MEMORANDUM
PRIVILEGED AND CONFIDENTIAL — ATTORNEY WORK PRODUCT
PREPARED IN ANTICIPATION OF LITIGATION
TO: Theodore Langston, Partner; Vivienne St. Claire, Partner
FROM: Simone Laroche, Senior Associate
DATE: December 2023
RE: Witness Preparation — Gerald Huang, VP Global Supply Chain Operations, Whitmore Aerospace LLC
MATTER: Defense of Whitmore Aerospace LLC in ICC Arbitration — ICC Case No. 27914/MHM (Kestrel Dynamics GmbH v. Whitmore Aerospace LLC)
ENGAGEMENT NO.: 1019-00001
This memorandum constitutes attorney work product prepared in anticipation of litigation and is protected by the work-product doctrine and the attorney-client privilege. This memorandum should not be disclosed, disseminated, or distributed to any person outside the Stanton & Crane LLP engagement team and Mr. Gerald Huang. Unauthorized disclosure may result in waiver of applicable privileges.
I. PURPOSE AND OVERVIEW
The purpose of this memorandum is to outline the preparation strategy for Gerald Huang's testimony at the evidentiary hearing in ICC Case No. 27914/MHM, currently scheduled for January 8–12, 2024, at the ICC Hearing Centre, New York, New York. The hearing will take place over five days, with Mr. Huang expected to appear for direct examination and cross-examination on Day 1 or Day 2, subject to confirmation in the final hearing schedule.
Gerald Huang serves as Vice President of Global Supply Chain Operations at Whitmore Aerospace LLC ("WAL" or "Respondent"). In this capacity, Mr. Huang bears primary responsibility for procurement, vendor qualification, and vendor management across WAL's global supply chain. He has been directly involved in WAL's commercial relationship with Kestrel Dynamics GmbH ("Kestrel" or "Claimant") since the execution of the Master Supply Agreement on June 15, 2018 (Document No. WAL-KDG-MSA-2018-0615). Mr. Huang is the single most important fact witness for Respondent's defense and counterclaim in this arbitration.
Mr. Huang will testify as a fact witness for Respondent on three principal topics:
1. The lot rejection process for the fourteen (14) rejected lots of Ti-6Al-4V ELI titanium alloy turbine housings delivered by Kestrel between March and September 2022, including WAL's incoming inspection procedures, the contractual quality standards applied, and the independent metallurgical testing that confirmed non-conformances.
2. Communications with Kestrel regarding cure obligations under Sections 8.4 and 14.2 of the Master Supply Agreement (as amended), including the cure-period notices, Kestrel's attempts to cure, and the ultimate failure to cure seven of the fourteen rejected lots within the contractually prescribed 45-calendar-day cure period.
3. WAL's decision to engage Valkyr Precision Components Inc. as a replacement supplier, including the timeline of the supplier-diversification review, the commercial rationale for selecting Valkyr, the onboarding process, and the pricing premium WAL paid — which forms the basis of Respondent's €5.17 million counterclaim.
The Tribunal in this matter is composed of the following members:
• Presiding Arbitrator: Prof. Dame Eleanor Fitzwilliam
• Claimant's Nominee: Dr. Hans-Ulrich Perren
• Respondent's Nominee: Hon. Robert A. Castillo
Opposing counsel representing Kestrel Dynamics GmbH is the firm of Haber Reinhardt Schlosser Partnerschaft mbB, with offices in Stuttgart and London. The lead partner is Dr. Maximilian Haber, who is expected to conduct the cross-examination of Mr. Huang. He is supported by Katrin Schäfer, Senior Associate, who is expected to handle documentary cross-referencing and follow-up questioning. Dr. Haber is known for an aggressive, detail-oriented style of cross-examination, and Ms. Schäfer is particularly adept at exploiting inconsistencies between witness statements and contemporaneous documentary evidence. We should prepare Mr. Huang accordingly.
This memorandum is protected attorney work product prepared in anticipation of the evidentiary hearing and should not be shared outside the Stanton & Crane engagement team and Mr. Huang. Under no circumstances should any portion of this memorandum be produced to opposing counsel or the Tribunal.
II. WITNESS BACKGROUND AND ROLE
A. Professional Background
Gerald Huang holds the title of Vice President of Global Supply Chain Operations at Whitmore Aerospace LLC, a position he has held since January 2017. WAL's corporate headquarters are located at 4200 Wilson Boulevard, Suite 1100, Arlington, Virginia 22203. WAL is organized as a Delaware limited liability company and operates as an aerospace and defense manufacturer specializing in propulsion systems and structural airframe components for military and commercial aviation platforms. WAL serves as a Tier 1 and Tier 2 supplier to major original equipment manufacturers and holds active contracts with the U.S. Department of Defense and allied foreign military programs.
For fiscal year 2022, WAL reported annual revenue of approximately $1.87 billion and maintained a workforce of approximately 6,400 employees across its domestic manufacturing facilities in Manassas, Virginia; Wichita, Kansas; and Mesa, Arizona, as well as engineering and support offices in Arlington, Virginia, and Huntsville, Alabama.
In his role as VP of Global Supply Chain Operations, Mr. Huang is responsible for the oversight of all procurement activities, vendor qualification and performance monitoring, supply chain risk assessment, and management of critical supplier relationships. He reports directly to Marcus J. Whitmore III, Chief Executive Officer. Mr. Huang manages a team of approximately forty-five procurement professionals and supply chain analysts and has direct signing authority for purchase orders and supplier agreements up to $15 million, with escalation to Mr. Whitmore for contracts exceeding that threshold.
Mr. Huang has been directly involved in the commercial relationship with Kestrel Dynamics GmbH since the execution of the Master Supply Agreement in June 2018. He participated in the original vendor qualification process for Kestrel, negotiated the commercial terms of the MSA and both subsequent amendments, and served as the primary WAL point of contact for commercial matters throughout the term of the agreement.
B. Relevance to the Dispute
Mr. Huang's testimony is central to Respondent's defense and counterclaim for several reasons:
First, Mr. Huang was the primary WAL contact for all commercial matters with Kestrel throughout the relevant period. His principal counterparts at Kestrel were Luisa Erdmann, Kestrel's Commercial Director, and Friedrich Brenner, Kestrel's Managing Director. The substantial majority of correspondence between the parties regarding lot rejections, cure status, and commercial negotiations flowed through Mr. Huang and Ms. Erdmann. Mr. Brenner was involved in higher-level discussions, particularly as the dispute escalated in the summer and early fall of 2022.
Second, Mr. Huang coordinated the issuance of the lot rejection notices sent to Kestrel and monitored the progress of cure periods. While the underlying quality determinations were made by WAL's quality engineering team under Dr. Ingrid Vollmer, SVP of Engineering & Manufacturing, Mr. Huang's supply chain organization was responsible for issuing the formal rejection notices, tracking cure deadlines, and communicating with Kestrel regarding the status of cure attempts.
Third, Mr. Huang led the supplier-diversification assessment that ultimately resulted in the engagement of Valkyr Precision Components Inc., headquartered at 4401 East Irvington Road, Tucson, Arizona 85714. Mr. Huang directed the evaluation of alternative suppliers, conducted the initial outreach to Valkyr, oversaw the vendor qualification process, and negotiated the commercial terms of the replacement supply agreement. His testimony regarding the timeline and rationale for the Valkyr engagement is essential to rebutting Kestrel's allegation that the termination was pretextual.
Fourth, Mr. Huang issued — or coordinated the issuance of — the Notice of Termination for Cause on October 3, 2022, working in close coordination with Dana Prescott, VP and General Counsel, and Dr. Ingrid Vollmer. Mr. Huang can testify to the deliberative process leading to the termination decision, the steps taken to exhaust alternatives before termination, and the factual basis for the notice.
C. Prior Involvement in Proceedings
Mr. Huang has already been actively involved in the proceedings to date:
• First Witness Statement: Mr. Huang provided a witness statement that was filed with Respondent's Statement of Defense and Counterclaim on June 30, 2023. This statement addressed the MSA relationship, the lot rejection process, and the timeline of events leading to termination.
• Supplemental Witness Statement: Mr. Huang provided a supplemental witness statement filed with Respondent's Rejoinder on September 29, 2023. The supplemental statement addressed certain new allegations raised in Kestrel's Reply, particularly regarding the timeline of WAL's contact with Valkyr and the alleged existence of an unpublished ≤0.15% porosity tolerance.
• Witness Designation: Mr. Huang is named as a witness in Respondent's Pre-Hearing Organizational Submissions filed in December 2023. He is currently scheduled for direct examination on Day 1 or Day 2 of the hearing, with cross-examination to follow immediately thereafter per the Tribunal's procedural directions.
It is imperative that Mr. Huang's hearing testimony be fully consistent with both of his prior witness statements. During preparation sessions, we should walk through the witness statements paragraph by paragraph and identify any areas where further clarification or elaboration may be needed, as well as any statements that could be subject to challenge on cross-examination.
III. KEY TESTIMONY TOPICS — DIRECT EXAMINATION
This section outlines the principal topics on which Mr. Huang will be examined during Respondent's direct examination. For each topic, this memorandum identifies the key facts, the relevant contractual provisions and documents, and the themes that Mr. Huang's testimony should reinforce.
A. The Master Supply Agreement and Amendments
The foundation of Mr. Huang's testimony is the Master Supply Agreement between WAL, as Buyer, and Kestrel Dynamics GmbH, as Seller, for the manufacture and supply of Ti-6Al-4V ELI titanium alloy turbine housings (referred to in the MSA as "Products"). The MSA was executed on June 15, 2018 and bears document number WAL-KDG-MSA-2018-0615.
Mr. Huang should be prepared to testify regarding the following key terms of the MSA:
• Term: The MSA has a five-year initial term running from June 15, 2018 through June 14, 2023, with two optional one-year renewal periods exercisable by WAL at its sole discretion. This is significant because Kestrel's lost-profit claim for the renewal terms rests on the assumption that WAL would have exercised these discretionary options — an assumption that WAL disputes.
• Governing Law and Dispute Resolution: The MSA is governed by the laws of the State of New York, without regard to its conflict-of-laws principles. Disputes are to be resolved by arbitration under the ICC Rules of Arbitration (2021 edition), before a three-member tribunal, with the seat of arbitration in New York, New York.
• Volume Commitments: The MSA provides for an annual minimum volume commitment of 2,400 units and a maximum of 3,600 units per contract year. Amendment No. 1, discussed below, increased the maximum annual volume to 4,000 units.
• Pricing: The unit price for the base contract year (CY1, covering the period from June 15, 2018 through June 14, 2019) was set at €4,850 per unit. The MSA provides for an annual escalation of 2.5% per annum, compounded. For CY4 (covering the period from June 15, 2021 through June 14, 2022, and extending to the period of the disputed lot deliveries), the applicable unit price was €5,222.92. Mr. Huang should be familiar with these figures, as they are relevant to the counterclaim calculation.
• Delivery Terms: Products were delivered DDP (Delivered Duty Paid, per Incoterms 2020) to WAL's manufacturing facility at 8500 Coppermine Road, Manassas, Virginia 20110. This means Kestrel bore all risk and cost of delivery until the Products arrived at WAL's facility.
• Quality Standards: The MSA required Kestrel to maintain AS9100 Rev D certification throughout the term of the agreement. Each lot of Products delivered was subject to WAL's incoming inspection procedure as set forth in WAL-QCP-100. Under the MSA, WAL had a 15-business-day acceptance window following delivery, during which WAL's quality engineering team inspected each lot for conformance to the applicable engineering specifications.
• Engineering Specifications: The applicable engineering specifications are WAL-SPEC-TH-401 through WAL-SPEC-TH-410. The critical specification for purposes of this dispute is WAL-SPEC-TH-401, Appendix C, Table 3, which sets the maximum allowable porosity for the Ti-6Al-4V ELI turbine housings at ≤0.25%. This is the contractual standard — it is published, it is part of the MSA, and it was consistently applied throughout the life of the agreement.
The MSA was amended twice during its term:
• Amendment No. 1 (February 10, 2020): This amendment added WAL-SPEC-TH-410, which introduced specifications for a high-temperature variant of the turbine housing for use in advanced propulsion applications. Amendment No. 1 also increased the maximum annual volume commitment from 3,600 units to 4,000 units to accommodate the additional product variant.
• Amendment No. 2 (September 3, 2021): This amendment was negotiated in response to COVID-19-related supply chain disruptions that were affecting Kestrel's manufacturing and logistics operations. Amendment No. 2 extended the cure period under Section 8.4 from 30 calendar days to 45 calendar days, thereby giving Kestrel additional time to address non-conformances before the cure period expired. Amendment No. 2 also added a force majeure carve-out for pandemic-related delays. Mr. Huang should testify that this amendment was a good-faith accommodation extended by WAL to Kestrel and that WAL voluntarily agreed to relax the cure timeline to support Kestrel during a period of global supply chain disruption.
Mr. Huang was involved in negotiating both amendments. His testimony should convey that the amendments reflect a collaborative and accommodating commercial relationship — not the adversarial dynamic that Kestrel now attempts to portray.
B. The Lot Rejection Process (March–September 2022)
Mr. Huang should be prepared to provide detailed testimony regarding the process by which WAL inspected, identified non-conformances in, and rejected fourteen (14) lots of Ti-6Al-4V ELI turbine housings delivered by Kestrel between March and September 2022.
WAL's Incoming Inspection Process: WAL's incoming inspection process is governed by WAL-QCP-100, a formal quality control procedure that applies to all incoming materials and components at the Manassas facility. Under this procedure, lots are inspected upon receipt. The inspection includes visual examination, dimensional measurement, and metallurgical sampling and analysis. For titanium alloy components such as the turbine housings at issue, the metallurgical analysis includes assessment of porosity using standardized microscopy and X-ray computed tomography techniques. Under the terms of the MSA, WAL has 15 business days from delivery to accept or reject each lot.
The Contractual Porosity Standard: The maximum allowable porosity for the turbine housings is ≤0.25%, as specified in WAL-SPEC-TH-401, Appendix C, Table 3. This specification is part of the contractual framework: it is referenced in the MSA, was provided to Kestrel prior to execution of the agreement, and was the basis on which Kestrel accepted the quality requirements. This is not an unpublished or internally modified standard — it is the contractual standard, and it has been consistently applied from CY1 through CY4. Mr. Huang must be unequivocal on this point, as Kestrel's allegation that WAL applied an undisclosed ≤0.15% tolerance is a central element of the Claimant's case.
Chronology of Rejections: Between March 7, 2022 (the date of the first rejection, involving Lot KDG-2022-0307) and September 19, 2022 (the date of the seventh uncured rejection, involving Lot KDG-2022-0919), WAL rejected a total of fourteen (14) lots comprising 1,680 units. These rejections were based on non-conformances identified during the incoming inspection process, primarily excessive porosity exceeding the ≤0.25% contractual limit.
Independent Metallurgical Testing: To provide objective confirmation of the non-conformances identified during WAL's internal inspection process, WAL engaged Arclight Materials Science Inc. to conduct independent metallurgical testing. The analysis was performed under the direction of Dr. Raymond Chow, a recognized expert in aerospace materials science. Dr. Chow's analysis confirmed that the rejected lots exhibited porosity levels ranging from 0.19% to 0.38%. While some lots fell near the 0.25% threshold, many substantially exceeded it. Dr. Chow's expert report has been filed with the Tribunal and will be the subject of expert testimony at the hearing.
Internal Process: Mr. Huang should testify regarding the internal process by which rejections were handled at WAL:
(a) WAL's quality engineering team, under the direction of Dr. Ingrid Vollmer (SVP Engineering & Manufacturing), performed the incoming inspection and identified non-conformances.
(b) Upon identification of a non-conformance, the quality team communicated the results to Mr. Huang's supply chain organization.
(c) Mr. Huang's team then issued the formal rejection notice to Kestrel, specifying the lot number, the nature of the non-conformance, and the commencement date of the 45-calendar-day cure period.
(d) Mr. Huang's team monitored the cure period, coordinated with Kestrel regarding cure submissions, and arranged for re-inspection of any cure attempts.
Key Point — Consistency of Standards: Mr. Huang should emphasize that WAL consistently applied the same ≤0.25% porosity standard throughout the entire life of the MSA, including during CY1 through CY3 when Kestrel's lots were accepted and the commercial relationship was functioning smoothly. The standard did not change in 2022. What changed was the quality of Kestrel's products. If challenged on this point during cross-examination, Mr. Huang should direct the Tribunal's attention to the WAL-SPEC-TH-401 specification documents and to WAL's inspection records from prior contract years, which demonstrate that earlier lots met the ≤0.25% standard.
Mr. Huang should be prepared to reject firmly and clearly Kestrel's allegation that WAL imposed an unpublished ≤0.15% porosity tolerance. While some internal engineering documents may reference a ≤0.15% aspirational or target-level tolerance for certain advanced applications, this aspirational target was never used as the basis for any rejection decision. The rejection criterion was always and exclusively the contractual ≤0.25% standard as published in WAL-SPEC-TH-401, Appendix C, Table 3.
C. Communications with Kestrel Regarding Cure
A significant portion of Mr. Huang's testimony will address the extensive communications between WAL and Kestrel regarding Kestrel's cure obligations under the MSA.
Contractual Framework for Cure: Section 8.4 of the MSA provides that, upon rejection of a lot for non-conformance with the applicable specifications, Kestrel has 45 calendar days (as extended by Amendment No. 2, dated September 3, 2021, from the original 30-calendar-day period) to cure the non-conformance by replacement or rework. The cure period commences upon Kestrel's receipt of the written rejection notice.
Persistent Quality Failure: Under Section 8.4, read together with Section 14.2(b), three (3) or more uncured rejections within any rolling twelve (12)-month period constitute a "Persistent Quality Failure." A Persistent Quality Failure entitles WAL to terminate the MSA for cause under Section 14.2(b). This is a bright-line contractual threshold: once three uncured rejections occur within a rolling twelve-month period, the termination right is triggered. In this case, seven (7) of the fourteen (14) rejected lots remained uncured within the 45-day cure period — far exceeding the three-rejection threshold by a wide margin.
Communications Chronology: Mr. Huang communicated directly with Luisa Erdmann, Kestrel's Commercial Director, regarding the status of cure attempts on a regular basis during the March–September 2022 period. On certain occasions, particularly as the volume of uncured rejections grew, Mr. Huang escalated discussions to Friedrich Brenner, Kestrel's Managing Director. The key communications chronology is as follows:
• March 2022: Following the first rejection of Lot KDG-2022-0307, Mr. Huang issued a formal rejection notice to Kestrel. Kestrel acknowledged receipt and indicated it would undertake a cure attempt. Kestrel submitted replacement units, which were subjected to re-inspection by WAL's quality team. The cure attempt failed re-inspection due to continued porosity exceedances.
• April–May 2022: Additional lots were rejected. Mr. Huang continued to communicate with Ms. Erdmann regarding cure timelines and the status of Kestrel's corrective actions. Mr. Huang conveyed WAL's growing concern about the pattern of non-conformances and urged Kestrel to implement root-cause corrective measures.
• June–July 2022: The volume of uncured rejections reached and exceeded the three-rejection Persistent Quality Failure threshold. Mr. Huang escalated concerns to Mr. Brenner and participated in multiple calls during which WAL emphasized the seriousness of the situation and encouraged Kestrel to take immediate corrective action. WAL expressed its willingness to work with Kestrel to resolve the quality issues but made clear that continued non-conformances would have contractual consequences.
• August 2022: Additional rejections continued. Mr. Huang and Ms. Erdmann exchanged multiple emails regarding the status of outstanding cure obligations. Kestrel made partial cure attempts, some of which passed re-inspection, but several remained uncured as cure periods expired.
• September 2022: The seventh uncured rejection — Lot KDG-2022-0919 — marked the final event triggering WAL's decision to proceed with termination for cause. By this point, WAL had exhausted reasonable efforts to work cooperatively with Kestrel to resolve the persistent quality failures.
Mr. Huang should testify to the good-faith efforts WAL made throughout this period to work with Kestrel before resorting to the contractual remedy of termination for cause. WAL did not terminate at the first opportunity; rather, WAL continued to engage with Kestrel, accepted partial cure submissions where they met specifications, and repeatedly encouraged Kestrel to address the root causes of the quality problems. The termination decision was made only after the pattern of persistent quality failures became undeniable and after WAL had given Kestrel every reasonable opportunity to correct its performance.
Key Documents: Mr. Huang should be thoroughly familiar with the rejection notices for all fourteen lots, the cure-period correspondence with Kestrel (including emails and formal letters between Mr. Huang and Ms. Erdmann and Mr. Brenner), and internal email chains between Mr. Huang and Dr. Vollmer's quality engineering team documenting the inspection results and cure evaluations.
D. WAL's Decision to Engage Valkyr Precision Components Inc.
This topic is among the most contested in the arbitration and will likely be a primary focus of cross-examination. Mr. Huang must be thoroughly prepared to address the timeline of WAL's engagement with Valkyr and to rebut Kestrel's pretext theory.
Kestrel's Allegation: Kestrel alleges that WAL's true motive for terminating the MSA was to replace Kestrel with a lower-cost domestic supplier — Valkyr Precision Components Inc. — and that the quality complaints were pretextual. According to Kestrel, WAL had already identified Valkyr as a preferred replacement supplier before the lot rejections began and used the rejections as a manufactured justification for a commercially motivated switch.
WAL's Position: WAL's position is that the engagement of Valkyr was a commercially reasonable mitigation step undertaken after Kestrel's quality failures became persistent and it became apparent that Kestrel could not reliably supply conforming products. The decision to engage Valkyr was not a pretext for termination; rather, it was a necessary response to the operational reality that WAL could not risk production disruptions for its military and commercial aviation customers by continuing to rely on a supplier that had failed to deliver conforming products over a six-month period.
Key Facts on Timeline: Mr. Huang should testify to the following timeline:
(a) Quality failures began in March 2022 with the rejection of Lot KDG-2022-0307. At that time, WAL had no plans to replace Kestrel and expected Kestrel to cure the non-conformances within the contractual cure period.
(b) After multiple rejections and failed cure attempts in the spring of 2022, WAL initiated a supplier-diversification review in approximately June–July 2022. This review was a prudent and commercially reasonable response to the growing pattern of quality failures. WAL's obligation to its own customers — including defense and military aviation programs — required contingency planning for the possibility that Kestrel would be unable to restore product quality.
(c) WAL's initial contact with Valkyr Precision Components Inc. (4401 East Irvington Road, Tucson, Arizona 85714) occurred in approximately August 2022. This contact was made after the Persistent Quality Failure threshold had been exceeded and while additional cure periods were still running.
(d) WAL did not execute a supply agreement with Valkyr until after the Notice of Termination for Cause was issued on October 3, 2022. The supply agreement was negotiated in October and November 2022, and deliveries from Valkyr commenced in early 2023.
(e) The decision to engage Valkyr was driven by supply-continuity concerns. WAL manufactures mission-critical propulsion components and structural airframe parts. Production disruptions caused by an unreliable supplier would have cascading impacts on WAL's manufacturing schedule, delivery commitments to end customers, and contractual obligations under defense programs.
Valkyr Pricing — The Dispositive Rebuttal: Perhaps the single most powerful fact undercutting Kestrel's pretext argument is the pricing. Valkyr's unit price for the Ti-6Al-4V ELI turbine housings is €8,432.92 per unit — substantially higher than Kestrel's CY4 price of €5,222.92 per unit. Even after application of Valkyr's 4.2% introductory discount, the net per-unit cost to WAL is approximately €8,078.74, representing a premium of approximately €2,855.82 per unit over the Kestrel contract price. WAL did not achieve cost savings by switching to Valkyr; to the contrary, WAL paid a significant premium.
Mr. Huang should emphasize this point clearly: WAL paid more — not less — for Valkyr components. If the motive for termination were to obtain a cheaper supplier, WAL would have selected a supplier at a lower price point. The fact that WAL accepted a substantial cost premium demonstrates that the switch was driven by necessity — the need for conforming, reliable products — not by opportunism.
Counterclaim Quantification: The price premium paid to Valkyr forms the basis of Respondent's counterclaim. The calculation is as follows:
• Replacement units sourced from Valkyr: 1,680 units
• Valkyr unit price: €8,432.92
• Kestrel CY4 contract price: €5,222.92
• Gross per-unit premium: €3,210.00
• Valkyr introductory discount: 4.2%
• Net per-unit premium: €3,210.00 × 0.958 = approximately €3,075.18
• Total replacement cost premium: 1,680 × €3,075.18 ≈ €5,166,302.40, rounded to approximately €5.17 million
This calculation has been reviewed by Sandra Gillespie at Canfield & Thorpe LLP, who conducted the forensic accounting review supporting the counterclaim, and by Dr. Nadia Ostrovsky of Ridgeline Economic Consulting LLC, who provided the damages quantification expert report filed with the Tribunal.
E. The Notice of Termination for Cause (October 3, 2022)
The culmination of Mr. Huang's testimony on direct examination concerns the Notice of Termination for Cause, which was issued by WAL to Kestrel on October 3, 2022.
Contractual Basis: The notice was issued pursuant to Section 14.2(b) of the MSA, which permits WAL to terminate the agreement for cause upon the occurrence of a Persistent Quality Failure — defined as three or more uncured rejections in any rolling twelve-month period. As of September 2022, WAL had documented seven (7) uncured rejections within the rolling twelve-month period from March through September 2022, far exceeding the three-rejection threshold.
Mr. Huang's Role: Mr. Huang played a central role in preparing and authorizing the Notice of Termination for Cause. He coordinated with Dana Prescott, VP and General Counsel, who reviewed the contractual basis for the termination and ensured compliance with the notice provisions of the MSA. He also coordinated with Dr. Ingrid Vollmer, who confirmed the technical basis for each of the uncured rejections and certified that the rejection decisions were consistent with WAL-QCP-100 and the applicable engineering specifications.
Deliberative Process: Mr. Huang should testify that the termination decision was not made lightly. It followed months of escalating quality concerns, repeated communications with Kestrel urging corrective action, and multiple failed cure attempts. The decision was made only after the pattern of quality failures became undeniable and only after WAL had exhausted all reasonable alternatives short of termination. The termination was a last resort, not a first instinct.
Mr. Huang should be prepared to walk the Tribunal through the chronology of the decision-making process — from the initial quality concerns in March 2022, through the escalation of discussions with Kestrel's management, to the formal decision to terminate in late September 2022, and the issuance of the notice on October 3, 2022. This chronology will reinforce the narrative that WAL acted deliberately, in good faith, and in strict compliance with the contractual procedures.
IV. ANTICIPATED CROSS-EXAMINATION — QUESTIONS AND SUGGESTED RESPONSES
This section identifies the most likely lines of cross-examination by Kestrel's counsel, Dr. Maximilian Haber and Katrin Schäfer of Haber Reinhardt Schlosser Partnerschaft mbB, and provides suggested responses for Mr. Huang. These suggested responses should be discussed and refined during the preparation sessions. Mr. Huang should not memorize or rehearse scripted answers but should internalize the key facts and themes so that his testimony is natural, consistent, and responsive.
A. Pretext / Motive for Termination
This is expected to be the primary line of cross-examination. Dr. Haber will attempt to establish that WAL had a pre-existing plan to replace Kestrel with a domestic supplier, and that the quality rejections were manufactured or exaggerated to create a contractual basis for termination.
Anticipated question (Dr. Haber): "Isn't it true that WAL had already decided to replace Kestrel with a domestic supplier before issuing the rejection notices?"
Suggested response: No. WAL had no plans to replace Kestrel prior to the quality failures that began in March 2022. The supplier-diversification review was initiated only after multiple lots failed incoming inspection and it became clear that Kestrel was unable to deliver conforming products. Valkyr was not contacted until approximately August 2022 — five months after the first rejection. During CY1 through CY3, WAL had a satisfactory commercial relationship with Kestrel, and there was no reason to seek a replacement supplier.
Anticipated question: "WAL paid €8,432.92 per unit to Valkyr — if cost savings were not the motive, why replace a supplier at a higher price?"
Suggested response: Exactly — the Valkyr price was substantially higher than Kestrel's CY4 price of €5,222.92. WAL incurred a significant premium for the replacement units, which is the basis of our €5.17 million counterclaim. If WAL's motive were to reduce costs, it would make no sense to switch to a supplier charging over 60% more per unit. The switch was driven by Kestrel's inability to deliver conforming products, not by cost considerations.
Anticipated question: "Didn't WAL begin informal discussions with Valkyr as early as spring 2022?"
Suggested response: WAL routinely evaluates alternative suppliers as part of prudent supply chain management practices. Any preliminary market assessment or industry networking conducted prior to the formal diversification review does not indicate a predetermined decision to terminate Kestrel. Every major aerospace manufacturer maintains awareness of qualified alternative sources for critical components — this is standard practice and, in many cases, a requirement of WAL's own customer contracts. The formal evaluation of Valkyr as a qualified replacement supplier began only after the pattern of uncured rejections was established, in approximately June–July 2022.
Note to preparation team: This line of questioning may be accompanied by the introduction of internal WAL emails or meeting notes from the spring of 2022 that reference alternative suppliers in a general context. Mr. Huang should be prepared to distinguish routine market intelligence and contingency planning from a firm, executed decision to replace Kestrel. He should acknowledge that prudent supply chain management involves continuous awareness of the supplier landscape without conceding that any specific decision to terminate Kestrel was made prior to the emergence of persistent quality failures.
B. Porosity Standards and Alleged Unpublished Specification
This line of cross-examination will focus on Kestrel's allegation that WAL applied a more stringent, unpublished porosity tolerance of ≤0.15% rather than the contractual ≤0.25%.
Anticipated question: "Isn't it true that WAL's internal inspection reports applied a porosity tolerance of ≤0.15%, which is stricter than the contractual ≤0.25%?"
Suggested response: No. The contractual porosity specification is ≤0.25%, as expressly stated in WAL-SPEC-TH-401, Appendix C, Table 3. All incoming inspections under WAL-QCP-100 applied this published standard as the acceptance/rejection criterion. It is possible that some internal engineering reports may have discussed an aspirational or target-level tolerance of ≤0.15% in the context of advanced design objectives or future specification development, but this aspirational target was never used as the basis for any rejection decision. The rejection criterion was always the contractual ≤0.25%.
Anticipated question: "Can you point to any lot rejected solely on the basis of the ≤0.25% standard where the porosity was between 0.25% and 0.38%?"
Suggested response: Yes. Dr. Raymond Chow's independent metallurgical analysis, conducted by Arclight Materials Science Inc., confirmed that the rejected lots exhibited porosity levels ranging from 0.19% to 0.38%. While some lots had porosity closer to the 0.25% threshold, others substantially exceeded it. Every rejection was based on the contractual ≤0.25% standard. Some lots with porosity at or near 0.25% may have exhibited other non-conformances as well — such as dimensional out-of-tolerance conditions or surface discontinuities — as documented in the individual rejection notices.
Note to preparation team: Dr. Haber may introduce specific internal WAL engineering emails that reference a ≤0.15% target. Mr. Huang should be prepared to explain the distinction between an aspirational engineering target (which reflects best-practice design goals for future applications) and a contractual acceptance/rejection criterion (which is the binding standard). Mr. Huang should also be prepared to defer to Dr. Vollmer's testimony for more detailed technical explanations of the inspection methodology, while affirming that the rejection decisions made by his supply chain team were based on the contractual standard as confirmed by the quality team.
C. Cure Period Compliance
This line of questioning will challenge whether WAL complied with the cure-period procedures and whether WAL provided Kestrel with a fair opportunity to cure.
Anticipated question: "Didn't WAL reject cure attempts unreasonably or fail to provide Kestrel with adequate notice?"
Suggested response: WAL followed the contractual procedure precisely. Upon rejection, Kestrel was notified in writing and given the full 45-calendar-day cure period, as extended by Amendment No. 2 dated September 3, 2021. WAL's quality team re-inspected all cure submissions in accordance with the same WAL-QCP-100 procedure applied to original deliveries. Seven lots remained non-conforming after the cure period expired. The cure submissions that met specifications were accepted; those that did not were rejected based on the same contractual standard.
Anticipated question: "Wasn't the 45-day cure period insufficient given ongoing supply-chain disruptions?"
Suggested response: Amendment No. 2, executed on September 3, 2021, specifically extended the cure period from 30 to 45 calendar days to account for COVID-related logistics disruptions, and also added a force majeure carve-out for pandemic-related delays. WAL voluntarily agreed to these accommodations in good faith, at Kestrel's request, precisely to address supply chain disruption concerns. By the time the quality failures at issue occurred — March through September 2022 — the most acute COVID-related supply chain disruptions had significantly abated. The 45-day cure period was the product of mutual agreement and was more than adequate.
D. Relationship with Kestrel Prior to Disputes
Dr. Haber may seek to establish that the abrupt onset of quality complaints in 2022 is suspicious in light of the previously satisfactory relationship.
Anticipated question: "Prior to March 2022, was WAL satisfied with Kestrel's performance?"
Suggested response: Generally, yes. During CY1 through CY3, Kestrel delivered conforming products, and WAL had few quality concerns. The commercial relationship was productive and cooperative. The fact that WAL agreed to two amendments — including one specifically designed to accommodate Kestrel during a difficult period — reflects the quality of the relationship during those years. The relationship deteriorated beginning in early 2022, when Kestrel's product quality declined materially and persistently.
Anticipated question: "If the relationship was satisfactory for years, isn't it suspicious that rejections suddenly increased in 2022?"
Suggested response: WAL did not change its inspection criteria. The inspection methodology under WAL-QCP-100 remained the same throughout the life of the MSA, and the porosity specification of ≤0.25% was unchanged. The change was in the quality of Kestrel's products, not in WAL's standards. WAL's inspection records from CY1 through CY3 confirm that earlier lots consistently met the ≤0.25% porosity standard. The decline in quality beginning in 2022 was on Kestrel's side, not a change in WAL's acceptance criteria. We do not know what internal changes at Kestrel's manufacturing facility may have contributed to the quality decline, but the inspection data speaks for itself.
E. Impact on WAL's Lender and Insurance
Cross-examination may touch on WAL's financial arrangements and disclosure obligations.
Anticipated question: "Did WAL notify its lender, Veltrano National Bank, about the arbitration?"
Suggested response: WAL complied with all notification obligations under its $350 million senior secured revolving credit facility with Veltrano National Bank, N.A. The arbitration was disclosed as required by the terms of the credit agreement. This is a routine disclosure obligation that applies to any material litigation or arbitration, and it does not bear on the merits of the dispute between WAL and Kestrel.
Note to preparation team: If Dr. Haber presses further into details regarding WAL's credit facility, covenant compliance, or communications with Veltrano National Bank, Mr. Huang should state that he is not responsible for WAL's banking relationships, defer to WAL's finance team on technical financial questions, and note that any attorney-client privileged communications regarding the arbitration are not appropriate subjects of testimony. We should prepare Mr. Huang with a clear boundary for this topic.
F. Counterclaim Details
Cross-examination on the counterclaim is likely to focus on the methodology and inputs of the €5.17 million calculation.
Anticipated question: "How did WAL calculate the €5.17 million counterclaim?"
Suggested response: The calculation is based on the actual replacement cost incurred by WAL. WAL sourced 1,680 replacement units from Valkyr Precision Components Inc. at a unit price of €8,432.92. This is compared to the CY4 contract price under the MSA with Kestrel of €5,222.92 per unit, yielding a gross per-unit premium of €3,210.00. After applying Valkyr's 4.2% introductory discount, the net replacement cost premium totals approximately €5.17 million. This calculation has been reviewed by Sandra Gillespie at Canfield & Thorpe LLP, which conducted the forensic accounting review supporting the counterclaim, and by Dr. Nadia Ostrovsky of Ridgeline Economic Consulting LLC, who provided the damages quantification expert report.
Note to preparation team: Mr. Huang should present the counterclaim calculation clearly but should be prepared to defer to the expert witnesses on detailed forensic and economic questions. His role is to provide the factual foundation — the number of replacement units, the pricing terms, and the commercial rationale — rather than to defend the economic modeling.
V. KEY DOCUMENTS FOR WITNESS REVIEW
Mr. Huang should be thoroughly familiar with the following documents in advance of the preparation sessions and the evidentiary hearing. Mr. Huang should re-read each document and be prepared to identify, locate, and discuss key provisions on direct and cross-examination.
1. Master Supply Agreement (WAL-KDG-MSA-2018-0615), executed June 15, 2018 — in particular Sections 8.4 (Quality Standards and Cure), 14.2 (Termination for Cause), 8.7 (Limitation of Liability and Consequential Damages Waiver), and all appendices referencing product specifications.
2. Amendment No. 1 (February 10, 2020) — addition of WAL-SPEC-TH-410 and increase of maximum annual volume to 4,000 units.
3. Amendment No. 2 (September 3, 2021) — extension of cure period to 45 calendar days and addition of force majeure carve-out.
4. WAL-SPEC-TH-401, Appendix C, Table 3 — the porosity specification establishing the ≤0.25% maximum allowable porosity.
5. WAL-SPEC-TH-401 through WAL-SPEC-TH-410 — the full suite of engineering specifications applicable to the Products.
6. WAL-QCP-100 — WAL's quality control procedure for incoming inspection at the Manassas facility.
7. Rejection notices for all 14 lots (Lot KDG-2022-0307 through Lot KDG-2022-0919) — formal written notices issued by WAL to Kestrel, specifying the nature of each non-conformance and the cure period.
8. Cure-period correspondence — emails and formal letters between Mr. Huang and Luisa Erdmann and Friedrich Brenner, including Kestrel's acknowledgments, cure submissions, and WAL's re-inspection results.
9. Notice of Termination for Cause dated October 3, 2022 — the formal notice issued pursuant to Section 14.2(b) of the MSA.
10. Valkyr Precision Components Inc. supply agreement and pricing terms — the replacement supply agreement and the commercial terms establishing the €8,432.92 per-unit price and 4.2% introductory discount.
11. Mr. Huang's first witness statement (filed June 30, 2023 with Respondent's Statement of Defense and Counterclaim).
12. Mr. Huang's supplemental witness statement (filed September 29, 2023 with Respondent's Rejoinder).
13. Dr. Raymond Chow's expert report (Arclight Materials Science Inc.) — independent metallurgical analysis confirming porosity non-conformances in rejected lots.
14. Dr. Nadia Ostrovsky's expert report (Ridgeline Economic Consulting LLC) — damages quantification supporting the counterclaim.
15. Kestrel's Statement of Claim dated April 28, 2023 — Mr. Huang should be particularly familiar with paragraphs 87, 92, 96, and 101, which set forth Kestrel's damages allegations, so that he understands the claims he is being called upon to rebut.
Mr. Huang should also review any internal WAL documents that are in evidence or may be introduced by opposing counsel, including internal emails, meeting notes, and supply chain review memoranda from the relevant period. The preparation team will provide Mr. Huang with a document binder organized by topic in advance of Session 1.
VI. PREPARATION SESSION LOGISTICS
A. Scheduling
We propose two preparation sessions with Mr. Huang:
Session 1 — Substantive Review and Document Walk-Through
• Date: December 2023 (specific date to be coordinated with Mr. Huang's calendar)
• Duration: Full day (approximately 9:00 AM – 5:00 PM, with breaks)
• Location: Stanton & Crane LLP, Washington, DC office, 1750 K Street NW, Washington, DC 20006
• Objective: Comprehensive substantive review of all testimony topics; paragraph-by-paragraph review of Mr. Huang's two witness statements; walk-through of key documents; identification of potential vulnerabilities; initial discussion of anticipated cross-examination themes
• Participants: Theodore Langston (Partner), Simone Laroche (Senior Associate), Jeffrey Park (Associate), and Gerald Huang
• Additional Attendee: Dana Prescott (VP & General Counsel, Whitmore Aerospace LLC) to attend Session 1 for purposes of coordination on privilege and work-product issues, and to provide context on the legal review of the termination notice
Session 2 — Mock Cross-Examination
• Date: First week of January 2024 (specific date to be confirmed; ideally January 3 or 4, 2024, to allow adequate time before the January 8 hearing start date)
• Duration: Half day (approximately 9:00 AM – 1:00 PM)
• Location: In person at C&H's Washington, DC office, or via secure videoconference (depending on Mr. Huang's schedule and travel plans)
• Objective: Simulated cross-examination to test Mr. Huang's composure, consistency, and command of the key facts under adversarial questioning conditions; real-time feedback and coaching
• Participants: Theodore Langston (observer/debrief), Simone Laroche (conducting mock cross-examination), Jeffrey Park (conducting follow-up examination), and Gerald Huang
B. Mock Cross-Examination
The mock cross-examination in Session 2 is designed to simulate the style and intensity of questioning Mr. Huang can expect from opposing counsel at the hearing. The assignments are as follows:
• Simone Laroche will conduct the primary mock cross-examination in the style of Dr. Maximilian Haber. Based on Dr. Haber's track record in prior ICC proceedings (including his examinations in Meridian Composites AG v. Thales Aeronautique SA, ICC Case No. 24817/RHZ), his approach is characteristically aggressive, methodical, and focused on establishing contradictions between witness statements and contemporaneous documents. He favors long, building sequences of questions designed to extract incremental admissions before closing with a summary question that synthesizes the admissions into a damaging narrative. Mr. Huang should be prepared for this technique and trained to answer each question precisely without volunteering additional information.
• Jeffrey Park will take the role of Katrin Schäfer, whose focus in cross-examination typically centers on documentary inconsistencies — comparing dates, figures, and statements across multiple documents and witness submissions. Ms. Schäfer is particularly adept at confronting witnesses with internal emails that appear to contradict formal position statements.
• The mock session will be recorded for internal review purposes (audio and/or video). The recording is work product protected and will be maintained by Stanton & Crane under the engagement file. The recording will not be shared outside the preparation team and Mr. Huang.
C. Coordination with Dr. Vollmer's Testimony
Mr. Huang's testimony must be coordinated with the testimony of Dr. Ingrid Vollmer, SVP Engineering & Manufacturing, to ensure complementarity without unnecessary overlap. The division of testimony responsibilities should be as follows:
Mr. Huang's Testimony (Commercial/Supply Chain Perspective):
• The commercial relationship with Kestrel, including the negotiation of the MSA and amendments
• Vendor communications regarding lot rejections and cure obligations
• The supplier-diversification review and the decision to engage Valkyr
• The commercial impact of Kestrel's quality failures on WAL's operations
• The issuance of the Notice of Termination for Cause
• The counterclaim: replacement cost premium and Valkyr pricing
Dr. Vollmer's Testimony (Technical/Engineering Perspective):
• The technical details of the incoming inspection process under WAL-QCP-100
• The engineering basis for the ≤0.25% porosity specification in WAL-SPEC-TH-401