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Final Award

Glossary

Beneficiary [Redacted]
Claimant [Claimant], a société anonyme incorporated in Greece under Greek laws, having its seat in [Redacted], Greece.
Consortium Consortium created between [Respondent], [Claimant], [Redacted], and [Redacted]
Consortium Agreement Consortium Agreement between [Respondent] and [Claimant] "for [Redacted]" dated 10 February 2016
Contracting Authority [Public Authority]
Experts Mrs. [Person 1] and Mr. [Person 2]
[Public Authority] [Public Authority]
[Redacted] [Public Authority]
Project [Redacted]
Respondent [Respondent], a société anonyme incorporated in Italy and operating under the Italian laws, having its seat in [Redacted], Italy.
Service Contract Service Contract [Redacted] signed on 29 December 2015
Tender Tender for Service Contract [Redacted]

I. THE PARTIES

I.1. Claimant

1.

The claimant is [Claimant] ("[Claimant]" or "Claimant"), a société anonyme created and organized under the laws of Greece, having its headquarters in [Redacted], Greece.

2.

Claimant is represented in this Arbitration by:

• Mr. [Person 3]
Attorney at Law
[Redacted]
[Redacted]
GREECE
Tel: [Redacted]
Fax: [Redacted]
Email: [Redacted]
[Redacted]

• Prof. Dr. [Person 4]
Attorney at Law
[Redacted]
[Redacted]
GREECE
Tel: [Redacted]
Fax: [Redacted]
Email : [Redacted]

I.2. Respondent

3.

The respondent is [Respondent] ("[Respondent]" or "Respondent"), a société anonyme created and organized under the laws of Italy, having its headquarters in [Redacted], Italy.

4.

Respondent is represented in this Arbitration by:

Mr. [Person 5]
Ms. [Person 6]
[Redacted]
[Redacted]
ITALY
Tel: [Redacted]
Fax: [Redacted]
Email: [Redacted]
[Redacted]

II. THE ARBITRATION AGREEMENT, APPLICABLE LAW, PLACE AND LANGUAGE OF THE ARBITRATION

5.

The dispute that is the subject matter of this arbitration has arisen in connection with the performance of a Consortium Agreement dated 10 February 2016 (the "Consortium Agreement") between the Parties "for [Redacted] [...]" (the "Project").

II.1. The Arbitration Agreement

6.

Article 14 of the Consortium Agreement (the "Arbitration Agreement") provides:

"The PARTNERS shall make every attempt to resolve amicably all differences concerning the interpretation of this Contract and the execution of the work. Any dispute or disagreement which cannot be resolved by the PARTNERS and any controversy, claim or dispute otherwise arising from or in connection with this agreement or with the Project shall finally be subject of judgement of the International Arbitration Court of Paris. The award in the Arbitration proceedings shall be final and binding upon the Parties. [...]"

II.2. Applicable Law

7.

Article 15 of the Consortium Agreement [Applicable Law] provides:

"The Agreement shall be deemed to be an Agreement made under and governed solely by and construed in accordance with the Law of Italy."

II.3. The Place of the Arbitration

8.
The Consortium Agreement is silent as regards the place of the arbitration.
9.
By email of 27 June 2018, Claimant proposed that the place of the arbitration be Paris, France.
10.
In its Answer to the Request for Arbitration dated 9 July 2018, Respondent accepted Claimant’s proposal for Paris, France, to be the place of the arbitration.
11.
As a consequence, Paris, France, is the place of this arbitration, as per the Parties’ agreement.

II.4. The Language of the Arbitration

12.
The Consortium Agreement is silent as regards the language of the arbitration.
13.
By email of 27 June 2018, Claimant proposed that the language of the arbitration be English.
14.
In its Answer to the Request for Arbitration dated 9 July 2018, Respondent accepted Claimant’s proposal that English be the language of the arbitration.
15.
As a consequence, English is the language of this arbitration.

III. THE PROCEDURE TO DATE

III.1. Initiation of the procedure

16.

Claimant initiated this arbitration by a Request for Arbitration dated 15 May 2018 received by the Secretariat (the "Secretariat") of the International Chamber of Commerce’s International Court of Arbitration (the "Court") on 14 June 2018, together with exhibits C1 to C8.

17.
On 11 July 2018, the Secretariat received the Respondent’s Answer to the Request for Arbitration dated 9 July 2018, together with Annexes 1 to 7.
18.

In the absence of any agreement to the contrary pursuant to Article 6(1) of the ICC Rules of Arbitration, the version of these rules applicable is that on force as of 1 March 2017 (the "ICC Rules").

III.2. Constitution of the Arbitral Tribunal

19.
Article 14 of the Consortium Agreement does not provide for the number of arbitrators composing the arbitral tribunal.
20.
In its Request for Arbitration dated 15 May 2018 and by email of 27 June 2018, Claimant proposed that a sole arbitrator be appointed by the ICC Court directly.
21.
In its Answer to the Request for Arbitration dated 9 July 2018, Respondent accepted Claimant’s proposal to have a sole arbitrator appointed in this case.
22.

Since the Parties have not agreed on the sole arbitrator to be appointed, on 23 August 2018, the ICC Court appointed Ms. Vanessa Thieffry, 45 rue de Tocqueville, 75017, France, tel: [Redacted], fax: [Redacted], email: [Redacted] as sole arbitrator (the "Sole Arbitrator"), upon the French National Committee’s proposal.1

23.
By letter of 23 August 2018, the ICC Secretariat transmitted the file to the Sole Arbitrator (Article 16 of the ICC Rules).

III.3. Terms of Reference, Case Management Conference, Procedural Order No. 1 and Provisional Procedural Timetable

24.
The Parties and the Sole Arbitrator corresponded to (i) finalize the Terms of Reference, (ii) address the procedural measures that may be adopted by the Sole Arbitrator in accordance with Article 22(2) of the ICC Rules, and (iii) determine the provisional procedural timetable as required by Article 24(2) of the ICC Rules.
25.
A case management conference (Article 24 of the ICC Rules) was held on 14 September 2018, by way of a telephone conference. The Sole Arbitrator and the Parties discussed the contents of the Terms of Reference, as well as of drafts of a Procedural Order No. 1 and a Provisional Procedural Timetable.
26.
The Terms of Reference were signed by correspondence, and, in the last instance, by the Sole Arbitrator, on 20 September 2018.
27.
On 21 September 2018, the Sole Arbitrator issued Procedural Order No. 1, along with the Provisional Procedural Timetable.

III.4. Document Production Phase

28.
On 28 September 2018, Claimant submitted its Request for the Production of Documents, in advance of the date provided in the Provisional Procedural Timetable.
29.
On 9 October 2018, Respondent submitted its Answer to Claimant’s Request for the Production of Documents, along with documents requested by Claimant, also in advance of the date provided in the Provisional Procedural Timetable.
30.
On 19 October 2018, Claimant acknowledged receipt of all the documents it had requested to be produced, in accordance with the Provisional Procedural Timetable.

III.5. Statement of Claim

31.
On 9 November 2018, Claimant submitted its Statement of Claim, accompanied by exhibits C9 to C31, in advance of the date provided in the Provisional Procedural Timetable.
32.

The same day, the Sole Arbitrator acknowledged receipt of Claimant’s Statement of Claim, and noted that Claimant:

• proposed, as factual witness, Mr. [Person 7], but that no witness statement has been filed; as a consequence, she referred to paragraphs 34 to 38 of Procedural Order No. 1 of 21 September 2018 ("PO No. 1")requiring a party wishing to rely on witness evidence (be it factual or expert) to file witness statements with their submissions, within the form prescribed at paragraph 36 of PO No. 1;

• submitted, amongst its exhibits: (i) two exhibits in the French language (C29 and C31), and (ii) one exhibit in the Italian language (C19), when English is the language of the arbitration per the parties’ agreement2, and pursuant to PO No. 1, "[a]ll exhibits other than those in English shall be submitted in their original language, together with a translation into English. [...]."3

33.

In light of the above, the Sole Arbitrator invited:

• Respondent to comment, as soon as possible and by 13 November 2018 at the latest, on exhibits C29 and C31, and more specifically to clarify whether it agreed with their being submitted in the French language or whether it required them being translated (in relevant parts) into English;

• Claimant to submit, as soon as possible and by 16 November at the latest: (i) a witness statement of Mr. [Person 7] in accordance with paragraphs 34 to 38 of PO No. 1, and (ii) a translation, at least in relevant parts, of exhibit C19, as per paragraph 23 of PO No. 1.

34.
On 12 November 2018, Respondent confirmed that it agreed to exhibits C29 and C31 being submitted in the French language only.
35.
The same day, Claimant submitted a translation of exhibit C19.
36.
On 15 November 2018, Claimant submitted the Witness Statement of Mr. [Person 7] in accordance with the Sole Arbitrator’s instructions of 9 November 2018.

III.6. Statement of Defense

37.
On 16 November 2018, Respondent submitted its Statement of Defense, along with 15 "Annexes", in advance of the date provided in the Provisional Procedural Timetable.
38.
On 19 November 2018, the Sole Arbitrator acknowledged receipt of Respondent’s Statement of Defense, and noted that: (i) Respondent submitted, with its Answer to the Request for Arbitration, 7 annexes, and (ii) the annexes submitted with the Statement of Defense are numbered 1 to 15.
39.

Consequently, she drew Respondent’s attention to Section 3 of PO No. 1, and more particularly to paragraphs 17, 20, and 21 thereof, pursuant to which, inter alia:

  • Exhibits shall "be numbered consecutively throughout this Arbitration";4
  • "[T]he number of each exhibit submitted by Respondent shall be preceded by the letter "R";5 
  • "The exhibits filed shall be accompanied by a list specifying the number of the exhibit, the nature of each document, its date and its author. The list of exhibits shall be updated with each new submission of a Party and each updated list of exhibits shall include all exhibits filed by the Party since the beginning of this Arbitration".6
40.
In light of the foregoing, the Sole Arbitrator invited Respondent to submit, by 23 November, a consolidated list of exhibits, numbered R1 to R22, and clarified that the exhibits submitted by Respondent would subsequently be deemed renumbered as per that list.
41.
On 22 November 2018, Respondent submitted again its Statement of Defense, clarifying that (i) paragraphs had been numbered but the content remained the same, and (ii) the exhibits had been numbered in accordance with PO No. 1. Respondent added that, in the process of numbering its exhibits, it noted that two such exhibits had been produced twice and, consequently, that the total number of exhibits it had submitted in the arbitration was 20 instead of 22.

III.7. Second Case Management Conference and Procedural Order No, 2

42.

On 27 November 2018, a Second Case Management Conference was held, by way of a telephone conference, to organise the hearing of 4 December 2018 (the Hearing) and its schedule.

43.
On 28 November 2018, the Sole Arbitrator issued Procedural Order No. 2, adopting the Hearing schedule.

III.8. Hearing, Procedural Order No. 3 and Provisional Procedural Timetable No. 2

44.
On 4 December 2018, the Parties and the Sole Arbitrator convened at the ICC Hearing Centre, 112, Avenue Kléber, Paris, France, for the Hearing, in accordance with the Provisional Procedural Timetable.
45.

The following persons attended:

• For Claimant: Professor [Person 4] (as external Counsel), Mr. [Person 3], and Mr. [Person 7] (as witness);

• For Respondent: Ms. [Person 6];

• For the Arbitral Tribunal: Ms. Vanessa Thieffry, Sole Arbitrator

46.

Throughout the Hearing, the following issues were discussed inter alia:

• in response to Claimant’s request for a finding that the Sole Arbitrator has jurisdiction to hear this case, Respondent confirmed that it had no objection to such jurisdiction;

• a number of translations of documents into the language of the arbitration were to be provided by the Parties;

• Claimant’s claim that the Sole Arbitrator issues an order that "Respondent comply with its obligation under Article 4(h) of the Agreement to disclose all documents and information relating to payments that the Respondent has received in relation to the Project, in general, and to the services rendered by Claimant, in particular" was obsolete following the document production phase, and was thus withdrawn.

47.
Finally, the next steps of the procedure were discussed between the Parties and the Sole Arbitrator. After such discussion, it was agreed to (i) modify the Provisional Procedural Timetable in order to change the dates of the Parties’ second written submissions, and (ii) limit their content.
48.

On 7 December 2018, the Sole Arbitrator thus issued Procedural Order No. 3 ("PO No. 3"), (i) adopting Provisional Procedural Timetable No. 2, (ii) limiting the Parties’ subsequent submissions to issues raised during the Hearing and the Sole Arbitrator’s request that the Parties further elaborate on specific issues, and (iii) taking note of Claimant’s withdrawal of its request for an order that "Respondent comply with its obligation under Article 4(h) of the Agreement to disclose all documents and information relating to payments that the Respondent has received in relation to the Project, in general, and to the services rendered by Claimant, in particular."

III.9. Notification of Change of Address

49.

On 11 January 2019, in accordance with Article 14 of the Terms of Reference, the Sole Arbitrator informed the Parties, that any written communications should, from that date, be sent to her new address as follows:

Vanessa Thieffry
[Redacted]
REED SMITH LLP
112 avenue Kléber
75116 Paris, FRANCE.

III.10. Reply and Rejoinder and Second Round of Simultaneous Submissions

50.
On 15 January 2019, the Parties submitted simultaneously their First Post-Hearing Submissions, in accordance with PO No. 3 and Provisional Procedural Timetable No. 2.
51.
The same day, the Sole Arbitrator invited to Parties to inform her, by 22 January 2019 at the latest, whether they wished another round of simultaneous submissions.
52.
On 20 January 2019, Claimant informed the Sole Arbitrator that it wished to counter-reply to Respondent’s submission.
53.
On 21 January 2019, Respondent indicated that it thought "the facts are clear enough and well discussed and counter discussed but obviously we have nothing against the counter-reply requested by the Claimant if considered necessary."
54.
The same day, Claimant replied that, unless the Sole Arbitrator decided otherwise, it would not insist on the opportunity of a counter-reply given Respondent’s "waiver" of its right to such a submission.
55.

On 28 January 2019, the Sole Arbitrator, taking note that Respondent (i) along with its last submission, filed 18 new exhibits out of 38, thus almost doubling the number of exhibits it had produced in this arbitration, and (ii) failed to produce the translation of exhibit R24, and after due consideration, invited:

• Respondent, to submit a translation into English of exhibit R24 by 30 January 2019 at the latest; and

• the Parties, to submit their Second Round of Simultaneous Submissions, strictly limited to answering their respective Simultaneous Reply and Rejoinder of 15 January 2019, by 11 February 2019.

56.
On 11 February 2019, the Parties submitted their Second Post-Hearing Submissions.

III.11. Submissions on Costs

57.

On 18 March 2019, the Sole Arbitrator invited the Parties to submit:

• their Statements on Costs simultaneously, including relevant particulars, by 22 March 2019 at the latest;

• their Comments on each other’s Statement on Costs, also simultaneously, by 29 March 2019 at the latest.

58.
In addition, since exhibit C4 which had been submitted by Claimant with its PostHearing Submission of 15 January 2019 was incomplete, the translation of Invoice No. 1492 appearing to be missing, the Sole Arbitrator invited Claimant to submit the translation of this invoice at its earliest convenience.
59.

As a consequence:

• on 22 March 2019, the Parties filed their Statements on Costs simultaneously;

• on 28 March 2019, Claimant filed the translation of the missing part of exhibit C4;

• on 29 March 2019, Respondent filed its Comments on Claimant’s Statement on Costs, in which it explained having misinterpreted Article 38 of the ICC Rules, and thus only submitted its list of costs in this second submission.

60.
In light of Respondent’s submission of 29 March 2019, on 2 April 2019, considering that Claimant had not had the opportunity to comment upon Respondent’s submission on costs, the Sole Arbitrator invited Claimant to do so, if it so wished, by 5 April 2019 at the latest.
61.
The same day, Claimant replied that (i) it did not object to Respondent’s submission of its costs, and (ii) it did not consider necessary to comment thereon, and therefore it waived its right to do so.

III.12. Closing of Proceedings

62.
On 10 April 2019, the Sole Arbitrator declared the proceedings closed in accordance with Article 27 of the ICC Rules.

III.13. Time Limit for Rendering the Award

63.
On 19 March 2019, the ICC Secretariat informed the Sole Arbitrator that, at its session of 7 March 2019, the ICC Court had extended the time limit for rendering the final award until 31 May 2019, in accordance with Article 23(2) of the ICC Rules.

IV. FACTUAL BACKGROUND TO THE DISPUTE

64.

The Parties are part of a consortium led by [Respondent], and composed of [Redacted], [Claimant], and [Redacted] (the "Consortium").7

65.

On 27 July 2015, the Consortium submitted a tender for Service Contract [Redacted] (the "Tender") issued by the [Redacted] ("[Redacted]" or the "[Public Authority]").8

66.

It was awarded to the Consortium on 28 October 2015.9 Thus, on 29 December 2015, [Respondent] signed Service Contract [Redacted] on behalf of the Consortium10 (the "Service Contract"), which according to the Parties consisted in the provision of expert services.

67.
In January 2016, the implementation of the Project started.11
68.

On 10 February 2016, the Parties entered into the Consortium Agreement for [Redacted],12 with the purpose of providing experts for the Project, with Respondent as Consortium Leader.

69.

According to the Consortium Agreement, the purpose of the consortium is to join "forces for the preparation and submission to the Client of the Technical and Financial Offer for [Redacted] and further implementation of the project, as Consortium, an unincorporated association, to carry out the specific purpose described below".13

70.

The Parties undertake to, inter alia:

  • "use their best efforts to implement the project to the satisfaction of the Client and the beneficiaries";14
  • cooperate in good faith and "refrain from everything that runs counter to the tasks and objectives of the present consortium agreement";15
  • take "full responsibility for ensuring the technical quality of the inputs of their particular contracted key and non key experts".16
71.

In case of default by a Party in providing the required experts "in such a way that the observance of important dates is endangered, the leader of the consortium shall be entitled to re-distribute the performances in coordination with the partner in such a way that the requirements of the project are best met."17

72.
The financial terms of the Consortium Agreement are set out at Article 5 thereof, and the rates to be paid for the different experts’ services are contained in an annex referred to as the Breakdown of Prices, or "BoP".
73.
The partners to the Consortium are then to be paid in accordance with Article 8 [Payments] of the Consortium Agreement.
74.
The application and interpretation of Articles 5 and 8 of the Consortium Agreement are at the heart of the subject matter of this Arbitration, and are set out in detail in the Discussion Section of this Award, below.
75.
Turkey suffered an attempted coup on 15 July 2016. The political climate that followed allegedly rendered it difficult to find experts that would be willing to go to that country.
76.

From November 2016 until January 2017, [Claimant] provided an expert, M. [Person 8], who performed 30 man/days. The latter were approved by the Beneficiary and the [Public Authority]. [Respondent] allegedly paid his fees "in full."18

77.

In April and May 2017, [Claimant] had difficulties submitting profiles of international experts, and those submitted were rejected by the [Public Authority].19

78.
On 1 June 2017, [Respondent] requested to provide profiles of local, Turkish experts instead, "because [the experts] have to work with the local companies."20
79.
Claimant contends that it was orally agreed that these experts would be charged at the rate of international experts, i.e., €650 per day, instead of the rate of local experts, €350 per day.
80.

Subsequently, [Claimant] submitted the profiles of Turkish experts.21 Amongst these profiles, were those of Mrs. [Person 1] and Mr. [Person 2] (the "Experts").

81.

On 25 September 2017, the [Public Authority] accepted their profiles,22 and [Claimant] thus contracted them.

82.
The Experts performed their assignments in August, September and October 2017.
83.
On 12 September 2017, [Claimant] thus issued a first invoice, No. 1456 for "Payment for Non-Key Expert [Person 1] (10 days) and [Person 2] (20 days)", in the amount of €19,500.23
84.
This invoice was paid in part on 1 December 2017.24
85.
On 7 November 2017, [Claimant] issued invoices Nos. 1492 and 1496 for payment of the services of the Experts, Mrs. [Person 1] (10 days) and Mr. [Person 2] (30 days), in the total amount of €26,000.25
86.

On 21 December 2017, [Respondent] acknowledged delays in payment as follows:26

"Concerning the delays in payments, this is strictly connected to the delays that we experiencing from different Contracting Authorities, including the Turkish one. We are expecting to receive some payments from Turkey by the end of the year and as soon as we receive the money we will be able to pay the outstanding invoices.

I would like to point out that by mid-December you received a partial payment from us which clearly demonstrates that we are willing to process the payments."

87.
The Parties further corresponded.
88.
The remaining amount of invoice No. 1456 was paid by [Respondent] on 29 December 2017.27
89.

On 17 January 2018, [Claimant] was still complaining of payment problems, requesting "immediate information on the issues below and swift processing of the related payments:

• Payment of the remaining balance of 11,098€,

• Release of the remaining 35% of our invoices equal to 15,295€ and

• Balance of the profit share total 25,193€ as per the Consortium Agreement."28

90.
On 26 January 2018, [Respondent] replied, inter alia, that "[...] I confirm you that you can invoice the whole balance of the profit share ('22.545,00€), because we could reach our agreed BoP in spite of the time reduction of the project, the coup and also the problem we registered in get approved the experts you proposed after one of them refused to reach the project site in August 2016."29
91.
The same day, [Claimant] issued invoice No. 1542 in the amount of €22,545, corresponding to the balance of its profit share.30
92.

On 7 February 2018, [Claimant]’s in-house legal counsel sent a formal letter to [Respondent], requesting immediate payment of the pending amount of €48,545 before 12 February 2018, failing which [Claimant] "is ready and willing to undertake all necessary legal measures to protect its interests against [[Respondent]’s] practices and to notify the relevant Contracting Authority."31

93.
In the absence of an answer by [Respondent], on 15 February 2018, [Claimant]’s in-house legal counsel sent an "extra-judicial complaint" to [Respondent], reiterating its payment request within 3 days, failing which [Respondent] would "be considered as permanent and deliberate violation of a conventional term and will be addressed according to the Law and the Agreement."32
94.

On 16 February 2018, [Respondent] replied, (i) contesting the tone of [Claimant]’s email of 15 February considering the "cooperative approach" it had adopted since the beginning of the Project, and (ii) contesting the rate of €650 per day applied to the services of the Experts, as they are local experts and not international experts.33

95.
The Parties subsequently maintained their positions and, on 9 March 2018, [Claimant] filed a Request for Amicable Settlement under Article 14 of the Consortium Agreement.34
96.
Following the failure of this attempt to settle the dispute, on 14 June 2018, [Claimant] filed a Request for Arbitration dated 15 May 2018 with the ICC Secretariat.

V. REQUESTS FOR RELIEF

97.
The Parties’ requests for relief are as follows:

V.1. Claimant’s request for relief

98.

In the Terms of Reference, Claimant sought:

a. A finding that Respondent is liable vis-à-vis Claimant for breach of contract;

b. A finding that Respondent is liable to pay to Claimant the amount of 26,000 € for the unpaid invoices Nos. 1492 and 1493 issued by Claimant on 7 November 2017 for services rendered by Claimant’s Experts Mrs. [Person 1] and Mr. [Person 2];

c. A finding that Respondent is liable to pay to Claimant the amount of 22,545 € for the unpaid invoice No. 1542 issued by Claimant on 26 January 2018 for Claimant’s profit share;

d. A finding that Respondent is liable to pay to Claimant the amount of 20,000 € for moral damages;

e. An order that Respondent pays all the aforementioned amounts with interest as per the Consortium Agreement;

f. An order that Respondent pays all arbitration costs and all legal costs for Claimant’s legal representation and assistance;

g. An order that Respondent complies with his obligation under Article 4(h) of the Consortium Agreement to disclose to Claimant all documents and information relating to the payments that Respondent has received in relation to the Project, in general, and to the services rendered by Claimant, in particular;

h. Such further or other relief as Claimant may request in due course in compliance with the applicable ICC Rules.

99.
In its Statement of Claim dated 8 November 2018, Claimant slightly amended its request for relief, requesting an additional finding that the Arbitral Tribunal has jurisdiction to hear this case.35
100.
At the Hearing of 4 December 2018, Claimant withdrew its request for an order that "Respondent, comply with its obligation under Article 4(h) of the Agreement to disclose all documents and information relating to payments that the Respondent has received in relation to the Project, in general, and to the services rendered by Claimant, in particular", stating that it was obsolete following the document production phase.
101.
The Sole Arbitrator took note of such withdrawal in PO No. 3.36

V.2. Respondent’s Request for Relief

102.

As regards Claimant’s claims, Respondent:

a. Considers it appropriate to transfer to Claimant the amount of the outstanding invoices, but deducting the amount of €21,000 - €2,100 (that corresponds to the percentage of profit sharing for Claimant), as this amount is, according to the Consortium Agreement, an undue margin that Claimant would like to retain from the rest of the Consortium;

b. Denies that interests are due since it proposed to pay Claimant on the basis of the above on 16 February 2018;

c. Denies that damages for reputation are due to Claimant.

103.

In addition, Respondent seeks :

a. Payment for the recruitment activities implemented by Ms. [Person 9] for the local experts that Claimant have contracted in the amount of €1,110 (€222 per working days x 5 working days) ;

b. Payment of reputation damages of €10,000.

VI. DISCUSSION

VI.1. Claimant’s Claims

VI.1.1. Jurisdiction

104.
Claimant requests a finding that the Arbitral Tribunal has jurisdiction to hear this case.
105.
Respondent does not deny the Arbitral Tribunal’s jurisdiction, as it confirmed during the Hearing of 4 December 2018.
106.
Based on the Arbitration Agreement and in light of the foregoing agreement of the Parties, the Sole Arbitrator upholds her jurisdiction to hear this case.

VI.1.2. Unpaid Invoices

107.

The dispute arises out of the failure of Respondent to pay Claimant the following three invoices (the "Unpaid Invoices"):

• Invoice No. 1492, issued on 7 November 2017 in the amount of €24,700 for the services of Mrs. [Person 1] (€6,500) and Mr. [Person 2] (€18,200);37

• Invoice No. 1493, issued on 7 November 2017 in the amount of €1,300 for the services of Mr. [Person 2];38

• Invoice No. 1542, issued on 26 January 2018 in the amount of €22,545 for the [Redacted],39 the amount of which depends directly from the total amounts invoiced for experts, including invoices 1492 and 1493 above.

(i) Claimant’s position

108.
Claimant contends that Respondent is (i) liable for breach of contract and (ii) its obligation of good faith, and (iii) is estopped from contesting the Unpaid Invoices.
109.

Claimant first contends that Respondent is liable for breach of contract for failure to pay the Unpaid Invoices.40 Claimant bases its claim:

• as regards Invoices Nos. 1492 and 1493, on Article 8 of the Consortium Agreement, pursuant to which "65% of the amount due to the Claimant is payable at the end of the first month following the month of performance and the rest 35% within 30 days from the approval of each interim report" ;41 and

• as regards Invoice No. 1542, on Article 5.2 of the Consortium Agreement.42

110.

According to Claimant, Respondent "acknowledged", at least in part, its breach of its obligation to pay the money it recognised being due,43 and the Parties reached a legal and binding agreement that the rate applicable to Mrs. [Person 1] and Mr. [Person 2]’s services would be that for international experts, as confirmed by:44

• Mr. [Person 7], Claimant’s witness, at the Hearing;

• the first Excel sheet of Exhibit C22, "Profit Aug.-Dec. 2017", which represents the calculation of profit sharing as follows:45

[Redacted image]

• the facts that (i) Claimant paid Invoices Nos. 1456 and 1457 for the Experts’ services with international rates;46 (ii) the Parties’ agreement was confirmed by Ms. [Person 9], who works for Respondent, in an email of 26 January 2018;47 and (iii) Respondent invited Claimant to invoice "the whole balance of profit share" calculated on the basis of international rates being applied to the Experts’ services;48

• Respondent’s acknowledgement that there was a delay in the payment of Invoices Nos. 1492 and 149349 without objecting to the rates applied in the Unpaid Invoices, Respondent’s objection only having been raised after the warning that this arbitration would be commenced, as confirmed by Respondent at the Hearing.50

111.

Claimant also highlights, in relation to Invoice No. 1542 for profit sharing, that Respondent only sent it an Excel sheet mentioning an international rate for the services of Mrs. [Person 1] and Mr. [Person 2] at the time, and that this spreadsheet was subsequently modified unilaterally by Respondent to include the rates for local experts and sent to Claimant inadvertently. This sheet reads as follows:51

[Redacted image]

112.
Claimant insists that it did not receive this calculation contemporarily, but only after it sent a request for amicable settlement to Respondent.52
113.
In addition, Claimant denies Respondent’s allegation that any agreement in relation to the invoicing of local experts at international rates’ would have required a modification of the Consortium Agreement and the agreement of all partners, to whom it would have been detrimental. Indeed, Claimant points out that the payment of the Experts’ services at international rates is not detrimental to the other partners of the Consortium, since Article 5.3 of the Consortium Agreement provides that Claimant could provide a maximum of 100 man/days of short term international experts, which is what it did. The only adjustment was that, in the aftermath of the coup d’état, local experts would be paid at international experts’ rates, an adjustment which did not affect the proper implementation of the project.53 Claimant finally adds that, in any case, whether Respondent had to obtain the other partners’ agreement is "not the Claimant’s business" as long as it obtained Respondent’s explicit approval to engage local experts at international rates.54
114.

As regards the fact that it was allegedly Respondent’s invoicing procedure to only verify invoices paid once every six months when calculating the profit sharing, and the practice established between the Parties, Claimant submits that: (i) it relies on "Respondent's prior agreement, in his capacity as the leading partner of the Consortium, with respect to any invoice issued by the Claimant, in his capacity as a member of the Consortium",55 and (ii) notwithstanding the terms of the Consortium Agreement, it has never issued any invoice without Respondent’s prior agreement, in accordance with "the practices and usages of the market to issue invoices to the leader of the Consortium following the latter's prior agreement to this effect" Claimant adds that (i) this is also true for Invoice No. 1542,56 and (ii) the dispute over the payment of the amounts invoiced by Claimant only arose after "Respondent threatened to go to arbitration."57 Claimant also rejects Respondent’s explanation of this procedure as "unclear and dubious", and reiterates that "it has never issued an invoice to the Respondent without its prior agreement."58

115.

Moreover, Claimant contends that Respondent breached its obligation of good faith provided for by Article 4.d of the Consortium Agreement.59 According to Claimant, the breach results from Respondent:

  • failing to pay the amounts it recognises were due;60
  • modifying unilaterally, at the end of the Project, the Parties’ agreement as to the rate applicable to the fees of Claimant’s experts;
  • refusing to pay Claimant for the Experts’ services, when it had received payment for these services from the Client;
  • still failing to pay, when it recognises that amounts are due to Claimant with respect to the Experts’ services; and
  • "failing to treat [Claimant] as a member of the Consortium, i.e., as a partner."61
116.
Claimant adds that the principle of good faith is also provided for by the Italian Civil Code, at Articles 1366, 1337, 1371, and 1375.62
117.

Claimant clarifies that it relies more particularly on Articles 1366 and 1375 of the Italian Civil Code. According to Claimant, Respondent allegedly failed to interpret (Article 1366) and perform (Article 1375) the Consortium Agreement correctly as did not treat Claimant as a Partner by not respecting the Parties’ agreement on the application of international rates. This, Claimant submits, consists in a material breach of the Consortium Agreement by Respondent. In this regard, Claimant insists that (i) Respondent benefitted from Claimant’s "name, experience and nationality to win the Contrat"; (ii) Claimant’s stake in the Contract was "disproportionally smaller (around 10%) than his actual contribution to win the Contract", which Claimant estimates at, at least, 20%. Conversely, Respondent (i) refused to pay international rates as per Invoices Nos. 1492 and 1493 when it had previously agreed to pay such rates for Invoice No. 1456; and (ii) allegedly "concealed from the Claimant that he had received payment by the Client."63

118.
Finally, Claimant submits that Respondent is estopped from invoking the contractual rate of local experts’ fee,64 since it had previously agreed to apply, and had applied, the rate for international experts, to local experts.65

(ii) Respondent 's Position

119.
Respondent alleges that Claimant should have applied the rates applicable to local experts to Mrs. [Person 1] and Mr. [Person 2]’s services. Consequently, Invoices Nos. 1492 and 1493 are not correct and, since it is established on the basis of the previous invoices, Invoice No. 1542 is also incorrect.
120.
Respondent explains that (i) Claimant has been in breach of the Consortium Agreement from the beginning of the implementation of the Project, and (ii) it has always attempted to perform the Consortium Agreement in a spirit of good cooperation.66
121.

Specifically, Respondent first contends that, pursuant to Clause 5.3 of the Consortium Agreement,67 Claimant only had the possibility to mobilise international experts for up to 100 man days and not a right thereto.68 This is allegedly confirmed by Clause 5.9 of the same, according to which if a Consortium Partner is not able to provide experts, the other partners may provide said experts and invoice their man days.69 It is thus only "in view of the good cooperation within the Consortium" that Respondent "allowed" Claimant to mobilise Mrs. [Person 1] and Mr. [Person 2]70 (even though they were local experts as opposed to international experts as required by the Consortium agreement), because Claimant was "unable to provide international experts because the ones requested by the project refused to leave".71 Since, under Clause 5.3 of the Consortium Agreement, the experts should be paid in accordance with the maximum fee rate provided for in the Breakdown of Prices, the maximum fee rate payable for local experts is €350 and not €650.

122.

Respondent denies Claimant’s assertion that (i) the Parties ever agreed to apply the rate applicable to international experts to Mrs. [Person 1] and Mr. [Person 2]’s services, and (ii) Respondent accepted the same.72 In this regard, Respondent highlights that:

• Claimant has been unable to produce in this arbitration any written confirmation of such an agreement: contrary to Claimant’s assertion, Ms. [Person 9] never confirmed orally that the rate of €650 would be applicable, and the absence of such an agreement is supported by the fact that "practically all the communications concerning the project were by email or skype (written messages)";73 in any event, if such an agreement had indeed been reached, it should have been made in writing with all the partners to the Consortium Agreement as it modifies the latter and negatively impacts the other Consortium members;74

• if Respondent did pay some invoices in which an international rate was applied to Mrs. [Person 1] and Mr. [Person 2]’s services, it is because of Respondent’s payment procedure. According to this procedure, upon receipt of Claimant’s invoices under Clause 8.1 of the Consortium Agreement, Respondent paid them immediately, "taking for granted that the invoices are correct and in line with the consortium agreement in the substance [...]. The only check made immediately on the invoices received is a formal check (VAT number and formal data requested for valid invoice)".75 The substance of the invoice, and "the possible or needed balance", was verified when, in accordance with Clause 5.2 of the Consortium Agreement, Respondent calculated the profit sharing: it is at that moment that the correction of any mistake in invoicing was requested.76 In this regard, Respondent explains that the profit sharing is calculated on the basis of the amounts invoiced and received from the Contracting Authority after deductions of ineligible costs and of the real costs of the Project. In practice, this requires referring to the experts’ invoices, those of the consortium partners prepared on the basis of the Consortium Agreement, and of the suppliers and service providers, if any;77

• moreover, Respondent insists that its internal policy is that "no acceptance of the invoices is given to the partners in consideration that it might occur, inter alia, that while examining the 6 months invoice sent by the consortium, the contracting authority decides to make deductions not paying some project expenses."78

123.
In addition, Respondent contends that Clause 5.4 of the Consortium Agreement provides for an obligation for Claimant to inform Respondent and/or seek approval from Respondent on the financial and contractual details before finalising an agreement with an individual expert, which Claimant did not do.79
124.
Respondent also points out that it had the possibility to apply Clause 12.1 of the Consortium Agreement which governs failure by a Consortium Partner to perform its obligations; however it did not do so "in view of good cooperation with the Partners", preferring instead to provide Claimant with experts.80
125.
As regards Claimant’s contention that Respondent breached its obligation of good faith under the Italian Civil Code, Respondent maintains that its contractual behaviour has been completely in line with the principle of contractual good faith invoked by Claimant.
126.

Indeed:

• the good faith principle as provided for by Articles 1366, 1337, 1371 and 1375 of the Italian Civil Code requires fair reciprocal contractual behaviour from parties to a contract, from the negotiation phase until the execution of the contract; Parties to a contract must thus act in such a way so as to safeguard the interests of the other parties on the basis of the principle "neminem laedere";81

• Respondent contends that it complied with this principle from the beginning of the negotiations, and during the performance of the Consortium Agreement. However, Respondent could not allow Claimant to invoice local experts at the rate of international experts, as this would imply that Claimant "is keeping exclusively for themselves a part of the profit that has to be instead divided by all the contractual parties";82

• in any event, Respondent denies having breached its good faith obligation as (i) no agreement was reached concerning the rates to be applied to Mrs. [Person 1] and Mr. [Person 2] modifying the Consortium Agreement; (ii) the experts’ fees have been paid to Claimant in accordance with the provisions of the Consortium Agreement; and (iii) Claimant has not only be treated as a partner, but it has been treated favourably.83

127.
Therefore, Respondent concludes that it has not only acted in good faith, but it is Claimant’s failure to act as such that led to the dispute.84

(iii) Analysis of the Sole Arbitrator

128.

Claimant contends that, by failing to pay the Unpaid Invoices, Respondent breached Articles 8 and 5 of the Consortium Agreement.85 Pursuant to these provisions:

"8. PAYMENTS

a. [Respondent] will pay the invoices submitted by [Claimant] upon receipt of the necessary supporting documents (i.e. timesheets, mission reports, copies of boarding passes and any other evidence that might be requested) and upon diligent fulfilment of tasks and delivery of all contractual outputs which fall within his/her responsibility according to the following schedule:

• 65% of the amount of each monthly invoice within the end of the first month following the month of performance

• The remaining 35% of the amount of each monthly invoice within 30 days from the approval of each interim report In case the invoice and/or timesheet are not submitted within the 8th day of the month following the month of performance then the Contractor will delay the payment by one or more months according to the length of the delay in the submission of the invoice and/or timesheet.

b. Invoices must be net of any duty or tax according to the Protocol on the Privileges and Immunities which forms annex to the Treaty of 8 April 1965 establishing the European Community."

"5. FINANCIAL AGREEMENT

5.1 A sum of 10% of all fees will be deducted by [Respondent] for project management, co-ordination, financial administration, and associated costs. This sum shall be calculated on the total fee budget and shall be deducted at the point of profit share analysis which shall be prepared and submitted on a six monthly basis;

5.2 At the end of the six month period, in line with the EU’s EuropeAid invoice procedures, [Respondent] shall produce a profit statement. This Profit / Loss shall then be re-imbursed to [Claimant] upon submission of its invoice to [Respondent]. Payment of this invoice shall be effected upon receipt of funds from the EU. The proportion of the profit share shall be fixed at 10,00%. The tentative amount to be distributed to [Claimant], according to the BoP, is 25.193 €.

5.3 [Claimant] shall have the chance to actively participate in the mobilization of up to a maximum of 100 man/days short term international experts according to the Breakdown of Prices. [Claimant] shall contract short term international experts up to a maximum all inclusive fee provided in the internal BoP and following updates after having informed [Respondent] on the negotiations with the short term expert.

5.4 The fee rates are all-inclusive (this means including: expert fee, living allowance, insurance as requested by the general conditions of the main contract, visa costs, partners management fee, taxes and all other associated costs of expert mobilization and demobilization).

5.4 [Claimant] will previously inform / seek approval from [Respondent] of the expert and the proposed contractual / financial details before agreement with an individual expert is finalised. [Respondent] as lead partner has the power to enforce replacement of an expert, who is not performing his/her duties to the required level of performance.

5.5 Copies of agreed contracts signed between [Claimant] and his experts must be available upon request.

5.6 It must be noted that each PARTNER providing Services under this contract shall pay all taxes, duties, fees or other charges as they may be levied under the applicable law, the amount of which is deemed to have been included in the costs described in this Agreement.

5.7 It will be the responsibility of each PARTNER to complete all contractual negotiations and logistical arrangements for the expert including, but not exclusively, visa support, international travel arrangements, contracting, etc.

5.8 It will be the responsibility of each PARTNER to ensure the quality of the expert’s input including any reporting requirements.

5.9 With respect to the allocation of person days allocated to each one of the Partner, in case one Partner cannot present the experts envisaged for the tasks, the other PARTNERS will be invited to present a suitable replacement with equivalent qualifications and experience. Final approval of the replacement CV shall be done by the Consortium Leader and, if applicable, the client and/or beneficiary.

[...]"

129.
The crux of the dispute between the Parties in relation to the Unpaid Invoices does not relate to whether they are due as a matter of principle, but rather to their quantification, and more specifically to the rate to be applied for payment of the services of Mrs. [Person 1] and Mr. [Person 2].
130.
In relation to the determination of the rate applicable to experts’ services, Clause 5.3 of the Consortium Agreement provides that:

"5.3 [Claimant] shall have the chance to actively participate in the mobilization of up to a maximum of 100 man/days short term international experts according to the Breakdown of Prices. [Claimant] shall contract short term international experts up to a maximum all inclusive fee provided in the internal BoP and following updates after having informed [Respondent] on the negotiations with the short term expert."

131.

This Breakdown of Prices provides for the following rates for expert services:86

[Redacted image]

132.
It is not disputed by the Parties that Mrs. [Person 1] and Mr. [Person 2] are local experts. Both Parties agree that, under the Consortium Agreement and the Breakdown of Prices agreed upon between the Parties, the services of Mrs. [Person 1] and Mr. [Person 2] should be remunerated on the basis of the rates applicable to "Senior Local Experts."
133.
What is disputed is whether there was a subsequent oral agreement between the Parties according to which the services of these Experts would be paid for at the rates applicable to international experts, i.e., €650 per man/day.
134.
Claimant alleges that Ms. [Person 9], an employee of Respondent, agreed that the Experts would be paid as international experts, whereas Respondent denies that such an agreement was reached.
135.
Since it is the Party alleging such a subsequent agreement, Claimant carries the burden of proof as to its existence. To this end, Claimant relies on a number of elements of proof, which it alleges demonstrate the existence of the Parties’ agreement.
136.
However, balancing the evidence submitted in this procedure, it appears that these elements of proof are not decisive in supporting Claimant’s allegation.
137.
The testimony of Mr. [Person 7], Claimant’s witness, at the Hearing, that an employee of Respondent, Ms. [Person 9], allegedly confirmed that the rate for international experts would be applied, does not carry decisive weight that the Parties have indeed amended the Consortium Agreement’s Breakdown of Prices to apply international rates to the Experts’ services. Mr. [Person 7] is a representative of Claimant: on its own, his testimonial evidence that the Consortium Agreement was indeed amended as regards the rates applicable to the Experts is not more conclusive than Respondent’s statement to the contrary.
138.

In addition, as regards :

• the first excel sheet of Exhibit C22, "Profit Aug.-Dec. 2017", which represents the calculation of profit sharing on the basis of international rates applied to Mrs. [Person 1] and Mr. [Person 2]’s services,87 and

• the facts that (i) Claimant paid Invoices Nos. 1456 and 1457 for the Experts’ services with international rates,88 (ii) the Parties’ agreement was confirmed by Ms. [Person 9], who works for Respondent, in an email of 26 January 2018,89 and (iii) Respondent invited Claimant to invoice "the whole balance of profit share" calculated on the basis of international rates being applied to Mrs. [Person 1] and Mr. [Person 2]’s services,90

Respondent explains its behaviour in a plausible way by relying on its internal payment procedure.

139.

This is especially so, since that behaviour appears to be in conformity with Clause 8.1 of the Consortium Agreement, pursuant to which payment is to be made partially on the face of the invoice, the balance being paid upon verification of "interim reports":

"8.1. [Respondent] will pay the invoices submitted by [Claimant] upon receipt of the necessary supporting documents (i.e. timesheets, mission reports, copies of boarding passes and any other evidence that might be requested) and upon diligent fulfilment of tasks and delivery of all contractual outputs which fall within his/her responsibility according to the following schedule:

• 65% of the amount of each monthly invoice within the end of the first month following the month of performance

• The remaining 35% of the amount of each monthly invoice within 3 0 days from the approval of each interim report.

[...]"

140.
In addition to the above observations, it seems unlikely that an agreement as important as the one in dispute, which allegedly directly contradicts the very wording of the Consortium Agreement, would not have been confirmed in writing.
141.
This conclusion is comforted by the documentary evidence submitted in this arbitration, which shows that:

• the Parties regularly and consistently communicated, either by email or by Skype messages;91 and

• upon agreeing to change the profile requirements of the experts from international experts to local experts, the Parties communicated at length, seeking approval from the "Client" and confirming such an approval in writing, in a Skype message, to Respondent.92

142.
Even assuming there was a misunderstanding between the Parties, and that Claimant may have genuinely thought that the rate for international experts would be applied to Mrs. [Person 1]’s and Mr. [Person 2]’s services, this does not mean that Respondent acted in bad faith or willfully misled Claimant. As Claimant was diligent enough to have the change of the experts’ profile recorded in writing, it should have attempted to obtain the same written confirmation for the rates to be applied to the Experts if it had thought it could obtain it. Instead, it kept an ambiguity as to the rates to be applied.
143.
In light of the foregoing, although Respondent recognized that Claimant is entitled to payment for Mrs. [Person 1]’s and Mr. [Person 2]’s services and for related profit sharing, the Unpaid Invoices were incorrect. They were thus not to be paid by Respondent in their facial amounts.
144.
Respondent contends that it is appropriate to transfer to Claimant "the amount of the outstanding invoices but deducting the amount of 21.000 euro — 2.100 percentage of profit sharing for [Claimant]."93
145.

As regards the amounts due for the services of the Experts, the Sole Arbitrator notes that:

• the Experts have worked a total of 70 days at the rate of €350 per day: the amount due for their services should thus be 70 x 350 = €24,500;

• these services have been invoiced for a total amount of €45,500 as follows: (i) Invoice No. 1456 in the amount of €19,500,94 which has been paid in full on 1 and 29 December 2017,95 (ii) Invoice No. 1492, in the amount of €24,700,96 and (iii) Invoice No. 1493, in the amount of €1,300;97

• therefore, Claimant has invoiced the amount of €21,000 (i.e., 45,500 -24,500) in excess of what was actually due by Respondent for the Expert’s services.

146.
In light of the above, the Sole Arbitrator finds that the amount still owed by Respondent for the services of the Experts is €5,000 (24,500 19,500 already paid on 1 and 29 December 2017).
147.

As regards the amounts due to Claimant for profit sharing, the Parties have not explained to the Sole Arbitrator how they were calculated. However, it results from Exhibit R22, submitted by Respondent in the arbitration specifically to demonstrate the amount of profit sharing it claims is owed to Claimant, that Claimant’s part of profit sharing should amount to €17,421. The following is an extract of Exhibit R22:98

[Redacted image]

148.

The Sole Arbitrator notes that this exhibit corresponds to Exhibit C22, which was introduced into evidence by Claimant after having been corrected by Respondent in the circumstances described in paragraph 111 above. This Exhibit shows as follows:99

[Redacted image]

149.
If Claimant challenged the circumstances in which it has been established and the numbers set out therein (because based on a rate of €350 applied to the Experts’ services), it did not challenge the method for calculating the profit sharing as set out in this Exhibit.
150.
Therefore, the amount owed to Claimant by Respondent in relation to profit sharing is €17,421.
151.
It results from the foregoing that Respondent still owes to Claimant the total amount of €22,421 (i.e., €5,000 for the services of the Experts100 + €17,421 in relation to profit sharing101) which corresponds approximately to Respondent’s allegation in this arbitration (i.e., €45,500102 - (€21,000 - €2,100)103).
152.
Therefore, the Sole Arbitrator decides that Respondent still owes to Claimant:

• €5,000, for the services of the Experts;

• €17,421, in relation to profit sharing.

VI.1.3. Moral Damages

(i) Claimant's Position

153.
Claimant contends that, because of Respondent’s failure to pay the Unpaid Invoices as per its contractual obligations, it has not paid Mrs. [Person 1] and Mr. [Person 2] for their services, which has resulted in damages to its reputation on the Turkish market.104
154.

Claimant relies on:

• Article 1218 of the Italian Civil Code, pursuant to which "whoever fails to comply with a contractual obligation is obliged to compensate the innocent party to the contract for the damage caused to it by the non-compliance"105, and

• alternatively, Article 2043 of the Italian Civil Code,106 pursuant to which "Any fraudulent or negligent fact that causes unjust harm to others, obliges the person who has committed the fact to compensate the damage."107

155.

Claimant contends that these provisions set forth an obligation for Respondent to compensate Claimant of "ANY damage it has caused to the Claimant, including pecuniary and non-pecuniary damage, such the one caused in the Claimant’s reputation".108

156.

Claimant submits that Respondent’s obligation was triggered by:109

• Respondent’s breach of its contractual obligation under the Consortium Agreement to pay the Unpaid Invoices; and

• Respondent’s breach of its obligations in tort by "omi[tting] to pay the same amount."

157.

In addition, Claimant alleges that (i) the reputation damage it suffers "is not an indirect or consequential damage but derives directly from the Respondent’s unlawful behaviour", and (ii) Respondent "was fully aware of the fact that part of the money owed to the Claimant was destined to the Turkish experts and that it is the Claimant who owes this money to these experts."110

158.
In this last regard, Claimant clarifies that, if it did have an obligation vis-à-vis the Experts to pay them, a "pay-when-paid" clause was inserted in their subcontracts as they were not "in-house experts", in accordance with standard market practice. Moreover, Claimant allegedly "immediately paid their stake to [the Experts] as soon as the Respondent paid their first invoice", but it did not pay them the balance of such fees due to the lack of payment by Respondent of their second invoice.111
159.

Finally, as regards Respondent’s contention that Claimant has not suffered any reputation damages since it has been awarded another contract as part of a consortium by the Contracting Authority, Claimant replies that:

• Respondent "is not in a position to know under which terms and conditions the consortium was awarded the contract and under which terms the Claimant accepted to participate in this [c]onsortium"; and

• The fact that it obtained a single contract, as consortium member, "at low bid" proves that its reputation has been damaged.112

160.
Therefore, the Claimant argues, its failure to pay the Experts only results from Respondent’s failure to pay Claimant.113

(ii) Respondent’s Position

161.
Respondent denies that it must compensate Claimant for damages to its reputation.
162.
Respondent challenges Claimant’s reliance on Article 1218 of the Italian Civil Code to obtain compensation for its alleged reputational damages, as it is applicable to contractual responsibility.114
163.

As to the ground of Article 2043, Respondent explains that it is applicable "to the damage deriving from an extracontractual responsibility damage deriving from fault and fraud (illegal behaviour) that creates the relation between the parties despite the existence of the contract."115 However, Respondent adds, Claimant is not entitled to damages in this case since:

• Claimant’s justification for not paying the Experts, i.e., that Respondent had not paid Claimant itself, is not valid as "there is no reference in [the Experts’] contracts that their payment is subject to the Claimant receipts of funds from the Respondent" ;116

• its failure to pay the Experts is "absolutely an arbitrary decision of the Claimant"117 since, according to Clause 8.1 of the Consortium Agreement, "only 65% of the amount invoiced by the experts was payable before the final approval of the final report";118 in this regard, Respondent emphasizes that no fault or fraud is attributable to it and in any event, the causal link between the damage and the alleged illegal behaviour required by Article 2043 of the Italian Civil Code is not established;119

• it has not suffered damage to its reputation since it has recently been awarded by the Contracting Authority "as consortium member a contract in Turkey "Technical Assistance for the Operating Structure and CISOP"";120

• its claim is based on the fact that Claimant informed the Experts that they had not received payment due to Respondent’s own lack of payment of Claimant;121

• it requested itself the Experts to inform the Contracting Authority that they were not paid, "imputing incorrectly the responsibility to the Respondent";122

• it claims as reputation damages the very same amount it owes to Mr. [Person 2], who has been complaining to the Contracting Authority and the Beneficiary.123

164.
As to Claimant’s assertion that it inserted a "pay-when-paid" clause in its subcontracts with the Experts, Respondent replies that each consortium member is free to draft its own contracts with experts as it wishes. Respondent suggests clauses and consortium members are supposed to follow these suggestions. In any event, the consortium members are supposed to draft these contracts in such a manner as it is consistent with the provisions of the Consortium Agreement. In addition, since the Consortium Agreement is based on a profit-sharing mechanism, any financial detail not in line with it should be approved by the leader of the Consortium under Article 5.4. In the case at issue, Claimant did not seek approval.124

(iii) Analysis of the Sole Arbitrator

165.
As a basis of its claim for moral damages, Claimant relies on the general principle of contractual liability and, in the alternative, on the general principle of liability in tort.
166.
Regarding the ground of contractual liability, Article 1218 of the Italian Civil Code125 requires that three cumulative conditions be fulfilled: (i) the breach of a contractual obligation by a defaulting party, (ii) a damage caused to that party’s cocontractor, and (iii) a causal link between the breach and the damage suffered.
167.
Claimant contends that, in this case, Respondent’s breach of contract is characterised by the latter’s failure to pay the Unpaid Invoices. However, it has been determined above that the Unpaid Invoices were incorrect, so that they were not due in the amounts in which they were issued. There is thus no contractual breach per se. Since the first condition is not fulfilled, Claimant’s claim on this ground should thus fail.
168.

Regarding the ground of liability in tort, Claimant relies on Article 2043 of the Italian Civil Code,126 pursuant to which "[a]ny fraudulent or negligent fact that causes unjust harm to others, obliges the person who has committed the fact to compensate the damage."127

169.
This provision also requires that three conditions be fulfilled: (i) the commission of a fraudulent or negligent fact, (ii) that unjust harm be suffered, and (iii) a causal link between the fact and the harm.
170.
As to the first condition, it appears to be Claimant’s submission that Respondent’s alleged failure to pay the Unpaid Invoices while pay-when-paid clauses were agreed in the Experts’ subcontracts must be characterised as a "fraudulent or negligent fact."
171.
The subcontract concluded with Mr. [Person 2] indeed contained a pay-when-paid clause.128 Since this subcontract was submitted in this arbitration by Respondent, it was aware of the existence of such a clause. The timing at which Respondent came into possession of the subcontract, however, is unclear. In this regard, none of the Parties have produced any evidence that the subcontract was submitted for approval to Respondent as leader of the Consortium at its time of conclusion.
172.

The Sole Arbitrator notes that:

• pursuant to Clause 8.1 of the Consortium Agreement, Respondent was to pay to Claimant 65% of the amount of each monthly invoice by the end of the first month following the month of performance, and the remaining 35% of the amount of each monthly invoice within 30 days from the approval of each interim report;

• the subcontract with Mr. [Person 2] was concluded by Claimant and as such, Claimant cannot seek to transfer to Respondent, under the pretext of liability in tort, the responsibility of payment obligations Claimant alone undertook with third parties.

173.
Claimant has thus not established that Respondent has committed a fraudulent or negligent fact: not only, as it has been determined above, were the Unpaid Invoices not due on the face of their amounts, but the fact that the subcontracts with the Experts contain pay-when-paid clauses is not opposable to Respondent, as it is a third party to such subcontracts. The first condition is consequently not fulfilled.
174.
In addition, it appears that the third condition is not fulfilled either: irrespective of whether Claimant has suffered damages to its reputation or not, Claimant has undoubtedly contributed to its own damage by informing the Experts that the reason why they were not paid was that Respondent, allegedly faultily, refused to pay Claimant, and inciting them to inform the Contracting Authority that they were not paid.129
175.
In view of the above, there is no need to assess whether the second condition is fulfilled.
176.
Therefore, Claimant’s claim for moral damages is dismissed.

VI.1.4. Interest

(i) Claimant's Position

177.

In its Statement of Claim, Claimant requested that Respondent be ordered to pay any amounts due with interest "as per the Agreement."130

178.
Claimant subsequently indicated in its First Post-Hearing Brief that, in the absence of a contractual interest rate, it requested the application of the legal interest rate provided for at Article 1284, paragraph 1, of the Italian Civil Code.
179.
According to Claimant, this Article provides for a rate of 5% per year starting from the date of the notification of the Request for Arbitration to the Respondent until full payment of all the monies found due to the Claimant.131

(ii) Respondent's Position

180.
Respondent denies that any interest is due to the Parties, and especially not to Claimant since Respondent offered a settlement solution in February 2018, and Claimant refused it.
181.

In the alternative, Respondent requests that the interest applied shall "make reference to the official reference interest rate fixed by the European Central Bank".132

(iii) Analysis of the Arbitral Tribunal

182.
It has been determined above that the Unpaid Invoices are not due to Claimant. Therefore, no interest is due for the amounts of these invoices.
183.

However, the Sole Arbitrator has determined at paragraph 152 above that amounts were still due to Claimant by Respondent, namely:

• €5,000, for the services of the Experts;

• €17,421, in relation to profit sharing.

184.
The purpose of interest is to compensate an aggrieved party for delayed payments.
185.
In this regard, the Sole Arbitrator notes that Respondent never contested that the above amounts were due to Claimant. It only contested the amounts of the Unpaid Invoices. It is thus only because of Claimant’s insistence on requesting excess amounts that it has not been paid to date.
186.
It results from the evidence that the monies owed to Claimant would have been paid if the Unpaid Invoices had been established in the correct amount. Therefore, Claimant cannot be deemed an aggrieved party and no interest can be due by Respondent on the above amounts before this Award is rendered.
187.

As to the interest due to Claimant as from the rendering of this Award:

• Claimant requests the application of Article 1284, paragraph 1, of the Italian Civil Code - without however submitting this provision in this Arbitration -;

• Respondent claims that the interest rate applied should be that of the European Central Bank, without any further clarifications or justifications.

188.
The Sole Arbitrator notes that the law applicable to the merits of this dispute is, as mentioned at paragraph 7 above, Italian law.
189.
As to the date at which interest shall start running, the Sole Arbitrator considers it reasonable to order that this date be 30 days after the date of this Award.
190.
In light of the foregoing, the Sole Arbitrator decides that interest shall be applied to the amounts owed to Claimant, at the rate and in the conditions prescribed by Italian law, starting 30 days after the date of this Award and until full payment.

VI.2. Respondent’s Counterclaims

191.
Respondent makes two counterclaims, namely (i) the payment of recruitment activities for the Experts, and (ii) reputation damages.
192.
These two counterclaims are addressed in turn below.

VI.2.1. Payment of Recruitment Activities

(i) Respondent’s Position

193.
Respondent requests payment by Claimant of the activities allegedly performed in 2017 by its employee, Ms. [Person 9], for the recruitment of Mrs. [Person 1] and of Mr. [Person 2],133 in the amount of €1,110, calculated as follows: €222 per working day x 5 working days.134
194.

As to the quantification of this counterclaim, Respondent clarifies that Ms. [Person 9]:135

• was paid €42,523 that year;136

• worked 191,5 working days during the same year;

• dedicated 5 days to the recruiting activities at stake in May 2017 (two and a half working days in Turkey, and two and a half days in Italy).

(ii) Claimant’s Position

195.

Claimant denies that Respondent is entitled to any payment for recruiting activities, as:137

• Respondent’s counterclaim is inadmissible for failure to identify the legal basis on which it relies to request such payment;

• Respondent is estopped from making this counterclaim as it had never raised this request prior to this arbitration.

196.

Moreover, Claimant denies that Ms. [Person 9] actually performed the recruitment activities at issue, as Respondent admits in its "submission (para. 9 in fine)", by indicating that "[i]f is again clear that Mr. [Person 10] representing [Respondent] made a favour to the Claimant providing the names of senior local experts to contract, allowing the Claimant to perform all the working days provided in the Contract."138

197.

In making such an assertion, Claimant contends that Respondent explicitly made a "clear and unambiguous recognition [...] that it was Mr. [Person 10] who assisted the Claimant in this respect and not Ms. [Person 9]!"139

198.
As to the quantification of Respondent’s counterclaim, Claimant expressly refuses to comment.140

(iii) Analysis of the Sole Arbitrator

199.
Respondent does not rely on any legal ground in support of its counterclaim.
200.
As already noted above, a party carries the burden of proof as to the claims and allegations it sets forth.
201.
In the absence of any legal basis being set forth, Respondent’s counterclaim should be dismissed.
202.

This is especially so, since:

• it is unclear whether Ms. [Person 9] is indeed the person - or the only person - who contributed to the recruitment of the Experts, as pointed out by Claimant;

• Respondent admitted that Ms. [Person 9]’s activities, if any, were performed voluntarily, in a spirit of cooperation, and without Claimant expressly requesting assistance or accepting to remunerate Respondent for such services.

203.
In light of the foregoing, Respondent’s counterclaim is dismissed.

VI.2.2. Reputation damages

(i) Respondent's Position

204.
Respondent contends that Claimant’s failure to pay the Experts had an adverse impact on the Consortium’s reputation since the Experts informed the Contracting Authority that they had not been paid.141
205.

This allegedly results in damages not only to the Consortium’s reputation, "but most of all of the leading partner (The Respondent) who was in daily contact with the Contracting Authority keeping the main responsibility for the whole consortium").142

206.
In this regard, Respondent highlights that Claimant has recently been awarded another contract by the Contracting Authority, whereas Respondent participating to the same tender has not been awarded this contract.143

(ii) Claimant's Position

207.
Claimant did not address this counterclaim in its submissions.

(iii) Analysis of the Sole Arbitrator

208.
As discussed above, three conditions are required under Italian law for any liability - be it contractual or in tort - to be engaged, one of which is the proof of a damage.144
209.
In this instance, Respondent has not carried out its burden of proof that its reputation has, in fact, been damaged by Claimant’s actions.
210.
Therefore, Respondent’s counterclaim for reputation damages is dismissed.

VI.3. Arbitration Costs

(i) Claimant’s Position

211.

Claimant requests that Respondent be ordered to pay the arbitration costs and legal fees and expenses incurred for its representation and assistance in the total of €26,004.58, as follows:

• advance on arbitration costs transferred to the ICC, in the total amount of €13,427.83;

• legal costs composed of (i) €9,920 for the services of its external counsel, Prof. Dr. [Person 4], and (ii) €2,656.75 for the travel and accommodation costs incurred by Claimant for the Hearing of 4 December 2018.145

212.
In addition, Claimant submits that it does not wish to comment Respondent’s costs.

(ii) Respondent’s Position

213.
Respondent requests that Claimant be ordered to bear all of the "Arbitration Costs", as a settlement solution was proposed to Claimant on 16 February 2018,146 solution that Claimant refused. Respondent also clarifies that it refused Claimant’s counter-offer because there was "no logic" behind it.147
214.
Respondent has not recapitulated the costs it wishes reimbursed. Along with its submission, it produces particulars from which it can be deduced that it requests reimbursement of the following expenses: (i) €186.86 (out-of-pocket expenses) + €109.94 (plane ticket) in expenses for the Hearing in Paris, and (ii) €2,090.40 for the time spent by Ms. [Person 6] on the case.
215.

In addition, Respondent challenges some of Claimant’s expenses as follows:

• Claimant could have used low cost-flights as transportation for the Hearing as Respondent did;

• Mr. [Person 3]’s flight and expenses for the purpose of the Hearing should be denied as his presence was not essential;

• Claimant requests payment for two hotel nights during the Hearing, when it could have taken a flight back on the day of the Hearing;

• receipts for Claimant’s lunch and dinner expenses are incompatible in timing, and another one should not be admitted as it is dated 5 December 2018, i.e., the day following the Hearing;

• one of the invoices is not understandable;

• taxi from and to the airport should not be admitted in full as the train service is cheaper;

• some credit card payments are not reconcilable with any purpose and as such should be rejected.

(iii) Analysis of the Sole Arbitrator

216.

Pursuant to Article 38 [Decision as to the Costs of the Arbitration] of the ICC Rules:

"1) 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.

[...]

4) The final award 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.

5) In making decisions as to costs, the arbitral tribunal may take into account such circumstances as it considers relevant, including the extent to which each party has conducted the arbitration in an expeditious and cost-effective manner."

217.
Based on these provisions, the Sole Arbitrator should allocate between the Parties (i) the costs of the arbitration as fixed by the ICC Court, and (ii) the Parties’ claimed legal and other costs.
218.
Article 38 of the ICC Rules grants arbitrators a broad discretion in this respect. In exercising such discretion, the outcome of the case and the relative success of the parties’ claims and defences is inter alia relevant. However, arbitrators may also consider the conduct of the parties, the reasonableness of the parties’ positions, or costs, and, more generally, all relevant circumstances.
219.
The Sole Arbitrator finds in her discretion that the Parties’ respective contributions to, and handling of, the events that led to their dispute the subject matter of this arbitration, and their respective efforts in the conduct of the arbitration in an expeditious and cost-effective manner, having regard to the complexity and value of the dispute as required by Article 22(1) of the ICC Rules, results in each Party bearing its share of the costs of this arbitration.
220.
As a consequence, the Sole Arbitrator decides that the fee and expenses of the Sole Arbitrator and the ICC administrative expenses fixed by the ICC Court, are to be borne in equal shares by both Parties. At its session of 29 April 2019, the ICC Court fixed these costs at USD 30,000, in accordance with Article 38 of the ICC Rules. Claimant has paid, in accordance with Article 37 of the ICC Rules, USD 15,000; and Respondent has paid USD 15,000. Therefore, no amount should be reimbursed to any Party.
221.
As regards the reasonable legal and other costs incurred by the Parties in the arbitration, the Sole Arbitrator has scrutinized the particulars produced in support of the Parties’ respective claims, and finds that they are reasonable.
222.
As explained above, the Sole Arbitrator has decided that each Party should bear its share of the costs of the arbitration. For the same reasons applied to the decision on the costs of the arbitration fixed by the Court, the Sole Arbitrator decides that each Party shall bear the costs they incurred for the presentation of their case.
223.

In light of the foregoing, the Sole Arbitrator decides that:

• the fees and expenses of the Sole Arbitrator and the ICC administrative expenses fixed by the ICC Court, are to be borne in equal shares by both Parties;

• each Party shall bear the costs it incurred for the presentation of its case.

VII. AWARD

224.

In light of the foregoing, the Sole Arbitrator decides as follows:

a. the Sole Arbitrator has jurisdiction over the claims and counterclaims the subject matter of this Final Award;

b. [Claimant]’s claim that [Respondent] is in breach of contract is dismissed;

c. As a consequence, [Claimant]’s request for a declaration that [Respondent] is liable to pay:

i. the amount of €26,000 for the unpaid invoices No. 1492 and 1493 issued by [Claimant] on 7 November 2017;

ii. the amount of €22,545 for the unpaid invoice No. 1542 issued by [Claimant] on 26 January 2018;

is dismissed;

d. [Respondent] is ordered to pay to [Claimant]:

i. €5,000, for the services of the experts Mrs. [Person 1] and Mr. [Person 2];

ii. €17,421, in relation to profit sharing,

with interest due on these amounts at the rate and conditions set out under Italian law, starting 30 days after the date of this Award and until full payment;

e. [Claimant]’s claim for moral damages in the amount of €20,000 is dismissed;

f. [Respondent]’s counterclaim for payment of recruitment activities in the amount of €1,100 is dismissed;

g. [Respondent]’s counterclaim for reputation damages in the amount of €10,000 is dismissed;

h. The fees and expenses of the Sole Arbitrator and the ICC administrative expenses fixed by the ICC Court at USD 30,000 shall be borne in equal shares by [Claimant] and [Respondent];

i. [Claimant] and [Respondent] shall each bear the costs they incurred for the presentation of its case.

225.
All other claims are dismissed.
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