The registered address of The East Cement is:
THE EAST CEMENT FOR INVESTMENT COMPANY
Wasfi A1 Tai St.
Maram Center - Appt No 416
Mr. Ulf Franke
jointly nominated by the co-arbitrators and confirmed by the Secretary General of the ICC on 25 November 2009, The joint nomination of the Chairman was made pursuant to the Parties’ agreement that the co-arbitrators nominate jointly a Chairman within 45 days upon notification of their confirmation,
Prof. Avv. Piero Bernardini
STUDIO LEGALE UGHI & NUNZIANTE
Via Venti Settembre 1
nominated by Claimant and confirmed by the ICC Court at its session of 8 October 2009.
Prof. Brigitte Stern
7, rue Pierre Nicole
nominated by Respondent and confirmed by the ICC Court at its session of 8 October 2009.
"(1) Disputes between one of the Parties and an investor of the other Party shall be notified in writing, including a detailed information, by the investor to the host Contracting Party of the investment. As far as possible the Parties shall endeavour to settle these differences by means of a friendly agreement.
(2) If these disputes cannot be settled in this way within six months from the date of the written notification mentioned in paragraph (1) the dispute shall be submitted, at choice of the investor to:
- a court of arbitration in accordance with the Rules of Procedure of the Arbitration Institute of the Stockholm Chamber of Commerce;
- the court of arbitration of the Paris International Chamber of Commerce;
- the ad-hoc court of arbitration established under the Arbitration Rules of Procedure of the United Nations Commission for International Trade Law;
- the International Centre for the Settlement of Investment Disputes (ICSID) set up by the "Convention on Settlement of Investment Disputes, between States and Nationals of other States ", in case both Contracting Parties have become signatories of this Convention.
(3) (see under 1.4 below)
(4) The arbitration decisions shall be final and binding for the Parties to the disputes. Each Contracting Party undertakes to execute the decisions in accordance with its national law.
(5) The Contracting Party which is a party to the dispute shall at no time whatsoever during the procedures involving investments disputes, asserts (sic) as a defence its immunity or the fact that the investor has received compensation under an insurance contract covering the whole or part of the incurred damage or loss."
"The arbitration award shall be based on:
- the provisions of this Agreement;
- the national law of the Contracting Party in whose territory the investment was made, including the rules relative to conflicts of laws;
- the rules and the universally accepted principles of international law."
|Item no||Expense explanation||Amount $||Amount in Euro||Amount in JOD|
|1||ICC court Fee||37,500.00|
|3||Case document translation||25,000.00|
|4||Jordan Consultancy & Various Advice||65,000.00|
In addition to the above, the Claimant had incurred indirect costs associated with the follow up and collection of documents for the case. Those costs are:
|Item no||Expense explanation||Amount$||Amount in Euro|
|2||Case Management cost||192,000.00|
"[s]ince it is the defendant who is winning this arbitration because the claim of Claimant was either withdrawn during the oral hearing or is dismissed by this final award, it is the Claimant who is to carry its costs."1
"[a]ccording to the general principles of international arbitration law, the arbitral tribunal must take into account for its decision on costs not only the result of the proceedings but also the behaviour of the parties during the proceedings.... According to good faith, the parties to an international arbitration must in particular facilitate the proceedings and abstain from all delaying tactics...."2
"The behaviour of the defendant during the entire proceedings did not comply with these requirements in any way. The defendant made none of the advance payments on costs which are required for the proceedings.... Further, it also contributed to unnecessary delay and confusion in the proceedings by appointing counsel at the last moment, (...) compounded by counsel’s renunciation to the mandate only a few days afterwards,,.. For the above reasons, the defendant shall also reimburse to the claimant the advance payment on costs, which the latter paid for these proceedings."3
"in light of the Claimants’ failure to meet their basic obligations and to orderly prosecute their claims, the Tribunal is of the view that the Claimants are to be perceived as the unsuccessful Party... [The costs of proceeding] were incurred as a result of the Claimants’ decision to commence this arbitration and their subsequent refusal to pursue their claims in an efficient manner in accordance with the applicable arbitration rules. It would not be fair or reasonable, in the Tribunal’s view, if these costs were to be borne or partially shared by the Respondent, the Government of Canada."4
The ICSID tribunal in Quadrant Pacific Growth Fund L.P. and Canasco Holdings Inc. v, Republic of Costa Rica, reached a similar conclusion in the context of the claimant’s failure to prosecute that case.5 There, the tribunal did not deem it necessary to determine the relative success or failure of either side. Rather, "the Tribunal may proceed to a decision on the allocation of costs on the basis of other factors, such as in a case where a party’s bad faith, lack of cooperation, dilatory or otherwise improper conduct justifies that the costs of the proceedings be assessed against such party." Citing that "[a]fter almost two years of adjudication..., Claimants suddenly decided to abandon their claims," and Claimant’s "crisply stated" withdrawal of counsel, the tribunal determined that
"Claimants cannot expect Respondent to carry the burden of the costs of defending claims that Claimants decided to abandon. Accordingly, equity and fairness mandate that Claimants should bear the expenses and costs incurred by the Respondent in this arbitration."
Similarly, in Piero Foresti, Laura de Carli & Others v. The Republic of South Africa, the respondent’s request for a default award, not with respect to the merits, but with respect to fees and costs resulted in the ICSID tribunal’s determination that it was "fair and reasonable" to order claimants to contribute €400,000 to respondent’s legal costs and associated expenses.6 Respondent explained that the tribunal could entertain its request to "render a default award in favour of the Respondent on the ground of Claimants’ failure to prosecute their claims." Furthermore,
"Respondent argued that it was entitled to an award of fees and costs because the Claimants had wasted the time, energy, and money of ICSID, the Tribunal, and the Republic by bringing a claim that (i) they never intended to pursue as pleaded, but rather had brought as a mere tactical device, (ii) could have been adequately handled under the Respondent’s own laws and procedures...."
"The arbitration award shall be based on: [i] the provisions of this Agreement; [ii] the national law of the Contracting Party in whose territory the investment^was made, including the rules relative to conflicts of laws; [iii] the rules and the universally accepted principles of international law." (emphasis added by Respondent)
In the alternative, Respondent respectfully asks the Tribunal to grant, at a minimum, the rate of interest akin to that Claimant deemed appropriate for itself, i.e., the EURIBOR rates for 3 months plus 5% to its award on costs in favour of Respondent in the case it is unpaid after 30 days from the date of notification. Although the Polish statutory rate is entirely justified in this case, this alternative mode of calculation, as proposed by Claimant itself, is consistent with the practices of other tribunals, both with respect to the level of,7 and the compound character of interest.8
In addition, and regardless of the choice among the alternative rates of interest proposed above, interest should be compounded quarterly, or at another interval deemed appropriate by this Tribunal. The relevance of granting compound interest has been underscored by an ICSID tribunal:
|Subtotal for costs of arbitration||€275,011.53|
|Subtotal for legal representation||€367,638.18|
|Travel expenses of Prokuratoria Generalna representative||€617.17|
|Cost of renting the ICC venue for the January 2010 hearing||€ 1,354.52|
|Subtotal for other costs||€25,491.76|
|Subtotal for legal and other costs||€ 393,129.94|
"1. The costs of the arbitration shall include the fees and expenses of the arbitrators and the ICC administrative expenses fixed by the Court, in accordance with the scale in force at the time of the commencement of the arbitral proceedings, as well as the fees and expenses of any experts appointed by the Arbitral Tribunal and the reasonable legal and other costs incurred by the parties for the arbitration.
2. The Court may fix the fees of the arbitrators at a figure higher or lower than that which would result from the application of the relevant scale should this be deemed necessary due to the exceptional circumstances of the case. Decisions on costs other than those fixed by the Court may be taken by the Arbitral Tribunal at any time during the proceedings.
3. The final Award shall fix the costs of the arbitration and decide which of the parties shall bear them or in what proportion they shall be borne by the parties."
"The rate of interest shall be the average bank short term lending rate to prime borrowers prevailing for the currency of payment at the place for payment, or where no such rate exists at that place, then the same rate in the State of the currency of payment. In the absence of such a rate at either place the rate of interest shall be the appropriate rate fixed by the law of the State of the currency of payment,"
"This solution seems to be that best suited to the needs of international trade and most appropriate to ensure an adequate compensation of the harm sustained. The rate in question is the rate at which the aggrieved party will normally borrow the money which it has not received from the nonperforming party."
The EURIBOR rate should be increased as such rate only reflects the interest at which banks lend money to each other, not loans to customers. Respondent has requested a margin of 5 per cent. The Tribunal finds such margin excessive taking into account the purpose of the interest outlined above, an approach also underlying the UN1DRO1T Principles. 2% is a more reasonable margin, and this margin is also frequently applied in international practice. A number of recent investment awards have applied LIBOR plus a 2 per cent margin, e.g. PSEG Global, Inc., et al. v. Turkey12 and Lemire v. Ukraine.13 EURIBOR is comparable to LIBOR and there is no reason why the same margin should not be used when the reference rate is EURIBOR, and in Cementownia "Nowa Huta" S.A. v. Republic of Turkey14 a 2 per cent margin was used in connection with EURIBOR.
The Tribunal is of the opinion that compound interest better than simple interest would compensate the Respondent in case of non-payment of the award on costs in favour of Respondent. This view is supported by recent case law in investment arbitration. See in particular Compania de Aguas del Aconquija S.A. and Vivendi Universal v. Argentine Republic.15 Respondent has suggested that the interest should be compounded quarterly. However, also in line with recent practice, the Tribunal decides that the interest should be compounded semiannually, see e.g. Cemento\vnia "Nowa Huta" S.A. v. Republic of Turkey16 and PSEG Global, Inc., et al. v. Turkey17.
For the reasons set out above, the Tribunal determines as follows:
(1) The Claimant, The East Cement for Investment Company, shall bear its own legal and other cost in this arbitration up and until this Partial Award.
(2) The Claimant, The East Cement for Investment Company, is ordered to pay to the Respondent, The Republic of Poland, € 393,129.94, which represents the legal and other costs incurred by Respondent in this arbitration up and until this. Partial Award. It should be noted that the legal and other costs awarded do not include the costs of arbitration to be fixed by the Court or any advance on costs payments.
(3) In the event of non-payment of the amount owing under (2) above within, 30 days of notification of the Award, compound interest shall be paid at the successive EURIBOR 3 months rate plus 2% for each year, or portion thereof, beginning 30 days from the date of receipt of this Partial Award by Claimant. Interest shall be compounded semi-annually.
(4) All other decisions are reserved for one or more further awards.
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