The claimant and the respondent, both Brazilian companies, were parties to a joint venture set up for the purpose of building an industrial plant in Brazil. A shareholders' agreement was subsequently made defining the interests of the parties in the joint venture and its operation. The agreement contained a dispute resolution clause specifying Brazilian law as the applicable substantive law to the extent it was not inconsistent with the parties' agreement. The project ran into delays. The claimant and the respondent disagreed over the question of whether there was an obligation to commence and complete work on the project by a given date.

La demanderesse et la défenderesse, deux sociétés brésiliennes, étaient parties à une coentreprise fondée afin de construire une usine au Brésil. Elles ont ensuite conclu une convention d'actionnaires définissant leur participation dans la coentreprise et son activité. Cet accord contenait une clause de règlement des différends stipulant que la loi brésilienne s'appliquerait au fond pour autant qu'elle soit compatible avec la convention des parties. Le projet s'est heurté à des retards. La demanderesse et la défenderesse sont entrées en litige sur la question de savoir s'il existait une obligation de commencer et de terminer les travaux du projet avant une date déterminée.

El demandante y el demandado, ambos empresas brasileñas, eran partes de una joint venture creada para construir una planta industrial en Brasil. A continuación se celebró un acuerdo de accionistas para definir los intereses de las partes en la joint venture y su funcionamiento. El acuerdo incluía una cláusula de solución de controversias que especificaba que la ley brasileña era la ley material aplicable siempre que esta fuera compatible con el acuerdo de las partes. El proyecto sufrió retrasos. El demandante y el demandado estaban en desacuerdo sobre la existencia de una obligación de comenzar y terminar las obras del proyecto en una fecha determinada.

'88. The Tribunal will analyse the three fundamental questions raised in this procedure in three subsequent chapters: (1) The obligation to start construction of [phase two of the project], (2) the default by Respondent of such obligation and (3) the appropriate relief to cure the breach.

V.1 The obligation to start construction of [phase two of the project]

89. The Shareholders' Agreement does not contain any specific obligation to start the construction of Phase II of the Project, nor does it explicitly set a date for the commencement or finalization of the construction. Claimant has argued that, notwithstanding the absence of a specific provision, the existence of the obligation can be induced from various provisions of the Shareholders' Agreement. Respondents disagree.

90. The discussion poses two classical problems of interpretation (interpretação) of contracts: what is the exact meaning of the words used by the parties in the Agreement and whether some obligations, not explicitly mentioned in the contract, have implicitly been agreed upon.

91. In this task, the Tribunal must apply Brazilian law on contracts, and specifically the Brazilian Civil Code. Brazil has recently enacted a new Civil Code (by Law 10.406 of January 10, 2002) ("CC 2002"), which has replaced the old Civil Code (approved by Law 3.071 of January 1, 1916) ("CC 1916"). The Shareholders' Agreement was signed when the CC 1916 was in force, while now the CC 2002 is the applicable law (CC 2002 came into force on January 10, 2003, in accordance with Art. 2.044). The transitory rule for the application of both Codes is contained in Art. 2.035 CC 2002: validity of agreements signed before CC 2002 came into force is to be ruled in accordance with the old Code, but effects produced thereafter shall be governed by the new Code.

92. It could be discussed whether interpretation, and especially integrative interpretation (interpretação integrativa), forms part of the validity or the effects of a contract. The discussion, however, is unnecessary, since in this matter CC 2002 has not introduced any material change. The Tribunal will therefore make reference to the provisions both of the old and the new Code, in order to justify its opinions.

93. The basic guideline for interpreting contracts is contained in Art. 112 CC 2002 (which coincides with Art. 85 CC 1916): "In the declarations of will attention is to be paid more to the intention contained therein than to the literal meaning of the language." ("Nas declarações de vontade se atenderá mais à intenção nelas consubstanciada do que ao sentido literal da linguagem.")1 In accordance with this rule, the Tribunal is required to determine the actual will of the parties, at the time when the Shareholders' Agreement was signed, rather than the literal meaning of the words effectively used.

94. Art. 113 CC 2002 provides a second rule of interpretation: "Agreements must be interpreted in accordance with good faith and the customs of the place of execution." ("Os negócios jurídios devem ser interpretados conforme a boa-fé e os usos do lugar de sua celebração.") The CC 1916 did not contain an equivalent article, but the interpretation in accordance with good faith and customs was generally accepted as an undisputed general principle of law (Caio Mario da Silva Pereira, Instituições de Direito Civil, I, 20ª ed. 2004, p. 503).

95. Good faith is not only a principle for interpretation of agreements, but also to the integration of obligations tacitly assumed by parties. Art. 422 CC 2002 provides that: "Contracting parties are bound to respect, both in the execution of and in the compliance with an agreement, the principles of probity and good faith." ("Os contratantes são obrigados a guardar, assim na conclusão do contrato, como em sua execução, os princípios de probidade e boa-fé.")

96. The historic Brazilian Commercial Code (Código Comercial) gave, in its Art. 131, a number of criteria for the interpretation of agreements. Although such principles are technically no longer in force, they are commonly held as general criteria which still should be applied in the interpretation of contracts. Article 131, III of the Código Comercial established that "the activity of the contracting parties, after the contract, related to the principal object of the contract, shall be the best explanation of the intent which the parties had at the time of execution of the same contract". ("O fato dos contraentes posterior ao contrato, que tiver relação com o objeto principal, será a melhor explicação da vontade que as partes tiverem no ato da celebração do mesmo contrato.")

97. In conclusion, the Tribunal understands that in its task of interpretation of the Agreement it must be guided:

- by the general rule that the true intent of the parties at the time of signature should prevail over the literal meaning of the language;

- bearing in mind the principle of good faith;

- taking into account that the acts of the parties, after execution of the contract, are an excellent indicator of the true intent at the time of signature; and

- that agreements oblige the parties not only to what is expressly agreed, but also to those consequences which necessarily derive from the principles of probity and good faith.

98. Applying these principles to the subject matter, the Tribunal finds that the correct interpretation of the Shareholders' Agreement implies:

(i) that the parties agreed, by incorporation, on a precise date for the initiation and finalization of [phase two of the project];

(ii) that the parties agreed that such date could be amended by consent among the parties;

(iii) that the parties assumed a double obligation: a positive obligation (obrigação de fazer), namely to cause the construction of the Project, and a negative obligation (obrigação de não fazer), namely not to hinder the construction of the Project, in accordance with the Business Plan agreed among the Parties.

. . . . . . . . .

V.2 The default by Respondent of its obligations under the Agreement

116. Towards the end of 2003, the development of Phase II of the Project was at the following stage:

- . . . the CdA [Conselho de Administração] of [the joint venture] had explicitly agreed to postpone the start of the construction of [phase two] for one year, thus implicitly modifying the Business Plan of the Company . . .;

- . . . the three Diretores of [the joint venture], including the two designated by [Respondent], had confirmed to [Claimant] that [phase two] would be operational in January 2006 . . .

117. On the basis of this confirmation from [the joint venture], [Claimant] consented to the Termos [Termos de Consolidação de Divida, Cessão de Crédito e outras Avenças], which were signed on the same date. Under the Termos [Claimant] contributed significant credits and dividends which it was entitled to receive from [company X] to the funding of [phase two] . . .

118. The Tribunal has found . . . that the parties were under a contractual obligation, arising from the Shareholders' Agreement, to implement the Project in accordance with the amended Business Plan and to abstain from any action which might cause the failure to develop the Project. Notwithstanding these obligations . . . [Respondent] sent a letter to [Claimant], with copy to all Diretores and members of the CdA of [the joint venture] . . .

- stating there is no corporate resolution of [the joint venture] regarding the implementation of [phase two];

- and requiring the Diretores and members of the CdA of [the joint venture] "to abstain from taking any measure with the purpose of converting the operations of [the joint venture] to [phase two], until the matter has been the object of the appropriate corporate resolution".

119. Since delivery of the letter, [Respondent] has consistently rejected the possibility of commencing implementation of [phase two]. As resolutions at the CdA level require unanimity, and decisions at the Diretores level require the signature of at least two Diretores, [Respondent] has been able to effectively block the construction of Phase II of the Project.

120. The Tribunal finds that [Respondent]'s actions constitute a breach (inadimplemento) of its contractual obligations, and specifically of the obrigação de fazer and obrigação de não fazer defined . . . above.

121. The Tribunal further finds that [Respondent]'s breach is fundamental and definitive.

122. The breach is fundamental because the construction of [phase two] was a fundamental part of the Project. The investment for [phase two] amounts to . . ., which is 68% of the total investment for the initial Phase I . . . [Claimant]'s projections, at the time of execution of the Shareholders' Agreement, show that it expected an internal rate of return of 23.2% for [phase two] and only of 18.5% if only [phase one] was built . . . Throughout its relationship with [Respondent], [Claimant] has insisted on the fundamental importance of the implementation of [phase two] . . . The Tribunal is convinced, on the basis of the evidence submitted, that [Claimant] would not have entered into the Project, had it been aware that Phase II would not be implemented.

123. The breach is definitive. Respondent has alleged throughout the arbitration that the dispute only refers to a delay in the construction of [phase two], [Claimant] preferring that Phase II be operative at the beginning of 2006, and [Respondent] at the beginning of 2009 . . . But [Respondent] has never given a firm commitment that it would agree to a commencement of the construction. . . . The Tribunal notes that the starting date for construction is a pure estimate . . .

124. Since [Respondent] has not given any firm commitment as regards the start of the construction of Phase II of the Project, and since such start, in accordance with the Agreement, requires the active participation of the Diretores appointed by the Respondent, [Claimant] has no guarantee as to when [phase two] will come into line. In these circumstances, [Claimant] is entitled to treat the breach by [Respondent] as definitive.

125. Respondent has argued that the dispute between the parties really represents a business dispute, and should be treated as a deadlock situation subject to Article 5.8 of the Agreement. The Tribunal disagrees. The deadlock provision is intended to solve situations in which the 50% shareholding structure of the Company results in the impossibility to adopt a resolution at the CdA or GSM [General Shareholders' Meeting] level. It is not intended to serve as a procedure to cure the breach, by any shareholder, of its obligations under Agreement. The remedies for this situation are established in Article 7.2 of the Agreement, and imply the loss of rights for the defaulting shareholder and the right of termination (rescisão) in favour of the in bonis party.

126. It would be contrary to the principles of probity and good faith if a defaulting party could escape its responsibilities for default, simply invoking the deadlock provision.

127. Claimant has argued in its submission to the Tribunal that [Respondent] should be held responsible in this arbitration for acts of its controlling shareholder [company X]. [Claimant]'s argumentation was based on the group of companies doctrine. The Tribunal rejects such extension of responsibility. The group of companies doctrine cannot be applied to request in this arbitration purported responsibilities incurred by Claimant's shareholder [company X], in the performance of separate agreements or in adopting certain corporate resolutions. Such responsibilities should be requested by filing actions in the appropriate jurisdiction . . .

128. In conclusion, the Tribunal finds that Respondent . . . has incurred in [sic] a personal, fundamental and definitive breach (inadimplemento) of its contractual obligation to develop the Project, including the construction of [phase two], in accordance with the Business Plan, as amended.

V.3 Relief sought by Claimant

129. The relief sought by Claimant in the Terms of Reference was the following: "Claimant therefore respectfully requests that the Arbitral Tribunal adjudge and declare that Respondent is in breach of the Shareholders' Agreement, that such breach has fundamentally frustrated the purpose of the Company (i.e. the completion of the Project), and, as a result, Claimant is entitled to recover from Respondent . . ."

130. In its Full Submission, the relief of Claimant was defined as follows: "Claimant seeks to protect its rights under the Shareholders' Agreement and the value of its financial commitments, and calls upon the Arbitral Tribunal to adjudge and declare that Respondent is in breach of the Shareholders' Agreement as set forth herein, such breach has fundamentally frustrated the agreed upon purpose of the Company (i.e., the completion of the Project), and as a result, Claimant is entitled to recover from Respondent . . ."

131. In its Second Submission, Claimant repeated the request for relief contained in its Full Submission, adding that Claimant would surrender its shares to the Company upon full payment of the award . . .

132. In the oral conclusions of the proceeding, Claimant defined the relief sought in the following terms (recorded verbatim in the minutes of the hearing, signed by the parties and the Tribunal): "As a result of a fundamental frustration, Claimant requests the rescisão of the Shareholders´ Agreement and an award of damages as permitted by Brazilian law and the Tribunal would have the power to determine the consequences to Claimant´s shares. . . ."

133. Respondent's Brazilian lawyer . . . stated in his oral conclusions that since Claimant had not expressly asked for rescisão in the Terms of Reference, the Tribunal did not have jurisdiction to rule on this issue, and that if it did so, the award would be null and void. The Tribunal does not agree with the argumentation set forth by counsel to Respondent. The Tribunal is of the opinion that, since the Terms of Reference, Claimant has been requesting the same claim.

134. The claim defined in the Terms of Reference included the following elements:

- a declaration that Respondent is in breach of the Shareholders' Agreement;

- that such breach has resulted in a frustration of the Agreement;

- that as a consequence thereof Claimant is entitled to receive the value of its shares in the Company, adjusted in accordance [with] the IGPM Index calculated by the Fundação Getúlio Vargas;

- plus the book value of Claimant's AFAC [advances for future capital increases] . . . also adjusted by the IGPM Index;

- plus the book value of [company X] minimum mandatory dividend;

-plus costs.

135. Throughout the Arbitration, the only material modifications introduced by Claimant in the request for relief are the following:

a) Claimant has clarified that the English expression frustration of the Agreement is the equivalent of rescisão.

b) Claimant has accepted to return its shares in the Company either to [the joint venture] or to whomever the Tribunal decides.

c) Claimant has dropped the request for payment of the AFAC . . .

d) Claimant has introduced in its oral conclusions a generic reference to "such other relief as the Tribunal may find appropriate".

136. The Tribunal finds that this last, generic request for relief cannot be admitted. The Tribunal's decision is based on Article 19 of the ICC Rules, which provides as follows:

After the Terms of Reference have been signed or approved by the Court, no party shall make new claims or counterclaims which fall outside the limits of the Terms of Reference unless it has been authorised to do so by the Arbitral Tribunal, which shall consider the nature of such new claims or counterclaims, the stage of the arbitration and other relevant circumstances.

137. Claimant has presented the claim regarding "such other relief as the Tribunal may find appropriate" in its final oral conclusions-too late in the procedure to guarantee the possibility of adequate defence by Respondent. Furthermore, the scope of the claim is excessively indeterminate to be admissible.

138. With regard to the clarification in the relief referred to in paragraph 135 a), the Tribunal notes that "frustration of an agreement" is a concept used frequently in English and American legal terminology. It is defined as "the premature determination2 of an agreement between parties, lawfully entered into and in course of operation at the time of its premature determination, owing to the occurrence of an intervening event . . . so fundamental as to be regarded by the law both as striking at the root of the agreement and entirely beyond what was contemplated by the parties when they entered into the agreement" (Mozley and Whiteleys's Law Dictionary, 8th ed., 1970, p. 156).

139. During the hearing, the expert witness . . . explained that under Brazilian law the correct expression to use was recisão. The Tribunal concurs and finds that frustration and rescisão are equivalent terms. Frustration is a common law concept which implies the premature termination of an agreement, due to a non-contemplated, material event, as e.g. the fundamental breach by the counterparty. In Brazilian law, rescisão is the right of the aggrieved party to request termination of an agreement, if the counterparty has not complied with its obligations (Art. 475 CC 2002). Consequently the Tribunal finds that the inclusion of the Brazilian legal term recisão is simply a clarification of what Claimant had been requesting since the outset.

140. As regards the other two clarifications introduced by Claimant to the relief sought (paragraph 135, c) and d)), the Tribunal finds that these do not amount to new claims, and that they also fall within the scope of the arbitration as defined in the Terms of Reference:

- the return of the shares held by Claimant is not a separate claim, but rather a necessary consequence of its request for a payment equivalent to the value of such shares; without return, Claimant would be obtaining an illicit enrichment; the return of the shares was thus a necessary consequence of the relief sought under the Terms of Reference; the return is implicitly included in the Terms of Reference and the Full Submission, and was then explicitly acknowledged by Claimant in its Second Submission and in its final conclusions;

- the withdrawal of a specific request, as the Claimant has done with regard to the payment of the . . . AFAC, is always acceptable in the course of an arbitration.

141. The principle that a specific claim includes what necessarily is a condition precedent thereto or a necessary result thereof, is admitted under Brazilian procedural law (Theotonio Negrão/José Roberto F. Gouvea, Código de Processo Civil e legislação processual em vigor, 36th ed., 2004, p. 403).

142. In conclusion, the Tribunal finds that the admissible relief sought by Claimant is the following:

(i) the rescisão of the Shareholders Agreement, the Tribunal having the power to determine the consequences to Claimant's shares and the amount which Claimant is entitled to receive up to the fair market value of Claimant's at-risk capital at [the joint venture] . . .

(ii) payment of the value of the minimum dividends from fiscal year 2003, which should have been paid out by [company X] . . .

(iii) costs associated with this arbitration, as stated in paragraph c) of the Full Submission . . . and pursuant to section 10.8 (f) of the Shareholders' Agreement;

(iv) all amounts with interest pursuant to section 10.8 (i) of the Shareholders' Agreement.

143. Respondent requests a denial in full of [Claimant]'s claims, plus reimbursement of costs incurred by Respondent in this arbitration.

144. The award will hereinafter analyse . . . the different requests for relief submitted by Claimant and denied by Respondent.

(i) The rescisão of the Shareholders' Agreement and damages deriving therefrom

145. . . . Claimant sent a letter to Respondent, notifying [Respondent] that it had defaulted under Articles 1, 4.2, 5.2, 5.5(a) and 5.5(b)(ix) of the Agreement. Respondent then had, in accordance with Article 7.1. of the Agreement, a 30 day period to cure the alleged breach. It has not done so.

146. The remedies available if the default is not cured are established in Article 7.2. of the Agreement: "the non-defaulting Shareholder, at its sole discretion, shall have the exclusive right to terminate this Agreement with respect to such defaulting Shareholder by giving the defaulting Shareholder notice thereof". The Portuguese version of the agreements translates the expression "right to terminate" as "direito de rescindir".

147. Article 7.2. is consistent with the general provision for default of obligations established by Brazilian law. Article 1092 CC 1916 established that: "The party damaged by the breach can require the termination of the contract with damages". ("A parte lesada pelo inadimplemento pode requerer a rescisão do contrato com perdas e danos.").

148. The same principle established by Article 1092 CC 1916 is reproduced by Article 475 CC 2002. This article provides as follows: "The party damaged by the breach can ask for the termination of the agreement, except if it prefers to request compliance therewith, indemnification for damages arising in both cases." ("A parte lesada pelo inadimplemeto pode pedir a resolução do contrato, se não preferir exigir-lhe o cumprimento, cabendo, em qualquer dos casos, indenização por perdas e danos.")

149. Although Article 475 CC 2002 uses the expression resolução, this concept is synonymous [with] the more traditional expression rescisão, used in Article 1092 CC 1916. The Agreement was signed under the rule of CC 1916 and correctly used the term rescisão.

150. Since Respondent has incurred in [sic] a personal, fundamental and definitive breach (inadimplemento) of its obligations under the Shareholders' Agreement, and Claimant has specifically requested the rescisão of such Agreement, the Tribunal decides that the Shareholders' Agreement be terminated by rescisão. The Tribunal's decision is based on Article 7.3. of the Agreement and Articles 1092 CC 1916 and 475 CC 2002.

151. In accordance with Brazilian law, the termination of an agreement by the party in bonis, due to the default by the counterparty, is considered as the effect of a tacit resolutory condition (this is shown by the fact that Art. 475 CC 2002 is contained in the section "Da cláusula resolutiva" and that Art. 474 regulates the effects of the "cláusula resolutiva expressa"]. In this area, the Brazilian Civil Code follows the tradition of French law, which introduced the idea that an implicit resolutory condition must be deemed to exist in all synallagmatic contracts. Such idea was formalised in Art. 1184 French Civil Code, and was thereafter accepted by most civil law codifications (see e.g. Art. 1165 first Italian Civil Code, Art. 1124 Spanish Civil Code). Art. 475 CC 2002 incorporates this tradition.

152. Termination of an agreement, as a consequence of the default by the party in malis, produces the same consequences as the extinction of an agreement subject to a resolutory condition, upon occurrence of such condition; these effects are threefold as provided for in Art. 475 CC 2002:

(a) the restitutio in integrum and damages resulting therefrom;

(b) the payment of additional damages by the party in malis to the party in bonis;

(c) the extinction of the agreement.

153. (a) Restitutio in integrum implies the return of the deliveries (prestações) made by the parties under the agreement, so that both are reinstated in the legal situation in which they were before the agreement was executed.

154. In our case, restitutio in integrum implies that Claimant must return the shares representing the 50% participation in [the joint venture], which [Claimant] acquired in execution of the Shareholders Agreement; such shares must be delivered to [Respondent], or, if [Respondent] so decides, to [the joint venture] (since after the return [Respondent] will be the only shareholder in [the joint venture]).

155. Simultaneously to such return of shares, [Respondent] must return to [Claimant] the amounts of money which Claimant paid into the Company, in order to obtain the shares. The Tribunal finds that these contributions (and not the book value or market value of the shares) represent the correct determination of the actual damage suffered by Claimant as a consequence of the default by [Respondent] and the return of its shares. . . .

156. The historic amount paid in by Claimant must be adjusted for monetary correction, in accordance with official indices, regularly published (Art. 395 CC 2002). The IGPM Index calculated by Fundação Getúlio Vargas is such an official, regularly published index.

157. The historic amount should also be increased by interest, as a retribution for the funding provided by [Claimant] to the Company. This funding made it possible that [the joint venture] construct and put into operation Phase I of the Project. If [Claimant] were not to be rewarded for the funds which it contributed and put at risk at [the joint venture], [Respondent] would obtain an unjustified enrichment-it would receive the Project, financed by [Claimant], without having to assume any cost for such financing. Restitutio in integrum is incompatible with illicit enrichment of any of the parties-especially of the party which has defaulted.

158. The Tribunal consequently finds that the capital contributed by [Claimant] must accrue interest on each payment, from the date of contribution, until the date of rescisão of the Agreement, i.e. the date of this award. The appropriate rate of interest is the legal rate of interest provided for by Article 406 CC 2002, i.e. the interest rate for the late payment of taxes to the National Treasury (such rate is known as Juros Selic).

159. Appendix C) to this award shows the correct adjustment for monetary depreciation and for interest of the historic amounts paid in by Claimant. . . . This is the amount which Respondent must pay to Claimant in exchange for [Claimant]'s shares in [the joint venture].

160. (b) Additional Damages: without prejudice to the amount which Respondent has to pay to Claimant in accordance with the preceding paragraph, Brazilian law also provides for the payment of additional damages. These damages, under Brazilian law, include both what the party in bonis has effectively lost plus what it has reasonably failed to win [Art. 402 CC 2002, Art 1059 CC 1916]. Brazilian law thus reflects the traditional distinction between damnum emergens and lucrum cessans.

161. In our case, the effective loss suffered by Claimant would typically include the actual costs incurred by [Claimant] in evaluating and executing the investment in [the joint venture]; the loss of the anticipated profits which Claimant could reasonably hope to obtain in the future as a consequence of the investment.

162. Loss of profit, however, is not indemnifiable under the Shareholders' Agreement. Article 11.8 expressly states that "notwithstanding anything contrary elsewhere in this Agreement, no Shareholder shall, in any event, be liable to any other Shareholder for loss of profits".

163. The meaning of this clause is very clear: even if Article 7.2. of the Agreement provides for rescisão, and even if rescisão may imply a legal obligation to indemnify for loss of profit, the parties have expressly agreed to forfeit such right to indemnification.

164. None of the parties has argued that Article 11.8 of the Agreement violates any mandatory provision of Brazilian law. The Tribunal is not aware of any.

165. Consequently, the Tribunal finds that, in accordance with Article 7.2. of the Agreement, the Claimant has waived its right to be indemnified for loss of profit, and only has a right to indemnification for actual loss.

166. In accordance with Brazilian law, it is the duty of the party alleging the existence of damages to prove that such damages have actually been incurred. No evidence of any type has been submitted to the Tribunal, showing that Claimant has suffered an effective loss, caused by its decision to invest in the Company (beyond the amount of the investment itself, which has already been addressed in section (a) Restitutio in integrum above).

167. The Tribunal notes that Article 1553 CC 1916, which granted tribunals a certain discretion to award damages, was contained in the section of the old Code dealing with the indemnification of damages caused by illicit acts (such as murder or rape). It is dubious whether it could be applied to contractual damages. In any case, the provision has not been maintained in the CC 2002. Art. 404, para. único CC 2002 gives judges the right to grant "supplementary indemnization" [sic], if the judge feels that legal interests are not sufficient to cover the loss. This provision is not applicable to a situation where, in the rescisão of an agreement, a party has failed to produce evidence of the effective losses it has suffered.

168. Brazilian law offers no scope to the Tribunal to make an approximate evaluation of damages. The Tribunal, in accordance with the express intention of the parties, has no discretionary powers to act ex aequo et bono. In the absence of any evidence presented by Claimant of the actual loss suffered, the Tribunal is not able to order payment of any indemnification.

169. (c) Extinction: the third consequence of the rescisão of an agreement is its extinction, which implies the voidance of all rights and obligations arising from the Agreement in favour or against any of the parties.

170. In conclusion, the Arbitral Tribunal finds that the Agreement is terminated as a consequence of rescisão, that [Claimant] must restitute to [Respondent] its shares in [the joint venture] against payment by [Respondent] of the amount of . . ., that no further damages have been proven, and that, upon delivery of the shares and payment of the amount in question, all rights and obligations of the parties under the Agreement shall be extinguished.

. . . . . . . .

(iv) Interest and monetary correction

179. Article 10.8 (d) of the Agreement provides that any monetary award must be expressed in Reais and shall include interest and monetary correction from the date of any breach or any violation of the Agreement. This provision is consistent with Article 395 CC 2002, which provides that a debtor in arrears (en mora) must pay to the creditor interest plus monetary correction in accordance with official indices regularly published.

180. Since the Agreement does not provide for a specific rate of default interest, the applicable rate of interest is the one established by Art. 406 CC 2002 for legal interest (juros legais), i.e. the rate in force from time to time for late payment of taxes to the National Treasury.

181. In the Terms of Reference Claimant included a specific request that amounts payable should be adjusted in accordance with the IGPM index calculated by Fundação Getúlio Vargas. This is consistent with Article 10.8 (i) of the Agreement, which specifically establishes that any monetary award shall include both monetary correction and interest. Furthermore under Brazilian law, monetary correction arises ex vi legis in all circumstances, even in the absence of specific request (Theotonio Negrão/José Roberto F. Gouvea, Código de Processo Civil e legislação processual em vigor, 36th ed., 2004, p. 2138).

182. In the Terms of Reference Claimant specifically referred to the IGPM Index calculated by Fundação Getulio Vargas. This index meets the requirements set forth in Art. 395 CC 2002.

183. The amount of money which Respondent has to pay to Claimant has been calculated in Appendix C). This amount includes interest and monetary correction from the dates of contribution by [Claimant] until November 30, 2004 . . . In these circumstances, in order to avoid double accrual of interest, the appropriate starting date for interest and monetary correction on the amount awarded in this decision must be December 1, 2004.

184. In conclusion, the Tribunal finds that the amount in Reais awarded to Claimant in paragraph 170 of this award, shall:

- be adjusted in accordance with the IGPM Index calculated by the Fundação Getúlio Vargas;

- shall accrue interest at the legal interest rate, set forth in Art. 395 CC 2002;

- from December 1, 2004 until the date of actual payment by Respondent.

185. The costs and expenses awarded in accordance with paragraph 178 of this award, shall be adjusted for monetary correction and accrue interest, from the date of notification of this award.'

1
The translations from Portuguese into English included in this Award are either those provided by the parties or a free translation made by the Arbitral Tribunal.

2
"determination" is a legal concept, which in this context means "ending or expiration"-see Black's Law Dictionary, 6th ed., 1991, fourth definition of "Determination", p. 310.