Austrian Firm Agrees to Pay Armstrong $7M

Lancaster, PA, September 27 -- The owner of an Austrian flooring supplier has agreed to pay nearly $7 million to Armstrong World Industries to settle a pair of lengthy disputes, according to the Lancaster New Era. The agreement with the owner of EFP Floor Products of Tyrol, Austria, was disclosed by Armstrong in an 18-page bankruptcy court filing Monday. Subject to bankruptcy court approval, the accord would end years of wrangling there and before an international arbitration panel. Armstrong had retained EFP in 1999 as a source of laminate floors. But Armstrong soon canceled the deal, saying EFP supplied products that infringed on patents of other firms. Lancaster-based Armstrong then asked the bankruptcy court to order EFP to compensate it for lost profits, business interruptions and certain direct costs. Separately, Armstrong also asked the court's permission to recoup $2.5 million it had paid EFP shortly before it entered bankruptcy, in so-called "preference" payments. EFP opposed Armstrong's effort to recover the payments and filed court papers alleging Armstrong had broken a follow-up deal signed in 2000. Armstrong took both EFP and its owner to arbitration in London before the International Chamber of Commerce, saying the 1999 pact called for disputes to be resolved that way. But EFP's owner, owner Egger Verwaltungsgesellschaft, challenged the chamber's jurisdiction, saying it had not signed either the 1999 or 2000 deals. A chamber arbitration tribunal agreed in January that it had no jurisdiction over Egger, posing the prospect that Armstrong would be liable for Egger's $1.3 million in attorney fees. That initial setback for Armstrong was followed by a victory. In July, the tribunal found that EFP had broken its 1999 pact with Armstrong, but that Armstrong had not broken the 2000 agreement. Before the tribunal held another hearing to set the damages, settlement talks were started, leading to Monday's agreement. Under the settlement, Armstrong, EFP and Egger would dismiss all the arbitration proceedings and all the preference payment actions. Egger would pay Armstrong $5.25 million as an arbitration settlement sum and $1.5 million as a preference settlement sum. However, not all of that $6.75 million would stay in Armstrong's pocket. Armstrong has agreed to pay nearly $1.4 million to its lawyers.