'Introduction

1. [In] November 2009, the Arbitral Tribunal ("the Tribunal") issued a First Partial Award in this arbitration ... ("the First Partial Award").

2. [In] April 2010, the Tribunal issued an Addendum making certain corrections to the First Partial Award ... References hereafter to the First Partial Award are references to that Award as corrected by that Addendum.

3. [In] November 2010, the Tribunal issued a Second Partial Award in this arbitration ... ("the Second Partial Award").

4. [In] January 2011, the Tribunal issued an Addendum making certain corrections to the Second Partial Award ... References hereafter to the Second Partial Award are references to that Award as corrected by that Addendum.

5. Descriptions of the parties, and the names and addresses of their respective counsel, and of the arbitrators are set out in the First Partial Award as follows (and remain the same): ...

6. The First and Second Partial Awards also contain accounts of the proceedings in this arbitration, the disputes between the parties and of the Tribunal's findings and decisions in relation to those disputes; for that reason the entire First Partial Award and the entire Second Partial Award are to be treated as incorporated by reference into this Award.

7. In brief, however, the First Partial Award dealt with claims for contractual sums which the Claimant said they were owed by the Owner, and with counterclaims by the Owner based on the Claimants' alleged mismanagement of the Hotel. In the event, the Tribunal awarded the Claimants certain contractual sums, and dismissed the Owner's counterclaims. The Second Partial Award dealt with whether, and if so how and when, the Agreements had been terminated (as the Claimants alleged they had been), and with certain further claims by the Claimants for contractual sums which they said they were owed by the Owner, and with their claims for compensation from the Owner, and for interest on sums recovered. In the event, the Tribunal decided that the Agreements had been terminated, and awarded the Claimants certain contractual sums, compensation and interest.

8. Further, in this Award we use the same abbreviations and defined terms as are used in the First and Second Partial Awards ... We will also continue to refer to the Respondent as "the Owner".

9. The Second Partial Award (at paragraphs 70, 77 and 130(11)) left over for subsequent decision compensation for losses suffered by the Claimants between 11 April 2009 and the date of the Second Partial Award [in] November 2010 ("the First Period"), and between the latter date and the handover of the Hotel by [the First Claimant] to the Owner ("the Second Period"); and costs. This Final Award deals with compensation for the First and Second Periods and costs, and with interest on sums awarded.

Proceedings

10. ... the Tribunal gave directions to enable the outstanding issues between the parties to be determined.

11. Pursuant to those directions:

(a) ... the Claimants served a submission on compensation and costs;

(b) ... the Owner served a response to the Claimants' submission on compensation and costs;

(c) ... the Claimants served a reply in further support of their claim for compensation and costs and in opposition to the Owner's claim for costs;

(d) ... the Claimants served supplemental submissions in support of their claim for compensation and costs;

(e) ... the Owner served a reply in further support of its submission for costs and opposition to the Claimants' supplemental submissions;

(f) ... the Claimants served a rejoinder to the Owner's reply in further support of its submission for costs and opposition to the Claimants' supplemental submission;

(g) ... the Claimants served a submission on privilege;

(h) ... the Owner served a submission on privilege;

(i) ... the Claimants served a further submission on privilege;

(j) ... the Owner served a further submission on privilege;

(k) ... the Claimants served a second supplemental submission in support of their claim for costs;

(I) ... the Claimants served an addendum to their third updated Exhibit B to their costs submissions and supporting documents;

(m) ... the Claimants served an amended fourth updated Exhibit B to their costs submission, and an updated Annex I to the affidavit of [Claimants' counsel].

12. The hearing concerning compensation for the First and Second Periods and costs took place ...

Compensation

19. The first matter that needs to be dealt with is the Claimants' claims for compensation in respect of the First and Second Periods.

Background

20. In order to explain what requires to be determined by the Tribunal, it is necessary to set out what we said at paragraphs 68 to 76 of the Second Partial Award. ...

21. The Hotel was handed over by [the First Claimant] to the Owner on 1 March 2011, so the Second Period runs from 11 November 2010 until 1 March, 2011.

The claims for compensation

22. The Claimants' claims are conveniently summarised in a table provided to the Tribunal at the hearing ...

23. Items I, II and Ill relate to the First Period, and item IV to the Second.

24. In relation to the first three items, the table refers to "contractual amounts due". However, as the Tribunal pointed out in paragraph 69 of the Second Partial Award, the Claimants are not entitled to contractual amounts after 11 April 2009 because, as is now known, on that date all three Agreements came to an end.

25. Accordingly, the first step in determining compensation is to identify the relevant principles to apply.

Principles

26. In the Second Partial Award, the Tribunal made its position clear in relation to this period at paragraph 76 ...

27. The experts are agreed that under [the applicable] law applying in [the city], the Courts have a wide discretion in assessing compensation in respect of a post-contractual period of time such as the First and Second Periods ...

28. [The Claimants' legal expert] says: "it is common practice that Courts take guidance from the provisions of the terminated contract. This is particularly appropriate where the parties have continued to rely on the contract and have acted in accordance with it." ...

29. [The Owner's legal expert] says that there is no: "general rule that the court will in every case exercise its discretion along the same lines as would have been followed if the parties' contract had not ceased to exist" ...

30. [The Owner's legal expert] may well be right that there is no general rule. The approach, however, is clearly permissible under [the applicable] law, and in the Tribunal's view appropriate in the present case. During the First Period the parties necessarily behaved as if the three contracts were still in force, and the Claimants are entitled to be remunerated as if they were.

31. So far as the Second Period is concerned, the Tribunal made clear at paragraph 70 of the Second Partial Award that the cost of providing services and facilities during any period after that Award necessarily required for the handover of the Hotel back to the Owner should be recoverable, but no element of profit. As we understand it, the Claimants' claims in respect of the Second Period have been made on that basis.

Deferral

32. Before seeking to apply these principles, however, it is necessary to consider the Owner's submission that the compensation for the two periods should not be decided by this Tribunal, but left to be decided in further proceedings.

33. The Owner submits:

If the Tribunal does not deny Claimants' compensation demand outright, it should decline to decide the question and defer the issue to subsequent arbitration and litigation as part of the issues of unresolved audits, stripping of assets and employees, final accounting and complaints about the way in which [A] Group has managed the Hotel in 2009 and 2010. ...

34. In relation to unresolved audits, the Owner makes the point that the claims are based on unaudited numbers because audits of the Hotel's accounts for 2009 and 2010 have not been completed.

35. These are submissions that the Tribunal is bound to reject. The claims for compensation in respect of both Periods are inextricably connected with the Claimants' claim to terminate the Agreements and need to be determined to bring these proceedings to a conclusion. Moreover, many of the sums ordered to be paid by the First and Second Awards were themselves based, necessarily, on unaudited figures.

36. It is apparent from the submissions made to us that attempts have been made, albeit so far unsuccessful, to produce audited accounts for 2009 and 2010; and it seems to the Tribunal that it follows from the fact that the Claimants seek, and in its view are entitled, to be treated as if the Agreements were still in force during the First Period that, correspondingly, the Owner is entitled to seek (if appropriate) subsequent adjustment of any payments ordered to be made as if the Agreements were still in force during that period.

37. In the meantime, however, the Tribunal is bound to determine the claims before it.

First Period

38. The Claimants say that, in respect of this period, if the Agreements had remained in force:

(a) [the First Claimant] would have been entitled under the Management Agreement to [amount] in respect of incentive fees for 2009; and

(b) [the Second Claimant] would have been entitled under the Services Agreement to [amount] for services performed, and to [amount] for monthly marketing fees; and under the License Agreement to [amount] for monthly royalty fees.1

39. The Owner denies that the Claimants are entitled to such sums by way of compensation. In addition to disputing that compensation should be assessed by reference to what would have happened under the Agreements, and to unaudited numbers, (see above), the Owner says that the "Claimants' misconduct in providing the services and the unusually poor performance of the Hotel that resulted" should be taken into account; and also that:

"The compensation" includes charges for services that have had no current value to the Hotel but served to subsidize the infrastructure, goodwill and advertising of non-party [A] and, by extension, the Hotels' competition. ...

40. The Owner says that the Hotel has performed very poorly by comparison with its rivals and attributes this to the Claimants stripping employees, and in particular key sales and marketing staff, from the Hotel and in many cases transferring them to other [A]-managed hotels. It also says that the Claimants have arranged for the Hotel to supply food to other [A]-managed properties at a loss ... These allegations were responded to in detail at Appendix A to the Claimants' submission ... This, amongst other things, exhibited a schedule of staff movements out of and into the Hotel from June 2009 to December 2010, and the Claimants' version of a chart originally exhibited by [an attorney/consultant called as a witness by the Owner] detailing, from June 2009 to December 2010, whether members of staff who left were replaced, and if so when. This in turn led to a reply from the Owner ...

41. In oral argument, [counsel] for the Owner argued that the Hotel had consistently underperformed. It was for the Claimants, he said, to justify their fees and to provide evidence to explain what costs they had incurred in providing services, and what benefits were actually provided to the Owner ...

42. As to the charges under the Services Agreement, the Owner submits that:

the charge to this Hotel is not a substantive or good faith calculation of the value or costs of these services provided to the Hotel, but rather the result of an undisclosed formula that apportions certain of the undisclosed costs of [A]'s overhead to the hotels they manage.2

In oral argument, the Owner suggested that the benefit that it received from the services provided under the Services Agreement and from use of the [X] name under the Licence Agreement, were of diminishing value to the Hotel as the handover back to the Owner approached ...

43. In the Tribunal's judgment, it is not necessary to consider the Owner's complaints of poor performance at great length. At least up to the end of 2010 (after the time when the claimed charges ceased3) the evidence before us suggests that the Hotel was at all levels at least adequately staffed;4 and the disputed allegations about whether food was supplied at a loss seem to the Tribunal trivial: even if there was a small loss, it can only have made only the most marginal difference to the performance of the Hotel.

44. The Claimants' charges are in line with previous years, were made in the ordinary course of the business of managing the Hotel, and do not, in the Tribunal 's view, require any further justification. They are what the Owner would have expected to have to pay had the Agreements continued in forced.

45. We should also mention that the Owner complains of "an express directive to those handing over the Hotel to relocate business to "alternative [A]-branded hotels".5 The document said to support this,6 however, is an entirely innocuous checklist for the handover of the Hotel which dates from January 2011. It deals, amongst other things, with the need to tell certain customers (for example, those who had booked through the [A] booking system) that the Hotel was going to cease to be an [A] Hotel. The only customers to be offered alternative accommodation at other [A]-branded hotels were ones who had booked intending to pay for their rooms by redeeming [A] points, which would not be possible after the transfer. In the Tribunal's view, the document evidences activities that were entirely proper.

46. As to the argument that the Owner received diminishing returns from any payments for such services as the [A] points scheme, or for the use of the [X] name, there are two points to be made. First, it would be equally true towards the close of the contractual periods of these Agreements if they had run their course, and not been prematurely terminated: the Owner would still have had to pay for such services and the use of the brand name up to the end. Secondly, and in any event, payment for these services is only claimed up to November 2010, three months before the Hotel was handed back to the Owner and ceased to carry the [X] brand. Applying the principles we have identified above, in our judgment the Owner should pay for services throughout the period the parties were behaving as if the Agreements were still in force in the same way as if they had really been in force. Moreover, the Owner, as a matter of fact, has had the benefit of using the name of the Hotel, and any other services provided by the Claimants, for the last three months up to the handover without charge.

47. Accordingly, the Tribunal finds that [the First Claimant] is entitled to recover [amount], and [the Second Claimant] is entitled to recover [amount] for services performed, [amount] for marketing, and [amount] for use of the [X] name: that is in total [amount].

Second Period

48. The Claimants made their claims for costs associated with their transition out of the Hotel in their supplemental submission ... The claims are:

Costs of labour related to IT transition

...

Costs of recovering data infected by virus from Hotel servers

...

Cost of data storage devices

...

IT transition meeting expenses

Costs associated with relocation of Hotel guests

...

49. Although the Owner disputes the IT-related costs as excessive and insufficiently justified ... in the Tribunal's view these costs were both necessary and reasonable. The Claimants were entitled to recover their own proprietary data from the Hotel and these were necessary costs of the handover.

50. In the Tribunal's judgment, however, the same cannot be said of the costs of moving guests from the Hotel. Some of these had been booked through the [A] booking system on preferential rates, and some using [A] Rewards points. The Hotel no longer offered these rates, or the use of such points, after the transfer. The guests were moved to the [other hotel operated by A in the city], and the extra costs were met by the Claimants; as also were the costs of round trip airport transportation for those guests - costs which were formerly met by the Hotel.

51. In the first place, the Tribunal does not see why this problem was not foreseen and avoided; and, secondly, it seems to the Tribunal that these costs were incurred principally to protect the Claimants' goodwill. In the Tribunal's judgment they should not fall on the Owner.

52. Accordingly, the Tribunal finds that the Claimants, and in particular [the First Claimant], are only entitled to recover the [amount] claimed in respect of IT costs.

Are the parties' costs recoverable?

53. Article 31 of the ICC Rules of Arbitration7 provides as follows:

1. The costs of the arbitration shall include the fees and expenses of the arbitrators and the ICC administrative expenses fixed by the Court, in accordance with the scale in force at the time of the commencement of the arbitral proceedings, as well as the fees and expenses of any experts appointed by the Arbitral Tribunal and the reasonable legal and other costs incurred by the parties for the arbitration.

…

3. The final Award shall fix the costs of the arbitration and decide which of the parties shall bear them or in what proportion they shall be borne by the parties.'

54. The agreement to arbitrate in the Management Agreement is contained in section 16.07 which provides as follows.

Except as otherwise specified in this Agreement, any dispute, controversy, or claim arising out of or relating to this Agreement shall be settled by arbitration in accordance with the rules of procedures of the International Chamber of Commerce (or any similar successor rules thereto) as are in force on the date when a notice of arbitration is received. The appointing authority shall be the International Chamber of Commerce. The number of arbitrators shall be one unless a party to the arbitration requests otherwise, in which case there shall be three. The language to be used in the proceedings shall be English. The place of arbitration shall be London, England. The decision of the arbitration board shall be final and binding upon the parties, and such decision shall be enforceable through any courts having jurisdiction. The costs and expenses of arbitration shall be allocated and paid by the parties as determined by the arbitrators.

Section 7.06 of the Services Agreement and Section 9.06 of the License Agreement are in similar terms.

Parties' contentions

55. The Owner focuses on the final sentence of the provision and submits:

The language in the Agreements create an express, contractual limitation on the powers of this Tribunal, revoking whatever authority might be afforded to it under Article 31 of the ICC Rules to award [attorneys' fees or the expenses incurred in the case, including experts] to one party or the other. ...Thus, at most, the Tribunal can apportion to either or both parties the actual administrative costs and expenses to arbitrate before the ICC.8

56. The Owner also asserts that the Agreements are based on [A] standard form contracts, which, it says, were produced by American lawyers, who are used to attorney's fees being treated differently from costs and expenses. It also contrasts the terms of the arbitration agreement with the earlier definition of "damages" in the Management Agreement which expressly includes attorney's fees and expenses and litigation costs and expenses.

In fact, the Agreements demonstrate that the authors distinguish between and referred separately to "litigation costs and expenses" and "attorneys' fees and expenses".9

57. The Claimants on the other hand, argue that the parties have by contract incorporated Article 31 of the ICC Rules into their Agreements, and that consequently there can be no doubt that the Tribunal is entitled to allocate all the costs incurred between the parties.

Discussion

58. Despite the Owner's submissions to the contrary, the last sentence of Section 16.07 does not expressly exclude the Tribunal's power to order one party to pay the other party's legal and other costs that would otherwise be conferred by Article 31 of the ICC Rules, and indeed by Section 61 of the English Arbitration Act 1996. The real question is whether the contents of that sentence are inconsistent with the existence of such a power and thus, by necessary implication, must exclude it.

59. There is, however, an inconsistency only if the words "The costs and expenses of arbitration" are taken to exclude the legal fees and related costs incurred by the parties themselves.

60. According to the Respondent, the principal reason for understanding the text to exclude such legal fees and related costs is because (it is said) otherwise the last sentence would simply duplicate Article 31 itself:

A universal and fundamental principle of contract interpretation is that all the terms of a contract are assumed to have meaning, and that a contract will not be read to make any provision superfluous. ...

Under this principle, the provision regarding an award of "costs and expenses of arbitration" in the last sentence of the Arbitration Provision cannot be read merely to restate what the ICC Rules provide in default of any other agreement between the parties. To read this last sentence of the Arbitration Provision as an oddly random repetition of one of the ICC Rules is to find no meaning or significance in its inclusion, an interpretation that would violate universally recognized contractual jurisprudence.

The last sentence of the Arbitration Provision must be read as having a purpose, namely carving an exception to the parties' reference to the ICC Rules of Arbitration, and limiting the Tribunal to award "fees and costs" different than that allowed by the ICC Rules. ...

Had the parties wished the ICC Rules regarding fees to be applied, they would not have included the last sentence and simply let ICC Article 31 speak for itself.10

61. In the Tribunal's judgment, however, this argument is unsustainable. Agreements to arbitration frequently adopt institutional rules (such as those of the ICC) and then unnecessarily restate matters that are already dealt with in those rules. Indeed, in the present case, the second sentence of section 16.07 ("The appointing authority shall be the International Chamber of Commerce.") is unnecessary. The same section has already adopted the ICC Rules, and the role of the ICC as appointing authority is fully dealt with in Articles 8, 9 and 10 of those Rules.

62. It is not at all surprising for the agreement to arbitrate to restate the effect of Article 31 of the ICC Rules: namely that it is for the arbitrators to determine how all the costs and expenses of the arbitration, including those incurred by the parties on their own behalf, should be allocated.

63. Moreover, the Tribunal does not think that the definition of "damages" earlier in the Agreement is relevant to the meaning of the agreement to arbitrate, which does not mention damages. Nor does the Tribunal derive any assistance from the use of the words costs "and expenses" elsewhere in the Agreement, in contexts different from arbitration.

64. Even if the Agreement was based on templates drafted for the [A] Group by US lawyers, the parties expressly agreed to subject their Agreements to the [applicable law] and provided for arbitration in London in accordance with the ICC Rules. The parties therefore knew very well that how a US court might approach the meaning of a provision for the payment of fees and expenses would be of at most marginal relevance to the construction of these Agreements ; and, in the Tribunal 's judgment , it does not affect how section 16.07 ought to be construed. Nor has the Tribunal discerned anything relevant in the negotiating history of the agreement to arbitrate which would alter this conclusion.

65. There is a further point. The agreements to arbitrate in the three Agreements each make London the seat of any arbitration. The effect of that is that English law is the curial or procedural law of this arbitration. As the Tribunal pointed out during the course of the oral hearing, if the final sentence of the agreement to arbitrate had the effect contended for by the Owner, it would constitute an agreement by virtue of which each party would have to pay its own costs in any event that was made before the dispute in question had arisen. Such an agreement would be invalid under section 60 of the English Arbitration Act 1996.

The Claimant's claim for costs

66. The Claimants' claim for legal fees and related costs, in its final form, appears in its Amended Fourth Updated Exhibit B ... and totals [amount], as shown in the following table: ...

67. We will deal with each of the first ten items in this section below; the eleventh (the advances on costs that the Claimants have made under Article 30 of the ICC Rules) will need to be dealt with separately.

Approach

68. The relevant parts of Article 31 of the ICC Rules have been set out above. Further, as this is an arbitration with its seat in London, the Tribunal is also bound by the relevant provisions of the English Arbitration Act 1996. So far as material, these are as follows:

61. ...

(2) Unless the parties otherwise agree, the tribunal shall award costs on the general principle that costs should follow the event except where it appears to the tribunal that in the circumstances this is not appropriate in relation to the whole or part of the costs.

...

63.

(1) The parties are free to agree what costs of the arbitration are recoverable.

(2) If or to the extent there is no such agreement, the following provisions apply.

(3) The tribunal may determine by award the recoverable costs of the arbitration on such basis as it thinks fit. If it does so, it shall specify -

(a) the basis on which it has acted, and

(b) the items of recoverable costs and the amount referable to each.

...

(5) Unless the tribunal ... determines otherwise -

(a) the recoverable costs of the arbitration shall be determined on the basis that there shall be allowed a reasonable amount in respect of all costs reasonably incurred, and

(b) any doubt as to whether costs were reasonably incurred or were reasonable in amount shall be resolved in favour of the paying party.

...

69. Accordingly, it is clear from both the ICC Rules and the relevant English law that any costs we order to be recovered by one party from another must be both reasonably incurred for the arbitration and reasonable in amount: in other words, they must be "reasonable costs".

70. The general principle is that costs should follow the event, save to the extent that this is, in the circumstances, not appropriate.

71. With this approach in mind, we now tum to whether the individual items claimed were reasonably incurred and reasonable in amount, and to how those costs we find to be reasonable (in both senses) should be allocated.

[Law firm 1]

72. [Law firm 1] were the Claimants' original Counsel in this arbitration. The claim made in respect of this item is [amount] in fees and [amount] in expenses. All these sums have already been paid. [Law firm 1] represented the Claimants for the first part of the proceedings and they drafted the pleadings and conducted some of the documentation production exercise.

73. The Owner says that these are costs it should not have to bear. If, however, it does have to bear some, it points to invoices of [amount] dating from 14 November and 7 December 2006, more than six months before the arbitration began; and in addition expresses concern about paying twice for work done by [law firm 1] and [law firm 2].

74. The Claimants say that the work done by [law firm 1] was necessary, and that the fees are reasonable.

75. In the Tribunal's judgment, subject to one point, the fees and expenses paid to [law firm 1] were reasonably incurred for the arbitration and reasonable in amount. The only exceptions are the fees [invoiced more than six months before the arbitration began]. It is clear from the narratives attached to the invoices that the services covered are referable to the dispute, but the Tribunal is not satisfied that fees and costs incurred so far before the commencement of these proceedings are properly referable to the arbitration.

76. The possibility that work may have had to be done a second time, and in particular that a second set of lawyers may have had to go over old ground in order to get up to speed on being brought into the case, is a problem for consideration in relation to [law firm 2]'s fees rather than those of [law firm 1].

77. Accordingly, the Tribunal finds that, in total, the sum of [amount] constitutes reasonable costs.

[Law firm 2]

78. [Law firm 2] were the Claimants' attorneys for the 41 months or so ... up to the final hearing ... The total claim for fees is for [amount] of which [amount] have already been paid and [amount] are still outstanding. The claim for expenses which have been paid amounts to [amount]. This makes the total amount of fees and expenses paid or to be paid [amount].

79. [Law firm 2]'s remuneration arrangement with the Claimants is complicated because it includes payment on both a time-costed and a success fee basis. In short, however, the position is this.

(a) For the period from first instruction to the First Partial Award, [law firm 2] charged hourly rates subject to a cap of (eventually) [amount]: which was the sum actually paid.

(b) [Law firm 2] also received a "Success-based Bonus" of [amount] in respect of the First Partial Award. This was made up of two sums: one amounting to 10% of the gross amount awarded to the Claimants in the First Partial Award; and one amounting to 1 per cent of the total amount of the dismissed counterclaims.

(c) For the period from the First Partial Award until October 2011, [law firm 2] was paid [amount] in respect of its invoiced hourly fees. As the Tribunal understands it, this was an uncapped amount.

(d) [Law firm 2] also received the Success-based Bonus of [amount] in respect of the Second Partial Award, being 10% of the gross amount awarded to the Claimants in that Award.

(e) [Law firm 2] also expects to be paid a Success-based Bonus of 10% of the sums awarded to the Claimants in this Award. The Owner says that, on the assumption that the Claimants recover [amount], that will amount to [amount].

(f) [Law firm 2] also now expects to receive a discretionary bonus amounting to a further I% of the total amount of the dismissed counterclaims, namely [amount].

A part of the hourly based fees that have accrued between March and October 2011 ... are currently being held back in trust, but will be paid to [law firm 2] "at the end of the representation based on client satisfaction".11

80. According to [law firm 2] its fees for the entire period during which it has represented the Claimants, if calculated by multiplying the number of hours billed by its fee earners by the hourly rate for each such fee earner, would be [amount].

81. The Owner says that the Claimants have failed to submit any support in ICC jurisprudence or otherwise for a prevailing party to be awarded a bonus amount that it has promised to pay its Counsel in its sole discretion over and above the legal fees it has actually incurred. This would face an unsuccessful party with an inequitable penalty arbitrarily set by its adversary. A party that agrees a contingent fee is, in effect, betting on success with the other party's money: a bet which in this case the other party knew nothing about. Moreover the ICC Rules only cover legal and other costs actually incurred by a litigant not some that it might at its own discretion choose subsequently to pay to its own lawyers ...

82. The Owner also points out that [law firm 2]'s invoices show that over 45 fee earners worked on this matter which, it says, is "a staggering number" and unnecessary.12 Moreover, eight attorneys appeared at the hearing in December 2008 which, it again says, was unnecessary.

Five of these attorneys each conducted one brief direct examination of an [A] witness. It appeared that the only purpose for this was to provide training for these attorneys and to credential them as having acted in an ICC arbitration.13

Moreover, says the Owner, the invoices produced suggest that costs associated with journeys to places not relevant to this arbitration, and probably connected with other cases altogether, have been included in the sums claimed ...

83. The Owner also submits that the Claimants have not substantiated the costs (that is the disbursements) said to have been paid to [law firm 2].

84. The Claimants respond that there is no prohibition on the recovery of contingency amounts. Clients demand alternative fee arrangements. Moreover it is in the nature of these proceedings that the total fees payable to a party's lawyers cannot be known until the proceedings have come to an end ...

85. The Claimants also say that their disbursements are set out in the invoices that they have included with their submission ... They also say that, wherever meetings for which they claim took place, the meetings in question concern this arbitration ...

86. In the Tribunal's judgment, in the context of an international arbitration how a party structures its arrangements to pay its own lawyers is a matter between it and those lawyers, provided always that such arrangements prove reasonable according to standards established by the relevant arbitration rules and the applicable curial law. Of course, lawyers will have to comply with their local law, and with any professional requirements to which they are subject. But what the Tribunal is concerned with is whether the costs that are incurred under those arrangements were reasonably incurred and were reasonable in amount.

87. Turning to the period up to the First Partial Award, in the Tribunal's opinion, the capped hourly charge ... seems in principle unexceptionable. Moreover, there appears to us no reason why a capped hourly fee arrangement should not be combined with a success fee. This is not a bet by one party with the other party's money, at least not where (as here) the success fee is paid before the first party knows whether it will recover it from the other party. Moreover, so far as the bonus equivalent to 1% of dismissed counterclaims is concerned, that must (in the first instance) be paid by the first party from its own money. The question is whether the combined figure is reasonable in amount and was reasonably incurred for the arbitration.

88. In favour of the reasonableness of this figure is the fact that it is lower than would have been invoiced on an hourly basis ... In the Tribunal's view, however, there are two particular points to bring into account in relation to this period. First, there must have been some costs involved in [law firm 2] taking over, and having to get on top of, an already running arbitration. This is not a cost that it would be reasonable for the Owner to have to pay. Secondly, we agree with the Owner that the Claimants have been somewhat over-lawyered. We do not, however, accept the suggestion that costs have been claimed which are related to other cases.

89. Deciding what is reasonable is not an exact science but an exercise in judgment. However, taking the two points we have accepted into account, the Tribunal has come to the conclusion that, at most, [amount] (in aggregate) can fairly be regarded as having been reasonably incurred for the arbitration and as being reasonable in amount; and we so find.

90. The Tribunal has much more difficulty in relation to the period after the First Partial Award. As we understand it during this period (November 2009 to October 2011) [law firm 2] has been paid its full hourly rate for work done. That being so, we cannot see how we can be satisfied that a Success-based Bonus in respect of the Second Partial Award, or any such bonus in respect of this Award can be found to be reasonable costs.

91. Nor do we see how a final discretionary bonus payable once the case is over can be said to constitute reasonable costs either. Indeed it does not seem to us that a discretionary bonus can be said to be "incurred" at all: it is a voluntary payment, even if the Claimants have now made clear that it will be paid to their lawyers.

92. Accordingly, the Tribunal finds that, in relation to fees, only the sums of [amount] and [amount] constitute reasonable costs: a total of [amount].

93. So far as expenses ... are concerned, these are listed in the invoices produced by the Claimants and, in the Tribunal's view, were reasonably incurred for the arbitration and are reasonable in amount.

94. Accordingly, the Tribunal finds that, in total, the sum of [amount] constitutes reasonable costs.

[Legal expert 1]

95. Mr ... has been the Claimants' expert witness on [the applicable] law in these proceedings . The sum claimed in respect of this item is [amount] in fees and [amount] in expenses.

96. The Owner has not specifically challenged these costs. [The expert] was clearly a necessary witness and, in the Tribunal's judgment, these fees and expenses were reasonably incurred for the arbitration and are reasonable in amount.

97. Accordingly, the Tribunal finds that the sum of [amount] constitutes reasonable costs.

[Law firm 3]

98. This concerns [applicable] law advice obtained between October 2006 and the summer of 2008. The amount claimed is [amount] in fees and [amount] in expenses.

99. The Owner makes the point that no advice on [the applicable] law obtained from this source was ever mentioned during the arbitration ...

100. It is clear, however, from the narratives in the bills produced that [law firm 3] was providing legal advice for what became this arbitration from mid­ December 2006 onwards. The Tribunal is not satisfied that this is the case for the earlier invoices, which total [amount]; but apart from these fees and expenses, the Tribunal is satisfied that the fees and expenses paid to [law firm 3] were reasonably incurred for the arbitration and are reasonable in amount.

101. Accordingly, the Tribunal finds that the sum of [amount] constitutes reasonable costs.

[Consulting/auditing firm 1]

102. This item consists of the fees of ... an expert witness called by the Claimants. These fees total [amount].

103. The Owner submits:

This charge represents the cost of hotel expert ..., whose report ultimately supported Respondent's contention that the Hotel chronically and significantly underperformed other hotels in its competitive set. The only point the Tribunal took away from [the expert]'s testimony that was helpful to Claimants was the conclusion that it was "extremely difficult to assess the extent to which the Hotel did perform poorly in relative terms" ... Considering that [the expert] was retained to persuade the Tribunal that the Hotel performed well in relative terms by tracking its performance against its competitive set, his ultimate success in demonstrating both that the Hotel performed poorly and that any competitive set analysis was an impenetrable muddle makes it hard to judge his ... fee a reasonable expense.14

104. The Claimants respond that the Owner's opinion as to the "success" of [the expert]'s work is irrelevant. The charge in any event is a discounted one for the benefit of the Claimants.15 [The expert] had to be called, they say, to meet the Owner's (failed) counterclaims ...

105. In the Tribunal's judgment, save in exceptional cases, the question of whether it was reasonable to incur costs in instructing and calling an expert witness does not involve considering the quality of that witness's evidence. Though, of course, the relevance of that evidence to the issues in the case does matter.

I06. So far as [the expert] is concerned, his evidence was relevant to issues raised by the Owner's counterclaims, and in the Tribunal's judgment it was reasonable for the Claimants to instruct him and incur costs in so doing. Whether the fees he has charged are reasonable in amount is a different question as (even discounted) they are large.

107. In the Tribunal's judgment, however, accepting that his evidence was relevant, but having regard to the extent to which it was of value in deciding issues in the case, the fees appear excessive and cannot fairly be said to be reasonable in amount. Indeed, in the Tribunal's view, a reasonable amount would be not more than [amount].

108. Accordingly, the Tribunal finds that the sum of [the above-mentioned amount] constitutes reasonable costs.

[Consulting/auditing firm 2]

109. This item consists of the fees of [two persons] who were expert witnesses called by the Claimants. Their fees total [amount].

110. The Owner says that [the first witnesses]'s evidence was of no assistance to the Tribunal and caused the Owner to have to expend resources to rebut what they call his "incorrect assumptions" and "riddled with errors".16 As to [the second witness], the Owner says that had the Claimants simply produced the [W] Invoices, and the monthly reports that went with them, [the witness]'s work would have been unnecessary. The Owner also says that his visit to the Hotel ... in February 2009 was only made necessary by what turned out to be a false point taken by the Claimants. The Owner also suggests that [that witness] was not really an independent expert witness because the Claimants tried to have him attend the handover of the Hotel back to the Owner. The Owner suggests that he has "an ongoing business relationship and financial arrangement with Claimants".17

111. The Claimants respond that:

Whatever expert evidence Claimants had to put forward was presented to address Respondent's counterclaims and Respondent's expert and fact evidence - all of which was roundly rejected by the Tribunal. Only the Tribunal knows what role Claimants' expert reports played in that outcome. Even so, whether they did or they did not, Claimants would not have been required to present expert evidence had it not been for Respondent's decision to put forward any and every possible counterclaim that it could think of, no matter how irresponsible or unprovable.18

112. [The second witness], the Claimants say, only had to travel to [the city] because of allegations of deceit that were in the end rejected by the Tribunal.19

113. The evidence of [these two expert witnesses] was relevant to the Owner's counterclaims, and in the former case also to the Claimants' claims. In the Tribunal's judgment, it was reasonable for the Claimants to instruct these two witnesses for the arbitration and to incur costs in so doing. Moreover their fees were themselves reasonable in amount.

114. Accordingly, the Tribunal finds that the sum of [amount] constitutes reasonable costs.

Hearing attendance expenses

115. This item concerns the cost of accommodation for a number of witnesses and members of the Claimants legal team for the second hearing ... and consists of hotel bills totalling [amount].

116. The Owner suggests that they are excessive, considering the hotel used belonged to the [A] Group, amounting to ... per night ...

117. The Claimants, on the other hand, say that this was not an unreasonable rate to pay for accommodation in London and indeed was "deeply discounted".20

118. In the Tribunal's judgment, the rates paid were not excessive for London accommodation, and thus these expenses were reasonably incurred for the arbitration, and are reasonable in amount.

119. Accordingly, the Tribunal finds that the sum of [amount] constitutes reasonable costs.

[General Manager]

120. [The former General Manager of the Hotel] was a witness called by the Claimants. His evidence was clearly necessary. At the time of giving evidence he was working at the [A] Hotel in [South America].

121. There is no specific challenge to these expenses and, in the Tribunal's view, the expenses incurred in relation to his attendance as a witness of [amount] were reasonably incurred for the arbitration, and are reasonable in amount.

122. Accordingly, the Tribunal finds that the sum of [amount] constitutes reasonable costs.

[A's Area Vice-President]

123. [A's Area Vice-President] was also a witness called by the Claimants, and the expenses sought in respect of his attendance total [amount]. He is no longer employed by the [A] Group, and lives in Canada.

124. Again, there is no specific challenge to these expenses and, in the Tribunal's view, they were reasonably incurred for the arbitration and are reasonable in amount.

125. Accordingly, the Tribunal finds that the sum of [amount] constitutes reasonable costs.

Photocopying and other charges

126. These were incurred in connection with copying documents at the Hotel and total [amount].

127. There is no specific challenge to these expenses and, in the Tribunal's judgment, they were reasonably incurred for the arbitration and are reasonable in amount.

128. Accordingly, the Tribunal finds that the sum of [amount] constitutes reasonable costs.

Total

129. It follows that the total amount of reasonable legal fees and related costs incurred by the Claimants is as follows.

.........

Allocation

130. The next question is whether the Owner should be ordered to pay any, and if so what proportion, of the Claimants' reasonable costs.

131. The Owner says that the Claimants brought the arbitration on their own heads by failing to answer the Owner's questions prior to proceedings commencing. It also says that the Claimants only recovered a fraction of their claim for post-Award losses; and that it was the Claimants' failure to make clear in good time their position on termination that has prolonged the proceedings and made them much more expensive. As the Owner's Counsel put it: "Everything after the First Partial Award is on [A]'s dime ...''.21

132. Both sides, it says, have won and lost on some points, and each side should bear its own costs.

133. The Claimants, on the other hand, accuse the Owner of dilatory conduct, and of raising large unmeritorious counterclaims that have all been dismissed. The Owner, they say, started the fight by seizing the Hotel's bank accounts, and made allegations in the course of the proceedings that they subsequently dropped or changed.22

134. In the Tribunal's judgment, the Owner has not conducted these proceedings in a way that can be described as dilatory, although it has of course fought hard at every stage. The Owner did, however, make allegations that it did not pursue, or that it subsequently changed;23 and its counterclaims were dismissed.

135. On the other hand, it seems to us that the Claimants' failure to serve a termination notice until after the hearings in December 2008 and February 2009 has made these proceedings longer and more complicated than would otherwise have been the case. Although, of course, it would always have been open to the Owner to have accepted the validity of the Termination Notice once it had been served, and so reduce what was in dispute.

136. In the Tribunal's judgment, a fair estimate of the extent to which the Claimants' own conduct has occasioned unnecessary costs is in the bracket 10 to 15 per cent, and as it would be hopelessly over-complicated to have the Claimants pay some part of the Owner's costs, the fairest way of dealing with this is to order the Owner to pay only 85 per cent of the Claimants' reasonable costs: that is, [amount].

The Owner's claim for costs

137. This is a claim by the Owner for, in total, [amount] first made in a letter ... and repeated in its submission ...

July 2008

138. The first component ... relates to an inspection of records at the Hotel carried out by the Owner in July 2008.

139. The Owner says that, at the time, it was gravely dissatisfied with the production being given by the Claimants and, in consequence, directed its attorneys to travel to [the city] in order to find out whether documents that were said to be lost, missing or destroyed were there. The Owner claims to have found many documents responsive to its document requests and to have arranged these copied and reviewed. The Owner says that it was, at lowest, grossly negligent for the Claimants not to have found these documents for itself. If it had, the Owner would not have had to fly its attorneys to [the city] ...

140. The Claimants respond that this was an improper exercise, and that the documents in question had always been available to the Owner at the Hotel and, indeed, that the documents taken were not responsive to requests that had been made, or relevant to issues in the arbitration. The whole exercise cost the Claimants unnecessary money because they had to fly their attorneys to [the city] to list the records that had been taken off-site without any prior notice by the Owner ...

141. In reply, the Owner says that the documents had not been made available in the ordinary course and that, indeed, their existence had been denied by the Claimants. The documents found were relevant to issues before the Tribunal ...

February 2009

142. The second component of the claim ... relates to the cost of inspecting documents at the Hotel in [the city].

143. The Owner says that during the course of preparing for the hearing that took place in December 2008, it discovered that a "receivables/payables" page that had been produced to it, and that listed [W] Invoices, had not been sent in the ordinary course of business as part of the information sent by [the First Claimant], as manager of the Hotel, to the Owner. The point was raised at the December hearing but it was only in January 2009, shortly before the February hearing, that the Claimants asked to examine the Owner's files on-site in [the city]. The Owner offered to have the originals flown to London and to give the Claimants full access to them there. The Claimants refused and insisted that an inspection take place in [the city], which is what happened.

144. The Owner says that requiring an inspection to take place at the Hotel was a waste of time and money. There was nothing to be seen at the Hotel that could not have been seen if the documents had been flown to London and examined, at much less expense, there ...

145. In response, the Claimants say that the only reason for this inspection was that the Owner had falsely alleged "document tampering" on the part of the Claimants in relation to the [W] Invoices and the examination needed to take place in [the city] in order to preserve the integrity of the documents ...

146. In reply, the Owner says that the Claimants were only now asserting that the trip was necessary to preserve the integrity of the documents. At the time they had suggested it would save costs, make matters easier for the Owner logistically, and allow the Hotel's three Directors of Finance to review the original documents. The Owner did not accuse the Claimants of document tampering, but of routinely omitting the relevant page from monthly reports sent to it; and this fact was accepted by the Tribunal ...

Discussion

147. In the Tribunal's judgment, the July 2008 inspection probably did produce some useful documents, though its launch without any prior notice to the Claimants was precipitate. The Tribunal has no doubt that if the Owner had simply requested the Claimants in writing to search specifically the records at the Hotel, whatever relevant was there could and would have been produced.

148. Accordingly, the Tribunal rejects the Owner's claim for costs in respect of the July 2008 inspection.

149. So far as the February 2009 inspection is concerned, however, the Tribunal agrees with the Owner that this was unnecessary. The documents in question could have been flown to, and inspected in, London.

150. Accordingly, the Tribunal finds that the sum of [amount for the February 2009 inspection] constitutes reasonable costs incurred by the Owner that the Claimants ought to pay.

151. This cross claim will be dealt with by setting off this sum against the costs that the Owner is ordered to pay to the Claimants to produce a net sum of [amount] payable by the Owner to the Claimants.

ICC and arbitrators' costs

152. The fees and expenses of the arbitrators and the ICC administrative expenses have been fixed by the Court as follows: ...

153. In line with the decision above relating to the party's legal and other costs, in the Tribunal's judgment the fees and expenses of the arbitrators and the ICC administrative expenses should be borne 85 per cent by the Owner and 15 per cent by the Claimants.

154. As each side has already paid advances under Article 30 of the ICC Rules ... from which the ICC and the arbitrators have been, or will be, paid, to achieve those proportions it is necessary to order that the Owner should pay the sum of [amount] to the Claimants.

Interest

155. The question arises as to what, if any, interest should be paid on the sums of compensation and costs that the Tribunal has ordered to be paid. Although at earlier stages in the arbitration the Claimants sought a much higher rate, at this stage, as is apparent from the exhibits to their submissions ..., they sought simple interest at 5 per cent per annum, a rate not specifically challenged by the Owner.

Pre and post-Award interest on compensation

156. In the Second Partial Award, the Tribunal decided that it was appropriate to award pre-award interest on a simple basis at 5 per cent per annum in respect of sums due under the Agreements.24 In line with the approach set out at paragraph 30 above, in the Tribunal's judgment it is also appropriate to award interest (at the same rate as awarded in the Second Partial Award) in respect of the sums awarded as compensation for the Claimants having behaved in relation to the Hotel as if the Agreements were still in force during the First Period. As before, interest on sums relating to a given month should run from 30 days after the end of that month.25

157. The individual sums which have formed the basis of the Tribunal's assessment of compensation for the First Period appear at Exhibit A to the Claimants' submission ... On the basis of the figures in that table ... the total amount of (simple) interest payable to [the First Claimant] is [amount] and to [the Second Claimant] is [amount]. The Tribunal's calculations are shown at Annex 1 to this Award.

158. As in the Second Partial Award, the Tribunal will also award simple interest at 5 percent (accruing daily) on the unpaid balance of the sums referred to at paragraph 47 above from the date of this Award until the date it is paid.26

159. The Claimants' claim in respect of the Second Period was made relatively recently, and in any event the sum awarded is quite small. In the Tribunal's judgment, it is sufficient in respect of this sum ... to award simple interest at 5 per cent (accruing daily) (that is, the same rate as in the preceding paragraph and as awarded in the Second Partial Award) on the unpaid balance from the date of this Award until the date it is paid.

Post-Award interest on costs

160. The Claimants are entitled to interest on the (net) sums that they have been awarded both by way of legal and other costs, and in respect of the ICC and arbitrators' costs, from the date of this Award until payment. In the Tribunal's judgment, this should be at the same rate, 5 per cent per annum (accruing daily), as in respect of the other sums that have been ordered to be paid.

Footnotes

161. For the avoidance of doubt, in this Award the footnotes form part of the Award.

Disposition

162. For the REASONS set out above, we [the members of the Tribunal], having carefully considered all the evidence and submissions made by the parties, hereby award and order:

(1) That the Owner do pay to [the First Claimant] the sum of [amount] by way of compensation in respect of the First Period, with simple interest at the rate of 5 per cent per annum (accruing daily) on the outstanding balance thereof from the date of this Award until payment.

(2) That the Owner do pay to [the First Claimant] the sum of [amount] by way of compensation in respect of the Second Period, with simple interest at the rate of 5 per cent per annum (accruing daily) on the outstanding balance thereof from the date of this Award until payment.

(3) That the Owner do pay to [the Second Claimant] the sums of [amount] for services performed, [amount] for marketing; and under the Licence Agreement to [amount] for use of the [X] name: that is in total [amount] by way of compensation for and in respect of the First Period, with simple interest at the rate of 5 per cent per annum (accruing daily) on the outstanding balance thereof from the date of this Award until payment.

(4) The sums ordered to be paid in sub-paragraphs (1) and (3) of this paragraph 162 are payable forthwith, but payment thereof shall be without prejudice to the rights of the parties to subsequent adjustment, and payment and repayment between them according]y, as if section 5.02D of the Management Agreement, section 2.07B of the Services Agreement, and section 3.01 of the Licence Agreement (as the case may be) applied to these sums.

(5) That the Owner do pay to [the First Claimant] the sum of [amount] by way of interest up to the date of this Award in respect of the sums ordered to be paid in sub-paragraph (1) of this paragraph.

(6) That the Owner do pay to [the Second Claimant] the sum of [amount] by way of interest up to the date of this Award in respect of the sums ordered to be paid in sub-paragraph (3) of this paragraph.

(7) That the Owner do pay to the Claimant the sum of [amount] by way of reasonable costs, with simple interest at the rate of 5 per cent per annum (accruing daily) on the outstanding balance thereof from the date of this Award until payment.

(8) Pursuant to Article 31(3) of the ICC Rules, that the Owner do pay to the Claimant the sum of [amount] in respect of the legal fees and related costs of the arbitrators and the ICC administrative expenses, fixed by the ICC Court at [amount], with simple interest at the rate of 5 per cent per annum (accruing daily) on the outstanding balance thereof from the date of this Award until payment.

(9) That this Award is final, and all requests and claims not otherwise dealt with in this Award, or in the First or Second Partial Awards, are rejected.'

1
See pages 5-9 of, and Exhibit A2, the Claimants' submission …; and for the contractual position see section 5.01 of the Management Agreement, set out at paragraph 52 of the First Partial Award, section 2 of the Services Agreement, set out at paragraph 54 of the First Partial Award, section 3 of the Licence Agreement, set out at paragraph 56 of the First Partial Award, and paragraphs 58 and 59 of the First Partial Award.

2
Owner's submission …

3
See paragraph 46 below.

4
See the Claimants' version on [the attorney/consultant]'s chart referred to above

5
The Owner's submission …

6
Exhibit 4 to [the attorney/consultant]'s Second Witness Statement

7
Editor's note: this and subsequent references are to the 1998 ICC Rules of Arbitration.

8
The Owner's submission …

9
The Owner 's submission …

10
The Owner's submission …

11
See the updated Annex l to the updated affidavit of [an attorney from law firm 2].

12
The Owner's submission …

13
The Owner's submission …

14
The Owner's submission … and see Transcript …

15
The Claimants' submission … and see Transcript …

16
The Owner 's submissions …

17
The Owner's submission … and Transcript …

18
The Claimants' submission … and Transcript …

19
The Claimants' submission …

20
The Claimants' submission …

21
Transcript …

22
The Owner's submission … and Transcript …

23
See the First Partial Award, paragraph 50.

24
See paragraphs 120-128.

25
See paragraphs 123 and 127 of the Second Partial Award.

26
See paragraph 129 of the Second Partial Award.