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Sunday, 30 April 2017 15:17

West Michigan ammunition equipment maker sues UAE-held firm in contract dispute

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HASTINGS — A West Michigan ammunition equipment manufacturer wants an arms maker owned by the United Arab Emirates to pay up.

In late January, BCN Technical Services Inc. of Hastings filed a lawsuit in the U.S. District Court for the Western District of Michigan against Caracal Light Ammunition LLC, an Abu Dhabi-based arms maker owned by the Emirates Defense Industry Company. 

BCN alleges the company breached its contract for $9.6 million worth of ammunition manufacturing equipment. 

The West Michigan manufacturer claims Caracal failed to provide the necessary components, gauges and other equipment to make the ammunition needed to test and validate the equipment, according to court documents. Without those materials, BCN maintains it cannot complete the machines, which are intended to manufacture 12.7 x 99 mm ammunition, known in the U.S. as .50 caliber rounds. The ammunition primarily is used in heavy machine gun applications. 

Thus far, BCN has spent nearly $8 million to produce the machines, according to the court documents. Caracal provided a $2.8 million downpayment at the outset of the contract. 

The lawsuit traces its roots back to March 2013 when BCN and Caracal signed the contract for the manufacturing equipment. In 2014, Caracal contended BCN was responsible for securing the necessary components and raw material. BCN refutes that claim, maintaining since the inception of its contract that Caracal was responsible for purchasing the components. 

BCN then offered to identify supplier sources for Caracal, but “over the course of the next two years the parties continued to dispute responsibility for the components,” according to the court documents. 

Currently, the parties are in the middle of negotiating a settlement, a process that is “going well,” said Daniel Roland, in-house counsel for BCN. 

Roland declined to comment further on the lawsuit. 

If a settlement is not reached, BCN is asking the court to grant it the ability to cancel the contract, recoup its expenses for manufacturing the equipment and seek damages in excess of $75,000, plus legal fees. The company is represented by Barnes & Thornburg LLP in the lawsuit.
Caracal did not respond to attempts for comment. 

While the dispute between BCN and Caracal began in 2013, the case may not be resolved for quite some time, said John Allen, a partner with Grand Rapids-based Varnum LLP. If a U.S. court rules in favor of BCN, enforcing that judgment on the UAE could prove challenging primarily because the countries do not share a general treaty on the matter. 

“What most commercial U.S. law firms do, if they don’t have a presence already in UAE, would be to affiliate with law firms that do or law firms that are domestic there and use their assistance to figure out the best method to enforce the U.S. judgment,” Allen said. “It’s not that the U.S. judgment is not enforceable, but it is very difficult — there is no doubt about that.”

Allen notes the discovery phase of lawsuits, where the court gathers documents, depositions and other evidence, can also get held up in international disputes. 

“The discovery phase takes a while, particularly when its involving a foreign country,” Allen said. “Sometimes, getting that information out of a foreign country is not easy to do. That can be just as true in the European Union as in the UAE, because they all have different procedural goals and rules relating to privacy or attorney-client privilege that often have to be dealt with.” 

BCN manufactures a variety of ammunition production equipment including bullet, cartridge and casing machines under its Bliss Munitions Equipment brand. 

The company is headquartered in Hastings, according to its website. It operates as a division of Canton, Mich.-based Schuler Inc., a metalforming equipment manufacturer that serves the automotive industry.

The Emirates Defense Industry Company, a state-owned organization, announced it had acquired Caracal this February at the annual International Defence Exhibition and Conference (IDEX) held in Abu Dhabi, according to a statement. The company originally formed under Tawazun, a state-held organization that focuses on economic development in the UAE. 

The company produces small arms ammunition for military and commercial applications. 

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