tutorial video tutorial video Discover the CiteMap in 3 minutes

Lawyers and other representatives

Final Award

ABBREVIATIONS

Parties VimpelCom Claimant VimpelCom Ltd.
OTMTI Respondent Orascom TMT Investments S.à r.l.
Parties’ Submissions
RFA VimpelCom’s Request for Arbitration, dated 8 July 2015
Response OTMTI’s Response to Request for Arbitration and Counterclaim, dated 3 September 2015
Counterclaim The separately numbered paragraphs in the Counterclaim section of OTMTI’s Response to Request for Arbitration and Counterclaim, dated 3 September 2015
SoC VimpelCom’s Statement of Claim, dated 4 December 2015
SoDC OTMTI’s Statement of Defense and Counterclaim, dated 4 March 2016
Reply VimpelCom’s Amended Reply on Indemnification Claims and Statement of Defense to Counterclaim, dated July 8, 2016
Rejoinder OTMTI’s Rejoinder on Indemnification Claims and Reply on Counterclaim, dated 22 August 2016
Rejoinder-CC VimpelCom’s Rejoinder on Counterclaim, dated 3 October 2016
V-PHB VimpelCom’s Post-Hearing Brief, dated 20 January 2017
O-PHB OTMTI’s Post-Hearing Memorial, dated 20 January 2017
V-TS VimpelCom’s Opening Submission on Tax Savings and Submission on Allocation of Costs, dated 24 March 2017
O-TS OTMTI’s Memorial on the Application of Article 10.7(d) of the SSEA to VimpelCom’s Indemnification Claims, and the Cost Allocation Principles Governing Any Award of Costs, dated 24 March 2017
VR-TS VimpelCom’s Reply Submission on Tax Savings, dated 14 April 2017
OR-TS OTMTI’s Second Memorial on the Application of Article 10.7(d) of the SSEA to VimpelCom’s Indemnification Claims, dated 14 April 2017
V-Costs VimpelCom’s Statement of Costs, dated 26 May 2017
O-Costs OTMTI’s Summary of Costs and Fees Incurred by Respondent OTMTI, dated 26 May 2017
CLA Claimant’s Legal Authority
CE Claimant’s Exhibit
RLA Respondent’s Legal Authority
RE Respondent’s Exhibit
Abouali I Witness Statement of Gamal Abouali, dated 4 March 2016
Abouali II Second Witness Statement of Gamal Abouali, dated 21 August 2016
Cisternino I Witness Statement of Christian Cisternino, dated 4 December 2015
Cisternino II Second Witness Statement of Christian Cisternino, dated 6 June 2016
Dobbie I Witness Statement of David Dobbie, dated 6 June 2016
Dobbie II Second Witness Statement of David Dobbie, dated 30 September 2016
Hubert I Witness Statement of Michel Hubert, dated 4 March 2016
Hupert II Second Witness Statement of Michel Hubert, dated 22 August 2016
Kuper Witness Statement of Bart Kuper, dated 6 June 2016
Lemke I Witness Statement of Alexander Lemke, dated 4 December 2015
Lemke II Second Witness Statement of Alexander Lemke, dated 6 June 2016
Lemke III Third Witness Statement of Alexander Lemke, dated 30 September 2016
Maisto I Expert Report of Guglielmo Maisto, dated 6 June 2016
Maisto II Second Expert Report of Guglielmo Maisto, dated 24 March 2017
Maisto III Third Expert Report of Guglielmo Maisto, dated 14 April 2017
Malackowski I Expert Report of James E. Malackowski, dated 4 March 2016
Malackowski II Second (Amended) Expert Report of James Malackowski (Royalty), dated 7 September 2016
Malackowski III Second (Amended) Expert Report of James Malackowski (Interest), dated 7 September 2016
Manzitti I Expert Report of Andrea Manzitti, dated 4 March 2016
Manzitti II Second Expert Report of Andrea Manzitti, dated 20 August 2016
Manzitti III Third Expert Report of Andrea Manzitti, dated 23 March 2017
Manzitti IV Fourth Expert Report of Andrea Manzitti, dated 14 April 2017
Meyer I Expert Report of Paul K. Meyer on Indemnification Claims, dated 6 June 2016
Meyer II Amended Expert Report of Paul K. Meyer on Counterclaim, dated 8 July 2016
Meyer III Third Expert Report of Paul K. Meyer (on Counterclaim), dated 30 October 2016
Nasr Witness Statement of Karim-Michel Nasr, dated 18 August 2016
G. Petrella Expert Report of Giovanni Petrella, dated 4 March 2016
V. Petrella I Witness Statement of Vania Petrella, dated 4 March 2016
V. Petrella II Second Witness Statement of Vania Petrella, dated 22 August 2016
Soliman Witness Statement of Ayman Soliman, dated 3 March 2016
Suchak Witness Statement of Ravi Suchak, dated 6 June 2016
Defined Terms and Other Abbreviations
Agenzia Agenzia delle Entrate, the Italian Revenue Agency
Arbitration Costs As defined in Article 28.1 of the LCIA Rules
Closing Memorandum Memorandum of Closing between VimpelCom, OTH, Wind Telecom S.p.A., Weather Investments II S.à r.l., and Orascom Telecom Media and Technology Holding S.A.E., dated 15 November 2012
CSPs Third-party lenders, known as Credit Support Providers, that entered into Credit Support Agreements with certain Italian banks in September 2005, in transactions connected to a 26 May 2005 Credit Facilities Agreement through which those banks lent funds to Wind Telecomunicazione
EFSA Egyptian Financial Supervisory Authority
EGM Extraordinary General Meeting
49/51% Rule An Algerian law that was understood to limit foreign ownership of Algerian companies to 49%, requiring 51 % Algerian ownership
Gide Gide, Loyrette Nouel
Global Telecom Global Telecom Holding S.A.E.
Guardia Guardia di Finanza, the Italian Financial Police
Hellas I Hellas I Telecommunication S.à r.l.
IBLOR Italian Bank Lender of Record
Italian Tax Authorities or | Authorities The Agenzia delle Entrate and the Guardia di Finanza, collectively
LCIA Rules 2014 Rules of Arbitration of the London Court of International Arbitration
Legal Costs As defined in Article 28.2 of the LCIA Rules
Material Loss Provision The provision in Article 11 of the Closing Memorandum, containing a reference inter alia to a "material Loss"
Name Rights As defined in Article 11 of the Closing Memorandum
Orascom Telecom Orascom Telecom Holding S.A.E.
Orascom TMT Orascom Telecom Media & Technology S.A.E.
OTA Orascom Telecom Algérie S.p.A.
PVCProcesso verbale di constatazione, an audit report issued by the Agenzia
SSEA Amended and Restated Share Sale and Exchange Agreement between VimpelCom and OTMTI, dated 15 April 2011
Separation Agreement Separation Agreement, dated 15 April 2011
Tellas Tellas Telecommunications S.A.
WACC Weighted Average Cost of Capital
WAHF Wind Acquisition Holding Finance S.p.A.
WAHF Audit The Italian Tax Authorities’ audit of WAHF in 2013-2014
WAHF Luxembourg Wind Acquisition Holdings Finance S.A.
Weather II Weather Investments II S.à r.l., now known as OTMTI
Wind Group Wind Telecom and its subsidiaries and affiliates
Wind Hellas Wind Hellas Telecommunications S.A.
Wind Hellas Spin-Off (also "Spin-Off’) The spin-off from or other disposal by the Weather Group of the Wind Hellas Group and all related assets and liabilities (SSEA, Art. 1.1)
Wind Telecom Wind Telecom S.p.A. (see also "Weather I")
Wind Telecom Audit The Italian Tax Authorities’ audit of Wind Telecom in 2013
Wind Telecomunicazioni Wind Telecomunicazioni S.p.A.
Wind Telecomunicazioni Audit The Italian Tax Authorities’ audit of Wind Telecomunicazioni in 2013-2014
2006 PIK Loans Payment-in-kind loans obtained by WAHF, through WAHF Luxembourg, in December 2006
2007 Shareholders Agreement Shareholders agreement between Wind Telecom, Wind Telecomunicazioni and Wind Hellas, dated 26 October 2007
2009 PIK Loans Payment-in-kind loans obtained by WAHF, through WAHF Luxembourg, in December 2009
The undersigned Arbitrators, having been designated pursuant to the agreement of Claimant VimpelCom Ltd ("VimpelCom") and Respondent Orascom TMT Investments S.à.r.l ("OTMTI"), set forth in Article 13.7 of the Amended and Restated Share Sale and Exchange Agreement dated 15 April 2011 (the "SSEA," Ex. CE-1 and RE-1),1 and proceeding in accordance with the 2014 Rules of Arbitration of the London Court of International Arbitration (the "LCIA Rules"); having received on behalf of VimpelCom and OTMTI written submissions, documentary evidence and witness and expert testimony, and having heard oral arguments, as described below; and having duly reviewed and considered the Parties’ submissions, documents, testimony and arguments, do hereby FIND and AWARD as follows:

I. INTRODUCTION: PARTIES AND CLAIMS

1.
VimpelCom is a company organized under the laws of Bermuda, with its registered address at Claude Debussylaan 88, 1082 MD, Amsterdam, the Netherlands. VimpelCom is a provider of telecommunications services in emerging markets.2 Throughout these proceedings it has been represented by Debevoise & Plimpton LLP.
2.
OTMTI is a company incorporated under the laws of Luxembourg, with its registered address at 1, Boulevard de la Foire, L-1528 Luxembourg, Grand Duchy of Luxembourg.3 Throughout these proceedings it has been represented by Cleary, Gottlieb, Steen & Hamilton LLP. OTMTI was previously known as Weather Investments II S.à r.l. ("Weather II").
3.
The Parties are signatories to the SSEA, by which VimpelCom acquired OTMTI’s shares in Wind Telecom S.p.A. ("Wind Telecom"), and thereby also of its subsidiary businesses in Italy (collectively, the "Wind Group").4 VimpelCom did not acquire the Wind Group’s Greek businesses, which were held and operated through Wind Hellas Telecommunications S.A. ("Wind Hellas");5 these were spun off to other buyers before closing.6 VimpelCom also acquired a majority of OTMTI’s emerging markets assets, through Wind Telecom’s indirect ownership of an Egyptian holding company, Orascom Telecom Holding S.A.E. ("Orascom Telecom").
4.
In this arbitration, VimpelCom contends7 that OTMTI has breached its obligations under the SSEA by refusing to indemnify VimpelCom for a share of the liabilities VimpelCom incurred in settling three separate audits initiated by Italian tax authorities in 2013, into transactions designed and executed by OTMTI prior to the SSEA.8 VimpelCom contends that pursuant to the SSEA, OTMTI was obligated to indemnify it for 72.65% of the amounts paid to settle these audits, a percentage corresponding to OTMTI’s shareholding in Wind Telecom at the time of the SSEA.9 VimpelCom seeks recovery of OTMTI’s alleged share of the payments made to the Italian authorities, amounting in total to more than €130 million, plus interest, attorneys’ fees and costs.10
5.
OTMTI denies VimpelCom’s claims. It contends as a threshold matter that two of the three settlements were not within the scope of OTMTI’s indemnity obligations under the SSEA.11 It also contends that VimpelCom is not entitled to indemnification with respect to any of the audits because VimpelCom did not comply with its duties, under the SSEA and New York law, related to timely notice to OTMTI about the audits, consultation or cooperation with OTMTI in defense of the audits, and mitigation of loss.12 As a result, the settlements themselves were "unjustified" and VimpelCom’s indemnity claims are "baseless."13
6.
OTMTI counterclaims against VimpelCom for a breach of contract that is unrelated to the Italian tax audits. It contends that under a Separation Agreement executed contemporaneously with the SSEA on 15 April 2011 (the "Separation Agreement"), VimpelCom was required to cease using the "Orascom" name in early 2012, a date that was subsequently extended to 31 December 2012 for certain geographic markets, through a Memorandum of Closing dated 15 November 2012 (the "Closing Memorandum").14 VimpelCom nonetheless continued to use the name - principally in Egypt and Algeria -after this period expired, allegedly without permission and without negotiating in good faith a modification of the name rights to include a reasonable payment.15 OTMTI originally sought a permanent injunction against VimpelCom’s continued use of the Orascom name, and damages to compensate for the unauthorized use of the name after 1 January 2013, in the form of a license fee or royalty.16 By the close of these proceedings, the injunction request was agreed to be moot as the use of the name had ended.17 OTMTI’s final request for relief was for monetary damages exceeding €84 million, together with interest, attorneys’ fees and costs.18
7.
VimpelCom denies OTMTI’s counterclaims. It contends that it was permitted under the Closing Memorandum to continue using the Orascom name in Algeria and Egypt after 2012, because terminating such use was "reasonably expected to result in... [a] material Loss" within Article 11 of the Closing Memorandum, based on conditions then prevailing in those countries. It contends that it complied with requirements to negotiate in good faith, but OTMTI did not do so by insisting that the only appropriate modifications to the name rights would involve financial payments.

II. PROCEDURAL HISTORY

8.
On 8 July 2015, VimpelCom filed a Request for Arbitration ("RFA"), invoking the arbitration agreement in Article 13.7 of the SSEA and nominating Mr. Philip Allen Lacovara as the first arbitrator in these proceedings.
9.
On 20 August 2015, OTMTI nominated Mr. Kenneth Kramer as the second arbitrator. On 3 September 2015, OTMTI filed a Response to Request for Arbitration and Counterclaim ("Response").
10.
On 10 September 2015, the LCIA confirmed the appointment of Messrs. Lacovara and Kramer to the Tribunal.
11.
On 2 October 2015, Messrs. Lacovara and Kramer notified the Parties that they had nominated Ms. Jean E. Kalicki as the third and presiding arbitrator. On 14 October 2015, the LCIA confirmed the appointment of Ms. Kalicki, and the Tribunal was duly constituted. No Party has objected to the constitution of the Tribunal.
12.
On 29 October 2015, following certain prior correspondence regarding procedural issues, the Parties and the Tribunal held a first procedural meeting in person in New York. On 24 November 2015, the Tribunal issued the Procedural Order No. 1, following circulation of a prior draft upon which the Parties had provided certain comments.
13.
Procedural Order No. 1 confirmed that pursuant to Article 13.7(a)(ii) of the SSEA, the legal seat of this arbitration is London, England. The Parties nonetheless agreed for reasons of convenience that hearings would be held in New York, without prejudice to the legal seat remaining in London. Procedural Order No. 1 established a timetable and procedures for further proceedings in this case.
14.
Pursuant to the agreed timetable, the Parties made the following principal pre-hearing submissions: (a) VimpelCom’s Statement of Claim, dated 4 December 2015 ("SoC"), (b) OTMTI’s Statement of Defense and Counterclaim, dated 4 March 2016 ("SoDC"), (c) VimpelCom’s Reply on Indemnification Claims and Statement of Defense to Counterclaim, dated 8 June 2016 and amended on 8 July 2016 ("Reply"), (d) OTMTI’s Rejoinder on Indemnification Claims and Reply on Counterclaim, dated 22 August ("Rejoinder"), and (e) VimpelCom’s Rejoinder on Counterclaim dated 3 October 2016 ("Rejoinder-CC"). These pleadings were accompanied by various documentary exhibits and authorities, along with witness statements and expert reports.
15.
The Parties also made various applications prior to the hearings, upon each of which the Tribunal received submissions from both Parties and thereafter rendered rulings.19 This included OTMTI’s application of 14 January 2016 regarding certain documents VimpelCom had redacted, which the Tribunal addressed in Procedural Order No. 2 dated 23 February 2016; applications by both Parties on 5 April 2016 for orders compelling further production of documents, which the Tribunal addressed by rulings on 13 April 2016; and further applications by OTMTI on 20 June 2016 and 30 June 2016, regarding certain documents, which the Tribunal addressed by rulings on 27 June 2016 and 1 July 2016, respectively.
16.
On 17 October 2016, the Parties notified each other that they wished to cross-examine certain of each other’s fact and expert witnesses who had submitted written statements and expert reports in support of and opposition to the substantive pleadings previously filed.
17.
On 17 October 2016, the Tribunal held a prehearing status conference with the Parties by telephone, to address certain issues related to the upcoming hearing. On 20 October 2016, the Tribunal issued Procedural Order No. 3 resolving such issues.
18.
The Tribunal thereafter considered and resolved certain additional pre-hearing applications, including VimpelCom’s application of 20 October 2016 to preclude a certain OTMTI defense and OTMTI’s application of 25 October 2016 regarding a particular witness, which the Tribunal addressed in Procedural Order Nos. 4 and 5, respectively.
19.
On 7-10 and 15-17 November 2016, the Tribunal held seven days of hearings in New York. During the hearings, the parties presented opening statements and oral testimony from certain fact and expert witnesses. The preponderance of oral testimony was in the form of cross-examination and re-direct examination relating to direct testimony previously filed by written statements and expert reports. Other witnesses and experts were not called for examination, but their statements and reports equally were taken under consideration as reflecting their direct testimony. The witness and expert evidence included, on behalf of VimpelCom, the testimony (in alphabetical order) of (a) Christian Cisternino, b) David Dobbie, (c) Bart Kuper, (d) Alexander Lempke, (e) Guglielmo Maisto, (f) Paul Meyer, and (g) Ravi Suchak; and on behalf of OTMTI, the testimony (in alphabetical order) of (a) Gamal Abouali, (b) Michel Hubert, (c) James Malackowski, (d) Andrea Manzitti, (e) Karim-Michel Nasr, (f) Giovanni Petrella, (g) Vania Petrella, and (h) Ayman Soliman.
20.
At the close of the oral hearings, the Parties agreed to submit simultaneous post-hearing briefs on 20 January 2017, addressing the issues presented up through the hearings. These submissions were duly made ("V-PHB" and "O-PHB").
21.
The Parties also indicated at the close of the hearings that they would consult regarding procedures to address certain "tax savings" issues that arose late in the proceedings and had been deferred for subsequent briefing. Following certain additional correspondence and a procedural telephone call on 6 March 2017, the Parties agreed to two rounds of simultaneous written submissions on these issues, followed by a potential one-day hearing on 2 May 2017. The written submissions were duly made, with simultaneous opening submissions on 24 March 2017 ("V-TS" and "O-TS") and reply submissions on 14 April 2017 ("VR-TS" and "OR-TS"). The Parties submitted additional expert evidence in support of these submissions. On 12 April and 18 April 2017 respectively, VimpelCom and OTMTI communicated that they no longer saw a need for a further hearing on this issue.
22.
The Parties’ first-round submissions on the "tax savings" issues, filed 24 March 2017, were also accompanied by the Parties’ observations on the legal and factual principles relevant to the allocation of costs in this case, with the issue of cost quantum deferred until the close of proceedings. On 17 May 2017, the Parties communicated their agreement to submit final cost schedules on 26 May 2017, which they thereafter did ("V-Costs" and "O-Costs," respectively). This completed the Parties’ submissions in this proceeding.
23.
All documents offered as exhibits, all witness statements and expert reports presented in this case, and all oral testimony in furtherance of such statements and reports have been admitted into evidence and duly considered by the Tribunal. The Tribunal also has considered the arguments raised by both Parties in their respective written submissions and in oral argument, and the various legal authorities submitted in support of such submissions and arguments.

III. AGREEMENTS ON ARBITRATION, SEAT AND GOVERNING LAW

24.
As relevant to VimpelCom’s claims, Article 13.7(a) of the SSEA provides, in relevant part, as follows:

Any and all disputes, controversies and claims between or among the parties and arising under, relating to or in connection with, this Agreement, in any manner whatsoever, whether in contract, in tort, or otherwise, and including any dispute or controversy regarding the existence, validity, enforceability or breach of this Agreement, shall be settled by arbitration by a tribunal of three (3) arbitrators constituted and acting under the LCIA Rules then in force (the "Rules"), save that any provision of the Rules which imposes any restriction on the nationality of any arbitrator or is otherwise invalid, void or unenforceable under English law shall not apply, in accordance with the following terms and conditions....

25.
Article 13.7(a)(ii) of the SSEA provides as follows:

The seat of arbitration shall be London, England, unless otherwise agreed by the parties, and the fact that hearings are held elsewhere shall not affect the seat of arbitration.

26.
Article 13.4 of the SSEA provides in relevant part as follows:

This Agreement, and any dispute, controversy or claim arising out of, relating to or in connection with this Agreement, or for the breach or alleged breach thereof, whether in contract, in tort or otherwise, shall be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to any conflicts of laws or other principles thereof that would result in the application of the laws of another jurisdiction.

27.
As relevant to OTMTI’s counterclaim, Clause 33(a) of the Settlement Agreement provides, in relevant part, as follows:

Following the consultation period... any and all disputes, controversies and claims between or among the parties and arising under, related to or in connection with this Agreement, in any manner whatsoever, whether in contract, in tort, or otherwise, and including any dispute or controversy regarding the existence, validity, enforceability or breach of this Agreement, shall be settled by arbitration by a tribunal of three (3) arbitrators constituted and acting under the LCIA Rules then in force (the "Rules"), save that any provision of the Rules which imposes any restriction on the nationality of any arbitrator or is otherwise invalid, void or unenforceable under English law shall not apply, in accordance with the following terms and conditions....

28.
Clause 33(a)(ii) of the Settlement Agreement provides as follows:

The seat of arbitration shall be London, England, unless otherwise agreed by the parties, and the fact that hearings are held elsewhere shall not affect the seat of arbitration.

29.
Clause 32 of the Settlement Agreement provides as follows:

This Agreement, and any dispute, controversy or claim arising out of, relating to or in connection with this Agreement, or for the breach or alleged breach thereof, whether in contract, in tort or otherwise, shall be governed by, and construed in accordance with, the laws of the State of New York, without giving effect to any conflicts of laws or other principles thereof that would result in the application of the laws of another jurisdiction.

30.
Paragraph 15 of the Closing Memorandum provides that many of the provisions of the Settlement Agreement, including Clauses 32 and 33 regarding governing law and arbitration, "shall apply to this Memorandum as if set forth herein..."

IV. VIMPELCOM’S CLAIMS FOR INDEMNIFICATION

A. Background Facts

31.
The Tribunal assumes the Parties’ familiarity with the underlying facts pleaded by both sides. It describes in this section only such background facts (essentially undisputed) as are a useful predicate to the discussion of the issues in dispute.
32.
VimpelCom’s claims arise out of three audits by the Italian Tax Authorities in 2013.20 The first audit involved a tax deduction claimed by Wind Telecom in 2009 in connection with OTMTI’s restructuring its Greek business related to Wind Hellas (the "Wind Telecom Audit"). The Italian Tax Authorities first served notice of this audit on 14 February 2013,21 and VimpelCom agreed to settle the audit on 31 July 2013,22 for €31.3 million (a principal amount of €24 million, penalties of €4 million, and approximately €3.3 million in interest).23
33.
The second audit concerned the Wind Group’s non-application of withholding taxes on the interest paid in 2009 in connection with inter-company loans to Wind Acquisition Holdings Finance S.p.A. ("WAHF"), a Wind Telecom subsidiary (the "WAHF Audit"). The Guardia first notified WAHLF of this audit on 17 September 2013,24 and VimpelCom agreed to settle the audit on 19 May 2014 for approximately €83.77 million.25
34.
The third audit concerned the non-application of withholding taxes in 2008, 2009 and 2010 on interest paid in connection with syndicated loans to Wind Telecomunicazioni S.p.A. ("Wind Telecomunicazioni"), another Wind Telecom subsidiary (the "Wind Telecomunicazioni Audit").26 The Italian Tax Authorities commenced this audit on 28 November 2013,27 and VimpelCom agreed to settle the audit on 22 May 2014, for approximately €61.76 million.28
35.
By the close of these proceedings, Wind Telecom, WAHF and Wind Telecomunicazione had paid all twelve installments of their respective settlement amounts.
36.
It is undisputed that VimpelCom demanded indemnification by OTMTI of 72.65% of these settlement amounts, reflecting the contractually specified formula for indemnification of any covered losses, and that OTMTI has refused these demands.

B. The Relevant SSEA Provisions

(1) SSEA Provisions on OTMTI’s Indemnification Obligations

37.
Article 10.2(a) of the SSEA provides as follows:

Following the Closing, Weather II29 shall indemnify, defend and hold VimpelCom and its respective officers, directors, employees, agents, Subsidiaries and Affiliates harmless from and against any and all liabilities, losses, damages, claims, fines, penalties, costs and expenses, including, without limitation, reasonable attorneys’ and accounting fees (collectively, "Losses") incurred by VimpelCom or any of its respective officers, directors, employees, agents, Subsidiaries or Affiliates, arising out of or resulting from (i) any breach of any representation or warranty made by Weather I or Weather II contained in Article III, Article IV or Article IX, as the case may be, of this Agreement or (ii) any breach by Weather I or Weather II of any covenant or obligation of Weather I or Weather II under this Agreement; provided, however, the indemnification set forth in this Section 10.2(a) shall not apply to any Loss sustained solely by a Spin-Off Asset to the extent such Loss is retained by such Spin-Off Asset at the time it is spun-off pursuant to the Spin-Off Plan.

38.
Article 10.2(b) of the SSEA provides as follows:

Following the Closing, Weather II shall indemnify, defend and hold VimpelCom and its respective officers, directors, employees, agents, Subsidiaries and Affiliates harmless from and against any and all Losses incurred by VimpelCom or any of its respective officers, directors, employees, agents, Subsidiaries or Affiliates, arising out of or resulting from (i) claims or residual liabilities related to Weather I’s ownership of Wind Hellas prior to the completion of the Wind Hellas Spin-Off,30 (ii) the Wind Hellas Spin-Off or (iii) claims related to Wind Hellas after the Wind Hellas Spin-Off.

39.
Article 10.2(d) of the SSEA provides as follows:

Following the Closing, Weather II shall indemnify, defend and hold VimpelCom and its respective officers, directors, employees, agents, Subsidiaries and Affiliates harmless from and against any and all Losses incurred by VimpelCom or any of its respective officers, directors, employees, agents, Subsidiaries or Affiliates arising out of or resulting from any Italian Withholding Tax Liability.31

40.
Article 10.2(g) of the SSEA provides as follows:

Without prejudice to the provisions of Section 10.5, Weather II shall only be liable to pay an indemnity equal to 72.65% of the amount of any Loss to be indemnified hereunder.

(2) SSEA Provisions Related to "Indemnification Procedures"

41.
In a section of the SSEA entitled "Indemnification Procedures," Article 10.7(a) of the SSEA provides as follows:

If VimpelCom, on one hand, or any of Weather II or the Weather I Shareholders, on the other hand, shall receive notice of any matter which such party, or any of its officers, directors, employees, agents, Subsidiaries or Affiliates (any of the foregoing, an "Indemnitee"), has determined has given, or is reasonably likely to result in, a right of indemnification under this Agreement, the Indemnitee shall promptly give the indemnifying party (the "Indemnitor") written notice of such claim, stating the amount of the Losses, if known, and method of computation thereof, all with reasonable particularity and including documentary proof, if available, and containing a reference to the provisions of this Agreement in respect of which such right of indemnification is claimed or arises; provided, however, that failure to so notify the Indemnitor shall not relieve the Indemnitor from any liability which it may have on account of the claim, except to the extent the Indemnitor shall have been prejudiced by such failure.

42.
Article 10.7(b) of the SSEA provides, in relevant part, as follows:

If an Indemnitee shall receive notice of any claim or proceeding initiated by a third party which is or may be subject to indemnification (other than any claim or proceeding related to Taxes) (each, a "Third Party Claim"), the Indemnitee shall promptly give the Indemnitor written notice of such Third Party Claim; provided, however, that failure to so notify the Indemnitor shall not relieve the Indemnitor from any liability which it may have on account of the Third Party Claim, except to the extent the Indemnitor shall have been prejudiced by such failure. In such event the Indemnitee shall permit the Indemnitor, at its option, to participate in the defense of such Third Party Claim by counsel of its own choice and at its own expense. If, however, the Indemnitor acknowledges in writing its obligation to indemnify the Indemnitee hereunder against all Losses that may result from such Third Party Claim, subject to the limitations set forth in this Article X, then the Indemnitor shall be entitled, at its option, to assume and control the defense of such claim by counsel of its own choice and at its own expense, provided that the Indemnitor and its counsel shall proceed with diligence and good faith with respect thereto....

43.
Article 10.7(d) of the SSEA provides as follows:

For purposes of this Article X, a Loss shall be eligible for indemnification to the extent and only to the extent such Loss has effectively been sustained by the Indemnitee. Any indemnification due by the Indemnitor shall be calculated taking into account the value of (i) any Tax savings obtained by the Indemnitee Group and/or (ii) any increase in the amount of Tax losses available to them for carry-forward or carry-back and, in each case, resulting from the tax deductibility of the relevant Loss.

44.
Article 10.7(f) of the SSEA provides as follows:

The Indemnitor shall not be held liable for indemnification with respect to a Loss or the increased portion of a Loss, as the case may be, to the extent such Loss, or increased portion of the Loss, for which indemnification is sought is attributed to (A) any willful misconduct on the part of the Indemnitee after Closing, or (B) any change in accounting methods (including consolidation methods) or policies of the Indemnitee after Closing, or (C) to the extent the Indemnitee Group had not, upon learning of the situation giving rise or likely to give rise to a Loss, used or caused entities of its Group to use, all reasonable efforts to mitigate the corresponding Loss; or (D) any breach of representation, warranty or covenant to the extent that the liability for such breach occurs or is increased as a result of any Tax-related or other Law enacted after the Closing with retroactive effect.

45.
Article 10.7(h) of the SSEA provides, in relevant part, as follows:

In the event of a Tax audit or inquiry by any Taxing Authority that may lead to an Italian Withholding Tax Liability and without prejudice to the provisions of Section 10.7 and provided that the following actions are not restricted by any obligation of confidentiality or by applicable Law:

(i) VimpelCom shall notify Weather II of such event as soon as reasonably practicable but in any event within ten (10) Business Days after VimpelCom or any of its Subsidiaries has been informed in writing of the beginning of such procedure.

(ii) VimpelCom shall coordinate, or cause its Subsidiaries to coordinate, with Weather II in the taking of any action relating to the conduct of such Tax audit or inquiry actions and provide to Weather II and its professional advisors such information and access to personnel, premises, documents and records as Weather II may reasonably request, subject to appropriate confidentiality undertakings. VimpelCom will use its reasonable efforts to include a representative appointed by Weather II in any meeting or material telephone call arranged by VimpelCom and/or the relevant Subsidiary with a representative of the relevant Taxing Authorities....

C. The Parties’ Obligations Arising from the SSEA and New York Law

46.
The Tribunal begins by noting that it construes the SSEA in accordance with general principles of New York law regarding contract construction. These include the principle that "words and phrases... should be given their plain meaning, and the contract should be construed so as to give full meaning and effect to all of its provisions."32 The corollary is that distinctions in language among provisions are presumed to have been intentional, such that those distinctions should be given meaning and effect. A further corollary is that while general principles of New York law regarding indemnification may be relevant as an aid to contract interpretation, i.e., in the event of ambiguity or to fill gaps, they should not be used to alter or displace contractual terms to which the Parties specifically have agreed, lest those agreed terms thereby be rendered without meaning and effect. Neither Party has suggested that this case involves any mandatory public policy provisions of New York law that should be deemed to override particular provisions of the SSEA.

(1) Indemnification Obligations Under the SSEA

47.
The SSEA provides a series of indemnification rights and obligations to both Parties, separately identified as "Indemnification by [OTMTI]" (Article 10.2) and "Indemnification by VimpelCom" (Article 10.4). While this arbitration involves a dispute only about indemnification by OTMTI, it is worth noting that some of the "Indemnification Procedures" under Article 10.7 (addressed further below) apply reciprocally regardless of which Party may be the indemnitee and which the indemnitor, while others were crafted only to apply to the indemnifications obligations of one Party.
48.
With respect to OTMTI, Article 10.2 requires it to indemnify VimpelCom for various potential categories of "Losses." As relevant to this case, these include those "arising out of or resulting from" certain types of claims or residual liabilities associated with ownership of Wind Hellas or the Wind Hellas Spin-Off transaction (detailed in Article 10.2(b)), and those "arising out of or resulting from any Italian Withholding Tax Liability" (detailed in Article 10.2(d)). As to both of these categories, the SSEA defines indemnifiable "Losses" broadly; the duty to indemnity covers "any and all liabilities, losses, damages, claims, fines, penalties, costs and expenses, including, without limitation, reasonable attorneys’ and accounting fees."33
49.
There are three relevant carve-outs to this otherwise sweeping definition of indemnifiable Losses. The first is that the Losses must have been ones that "have effectively been sustained" by VimpelCom, meaning that they are not offset by any tax savings or carry-forward deductible tax losses.34 The second is that the Losses must not be ones for which VimpelCom failed to use "all reasonable efforts to mitigate the corresponding Loss," after "learning of the situation giving rise or likely to give rise to a Loss."35 The third is that OTMTI’s indemnification obligation in any event covers only 72.65% of any covered Losses, leaving VimpelCom in all circumstances responsible for carrying the remaining 27.35% of its Losses.36

(2) New York Law Principles of Analysis

50.
In the context of settlements of potential liability to third parties, New York law establishes certain principles regarding common law indemnification, as well as enforcement of contractual indemnification agreements absent particular provisions specifying otherwise.37 These include the general proposition that so long as the indemnitor was provided notice of the underlying claim, the settlement will be covered by the indemnity, provided that it was made in subjective good faith and was objectively reasonable.38 Regarding the former, courts presume a settlement was entered into in good faith where the indemnitee retains cognizable exposure from its decision to settle, including situations in which the indemnitor already has given notice that it intends to contest any obligation to contribute. In such circumstances, courts reason that the indemnitee presumptively (albeit rebuttably by other evidence) shares the indemnitor’s interest in settling only for reasons taken in good faith.39 The indemnitee’s understanding in these circumstances that it risks bearing the full burden of the settlement is considered to be a powerful check on rash or imprudent settlement decisions. These cases are specifically distinguished from those where the indemnitee has no residual incentive to try to reduce the underlying liability, and therefore adequate notice of the claim to the indemnitor is particularly important to enable it to protect itself from settlements that may not be in good faith.40
51.
Particularly in the cases where the presumption of good faith applies, however, the burden is on the indemnitor to prove an absence of good faith. To do so, it must demonstrate more than simply questionable judgment, or even negligence in failing to adequately investigate possible defenses; the cases instead suggest that some kind of active bad faith is required, such as fraud or collusion.41
52.
As for the second requirement - reasonableness of the settlement - the question is an objective one, but it too is generally deferential to the indemnitee under New York law, provided that notice of the claim was provided to the indemnitor. In particular, the indemnitee is not required to prove that the underlying third-party claims necessarily would have succeeded absent the settlement,42 or even that the third-party claims were objectively strong. Rather, the question is whether "there was [a] possibility that litigating the case to the end would result in a judgment... in an amount greater than the settlement,"43 meaning that the settlement was within the range of possible exposure the indemnitee might have faced.44 Nor is the indemnitee required to prove that there was no way it could have bolstered its chances of defeating the third-party claims, or reducing the magnitude of its potential exposure, by adopting different litigation or negotiation strategies.45 To the contrary, New York law recognizes that such second-guessing of good faith settlement decisions, inevitably in hindsight, would be tantamount to requiring the indemnitee to re-litigate at the indemnification stage the very third-party claims it settled in good faith. This would undermine one of the core objectives of an indemnification agreement, which is to provide for a predictable allocation of future risk.46
53.
By contrast, New York cases provide for far less deference where the indemnitee settled the third party claim without prior notice to the indemnitor, and in so doing deprived it either of a contractually stipulated right or an equitably implied right (in the absence of a contractual arrangement otherwise) to assume the defense of the action or to consent to any settlement. In consequence of the thwarting of these important rights, the cases provide a substitute check on unreasonable indemnitee settlements, by requiring the indemnitee to demonstrate that it would have been liable on the underlying claim - and therefore that the indemnitor was not substantively prejudiced by the unilateral settlement.47 Notably, even in these cases, the procedural prejudice of having been denied notice does not itself qualify as substantive prejudice; absent a finding that the procedural deficiency resulted in the indemnitee settling a case for which it had no real liability, the failure to provide notice does not relieve the indemnitor of its obligation to share the burden of a reasonable settlement.48
54.
These general New York law principles are relevant background to the dispute, among other things because they help frame the Parties’ respective arguments. At the same time, their relevance to the analysis is somewhat limited by the fact that the Parties in this case did not leave such issues to be resolved solely through application of default propositions of New York law. To the contrary, they included very specific agreements in the SSEA regarding each of these key issues. These included the parameters of VimpelCom’s obligation to notify OTMTI of different types of potential exposures, and the nature of OTMTI’s participation, coordination or consultation rights with respect to the underlying claims, following its receipt of such notice. Importantly, the Parties also agreed on the specific consequences of VimpelCom’s potential non-compliance with its notice obligations, including the circumstances under which this might (or might not) relieve OTMTI of its otherwise broad indemnification obligations. In these circumstances, the Parties’ contractual agreements take precedence over the default presumptions of New York law. The Tribunal therefore examines the contractual provisions in some detail below, with respect to issues of notice, participation, and consequences. It also examines the SSEA’s general requirement regarding mitigation of "Losses," as relevant to the specific issue of settlement of third party claims.

(3) SSEA Provisions Regarding Notice

55.
With respect to the issue of notice, the SSEA sets forth three different descriptions of an indemnitee’s obligations. The distinctions between these provisions must be taken as intentional and given meaningful effect.
56.
Two of the provisions relate to exposures defined with reference to subject matter. The most specific obligations attach under Article 10.7(h)(i), "[i]n the event of a Tax audit or inquiry by any Taxing Authority that may lead to an Italian Withholding Tax Liability." In this context, VimpelCom is identified as the potential indemnitee and OTMTI as the potential indemnitor. VimpelCom is required to notify OTMTI "as soon as reasonably practicable but in any event within ten (10) Business Days after VimpelCom or any of its Subsidiaries has been informed in writing of the beginning of such procedure," except to the extent it is restricted from doing so by "any obligation of confidentiality."49 According to this provision, the trigger for VimpelCom’s obligation to OTMTI is its own receipt of written notice about the beginning of a "procedure," defined as a "Tax audit or inquiry." The only qualifier is that this audit or inquiry must be one that "may lead' to an Italian Withholding Tax Liability. In other words, the mere potential for an indemnifiable loss ("may lead") triggers the duty to provide notice. Upon occurrence of this trigger, VimpelCom’s deadline for notifying to OTMTI is defined with specificity, namely no later than 10 business days.
57.
This very specific deadline - applicable only to VimpelCom and only to Italian Withholding Tax issues - contrasts with both Parties’ obligations to each other under Article 10.7(b). This provision governs in the event that either Party "receive[s] notice of any claim or proceeding initiated by a third party which is or may be subject to indemnification (other than any claim or proceeding related to Taxes) (each, a ‘Third Party Claim’)."50 For these non-tax related claims, the trigger for the indemnitee’s obligation is (similarly to Article 10.7(h)(i)) its own receipt of notice of a claim, and similarly extends to any claim with the mere potential for an indemnifiable loss (a non-tax claim "which is or may be subject to indemnification"). But the indemnitee’s deadline is defined with less specificity than with respect to a potential Italian Withholding Tax Liability; it is required to "promptly" give the indemnitor notice of the non-tax claim.51 How long a period qualifies as "prompt" is left undefined. It may be more than 10 business days, or conceivably could be less than 10 business days, depending on the circumstances.
58.
In addition to these notice obligations that apply to some but not all types of exposure, the SSEA contains a general or catch-all notice provision - Article 10.7(a) - that applies only to VimpelCom, and applies regardless of the specific subject matter of claims. Under this provision, when VimpelCom "receive[s] notice of any matter which [it]... has determined has given, or is reasonably likely to result in, a right of indemnification" under the SSEA.52 Under this provision, the trigger for VimpelCom’s obligation of notice to OTMTI has two parts: it not only must have received notice of a potential source of exposure, but also already have "determined" (in the past tense) that the threat is real and not merely theoretical, in the sense that the matter "has given, or is reasonably likely to result in," a loss to itself which would give rise to a right of indemnification by OTMTI.
59.
This combination of the requirement of a "determin[ation]," and that the determination be based on an assessment of the "likel[ihood]" of loss and not the mere possibility of loss, distinguishes Article 10.7(a) from Articles 10.7(b) and 10.7(h)(1), which attach simply upon receipt of notice of a claim that "may" lead to VimpelCom’s liability (for Italian Withholding Taxes) or "may be" subject to indemnification (as a non-tax related Third Party Claim). In particular, the textual differences imply an awareness that Article 10.7(a)’s duties of "prompt" notice attach only after it has undertaken some form of internal evaluative process. While this internal process is subject to certain implied requirements of a reasonable timetable - VimpelCom could not unreasonably ignore its own receipt of notice of a potential exposure, or unreasonably delay evaluating such notice to determine if it is "reasonably likely to result in" an indemnifiable loss - nor is VimpelCom’s determination regarding likelihood required to be instantaneous with its learning of any even theoretical exposure.
60.
In any event, once VimpelCom itself has made a determination regarding likelihood of loss, it is required to "promptly" so notify OTMTI; it cannot sit on its own conclusions without sharing them with OTMTI. But under the distinct language of Article 10.7(a) -and in clear contrast with the other SSEA provisions - OTMTI has no right to receive notice of a potential third party claim prior to this time. The reasons for allowing some additional time for VimpelCom to conduct an assessment of "likel[ihoods]," leading to a "determin[ation]" that an indemnifiable loss is "reasonably likely" and not simply demanded (perhaps unreasonably) by a third party, become clearer when the different content of the Parties’ post-notice rights and obligations under the three SSEA provisions are examined and compared. The Tribunal turns to this issue next.

(4) SSEA Provisions Regarding Participation

61.
The provision of notice by an indemnitee to an indemnitor, in accordance with the SSEA provisions addressed above, triggers certain further rights and obligations with regard to the underlying third party claim. As with the issue of notice, the SSEA distinguishes between the rights and obligations applicable to different types of claims, and the distinctions between these provisions must be taken as intentional and given meaningful effect.
62.
First, with regard to non-tax related Third Party Claims against either Party under Article 10.7(b), that Party is required to "permit [the other Party], at its option, to participate in the defense" of the claim, through the appearance of its own counsel in the proceedings. Alternatively - if it acknowledges its indemnification obligations - the other Party may even "assume and control the defense of such claim" in its entirety.53 These are very important prerogatives, as they permit the indemnitor to play a direct role in, and even the possibility of complete control over, the defense of the Third Party Claims.
63.
Notably, these direct rights of participation and/or control are not extended to the defense of tax claims. Such claims are expressly carved out from the definition of "Third Party Claims" otherwise covered by Article 10.7(b). The Parties agree that this carve-out was specifically negotiated, with OTMTI proposing that it could "assume and control the conduct of the Tax audit or inquiry and the defense of any related claim by counsel of its own choice," and VimpelCom rejecting this proposal.54
64.
But the SSEA goes on to create a sub-category of tax claims - those with respect to a "Tax audit or inquiry... that may lead to an Italian Withholding Tax Liability" - for which different (though lesser) rights attach. As to these claims, VimpelCom must "coordinate" with OTMTI "in the taking of any action relating to the conduct of such Tax audit or inquiry actions," and to provide OTMTI "such information and access to personnel, premises, documents and records" as OTMTI may reasonably request. VimpelCom is also obliged to "use its reasonable efforts to include a representative appointed by [OTMTI] in any meeting or material telephone call arranged by VimpelCom... with a representative of the relevant Taxing Authorities."55 These are fairly specific obligations, but by the terms expressly agreed, they extend rights only to coordination, information, and reasonable efforts of inclusion, not to participation or control. They aim at enabling OTMTI to be informed and within reason to be present, but not to dictate or to control the ultimate strategy selected by VimpelCom to address the potential Italian Withholding Tax Liability. Indeed, the very fact that these rights are distinguished from those granted to OTMTI regarding non-tax related claims underscores that neither coordination, information or inclusion (the rights identified in Article 10.7(b)) themselves imply actual "participation" in the defense, a right which is separately identified in Article 10.7(h)(ii) and for which tax claims are specifically excluded.
65.
Finally, Article 10.7(a), which applies across subject matters but only after VimpelCom "has determined" that a matter is "reasonably likely to result in, a right of indemnification" against OTMTI under the SSEA,56 is worded quite differently. By its plain terms, it makes no reference either to rights of participation in or control of the defense (as in Article 10.7(h)(ii), or to coordination and reasonable efforts of inclusion in meetings and material telephone calls with the third party presenting the underlying claim (as in Article 10.7(b)). Rather, OTMTI’s rights under Article 10.7(a) are defined simply in terms of the degree of information that VimpelCom must provide it about a "reasonably likely" loss for which it will seek indemnification. Specifically, OTMTI is entitled to be promptly informed of "the amount of the Losses, if known, and method of computation thereof, all with reasonable particularity and including documentary proof, if available, and containing a reference to the provisions of this Agreement in respect of which such right of indemnification is claimed or arises."57 All of this information undoubtedly is relevant to OTMTI’s ability to evaluate its duty of indemnification, but it is not relevant to OTMTI’s role in discussions with the third party. Nothing in Article 10.7(a) even purports to address such a role, whether defined as "participation," "coordination," or "inclusion" in meetings or phone calls.
66.
OTMTI suggests that regardless of the textual differences between Article 10.7(a) and the two other provisions, the notice requirements in Article 10.7(a) must be considered implicitly to provide "an opportunity to be meaningfully involved in defending against" third party claims.58 Otherwise, OTMTI suggests, "the notice would be of no value to the indemnitor."59 As a threshold matter, the Tribunal is not persuaded by the latter proposition. Requiring an indemnitor to be promptly notified of a likely exposure, including the likely quantum of its exposure, can serve a range of operational objectives entirely apart from its potential involvement in defense of the underlying claims. For example, notice of a likely claim for a substantial indemnification may trigger reporting requirements regarding such a contingent liability, including disclosures to shareholders or potential regulators. There may be implications for required financial statements. There may be a need to make reserves for potential liability, with impacts on extrinsic covenants or financing obligations. All of these present commercial reasons to require an indemnitee to provide prompt notice that a claim for indemnification already has ripened or is likely to do so, whether or not the indemnitor is contractually entitled to be brought into the investigation or defense of the underlying third party claims themselves against the indemnitee.
67.
Be that as it may, the broader point is that the Tribunal does not have the power to rewrite the Parties’ contract to provide different rights and obligations than those to which they specifically agreed. Whatever the validity of OTMTI’s proposition for a hypothetical contract requiring notice but entirely silent with respect to the issue of participation, this is not such a contract. The Parties here clearly knew how to grant rights of involvement, including rights of participation, coordination and inclusion. If they had intended such rights to apply across the board for all potential exposures, they could have done so very simply, by including them in a catch-all provision. Instead, they apportioned these rights carefully among different types of claims, distinguishing non-tax claims from tax-related claims, and further singling out a particular subset of tax-related claims ("Italian Tax Withholding" claims) for different treatment than all other tax claims. They did so in the context of a heavily negotiated contract between two highly sophisticated Parties, both represented by experienced counsel. In these circumstances, and in light of the accepted maxim expressio unius est exclusius alterius, the Parties’ crafting of such distinctions must be given force and effect. The Tribunal sees no basis, in New York law or in the facts of this case, to rewrite the SSEA to elide distinctions among the three provisions that are apparent on their face.

(5) SSEA Provisions Regarding Consequences of Inadequate Notice

68.
As noted above, the SSEA specifically addresses the consequences of potentially inadequate notice to the indemnitor. Article 10.7(a) — the provision requiring provision of information about a potential indemnification claim promptly after the indemnitee "has determined" that a claim "is reasonably likely to result in" a right of indemnification -states that "failure to so notify the Indemnitor shall not relieve the Indemnitor from any liability which it may have on account of the claim, except to the extent the Indemnitor shall have been prejudiced by such failure" (emphasis added). Similarly, Section 10.7(b) - the provision requiring notice of any non-tax related Third Party Claim promptly after the indemnitee receives notice of such claim - provides that "failure to so notify the Indemnitor shall not relieve the Indemnitor from any liability which it may have on account of the Third Party Claim, except to the extent the Indemnitor shall have been prejudiced by such failure."
69.
Interestingly, there is no parallel provision in Section 10.7(h), addressing the consequences of a failure to provide notice within 10 business days of a "Tax audit or inquiry by any Taxing Authority that may lead to an Italian Withholding Tax Liability." Conceivably, this may be because the obligation to provide such notice is itself contingent rather than absolute, with an exception regarding confidentiality that does not appear in Sections 10.7(a) or (b). Alternatively, it may be that similar language was impliedly cross-referenced, from the general statement in Section 10.7(h) that its terms are "without prejudice to the provisions of Section 10.7."
70.
Be that as it may, it is worth making a few threshold observations about the "prejudice" provisions. First, they are framed as a limited "except[ion]" to a general presumption that a failure of notice "shall not relieve" the indemnitor of its indemnification obligations. "Shall not" is mandatory language. Second, there is an express causation requirement: the relevant prejudice must be occasioned "by such failure," i.e., by the breach of the notice requirement. As a result, the relevant question is not whether earlier notice than contractually required might be commercially sensible in certain circumstances; it is whether notice later than contractually required itself occasioned harm. Third, the exception for prejudice is not all or nothing: the provisions refer to an exception "to the extent" of the demonstrated prejudice, leaving open the possibility of a reduction, rather than an outright elimination, of the indemnification obligation.
71.
Finally, the term "prejudice" is not defined, to provide specific direction to a tribunal undertaking such analysis. Nonetheless, it seems apparent that the term requires an evaluation of substantive prejudice, not procedural prejudice. A delay in notice may well delay the benefits of other procedural rights that attach upon such notice, including for example the right to receive particularized information about the computation of Losses under Section 10.7(a) or the rights of coordination, information and inclusion in Section 10.7(h).60 But if this were sufficient to constitute prejudice, then the exception for circumstances of prejudice would swallow the rule from which the exception is intended to derogate. The violation of the notice obligation necessarily would create the very prejudice (late receipt of information, late opportunity to attend meetings, etc.) required to satisfy the exception.
72.
In these circumstances, it is clear that the exception requires a showing of substantive prejudice, meaning material and tangible economic harm. In other words, the question will be whether later notice to the indemnitor than contractually required made a material difference to the indemnitor’s exposure, either (a) directly, by preventing it from eliminating the indemnitee’s primary exposure to the underlying claim, or reducing that exposure so substantially as to render the indemnitee’s ultimate settlement objectively unreasonable, or perhaps (b) indirectly, by preventing the indemnitor from taking some other business measures to protect or hedge against the detrimental consequences of its eventual indemnification obligations.
73.
In either case, the burden is on the indemnitor to make such a showing. This is a function of the formulation in the SSEA, in which prejudice is framed as an exception (or affirmative defense) to an otherwise binding obligation to indemnify notwithstanding the failure of notice ("shall not relieve the Indemnitor from any liability... except to the extent"). The language of the SSEA also defeats OTMTI’s suggestion that the burden is on VimpelCom to demonstrate the absence of prejudice to OTMTI from such delay, in the form of "actual liability" to the Italian authorities notwithstanding any possible counter-arguments OTMTI might now suggest. Whatever the default rule under New York law about the possible burden to prove "actual liability" where an indemnitee (by denying notice) deprives an indemnitor of a meaningful right to control a defense or consent to a settlement, the SSEA here defines the standard differently, and it places the burden on the indemnitor.
74.
Placing the burden of proof on OTMTI in these circumstances is also a matter of commercial reasonableness, because it is in the best position to articulate the manner in which it claims to have been materially prejudiced. It is neither feasible nor reasonable to expect VimpelCom to prove a negative, namely that there is no step OTMTI conceivably might have taken, had it been given earlier notice, that would have eliminated or materially reduced VimpelCom’s risk of exposure from the Italian Tax Audits. Rather, the burden is on OTMTI to show concretely that earlier notice would have enabled it to take particular, identifiable steps - steps it was unable to take later when notice was provided - which would have either eliminated VimpelCom’s exposure, or so materially reduced that exposure as to render VimpelCom’s ultimate settlement decision (including the amount of the settlement) unreasonable in the circumstances. The requirement of concreteness flows from the contract designation of actual prejudice as an exception to the ordinary rule. The exception cannot be invoked based merely on speculation, with the benefit of hindsight, that "something" might have been done with earlier notice that in turn "might" have altered the settlement calculus.

(6) SSEA Provisions Regarding Mitigation of Loss

75.
The final element in the legal analysis concerns the issue of mitigation. As noted above, Article 10.7(f)(C) provides that "[t]he Indemnitor shall not be held liable for indemnification with respect to a Loss or the increased portion of a Loss, as the case may be,... to the extent the Indemnitee Group had not, upon learning of the situation giving rise or likely to give rise to a Loss, used or caused entities of its Group to use, all reasonable efforts to mitigate the corresponding Loss."
76.
Several observations are warranted. The first is about timing. Contrary to the normal notion that mitigation is a duty that a wronged party assumes only after it has been harmed by another party, here the contractual duty of the indemnitor to mitigate its Losses accrues not only after it has incurred a liability (i.e., "upon learning of the situation giving rise... to a Loss"), but also before, when the loss becomes reasonably foreseeable (i.e., "upon learning of the situation... likely to give rise to a Loss"). The former means that once on notice of a situation giving rise to loss, the indemnitor has a duty to take reasonable steps to keep that existing loss from recurring or expanding, for example by ceasing to engage in the same risky conduct or seeking to forestall additional negative consequences of its existing liability. The latter requires a degree of due diligence in preventing foreseeable future loss, but only to the extent that loss is otherwise "likely" and not merely theoretical or potential. Again, the use of the word "likely" - rather than the word "may" - implies some internal evaluative process by the indemnitee regarding the probability of loss, prior to the triggering of its duty of mitigation.
77.
The second observation is about content. The general mitigation requirement in the SSEA - or the general requirements of New York law with regard to mitigation of loss from another party’s wrongful conduct - cannot alter the contours of the Parties’ specific agreements in other provisions of the SSEA, including with respect to the required level of notice and participation in regard to third party claims. Consistent with the general rule of contract construction that "specific terms and exact terms are given greater weight than general language,"61 the notice and participation rights relevant to this case are governed by Articles 10.7(a) and (h), and not by Article 10.7(f)(C), which makes no reference to notice or participation. In these circumstances, the indemnitor cannot invoke the general mitigation provision to posit a legal requirement that the indemnitee engage it either earlier or more extensively in the defense of potential third party claims than the SSEA otherwise gave the indemnitor a right to expect.
78.
Moreover, in the context of exposure to third party claims, a general mitigation requirement cannot impose an absolute duty to litigate, or to adopt a more aggressive posture in settlement negotiations within a range of reasonable approaches to potential liability.62 Different parties naturally will have different degrees of risk aversion, and indemnification agreements do not require - as a condition of indemnification - that the indemnitee adopt the same posture towards litigation and assumption of risk that the indemnitor might have been prepared to adopt. Where this is important to an indemnitor, it can negotiate a right to assume and control the defense of a case. Absent such a right, it must expect that the indemnitee may have different views about both strategy and risk tolerance. The inclusion of a general clause about mitigation of loss does not entitle the indemnitor later to deny indemnification, simply because the indemnitee’s approach was more cautious than the indemnitor might have been with respect to its evaluation and assessment of risk.
79.
The reality that indemnification disputes are generally litigated in hindsight, after the underlying losses have crystallized, underscores this interpretation. If general mitigation clauses allowed indemnitors to broadly second-guess decisions to settle rather than litigate third party claims to conclusion, then the reverse could also be true: indemnitors who are more risk-averse than their indemnitees could assail in hindsight any decision to reject a settlement offer and proceed to trial, whenever the trial outcome results in greater loss than the earlier settlement offer. Mitigation clauses then would become the vehicle always for arguing that the indemnitee made the wrong decision, with the benefit of later knowledge of events.
80.
For this reason, the Tribunal does not read Article 10.7(f)(C)’s reference to using "all reasonable efforts to mitigate the corresponding Loss" as requiring VimpelCom necessarily to litigate all possible defenses against third party claims, rather than to accept settlements that entail loss below the amounts of total potential exposure.
81.
The question then becomes what obligations Article 10.7(f)(C) add to the analysis that is otherwise dictated by other provisions of the SSEA and New York law, in the context of a party’s settlement of third party claims. OTMTI initially argued that the "all reasonable efforts" formulation elevated VimpelCom’s mitigation obligations beyond what New York law otherwise would require, with the use of the word "all" suggesting a requirement to make "every effort," and not just reasonable efforts.63 However, as VimpelCom noted, the case upon which OTMTI relied actually interpreted an express "every effort" clause to mean "every reasonable effort,"64 suggesting certain limitations on the duties imposed. The Parties also debated the contours of an analogous "best efforts" formulation, with VimpelCom contending that it requires only "such efforts as are reasonable" in the circumstances,65 and OTMTI contending it requires "all reasonable means," which it said implied duties beyond simply acting in good faith.66 Perhaps recognizing the inevitable fluidity of these terms, and in response to questions from the Tribunal, OTMTI ended up characterizing the mitigation requirement of the SSEA primarily as a "point of emphasis," that "underscored" obligations of reasonableness already existing under New York law.67
82.
Be that as it may, in the Tribunal’s view, a duty of mitigation does suggest certain requirements. First, an indemnitee should approach a decision whether to settle a claim based upon a bona fide evaluation of its potential liability, and not entirely or primarily on extrinsic factors unconnected to such evaluation. This is connected to its duty of subjective good faith. Second, an indemnitee should conduct a reasonable inquiry into the legal and factual bases for the claim, and evaluate the relative strengths and weaknesses of the opposing positions with reasonable care, for example with the assistance of appropriately knowledgeable legal counsel. This does not mean it is required to chase down every possible piece of information, interview every possible witness, or consider every possible legal argument; nor is it required to assert every possible defense, even ones that in hindsight might appear potentially promising. The cases confirm instead that the duty is one of "reasonable efforts," and reasonableness must be evaluated in the circumstances, including the time and resources available.68 Finally, in addition to these requirements about motive and process, a mitigation obligation imposes a duty of proportionality, which is closely connected to the reasonableness of the ultimate settlement. The indemnitee does not mitigate its potential loss from litigation if it settles claims for amounts that are patently excessive in relation to any realistic evaluation of the scale of potential liability.
83.
With respect to each of these inquiries, the burden of proof is on the indemnitor to identify a particular "reasonable effort" that the indemnitee should have taken, not on the indemnitee to demonstrate that it took every possible theoretical care. This burden is reflected in the structure of the SSEA provision, which suggests that it provides an indemnitor with an affirmative defense to its otherwise applicable obligations ("[t]he Indemnitor shall not be held liable for indemnification... to the extent...."). In accordance with this provision, the indemnitor must demonstrate that the indemnitee unreasonably failed to take particular, concrete steps that it should have done. Finally, the indemnitor bears the burden of demonstrating that the additional steps it contends were required would have been "mitigated" the Losses, in the sense of eliminating or materially reducing such losses, without at the same time creating significant additional risks.69 It is not sufficient simply to speculate, after the fact, that additional steps "might" have had that salutary effect. The mitigation defense in this sense is similar to the "substantive prejudice" exception discussed above.

(7) Conclusion

84.
Based on this framework, the Tribunal concludes that the appropriate sequence of inquiry for each of VimpelCom’s three separate indemnification claims is as follows. First, the Tribunal determines whether the claims fall within the scope of the indemnification obligation in the first place. If so, the Tribunal next examines whether in reaching the decision to settle each of the Italian tax claims, VimpelCom in good faith believed that it otherwise faced a cognizable risk of exposure with respect to such claims. This is a threshold requirement under New York law, and is not varied by any contractual provisions under the SSEA. Assuming subjective good faith, the Tribunal next examines whether VimpelCom complied with the applicable notice and participation provisions of the SSEA, and to the extent there is any doubt, whether any shortfalls in this regard demonstrably prejudiced OTMTI, in the sense that it exposed OTMTI to loss that otherwise it would not have faced. In the absence of any such demonstrable prejudice, the inquiry remains as it would be under New York law where there is no dispute about notice, namely whether the decision to settle at all, or the terms of the resulting settlement, were objectively unreasonable. If not, then OTMTI’s obligation to indemnify attaches, except to the extent that the "Losses" could reasonably have been obviated or significantly reduced by concrete steps that VimpelCom failed to take in mitigation. The obligation otherwise extends to all Losses effectively sustained by VimpelCom, and includes OTMTI’s 72.65% share of such Losses, plus applicable interest. The Tribunal examines each of these issues in turn below.

D. The Wind Telecom Indemnification Claim

(1) Background on the Transactions and the Audit

85.
As previously noted, VimpelCom did not acquire the Greek businesses that Wind Telecom previously had held and operated through Wind Hellas; these were spun off to other buyers before closing. Well prior to the Spin-Off, Wind Telecom had consolidated its own direct and indirect interests in a Greek fixed-line provider (Tellas Communications S.A., or "Tellas") and a Greek mobile carrier, TIM Hellas, to bring them under the single umbrella of Wind Hellas. The transactions by which this was accomplished were complex, and the Tribunal does not purport to summarize them here. The numerous steps included, however, a series of intra-group derivative transactions among Wind Hellas, Wind Telecomunicazione and Wind Telecom, which were backed by put and call options issued without premiums on the underlying stock of an affiliated Greek company (Hellas I Telecommunication S.à r.l., or "Hellas I"). As initially created in October 2007 by a Shareholders’ Agreement among the three companies involved in the derivative transactions (the "2007 Shareholders Agreement"), the put option was granted by Wind Telecom to Wind Telecomunicazione, and the call option was granted by Wind Telecomunicazione to a different company, Wind Hellas. In September 2008, the call option was terminated, but a few months later in February 2009 a new call option was agreed and implemented through an amendment of the Shareholders’ Agreement. The 2009 call option was held by the ultimate parent, Wind Telecom, rather than by Wind Hellas, the original holder of the call option. Wind Telecom continued to hold a put option in favor of Wind Telecomunicazione, with the result that the previously "non-matching" put and calls were now matching, reciprocally between Wind Telecom and Wind Telecomunicazione.70
86.
Within months of the February 2009 transaction, the Greek businesses collapsed, resulting in insolvency by the end of the year. Wind Telecom devalued the put option on its year-end 2009 balance sheet, and thereafter Wind Telecomunicazione exercised the put option, resulting in a loss to Wind Telecom some €207 million. Wind Telecom carried the loss forward to deduct it from subsequent years’ taxable profits, ultimately yielding roughly €57 million in tax savings in Italy.71
87.
The Wind Telecom Audit is discussed further below. For purposes of this background section, it is essentially undisputed that on 14 February 2013, after VimpelCom had acquired Wind Telecom, the Italian Tax Authorities served notice of the opening of the audit and requested certain financial and accounting documents from 2009, as well as documents related to Wind Telecom’s restructuring of Wind Hellas from 2007 through 2009.72 As the new owner of Wind Telecom, VimpelCom oversaw responses to the audit inquiries. Following certain additional inquiries, document requests and discussions, the Italian Tax Authorities provided Wind Telecom in late May 2013 with a summary of a draft audit report, expressing a preliminary view that the derivative transactions under which Wind Telecom had claimed the €207 million loss violated Italian tax avoidance laws, since absent the derivative structure a more straightforward loss on shareholding in the Greek business would not have been tax deductible.73 The draft audit report was accompanied by a questionnaire, to which Wind Telecom submitted answers in mid-June 2013.74 On 17 July 2013, the Italian Tax Authorities indicated that they were close to issuing a final audit report finding liability, but proposed a settlement under which Wind Telecom would pay €24 million in back taxes plus penalties and interest, understood by Wind Telecom (and VimpelCom) to total approximately €29 million. The Italian Tax Authorities proposed that this settlement could be achieved by a report focusing on one of the constituent parts of the derivative transactions, namely the granting of the put option without any premium, which would be said to violate Italian transfer pricing rules requiring affiliates to deal with one another on an arm’s length basis. The settlement offer would not require Wind Telecom to admit wrongdoing under this or any other theory, but would require it to "adhere" to the terms of the Authorities’ final audit report in the sense of agreeing not to challenge it before the Italian tax courts. The Italian Tax Authorities indicated that this offer would expire at the end of July 2013.75
88.
Following certain deliberations discussed further below, on 31 July 2013, VimpelCom agreed to settle the audit for a total €31.3 million, which was based on the Italian Tax Authorities’ intervening (higher) calculation of the interest component. This sum was to be paid in quarterly installments over several years.76 VimpelCom demanded that OTMTI indemnify it for 72.65% of the settlement amount under the SSEA, which OTMTI refused.

(2) Whether the Audit Falls Within the Scope of IndemnificationObligations

89.
The first disputed issue is whether the SSEA’s indemnification obligation applies to the Wind Telecom Audit at all. The New York courts require an agreement to indemnify to be "clearly implied from the language and purpose of the entire agreement and the surrounding facts and circumstances."77 The question therefore is whether the SSEA’s indemnification obligations clearly extend to the type of claims the Italian Tax Authorities presented in the Wind Telecom audit.
90.
The Tribunal finds that it does. The relevant provision is Article 10.2(b), which provides for indemnification of VimpelCom’s Losses "arising out of or resulting from (i) claims or residual liabilities related to [Wind Telecom’s] ownership of Wind Hellas prior to the completion of the Wind Hellas Spin-Off, (ii) the Wind Hellas Spin-Off or (iii) claims related to Wind Hellas after the Wind Hellas Spin-Off."
91.
OTMTI argues that VimpelCom’s settlement of the Wind Telecom Audit does not fall within Article 10.2(b)(i), as the settlement was based on alleged tax law violations in connection with intercompany transactions (the put and call options) between Wind Telecom and Wind Telecomunicazione, and not on Wind Telecom’s ownership of Wind Hellas.78 Further, the shares underlying the put option were not shares in Wind Hellas, but rather in Hellas I, a subsidiary of Wind Telecom.79 As to Article 10.2(b)(iii), OTMTI argues that "these transactions and their tax treatment were finalized before the Wind Hellas Spin-Off," so the Wind Telecom Audit cannot constitute a "claim[] related to Wind Hellas after" the Spin-Off.80
92.
In the Tribunal’s view, however, these arguments do not take into account the fair reading of the term "related to" as used in both of the arguably relevant clauses. "Related to" is a fairly broad term that encompasses a variety of direct and indirect relationships. Both contemporaneously and in this arbitration, OTMTI has sought to explain the put transaction not as an isolated, stand-alone arrangement, but rather as a critical part of a broader series of transactions with the legitimate business objective of restructuring Wind Telecom’s Greek mobile and fixed telephone businesses under the common umbrella of Wind Hellas.81 Other steps in this series of transactions included Wind Hellas’ purchase from a third party of a 49% stake in the joint venture that owned Tellas, to bring Tellas fully under Wind Telecom’s ownership (the other 51% already being owned by Wind Telecom’s subsidiary, Wind Telecomunicazione); the call option, which as created in 2007 gave Wind Hellas the right to buy the remaining joint venture stock from Wind Telecomunicazione; and the put option, which entitled Wind Telecomunicazione to put the same stock to the parent, Wind Telecom. All of these steps were connected to Wind Telecom’s broader business purpose of enable the folding of Tellas into the combined entity. And all of this was structured, as OTMTI’s witness Karim-Michel Nasr explained at the hearing, in order to serve the overall interest of the Wind Telecom Group;82 Wind Telecom was able to achieve all of this because of its "ownership of Wind Hellas" at all relevant times. The tax claim that the Italian Tax Authorities asserted arose out of that restructuring, and thus "related to" Wind Telecom’s "ownership" of Wind Hellas within the meaning of Article 10.2(b)(i). To conclude otherwise would require viewing the constituent parts of the restructuring transaction as entirely separate from one another, which is precisely the opposite of the holistic approach that OTMTI contends is warranted to understand the broader business purpose served by the originally asymmetrical put and call components.
93.
The Wind Telecom Audit likewise falls within the scope of Article 10.2(b)(iii). The Italian Tax Authorities’ 2013 challenge to the deductions taken on the put was a claim "related to" Wind Hellas, and it was asserted "after" the Spin-off. It is not logical to read the temporal provision ("claims related to Wind Hellas after the Wind Hellas Spin-Off’) as OTMTI does, namely as referring only to post-Spin-Off conduct giving rise to potential liability, as opposed to post-Spin-Off claims. After the Spin-Off, any new business conduct related to Wind Hellas presumably would be the responsibility of Wind Hellas’ new (post-Spin-Off) owner, not of Wind Telecom as its pre-Spin-Off owner. Yet the whole purpose of this SSEA indemnification provision was to allocate burdens falling on Wind Telecom, as between OTMTI (Wind Telecom’s prior owner, at the time Wind Telecom owned Wind Hellas), and VimpelCom (Wind Telecom’s new owner, after Wind Telecom ceased to own Wind Hellas). The more logical reading of the provision, in the context not only of its language but also "the purpose of the entire agreement and the surrounding facts and circumstances,"83 is thus to address claims that might be brought against Wind Telecom even after the Spin-off, for events related to Wind Hellas that occurred during the earlier time when Wind Telecom remained Wind Hellas’ owner. The Wind Telecom Audit presented just such a claim.

(3) Good Faith

94.
The next question is whether in reaching the decision to settle the Wind Telecom Audit, VimpelCom in good faith believed that it otherwise faced a cognizable risk of exposure. In accordance with the legal principles discussed in Section IV.C.2, a presumption of good faith applies given that VimpelCom at all times retained significant exposure (a minimum of 27.35%) from any settlement. The presumption is all the more warranted here because VimpelCom was aware that OTMTI was unlikely to indemnify VimpelCom for the other 72.65% voluntarily. In these circumstances, VimpelCom understood that it faced a risk of bearing the full consequences of its settlement decision. It is therefore presumed to have subjectively believed the settlement was reasonable in the circumstances.
95.
That presumption of subjective good faith is further supported by the fact that VimpelCom engaged in a process intended to enable it to evaluate Wind Telecom’s exposure from the Wind Telecom Audit. This included an effort to determine the reasons for the relevant steps in the complex Wind Hellas transactions, and to consult with Italian tax counsel regarding the applicable legal principles, the nature of the judicial proceedings Wind Telecom would face if it chose to litigate the claim, and the potential outcomes and risks of that course of action. In particular, even apart from VimpelCom’s eventual outreach to OTMTI, it is undisputed that VimpelCom conferred with Wind Telecom personnel whom it believed to have relevant knowledge (including Mr. Shalaby, the Wind Group’s General Counsel at the time of the transactions); gathered and reviewed documents available to the Wind Group; and reviewed the information thus gathered with its own Group Tax Advisor (Mr. Kuper) and with external tax counsel experienced in contentious tax matters in Italy, including the same outside counsel (Mr. Cisternino) who had advised OTMTI when it still owned Wind Telecom.84 These discussions were aimed at understanding both the legal theories pursued by the Italian Tax Authorities and the potential defenses to liability on those theories. However thorough (or not thorough) this exercise may have been, and however it might have been improved, and however risk-averse VimpelCom ultimately may have been in evaluating the information it gathered, these are not the steps of a company acting in subjective bad faith.
96.
The presumption of good faith is also supported by evidence demonstrating that VimpelCom’s decision to settle was based on its perception (rightly or wrongly) that the company otherwise faced greater exposure - both financial and possibly criminal - from not doing so. VimpelCom’s analysis was set forth in a 25 July 2013 memorandum from the company’s management to its Supervisory Board,85 which attached a memo from the Group Tax Department that itself summarized a detailed 23 July 2013 memorandum from external tax counsel.86 These documents focused on the Italian Tax Authorities’ stated intent to issue imminently a final audit report on tax avoidance grounds, based on the theory that the inter-company put arrangement had little rationale from the Wind Telecom perspective other than to enable it to convert any non-deductible losses related to its equity investment into a deductible loss on a derivative contract. Management’s contemporaneous understanding was that this claim "could subject Wind Telecom to substantial tax claims" of at least €114 million (composed of €57 million in back taxes, plus interest and penalties ranging from 100%-200%). Management also noted that "[c]riminal charges conceivably could be brought against officers and directors of Wind Telecom (including individuals who are presently officers of VimpelCom) during the relevant period."87
97.
With respect to the likelihood of such exposure, VimpelCom’s contemporaneous understanding - again based on the advice of its external tax counsel - was that there were "current uncertainties" in the way the Italian tax courts would apply the relevant legal principles, "due to the fact that these anti-abuse principles are not reflected in a written provision in the Italian (tax) laws" but "only originate from... case law [that] is still too recent and not uniform," which "does not allow for any reliable prediction on the possible ramifications."88 The authors acknowledged that "from a pure legal standpoint - there are defensive arguments to challenge" the Italian Tax Authorities’ position in the tax courts. On the other hand:

from a substantial standpoint - in our experience the current approach of Italian tax courts (and the Supreme Court of Justice) is generally very tough against taxpayers in relation to complex intra-group cross-border transactions generating an overall tax erosion in Italy, in particular in cases in which the transaction gives rise to costs not reflected in (i) real cash payments between related parties and (ii) income taxed at the level of another resident group company.89

98.
On balance, management "concluded that it is unlikely that Wind Telecom would win in court if it were to challenge the audit report."90 Moreover, VimpelCom had received legal advice that, in order even to challenge a tax assessment in Italy, Wind Telecom first would have to first pay 1/3 of the assessed amount (here €19 million) plus interest - and in order to appeal from any adverse ruling by the court of first instance, 2/3 of the assessed amount (€38 million), plus interest and penalties.91 In addition to these financial considerations, management also considered the risk of possible criminal prosecution of Wind Telecom officers and directors, a possibility that the Italian Tax Authorities had raised expressly and that outside legal counsel had confirmed to be a risk.92
99.
Against these risks, VimpelCom evaluated the alternative to litigation, in the form of the settlement proposal under a theory that the put component of the transaction lacked arms’ length consideration. The cost of this avenue was understood to be approximately €29 million, and "[m]ost importantly... the [authorities] will NOT file a tax report with the criminal prosecutor."93 However, management understood that the settlement offer was contingent on "the Company agree[ing] to ‘adhere’ to the tax report without contesting it in front of the tax courts," and that the offer "will not be open for acceptance after 31 July 2013."94 VimpelCom understood this to be "A HARD DEADLINE."95 The evidence was that VimpelCom believed the Italian Tax Authorities had floated the alternative "transfer pricing" theory only as a compromise to induce settlement, but if Wind Telecom declined, then the Authorities would pursue the original anti-abuse theory of liability, not the transfer pricing theory.96 The Authorities "ha[ve] also stated" that, if the settlement offer was not accepted by the deadline, they "will forward [the] audit to the criminal prosecutor for possible criminal charges against Wind Telecom and its officers and directors."97
100.
With this understanding of the options, on 25 July 2013 VimpelCom’s management recommended that Wind Telecom accept the proposal "because there is a significant risk of higher liability if we challenge the audit report."98 They acknowledged that "the indemnity from [OTMTI] is helpful and we believe will mitigate our losses," but stated that "[h]owever, we would recommend settlement even if there was no indemnity available in view of the significant risk of higher liability if we do not settle."99
101.
On the same day as this recommendation (by letter dated 25 July 2013), OTMTI informed VimpelCom that that "it does not accept" any obligation to indemnify VimpelCom regarding the Wind Telecom Audit, that it could "neither object to nor support any settlement," and that "VimpelCom will need to proceed as it deems appropriate under its own responsibility and on its own account."100
102.
The next day (26 July 2013), VimpelCom’s Supervisory Board unanimously approved the recommended settlement.101 It is not clear if this decision was made with knowledge of OTMTI’s letter dated 25 July 2013; VimpelCom’s Statement of Claim suggests that the letter may have been received on 26 July 2013.102 However, VimpelCom already understood (including from an OTMTI email of 9 July) that "OTMTI, as a matter of princip[le], opposes a settlement, or indeed settlement discussions,"103 yet as noted above it determined to proceed even if an indemnity would not be forthcoming.104 In accordance with New York law, VimpelCom’s awareness of risk that it might not be indemnified -together with its retention in any event of 27.35% of the potential financial liability, and Wind Telecom’s retention of the full risk of any criminal prosecution of its officers and directors - supports the presumption that VimpelCom acted in good faith in deciding to settle the Italian Tax Authorities’ claims.
103.
The Wind Telecom Board of Directors in turn approved the settlement on 30 July 2013.105 On 31 July 2013, the Italian Tax Authorities issued their final report regarding the Wind Telecom Audit, to which Wind Telecom formally "adhered" the same day, accepting the settlement offer which used a "transfer pricing" rationale as the basis for calculating the amounts to be paid. Wind Telecom submitted a letter for the record stating that although it "adhered" to (i.e., would not challenge) the final tax audit report, it did not admit liability and objected to the audit conclusions.106
104.
With regard to the issue of good faith, OTMTI contends that VimpelCom’s "conduct was not consistent with how one would expect a good faith indemnitee to behave," in several respects.107 At the most basic level, it contends that VimpelCom "settled hastily, without sufficient investigation."108 It suggests that, if VimpelCom had been acting in good faith, it would have notified OTMTI about the Audit earlier, since VimpelCom knew that OTMTI personnel had superior information about the underlying transactions and their business rationale.109 Doing so would have enabled Mr. Nasr, the self-described "architect" of the Wind Hellas transactions,110 to "reconstruct[] the precise steps of, and the reasons for such a complex series of transactions that had taken years earlier," which OTMTI describes as "a difficult and time-intensive task."111 OTMTI contends that, in general, VimpelCom showed little interest in (or even actively "thwarted") its eventual efforts to assist, entering into the settlement less than two months after informing OTMTI of the Audit.112 As a result VimpelCom remained "confused, perhaps willfully so, about the business rationale for the transactions at issue in the Wind Telecom Audit."113
105.
OTMTI also argues that VimpelCom provided the Italian Tax Authorities with mistaken information - specifically, not clearly explaining that by the time the put option was exercised, the call option no longer involved Wind Hellas but rather Wind Telecom. According to OTMTI, VimpelCom’s failure to explain that the February 2009 call option was held by Wind Telecom rather than Wind Hellas enabled the Authorities to promote the alternative transfer pricing theory, which otherwise could not properly have applied to a transaction now between two Italian companies. VimpelCom then failed to timely inform OTMTI that the Italian Tax Authorities had presented the transfer pricing theory. These are both said to be evidence that VimpelCom was not acting in good faith when it accepted the settlement on that basis.114
106.
Finally, OTMTI also faults VimpelCom for insufficiently crediting the strength of potential defenses. It suggests that VimpelCom should have placed more emphasis on internal doubts by members of its own team about the merits of the anti-abuse claim,115 and should have actively pursued defenses as well to the transfer pricing claim, rather than simply accepting this alternative without analysis.116 According to OTMTI, a more aggressive posture towards the Italian Tax Authorities "could have defeated" any claims or "at least attempted to defeat [them] with no downside risk if VimpelCom did not prevail."117
107.
The Tribunal returns to these issues later in its discussion of issues of notice, prejudice and mitigation. For purposes of the present inquiry, however, none of these alleged failings demonstrates that VimpelCom approached its assessment of its exposure in subjective bad faith. In retrospect, it is always possible to identify steps that might have been taken earlier or in addition to those already taken. But this does not suggest that VimpelCom was making no good faith effort to examine the issues involved in the anti-abuse claim, or was "willfully" choosing to remain ignorant about those issues as OTMTI suggests.118 As for the transfer pricing claim, the evidence is clear that VimpelCom believed this was simply a mechanism to support a settlement at a lower level, such that asserting defenses to that claim would simply drive the Italian Tax Authorities back to the higher-exposure anti-abuse claim. Moreover, there was credible evidence that the Italian Tax Authorities were following a pattern of imposing tight deadlines, and that the pace of investigation - and therefore the timing of VimpelCom’s decision-making - was not entirely within its control. Whether it made the best use of the limited time it had is not the relevant inquiry, particularly for the threshold issue of good faith. As noted above, the law requires more to overcome the presumption of good faith than arguments about either an allegedly negligent failure to fully investigate potential defenses,119 or the exercise of allegedly questionable judgment in evaluating the strengths and weaknesses of a case. OTMTI has not presented any basis for suspecting active bad faith with respect to the Wind Telecom Audit, such as fraud or collusion with the Italian Tax Authorities.
108.
Indeed, OTMTI’s only suggestion that VimpelCom may have had less than pure motives with respect to settlement of the Wind Telecom Audit is a general speculation (running through its submissions regarding all the audits) that VimpelCom placed undue weight on conciliation with the Italian Tax Authorities in light of the company’s ongoing business in Italy. Even if true, this particular fact - that following the acquisition VimpelCom would place more value than OTMTI would have on preserving official relationships in Italy -was entirely foreseeable, as the natural result of a result of a transaction that enabled OTMTI to leave the country while VimpelCom remained heavily invested there. The Parties nonetheless decided to expressly exclude tax claims from the category of Third Party Claims for which OTMTI had the right, under SSEA Article 10.7(b), to participate directly in the defense, and even to assume the defense outright if it conceded its indemnification liability. Indeed, there was testimony that the very reason VimpelCom insisted on stripping out tax claims from Article 10.7(b) was to assure that it could make prudent judgments in light of its overall status as an Italian taxpayer under continuing review by the Italian Tax Authorities.120 The resulting agreement left the defense of tax claims in the hands of VimpelCom, but still subject to its retention of 27.35% of the burden of any settlement, which was a considerable check on any temptation otherwise to prioritize continuing relationships over concrete financial interests.
109.
In any event, the duty of good faith does not require a complete absence from a settlement calculus of any possible extrinsic considerations, such as the value of preserving reputation and good will. OTMTI has not shown that either this alleged factor or any other allegedly improper consideration motivated VimpelCom to accept a settlement that it did not otherwise believe to be reasonable in the circumstances. The Tribunal concludes to the contrary: that VimpelCom in good faith believed, at the time it decided to settle the Wind Telecom Audit, that there was a credible, non-negligible risk that it would be unable to persuade the Italian Tax Authorities, and thereafter the Italian courts, that the put and call structure served valid business objectives other than tax avoidance, particularly from the perspective of the Italian entity that was subject to the Italian tax laws. VimpelCom also apparently had a genuine concern that Wind Telecom directors and officers could be exposed to personal risk of criminal prosecution, a factor that it described as "most important []" in its consideration.121 While it may be easy for OTMTI in hindsight to discount this risk as unlikely, it was not OTMTI’s personnel facing the prospect of potential prosecution, and VimpelCom cannot be faulted for placing a premium on the security of personnel now under its corporate chain of responsibility. Finally, the evidence demonstrates that VimpelCom genuinely believed that the settlement terms offered presented a reasonable means of avoiding the uncertainties and risks of litigation, including the possibility of greater liability. This is sufficient to find that it acted subjectively in good faith. The objective reasonableness of its settlement is a separate issue to which the Tribunal turns in due course, after first addressing the issues of contractual notice, participation and prejudice.

(4) The Adequacy of Notice and Opportunity to Participate

110.
The relevant question for this portion of the analysis is not whether it might have been wiser for VimpelCom to provide earlier notice to OTMTI regarding the Italian Tax Authorities’ inquiries, or to seek greater involvement by OTMTI in developing responses to those inquiries. The question is whether different conduct was contractually required.
111.
The SSEA provision relevant to the corporate income tax issue in the Wind Telecom Audit is Article 10.7(a). As discussed in Sections IV.C.3 and IV.C.4 above, this is crafted quite differently both from Article 10.7(b) governing claims not related to taxes, and from Article 10.7(h)(i) governing claims related to Italian withholding taxes. For those provisions, VimpelCom’s duty to notify OTMTI would be triggered by its own receipt of a notice of a "claim or proceeding" (in the case of Article 10.7(b)) or "the beginning of’ of a "Tax audit or inquiry" (in the case of Article 10.7(h)(i)), regardless of VimpelCom’s view of the strength or weakness of such claim or inquiry. Following such notice, OTMTI would be provided a right to "participate in the defense" or "assume and control the defense" (in the case of Article 10.7(b)), or a right to have VimpelCom "coordinate... in the taking of any action relating to the conduct" of a withholding tax inquiry, "use its reasonable efforts" to include OTMTI in meetings and calls with the Italian Tax Authorities, and provide OTMTI "such information and access" as OTMTI may reasonably request (in the case of Article 10.7(h)(i)).
112.
By contrast, under the only provision applicable to the Wind Telecom Audit, notice was due to OTMTI only after Vimpelcom "has determined’ that a claim is "reasonably likely to result in" a tangible loss as to which VimpelCom has a right to indemnification (Article 10.7(a), emphasis added). As noted previously, VimpelCom could not unreasonably delay reaching an internal determination on the likelihood of a loss, but nor was it obliged to alert OTMTI immediately upon learning of a potential claim, before even conducting its own analysis. The provision implicitly accepts that some reasonable period of time is appropriate for VimpelCom first to evaluate a potential claim for the "likel[ihood]" of a loss. Only after doing so is VimpelCom is required to notify OTMTI promptly of its determination that a loss is reasonably likely, along with "the amount of the Losses, if known, and method of computation thereof, all with reasonable particularity and including documentary proof, if available" (id.). These are the only obligations that Article 10.7(a) places on VimpelCom. Unlike Article 10.7(b), Article 10.7(a) grants no rights to OTMTI to "participate in the defense" of the third party claim, nor does it impose (as does Article 10.7(h)(i)) any duties to "coordinate" with OTMTI with regard to the conduct of a tax audit, or to "use its reasonable efforts to include" OTMTI in meetings or telephone calls with the Italian Tax Authorities. Any fair reading of the SSEA must treat the distinctions among these three provisions, in a contract between two sophisticated parties, as having substantive significance.
113.
Two questions therefore arise under Article 10.7(a). First, when did VimpelCom itself determine that Wind Telecom would face a claim from the Italian Tax Authorities that was "reasonably likely" to give rise to a tangible loss - and has OTMTI demonstrated that VimpelCom was unreasonably tardy in making this internal determination? Second, after making this internal determination, did VimpelCom provide "prompt" notice of this fact to OTMTI, including such information about the amount of the likely Losses and the method of their computation, with "reasonable particularity" as it was then able?
114.
The evidence is that the Italian Tax Authorities first contacted Wind Telecom regarding this matter on 14 February 2013. OTMTI contends that this initial contact triggered VimpelCom’s obligation to notify OTMTI under Section 10.7(a), because as of this date VimpelCom "knew or should have known" that the audit would be "reasonably likely to result in a right of indemnification" against OTMTI.122 VimpelCom responds that this is not so, because "many inquiries from the Italian Tax Authorities never mature into potentially indemnifiable claims," and the SSEA obligation is triggered not by notice simply of the authorities’ interest in a transaction, but rather by a VimpelCom determination that it is facing a "reasonably likely" loss.123
115.
The Authorities’ 14 February 2013 communication to Wind Telecom was solely a request for documents: the 2007 Shareholders Agreement, the put and call option contracts and their amendments, and various 2009 financial and accounting documents.124 The inquiry contained no allegations of any breach by Wind Telecom of any tax obligations, nor any indication that the Authorities already were leaning towards a finding of such a breach. It made no reference to any Italian tax law provisions or to any particular theories of potential liability. In these circumstances, the Tribunal cannot find that the mere receipt of such a document request required VimpelCom already to conclude that an indemnifiable loss had become "reasonably likely," which would trigger its duty under Article 10.7(a) to notify OTMTI of that determination and of the projected "amount of the Losses... and the method of computation thereof... with reasonable particularity." This is far too much to read into an initial document request.
116.
The evidence demonstrates that by mid-to-late March 2013, however, Wind Telecom understood that the Italian Tax Authorities were "focusing their attention" on the put and call transactions, in connection Wind Telecom’s deduction of the €207 million loss.125 Even so, in the Tribunal’s view, there remains a difference between understanding that authorities are looking into a particular transaction, and being required to make a company determination that such an inquiry has matured to a point that a tangible loss can be said to be "reasonably likely." As of early April 2013, the Italian Tax Authorities were still in information-seeking mode. On 3 April 2013, Wind Telecom had provided them with a short summary of the corporate events between 2007 and 2010,126 and on 4 April 2013, the Italian Tax Authorities responded with a request for "clarifications" regarding the "financial charges cost item" of €207 million, stating that they sought to "understand the nature, origin, accounting methods" and other information in relation to this entry.127 On 10 April 2013, Wind Telecom responded with a brief explanation that this was the "charge... derived from the valuation of the derivative agreed upon between" Wind Telecomunicazione and Wind Telecom, specifically the put option referenced in its summary memo of 3 April 2013, and the loss was booked on the 2009 financial statements "as a result of the default of the Wind Hellas sub-group and the consequent initiation of bankruptcy proceedings."128 On 24 April 2013, the Italian Tax Authorities requested additional information, including information about increases or decreases in Telecomunicazione’s own income for 2009, and copies of certain correspondence.129 Wind Telecom provided the requested information on 6 May 2013.130
117.
The evidence does not show that during these exchanges through mid-May 2013, the Italian Tax Authorities ever conveyed to Wind Telecom even preliminary conclusions regarding alleged wrongdoing. While subsequent developments may encourage hindsight judgments about when the Authorities may have formed such views, the relevant question under Article 10.7(a) is whether their communications to Wind Telecom at the time were sufficiently clear and ominous as to require VimpelCom already to have "determined" that a quantifiable loss was "reasonably likely." There is no evidence that VimpelCom in fact formed any such conclusions during this time period, nor is the Tribunal prepared to condemn it for not having done so, simply on the basis of the Authorities’ requests for information. Indeed, to posit otherwise - that VimpelCom was remiss in not concluding from these inquiries that a loss was "reasonably likely" - would assume the contrary of what OTMTI itself insists, namely that it should have been obvious to VimpelCom by this time either that there was no legitimate business rationale for the put arrangement, or that it was reasonably likely the Italian Tax Authorities would reject any contentions regarding such a legitimate rationale. The Tribunal sees no basis in the evidence for requiring VimpelCom to have made such determinations of a likely loss based on the Authorities’ initial inquiries.
118.
This situation changed in late May 2013, however, when the Italian Tax Authorities presented Wind Telecom with a summary of a draft audit report, reflecting the Authorities’ preliminary conclusions from the materials they had examined, together with a list of additional questions. The summary report, which was provided in draft on 22 May 2013 and in final on 31 May 2013,131 cited Article 37 -bis of Decree 600 (the Italian tax law provision applicable to anti-avoidance), and stated that the Authorities viewed the Wind Hellas derivative transactions as a "maneuver to avoid taxes... which... allowed [Wind Telecom] to achieve undue tax reductions."132 This notice was sufficiently clear about the Authorities’ intent as to trigger VimpelCom’s duty to make a determination of the likelihood of loss and promptly notify OTMTI if it believed such loss to be reasonably likely.
119.
However, there is no reason to conclude that VimpelCom was tardy in making its internal determination, following its receipt of the Authorities’ summary draft report in late May 2013. The record demonstrates that VimpelCom personnel informed the company’s Finance & Strategy Committee of the situation during June 2013.133 This internal reporting step, generally required when company management become aware of a concrete or likely risk of exposure, is indicative of when VimpelCom made its own determination that a loss was reasonably likely in connection with the Wind Telecom Audit.
120.
Importantly, VimpelCom’s notification to OTMTI was virtually contemporaneous with the report to its own Finance & Strategy Committee. On 13 June 2013, VimpelCom notified OTMTI of the audit, both by phone and by email.134 On 19 June 2013, VimpelCom formally asserted its right to indemnification pursuant to the SSEA.135
121.
OTMTI objects, first, that it was not informed of the Italian Tax Authorities’ inquiries during the roughly four months between 14 February 2013 (when the Authorities sent their initial document requests to Wind Telecom) and 13 June 2013.136 But as discussed above, SSEA Article 10.7(a) in no way obligated VimpelCom to notify OTMTI of the receipt of government inquiries, nor of the beginning of an audit process, nor of the ongoing progress of any inquiry or audit. Had the contract required such notice, the Tribunal would have little difficulty accepting OTMTI’s objection that it was not provided. But that is not what the provision says. Given the precise wording of Article 10.7(a), the Tribunal concludes that VimpelCom’s notification of 13 June 2013 satisfied the rather minimal requirements of the provision, namely for prompt notice to OTMTI after VimpelCom "has determined" that a tax claim (other than one involving Italian Withholding Taxes) was "reasonably likely" to give rise to a right of indemnification under the SSEA.
122.
OTMTI also complains about the limited degree to which VimpelCom solicited and meaningfully considered its input regarding a possible anti-abuse or anti-avoidance claim, between the 13 June 2013 notification and the Authorities’ 17 July 2013 settlement offer on a different (transfer pricing) theory.137 The record suggests that the Parties had a number of written exchanges and held a number of conference calls and meetings during June and July 2013, including a significant meeting in Rome on 16 July 2013. OTMTI contends, however, that VimpelCom did not alert it to any particular urgency during this period to reconstruct the business rationale for the put and call transactions, and in any event did not seem particularly interested in the explanations OTMTI attempted to provide, much less in including it directly in any discussions with the Italian Tax Authorities.138 As to these complaints, however, the Tribunal again emphasizes that the SSEA did not obligate VimpelCom to coordinate at all with OTMTI with respect to its dealings with the Italian Tax Authorities, other than for one specific type of audit - a withholding tax audit -addressed in Article 10.7(h)(i)). No similar coordination or consultation duties appear within Article 10.7(a). In these circumstances, OTMTI’s complaints about the wisdom of VimpelCom’s not involving it earlier or more extensively in its consideration of the anti-abuse exposure cannot give rise to a valid claim for violation of contractual participation rights that did not exist.
123.
A final question regarding compliance with Article 10.7(a) arises with respect to a "reasonably likely" loss in connection with a settlement on transfer pricing grounds. OTMTI complains that VimpelCom withheld from it for some time the fact that settlement was under discussion with the Italian Tax Authorities, and particularly that a settlement might be framed as involving transfer pricing charges. The evidence regarding those settlement discussions is as follows.
124.
First, contemporary documents confirm that as of 8 July 2013, VimpelCom understood that "the Italian authorities are ready to issue an audit report" asserting liability for "€57 million in back taxes plus between 100%-200% in penalties plus interest," but "[t]he tax authorities have held off issuing their report to give Wind Telecom time to consider whether it will enter into non-binding settlement discussions."139 Outside counsel had advised VimpelCom that the audit report would be on anti-abuse grounds, and that Wind Telecom’s "main strengths" in facing such a case were the absence of any direct evidence of tax motivations for the transactions, the fact that alternative structures were not available because of financial covenants, and that from the perspective of the Wind Group as a whole, there were valid business reasons to consolidate the Greek fixed and mobile operations. The corresponding "main weaknesses" were that "a tax court will consist of non-tax-experts, who may be more inclined to a substance over form argumentation," that as of this point the "business arguments" for some of the complex structures were "mere anecdotal" rather than supported by contemporaneous documentation, and that "[t]he reasons for certain decisions during the period 2007-2010 cannot (yet) be explained persuasively."140 On balance, VimpelCom’s Group Tax Department considered that the company "should be prepared to continue to appeal and litigate this issue, unless [the Italian Tax Authorities] would come up with a very generous proposal for settlement."141 At the same time, outside counsel advised that "it is highly recommended to pursue this [i..e., the possibility of a settlement] before the tax audit report has been issued (which is expected very soon)."142 In terms of what might be considered acceptable parameters for settlement, VimpelCom’s "tax team feels that a settlement in the range of 50%-75% of the back taxes without any penalties (and without accepting any criminal liability) would be a good deal."143
125.
Based on this assessment, Wind Telecom’s outside counsel that day broached the possibility of settlement with the Authorities.144 VimpelCom understood that the outreach proposal would track the recommendations from its tax team, namely that it "would potentially include" payment of "[b]ack taxes reduced to 50-75% of EUR 57m, [p]enalties reduced to zero; [l]ate payment interest on the reduced amount of back taxes; [and] [n]o notification to the public prosecutor."145 It approved the outreach on the basis that its advisers "all seem to agree that it makes sense to speak with the tax authorities now before the report is issued" on a tax-avoidance basis.146
126.
However, at least as of 10 July 2013, VimpelCom had not yet received even "an initial feedback from [the Italian Tax Authorities] on their view of an out of court settlement."147 VimpelCom thus considered it "far from clear that the tax authorities are anywhere near accepting this."148 In particular, VimpelCom considered it quite possible that the Italian Tax Authorities would decline to do so, as "it would mean that they are letting Wind Telecom realize part of the tax benefit from what they claim is an artificial scheme to generate such benefit."149 VimpelCom’s concerns in this regard make clear that it believed the Authorities were still committed to an anti-avoidance theory of liability. There is no evidence that VimpelCom at this time believed the Authorities had embraced any alternative theory such as transfer pricing.
127.
On 17 July 2013, the Italian Tax Authorities responded with a concrete settlement proposal, which indicated their willingness to resolve the issue at roughly the levels proposed - and apparently explained that they could do so by invoking an alternative transfer-pricing theory of liability. Two days later, on 19 July 2013, VimpelCom notified OTMTI of the fact of the Authorities’ proposal, the quantum of the proposed settlement (understood to total roughly €29 million, with no criminal prosecution), and the Authorities’ statement that "this offer will not be available after 31 July 2013."150 On 25 July 2013, OTMTI responded that it understood the Italian Tax Authorities were "a few days away from completing [their] audit and issuing [their] report if this matter is not settled this week," but that "we are not in a position to comment" on the terms of the proposed settlement," and VimpelCom therefore would have to proceed at its own risk.151
128.
There are two separate components of a "notice" inquiry regarding these settlement developments. The first is whether VimpelCom violated Article 10.7(a)’s notice requirement by not alerting OTMTI to Wind Telecom’s overture to the Italian Tax Authorities, around 8 July 2013, about a possible settlement. The evidence suggests that by this time VimpelCom already had made certain general remarks to OTMTI about the possibility of engaging the Authorities in settlement talks, including during a 27 June 2013 conference call.152 It did not, however, subsequently disclose that in early July Wind Telecom raised the issue directly with the Authorities and floated proposed figures for their consideration. In the Tribunal’s view, VimpelCom’s 8 July 2013 outreach necessarily reflects that by this time it had determined that a loss of at least this magnitude was "reasonably likely." On the other hand, by this time OTMTI already was on notice of the potentially higher exposure threatened by the Authorities’ anti-abuse theory, and it was not until the Authorities responded concretely on 17 July 2017 that VimpelCom could determine that the "reasonably likely" loss was now crystallizing around this lower amount. VimpelCom’s notice to OTMTI two days later of the proposed settlement amount did not violate its obligation under Article 10.7(a) of prompt notice regarding the "amount" of a "reasonably likely" loss.
129.
The second component of the inquiry concerns the sufficiency of the explanation provided on 19 July 2013, regarding the Authorities’ settlement proposal. That notice did not specifically alert OTMTI that the proposed settlement was on a transfer pricing theory. The 19 July 2013 notice alluded only vaguely to certain "technical adjustments... to the [Authorities’] report which get to the resulting settlement figures."153 OTMTI describes this as "a deliberately opaque mischaracterization."154 VimpelCom responds that it "had no contractual obligation to provide OTMTI with updates on the Italian tax authorities’ evolving legal theories."155 However, the cases upon which VimpelCom relies for this proposition did not involve contracts that specified the required content of the relevant notice.156 By contrast, Article 10.7(a) expressly obligated VimpelCom to notify OTMTI promptly not only that VimpelCom had made a "determination" of the fact of a "reasonably likely" loss and the projected "amount" of such loss, but also (to the extent possible) about the "method of computation thereof... with reasonable particularity." This provision arguably did require VimpelCom to notify OTMTI promptly of a significant change in the legal theory underlying any "reasonably likely" loss.
130.
In these circumstances, if VimpelCom had provided no prompt amplification of its reference in the 19 July 2013 communication to unspecified "technical adjustments," an argument could be made that it would have breached Article 10.7(a) by not alerting OTMTI to the "method of computation" of a loss that had become "reasonably likely" by virtue of the Authorities’ 17 July 2017 settlement offer. However, the 19 July 2013 email specifically offered "a call to explain the technical adjustments," and proposed the next business day, 22 July 2013, "[i]n light of the ITA’s settlement proposal and the limited timeframe we have in which to consider it." OTMTI asked for the call to be a day later, on 23 July 2013.157 The call was held that day, and OTMTI’s own witnesses confirm that at that time VimpelCom did explain that the proposed settlement would be on a transfer pricing theory.158 In these circumstances, no breach of Article 10.7(a) can rest on the short delay between Wind Telecom’s receipt of the Authorities’ settlement proposal on 17 July 2013, VimpelCom’s 19 July 2013 suggestion of a call with OTMTI to discuss that proposal, and the ensuing 23 July 2013 call in which the underlying theory was identified to OTMTI.

(5) The Issue of Prejudice

131.
As discussed above, the Tribunal finds that there was no breach by VimpelCom in not notifying OTMTI before 13 June 2013 of a determination that a loss was reasonably likely with respect to the Wind Telecom Audit. As a result, it is not strictly necessary to explore OTMTI’s argument regarding alleged prejudice from such an SSEA breach. Article 10.7(a) does not compel an inquiry into whether notice earlier than contractually required might have been more prudent, to facilitate VimpelCom’s gathering of information for its dealings with the Italian Tax Authorities. It only asks whether OTMTI has been prejudiced by a breach of VimpelCom’s legal obligations. Absent such a breach, the issue of prejudice does not arise.
132.
For the avoidance of doubt, however, the Tribunal notes that, even if earlier notice to OTMTI of the Wind Telecom Audit had been contractually required, OTMTI has not met its burden of showing substantive prejudice caused by the intervening delay. As explored in Section IV.C.5 above, OTMTI must show not simply that earlier notice would have enabled it to be more engaged in the process - as to which it had no procedural right under Article 10.7(a) - but rather that by doing so, it would have been able to offer concrete contributions that it was unable to do later, which would have either eliminated Wind Telecom’s exposure from the audit, or so substantially reduced that exposure as to render the decision to settle objectively unreasonable.
133.
OTMTI presents two principal arguments regarding such prejudice, one relating to the anti-avoidance/anti-abuse theory of liability and the other relating to the Italian Tax Authorities’s eventual findings regarding transfer pricing liability. With respect to the former, OTMTI’s argument is that earlier notice to it of the Authorities’ inquiries would have enabled Mr. Nasr and his colleagues to "reconstruct[] the precise steps of, and the reasons for such a complex series of transactions that had taken years earlier," which OTMTI describes as "a difficult and time-intensive task"159 that could not be accomplished within the roughly four weeks it had between mid-June and mid-July 2013. Had OTMTI been provided more time for this process, it contends, "VimpelCom would have learned, and then could have effectively explained to the [Italian Tax Authorities], that there were no legitimate grounds for an abuse-based assessment."160
134.
The Tribunal accepts on the present record that Mr. Nasr and his colleagues had bona fide business objectives, from the perspective of the Wind Group as a whole, in connection with the put and call structure it adopted in 2007. There is no evidence in the record to suggest that in 2007 the Wind Group either already foresaw a significant risk that the Greek businesses could collapse, or planned the derivative transactions for the primary purpose of hedging against such a possibility, by enabling Wind Telecom to claim tax deductions at the parent company level in Italy to partially offset any future downturn in the Greek business at the level of its subsidiaries.
135.
The Tribunal also accepts that, given more time, OTMTI could have developed a more thorough presentation regarding the Wind Group’s underlying business rationale for the derivative transactions, than the ones it presented to VimpelCom on 9 July 2013 and 14 July 2013 (in draft "structure papers" prepared by its outside counsel) and that the Parties thereafter discussed in Rome on 16 July 2013. OTMTI’s 9 July 2013 draft recognized that "[i]t is crucial to explain the business reasons underlying the put option agreement, which is a key step to avoid a potential challenge of the tax loss of Euro 207ML."161 OTMTI’s 14 July 2013 draft updated this slide to criticize Wind Telecom/VimpelCom for not yet "effectively explain[ing]" those business reasons to the Italian Tax Authorities,162 but at the same time it left placeholders for what explanation should be provided, including placeholders to (a) "document business rationale underlying the put and call, emphasizing reasons for timing and parties’ mismatch," (b) to "try to explain rationale underlying call on matching terms as put," particularly from the perspective of Wind Telecom rather than the Wind Group as a whole; and (c) to "[s]ee whether and to what extent we can successfully articulate an argument that a deductible loss would have been realized anyhow in 2010 upon the ultimate disposal" of the underlying shares.163 VimpelCom emphasizes these placeholders, arguing that by the time of the Rome meeting, OTMTI had "identified no material arguments that had not already been raised - and rejected - by the Italian tax authorities."164 VimpelCom also argues that no further time was available beyond this point, given the strict 31 July 2013 settlement deadline imposed by the Italian Tax Authorities. OTMTI responds that it had not been told of the urgency to complete its work by the time of the Rome meeting.165 In any event, OTMTI argues that if VimpelCom had informed it of the audit earlier than June 2013 - for example, in February when the Authorities first presented their document requests - it would have had far more time to review underlying records and supply the missing explanations.166 The Tribunal assumes arguendo that this is the case.
136.
The real question, however, is whether such a fuller reconstruction (a) would have revealed something so materially different than VimpelCom already understood, (b) as to have enabled it to present a defense for Wind Telecom that would be so understandable and compelling, from the perspective of the Italian Tax Authorities and Italian tax courts (not from OTMTI’s own perspective), (c) that either the Authorities would forgo any potential assessment on anti-avoidance grounds, or Wind Telecom would be assured success in a subsequent court challenge, without any risk of a worse outcome than the settlement terms. It is important to recall that Wind Telecom’s ultimate exposure did not depend upon the Authorities finding a "smoking gun" document that would definitively prove an actual tax avoidance motive. Rather, the expert evidence was that the Italian Tax Authorities could raise doubts about apparent motives, by identifying seeming "anomalies" of a transaction that resulted in tax benefits to which a taxpayer otherwise would not be entitled, and thereby shift the burden to the taxpayer to disprove an inference about tax avoidance motivations.167 In this context, the question of prejudice boils down to whether OTMTI has shown that its earlier involvement in the Wind Telecom Audit would have enabled VimpelCom and Wind Telecom to disprove any such inference, so clearly and certainly as to remove any reasonable exposure and therefore render the settlement decision objectively unreasonable. As to this question, OTMTI has not sustained its burden.
137.
First, the arguments that OTMTI states it would have presented more fully, had it been given earlier notice, are essentially amplifications on those that Wind Telecom presented in shorter form to the Italian Tax Authorities. OTMTI’s explanations of the business rationale for the derivative transactions were focused heavily on the objectives of the Wind Group as a whole, in particular the importance to it of consolidating the Greek fixed and mobile telecommunications businesses, while providing additional protection to lenders who otherwise could have blocked the consolidation through financial covenant restrictions on Wind Hellas.168 While the Tribunal has no doubt that OTMTI could have forcefully defended these objectives, they are not materially different points than Wind Telecom itself provided to the Italian Tax Authorities.169
138.
Second, these arguments were heavily focused on the business objectives of the Wind Group as a whole, and not the specific advantages to Wind Telecom - the Italian entity of most interest to the Italian Tax Authorities and Italian tax courts - of granting the put option to its subsidiary at no premium. As of 2007 when the derivative structure was created, it was capable of generating only tax losses (and never taxable gains) in Italy, since any share value increases would benefit Wind Hellas in Greece, not Wind Telecom in Italy.170 The new call option in February 2009 did not change this by creating any realistic upside for Wind Telecom, particularly in light of the already impending collapse of the Greek market. There were other seeming anomalies in 2009, including (a) a February 2009 increase in the strike price of the put option, at a time when the underlying share value already was falling, and (b) Wind Telecomunicazione’s decision not to exercise its put option at the end of 2009, despite Wind Hellas already being in default (which would not have afforded any tax benefits for its parent Wind Telecom), but instead to wait until 2010, after Wind Telecom first devalued the derivative on its year-end 2009 balance sheet (which created the tax-deductible "financial" loss). These factors were likely to increase suspicion by the Italian Tax Authorities, and eventually the Italian courts, even if OTMTI might have been able to articulate further explanations as it now claims.171 At the most basic level, the Italian Tax Authorities likely still would have been skeptical of a series of inter-company transactions resulting in a €57 million tax benefit that Wind Telecom "would not have gotten but for a put [and] call arrangement with its subsidiaries."172 That inescapable reality underpinned the concerns about a "serious risk of liability" which were being conveyed to VimpelCom at the time by both its internal tax department and its external counsel.173
139.
Third, earlier OTMTI involvement would not have removed the practical challenges Wind Telecom would have faced had an anti-avoidance claim proceeded to court. These included the fact that its explanations regarding legitimate business rationales would have been heavily reliant on after-the-event witness statements, rather than contemporaneous documents from 2007 and 2009 that directly memorialized Wind Telecom’s thought processes. Even with the additional years available to develop this case for arbitration, OTMTI was not able to locate any such contemporaneous written explanations. The expert evidence was that Italian courts are skeptical at best of written witness statements by a taxpayers’ personnel, seeking to supply explanations for which there is limited contemporaneous corroboration.174 The complexity of the derivative transactions also would remain a challenge, in a system in which (a) tax court judges are not specialists in sophisticated financial instruments;175 (b) they are known to be suspicious of complicated transactions between related companies which yield substantial tax benefits;176 and (c) hearings for parties to try to persuade judges who remain skeptical based on written submissions are generally limited to 30 minutes or less of counsel argument, without any opportunity for fact witnesses to provide live explanations.177
140.
Given these practical constraints, the Tribunal is unable to conclude that earlier notice to OTMTI of the Authorities’ interest in the transactions necessarily would have allowed it to dissuade the Authorities even from pursuing an anti-avoidance claim, or necessarily would have enabled Wind Telecom to prevail in defending such a claim before the Italian tax courts. Put most plainly, OTMTI did not have a "secret weapon" that could have rendered Wind Telecom absolutely confident of a "knockout blow." In these circumstances, OTMTI has not met its burden of demonstrating prejudice from any arguable late notice. It has not shown that earlier notice would have enabled it to guide Wind Telecom to an outcome in which it assuredly "would have prevailed if it had challenged the assessment in litigation," which is what OTMTI in this case contends.178
141.
Nor has OTMTI demonstrated that its earlier involvement would have ensured that Wind Telecom could litigate its defenses with "no downside risk" of a worse outcome than it achieved through its decision to settle with the Authorities.179 The Italian law experts differed in their views of the likelihood of penalties attaching to an anti-abuse finding,180 and the Tribunal concludes that Wind Telecom’s potential exposure to such penalties was not a settled question. It is unclear how OTMTI’s earlier involvement would have resolved this uncertainty. More fundamentally, even in the theoretical absence of any risk of court-imposed penalties, litigation of an anti-abuse claim still would have been a fight over €57 million in back taxes plus interest on that amount, continuing to accumulate during the significant length of the court proceedings. This is self-evidently a greater exposure than the €31.3 million (inclusive of all interest and penalties) that Wind Telecom agreed to pay through its settlement tied to an alternative theory of a transfer pricing violation.
142.
This brings the Tribunal to OTMTI’s second main argument regarding prejudice, which involves the alternative transfer pricing theory. OTMTI contends that earlier notice to it of the audit would have enabled it to prevent Wind Telecom from making a "mistake" in the description of the call option, which allegedly prompted the Italian Tax Authorities to claim a transfer pricing violation. As to this argument, OTMTI’s burden is to show not just that (a) Wind Telecom made such a mistake, and (b) that a more accurate description would have eliminated all risk of liability under a transfer pricing assessment, but also that (c) this would have eliminated the risk of the Italian Tax Authorities proceeding against Wind Telecom on the original anti-abuse theory. OTMTI’s arguments focus on the first and second issues, while doing little to address the third.
143.
Specifically, OTMTI argues that, if Wind Telecom had emphasized that Wind Telecom and not Wind Hellas held the call option from February 2009, the Italian Tax Authorities could not have pursued a transfer pricing theory, because this replacement eliminated the cross-border component of the 2007 structure, which was an absolute prerequisite for any transfer pricing claim.181 VimpelCom responds, first, that Wind Telecom did provide the Authorities with the correct information about the holder of the call option in 2009.182 The evidence partially supports this contention. On 3 April 2013, Wind Telecom told the Authorities that the 2007 call option had been "modified..., providing for [Wind Telecom] to be able to exercise it" on the shares owned by Wind Telecomunicazione.183 The Agenzia’s 31 May 2013 questionnaire acknowledged this notification, stating that in 2009 "[Wind] Telecom and Wind Telecomunicazione modified the Put/Call option."184 OTMTI criticizes Wind Telecom for using the word "modified," when the precise sequence was that the 2007 call option was terminated in September 2008 and a new call option agreed in February 2009.185 It is not clear, however, why the distinction between a direct modification (on the one hand) and a termination followed by replacement after a few months’ gap (on the other) would have been so crucial as to change the Authorities’ views. Wind Telecom did explain the main point on 3 April 2013, namely that the party holding the call option in 2009 was Wind Telecom and not Wind Hellas as originally structured in 2007. On the other hand, Wind Telecom missed an opportunity to expand on this issue in its later 14 June 2013 response to the questionnaire, which asked (inter alia) for an explanation of "the economic reason that drove Weather Investment S.p.A. [Wind Telecom] to accept this modification." Wind Telecom’s response focused on the reasons the put option had been modified, not why the call option was reissued to Wind Telecom rather than Wind Hellas.186
144.
It is also true that Wind Telecom and VimpelCom did not invoke the absence of a cross-border element in the 2009 call option as part of a reasoned and vigorous defense to transfer pricing liability.187 VimpelCom contends that this would not necessarily have eliminated exposure, as the Italian Supreme Court at the time (prior to a 2015 regulatory change) had ruled that transfer pricing principles could apply even in domestic abuse cases.188 More fundamentally, VimpelCom argues that the question of exposure from a transfer pricing claim was purely academic, because the transfer pricing theory was merely a convenient means to an end - a tool that provided the Italian Tax Authorities with flexibility to conclude a settlement at a lower figure than they could have offered under the anti-abuse theory that the Authorities otherwise were determined to pursue.189
145.
The Tribunal accepts, first, that this was VimpelCom’s contemporaneous understanding of the Italian Tax Authorities’ position: it is reflected in management’s 25 July 2013 memorandum to the Supervisory Board, which recounted that "[i]f the offer is not accepted, the ITA asserts that it will proceed with issuing the audit report and attempting to collect the €57 million it claims is owned, plus additional penalties and interest. The ITA has also stated that it will forward its audit to the Italian criminal prosecutor...."190 The reference to €57 million in back taxes, and to possible criminal prosecution, clearly denotes a threat by the Authorities to proceed on the anti-abuse theory, not on the transfer pricing theory. There is no evidence suggesting that the Authorities had not made such a threat, or that it was an entirely empty threat because in reality, the Authorities already had "abandoned" any interest in an anti-abuse claim, which is what OTMTI contends.191
146.
In the absence of such evidence, the Tribunal cannot conclude that earlier notice to OTMTI would have eliminated any exposure to VimpelCom, even if OTMTI (as it contends) could have successfully forestalled a transfer pricing charge. If the result of doing this simply would have been that the Italian Tax Authorities maintained their threat of a higher value anti-abuse charge, it follows that OTMTI has not demonstrated any substantive prejudice to it from VimpelCom’s alleged failure to involve it more fully in the description of the call option, or to involve it in discussions with the Authorities about the validity of any transfer pricing assessment.
147.
For these reasons, the Tribunal concludes that earlier notice to OTMTI would not have enabled OTMTI to eliminate all potential Wind Telecom exposure from the Wind Telecom Audit or from any tax assessments the Authorities might make as a result of that audit. So long as the exposure remained, VimpelCom is entitled to discretion under New York law in weighing the risks and benefits of having Wind Telecom settle rather than litigate. As discussed in Section IV.C above, this discretion is subject only to the deferential New York standard that the settlement itself must have been "reasonable," and to VimpelCom’s separate duty to mitigate foreseeable losses, which are discussed further below.

(6) Reasonableness of Settlement

148.
As discussed in Section IV.C, under the legal framework applicable to this case, OTMTI is responsible to indemnify VimpelCom for its contractual share of settlements entered into in good faith, unless VimpelCom failed to comply with applicable notice requirements and such failure demonstrably prejudiced OTMTI - but only to the extent that VimpelCom’s decision to settle, and the terms of the resulting settlement, were objectively unreasonable. The question of reasonableness revolves around whether "there was [a] possibility that litigating the case to the end would result in a judgment... in an amount greater than the settlement,"192 meaning that the settlement was within the range of possible exposure the indemnitee might have faced.193
149.
In this case, the Tribunal concludes, for the reasons discussed generally in Section IV.D.5 above, that there was a possibility VimpelCom would not have been successful in defending against an assessment brought against Wind Telecom on tax avoidance grounds. While it is easy in hindsight for OTMTI to argue that Wind Telecom "would have been fully able to rebut" any challenge on that basis,194 VimpelCom has demonstrated sufficient doubts about the outcome in the Italian courts as to make such success, at minimum, far from a foregone conclusion. There were disagreements between the Parties’ Italian law experts regarding the probabilities of litigating, but it is unnecessary for this Tribunal to determine which experts were more correct regarding the odds of success or defeat. It is also unnecessary to determine whether VimpelCom should have been less risk-averse in facing these odds, as OTMTI contends that it would have been in similar circumstances. The whole purpose of an indemnification agreement is to avoid having to retry the theoretical merits of a third party claim, so long as the decision to settle was within a zone of objective reasonableness. The contemporaneous legal advice that VimpelCom received, from its internal and external tax counsel, was that there were cognizable risks of proceeding to court. The Tribunal is unable to conclude that this was self-evidently untrue.
150.
Second, the Tribunal concludes (as discussed in Section IV.D.5) that there could have been downsides to insisting on litigation. The Tribunal is not convinced that the Italian Tax Authorities necessarily had abandoned all intention to proceed on a tax avoidance theory, and indeed, the contemporaneous evidence is that they affirmatively insisted they would proceed on this basis absent a settlement.195 In these circumstances, there is no need to resolve the disputed question whether the cost of losing a transfer pricing case in court would have been higher than the cost of settling a transfer pricing case, based for example on the possibility of penalties. The starting point for a case on tax avoidance grounds would be a higher level of back taxes (€57 million) than the total settlement amount of €31.3 million. Moreover, the litigation process would have required Wind Telecom to pay a deposit of at least one-third of the assessed amount (€19 million) simply to get to a court of first instance, and twice that (€38 million) if there was a need to appeal;196 these sums would remain unavailable to the company for years.197 Meanwhile, interest would accrue on the unpaid portion of back taxes at substantially above market rates.198 Finally, the evidence was that a taxpayer who loses in the courts must pay not only the entire assessment with interest, but also a significant "tax collection fee," which ranged at the time between 4.65% and 8% of the overall taxes, penalties and interest.199 Settling avoided exposure to this additional amount. All told, VimpelCom contemporaneously estimated that its potential exposure from not settling would be at least €114 million, and could be "significantly higher."200 The sheer magnitude of these figures reasonably justified VimpelCom in adopting a risk-averse stance, given the enormous consequences to the company of otherwise making a mistake in judgment.
151.
Finally, the fact that the Italian Tax Authorities continued to threaten referral of a tax avoidance case to criminal prosecutors cannot be disregarded.201 VimpelCom’s outside counsel had advised that "violations of this kind... are generally sent also to the criminal prosecutor’s office,"202 and management considered this threat to the security of Wind Telecom’s officers and directors to be "most important []" in their decision to recommend settlement.203 While OTMTI now contends that this was an empty threat, it was not OTMTI’s personnel who would suffer the resulting fear and damage to reputation if prosecutors determined to try to press charges. The Tribunal is unable to conclude that VimpelCom was unreasonable in taking this concern heavily into account.

(7) Mitigation of Loss

152.
As discussed in Section IV.C.6, even in the event of an otherwise reasonable settlement, OTMTI may seek to demonstrate under Article 10.7(f)(C) of the SSEA that it should not be held liable for indemnification "with respect to a Loss or the increased portion of a Loss," because VimpelCom "had not, upon learning of the situation giving rise or likely to give rise to a Loss, used or caused entities of its Group to use, all reasonable efforts to mitigate the corresponding Loss." The reference to mitigating a "situation... likely to give rise to a Loss" means that VimpelCom had a duty to exercise due diligence in preventing foreseeable future loss, once it is has determined that such loss is likely. This general mitigation duty did not alter the contours of the Parties’ specific agreements regarding the required level of notice and participation in regard to third party claims, nor did it amount to a duty to litigate or a duty to be more aggressive in settlement negotiations, within a range of reasonable approaches. However, it did require VimpelCom to take reasonable steps to conduct a bona fide evaluation of its potential liability, involving reasonable efforts of inquiry into the legal and factual bases, and to assess its options with reasonable care. Because mitigation is an affirmative defense, OTMTI bears the burden to identify specific steps in this regard that VimpelCom should have taken but did not, and to show that such steps would have eliminated or materially reduced the Losses without at the same time creating significant additional risks.
153.
OTMTI’s arguments regarding mitigation fall into three basic categories. First, it argues that VimpelCom failed to mitigate its Losses by involving OTMTI earlier in the Wind Telecom Audit, which OTMTI contends would have revealed valid defenses to liability that VimpelCom failed to assert.204 Second, OTMTI argues that VimpelCom made certain affirmative mistakes in its dealings with the Italian Tax Authorities, which allowed them to seize on a transfer pricing theory OTMTI contends otherwise would have been facially invalid.205 Finally, OTMTI argues that, even after accepting to settle in principle, VimpelCom failed to take reasonable steps regarding the calculation of settlement amounts, with respect both to the core theory of liability (the absence of an appropriate premium for the put option) and the computation of interest.206 The Tribunal examines these three issues in turn.
154.
First, to the extent OTMTI is arguing that a failure to notify OTMTI earlier or to involve it more systematically was itself a violation of the duty to mitigate,207 this is inconsistent with the notion that a general mitigation obligation cannot override specific contractual agreements regarding required notice and participation. OTMTI’s argument seeks to rewrite the Parties’ contract by introducing, through the "mitigation" clause, the very same types of notice and cooperation options that the carefully negotiated contract did not provide for this type of tax exposure. However, in principle VimpelCom could still be liable for a failure to reasonably investigate and evaluate the Authorities’ claims, if OTMTI can demonstrate that (a) by omitting specific additional steps, the resulting inquiry fell below a reasonable level of diligence, and (b) the consequence of this inadequate diligence was a failure to discover clearly successful defenses, in light of which VimpelCom would have no reasonable discretion to settle instead. These are difficult hurdles to meet, and the Tribunal concludes that OTMTI has not met them.
155.
OTMTI contends, for example, that VimpelCom should have ensured a timelier interview with OTMTI personnel, including principally Mr. Nasr, who OTMTI suggests was essential to any proper understanding of the challenged transactions.208 The Tribunal accepts that Mr. Nasr had the most direct involvement in the design of the derivative structure, and that in hindsight VimpelCom might have benefited from his earlier involvement. But it is a large leap from this to concluding that the investigation Wind Telecom and VimpelCom conducted prior to soliciting OTMTI’s input fell below reasonable levels of due diligence. VimpelCom conferred with a number of current and former Wind Telecom personnel whom it believed to have relevant knowledge (including but not limited to Mr. Shalaby, the Wind Group’s General Counsel at the time of the transactions), and it made efforts to gather and review documents available to the Wind Group.209 An acquirer of a company does not violate its diligence obligations by focusing first on the resources most readily available to it, within the acquired company, before reaching out to the personnel of the former owner. Moreover, OTMTI still had a full month to involve Mr. Nasr after receiving notice of the audit in mid-June 2013 and before the Rome meeting in mid-July. The fact that this time proved insufficient for Mr. Nasr to "reconstruct[] the precise steps of, and the reasons for such a complex series of transactions that had taken years earlier"210 does not render VimpelCom’s procedures patently unreasonable. Finally, as discussed in Section IV.D.5 above, OTMTI has not demonstrated that a fuller reconstruction of events, enabled by earlier consultation with Mr. Nasr, would have unearthed additional information that was so compelling as to eliminate all possible exposure to Wind Telecom from the audit, particularly the threatened tax avoidance claim. In these circumstances, OTMTI has not demonstrated that any delay in involving it (or Mr. Nasr) in the inquiry was the ultimate cause of the "Loss" (i.e., the settlement). This causation element is critical to the affirmative defense of a failure to mitigate.
156.
The same analysis pertains to OTMTI’s criticism that VimpelCom was too hasty in responding to the questionnaire the Agenzia sent in late May 2013, with its summary draft audit report. OTMTI argues that under the applicable rules, Wind Telecom could have taken 60 days to respond, but instead it responded in two weeks, on 14 June 2013 (the day after notifying OTMTI of the audit).211 VimpelCom contests that reading of the applicable rules, contending that the Italian Tax Authorities could have issued an audit report "at any time."212 Indeed, VimpelCom’s outside tax counsel considered it "very likely that [the Authorities] would do so very soon," given that they "were clearly convinced that the Wind Hellas Transactions were executed for tax avoidance purposes."213 He explains that he believed it to be "crucial to respond to the [Authorities’] requests as soon as possible," to try to "influence [their] internal deliberations."214
157.
In general, the Tribunal accepts that, throughout the audit, the Authorities used short deadlines to ratchet up the pressure on Wind Telecom. It is difficult to condemn VimpelCom in hindsight for reacting to the pressure thereby created. More importantly, the Tribunal is not convinced that taking more time to complete the questionnaire would have fundamentally eliminated Wind Telecom’s exposure from the audit. The Italian Tax Authorities by this time already had reached a preliminary conclusion that the derivative transactions were a "maneuver to avoid taxes... which... allowed [Wind Telecom] to achieve undue tax reductions."215 OTMTI has not demonstrated that insisting on additional time to respond to the questionnaire would have enabled Wind Telecom to include such qualitatively different information in its response as to necessarily satisfy the Authorities’ considerable suspicions.
158.
As to OTMTI’s complaint that VimpelCom rushed in mid-July 2013 to accept the Authorities’ settlement offer,216 the evidence is that the Authorities stated they had "finalized their analysis" and were "ready to issue the tax report."217 The Authorities also presented the offer as a take-it-or-leave-it proposal that would expire by 31 July 2013, a position that VimpelCom contemporaneously shared with OTMTI.218 It was rational - and certainly not patently unreasonable - for VimpelCom to believe the Authorities’ statement in this regard. In these circumstances, the Tribunal cannot conclude that VimpelCom fell below any reasonable level of diligence in deciding to accept the offer within the time period demanded, rather than declining to do so in the hope that continued investigation might reveal defenses so compelling as to eliminate any possible future exposure greater than the amount for which VimpelCom agreed to settle.
159.
OTMTI’s second category of mitigation arguments involves alleged affirmative mistakes by VimpelCom, in its discussion of the put and call structure, that allowed the Italian Tax Authorities to use the transfer pricing theory as the basis for the settlement proposal. OTMTI’s criticism of Wind Telecom’s description of the call option is essentially one about negligence, not deliberate misconduct: it describes VimpelCom as providing the Authorities with "mistaken information,"219 as having "bumble[d] its way" into suggesting the basis for a transfer pricing assessment,220 as having committed an "error" that it later failed to correct,221 and as having made "missteps,"222 all of this related to not sufficiently explaining the elimination of the cross-border component when the call option was replaced in 2009. As discussed above, VimpelCom argues that it made no such mistakes, citing its 3 April 2013 statement to the Authorities that the 2007 call option had been "modified..., providing for [Wind Telecom] to be able to exercise it" on the shares owned by Wind Telecomunicazione.223 However, even if one were to accept that VimpelCom misused the word "modif[y]" and did not emphasize the significance of Wind Telecom’s holding the 2009 call option, this would not suffice to meet OTMTI’s burden on its affirmative defense to indemnification. The obligation to take reasonable steps to mitigate losses does not equate to a requirement to make no errors in an appreciation of facts or an evaluation of law, such that any later proof of a mistake or failure to raise an argument obviates a contractual right to indemnification. Moreover, as the Tribunal discussed in Section IV.D.5, the evidence demonstrates that VimpelCom understood at the time that the Authorities were using the transfer pricing theory as a tool to propose a settlement at a lower level of payment than they could have offered under an abuse or avoidance theory, and that the Authorities expressly threatened to proceed with an assessment on the latter basis if the settlement offer was not promptly accepted. In these circumstances, and given the Tribunal’s conclusion that Wind Telecom was not without some remaining exposure on an anti-avoidance charge, OTMTI has not made the required causal connection between VimpelCom’s alleged "mistake" and its sustaining a "Loss" within the scope of the SSEA’s indemnification requirement.
160.
Finally, OTMTI argues that VimpelCom failed to mitigate losses by challenging the Authorities’ calculation of the settlement amounts, both as to any hypothetical premium for the put option and as to the computation of interest. With respect to the former, the Tribunal accepts that neither the Authorities nor VimpelCom engaged in a rigorous evaluation of an appropriate premium, precisely because the transfer pricing theory was simply a tool to justify settlement at a figure that had been determined independently of such calculations. The evidence shows that VimpelCom was the one that first floated the idea of settling at repayment of roughly 50-75% of the €57 million in tax savings that Wind Telecom had achieved through the derivative transactions.224 The Authorities’ concrete proposal of 17 July 2013 simply placed this notion within a convenient analytical framework. In these circumstances, and given the Authorities’ express threat to revert to an anti-abuse charge if the proposal was not promptly accepted, it was unlikely that any response by VimpelCom insisting on a more rigorous valuation of a hypothetical premium would have "mitigated" the broader exposure.
161.
With respect to the interest component, the evidence does show that the Authorities’ 26 July 2013 calculations increased the overall settlement amount by €1.6 million, by raising the interest component beyond the level VimpelCom previously had understood would be due. OTMTI argues that VimpelCom itself believed the higher figure was in error, because the Authorities had calculated interest from 2010 rather than 2012, the date on which Wind Telecom could first use its earlier tax deduction to offset tax gains. The evidence supports this point, demonstrating that VimpelCom considered the Authorities’ calculation to be wrong.225 However, the evidence also shows that VimpelCom did push back on this basis, with its counsel reporting that "we had a tough discussion with them." Counsel reported that the Authorities nonetheless "are immovable" because the calculation "comes from their system," and "[u]nfortunately I do not have the chance to do more."226 Based on this advice from counsel, VimpelCom management reported internally that "we have pushed this and we are told there is no way to change it."227 In these circumstances, the Tribunal cannot find a failure to take reasonable steps to mitigate losses. While mitigation may have required VimpelCom to raise arguments with the Authorities against their calculation of interest, it does not require that such efforts be successful. Nor does it require that VimpelCom refuse to give in on the point in the face of the Authorities’ resistance, with the possible result of jeopardizing the broader settlement then just days away from the Authorities’ expressed final deadline.
162.
At a broader level, the Tribunal observes that the decision to settle itself can be seen as a form of mitigation. It is clear that the Parties had different views of the strength of the Authorities’ claims and of Wind Telecom’s potential defenses, as well as different levels of risk-aversion, but also that both Parties’ views and attitudes were formed in good faith. This happens in many cases. However, the fact that an indemnitor may be less risk-averse than an indemnitee does not obligate the latter to adopt the former s views and therefore take its chances in court, particularly where the indemnitee retains significant direct exposure. That was the case here, given VimpelCom’s residual 27.35% of liability and OTMTI’s express notice that it would not willingly pay the other 72.65%. These factors ensured that VimpelCom had a continuing motivation to act in a reasonable manner to mitigate losses, and it chose to do so by a path that capped both Parties’ exposure through settlement, rather than risking what it believed in good faith to be significantly higher exposure through litigation. Had it done otherwise and subsequently lost in court, OTMTI equally could have accused VimpelCom of failing to mitigate by not accepting the earlier settlement offer. In these circumstances, the Tribunal is unable to conclude that either the mitigation requirement in the SSEA, or general mitigation duties under New York law, imposed a duty on VimpelCom to contest the Authorities’ claims more aggressively than its own good faith judgment, and the contemporaneous legal advice it received from counsel, suggested was warranted.

E. The WAHF Audit Claim

(1) Background on the Transactions and the Audit

163.
The second audit at issue concerns the non-application of withholding taxes on the interest that WAHF, a Wind Telecom subsidiary, paid in 2009 in connection with certain inter-company loans. In December 2006, WAHF took out "payment in kind" loans in the amount of US$500 million and €1.35 billion (the "2006 PIK Loans") from an affiliate in Luxembourg (Wind Acquisition Holdings Finance S.A., or "WAHF Luxembourg"); WAHF Luxembourg had borrowed the funds to make the 2006 PIK Loans from lenders based outside of Italy. WAHF guaranteed WAHF Luxembourg’s loans from the lending banks. When WAHF repaid the 2006 PIK Loans in 2009, WAHF Luxembourg in turn repaid the matching principal and interest on its loans to the foreign lenders.228 WAHF did not apply withholding taxes in Italy on the interest paid to WAHF Luxembourg, on the basis that these were inter-company loans. WAHF Luxembourg claimed exemption from withholding taxes in Luxembourg, under that country’s tax laws which exempted outbound interest payments from withholding tax.229
164.
On 17 September 2013, the Italian financial police (the Guardia) notified WAHF of an audit regarding its non-payment of withholding taxes for the loan interest paid in 2009.230 Following certain additional inquiries, document requests and discussions, on 19 December 2013 the Guardia issued an audit report concluding that the non-payment of withholding taxes was improper. Had WAHF borrowed funds directly from the foreign banks, it would have been liable for withholding taxes in Italy, but instead, the Guardia concluded, WAHF Luxembourg was interposed in the structure to enable WAHF to avoid paying such taxes, by availing itself of the Italian law exemption for inter-company loans. The Guardia found "a series of circumstances that are perfectly in line with the typical character of the so-called ‘conduit companies’" discussed in a 1986 OECD report on "Double Taxation Conventions and the Use of Conduit Companies." It observed that WAHF Luxembourg lacked significant assets or operations, passed on all costs to WAHF, and was not the true "beneficial owner" of the interest, which it was obligated to pass on to the foreign lenders who had extended financing for the purpose of WAHF Luxembourg’s making concomitant loans to WAHF.231 Accordingly, the Guardia concluded, WAHF owed back taxes of more than €199 million, calculated by applying a 27% withholding rate due on "notes" issued by Italian resident companies, with interest and penalties of up to a further €498 million. The Guardia referred the matter to the Italian revenue agency (the Agenzia) for further proceedings.
165.
Following certain additional inquiries and discussions, on 14 May 2014 the Agenzia offered WAHF a settlement under which WAHF would be required to pay approximately €73 million plus interest, but would not be assessed any penalties.232 On 19 May 2014, WAHF (with VimpelCom’s concurrence) agreed to settle the audit on these terms, totaling approximately €83.77 million to be paid in installments over several years.233 VimpelCom demanded that OTMTI indemnify it for 72.65% of the settlement amount under the SSEA, which OTMTI refused.

(2) Whether the Audit Falls Within the Scope of IndemnificationObligations

166.
OTMTI contends that the WAHF Audit falls outside the scope of its indemnification obligations under Section 10.2(d) of the SSEA, which addresses indemnification for "any Italian Withholding Tax Liability." This phrase is defined in Article 1.1 of the SSEA to mean "any assessment of any deficiency in, or claim for, Italian withholding taxes made by the Italian Taxing Authority (other than with respect to Italian withholding taxes... covered by the Excluded PVCs)," the latter a reference to two tax claims specifically identified by the Parties. OTMTI focuses on the words "assessment" and "claim," and contends that these refer to formal steps which postdate a final audit report by the Agenzia, which is not required to adopt the Guardia’s own prior report. Rather, OTMTI contends, "the Agenzia office in charge of assessments is ultimately empowered to decide whether to issue an [assessment] or dismiss [the audit report’s] findings."234 As a result, according to OTMTI, settlement agreements reached prior to the Agenzia’s decision to issue an assessment are premature under Section 10.2(d). According to OTMTI, VimpelCom "agreed to settle the WAHF Audit before the tax authorities had actually made any assessment or claim,... thus taking the settlement outside the scope of the indemnity, which covers only claims that have actually been assessed."235
167.
The Tribunal disagrees. The indemnity obligation contains the disjunctive "or," meaning that it covers a payment in response either to an "assessment" or to a "claim" by the Italian Tax Authorities with respect to Italian withholding taxes. Whatever the proper meaning of the term "assessment,"236 the term "claim" is a generic one; it normally carries with it an assertion by one person that another person is legally obliged to pay over certain sums of money.237 Nothing in Section 10.2(d) alters the general nature of this term, by specifying for example that it refers only to claims asserted in court proceedings after the formal tax assessment has issued.
168.
In the absence of any such specific definition, a common-sense interpretation of the word "claim" leads to the conclusion that the findings of the Guardia embodied in its final report sent to the Agenzia constituted a "claim" creating a risk of exposure for WAHF. The Guardia’s report concluded with the clear statement that WAHF owed withholding taxes in a specified amount. Although the Agenzia had autonomy to decide whether to adopt these findings in its own final audit report and thereafter pursue tax recovery by formal "assessment," this does not mean that no "claim" against WAHF existed until that process was complete, such that any earlier settlement of anticipated liability ipso facto destroys VimpelCom’s contractual right to indemnification. In this case, the Agenzia communicated through WAHF’s outside counsel that it essentially agreed with the Guardia’s findings and was prepared to proceed against WAHF for the tax deficiency. These communications indicated that the claim previously asserted by the Guardia was being pursued rather than abandoned. As discussed further below, VimpelCom also understood that absent a settlement, the Agenzia would assert liability at a level higher than the offered settlement amount. The SSEA did not require VimpelCom to reject the Agenzia’s settlement offer when it was proffered, and instead wait for the Agenzia’s completion of the further threatened steps. Indeed, VimpelCom’s concern was that the settlement offer was time-sensitive and might not be available later when the Agenzia could have less discretion for compromise. To require VimpelCom to run this risk in order to maintain its right to indemnification would be neither logical nor reasonable, when such a requirement is not stated in the SSEA and could expose both Parties to potentially greater liability.
169.
If there were any doubt about this conclusion based on the natural meaning of the term "claim," two other features of the SSEA’s definitions resolve it. First, Article 1.1’s definition of "Italian Withholding Tax Liability" is defined in terms of "assessment[s]... or claim[s]... made by the Italian Taxing Authority" (emphasis added), with that term further defined to "mean[] any Taxing Authority in Italy" (emphasis added). The word "any" confirms the Parties understood there was more than one such potential "Taxing Authority." This is further confirmed by Article 1.1’s definition of "Taxing Authority" as "any Governmental Entity responsible for the administration or collection of any Tax" (emphasis added). There is nothing in these encompassing definitions to suggest that a covered "claim" only may come into being following the Agenzia’s issuance of a formal assessment, and not following the Guardia’s earlier issuance of its own formal audit report - particularly coupled with the Agenzia’s indication that it was prepared to move forward with similar conclusions regarding WAHF’s liability.
170.
Second, Article 1.1 carefully excluded from the scope of the covered "assessment[s]... or claim[s]" the Italian withholding taxes "covered by the Excluded PVCs." The term "Excluded PVCs" was defined in Article 1.1 as "(i) the processo verbale di constatazione notified by the Rome office of the Italian Taxing Authority to Wind on May 31, 2010 and (ii) the processo verbale di constatazione notified to Wind Acquisition Finance S.p.A. on May 31, 2010, both including all related interest, penalties or fines." The dates referenced refer to audit reports (known as "PVCs") issued in connection with a withholding tax investigation that was known to the Parties at the time of the SSEA. That prior investigation had also involved loan structures utilizing a Luxembourg-based entity between the ultimate borrower and the ultimate lender, and there is evidence that the Withholding Tax Indemnity was specifically included in the SSEA because the Parties recognized the likelihood that WAHF’s PIK loans also would be audited in due course by the Italian Tax Authorities.238 There would have been no need to carve out the two prior PVCs (audit reports) from the scope of that indemnity if future audit reports generally were insufficient to create a duty of indemnification, but rather formal assessments were required before any settlement could qualify. The Tribunal is unpersuaded by OTMTI’s counter-argument that the reference in Article 1.1 to "Excluded PVCs" becomes relevant only to the extent that such PVCs thereafter ripened into formal assessments by the Agenzia.239 The Tribunal considers this to be a strained reading of the syntax, since the parenthetical exclusion of the Excluded PVCs follows right after the reference to indemnifiable "claims," and not after the reference to "assessments." At most, the term modifies and qualifies both "assessments" and "claims"; it would be too tortuous to read it as if it carved out the Excluded PVCs only from the term "assessments."
171.
For these reasons, the Tribunal concludes that the settlement of the WAHF Audit falls within the scope of the SSEA’s indemnification obligations.

(3) Good Faith

172.
In accordance with the legal principles discussed in Section IV.C.2, and as with the Wind Telecom Audit, a presumption of good faith applies to the settlement of the WAHF Audit, given that VimpelCom at all times retained at least 27.35% of the exposure from any settlement, and given its understanding at the time of the settlement that OTMTI did not concur in its actions.240 These facts demonstrate that VimpelCom understood it faced the risk of bearing the full consequences of its settlement decision, and VimpelCom therefore is presumed to have subjectively believed that the settlement was reasonable in the circumstances.
173.
As with the Wind Telecom Audit, that presumption of subjective good faith is further supported by the fact that VimpelCom engaged in a process to evaluate WAHF’s exposure prior to concluding the settlement. This included an effort to gather documents and consult with personnel involved in the loan structuring, in order to determine the reasons for the structure and the evidence that might be presented to the Italian Tax Authorities regarding its bona fides. VimpelCom also consulted with Italian tax counsel regarding the applicable legal principles, the nature of the judicial proceedings WAHF would face if it chose to litigate, and the potential outcomes and risks of that course of action.
174.
The evidence further indicates that VimpelCom’s decision to settle the WAHF Audit was based at least substantially on its perception, supported by the views of outside counsel, that the company otherwise faced significant exposure from not doing so. On 29 April 2014, counsel prepared a memo stating that "the [Agenzia] has received the Tax Report by the [Guardia]" and that "in our experience, the conclusions (in their main terms) of the tax auditors are generally confirmed by the body responsible for the assessment," even though it may be "possible to obtain a partial review... in the framework of a settlement."241 Regarding the specific case, counsel advised that there were various "[d]efensive arguments" which could be pursued, but also various "weaknesses." The latter included the reality that (a) while applicable OECD directives were designed to eliminate double taxation, "it is of equal concern that such payments should not escape taxation at all" in any Member State, which seemed to be the case for this transaction; (b) the WAHF loan from WAHF Luxembourg and the WAHF Luxembourg loan from the foreign lenders were "factually and contractually strictly linked (mirrored indeed)"; (c) WAHF Luxembourg had limited capital or presence of its own, ran no apparent risk in the transaction, "appears as ‘passive’," and had "never carried on activity other than borrowing financial resources to be extended (in exactly the same amount and under the same conditions)" to WAHF; and (d) "the structure seems not to substantially divert from the one already assessed in 2011" in another challenged transaction in the Wind Group.242
175.
Counsel also advised that litigation regarding these issues would be subject to "uncertainties" due to a lack of uniform case law, and "in our experience the current approach of Italian tax courts are generally very tough against taxpayers in relation to complex intra group transactions implying cross border payments generating an overall tax erosion in Italy without a very strong (and documented) valid business reasons other than the tax saving and this could affect the judgment in a case like that one at stake...." On this basis, counsel concluded that "it seems unlikely that the company would succeed in litigation. Moreover, substantial deposits (1/3 of the assessed amount plus interest) most likely would have to be paid even to proceed to litigation.243
176.
This advice of counsel was subsequently reflected in a 16 May 2014 memorandum from VimpelCom’s management to its Supervisory Board, which addressed also the Wind Telecomunicazione Audit that was under consideration at the same time. With respect to the WAHF Audit, management reported that the Agenzia as well as the Guardia "have... concluded that...WAHF violated Italian tax law by not applying withholding taxes" on the interest payments, and that the Agenzia "has indicated that it is considering to issue a number of formal tax assessments," including up to €199 million plus penalties and interest. Management’s contemporaneous understanding was that "penalties could be as high as 250%" but "the most commonly used rate" was 150%,244 which could mean penalties of almost €300 million for the WAHF Audit. WAHF would also be exposed to additional interest obligations in the tens of millions of Euros.245
177.
With respect to the likelihood of such exposure, VimpelCom’s contemporaneous understanding - again based on the advice of its external tax counsel - was that "under current Italian laws and jurisprudence [there was] a lot of uncertainty" attached to concepts like ‘beneficial ownership’ and ‘interposing special purpose companies,’."246 There were "valid defensive arguments that can be brought forward in court, but the Italian courts are currently rather tough towards alleged tax-offenders. This is particularly so in cases where ‘beneficial ownership’ and ‘special purpose companies’ schemes were used." Given these factors, "it seems rather difficult to assess" the ultimate outcome in the courts, and therefore "it is tricky to recommend" taking chances with court proceedings, so that a settlement proposal "should be seriously considered."247 Management reported that outside counsel advised "it is unlikely that we would end up with a better result" from litigating, and "[i]t is therefore probable that a settlement proposal (as currently negotiated) will lead to a better end-result."248 Moreover, VimpelCom understood that challenging an eventual tax assessment would require it first to pay 1/3 of the assessed amount (totaling roughly €67 million for the WAHF Audit) plus interest, and twice that if it were necessary to proceed to the court of second instance.249
178.
Balanced against this risk was a pending settlement offer for a "significantly reduced amount of taxes and without application of penalties."250 For the WAHF Audit, the proposal involved withholding taxes at a 12.5% (rather than 27%) rate, no application of a so-called "gross-up" clause, and "penalties... reduced to 0%," resulting in a total settlement amount of €84 million (including roughly €11 million in interest), to be paid in quarterly installments over three years.251
179.
With this understanding of the options, VimpelCom’s management recommended that WAHF accept the settlement proposal, "because there is a significant risk of higher liability if we challenge the audit report[] in the Italian tax courts" and outside counsel "have analyzed the matter and concluded that it is not probable that... WAHF [would] win in court if it were to challenge ITA’s position."252 Management referenced the possibility of a 72.65% indemnity by OTMTI,253 which "is helpful and we believe will mitigate our losses. However, we would recommend settlement even if there was no indemnity available in view of the significant risk of higher liability if we do not settle."254 By the time of this memorandum, OTMTI already had informed VimpelCom that it was "not in a position to provide [it] an informed view on the settlement proposals" and that, "should you decide to accept them, you will bear all the responsibility thereof."255 VimpelCom’s Supervisory Board nonetheless unanimously approved the recommended settlement,256 and the Italian Tax Authorities issued their final report regarding the WAHF Audit, to which WAHF formally "adhered."257
180.
OTMTI contends that VimpelCom "accelerat[ed] settlement discussions" with the Agenzia,258 the clear implication being that such discussions were premature and that taking additional time might have enabled it to present compelling substantive defenses.259 However, it is clear that VimpelCom had been genuinely concerned since February 2014 that the Agenzia might issue the tax assessment at any time,260 and the record reflects that, in the months that followed, the Agenzia put substantial time pressure on WAHF, summoning it to meetings often on a day’s notice or less. There is no indication that the Agenzia would have granted much more time, particularly if it sensed that the purpose was not to engage in genuine settlement discussions but rather for WAHF to develop further defense arguments.
181.
It is also unclear that additional time would have changed the Agenzia’s analysis materially, given that it already had considered - and evidently found unpersuasive - the arguments that WAHF already had presented. These arguments directly reflected OTMTI’s input to date: the record demonstrates that, before settlement discussions got underway, VimpelCom solicited OTMTI’s comments on a draft memorandum contesting the Guardia’s conclusions,261 and incorporated those comments into a second draft,262 only submitting the final version to the Agenzia on 20 March 2014 after OTMTI confirmed that it had "no further comments."263 VimpelCom and WAHF thereafter focused only on the issue of penalties, and solicited OTMTI’s comments on that issue for a supplemental memorandum submitted to the Agenzia on 13 May 2014.264
182.
This history does not suggest either that OTMTI contemporaneously identified specific additional arguments that VimpelCom and WAHF refused to present, or that the Agenzia would have granted them significant additional time to try to develop other arguments. The contention that VimpelCom therefore truncated an otherwise available window to advance defense arguments is not well grounded. But even if the facts had suggested some room to develop further arguments, any failure by VimpelCom to fully appreciate this possibility, or to give it substantial weight as promising a material difference in the outcome, would not amount to bad faith. Nor it would it be bad faith for VimpelCom to be less confident than OTMTI that the arguments already advanced unsuccessfully to the Agenzia might fare better before the Italian courts.
183.
OTMTI’s most emphatic argument regarding an alleged lack of good faith is not about the "acceleration" of settlement discussions as such, but that VimpelCom allegedly had an "ulterior motive" for settling at all.265 OTMTI argues that VimpelCom’s decision to settle the WAHF Audit was motivated by a wish to protect itself from potential withholding tax exposure in connection with another set of loans (the 2009 PIK Loans, also structured through WAHF Luxembourg) that WAHF was "looking to refinance" in 2014, but that were not subject to any SSEA indemnification requirement.266 OTMTI repeatedly characterizes VimpelCom’s consideration of this issue as denoting a sacrifice of OTMTI’s interests for the sake of a "true agenda" that furthered VimpelCom’s "parochial interests" at OTMTI’s expense.267
184.
The evidence does indicate that VimpelCom considered WAHF’s exposure with respect to interest payments on the 2009 PIK Loans as part of its calculus regarding the WAHF Audit. At the same time, the evidence shows that the linkage was primarily one of timing, not of a change in outcome, and that VimpelCom believed it was pursuing a "win-win" strategy for both exposures, not a "trade-off’ involving the surrender of a better approach to the WAHF Audit for the sake of advancing its interests with respect to the 2009 PIK Loans.
185.
Specifically, and as VimpelCom advised OTMTI at the time, VimpelCom considered that "[g]iven the stance adopted by the [Agenzia] on the current WAHF audit," it was "inevitable that the [Agenzia] will at some point make a claim" for similar withholding taxes on interest paid between 2010 and 2014 on the 2009 PIK Loans.268 VimpelCom’s internal documents show that it believed a proactive approach was in its best interest, involving voluntarily approaching the Agenzia about this issue and offering to pay withholding tax on the "most recent PIK interest payments" in 2014. This would enable it to pay only a 5% rate, which "in our view is the lowest possible WHT that can be claimed for this payment."269 However, achieving that rate would mean making a decision promptly, in order to invoke a time-limited tax amnesty program. It would also require WAHF to admit that WAHF Luxembourg was not the beneficial owner of the interest payments, which was the same issue in play in the WAHF Audit but which would be contrary to the position WAHF thus far had been asserting (unsuccessfully) in its defense. VimpelCom considered that "in the context of the discussion with ITA a settlement for WAHF should ideally be concluded on or before the deadline for the payment of this 5% WHT [on the 2014 interest payments], which is May 16, 2014."270
186.
VimpelCom contends that there were benefits to all Parties by coordinating the timing of WAHF’s voluntary tax payment on the 2009 PIK Loans interest with a settlement of the WAHF audit - namely, that doing the former promptly could help earn "good will" from the Agenzia with respect to the latter, at a time that it was still considering the issue of penalties.271 OTMTI characterizes this as "self-serving revisionism."272 However, the evidence indicates that this was a viewpoint VimpelCom communicated to OTMTI at the time,273 so at minimum it is not "revisionism." VimpelCom’s Supervisory Board memorandum also reflects its own contemporaneous internal belief that linking the timing of the two issues was in the best interests of the WAHF Audit, and not just its own interests in connection with the 2009 PIK Loans. Specifically, VimpelCom management informed the Board that "[a]pplication of 5% WHT [on the 2014 interest payments] has potentially facilitated a favorable settlement with ITA for the 2009 payment" at issue in the WAHF Audit.274 There is no evidence to suggest that this was not a genuine belief. VimpelCom’s decision to act on this belief is not indicative of subjective bad faith.
187.
Most importantly, the evidence does not suggest that VimpelCom was motivated by self-interest to accept a settlement of the WAHF Audit that it did not otherwise believe to be reasonable in the circumstances. This is not a case in which an indemnitee abandoned what it genuinely believed to a valid and strong defense, and conceded liability for a spurious claim solely or primarily to obtain a collateral advantage for a different exposure. Rather, the contemporaneous documents show that VimpelCom (together with its counsel) saw a genuine risk that WAHF Luxembourg would be viewed as a mere conduit to the foreign lenders and not as the beneficial owner of the interest payments. VimpelCom also genuinely believed the settlement terms presented a reasonable means of avoiding the risks of litigation, including the possibility of greater liability (for which, under the SSEA, it would bear at least 27.35%). In these circumstances, it was not improper for VimpelCom to conclude that, where there was a substantial prospect of liability in any event, it was a prudent business judgment to reach a settlement that managed the WAHF Audit exposure appropriately, but did so jointly with resolving the identical issue with respect to another exposure. The presence of a mixed-motive involving the other exposure does not eliminate the existence of a valid motive for the WAHF Audit settlement. The Tribunal concludes that VimpelCom acted subjectively in good faith in settling the WAHF Audit, even if it had additional reasons for doing so that were related to an independent exposure.

(4) The Adequacy of Notice and Opportunity to Participate

188.
As discussed in Section IV.C.3, VimpelCom’s obligation regarding notice with respect to the WAHF Audit is governed by Article 10.7(h)(i) of the SSEA, which applies "[i]n the event of a Tax audit or inquiry by any Taxing Authority that may lead to an Italian Withholding Tax Liability." In this context, VimpelCom is required to notify OTMTI "as soon as reasonably practicable but in any event within ten (10) Business Days after VimpelCom or any of its Subsidiaries has been informed in writing of the beginning of such procedure," except to the extent it is restricted from doing so by "any obligation of confidentiality."275 There is no dispute that VimpelCom complied with this requirement. The Guardia notified WAHF of the beginning of its audit on 17 September 2013, and VimpelCom notified OTMTI of this event on 27 September 2013.276 This was in eight business days, well within the ten business days referenced in the SSEA.
189.
The debated issue is whether VimpelCom thereafter complied with the obligations that followed the provision of notice. Under Article 10.7(h)(ii) of the SSEA, VimpelCom was required to "coordinate" with OTMTI "in the taking of any action relating to the conduct of such Tax audit or inquiry actions"; to provide OTMTI "such information and access to personnel, premises, documents and records" as OTMTI may reasonably request; and to "use its reasonable efforts to include a representative appointed by [OTMTI] in any meeting or material telephone call arranged by VimpelCom... with a representative of the relevant Taxing Authorities."277 As discussed in Section IV.C.4, these obligations are distinct from participation in or control of the defense, additional rights that were separately identified in Article 10.7(h)(ii) for won-tax claims, but for which tax claims were specifically excluded.
190.
OTMTI contends that VimpelCom breached these various duties. The Tribunal concludes otherwise.
191.
First, during the roughly seven months between mid-September 2013 (when the Guardia initiated the WAHF Audit) and mid-April 2014 (when it appears settlement discussions with the Agenzia got underway), VimpelCom repeatedly reached out to OTMTI to inform it of developments, to seek OTMTI’s input on documents to be submitted to the Italian Tax Authorities, and to notify it of upcoming meetings. Thus, for example, with respect to the Guardia investigation:

• On 29 October 2013, VimpelCom wrote to OTMTI noting that it had not yet heard back following its 27 September 2013 notice about the initiation of the WAHF Audit, invited OTMTI again to discuss the issue, and inquired whether OTMTI would like to attend any meetings with the Guardia.278 The parties thereafter met on 7 November 2013 to discuss the WAHF Audit.279

• On 19 November 2013, VimpelCom notified OTMTI that the Guardia wished to meet to discuss "the preliminary findings of their investigations," thereafter notified OTMTI of the specific time and place for the meeting, and proposed a call to "discuss the approach for the meeting"; after the meeting, VimpelCom proposed another "update call" with OTMTI.280

• On 25 November 2013, VimpelCom requested information from OTMTI, explaining that "[w]e will need to be able to provide the [Guardia] with adequate explanations to these questions and why Weather took the decisions it did."281 While VimpelCom was waiting for OTMTI’s response, the Guardia requested another meeting, and VimpelCom invited OTMTI to attend.282

• On 3 December 2013, VimpelCom asked OTMTI to share its "arguments to support that WAHF was beneficial owner of the relevant payments," in advance of the next meeting with the Guardia.283 VimpelCom also forwarded "the list of documents requested" by the Guardia.284

• VimpelCom thereafter arranged for OTMTI to attend the next meeting with the Guardia on 12 December 2013.285 OTMTI received the same document from the Guardia that VimpelCom did, setting out its "conclusion" that a 27% withholding tax amounting to €199 million should have been applied, because "[t]hey considered the Luxco as a conduit... and in general the structure an abusive construction."286 The Guardia was to issue its final report soon to the Agenzia, and OTMTI advised that "[a]t this point our thinking is that there is little to be gained by trying to change their mind and that our arguments should be presented to the [Agenzia] in due course."287

192.
The record reflects that VimpelCom likewise reached out to OTMTI once the Agenzia become involved in reviewing the Guardia’s audit report. While the Parties had certain disagreements regarding the strategy for handling the initial meetings with the Agenzia, this is not the same as being excluded from such meetings, or a failure by VimpelCom even to attempt to coordinate. The evidence shows, for example, that:

• On 21 February 2014, the same day VimpelCom learned that the Agenzia had agreed to meet,288 it asked OTMTI if it wished to attend. OTMTI confirmed that it would do so and proposed a preparation call to "discuss the findings of the audit and the approach to take with the tax administration." OTMTI indicated that it believed the Guardia’s findings were "wrong," and that "there is room" to rebut those findings, through arguments about the "genuine" role of WAHF Luxembourg. These would be along the same lines that it had just argued in the Wind Telecomunicazione Audit with respect to another challenged transaction, referred to in the correspondence as the "2005 Senior."289

• Following further discussions between the Parties, OTMTI suggested asking the Agenzia to postpone the scheduled meeting, whereas VimpelCom was concerned that this "could lead to a more aggressive approach from them," and preferred to proceed with the meeting, at minimum to ask the Agenzia to explain "on what basis [the Guardia’s report] is grounded." OTMTI believed that approach would not suffice since "we have had this report for over 2 months now, so supposedly have plenty of time to review it," even though the reality was that in the interim "the Senior issues took precedence" in the Parties’ mutual preparations. OTMTI therefore considered it "preferable to take the time" first to review arguments (including those soon to be circulated by its outside counsel), "before engaging with" the Agenzia. It concluded that "[h]owever you are best placed to weight the risk of antagonizing the [Agenzia] by delaying the meeting, versus that of coming to them somewhat unprepared, and we will defer to you[r] final judgement here."290

• VimpelCom responded that, since 60 days already had expired following the Guardia’s report, "they can issue the tax assessment at any time," so it believed it best to proceed with the meeting. OTMTI confirmed its outside counsel would attend. VimpelCom in turn confirmed that "[i]n the event that we are compelled to discuss possible defensive arguments, we intend to outline the points of objection [that its outside counsel] mentioned on the call [with OTMTI]," and if OTMTI’s outside counsel "believes there are further arguments which we should advance to help our position, we would certainly welcome her raising them with the [Agenzia] at the meeting."291 OTMTI’s outside counsel then circulated an executive summary of possible defense arguments to be considered.292

193.
These exchanges have been summarized in some detail, as they epitomize a general difference in approach towards the Agenzia, with VimpelCom generally preferring a strategy of engagement and OTMTI a more aggressive posture. At the same time, the exchanges also evidence a reasonable effort to coordinate, not an exclusion from discussions. The same is true of the exchanges over the next two months:

• On 5 March 2014, OTMTI requested a meeting to "better understand your estimates of potential claim and/or settlement amount under different scenarios," and "review the action plan on the various open cases," and VimpelCom proposed a meeting two days later.293

• Following that meeting, the Parties scheduled a further call "to resume discussions on possible settlement scenarios for the Senior and on the PIK," and VimpelCom responded by circulating "for your review a first draft of the memo that we intend to submit to the [Agenzia] on WAHF... in case you had any substantive comments." VimpelCom noted however that "[w]e should aim to submit the memo to the [Agenzia] as soon as possible before they issue the assessment." It also advised OTMTI that the Agenzia had requested another meeting, and invited OTMTI’s counsel to attend.294

• OTMTI’s counsel thereafter submitted its comments on the draft memo,295 VimpelCom returned a revised second draft which "takes into account the comments which [OTMTI’s counsel] had provided on the first draft, and OTMTI confirmed, "no further comments from our side."296 The resulting defense memorandum, reflecting this process of coordination, was submitted to the Agenzia on 20 March 2014.297

• Following submission of the defense memo, VimpelCom notified OTMTI of the Agenzia’s request for another meeting, and proposed another call to discuss.298 During this 26 March 2014 meeting, the Agenzia apparently continued to assert that WAHF Luxembourg was not the beneficial owner of the WAHF interest payments, so a withholding tax should have been paid.299

• Over the next week, it appears that the only communications with the Agenzia were about its parallel inquiry in relation to the Wind Telecomunicazione Audit.300 Thereafter, when the Agenzia proposed another meeting on the WAHF Audit, VimpelCom on 9 April 2014 notified OTMTI of this fact, as well as its "sense that there may be some appetite on their part to explore settlement of the audit without the application of penalties."301 VimpelCom also informed OTMTI that it was important to follow up with the Agenzia soon, since "there will be several holidays in Italy" beginning 18 April 2014 through early May 2014, and the Agenzia officer responsible for the WAHF Audit "will soon be leaving and will be replaced with someone else."302 VimpelCom invited OTMTI’s counsel to participate in a meeting then scheduled for 11 April 2014.303

• The Agenzia thereafter postponed the meeting to the morning of 14 April 2014, a time when OTMTI’s counsel could not attend, but she confirmed that if the meeting could not be postponed further, "we are fine with you and [your outside counsel] meeting with them on your own." VimpelCom nonetheless attempted to get the meeting postponed to 15 April 2014, but the Agenzia ultimately declined to do so and asked to proceed on 14 April 2014. VimpelCom proceeded with the meeting on its own, as OTMTI had expressly consented to its doing. It also informed OTMTI of its desire to arrange a "second meeting" that week with the Agenzia, tentatively on 17 April 2014, before the start of the holiday period.304

194.
OTMTI now claims that "VimpelCom’s misconduct in connection with the WAHF Audit started as early as February 2014."305 However, the chronology above demonstrates no such misconduct. Nor do the contemporary documents reflect any complaint by OTMTI about non-coordination or non-inclusion, prior to mid-April 2014. Indeed, OTMTI’s 15 May 2014 letter declining to offer any opinion on the Agenzia’s settlement offer complained only that "in recent weeks" VimpelCom had not "fully complied" with its SSEA obligations.306 The Tribunal therefore focuses below on events in the final period between mid-April 2014 and mid-May 2014, when settlement discussions with the Agenzia were underway.
195.
As discussed above, VimpelCom informed OTMTI on 9 April 2014 of its sense that the Agenzia was open to exploring a settlement involving no penalties, and that it wished to follow up on this possibility in meetings prior to the holiday period commencing 18 April 2014.307 On 16 April 2014, VimpelCom informed OTMTI that of its view that this objective could be furthered by proactively raising with the Agenzia, concomitant with the ongoing discussions about the WAHF Audit, the possibility of WAHF’s paying withholding taxes for 2010-2014 interest paid on the 2009 PIK Loans. It provided this notice to OTMTI, however, only when its counsel already was en route to a meeting with the Agenzia "to have this exploratory discussion."308 OTMTI accuses VimpelCom of "deliberately and strategically exclud[ing]" its counsel from the 16 April 2016 meeting.309 The evidence of such "deliberate" exclusion is not compelling, however, since VimpelCom already had notified OTMTI that it hoped to schedule a second meeting with the Agenzia that week,310 prior to the national holidays.311 VimpelCom apparently tried to arrange a meeting on 17 April 2014 - the day it had previously had told OTMTI it was targeting for this "second meeting"312 - but the Agenzia insisted it was available only on 16 April 2014. VimpelCom acknowledged that this did not allow much (if any) notice to OTMTI’s counsel, but reminded OTMTI that "[u]nfortunately... we do not always have the luxury of time when dealing with" the Agenzia and that "effectively, you knew of the meeting when we did." It provided OTMTI with a debriefing the next day.313
196.
While this explanation may explain the short notice of the 16 April 2014 meeting, it does not fully explain why VimpelCom never previously alerted OTMTI to the possibility (even in principle) of raising the 2009 PIK Loan issue with the Agenzia, particularly given VimpelCom’s admission that it had been "discuss[ing] the position internally at length."314 VimpelCom’s explanation for not mentioning this previously to OTMTI was that "it was not something we had fully considered or reached a view on internally." It contended that "[o]nce we did reach a view, we immediately called the [Agenzia]" to try to arrange a meeting, and notified OTMTI as soon as the meeting time had been scheduled.315
197.
Be that as it may, the decision to interject the 2009 PIK Loans issue into discussions with the Agenzia occurred (a) only after VimpelCom already had worked collaboratively with OTMTI in March 2014 to provide a substantive defense memorandum reflecting both Parties’ views,316 and (b) only after the Agenzia nonetheless continued to maintain that a withholding tax should have been paid.317 This supported VimpelCom’s view that the Parties’ collective arguments against liability had been insufficient to persuade the Agenzia. That view was corroborated by its outside counsel’s advice later that month that "the tax authorities appear to be quite confident of their position," not least because the underlying loan structure at issue in the WAHF Audit "seems not to substantially divert from the one already assessed" in a prior audit involving the Wind Group, which the company had settled in 2011.318 In these circumstances, VimpelCom appears to have genuinely believed that the best outcome it could obtain from the Agenzia would be a settlement at the lower 12.5% tax rate and without penalties, and that offering a voluntary payment of taxes in connection with the 2009 PIK Loans (without waiting for an a later assessment) would facilitate rather than hamper that goal. While VimpelCom presumably could have raised this tactical judgment with OTMTI somewhat earlier than it did, any delay in notification of this point alone (after fully collaborating on the substantive defense arguments to little apparent success) is unlikely to have significantly altered the conclusions of the Agenzia. Moreover, VimpelCom’s decision to inject the 2009 PIK Loans into the discussions did not negate its prior consultations with OTMTI over the legal and tactical approaches to defending or minimizing liabilities in the WAHF Audit. OTMTI’s suggestion that the Agenzia was materially emboldened by VimpelCom’s approach to the settlement discussions is not supported by the evidence, which indicates that the Agenzia already had reached certain conclusions about "beneficial ownership" along the lines of the Guardia’s earlier audit report.
198.
Following this exchange, the discussions with the Agenzia continued to focus on the issue of penalties. It is true that one meeting on this issue (on 8 May 2014) was attended by WAHF’s outside counsel without invitation to OTMTI, but the evidence is that the Agenzia summoned him on such short notice that day that no company representative was able to attend for WAHF either.319 OTMTI was briefed on the meeting the same day it occurred.320 A few days later, the Agenzia requested a memorandum on the non-application of penalties but provided an overnight deadline; VimpelCom nonetheless sent OTMTI a draft to review. OTMTI advised that it had "no substantive comments on the memo," approved its submission "as is," and noted that it "understand[s] the approach taken to seek a waiver of the penalties."321 The supplemental memorandum was promptly submitted to the Agenzia.322
199.
The same day, VimpelCom sent OTMTI a draft request to the Agenzia to enter into a "mutual agreement procedure," requesting "any comments on the draft."323 VimpelCom advised OTMTI that "if we receive an acceptable settlement offer on the current audit within the next couple of days, it would make little sense to delay in accepting it," particularly in light of the impending 16 May 2016 deadline it faced with respect to the 2014 interest payment on the refinanced 2009 PIK Loans. OTMTI reiterated its concern about any "accelerated settlement" to accommodate any deadline tied to the 2009 PIK Loans issue, but indicated it would "in due course consider any reasonable settlement proposal that the tax authorities may provide to you, notwithstanding the reservations."324
200.
The next day, the Agenzia offered to close the WAHF Audit without application of penalties,325 which was the objective VimpelCom had notified OTMTI five weeks earlier (on 9 April 2016) that it hoped to achieve.326 VimpelCom informed OTMTI that it intended to accept the offer since "[t]his... achieves the objective that we have been pursuing extensively," and "this is the best possible outcome that we can expect to achieve." OTMTI replied that, because it believed that VimpelCom had violated its SSEA obligations regarding coordination and inclusion, OTMTI was "not in a position to provide you with an informed view of the settlement proposals... [and] cannot evaluate the appropriateness of these proposals," so VimpelCom "will bear all the responsibility" for the settlement if it decided to proceed.327
201.
Based on this record, the Tribunal concludes that, while the Parties evidently had different views of the advantages and drawbacks of a settlement versus a subsequent litigation, the differences were not due to an alleged failure to coordinate or to use reasonable efforts to include OTMTI representatives in meetings with the Italian Tax Authorities.328 OTMTI has not shown a breach of these SSEA provisions, nor of the predicate obligation to notify it within ten business days of a "Tax audit or inquiry."329

(5) Reasonableness of Settlement

202.
The next step in the analysis is to assess whether VimpelCom’s decision to settle, and the terms of the resulting settlement, were objectively reasonable, in the sense that "there was [a] possibility that litigating the case to the end would result in a judgment... in an amount greater than the settlement."330
203.
The Tribunal concludes that there was indeed such a possibility - in other words, that WAHF might not have been successful in defending against an assessment brought on the ground that WAHF Luxembourg was simply a conduit for interest payments that in "substance" (rather than form) belonged to foreign lenders. Even crediting OTMTI’s position that there were arguments to try to justify WAHF Luxembourg’s status as a true beneficial owner, (a) the structure of the back-to-back loan transactions; (b) the evidence of how and when they were put in place, coupled with the evidence about WAHF Luxembourg’s extremely thin assets and operations; and (c) and the Italian courts’ increasing adoption of a "substance over form" approach to deny beneficial ownership status to intermediary companies, particularly when the consequence is the absence of tax payments both in Italy and abroad,331 all combined to create a significant risk that WAHF’s arguments ultimately might not be successful. At the very least, the circumstances fell significantly short of an absolutely or even strongly compelling case for defending against the tax claims. It is unnecessary to determine what the odds of success ultimately might have been, so long as they remained cognizable. VimpelCom received contemporaneous legal advice, from both its internal and external tax counsel, that this was definitely the case. The Tribunal is unable to conclude that this was self-evidently untrue, which would be required for it to find the decision to settle objectively unreasonable.
204.
The only other basis upon which the settlement decision could be objectively unreasonable is if there were no objective downside to WAHF’s taking its chances on litigation, rather than agreeing to settle. OTMTI contends that this is the case because there was no realistic chance anyway of WAHF’s being assessed taxes at a rate higher than 12.5% or of penalties being applied following court proceedings. The Tribunal is unable to accept such categorical arguments about the absence of risk.
205.
First, while OTMTI claims that during a 26 March 2014 meeting the Agenzia indicated it was abandoning any claim for the higher 27% rate,332 WAHF’s outside counsel denies that any such statement was made.333 What does seem clear is that in late April 2014, outside counsel advised WAHF in writing that in the event of litigation rather than settlement, the 12.5% rate "cannot be considered as granted."334 The issue turned on whether WAHF could establish that the lending banks and the holders of the PIK notes that were used to finance the loans were located in jurisdictions that Italy deemed sufficiently transparent, or whether some were located in "black-listed" jurisdictions that were not adequately transparent. As of the time of the settlement, it appeared that at least some of the note holders were located in black-listed jurisdictions, and others could not be identified given trades on the secondary markets.335 The two Italian law professors presented as experts in this case - Profs. Manzitti and Maisto - differed on the extent of the residual risk in these circumstances.336
206.
The contemporaneous documents also show that VimpelCom’s counsel considered WAHF would face a risk of penalties absent a settlement. One reason was precisely because the Wind Group in 2011 had settled a prior withholding tax audit involving a "substantially" similar structure challenged on beneficial ownership grounds. The 2011 settlement waived penalties "based on the uncertainties of the concept of beneficial owner" in 2011, and OTMTI invokes this as proof that a similar outcome was inevitable even in litigation.337 However, VimpelCom’s counsel contemporaneously advised it in 2014 that "[a]t this stage it is not predicable if the Wind case will allow them or not to reduce penalties also in this case (or only partially), considering that after the 2011 settlement the group did not change anything in the WAHF structure."338 The Tribunal accepts it as objectively reasonable for VimpelCom to worry that, with each successive instance of non-payment of withholding taxes in connection with a particular structure repeatedly challenged by authorities, the risk of being perceived as a "repeat offender" might increase, as therefore would the risk of penalties. Certainly, from 2011 on, the Wind Group was on notice that the Agenzia took a dim view of these sorts of structures, and at some point (absent a settlement) the Italian tax courts might prove unwilling to accept that the Group nonetheless had a credible basis for continuing to claim conditions of "uncertainty."
207.
Moreover, even aside from the implications of the 2011 settlement, it appears that the issue of penalties was not without risk. Despite Prof. Manzitti’s contention that continuing "uncertainty" about the meaning and application of the beneficial ownership standard would have protected WAHF from penalties,339 Prof. Maisto produced several Italian court decisions, around the time of the WAHF settlement and afterwards, in which the courts sustained the application of penalties in withholding tax cases involving intermediate entities used as conduits.340 While Prof. Manzitti believed these decisions "do not resolve the uncertainties,"341 at minimum the decisions illustrate that the courts were not uniform in rejecting such penalties. In light of these decisions, the Tribunal cannot deem the risk of a similar outcome in this case to have been entirely negligible. Moreover, the sheer magnitude of any potential penalties, in the event they were assessed and upheld, justified a risk-averse approach as objectively reasonable. The penalties threatened by the Italian Tax Authorities were apparently over five times the value of WAHF itself and, if assessed, could have forced WAHF into bankruptcy.342
208.
Finally, the fact remains that even to challenge an assessment, WAHF would have had to make a court deposit for the WAHF Audit of some €67 million plus interest. It was not objectively unreasonable in these circumstances for VimpelCom to accept a settlement for a total €84 million, to forestall any possible risk of liability for additional back taxes, with more interest, plus a significant tax collector’s fee.

(6) Mitigation of Loss

209.
Finally, OTMTI has not demonstrated that VimpelCom failed to exercise due diligence in preventing foreseeable loss, and therefore violated its obligation under Article 10.7(f)(C) of the SSEA to use "all reasonable efforts to mitigate the corresponding Loss." The evidence demonstrates that VimpelCom took reasonable steps to evaluate WAHF’s potential liability, including investigating the facts of the challenged transaction and obtaining outside legal advice on the relevant issues of Italian tax law. OTMTI has not met its burden of demonstrating specific additional steps that VimpelCom should have taken but did not, which could have eliminated or materially reduced the exposure from the WAHF Audit.
210.
OTMTI’s principal arguments with respect to mitigation are that VimpelCom (a) did not prepare diligently enough to defend the WAHF Audit, (b) failed to "ensure that OTMTI and its counsel would be in as strong a position as possible to assist" in the defense, by providing it more time to comment on draft submissions to the Italian Tax Authorities, (c) rushed to settle the WAHF Audit instead of "tak[ing] full advantage of the time periods allowed by Italian law," and (d) most fundamentally, failed to present additional defenses to the Agenzia, or to litigate the defenses of which it was aware, which it allegedly could have pursued before the tax courts with no risk of greater liability.343
211.
The evidence with respect to most of OTMTI’s contentions has been discussed above. With respect to diligent preparation, it is almost always possible in hindsight to identify additional avenues that might have been explored, or to contend that those actually explored should have been investigated earlier or pursued more aggressively. These arguments do not suffice, however, to prove a failure to mitigate sufficient to defeat a contractual right to indemnification, so long as the evidence demonstrates a good faith and reasonable effort to evaluate potential defenses and weigh potential risks. As to the limited time provided to OTMTI to comment on VimpelCom’s draft defense memos, this was partially a function of the pressure generated by the Agenzia, combined with the advice of outside tax counsel that a tax assessment could be issued at any time. OTMTI’s argument that longer time periods were allowed by law is a non-sequitur, as this relates to the last date the Agenzia could have issued an assessment consistent with the statute of limitations, not the earliest date on which it might have done so after receiving the Guardia’s detailed report. VimpelCom was not required by the SSEA to run the risk of postponing any settlement discussions when offered by the Agenzia, after it determined in good faith that WAHF faced substantial risks.
212.
As for OTMTI’s argument that VimpelCom failed to present additional defenses to the Agenzia, the fact remains that OTMTI signed off on VimpelCom’s revised defense memorandum, after its first-round comments on an earlier draft had been incorporated. OTMTI did not object to the defense submission as incomplete or inaccurate. An indemnitor cannot void its contractual obligations by arguing that the indemnitee should have divined additional legal defenses that it also failed to appreciate at the time. In any event, none of the arguments OTMTI now says VimpelCom should have presented appear so conclusive as to remove the considerable risk of an adverse tax assessment, given the basic structural elements of the challenged back-to-back loan structure. And absent a complete surrender by the Italian Tax Authorities on their underlying "beneficial ownership" theory, there appears to have been no more favorable settlement terms that VimpelCom could have sought to negotiate, than the 12.5% tax rate and waiver of all penalties which it actually achieved.344
213.
Finally, the Tribunal cannot accept the contention that mitigation required VimpelCom to make WAHF litigate the beneficial ownership issue before the tax courts, rather than accept the settlement offer presented by the Agenzia. The outcome in court was not preordained, nor was it certain that a negative outcome would be no less onerous than the settlement proposal. In these circumstances, the decision to settle itself was a form of mitigation of risk.

F. Wind Telecomunicazioni Indemnification Claim

214.
The issues presented in the final indemnification claim, concerning non-application of withholding taxes by Wind Telecomunicazione, are somewhat similar to the withholding tax issues involved in the WAHF Audit. The Tribunal therefore focuses below on the key points, without repeating in full the analysis above.

(1) Background on the Transactions and the Audit

215.
The final matter for which VimpelCom seeks indemnification concerns a settlement with the Italian Tax Authorities, in connection with withholding taxes that its subsidiary Wind Telecomunicazione had not applied to interest payments on certain loans from Italian lenders, primarily backed by foreign credit providers.
216.
In May 2005, Wind Telecomunicazione borrowed some €7.5 billion using an "Italian Bank Lender of Record" ("IBLOR") financing structure. While the Italian banks served as lenders of record, their loan agreement (known as the Credit Facilities Agreement) expressly contemplated that the lenders in turn would execute Credit Support Agreements with "Credit Support Providers" ("CSPs"), to obtain financing for the loans to Wind Telecomunicazione.345 In September 2005, the Italian lenders executed such agreements with foreign CSPs, covering most of the amounts being lent to Wind Telecomunicazione. The terms obligated the Italian banks to relay to the CSPs, within days of receipt, the interest payments they received from Wind Telecomunicazione.346 Over fiscal years 2008, 2009 and 2010, Wind Telecomunicazione repaid the loans with interest, and the Italian banks channeled the payments to the CSPs. Wind Telecomunicazione did not apply withholding taxes on any of the interest payments, taking advantage of Italian tax law provisions that exempted interest payments to resident lenders; by contrast, under Italian law, interest paid directly to foreign lenders would have been subject to withholding tax. Following repayment of the original loans, Wind Telecomunicazione took out new loans in November 2010 through a similar IBLOR structure, but this time it withheld taxes on the interest payments that would be passed on to ultimate non-resident CSPs, in what is known as a "transparent" (versus an "opaque") IBLOR structure.
217.
On 28 November 2013, the Agenzia initiated the Wind Telecomunicazione Audit, requesting certain information and documents related to the 2005 financing structure and the 2008, 2009 and 2010 loan payments.347 As discussed below, the basic issue in this audit was whether the IBLOR structure in substance (even if not in form) constituted loans from the foreign CSPs to Wind Telecomunicazione - albeit passed through intermediate Italian banks - and accordingly whether the CSPs (rather than the Italian lenders) were the true "beneficial owners" of the interest payments.
218.
The Agenzia made its answer to these questions clear on 24 December 2013, roughly a month after initiating the Audit, when it issued a formal tax assessment for the fiscal year 2008. The assessment reflected the Agenzia’s conclusion that the Italian banks were mere intermediaries, that the foreign CSPs were the true beneficial owners of the interest payments, and that the IBLOR structure had been devised to avoid payment of withholding taxes that properly were due under Italian law. Among other things, the Agenzia emphasized that the financing had been "ab initio intended for syndication through an IBLOR structure"; that the was a "strong connection, in fact and in law," between Wind Telecomunicazione’s "Senior Facility Agreement" with the Italian lenders and the Credit Support Agreement those lenders had with the CSPs; that "the structure was chosen in order to be ‘fiscally efficient,’ particularly with regard to the non-application of withholding taxes on outgoing funds"; that the interest payments were not "effectively available" to the Italian lenders, which was relevant under Italian law "more than legal ownership"; and that the Italian lenders maintained no "decision-making autonomy with respect to the lifecycle of the loan."348 Based on these findings, the Agenzia declared a fiscal year 2008 assessment of more than €30 million in withholding taxes plus interest, along with administrative penalties of 150%.
219.
On 14 May 2014, following certain additional discussions with Wind Telecomunicazione (under the guidance of VimpelCom), the Agenzia offered a settlement which would cover withholding taxes for all three years (2008-2010), in a combined amount of €52 million plus interest, but without any penalties.349 On 22 May 2014, Wind Telecomunicazione (with VimpelCom’s concurrence) agreed to settle the audit on these terms, for a total of approximately €61.7 million.350 VimpelCom demanded that OTMTI indemnify it for 72.65% of the settlement amount under the SSEA, which OTMTI refused.
220.
In contrast to the WAHF Audits, there is no dispute that the Wind Telecomunicazione Audit (which followed a formal tax assessment by the Agenzia) fell within the scope of the SSEA’s indemnification obligations. OTMTI does contest any indemnification obligation on separate grounds, discussed below.

(2) Good Faith

221.
First, as with the Wind Telecom and WAHF Audits, OTMTI contends that the Wind Telecomunicazione settlement was not in good faith. The analysis starts in the same place, with a presumption of good faith given that VimpelCom at all times retained at least 27.35% of the exposure, and further understood at the time of settlement that OTMTI disagreed with its decision and would not voluntarily indemnify it for the remaining 72.65%.351
222.
As with the other audits, the presumption of good faith is further supported by the fact that VimpelCom engaged in a process to evaluate Wind Telecomunicazione’s exposure prior to concluding the settlement. This included an effort to investigate the underlying transaction, by meeting with attorneys involved in structuring the underlying loans and the lenders who made those loans, consulting with its internal tax advisors, and obtaining the views of two different outside Italian law firms. VimpelCom’s regular outside counsel in Italy emphasized the prudence of seeking an appropriate settlement. It identified a series of "[d]efensive arguments" that "in principle one could try to argue,"352 but also identified a series of "weaknesses," connected both to the structure of the transaction, the language of the transaction documents, and the "substance over form" approach likely to be followed by the Italian authorities.353 Counsel also noted that the Agenzia was in possession of a presentation that one of the lending banks (BNP Paribas) had made to Wind Telecomunicazione, which specifically highlighted that "a Full IBLOR mechanism will be very difficult to maintain" due to the "high risk of recharacterisation of this structure by tax authorities as [a] mere pass-through designed to optimize withholding tax treatment."354 On balance, given that "the current approach of Italian tax court are generally very tough against taxpayers" in such complex cross-border transactions, counsel advised that "the Company seems to have not high chances to succeed in litigation."355
223.
The second law firm provided two memoranda. The first identified a series of arguments "to demonstrate that the Lenders may not be disregarded and that CSPs may not be considered as beneficial owners of interest" paid by Wind Telecomunicazione. This firm concluded that "the tax authorities’ thesis... seems to be groundless."356 However, following further meetings about "the discussions so far with the Italian tax authorities," the same firm acknowledged that:

when deciding whether to settle or to pursue litigation on a very complex matter, which also involve[s] considerable amounts... it may be not sufficient to evaluate whether strong arguments are available to resist the claim. Unfortunately, as far as complex and international transactions are concerned, the taxpayer runs the risk that its own arguments, even if reasonably grounded, would not be properly understood and evaluated by the Tax Court. This is because Italian judges are not normally familiar with such complex tax issues. Moreover, the recent case-law developments show that, especially when complex and international financial transactions are concerned, the Tax Courts often rule in favor of the Tax Authorities.357

The firm suggested that the defensive arguments previously outlined in any event "may be used strategically in the tax settlement procedure to achieve a satisfactory agreement," which counsel characterized as "at least" (a) distinguishing between "the amounts effectively paid to resident CSPs" and the larger amount passed on to foreign CSPs, (b) as to the latter, obtaining any lower withholding tax rates provided under applicable tax treaties, and (c) obtaining an agreement involving no penalties, which otherwise could be significant.358

224.
The evidence indicates that VimpelCom’s decision to settle the Wind Telecomunicazione Audit was based at least substantially on this appreciation of risk. The same 16 May 2014 Supervisory Board memorandum that addressed the WAHF Audit also summarized management’s concerns about the Wind Telecomunicazione Audit. These included the reality that it was difficult to predict the outcome, because "with respect to IBLOR structures such as ours, no formal position has been taken by the appropriate Italian Governmental bodies." Management understood that there were "valid defensive arguments that can be brought forward in court," but worried that "the Italian courts are currently rather tough towards alleged tax offenders," and were "most skeptical towards complex cross-border financial structures which caused tax erosion from Italy, and which lack solid business reasons (other than saving Italian taxes)." Management noted that both Wind Telecomunicazione’s own head of tax and its regular outside counsel "have advised that it is unlikely that we would end up with a better result" from litigating than from the settlement, and that a "second opinion from other Italian tax counsel [had] reached the same conclusion (although not always based on the same line of thinking). It is therefore probable that a settlement proposal (as currently negotiated) will lead to a better end-result."359
225.
Specifically, management worried that the potential exposure from litigating and losing with respect to all three years of potential assessments (the 2008 assessment already received, and the 2009 and 2010 ones expected) could be in the range of €82 million in unpaid withholding taxes, plus interest and penalties "most commonly" set at 150%, for potential exposure in the range of €205 million.360 As with the other audits, a challenge to the assessment would have required an upfront deposit of roughly 1/3 of the assessment amount, plus interest, and twice that if resort to a court of second instance was required. Balanced against this unpalatable option was the pending settlement offer, predicated on the Agenzia’s agreement "to not apply WHT to Italian recipients and to apply 10% to non-residents," with "[t]he penalties... reduced to 0%," for a total liability of roughly €62 (of which roughly €10 million was interest). Management noted that the Agenzia had imposed a deadline of 20 May 2014 to accept the offer.361
226.
With this understanding of the options, VimpelCom’s management recommended that Wind Telecomunicazione accept the settlement proposal. As with the WAHF Audit, management referenced the possibility of a 72.65% indemnity by OTMTI, which "is helpful and we believe will mitigate our losses. However, we would recommend settlement even if there was no indemnity available in view of the significant risk of higher liability if we do not settle."362 VimpelCom’s Board accepted this recommendation on 19 May 2014 and Wind Telecomunicazione’s Board followed on 21 May 2014363; the settlement was concluded on 22 May 2014. By this time, OTMTI already had informed VimpelCom that it considered the Agenzia’s claims "groundless" and that VimpelCom would "bear all responsibility" for any settlement.364
227.
OTMTI contends that in settling for fiscal years 2009 and 2010 in addition to 2008, Wind Telecomunicazione "deliberately increased its exposure."365 The Tribunal disagrees. The Agenzia had made clear from the commencement of its audit that it was targeting all three fiscal years, for which the exact same IBLO structure was at issue.366 While the December 2013 tax assessment was limited to the 2008 interest payments, apparently because the five-year statute of limitations on assessments for 2008 was about to expire, the contemporaneous evidence demonstrates that VimpelCom believed similar assessments for 2009 and 2010 "will undoubtedly be issued in due course."367 This was hardly an irrational belief, particularly as VimpelCom’s outside counsel had advised it that "[i]t is reasonable that [the Agenzia] will assess, on the same ground, also interest paid in 2009 and 2010."368 The duty of good faith did not require VimpelCom to reject a global settlement offer when presented, and instead insist on the Agenzia’s first pursuing Wind Telecomunicazione for each successive year with a formal tax assessment.
228.
OTMTI’s other contentions about bad faith are echoes of its arguments with respect to the other audits, namely that if VimpelCom were truly proceeding in good faith, it would have (a) more fully involved OTMTI in the defense of the audits,369 and (b) litigated rather than settled, because the available defenses were allegedly so strong - and any "downside" to litigation allegedly so spurious - that declining to litigate cannot have been in good faith. The Tribunal has already discussed these types of contention in connection with the WAHF Audit. The issue of participation will be discussed more below, but on the facts of this case, OTMTI certainly cannot bootstrap an argument about alleged breach of participation rights into a demonstration of bad faith. As for the merits of litigating versus settling, it is not necessary for purposes of a "good faith" analysis to determine which company had a more accurate view of the likelihood of success. So long as VimpelCom in fact believed that Wind Telecomunicazione faced cognizable risks from litigating the assessment, and it formed that belief at least in part on the contemporaneous advice of counsel, there is no basis for finding an absence of good faith.

(3) The Adequacy of Notice and Opportunity to Participate

229.
As with the WAHF Audit, there is no dispute with respect to the Wind Telecomunicazione Audit that VimpelCom complied with its notice obligation to OTMTI under Article 10.7(h)(i) of the SSEA. The Agenzia notified Wind Telecomunicazione of the beginning of its audit on 28 November 2013, and the following day (29 November 2013) VimpelCom forwarded the Agenzia’s notice to OTMTI.370 OTMTI confirmed receipt of this notice on 1 December 2013.371
230.
Again, the debated issue is whether VimpelCom thereafter complied with the obligation to "coordinate" with OTMTI "in the taking of any action relating to the conduct of such Tax audit or inquiry actions," and to "use its reasonable efforts to include a representative appointed by [OTMTI] in any meeting or material telephone call arranged by VimpelCom... with a representative of the relevant Taxing Authorities."372 OTMTI contends that VimpelCom breached these various duties, and thus failed to provide it with a "meaningful opportunity to participate in the defense and settlement."373 Specifically, OTMTI argues that VimpelCom "repeatedly and consistently excluded OTMTI from participating in the preparation of submissions to, and meetings and telephone conferences with, the Agenzia."374
231.
The evidence does not support this assertion. During the initial period between notice of the audit and the Agenzia’s issuance of the tax assessment, VimpelCom primarily was engaged in gathering materials to respond to a questionnaire the Agenzia had provided, with a two-week deadline. VimpelCom sent OTMTI a copy of that questionnaire on 29 November 2013, the day after the Agenzia sent it, and suggested a call for the Parties to "work out how best to handle the request amongst themselves."375 The Parties thereafter continued to communicate regarding gathering relevant documents, and VimpelCom invited OTMTI to participate in calls with tax counsel and one of the lenders involved in structuring the loans.376 While OTMTI complains that VimpelCom only provided it a draft response to the questionnaire on 12 December 2013, the day before it was due,377 there is no evidence suggesting that the draft had been prepared much earlier than that, and indeed this seems unlikely given the Parties’ struggle over the last two weeks to locate the relevant information. OTMTI’s complaint that the draft initially was sent without attachments does not advance its cause, particularly given the evidence that this was because of difficulty uploading large files and that VimpelCom instead invited OTMTI’s counsel to view the attachments in its office.378 While it is unfortunate that this combination of events resulted in OTMTI’s comments not being received in time to incorporate them in the questionnaire response, there is no reason to believe that these comments would have shifted the Agenzia’s views so dramatically as to ward off the assessment it issued on 24 December 2013
232.
Following that assessment, the Parties had numerous communications regarding how to respond, and VimpelCom invited OTMTI to attend meetings and calls with the lenders and their counsel to develop further information and arguments; VimpelCom also invited OTMTI to attend meetings with the Agenzia in January and February 2014.379 In February 2014, OTMTI agreed to VimpelCom’s suggestion that Wind Telecomunicazione submit a "request for mutual agreement" to the Italian Tax Authorities, although it expressed its view that such discussions should not bind Wind Telecomunicazione to accept a settlement, and that "litigation may well be the best option available to Wind, eventually."380 Thereafter, VimpelCom sought and incorporated OTMTI’s input on a legal memorandum regarding penalties,381 and invited OTMTI to attend further meetings with the Italian Tax Authorities in March 2014.382 The Parties met to discuss "estimates of potential claim and/or settlement amount[s] under different scenarios,"383 and VimpelCom passed on to OTMTI the Agenzia’s views on the appropriate withholding tax on the interest paid for the years 2008, 2009 and 2010.384
233.
As with the WAHF Audit, OTMTI’s principal complaint appears to involve the April and May 2014 time period, in which it alleges that VimpelCom "began to exclude OTMTI from meetings" about the two audits and did not "fully disclos[e]... the substance" of settlement discussions.385 With respect to the allegation of deliberate exclusion, OTMTI focuses on the same 14 April 2014 meeting with the Agenzia that the Tribunal discussed in connection with the WAHF Audit, but the evidence (discussed in Section IV.E.4) shows that VimpelCom tried to reschedule this to accommodate OTMTI’s participation.
234.
Beyond this meeting, which clearly does not reflect any actionable failure to coordinate, the real issue between the Parties was not lack of coordination, but simply divergent views on the advisability of presenting certain arguments to the Agenzia. Specifically, in mid-to-late April 2014, VimpelCom debated internally the potential validity of certain additional defense arguments that one of the outside law firms had raised, the principal one of which was referred to in short-hand as the "lender" argument. The thrust of this argument was that it was the Italian bank lenders that had the obligation to withhold any taxes based on their contractual relationship with the CSPs, and not Wind Telecomunicazione’s obligation to do so.386 The argument apparently had been included in a prior memorandum to the Agenzia, and the question was whether to now emphasize it more forcefully. VimpelCom’s regular outside counsel did not consider it likely to "sway" the Agenzia, particularly in the context of a "mutual agreement" procedure. VimpelCom’s internal counsel likewise felt "the argument may not hold," given the Agenzia’s consistent view that "the IBLOR structure is an artificial imposition of Italian banks," but agreed that it could be emphasized as a further point to try to obtain a favorable approach towards penalties.387
235.
While the issue was being discussed internally, on 2 May 2014 OTMTI sent VimpelCom a summary of the same potential arguments. VimpelCom responded that "we have already considered these arguments... in detail and have advanced them verbally in meetings" with the Agenzia, but the Agenzia "has stated unequivocally on a number of occasions that the procedure in course is aimed at discussing a possible settlement and trying to reach an agreement on the figures as opposed to discussing an annulment of the assessment," and that "[t]he appropriate forum to seek an annulment is the tax courts,"388 the litigation course that settlement discussions were trying to avoid. VimpelCom explained to OTMTI that "[h]aving been given this clear message, our objective to date in discussing these and other defensive arguments with the [Agenzia] has been to give the a firm indication of how we would challenge the audit before the tax courts in order to encourage the [Agenzia] to reduce penalties as much as possible." As a matter of strategy, VimpelCom believed that submitting further written memoranda at this point on liability issues "could prejudice our chances of obtaining a favorable settlement offer," and in any event VimpelCom did not consider the additional arguments strong in their substance.389 Nonetheless, the next day VimpelCom apparently did reach out to the Agenzia to request a meeting "to discuss these arguments." The Agenzia advised that "they do not see any reason to meet again until they have completed their analysis because they already have a very clear view on our arguments," including this argument.390
236.
This exchange demonstrates a difference in opinion about the strength of potential arguments, and the tactical impact of raising them further at a given point. What it does not reflect is a breach of VimpelCom’s duties under the SSEA. The SSEA does not require the Parties to reach agreement on issues of strategy, only that reasonable efforts be made to coordinate with OTMTI, while OTMTI retained the ultimate right to decide in good faith whether to reach a reasonable settlement.
237.
Finally, OTMTI makes much of an internal VimpelCom discussion on 20 May 2014, after VimpelCom’s Board already had approved the settlement proposal, about whether to share with OTMTI a draft appeal VimpelCom had prepared to file in court, in the event the settlement was not concluded within the applicable window for the "mutual agreement" procedure.391 As OTMTI notes, VimpelCom debated not sharing the document with OTMTI, because it feared this would "complicate things" by emboldening OTMTI to argue that the strength of the arguments included in the draft appeal demonstrated the viability of litigating rather than settling.392 There is nothing nefarious about having this debate, in circumstances where the Parties already had staked out opposite positions on whether to litigate or settle, and where it was clear that VimpelCom viewed the document only as a contingency in the face of a pending appeal deadline.393 In any event, VimpelCom did end up sharing the document with OTMTI the next day, along with an explanation that any filing would be "purely as a technical matter in order to safeguard our position and preserve our rights."394 In other words, VimpelCom portrayed the document to OTMTI in precisely the same terms as it viewed it internally. Ultimately, it proved unnecessary to file the document at all, as the Agenzia concluded the settlement within the applicable time window and on the terms that VimpelCom had found reasonably acceptable. Nothing in this episode reveals a failure to coordinate in breach of VimpelCom’s SSEA obligations.

(4) Reasonableness of Settlement

238.
The Tribunal likewise concludes, as with the WAHF Audit, that VimpelCom’s decision to settle and the terms of the resulting settlement were objectively reasonable, in the sense that exposure was lower than Wind Telecomunicazione possibly might face as an adverse judgment, if it declined to settle and insisted on litigating in court.
239.
OTMTI’s principal objection is that the defense arguments "would have prevailed" in litigation.395 It identifies a series of arguments that, in its view, were bound to succeed in court.396 As alleged confirmation of the inevitability of success, OTMTI invokes a late 2015 decision of a first-instance Italian court (referred to as the "Seat" decision),397 which successfully challenged an assessment of withholding taxes on interest paid under an IBLOR structure. The Seat case was litigated by the same outside counsel VimpelCom had consulted for a second opinion with respect to the Wind Telecomunicazione Audit, and who (as discussed above) had provided two memoranda for its consideration. According to OTMTI, the Seat case demonstrates that "the Agenzia’s challenge to Wind Telecomunicazione’s use of this well-established financing structure was meritless," and that Wind Telecomunicazione similarly "would have prevailed in a litigation challenge to the Agenzia’s assessment."398
240.
The Tribunal is unable to accept this outcome as a categorical certainty or even as highly likely and carrying minimal risk. While OTMTI summarizes the strengths of the potential defense arguments, VimpelCom sets forth the counter-arguments that potentially supported the Agenzia’s position in support of a substance-over-form analysis of the IBLOR structure.399 When VimpelCom was weighing these various arguments and counter-arguments, there was no particularly applicable case-law on the issue, a fact that its regular outside counsel expressly emphasized in delineating the risks.400 The future decision in the Seat case by definition was not available for consideration in 2014. The IBLOR structure in the Wind Telecomunicazione Audit also had certain distinguishing features, including that the Italian banks bore less risk than those in the Seat IBLOR structure. The presence of these risks was a significant factor, to the Seat court, in recognizing the Italian banks as true beneficial owners of the interest payments.401 Even apart from these distinguishing features, the fact is that the outcome was far from pre-ordained at the time VimpelCom was facing a decision about whether to settle or litigate. Indeed, the very outside counsel who eventually brought the Seat challenge, and who initially appeared enthusiastic about assisting Wind Telecomunicazione to assert similar defenses,402 subsequently cautioned that the outcome was far from certain. Among other things, he acknowledged that "as far as complex and international transactions are concerned, the taxpayer runs the risk that its own arguments, even if reasonably grounded, would not be properly understood and evaluated by the Tax Court," and that "recent case-law developments show that, especially when complex and international financial transactions are concerned, the Tax Courts often rule in favor of the Tax Authorities.403 In these circumstances, it was not unreasonable for VimpelCom to adopt a conservative approach towards risk management. The fact that Seat may have been less risk averse, and willing to take its chances in court, does not render VimpelCom’s contrary judgment call beyond the realm of reasonable discretion.
241.
Nor, for the reasons generally discussed in connection with the other audits, can the Tribunal accept OTMTI’s argument that there was no objective downside to Wind Telecomunicazione’s attempting litigation. OTMTI argues that "even if Wind Telecomunicazione’s litigation challenge failed, its exposure would not have increased,"404 because the settlement terms were "equivalent to its worst case scenario in litigation."405 But this depends on accepting several propositions which are neither clear today, nor more importantly were highly likely and carrying minimal risk at the time VimpelCom faced its decision. The first proposition is that there was no scenario under which Wind Telecomunicazione could have faced a higher withholding tax rate than the 10% rate with which the settlement was calculated.406 But the Agenzia’s assessment for 2008 had started out asserting entitlement to the higher statutory rate of 12.5%, and it appears that the 10% rate was achieved by convincing it to take into account tax treaties in force with the various jurisdictions where the foreign CSPs were based, even absent formal requests from the CSPs to apply the treaties and certificates from their revenue agencies.407 This reduction was one of the key objectives identified for the negotiations by the outside counsel brought in for a second opinion - the one who later litigated the Seat case408 - and there is no guarantee that a tax court ruling against Win Telecomunicazione after protracted litigation would have been as willing to recalculate the rates from the amounts set forth in the formal assessment.409
242.
The second proposition on which OTMTI’s "no downside" argument depends is that any penalties would have been waived following a court proceeding, due to the uncertainty of the tax rules applicable to IBLOR structures.410 However, the Agenzia had begun by claiming penalties at 150% in its 2008 assessment. In a litigation context, it could have countered Wind Telecomunicazione’s arguments about "objective uncertainty" by invoking the BNP Paribas memorandum, which expressly warned Wind Telecomunicazione at the time of the transaction of the "high risk" the authorities would recharacterize an opaque IBLOR structure as a "pass-through" designed to avoid withholding taxes.411 It was certainly reasonable to worry that a tax court might be disinclined to waive penalties in the face of concrete evidence that a company had been cautioned about the risk of tax scrutiny but evidently disregarded that warning. Whatever the contours of the doctrine of "objective uncertainty," a court might well factor in any significant countervailing proof of subjective foreknowledge, which the Agenzia had ready to deploy in this case.
243.
In these circumstances, it was reasonable for VimpelCom to conclude that losing a challenge in the courts might expose it to substantially higher liability than settling the case. The settlement offer achieved the specific goals that outside counsel had identified for such negotiations, namely reduction of the tax rate to account for tax treaties applicable to the foreign CSPs and a complete waiver of penalties.412 There is no evidence that Wind Telecomunicazione could have achieved better terms in the settlement, and no basis for concluding that a complete victory in litigation was self-evident or highly likely with minimal risk. The fact that (as with the other Audits) Wind Telecomunicazione would have had to make a court deposit of 1/3 of the assessed amount plus interest, even to challenge the assessment, and then could face a significant tax collector’s fee if it lost in court, also factors into the reasonableness of the settlement decision.

(5) Mitigation of Loss

244.
Finally, OTMTI has not demonstrated that VimpelCom failed to exercise due diligence in preventing foreseeable loss, and therefore violated its mitigation obligation under Article 10.7(f)(C). The evidence demonstrates that VimpelCom investigated the challenged transaction and obtained outside legal advice on the relevant issues of Italian tax law.
245.
OTMTI’s contention that VimpelCom failed to mitigate rests primarily on two assertions that parallel its objections with regard to the WAHF Audit: (1) that mitigation required VimpelCom to do more to "obtain[] OTMTI’s assistance with... the substantive issues,"413 and (2) that mitigation required VimpelCom to "pursue aggressively.. the persuasive defenses that [it] should have asserted, including in litigation."414 As to the former, the Tribunal already has noted that the SSEA’s mitigation clause cannot be read as requiring more participation than the SSEA’s consultation and coordination provisions themselves require. OTMTI could have bargained for the greater option of participating in or even assuming the defense, as it did in Article 10.7(b) for non-tax claims, but it chose to accept lesser rights. It cannot undo that choice by arguing that a general duty to mitigate foreseeable losses required VimpelCom to involve OTMTI more meaningfully in conducting the defense.
246.
With respect to OTMTI’s insistence that "VimpelCom’s obligation to ‘use[] all reasonable efforts to mitigate’ Losses required that it litigate the strong defenses available... rather than agree to a settlement,"415 the Tribunal likewise has rejected the equation of mitigation with a duty to litigate. Moreover, given that the outcome in court was not pre-ordained, and that it was not clear that a negative outcome in court would be no more burdensome than the settlement proposal on the table, the decision to settle itself may be seen as a form of mitigation of risk.

G. Quantification of Damages

247.
For the reasons set forth above, the Tribunal has found that OTMTI breached its obligation to indemnify VimpelCom for 72.65% of Losses resulting from a good faith and reasonable settlement of the Wind Telecom, WAHF, and Wind Telecomunicazione Audits. The quantification of indemnifiable Losses follows from the SSEA’s definition of the term, which covers "any and all liabilities, losses, damages, claims, fines, penalties, costs and expenses, including, without limitation, reasonable attorneys’ and accounting fees."416 The only potential reduction to indemnifiable Losses is to the extent any portion of VimpelCom’s Losses was not "effectively... sustained", because it was offset by tax savings or carry-forward deductible tax losses from which VimpelCom benefitted or could have benefited.417 Beyond this issue, the Parties agree that, with respect to any liability determined by this Tribunal, VimpelCom is entitled to an award of interest, although they differ on an appropriate rate. These issues are addressed in turn below.

(1) OTMTI’s "Losses" for Audit Settlement Amounts and Related Costs

248.
The amounts paid in settlement of the three Audits are not in dispute. While the settlement amounts were paid in installments, each installment has now been paid in full. For the Wind Telecom settlement, the total amount paid to the Italian Tax Authorities (rounded to the nearest Euro as per CE-359, the interactive Excel spreadsheet provided by VimpelCom’s expert for calculation of damages)418 was €31,464,594419; for the WAHF Audit, it was €83,769,224; and for the Wind Telecomunicazione Audit, it was €61,759,373, consisting of €29,702,419 for fiscal year 2008, €19,369,909 for fiscal year 2009, and €12,687,045 for fiscal year 2010.420 The total amount paid in settlement of the three audits was thus €176,993,191.421
249.
There is no dispute that the indemnification obligation also covers "reasonable attorneys’ and accounting fees" incurred in connection with the Italian Tax Audits, consistent with the definition of Losses in SSEA Article 10.2(a).422 VimpelCom presented evidence of such fees and associated taxes, for a total amount of €3,187,889 (rounded to the nearest Euro), again subject to any potential offset for tax savings.423 The Tribunal accepts these as reasonable in the circumstances.
250.
Pursuant to the SSEA, OTMTI’s indemnification obligation will be 72.65% of these total VimpelCom costs, after any offsets for tax savings, an issue that is first discussed below.

(2) The Tax Savings Issue

251.
The next issue is whether VimpelCom’s total Losses should be adjusted to reflect any tax savings that were obtained or were available to it as a result of the settlements. Under Article 10.7(d) of the SSEA,

a Loss shall be eligible for indemnification to the extent and only to the extent such Loss has effectively been sustained by the Indemnitee. Any indemnification due by the Indemnitor shall be calculated taking into account the value of (i) any Tax savings obtained by the Indemnitee Group and/or (ii) any increase in the amount of Tax losses available to them for carry-forward or carry-back and, in each case, resulting from the tax deductibility of the relevant Loss.

252.
As evident from the structure of this Article, it addresses potential offsets in two different scenarios. The first, covered by clause (i) of Article 10.7(d), is where the Wind Group actually "obtained" tax savings, because of "the tax deductibility of the relevant Loss." This is a straightforward factual question, which looks solely to past events, i.e., whether the Wind Group in fact claimed and received any tax deductions on account of any component of an otherwise indemnifiable Loss. In this case, there is no dispute that it has not done so with respect to the amounts paid in settlement of the Audits.424 VimpelCom admits, however, that the Wind Group did take a tax deduction in connection with the professional fees incurred in connection with the Audits.425 By straightforward application of Article 10.7(d), first clause, VimpelCom’s indemnifiable Losses must be reduced for "the value" to the Wind Group of this tax deduction. The Tribunal considers the reference to "value" to refer to the amount of tax savings actually achieved, taking into account the tax consolidation regime that was in place for the Wind Group even prior to SSEA.426 VimpelCom has demonstrated that "the effects of tax consolidation meant that the deductions resulted in no tax savings or valuable tax benefits to the Wind Group" with respect to the professional fees, except for €33,884 (rounded to the nearest Euro) in regional tax savings obtained by Wind Telecomunicazione.427 An offset should be allowed for these savings, reducing VimpelCom’s total Loss associated with professional fees from €3,187,889 to€3,154,005.428
253.
However, clause (ii) of Article 10.7(d) also covers a second scenario, which is where tax savings from an otherwise indemnifiable Loss have not yet been "obtained," but where the Loss results in "any increase in the amount of Tax losses available to [the Wind Group] for carry-forward or carry-back" (emphasis added). This is a more complicated provision, as it presents the question of what it means for the losses to be "available... for carry-forward"429 use as a tax deduction, and for the Parties to "tak[e] into account the value of’ such "available" tax-deductible losses. The Parties agree that the threshold requirement is that the particular loss be legally available, in the sense of being of a tax-deductible nature under Italian law.430 The harder question is whether, if a particular loss is legally of such a deductible nature, the references to "availability" and "value" also contemplate an inquiry into whether tax savings would be (or could have been) achievable as a practical matter, in the sense that the Wind Group could obtain actual benefit from such a carry-forward loss.
254.
In principle, this could require a several-step inquiry. The first step would be to determine, as of the date of the Award, not only whether the Wind Group actually had applied the carry-forward loss to its benefit in any tax filings, but also whether it could have achieved any "value" from doing so, given other aspects of its performance and its applicable tax regime. The Tribunal sees logic to undertaking this inquiry, which could have been foreseeable to the Parties at the time they agreed to arbitration under the SSEA. It ensures that an indemnitee does not benefit at the indemnitor’s expense from failing to take a legally available deduction from which it demonstrably would have derived "value," in amounts that a tribunal can calculate with reasonable certainty as of the date of the Award. The incentive is on the indemnitee to try to pursue all legally available deductions, with the understanding that if it does not and an arbitral tribunal later finds that it could have obtained value by doing so, the consequence is for its account. VimpelCom does not challenge this conclusion, at the level of principle.431
255.
However, the Tribunal has greater reluctance regarding further steps that look beyond the date of the Award, to consider not only whether there are scenarios under which the Wind Group still might be able to obtain value from any future carry-forward of past deductible losses, but also what the projected future "value" of such theoretical future offsets might be, or what mechanisms might be used in future to determine that question. This analysis could lead the Tribunal down a tricky path requiring it to decide (a) how many years should be covered by such a forward-looking inquiry, particularly given the Parties’ agreement that under Italian law, tax-deductible losses in principle can be carried forward indefinitely; (b) how to address the reality that any future tax benefits inevitably will depend not only on future taxable income, but also on future tax planning, made in the context of the known content of an arbitration award; (c) how certain the likelihood of future taxable income and the amount of such income must be, to avoid utter speculation about the value of any future tax savings; and (d) how to manage the contingency that the future expected savings might not materialize in toto or to the same degree as previously anticipated. It is far from clear that the Parties intended an arbitral tribunal to delve into such issues, which would also create an inevitable recipe for further (post-Award) disputes.
256.
On balance, the Tribunal concludes that the second clause of Article 10.7(d) should be given more circumscribed focus. It will consider the legal inquiry about tax deductibility under applicable law, and the non-speculative factual inquiry into whether the Wind Group could have achieved any "value" up through the date of the Award by taking advantage of legally available tax deductions. As discussed further below, the Tribunal also will address certain immediately foreseeable issues the Parties have briefed with respect to possible tax savings from deferred interest payments made in 2016 and 2017. It declines, however, to engage in the far more speculative analysis of whether there are scenarios under which the Wind Group might obtain further tax savings beyond that.
257.
Beginning this analysis with the issue of deductibility, there is no dispute that back taxes and any penalties paid in connection with back taxes are not deductible under Italian law.432 The question of deductibility therefore focuses only on the interest component of the settlement amounts. There are two types of interest at issue: "late payment interest" on back taxes, and "deferral interest" paid on settlement installments.433 OTMTI contends that both are deductible under Italian law;434 VimpelCom contends that deductibility is "uncertain under Italian tax law."435 The Tribunal considers it notable, however, that this is not the view the Wind Group apparently adopted at the time it was considering the Wind Telecom settlement, when one of its senior internal tax advisors remarked that the company could take "comfort" from the tax deductibility of the interest component.436 There is no evidence to suggest that VimpelCom was subsequently advised otherwise prior to this arbitration, nor indeed that it even made an effort to consider the question, at the time the relevant tax returns were being compiled. Certainly, the record is devoid of any suggestion that VimpelCom actively determined, at any time prior to this arbitration, that the Wind Group had no legitimate basis for claiming an interest deduction.437 Given its obligations under Article 10.7(d), and that it was placed on notice of a potential tax deduction by its own senior tax professional, VimpelCom at minimum was obliged to explore the possibility of such a tax saving.
258.
The fact that it evidently did not do so puts the Tribunal in the position of evaluating deductibility solely on the basis of non-contemporaneous assessments by the two expert witnesses presented by the Parties. The Tribunal concludes that ultimately OTMTI’s expert is more persuasive on this issue, particular in light of certain Italian law materials cited in support of deductibility. The fact that the contemporaneous "first reaction" of the Wind Group’s senior tax advisor also was to assume deductibility further corroborates the conclusion, drawn from the relevant Italian law materials, that a deduction was more likely to be allowed than to be disallowed.438
259.
Accordingly, the Tribunal concludes that a claim for deduction of interest payments more likely than not would have been accepted as bona fide. The question then turns to whether taking such a deduction would have led to any "value" for the Wind Group, over the non-speculative period of time represented by the years between the accrual of the Losses and the Tribunal’s Award. The Tribunal accepts the analysis of VimpelCom’s expert that under the accrual principle in Italian law, the "late payment interest" accrued in fiscal year 2013 for the Wind Telecom settlement, and no later than fiscal year 2014 for both the WAHF and Wind Telecomunicazione settlements, rather than in the later periods when such interest payments actually were paid.439 By contrast, VimpelCom accepts that the "deferral interest" accrued over the duration of the installment payment periods for each settlement, which ranged from 2013 to 2017, and that the relevant portions accruing in 2015, 2016 and 2017 could at least "hypothetical[ly]" have "value" as tax deductions.440
260.
First, with respect to the late payment interest and deferral interest that accrued in 2013 and 2014, the Tribunal accepts that even a retrospective amendment of the returns for 2013 and 2014 would achieve no tax savings for the Wind Group in those years, because the Group had other operating losses and deductions for 2013 and 2014 that left it with no tax liability in any event.441 Orascom does not dispute the showing that, on an accrual basis, the Wind Group could not have realized any tax savings in 2013 or 2014. On the other hand, because Italian law apparently allows a taxpayer to carry forward losses indefinitely - at least to the extent of using such losses to offset up to 80% of taxable income for a subsequent year - it is relevant that the Wind Group apparently did have taxable net income in 2015. However, it apparently claimed the 80% maximum carry-forward that year based on other losses. Because its prior years’ losses were so great, the 80% limitation meant that even enhancing the earlier loss carry-forwards - by adding the 2013 and 2014 interest payments - would not have generated any tax saving for 2015.442
261.
By contrast, with respect to the deferral interest that accrued in 2015, VimpelCom appears to concede that, because the Wind Group had net income in that year, there would have been certain tax savings if it had claimed deductions.443 Its decision not to do so is therefore for its account, and its indemnifiable Losses must be reduced to reflect the tax savings that it could have achieved. VimpelCom calculates these savings for fiscal year 2015 as €92,067.444 By contrast, OTMTI calculates the 2015 savings as €212,897.445 While the respective calculations are somewhat murky, the Tribunal notes that OTMTI cites to underlying documents, while VimpelCom offers its figure through an expert who does not cite any underlying evidence for his figures. On balance, the Tribunal is willing to credit OTMTI’s figures for this purpose. VimpelCom’s indemnifiable Losses therefore should be reduced for a further €212,897 that it could have obtained in connection with the 2015 deferral interest.446
262.
Given when the evidentiary record in this case closed - the final submissions on the tax savings issue were provided in April 2017 - the Tribunal has no information before it with regard to taxable income or deductions for fiscal year 2016, for which tax filings in Italy apparently were due only in the second half of 2017. By definition, the Tribunal likewise has no information about the future tax position for fiscal year 2017 (when the last settlement instalment was made). As for these periods, OTMTI correctly notes that VimpelCom’s duty to try to obtain available tax savings does not end in 2015, because the SSEA requires it to undertake "all reasonable steps to try to recover from a ‘third party’" any sums which could be the subject of an indemnification claim,447 and if so recovered, to share such recovery with OTMTI pro tanto.448 The Tribunal accepts that, if circumstances were to make it possible for the Wind Group to obtain tax savings in connection with the Audits for fiscal years 2016, 2017 or beyond - either through a further carry forward of the 2013-2014 accrued late payment interest, or through deductions of the final 2016-2017 deferral interest instalments - then VimpelCom would have a duty either to take steps to cause the Wind Group to achieve that value, or alternatively to make OTMTI whole for the consequences to OTMTI of any decision not to do so.
263.
As to the first of these categories - a potential further carry-forward of the 2013-2014 late payment interest on the Wind Teleom settlement - VimpelCom declares this to be an entirely illusory possibility. It points to (a) a 2016 decision to "deconsolidate" the Wind Group tax regime, and (b) a corporate restructuring resulting in Wind Telecom (the prior owner of any carry-forward losses) having no operations of its own or any continuing equity stake in WAHF or Wind Telecomunicazione, that could enable it (on a Group basis) to offset its past carry-forward losses against their potential income.449 OTMTI responds that, under Article 10.7(f)(B) of the SSEA, OTMTI’s right to a tax offset must be calculated as if no such changes had taken place.450
264.
The Tribunal is unpersuaded by OTMTI’s interpretation. Article 10.7(f)(B) provides that OTMTI "shall not be held liable for indemnification with respect to a Loss or increased portion of a Loss" to the extent attributable to "any change in accounting methods (including consolidation methods) or policies of the Indemnitee after Closing." Had VimpelCom or its subsidiaries taken accounting steps after the SSEA which either triggered a tax audit or increased exposure in a pending audit, the provision might apply. In this case, however, the indemnifiable "Losses" were defined and fixed by the 2013-2014 Audit settlements, and the 2016 change in consolidation policies and corporate restructuring did not alter the amount of those Losses. Even if those changes might affect the Wind Group’s theoretical ability to use loss carry-forwards, it is far from clear that Article 10.7(f)(B) was intended to cover such circumstances, and force the Parties to undertake for each future year a pro forma reconstruction of the tax situation, as if what actually occurred had never occurred. There is no contention (much less evidence) that VimpelCom made any of these changes in order to enhance OTMTI’s indemnification burden, nor that the Wind Group is itself somehow enjoying a tax benefit that it is not sharing with OTMTI. Moreover, it appears that the policy of retaining any tax losses at the level of the individual business units, such as Wind Telecom, was adopted back in 2009, when OTMTI still owned the Wind Group.451 The fact that several years after the Audit Losses were fixed - and several years after OTMTI repudiated its obligation to contribute 72.65% of the Audit settlement amounts - Wind Telecom came to no longer own equity in other Group companies, is not a development for which the SSEA requires VimpelCom to prepare alternate-university tax computations to compensate OTMTI for its share of alternate-universe deductions from which the Wind Group itself did not obtain any value.
265.
This leaves the question of the final 2016-2017 deferral interest installments for the WAHF and Wind Telecomunicazione settlements, which VimpelCom appears to concede would be deductible if those entities had net taxable income in those years (which the Tribunal cannot determine). Using OTMTI’s calculations for the same reason stated with respect to the 2015 deferral interest, VimpelCom’s maximum tax savings for these years (rounded to the nearest Euro) would be €354,726 for 2016 and €79,208 for 2017,452 which - after applying the SSEA’s 72.65% formula - would result in a further reduction in OTMTI’s obligations of €257,708 and €57,545, respectively (prior to application of any interest). The Tribunal already has noted VimpelCom’s duty to take reasonable steps to achieve tax savings on these payments, or to make OTMTI whole for the consequences to OTMTI of any decision on its part not to do so. It trusts that VimpelCom will ensure a prompt payment or credit to OTMTI, if these entities do prove to have net taxable income in these years. However, it is not the role of the Tribunal to create mechanisms to enable the Parties to police compliance with such future obligations. For this reason, the Tribunal declines OTMTI’s request that it impose specific reporting obligations on VimpelCom regarding its taxable income, other deductible losses, or tax filings for 2016, 2017, or the years beyond.453
266.
In conclusion, and for the reasons stated above, the Tribunal declines any offsets under Article 10.7(d) to VimpelCom’s total Losses, for purposes of calculating OTMTI’s 72.65% share, except for (a) an offset of €33,884 to VimpelCom’s full cost incurred in connection with professional fees, to reflect its actual tax savings; and (b) an offset of €212,897 to VimpelCom’s total Losses for the tax savings the Wind Group could have achieved had it claimed an available deduction in 2015 for the the deferral interest accruing in that year. The Tribunal has taken these into account in calculating OTMTI’s resulting indemnification obligations, with adjustments noted on the interactive Excel spreadsheet provided for its use.454 With respect to the 2016 and 2017 deferral interest, the Tribunal maks no adjustment to the Excel spreadsheet or to the damages calculations in this Award, but confirms VimpelCom’s contingent duty to reimburse OTMTI for €257,708 and €57,545 respectively, plus applicable interest, if