'48. According to Clause 11 of the Agreement, Claimant was obliged to open a fully workable, acceptable, and operative letter of credit (the "LC") at Respondent's bank counters. According to Clause 22A of the Agreement, the LC had to be in strict compliance with Annex 1 and formed an integral part of the Agreement. Specifically, Clause 22A reads as follows:

L/C to be opened fully operative by Swift and received at seller's counters latest 11 April … in strict compliance with the attached Annex 1 which is integral part of this contract. In case the receipt of the fully workable, operative and acceptable L/C delay further than 14.04… the new sale price should be adjusted by the seller, at his sole discretion as per the new market prices.

49. Clause 27B, first sentence, of the Agreement provided as follows:

Any amendments and additions to the present contract are valid only if made in writing and signed by both the buyer and the seller.

50. According to Clause 27B, sentence two, of the Agreement:

all correspondence connected with the fulfilment of the present contract will take place in the English Language.

51. Save for the LC drafts sent to Respondent, the correspondence between the Parties took place in the Turkish language.

52. On April 10 … at 3:45pm, Claimant sent Respondent a draft LC it intended to open and which it had received from its bank ...

53. On April 11 … at 10:53am, Respondent informed Claimant that

there are many differences between the LC text that [Claimant] sent yesterday and the text provided in Annex 1 of the contract.

54. Respondent emphasized therein that Claimant should make sure its bank does not change the text of the LC.

55. On April 11 … at 11:45am, Claimant signed five pages of the Agreement and sent them to Respondent by fax. Claimant, however, did not sign or send Annex 1 of the Agreement which it allegedly did not receive ...

56. On April 11 … at 3:20pm, Claimant informed Respondent that its bank was reissuing the LC in conformity with the form provided by Respondent and that the new draft would be sent to Respondent within the same day.

57. On April 11 … at 4:07pm, Claimant sent the amended LC to Respondent by fax.

58. On April 11 … at 6:41pm, Respondent informed Claimant that the new draft of the LC still deviated from the text required by Annex 1 of the Agreement. In particular, the draft LC sent by Claimant required the presentation of a "EUR 1 Certificate", which, according to Respondent, was impossible to obtain in the [country] from where the goods had to be shipped. Finally, Respondent asked Claimant to notify its bank that it was important to "keep to the requested text".

59. On April 12 … at 10:04am, Respondent confirmed to have received the Agreement signed by Claimant and informed Claimant that the final part, namely the LC text, was missing. Respondent urged Claimant to approve that section and to transmit it to Respondent. The Annex 1, submitted by Respondent as Enclosure 2, was not signed by either of the Parties. Later on the same day, on April 12, … at 10:09am, Claimant informed Respondent that the LC was being opened.

60. On April 12 … at 2:53pm, Respondent received from its bank … a copy of the LC which had been opened at their counters on April 11 ... According to Respondent, the opened LC contained discrepancies with provisions 44B and 47A of Annex 1. Pursuant to Clause 22A of the Agreement, Respondent had to receive the LC by April 11 … at the latest. According to Respondent, Claimant did not fulfil this requirement.

61. Clause 22A of the Agreement further provided that if Claimant failed to open a LC in strict compliance with Annex 1 by April 14 … Respondent were in a position to adjust the sales prices at its sole discretion as per the new, then available market prices.

62. According to Respondent, Claimant failed to open a LC in strict compliance with Annex 1 by April 14 ...

63. Furthermore, Clause 22A provided that if the LC was not in strict compliance with Annex 1 by April 17 … Respondent was entitled to delay the shipment and to cancel the contract.

64. According to Respondent, Claimant did not open a LC in strict compliance with Annex 1 by April 17 ...

65. On April 18 … Respondent sent Claimant a fax summarizing the facts since April 10 ... It stressed, in short, that on April 10 … Claimant had sent Respondent a draft of the LC which was not in compliance with Annex 1. A day later, Respondent had received another draft of the LC, which was again deviating from the wording of Annex 1. Finally, Respondent received a copy of a LC opened by Claimant, which still did not comply with Annex 1 of the Agreement. Nonetheless, Respondent offered, despite the missed May production, to use the corrected and amended LC for the June production. Alternatively, Respondent offered to return the incorrectly opened LC to the Claimant to allow the release of the credit line.

66. On April 19 … Claimant sent a fax to Respondent, in which it explained that its bank had made a clear mistake concerning the LC text despite Claimant's instructions not to insert the "EUR 1 certificate requirement". Furthermore, Claimant informed Respondent that its bank had understood the mistake and had done all necessary corrections. Claimant stressed that it was expecting Respondent to deliver the goods within the time limit specified by the Agreement.

67. On April 20 … at 9:08am, Respondent received from its bank a fax copy of the amendments to the LC Claimant opened on April 1 … The "EUR 1 certificate requirement" was removed from the LC text. Nevertheless, the LC was, according to Respondent, not in strict compliance with Annex 1 of the Agreement.

68. In its fax to Respondent dated May 26 …Claimant stated that it had fulfilled all obligations according to the Agreement. It was expecting Respondent's confirmation that the goods would be delivered in compliance with the Agreement. Otherwise, Claimant would terminate the Agreement and would make Respondent liable for any damage caused to Claimant.

69. On May 29 … Respondent replied to Claimant's fax of May 26 … It reiterated the two alternatives it had presented to Claimant in its fax of April 18 … Accordingly, Claimant was given the opportunity to either use the corrected and amended LC for the June production or it could demand the return of the LC in a unutilized manner. Respondent invited Claimant to make a decision and stressed it would act accordingly.

70. On June 6 … Claimant contacted other suppliers to get the [goods] it needed. On the same day, a sale and purchase contract was concluded with a new supplier ... Claimant bought a total of 3,961.47 MT for a total price of … Because of higher prices for 3,952.70 MT [the amount originally ordered from Respondent], Claimant paid [a higher amount] compared to the sum it would have paid to Respondent according to the Agreement.

71. On June 23 … at 4:19pm, Respondent informed Claimant that it had been able to secure with the mill the allocation of 15,000 MT of [goods] with production in July and delivery in August. Respondent requested an immediate reply to allow for the necessary changes to the LC to be made and for the order to be placed in time for the July production. The same message was resent to Claimant on June 26 … Claimant did not reply.

………

Did Claimant open a valid Letter of Credit by April 14 or April 17 …?

1. Claimant's position

117. On April 6 … Claimant received a draft text of an LC which it considered to be not binding … On April 10 …, however, Claimant itself sent a draft text of the LC to be opened to Respondent ...

118. Specifically, Claimant alleged it fulfilled its obligations under the Agreement to open the LC on April 11 … at the latest … According to Claimant, its "offer" of the LC of April 10 … was made in conjunction with the terms and conditions as set forth in the Agreement. In fact, Claimant presented on April 10 … an "operative, workable and validly acceptable Letter of Credit" (SoC …).

119. Contrary to its statement made in the Statement of Claim, Claimant later pointed out that it was not in a position to "know whether the opened letter of credit is acceptable by the Respondent or not" ... It did not know whether it had complied with Agreement, because Respondent objected to the LC in English for the first time on April 18 …

120. Upon receipt of Respondent's objection to the terms of the LC, Claimant, on April 19 … rectified the text of the LC. It withdrew the requirement to present a EUR1-certificate ... Claimant thereby changed the LC, although Respondent "entered into an effort to evade from [its] contractual obligations" and despite the already established LC which was "in conformity" with the Agreement (SoC …).

121. Claimant further held that Respondent, on the basis of Clause 22A, should have either increased the price under the Agreement or terminated the Agreement. …

122. After the adjustment of the LC, Claimant insisted on the fulfilment of the Agreement on May 26 ...

123. Upon receipt of Respondent's faxed letter of May 29 … Claimant considered the Agreement to be terminated. According to Claimant, Respondent had fundamentally breached the Agreement by not delivering the [goods] as per the terms and conditions defined by the Parties ... Thus, it had to enter into a contract with [another supplier], from which it purchased the same quantity of [goods], but at a higher price … The higher price damaged Claimant. It is not seeking to be compensated for the damages.

2. Respondent's position

124. Respondent denied any breach of the Agreement …

125. It is Respondent's position that Claimant failed to open an acceptable, fully workable LC in strict compliance with the Agreement and, in particular, with Clause 22 of the Agreement ...

126. Claimant was obliged to open the LC by April 17 … All drafts Claimant presented to Respondent contained "many discrepancies" (SoD …). Discrepancies were, however, not acceptable under the Agreement, because they had to be in strict compliance with Clause 22.

127. According to Respondent, it brought the discrepancies to the attention of Claimant on a number of occasions ... In particular, the requirement to present a EUR1 certificate was a "clear stop clause for the LC" (SoD …).

128. Despite Respondent's reminders Claimant failed to open an acceptable LC by both April 14 … and April 17 …

129. Respondents offered Claimant two options on April 18 … Claimant, however, while admitting its fault, claimed delivery of the [goods] as per the terms of the Agreement. Claimant held it had fulfilled the requirements regarding the opening of the LC …

130. It is Respondent's view that Claimant, as of April 19 … was in material breach of Clause 22 of the Agreement …

3. The Sole Arbitrator's considerations

131. The main issue in this Arbitration is whether Claimant presented Respondent a fully operative, workable, and acceptable LC as per the Agreement (Clause 22A). Specifically, it has to be analysed whether, under Swiss law, the principle of strict compliance with the required form text is applicable. The issue is relevant, because the seller will only get paid by the bank issuing the LC if the documents presented upon the delivery of the sold goods comply with the requirements as set forth in the respective letter of credit. Accordingly, the Sole Arbitrator will have to examine how Clause 22A of the Agreement is to be interpreted in the present context (i.e. "LC to be opened fully operative by Swift and received at seller's counters latest 11 April … in strict compliance with the attached Annex 1 […]").

132. Specifically, the question to be examined by the Sole Arbitrator is whether Claimant complied with said Clause and how the standard of strict compliance is to be defined in accordance with the applicable Swiss law.

a) The principle of strict formal compliance with documents presented under Swiss law

133. In a recent decision, the Swiss Federal Court held that the documentary credit, thus including letters of credit, is characterized by the principle of strict compliance, i.e. the conformity between the documents to be presented to the issuing bank and the credit (payment) offered by the bank, on which the credit depends upon (Decision of the Swiss Federal Court, referred to as BGE 131 III 222, 4.1: "[…] elle [l'accréditif] est aussi caractérisée par le principe dit la rigueur documentaire, en ce sens que la condition dont elle depend n'a pas d'objet autre que la conformité des documents aux clauses de l'accréditif").

134. According to another decision of the Swiss Federal Court of 2005, which examined the application of the UCP 500 under Swiss law, held the following: the principle of strict compliance with the document presented to the issuing bank means that the bank only examines the formal compliance of the presented documents, i.e. the compliance thereof with the credit and not the compliance with the products sold (decision of the Swiss Federal Court of November, 9, 2006 (referred to as decision # 4C.393/2005, 3.1).

135. Consequently, one has to conclude that the principle of strict formal compliance with letter of credit documents to be presented by the seller is a generally accepted principle under Swiss law. The principle ensures that the seller, in international transactions, is being paid upon presentation of the documents as required by the letter of credit. As such, Respondent's insisting on the strict compliance of the LC presented by Claimant with Clause 27 of the Agreement is in line with Swiss law.

b) The principle of strict formal compliance with documents presented applies internationally

136. The same principle is applicable in the international context as well. In a US case, the issuing bank refused payment under a letter of credit because the invoice accompanying the beneficiary's draft did not contain the exact information required by the letter (Courtaulds North America, Inc. v. North Carolina National Bank, 528 F.2d 802 (4th Cir. 1975), referring to Equitable Trust Co. of N.Y. v. Dawson Partners, Ltd, 27 Lloyd's List Law Rpts 49,52 (1927)). The court granted summary judgment in favour of the bank (referring with approval to H. Harfield, Bank Credits and Acceptances 73, 5th ed. 1974; emphasis added by the Sole Arbitrator): "There is no room for documents which are almost the same, or which will do just as well" (528 F.2d at 806)).

137. In the case known as Texpor Traders, Inc. v. Trust Company Bank, the court considered the following discrepancy not as "trivial or microscopic" (720 F.Supp. 1100, 10 U.C.C. Rep. Serv. 2d (Callaghan) 1227 (S.D.N.Y. 1989):

Oxford Industries, Inc., Robert Stock Division, Dept OA5, P.O. Box 510, Lyons, GA 30436, attn: Sue Turner

instead of

Oxford Industries, Inc., P.O. Box 1618, Atlanta, Georgia 30310.

138. Similarly, the ICC Banking Commission held the following: "As typing errors are often in technical expressions, it is not possible for bank employees to judge the importance of such discrepancy, even if it seems to be a minor one. According to our experience it is therefore advisable to amend the error in order not to risk a rejection of the documents" (ICC-Publ. Nr. 434, S. 333).

139. Ultimately, the bank's decision is always going to be whether a formally discrepant document could be accepted if no risk of misinterpretation of the incorrect statement exists (ICC-Publ. Nr. 565 (E), R 209).

c) The Parties' agreement on ICC Incoterms Edition 2000

140. The Sole Arbitrator is furthermore directed to Clause 23 of the Agreement, whereby the Parties agreed to apply all commercial terms in compliance with the "ICC Incoterms latest edition 2000" (Clause 23 of the Agreement).

141. The ICC guide to the Incoterms 2000 provide for the following (Jan Ramberg, ICC Guide to Incoterms 2000, Understanding and practical use, P. 27; emphasis added by the Sole Arbitrator):

In this context [relation between Incoterms and documentary credits] the parties should ensure that

• the instructions given by the buyer to the bank undertaking the documentary credit (the issuing or opening bank) are fully compatible with the requirements under the contract of sale;

• the seller is offered the opportunity in advance, and well before the handing over of the goods for carriage, to check the terms of the documentary credit;

• inconsistency between the requirements under the documentary credit and the requirements under the contract of sale is avoided, since the buyer may be in breach of his payment obligation if the seller cannot get paid under the documentary credit when his document conform with the contract of sale; and

• the buyer does not instruct the bank to pay against a transport document which does not control the disposition of the goods and which would therefore not prevent the seller from sending the goods to someone else after he has been paid.

142. As a result of the above, however, Respondent was in a position to insist on a strict compliance with the form text of the LC as submitted to Claimant as Annex 1 of the Agreement. The requirements as set forth in the Agreement are in line not only with Swiss law, but also meet the internationally accepted standard, including the applicable Incoterms as per Article 23 of the Agreement.

143. In the following, the Sole Arbitrator will determine whether the Parties complied with the respective ICC Guide to Incoterms. In particular, the Sole Arbitrator will determine whether Claimant had ample opportunity to comply with the required provision to open an acceptable LC. By the same token, the Sole Arbitrator will decide whether the discrepancies, as pointed out by Respondent in this Arbitration, could rightfully be rejected by Respondent.

d) The relevance of strict compliance as set forth in Clause 22A of the Agreement

144. The Sole Arbitrator, upon careful review of the Parties' arguments and submitted evidence, concludes as follows:

145. It is undisputed that Claimant received the form LC Respondent included as Annex 1 to the Agreement on April 6 … (and possibly again on April 7 ...). By referring to Clause 27 B and C of the Agreement, Claimant argued the Sole Arbitrator should ignore that Respondent in fact did send the form text of the LC on April 6 ...

146. The rationale of the aforementioned provision of the Agreement is, however, not the obligation to fade out any and all information received and exchanged between the Parties. A closer look at the Agreement reveals that the Parties, when signing the Agreement, did not exclude Claimant's obligation to open a LC according to Clause 22. To the contrary, the opening of a respective LC was a conditio sine qua for the Agreement to be executed.

147. From the evidence presented, it was obvious to which form text LC Respondent was referring to on numerous occasions. The logical conclusion can only be that Respondent always referred to the text of the form LC it had sent to Claimant at least on April 6 … But even assuming that Claimant believed the original text of the form LC were to be ignored, it should have, as a loyal business partner and acting in good faith, addressed the issue with Respondent. It could have easily contacted Respondent to make sure it was working on the opening of an acceptable LC as per the terms of the Agreement which would not torpedo the delivery of the [goods] it needed.

148. Further, the review of the correspondence shows that the Parties repeatedly discussed the terms of the LC to be opened ... It becomes apparent that Claimant never expressed any doubts as to what text of a LC Respondent was referring to. On the contrary, based on Claimant's handwritten note of April 7 … Respondent was led to believe Claimant was referring to the sample text of the LC Respondent had already sent to Claimant ...

149. As seen above, the Sole Arbitrator considers the correspondence in the [language other than English used by the Parties] as a valid means of communication between [them]. Claimant's emphasis on the isolated application of English communication only does not convince the Sole Arbitrator. Claimant is attempting to make the Sole Arbitrator believe he should disregard Respondent's repeated communications. In other words, the Sole Arbitrator should disregard Respondent's warnings that the draft LCs Claimant had presented was [sic] not operative due to a number of discrepancies. In fact, Respondent insisted repeatedly on strict formality ...

150. In this context, the Sole Arbitrator needs to take into consideration the following factors: first, Claimant, even throughout this Arbitration, never asserted that the changes to the draft LC were not (or even not easily) doable by Claimant that was in charge of issuing the LC. Second, Respondent convincingly showed that the requirement to present the so-called EUR1 certificate was virtually impossible. Even if Respondent had agreed thereto, the delivery of [goods from the country of production to the buyer's country] could not possibly have been accompanied by the respective EUR1 certificate. Consequently, Respondent would not have been in a position to receive payment, had it attempted to demand payment from the bank issuing the LC, because it would have not been able to present any EUR1 certificate. Third, Claimant never expressed any doubts as to what text of the LC it had to open to comply with the requirements of the Agreement.

151. Further, Claimant admitted on April 19 … that its bank unfortunately had insisted on the presentation of the respective EUR1 certificate ...

152. Claimant knew about the discrepancies on April 11 …10:53am at the latest …, after it had presented Respondent a form text of the LC on April 10 ... Respondent, in its email of April 11 … stressed the respective discrepancies and requested for the LC to be in compliance with the form text it had provided ...

153. [The person acting] on behalf of Claimant replied to Respondent's email of April 11 … on the same day at 3:20pm ... The email stated the following in the Turkish language (emphasis added):

… [The bank] is reissuing the letter of credit by keeping the form that you provided. We will send you the new text within today

Please be informed accordingly.

154. It is, therefore, established, that i) Claimant acknowledged receipt of the form text LC, ii) it agreed to comply with the respective text of the LC which Respondent had provided, iii) acknowledged that the draft LC it had presented on the same day had to be corrected accordingly, and iv) promised it would submit a corrected version on the same day ...

155. The Sole Arbitrator, as a result, concludes the following: although the Parties did not sign the form text of an LC, Claimant was aware of the form text of the LC Respondent required. Claimant, who had received the draft form text of the LC on April 6 and likely again on April 7 … expressly confirmed to Respondent its intention to comply with the sample LC it had received earlier. Otherwise, Respondent's communication of April 11 … would not make any sense. The facts around April 11 … are thus contrary to Claimant's position in this Arbitration. Had Claimant indeed assumed a different sample text LC had been concluded between the Parties, it would have likely objected to Respondent's email of April 11 … (see above, at note 152).

156. Later on April 11 … Claimant sent Respondent a new version of the LC ... The new version still included the Seller's (i.e. Respondent) requirement to present a EUR1 certificate. Respondent replied again on April 11 … at 6:41pm and objected to the text of the LC … A further draft LC was submitted to Respondent on April 12 … at 2:53pm … The draft LC, however, again required Respondent to present the EUR1 certificate ... And again, Respondent objected …

157. In sum, the draft LCs presented by Claimant until April 19 … contained discrepancies and included, in particular, the requirement for the seller to present a EUR1 certificate issue. Claimant did not object, but in fact admitted the discrepancies and promised to comply with the sample text of the LC as required by Respondent ... Claimant's communication of April 11 … is in line with Claimant's handwritten and dated note of April 7 … whereby Mr [A] instructed Mr [B] to open an LC ... On April 7 … Claimant could have, however, only referred to the sample text of the LC it had previously received from Respondent.

158. The Sole Arbitrator concludes that Claimant admitted its failure to present a fully workable LC within the terms set forth in Clause 22A of the Agreement, i.e. by April 17 ...

159. As seen above, Claimant was obliged to respect Clause 22A which required the LC to be in strict compliance with the Agreement. This requirement is best practice under Swiss law, by international standards, and, in particular, as per the contractually agreed ICC Incoterms edition 2000 (see above, at notes 133 to 141). Because of Claimant's failure to present an acceptable LC by April 17 … Respondent was under no obligation to deliver the [goods] within the time frame set forth in the Agreement.

………

D. Respondent's alleged fundamental breach of the Agreement

161. After April 19 … Claimant continued to insist on the delivery of the [goods] as per the Agreement and the originally agreed prices (see above, at note 66). Claimant's bank … issued (by fax) a copy of the LC, Claimant had effected on April 19 ... According to Claimant's position on May 26 … it believed to have fulfilled all requirements as per the Agreement. Respondent, however, held that the LC still contained discrepancies and that the time to deliver the [goods] at the originally agreed prices had lapsed (see above, at notes 67 and 122 …).

162. Respondent offered Claimant on May 29 … to either return the LC issued by Claimant's bank or to amend the LC according to the prices for the June … production ... On June 23 … Respondent reiterated its offer and informed Claimant that it had been able to secure the requested [goods] for delivery in August ... (see above, at note 71). As seen above, Respondent was not in breach of the Agreement by April 17 ... The "further delay" was, therefore, caused by Claimant, because it did not present an amended LC as per the new terms of the shipment. Specifically, Respondent would have been entitled to either delay the shipment or to even cancel the Agreement. It did, however, not do so (see Clause 22A, last sentence, of the Agreement).

163. Claimant remained silent and did not answer Respondent's communications of May and June …

164. In the meantime, Claimant purchased the [goods] from [another supplier], but at a higher price. It had considered the Agreement terminated and held that Respondent had fundamentally breached the Agreement (see above, at note 123). Claimant, however, neither formally terminated the Agreement nor communicated Respondent its intention to purchase the [goods] from [the new supplier]. To date, Claimant claims the difference in price, because it purchased the steel plate from [the new supplier] at a higher price.

165. As seen, the Sole Arbitrator concluded that Claimant failed to open an acceptable LC after April 17 ... Claimant thereby failed to fulfil its obligations under the Agreement, i.e. the presentation of a LC in strict compliance with the Agreement. An amendment of the LC issued by Claimant's bank would, however, have been necessary to trigger Respondent's obligation to deliver the [goods] at a later date.

166. In other words, so long as Claimant did not present an acceptable and fully workable LC, no shipping date could possibly have been determined by Respondent. Thus, any delay with respect to possible shipping dates is to be borne by Claimant.

167. As seen, Claimant did not respond to Respondent after April 19 ... Only about one year later, it commenced this Arbitration and claimed damages for an alleged breach of the Agreement.

168. As a result of the above, Claimant's claim for the alleged breach of the Agreement by Respondent is not warranted for the period following April 19 … Claimant's claim has, therefore, to be rejected.'