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
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
Paolo Di Giovanni
Via Barozzi, 1
20122 Milan, Italy
Telephone: 00 39 02 77 11 31
Fax: 00 39 02 77 11 32 60
Mazzoni Regoli Cariello Pagni
Gatai, Minoli, Agostinelli, Partners
Telephone: 00 39 02 30 32 32 32
Fax: 00 39 02 30 32 32 42
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
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
Co-Arbitrator nominated by Claimant
Professor Bernard Hanotiau
Hanotiau & van den Berg
IT Tower (9th floor)
480, Avenue Louise - B9
Telephone: 00 32 2 290 39 00
Fax: 00 32 2 290 39 39
Co-Arbitrator nominated by Respondent
Aw. Prof. Sergio Maria Carbone
Via Assarotti, 20
Telephone: 00 39 010 831 7082
Fax: 00 39 010 831 4830
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
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)
"Where the aforementioned provisions are silent, the proceedings shall be governed by rules, which the Arbitral Tribunal will issue after consultation with the parties."
"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."
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.
"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."
□ 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.
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:
CER-1, Expert Report of Dr. Ertel, p. 5.
"(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
(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
"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
"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
"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.
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:
CER-2, Expert Report of Dr. Ertel, p. 13, Figure 1-3.
(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
(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
(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
(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
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;
g. Contamination of soil and ground-water.
h. Past, present and potential litigation on HSE matters (only for Spinetta Site).
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
"(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
"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
"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
□ 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)
□ 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
□ 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
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.
"For the avoidance of doubt, the Sellers will not be liable to indemnify any Site-Related Environmental Losses."245
"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
"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
□ 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.
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;
"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)
"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
"(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
"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
□ 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.
(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