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Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Richard B Sanders X-To: Mark E Haedicke X-cc: X-bcc: X-Folder: \Richard_Sanders_Dec2000\Notes Folders\All documents X-Origin: Sanders-R X-FileName: rsander.nsf Enron Europe has decided to pursue this claim. How involved would you like me to be? ---------------------- Forwarded by Richard B Sanders/HOU/ECT on 12/05/99 01:44 PM --------------------------- Jon Chapman 11/10/99 09:50 AM To: Mark Frevert/LON/ECT@ECT, Danny McCarty/LON/ECT@ECT, John Sherriff/LON/ECT@ECT cc: Matthew Scrimshaw/LON/ECT@ECT, Michael R Brown/LON/ECT@ECT, Richard B Sanders/HOU/ECT@ECT Subject: Warranty claim by Enron Teesside Operations Limited against ICI Chemicals & Polymers Limited ("ICI") PRIVILEGED ATTORNEY - CLIENT COMMUNICATION : CONFIDENTIAL Mark / Dan / John As you are aware , earlier this year , we served formal notices of two potential warranty claims ( re. the Halochems. closure and the DuPont reduced steam-take ) on ICI , as required by the Sale of Business Agreement . We have subsequently prepared a detailed draft analysis and costing of our claims (the "Particulars of Claim") which has been served on ICI's lawyers , Herbert Smith . They have come back with some requests for supporting documentation which we are currently dealing with. The Sale of Business Agreement requires us , unless ICI agree to settle which seems highly unlikely at this stage , to issue formal court proceedings against ICI before 21 November in respect of the Halochems. claim and before 17 December in respect of DuPont . We wish to deal with the two claims together and , accordingly , it is proposed that we issue proceedings , at latest , on 16 November . Issue puts us into a formal procedural timetable . ICI would have 14 days to reply indicating whether they wish to defend and a further 14 days to issue a defence , though this period is generally capable of being extended by a further 28 days . The process of discovery , whereby each side has the opportunity to examine relevant documentation in the possession of the other , would probably begin after 3 months or so . If we were to go to full trial , this could be in the second half of next year . If we don't issue proceedings before the relevant dates , we lose the right to bring the relevant claim completely unless ICI has waived the requirement that we issue proceedings by these dates , which they have shown no inclination to do.The downside of issuing proceedings is that , whilst we are entitled to withdraw them at any stage if we decide not to proceed with the claims , we would then be liable for much of ICI's legal costs from the date of issue to the date of withdrawal . Our lawyers' view is that , were we to go to full trial and lose , the potential aggregate liability for ETOL's legal costs and ICI's legal costs would be between o1 million and o1.5 million (our current costs are around o70 , 000 ). In terms of the chances of success of our claims were we to go to full trial , I believe , and am advised , that the DuPont reduced steam-take claim is more likely to succeed than the Halochems. shutdown claim . Given the legal complexities of contractual warranty claims , I do not think it would be wise , at this stage , to be overly confident of success at full trial . However , there is certainly , in my view , good potential for achieving a settlement with ICI which may involve more than simply a cash payment (eg restructuring of key contracts , land deals etc. ) .We do know that , as a matter of practice , ICI ignore potential claims unless proceedings have been issued . Issue of proceedings should , thus , be viewed primarily , at this stage , as a necessary means of getting ICI to the negotiating table . Their costs will not ramp up significantly until discovery starts , so we should be ready to monitor closely and constantly our prospects in the litigation as against our potential exposure should we withdraw or lose . On the basis of the above , I would recommend that proceedings are issued against ICI and would very much welcome your views or comments on this. Regards. Jon
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