An Engineering, Procurement and Commissioning Contract was concluded between one of the two Asian Claimants and the European Respondent, pursuant to which the latter undertook to supply the former with power generating equipment (wind turbine generators, WTGs). The other Claimant was involved in the project as the operating and maintenance agency and was responsible for funding arrangements. The equipment became damaged soon after it was put into operation due to local climatic conditions. The parties were unable to agree on appropriate remedial measures, whereupon the Claimants commenced arbitration proceedings to obtain damages for the abortive performance of the equipment. Their claim broke down into a claim for past loss and a claim for future loss. The parties' contract was governed by the law of State D, which was based on English common law. In its award, the arbitral tribunal included references to English cases establishing principles also applicable in State D.La défenderesse européenne avait conclu avec l'une des deux demanderesses asiatiques un contrat d'ingénierie, d'approvisionnement et de mise en service aux termes duquel elle s'engageait à lui fournir des équipements de production d'énergie (éoliennes ou « WTG » selon l'abréviation anglaise). La seconde demanderesse participait au projet en tant qu'organisme chargé de l'exploitation et de la maintenance et était responsable du financement. Peu après leur mise en service, les équipements ont subi des dommages dus aux conditions climatiques locales. Les parties n'étant pas parvenues à s'entendre sur les mesures correctives appropriées, les demanderesses ont engagé une procédure d'arbitrage afin d'être indemnisées des défaillances de fonctionnement des équipements. Leur demande se décomposait en deux parties, l'une pour le préjudice passé, l'autre pour le préjudice futur. Le contrat des parties était régi par la loi de l'État D, qui se fondait sur la common law anglaise. Dans sa sentence, le tribunal arbitral s'est référé à des affaires anglaises établissant des principes également applicables dans l'État D.Se celebró un contrato de ingeniería, suministro y puesta en servicio entre uno de los dos demandantes asiáticos y el demandado europeo, de conformidad con el cual este último se comprometió a suministrar al primero un equipo de generación de energía (aerogeneradores o «WTG», por sus siglas en inglés). El otro demandante participaba en el proyecto como agencia de explotación y mantenimiento y era responsable de los arreglos de financiación. El equipo se vio dañado poco tiempo después de la puesta en funcionamiento debido a las condiciones climáticas locales. Las partes no lograron ponerse de acuerdo en torno a unas medidas correctoras apropiadas, por lo cual los demandantes iniciaron el procedimiento de arbitraje solicitando daños y perjuicios por el fallido funcionamiento del equipo. La demanda de estos últimos se dividió en una demanda por pérdidas pasadas y en una demanda por pérdidas futuras. El contrato entre las partes estaba regido por la ley del Estado D, que está basada en la common law inglesa. En su laudo, el tribunal arbitral incluyó referencias a casos ingleses que establecían principios también aplicables en el Estado D.

'Responsibility in relation to site selection: [Respondent]'s case

75. [Respondent]'s case, to put it simply, is that, in accordance with the modus operandi established from past dealings, its responsibility was to supply its "standard" turbines. It was not [Respondent]'s responsibility to study the site conditions. The site was chosen entirely by [the founder of Claimant 1 and a company of which he was partner], who must be taken as having satisfied themselves that the WTGs to be supplied by [Respondent] would be suitable for the site.

Our views: site conditions: contractual responsibility

76. [Respondent's founder and director] may be right about the course of [Respondent]'s past dealings with [the founder of Claimant 1] and the entities he mentions, but this is entirely contrary to the responsibilities which [Respondent] expressly undertook by the EPC contract. Unfortunately for [Respondent], neither [the founder of Claimant 1] nor the entities referred to are party to the contract. They are also not parties to the arbitration.

77. The contract clearly required [Respondent] to design the WTGs to the site conditions. Site conditions are mentioned more than once in the contract documents. Clause 4.2.1 of the Technical Specification states:

4.2.1 General design requirements

The [wind turbine reference no....] is designed to have a lifetime of at least 20 years under the conditions as specified in Annexe A and provided they are used and maintained according to the manuals of the Contractor...

Quality control during design, production, assembly, commissioning and operation is adequate to guarantee that the installed [wind turbines reference no....] are replicas of the certified design as minimum standard and as modified to conform to the site conditions.

78. Clause 4.2.2 of the Technical Specifications states that the [wind turbine reference no....] is designed to "survive wind conditions as specified in Annexe A".

Annexe A-wind data

79. Annexe A contains, among other things, what purports to be a copy of a set of wind data collected at site.... they would appear to be data collected... for an earlier project. It is the Claimants' evidence, and we are prepared to accept, that from these data, which were supplied to [Respondent], it would have been possible to calculate the wind turbulence intensity for the general area of the project. But as [Respondent] contends that its responsibility was merely to supply its "standard" turbines, it can reasonably be assumed that [Respondent] did not see it as part of its responsibility to analyse the data or to take any such analysis into account.

The... standard

80. Clause 4.2.1.1 of the Technical Specifications (under the heading General design requirements) refers to the... standard. It states, among other things:

In general the design of the [wind turbine reference no....] has been carried out in accordance with the technical criteria of the regulations for the type-certificate of wind turbines [reference no....]

81. In our view, it is no answer for [Respondent] to say that its WTGs were designed according to the [aforementioned] standard. The standard itself lays great stress on the need to design to site conditions. Section 4.3.2 of the standard, for instance, requires WTGs to be designed not only for normal wind conditions, but also for extreme ones. Section 4.1.2.4 also requires WTGs to be designed to the electrical conditions at the point where they are to be connected to the grid, including grid failures.

Our conclusion

82. In the light of these contractual provisions, [Respondent] cannot say, in effect, that its responsibility was to supply its "standard" WTGs, and that the selection of the site suitable for the WTGs was the responsibility of [the founder of Claimant 1 and a company of which he was partner] or anyone else. The true position according to the contract is the other way round. It was for [Respondent] to design and supply WTGs that would suit the site, and it was also for [Respondent] to ensure that it had all the relevant data about the site, and to make appropriate use of the data, in order to ensure that the WTGs supplied would fulfil the requirements of the contract. This applies to the wind conditions, the characteristics of the terrain, the electrical grid characteristics (including the outage frequencies), and everything else about the site that any WTG designer would need to take into account.

83. [Respondent] clearly failed to fulfil the obligations which it undertook by the contract to supply WTGs of the kind specified in the contract. To say that its obligation was to supply its "standard" turbines, is to admit a breach of contract of a gross order.

.........

Fundamental breach-limitation of liability

115. Counsel for Claimants submits that the breaches are so serious that they constitute a fundamental breach of the contract, and that for that reason 49(b) is not applicable. Counsel for [Respondent], on the other hand, submits that there is no rule of law that an exception or exclusion clause is nullified by a so-called fundamental breach of contract. In support, he refers to the English cases of Suisse Atlantique Societe D'Armement Maritime S.A. vs N.V. Rotterdamsche Kolen Centrale [1966] 2 All E R 61, and Photo Production Ltd vs Securicor Transport Ltd [1980] A C 82.

116. We accept the submission of counsel for [Respondent]. The position in English common law, which has been accepted by the courts in [State D], is that there is no such rule of law, and that the question in all cases is whether an exclusion or limitation clause, on its true construction, extends to cover the obligation or liability which is sought to be excluded or restricted. We accept that the defects in the WTGs are defects within the meaning of the clauses under this heading ("Liability for Defects") of the contract. We accept that Clause 49(b) applies, in that the defects are so substantial as to deprive the purchaser of the benefit of the contract, and the purchaser's remedy is as provided in the clause. In particular, the purchaser is entitled to claim compensation for the loss it has suffered, but only up to a maximum of 18.5% of the contract price.

.........

Claim for future loss

141. There is no doubt that prospective loss resulting from a breach of contract is recoverable under the applicable law. In fact, in court action, damages for all prospective loss flowing from a single breach of contract must be recovered once and for all in one action.

142. The claim for future loss has been presented on a different basis altogether from that for the claim for past loss. Instead of attempting to estimate the shortfall in the power generation, the claim proceeds on the basis of how much revenue would have been generated if the WTGs were to produce to the total amount projected in the contract... Since some 4 years have been claimed for the past loss, the claim for future loss is based on a remaining design life of 16 years. A unit rate... is applied to that figure to obtain the gross revenue for Year 1 of the 16 years. The unit rate is increased by 10.58% every year compounded. Operation and maintenance expenses, fixed at [amount] for Year 1, is increased by 10% compound every year. A net revenue, referred to as "cash flow", is arrived at for each year, being the difference between the gross revenue and operation and maintenance expenses. There is then presented a global figure of [amount] as the total net "present value of future short performance", based on a discount interest rate of 11.75% per annum.

Our assessment of future loss

143. The Claimants have not explained why they have presented the claim in this way. The underlying assumption of their claim seems to be that the WTGs are not capable of producing anything at all after the 52 month period for which the past loss has been claimed. This obviously cannot be right. Although the evidence is that all the WTGs will eventually fail, the fact is that some 30 of them at the date of hearing were still functioning. So the [power generating facility], though performing poorly, will continue to produce, even though less and less as time goes by.

144. On the other hand, this also means that the loss which has occurred will continue. There is also no doubt that the losses will accelerate as the remaining WTGs continue to fail prematurely, as they are bound to do.

145. Prospective losses are difficult to quantify. But, as stated earlier, this does not disentitle the claimant to compensation if the loss can be demonstrated as likely to occur. We must therefore do our best to arrive at a reasonable figure to compensate for the future loss which is bound to occur. We would use the demonstrated past loss for the first 52 months as a guide. We take into consideration the likelihood of the acceleration of the loss as more and more of the WTGs continue to fail. On the other hand, we take into account the uncertainties and contingencies of the future, just as courts do when assessing future loss, e.g. in a personal injury claim. We therefore discount the remaining 16 years of design life, which the Claimants use to calculate the future loss. We also take into consideration the fact that the amount of the future loss which we assess is to be paid immediately and that it is necessary therefore to discount for the present payment of something which accrues in the future.

146. Taking all factors and circumstances into account, and doing the best we can as we say, we would award, for future loss, a sum equivalent to twice the amount which we have awarded for past loss... This is equivalent to extending the 52 months' past loss to a further period of 104 months, or 8 years and 8 months. This compares with the multiplier of 16 years claimed by the Claimants. We consider this to be fair and reasonable. This being an award for future loss, no interest is claimable.'