In 2000, a year prior to the commencement of the arbitration in 2001, Respondent No. 2 and its affiliated companies ('Debtors') filed in a US court for protection under US bankruptcy laws. At that time, Respondent No. 2 was in arrears with its payments to Claimant, an Asian company, under their contracts. The ultimate parent company of the group to which Respondents belonged acquired the assets of Respondent No. 2 and affiliated companies and agreed to assume all 'assumed liabilities', defined as 'all Contracts of Sellers . . . other than the Rejected Contracts and the Completed Contracts'. Although not listed as Rejected Contracts or Completed Contracts, the contracts between Claimant and Respondent No. 2 were considered by the parties as rejected and a new contract ('Continuation Contract') was made between Claimant and Respondent No. 1 for completion of the project. Respondents terminated their agreement with Claimant, causing the latter to initiate the arbitration. Concurrently, Respondents' parent company was litigating against Claimant to recover money under one of the parties' contracts.

'[Respondent parent company] incorporated [Respondent No. 1] in June of 2000 as its vehicle to take title to most of the assets and assume certain of the liabilities of the bankrupt [Respondent] group. The [A] Contract received special treatment in the bankruptcy. It was not an assumed contract and it was not a purely rejected contract either. It was something in between, or as Mr . . . put it in his testimony: "During the course of the auction . . . the . . . project was taken from the rejected projects list . . . subject to the understanding that there would be the rejection, the replacement contract, subject to that, it was being taken off the rejected projects list. It was, it was carved out, it was identified in the auction proceedings as a special case or a different case, it was not technically an assumed contract, it was off the rejected contract list, it was not technically an assumed contract . . ."

It is clear, however, that the . . . Project was not rejected in the bankruptcy. [Respondent parent company] and [project owner] agreed that the project would be completed, but under a new contract, not the old [A] Contract. Accordingly, the [A] Contract was deemed rejected in the bankruptcy and was replaced by the Continuation Contract.

The Representation Agreement did not appear as a rejected contract or a completed contract in the Asset Purchase Agreement between [Respondent parent company] and the Debtors and, as such, was an assumed contract pursuant to Schedule 2.03 of the Asset Purchase Agreement. There are other factors to support the finding that the Representation Agreement was an assumed contract. As testified by Mr . . ., [Respondent parent company] received credit in the bankruptcy auction for removing the [A] Contract from the list of rejected contracts and, presumably, for not placing the Representation Agreement on the list of rejected contracts. The purchase price for the assets of the Debtor was a mix of cash and value of assumed liabilities. Had either of the [A] Contract or the Representation Agreement been on the list of rejected contracts in [Respondent parent company]'s bid, the value of [Respondent parent company]'s bid would have significantly decreased. Mr . . . testified that the liability value of the [A] Contract was "on the order of $30 million", and that both [Respondent parent company] and [X] received a credit of this amount in the bankruptcy auction.

During cross-examination, Mr . . . confirmed that he had been responsible within [Respondent group company] for coordination, screening and approval of foreign and domestic representative contracts. When shown Schedule 3.17(a)(iii) to the Asset Purchase Agreement, which listed the Representation Agreement among many other agreements in the same category, and asked whether they were assumed by [Respondent parent company] or [Respondent No. 1], Mr . . . answered: "The general possession of both bidders [Respondent parent company and X] was that these were part of the assets that were being transferred". Under redirect, however, Mr . . . modified his answer and stated that Schedule 3.17(a)(iii) was "just a list" and that he could not testify as to which contracts had been or had not been assumed. Irrespective of Mr . . .'s understanding or view in this regard, the Representation Agreement was listed as a "Contract" in the Asset Purchase Agreement, and [Respondent parent company] assumed all Contracts other than Rejected Contracts and Completed Contracts. Neither of the [A] Contract or the Representation Agreement was listed as a Rejected Contract or Completed Contract. The fact that the Bankruptcy Court, based on the arrangements in the MOU, declared . . . that the [X] Contract was deemed rejected as of July 13, 2000, cannot change the clear wording under the Asset Purchase Agreement that [Respondent parent company], and its assignee [Respondent No. 1], assumed the Representation Agreement.

The Debtor clearly viewed the Representation Agreement as an assumed contract, as evidenced by an affidavit signed on June 20, 2001, by Mr . . ., an Assistant Secretary of [Respondent group company], and filed with the District Court. In this affidavit, Mr . . . states that the Bankruptcy Court on July 13, 2000, authorized the acquisition by [Respondent No. 1] of substantially all of the assets and certain of the liabilities of the Debtor's, including the Representation Agreement.

Furthermore, on July 18, 2001, during a hearing in the District Court, [Respondent No. 1] confirmed that it had assumed the Representation Agreement, and maintained that position until several months into this arbitration.

In February of 2002, [Respondent parent company] and [Respondent No. 1] changed position when [Respondent parent company] asserted in the Bankruptcy Court, and [Respondent No. 1] in this arbitration, that [Respondent No. 1] had not assumed the Representation Agreement. [Respondent No. 1] has in this regard argued that the [A] Contract was intended to be a rejected contract, notwithstanding the fact that it did not appear on the list of rejected contracts, and that the Asset Purchase Agreement treated contracts associated with rejected contracts as rejected contracts as well. Therefore, according to [Respondent No. 1], the Representation Agreement was not intended to be an assumed contract. However, given the special treatment of the [A] Contract in the bankruptcy proceedings and, irrespective of the degree to which the [A] Contract should be regarded as a rejected contract, the more important fact that the . . .Project was assumed will tip the scale in favor of [Claimant]'s position that the Representation Agreement was an assumed contract.'