U.S. firm Orbital sues Heckler & Koch over XM25 weapon

BERLIN/NEW YORK (Reuters) - German gunmaker Heckler & Koch (MLHK.PA) said U.S. aerospace and defence company Orbital ATK Inc (OA.N) had filed a suit in the United States seeking damages in excess of $27 million (22 million pounds).

In the complaint, filed at the U.S. District court in the district of Minnesota, Orbital said it was seeking damages for breach of contract over the XM25 semi-automatic weapon system which Orbital and Heckler & Koch started developing more than 20 years ago.

"Heckler & Koch GmbH rejects all claims, based on the information we have so far," the company said in a statement on Thursday.

"Heckler & Koch GmbH did not receive the complaint formally from the U.S. District Court, District of Minnesota so far," the gunmaker also said in its brief statement.

A spokesman for Heckler & Koch declined to comment on the details of the claims.

Orbital said in the filing, seen by Reuters, that Heckler & Koch had failed to deliver twenty additional prototypes of the XM25 weapon systems, as contracted, and that its failure to do so meant the U.S. Army had raised the possibility of terminating its contract with Orbital.

"Even if the Prime Contract is not terminated, Orbital ATK has incurred and will incur additional costs as a direct result of the substantial delay caused by Heckler & Koch's non-performance and the need to re-procure the twenty weapons from an alternate manufacturer," it stated in the filing.

Orbital is also asking in the filing that Heckler & Koch transfer certain intellectual property to enable another contractor to carry out the work.

The filing said Heckler & Koch had queried whether the weapons, which target enemies protected by walls or hidden in hard-to-reach places, would violate international laws of war.

The filing also said that after receiving legal opinions, Heckler & Koch had said it would only supply the weapons if the U.S. government provided a special certification, which the government refused to do. Informal mediation failed, and Heckler & Koch refused to engage in formal mediation, the filing stated.

(Reporting by Victoria Bryan in Berlin and Jonathan Stempel in New York; Editing by Elaine Hardcastle and Jane Merriman)