Cases & Deals

Cliffs Natural Resources wins baseball arbitration against Canadian steel maker

Client(s) Cliffs Natural Resources Inc.

On December 17, 2010, subsidiaries of Jones Day client Cliffs Natural Resources Inc., headquartered in Cleveland, Ohio, and the largest producer of iron ore pellets in North America, achieved a complete victory in an AAA arbitration against Essar Steel Algoma, Inc., a Canadian steel maker. Cliffs brought the arbitration claim after certain industry benchmarks used to establish the annual price of iron ore pellets under the parties' long-term supply agreement ceased to be published in 2010. The contract provided that if such information ceased to be published, the parties would negotiate revised contract terms based on currently published information, and would then proceed if necessary to a "baseball" arbitration in which the arbitrators would select one party's proposed revisions. Jones Day showed, during a three-day hearing, that Cliffs' proposal was superior. After conclusion of the hearing, the arbitrators adopted Cliffs' proposal and rejected Essar's. As a result, Cliffs is entitled to a "true-up" payment for 2010 of approximately $129 million, and its proposed revisions to the contract will be used to set pellet prices in remaining years of the contract.

Essar Steel Algoma Inc., v. The Cleveland Cliffs Iron Co., et al., No. 50 154 T 00395 10 (AAA)