First Wind also petitioned the New York Supreme Court, in an effort to ensure Clipper puts aside the $59,521,000 being claimed. The developer said the money represented advance payments made as part of a 2007 turbine deal.
The arbritration is going through the America Arbitration Association in Chicago. Clipper maintained it had access funds if the judgement went against it.
The arbitration hearing follows Clipper's acquisition by private equity company Platinum Equity from United Technologies Corporation. First Wind states that Clipper has effectively stopped manufacturing wind turbines, which the company denies.
The supreme court judge rejected First Wind's petition on the grounds that Clipper said it was willing and able to manufacture the turbines if First Wind placed a firm order and made the "required deposit". The judge also said that taking such a sum of money out of the company could bankrupt it.
Clipper has admitted it has ceased wind turbine manufacturing due to lack of orders. First Wind has also claimed Clipper has stopped its warranty obligations to it and other customers and that Platinum is planning to close down the majority of its operations.
Neither First Wind or Clipper-owner Platinum Equity were available to comment.
A recent report in the Pacific Coast Business Times claimed Clipper was making around 200 cuts to its Carpinteria head office. It said employees were informed of the plan on 7 November.
The report claimed that Clipper's new CEO Michael Reed - who was installed by Platinum earlier this year - will take the company's head count down to 100 by February next year. All of these will be based at its Cedar Rapids plant.
It said the only part of the company that was likely to continue was its servicing operations, which handled the Clipper-developed gearbox for the 2.5MW Liberty turbine.