Burning issue for court hits oil pipeline project

By Angela Xu  |   2008-6-19  |     NEWSPAPER EDITION

A LOCAL company has filed a lawsuit against German-based Weishaupt Corp, which has the major share of China's burner market, seeking more than 18 million yuan (US$2.6 million) for breach of contract.

The dispute has affected oil pipeline construction in a project to transport gas from the country's west to the east.

The Shanghai No. 1 Intermediate People's Court has accepted the case. To ensure compensation if the plaintiff wins the case, the court has impounded Weishaupt facilities valued at nearly 10 million yuan.

The plaintiff, Shanghai Weisu Burner Equipment Co Ltd, accused Weishaupt of withdrawing its authorization without notice.

Weisu is seeking compensation and asking Weishaupt to provide after-sales service for its clients.

Weisu said it was authorized to sell Weishaupt burners in East China in 1998 without a time limit and helped build reputation of the brand in the domestic market after 10 years' development. But Weishaupt withdrew authorization in early April. It refused to provide technical support or offer burners to more than 170 clients who signed contracts with Weisu.

"Weishaupt should at least have given us a six-month grace period and provided goods to those who had made orders," said Tang Huadong, lawyer for the plaintiff. "Now we are facing huge compensation demands for being unable to implement contracts."

Dai Zhenghao, manager of the Shanghai office of Weishaupt, said they stopped authorization because Weisu sold its burners at unfair low prices and did business in unauthorized areas. He also accused Weisu of having unqualified technicians.

The dispute between the two sides has caused trouble for China Petroleum West Pipeline Co Ltd, which is in charge of oil pipeline construction and management in west China, according to Li Jiancheng, director of the company's oil purchase division.