The arbitral tribunal (the "Tribunal") in this arbitration is composed of:

a. The co-arbitrator nominated by the Claimants and appointed by the LCIA Court:

Mr Richard Jacobs QC

Essex Court Chambers

24, Lincoln’s Inn Fields

London WC2A 3EG, United Kingdom

Email: riacobs@essexcourt.com

b. The co-arbitrator nominated by the Respondents and appointed by the LCIA Court:

Prof Dr Miodrag V Orlic

University of Belgrade

42, Knjeginje Zorke Street

11000 Belgrade, Serbia

Email: miodragvorlic@gmail.com

c. The presiding arbitrator selected and appointed by the LCIA Court:

Prof Dr Maxi Scherer

Wilmer Cutler Pickering Hale and Dorr LLP

49, Park Lane, London W1K 1PS, United Kingdom

Email: maxi.scherer@wilmerhale.com

a. the seat of this arbitration is London;²

b. the language of the proceedings is English;³ and

c. the laws governing the dispute are the substantive laws of the Republic of Serbia.⁴

a. asked the Parties to confirm that (i) all correspondence from the Tribunal to the Parties shall be sent to the Parties’ representatives and per email only; and (ii) the Parties’ contact details, as listed in the Tribunal’s letter, are correct and, if not, to provide the Tribunal with any required corrections and amendments;

b. directed the Claimants to file their statement of case on or before 23 February 2017 or to elect to treat the Request as their statement of case, pursuant to Article 15.2 of the LCIA Rules; and

c. drew the Parties’ attention to the fact that Article 15 of the LCIA Rules requires any statements to set out in sufficient detail the facts and any contentions of law to be relied upon, and to attach all essential documents.

a. confirmed that the case management conference would take place, by telephone, on 30 March 2017, at 5 p.m. London time, at time convenient to the Parties; and

b. invited the Parties to provide the Tribunal, either jointly or separately, with (i) a proposed timetable for this arbitration; and (ii) any items the Parties wished to put on the agenda for the case management conference.

a. circulated an agenda and dial-ins for the case management conference;

b. provided the Parties with a draft procedural order No. 1 and invited the Parties, if they wished, to provide written comments on the draft in advance of the case management conference; and

c. advised the Parties that it would discuss the Claimants’ extension request with the Parties at the upcoming case management conference.

a. provided a summary of the Case Management Conference;

b. issued its first procedural order (the "Procedural Order No. 1"), setting out the procedural timetable in Appendix A (the "Procedural Timetable"); and

c. decided to grant the Claimants’ extension request.

a. noted that the Parties had made a number of unsolicited submissions and asked the Parties to seek leave to make any submissions on the other Parties’ applications/requests and to refrain from making such submissions, unless authorized by the Tribunal to do so;

b. concerning the Respondents’ application: ordered the Claimants to produce certain documents regarding Respondents’ Request to Produce No. 13 on or before 7 August 2017; and

c. concerning the Claimants’ application: noted that in light of the Parties’ comments, there was no need for further action at this stage.

a. the Claimants filed the first witness statements of (i) Peter Kamaras, (ii) Stanislav Barica, and (iii) Pavol Vrchovinsky (all dated 16 August 2017), as well as the accompanying submission (the "Claimants’ Witness Submission" or "CSub1"); and

b. the Respondents filed the first witness statements of (i) Boris Milosevic (dated 10 August 2017) and (ii) Ernst Bode (dated 16 June 2017), and the first expert report of Abdul Sirshar Qureshi (dated 11 August 2017), as well as the accompanying submission (the "Respondents’ Witness Submission" or "RSub1").

a. the Claimants filed the second witness statements of (i) Peter Kamaras, (ii) Stanislav Barica, and (iii) Pavol Vrchovinsky, and the first expert report of Frank Ilett (all dated 27 September 2017), as well as the accompanying submission (the "Claimants’ Rebuttal Witness Submission" or "CSub2"); and

b. the Respondents filed the second witness statement of Boris Milosevic (dated 25 September 2017), the first witness statement of Vladan Mihailovic (dated 19 September 2017), and the second expert report of Abdul Sirshar Qureshi (dated 22 September 2017), as well as the accompanying submission (the "Respondents’ Rebuttal Witness Submission" or "RSub2").

a. the Claimants’ first letter related to objections to the Respondents’ rebuttal submission of 27 September 2017: according to the Claimants, the Respondents unduly included new allegations in those rebuttal submissions;

b. the Claimants’ second letter related to the Claimants’ request to add a new legal representative (Mr Maric): the Claimants provided a statement by Mr Maric, in reply to the Respondents’ comments of 18 October 2017;

c. the Claimants’ third letter related to the Respondents’ queries regarding certain documents produced by the Claimants (exhibits CF-225 and CF-226): the Claimants provided information regarding these documents in reply to the Respondents’ queries of 18 October 2017; and

d. the Claimants’ fourth letter related to queries regarding certain documents in relation to exhibit RF-37 submitted with the Respondents’ submission of 16 August 2017.

a. concerning the Claimants’ first letter (objections to the Respondents’ rebuttal submission of 27 September 2017): invited the Respondents to comment on the Claimants’ objections;

b. concerning the Claimants’ second letter (Claimants’ additional legal representative): invited the Respondents to comment on Mr Maric’s statement;

c. concerning the Claimants’ third letter (Respondents’ queries regarding exhibits CF-225 and CF-226): invited the Respondents to confirm whether the information provided by the Respondents answered their queries regarding these documents; and

d. concerning the Claimants’ fourth letter (Claimants’ queries regarding Respondents’ exhibit RF-37): invited the Respondents to comment.

a. the Respondents’ first letter related to the Claimants’ additional legal representative;

b. the Respondents’ second letter related to their query on certain documents produced by the Claimants’ (exhibits CF-225 and CF-226); and

c. the Respondents’ third letter related to the Claimants’ queries regarding Respondents’ exhibit RF-37.

a. noted that the Claimants withdrew their request to add Mr Maric as legal representative of the Claimants’ legal team and, in light of this, it would not issue a decision on this point;

b. made a decision regarding the Respondents’ queries about certain documents produced by the Claimants (exhibits CF-225 and CF-226); and

c. invited the Claimants to confirm whether the information provided by the Respondents answers their queries regarding exhibit RF-37.

a. the Claimants’ first letter contained further comments regarding their objections to the Respondents’ rebuttal submission of 27 September 2017;

b. the Claimants’ second letter related to the Claimants’ new request to introduce new evidence in form of exhibits CF-271-280; and

c. the Claimants’ third letter related to their queries about the Respondents’ exhibit RF-37: the Claimants, based on the information provided by the Respondents, withdrew their queries on this point.

a. concerning the Claimants’ objections regarding the Respondents’ rebuttal submission: noted that it had received the Parties’ comments and was currently deliberating this point;

b. concerning the Claimants’ queries regarding Respondents’ exhibit RF-37: noted that the Claimants’ queries were either satisfied or withdrawn and that no decision was required on this point;

c. further noted that with its second letter of 25 October 2017 the Claimants sought to introduce new evidence in form of exhibits CF-271 to CF-280 and thus invited the Respondents to comment on the Claimants’ request.

a. the Claimants’ objections regarding the Respondents’ rebuttal submission: the Tribunal found that it was not at present persuaded that the Respondents’ rebuttal submission contained new allegations of breach, with the exception of para. 69 in relation to which the Tribunal reserved its decision, until the Respondents’ position has become clear; and

b. the Claimants’ requests to introduce new evidence: the Tribunal granted the requests to introduce exhibits CF-273-275, CF-277-278, and CF-281 to the file, and dismissed the requests otherwise.

a. on behalf of the Claimants:

i. Mr Peter Kamaras, Mr Stanislav Barica, Mr Pavol Vrchovinsky (all also as witnesses), and Mr Richard Roman;

ii. Mr Kristopher Kerstetter, Mr Adam Polonsky, Ms Erika Saluzzo, and Mr Dilan Ozdemir of Humphries Kerstetter LLP, and Mr Thomas Raphael QC of 20 Essex Street Chambers as legal counsel;

iii. Mr Frank Ilett of Haberman Ilett LLP as expert;

iv. Ms Martina Thomas of City Legal as interpreter; and

b. on behalf of the Respondents:

i. Ms Olivera Stanimirovic;

ii. Ms Senka Mihaj and Mr Aleksandar Fillen of MIM Law Office, Dr Radomir Milosevic and Mr Filip Milosevic of Law Office Milosevic, Mr Nebojsa Andjelkovic of Law Office Andjelkovic, Dr Miroslav Paunovic of Law Office Paunovic, Prof Dr Vladimir Pavic, and Prof Dr Dusan Popovic of the Faculty of Law of the University of Belgrade as legal counsel;

iii. Mr Boris Milosevic, Mr Ernst Bode, and Mr Vladan Mihailovic as witnesses; and

iv. Mr Abdul Sirshar Qureshi as expert.

a. acknowledged receipt of the Claimants’ additional legal material; and

b. concerning the Parties’ cost submissions, referred to para. 32 of Procedural Order No. 1 (according to which the Parties shall submit their first submissions on costs as one-page statements and shall not include supporting documents, and the Tribunal may order further submissions on costs if it deems this useful), noted that it believed the Parties’ statements of costs could be submitted in early January 2018, and invited the Parties to confer on the point, and to provide their comments, jointly or separately, by 18 December 2017.

a. thanked the Respondents for the submission of additional legal exhibits RL-12 to RL-16, and the Claimants for their production of the Serbian versions of previously submitted exhibits CL-27 to CL-45; and

b. invited the Parties to confer on the possible date for cost submissions and to provide their comments, jointly or separately, on or before 18 December 2017.

a. referred the Parties to Procedural Order No. 4 which provided that in the PostHearing Briefs "the Parties shall not raise new arguments, nor submit any new documents, except for limited legal authorities, if necessary" (para. 2(c)) and set a specific deadline for the submission of any new legal authorities "as early as possible, but in any event at least 10 days before the Post-Hearing Briefs are due" (para. 2(d));

b. decided to admit to the record CL-46 and CL-47 since they are not new legal exhibits but merely additional English translations of exhibits RL-13 and RL-14 already provided by the Respondents;

c. decided not to admit to the record CL-48 since it is a new legal exhibit and, as such, was submitted after the deadline provided in Procedural Order No. 4; and

d. closed the proceedings, noting that no further submissions by the Parties were admissible, save for the matter of costs and unless the Tribunal decided otherwise.

a. reminded the Parties that it had closed the proceedings, save for the matter of costs and unless the Tribunal decided otherwise;

b. noted that in light of the Claimants’ further submissions and objections, the Tribunal had to postpone the Parties’ costs submissions and determine instead whether re-opening the proceedings on these points was necessary, and thus invited the Respondents to comment thereon; and

c. noted that the Claimants in their Post-Hearing Briefs at paragraph 123 had for the first time presented particulars regarding its relief on interest, thus decided to reopen the proceedings on this point and invited the Respondents to comment thereon.

a. decided that the Respondents’ Post-Hearing Brief did not contain new breaches which would warrant the re-opening of the proceedings, but noted, for the avoidance of doubt, that if would ignore new arguments to the extent the Parties had raised them in their Post-Hearing Briefs; and

b. reiterated is previous procedural direction to close the proceedings, save for the matter of costs; and directed the Parties to submit their cost submissions by 5 February 2018.

a. Request, dated 5 August 2016;

b. Statement of Case, dated 14 February 2017;

c. Statement of Reply, dated 25 April 2017;

d. Claimants’ Witness Submission, dated 16 August 2017;

e. Claimants’ Rebuttal Witness Submission, dated 27 September 2017;

f. Claimants’ Post-Hearing Brief, dated 20 December 2017; and

g. Claimant’s Cost Submission, dated 5 February 2018.

a. Fact exhibits CF-1 to CF-270;

b. Legal exhibits CL-1 to CL-47;

c. Witness statements:

i. First witness statement of Peter Kamaras, dated 16 August 2017 ("PK1"); and second witness statement of Peter Kamaras, dated 27 September 2017 ("PK2");

ii. First witness statement of Stanislav Barica, dated 16 August 2017 ("SB1"); and second witness statement of Stanislav Barica, dated 27 September 2017 ("SB2");

iii. First witness statement of Pavol Vrchovinsky, dated 16 August 2017 ("PV1"); and second witness statement of Pavol Vrchovinsky, dated 27 September 2017 ("PV2"); and

d. Expert report of Mr Frank Ilett, dated 27 September 2017 ("FI Report"), including appendices A to G and exhibits 1 to 16.

a. Response to the Request, dated 15 October 2016;

b. Statement of Defence, dated 20 March 2017;

c. Respondents’ Witness Submission, dated 16 August 2017;

d. Respondents’ Rebuttal Witness Submission, dated 27 September 2017;

e. Respondents’ Post-Hearing brief, dated 20 December 2017; and

f. Respondents’ Cost Submission, dated 5 February 2018.

a. Fact exhibits RF-1 to RF-52;

b. Legal exhibits RL-1 to RL-16;

c. Witness statements:

i. First witness statement of Boris Milosevic, dated 10 August 2017 ("BM1") and second witness statement of Boris Milosevic, dated 25 September 2017 ("BM2");

ii. Witness statement of Ernst Bode, dated 16 June 2017 ("EB");

iii. Witness statement of Vladan Mihailovic, dated 19 September 2017 ("VM");

d. Expert reports:

i. First expert report of Abdul Sirshar Qureshi, dated 11 August 2017 ("AQ1 Report") including appendices A to L and exhibits 1 to 73; second expert report of Abdul Sirshar Qureshi, dated 22 September 2017 ("AQ2 Report") including appendices A to E and exhibits 74 to 87.

"Declaring that the purported termination of the MSA by the Company was invalid.

Declaring that RoS and the Company are jointly liable to pay to the Service Provider the fixed part of the Management Fee pursuant to clause 3.2.5 of the MSA and the Privatisation Bonus pursuant to clause 3.2.9 of the MSA.

Ordering the Company and RoS jointly and severally to pay to the Service Provider an amount equal to 30% of the Acquisition Price plus VAT of 20% of that sum, plus interest accruing from 30 June 2016 (to be assessed) plus costs.

Should the Company fail to pay the Termination Fee by 16 May 2017, the Claimants will seek an additional award declaring the Company liable for and requiring the Company to pay EUR 2,040,000 plus interest (to be assessed) plus costs."⁷

"The Claimants, on reflection, accept that [the] 1 April 2016 [termination] notice was valid when given, as the privatization was under way, which is sufficient for the purposes of clause 8.4. It makes sense that it is possible to give notice in advance to take effect at the time the privatization is scheduled to complete."⁸

"Since it is accepted that the MSA was terminated on 30 June 2016, by virtue of the notice of 1 April 2016, the Claimants no longer claim the termination fee of €2.04 million."⁹

"The Claimants deny that the Respondents are entitled to any relief. The Claimants’ claims are well founded and costs should be ordered in favour of the Claimants."¹⁰

"In conclusion, it is submitted that the Tribunal should award the Claimants €16,197,806.09 plus VAT at 20%, and RSD 100,536,504 by way of management fee for May and June 2016, in damages or debt. If the correct privatisation bonus turns out to be higher, the Claimants will claim the higher sum.

The Claimants will also claim interest on the sums due, in accordance with Serbian law. Calculations will be provided in due course.

Further or alternatively the Claimants claim declarations as appropriate as per paragraphs 160, 165, 167 and/or 168 above.

The Claimants also claim costs, including the Tribunal’s expenses and the Claimants’ legal costs."¹¹

"Under LCIA Rules 26.4: ‘The Arbitral Tribunal may order that simple or compound interest shall be paid by any party on any sum awarded at such rates as the Arbitral Tribunal decides to be appropriate (without being bound by rates of interest practised by any state court or other legal authority) in respect of any period which the Arbitral Tribunal decides to be appropriate ending not later than the date upon which the award is complied with.’ HPK therefore claims an appropriate award of interest. Under MSA 5.2.1, ‘the Service Provider may charge interest at the rate of the official legal default interest rate in line with the Governing Law.’ As stated on the website of the National Bank of Serbia, the default interest rate is the key policy rate plus 8% and the key policy rate was 4% from 07.07.16, then 3.75% from 07.09.17, then 3.5% from 09.10.17 to date. HPK claim simple interest on all their claims at the above rates for the period 30.06.16 (30.05.16 for the May management fee), to date of payment. At 01.01.18 this will total €3,026,562 accruing at €5,317 daily thereafter. We submit such rate is the agreed rate and is appropriate. We do not know if this approach will be disputed but, if for any reason it is not accepted by the Tribunal, we submit that at the least a high commercial rate (c. 9% to reflect Serbian borrowing costs) would be appropriate and interest should then be awarded on a compound basis with quarterly rests."¹⁴

"The Respondents request the Tribunal to (i) dismiss Claimants’ Claim in its entirety as unfounded; and (ii) order the Claimants’ to jointly and severally reimburse the Respondents for the full amount of their costs related to this Arbitration, including the costs of representation and other related costs."¹⁵

"The RoS wishes to enter this Agreement:

(a) in recognition of, and in order to secure for the Company to benefit of the Service Provider’s experience and management expertise according to the terms of this Agreement;

(b) in order to restructure and establish the long term viability of the Company."²⁷

a. whether the Tribunal has jurisdiction to hear the dispute;

b. whether the MSA was validly terminated by the Respondents and a termination fee is due to the Claimants under Clause 8.3.2 of the MSA;

c. whether a privatisation bonus is due under Clause 3.2.9 of the MSA, and if so, how much and by whom;

d. whether management fees are due for the months of May and June 2016 under Clause 3.2.5 of the MSA;

e. whether interest is due;

f. whether any other requests are well-founded; and

g. which Party bears the costs of this arbitration.

"DISPUTE RESOLUTION

16.1 Prior to resorting to remedies pursuant to clause 17, the Parties will attempt to promptly resolve a Dispute in good faith through negotiations.

16.2 Unless otherwise agreed in writing, all discussions regarding the Dispute shall be conducted without prejudice to the rights of each of the Parties and shall be conducted between the authorised representatives of the Parties. If such Dispute is not resolved within 30 (thirty) days or within a time period prescribed by a later written agreement between the Parties, such Dispute is to be settled according to remedies in clause

17. "⁴¹

"any dispute, controversy, claim or disagreement arising directly or indirectly under, out of, in connection with, or in relation to this Agreement (or the subject matter of this Agreement) including, without limitation, any dispute, controversy, claim or disagreement relating to the existence, validity, interpretation, construction, performance, enforcement or termination of this Agreement."⁴²

"CHOICE OF LAW AND JURISDICTION

17.1 This Agreement shall be governed by and construed in accordance with the Governing Law.

17.2 Any Dispute arising out of or in connection with this Agreement, including any question regarding its existence, validity or termination, which has not been resolved through negotiation pursuant to clause 16 within 30 (thirty) days after the occurrence of such Dispute, shall be referred to and finally resolved by arbitration under the London Court of International Arbitration Rules, which Rules are deemed to be incorporated by reference into this clause.

17.3 The London Court of International Arbitration shall act as both, the administrative body and appointing authority and shall consist of three arbitrators.

The Service Provider and Bidder shall have the right to jointly nominate one arbitrator and the Company and RoS shall have the right to nominate by joint signature, one arbitrator and the two party-nominated arbitrators shall jointly nominate the third arbitrator who shall act as a chairman. The place of arbitration shall be London, England. The language to be used in the arbitral proceedings shall be English. All disputes shall be resolved in accordance with the effective substantive laws of Republic of Serbia being the Governing Law.

17.4 Any award shall be binding, final and enforceable before a tribunal possessing jurisdiction.

17.5 Each Party agrees to be bound by all and any awards or decisions of the arbitration tribunal appointed pursuant to this clause whether or not it took part in the arbitral proceedings provided that it was given notice of such proceedings in accordance with the provisions of this clause. This shall also apply to any decisions relating to procedural matters.

17.6 The Parties waive any rights of application of appeal to any court or tribunal of competent jurisdiction to the fullest extent permitted by law in connection with any question of law arising in the course of an arbitration or with respect to any award rendered in accordance with this clause.

17.7 The Parties agree that the arbitral award may be enforced against the Parties to the arbitration proceedings or their assets wherever they are located or may be found and that a judgment upon the arbitral award may be entered in any court having jurisdiction thereof."⁴³

"The Claimants, on reflection, accept that [the] 1 April 2016 [termination] notice was valid when given, as the privatization was under way, which is sufficient for the purposes of clause 8.4. It makes sense that it is possible to give notice in advance to take effect at the time the privatization is scheduled to complete."⁴⁷

"Since it is accepted that the MSA was terminated on 30 June 2016, by virtue of the notice of 1 April 2016, the Claimants no longer claim the termination fee of €2.04 million."⁴⁸

"Having in mind that the procedure of privatization over the Privredno drustvo za proizvodnju i preradu celika Zelezara Smederevo doo Smederevo, statistic number:

07342691, has begun on 4 March 2016, under the number JP 1/16 (hereinafter: Procedure of Privatization) hereby inform you of the following:

According to Article 8.4. of the Management and Consultancy Services Agreement, concluded on 21 March 2015, (hereinafter: the Agreement), in the event of successfully conducted the Procedure of Privatization the Agreement has to be considered as terminated upon the expiration of a period of 90 (ninety) days of receipt of this Notice or the successful completion of the Procedure of Privatization, whichever comes later."⁵²

"THE CHAIRMAN: Okay. Let me, then, maybe ask my subsequent question; absent any later termination with the second Termination Notice, is it also your case that the privatisation bonus would be due on the basis of the first termination.

MR PAVIC: If -- well, if first termination is the one, and the second termination doesn’t produce immediate effect, then, of course, absent second termination then the bonus is due. That was our case from the very beginning, that we were on the course for termination and the bonus there."⁵⁹

"MR JACOBS: So if we were to say that the second Notices were invalid, for whatever reason, whether they didn’t go through the proper procedures or because they were in breach of good faith, or whatever the reason may be, then you accept the first Notice is a valid notice and the privatisation bonus would be due from the company?

MR PAVIC: That is exactly what we have been submitting from the very beginning. That is our secondary argument. The first line of argumentation is that we have privatisation bonus which is not due to the second Termination Notice."⁶⁰

"Having in mind that [the First Claimant] (hereinafter: HPK) did not fulfill certain provisions of the Management and Consultancy Services Agreement dated on 21 March 2015 (hereinafter: the Agreement), we hereby inform you that, pursuant to Article 8.1. of the Agreement, the [Second Respondent] (hereinafter: the Company) has unilaterally terminated the Agreement by the decision of the Assembly of the Company dated 25 June 2016 which we hereby enclose to this Notice.

The reasons for the termination, among others, are:

• [B]reach of the Article 3.1.5.1 due to the fact that the Net Working Capital, starting from 30 November 2015, until the date of sending of this Notice, constantly amounted less than USD 80,000,000 (eighty million dollars);

• Breach of the Frame Contract of Sale No. 151 by the company Pikaro s.r.o, Bellova 3, 040 0 I Kosice, Slovak Republic, statistic number: 36674079, as a supplier, due to which the subject agreement has been canceled as well, what represents the additional reason for termination of the Agreement;

• Entering into the agreement with a related parties [sic] without prior approval and notification of the Supervisory Board of the Company;

• Breaches of the non-compete obligations defined by the Agreement by HPK;

• Expiration of the Insurance Policy issued in accordance with Article 2.3.7 of the Agreement;

• Breaches of clauses defined in chapter 3 and chapter 4 of the Agreement by HPK;

• Breaches of the provisions of the Serbian Companies Law ("Official Gazette RS", No. 36/2011, 99/2011, 83/2014 - another law and 5/2015) as well as other applicable laws and regulations;

• Breaches of other obligations stipulated in the Agreement."⁶²

"8.1 The RoS and/or the Company may (but shall not be obligated to) terminate this Agreement by a notice to the Service Provider and the Bidder upon the occurrence and during the continuance of any of the following events:

8.1.1 the Service Provider or Consultants or members of the Supervisory Board nominated by the Service Provider as applicable, fail to comply with any of their material obligations in this Agreement (including fulfilment of the KPis as set out by the Business Plan or other obligations set out by the Business Plan and/or any other strategic documentation) and do not correct such failure within 120 (one hundred twenty) days of the date of a notice requiring correction from the non-defaulting Party;

8.1.2 if the Raw Materials Agreements cease to be valid and legally binding before the expiration of third anniversary of the Closing or the Raw Materials Agreements are terminated or breached in any material manner by a respective supplier;

in which cases the Company shall not be obliged to pay neither the Termination Fee nor the Privatization Bonus to the Service Provider and will retain the right on indemnification from the Service Provider and/or the Bidder for of all damages suffered."⁶⁷

"agreement/s on supply of raw materials to the Company to be concluded between the Company, as the purchaser, and the Service Provider or the Bidder and one of their Affiliates, as the supplier of such raw materials, that will, inter alia, include provisions securing the right of the Company to (i) at least 60 (sixty) calendar days of delayed payment of such raw materials (ii) have in any moment of the validity of the Raw Material Agreements on a Company premises a stock of delivered raw materials and / or raw materials ordered and in transit to the Company of a minimum USD 20,000,000 (twenty million dollars) value. For avoidance of doubt, such Raw Material Agreements shall be valid and legally binding during the entire Term of this Agreement."⁶⁸

a. on 22 April 2015, the Company entered into the RMA, a "Frame Contract of Sale" concerning the purchase of raw materials from Pikaro, an affiliate of the Claimants;⁶⁹ and

b. on 25 June 2016, the Second Respondent sent a termination notice to Pikaro, purporting to terminate the RMA.⁷⁰

"In accordance with the [MSA] [...] the Seller [i.e. Pikaro] shall guarantee to the Buyer [i.e. the Company] a credit amounting to USD 20,000,000.- (in words: twenty million US dollars) upon delivery of Goods in form of 60 days deferred payment conditions [...]."⁸⁶

"The payment shall be effected as follows: 100% of the value of the Goods shall be paid by the Buyer [i.e. the Company] 60 days after the date of loading the Goods by the Producer, advised by the Seller [i.e. Pikaro], based on invoice issued by the Seller [sic]."⁸⁷

a. Producer loads and sends the goods to Pikaro;

b. Goods are on their way from the producer to Pikaro (the "In-Transit Time");

c. Pikaro receives and reviews the goods;

d. Pikaro sends the goods to the Company and invoices the Company;

e. Company receives the goods;

f. Payment of goods is due according to invoice; and

g. Company pays Pikaro for the goods.

a. the RMA, as a framework agreement, foresaw and allowed the parties (i.e. Pikaro and the Company) to enter into subsequent implementation agreements in form of single contracts regarding the sale of raw materials;¹⁰⁸

b. Pikaro and the Company entered into several of those single contracts which (i) provided for shorter invoicing periods (e.g. 5 days, 30 days);¹⁰⁹ (ii) were each time approved by the Company’s supervisory board and by the Respondents’ OFGR;¹¹⁰ and (iii) superseded the Parties’ previous agreement in the RMA;¹¹¹ and

c. the RMA did not prohibit shorter invoicing periods since (i) Clause 1.1 allowed for the parties to "otherwise agree[] in writing";¹¹² and (ii) Clause 1.3 provided that the single contracts were an "integral part" of the RMA.¹¹³

"Q Second. Yes. You first said that Mr Kamaras is claiming that -- sorry, just a second -- yes - that the credit period is to be calculated as an average of sixty days from the date of company would otherwise have to pay raw materials, and that — is it -- first of all, comment this formula, average sixty days, et cetera, as the method of calculating this sixty days deferred payments, and whether Mr Kamaras correctly interpreting your agreement in regard the method, so whether you agreed to that or not.

A Well, it is the average that we were looking at, average credit period of sixty days"¹²⁰

"I am therefore unable to validate the 21 day figure and am instructed that it is accurate."¹²⁷

"‘Material’ means in respect of any fact, object, claim, liability or event which could cause, would result or lead directly or indirectly to a significant impact on, inter alia, the business, assets or operations of the Company exceeding EUR 500,000 (five hundred thousand euros) or equivalent in other currency, except those disclosed within this Agreement."¹³⁷

a. according to the Respondents, the definition in Clause 1.1 does not apply to Clause 8.1.1 since the term ‘material’ is not capitalized,¹³⁸ noting furthermore that the Serbian version of Clause 8.1.1 uses a different word for ‘material’ than in Clause 1.1, and that this word means ‘substantive’ (as opposed to procedural);¹³⁹ and

b. the Claimants contest the Respondents’ interpretation and state that Clause 8.1.1 MSA requires a material breach (rather than a breach of a material obligation), while at the same time accepting that the definition in Clause 1.1. does not apply to the non-capitalized term ‘material’ in Clause 8.1.1 MSA.¹⁴⁰

"In accordance with the [MSA] [...] the Seller [i.e. Pikaro] shall guarantee to the Buyer [i.e. the Company] a credit amounting to USD 20,000,000.- (in words: twenty million US dollars) upon delivery of Goods in form of 60 days deferred payment conditions [...]."¹⁴³

"The Closing of this transaction shall occur when the following preconditions are met: [...] [t]he Raw Materials Agreements are duly signed in a form reasonably satisfactory to all Parties [...]."¹⁵⁰

"The Parties acknowledge that the Raw Material Agreement has been signed with the terms and conditions as well as in a form satisfactory to the Parties and as defined by the MSA."¹⁵¹

a. on 22 April 2015, Pikaro and the Company entered into the RMA which deals with the supply of raw materials to the Company; and

b. on 21 May 2015, Pikaro and the Company entered into the Pikaro Sales Contract according to which Pikaro, as an agent, sells the Company’s products to endproducers.¹⁵⁷

a. the Gross Financing Approach artificially isolates the RMA from the overall Pikaro/Company financial relationship and is therefore "completely unfounded and divorced from reality;"¹⁶¹

b. Pikaro and the Company entered into several set-off agreements which show that they "did not consider the two arrangements [i.e. the RMA and the Pikaro Sales Contract] to be separate and unrelated;"¹⁶² and

c. the two arrangements were connected since "the claims of Pikaro towards endbuyers for [the Company]’s products were utilized to obtain means to finance [the Company]."¹⁶³

"MR JACOBS: Can I just ask something? On your effective gross financing, that does involve a netting-off of amounts owed one way against amounts owed the other way. A: That’s correct. Yes.

MR JACOBS: I am just a bit puzzled, why is it gross financing? Why isn’t that a species of net financing? Is there something about —

A: That is a very good question. I would like to feel I came up with the term, but the term was defined to me about what needed to be done and that was the term that was given to me so I would like to say I came up with it and I made it up but I am afraid that wasn’t the case, so the key thing is you are quite right, it is about understanding the netting-off between the payables and the receivables due date, so you are right on that point. I would say, and I agree with you, it is probably more of a net — it is probably in the camp of the net calculation."¹⁶⁵

"Sometimes in May, end of May, June, Pikaro suggested, Mr Kamaras, Pikaro, HPK, suggested that, basically, because of the practical limitations and issues with respect to factoring of the receivables that Zelezarah as towards foreign suppliers, foreign customers in Serbia, that basically we transfer a part of them, which are on deferred payment terms, to Pikaro in order for Pikaro to utilize their own credit lines in Unicredit, Slovakia, and as a result of that, to be able to faster collect cash with that collection of cash to purchase even more inventories at the better and favourable conditions [...]."¹⁶⁸

"On that discussion, on those Supervisory Board, I remember I clearly said to everyone that basically this is a temporary solution for until Železara opens its own subsidiary abroad, and that is how we all understood each other."¹⁶⁹

"Finally, in January 2016, Mr. Kamaras openly verbally stated on the meeting held on Sunday 24 January 2016 in KPMG offices on which Mr. Ivica Kojic, Mr. Bojan Bojkovic, Mr. Nenad Mijailovic, Mr. Milun Trivunac and myself attended that he is unable to provide this financing to Zelezara as envisaged by the MSA."¹⁷⁰

"I always go back to 24th January 2016 when Mr. Kamaras admitted to the close audience that he does not have the necessary USD 20 million of financing to provide to Zelezara."¹⁷¹

"Pikaro said on 24 January 2016 to Mr Ivica Kojic, Chief of Staff of the Prime Minister, Mr Nenad Mihailovic, State Secretary in the Ministry of Finance, Mr Milan Trivunac, Assistant Minister in the Ministry of Economy, Mr Bojan Bojkovic, member of Supervisory Board of Železara and to myself, a member of Supervisory Board of Zelezara, that he does not have a possibility to be in a position that 20 million net exposure is towards him, that he cannot return those receivables, and that he cannot have 20 million of financing towards us. That is what he said on the 24th."¹⁷²

"In fact, credit of over $20 million was provided beginning in August 2015 after the initial ramp-up and then throughout the relevant period apart from November 2015 when it fell slightly below due to the lessening of orders."¹⁷⁵

"We have understood quite clearly that it cannot be 20 million on Day 1 that you pool and receive the inventories, raw materials, in the value of that, that it will take time for the goods, for the raw materials to arrive to Smederevo, and for them to be put into the Production."¹⁷⁶

a. according to the calculations of the Claimants’ expert, the Credit was breached at certain times in 2015, but not since December 2015;¹⁷⁷ and

b. according to the calculations of the Respondents’ expert, the Credit was breached at times, but not in January/February and May/June 2016.¹⁷⁸

"THE CHAIRMAN: Before we move on, just really to clarify, I think it is very clear from this outline or timeline, when you referred to shipment date, you always referred to shipment date by Pikaro to Zelezara to the company.

A: By Pikaro to Zelezara. Yes.

Okay, in terms of the comparison of the two financing periods, just to make it very clear, in terms of what our start and end date is, I was saying, or I was instructed to assume that it was a shipment date compared to Mr Ilett saying the date of Pikaro’s pre-payment, the end date I say is, or have been instructed to assume payment due date compared to Mr Ilett’s date of invoice settled."¹⁸¹

"8.1 The RoS and/or the Company may (but shall not be obligated to) terminate this Agreement by a notice to the Service Provider and the Bidder upon the occurrence and during the continuance of any of the following events:

8.1.1 the Service Provider or Consultants or members of the Supervisory Board nominated by the Service Provider as applicable, fail to comply with any of their material obligations in this Agreement (including fulfilment of the KPis as set out by the Business Plan or other obligations set out by the Business Plan and/or any other strategic documentation) and do not correct such failure within 120 (one hundred twenty) days of the date of a notice requiring correction from the non-defaulting Party;

8.1.2 if the Raw Materials Agreements cease to be valid and legally binding before the expiration of third anniversary of the Closing or the Raw Materials Agreements are terminated or breached in any material manner by a respective supplier;

in which cases the Company shall not be obliged to pay neither the Termination Fee nor the Privatization Bonus to the Service Provider and will retain the right on indemnification from the Service Provider and/or the Bidder for of all damages suffered."¹⁹⁰

"makes it clear that the termination may be made where there is "occurrence or continuation" (in Serbian: ‘nastupanja ili trajanja’). Given that the transaction lawyers who drafted this document were all Serbian, 166 Serbian text is a ‘hidden anchor language’ of the contract - the native language of its drafters. Therefore, it is relevant and useful interpretation tool for any ambiguities which might arise in respect of the nominally prevailing English text."¹⁹¹

"This Agreement has been executed in Serbian and English language. In case of any discrepancy or inconsistency between these two versions, the English version shall prevail."¹⁹²

a. failed to maintain the required level of net working capital of 80 million for the Company pursuant to Clause 3.1.5 of the MSA (the "New Working Capital" issue);¹⁹³

b. failed to fulfil the requirements in relation to related party arrangements pursuant to Clause 4.2 of the MSA (the "Related Party Arrangement" issue);¹⁹⁴

c. failed to fulfil the requirement of a professional insurance indemnity pursuant to Clause 2.3.7 of the MSA (the "Professional Insurance" issue);¹⁹⁵

d. breached their non-competition obligations pursuant to Clause 11 of the MSA (the "Non-Competition" issue);¹⁹⁶

e. failed to provide the required skilled managers for the Company (the "Managers" issue);¹⁹⁷ and

f. obstructed the privatisation and closing of the Privatisation Agreement (the "Obstruction of Privatisation" issue).¹⁹⁸

"The RoS and/or the Company may (but shall not be obligated to) terminate this Agreement by a notice to the Service Provider and the Bidder upon the occurrence and during the continuance of any of the following events: [...]

the Service Provider or Consultants or members of the Supervisory Board nominated by the Service Provider as applicable, fail to comply with any of their material obligations in this Agreement (including fulfilment of the KPis as set out by the Business Plan or other obligations set out by the Business Plan and/or any other strategic documentation) and do not correct such failure within 120 (one hundred twenty) days of the date of a notice requiring correction from the non-defaulting Party"²⁰²

"A party to an agreement may terminate the agreement without leaving the debtor a subsequent time limit for performance, should the debtor’s conduct indicates (sic) that it will not perform his obligation even during the course of subsequent time limit."²⁰⁴

"Article 126 of the Law on Obligations stipulates that, as a rule, a creditor wishing to terminate an agreement must provide appropriate subsequent period for the debtor to perform. However, this general rule is subject to three exceptions.

Two exceptions deal with situations where timely performance is key. First, no additional time period need be given where the contract sets a deadline for performance of an obligation and it is evident that one party will not fulfil it (Article 128 of the Law on Obligations). Second, where timely performance is an essential element of the contract, expiration of deadline rescinds the contract automatically, unless creditor opts to keep it afoot (Article 125 of the Law on Obligations).

The third exception. Article 127 of the Law on Obligations, deals with obligations where deadline for performance was either not set or its observance is not of essential nature. Even in such situations, a party is nevertheless entitled to terminate the agreement without leaving an additional period to the debtor, if one can conclude from the debtor’s behavior that it will not fulfill its obligation even if given subsequent period to perform. The purpose of this article is to dispense of the need to give additional period where giving it would he useless."²⁰⁵

"It seems to us that there is space for a broad interpretation of [Article 127 LO]. Debtor’s conduct may be such that it has explicitly stated that it would not perform the contract. However, even in cases when it can be inferred from debtor’s certain conduct that it would not perform the contract, creditor is not obliged to leave it the appropriate subsequent time limit, but can instead terminate the contract by a simple statement without leaving such a time limit. Therefore, debtor’s conduct should be understood so as to include its direct actions — a statement by which it declines the contract performance, as well as its indirect actions, by which its intention not to perform the contract can be established in a certain manner. By the same token, it would suffice to establish that the debtor is unable to perform the contract within the appropriate subsequent time limit."²⁰⁶

"On 127, [...] The material demonstrates the principle that if a breach or prospective breach is not so serious that it deprives the creditor of the purpose of the contract, it cannot be grounds for termination. This is established by Perovic Commentary [...]. So for 127, the prospective breaches which the debtor’s conduct make obvious must be so serious as to prevent achievement of the purpose of the contract within a reasonable deadline for performance [...]. To use another phrase, the prospective breaches must go to the root of the contract. 131’s rule that insignificant breaches cannot justify termination is not exhaustive: many breaches that are more than insignificant will not be enough under 127. This is consistent with principle. Serbian law aims to preserve contracts and permitting termination for breaches which were not so serious that they defeated the purpose of the contract, nor fundamental, would contradict this policy. (3) Uncertainty as to whether the debtor will perform is not enough: this must be obvious from his conduct [...]. (4) Termination is not possible under 127 where the 120 day notice provision which the parties have agreed in 8.1.1 can and should be used (outside e.g. refusal to perform with insufficient time available to give notice)."²⁰⁷

"So the correct analysis is that in the main Perovic commentary (1995) [...]: to justify termination the breach must be so serious as to undermine the purpose of the contract', in effect it must be fundamental; partial performance which yields."²⁰⁸

"The Service Provider commits: [...] to at all times keep the Net Working Capital of the Company not lower than USD 80,000,000 (eighty million dollars)."²¹²

"Current Assets reduced by all:

(a) liabilities to domestic or foreign suppliers for purchases of any goods, assets or services;

(b) liabilities to banks or other institutions for working capital loans, maintenance loans, capital expenditure loans, leases, overdrafts, etc.;

(c) liabilities to government for unpaid taxes, contributions, custom duties or any other fiscal liabilities;

(d) liabilities to employees for salaries, bonuses and any other remunerations (excluding employee benefits calculated under IAS 19);

(e) accrued expenses;

(f) liabilities to customers for advance payments received."²¹³

"A shareholder capital contribution (taking no more than one week);

A pledge of the fixed and current assets of the business in order to secure a long-term loan from a commercial bank ([...], which would have taken c. 90 days);

Securing from He Steel a long-term advance payment (either to the Company or to the supplier) for the purchase of raw materials (taking between 30 and 60 days provided all approvals were given); and

Balance sheet adjustments of payment terms for the purchase of raw materials and the sale of end products - payment terms for raw materials delivered by Pikaro could have been extended to 370 days, with the effect that the payables would have been reclassified in the Company’s accounts as long-term (and hence not forming part of the calculation of NWC). At the same time, payment terms for end products purchased by Pikaro from the Company could have been extended to 355 days (hence the receivables would remain current assets and form part of the calculation of NWC). This would have taken c. 60 days depending on the actual raw material flow.²¹⁹

Here, the performance of the MSA became moot after only 5 days due to its termination on the basis of the First Termination Notice, and the issue of non-performance during the 120 days Correction Period is thus irrelevant.

"The Service Provider recognises that Related Party Arrangements need to be effected on a transparent, arm’s length basis and in the best interests of the Company and the Service Provider hereby agrees that, prior to effecting any Related Party Arrangement, the Service Provider shall:

[4.2.1] provide full disclosure of and provide all supporting documents relating to such Related Party Arrangement to the Supervisory Board.

[4.2.2] obtain the co-signature of the OFGR (such co-signature not to be unreasonably withheld or delayed); and

[4.2.3] check whether there are any legal or regulatory requirements that might prevent such arrangements, generally or only in certain territories or circumstances, notify the Supervisory Board of the existence of any such requirement. The Service Provider shall not enter into any such agreement before the said requirements are met."²²⁷

"any arrangement, transaction or agreement (or any modification of any arrangement, transaction or agreement) involving the Company or any subsidiary or any other Affiliate thereof or the business or properties thereof, on the one hand, and the Service Provider or any Affiliate or the business or properties thereof (whether as a party thereto or receiver or provider of any accommodation, consideration, goods or services), on the other hand."²²⁸

"in relation to any person be it legal entity or natural person, (a) any other person directly or indirectly Controlling or Controlled by or under common Control with, such a person, or (b) any (i) Officers, Officer, trustee or beneficiary of such a person, (ii) spouse, parent, sibling or descendant of any person described in (i) or spouse, parent, sibling or descendant of the person directly or indirectly Controlling, or which is under common Control with, such person, and (iii) any trust (or its equivalent under any Governing Law) for the benefit of any person described in (i) and (ii)."²²⁹

"directly or indirectly, whether through the ownership of shares/stake, by contract or otherwise (i) the right to have the majority of the voting rights exercisable at a shareholders meeting (or its equivalent) of the person concerned or (ii) the right to appoint, and/or remove and/or direct/procure the decision making process of other corporate bodies (including but not limited to, supervisory boards, managing boards or equivalent thereof of the person concerned), and the terms "Controlled" and "Controlling" shall be construed accordingly."²³⁰

"[t]he Service Provider has executed an agreement on professional insurance indemnity in a form approved by the RoS and the Company with minimum insurance coverage of EUR 5,000,000 (five million euros)."²³⁷

"The Service Provider and the Bidder [i.e. the Claimants] hereby undertakes for the benefit of the other Parties that, during the Term of this Agreement, the Service Provider, the Bidder as well as members of the Supervisory Board nominated by the Service Provider and the Consultants, shall not, and shall procure that each of its Affiliates shall not, without the consent of the RoS:

11.1.1 carry on or be engaged or hold any direct or indirect interest in the issued share capital of any business that operates in the steel sector, and represents direct competitor of the Company regardless of the territory or jurisdiction;

11.1.2 provide any goods or services, or enter into, or have an interest in, any arrangement with any third party providing goods or services, in respect of any business that operates in the steel sector and represents direct competition of the Company, regardless of the territory or jurisdiction;

11.1.3 cause or permit any person directly or indirectly to do any of the foregoing acts or things in the name of or with the support of the Service Provider or the Bidder.

11.2 During a period of 2 (two) years after the termination of this Agreement, the obligations set out in this clause 11 shall continue to exist, but shall become limited to the European Economic Area."²⁴⁵

"The Service Provider shall owe the following duties to the Company: [...] Duty of care (within the meaning of the articles 63 and 64 of the Serbian Companies Act)."²⁶⁰

"Persons referred to in Article 61 paragraph 1 items 4) and 5) of this Law shall carry out their duties in that capacity in good faith, with due diligence and in a reasonable belief that they act with the company’s best interest.

For the purposes of paragraph 1 of this Article, due diligence shall be the level of care which a reasonably cautious person would use if he/she had the knowledge, skills and experience that could reasonably be expected of a person carrying out the same functions in a company.

If a person referred to in Article 61 paragraph 1 items 4) and 5) has certain specific knowledge, skills or experience, such knowledge, skills and experience shall also be taken into account for the purpose of evaluation of due diligence.

It is deemed that persons referred to in Article 61 paragraph 1 items 4) through 5) of this Law may also base their actions on the information and opinions provided by persons specialized in a specific filed for whom they reasonably believe they have acted in good faith in each specific case.

A person referred to in Article 61 paragraph 1 items 4) through 5) who demonstrates that he/she acted in accordance with this Article shall not be liable for any damage incurred by a company as a result of such action."²⁶¹

"A company may bring legal action against a person referred to in Article 61 paragraph 1 items 4) through 5) of this Law for indemnification of any damage caused to it by such person through a breach of the duty of care provided for in Article 63 of this Law."²⁶²

"[to provide a] termination agreement or similar document entered into between the Seller [i.e. the Second Respondent] and HPK Management doo [i.e. the First Claimant] confirming that the [MSA] is terminated as of the Closing Date, and that HPK Management d.o.o do not have any claim, rights or title against the Uniform Sales Package."²⁶⁶

"Q Leaving aside Pikaro and HPK, all the waiver letters the Service Provider had to get were obtained by —

A No, that is not correct. Two of the waiver letters werenot received on the 24th. They were received only on 28or 29 June. If so I recall well, one was Hurkovicz(?) but please don’t keep me for the words. I really don’t know the details. I forgot but I know, there were two suppliers who have not signed their waiver letters until the 24th.

Q But they were obtained by the closing.

A Yes. We have obtained them by the closing in those hectic few days before the closing."²⁷³

"Q There is not a single document in which you chase for an HPK waiver letter before the termination.

A HPK letter was needed before the closing not before termination. We didn’t terminate because they didn’t provide a waiver letter. We didn'tterminate the MSA because Pikaro hasn’t provided a waiver letter."²⁷⁶

"Q Okay, in your written statement you said that you asked Mr Kamaras about urgency of the matter knowing from media that the closing under the privatisation contract was scheduled for 30 June 2016. Can you tell us what did Mr Kamaras told you on your question, what did he answer on your question, and how was it, his reaction about it.

A Mr Kamaras mentioned that he doesn’t believe that theclosing will happen until 30 June, that it will be in the third quarter, even maybe later which was logical for me at the time because we had not been very advanced at the stage of contract conclusion and negotiation."²⁸⁴

"...then I guess I asked, or I asked how urgent is the matter, since from the press I heard, on 30 June the closing should be, and his statement was, "It is unrealistic that that will happen on 30 June. It will happen probably in the third quarter, maybe in the fourth". That was for me very important, very important information, because he was the side, he was for me the party I should negotiate with, and that, for me, was — there is no rush."²⁸⁵

"Although the incident surrounding hills of exchange evidences the negligent attitude of the Claimants and their apparent lack of good faith, it was not the reason for the termination of the MSA since this incident only came to light after the MSA was terminated."²⁸⁹

"Q Have you been aware that Hesteel, the Chinese company, wished to purchase a plant with two functioning blast furnaces?

A Yes. Yes I was."²⁹³

a. Concerning the 11-13 June 2016 outage, the Respondents argue that it was due to insufficient levels of scrap, a raw material needed for the production of steel.²⁹⁵ According to the Claimants, the outage was initially due for maintenance reasons, but was then "brought forward when a railroad accident led to a short-term scrap shortage."²⁹⁶

b. Concerning the 22 June 2016 outage, the Respondents state that it was due to insufficient levels of coke, another raw material needed for the production of steel.²⁹⁷ The Claimants argue that, while the coke levels were low, the outage was for planned maintenance works.²⁹⁸ The Respondents contest this stating that (i) maintenance works never require more than 24 hours; and (ii) the required maintenance works had already been done earlier that month, on 11 June 2016.²⁹⁹

"[...] purchase of Coke from Slovakia is an emergency purchase because supplier from Lukavac has logistical issues caused by Croatian railways repairing a tunnel, which prevents transportation of coal from Ploce to Lukavac. We are going next week to inspect situation in Lukavac and to find solution. We need to buy this Coke from Slovakia in order not to jeopardize the production in the meantime."³⁰³

"In addition to the Management Fee outlined in clauses 3.2.4, 3.2.5, 3.2.6, 3.2.7 and 3.2.8, the Service Provider shall be entitled to a bonus fee in case of any privatisation of the Company that occurs within 5 (five) years (or a period of five years plus any additional period of this Agreement agreed to under clause 7.2 hereof) calculated as of the Closing of this Agreement, in the amount equal to 30% of the acquisition price of the Company ’ stake achieved through such privatisation procedure but in no event lower than USD 10,000,000 (ten million dollars) (the Privatisation Bonus)."³¹³

"Subsequently in September 2015 the businessmen behind GLS (Yves Nassan and Lazar Fruchter) did acquire a minority stake in the Bidder but even that would not have satisfied the control requirements in the MSA."³²⁶

"the evidence that Lazar and Fruchter’s stake was only 20% [...]"³²⁷

"This Agreement has been executed in Serbian and English language. In case of any discrepancy or inconsistency between these two versions, the English version shall prevail."³²⁸

"MR JACOBS: Okay. There were obviously some drafts before the final MSA. Were those drafts always circulated in English, just like the red line we have seen? [Mr Pavic]: Only English. Only the — not only the final — I think we have — I don't know when the translation was done from English to Serbian, whether it was already done around 20 March or not. The translation — I think by the time we selected it, if I am not mistaken and we selected them around 20 March, that at that time only the English version was around, and Serbian version was included in - as a translation few days after."³³⁰

"ML [Marek Lorinz, on behalf of the Claimants]: The consideration was, let’s say if you, let’s say want to privatize the plant before the expiration of 3 years, th[e]n we are entitled to the success fee, which is X % of the sale price, X % of investment commitment but no less than asked for.

MH [Mark Harrison, on behalf of the Claimants]: That sounds like you’re happy. I mean... for those 3 years MSA agreement, and as you say, whoever comes along in a really good phase, it’s a win-win, the Government wins, we take the success fee and that’s it."³³²

"BM: With respect to the exit bonus, our suggestion is to have it 30% of the sales price only, without these capital commitments, because this would be very difficult to assess and to calculate. Capital commitment will be something that the company will get and I think it’s very difficult for the company to find the cash given that those capital commitments will be over a 5 period... 5 years to find cash now in order to pay 30% of the future capital commitment by somebody."³³⁴

"BM: No, that’s... sure, that’s understandable. I mean you know in privatizations that they weight those things differently. One is the purchase price weighting, one is the weighting of a... No, no, I’m talking about we cannot have 30% on the equity and 30% on the capital commitment."³³⁵

"BM: If it’s a 30% of the privatization proceeds for the equity and or higher of 30% of that or 10 million dollars, I think that is ok."³³⁶

"PROFESSOR ORLIC: Good. Can we go to the page 34 [of the Negotiation Transcript]? It goes like this:

"Peter Kamaras: No, no, I am listening. Do you have any suggestions?

"Boris Milosevic: Our suggestion was only Mark Harrison zero ", and there was general laughter. Now, Mr Boris Milosevic says, and I am quoting: "If it is a 30 per cent of the privatization receipts for the equity and/or higher of 30 per cent of that or $10 million I think that is okay"

"Peter Kamaras: Okay"

So you accepted what Boris Milosevic ask you for.

A Yes, Professor, yes. I did. Can I put the broader picture behind it? There was a discussion brought by Marek Lor[i]nz, what happens if Železara is giving away for nothing for investment in case somebody comes and says okay, I will get it for free, but I invest 1 billion, that is basically what the Chinese did. For this case they suggested this minimum 10 million amount. This was my understanding of this 10 million, and somebody get it for free but promises - we originally, I think, I believe it should be there, ask also for 30 per cent. Marek Lorinz gave me this idea, asking for 30 per cent of the investment, can be outrageous number so this was rejected flatly, so we agreed that in case of such a strange — well, not strange actually, but — there is this minimum of 10 million, okay? And in case it is sold for real money, that there is money to be paid to the government, then we get 30 per cent. This was my understanding of the story.

PROFESSOR ORLIC: But it was said for the equity.

A It says so very likely, yes. It says so in the transcript, yes."³³⁷

"ML [Marek Lorinz, on behalf of the Claimants]: The consideration was, let’s say if you, let’s say want to privatize the plant before the expiration of 3 years, th[e]n we are entitled to the success fee, which is X % of the sale price, X % of investment commitment but no less than asked for.

MH [Mark Harrison, on behalf of the Claimants: That sounds like you’re happy. I mean... for those 3 years MSA agreement, and as you say, whoever comes along in a really good phase, it’s a win-win, the Government wins, we take the success fee and that’s it."³⁴⁶

"Fresh coke relatively quickly deteriorates in quality and begins to disintegrate, reducing its efficiency. The coke’s function in the blast furnace is to create a supporting structure and allow wind flow through the charge, so the size and strength of the coke are very important. If a company keeps a higher inventory of coke on site, it will suffer from a significantly higher volume of undersize coke (due to disintegration), which cannot be charged directly into the blast furnace. The only use for undersize, degraded coke is as a replacement fuel for sinter production, but as coke is very expensive compared with the fuel ordinarily used for sinter production, this is uneconomical and increases production costs. Accordingly, the ordering and storage of coke on site requires a careful balancing act."³⁴⁷

"(1) By contract of order the provider undertakes the obligation towards the principal to perform certain actions on his account.

(2) At the same time the provider shall be authorized to undertake such actions.

(3) The provider shall be entitled to remuneration for his effort, unless otherwise provided by the contract or derives from the nature of the mutual relationship between the parties."³⁵⁷

"Should several principals entrust a performance of an order to a provider, they shall be jointly and severally liable towards him."³⁵⁸

"In addition to the Management Fee outlined in clauses 3.2.4, 3.2.5, 3.2.6, 3.2.7 and 3.2.8, the Service Provider shall be entitled to a bonus fee in case of any privatisation of the Company [...] (the Privatisation Bonus)."³⁶⁴

"The Management Fees as regulated by 3.2.4, 3.2.5, 3.2.6, 3.2.7, 3.2.8 and 3.2.9 shall be reimbursed as stipulated in clause 3.2 and invoiced to the Company"³⁶⁵

"All payments required by this Agreement to be made to the Service Provider shall be made by the Company by means of bank transfer in RSD, in accordance with the median exchange rate of the National Bank of Serbia on the day of payment to the Service Provider’s account RSD 170- 30023743000-98, as set out in the invoice."

"Such invoice would be payable immediately and the Company would not have the right to object to it."

"If the RoS or the Company terminates this Agreement in accordance with clause 8.4, the Company shall be obliged to pay to the Service Provider the Privatization Bonus in line with the terms specified in clause 3.2.9."

"As we have already informed you, any kind of guarantee of the Republic of Serbia would be considered as a State Aid. Hence, we deleted any monetary obligation of the Republic of Serbia from the Agreement (re payment obligations in case Železara fails to pay its liabilities)."³⁶⁸

Indeed, one of the changes suggested in the red-line version of the MSA was to include in Clause 5.1.3, discussed above, that any payment was to be made by the Company:³⁶⁹

5.1.4 5.1.3 Invoices referring to the Fixed Fee shall be issued monthly and shall be payable by the Company in accordance with terms of this Agreement.

" We have accepted this and have removed the language that was stating that the RoS would be liable for the Company obligation in respect of the obligations arising out of the MSA"³⁷⁰