1019-00001 · Haber Reinhardt Schlosser Partners · Correspondence/Client

post-hearing-report-letter.docx DOCUMENT M&A / Corporate

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CALDERWOOD & HARKNESS LLP Attorneys at Law

600 Lexington Avenue New York, New York 10022 Telephone: (212) 506-7000 Facsimile: (212) 506-7001 www.calderwoodharkness.com

January 19, 2024

PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION

VIA ELECTRONIC MAIL AND HAND DELIVERY

Dana Prescott, Esq. Vice President & General Counsel Whitmore Aerospace LLC 4200 Wilson Boulevard, Suite 1100 Arlington, Virginia 22203

Marcus J. Whitmore III Chief Executive Officer Whitmore Aerospace LLC 4200 Wilson Boulevard, Suite 1100 Arlington, Virginia 22203

Re: ICC Case No. 27914/MHM — Kestrel Dynamics GmbH v. Whitmore Aerospace LLC — Post-Hearing Report

Engagement No.: 1019-00001

Dear Dana and Marcus:

We write to provide this comprehensive post-hearing report following the five-day evidentiary hearing conducted in the above-captioned arbitration. This letter is protected by the attorney-client privilege and the work-product doctrine and should be treated as strictly confidential. No portion of this letter should be disclosed to any third party without our prior written consent.

I. Introduction and Purpose

This letter reports on the evidentiary hearing held January 8 through January 12, 2024, at the ICC International Court of Arbitration Hearing Centre in New York, New York. The hearing was conducted before the following Tribunal:

• Prof. Dame Eleanor Fitzwilliam (Presiding Arbitrator)

• Dr. Hans-Ulrich Perren (Claimant's nominee)

• Hon. Robert A. Castillo (ret.) (Respondent's nominee)

Claimant Kestrel Dynamics GmbH ("Kestrel" or "Claimant") was represented at the hearing by Dr. Maximilian Haber and Katrin Schäfer of Haber Reinhardt Schlosser Partnerschaft mbB, Stuttgart and London. Respondent Whitmore Aerospace LLC ("WAL" or "Respondent") was represented by Theodore Langston, Vivienne St. Claire, Simone Laroche, and Jeffrey Park of Calderwood & Harkness LLP.

The hearing proceeded over five full days in accordance with the procedural calendar established in Procedural Order No. 1 (February 14, 2023), as subsequently amended by Procedural Orders Nos. 3 and 5. No material procedural irregularities occurred during the hearing, and both parties had a full and fair opportunity to present their cases.

The purpose of this letter is fourfold: (1) to summarize the testimony presented by both fact and expert witnesses; (2) to identify the Tribunal's apparent areas of focus based on the questions posed by the arbitrators during the hearing; (3) to provide our firm's candid assessment of the likely outcomes on each claim and counterclaim; and (4) to outline the next steps in the proceeding, including the preparation and filing of post-hearing briefs, which are due on February 9, 2024.

We are pleased to report that, in our assessment, the hearing went very well for WAL. As discussed in greater detail below, we believe that the evidentiary record strongly supports WAL's defense against Kestrel's claims and WAL's affirmative counterclaim. We address each of these matters in turn.

II. Overview of Hearing Structure

The five-day hearing was structured as follows:

The arbitration was conducted in English, as required by Section 22.3 of the Master Supply Agreement dated June 15, 2018 (the "MSA"), and in accordance with the ICC Rules of Arbitration (2021 edition). The seat of arbitration is New York, New York, and the substantive governing law is the law of the State of New York. All witnesses testified in English, with the exception of Dr. Stefan Voss, who testified with the assistance of a German-English interpreter provided by the ICC. Real-time transcription was provided by Sundial Solutions, and daily transcripts were made available to both parties at the close of each hearing day.

The hearing was conducted in a standard format with each witness presented through direct examination (or, in certain cases, on the basis of a written witness statement adopted as direct testimony), followed by cross-examination, redirect, and questions from the Tribunal. The Tribunal was active throughout the hearing and posed substantive questions to virtually every witness. We discuss the significance of those questions in Section VI below.

III. Summary of Opening Statements

A. Claimant's Opening (Dr. Maximilian Haber, HRS)

Dr. Haber delivered Kestrel's opening statement over approximately ninety minutes. The central thrust of Kestrel's case, as presented in the opening, was that WAL committed a material breach of the MSA (contract no. WAL-KDG-MSA-2018-0615) by wrongfully rejecting fourteen lots of Ti-6Al-4V ELI (Extra Low Interstitial) titanium alloy turbine housings — comprising a total of 1,680 units — delivered between March and September 2022.

Kestrel's principal theory of breach was that WAL applied an unpublished and unilaterally adopted porosity tolerance of ≤0.15% to its incoming inspections, rather than the contractual porosity specification of ≤0.25% set forth in WAL-SPEC-TH-401, Appendix C, Table 3. According to Dr. Haber, this tightened standard was never communicated to Kestrel, never incorporated into the MSA or any amendment thereto, and was used as a pretext to manufacture grounds for termination.

Dr. Haber argued that WAL's true motive for the rejections and subsequent termination was to replace Kestrel with a lower-cost domestic supplier, Valkyr Precision Components Inc., headquartered in Tucson, Arizona. Kestrel contended that WAL had been in discussions with Valkyr well before the quality issues arose and that the rejections were orchestrated to create a paper trail justifying the termination of a long-standing supply relationship.

On damages, Dr. Haber presented Kestrel's total claim of €47.3 million, broken down as follows:

Dr. Haber also addressed WAL's counterclaim of €5.17 million for Valkyr replacement costs, arguing that the counterclaim was barred because WAL's termination was itself wrongful, and that even if the termination were upheld, the Valkyr costs were inflated and should have been mitigated through a competitive procurement process.

B. Respondent's Opening (Theodore Langston, C&H)

Theodore Langston delivered WAL's opening statement over approximately two hours. Mr. Langston's presentation was organized around three principal themes: (1) the rejections were substantively justified; (2) the termination was procedurally and contractually proper; and (3) Kestrel's damages claims were grossly overstated and largely barred by the MSA.

On the first theme, Mr. Langston presented the results of independent metallurgical testing conducted by Arclight Materials Science Inc. under the direction of Dr. Raymond Chow. Dr. Chow's testing confirmed porosity levels ranging from 0.19% to 0.38% across the fourteen rejected lots, with the majority of lots exceeding the contractual porosity limit of ≤0.25% as specified in WAL-SPEC-TH-401, Appendix C, Table 3. Mr. Langston emphasized that the contractual specification was unambiguous, was expressly incorporated into the MSA, and had been the operative standard throughout the entire commercial relationship.

On the second theme, Mr. Langston demonstrated that WAL's termination for Persistent Quality Failure was proper under Section 14.2(b) of the MSA. That provision permits termination upon seven uncured rejections in any rolling twelve-month period — a threshold that Kestrel indisputably exceeded between March and September 2022. The three-rejection threshold triggering the escalation procedure under Section 8.4 had been crossed by June 2022, and seven uncured rejections had accumulated by the time of the October 3, 2022, termination notice. Moreover, Kestrel failed to cure within the forty-five calendar-day amended cure period (as extended by Amendment No. 2, dated September 3, 2021) for five of the seven uncured lots. For the remaining two lots, Kestrel provided replacement units that themselves failed incoming inspection.

On the third theme, Mr. Langston argued that Kestrel's damages were vastly overstated in several critical respects:

• The renewal-period lost profits of €27.15 million were entirely speculative because the renewal options were exercisable solely at WAL's discretion. WAL had no obligation to renew, and there was no basis for assuming renewal at one hundred percent probability.

• Consequential damages, including the €3.90 million reputational damages claim, were expressly waived under Section 8.7 of the MSA, which contains a clear and enforceable mutual waiver of consequential, indirect, incidental, and special damages.

• Kestrel's claimed contract-specific margin of 22.4% was inflated. WAL's forensic analysis showed that the actual margin, after proper allocation of direct overhead, was approximately 16.8%.

• The €3.42 million in rework costs was overstated because a significant portion of the claimed rework constituted routine manufacturing activity, not rework attributable to WAL's rejections.

Finally, Mr. Langston presented WAL's counterclaim of €5.17 million in replacement-component costs incurred as a result of Kestrel's quality failures. This figure represents the premium WAL was forced to pay Valkyr for 1,680 replacement turbine housings at a per-unit price of €8,432.92, compared to Kestrel's Contract Year 4 price of €5,222.92 — a per-unit premium of €3,210.00. This gross premium of €5,392,800 was reduced by Valkyr's 4.2% introductory discount, yielding a net counterclaim of approximately €5.17 million. Mr. Langston emphasized that the decision to onboard Valkyr was a commercially reasonable mitigation step, taken only after Kestrel's repeated and uncured quality failures made it clear that Kestrel could not be relied upon to supply conforming product.

During WAL's opening, the Tribunal was notably engaged. Prof. Dame Eleanor Fitzwilliam asked several clarifying questions regarding the porosity specification — specifically, whether the ≤0.25% standard appeared on the face of the MSA or only in the incorporated specifications — and regarding the timing of WAL's initial engagement with Valkyr. Mr. Langston responded to each question clearly and directly, pointing the Tribunal to the specific contractual provisions and documentary evidence supporting WAL's position. The Tribunal's interest in these two issues during the opening foreshadowed questions that recurred throughout the hearing, as discussed in Section VI below.

IV. Summary of Fact Witness Testimony

The hearing featured testimony from five fact witnesses — three called by Kestrel and two called by WAL. We summarize each witness's testimony below, including our assessment of the impact of each witness's testimony on the overall case.

A. Claimant's Fact Witnesses

1. Friedrich Brenner — Managing Director (*Geschäftsführer*), Kestrel Dynamics GmbH. Mr. Brenner was Kestrel's lead fact witness and testified on the afternoon of Day 1 and the morning of Day 2.

Direct Examination (Dr. Haber). Mr. Brenner's direct testimony covered the history of the commercial relationship between Kestrel and WAL, the negotiation and execution of the MSA in 2018, Kestrel's substantial investment in tooling and production capacity to meet WAL's specifications, and the adverse impact of WAL's termination on Kestrel's overall business. Brenner characterized the rejections as pretextual and motivated by WAL's desire to reduce supply-chain costs by replacing Kestrel with a lower-cost domestic alternative. He alleged that he first became aware of WAL's discussions with Valkyr as early as mid-2021 — well before the quality issues that ultimately formed the basis for termination.

Cross-Examination (Simone Laroche). Ms. Laroche's cross-examination was highly effective. Brenner was confronted with contemporaneous internal email correspondence showing that Kestrel's own quality-assurance team had flagged porosity concerns in multiple lots prior to shipment to WAL. Specifically, Ms. Laroche presented three internal quality alert memoranda (Exhibits R-117, R-118, and R-122) issued by Kestrel's quality department between April and July 2022, each noting that specific lots had porosity readings approaching or at the contractual limit. Mr. Brenner acknowledged awareness of at least three such internal quality alerts but maintained that the products were, in his view, within specification at the time of shipment.

Key Moment. The most significant moment in Brenner's testimony occurred when Ms. Laroche asked him to identify any document — whether a letter, email, meeting note, or any other written communication — in which Kestrel formally disputed the ≤0.25% porosity standard prior to the commencement of this arbitration. Mr. Brenner was unable to identify any such document. He acknowledged that WAL-SPEC-TH-401, Appendix C, Table 3 was provided to Kestrel during the MSA negotiations and was incorporated into the MSA by reference pursuant to Section 3.2. This concession was significant because it effectively negated Kestrel's argument that the ≤0.25% standard was not the operative contractual specification.

Tribunal Questions. Dr. Perren asked Mr. Brenner to clarify when Kestrel first learned of the alleged ≤0.15% porosity standard that Kestrel contends WAL applied. Brenner's response was notably vague. He referred to "informal conversations" with WAL engineering personnel but was unable to identify any specific individual, any specific date, or any documentary support for these conversations. This vagueness appeared to concern the Tribunal and contrasted sharply with the precision of WAL's documentary evidence.

Assessment. The cross-examination of Mr. Brenner effectively undermined his narrative that the rejections were pretextual. His concession regarding internal quality alerts was particularly damaging because it demonstrated that Kestrel itself was aware of porosity concerns in the rejected lots and shipped the product nonetheless. His inability to identify any pre-arbitration document disputing the ≤0.25% standard further weakened Kestrel's position. Overall, Brenner's testimony, while earnest, was not persuasive on the key issues.

2. Luisa Erdmann — Commercial Director, Kestrel Dynamics GmbH. Ms. Erdmann testified on the morning of Day 2.

Direct Examination (Dr. Haber). Ms. Erdmann's testimony focused on the financial impact of WAL's termination on Kestrel's business, Kestrel's efforts (or lack thereof) to mitigate its losses by seeking alternative customers, and the commercial basis for Kestrel's damages claim. She presented Kestrel's margin analysis and defended the 22.4% margin figure used by Kestrel's damages expert, Prof. Dieter Langfeld of Rheinsberg Advisory AG, asserting that this figure was based on actual fiscal year 2021 financial data.

Cross-Examination (Jeffrey Park). Mr. Park conducted a focused and effective cross-examination. He confronted Ms. Erdmann with Kestrel's own management accounts for fiscal year 2021 (Exhibit R-201), which showed that the WAL contract margin was approximately 16.8% after allocation of direct overhead — significantly lower than the 22.4% figure used in Prof. Langfeld's expert report. Ms. Erdmann struggled to reconcile the discrepancy and ultimately attributed it to "different cost-allocation methodologies," but was unable to articulate a coherent explanation for why the methodology employed by Prof. Langfeld was preferable to the methodology reflected in Kestrel's own internal management accounts prepared in the ordinary course of business.

Key Moment. Ms. Erdmann also admitted under cross-examination that Kestrel did not undertake meaningful efforts to find replacement customers for the turbine-housing production capacity until approximately six months after receiving WAL's October 3, 2022, termination notice. When pressed by Mr. Park as to why Kestrel delayed in pursuing alternative business, Erdmann provided only a general explanation about the difficulty of finding new aerospace customers, without pointing to any specific steps taken during the initial six-month period. This admission is relevant to both Kestrel's duty to mitigate and the reasonableness of its lost-profits claims.

Assessment. Ms. Erdmann's testimony weakened Kestrel's damages case in two important respects. First, the margin discrepancy — 22.4% versus 16.8% — directly undermines the foundation of Prof. Langfeld's damages quantification. Second, the delayed mitigation admission provides an additional basis for the Tribunal to reduce any damages award, should it find in Kestrel's favor on liability (which we consider unlikely). We expect to emphasize both points in the post-hearing brief.

3. Dr. Stefan Voss — Head of Quality Assurance, Kestrel Dynamics GmbH. Dr. Voss testified on the afternoon of Day 2.

Direct Examination (Katrin Schäfer). Dr. Voss's direct testimony addressed Kestrel's quality-control processes, its AS9100 Revision D certification and compliance, and its internal porosity-testing methodology. Dr. Voss maintained that all fourteen rejected lots met the ≤0.25% contractual porosity specification based on Kestrel's internal testing. He explained that Kestrel employed an optical microscopy technique for porosity measurement and argued that this methodology was consistent with accepted industry practice.

Cross-Examination (Simone Laroche). Ms. Laroche conducted a thorough cross-examination that exposed several critical weaknesses in Dr. Voss's testimony. First, she presented Kestrel's own test certificates (Exhibits R-131 through R-144) showing that several lots had porosity readings between 0.22% and 0.27%, with specific lots exceeding the 0.25% threshold even under Kestrel's own testing methodology. Dr. Voss argued that measurement uncertainty and differences in testing methodology could account for the discrepancy between Kestrel's results and those obtained by Dr. Chow, but this explanation was undermined by the fact that Kestrel's own data showed exceedances.

Second, and perhaps most significantly, Dr. Voss acknowledged under cross-examination that Kestrel's porosity-testing equipment had not been recalibrated during the relevant period as required by AS9100 Revision D protocols. AS9100 Rev D, Section 7.1.5.2, requires that monitoring and measurement equipment be calibrated or verified at specified intervals, or prior to use, against measurement standards traceable to international or national standards. Dr. Voss attempted to minimize this lapse by stating that the calibration was "approximately current," but this characterization was unconvincing and appeared to trouble the Tribunal.

Key Moment. Hon. Castillo asked Dr. Voss directly whether Kestrel's own test data showed any lots exceeding 0.25% porosity. After a pause, Dr. Voss admitted to "borderline" results in three to four lots. This admission was highly significant because it corroborated Dr. Chow's independent findings and undermined Kestrel's central contention that all fourteen lots were within specification.

Assessment. Dr. Voss's admissions regarding calibration lapses and borderline porosity results were among the most damaging moments of the hearing for Kestrel. His testimony effectively corroborated the findings of WAL's metallurgical expert, Dr. Chow, and demonstrated that even under Kestrel's own testing regime — which used a less sensitive methodology and equipment that had not been properly calibrated — the rejected lots were at or near the contractual limit. This testimony significantly undermined Kestrel's position that all lots met the contractual specification and that WAL's rejections were pretextual.

B. Respondent's Fact Witnesses

4. Gerald Huang — VP Global Supply Chain Operations, Whitmore Aerospace LLC. Mr. Huang testified on the afternoon of Day 2 and the morning of Day 3.

Direct Examination (Theodore Langston). Mr. Huang provided comprehensive testimony regarding the lot-rejection process, WAL's incoming inspection procedures under WAL-QCP-100 (WAL's Quality Control Procedures manual), and the chronology of communications with Kestrel regarding cure for each rejected lot. Mr. Huang detailed the specific dates and circumstances of each of the seven uncured rejections, spanning from Lot KDG-2022-0307 (rejected March 22, 2022) through Lot KDG-2022-0919 (rejected October 1, 2022). He provided clear, document-supported testimony that Kestrel failed to provide replacement or reworked units within the forty-five calendar-day cure period for five of the seven uncured lots and that the replacement units provided for the remaining two lots themselves failed WAL's incoming inspection.

Mr. Huang also addressed the Valkyr engagement in detail. He testified that WAL began discussions with Valkyr in June 2022 — after the fourth lot rejection — as a supply-continuity measure necessitated by the growing concerns about Kestrel's ability to deliver conforming product. He was emphatic that the Valkyr discussions were initiated in response to, not in advance of, the quality failures. Mr. Huang testified that Valkyr was formally onboarded as a replacement supplier only after the October 3, 2022, termination notice was issued to Kestrel, and that the first purchase order to Valkyr was issued on November 14, 2022.

Mr. Huang also provided important testimony on the cost differential between Kestrel and Valkyr. Valkyr's per-unit price was €8,432.92, compared to Kestrel's Contract Year 4 price of €5,222.92 — a per-unit premium of €3,210.00. Mr. Huang testified that WAL accepted this substantial cost premium because Valkyr was the only qualified domestic supplier capable of meeting WAL's production timeline and AS9100 Rev D certification requirements. He explained that Valkyr's 4.2% introductory discount was negotiated as a volume commitment incentive and reflected a modest but meaningful cost reduction.

Cross-Examination (Dr. Haber). Dr. Haber's cross-examination of Mr. Huang focused principally on the timing of the Valkyr discussions. Dr. Haber pressed Mr. Huang on whether WAL had been in contact with Valkyr prior to June 2022 and suggested that informal discussions predated the quality issues. Mr. Huang firmly denied this contention and pointed to documentary evidence — specifically, internal procurement team emails (Exhibits R-304, R-305, and R-308) — confirming that the first substantive contact with Valkyr occurred on June 17, 2022. Dr. Haber was unable to identify any countervailing documentary evidence suggesting earlier contact.

Tribunal Questions. Prof. Dame Eleanor Fitzwilliam asked Mr. Huang whether WAL considered seeking competitive bids from suppliers other than Valkyr before awarding the replacement contract. Mr. Huang acknowledged that WAL prioritized speed of qualification given the urgency of the production timeline and the stringent aerospace certification requirements (AS9100 Rev D qualification typically requires twelve to eighteen months) over cost optimization through a competitive bidding process. Mr. Huang explained that Valkyr was the only alternative supplier that had an existing AS9100 Rev D certification for Ti-6Al-4V ELI alloy turbine housings and could meet WAL's production schedule. While this answer was reasonable, it may be relevant to the Tribunal's assessment of WAL's duty to mitigate on the counterclaim, as we discuss in Section VII.B below.

Assessment. Mr. Huang was an outstanding witness. His testimony was consistent, methodical, and thoroughly supported by documentary evidence. His account of the Valkyr timeline was credible and effectively rebutted Kestrel's pretext theory. The Tribunal appeared to find Mr. Huang's testimony reliable, and his demeanor was professional and measured throughout both direct and cross-examination. His testimony laid a strong evidentiary foundation for both WAL's defense and its counterclaim.

5. Dr. Ingrid Vollmer — SVP Engineering & Manufacturing, Whitmore Aerospace LLC. Dr. Vollmer testified on the morning of Day 3.

Direct Examination (Vivienne St. Claire). Ms. St. Claire led Dr. Vollmer through a detailed presentation of WAL's quality-control inspection process under WAL-QCP-100, the derivation and publication of the porosity specification in WAL-SPEC-TH-401, Appendix C, Table 3, the technical rationale for the ≤0.25% porosity limit, and the specific technical basis for each of the fourteen lot rejections.

Dr. Vollmer explained that the ≤0.25% porosity limit for Ti-6Al-4V ELI alloy in turbine-housing applications was established based on well-recognized aerospace industry standards, including AMS 4930 and the recommendations of ASTM International. She testified that the specification was derived from extensive internal testing, published literature, and consultation with materials scientists, and that it reflected the minimum quality standard necessary to ensure structural integrity in high-stress turbine environments. She further explained that this specification was expressly provided to Kestrel during the MSA negotiations in 2018, was incorporated by reference into the MSA pursuant to Section 3.2, and had been the operative standard throughout the entire commercial relationship without any dispute until this arbitration.

Critically, Dr. Vollmer denied that WAL ever applied an unpublished ≤0.15% porosity standard to its incoming inspections. She testified that the 0.15% figure referenced by Kestrel appeared in an internal WAL research memorandum (Exhibit C-87) that explored potential specification tightening for next-generation turbine-housing products then in the early conceptual design phase. Dr. Vollmer explained that this memorandum was a forward-looking research document, not a quality-control directive; it was never communicated to Kestrel, never incorporated into any purchase order or specification, and was never applied to any incoming inspection of existing MSA orders. She noted that the memorandum itself bore the header "PRELIMINARY — FOR INTERNAL R&D USE ONLY" and was addressed solely to WAL's Advanced Materials Research group, not to the Supply Chain or Quality Assurance departments.

Cross-Examination (Katrin Schäfer). Ms. Schäfer's cross-examination attempted to establish a link between the internal research memorandum and WAL's inspection practices, suggesting that the research aspirations influenced the inspection team's approach to porosity evaluation. Dr. Vollmer rejected this clearly and firmly. She explained the distinction between research aspirations for future product generations and contractual specifications governing existing supply relationships, and she testified that the inspection team operated solely under WAL-SPEC-TH-401 and WAL-QCP-100 — documents that contained no reference to the 0.15% figure. Ms. Schäfer was unable to produce any evidence contradicting Dr. Vollmer's testimony on this point.

Tribunal Questions. Dr. Perren asked Dr. Vollmer about the practical consequences of porosity levels in the 0.25% to 0.38% range in Ti-6Al-4V ELI alloy turbine housings. Dr. Vollmer provided a clear and compelling explanation of the risk of microcrack propagation in high-stress turbine environments, noting that porosity above the contractual limit creates nucleation sites for fatigue cracks that can propagate under cyclic loading conditions, potentially leading to catastrophic component failure. She emphasized that the ≤0.25% specification was not an arbitrary threshold but a safety-critical requirement with direct implications for aircraft safety and regulatory compliance.

Assessment. Dr. Vollmer was, in our assessment, the strongest witness of the entire hearing — for either side. She was technically authoritative, composed and unflappable under cross-examination, and highly persuasive in explaining both the safety rationale for the porosity specification and the distinction between the research memorandum and the contractual standard. Her testimony should carry significant weight with the Tribunal and provides a robust evidentiary foundation for WAL's position that the rejections were substantively justified by legitimate quality and safety concerns.

V. Summary of Expert Witness Testimony

A. Metallurgical / Technical Experts

1. Dr. Raymond Chow — Respondent's Expert (Arclight Materials Science Inc.). Dr. Chow testified on Day 4 of the hearing.

Direct Examination. Dr. Chow presented the findings of his expert report, which detailed the results of independent porosity testing conducted on samples drawn from all fourteen rejected lots. His testing confirmed porosity levels ranging from 0.19% to 0.38%, with the majority of lots — ten out of fourteen — exceeding the contractual ≤0.25% limit. Of the four lots that fell below 0.25%, the highest reading was 0.24%, and these lots exhibited other quality anomalies noted in his report. Dr. Chow's methodology employed quantitative image analysis per ASTM E1245 combined with computed tomography (CT) scanning, which he described as the most accurate and comprehensive methodology available for volumetric porosity assessment in metallic alloys. Testing was conducted at Arclight's NADCAP-accredited laboratory at 7900 Westpark Drive, Suite 200, McLean, Virginia 22102.

Dr. Chow also addressed and rebutted the methodology employed by Claimant's metallurgical expert, Dr. Martina Kessler of Albrecht Prüftechnik GmbH. Dr. Chow noted several deficiencies in Dr. Kessler's approach: her reliance on optical microscopy, which is a two-dimensional surface-measurement technique less sensitive than three-dimensional CT scanning for detecting subsurface and interior porosity; her failure to test representative cross-sections from the structurally critical zones of the turbine housings (i.e., the high-stress regions adjacent to the turbine mounting flanges and the blade-tip clearance zone); and her use of sample-preparation techniques that, in Dr. Chow's opinion, may have introduced artifacts that could understate porosity readings.

Cross-Examination (Dr. Haber). Dr. Haber challenged Dr. Chow's sample selection, arguing that the samples drawn from the rejected lots may have been exposed to post-manufacturing handling damage during storage and transit, which could have introduced porosity artifacts. Dr. Chow responded convincingly that rigorous chain-of-custody protocols were followed throughout the sampling and testing process, including photographic documentation of sample condition at receipt, sealed-container storage, and tamper-evident packaging. He further noted that the porosity patterns observed in his testing were consistent with manufacturing-origin defects — specifically, gas porosity and shrinkage porosity characteristic of the casting and hot isostatic pressing (HIP) process — rather than handling damage, which would typically manifest as surface-level mechanical deformation rather than distributed interior porosity.

Tribunal Questions. Prof. Dame Eleanor Fitzwilliam asked Dr. Chow to comment on measurement uncertainty in his porosity results. Dr. Chow provided a detailed statistical analysis, including confidence intervals for each lot, demonstrating that even accounting for the upper bound of measurement uncertainty (which he quantified at ±0.02% for the CT-scanning methodology), the majority of the tested lots exceeded the 0.25% contractual threshold. Specifically, he testified that eight of the ten lots with readings above 0.25% still exceeded the threshold at the lower bound of the measurement uncertainty range.

Assessment. Dr. Chow's testimony was rigorous, methodologically sound, and highly credible. His expertise in aerospace materials testing was evident, and his presentation was accessible to a Tribunal composed of legal professionals. The Tribunal appeared to give significant weight to his quantitative analysis, and his rebuttal of Dr. Kessler's methodology was thorough and persuasive. We consider Dr. Chow to be one of the most effective expert witnesses we have presented in any arbitration proceeding.

2. Dr. Martina Kessler — Claimant's Expert (Albrecht Prüftechnik GmbH). Dr. Kessler also testified on Day 4.

Direct Examination. Dr. Kessler testified that her own testing of samples from the fourteen rejected lots showed porosity levels within the ≤0.25% contractual limit for all fourteen lots. She defended her optical microscopy methodology as a "well-established and widely used" technique for porosity measurement in metallic alloys and argued that Dr. Chow's CT-scanning results may have been affected by calibration differences and image-processing assumptions.

Cross-Examination (Simone Laroche). Ms. Laroche's cross-examination exposed several significant methodological weaknesses in Dr. Kessler's analysis:

• Methodology. Dr. Kessler's optical microscopy approach measures porosity only at a prepared two-dimensional cross-section, whereas Dr. Chow's CT-scanning methodology provides a three-dimensional volumetric assessment. Ms. Laroche established that optical microscopy is inherently less precise for detecting interior porosity that does not intersect the specific cross-section being examined.

• Sample Selection. Dr. Kessler tested only surface-proximate zones of the turbine housings, rather than the structurally critical interior sections where porosity would be most relevant to component integrity. When asked why she did not test the interior zones, Dr. Kessler stated that her instructions from Kestrel were to test according to Kestrel's standard testing protocol, which focused on surface-proximate regions.

• Calibration Lapse. Dr. Kessler's report did not address the calibration lapse in Kestrel's own testing equipment acknowledged by Dr. Voss during his testimony. When asked whether the calibration status of the equipment used by Kestrel to generate its internal test data was relevant to her analysis, Dr. Kessler acknowledged that it "could be a factor" but stated she had not investigated it.

Key Moment. The pivotal moment in Dr. Kessler's testimony came when she conceded, in response to a question from Ms. Laroche, that CT scanning is the "gold standard" for porosity measurement in aerospace alloys. She further acknowledged that her optical microscopy method had a higher measurement uncertainty margin — which she estimated at ±0.04%, compared to Dr. Chow's ±0.02% — meaning that her results were inherently less reliable for determining compliance with a specific numerical specification. This concession effectively undermined the evidentiary weight of her conclusions.

Tribunal Questions. Hon. Castillo asked Dr. Kessler whether she had been provided with the same lot samples as Dr. Chow. Dr. Kessler confirmed that the samples used in her analysis were drawn from a parallel set of retained samples maintained by Kestrel, rather than from the same physical samples tested by Dr. Chow. This raised comparability issues, as the samples were drawn from different portions of the same lots but were not identical specimens. Hon. Castillo appeared to note this distinction carefully.

Assessment. Dr. Kessler's testimony was significantly weakened by the methodological critiques and her concessions regarding CT scanning superiority and measurement uncertainty. The contrast between her testimony and Dr. Chow's was stark, and we believe the Tribunal was left with a clear impression that Dr. Chow's analysis was more rigorous and reliable. Dr. Kessler appeared to recognize the vulnerability of her position during the cross-examination, and her responses became increasingly hedged as the questioning progressed.

B. Damages Experts

3. Dr. Nadia Ostrovsky — Respondent's Expert (Ridgeline Economic Consulting LLC). Dr. Ostrovsky testified on the morning of Day 5.

Direct Examination. Dr. Ostrovsky presented her rebuttal of Prof. Langfeld's damages quantification, identifying multiple errors and unsupported assumptions in his analysis. Her key points were as follows:

(i) Margin Inflation. The 22.4% margin claimed by Kestrel and used by Prof. Langfeld was inflated. Dr. Ostrovsky's independent analysis of Kestrel's management accounts and financial statements showed that the actual contract-specific margin, after proper allocation of direct overhead (including facility costs, equipment depreciation, and allocated administrative expenses attributable to the WAL contract), was approximately 16.8%. Dr. Ostrovsky noted that the discrepancy arose because Prof. Langfeld excluded certain direct-overhead categories from his margin calculation, without any stated justification for doing so.

(ii) Renewal-Period Lost Profits. The €27.15 million in renewal-period lost profits was speculative and unsupported. The renewal options under Section 16.2 of the MSA were exercisable solely at WAL's discretion, creating no contractual obligation to renew. Dr. Ostrovsky testified that, in accordance with standard damages-quantification methodology, lost profits attributable to a discretionary renewal option must be discounted by the probability of exercise. Prof. Langfeld applied no such discount, instead assuming one hundred percent probability of renewal — an assumption Dr. Ostrovsky characterized as "fundamentally inconsistent with accepted practice in forensic economics."

(iii) Reputational Damages. The €3.90 million reputational damages claim lacked any objective evidentiary basis. Kestrel had not produced any documents showing that it lost specific business opportunities as a result of the WAL termination, and its claimed reputational harm was based solely on the subjective assertions of its management. Moreover, Dr. Ostrovsky noted that reputational damages are consequential in nature and are expressly barred by the mutual consequential damages waiver in Section 8.7 of the MSA.

(iv) Rework Costs. The €3.42 million rework cost claim was overstated because Kestrel's own production records showed that a substantial portion of the claimed rework — approximately €1.8 million — was performed as part of routine manufacturing processes (including standard finishing, deburring, and surface treatment), not solely in response to WAL's lot rejections.

Dr. Ostrovsky also provided testimony supporting WAL's counterclaim quantification. She walked the Tribunal through the calculation: 1,680 units multiplied by the per-unit price differential (€8,432.92 Valkyr price minus €5,222.92 Kestrel CY4 price = €3,210.00 per unit), yielding a gross premium of €5,392,800.00, net of Valkyr's 4.2% introductory discount (approximately €226,498), for a net counterclaim of approximately €5.17 million. She testified that this calculation was straightforward, well-documented, and consistent with WAL's procurement records.

Cross-Examination (Katrin Schäfer). Ms. Schäfer challenged Dr. Ostrovsky's overhead-allocation methodology, arguing that certain cost categories included in Dr. Ostrovsky's allocation were shared costs that should not have been attributed to the WAL contract. Dr. Ostrovsky defended her approach as consistent with standard forensic-accounting practices as recognized by the American Institute of Certified Public Accountants (AICPA) and noted that her allocation methodology aligned with the independent analysis conducted by Sandra Gillespie of Canfield & Thorpe LLP, who was retained by WAL to perform a separate forensic review of Kestrel's financial data. Ms. Schäfer was unable to identify a specific flaw in the allocation methodology and moved on to other topics.

Assessment. Dr. Ostrovsky was well-prepared, methodical, and persuasive. Her margin analysis directly contradicted the testimony of Luisa Erdmann and the assumptions underlying Prof. Langfeld's expert report, creating a compelling narrative of inflated damages. Her testimony on the renewal-probability issue was particularly effective, as it highlighted a fundamental analytical flaw in Prof. Langfeld's report that the Tribunal clearly noted.

4. Prof. Dieter Langfeld — Claimant's Expert (Rheinsberg Advisory AG). Prof. Langfeld testified on the afternoon of Day 5.

Direct Examination. Prof. Langfeld presented his damages quantification totaling €47.3 million. He maintained the 22.4% margin figure, defended the inclusion of renewal-period lost profits on the basis that WAL had historically renewed its supply contracts and that there was no commercial reason to expect non-renewal, and argued that reputational damages were an appropriate element of Kestrel's claim given the significance of the WAL relationship to Kestrel's market standing.

Cross-Examination (Simone Laroche). Ms. Laroche's cross-examination was methodical and devastating. She demonstrated that Prof. Langfeld did not conduct an independent analysis of Kestrel's financial statements but instead relied on summary financial data provided by Kestrel's management — specifically, by Luisa Erdmann — without independent verification. When confronted with the management accounts showing the lower 16.8% margin, Prof. Langfeld acknowledged that he had not reviewed those accounts prior to completing his report. He stated that his instructions from Kestrel were to use the 22.4% figure, and that he relied on the accuracy of the data provided by his client.

Ms. Laroche also highlighted the absence of any probability discount in Prof. Langfeld's renewal-period lost-profit calculation. She established that Prof. Langfeld assumed one hundred percent probability of renewal despite the expressly discretionary nature of the renewal option under Section 16.2 of the MSA. When asked why he did not apply a probability discount — as would be standard practice for uncertain future income streams — Prof. Langfeld stated that his instructions were to assume renewal and that he understood WAL's historical practice to support that assumption.

Key Moment. The most damaging moment for Prof. Langfeld occurred when Prof. Dame Eleanor Fitzwilliam, the Presiding Arbitrator, asked him directly whether, in his professional opinion as a forensic economist, it was appropriate to include renewal-period profits in a damages calculation without applying any probability discount for the likelihood of option exercise. Prof. Langfeld's answer was equivocal. He stated that the appropriateness of a probability discount "depends on the circumstances" and that there were "arguments on both sides." This response appeared to satisfy neither the question nor the Tribunal. The Presiding Arbitrator's follow-up expression suggested that she found the omission of any probability analysis to be a significant gap in Prof. Langfeld's report.

Assessment. Prof. Langfeld's credibility was significantly damaged by his concessions regarding the failure to independently verify the margin data and the omission of a renewal-probability discount. His reliance on data provided by Kestrel's management, without independent verification, undermined the objectivity and reliability of his expert report. The Tribunal appeared skeptical of his overall damages figure, and we believe that the Tribunal is unlikely to accept his quantification in whole or in substantial part. His equivocal response to the Presiding Arbitrator's direct question was a particularly poor moment that highlighted the analytical weaknesses in his approach.

VI. Tribunal's Apparent Areas of Focus

Based on the questions posed by the Tribunal during the hearing, we have identified the following areas of apparent focus. These observations will inform the preparation of our post-hearing brief.

1. The Porosity Specification. The Tribunal devoted substantial time throughout the hearing to understanding whether the ≤0.25% standard set forth in WAL-SPEC-TH-401, Appendix C, Table 3 was the operative contractual porosity specification. Prof. Dame Eleanor Fitzwilliam and Dr. Perren both asked multiple questions on this topic across several witnesses, including Mr. Brenner, Dr. Vollmer, Dr. Chow, and Dr. Kessler. The Tribunal's questions were directed at establishing with certainty that the ≤0.25% standard — rather than the ≤0.15% figure from the internal research memorandum — governed the parties' contractual relationship. Assessment: Based on the pattern of questioning and the weight of the evidence, we believe the Tribunal is persuaded that the contractual specification was clearly ≤0.25%, and that Kestrel's argument regarding an unpublished ≤0.15% standard will be rejected.

2. Testing Methodology. The Tribunal showed particular interest in the competing metallurgical testing methodologies — CT scanning (Dr. Chow) versus optical microscopy (Dr. Kessler). Hon. Castillo's questions, in particular, suggested that he found Dr. Chow's CT-scanning approach more reliable, especially in light of Dr. Kessler's concession that CT scanning is the "gold standard" for porosity measurement in aerospace alloys. Dr. Perren's questions about the practical consequences of elevated porosity further indicated the Tribunal's engagement with the technical merits. Assessment: We expect the Tribunal to prefer Dr. Chow's methodology and findings over Dr. Kessler's.

3. Valkyr Timeline and Pretext Theory. The Tribunal probed the timeline of WAL's engagement with Valkyr through questions to Mr. Huang. The documentary evidence supporting a June 2022 commencement of discussions — after the fourth lot rejection — was compelling, and Mr. Huang's testimony was consistent and credible. However, Prof. Fitzwilliam's question regarding competitive bidding suggests that the Tribunal may apply some mitigation-related analysis to WAL's counterclaim, even if it rejects Kestrel's pretext theory on the merits. Assessment: We believe the pretext theory will be rejected, but the competitive-bidding issue may result in a modest reduction to the counterclaim, as discussed below.

4. Renewal-Option Profits. The Tribunal appeared openly skeptical of Kestrel's inclusion of €27.15 million in renewal-period lost profits. Prof. Fitzwilliam's direct question to Prof. Langfeld regarding probability discounts was a strong indicator that the Tribunal considers the omission of such a discount to be a fundamental flaw. The discretionary nature of the renewal option under Section 16.2 makes the inclusion of renewal-period profits at full value difficult to sustain. Assessment: We expect the renewal-period lost-profits claim to be dismissed or, at most, sharply discounted.

5. Consequential Damages Waiver (§ 8.7). During opening statements, the Tribunal asked counsel for both sides to address the scope and enforceability of the consequential damages waiver in Section 8.7 of the MSA under New York law. This question suggests that the waiver will play a central role in the Tribunal's analysis of Kestrel's damages claims, particularly the reputational damages component and potentially the lost-profits claims as well. New York law generally enforces consequential damages waivers in negotiated commercial contracts between sophisticated parties, and we intend to brief this issue thoroughly. Assessment: We expect the Tribunal to enforce the waiver, which would bar Kestrel's reputational damages claim and could further limit its lost-profits recovery.

6. Margin Analysis. The discrepancy between the 22.4% margin claimed by Kestrel and the 16.8% margin reflected in Kestrel's management accounts was clearly noted by the Tribunal. Dr. Perren specifically asked Dr. Ostrovsky to walk through the reconciliation of the two figures during her testimony, indicating that this issue is of particular interest to at least one member of the Tribunal. Assessment: We expect the Tribunal to adopt the 16.8% figure, or something close to it, should any damages be awarded — though, as noted, we consider a damages award on the primary claims unlikely.

VII. Overall Assessment of Likely Outcomes

Based on the evidence presented at the hearing, the testimony of the witnesses, the Tribunal's questions, and our experience in international arbitration proceedings, we provide the following candid assessment of the likely outcomes.

A. Kestrel's Claims

Material Breach Claim. Our firm assessment is that Kestrel's material breach claim is likely to be dismissed. The weight of the metallurgical evidence strongly favors WAL. Dr. Chow's independent testing — which employed the superior CT-scanning methodology — confirmed that the majority of the rejected lots exceeded the ≤0.25% contractual porosity limit. Dr. Kessler's contrary findings were undermined by her concession that CT scanning is the gold standard, her failure to test structurally critical zones, and the comparability issues arising from the use of parallel rather than identical samples. The contractual specification in WAL-SPEC-TH-401 was clearly ≤0.25%, not ≤0.15%, and Kestrel's own witnesses made damaging concessions: Mr. Brenner acknowledged the internal quality alerts and was unable to identify any pre-arbitration document disputing the porosity standard; Dr. Voss admitted to calibration lapses and "borderline" porosity results in three to four lots. The cumulative effect of this evidence strongly supports WAL's position that the rejections were substantively justified.

Termination for Persistent Quality Failure (§ 14.2(b)). We believe the Tribunal is likely to uphold WAL's termination. Seven uncured rejections in a rolling twelve-month period (March through September 2022) far exceed the three-rejection threshold triggering the Section 8.4 escalation procedure. Kestrel failed to cure within the forty-five calendar-day amended cure period for five of the seven uncured lots, and the replacement units provided for the remaining two lots were themselves non-conforming. The procedural requirements of Section 14.2(b) were satisfied. Mr. Huang's testimony on the chronology and cure-period failures was clear, well-documented, and uncontradicted on the facts.

Lost Profits — Remaining MSA Term (€12.83M). This claim is likely to be dismissed on multiple grounds. First, if the Tribunal finds that WAL's termination was proper — which we consider likely — then there is no breach giving rise to a lost-profits claim. Second, even if the Tribunal were to find a breach, lost profits for the remaining contractual term are consequential in nature and are likely barred by the Section 8.7 waiver under New York law. Third, the margin assumptions underlying the claim have been seriously undermined by the evidence.

Lost Profits — Renewal Terms (€27.15M). This claim is very likely to be dismissed. The renewal options under Section 16.2 were exercisable solely at WAL's discretion. There was no contractual obligation to renew, and WAL has not indicated that it would have exercised the renewal options even absent the quality dispute. Prof. Langfeld's failure to apply any probability discount for the likelihood of renewal exercise was a significant analytical flaw that the Tribunal clearly noted. Even if the Tribunal were inclined to award some amount for lost renewal-period profits — which we consider unlikely — it would need to apply a substantial probability discount, dramatically reducing the quantum.

Rework Costs (€3.42M). This claim is likely to be dismissed. The exclusive remedy provision in Section 8.7 limits Kestrel to replacement or credit for rejected lots. Moreover, the evidence showed that a substantial portion of the claimed rework costs related to routine manufacturing activities rather than rework attributable to WAL's rejections. Even if some rework costs were recoverable in principle, the quantum would be significantly reduced.

Reputational Damages (€3.90M). This claim is very likely to be dismissed. The claim is speculative, lacking any specific evidence of lost business opportunities attributable to the WAL termination. It is consequential in nature and is expressly barred by the Section 8.7 mutual waiver of consequential damages. Under New York law, consequential damages waivers in arm's-length commercial contracts between sophisticated parties are routinely enforced. We are not aware of any basis on which the Tribunal might decline to enforce Section 8.7.

B. WAL's Counterclaim (€5.17M)

Assessment. We believe WAL's counterclaim is likely to be sustained in whole or in substantial part. The replacement-component costs incurred through Valkyr are well-documented. The per-unit premium calculation is straightforward and supported by both procurement records and the testimony of Mr. Huang and Dr. Ostrovsky: 1,680 units × (€8,432.92 Valkyr price minus €5,222.92 Kestrel CY4 price) = €5,392,800.00 gross premium, net of the 4.2% introductory discount, yielding approximately €5.17 million. The costs were incurred as a direct result of Kestrel's quality failures and WAL's commercially reasonable decision to source replacement components.

Risk Factor. The principal risk factor on the counterclaim is the Tribunal's interest in the competitive-bidding and mitigation issue. Prof. Fitzwilliam's question to Mr. Huang regarding whether WAL considered seeking additional bids suggests that the Tribunal may scrutinize whether WAL discharged its duty to mitigate by engaging Valkyr without a competitive procurement process. While Mr. Huang's explanation — that Valkyr was the only AS9100 Rev D-certified alternative capable of meeting WAL's production timeline — was reasonable, the Tribunal may nonetheless find that WAL had a duty to at least solicit one or two additional bids, even if the timeline was compressed. If the Tribunal applies a mitigation-related discount, we would expect a modest reduction.

Estimated Range. Based on the foregoing analysis, we estimate the likely counterclaim award in the range of €3.5 million to €5.17 million, depending on the Tribunal's assessment of WAL's mitigation efforts. The lower end of this range assumes a meaningful mitigation discount; the upper end reflects a full award.

C. Costs. We expect that the Tribunal will order Kestrel to bear a substantial majority of the ICC administrative costs and the arbitrators' fees, which total approximately $1.24 million. Under the ICC Rules and consistent with the Tribunal's broad discretion on costs, the prevailing party typically recovers a substantial share of the arbitration costs, and we believe the outcome of the hearing strongly favors WAL.

With respect to WAL's legal costs, our total fees and disbursements through the conclusion of the hearing are approximately $3.12 million, comprising $2,487,300 in professional fees and $634,700 in costs and disbursements (including expert fees, travel, document production, and hearing-room costs). This figure is reasonable and well-documented, and we expect the Tribunal to issue a significant cost-reimbursement order in WAL's favor. We will prepare a detailed cost submission for inclusion in the post-hearing brief.

VIII. Next Steps

A. Post-Hearing Briefs

The filing deadline for simultaneous post-hearing briefs is February 9, 2024, as set forth in Procedural Order No. 5 (December 1, 2023).

Our strategy for the post-hearing brief will emphasize the following themes:

(i) The credibility and methodological superiority of Dr. Chow's metallurgical findings over Dr. Kessler's, including the CT-scanning versus optical-microscopy comparison, the sample-selection issues, and the measurement-uncertainty analysis;

(ii) The significant admissions made by Kestrel's own witnesses on cross-examination, including Mr. Brenner's acknowledgment of internal quality alerts and inability to identify any pre-arbitration dispute of the porosity specification, Dr. Voss's admission of calibration lapses and "borderline" porosity results, and Ms. Erdmann's acknowledgment of delayed mitigation efforts;

(iii) The enforceability of the Section 8.7 consequential damages waiver under New York law, with citation to relevant case authority, including Strathmore Casualty Group v. Kestrel Corporation, 84 N.Y.2d 430 (1994), and its progeny;

(iv) The discretionary nature of the renewal options under Section 16.2 and Prof. Langfeld's failure to apply any probability discount;

(v) The well-supported and well-documented counterclaim, including the straightforward per-unit premium calculation and the reasonableness of WAL's decision to onboard Valkyr; and

(vi) A proactive discussion of the competitive-bidding and mitigation issue raised by the Tribunal, demonstrating that WAL's decision to engage Valkyr without a full competitive procurement was commercially reasonable given the urgency of the supply-continuity need and the limited number of AS9100 Rev D-certified suppliers capable of manufacturing Ti-6Al-4V ELI alloy turbine housings to WAL's specifications within the required timeframe.

The Calderwood & Harkness team — Mr. Langston, Ms. St. Claire, Ms. Laroche, and Mr. Park — will prepare the initial draft of the post-hearing brief. We will circulate the draft to Ms. Prescott for review and comment by January 31, 2024, allowing sufficient time for revisions prior to the February 9 filing deadline.

B. Anticipated Timeline

The remaining milestones in the proceeding are as follows:

The Tribunal indicated during the hearing that it expects to render a final award within approximately sixty to ninety days following receipt of the parties' post-hearing briefs. Assuming timely filing on February 9, this places the expected award date in the range of April to May 2024, though the Tribunal may render its award earlier or later depending on the complexity of the issues and the Tribunal's schedule.

C. Coordination Items

We request the following coordination items from WAL:

1. Document Preservation. Please ensure that all hearing-related materials, witness files, internal correspondence, and other documents relevant to this proceeding continue to be preserved pending the issuance of the final award and the expiration of any applicable challenge period.

2. Forensic Accounting. Canfield & Thorpe LLP (Sandra Gillespie) has completed its forensic accounting analysis in support of Dr. Ostrovsky's expert work. Ms. Gillespie's final invoice is pending and will be included in our cost submission to the Tribunal.

3. Cost Submission. We will prepare a detailed schedule of WAL's legal costs and disbursements for submission to the Tribunal as part of the post-hearing brief. We will coordinate with Ms. Prescott to ensure completeness and accuracy.

4. Hearing Transcript. The official transcript of the hearing is being finalized by Sundial Solutions and is expected to be circulated to the parties within ten business days. We will provide relevant transcript excerpts under separate cover once available.

IX. Closing

We are confident in the overall outcome of this proceeding based on the strength of the evidence presented at the hearing and the performance of WAL's witnesses. The factual and expert testimony strongly supports WAL's position on both the defense of Kestrel's claims and the prosecution of WAL's counterclaim. While no outcome in arbitration can be guaranteed, we believe the evidentiary record is highly favorable to WAL and that the Tribunal's questions during the hearing were broadly consistent with the analytical framework we advanced.

We remain available at your convenience to discuss the hearing in further detail and to coordinate the preparation of the post-hearing brief. Please do not hesitate to contact the undersigned at the contact information below.

We appreciate the confidence you have placed in Calderwood & Harkness, and we look forward to bringing this matter to a successful conclusion.

Very truly yours,

CALDERWOOD & HARKNESS LLP

By: ________

Theodore Langston Partner

600 Lexington Avenue New York, New York 10022 Tel: (212) 506-7100

Email: t.langston@calderwoodharkness.com

1750 K Street NW Washington, DC 20006 Tel: (202) 371-6200

cc: Vivienne St. Claire, Partner, Calderwood & Harkness LLP Simone Laroche, Senior Associate, Calderwood & Harkness LLP Jeffrey Park, Associate, Calderwood & Harkness LLP

Enclosures: None. Hearing transcript excerpts to follow under separate cover.

This letter and all attachments are protected by the attorney-client privilege and the work-product doctrine. This co

CALDERWOOD & HARKNESS LLP Attorneys at Law
600 Lexington Avenue New York, New York 10022 Telephone: (212) 506-7000 Facsimile: (212) 506-7001 www.calderwoodharkness.com
January 19, 2024
PRIVILEGED AND CONFIDENTIAL — ATTORNEY-CLIENT COMMUNICATION
VIA ELECTRONIC MAIL AND HAND DELIVERY
Dana Prescott, Esq. Vice President & General Counsel Whitmore Aerospace LLC 4200 Wilson Boulevard, Suite 1100 Arlington, Virginia 22203
Marcus J. Whitmore III Chief Executive Officer Whitmore Aerospace LLC 4200 Wilson Boulevard, Suite 1100 Arlington, Virginia 22203
Re: ICC Case No. 27914/MHM — Kestrel Dynamics GmbH v. Whitmore Aerospace LLC — Post-Hearing Report
Engagement No.: 1019-00001
Dear Dana and Marcus:
We write to provide this comprehensive post-hearing report following the five-day evidentiary hearing conducted in the above-captioned arbitration. This letter is protected by the attorney-client privilege and the work-product doctrine and should be treated as strictly confidential. No portion of this letter should be disclosed to any third party without our prior written consent.
I. Introduction and Purpose
This letter reports on the evidentiary hearing held January 8 through January 12, 2024, at the ICC International Court of Arbitration Hearing Centre in New York, New York. The hearing was conducted before the following Tribunal:
• Prof. Dame Eleanor Fitzwilliam (Presiding Arbitrator)
• Dr. Hans-Ulrich Perren (Claimant's nominee)
• Hon. Robert A. Castillo (ret.) (Respondent's nominee)
Claimant Kestrel Dynamics GmbH ("Kestrel" or "Claimant") was represented at the hearing by Dr. Maximilian Haber and Katrin Schäfer of Haber Reinhardt Schlosser Partnerschaft mbB, Stuttgart and London. Respondent Whitmore Aerospace LLC ("WAL" or "Respondent") was represented by Theodore Langston, Vivienne St. Claire, Simone Laroche, and Jeffrey Park of Calderwood & Harkness LLP.
The hearing proceeded over five full days in accordance with the procedural calendar established in Procedural Order No. 1 (February 14, 2023), as subsequently amended by Procedural Orders Nos. 3 and 5. No material procedural irregularities occurred during the hearing, and both parties had a full and fair opportunity to present their cases.
The purpose of this letter is fourfold: (1) to summarize the testimony presented by both fact and expert witnesses; (2) to identify the Tribunal's apparent areas of focus based on the questions posed by the arbitrators during the hearing; (3) to provide our firm's candid assessment of the likely outcomes on each claim and counterclaim; and (4) to outline the next steps in the proceeding, including the preparation and filing of post-hearing briefs, which are due on February 9, 2024.
We are pleased to report that, in our assessment, the hearing went very well for WAL. As discussed in greater detail below, we believe that the evidentiary record strongly supports WAL's defense against Kestrel's claims and WAL's affirmative counterclaim. We address each of these matters in turn.
II. Overview of Hearing Structure
The five-day hearing was structured as follows:
The arbitration was conducted in English, as required by Section 22.3 of the Master Supply Agreement dated June 15, 2018 (the "MSA"), and in accordance with the ICC Rules of Arbitration (2021 edition). The seat of arbitration is New York, New York, and the substantive governing law is the law of the State of New York. All witnesses testified in English, with the exception of Dr. Stefan Voss, who testified with the assistance of a German-English interpreter provided by the ICC. Real-time transcription was provided by Sundial Solutions, and daily transcripts were made available to both parties at the close of each hearing day.
The hearing was conducted in a standard format with each witness presented through direct examination (or, in certain cases, on the basis of a written witness statement adopted as direct testimony), followed by cross-examination, redirect, and questions from the Tribunal. The Tribunal was active throughout the hearing and posed substantive questions to virtually every witness. We discuss the significance of those questions in Section VI below.
III. Summary of Opening Statements
A. Claimant's Opening (Dr. Maximilian Haber, HRS)
Dr. Haber delivered Kestrel's opening statement over approximately ninety minutes. The central thrust of Kestrel's case, as presented in the opening, was that WAL committed a material breach of the MSA (contract no. WAL-KDG-MSA-2018-0615) by wrongfully rejecting fourteen lots of Ti-6Al-4V ELI (Extra Low Interstitial) titanium alloy turbine housings — comprising a total of 1,680 units — delivered between March and September 2022.
Kestrel's principal theory of breach was that WAL applied an unpublished and unilaterally adopted porosity tolerance of ≤0.15% to its incoming inspections, rather than the contractual porosity specification of ≤0.25% set forth in WAL-SPEC-TH-401, Appendix C, Table 3. According to Dr. Haber, this tightened standard was never communicated to Kestrel, never incorporated into the MSA or any amendment thereto, and was used as a pretext to manufacture grounds for termination.
Dr. Haber argued that WAL's true motive for the rejections and subsequent termination was to replace Kestrel with a lower-cost domestic supplier, Valkyr Precision Components Inc., headquartered in Tucson, Arizona. Kestrel contended that WAL had been in discussions with Valkyr well before the quality issues arose and that the rejections were orchestrated to create a paper trail justifying the termination of a long-standing supply relationship.
On damages, Dr. Haber presented Kestrel's total claim of €47.3 million, broken down as follows:
Dr. Haber also addressed WAL's counterclaim of €5.17 million for Valkyr replacement costs, arguing that the counterclaim was barred because WAL's termination was itself wrongful, and that even if the termination were upheld, the Valkyr costs were inflated and should have been mitigated through a competitive procurement process.
B. Respondent's Opening (Theodore Langston, C&H)
Theodore Langston delivered WAL's opening statement over approximately two hours. Mr. Langston's presentation was organized around three principal themes: (1) the rejections were substantively justified; (2) the termination was procedurally and contractually proper; and (3) Kestrel's damages claims were grossly overstated and largely barred by the MSA.
On the first theme, Mr. Langston presented the results of independent metallurgical testing conducted by Arclight Materials Science Inc. under the direction of Dr. Raymond Chow. Dr. Chow's testing confirmed porosity levels ranging from 0.19% to 0.38% across the fourteen rejected lots, with the majority of lots exceeding the contractual porosity limit of ≤0.25% as specified in WAL-SPEC-TH-401, Appendix C, Table 3. Mr. Langston emphasized that the contractual specification was unambiguous, was expressly incorporated into the MSA, and had been the operative standard throughout the entire commercial relationship.
On the second theme, Mr. Langston demonstrated that WAL's termination for Persistent Quality Failure was proper under Section 14.2(b) of the MSA. That provision permits termination upon seven uncured rejections in any rolling twelve-month period — a threshold that Kestrel indisputably exceeded between March and September 2022. The three-rejection threshold triggering the escalation procedure under Section 8.4 had been crossed by June 2022, and seven uncured rejections had accumulated by the time of the October 3, 2022, termination notice. Moreover, Kestrel failed to cure within the forty-five calendar-day amended cure period (as extended by Amendment No. 2, dated September 3, 2021) for five of the seven uncured lots. For the remaining two lots, Kestrel provided replacement units that themselves failed incoming inspection.
On the third theme, Mr. Langston argued that Kestrel's damages were vastly overstated in several critical respects:
• The renewal-period lost profits of €27.15 million were entirely speculative because the renewal options were exercisable solely at WAL's discretion. WAL had no obligation to renew, and there was no basis for assuming renewal at one hundred percent probability.
• Consequential damages, including the €3.90 million reputational damages claim, were expressly waived under Section 8.7 of the MSA, which contains a clear and enforceable mutual waiver of consequential, indirect, incidental, and special damages.
• Kestrel's claimed contract-specific margin of 22.4% was inflated. WAL's forensic analysis showed that the actual margin, after proper allocation of direct overhead, was approximately 16.8%.
• The €3.42 million in rework costs was overstated because a significant portion of the claimed rework constituted routine manufacturing activity, not rework attributable to WAL's rejections.
Finally, Mr. Langston presented WAL's counterclaim of €5.17 million in replacement-component costs incurred as a result of Kestrel's quality failures. This figure represents the premium WAL was forced to pay Valkyr for 1,680 replacement turbine housings at a per-unit price of €8,432.92, compared to Kestrel's Contract Year 4 price of €5,222.92 — a per-unit premium of €3,210.00. This gross premium of €5,392,800 was reduced by Valkyr's 4.2% introductory discount, yielding a net counterclaim of approximately €5.17 million. Mr. Langston emphasized that the decision to onboard Valkyr was a commercially reasonable mitigation step, taken only after Kestrel's repeated and uncured quality failures made it clear that Kestrel could not be relied upon to supply conforming product.
During WAL's opening, the Tribunal was notably engaged. Prof. Dame Eleanor Fitzwilliam asked several clarifying questions regarding the porosity specification — specifically, whether the ≤0.25% standard appeared on the face of the MSA or only in the incorporated specifications — and regarding the timing of WAL's initial engagement with Valkyr. Mr. Langston responded to each question clearly and directly, pointing the Tribunal to the specific contractual provisions and documentary evidence supporting WAL's position. The Tribunal's interest in these two issues during the opening foreshadowed questions that recurred throughout the hearing, as discussed in Section VI below.
IV. Summary of Fact Witness Testimony
The hearing featured testimony from five fact witnesses — three called by Kestrel and two called by WAL. We summarize each witness's testimony below, including our assessment of the impact of each witness's testimony on the overall case.
A. Claimant's Fact Witnesses
1. Friedrich Brenner — Managing Director (*Geschäftsführer*), Kestrel Dynamics GmbH. Mr. Brenner was Kestrel's lead fact witness and testified on the afternoon of Day 1 and the morning of Day 2.
Direct Examination (Dr. Haber). Mr. Brenner's direct testimony covered the history of the commercial relationship between Kestrel and WAL, the negotiation and execution of the MSA in 2018, Kestrel's substantial investment in tooling and production capacity to meet WAL's specifications, and the adverse impact of WAL's termination on Kestrel's overall business. Brenner characterized the rejections as pretextual and motivated by WAL's desire to reduce supply-chain costs by replacing Kestrel with a lower-cost domestic alternative. He alleged that he first became aware of WAL's discussions with Valkyr as early as mid-2021 — well before the quality issues that ultimately formed the basis for termination.
Cross-Examination (Simone Laroche). Ms. Laroche's cross-examination was highly effective. Brenner was confronted with contemporaneous internal email correspondence showing that Kestrel's own quality-assurance team had flagged porosity concerns in multiple lots prior to shipment to WAL. Specifically, Ms. Laroche presented three internal quality alert memoranda (Exhibits R-117, R-118, and R-122) issued by Kestrel's quality department between April and July 2022, each noting that specific lots had porosity readings approaching or at the contractual limit. Mr. Brenner acknowledged awareness of at least three such internal quality alerts but maintained that the products were, in his view, within specification at the time of shipment.
Key Moment. The most significant moment in Brenner's testimony occurred when Ms. Laroche asked him to identify any document — whether a letter, email, meeting note, or any other written communication — in which Kestrel formally disputed the ≤0.25% porosity standard prior to the commencement of this arbitration. Mr. Brenner was unable to identify any such document. He acknowledged that WAL-SPEC-TH-401, Appendix C, Table 3 was provided to Kestrel during the MSA negotiations and was incorporated into the MSA by reference pursuant to Section 3.2. This concession was significant because it effectively negated Kestrel's argument that the ≤0.25% standard was not the operative contractual specification.
Tribunal Questions. Dr. Perren asked Mr. Brenner to clarify when Kestrel first learned of the alleged ≤0.15% porosity standard that Kestrel contends WAL applied. Brenner's response was notably vague. He referred to "informal conversations" with WAL engineering personnel but was unable to identify any specific individual, any specific date, or any documentary support for these conversations. This vagueness appeared to concern the Tribunal and contrasted sharply with the precision of WAL's documentary evidence.
Assessment. The cross-examination of Mr. Brenner effectively undermined his narrative that the rejections were pretextual. His concession regarding internal quality alerts was particularly damaging because it demonstrated that Kestrel itself was aware of porosity concerns in the rejected lots and shipped the product nonetheless. His inability to identify any pre-arbitration document disputing the ≤0.25% standard further weakened Kestrel's position. Overall, Brenner's testimony, while earnest, was not persuasive on the key issues.
2. Luisa Erdmann — Commercial Director, Kestrel Dynamics GmbH. Ms. Erdmann testified on the morning of Day 2.
Direct Examination (Dr. Haber). Ms. Erdmann's testimony focused on the financial impact of WAL's termination on Kestrel's business, Kestrel's efforts (or lack thereof) to mitigate its losses by seeking alternative customers, and the commercial basis for Kestrel's damages claim. She presented Kestrel's margin analysis and defended the 22.4% margin figure used by Kestrel's damages expert, Prof. Dieter Langfeld of Rheinsberg Advisory AG, asserting that this figure was based on actual fiscal year 2021 financial data.
Cross-Examination (Jeffrey Park). Mr. Park conducted a focused and effective cross-examination. He confronted Ms. Erdmann with Kestrel's own management accounts for fiscal year 2021 (Exhibit R-201), which showed that the WAL contract margin was approximately 16.8% after allocation of direct overhead — significantly lower than the 22.4% figure used in Prof. Langfeld's expert report. Ms. Erdmann struggled to reconcile the discrepancy and ultimately attributed it to "different cost-allocation methodologies," but was unable to articulate a coherent explanation for why the methodology employed by Prof. Langfeld was preferable to the methodology reflected in Kestrel's own internal management accounts prepared in the ordinary course of business.
Key Moment. Ms. Erdmann also admitted under cross-examination that Kestrel did not undertake meaningful efforts to find replacement customers for the turbine-housing production capacity until approximately six months after receiving WAL's October 3, 2022, termination notice. When pressed by Mr. Park as to why Kestrel delayed in pursuing alternative business, Erdmann provided only a general explanation about the difficulty of finding new aerospace customers, without pointing to any specific steps taken during the initial six-month period. This admission is relevant to both Kestrel's duty to mitigate and the reasonableness of its lost-profits claims.
Assessment. Ms. Erdmann's testimony weakened Kestrel's damages case in two important respects. First, the margin discrepancy — 22.4% versus 16.8% — directly undermines the foundation of Prof. Langfeld's damages quantification. Second, the delayed mitigation admission provides an additional basis for the Tribunal to reduce any damages award, should it find in Kestrel's favor on liability (which we consider unlikely). We expect to emphasize both points in the post-hearing brief.
3. Dr. Stefan Voss — Head of Quality Assurance, Kestrel Dynamics GmbH. Dr. Voss testified on the afternoon of Day 2.
Direct Examination (Katrin Schäfer). Dr. Voss's direct testimony addressed Kestrel's quality-control processes, its AS9100 Revision D certification and compliance, and its internal porosity-testing methodology. Dr. Voss maintained that all fourteen rejected lots met the ≤0.25% contractual porosity specification based on Kestrel's internal testing. He explained that Kestrel employed an optical microscopy technique for porosity measurement and argued that this methodology was consistent with accepted industry practice.
Cross-Examination (Simone Laroche). Ms. Laroche conducted a thorough cross-examination that exposed several critical weaknesses in Dr. Voss's testimony. First, she presented Kestrel's own test certificates (Exhibits R-131 through R-144) showing that several lots had porosity readings between 0.22% and 0.27%, with specific lots exceeding the 0.25% threshold even under Kestrel's own testing methodology. Dr. Voss argued that measurement uncertainty and differences in testing methodology could account for the discrepancy between Kestrel's results and those obtained by Dr. Chow, but this explanation was undermined by the fact that Kestrel's own data showed exceedances.
Second, and perhaps most significantly, Dr. Voss acknowledged under cross-examination that Kestrel's porosity-testing equipment had not been recalibrated during the relevant period as required by AS9100 Revision D protocols. AS9100 Rev D, Section 7.1.5.2, requires that monitoring and measurement equipment be calibrated or verified at specified intervals, or prior to use, against measurement standards traceable to international or national standards. Dr. Voss attempted to minimize this lapse by stating that the calibration was "approximately current," but this characterization was unconvincing and appeared to trouble the Tribunal.
Key Moment. Hon. Castillo asked Dr. Voss directly whether Kestrel's own test data showed any lots exceeding 0.25% porosity. After a pause, Dr. Voss admitted to "borderline" results in three to four lots. This admission was highly significant because it corroborated Dr. Chow's independent findings and undermined Kestrel's central contention that all fourteen lots were within specification.
Assessment. Dr. Voss's admissions regarding calibration lapses and borderline porosity results were among the most damaging moments of the hearing for Kestrel. His testimony effectively corroborated the findings of WAL's metallurgical expert, Dr. Chow, and demonstrated that even under Kestrel's own testing regime — which used a less sensitive methodology and equipment that had not been properly calibrated — the rejected lots were at or near the contractual limit. This testimony significantly undermined Kestrel's position that all lots met the contractual specification and that WAL's rejections were pretextual.
B. Respondent's Fact Witnesses
4. Gerald Huang — VP Global Supply Chain Operations, Whitmore Aerospace LLC. Mr. Huang testified on the afternoon of Day 2 and the morning of Day 3.
Direct Examination (Theodore Langston). Mr. Huang provided comprehensive testimony regarding the lot-rejection process, WAL's incoming inspection procedures under WAL-QCP-100 (WAL's Quality Control Procedures manual), and the chronology of communications with Kestrel regarding cure for each rejected lot. Mr. Huang detailed the specific dates and circumstances of each of the seven uncured rejections, spanning from Lot KDG-2022-0307 (rejected March 22, 2022) through Lot KDG-2022-0919 (rejected October 1, 2022). He provided clear, document-supported testimony that Kestrel failed to provide replacement or reworked units within the forty-five calendar-day cure period for five of the seven uncured lots and that the replacement units provided for the remaining two lots themselves failed WAL's incoming inspection.
Mr. Huang also addressed the Valkyr engagement in detail. He testified that WAL began discussions with Valkyr in June 2022 — after the fourth lot rejection — as a supply-continuity measure necessitated by the growing concerns about Kestrel's ability to deliver conforming product. He was emphatic that the Valkyr discussions were initiated in response to, not in advance of, the quality failures. Mr. Huang testified that Valkyr was formally onboarded as a replacement supplier only after the October 3, 2022, termination notice was issued to Kestrel, and that the first purchase order to Valkyr was issued on November 14, 2022.
Mr. Huang also provided important testimony on the cost differential between Kestrel and Valkyr. Valkyr's per-unit price was €8,432.92, compared to Kestrel's Contract Year 4 price of €5,222.92 — a per-unit premium of €3,210.00. Mr. Huang testified that WAL accepted this substantial cost premium because Valkyr was the only qualified domestic supplier capable of meeting WAL's production timeline and AS9100 Rev D certification requirements. He explained that Valkyr's 4.2% introductory discount was negotiated as a volume commitment incentive and reflected a modest but meaningful cost reduction.
Cross-Examination (Dr. Haber). Dr. Haber's cross-examination of Mr. Huang focused principally on the timing of the Valkyr discussions. Dr. Haber pressed Mr. Huang on whether WAL had been in contact with Valkyr prior to June 2022 and suggested that informal discussions predated the quality issues. Mr. Huang firmly denied this contention and pointed to documentary evidence — specifically, internal procurement team emails (Exhibits R-304, R-305, and R-308) — confirming that the first substantive contact with Valkyr occurred on June 17, 2022. Dr. Haber was unable to identify any countervailing documentary evidence suggesting earlier contact.
Tribunal Questions. Prof. Dame Eleanor Fitzwilliam asked Mr. Huang whether WAL considered seeking competitive bids from suppliers other than Valkyr before awarding the replacement contract. Mr. Huang acknowledged that WAL prioritized speed of qualification given the urgency of the production timeline and the stringent aerospace certification requirements (AS9100 Rev D qualification typically requires twelve to eighteen months) over cost optimization through a competitive bidding process. Mr. Huang explained that Valkyr was the only alternative supplier that had an existing AS9100 Rev D certification for Ti-6Al-4V ELI alloy turbine housings and could meet WAL's production schedule. While this answer was reasonable, it may be relevant to the Tribunal's assessment of WAL's duty to mitigate on the counterclaim, as we discuss in Section VII.B below.
Assessment. Mr. Huang was an outstanding witness. His testimony was consistent, methodical, and thoroughly supported by documentary evidence. His account of the Valkyr timeline was credible and effectively rebutted Kestrel's pretext theory. The Tribunal appeared to find Mr. Huang's testimony reliable, and his demeanor was professional and measured throughout both direct and cross-examination. His testimony laid a strong evidentiary foundation for both WAL's defense and its counterclaim.
5. Dr. Ingrid Vollmer — SVP Engineering & Manufacturing, Whitmore Aerospace LLC. Dr. Vollmer testified on the morning of Day 3.
Direct Examination (Vivienne St. Claire). Ms. St. Claire led Dr. Vollmer through a detailed presentation of WAL's quality-control inspection process under WAL-QCP-100, the derivation and publication of the porosity specification in WAL-SPEC-TH-401, Appendix C, Table 3, the technical rationale for the ≤0.25% porosity limit, and the specific technical basis for each of the fourteen lot rejections.
Dr. Vollmer explained that the ≤0.25% porosity limit for Ti-6Al-4V ELI alloy in turbine-housing applications was established based on well-recognized aerospace industry standards, including AMS 4930 and the recommendations of ASTM International. She testified that the specification was derived from extensive internal testing, published literature, and consultation with materials scientists, and that it reflected the minimum quality standard necessary to ensure structural integrity in high-stress turbine environments. She further explained that this specification was expressly provided to Kestrel during the MSA negotiations in 2018, was incorporated by reference into the MSA pursuant to Section 3.2, and had been the operative standard throughout the entire commercial relationship without any dispute until this arbitration.
Critically, Dr. Vollmer denied that WAL ever applied an unpublished ≤0.15% porosity standard to its incoming inspections. She testified that the 0.15% figure referenced by Kestrel appeared in an internal WAL research memorandum (Exhibit C-87) that explored potential specification tightening for next-generation turbine-housing products then in the early conceptual design phase. Dr. Vollmer explained that this memorandum was a forward-looking research document, not a quality-control directive; it was never communicated to Kestrel, never incorporated into any purchase order or specification, and was never applied to any incoming inspection of existing MSA orders. She noted that the memorandum itself bore the header "PRELIMINARY — FOR INTERNAL R&D USE ONLY" and was addressed solely to WAL's Advanced Materials Research group, not to the Supply Chain or Quality Assurance departments.
Cross-Examination (Katrin Schäfer). Ms. Schäfer's cross-examination attempted to establish a link between the internal research memorandum and WAL's inspection practices, suggesting that the research aspirations influenced the inspection team's approach to porosity evaluation. Dr. Vollmer rejected this clearly and firmly. She explained the distinction between research aspirations for future product generations and contractual specifications governing existing supply relationships, and she testified that the inspection team operated solely under WAL-SPEC-TH-401 and WAL-QCP-100 — documents that contained no reference to the 0.15% figure. Ms. Schäfer was unable to produce any evidence contradicting Dr. Vollmer's testimony on this point.
Tribunal Questions. Dr. Perren asked Dr. Vollmer about the practical consequences of porosity levels in the 0.25% to 0.38% range in Ti-6Al-4V ELI alloy turbine housings. Dr. Vollmer provided a clear and compelling explanation of the risk of microcrack propagation in high-stress turbine environments, noting that porosity above the contractual limit creates nucleation sites for fatigue cracks that can propagate under cyclic loading conditions, potentially leading to catastrophic component failure. She emphasized that the ≤0.25% specification was not an arbitrary threshold but a safety-critical requirement with direct implications for aircraft safety and regulatory compliance.
Assessment. Dr. Vollmer was, in our assessment, the strongest witness of the entire hearing — for either side. She was technically authoritative, composed and unflappable under cross-examination, and highly persuasive in explaining both the safety rationale for the porosity specification and the distinction between the research memorandum and the contractual standard. Her testimony should carry significant weight with the Tribunal and provides a robust evidentiary foundation for WAL's position that the rejections were substantively justified by legitimate quality and safety concerns.
V. Summary of Expert Witness Testimony
A. Metallurgical / Technical Experts
1. Dr. Raymond Chow — Respondent's Expert (Arclight Materials Science Inc.). Dr. Chow testified on Day 4 of the hearing.
Direct Examination. Dr. Chow presented the findings of his expert report, which detailed the results of independent porosity testing conducted on samples drawn from all fourteen rejected lots. His testing confirmed porosity levels ranging from 0.19% to 0.38%, with the majority of lots — ten out of fourteen — exceeding the contractual ≤0.25% limit. Of the four lots that fell below 0.25%, the highest reading was 0.24%, and these lots exhibited other quality anomalies noted in his report. Dr. Chow's methodology employed quantitative image analysis per ASTM E1245 combined with computed tomography (CT) scanning, which he described as the most accurate and comprehensive methodology available for volumetric porosity assessment in metallic alloys. Testing was conducted at Arclight's NADCAP-accredited laboratory at 7900 Westpark Drive, Suite 200, McLean, Virginia 22102.
Dr. Chow also addressed and rebutted the methodology employed by Claimant's metallurgical expert, Dr. Martina Kessler of Albrecht Prüftechnik GmbH. Dr. Chow noted several deficiencies in Dr. Kessler's approach: her reliance on optical microscopy, which is a two-dimensional surface-measurement technique less sensitive than three-dimensional CT scanning for detecting subsurface and interior porosity; her failure to test representative cross-sections from the structurally critical zones of the turbine housings (i.e., the high-stress regions adjacent to the turbine mounting flanges and the blade-tip clearance zone); and her use of sample-preparation techniques that, in Dr. Chow's opinion, may have introduced artifacts that could understate porosity readings.
Cross-Examination (Dr. Haber). Dr. Haber challenged Dr. Chow's sample selection, arguing that the samples drawn from the rejected lots may have been exposed to post-manufacturing handling damage during storage and transit, which could have introduced porosity artifacts. Dr. Chow responded convincingly that rigorous chain-of-custody protocols were followed throughout the sampling and testing process, including photographic documentation of sample condition at receipt, sealed-container storage, and tamper-evident packaging. He further noted that the porosity patterns observed in his testing were consistent with manufacturing-origin defects — specifically, gas porosity and shrinkage porosity characteristic of the casting and hot isostatic pressing (HIP) process — rather than handling damage, which would typically manifest as surface-level mechanical deformation rather than distributed interior porosity.
Tribunal Questions. Prof. Dame Eleanor Fitzwilliam asked Dr. Chow to comment on measurement uncertainty in his porosity results. Dr. Chow provided a detailed statistical analysis, including confidence intervals for each lot, demonstrating that even accounting for the upper bound of measurement uncertainty (which he quantified at ±0.02% for the CT-scanning methodology), the majority of the tested lots exceeded the 0.25% contractual threshold. Specifically, he testified that eight of the ten lots with readings above 0.25% still exceeded the threshold at the lower bound of the measurement uncertainty range.
Assessment. Dr. Chow's testimony was rigorous, methodologically sound, and highly credible. His expertise in aerospace materials testing was evident, and his presentation was accessible to a Tribunal composed of legal professionals. The Tribunal appeared to give significant weight to his quantitative analysis, and his rebuttal of Dr. Kessler's methodology was thorough and persuasive. We consider Dr. Chow to be one of the most effective expert witnesses we have presented in any arbitration proceeding.
2. Dr. Martina Kessler — Claimant's Expert (Albrecht Prüftechnik GmbH). Dr. Kessler also testified on Day 4.
Direct Examination. Dr. Kessler testified that her own testing of samples from the fourteen rejected lots showed porosity levels within the ≤0.25% contractual limit for all fourteen lots. She defended her optical microscopy methodology as a "well-established and widely used" technique for porosity measurement in metallic alloys and argued that Dr. Chow's CT-scanning results may have been affected by calibration differences and image-processing assumptions.
Cross-Examination (Simone Laroche). Ms. Laroche's cross-examination exposed several significant methodological weaknesses in Dr. Kessler's analysis:
• Methodology. Dr. Kessler's optical microscopy approach measures porosity only at a prepared two-dimensional cross-section, whereas Dr. Chow's CT-scanning methodology provides a three-dimensional volumetric assessment. Ms. Laroche established that optical microscopy is inherently less precise for detecting interior porosity that does not intersect the specific cross-section being examined.
• Sample Selection. Dr. Kessler tested only surface-proximate zones of the turbine housings, rather than the structurally critical interior sections where porosity would be most relevant to component integrity. When asked why she did not test the interior zones, Dr. Kessler stated that her instructions from Kestrel were to test according to Kestrel's standard testing protocol, which focused on surface-proximate regions.
• Calibration Lapse. Dr. Kessler's report did not address the calibration lapse in Kestrel's own testing equipment acknowledged by Dr. Voss during his testimony. When asked whether the calibration status of the equipment used by Kestrel to generate its internal test data was relevant to her analysis, Dr. Kessler acknowledged that it "could be a factor" but stated she had not investigated it.
Key Moment. The pivotal moment in Dr. Kessler's testimony came when she conceded, in response to a question from Ms. Laroche, that CT scanning is the "gold standard" for porosity measurement in aerospace alloys. She further acknowledged that her optical microscopy method had a higher measurement uncertainty margin — which she estimated at ±0.04%, compared to Dr. Chow's ±0.02% — meaning that her results were inherently less reliable for determining compliance with a specific numerical specification. This concession effectively undermined the evidentiary weight of her conclusions.
Tribunal Questions. Hon. Castillo asked Dr. Kessler whether she had been provided with the same lot samples as Dr. Chow. Dr. Kessler confirmed that the samples used in her analysis were drawn from a parallel set of retained samples maintained by Kestrel, rather than from the same physical samples tested by Dr. Chow. This raised comparability issues, as the samples were drawn from different portions of the same lots but were not identical specimens. Hon. Castillo appeared to note this distinction carefully.
Assessment. Dr. Kessler's testimony was significantly weakened by the methodological critiques and her concessions regarding CT scanning superiority and measurement uncertainty. The contrast between her testimony and Dr. Chow's was stark, and we believe the Tribunal was left with a clear impression that Dr. Chow's analysis was more rigorous and reliable. Dr. Kessler appeared to recognize the vulnerability of her position during the cross-examination, and her responses became increasingly hedged as the questioning progressed.
B. Damages Experts
3. Dr. Nadia Ostrovsky — Respondent's Expert (Ridgeline Economic Consulting LLC). Dr. Ostrovsky testified on the morning of Day 5.
Direct Examination. Dr. Ostrovsky presented her rebuttal of Prof. Langfeld's damages quantification, identifying multiple errors and unsupported assumptions in his analysis. Her key points were as follows:
(i) Margin Inflation. The 22.4% margin claimed by Kestrel and used by Prof. Langfeld was inflated. Dr. Ostrovsky's independent analysis of Kestrel's management accounts and financial statements showed that the actual contract-specific margin, after proper allocation of direct overhead (including facility costs, equipment depreciation, and allocated administrative expenses attributable to the WAL contract), was approximately 16.8%. Dr. Ostrovsky noted that the discrepancy arose because Prof. Langfeld excluded certain direct-overhead categories from his margin calculation, without any stated justification for doing so.
(ii) Renewal-Period Lost Profits. The €27.15 million in renewal-period lost profits was speculative and unsupported. The renewal options under Section 16.2 of the MSA were exercisable solely at WAL's discretion, creating no contractual obligation to renew. Dr. Ostrovsky testified that, in accordance with standard damages-quantification methodology, lost profits attributable to a discretionary renewal option must be discounted by the probability of exercise. Prof. Langfeld applied no such discount, instead assuming one hundred percent probability of renewal — an assumption Dr. Ostrovsky characterized as "fundamentally inconsistent with accepted practice in forensic economics."
(iii) Reputational Damages. The €3.90 million reputational damages claim lacked any objective evidentiary basis. Kestrel had not produced any documents showing that it lost specific business opportunities as a result of the WAL termination, and its claimed reputational harm was based solely on the subjective assertions of its management. Moreover, Dr. Ostrovsky noted that reputational damages are consequential in nature and are expressly barred by the mutual consequential damages waiver in Section 8.7 of the MSA.
(iv) Rework Costs. The €3.42 million rework cost claim was overstated because Kestrel's own production records showed that a substantial portion of the claimed rework — approximately €1.8 million — was performed as part of routine manufacturing processes (including standard finishing, deburring, and surface treatment), not solely in response to WAL's lot rejections.
Dr. Ostrovsky also provided testimony supporting WAL's counterclaim quantification. She walked the Tribunal through the calculation: 1,680 units multiplied by the per-unit price differential (€8,432.92 Valkyr price minus €5,222.92 Kestrel CY4 price = €3,210.00 per unit), yielding a gross premium of €5,392,800.00, net of Valkyr's 4.2% introductory discount (approximately €226,498), for a net counterclaim of approximately €5.17 million. She testified that this calculation was straightforward, well-documented, and consistent with WAL's procurement records.
Cross-Examination (Katrin Schäfer). Ms. Schäfer challenged Dr. Ostrovsky's overhead-allocation methodology, arguing that certain cost categories included in Dr. Ostrovsky's allocation were shared costs that should not have been attributed to the WAL contract. Dr. Ostrovsky defended her approach as consistent with standard forensic-accounting practices as recognized by the American Institute of Certified Public Accountants (AICPA) and noted that her allocation methodology aligned with the independent analysis conducted by Sandra Gillespie of Canfield & Thorpe LLP, who was retained by WAL to perform a separate forensic review of Kestrel's financial data. Ms. Schäfer was unable to identify a specific flaw in the allocation methodology and moved on to other topics.
Assessment. Dr. Ostrovsky was well-prepared, methodical, and persuasive. Her margin analysis directly contradicted the testimony of Luisa Erdmann and the assumptions underlying Prof. Langfeld's expert report, creating a compelling narrative of inflated damages. Her testimony on the renewal-probability issue was particularly effective, as it highlighted a fundamental analytical flaw in Prof. Langfeld's report that the Tribunal clearly noted.
4. Prof. Dieter Langfeld — Claimant's Expert (Rheinsberg Advisory AG). Prof. Langfeld testified on the afternoon of Day 5.
Direct Examination. Prof. Langfeld presented his damages quantification totaling €47.3 million. He maintained the 22.4% margin figure, defended the inclusion of renewal-period lost profits on the basis that WAL had historically renewed its supply contracts and that there was no commercial reason to expect non-renewal, and argued that reputational damages were an appropriate element of Kestrel's claim given the significance of the WAL relationship to Kestrel's market standing.
Cross-Examination (Simone Laroche). Ms. Laroche's cross-examination was methodical and devastating. She demonstrated that Prof. Langfeld did not conduct an independent analysis of Kestrel's financial statements but instead relied on summary financial data provided by Kestrel's management — specifically, by Luisa Erdmann — without independent verification. When confronted with the management accounts showing the lower 16.8% margin, Prof. Langfeld acknowledged that he had not reviewed those accounts prior to completing his report. He stated that his instructions from Kestrel were to use the 22.4% figure, and that he relied on the accuracy of the data provided by his client.
Ms. Laroche also highlighted the absence of any probability discount in Prof. Langfeld's renewal-period lost-profit calculation. She established that Prof. Langfeld assumed one hundred percent probability of renewal despite the expressly discretionary nature of the renewal option under Section 16.2 of the MSA. When asked why he did not apply a probability discount — as would be standard practice for uncertain future income streams — Prof. Langfeld stated that his instructions were to assume renewal and that he understood WAL's historical practice to support that assumption.
Key Moment. The most damaging moment for Prof. Langfeld occurred when Prof. Dame Eleanor Fitzwilliam, the Presiding Arbitrator, asked him directly whether, in his professional opinion as a forensic economist, it was appropriate to include renewal-period profits in a damages calculation without applying any probability discount for the likelihood of option exercise. Prof. Langfeld's answer was equivocal. He stated that the appropriateness of a probability discount "depends on the circumstances" and that there were "arguments on both sides." This response appeared to satisfy neither the question nor the Tribunal. The Presiding Arbitrator's follow-up expression suggested that she found the omission of any probability analysis to be a significant gap in Prof. Langfeld's report.
Assessment. Prof. Langfeld's credibility was significantly damaged by his concessions regarding the failure to independently verify the margin data and the omission of a renewal-probability discount. His reliance on data provided by Kestrel's management, without independent verification, undermined the objectivity and reliability of his expert report. The Tribunal appeared skeptical of his overall damages figure, and we believe that the Tribunal is unlikely to accept his quantification in whole or in substantial part. His equivocal response to the Presiding Arbitrator's direct question was a particularly poor moment that highlighted the analytical weaknesses in his approach.
VI. Tribunal's Apparent Areas of Focus
Based on the questions posed by the Tribunal during the hearing, we have identified the following areas of apparent focus. These observations will inform the preparation of our post-hearing brief.
1. The Porosity Specification. The Tribunal devoted substantial time throughout the hearing to understanding whether the ≤0.25% standard set forth in WAL-SPEC-TH-401, Appendix C, Table 3 was the operative contractual porosity specification. Prof. Dame Eleanor Fitzwilliam and Dr. Perren both asked multiple questions on this topic across several witnesses, including Mr. Brenner, Dr. Vollmer, Dr. Chow, and Dr. Kessler. The Tribunal's questions were directed at establishing with certainty that the ≤0.25% standard — rather than the ≤0.15% figure from the internal research memorandum — governed the parties' contractual relationship. Assessment: Based on the pattern of questioning and the weight of the evidence, we believe the Tribunal is persuaded that the contractual specification was clearly ≤0.25%, and that Kestrel's argument regarding an unpublished ≤0.15% standard will be rejected.
2. Testing Methodology. The Tribunal showed particular interest in the competing metallurgical testing methodologies — CT scanning (Dr. Chow) versus optical microscopy (Dr. Kessler). Hon. Castillo's questions, in particular, suggested that he found Dr. Chow's CT-scanning approach more reliable, especially in light of Dr. Kessler's concession that CT scanning is the "gold standard" for porosity measurement in aerospace alloys. Dr. Perren's questions about the practical consequences of elevated porosity further indicated the Tribunal's engagement with the technical merits. Assessment: We expect the Tribunal to prefer Dr. Chow's methodology and findings over Dr. Kessler's.
3. Valkyr Timeline and Pretext Theory. The Tribunal probed the timeline of WAL's engagement with Valkyr through questions to Mr. Huang. The documentary evidence supporting a June 2022 commencement of discussions — after the fourth lot rejection — was compelling, and Mr. Huang's testimony was consistent and credible. However, Prof. Fitzwilliam's question regarding competitive bidding suggests that the Tribunal may apply some mitigation-related analysis to WAL's counterclaim, even if it rejects Kestrel's pretext theory on the merits. Assessment: We believe the pretext theory will be rejected, but the competitive-bidding issue may result in a modest reduction to the counterclaim, as discussed below.
4. Renewal-Option Profits. The Tribunal appeared openly skeptical of Kestrel's inclusion of €27.15 million in renewal-period lost profits. Prof. Fitzwilliam's direct question to Prof. Langfeld regarding probability discounts was a strong indicator that the Tribunal considers the omission of such a discount to be a fundamental flaw. The discretionary nature of the renewal option under Section 16.2 makes the inclusion of renewal-period profits at full value difficult to sustain. Assessment: We expect the renewal-period lost-profits claim to be dismissed or, at most, sharply discounted.
5. Consequential Damages Waiver (§ 8.7). During opening statements, the Tribunal asked counsel for both sides to address the scope and enforceability of the consequential damages waiver in Section 8.7 of the MSA under New York law. This question suggests that the waiver will play a central role in the Tribunal's analysis of Kestrel's damages claims, particularly the reputational damages component and potentially the lost-profits claims as well. New York law generally enforces consequential damages waivers in negotiated commercial contracts between sophisticated parties, and we intend to brief this issue thoroughly. Assessment: We expect the Tribunal to enforce the waiver, which would bar Kestrel's reputational damages claim and could further limit its lost-profits recovery.
6. Margin Analysis. The discrepancy between the 22.4% margin claimed by Kestrel and the 16.8% margin reflected in Kestrel's management accounts was clearly noted by the Tribunal. Dr. Perren specifically asked Dr. Ostrovsky to walk through the reconciliation of the two figures during her testimony, indicating that this issue is of particular interest to at least one member of the Tribunal. Assessment: We expect the Tribunal to adopt the 16.8% figure, or something close to it, should any damages be awarded — though, as noted, we consider a damages award on the primary claims unlikely.
VII. Overall Assessment of Likely Outcomes
Based on the evidence presented at the hearing, the testimony of the witnesses, the Tribunal's questions, and our experience in international arbitration proceedings, we provide the following candid assessment of the likely outcomes.
A. Kestrel's Claims
Material Breach Claim. Our firm assessment is that Kestrel's material breach claim is likely to be dismissed. The weight of the metallurgical evidence strongly favors WAL. Dr. Chow's independent testing — which employed the superior CT-scanning methodology — confirmed that the majority of the rejected lots exceeded the ≤0.25% contractual porosity limit. Dr. Kessler's contrary findings were undermined by her concession that CT scanning is the gold standard, her failure to test structurally critical zones, and the comparability issues arising from the use of parallel rather than identical samples. The contractual specification in WAL-SPEC-TH-401 was clearly ≤0.25%, not ≤0.15%, and Kestrel's own witnesses made damaging concessions: Mr. Brenner acknowledged the internal quality alerts and was unable to identify any pre-arbitration document disputing the porosity standard; Dr. Voss admitted to calibration lapses and "borderline" porosity results in three to four lots. The cumulative effect of this evidence strongly supports WAL's position that the rejections were substantively justified.
Termination for Persistent Quality Failure (§ 14.2(b)). We believe the Tribunal is likely to uphold WAL's termination. Seven uncured rejections in a rolling twelve-month period (March through September 2022) far exceed the three-rejection threshold triggering the Section 8.4 escalation procedure. Kestrel failed to cure within the forty-five calendar-day amended cure period for five of the seven uncured lots, and the replacement units provided for the remaining two lots were themselves non-conforming. The procedural requirements of Section 14.2(b) were satisfied. Mr. Huang's testimony on the chronology and cure-period failures was clear, well-documented, and uncontradicted on the facts.
Lost Profits — Remaining MSA Term (€12.83M). This claim is likely to be dismissed on multiple grounds. First, if the Tribunal finds that WAL's termination was proper — which we consider likely — then there is no breach giving rise to a lost-profits claim. Second, even if the Tribunal were to find a breach, lost profits for the remaining contractual term are consequential in nature and are likely barred by the Section 8.7 waiver under New York law. Third, the margin assumptions underlying the claim have been seriously undermined by the evidence.
Lost Profits — Renewal Terms (€27.15M). This claim is very likely to be dismissed. The renewal options under Section 16.2 were exercisable solely at WAL's discretion. There was no contractual obligation to renew, and WAL has not indicated that it would have exercised the renewal options even absent the quality dispute. Prof. Langfeld's failure to apply any probability discount for the likelihood of renewal exercise was a significant analytical flaw that the Tribunal clearly noted. Even if the Tribunal were inclined to award some amount for lost renewal-period profits — which we consider unlikely — it would need to apply a substantial probability discount, dramatically reducing the quantum.
Rework Costs (€3.42M). This claim is likely to be dismissed. The exclusive remedy provision in Section 8.7 limits Kestrel to replacement or credit for rejected lots. Moreover, the evidence showed that a substantial portion of the claimed rework costs related to routine manufacturing activities rather than rework attributable to WAL's rejections. Even if some rework costs were recoverable in principle, the quantum would be significantly reduced.
Reputational Damages (€3.90M). This claim is very likely to be dismissed. The claim is speculative, lacking any specific evidence of lost business opportunities attributable to the WAL termination. It is consequential in nature and is expressly barred by the Section 8.7 mutual waiver of consequential damages. Under New York law, consequential damages waivers in arm's-length commercial contracts between sophisticated parties are routinely enforced. We are not aware of any basis on which the Tribunal might decline to enforce Section 8.7.
B. WAL's Counterclaim (€5.17M)
Assessment. We believe WAL's counterclaim is likely to be sustained in whole or in substantial part. The replacement-component costs incurred through Valkyr are well-documented. The per-unit premium calculation is straightforward and supported by both procurement records and the testimony of Mr. Huang and Dr. Ostrovsky: 1,680 units × (€8,432.92 Valkyr price minus €5,222.92 Kestrel CY4 price) = €5,392,800.00 gross premium, net of the 4.2% introductory discount, yielding approximately €5.17 million. The costs were incurred as a direct result of Kestrel's quality failures and WAL's commercially reasonable decision to source replacement components.
Risk Factor. The principal risk factor on the counterclaim is the Tribunal's interest in the competitive-bidding and mitigation issue. Prof. Fitzwilliam's question to Mr. Huang regarding whether WAL considered seeking additional bids suggests that the Tribunal may scrutinize whether WAL discharged its duty to mitigate by engaging Valkyr without a competitive procurement process. While Mr. Huang's explanation — that Valkyr was the only AS9100 Rev D-certified alternative capable of meeting WAL's production timeline — was reasonable, the Tribunal may nonetheless find that WAL had a duty to at least solicit one or two additional bids, even if the timeline was compressed. If the Tribunal applies a mitigation-related discount, we would expect a modest reduction.
Estimated Range. Based on the foregoing analysis, we estimate the likely counterclaim award in the range of €3.5 million to €5.17 million, depending on the Tribunal's assessment of WAL's mitigation efforts. The lower end of this range assumes a meaningful mitigation discount; the upper end reflects a full award.
C. Costs. We expect that the Tribunal will order Kestrel to bear a substantial majority of the ICC administrative costs and the arbitrators' fees, which total approximately $1.24 million. Under the ICC Rules and consistent with the Tribunal's broad discretion on costs, the prevailing party typically recovers a substantial share of the arbitration costs, and we believe the outcome of the hearing strongly favors WAL.
With respect to WAL's legal costs, our total fees and disbursements through the conclusion of the hearing are approximately $3.12 million, comprising $2,487,300 in professional fees and $634,700 in costs and disbursements (including expert fees, travel, document production, and hearing-room costs). This figure is reasonable and well-documented, and we expect the Tribunal to issue a significant cost-reimbursement order in WAL's favor. We will prepare a detailed cost submission for inclusion in the post-hearing brief.
VIII. Next Steps
A. Post-Hearing Briefs
The filing deadline for simultaneous post-hearing briefs is February 9, 2024, as set forth in Procedural Order No. 5 (December 1, 2023).
Our strategy for the post-hearing brief will emphasize the following themes:
(i) The credibility and methodological superiority of Dr. Chow's metallurgical findings over Dr. Kessler's, including the CT-scanning versus optical-microscopy comparison, the sample-selection issues, and the measurement-uncertainty analysis;
(ii) The significant admissions made by Kestrel's own witnesses on cross-examination, including Mr. Brenner's acknowledgment of internal quality alerts and inability to identify any pre-arbitration dispute of the porosity specification, Dr. Voss's admission of calibration lapses and "borderline" porosity results, and Ms. Erdmann's acknowledgment of delayed mitigation efforts;
(iii) The enforceability of the Section 8.7 consequential damages waiver under New York law, with citation to relevant case authority, including Strathmore Casualty Group v. Kestrel Corporation, 84 N.Y.2d 430 (1994), and its progeny;
(iv) The discretionary nature of the renewal options under Section 16.2 and Prof. Langfeld's failure to apply any probability discount;
(v) The well-supported and well-documented counterclaim, including the straightforward per-unit premium calculation and the reasonableness of WAL's decision to onboard Valkyr; and
(vi) A proactive discussion of the competitive-bidding and mitigation issue raised by the Tribunal, demonstrating that WAL's decision to engage Valkyr without a full competitive procurement was commercially reasonable given the urgency of the supply-continuity need and the limited number of AS9100 Rev D-certified suppliers capable of manufacturing Ti-6Al-4V ELI alloy turbine housings to WAL's specifications within the required timeframe.
The Calderwood & Harkness team — Mr. Langston, Ms. St. Claire, Ms. Laroche, and Mr. Park — will prepare the initial draft of the post-hearing brief. We will circulate the draft to Ms. Prescott for review and comment by January 31, 2024, allowing sufficient time for revisions prior to the February 9 filing deadline.
B. Anticipated Timeline
The remaining milestones in the proceeding are as follows:
The Tribunal indicated during the hearing that it expects to render a final award within approximately sixty to ninety days following receipt of the parties' post-hearing briefs. Assuming timely filing on February 9, this places the expected award date in the range of April to May 2024, though the Tribunal may render its award earlier or later depending on the complexity of the issues and the Tribunal's schedule.
C. Coordination Items
We request the following coordination items from WAL:
1. Document Preservation. Please ensure that all hearing-related materials, witness files, internal correspondence, and other documents relevant to this proceeding continue to be preserved pending the issuance of the final award and the expiration of any applicable challenge period.
2. Forensic Accounting. Canfield & Thorpe LLP (Sandra Gillespie) has completed its forensic accounting analysis in support of Dr. Ostrovsky's expert work. Ms. Gillespie's final invoice is pending and will be included in our cost submission to the Tribunal.
3. Cost Submission. We will prepare a detailed schedule of WAL's legal costs and disbursements for submission to the Tribunal as part of the post-hearing brief. We will coordinate with Ms. Prescott to ensure completeness and accuracy.
4. Hearing Transcript. The official transcript of the hearing is being finalized by Sundial Solutions and is expected to be circulated to the parties within ten business days. We will provide relevant transcript excerpts under separate cover once available.
IX. Closing
We are confident in the overall outcome of this proceeding based on the strength of the evidence presented at the hearing and the performance of WAL's witnesses. The factual and expert testimony strongly supports WAL's position on both the defense of Kestrel's claims and the prosecution of WAL's counterclaim. While no outcome in arbitration can be guaranteed, we believe the evidentiary record is highly favorable to WAL and that the Tribunal's questions during the hearing were broadly consistent with the analytical framework we advanced.
We remain available at your convenience to discuss the hearing in further detail and to coordinate the preparation of the post-hearing brief. Please do not hesitate to contact the undersigned at the contact information below.
We appreciate the confidence you have placed in Calderwood & Harkness, and we look forward to bringing this matter to a successful conclusion.
Very truly yours,
CALDERWOOD & HARKNESS LLP
By: ________
Theodore Langston Partner
600 Lexington Avenue New York, New York 10022 Tel: (212) 506-7100
Email: t.langston@calderwoodharkness.com
1750 K Street NW Washington, DC 20006 Tel: (202) 371-6200
cc: Vivienne St. Claire, Partner, Calderwood & Harkness LLP Simone Laroche, Senior Associate, Calderwood & Harkness LLP Jeffrey Park, Associate, Calderwood & Harkness LLP
Enclosures: None. Hearing transcript excerpts to follow under separate cover.
This letter and all attachments are protected by the attorney-client privilege and the work-product doctrine. This co

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