Claimant, a Netherlands Antilles company, and Respondent, a Venezuelan company, negotiated a time charter party for the provision of tug services by Claimant to Respondent. The charter party was put on hold by Respondent as a result of government restrictions on the tug operators authorized to provide services in local waters. Respondent considered the charter party to have been frustrated by force majeure, which Claimant refused to accept, accusing Respondent of misrepresentation and failure to take action to save the situation. Respondent retorted by accusing Claimant of failing to obtain the necessary permits to operate the tugs. The parties' relations deteriorated, leading to the initiation of arbitration proceedings, in which Claimant sought damages for the losses it had suffered.

'10. General Conclusions of Facts

The examination and analysis of the evidence of record lead the Tribunal to the following conclusions:

10.1. During the negotiation of the Time Charter, [Respondent]'s negotiators, acting in good faith and relying on the freedom to contract given to [Respondent] under the Master Agreement, made representations and promises . . . to [Claimant] that the Time Charter could be concluded and could operate free from Government interference, and that [Respondent] would enforce its right of freedom to contract under the Master Agreement.

10.2. [Claimant] justifiably relied on [Respondent]'s representations and promises in entering into the Time Charter.

10.3. At the time of entering into the Time Charter, [Claimant] had the necessary onshore license to operate in [locality], which was proved to the satisfaction of [Claimant]'s and [Respondent]'s legal counsel and was confirmed by the [local] court. [Claimant] did not mislead [Respondent] on the subject of whether additional licences or permissions were required.

10.4. [Respondent] signed the Time Charter with full knowledge of [the port authority]'s position that the performance of tug services in [locality] required its permission.

10.5. By entering into the Time Charter, [Respondent] undertook the obligation and had the duty to act in good faith towards [Claimant], including good faith compliance with its representations and promises to enforce its right to freedom to contract under the Master Agreement.

10.6. After the signing of the Time Charter and in the course of the court proceedings initiated by [Claimant] with [Respondent]'s approval, [Respondent] further promised [Claimant] that it would take action and enforce its right of freedom to contract under the Master Agreement if [Claimant]'s legal action proved unsuccessful.

10.7. [Respondent] did not comply in good faith with its representations and promises to [Claimant] to enforce its right of freedom to contract under the Master Agreement with regard to [Claimant]'s performance of the Time Charter, although [Respondent] had the power - having the right - of doing so. Following the conclusion of the [local] court proceedings, [Respondent] took no action to enforce its right but rather sought to excuse itself from its obligations to [Claimant] under the Time Charter and its prior representations and promises. [Respondent]'s conduct effectively caused the termination of the Time Charter.

10.8. The Time Charter did not fail to come in effect nor fail to operate as a result of "force majeure", since the actions of [port authority] and the Government, and the court decisions upholding their position, do not constitute force majeure in the strict meaning of the term. This is especially true where [Respondent] knew of [the port authority]'s position before it signed the Time Charter.

10.9. [Respondent] breached the duty of good faith that it owed to [Claimant] under the Time Charter because of its failure to enforce its right of freedom to contract under the Master Agreement. [Claimant] is therefore entitled to the damages awarded herein.

11. Considerations of Law

11.1. It is agreed between the parties that the Award shall be founded on the substantive law of the Netherlands Antilles.

11.2. The law of the Netherlands Antilles is similar to the law of the Netherlands, unless it specifically deviates therefrom. No subject came up in the course of this arbitration where such a deviation was argued to be present.

11.3. Books 3, 5 and 6 of the New Civil Code of the Netherlands came into effect on January 1, 1992. They contain the so-called "Patrimonial law." Particularly with respect to the subjects relevant to the present arbitration, the New Civil Code does not purport to do anything else than to codify the existing case law (developed on the basis of the Civil Code of 18.7)2. It follows (a) that the equivalence of Netherlands and Netherlands Antilles law is not disturbed by the introduction of the New Civil Code in the Netherlands only and not also in the Netherlands Antilles, and (b) that it is indifferent whether the law is presented in the form of a short resumption of "old" cases or in the form of the text of a particular, numbered article of the New Civil Code.

11.4. The present Award is based on a careful examination of the contractual relationship between the parties as set out in the Time Charter Agreement in the light of the surrounding circumstances as they developed during the year . . . The Tribunal looked in detail at all the facts of the case and attributed to them the legal consequences which in its opinion had to follow. It determined the meaning which the parties could reasonably mutually attach to the provisions of the contract; it also determined the consequences of the statements and conduct of each of the parties.

11.5. Article 248 of Book 6 of the New Civil Code sets out an extremely important rule of Netherlands law and also Netherlands Antilles law:

A contract has not only the juridical effects agreed to by the parties, but also those which, according to the nature of the contract, result from the law, usage or the requirements of reasonableness and equity.

A rule binding upon the parties as a result of the contract does not apply to the extent that, in the given circumstances, this would be unacceptable according to the criteria of reasonableness and equity.

11.6. The words "reasonableness and equity" (redelijkheid en billijkheid) are synonymous to what in the former Netherlands law and the present-day Netherlands Antilles law is called "good faith" (goede trouw). The modern Netherlands legislator preferred to reserve the expression "good faith" (goede trouw) for a description of the state of mind of a person who in all honesty errs about a legal situation, and to use the expression "reasonableness and equity" (redelijkheid en billijkheid) for the normative description of how participants in a given social context (e.g., a contract) ought to behave towards each other. It should be noted that the Netherlands Supreme Court has consistently ruled that the requirements of "reasonableness and equity" govern not only the contract once it exists but also the making of the contract (without prejudice to the statutory recognition of each specific classic "defects" as error, undue influence, etc.).'