'II. Claimant's request for an adverse inference due to respondent's non-compliance with documentary production order

69. Claimant wishes the Tribunal to make an adverse inference for what it considers to be Respondent's failure to comply with Claimant's Request for Production of Documents dated . . . and the Tribunal's order [two days later]. The sanction for non-compliance is envisaged in Article 9(4) of the IBA Rules on the Taking of Evidence in International Commercial Arbitration ("IBA Rules of Evidence") which are applicable according to Article 9.1 of the Terms of Reference . . .

70. Article 9(4) of the IBA Rules of Evidence states:

If a Party fails without satisfactory explanation to produce any document requested in a Request to Produce to which it has not objected in due time or fails to produce any document ordered to be produced by the Arbitral Tribunal, the Arbitral Tribunal may infer that such document would be adverse to the interests of that Party.

71. According to Claimant, its request was aimed at obtaining documents evidencing that the material purchased by Respondent from its own suppliers and the material it sold on to Claimant was the same and that it contained less [metal] than what the Parties agreed to in the Contracts and what was reflected in the test reports of [the inspection company], which had been manipulated.

72. In this respect, Respondent failed to produce:


- the purchase contracts it concluded with its own suppliers,

- its books of account and bank statement for the relevant period,

- the analysis certificates supplied by its own suppliers,

- the corresponding delivery notes,

- the names and contact information of Respondent's persons in charge of the purchase contract negotiation and the persons in charge at Respondent's suppliers,

- the documents with regard to the transportation of the ordered materials from [supplier's state] to . . . warehouses,

- contact information of the person in charge, both on Respondent's side and on the side of its suppliers, as well as information about the persons transporting the materials,

- invoices and statement of account received by Respondent from [the inspection company] during the storage period, sampling and analysis instructions to [the inspection company] in respect of the materials analysis, names and contact information of persons in charge on Respondent's and [the inspection company]'s side . . .

73. Claimant renewed its request in its Post-Hearing Brief, concluding that Claimant's arguments and evidentiary intentions must be deemed to be accepted by Respondent in the absence of any challenge of its arguments by the latter . . .

74. Respondent submitted no comments in this respect.

75. The Tribunal will deal with Claimant's request for an adverse inference when it comes to determining Respondent's breaches under the Four Contracts below.

. . . . . . . .

170. The Tribunal does not consider it appropriate to dismiss Claimant's breach of contract claim with respect to the first three Contracts, as all Contracts show a clear pattern. At the same time, the Tribunal is today in the impossible situation to determine the exact actual ore content of the deliveries made by Respondent under these contracts. Claimant has requested that an adverse inference be drawn given Respondent's non-production of the required documents. This is probably one of the rare cases, where a negative inference is both appropriate and necessary to establish the claiming party in its rights. There is sufficient evidence on record that makes it most plausible that the ore content was below the contractual minimum requirement also in the case of the three Contracts here under consideration. Moreover, the absence of any documents concerning the origin of the [metal] supplied to Claimant is most troubling given the circumstances of the case, and so is the lack of any explanation by Respondent as to why the [inspection company] certificates showed such huge discrepancies, in particular in comparison to the values established by the Expert for the Material supplied under the Fifth Contract.

171. Despite such negative inference, it remains difficult to take the figures given by Claimant at face value. But this is not a matter having to do with the unfitness of the supplied [metal] and thus Respondent's breach of contract, but with the quantum of Claimant's lost profit claims. When dealing with the quantum of Claimant's lost profit claim under the first three Contracts, the Tribunal will be reducing to some extent the amount of Claimant's claim to take account of that uncertainty.

172. To conclude, the Tribunal is convinced on balance that the material supplied under the first three Contracts was unfit, and that Respondent was therefore in breach of contract.'