'II. Claimant's request for an adverse inference

1. Claimant's position

30. Claimant seeks to obtain from the Arbitral Tribunal an adverse inference for what it considers to be Respondent's ongoing refusal, delay, destruction and incomplete production of documents requested by Claimant and ordered by the Arbitral Tribunal. Such conduct on its own supports the making of an adverse inference and there is no requirement, as a matter of law, that [Claimant] has to specify exactly how the missing documents prove damages to [Claimant].

31. According to [Claimant], [Respondent] declined to produce without explanation documents responsive to Requests . . . As regards Requests . . ., [Claimant] considers that no satisfactory explanation was given as to the alleged non-existence of these documents.

32. [Claimant] concludes that the record amply supports adverse inferences in at least three areas as to which [Respondent] has withheld documents . . .

2. Respondent's position

33. In the first place, Respondent objected to "discovery, as has been ordered in this arbitration, in relation to [Claimant]'s requests for documents . . .". For Respondent, discovery is not part of an ICC arbitration in Paris.

34. According to Respondent, the drawing of an adverse inference by the Arbitral Tribunal, even in accordance with Article 9.4 of the Terms of Reference, does not create a legal or factual presumption, nor can it give rise to a shifting of the burden of proof on [Respondent]. Such interpretation of Article 9.4 of the Terms of Reference would, amongst other [sic], also be inconsistent with Article 8 of the Swiss Civil Code ("CC").

35. Claimant failed to explain or prove its allegations or claims, and more generally to establish the evidentiary relevance, i.e. the circumstances that are necessary to seek such inference. Moreover, [Respondent] has responded to most of Claimant's production requests, and in cases where the documents could not be produced because they could not be found or were not produced because they were not relevant, [Respondent] made its best efforts to provide explanations as to why they might be missing or were not produced.

3. Finding of the Arbitral Tribunal

36. An Arbitral Tribunal acting under the ICC Rules has the inherent power to order the production of certain documents. This power flows from Article 20(1) and (5) of the ICC Rules and is not excluded by the mere fact that the Arbitral Tribunal has its seat in Paris. It may be limited inasmuch as Parties to an international arbitration agreeing to Paris as place of arbitration may have different expectations as to discovery of documents than when they agree to a common law jurisdiction where discovery is a common feature of at least the judicial system. In the present case, which opposes a US and a Swiss corporation, these considerations do not need to be pursued further, since the Parties, who are both represented in this arbitration by experienced counsel, have expressly agreed to the power of the Arbitral Tribunal to order the production of documents.

37. Articles 9.3 and 9.4 of the Terms of Reference read as follows:

9.3 A Party may, by written notice to produce a document or class of documents, requests the other Party to provide any document relevant to the dispute between the Parties, provided such document or class of documents is identified with reasonable particularity and is not at the disposal of the requesting Party. Requests for documents shall be made in writing as soon as reasonably practicable and in any event before a date to be stipulated in a provisional timetable. Documents so requested should be produced within a reasonable period of time unless objections are taken to their production within ten days after receipt. Where an objection is taken to production, the requesting party may submit the dispute concerning the production of documents to the Arbitral Tribunal. All Parties shall do their best to avoid delay to the arbitral proceedings by late requests for documents.

9.4 If a Party fails without satisfactory explanation to produce any document requested by the other Party and subsequently ordered to be produced by the Tribunal, the Tribunal may infer that such document would be adverse to the interests of that Party.

38. It is on the basis of Article 9.4 that the Arbitral Tribunal ordered the production of documents, as set forth in Procedural Orders Nos 4 and 6.

39. As mentioned above, the Arbitral Tribunal has ruled in its Procedural Orders Nos 6 and 7 that it was not prepared to draw adverse inferences from Respondent's non- or incomplete production of documents prior to the evidentiary hearing. Given the finality of arbitrators' awards (see Article 28(6) of ICC Rules) in deciding upon commercial disputes, arbitrators often prefer to render their decisions once the case has been heard in its entirety. This preference was also the driving motive of this Arbitral Tribunal.

40. The Arbitral Tribunal has read with interest the Residential Funding Corp. case, which Claimant discussed and relied upon in its Post-Hearing Brief No 2. In that case, the US Court of Appeals for the 2nd Circuit reviewed the possible sanctions under Rule 37(b)(2) of the Federal Rules of Civil Procedure (FRCP) where a party breaches a discovery obligation or fails to comply with a court order regarding discovery. This Arbitral Tribunal is not, however, prepared to seek inspiration from that US Appeal Court case, since it does not believe that discovery ordered in the context in an US Court trial has anything in common with the production of documents ordered by an arbitral tribunal acting under the ICC Rules and sitting in Paris.

41. The Arbitral Tribunal does not hesitate to state that orders for the production of documents often reach their limits when a party to an arbitration elects not to comply with such orders, or does not do so fully. Given the different approaches, different views and practices regarding orders for the production of documents which prevail all over the world, an international arbitral tribunal will normally be reluctant to draw a quick conclusion from a party's non-production of documents. It would in particular rarely, if ever, be appropriate to shift the burden of proof from the party requesting the production of documents to the party ordered to produce the same.

42. Nevertheless, where a party does not comply with an order for the production of a very specific document, and where the arbitral tribunal has reason to believe that such document exists, and no valid excuse for its non-production is offered, the Tribunal may come to the conclusion that an adverse inference should be made with regard to a specific fact. In other words, in such case, the fact that the requesting party cannot meet its burden of proof with respect to a specific point would lead to the dismissal of its claim, even if all the other elements of such claim would have been shown to exist. Thus, an adverse inference with respect to one fact will not automatically be a substitute for all the other elements of a claim as to which the party bearing the burden of proof will have to provide sufficient and satisfactory evidence.

43. When reviewing the Claimant's claims, the Arbitral Tribunal will apply these considerations to its findings.'