Deutsche Telekom v. Network Enhanced Technologies, Final Award, 2 June 2015

Terminology
Agreement	Agreement on Hubbing, Trading, Termination For VoIP (NGVI) between the Parties dated 22 May 2012, signed on 22 May 2012 and 26 April 2012, respectively (exh. C-2)
Art.	Article(s)
BGE	"Bundesgerichtsentscheid"; published decision of the Swiss Federal Supreme Court (www.bger.ch)
CC	Swiss Civil Code
Comments on Rejoinder	Claimant's limited Comments on Rejoinder dated 16 January 2015
Counterclaim	Respondent's Statement of Counterclaim dated 13 November 2014 (labelled by Respondent as "Cross-Complaint for Damages")
Court	International Court of Arbitration of the International Chamber of Commerce
CO	Swiss Code of Obligations
Exh.	Exhibit(s)
Exh. C-[No.]	Exhibit(s) of Claimant and the number of the pertaining exhibit(s)
Exh. R-[No.]	Exhibit(s) of Respondent and the number of the pertaining exhibit(s)
N.	Note(s)
No.	Number
P.	Page(s)
para.	Paragraph
paras	Paragraphs
Parties	Claimant (Deutsche Telekom AG) and Respondent (Network Enhanced Technologies, Inc.) together
PILA	Swiss Private International Law Act
PO	Procedural Order
Rejoinder	Respondent's Statement of Rejoinder dated 16 December 2014
Reply	Claimant's Statement of Reply dated 26 November 2014
RfA	Claimant's Request for Arbitration dated 11 April 2014
Rules	Rules of Arbitration of the International Chamber of Commerce (version in force as from 1 January 2012)
Secretariat	Secretariat of the Court
SoC	Claimant's Statement of Claim included in its RfA
SoD	Respondent's Statement of Defence dated 13 November 2014 (labelled by Respondent as "Answer to Complaint" to Claimant's Request for Arbitration)
Sole Arbitrator	Dr Michael Lazopoulos as the Sole Arbitrator in this arbitration
ToR	Terms of Reference dated 5 September 2014 as approved by the Court

1.

Claimant, Deutsche Telekom AG, is a German corporation having its registered office at Friedrich-Ebert-Allee 140, 53113 Bonn, Germany. It is a telecommunication provider who does business in all areas of telecommunication and similar areas.

2.

Respondent, Network Enhanced Technologies, Inc., is a US corporation which offers long distance products and services to markets within the United States and internationally. It has its delivery address at 1725 Winward Concourse Suite 150, Alpharetta, Georgia 30005, USA.

3.

The arbitral proceedings have been brought on the basis of the Agreement (exh. C-2) signed by the Parties (RfA, paras 7-8). The Agreement provides in Art. 15.6(2) the following arbitration agreement:

" [...]

In the event of any dispute arising between the Parties with respect to the interpretation or implementation of any provision of this Agreement, the Parties shall use all reasonable efforts to resolve such dispute amicably with the goal of preserving the relationship between the Parties. Unless otherwise provided by mandatory law provisions, all disputes arising in connection with the Agreement, including but not limited to, its validity, interpretation, fulfilment, effects and consequences, shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one (1) arbitrator in accordance with the said Rules. The arbitration proceedings shall take place in Zurich, Switzerland and be conducted in English."

4.

Respondent has objected to the jurisdiction of the Sole Arbitrator by asserting, among other things, that the arbitration agreement is unfair, adhesive, unconscionable and further fails to comply with applicable laws between contracting parties in the United States and the State of California with regard to arbitration provisions (SoD, p. 1).

5.

The Sole Arbitrator will rule on his jurisdiction regarding Respondent's objection as a preliminary question in paras 109-124 below.

6.

According to Art. 15.6(2) of the Agreement (see note 3 above), the place of arbitration is Zurich, Switzerland.

7.

Hence, the place of arbitration in the present case is Zurich, Switzerland.

8.

In accordance with Art. 187(1) of the PILA which applies to international arbitral tribunals having their seat in Switzerland, the arbitral tribunal shall rule according to the law chosen by the Parties or, in the absence of such choice, according to the law with which the dispute is most closely connected.

9.

According to Art. 15.6(1) of the Agreement, the Parties agreed that the dispute shall be governed and interpreted under the laws of Switzerland without application of the United Nations Convention on Contracts for the International Sale of Goods (CISG) as well as of any other laws of any other country.

"This Agreement shall exclusively be construed in accordance with, and governed by, the laws of Switzerland. The application of the United Nations Convention on Contracts for the International Sale of Goods (CISG) as well as of any other laws of any other country shall expressly be excluded. [...]. "

10.

Hence, Swiss law with the exclusion of the CISG and any other laws of any other country than Switzerland is the law governing the dispute between the Parties.

11.

Pursuant to Art. 15.6(2) of the Agreement (see para. 3 above), the language of this arbitration shall be English.

12.

Consequently, English is the language of these arbitration proceedings.

13.

On 11 April 2014, Claimant conveyed its RfA by courier to the Court.

14.

By letter dated 14 April 2014, the Secretariat acknowledged receipt of Claimant’s RfA and advised the Parties that pursuant to Art. 4(2) of the Rules, this arbitration had commenced on 14 April 2014.

15.

By letter dated 9 May 2014, the Secretariat acknowledged receipt of a USD 3,000 filing fee paid by Claimant and fixed a provisional advance of USD 17,000 to cover the costs of the arbitration until the ToR are established (Art. 36(1) of the Rules).

16.

By letter of the same day addressed to Respondent's address at 700 S. Flower Street, Los Angeles, California 90017, USA, the Secretariat provided Respondent with a copy of the RfA and set Respondent a deadline of 30 days from the day following receipt of this letter to tile its Answer to the RfA.

17.

In its letters to the Parties dated 9 May 2014, the Secretariat noted that the arbitration agreement provides for one arbitrator and advised the Parties that it they should fail to nominate the sole arbitrator within 30 days from the date Respondent received the RfA or any additional time allowed by the Secretariat, the Court would appoint the arbitrator as provided in Art. 12(3) of the Rules.

18.

By letter dated 13 June 2014, after being informed by the Secretariat that the RfA could not be served on Respondent under the address stated therein, Claimant requested the Secretariat to serve the RfA on the following updated addresses: Network Enhanced Technologies, Inc., 1725 Windward Concourse, Suite 150, Alpharetta, Georgia 30005, USA, and Network Enhanced Technologies, Inc., c/o Mr Sharoz Yroshalmiane, 700 S Flower Street, Suite 420, Los Angeles, California 90017-4106, USA.

19.

By letter dated 23 June 2014, the Secretariat served the RfA again on Respondent at its updated addresses and advised Respondent that all time limits would start running from receipt of this correspondence. The Secretariat further confirmed receipt of USD 14,000 paid by Claimant. Consequently, the provisional advance of USD 17,000 has been fully paid by Claimant.

20.

By letter dated 11 July 2014, the Secretariat informed the Parties that the RfA was successfully notified on 25 June 2014 to Respondent's address in Georgia at 1725 Windward Concourse, Suite 150, Alpharetta, Georgia 30005, USA. It further informed the Parties that the notification to Respondent's address in California at Network Enhanced Technologies, Inc., c/o Mr Sharoz Yroshalmiane, 700 S Flower Street, Suite 420, Los Angeles, California 90017-4106, USA, had failed after several unsuccessful attempts. The Secretariat further advised the Parties that all future correspondence to Respondent would be sent to its address in Georgia, unless it receives an objection from the Parties within 10 days from the day following the date of receipt of its letter.

21.

By letter dated 14 August 2014, the Secretariat advised the Parties that the Court had taken the necessary steps for the appointment of the sole arbitrator as provided in Art. 13(3) of the Rules, and that it had fixed the advance on costs at USD 45,000, subject to later readjustments.

22.

By letter dated 21 August 2014, the Secretariat informed the Parties that the Court had appointed Dr Michael Lazopoulos as sole arbitrator in the present arbitration upon the Swiss National Committee’s proposal (Art. 13(3) of the Rules). It further made the following payment requests to the Parties: USD 5,500 for Claimant (USD 22,500 minus USD 17,000 already paid by Claimant; see para. 19 above) and USD 22,500 for Respondent.

23.

On 21 August 2014, the Secretariat transmitted the file to the Sole Arbitrator who received it on the following day. The Sole Arbitrator accepted the appointment and declared to be and to remain impartial and independent of the Parties.

24.

By letter dated 26 August 2014, sent to Claimant's counsel's email address and Respondent's email address (avi@netincusa.com), the Sole Arbitrator asked the Parties to indicate their availability for a case management conference call until 29 August 2014.

25.

By letter dated 27 August 2014, the Sole Arbitrator provided the Parties with drafts of the ToR, the PO No. 1, the Procedural Timetable, and a copy of his letter dated 26 August 2014, and invited the Parties to provide their comments (if any) on these documents and to complete the ToR no later than by 2 September 2014. The letter dated 27 August 2014 (including enclosures) was sent to Claimant's counsel and Respondent by courier and email. According to the proof of delivery received from FedEx, Respondent received the hard copy of the Sole Arbitrator's letter dated 27 August 2014 (including enclosures) at its address in Georgia at 1725 Windward Concourse, Suite 150, Alpharetta, Georgia 30005, USA, on 29 August 2014.

26.

By email dated 29 August 2014, Claimant’s counsel confirmed its general availability for a case management conference call.

27.

By email dated 2 September 2014, Claimant’s counsel provided its comments on the drafts of the PO No. 1 and the ToR.

28.

By letter dated 5 September 2014, the Sole Arbitrator advised the Parties that Claimant’s comments on the drafts had been noted and appropriately taken into consideration in the respective documents. In his letter dated 5 September 2014, the Sole Arbitrator noted that Respondent had not filed any comments on the drafts of the ToR, the PO No. 1 or the Procedural Timetable within the deadline set in his letter dated 27 August 2014. Neither had Respondent indicated its availability for a possible case management conference call within the deadline set in his letter dated 26 August 2014. The Sole Arbitrator further noted that to that date, Respondent had neither participated in these proceedings nor raised any objection to them. Against this background, the Sole Arbitrator set the Parties a deadline until 17 September 2014 to duly sign six original copies of the enclosed ToR and return them to him. He further invited the Parties to provide him with their comments (if any) on the enclosed revised Procedural Timetable within the same deadline.

29.

In the same letter, the Sole Arbitrator advised the Parties that if any of the Parties should refuse to sign the ToR within the set deadline, he would proceed as provided in Art. 23(3) of the Rules and submit the ToR to the Court for approval.

30.

The Sole Arbitrator's letter dated 5 September 2014 (including enclosures) was sent to Claimant’s counsel by courier and email, and to Respondent by courier, email (avi@netincusa.com) and telefax (+1 888 876 1588). According to the proof of delivery received from FedEx, Respondent received the hard copy of the Sole Arbitrator’s letter dated 5 September (including enclosures) at its address at 1725 Windward Concourse, Suite 150, Alpharetta, Georgia 30005, USA, on 8 September 2014.

31.

By letter dated 16 September 2014, Claimant's counsel provided the Sole Arbitrator with six signed original copies of the ToR. In the same letter, Claimant’s counsel advised the Sole Arbitrator that with respect to its SoC, Claimant would refer to its RfA and refrain from submitting a further separate statement, unless the Sole Arbitrator deemed this necessary. By doing so, Claimant declared that its RfA included its SoC.

32.

By letter of the same day, Claimant's counsel informed the Secretariat that it had come to Claimant's attention that the California Secretary of State Record on Corporate Filing listed a company named Incorp. Services, Inc. as Respondent's Registered Agent in the State of California. Considering that Respondent had so far not participated at all in this arbitration, Claimant requested the Secretariat to serve the RfA and a copy of the remainder of the file in addition to the following address: c/o Network Enhanced Technologies, Inc, Incorp Services, Inc., 5716 Corsa Ave, Suite 110, Westlake Village, California 91362-7354 USA.

33.

By letter dated 19 September 2014, the Secretariat additionally notified the RfA and a copy of the remainder of the file to the address provided by Claimant in its letter dated 16 September 2014. In its letter, the Secretariat advised Respondent that this additional notification of the RfA did not affect any time limits. The Secretariat further acknowledged receipt of USD 5,500 paid by Claimant. Consequently, Claimant has fully paid its share of the advance on costs in the total amount of USD 22,500 (USD 5,500 + USD 17,000; see para. 22 above).

34.

By PO No. 2 dated 23 September 2014, the Sole Arbitrator advised the Parties that Respondent did not sign the ToR within the deadline set in his letter dated 5 September 2014 and ordered that the ToR signed by Claimant and himself shall be submitted to the Court for approval as provided in Art. 23(3) of the Rules. PO No. 2 was sent to Respondent's addresses at 1725 Winward Concourse Suite 150, Alpharetta, Georgia 30005, USA, and c/o Network Enhanced Technologies, Inc., Incorp Services, Inc., 5716 Corsa Ave Suite 110, Westlake Village, California 91362-7354, USA. According to the proof of delivery received from FedEx, Respondent received hard copies of the Sole Arbitrator's letter dated 23 September (including enclosures) at its addresses in Georgia and California on 25 September 2014.

35.

By letter dated 25 September 2014, the Secretariat advised the Parties that it would submit the ToR to the Court for approval as provided in Art. 23(3) of the Rules. Further, the Secretariat noted that Respondent had not paid the balance of the advance on costs in the amount of USD 22,500 as requested by the Secretariat in its payment request dated 21 August 2014. It set Respondent an additional time limit to pay the requested amount until 19 October 2014, and advised the Parties that it it would not receive such payment, it may request that Claimant pay the balance of the advance on costs on behalf of Respondent.

36.

By letter dated 10 October 2014, the Secretariat informed the Parties that the Court had approved the ToR signed by Claimant and the Sole Arbitrator. In the same letter, the Secretariat noted that Respondent had not paid its share of the advance of costs within the deadline set in the payment request dated 21 August 2014. Therefore, the Secretariat invited Claimant to substitute for Respondent by paying the amount of USD 22,500 until 24 October 2014.

37.

By PO No. 3 dated 10 October 2014, the Sole Arbitrator proposed additional dates for a case management conference call and invited the Parties to indicate their availability for this conference call until 16 October 2014. He advised the Parties that failure to indicate any specific date for this conference call within this deadline will be understood that the silent Party is available at any of the dates and times proposed by the Sole Arbitrator.

38.

In the same order, the Sole Arbitrator invited the Parties to submit their comments (if any) on the enclosed Procedural Timetable dated 10 October 2014 and the Provisional Agenda for the case management conference call until 16 October 2014. Further, he set Respondent a deadline to submit its statement of defence until 5 November 2014.

39.

In the same order, the Sole Arbitrator set the Parties a deadline until 10 November 2014 to inform him in writing whether they requested any hearings. He advised the Parties that it no hearings should be requested by either of the Parties within this deadline, he intends to decide the case solely on the documents submitted by the Parties (Art. 25(6) of the Rules).

40.

PO No. 3 (including enclosures) was sent to Respondent's addresses at 1725 Winward Concourse Suite 150, Alpharetta, Georgia 30005, USA, and c/o Network Enhanced Technologies, Inc., Incorp. Services, Inc., 5716 Corsa Ave Suite 110, Westlake Village, California 91362-7354, USA. According to the proof of delivery received from FedEx, Respondent received hard copies of PO No. 3 (including enclosures) at its addresses in Georgia and California on 13 October 2014.

41.

By email dated 14 October 2014, received from Respondent's representative Mr Avi Yroshalmiane and sent from Respondent’s known email address (avi@netincusa.com), Respondent asked the Sole Arbitrator for an extension till 1 November 2014.

42.

By email of the same day, sent to Respondent's email address (avi@netincusa.com), the Sole Arbitrator invited Respondent to specify for which deadline set in PO No. 3 Respondent requested an extension of deadline until 1 November 2014.

43.

By email of the same day, Respondent replied to "move all dates 30 days forward so that he may have counsel defend".

44.

By email dated 15 October 2014, Claimant objected to a rescheduling of the dates or extensions of time limits for submissions by stating that Respondent was not only in arrears with the payment, but now also tried to delay the proceedings, without even trying to offer reasons for the failure to participate in them so far.

45.

By PO No. 4 dated 15 October 2014, the Sole Arbitrator partially granted Respondent's request for time extension by extending the time limit set to the Parties in PO No. 3 until 23 October 2014. Furthermore, the Sole Arbitrator advised Respondent that he expects that, in the meantime, it starts preparing its statement of defence.

46.

By letter dated 17 October 2014, Claimant asked the Secretariat to once more request Respondent to pay its share of the advance on costs.

47.

By letter dated 22 October 2014, the Secretariat noted that Mr Yroshalmiane was now participating on behalf of Respondent and granted Respondent a further additional time to pay its share of the advance on costs until 31 October 2014.

48.

By submission dated 23 October 2014, Claimant confirmed its availability for the case management conference call on all of the proposed dates. Claimant further advised the Sole Arbitrator that it fully consented with the suggested Provisional Procedural Timetable dated 10 October 2014 and the Provisional Agenda for the case management conference call dated 10 October 2014. As regards a possible hearing, Claimant advised the Sole Arbitrator that Claimant refrained from making such request and suggested that the Sole Arbitrator decide the case solely on the basis of the documents submitted by the Parties, unless Respondent should submit a statement in good time which would make such hearing inevitable or desirable.

49.

By PO No. 5 dated 29 October 2014, the Sole Arbitrator noted that Respondent did not file any comments on the Provisional Procedural Timetable, the proposed dates for the case management conference call, or the Provisional Agenda for the case management conference call within the extended deadline. Neither did it request any oral hearing within the extended deadline. The Sole Arbitrator ordered that the case management conference call would take place on 3 November 2014 and that he expects to receive Respondent's statement of defence until 5 November 2014.

50.

On 3 November 2014, the case management conference call took place as scheduled. Claimant was represented by its counsel and Respondent was represented by its president, Mr Avi Yroshalmiane. In this conference call, Respondent asserted that it would need more time for the preparation of its statement of defence and requested an extension of deadline for its filing until 12 November 2014. Claimant objected to an extension of the deadline for the filing of the statement of defence. After having heard the arguments of both Parties, the Sole Arbitrator granted to Respondent a last and final extension to submit its statement of defence until 12 November 2014. Upon request of the Sole Arbitrator, Respondent confirmed that it would meet this deadline (cf. the Sole Arbitrator’s letter to the Parties dated 4 November 2014).

51.

It was further agreed during this conference call that Respondent should submit a comprehensive statement of defence, including all factual allegations, possible witness statements and other evidence. With regard to a possible hearing, it was agreed that Respondent should inform the Sole Arbitrator in its statement of defence, and Claimant in its possible comments on the statement of defence, whether they requested any hearings. With regard to Respondent’s mail delivery address, Respondent confirmed that all mail deliveries could be duly served at the address of its registered agent in Georgia at NETWORK ENHANCED TECHNOLOGIES, INC., 1725 Windward Concourse, Suite 150, Alpharetta, Georgia 30005. Respondent further confirmed that no additional notification at the address in Westlake Village, California, should be necessary (cf. the Sole Arbitrator’s letter to the Parties dated 4 November 2014).

52.

By letter dated 3 November 2014, the Secretariat acknowledged receipt of USD 22,500 substituted for Respondent by Claimant. Therefore, the entire advance on costs fixed by the Court at USD 45,000, subject to later readjustments, has been fully paid by Claimant (see para. 33 above).

53.

By email dated 6 November 2014, Mr Benjamin Kiss from Fischer, Zisblatt & Kiss, 1901 Avenue of the Stars, Suite 1020, Los Angeles, CA 90067, USA, advised the Sole Arbitrator that his office had been retained to represent Respondent in this arbitration. In the same email, Respondent's counsel advised the Sole Arbitrator that Respondent allegedly did not have a copy of the RfA and requested the Sole Arbitrator to provide him with a copy of it. Furthermore, he requested an additional time extension of 15 days to file Respondent's statement of defence and possible counterclaim.

54.

By PO No. 6 dated 8 November 2014, the Sole Arbitrator invited Claimant to provide its comments to Respondent's additional request for time extension to file its statement of defence until 11 November 2014.

55.

On 11 November 2014, Claimant submitted its comments on Respondent's further request for time extension and requested the Sole Arbitrator to reject Respondent’s request and to proceed on 13 November 2014 with a speedy resolution of this matter without considering any submissions received from Respondent after 12 November 2014.

56.

By PO No. 7 dated 12 November 2014, and in consideration that Respondent had time for more than four months to prepare its defence and to submit its statement of defence (see para. 19 above), the Sole Arbitrator granted Respondent an emergency time extension to file its statement of defence until 14 November 2014. The Sole Arbitrator advised Respondent in his order that, should it tail to submit its statement of defence within this deadline, it would be deemed to have waived its right to file a statement of defence and the Sole Arbitrator would proceed with the arbitration.

57.

On 14 November 2014, the Sole Arbitrator received Respondent’s SoD and its Counterclaim.

58.

By PO No. 8 dated 14 November 2014, the Sole Arbitrator ordered Claimant to submit its comments on the SoD and Counterclaim until 20 November 2014. At the same time, he ordered Respondent to quantify the monetary value of its Counterclaim within the same deadline.

59.

By submission dated 17 November 2014, Claimant’s counsel requested an extension of the time limit for its comments on the SoD and Counterclaim until 27 November 2014. Further, Claimant’s counsel informed the Sole Arbitrator that Claimant did not request an oral hearing.

60.

By letter dated 17 November 2014, the Sole Arbitrator granted Claimant's request for time extension for the filing of its comments on Respondent's SoD and Counterclaim until 27 November 2014.

61.

By submission dated 19 November 2014, Respondent's counsel informed the Sole Arbitrator that he could not quantify Respondent’s counterclaim within the deadline set in PO No. 8. He further stated that he hoped "to be able to accomplish this within the next two weeks".

62.

On 26 November 2014, Claimant submitted its Reply. In its Reply, it asserted that pursuant to Art. 5(5) of the Rules any counterclaims must be raised with the Answer and that after this point in time, counterclaims are therefore no longer admissible. It further submitted that pursuant to Art. 23(4) of the Rules no party can bring further claims which fall outside the limits of the ToR. As Respondent submitted its counterclaims only with its SoD - and thus after the ToR have been signed - Claimant submitted that the counterclaims had been filed too late, were outside the ToR's scope and consequently inadmissible. Claimant further submitted that - beside their inadmissibility - Respondent's counterclaims were without any tactual and legal basis.

63.

By PO No. 9 dated 3 December 2014, and by taking all circumstances into consideration, including the nature of the counterclaims, the fact that the counterclaims are related to the underlying dispute and based on the same Agreement, the stage of the proceedings and possible disruption caused by the counterclaims, the Sole Arbitrator considered that it appeared appropriate to authorise the inclusion of Respondent's counterclaims in these arbitral proceedings as requested by Respondent (Art. 23(4) of the Rules).

64.

In the same order, the Sole Arbitrator set Respondent a deadline to submit its Rejoinder until 16 December 2014. The Sole Arbitrator made Respondent aware that in the light of equal treatment and in view of Art. 22(1) of the Rules, he would not grant any time extension for the submission of the Rejoinder.

65.

By submission dated 8 December 2014, Claimant requested that the Court fix separate advances on costs to avoid that Claimant was forced to pay (again fully) the advance on costs for Respondent's counterclaim.

66.

By letter dated 10 December 2014, the Secretariat noted that by PO No. 9, the Sole Arbitrator had authorized Respondent to include its counterclaims raised in its Counterclaim. The Secretariat further noted that Respondent had not quantified the monetary value of its counterclaims as requested by the Sole Arbitrator in PO No. 8. It provided the Parties with an updated Financial Table including an estimate of the separate advance of USD 90,000 to be paid by Respondent if the Court should fix separate advances at a notional amount of USD 1,600,000. Further, it invited Respondent to provide its comments on Claimant's request for separate advances on costs before 16 December 2014.

67.

By submission dated 10 December 2014, Respondent requested that the Court denies Claimant's request for separate advances on costs. It advised the Secretariat that it would be hindered from participating in the arbitration proceedings should it be required to provide the "exorbitant" advance costs requested by Claimant. Further, Respondent informed the Secretariat that it would quantity the monetary value of its Counterclaim in its Rejoinder.

68.

By submission dated 15 December 2014, Claimant requested to set separate advances on costs for Claimant's claim and Respondent’s counterclaim and to proceed with the arbitration in an efficient and swift manner.

69.

By letter of the same day, the Secretariat acknowledged receipt of Respondent’s correspondence dated 10 December 2014 and Claimant's correspondence dated 15 December 2014. It advised the Parties that for the sake of procedural efficiency, it would invite the Court to examine whether to fix separate advances on costs at one of its next sessions. It further advised the Parties that if the amount in dispute is not quantified, the Court fixes the separate advances on costs at its discretion, using the notional amount of USD 1,600,000 which is generally applied by the Court in case of a sole arbitrator.

70.

On 17 December 2014 at 2:29 (CET), 2:54 (CET), and 2:59 (CET), respectively, Respondent submitted its Rejoinder in three different emails to ensure its delivery, given the size of the documents. By separate letter of the same day, Respondent requested the opportunity to conduct discovery and that the proceedings should be stayed pending the outcome of the declaratory relief action which Respondent intended to file in the Superior Court of California within the next ten days.

71.

By unsolicited submission dated 17 December 2014, Claimant requested that the Rejoinder should be disregarded because it had been filed after the time limit ordered in PO No 9.

72.

By letter dated 18 December 2014, and in consideration that the time limit was missed by less than 3 hours, there were no indications that Respondent's late filing was made by deliberate conduct or in abuse of procedure, the late filing did not cause any delay of the proceedings, and that it was not evident that Respondent took any advantage of its late filing or that Respondent's filing caused any disadvantage to Claimant, the Sole Arbitrator admitted Respondent's Rejoinder in this arbitration and by doing so dismissed Claimant's objection dated 17 December 2014.

73.

By PO No. 10 dated 19 December 2014, the Sole Arbitrator ordered that Claimant shall be given the opportunity to submit its comments to Respondent's Rejoinder until 16 January 2015 to the extent that Respondent had raised new assertions related to Respondent's Counterclaim and the exhibits related thereto.

74.

In the same order, the Sole Arbitrator declined Respondent's request dated 17 December 2014 for conduct of discovery, by taking all circumstances into consideration, including that these proceedings is an international arbitration proceeding and not a state court-litigation proceeding, the prevailing view in international arbitration that neither US-style court-litigation discovery nor English court-litigation disclosure (or similar features from other systems) should be practiced in international arbitration (Zuberbuhler/Hofmann/Oetiker/Rohner, IBA Rules of Evidence, Commentary on the IBA Rules on the Taking of Evidence in International Arbitration, Zurich 2012, Art. 3 N 18, 35), the fact that document production is a procedural issue which is governed by the rules of the procedure (Zuber-buhler/Hofmann/Oetiker/-Rohner, loc. cit., Art. 3 N 42), the rules provided for in sections II./4, II./6, and section III./14 of PO No. 1, and the fact that Respondent's request does not meet the requirements as to the content of a request to produce documents.

75.

In the same order, the Sole Arbitrator declined Respondent's other request made on 17 December 2014 for a stay of the proceedings. The Sole Arbitrator held that there are no compelling reasons evident or alleged by Respondent that would justify such stay.

76.

In the same order, the Sole Arbitrator informed the Parties that thereafter he intended to close the proceedings and decide the case solely on the documents submitted by the Parties (Art. 25(6) of the Rules), after none of the Parties had requested a hearing within the deadline agreed in the case management conference call held on 3 November 2014 (cf. the Sole Arbitrator's letter dated 4 November 2014, section (v)), and since none of the Parties had submitted any witness testimonies or offered any witnesses with their submissions (section 1I./6 of the PO No. 1).

77.

By email dated 24 December 2014, Respondent requested that the Sole Arbitrator allow for the submission of witness testimony via declaration.

78.

By letter dated 8 January 2015, the Secretariat informed the Parties that in its session of 8 January 2015, the Court had fixed separate advances. It provided the Parties with an updated Financial Table including a payment request for Respondent to pay a separate advance of USD 90,000 until 9 February 2015.

79.

By letter dated 12 January 2015, Respondent informed the Secretariat, the Sole Arbitrator and Claimant that it would not pay the requested separate advance. In the same letter, it further advised that it had filed a Complaint with the Superior Court of California, County of Los Angeles.

80.

By letter dated 16 January 2015, the Secretariat acknowledged receipt of Respondent letter dated 12 January 2015 and informed Respondent that, unless the Secretariat received the requested payment until 9 February 2015, the Secretary General may set a time limit of not less than 15 days on the expiry of which Respondent’s counterclaims would be considered withdrawn (Art. 36(6) of the Rules).

81.

By submission of 16 January 2015, Claimant submitted its Comments on Rejoinder.

82.

By unsolicited submission dated 2 February 2015, Respondent filed its comments on Claimant's Comments on Rejoinder.

83.

By unsolicited submission dated 4 February 2015, Claimant requested that Respondent's unsolicited submission dated 2 February 2015 should be disregarded and the proceedings should be officially closed.

84.

By letter dated 9 February 2015, the Sole Arbitrator acknowledged receipt of the Parties' unsolicited submissions dated 2 and 4 February 2015 and advised the Parties that he would decide on their admissibility in his final award (see paras 143-148 below). He further informed the Parties that he would disregard any further unsolicited submissions tiled by the Parties and would formally close the proceedings after the expiry of the final time-limit and invite the Parties to file their cost submissions.

85.

In the same letter, the Sole Arbitrator further dismissed Respondent's request for the submission of belated witness testimony dated 24 December 2014.

86.

By letter dated 10 February 2015, the Secretary General informed the Parties that the Secretariat had not received the requested separate advance on costs for the counterclaims within the deadline set in the Secretariat's letter dated 8 January 2015. He granted Respondent a last and final deadline of 15 days from the day following the receipt of his letter to pay the requested separate advance and advised the Parties that failing making such payment Respondent's counterclaims would be considered withdrawn (Art. 36(6) of the Rules). Furthermore, he invited the Sole Arbitrator to suspend his work on the counterclaims.

87.

By letter dated 3 March 2015, the Secretariat advised the Parties that it had not received the requested separate advance on costs for the counterclaims or an objection pursuant to Art. 36(6) of the Rules. Pursuant to Art. 36(6) of the Rules, the Secretariat declared that Respondent's counterclaims were considered withdrawn as of 3 March 2015.

88.

By PO No. 11 dated 19 March 2015, the Sole Arbitrator advised the Parties that there was one additional issue that had to be clarified before the proceedings could be closed. He drew the Parties' attention to Respondent's assertion made in its Rejoinder that it was allegedly entitled to damages based upon the differences between the premium rates it was charged and the standard services that it was in fact allegedly receiving. The Sole Arbitrator informed the Parties that, notwithstanding that Respondent's counterclaims raised in its separate counterclaim dated 13 November 2014 were considered withdrawn as per letter of the Secretariat dated 3 March 2015 (Art. 36(6) of the Rules), he may nevertheless have to deal with Respondent’s claim for price reduction, at least to the extent that this argument should be considered as a set-off defence ("Set-Off Defence"). He therefore invited Respondent to inform him in writing until 26 March 2015 (CET) whether it adhered to its set-off claim or withdrew it. Should Respondent tail to make the requested statement within this deadline, it will be deemed to have withdrawn its set-off claim (cf. PO No. 11 dated 19 March 2015).

89.

By email dated 19 March 2015, Respondent advised the Sole Arbitrator that it adhered to its set-off claim.

90.

By letter dated 2 April 2015, the Secretariat informed the Parties that at its session of 2 April 2015, the Court had readjusted the advance on costs and increased it from USD 45,000 to USD 60,000, subject to later readjustment (Art. 36(5) of the Rules). It provided the Parties with an updated Financial Table including a payment request for Respondent to pay USD 15,000 until 9 April 2015.

91.

By letter dated 7 April 2015, the Secretariat informed the Sole Arbitrator that, at its session of 2 April 2015, the Court extended the time limit for rendering the final award until 29 May 2015.

92.

By letter dated 8 April 2015, Claimant requested that separate advances on costs are to be fixed for Claimant's claims and Respondent's set-off claim pursuant to Art. 36(3) of the Rules. It further stated that readjusted advance on costs fixed by the Court is allegedly too high, because the amount in dispute for the set-off claim of USD 379,926 is overstated and should be reduced to an appropriate amount of USD 122,286.

93.

By email dated 9 April 2015, Respondent indicated that it does not have available funds to pay the requested advance on costs.

94.

By letter dated 9 April 2015, the Secretariat informed the Parties that the Court has duly considered Claimant’s position at its session of 2 April 2015 and invited Claimant to clarify by 14 April 2015 whether it requests that the Court reconsiders its decision dated 2 April 2015. With the same letter, it provided the Parties with an updated Financial Table including a payment request for Claimant to pay USD 15,000 until 24 April 2015.

95.

On 9 April 2015, the Sole Arbitrator issued PO No. 12, in which he declared the proceedings closed with respect to the matter to be decided in this final award in accordance with Art. 27(1)(a) of the Rules and invited the Parties to submit itemized statements of their costs.

96.

By email dated 13 April 2015, Claimant requested that the Court reconsiders its decision to readjust the global advance on costs (Art. 36(5) of the Rules) and to instead fix a separate advance on costs for Respondent's set-off claim (Art. 36(3) of the Rules).

97.

By letter dated 14 April 2015, the Secretariat acknowledged receipt of Claimant's submission dated 13 April 2015 and advised the Parties that it will invite the Court to examine whether to reconsider its decision to readjust the advance on cost dated 2 April 2015 at one of its next session.

98.

Both Claimant and Respondent submitted their itemized statement on costs on 14 April 2015.

99.

By email dated 14 April 2015, the Parties were granted a deadline until 16 April 2015 to comment on the statement on costs submitted by the other Party.

100.

On 15 April 2015, Respondent submitted its comments on Claimant’s statement on costs and stated that the invoices submitted by Clamant reveal only non-specific legal charges. Claimant did not file any separate comments on Respondent’s statement on costs.

101.

By letter dated 4 May 2015, the Secretariat informed the Parties that, at its session of 30 April 2015, the Court decided not to readjust the advance on costs fixed at USD 60,000. In view of Respondent's consistent refusal to contribute financially to this arbitration and to pay the balance of the advance on costs of USD 15,000, the Secretariat reiterated its invitation to Claimant to substitute for Respondent by paying the outstanding amount of USD 15,000 as indicated in the enclosed Financial Table until 19 May 2015.

102.

By letter dated 27 May 2015, the Secretariat informed the Parties that, at its session of 13 May 2015, the Court extended the time limit for rendering the final award until 30 June 2015. It further acknowledged receipt of USD 15,000 paid by Claimant. Consequently, the advance on costs reconsidered by the Court to USD 60,000, subject to later readjustment, has been entirely paid by Claimant.

103.

Claimant submitted the following prayers for relief (RfA, p. 1; Reply, paras 47, 74):

1. Respondent is ordered to pay Claimant USD 449,143.59.

2. Respondent is further ordered to pay Claimant interest in the amount of 12% per annum on

• USD 117,205.04 since 9 December 2012

• USD 89,618.13 since 10 January 2013

• USD 92,889.63 since 8 February 2013

• USD 80,139.77 since 16 March 2013

• USD 69,291.02 since 11 April 2013

3. Respondent is ordered to bear the cost of this proceeding, including attorneys' fees.

104.

Regarding Respondent’s counterclaim, Claimant requests that the Sole Arbitrator dismisses Respondent’s counterclaim to the extent that it is admissible (Reply, paras 71-73; Comments on Rejoinder, paras 111,116).

105.

In its SoD, Respondent submitted the following prayers for relief (SoD, p. 6):

1. That Claimant takes nothing by virtue of their Complaint and that the same be dismissed with prejudice;

2. For attorneys’ fees allowed by law;

3. For cost of suit incurred herein;

4. For such other relief, legal or equitable, that the Court may deem just and proper.

106.

In its Counterclaim, Respondent submitted the following prayers for relief (Counterclaim, p. 8):

1. Compensatory damages, according to proof at trial, plus costs and attorneys' fees;

2. Pre- and post-judgment interest at the legal rate;

3. Punitive damages;

4. Such other and further relief as the Court deems just and proper.

107.

Respondent failed to pay the requested separate advance on costs for its counterclaim fixed by the Court within the additional time limit set by the Secretariat in its letter dated 10 February 2015 (see paras 86-87 above). Therefore, pursuant to Art. 36(6) of the Rules, Respondent’s counterclaim is considered withdrawn as of 3 March 2015 (see para. 87 above).

108.

Consequently, the Sole Arbitrator will not deal with Respondent's counterclaim, but only hear the claims submitted by Claimant and Respondent's Set-Off Defence (see paras 88-89 above).

109.

In the light of efficiency, the Sole Arbitrator decided to rule on jurisdiction in the final award rather than in a partial or interim award.

110.

The arbitral tribunal has been constituted under the Rules. Since Zurich is the agreed place of arbitration (see para. 7 above), the provisions of Chapter 12 of the PILA apply to this arbitration.

111.

Art. 186(1) PILA states the general principle of competence-competence, empowering the arbitral tribunal to decide on its own jurisdiction. Art. 6(3) of the Rules similarly contains the principle of competence-competence. According to Art. 186bis(1) PILA, the principle of competence-competence applies irrespective of whether an action having the same subject-matter is already pending between the same parties before a state court unless significant grounds exist that require a stay in arbitration proceedings. Pursuant to Art. 186(2) PILA, jurisdictional objections should be raised prior to any statement on the merits.

112.

Claimant derives the jurisdiction of the Sole Arbitrator from the arbitration clause contained in Art. 15.6(2) of the Agreement (exh. C-2 to the RfA; RfA, paras 7-8; see para. 3 above).

113.

In its SoD, Respondent has objected to the jurisdiction of the Sole Arbitrator by stating, among other things, that the arbitration agreement is unfair, adhesive, unconscionable and further fails to comply with applicable laws between contracting parties in the United States and the State of California with regard to arbitration provisions (SoD, p. 1; Rejoinder, p. 2; see also para. 4 above).

114.

A valid arbitration agreement between the parties to the dispute is the basis for an arbitral tribunal's jurisdiction. For an arbitration agreement to be valid, it is necessary that (i) the subject-matter of the dispute is capable of settlement by arbitration (Art. 177 PILA; see paras 115-116 below), (ii) the Parties have reached consent on the salient features (essentialia negotii) of the arbitration agreement (Art. 178(1) PILA; see paras 117-120 below), and (iii) the arbitration agreement was concluded in the form specified by law (Art. 178(1) PILA; see paras 121-122 below; cf. Ber-ger/Kellerhals, International and Domestic Arbitration in Switzerland, 3rd ed., Berne 2015, n. 343 et seq.). As it will be set forth below, all requirements for a valid arbitration agreement are fulfilled in the present case.

115.

According to Art. 177(1) PILA, "any dispute of financial interest" can be subject to arbitration. Because this provision is a substantive rule of Swiss private international law, an arbitral tribunal seated in Switzerland may not apply any more restrictive standards that might exist under an applicable foreign law (Lembo/Conrad Hari, International Arbitration in Switzerland and Foreign Bankruptcy: Where Do We Stand?, ASA Bull. 4/2014, p. 737).

116.

The claim submitted by Claimant involves a financial interest, namely the payment of USD 449,143.59 plus interest. The requirement of arbitrabilty is thus fulfilled.

117.

Art. 178(2) PILA describes the conflicts of law rules for determining the law that governs the substantive validity of the arbitration agreement. According to this provision, an arbitration agreement is valid in terms of substance if the parties have reached consent in accordance with either (i) the law chosen by them to govern the arbitration agreement, or (ii) the law applicable to the dispute and, in particular, the law applicable to the principal contract, or (iii) Swiss law. By designating three alternative connecting factors, the legislature aimed at providing the parties to arbitration with the greatest possible degree of predictability, and at limiting the challenges against the substantive validity of an arbitration agreement to a minimum (BGE 119 II 380 cons. 4a). The conflict of laws rule provided in Art. 178(2) PILA follows the principle in favorem validitatis. It allows the arbitral tribunal to regard an arbitration agreement as valid that would be invalid under the law chosen by the parties or under the law applicable to the main contract, provided that it at least satisfies the substantive requirements of Swiss contract law (Berger/Kellerhals, loc. cit., n. 393).

118.

The Parties have not chosen a specific law to govern the arbitration agreement. They have chosen Swiss law as the law applicable to the dispute (see paras 9-10 above). Under Swiss law, the minimum substantive requirement in relation to the conclusion of contract requires the mutual consent of the parties with regard to the essentialia negotii of an arbitration agreement (Art. 1(1) CO; Berger/Kellerhals, loc. cit., n. 390), i.e. to submit the dispute to arbitration and to sufficiently specify the object of the dispute or the legal relationship out of which any dispute shall be resolved through arbitration.

119.

By signing the Agreement containing the arbitration clause (Art. 15.6(2) of the Agreement; exh. C-2 to the RfA), the Parties have mutually agreed that "all disputes arising in connection with the Agreement, including but not limited to, its validity, interpretation, fulfilment, effects and consequences, shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce by one (1) arbitrator in accordance with the said Rules." This arbitration agreement is clear, comprehensive and sufficiently specified. It is further well balanced since both Parties have the same rights and obligations under the arbitration clause. There can also be no doubt that both Parties being corporations experienced in contractual negotiations understood the scope and the legal consequences of the said arbitration agreement. Hence, it is not conclusive how this arbitration agreement should be unfair, adhesive and unconscionable as maintained by Respondent (SoD, p. 1).

120.

The substantive requirements for a valid arbitration agreement under Swiss law are thus fulfilled.

121.

Art. 178(1) PILA addresses the form of the arbitration agreement. It provides that the arbitration agreement must be evidenced by text.

122.

In the present case, the arbitration agreement is contained in Art. 15.6(2) of the Agreement (exh. C-2 to the RfA; see para. 3 above). The formal requirement of writing is thus fulfilled.

123.

By signing the Agreement containing the arbitration agreement at issue (Art. 15.6.(2) of the Agreement), the Parties have validly entered in and are bound by their agreement to arbitrate their dispute, which falls within the scope of the arbitration agreement. The Parties have thereby renounced their right of recourse to the jurisdiction of the national state courts in respect of their dispute. Pursuant to the principle of pacta sunt servanda, neither party can unilaterally declare that it is no longer bound by the arbitration agreement.

124.

Based on the above, the Sole Arbitrator comes to the conclusion that he has jurisdiction to decide the dispute submitted to him.

125.

Claimant’s position can be summarized as follows (RfA, paras 13-24):

126.

The Parties concluded the Agreement according to which Claimant provided the conveyance and the termination of international telephone traffic to specified countries for Respondent via its Installations and network facilities. Claimant has fulfilled all its obligations under the Agreement and is entitled to the corresponding payment.

127.

Pursuant to Art. 9.1 of the Agreement, Respondent is obliged to pay the applicable price for Claimant's services. The price payable by Respondent amounts to USD 449,143.59 as per the following breakdown:

	Invoice date	Invoice no.	Invoice amount (USD)
1	08/11/2012	91167217	117,205.04
2	10/12/2012	91169270	89,618.13
3	08/01/2013	91171139	92,889.63
4	13/02/2013	91173159	80,139.77
5	11/03/2013	91175251	69,291.02
			449,143.59

128.

Additionally, Claimant is entitled to interest on the invoiced amounts (exh. C-3) as provided for in Art. 9.5 of the Agreement. This provision stipulates that, if the invoiced amount in any invoice delivered pursuant to Art. 9.4 of the Agreement is not paid within thirty (30) days after the date of the invoice (the 30th day being the "Due Date"), the Party having issued such invoice may charge interest at a rate of 12% per annum on the unpaid and undisputed amount from the day after the due date.

129.

In accordance with Art. 9.4 of the Agreement, Claimant sent Respondent invoices (exh. C-3) on a monthly basis for the service period of October 2012 until February 2013, specifying the number of minutes terminated at the various destinations and the applicable prices in relation thereto. In addition, Claimant sent Respondent a reminder on 20 December 2012 (exh. C-4) regarding the payment of the invoice dated 8 November 2012, and asked Respondent to complete this payment until 3 January 2013. Claimant sent a second reminder on 13 March 2014 (exh. C-5), requesting Respondent to pay all outstanding debts until 27 March 2014.

130.

To this day, Respondent has withheld all invoiced payments. Claimant thus claims interest at a rate of 12% per annum on all invoices not paid by Respondent by the respective Due Date from the day after the due date ("Default Day"). According to Claimant, it is entitled to the following interest payments:

	Invoice date	Invoice no.	Invoice amount (USD)	Due Date	Default Day	Interest
1	08/11/2012	91167217	117,205.04	08/12/2012	09/12/2012	12%
2	10/12/2012	91169270	89,618.13	09/01/2013	10/01/2013	12%
3	08/01/2013	91171139	92,889.63	07/02/2013	08/02/2013	12%
4	13/02/2013	91173159	80,139.77	15/03/2013	16/03/2013	12%
5	11/03/2013	91175251	69,291.02	10/04/2013	11/04/2013	12%

131.

Respondent's position can be summarized as follows (SoD, p.2-3; Rejoinder, p. 3-8):

132.

Respondent did not pay the amount of USD 449,143.59 related to outstanding invoices because it was not obligated to pay it as Claimant failed to provide the agreed premium routing which resulted in a multitude of trouble tickets and loss of customers which ultimately lead Respondent to terminate its relationship with Claimant (SoD, p. 2; Rejoinder, p. 7-8).

133.

Respondent asserts that it is entitled to damages based upon the differences between the premium rates it was charged and the standard services that it was in fact receiving from Claimant. According to Respondent, the premium services were being charged at a rate of 25% above that of standard services (Rejoinder, p. 8). Therefore, Respondent submits that it shall not be obliged to pay for the services claimed by Claimant. It should rather be credited the amount of USD 379,926.02 or USD 342,568.35, respectively (Rejoinder, p. 7-8).

134.

Respondent further submits that Claimant waived all outstanding balances after 31 December 2012 when, on or about 2 March 2013, Dieter Villhard, Claimant’s head of Wholesale Services Billing and Settlement International, requested that Respondent only pay through December 2012.

135.

According to Respondent, the relationship between the Parties began in 2002 when, effective as of 12 April 2002, Respondent entered into an International Voice Termination Agreement with T-Systems USA, Inc. On or about 2 December 2003, Respondent entered into a first amendment to International Voice Termination Agreement with T-Systems North America, Inc. formerly known as T-Systems USA, Inc. On or about 12 December 2005, Respondent and T-Systems North America, Inc. entered into amendment No. 2 to the International Voice Termination Agreement. In the above agreements, Respondent contracted to receive Claimant’s premium and standard services through two trunk groups. Throughout the years, the relationship worked smoothly and services were rendered and paid for as per the terms of the agreement.

136.

On or about 21 April 2010, Claimant informed Respondent via email that it is lacking about 80 ports to fully implement a deal with DT ICSS for ROW termination, its T-Mobile U.S.A. subsidiary. Claimant indicated that Respondent has 10 ports set up for Standard HR Service and 23 ports set up for Premium PH Service. Claimant requested that Respondent reduce its capacity. Respondent declined to reduce its ports.

137.

In or about January 2012, Claimant once again informed Respondent via email that it needed to reduce the number of TDM circuits allocated to Respondent in order to free up port capacity. At that time, Respondent did not agree to relinquish its premium lines, yet began to experience connection difficulties.

138.

Respondent was experiencing decreased quality in the services being provided. Thus, in May 2012, Claimant represented to Respondent that it could provide better service by routing calls through its VoIP service as opposed to trunk lines, which resulted in a contract being entered into between the parties in or about May 2012 which was to accomplish 1) Claimant's need to take back the trunk lines; and 2) Respondent's request for better quality. Although this Agreement sets forth that the contracting party was now Claimant, all contacts between the parties remained the same and all communications were to the same sales people who maintained their signature line as Deutsche Telekom North America U.S.A. Further, all correspondence between the parties relating to the payment of invoices, the quality of service and trouble tickets were with Deutsche Telekom North America U.S.A.

139.

In or about 2 January 2013, Respondent received an email from Claimant explaining that Respondent had removed Claimant from routing to Serbia due to quality concerns and, since Claimant was unable to determine the cause, it suggested that Respondent move from Premium Service to Claimant's Mobile Hubbing Service.

140.

In or about 26 February 2013, Respondent was forced to terminate the use of Claimant's services due to poor quality, specifically in routing to Bosnia and Serbia (exh. R-5).

141.

There are several issues which may have to be decided to determine whether Claimant has a claim against Respondent or not (cf. para. 20 of the ToR). Those are:

• Admissibility of certain unsolicited submissions;

• Who are the parties to the Agreement?

• Did Claimant meet its burden of proving that, during the period of October 2012 to February 2013, it provided services for Respondent in the total amount of USD 449,143.59 as listed in the outstanding invoices (exh. C-3)?

• Did Respondent meet its burden of proving that Claimant breached the Agreement by providing services of quality below the agreed standard?

• If so, did Respondent meet its burden of proving that the services charged by Claimant were at a rate of 25% above of what it would have been entitled to charge?

• Did Respondent meet its burden of proving that Claimant waived all outstanding balances after 31 December 2012?

142.

In the following, the Sole Arbitrator will discuss and analyze the issues outlined above as appropriate.

143.

In the course of this arbitration, the Parties made a number of unsolicited submissions (see paras 71, 82 and 83 above), including, among other things, Respondent's submission dated 2 February 2015 and Claimant's submission dated 4 February 2015.

144.

Since these two unsolicited submissions may have an impact on the Sole Arbitrator's decision on the merits, the Sole Arbitrator advised the Parties in his letter dated 9 February 2015 that he will decide about their admissibility in his final award.

145.

In its submission dated 2 February 2015, Respondent provided its comments on various assertions made by Claimant in its Comments on Rejoinder, including, among other things, Claimant's assertion regarding the caller identification and its assertion regarding the purpose of trouble tickets. Furthermore, it reiterated once again the position made in its Rejoinder that it was not receiving the services for which it contracted.

146.

In its submission dated 4 February 2015, Claimant requested that Respondent's submission dated 2 February 2015 be disregarded. It states that the Sole Arbitrator has allowed several rounds of submissions and has fixed respective time limits therefore. In line with this procedural timetable, Respondent was thus able to present its case comprehensively in several rounds of submissions. Respondent, however, has repeatedly disregarded the procedural timetable by not complying with agreed time limits. Claimant submits that with its submission dated 2 February 2015, Respondent has once more disregarded the procedural timetable by unilaterally creating for itself a further round of submissions (cf. Claimant’s submission dated 4 February 2015).

147.

Section II./7 of the PO No. 1 states that the Parties are generally not permitted to submit any further statements or evidence outside of the procedural timetable. According to established case law and legal scholars, the principle of the right to be heard requires, however, that the Parties have the right to express themselves on any new allegation of the opposing party presented in the course of the proceeding and which might affect its legal position (cf. BGE 138 I 484; Berger/Kellerhals, loc. cit., n. 1024).

148.

Based on the above considerations, the Sole Arbitrator therefore allows and takes into consideration Respondent’s statements made in its submission dated 2 February 2015, to the extent that they refer to new allegations made in Claimant’s Comments on Rejoinder and to the extent that they affect its legal position.

149.

It is undisputed and evident from the file that the Agreement was signed by Claimant on the one hand, and by Respondent on the other hand (exh. C-2, p. 15).

150.

Respondent maintains, however, that Claimant, Deutsche Telekom North America, Inc., T-Systems USA, Inc. and T-System North America, Inc. were at the relevant time the agents of each other and representations made by one of these companies are deemed to be made while acting on behalf of the others (Rejoinder, p. 2; Respondent's submission dated 2 February 2015). Furthermore, it states, among other things, that although the Agreement sets forth that the contracting party was Claimant, all contacts between the parties remained the same and all communications were the same sales people who maintained their signature line as Deutsche Telekom North America, Inc. It further states that all correspondence between the parties relating to the payment of invoices, the quality of service and trouble tickets were with the involvement of Deutsche Telekom North America, Inc. (Rejoinder, p. 7-8).

151.

Claimant maintains that only the relationship between it and Respondent is relevant in this dispute, not Respondent's previous relationship with Deutsche Telekom North America, Inc. (Comments on Rejoinder, paras 95-98).

152.

It is unclear from Respondent’s allegation whether it alleges that the Agreement was signed by Claimant on behalf of Deutsche Telekom North America, Inc. and/or any other affiliated company and thus Claimant is not a party to the Agreement. If so, Respondent bears the burden of proving the existence of such legal representation (Art. 8 CC). Mere allegations such as that all negotiations, communication and contacts were always with the party known as Deutsche Telekom North America, Inc. and not with Claimant do not suffice as proof for the existence of any legal representation by Claimant in the name and on behalf of any other company (SoD, p. 4; Rejoinder, p. 7-8). It also not evident from Respondent’s allegations why Claimant should not have been entitled to delegate certain negotiations, communication or services to be performed under the Agreement to third parties, including its affiliated companies. Respondent's allegation is also contrary to the wording of the Agreement which does neither refer to any agency relationship between Claimant and Deutsche Telekom North America, Inc. nor any legal representation of Deutsche Telekom North America, Inc. The Agreement rather states on page 15 that it is signed "On behalf of Deutsche Telekom AG" and "On behalf of NETWORK ENHANCES TECHNOLOGIES INC.) being the Parties to this arbitration.

153.

Based on these considerations, the Sole Arbitrator finds that Respondent has not substantiated, let alone proved, that Claimant acted as an agent or a legal representative of Deutsche Telekom North America, Inc. and/or any other affiliated company when entering into the Agreement. In contrast, there is abundant evidence that Claimant entered into the Agreement in its own name. Therefore, the Parties to the Agreement are identical with the Parties to this arbitration, being Claimant and Respondent. Therefore, both Claimant and Respondent are legally bound to the rights and obligations arising out of the Agreement.

154.

The main rights and obligations arising out of the Agreement can be summarized as follows:

155.

Under the Agreement, Claimant undertook to provide "[...] the conveyance and the termination of the international telephone Traffic to the destination countries listed in the price list in Annex A by Deutsche Telekom via its TELEKOM GLOBAL NET-PoP-installations and network facilities and/or the conveyance and the termination of the international telephone Traffic to the destination countries listed in the price list in Annex E by [Carrier] via its installations and network facilities" (Art. 2.1 of the Agreement).

156.

For the services rendered by Claimant, Respondent undertook to "[...] pay the applicable prices as specified in the Price List set forth in Annex A and any other applicable fees set forth in the Order Form [...]. Each Party shall pay interest on overdue amounts and all applicable taxes." (Art. 9.1 of the Agreement).

157.

The invoice and payment mechanism is governed in Art. 9.3-9.5 of the Agreement. The relevant provisions can be summarized as follows:

"Each Party shall measure the volume of traffic by recording the Conversation Time with one-second accuracy. In the bill the sum of recorded calls will be rounded into full calling minutes. Destinations with special rounding rules will be provided with the monthly price list and are specified in Annex A.

Each Party shall send an invoice once a month to the other Party, payable in USD. The invoice shall specify the number of minutes terminated at the various destinations and the applicable prices in relation thereto.

If the invoiced amount in any invoice delivered pursuant to Section 9.4 is not paid within thirty (30) days after the date of the invoice (the 30th day being the "Due Date"), the Party that rendered such invoice may charge interest at a rate of 12% (twelve) per annum on the unpaid and undisputed amounts form the day after the Due Date to the date of receipt of payment. The payment shall be deemed received on the date the amount of such payment is credited to the applicable bank account listed in Annex B. All bank charges in relation to the payment of invoices due hereunder shall be borne by the Party required to pay such invoice. The payment shall be made only in accordance with the instructions listed in Annex B."

158.

Claimant maintains that it complied with its contractual obligation by providing Respondent with the services via its network as agreed in the Agreement and thus Respondent is obliged to pay for the agreed applicable price for Claimant's services (RfA, paras 15-16).

159.

According to Claimant, the agreed price payable by Respondent for its services rendered during the period of October 2012 to February 2013 amounts to USD 449,143.59 as per the following breakdown (RfA, para. 16; exh. C-3):

	Invoice date	Invoice no.	Invoice amount (USD)
1	08/11/2012	91167217	117,205.04
2	10/12/2012	91169270	89,618.13
3	08/01/2013	91171139	92,889.63
4	13/02/2013	91173159	80,139.77
5	11/03/2013	91175251	69,291.02
			449,143.59

160.

According to Art. 8 CC, the burden of proving an alleged fact rests on the party which bases its claim on that fact. Therefore, the burden of proof for Claimant’s allegation that the claimed amount of USD 449,143.59 corresponds to the agreed price payable by Respondent for its services rendered during the period of October 2012 to February 2013 lies on Claimant (Art. 8 CC).

161.

The aforementioned invoices no. 1-5 ("Invoices"; exh. C-3) were submitted by Claimant as exh. C-3. Each invoice specifies, among other things, the services provided by Claimant for Respondent at the various destinations during the period of October 2012 to February 2013, including the dates and number of minutes terminated at these various destinations as well as the applicable prices in relation thereto to be paid by Respondent.

162.

It is undisputed that Claimant effectively rendered the services listed in the Invoices (exh. C-3). Respondent contests, however, that Claimant's services met the agreed quality standard. It therefore submits that it shall not be obliged to pay for the services claimed by Claimant. It should rather be credited the amount ot USD 379,926.02 or USD 342,568.35, respectively (SoD, p. 2; Rejoinder, p. 7-8; see paras 88, 133 and 138 above). The Sole Arbitrator will deal with this alleged breach of the Agreement and the Set-Off Defence relating thereto at paras 166-194.

163.

Furthermore, it is undisputed that the prices listed in the Invoices relating to these services correspond to the prices agreed between the Parties.

164.

It further remains undisputed that the total of the Invoices amounts to USD 449,143.59.

165.

Based on these considerations, the Sole Arbitrator finds that Claimant has established that it provided the services listed in the Invoices during the period of October 2012 to February 2013 and that the claimed amount of USD 449,143.59 corresponds to the agreed price payable by Respondent to Claimant for these services.

166.

Respondent asserts that in May 2012, Deutsche Telekom North America, Inc. represented to Respondent that it could provide better services by routing calls through its VoIP service opposed to trunk lines, which resulted in the Agreement between Claimant and Respondent (SoD, p. 2; Rejoinder, p. 3). According to Respondent, almost immediately after entering into the Agreement, it experienced quality problems with the services provided by Claimant and it constantly sent trouble tickets to Claimant (Rejoinder, p. 4-8; exh. R-7 to R-19; Respondent’s submission dated 2 February 2015, p. 2). It further maintains that it informed Claimant that it is losing customers due to the poor quality of services it is receiving through the VoIP services (Rejoinder, p. 4-7).

167.

According to Respondent, Claimant breached the Agreement by providing allegedly only "Standard Hubbing" despite the fact that Respondent contracted to receive and was paying for "Premium Hubbing" (SoD, p. 2; Rejoinder, p. 6-8; Respondent’s submission dated 2 February 2015, p.1; paras 131-140 above).

168.

Claimant contests that it breached the Agreement (Reply, paras 59-63). It maintains that it complied with the agreed standard by even going beyond what was contractually agreed. It maintains that as soon as Claimant was confronted with Respondent's complaint about a potential quality issue, it immediately offered to upgrade Respondent from Premium Hubbing to Mobile Hubbing which represents the highest quality standard (Reply, para 62-63; Comments on Rejoinder, paras 99-106).

169.

The burden of proof for Respondent’s allegation that Claimant breached the agreement by allegedly only providing standard services instead of the agreed premium services lies on Respondent (Art. 8 CC).

170.

Section II./4 ot the PO No. 1 imposes a procedural obligation on the Parties to express their tactual and legal allegations in their submissions with appropriate precision. It states that the Parties’ submissions shall contain detailed factual and legal allegations with a reasonable degree of specification. It further authorises the Sole Arbitrator to disregard factual allegations and offers of evidence which are not presented with a reasonable degree of specification.

171.

It would have been on the Respondent to demonstrate in its submissions with a reasonable degree of specification that the quality of the services provided by Claimant was below the agreed standard. As Claimant correctly states (Reply, paras 58 and 61; Comments on Rejoinder, para 100), the mere reference to some trouble tickets is not sufficient proof for any quality issues and certainly not sufficient proof for Respondent's implied assertion that all services (including, among other things, some thousand termination minutes) provided by Claimant in 2012 had been of minor quality. Neither does the reference to trouble tickets prove that the alleged quality issues were caused by Claimant.

172.

Even if there had been a limited number of quality issues (which has not been demonstrated nor proven by Respondent), such quality issues would not necessarily constitute a breach of the Agreement. As Claimant correctly states (Comments on Rejoinder, para. 104), it is absolutely normal in a contractual relationship of this type that sometimes recalibration issues and similar issues occur, which then are remedied by the service provider.

173.

As far as Respondent refers to decreased quality in the services being provided by Deutsche Telekom North America, Inc. or representations made by Deutsche Telekom North America, Inc. to Respondent (SoD, p. 3; exh. R-2 and R-3), such allegations are irrelevant to the present dispute. The alleged incidents to which Respondent refers allegedly occurred with Deutsche Telekom North America, Inc. and happened in April 2010 and January 2012 (R-2 and R-3), i.e. at a time before the Parties entered into the Agreement. If there had been any quality issues at that time, they solely concern the business relationship between Respondent and Deutsche Telekom North America, Inc. and not the contractual relationship between the Parties which is the subject of the present arbitration. As shown in paras 149-153, Deutsche Telekom North America, Inc. is neither a party to the Agreement nor a party to the present dispute.

174.

The same is true as far as Respondent refers to trunks and circuits. As Respondent itself sets out (SoD, p. 2; Rejoinder, p. 3), the trunk lines and circuits had been taken back in exchange for the more modern VoIP services. This exchange resulted in the conclusion of the Agreement (exh. C-2) presently in dispute.

175.

Based on these considerations, the Sole Arbitrator finds that Respondent has not substantiated with a reasonable degree of specification, let alone proved, that Claimant breached the Agreement by providing services of minor quality than the quality agreed in the Agreement, in particular with regard to the services relating to the Invoices (exh. C-3) in the total amount of USD 449,143.59.

176.

Respondent asserts that despite the fact that it contracted to receive and was paying for premium services, it only received standard services. According to Respondent, the premium services were being charged by Claimant at a rate of 25% above of the rates for its standard services. Respondent submits that it should not be obliged to pay for the services claimed by Claimant. It should rather be credited the amount of USD 379,926.02 or USD 342,568.35, respectively (SoD, p. 2; Rejoinder, p. 6-8; Respondent’s submission dated 2 February 2015).

177.

As stated in PO No. 11 dated 19 March 2015, notwithstanding that Respondent's counterclaims raised in its separate Counterclaim dated 13 November 2014 are considered withdrawn as per letter ot the Secretariat dated 3 March 2015 (Art. 36(6) ot the Rules), the Sole Arbitrator may nevertheless have to deal with Respondent's Set-Off Defence (see para. 88 above).

178.

It is the prevailing view in the Swiss legal doctrine that the right to set-off should be admitted without restrictions before an international arbitral tribunal with its seat in Switzerland (Poudret/Besson, Comparative Law of International Arbitration, 2nd ed., Zurich 2002, n. 324 with further references), even in cases where the relationship out of which the set-off claim is said to arise its outside the scope of the arbitration agreement for the same claim (Berger/Kellerhals, loc. cit., n. 522 and 526 with further references).

179.

In the present case, Respondent's Set-Off Defence does not give rise to any issues of jurisdiction, because it is subject to the same legal relationship and the same arbitration agreement as Claimant's claim.

180.

Based on the above, the Sole Arbitrator comes to the conclusion that he has jurisdiction to hear Respondent’s Set-Off Defence.

181.

After the Sole Arbitrator's jurisdiction over Respondent’s Set-Off-Defence has been established, the Sole Arbitrator has to determine its merits.

182.

According to Swiss case law and Swiss legal doctrine, the issue of the material validity of a set-off is governed by the law of the (main) claim against which set-off is sought (BGE 81 II 175 cons. 4; Berger/Kellerhals, loc. cit., n. 1221; Schott/Courvoisier, Internationales Privatrecht, Basler Kommentar, Honsell/Vogt/Schnyder/Berti (eds.), 3rd ed., Basle 2013, Art. 186 n. 80-81). Not only is Claimant's claim as the main claim in the present dispute governed by Swiss law (see para. 9 above). Since Respondent's set-off arises out of the Agreement, it is governed by the parties' choice of law clause contained in Art. 15.6 of the Agreement (exh. C-2), i.e. Swiss law as well. The material validity of Respondent’s set-off claim is therefore governed by Swiss law.

183.

Under Swiss law, set-off is one of several possible ways of extinguishing an obligation. It is a defence of substantive nature aimed at the settlement of debt (cf. Berger/Kellerhals, loc. cit., n. 522; Poudret/Besson, loc. cit., n. 317). This is in contrast to some other jurisdictions, where set-off may be primarily considered a procedural instrument. Set-off may be declared at any time by unilateral declaration by one of the parties (cf. Berger/Kellerhals, loc. cit., n. 522). Swiss law does not require that the main claim and the set-off claim be connected or even arise from the same legal relationship (Berger/Kellerhals, loc. cit., n. 522). The only requirements are that the two claims must exist between the same parties, be of the same kind, and have become due (Art. 120(1) of the CO). In addition, there should be no statutory or contractual exclusion of set-off (Art. 125 and 126 of the CO).

184.

As it will be shown below, Respondent’s set-off already fails on the first requirement, namely the existence of a claim of Respondent against Claimant which could be set-off. The existence of a set-off claim against Claimant would require that (i) Claimant provided instead of the agreed "Premium Hubbing" only "Standard Hubbing", and that (ii) the price agreed between the Parties was above the price for "Standard Hubbing" and thus Respondent should be entitled to receive a price reduction between the contractually agreed price and the price for "Standard Hubbing". The burden of proof for these allegations lies on Respondent (Art. 8 CC).

185.

Section II./4 of PO No. 1 imposes a procedural obligation on the Parties to express their factual and legal allegations in their submissions with appropriate precision. It states that the Parties' submissions shall contain detailed tactual and legal allegations with a reasonable degree of specification. It further authorises the Sole Arbitrator to disregard factual allegations and offers of evidence which are not presented with a reasonable degree of specification.

186.

As shown in paras 166-175 above, Respondent has not substantiated with a reasonable degree of specification, let alone proved, that the services provided by Claimant to Respondent were below the quality standard agreed between the Parties in the Agreement. On this account alone, Respondent's set-off cannot be admitted.

187.

In addition, Respondent's damage calculation for its alleged set-off in the amount of USD 379,926.02 is wrong. According to Respondent’s allegation, "[...] Premium services were being charged at a rate of 25% above that of the Standard services. In 2012, N.E.T paid Deutsche $1,070,560.62 and was billed an additional $449,143.59 as set forth by Claimant. Based on N.E.T.'s calculation, it should be credited $379,926.02." (Rejoinder, p. 8). Apparently, Respondent calculated its alleged set-off amount of USD 379,926.02 based on USD 1,070,560.62 paid to Claimant (and presumably Deutsche Telekom North America, Inc.) in 2012 and USD 449,143.59 which was billed by Claimant to Respondent and which is subject of Claimant's claim against Respondent in this arbitration (USD 379,926.02 = 25% of [USD 1,070,560.62 + USD 449,143.59]). However, there is no reason why Respondent should be entitled to receive 25% from USD 449,143.59 relating to the outstanding Invoices (exh. C-3), since it has never paid this amount. Thus, a possible set-off could only be calculated on USD 1,070,560.62, i.e. on the amount which was allegedly paid by Respondent. However, since Respondent's set-off cannot be admitted in any event (see para. 186), Respondent’s miscalculation is not relevant to the outcome of the case.

188.

As far as Respondent claims a price reduction for the services being provided and paid under its agreement with Deutsche Telekom North America, Inc. (cf. Rejoinder, p. 8), such allegations are irrelevant to the present dispute since Claimant was not a party to this agreement (see paras 149-153). Thus, a possible set-off claim concerning services being provided under the agreement with Deutsche Telekom North America Inc. would need to be directed against Deutsche Telekom North America which is however not a party to this arbitration.

189.

Furthermore, Art. 13.1 of the Agreement states that each Party shall only be liable for injury and damage that are caused by wilful conduct or by gross negligence. Art. 13.2 of the Agreement further limits the Parties’ liability up to the maximum amount ot EUR 50,000 or EUR 100,000, respectively. According to Art. 13.2(ii) of the Agreement, a Party’s liability for, among other things, loss of profit or of a customer is expressly excluded. Respondent failed to prove that Respondent did incur any damage with regard to the allegedly experienced minor quality of the calls and that such quality issues were caused by wilful conduct or by gross negligence of Claimant. Also for this reason, Respondent's Set-Off Defence cannot be admitted.

190.

As far as Respondent alleges that its calls were not getting caller identification, Respondent did neither substantiate nor prove that the caller identification is a feature typically pertaining to "Premium Hubbing" - which is disputed by Claimant (Comments on Rejoinder, para. 103). But even if the caller identification had been a feature being part of the agreed premium service, it is more than questionable whether the mere lack of this feature would constitute a defect which would justify a price reduction at all. Respondent is silent on the question why the caller identification should be a feature of such importance that its absence would justify a price reduction.

191.

Furthermore, Respondent has neither substantiated nor proved that the services provided by Claimant were allegedly only equivalent to "Standard Hubbing". Neither did Respondent demonstrate the differences between "Standard Hubbing" and "Premium Hubbing" at all. It would have been on Respondent, however, to make the necessary allegations with a reasonable degree of specification to prove that Claimant allegedly only provided "Standard Hubbing". Against this background, it can be left open whether the mere reference to a price list provided by Deutsche Telekom North America, Inc. (and not Claimant) in 2010 would sufficiently prove that the prices for "Premium Hubbing" are at rate of 25% above the rates for "Standard Hubbing" (cf. Rejoinder, p. 8).

192.

As far as Respondent claims that it is entitled to receive a price reduction from the services related to the trouble tickets, it would have been on Respondent to specify at which specific date, for which specific service, to which specific destination listed in the Invoices it claims such reduction. However, Respondent failed to do so. It is not conclusive from Respondent's submissions why a general reduction of 25% on all services charged by Claimant in 2012 should be justified.

193.

Since it is clear that the first requirement of a set-off (i.e. the existence of a claim of Respondent against Claimant) is not met, there is no need to deal with the other requirements required for a set-off (see para. 183 above).

194.

Based on these considerations, the Sole Arbitrator finds that Respondent has not substantiated, let alone proved, that it is entitled to receive any price reduction. Respondent’s set-off plea is therefore dismissed.

195.

For the sake of completeness, the Sole Arbitrator will also address Respondent alleged claim raised in its Rejoinder for damages for the alleged loss of customers due to the alleged poor service quality provided by Claimant (Rejoinder, p. 8). This is, however, only to the extent that this argument should be considered as a set-off defence and thus be heard despite the fact that Respondent's counterclaim for its alleged loss of customers is deemed to be withdrawn (see paras 107-108).

196.

As shown in paras 166-175 above, Respondent has not substantiated with a reasonable degree of specification, let alone proved, that the services provided by Claimant to Respondent were below the quality standard agreed between the Parties in the Agreement. On this account alone, Respondent's possible set-off for damages for loss of customers cannot be admitted.

197.

Furthermore, Respondent has neither substantiated nor proved that it effectively lost any customers or that it suffered any damages from the alleged loss of customers. It would have been on Respondent, however, to make the necessary allegations with a reasonable degree of specification to prove that it effectively lost customers due to the services provided by Claimant and that it suffered any damages from this loss of customers. Also for this reason, Respondent's possible set-off defence for loss of customers cannot be admitted.

198.

Finally, Art. 13.2(ii) of the Agreement provides that a Party's liability for, among other things, loss of profit or of a customer is expressly excluded. A possible set-off defence for damages for loss of customers does fall under this clause and would thus be excluded. Also for this reason, Respondent’s possible set-off defence for loss of customers cannot be admitted.

199.

Based on these considerations, the Sole Arbitrator finds that Respondent’s possible set-off plea for damages based on alleged loss of customers must therefore be dismissed.

200.

Respondent asserts that Claimant waived all outstanding balances after 31 December 2012 when on or about 2 March 2013, Dieter Villhard, Claimant's head of Wholesale Services Billing and Settlement International, requested that Respondent only pay through December 2012 (SoD, p. 4; exh. R-1).

201.

Claimant contests that it waived its right to be paid for the service periods subsequent to 31 December 2012. It states that the fact that no further payments for later periods were requested in the email dated 2 March 2013 is simply because payment for any subsequent service period was not due at the time when the email was sent (Reply, paras 65-67).

202.

The Parties are in dispute as to the true nature of the statement made by Claimant in its email dated 2 March 2013 (exh. R-1). Art. 18(1) CO governs the interpretation of statements relating to the form and content of a contract. It reads as follows:

"As regards both the form and content of a contract, the true intent which is mutually agreed upon shall be considered, and not an incorrect statement or manner of expression used by the parties, whether due to error, or with the intention of concealing the true nature of the contract." (working translation by the Sole Arbitrator).

203.

This provision also applies in analogy to the interpretation of unilateral statements and declarations made by a party (BGE 115 II 329; 54 II 313). Consequently, under Swiss law, the Sole Arbitrator has to seek to determine the true intent of the parties (BGE 131 III 606; Gauch/Schluep/Schmid/Rey/Emmenegger, Schweizerisches Obligationenrecht, Allgemeiner Teil, Vol. 1,9th ed., 2008, n. 1200).

204.

If it is not (or no longer) possible to reliably determine the parties' actual intentions at the time of the conclusion, the arbitral tribunal or a court must ascertain their presumed intention (BGE 130 III 66). To do so, the judicial body may revert to the so-called "objective method of interpretation" (BGE 92 II 347). The arbitral tribunal or the court has to establish what a reasonable party would have intended in good faith, by taking into account not only the wording of the contract but also all relevant circumstances (published decision of the Swiss Federal Supreme Court: 4A_453/2009 dated 26 January 2010, cons. 3.1). The court has to aim for a "sensible solution" (BGE 119 II 372; Gauch/Schluep/Schmid/Rey/Emmenegger, loc. cit., n. 1201).

205.

The Swiss Federal Supreme Court has developed a number of rules concerning the interpretation of contracts and statements made by the parties (BGE 122 III 429; Gauch/Schluep/Schmid/Rey/Emmenegger, loc. cit., n. 1205-1221). Firstly, the starting point of any interpretation of a contract or a statement is its wording. The terms shall be construed according to their ordinary meaning (general language use). In addition, not only the wording of the particular clause but also the context of such clause in the framework of the contract or the statement has to be taken into account (published decision of the Swiss Federal Supreme Court: 4C_313/2004 dated 21 January 2006, consid. 2.2). Secondly, in its endeavour to determine the "true intention" of the parties, the arbitral tribunal or the court may also consider the circumstances surrounding each individual case (BGE 118 II 366). In cases where the surrounding circumstances do not provide a clear answer with respect to the parties’ true intention, the wording of a contract or statement shall prevail (BGE 129 III 122; Gauch/Schluep/Schmid/Rey/Emmenegger, loc. cit., n. 1220).

206.

In order to determine the true intention of Claimant's email dated 2 March 2013, the Sole Arbitrator has to examine the wording of Claimant's statement made therein as well as the surrounding circumstances.

207.

The email itself does not contain the necessary elements or terms of a waiver. In particular, it does not contain the word "waiver" or a term with a similar meaning. Contrary to Respondent’s allegation, in its email dated 2 March 2013, Claimant did not request that Respondent "only pay through December 2012" (SoD, p. 2). It rather asked Respondent to inform it until Monday if Respondent "is willing to pay the mentioned outstanding amounts for the service period October-December 2012" (exh. R-1). There is no wording used in the email that would indicate any waiver or limitation of Respondent's payment obligations towards Claimant. Under these circumstances, the Sole Arbitrator concludes that the wording of the email does not support Respondent's allegation that Claimant has indeed waived its right to be paid for its service periods subsequent to 31 December 2012.

208.

As set out above, the wording of a contract or a statement is only one of several possible methods to determine the true intent of the parties. In the following, the Sole Arbitrator will evaluate the surrounding circumstances of the statement made in the said email.

209.

As Claimant correctly points out, the subsequent services were not due on 2 March 2013 when the email was sent to Respondent. According to exh. C-3, the invoice for the subsequent service period of January 2013 was issued and apparently delivered to Respondent on 13 February 2013 and thus not due before 15 March 2013 (exh. R-3; RfA, paras 16 and 20). Thus, a reasonable person in the shoes of Respondent could not understand the statement made by Claimant in its email as a waiver of its right to be paid for the service periods subsequent to 31 December 2012. There are no other surrounding circumstances evident from the Parties’ submissions or the file which would support Respondent’s allegation that Claimant has indeed waived its right to be paid for its service periods subsequent to 31 December 2012. The Sole Arbitrator further notes that Respondent did not provide a plausible explanation why Claimant should have waived its right to be paid for the service periods after 31 December 2012.

210.

Based on these considerations, the Sole Arbitrator finds that Respondent has not proved that Claimant has waived its right to be paid for the services provided after 31 December 2012.

211.

As far as Respondent asserts that Claimant was engaged in fraud and that it had been unjustifiably enriched (Rejoinder, p. 2), and to the extent that these assertions should be heard after Respondent's counterclaim is deemed to be withdrawn, the Sole Arbitrator finds that Respondent has not substantiated, let alone proved, that Claimant was engaged in any fraudulent conduct or that that it would have been unjustifiably enriched.

212.

In its SoD, Respondent raised the following twenty-one affirmative defenses of which most of them are unknown to Swiss laws:

"FIRST AFFIRMATIVE DEFENSE

The Complaint fails to state facts sufficient to constitute a cause of action.

SECOND AFFIRMATIVE DEFENSE

N.E.T. is informed and believes, and thereon alleges, that Claimant failed to mitigate its damages.

THIRD AFFIRMATIVE DEFENSE

Claimant’s claims are barred by the doctrine of laches.

FOURTH AFFIRMATIVE DEFENSE

Claimant’s claims are barred by the doctrine of estoppel.

FIFTH AFFIRMATIVE DEFENSE

Claimant’s claims are barred by the doctrine of waiver.

SIXTH AFFIRMATIVE DEFENSE

Claimant’s claims are barred, in whole or in part, by the doctrine of accord and satisfaction.

SEVENTH AFFIRMATIVE DEFENSE

Claimant failed to perform its duties in order to earn the alleged damages in the Complaint.

EIGHTH AFFIRMATIVE DEFENSE

Claimant is barred from recovering any damages or relief by reason of the lack or inadequacy of consideration that defeats the effectiveness of any alleged contract between the parties.

NINTH AFFIRMA TIVE DEFENSE

N. E. T.’s actions, as alleged in the Complaint, were at all times reasonable and justified.

TENTH AFFIRMA TIVE DEFENSE

Claimant breached its obligations to N.E.T. under the Agreement by its acts and/omissions including failure to abide by the terms of the Agreement.

ELEVENTH AFFIRMA TIVE DEFENSE

N.E.T’s performance has been discharged and excused by Claimant’s conduct relating to the alleged Agreement.

TWELFTH AFFIRMATIVE DEFENSE

Claimant is barred from recovery of any deficiency over the amount already collect-

ed for failure to comply with the terms of the Agreement and applicable law.

THIRTEENTH AFFIRMATIVE DEFENSE

Plaintiff is barred from bringing this action, in whole or in part, or Claimant’s claims should be proportionately reduced, to the extent that the N.E.T. is entitled to a setoff in relation to claims asserted by Claimant.

FOURTEENTH AFFIRMATIVE DEFENSE

Claimant’s claim is barred, in whole or in part, by their release of that claim.

FIFTEENTH AFFIRMATIVE DEFENSE

Claimant’s claims are barred by the doctrine of unclean hands.

SIXTEENTH AFFIRMATIVE DEFENSE

Claimant’s claims are barred due to their failure to cooperate, which either bars or proportionately reduces any potential recovery by Plaintiff, and/or entitles N.E.T. to recover any damages they have incurred as a result of Claimant’s alleged breach.

SEVENTEENTH AFFIRMATIVE DEFENSE

Any obligations of N.E.T. are excused since conditions precedent, concurrent and/or subsequent to performance have not been met.

EIGHTEENTH AFFIRMATIVE DEFENSE

Claimant's claims are barred, in whole or in part, to the extent that Claimant committed fraud in relation to the matters sued upon.

NINETEENTH AFFIRMATIVE DEFENSE

Claimant's claims are barred to the extent the subject Agreement is ambiguous.

TWENTIETH AFFIRMATIVE DEFENSE

Any purported failure to exercise or delay in exercising a right or remedy under the Agreement does not constitute a waiver of such right or remedy.

TWENTY-FIRST AFFIRMATIVE DEFENSE

N.E. T. presently has insufficient knowledge or information upon which to form a belief as to whether it may have additional, as yet unstated, affirmative defenses that govern the claim asserted by Claimant. N.E. T. reserves the right to assert additional affirmative defenses as appropriate."

213.

Respondent did not present with a reasonable degree of specification as required in section II./4 of the PO No. 1, let alone prove, the necessary factual and legal allegations which would justify the application of any affirmative defense raised by Respondent. Neither is it evident from the file that any affirmative defenses should be applied in the present dispute, as far as they should be applied ex officio.

214.

Based on these considerations, the Sole Arbitrator finds that Respondent has not substantiated, let alone proved, that any affirmative defense applies in the present dispute.

215.

Claimant seeks payment of 12% default interest per annum on the outstanding Invoices by the respective default date as per the following breakdown (see paras 128-130):

	Invoice date	Invoice no.	Invoice amount (USD)	Due Date	Default Date	Interest
1	08/11/2012	91167217	117,205.04	08/12/2012	09/12/2012	12%
2	10/12/2012	91169270	89,618.13	09/01/2013	10/01/2013	12%
3	08/01/2013	91171139	92,889.63	07/02/2013	08/02/2013	12%
4	13/02/2013	91173159	80,139.77	15/03/2013	16/03/2013	12%
5	11/03/2013	91175251	69,291.02	10/04/2013	11/04/2013	12%

216.

Respondent did not submit any argument or specific objection on the percentage or starting date of default interest claimed by Claimant. However, given Respondent’s request to reject Claimant’s claim in full, it can be assumed that it also objects to the granting of any interest.

217.

Art. 9.5 of the Agreement provides that, if the invoiced amount in any invoice delivered pursuant to Art. 9.4 of the Agreement is not paid within thirty (30) days after the date of the invoice (the 30th day being the "Due Date"), the Party that rendered such invoice may charge interest at a rate of 12% (twelve) per annum on the unpaid and undisputed amount from the day after the Due Date to the date of receipt of payment.

218.

Art. 9.6(3) of the Agreement further provides that all disputed amounts which are subsequently determined to be owing under this Agreement shall bear interest in accordance with Art. 9.5 from the day after the applicable Due Date until paid in full.

219.

Under Swiss law as the applicable law chosen by the Parties, Art. 104(1) CO states that, absent any contrary contractual stipulation, the statutory default interest rate between the parties is 5% per annum. Where the contract envisages a rate of interest higher than 5%, whether directly or by agreement of a periodic bank commission, such higher rate of interest may also be applied while the debtor remains in default (Art. 104(2) CO).

220.

With regard to the date at which default interest starts to run, Art. 104(1) CO states that interest runs from the moment the debtor is in default. According to the general rule of Art 102(1) CO, the debtor is in default upon receiving a formal reminder. However, no formal reminder is necessary where a deadline for performance of the payment obligation has been agreed; it thereby suffices, that the contractually agreed deadline is determinable by way of calculation (Thier, Obligationenrecht, Kurzkommentar, Basel 2014, Art. 102 N 5). Where this is the case, the debtor is automatically in default on expiry of the deadline (Art. 102(2) CO).

221.

In the present case, the Parties have agreed that the deadline for performance of the payment obligation shall be the thirtieth day after the date of the invoice (Art. 9.5 of the Agreement). Thus, Respondent was automatically in default on the day following the thirtieth day, i.e. on thirty-first day following the invoice date.

222.

In accordance with Art. 9.4 of the Agreement, Claimant sent Respondent the Invoices for the service period October 2012 until February 2013 on 8 November 2012, 10 December 2012, 8 January 2013, 13 February 2013 and 11 March 2013. It is undisputed that, until today, none of the Invoices has been paid by Respondent. Pursuant to Art. 9.5 of the Agreement and in accordance with Art. 102(2) CO, Respondent became automatically in default with its payment obligations on the day following the thirtieth day after the date of the respective Invoices. No additional formal reminder was necessary. Therefore, Claimant is entitled to be paid default interest at the agreed default interest rate of 12% per annum on the unpaid invoice amounts of

• USD 117,205.04 since 9 December 2012,

• USD 89,618.13 since 10 January 2013,

• USD 92,889.63 since 8 February 2013,

• USD 80,139.77 since 16 March 2013, and

• USD 69,291.02 since 11 April 2013.

until the date of payment.

223.

Accordingly, for all the reasons set out above, the Sole Arbitrator decides that Respondent is ordered to pay Claimant USD 449,143.59 plus default interest in the amount of 12% per annum on

• USD 117,205.04 since 9 December 2012,

• USD 89,618.13 since 10 January 2013,

• USD 92,889.63 since 8 February 2013,

• USD 80,139.77 since 16 March 2013, and

• USD 69,291.02 since 11 April 2013

until the date of payment.

224.

According to Art. 37(4) of the Rules, the Sole Arbitrator shall fix the costs of the arbitration and decide which of the parties shall bear them or in what proportion they shall be borne by the parties.

225.

Pursuant to Art. 37(1) of the Rules, the costs of the arbitration shall include the fees and expenses of the arbitrators and the ICC administrative expenses fixed by the Court, in accordance with the scale in force at the time of the commencement of the arbitration, as well as the fees and expenses of any experts appointed by the arbitral tribunal and the reasonable legal and other costs incurred by the parties for the arbitration. Art. 37(1) and (5) of the Rules provides the Sole Arbitrator with great discretion in allocating arbitration costs and awarding party costs, including legal costs and other costs incurred by the parties.

226.

Considering all facts and circumstances of the case and the above described outcome of this arbitration, the Sole Arbitrator considers it appropriate and justified that Respondent shall bear the entire costs of the arbitration. There is no reason evident for the Sole Arbitrator in the present case to depart form the "costs follow the event" rule.

227.

The Court fixed the costs of the arbitration at USD 60,000 (see paras 90, 94, and 101 above). Since the entire advance on costs fixed has been fully paid by Claimant (see para. 102 above), the above mentioned cost assessment leads to the result that Respondent must compensate Claimant for 100% of the arbitration costs advanced by Claimant. Thus, Respondent must pay to Claimant USD 60,000.

228.

In its Cost Submission dated 14 April 2015, Claimant requested the conversion of the advance on costs ot USD 60,000 paid to the ICC from USD into Euro (Claimant’s Cost Submission dated 14 April 2015, para. 136). Considering that the costs of the arbitration are fixed by the Court in USD and were paid by Claimant in USD, and that Claimant is doing business in USD (e.g. the business with Respondent; see para. 127 above), the Sole Arbitrator deems it appropriate to award the amount in USD to be reimbursed by Respondent to Claimant for the advances paid by Claimant to the Court.

229.

As for the costs of legal representation and other costs claimed by the Parties, the above mentioned cost assessment leads to the result that Respondent must compensate Claimant for its legal representation and further costs. Claimant submitted a claim for legal representation and other costs amounting to a total of EUR 60,976.00 (Claimant's Cost Submission dated 14 April 2015, para. 138; exhibit C-10). In addition, it claims an amount of EUR 4,500 for anticipated review of the final award and related correspondence between it and its counsel (including for the drafting of its Cost Submission; Claimant's Cost Submission dated 14 April 2015, para. 139).

230.

As regards to the costs for legal representation in the total amount of EUR 60,976, Claimant's Cost Submission is sufficiently evidenced by the respective invoices. Contrary to Respondent's objection (see para. 100 above), the Parties were not required to specify the legal charges in further detail. As expressly stated in PO No. 12 dated 9 April 2015 and to preserve the attorney-client privilege, attorney's invoices do not have to include details of activity. The amount of EUR 60,976 appears in the light of complexity and based on the numerous objections and arguments raised in the course of the arbitration reasonable and justified to the Sole Arbitrator. Therefore, Respondent shall pay to Claimant EUR 60,976 for legal representation and other costs connected in connection with the present arbitration proceedings.

231.

As regards to Claimant's additional claim for compensation in the amount EUR 4,500, the Sole Arbitrator finds that this amount is neither evidenced nor reasonable. Furthermore, the Sole Arbitrator’s decision on costs is limited to the legal and other costs incurred by the Parties during the arbitration (cf. Art. 37(1) of the Rules; Fry/Greenberg/Mazza, The Secretariat’s Guide to ICC Arbitration, Paris 2012, n. 3-1492). The Sole Arbitrator finds that he has no jurisdiction to decide on compensation for anticipated legal fees that may or may not incur after the termination of the arbitration. Therefore, the Arbitrator finds that Claimant's request for compensation in the additional amount of EUR 4,500 cannot be granted and must thus be dismissed.

Based on the above considerations, examination and reasoning and after having carefully considered all factual and legal allegations and arguments submitted by the Parties -even if not explicitly mentioned or discussed in this final award - the Sole Arbitrator renders the following

1 The Sole Arbitration has jurisdiction to decide the dispute submitted to him.

2 Respondent is ordered to pay to Claimant USD 449,143.59 plus default interest in the amount of 12% per annum on:

• USD 117,205.04 since 9 December 2012,

• USD 89,618.13 since 10 January 2013,

• USD 92,889.63 since 8 February 2013,

• USD 80,139.77 since 16 March 2013, and

• USD 69,291.02 since 11 April 2013

until the date of payment.

3 Respondent is ordered to bear the entire arbitration costs of USD 60,000 as fixed by the Court. Thus, Respondent is ordered to reimburse Claimant the amount of USD 60,000.00.

4 Respondent is ordered to pay to Claimant an indemnity for legal and other costs of EUR 60,976.00.

5 Respondent's set-off is dismissed.

6 All other and further claims and requests for relief submitted by either Party are not sustained and dismissed.

Deutsche Telekom v. Network Enhanced Technologies

Documents of the case

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

Final Award

I. Introduction

A. The Parties to the Arbitration

1. Claimant

2. Respondent

B. Arbitration Agreement

C. Place of Arbitration

D. Applicable Law

E. Language of the Arbitration Proceedings

II. Procedural History

A. Commencement of the Arbitration

B. Constitution of the Arbitral Tribunal

C. Arbitral Proceedings

D. Closing of the Proceedings

III. Relief Sought

A. Relief sought by Claimant

B. Relief sought by Respondent

IV. Withdrawal of Respondent's Counterclaim

V. Jurisdiction

A. General Remarks

B. Validity of the Arbitration Agreement

1. Arbitrability

2. Substantive Validity

3. Formal Validity

4. Conclusion

C. The Sole Arbitrator's Decision on Jurisdiction

VI. The Dispute in this Arbitration

1. Claimant’s Position

2. Respondent's Position

VII. The Sole Arbitrator's factual and Legal Conclusions

A. The Issues to Be Decided

B. Admissibility of Certain Unsolicited Submissions

C. The Parties to the Agreement

D. The Parties' Rights and Obligations under the Agreement

E. The Services Rendered and Invoiced by Claimant

F. Respondent's Alleged Breach of the Agreement by Claimant

G. Respondent's Set-Off Defence Based on Price Reduction

1. Jurisdiction

2. Material Validity

H. Possible Set-Off Defence based on Damages for Loss of Customers

I. Claimant's Alleged Waiver of its Right to be Paid for Services after 31 December 2012

J. Alleged Fraud or Unlawful Enrichment

K. Affirmative Defenses Raised by Respondent

L. Respondent’s Obligation to Pay Interest

VIII. Conclusions and decision of the Sole Arbitrator

IX. Costs of the Arbitration and Legal and other costs

A. Costs of the Arbitration Fixed by the Court

B. Legal and Other Costs

FINAL AWARD:

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