By Asaf Bergerfreund

Orckit Communications (Nasdaq:ORCT) filed an NIS 14 million lawsuit on Sunday at the Tel Aviv District Court against British equipment supplier Astec Standard Power Europe.

Astec had provided Orckit with converters for installation in Orckit products. Orckit claims the converters were damaged.

The story began, Orckit says, when it signed a contract to buy the converters from Astec in 1995. By 1998 Orckit had purchased tens of thousands of converters for $1.2 million.

Orckit claims that its customers began returning products as of mid-1998, claiming they were malfunctioning. Orckit sent the converters for technical inspection in Astec, which admitted the converters did suffer from technical malfunctions.

Astec said the root of the problem was a fracture in a resistor in the converter, Orckit alleges. The Israeli firm claims that Astec refused to provide replacement converters within a reasonable amount of time.

This forced Orckit to replace the malfunctioning converters with fully operating ones at its own expense, it claims.

Orckit says that had it not quickly acted to replace the damaged goods, it would have lost its main customers and might have been exposed to major lawsuits.

It further alleges that it suffered great damage as a result of having to purchase the alternative converters, and from decreasing orders by major clients. It also claims harm to its reputation.

The defense has not yet filed a response.