Breach of Contract: Data Center Ordered to Refund $1.7M in Monthly Rent

Data Center Ordered to Refund $1.7M in Monthly Rent

Utilizing a contractual arbitration clause and dispute resolution procedures, Trepanier Tajima LLP proved that the data center for years issued invalid invoices to a submarine cable system co-location tenant. In a contentious arbitration proceeding, Trepanier Tajima LLP proved that the data center did not deliver the licensed space to specifications and the data center was therefore not entitled to invoice the co-location tenant for monthly rent. Trepanier Tajima LLP proved that the data center breached an interim injunctive order that barred the data center from refusing customary access and service to the tenant while the rent refund dispute was pending. The arbitrators sanctioned the data center the breach of the interim order. The arbitrators also dismissed the data center’s counterclaim to increase the monthly rental amounts on the tenant and awarded legal fees for the dismissal. Thereafter, Trepanier Tajima LLP obtained an order from the United States District Court of Hawaii confirming the rent refund award and the federal court found that the data center’s opposition to confirmation of the arbitration award (and motion to vacate the award) lacked merit and therefore imposed legal fees on the data center. The case is now on appeal in the Ninth Circuit Court of Appeals.

The invocation of the contractual arbitration clause ensured that the client obtained faster and more cost-effective results without going through typical courtroom procedures. Arbitration is often a preferred means of obtaining resolution of commercial disputes because the award is difficult to vacate, modify, or successfully appeal. However, arbitrators have limited ability to enforce their rulings and often the arbitration award must be confirmed and enforced by a court, unless the other party voluntarily complies.