A New York state appeals court on Tuesday reignited a high-stakes contract battle, reinstating a lawsuit by three solar facility operators seeking to enforce a more than $77 million arbitration award against Italian energy giant Enel SpA. The court found that Enel’s guaranty agreements—now at the center of the dispute—contain ambiguities too significant to dismiss outright.
Panel Says Guaranty Timing Requirements Unclear
A unanimous five-judge panel ruled it could not conclusively determine whether the operators were required to demand payment from Enel while arbitration was still underway. That question, the court said, was far from settled—and certainly not grounds for dismissal.
Enel has argued the guaranties expired. But given the agreements’ murky language, the appeals court said the trial court erred in tossing the breach-of-contract claim at Enel’s request.
Dispute Rooted in 2013 Mexico Solar Venture
The conflict traces back to Enel’s 2013 venture to build solar facilities in Mexico using separate owner and construction subsidiaries. According to the plaintiffs—three former Enel owner subsidiaries now operating the facilities—Enel used the structure to duck liability.
They allege Enel spun off controlling stakes in the owner entities to private investors while retaining the construction subsidiaries, including Kino Contractor SA, the subsidiary that signed the construction contracts and later fell short on performance standards.
The operators claim Enel intentionally undercapitalized Kino, leaving it unable to pay for construction defects once they surfaced.
