ICC Awards

Final Award in Case 16451

'1. The Parties, their lawyers and the Tribunal

The Claimant

1.1. The Claimant … (hereinafter "the Claimant" or [A]) is a company incorporated in [a country in the Pacific], whose principal office is [in a West European country].

1.2. The Claimant is represented by: …

The Respondent

1.3. The Respondent … (hereinafter "the Respondent" or [B]) is a company in the [B] group of companies, whose principal office is [in a country in the Middle East].

1.4. The Respondent is represented by: …

The Tribunal

1.5. In its Request for Arbitration … [A] nominated [Arbitrator 1] as one of the members of the Arbitral Tribunal ("the Tribunal"), and in its Answer … [B] nominated [Arbitrator 2]. … the co-arbitrators were confirmed by the Secretary General of the ICC, pursuant to Article 9.2 of the ICC Rules of Arbitration("the ICC Rules").¹

1.6. By letter … the parties agreed to authorise the co-arbitrators to nominate jointly the Chairman and the two nominated Arbitrators thereafter agreed to nominate [Arbitrator 3] as Chairman of the Tribunal.

1.7. … the Secretary-General of the International Court of Arbitration of the International Chamber of Commerce ("the ICC") confirmed [Arbitrator 3]'s appointment again pursuant to Article 9.2 of the ICC Rules.

1.8. The contact details of the members of the Tribunal are as follows …

2. The agreement to arbitrate and the governing law provision

2.1. Both the agreement to arbitrate and the governing law provision were contained in an agreement between [A] and [B], which was made [in] September 2004 but which was stated to be effective from the 1st January 2004. The agreement will be referred to in this Award as "the [A] Agreement" or "the Agreement". It was signed by … on behalf of [A], and by … an authorised representative of [B].

2.2. [A] is a company which is beneficially owned by Mr [X]. …

2.3. In addition to [A], Mr [X] was the beneficial owner of two other companies to which reference will be made, namely [C], a [West European] corporation, and [D], a company incorporated in [a Caribbean country].

2.4. In this Award references to Mr [X] should, where the context so requires, be understood to refer also to [C], [D] and [A].

The agreement to arbitrate

2.5. The parties' agreement to arbitrate is set out in Article 10.2 of the [A] Agreement and is in the following terms:

All disputes arising in connection with this Agreement shall be finally settled under the rules of Conciliation and Arbitration of the International Chamber of Commerce by three arbitrators appointed in accordance with the said Rules. The forum of the arbitration will be in Geneva, Switzerland, and the proceedings will be conducted in the English language.

The governing law provision

2.6. The governing law provision is set out in Article 10.1 of the [A] Agreement, and is in the following terms:

This Agreement shall be governed by and construed in accordance with English law.

2.7. There was one Addendum to the [A] Agreement. The Addendum did not affect either the agreement to arbitrate or the governing law provision. It will be referred to briefly below.

Jurisdiction

2.8. No issue arose as to the tribunal's jurisdiction. Accordingly, there was no need for the Tribunal to make any decision on its jurisdiction. For the sake of completeness, however, the Tribunal wishes to make it clear that the agreement to arbitrate gave it jurisdiction to decide the matters referred to it in this case.

3. The proceedings

3.1. As has been stated above, the Request for Arbitration was dated the 10th July 2009 and the Answer was dated the 21st September 2009.

3.2. On the 10th September 2009, pursuant to Article 6.2 of the ICC Rules, the ICC Court decided that the arbitration should proceed.

3.3. On the 12th January 2010 a hearing was held ... The Terms of Reference were signed at the hearing.

3.4. Also on the 12th January 2010 the Tribunal issued Order for Directions No. 1, which made provision for the procedure to be followed up to and including the substantive hearing and the service of post-hearing Written Submissions.

3.5. The hearing was fixed to take place [in] October 2010. The parties agreed that the venue for the hearing should be ... In the event, the hearing lasted only 2 days.

3.6. On the 9th December 2010, pursuant to Article 24 of the Rules, the ICC Court extended the time for rendering the Final Award to the 28th February 2011.

3.7. On the 11th January 2011 the Tribunal closed the proceedings in accordance with Article 22.1 of the ICC Rules.

4. [A]'s case

4.1. Under the [A] Agreement, [A] agreed to provide certain services to [B] in respect of Hotel Projects undertaken by [B] on behalf of [E, a property developer] ("the Client") under certain Management Contracts. The relevant Hotel Projects were:

(1) [two] hotels at ... [site 1]; and

(2) ... Hotel in ... [site 2].

4.2. [A's] claims:

(1) the sum of [amount] said to be due from [B] under the [A] Agreement ; and

(2) an order that [B] provide all necessary information and documentation so as to enable it to verify the remuneration under the Agreement due for the period between the 1st January 2008 and the date of the termination of the [site 2] Management Contract ("the [site 2] termination date") in accordance with Clause 4.5 of the Agreement, and for payment of the remuneration found due; and

(3) rectification of the Agreement so that Clauses 5.1 and 5.2 read:

5.1. This Agreement shall come into effect from the date of signature hereof by both parties and shall remain in full force and effect until terminated by both parties' mutual written agreement or in the event of the following happening;

5.2. If Management Contract (as renewed from time to time) is awarded to the Company or its Affiliates and the Management Contract is terminated or expires for any reason in relation to that Management Contract but not in relation to any other Management Contract the subject of the Agreement. (emphasis added)

(4) further or alternatively, a declaration that the [A] Agreement was not terminated on the [site 2] termination date but remained in full force and effect in relation to [site 1] thereafter and will remain in full force and effect unless and until validly terminated in accordance with Clause 5 of the Agreement;

(5) an order that [B] provide all necessary information and documentation so as to enable [A] to verify the remuneration due in relation to [site 1] in accordance with Clause 4.5 of the [A] Agreement and for payment of the remuneration found due;

(6) the costs and expenses caused by [B]'s attempted wrongful repudiation of the [A] Agreement, and its breach of the Agreement in failing to pay all sums promptly due, including the costs of these proceedings;

(7) interest on all sums awarded (including costs) both before and after any Award; and

(8) all other necessary accounts and enquiries and further or other relief.

4.3. Although [A] expressly reserved its right to supplement, modify or amend its arguments of fact and law and to furnish additional documents and evidence in support of its case in subsequent submissions, and, in particular, to increase and/or amend the extent and/or amount of its claims, no substantive modifications or amendments were made.

5. [B]'s case

5.1. [B] requests the Arbitral Tribunal to reject all of [A]'s claims for the following reasons:

(1) the [A] Agreement was validly and legally terminated according to its terms, with the result that [A]'s claim that the Agreement remains in force is groundless.

(2) Clause 5.2 of the [A] Agreement clearly stipulated that the Agreement terminates when "a Management Contract is terminated or expires for any reason". The termination of the [site 2] Hotel Management Contract by a Settlement Agreement dated the 23rd July 2008 (and which came into effect on the 31st July 2008) therefore constitutes a termination event under the [A] Agreement and as a result brought that Agreement to an end.

(3) [A]'s request for rectification of the [A] Agreement is groundless and constitutes an admission that the Agreement is in fact clear on its face regarding termination.

(4) [A] has failed to provide any proof that the parties' intention was other than that expressly stipulated in the [A] Agreement; that is to say that the Agreement was terminable upon the termination of a Management Contract.

(5) [A] is not entitled to any of the sums it claims in its Request for Arbitration. No sums are outstanding and owing to [A] in respect of the 2006 period and no fees have ever been invoiced to [B] in respect of the period running from 2007 to the termination of the Agreement.

(6) In addition, [A] has breached its contractual obligations by failing to provide the services it contractually agreed to provide so that [B] is entitled to reimbursement of all sums paid to [the Claimant].

5.2. [B] also counterclaims for damages for breach of the Agreement by [A]. In particular, [B] makes the following claims:

(1) An award (including interest) of [amount] for the losses caused as a direct result of [A]'s breach.

(2) [B] respectfully requests the Arbitral Tribunal to reject all of the Claimant's claims and to hold that the Agreement was validly terminated as of the 1st August 2008, and that [A] breached the terms of the Agreement and is not entitled to any sums claimed.

(3) [B] further requests that [A] be ordered to pay all of [B]'s costs of the arbitration, including interest, ICC costs and all legal fees and expenses.

6. The issues

6.1. There are four principal issues for the Tribunal to consider:

(1) the construction of the Agreement ("the Construction Issue");

(2) whether the Agreement should be rectified ("the Rectification Issue");

(3) whether [A] was in breach of the Agreement ("the Breach Issue")·

(4) whether Mr [X] is entitled to compensation ("the Compensation Issue").

6.2. The Tribunal will deal with each of those issues in turn, but before doing so will briefly set out, in the next section of this Award, the background to the making of the Agreement and its findings of fact on the evidence.

7. The background and the Tribunal's findings of fact

7.1. The relationship between Mr [X] and [B] goes back to the mid-1990s. [In] January 1996 [F] (a company in the [B] Group) entered into an agreement with [C]. This Agreement was entitled "Confidential Agreement" and was entered into in contemplation of [C]/Mr [X] being appointed as an adviser to [F] in connection with projects in [a Middle Eastern country]: those projects were to be nominated by Mr [X].

7.2. Subsequently, [in] February 1996 [C] and [F] entered into a Consultancy Agreement ("the [C] Agreement") in relation to [a hotel].

7.3. Mr [X]'s duties as specified in the [C] Agreement, which was itself conditional upon [F] being awarded the management contract for that hotel (which eventually happened, albeit not while the [C] Agreement was in force), were described in the following manner:

The Consultant's Duties pursuant to the Consultancy Agreement would include in particular advising [F] generally with respect to performing the Management Contract and liaising from time to time with the … local authorities, government departments and officials in connection with the performance by [F] of the management contract, as more particularly agreed in the Consultancy Agreement.

7.4. Although there appears to have been little or no activity while the [C] Agreement was in force, [B] remained very keen on expanding in the [Middle Eastern country], and in early 2000 Mr [X] was contacted by ... [B]'s Managing Director for Europe and the Middle East and later by ... [B]'s Director of Operations in the Middle East ... Mr [X] was also introduced to ... [B]'s co-founder and President.

7.5. Notwithstanding the lack of activity during the life of the [C] Agreement, in its letter dated ... February 1996, [B] (through its subsidiary, [F]) expressed itself to have been "extremely impressed" with Mr [X]'s "expertise and wide experience of business development in the [Middle Eastern country]", and Mr [X] was asked to speak, on [B]'s behalf, to his friend and business associate Mr [Y], who was then Managing Director of [site 1], and who subsequently became Chairman of [E].

7.6. [In] December 2000 another company in the [B] Group, [G] (a [South East Asian] company), entered into an agreement with [D] ("the [D] Agreement"). The [D] Agreement was entitled "Advisory Agreement" and was, as will be seen, save for some minor changes in wording, in identical terms to those which were subsequently contained in the [A] Agreement. Indeed the sites identified in the definition of the "Hotel Project" were the same in both the [D] Agreement and the [A] Agreement, although by the date upon which the [A] Agreement was made the [site 1] Management Agreement ("the [Site 1 Management] Agreement") was already in existence.

7.7. The [Site 1 Management] Agreement was entered into [in] May 2001. No other Management Contract was entered into while the [D] Agreement was in force.

7.8. In early 2004 Mr [X] decided that he wanted to engage new lawyers. He felt that his existing lawyers were too slow for his business requirements. He decided that he needed a new corporate structure to carry on his business. Mr [X] explained the position to [B], who, although initially resistant to any change, eventually agreed to co-operate with Mr [X].

7.9. As a result of the change, [in] September 2004 the [D] Agreement was terminated by mutual consent, and [20 days later] the [A] Agreement was made. Under the [A] Agreement, Mr [X] was entitled to receive remuneration in respect of the Management Agreement for the [Site 1] hotels notwithstanding that the [Site 1 Management] Agreement had been entered into between different parties and over 3 years before the [A] Agreement was made.

7.10. Once the [A] Agreement was in place [B] and Mr [X] began to look for opportunities for [B] to be awarded new Management Contracts. [B] made it clear to Mr [X] that it wanted the opportunity to run a 5-star hotel in the region. Mr [X] suggested to Mr [Y] that [E] should consider using [B] to manage such a hotel.

7.11. Mr [X]'s evidence (which the Tribunal accepts) is that Mr [Y] was initially resistant to that idea but that Mr [X] eventually persuaded him to award a Management Contract for a 5-star hotel to [B]. In order to make the contractual position clear once Mr [Y] had been persuaded to allow [B] to manage a 5-star hotel, the Addendum to the [A] Agreement was made [in] April 2005. The Addendum identified two hotel projects as coming within the definition of "Hotel Project" under the [A] Agreement: the [Site 2] Hotel and [another] project

7.12. The [Site 2] Hotel Management Agreement was entered into [in] June 2005. This was the only Management Agreement entered into under the [A] Agreement.

7.13. Although the events after the opening of the [Site 2] Hotel were the subject of much of the evidence during the hearing as a result of the view that the Tribunal has formed on the Construction Issue (see below) the Tribunal does not consider it necessary for the purposes of this Award to set out a detailed account of those events nor to express any views of the rights and wrongs of the dispute that arose between [B] and [E].

7.14. It is sufficient for the purposes of this Award to state that almost immediately after the [Site 2] Hotel was opened in late 2007, Mr [Y] began to express his dissatisfaction with [B]'s management. Nothing that [B] said or did could dissuade Mr [Y] from his view that [B]'s management was unsatisfactory and so it was that [in] May 2008 [E] served a Notice of Termination of the [Site 2] Hotel Management Agreement. The Agreement was terminated by agreement on the 31st July 2008.

7.15. When [E] started complaining about [B]'s management of the [Site 2] Hotel, [B] asked Mr [X] to intercede on its behalf. [B] was particularly concerned by the launch of [E]'s own luxury hotel brand ... in May 2008, and its position in this arbitration is that a desire to take over the management of the [Site 2] Hotel for that new brand, rather than the alleged dissatisfaction with [B]'s services, was the true reason for [E]'s behaviour towards [B] during the relevant period. Be that as it may, Mr [X]'s efforts to sway [E] were no more successful than were [A]'s.

7.16. [B] was extremely disappointed that Mr [X] was not able to persuade Mr [Y] to change his mind. Eventually however, Mr [Y] and [B] agreed a negotiated settlement of the dispute, and Mr [X]'s evidence (which the Tribunal accepts) is that he did his best to ensure that the settlement would be as favourable as possible for [B].

7.17. However, [B] was not satisfied with Mr [X]'s efforts on its behalf, and wrote a number of letters complaining that Mr [X] should have been aware of the creation of [E's luxury hotel brand] prior to it being notified to the public [in] May 2008, and should have informed [B] of the same, and assisted [B] in dealing with the complaints that [E] was making. On 1st August 2008, the day after and in consequence of the termination of the [Site 2] Hotel Management Agreement, [B] notified Mr [X] that the [A] Agreement had been terminated.

8. The Construction Issue

8.1. In considering the construction of the [A] Agreement it is necessary for the Tribunal to deal with two aspects of the Agreement: first Mr [X]'s duties under the Agreement and, secondly, the termination provisions of the Agreement.

8.2. The parties were in agreement as to the legal principles to be applied, as a matter of English law, to the construction of the Agreement. Accordingly, it is not necessary to add to the length of this Award by referring to the legal authorities which were common ground between the parties.

(a) Mr [X]'s duties

8.3. The services to be provided by Mr [X] under the Agreement were set out in Clause 3. They were:

3. Services to be provided by the advisor

The Advisor should provide the following services ("the Services") to the Company hereunder:

3.1. Advising the Company in connection with instigating and developing good commercial relations which are beneficial for the promotion of the Company's business or that of any member of the [B] Group with respect to the Hotel Project/s.

3.2. Advising the Company of the status of the Management Contract at all Contracts issued thereunder and also advising the Company with respect to the performance of the Management Contract, PROVIDED ALWAYS that the Adviser shall not be liable to compensate the Company in respect of any loss, damage, costs or expenses which the Company may suffer or incur as a result of or in connection with the Management Contract; and

3.3. Advising the Company from time to time on any issues with the local authorities, government departments and officials in connection with the performance by the Company of the Management Contract.

8.4. As has been stated, the services to be provided by Mr [X] under the [A] Agreement were the same services as had been provided by him under the [D] Agreement. However, whereas under the [D] Agreement Mr [X] was to receive [amount] on the signing of a Management Contract and thereafter 40% of the difference between [B]'s Management Fees and its Management Expenditure, under the [A] Agreement Mr [X] received no lump sum payment, but his percentage of the difference between the Management Fees and the Management Expenditure was increased to 50%.

8.5. The Tribunal has outlined the history of the relationship between Mr [X] and [B] in some detail because it seems to the Tribunal that, when looking objectively at the provisions of the [A] Agreement, that history is of some assistance in identifying what was expected of Mr [X] by [B] under the [A] Agreement.

8.6. It is the Tribunal's clear view that [B] saw Mr [X]'s role as that of a facilitator. He was to introduce [B] to influential people in the [country] and to use his influence to try to ensure that [B] was well-placed to obtain Management Contracts. In addition, Mr [X] was expected to act as [B]'s antennae in the ... region; to give [B] notice of problems of which he was made aware in the performance by [B] of its duties under those Management Contracts; and to assist [B], if possible, to resolve such problems. That summary of the Tribunal's understanding of Mr [X]'s duties is in the Tribunal's view what is expressed in Clause 3 of both the [D] Agreement and the [A] Agreement.

8.7. It would seem that Mr [X] performed those duties which have been identified by the Tribunal satisfactorily under the [D] Agreement so that [B] was prepared to enter into the [A] Agreement with him and to identify his duties under that Agreement in precisely the same terms.

8.8. The Tribunal will consider later in this Award the allegation that Mr [X] was in breach of his duties to [B]. However, before doing so the Tribunal will next consider the termination provisions under the [A] Agreement.

(b) Termination

8.9. In order to provide context for the consideration of the termination provisions in the [A] Agreement, the Tribunal will start by setting out the termination provisions in the [D] Agreement. They were in the following terms:

5. Duration and expiry

5.2.1. After a period of 12(twelve) months from the date of commencement of the Agreement no Management Contract/s, as defined in Clause 1.1.5 of this Agreement, has/have been entered into by or awarded to the Company or any of its Affiliates. If immediately prior to the end of this twelve months period it appears to both parties that a MANAGEMENT Contract is likely to be entered into or awarded to the Company then the Agreement shall not terminate after the twelve months period has expired but shall be extended for a further 6(six) months period. If the Management Contract is not awarded within the extended period and as such the position remains that no Management Contract have been entered into by or awarded to the Company or any of its Affiliates, then this Agreement shall terminate after expiry of the extended period, or

5.2.2. If a Management Contract (as renewed from time to time) is awarded to the Company or its Affiliates and the Management Contract is terminated or expires for any reason.

5.3. For the avoidance of doubt, the termination or expiry of this Agreement shall not affect the Company's obligation to pay any portion of the Remuneration in accordance with Clause 4 hereof which had accrued to the Advisor prior to the date of such termination.

5.4. The Company and the Advisor shall use all reasonable endeavours to tender for the Management Contract/s as soon as possible.

8.10. The termination provisions in the [A] Agreement were in the following terms:

5. Duration and expiry

5.2. If a Management Contract (as renewed from time to time) is awarded to the Company or its Affiliates and the Management Contract is terminated or expires for any reason.

5.4. The Company shall use all reasonable endeavours to tender for the Management Contract/s as soon as introduced by the Advisor.

8.11. It will readily be seen that, apart from the omission of Clause 5.2.1 and the revised wording in Clause 5.4 the material part of the termination provision is identical in the two agreements.

8.12. The Tribunal was provided with a detailed textual and syntactical analysis of the two agreements. However, it does not seem to the Tribunal that the construction of Clause 5.2 presents any difficulty. A "Management Contract" is defined in precisely the same terms in each agreement.

8.13. Clause 5.2 provides that the [A] Agreement would remain in full force and effect until "a" management contract is terminated "for any reason".

8.14. The [Site 2] Hotel Management Agreement was a Management Contract as defined in the [A] Agreement. The [Site 2] Hotel Management Agreement was terminated on the 31st July 2008, having been entered into [in] June 2005.

8.15. It was submitted on behalf of Mr [X] that Clause 5.2 would operate very harshly if [B] had entered into a number of Management Contracts and only one of those Management Contracts was terminated. However, [B's Director of Operations in the Middle East] explained that the commercial rationale behind the structure of the [A] Agreement was apparent when seen in the context of the agreements usually entered by [B]. At one end of the spectrum, an agent could be remunerated for introducing a project by way of a one-off finder s fee. At the other end of the spectrum, an agent with long-term duties and a more demanding scope of work could be remunerated over a longer period by way of a percentage of the revenue stream, varying between a few percentage points to "an extreme" of 50% of [B]'s revenue.

8.16. As the Tribunal understands [the] evidence [of B's Director of Operations in the Middle East], in the present case Mr [X] was paid a large sum by way of both of an initial finder's fee (under the [D] Agreement) and subsequently (under the [A] Agreement) by way of ongoing payments at the "extreme" end of a share in [B]'s revenue, and this even though he had few ongoing duties after conclusion of a Management Agreement by [B]. The counterbalance for that high remuneration was an accepted risk that the [A] Agreement would end in the event that one of a number of Management Contracts was lost so that the Agreement came to an end: see Transcript ...

8.17. Although the Tribunal can see some force in Mr [X]'s submission, it seems to the Tribunal that there is equal, if not greater, force in [the] explanation of the commercial rationale of the Agreement [given by B's Director of Operations in the Middle East].

8.18. In any event, the Tribunal has concluded that the construction of Clause 5.2 is very clear and straightforward and that the consequence of the termination of one Management Contract would be to bring about the termination of the [A] Agreement.

8.19. It is fair to say that neither the [D] Agreement nor the [A] Agreement is particularly well drafted notwithstanding the fact that each agreement was drafted by lawyers acting for both Mr [X] and for [B]. However, the termination provisions contain no difficulties of construction, and the clarity of the termination provision is such that if Mr [X] wishes to avoid its consequence, he has to seek rectification of the [A] Agreement.

9. The Rectification Issue

9.1. The Tribunal has concluded that the construction of the termination provision of the [A] Agreement presents no difficulty, and that, on its true construction, in the event that a management contract has terminated for any reason the [A] Agreement would come to an end. Mr [X], therefore, seeks rectification of Clause 5.2 of the Agreement so that it reads:

5.2 If a management contract (as renewed from time to time) is awarded to the company or its affiliates and the management contract has terminated or expires for any reason in relation to that management contract but not in relation to any other management contract the subject matter of the Agreement.

9.2. Again, there was no dispute between the parties as to the principles of English law that were to be applied to the claim for rectification and it is, therefore, unnecessary to add to the length of this Award by referring to the legal authorities. It was common ground that, in order to succeed on the rectification claim, Mr [X] would have to satisfy the Tribunal that the Agreement did not accurately record the bargain between the parties and that the common intention of the parties, which continued to the moment at which the Agreement was concluded ("the continuing common intention''), was that Clause 5.2 should have been drafted in the terms for which Mr [X] contends.

9.3. There are a number of difficulties in the way of rectifying the agreement by the addition of those words. First the effect of those words would mean that Clause 5 was effectively redundant. Because of the definition of Management Fees in the Agreement, [A] would in any event not receive any remuneration in respect of any Hotel Management Agreement which ceased to exist for whatever reason, and there is no need to provide for this in a separate provision (as the rectified Clause 5.2 would).

9.4. Further should the clause be rectified as proposed, there could be no termination of the [A] Agreement unless both parties agreed to termination or until all Management Contracts were terminated (by which time the Agreement could in any event have no further application). That would be an unnatural consequence of a rectification, and an uncommercial result. It would be unlikely to be the parties' intention in an agreement which contains a termination provision.

9.5. Secondly, a plea of rectification is faced with the factual difficulty that Mr [X] is wholly unable to demonstrate a continuing common intention on the part of both himself and [B] that the termination of one management contract should not bring about the termination of the [A] Agreement. In this context, it is important to set out Mr [X]'s own evidence in his first Witness Statement. He stated:

10. The [D] Agreement was drafted by [a person] who was an in-house lawyer for [B] and who was in discussions regarding the [D] Agreement with my then lawyer ... The commercial terms of this agreement were discussed between me, [B's Managing Director for Europe and the Middle East] and [B's Director of Operations in the Middle East]. I did not discuss the detailed legal terms as I relied on [B]. In particular there were no discussions about termination provisions. Had it been suggested that if one management agreement for a hotel were to terminate for any reason whatsoever the whole consultancy would terminate I would have rejected this suggestion because it would not reflect the long term-nature of the agreement we were making. It was however never suggested as it was not what it was intended by the parties and it was never agreed.

9.6. When it came into the [A] Agreement, which Mr [X] had requested should be entered into because he wanted to change his lawyers, who he felt were too slow for his commercial purposes Mr [X] stated:

19. I did not review in detail the content of the amendments to the [D] Agreement which were incorporated into the new agreement because it was always clear between the parties that the contract shall continue on the same commercial terms as the [D] Agreement.

20. I was aware that [B]'s in-house lawyers made some technical changes to the wording to reflect the changes that had occurred since the [D] Agreement was signed, but there was no discussion about any change to the commercial terms and it was certainly not intended by either party or agreed that the commercial terms would be changed.

9.7. Mr [X]'s evidence to the Tribunal was to the same effect, namely that he did not read the Agreement but left it to his lawyers: Transcript ... He appeared to consider that the termination provisions were a part of the commercial terms of the agreement. However, it is clear that the commercial terms were changed in the sense that the remuneration provisions in the [A] Agreement were different to those in the [D] Agreement.

9.8. At the very best, Mr [X]'s evidence is that he had a subjective view that the [A] Agreement would continue as long as a Management Contract was in place. However, the Tribunal heard no evidence that any such provision was ever discussed between the parties, far less agreed. And Mr [X] made it clear in his evidence that he had never discussed his subjective view with [B]: see Transcript ...

9.9. In the circumstances, it seems to the Tribunal to be unarguable that there was any intention, far less a continuing common intention, between the parties that the Consultancy Agreement would continue notwithstanding the termination of a management contract.

9.10. In these circumstances the rectification claim must fail.

10. The Breach Issue

10.1. The Tribunal now turns to deal with [B]'s allegation that Mr [X] was in breach of its duties to [B]. As already noted in Section 8(6) above, [B] was perfectly happy with Mr [X]'s performance of his duties under the [D] Agreement. Further, [B's Director of Operations in the Middle East], [B]'s only witness at the hearing, freely accepted in his oral evidence that [B] had no complaint about Mr [X]'s performance of his duties until the beginning of November 2007 when [E] started to complain about [B]'s management of the [Site 2] Hotel.

10.2. The Tribunal has explained earlier in this Award (see Paragraph 8.5 above) what it finds Mr [X]'s duties to have been under both the [D] and the [A] Agreements. The Tribunal has also concluded that Mr [X] seemed to have performed those duties satisfactorily under the [D] Agreement.

10.3. The Tribunal has carefully considered [B]'s contention that Mr [X] failed to perform his duties under, and was in breach of, the [A] Agreement. There was no evidence to suggest that [B] made any complaint about Mr [X]'s performance before the problems with [E] arose: indeed, the evidence is that no complaint was made. The gravamen of [B]'s complaint in the arbitration appears to be that Mr [X]'s antennae were not sufficiently acute to have seen Mr [Y]' s dissatisfaction even before he expressed it to [B]. [B] also complains that Mr [X] should have warned it of the formation of [E's luxury hotel brand] and of Mr [Y]'s intention (as [B] came to believe) that [E's luxury hotel brand] had been formed for the specific purpose of taking over the [Site 2] Hotel.

10.4. The Tribunal has unhesitatingly concluded that (a) Mr [X] performed his duties under the [A] Agreement properly and satisfactorily and (b) [B]'s allegations of breach on the part of Mr [X] are without merit. Notwithstanding those findings, the Tribunal is satisfied that [B]'s allegations were made in good faith and were the expression of [B]'s deep frustration at the treatment that it received from [E]. The Tribunal makes no findings as to whether [E] was justified in making the complaints that it did: that was not an issue which the Tribunal had to decide or upon which it could make a decision.

11. Summary

11.1. As has been stated, the Tribunal has concluded that Mr [X] was not in breach of the [A] Agreement at the date upon which the management contract for the [Site 2] Hotel was terminated. The Tribunal has also held that on the date upon which the [Site 2] Hotel contract was terminated the [A] Agreement came to an end.

11.2. It follows from those findings that the Tribunal has concluded that [B] was not entitled to terminate the [A] Agreement on the grounds of Mr [X]'s breach as he was not in breach of his duties and obligations under that agreement. Indeed, although it threatened to do so, [B] never in fact purported to terminate the [A] Agreement on the grounds of Mr [X]'s breach.

11.3. [B] is, therefore not entitled to repayment of the sums paid to Mr [X] under the [A] Agreement and [B]'s counterclaim must therefore necessarily fail.

11.4. In the circumstances the Tribunal does not have to reach any conclusion on [B]'s contention that a breach of the [A] Agreement by Mr [X] would have entitled it to withhold payment of sums due to Mr [X], let alone claim a repayment of sums already paid to him, absent a termination for repudiatory breach or an allegation of total or partial failure of consideration. As a matter of English law, parties to an agreement are obliged to perform their obligations under the agreement until the agreement is terminated. In English law breach of an agreement entitles the innocent party to accept the breach as repudiatory and to bring the agreement to an end: it does not entitle the innocent party to suspend performance of its obligations until the party in breach remedies its breach. The agreement remains in existence for the benefit of the wrongdoer as much as for the benefit of the innocent party. In any event, on the facts of this case, any allegation of repudiatory breach or total or partial failure of consideration would have been hopeless, and would have failed.

12. Compensation

12.1. In the light of the Tribunal's findings, Mr [X] is entitled to compensation under the [A] Agreement up to the date of the termination of the Agreement, namely, the 31st July 2008, but not to compensation after that date. At the date of termination [B] owed Mr [X] the monies due under the [A] Agreement in respect of the calendar year 2007 in the sum of [amount]. In addition Mr [X] is also entitled to be paid for the first seven months of 2008.

12.2. At the conclusion of the evidential hearing, the Tribunal asked the parties to let it have the sum owed to Mr [X] for the first seven months of 2008. ... [the Respondent's counsel] sent to [the Claimant's counsel] calculations of the amounts due to Mr [X] in respect, inter alia, of the period between the 1st January 2008 and the 31st July 2008. The calculations had been prepared by [a firm of auditors] and had been sent to [the Respondent's counsel] by letter ... By letter ... [the Claimant's counsel] confirmed that Mr [X] had "no dispute with the figures received from [B]".

12.3. Those calculations show that Mr [X] is entitled to the sum of [amount] for the period between the 1st January 2008 and the 31st July 2008.

12.4. In addition Mr [X] claims interest on the monies outstanding and owed to him, and the Tribunal agrees that he is entitled to simple interest on those monies from 1 January 2008 (for the 2007 payments) and from 1 August 2008 (for the 2008 payments) at the rate of 5%. This is the rate claimed by Mr [X], and [B] did not challenge that rate as being unreasonable. In the circumstances, the Tribunal is satisfied that 5% is a reasonable rate.

12.5. In the light of the agreement between the parties as to the sums due to Mr [X] by way of compensation up to the date of termination of the Agreement, it is unnecessary for the Tribunal to grant the relief sought by Mr [X] and referred to in Paragraphs 4.2(2) and (5) above.

13. Costs

13.1. Finally, the Tribunal must deal with the costs of the Arbitration: see Article 31 of the ICC Rules. Mr [X] has succeeded in that part of his claim in which he seeks payment for his services up to the date of termination of the Agreement but has failed in his claim for rectification. [B] has successfully resisted the claim for rectification but has failed on its counterclaim.

13.2. In the result, the Tribunal has concluded that neither party has prevailed, and that in the exercise of its discretion the appropriate order is an order that each party should bear its own costs.

13.3. The Tribunal has concluded that the appropriate order in respect of the ICC's costs of the arbitration is that each party should bear 50% of those costs, which are.

13.4. Each party has paid [amount], a total of [amount], and the ICC Court has assessed the total amount of the costs of the arbitration in the sum of [a lower amount].

13.5. In the circumstances, no further payment order needs to be made.

14. Conclusion

14.1. Before stating its Award in this Arbitration, the Tribunal would like to pay tribute to the economical and efficient manner in which both parties have conducted the Arbitration. In consequence of that economy and efficiency, the Tribunal was able to finish the hearing in two days rather than the three days that was set aside. The Tribunal was greatly assisted by the efforts of Counsel for both parties throughout.

AWARD

For the reasons set out above, and having considered carefully the evidence and submissions of the parties, we, [the Arbitrators]:

adjudge, award order and declare that:

l. [B] shall pay to [A] the sum of [amount] in respect of his fees for 2007 together with simple interest thereon from the 1st January 2.008 until payment at the rate of 5% per annum.

2. [B] shall pay to [A] the sum of [amount] in respect of the period between the 1st January 2008 and the 31st July 2008 together with simple interest thereon from the 1st August 2008 until payment at the rate of 5% per annum.

3. All other claims by [A] in this Arbitration are dismissed.

4. [B]'s Counterclaim is dismissed .

5. The [A] Agreement was terminated on the 31st July 2008.

6. The total costs of the arbitration have been assessed by the ICC Court in the sum of [amount].

7. There shall be no Order as to the costs of the Arbitration; in particular each party shall bear the 50% of the ICC's costs which it has already paid at the time of this Award (with no repayment being due by either party to the other in that respect).

8. For the avoidance of doubt, any and all other claims and counterclaims in this arbitration are dismissed.'

1
Editor's note: this and subsequent references are to the 1998 ICC Rules of Arbitration.

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