(a) Any dispute, controversy or Action arising out of or relating to this Agreement, or the breach thereof (other than a dispute, controversy or Action arising out of or in relation to or in connection with the calculation of the Adjusted Cash Purchase Price, which shall be resolved in accordance with Section 6.4), shall be determined by arbitration administered by the American Arbitration Association in accordance with its International Arbitration Rules. The place of arbitration shall be New York, New York. The number of arbitrators shall be three (3).
This Agreement and the legal relations between the Parties shall be governed by and construed in accordance with the laws of the State of New York, United States of America without regard to principles of conflicts of laws that would direct the application of the laws of another jurisdiction.
A. Value Added Tax ("VAT") liabilities that the Peruvian authorities imposed upon Savia attributable to periods prior to the so-called Determination Date, which was defined in the SPA to be June 30, 2008 (the "VAT Taxes Claim");
B. Certain tax obligations for which IMI Delaware was allegedly liable (or will become liable) and which Purchaser paid (or believes it will be compelled to pay), arising out of Seller’s operation of IMI Delaware’s unincorporated branch, then known as "IMI Peru," in 2000 and 2001 (the "IMI Tax Claims"). These obligations include 2001 taxes of IMI Peru assessed by the Peruvian tax authority and which were ultimately paid by an affiliate of Purchaser, as well as taxes for 2000 which were assessed but have not yet been paid.
C. A claim arising out of a proceeding begun by the Peruvian authorities alleging deficiencies in the maintenance of certain of the drilling platforms used in Savia’s operations (the "Platform Maintenance Claim");
D. Additional pre-closing conditions or claims, as more specifically described below, known generally as: (1) the Pipeline Abandonment and EIS Environmental Claims; (2) the Health and Safety Claims; (3) the Vacation Claims; and (4) the Profit Distribution Claim; and
E. A dispute arising over the proper calculation of the income that Seller is entitled to receive from the escrow account (the "Escrow Account") which was established under the SPA to secure Seller’s indemnification obligations (the "Escrow Income Claim").
WHEREFORE, for the reasons set forth above, Offshore is ORDERED to reimburse Purchaser (including Ecopetrol and/or Savia) for the payments that Savia has made to the Peruvian tax authorities for VAT taxes asserted to be due for the tax years 2002 through 2007 inclusive. This reimbursement shall be made on or before the 30th calendar day after the issuance of this Interim Award.
This Interim Award does not in any way resolve the underlying merits of the dispute among the parties, including, without limitation, whether Offshore would ultimately be entitled to, among other relief, the return of the amounts paid pursuant to this Order by reason of the Respondents’ breach of the SPA, or otherwise.
Interim Award, at 7. While the Order was without prejudice to the underlying merits of the dispute, it was premised upon the Tribunal’s4 interpretation of the relevant indemnification section in the SPA which, in the Tribunal’s view, required Purchaser to front the VAT tax liabilities pending a final determination of liability by the Peruvian tax authorities.
1. DECLARES that the Tribunal has jurisdiction to the extent necessary to ensure compliance with its Interim Award, including the jurisdiction to interpret SPA Article 8 as it relates to the use of escrowed funds to satisfy the Interim Award.
2. DECLARES that the Seller’s tender of performance [i.e. its attempt to pay the Interim Award with monies from the Escrow Account] in purported compliance with the Interim Award is ineffective.
3. DEFERS until the final hearings in this arbitration any decision on whether damages, interest and costs, if any, allegedly caused by the Seller’s actions, should be awarded to Respondent.
Procedural Order No. 1. In an attempt to expedite the arbitration and upon the request of the parties, Procedural Order No. 1 dated June 26, 2012 set a schedule for the parties to advise the Tribunal whether they could agree upon a list of issues ripe for preliminary determination. If not, the Order permitted the parties to advise the Tribunal of their positions so that the Tribunal could decide upon a list of issues that might be the subject of a preliminary determination, which could thereafter be briefed and decided. After the parties were unable to agree upon a list of issues and, after briefing and further argument, the Tribunal determined that there were no such issues.
Procedural Order No. 2. Procedural Order No. 2 dated August 22, 2012 set a schedule for the remainder of the arbitration. Procedural Order No. 2 anticipated hearings in October 2013.
Procedural Order No. 3. Procedural Order No. 3 dated December 7, 2012 set a procedure (after briefing and argument) for the resolution of disputes that had arisen over the exchange of documents.
Procedural Order No. 4. A dispute arose over whether the parties had agreed to stay certain claims and whether Seller could issue new document requests relating to the claims allegedly stayed. Procedural Order No. 4 dated December 13, 2012 dealt with the parties’ disclosure obligations relating to these claims.
Procedural Order No. 5. Procedural Order No. 5 dated March 4, 2013 memorialized Claimant’s consent to Purchaser’s application to assert supplemental counterclaims arising out of the Peruvian tax authorities’ VAT tax audits for tax years 2002, 2006 and 2007 and granted, on consent, Purchaser’s application to supplement such counterclaims.
Procedural Order No. 6. In or about January 2013, Seller petitioned the Tribunal to reconsider its jurisdiction to render the Interim Awards referenced above and, upon reconsideration, to vacate those awards. Procedural Order No. 6 dated January 10, 2014 reaffirmed the Tribunal’s view that it had the requisite jurisdiction to issue its prior Interim Awards and declined to issue further rulings or awards in response to Seller’s petition.
Procedural Order No. 7. Procedural Order No. 7 dated March 20, 2014 resolved Seller’s application, originally made at the hearings, for further information regarding Purchaser’s payment, through an affiliate, of IMI Peru’s taxes. That application was denied.
Procedural Order No. 8. At the conclusion of the hearings on the merits in March 2014, the Tribunal requested Seller to set forth its position—in view of Seller’s prior concession, made in a pleading dated June 21, 2013, that it no longer opposed Purchaser’s indemnity claims relating to the VAT taxes paid by Savia—concerning whether it was continuing to oppose such claims. Seller then argued that evidence adduced at the hearings enabled it to withdraw its prior concession. Procedural Order No. 8 dated April 3, 2014 denied Seller’s application to withdraw the concession.
Seller shall indemnify and defend the Purchaser Indemnitees and hold the Purchaser Indemnitees harmless from and against (1) all liability for Taxes of any PT Group Member... attributable to (A) any Pre-Determination Date Tax Period... ; (5) any Loss that a Purchaser Indemnitee shall suffer, sustain or become subject to as a result of the breach of Seller’s representations and warranties contained in Section 3.6 (Taxes and Assessments) or Seller’s covenants and agreements herein... ; and (7) all liability for reasonable legal, accounting and appraisal fees and expenses with respect to any item described in clauses (1) - (6) of this Section 7.4(a).
Any indemnity payment required to be made pursuant to this Section 7.4 will be paid within thirty (30) days after an Indemnified Party makes written demand upon an Indemnified Party, but in no case earlier than five (5) Business Days prior to the date on which the relevant Taxes (including estimated Tax payments) are required to be paid.... If the Taxes that are contested must be paid under applicable law prior to or upon commencement of a contest proceeding, Seller shall pay such Taxes to the applicable Governmental Authority prior to or upon commencement of such proceeding.
Therefore, in an effort to mitigate the damages that a demand for payment and/or an attachment over the company’s assets will cause to Savia’s cash-flow and existing cash holdings... Savia has commenced working on the preparation of actions seeking to vacate the resolutions issued by the Tax Court and to obtain injunctions authorizing Savia to withhold any payments to Sunat in connection with the applicable Tax Determinations until such actions are resolved by the courts.
Request for Interim Relief, ¶ 27.
Unless an injunction is obtained, Sunat can pursue the collection of the amounts claimed in the Tax Determinations related to the [2001 and 2003 tax years].... There is an imminent risk that Sunat will issue updated determinations and demand payment of such amounts at any time. Such request will adversely affect the company’s cash flow and seriously compromise the company’s ability to conduct business in its ordinary course.
* * *
Therefore, in order to protect and/or mitigate any damages to Savia and/or Seller and/or Purchaser, you are hereby notified that [Purchaser] has instructed Savia to proceed with the filing of the Lawsuits [i.e. injunction applications and appeals in order to stay Sunat enforcement efforts] and take any other legal action required thereto.
Id., ¶ 29; Joint Exhibit ("JTEX") 0179.
Seller shall control and bear the cost of any Tax audit or Tax contest that relates solely to a Pre-Determination Date Tax Period...; provided, however, that Purchaser shall be entitled to attend and participate in any such Tax audit or Tax contest at its sole cost and expense.
As indicated above, because Seller is already in control of the 2004-2005 VAT Tax Contest, Purchaser has relied on the foregoing representation as assurance of Seller’s payment despite the substantial cause for insecurity arising from Seller’s non-performance and delayed performance in the past, and on that basis Purchaser is refraining from suspending its performance to the extent of this amount and is not withholding payment of this amount from the Earn Out. Purchaser therefore expects Seller to promptly comply with the foregoing representations and all of its obligations under the [SPA] and to timely pay all the Taxes for which Seller is required to indemnify Purchaser under the [SPA, including]... the 2004-2005 VAT Tax Amount as required.
|Tax Year||Payment Date||Payment Amount in US Dollars|
|2001||March 17, 2010||$1,139,244.19|
|2002||August 31, 2012||$11,998,170.93|
|2003||March 24, 2010||$7,847,797.39|
|2004||November 21, 2011||$11,674,652.59|
|2005||November 21, 2011||$11,770,399.25|
|2006||November 13, 2012||$27,614,850.25|
|2007||August 28 and 29, 2012||$12,249,506.00|
Ballón WS, ¶ 5. Savia’s payments to SUNAT were in Nuevos Soles. The above chart reflects the U.S. Dollar equivalents "at the exchange rates recorded in Savia’s accounting reports in effect at the time of each payment." Id., ¶ 6. Each of these payments was preceded by an unsuccessful demand upon Seller to reimburse Purchaser in accordance with the terms of the SPA. As explained above, Seller reimbursed Purchaser for the 2001 and 2003 assessments totaling $8,987,041.58 leaving a balance claimed by Purchaser of $75,307,579.02.
Seller is only entitled to assume the control of a Tax contest for which Seller will indemnify, defend and hold Purchaser harmless. Because Seller has repudiated Purchaser’s claim for indemnification, Seller has no right to control the defense of the Tax Determinations and the related Tax Proceedings.
Failure to appear in the procedure on or before such date [December 28, 2009] would authorize Sunat to proceed with the bankruptcy proceeding and request INDECOPI to declare the bankruptcy of International Marine, which would, in turn, materially affect the operations of the company and/or its subsidiaries and affiliated companies including, but not limited [to], imposing restrictions and/or attachments to the assets of such companies.
Id., JTEX 0148.
Peruvian law states that a Peruvian branch and its foreign parent are two different legal entities for purposes of their respective tax obligations. Thus, the Peruvian branch and its foreign parent are two separate taxpayers.
Hernández First Opinion, ¶¶ 14, 23-26.
Article 396. - Concept
A branch is a secondary establishment through which a corporation develops, in a place different than its domicile, certain activities within its corporate purpose. The branch has no legal identity independent from that of its principal. It is provided with permanent legal representation and enjoys administrative autonomy within the scope of the activities it is assigned by the principal, in conformity with the terms of the powers of attorney granted to its representatives.
Article 397. - Responsibility of the parent
The parent corporation is liable for the obligations of the branch. Any agreement to the contrary is null and void.
Barclay First WS, Ex. 13 and 14.
Based on this conclusion and its underlying principles, the author of this report disagrees with Dr. Hernandez’s assertion that, since our law does not expressly provide "that the foreign parent company is liable for payment of taxes owed by its Peruvian branch as a taxpayer... SUNAT cannot impose this liability to the foreign parent company and therefore may not demand payment of the tax debts of the branch office." I reiterate that the imposition of this liability is fully covered by article 397 of the Law of Companies.
Expert Testimony of Dr. César Enrique Talledo Mazú dated December 21, 2013, ¶ 27. See also, Barclay Tr. 1544.
Seller agrees to defend, indemnify and hold harmless each PT Group Member, Purchaser and their Affiliates... from and against all Losses incurred by any of the Purchaser indemnitees as a result of (i) the breach of any of the representations and warranties of Seller in this Agreement.
quoted at Statement of Facts, ¶ 297. (Purchaser’s payment of the bankruptcy debts, which included the pension claims, also constituted a "Loss" as defined in the SPA. SPA, Ex. A (Definitions), at 8.
[T]here are no new issues in the letter [from OSINERGMIN] informing us of the initiation of administrative procedure. This type of procedure is routine and we have worked through these types of proceedings in the past. This type of proceeding is subject to a defined administrative process and there is no immediate action, sanction or fine. We are extremely confident in our ability to manage this issue. We strongly caution you against jumping to conclusions or extreme reactions based on this letter.
Purchaser does not waive and shall not be deemed to have waived any right to indemnification under applicable provisions of the Stock Purchase Agreement for any breach of any of [Offshore’s] representations or warranties under Sections... 3.7... regardless of whether Purchaser was aware of any such breach at the time of Closing.
[In] CBS Inc. v. Ziff-Davis Publishing Co.,... the New York Court of Appeals held that a buyer can recover for breach of warranty even if the purchaser had formed doubts as to the truth of the warranted facts prior to the closing. To hold otherwise, "would have the effect of denying the express warranties of their only value to [the purchaser]—i.e., as continuing promises by [the seller] to indemnify [the purchaser] if the facts warranted proved to be untrue." Id. at 506, 554 N.Y.S.2d 449, 553 N.E.2d 997. The Court of Appeals adopted the "basis of the bargain" approach to this issue, holding that "[t]he critical question is not whether the buyer believed in the truth of the warranted information.... but whether [the buyer] believed [the buyer] was purchasing the [seller’s] promise [as to its truth]." Id. at 503, 554 N.Y.S.2d 449, 553 N.E.2d 997.
The exception to the Ziff-Davis rule is if a "buyer closes on a contract in full knowledge and acceptance of facts disclosed by the seller which would constitute a breach of warranty." Galli v. Metz, 973 F.2d 145, 151 (2d Cir. 1992).
Assured Guar. Mun. Corp. v. Flagstar Bank, FSB, 892 F.Supp.2d 596, 604 (S.D.N.Y. 2012) ("Flagstar") .29
Viewing the facts in the light most favorable to [the Purchaser, it] obtained the representations and warranties to ensure the quality of the loans in part because its reviews were not comprehensive. Moreover, the representations and warranties do not mention [the Purchaser’s] due diligence. [The Purchaser] obtained those representations and warranties even after conducting its own diligence review.
Flagstar, 892 F.Supp.2d at 603.
§ 161 When Non-Disclosure is Equivalent to an Assertion
A person’s non-disclosure of a fact known to him is equivalent to an assertion that the fact does not exist in the following cases only:
(a) where he knows that disclosure of the fact is necessary to prevent some previous assertion from being a misrepresentation or from being fraudulent or material.
(b) where he knows that disclosure of the fact would correct a mistake of the other party as to a basic assumption on which that party is making the contract and if non-disclosure of the fact amounts to a failure to act in good faith and in accordance with reasonable standards of fair dealing.
(c) where he knows that disclosure of the fact would correct a mistake of the other party as to the contents or effect of a writing, evidencing or embodying an agreement in whole or in part.
(d) where the other person is entitled to know the fact because of a relation of trust and confidence between them.31
a. Notify the company of the identified violations and provide a specific cure period, with the result that the agency may exercise its oversight and sanctioning powers upon the expiration of that period; or
b. Immediately exercise its oversight powers by commencing an administrative sanction proceeding where it has concluded that the violations have occurred repeatedly or are punishable administrative violations warranting the imposition of an immediate sanction.
See Alegre Opinion, ¶ 26.
28.3.- The respective Management Office for Oversight, the Adjunct Management Office for Tariff Regulation or equivalent area are authorized to issue Reports if they detect observations or situations that violate the current legal and technical framework, and must set forth the applicable provisions for the remediation of all of the instances of non-compliance by the supervised companies." JTEX 0462 at 14-15 (emphasis added)
11. OSINERGMIN’s supervisory function entails finding objective facts, collecting data, supervising, investigating, and, especially, auditing the performance of a regulated activity. Its purpose is to prevent the commission of administrative violations and to ensure compliance with the law. In contrast, the sanctioning power is exercised to punish regulated entities when there is sufficient certainty to affirm that there are transgressions of the legal order or injury to certain legally protected interests recognized by said legal order. (emphasis added)
12. Notice 8604 did not detect administrative violations, given that it was issued within the framework of an administrative supervisory proceeding and not as part of an administrative sanction proceeding. According to numeral 3 of article 28 of the Supervisory Regulations of OSINERGMIN, Notice 8604 detected "observations," that is to say findings, suggestions, and technical recommendations that are made within the framework of a supervisory visit, but not "situations that violate the current legal and technical framework."
a. The platforms 3J of Littoral A2 of Pena Negra and NPBX of Paita must be intervened upon on an emergency basis before they collapse.
b. Petro-Tech Peruana SA must reformulate its Program of maintenance of 2008, giving priority to the platforms that do not count with any type of corrective maintenance 52 platforms and must intensify the replacement of the Anodes in the platforms, given that in 23 of the platforms examined (30.67%) there is evidence of wear beyond the permissible amount (80%).
c. Petro-Tech Peruana SA must conduct a Study of structural loads for each platform to ensure the reliability of the use of these installations in the Exploration and or Exploitation of Hydrocarbons. It is also important to complement the study with an analysis of risks taking into account also the last inspections. This analysis entails the evaluation of the vulnerability of the structures of the dangers to which they are exposed and of the economic consequences of the damage that these dangers could cause.
d. Petro-Tech Peruana SA must have diving equipment with sufficient capacity and infrastructure to be able to realize the subaquatic work necessary to maintain the platforms in good operating condition.
(Emphasis added.) This mandatory language of remediation contradicts Purchaser’s assertion that Oficio 8604 was intended merely "to prevent the commission of administrative violations."
(b) an additional sum of $50,000,000 to the Escrow Agent (the "Supplemental Escrow Amount") pursuant to the Escrow Agreement which sum may be applied solely to claims that Seller is obligated to pay pursuant to Article 8 of this Agreement and that result from a breach of Section 3.7 (an "Undisclosed Environmental Loss").
If the Indemnifying Party disputes the right of the Indemnified Party to indemnification under this Article 8 with respect to the Third Party Claim described in a Third Party Claim Notice, then in such event (i) the Indemnified Party may defend the Third Party Claim with counsel of its choice, subject to the right of the Indemnifying Party to admit its obligation to indemnify the Indemnified Party and assume the defense of the Third Party Claim at any time prior to settlement or final determination; provided, however, that the Indemnified Party (x) shall diligently defend such Third Party Claim... and (y) may not enter into a settlement thereof without obtaining approval of the Indemnifying Party.
Seller shall indemnify and defend the Purchaser Indemnitees and hold the Purchaser Indemnitees harmless from and against (1) all liability for taxes of any PT Group Member... attributable to (A) any Pre-Determination Date Tax Period,... (5) any Loss that a Purchaser Indemnitee shall suffer, sustain, or become subject to as a result of the breach of Seller’s representations and warranties contained in Section 3.6 (Taxes and Assessments) or Seller’s covenants and agreements herein, or in any certificate delivered with respect to any of the foregoing, that relate to Taxes.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, NONE OF PURCHASER, SELLER, OR ANY OF THEIR RESPECTIVE INDEMNIFIED PARTIES SHALL BE ENTITLED TO CONSEQUENTIAL, INDIRECT, SPECIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY AND EACH OF PURCHASER AND SELLER,... HEREBY EXPRESSLY WAIVES ANY RIGHT TO CONSEQUENTIAL, INDIRECT, SPECIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY.
2. Escrow Amount. Pursuant to Section 2.3(b)(i) of the Stock Purchase Agreement, Purchaser is depositing with the Escrow Agent the Escrow Amount, to be held be the Escrow Agent in accordance with the terms hereof. It is hereby expressly stipulated and agreed that all interest or other income on the Escrow Amount shall belong to Seller and not constitute a part of the Escrow Amount. Seller shall be entitled to a quarterly distribution of all interest earned on the Escrow Amount.
The Escrow Agent shall invest the funds held in escrow through an account managed by the Escrow Agent.... The funds held in such account shall be held in (i) readily marketable direct obligations of the Government of the United States or any agency or instrumentality thereof or readily marketable obligations unconditionally guaranteed by the full faith and credit of the Government of the United States.
except in accordance with either (i) written instructions executed both by an authorized officer of Purchaser and by an authorized officer of Seller ("Joint Instructions"), or (ii) a certificate delivered by any Purchaser to the Escrow Agent, executed by an authorized officer of such Purchaser (a "Final Award Certificate"), which certificate shall (A) state that, of the amounts contested in Seller’s Indemnity Certificate, such Purchaser is entitled to indemnification under Section 7.4 or Article 8 of the Stock Purchase Agreement, (B) state the aggregate amount of such indemnification to which such Purchaser is entitled, [and] (C) have attached thereto a true and complete copy of the Arbitral Award... confirming that such Purchaser is entitled to such amount of indemnification.
The arbitrators are authorized to include in their award an allocation to any Party of such costs and expenses, including attorneys’ fees, as the arbitrators shall deem reasonable.
* * *
In the event that monetary damages are awarded, the award shall include interest, running from the date of default to the date of payment of the award in full. Any award shall be made payable in United States Dollars, free of any Tax or other deduction.
(1) AWARDS Purchaser compensation for all losses occasioned by Seller’s failure to reimburse Purchaser for the VAT taxes that Purchaser paid for tax years 2001 through 2007, including: (a) the amounts of such taxes paid; (b) interest on such amounts at the simple rate of nine percent (9%) per annum from the date of such payments until satisfaction of this AWARD; (c) the reasonable costs and counsel fees incurred in responding to the VAT tax litigation in Peru; (d) the reasonable costs and counsel fees incurred in the prosecution of the VAT claims before this Tribunal; and (e) the reasonable costs and counsel fees incurred in the litigation involving the Interim Awards before the U.S. District Court. With respect to the computation of interest in accordance with ¶ A(1)(b) above, Purchaser shall be entitled to such interest for tax years 2001 and 2003 from the payment dates reflected in ¶ 65 above to the date of Seller’s payment of these amounts on February 15, 2011 (see ¶ 58 above), and Purchaser shall be entitled to such interest for tax years 2002 and 2004 through 2007 from the payment dates reflected in ¶ 65 above to the date of Seller’s payment of these amounts pursuant to this AWARD.
(2) Purchaser sought no affirmative relief with respect to VAT taxes for Tax Year 2008, but the Tribunal trusts that, to the extent such 2008 VAT taxes are imposed, Seller shall pay such taxes directly when they become due, or shall reimburse Purchaser for its payment of such 2008 VAT taxes immediately upon Purchaser’s payment of such 2008 VAT taxes and its written demand for reimbursement.
(3) Assuming Seller’s full satisfaction of its VAT obligations as set forth in this ¶ A, Purchaser shall return to Seller, upon 30 days from its receipt, any refunds of VAT taxes that Purchaser has already received for those years (the "VAT Refunds"), whether the VAT Refunds are received in the form of cash or credits against other liabilities that Purchaser may owe. To the extent that Seller does not fully satisfy its VAT obligations as set forth in this ¶ A, Purchaser shall duly credit Seller for VAT Refunds against the amount owing in accordance with this AWARD.
(4) Notwithstanding anything to the contrary in ¶ A(1) above, the accrual of Seller’s nine percent interest obligation will cease to accrue upon Purchaser’s receipt of any VAT Refunds, but Purchaser need not make any reimbursement until Seller fully satisfies its VAT obligations less any credit to which it is entitled in accordance with ¶ A(3) above.
B. With respect to the IMI Tax Claims discussed in Section V.B. above:
(1) With respect to the IMI Tax Claim relating to tax year 2001, AWARDS Purchaser the sum of $1,491,384.64 with interest on such amount at the simple rate of nine percent (9%) per annum commencing from the date that OFG paid the bankruptcy claims until satisfaction of this AWARD;
(2) With respect to the IMI Tax Claim relating to tax year 2000, DECLARES that Seller shall reimburse Purchaser for any amounts that Purchaser may pay for such tax liability within 30 days of Purchaser’s demand for indemnification in accordance with the provisions of SPA § 7.4(d). Any unpaid amount shall bear interest at the simple rate of nine percent (9%) per annum commencing on the date that Purchaser pays any such tax liability and continuing until satisfaction of this AWARD.
C. DENIES Purchaser’s Pipeline Maintenance Claim.
D. With respect to the Pipeline Abandonment and EIS Environmental Claims, the Health and Safety Claims, the Vacation Claims and the Profit Distribution Claim discussed in Section V.D. above:
(1) DECLARES, provided that, as of the date of this AWARD, the aggregate amount of liability for all Losses which are subject to the "Basket" defined in SPA ¶ 8.5 has not exceeded the sum of $15 million, there is no present duty of Seller to compensate Purchaser for any of the claims identified in this ¶ D:
(2) DECLARES that, for purposes of any future enforcement of Purchaser’s indemnity rights, and only upon any eventual fulfillment of the Basket requirement, Purchaser would be entitled to indemnification in the following amounts:
(a) the sum of $374,507.62 with respect to the Pipeline Abandonment, EIS Environmental and Health and Safety Claims (the "Indemnified Amount"), together with interest at the simple rate of nine percent (9%) per annum commencing on the dates the payments constituting the Indemnified Amount were made until satisfaction of this AWARD; and
(b) the sum of $1,147,455.03 with respect to the Vacation Claims together with interest at the simple rate of nine percent (9%) per annum commencing on the dates payments of the indemnified Vacations Claims were made until satisfaction of this AWARD;
(c) DENIES Purchaser’s Profit Distribution Claim and Awards Seller interest at the simple rate of nine percent (9%) per annum commencing on the date such amount was deducted from the Earn-Out and ending on the date of the Final Award to be rendered in this arbitration. Purchaser shall credit the amount of the Profit Distribution Claim plus the interest against amounts owed to Purchaser in this Award.
E. With respect to the Escrow Income Claim discussed in Section V.E. above:
(1) DECLARES that, in accordance with the findings set forth in Section V.E. above, Seller is not entitled to a distribution of income out of the Escrow Account on any investment in prefunded municipals to the extent that such distribution consists of the amortization of the premium over par paid to acquire the security; and
(2) ORDERS that, within sixty (60) days from the date of the service of this AWARD, the parties’ respective advisors meet and confer in an attempt to agree upon the appropriate amount of income received from the prefunded municipal bonds to be credited to the Escrow Amount and, in the event that agreement cannot be reached, either party, within thirty (30) days thereafter, may apply to the Tribunal to resolve any disagreement. The Tribunal will exercise continuing jurisdiction to resolve any dispute that may arise in connection with this ¶ E(2).
F. With respect to the parties’ applications for costs and professional fees:
(1) Purchaser is awarded its reasonable costs and counsel fees in connection with the VAT claims, the IMI Peru tax claims, the Pipeline Abandonment and EIS Environmental Claims, the Health and Safety Claims, the Vacation Claims and the Escrow Income Claim;
(2) Seller is awarded its reasonable costs and counsel fees in connection with its defense of the Pipeline Abandonment Claim and the Profit Distribution Claim;
(3) With respect to the award to Purchaser of its reasonable costs and counsel fees in connection with the VAT claims, such costs and reasonable fees include both the costs and fees incurred in prosecuting its claims before this Tribunal and the costs and reasonable fees incurred in the proceedings in the U.S. District Court;
(4) On all claims on which costs and fees are awarded, such costs and fees include those incurred by local Peruvian counsel in the prosecution or defense, as the case may be, of the various claims listed above to the extent such costs and fees are not already included in the amounts awarded;
(5) Within thirty (30) days from the date of the service of this AWARD, each party may submit an application for the costs and fees awarded in accordance with this ¶ F. Such application shall itemize with reasonable particularity the elements of such costs and fees and shall include a description of the work performed, the persons who performed the work and the rates charged for such services. Descriptions of the services performed may be redacted to the extent required to preserve confidentiality. The applications shall include a statement by counsel that such costs and fees have been actually incurred and paid, or that such costs and fees are actually owing. Within two weeks from the receipt of the other side’s application, the receiving party may file a response with any objections or observations that it may wish to raise. The Tribunal will thereafter determine the amounts to be awarded and, in that connection, reserves the right, at its option, to conduct a telephonic or in-person hearing to discuss any matters that may need clarification. The Tribunal will exercise continuing jurisdiction to determine the costs and fees to be awarded in connection with this ¶ F.
G. This PARTIAL FINAL AWARD is in full settlement of all claims and counterclaims submitted to the Tribunal for decision, except as otherwise provided herein,
H. WE HEREBY CERTIFY that, for the purposes of Article 1 of the New York Convention of 1958, on the Recognition and Enforcement of Foreign Arbitral Awards, this Partial Final Award was made in New York County, NY, United States of America.
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