'61 . … the principal issues for the Parties' dispute as to the merits arise from the legal interpretation and application of the LPG Contract's Hardship Clause.

62. The Hardship Clause: The relevant wording of Clause 18.2 of the LPG Contract provides, here divided into numbered sub-paragraphs for ease of reference, as follows:

18.2 [1] In the event that, during the term of this Contract and due to circumstances which could not have been reasonably foreseen as of the date on which this Contract was entered into,

[2] either Party suffers severe and unforeseeable hardship for a period of time not shorter than 6 (six) months,

[3] the Party which is suffering the above mentioned severe and unforeseeable hardship shall give, to the other Party, written notice thereof,

[4] which will specify (i) the date and nature of the event or events which caused the change alleged by it; (ii) an evaluation of the hardship that has been suffered; and (iii) the proposal made by that Party to remedy that hardship.

It will, of course, be necessary to consider much more of the Parties' contractual wording than this brief extract. It will be noted, however, that the phrase "severe and unforeseeable hardship" is not expressly defined in the LPG Contract.

………

132. In the Tribunal's view, as required by Article 17(1) and Article 17(2) of the ICC Rules, the necessary starting point to the Hardship Clause is the interpretation and effect of the LPG's contractual wording under the relevant legal principles of New York law relating to the interpretation of commercial agreements, such as the LPG Contract.

………

The Claimant's case

134. In summary, the Claimant submits that the Hardship Clause requires the restoration of the "equitable character" of the LPG Contract when the "gateway" of severe and unforeseeable hardship occurs. The contractual references to "equity" appear stated in Clauses 18.l and 18.3 of the LPG Contract …

135. [Claimant] submits that Clause 18.1 contains the Parties' acknowledgement that when executed, the LPG Contract constituted "a fair and equitable agreement". Clause 18.3 then states that whenever a "severe and unforeseeable hardship" arises, the Parties must negotiate toward an amendment "to restore the equitable character of this Contract". Because the restoration of the equitable balance of the LPG Contract is, in fact, the specified remedy for the condition of hardship, the terms ''fair and equitable" or "equitable balance" must necessarily inform the meaning of "severe and unforeseeable hardship" in Clause 18.2 of the LPG Contract.

136. The notion of "hardship" thus stands as the antithesis to the notion of a "fair and equitable contract"; and it may be remedied by a modification that "restores the equitable character" of the LPG Contract. That is why both Parties have agreed that the Hardship Clause's "severe and unforeseeable hardship" requirement serves as the "gateway" for restoring the intended equitable balance of the LPG Contract.

137. [Claimant] submits that that New York law requires this Tribunal to look to the plain meaning of the Hardship Clause in order to determine whether [Claimant] has suffered "severe and unforeseeable hardship" under the LPG Contract. It also submits that New York law requires that the full agreement, including the Hardship Clause, must be read as a unified whole: see Madison Hudson Assoc. LLC v. Neumann, 44 A.D.3d 473, 480, 843 N.Y.S.2d 589 (1st Dept. 2007) ("contracts must be read as a whole and all terms of a contract must be harmonized whenever reasonably possible"), citing Matter of Westmoreland Coal Co. v. Entech, Inc., I00 N .Y.2d 352, 358, 794 N.E.2d 667, 763 N.Y.S.2d 525 (2003).

138. Extrinsic evidence: In accordance with these legal principles of New York law, [Claimant] submits that the Hardship Clause should be interpreted and applied with due regard for the Parties' understanding of the pricing basis for the LPG Contract.

139. [Claimant] submits that this evidence establishes, beyond any fair debate, that at the time the Parties agreed the LPG Contract, the Parties understood that its price would approximate [Claimant's] least cost alternative supply, then (as now) in West Africa. That was the basis for the Parties' negotiations; and it was what the Parties informed the financing institutions when securing the financing for the … Project.

140. As to the Tribunal's question at the end of the main hearing, as to whether the Tribunal may look to evidence outside the LPG Contract for guidance in interpreting the LPG Contract (including its Hardship Clause), [Claimant] submits that the answer, in general, is "yes". Under New York law, a contract's clear terms must be given full effect in accordance with their plain meaning. It is nonetheless appropriate to consider extrinsic evidence to interpret and apply the Hardship Clause, so long as such evidence is not used to contradict the unambiguous terms of the Hardship Clause. New York's highest court, the Court of Appeals, has held that it is entirely proper for an arbitrator to consider parol evidence establishing the intent of the Parties "even where the agreement is unambiguous, such that 'the award may well reflect the spirit rather than the letter of the agreement'": Aeneas MacDonald Police Benevolent Ass'n, Inc. v. City of Geneva , 92 N.Y.2d 326, 332, 703 N. E.2d 745, 680 N.Y.S.2d 887 (1998) (internal citations omitted) (Levine, J.).

141. Thus, whilst the LPG Contract is the only contract at issue in these arbitration proceedings, [Claimant] submits that the Tribunal can and should apply the Hardship Clause with due regard to the Parties' understanding, during the pre-contractual negotiations, that the LPG price was broadly equivalent to [Claimant's] least cost alternative supply of LPG, as submitted above.

142. Clause 24: As to the effect of Clause 24 of the LPG Contract (the "Entire Agreement" or "Merger" clause),1 as also raised by the Tribunal at the main hearing, [Claimant] submits extrinsic or parol evidence is generally admissible under New York law notwithstanding such a clause, as long as that evidence "would not modify or contradict the terms of a contract, but would explain certain ambiguities in the contract": ESPN, Inc. v. Office of Comm'r of Baseball , 76 F.Supp.2d 383, 404 (S.D.N.Y. 1999) (internal citations omitted); see also Telemundo Group, Inc. v. Alden Press, Inc., 181 A.D.2d 453, 580 N.Y.S.2d 999, 1000 (1st Dept. 1992) ("Nor do we accept the argument that the standard integration clause contained in the contract precludes further inquiry. Extrinsic or parol evidence is admissible notwithstanding such a clause where it 'would not modify or contradict the terms of the contract, but would explain ambiguities in the contract'"), quoting Word Mgmt. Corp. v. AT & T Info. Sys., 135 A.D.2d 31 7, 319, 525 N.Y.S.2d 433 (3rd Dept. 1988)).

143. Accordingly, [Claimant] submits that this Tribunal should apply the Hardship Clause to restore the equitable character of the LPG Contract in keeping with the Parties' understanding that the LPG Contract's pricing was based on [Claimant's] least cost alternative source of supply, consistent with Clause 24 of the LPG Contract.

144. [Claimant] submits that other extrinsic evidence confirms the Hardship Clause's focus on restoring the "equitable character of the contract". When the Parties submitted their dispute to the Expert …, the Parties jointly defined "hardship" to the Expert as "the occurrence of unforeseeable events that fundamentally alters the equilibrium of the contract and cause severe and unforeseeable losses to one of the Parties". [Claimant] emphasises the concept of equilibrium.

(At that time, [Claimant] was not represented by counsel; and both Parties explicitly reserved their rights to assert their legal views on the definition of this contractual term if an arbitration should become necessary. The definition submitted to the Expert was not therefore intended to become a legally binding interpretation of the Hardship Clause, and in any event, under New York law, it could not be read to alter the contractual meaning of the Clause because extrinsic evidence may not be introduced where it modifies or contradicts the plain language of the contract: 67 Wall St. Co. v. Franklin Nat. Bank, 37).

145. There is no doubt that the Parties understood that this approach was the basis for the pricing agreed in the LPG Contract. First, [Claimant] presented as witnesses the persons who actually negotiated the price … and who agreed this was the premise for selecting [the chosen price reference] …. [Respondent] presented no equivalent testimony to the contrary.

146. Second, the Parties explained the pricing term in exactly this way … when their representatives met the financing bank … in order to provide information about the LPG Contract for international financial underwriters. In that meeting, [Claimant's witness] explained that [Respondent] would provide [Claimant] with a competitive source of LPG and not a cheaper source as the draft rating agency presentations indicated. To illustrate his point, [the witness] explained that [Claimant] sourced its LPG in ascending order of cost from Africa, South America, the Middle East and Europe. [Claimant] expected gradually to shift LPG imports away from the Middle East and towards Africa, as it expected two new LPG sources to come online in Nigeria in 1998. …

147. [Claimant] submitted … that … the cost of [Respondent's] LPG was expected to be closely competitive with the Nigerian LPG supply available to [Claimant] …

148. For all these reasons, [Claimant] submits that such extrinsic evidence is relevant under New York law to the interpretation of the LPG Contract's Hardship Clause, thereby establishing [Claimant's] case.

The Respondent's case

149. In summary, the Respondent submits that, under New York law, the best evidence of the Parties' contractual intent is the written agreement itself. The Hardship Clause requires proof by [Claimant] of "severe and unforeseeable hardship"; and the LPG Contract does not provide any lesser "equitable" standard. References to the equitable character of the LPG Contract in Clauses 18.1 and 18.3 of the LPG Contract become relevant as to contractual adjustments after a party has proven severe and unforeseeable hardship. In this case, [Claimant] has failed to prove that it has suffered any "hardship" under the Hardship Clause, as interpreted under New York law as the applicable law.

150. Extrinsic evidence: [Respondent] submits that, under New York law, this Tribunal should not consider evidence outside the four corners of the LPG Contract unless the Tribunal determines (without resort to extrinsic evidence) that the contractual language is "ambiguous".

151. Even if the Tribunal were to determine that the LPG Contract is ambiguous (which [Respondent] disputes), no extrinsic evidence in this arbitration indicates that the Parties ever agreed to any standard other than the "severe and unforeseeable hardship" standard expressed in the Hardship Clause.

152. [Claimant's witness] testified at the main hearing that the first draft of the Hardship Clause in the LPG Contract contained the words "severe and unforeseeable hardship" and that those words appeared in every other draft of the Hardship Clause. He also conceded that [Claimant] never asked that the words of the Hardship Clause be modified before the LPG Contract's execution.

153. … the LPG Contract's principal draftsman and negotiator for [Respondent] testified that the Parties never sought to alter the standard embodied in the Hardship Clause. As [the aforementioned draftsman] testified, the Parties intended the standard to apply only in the most extreme scenarios.

154. Other agreements: [Respondent] submits that, under New York law, the Tribunal should consider all the contracts comprising the … Project as a whole, if it were to resort to extrinsic evidence. Accordingly, in considering [Claimant's] claim, the Tribunal should consider the way in which the several … agreements were designed to work together (and, in fact, do work together) to ensure the viability of the … Project for the benefit of all parties, including [Respondent] and [Claimant].

155. As a general matter, whether individually executed contracts should be treated as "mutually dependent" or as distinct agreements turns on the intent of the parties under New York law: Rudman v. Cowles Commc 'ns, Inc., 30 N.Y.2d 1 , 13, 280 N.E.2d 867, 873, 330 N.Y.S.2d 33, 42 (1972). The parties' intent is derived from the form and nature of the instruments themselves; thus, contracts between the same parties that are "executed at substantially the same time, related to the same subject matter" are regarded as "contemporaneous writings and must be read together as one": Nau v. Vulcan Rail & Constr. Co., 286 N.Y. 188, 197, 36 N.E.2d 106, 110 (1941); Patton v. Ferrara, 46 A.D.3d 1203, 1204, 848 N.Y.S.2d 732, 733 (3d Dep't 2007) (same); BWA Corp. v. Alltrans Express U S.A., Inc., 112 A.D.2d 850, 852, 493 N.Y.S.2d 1, 3 (1st Dep't 1985) ("Where several instruments constitute part of the same transaction, they must be interpreted together.").

156. [Respondent] submits that the LPG Contract, as established on the evidence, is not an isolated agreement but instead forms an integral part of the … Project as a whole, together with the other related agreements. All but one of these agreements were executed on the same day …; and the [other] Agreement was executed a short time thereafter … Under New York law, because these agreements were agreed and executed at substantially the same time to give effect to the same overall transaction …, these agreements should be interpreted by the Tribunal together, as a whole.

157. The fact that the agreements are not all between the same parties does not change this result under New York law; and [Respondent] itself (albeit not [Claimant]) is a party to each supply agreement. Moreover, [Respondent's] counter-party to each agreement is a shareholder in [Respondent]. New York law contemplates that multiple agreements will be read together under such circumstances: see Nau, 286 N.Y. at 197, 36 N.E.2d at 110 (examining various agreements between three parties and concluding that all three instruments "must be read together" because they were "related to the same subject matter"); and Eden Music Corp. v. Times Square Music Publ'ns Co., 127 A.D.2d 161, 165, 514 N.Y.S.2d 3, 5 (1st Dep't 1987).

158. Under New York law, although the presence of formally different parties to various agreements may at times be a "pertinent" factor in this analysis, the ''operative question" remains "whether the contracts were part of a single transaction intended to effectuate the same purpose": TVT Records v. Island Def Jam Music Group, 412 F.3d 82, 89-90 (2d Cir. 2005) (applying New York law). Indeed, under New York law, " . . . all writings which form part of a single transaction and are designed to effectuate the same purpose [must] be read together, even though they were executed on different dates and were not all between the same parties" id. (citation omitted; emphasis added by [Respondent]).

159. Clause 24: Clause 24 of the LPG Contract (the "Entire Agreement" clause) does not lead to a different conclusion under New York law. A "contemporaneously signed writing" that is part of a "single integrated transaction" can be construed along with the contract, notwithstanding the "merger clause set forth" in that writing: Morrissey v. Nextel Partners, 2009 N Y Slip Op. 50260U, at 7 (N.Y. Sup. Ct. Feb. 19, 2009). However, Clause 24, by its terms, bars consideration of prior agreements concerning the purchase or sale of LPG, but not consideration of other contracts in the same integrated transaction.

160. Accordingly, for these and other reasons summarized earlier in this Award, [Respondent] submits that [Claimant's] case fails to meet the requirements of the LPG Contract's Hardship Clause, as interpreted in accordance with the rules of contractual interpretation under New York law.

The Tribunal's analysis

161. It is common ground between the Parties that the Tribunal is required to apply New York law to the interpretation of the LPG Contract, including its Hardship Clause (Clause 18). The Tribunal sets out below the legal principles it considers relevant to the disputed issues of contractual interpretation.

162. General principles: A written agreement that is complete, clear and unambiguous on its face must be enforced by a court or tribunal according to the plain meaning of its terms, without reference to extrinsic materials outside the four corners of the instrument: Goldman v. White Plains Center for Nursing Care, 11 NY3d 173, 176 (2008); Greenfield v. Phillies Records, 98 N Y2d 562, 569 (2002); and W.W.W. Assoc. v. Giancontieri 77 NY2d 157, 162 (1990).

163. The question whether or not a contractual provision is "ambiguous" is a question of law to be resolved by the court or tribunal: W.W.W. Assoc., 77 N Y2d, at 162.

164. A contractual provision is ambiguous if it is reasonably susceptible of more than one meaning: White v. Continental Casualty Co., 9 N Y3d 264, 267-268 (2007); Robbins International Inc. v. Robbins MEW, 275 B.R. 456, 464 (S.D.N.Y. 2002) (citing Nowak v. lronworkers Local 6 Pension Fund, 81 F3d 1182, 1192 [2d Cir. 1996]).

165. Extrinsic evidence is not admissible to create an ambiguity in a written instrument which is complete and clear and unambiguous on its face: W.W.W. Assoc., 77 NY2d, at 163.

166. Where an ambiguity has been found by a court or tribunal, the subjective intent or understanding of one party to a contract is inadmissible as extrinsic evidence of the contractual provision's meaning, absent proof that the subjective intent or understanding was communicated to and considered by all parties to the contract. This legal principle is well known and long established by many legal authorities, notably Wells v. Shearson Lehman/American Express, 72 NY2d II, 24 (1998); Messina v. Lufthansa German Airlines, 47 NY2d 110, 115 ( 1979); Hudson-Port Ewen Associates v. Kuo, 162 A.O. 2d 301, 305 (3d Dept. 1999) aff'd 78 N Y2d 944; and NYCAL Corp. v. Inoco PLC, 988 F. Supp 296, 302 (S.D.N.Y. 1997) ("Only the parties' objective manifestations of intent are considered").

167. A court or tribunal should not, in the guise of construction, interpretation or implication, add or excise terms; nor distort the meaning of those used and thereby make a new contract for the parties. Similarly, this general principle is well known and long established by several legal authorities, notably Vermont Teddy Bear Co. v. 538 Madison Realty Co., 1 N Y3d 470, 475 (2004); Reiss v. Finandal Performance Corp., 97 N Y2d 195, 199 (2001 ); Rowe v. Great Atl. & Pac. Tea Co., 46 N Y2d 62, 72 (1978).

168. Even if not executed by all the same parties and on the very same date, contracts relating to the same subject matter or to effectuate the same purpose and forming a part of the same transaction may be read together: Nau v. Vulcan Rail & Construction Co., 286 N.Y. 188, 197 (1941); TVT Records v. The Island Def Jam Music Corp., 412 F3d 82, 89 (2d Cir. 2005).

169. Clause 24: The effect of an "Entire Agreement" or "merger" clause in a contract, typically reciting that it "represents the entire understanding between the parties" is to require the full application of the parol evidence rule barring the introduction of extrinsic evidence to vary or contradict the terms of the writing: for example, see Primex Intern. Corp. v. Wal-Mart Stores Inc., 89 N Y2d 594,599-600. It would not, however, exclude consideration of independent agreements between the parties which did not vary or contradict the terms of the provisions at issue (id., at 600). Accordingly, such a clause would not bar evidence of other agreements under the "Nau rule": see Morrissey v. Nextel Partners, 2009 WL 400030 (2009 N.Y. Slip Op 50260, citing County of Broome v. Travelers Indem. Co., 58 NY2d 753, 762 (1982) (dissent).

170. Other legal principles: As summarized above, both Parties advanced their respective cases on the basis of the LPG Contract's Hardship Clause and the general principles of New York law on contractual interpretation. Neither based their case by reference to the force majeure provisions in Clause 17 of the LPG Contract, which must nonetheless be read with the Hardship Clause as part of the same contract. As to New York law, the Tribunal considers it inappropriate, given the Parties' own contractual wording as a lex specialis, to have regard to Section 2-61 5 of the New York Uniform Commercial Code or the common law doctrine of commercial impracticality.2 In addition, the Tribunal considers it inappropriate, given their different wordings and applicable laws, to have specific regard to the individual terms of the other agreements comprising the … Project - save as indicated below.

171. Lastly, but not least, the Tribunal has regard to the well-established principles of New York law that common sense and good faith are the leading stars of contractual interpretation and that, in interpreting contractual wording, New York courts endeavour to arrive at the objective meaning jointly intended by the parties.

The Tribunal's decision

172. Applying these principles of New York law to the wording of the LPG Contract's Hardship Clause, the Tribunal does not find in such wording any relevant ambiguity for the purpose of its decisions in this Award, as explained further below.

173. Accordingly, as a matter of New York law, the Tribunal considers it inappropriate to consider in this Award the effect of the extrinsic evidence adduced principally by [Claimant] (but also by [Respondent]) as to the Parties' disputed interpretations of the LPG Contract. The Tribunal was also unpersuaded, on the evidence adduced in these proceedings as to the pre-contractual negotiations, that such extrinsic evidence established a common or objective understanding of the basis for pricing under the LPG Contract, including any understanding (as alleged by [Claimant]) that the pricing would approximate [Claimant's] "lowest cost alternative".

174. In the Tribunal's view, the first paragraph of Clause 24 of the LPG Contract (the "Entire Agreement" or "merger" clause set out above) is to be interpreted in accordance with its terms and the New York authorities cited above, including the "Nau rule". Moreover, it is to be noted that Clause 24 is expressly directed at excluding "prior" contracts but not contemporaneous contracts, such as the Natural Gas Agreement which form, with the LPG Contract, an intrinsic part of the … Project as an overall commercial transaction. Accordingly, as a background fact consistent with its terms, the Tribunal considers it appropriate to consider the … Project and the Natural Gas Agreement as part of the factual material relevant to the interpretation of the LPG Contract's Hardship Clause.'

1
Editor's note: Clause 24 reads as follows: 'This Contract is the entire agreement between the Parties regarding the purchase and sale of the Products object of it and no prior contracts, promises or agreements, whether written or verbal, shall be of any force or effect after the date of this Contract, unless embodied herein.This Contract may only be modified by a written document duly executed and delivered by both Parties but no modification hereof shall be effected ( nor deemed to be effected ( by the acknowledgment or acceptance of purchase orders or printed forms containing different or additional terms and/or conditions.'

2
Section 2-615 provides, in material part: "Except so far as a seller may have assumed a greater obligation ... [d]elay in delivery or non-delivery in whole or in part by a seller .... is not a breach of his duty under a contract for sale if performance as agreed has been made impracticable by the occurrence of a contingency the non-occurrence of which was a basic assumption on which the contract was made or by compliance in good faith with any applicable foreign or domestic governmental regulation ..." This provision may also inure to the benefit of a "buyer" under New York law.