Dow Chemical awarded US$2.16 billion in arbitration with Kuwait company

An international arbitration panel has ruled that Dow Chemical Co., the largest U.S. chemical maker by sales, is to be awarded US$2.16 billion in damages after a Kuwait company canceled a 2008 agreement to buy a stake in the company’s plastics business.

Midland, Mich.-based Dow put together a US$17.4 billion joint venture with Petrochemical Industries Co. (PIC), a subsidiary of state-owned Kuwait Petroleum Corp., to produce plastics for consumer products, automotive parts, and drug processing in 2008.

But as commodity prices plunged and the global economy went into a recession, the so-called K-Dow Petrochemicals joint venture was scrapped just days before it was set to close. Two months after the deal collapsed, Dow posted losses of US$1.55 billion for the fourth-quarter of 2008 and cut about 11 per cent of its global work force.

The International Court of Arbitration in Paris ruled that PIC will pay Dow for backing out of the deal. The court is part of the International Chamber of Commerce.

“This outcome brings resolution and closure to the issue,” Dow chairman and CEO Andrew Liveris said in a news release. “We remain focused on continuing to move forward with our transformation and profitable business partnerships — both in Kuwait and around the world.”