'A. Respondent's case

56. [Respondent] asserts that [Claimant]'s claims for breach of fiduciary duty and intentional tortious conduct are subject to New York law by virtue of Article 13 of the Shareholders Agreement, which states that "This Agreement shall be governed by, and construed in accordance with the laws of the State of New York (regardless of the laws that might otherwise govern under applicable New York principles of conflict of laws)". According to [Respondent], this provision reflects the parties' intent to have New York law serve as the single system of law governing their entire - shareholder and contractual - relationship, to which [Claimant]'s claims directly pertain. [Respondent] maintains that this intent is reflected not only in the language and purpose of the contract, but in the parties' conduct both prior to and after entering into the Shareholders Agreement.

57. Furthermore, [Claimant] also argues that, even if this choice-of-law clause did not extend to the parties' entire relationship, New York law would still apply because (1) [Claimant]'s claims require interpretation of the Shareholders Agreement, (2) the Shareholders Agreement created the shareholder duties which [Claimant] alleges were breached, and (3) [Claimant]'s claims also involve [Respondent's] performance and [Claimant]'s rights under the Agreement. According to [Respondent], where the claims being made involve interpretation or performance of an underlying contract, the choice-of-law clause of that contract applies.

58. Finally, and in any event, [Respondent] maintains that [Claimant] should be estopped from arguing that German law applies, since [Claimant] relied exclusively on New York law in [a prior arbitration it had initiated against Respondent alleging they had reached an impasse in their relations].

59. Accordingly, [Respondent] argues, [Claimant]'s claims are governed by the New York statute of limitations, which is three years for breach of fiduciary duty claims, and one year for intentional tort claims. This would mean that, in order to be timely, [Claimant]'s fiduciary duty and tort claims must have accrued after 23 December 2001 (three years prior to the filing of [Claimant]'s Request) and 23 December 2003 (one year prior to [Claimant]'s Request), respectively. Because [Claimant]'s claims arose prior to these dates, [Respondent] maintains that they are time-barred.

B. Claimant's case

60. Claimant, on the other hand, maintains that German law is applicable to its claims and that, under German law, the claims would not be time-barred. In particular, Claimant asserts that the rights and liabilities of shareholders of a German GmbH, such as [A], are governed by German law and that Article 13 of the Shareholders Agreement does not change this. The language of Article 13, Claimant argues, states only that New York law governs the Agreement itself, but nowhere suggests that it governs the parties' entire relationship. Had the parties wished for New York law to apply more broadly, Claimant argues, they would not have chosen such a narrow formulation of the choice-of-law clause.

61. Moreover, [Claimant] argues that none of its claims involve interpretation of, duties created by, or performance under the Shareholders Agreement. Rather, Claimant argues that its claims are entirely independent from the Shareholders Agreement and would exist even in the absence thereof.

62. Accordingly, [Claimant] maintains, it is German law that is applicable and [Claimant]'s claims are timely under the applicable German statutes of limitations.

C. The Arbitral Tribunal's findings

1. Subjective intent of the parties

63. The first question before the Tribunal in assessing which law is applicable to the present case - prior to turning to the language of the contract itself - is whether there is evidence of a clear subjective intent on the part of the parties to have German or New York law govern their entire relationship.

64. As indicated above, the parties disagree regarding their intentions as to the law applicable to their overall relationship. According to [Respondent], "the parties intended the Shareholders Agreement to serve as the umbrella agreement that would govern their overall relationship" ... [Claimant], on the other hand, maintains that "the parties understood and intended that German law would govern those aspects of their shareholder relationship that were not specifically addressed in any substantive term of the Agreement" ...

65. In support of their positions, the parties submitted witness statements ... regarding the negotiations leading to the Shareholders Agreement. These witnesses were also heard at the Hearings ... In their witness statements, [the witnesses] confirmed the representations made in the parties' submissions. For instance, [Respondent's witness] stated that, "both [Respondent] and [Claimant] made clear to each other that each intended to have their contractual and shareholder relationship governed by a single legal regime - the State of New York"... [Claimant's witness], on the other hand, declared that, "I understood that the choice-of-law clause meant only that New York law would apply to the interpretation and construction of the Agreement itself, as it quite plainly states in simple English, and not that it would apply to anything else" ...

66. After a review of the parties' submissions and the supporting witness statements and testimony, the Tribunal cannot conclude that there was any such subjective intent to have either New York or German law govern the parties' entire relationship. Neither party or witness was able to point to any specific conversations with the other side to support a finding that the parties shared the same subjective understanding as to whether New York law was to govern anything beyond the Agreement itself. In fact, the testimony of the witnesses suggests that the issue of exactly how far the parties intended New York law to apply was not even considered, let alone discussed, by the parties during the negotiations ...

67. Accordingly, in the absence of evidence of a mutual subjective intent to make New York law applicable to the entire relationship, the Tribunal must turn to the contract itself and interpret it objectively to determine the scope of the
choice-of-law clause.

2. Objective interpretation of the contract

68. An objective interpretation of the choice-of-law clause naturally begins with the language of the clause itself. Article 13 of the Shareholders Agreement states as follows:

This Agreement shall be governed by, and construed in accordance with the laws of the State of New York (regardless of the laws that might otherwise govern under applicable New York principles of conflict of laws.)

69. As Claimant points out, the language of the clause itself is narrow, stating only that New York law governs "this Agreement" and its construction. The clause does not state anything about extending New York law beyond the bounds of the contract to govern the parties' entire relationship, or to disputes arising out of the relationship the contract creates. To read the provision as [Respondent] suggests this Tribunal should requires going beyond the plain meaning of the words chosen by the parties. Had the parties intended to extend the application of New York law to their entire relationship, a myriad of alternative formulations would have been available to express precisely that intent. The parties, however, chose no such formulation.

70. Moreover, nothing in the remainder of the contract or in the parties' conduct, both of which may contribute to an objective interpretation of Article 13, contradicts this interpretation. For instance, although the references in the Shareholders Agreement to "applicable law" are somewhat ambiguous, they do suggest that the parties did in fact expect other laws, including German law, to apply to their relationship and that it was thus not to be governed exclusively by New York law. This is particularly so given that the Agreement also calls for the creation of various "operating companies", the place of incorporation of which was not yet determined. Although [Respondent] maintains that it would have not made good business sense for the parties to have different legal traditions and systems governing various aspects of their relationship, there is no evidence that the parties did not. Rather, they expressly considered situations in which New York law would not apply. [Respondent]'s attempt to explain away the references to "applicable law" as references to those limited situations in which the local mandatory law could not be supplanted, is unconvincing. If the parties were referring to mandatory law that could not in any event be waived, then including such exceptions in the contract would have been superfluous. Even if one were to assume that the parties intended to include references to those situations in which mandatory law applied, it is unlikely that the few references listed in the contract cover every such instance, particularly where the parties were still unsure as to where the Operating Companies would be incorporated. There thus appears to be no reasonable explanation for these references to "applicable law", other than that they indicate that the law at the place of incorporation of the various companies applies, inter alia, to govern the parties' relationship in those companies. The same would thus apply to [A], which was a German GmbH.

71. In addition, although [Respondent] argues that [Claimant]'s conduct after execution of the Shareholders Agreement suggests that [Claimant understood New York law to apply to the parties' entire relationship, this argument is not entirely convincing. In particular, [Respondent] maintains that [Claimant]'s reliance on New York law in the first arbitration demonstrates such an understanding, or in any event should estop [Claimant] from now claiming that New York law is inapplicable. However, [Claimant]'s reliance on New York law in the first arbitration is not necessarily inconsistent with its position that German law governs the claims at issue here. This is because, in the first arbitration, [Claimant] based its claims on the Impasse Provision, arguing that an impasse had been reached and that [Respondent] was thus required to buy out its shares. That claim was based in the Shareholders Agreement and required an interpretation of that Agreement - i.e. of what constituted an impasse and whether one had been reached - and thus clearly fell within the scope of the choice-of-law clause. In contrast, [Claimant]'s claims here are not brought based upon any provision of the Shareholders Agreement and do not in and of themselves require an interpretation of that Agreement (see paras. 78 et seq. below).

72. In conclusion, an objective interpretation of the language of the choice-of-law clause and of the Shareholders Agreement leads to the conclusion that, as the language of Article 13 clearly states, the parties intended New York law to govern the Agreement and its interpretation and construction. However, the notion that the parties intended New York law to apply beyond that, namely to the parties' entire relationship, finds no support therein.

73. There is also a common sense element to the position that, under the facts of this case, the parties would not have intended New York law to govern their entire relationship. This is because, at the time the Agreement was negotiated and signed, there was no corporate form under New York law that was equivalent or comparable to the GmbH. Because the level of duties owed by one shareholder to another depends on the corporate form at issue, if the parties truly intended to have the shareholder rights and duties of the parties governed by New York law, they would have had to discuss and decide on a corresponding corporate form under New York law. Neither party has pointed to any such discussions or deliberations regarding what would have been significant issues. Absent this, it is difficult to presume that they wished New York law to govern a form of corporation that did not exist under New York law.

3. The basis of [Claimant]'s claims

74. [Respondent] has also maintained that, even absent a finding that New York law was to govern the parties' entire relationship, New York law nevertheless applies because [Claimant]'s claims, by definition, require interpretation of, duties created by, or performance under the Shareholders Agreement.

75. The Tribunal disagrees. [Claimant]'s claims, as formulated in its submissions to the Tribunal, are not based on the Shareholders Agreement. [Claimant] has expressly maintained that it is relying exclusively on German tort law and on the fiduciary duties imposed on shareholders under German law and not on any duties imposed by or arising from the contractual relationship in the Shareholders Agreement. Whether these claims, as asserted, have merit, is not the question before the Tribunal at present. The sole issue is whether the claims brought by [Claimant] in and of themselves require an interpretation of the Shareholders Agreement, and the Tribunal holds that they do not. An exception must be made, however, for the possible situation in which [Respondent] were to rely, as a defense, upon the Shareholders Agreement to argue that the parties waived, restricted or modified the duties, if any, arising under German GmbH law upon which [Claimant] bases is claims. For the purpose of determining whether the parties so agreed, an interpretation of the Shareholders Agreement would be required and this interpretation would be subject to New York law, pursuant to the choice-of-law clause contained in the Shareholders Agreement.

76. The Tribunal finds its view confirmed in the decision of the ... Court of Appeals ..., affirming the ... District Court's dismissal of [Claimant]'s claims in light of the arbitration provision in Article 13 of the Shareholders Agreement. The Court of Appeals explained its decision as follows:

The [Claimant's] argument that he bases the claim on the [Respondent's] breach of shareholder duties and the German case law developed in that regard - but does not base it on the [Shareholders Agreement] - does nothing with regard to the fact that the arbitration clause applies here. Even if the [Shareholders Agreement] is not necessary to establish the compensatory damage claims, the court involved with the lawsuit cannot limit itself to only applying the case law generally developed concerning the breach of shareholder duties to the submitted factual situation. The court must also examine the question of whether specifications or restrictions of the shareholder duties arise from the [Shareholders Agreement], as a result of which the principles developed by the case law are modified in the case being decided here ...

[Respondent] argues that this decision by the ... Court of Appeals confirms that [Claimant's claims require an interpretation of the Shareholders Agreement and, as a result, that only New York law must apply. The Tribunal, however, has a more differentiated view.

77. The decision of the ... Court of Appeals does not say that [Claimant]'s claims involve an interpretation of the Shareholders Agreement. Rather, the Court of Appeals recognizes that the Shareholders Agreement may not be necessary to establish the main claims. The possibility that an interpretation of the Shareholders Agreement may be required in order to determine whether the German law fiduciary duties upon which [Claimant] bases its claims (if any) have been restricted or limited would only come about in the event that [Respondent] were to raise this argument as a defense. In other words, it is not [Claimant]'s claims that could potentially require interpretation of the Shareholders Agreement, but rather a defense that may or may not be raised by [Respondent].

78. Of course, the Tribunal recognizes that, in the event that [Respondent] were to raise a defense based on the Shareholders Agreement, and interpretation of that Agreement were to become necessary, such interpretation would be conducted under principles of New York law. This does not mean, however, that [Claimant]'s principal claims between shareholders of a German GmbH concerning their fiduciary duties under German law, must also be subject to New York law.

79. The Tribunal thus finds that [Claimant]'s claims in and of themselves do not arise from or require an interpretation of the Shareholders Agreement. Moreover, as discussed above, there is no evidence of a common intent or other agreement between the parties to have their claims governed by either New York or German law. The parties having failed to clearly identify the law applicable to their claims, it is now for the Tribunal to determine the law that is most appropriate under the circumstances of the present case pursuant to Article 17 of the ICC Rules.

4. Law applicable pursuant to Article 17 of the ICC Rules

80. Article 17 of the ICC Rules of Arbitration provides that, where the parties fail to clearly designate the applicable law, the Tribunal shall apply the rules of law "which it deems appropriate". In assessing which law is most appropriate to the proceedings at bar, the Tribunal looks to the factual and procedural history as well as to the parties involved.

81. A review of the facts of this case makes clear that the ties to Germany are indeed extensive: As indicated above, the claims here are brought by one shareholder of a German GmbH against another. The claims, as alleged, are based in German law and more specifically, on the fiduciary duties and obligations that German law imposes on shareholders of such a German corporation. Moreover, there are additional factors linking this case to Germany, namely the fact that the [industrial plant] itself is located in Germany and that the relevant conduct forming the basis of [Claimant]'s claims, including [A]'s bankruptcy and auction, actually took place in Germany. There has also been litigation involving the parties to this arbitration, and related to this arbitration, in the German courts.

82. On the other hand, the only connections that this case has to New York are that counsel who negotiated the Agreement were New York lawyers and that the choice-of-law clause designates New York law to govern the Agreement and its construction ( but not, as indicated above, the parties' entire relationship. Neither the parties, which are Dutch ([Claimant]) and French ([Respondent]), nor the procedural or factual history of the case have any ties to New York. Moreover, as indicated above, the corporate form governing the applicable shareholder duties is the GmbH, a German corporate form without an exact equivalent in New York law. Under these circumstances, the Tribunal finds that it would be awkward to attempt to apply New York law, and the fiduciary duties that it would impose, to a foreign corporate structure.

83. Given that the relevant events took place in Germany, and that the fiduciary duties at issue here involve the duties of shareholders in a German corporation, the Tribunal finds that German law has the "greater interest" in being applied here. Accordingly, the Tribunal holds that the substantive law applicable to [Claimant]'s main claims, and thus to the issue of the timeliness of those claims, is German law. It now remains to be seen whether [Claimant]'s claims are timely under that law.'