Respondent ordered a sugar-cube production plant from Claimant. Following Respondent's default on the contractual terms of payment and the failure to find a solution, Claimant terminated the sales contract and claimed compensation and interest from Respondent. In so doing, it pointed out the attempts it had made to mitigate damage by selling that part of the facilities which had not been specially designed to meet Respondent's particular needs. Respondent argues its inability to finance the order due to unforeseen economic changes in the Turkish sugar-cube market, currency divergency and a rise in the costs of energy, cardboard packaging and labour, preventing it from obtaining a bank loan. It requests repayment of its advance. In the final Award, the sole Arbitrator firstly finds the contract to be valid, as the financing thereof by Respondent was not a condition precedent for its validity. The Arbitrator decides Dutch law is applicable, but also stresses that the national rules of law should be applied in the light of international contractual law, especially the <b>Unidroit Principles</b>. He considers that the events mentioned by Respondent do not release it from its obligation to pay, as the cancellation of contracts due to the occurrence of unforeseen events should be admitted only in rare cases. He decides that the events mentioned by Respondent are part of the economic risks borne by the latter. As the cancellation of the contract is thus valid, Claimant is accordingly entitled to compensation and interest. The costs of the arbitration are not split in accordance with the parties' respective success rates. General principles of international arbitration law call for arbitral tribunals to take account of the parties' attitudes during the proceedings as well as the outcome of such proceedings. As Respondent had not paid any advance and had not signed the Terms of Reference or taken part in the hearings, it should bear the arbitration costs in full.

<i>With respect to Respondent's obligation to pay and the events referred to with a view to its release therefrom:</i>

'The circumstances put forward by Respondent do not entitle the Arbitral Tribunal to release Respondent from its obligation to pay pursuant to Art. 6:258 of the Dutch Civil Code (Burgertijk Wetboek, BW) on the ground of the occurrence of unforeseen circumstances ("onvoorziene omstandigheden"). It is true that the provisions of the Dutch Civil Code as the law governing the producer are applicable to the contract in accordance with Art. 13, para. 3, sentence 1 of the ICC Rules of Arbitration taken in conjunction with Section 28.2 of the General Terms of Business. This also follows from Art. 13, para. 3, sentence 2 of the ICC Rules of Arbitration taken in conjunction with Article 187, paragraph 1, 2nd alternative of the Swiss Private International Law Act (PILA). The Swiss PILA, according to Article 176, paragraph 1 thereof, is applicable to the present arbitration, as Zurich (Switzerland) was fixed by ICC as the place of arbitration and both parties have their registered offices outside Switzerland. Claimant, in its capacity as producer of the sugar-cube production plant, has effected the characteristic performance in respect of the contract; as a result, the dispute is most closely connected with its law . . .

The provision of Art. 6:258 also applies, even though in Section 25 of the General Terms of Business the parties agreed on special regulations covering "grounds for release". Indeed, according to Art. 6:250 of the BW, the parties may not derogate from this provision by mutual agreement, which means that the rule is mandatory . . .

The requirements of the provision are not met in the present case, however, the premise being that this provision should only be applied with much prudence. This is firstly because it is a special rule giving general autorization to consider specific contractual provisions as inapplicable in the given circumstances according to standards of fairness and reasonableness ("redelijkheid en billijkheid"), pursuant to Art. 6:248, para. 2 taken in conjunction with Art. 3:12 of the Dutch Civil Code . . . As it is, this general provision is applied only with much prudence in internal legal practice within the Netherlands . . . The prime decisive factor here, according to Art. 3.12 of the BW, is the "legal conviction valid in the Netherlands". In the case of application of the provision in an international context, this is replaced by the legal convictions valid in international contract law. The decisive characteristic here, however, is the principle of pacta sunt servanda, as expressed to some extent in Article 1.3 of the Unidroit Principles of International Commercial Contracts . . . These legal convictions are also to be taken into consideration when applying national law to international matters . . . The necessity and admissibility of interpreting national law in the light of the Unidroit Principles has also been specifically advocated for Dutch law . . .

It is the intention of the Dutch legislator that such prudence in applying the law should also exist in the application of the special rule in Art. 6:258 . . . Such prudence is again in keeping with international contractual and arbitral practice. It should also be considered in the context of national Dutch law . . . Accordingly, termination of a contract on the grounds of the occurrence of unforeseeable circumstances ("hardship", "clausula rebus sic stantibus") should be admitted only in extreme and rare cases . . . The underlying principle in international trade is rather that the parties themselves assume the corresponding risks of performing and fulfilling the contract unless the risks are expressly otherwise distributed in the contract itself . . . Moreover, Art. 6.2.1 of the Unidroit Principles states specifically that the mere fact that performance of a contract entails greater economic difficulties for one of the parties is not sufficient justification for accepting a case of hardship . . . The ICC principles on force majeure and hardship also provide that a party cannot invoke hardship in performance simply because the contract turns out to be unprofitable for it . . . Accordingly, a Dutch arbitral tribunal found that a dramatic fall in prices and currency divergency alone do not constitute unforeseeable circumstances and therefore do not justify termination of the contract. It was the opinion of the arbitral tribunal that these circumstances fell rather within the area of risk of the party concerned . . . In view of these uncertain circumstances on the Turkish market, known to Respondent, it cannot be countenanced that Respondent now wished to shift the associated economic risks to Claimant. . . .'

<i>With respect Claimant's ending of the contract:</i>

'Claimant, for its part, however, . . . put effective end to the contract with Respondent. The question here may be whether Claimant, through the document from its legal counsel dated . . . , effectively cancelled the contract by way of voidance («vernietiging») in accordance with Art. 3:39 of the BW, or by way of termination («ontbinding») in accordance with Art. 6:267, para. 1 of the BW. The parties in fact effectively excluded these provisions of the applicable Dutch law in the General Conditions for the Supply and Erection of Plant and Machinery for Import and Export of the United Nations Economic Commission for Europe (No. 188 A) appended to the order confirmation. According to these Supply Conditions, Claimant is entitled to terminate the contract and claim damages.

The General Supply Conditions were validly included in the contract between the parties. To this end, Art. 6:234, para. 1(1) of the BW taken in conjunction with Art. 6:233(b) of the BW requires that the user provide the other party with the conditions "before or at the time of concluding the contract", so that the other party has "a fair possibility of acquainting itself" with the content of such conditions. The order confirmation of . . . , which was initialled and signed by both parties and hence represents the actual text of the contract, contains both in the preamble and the concluding section an express reference to the General Supply Conditions, which were moreover appended to the contract.

According to Art. 10.2 of the Supply Conditions, Claimant could, in the event of the late taking of delivery, summon Respondent to take delivery within a fitting period of time; once this period had expired, it could renounce the contract simply by giving written notification. The Claimant has satisfied these requirements. . . .'

<i>With respect to the arbitration costs:</i>

'According to Art. 20 of the ICC Rules of Arbitration, the Arbitral Tribunal is required, in addition to deciding on the merits of the case, to rule on the costs of the arbitration and decide which of the parties should pay the costs. According to general principles, the costs of the proceedings are borne by the unsuccessful party in the arbitration . . . In the present case, Respondent is unsuccessful in its counterclaim, while Claimant is only partially successful in its claim. Moreover, it is liable towards Respondent for costs in connection with the partial withdrawal of its claim announced during the proceedings . . . . However, the arbitration costs are to be borne in full by Respondent. Indeed, according to general principles of international arbitration law, the Arbitral Tribunal, in its decision on costs, should take account not only of the outcome of the proceedings but also of the conduct of the parties during the proceedings . . . Parties to international arbitration have a special duty, in good faith, to help the proceedings to progress and to refrain from any delaying tactics . . . Respondent's conduct during the entire proceedings in no way meets these requirements. Respondent paid none of the advances on costs required for the arbitration. Moreover, it not only delayed in submitting its counterclaim, namely until after the first draft of the Terms of Reference had been drawn up, refused to sign the Terms of Reference amended in accordance with its wishes, despite being fully advised by the Arbitral Tribunal as to the significance and legal consequences, and failed to take part in the hearings despite being given sufficient notice, but also, by instructing legal counsel at the last minute, i.e. after the hearings were over and shortly before the expiry of the final deadline for reacting to the report of the proceedings, and then cancelling the brief just a few days later, contributed considerably to delaying and confusing proceedings. This was moreover exacerbated by the fact that the same legal counsel resumed the brief on the same day, without the arbitrator being informed.

For the above-mentioned reasons, Respondent shall reimburse Claimant for the advance on costs amounting to . . . paid by the latter in respect of these proceedings.

According to Article 20, para. 2 of the ICC Rules of Arbitration, the requirement to pay costs incumbent on Respondent also covers the "normal legal costs incurred by the parties". . . . The "normal" nature of the legal costs is determined according to general principles underlying arbitration cost law. The deciding factor here is whether the validated legal costs are objectively necessary and fitting, given the factual and legal complexity of the case including the anticipated time it would take. The Arbitral Tribunal has some leeway in making its decision . . . In view of the legal questions raised by the proceedings and having regard to the course of the proceedings described above, the Arbitral Tribunal finds Claimant's validated legal costs necessary and fitting, and therefore also "normal" within the meaning of Art. 20, para. 2 of the ICC Rules of Arbitration. They are consequently to be borne in full by Respondent.'