In a comprehensive filing against Nel ASA, its subsidiaries Nel Hydrogen A/S, Nel Hydrogen Inc., and several top executives, Iwatani Corporation of America has laid out a series of allegations in a detailed amended complaint – this time naming names of current and former senior executives at Nel.
Iwatani, one of Japan’s largest industrial gas companies, alleges that the defendants engaged in deceptive practices, including misrepresenting the capabilities and reliability of their hydrogen fueling stations, known as H2Stations, which were sold to Iwatani in 2019 and later deployed in California with disastrous results.
Named in the amended complaint filed last week are Jon André Løkke, former CEO of Nel ASA; Stein Ove Erdal, Senior Vice President Legal and General Counsel; Håkon Volldal, current CEO of Nel ASA; and Robert Borin, Senior Vice President of Nel’s Fueling Division. These executives are accused of playing key roles in devising and executing strategies that misled customers about the product’s readiness and reliability.
In a previous statement, Nel said it strongly rejects the allegations and will vigorously oppose the lawsuit.
Meanwhile, since the filing of the initial complaint in January, Nel has pulled support of the H2Stations due to the lawsuit, a violation of its contractual obligations, Iwatani alleges.
“We have left the sites untouched since we found out about the lawsuit. But we would like your ok to go onto Hawaiian Gardens [fueling station] to retrieve tools and equipment,” a Nel Hydrogen Refueling employee said in response to Iwatani’s request for remote access to the stations, according to the complaint.
The amended complaint details a concerted effort by Nel’s leadership to expand aggressively into the hydrogen fueling industry, capitalizing on the burgeoning interest in clean energy solutions. According to the complaint, under the guidance of these executives, Nel pursued sales of H2Stations with the knowledge that the products were not adequately tested and had significant defects.
Iwatani alleges that it was misled into purchasing the H2Stations based on false assurances regarding their performance, technological advancement, and suitability for commercial use. The complaint further claims that once operational issues arose, the defendants systematically concealed the defects and failed to perform required repairs under warranty, contributing to significant operational and financial losses for Iwatani.
The amended complaint lays out a timeline of interactions between Iwatani and Nel’s representatives, highlighting instances where critical information was allegedly withheld or misrepresented: in meetings held in 2019 in Osaka, Japan as well as in New York and San Francisco.
This includes claims that Nel insisted on exclusive service and maintenance contracts as a means to control information and avoid liability, rather than as a measure to ensure the proper functioning of the H2Stations. Additionally, the service and maintenance contracts essentially allowed Nel to field test the hydrogen fueling stations, since they had not been previously tested, according to the complaint.
“This shifted the cost of field testing the H2Stations to Plaintiff and allowed Defendants to take them into the market before they were properly tested or ready for actual commercial use by customers, and long before the software underlying the Control Systems and Software was actually created,” the complaint reads.
Below is a summary of the specific allegations against each named executive:
Jon André Løkke
- Position and Tenure: CEO of Nel ASA from January 4, 2016, until stepping down to become a member of the Board from June 2022 through May 2023. Iwatani claims he was removed from his role amid the “unfolding disaster within the hydrogen fueling business.”
- Allegations:
- Key architect of Nel’s expansion into the hydrogen fueling industry.
- Played a significant role in formulating Nel’s hydrogen fueling business strategy, including product offerings and requiring customers to contract exclusively with Nel for service and maintenance.
- Allegedly involved in misleading sales and marketing strategies, including providing false information about the capabilities and testing performance of Nel’s hydrogen fueling stations (H2Stations).
Stein Ove Erdal
- Position and Tenure: Senior Vice President Legal and General Counsel since May 2019.
- Allegations:
- Critically involved in Nel’s hydrogen fueling business strategy and the formulation of a “contractual strategy” aimed at avoiding liability by making service and maintenance contracts a prerequisite for equipment purchase.
- Allegedly knew of the H2Stations being early R&D level products with insufficient real-world testing and played a role in concealing defects and operational failures from customers, including Iwatani.
Håkon Volldal
- Position and Tenure: CEO of Nel ASA since July 1, 2022.
- Allegations:
- Assumed the role amid the ongoing issues with the hydrogen fueling business and was informed about the defects in the hydrogen fueling equipment, including H2Stations.
- Despite awareness of the equipment’s defects and the financial implications of increased station utilization, Volldal is accused of failing to rectify the ongoing conspiracy, fraud, deceit, and other misconduct against customers like Iwatani.
Robert Borin
- Position and Tenure: Senior Vice President of Nel ASA’s Fueling Division since April 6, 2021.
- Allegations:
- Involved in decision-making processes regarding the response to defects and failures of the H2Stations sold to Iwatani and others.
- Accused of endorsing strategies to withhold information about the equipment’s defects from Iwatani, making misrepresentations about the causes of equipment failures, and not fulfilling warranty or other obligations to repair the defects.
