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Final Arbitral Award

1. PARTIES AND THEIR REPRESENTATIVES

Claimant: UAB "Skyroad Leasing"
Code of the legal person: 300887740
Liepyno g. 2, 08108 Vilnius, Lithuania
Tel. +370 616 46431
E-mail: info@skyroadleasing.com

Represented by: Attorneys-at-law Paulius Docka and / or RonaldasKontautas
Law firm Juodka ir partneriai - PRIMUS
Business center "Europa", Konstitucijos pr. 7, 09308
Vilnius, Lithuania
Tel. +370 5 248 7337
E-mail: paulius.docka@primus.legal

Respondent: OJSC "Tajik Air"
Code of the legal person: 010005021
Address: 32/1 Mastongulov Mirzo Str., 734012 Dushanbe,
Republic of Tajikistan
Tel. +992 48 701-50-50, +992 905 100-200, fax. +992 48 701 50-68
E-mail: info@tajikairlines.com; office@tajikairlines.com

Represented by: Mr. Khafizov Zafar Dodarjonovich (Хафизов Зафар Додарчонович)1
The Head of the Legal department of the Ministry of Transport of the Republic of Tajikistan
14 Aini str., 734042 Dushanbe, Republic of Tajikistan
E-mail: z-khafizov@mail.ru

2. ARBITRAL TRIBUNAL

Arbitrator: Mr. Gediminas Dominas, appointed by the Claimant by the Request for Arbitration on 5 September 2017. Contact information of Mr. Gediminas Dominas is the following: Mr. Gediminas Dominas, Law firm DOMINAS DERLING, Vilniaus str. 31, 01402, Vilnius, tel.: +370 5 232 1111, e-mail: g.dominas@dominasderling.lt.

Arbitrator: dr. Solveiga Palevičienė, appointed by the Order of the Chairman of the Vilnius Court of Commercial Arbitration (hereinafter referred to as VCCA) on the basis of Article 17(1)(3) of the Arbitration Rules of the Vilnius Court of Commercial Arbitration (hereinafter the Rules or the VCCA Rules) on 15 November 2017. Contact information of Ms. Solveiga Palevičienė is the following: Ms. Solveiga Palevičienė, Law firm GLIMSTEDT Bernotas ir partneriai, Jogailos str. 4, 01116 Vilnius, tel.: +370 5 269 0701, e-mail: s.paleviciene@glimstedt.lt.

Presiding arbitrator: dr. Eglė Zemlytė, appointed by the Co-arbitrators on 23 November 2017. Contact information of Ms. Eglė Zemlytė is the following: Ms. Eglė Zemlytė, professional law partnership CONFIDENCE Law Office, Konstitucijos pr. 7, 09307 Vilnius, tel.: +370 656 211 51, e-mail: e.zemlyte@confidence.law.

The members of the Arbitral Tribunal filled and submitted Arbitrator’s declaration of acceptance and statement of independence which were sent to the Parties on 3 November 2017, 15 November 2017 and 27 November 2017. The Parties did not raise any objections against appointment of any of the members of the Arbitral Tribunal.

Arbitration case file was transmitted to the Arbitral Tribunal on 19 December 2017.

3. DEFINITIONS AND ABBREVIATIONS2

ARBITRAL AWARD 276 Final Arbitral Award of 26 February 2014 issued under the Rules of the Vilnius Court of Commercial Arbitration in the case No. 276 between the Claimant and the Respondent
ARBITRAL AWARD AWARDOR Final Arbitral Award issued in this Arbitration Case
ARBIS The Vilnius Court of Commercial Arbitration (VCCA) arbitration case management system online
ARBITRATION CASE Vilnius Court of Commercial Arbitration Case No 373 between the Claimant and the Respondent
ARBITRAL TRIBUNALOR Arbitral Tribunal constituted in this Arbitration Case
TRIBUNAL consisting of co-arbitrators Mr. Gediminas Dominas, Ms. Solveiga Palevičienė and presiding arbitrator Ms. Eglė Zemlytė
AIRCRAFT 1 Aircraft Boeing 737-522, serial number 26700, and two CFM56-3C1 engines, serial number 726157 and serial number 72457
AIRCRAFT 2 Aircraft Boeing 737-522, serial number 26707, and two CFM56-3C1 engines, serial number 727424 and serial number 721689
AIRCRAFT Both Aircraft 1 and Aircraft 2
BLUEBOOK AVITAS BlueBook of Jet Aircraft Values
CC The Civil Code of the Republic of Lithuania.
CLAIMANT (OR FINANCIAL LESSOR OR SKYROAD LEASING) UAB "Skyroad Leasing", code of the legal person: 300887740
DEFAULT LEASE The Lease under Article 6,499(3) of the CC and Article 23.12.1 of the Lease Agreements
DESKTOP APPRAISAL Desktop Appraisal: Two Boeing 737-500 Aircraft dated 11 January 2018 (Exhibit C-37 to the Claimant’s Submission on Additional Evidence of 12 January 2018)
DESKTOP APPRAISAL VALUE Current Market Value for the Aircraft established in the Desktop Appraisal
INSPECTION REPORT Inspection of physical condition of the used Boeing 737522 aircraft, manufacturer serial numbers 26700 and 26707, and determination of the tasks required to restore both aircraft airworthiness status including average market price for these tasks (prepared by Mr. A. Vegys) (Exhibit C-33 to the Claimant’s Submission on Additional Evidence of 12 January 2018)
LATE PAYMENT LAW Law on Prevention of Late Payment in Commercial Transactions of the Republic of Lithuania No. IX-1873 of 9 December 2003
LAW ON COMMERCIAL ARBITRATION OR LCA Law on Commercial Arbitration of the Republic of Lithuania No. 1-1274 of 2 April 1996
LEASE The monthly lease payment under the Lease Agreements for the lease of Aircraft
LEASE AGREEMENT 1 The Aircraft Finance Lease Agreement No. 506/09-10 of 15 September 2009 (Exhibit C-2 to the Claimant’s RfA)
LEASE AGREEMENT 2 The Aircraft Finance Lease Agreement No. 598/09-10 of 29 September 2009 (Exhibit C-4 to the Claimant’s RfA)
LEASE AGREEMENTS Both Lease Agreement 1 and Lease Agreement 2
PARTIES Both the Claimant and the Respondent
RfA Request for Arbitration of the Claimant dated 5 September 2017
RESPONDENT (ORFINANCIAL LESSEE ORTAJIK AIR) OJSC "Tajik Air", code of the legal person: 010005021
RULES OR VCCA RULES The Arbitration Rules of Vilnius Court of Commercial Arbitration as of 1 July 2017
SIDE LETTER 1 Side Letter No. 2010/11/02 to the Aircraft Finance Lease Agreement regarding one (1) used Boeing 737-500 aircraft, MSN 26700 signed by AB "Avia Asset Management" and the Parties (Exhibit C-6 to the Claimant’s RfA)
SIDE LETTER 2 Side Letter No. 2010/11/02 to the Aircraft Finance Lease Agreement regarding one (1) used Boeing 737-500 aircraft, MSN 26707 signed by AB "Avia Asset Management" and the Parties (Exhibit C-7 to the Claimant’s RfA)
SIDE LETTERS Both Side Letter 1 and Side Letter 2
SATEMENT OF COUNTERCLAIM Statement of Counter-claim filed by the Respondent in the Arbitration Case on 30 October 2017
SUBMISSION ON ADDITIONAL EVIDENCE Submission on Addition Evidence filed in the Arbitration Case by the Claimant on 12 January 2018
SUPREME COURT The Supreme Court of the Republic of Lithuania.
TAILWIND Tailwind Capital, LCC
VCCA Vilnius Court of Commercial Arbitration.

4. THE DISPUTE

4.1. FACTUAL BACKGROUND

1.
AB "Avia Asset Management", as financial lessor, and OJSC "Tajik Air" (then State Unitary Aviation Enterprise "Tajik Air"), as financial lessee, (hereinafter - the Respondent, the Financial Lessee or Tajik Air) entered into two Lease Agreements (hereinafter - the Lease Agreements):

a) On 15 September 2009 AB "Avia Asset Management" and the Respondent entered into Aircraft Finance Lease Agreement3 (hereinafter - the Lease Agreement 1) regarding the lease of the aircraft (make and model: used Boeing 737-522; aircraft manufacturer’s serial number 26700) described in the Lease Agreement (hereinafter - Aircraft 1).

b) On 29 September 2009 AB "Avia Asset Management" and the Respondent entered into Aircraft Finance Lease Agreement4 (hereinafter - the Lease Agreement 2, both Lease Agreement 1 and Lease Agreement 2 hereinafter referred to as the Lease Agreements) regarding the lease of the aircraft (make and model: used Boeing 737-522; aircraft manufacturer’s serial number 26707) described in the Lease Agreement (hereinafter - Aircraft 2, both Aircraft 1 and Aircraft 2 hereinafter referred to as the Aircraft).

2.
The wording of the Lease Agreements is the same, except for the part which described the object of the Lease Agreements.
3.
On 2 November 2010 all rights and obligations of AB "Avia Asset Management" under Lease Agreements were transferred to UAB "Skyroad Leasing" (hereinafter the Claimant, the Financial Lessor or Skyroad Leasing. This was done by executing the Side Letter No. 2010/11/02 to the Aircraft Finance Lease Agreement 1 regarding one (1) used Boeing 737-500 aircraft, MSN 267005 (hereinafter - the Side Letter 1) and the Side Letter No. 2010/11/02 to the Aircraft Finance Lease Agreement 2 regarding one (1) used Boeing 737-500 aircraft, MSN 267076 (hereinafter - the Side Letter 2, both Side Letter 1 and Side Letter 2 - the Side Letters) signed by AB "Avia Asset Management", the Claimant and the Respondent. At the time of the conclusion of the Side Letters the Claimant’s name was (JAB "AviaAM B03" which on 25 November 2014 was changed to UAB "Skyroad Leasing"7.
4.
The Parties agreed that the lease term of the Aircraft shall be 60 months from the delivery date (Article 1.4 of the Lease Agreements). Aircraft 1 was delivered to the Respondent on 30 September 2009, which was confirmed by the Respondent’s signature on the Final Acceptance Certificate8. Aircraft 2 was delivered to the Respondent on 29 October 2009, which was confirmed by the Respondent’s signature on the Final Acceptance Certificate9.
5.
In Article 1.7 of the Lease Agreements it was agreed that the amount of monthly rent shall be 149,000 USD (hereinafter - the Lease), payable monthly in advance.
6.
Under Article 23.1 of the Lease Agreements the Respondent was obligated to return the Aircraft on the "Expiration Date" which, based on Article 4.2 of the Lease Agreements, meant the date on which Financial Lessee was required to redeliver the Aircraft to Financial Lessor.
7.
The Respondent failed to pay the Lease, therefore, the Claimant initiated arbitration proceedings in 2013 requesting to award the unpaid Lease. On 26 February 2014 the Arbitral Award, adopted according to the Arbitration Rules of the Vilnius Court of Commercial Arbitration in force as from 1 January 2013 (wording as of 1 March 2013), was issued in arbitration case No. 276 (hereinafter - Arbitral Award 276)10. 2,824,000 USD of the Lease and 9 percent interest per annum were awarded from the Respondent by Arbitral Award 276.
8.
The Respondent further continued failing to pay the Lease. In addition, the Respondent failed to redeliver the Aircraft when the lease term has expired. Therefore, the Claimant initiated these arbitration proceedings.

4.2. CLAIMANT’S RELIEF SOUGHT

9.
The Claimant requests the following relief:

"1) To award the Outstanding Lease. Payments amounting to USD 4,306,100 (four million three hundred six thousand one hundred US Dollars) from the Respondent to the Claimant;

2) To award the Pre-award Interests amounting to USD 1,574,852.43 (one million five hundred seventy four thousand eight hundred fifty two US Dollars and forty three cents) from the Respondent to the Claimant;

3) To award the Default Lease amounting to USD 10,335,473.11 (ten million three hundred thirty five thousand four hundred seventy three US Dollars and eleven cents) from the Respondent to the Claimant;

4) To award the Value of the Aircraft amounting to USD 4,000,000 (ten million five hundred thousand US Dollars) from the Respondent to the Claimant;

5) To award from the Respondent an 8 percent interest rate per annum calculated as from awarded sum from the moment of submission of this Request until the effective day of full settlement by the Respondent (the Post-award Interest);

6) To award the attorney's fee amounting to EUR 13,022.36 (thirteen thousand twenty two euros and thirty six cents) from the Respondent to the Claimant;

7) To award from the Respondent to the Claimant legal costs incurred by the Claimant in relation with the procedures before VCCA and Arbitral Tribunal, including but not limited to the registration and arbitration fees and attorney’s fee".11

4.3.RESPONDENT’S RELIEF SOUGHT

10.
The Respondent did not file the Answer to the Request of Arbitration (please see further Part 5.2.4 of the Arbitral Award).

5. THE ARBITRATION PROCEEDINGS

5.1. ARBITRATION AGREEMENT, JURISDICTION OF THE ARBITRAL TRIBUNAL AND APPLICABLE LAW

11.
Article 27.2 of the Lease Agreements12 reads as follows:

"Dispute Resolution. The parties acknowledge that in order to minimize any disputation which may result from a dispute or difference they will attempt to resolve such dispute prior to taking any further action in order to resolve the dispute. Any dispute, controversy or claim arising out of or relating to this Finance Lease shall be settled by Arbitration in the Vilnius Court of Commercial Arbitration in accordance with its Rules. The number of arbitrators shall be 3 (three). The venue of arbitration shall be in Vilnius. The language of arbitration shall be English. Substantive Laws of the Republic Lithuania will be applied by the arbitrators in any arbitration. Any notice with respect to arbitration, including a notice by FINANCE LESSOR and FINANCE LESSEE of arbitration commencing arbitral proceedings will be delivered to the other party as set forth in Article 26.2."

5.2. THE ARBITRAL PROCESS

5.2.1. Number of arbitrators and composition of the Arbitral Tribunal

12.
In Article 27.2 of the Lease Agreements the Parties agreed that the number of arbitrators shall be 3 (three).
13.
The Claimant appointed Mr. Gediminas Dominas by the Request for Arbitration on 5 September 2017.
14.
Mr. Gediminas Dominas accepted the appointment on 26 October 2017. The VCCA informed the Parties on the acceptance of the appointment by e-mail of 3 November 201713.
15.
On 31 October 2017 the Claimant filed the Submission on Appointment of the Arbitrator on behalf of the Respondent and Setting Additional Term for the Respondent’s due Submission asking the VCCA to appoint the arbitrator on behalf of the Respondent without any additional delay on the basis of Articles 14(5) and 17(1)(3) of the Rules.
16.
On 9 November 2017 the Respondent sent an e-mail stating that "As for the appointment of the Arbitrator by our party at the moment, the candidature is coordinated by the Respondent’s Guide and you will receive an e-mail sent to you by November 14, a completed Questionnaire compiled and in accordance with the requirements of normative legal acts (substantive law) of the Republic of Lithuania."14
17.
On 10 November 2017 the VCCA sent an e-mail to the Respondent noting that the time-limit of 20 days to appoint one arbitrator on behalf of the Respondent ended on 8 November 2017 and that the VCCA did not receive any request for the extension of the time-limit for the appointment of the arbitrator. It was also noted that should the Respondent fail to appoint the arbitrator until 14 November 2017 the arbitrator on behalf of the Respondent would be appointed by the Chairman of the VCCA under Article 17 of the Arbitration Rules of the VCCA without any additional delay.15
18.
The Respondent failed to appoint the arbitrator until 14 November 2017.
19.
On 15 November 2017 and pursuant to Article 17(1)(3) of the VCCA Rules the Chairman of the VCCA appointed dr. Solveiga Palcvičienė as an arbitrator on behalf of the Respondent16.
20.
The Parties were informed about the appointment of dr. Solveiga Palcvičienė by letter of the VCCA of 15 November 2017 No. 196/17-373 which was sent to the Parties by e-mail and, additionally, by registered mail to the Respondent17. The Arbitrator’s Declaration of Acceptance and Statement of Independence filled by dr. Solveiga Palcvičienė on 15 November 2017 was attached to the said letter.
21.
The Co-arbitrators appointed the presiding arbitrator dr. Eglė Zemlytė on 23 November 2017.
22.
The Parties were informed about the appointment of dr. Eglė Zemlytė by letter of the VCCA of 27 November 2017 No. 200/17-373 which was sent to the Parties by e-mail and, additionally, by registered mail to the Respondent18. The Arbitrator’s Declaration of Acceptance and Statement of Independence filled by dr. Eglė Zemlytė on 27 November 2017 was attached to the said letter.
23.
The Parties did not raise any objections against appointment of any of the members of the Arbitral Tribunal.

5.2.2. Place and language of arbitration

24.
Article 27.2 of the Lease Agreements provides for Vilnius, Lithuania as the place and English as the language of arbitration.
25.
Accordingly, these proceedings were conducted in the English language and any decision, procedural order or award are deemed to have been made in Vilnius, Lithuania.
26.
The Respondent submitted its Statement of 23 October 2017 and Objection of 24 October 2017 with enclosures in Russian. Taking into account that the Claimant relied on the English language as the language of arbitration and the fact that the Respondent a number of times was encouraged to provide translations of such documents, the Arbitral Tribunal decided to accept only the requests / documents submitted in English, i.e. exclude from the file the Parties’ requests / documents submitted in the language other than the language of arbitration, i.e. the English language (see further Summary of the arbitration proceedings, Part 5.2.4 of the Award).

5.2.3. Form of the hearing and applicable rules

27.
As the arbitration proceedings were initiated in September 2017, the wording of the VCCA Rules as of 1 July 2017 is applicable in this case.
28.
According to Article 27(2) of the VCCA Rules unless the parties agree upon the form of arbitral proceedings, the Arbitral Tribunal shall consider the case in a written procedure, unless it recognizes the necessity of an oral hearing.
29.
On 22 December 2017 the Arbitral Tribunal issued Procedural Order No. 1 inter alia asking the Parties to provide their opinion on the form of the hearing19. The Claimant provided its opinion on 12 January 2018 stating that the decision on the form of the arbitration proceedings shall be left at the disposal of the Arbitral Tribunal. No comments were received from the Respondent.
30.
On 26 January 2018 the Arbitral Tribunal issued Procedural Order No. 2 inter alia deciding to hold the oral hearing on 12 March 2018 (and 13 March 2018, if necessary) taking into account the amount in dispute and the fact that the Respondent did not submit a response to the Request of Arbitration20.
31.
The hearing took place on 12 March 2018 at the premises of the VCCA (M. Valančiaus str.lA-7, Vilnius, Lithuania). Only the representative of the Claimant Mr. Paulius Docka attended the hearing. The Respondent did not attend the hearing.

5.2.4. Summary of the arbitration proceedings

32.
On 5 September 2017, the VCCA received the Claimant’s Request for Arbitration (hereinafter - the RfA) dated 5 September 2017.
33.
On 7 September 2017, the VCCA started the administration of the arbitration proceedings, the case was given number 373 (hereinafter - the Arbitration Case).
34.
By the letter dated 7 September 2017, the VCCA notified the Respondent of the RfA and requested the Respondent to submit the Answer to the RfA within 30 days following the receipt of the RfA. The said letter was sent to the Respondent by e-mail as well as by registered mail.
35.
On 23 October 2017 Mr. Zafar Khafizov sent an e-mail to the VCCA (from z-khafizov@mail.ru to r.racko@arbitrazas.lt) with the copy of Authorization of 5 October 2017 No. 8/1-1827 issued by Open Joint-Stock Company "Tajik Air" (signed by director general Mr. Rakhimov Kh) authorizing Khafizov Zafar Dodarjonovich (Хафизов Зафар Додарчонович) to represent Open Joint-Stock Company "Tajik Air" "in the Commercial Arbitration Court of the city of Vilnius of the Republic of Lithuania on the suit of the leasing company UAB "Skyroad leasing" of the city of Vilnius of the Republic of Lithuania "On collection of unpaid leasing balance at the amount of 20 229 447,9 USD."21 The document "Заявление"in Russian, without translation into English, confirming the receipt of the VCCA’s letter of 7 September 2017 on 19 October 2017 was also attached to the said e-mail of Mr. Zafar Khafizov.
36.
On 24 October 2017 Mr. Zafar Khafizov sent an e-mail to the VCCA together with "Возражение на исковое заявление" in the Russian language and its annexes: Устав продолжение.рdf, Устав.рdf and cloud_stock_attachments.htm. All the annexes were submitted in Russian as well.
37.
On 25 October 2017 the VCCA forwarded the Respondent’s email of 24 October 2017 to the Claimant and asked to submit its opinion regarding language of the documents submitted by the Respondent until 27 October 2017. The e-mail of 24 October 2017 was copied to Mr. Zafar Khafizov (z-khafizov@mail.ru) to which Mr. Zafar Khafizov replied by thanking for information and looking forward for the news until 27 October 2017 (in Russian).
38.
On 27 October 2017 the Claimant filed Submission on language and authorization in which the Claimant relied on the English language as the language of arbitration proceedings as well as asked the VCCA to request the Respondent to submit the authorization proving Mr. Khafizov Zafar Dodarjonovich is authorized to represent the Respondent in these proceedings due to the fact that Mr. Khafizov Zafar Dodarjonovich is the Head of the Legal department of the Ministry of Transport of the Republic of Tajikistan and it is not a common practice for the company to be represented by a civil servant.
39.
On 31 October 2017 Mr. Zafar Khafizov by e-mail submitted Statement of Counter-Claim together with Resolution of the Government of the Republic of Tajikistan No. 17 of 27 January 2016 "On appointment of Rakhimov K. General Director of Tajik Air Joint Stock Company" as well as the Resolution of the Government of the Republic of Tajikistan No. 416 of 7 September 2006 "Re: The State Unitary Aviation Enterprise Tajik Air". Additional documents in Russian language followed on the same day (stored at data cloud).
40.
On 31 October 2017 the Claimant filed Submission on Appointment of the Arbitrator on behalf of the Respondent and Setting Additional Term for the Respondent’s due Submission. Claimant noted that the Respondent acted in the way to undermine arbitration proceedings and asked to set an additional term to the Respondent to submit its Answer to the Request for Arbitration and other legal documents in a proper and agreed language, i.e. English22. According to Claimant, such additional term, should not, subject to Article 6 of the Rules, exceed 10 (ten) days.
41.
On 2 November 2017 Mr. Zafar Khafizov sent an e-mail (in Russian) asking the representative of the VCCA to send the original award to the Ministry of Transport of the Republic of Tajikistan as well as by e-mail.
42.
On 3 November 2017 the VCCA sent the letter No. 187/17-373 to the Respondent asking to i) submit the Respondent’s Statement of 23 October 2017 and Objection of 24 October 2017 with enclosures translated into English and, for the sake of certainty, to ii) submit the authorization/resolutions/approval or other legal document of the Ministry of Transport appointing/giving its consent to appoint Mr. Khafizov Zafar Dadarjonovich as a lawful and proper representative of the Respondent or to submit clarification that such representation is a lawful and proper act under the laws of the Republic of Tajikistan until 13 November 2017.
43.
On 3 November 2017 the Chairman of the VCCA also issued an Order setting the time- limit of 5 (five) days for the Respondent to pay the registration fee for the Respondent’s Counterclaim. The Order together with the invoice were sent to the Respondent by e-mail to the addresses info@tajikairlines.com, hamroev.f@tajikairlines.com, kurbunov.s@takijairlines.com, amrullo80@mail.ru, on3 8tario@mail.ru, office@tajikairlines.com and z-khafizov@mail.ru.
44.
On 5 November 2017 three e-mails of Mr. Zafar Khafizov concerning the registration fee, the authorization and the e-mail addresses were received (Mr. Zafar Khafizov asked to send all the correspondence to him as persons to whom the e-mails were addressed were no longer employees of the Respondent). After the e-mail of the VCCA explaining the arbitration fees Mr. Zafar Khafizov confirmed by e-mail that the registration fee would be paid. On 8 November 2017 Mr. Zafar Khafizov sent an e-mail with the copy of the document proving registration fee was paid by the Respondent.
45.
On 9 November 2017 Mr. Zafar Khafizov by e-mail sent the copy of the Authority No. 13 issued on 8 November 2017 by the Ministry of Transport of the Republic of Tajikistan authorizing Mr. Zafar Khafizov Dodarjonovich to represent the Respondent in present proceedings.
46.
On 10 November 2017 the Chairman of the VCCA issued an Order accepting the Counterclaim of the Respondent, ordering to pay the Respondent a preliminary arbitrating fee of 8 080 EUR in 30 days and setting the time-limit of 30 days to the Claimant for submission of the Answer to the Counterclaim. The e-mail of Mr. Zafar Khafizov that the payment had to be made by the indicated date followed on the same day. The arbitrating fee was not paid by the date set by the VCCA.
47.
On 29 November 2017 the Claimant filed the Answer to the Respondent’s Counterclaim as of 30 October 2017.
48.
On 19 December 2017, the VCCA transmitted the arbitration case file to the Arbitral Tribunal.
49.
On 22 December 2017, the Arbitral Tribunal issued Procedural Order No. 1, wherein it offered the Parties to provide their proposals on further proceedings until 15 January 2018 as well as decided inter alia on the following:

"1. To offer the Respondent to pay the preliminary arbitrating fee of 8 080 EUR until 15 January 2018 and to inform the Respondent that failure to pay the fee shall result in refusal to hear and decide on the Respondent's Statement of Counter-Claim of 31 October 2017.

2. To offer the Respondent to submit the Answer to the Request of Arbitration of 5 September 2017 until 15 January 2018, and to inform the Respondent that, provided arbitral jurisdiction to hear the present dispute exists, under Article 33 of the Rules where a party fails to present a mandatory procedural document or does not take part in the arbitral hearing without a valid reason, the Arbitral Tribunal shall have the power to proceed with conducting the arbitral proceedings and make an arbitral award based on the evidence available in the case or make procedural decisions stipulated in Article 41 of these Arbitration Rules;

3. To offer the Claimant to submit its opinion on the additional authorization documents for Mr. Hafizov Zafar Dodarjonovich to represent the Respondent submitted after the submission of the Claimant's Submission on language and authorization until 15 January 2018."

50.
It was also emphasized in the Procedural Order No. 1 that, based on arbitration agreement, English is the language of these arbitration proceedings, therefore, all the documents submitted in these proceedings shall be in English or translated to the English language. Only documents submitted in English were to be examined by the Arbitral Tribunal in these proceedings.
51.
On 12 January 2018 the Claimant submitted two procedural documents by e-mail: Submission on the Procedural Order No. 1 and Submission on Additional Evidence together with 6 exhibits.
52.
The Respondent did not submit any written submissions and did not pay the preliminary arbitrating fee of 8 080 EUR.
53.
On 26 January 2018, the Arbitral Tribunal issued Procedural Order No. 2, wherein it was decided:

"1. To leave the Statement of Counterclaim submitted by the Respondent unconsidered due to the fact that the Respondent failed to pay the determined arbitration fees in full.

2. To offer the Respondent to provide its opinion on the Claimant’s Submission on additional evidence of 12 January 2018 until 5 February 2018.

3. The preliminary hearing shall not be appointed.

4. There will be no exchange of additional procedural documents (except for the submission of the Respondent’s opinion on Claimant's Submission on additional evidence of 12 January 2018, clause 2 of this Procedural Order 2). The Claimant’s Request for Arbitration due to its comprehensiveness and evidence submitted is considered as conforming to the requirements applicable to the Statement of Claim.

5. Considering the fact that the case involves considerable amount in dispute and the Respondent did not submit any response to the Request of Arbitration (Возражение на исковое заяеление shall not be examined by the Arbitral Tribunal as it is submitted in Russian language and the Respondent was given every opportunity to provide translation of this document into English language; the Statement of Counterclaim shall not be heard as the Respondent did not pay the requested arbitrating fee although it was given every opportunity to do so) to hear this dispute in oral proceedings and to appoint the hearing on 12 March 2018, 9 am (EEST) (reserving also 13 March 2018 in case there will be a need to continue examination on the next day) in the premises of the VCCA (A. Valančiaus str. 1A-7, Vilnius).

6. To set the lime limit until 1 March 2018 for the Parties’ requests to call the witnesses / experts to the main hearing.

7. To note to the Parties that based on Article 33 of the Rules where a party fails to present a mandatory procedural document or does not take part in the arbitral hearing without a valid reason, the Arbitral Tribunal shall have the power to proceed with conducting the arbitral proceedings and make an arbitral award based on the evidence available in the case or make procedural decisions stipulated in Article 41 of these Arbitration Rules.

8. To reiterate that under Article 4(1) of the Rules if the parties agree on the application of these Arbitration Rules, it shall be deemed that they at the same time agree that all procedural documents shall be submitted by using the ARBIS system, and in cases where it is not used - by e-mail. In this case, the procedural documents shall be deemed to have been served to the party on the next day after their dispatch."

54.
On 1 March 2018 the Claimant submitted the Witness Statement of Mr. Rolandas Rakauskas and asked the Arbitral Tribunal "to consider Witness Statement as direct testimony by the witness, unless the Respondent clearly expresses a desire to cross examine the witness during the oral hearing".
55.
No documents / submissions were received from the Respondent.
56.
On 6 March 2018, the Arbitral Tribunal issued Procedural Order No. 3, wherein it set the provisional agenda of the hearing and decided on the following:

"1. Additional evidence presented by the Claimant on 12 January 2018 is considered admissible and shall be assessed by the Arbitral Tribunal during examination of the case;

2. Witness Statement of Mr. Rolandas Rakauskas of 1 March 2018 shall be assessed by the Arbitral Tribunal without summoning a witness to appear, however, Respondent’s failure to request cross-examination of the witness shall not be considered by the Arbitral Tribunal as the Respondent's acceptance of the contents of the statement."

57.
It was noted once again in the Procedural Order No. 3 that, based on Article 33 of the Rules, where a party fails to present a mandatory procedural document or does not take part in the arbitral hearing without a valid reason, the Arbitral Tribunal shall have the power to proceed with conducting the arbitral proceedings and make an arbitral award based on the evidence available in the case or make procedural decisions stipulated in Article 41 of the Arbitration Rules.
58.
Also, it was reiterated in the Procedural Order No. 3 that under Article 4(1) of the Rules if the parties agree on the application of these Arbitration Rules, it shall be deemed that they at the same time agree that all procedural documents shall be submitted by using the ARBIS system, and in cases where it is not used - by e-mail. In this case, the procedural documents shall be deemed to have been served to the party on the next day after their dispatch.
59.
On 12 March 2018, the main hearing was held. Only representative of the Claimant Mr. Paulius Docka attended the hearing. The Respondent did not attend the hearing although it was dully notified about the date and place of the hearing by Procedural Order No. 2 by e-mail info@tajikairlines.com and z-khafizov@mail.ru which was sent on 26 January 2018 and, according to the e-mail delivery report, received by the addressees on the same day. (Nevertheless, pursuant to Article 4(1) of the Rules, procedural documents shall be deemed to have been served to the party on the next day after their dispatch by e-mail).
60.
On 13 March 2018, the Arbitral Tribunal issued Procedural Order No. 4 declaring oral examination of the case completed, setting the time limit until 21 March 2018 to present documents / requests regarding legal costs and the time limit until 26 March 2018 to provide comments on the documents / requests of the other Party (if any). It was once again noted in Procedural Order No. 4 that based on Article 33 of the Rules where a party fails to present a mandatory procedural document or does not take part in the arbitral hearing without a valid reason, the Arbitral Tribunal shall have the power to proceed with conducting the arbitral proceedings and make an arbitral award based on the evidence available in the case or make procedural decisions stipulated in Article 41 of the Arbitration Rules.
61.
On 21 March 2018 the Claimant filed the Submission on Costs23. No requests regarding legal costs or comments on the Claimant’s Submission on Costs were received from the Respondent.
62.
On 27 March 2018, the Arbitral Tribunal issued Procedural Order No. 5, wherein it declared the proceedings closed under Article 42 of the VCCA Rules and set the time limit for making a final award.

6. THE TRIBUNAL’S ANALYSIS AND DECISION

6.1. RELEVANT ISSUES

63.
Taking into account the dispute between the Parties (Part 4.1 of the Award) and the relief sought by the Claimant (Part 4.2 of the Award) the Arbitral Tribunal shall decide on each of the Claimant’s requests by - first - describing the Parties’ positions, and - second - providing its analysis and decision (see Parts 6.4 - 6.9).
64.
However, before doing that, the Arbitral Tribunal finds it necessary to decide on the jurisdiction of the Arbitral Tribunal to the extent it relates to Article 12(3) of the Law on Commercial Arbitration of the Republic Lithuania (hereinafter - the LCA) as well as on legal effect of Arbitral Award 276 in present Arbitration Case.
65.
On 31 October 2017 the Respondent filed the Statement of Counter-Claim (hereinafter - Statement of Counterclaim). In the Statement of Counterclaim the Respondent asked the Arbitral Tribunal to declare arbitration agreements enshrined in the Lease Agreement invalid based on Article 12(3) of the LCA due to the status of the Respondent being the state enterprise under the laws of the Republic of Tajikistan. The Respondent, however, failed to pay the requested arbitrating fee for the Statement of Counterclaim and, therefore, the Arbitral Tribunal, following Article 41 (4)(4) of the VCCA Rules, left the Statement of Counterclaim unconsidered. The Respondent did not file the objection against jurisdiction of the Arbitral Tribunal either although it had every opportunity to do so as had been aware of the proceedings and the content of the RfA filed against it (see Part 5.2.4 of the Award).
66.
It is the Arbitral Tribunal’s position that due to the procedural behavior of the Respondent described above, it is considered that no counterclaim or objection against jurisdiction of the Tribunal is filed in these proceedings. Nevertheless, the Arbitral Tribunal finds it necessary to decide on the application of Article 12(3) of the LCA to the arbitration agreements enshrined in the Lease Agreements. The Arbitral Tribunal shall not consider the arguments of the Respondent contained in the Statement of Counterclaim as well as in the Claimant’s Answer to the Statement of Counterclaim on the merits of the case as these specific arguments are excluded from the scope of this Arbitration Case and deciding on them could mean exceeding the mandate of the Arbitral Tribunal. The Arbitral Tribunal further, in Part 6.2, shall decide only on applicability of Article 12(3) of the LCA which is a mandatory legal norm of lex arbitri as in such cases the Arbitral Tribunal is considered being entitled to decide on its jurisdiction ex officio24.
67.
As to legal effect of the Arbitral Award 276, the Arbitral Tribunal determines the extent to which factual and legal findings in the Arbitral Award 276 are applicable in this Arbitration Case in Part 6.3.

6.2. ARBITRAL TRIBUNAL’S JURISDICTION

68.
The Arbitral Tribunal finds that Article 12(3) of the LCA does not render arbitration agreements signed by the Respondent invalid for the following reasons.
69.
First of all, Article 12(3) of the LCA is not applicable to the foreign entities. The legislative history of the LCA clearly suggests that the restrictions enshrined in Article 12(3) could be applicable to the State entities incorporated under Lithuanian law only.
70.
The restrictions for the State entities to enter into arbitration agreements were first introduced into Lithuanian law in 1996 when the LCA was adopted25. These restrictions were enshrined in Article 11(2) of the LCA (until new wording of the LCA was adopted in 2012). Article 11(2) of the LCA (wording of 1996) provided the following:

"disputes may not be referred to arbitration if one of the parties is a state or municipal enterprise or an institution or organisation, unless the prior consent of the founder of such enterprise, institution or organisation regarding the arbitration agreement has been obtained".

71.
In 2001 Article 11(2) of the LCA was amended by making an exception to the Bank of Lithuania. The amended norm stated the following:

" disputes may not be referred to arbitration if one of the parties is a state or municipal enterprise or an institution or organisation, except for the Bank of Lithuania is a party to, unless the prior consent of the founder of such enterprise, institution or organisation regarding the arbitration agreement has been obtained."

72.
Without questioning the reasoning for such amendment, it is clear to the Arbitral Tribunal that the restrictions were designed to apply to the Lithuanian State entities and institutions, but not the foreign ones. As the wording of the restrictions remained the same in the new wording of the LCA adopted in 2012, the same applies to the restrictions enshrined in Article 12(3) of the LCA. Therefore, when deciding whether the status of the Respondent could have any effect on the validity of its consent to decide disputes in arbitration on the basis of Article 12(3) of the LCA, the test is if the Respondent is a Lithuanian entity or institution. The Respondent is an entity established under the laws of the Republic of Tajikistan and that alone bars any possibility of application of Article 12(3) of the LCA.
73.
Secondly, even despite the fact that restrictions in Article 12(3) of the LCA are designed for the Lithuanian State entities, the Arbitral Tribunal adds that under the legislative history of the LCA the restrictions should not apply in international commercial arbitration cases. It is noted in the travaux préparatories of the new wording of the LCA that in case of international commercial arbitration a public actor assumes particular international obligations (pacta sunt servanda), therefore, it is acknowledged that the state is not allowed to rely on domestic law in order to avoid these obligations.26
74.
Moreover, under interpretation of the Supreme Court of the Republic of Lithuania (hereinafter - the Supreme Court), restrictions enshrined in Article 12(3) (ex Article 11(2)) of the LCA are considered as limitations on capacity of the party to the arbitration agreement27. According to Lithuanian conflict of laws rules, the capacity of a foreign legal person is to be determined according to the laws of the State in which this person is founded28. In case of the Respondent it is not the Republic of Lithuania, therefore, the capacity of Respondent is not to be determined under Lithuanian law29.
75.
Considering the above, the Arbitral Tribunal holds that Article 12(3) of the LCA does not affect the validity of the arbitration agreement included in the Lease Agreements. Due to that and the fact that the dispute is clearly of a commercial nature (therefore, arbitrable under Article 12(1) and (2) of the LCA) the Arbitral Tribunal has jurisdiction to decide on the Parties’ dispute in this Arbitration Case.

6.3. LEGAL EFFECT OF ARBITRAL AWARD 276 IN ARBITRATION CASE

76.
In the RfA the Claimant argues that not only the dispositive part of Arbitral Award 276 but also the circumstances established in the Arbitral Award 276 have res judicata effect. The Claimant relics on the provisions of the LCA, Code of Civil Procedure of the Republic of Lithuania as well as arbitration doctrine30.
77.
The Arbitral Tribunal agrees with the Claimant on the legal effect of the Arbitral Award 276.
78.
Article 41(3) of the LCA states that after the arbitral award is issued the parties of the dispute are prevented from filing the same claims regarding the same subject matter and based on the same grounds. The LCA expressly establishes only one side of the res judicata doctrine and is silent on the other side, according to which, the circumstances established in the arbitral award have res judicata (or so-called "preclusive") effect in subsequent arbitration proceedings. However, absence of such express regulation, in Arbitral Tribunal’s opinion, does not mean that the Arbitral Tribunal is prevented from applying broader doctrine of res judicata which precludes not only re-examination of the same dispute between the same parties but also re-examination of the issue of fact or law that was previously decided in proceedings between the same parties. The Arbitral Tribunal comes to such conclusion for the following reasons.
79.
First of all, Lithuanian procedural law (namely, the Code of Civil Procedure) acknowledges both sides of res judicata doctrine: the party is prevented not only from bringing the same claim, but also from questioning the facts established in previous case. Thus, the Arbitral Tribunal finds no good reason why the application of the doctrine of res judicata in respect of arbitration awards should be different from that in respect of court judgments, provided the parties to the dispute are the same.
80.
Secondly, it would be simply unfair to the Parties if the Arbitral Tribunal departed from the views held in previous award in which the same facts were examined.
81.
Thirdly, there is a clear tendency in international commercial arbitration for the courts and tribunals to apply the same (or even more flexible) rules of the doctrine of res judicata as in case of the court judgements31.
82.
Considering the above and due to the fact that Arbitral Award 276 in part dealt with the same questions under the Lease Agreements as are being raised in the Arbitration Case, the Arbitral Tribunal further takes into account and / or relies on the findings and views held in Arbitral Award 276. Due to the arguments indicated above, the Arbitral Tribunal finds it reasonable to take into account not only factual circumstances but also legal findings established in Arbitral Award 276.

6.4. OUTSTANDING LEASE OF USD 4,306,100

6.4.1. Parties’ positions

6.4.1.1. Claimant’s position

83.
The Claimant claims that the Claimant undertook to lease both Aircraft and deliver them to the Respondent. It is the Claimant’s position that the Claimant duly performed its obligations under the Lease Agreements and it does not require additional proof as it is confirmed by the Arbitral Award 276. Despite the fact that according to Articles 1.5 and 5.2.1 of the Lease Agreements the Respondent was obliged to pay the Lease and that the outstanding Lease were awarded by the Arbitral Award 276, the Respondent continued infringement of the Lease Agreements by failing to pay the Lease. As the Lease for the period of 1 October 2012 through 1 July 2013 was awarded by the Arbitral Award 276, the lease term of Aircraft 1 expired on 30 September 2014 and the lease term of the Aircraft 2 expired on 29 October 2014, the Claimant claims the Lease from the Respondent for the following period:

i) the Lease for the Aircraft 1 starting from 1 August 2013 and ending on 30 September 2014;

ii) the Lease for the Aircraft 2 stalling from 1 August 2013 and ending on 29 October 201432.

84.
The Claimant further provided information on the invoices issued to the Respondent for the Lease for both Aircraft and attached the invoices to the RfA33.
85.
According to the Claimant, the following invoices were issued to the Respondent for the lease of the Aircraft 1 for the period of 1 August 2013 - 30 September 20 1 434:

No Invoice No. Invoice Date Amount of the Invoice
1. B03 No. 13078 1 August 2013 USD 149,000
2. B03 No. 13090 2 September 2013 USD 149,000
3. B03 No. 13097 1 October 2013 USD 149,000
4. B03 No. 13111 4 November 2013 USD 149,000
5. B03 No. 13121 2 December 2013 USD 149,000
6. B03 No. 14004 2 January 2014 USD 149,000
7. B03 No. 14014 3 February 2014 USD 149,000
8. B03 No. 14020 3 March 2014 USD 149,000
9. B03 No. 14028 1 April 2014 USD 149,000
10. B03 No. 14036 2 May 2014 USD 149,000
11. B03 No. 14045 2 June 2014 USD 149,000
12. B03 No. 14053 1 July 2014 USD 149,000
13. B03 No. 14061 1 August 2014 USD 149,000
14. B03 No. 14069 1 September 2014 USD 149,000
Total amount:USD 2,086,000

86.
According to the Claimant, the following invoices were issued to the Respondent for the lease of the Aircraft 2 for the period of 1 August 2013 - 29 October 201435:

No. Invoice No. Invoice Date Amount of the Invoice
1. B03 No. 13077 1 August 2013 USD 149,000
2. B03 No. 13089 2 September 2013 USD 149,000
3. B03 No. 13096 1 October 2013 USD 149,000
4. B03 No. 13110 4 November 2013 USD 149,000
5. B03 No. 13120 2 December 2013 USD 149,000
6. B03 No. 14003 2 January 2014 USD 149,000
7. B03 No. 14013 3 February 2014 USD 149,000
8. B03 No. 14019 3 March 2014 USD 149,000
9. B03 No. 14027 1 April 2014 USD 149,000
10. B03 No. 14035 2 May 2014 USD 149,000
11. B03 No. 14044 2 June 2014 USD 149,000
12. B03 No. 14052 1 July 2014 USD 149,000
13. B03 No. 14060 1 August 2014 USD 149,000
14. B03 No. 14068 1 September 2014 USD 149,000
15. B03 No. 14076 1 October 2014 USD 134,100
Total amount:USD 2,220,100

87.
Considering the above, the Claimant asks the Arbitral Tribunal to award USD 4,306,100 of the outstanding Lease (USD 2,086,000 + USD 2,220,100).

6.4.1.2. Respondent's position

88.
The Respondent did not provide its position regarding the Claimant’s request to award the outstanding Lease, although it had every opportunity to do so: the Respondent was aware of the ongoing arbitration proceedings (the Authorization was issued to Mr. Zafar Khafizov for representation of the Respondent specifically in this dispute already on 5 October 201736; the representative of the Respondent was actively engaged in the e-mail correspondence with the VCCA (see Part 5.2.4 of the Award); the Respondent filed the Counterclaim in these proceedings on 31 October 2017, etc.), the Respondent was encouraged to provide its position in writing in the English language a number of times by both the VCCA and the Arbitral Tribunal (see paras 42, 49, 53 of the Award).

6.4.2. Tribunal’s analysis

89.
Article 1.5 of the Lease Agreements reads as follows:

"1.5 Rent During Finance Lease Term

FINANCIAL LESSEE will pay to FINNANCIAL LESSOR monthly rent in the following amounts ("Rent") as set forth below

Finance Lease Term MonthsAmount of Monthly Rent
Finance Lease Term:149,000 USD (one hundred forty nine thousand US Dollars), payable monthly in advance"

90.
Article 5.2.1 of the Lease Agreements reads as follows:

"5.2.1 Amount of Rent. FINANCIAL LESSEE will pay to FINANCIAL LESSOR One. Hundred Forty Nine Thousand U.S. Dollars (USS 149,000) monthly in advance as rent for the Aircraft ("Rent"). The. Rent is fair and individually negotiated by considering the economic circumstances for the next 60 (sixty) months after the Delivery Date. The obligation to pay the Rent shall be absolute and unconditional under any and all circumstances and regardless of other events."

91.
According to Article 6,477(1) of the Civil Code of the Republic of Lithuania (hereinafter - the CC) under a contract of lease one party (lessor) shall be obliged to grant to the lessee a thing for payment in temporary possession and use, and the other party (lessee) shall undertake to pay a lease payment. It is repeated in Article 6,487(1) of the CC that the lessee shall be obliged to pay the lease payment on time. Hence, the Respondent is obliged to pay the Lease to the Claimant based on both the applicable law and the Lease Agreements.
92.
From the evidence provided by the Claimant it is clear that the Claimant performed its essential duty to deliver the Aircraft to the Respondent properly. It is proven by the Respondent’s signature on Final Acceptance Certificates confirming the delivery of the Aircraft 1 on 30 September 2009 and Aircraft 2 on 29 October 2009.37 In addition, the fact that Claimant performed its duty to deliver the Aircraft to the Respondent is confirmed by the Arbitral Award 276, which is considered having res judicata effect in this Arbitration Case (see Part 6.3 of the Award).
93.
Since the Claimant properly performed its obligation to deliver the Aircraft to the Respondent, the Respondent was obliged to pay the Lease. By failing to do that the Respondent breached both the provisions of the applicable law (namely, Articles 6,477(1) and 6,487(1) of the CC) as well as the Lease Agreements (namely, Articles 1.5 and 5.2.1 of the Lease Agreements).
94.
The Claimant claims the Lease payable from 1 August 2013 because the outstanding Lease for the previous period ending 1 July 2013 was already awarded to Claimant by the Arbitral Award 276.
95.
According to the Lease Agreements, the lease term of the Aircraft was 60 months. Since the Aircraft I was delivered to the Respondent on 30 September 2009, the end of the lease term of the Aircraft 1 is 30 September 2014. Since the Aircraft 2 was delivered to the Respondent on 29 October 2009, the end of the lease term of the Aircraft 2 is 29 October 2014.
96.
Considering the above, the Arbitral Tribunal decides that the Claimant’s request to award Lease for the Aircraft 1 for the period of 1 August 2013 -30 September 2009 and for the Aircraft 2 for the period of 1 August 2013 - 29 October 2014 by applying USD 149,000 monthly lease rate, i.e. USD 2,086,000 for the Aircraft 1 and USD 2,220,100 for the Aircraft 2 is justified.
97.
Considering the above, the Arbitral Tribunal awards the Respondent to pay to the Claimant USD 4,306,100 (USD 2,086,000 + USD 2,220,100) of the outstanding Lease.

6.5. PRE-AWARD INTERESTS AMOUNTING TO USD 1,574,852.43

6.5.1. Parties’ positions

6.5.1.1. Claimant’s position

98.
Due to the fact that the Respondent breached the obligation to pay the Lease in time the Claimant claims USD 1,574,852.43 of pre-award interests based on Article 5.7 of the Lease Agreements38.
99.
The Claimant’s calculation of the pre-award interest for payments for the Aircraft 1 (USD 767,132.24) is provided in Exhibit C-15 and for the Aircraft 2 (USD 807,720.19) - in Exhibit C-16 attached to the RfA.
100.
The pre-award interest is calculated by the Claimant using LIBOR interest rate. It is explained by the Claimant that "LIBOR is London Interbank Offered Rate and it is a benchmark for interest rate. In this current case the source of the value of LIBOR was the web site of the official administrator ICE Benchmark Administration39 for each date on which the amount was originally due."

6.5.1.2. Respondent’s position

101.
The Respondent did not provide its position regarding the Claimant’s request to award pre-award interest, although it had every opportunity to do so (see para 88 of the Award).

6.5.2. Tribunal’s analysis

102.
Article 5.7 of the Lease Agreements reads as follows:
103.
"Default Charge.If FINANCIAL LESSOR does not receive on Financial Lessor’s Bank Account the Rent or any other amount on or before the specific date when due, the FINANCIAL LESSOR will suffer loss and damage the exact nature and amount of which are difficult or impossible to ascertain. FINANCIAL LESSEE will pay FINANCIAL LESSOR as supplemental Rent (by way of agreed compensation and not as a penalty) a charge on any due and unpaid amounts payable by FINANCIAL LESSEE under this Finance Lease. Such charge will be calculated at six month LIBOR in effect on the date on which the amount was originally due plus ten percent (10%) for the period from the date the amount originally was due through the date the amount actually is received at FINANCIAL LESSOR’s Bank or, in the case of FINANCIAL LESSOR’s performance of FINANCIAL LESSEE’S obligations hereunder, from the date of payment by FINANCIAL LESSOR through the date of FINANCIAL LESSEE’S repayment to FINANCIAL LESSOR ("Default Charge"). Default Charge will accrue on a day-to-day basis and be compounded monthly."
104.
The Arbitral Tribunal already established that the Respondent breached its obligation to pay the Lease in time (see paras 89-96 of the Award). Hence, the Claimant is entitled to pre-award interest based on Article 5.7 of the Lease Agreements. Parties’ agreement on payment of pre-award interest (Default Charge) enshrined in Article 5.7 of the Lease Agreement, in Arbitral Tribunal’s opinion, is fully compatible with and enforceable under applicable Lithuanian law.
105.
Since the Respondent did not raise any objections against the Claimant’s request to award pre-award interest, nor did the Respondent raise any objections regarding calculation of such pre-award interest, the Arbitral Tribunal reviews only the basic principle of calculation of the pre-award interest and does not perform detailed verification of the Claimant’s calculations.
106.
As it is evident from the calculation tables provided by the Claimant40 the pre-award interest is calculated using LIBOR (London Interbank Offered Rate) applicable on the date of the payment of the Lease increased by 10 (ten) percent from the amount of the unpaid Lease from the date the Lease was due (for each of the invoice) until 5 September 2017 which was the date when the Claimant filed the RfA and initiated present arbitration proceedings. Such calculation, in Arbitral Tribunal’s opinion, is fully in line with the Parties’ agreement enshrined in Article 5.7 of the Lease Agreements. Therefore, the Arbitral Tribunal decides that that the Claimant’s request to award pre-award interest of USD 767,132.24 for the unpaid Lease for the Aircraft 1 and USD 807,720.19 for the unpaid Lease for the Aircraft 2 is justified.
107.
Considering the above, the Arbitral Tribunal awards the Respondent to pay to the Claimant USD 1,574,852.43 of the pre-award interests (USD 767,132.24 + USD 807,720.19).

6.6. DEFAULT LEASE AMOUNTING TO USD 10,335,473.11

6.6.1. Parties’ position

6.6.1.1. Claimant’s position

108.
The Claimant notes that the Respondent failed to redeliver the Aircraft after the lease term (60 months) has expired and therefore, violated its duty under Article 23.1 of the Lease Agreements as well as Article 6,499(1) of the CC41.
109.
In Claimant’s opinion, the Claimant is entitled to the Lease from the date when the Aircraft had to be redelivered to the Claimant (hereinafter - the Default Lease) based on Article 23.12.1 of the Lease Agreements as well as Article 6,499(3) of the CC. The Claimant also relies on the case law of the Supreme Court42.
110.
Claimant requests to award from the Respondent USD 5,239,833.33 of the Default Lease for the Aircraft 1 calculated using USD 149,000 Lease rate for the period from 1 October 2014 (re-delivery date of the Aircraft 1) until 5 September 2017 (the date of the submission of the RfA) as well as USD 5,095,639.78 of the Default Lease for the Aircraft 2 calculated using USD 149,000 Lease rate for the period from 30 October 2014 (re-delivery date of the Aircraft 2) until 5 September 2017 (the date of the submission of the RfA), i.e. the Claimant request to award in total USD 10,335,473.11 of the Default Lease43.

6.6.1.2. Respondent's position

111.
The Respondent did not provide its position regarding the Claimant’s request to award the Default Lease, although it had every opportunity to do so (see para 88 of the Award).

6.6.2. Tribunal’s analysis

112.
Article 6,499(1) of the CC provides:

"Upon the termination of the contract of lease, the lessee shall be bound to return the thing to the lessor in the same condition as received, taking into account normal depreciation, or in the state agreed in the contract."

113.
Article 23.1 of the Lease Agreements reads as follows:

"23.1 Date of Return. FINANCIAL LESSEE is obligated to return the Aircraft, Engines, APU, Parts and Aircraft Documentation to FINANCIAL LESSOR on the Expiration Date, unless a Total Loss of the Aircraft occurred prior to the Expiration Date and this Finance Lease was terminated early in accordance with Article 19.3. If an Event of Default occurs hereunder by FINANCIAL LESSEE failing to return the Aircraft on the Expiration Date or if an Event of Default occurs prior to or after the Expiration Date and FINANCIAL LESSOR repossesses the Aircraft, the return requirements set forth in this Article 23 nonetheless must be met on the date the Aircraft is actually returned to FINANCIAL LESSOR or repossessed by FINANCIAL LESSOR."

114.
Article 4.2 of the Lease Agreements reads as follows:

"4.2 "Expiration Date". "Expiration Date" means the date on which FINANCIAL LESSEE is required to redeliver the Aircraft to FINANCIAL LESSOR in the condition required by this Finance Lease on the last day of the Finance Lease Term."

115.
According to Article 4.1 lease term is sixty (60) months from the delivery date.
116.
As it was already established by the Arbitral Tribunal delivery date of the Aircraft I was 30 September 2009, Aircraft 2-29 October 2009, hence the lease term for the Aircraft 1 expired on 30 September 2014 and for the Aircraft 2 - on 29 October 2014. It means that based on the provisions of Article 23.1 of the Lease Agreements as well as Article 6,499(1) of the CC the Respondent had to return the Aircraft 1 to the Claimant on 30 September 2014 and the Aircraft 2 - on 29 October 2014.
117.
Based on evidence provided by the Claimant, namely, Notice of Redelivery of the Aircraft of 24 April 201744, Notice on Default of 19 May 20 1 745, Letter of the Respondent No. 1.3/1-974 of 22 May 201746, Inspection report of Mr. Artūras Vegys47, the Aircraft were not returned (redelivered) to the Claimant and are up till now in the possession of the Respondent. The Respondent did not provide any explanation for the failure to redeliver the Aircraft. Hence, the Arbitral Tribunal concludes that the Respondent failed to perform its obligation to redeliver the Aircraft and further decides on whether the Respondent is bound by the duty to pay the Default Lease due to such failure.
118.
Article 6,499(3) of the CC provides:

" In the event of the failure on the part of the lessee to return the leased thing, he shall be bound to compensate to the lessor the amount of the value of that thing, likewise to effectuate the payment of lease and compensate for other damages incurred by the lessor. "

119.
Article 23.12.1 of the Lease Agreements reads as follows:

"23.12 FINANCIAL LESSEE’S Continuing Obligations. In the event that FINANCIAL LESSEE does not return the Aircraft to FINANCIAL LESSOR on the Expiration Date and in the condition required by this Article 23 for any reason (whether or not the reason is within FINANCIAL LESSEE’S control):

23.12.1 the obligations of FINANCIAL LESSEE under this Finance Lease will continue in full force and effect on a day-to-day basis until such return. This will not be considered a waiver of FINANCIAL LESSEE'S Event of Default or any right of FINANCIAL LESSOR hereunder."

120.
It is clear from the above that both the law and the Lease Agreements imposes the duty on the Financial Lessor to pay the Lease for the Aircraft in case of failure to redeliver the Aircraft at the end of the lease term. Hence, due to the failure to redeliver the Aircraft the Respondent is bound by the duty to pay the Claimant the Default Lease for the Aircraft (USD 149,000 per month for each Aircraft). Consequently, the Arbitral Tribunal finds that the Claimant’s request to award the Default Lease of USD 5,239,833.33 for the Aircraft 1 and USD 5,095,639.78 for the Aircraft 2 is justified.
121.
Considering the above, the Arbitral Tribunal awards the Respondent to pay to the Claimant USD 10,335,473.11 of the Default Lease (USD 5,239,833.33 + USD 5,095,639.78).

6.7. VALUE OF THE AIRCRAFT AMOUNTING TO USD 4,000,000

6.7.1. Parties’ position

6.7.1.1. Claimant’s position

122.
The Claimant claims that in accordance with Article 23.9.4 of the Lease Agreements, the Aircraft had to be redelivered in the airworthy condition, moreover, fully satisfying other exact requirements agreed in Article 23 of the Lease Agreements. In addition, Article 6,499(1) also requires the Respondent to return the Aircraft in the same condition as received, taking into account normal depreciation, or in the condition as agreed in the lease agreement.48
123.
The Claimant further asserts that since 1 October 2012 (when the Respondent ceased paying the Lease for the Aircraft under the Lease Agreements) the Parties are in disagreement and despite the Claimant’s efforts the Parties have not been able to solve the dispute amicably.49 To support the latter statement the Claimant presented written communication with the Respondent requesting to return the Aircraft50 as well as Witness Statement of Mr. Rolandas Rakauskas of 27 February 201 851.
124.
The Claimant explains52 that under Article 12.1 and Article 23.9.1 of the Lease Agreements, the Respondent undertook to maintain and repair the Aircraft at its own expense and in accordance with:

i) maintenance program (maintenance program means the Respondent's maintenance program as approved by the aviation authority or such other maintenance program as the Claimant may, in its discretion, accept in writing53);

ii) the rules and regulations of the aviation authority (aviation authority means the Civil Aviation Administration of the Republic of Lithuania or any government entity which under the laws of the Republic of Lithuania from time to time has control over civil aviation or the registration, airworthiness or operation of aircraft in Lithuania. Aviation authority means also Tajik Civil Aviation Authority or any government entity to which based on Article 83 bis of the Convention of International Civil Aviation certain duties and rights have been transferred by the Civil Aviation Authority of the Republic of Lithuania under 83bis Agreement and within the scope of delegation54);

iii) manufacturer's type design (manufacturer means the Boeing Company55); and

iv) any other regulations or requirements, which are necessary to maintain valid Certificates of Airworthiness of the Aircraft, meet all other requirements of airworthiness and under Article 23 of the Lease Agreements in order to be able to operate the Aircraft.

125.
In Claimant’s opinion, the Respondent failed to maintain and repair the Aircraft properly and, therefore, the Aircraft lost their airworthiness: i) the Aircraft 1 became not airworthy on 28 August 2013, when its Airworthiness Review Certificate became invalid and was not renewed by the Civil Aviation Administration of the Republic of Lithuania56; ii) the Aircraft 2 became not airworthy on 16 June 2014, when its Airworthiness Review Certificate became invalid and was not renewed by the Civil Aviation Administration of the Republic of Lithuania57.
126.
The Claimant explained that a valid Airworthiness Review Certificate is a certificate which confirms airworthiness of the aircraft and that it is allowed to be operated. Any aircraft becomes not airworthy in case of irregular and / or improper maintenance and / or repair. The foregoing also causes suspension or invalidity of the Airworthiness Review Certificate. Such suspension or invalidity means that a person is not allowed to operate an aircraft. As the Aircraft are registered in the Registry of the Civil Aircraft of the Republic of Lithuania, the laws of the Republic of Lithuania and regulations of EASA are applicable. Pursuant to Article 29(1) of the Law on Aviation, in order to operate and use any aircraft in the air space of the Republic of Lithuania, the aircraft must be airworthy and to maintain a valid Certificate of Airworthiness. Under Article 29(2) of the Law on Aviation, the aircraft shall be considered as airworthy in case it is respectively designed, manufactured, installed, maintained and its flight characteristics comply with the requirements of flight safety.58
127.
It is also the Claimant’s position that despite the fact that the redelivery of the Aircraft is the Respondent’s obligation, it is impossible to return the Aircraft to the Republic of Lithuania by the Claimant itself as the Claimant would be forced to suffer significant losses in order to return the Aircraft which lost their main functionality, i.e. they cannot be operated and perform flights.59
128.
Based on the arguments indicated above the Claimant claims that the loss of airworthiness of the Aircraft due to breach of one of the material obligations under the Lease Agreements, i.e. ensuring maintenance of the Aircraft, by the Respondent, along with non-redelivery of the Aircraft for almost 4 (four) year's, deprive the Claimant from its, as the Aircraft’s owner, main right to dispose the Aircraft. Therefore, the provisions of CC, i.e. Article 6,502(1) and Article 6,499(3), should apply and the Aircraft considered lost / destroyed due to actions of the Respondent.60
129.
On 12 January 2018 the Claimant filed Submission on Additional Evidence (hereinafter -the Submission on Additional Evidence) together with the Inspection Report of Mr. A. Vegys on the Aircraft technical condition and determination of the tests required to restore both Aicraft’s airworthiness and average market price for such tasks (hereinafter - the Inspection Report)61. It is indicated in the Inspection Report that both Aircraft are not airworthy, stored improperly and that it is impossible to restore the airworthiness of the Aircraft62.
130.
The Claimant further asserts that since it is impossible for the Respondent to redeliver the Aircraft in the condition agreed in Article 23 of the Lease Agreements, the Claimant has a right to refuse to accept such Aircraft. This right, in the words of the Claimant, is confirmed by the case law of the Supreme Court and Lithuanian Court of Appeal63. The Claimant further elaborates that pursuant to the case law of the Supreme Court the liability of the lessee under Article 6,502(1) of the CC occurs at his fault. The fault of the lessee on the loss of the leased object is presumed. Accordingly, the lessee shall prove that the leased object was not lost due to his fault. Further, pursuant to the case law of the Supreme Court and Lithuanian Court of Appeal, where in the event of lessee’s failure to redeliver the leased object, the court established that the lessor has the right to request and the lessee is bound to compensate the amount of the value of the leased object64.
131.
The Claimant notes that Pursuant to Article 1.10 and Article 5.15.1 of the Lease Agreements, the Claimant and the Respondent agreed on the different value of the Aircraft:

i) USD 5,250,000 for each of the Aircraft on the Redelivery Dates based on Article 1.10 of the Lease Agreements, and

ii) USD 2,000,000 for each of the Aircraft on the Redelivery Dates under Article 5.15 of the Lease Agreements, if the Respondent opts for purchase option under the Lease Agreements65.

132.
Due to the fact that both the Claimant and the Respondent agreed on the price of the Aircraft, which is a fair price and reflects the deprivation of the Claimant, under Article 5.15.1 of the Lease Agreements (USD 2,000,000 each of the Aircraft on the Redelivery Dates), in Claimant’s opinion, the agreed price, i.e. value of the Aircraft should apply in this current case. Hence, the Claimant claims from the Respondent for compensation of USD 4,000,000 (four million US Dollars) as the value of both Aircraft66.
133.
In order to support the requested value of the Aircraft the Claimant also submitted the following evidence:

i) the Inspection Report, according to which in order to restore the Aircraft’s airworthiness status the average marked value of the required / expected tasks are from EUR 1,097,550 to 2,802,150 for the Aircraft 1 and from EUR 920,200 to EUR 2,624,800 for the Aircraft 267;

ii) AVITAS BlueBook of Jet Aircraft Values (hereinafter - BlueBook) extract68 according to which, provided the Aircraft have been maintained and stored properly, the market value of each Aircraft would be USD l,700,00069;

iii) Desktop Appraisal of the Aircraft (hereinafter - Desktop Appraisal) performed by Tailwind Capital, LLC (hereinafter - Tailwind)70 which, as Claimant alleges, reaffirms the total loss of the Aircraft and according to which the Aircraft can be valuated only as scrap and as such are each worth EUR 350,000 provided they are stored in accordance with original equipment manufacturer’s guidelines71.

6.7.1.2. Respondent's position

134.
The Respondent did not provide its position regarding the Claimant’s request to award value of the Aircraft, although it had every opportunity to do so (see para 88 of the Award).

6.7.2. Tribunal’s analysis

135.
It was already established by the Arbitral Tribunal that the Respondent failed to re-deliver the Aircraft to the Claimant and, therefore, breached its obligations under both the applicable law and the Lease Agreements (see para 117 of the Arbitral Award). It is, therefore, Article 6,499 of the CC applicable requiring the Respondent to compensate the amount of the value of the Aircrafts and other damages incurred by the Claimant.
136.
The Claimant relies not only on Article 6,499 of the CC but also on Article 6,502(1). Article 6,502(1) of the CC reads as follows:

" The lessee shall be liable for the loss of a thing unless he proves that the loss was not due to his fault or that of the persons he, upon the permission of the lessor, granted the right of use of the leased thing or allowed access thereto."

137.
In Claimant’s opinion, the Aircraft should be considered lost / destroyed due to actions of the Respondent as the Respondent failed to properly maintain the Aircraft.
138.
Based on the evidence provided by the Claimant the Arbitral Tribunal establishes the following relevant factual circumstances:

i) The Respondent failed to properly maintain the Aircraft and, therefore, violated Article 12 of the Lease Agreements ("Maintenance of Aircraft"):

a) Both Aircraft have become not airworthy more than three years ago: Airworthiness Review Certificate, ARC reference 0149472 proves that the certificate for the Aircraft 1 was not renewed by the Civil Aviation Administration of the Republic of Lithuania after 28 August 2013 while Airworthiness Review Certificate, ARC reference 0148273 proves that the certificate for the Aircraft 2 was not renewed by the Civil Aviation Administration of the Republic of Lithuania after 16 June 2014;

b) Inspection Report74 confirms that both Aircraft currently are in non-airworthy condition, are not properly stored, no proof that any maintenance actions were performed after 22 July 2016 were found.

ii) Due to the failure to properly maintain the Aircraft (see item (i) above) the Respondent could not return the Aircraft in the condition required by Article 23 of the Lease Agreement nor could it be done today;

iii) Restoration of the airworthiness of the Aircraft requires considerable expenditures: based on the Inspection Report the average market price for the tasks required to restore airworthiness of the Aircraft is from EUR 1,097,555 to EUR 2,802,150 for the Aircraft 1 and from EUR 920,000 to 2,624,800 for the Aircraft 275.

iv) Based on BlueBook extract76, provided the Aircraft have been maintained and stored properly, the market value of each Aircraft would be USD 1,700,000;

v) Based on Desktop Appraisal77 market value of the Aircraft is close to a scrap or part-out value and equals approx. USD 350,000 each (hereinafter - the Desktop Appraisal Value);

vi) Both Aircraft physically exist78;

vii) Based on Inspection Report, absence of Part 145 approved maintenance provider in the Republic of Tajikistan and the fact that the Aircraft cannot be transported due to the loss of airworthiness are very serious obstacles for restoration of the airworthiness of the Aircraft79.

139.
It is evident for the Arbitral Tribunal that due to the situation described above and considering the applicable legal rules the Respondent is liable for the deterioration of the status of the Aircraft and the inability to return the Aircraft in condition described in the Lease Agreements. However, the extent to which the Respondent is liable poses an important question whether the current value of the Aircraft should be deducted from the value it could have had if the maintenance of the Aircraft was performed properly.
140.
The Aircraft physically exist and their Desktop Appraisal Value is USD 350,000 each. Hence, one could argue that the Desktop Appraisal Value should be deducted from the value of the Aircraft requested by the Claimant (provided the value requested is considered just and reasonable) since the ownership of the Aircraft is not affected by the Award. However, the Arbitral Tribunal is of the opinion that it would be unfair to deduct such Desktop Appraisal Value of the Aircraft for the following reasons.
141.
First of all, the real current value of the Aircraft might be close to zero. The Desktop Appraisal Value of the Aircraft, USD 350,000 each, was established by Tailwind based on the assumption that the Aircraft are stored in accordance with OEM guidelines for storage and maintenance. Tailwind noted that if not, the established values may be reduced significantly80. At the same time it is clearly provided in the Inspection Report that the Aircraft are stored improperly81.
142.
Secondly, the deduction would not serve its purpose. Deduction of the Desktop Appraisal Value of the Aircraft would be reasonable only if the Claimant had immediate possibility to further use the Aircraft for its own purposes. This is completely not the case here. The Aircraft remain in the possession of the Respondent who is not willing to make any efforts to return the Aircraft to the Claimant although requested to do that by the Claimant several times. Repossession of the Aircraft by the Claimant seems impossible. Furthermore, such repossession seems also unreasonable and unfair to the Claimant as the Aircraft lost their main functionality and cannot be operated while restoration of their airworthiness, taking into account their Desktop Appraisal Value (max USD 350,000 each), the value of the properly maintained Aircraft established in BlueBook (USD 1,700,000 each), the costs needed to restore airworthiness (from 1 to 3 million euros for each Aircraft), seems rather irrational.
143.
Hence, the Arbitral Tribunal takes the view that the value of the Aircraft which existed on the day the Aircraft had to be redelivered (October 2014) must be compensated.
144.
The Parties agreed in the Lease Agreement on the value of the Aircraft. Based on Article 1.10 of the Lease Agreement the value of the Aircraft provided they were properly maintained would have been USD 5,250,000 since under Article 1.10 of the Lease Agreements the Parties agreed that the value of the Aircraft is USD 9,000,000 and it will decrease by USD 750,000 on each anniversary of the Delivery Date. However, the Claimant requests compensation which equals not USD 5,250,000 for each Aircraft but USD 2,000,000, i.e. purchase price under Article 5.15.1 of the Lease Agreement applicable in case the Respondent would have chosen to purchase the Aircraft after the lease term had expired.
145.
The requested value of the Aircraft (USD 2,000,000 each) is confirmed by the agreement between the Parties, from the two values enshrined in the Lease Agreement the Claimant requests for the lower one, in addition, it is very close to the one established in BlueBook (USD 1,700,000; however, the latter is established for the year of 2017). Hence, the Arbitral Tribunal finds the requested value of the Aircrafts fair and reasonable and satisfies the request of the Claimant to award USD 4,000,000 (USD 2,000,000 + USD 2,000,000) as the value of the Aircrafts.
146.
Considering the above, the Arbitral Tribunal awards the Respondent to pay to the Claimant USD 4,000,000 as the value of both - the Aircraft 1 and the Aircraft 2.

6.8. POST AWARD INTEREST

6.8.1. Parties’ positions

6.8.1.1. Claimant’s position

147.
The Claimant asks the Tribunal to award 8 percent of annual post award interest from the amount awarded to the Claimant as from the submission of the RfA until the final execution of the Award.
148.
The Claimant relies on the provisions of the CC (Article 6.37(2) and the Law on Prevention of Late Payment in Commercial Transactions of the Republic of Lithuania No. IX-1873 of 9 December 2003 (hereinafter - Late Payment Law). In Claimant’s opinion the interest rate shall be calculated based on the latter law as the application of this law is confirmed in the Arbitral Award 276 which has the res judicata effect in this case.82 The Claimant also provides evidence proving that the interest rate of the main refinancing operations on 1 July 2017 was announced to be 0 percent83, therefore, the interest rate of 8 percent which is established by the Late Payment Law shall be applicable.84

6.8.1.2. Respondent’s position

149.
The Respondent did not provide its position regarding the Claimant’s request to award post award interest, although it had every opportunity to do so (see para 88 of the Award).

6.8.2. Tribunal’s analysis

150.
Following Article 6.37(2) of the CC the debtor shall also be bound to pay a certain interest established by laws on the sum adjudged to the creditor for the period from the moment of the commencement of the case in the court until the final execution of the judgement.
151.
Article 1 of the Late Payment Law provides that the purpose of the Law is to regulate interest on late payments for the goods sold, services provided and works carried out as well as to establish the rights of creditors in case of late payment. Article 2 of the Late Payment Law provides that this Law applies to all payments made as remuneration for commercial transactions concluded between economic entities or between economic entities and public authorities which lead to the delivery of goods, provision of services or performance of works for remuneration and in which payments are made.
152.
Since the Lease Agreements concluded by the Parties are clearly commercial transaction, the Arbitral Tribunal is convinced that the interest rate should be determined based on the provisions of the Late Payment Law.
153.
Article 3(2) of the Late Payment Law provides that the amount of interest payable by the debtor shall be calculated applying the interest rate specified in Article 2(5) of this Law, which was in force in the half-year in question when the debtor became obliged to pay interest. During the first half-year the most recent interest rate, announced before the first calendar day of the first half-year shall be in force, for the following six months the most recent interest rate announced before the first calendar day of the second half-year shall apply. Article 2(5) of the Late Payment Law provides that late payment interest rate means 8 percent plus interest rate applied by the European Central Bank to its main refinancing operations in the case of fixed-rate tenders or marginal interest rate if a main refinancing operation was conducted according to a variable-rate tender procedure.
154.
Based on the information provided on the official website of the European Central Bank as well as submitted by the Claimant85, the interest rate applied by the European Central Bank to its main refinancing operations announced before 1 July 2017 was 0. Hence, the interest rate payable by the Respondent is 8 percent.
155.
Following Article 9(2) of the VCCA Rules, unless the parties agree otherwise, the arbitral procedure shall be deemed started on the day the Secretariat received the claim or the request for arbitration. The RfA was received by the Secretariat on 5 September 2017. Hence, the Claimant is awarded with 8 percent annual interest rate calculated from the awarded sum of USD 20,216,425.54 from 5 September 2017 until final payment.
156.
Considering the above, the Arbitral Tribunal awards the Respondent to pay to the Claimant 8 percent annual interest rate from the awarded amount of USD 20,216,425.54 from 5 September 2017 until final payment.

6.9. ARBITRATION COSTS

157.
The Claimant requested the Arbitral Tribunal to award from the Respondent legal costs incurred by the Claimant in relation with the procedures before VCCA and Arbitral Tribunal, including but not limited to the registration and arbitration fees and attorney’s fee.
158.
The Respondent did not submit a request for compensation of the legal costs.
159.
The Claimant paid EUR 484 registration fee86 and EUR 65,194.22 arbitrating fee (EUR 65,678.22 (including VAT) in total). The Respondent paid EUR 400 registration fee for the submission of the Statement of Counterclaim.
160.
Following Article 7(4) of the VCCA Rules, the paid arbitration fees shall be awarded to the successful party from the unsuccessful party, unless the agreement of the parties provides for otherwise. Since the requests of the Claimant are satisfied in full, the Arbitral Tribunal awards EUR 65,678.22 of the arbitrating fees from the Respondent.
161.
Together with the RfA the Claimant submitted evidence (Invoice and Certificate of Completed Works)87 that the Claimant paid EUR 13,022.36 for the attorney’s fees. On 21 March 2017 the Claimant submitted evidence that the Claimant suffered the following additional costs incurred in this Arbitration case:

i) The Claimant paid USD 4,923.6 (EUR 4000) for Mr. A. Vegys for the preparation of the Inspection Report88 which is proven by Author’s Agreement of 22 August 2017, Certificate of Delivery and Acceptance of the Report and Credit Transfer Order89;

ii) The Claimant paid USD 1,850 for Tailwind Capital, LLC for the preparation of the Desktop Appraisal90 which is proven by Engagement Letter of 10 January 2018, Invoice and Credit Transfer Order91.

162.
As regard arbitration costs other than arbitrating fees the VCCA Rules and the Law on Commercial Arbitration of the Republic of Lithuania are silent on the allocation of such costs. However, in Article 27.5 of the Lease Agreements the Parties agreed on the following:

"27.5 Prevailing Party in Dispute. If any legal action or other proceeding is brought in connection with or arises out of any provisions of this Finance Lease, the prevailing party will be entitled to recover reasonable attorney’s fees and other costs incurred in such action or proceedings. The prevailing party will also, to the extent permissible by Law, be entitled to receive pre- and post-judgment Default Charges."

163.
The Arbitral Tribunal considers the agreement enshrined in Article 27.5 of the Lease Agreements as clear agreement on the rule of "costs follow the event" and, considering the Parties’ procedural behavior, the volume of the case, the amount in dispute and the Claimant’s relief requested in these proceedings, finds the legal costs suffered by the Claimant, i.e. EUR 13,022.36 and USD 6,773.6 (USD 4,923.6+ USD 1,850), reasonable.
164.
Considering the above, the Arbitral Tribunal awards the Respondent to pay to the Claimant EUR 78,700.58 (65,678.22+13,022.36) and USD 6,773.6 as compensation of legal costs suffered by the Claimant.

7. THE ARBITRAL AWARD

165.
For the above reasons, the Arbitral Tribunal, satisfying the Claimant’s requests in full, makes the following Final Award:

i) the Respondent OJSC"Tajik Air", code of the legal person 010005021, 32/1 Mastongulov Mirzo Str., 734012 Dushanbe, Republic of Tajikistan, shall pay the Claimant UAB"Skyroad Leasing", code of the legal person 300887740, Liepyno g. 2, 08108 Vilnius, Lithuania USD4,306,100 (four million three hundred six thousand one hundred US dollars) of the outstanding Lease;

ii) the Respondent OJSC "Tajik Air", code of the legal person 010005021, 32/1 Mastongulov Mirzo Str., 734012 Dushanbe, Republic of Tajikistan, shall pay the Claimant UAB "Skyroad Leasing", code of the legal person 300887740, Liepyno g. 2, 08108 Vilnius, Lithuania USD1,574,852.43 (one million five hundred seventy four thousand eight hundred fifty two US Dollars and forty three cents) of the pre-award interests;

iii) the Respondent OJSC"Tajik Air", code of the legal person 010005021, 32/1 Mastongulov Mirzo Str., 734012 Dushanbe, Republic of Tajikistan, shall pay the Claimant UAB"Skyroad Leasing", code of the legal person 300887740, Liepyno g. 2, 08108 Vilnius, Lithuania USD 10,335,473.11 (ten million three hundred thirty five thousand four hundred seventy three US Dollars and eleven cents) of the Default Lease;

iv) the Respondent OJSC"Tajik Air", code of the legal person 010005021, 32/1 Mastongulov Mirzo Str., 734012 Dushanbe, Republic of Tajikistan, shall pay the Claimant UAB"Skyroad Leasing", code of the legal person 300887740, Liepyno g. 2,08108 Vilnius, Lithuania USD 4,000,000 (four million US Dollars) as the value of the Aircraft;

v) the Respondent OJSC"Tajik Air", code of the legal person 010005021, 32/1 Mastongulov Mirzo Str., 734012 Dushanbe, Republic of Tajikistan, shall pay the Claimant UAB"Skyroad Leasing", code of the legal person 300887740, Liepyno g. 2. 08108 Vilnius. Lithuania, 8 (eight) percent annual interest calculated from the amounts awarded (items i - iv above) from 5 September 2017 until final payment.

vi) the Respondent OJSC"Tajik Air", code of the legal person 010005021, 32/1 Mastongulov Mirzo Str.. 734012 Dushanbe, Republic of Tajikistan, shall pay the Claimant UAB "Skyroad Leasing", code of the legal person 300887740 Liepyno g. 2, 08108 Vilnius, Lithuania, EUR 78,700.58 (seventy eight thousand seven hundred euros and fifty' eight cents) and USD 6,773.6 (six thousand seven hundred seventy three US dollars and sixty cents) as compensation of legal costs suffered by the Claimant.

8. GROUNDS AND PROCEDURE FOR SETTING ASIDE

166.
Following Article 41(1) of the Law on Commercial Arbitration of the Republic of Lithuania this Final Award shall take effect from the moment it is made and shall be enforced by the parties.
167.
Following Article 50 of the Law on Commercial Arbitration of the Republic of Lithuania an arbitral award may be set aside upon submitting an appeal to the Court of Appeals of Lithuania on the grounds stipulated in this article.
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