'(ii) Considerations of the Sole Arbitrator

303. In analysing the issue of the [equipment]'s failure, the Sole Arbitrator considers it appropriate to first make a preliminary decision as to the evidence submitted in this arbitration, in particular, the written statements of [two witnesses].

304. In the Sole Arbitrator's view, these witnesses, although duly summoned, did not appear at the hearing without any valid reason. In this regard, the Sole Arbitrator fails to see any justification for departing from the general rule established in Article 4(8) of the IBA Rules, which are applicable in accordance with Section 17 of Procedural Order No. 1.1 Therefore, these witness statements are excluded from the record and will not be considered evidence as requested by Claimant.

305. However, the Sole Arbitrator accepts the photographs of the [equipment] filed by Respondent as documentary evidence ... since they were introduced in this arbitration at the appropriate stage. Further, such photographic materials were widely used at the hearing by both Claimant's counsel and witnesses in order to elaborate on some arguments, clarify some positions or, at least, illustrate some points of their pleadings.

………

Is there any adverse inference or conclusion to be drawn by the Sole Arbitrator as a result of the conduct of the parties during these proceedings? Has the conduct of the parties any effect on the outcome of this arbitration?

(i) Positions of the Parties

373. In its Post-Hearing Brief, Claimant argued that Respondent did not comply with certain Procedural Orders issued in these proceedings.

374. In particular, [Claimant] alleged that Respondent failed to produce the documents requested ... namely (i) a complete copy of the insurance policy ... which covered Respondent's civil liability ... and (ii) a copy of the reports issued by the adjusters of the insurance policies. ... Claimant also stated that its ability to prepare its Memorial had been limited by Respondent's conduct throughout the document production process ...

375. Based on this allegation, Claimant requested the Sole Arbitrator to draw an adverse inference against [Respondent] in accordance with Article 9(4) of the IBA Rules ...

376. Claimant also criticized Respondent for failing to make [witnesses] available for cross-examination at the hearing. It is Claimant's position that the written statements submitted by these two witnesses are of no value since they did not appear to ratify them at the hearing. ...

377. Claimant returned to this issue ... According to [Claimant], while all their witnesses attended and were heard at the hearing as requested by [Respondent] and ordered by the Sole Arbitrator, Respondent's witnesses did not appear in spite of the fact that they were duly summoned, preventing Claimant from cross-examining them.

378. [Claimant] also claimed that Respondent's request for document production was filed once the time limit had elapsed. In addition to this, Claimant stated that [Respondent] did not submit its Counter-Memorial in due time.

379. Finally, Claimant also pointed to the fact that it was forced to pay the whole of the advance on costs of this arbitration due to the fact that Respondent did not pay its share in accordance with the procedure established in Article 30(3) of the ICC Rules.2

380. Claimant concluded that "this permanent behaviour of the Respondent, which is fully accredited by the examples given in this presentation, constitutes a clear breach of the contract and the terms of reference signed by their Respondent representatives". …

381. In its written pleadings, Respondent has not refuted Claimant's allegations. Only in its Post-Hearing Brief, [Respondent] admitted that it would be unreasonable to refer to written statements of witnesses that did not attend the hearing. …

(ii) Considerations of the Sole Arbitrator

382. The Sole Arbitrator will first address the issue of the evidence produced in this case and the allegations made by Claimant in this respect in order to take its decision on the adverse inference as anticipated in Procedural Order No. 3.

383. It is for the Sole Arbitrator to decide on the appropriateness, relevance and weight of any evidence produced by the parties in these proceedings.3 In order to accomplish this, "the Sole Arbitrator may seek guidance from, but shall not be bound by, the 1999 IBA Rules on the Taking of Evidence in International Commercial Arbitration".4

384. Article 9(4) of the IBA Rules allows arbitral tribunals to make an adverse inference if a party fails without satisfactory explanation to produce any document after being ordered to do so.5

385. This rule is consistent with Section 15 of Procedural Order No. 1, which establishes that "if one of the Parties fails to submit any document required by the other Party or the Sole Arbitrator without grounded reasons, the Sole Arbitrator may conclude what it deems appropriate as the case may be".

386. Accordingly, the Sole Arbitrator is free to make inferences based on the evidence that the parties have effectively offered or produced or have failed to offer or produce.6

387. In the present arbitration, the Sole Arbitrator allowed a round of discovery in accordance with Row No. 27 of the Procedural Calendar.8 In that stage, while Claimant filed all the documents requested to be produced by [Respondent] … Respondent did not exchange the documents requested by Claimant without providing any reasonable explanation.9 At that time, the Sole Arbitrator anticipated that Respondent's failure was material and, therefore, it would be taken into account by the Sole Arbitrator in allocating the costs of the arbitration pursuant to Article 31(3) of the ICC Rules. …

388. Nevertheless, after reviewing the entire evidence produced in this arbitration - either documents produced as a consequence of an order issued by the Sole Arbitrator or documents voluntarily submitted by the parties with their written pleadings - the Sole Arbitrator is satisfied with the evidence produced by the parties.

389. Moreover, the Sole Arbitrator finds that the evidence produced in this case has been sufficient to determine the facts relevant to the issues in dispute. The existence of a decisive or extremely relevant document not produced in these proceedings which could eventually alter the Sole Arbitrator's findings or change the outcome of the case is, in the opinion of the Sole Arbitrator, highly unlikely.

390. Based on this understanding, the Sole Arbitrator denies Claimant's request that an inference adverse to Respondent's defences be drawn in this case.

391. However, the Sole Arbitrator considers that, in the course of these proceedings, Respondent was not completely diligent in complying with Procedural Orders issued by the Sole Arbitrator.

392. For instance, in addition to Respondent's failure to submit the documents ordered to be produced (despite the fact that the Sole Arbitrator had granted a time extension to comply with such procedural obligation), [Respondent] (i) failed to answer certain requests made by the Sole Arbitrator … (ii) failed to file its request for document production in due time … and (iii) failed to submit its Counter-Memorial within the time frame …

393. The Sole Arbitrator considers that this lack of due diligence has unnecessarily affected the way in which these proceedings have been conducted. For instance, Respondent's untimely submission of its Counter-Memorial prevented Claimant from filing a Reply Memorial and obliged the Sole Arbitrator to alter the original Procedural Calendar. In other cases, Respondent's uncooperative behaviour demanded additional work in this arbitration.

394. The Sole Arbitrator will consider these facts when assessing the costs of the arbitration.10

395. Finally, notwithstanding its interest in receiving [the absent witnesses'] testimonies, the Sole Arbitrator must hold Respondent responsible for not making them available for cross-examination at the hearing in accordance with Section 25 of Procedural Order No. 1.11 For that reason, as explained before, the written statements of these witnesses submitted in this arbitration were not considered as evidence by the Sole Arbitrator in making this Final Award.'

1
Article 4(8) of the IBA Rules provides: "If a witness who has submitted a witness statement does not appear without a valid reason for testimony at an evidentiary hearing, except by agreement of the parties, the arbitral tribunal shall disregard that witness statement unless, in exceptional circumstances, the arbitral tribunal determines otherwise." See also Sections 17 and 25 of Procedural Order No. 1.

2
Editor's note: This and subsequent references are to the 1998 ICC Rules of Arbitration.

3
Section 11 of Procedural Order No. 1.

4
Section 17 of Procedural Order No. 1.

5
The failure to submit any document previously requested to be produced which is reasonably expected to be in the party's possession can lead an arbitral tribunal to believe that such document is adverse to the interests of that party. To this respect, Article 9(4) of the IBA Rules states: "If a Party fails without satisfactory explanation to produce any document requested in a Request to Produce to which it has not objected in due time or fails to produce any document ordered to be produced by the Arbitral Tribunal, the Arbitral Tribunal may infer that such document would be adverse to the interests of that Party."

6
Charles N. Brower, "Evidence before international tribunals: The need for some standard rules", 28 International Law 47, 1994, at page 56.

7
Editor's note: Row No. 2 specified the date on which the parties were to simultaneously exchange documents in response to requests for production of documents or exchange objections to such production requests.

8
This discovery exercise was conducted in the course of an international arbitration between parties and counsel of different cultures and nationalities and, therefore, was required to be undertaken in accordance with the general principles and practice of international arbitration related to document production.

9
The breach of this procedural obligation was aggravated by the fact that Respondent previously informed that it would prepare such documents for submission … and, for such purpose, requested a postponement of the time limit set forth to comply with Row No. 2 of the Procedural Calendar, which was granted by the Sole Arbitrator ...

10
The failure to comply with procedural orders or, in general, any uncooperative behaviour of the parties during the course of the proceedings may be taken into consideration in allocating the costs of the arbitration. See: Yves Derains - Eric A. Schwartz, A Guide to the ICC Rules of Arbitration, Second Edition, Kluwer Law International, 2005, p. 373.

11
Section 25 of Procedural Order No. 1 provides: "Failure to make a witness available for cross-examination without good cause shall give the Sole Arbitrator the full discretion to assign such weight and materiality to the statement or report as it sees fit."