Orion announces settlement in dispute with former owner

Houston, Texas – Orion Engineered Carbons has reached an agreement with former owner Evonik Industries AG to settle the arbitration proceedings launched against an Evonik affiliate in June 2019. 

The arbitration aimed to enforce – among others – indemnity claims covering capital expenditures and costs to remedy past violations of the US Clean Air Act, alleged by the US Environmental Protection Agency (EPA), Orion announced 21 June.

According to the settlement, Evonik has agreed to make a one-time cash payment of €66.55 million to Orion which resolves the claims and counterclaims the parties raised in the arbitration. 

The settled dispute originates from the acquisition of the carbon black business by Rhône Capital and Triton after the business was spun-off by Evonik in 2011.

The 2011 acquisition agreement provided for a partial indemnity from Evonik against various exposures, including capital investments, fines and costs arising in connection with US Clean Air Act violations that allegedly occurred prior to the closing of the 2011 acquisition.

In 2018, Orion and EPA reached a ‘consent decree’ which obliged the carbon black manufacturer to install certain capital-intensive pollution control equipment at its US plants.

In June 2019, Orion initiated arbitration proceedings to enforce its environmental indemnity claims against Evonik, which in turn submitted certain counterclaims related to tax indemnities and cost reimbursements against Orion. 

The settlement, said the Orion statement, “terminates the arbitration and puts an end to a legal controversy that lasted for almost a decade.”

ERJ is requesting a statement from Evonik about this development.