Any Dispute not resolved as provided for in Clauses 23.1 and 23.2 shall be finally settled by arbitration as provided in this Article 23.3.
23.3.1 All Disputes shall be finally settled by binding arbitration under the Rules of Arbitration of the International Chamber of Commerce (the "ICC Rules") then in effect.
23.3.2 The place of arbitration shall be London, England. The arbitral proceedings shall be conducted in the English language.
23.3.3 The arbitral panel shall be composed of three (3) arbitrators appointed in accordance with the ICC Rules; provided that, following their confirmation by the ICC International Court of Arbitration (the "ICC Court"), the arbitrators so nominated on behalf of each of the claimant(s) (jointly if more than one) and the respondent(s) (jointly if more than one) shall agree on a nomination for the third arbitrator, who shall chair the arbitral panel. If such nomination is not made within twenty (20) days from the date on which the appointment of both of them have been confirmed, then the third arbitrator shall be appointed by the ICC Court.
23.3.4 The arbitrators are not empowered to award damages in excess of compensatory damages, and each Party hereby irrevocably waives any right to recover such excess damages with respect to any dispute resolved by arbitration.
23.3.5 Any determination or award rendered in an arbitration conducted hereunder:
(a) shall be final and binding on all Parties;
(b) shall be implemented in accordance with its terms;
(c) may be entered as a judgment by any court of competent jurisdiction; and
(d) if a monetary award, shall be made and promptly payable in U.S. dollars free of any tax, deduction, or offset, and the arbitral panel may grant pre-award and post-award interest at commercial rates. Any costs, fees, or taxes incident to enforcing the award shall be charged against the Party resisting enforcement.
The Parties further expressly waive, to the fullest extent permitted by applicable law, any right to challenge an award by the arbitrators anywhere outside the place of arbitration agreed herein.
This Agreement shall be governed by and construed in accordance with the laws of the Federal Republic of Nigeria without regard to principles of conflicts of laws that would direct the application of the laws of another jurisdiction.
Robert H Smit Esq
Simpson Thacher & Bartlett LLP
425 Lexington Avenue
New York, NY 10017
Chief Tinuade Oyekunle
17 Olujobi Street
Gbagada Phase 1, Lagos
Julian D M Lew QC
20 Essex Street
1. Claimant’s Statement of Case on Quantum dated 8 August 2011, including correction made by Clifford Chance’s letter dated 10 August 2011 (SoCQ)
2. Defence of the Second and Third Respondents in respect of Quantum dated 28 October 2011 (SoDQ)
3. Claimant’s Statement of Reply on Quantum dated 16 January 2012 (Reply Q)
4. Witness Statement of Gavin Gaul
5. Witness Statement of James Hughes
6. Witness Statement of James Richardson
7. Fourth Witness Statement of Keith Sparks
8. Claimant’s Skeleton Argument on Remedies dated 12 March 2012 (C Skeleton Q)
9. Second and Third Respondents’ Skeleton Argument in respect of Remedies dated 12 March 2012 (R Skeleton Q)
... Enron Nigeria Power Limited and its affiliates involved in the development of the Nigeria Project [as they] are not included in the bankruptcy filing and are free to pursue the development of the Lagos IPP in the ordinary course of business.
i. lost profits that it would have reasonably been expected to make from Phase II as at the date of the breach;
ii. alternatively, damages quantified on the basis of a loss of chance to make profits from Phase II;
iii. alternatively, damages quantified according to the amount the Second and Third Respondents would hypothetically have been willing to pay to be released from their obligations under the Original PPA (i.e. Wrotham Park damages);
iv. alternatively, damages based on its reliance loss.
v. In any event, interest on any damages awarded, and costs and expenses.
a) successfully obtaining the finance required to meet its obligations under the Original PPA;
b) successfully negotiating an EPC contract for the construction of the Power Plant and Gas Pipeline, with a competent and willing EPC contractor;
c) successfully obtaining a supply of gas for the operation of the Power Plant; and
d) making less profit due to other unforeseen material factors.
ENPH contends that none of the contingencies would have occurred and that it had a very strong chance to make a profit under Phase II: "... it had a very high likelihood of overcoming each of the ‘contingencies’ that attached to Phase II at the time of signing the Original PPA".16
a. AES had to exercise the Option;
b. debt-finance for the Power Plant and Gas Pipeline had to be arranged, or construction commenced;
c. the parties had to agree a replacement PPA;
d. all three Respondents had to agree to AES taking over Phase II; and
e. Claimant had to provide a satisfactory parent guarantee.27
○ no staff of its own
○ no office of its own anywhere in the world
○ no bankers or bank account
○ a share capital of only US$ 1000
○ no assets
○ no earnings
○ no auditors
○ no management audited accounts
○ never seen or built a power station
○ never transported gas
○ never constructed any gas pipeline
○ no track record whatever
○ no electricity, gas or pipeline experience or capability of its own
○ no financial or technical substance whatever.
1. damages as at 15 December 1999 in the sum of US$ 474,912,000 being the project NPV as determined in the Phase II Models; or
2. alternatively such sum as the Tribunal considers appropriate based on "loss of a chance", "Wrotham Park damage" or "reliance loss"; and
3. interest at prevailing Nigerian deposit interest rates until payment, alternatively at such commercial rate as the Tribunal considers appropriate pre- and post-award;39 and
4. Claimant’s costs.
(i) the Tribunal should assess the Claimant’s expectation damages at its wasted costs or wasted costs plus 20%, in line with the parties’ expectations as recorded in the Original PPA.
(ii) alternatively, the Tribunal should assess the value of the Claimant’s lost opportunity to earn the contingent AES payment at US$ 224,812.50, and the value of its lost opportunity to earn the NPV of US$ 28.8 million as US$216,000.
(iii) in further alternative, the Tribunal should award reliance loss;
(iv) simple interest should be awarded at the after tax rate on short term US Treasury Bills from 12 June 2006.
A. Damages due to Claimant for breaches of Second and Third Respondents
B. Date from when damages should be calculated
C. Interest: date from when interest starts to run and interest rate
1. US$ 28,803,000, according to the model prepared in September 1999, two months before the original PPA was agreed; which applied a discount of 25%;48 and
2. US$ 474,912,000, according to an updated model prepared in December 2011 using a discount rate of 20%.49
... the Tribunal considers it necessary to take into account both the uncertainties of Phase II coming to fruition and/or the risk that the Claimant’s net profit would have been less than anticipated and/or the benefit accruing to the Claimant by way of early receipt of funds by way of damages, the Tribunal may wish to adjust the expected profit figure either:
(a) by applying a discounted cash flow methodology based on the risks and uncertainties faced by the Claimant as at December 1999 and by considering the Phase II Pro Formas; or
(b) by making its own assessment of the probability of the Claimant achieving the profits it anticipated making from Phase II, by way of a loss of chance analysis.52
Because the decision of the creditors’ committee and the restructuring guys that were running Enron was that they only wanted to put clean assets into Prisma, anything that had troubles or issues associated with it they didn’t want to put into Prisma and, given the disputes with the government, they didn't feel that it was appropriate to put that asset into Prisma and they would keep it in the estate and try to capture value out of that asset as part of the estate.57
1. would a final agreement have been reached by AES and Respondents?
2. would AES in fact have exercised the option?
3. would AES have been able to raise the necessary finance and otherwise been able to perform the new PPA?
4. would ENPH have been able to obtain a parent guarantee as required under the Original PPA?
If the breach occurred after the Effective Date, the Claimant would be entitled to recover as damages cost plus 20%. It could not have been contemplated that the Claimant should recover a significantly greater amount as damages if a breach occurred prior to, rather than after the Phase II Effective Date, at a time when it had done absolutely nothing to perform the Original PPA and had indicated its desire to divest itself of Phases II.71
|Award on Liability||Legal fees||Other costs|
|1 st Respondent:||£ 302,000||£ 56,675.00|
|Award on Remedies|
|Claimant:||£ 167,007.90||£ 42,006.92|
|1st Respondent:||£ 170,000||£ 27,680|
|Award on Quantum|
|Claimant:||£ 124,095.79||£ 120,674.99|
|1 st Respondent:||£ 10,00079|
(i) In the Award on Liability the Tribunal found that the breaches of the Originally PPA were by Second and Third Respondents. First Respondent was not in breach of the Original PPA.86
(ii) In the Award on Remedies the Tribunal determined that Second and Third Respondents were liable to Claimant in damages for the breaches of the Original PPA. The Tribunal also determined that First Respondent was not liable to buy out Claimant’s rights under the Original PPA as Claimant had argued.87
(iii) In this Award on Quantum the Tribunal has determined that Second and Third Respondents shall pay to Claimant US$ 11,220,000 as damages for its loss of chance due to Second and Third Respondents’ breaches of the Original PPA.88
a) Claimant shall pay First Respondent GB£ 415,355 and US$ 90,000. This comprises
(i) GB£ 331,000. The Tribunal has reduced the amount of First Respondent’s legal fees incurred in the liability stage of this arbitration by 50% to reflect the numerous unnecessary defences, counterclaims and cross claims which First Respondent raised; but has not reduced the fees incurred for the remedies stage or its submissions on costs in this arbitration;
(ii) GB£ 84,355 being the costs and expenses incurred in connection with the arbitration;
(iii) US$ 90,000 paid to the ICC Court towards the costs of this arbitration.
b) Second and Third Respondents shall pay Claimant GB£ 718,147 and US$ 870,000. This comprises
(i) GB£ 410,405 in respect of Claimant’s legal fees. The Tribunal has discounted Claimant’s basic fees by 50% because the damages awarded were so significantly less than the damages sought. For the same reason, the Tribunal has decided not to order Second and Third Respondents to pay any of the uplift or success fees which Claimant may have to pay its legal counsel;
(ii) GB£ 307,742 in respect of its costs and expenses incurred in connection with this arbitration; and
(iii) US$ 870,000 paid to the ICC towards the costs of this arbitration.
(a) Second and Third Respondents shall pay Claimant damages in the amount of US$ 11,220,000 plus simple interest of 2% above US prime rate from the date of the commencement of this arbitration i.e., 13 June 2006,89 to the date of payment;
(b) Claimant shall pay First Respondent GB£ 415,355 and US$ 90,000 in respect of its legal costs and expenses;
(c) Second and Third Respondents shall pay Claimant GB£ 718,147 and US$ 870,000 in respect of its legal costs and expenses;
(d) All other claims are dismissed.
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