Arbitration costs / Inappropriateness to use, as a basis for fixing the party's costs, the Zurich rates applicable for the fees of attorneys in court proceedings / Apportionment of costs

'Since the second stage of the proceedings (devoted to determining the damage suffered by Claimant) thus becomes pointless, this Award must settle the issue of the arbitration costs and expenses . . . In this respect, it should be noted that while Defendant entirely wins his case on the merits and Claimant's claims are disallowed, it nevertheless remains that two of Defendant's allegations have proved to be unfounded. On the one hand, Defendant denied in the face of facts Claimant's capacity to act, thus forcing an investigation to be carried out on this point, and only waived this unfounded objection at the hearing of the tribunal. On the other hand, Defendant based his case on the validity of the notice of termination of . . . 1989, although the notice of termination would not have sufficiently justified the immediate cancellation of the agreements, had the cancellation not been accepted later on by Claimant. These two considerations justify that one quarter of the arbitration costs should be borne by Defendant. Therefore Defendant should only obtain a partial reimbursement of expenses. In order to fix the amount of expenses, the Zurich rates applicable to the fees of attorneys in court proceedings (Order of 10 June 1987) are obviously not appropriate. Furthermore the arbitrators have in hand the appraising elements needed for a fair determination of such expenses in light of the proceedings that have taken place before them. Taking into account, on the one hand, the relatively high amount in dispute and, on the other hand, the fact that the proceedings were confined to the question of principle, excluding any instruction regarding the value of damage, it would seem fair to fix the amount of the expenses of each party to some Sfr. 80,000. Considering, as stated above, that Claimant shall bear three quarters and Defendant one quarter of this amount, no allocation of expenses shall be granted to the former and the latter shall obtain expenses reduced by one half.

. . .

In light of these considerations the Arbitral Tribunal . . .

- Decides that Claimant shall pay three quarters of the arbitration costs, fixed at US$ 160,000, and as these costs were entirely advanced by Claimant, Defendant shall reimburse one quarter of them to Claimant, plus 5% interest (five percent) from the date of notification of this award.

- Orders Claimant to pay to Defendant the sum of Sfr. 40,000, plus a 5% interest (five percent) from the date of notification of this Award, as a share in Defendant's expenses for counsel.'