Fosdal arbitration case loss will reduce net profit by approximately 70 million yuan in 2025

Hangzhou Fosta Deep Cold Equipment Co., Ltd. (Stock Code: 603173, Stock Name: Fosta) recently announced that the company received an arbitration award from the International Court of Arbitration of the International Chamber of Commerce (ICC) regarding a contract dispute case. The company, as the respondent, was ordered to pay damages, interest, and related costs to the claimant. Based on preliminary estimates, this arbitration result will reduce the company’s net profit for 2025 by approximately 70 million RMB, but it will not affect the company’s normal production and operations. The disclosed 2025 annual performance forecast has already fully considered this impact.

The announcement shows that this arbitration case originated from a equipment manufacturing and delivery contract signed on November 1, 2020, between the company and Air Water Cryoplant (later merged into Air Water Engineering Inc., hereinafter “AWE”). The contract amount was USD 2.53 million. Due to disputes during contract performance, AWE filed for arbitration with the ICC, claiming a total of 173,473.91 million Japanese Yen in damages plus interest and other costs.

According to the ICC award, Fosta is required to pay AWE in three parts: first, 1,595,092,562 Japanese Yen for damages; second, USD 105,000 for ICC advance payment fees; third, 256,000,000 Japanese Yen for legal fees and other related expenses. All amounts are subject to an annual interest rate of 3% (simple interest), with the start date and principal as follows:

The company states that the specific accounting treatment of this arbitration result and its final impact on the company’s profit and loss will be subject to the results confirmed after the annual audit by the accountant. As of the announcement date, the company and its controlling subsidiaries have no other major lawsuits or arbitration matters that need to be disclosed but have not been disclosed.

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Editor: Xiao Lang Kuai Bao