A New York court has partly denied motions by polysilicon maker MEMC (WFR.N) against Conergy (CGYG.DE), a small victory for the German solar group in the two companies' ongoing legal battle.
The move relates to Conergy's efforts to declare invalid a wafer supply contract it had agreed with MEMC two years ago.
Shares in Conergy were up 17.2 percent at 1229 GMT, while Frankfurt's technology index was 0.6 percent lower.
(This is) slightly positive as the company's future will mainly depend on the outcome of the trial but experts don't expect a quick ruling, a local trader said.
Under the contract, which was signed in late 2007, MEMC supplies solar wafers to Conergy over a 10-year period, with pre-determined pricing, on a take-or-pay basis starting in the third quarter of 2008.
Under a take-or-pay contract, a buyer agrees to either take any product that is offered or pay a specified amount as compensation if it does not take the product.
Analysts have said terms of the contract were unfavourable, such as annual price decreases that are slower than the decline of market prices, resulting in above-market costs for Conergy.
In April, Conergy sought to have a New York City court declare the contract invalid after talks with MEMC to renegotiate the terms of the contract had failed.
In the complaint, Conergy said it wanted the take or pay provision of the contract to be made void and unenforceable, pointing to anti-competitive contractual provisions. [ID:nLR370265]
MEMC at the end of July moved to dismiss Conergy's claim regarding the contract's anti-competitive provisions, the U.S. District Court for the Southern District of New York wrote in a statement obtained by Reuters on Tuesday.
For now, Conergy has made sufficient factual allegations that it was a potential competitor at the time that it entered into the Agreement with MEMC, thereby rendering its claims against defendants (MEMC) plausible, the court said, according to the statement.
Conergy declined to comment. (Reporting by Christoph Steitz; Editing by Jon Loades-Carter)