'(b) Proof of authority to enter the agreement under New York law

5.13 Appropriate authority to enter into an agreement may be proved under New York law in a variety of ways. Among these are evidence of actual or apparent authority and the principle of ratification.

5.14 The Tribunal finds that Claimant proved due execution of the Loan Agreement by one individual, Mr [A], on behalf of both parties, which at the time were related entities.

5.15 There was no detailed evidence at the hearing concerning Mr [A]'s authority to execute the Loan Agreement on behalf of Claimant. However, Claimant has ratified that authority by bringing claims based on the Loan Agreement in this arbitration,1 and by accepting benefits under it.2

5.16 There was evidence at the hearing, which the Tribunal accepts, that Mr [A] also had actual authority to execute the Loan Agreement on behalf of Respondent, both as a result of express authority from Respondent's Board of Directors and as a result of his capacity as a Director.

5.17 Respondent's Board Minutes dated . . . specifically authorized Mr [A] to "execute and deliver on behalf of [Respondent] the Shareholders' Agreement and to execute and deliver any other agreements and documents contemplated by the Shareholders' Agreement and take all other actions necessary in order to carry out the purposes of the Shareholders' Agreement".

5.18 The Loan Agreement in question was one of the other agreements appropriate to effectuate [a share purchase transaction] and was "contemplated by the Shareholders' Agreement" by being defined and referred to several times in the Shareholders' Agreement.

5.19 In any event, had that not been the case, Mr [A]'s status as a Director of Respondent empowered him, under New York law, with prima facie authority "to do any act which the Directors could authorize or ratify"3. That includes prima facie authority, which was not rebutted, to execute the Loan Agreement.

5.20 Mr [A] also had apparent authority to execute the Loan Agreement on behalf of Respondent. Where there is a specific representation on the part of a company that it has taken all steps necessary to enter into an agreement, including due authorization of its agent signing the agreement, the agent is deemed to have had apparent authority to enter into the agreement on behalf of the company.4

5.21 Here, the Loan Agreement contained a specific written representation by Respondent (in Section 8(b)) that "the execution and delivery by [Respondent] of [the Agreement] and the performance by [Respondent] of the transactions contemplated hereby have been duly authorized by all necessary corporate or other action of [Respondent]".

5.22 In addition, there was also ample evidence that Respondent ratified the Loan Agreement by making partial payments under it. Evidence of the actual payments made was provided in the Affidavit of Mr [B] dated . . ., which evidence was later confirmed in his oral testimony . . . As set out in the letter of demand sent to the Respondent on . . . , the payments were as follows: . . .

5.23 Those payments under the Loan Agreement were reflected in Note 13 of Respondent's 2001 audited financial statements. Furthermore, Respondent's own audit confirmations . . . correlated closely with the partial payments and are further evidence of ratification.

5.24 Respondent refused to produce its audited financial statements for the years following 2001, from which the Tribunal draws an adverse inference to the effect that they would have reflected Respondent's payments in 2001 and 2002 as additional evidence of ratification of the Loan Agreement.

5.25 Accordingly, for all or any of the foregoing reasons the Tribunal finds on the evidence that Claimant has affirmatively established due execution of the Loan Agreement on behalf of both parties.'

1
Niagara Woolen Co. v. Pacific Bank, 141 A.D.2d 265 (1st Dept. 1910).

2
Beutel v. Beutel, 55 N.Y.2d 957, 958 (1982).

3
Hastings v. Brooklyn Life Ins. Co. 138 N.Y. 473, 479 (1893).

4
See Spectra Audio Research, Inc. v. 60-86 Madison Ave. Dist. Mgmt. Assoc., 267 A.D.2d 23, 24 (1st Dept. 1999).