Press Release - Court Judgment in GFA's claim against Local Ocean

Press Release June 25, 2012

The Israeli Tel Aviv District Court issued a judgment by way of settlement, in a claim filed by GFA Advanced Systems Ltd ('GFA') against Local Ocean, LLC and others, to enforce its rights under the joint venture agreement, which established Local Ocean, LLC and the fish farm it operates in the Hudson area in New York State.


In its judgment, the court resolved that GFA would receive financial compensation in the amount of US $4 million to be paid over several interest bearing installments and to be secured by a pledge over 49% of the holdings in the entity that holds and operates the Hudson farm.

Local Ocean, LLC further undertook that it shall use GFA's knowhow and licensed technology in the Hudson farm alone and that it shall not use GFA's knowhow and licensed technology in any other future fish farms it will establish.

The judgment further terminated the joint venture agreement entered into between the parties in 2009, under which the Hudson farm was established, and declared the memorandum of understanding entered into by the parties in 2010 as not legally binding and void.

 

Dotan Bar Noy, GFA's CEO commented: "This is an important milestone for Grow Fish Anywhere ('GFA'), which sends a clear message to the market. Our unique know-how and technology has a significant value and we have and will continue to ensure that it is safe-guarded and protected. We are happy to leave this dispute behind us and move forward with our research and developments efforts and the implementation thereof in new future fish farms."

 

GFA was represented in the above legal proceeding by the law firm of Prof. Yuval Levy & Co. by Nir Kehat and Dana Elmalah from the firm's litigation department and Tomer Maharshak and Ayal Klinemintz from the firm's cross-border M&A and capital markets department.

Local Ocean, LLC and the other respondents were represented by the law firm of Fischer Behar Chen Well Orion & Co. by Reuven Behar and Merav Bar Zik.


Background on the dispute

GFA and Sanit Group were two halves of a joint aquaculture venture setting up a joint company, Local Ocean, LLC, under which a fully-closed, zero discharge intensive fish farm in the Hudson area in New York State,was established.

 

Under the joint venture agreement, GFA provided Local Ocean, LLC with a non-transferable license to its licensed patented technology, through which the fish farm is operated, while Sanit was to provide management services and financing for the joint operation.

The above license further stated that any subsequent development to the patented technology and related know-how by Local Ocean, LLC, would be the property of GFA.

 

Under the court documents it was stated that soon after GFA fulfilled its obligations to transfer the technology to Local Ocean, LLC and provided the operational know-how to the local teams, the joint venture agreement was breached in numerous ways by Sanit; leading the parties to negotiate certain amendments to the joint venture agreement in the form of a non-legally binding memorandum of understanding, which was never contractually agreed to by GFA in the form of a definitive agreement.

 

In its claim, GFA requested of the court to, among other things, instruct the Local Ocean group to comply with the provisions of the joint venture agreement and declare that GFA is entitled to receive the documents as necessary for the implementation of the agreement. GFA also requested that the court declare the memorandum of understanding as void.

 

GFA's claim was followed by a counter claim by Local Ocean, LLC.