Solvay Specialty Polymers v. Edison, Partial Award, 22 June 2021

1.

Solvay Specialty Polymers Italy S.p.A. (hereafter "Solvay", "Solvay Italy" or "Claimant") - a company created under the laws of Italy; whose principal business is the manufacturing of high-performance plastics.

2.

Claimant has its corporate seat in Milan, Italy, at the following address:

Solvay Specialty Polymers Italy S.p.A.
Viale Lombardia, 20
20021 Bollate (Milan)
Italy

3.

Claimant is represented in this arbitration by:

Peter J. Turner
Freshfields Bruckhaus Deringer LLP
9, avenue de Messine
75008 Paris, France
Telephone: 00 33 1 44 56 44 56
Fax: 00 33 1 44 56 44 00
Email: peter.turner@freshfields.com

and

Fabrizio Arossa
Freshfields Bruckhaus Deringer LLP
Piazza del Popolo, 18
00186 Rome, Italy
Telephone: 00 39 6 69 53 31
Fax: 00 39 6 69 53 38 00
Email: fabrizio.arossa@freshfields.com

and

Paolo Di Giovanni
Barbara Concolino
Bonelli Erede
Via Barozzi, 1
20122 Milan, Italy
Telephone: 00 39 02 77 11 31
Fax: 00 39 02 77 11 32 60
Email: paolo.digiovanni@belex.com
barbara.concolino@belex.com

Alberto Mazzoni
Mazzoni Regoli Cariello Pagni
Nicola Ferrini
Gatai, Minoli, Agostinelli, Partners
Telephone: 00 39 02 30 32 32 32
Fax: 00 39 02 30 32 32 42
Email: nferrini@gattai.it

4.

Edison S.p.A. (hereafter "Edison" or "Respondent") is a limited liability company created under the laws of Italy, and primarily active in the energy sector.

5.

Respondent has its corporate seat in Milan, Italy, at the following address:

Edison S.p.A.
Foro Buonaparte, 31
20121 Milan
Italy

6.

Respondent is represented in this arbitration by:

Ferdinando Emanuele
Milo Molfa
Paolo Bertoli
Cleary Gottlieb Steen & Hamilton LLP
Via San Paolo, 7
20121 Milan, Italy
Telephone: 00 39 02 726 081
Fax: 00 39 02 86 98 44 40
Email: femanuele@cgsh.com
mmolfa@cgsh.com
pbertoli@cgsh.com

and

Francesco Benatti
Francesca Benatti
Studio Legale Prof. Avv. Francesco Benatti
Piazza della Republica, 28
20128 Milan, Italy
Telephone: 00 39 02 29 00 34 42
Fax: 00 39 02 65 75 589
Email: segreteria@studiolegalefbenatti.it
fbenatti.law@libero.it

7.

At its session of 19 July 2012, the ICC International Court of Arbitration (hereafter "the Court") confirmed, pursuant to Article 13(1) of the ICC Arbitration Rules in force as of 1 January 2012 ("ICC Rules"), Prof. Bernard Hanotiau, as co-arbitrator upon Claimants’ joint nomination (originally Solvay Italy and Solvay S.A., a corporation established in Belgium),² and Prof. Sergio Maria Carbone, as co-arbitrator upon the Respondent’s nomination.

8.

Their contact details are as follows:

Co-Arbitrator nominated by Claimant
Professor Bernard Hanotiau
Hanotiau & van den Berg
IT Tower (9th floor)
480, Avenue Louise - B9
1050 Brussels
Belgium
Telephone: 00 32 2 290 39 00
Fax: 00 32 2 290 39 39
E-mail: bernard.hanotiau@hvdb.com

Co-Arbitrator nominated by Respondent
Aw. Prof. Sergio Maria Carbone
Via Assarotti, 20
16122 Genoa
Italy
Telephone: 00 39 010 831 7082
Fax: 00 39 010 831 4830
Email: carbone@carbonedangelo.it

9.

At its session of 19 July 2012, pursuant to Article 13(1) of the ICC Rules, the Court confirmed Dr. Wolfgang Peter as President of the Arbitral Tribunal upon joint nomination of both co-arbitrators.

Dr. Wolfgang Peter
Peter & Kim Ltd.
Avenue du Champel 8C
CH - 1206 Geneva
Tel: +41 58 317 70 70
Fax: +41 58 317 70 75
Email: wpeter@peterandkim.com

10.

Thus, the Arbitral Tribunal was constituted on 19 July 2012 and the file was transmitted on the same day, pursuant to Art. 16 of the ICC Rules.

11.

Article 11.13 of the Agreement for the Sale and Purchase of 480,400,000 shares representing 100 percent of the corporate capital of AGORÀ S.p.A. between Claimant Solvay Italy and Edison (formerly Montedison S.p.A. and Longside International S.A.) dated 21 December 2001 (hereafter the "Agreement" or "SPA") provides as follows:

"11.13 Jurisdiction

Any dispute between the Parties hereto, arising out of or in connection with this Agreement, including its implementation, interpretation, termination or enforcement, shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce (ICC) by 3 (three) arbitrators, who shall be appointed and be operating in accordance with the said Rules.

The arbitrators shall apply Italian substantive law and shall render their award "secondo diritto". The venue of the arbitration shall be Geneva - Switzerland. All proceedings of the arbitration, including arguments and briefs, shall be conducted in English and governed by Italian procedural rules applicable to international arbitrations. The Sellers shall be treated to a single party and shall be entitled to appoint only one arbitrator." (Exh. C-1)

12.

Art. 11.13, second paragraph, of the Agreement, as set out above, states that Italian procedural rules applicable to international arbitrations shall apply to these proceedings.

13.

Furthermore, pursuant to para. 54 of the Terms of Reference, the present dispute is to be settled in accordance with the ICC Rules of Arbitration of 2012 and the Terms of Reference themselves.

14.

Moreover, pursuant to para. 54 of the Terms of Reference executed between the Arbitral Tribunal and the Parties on 9 October 2012, it was agreed that:

"Where the aforementioned provisions are silent, the proceedings shall be governed by rules, which the Arbitral Tribunal will issue after consultation with the parties."

15.

Such rules were issued by the Arbitral Tribunal (referred to hereafter as "Specific Procedural Rules") with the Procedural Order No. 1 on 11 October 2012.

16.

Article 11.12 of the Agreement provides for the laws of Italy to govern the merits of the dispute:

"11.12 Applicable law

This agreement, including all Schedules, agreements, documents and instruments executed hereunder, and the validity hereof and thereof shall be governed by and construed and interpreted in accordance with the substantive laws of Italy."

17.

Article 11.13 of the Agreement designates Geneva, Switzerland, as the place of arbitration.

18.

Accordingly, where applicable, mandatory provisions of Chapter 12 of PILA apply to this dispute.

19.

During Phase I of the arbitration, the Parties filed written pleadings, including numerous exhibits, several witness statements and expert reports. The Arbitral Tribunal issued several decisions and orders upon procedural requests from the Parties. The most significant procedural steps, submissions and decisions leading to the Interim Award of 22 September 2014 are summarized below.

20.

Solvay S.A. (Belgium) and Solvay Italy (hereafter "Claimants") initiated these arbitration proceedings against Edison on 25 April 2012 by filing their Request for Arbitration (hereafter "the RfA").

21.

By letter dated 4 June 2012, pursuant to Article 5(2) of the Rules, Respondent: (i) applied for an extension of time for submitting its Answer to the RfA; (ii) nominated Professor Sergio Maria Carbone as co-arbitrator; and (iii) proposed that the co-arbitrators appoint the President of the Arbitral Tribunal.

22.

On 6 July 2012, Respondent submitted its Answer and Counterclaim.

23.

At its session of 19 July 2012, the International Court of Arbitration of the International Chamber of Commerce ("the Court") confirmed Professor Bernard Hanotiau and Professor Sergio Maria Carbone as co-arbitrators.

24.

At the same session of 19 July 2012, the Court confirmed Dr. Wolfgang Peter as President of the Arbitral Tribunal upon the co-arbitrators’ joint nomination.

25.

On 25 July 2012, Claimants filed their Reply to the Counterclaim.

26.

On 11 October 2012, the Arbitral Tribunal issued Procedural Order No. 1 confirming the Specific Procedural Rules and the Provisional Timetable as agreed during the time management conference of 9 October 2012.

27.

On 11 February 2013, Claimants submitted their Statement of Claim (hereafter referred to as "SoC").

28.

On 1 July 2013, Respondent filed its Statement of Defence and Counterclaim (hereafter referred to as "SoD").

29.

On 17 July 2013, following the Parties’ petitions concerning the scope of the hearing on the issue of time-bar scheduled for 17 September 2013 in light of Respondent’s request to expand the latter to include additional preliminary objections to the Tribunal’s jurisdiction, the Arbitral Tribunal suspended the Procedural Timetable in force at the time, and bifurcated the procedure in order to fully address all of Respondent’s preliminary objections as a matter of priority.

30.

On 14 August 2013, following the Parties’ submissions on the newly proposed Procedural Calendar, the Arbitral Tribunal established the Updated Procedural Timetable, under Procedural Order No. 2.

31.

The Document Production phase took place between August 2013 and October 2013.

32.

On 14 October 2013, Claimants submitted their Answer on the Preliminary Issues raised by Respondent along with expert reports, documentary evidence and legal authorities.

33.

On 19 December 2013, Respondent presented its Reply on the Preliminary Objections along with expert reports, index of exhibits and legal authorities.

34.

On 15 January 2014, Claimants submitted their Rejoinder on the Preliminary Issues raised by Respondent, including expert reports, documentary evidence and legal authorities.

35.

On 12 - 13 February 2014, a hearing on the preliminary objections was held in Geneva, Switzerland.

36.

On 17 April 2014, Claimants and Respondent submitted their respective Post-Hearing Briefs.

37.

On 22 December 2014, the Arbitral Tribunal issued its Interim Award, which was notified to the Parties by the ICC on 29 December 2014. In its Interim Award, the Arbitral Tribunal decided as follows:

a) The time-bar objection with respect to Contractual Claims is dismissed;

b) The issue of any prejudice caused to Respondent’s defense by the allegedly delayed notices of Contractual Claims is joined to the merits phase;

c) The time-bar objection with respect to the Tort Claims is joined to the merits’ phase of these proceedings;

d) The objection against the filing of the Tort Claims late pursuant to Art. 23(4) of the ICC Rules is dismissed;

e) The objection against the standing of Solvay Belgium is sustained;

f) The objection against the standing of Solvay Italy to submit the Tort Claims is dismissed;

g) The objection to the Arbitral Tribunal’s jurisdiction to hear the Tort Claims is dismissed;

h) The objection to the Arbitral Tribunal’s jurisdiction to hear Claimants’ Claims relating to the Bussi Site on the grounds of waiver is dismissed;

i) The objection to the Arbitral Tribunal’s jurisdiction to hear "Historical" Claims is joined to the merits phase;

j) Respondent’s request to strike out Prayer for Relief (e) is dismissed and the question of the jurisdiction over the claims presented under Prayer for Relief (e) is reserved for the merits phase;

k) The decision concerning the Parties’ costs is joined to the merits phase;

l) It orders both Parties to report to the Arbitral Tribunal within three (3) weeks following the notification of this Interim Award on their efforts to agree the Procedural Timetable for the merits phase of the arbitration.

38.

On 26 January 2015, the Parties jointly requested that the Arbitral Tribunal stay the current arbitral proceedings until the full reasoning of both domestic criminal proceedings relating to the Bussi and Spinetta Sites pending before the Italian domestic courts had been published.

39.

On 28 January 2015, the Arbitral Tribunal accepted the Parties’ request for a stay of the proceedings. At the same time, the Parties were ordered to update the Arbitral Tribunal on the status of the publication/judgments of the Italian court proceedings on a trimester basis, starting with 31 March 2015.

40.

On 31 March 2015, as ordered by the Arbitral Tribunal, the Parties updated the Arbitral Tribunal on the status of the Italian court proceedings and informed the Arbitral Tribunal that the full reasoning of the judgment rendered by the Chieti Corte d’Assise (Chieti Court of Assise) was published on 2 February 2015, while the proceedings before the Alessandria Corte d’ Assise (Alessandria Court of Assise) in relation to the Spinetta Site were still pending. The Parties added that they expected a final judgment by July 2015, with full reasoning anticipated by the fall of 2015.

41.

On 15 June 2015, the Parties informed the ICC that in light of the Arbitral Tribunal’s order of 28 January 2015, the arbitration had been stayed until the publication of the Alessandria Corte d’Assise judgment with its full reasoning and that an update would be sent to the Arbitral Tribunal and the ICC on or around 30 June 2015.

42.

On 2 July 2015, the Parties again updated the Arbitral Tribunal about the pending status of the proceedings before the Alessandria Corte d’ Assise in relation to the Spinetta Site with the next hearing scheduled on 21 September 2015. On the following day, the ICC confirmed that the arbitration proceedings would continue to be held in abeyance until further notice from the Parties or the Arbitral Tribunal.

43.

On 6 October 2015, the Parties informed the Arbitral Tribunal that the proceedings before the Alessandria Corte d’Assise in relation to the Spinetta Site were still pending and the full reasoning was expected to be published by February 2016. Accordingly, on 7 October 2015, the Arbitral Tribunal confirmed that the arbitration proceedings would remain in abeyance until February 2016.

44.

On 23 December 2015, the Parties jointly advised the Arbitral Tribunal that on 14 December 2015, the Alessandria Corte d’Assise rendered the dispositive part of its judgment in relation to the Spinetta Site and that the full reasoning would be published by mid-March 2016. On 5 January 2016, the ICC Secretariat confirmed that the arbitration proceedings would continue to be held in abeyance until further notice from the Parties or the Arbitral Tribunal.

45.

On 7 April 2016, the ICC Secretariat requested the Parties to indicate whether the arbitration would proceed or would continue to be held in abeyance.

46.

On 8 April 2016, the Parties informed the Arbitral Tribunal and that on 8 March 2016, the Court of Appeal of Turin approved the request made by the Chairman of the Alessandria Corte d’Assise and granted an extension until 12 June 2016 for the publication of the full reasoning of the judgment in relation to the Spinetta Site. On 11 April 2016, the ICC confirmed that the arbitration proceedings would continue to be held in abeyance until further notice from the Parties or the Arbitral Tribunal.

47.

On 3 May 2016, the ICC acknowledged receipt of USD 2,500 from Claimants in payment of the abeyance fee and confirmed that the arbitration would continue to be held in abeyance.

48.

On 22 July 2016, the Parties informed the Arbitral Tribunal that the Alessandria Corte d’Assise published the reasoning of its judgment in relation to the Spinetta Site on 6 June 2016 and that the reasoning was made available to the Parties on 8 June 2016. Considering the need to (i) review the implications of the reasoning of the judgment and (ii) define the contents of the upcoming appeals against the judgment, the Parties announced that they agreed to continue to hold the arbitration in abeyance until 30 September 2016. On 27 July 2016, the ICC Secretariat confirmed that the arbitration would continue to be held in abeyance until 30 September 2016.

49.

On 3 October 2016, the ICC Secretariat requested the Parties to provide an update concerning the status of the arbitral proceedings. Accordingly, on 7 October 2016, the Parties jointly requested the Arbitral Tribunal to extend the stay of the proceedings until 18 November 2016 on the grounds that more time would be needed to review and understand fully the implications of the judgment rendered by the Alessandria Corte d’Assise in relation to the Spinetta Site.

50.

On 12 October 2016, the ICC Secretariat confirmed that the arbitration would continue to be held in abeyance until 18 November 2016.

51.

On 21 November 2016, the Parties informed the Arbitral Tribunal that they had an opportunity to review and understand fully the implications of the reasoning of the judgment rendered by the Alessandria Corte d’Assise in relation to the Spinetta Site Accordingly, the Parties announced that they agreed to resume the arbitral proceedings and discuss the procedural timetable for the merits phase of the proceedings.

52.

On 22 December 2016, the Parties provided the Arbitral Tribunal with their agreed Procedural Timetable for the second, merits, phase of the arbitral proceedings. On the same date, the Arbitral Tribunal confirmed its agreement with the various procedural steps leading up to the evidentiary hearing.

53.

On 19 January 2017, in consultation with the Parties, the Arbitral Tribunal confirmed that the hearing would take place between 23 May 2018 and 1 June 2018. In light of the agreed hearing dates, the Arbitral Tribunal invited the Parties to review the Procedural Timetable.

54.

Accordingly, on 27 January 2017, the Parties submitted the revised Procedural Timetable. The Arbitral Tribunal confirmed the new Procedural Timetable on 13 February 2017 for the second phase of the proceedings.

55.

Without attempting to be exhaustive, the Arbitral Tribunal notes that during the written phase of Phase II of this arbitration, the Parties filed written pleadings, including numerous exhibits, several witness statements and several rounds of expert reports. The Arbitral Tribunal issued several decisions and orders upon procedural requests from the Parties. The most significant procedural steps, submissions and orders are summarized below.

56.

On 16 June 2017, the Parties simultaneously submitted to the attention of the Arbitral Tribunal, responses to the other Party’s objections to the submitted Document Requests. The Parties set out their positions in the form of Redfern Schedules. Moreover, both Parties made certain general introductory remarks concerning the nature of each Party’s objections to document production requests, respectively replies, thereto.

57.

On 22 June 2017, Claimant requested the Arbitral Tribunal to consider whether it would be procedurally efficient to call for a short conference call to deal with a number of points of principle before deciding on the individual document production requests.

58.

On 23 June 2017, Respondent objected to the request and argued that in any event, it was impossible to comment on the request, as it was not fully motivated.

59.

On the same day, the Arbitral Tribunal invited Claimant to set out a list of points that it believed would benefit from a discussion with the Tribunal and Respondent, and also set a deadline for Edison to comment on the same. Accordingly, both Parties presented their letters on 28 June 2017 and 6 July 2017.

60.

In line with the Arbitral Tribunal’s instructions, on 28 June 2017, Claimant submitted its letter presenting issues related to document production. In its letter, Claimant detailed the "points of principle" raised by Edison’s Reply to the Claimant’s objections to document production and reiterated its request to have a conference call to discuss and settle the issues quickly. On the same day, Respondent provided its comments to the letter of Claimant of 22 June 2017, and in particular, Respondent requested the Arbitral Tribunal to strike the Claimant’s replies to Respondent’s submission of 16 June 2017 from the record of the arbitration proceedings, noting that Claimant’s replies violated both the rules governing the document production phase and the Arbitral Tribunal’s decision of 23 June 2017.

61.

On 30 June 2017, the Arbitral Tribunal rejected Respondent’s request to strike out Claimant’s letter of 28 June 2017 from the record and invited Respondent to briefly submit its response to that letter by 6 July 2017.

62.

Accordingly, on 6 July 2017, Respondent submitted its replies to the Claimant’s letter and objected to the Claimant’s proposal.

63.

Having reviewed the positions of both Parties, on 13 July 2017, the Arbitral Tribunal decided that it was unnecessary to hold a conference call prior to the decision on the various document production requests of the Parties.

64.

On 25 July 2017, the Arbitral Tribunal rendered its Procedural Order No. 3 regarding the Parties’ Document Production Requests, partially granting Claimant’s and Respondent’s requests.

65.

On 26 July 2017, Claimant requested clarification as to the precise scope of the Arbitral Tribunal’s order to produce documents pursuant to Respondent’s Requests Nos. 11 and 13, noting that it read the order as applying only to the two specific events listed under Requests No. 11 and 13, with the rest of the Requests being dismissed.

66.

Having considered Claimant’s letter, on 27 July 2017, the Arbitral Tribunal confirmed the Claimant’s understanding regarding the rulings on Respondent’s Requests Nos. 11 and 13.

67.

On 28 July 2017, the Parties informed the Arbitral Tribunal that they agreed on an extension of the deadline for the production of documents until 22 September 2017.

68.

On 20 September 2017, the Parties jointly informed the Arbitral Tribunal about their agreement on a further extension of the deadline to produce the first responsive documents until 6 October 2017.

69.

On 6 October 2017, the Parties submitted documents responsive to the other party’s requests for production of documents.

70.

On 3 November 2017, the Parties informed the Arbitral Tribunal that they agreed to extend the deadline for Solvay to file its Reply and Defence to Counterclaim (hereafter "Reply") until 6 November 2017, indicating that the remaining deadlines under the Procedural Timetable remain the same.

71.

On 6 November 2017, Claimant submitted its Reply along with witness statements, expert reports, documentary evidence and legal authorities.

72.

On 12 February 2018, the Parties jointly informed the Arbitral Tribunal about their agreement to hold the hearing in Paris instead of Geneva. On 27 February 2018, the Arbitral Tribunal confirmed this change in venue.

73.

On 5 March 2018, the Parties informed the Arbitral Tribunal that they agreed to extend the deadline for Edison to file its Rejoinder to Reply and Reply to Defence to Counterclaim until 12 March 2018.

74.

On 12 March 2018, Respondent submitted its Rejoinder to Reply and Reply to Defence to Counterclaim.

75.

On 4 April 2018, the Arbitral Tribunal invited the Parties to provide a more precise update on the quantification of their claims by 13 April 2018 and to comment on the true value of the declaratory reliefs requested by each Party. In line with the instructions of the Arbitral Tribunal, the Parties sent their letters on 13 April 2018, informing the Arbitral Tribunal about the quantification of their claims.

76.

On 13 April 2018, Claimant submitted its Rejoinder to Counterclaim together with documentary evidence and legal authorities.

77.

On 28 May 2018, the Parties submitted the experts’ joint list of agreements and disagreements on the Italian administrative law issues.

78.

On 29 May 2018, the Parties submitted the quantum experts’ joint agreement and disagreement list.

79.

On 17 April 2018, a pre-hearing conference call was held between the Parties and the President on behalf the Arbitral Tribunal. During the conference call, the procedural and practical aspects of the hearing were discussed and the Timetable for the hearing was established.

80.

On 18 April 2018, in a follow-up to the pre-hearing conference call, the Parties notified the Arbitral Tribunal of the fact witnesses and experts that they intended to hear at the hearing.

81.

On 23 May 2018 - 1 June 2018, a hearing was held in Paris, France at the ICC Hearing Center.

82.

During the hearing, the Parties made detailed opening statements.

83.

The following fact witnesses were heard during the hearing:
□ Mr. Marco Bagnoli
□ Mr. Aldo Trezzi
□ Mr. Georges Crauser
□ Ms. Christine Tahon
□ Mr. Massimo Ambanelli
□ Mr. Mario Lombardi
□ Mr. Guido Angiolini
□ Mr. Guido Santi

84.

The following quantum experts were heard:
□ Professor Nicola Miglietta and Dr. Massimo De Dominicis (Claimant’s experts)
□ Professor Angelo Provasoli, Professor Massimiliano Nova and Mr. Andrea Moroni (Respondent’s experts)

85.

In addition, the following experts were examined as part of witness conferencing:
□ Professor Massimo Morbidelli (Claimant’s legal expert) and Professor Riccardo Villata (Respondent’s legal expert)
□ Dr. Thomas Ertel (Claimant’s environmental expert) and Dr. Giacomo Donini, Ms. Elena Leale and Mr. Andrea Alessandro Del Frate (Respondent’s environmental experts)

86.

The hearing was concluded on 1 June 2018, with a discussion of the post-hearing procedure, including the timing and scope of the post-hearing briefs, exchanges of additional legal authorities between the Parties, as well as the timing of the submissions on costs.

87.

On 17 July 2018, Respondent sent a letter to the Arbitral Tribunal, informing the latter of the decision of the Turin Appellate Court of Assise ("Turin Appellate Court") dated 20 June 2018 and requesting to add the judgment to the record as a new exhibit.

88.

In response to Respondent’s letter, Claimant confirmed on 19 July 2018 that Claimant had no objection to the filing of the Turin Appellate Court’s Judgment while noting that Respondent’s letter made a number of misleading statements regarding said judgment.

89.

On 24 July 2018, Respondent submitted a copy of the Turin Appellate Court’s Judgment with an English translation.

90.

On 6 August 2018, Claimant objected to the statements made by Respondent in its cover letter of 24 July 2018.

91.

On 10 September 2018, the Parties informed the Arbitral Tribunal of their agreement to extend the deadline of the Post-Hearing Briefs and Replies to Post-Hearing Briefs to 15 October 2018 and 30 November 2018, respectively.

92.

On 5 October 2018, Respondent sent a letter to the Arbitral Tribunal and requested leave to add the dispositif of the Supreme Court’s Judgment of 28 September 2018 quashing the judgment of the L’Aquilla Appellate Court of Assisse ("L’Aquilla Appellate Court") dated 17 February 2017 to the record as a new exhibit.

93.

On 12 October 2018, the Arbitral Tribunal invited Claimant to comment on the Respondent’s request to add the dispositive part of the Italian Supreme Court’s Judgment of 28 September 2018 to the record.

94.

On 15 October 2018, Claimant and Respondent submitted their respective Post-Hearing Briefs.

95.

In line with the Arbitral Tribunal’s instructions, on 16 October 2018, Claimant confirmed that it did not object to the filing of the dispositive of the Italian Supreme Court’s Judgement to the record of the arbitration.

96.

On 17 October 2018, Respondent filed a copy of the Supreme Court Judgment quashing the judgment of the L’Aquilla Appellate Court along with its English translation.

97.

On 26 October 2018, Respondent filed the full Supreme Court Judgment, including the reasoning underlying the dispositive that was filed on 17 October 2018.

98.

On 14 November 2018, the Parties informed the Arbitral Tribunal about their agreement to postpone the deadline for the filing of the Reply Post-Hearing Briefs and Cost Submissions to 14 December 2018 and 20 December 2018, respectively. The Parties also agreed that Respondent would add to the record two additional documents as exhibits No. R-300 and R-301 - Resolutions of the Piedmont Regional Board.

99.

On 7 December 2018, the Parties informed the Arbitral Tribunal about their agreement to extend the deadline for the filing of their Cost Submissions to 25 January 2019.

100.

On 14 December 2018, Claimant and Respondent submitted their respective Replies to Post-Hearing Briefs, with Edison filing Exhibits R-299-bis, R-300, R-301.

101.

On 25 January 2019, Claimant and Respondent submitted their respective Cost Submissions.

102.

On 5 February 2019, Respondent sought leave from the Arbitral Tribunal to produce the reasoning of the Judgment of the Turin Appellate Court dated 20 June 2018 with respect to the criminal proceedings concerning the Spinetta Site and requested that the Parties be allowed to briefly comment on the Judgment.

103.

On 7 February 2019, Claimant informed the Arbitral Tribunal about its agreement with the Respondent’s request. On 12 February 2019, the Arbitral Tribunal granted the Respondent’s request and confirmed that each Party may seek leave from the Tribunal to file a brief reply to the first round of comments.

104.

Accordingly, on 13 March 2019, Respondent submitted a copy of the Judgment of the Turin Appellate Court dated 20 June 2018 along with an English translation as Exhibit R-303.

105.

On 27 March 2019, in line with the Tribunal’s directions of 12 February 2019, the Parties sent their comments on the reasoning of the Turin Appellate Court’s Judgment with respect to the Spinetta Site criminal proceedings.

106.

Following its deliberations on 3 May 2019, on 8 May 2019, the Tribunal invited the Parties (i) to comment on each other’s submissions dated 27 March 2019 regarding the Judgment of the Turin Appellate Court and invited the Parties to particularly address the Court’s comments on the Characterization Plans as well as to provide an agreed translation of the court’s findings (Exhibit R-303 being an Unofficial Translation); and (ii) to update the Tribunal as to any other criminal or civil proceedings, if any, pending with respect to the contamination of the Spinetta and Bussi sites by 24 May 2019.

107.

Accordingly, the Parties filed their additional comments on the Judgment of the Turin Appellate Court and updated the Tribunal regarding the other related administrative and criminal proceedings on 24 May 2019.

108.

On 18 December 2019, Respondent notified the Arbitral Tribunal of the Italian Supreme Court’s judgment dated 12 December 2019, confirming the second instance judgment of the Turin Appellate Court in the criminal proceedings in Italy concerning the Spinetta Site. With the same letter, Edison submitted a number of comments regarding the significance of the Supreme Court Judgment of 12 December 2019 to its defence in the arbitration and requested leave from the Tribunal to file the dispositive part of that judgment into the record.

109.

On the following day, the Arbitral Tribunal granted leave to Respondent to file the dispositive part of the decision of the Supreme Court as an exhibit by 3 January 2020.

110.

On 3 January 2020, Respondent filed the dispositive section of the Italian Supreme Court’s judgment concerning the criminal proceedings related to the Spinetta Site as Exhibit R-304.

111.

On 14 January 2020, the Arbitral Tribunal invited Solvay to comment on the dispositive part of the decision of the Supreme Court by 21 January 2020 at the latest.

112.

On 20 January 2020, Claimant filed its comments accordingly, contending, inter alia, that without the reasoning of the Italian Supreme Court concerning the findings of the Turin Appellate Court, it found it difficult to comment on the substance of the Supreme Court’s decision. Solvay further stated that until the publication of such motivational part, it considered that its comments on the findings of the Turin Appellate Court were sufficient to address the Italian Court proceedings regarding the Spinetta Site. Nevertheless, by the same letter, Claimant also made a number of comments concerning the dispositive part of the decision of the Italian Supreme Court and rejected Respondent’s interpretation of the same.

113.

On 22 January 2020, Respondent filed another submission concerning the findings of the Italian Supreme Court and the Turin Appellate Court regarding the Spinetta Site, rejecting, in particular, the comments made by Solvay in its letter of 20 January 2020 concerning the significance of the decisions of both instances on the arbitration proceedings.

114.

On the following day, the Arbitral Tribunal notified the Parties as follows concerning the relevance of the reasoning of the Italian Supreme Court and the Parties’ comments on the same:

"The Arbitral Tribunal has noted and discussed internally both Parties’ letters of 20 and 22 January 2020, respectively.

In particular, the Tribunal noted that both Parties are of the opinion that the confirmation of the decision of the Turin Court of Appeals by the Supreme Court is favourable for their respective positions in the arbitration.

At the same time, the Tribunal noted the Claimant’s comment that without the text of the reasoning of Supreme Court’s Judgment of 12 December 2019 it is difficult to decide if this Judgment contained anything new and in addition to the reasoning contained in the decision of the Turin Court of Appeals, as well as Respondent’s formal request to add this reasoning to the record as soon as it becomes available as Exhibit R-305.

Having considered the matter and the Respondent’s request, the Arbitral Tribunal grants leave to Respondent to submit the translation of the reasoning of the Supreme Court as soon as practicable after its publication.

The Arbitral Tribunal would be grateful to the Parties for the indication as to when the text of the reasoning would be available for the purposes of its own planning and ICC Court’s extension of the deadline for the Tribunal to render its award."

115.

By email of 23 January 2020, Claimant filed another letter with the Tribunal at the same time as the above decision was notified to the Parties, (i) rejecting the comments of Edison in its letter of 22 January 2020 as an unwarranted and unauthorised submission, and (ii) pointing out the inconsistencies in the letter of Respondent and the decision of the Turin Appellate Court. In the same submission, Solvay stressed that the Italian Supreme Court ultimately confirmed the findings of the Turin Appellate Court and that therefore there was no need for the filing of the reasoning of the Italian Supreme Court’s decision of 12 December 2019 (yet to be published).

116.

By an additional communication of the same date, the Tribunal acknowledged Claimant’s request that Respondent’s letter of 22 January 2020 be struck out, but decided that it was not necessary to strike that letter from the record, as the relevance of the reasoning of the Italian Supreme Court’s decision would be assessed in due time. Accordingly, the Tribunal invited the Parties to refrain from further comments on the decisions of the Italian Supreme Court and the Turin Appellate Court until the filing of the reasoning of the decision of the Supreme Court of 12 December 2019.

117.

On 24 January 2020, counsel for Respondent notified the Arbitral Tribunal that although it was not in a position to indicate when the reasoning of the Supreme Court’s judgment of 12 December 2019 would be published, based on Article 612 of the Italian Code of Criminal Procedure and the consultation with the criminal law counsel of Respondent, it expected the publication to be made shortly.

118.

On 21 February 2020, Edison further informed the Tribunal that the reasoning of the Supreme Court was not yet published but assured members of the Arbitral Tribunal that its criminal law counsel was monitoring the proceedings on a regular basis.

119.

On 12 March 2020, counsel for Claimant inquired with the Arbitral Tribunal if in light of the public health emergency in Italy related to the COVID-19, it was still intended to wait for the reasoning of the Supreme Court’s decision before rendering its Award on the matter.

120.

On the following day, counsel for Respondent responded to the above letter, by indicating that the decision concerning the filling to the record of the reasoning of the Supreme Court Decision was already made and commenting that the judgment is likely to be drafted sooner in light of the hiatus of the court hearings in Italy.

121.

On 25 March 2020, the Tribunal acknowledged the Parties’ letters of 12 and 13 March 2020, and informed them that it saw no reasons to change its decision concerning the relevance and filing of the reasoning of the Supreme Court’s decision in light of the public health emergency announced in Italy.

122.

On 20 April 2020, Claimant wrote to the Tribunal and requested leave to introduce the judgment of the Italian Council of State (Consiglio di Stato, Italy’s highest administrative court) in the case of Edison c/ Mattm, Solvay e altri - Sentenza Cons. Stato n. 2301/2020 ("Council of State Judgment") into evidence. According to Solvay, the case was relevant for the arbitration proceedings as it concerned the responsibility as a matter of administrative law for the contamination at the Bussi Site.

123.

On 21 April 2020, the Arbitral Tribunal acknowledged Claimant’s request concerning the decision of the Council of State and granted leave to Respondent to provide its comments on Claimant’s request by 27 April 2020.

124.

On 27 April 2020, Respondent confirmed that it did not object to Claimant’s request to file the Council of State Judgment into the record and requested that the Tribunal direct both Parties to file consecutive, as opposed to simultaneous, submissions on the Council of State Judgment.

125.

On 29 April 2020, the Arbitral Tribunal granted leave to Claimant to file Council of State Judgment in the matter of Edison c/ Mattm, Solvay e altri and requested Claimant’s comments on Respondent’s proposal for the submissions on the same.

126.

On 4 May 2020, Claimant filed the Council of State Judgment of 4 April 2020, with its translation, as Exhibit C-493.

127.

On 5 May 2020, the Arbitral Tribunal granted leave to the Parties to file two rounds of simultaneous briefs on the relevance of the Council of State Judgment on these arbitration proceedings on 12 and 18 May 2020 respectively.

128.

On 11 May 2020, counsel for Respondent notified the Tribunal that it received the motivational part of the Italian Supreme Court’s judgment of 12 December 2019 and that it intended to file it as soon as the translation was ready. Respondent also requested that the Tribunal reconsider its decision concerning the submissions on the Council of State Judgment and direct the Parties to address both the Council of State Judgment and the Supreme Court reasoning in one submission to be filed at a later stage.

129.

On 12 May 2020, counsel for Claimant objected to Respondent’s latest request and suggested that the comments be filed separately on each decision. By letter of the same date, the Arbitral Tribunal granted the Parties one additional day to file their first round of comments on the Council of State Judgment and decided that the Parties would be granted leave to file comments on the reasoning of the Supreme Court’s Judgment of 19 December 2019, once the translation of the same would be filed on the record.

130.

On 13 May 2020, the Parties filed their first comments on the decision of the Council of State Judgment in relation to the Bussi Site. On 18 May 2020, the Parties submitted their replies to each other Party’s comments of 13 May 2020

131.

On 1 June 2020, Respondent filed the reasoning of the Italian Supreme Court’s judgment of 12 December 2019, together with its translation (Exhibit R-305).

132.

On 3 June 2020, the Arbitral Tribunal granted leave to the Parties to provide their written comments on the significance/application of the Supreme Court Judgment to these proceedings, with the first round to be filed on 11 June 2020 (7 pages maximum) and the second on 18 June 2020 (5 pages maximum).

133.

Following a request from Respondent’s counsel, these deadlines were extended to 19 and 26 June 2020, respectively, on 5 June 2020.

134.

Both Parties have submitted their comments accordingly.

135.

By letter of 22 July 2020, the Arbitral Tribunal asked Claimant to provide its update concerning the Losses and damages quantification in light of the decision of the Council of State and Respondent’s submissions of 19 May 2020 by 14 August 2020, at the latest.

136.

Claimant provided its comments by 1 August 2020 and Respondent made its comments thereto by 17 August 2020, following the Tribunal’s request of 4 August 2020.

137.

On 18 November 2020, the Arbitral Tribunal invited the Parties to update their Statement of Costs, in light of the various submissions since the filing of the Post-Hearing Briefs, by 25 November 2020. Both Parties filed their Updates on Statement of Costs accordingly.

138.

On 30 November 2020, the Arbitral Tribunal declared the proceedings closed in accordance with Article 27 of the ICC Rules.

139.

On 7 December 2020, Counsel for Claimant informed the Tribunal of its new address at 9, avenue de Messine, Paris.

140.

Throughout the proceedings, the ICC Court has extended the deadline for the Arbitral Tribunal to render its Final Award in this matter. The Arbitral Tribunal sets out below the details concerning such extensions:

□ On 4 April 2013, the ICC Court extended the time limit for rendering the Final Award until 31 March 2014.

□ On 6 March 2014, the ICC Court extended the time limit for rendering the Final Award until 30 June 2014.

□ On 5 June 2014, the ICC Court extended the time limit for rendering the Final Award until 30 September 2014.

□ On 4 September 2014, the ICC Court extended the time limit for rendering the Final Award 2014 until 31 October 2014.

□ On 6 November 2014, the ICC Court extended the time limit for rendering the Final Award until 31 December 2014.

□ On 4 January 2015, the ICC Court extended the time limit for rendering the Final Award until 30 April 2015.

□ On 8 January 2015, the ICC Court extended the time limit for rendering the Final Award until 30 April 2015;

□ On 2 April 2015, the ICC Court extended the time limit for rendering the Final Award until 31 July 2015;

□ On 2 July 2015, the ICC Court extended the time limit for rendering the Final Award until 30 October 2015;

□ On 8 October 2015, the ICC Court extended the time limit for rendering the Final Award until 29 February 2016;

□ On 4 February 2016, the ICC Court extended the time limit for rendering the Final Award until 31 May 2016;

□ On 12 May 2016, the ICC Court extended the time limit for rendering the Final Award until 31 August 2016;

□ On 4 August 2016, the ICC Court extended the time limit for rendering the Final Award until 30 November 2016;

□ On 3 November 2016, the ICC Court extended the time limit for rendering the Final Award until 28 February 2017;

□ On 2 February 2017, the ICC Court extended the time limit for rendering the Final Award until 31 January 2018;

□ On 11 January 2018, the ICC Court extended the time limit for rendering the Final Award until 30 September 2018;

□ On 6 September 2018, the ICC Court extended the time limit for rendering the Final Award until 28 February 2019;

□ On 7 February 2019, the ICC Court extended the time limit for rendering the Final Award until 31 May 2019;

□ On 2 May 2019, the ICC Court extended the time limit for rendering the Final Award until 31 July 2019;

□ On 4 July 2019, the ICC Court extended the time limit for rendering the Final Award until 30 September 2019.

□ On 5 September 2019, the ICC Court extended the time limit for rendering the Final Award until 31 October 2019.

□ On 3 October 2019, the ICC Court extended the time limit for rendering the Final Award until 29 November 2019.

□ On 6 November 2019, the ICC Court extended the time limit for rendering the Final Award until 31 December 2019.

□ On 4 December 2019, the ICC Court extended the time limit for rendering the Final Award until 31 January 2020.

□ On 9 January 2020, the ICC Court extended the time limit for rendering the Final Award until 28 February 2020.

□ On 6 February 2020, the ICC Court extended the time limit for rendering the Final Award until 29 March 2020.

□ On 5 March 2020, the ICC Court extended the time limit for rendering the Final Award until 30 April 2020.

□ On 2 April 2020, the ICC Court extended the time limit for rendering the Final Award until 30 June 2020.

□ On 7 May 2020, the ICC Court extended the time limit for rendering the Final Award until 30 June 2020.

□ On 4 June 2020, the ICC Court extended the time limit for rendering the Final Award until 31 July 2020.

□ On 2 July 2020, the ICC Court extended the time limit for rendering the Final Award until 30 August 2020.

□ On 6 August 2020, the ICC Court extended the time limit for rendering the Final Award until 30 November 2020.

□ On 5 November 2020, the ICC Court extended the time limit for rendering the Final Award until 31 December 2020.

□ On 3 December 2020, the ICC Court extended the time limit for rendering the Final Award until 29 January 2021.

□ On 14 January 2021, the ICC Court extended the time limit for rendering the Final Award until 26 February 2021.

□ On 4 February 2021, the ICC Court extended the time limit for rendering the Final Award until 31 March 2021.

□ On 4 March 2021, the ICC Court extended the time limit for rendering the final award until 30 April 2021.

□ On 1 April 2021, the Court extended the time limit for rendering the Final Award until 30 July 2021.

141.

The present dispute stems from the Share Purchase Agreement ("SPA" or the "Agreement") dated 21 December 2001 between Solvay S.A. as the Purchaser and Montedison S.p.A. and Longside International S.A. as the Sellers for the purchase of 100% of the shares of Agorà S.p.A ("Agorà"), a subsidiary of Edison. At the time of the transaction, Agorà owned 100% of Ausimont S.p.A - a company which in turn owned various subsidiaries in Italy active in the "research, development, manufacture, marketing, sale, and distribution of materials based on fluorine and oxygen chemistry".³ Following the transaction, Edison became a legal successor of Montedison, which had made a number of representations in relation to the production Sites owned by Ausimont (see para. 246 below), and thus Edison became the Respondent in these proceedings.

142.

Among others, these subsidiaries operated industrial sites at Bussi, Spinetta and Porto Marghera in Italy, which had seen contamination of the soil and water under the plants and in the surrounding areas. As will be further discussed below, the Porto Marghera Site was subject to specific provisions under the SPA, which provided for an uncapped indemnification of Solvay by Edison covering environmental liabilities outside of the perimeter of the Porto Marghera Site.⁴ These provisions and the developments at the Porto Marghera Site are not part of this dispute.

143.

The production facilities at Bussi and Spinetta were also subject of specific representations regarding the environmental contamination of the soil and water under the plants and in the surrounding areas under the SPA. The extent, cause and timing of their pollution are at the heart of this arbitration.

144.

Before turning to the negotiation and signing of the Agreement, the Arbitral Tribunal will briefly set out the historical background of the Bussi and Spinetta Sites ("Sites"), since both Parties have spent a substantial part of their pleadings on the history of the operation of these Sites and because the so-called historical contamination of these Sites is important for both Parties’ claims.

145.

The Bussi Site is found in the region of Abruzzo and is situated at the provincial town called Bussi sul Tirino, approximately 35 kilometres outside the city of Pescara (located on the Adriatic coast of Italy). The facility is bordered by the Pescara River and its tributary, Tirino River.⁵

146.

The Bussi Site was used for the production of various chemical products since 1902, with Edison operating the Bussi facility since the early 1930s, first, through its predecessor called Montecatini S.p.A. and later in the name of its subsidiaries S.I.A.C. S.p.A ("SIAC") and Ausimont, as well as its own name.⁶ Throughout its history, the Bussi plant produced a number of chemical products that used known contaminants, including chloromethane, mercury, chloroethenes, hexachlorobutadiene, lead, benzene, boron and hydrocarbons. During the first and Second World War, the facility also produced toxic gases such as mustard and arsine gas.⁷

147.

The Plant continued to operate under the management of Montecatini S.p.A. (eventually merged with Edison S.p.A. in 1966 and became known as Montedison S.p.A.) following the above events and expansion of production of ammonium chloride, dichloroethane, in particular.⁸ Below is the plan of the area elaborated by Dr. Ertel, Claimant’s technical expert and a professional geologist for the purposes of his expert report:

148.

Throughout its briefs, Claimant has emphasized that a number of incidents and negligent practices occurred at the site during the direct control of Edison and its subsidiaries that contributed to the pollution of the Bussi Site and its surroundings. Thus, Claimant emphasizes that since at least the 1950s, Respondent discharged wastewater into the soil beyond the limits allowed by the relevant authorities. Relying on internal memoranda of Edison employees from the 1970s and official contemporaneous documents from the regional authorities as well as the report of its expert, Dr. Ertel, Solvay cites a number of examples of unauthorised discharges by the Bussi facility into the Tirino River and Pescara rivers.⁹ In particular, Claimant points out that the limitation on the level of the free chlorine (0.1-0.2 mgr/l) contained in the discharges from the Bussi facilities were not respected by Edison.¹⁰

149.

With respect to the Pescara River, Solvay states that "Edison had not been authorized to discharge wastewater into the Pescara River", as Edison’s "authorization concerned only cooling waters" and therefore claims that "any discharge of wastewater into the Pescara River was unauthorized."¹¹

150.

Respondent counters that the very same documents relied upon by Solvay to advance its case, demonstrate rather that "Edison was authorized to discharge into the Pescara River for all 'intents and purposes’".¹² Edison also insists that during the period up to the early 1970s it cooperated with and did not attempt to misinform the relevant authorities about its discharges into the ground and rivers close to the Site and that it attempted to reduce the amount of contaminants deriving from the activities at the plant and their environmental impact.¹³

151.

Edison submits that in any event with respect to all of the major contaminants that were emitted as a result of the production at the Bussi site, including mercury¹⁴, lead¹⁵, free chlorine¹⁶ and chloromethane¹⁷ there were no applicable laws at the time in existence in Italy, which would have regulated the disposal of such products and their limitations.

152.

Edison emphasises in this respect that before the entry into force of the Presidential Decree No. 915 dated 10 September 1982, there were no laws applicable to disposal of waste into landfills.¹⁸ Similarly, Respondent states that with respect to the concentration limits in water discharges, prior to the implementation of the Law No. 319 of 1976 (the so-called "Merli Law"), there were no national regulations on the water discharges applicable to the Bussi Site operations.¹⁹ Edison emphasises that at the time, the lack of any specific regulation concerning industrial waste was consistent with the applicable regulatory regimes of other industrialised countries.²⁰

153.

Edison further points out that contrary to the position of Solvay, "Article 20 of Law No. 366 dated 20 March 1941 allowed for the 'dispersion’ of the waste which could not be used in the industrial or agriculture business."²¹ With respect to chloromethane in particular, Respondent insists that the relevant authorities were aware of Edison’s practices at the Bussi site and that Respondent always made efforts to reduce contamination even in the absence of any law requiring it to do so. In particular, Respondent points to its investments and efforts in the 1970s to treat both mercury and lead concentrations in the soil as evidence of its best efforts and actions beyond the generally accepted standard of care at the time.²²

154.

Solvay further alleges that throughout the 1970s, the Plant continued to discharge wastewater that contained lead, boron, mercury and heavy chloromethane contrary to its permits and regulatory limits. According to Claimant, as a result, the Pescara River, into which the Tirino River flowed, had been contaminated by lead and mercury to such an extent that, since the early 1970s, no fish or aquatic life could be found in it.²³

155.

Claimant describes numerous reports and memoranda issued by the Bussi Site’s management, which it submits reflected Respondent’s knowledge of the true state of contamination of free chlorine, mercury and lead as reported to Edison’s Health Safety & Environmental ("HSE") and External Relations Departments.²⁴

156.

Solvay also points to significant efforts by Edison’s management to control the scientific studies and the flow of information regarding the Bussi Site and contamination levels at the time, to ensure that no negative publicity would ensue.²⁵ Claimant states that despite these efforts, criminal proceedings were commenced in 1976 in the local courts with respect to the pollution of the Pescara and Tirino rivers caused by the productions at the Bussi Site, wherein the relevant court appointed an independent expert to determine the extent of the pollution and if the river pollution was imputable to Edison.²⁶

157.

Claimant and its expert, Dr. Ertel, note that the report issued by the Magistrate, Dr. Mucciarone, to Respondent as part of these proceedings concluded that the water analyses in the Pescara River revealed "the existence of a specific pollution problem of industrial origin attributable to the following indices: mercury-lead-boron" and noted that the plant discharged all of its liquid effluents "directly into the river Pescara, a few meters upstream of the confluence with the Tirino river".²⁷

158.

Claimant also emphasises that this report specified a link to the Edison facilities by stating that the "plants that produce chlorine-sodium customarily use mercury" in their processes.²⁸ The same report also found in its conclusion that the "activities of the complex in question [Montedison] have determined levels of concentration of mercury and boron in the waters of the river Tirino downstream of the plant discharges, as well as lead in the river Pescara, typical of severely polluted waters"²⁹.

159.

Of particular importance for Solvay is the finding by the court-appointed expert in 1976 appointed by the Magistrate Dr. Mucciarone in proceedings before the Courts of Popoli that the "treatment plants for the purification of mercury and lead could not achieve a 100% purification" and that these treatment facilities had only recently been installed - as seen from the accumulation of the mercury and lead in the sediments surrounding the Bussi Plant. Claimant argues that therefore Edison was on notice that "it had to deal with the lasting effects of the past contamination" and that it knew that its newly installed treatment facilities would not be able to remedy the past contamination revealed in the report.³⁰

160.

According to Claimant, between 1977 and 1979, certain members of the scientific community also expressed their concerns about "the levels of lead and mercury found in fish and shellfish" in the Pescara River, as had been reported in the news at the time.³¹ Solvay contends that, faced with the court-appointed expert report outlined above and the various reports in the media concerning the pollution levels in the Tirino and Pescara rivers, Respondent continued its campaign of concealment of the operations at the Plant and commissioned multiple scientific studies that put forth alternative theories/solutions for the pollution by lead and mercury in the Pescara valley. At the same time, according to Solvay, Edison’s management continued receiving further reports regarding the levels of pollution through its internal studies and those of the Provincial Chemical laboratory but refused to draw appropriate consequences and invest in clean-up efforts.³²

161.

Edison contends to have made its best efforts during this period in order to reduce contamination at the Bussi Site, by conducting several activities and making important investments in order to build wastewater treatment plants. In this respect, Edison submits that, inter alia, it built:

"(i) a plant for the treatment of wastewater coming from the SIAC plant; (ii) a plant to allow recirculation of the washing waters and to lower the cells’ header gases; (iii) a plant for the treatment of the wastewater coming from the chlorine-sodium plant; and (iv) tanks for the storage of chloromethane."³³

162.

Edison also reiterates its position that prior to the promulgation of the Presidential Decree No. 915 of 1982 and the Merli Law, no specific limits on the levels of contaminants in the wastewater were set as a matter of Italian law. With respect to lead concentration in particular, Edison states that the Health Ministry’s Circulars -which did set such limits - were and are not sources of Italian law, but rather contain only reference standards for public authorities.³⁴ Furthermore, Respondent points out that Edison, together with Octel (a British chemical company that jointly owned SIAC facility with Edison), monitored the levels of lead and free chlorine in its wastewater and were in constant contact with the public authorities, cooperating with the latter to discuss the standards of concentration reachable by using best available technology. Edison points out in this respect that except for the SIAC facility, lead concentration at the Bussi Site was always lower than 0.1 mg/l, which is below the 2 p.p.m. (the lowest range of approved concentration limits of lead among European countries at the time) as demonstrated by the internal survey conducted in 1972 and reported to Montedison’s management at the time.³⁵

163.

Relying on the internal report from 23 May 1972, Edison also submits that the survey conducted during May 1972 found that other contaminants present in the soil and water near the Bussi facility were within acceptable norms, with only a few values above the limits set in the Ministry of Health Circulars: "[t]he values found for almost all the parameters tested so far (temperature, pH, suspended and settleable solids, dissolved oxygen, permanganate consumption, C.O.D., B.O.D.5, oils and fats, ammonium nitrate, sulphide, free chlorine, boron, lead and mercury) were within the limits indicated in the Ministry of Health Circular of 2.10.1971."³⁶

164.

With respect to chloromethane, while Respondent does not deny that dumping of chloromethane waste into the Tirino River occurred up to 1972, it claims that from January 1972 onwards, Edison repeatedly took measures to put chloromethane either into protected mega-landfills made of concrete or iron, or transferred to Porto Marghera site, where a treatment plant was in use (until 1991); or after February 1991, that such waste was treated at the Bussi Site through its Caloric facility.³⁷

165.

With respect to the criminal proceedings initiated in 1976 against Edison’s employees and the resulting court-appointed expert report cited by Claimant in para. 156 above, Respondent notes that Solvay omits the important outcome of these proceedings - notably that Edison’s "employees had been discharged from all counts".³⁸ Respondent also emphasises that the court-appointed expert in the same proceedings noted that the treatment facilities for the purification of mercury and lead installed by Edison were state of the art and that such facilities were removing lead and mercury from the discharges "up to the maximum amount permitted by current technology".³⁹

166.

Edison also objects to many of the documents submitted by Claimant in support of its assertions that Edison knew of the real levels of the contamination and actively concealed the true extent of the pollution levels by pointing out that such documents can have no probative value as they were in the form of "unwritten and anonymous" notes, and often were illegible.⁴⁰

167.

According to Respondent, in the early 1980s, given the increasing diversification of its group’s businesses, Edison "resolved to significantly revise its corporate structure in order to enhance the performance and accountability of each division and thus make them directly and independently responsible for their results".⁴¹ As part of this corporate restructuring, in 1981, the specialty chemicals business of Edison was transferred to a wholly owned subsidiary, Ausimont (held in the name of Montedison, with Montefluos S.p.A. incorporated into Ausimont later - in 1991).⁴²

168.

The Parties have different positions as to the management and operation process within Ausimont following the corporate restructuring. Respondent’s position is that after its reorganisation in 1981, Edison became "a pure conglomerate holding company, owning hundreds of stand-alone subsidiaries—including at the time Ausimont—that have operated in full autonomy and independently from Edison."⁴³ Thus, Respondent asserts that following 1981, its subsidiaries had a high degree of operational autonomy in all day-to-day matters and that similarly, Ausimont did not have any horizontal or vertical integration or synergies with Edison and operated in complete autonomy from Edison.⁴⁴

169.

On the other hand, while Claimant accepts that Edison became an industrial holding company after 1981, it argues that Edison retained responsibility for the coordination of all strategic decisions of its subsidiaries, including Ausimont, and "for the unitary and centralized management of certain policies including, in particular, 'policies of general significance in relation to the social context, such as environmental policies and safety’ of the companies of the group".⁴⁵

170.

The issue of Edison’s knowledge and responsibility for the environmental pollution persisting at that Bussi and Spinetta Sites following its reorganisation as a holding company will be addressed in further detail in the Discussion section below. The Tribunal will accordingly outline the Parties’ positions on the events post-1981 at the Bussi Site immediately hereunder.

171.

Solvay alleges that even after the reorganisation of 1981, Ausimont and Respondent were aware of the contamination at the Bussi site. It points in this respect to a memo addressed to the "director" of Ausimont’s Bussi Plant in June 1981 and its chloroderivatives department concerning the water pollution by mercury and difficulties associated with the cleaning up of the mud/sludge below the Plant’s operational area.⁴⁶ Claimant also submits that Ausimont mandated Istituto Donegani, a research company, to analyse samples of river waters and sediments of the Pescara River, as well as samples of soil near the site.⁴⁷ Claimant underscores that the confidential report prepared by Istituto Donegani at the time stated that the mercury levels in the water samples were "higher than the levels of the uncontaminated areas" and that the concentration of mercury in the sediments was "much higher than the natural values".⁴⁸

172.

Claimant also cites the disclosure by Edison of an occurrence of an accident - which it says resulted in the release of some 60 tonnes of the product from the chloromethane facility to its own employees and those of Ausimont on 26 November 1985, as reflected in the internal note of Mr. Di Carlo (head of the chloromethane plant at the time).⁴⁹

173.

Edison dismisses the above events and documents as either misrepresenting the facts at the Bussi facility or as being unsupportive of the knowledge by Edison of the state of the pollution. Thus, with respect to the internal technical memo from June 1981, Respondent points out that that internal memo not only highlighted the fact that the tested values were "considerably below that envisaged by Law no. 650" [i.e. the law No. 650 dated 24 December 1979, which granted a prorogation to the application of the Merli Law, described in para. 152 above], but also reported on the reduction of mercury contamination following the treatment of mud/sludge, with improvements following the interventions by the company management.⁵⁰

174.

As for the report authored by Istituto Donegani and mandated by Ausimont, Respondent states first that the higher values of mercury in the sediments and water found by the institute are perfectly normal "in an area where a chemical factory is located and during a time when no HSE Laws existed"⁵¹. Edison further points out that the same report, in the parts that were ignored by Claimant, acknowledged that mercury was found in water samples in "concentrations equal to zero" and that, more generally, the levels of concentrations analysed in the water and sediments of the Pescara river, as well as the soil and vegetation of the surrounding area, were no different than those cited in other publications with respect to other industrial areas.⁵²

175.

Claimant also points to a number of environmental surveys that had been conducted at the Bussi Site since the mid-1980s, which, it argues, are indicative of the knowledge of the true levels of contamination of the site by Edison. For its part, Respondent contends that these studies did not indicate anything that would have been contrary to the HSE laws at the time or troublesome from the perspective of contamination of the Site.⁵³ Below are some of the excerpts of the findings of these surveys and reports:

(i) On 1 September 1986, Mr. Mauro Molinari, a geologist, issued a report on the hydrogeological condition of the area surrounding the Bussi Site.⁵⁴ While Claimant asserts that Mr. Mauro Molinari was a geologist of the Edison Group, Respondent states that Mr. Molinari was a geologist working in the Enimont (not Edison) Group.⁵⁵ (The Arbitral Tribunal notes, however, that according to Respondent, Enimont was a joint venture of Edison with ENI group to which Edison contributed most of its chemical and petrochemical assets.⁵⁶)

This report represented a hydrogeological survey of the area surrounding the Bussi plant and was prepared in connection with the possible renewal of the authorization of the landfill for special waste in the Chiusella area (landfill 2A) in the vicinity of the plant.⁵⁷ The report concluded that "there are no underground water captations [i.e. pools or gathering of water] in the area surrounding the landfill" and that "[f]rom a geotechnical point of view, there are no issues with respect to the entire stability of the slope of the landfill, since both the wages applied and the grade of the edge are within the normal security limits".⁵⁸ However, the report also addressed "the possible instability of a superficial layer of clayish silt"⁵⁹ and suggested that "long-term monitoring of the piezometric levels and the chemical characteristics of the waters will lead to a greater understanding of the circulation of the groundwater and whether there are connections to the river Tirino."⁶⁰

Following this report and the subsequent December 1986 Report, the Provincial Government of Pescara sent a letter to the local court, the Region and the Mayor of Bussi, which, Claimant asserts, makes clear that landfills 2A and 2B (contemplated for the "special waste" in the second report of December 1986), contained types of waste and residues which would not fall within authorised levels.⁶¹ Respondent, for its part, points out that this letter contained a table of analyses of the waste at the Site by the regional authority (Chemical Department of the Laboratory of Hygiene and Prophylaxis) which indicated that all of the samples were found to be "not toxic and noxious".⁶² Edison also points to a fact that a proceeding against Mr. Sanitini, the director of the Bussi Site at the time, was initiated in 1987 for the illegal disposal of waste and that it was dismissed simply because the facts underlying the proceedings were found to "not exist".⁶³

(ii) An internal report prepared in November 1988, entitled "INDUSTRIAL WASTE Situation at Montefluos BUSSI" which confirmed the existence of an old abandoned landfill outside the production facilities which was used for the storage of chemical waste during the military production of mustard gas; presence of different types of "toxic and hazardous waste which present critical disposal issues, at this stage", including "solid chlorinated pitch from chloromethane", "tails from distillation of chloromethane", "debris, carbons, resins and graphite" and "mercury-containing sludge from brine treatment".⁶⁴ The report also noted that the land on which the manufacturing site had operated for about 90 years was "diffusely contaminated" and that "any material produced by excavations pose[d] disposal problems". The same report noted that the transport of secondary raw materials carried a certain risk, in light of the new legislation, for which "the operational procedures have not yet been identified".⁶⁵

Respondent for its part questions the utility and legitimacy of the above report, by noting, that the "author of the document is unknown, the report is neither signed nor written on Ausimont’s letterhead and, thus, its authenticity cannot be proved and is challenged".⁶⁶ Nevertheless, Edison points out that this report demonstrated the full compliance of the Site with HSE laws, since it also stated that the "special and inert waste deriving from the productions [at the Site] are stored in compliance with law in proper own authorized landfills (2 type B and A)"; "there are no industrial waste deriving from past activities" and that the "past, toxic and noxious waste had been stored in landfills, sent to Porto Marghera, and to a landfill in Germany".⁶⁷

Respondent also challenges Claimant’s assertion that the above report was reviewed at a meeting of Edison’s Safety and Environment Committee of 24 November 1988, since the minutes of the meeting never mention the report itself.⁶⁸

(iii) In February 1991, Mr. Molinari wrote to Messrs Santini and Alleva of Montefluos, reporting summary results of his further study based on some 20 years of surveys by the Plant’s Technical Service. Mr. Molinari noted in particular the shallow aquifer and a possible exposure of the groundwater to pollutants filtering from the land above. He also suggested that there may be a connection to the deep layer of the aquifers, leading to the contamination of the aquifers. Mr. Molinari therefore suggested to "activate a plan to verify the characteristics of the subsoil and the links between the various aquifers" and a further hydrogeological survey of the area around the plant.⁶⁹

The results of these additional surveys were summarised in a further November 1991 report submitted to the management of the Bussi Plant (the "1991 Molinari Report") which confirmed high levels of heavy metals, lead, mercury, arsenic and other elements in the soil in excess of the Dutch legal limits (the commonly referred to industrial standards at the time in the absence of a specific Italian legislation in this regard):

"The soil samples taken during the surveys were subsequently tested and analysed by the Chemical Laboratory at the plant. Overall, 34 samples were analysed to establish the level of heavy metals, lead or arsenic, associated with the widespread presence in large areas of the plant of filling material made up of pyrite ashes, mercury and chloromethane, which may be traced back to current production processes."⁷⁰ (emphasis added)

In this November 1991 report, Mr. Molinari also confirmed the contamination of the groundwater by chloromethane, mercury and lead based on the samples taken:

"Finally, table 2 and annex 11 contain the results of the tests on the groundwater samples taken from eighteen piezometric wells drilled next to the boreholes. Lead contamination is highlighted in sample 2, mercury in samples 3-9-11 -14 and chloromethane in samples 8-9 - 10 - 11 - 12 - 14."⁷¹

Accordingly, in his conclusions, Mr. Molinari recommended that the aquifer be monitored and tested for at least a year on a monthly basis.⁷²

For its part, Respondent underscores that the above results have been misinterpreted by Claimant as evidence of severe pollution, when in fact, only 3 out of 34 samples of soil analysed by Mr. Molinari for his report contained values higher than the Dutch limits with respect to lead, and 7 with respect to mercury, while only 1 sample contained the values higher than the same Dutch limits with respect to both mercury and lead.⁷³ Edison further notes that with respect to "18 groundwater samples, only 1 sample contained values higher than the Dutch limits with respect to lead, only 4 samples with respect to mercury, and only 6 samples with respect to chloromethane, while only 3 samples contained higher values than the Dutch limits with respect to both mercury and chloromethane"⁷⁴.

Moreover, Edison again emphasises that the Dutch limits were merely taken as a reference, since at the time Italian legislation did not have specific thresholds for industrial areas and therefore no violation of Italian HSE laws could be interpreted as a result.⁷⁵

(iv) In July 1992, Mr. Molinari issued a new report on "the surveys conducted on the subsoil" at the Bussi Site addressed to Montefluos management at Bussi and the Montefluos HSE office in Milan (Mr. Aggugia), ("1992 Molinari Report").⁷⁶ In the report, Mr. Molinari essentially confirmed previous findings and provided the following conclusions in particular:

"The subsoil beneath the Montefluos plant at Bussi contains several aquifers which are separate at a local level, but which constitute a single aquifer on a 'regional’ scale;

- practically all the piezometric wells contain instances of products associated with the plant’s production processes:

-in light of recent government rules on the protection of aquifers from pollution, in my opinion, the Management should take steps to try to limit the contamination of the aquifers:

- the trials also highlighted the high level of permeability of the soil beneath the plant: on the one hand, this phenomenon facilitates the spread of the pollution: on the other, it allows you to keep it under control with appropriate drainage works:

- in my opinion, the adoption of measures to check and repair the leaks from the sewage system, tanks and various pipes and waterproofing the area where the filling material is deposited should be sufficient to limit the deterioration of the situation in the medium to long term;

- works to drain the polluted water through wells and drainage ditches will feasibly speed up the remediation, but it is necessary to ascertain whether the treatment facilities are able to treat the drained water in terms of flow and quality of the water."⁷⁷(emphasis added)

While Solvay alleges that none of the measures suggested above were taken,⁷⁸ Edison argues that it took the necessary remediation actions, with some of them initiated even before the recommendations of Mr. Molinari.⁷⁹

(v) An internal audit report was issued in November 1992 by "a mixed team made up of staff from within and outside the company, and was supported by the manual developed by the Group Environment Committee" (the "1992 Audit").⁸⁰ The report noted many of the conclusions of Mr. Molinari in 1991 with regard to the subsoil, and recommended that "[a] risk assessment must be carried out as soon as possible and a decontamination plan must be drawn up."⁸¹

(vi) In 1992, Ausimont⁸² commissioned a consultancy company called Environmental Resources Limited ("ERL" later known as "ERM") to become the external auditor for the Bussi Site and to conduct additional surveys on the soil, subsoil, shallow groundwater, deep aquifers and rivers; the result of which was recorded in writing in a March 1993 report (the "1993 ERL Report").⁸³

The Report, while noting the limitations of its assessment and analysis due to the reliance on the data provided to it, as well as the scope of its assignment,⁸⁴ nevertheless provided the following "Preliminary environmental risk assessment":

"A preliminary environmental risk assessment leads to the following conclusions:

• concern for the potential mercury and lead pollution of the River Tirino and, as a consequence, the Pescara;

• concern for any users of the groundwater downstream of the plant and downstream of the landfills;

• the risk of the pollutants being carried by air should be assessed;

• the risk of contaminated soil being ingested does not raise excessive concern.

The situation described above is decidedly worrying in absolute terms, although the existence of only a few 'recipients’ of the pollution around the factory may facilitate the management of any remediation works."⁸⁵

The same report also reported "very high lead content" levels in Tirino River as well as negligible levels of chloromethane, while noting that it was likely that no test was carried out for mercury. For Pescara River, the report noted the presence of "chloromethane concentration of 20 ppb downstream against a negligible concentration upstream".⁸⁶

The recommendations of the report included further sampling of the water and sediments of the Pescara and Tirino Rivers, as well as "all the piezometers for mercury, lead and chloromethane on a monthly basis", and also stated that "any subsequent containment or remediation measures must be conditional upon and guided by an in-depth investigation of the environmental conditions of the Plant."⁸⁷

176.

Claimant concludes that as a result of the above reports and its own actions since the 1920s concerning certain production, Edison knew that the contamination at and in the vicinity of the Bussi site posed a significant risk to the personnel and the population at large but did nothing to implement the recommendations of the 1993 ERL Report to plan the proper remediation measures, instead embarking on the campaign of concealing key information concerning the contamination of the Site.⁸⁸

177.

For its part, Respondent argues that as a preliminary matter, Edison, as opposed to Montecatini or Ausimont, never received this report and that in any event, "in 1993 there was no legally binding parameter under Italian legislation regarding contamination in the soil, subsoil or groundwater" and that Ausimont continued to carry out surveys and improve the environmental situation at the Bussi Site in subsequent years.⁸⁹

178.

In 1994, following an establishment of the new internal research centre ("CRAM") within Montecatini/Ausimont to carry out environmental tasks within Montedison group (addressees included Montecatini, Ausimont, Himont, Cersam, Antibioticos)⁹⁰ a new ranking system was established to perform a risk analysis "for the definition of priorities in contaminated site reclamation".⁹¹

179.

In this context, another assessment of the environmental situation was conducted by a mixed internal team of Ausimont employees, which included, among others, Mr. Fabbri from Montecatini, Mr. Aguggia from Ausimont, as well as various members of the HSE Committees for Ausimont, and the Spinetta and Marghera Sites.⁹² This team produced the 1994 Internal Audit Report, which contained the following conclusions:

"There is no risk of contamination spreading by air, direct contact or through the groundwater (since this is still unused) as a result of the precautions taken over the last few years.

The only risk could arise from the presence of lead, mercury and chloromethane in the surface water in proximity to the Plant, which has migrated from certain on-site areas at the Plant through the water table. However, even in this case, the risk is very low for each of the three substances (with values of between 5 and 7 on a scale of 0 to 100)."⁹³

180.

The Report further recommended the continued pursuit of the waterproofing plan envisaged by the project "Daisy" within the company, to continue the testing and monitoring of the "quality of the aquifers", as well as to pursue the authorisation for new inert waste landfill.⁹⁴

181.

While Claimant alleges that these conclusions ignored years of survey and studies conducted at the Bussi Site,⁹⁵ Respondent argues that Solvay grossly misrepresents the content of the 1994 Internal Audit Report.⁹⁶ These positions will be further assessed in the Discussion sections below, as part of the Tribunal’s review of the expert evidence presented by both Parties.

182.

In 1998, Mr. Mauro Molinari, the same geologist responsible for the 1991 Reports and still working on assignment of Ausimont,⁹⁷ was instructed to coordinate a new hydrogeological survey of the environmental condition of the Bussi Site, especially focusing on the evolution of the mercury contamination in the soil and groundwater in the chlorine-soda plant area.⁹⁸ In his findings, Mr. Molinari again confirmed the major findings of the previous reports:

"Overall, we can say that the results of the soil sample analyses confirm the previous results in 1991 and 1993: the areas with the highest concentrations of mercury in the soil are essentially the same in the two surveys and the values are of the same order of magnitude with variations that are essentially due to the problems arising from sampling heterogeneous soils, as highlighted in figures 2 and 3.

The situation is slightly more complex with regard to the groundwater: figure 4 identifies the piezometers that exceed the limit of 5 ppb; it is clear that the highest values in the two surveys are not the same, although these discrepancies could be due to the fact that the monitoring points are not the same."⁹⁹

183.

On the basis of the above findings, the report also concluded that although the mercury levels still exceeded the authorized limits, since the concentration levels remained the same as those contained in his previous findings, this essentially ruled out any deterioration of the situation and any mobilisation of the mercury.¹⁰⁰

184.

Claimant contends that the 1998 Molinari report was shown to be based upon "data that had been manipulated to bolster his conclusion that the contamination had not deteriorated since 1991"¹⁰¹ and claims that the mercury readings cited in the Report were found to be falsified, during the criminal investigation by the Public Prosecutor of Pescara when tables with handwritten notes bearing indicators "true" and "false" were discovered as part of the documents seized at the Plant in 2006-2009.¹⁰²

185.

Respondent points out that the scope of the 1998 Molinari Report was deliberately limited to mercury, and emphasises that this report was part of ongoing voluntary efforts by Ausimont to maintain control over the environmental contamination at its sites.¹⁰³ It therefore denies that any manipulation of data took place by Ausimont and even less so by Edison, since the Report not only essentially confirmed Mr. Molinari’s previous findings (in relation to mercury), but also reflected data which later became part of the Preliminary Characterization Plan filed with the authorities. It further questions the authenticity of the tables claimed to be falsified by Respondent and proffered by Claimant, by noting that the only evidence offered in support of the allegation that there was any falsification, were several tables "bear[ing] the words 'true’ and 'false’ in handwriting" which puts into question the authenticity and reliability of these remarks.¹⁰⁴

186.

These and other contentions will be part of the Tribunal’s analysis under section VIII. Discussion A. 1 2 below.

187.

The Spinetta industrial Site is located in Spinetta Marengo, a locality that is part of the municipality of Alessandria (North-western Italy) in the eastern part of the Province of Alessandria towards the east of the Bormida River, in an area called Fraschetta. It is bordered by the town of Spinetta Marengo and by cultivated rural areas and a railway.¹⁰⁵

188.

Originally, the Spinetta Site was the home of a factory for the processing of gold-bearing earth, producing gold, silver and lead.¹⁰⁶ Since 1905, the Spinetta site was used for copper sulphate and sulphuric acid production under the name of Marengo company, expanding further to the production of chemical fertilizers. Since the end of 1920s, following the acquisition of the Sclopis company, additional chemical products were added to the Spinetta Site, including concentrated acid, muriatic acid, nitric acid, chromium alum, dichromates and synthetic camphor.¹⁰⁷

189.

In first half of 1930s, the Marengo company was taken over by Montecatini, which activated the production of lead arsenates, fluorosilicates, sodium, barium, zinc and magnesium. In the 1950s, in addition to the production of concentrated acid which represented an important part of the activities at the site, further products were introduced, such as H.F. [hydrofluoric (acid)] algoplan and algofrene of the family of chlorides, iron pigments, titanium and fiberglass (called "Sillan")¹⁰⁸ These new products included carbon tetrachloride, which, as will be seen below, is one of the products that Claimant contends lead to the contamination of the groundwater at the Spinetta Site and its vicinity.¹⁰⁹

190.

Since the 1960s, the production of copper sulphate, camphor, dichromates and sulphuric acid were discontinued, while the production of concentrated sulphuric acid, hydrofluoric acid, titanium dioxide, Algoflon, colour pigments, ultrasil, Algofrene, dehydrated ferrous sulphate and esaflon were maintained. In 1966, following the merger between Edison and Montecatini (with the company eventually being renamed Montedison S.p.A. as set out in para. 147 above¹¹⁰), the production lines at the Spinetta-Marengo Site were developed in two major areas:

"inorganic pigments: the raw materials for producing titanium dioxide and colour pigments are: ilmenite and titanium slag, sodium dichromate, molybdic anhydride, lead and cadmium;

fluorochemicals that use hydrofluoric acid (from fluorine and oleum) and carbontetrachloride and chloroform to produce various types of Algofrene (coolants, fine solvents and spray propellants) and the Algoflon polymer"¹¹¹.

191.

From 1971 on, the production of chromates and dichromates, which relies on chromium for production, were suspended and the facilities dealing with the chemical were permanently dismantled in 1974,¹¹² with the area not engaged in chromium-related production from thereon, according to Solvay.¹¹³

192.

By 1983, the sulphuric acid production was completely abandoned and the production for fluorinated and fluorochlorinated compounds was increased, with the addition of new products such as perfluoropropene, tetrafluoroethylene, Tecnoflon and Fomblin. Chloroform and carbon tetrachloride were used for the production of a large part of these compounds, although the use of the carbon tetrachloride compound was ceased in 2004, according to the Claimant’s expert.¹¹⁴

193.

As of the Closing date, two companies were operating on the Site, in addition to Ausimont/Edison: Arkema S.r.l. ("Arkema") - which produced organic peroxides -and Cofely Energia S.r.l., which, as the successor of Edison Termoelettrica S.p.A., continues to own and operate the power plant established on the Site. The presence of these companies at the Site can be seen on the plan of the area elaborated by Dr. Ertel¹¹⁵:

194.

Throughout these proceedings, Claimant submitted that the Spinetta Site also was subject to continued contamination as a result of by-products of the industrial production spilling into the soil and groundwater during the direct control of Edison. Relying on a number of documents that Solvay claims were discovered only following broad criminal investigations commenced by the Italian authorities in 2008 in relation to the contamination of the Spinetta Site, Claimant cites a number of examples of reports, internal memoranda and public documents to demonstrate that Edison at all relevant times was either in control of the facility or had knowledge of the environmental issues at the Spinetta Site, which were not disclosed to Solvay prior to the Closing.¹¹⁶

195.

Some of these reports and events will be presented below, together with the outline of Respondent’s position on these issues.

196.

As an initial point, Claimant alleges that already before 1981, when the specialty chemicals business of Edison was transferred to a wholly owned subsidiary, Ausimont, (see para. 167 above), Edison had knowledge of the contamination at the Spinetta Site which affected "(i) the soil and the landfills of the Spinetta Site; (ii) the surface waters flowing towards areas located outside the Site; and (iii) the shallow and the deeper aquifers, both within and outside the Site."¹¹⁷ With respect to these assertions, Claimant relies on, inter alia, the 1946 Conti Report; the testing of water wells conducted by Edison itself from 1955-1980s; the 1975 so-called "Roletto Report" and an internal communication between an Edison’s employee and Edison’s DIPI Department, which will be further described below.¹¹⁸

197.

As will be shown below in more detail, Respondent, however, denies that any of the historical contamination is relevant for the issue of the breach of the SPA as Edison was not found to be in violation of any HSE laws at the time; that it had any knowledge of this contamination, or that it was responsible for any contamination relating to that period.¹¹⁹

198.

By way of explanation, Claimant submits that in 1946, a report by Professor Conti of the University of Genoa ("the Conti Report") revealed the existence of a deposit of chromite panels, i.e. the residues of chromium manufacturing at the Spinetta Site. The report also reported a serious contamination in the groundwater at the Spinetta Site due to alkaline chromates dating back to 1941-1942¹²⁰ and noted the seepage of shallow groundwater into deeper waters.¹²¹ While Claimant imputes knowledge of the report to Edison because the Conti Report was found in a hidden location in the Spinetta plant in 2008,¹²² Respondent asserts that this report - which it refers to as the "Conti Publication" - was an independent study which was not commissioned by Edison. Respondent claims that it never received a copy of the Conti Report and that it was unaware of its existence. Edison also disputes the findings of the Conti Report and the allegation by Claimant that this report was hidden at the Spinetta Plant.¹²³

199.

Claimant also alleges that from 1955 to 1980, Respondent conducted analyses of wells located within and outside the Spinetta Site, which confirmed the presence of groundwater pollution due to chromium and chlorinated organic compounds.¹²⁴ Solvay further points out that in 1969-70, Respondent was ordered to compensate "Autostrada Torino Piacenza" because the discharges by Edison into the River Bormida were found to be unlawful since "the limits laid down in the authorization were exceeded".¹²⁵

200.

In response, relying on its expert, Prof. Villata, Edison again recalls that prior to 1981, none of the actions evoked by Claimant could have constituted a violation of environmental laws, in the absence of any such applicable law. Further, Edison points to a number of its actions, including financing of studies on fisheries repopulation, payment of compensation to the Italian Federation of Fisheries, elaboration of the Recovery Plan of the Plant - as evidence of Edison’s commitment to environment and efforts in minimising contamination of the Spinetta Site and locality.¹²⁶

201.

Both Parties also considered the significance of an internal communication dated 23 February 1972 between Mr. Gadina (Edison’s employee), and Mr. Bianconi, the General Manager of Edison’s DIPI Department, whereby the former stated that it had been known at least since 1940 that the company’s discharges into the Bormida river were "hazardous due to [their] acidity and for chromium content" and decided to build a spillway to drain the wastewater.¹²⁷ This internal communication further reported that the discharge of effluents into the Bormida river continued until 1972 and that several authorities, municipalities and interest groups initiated various proceedings and calls for action (including the initiation of procedure for the pollution of the River Po and a call by the Company’s trade union "to bring an end to such shameless polluting of the Bormida River").¹²⁸ While Claimant argues that this communication and proceedings demonstrate that since 1940, Edison had known about these discharges, Respondent again stresses that "before the enactment of the Merli Law, no legislation relating to the contamination of discharged water was in place. Royal Decree No. 1604/1931 on fisheries only required that the discharge of effluents in public water be authorized subject to certain conditions."¹²⁹ In this respect, Respondent underscored in its submissions that the internal communication of Mr. Gadina rather testified to the continued monitoring by Edison of the situation with the environment in and around the Spinetta Site.¹³⁰

202.

During this period, in 1975, in the criminal proceedings brought against an Edison employee,¹³¹ the court-appointed expert, Mr. Roletto prepared a report on the environmental contamination of the Spinetta site (the "Roletto Report").¹³² The Roletto Report concluded that the system to dispose of wastewater appeared to be "extremely rudimental" and that the structural features of the gypsum basins were acting not as settlement basins but "simply dumps where gypsum and other solid residues accumulate".¹³³ Similarly to the Conti Report, Respondent denies that it ever received the Roletto Report and disputes its findings as, according to Edison, it contains numerous anonymous and handwritten comments over a barely legible copy of the report itself.¹³⁴ Further, relying on its expert, Mr. Del Frate, Respondent points out that the Roletto Report had a limited scope in any event, only dealt with the efficiency of the dump (used as a basin for the settling of process water) while not considering the ability or inability of the gypsum basin to prevent the contamination of the subsoil.¹³⁵

203.

Claimant also points out that at the end of 1970s, the Municipality of Alessandria ordered an environmental investigation, which also concluded that the River Bormida had become unfit for agricultural and civil purposes, with significant presence of high levels of heavy metals (chromium, titanium, lead, nickel, zinc and copper) and anions (chlorides, bromides, fluorides and sulphates).¹³⁶ Edison contends that instead the report cited by Solvay is in fact a study commissioned by the municipality of Alessandria to the University of Turin, which examined the contamination of the Bormida and Tanaro rivers not aimed at Edison specifically, but also by industrial plants and by domestic and agricultural discharges, with only a portion of a large report being dedicated to the Spinetta-Marengo Plant.¹³⁷

204.

Claimant also states that the contamination of the Spinetta Site continued further when the Site’s assets were officially transferred to Ausimont in the 1980s, as exemplified by a number of environmental surveys that were initiated by Ausimont/Montedison either through their employees or external consultants. In particular, Solvay cites the following:

(i) Various analyses carried out in 1984 and 1985 on certain wells outside the Site, which disclosed high concentration levels of chromium and chlorinated compounds.¹³⁸

In response, Edison again states that the measures taken were irrelevant, since the "legal contamination limits on soil, sub-soil and groundwater were introduced for the first time in 1999 by Ministerial Decree No. 471 of 1999 ("DM 471")."¹³⁹

(ii) Similar examination and findings were made by the same Mr. Mauro Molinari involved in the examination of the Bussi Site on behalf of Ausimont/Montefluous (see para. 175(i) above as to Mr. Molinari’s position). According to Claimant’s expert, in his note of 1986, Mr. Molinari found that the shallow groundwater and deep aquifers below the Site were connected and suggested the monitoring of the situation by means of the piezometers installed both upstream and downstream from existing landfills.¹⁴⁰ The 1989 Molinari Report confirmed the findings on the interconnectivity of the groundwaters and deep aquifers, as well as the existence of a piezometric dome in the Algofrene plant.¹⁴¹ The 1989 Report also contained the following conclusions and proposals:

"Given the absence of sufficiently thick and continuous impermeable layers, the groundwater below the Spinetta Marengo plant is recharged from superficial waters and is therefore potentially exposed to the risk of accidental leakages.

Furthermore, the drainage from the wells and losses from the network cause a local reversal of the groundwater flow. Therefore certain wells located along the Southern side of the plant which, being upstream, should provide good quality water, receive water downstream from under a chemical plant, with all the associated risks.

[...]

As a general indicator, an activated carbon system (CHEMVIRON -NORIT ITALIA - SICEF) should cost around one million lire to install, while running costs obviously depend on the consumption of activated charcoal. This is difficult to predict at this stage, as it depends on various factors such as the variation over time of the concentrations of solvents, of the extracted flow rate and, of course, the result of the upstream decontamination measures taken to eliminate the causes of the pollution.

The timescale for remediation will, however, be lengthy. Experience from several plants has shown that concentrations of pollutants usually decrease rapidly in the first months of operations, but it often takes many years to fully resolve the problem. Provided that microorganisms capable of mineralising this type of pollutants can be found, bioremediation techniques can be useful in the final phase of decontamination and can considerably reduce timescales and costs."¹⁴²

Claimant points out that Edison did not follow the advice of Mr. Molinari and relies on an internal communication to Montedison in a letter dated 25 August 1989, whereby Montedison’s plant Manager at the time, Mr. Capogrosso, sent the 1989 Molinari Report to Mr. Fabbri, the head of Montedison’s "Coordination of the Policies and the Industrial Activities of Montedison" Department.¹⁴³ In the same letter, Mr. Capogrosso expressed concerns about the conclusions found in the Report and caution as to the disclosure of information with regard to the environmental situation as follows:¹⁴⁴

"Regarding the operational proposals of pages 14 and 15 I am quite uncertain in the achievement of the objective of the layer’s quality. It is moreover my view, as I already had the chance to tell you, that the construction of purging wells would inevitably bring to the disclosure of issues which are delicate for obvious reasons.

I am however available to reconsider the current approach to the issue consistently with Montedison’s policies on the matter."¹⁴⁵ (emphasis added)

For its part, Respondent points out that the 1986 note from Mr. Molinari was in draft form and that in any event, its suggestions with respect to the installation of piezometers were actually implemented with piezometers installed in numbers greater than those recommended. Edison also points out that its expert, Prof. Pietro Bruno Celico ("Prof. Celico") explained that Mr. Molinari’s conclusions did not take into account "that possible infiltrations were negligible as the aquifers are autonomous from each other, given the different piezometric levels, the different carachteristics [sic] of water mineralization, and different levels of hydraulic conductivity."¹⁴⁶

With respect to the 1989 Report of Mr. Molinari, Respondent acknowledges that this report identified a number of recommended actions to assess the conditions of the groundwater and the stratigraphic condition of the subsoil at the Site but does not agree that this report supports Claimant’s case. In particular, Edison emphasises that since no legislation existed at the time concerning the levels of groundwater and soil contamination, Montefluos/Ausimont had no specific obligations in this respect and therefore even the commissioning of this repot in the absence of relevant legislation demonstrated "Montefluos/Ausimont’s commitment to the environment".¹⁴⁷ Respondent further relies on Prof. Celico’s expert opinion that there were no inversions of direction flows that occurred on the Site during Ausimont’s management.¹⁴⁸

(iii) Claimant cites the 1994 Report from Mr. Molinari that confirmed the application of the conceptual model of his previous two reports and stated that it was not possible to identify a spatially continuous impermeable layer under the entire area of the Plant.¹⁴⁹

Respondent notes for its part that the 1994 Molinari Report was not a new study, but was merely a supporting document for Ausimont’s application for water supply and acknowledges that the same conclusion found in the previous reports concerning his inability to find an impermeable layer that would be "adequately thick, and sufficiently extensive in area, that is continuous below the entire plant area, that could form a separation between different aquifer".¹⁵⁰

205.

According to Solvay, in the mid-1990s, further studies had been conducted with respect to the Spinetta Site, which indicated improvements in the contamination levels. In particular:

(i) As an initial matter, Claimant points out that already in 1990, Galson Technical Services Inc. ("Galson"), a US company specialized in environmental audits was commissioned to draft an environmental report relating to the Spinetta Site (the "Galson Report").¹⁵¹ According to the Claimant, this draft Galson Report dated 14 December 1990 was communicated to Mr. Carlo Cogliati, (according to Solvay Mr. Cogliati was Edison’s Manager and a CEO of Montefluos/Ausimont and according to Edison Mr. Cogliati was the Chairman and Chief Executive Officer of Ausimont only, with, as will be further assessed below, only a formal role as an employee of Edison at the same time).¹⁵² Solvay submits that this report found that the area within and around the Spinetta Site was seriously contaminated, highlighting DDT as among potential sources of contamination, and also pointed that the company was in violation of permits granted to it with respect to the industrial discharges.¹⁵³ Solvay states that the Galson Report also specifically identified the presence of chromium and other compounds that presented a risk for contamination of both soil and groundwater and deficiencies in the wastewater treatment plants. According to the Claimant, the results of Galson findings were discussed by the Health Safety & Environmental Operative Committee ("Comitato Protezione Ambiente e Sicurezza")¹⁵⁴ during a meeting in November 1990 and summarized in an internal report dated 6 February 1991.¹⁵⁵.

Respondent dismisses the findings of the Galson Report and Claimant’s submissions. First, Edison points out that all relevant times, Mr. Cogliati’s relationship with Edison was "merely formal" (despite Edison’s admission that between 1 March 1994 and July 2001 Mr. Cogliati became "an employee of Edison, but simultaneously and without any interruption was seconded to Ausimont, where he continued without any hiatus, his role and functions [Chairman and CEO of Ausimont])"¹⁵⁶. Second, Respondent submits that the minutes of the meeting of November 1990 presented by Claimant do not demonstrate that the Galson Report was discussed by members of the Committee, but rather merely that "Mr. Aguggia reported on the audit carried out in Spinetta Marengo by the U.S. company Galson".¹⁵⁷ Third, as to the substance of the Galson Report, Respondent acknowledges that the report highlighted a number of issues with the contamination at the Site, such as the inadequacy of the wastewater treatment plants, the contamination of the domestic wells and presence of chromium exceeding the levels recommended by the European Community. However, at the same time, Respondent points out that this report noted that the Plant possessed all of the current permits for operation of the landfills and the Site’s management’s willingness to address the groundwater contamination at the Site, as the "Report show[ed] that '[m]anagement view[ed] the presence of organic contaminants in the groundwater as a serious and confidential problem."¹⁵⁸

Edison also stresses again that at the time of the Report there were no legal standards concerning levels of contamination as the "first legislation which set forth concentration limits of a determined substance was the D.M 471/1999"¹⁵⁹.

(ii) Both Parties also discussed at length an internal report of 1992, signed by one Mr. Silvano Bigi, who was in charge of the HSE Operative Committee on environmental matters from its inception in 1990 until 1994.¹⁶⁰ This report (referred to by the Parties as the "Bigi Report")¹⁶¹ was prepared as part of a further environmental audit of the Spinetta Site by Ausimont.¹⁶² The report concluded as follows concerning the soil and groundwater:

"Soil/Subsoil/Groundwater-Given the age of the site, which has been in operation since 1905, and the many processes that have been carried out there over time, particularly in the first years of the 1900s, the soil is diffusely polluted (chromium, lead, arsenic and halogenates). The groundwater is polluted mainly by halogenates. The only currently available safety measure for the groundwater is to use pumping wells with special treatment of the extracted water. As a rough estimate, this operation would require an investment of around 10 billion lire (to be carried out in 1993)."¹⁶³

According to Solvay and its expert, Dr. Ertel, the Bigi Report also confirmed that the landfills which were only authorized for "special waste" were filled with toxic/noxious substances like arsenic, mercury, lead and aromatic solvents.¹⁶⁴ It further confirmed that the aquifer on the Site was contaminated with halogenated substances, in part hexavalent chromium.¹⁶⁵

In its response concerning the significance of the Bigi Report, Edison notes that the report itself was not based on any overall analysis of "of soil, subsoil and groundwater" - which was specifically outsourced to the firm ERL and contained in its report of 1992 discussed below¹⁶⁶ - and that the report underscored a number of ongoing works that were aimed at prevention of the contamination of the aquifer in particular, as well as the correct and authorised operation of the landfills, which seemed to be "safe for the moment".¹⁶⁷

(iii) Claimant also relies on the findings of the report prepared by ERL (later changed to Environmental Resources Management "ERM"¹⁶⁸), an international environmental consultancy, which was selected in 1992 as the external auditor for the Spinetta Site (just as for the Bussi Site), to demonstrate the ongoing knowledge by Edison of the environmental pollution at the Site.¹⁶⁹ The results of the environmental survey by ERL were compiled in a report (the "1992 ERL Report").¹⁷⁰ According to the Claimant, the 1992 ERL report confirmed the contamination of soil by heavy metals as a result of previous years of production and the presence of toxic/noxious waste in several landfills which did not have the requisite authorizations for such waste (i.e. no existing authorisation for toxic or noxious waste, but rather for disposal of "special waste" only). Solvay submits that the report further confirmed that the aquifers beneath the Spinetta Site were not protected by strong and impermeable horizons,¹⁷¹ and that in some of the plant wells the halogenated hydrocarbon (chloroform and bromoform) exceeded the acceptable levels for drinking water. According to Claimant, the 1992 ERL Report found that "the organic pollution could also exist near the fuel tanks, the Algofrene area and the post-treatment Algoflon facility", and while acknowledging that the groundwater contamination had reduced, it still found that the levels of pollution were significant.¹⁷²

Respondent again stresses that the 1992 ERL Report is an example of Ausimont’s continuing efforts to control the pollution at the Site, as it was made following a recommendation by Mr. Bigi to "commission a very highly competent and professional firm" to carry out meticulous analysis in the USA and Italy and to complete a Soil Remediation Plan.¹⁷³ Further, Edison argues that Claimant misrepresents the contents of the 1992 ERL Report, as Solvay omitted the finding of "constantly declining contamination during the recent years" by ERL at the Spinetta Site, as well as the conclusion that the "sources of leaks have probably been eliminated and that the actions taken (hydraulic barrier, drainage and partial demolition, renovation of sewer networks) have been effective".¹⁷⁴

Respondent further emphasises that while ERL indeed found that some of the plant wells exceeded the acceptable levels of halogenated hydrocarbon, only well no. 8 was used for drinking water, and until Closing Date the measurements from this well had always been compliant with the requirements set forth by the applicable legislation.¹⁷⁵

With respect to such applicable legislation, Respondent again reiterates its position that before the Presidential Decree No. 915/1982 and the Merli laws there were either no relevant laws at all or legal limits concerning the concentrations of contaminants or disposal of waste and that therefore it was possible that "residues of waste remained in landfills C,D and E" Moreover, Edison points out that concentrations of contaminants in the soil - if indeed they exceeded the Dutch legislation - were not indicative of any violations of laws and such references were non-binding.¹⁷⁶ As for the organic pollution, Respondent points out that while the Report did suggest that the organic pollution could also exist near the fuel tanks, it also found as follows in its comments regarding the Chemical Characteristics of the Areas of the establishment polluted by halogenated organic compounds:¹⁷⁷

"The results of the chemical analyses and the determination of the organochlorine compounds indicate degrees of pollution well within the limits established by the Dutch legislation (See Table 4.11).

Core sampling and analyses were carried out in the areas OR2 and AL1 with the explicit intention of ascertaining the presence of organic compounds in the soil.

The results of the chemical analyses and the determination of the organochlorine compounds indicate degrees of pollution well within the limits established by the Dutch legislation (See Table 4.11).

This does not mean, however, that there are no areas where the soil is potentially compromised: the analyses and number of boreholes were minimal.

The low levels of soil pollution in comparison with the high organic pollution in groundwater (see the following paragraph) could be due to two key factors:

□ organic pollution in groundwater is largely due to previous leaks in the sewer system, bearing in mind that it has been around 3 years since process leaks could have reached the sewage system

□ the mobility and volatility of organochlorine compounds makes it difficult to make a direct correlation between the presence of organochlorine in an area and the degree of groundwater pollution in the vicinity of that area."¹⁷⁸

Finally, Respondent also disputes that the 1992 ERL Report was actually considered by the HSE Operative Committee. In Edison’s submission, the minutes of the Montecatini HSE Operative Committee dated 26 January 1993 upon which Solvay relies, do not contain any reference to the ERL Report itself but only some references to analysis of the soil and groundwater that had been carried by ERL.¹⁷⁹

(iv) Claimant also refers to the April 1993 report issued by ERL entitled "Environmental Baseline Assessment: Spinetta Marengo", which it claims issued a follow-up report on the environmental conditions of the Spinetta Site that essentially confirmed the above findings of the 1992 ERL Report.¹⁸⁰ Solvay emphasises that this document was labelled "extremely privileged" and that it referenced: (i) three areas toxic and noxious waste as defined by the Presidential Decree No 915/82; (ii) excessive pollution by hexavalent chromium and lead pursuant to the Dutch standards, as well as levels of chloroform and bromoform exceeding the limits of acceptability for human consumption; (iii) the pollution of aquifers underneath the Site by chromium.¹⁸¹

Respondent for its part points out that the 1993 ERL report was merely a summary report in English of the 1992 ERL Report, and notes that with respect to the findings regarding chloroform and bromoform, the 1993 Report noted that that pollution did not appear to derive from the pollutants used during the active operations at the Site.¹⁸²

206.

As with the Bussi Site allegations listed in para. 178-181 above, Claimant submits that following the establishment of Montecatini/Ausimont’s own Environmental Research Centre called "CRAM", follow-up reports commissioned on the Spinetta Site by Ausimont and/or Edison since the mid-1990s failed to properly acknowledge the true state of affairs with the pollution at the Site.¹⁸³ Instead, Claimant states that two technical reports were commissioned and issued in 1997, which "painted a reassuring picture of the situation at the Spinetta Site":¹⁸⁴

(i) A report by Professors Di Molfetta and Bortolami entitled a "Technical-descriptive Report", which focused on the application for the grant of a concession relating to the industrial use of groundwater;¹⁸⁵

(ii) A report by Professor Bortolami named "Experimental characterization of the shallow and deep confined aquifer under the Ausimont S.p.A’s area in Spinetta Marengo"¹⁸⁶

207.

Claimant states that in the two reports drafted above, "the risk of contamination of the deep aquifers was [described as] minimal" and that it was also stressed that "the groundwater was not polluted by heavy metals, chromium or chlorinated solvents." While Claimant submits that the conclusions reached in the reports of Professors Di Molfetta and Bortolami are unreliable, as "both had failed to take into account the areas in which these anomalies had been detected in previous years"¹⁸⁷; Respondent argues that the conclusions of the report of Professors Bortolami and Di Molfetta are correct and reliable as "they are based on experimental data and are consistent with the purpose of such study."¹⁸⁸

208.

Respondent argues that Solvay and its expert, Dr. Ertel, fail to note the different purposes of the 1989 Molinari Report, which "was a detailed study, aimed at the optimal management of the resource used by the plant" and the 1997 reports of Professors Bortolami and Di Mofetta - which "were both general studies on the condition of the groundwater, and especially of the deeper aquifer".¹⁸⁹ Relying on its hydrogeological expert, Prof. Celico, Edison concludes therefore that the studies by Professors Bortolami and Di Mofetta were correct and did not ignore or downplay the findings of previous reports, as their measurements were correct for the limited purposes of their own inquiries.¹⁹⁰

209.

Again, with respect to the Spinetta Site, Claimant maintains that just like for the Bussi Site, none of the above reports/findings regarding the Spinetta Site were made available to it before the Closing Date as part of the data room review or additional disclosure.¹⁹¹ The Tribunal turns to the particulars of the transaction and the scope of the disclosures by Edison during the due diligence immediately below.

210.

As described briefly above, this arbitration stems from the SPA between Edison and Solvay for 100% of Ausimont assets. Before setting out the most relevant parts of the transaction and the SPA itself, below, the Tribunal will describe the details of the auction process itself, as this has an impact on the extent of the knowledge of both Parties of the true state of contamination existing at the time at the Spinetta and Bussi Sites

211.

The background of the transaction is as follows. In the summer of 2000, Electricité de France (EDF) and Fiat completed their leveraged buy-out of the Edison group and accelerated the divesture program of non-core assets of Edison, previously commenced by Edison itself. Thus, assets not engaged in the energy sector (such as the production and distribution of electricity and gas) were subject to sale.¹⁹²

212.

In the first months of 2000, Edison resolved to divest some of its industrial activities, including Ausimont, since the latter was principally involved in the production of chemicals and peroxides and such assets were part of the divestment program of Edison.¹⁹³ As part of the program, on 16 July 2001, Edison (through Mediobanca - Banca di Credito Finanziario S.p.A and Goldman Sachs SIM S.p.A.¹⁹⁴ - hereafter "Financial Advisors") initiated the process of soliciting the potential bidders for the first phase of the auction procedure, by submitting a confidential memorandum outlining Ausimont’s activities and past performance.¹⁹⁵

213.

Solvay was among the potential buyers that communicated an initial non-binding offer, initially valuing the enterprise at EUR 1.4 billion, with an equity value of EUR 730 million.¹⁹⁶

214.

On 6 August 2001, the Financial Advisors of Edison informed those bidders whose preliminary offers were selected (among them Solvay) of the second phase of auction and invited the latter to participate.¹⁹⁷ Notably, the notice from the financial consultants of Edison specifically addressed the possibility for the bidders to perform a due diligence with respect to Ausimont during the second phase of the auction, and set out the detailed rules governing the due diligence process in Appendix 1 of the notice.¹⁹⁸

215.

As discussed above, all selected bidders, including Claimant, were invited to conduct a "commercial, financial and legal due diligence" of the assets sold, which included an opportunity to:

(i) Access a data room during the period between 10 and 15 September 2001, and on 1 October 2001, for a review of the business activities of Ausimont;

(ii) Attend a management presentation on 10 September 2001 concerning Ausimont’s business; and

(iii) Visit the three selected Ausimont sites in Spinetta Marengo, Porto Marghera and Thorofare.¹⁹⁹

216.

Consistent with the above, Solvay was given access to the data room in Milan from 10 to 15 September 2001, and on 1 October 2001.²⁰⁰

217.

According to Respondent, for the two Sites in dispute, namely the Spinetta and Bussi, the documents provided in the data room inter alia concerned the following parameters:²⁰¹

a. Air emissions;

b. Water withdrawals and wastewater discharges;

c. Waste disposal;

d. Loading/ unloading, storage and transportation of special toxic and noxious waste and oils;

e. Disposal of dangerous substances;

f. Asbestos;

g. Contamination of soil and ground-water.

h. Past, present and potential litigation on HSE matters (only for Spinetta Site).

218.

The Parties agree that over a quarter of the 100-page data room index was devoted to environmental issues.²⁰² Claimant submits, however, that "fewer than nine pages were devoted to Bussi and Spinetta; and only half a page dealt with soil contamination, the only relevant issue in this arbitration."²⁰³

219.

During the due diligence process, Solvay was assisted by ERM, the same company that had also advised Ausimont for several years with regard to the Bussi and Spinetta Sites.²⁰⁴ Solvay insists that for the purposes of the due diligence it engaged ERM Belgium and not ERM Italy, which was acting as an environmental auditor for the Spinetta and Bussi Sites. Claimant also contends that at the time of the due diligence it was not aware that ERM Italy was acting for Ausimont previously and that, in any event, it demonstrated that none of the same individuals working for ERM Italy and Ausimont before the 2001 data room exercise participated in the data review.²⁰⁵ Edison submits that even though "Solvay had formally engaged ERM Belgium, the environmental due diligence of Ausimont was carried out by ERM Italy" and further points out that Claimant could not demonstrate that none of the ERM Italy employees who worked at the Bussi or Spinetta Sites were not also part of the due diligence review team and that Ausimont’s financial statements indicated that the ERM group, including ERM Italy were Ausimont’s environmental advisors for years.²⁰⁶ Respondent also emphasises that as per the data room register that it maintained during this period, representatives of ERM entered the data room 6 times, Claimant’s environmental expert, Mr. Carimati, who was the environmental expert responsible for Solvay Italy, entered twice, and the Claimant’s other representatives entered 118 times.²⁰⁷

220.

According to the Data Room Index, the environmental documents made available in the data room were listed under "Section O.Environment", with Sections O.2 and

O.4 particularly relevant to the Bussi and Spinetta Sites.²⁰⁸ Solvay alleges that the only documents that were relevant to the arbitration and the pollution at the Bussi Site that were made available in the data room were as follows (under Section O.2.10. "Soil contamination"):

"(i) a draft of the Characterization Plan dated 31 March 2001 (O.2.10.1);

(ii) a related (pre-notification) letter dated 27 March 2001, by which Ausimont informed the local authorities that, while a limited pollution had been detected, its extent and the geological, hydrogeological and environmental characteristics of the area "did not pose a threat to the public health or to the environment" (O.2.10.2(1)); and

(iii) a communication of 4 September 2001, by which the "Local Authority" acknowledged receipt of the Characterization Plan (O.2.10.3(1))."²⁰⁹

221.

Claimant also submits that the only documents that were relevant to the contamination issues at the Spinetta Site that were made available in the data room were as follows (under Section O.4.11. "Soil contamination"):

"(i) the Characterization Plan dated 31 March 2001, including annexes thereto and the filing letter of 16 May 2001 to the local authorities (O.4.11.1);

(ii) a related (pre-notification) letter dated 28 March 2001, by which Ausimont informed the local authorities that, while a limited pollution had been detected, "the quantity and nature of the substances present in the subsoil and the geological, hydrogeological and environmental characteristics of the area are such that no danger exists to public health and the environment outside the site" (O.4.11.2(1));

(iii) two letters, dated 26 April 2001 and 21 May 2001, from and to the Region of Piedmont (O.4.11.2(2) and O.4.11.2(3)), concerning clarifications of the characterization procedure; and

(iv) a list of "current and potential litigation on health&safety [sic] environmental matters" (O.4.12.1)."²¹⁰

222.

Solvay acknowledges that the documents contained in the data room also contained the financial statements of Ausimont from 1995-2000, which included provisions for environmental liabilities, including remediation and clean-up costs. It points out, however, that these liabilities were negligible as they amounted to EUR 6 million only for all of the industrial sites of Ausimont, and also emphasises that this overall figure was also explicitly confirmed by Mr. Boncoraglio on behalf of Ausimont in further questioning as seen below.²¹¹

223.

The due diligence procedure set out in the letter of 6 August 2001 to Solvay and other bidders also provided that participants in the second phase could request additional documents and information, through a regulated Q&A process.²¹² Respondent emphasises that according to its list of Q&A inquiries at that time, Claimant asked or made 328 questions and requests, of which only 22 dealt with HSE matters - among which only 4 concerned the Bussi Site and 1 concerned the Spinetta Site. Edison also underscores that none of these inquiries related to the historical or current levels of contamination at the Sites, the Preliminary Characterization Plans or the prospective remedial works.²¹³ While Respondent insists that the Claimant’s queries were "properly answered"²¹⁴, Claimant submits that its questions were either "substantially unanswered or were rejected."²¹⁵

224.

Solvay also notes that it was not allowed to make copies of the "Bussi Site soil-contamination documents" despite its requests, and that its queries concerning risk recommendations provided by the insurance companies related to the different sites remained unanswered.²¹⁶

225.

Edison maintains, however, that Ausimont’s refusal in this regard was entirely in compliance with the procedural rules acknowledged and accepted by Solvay, which applied to all bidders and provided that only "selected items of data will be available in copy on request"²¹⁷ to "protect the confidentiality of Ausimont’s documents and information."²¹⁸ Edison also submits that for such documents, "although not allowed to make photocopies," Solvay was, however, permitted to take handwritten notes and even to dictate the full text of documents into voice recorders.²¹⁹

226.

Despite the differences between the Parties as to the scope of the due diligence and the transparency of Respondent with regard to the due diligence exercise in this arbitration, the Parties agree that on 9 November 2001, Solvay wrote a letter to Edison’s Financial Advisors, effectively concluding the due diligence phase by confirming that "on the basis of our due diligence review and relying on the information received, we do not need any additional information to finalize an SPA. This assumes, however, that (i) there have been no material changes at Ausimont of which we are unaware, and (ii) an agreement will be reached on the terms of the SPA."²²⁰

227.

The scope of the due diligence exercise, the Characterization Plans for Bussi and Spinetta sites, as well as their nature, contents and compliance with the applicable Italian law are subject of extensive debate in this arbitration and shall be addressed further in the discussion section below together with those concerning the engagement of ERM and the latter’s knowledge of the contamination of the Bussi and Spinetta Sites (Discussion Section VIII. A). Below, the Arbitral Tribunal will first set out the particulars or the Share Purchase Agreement and its negotiation.

228.

On 25 September 2001, the Financial Advisors of Edison sent Solvay and other selected bidders an initial draft of the Agreement, and requested the bidders to provide their comments on the draft by 9 October 2001.²²¹ The draft included a limitation on the liability of Edison for the remedial works at the Bussi, Spinetta and Porto Marghera industrial Sites of up to EUR 10 million and also included an Environmental Covenant, supplementing the SPA, which related to sites with a history of issues with waste disposal.²²²

229.

On 15 October 2001, Solvay sent to Edison its preliminary comments on the initial draft of the Agreement (First Comments)²²³ and, inter alia, requested Edison to provide stronger environmental protection by, among others deleting "any mention [...] with respect to limitations of liability as to the amount and time" from the Environmental Section of the Representations and Warranties (Section 6.2F of the Agreement).²²⁴ It also made the following requests for a "standard set of representations and warranties with respect to health (to be defined), safety (to be defined) and environmental (to be further defined, including references to land, water, air, fauna and flora)" under Section 6.2F of the draft SPA:

"A warranty that [Agora] and its Subsidiaries are in compliance with all Environmental laws and existing clean-up obligations and plans;

A warranty that [Edison has] no knowledge of historical pollution or discharge of hazardous product or other environmental liabilities;

A warranty that [Edison has] no knowledge of threatened examinations by the relevant authorities or circumstances which may give rise thereto;

A warranty to the effect that [Edison has] provided [Solvay] with all data relating to the health, safety and environmental matters;

A complete list of current clean-up obligations, remedial works and change of process obligations to be implemented or reasonably likely to be required in order to comply with applicable law."²²⁵

230.

Further, Solvay requested an indemnification obligation for remedial and clean-up measures at the relevant sites. Solvay proposed that Edison indemnify against:

"all Losses (including for the purpose of this section all remedial, compliance, clean-up and ring fencing costs) arising out of or in connection with a contamination, pollution or degradation or any risk thereof to the environment or any harm or risk of harm to the health and safety of any Person occurred or originated prior to the Closing Date."²²⁶

231.

For its part, Solvay was ready to accept that the liability for the remediation costs for the Ausimont’s current production sites to be capped at "approximately 50 to 60 million euro" [Solvay’s estimate of the costs of remediation] for the areas confined to the current operating sites, but subject to further due diligence.²²⁷ In the event, however, additional due diligence was not provided for.²²⁸

232.

Solvay further insisted that all limitations on indemnity obligations be expressly eliminated in case of fraud, wilful misconduct or gross negligence on the part of the Seller and uncapped unlimited indemnification for other environmental losses.²²⁹

233.

On 1 November 2001, Edison’s Financial Advisors sent to Solvay and to the other bidders a revised draft of the Agreement.²³⁰ In this second draft, Edison accepted some of Solvay’s comments and provided for the following amendments to the draft:

□ A representation that Agora and its subsidiaries were "in substantial compliance with all Environmental Laws relating to the operations and conduct of their respective Properties and business" and had "all material Environmental Authorizations and all such material Environmental Authorizations [were] in full force and effect";²³¹ (original emphasis by Edison)

□ An undertaking to hold Solvay "harmless and indemnified from and against any actual damage or loss [...] which is a direct consequence of the breach of any of the representations and warranties", and "directly derives from facts or circumstances occurring before the Closing Date."²³² (original emphasis by Edison)

234.

Respondent, as the Seller, also proposed to extend its indemnification obligation for remedial and clean-up measures at the various production sites of Ausimont. Specifically, it was prepared, up to the global cap of EUR 80 million (rather than the earlier cap of EUR 10 million²³³), to reimburse to Ausimont (post transaction) the reasonable expenses incurred by it for certain remedial works relating to the Sites, in accordance with the plan to be approved by relevant authorities in Italy.²³⁴ This provision still was subject to the deductible threshold of EUR 15 million.²³⁵

235.

On 9 November 2001, Solvay made a new non-binding offer for the entire share capital of Agorà [Ausimont] in the range of EUR 575 million to EUR 625 million and provided additional comments on the revised draft (Second Comments), which included inter alia:

□ Solvay proposed a general indemnification cap of EUR 150 million;²³⁶

□ Solvay requested an uncapped indemnification relating to environmental losses at Porto Marghera "occurring outside the perimeter of the current operating site in Porto Marghera but relating to or originating in such site";²³⁷

□ Solvay also requested an uncapped indemnity for "all Environmental Losses occurring outside the perimeter of the current operating sites", other than the Porto Marghera Site, as well as a separate cap of EUR 50 million for all other environmental losses;²³⁸

□ Further, Solvay revised its economic offer, indicating "an enterprise value for Agora in the range of EUR 1275 million to EUR 1325 million, and a cash price for the entire share capital of Agora in the range of EUR 575 million to EUR 625 million".²³⁹

236.

At the same time, Solvay again mentioned that "[o]n the basis of the due diligence review and relying on the information received", it did not "need any additional information to finalise an SPA,"²⁴⁰ based on the assumption that there have been no material changes at Ausimont of which Solvay was not aware and that an agreement would be reached on the terms of the SPA. At the same time, Edison points out that the following terms were no longer repeated by Solvay:

□ Solvay omitted many of the requests made in its First Comments with regard to HSE Laws Warranty, including the request of a warranty regarding Edison’s knowledge of historical pollution, discharge of hazardous products as well as other environmental liabilities in relation to Ausimont’s production sites;²⁴¹

□ Solvay did not repeat its previous comment that "the draft did not include any R&Ws [i.e. representations and warranties] as to the accuracy and comprehensiveness of the information contained in the Characterization Plans".²⁴²

237.

The comments on the Environmental Representations and Warranties from Claimant’s communication are set out below:

6.2 F — Environmental

All references as to the materiality of an authorization, violation etc should be deleted.

The definitions of Environment and Environmental Law should also cover health, safety, fauna and flora.

The representations and warranties set out in section (e) should be completed with a warranty that the Company and the Subsidiaries are in compliance with all existing clean-up obligations, remedial works and change of process obligations, a list of which is attached as a schedule to the agreement.

6.2 F - Environmental

All references as to the materiality of an authorization, violation etc should be deleted.

The definitions of Environment and Environmental Law should also cover health, safety, fauna and flora.

The representations and warranties set out in section (e) should be completed with a warranty that the Company and the Subsidiaries are in compliance with all existing clean-up obligations, remedial works and change of process obligations, a list of which is attached as a schedule to the agreement.

238.

Both Parties note that the allocation of environmental risks was an important topic in these negotiations.²⁴³

239.

In particular, relying on its witness, Mr. Santi, Edison points to the meeting of 15 November 2001, where Solvay accepted to assume the risks relating to all the costs for the clean-up and remediation obligations within the Ausimont industrial Sites post-transaction other than Porto Marghera, while Edison would agree to an "uncapped indemnification for the environmental liabilities that could arise outside the boundaries of the Porto Marghera site, and to a €25 million reduction on the upper end of the offered price range."²⁴⁴

240.

On 23 November 2001, Solvay’s legal consultants sent a new version of the SPA to Edison’s lawyers with what Edison claims was a proposal consistent with the above understanding reached in a 15 November 2001 meeting. In particular, Respondent points that in Section 9.1(b) of the draft SPA related to the indemnification, Solvay proposed the following language:

"For the avoidance of doubt, the Sellers will not be liable to indemnify any Site-Related Environmental Losses."²⁴⁵

241.

At the same time however, the same draft provided a number of provisions which involved indemnification by Respondent for the environmental losses or remedial measures, including losses stemming from any breaches of Fundamental Representations and Warranties as well as a specific representation by Edison that Ausimont and its Subsidiaries were:

"in compliance in all material respects with all HSE Laws, including any remediation and clean-up obligations relating to the operations and conduct of their respective Properties, Sites and businesses" [...]; and

"there are no circumstances that could reasonably be expected to result in Environmental Losses" [...].²⁴⁶

242.

On 26 November 2001, Solvay S.A and Edison (Montedison) entered into an Exclusivity Agreement reflecting the main guidelines and principles upon which negotiations would proceed.²⁴⁷ Under the Exclusivity Agreement, the Parties agreed "to enter into negotiations with respect to the [purchase of 100% of Agora’s share capital] on an exclusive basis as of the date of execution of th[e] agreement until 22 December 2001." The main principles provided under the Exclusivity Agreement were as follows:

"Price for 100% of Agorà Capital Euro 585-600 million, the price within the range depending on the contents of the contract. [...]"

"Consolidated Net Debt Euro 700 million. Obligation to inform if such figure is exceeded [...]"

"General Indemnities Reps & warranties: Cap of Euro 80 million, except fraud, willful misconduct & gross negligence [...]"

"Health, Safety and Environmental Indemnities Porto Marghera outside Ausimont site: Full indemnity (no time & amount limitation)

[...]

Outside sites; unknown and/or undisclosed sites: Part of EUR 80 million General Indemnities cap

On sites remediation costs: No Indemnity

Environmental Covenant: To be revised to an agreeable form."²⁴⁸

243.

The Exclusivity Agreement also contained a provision that "No material breach of covenants or key representations and warranties to be identified [in] Material Adverse Change clause, other than changes in general market conditions, threshold to be agreed".²⁴⁹

244.

The Parties ultimately signed the Agreement on 21 December 2001 ("SPA" or "Agreement").²⁵⁰ Consistent with the above exchanges and negotiations, the final version of the SPA contained several representations and warranties concerning the various sites where Ausimont was operating, as well as specific representations concerning past compliance with various Italian environmental and safety laws and regulations including, inter alia, that:

□ Solvay entered into the Agreement "on the basis of its own assumptions, projections, and estimates, and assuming its own full risk" except as otherwise established under the Agreement;²⁵¹

□ Edison’s representations or warranties "shall be true and correct [...] with reference to the situation existing as at the Closing Date";²⁵²

□ Edison would not provide any "representation or warranty [...] directly or indirectly, among others, as to Product Liability, inventory, accounts receivable, or other representations and warranties on Environment which could give rise to Site-Related Environmental Remediation Costs";²⁵³

□ Edison agreed to indemnify Solvay for "any Off-Site Environmental Liabilities and any Site Related Environmental Liabilities arising out of or resulting from the breach of’ the USE Laws Warranty;²⁵⁴

□ Edison agreed to indemnify Solvay for "Porto Marghera Environmental Liabilities"²⁵⁵.

245.

Under Article 6.2F(a) of the Agreement, Edison specifically provided that Ausimont was in "substantial compliance with all HSE Laws relating to the operations and conduct of their respective Properties, Sites and businesses",²⁵⁶ "[e]xcept as disclosed in the Disclosure Letter, this Agreement and the Data Room Documents":²⁵⁷

6. REPRESENTATIONS AND WARRANTIES BY THE SELLERS

6.1 The Sellers do not make any representations, give any warranties or undertake any commitments with reference to the Company and the Subsidiaries, their assets and businesses, the Shares and more in general the transactions contemplated under this Agreement, other than those expressly and specifically given in this Section 6 and in Section 5.1, to the extent applicable, of this Agreement. For the avoidance of doubt, except to the extent specifically and expressly represented and warranted below, no representation or warranty is given, directly or indirectly, among others, as to Product Liability, inventory, accounts receivable, or other representations and warranties on Environment which could give rise to Site-Related Environmental Remediation Costs. Any matter addressed, in whole or in part, by a representation or warranty shall not be deemed also addressed by a more general or different

6.2 Except as disclosed in the Disclosure Letter, this Agreement and the Data Room Documents, Montedison represents and warrants to the Purchaser as follows:

F. Environmental, Health and Safety and Similar Matters

(a) The Company and the Subsidiaries are in substantial compliance with all HSE Laws relating to the operations and conduct of their respective Properties, Sites and businesses;

(b) neither the Company nor any of the Subsidiaries has received any written communication, failure to comply with which would constitute a material violation of HSE Law or compliance with which could be secured by further proceedings under Environmental Law in relation to the carrying on of a material portion of its business;

246.

Section 9 of the Agreement in turn set out the specific categories of liabilities for indemnification by Edison, as well as the exclusions and restrictions for the indemnification. In particular, Section 9.1.1 of the SPA provided as follows:

"From and after the Closing and subject to the conditions and limitations set forth below, Montedison agrees to indemnify the Purchaser or, at the request of the Purchaser, the Company and the Subsidiaries and their successors (by operation of law or pursuant to any designation permitted under the terms of this Agreement) (the 'Purchaser Indemnitees’), against:

a. subject to Section 9.3,

(i.) any and all Losses for breach of representations and warranties, representations and warranties being untrue or inaccurate and for breach of covenant (other than Losses arising out of or resulting from the breach by the Sellers of the Fundamental Representations and Warranties, the Specific Representations and Warranties, the breach of the representation and warranty set forth under Section 6.2E (f) and the Fundamental Covenants); and

(ii.) any Off-Site Environmental Liabilities and Site-Related Environmental Liabilities arising out of or resulting from the breach of Section 6.2 F (other than the Porto Marghera Environmental Liabilities).

[...]"²⁵⁸ (original emphasis)

247.

Section 9.3 set out certain exclusions and restrictions to the above indemnifications, and in particular those stemming from the Environmental Liabilities:

"9.3.1 The obligation of the Sellers to indemnify the Purchaser Indemnitees under this Agreement is subject to the exclusions, restrictions and limitations set forth below.

(a) With regard to the indemnification obligations set forth under Section 9.1.1(a):

(i) the Sellers shall not be liable for indemnification at any time for any individual Loss actually amounting to less than €50,000 (fifty thousand);

(ii) the Sellers’ indemnification obligation shall be effective only when the cumulative amount of Losses indemnifiable to the Purchaser Indemnitees - excluding the individual Losses below the threshold set forth in Section 9.3.1 (a)(i) above - in the aggregate exceeds €10,000,000 (ten million), it being understood that, if said threshold is exceeded, the Sellers shall be liable to pay only the excess amount; and

(iii) in no event shall the cumulative amount payable by the Sellers by way of indemnification or any other ground under this Agreement exceed €80,000,000 (eighty million).

(b) With regard to the indemnification obligations set forth under Sections 9.1.1 (b) and 9.1.2, the Sellers indemnification obligation shall be uncapped in the amount; it being understood that (i) the Sellers’ liability under Section 9.1.1 (b) (ii) and (iii) shall not be qualified by any knowledge of the Purchaser Indemnitees or by any disclosure made in respect thereof in accordance with this Agreement nor any other knowledge by the Purchaser or by the fact that such Losses cannot be considered as a breach of representation and warranties or a breach of covenant or any other obligation under this Agreement, and (ii) the Sellers’ representations and warranties under Sections 6.2 A and 6.2 B (a), (b), (c), (f), (g), (i), (j) shall not be qualified by any disclosure."²⁵⁹

248.

Of particular importance to the Claimant’s case in this arbitration is Section 9.3.10 of the Agreement, which provides that "[a]ny limitations or restrictions set forth under this Section 9.3 will not apply in the event of any Loss resulting from fraud, wilful misconduct or gross negligence by the Sellers."

249.

The above provisions are at the heart of the Parties’ debate regarding Edison’s liability, if any, for the environmental damage that occurred at the Bussi and Spinetta sites and shall be part of the Tribunal’s analysis in Section VIII below.

250.

The Parties also entered into an Environmental Covenant, which supplemented the SPA.²⁶⁰ Section 1.2 of the Environmental Covenant provided a restriction as to the Buyer’s investigation of past environmental contaminations without the prior written consent of Edison.²⁶¹

251.

Thus, under Section 1.2 of the Environmental Covenant, Respondent would have no Liability under the SPA in respect to any Environmental Losses to the extent that these would result from Solvay engaging in any of the following:

"(A) Informing any third party (including, but not limited to, any Regulator) of the circumstances relating or giving rise to the Environmental Losses (including, but not limited to, informing any such party that any Properties or Equipment or plant is or may be contaminated or admitting to any such third party liability in respect of any claim or potential claim), or making available to any such third party any information in relation to such circumstances or contamination, except in the event the Purchaser is required to do so [...];

(B) purposely instigating or initiating any proceeding, suit or claim by the Regulator or any third party which may give rise to Environmental Losses;

(C) failing to keep and/or make available on reasonable request to Montedison or to any Person notified to the Purchaser by Montedison any records (in relation to the spills or any other operational matters) which the Company and/or the Subsidiaries are legally required to keep or are regularly kept [...];

(D) carrying out any investigative or monitoring works in respect of any contamination at any Properties and Equipment and plants without Montedison’s prior written consent, [...]."²⁶²

252.

At the same time, pursuant to the SPA, Solvay would not be compelled to comply with the obligations (A) and (D) above under the Covenant to the extent it were required to take any of the actions:

"by a Regulator court or other authority or under any applicable law or regulation, including HSE Law;"

"in the event of an immediate serious risk to human health or to the Environment (in which event [Respondent] shall be informed as soon as reasonably possible)";

"within the normal conduct of the plants, the Property or Equipment including technological and production upgrades, or where | the Respondent] has approved the proposed course of action in writing, such approval not to be unreasonably withheld or delayed".²⁶³

253.

Under the Environmental Covenant, Solvay was also required not to admit liability or not to make or accept any settlement for Environmental Losses without the consent of Edison.²⁶⁴ Solvay was further obliged to obtain Edison’s consent before carrying out activities related to Environmental Remediation Costs the cost of which would exceed EUR 1,000,000 in case that these activities "would or might give rise to any liability for reimbursement or indemnification by" Edison.²⁶⁵

254.

The above provisions are of particular relevance to the Respondent’s counterclaims and shall be discussed in detail in Section VIII.F below.

255.

Following the Closing Date, i.e. 7 May 2002, the ownership and operation of the Bussi Site was transferred to Claimant.²⁶⁶ It is useful to recall for the purposes of this chapter that the Bussi Site is located in the valley of the Tirino River and is bordered by two rivers, the Pescara River and its tributary Tirino River.²⁶⁷

256.

After the Closing Date, Claimant instructed ENSR Italia S.r.l. (formerly HPC)²⁶⁸ to identify in greater detail the safety measures to be implemented based on the Characterization Plan, following a request from the relevant government bodies in accordance with the administrative procedure envisaged by Articles 9 and 10 of DM 471/99. HPC/ ENSR issued a report in November 2002,²⁶⁹ stating that two safety measures needed to be implemented:

□ Waterproofing of soils contaminated by mercury; and

□ A pump & treat system to remediate the shallow groundwater in the production areas identified by the Characterization Plan.

257.

On 13 December 2002, Claimant submitted this report to the Municipality of Bussi, the Region of Abruzzo, and ARTA Abruzzo ("ARTA" - the Agenzia Regionale per la Tutela dell’Ambiente, the regional agency for the protection of the environment)²⁷⁰ for approval of the safety measures concerning the soil and the shallow aquifer, as well as a program for future monitoring activities to be implemented at the Bussi Site (the "2002 Report").²⁷¹

258.

In March 2003, the public authorities suspended examination of the safety measures proposed in the 2002 Report for the Internal Areas and asked Solvay Italy to supplement the Characterization Plan (originally submitted by Ausimont prior to the signing of the SPA) to include the neighbouring SIAC area in the "conceptual model" of the Site. This area had not been characterised by Ausimont at the time of the conclusion of the SPA in 2001.²⁷² According to Solvay, as the new owner of the Bussi Site, it accepted to perform a number of additional surveys and Characterization activities.²⁷³

259.

After several iterations of the report made by ENSR in July 2003-March 2004 (following comments made thereto by the local authorities), the findings of the additional survey of the Internal Areas and the SIAC area were recorded in a report issued in November 2004 by ENSR, containing the Results of the Supplement to the Characterization Plan for the Bussi Site (the "RSCP Report").²⁷⁴ This report revealed that:

(i) Environmental assessments revealed values exceeding the concentration limit values for metals, including arsenic, total chromium, hexavalent chromium, mercury, nickel and lead.²⁷⁵

(ii) 30 primary groundwater samples analysed indicated values exceeding those contained in the DM 471/99 for groundwater for the following additional elements: "Hydrocarbons expressed as n-hexane, aromatic compounds, chlorinated aliphatic compounds, halogenated compounds". With respect to the groundwater samples outside of the Site, values exceeding the limits were found for various chlorinated aliphatic compounds;²⁷⁶

(iii) The area of the Bussi Site located on the left bank of the River Tirino, which had not been characterized in the Characterization Plan of 2001, was revealed to be heavily contaminated.²⁷⁷

(iv) Several containment measures had to be implemented as soon as possible, including creating a hydrogeological barrier.²⁷⁸

260.

In light of the above findings, Claimant terminated its consultancy agreement with ENSR with respect to the Bussi Site. Instead, it instructed another consultancy firm, Environ Italy S.r.l. ("Environ"), to investigate and implement a remediation plan and an emergency safety plan ("MSE") with respect to the shallow ground water.²⁷⁹

261.

Environ was specifically asked to compare the Characterization Plan of 2001 with the RSCP Report from 2004. Environ submitted this report to the local authorities on 3 December 2004.²⁸⁰ Solvay informed Respondent of the same and sent a copy of the report, together with the Notice of Claim of 3 December 2004 to Edison.²⁸¹ The report’s conclusion was that "the contamination, which was already present in 2001, was greatly underestimated [...]."²⁸²

262.

In January 2005, Environ outlined the MSE measures for the Site in its report to the Pescara authorities, which were supplemented in March 2005.²⁸³ These measures were approved by the local authorities in May 2005, and put into operation on 20 July 2005, following a request by the authorities to speed up the remediation plans and submit a new plan as soon as possible.²⁸⁴

263.

Environ’s plan suggested a Pump & Treat system, which was intended to prevent the contamination from spreading outside the industrial perimeter, as well as a hydraulic barrier to be set up for the shallow aquifer in order to prevent the contamination from spreading outside. It further suggested extraordinary maintenance of a drainage pipe to avoid the interaction between the shallow groundwater underneath the Site and the sewage network. According to Solvay, between 2007 and 2012, Claimant monitored the conditions of the groundwater and the functioning of the safety measures, which further revealed widespread contamination mainly due to organochlorine compounds.²⁸⁵

264.

Based on the data revealed by monitoring the MSE measures, Claimant then submitted a Preliminary Remediation Plan ("PRP") to the Region of Abruzzo, the Province of Pescara, the Municipality of Bussi, Agenzia Regionale per la Tutela dell’Ambiente and the Health Department of Popoli (Pescara). The PRP set out proposed remediation technologies and also envisaged further investigations.²⁸⁶

265.

The PRP was approved by the authorities on 29 November 2005,²⁸⁷ and the supplementary surveys and investigations were carried out from 2006, parallel to the MSE measures. During these investigations, Solvay discovered the existence of a deep aquifer, which was not disclosed by Ausimont in the Characterization Plan, although Claimant argues that the same aquifer was already identified by Mr. Molinari in the 1990s.²⁸⁸ This aquifer was subsequently found to be contaminated, requiring the setting up of emergency measures from March 2008 onward.²⁸⁹

266.

In the meantime, as part of the transfer of certain lands surrounding the Bussi industrial site to the Municipality of Bussi pursuant to the agreement between Ausimont and the latter administration, Solvay discovered, in 2004, further traces of possible contamination of the external areas of the Site as evidence from old landfills.²⁹⁰

267.

As a result, Solvay commissioned further investigations first by ENSR, and then by Environ, which revealed significant contamination of the groundwater, soil and subsoil of the external areas by, among others, mercury, lead, boron, aliphatic chlorinated compounds and hydrocarbons.²⁹¹ Following the discovery, and the request from the local authorities, Claimant commissioned Environ to submit a characterization plan for the External Areas, which was submitted to and approved by the Services Committee on 9 April 2005.²⁹²

Solvay Specialty Polymers v. Edison

Documents of the case

Lawyers, other representatives, expert(s), tribunal’s secretary

Partial Award

I. THE PARTIES AND THEIR REPRESENTATIVES

A. Claimant¹

B. Respondent

II. THE ARBITRAL TRIBUNAL

III. THE ARBITRATION AGREEMENT

IV. THE APPLICABLE LAW

A. The Applicable Procedural Taw

B. The Applicable Substantive Law

C. Place of Arbitration

V. PROCEDURAL HISTORY

A. The Interim Award

B. The Stay of The Arbitral Proceedings and the Second Phase of the Arbitration

C. Written phase of the Proceedings

D. The Evidentiary Hearing

E. The Post-Hearing Phase

F. Extensions of the Deadline to Render the Final Award

VI. FACTUAL BACKGROUND OF THE DISPUTE

A. Historical Background of The Sites

1. The Bussi Site

a) The period between 1950-1972

b) The period between 1972-1981

c) The period from January 1981 to the Negotiation of the SPA

2. The Spinetta Site

a) The period between 1950-1981

b) The period between 1980s-1990s

c) The period from the mid-1990s to the Negotiation of the SPA

B. Private Auction of Ausimont

1. First Phase of the Auction: Non-Binding Offer

2. Second Phase of the Auction: Due Diligence

C. The Negotiation of the Agreement

D. The Sale and Purchase Agreement

E. The Events Following the Closing

1. The Bussi Site

a) Investigations/Surveys conducted by Claimant following the Closing

Wolfgang Peter	President
Bernard R. Hanotiau	Appointed by the claimant
Sergio Maria Carbone	Appointed by the respondent

Solvay Specialty Polymers v. Edison

Documents of the case

Lawyers, other representatives, expert(s), tribunal’s secretary

Partial Award

I. THE PARTIES AND THEIR REPRESENTATIVES

A. Claimant1

B. Respondent

II. THE ARBITRAL TRIBUNAL

III. THE ARBITRATION AGREEMENT

IV. THE APPLICABLE LAW

A. The Applicable Procedural Taw

B. The Applicable Substantive Law

C. Place of Arbitration

V. PROCEDURAL HISTORY

A. The Interim Award

B. The Stay of The Arbitral Proceedings and the Second Phase of the Arbitration

C. Written phase of the Proceedings

D. The Evidentiary Hearing

E. The Post-Hearing Phase

F. Extensions of the Deadline to Render the Final Award

VI. FACTUAL BACKGROUND OF THE DISPUTE

A. Historical Background of The Sites

1. The Bussi Site

a) The period between 1950-1972

b) The period between 1972-1981

c) The period from January 1981 to the Negotiation of the SPA

2. The Spinetta Site

a) The period between 1950-1981

b) The period between 1980s-1990s

c) The period from the mid-1990s to the Negotiation of the SPA

B. Private Auction of Ausimont

1. First Phase of the Auction: Non-Binding Offer

2. Second Phase of the Auction: Due Diligence

C. The Negotiation of the Agreement

D. The Sale and Purchase Agreement

E. The Events Following the Closing

1. The Bussi Site

a) Investigations/Surveys conducted by Claimant following the Closing

A. Claimant¹