'Claimant's position

According to Claimant, it is commonly admitted in [State X] and Swiss legal doctrine that the letter of a contract is "the primary means of interpretation, whereas negotiations, conduct before and after the conclusion of a contract […] are regarded as supplementary means of construction" (Claimant's Initial Memorial). When, as in the Concession Agreement, the wording is clear and unequivocal, it is the primary means of interpretation, that has to prevail and subsequent conduct does not amend it (Claimant's Second Memorial). … As the wording of Article 8 of the Concession Agreement is clear, the conduct of Claimant in the implementation of the Concession Agreement has not to be taken into account and does not amend the basic agreement.

Claimant adds that the Agreement has to be interpreted in accordance with its purpose as well as in consideration of justice and fairness, which support the literal meaning of Articles 5 and 8. If each operator had to include the interconnection fees in the Gross Revenue, the consequence would be duplication of collection from the same revenue, which is contrary to the purpose of the Concession Agreement and to fairness and justice. …

Even if Claimant admits that there are other methods of interpretation, it argues that the sole one when the wording is clear is the literal interpretation and thus Respondents' method of interpretation is irrelevant (Claimant's Second Memorial) for the following reasons:

Respondents rely on Claimant's implementation of the Licensing Agreement for interpreting the Concession Agreement. However, as the Concession Agreement is a separate agreement from the Licensing Agreement entered into between Claimant and the Ministry, which is no longer in force, Respondents cannot rely on Claimant's performance of the Licensing Agreement to interpret the provisions of the Concession Agreement (Claimant's Initial and Second Memorial). … Furthermore, since the execution of the Concession Agreement …, Claimant has never included in the Gross Revenue the interconnection fees and fees other than "connection (installation) fees, monthly fixed fees and call charges, the taxes which are not levied on its earnings and the interest for late payment" (Claimant's Post-Hearing Brief) …

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[Respondents'] position

Respondents contend that, in accordance with [State X case law], "the agreements are the binding Law of their parties".

Respondent No. 2 adds that under [State X law], "the actual and joint objectives of the contracting parties shall be available when determining the terms and conditions of the agreement" (Respondent No. 2's Answer). Under such Article "while the joint and actual purposes of the parties are sought, the enforcement way of the Agreement will constitute a prominent point in determining the meaning attached to the Agreement by the Parties" (Respondent No. 2's Reply Memorial). The payments during 32 months laid "justifiable confidence" that Claimant would continue to pay as its "real will and intention" was that the Gross Revenue would continue to include the revenues earned "over entire number of subscribers" (Respondent No. 2's Response to Claimant's Second Memorial).

As Claimant (i) executed the Licensing Agreement, (ii) included interconnection fees in the Gross Revenue for a period of 32 months and (iii) executed the Concession Agreement, in terms similar that of the Licensing Agreement, without requesting changes in the definition of the Gross Revenue, the non-inclusion of interconnection fees in the Gross Revenue is not permissible (Respondent No. 1's Answer). Such 32 month payment is a "clear indicator of the parties' common objectives and being a cautious operator, the Claimant party has to know the meaning referred in the agreement while signing it" (Respondent No. 2's Answer). Claimant's unilateral decision not to include the interconnection fees in the Gross Revenue, after 32 months of inclusion, is not sufficient for amending the Concession Agreement. Moreover, Respondents Nos. 1 and 2 note that other GSM operators … parties to similar concession agreements, still include the interconnection fees in the Gross Revenue (Respondents No. 1 and 2's Reply Memorials). It would be contrary to the constitutional principle of "equality" if all operators did not include the same elements in the Gross Revenue (Respondent No. 1's Post-Hearing Brief).

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Respondent No. 1 adds that in accordance with [State X case law], the interpretation of the Concession Agreement is that "notwithstanding definition of installation fees and communication fees is not included in the concession agreement, according to Article 2 of the concession agreement any fees collected in return for any service provided within the framework of establishment, development and operation of a mobile telephony system that constitutes the base for the agreement should be taken as either installation fee or communication fee". Accordingly, the wording of the Concession Agreement is not to be construed as being limitative; the inclusion of such broad terms as installation fees and communication fees "was aimed at including any fees collected in return for the services provided for establishment, development and operation of a mobile telephony system into gross revenue that constitutes the basis of Treasury Share" (Respondent No. 1's Post-Hearing).

Respondent No. 2 further states that as [State X law] provides that "any person shall conform to the rules of honesty while making use of his rights and effecting his debts. The legal system does not protect the abuse of any right", each party has to act in compliance with the "confidence inspired on the other, otherwise, they may act against the objective goodwill rules". After a 32-month implementation, Claimant's unilateral decision not to anymore include interconnection fees in the Gross Revenue does not conform to goodwill (Respondent No. 2's Answer). …

Respondents Nos. 1 and 2 contend that Claimant's method of interpretation:

- could be acceptable solely when the contractual provisions are not clear, which is not the case in the present arbitration as, under the Concession Agreement, "interconnection is also accepted to be covered by communication fee" (Respondent No.1's Reply Memorial and Response to Claimant's Second Memorial). Respondent No. 2 adds that the "text of the agreement is so obvious that the meaning attributed by both parties to the concept and scope of gross revenue had been the same for nearly 3 years" (Respondent No. 2's Reply Memorial).

- there are eight more methods of interpretation, one of those being the rule of "retrospective interpretation" under which "when judging a covenant, the judge should first of all go back to the time of establishment of the covenant, and has to find out the wills and demands of the parties in harmony therewith, by examining the situations, conditions and events as known by them as well as the words and expressions used by them" (Jaggi/Gauch Art. 18, N. 417; Gauch/Schluep, IN.889; Kaplan, p. 59) (Respondent No.1's Reply Memorial). … Thus the long term implementation must be taken into consideration in interpreting the Concession Agreement and a two year implementation is deemed to be a long term implementation as decided by [State X case law], (Respondent No. 2's Response to Claimant's Second Memorial and its annex 2). Such method is appropriate in the present case as Claimant's will "in establishment and maintenance of the case is clear. It had paid the treasury share over its interconnection revenues for a long period, and should continue to do so" (Respondent No.1's Reply Memorial). Respondent No. 1 concludes that the Treasury Share should be paid for the interconnections under "all methods of interpretation" (Respondent No.1's Response to Claimant's Second Memorial).

- Claimant does not apply its own method of interpretation. Indeed, arguing that the literal method should be applied, it replaces the term "communication fees" by "conversation (call) charges", thereby limiting the scope of the word "communication". Under the Concession Agreement, communication fees are to be given in the broadest meaning as the telecommunication sector is a "rapidly-developing sector" in which services and devices are developed continuously and thus it is not "possible to determine all the items on which the Treasury should be paid". Respondent No. 1 adds that "it is not reasonable that share shall not be paid on the items that have not been listed within this definition" and requests the Arbitral Tribunal to decide on "paying treasury share over all taxes rather than specifying them by name" (Respondent No. 1's Reply Memorial). Respondent No. 2 submits that, the wording of the Concession Agreement not being limitative and Article 11 relating to "Services to be provided", services that were not offered at the time of execution of the Concession Agreement are to be included in the Gross Revenue as they are now being provided. The Concession Agreement has to be interpreted in the broadest way to include all fees earned for communication services (Respondent No. 2's Post-Hearing Brief).

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Arbitral Tribunal's discussion

The Arbitral Tribunal has first to determine the method of interpretation of the Concession Agreement and then to interpret the provisions of its Articles 5 and 8.

It is undisputed that (i) the object of the Concession Agreement is the "establishment, development, operation of mobile system based on GSM […]" pursuant to its Article 2 and (ii) such GSM Mobile Telephone Services provided by Claimant are defined as "Telecommunication service[s] provided for the users possessing a suitable terminal apparatus through GSM Mobile Telephone system" pursuant to Article 5(l).

a) The method of interpretation of the Concession Agreement

Under Article 17 of the ICC Rules, "the Arbitral Tribunal shall take account of the provisions of the contract and the relevant trade usages". As to the contractual provisions, the Arbitral Tribunal notes that the definition of the Gross Revenue is very broadly worded, i.e., "all types of installation fees, fixed monthly charges, communication charges; inclusive of all taxes, charges and fund contributions". These terms are equivocal because very general. The Arbitral Tribunal finds, in accordance with [the State X] authorities, that (i) the intent of the parties was to agree on a wide range of elements to be included in the Gross Revenue and (ii) the implementation of the Concession Agreement by the parties has to be construed as a method of interpreting its wording … [State X] case-law confirms this, as the [supreme court] decided that "the implementation of the Contract is the most important element in determining the real and joint purposes of the parties" …

The Licensing and the Concession Agreements have similar provisions, the sole difference being that the Authority replaced the Ministry. Neither Claimant nor Respondent No.1 requested any amendment at the time the Concession Agreement replaced the Licensing Agreement. Thus the rights and obligations of each party remain the same. Accordingly, the interpretation of the Concession Agreement should take into account the implementation by the parties of the Licensing Agreement.

It is undisputed that the amounts of the Treasury Share were always assessed by Claimant alone, which paid spontaneously, without receiving bills. Thus, Claimant's method of calculation of the Treasury Share from April 1998 to February 2001 determining the elements included in the Gross Revenue was freely determined by it. Claimant's inclusion of the interconnection fees in the Gross Revenue lasted throughout the implementation of the Licensing Agreement. Since the execution of the Concession Agreement, Claimant did no longer include interconnection fees in the Gross Revenue. However, as stated above, the Agreements being similar, Claimant's implementation of the Licensing Agreement is an important factor for the construction of the Concession Agreement and the determination of the real and joint purpose of the parties. As stated by Respondent No. 2, the implementation during a long period of time constitutes a "clear indicator of the parties' common objectives" and thus a clear indicator of the interpretation of the Concession Agreement.

Furthermore, it is also to be noted that Claimant is a legal entity and merchant under the [State X] Commercial Code and thus has the duty to act as a "prudent businessman" [according to the terms of the Commercial Code].

The Arbitral Tribunal finds that Claimant spontaneously included in the Gross Revenue the following elements …

• the Scratch Card Sale Revenues

• the monthly fixed fee Revenues

• the call charges

• the interconnections until March 2001

• the roaming Revenue.

Since the execution of the Licensing and Concession Agreements, Claimant excluded from the Gross Revenue the following elements:

• the Post-Paid SIM Card Sales Revenues

• the Pre-Paid SIM Card Sales Revenues

• VAS-IVR Revenues

• SMS Revenues

• Fax and Data Revenues

• SIM Card Services

• Billing Service

• MSISDN Changes

• Activation / Deactivation

• Title Changing

• Detailed Invoice Fees

• Transfer Fees

• Contract Stamp Tax

• Roaming Revenues of [Claimant] Subscribers (MOC)

• Interest Revenues for Fault.

b) The provisions of Articles 5 and 8 of the Licensing and Concession Agreements

Article 8 provides that "the operator shall pay to the Treasury each month 15% of the gross revenue from all subscribers". The Arbitral Tribunal decides that there are two conditions to determine the elements to be included in the calculation of the Treasury Share : (i) the elements are those included in the definition of the Gross Revenue under Articles 5(n) of the Concession Agreement, i.e. "all types of installation fees, fixed monthly charges, communication charges ; inclusive of all taxes, charges and fund contributions" and (ii) they are to be paid by Subscribers under Articles 5(k) of the Concession Agreement.

<underline>As to the elements to be included in the Gross Revenue</underline>

The Arbitral Tribunal, having noted above that the Gross Revenue is broadly defined, decides that the wording "all types of installation fees, fixed monthly charges, communication charges" as well as "all taxes, charges and fund contributions" (emphasis added) means that Article 5 is not an exhaustive list of items which constitute the Gross Revenue. Indeed:

- such wording shall not be interpreted restrictively, as it uses broad terms. Thus, "communication charges" shall not be limited, as Claimant alleges, to "calling fees".

- as the telecommunication sector is continuously developing, the Concession Agreement used general terms in order to include all telecommunication services which could be provided in the future by the operators.

Accordingly, the Gross Revenue is to be regarded as the addition of all revenues, fees and charges received by the operators for having provided services in connection with telecommunication. Indeed, the payment of the Treasury Share is the compensation for the telecommunication concession granted to the operators by the [State X] Public Authorities. It is the "royalty", due by the operators to the Treasury. Thus, the elements to be included in the Gross Revenue are (i) revenues, fees and charges received from the Subscribers (ii) in consideration of and in connection with telecommunication services.

However are not revenues, the amounts received by the operators from their subscribers and fully repaid to a third party, without any remuneration for the operators.

The Arbitral Tribunal decides that "telecommunication services" are "the transmission, emission and reception through cable, wireless, optical, electric, magnetic, electromagnetic, electrochemical, electromechanic and other transmission systems of all kinds of sign, symbol, voice and image and all kinds of data which can be converted into electric signals" in accordance with the definition given in Article 5(r) of the Concession Agreement. They are not limited, as Claimant alleges, to "a conversation that takes place point to point and in real time between two persons". Claimant's definition is too restrictive as all services provided in the telecommunication field and which are or will be offered to the subscribers must be included.

Accordingly, the Arbitral Tribunal taking into account that the telecommunication services provided by the operators are continuously in development, decides not to exhaustively list the elements to be included in the Gross Revenue but to state the conditions leading to inclusion in the Gross Revenue. Are to be included in the Gross Revenue, the fees, revenues and taxes which (i) constitute a remuneration for the operators from their Subscribers and (ii) arise out of telecommunication services.

The Arbitral Tribunal will draw the consequences for the elements at issue:

- interconnection fees are fees received for telecommunication connections between two GSM networks. As they correspond to particularly essential telecommunication services - without interconnections, subscribers of different networks could not communicate - the Arbitral Tribunal decides that interconnection fees are elements of the Gross Revenue pursuant to Article 5. The Arbitral Tribunal does not distinguish between the initiating operator and the finalizing operator, as interconnection fees are part of the revenue of each of them, in consideration of telecommunication services provided.

- SIM Card Servicing Fee, Line Re-connection Fee, Number Changing Fee, Title Changing Fee, and Cancellation-Reclamation Fees are fees received for installation services required to allow telecommunications. They thus are revenues collected by the operators in connection with telecommunication services. Accordingly, the Arbitral Tribunal decides that these revenues are elements of the Gross Revenue.

- Detailed Invoice Fees are monthly fixed fees in accordance with Article 5 of the Concession Agreement and fees in connection with telecommunication services. Accordingly, as they fulfil the two conditions to be included in the Gross Revenue, the Arbitral Tribunal decides that these fees are elements of the Gross Revenue.

- Value Added Services, in particular fax, info-line, SMS are telecommunication services provided by operators to subscribers. Even if they are not "conversation" fees, it does not mean that they are not communication fees. As the Arbitral Tribunal has decided to include in the Gross Revenue all fees received in consideration of telecommunication services, these value added services are elements of the Gross Revenue.

- Interest for delayed payment are [sic] not a revenue as defined above, since they do not constitute an additional remuneration included in the operators' global revenue but an indemnity for Claimant's loss due to default of payment by its Subscribers. The Arbitral Tribunal decides that, since (i) this element is "a compensation for financial risk" for Claimant, (ii) is not a subscribers' payment in compensation of telecommunication services provided by Claimant but is a payment in compensation of the Subscribers' delay of payment and (iii) is not an amount invoiced to the Subscribers for a telecommunication services, interest for delayed payment are not to be included in the Gross Revenue.

- Value Added Tax, Private Communication Tax, Private Transaction Tax, Land Registry charges, Motor Vehicle Tax, Wireless Usage and Permit Fee, Private Consumption Tax, Contribution to Education Tax, Stamp Tax as well as any other present or future taxes are to be included in the Gross Revenue if and when they fulfil two conditions: (i) be a "revenue"; i.e., money earned by the operators and (ii) be related to "installation fees, fixed monthly charges, communication charges". Some taxes are not an element of remuneration when the operators are solely "responsible taxpayer", i.e. they collect such taxes from the subscribers and fully repay them to the Tax Office, as is the case of the Value Added Tax, thus not making a profit.

The Arbitral Tribunal finds it necessary to clarify the approach to its reasoning as follows: throughout this procedure, the parties have referred to elements to be included in the Gross Revenue without sufficiently describing and defining them, in particular the term "tax" which either may refer to elements part of the Gross Revenue or not part of the Gross Revenue. For the purpose of the present Final Award, the Arbitral Tribunal decides to use the following concepts: all moneys received by Claimant in relation with the services rendered to its subscribers and kept by it are part of the Gross Revenue; all moneys received by Claimant in relation to the services rendered and which are not kept by it but totally forwarded, without remuneration, to the Treasury or any other State money collecting agency are "taxes" in the fiscal sense of the term and are not to be included in the Gross Revenue, as for example the Value Added Tax for which Claimant acts as a "responsible taxpayer".

The Arbitral Tribunal taking into account that the telecommunication sector is in continuous development, decides not to give an exhaustive list of the taxes to be included in the Gross Revenue, the general conditions having been laid down in the preceding paragraph.

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<underline>As to the Subscribers</underline>

Under Article 5, are Subscribers, "legal and natural persons entering into a contract with the operator in order to benefit from the services provided by the GSM system".

The Arbitral Tribunal finds that under this definition (i) "legal and natural persons" include private persons as well as companies, (ii) "contract" is not limited to "subscription agreement" or "interconnection agreement" and (iii) "in order to benefit from the services provided by the GSM system" is not limited to the mere call between two persons, but can also be extended to any telecommunication service provided by the GSM system, such as interconnection.

Thus, the Arbitral Tribunal decides that Subscriber shall include all persons benefiting from GSM services under an agreement, including operators entering into an interconnection agreement with another operator in order to provide interconnection between their two networks.

Accordingly, (i) interconnection fees being included in the Gross Revenue under Article 5, (ii) the operator being regarded as Subscriber under Article 5 and (iii) from April 1998 to February 2001, Claimant having spontaneously included interconnection fees in the Gross Revenue's calculation, the Arbitral Tribunal decides that the interconnection fees are to be included in the calculation of the Treasury Share, the two conditions of Article 8 being fulfilled.'