"The dispute which must be resolved by the Arbitral Tribunal arises from Agreement 020A/03 concluded between the parties on 19 May 2003, the objective of which, under its clause 3.1, includes the study, design, construction, installation, testing, certification, completion, development, sale, provision of services, according to the requirements of each case, and delivery of the C4I Olympic Security systems as a "turn-key" solution, compatible and interoperable between each other, as an integral unit, as specified in Annex A of this agreement, which constitute a security and operations support information system under the name "Command Control Communications Coordination & Integration - C4I" concerning initially the security of Olympic Games 2004 and subsequently for permanent use (hereinafter "C4I System"). The C4I System, according to the Agreement, consists of three systems: a) the Command & Decision Support System (CDSS) which comprises 7 sub-systems in total, b) the Communication and Information System (CIS) which comprises 13 sub-systems, and c) the Command Support Systems (CSS) which comprises 10 sub-systems.
The original agreement was further modified under the following amendments:
(i) The 1st Amendment dated 23 December 2003
(ii) The 2nd Amendment dated 7 April 2004
(iii) The 3rd Amendment dated 25 June 2004
(iv) The 4th Amendment dated 05 August 2004
(v) The 5th Amendment dated 29 March 2007
(vi) The 6th Amendment dated 11 September 2007
(vii) The 7th Amendment dated 27 October 2008
The original agreement and the amendments shall be referred to hereinafter for the purposes of this arbitration as "the Agreement"."
(b) The allegations of the Claimant are summarized in para 7c of the ToR as follows:
"Based on the Claimant’s request for arbitration dated 16 June 2009 (hereinafter "Request for Arbitration"), the Claimant contends that the Respondent acted in bad faith and in a non-contractual manner and has repeatedly breached the Agreement. More specifically, the Claimant considers that, in spite of the fact that the C4I System was completed and delivered to the Respondent and that it is already used on a daily basis and now constitutes an integral component of the public safety infrastructure of the Greek State, the Respondent refuses to repay the Claimant and to release the letters of guarantee submitted by the Claimant. The Claimant contends that the Respondent failed to fulfil its obligations for no good reason and, in particular, it breached its duty to act in good faith and observe its contractual obligations."
(c) The requests for relief of the Claimant are summarized in para 7d of the ToR.
(d) The allegations of the Respondent are summarized in para 7e of the ToR as follows:
"The Respondent, in its answer to the Request for Arbitration dated 25 September 2009 (hereinafter "Answer") contends that the Claimant was not in a position to supply the Respondent with a complex and interoperable security system for the 2004 Athens Olympic Games, as a turn-key solution, as required under the circumstances and in accordance with the specifications set by the Respondent. The Respondent contends that the Claimant failed to fulfil its obligations and, in particular, failed to supply, apart from the other systems and subsystems, the CDSS System. Consequently, it exposed the country to the risk of suffering international humiliation due to the potential transfer of the Games to another country. In view of the Olympic Games, it became necessary to provisionally accept, by usage and not in accordance with the terms of the agreement, some of the C4I Systems and Subsystems, without carrying out the agreed testing.
The right to carry out all the agreed contractual procedures of delivery and acceptance of the System was reserved.
The Respondent argues that the Claimant acted in bad faith, abusively and that the Request for Arbitration was brought prematurely. The Claimant was obliged to deliver the C4I System as an integral unit, as a "turn-key" solution and ready for operational use. The performance of the Claimant's obligations under a strict time-limit was a material condition of the Agreement. The Claimant was in delay and seemed incapable of carrying out the material requirements of the Agreement, primarily in respect of the inter-operability of the system, but also in respect of the development of the applications of the CDSS system.
Following the 5th amendment of the Agreement, while the Respondent fulfilled its obligations, the Claimant failed to fulfil its side of the obligations and delayed in delivering some of the remaining subsystems, such as subsystem 16 AVL, while it failed to deploy a broadband network in subsystem 17, as it had promised. Additionally, the claimant failed to pay the difference in the telecommunication charges which were incurred from the change of the architecture of the network in subsystem 17, while it was obliged to do so under the agreement. Furthermore, it failed to fulfil its contractual obligation to construct a second switching centre of subsystem 20 - TETRA - in GADA, before the completion of the general C4I system test (October 2008). Moreover, the Claimant delayed in fulfilling its contractual (under the 5th amendment) obligation to deliver the overall implementation design of subsystems 1-7. Additionally, the Respondent alleges that SIEMENS HELLAS S.A. replaced the Claimant, following the 5th amendment of the agreement."
(e) The requests for relief of the Respondent are summarized in para 7f of the ToR.
"14. Preliminary Issues
A separate hearing shall be conducted and a separate decision shall be rendered for preliminary issues. For the purposes of this paragraph No. 14 (i.e. for the separate hearing and decision), preliminary issues are considered to be those which are connected to:
a) the following requests by the Claimant:
(1) Inadmissibility of the Respondent’s Supplementary Answers
(2) Inadmissibility of the Plea for set-off, because on the one hand this plea hides a belated counter-claim and on the other hand the costs of the ICC Arbitration have not yet been paid
(3) Separation of the examination of the merits of the case into two (2) stages the first of which will determine whether the acceptance of the C4I System by the Respondent shall be upheld or rejected
b) the following requests by the Respondent:
(1) Request for the suspension of the proceedings due to criminal charges.
(2) Lack of standing to bring the Request.
(3) Inadmissibility of the Request for Arbitration due to lack of written preliminary steps.
(4) Invalidity of the arbitration clause and thus lack of jurisdiction of the Arbitral Tribunal.
It is however evident that the determination of these issues and this paragraph in general do not constitute nor can be construed as limiting any party from raising, according to the procedural rules which govern this arbitration and at any subsequent stage, any claims or pleas on the merits or on the arbitral proceedings, preliminary or not, while they do not limit nor can be construed as limiting the Arbitral Tribunal from holding at any stage of the proceedings that there are any other preliminary issues concerning the proceedings or the merits of the dispute, or any part of them, nor whether an issue is preliminary or not, nor whether a preliminary issue is closely connected to the merits of the dispute or whether it requires taking of evidence, so that this issue may be considered along with the merits of the dispute. "
"1. The Arbitral Tribunal
The arbitral tribunal is composed of:
(a) Grigorios I. Timagenis Lawyer LL.M, Ph.D.
(Chairman of the Arbitral Tribunal)
57 Notara Str., 8th floor
185 35 Piraeus
(b) Dionysios Kondylis Emeritus Judge of the Supreme Court (Areios Pagos) (Co-arbitrator nominated by the Claimant)
23 Amaryllidos Str.,
153 41 Aghia Paraskevi
(c) Styliani Charitaki Legal Counsel of the State
(Co-arbitrator nominated by the Respondent)
10 Karageorgi Servias Str.,
101 84 Athens
Tel.: +30-210-3375190, 3375039 (secretariat 210-3375221)
2. Documents Instituting the Proceedings
This arbitration was instituted by the Claimant’s submission of the Request for Arbitration dated 16 June 2009, to which the Respondent answered with its Answer to the Request dated 25 September 2009 following an extension granted by the Secretariat of the International Court of Arbitration of the ICC in its letter dated 27 August 2009 addressed to the parties.
3. Composition of the Arbitral Tribunal
The Arbitral Tribunal is constituted as follows:
(a) On 3 September 2009, pursuant to Article 9(2) of the ICC Rules of Arbitration, the Secretary General of the International Court of Arbitration of the ICC confirmed as coarbitrator Mr. Dionysios Kondylis, who was nominated by the Claimant in its Request for Arbitration dated 16 June 2009.
(b) On 3 September 2009, pursuant to Article 9(2) of the ICC Rules of Arbitration, the Secretary General of the International Court of Arbitration of the ICC confirmed as coarbitrator Mrs Styliani Charitaki, who was nominated by the Respondent in its document dated 6 August 2009 (Protocol No. 87774/457380).
(c) The two arbitrators who were nominated by the parties failed to nominate the Chairman of the Arbitral Tribunal, and consequently the International Court of Arbitration of the ICC appointed Mr. Grigorios I. Timagenis, holder of a PhD, Lawyer, as Chairman of the Arbitral Tribunal, following a recommendation by the Greek Committee of the ICC (Articles 8(4) and 9(3) of the Rules of Arbitration of the ICC).
4. The parties to this Arbitration and their authorised lawyers
The parties to this arbitration are as follows:
SCIENCE APPLICATIONS INTERNATIONAL CORPORATION,
1710 SAIC DRIVE, McLean, VA, 22102,
United States of America
Its authorised lawyers are as follows :
1. Messrs. Allen B. Green and William T. O’ Brien
McKenna Long & Aldridge LLP
1900 K Street NW
Washington, DC 20006-1108
United States of America
Fax: +1 202,496.7756
E-mail: email@example.com and firstname.lastname@example.org
2. Mr. Grigorios Pelekanos
Ballas, Pelekanos & Associates
10 Solonos Str., Kolonaki
106 73 Athens
Tel.: 210 3625943
Fax: 210 3647925
3. Mr. Epameinondas Lampadarios
Lampadarios and Associates
3 Stadiou Str.
105 62, Athens
Tel.: 210 3224047
Fax: 210 3226368
Greek State, as legally represented by the Minister of Finance and the Minister of Civil Protection
68 Akadimias Str.
106 78 Athens
Tel.: 210 3804971
Fax: 210 3328180
Its authorised lawyers are as follows :
1. Mr. Dimitrios Chanis (Legal Counsel of the State)
2 Paparrigopoulou Str., 105 61 Athens, Greece
Tel.: +30 210 3252977 and +30 210 3368747 / Fax: +30210 3231964
Mr. Dimitrios Katopodis
(Associate Judge of the Legal Council of the State)
Mrs Georgia Papadaki
(Associate Judge of the Legal Council of the State)
3 Akadimias Str.
106 71 Athens
Tel.: 210 3682541
Fax: 210 3682221
2. Potamitis, Vekris, Bersis, Papadiamantis Law Firm
Attn: Stathis Potamitis, Xenophon Paparrigopoulos, Vicky Psalti
9 Neophytou Vamva
106 74 Athens
Tel.: 210 3380000 Fax: 210 3380020 E-mail: email@example.com,
(The Claimant and the Respondent shall be referred to hereinafter as the "parties")."
(a) By the Claimant, the power of attorney dated 24 May 2010 (in English, together with its lawful translation in Greek with an Apostille dated 26 May 2010) which was signed by Lawrence E. Ruggiero, Vice-Chairman and Assistant General Legal Advisor, as legal representative of the Claimant, in the presence of the Notary Public of the State of Virginia in the USA, Kaye Elliot Endahl, and
(b) by the Respondent, the documents of the Chairman of the Legal Council of the State dated 6 August 2009 (protocol no. 87775/457380), 11 December 2009 (protocol no. 136444/457380) and 17 June 2010 (protocol no. 69270/457380), as well as the decision of the Minister of Finance dated 14 July 2010 (protocol no. 10107).
The Terms of Reference were signed on 21st of July 2010 and the time limit which is provided for by the Rules for the issuance of the award was extended sequentially until the 30th of April 2011 and the 31st of July 2011 by decisions of the International Court of Arbitration of the ICC at its meetings which were held on 13/1/2011 and 7/4/2011 respectively (which were notified to the Arbitral Tribunal and to the litigant parties by email on 13/1/2011 and by letters on 28/1/2011 and 19th April 2011 respectively).
(b) The majority opinion regarding the reasoning is included in the following paragraphs, while the dissenting opinion and any different opinions or supplementary reasoning are set out in Chapter F below.
"All claims or disputes arising out of or in connection with the present AGREEMENT or its interpretation, shall be finally settled under the Rules of Arbitration of the International Chamber of Commerce (ICC) and shall be decided under the Greek Law. The arbitration shall be conducted by three Greek arbitrators, appointed pursuant to the Rules of the International Chamber of Commerce, where one arbitrator shall be nominated by the PURCHASER, one arbitrator shall be nominated by the CONTRACTOR and the third Arbitrator, acting as Chairman, shall be nominated by the two nominated arbitrators or, in case of disagreement, in accordance with the aforesaid Rules"
(b) Pursuant to article 6, para. 2 of the Rules of Arbitration of the International Court of Arbitration of the International Chamber of Commerce, the Arbitral Tribunal is empowered to decide on its own jurisdiction. Notwithstanding any relevant request by the Respondent, the Arbitral Tribunal must examine and decide of its own motion regarding its jurisdiction before the examination of any other preliminary issue or of the merits of the dispute.
"1. The hearing of administrative disputes belongs to the jurisdiction of the Council of State and the ordinary administrative courts, as provided by law, subject to the powers of the Court of Audit.
2. Civil courts shall have jurisdiction on all private disputes, as well as on cases of voluntary jurisdiction, as provided by law."
(b) Decision No. 24/1993 of the Special Supreme Court resolved this issue, stating that according to the true meaning of article 94 para. 1 of the Constitution, the legislator may permit administrative disputes to be referred to arbitration upon an agreement of the parties and that the related law is not forbidden by the constitution.
(c) Given the above, it is accepted that administrative disputes may also be referred to arbitration, if the law permits. However, there is no general provision permitting administrative disputes to be referred to arbitration, such as articles 867 CPC and 49 of the Introductory Law to the Civil Procedure Code, and therefore there must be a case by case examination of whether there is any law permitting the specific category of administrative disputes to be referred to arbitration given that, without a legislative basis, the arbitration clause shall be invalid as it directly contradicts the aforesaid provision of the Constitution.
The current section specifically refers to the Arbitral Tribunal’s own-initiative examination regarding its jurisdiction, while in the context of this examination, answers regarding the related claims of the parties are also provided.
"The same text of the original law, as drafted by UNCITRAL, refers to the following footnote in regard to the term "commercial", which widens its interpretation to be considered as "financial".
"The term "commercial" should be given a wide interpretation so as to cover matters arising from all relationships of a commercial nature, whether contractual or not. Relationships of a commercial nature include, but are not limited to, the following transactions:
Any trade transaction for the supply or exchange of goods or services, distribution agreement, commercial representation or agency, factoring, leasing, construction of works, licensing, investment, financing, banking, operating agreement or concession, joint venture and other forms of industrial or business cooperation, carriage of goods or passengers by air, sea, rail or road."
For legislative technique reasons this footnote was not included in the text of the proposed law, as predetermined by various countries when adopting the model law as national law. However, it is still used for the interpretation of the term "commercial".
(b) In addition, even based on a systemic approach, it must be noted that paragraph 7 (in an article entitled "dispute resolution") is at the end of the article with the obvious intention to distinguish (and differentiate as to the legal consequences, i.e. to apply different procedures for the resolution of the disputes) between supplies of major importance, and therefore the legislator intended an a contrario interpretation of paragraph 7 in relation to the previous paragraphs. It does not appear to provide convincing arguments to support that this different procedure for the resolution of the disputes (which paragraph 7 certainly intends), and which shall be agreed upon in the agreement, must be subject to some restrictions (as to the type of dispute, i.e. in regard to the delivery, and as to the type of resolution, i.e. an administrative one) based on the previous paragraphs.
(c) The fact that an eighth paragraph was subsequently added (under article 31 of presidential decree 189/1997), which refers once more to the Dispute Resolution Committees (expenditures), cannot support that paragraph 7 refers to similar dispute resolution proceedings, firstly because it is still certain that paragraph 7 purposefully intended to establish a different method of dispute resolution for supplies of major importance, and furthermore in a manner which is agreed upon in the agreement, and secondly the systemic interpretation is important for some laws with dogmatic cohesion, while the addition of a paragraph subsequent to paragraph 7, which paragraph should potentially have been present from the outset, may very well be deemed as a legislative error.
(d) Furthermore, the historical interpretation (i.e. what the previous presidential decree 785/1978 provided for) may assist in the interpretation, given that presidential decree 284/1989 indeed intended to amend and supplement (and rephrase) presidential decree 785/1978. Indeed, presidential decree 785/1978, in its article 69, paragraph 6 (the last sentence of which was similar to paragraph 7 of article 69 of presidential decree 284/1989) provided that: "More specifically, in case of supplies of major importance from abroad, the abovementioned Committee shall be constituted as provided by the relevant agreement, which may also examine any dispute regarding the interpretation and implementation of the agreement".
(e) This provision defines (teleological interpretation) its purpose (which once again proves that the legislator prefers to follow arbitration proceedings for international disputes of the public sector) and the purpose of the amended provision (i.e. of paragraph 7 of article 69 of presidential decree 284/1989) as well as the purpose of the amendments. It is indeed clear that the purpose of the last sentence of paragraph 6 of presidential decree 785/78 was to ensure that, for the resolution of disputes regarding the supplies "of major importance" "from abroad', the committee would not be constituted in accordance with the provisions of the presidential decree for other supplies, but "as provided by the relevant agreement" (and therefore, for instance, in accordance with the agreement, it could be constituted as provided by the ICC Rules of Arbitration), and that it may "examine any dispute regarding the interpretation and implementation of the agreement" (i.e. to have the full powers of an arbitration such as this arbitration provided by article 28 of the agreement).
(f) The reason for this regulation is evident and is referred to in paragraphs Cl3(6) and (7) above, i.e. for supplies of major importance many firms from abroad were unwilling to accept the resolution of disputes by the committees of the presidential decree or by the courts (which was ultimately detrimental to the interests of the Greek State, since the number of its candidates-suppliers was limited, and thus it would not have the opportunity to achieve better supplies at better terms) and for this reason presidential decree 785/78 allowed the parties to agree upon the constitution of committees which could resolve all disputes arising from the agreement. The fact that this provision of presidential decree 785/1978 (i.e. an arbitration by committees with agreed composition and with subject-matter the resolution of all disputes arising from the interpretation and implementation of the agreement) is included in the last sentence of paragraph 6 of article 69 (which, as to the remaining, refers to the administrative resolution of disputes regarding the delivery), proves that the position of a provision (restrictive interpretation) is less relevant that its wording (grammatical interpretation) in combination with its purpose (teleological interpretation).
(g) By amending presidential decree 284/1989, paragraph 7 of article 69, the legislator in fact widened (clearly in favour of the Greek State) the previous regulation so that firstly, this regulation may apply to all supplies of major importance (i.e. even if these supplies are made by firms abroad) and secondly, the agreement of the parties may regulate not only the composition of the committees but also in general the method for the resolution of the disputes (i.e. either by the ordinary courts or by arbitration proceedings) and in case of arbitration, the type of the arbitral tribunal and the entire proceedings without imposing by (new) paragraph 7 any restrictions as to the subjectmatter of the arbitration.
(h) Therefore, interpreting presidential decree 284/1989 (article 69, para. 7) a contrario to presidential decree 785/1978 (article 69 para. 6) and concluding that the legislator, with the amendment of presidential decree 284/1989 and despite the clear wording of the provision, intended not to widen the previous provision but to restrict it, so that supplies of major importance may not be submitted to arbitration for every dispute with agreed upon bodies for the resolution of the disputes, does not pursue any objective, and such a contrario interpretation without any connection to any teleological interpretation, must not be accepted, since it leads to erroneous conclusions.
(i) Given the above, it is obvious that a restriction of the clear wording and spirit of paragraph 7 of article 69 of presidential decree 284/1989 is not justified.
(b) It must also be noted that presidential decree 284/1989 was issued by the authority of paragraph 5 of article 50 of presidential decree 721/1970. More specifically, paragraph 5 provides inter alia as follows:
"5. By Royal Decrees, issued following proposals by the Ministers of National Defence and Economics, the following is provided regarding supplies, contracts and works, carried out nationally or abroad by the Directorates of the Armed Forces:"
"k. The procedure for the tenders, the award of the contracts, the submission and hearing of objections."
"n. The method of checking and delivering, rejecting supplies, arbitration, as well as the constitution, the purpose and operation of the central or peripheral committees for the acceptance, checking and arbitration."
"u. The specific terms and the proceedings for some supplies from abroad, by exception from the provisions regarding the supplies of the Armed Forces. "
"v. The remuneration paid to the military officers in general, civil officers and persons employed by other services which participate in committees for conducting tender proceedings, expert opinions, delivery acceptance procedures and arbitration proceedings."
"x. Any other relevant provision and details."
(c) Based on these provisions, an authorisation is granted to define by royal, and now presidential, decrees the "method...of arbitration" (case n) and reference is made to "persons employed by other services" which may participate "in committees for conducting... arbitration proceedings" (case v).
(d) In this case, once again, the restrictive interpretation of the term "arbitration" cannot be supported under the argument that the original, and furthermore absentminded, legislator of presidential decree 721/1970 (and specifically the enabling legislative provision of paragraph 5 of article 50) did not confer a wider authorisation for arbitration, but it exclusively referred (and thus restricted its authorisation) to the restricted and advisory arbitration of article 16 of law 654/1937 (A 162), which was a text adopted 33 years earlier and in an era when the binding arbitration agreement was not widely accepted in private disputes, i.e. only in commercial disputes (see Civil Procedure i.e. Law 2/14 Apr. 1834 article 106-110)6, and furthermore since the same enabling legislative provision (i.e. paragraph 5 of article 50 of law 721/1970) was used as a legislative basis for the arbitration of the last sentence of paragraph 6 of article 69 of presidential decree 758/1978, which concerned supplies from abroad and established a binding arbitration for all disputes arising from the agreement, with a composition of arbitration committees based on the agreement between the parties which, as referred to above, widened the meaning of presidential decree 284/1989.
(e) Furthermore, and irrespective of what is referred to above, case u of paragraph 5 of article 50 of law 721/1970 enables the regulation of specific terms and proceedings "for some supplies from abroad, by exception from the provisions regarding the supplies of the Armed Forces" (and this is one more provision which grants more discretion for the conclusion of international agreements, including arbitration in contrast with other provisions) whereas case x stipulates that the decrees which shall be issued may provide for "any other relevant provision" including the agreement for arbitration as a relevant provision.
(f) Given the above, the legislative authority for paragraph 7 of article 69 of presidential decree 284/1989 (but also the legislative basis for arbitration clauses) is set out in not only in cases n and v of paragraph 5 of article 50 of law 721/1970 but also in cases u and x of the same paragraph, which is further reinforced by the fact that the contested agreement was concluded on the basis of the exceptional provisions of articles 71, 73 and 76 of presidential decree 284/1989, which permit "the delivery of supplies by exception from ordinary proceedings" (article 71 para. 1) and under "direct contracting of a supply without call for tender" (article 73 para. 1) and without any restriction as to the content of the relevant agreements, thus permitting the arbitration agreement.
(g) Therefore, paragraph 7 of article 69 of presidential decree 284/1989 constitutes the legislative basis for the conclusion of a valid agreement for the submission to arbitration of disputes arising from agreements of major importance which were concluded pursuant to presidential decree 284/1989, and accordingly of the arbitration clause which is included in article 28 of the contested agreement. Furthermore, articles 71 para. 1 and 73 para. 1 constitute the legislative basis for permitting such arbitration agreement; these articles in some cases (such as in this case) permit, in the interest of the Greek State, the direct contracting of a supply by exception from the ordinary proceedings and without any restrictions as to the content of the relevant agreements. Consequently, the arbitration clause of article 28 of the contested agreement is valid.
(h) In addition, since the Respondent itself included the arbitration agreement both in the original call for tender and in the decision for the awarding of the supply agreement, and then finally in the contested agreement, it is clear that the Respondent accepted that article 69 para. 7 and the provisions of presidential decree 284/1989 in general (under which the agreement was concluded) permitted the conclusion of a valid arbitration agreement, and therefore, in the context of good administration, it is unacceptable to attempt a posteriori a different interpretation and to defeat the reasonable expectations of its contracting parties, which relied upon the validity of the arbitration clause of article 28 of the contested agreement which, as referred to above, was a subject-matter of their negotiations.
(b) In relation to this issue, article 5 of the ICC Rules of Arbitration, which specifies that the Respondent must file its Answer within 30 days, requires that the Respondent submit its answer to the relief sought by the Request (and to submit its claims in relation to the real facts); the Respondent, however, had already submitted such claims with its answer dated 25 September 2009 (following an extension of the time for filing its Answer granted by the Secretariat of the International Court of Arbitration of the ICC).
(c) However, notwithstanding that article 5 of the Rules seeks an answer to the request (and the Respondent with its answer sought the dismissal), it does not require the Respondent to submit all its claims, arguments, rebuttals or requests with its answer.
(d) Furthermore, article 18(1) of the Rules, presupposes that the parties shall have submitted further arguments before the drafting of the Terms of Reference, since it provides that the Arbitral Tribunal shall draft the Terms of Reference in consideration of the most recent submissions of the parties.
(e) Furthermore, article 19 of the Rules stipulates that after the Terms of Reference have been signed, no party shall make new claims or counterclaims ("produce claims or counterclaims" according to the Greek rendering of the Rules) which fall outside the limits of the Terms of Reference, unless it has been authorised to do so by the Arbitral Tribunal. From this provision, it appears that new claims or counterclaims may be submitted before the Terms of Reference have been signed, without the permission of the Arbitral Tribunal.
(f) Given the above, any answer and request submitted by the Respondent (and also by the Claimant) before the Terms of Reference were signed were filed in a timely fashion whereas any claims to the contrary by the Claimant must be dismissed.
2. Regarding the inadmissibility of the Respondent’s plea for set-off because (a) this plea hides a belated counterclaim and (b) the costs of the Arbitration have not yet been paid
(a) The Respondent, with its Supplementary Answer dated 20/4/2010, submitted an alternative request that the amount of 70,246,683.30€ must be set-off against its counterclaims amounting to 122,027,043€ and other counterclaims which were not specified, but it reserved its right to specify them with its written submissions [specifically see Terms of Reference under 7(f) 11(3)].
(b) The Claimant filed a procedural objection requesting that the Respondent’s plea for set-off be dismissed because the related plea hides a belated counterclaim and also the costs of the Arbitrations have not yet been paid.
(c) In relation to this matter, it must be noted that the Respondent, by submitting its counterclaims, does not request that the Claimant pay these amounts of the counterclaims but it requests to dismiss the claims of the Claimants because of these counterclaims.
(d) However with such request, the submission of the Respondent’s counterclaims constitutes a real plea for set-off and any claims to the contrary by the Claimant must be dismissed.
(e) Furthermore, the Arbitral Tribunal has no jurisdiction to fix the advance on costs. More specifically, according to article 30(2) of the Rules, the amount for the advance on costs is fixed by the International Court of Arbitration of the ICC. This rule also applies in the case of a plea for set-off which, according to article 30(5) of the Rules, is taken into account when determining or adjusting the advance to cover the costs of arbitration by the International Court of Arbitration of the ICC, pursuant to article 30(2) of the Rules.
(f) In any event the decision of the Arbitral Tribunal on the admissibility of the set-off objection is not linked with the decision of the International Court of Arbitration of ICC about the amount of the advance.
(g) For these reasons the Arbitral Tribunal holds that the set-off objection of the Respondent is admissible and the Arbitral Tribunal reserves its decision on the merits for a future Award.
3. Regarding the separation of the examination of the merits of the case in two stages, the first of which will determine whether the acceptance of the C4I System by the Respondent shall be upheld or rejected
(a) The Claimant, with its abovementioned documents, both during the drafting of the Terms of Reference and with its aforesaid written submission and memoranda, and also during the hearing of the case on 17 December 2010, submitted and claimed that the merits of the case must be examined in two (2) stages, the first of which will determine whether the acceptance of the C4I System by the Respondent shall be upheld or rejected. The Respondent denied such separation. By the Terms of Reference (paragraph 14) this request was agreed to be examined as a preliminary issue in a separate hearing conducted for the preliminary issues.
(b) Given this request, it must be noted that in order to facilitate the proceedings, the Arbitral Tribunal has the power to separate the examination of the merits of the case in two stages.
(c) Nevertheless, the documents which were submitted to the Arbitral Tribunal up to this date are insufficient for the Arbitral Tribunal to decide whether the requested separation shall facilitate or obstruct the investigation of the merits (as argued by both parties) and despite the fact that both parties indicatively referred to some examples, these were insufficient to provide a full picture to the Arbitral Tribunal.
(d) The main issue, which remains unclear, is the legal consequences (and the basis of the provisions) of the recognition by the Arbitral Tribunal that the Respondent accepted the delivery of the C4I, and which of the defence arguments of the Respondent (e.g. claims regarding defects or omissions, pleas for set-off, etc.) would be rejected if such acceptance were to took place, while it is clear that any development of such claims from both parties at this stage of the examination of the preliminary issues would require extensive analysis of substantial issues. Therefore, and given the above, this request is so closely connected to the merits of the case that the Arbitral Tribunal cannot examine it before becoming aware of all the claims and evidence on the merits of the case, and specifically as to the influence of the acceptance of the C4I System on the other issues of the merits. In addition, the proposed separation does not correspond to a separation between the liability and the quantum of the claim, but also affects the claims of the parties in regard to the liability.
(e) It is certain that this does not assist the parties, which shall be obliged to prepare and submit all their arguments, both main and alternate; however, for the correct administration of justice, the Arbitral Tribunal must be able to examine the entire case file in order to decide whether some issues could or might be separated and examined in a different hearing.
(f) Following this, the Claimant’s request regarding the separation of the examination of the merits is rejected.
More specifically, article 250 of the Code of Civil Procedure reads as follows:
"If a criminal action is pending and affects the determination of the (civil) dispute, the Court may on its own initiative or following the request of any party, to order the postponement of the hearing until the criminal proceedings are terminated irrevocably."
Regarding this request of the Respondent, it must be noted that the Arbitral Tribunal, as more specifically explained below, has the discretion (but not the obligation) to suspend the arbitration proceedings in view of any other pending proceedings, the results of which might affect the issues determined by this arbitration. This discretion, however, must be exercised very cautiously in order to avoid long delays which by their nature are incompatible with the arbitration proceedings, a fortriori since the Arbitral Tribunal has the power to decide in preliminary proceedings upon any issues which constitute pre-requisites for the acceptance or rejection of requests or claims submitted before the tribunal; in this case, however, although 2½ years have passed since the criminal prosecution, neither the investigating authorities nor the Respondent have ascribed any charges to any specific public officers.
Regarding any influence (and the legal consequences) of corruption (in the conclusion of the agreement or in the acceptance of the project), the evidence submitted to this day is insufficient to justify the suspension of the arbitration until the end of any criminal proceedings. For this reason, this request for suspension cannot be accepted at this stage, but it can be re-examined with the merits of the case if it is re-submitted and the corruption, its method and its consequences are specified (i.e. if they affected the agreement or the acceptance of the delivery).
The criminal charges which were pressed only in rem- a long time ago - and not against any specific person who handled this matter on behalf of the Respondent, cannot justify any suspension.
(a) The request for suspension of the arbitration proceedings due to criminal charges was submitted by the Respondent with its original answer to the request (pages 9-10), it was developed in detail in its Pleading dated 24/9/2010 submitted prior to the hearing of 17/12/2009 (specifically pages 1-38) and in its Supplementary CrossPleadings submitted after this hearing (specifically pages 23-40). It was also developed orally during the hearing of the case by the authorised lawyers of the Respondent.
According to the arguments of the Respondent, the legal basis of this request is article 250 of the Civil Procedure Code, while the factual basis is the fact that criminal charges have been pressed and an investigation has been launched for the case of Siemens, "an aspect of which is the conclusion and implementation of the agreement for the supply of the C4I Olympic Games Security Systems". The criminal charges have been pressed for the following offences against the Public State: passive and active corruption, money laundering, fraud, constitution of criminal organisation for committing these offences at a felony level (see pages 12-13 of pleadings dated 24/9/2009). The Respondent also states that this agreement is the subject matter of investigation by the Investigative Committee of the Greek Parliament.
In order to establish the connection of Siemens with the Claimant, the Respondent notes that the first company was the main subcontractor (at a percentage over 80%) of the contested agreement for the supply of the C4I system, that following the 5th amendment of the agreement it undertook to execute almost the entire project, and that it undertook, by substituting the Claimant, the crucial sector of the interoperable system.
(b) The Claimant argues that article 250 of the Civil Procedure Code does not apply in these arbitration proceedings, which must be conducted according to the ICC Arbitration Rules, law 2735/1999 and in the alternative articles 682-703 of the Civil Procedure Code, as defined by paragraph 11 of the Terms of Reference. These rules do not contain - according to the Claimant - any provision similar to article 250 of the Civil Procedure Code. Therefore, according to the Claimant, this request is unlawful. In addition, the Claimant argues, clearly in the alternative, that in any case the requirements of article 250 of the Civil Procedure Code do not apply and that "the decision for the suspension is at the discretion of the Arbitral Tribunal". Furthermore, relying upon article 24(1) of the ICC Rules of Arbitration, as well as on the delay in the criminal proceedings in Greece, the Claimant argues that any acceptance of suspension "would result in the final abolishment of the arbitration proceedings" and thus the principle of fair trial would be infringed upon.
(c) Article 15(1) of the ICC Rules of Arbitration stipulates as follows (in free translation from English): "The proceedings before the Arbitral Tribunal shall be governed by these Rules and, where these Rules are silent, by any rules which the parties or, failing them, the Arbitral Tribunal may settle on, whether or not reference is thereby made to the rules of procedure of a national law to be applied to the arbitration."
Based on this provision, paragraph 11 of the Terms of Reference provided that the Arbitral Tribunal shall apply the ICC Rules of Arbitration, and that "if the proceedings are not governed by other rules, in the alternative, the provisions of articles 683-703 of the Greek Civil Procedure Rules shall apply, subject to the exceptions which are mentioned herein below in paragraph 13". Given that this arbitration (as upheld above) is an international commercial arbitration and falls within Law 2735/1999, article 19 of this law shall also apply (and furthermore by priority against the interim measures provisions of the articles of the Civil Procedure Rules, as the last alternative resort), which stipulates that failing any agreement between the parties upon some procedural issues, the Arbitral Tribunal may conduct the arbitration in such manner as it considers appropriate. Finally, number 9 of paragraph 13 of the Terms of Reference states, inter alia, that the Arbitral Tribunal shall be able to enact any other provisions or exceptions for all the procedural issues while it shall inform the parties in a timely fashion.
(d) The provisions referred to in the previous paragraph, which govern the proceedings of this arbitration, do not expressly refer to article 250 of the Civil Procedure Code and do not contain any provision similar to this article, while article 250 of the Civil Procedure Code does not apply in the interim measures proceedings and it is incompatible with their urgent nature. However, when these proceedings have been agreed upon in arbitration for the hearing of the main case, as in this case, article 250 of the Civil Procedure Code is compatible, and based on article 19 of Law 2735/1999, the Arbitral Tribunal may, at its discretion, apply this article directly or by analogy. Furthermore, the Respondent submitted its request for suspension of the arbitration proceedings, based on article 250 of the Civil Procedure Code with its original Answer to the Request for Arbitration, i.e. before the determination of the abovementioned rules, while it reinstated this during the hearing for drafting the Terms of Reference and it was referred to in the latter as its "first preliminary" request. The Terms of Reference were drafted upon a unanimous agreement of the parties and the Arbitral Tribunal, and provide for a separate hearing and decision upon the preliminary issues. Therefore, it would be contradictory to accept that the procedural rules which are provided in the Terms of Reference a priori exclude upholding as well-founded in law the abovementioned request, and that at the same time they impose its examination as a priority. Thus, according to the correct interpretation approach of the aforesaid definitions of the Terms of Reference, the application of article 250 of the Civil Procedure Code, as well as the investigation of the merits of the Respondent’s relevant request based on this article, are also included in the "provisions or exceptions", which may be enacted by the Arbitral Tribunal during the arbitration, since the related exception is taken for granted by the same Terms of Reference of which the parties were aware, and which they had unanimously accepted. Given the above, the Arbitral Tribunal upheld that the application of article 250 of the Civil Procedure Code must not be excluded in this arbitration, but on the contrary it must be accepted, under the main condition that its requirements are met, that the suspension is at the discretion of the Arbitral Tribunal and that the suspension shall not result in a de facto abolishment or in a long delay of the arbitration proceedings. Consequently, the Respondent’s request is acceptable and prima facie (under the meaning of the existence of an establishing provision) well-founded in law and as to the remaining, it must be decided whether it is founded in law (i.e. whether the Respondent relies on facts which fulfil the remaining requirements of article 250 of the Civil Procedure Code) and in fact (i.e. whether the facts upon which the Respondent relies are real).
(e) In order to establish, legally and substantially, the abovementioned request, the Respondent relies on and submits mainly the following evidence, the material content of which is in summary as follows: a) The -05, ω-7/50 and ω/2008/47 orders of the Public Prosecutor of the Athens Court of First Instance, initiating ordinary investigations. Based on these orders, criminal prosecution was pressed regarding the offences referred to above (under no. 1) in relation to Siemens. On 26/6/2009, an arrest warrant was issued against Mich. Christoforakos, employee and managing director of Siemens in Greece, for fraud against the Greek Public State, concerning over 150,000 Euros, in regard to the supply of the C4I Olympic Games Security System to the Public State. According to the warrant, the false representations that constituted the offence of the fraud were mainly that the Claimant and Siemens as the subcontractor represented that they had the technical infrastructure, know-how, etc. to implement and deliver the project within its contractual time limit, while in fact they were not qualified to do so. The time of committing the fraud appears to be the period between the year 2002 and 19/5/2003. b) On 14/9/2009, a new arrest warrant was issued against Christoforakos for repeated fraud against the Public State. It refers to the period between 23/8/2004 and 5/12/2007, it concerns the same false representations and the total amount of damages is in the amount of 79,279,261.35 Euros, i.e. the released amount for the supply during this period, c) Order imposing an imprisonment penalty of one year in total by the Magistrates’ Court of Munich on M. Christoforakos since, as director of Siemens in Greece, he proceeded to pay bribes to the two largest political parties, and specifically to the treasurers of these parties at the time. More specifically, he was sentenced on the basis that he paid an amount in the order of tens of millions Euros to the aforesaid treasurers of the two parties in order to accelerate the acceptance of the partial works for the supply of the C4I and to persuade the competent officials to decide in favour of Siemens, possibly in breach of their duties, d) Decision by the Court of First Instance of Munich dated 28/7/2008, based on which the officer of Siemens, Rheinhard Siekaczec, was sentenced to a two-year imprisonment for paying bribes to various countries, including Greece, in relation to the C4I supply. This decision notes that for these bribes, Siemens (in Germany) was ordered to pay a fine of 201,000,000 Euros), e) The memorandum dated 6/6/2008 by the American law firm Debevoise and Plimpton LLP addressed to the Public Prosecutor of the Athens Court of First Instance which states that M. Christoforakos told Siekaczek "since the delivery of the project was well under way" (Siekaczec, that is the C4I project), he would need 10-15 million Euros "in order to pay commissions to four ministries - Internal Affairs, National Defence, Culture, Communications - based on the promises he made at the time of the awarding of the contract". This document also states that: "Siekaczec added that he had never discussed about the payment of commissions with anyone in SAIC and that he had never got the impression that SAIC had any involvement in these payments" (page 24, case 3-6). Furthermore, this document also refers to M. Christoforakos’ attempts to obtain money for bribes regarding the C4I project through the employees of Siemens Kutschenreuther and Meyer, f) The testimony of Siekaczec dated 17/11/2006 before the Magistrates’ Court of Munich, in which he stated that Christoforakos told him that the receivers of the monies, which were transferred by the Placid Blue Corporation, through its account in ABN AmroBank in Munich (which account is estimated to amount annually from 1 to 4 million Euros), "were the political parties in Greece". In the same testimony, Siekaczek stated that M. Christoforakos told him that in order for the C4I programme to be awarded to Siemens and to the joint venture, he (i.e. Christoforakos) had to pay "the Ministry of National Defence, the Ministry of Internal Affairs, the Ministry of Sports and one more Ministry", and that the amount was approximately 10 million Euros, g) The statement of defence dated 6/2/2007 of Siekaczek to the Bavarian State Criminal Police, in which he refers to the monies paid for bribes to various countries, including 10 million Euros for Greece, h) The report dated 8/10/2008 for the examination of Siekaczek as a witness by the 4th special investigator, made in Munich. The most material facts testified by the witness (and which are similar to the previous ones) refer to the monies which were sent through Munich "for the improvement of the relationships with the political parties, i.e. with PASOK and Nea Dimokratia", and that he paid Christoforakos and Mavridis approximately 10-15 million Euros per year. He also states that he does not know whether Greek officials or ministers or politicians received payments as bribes from Siemens or SAIC and that: "As far as I know, SAIC did not have any involvement in eventual promises for payment of monies (bribes)".
(f) As stated by the Respondent, and also as noted from the abovementioned documents cited by the Respondent, criminal charges were pressed for the first time regarding the aforesaid offences in July 2008 (on 2/7/2008). The prosecution was launched in rem, whereas the relevant charges have not been personalised, by the hearing of the case on 17/12/2010 or by the closing of the proceedings (21/1/2011), against specific public officers or employees of the Greek State. Only employees of Siemens have been prosecuted. However, a pre-requisite for bribery is a bribed public employee or officer. Such a specific person is not referred to by the Respondent and is not proven by the submitted evidence. Such persons and the manner by which the contested agreement was affected or the Claimant’s claims are affected have not been specified by the Respondent or by the conducted investigation, even though a substantial period of time has elapsed since the beginning of the prosecution.
(g) Given the above, the Arbitral Tribunal cannot justify acceptance of the request for suspension of the arbitration until the closing of the criminal proceedings (which, as it can be deduced from the evidence, is at the outset), specifically in the context of the arbitration which requires speedy proceedings, and furthermore since there is no evidence that the party in these proceedings, i.e. SAIC, had any participation in the alleged payments of bribes on behalf of Siemens. Therefore, the relevant request of the Respondent must be dismissed. However if, during the process of the case, new evidence arises which may justify any suspension for a specific, reasonable period of time, a new relevant request may be re-submitted.
(b) Regarding the legal representation of the Claimant in this arbitration, the latter submitted the power of attorney referred to above under B 3(a), which the Arbitral Tribunal, for the present time and under the condition that it shall not further be contested on specific and convincing reasons, considers it sufficient for the lawful representation of the Claimant in this arbitration while, regarding the locus standi of the Claimant, it must be noted that as deduced from the 5th amendment dated 29/3/2007 of the contested agreement, this amendment (as was the original agreement and the previous amendments) was concluded and signed between on the one hand the Greek State (Respondent) and on the other hand the Science Applications International Corporation - SAIC (Claimant) and irrespective of the size of the works which "SIEMENS HELLAS S.A." undertook to implement, this company was acting and continues to act as a subcontractor of the Claimant, while the Respondent and the Claimant remained the parties of the contested agreement. Therefore, the Claimant has standing to bring this arbitration and it also has legal interest to raise the claims it submits, and any arguments to the contrary of the Respondent must be dismissed.
(b) Article 28, paragraph 2 of the contested agreement provides that:
"28.2. The contracting parties undertake to act in good faith and through negotiations, to settle within a short period of time any dispute or claim arising out of the AGREEMENT, or in connection with it or with any of its clauses. In cases where the parties fail to settle their dispute under the abovementioned means, following written notice communicated between parties, which shall confirm the dispute, each party may have recourse to arbitration, as set out herein below. In light of the foregoing, each party shall communicate to the other a written report of its position on the matter which remains unsettled."
(c) The Claimant (specifically in its Pleadings dated 15 October 2010, page 42 et seq.) relies on article 8 of the contested agreement, as amended by the 5 th Amendment of the agreement, and specifically by its paragraph 8, and argues that based on this amendment (which as noted is more recent than article 28.2), a specific step for the acceptance of the system and the recourse to arbitration is provided, while the Claimant, allegedly, according to its correspondence with the Respondent, observed the preliminary step of article 8.8 on the one hand and on the other hand it simultaneously observed the steps of article 28.2. More specifically, article 8.8 of the contested agreement, as amended by the 5 th Amendment of the contested agreement, states verbatim as follows:
"8.8. Following the completion of all test procedures for the C4I SYSTEM, either with success or with deficiencies / variations which do not render it inappropriate for the intended use, THE PURCHASER shall issue and sign a Protocol of Qualitative and Quantitative Acceptance within 15 days from the completion, and therefore the C4I SYSTEM shall be deemed as FINALLY ACCEPTED by the PURCHASER at that specific day of the signing of the aforesaid Protocol. In the case where, according to a justified opinion of the PURCHASER, there are deficiencies / variations according to what is referred to above, these shall be recorded in the Protocol of Qualitative and Quantitative Acceptance. The parties are obliged, within 50 days from the date of issuance of the Protocol of Qualitative and Quantitative Acceptance, to proceed to solve any dispute on the value of the deficiencies / variations of the C4I SYSTEM and its SUBSYSTEMS. Failing to conclude such agreement within the aforesaid time limit, any of the Parties may have recourse to the arbitration provided in article 28 in order to finally resolve the Dispute."
(d) In this regard, it must be noted that the observance of the steps provided in article 28.2 of the Agreement does not affect in any way the validity of the arbitration clause (which is included in article 28 para. 3 of the contested agreement) and therefore there is no issue regarding the jurisdiction of the Arbitral Tribunal. On the contrary, the Arbitral Tribunal is competent to decide whether this step was observed or not, since any contest of this issue is also a dispute arising from the agreement or its interpretation and falls within the arbitration agreement of article 28.3 of the agreement. Failing to observe the step of article 28.2 could simply act as an exception which would postpone the arbitration proceedings.
(e) First and foremost, however, the purpose of article 28.2 is to empower the parties with an amicable resolution of their dispute through negotiations. Furthermore, the written notice communicated between parties which is provided in this article aims to make the other party aware that the notifying party considers that the negotiation stage has ended and thus the other party, if it so wishes, may commence the arbitration proceedings (without waiting for any response from the notifying party or without expecting any further negotiations).
(f) However, when a party refers to arbitration, at that point the document for the initiation of the arbitration proceedings in fact incorporates the confirmation of the dispute, the notice that further negotiations are insignificant and the development of its case, whereas the development of the case of the other party is set out in its answer.
(g) It must be noted that the relevant written notice of article 28.2 does not serve any other purpose than that which is referred to in para, (e) above and therefore it cannot be interpreted as preventing the initiation of the arbitration.
(h) In addition, contrary to the claims of the Respondent, the provision of article 28.2 of the contested agreement for the resolution of any dispute through negotiations, within a short period of time and upon written notice and written report of the position of the parties, does not serve, nor does it appear that it serves the detailed specification of the subject-matter of the dispute before the commencement of the arbitration. This view is reinforced by the fact that according to what was accepted above and pursuant to the ICC Rules of Arbitration (but also pursuant to the request of the Respondent which was accepted by the Tribunal), additional requests and answers and arguments (which define the subject-matter of the arbitration) may be submitted even after the initial requests and answers, an argument which was vigorously supported by the Respondent in relation to its supplementary answers. Furthermore, article 28.2 does not aim to address the "tight" time limits provided by the ICC Rules of Arbitration regarding the answer and the other proceedings, since these time limits of the ICC Rules of Arbitration, in complicated cases, can be addressed with extensions (such as in this case, firstly for the submission of the Respondent’s answer and during the subsequent stages of the proceedings) and with the submission of supplementary requests (as it was also accepted in this case, according to what is referred to above).
(i) In any case, both from the communication of the parties before the commencement of the arbitration (as detailed in the Claimant’s Pleadings of 15 October 2010, pages 44-49 and proven by the cited documents) and from the positions of the parties as set out in the Terms of Reference and its pleadings, the existence of a dispute and the positions of the parties are fully confirmed, and therefore the suspension of the arbitration proceedings in order to communicate the written notice confirming the dispute is pointless.
(j) Therefore, it must be accepted that the Claimant’s Request for Arbitration dated 16 June 2009 is not inadmissible due to failure to complete written preliminary steps, according to article 28.2 of the contested agreement, and thus the Respondent’s claims to the contrary must be rejected.
The opinion of this arbitrator regarding this objection is as follows:
(1) According to the prevailing opinion in case law and in theory, an agreement is administrative if one of the contracting parties is the State or a public entity, and this agreement aims to satisfy a purpose of public interest according to the law, and in addition the State or the public entity, in order to satisfy the abovementioned purpose, is in a dominant position over the counter-party, either based on the regulatory regime which governs the agreement, or based on clauses provided by regulations and included in the agreement, but in exception from the common law (Supreme Special Court 19, 20, 21/2009, with references to the case law of the Supreme Special Court, Spiliotopoulos, Administrative Law, issue 13th, para. 186, 187). The administrative agreement falls within the field of the administrative law, while the element of the dominant position of the State or the public entity, which is a notional element of this law, must follow either from the regulatory regime which governs the agreement, or from its clauses, which not only deviate from the common law, but which must also be included in this agreement by law ("... which are provided by regulation and have been included in the agreement", according to the wording of the abovementioned decisions of the Supreme Special Court).
(2) Article 1 of presidential decree 284/1989, which was in force at the time of the conclusion of the contested Agreement, stipulates that: "This Presidential Decree exclusively governs the procedures regarding the supplies, contracts, works and service provision, carried out nationally or abroad under the care of the Ministry of National Defence in order to fulfil its needs of any kind". (The same, with more a detailed wording, is provided by article 1 of Law 3433/2006, article 71 of which abolished presidential decree 284/1989). Furthermore, article 5 para. 1(a) of Law 2833/2000 stipulates that: "The security of the Olympic Games is assigned to the Hellenic Police, at the Headquarters of which a specific service is constituted under the title "Olympic Games Security Directorate" to supervise the executive planning and to coordinate the bodies which are responsible for the order and security and which participate in the preparation and operation of the 2004 Olympic Games". Furthermore, article 1 para. 1 of Law 2292/1995 and article 1(a)(b) of Law 2800/2000, the former referring to the Ministry of National Defence and the latter to the Ministry of Public Order, stipulate as follows: Article 1 para. 1 of Law 2292/1995: "The National Defence includes all operations and activities developed by the State in order to protect its integrity, national independence and sovereignty, as well as the security of the citizens against any external attack or threat, and the support of the national interests". Article 1(a)(b) of Law 2800/2000: "The mission of the Ministry of Public Order, within the limits of the Constitution and the laws, is as follows: a) To safeguard and preserve the public order; b) to protect the public and state security".
"The abovementioned requirements at a security level impose the establishment of a Specific Service in the context of the Hellenic Police, as furthermore also provided in the candidacy file, which shall be competent to supervise the executive planning and to coordinate the bodies which are responsible for the order and security, and which participate in the preparation and operation of the 2004 Olympic Games. In order to execute its mission, this service shall cooperate with all the competent bodies and shall be staffed by personnel on secondment from these bodies..."
From the abovementioned extract, it is also apparent that even in the candidacy file which was submitted by our Country for the award of the organisation and execution of the Olympic Games, the Police was specified as the competent body for order and security issues. Consequently, the supplies and services regarding the security of these games concern the satisfaction of the needs of the Hellenic Police, i.e. of a service which belonged to the Ministry of Public Order, and not to the satisfaction of the needs of the Ministry of National Defence. Therefore, presidential decree 284/1989 cannot apply to these supplies, since this decree refers to supplies, etc for the satisfaction of the needs of this Ministry.
However since, as it was already explained, presidential decree 284/1989 does not apply in this case and there is no other law imposing the abovementioned terms in the Agreement, these terms derive from the intention of the parties, and are in agreement with the rules of private law. In addition, even if they deviate from the rules of private law, this does not suffice to characterise the agreement as "administrative". These terms, according to the case law of the Special Supreme Court, must also be "provided by regulatory laws", which is not the case.
a. At the time of the enactment of the enabling provision of para. 5 of article 50 of presidential decree 721/70 (251/A/23.11.70), its legislator refers to "arbitration" and to "arbitration committees" according to the meaning of the corresponding terms of article 16 of law 654/37, which was in force at that time, i.e. the administrative resolution of disputes by a technical collective body, deciding upon specific technical and real issues in regard to the acceptance of the materials under supply, and not according to the meaning, which was also known to the legislator, of the arbitration as a final resolution of any dispute arising from the execution of the supply agreement, upon a decision by the arbitral tribunal with a binding effect, thus excluding the jurisdiction of state courts (Law 633/70- 173/A/21.08.70- regarding the arbitration clause and composition of an arbitral Tribunal with reference to the arbitration rules of the International Chamber of Commerce).
b. Under the aforesaid interpretation and in the same spirit, the legislator of presidential decree 785/78 provided for the arbitration proceedings and the relevant arbitration committee of article 69. Irrespective of whether the relevant provision for the supplies of major importance may be in breach of the relevant legislative delegation, as long as it permits the arbitration committee to also examine every dispute regarding the interpretation and implementation of the agreement, this provision refers to an administrative resolution of disputes by a collective body, and not to an arbitration resolution of disputes by an arbitral tribunal, deciding finally and irrevocably, thus excluding the jurisdiction of the subject-matter state courts.
c. Under article 69 of presidential decree 284/89, the legislator, in compliance with the relevant enabling provision of law 721/70, replaces the terms "arbitration" and "arbitration committee" with the terms "dispute resolution" and "dispute resolution committee" and regulates the relevant administrative procedure in order, following a decision (protocol) of the corresponding collective technical body, to resolve the existing disputes - arising either between the State and the supplier, or between the members of the administrative collective body responsible for checking and acceptance- regarding real and technical matters arising from the acceptance of the deliverables and the reduction of their price. The provision of paragraph 7, regarding the case of supplies of major importance, - in contrast to the relevant provision of presidential decree 785/78 - no longer refers to the examination of disputes regarding the interpretation and execution of the agreement, and furthermore it provides as a requirement for the contractual determination of the method of dispute resolution the existence of a corresponding provision in the specific terms of the regulatory act of the call of the relevant tender, while it does not extend the dispute resolution to other categories i.e. to other issues beyond the technical matters referred to in the previous paragraphs of the same article, and it does not authorise the administrative bodies to conclude an arbitration clause. The provision of para. 7, contrary to the previous paragraphs of article 69, is limited to procedural issues which - due to the particularities of cutting edge technologies which usually refer to supplies of major importance - require a different approach in order to reach correct technical conclusions (e.g. more than one month time limit for the issuance of the relevant protocol, different constitution and composition of the technical body, such as the participation of more members and/or foreigners, specially qualified technical advisors, determination of specific technical procedure for re-checking). This opinion is reinforced by the fact that the subsequent addition of para. 8 in article 69 provides that the financial expenses of the procedure shall be paid by the contracting party which requests the submission of the case to the Dispute Resolution Committee. If para. 7 contained a provision regarding the conclusion of the arbitration clause, then - following a logical and systemic sequence - the provision regarding the payment of the expenses should be inserted between paragraphs 6 and 7 of article 69. It is also noted that the circular instructions of YETHA, of the year 1992, regarding the implementation of the provisions of presidential decree 284/89 and specifically of article 69, are limited to indicating the need of the participation in the dispute resolution committees of a representative of the commercial and industrial sector without making any reference to the conclusion of any arbitration clauses.
d. Consequently, the arbitration clause of article 28.3 included in the agreement, which does not refer to a procedure for the resolution of technical disputes but provides in general and vaguely that: "All claims or disputes arising out of or in connection with the present AGREEMENT or its interpretation shall be finally settled by arbitration...", and which was concluded despite the absence of relevant provision permitting its conclusion, is unlawful and invalid, and for this reason the Arbitral Tribunal lacks jurisdiction for the resolution of this dispute and thus this request for arbitration must be dismissed.
2. The Claimant’s plea regarding the inadmissibility and belated supplementary answers of the Respondent and its claims contained therein is rejected.
3. The Claimant’s counter-plea regarding the inadmissibility of the plea for setoff submitted by the Respondent is rejected regarding its legal basis that this pleas hides a belated counter-claim, and regarding its legal basis that the relevant Arbitration costs have not yet been paid. The Respondent’s set-off objection is held admissible. The decision on the merits is reserved for a future Award.
4. The Claimant’s request for separation of the merits of the case in two stages, the first of which will determine whether the acceptance of the C4I System by the Respondent shall be upheld or rejected, is rejected.
5. The Respondent’s request for the suspension of the proceedings due to criminal charges is rejected.
6. The Respondent’s objections regarding the lack of legal representation, the lack of standing to bring the request, or in the alternative, the lack of legal interest on behalf of the Claimant, are rejected.
7. The Respondent’s objection regarding the inadmissibility of the contested request for arbitration and the related lack of jurisdiction of the Arbitral Tribunal due to lack of written preliminary steps of article 28, paragraph 2 of the contested agreement, is rejected.
8. The Respondent’s objection regarding the invalidity of the arbitration clause of article 28.3 of the contested agreement, and thus the lack of jurisdiction of the Arbitral Tribunal, is rejected.
9. All other claims, including those relating to costs arising from the present Award, are reserved for one or more future awards.
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