PONTOTOC - Whether arbitration will be necessary to settle a biodiesel business dispute is a question before Chancellor Jacqueline Mask.

Friday, Mask heard brief arguments from each side of a Monroe County complaint demanding return of $365,000 invested by Process Technologies Services LLC of North Carolina into Mississippi Investment Petroleum Co., now based in Aberdeen.

At issue was whether PTS must use arbitration to resolve its issues with MIPCO instead of its lawsuit.

PTS bought into MIPCO in 2009, but claims it was lied to about issues crucial to the company's success, such as top officials' personal investments in the company and their staff experience to make a successful product.

Also Friday, MIPCO officials at the Pontotoc County proceeding declined to comment on plans to construct a new refinery at the Port of Aberdeen.

Recently, MIPCO moved out of a Houston facility where the company sought to operate after 2009 plans for a plant in Aberdeen didn't work out.

But an official with the Mississippi Department of Environmental Quality said MIPCO is closer to permission for the new facility.

Robbie Wilbur, MDEQ's spokesman, said MIPCO's air construction permit application is complete except for a site layout. "We cannot move forward to public notice without reviewing an adequate site layout," Wilbur said earlier this week.

He also said MDEQ made a pre-permitting site inspection in Aberdeen on Feb. 24 and a site visit to Houston, where staff will recommend termination of all permits.

As for the chancery court hearing, MIPCO attorney Jeffrey M. Williams of Jackson told Mask that when PTS signed its investment agreement with MIPCO, it agreed to take disputes to arbitration. Arbitration is a method to resolve disputes by involving a neutral third party, whose decision is binding.

Kathryn H. Hester of Jackson, attorney for PTS, said her client cannot be held to conditions of a void document.

"We're saying these sheets of paper are fraudulent," she said. "If we had known the facts, we would not have signed it."

The company also wants interest and reasonable attorney's fees.

Mask said her decision will be made soon.

Contact Patsy R. Brumfield at (662) 678-1596 or patsy.brumfield@djournal.com.