Kelley Drye Team Brings Home Arbitration Victory for Lucent

Kelley Drye won a favorable award on behalf of Lucent Technologies International, Inc. in a complex international arbitration in which the claimant sought damages in excess of $42 million. Lucent and Telesisa Sistemas Em Telecomunicações, S.A. had entered into agreements that created a joint venture known as Octel Comunicações, Ltda., to sell and service voice messaging products in Brazil. Telesisa alleged that Lucent had violated those agreements by failing to provide adequate funding for the JV, not agreeing for the JV company to distribute dividends, and competing against the JV. Lucent asserted a counterclaim that Telesisa had wrongfully appropriated funds belonging to the JV, and failed to pay promissory notes worth millions of dollars for equipment that Lucent had shipped to Octel.

The arbitration was held under the auspices of the AAA in New York, with a panel comprised of the former General Counsel of Johnson & Johnson, a professor of international law at NYU, and the Dean of the Boston University School of Law. Because Brazilian law governed the dispute, the Kelley Drye team worked closely with Brazilian counsel and an expert in Brazilian commercial law. After a hearing last year, the panel found for Lucent on its counterclaims and granted Telesisa only a small fraction of its alleged damages. Telesisa then sought a rehearing of certain issues, but Kelley Drye attorneys successfully defended against that challenge as well. The matter recently concluded with a settlement on terms highly favorable to Lucent.