Claimant v. Respondent

The claimant is [Claimant] ("[Claimant]" or "Claimant"), a société anonyme created and organized under the laws of Greece, having its headquarters in [Redacted], Greece.

Claimant is represented in this Arbitration by:

• Mr. [Person 3]
Attorney at Law
[Redacted]
[Redacted]
GREECE
Tel: [Redacted]
Fax: [Redacted]
Email: [Redacted]
[Redacted]

• Prof. Dr. [Person 4]
Attorney at Law
[Redacted]
[Redacted]
GREECE
Tel: [Redacted]
Fax: [Redacted]
Email : [Redacted]

The respondent is [Respondent] ("[Respondent]" or "Respondent"), a société anonyme created and organized under the laws of Italy, having its headquarters in [Redacted], Italy.

Respondent is represented in this Arbitration by:

Mr. [Person 5]
Ms. [Person 6]
[Redacted]
[Redacted]
ITALY
Tel: [Redacted]
Fax: [Redacted]
Email: [Redacted]
[Redacted]

The dispute that is the subject matter of this arbitration has arisen in connection with the performance of a Consortium Agreement dated 10 February 2016 (the "Consortium Agreement") between the Parties "for [Redacted] [...]" (the "Project").

Article 14 of the Consortium Agreement (the "Arbitration Agreement") provides:

"The PARTNERS shall make every attempt to resolve amicably all differences concerning the interpretation of this Contract and the execution of the work. Any dispute or disagreement which cannot be resolved by the PARTNERS and any controversy, claim or dispute otherwise arising from or in connection with this agreement or with the Project shall finally be subject of judgement of the International Arbitration Court of Paris. The award in the Arbitration proceedings shall be final and binding upon the Parties. [...]"

Article 15 of the Consortium Agreement [Applicable Law] provides:

"The Agreement shall be deemed to be an Agreement made under and governed solely by and construed in accordance with the Law of Italy."

Claimant initiated this arbitration by a Request for Arbitration dated 15 May 2018 received by the Secretariat (the "Secretariat") of the International Chamber of Commerce’s International Court of Arbitration (the "Court") on 14 June 2018, together with exhibits C1 to C8.

In the absence of any agreement to the contrary pursuant to Article 6(1) of the ICC Rules of Arbitration, the version of these rules applicable is that on force as of 1 March 2017 (the "ICC Rules").

Since the Parties have not agreed on the sole arbitrator to be appointed, on 23 August 2018, the ICC Court appointed Ms. Vanessa Thieffry, 45 rue de Tocqueville, 75017, France, tel: [Redacted], fax: [Redacted], email: [Redacted] as sole arbitrator (the "Sole Arbitrator"), upon the French National Committee’s proposal.¹

The same day, the Sole Arbitrator acknowledged receipt of Claimant’s Statement of Claim, and noted that Claimant:

• proposed, as factual witness, Mr. [Person 7], but that no witness statement has been filed; as a consequence, she referred to paragraphs 34 to 38 of Procedural Order No. 1 of 21 September 2018 ("PO No. 1")requiring a party wishing to rely on witness evidence (be it factual or expert) to file witness statements with their submissions, within the form prescribed at paragraph 36 of PO No. 1;

• submitted, amongst its exhibits: (i) two exhibits in the French language (C29 and C31), and (ii) one exhibit in the Italian language (C19), when English is the language of the arbitration per the parties’ agreement², and pursuant to PO No. 1, "[a]ll exhibits other than those in English shall be submitted in their original language, together with a translation into English. [...]."³

In light of the above, the Sole Arbitrator invited:

• Respondent to comment, as soon as possible and by 13 November 2018 at the latest, on exhibits C29 and C31, and more specifically to clarify whether it agreed with their being submitted in the French language or whether it required them being translated (in relevant parts) into English;

• Claimant to submit, as soon as possible and by 16 November at the latest: (i) a witness statement of Mr. [Person 7] in accordance with paragraphs 34 to 38 of PO No. 1, and (ii) a translation, at least in relevant parts, of exhibit C19, as per paragraph 23 of PO No. 1.

Consequently, she drew Respondent’s attention to Section 3 of PO No. 1, and more particularly to paragraphs 17, 20, and 21 thereof, pursuant to which, inter alia:

• Exhibits shall "be numbered consecutively throughout this Arbitration";⁴
• "[T]he number of each exhibit submitted by Respondent shall be preceded by the letter "R";⁵ 
• "The exhibits filed shall be accompanied by a list specifying the number of the exhibit, the nature of each document, its date and its author. The list of exhibits shall be updated with each new submission of a Party and each updated list of exhibits shall include all exhibits filed by the Party since the beginning of this Arbitration".⁶

On 27 November 2018, a Second Case Management Conference was held, by way of a telephone conference, to organise the hearing of 4 December 2018 (the Hearing) and its schedule.

The following persons attended:

• For Claimant: Professor [Person 4] (as external Counsel), Mr. [Person 3], and Mr. [Person 7] (as witness);

• For Respondent: Ms. [Person 6];

• For the Arbitral Tribunal: Ms. Vanessa Thieffry, Sole Arbitrator

Throughout the Hearing, the following issues were discussed inter alia:

• in response to Claimant’s request for a finding that the Sole Arbitrator has jurisdiction to hear this case, Respondent confirmed that it had no objection to such jurisdiction;

• a number of translations of documents into the language of the arbitration were to be provided by the Parties;

• Claimant’s claim that the Sole Arbitrator issues an order that "Respondent comply with its obligation under Article 4(h) of the Agreement to disclose all documents and information relating to payments that the Respondent has received in relation to the Project, in general, and to the services rendered by Claimant, in particular" was obsolete following the document production phase, and was thus withdrawn.

On 7 December 2018, the Sole Arbitrator thus issued Procedural Order No. 3 ("PO No. 3"), (i) adopting Provisional Procedural Timetable No. 2, (ii) limiting the Parties’ subsequent submissions to issues raised during the Hearing and the Sole Arbitrator’s request that the Parties further elaborate on specific issues, and (iii) taking note of Claimant’s withdrawal of its request for an order that "Respondent comply with its obligation under Article 4(h) of the Agreement to disclose all documents and information relating to payments that the Respondent has received in relation to the Project, in general, and to the services rendered by Claimant, in particular."

On 11 January 2019, in accordance with Article 14 of the Terms of Reference, the Sole Arbitrator informed the Parties, that any written communications should, from that date, be sent to her new address as follows:

Vanessa Thieffry
[Redacted]
REED SMITH LLP
112 avenue Kléber
75116 Paris, FRANCE.

On 28 January 2019, the Sole Arbitrator, taking note that Respondent (i) along with its last submission, filed 18 new exhibits out of 38, thus almost doubling the number of exhibits it had produced in this arbitration, and (ii) failed to produce the translation of exhibit R24, and after due consideration, invited:

• Respondent, to submit a translation into English of exhibit R24 by 30 January 2019 at the latest; and

• the Parties, to submit their Second Round of Simultaneous Submissions, strictly limited to answering their respective Simultaneous Reply and Rejoinder of 15 January 2019, by 11 February 2019.

On 18 March 2019, the Sole Arbitrator invited the Parties to submit:

• their Statements on Costs simultaneously, including relevant particulars, by 22 March 2019 at the latest;

• their Comments on each other’s Statement on Costs, also simultaneously, by 29 March 2019 at the latest.

As a consequence:

• on 22 March 2019, the Parties filed their Statements on Costs simultaneously;

• on 28 March 2019, Claimant filed the translation of the missing part of exhibit C4;

• on 29 March 2019, Respondent filed its Comments on Claimant’s Statement on Costs, in which it explained having misinterpreted Article 38 of the ICC Rules, and thus only submitted its list of costs in this second submission.

The Parties are part of a consortium led by [Respondent], and composed of [Redacted], [Claimant], and [Redacted] (the "Consortium").⁷

On 27 July 2015, the Consortium submitted a tender for Service Contract [Redacted] (the "Tender") issued by the [Redacted] ("[Redacted]" or the "[Public Authority]").⁸

It was awarded to the Consortium on 28 October 2015.⁹ Thus, on 29 December 2015, [Respondent] signed Service Contract [Redacted] on behalf of the Consortium¹⁰ (the "Service Contract"), which according to the Parties consisted in the provision of expert services.

On 10 February 2016, the Parties entered into the Consortium Agreement for [Redacted],¹² with the purpose of providing experts for the Project, with Respondent as Consortium Leader.

According to the Consortium Agreement, the purpose of the consortium is to join "forces for the preparation and submission to the Client of the Technical and Financial Offer for [Redacted] and further implementation of the project, as Consortium, an unincorporated association, to carry out the specific purpose described below".¹³

The Parties undertake to, inter alia:

• "use their best efforts to implement the project to the satisfaction of the Client and the beneficiaries";¹⁴
• cooperate in good faith and "refrain from everything that runs counter to the tasks and objectives of the present consortium agreement";¹⁵
• take "full responsibility for ensuring the technical quality of the inputs of their particular contracted key and non key experts".¹⁶

In case of default by a Party in providing the required experts "in such a way that the observance of important dates is endangered, the leader of the consortium shall be entitled to re-distribute the performances in coordination with the partner in such a way that the requirements of the project are best met."¹⁷

From November 2016 until January 2017, [Claimant] provided an expert, M. [Person 8], who performed 30 man/days. The latter were approved by the Beneficiary and the [Public Authority]. [Respondent] allegedly paid his fees "in full."¹⁸

In April and May 2017, [Claimant] had difficulties submitting profiles of international experts, and those submitted were rejected by the [Public Authority].¹⁹

Subsequently, [Claimant] submitted the profiles of Turkish experts.²¹ Amongst these profiles, were those of Mrs. [Person 1] and Mr. [Person 2] (the "Experts").

On 25 September 2017, the [Public Authority] accepted their profiles,²² and [Claimant] thus contracted them.

On 21 December 2017, [Respondent] acknowledged delays in payment as follows:²⁶

"Concerning the delays in payments, this is strictly connected to the delays that we experiencing from different Contracting Authorities, including the Turkish one. We are expecting to receive some payments from Turkey by the end of the year and as soon as we receive the money we will be able to pay the outstanding invoices.

I would like to point out that by mid-December you received a partial payment from us which clearly demonstrates that we are willing to process the payments."

On 17 January 2018, [Claimant] was still complaining of payment problems, requesting "immediate information on the issues below and swift processing of the related payments:

• Payment of the remaining balance of 11,098€,

• Release of the remaining 35% of our invoices equal to 15,295€ and

• Balance of the profit share total 25,193€ as per the Consortium Agreement."²⁸

On 7 February 2018, [Claimant]’s in-house legal counsel sent a formal letter to [Respondent], requesting immediate payment of the pending amount of €48,545 before 12 February 2018, failing which [Claimant] "is ready and willing to undertake all necessary legal measures to protect its interests against [[Respondent]’s] practices and to notify the relevant Contracting Authority."³¹

On 16 February 2018, [Respondent] replied, (i) contesting the tone of [Claimant]’s email of 15 February considering the "cooperative approach" it had adopted since the beginning of the Project, and (ii) contesting the rate of €650 per day applied to the services of the Experts, as they are local experts and not international experts.³³

In the Terms of Reference, Claimant sought:

a. A finding that Respondent is liable vis-à-vis Claimant for breach of contract;

b. A finding that Respondent is liable to pay to Claimant the amount of 26,000 € for the unpaid invoices Nos. 1492 and 1493 issued by Claimant on 7 November 2017 for services rendered by Claimant’s Experts Mrs. [Person 1] and Mr. [Person 2];

c. A finding that Respondent is liable to pay to Claimant the amount of 22,545 € for the unpaid invoice No. 1542 issued by Claimant on 26 January 2018 for Claimant’s profit share;

d. A finding that Respondent is liable to pay to Claimant the amount of 20,000 € for moral damages;

e. An order that Respondent pays all the aforementioned amounts with interest as per the Consortium Agreement;

f. An order that Respondent pays all arbitration costs and all legal costs for Claimant’s legal representation and assistance;

g. An order that Respondent complies with his obligation under Article 4(h) of the Consortium Agreement to disclose to Claimant all documents and information relating to the payments that Respondent has received in relation to the Project, in general, and to the services rendered by Claimant, in particular;

h. Such further or other relief as Claimant may request in due course in compliance with the applicable ICC Rules.

As regards Claimant’s claims, Respondent:

a. Considers it appropriate to transfer to Claimant the amount of the outstanding invoices, but deducting the amount of €21,000 - €2,100 (that corresponds to the percentage of profit sharing for Claimant), as this amount is, according to the Consortium Agreement, an undue margin that Claimant would like to retain from the rest of the Consortium;

b. Denies that interests are due since it proposed to pay Claimant on the basis of the above on 16 February 2018;

c. Denies that damages for reputation are due to Claimant.

In addition, Respondent seeks :

a. Payment for the recruitment activities implemented by Ms. [Person 9] for the local experts that Claimant have contracted in the amount of €1,110 (€222 per working days x 5 working days) ;

b. Payment of reputation damages of €10,000.

The dispute arises out of the failure of Respondent to pay Claimant the following three invoices (the "Unpaid Invoices"):

• Invoice No. 1492, issued on 7 November 2017 in the amount of €24,700 for the services of Mrs. [Person 1] (€6,500) and Mr. [Person 2] (€18,200);³⁷

• Invoice No. 1493, issued on 7 November 2017 in the amount of €1,300 for the services of Mr. [Person 2];³⁸

• Invoice No. 1542, issued on 26 January 2018 in the amount of €22,545 for the [Redacted],³⁹ the amount of which depends directly from the total amounts invoiced for experts, including invoices 1492 and 1493 above.

Claimant first contends that Respondent is liable for breach of contract for failure to pay the Unpaid Invoices.⁴⁰ Claimant bases its claim:

• as regards Invoices Nos. 1492 and 1493, on Article 8 of the Consortium Agreement, pursuant to which "65% of the amount due to the Claimant is payable at the end of the first month following the month of performance and the rest 35% within 30 days from the approval of each interim report" ;⁴¹ and

• as regards Invoice No. 1542, on Article 5.2 of the Consortium Agreement.⁴²

According to Claimant, Respondent "acknowledged", at least in part, its breach of its obligation to pay the money it recognised being due,⁴³ and the Parties reached a legal and binding agreement that the rate applicable to Mrs. [Person 1] and Mr. [Person 2]’s services would be that for international experts, as confirmed by:⁴⁴

• Mr. [Person 7], Claimant’s witness, at the Hearing;

• the first Excel sheet of Exhibit C22, "Profit Aug.-Dec. 2017", which represents the calculation of profit sharing as follows:⁴⁵

[Redacted image]

• the facts that (i) Claimant paid Invoices Nos. 1456 and 1457 for the Experts’ services with international rates;⁴⁶ (ii) the Parties’ agreement was confirmed by Ms. [Person 9], who works for Respondent, in an email of 26 January 2018;⁴⁷ and (iii) Respondent invited Claimant to invoice "the whole balance of profit share" calculated on the basis of international rates being applied to the Experts’ services;⁴⁸

• Respondent’s acknowledgement that there was a delay in the payment of Invoices Nos. 1492 and 1493⁴⁹ without objecting to the rates applied in the Unpaid Invoices, Respondent’s objection only having been raised after the warning that this arbitration would be commenced, as confirmed by Respondent at the Hearing.⁵⁰

Claimant also highlights, in relation to Invoice No. 1542 for profit sharing, that Respondent only sent it an Excel sheet mentioning an international rate for the services of Mrs. [Person 1] and Mr. [Person 2] at the time, and that this spreadsheet was subsequently modified unilaterally by Respondent to include the rates for local experts and sent to Claimant inadvertently. This sheet reads as follows:⁵¹

[Redacted image]

As regards the fact that it was allegedly Respondent’s invoicing procedure to only verify invoices paid once every six months when calculating the profit sharing, and the practice established between the Parties, Claimant submits that: (i) it relies on "Respondent's prior agreement, in his capacity as the leading partner of the Consortium, with respect to any invoice issued by the Claimant, in his capacity as a member of the Consortium",⁵⁵ and (ii) notwithstanding the terms of the Consortium Agreement, it has never issued any invoice without Respondent’s prior agreement, in accordance with "the practices and usages of the market to issue invoices to the leader of the Consortium following the latter's prior agreement to this effect" Claimant adds that (i) this is also true for Invoice No. 1542,⁵⁶ and (ii) the dispute over the payment of the amounts invoiced by Claimant only arose after "Respondent threatened to go to arbitration."⁵⁷ Claimant also rejects Respondent’s explanation of this procedure as "unclear and dubious", and reiterates that "it has never issued an invoice to the Respondent without its prior agreement."⁵⁸

Moreover, Claimant contends that Respondent breached its obligation of good faith provided for by Article 4.d of the Consortium Agreement.⁵⁹ According to Claimant, the breach results from Respondent:

• failing to pay the amounts it recognises were due;⁶⁰
• modifying unilaterally, at the end of the Project, the Parties’ agreement as to the rate applicable to the fees of Claimant’s experts;
• refusing to pay Claimant for the Experts’ services, when it had received payment for these services from the Client;
• still failing to pay, when it recognises that amounts are due to Claimant with respect to the Experts’ services; and
• "failing to treat [Claimant] as a member of the Consortium, i.e., as a partner."⁶¹

Claimant clarifies that it relies more particularly on Articles 1366 and 1375 of the Italian Civil Code. According to Claimant, Respondent allegedly failed to interpret (Article 1366) and perform (Article 1375) the Consortium Agreement correctly as did not treat Claimant as a Partner by not respecting the Parties’ agreement on the application of international rates. This, Claimant submits, consists in a material breach of the Consortium Agreement by Respondent. In this regard, Claimant insists that (i) Respondent benefitted from Claimant’s "name, experience and nationality to win the Contrat"; (ii) Claimant’s stake in the Contract was "disproportionally smaller (around 10%) than his actual contribution to win the Contract", which Claimant estimates at, at least, 20%. Conversely, Respondent (i) refused to pay international rates as per Invoices Nos. 1492 and 1493 when it had previously agreed to pay such rates for Invoice No. 1456; and (ii) allegedly "concealed from the Claimant that he had received payment by the Client."⁶³

Specifically, Respondent first contends that, pursuant to Clause 5.3 of the Consortium Agreement,⁶⁷ Claimant only had the possibility to mobilise international experts for up to 100 man days and not a right thereto.⁶⁸ This is allegedly confirmed by Clause 5.9 of the same, according to which if a Consortium Partner is not able to provide experts, the other partners may provide said experts and invoice their man days.⁶⁹ It is thus only "in view of the good cooperation within the Consortium" that Respondent "allowed" Claimant to mobilise Mrs. [Person 1] and Mr. [Person 2]⁷⁰ (even though they were local experts as opposed to international experts as required by the Consortium agreement), because Claimant was "unable to provide international experts because the ones requested by the project refused to leave".⁷¹ Since, under Clause 5.3 of the Consortium Agreement, the experts should be paid in accordance with the maximum fee rate provided for in the Breakdown of Prices, the maximum fee rate payable for local experts is €350 and not €650.

Respondent denies Claimant’s assertion that (i) the Parties ever agreed to apply the rate applicable to international experts to Mrs. [Person 1] and Mr. [Person 2]’s services, and (ii) Respondent accepted the same.⁷² In this regard, Respondent highlights that:

• Claimant has been unable to produce in this arbitration any written confirmation of such an agreement: contrary to Claimant’s assertion, Ms. [Person 9] never confirmed orally that the rate of €650 would be applicable, and the absence of such an agreement is supported by the fact that "practically all the communications concerning the project were by email or skype (written messages)";⁷³ in any event, if such an agreement had indeed been reached, it should have been made in writing with all the partners to the Consortium Agreement as it modifies the latter and negatively impacts the other Consortium members;⁷⁴

• if Respondent did pay some invoices in which an international rate was applied to Mrs. [Person 1] and Mr. [Person 2]’s services, it is because of Respondent’s payment procedure. According to this procedure, upon receipt of Claimant’s invoices under Clause 8.1 of the Consortium Agreement, Respondent paid them immediately, "taking for granted that the invoices are correct and in line with the consortium agreement in the substance [...]. The only check made immediately on the invoices received is a formal check (VAT number and formal data requested for valid invoice)".⁷⁵ The substance of the invoice, and "the possible or needed balance", was verified when, in accordance with Clause 5.2 of the Consortium Agreement, Respondent calculated the profit sharing: it is at that moment that the correction of any mistake in invoicing was requested.⁷⁶ In this regard, Respondent explains that the profit sharing is calculated on the basis of the amounts invoiced and received from the Contracting Authority after deductions of ineligible costs and of the real costs of the Project. In practice, this requires referring to the experts’ invoices, those of the consortium partners prepared on the basis of the Consortium Agreement, and of the suppliers and service providers, if any;⁷⁷

• moreover, Respondent insists that its internal policy is that "no acceptance of the invoices is given to the partners in consideration that it might occur, inter alia, that while examining the 6 months invoice sent by the consortium, the contracting authority decides to make deductions not paying some project expenses."⁷⁸

Indeed:

• the good faith principle as provided for by Articles 1366, 1337, 1371 and 1375 of the Italian Civil Code requires fair reciprocal contractual behaviour from parties to a contract, from the negotiation phase until the execution of the contract; Parties to a contract must thus act in such a way so as to safeguard the interests of the other parties on the basis of the principle "neminem laedere";⁸¹

• Respondent contends that it complied with this principle from the beginning of the negotiations, and during the performance of the Consortium Agreement. However, Respondent could not allow Claimant to invoice local experts at the rate of international experts, as this would imply that Claimant "is keeping exclusively for themselves a part of the profit that has to be instead divided by all the contractual parties";⁸²

• in any event, Respondent denies having breached its good faith obligation as (i) no agreement was reached concerning the rates to be applied to Mrs. [Person 1] and Mr. [Person 2] modifying the Consortium Agreement; (ii) the experts’ fees have been paid to Claimant in accordance with the provisions of the Consortium Agreement; and (iii) Claimant has not only be treated as a partner, but it has been treated favourably.⁸³

Claimant contends that, by failing to pay the Unpaid Invoices, Respondent breached Articles 8 and 5 of the Consortium Agreement.⁸⁵ Pursuant to these provisions:

"8. PAYMENTS

a. [Respondent] will pay the invoices submitted by [Claimant] upon receipt of the necessary supporting documents (i.e. timesheets, mission reports, copies of boarding passes and any other evidence that might be requested) and upon diligent fulfilment of tasks and delivery of all contractual outputs which fall within his/her responsibility according to the following schedule:

• 65% of the amount of each monthly invoice within the end of the first month following the month of performance

• The remaining 35% of the amount of each monthly invoice within 30 days from the approval of each interim report In case the invoice and/or timesheet are not submitted within the 8th day of the month following the month of performance then the Contractor will delay the payment by one or more months according to the length of the delay in the submission of the invoice and/or timesheet.

b. Invoices must be net of any duty or tax according to the Protocol on the Privileges and Immunities which forms annex to the Treaty of 8 April 1965 establishing the European Community."

"5. FINANCIAL AGREEMENT

5.1 A sum of 10% of all fees will be deducted by [Respondent] for project management, co-ordination, financial administration, and associated costs. This sum shall be calculated on the total fee budget and shall be deducted at the point of profit share analysis which shall be prepared and submitted on a six monthly basis;

5.2 At the end of the six month period, in line with the EU’s EuropeAid invoice procedures, [Respondent] shall produce a profit statement. This Profit / Loss shall then be re-imbursed to [Claimant] upon submission of its invoice to [Respondent]. Payment of this invoice shall be effected upon receipt of funds from the EU. The proportion of the profit share shall be fixed at 10,00%. The tentative amount to be distributed to [Claimant], according to the BoP, is 25.193 €.

5.3 [Claimant] shall have the chance to actively participate in the mobilization of up to a maximum of 100 man/days short term international experts according to the Breakdown of Prices. [Claimant] shall contract short term international experts up to a maximum all inclusive fee provided in the internal BoP and following updates after having informed [Respondent] on the negotiations with the short term expert.

5.4 The fee rates are all-inclusive (this means including: expert fee, living allowance, insurance as requested by the general conditions of the main contract, visa costs, partners management fee, taxes and all other associated costs of expert mobilization and demobilization).

5.4 [Claimant] will previously inform / seek approval from [Respondent] of the expert and the proposed contractual / financial details before agreement with an individual expert is finalised. [Respondent] as lead partner has the power to enforce replacement of an expert, who is not performing his/her duties to the required level of performance.

5.5 Copies of agreed contracts signed between [Claimant] and his experts must be available upon request.

5.6 It must be noted that each PARTNER providing Services under this contract shall pay all taxes, duties, fees or other charges as they may be levied under the applicable law, the amount of which is deemed to have been included in the costs described in this Agreement.

5.7 It will be the responsibility of each PARTNER to complete all contractual negotiations and logistical arrangements for the expert including, but not exclusively, visa support, international travel arrangements, contracting, etc.

5.8 It will be the responsibility of each PARTNER to ensure the quality of the expert’s input including any reporting requirements.

5.9 With respect to the allocation of person days allocated to each one of the Partner, in case one Partner cannot present the experts envisaged for the tasks, the other PARTNERS will be invited to present a suitable replacement with equivalent qualifications and experience. Final approval of the replacement CV shall be done by the Consortium Leader and, if applicable, the client and/or beneficiary.

[...]"

"5.3 [Claimant] shall have the chance to actively participate in the mobilization of up to a maximum of 100 man/days short term international experts according to the Breakdown of Prices. [Claimant] shall contract short term international experts up to a maximum all inclusive fee provided in the internal BoP and following updates after having informed [Respondent] on the negotiations with the short term expert."

This Breakdown of Prices provides for the following rates for expert services:⁸⁶

[Redacted image]

In addition, as regards :

• the first excel sheet of Exhibit C22, "Profit Aug.-Dec. 2017", which represents the calculation of profit sharing on the basis of international rates applied to Mrs. [Person 1] and Mr. [Person 2]’s services,⁸⁷ and

• the facts that (i) Claimant paid Invoices Nos. 1456 and 1457 for the Experts’ services with international rates,⁸⁸ (ii) the Parties’ agreement was confirmed by Ms. [Person 9], who works for Respondent, in an email of 26 January 2018,⁸⁹ and (iii) Respondent invited Claimant to invoice "the whole balance of profit share" calculated on the basis of international rates being applied to Mrs. [Person 1] and Mr. [Person 2]’s services,⁹⁰

Respondent explains its behaviour in a plausible way by relying on its internal payment procedure.

This is especially so, since that behaviour appears to be in conformity with Clause 8.1 of the Consortium Agreement, pursuant to which payment is to be made partially on the face of the invoice, the balance being paid upon verification of "interim reports":

"8.1. [Respondent] will pay the invoices submitted by [Claimant] upon receipt of the necessary supporting documents (i.e. timesheets, mission reports, copies of boarding passes and any other evidence that might be requested) and upon diligent fulfilment of tasks and delivery of all contractual outputs which fall within his/her responsibility according to the following schedule:

• 65% of the amount of each monthly invoice within the end of the first month following the month of performance

• The remaining 35% of the amount of each monthly invoice within 3 0 days from the approval of each interim report.

[...]"

• the Parties regularly and consistently communicated, either by email or by Skype messages;⁹¹ and

• upon agreeing to change the profile requirements of the experts from international experts to local experts, the Parties communicated at length, seeking approval from the "Client" and confirming such an approval in writing, in a Skype message, to Respondent.⁹²

As regards the amounts due for the services of the Experts, the Sole Arbitrator notes that:

• the Experts have worked a total of 70 days at the rate of €350 per day: the amount due for their services should thus be 70 x 350 = €24,500;

• these services have been invoiced for a total amount of €45,500 as follows: (i) Invoice No. 1456 in the amount of €19,500,⁹⁴ which has been paid in full on 1 and 29 December 2017,⁹⁵ (ii) Invoice No. 1492, in the amount of €24,700,⁹⁶ and (iii) Invoice No. 1493, in the amount of €1,300;⁹⁷

• therefore, Claimant has invoiced the amount of €21,000 (i.e., 45,500 -24,500) in excess of what was actually due by Respondent for the Expert’s services.

As regards the amounts due to Claimant for profit sharing, the Parties have not explained to the Sole Arbitrator how they were calculated. However, it results from Exhibit R22, submitted by Respondent in the arbitration specifically to demonstrate the amount of profit sharing it claims is owed to Claimant, that Claimant’s part of profit sharing should amount to €17,421. The following is an extract of Exhibit R22:⁹⁸

[Redacted image]

The Sole Arbitrator notes that this exhibit corresponds to Exhibit C22, which was introduced into evidence by Claimant after having been corrected by Respondent in the circumstances described in paragraph 111 above. This Exhibit shows as follows:⁹⁹

[Redacted image]

• €5,000, for the services of the Experts;

• €17,421, in relation to profit sharing.

Claimant relies on:

• Article 1218 of the Italian Civil Code, pursuant to which "whoever fails to comply with a contractual obligation is obliged to compensate the innocent party to the contract for the damage caused to it by the non-compliance"¹⁰⁵, and

• alternatively, Article 2043 of the Italian Civil Code,¹⁰⁶ pursuant to which "Any fraudulent or negligent fact that causes unjust harm to others, obliges the person who has committed the fact to compensate the damage."¹⁰⁷

Claimant contends that these provisions set forth an obligation for Respondent to compensate Claimant of "ANY damage it has caused to the Claimant, including pecuniary and non-pecuniary damage, such the one caused in the Claimant’s reputation".¹⁰⁸

Claimant submits that Respondent’s obligation was triggered by:¹⁰⁹

• Respondent’s breach of its contractual obligation under the Consortium Agreement to pay the Unpaid Invoices; and

• Respondent’s breach of its obligations in tort by "omi[tting] to pay the same amount."

In addition, Claimant alleges that (i) the reputation damage it suffers "is not an indirect or consequential damage but derives directly from the Respondent’s unlawful behaviour", and (ii) Respondent "was fully aware of the fact that part of the money owed to the Claimant was destined to the Turkish experts and that it is the Claimant who owes this money to these experts."¹¹⁰

Finally, as regards Respondent’s contention that Claimant has not suffered any reputation damages since it has been awarded another contract as part of a consortium by the Contracting Authority, Claimant replies that:

• Respondent "is not in a position to know under which terms and conditions the consortium was awarded the contract and under which terms the Claimant accepted to participate in this [c]onsortium"; and

• The fact that it obtained a single contract, as consortium member, "at low bid" proves that its reputation has been damaged.¹¹²

As to the ground of Article 2043, Respondent explains that it is applicable "to the damage deriving from an extracontractual responsibility damage deriving from fault and fraud (illegal behaviour) that creates the relation between the parties despite the existence of the contract."¹¹⁵ However, Respondent adds, Claimant is not entitled to damages in this case since:

• Claimant’s justification for not paying the Experts, i.e., that Respondent had not paid Claimant itself, is not valid as "there is no reference in [the Experts’] contracts that their payment is subject to the Claimant receipts of funds from the Respondent" ;¹¹⁶

• its failure to pay the Experts is "absolutely an arbitrary decision of the Claimant"¹¹⁷ since, according to Clause 8.1 of the Consortium Agreement, "only 65% of the amount invoiced by the experts was payable before the final approval of the final report";¹¹⁸ in this regard, Respondent emphasizes that no fault or fraud is attributable to it and in any event, the causal link between the damage and the alleged illegal behaviour required by Article 2043 of the Italian Civil Code is not established;¹¹⁹

• it has not suffered damage to its reputation since it has recently been awarded by the Contracting Authority "as consortium member a contract in Turkey "Technical Assistance for the Operating Structure and CISOP"";¹²⁰

• its claim is based on the fact that Claimant informed the Experts that they had not received payment due to Respondent’s own lack of payment of Claimant;¹²¹

• it requested itself the Experts to inform the Contracting Authority that they were not paid, "imputing incorrectly the responsibility to the Respondent";¹²²

• it claims as reputation damages the very same amount it owes to Mr. [Person 2], who has been complaining to the Contracting Authority and the Beneficiary.¹²³

Regarding the ground of liability in tort, Claimant relies on Article 2043 of the Italian Civil Code,¹²⁶ pursuant to which "[a]ny fraudulent or negligent fact that causes unjust harm to others, obliges the person who has committed the fact to compensate the damage."¹²⁷

The Sole Arbitrator notes that:

• pursuant to Clause 8.1 of the Consortium Agreement, Respondent was to pay to Claimant 65% of the amount of each monthly invoice by the end of the first month following the month of performance, and the remaining 35% of the amount of each monthly invoice within 30 days from the approval of each interim report;

• the subcontract with Mr. [Person 2] was concluded by Claimant and as such, Claimant cannot seek to transfer to Respondent, under the pretext of liability in tort, the responsibility of payment obligations Claimant alone undertook with third parties.

In its Statement of Claim, Claimant requested that Respondent be ordered to pay any amounts due with interest "as per the Agreement."¹³⁰

In the alternative, Respondent requests that the interest applied shall "make reference to the official reference interest rate fixed by the European Central Bank".¹³²

However, the Sole Arbitrator has determined at paragraph 152 above that amounts were still due to Claimant by Respondent, namely:

• €5,000, for the services of the Experts;

• €17,421, in relation to profit sharing.

As to the interest due to Claimant as from the rendering of this Award:

• Claimant requests the application of Article 1284, paragraph 1, of the Italian Civil Code - without however submitting this provision in this Arbitration -;

• Respondent claims that the interest rate applied should be that of the European Central Bank, without any further clarifications or justifications.

As to the quantification of this counterclaim, Respondent clarifies that Ms. [Person 9]:¹³⁵

• was paid €42,523 that year;¹³⁶

• worked 191,5 working days during the same year;

• dedicated 5 days to the recruiting activities at stake in May 2017 (two and a half working days in Turkey, and two and a half days in Italy).

Claimant denies that Respondent is entitled to any payment for recruiting activities, as:¹³⁷

• Respondent’s counterclaim is inadmissible for failure to identify the legal basis on which it relies to request such payment;

• Respondent is estopped from making this counterclaim as it had never raised this request prior to this arbitration.

Moreover, Claimant denies that Ms. [Person 9] actually performed the recruitment activities at issue, as Respondent admits in its "submission (para. 9 in fine)", by indicating that "[i]f is again clear that Mr. [Person 10] representing [Respondent] made a favour to the Claimant providing the names of senior local experts to contract, allowing the Claimant to perform all the working days provided in the Contract."¹³⁸

In making such an assertion, Claimant contends that Respondent explicitly made a "clear and unambiguous recognition [...] that it was Mr. [Person 10] who assisted the Claimant in this respect and not Ms. [Person 9]!"¹³⁹

This is especially so, since:

• it is unclear whether Ms. [Person 9] is indeed the person - or the only person - who contributed to the recruitment of the Experts, as pointed out by Claimant;

• Respondent admitted that Ms. [Person 9]’s activities, if any, were performed voluntarily, in a spirit of cooperation, and without Claimant expressly requesting assistance or accepting to remunerate Respondent for such services.

This allegedly results in damages not only to the Consortium’s reputation, "but most of all of the leading partner (The Respondent) who was in daily contact with the Contracting Authority keeping the main responsibility for the whole consortium").¹⁴²

Claimant requests that Respondent be ordered to pay the arbitration costs and legal fees and expenses incurred for its representation and assistance in the total of €26,004.58, as follows:

• advance on arbitration costs transferred to the ICC, in the total amount of €13,427.83;

• legal costs composed of (i) €9,920 for the services of its external counsel, Prof. Dr. [Person 4], and (ii) €2,656.75 for the travel and accommodation costs incurred by Claimant for the Hearing of 4 December 2018.¹⁴⁵

In addition, Respondent challenges some of Claimant’s expenses as follows:

• Claimant could have used low cost-flights as transportation for the Hearing as Respondent did;

• Mr. [Person 3]’s flight and expenses for the purpose of the Hearing should be denied as his presence was not essential;

• Claimant requests payment for two hotel nights during the Hearing, when it could have taken a flight back on the day of the Hearing;

• receipts for Claimant’s lunch and dinner expenses are incompatible in timing, and another one should not be admitted as it is dated 5 December 2018, i.e., the day following the Hearing;

• one of the invoices is not understandable;

• taxi from and to the airport should not be admitted in full as the train service is cheaper;

• some credit card payments are not reconcilable with any purpose and as such should be rejected.

Pursuant to Article 38 [Decision as to the Costs of the Arbitration] of the ICC Rules:

"1) The costs of the arbitration shall include the fees and expenses of the arbitrators and the ICC administrative expenses fixed by the Court, in accordance with the scale in force at the time of the commencement of the arbitration, as well as the fees and expenses of any experts appointed by the arbitral tribunal and the reasonable legal and other costs incurred by the parties for the arbitration.

[...]

4) The final award shall fix the costs of the arbitration and decide which of the parties shall bear them or in what proportion they shall be borne by the parties.

5) In making decisions as to costs, the arbitral tribunal may take into account such circumstances as it considers relevant, including the extent to which each party has conducted the arbitration in an expeditious and cost-effective manner."

In light of the foregoing, the Sole Arbitrator decides that:

• the fees and expenses of the Sole Arbitrator and the ICC administrative expenses fixed by the ICC Court, are to be borne in equal shares by both Parties;

• each Party shall bear the costs it incurred for the presentation of its case.

In light of the foregoing, the Sole Arbitrator decides as follows:

a. the Sole Arbitrator has jurisdiction over the claims and counterclaims the subject matter of this Final Award;

b. [Claimant]’s claim that [Respondent] is in breach of contract is dismissed;

c. As a consequence, [Claimant]’s request for a declaration that [Respondent] is liable to pay:

i. the amount of €26,000 for the unpaid invoices No. 1492 and 1493 issued by [Claimant] on 7 November 2017;

ii. the amount of €22,545 for the unpaid invoice No. 1542 issued by [Claimant] on 26 January 2018;

is dismissed;

d. [Respondent] is ordered to pay to [Claimant]:

i. €5,000, for the services of the experts Mrs. [Person 1] and Mr. [Person 2];

ii. €17,421, in relation to profit sharing,

with interest due on these amounts at the rate and conditions set out under Italian law, starting 30 days after the date of this Award and until full payment;

e. [Claimant]’s claim for moral damages in the amount of €20,000 is dismissed;

f. [Respondent]’s counterclaim for payment of recruitment activities in the amount of €1,100 is dismissed;

g. [Respondent]’s counterclaim for reputation damages in the amount of €10,000 is dismissed;

h. The fees and expenses of the Sole Arbitrator and the ICC administrative expenses fixed by the ICC Court at USD 30,000 shall be borne in equal shares by [Claimant] and [Respondent];

i. [Claimant] and [Respondent] shall each bear the costs they incurred for the presentation of its case.