"1. The proceedings are terminated without prejudice.
2. Both Parties are invited to file their Statements of Costs by 3 April 2020.
3. The allocation of the costs will be decided in an Award."
The only outstanding issue upon which the Arbitral Tribunal has to rule concerns fixing the amount of costs and their allocation. It will however first summarize the main steps of the proceedings.
Claimant would have paid the advance on the costs, however, the position of the Respondent, that he will not honour any award issued by the honourable tribunal will make any award in favour of the Claimant unenforceable. Any costs that incurred to the Respondent are therefore made on his own risk, particularly as Respondent even agreed to arbitration proceedings after the 15 January 2019 declaration has been passed.
In its letter dated 13 April 2020, Claimant states the following:
"as for assessment of costs, Art. 9 paragraph 5 of the Treaty between The Federal Republic of Germany and The Czech and Slovak Federal Republic Concerning the Promotion and Reciprocal Protection of Investments of 2 October 1990 ("the Treaty") provides that each Contracting Party shall bear the costs of its own member and of its legal representation in the arbitration proceedings. The same does account in relationship between an investor and one of the contracting countries through Art 10, para 2 of the aforementioned treaty.
While claimant will accept to carry his own costs in case of a positive award in his favor, it will be unacceptable for him to carry the respondents' costs in case of a negative award. Imposing the risk of government attorney costs on losing investors in effect undermines the very purpose of such treaties; it raises the litigation risk in factual situations which are as a rule ambiguous, confused and contradictory to a prohibitive level, in particularly for smaller companies for whom litigation risk is high and where a government enjoys significant superiority in terms of expertise, experience and resources available for defence (International Thunderbird Gaming Corp v United Mexican States, Separate Opinion by Prof. Thomas Wälde (December 2005), at , ), such as in the present case. Insofar the UNCITRAL 2010 rules, that give discretion to the tribunal on the allocation of the costs, must be interpreted by the rules of the German - Czech BIT."
"6. RESPONDENT IS ENTITLED TO ITS ENTIRE COSTS
7. Respondent requests that the Tribunal award it its entire costs. Respondent incurred these costs for its representation and for its own services regarding the claim raised by Claimant. While Claimant initiated the proceedings, he failed to fulfil his duties under the applicable arbitration rules. The termination of the proceedings is therefore a consequence of Claimant's breach of his duties. The costs incurred by Respondent were therefore wasted due to Claimant's breach of his duties. Claimant should therefore bear the costs incurred by Respondent."
1. The arbitral tribunal shall fix the costs of arbitration in the final award and, if it deems appropriate, in another decision.
2. The term "costs" includes only:
(a) The fees of the arbitral tribunal to be stated separately as to each arbitrator and to be fixed by the tribunal itself in accordance with article 41;
(b) The reasonable travel and other expenses incurred by the arbitrators;
(c) The reasonable costs of expert advice and of other assistance required by the arbitral tribunal;
(d) The reasonable travel and other expenses of witnesses to the extent such expenses are approved by the arbitral tribunal;
(e) The legal and other costs incurred by the parties in relation to the arbitration to the extent that the arbitral tribunal determines that the amount of such costs is reasonable;
(f) Any fees and expenses of the appointing authority as well as the fees and expenses of the Secretary-General of the PCA.
|Nr of hours||USD|
This amount appears reasonable in view of the amount in dispute, the complexity of the issues and the time spent.
According to Article 42 para 1 of the Arbitration UNCITRAL Rules:
"1. The costs of the arbitration shall in principle be borne by the unsuccessful party or parties. However, the arbitral tribunal may apportion each of such costs between the parties if it determines that apportionment is reasonable, taking into account the circumstances of the case.
2. The arbitral tribunal shall in the final award or, if it deems appropriate, in any other award, determine any amount that a party may have to pay to another party as a result of the decision on allocation of costs."
- The principles set out in Articles 9 and 10 of the Germany-Czech Republic BIT consider the situation in which the proceedings have been conducted until the end, with a final award that decides upon the Parties’ prayers for relief. It does not apply in a situation where the proceedings have been prematurely terminated because of the failure of one of the Parties to comply with its duties.
- In any case, the rule allows expressly the arbitral tribunal to "determine a different allocation of costs" The Arbitral Tribunal considers that such a determination of a different allocation is justified in the present case.
- Applying the principles of Article 42 of the UNICTRAL Arbitral Rules, Claimant appears to be the "unsuccessful party", as far as the proceedings that he initiated have been terminated because of his decision not to pay the first advance, after having started the proceedings. His behavior with respect to payment of the costs of the arbitration appears to be in bad faith, as far as it involves a the decision to introduce claims against another party while resisting advancing any share of the fees, and forcing the other party to do so and to defend against these claims.
- Since Respondent was raveled into the proceedings where it did not have an opportunity to present its case but complied with all the requests addressed to it, the Arbitral Tribunal considers that it would be unfair for Respondent to have to bear costs of the proceedings.
|Costs 2016-2017 Analysis of the case, notification, conciliation, travel expenses Claimant||125,000.00|
|Costs 20182019 Submission of the case to the Tribunal, travel costs, examination of interference by White and Case Law Firm||25,000.00|
|Costs 2020 Vaclav Fischer - external advice on the financing of the case and whether the Czech Republic will comply with the judgment||[REDACTED]|
|zeiler.partners, legal fees||57,041.67|
|zeiler.partners, expenses (ADS Management Consulting GmbH)||78,808.40|
|Respondent’s internal costs||32,000.00|
1. The proceedings are terminated without prejudice, as decided in PO 4.
2. The overall costs of the arbitral proceedings are fixed at USD 76,975.45.
3. Claimant is ordered to reimburse Respondent an amount of USD 76,975.45, corresponding to the balance of its initial deposit to the PCA that is not reimbursed by the PCA after settling the costs of the arbitral proceedings.
4. Claimant is ordered to reimburse Respondent an amount of CZK 167,850.07 for its costs incurred in these proceedings.
5. All other prayers for relief are rejected.
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