'12. The Terms of Reference where duly signed by Claimant, Defendant and Arbitrator as of 20.7.2001.

. . . . . . . . .

14. In accordance with the procedural rules agreed by the parties, Claimant made six submissions of additional documents (on 22, 23, 24, 26, 30, and 31.10.2001) and Defendant filed an expert report (the "Expert Report") on 31.10.2001. Claimant submitted his comments on the Expert Report on 21.11.2001. Final Writs by Claimant and Defendant were filed on 7.12. and 19.12.2001.

15. Defendant attached to its Final Writ a letter dated 9.11.2001, addressed by [Company X] to Defendant. In that letter [Company X] states:

- that a test of the Equipment had been performed as of 12.02.2001;

- that such test had shown insufficiencies in the performance of the Equipment to serve three or four furnaces;

- that Defendant had not taken any action to repair, modify or substitute the Equipment;

- that consequently [Company X] rejects the Equipment in accordance with clause 29 of the contract between [Company X] and Defendant.

16. On 17.01.2002 the Arbitrator sent a letter to the parties, stating:

"As a consequence of [Company X]'s letter dated 9.11.2001, in which [Company X] rejects the Equipment, a number of new issues have arisen, which require additional evidence, in order to ascertain the reasons why [Company X] has taken such decision, and its possible impact on the contractual relation between Claimant and Defendant. Consequently, the Arbitrator, in accordance with Point G)e) Terms of Reference, hereby

A) Requests Defendant to produce, not later than January 24, 2002 a certified copy of the Contract between [Company X] and Defendant, to which reference is made in [Company X]'s letter dated 9.11.2001. Defendant is authorized to blank out any specific references to prices.

B) Requests Defendant to produce, not later than January 24, 2002 the certificates and any other documentation drafted in preparation or as a consequence of the test of the Equipment apparently performed on February 12, 2001, and to which reference is made in [Company X]'s letter.

C) In accordance with clause G)e) of the Terms of Reference, the Arbitrator intends to send to [Company X] the letter which is attached hereto. Parties are requested to comment on such initiative by January 24, 2002.

D) Parties are authorized to present through January 24, 2002 any other documents, statements or evidence related to [Company X]'s purported rejection of the Equipment."

17. Notwithstanding the fact that in a letter dated 28.01.2002 the Arbitrator extended the time period for Defendant to produce the documents referred to in the preceding paragraphs, the Defendant failed to do so, without giving any explanation.

18. On 11.01.2002 Claimant submitted a "claim for an urgent injunction", in order to prohibit Defendant to make an intended drawing under the Bank Guarantee. After hearing Defendant's arguments (contained in a letter dated 16.01.2002), the Arbitrator issued the following provisional conservatory order as of 17.01.2002:

"In accordance with art. 23 of the ICC Rules of Arbitration, the Arbitrator hereby orders Defendant . . . not to request any payment under a first demand bank guarantee issued by [Bank A] on behalf of Claimant . . . in accordance with the Contract dated February 21, 1997.

This order shall be valid until January 28, 2002. This order shall take the form of an award, if so requested by Claimant for the purpose of its enforcement through the Courts.

The reasons for the granting of this order are the following: Claimant is requesting in its claims "that Defendant refrain from executing the first demand bank guarantee issued by [Bank A] for . . . (the "Bank Guarantee") in accordance with the Contract" (see point C)c)3. Terms of Reference). Defendant has indicated its intention of requesting payment under such guarantee. In accordance with the Contract, Defendant can only call under the guarantee, if Claimant has defaulted under its contractual obligations-the very issue which is being discussed in this arbitration. Besides, if Defendant claims under the guarantee, the relief sought by Defendant-namely that Defendant refrain from doing so-becomes illusory.

The order is time limited until January 28, 2002 because, in accordance with Defendant's allegations, the guarantee expires on February 1, 2002 and Defendant is requesting from Claimant an extension of the bank guarantee. The Arbitrator will in due course decide whether the time limit of this order is or not extended."

19. After further submission by the parties, the Arbitrator replaced the provisional conservatory order by a new conservatory order dated 28.01.2002, with the following text:

"In accordance with article 23 of the ICC Rules of Arbitration, and bearing in mind the arguments set forth in the preceding paragraph, the Arbitrator hereby orders Defendant . . . not to request any payment under the Bank Guarantee, except if Defendant, when making such request, strictly adheres to the following conditions:

a) The maximum amount to be collected by Defendant shall not exceed . . .

b) Any request for payment shall be made with an express instruction issued to and approved by [Bank A] (the "Bank") that (i) all amount paid out under the Bank Guarantee shall not be delivered to the beneficiary, [Defendant], but rather be held in escrow by the Bank, in a special joint account opened in the Bank on behalf of [Claimant] and [Defendant] (ii) the amounts deposited in such account shall only be paid out to any of both parties, in accordance with the decision contained in the final award rendered in this Arbitration (ICC Arbitration case 11367).

c) Defendant shall inform in advance the Arbitrator and the Claimant of any intended request for payment, giving details of the wording of the instructions to be given to the Bank. Defendant shall not submit such request until the wording of the instructions has not been approved by the Arbitrator.

This Order is not time limited. It shall take the form of an award if so requested by Claimant for the purpose of its enforcement through the Courts."

20. On 21.02.2001 the Arbitrator received and circulated to the parties a letter from [Company X], in which [Company X]

- described the contract entered into between [Company X] and Defendant;

- confirmed that the Equipment had been tested on 12.12.2001, in presence of Defendant;

- stated that the test had to be abandoned, since it was established that the pit management could not be performed in accordance with such contract;

- confirmed that it had requested Defendant to increase the capacity of the Equipment and of the pit management system, in order to reach the levels agreed upon in their contract;

- Defendant's lack of response to [Company X]'s requests, led [Company X] to reject the Equipment.

21. Claimant and Defendant were given an opportunity to present an Additional Writ, which both parties did on 28.02.2002. Claimant and Defendant confirmed that Defendant had on 31.01.2002 called the Bank Guarantee for its total amount . . ., thus violating the Arbitrator's conservatory order dated 28.01.2002. As of the date hereof, it is not certain whether the Bank will or not make a payment to the Defendant in accordance with the request.

For this reason, Claimant added the following claims to the relief it is seeking:

"01 - That the Defendant be condemned to pay all damages and costs that may arise to [Claimant] or to its successor in title . . . from the payment by the Bank to the Defendant or to its successor in title of the full amount of the bank guarantee or of any amount not in accordance with the conditions of the interim injunction of January 28, 2002, or that may arise from any award that the Defendant may obtain against the Bank in any lawsuit, either in a judicial court, or in an arbitral tribunal, calling on the responsibility of the Bank not making the payment of the full amount of the bank guarantee or of any amount not in accordance with the conditions of the referred interim injunction.

02 - Be judged by the arbitral tribunal that the Defendant had and it has not (sic) the right to reject the cranes as it notified the Claimant by . . . letter of January 10, 2002".

22. These additional requests presented by Claimant in its final submission, pose the question of their admissibility. The relevant provision is Art. 19 of the Rules, which states as follows:

"New Claims

After the Terms of Reference have been signed or approved by the Court, no party shall make new claims or counterclaims which fall outside the limits of the Terms of Reference unless it has been authorized to do so by the Arbitral Tribunal, which shall consider the nature of such new claims or counterclaims, the stage of the arbitration and other relevant circumstances."

Claimant's relief, as set forth in the Terms of Reference, included a request that Defendant refrain from executing the Bank Guarantee, but no reference to a right to reject the Equipment . . .

The Arbitrator is of the opinion that the second request is not admissible, since such request could and should have been presented at the outset of the procedure and included in the Terms of Reference. Claimant has failed to do so, and it is not appropriate that such new request be admitted at such late stage of the proceeding.

As regards the first request, it should be declared admissible. Firstly, because it falls within the general limits of the relief sought in the Terms of Reference: it is not a "new claim . . . which falls outside the limits of the Terms of Reference", and thus is not affected by the prohibition contained in Art. 19 of the Rules. And secondly, because the Defendant mentioned its intention to call under the Bank Guarantee only on 11.01.2002, and since such intention could not have been foreseen, Claimant could not have filed for such relief before the date when it did.

23. On 28.02.2002 the Arbitrator declared the proceedings closed, in accordance with art. 22.1. of the Rules of the Court. On 15.03.2002 Claimant filed a request for the issuance of the conservatory order in the form of an award.

24. Throughout the Arbitration, the procedural rules established in the Rules of the Court and those agreed in the Terms of Reference have been duly complied with, and no party has raised any objection or protest.'