing 445 million yuan in 2015. There's a danger that the company might face suspension of trading of its shares on the SSE due to the losses.

The arbitration case is a consensual process used by companies as an alternative to litigation for reaching final binding resolutions for disputes in international deals. It would be heard before the arbitration court of the International Chamber of Commerce.

Sinovel is among the most prominent players at both the global and domestic level in the offshore wind energy market. It recently signed a strategic cooperation agreement with communications firm Cisco Systems in the US. The deal is meant to boost new breakthroughs in the construction of the Energy Net, such as in the fields of micro-grid for distributed wind installations, smart wind software service, and new energies for smart cities.