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Source(s) of the case information (above):

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

Award

I. THE ARBITRATION PROCEEDINGS

The Request

1.1.
On 15 December 1977, the Italian limited company Benvenuti and Bonfant Srl ("B&B"), whose registered office is in Rome submitted to the Secretary-General of icsid ("the Centre") in Washington DC, a request for arbitration dated 12 December 1977 together with a Protocol of Agreement ("the Agreement") of 16 April 1973 between B&B and the Government of the People's Republic of the Congo ("the Government") containing an arbitration clause referring to the Convention for the Settlement of Investment Disputes between States and Nationals of other States ("the Convention") all in accordance with Article 36 of the Convention and Articles 1, 2 and 4 of the Rules for the Institution of Proceedings and Articles 15(1) of the Administrative and Financial Rules of the Centre. The wording of the arbitration clause is contained in paragraph 1.15 below.
1.2.
The Secretary-General of the Centre registered the request on the 15th December 1977.

The Constitution of the Tribunal

1.3.
On 2 January 1978. B&B appointed Mr Rudolf Bystricky. a Czechoslovak national, domiciled in Switzerland, as arbitrator. Mr Bystricky notified the Centre of his acceptance on 14 February 1978. On 14 March 1978, the Government appointed Mr Edilbert Razafindralambo. a Malagasay national, as arbitrator. Mr Razafindralambo notified the Centre of his acceptance on 20 March 1978. The parties failed to agree on the appointment of the arbitrator who was to act as President of the Tribunal. On 24 March 1978 B&B invoked Article 4 of the Arbitration Rules ("the Rules") and asked the Chairman of the Administrative Council, to nominate the President. The Chairman of the Administrative Council, after consultation with the parties appointed, pursuant to Article 38 of the Convention and Article 4 of the Rules. Mr Alex Bonn, a Luxembourg national, as President of the arbitral tribunal on 26 April 1978. Mr Bonn notified his acceptance on 8 May 1978. The Tribunal having been deemed constituted, the process commenced on 9 May 1978. in accordance with the provisions of Article 6(1) of the Rules. On 25 May 1978. however. Mr Bonn resigned as arbitrator and on 3 June 1978 the Chairman of the Administrative Council, after consultation with the parties, appointed, in accordance with the aforementioned provisions of the Convention and the Rules. Mr Jorgen Trolle. a Danish national as President. Mr Trolle notified his acceptance on 5 June 1978.

The Preliminary Consultation

1.4.
The Tribunal met for the first time in Geneva on 14 and 15 June 1978. On the proposal of the President, the Tribunal decided, in accordance with Article 15(3) of the Rules, to admit to its proceedings the Secretary-General of the Centre and the Secretary of the Tribunal, nominated in accordance with the Article 25 of the Administrative Rules. Mr Sella, representative of the Secretary-General of the Centre and Mr Maffei. Secretary of the Tribunal, took part in the sessions. The session of 15 June took place in the presence of the representatives of B&B. The representatives of the Government, although invited, did not attend.
1.5.

The purpose of this meeting was to hold a preliminary consultation as to the procedure in accordance with the provisions of Article 20 of the Rules. At this meeting, the Tribunal took the following measures to supplement the Convention and the Rules:

(1) As proposed by B&B in its request for arbitration and accepted by the Government in a letter dated 14 March 1978 addressed to the Secretary-General, the legal seat of the Tribunal was established in Geneva. The Tribunal left itself the possibility of meeting in any other place which might be required for the purposes of the preliminary investigation ("l’instruction") or by the agreement of its members.

(2) It was decided that the presence of the majority of the members of the Tribunal would be required at all sessions, pursuant to Article 14 and 20 of the Rules.

(3) Pursuant to the provisions of Article 25 of the Rules, the Tribunal delegated to its President the power to make all orders relating to procedural time limits.

(4) In accordance with Article 30 of the Rules, it was decided that B&B would deposit its Memorial before 21 August 1978 and the Government would deposit its Counter-Memorial before 31 October 1978.

(5) It was decided that the Tribunal would, at the end of the oral proceedings, determine whether it was necessary to give the parties the opportunity to submit concluding memorials.

(6) Finally, it was decided to submit to the Government B&B's suggestion that the Tribunal be granted a power to rule on the merits of the dispute "ex aequo et bono" in accordance with Article 42(3) of the Convention, to ask the Government if it was in agreement that all communications from the Centre to the Government during these proceedings could properly be made to its Embassy in Paris and to ask if it could provide B&B and the Tribunal with the text of the Constitution, the Civil Code, the Commercial Code, the legislative provisions relating to the conflict of laws and the Investment Code of the People's Republic of the Congo.

1.6.

The Government was notified of this suggestion and this request in a letter of 20 June 1978 from Mr Broches, the Secretary-General of the Centre. In a letter of 30 August 1978 the Government replied in the negative to the points relating to judgment of the case ex aequo et bono and to all communications of the Centre being sent to its Embassy in Paris. With regard to its legislation, the Government drew attention to the fact that:

the Civil Code, the Commercial Code and the legislation relating to the conflict of laws in force in the People's Republic of the Congo are identical to those of France until our independence, that is to say. until 15 August 1960.

The Proceedings

1.7.
B&B lodged its Memorial on 21 August 1978 ("the Memorial") and the Government remitted a document entitled Counter-Memorial on 20 October 1978. which was in fact a denial of competence.
1.8.
The Tribunal met on 17 and 18 November 1978 in Paris in the presence of Mr Piero Sella, representative of the Secretary-General of the Centre and Mr Andres Rigo, nominated as Secretary of the Tribunal place of Mr Maffei, and without the parties. The Tribunal noted that the Government had lodged a denial of competence and decided to suspend the proceedings as to the merits of the case in accordance with Article 41(3) of the Rules. Furthermore, having noted that B&B had lodged its observations on the denial of competence on 14 November 1978 it invited the Government in accordance with Article 19 of the Rules to present its comments on the observations of B&B before 29 December 1978. The Tribunal noted also that the facts upon which the denial of competence was based seemed to be closely linked to the merits of the case and invited the Government to lodge, together with those comments, a Counter-Memorial containing the matters referred to in paragraph (3) of Article 30 of the Rules.
1.9.
On 20 December 1978 the Government requested a further extension of the time limit for the lodging of its pleadings of one month. The President of the Tribunal decided not to extend the time limit and the Government was informed of this by a cable dated 20 December 1978.
1.10.
A document entitled "Counter-Memorial" dated 26 December 1978 and sent by post from Brazzaville on 27 December 1978 was received at the headquarters of the World Bank in Paris on 4 January 1979. In this document, the Government did no more than to rely upon the argument that the Tribunal lacked jurisdiction and to repeat the conclusions contained in its "Counter-Memorial" of 20 October 1978.
1.11.

In a letter of 8 January 1979. B&B pointed out that the Government:

(a) did not attend the "hearing" which took place in Geneva on 15 June 1978:

(b) did not lodge the Counter-Memorial within the time limits fixed by the Tribunal;

(c) failed to present a reply to the observations of B&B on the denial of competence: and

(d) omitted to pay to the Centre the contribution which had been requested of it towards the costs of the proceedings.

B&B concluded, in consequence, that the Government should be declared to be in default, in accordance with Article 42(1) of the Rules.

1.15.

With respect, secondly, to the question of which provision for settling disputes governed the present proceedings, the Tribunal noted that the Government referred solely to Article 25 of the Articles of Association, as a basis of its denial of competence. The wording of this Article is as follows:

All disputes which may arise during the existence of the Company or during its liquidation, either between the shareholders themselves over company affairs, or between the shareholders and the company, which have not been resolved by the competent local courts, or by agreement, will be submitted to arbitration within the framework of the Convention of 18 March 1965 for the Settlement of Investment Disputes between States and Nationals of Other States established by the International Bank for Reconstruction and Development, the proceedings being in French.

For its part B&B. relying on Article 12 of the Agreement, concluded that the denial of competence should be dismissed. This Article provides that:

All disputes which may arise between the parties in the execution of the present protocol of agreement and which have not been resolved by agreement, will be subject to arbitration within the framework of the Convention of 18 March 1965 for the Settlement of Investment Disputes between States and Nationals of Other States established by the International Bank for Reconstruction and Development, the proceedings being in French. The parties agree to be bound by the decision of the arbitrator, undertake to ensure its execution, and renounce all rights of appeal against the decisions rendered. The arbitration costs will be shared equally by the parties.

1.16.
The parties' disagreement, as to the interpretation to be given to Article 25 of the Articles of Association, has already been noted. The Tribunal considered that there was no need to decide this question because it was of the opinion that B&B claims were in fact essentially founded on alleged violations of the Agreement and not on acts of the Government in its capacity as shareholder in PLASCO and did not directly arise from a dispute as to the application of the Articles of Association. In this respect, the Tribunal noted furthermore that B&B's grievances related to an alleged failure by the Government to give the necessary guarantees for the provision of finance that PLASCO would have required, to an alleged failure by the Government to define a tax status for PLASCO. as well as to the imposition by decree of a "political price" for the sale of the company's products.

Taking the preceding facts into account, the Tribunal, considering that the denial of competence should be treated as a preliminary question, upheld its competence to decide the present case.

1.17.
With respect to B&B's request to the Tribunal to declare the Government to be in default, the Tribunal considered that the fact that the Government did not attend the preliminary consultative meeting of 15 June 1978 did not constitute a default within the meaning of Article 45 of the Convention or of Article 42 of the Rules and that it was entitled to deposit a denial of competence within the time limit fixed for the lodging of the Counter-Memorial (Article 41 of the Rules). No doubt the Government was invited by the Tribunal, for reasons of convenience, to lodge, at the same time as its supplementary observations on the question of competence, a counter-memorial on the merits of the case. It was not. however, obliged to do so. the proceedings as to the merits having been suspended by virtue of Article 41(3) of the Rules after the denial of competence had been lodged. As to the Government's alleged failure to reply to the observations of B&B, it does not seem to the Tribunal to be of a nature to be held against it. since the Tribunal considered that it was already in possession of all the facts necessary to render a fully informed decision on the denial of competence.
1.18.

The Tribunal accordingly dismissed both the Government's plea of lack of competence and B&B's argument that the Government should be declared in default. In accordance with Articles 19. 30 and 41(4) of the Rules, the Tribunal then ordered the parties to submit to the Tribunal the following documents relating to the written proceeding and fixed in this respect the following time limits:

(a) the Government's Counter-Memorial by 8 March 1979;

(b) B&B's Reply by 12 April 1979;

(c) the Government's Rejoinder by 22 May 1979.

Finally the Tribunal decided that the written proceedings would be followed by a phase of oral proceedings.

1.19.
The Government did not deposit its Counter-Memorial within the prescribed time limit and B&B addressed to the Tribunal on 9 March 1979 a letter in which it requested that the phase of written proceedings be declared closed and that the oral proceedings be commenced forthwith. The Tribunal treated this letter as a claim by B&B falling within the framework of Article (45 of the Convention and Article 42 of the Rules. In accordance with these Articles the Tribunal granted a period of grace to the Government in which to lodge its Counter-Memorial, by 30 April at the latest. This decision was conveyed to the Parties by telegram on 11 April 1979. The Government did not lodge its Counter-Memorial within the period of grace.
1.20.

On 3 May 1979. the Government requested an extension of the time limit, taking into account the change which had taken place at the Department of Industry and Tourism. On the 8 May 1979. the Government was informed by the Centre that the Tribunal had decided not to extend the time limit since:

(a) the request for an extension of the time limit was made after its expiry:

(b) it was the third time limit fixed for the lodging of the CounterMemorial: and

(c) the written proceedings were to be followed by a phase of oral proceedings in the course of which the Government would have every opportunity to present the grounds of its defence.

1.21.
At the beginning of May, the parties were informed that the hearings would take place on 6 and 7 June 1979 in Geneva. The Arbitral Tribunal met as arranged and heard on the one side. Messrs C. Bonfant and M. Sinagra representing B&B and on the other side. Messrs L. Zubabela and R. Martin representing the Government, as well as Miss Z. Ingster and Mr C. Mazzieri. whose attendance was requested by B&B. and who were called as witness and expert respectively.
1.22.
At the hearings the minutes of a meeting between the representatives of both parties which took place in Rome on 5 June 19"-were presented to the Tribunal. The Tribunal took cognizance of the minutes by a procedural order of 7 June 1979. According to these minutes the representatives of the parties reached an agreement to settle their present dispute by means of an out-of-court settlement. With this in mind, the parties asked the Tribunal not to render its decision before 30 August 1979 or. if it was impossible to reach an agreement before that date, to render its award as quickly as possible by judgment ex aequo et bono. The Tribunal stated that, to provide for the last possibility mentioned, in order to complete the investigation of the case (l’instruction) it envisaged calling for an expert financial and economic study of certain of B&B's claims. At the hearing of 6 June, the President of the Tribunal informed the parties that the Tribunal would meet again once the expert report had been completed
1.23.
In a letter of 18 July 1979 B&B informed the Tribunal that -considered that the negotiations with the Government had finally broker down and requested the Tribunal to order the preparation of the financial and economic study and to declare the process to be closed pursuant to Article 38 of the Rules.
1.24.
The President of the Tribunal asked for a preliminary report from the Danish Company United Breweries Ltd which gave its opinion on 28 August 1979. This preliminary opinion was conveyed to the parties by the Centre on 25 September 1979 and the President of the Tribunal invited the parties to convey to him their comments.
1.25.
In the meantime, the representatives of the parties held discussions at the beginning of September in Paris and signed a draft agreement which was presented to the Tribunal by B&B with a letter dated 11 September 1979 in which B&B summarized its claims. The Government, however, informed the Tribunal by telex dated 12 September 1979 that it repudiated the draft agreement.
1.26.
On 1 October 1979 the Government requested that the Tribunal convene a fresh hearing. B&B addressed several communications to the Tribunal during October expressing its opposition to such a meeting. Moreover in a letter of 10 October 1979, B&B forwarded to the Tribunal its observations on the expert report by United Breweries Ltd as well as a summary of its requests, and asked that a final award be rendered.
1.27.
On 23 October 1979 the Government announced that it would immediately lodge a Counter-Memorial. The President reminded the Government that after several extensions of the time limits fixed for the lodging of the Counter-Memorial, the Tribunal had granted a final period of grace by virtue of Article 45 of the Convention, that this delay had expired on 30 April 1979 and that for this reason it could no longer accept a CounterMemorial (telexes dated 10 and 25 October 1979).
1.28.
Furthermore, on 25 October 1979, the President of the Tribunal asked the Government for details of the new facts which according to it. would justify a new hearing and required that before any hearing be convened the Government pay its share of the costs of the proceedings, all before 31 October 1979.
1.29.
The Government mentioned in telexes dated 29 and 30 October 1979 that it was in possession of certain documents relating to the case which could be remitted to the Tribunal if it was given the opportunity and that, unfortunately, the political changes which had taken place throughout the proceedings had prevented the Government from presenting to the Tribunal all the available documentation relating to the case within the time limits which had been fixed.
1.30.
On 6 November 1979. the Tribunal invited the Government to lodge those documents at the latest by 12 November 1979 at 9.00 a.m. and ordered the parties to attend a hearing at 2.30 p.m. on the same day so as to enable the Tribunal to obtain clarification of them. On 9 November 1979. the Government paid to the Centre the sum of FF 126,000 in respect of the costs of the proceedings.
1.31.
At the session held in Paris on 12 and 13 November in the presence of the Secretary-General of the Centre and the Secretary of the Tribunal, the Tribunal heard Messrs Jacquemaire and Vigneau as well as Messrs Sika and Mabouana. respectively counsel for and representatives of the Government and Maitre Sinagra. Professor A. Sinagra and Mr Bonfant in their capacity as counsel for and representatives of B&B.
1.32.
The Government's representatives asked that the Tribunal exercise the discretionary power granted by the Rules to permit the Government to refute B&B's Memorial and to make a counterclaim. For their part, the counsel and representatives of B&B took the view that the documents presented by the Government should not be admitted by the Tribunal since they had been lodged after the expiry of the time limit of 31 October 1979 and that any prolongation of the proceedings resulting from their admission would not be justified.
1.33.

The Tribunal nevertheless considered that special circumstances of a domestic political nature had prevented the normal functioning of certain Congolese State agencies, and these were such as to explain the Government's failure to comply with the successive time limits fixed by the Tribunal. The Tribunal also took the view that the documents presented by the Government could be considered as an indication that the Tribunal did not have at its disposal all the necessary facts for it to render its award. The Tribunal therefore made the following decision:

1. In accordance with Articles 25 and 40 of the Rules the parties should submit to the Tribunal the following documents:

(a) The Government's Counter-Memorial and Counterclaim, by 21 December 1979 and

(b) B&B's Observations on the Counterclaim, by 31 January 1980.

2. There would be no further exchange of Memorials between the parties.

3. All future costs of the Tribunal and of the Centre would be paid by the Government.

1.34.
The Government lodged a Memorial in Defence and Counterclaim and B&B its observations ("the Memorial in Defence and the Observations") within the prescribed time limits. B&B, in a letter of 7 February 1980, asked the Tribunal that the process be closed and that an award be made in accordance with Article 60 of the Rules.
1.35.
The Tribunal met in Paris on 27. 28 and 29 February 1980 without the parties and with the assistance of the Secretary-General of the Centre and the Secretary of the Tribunal. It was then decided, after having established that no further information was required from the parties for the award to be prepared, that the Tribunal would make a procedural order declaring the process to be closed.

The Closing of the Process

1.36.
The Tribunal made a procedural order dated 7 August 1981 in accordance with Article 38 of the Rules declaring the process to be closed.

II. THE FACTS

2.1.
The Tribunal will now set out the facts which are at the origin of the dispute, as they emerge from an examination of the written document of the parties, the hearing of the witnesses and the pleading"
2.2.
Towards the end of 1972. B&B was instructed by the Government to examine the feasibility of building and operating in the Congo a factory for the manufacture of plastic bottles (Annexe 2.M).
2.3.
In a letter of 20 December 1972 addressed to the Government B&B proposed that the Government should take a share of 40% in a mixed company to be formed (Annexe 1-M). This share was later increased to 60%.
2.4.
The parties agreed to commission the "Société Italienne d’Engineering" (‟sodisca") to construct the factory, and sodisca asked for an advance provision of finance.
2.5.
B&B undertook to make an advance provision of finance of CFA 22,000,000 in a "pro-forma of the Preliminary Agreement" dated 2 March 1973 (Annexe 9-M). This sum was to correspond to B&B's entire share in the capital provided for the formation of the mixed company. B&B paid the said sum on 6 March 1973 (Annexes 10-M and 11-M).
2.6.

On 16 April 1973, the parties signed the Agreement (Annexe 12-M) which provided for:

(a) the creation of a mixed company with a nominal capital of CFA 55,000,000, 60% of which was to be owned by the Government and 40% by B&B (Article 1):

(b) the right of the Government to repurchase the shares of B&B five years after the formation of the new company, the purchase price to be fixed by common agreement between the parties or in default by arbitration (Article 5);

(c) an undertaking by the Government to provide all possible guarantees for the provision of finance which the company might need for the realisation of its programme and to grant it a tax status by means of an "establishment agreement" (Article 13); and

(d) an undertaking by B&B to guarantee the marketing of the products of the company to be established (Article 14).

2.7.

On the date of the Agreement, the Parties also signed the Memorandum and Articles of Association of PLASCO (Annexe 13-M) a company which was formed for a duration of 99 years (Article 4) and which was to be run by a Board of Directors of seven members, at least four of whom were to be appointed by the Government (Article 9). In accordance with Article 15 of the Articles of Association, the Board of Directors was to meet at least once a year at the summons of its Chairman or at the request of two-thirds of its members. By virtue of Article 22 the shareholders had a right to a first annual dividend:

consisting of 5% of the sums in which their shares had been paid-up and not redeemed, but without the possibility, if the profits of one year did not allow for such a payment, for the shareholders to claim them out of the profits of the following years.

2.8.
In the minutes relating to the formation of PLASCO (Annexe 14-M) dated 28 June 1973 it was laid down that PLASCO would be subject to a regime of single tax within the framework of the treaties of the udeac. which would be set out in an establishment agreement. It was also noted in these minutes that the Government would intervene when the time came, so as to ensure that PLASCO did not suffer from any foreign competition, and that PLASCO would be able to deal with various clients, particularly with siacongo, a Government concern.
2.9.
On 21 April 1973. a contract was signed between PLASCO and SODISCA providing for the supply of a plant, ready to operate, for the manufacture of thermoplastic bottles with a production capacity of approximately 8,000,000 units (presumably per year) and of a mineral water bottling factory capable of producing 2,200 bottles an hour. The cost of these two factories was CFA 305,000,000 (Annexe 16-M). This contract was countersigned by the Minister for Industry on 4 May 1973.
2.10.
B&B and the Government acted as guarantors for the benefit of sodisca of the six monthly drafts of PLASCO to a total amount of CFA 250,000,000. part of the cost of the plants. These drafts were endorsed by the "Caisscs Centrale d'Amortissement" of the Congo and carried interest at the rate of 8%.
2.11.
The Government paid CFA 22,000,000 to sodisca in March 1973 on behalf of PLASCO. and charged CFA 9,000,000 on the capital of PLASCO representing the value of the site allocated for the construction of these plants. The Government authorized this site to be occupied on 21 August 1973. On the other hand, it failed to make the payment of CFA 2,000,000 which was needed for it to make up its share.
2.12.
The first meeting of the board of directors of PLASCO took place on 18 October 1973. The minutes of this meeting show that no local bank was prepared to provide PLASCO with working capital and that B&B undertook to guarantee the possible deficit by means of overdraft facilities with the Banque Commerciale Congolaisc. It was stressed by the Chairman "that in principle there arc to be two meetings a year" (Annexe 15-M).
2.13.
Following a report on the state of PLASCO (Annexe 18-M) prepared by Mr Mombou. Director General at the Ministry of Industry and a Director of PLASCO. the Ministry of Industry called a meeting of the Board of Directors for 4 June 1974 (Annexe 19-M). The Agenda included the Government's payment of the last instalment of capital of CFA 2,000,000 and the increase of the overdraft facilities from CFA 50 to 100,000,000.
2.14.
The Government representatives all failed to attend this meeting. On 17 September 1974 round-table consultation enabled the reaching of ar. agreement for PLASCO to obtain a loan from the Banque Centrale so as to alleviate its cash shortage.
2.15.
B&B secured a meeting of the Board of Directors, to be held in January 1975. fifteen months after the first meeting (Annexe 36-M). According to B&B. the minutes of this meeting acknowledged that B&B had advanced the sum of CFA 43,451,094 so as to meet PLASCO's cash requirements and recorded the Government's promise to repay immediately to B&B the sum of CFA 25,000,000. At the meeting, the sale prices of the mineral water were fixed taking into account a profit margin of 10% for PLASCO. These minutes were not presented to the Tribunal and B&B stated on several occasions that at the time of the expropriation this document was at PLASCO’s registered office, whereas the Government declared that it was not in its possession. The Government did not dispute the contents of this document as presented by B&B to the Tribunal.
2.16.
In February 1975. the Government acted as guarantor of a loan of CFA 100,000,000 granted by the Banque Commerciale Congolaise to PLASCO.
2.18.
When the plant began operating, Mr Bonfant. the Managing Director of PLASCO, and Miss Ingster, formed the "Entreprise de Distribution Congolaise" ("EDICO") so as to meet B&B's obligation to guarantee the commercialization of the mineral waters processed by PLASCO.
2.19.
On 3 October 1975, the Government unilaterally fixed by decree (Annexe 21-M) the sale prices of the bottles of mineral water at levels lower than those laid down at the meeting of the Board of Directors of PLASCO in January 1975. B&B protested against this measure taken by the Government and stressed that the new prices entailed a loss for PLASCO of CFA 23.86 per bottle of mineral water (Annexe 22-M).
2.20.
As from November 1975 the Government embarked upon a policy of "radicalization" which involved, in particular, the creation of government agencies such as the "Management-Party-Union" ("the Trilogy"), interference by these agencies in the management of PLASCO and finally the dissolution of EDICO by decree of 9 November 1975 (Annexe 24-BM).
2.21.
After repeated requests by B&B. the Government called a meeting of the Board of Directors which was held on 18 January 1976. At this meeting, new sale prices were fixed for the bottles of mineral water, which would have given PLASCO a profit margin of 10%. In addition a budget for 1976 was approved (Annexe 29-M).
2.22.
Following an administrative memorandum dated 29 January 1976. Mr Bonfant was of the opinion that PLASCO had become a State Company (Annexe 32-M) without there having been a formal act of expropriation.
2.23.
Considering that their personal safety was no longer guaranteed and on the advice of Mr Corradello, Charge d'Affaires at the Italian Embassy in Brazzaville, according to whom the arrest of Mr Bonfant was imminent, the latter and most of the Italian personnel of PLASCO hastily left the Congo in February 1976 (Annexe 4 to the declarations of the representatives of B&B at the hearing in Geneva). The registered office of PLASCO was subsequently occupied by the Army. His hasty departure from the Congo prevented Mr Bonfant from taking with him all the documents of PLASCO and EDICO relating to this case.
2.24.
The attempts by B&B and the Government to resolve their dispute out of Court were unsuccessful.

III. THE PARTIES' CONCLUSIONS

3.1.

B&B concluded its Memorial as follows:

In conclusion, Benvenuti and Bonfant ask for the following:

1. Compensation for the non-payment of the minimum guaranteed profits of PLASCO : CFA 5,500,000

2. Compensation for the value of 40% of PLASCO at the end of the five year term starting from the date of its construction : CFA 110,098,936

3. Repayment of the loans made for the benefit of PLASCO : CFA 226,970,885

4. Repayment of the sums paid to sodisca for the debts of PLASCO : CFA 77,754,324

5. Compensation following the dissolution of ED1CO : CFA 88,000,000

6. Damages for intangible loss ("prejudice moral"): CFA 250,000,000

Provisional Total: CFA 758,324,145

And in addition interest on the damages (Memorial p. 70).

3.2.
B&B repeated these various claims in its letter to the Tribunal dated 11 September 1979 but it stated that its claim relating to the repayment of the sums paid to sodisca for the debts of PLASCO was reduced to CFA 61,000,000, the figure agreed between the parties at their meeting on 5 September 1979 in Paris.
3.3.
B&B reaffirmed its conclusions in a letter to the Tribunal dated 10 October 1979. confirming the sum claimed under the head mentioned in paragraph 3.2 and the sums claimed in heads 1). 5) and 6) of the Memorial and specifying that the sum claimed as a repayment of the loans made for the benefit of PLASCO was CFA 142,780,253 excluding interest. Taking into account these corrections, the total sum excluding interest, claimed by B&B was CFA 657,379,189.
3.4.
Finally. B&B reaffirmed in its Observations, the claims contained in its letter of 11 September 1979 and. in addition, claimed interest at a rate of 15% per annum on the sums which might be awarded to it by the Tribunal
3.5.

Apart from the denial of competence, the substance of which has already been the subject of a decision by the Tribunal, the Government has. on the one hand, concluded in its Memorial in Defence that all the heads of the main claim be dismissed and. on the other, made a counterclaim containing the following heads:

1. Damages for the non-payment of duties and taxes relating to the import under cover of PLASCO of materials destined for third parties : CFA 32,727,555

and the sum owing in respect of interest at the rate of 10% per annum calculated between the date of each import and the date of the payment of damages awarded under this head.

2. The overpricing of raw materials : CFA 31,590,000

and the sum owing in respect of interest at the rate of 10% per annum for the period between, on the one hand. 31 December 1975 and 31 December 1976, and. on the other, the date of the payment of damages awarded under this head.

3. Damages for defaults in the execution of the supply agreement with SODISCA : CFA 93,051,000

and interest at the rate of 10% per annum for the whole period between the date of receipt of the plant and the date of payment of the damages awarded under this head.

4. Defects relating to the construction of the plant : CFA 1

5. Damages for intangible loss ("prejudice moral") : CFA 250,000,000

Total: CFA 407,368,556

IV. THE LAW

The Law Applicable

The Main Claim

(A) The Merits of the Main Claim

4.5.
During the negotiations for a settlement which took place between the parties in Rome in June and in Paris in September 1979, the Government's representatives recognized in principle the merits of the plaintiff's claim but not the amount of the sums claimed.

B&B states that this recognition, of which the Tribunal has been informed during the process, binds the Government according to the general rules relating to the obligatory force of agreements and judicial admissions (French Civil Code. Articles 1354 and 1356).

The Government, on the other hand, has maintained that it rejected the settlement in question which could not become binding without its ratification.

4.6.
In these circumstances, the Tribunal considers that it must analyse the evidence presented and adopt a position on the merits of the plaintiff's claims and determine their amount.
4.7.
As a preliminary point, it must be noted that the plaintiff's exposition of the facts and circumstances of the case was not disputed in its essentials and that it did not have access to the evidence and documents which remained in the Congo.

(1) The non-payment of CFA 2,000,000 of the capital of PLASCO

4.9.

The Government stated (Memorial in Defence, p. 6) that the balance of its share of the registered capital of PLASCO, i.e. CFA 2,000,000. was paid as reserves and fees for the registration of the Company.

If one considers, however, that at the meeting of the Board of Directors of PLASCO of 4 October 1973 (Annexe 15-M p. 3C) it was stated that the sum had not been paid and that the same fact was mentioned in a report dated 28 May 1974. addressed to the Minister for Industry, the Mines and Tourism, by the Director-General of the Ministry of Industry Mr Angusto Mambou (Annexe 18-M) where it is stated that:

The Congolese Party therefore remains indebted to PLASCO in the sum of 2 million CFA

one must conclude that the sum mentioned was never paid by the Government.

(2) The origin of PLASCO's difficulties

4.10.
As has been mentioned above. B&B complained that, on the one hand, the Chairman of PLASCO did not convene meetings of the Board of Directors as often as would have been desirable in order to resolve the Company's difficulties and that, on the other hand, the Government Commissions and the "Management-Party-Union" (the "Trilogy") interfered in an obstructive manner with the running of the company.
4.11.
As to the question firstly, of the convening of meetings of Board of Directors, the Tribunal considers that it has been shown that B&B did. in urgent cases, ask for meetings of the Board of Directors but that such meetings never took place.
4.12.

A letter dated 21 October 1975 addressed by the Managing Director to the Chairman of the Board of Directors of PLASCO. states as follows:

We should be grateful if you would call an extraordinary meeting of the Board of Directors as soon as possible, on whichever date is convenient to you (before 5 November 1975) (Annexe 27-M).

A similar request was made in a letter of 26 January 1976 (Annexe 30-M).

4.13.
Finally, it emerges also from the file that the Chairman of the Board of Directors of the Company did on one occasion, in place of convening the Board of Directors, consult the Directors at their respective homes (Annexe 21-M).
4.14.
The Tribunal is of the opinion that the absence of regular board meetings was contrary to the Agreement.
4.15.
Regarding the allegation that the Government Commissions and the "Management-Party-Union" (the "Trilogy") interfered in the running of PLASCO. Mr Corrado Bonfant and Miss Ingster as well as the Government representatives gave ample explanations during the oral proceedings of 6 and 7 June 1979.
4.16.
The Tribunal considers it probable that the behaviour of these Government bodies caused a certain amount of confusion and delay without it being possible to determine their extent. Although not disputing that these bodies certainly were, according to Congolese Law. legitimate emanations of the new political system, the Tribunal must nevertheless conclude that the consequences of their action were not provided for in the Agreement which was made before their creation.
4.17.
The Tribunal does not however consider it useful to labour this point, because the breach of contract alleged in this head does not seem to have had an appreciable influence on PLASCO's economic and financial situation and other circumstances which will be dealt with below, constitute a more characterized breach of contract which engages the responsibility of the Government.

(3) The non-performance of the Government's contractual obligations

(a) The obligation to provide finance

4.18.

Article 9. part one, letter C of the Agreement requires the Government to:

provide all possible guarantees for the provisions of finance which the new company might require for the realisation of its programme.

4.19.
The plaintiff argues that the Government did not comply with its obligation to contribute to the provision of finance for the activities of PLASCO.
4.20.
The defendant, on the other hand, pointed out that the Government, in conjunction with B&B. acted as guarantor of a loan of CFA 100 million from the Banque Commerciale Congolaise. This loan was used, according to the plaintiff, for the payment of the first bills of exchange drawn in favour of sodisca.
4.21.
In the opinion of the Tribunal, the plaintiff is justified in claiming that in giving this guarantee, the Government did not adequately and totally fulfil its obligation contained in Article 9 to give "all possible guarantees" Since the budget laid down in Articles 7 and 8 of the Agreement is clearly insufficient for the management of the concern, this obligation extended also to the financial needs of PLASCO.
4.22.
The Tribunal considers that letters dated 21 October 1975 and 26 January 1976 (Annexes 27-M and 30-M). show that the Government did not give the financial support required of it. since B&B asks in these letters for the release of sums intended for PLASCO.
4.23.

This failure is further underlined by the "Operating Statement for 1976" drawn up for the meeting of the Board of Directors of 18 January 1976. which states on page 2 that:

to resolve (the financial aspect of the problems) in a satisfactory and definitive manner, a loan by the State of one hundred million CFA must definitely be released to cover financial commitments and the repayment of debts as well as to provide working capital so as to ensure the regular purchase of raw materials. This loan must definitely be received before the end of the present month of January and be repayable over three years, from 1977.

(b) The obligation to grant a preferential tax status

4.24.

As already stated. Article 13 of the Agreement provides that:

The tax status of PLASCO with respect to the Congolese Code of Investments will be defined in the Establishment Agreements to be drawn up.

The plaintiff states that despite numerous requests on its part, it was unable to obtain such a status. In the "Operating Statement for 1976" (Annexe 29-M) cited above, it is stated that:

In conclusion, so as to ensure full production by PLASCO. the following measures must be taken …
4. Ascertain the tax status and the domestic consumer tax so as to be able to offer competitive prices to its potential customers either inside or outside the country.

4.25.

Moreover, in a note dated 2 August 1975 from the Ministry of Finance, signed by Mr M'Bizi and addressed to the Minister, reference is made to a request by PLASCO for the grant of:

the reduced tariff of 5% on its materials and a total exemption from duty on its imports of raw materials for the manufacture of its products (Annexe 11 to the Declaration of B&B at the hearing in Geneva in 1979).

4.26.
The Government maintained for its part that PLASCO was granted such a tax status. It referred in this respect to the letter of the Division of Customs of Brazzaville to the "Camarade Directeur de Cabinet" of the Ministry of Justice and Labour dated 8 November 1979 which provides that PLASCO enjoys the benefit of the "domestic consumer regime" which regime operates in practice according to the rules of the single tax (Annexe 23-MID).
4.27.
In the opinion of the Tribunal, the burden of proving that such an advantage was granted falls upon the Government since the relevant official decrees are at its disposal.
4.28.
To clarify this question, however, the Tribunal only has at its disposal, on the one hand, the note of 2 August which creates a serious presumption that such a tax status had not been granted in 1975. and on the other, the documents of 1979. presented by the Government (Annexe 23-MID) the probative value of which seems to be very weak.
4.29.
In these circumstances, the Tribunal can only conclude that:

— The Government promised B&B a special tax status for PLASCO. but

— that such a tax status was never granted.

(c) The obligation to take protectionist measures

4.30.
B&B also pointed out that the Government had promised that it would take protectionist measures to limit imports of mineral water, when PLASCO’s production had reached a satisfactory level.
4.31.
It refers in this respect to the request made, at the meeting of the Board of Directors of PLASCO on 28 June 1973 (Annexe 14-M. p.2) to the Government, to intervene when the time came to ensure that the production of PLASCO did not suffer from any competition. Mr Bonfant was told then that "when quality is achieved, there will be no problems".
4.32.

Point 7 of the Agenda proposed by the Managing Director of PLASCO in his letter to the Minister of Labour and State Insurance of 21 October 1975 lists the following questions:

(7) Effective measures to be taken for the protection of PLASCO's products:

(a) A total ban on imports of water except those said to be medicinal and sold exclusively in pharmacies.

(b) Authorisation by UDEAC (dossier lodged already in July).

(c) Domestic consumer tax.

(d) A preferential rate of the CFCO for the transportation of PLASCO's products throughout the whole country.

4.33.
Furthermore, in the Agenda of the Board Meeting of 16 January 1976 (Annexe 28-M) the Italian party mentioned the need for protectionist measures.
4.34.
The formula of approval of the "Operating Statement for 1976 (Annexe 29-M) reaffirms "the need to ban all imports of water except those said to be medicinal and sold exclusively to pharmacies".
4.35.
B&B states that this Statement was unanimously approved at the meeting, and this fact was confirmed by the depositions of Mr Corrado Bonfant and Miss Ingster made at the Tribunal hearings of 6 and 7 June 1979.
4.36.
Taking into account the above and the fact that the Government did not raise any serious objections, although it could, in particular, have produced the minutes of the meeting which are in its possession, the Tribunal considers as proven that the decisions of the Board of Directors were unanimously taken.
4.37.
The Tribunal considers also that it has been proven that the Government undertook to take protectionist measures but that it did not fulfil its obligations.

(d) The performance by SIACONGO of its contractual obligations

(4) The price of the bottles of mineral water

4.41.
As stated above. Decree No. 6127/MC/DGC/DGP of 3 October 1975 (Annexe 21-M) prescribed certain prices for PLASCO's "Mayo" Mineral Water.
4.42.
The Tribunal notes that these prices were lower than those adopted at a meeting of the Board of Directors of PLASCO on 28 January 1975. as emerges from the Document "III Ex-Factory sale price without ta"x enclosed with a letter of 24 January 1975 (Annexe 36-M) which contained notification by the Minister of Industry and Mines of that meeting.
4.43.
These prices are also lower than those which had been adopted at the meeting of 18 January 1976 (Annexe 29-M). Attention is also drawn to the letter of 26 January 1976 (Annexe 30-M) where it is stated that "we were in complete agreement with respect to the new prices to be adopted".
4.44.
B&B protested by letter of 4 December 1975 (Annexe 22-M), maintaining that the price levels prescribed in the decree were lower than the cost price. During the oral proceedings. B&B stressed this fact.
4.45.

As to the Government, its reply to this argument was merely to recall the context in which the decree was made. It declared in particular that:

It is true that the Congo fixed, by sovereign act at the end of 1975. PLASCO's sale prices at a level lower than that requested by Mr Corrado Bonfant; and he claims, lower even than the cost price. The Congo recognises that this sovereign act represents, by its nature, an interference in the running of a mixed company. One must bear in mind, however, the context in which it was taken. As recalled above, at this very time, the representative of the Italian party refused to give satisfactory explanations relating to multiple transactions, governed by Article 40 of the Company Law. thus putting in doubt whether the costs upon which his calculation of the cost price was based were justified (Memorial in Defence, p. 19).

4.46.
The Tribunal considers that the fixing of prices by the contested decree caused inevitable damage to PLASCO and that the Government must assume responsibility for it.

(5) The dissolution of EDICO

4.47.
As mentioned above, the Prime Minister's Decree No. 75/508 of 9 November 1975 put an end to EDICO's existence (Annexe 26B-M).
4.48.
This company was founded on 7 February 1975 by Mr Corrado Bonfant and Miss Ingster (Annexe 34-M). They did so at the request of B&B itself with whom they had entered into an agreement for the purpose (Annexe 41-M) which provided the promoters with the necessary capital.
4.49.
B&B maintained that the company was formed by it so as to enable it to fulfil its obligation laid down in Article 14 of the Agreement to "guarantee the marketing of the mineral waters produced by PLASCO" and that the Government insisted that the commercialization take place under the guarantee responsibility of B&B through another Congolese Company to be formed.
4.50.
Mr Bonfant and Miss Ingster declared at the oral proceedings in Geneva on 6 and 7 June 1979 that the formation of EDICO was in accordance with the aims of both the Italian and Congolese parties.
4.51.
This statement was contradicted by the Government's representative Mr Zubabela. according to whom the commercialization of the products was to be carried out by PLASCO itself, EDICO's existence doing no more than to increase the prices of PLASCO’s products.
4.52.
The Tribunal considers that, although it has not been shown that B&B’s obligation, by virtue of Article 14 of the Agreement, to guarantee the marketing of PLASCO’s products rendered necessary the formation of another Company, nothing in the Agreement nor in the Articles of Association prevented B&B from entrusting this marketing to PLASCO itself.
4.53.
Furthermore, it notes that the plans for the formation of EDICO were often mentioned in the documents of the case, in particular in the Agenda contained in Annexe 28-M and the Operating Statement for 1976 (Annexe 29-M).
4.54.
It is not without interest to note that EDICO was formed and legally registered without protest from any party, and that it was able to operate normally from its formation in February 1975 to the date of its dissolution in November of the same year.
4.55.
The formation of a company controlled by B&B for the marketing of PLASCO’s products does not seem to be at all exceptional considering B&B’s minority shareholding in PLASCO. In consequence, the Tribunal considers that the dissolution of the said Company followed by the seizure of its assets by the Government is bereft of all legal justification.

(6) The seizure of PLASCO by the Government

4.56.
B&B has stated that the Government, by means of the administrative memorandum mentioned in para. 2.22 and the use of the military occupation of the property and the premises of PLASCO mentioned in para. 2.23. dispossessed it of its share in PLASCO and appropriated it to itself.
4.57.
The Government denies, for its part, in the Memorial in Defence, that it carried out any confiscation or nationalization and maintains that the Italian party is free at any time, to return and recover its share (pp. 17-20).
4.65.
By reason of the above, the Government must therefore be ordered to pay B&B damages, the quantum of which will be determined ex aequo et bono by the Tribunal in the following paragraphs:

(B) The Assessment of Damages

(1) B&B’s claim for compensation for the non-receipt of profits as holder of 40% of the shares in PLASCO

4.66.
B&B restricted this claim to the profits which were not received during the five years at the end of which the Government could, by virture of Article 5 of the Agreement, have bought back its shares.
4.67.

B&B relies in this respect on Article 22 of the Articles of Association which provides that the shareholders were entitled to a first annual dividend:

consisting of 5% of the sums in which their shares had been paid up and not redeemed, but without the possibility, if the profits of one year did not allow for such a payment, for the shareholders to claim them out of the profits of the following years (Annexe 13-M).

4.68.
On this point, the Tribunal first observes that this clause in the Articles states clearly that the right to dividends is cancelled in a particular year if there are insufficient profits for the payment of dividends.
4.69.
In the first of the five years in respect of which B&B claims compensation, no profits were made. In the second year, which is the one in which production commenced, one could not. in the opinion of the Tribunal, expect any profits.
4.70.
The Tribunal therefore considers that in respect of these two years B&B is not entitled to claim compensation.
4.71.
As to the last three years, the Tribunal considers on the other hand, that if the contract had been performed as agreed PLASCO would have made sufficient profits to pay the 5% dividend. The partners themselves admitted this by referring to the probable profits in the Operating Statement for 1976 (Annexe 29-M).
4.72.
The Tribunal therefore considers itself bound to award to B&B the sum of CFA 3,300,000. under this head.

(2) Compensation for the value of 40% of the shares in PLASCO

4.74.
As to the valuation of PLASCO, B&B bases it essentially on the company’s estimated profits contained in the Operating Statement for 1976.
4.75.
On the basis of a) the projected profits, b) the duration of these profits (99 years) and c) the valuation rates, the financial expert Carlo Mazziere, employed by B&B. established in a declaration of 7 August 1978 (Annexe 37-M), the value of PLASCO to be CFA 275,276,840. 40% of this sum. i.e.: CFA 110,098,936. constitutes the amount claimed by B&B.
4.76.
At the hearing of 7 June 1979, the same expert, heard as witness without objection by the Government, confirmed the correctness of this declaration.
4.77.
The Tribunal moreover considered it useful to obtain a supplementary declaration from an independent expert and therefore asked the Danish Company "United Breweries Limited" to be kind enough to make one.
4.78.

In a declaration made in English, the above-mentioned Company, in an opinion signed by its Senior Vice-President Per Green, stated amongst other things that:

Having studied the "Memoire", it would appear that one cannot base an evaluation of PLASCO SA on its expected earnings nor its value as a "going concern" due to the fact that - according to the information given - its market price was never established. At the board meeting of PLASCO SA on 18th January 1976. prices were agreed as well as a budgeted profit for 1976. based on these prices, of CFA 36,340,740. Due to the acts of the Congolese authorities these figures were never realised for original parties in PLASCO SA.

The conclusion that "expected earnings" are an inappropriate criteria for evaluation in this case can. in a more general way. be deduced from the fact that, as matters stand, one of the parties involved has. throughout the currency of the arrangement, complete power to decide the prices of PLASCO’s products and thereby, to a very considerable extent, the profit (or loss) of the company.

Under these circumstances and given the fact

That the plant is newly constructed.

That the parties have agreed on the supply of a plant ready to operate, and

That PLASCO SA was technically operational at the time of the classification of PLASCO SA as an "entreprise d' Etat". I would consider the logical basis for an evaluation of PLASCO SA to be the recent investment which can be quite accurately defined, and which seems to be the best available "objective" criteria (i.e. a criterion which is not dependent on acts or omissions of one or both of the parties involved). On this basis B&B would be entitled to 40% of the original investment, i.e. CFA 122,000,000.

Having seen this declaration, the plaintiff declared that it would limit its claim to the sum of CFA 110,098,936 which it had originally claimed (letter of Mr Sinagra to the Tribunal dated 10 October 1979).

4.79.
The Tribunal considers that the conclusions of Mr Green's expert opinion taken in their entirety can be upheld and decides that the Government must pay to B&B the amount claimed under this head.

(3) The loans made for the benefit of PLASCO

4.80.
The Tribunal has already indicated above that in a letter dated 10 October 1979 B&B submitted a new formulation of its claim calculated at CFA 142,780,253, not including interest. The Government, for its part, declared itself unable to give detailed answers to each of B&B's claims on this point whilst at the same time denying that the expenses which gave rise to the loans had been made for the sole benefit of PLASCO and observing that. in any case, there existed an inextricable mixture between the personal accounts of Mr Bonfant and those of PLASCO (Memorial in Defence, pp. 20-22).
4.81.
In the course of the negotiations held in Rome, however, the Government’s representatives recognized the heads of claim and the Government did not deny that they were well-founded in the Memorial in Defence.
4.82.
The Tribunal considers therefore that it is just and equitable to award B&B the sum of CFA 142,780,253 under this head.

(4) The sums paid to SOD1SCA for the debts of PLASCO

4.83.
In the course of negotiations held in Paris on 5 September 1979. both parties agreed to reduce the amount of this claim which stood originally at CFA 77,754,324. to the sum of CFA 61,000,000.
4.84.
Although the Government did not ratify this agreement, it did not raise any serious objections to this claim in the Memorial in Defence.
4.85.
B&B having maintained the figure of CFA 61,000,000 as the amount of its claim under this head, this is the sum which must be awarded to it.

(5) Compensation following the dissolution of EDICO

4.86.
The Tribunal declared above that the Government must compensate B&B for the dissolution of EDICO.
4.87.
The registered capital of EDICO was CFA 1,000,000. The shares were owned by Mr Bonfant and Miss Ingster. but had been paid for by B&B (Annexe 37-M, Article 7 and Annexe 41-M. Article 1) which therefore makes a claim for this amount.
4.88.
B&B claims that it paid out in addition CFA 15,000,000 and CFA 12,000,000 respectively for the installation of the offices and as working capital (Annexe 41-M. Article 4) and for accommodation and equipment (Annexe 41-M, Article 5). It claims compensation for these amounts.
4.89.
Finally it formulated another head of claim for the sum of CFA 60,000,000. which it justifies on the basis of the provisions of an agreement made with Mr Bonfant and Miss Ingster (Annexe 41-M, Article 6). According to this agreement. B&B would, after five years, have the right to repurchase the shares of Mr Bonfant and Miss Ingster at the nominal price of CFA 1, whereas the latter two would have the right to prevent the repurchase if they repaid the sums advanced by B&B, i.e. a total CFA 28,000,000. and paid to it a supplementary amount of CFA 60,000,000. According to B&B. these provisions prove that after five years, EDICO would have had a valuation of CFA 28,000,000 plus CFA 60,000,000. This explains why it claims additional compensation of CFA 60,000,000. over and above the sums mentioned of CFA 1,000,000. CFA 15,000,000 and CFA 12,000,000.
4.90.
In the first place, the Tribunal considers that the copy of the registration of EDICO included in the dossier (Annexe 4-MID shows that the registered capital of CFA 1,000,000 has been paid up. This sum was paid by B&B. For this reason it is reasonable and equitable to order the Government to repay that sum to B&B.
4.91.
As to the sums of CFA 15,000,000 and CFA 12,000,000 the Tribunal, in a telegram of 23 May 1979. invited B&B to adduce evidence that these sums were in fact paid.
4.92.
B&B did not do so. on the grounds that it did not possess any evidence other than that already presented (Annexes 34-M and 41-M) since EDICO's papers remained in the Congo.
4.93.
The Tribunal does not regard this answer as satisfactory because it considers that B&B could have extracted from the financial records and the papers left in Italy some facts capable of supporting its case. In these circumstances, the Tribunal must dismiss B&B's claims for the payment of the two contested sums.
4.94.
With regard finally to the sum of CFA 60,000,000, the Tribunal considers that the above mentioned agreement (Annexe 41-M) does not constitute in any respect a legal basis of a nature to justify the claim that the valuation of EDICO after five years would have increased by CFA 60,000,000. B&B's claim under this head must therefore be dismissed. In conclusion, out of all these claims. B&B is only entitled to the repayment of the sum of CFA 1,000,000.

(6) Compensation for intangible loss ("prejudice moral")

(7) Interest

4.97.
Following the provisional agreement between the parties, which was not ratified by the Government. B&B claimed interest at the rate of 15% a year on all sums awarded to it.
4.98.
The Tribunal does not consider it possible to uphold this claim seeing as the law applicable. Congolese Law lays down a significantly lower rate of interest. The Tribunal observes, however, that the Government, in its Memorial in Defence, suggested a rate of interest of 10% in connection with its counterclaim. By virtue of its power to rule ex aequo et bono. the Tribunal considers it equitable to adopt this rate in relation to the compensation awarded to B&B.
4.99.

B&B claimed interest on the sums mentioned above as from the following dates:

(1) loss of profits on the 40% of the shares in PLASCO:

Interest to run from 16 April 1978 (the end of the five year period beginning with the formation of PLASCO).

(2) compensation for the value of its 40% holding in PLASCO:

Interest to run from 16 April 1978 (end of the five year period beginning with the formation of PLASCO).

(3) loans made to PLASCO:

Interest to run from 1 January 1975 for the sums advanced in years 1973 and 1974 (CFA 64,002,539) and from 1 January 1976 for the sums advanced in 1975 (CFA 76,777,714).

(4) sums paid to sodisca:

Interest to run from 1 August 1978 (date of the Agreement between B&B and sodisca).

(5) compensation for the dissolution of EDICO (4.8(5)):

Interest to run from 9 November 1975 (date of the dissolution of EDICO).

(6) compensation for intangible loss ("prejudice moral"):

Interest to run from 3 February 1976.

4.100.
The Tribunal considers these claims to be reasonable and equitable and therefore orders the Government to pay the above items of interest, to run from the stated dates.

The Counterclaim

4.101.

As mentioned above, the Government made a counterclaim covering the following items:

(1) Damages for non-payment of duties and taxes relating to the import under cover of PLASCO of goods destined for third parties.

(2) Overpricing of raw materials.

(3) Damages for defaults in the execution of the supply agreement with SODISCA.

(4) Defects relating to the construction of the plant.

(5) Reparation of intangible loss ("prejudice moral").

(1) The admissibility of the counterclaim and the competence of the Tribunal in relation to it

4.102.
The Tribunal considers that the counterclaim, the admissibility of which was disputed by B&B, can nevertheless be allowed in accordance with Article 40(2) of the Rules, the Tribunal having decided that the Government provided a sufficient explanation for the delay in presenting its claim, after having taken into account the objections of the other party (cf. Procedural Order of 14 November 1979).
4.103.
The Tribunal then considered the question of whether one or more of the heads of the counterclaim might be beyond its competence, laid down in Article 12 of the Agreement and Article 25 of the Articles of Association.
4.104.
Considering that the counterclaim relates directly to the object of the dispute, that the competence of the Tribunal has not been disputed and that it is within the competence of the Centre, the Tribunal considers therefore, that it is bound to uphold its competence (Article 40(1) of the Rules).

(2) The duties and taxes

4.105.
The Government, referring to the fact that PLASCO enjoyed a privileged customs status, states that this amounted to privileged tax treatment which Mr Bonfant abused, under the cover of PLASCO, by importing goods which were unrelated to PLASCO’s business and destined for third parties that did not benefit from the same status.
4.106.
The Tribunal recalls in this respect that, as mentioned above, it has not been established that PLASCO obtained privileged tax status. Furthermore it has not been conclusively proven that the company in fact enjoyed preferential customs rights.
4.107.
None of the documents lodged with the Tribunal established that Mr Bonfant perpetrated fraudulent acts against the Customs Division. In these circumstances, the Tribunal must dismiss the Government’s claim under this head, without it being necessary to examine the question of whether the plaintiff should be considered as responsible for possibly fraudulent acts perpetrated by Mr Bonfant.

(3) The overpricing of the raw materials

4.108.
The Government stated that Mr Bonfant always refused to say at what prices the suppliers of PLASCO obtained the raw materials, which according to the Government is understandable "because it appears that the prices charged by the four suppliers of PLASCO were, in fact, greatly inflated by comparison with the prices on the European market" (Memorial in Defence, p. 29).
4.109.
The Tribunal considers, however, that on examination of the documents produced, it is not possible to substantiate these claims. The Tribunal therefore cannot uphold this head of the counterclaim.

(4) The defaults in the execution of the supply agreement with sodisca

4.110.
As stated above, the Government in support of its conclusions relating to this point, states that "the Congo is justified in seeking complete reparation of the damage suffered as a result of all failures or defects in the carrying out of the works".
4.111.
The Tribunal recalls in this respect that the contract for the construction of the plant (Annexe 16-M) was signed in the name of PLASCO by its Chairman. Mr Justin Lekoundzou. On 10 December 1974. PLASCO accepted, without reservation, delivery of the installations from sodisca (Annexe 2 of the Observations). The receipt was signed in the name of PLASCO by Messrs Bonfant. Claudio Mele and Ludovico Branchetti. The documents filed in the proceedings, in particular the photographs, attest to the fact that the delivery was taken at a ceremony in which the Congolese authorities participated.
4.112.
It was only after appropriation of the firm by the Government that PLASCO in a letter addressed to sodisca on 12 April 1976 and signed by the new Managing Director (illegible name) (Annexe 16-MID) made claims in respect of a long list of defects in the construction of the plant.
4.113.
These complaints were strongly refuted in an undated letter from sodisca received by the Minister for Commerce on the 16 June 1976 and by PLASCO on 14 July 1976 (Annexe 17-MID).
4.114.
The Tribunal considers that sodisca’s reply is of a nature to invalidate the Government's claims. In fact, it does not seem that this point was seriously maintained either by PLASCO. or by the Government before the Memorial in Defence.
4.115.
Furthermore, the Tribunal does not consider it useful, as requested by the Government, to order an expert technical report on the plant because it could not provide any really pertinent and convincing evidence as to the state of the plant in 1974. In conclusion. the Tribunal must also dismiss the Government's counterclaim, under this head.

(5) The defects relating to the construction of the plant: The stopper mould and the purity of the water.

4.116.
The Government also argued that a plant such as the one envisaged in the supply agreement with sodisca cannot operate without a stopper mould and that the Agreement imposed on B&B the obligation to guarantee the purity and good quality of the water to be processed.
4.117.
The Tribunal refers as to the first point to the letter of sodisca cited above (Annexe 17-MID). This letter states that the invoice relating to the mould was cancelled at the request of PLASCO and that the moulds could not form part of the supply agreement because the shape of the models and the type of bottles were not known. The cost of moulds varies a great deal (Part C. paragraphs (f) and (g)).
4.118.
With regard to the problem of the purity of the water, a document dated 4 July 1975 from Head of the Department of Bacteriology of the "Laboratoire National de Sante Publique" of Brazzaville shows that three samples and analyses made on 16 June 1975 (Annexe 12 of the Observations) proved that the water was bacteriologically fit for consumption.
4.119.
It follows that the Tribunal is no more able to uphold this head of the Government’s counterclaim, than the others.

(6) Intangible loss ("prejudice moral")

4.120.

The Government argues as to this point that:

It is in possession of an unfinished plant for the production of table water, which does not conform to the contractual specifications and does not comply with sanitary standards which are essential since the product is destined for human consumption.

— it has been abandoned by the industrial partner with which, in good faith, it had entered into a common industrial venture and whose presence was essential to ensure the technical management of the plant.

— it finds itself, furthermore, unjustly brought before an international court, which, for a State, is particularly serious (Memorial in Defence, pp. 37-38).

4.121.
For the reasons set out above the Tribunal rejects all these arguments. It has not been shown that the construction of the plant of which the Government took possession was unfinished, or that the water was not fit for consumption. Furthermore, it was emphasized above that it was as a result of the Government's own conduct that the representative of its Italian partner left the Congo and that B&B considered itself obliged to commence arbitral proceedings.
4.122.
The Tribunal considers therefore that there is no question of the Government having suffered "prejudice moral" and that for this reason its counterclaim has no basis in law at all.
4.123.
In conclusion, the Tribunal dismisses the counterclaim in its entirety, in all its conclusions, without it being necessary to examine the other arguments put forward by the Government, either because they are irrelevant or because they relate to inadmissible facts.

Cost of the Proceedings and of the Additional Claim for Damages

4.124.

Article 12(3) of the Agreement provides that:

the costs of the arbitration shall be shared equally between the parties.

Article 25(2) of the Articles of Association contains an identical provision (Annexe 13-M).

4.125.
In the opinion of the Tribunal, these two Articles imply that each party must bear its own costs without being indemnified. The Tribunal, accordingly, decides that each party must bear its own costs.
4.126.
On the other hand, in accordance with the above mentioned provisions of the arbitral clauses, each party must pay half of the costs of the Centre and the Tribunal as soon as they have been settled and notified to the parties.
4.127.
Moreover, considering that the Government did not. before the sessions in Paris of 13 November 1979 take a significant part in the proceedings and that this attitude led to serious delays as well as to additional costs for B&B. the latter asked the Tribunal to take this into account in the preparation of its final award.
4.128.
The Tribunal observes that the Government did not formally object to this request.
4.129.
The Tribunal therefore considers it equitable that this request be accepted and decides accordingly that the Government must pay B&B in addition to the sums already awarded, the sum of US $15,000 with interest at the rate of 6% per annum from the date of the award until payment.

FOR THESE REASONS

The Tribunal decides that:

(a) As to the claim of B&B

(i) The heads of B&B’s claim arc well founded in principle;

(ii) The Government must pay damages to B&B:

(A) As compensation for non-receipt of profits as holder of 40% of the shares of PLASCO : CFA 3,300,000 and interest to run from 16 April 1978 at the annual rate of 10%.

(B) As damages for the value of 40% of the shares of PLASCO : CFA 110,098,936 and interest to run from 16 April 1978 at the annual rate of 10%.

(C) For the loans made for the benefit of PLASCO : CFA 142,780,253 and interest to run from 1 January 1975 for the loans made in the years 1973 and 1974 (CFA 64,002,539). and to run from 1 January 1976 for the loans made in 1975 (CFA 78,777,714) at the annual rate of 10%.

(D) As a repayment of the sums paid to sodisca for the debts of PLASCO : CFA 61,000,000 and interest to run from 1 August 1978 at the annual rate of 10%.

(E) As compensation following the dissolution of EDICO : CFA 1,000,000 and interest to run from 9 November 1975 at the annual rate of 10%.

(F) As compensation for intangible loss : CFA 5,000,000 and interest to run from 3 February 1976 at the annual rate of 10% and

(iii) in addition the Government is ordered to pay B&B as supplementary damages, the sum of US $15,000. plus interest on this sum at the annual rate of 6% to run from the date of the present award.

(b) As to the counterclaim

All the conclusions contained in the Government's counterclaim are rejected.

(c) As to the arbitration costs and the parties' costs

(i) The Government and B&B must each bear half the arbitration costs and to the extent that one of the parties has paid to the Centre sums exceeding half of the arbitration costs, as settled, then as mentioned above, the other party must pay to it the difference, plus interest on this sum at the annual rate of 6% to run from the date of the present award and

(ii) each party must bear its own costs. The costs mentioned in paragraph (i) above will not be finally settled until after their calculation by the Financial Division of the World Bank. The Tribunal orders the Secretary-General to provide the parties with a bill of their costs, as soon as they have been settled, certified by him as being in conformity with the provisions of the Administrative and Financial Rules.

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