Ben-Gurion International Airport, Israel - In an unprecedented and unusual measure, Israel Aircraft Industries requested and was granted an injunction against the BVR company from Givatayim enjoining BVR from interfering with an export contract in which the two had cooperated. The Court ordered BVR to refrain from taking steps of any kind, which are intended to exclude the MLM Division of Israel Aircraft Industries Inc. ("IAI/MLM") from the export contract for the German Air Force, and to refrain from engaging a foreign company under its supervision in order to fulfill the contract.
In 1996, the two companies initiated contact with BGT, a German company, for the purpose of supplying training systems for German Air Force combat aircraft. According to the contract, IAI/MLM supplies the airborne system, including know-how to manufacture parts in Germany, and BVR supplies the ground display stations.
At the end of 1997, the joint venture agreement expired between IAI/MLM and BVR and the companies began to compete against each other in the world market, with the agreement to continue to implement projects for which contracts had already been signed.
The German project, which represents a technological breakthrough, encountered difficulties, particularly due to the failure of an American subcontractor who was central to the plan, who at the same time (1996-97) was a partner of BVR.
Despite this, IAI/MLM succeeded in overcoming the difficulties and achieved a major success by passing a series of flight tests by German Air Force pilots at a German Air Force Base. The summary report determined that the flight system surpassed all of the requirements in the strict specifications of the German Air Force. As a result, IAI/MLM completed its supply to BGT of the vast majority of the components required within the terms of the contract. In addition, IAI/MLM transferred to BGT, according to the agreement between them, manufacturing rights and manufacturing packages in order to continue manufacturing in Germany, and thereby exposing proprietary knowledge to the German partner.
At this stage, during which it was possible to complete supply to the German customer, BVR is attempting to cancel the contract with IAI/MLM, and to replace IAI/MLM with a foreign company which made contact with BVR .
This action could damage Israel's exports and sully the name of Israeli industry in an important and central European market.
During all of its years of operation, Israel Aircraft Industries Management has refrained, at almost all cost, from legal confrontations. In this case, the Management of IAI feels that BVR's behavior deviates from all appropriate business practices. Therefore, it has submitted the injunction against BVR, in a measure to encourage the company to honor the original contract which was signed in Germany, and to complete the supply as required by the contract.