1019-00001 · Haber Reinhardt Schlosser Partners · Procedural

objections-to-claimant-document-requests.docx DOCUMENT M&A / Corporate

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CONFIDENTIAL

CALDERWOOD & HARKNESS LLP 600 Lexington Avenue New York, NY 10022 Telephone: +1 (212) 558-4000 Facsimile: +1 (212) 558-3588

March 24, 2023

Professor Dame Eleanor Fitzwilliam (Presiding Arbitrator) Dr. Hans-Ulrich Perren (Co-Arbitrator) The Hon. Robert A. Castillo (Co-Arbitrator)

ICC Arbitral Tribunal ICC Case No. 27914/MHM

Re: Respondent Whitmore Aerospace LLC's Objections to Claimant's Document Production Requests Pursuant to Procedural Order No. 2 dated March 17, 2023

Copies:

Dr. Maximilian Haber Haber Reinhardt Schlosser Partnerschaft mbB Königstraße 35 70173 Stuttgart, Germany

and

30 St Mary Axe London EC3A 8BF United Kingdom

(Counsel for Claimant Kestrel Dynamics GmbH)

ICC Secretariat International Court of Arbitration International Chamber of Commerce 33–43 avenue du Président Wilson 75116 Paris, France

Dear Members of the Tribunal,

I. Introduction and Procedural Context

This letter is submitted by Calderwood & Harkness LLP on behalf of Respondent Whitmore Aerospace LLC ("WAL" or "Respondent") in ICC Case No. 27914/MHM. The purpose of this submission is to set forth Respondent's objections to certain document production requests served by Claimant Kestrel Dynamics GmbH ("Kestrel" or "Claimant"), through its counsel Haber Reinhardt Schlosser Partnerschaft mbB ("HRS"), in connection with the Redfern Schedule exchange mandated by the Tribunal.

As the Tribunal will recall, Procedural Order No. 2, issued on March 17, 2023, established the document production schedule and framework for Redfern Schedule submissions in this proceeding. Among other things, Procedural Order No. 2 set a deadline of March 24, 2023 for the simultaneous exchange of document production requests, and provided that objections to such requests shall be submitted no later than April 7, 2023, unless the Parties agree otherwise or a Party elects to submit objections together with its initial requests. Respondent elects the latter course and hereby files its objections contemporaneously with its Redfern Schedule submissions.

Claimant, through HRS, served its document production requests on Respondent on or about March 17, 2023. The requests consist of nine numbered categories of documents. Respondent has carefully reviewed each of Claimant's requests and, for the reasons set forth in detail below, raises objections to Request Nos. 3, 5, 7, and 9. Respondent does not object to the remaining requests (Request Nos. 1, 2, 4, 6, and 8) and will produce responsive, non-privileged documents in its possession, custody, or control in accordance with the schedule established by the Tribunal.

Respondent confirms its compliance with its document preservation and production obligations under Procedural Order Nos. 1 and 2 and confirms that it has implemented, and continues to maintain, a litigation hold encompassing all categories of documents reasonably relevant to this proceeding. Respondent further notes that, concurrently with this letter, it is submitting its own Redfern Schedule of document production requests directed to Claimant.

Respondent respectfully requests that the Tribunal rule on the objections set forth herein in accordance with the ICC Rules of Arbitration (2021 edition), the procedural framework established at the preliminary procedural conference held on February 14, 2023 (memorialized in Procedural Order No. 1), and, to the extent adopted by the Tribunal, the IBA Rules on the Taking of Evidence in International Arbitration (2020 revision).

For the Tribunal's convenience, the following background procedural parameters are relevant to the present submission:

• Applicable Substantive Law: The law of the State of New York governs the underlying dispute, as provided by Section 22.1 of the Master Supply Agreement dated June 15, 2018 (the "MSA").

• Seat of Arbitration: New York, New York, United States.

• Language of Arbitration: English.

• Claimant: Kestrel Dynamics GmbH, a company organized under the laws of the Federal Republic of Germany, with its principal place of business at Industriestraße 48, 73447 Oberkochen, Germany.

• Respondent: Whitmore Aerospace LLC, a limited liability company organized under the laws of the State of Delaware, with its principal place of business at 4200 Wilson Boulevard, Suite 1100, Arlington, Virginia 22203.

II. General Principles Governing Document Production

Before turning to Respondent's specific objections, Respondent respectfully sets out the general principles that, in Respondent's submission, should guide the Tribunal's resolution of any disputes regarding document production.

Respondent acknowledges the Tribunal's authority to order document production under Article 25(5) of the ICC Rules of Arbitration (2021 edition) and the applicable provisions of the IBA Rules on the Taking of Evidence in International Arbitration, to the extent adopted by the Tribunal in Procedural Order No. 1. Procedural Order No. 1 provides, at Paragraph 12.3, that document production requests shall be governed by the principles set forth in Articles 3 and 9 of the IBA Rules, adapted as the Tribunal deems appropriate.

Those principles, which are now well established in international arbitration practice, require that document production requests satisfy the following criteria:

(a) Specificity: Each request must identify, with reasonable particularity, a narrow and specific category of documents, rather than broad, undefined classes of documents. A request for "all documents relating to" a general subject matter, without temporal or substantive limitation, fails to meet this standard. See IBA Rules, Art. 3.3(a)(ii).

(b) Relevance and Materiality: Requested documents must be relevant to the case and material to its outcome. The requesting party bears the burden of demonstrating that the documents sought are relevant to specific issues that the Tribunal must determine. See IBA Rules, Art. 3.3(b); Art. 9.2(a).

(c) Proportionality: The burden of producing the requested documents must be proportionate to the significance of the documents to the issues in dispute. Where the burden of production substantially outweighs the likely probative value of the documents, the Tribunal should deny or narrow the request. See IBA Rules, Art. 9.2(c).

(d) No Fishing Expeditions: Document production in international arbitration is not equivalent to the broad pre-trial discovery available in domestic litigation in the United States or certain other jurisdictions. Requests that are designed to enable a party to search through the opposing party's files in the hope of finding support for claims or defenses that the requesting party cannot otherwise substantiate are impermissible. This principle is deeply embedded in international arbitration practice and has been repeatedly affirmed by arbitral tribunals and commentators alike.

Respondent submits that several of Claimant's requests fail to meet these standards. In particular, Claimant's Request Nos. 3, 5, 7, and 9 amount to impermissible "fishing expeditions" that seek broad categories of internal business documents, third-party communications, and strategic materials that have no direct relevance to the issues the Tribunal must determine. As set forth below, these requests appear designed to support speculative theories regarding WAL's subjective motivations for terminating the MSA — theories that are legally irrelevant where, as here, the termination was objectively justified under the express terms of the contract.

Finally, Respondent reserves all rights regarding the attorney-client privilege and the work product doctrine as applicable under the law of the State of New York. The arbitration is seated in New York, and the MSA is governed by New York law. Accordingly, the scope and applicability of evidentiary privileges should be determined by reference to New York law, including CPLR § 4503 (attorney-client privilege) and the work product doctrine as applied by New York courts. Respondent has not waived, and does not intend to waive, any applicable privilege, and Respondent's discussion of certain factual matters in this submission is without prejudice to its privilege rights.

III. Objection to Claimant's Request No. 3: WAL's Negotiations and Correspondence with Valkyr Precision Components Inc.

A. Description of the Request

Claimant's Request No. 3 seeks the production of:

"[A]ll documents, correspondence, communications, drafts, term sheets, proposals, and agreements between Whitmore Aerospace LLC and Valkyr Precision Components Inc. relating to the supply of titanium alloy turbine housings, including but not limited to any negotiations, pricing discussions, or supply agreements entered into before, during, or after the period of the Master Supply Agreement with Kestrel Dynamics GmbH."

The breadth of this request is immediately apparent from its text. It encompasses an indefinite timeframe — expressly including periods "before, during, or after" the MSA — and is not limited to any specific category of document, any particular issue in dispute, or any defined time period. The request would, on its face, sweep in every document that has ever been exchanged between WAL and Valkyr Precision Components Inc. ("Valkyr") on the subject of titanium alloy turbine housings, regardless of when it was created, its subject matter, or its relevance to any issue before this Tribunal.

B. Grounds for Objection

1. Overbreadth and Lack of Specificity. Respondent objects to Request No. 3 on the ground that it is facially overbroad and lacks the specificity required under the IBA Rules and the Tribunal's procedural orders. The request seeks "all documents" without any meaningful temporal limitation, substantive limitation, or relevance to the specific issues in dispute. This is precisely the type of wide-ranging, exploratory request that the IBA Rules and established arbitral practice are designed to prevent.

Valkyr Precision Components Inc. is a precision aerospace component manufacturer headquartered at 4401 East Irvington Road, Tucson, Arizona 85714. WAL engaged Valkyr as a replacement supplier of titanium alloy turbine housings following Kestrel's Persistent Quality Failure and WAL's termination of the MSA on October 3, 2022, pursuant to Section 14.2(b) of the MSA. WAL's commercial relationship with Valkyr is a separate, independent business relationship that is not governed by the MSA between WAL and Kestrel. The terms, conditions, pricing structures, and technical specifications agreed upon between WAL and Valkyr are the product of arm's-length commercial negotiations between those two parties and have no bearing on the contractual obligations, performance, or breach of the MSA.

If produced in its entirety, the request would sweep in, among other things:

(a) Competitively sensitive pricing information, including Valkyr's per-unit price of €8,432.92 and the introductory discount of 4.2% negotiated in connection with the initial supply order, as well as any subsequent pricing discussions or renegotiations;

(b) Proprietary engineering specifications and manufacturing process data exchanged between WAL and Valkyr in connection with the qualification and production of replacement turbine housings;

(c) Internal business strategy documents reflecting WAL's negotiating positions, commercial assessments, and supplier evaluation criteria;

(d) Communications regarding Valkyr's manufacturing capacity, delivery schedules, and quality management systems that have no connection whatsoever to the issues before this Tribunal.

None of these categories of documents bears on the core issues the Tribunal must determine, namely: whether WAL's rejection of fourteen lots of Products and termination of the MSA under Section 14.2(b) for Persistent Quality Failure were contractually proper.

2. Irrelevance to the Issues in Dispute. Respondent further objects to Request No. 3 on the ground that the documents sought are not relevant to, and not material to the outcome of, the issues in dispute.

As defined in the Terms of Reference signed by the Parties on January 30, 2023, and as further elaborated in Procedural Order No. 1, the central issues in this arbitration are:

(a) Whether the fourteen rejected lots of Products (totaling 1,680 units, comprising Lot KDG-2022-0307 through Lot KDG-2022-0919) failed to meet the contractual porosity specification of ≤0.25% set forth in WAL-SPEC-TH-401, Appendix C, Table 3;

(b) Whether WAL's termination of the MSA for Persistent Quality Failure was procedurally and substantively proper under Section 14.2(b) of the MSA, having regard to the cure period provisions of Section 8.4 (as amended by Amendment No. 2 dated September 3, 2021, extending the cure period from thirty (30) to forty-five (45) calendar days); and

Claimant's apparent purpose in seeking these documents is to support its theory — advanced in the Request for Arbitration filed October 24, 2022 — that WAL's termination of the MSA was pretextual, and that WAL fabricated or exaggerated the quality deficiencies in Kestrel's Products in order to replace Kestrel with a lower-cost domestic supplier. This theory is factually baseless.

The undisputed commercial data demonstrates that WAL's transition from Kestrel to Valkyr was significantly more costly, not less. Valkyr's unit price of €8,432.92 substantially exceeds Kestrel's Contract Year 4 unit price of €5,222.92 — a premium of approximately €3,210.00 per unit, or approximately 61.5%. Even after application of Valkyr's introductory discount of 4.2%, the per-unit cost to WAL remains substantially higher than the Kestrel price. The notion that WAL would orchestrate an elaborate and risky scheme to reject fourteen lots of Products, expose itself to an arbitration with claims exceeding €12 million, and simultaneously incur millions of euros in additional procurement costs, all in order to achieve a "cost saving" that does not exist, defies commercial logic.

Indeed, WAL's counterclaim for €5.17 million in replacement-component costs — calculated as 1,680 units multiplied by the per-unit premium, net of Valkyr's introductory discount of 4.2% — itself demonstrates that the Valkyr engagement was an emergency mitigation measure undertaken by WAL to maintain its production schedules and fulfill its obligations to its own customers, not a pretext for termination.

Moreover, the timing of the events is dispositive. WAL's engagement of Valkyr occurred after Kestrel's quality failures and the seven uncured rejections that took place between March 7, 2022 and September 19, 2022. WAL did not begin substantive discussions with Valkyr until after the seventh uncured rejection (Lot KDG-2022-0919, rejected September 19, 2022) and the issuance of the termination notice on October 3, 2022. Documents relating to WAL's post-termination efforts to secure an alternative supply source are simply not relevant to the antecedent question of whether Kestrel's Products conformed to the MSA specifications during the performance period.

Respondent submits that the limited information regarding the Valkyr engagement that is relevant to the quantification of Respondent's counterclaim — specifically, the replacement unit cost, the number of replacement units procured, and the introductory discount rate — has already been disclosed in the Answer and Counterclaim filed on December 12, 2022, at Paragraphs 87 through 94. This information will be further detailed and documented in Respondent's forthcoming Statement of Defense and Counterclaim, to be filed in accordance with the procedural timetable established by the Tribunal.

3. Proportionality and Burden. Even if the Tribunal were to find some marginal relevance in certain categories of documents encompassed by Request No. 3 — which Respondent does not concede — the burden of producing the full scope of requested documents would be grossly disproportionate.

Production of the entirety of WAL's commercial correspondence, technical exchange, and pricing negotiations with Valkyr would require the review of thousands of pages of documents, including emails, memoranda, technical drawings, supplier qualification reports, and contractual instruments. WAL's procurement team, engineering staff, and quality assurance personnel have been engaged in extensive communications with Valkyr since late 2022, and a full-scope production would require the collection, review, and potential redaction of a substantial volume of material. This burden is disproportionate to the marginal relevance — if any — of such documents.

Respondent is, however, prepared to produce a limited subset of documents strictly necessary to support the quantification of its counterclaim, namely documents reflecting the per-unit replacement cost, the total number of replacement units procured from Valkyr, and the terms of any applicable discount. Respondent submits that this limited production is both appropriate and sufficient for the Tribunal's purposes.

C. Relief Requested

For the foregoing reasons, Respondent respectfully requests that the Tribunal deny Claimant's Request No. 3 in its current form as overbroad, irrelevant, and disproportionate.

In the alternative, if the Tribunal is inclined to order some production in response to this request, Respondent respectfully requests that the scope of any such order be narrowed to documents reflecting: (i) the per-unit replacement cost of titanium alloy turbine housings procured from Valkyr; (ii) the total number of replacement units procured; and (iii) the terms of any introductory or volume discount applicable to such procurement. Respondent further requests that any such production be limited to the period from October 3, 2022 through December 31, 2022, which encompasses the initial replacement procurement cycle.

IV. Objection to Claimant's Request No. 5: Internal WAL Communications Regarding Supplier Diversification Strategy

A. Description of the Request

Claimant's Request No. 5 seeks the production of:

"[A]ll internal communications, memoranda, reports, board materials, presentations, and strategy documents of Whitmore Aerospace LLC relating to supplier diversification, sole-source risk, or any plan or strategy to reduce reliance on Kestrel Dynamics GmbH as a supplier of titanium alloy turbine housings, for the period January 1, 2020 through October 3, 2022."

This request is sweeping in its scope. It targets internal WAL business strategy documents prepared by, shared with, or circulated among WAL's executive leadership, including Chief Executive Officer Marcus J. Whitmore III, Vice President and General Counsel Dana Prescott, Vice President of Global Supply Chain Operations Gerald Huang, and Senior Vice President of Engineering and Manufacturing Dr. Ingrid Vollmer. The request extends over a period of nearly three years and encompasses every conceivable type of internal business communication and strategic planning document.

B. Grounds for Objection

Respondent objects to Request No. 5 on multiple, independent grounds, each of which is independently sufficient to warrant denial of the request.

1. Attorney-Client Privilege. WAL's supplier diversification considerations necessarily involved consultation with its in-house legal counsel, Dana Prescott, Vice President and General Counsel. Ms. Prescott is a member of the New York State Bar and serves as the senior legal officer of WAL. In that capacity, Ms. Prescott was involved in strategic supply-chain decisions from a legal-risk perspective, including the assessment of contractual rights and obligations under the MSA, the evaluation of legal risks associated with sole-source supplier arrangements, and the provision of legal advice regarding WAL's rights in the event of supplier non-performance.

Communications between WAL's business personnel — including Mr. Whitmore, Mr. Huang, and Dr. Vollmer — and Ms. Prescott regarding supplier strategy, contract interpretation, termination rights, and related legal matters are protected by the attorney-client privilege under the law of the State of New York. See N.Y. CPLR § 4503(a) (providing that "[u]nless the client waives the privilege, an attorney or his or her employee, or any person who obtains without the knowledge of the client evidence of a confidential communication made between the attorney or his or her employee and the client in the course of professional employment, shall not disclose, or be allowed to disclose such communication"). The privilege extends to communications made for the purpose of obtaining or providing legal advice, including communications in which legal and business considerations are intertwined, provided that the dominant purpose of the communication is the seeking or rendering of legal advice. See Alice Ames, 78 N.Y.2d 371, 377 (1991).

The arbitration is seated in New York, and the MSA is governed by New York law. Accordingly, the scope and applicability of the attorney-client privilege in this proceeding should be determined by reference to New York law. This is consistent with the approach adopted by numerous arbitral tribunals in international commercial arbitration, including the guidance provided in Article 9.2(b) of the IBA Rules, which recognizes legal impediment or privilege as a ground for excluding documents from production.

WAL has not waived the attorney-client privilege and affirmatively objects to the production of any documents that reflect, contain, summarize, or reference legal advice rendered by Ms. Prescott or by any external counsel retained by WAL in connection with the matters at issue in this arbitration. To the extent that any internal communications responsive to Request No. 5 contain or reference legal advice provided by Ms. Prescott in her capacity as General Counsel, such documents are privileged and must be withheld from production.

2. Work Product Doctrine. In addition to the attorney-client privilege, the work product doctrine provides an independent basis for withholding documents responsive to Request No. 5.

Following the emergence of quality issues with Kestrel's Products in early 2022 — beginning with the rejection of Lot KDG-2022-0307 on March 7, 2022 — WAL's in-house and external legal teams prepared analyses, assessments, memoranda, and other materials evaluating WAL's contractual rights under the MSA. These materials addressed, among other things:

(a) WAL's right to reject non-conforming lots under Section 8.4 of the MSA;

(b) The cure period provisions of Section 8.4, as amended by Amendment No. 2 dated September 3, 2021 (extending the cure period from thirty (30) to forty-five (45) calendar days following written notice of rejection);

(c) The definition and threshold for "Persistent Quality Failure" under Section 14.2(b) of the MSA (three or more uncured rejections in a rolling twelve-month period);

(d) WAL's right to terminate the MSA for Persistent Quality Failure and the procedural requirements for doing so; and

(e) WAL's potential claims for damages, including replacement-component costs and consequential damages.

These documents were prepared in anticipation of the dispute with Kestrel, which was reasonably foreseeable by mid-2022 at the latest, given the mounting quality failures and the progression toward the Persistent Quality Failure threshold. By the time of the fifth uncured rejection (Lot KDG-2022-0711, rejected July 11, 2022), it was apparent that Kestrel was unable or unwilling to cure the recurring porosity exceedances, and that a dispute regarding termination was highly likely. Documents prepared by or at the direction of WAL's legal counsel in anticipation of this dispute are protected as attorney work product and are not subject to production.

Claimant's request, by targeting the period from January 1, 2020 through October 3, 2022, necessarily captures documents created during the period when this dispute was foreseeable and in which WAL's legal counsel was actively engaged in evaluating WAL's rights and legal strategy. Production of such documents would undermine the fundamental protections afforded by the work product doctrine and would effectively require WAL to disclose its litigation strategy and mental impressions of counsel — a result that is plainly impermissible under New York law and in international arbitration practice.

3. Irrelevance and Overbreadth. Even setting aside the dispositive privilege and work product objections, Request No. 5 should be denied on the independent grounds of irrelevance and overbreadth.

WAL's internal strategic considerations regarding supply-chain management, including any assessments of sole-source risk or supplier diversification opportunities, are ordinary business decisions of the type that any sophisticated aerospace manufacturer would routinely undertake. Such decisions do not bear on the central factual question in this arbitration: whether Kestrel's Products met the contractual porosity specification of ≤0.25% as set forth in WAL-SPEC-TH-401, Appendix C, Table 3.

The quality failures at issue are objective, metallurgically verifiable facts. The rejected lots exhibited porosity levels ranging from 0.19% to 0.38%, as documented by WAL's incoming inspection team under WAL-QCP-100 and independently confirmed by Respondent's metallurgical expert, Dr. Raymond Chow of Arclight Materials Science Inc. Seven of the fourteen rejected lots remained uncured after expiration of the applicable forty-five (45) calendar day cure period. These facts are not altered, qualified, or undermined in any way by the existence — or non-existence — of a WAL supplier diversification strategy.

Claimant's theory appears to be that the existence of an internal supplier diversification strategy would demonstrate that WAL's termination was motivated by a desire to replace Kestrel, rather than by genuine quality concerns. This argument conflates motive with justification. Even if WAL simultaneously desired to diversify its supplier base — a proposition that Respondent does not concede — this would not convert a contractually proper termination into a wrongful one. The MSA establishes objective criteria for Persistent Quality Failure (three or more uncured rejections in a rolling twelve-month period) and grants WAL an express termination right upon the occurrence of a Persistent Quality Failure. WAL exercised that right after seven uncured rejections — more than double the contractual threshold. WAL's subjective motivations, whatever they may have been, are legally irrelevant where the objective conditions for termination were satisfied.

Furthermore, the temporal scope of the request — spanning from January 1, 2020 through October 3, 2022 — is vastly overbroad. The quality failures at issue commenced in March 2022. Internal WAL communications from 2020 and 2021 regarding general supply-chain strategy cannot be relevant to whether specific lots delivered in 2022 conformed to the MSA specifications. The breadth of the request confirms that it is a fishing expedition designed to uncover any internal WAL communication that might, in isolation and out of context, be characterized as evidence of pretext.

C. Relief Requested

For the foregoing reasons, Respondent respectfully requests that the Tribunal deny Claimant's Request No. 5 in its entirety on the grounds of attorney-client privilege, work product protection, irrelevance, and overbreadth. Each of these grounds independently warrants denial.

In the event that the Tribunal considers that any category of non-privileged, responsive documents may exist that are not otherwise objectionable on relevance grounds, Respondent respectfully requests the opportunity to prepare and submit a privilege log identifying any documents withheld on grounds of privilege, consistent with established practice in international arbitration and the guidance provided in Article 9.2(b) of the IBA Rules. Respondent proposes that any such privilege log be submitted within fourteen (14) days of the Tribunal's order, or such other period as the Tribunal may direct.

V. Objection to Claimant's Request No. 7: WAL's Communications with Veltrano National Bank, N.A. Regarding Covenant Compliance

A. Description of the Request

Claimant's Request No. 7 seeks the production of:

"[A]ll communications between Whitmore Aerospace LLC and Veltrano National Bank, N.A. concerning the impact of the Kestrel Dynamics GmbH arbitration or the termination of the Master Supply Agreement on WAL's financial covenants, credit facility, or borrowing capacity."

This request targets WAL's relationship with Veltrano National Bank, N.A., WAL's senior secured lender, under a $350 million revolving credit facility. The request seeks communications regarding the interplay between this arbitration (or the termination of the MSA) and WAL's compliance with financial covenants contained in its credit agreement with Veltrano National Bank.

B. Grounds for Objection

1. Irrelevance. Respondent objects to Request No. 7 on the ground that the documents sought are wholly irrelevant to the issues before the Tribunal.

WAL's banking relationship, its financial covenant compliance, and its borrowing capacity under its credit facility with Veltrano National Bank, N.A. are matters entirely external to the contractual relationship between WAL and Kestrel and have no bearing on any issue the Tribunal must determine. The central questions in this arbitration — whether the rejected lots conformed to the contractual porosity specification, whether the termination was proper under Section 14.2(b), and the appropriate quantum of damages — do not require or benefit from an examination of WAL's third-party financing arrangements.

Claimant's apparent purpose in making this request is to establish that WAL was financially motivated to terminate the MSA — presumably, to suggest that the termination was driven by financial pressures unrelated to Kestrel's performance. This theory fails for the same reasons discussed above in connection with Request No. 5: WAL's subjective financial motivations, even if they existed (which Respondent does not concede), are legally irrelevant where the termination was objectively justified under the express provisions of the MSA. The MSA's termination provision in Section 14.2(b) does not condition the exercise of the termination right on the absence of any concurrent financial consideration. The termination right is triggered by objective criteria — Persistent Quality Failure — which were indisputably satisfied.

Moreover, the MSA's dispute resolution clause (Section 22.3) and the issues defined in the Terms of Reference signed by the Parties on January 30, 2023 do not encompass WAL's third-party financing arrangements. The Tribunal's jurisdiction extends to disputes arising out of or relating to the MSA; WAL's separate credit facility with Veltrano National Bank is not a matter "arising out of or relating to" the MSA in any relevant sense.

2. Confidentiality. Respondent further objects to Request No. 7 on the ground that the documents sought contain commercially sensitive and confidential financial information regarding WAL's credit facility, financial covenants, borrowing capacity, and overall financial condition. WAL's communications with Veltrano National Bank, N.A. are subject to confidentiality obligations under the credit agreement and contain proprietary financial data, the disclosure of which would cause WAL significant competitive harm.

The production of such documents is grossly disproportionate to any arguable relevance. Even assuming, arguendo, that such documents might contain some marginally relevant information regarding WAL's financial condition or decision-making — which Respondent does not concede — the competitive harm and confidentiality concerns far outweigh any such marginal relevance. This is precisely the type of consideration contemplated by Article 9.2(e) of the IBA Rules, which permits the Tribunal to exclude documents where "considerations of commercial or technical confidentiality that the Arbitral Tribunal considers compelling" so warrant.

Respondent notes that, while the Tribunal's Procedural Order No. 1 provides for confidentiality protections applicable to documents produced in this proceeding, such protections do not fully mitigate the risks of disclosure of WAL's sensitive financial information, particularly where the information has no relevance to the issues in dispute.

C. Relief Requested

For the foregoing reasons, Respondent respectfully requests that the Tribunal deny Claimant's Request No. 7 in its entirety as seeking documents that are irrelevant to the issues in dispute, protected by compelling confidentiality considerations, and disproportionate in scope.

VI. Objection to Claimant's Request No. 9: WAL's Internal Quality Control Procedures Beyond WAL-QCP-100

A. Description of the Request

Claimant's Request No. 9 seeks the production of:

"[A]ll quality control procedures, guidelines, protocols, and internal memoranda applied by Whitmore Aerospace LLC to incoming inspection of titanium alloy turbine housings, including any procedures or standards applied in addition to or in place of WAL-QCP-100 and WAL-SPEC-TH-401 through WAL-SPEC-TH-410."

Claimant's apparent purpose in making this request is to support its theory — advanced in the Request for Arbitration and further elaborated in Claimant's preliminary submissions — that WAL applied an unpublished, more stringent porosity tolerance of ≤0.15% to the incoming inspection of Kestrel's Products, rather than the contractual specification of ≤0.25% set forth in WAL-SPEC-TH-401, Appendix C, Table 3. Claimant has suggested that WAL used this alleged undisclosed standard as the true basis for its rejections, thereby rejecting lots that actually conformed to the agreed-upon specification.

B. Grounds for Objection

1. Partial Compliance / No Additional Standards Exist. Respondent has already produced, in connection with the filing of its Answer and Counterclaim on December 12, 2022, and in its initial voluntary production on February 28, 2023, the complete set of quality control procedures and engineering specifications applicable to the Products under the MSA. Specifically, Respondent has produced:

(a) WAL-QCP-100 — WAL's Master Quality Control Procedure for Incoming Inspection of Aerospace Components (Rev. 7, effective January 15, 2021), which establishes the general framework for incoming inspection, including sampling methodology, measurement protocols, and acceptance/rejection criteria;

(b) WAL-SPEC-TH-401 through WAL-SPEC-TH-410 — the complete suite of engineering specifications for titanium alloy turbine housings procured under the MSA, including WAL-SPEC-TH-401, which contains, at Appendix C, Table 3, the porosity specification of ≤0.25% that is central to this dispute.

These documents constitute the complete and exhaustive set of quality control procedures and engineering specifications that WAL applied to the incoming inspection of Kestrel's Products. WAL represents to the Tribunal, through undersigned counsel, that no additional or supplementary porosity standard was applied to the inspection of Kestrel's Products beyond the ≤0.25% limit expressly stated in WAL-SPEC-TH-401, Appendix C, Table 3. There is no unpublished ≤0.15% standard. The allegation that WAL applied an undisclosed, more stringent porosity tolerance is unfounded and is contradicted by the inspection records already produced, which evaluate each lot against the ≤0.25% threshold.

Respondent further notes that the AS9100 Rev D certification framework, which Kestrel was required to maintain as a condition of the MSA (see Section 6.2(c)), is a publicly available standard published by the Society of Automotive Engineers International. To the extent Claimant seeks information regarding the AS9100 Rev D requirements, those requirements are publicly accessible and need not be produced by Respondent.

2. Overbreadth. To the extent Claimant's Request No. 9 seeks WAL's internal quality procedures applicable to products other than the titanium alloy turbine housings supplied by Kestrel under the MSA, the request is overbroad and seeks documents that are plainly irrelevant to this dispute. WAL manufactures and procures a wide range of aerospace components for use in its products, each subject to its own set of quality control procedures and engineering specifications. The quality procedures applicable to WAL's other product lines and component categories have no bearing on the questions before this Tribunal and are proprietary trade information that Respondent should not be required to disclose.

Respondent objects to producing quality control procedures, guidelines, or protocols that relate to products other than the Products supplied by Kestrel under the MSA, as such production would be irrelevant, disproportionately burdensome, and would require the disclosure of proprietary manufacturing and quality assurance information unrelated to this dispute.

C. Relief Requested

Respondent confirms that it has produced all responsive, non-privileged quality control documents applicable to the Products supplied by Kestrel under the MSA, and respectfully represents that no additional standards beyond those already produced were applied to the inspection of those Products.

Respondent requests that the Tribunal deny Claimant's Request No. 9 to the extent it seeks documents beyond those already produced, including any quality control procedures applicable to products other than the MSA Products.

VII. Summary of Respondent's Positions

For the Tribunal's convenience, Respondent's positions on the four contested requests are summarized in the following table:

Respondent reiterates that it does not object to Claimant's remaining requests (Request Nos. 1, 2, 4, 6, and 8) and will produce responsive, non-privileged documents in accordance with the schedule established by the Tribunal.

VIII. Reservation of Rights

Respondent expressly reserves all rights and defenses in this arbitration, including but not limited to:

(a) The right to raise additional privilege objections if Claimant's document production requests are modified, supplemented, or expanded at any stage of the proceedings;

(b) The right to supplement the objections set forth herein if additional grounds for objection come to Respondent's attention;

(c) The right to prepare and submit a privilege log identifying documents withheld on grounds of privilege, if ordered by the Tribunal;

(d) All rights and defenses asserted in the Answer and Counterclaim filed December 12, 2022, including all defenses to Claimant's claims and all grounds supporting Respondent's counterclaim for €5.17 million in replacement-component costs; and

(e) All procedural and substantive rights under the ICC Rules of Arbitration (2021 edition), the IBA Rules on the Taking of Evidence, and the law of the State of New York.

Nothing in this submission constitutes a waiver of any privilege, right, or defense available to Respondent under applicable law or the procedural framework governing this arbitration. To the extent Respondent has referenced or described the substance of any communications or documents in this submission for the purpose of establishing its objections, such references are made solely for that purpose and do not constitute a waiver of any applicable privilege.

Respondent is grateful for the Tribunal's consideration of these objections and respectfully requests that the Tribunal rule on these matters at its earliest convenience, in order to permit the Parties to proceed with the document production process in accordance with the procedural timetable.

Respectfully submitted,

CALDERWOOD & HARKNESS LLP

By: ________

Name: Theodore Langston

Title: Partner

Date: March 24, 2023

Calderwood & Harkness LLP 600 Lexington Avenue New York, NY 10022 Telephone: +1 (212) 558-4000 Facsimile: +1 (212) 558-3588

Counsel for Respondent Whitmore Aerospace LLC Engagement No.: 1019-00001

Certificate of Service

I, Theodore Langston, hereby certify that on March 24, 2023, a true and correct copy of the foregoing letter setting forth Respondent Whitmore Aerospace LLC's Objections to Claimant's Document Production Requests Pursuant to Procedural Order No. 2 was served upon the following by email and international courier:

Counsel for Claimant Kestrel Dynamics GmbH:

Dr. Maximilian Haber Katrin Schäfer Haber Reinhardt Schlosser Partnerschaft mbB Königstraße 35 70173 Stuttgart, Germany

and

30 St Mary Axe London EC3A 8BF United Kingdom

ICC Secretariat:

International Court of Arbitration International Chamber of Commerce 33–43 avenue du Président Wilson 75116 Paris, France

Client Copy:

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

________________________________________

Theodore Langston Partner, Calderwood & Harkness LLP

Request No.	Subject Matter	Respondent's Position	Alternative Relief
No. 3	Negotiations and correspondence with Valkyr Precision Components Inc.	Deny as overbroad, irrelevant to the issues in dispute, and disproportionate to any marginal relevance.	If the Tribunal is inclined to order production, narrow scope to documents reflecting per-unit replacement cost, total units procured, and discount terms, limited to October 3–December 31, 2022.
No. 5	Internal communications regarding supplier diversification strategy	Deny in entirety on grounds of attorney-client privilege, work product doctrine, irrelevance, and overbreadth.	If non-privileged responsive documents are found to exist, Respondent requests the opportunity to prepare a privilege log within 14 days of any order.
No. 7	Communications with Veltrano National Bank, N.A. regarding covenant compliance	Deny in entirety as irrelevant to the issues in dispute and protected by compelling confidentiality considerations.	None proposed.
No. 9	Internal quality control procedures beyond WAL-QCP-100 and WAL-SPEC-TH-401 through -410	Deny to the extent it seeks documents beyond those already produced. Respondent has produced the complete and exhaustive set of applicable quality procedures and represents that no additional porosity standard exists.	None required; Respondent has already substantially complied.

CONFIDENTIAL
CALDERWOOD & HARKNESS LLP 600 Lexington Avenue New York, NY 10022 Telephone: +1 (212) 558-4000 Facsimile: +1 (212) 558-3588
March 24, 2023
Professor Dame Eleanor Fitzwilliam (Presiding Arbitrator) Dr. Hans-Ulrich Perren (Co-Arbitrator) The Hon. Robert A. Castillo (Co-Arbitrator)
ICC Arbitral Tribunal ICC Case No. 27914/MHM
Re: Respondent Whitmore Aerospace LLC's Objections to Claimant's Document Production Requests Pursuant to Procedural Order No. 2 dated March 17, 2023
Copies:
Dr. Maximilian Haber Haber Reinhardt Schlosser Partnerschaft mbB Königstraße 35 70173 Stuttgart, Germany
and
30 St Mary Axe London EC3A 8BF United Kingdom
(Counsel for Claimant Kestrel Dynamics GmbH)
ICC Secretariat International Court of Arbitration International Chamber of Commerce 33–43 avenue du Président Wilson 75116 Paris, France
Dear Members of the Tribunal,
I. Introduction and Procedural Context
This letter is submitted by Calderwood & Harkness LLP on behalf of Respondent Whitmore Aerospace LLC ("WAL" or "Respondent") in ICC Case No. 27914/MHM. The purpose of this submission is to set forth Respondent's objections to certain document production requests served by Claimant Kestrel Dynamics GmbH ("Kestrel" or "Claimant"), through its counsel Haber Reinhardt Schlosser Partnerschaft mbB ("HRS"), in connection with the Redfern Schedule exchange mandated by the Tribunal.
As the Tribunal will recall, Procedural Order No. 2, issued on March 17, 2023, established the document production schedule and framework for Redfern Schedule submissions in this proceeding. Among other things, Procedural Order No. 2 set a deadline of March 24, 2023 for the simultaneous exchange of document production requests, and provided that objections to such requests shall be submitted no later than April 7, 2023, unless the Parties agree otherwise or a Party elects to submit objections together with its initial requests. Respondent elects the latter course and hereby files its objections contemporaneously with its Redfern Schedule submissions.
Claimant, through HRS, served its document production requests on Respondent on or about March 17, 2023. The requests consist of nine numbered categories of documents. Respondent has carefully reviewed each of Claimant's requests and, for the reasons set forth in detail below, raises objections to Request Nos. 3, 5, 7, and 9. Respondent does not object to the remaining requests (Request Nos. 1, 2, 4, 6, and 8) and will produce responsive, non-privileged documents in its possession, custody, or control in accordance with the schedule established by the Tribunal.
Respondent confirms its compliance with its document preservation and production obligations under Procedural Order Nos. 1 and 2 and confirms that it has implemented, and continues to maintain, a litigation hold encompassing all categories of documents reasonably relevant to this proceeding. Respondent further notes that, concurrently with this letter, it is submitting its own Redfern Schedule of document production requests directed to Claimant.
Respondent respectfully requests that the Tribunal rule on the objections set forth herein in accordance with the ICC Rules of Arbitration (2021 edition), the procedural framework established at the preliminary procedural conference held on February 14, 2023 (memorialized in Procedural Order No. 1), and, to the extent adopted by the Tribunal, the IBA Rules on the Taking of Evidence in International Arbitration (2020 revision).
For the Tribunal's convenience, the following background procedural parameters are relevant to the present submission:
•  Applicable Substantive Law: The law of the State of New York governs the underlying dispute, as provided by Section 22.1 of the Master Supply Agreement dated June 15, 2018 (the "MSA").
•  Seat of Arbitration: New York, New York, United States.
•  Language of Arbitration: English.
•  Claimant: Kestrel Dynamics GmbH, a company organized under the laws of the Federal Republic of Germany, with its principal place of business at Industriestraße 48, 73447 Oberkochen, Germany.
•  Respondent: Whitmore Aerospace LLC, a limited liability company organized under the laws of the State of Delaware, with its principal place of business at 4200 Wilson Boulevard, Suite 1100, Arlington, Virginia 22203.
II. General Principles Governing Document Production
Before turning to Respondent's specific objections, Respondent respectfully sets out the general principles that, in Respondent's submission, should guide the Tribunal's resolution of any disputes regarding document production.
Respondent acknowledges the Tribunal's authority to order document production under Article 25(5) of the ICC Rules of Arbitration (2021 edition) and the applicable provisions of the IBA Rules on the Taking of Evidence in International Arbitration, to the extent adopted by the Tribunal in Procedural Order No. 1. Procedural Order No. 1 provides, at Paragraph 12.3, that document production requests shall be governed by the principles set forth in Articles 3 and 9 of the IBA Rules, adapted as the Tribunal deems appropriate.
Those principles, which are now well established in international arbitration practice, require that document production requests satisfy the following criteria:
(a) Specificity: Each request must identify, with reasonable particularity, a narrow and specific category of documents, rather than broad, undefined classes of documents. A request for "all documents relating to" a general subject matter, without temporal or substantive limitation, fails to meet this standard. See IBA Rules, Art. 3.3(a)(ii).
(b) Relevance and Materiality: Requested documents must be relevant to the case and material to its outcome. The requesting party bears the burden of demonstrating that the documents sought are relevant to specific issues that the Tribunal must determine. See IBA Rules, Art. 3.3(b); Art. 9.2(a).
(c) Proportionality: The burden of producing the requested documents must be proportionate to the significance of the documents to the issues in dispute. Where the burden of production substantially outweighs the likely probative value of the documents, the Tribunal should deny or narrow the request. See IBA Rules, Art. 9.2(c).
(d) No Fishing Expeditions: Document production in international arbitration is not equivalent to the broad pre-trial discovery available in domestic litigation in the United States or certain other jurisdictions. Requests that are designed to enable a party to search through the opposing party's files in the hope of finding support for claims or defenses that the requesting party cannot otherwise substantiate are impermissible. This principle is deeply embedded in international arbitration practice and has been repeatedly affirmed by arbitral tribunals and commentators alike.
Respondent submits that several of Claimant's requests fail to meet these standards. In particular, Claimant's Request Nos. 3, 5, 7, and 9 amount to impermissible "fishing expeditions" that seek broad categories of internal business documents, third-party communications, and strategic materials that have no direct relevance to the issues the Tribunal must determine. As set forth below, these requests appear designed to support speculative theories regarding WAL's subjective motivations for terminating the MSA — theories that are legally irrelevant where, as here, the termination was objectively justified under the express terms of the contract.
Finally, Respondent reserves all rights regarding the attorney-client privilege and the work product doctrine as applicable under the law of the State of New York. The arbitration is seated in New York, and the MSA is governed by New York law. Accordingly, the scope and applicability of evidentiary privileges should be determined by reference to New York law, including CPLR § 4503 (attorney-client privilege) and the work product doctrine as applied by New York courts. Respondent has not waived, and does not intend to waive, any applicable privilege, and Respondent's discussion of certain factual matters in this submission is without prejudice to its privilege rights.
III. Objection to Claimant's Request No. 3: WAL's Negotiations and Correspondence with Valkyr Precision Components Inc.
A. Description of the Request
Claimant's Request No. 3 seeks the production of:
"[A]ll documents, correspondence, communications, drafts, term sheets, proposals, and agreements between Whitmore Aerospace LLC and Valkyr Precision Components Inc. relating to the supply of titanium alloy turbine housings, including but not limited to any negotiations, pricing discussions, or supply agreements entered into before, during, or after the period of the Master Supply Agreement with Kestrel Dynamics GmbH."
The breadth of this request is immediately apparent from its text. It encompasses an indefinite timeframe — expressly including periods "before, during, or after" the MSA — and is not limited to any specific category of document, any particular issue in dispute, or any defined time period. The request would, on its face, sweep in every document that has ever been exchanged between WAL and Valkyr Precision Components Inc. ("Valkyr") on the subject of titanium alloy turbine housings, regardless of when it was created, its subject matter, or its relevance to any issue before this Tribunal.
B. Grounds for Objection
1. Overbreadth and Lack of Specificity.  Respondent objects to Request No. 3 on the ground that it is facially overbroad and lacks the specificity required under the IBA Rules and the Tribunal's procedural orders. The request seeks "all documents" without any meaningful temporal limitation, substantive limitation, or relevance to the specific issues in dispute. This is precisely the type of wide-ranging, exploratory request that the IBA Rules and established arbitral practice are designed to prevent.
Valkyr Precision Components Inc. is a precision aerospace component manufacturer headquartered at 4401 East Irvington Road, Tucson, Arizona 85714. WAL engaged Valkyr as a replacement supplier of titanium alloy turbine housings following Kestrel's Persistent Quality Failure and WAL's termination of the MSA on October 3, 2022, pursuant to Section 14.2(b) of the MSA. WAL's commercial relationship with Valkyr is a separate, independent business relationship that is not governed by the MSA between WAL and Kestrel. The terms, conditions, pricing structures, and technical specifications agreed upon between WAL and Valkyr are the product of arm's-length commercial negotiations between those two parties and have no bearing on the contractual obligations, performance, or breach of the MSA.
If produced in its entirety, the request would sweep in, among other things:
(a) Competitively sensitive pricing information, including Valkyr's per-unit price of €8,432.92 and the introductory discount of 4.2% negotiated in connection with the initial supply order, as well as any subsequent pricing discussions or renegotiations;
(b) Proprietary engineering specifications and manufacturing process data exchanged between WAL and Valkyr in connection with the qualification and production of replacement turbine housings;
(c) Internal business strategy documents reflecting WAL's negotiating positions, commercial assessments, and supplier evaluation criteria;
(d) Communications regarding Valkyr's manufacturing capacity, delivery schedules, and quality management systems that have no connection whatsoever to the issues before this Tribunal.
None of these categories of documents bears on the core issues the Tribunal must determine, namely: whether WAL's rejection of fourteen lots of Products and termination of the MSA under Section 14.2(b) for Persistent Quality Failure were contractually proper.
2. Irrelevance to the Issues in Dispute.  Respondent further objects to Request No. 3 on the ground that the documents sought are not relevant to, and not material to the outcome of, the issues in dispute.
As defined in the Terms of Reference signed by the Parties on January 30, 2023, and as further elaborated in Procedural Order No. 1, the central issues in this arbitration are:
(a) Whether the fourteen rejected lots of Products (totaling 1,680 units, comprising Lot KDG-2022-0307 through Lot KDG-2022-0919) failed to meet the contractual porosity specification of ≤0.25% set forth in WAL-SPEC-TH-401, Appendix C, Table 3;
(b) Whether WAL's termination of the MSA for Persistent Quality Failure was procedurally and substantively proper under Section 14.2(b) of the MSA, having regard to the cure period provisions of Section 8.4 (as amended by Amendment No. 2 dated September 3, 2021, extending the cure period from thirty (30) to forty-five (45) calendar days); and
(c) The appropriate quantum of damages, if any, whether on Claimant's primary claim or on Respondent's counterclaim.
Claimant's apparent purpose in seeking these documents is to support its theory — advanced in the Request for Arbitration filed October 24, 2022 — that WAL's termination of the MSA was pretextual, and that WAL fabricated or exaggerated the quality deficiencies in Kestrel's Products in order to replace Kestrel with a lower-cost domestic supplier. This theory is factually baseless.
The undisputed commercial data demonstrates that WAL's transition from Kestrel to Valkyr was significantly more costly, not less. Valkyr's unit price of €8,432.92 substantially exceeds Kestrel's Contract Year 4 unit price of €5,222.92 — a premium of approximately €3,210.00 per unit, or approximately 61.5%. Even after application of Valkyr's introductory discount of 4.2%, the per-unit cost to WAL remains substantially higher than the Kestrel price. The notion that WAL would orchestrate an elaborate and risky scheme to reject fourteen lots of Products, expose itself to an arbitration with claims exceeding €12 million, and simultaneously incur millions of euros in additional procurement costs, all in order to achieve a "cost saving" that does not exist, defies commercial logic.
Indeed, WAL's counterclaim for €5.17 million in replacement-component costs — calculated as 1,680 units multiplied by the per-unit premium, net of Valkyr's introductory discount of 4.2% — itself demonstrates that the Valkyr engagement was an emergency mitigation measure undertaken by WAL to maintain its production schedules and fulfill its obligations to its own customers, not a pretext for termination.
Moreover, the timing of the events is dispositive. WAL's engagement of Valkyr occurred after Kestrel's quality failures and the seven uncured rejections that took place between March 7, 2022 and September 19, 2022. WAL did not begin substantive discussions with Valkyr until after the seventh uncured rejection (Lot KDG-2022-0919, rejected September 19, 2022) and the issuance of the termination notice on October 3, 2022. Documents relating to WAL's post-termination efforts to secure an alternative supply source are simply not relevant to the antecedent question of whether Kestrel's Products conformed to the MSA specifications during the performance period.
Respondent submits that the limited information regarding the Valkyr engagement that is relevant to the quantification of Respondent's counterclaim — specifically, the replacement unit cost, the number of replacement units procured, and the introductory discount rate — has already been disclosed in the Answer and Counterclaim filed on December 12, 2022, at Paragraphs 87 through 94. This information will be further detailed and documented in Respondent's forthcoming Statement of Defense and Counterclaim, to be filed in accordance with the procedural timetable established by the Tribunal.
3. Proportionality and Burden.  Even if the Tribunal were to find some marginal relevance in certain categories of documents encompassed by Request No. 3 — which Respondent does not concede — the burden of producing the full scope of requested documents would be grossly disproportionate.
Production of the entirety of WAL's commercial correspondence, technical exchange, and pricing negotiations with Valkyr would require the review of thousands of pages of documents, including emails, memoranda, technical drawings, supplier qualification reports, and contractual instruments. WAL's procurement team, engineering staff, and quality assurance personnel have been engaged in extensive communications with Valkyr since late 2022, and a full-scope production would require the collection, review, and potential redaction of a substantial volume of material. This burden is disproportionate to the marginal relevance — if any — of such documents.
Respondent is, however, prepared to produce a limited subset of documents strictly necessary to support the quantification of its counterclaim, namely documents reflecting the per-unit replacement cost, the total number of replacement units procured from Valkyr, and the terms of any applicable discount. Respondent submits that this limited production is both appropriate and sufficient for the Tribunal's purposes.
C. Relief Requested
For the foregoing reasons, Respondent respectfully requests that the Tribunal deny Claimant's Request No. 3 in its current form as overbroad, irrelevant, and disproportionate.
In the alternative, if the Tribunal is inclined to order some production in response to this request, Respondent respectfully requests that the scope of any such order be narrowed to documents reflecting: (i) the per-unit replacement cost of titanium alloy turbine housings procured from Valkyr; (ii) the total number of replacement units procured; and (iii) the terms of any introductory or volume discount applicable to such procurement. Respondent further requests that any such production be limited to the period from October 3, 2022 through December 31, 2022, which encompasses the initial replacement procurement cycle.
IV. Objection to Claimant's Request No. 5: Internal WAL Communications Regarding Supplier Diversification Strategy
A. Description of the Request
Claimant's Request No. 5 seeks the production of:
"[A]ll internal communications, memoranda, reports, board materials, presentations, and strategy documents of Whitmore Aerospace LLC relating to supplier diversification, sole-source risk, or any plan or strategy to reduce reliance on Kestrel Dynamics GmbH as a supplier of titanium alloy turbine housings, for the period January 1, 2020 through October 3, 2022."
This request is sweeping in its scope. It targets internal WAL business strategy documents prepared by, shared with, or circulated among WAL's executive leadership, including Chief Executive Officer Marcus J. Whitmore III, Vice President and General Counsel Dana Prescott, Vice President of Global Supply Chain Operations Gerald Huang, and Senior Vice President of Engineering and Manufacturing Dr. Ingrid Vollmer. The request extends over a period of nearly three years and encompasses every conceivable type of internal business communication and strategic planning document.
B. Grounds for Objection
Respondent objects to Request No. 5 on multiple, independent grounds, each of which is independently sufficient to warrant denial of the request.
1. Attorney-Client Privilege.  WAL's supplier diversification considerations necessarily involved consultation with its in-house legal counsel, Dana Prescott, Vice President and General Counsel. Ms. Prescott is a member of the New York State Bar and serves as the senior legal officer of WAL. In that capacity, Ms. Prescott was involved in strategic supply-chain decisions from a legal-risk perspective, including the assessment of contractual rights and obligations under the MSA, the evaluation of legal risks associated with sole-source supplier arrangements, and the provision of legal advice regarding WAL's rights in the event of supplier non-performance.
Communications between WAL's business personnel — including Mr. Whitmore, Mr. Huang, and Dr. Vollmer — and Ms. Prescott regarding supplier strategy, contract interpretation, termination rights, and related legal matters are protected by the attorney-client privilege under the law of the State of New York. See N.Y. CPLR § 4503(a) (providing that "[u]nless the client waives the privilege, an attorney or his or her employee, or any person who obtains without the knowledge of the client evidence of a confidential communication made between the attorney or his or her employee and the client in the course of professional employment, shall not disclose, or be allowed to disclose such communication"). The privilege extends to communications made for the purpose of obtaining or providing legal advice, including communications in which legal and business considerations are intertwined, provided that the dominant purpose of the communication is the seeking or rendering of legal advice. See Alice Ames, 78 N.Y.2d 371, 377 (1991).
The arbitration is seated in New York, and the MSA is governed by New York law. Accordingly, the scope and applicability of the attorney-client privilege in this proceeding should be determined by reference to New York law. This is consistent with the approach adopted by numerous arbitral tribunals in international commercial arbitration, including the guidance provided in Article 9.2(b) of the IBA Rules, which recognizes legal impediment or privilege as a ground for excluding documents from production.
WAL has not waived the attorney-client privilege and affirmatively objects to the production of any documents that reflect, contain, summarize, or reference legal advice rendered by Ms. Prescott or by any external counsel retained by WAL in connection with the matters at issue in this arbitration. To the extent that any internal communications responsive to Request No. 5 contain or reference legal advice provided by Ms. Prescott in her capacity as General Counsel, such documents are privileged and must be withheld from production.
2. Work Product Doctrine.  In addition to the attorney-client privilege, the work product doctrine provides an independent basis for withholding documents responsive to Request No. 5.
Following the emergence of quality issues with Kestrel's Products in early 2022 — beginning with the rejection of Lot KDG-2022-0307 on March 7, 2022 — WAL's in-house and external legal teams prepared analyses, assessments, memoranda, and other materials evaluating WAL's contractual rights under the MSA. These materials addressed, among other things:
(a) WAL's right to reject non-conforming lots under Section 8.4 of the MSA;
(b) The cure period provisions of Section 8.4, as amended by Amendment No. 2 dated September 3, 2021 (extending the cure period from thirty (30) to forty-five (45) calendar days following written notice of rejection);
(c) The definition and threshold for "Persistent Quality Failure" under Section 14.2(b) of the MSA (three or more uncured rejections in a rolling twelve-month period);
(d) WAL's right to terminate the MSA for Persistent Quality Failure and the procedural requirements for doing so; and
(e) WAL's potential claims for damages, including replacement-component costs and consequential damages.
These documents were prepared in anticipation of the dispute with Kestrel, which was reasonably foreseeable by mid-2022 at the latest, given the mounting quality failures and the progression toward the Persistent Quality Failure threshold. By the time of the fifth uncured rejection (Lot KDG-2022-0711, rejected July 11, 2022), it was apparent that Kestrel was unable or unwilling to cure the recurring porosity exceedances, and that a dispute regarding termination was highly likely. Documents prepared by or at the direction of WAL's legal counsel in anticipation of this dispute are protected as attorney work product and are not subject to production.
Claimant's request, by targeting the period from January 1, 2020 through October 3, 2022, necessarily captures documents created during the period when this dispute was foreseeable and in which WAL's legal counsel was actively engaged in evaluating WAL's rights and legal strategy. Production of such documents would undermine the fundamental protections afforded by the work product doctrine and would effectively require WAL to disclose its litigation strategy and mental impressions of counsel — a result that is plainly impermissible under New York law and in international arbitration practice.
3. Irrelevance and Overbreadth.  Even setting aside the dispositive privilege and work product objections, Request No. 5 should be denied on the independent grounds of irrelevance and overbreadth.
WAL's internal strategic considerations regarding supply-chain management, including any assessments of sole-source risk or supplier diversification opportunities, are ordinary business decisions of the type that any sophisticated aerospace manufacturer would routinely undertake. Such decisions do not bear on the central factual question in this arbitration: whether Kestrel's Products met the contractual porosity specification of ≤0.25% as set forth in WAL-SPEC-TH-401, Appendix C, Table 3.
The quality failures at issue are objective, metallurgically verifiable facts. The rejected lots exhibited porosity levels ranging from 0.19% to 0.38%, as documented by WAL's incoming inspection team under WAL-QCP-100 and independently confirmed by Respondent's metallurgical expert, Dr. Raymond Chow of Arclight Materials Science Inc. Seven of the fourteen rejected lots remained uncured after expiration of the applicable forty-five (45) calendar day cure period. These facts are not altered, qualified, or undermined in any way by the existence — or non-existence — of a WAL supplier diversification strategy.
Claimant's theory appears to be that the existence of an internal supplier diversification strategy would demonstrate that WAL's termination was motivated by a desire to replace Kestrel, rather than by genuine quality concerns. This argument conflates motive with justification. Even if WAL simultaneously desired to diversify its supplier base — a proposition that Respondent does not concede — this would not convert a contractually proper termination into a wrongful one. The MSA establishes objective criteria for Persistent Quality Failure (three or more uncured rejections in a rolling twelve-month period) and grants WAL an express termination right upon the occurrence of a Persistent Quality Failure. WAL exercised that right after seven uncured rejections — more than double the contractual threshold. WAL's subjective motivations, whatever they may have been, are legally irrelevant where the objective conditions for termination were satisfied.
Furthermore, the temporal scope of the request — spanning from January 1, 2020 through October 3, 2022 — is vastly overbroad. The quality failures at issue commenced in March 2022. Internal WAL communications from 2020 and 2021 regarding general supply-chain strategy cannot be relevant to whether specific lots delivered in 2022 conformed to the MSA specifications. The breadth of the request confirms that it is a fishing expedition designed to uncover any internal WAL communication that might, in isolation and out of context, be characterized as evidence of pretext.
C. Relief Requested
For the foregoing reasons, Respondent respectfully requests that the Tribunal deny Claimant's Request No. 5 in its entirety on the grounds of attorney-client privilege, work product protection, irrelevance, and overbreadth. Each of these grounds independently warrants denial.
In the event that the Tribunal considers that any category of non-privileged, responsive documents may exist that are not otherwise objectionable on relevance grounds, Respondent respectfully requests the opportunity to prepare and submit a privilege log identifying any documents withheld on grounds of privilege, consistent with established practice in international arbitration and the guidance provided in Article 9.2(b) of the IBA Rules. Respondent proposes that any such privilege log be submitted within fourteen (14) days of the Tribunal's order, or such other period as the Tribunal may direct.
V. Objection to Claimant's Request No. 7: WAL's Communications with Veltrano National Bank, N.A. Regarding Covenant Compliance
A. Description of the Request
Claimant's Request No. 7 seeks the production of:
"[A]ll communications between Whitmore Aerospace LLC and Veltrano National Bank, N.A. concerning the impact of the Kestrel Dynamics GmbH arbitration or the termination of the Master Supply Agreement on WAL's financial covenants, credit facility, or borrowing capacity."
This request targets WAL's relationship with Veltrano National Bank, N.A., WAL's senior secured lender, under a $350 million revolving credit facility. The request seeks communications regarding the interplay between this arbitration (or the termination of the MSA) and WAL's compliance with financial covenants contained in its credit agreement with Veltrano National Bank.
B. Grounds for Objection
1. Irrelevance.  Respondent objects to Request No. 7 on the ground that the documents sought are wholly irrelevant to the issues before the Tribunal.
WAL's banking relationship, its financial covenant compliance, and its borrowing capacity under its credit facility with Veltrano National Bank, N.A. are matters entirely external to the contractual relationship between WAL and Kestrel and have no bearing on any issue the Tribunal must determine. The central questions in this arbitration — whether the rejected lots conformed to the contractual porosity specification, whether the termination was proper under Section 14.2(b), and the appropriate quantum of damages — do not require or benefit from an examination of WAL's third-party financing arrangements.
Claimant's apparent purpose in making this request is to establish that WAL was financially motivated to terminate the MSA — presumably, to suggest that the termination was driven by financial pressures unrelated to Kestrel's performance. This theory fails for the same reasons discussed above in connection with Request No. 5: WAL's subjective financial motivations, even if they existed (which Respondent does not concede), are legally irrelevant where the termination was objectively justified under the express provisions of the MSA. The MSA's termination provision in Section 14.2(b) does not condition the exercise of the termination right on the absence of any concurrent financial consideration. The termination right is triggered by objective criteria — Persistent Quality Failure — which were indisputably satisfied.
Moreover, the MSA's dispute resolution clause (Section 22.3) and the issues defined in the Terms of Reference signed by the Parties on January 30, 2023 do not encompass WAL's third-party financing arrangements. The Tribunal's jurisdiction extends to disputes arising out of or relating to the MSA; WAL's separate credit facility with Veltrano National Bank is not a matter "arising out of or relating to" the MSA in any relevant sense.
2. Confidentiality.  Respondent further objects to Request No. 7 on the ground that the documents sought contain commercially sensitive and confidential financial information regarding WAL's credit facility, financial covenants, borrowing capacity, and overall financial condition. WAL's communications with Veltrano National Bank, N.A. are subject to confidentiality obligations under the credit agreement and contain proprietary financial data, the disclosure of which would cause WAL significant competitive harm.
The production of such documents is grossly disproportionate to any arguable relevance. Even assuming, arguendo, that such documents might contain some marginally relevant information regarding WAL's financial condition or decision-making — which Respondent does not concede — the competitive harm and confidentiality concerns far outweigh any such marginal relevance. This is precisely the type of consideration contemplated by Article 9.2(e) of the IBA Rules, which permits the Tribunal to exclude documents where "considerations of commercial or technical confidentiality that the Arbitral Tribunal considers compelling" so warrant.
Respondent notes that, while the Tribunal's Procedural Order No. 1 provides for confidentiality protections applicable to documents produced in this proceeding, such protections do not fully mitigate the risks of disclosure of WAL's sensitive financial information, particularly where the information has no relevance to the issues in dispute.
C. Relief Requested
For the foregoing reasons, Respondent respectfully requests that the Tribunal deny Claimant's Request No. 7 in its entirety as seeking documents that are irrelevant to the issues in dispute, protected by compelling confidentiality considerations, and disproportionate in scope.
VI. Objection to Claimant's Request No. 9: WAL's Internal Quality Control Procedures Beyond WAL-QCP-100
A. Description of the Request
Claimant's Request No. 9 seeks the production of:
"[A]ll quality control procedures, guidelines, protocols, and internal memoranda applied by Whitmore Aerospace LLC to incoming inspection of titanium alloy turbine housings, including any procedures or standards applied in addition to or in place of WAL-QCP-100 and WAL-SPEC-TH-401 through WAL-SPEC-TH-410."
Claimant's apparent purpose in making this request is to support its theory — advanced in the Request for Arbitration and further elaborated in Claimant's preliminary submissions — that WAL applied an unpublished, more stringent porosity tolerance of ≤0.15% to the incoming inspection of Kestrel's Products, rather than the contractual specification of ≤0.25% set forth in WAL-SPEC-TH-401, Appendix C, Table 3. Claimant has suggested that WAL used this alleged undisclosed standard as the true basis for its rejections, thereby rejecting lots that actually conformed to the agreed-upon specification.
B. Grounds for Objection
1. Partial Compliance / No Additional Standards Exist.  Respondent has already produced, in connection with the filing of its Answer and Counterclaim on December 12, 2022, and in its initial voluntary production on February 28, 2023, the complete set of quality control procedures and engineering specifications applicable to the Products under the MSA. Specifically, Respondent has produced:
(a) WAL-QCP-100 — WAL's Master Quality Control Procedure for Incoming Inspection of Aerospace Components (Rev. 7, effective January 15, 2021), which establishes the general framework for incoming inspection, including sampling methodology, measurement protocols, and acceptance/rejection criteria;
(b) WAL-SPEC-TH-401 through WAL-SPEC-TH-410 — the complete suite of engineering specifications for titanium alloy turbine housings procured under the MSA, including WAL-SPEC-TH-401, which contains, at Appendix C, Table 3, the porosity specification of ≤0.25% that is central to this dispute.
These documents constitute the complete and exhaustive set of quality control procedures and engineering specifications that WAL applied to the incoming inspection of Kestrel's Products. WAL represents to the Tribunal, through undersigned counsel, that no additional or supplementary porosity standard was applied to the inspection of Kestrel's Products beyond the ≤0.25% limit expressly stated in WAL-SPEC-TH-401, Appendix C, Table 3. There is no unpublished ≤0.15% standard. The allegation that WAL applied an undisclosed, more stringent porosity tolerance is unfounded and is contradicted by the inspection records already produced, which evaluate each lot against the ≤0.25% threshold.
Respondent further notes that the AS9100 Rev D certification framework, which Kestrel was required to maintain as a condition of the MSA (see Section 6.2(c)), is a publicly available standard published by the Society of Automotive Engineers International. To the extent Claimant seeks information regarding the AS9100 Rev D requirements, those requirements are publicly accessible and need not be produced by Respondent.
2. Overbreadth.  To the extent Claimant's Request No. 9 seeks WAL's internal quality procedures applicable to products other than the titanium alloy turbine housings supplied by Kestrel under the MSA, the request is overbroad and seeks documents that are plainly irrelevant to this dispute. WAL manufactures and procures a wide range of aerospace components for use in its products, each subject to its own set of quality control procedures and engineering specifications. The quality procedures applicable to WAL's other product lines and component categories have no bearing on the questions before this Tribunal and are proprietary trade information that Respondent should not be required to disclose.
Respondent objects to producing quality control procedures, guidelines, or protocols that relate to products other than the Products supplied by Kestrel under the MSA, as such production would be irrelevant, disproportionately burdensome, and would require the disclosure of proprietary manufacturing and quality assurance information unrelated to this dispute.
C. Relief Requested
Respondent confirms that it has produced all responsive, non-privileged quality control documents applicable to the Products supplied by Kestrel under the MSA, and respectfully represents that no additional standards beyond those already produced were applied to the inspection of those Products.
Respondent requests that the Tribunal deny Claimant's Request No. 9 to the extent it seeks documents beyond those already produced, including any quality control procedures applicable to products other than the MSA Products.
VII. Summary of Respondent's Positions
For the Tribunal's convenience, Respondent's positions on the four contested requests are summarized in the following table:
Respondent reiterates that it does not object to Claimant's remaining requests (Request Nos. 1, 2, 4, 6, and 8) and will produce responsive, non-privileged documents in accordance with the schedule established by the Tribunal.
VIII. Reservation of Rights
Respondent expressly reserves all rights and defenses in this arbitration, including but not limited to:
(a) The right to raise additional privilege objections if Claimant's document production requests are modified, supplemented, or expanded at any stage of the proceedings;
(b) The right to supplement the objections set forth herein if additional grounds for objection come to Respondent's attention;
(c) The right to prepare and submit a privilege log identifying documents withheld on grounds of privilege, if ordered by the Tribunal;
(d) All rights and defenses asserted in the Answer and Counterclaim filed December 12, 2022, including all defenses to Claimant's claims and all grounds supporting Respondent's counterclaim for €5.17 million in replacement-component costs; and
(e) All procedural and substantive rights under the ICC Rules of Arbitration (2021 edition), the IBA Rules on the Taking of Evidence, and the law of the State of New York.
Nothing in this submission constitutes a waiver of any privilege, right, or defense available to Respondent under applicable law or the procedural framework governing this arbitration. To the extent Respondent has referenced or described the substance of any communications or documents in this submission for the purpose of establishing its objections, such references are made solely for that purpose and do not constitute a waiver of any applicable privilege.
Respondent is grateful for the Tribunal's consideration of these objections and respectfully requests that the Tribunal rule on these matters at its earliest convenience, in order to permit the Parties to proceed with the document production process in accordance with the procedural timetable.
Respectfully submitted,
CALDERWOOD & HARKNESS LLP
By: ________
Name: Theodore Langston
Title: Partner
Date: March 24, 2023
Calderwood & Harkness LLP 600 Lexington Avenue New York, NY 10022 Telephone: +1 (212) 558-4000 Facsimile: +1 (212) 558-3588
Counsel for Respondent Whitmore Aerospace LLC Engagement No.: 1019-00001
Certificate of Service
I, Theodore Langston, hereby certify that on March 24, 2023, a true and correct copy of the foregoing letter setting forth Respondent Whitmore Aerospace LLC's Objections to Claimant's Document Production Requests Pursuant to Procedural Order No. 2 was served upon the following by email and international courier:
Counsel for Claimant Kestrel Dynamics GmbH:
Dr. Maximilian Haber Katrin Schäfer Haber Reinhardt Schlosser Partnerschaft mbB Königstraße 35 70173 Stuttgart, Germany
and
30 St Mary Axe London EC3A 8BF United Kingdom
ICC Secretariat:
International Court of Arbitration International Chamber of Commerce 33–43 avenue du Président Wilson 75116 Paris, France
Client Copy:
Dana Prescott Vice President & General Counsel Whitmore Aerospace LLC 4200 Wilson Boulevard, Suite 1100 Arlington, VA 22203
________________________________________
Theodore Langston Partner, Calderwood & Harkness LLP
Request No. | Subject Matter | Respondent's Position | Alternative Relief
No. 3 | Negotiations and correspondence with Valkyr Precision Components Inc. | Deny as overbroad, irrelevant to the issues in dispute, and disproportionate to any marginal relevance. | If the Tribunal is inclined to order production, narrow scope to documents reflecting per-unit replacement cost, total units procured, and discount terms, limited to October 3–December 31, 2022.
No. 5 | Internal communications regarding supplier diversification strategy | Deny in entirety on grounds of attorney-client privilege, work product doctrine, irrelevance, and overbreadth. | If non-privileged responsive documents are found to exist, Respondent requests the opportunity to prepare a privilege log within 14 days of any order.
No. 7 | Communications with Veltrano National Bank, N.A. regarding covenant compliance | Deny in entirety as irrelevant to the issues in dispute and protected by compelling confidentiality considerations. | None proposed.
No. 9 | Internal quality control procedures beyond WAL-QCP-100 and WAL-SPEC-TH-401 through -410 | Deny to the extent it seeks documents beyond those already produced. Respondent has produced the complete and exhaustive set of applicable quality procedures and represents that no additional porosity standard exists. | None required; Respondent has already substantially complied.

CONFIDENTIAL

CALDERWOOD & HARKNESS LLP

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