'I. Procedure

1.1. [Claimant] filed a Request for Arbitration with the International Court of Arbitration of the International Chamber of Commerce (hereinafter, the "Court"). [Respondent] was named as Respondent.

………

1.5. The dispute relates to a Management Agreement …, to which [Claimant] and [Respondent] are parties (hereinafter, the "Management Agreement").¹

1.6. Article 20 of the Management Agreement reads:-

Dispute Resolution

The parties shall attempt to resolve amicably all questions and disputes arising in connection with this Agreement, or the breach, termination and invalidity thereof ("the dispute"). Should they fail to do so within thirty (30) days after the dispute arise, they shall at the request of either party jointly appoint a neutral mediator to resolve the dispute within thirty (30) days from such request.

Should the parties fail to agree on a mediator in accordance with Article 20.1, or should the mediator fail to settle the dispute within sixty (60) days from appointment, either party may submit the dispute for final settlement by arbitration under the Rules Of Conciliation and Arbitration of the International Chamber of Commerce by three arbitrators appointed in accordance with said rules.

The place of arbitration shall be the one determined in the TERM SHEET. The arbitrators will determine the matters in dispute in accordance with applicable law determined in the TERM SHEET. The arbitration shall be conducted in English.

The decision and award of the arbitrators shall be binding upon both parties and shall be enforceable in any court of competent jurisdiction.

Such decision and award may allocate the cost of such arbitration to one of the parties or disproportionately between the parties.

1.7. The Term Sheet reads:

With respect to Article 20, Arbitration, of the Agreement, the following shall apply:

a) Place of Arbitration: [Capital city of State X]

b) Applicable Law: [Law of State X]

1.8. … [Respondent] submitted its answer to the Request for Arbitration to the Court which, inter alia, challenged the jurisdiction of this Tribunal to decide this dispute. Without prejudice to its claim of non-jurisdiction, and in the alternative, [Respondent] denied [Claimant]'s claim and filed a counterclaim against [Claimant].

1.9. The Court … decided that the matter should proceed pursuant to Article 6(2) of the ICC Rules of Arbitration (1998) (hereinafter, the "Rules") and left it to the Tribunal to decide on the jurisdictional issue.

1.10. … the Secretary General of the Secretariat of the Court (hereinafter, the "Secretariat"), in accordance with Article 9(2) of the Rules, confirmed … as co-arbitrator upon [Claimant]'s nomination …

1.11. … the Secretary General of the Secretariat, in accordance with Article 9(2) of the Rules, confirmed … as co-arbitrator upon [Respondent]'s nomination …

1.12. … the Court, in accordance with Article 9(1) of the Rules, confirmed the nomination of … as Chairman of the Tribunal. … [Claimant] and [Respondent] nominated [the Chairman of the Tribunal] jointly after consultation with their party-appointed arbitrators.

1.13. … the Court fixed the advance for costs on this matter at ... On the same date, the Secretariat invited the parties each to pay (in accordance with Article 30(3) of the Rules) one half of the advance on costs. …

1.14. … the Tribunal met with the parties ... At the meeting, the parties agreed and signed the Terms of Reference for this arbitration. They also agreed to Procedural Order No. 1, which sets forth aspects of the procedure for this arbitration including a provisional schedule for these proceedings.

1.15. … the Secretariat wrote to the parties noting that the time limit granted to [Respondent] for the payment of its share of the advance on costs had expired without any payment having been made, and invited [Claimant] to pay [Respondent]'s share within fifteen days.

1.16. … [Claimant] wrote to the Secretariat, stating:

We refer to your letter … concerning Respondent's failure to pay its share of the advance on costs … despite the deadline for payment. Could Respondent please clearly state its position in relation to payment of this sum within 7 days of today. Claimant urges Respondent to honour its obligation to pay and regrets its delay in doing so. Claimant is ready to pay Respondent's share of the advance on costs if Respondent does not pay within 7 days. In that case, Claimant intends to apply to the Tribunal immediately for a partial award on costs.

1.17. … [Claimant] paid … as [Respondent]'s share of the advance on costs, which payment the Secretariat acknowledged ...

1.18. … the Tribunal held a Hearing at the offices of [one of the co-arbitrators].

1.19. The Hearing dealt with four issues:

- [Respondent]'s request that the Tribunal find that it had no jurisdiction over the dispute.

- [Claimant]'s Application for a Partial Award on Costs.

- [Claimant]'s Application for Jurisdiction Protection Measures.

- [Respondent]'s withdrawal of its counterclaims.

1.20. We will deal herein with the procedural aspects of each issue in turn.

The Agreement on How to Handle the Jurisdictional Issue

1.21. [Respondent] wanted to deal with the jurisdictional issue that it had raised as a preliminary issue, while [Claimant] did not want to delay the proceeding to deal with an issue that it deemed without merit. Finally, the agreement of both parties is reflected in the following language of Procedural Order No. 1.

1.22. Procedural Order No. 1 records that "[a]fter hearing the positions of both parties, the Tribunal decided to deal with the Jurisdictional Issue as a preliminary matter on an expedited basis" as well as the fact that: "The parties further agreed that if the Tribunal determines that it does not have jurisdiction in this matter, such determination would be reflected in a Final Award; they further agreed that if the Tribunal determines that it does have jurisdiction, such determination will be set forth in an Order of the Tribunal (the "Jurisdictional Order"), which will then be appropriately reflected in an eventual Final Award on the merits of this dispute."

1.23. In response to the Tribunal's request that each counsel seek instructions from its client as to whether it would be appropriate and acceptable to include [Claimant's parent company] as a party to this arbitration, [Claimant]'s counsel wrote to the Tribunal …, confirming that that they were also instructed by [Claimant's parent company], which considers that it is, and always has been, bound by the arbitration agreement contained in Article 20 of the Management Agreement. [Claimant]'s counsel also informed the Tribunal that, if sued by the Respondent on a counterclaim in the present arbitration, [Claimant's parent company] would not - indeed could not - object to the jurisdiction of the Tribunal on the ground that it is not bound by the arbitration clause in the Management Agreement. Moreover, [Claimant]'s counsel stated that in the interest of procedural economy and the expeditious resolution of all claims between the various signatories to the Management Agreement, [Claimant] and [its parent company] undertook not to resist the jurisdiction of the Tribunal over any claims brought by [Respondent] against [Claimant's parent company] in the present arbitration.

1.24. … [Respondent] filed with the Tribunal a Memorial on Jurisdiction setting forth its arguments to the effect that the Tribunal has no jurisdiction in this arbitration. In its cover letter to the Tribunal [Respondent]'s counsel also stated that [Respondent] did not accept the offer by [Claimant's parent company] to be "included as a party" in the arbitration.

1.25. … [Claimant] filed with the Tribunal its defence to [Respondent]'s objection, setting forth its arguments to the effect that the Tribunal has full jurisdiction to conduct this arbitration, including the right to hear any claims that [Respondent] may have, against [Claimant]'s parent company ...

1.26. At the Paris Hearing … the Tribunal heard oral argument and considered the written submissions of the parties on [Respondent]'s contention that the Tribunal was without jurisdiction to hear the dispute.

1.27. In Procedural Order No. 2 … the Tribunal found that it had jurisdiction in the present arbitration and that all claims and counterclaims against [Claimant] and [its parent company] arising out of the Management Agreement should be decided in this ICC arbitration. Nevertheless, since [Respondent] withdrew its counterclaims in their entirety, [Claimant's parent company] was never joined as a party to this arbitration.

1.28. In Order No. 2, the Tribunal also denied [Claimant]'s application that it exercise its discretion to issue jurisdiction protection measures, commonly called "anti-suit injunctions", in respect of [Respondent]'s actions in the Courts of [State X] relating to this arbitration.

1.29. Finally, in Order No. 2, the Tribunal denied [Claimant]'s assertion that [Respondent] did not have the right to withdraw its counterclaims, while affirming that any such claims against [Claimant] or [its parent company] in respect of the Management Agreement as [Respondent] might wish to assert at a later date remained subject to this arbitration, to be dealt with as New Claims under Article 19 of the Rules.

1.30. The analysis and dispositive provisions of its decision on jurisdiction are set forth in Annex A to this Award which are incorporated herein and hereby confirmed by the Tribunal, thereby satisfying the requirement of Procedural Order No. 1 that they be "appropriately reflected in an eventual Final Award on the merits of this dispute". This Tribunal explicitly confirms in this Award that it has jurisdiction over the dispute.

Partial Award on Costs

1.31. … [Claimant] filed with the Tribunal an Application for a Partial Award on Costs seeking to have the Tribunal award it a payment from [Respondent] of …, representing the amount paid by Claimant in substitution of Respondent's share of the advance on costs pursuant to Article 30(3) of the ICC Rules, plus interest and the costs of its application.

1.32. [Respondent] filed with the Tribunal a reply to [Claimant]'s Application asking the Tribunal to deny the relief sought by [Claimant] in its Application.

1.33. … [Claimant] filed its Post-Hearing Submission dealing inter alia with the issues of payment by [Respondent] to [Claimant] of [Respondent]'s share of the deposit …

1.34. … [Respondent] filed its Post-Hearing Submission dealing inter alia with the issues of payment by [Respondent] to [Claimant] of [Respondent]'s share of the deposit.

1.35. … [Respondent] wrote to the ICC Court as follows:

Please note that the Respondent withdraws its counterclaims against the Claimant from the above-mentioned arbitration case, this is without prejudice to the Respondent's underlying rights to these claims and the Respondent reserves its right to pursue these claims in other proceedings whether presently or at a future date before all courts and/or tribunals of competent jurisdiction.

The Respondent requests that the ICC ICA apply Article 31(4)[sic] of the Rules and reassess the arbitration costs and the arbitrators' fees in view of this withdrawal and to notify the Parties and the Tribunal of the reassessed amounts.

1.36. … the Court decided to decrease the advance on costs from … to …, and ordered that … be reimbursed to [Claimant]. One half of such reimbursement reduced [Claimant]'s deposit to …, the net amount that [Claimant] has paid in respect of [Respondent]'s share of the advance on costs.

1.37. … the Tribunal issued a Partial Award (final as to the matters decided therein) as follows:

- [Respondent] should forthwith pay [Claimant] [half of reduced advance on costs].

- [Respondent] should pay interest at the rate of 5 per cent per annum, on [half of the advance on costs prior to the reduction] for the period [prior to the reduction, and thereafter on the sum of [half of the reduced advance on costs] until all amounts due under the Partial Award are paid.

- The Tribunal reserved its decision on the question of costs claimed by [Claimant] in respect of the matters decided under the Partial Award.

The Issue of "Forgery"

1.38. … [Respondent] submitted its Statement of Defence.

1.39. In its letter of transmittal of the Statement of Defence, [Respondent] alleged that financial projections dated April 2007 relating to the potential profitability of the hotel which [Claimant] claimed to have sent to [Respondent] under letter dated … were "forgeries". Such projections had been cited as one of a number sources of information used by … [Claimant]'s independent financial expert, to establish the amount of [Claimant]'s claim.

1.40. [Respondent] asked the Tribunal either:

- To exclude the admission of [Claimant's expert]'s report and to appoint another expert to report on quantum; or

- If the documents were admitted, to suspend the arbitration proceedings in application of [the relevant provision of State X law] until the [local] courts finally ruled upon the authenticity of the disputed projections.

1.41. … [Claimant] replied. It denied that the projections were "forgeries." It said that its records indicated that the projections had been supplied to [Respondent] as part [of] the negotiations of the Management Agreement. It claimed that the projections (which may or may not have been actually received by [Respondent]) constituted only one of a number of sources used by [Claimant's financial expert] to render his expertise. It rejected [Respondent]'s call for a Tribunal-appointed expert in place of [Claimant's financial expert]. Finally, it noted that [the relevant provision of State X law] does not require that the Tribunal suspend arbitration proceedings unless it is of the view that resolution of the issue of "forgery" is required for the issuance of the Award.

1.42. After several further exchanges by the parties on the issue, by letter dated …, the Tribunal announced its unanimous decision as follows:

Having carefully considered the substance of the matters and the requests [of the parties] the Tribunal makes the following decisions:

- In accordance with [the relevant provision of State X law], the Tribunal determines that, notwithstanding [Respondent]'s allegations of forgery, the resolution of the issue of forgery is not required for the issuance of an award. Accordingly, the proceedings will continue in accordance with the already established schedule.

- The Tribunal is not minded at this time to appoint a Tribunal expert.

- The Tribunal declines to exclude at this time from evidence the financial projections dated April 2007 or the expert report of [Claimant's financial expert].

Yours sincerely

…

For the Tribunal

[Respondent]'s Challenge to the Chairman

1.43. By letter …, [Respondent] submitted an application to the Tribunal for the recusal of the Chairman ... It cited "his" decisions in respect of the jurisdictional challenge, the Partial Award in respect of the deposit, and the dispute over the "forged" document as evidence of his lack of impartiality and fairness.

1.44. … the ICC Secretariat wrote to [the Chairman of the Tribunal], copying all the other relevant participants, stating that it considered [Respondent]'s letter … a challenge against him as Chairman under Article 11 of the Rules, and invited him, [Claimant] and the other arbitrators to comment.

1.45. … [The Chairman of the Tribunal] replied, denying any partiality, noting that all of the decisions of which [Respondent] complained were unanimous decisions of the Tribunal, and suggesting that reasonable decisions with which a party disagrees should not be grounds for the removal of an arbitrator.

1.46. … [Claimant] wrote opposing [Respondent]'s application for recusal of [the Chairman of the Tribunal], stating, inter alia, that the application was the latest in a series of tactical manoeuvres by [Respondent] to delay and frustrate the proceedings. It further noted that [Respondent] wrongly based its challenge on [State X law], rather than on Article 11 of the ICC Rules.

1.47. … [Respondent] insisted that [the relevant provision of State X law] was applicable and that the recusal application should be decided by the [competent state court].

1.48. … the ICC Court of Arbitration rejected the challenge to [the Chairman of the Tribunal].

1.49. … [Respondent] objected to the ICC Court's decision, claiming that [State X] law governed the question of recusal and reserving its rights in respect of the alleged breach.

1.50. … [Claimant] wrote to [the Chairman of the Tribunal] stating that while it wholly endorsed the decision of the ICC Court which it felt had been validly decided, out of an abundance of caution, it invited the Tribunal to forward the challenge request to [State X court 1].

1.51. … [the Chairman of the Tribunal] replied. While expressing his content with the ICC decision, he confirmed he would be happy to cooperate with the parties in any reasonable approach to the [State X] Courts. He requested their joint proposal for such an approach.

1.51. … [Respondent] replied that, given [Claimant]'s position that the ICC had validly decided the challenge against [the Chairman of the Tribunal], it could not then request the referral of the same application to the [state court]. Thus, as a result of [Respondent]'s decision, no such application was made to the [State X] Courts.

Efforts to Schedule a Hearing

1.53. We turn now to the efforts of the Tribunal to schedule a time and place for the Witness Hearing. It would not be useful to cite each and every communication relating to this issue. Rather, we will summarize what turned out to be a difficult and contentious issue.

1.54. In Procedural Order No. 1, the Witness Hearing was by agreement scheduled for … October 2011. Hearing rooms were booked in [the capital city of State X] for those dates. However … [Claimant] noted violent clashes in [that city] the day before and asked that the Tribunal and [Respondent] consider moving the hearings to another location, such as Paris. [Respondent] rejected the suggestion of such a move, citing among other things, visa problems and family and other commitments for the … participants [from State X]. After several other email exchanges … [Respondent's lawyers] emailed as follows:

I note the position of counsel for the Claimant, and frankly cannot blame them for their concern. We are equally concerned here.

I suggest that we aim for mid-December …. Given that the seat of this arbitration is in [State X], I propose that we wait until mid-November, if the situation in [State X] is stabilized by then, we can continue with a Hearing as planned in [its capital city]. If the situation remains uncertain, we could opt for Paris or London, subject to a fair arrangement as to costs. We will try to arrange for visas as of now, to be on the safe side. If the Hearing will be abroad and any of our witnesses is unable to travel we can then revert to video conferencing facilities for such witnesses.

1.55. [Claimant] immediately replied, accepting a postponement to mid-December, but demurring on the issue of costs. The Tribunal postponed the Hearing scheduled for … October 2011.

1.56. The parties explored various dates. After many exchanges, it became clear that the parties were available from [in] March 2012. … the Tribunal ordered the Hearing for those dates, without specifying their venue. Both parties confirmed their availability for those dates.

1.57. [Later] the Tribunal turned to the question of the situs for such Hearing. It cited its right under Article 14(2) of the Rules to conduct hearings at any location it considered appropriate. It noted that such power had been specifically approved by the parties in Paragraph 19 of the Terms of Reference.² It recorded that [Claimant] had suggested, as a result of the continuing unsettled situation in [the capital city of State X], Paris as the venue. [Respondent] insisted on [the capital city of State X]. The Tribunal stated that it would consider both locations, but also suggested London, Cyprus, Istanbul and Dubai as alternatives. It confirmed that, in any event, the seat of the arbitration would remain [unchanged]. It requested the comments of the parties, before making its decision.

1.58. [The following month] [Respondent] said that there was no valid reason for the Tribunal to exercise any discretion to shift the Hearing from [State X], but offered [another town in State X] as a suggestion. … the Tribunal agreed to select [the alternative town], subject to reservations as to the security situation and the availability of adequate video conferencing facilities.

1.59. However, after [disturbing events and reports], the Tribunal … changed its tentative decision, and ordered that the hearing be held in Paris.

1.60. [Respondent] replied the next day, conceding that the Tribunal had the discretion under the ICC Rules to make "appropriate" decisions to change the place of hearings, but contended that "this is never a carte blanche authorization" and that the decision to move the hearing from [the suggested town] was inappropriate. It stated that it could not attend a hearing in Paris in March, but could attend a hearing abroad in late April or May.

1.61. The following day …[Respondent] reversed its position on venue. It stated that it had never accepted that the Hearing on the merits could be held outside [State X]. It stated that [Respondent] would only attend a Hearing in [State X].

1.62. By return, the Tribunal responded that it would be impossible for it to hold a Hearing in April, May, June or July. It had warned the parties in mid-January to prepare for the possibility of a hearing in Paris if the security situation deteriorated. Accordingly, it confirmed its order, and stated that the hearing would begin at … pm on … March 2012, in Paris.

1.63. … [Respondent] reaffirmed its decision not to attend the hearing in Paris.

1.64. [The following day] [Claimant] told the Tribunal that it had received a decision from [a court in State X] ordering it to withdraw the April 2007 financial projections from the record in this arbitration on the ground that it was not proved that [Respondent] had received them. While [Claimant] would appeal such decision, it would withdraw the projections. Moreover, it suggested that [Claimant's expert's] report needed to be revised in other respects to take account of recent declines in the [State X] tourist industry. It therefore suggested that the Hearing begin as scheduled … but that it deal only with issues of liability. It suggested that issues of quantum be dealt with later, without a Hearing, on a documents-only basis.

1.65. … [Respondent] opposed bifurcation of the issues, asking that [Claimant] be prohibited from submitting any report by [Claimant's expert] or any new evidence on quantum.

1.66. … the Tribunal denied [Claimant]'s request for bifurcation of the issues, with questions of quantum to be decided without a face-to-face Hearing. It also denied [Respondent]'s suggestion that the Hearing be held without giving [Claimant] the opportunity to submit any evidence in respect of its claims on quantum. Accordingly, the Tribunal concluded that the … Hearing must be postponed. It suggested a telephone conference call to set new dates for a Hearing with the question of the venue to be decided later.

1.67. At a subsequent conference call, a revised schedule was agreed upon, culminating with a hearing to commence [in] June 2012. The Hearing venue was left open.

1.68. … Fearing … disruption in [the capital city of State X, [Claimant] suggested Paris as the venue, with the possibility of London or Dubai as alternatives.

1.69. … [Respondent] reiterated its refusal to attend a Hearing outside of [State X]. It stated that any member of the Tribunal reluctant to travel to [State X] could attend by video link.

1.70. The Tribunal then suggested consideration of a Hearing in [the capital city of State X], outside of the centre of the city, with those not wishing to come to [State X] attending by video link. This was rejected by [Claimant] which pointed out the technical difficulties in multi-site video conferencing which would have been required.

1.71. Finally, given the difficulties in crafting a viable Hearing in [State X] with appropriate video conferencing technology, … the Tribunal ordered the Hearing to begin in Paris [in] June 2012, with witnesses permitted to give testimony by video if they wished.

1.72. … [Respondent] confirmed that it would not attend the Hearing in Paris.

Challenges to [the co-arbitrators]

1.73. … after many communications among the members of the Tribunal, the Chairman sent the following email to the participants.

Dear Colleagues,

[The co-arbitrator nominated by the Respondent] has informed me that he will not attend the hearing in Paris at which the Respondent … will not be represented.

He asked the ICC and the parties for advice what to do under the circumstances.

1.74. [Claimant] replied [on the following day]. It noted that [the co-arbitrator]'s decision came soon after [Respondent]'s refusal to attend the hearing. It stated its belief that [the co-arbitrator]'s refusal was not a coincidence and that his decision constituted a grave failure to fulfil his duties as an arbitrator and showed a fundamental lack of independence. It asked the ICC to remove him as under Article 12(2) of the Rules. Alternatively, it challenged him under Article 11 of the Rules.

1.75. [Three days later] the ICC Secretariat requested [the co-arbitrator], the parties, and the other arbitrators to comment on the challenge to [the co-arbitrator].

1.76. [Six days later] [Respondent] wrote a 19-page letter to the ICC setting forth a list of complaints against the Tribunal for its handling of the arbitration, defending [the co-arbitrator]'s decision not to attend the Paris Hearing, and again asked [the Chairman of the Tribunal] to recuse himself, threatening to take action against him personally for dereliction of duty and collusion with the Claimant. However, it did not again challenge [the Chairman of the Tribunal], but it challenged [the other co-arbitrator] under Articles 11 and 12 of the Rules.

1.77. [Three days later] the Tribunal again postponed the hearing.

1.78. [Both co-arbitrators], [Claimant], [Respondent] and [the Chairman of the Tribunal] all commented on the challenges.

1.79. … the ICC Court made the following decisions:

- It accepted the challenge to [the co-arbitrator nominated by the Respondent].

- It rejected the challenge to [the co-arbitrator nominated by the Claimant].

- It invited [Respondent] to nominate a new co-arbitrator.

1.80. … [the co-arbitrator nominated by the Respondent] wrote to the ICC, stating that his removal was null and void and did not affect his continuation as a member of the Tribunal.

1.81. [Respondent] did not nominate a new co-arbitrator. Following [Respondent]'s refusal to nominate an arbitrator in replacement of [the arbitrator it originally nominated], the Court decided not to follow the original nominating process and to directly appoint [another arbitrator] pursuant to Article 12(4) of the Rules. …

The Witness Hearing

1.82. … the Tribunal, as reconstituted, set the hearing for … November 2012, for three to five days. The venue remained open.

1.83. … the Tribunal again consulted with the parties concerning the venue of the Hearing. It noted its members had been threatened personally with action in the courts of [State X] and that the [Respondent] had already taken action in those courts against potential witnesses. It stated that the Tribunal might take these threats of disruption into account in making its decision on the place of the Hearing. In addition to [the capital city of State X] as a venue, the Tribunal suggested the possibility of Paris, Cyprus, Istanbul or Dubai. It requested the parties to comment.

1.84. The Tribunal received no comments from [Respondent]. [Claimant] left the question of venue to the Tribunal's discretion. [Subsequently] the Tribunal picked Paris as the place of the Hearing.

1.85. Around the end of September, members of the Tribunal received a missive by diplomatic means indicating that [a court in State X] had … ordered that an award in this matter be rendered by October 30 2012.

1.86. On 4 October 2012, the ICC Court extended the time limit for rendering the Final Award in this matter until 31 January 2013.

1.87. On 16 October 2012, [Respondent] again protested the conduct of the arbitration and the removal of [the co-arbitrator it had nominated] from the Tribunal. It declared that it did not recognize the legitimacy of the Tribunal as formed at that time.

1.88. On 17 October 2012, the Tribunal said that, while it seemed that [Respondent] would not appear at the November Hearing, it was again invited to attend. It noted however that it would be unthinkable that a party, by refusing to appear, would thwart the proceedings. The Hearing, in any event, would commence [in] November 2012 in Paris. It noted that the matter had been fully briefed by both sides, and that the Tribunal had at its disposal the materials upon which to reach a reasoned decision.

1.89. On 30 October 2012, [Claimant] denied that the order of the [state court] was binding upon the Tribunal, stating its legal reasons. On 31 October 2012, [Respondent] disagreed, stating its legal reasons. On the request of the Tribunal … the lead … lawyer [from State X] representing [Claimant] confirmed that, in his opinion the interpretation placed by [Respondent] on the [state court] decision was incorrect as a matter of law.

1.90. On 30 October 2012, [Claimant] suggested that it would be unnecessary for its witnesses to attend the Hearing, and that a one-day Hearing with only [Claimant]'s written statement sufficient to present its case. The Tribunal immediately rejected this suggestion, stating that [Claimant] bore the burden of proof and that it must appear and present its witnesses to attempt to prove its case.

1.91. The Hearing was finally held [in] November 2012 [in] Paris.

………

1.94. [Respondent] did not appear at the Hearing.

1.95. Witnesses for [Claimant] appearing were …

1.96. The Tribunal also considered the Witness Statements (or Expert Reports) of …

1.97. The Court Reporters who prepared a verbatim record of the Hearing were ... Transcripts of the proceedings were supplied daily, including to [Respondent].

1.98. … [Claimant] presented a revised Request for Relief, adjusting downward its previous claim.

1.99. … at the end of the Hearing, the Chairman closed the proceedings pursuant to Article 22 of the Rules, which he read into the record. He noted that the Tribunal would await the parties' claims for costs, which would include [Claimant]'s submissions on costs occasioned by [Respondent]'s recourses to local courts, allegedly in breach of the arbitration agreement.

1.100. [Some two weeks later] [Claimant] presented its claim for costs. This included a claim for the costs of defending actions brought by [Respondent] in local courts. [Respondent] did not submit a claim for costs.

1.101. [The same day, the lawyers] representing [Respondent], emailed as follows:

I regret that I have to rain on this very private parade, and disrupt everybody's efforts to provide [Claimant] and all its little helpers with the highest return on its investment in this case.

… Today [a court in State X] issued a judgement terminating the arbitration proceedings pursuant to the [State X] Arbitration Law. This means that the dispute lies exclusively within the jurisdiction of the [State X] courts.

1.102. At the request of the Tribunal, [Respondent's counsel] subsequently sent his translation of the decision.

1.103. [Counsel] representing [Claimant] commented on the decision of the [state court]. He asserted that the decision of the [state court] was directly in contrast with previous decisions of [State X] Courts. He announced that [Claimant] would appeal the decision. He argued that, in any event, the ICC Rules apply to this arbitration which had given the Tribunal a different deadline for the production of an award. He urged the Tribunal to continue the arbitration and to issue its final award. In support of his position, he cited [State X] and foreign case law, and scholarly writings.

1.104. [Two months later, Claimant] wrote to the Tribunal commenting on the jurisdictional status of the decision of the [state court].

1.105. On the same day, [Respondent] replied, contesting [Claimant]'s legal analysis.

The Parties' Prayers for Relief

1.106. The Tribunal will rule in this Award on the parties' respective prayers for relief.

1.107. Claimant's most recent prayers for relief were submitted on … as follows:

[Claimant] requests an award against [Respondent] as follows:

a) Ordering [Respondent] to pay [Claimant]:

i) An outstanding amount of … in respect of the Pre-Opening Management Services Assistance Fee;

ii) Damages for lost profits in respect of the Hotel in an amount not less than …;

iii) Damages for lost profits in respect of Claimant's Network in an amount not less than …;

iv) An upwards adjustment on all foregoing sums to take account of the incidence of taxation on damages;

v) The costs and fees incurred in connection with this arbitration; AND

vi) Interest on all foregoing sums;

b) Declaring that [Respondent] has repudiated the Agreement; OR

c) Declaring that the Agreement is terminated; AND

d) Granting such further or alternative relief as the Tribunal may deem appropriate in the circumstances.

1.108. Respondent requested the Tribunal in its latest submission …:

In light of all the above, the Respondent requests that the Tribunal issue and award:

- Denying all the Claimant's requests for compensation.

- If quantum will be considered by the Tribunal - Accept the estimates prepared by [consultants] for the years 2009 to 2011 as the contractual agreed compensation and thus the cap on damages, and reduce the damages for the reasons set out in this Submission;

- Order that the Claimant shall bear alone all the costs of this arbitration including legal costs and accordingly cancel the partial award … and order the Claimant to reimburse the Respondent any amounts paid pursuant thereto.

- Grant the Respondent any other relief that the Tribunal deems just and equitable.

The Time Extensions for Rendering the Final Award

1.109. The time limit for rendering the Final Award was successively extended by the Court pursuant to Article 24 (2) of the Rules as follows ...

II. The management agreement

2.1. This dispute relates to a Management Agreement between the parties relating to the [Claimant], a five star hotel which was under construction … (hereinafter, sometimes, the "Hotel").

2.2. [Respondent] was the owner of the Hotel and is defined as the "Owner" in the Management Agreement. [Claimant] was to operate the Hotel and is defined as the "Operator".

2.3. The following provisions of the Management Agreement are relevant to this dispute.

2.4. Owner warrants and undertakes to complete the construction of the Hotel in such a manner as to have Operator Opening all Hotel facilities to the public not later than (9) nine months after the Effective Date. (Article 2.3 (e))

2.5. Owner warrants that for the Duration the Hotel will remain free from any encumbrances or other restrictions, which could in any way adversely affect the right or ability of Operator to manage and operate the Hotel and to make remittance of the Fees. Any Mortgage or other agreements entered into by Owner with respect to the Hotel must provide, either by means of a non-disturbance agreement agreed to in writing or otherwise, that this Agreement will continue in force in case of any change of possession or ownership…. of the… Hotel for any reason… (Article 3.1)

2.6. From the Effective Date until the Opening Date, Operator will in accordance with Schedule 2 to this Agreement:

a) Provide limited technical assistance to Owner in connection with the architectural design, construction engineering, interior design and furnishing of the Hotel as is appropriate to ensure that the [Claimant's] Standards are complied with and,

b) Provide Owner with pre-opening management assistance services necessary for the proper running and operation of the Hotel. (Article 4.1)

2.7. Basic Management Fee - In consideration of the management services provided by Operator hereunder, the Hotel will pay to Operator a Basic Management Fee as determined in the TERM SHEET. (Article 7.1)

2.8. Profit of Alcoholic Beverage Sales -In consideration of the alcoholic beverage sales and services provided by the Operator at the Hotel, Owner will pay to Operator the Profit of Alcoholic Beverage Sales as determined by the TERM SHEET. (Article 7.3)

2.9. Incentive Fee - Operator shall receive an Incentive Fee calculated in accordance with the formula determined in the TERM SHEET. (Article 7.5)

2.10. Disposition by Owner

In case Owner wishes to sell the Hotel during the Duration, or otherwise dispose of the Hotel, in accordance with Article 12.2 hereto ("Disposition") to any other interest person, firm or corporation ("Interested Party"), Owner shall advise Operator of the name and address of such Interested Party.

Any sale or other divestiture of any interest in Owner of more than 50% of the outstanding shares of or other interest in Owner shall be deemed a Disposition of the Hotel for purposes of this Agreement.

Owner may not conclude a Disposition without having first obtained from the Interested Party a written commitment in form and substance acceptable to Operator that such Interested Party accepts and will be bound by all provisions of this Agreement.

Operator may elect to terminate this Agreement effective as of the date of the consummation of a Disposition, in the event the Interested Party is itself in control of or is controlled by a party, which Operator, in its sole discretion, considers to be a competitor or if the Interested Party is not of a credit worthiness at least equal to the one of the Owner.

In the event this Agreement is terminated by Owner or an Interested Party in anticipation or as a result of a Disposition, Owner will be obligated to pay minimum liquidated damages to Operator corresponding to the sum of three (3) times the average of the Fees and the Marketing Cost Contribution earned by Operator during the last three (3) full Fiscal Years. In the event of a Disposition in the first three full Fiscal Years of operation, Operator will be entitled to compensation as liquidated damages based on the most recent performance estimates prepared by Operator before the event of Disposition. The minimum liquidated damages shall be payable without prejudice to any other rights of Operators provided to them by law, contract, in equity or otherwise, including the right to receive compensation of additional damages. (Article 12)

2.11. Duration

The initial term of this Agreement shall commence on the Effective Date and, unless sooner terminated as herein provided, shall continue to midnight of December 31, ten (10) years after the last day of the First Fiscal Year.

After the expiration of the initial term as provided in Article 17.1, this Agreement shall continue for successive extensions of five (5) years, unless terminated by Owner or Operator by notice of termination of not less than twelve (12) months prior to the expiration of the initial term or any extension thereof. (Article 17)

2.12. Relevant provisions of the TERM SHEET, incorporated in the Management Agreement, set forth therein and made a part thereof, are the following.

2.13. 4. The Pre-opening Management Services Assistance fee…shall be the lump sum of …

5. The Fees are determined as follows:

a) The Basic Management Fee shall be one and one half (1.5) percent of Gross Revenue;

b) The Profit of Alcoholic Beverages Sales shall be one half (0.5) per cent of Gross Revenue;

c) The Royalty payable pursuant to the trademark license in accordance with Article 10 of this Agreement shall be one percent (1%) of Gross Revenue.

d) The Incentive Fee shall be calculated as a percentage of the Gross Operating Profit as follows:

III. The facts

3.1. The relevant facts in this matter are largely undisputed, and to the extent that disputes exist, most such disputes are not relevant to the final result.³ The Tribunal, after carefully considering the evidence, finds that the following is what occurred.

3.2. [State X] is a desirable and (before [recent unrest]) rapidly growing tourist destination. [Claimant] is an active, successful upscale hotel operator which has been active in [State X] for over thirty years. In 2011, it had seven hotels and five cruise ships in [State X]. However, following the non-renewal of a Management Agreement for an existing hotel in [a resort in State X], [Claimant] was without a hotel in that important tourist destination.

3.3. [Respondent] is part of an important … industrial conglomerate [in State X] controlled by [its Chairman]. In addition to being a leading industrialist, [Respondent's Chairman] was an influential politician, with close ties to [a political party] and the [State X] government. …

3.4. In 2007, [Respondent] had two unfinished hotels in the … region.

3.5. Accordingly, [Claimant] and [Respondent] entered into two Management Agreements for the two hotels. This dispute relates to the Management Agreement for [Hotel 1]. However, as will be seen from witness testimony, disputes involving payments allegedly due to [Claimant] under a management agreement for the other hotel, [Hotel 2], also coloured discussions concerning disputes involving [Hotel 1].

3.6. The Management Agreement was signed [in] June 2007, for [Respondent] by [its Chairman], for [Claimant's parent company] by [its] President and CEO and for [Claimant] by [its] Senior Vice President …). [Claimant's parent company] signed the Agreement as guarantor.

3.7. The Management Agreement is essentially divided into two parts. The first part covers the management services to be provided by [Claimant] to [Respondent] during the period prior to the opening of the Hotel. The second part covers the services [Claimant] agreed to provide to [Respondent] after the hotel opened.

3.8. In the pre-opening period, the services to be provided by [Claimant] were limited. They were intended to ensure the implementation of [Claimant's] standards and procedures in all areas of the project, including those related to the architectural design, construction, engineering, interior design and finishing of the hotel and also quality assurance services, safety, environmental protections, administration, accounting and marketing. [Claimant]'s Services in the pre-opening period therefore included, for example, reviewing plans, establishing a concept for all areas of the project, and liaising with the project manager, architect, interior designer and other professionals to be employed by [Respondent].

3.9. For the pre-opening services, [Claimant] was to be paid a fixed fee of ...

3.10. The services to be provided under the Management Agreement by [Claimant] in the pre-opening phase are similar to those provided for in many hotel management agreements. The owner builds a hotel with its own contractors, architects, interior designers etc. and the management company provides various consulting services during that pre-opening phase of the project in order to ensure implementation of its standards and procedures for operating the hotel.

3.11. The Management Agreement reflects the hotel industry standard. [Claimant]'s obligations are listed in Articles 4, 5 and 6 of the Management Agreement, whilst [Respondent]'s responsibilities are stated under Articles 2 and 3 of the Management Agreement. According to these provisions, [Claimant] was not required to act as a project manager for the construction works. This was [Respondent]'s responsibility.

3.12. In the Management Agreement, [Respondent] undertook to complete construction of the Hotel so that [Claimant] could open all Hotel facilities to the public not later than nine months after signature of the Agreement ... [Respondent] should therefore have completed the Hotel by [the end of] March 2008. This did not occur.

3.13. In May 2008 there was a simulated temporary opening of part of the Hotel so that [Respondent] could obtain an operating licence and corresponding tax exemption. However, the Tribunal finds that this was not an opening of the Hotel as contemplated under the Management Agreement. It never received guests at that time and closed a few days later to permit completion of construction …

3.14. In fact, no evidence has been presented to the Tribunal that construction of the Hotel was ever completed.

The Sale of the Hotel

3.15. In around September or October 2008, rumours reached [Claimant] that [Respondent] was to sell the Hotel.

3.16. [Respondent's Chairman] told [Claimant's General Manager] in the middle of October 2008 that he was considering selling the Hotel but had not yet signed with a buyer. He told [Claimant's General Manager] that he would involve [Claimant]. This conversation is recorded in an email from [Claimant's General Manager] to [Claimant's Senior Vice-President].

Mr [A] did answer my call on Thursday and he was in Paris. He did confirm he is considering the sales of [the Hotel] but he did not sign yet with the buyer. He mentioned he will be back in [State X] Sunday night and we will meet … on Monday or Tuesday. He did mention to me that he will involve and discuss with us.

3.17. On [the same day] [Claimant's General Manager] sent a letter to [Respondent's Chairman] referring to the rumoured decision by [Respondent's Chairman] to sell the Hotel stating:

I also would like to discuss the ramifications of your decision as to the potential sale of [the Hotel] and to reach an understanding as to the rights of each party. We do value your partnership and look forward to a continued successful business relationship.

3.18. [Claimant] asserts that [the following month] [the Director of Projects of] [Respondent] casually mentioned to [Claimant's General Manager] that the Hotel has been sold to a certain … who has since taken possession of the property. When [Claimant's general manager] enquired about the Agreement, [Respondent's Director of Projects] explained that the new owner was not interested in having [Claimant] manage the property. The next day, [Claimant's General Manager] confirmed this conversation in an email to [Claimant's Senior Vice-President] …

3.19. In that same email [Claimant's General Manager] went on to say:

As you may know, a few weeks ago the owner had the intention to sell but was not sure and about 3-4 weeks ago over dinner I cautioned him to consider the contract terms before making any decisions, but unfortunately, he proceeded without our involvement and he is in clear breach of the contract. The owner also being a power [ful] [party] official has shared a comment over the dinner that if he sold without the management agreement he will not pay the penalty.

3.20. [The following month] [Claimant's Senior Vice-President] wrote to [Respondent's Chairman] in relation to the rumoured sale of the Hotel. He stated:

It was brought to our attention that a disposition of the [Hotel] has been completed during the past few weeks. If indeed this is the case, we appreciate your confirmation of such matter in order to plan accordingly.

As your trusted business partner, in good will and in reference to our Management Agreement (Article 12), we would like to arrange a meeting to discuss this matter in more detail to ensure a smooth transition and the continuation of our strong business relationship in other ventures.

3.21. A meeting took place … attended by [Claimant's Vice-President Finance and Controlling] and [Claimant's Senior Vice-President] and [Respondent's Chairman] and his wife … at [Respondent's Chairman]'s villa … At this meeting, [Respondent's Chairman] informed [Claimant] that [Respondent] had recently sold the Hotel to a third-party purchaser. [Respondent's Chairman] also informed [Claimant] that the purchaser did not propose to acknowledge [Claimant]'s management rights in the Hotel. [Respondent's Chairman] did not disclose the identity of the purchaser.

3.22. [Respondent] confirms in its Answer … that it found a buyer for the Hotel and that a sale agreement had been concluded.

3.23. The Tribunal finds that such a sale by [Respondent] to a third party without previously notifying [Claimant] and ensuring its ongoing management rights, and indeed, [Respondent]'s failure to complete construction of the Hotel on time would constitute breaches of the Management Agreement, unless [Respondent] had a legal excuse. While [Respondent] puts forward allegations of [Claimant]'s management disorganization and lack of support in the construction project, such allegations are unproved, and more important, of scant relevance to [Respondent]'s alleged breaches.

3.24. Rather [Respondent] relies principally on a single argument. It contends that [Claimant] lost interest in the Hotel project, abandoned it, and encouraged [Respondent's Chairman] to sell the Hotel. [Respondent] says that [Claimant] then agreed not to put forward any claim against [Respondent] as a result …

3.25. We will examine [Claimant]'s alleged abandonment and release of claim in detail.

3.26. [Claimant's General Manager] was resident in [the locality] during the events in question to attend to [Claimant]'s responsibilities in respect of the Hotel and of [Hotel 2]. He testified concerning [Claimant]'s extensive marketing efforts to introduce the Hotel to the tourism industry, including attendance at various trade shows and direct mailings and brochures. He denies that [Claimant] was not interested in the Hotel. "We continued to market and advertise the project until we were told that the [Hotel] had been sold." …

3.27. He also testified concerning his regular meetings with [Respondent's] representatives concerning issues of decoration and organization of the Hotel.

3.28. [Respondent] asserts that [Claimant's General Manager] urged [Respondent's Chairman] to sell the Hotel. [Claimant's General Manager] denies this. He states:

During a conversation sometime in August or September 2008, [Respondent's Chairman] asked me what I thought about selling one of the two hotel properties. I gave him my personal opinion that, if he wanted to sell one of the two hotels, he should get rid of [Hotel 1]. I told him that [Hotel 1] was a poorly finished property where design and construction works had not advanced much and that it was more difficult to manage, because it was situated high above the sea level and not all too close to the beach, whereas he had done a much better job on [Hotel 2] which turned out much more beautiful. To be sure, I gave him this opinion as a purely personal opinion in a casual discussion and not as [Claimant]'s representative. I did not encourage him to sell the property without abiding by the terms of the Management Agreement - in fact, I did not encourage him to sell the property at all.

I have been informed that [Respondent] has stated, "The idea of disposing of the property (not as an operating hotel) was communicated in [Claimant's] local management in [the resort] before the sale and they advised the [Respondent] Group to proceed with the sale." This is not correct, and I was just sharing a personal view in a friendly conversation with [Respondent's Chairman] who asked for my opinion, not [Claimant]'s opinion. I basically told him that, if he wanted to sell one of the two properties, he should sell the one which is in a bad condition. Also, I would not have expected [Respondent's Chairman] not to abide by the terms of the Management Agreement when selling the hotel.

I have also been told that [Respondent] has stated, "the local manager for [Claimant], [Claimant's General Manager], actually encouraged [Respondent] to go ahead and sell the property". Again this is incorrect, I did not encourage [Respondent's Chairman].⁴

… Meeting [in] January 2009

3.29. … a meeting was held in [the capital city of State X]. It was attended by [the Vice-President Finance and Controlling] and [the Senior Vice-President] of [Claimant] and by [Respondent's Chairman] and his wife … on behalf of [Respondent]. [Respondent's Chairman] informed [Claimant] that he had sold the Hotel to an undisclosed third-party and that the purchaser did not intend to employ [Claimant] as manager under the Management Agreement.

3.30. The parties otherwise dispute what occurred at the meeting.

3.31. [Respondent's Chairman] testifies that [Claimant's Senior Vice-President] stated that [Claimant] confirmed that it had no interest in the Hotel, that it asked that the Management Agreement be terminated and that he stated that [Claimant] would send [Respondent] a letter of termination agreeing that neither party should have any liability in respect thereof.⁵

3.32. [Claimant's Vice-President Finance and Controlling] denies that [Claimant] ever indicated that it abandoned the hotel. Rather, [Claimant's Senior Vice-President] said that they would have to review the Management Agreement carefully to determine the compensation due to [Claimant] as a result of the sale under those circumstances.⁶

3.33. [Three months later, the lawyers] acting for [Claimant], wrote to [Respondent] stating that it was in breach of the Management Agreement, and demanding compensation.

3.34. The parties tried to resolve the dispute (and, at the same time, another dispute regarding monies allegedly payable to [Claimant] under the management agreement for [Hotel 2].) [Respondent] suggested that [Claimant] consider managing … another property it owned. [Claimant] said it would consider the proposal.

The [subsequent] Meeting

3.35. … a further meeting was held to resolve the dispute. In attendance for [Respondent] were [Respondent's Chairman and his wife] (and for a day, [another person]); for [Claimant] [its Senior Vice-President, its Vice-President Finance and Controlling, and its Vice-President of Technical Services and Projects].

3.36. [Claimant's Vice-President of Technical Services and Projects] testified at the Hearing as follows:

Q. What was the purpose of the meeting?

[V-P Technical Services & Projects:] The purpose of that meeting, as far as I remember, it was two things. Number one, we were requesting him to pay his duty [in respect of [Hotel 2]] and number two, we talked about the compensation for the sale of the [Hotel] project.

Q. What was stated at that meeting about the [Hotel 1] project?

A. Sorry, can you repeat?

Q. What was said at that meeting about the [Hotel 1] project?

A. We mentioned to him that there is a rumour that the hotel has been sold and we had never been informed. We have no idea, and as per the contract, we should be consulted first and we should be informed officially. So far he confirmed that he had sold the hotel, and we mentioned as per the contract we have to negotiate the compensation, and then he blew up shouting, screaming; he did everything, I mean he even shouted at his wife in this meeting.

Q. Can you remember what was said?

A. He said, "I am not paying anything. I can give you compensation, a piece of land ... I am …, I am well known, I don't pay any money. The first thing you have to do, you have to - in order for me to pay this money with the other money, the [amount] [for [Hotel 2]], you have to forget the [Hotel 1] compensation. If you don't do this, forget it. I won't pay anything."

So it was a very threatening meeting from his side and then he threw the papers, as far as I remember, as he left.

Q. It's been said by [Respondent] that [Claimant] abandoned [Hotel 1]. Could you comment on that please?

A. This is very untrue.⁷

3.37. [Claimant's Vice-President Finance and Controlling]'s testimony concerning [these] meetings is more comprehensive but to the same effect. …

3.38. At the Witness Hearing, [Claimant's Vice-President Finance and Controlling]'s description of the meetings was even more vivid. …

IV. Analysis

4.1. In view of the parties' respective submissions, the Tribunal finds that there can be no doubt that [Respondent] materially breached at least three key provisions of the Management Agreement.

- It failed to complete the construction of the Hotel within nine months of the Effective Date … (Article 2.3(e) of the Management Agreement.)

- It sold the Hotel without informing [Claimant] and without obtaining the written commitment of the buyer to accept and be bound by the Management Agreement. (Article 12.3 of the Management Agreement.)

- It failed to keep the Hotel free from encumbrances and restrictions adversely affecting the right or ability of [Claimant] to manage and operate the Hotel. (Article 3.1 of the Management Agreement.)

4.2. [Respondent]'s legal arguments are weak and ultimately unavailing.

4.3. [Respondent]'s principal (indeed, sole) argument is that [Claimant] abandoned the Hotel project. There is no evidence to support this contention but the testimony of [Respondent's Chairman]. It is convincingly refuted by the testimony of [Claimant's Vice-President Finance and Controlling, Claimant's Vice-President of Technical Services and Projects, and Claimant's General Manager].

4.4. Moreover, the evidence shows that up to the time [Respondent] sold the Hotel, [Claimant] continued to support the project with marketing efforts and with advice to [Respondent] …

4.5. Article 4.1 of the Management Agreement makes clear that [Claimant]'s role in the pre-opening phase of the Hotel project was limited to giving advice and limited services for the running of the Hotel. It was not responsible for the management of its construction. Rather, [Respondent] was responsible for building the Hotel by a certain date to be turned over to [Claimant] to manage. [Respondent] failed to do so.

4.6. [Respondent] attempts to stretch a casual conversation between [Respondent's Chairman] and [Claimant's General Manager] concerning a possible sale of the hotel into an agreement that [Respondent] could sell the Hotel without transferring its obligations under the Management Agreement to the new buyer. The evidence fails to support this unlikely contention.

4.7. [Respondent] then argues that [Claimant's Senior Vice-President], at a meeting on …, on behalf of [Claimant], agreed to send a written acknowledgement to [Respondent] that it would not hold [Respondent] liable for its breach in selling the Hotel without protecting [Claimant]'s rights to continue management.

4.8. This contention is unsubstantiated by any documentary evidence. It is moreover disputed by [Claimant's Vice-President Finance and Controlling], a participant at the meeting.⁸ This contention is also highly implausible. It would not have been within the authority of [Claimant's Vice-President Finance and Controlling] or [its Senior Vice-President] to do so, as line employees of [Claimant]. Such decision would require approval of the Board of Directors of [Claimant's parent company].⁹ Finally, it is simply not credible that [Claimant], a large international company, would simply relinquish valuable rights in such a casual fashion as [Respondent's Chairman] claims.

4.9. In fact, it appears that if either party abandoned the project, it was [Respondent]. It failed to implement a viable construction project, to hire a competent construction project manager, to engage an experienced decorator, and, in general, to do the necessary to complete construction. Finally, tiring of the project, [Respondent] sold the unfinished Hotel to a third party without assuring the rights of the Operator with the new owner.

4.10. [Respondent] also unsuccessfully asserts the principle of exception non adimpleti contractus, a concept enshrined in [the State X] Civil Code. This provides:

In bilateral contracts, when reciprocal obligations are due, either contracting party may withhold performance if the other fails to perform.

4.11. However, [Respondent] has failed to prove that [Claimant] did not perform its obligations under the Agreement and [the above provision of the Civil Code] is therefore irrelevant. Moreover, even if it were relevant, the Tribunal finds that [Respondent] could still not rely on [that provision], because its twin conditions of application are not fulfilled. First, obligations which are not performed must correspond with each other; second, the obligations must be required to be performed simultaneously. The classic example is the contract for sale of goods, where, if one party fails to tender the purchase price, the other may refuse to transfer title to the goods. In the present case, the obligation on [Claimant] to perform services in the pre-opening phase does not correspond, nor was it to be performed simultaneously with the obligation on [Respondent] to complete the construction of the Hotel and/or to ensure that a prospective purchaser will take on the Management Agreement.

4.12. Moreover, even if it applied and its conditions were fulfilled, the exception which merely entitles a party to suspend performance pending correlative action, would not, by itself justify [Respondent] in definitively terminating the Agreement, which is what [Respondent] did by selling the Hotel with neither notice to [Claimant] nor signature of non-disturbance undertakings with the purchaser.

4.13. These legal arguments, weak and unconvincing as they may be, appear to be ex post facto excuses concocted by [Respondent] and its legal advisers long after the breaches.

4.14. Fundamentally, at the time of its breaches of the Management Agreement, [Respondent] seems not to have been concerned with finding any legal justification for doing as it did. It appears to have been confident that with [Respondent's Chairman]'s political power, it could act with impunity to such inconveniences as signed contracts and legal obligations. It acted as if it were above the law.

4.15. The Tribunal finds that [Claimant] has succeeded in satisfying its burden of proof. [Respondent] materially breached its obligations under the Management Agreement.

Action by the [state court]

4.16. However, before turning to the question of damages, we must first deal with an important, ancillary matter.

4.17. As outlined above, [Respondent] has often, during the course of this arbitration, attempted to derail it by taking obstructive action before the local courts contrary to the ICC Rules. We will deal with the costs of some of these attempts in a later section of this Award.

4.18. However, in rendering this Award itself, the Tribunal has been forced to face one such conflict caused by the decision of the [state court] described in Paragraph 1.101 of this Award, and by the decisions of the ICC Court described in Paragraph 1.103 hereof.

4.19. For advice on how to proceed in the face of this conflict, the Tribunal asked two leading … lawyers [from State X], [the lawyer] representing [Claimant] and [the lawyer] representing [Respondent]. Their views concerning our legal duty differed completely.

4.20. By way of background [State X court 1] dismissed [Claimant]'s challenge to the Order of [that court] ("Termination Decision"), which fixed 30 October 2012 as the deadline for rendering the Final Award as per [State X law].

4.21. … [Claimant] submitted to [State X court 2] an objection to the execution of the Termination Decision of the [State X court 1].

4.22. The translated copy of the Termination Decision by [State X court 1] provided by [Respondent] states that:

With respect to the complaint on the merits and the outlined reasons thereof, this complaint is groundless and deniable due to the fact that nothing could be changed whether the court has applied Article 24/1 of the ICC Rules or [the relevant provision of State X law] regarding extension or non-extension of the Arbitration term. Moreover, it is clear from documents that the Complainant submitted [its petition] to the present Court, claiming that an order be issued ruling that the arbitration proceedings are to be resumed up to 21/10/2012 for issuance of the arbitral award by the ICC Court reviewing the arbitration dispute. In this respect, resorting to the present court represents a declaration by the ICC Court of its approval to apply the provisions of [State X law] with respect to the arbitration proceedings, the issuance of an arbitral award, the terms of arbitration and the present Court's authority to undertake the procedures believed appropriate. This is in addition to the fact that the Arbitration takes place inside [State X], and thus the present Court has jurisdiction over reviewing the Complaint and applying the provisions of the aforementioned Arbitration law.

It has been established that [State X] Legislation … has left the matter of scheduling a date for issuance of an arbitration award open to the management of the disputing parties, i.e., the disputing party's management is assigned to schedule the commencement and expiry dates of arbitration thus denying any legal mandatory rules to this effect. The arbitration tribunal or the arbitration court is accordingly required to consider the expiry date scheduled, unless all the disputing parties agree to an extension thereof. Should the arbitrating parties fail to agree on certain extension, after which the arbitral award is issued or if their arbitration agreement is found to be null and void, then the date is to be scheduled by operation of law.

Whereas, these extension have exceeded the legally prescribed period provided for in both the ICC Rules and the [State X] Arbitration Law and these extensions were not consented by the two disputing parties, therefore the complained-against decision is legally and factually grounded and is thus worthy of acceptance. Accordingly, the claims that the complained-against decision is in violation of Law, that this decision should be adjudicated null and void and that a judgment is to be rendered ruling for the requests as amended by the "requests amendment writ", are all not in place and worthy of rejection.

In light of the above, the present court hereby rules for termination of the arbitration proceedings in Arbitration Case No. 17185/FM/JHN which is reviewed by the ICC International Court of Arbitration.

4.23. [Claimant] objects to the applicability of the [State X] law on Arbitration in regard to extensions of time for rendering the final award. It argues that the Tribunal is entitled to and should proceed with the arbitration until the rendering of a Final Award for the reasons set forth below.

4.24. First, [Claimant] submits that the Parties agreed to the ICC Rules, which allows this Tribunal to proceed with the arbitration and the rendering of the Final Award in such circumstances. [Claimant] argues that "the Arbitral Tribunal is entitled and required to continue with the arbitration and to issue its final award. There is ample doctrinal support for the proposition that a tribunal may do so in the circumstances."¹⁰

4.25. Second, [Claimant] submits that [State X court 1's] Termination Decision contradicts a previous decision by another division of the same court … on an annulment request regarding the Partial Award … ("Annulment Decision"). According to [Claimant], the Annulment Decision … denied the applicability of the [State X] Law on Arbitration in the present proceedings and, as such, denied [State X] courts' jurisdiction on any form of judicial review on the conduct or outcome of this arbitration …

4.26. Third, [Claimant] relies on the judgment [of the supreme court of State X], which held, according to Claimant, that [the relevant provision of the State X] Law on Arbitration "does not lay down a mandatory norm, and that the lower court had in fact erred in terminating the subject arbitrations, when it should have instead deferred to the authority vested in the arbitral tribunals by the [administering institution's rules] to extend the time-limit for rendering their awards" …

4.27. [Claimant] further adds that the objection that it raised before [State X court 2] to the execution of the Termination Decision automatically stays enforcement thereof …

4.28. [Respondent], in turn, claims that [State X court 1's] Termination Decision is immediately binding¹¹ on the Parties and disposes of the matter definitively for the following reasons.

4.29. First, [Respondent] argues that the seat of this arbitration, namely [the capital city of State X], triggers the application of [the relevant provision of the State X] Law on Arbitration,¹² and that [it] is a mandatory provision that prevails over the ICC Rules.¹³

4.30. Second, [Respondent] claims that the Annulment Decision … is distinguishable from the Termination Decision as the Annulment Decision dealt with the issue of nullity as it relates to partial awards while the Termination Decision addressed the mandatory provisions of terminating proceedings. According to [Respondent], [State X court 1] decided that the [State X] Law on Arbitration did not apply as to the annulment procedure because said provision does not apply to partial awards "that do not rule upon the 'subject matter' of the dispute or that do not 'end the arbitral dispute'".¹⁴

4.31. Third, with respect to the holding in the [above-mentioned supreme court] case, [Respondent] argues that it is "quite distinguishable".¹⁵ This because, it argues, the decision "dealt with different arbitration rules with no specified time limits".¹⁶ [Respondent] adds, without referring to any specific submission, that [Claimant] requested an extension of the time limit under [the relevant provision of the State X] Law on Arbitration which is a "clear concession and confirmation by Claimant of the applicability of [the provision] to the ICC Rules".¹⁷

4.32. As to [Claimant]'s application before [State X court 2], [Respondent] argues that the "so called 'objection to enforcement' has no application to judgments that by provision of law are automatically enforceable. There are no enforcement procedures to terminate an arbitration (the police will not raid the arbitration premises and stop proceedings by force). The judgment of [State X court 1 ] is by operation of law automatically enforced, and accordingly its legal effects are not suspended by any 'contestation' or 'objection' to enforcement, which can only stop enforcement of judgments that require enforcement procedures (e.g. vacating premises, attaching funds etc.)."¹⁸

4.33. The Tribunal, upon consideration of the Parties' arguments, has decided to proceed with the arbitration and to render this Final Award for the following reasons.

4.34. It is undisputed that the Parties entered into the Management Agreement, which provides in its Article 20 that the Parties may submit any dispute for "final settlement by arbitration under the Rules of Conciliation and Arbitration of the International Chamber of Commerce ...". The Parties have moreover confirmed the application of the ICC Rules by their execution of the Terms of Reference and by way of "Procedural Order No. 1 by Consent" providing for the application of the ICC Rules. Therefore, the Parties have willingly consented to arbitrate any dispute under the auspices of the ICC in accordance with the ICC Rules. As [State X court 1] in the Annulment Decision puts it: "the procedural rules set forth in the ICC regulations are the ones applicable to the arbitration proceedings, after having been expressly endorsed by both parties in a way that makes these rules and the procedural provisions they contain a part of the arbitration agreement itself, as long as the parties did not agree to other procedural rules".

4.35. It is simply not enough for [Respondent] to claim that the [State X] Law on Arbitration prevails over the ICC Rules on the ground that the [State X] Law on Arbitration provides "mandatory provisions of the law governing arbitrations in the jurisdiction of the seat of arbitration".¹⁹ Nothing indicates that the Parties' agreement on [the capital city of State X] as the place of arbitration would have the legal consequence of removing or taking precedence over the application of the ICC Rules in favour of the [State X] Law on Arbitration to govern the conduct of the proceedings, let alone on this very question of extensions of time and the ultimate deadline for the rendering of the Final Award.

4.36. To the contrary, Article 15 of the ICC Rules provides that "[t]he proceedings before the Arbitral Tribunal shall be governed by these Rules and, where these Rules are silent, by any rules which the parties or, failing them, the Arbitral Tribunal may settle on, whether or not reference is thereby made to the rules of procedure of a national law to be applied to the arbitration". And the ICC Rules are not silent on the issue of the time limit for rendering the final award. Article 24(2) of the ICC Rules provides, in relation to the time limit for rendering the final award, that "[t]he Court may extend this time limit pursuant to a reasoned request from the Arbitral Tribunal or on its own initiative if it decides it is necessary to do so".

4.37. Moreover, application of the ICC Rules, including the question of extensions of time for the rendering of awards, seems to be in conformity with [the relevant provision] of the [State X] Law on Arbitration. This is because [that provision] sets a default deadline for the rendering of the award in the event the Parties have not agreed otherwise. Yet, in the case at hand, the Parties have precisely agreed otherwise by referring to the ICC Rules, which contains provisions on the question of extension of time and deadline for the rendering of the Final Award.

4.38. This was in fact confirmed by the [supreme court] decision holding that the "[State X] legislator thought it is proper not to determine the time frame required to issue the comprehensive dispute-settling arbitration award and left the matter to the will of Parties to decide on it at their discretion. Therefore, the legislator did not specify the timeframe required for issuing such award as an imperative procedural rule. Accordingly the rules mentioned under [the relevant provisions of the administering institution] shall be applicable to the proceedings of arbitration claims … that give the arbitral tribunal the authority to determine the timeframe required for issuing its award on both claims based on the circumstances of each claim and the requests made under each of them in a manner that does not prejudice the right of Parties to defence."²⁰

4.39. [Respondent]'s efforts to distinguish the [supreme court] case are unpersuasive. It does not matter whether the arbitration rules applicable in the [supreme court] case … did not provide for specific time limits. The question is whether the time limit set forth in [the relevant provision] of the [State X] Law on Arbitration is mandatory or rather a default rule only in the absence of the parties' agreement. And the Court responded to this question by clearly holding that parties' agreement would prevail and that the time limit in [the relevant provision] of the [State X] Law on Arbitration was a default rule only. Moreover, it does not matter, contrary to what [Respondent] claims, that there were no specific time limits in the underlying arbitration rules in the [supreme court] case. This is because, like the case at hand, there was an initial timetable for the rendering of the award, which was subject to extension, like the case at hand, as per the agreed-upon arbitration rules, namely by the Tribunal in accordance with [the relevant provisions of the administering institution], just like the deadline was extended in the case at hand by the Court pursuant to Article 24 of the ICC Rules.

4.40. As to [Respondent]'s further effort to distinguish [the supreme court case] on the ground that [Claimant] made a request for an extension of time under [the relevant provision] of the [State X] Law on Arbitration and that this is a "clear concession and confirmation by Claimant of the applicability of [that provision] to the ICC Rules", it is not substantiated by any reference to any documentary evidence where [Claimant] would have made such a request, let alone in a manner that would forego the application of the ICC Rules. This even more so as [that provision] of the [State X] Law on Arbitration does not entail waiver of the ICC Rules as the two norms are, as set forth above, compatible. Nothing on the record indicates that Claimant waived the agreed upon ICC Rules or relied on the default deadline of [the relevant provision] of the [State X] Law on Arbitration on this very question of extension of time.

4.41. The Tribunal holds that it is bound by the ICC Rules pursuant to which it has been constituted and to which the Parties have agreed. In these circumstances, the Tribunal cannot terminate these proceedings on the basis of the Termination Decision of [State X court 1], without violating the parties' agreement and its own mission. As Professor Lew puts it: [t]he explanation as to why the arbitrators can continue with an arbitration notwithstanding an order from a court is the fact that, fundamentally, the tribunal's authority comes from the parties' agreement to arbitrate".²¹

4.42. Based on the foregoing, the Tribunal denies [Respondent]'s request that this Tribunal terminate the proceedings on the basis of the Termination Decision and the fact that the Award has not been rendered within the 31 October 2012 date set by the Order of [State X court 1]. For the same reasons, it is irrelevant whether the Termination Decision has become enforceable or not. The Tribunal thus holds that, pursuant to the ICC Rules, it has to render a Final Award within the time limit fixed … by the ICC Court …

4.43. The Tribunal can now turn to the question of damages.

V. Damages

5.1. Having determined that [Respondent] breached the Management Agreement, we now turn to the question of damages to [Claimant] resulting from such breaches. In making such determination, the Tribunal has been assisted by reports from financial experts employed by each of the parties.

5.2. For [Claimant], three reports prepared by [its expert]:

- The First Report, dated …

- The Second Report, dated …

- The Third Report, dated …

[Claimant's expert] also testified at the Witness Hearing.

5.3. For [Respondent], two reports:

- A report by [Respondent's expert 1] dated …

- A report from [Respondent's expert 2], dated ...

5.4. In its Request for Arbitration, [Claimant] claimed total compensation of [amount] for four categories of loss.

- The loss of fees and royalties it would have earned under the Management Agreement.

- The loss it suffered, and continues to suffer, across its network of other properties in [State X] as a result of the loss of the Hotel.

- The loss of the advertising asset consisting of [Claimant] signage at the Hotel.

- The reputational loss resulting from the manner of the loss of the benefit of the Management Agreement.

5.5. In its Statement of Claim, based on calculations provided by [its expert], [Claimant] claimed a total of [amount], plus interest and arbitration costs.

This was comprised of:

[Claimant]'s losses including interest on past losses up to 31 December 2010 and after adjustment for the incidence of taxation on damages

5.6. As a result of [Claimant's expert]'s Third Report, [Claimant] realistically further reduced its claim, reflecting the continuing problems in the [State X] tourist industry. Its reduced claim follows:

[Claimant]'s losses including interest on past losses up to 31 March 2012 before adjustment for the incidence of taxation on damages

5.7. We will later examine this claim, and certain of its components, in greater detail. But first we deal with an assertion of [Respondent]'s which, if correct, would render all such calculations meaningless.

5.8. [Respondent] claims that Article 12.5 of the Management Agreements limits any [Claimant] claim for damages. It will be recalled that Article 12.5 states:

In the event this Agreement is terminated by Owner or an Interested Party in anticipation or as a result of a Disposition, Owner will be obligated to pay minimum liquidated damages to Operator corresponding to the sum of three (3) times the average of the Fees and the Marketing Cost Contribution earned by Operator during the last three (3) full Fiscal Years. In the event of a Disposition in the first three full Fiscal Years of operation, Operator will be entitled to compensation as liquidated damages based on the most performance estimates prepared by Operator before the event of Disposition. The minimum liquidated damages shall be payable without prejudice to any other rights of Operator provided to them by law contract, in equity or otherwise including the right to receive compensation of additional damages.

5.9. The plain meaning of Article 12.5 is that it sets a floor, not a ceiling, on the damages that [Claimant] can collect. [Claimant] is also entitled to "compensation of additional damages", which is what it now claims.

5.10. While this analysis of the actual language of Article 12.5 should be dispositive of the issue, we also deal with an additional argument put forward by [Respondent].

5.11. [Respondent] also asserts [a provision in State X legislation] which provides:

If the harm exceeds the amount of damages fixed by agreement, the creditor may not claim the additional amount unless he proves that the debtor has committed fraud or gross negligence.

5.12. In this case, however, the "amount of damages" is not "fixed by agreement". Article 12.5 provides that "minimum liquidated damages" are payable without prejudice to other damages to which the Operator may be entitled.

5.13. [State X] rules on the interpretation of contracts state that the intention of the parties prevails over their characterization of the transaction … It follows that, if, as in this case, the parties include in their agreement a reference to liquidated damages, but the provision in question displays the characteristics of a general damages clause, the objective interpretation is retained.

Analysis of [Claimant's expert]'s report

5.14. Having thus dealt with Article 12.5 and its inapplicability to the present situation, we will now address the thrust of [Claimant's expert]'s third report, and possible criticisms thereof.

5.15. The Management Agreement has a ten-year term, with the possibility of two five-year extensions. Based on its experience, [Claimant] assumes that the Management Agreement would be extended. This is, of course, uncertain. [Claimant's expert] deals with this uncertainty by discounting the probability of the first extension by 50% and the second extension by another 50%. This seems a reasonable approach to an uncertain probability.

5.16. The [report of Respondent's expert 2] criticizes [Claimant's expert]'s assumption of occupancy and rental rates for the Hotel, being based on results obtained from two other [Claimant] hotels, neither of which is in [the same resort]. However, the hotel results cited by [Respondent's expert 2] include hotels of a lower quality standard than the Five Star quality intended for the Hotel. On balance, [Claimant's expert]'s assumptions seem appropriately conservative. For example, he assumes that the occupancy rates of the Hotel will only equal those of [Claimant]'s other [similarly located] hotels in 2016, which again appears reasonable.

5.17. [Claimant's expert]'s projections' operating costs and of the date of opening of the Hotel are based on reasonable data and also appear satisfactory.

5.18. Thus the operating assumptions upon which [Claimant's expert] bases his expert report seem appropriate.

5.19. However, any projection of future revenue streams must be discounted by both the time value of money (a dollar received ten years from today is worth less than one received today) and by the risk that the money may not be received at all. [Claimant's expert] explains his approach to such discount as follows:

I analyse the Claimant's lost profits between past losses and futures losses by reference to 29 February 2012 (which is a convenient date). I discount the Claimant's future losses to a present value as at that date at a discount rate of 16.24%. I do this to take account of the time value of money and the risks associated with these amounts. I calculate the discount rate as the sum of four elements.

(1) the opportunity cost of capital of the Claimant's lost future profits, reflecting their relevant risks. I estimate this as 7.67%;

(2) a deduction of 0.15% to allow for the Claimant's increased capacity for debt finance and the future tax benefits of such finance;

(3) an additional premium to reflect the country risks surrounding the Claimant's lost future profits that arise by virtue of the fact that the Claimant's operations (the Hotel and the Claimant's Network) would have been, and are, located in [State X], being risks that are difficult to reflect explicitly in forecasts of the performance of the Hotel and the Claimant's Network. I estimate the appropriate country risk premium as 7.72%; and

(4) a further additional premium to reflect certain other risks (other than country risk) that are difficult to reflect explicitly in forecasts of the performance of the Hotel and the Claimant's Network. The Assessment of the premium necessarily involves subjective judgement. I have assessed it as 1.00%.²²

5.20. This is a classical (and in our view, generally sound) approach to an appropriate discount to future cash flows. However, the numbers derived are matters of judgment.

5.21. [Claimant's expert] explained that the country risk factor described in paragraph 3 is the difference between the interest payable on risk-free sovereign debt and that of the country in question, in this case, [State X]. Again, this is classic, financial analysis, with which the Tribunal finds no fault.

5.22. However, the Tribunal questions whether the total discount rate, 16.24%, adequately reflects the real risk of the projected future cash flow. Stated another way, is 1.00% provided for sufficient to reflect the political, economic, and security risk that characterizes [State X] today.

5.23. Accordingly, we asked [Claimant's expert] to produce the results of applying discount rates one, two, and three points higher than 16.24% - at 17.24%, 18.24% and 19.24%. [Claimant's expert], a consummate and highly independent professional, staunchly defended his choice of 16.24%, but he graciously and rapidly provided the Tribunal with the results it requested.

5.24. They are …

5.25. We turn now to the elements of loss to which such discount rates should be applied.

5.26. There can be no question that the claim for pre-opening management assistance fees (plus interest) is due and payable.

5.27. Similarly, we are satisfied that the computation of [Claimant]'s lost profits in respect of the Management Agreement for the Hotel is reasonable.

5.28. However, we are not convinced by the claim for lost profits in respect of [Claimant]'s network of other hotels in [State X]. The claim is too speculative for us to have confidence in the quantification of the impact of this consequence claimed by [Claimant]. Accordingly, we will disallow that claim.

5.29. On balance, and after considering the expert evidence before us, we are of the view that application of a discount rate of 18.24% correctly reflects the risks associated with [Claimant]'s claims for losses up to 31 March 2012 and after adjustment for the incidence of taxation on damages. According to [Claimant's expert]'s results, [Claimant]'s losses under a discount rate of 18.24% amount to [amount]. Having rejected the claim for lost profits in respect of [Claimant]'s network of other hotels in [State X] valued at [amount], we find that [Respondent] is liable to pay [Claimant] [amount] (plus interest and costs, to be subsequently dealt with in this Award.).

VI. Interest

6.1. [The relevant State X legislation] provides:

When the object of an obligation is the payment of a sum of money, the amount of which is known at the time the request is made, and the debtor is late in effecting payment, he is obliged to pay the creditor, as damages for delay interest at the rate of four per cent in civil matters and five per cent in commercial matters. Such interest shall run from the date of the judicial claim therefore …

6.2. This is clearly a commercial matter. Hence the applicable rate is five per cent.

6.3. [Claimant]'s claims already contain an element of interest up to 31 March 2012. We will order [Respondent] to pay [Claimant] interest at the rate of five (5) per cent per annum from 1 April 2012 on [the amount for which it is liable] until such amount is paid.

VII. Costs

7.1. Article 31.3 of the Rules states:

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.

7.2. This provision of the Rules gives arbitral tribunals total discretion in the allocation of the costs of proceedings between the parties. It is also customary in international arbitration to apply the rule "costs follow the event".²³ In other words the losing party shall pay the reasonable and foreseeable costs incurred by the prevailing party.

7.3. There can be no question that [Claimant] has prevailed in this arbitration. The question then becomes are the costs that it claims to have incurred reasonable, foreseeable, and in connection with this arbitration.

7.4. On [date], [Claimant] submitted its claim for costs. [Respondent] has made no comment thereon.

7.5. We will deal with [Claimant]'s claim under three headings:

- Its claim for costs as damages for breach of the Arbitration Agreement.

- Its claims for the costs of the arbitration.

- Its claims for the costs of a success fee with [its lawyers].

Damages for Breach of the Arbitration Agreement

7.6. It has been noted that [Respondent] instituted many proceedings in [State X] courts related to this arbitration. [Claimant] has listed them, its short-form legal arguments with respect to each, and its related cost claims as set forth in Annex B hereof.

7.7. Article 20 of the Management Agreement subjects "all questions and disputes arising out of this Agreement" to final settlement under the Rules. It is clear that [Respondent] has often ignored its undertaking.

7.8. Gary B. Born, a noted expert on International Arbitration law, has written:

An international arbitration agreement also has negative effects, which are almost precisely the mirror-image of its positive effects. That is, with regard to virtually all of the disputes that a party is obligated positively to resolve by arbitration, a comparable negative obligation exists forbidding litigation of such matters. (emphasis added)

7.9. [Claimant] asserts that by extensively resorting to local courts, [Respondent] has blatantly and voluntarily breached its obligations under the arbitration agreement to deal with all such disputes in arbitration proceedings. As a result, [Claimant] is entitled to damages.

7.10. Mr Born further notes:

Another means of enforcing the negative effects of an arbitration agreement is to award damages for breaches of the parties' undertaking in their agreement not to litigate disputes that have been submitted arbitration. (emphasis added)

7.11. This solution is considered to be "an appropriate supplementary means of enforcing arbitration agreements, by increasing the disincentives for such conduct"²⁴ and has been upheld in several jurisdictions.²⁵

7.12. Various contemporary judicial decisions in both the United States and England are cited by Mr Born as having either awarded damages for the breach of an arbitration agreement or indicated that the possibility for doing so existed. Similar cases exist in other jurisdictions.

7.13. [Claimant] claims its costs in defending the litigations in the amount of [amount].

7.14. [Respondent] has regularly attempted to derail these proceedings by instigating actions in local courts on issues that are within the jurisdiction of the Tribunal and of the ICC. The costs that [Claimant] has incurred in attempting to defend against these tactics are the result of [Respondent]'s breach of the Arbitration Agreement. With two exceptions, we find they are costs recoverable in this arbitration.

7.15. [Claimant] claims for costs incurred in defending three of its employees against claims of alleged forgery in respect of April 2007 final projections here and above just discussed. The claim is for legal fees of [amount]. It also claims for [amount] in respect of legal fees incurred in enforcing the final Partial Award ... While reasonable arguments can be made for awarding [Claimant], the Tribunal is uncertain that it is within the ambit of its authority to award [Claimant] these costs. Hence, it will deduct them.

Other Costs Claimed

7.16. In addition, [Claimant] claims:

1. [amount] for fees and disbursements paid to [its lawyers] (not including those incurred in respect of the ancillary … litigation described above.)

2. [amount] for amounts paid to the ICC in respect of the advance on costs. (As noted, above the Tribunal has already issued a Partial Award against [Respondent] in favour of [Claimant] in respect of [Respondent]'s share of the deposit that [Claimant] had to advance upon [Respondent]'s default.)

3. Expert fees and disbursements of [its expert] of [amount].

4. The costs of expenditure of management time in respect of preparation for and testimony at the hearing of [amount].

5. Hearing costs, including witness travel and accommodation costs, court reporters, and the cancellation costs for a hearing centre as the result of a cancelled hearing) [amount].

6. The possible amount of two success fees payable to [its lawyers]; one for 2% of the amount of this Award, and the other for 20% of any amount of the Award collected upon its enforcement.

7.17. This has been a costly proceeding, made more costly by the unavoidable disruptions occasioned by [political unrest in State X] and by the largely avoidable ones occasioned by [Respondent]'s disruptive tactics. It is regrettable when the costs of litigation equal around forty percent of the eventual recovery in respect of the principal claim the prevailing party. However, it should be remembered that this arbitration began with claims and counter-claims totalling nearly [amount], with that amount being whittled down over time by [Respondent]'s withdrawal of its counterclaim, and [Claimant]'s claim value dwindling as events in [State X] reduced its expectation of future profits.

7.18. The costs claimed by [Claimant] are the result of fees and expenses freely negotiated between [Claimant] and the lawyers and experts it employed, with no certainty of their ever being reimbursed. In other words, they are the result of market-based decisions of a highly sophisticated international company, presumably experienced in transnational litigation, which found them reasonable.

7.19. By and large, we also find them reasonable.

7.20. So, with two exceptions, and one reservation, the Tribunal accepts [Claimant]'s claims for costs.

7.21. The exceptions are:

- [Claimant]'s claim for the costs of its executive time; and

- [Claimant's lawyers'] success fees.

7.22. The reservation is in respect of the amounts paid by [Claimant] to the ICC as an advance on costs.

7.23. The costs of executive time, especially costs of those other than in-house counsel, is an issue about which there is no unanimity of views within the arbitration community.²⁶ In this case, where the costs are estimates, not based on time records and not the costs of in house counsel, it seems inappropriate to award them. Hence, [Claimant]'s claim for these costs will be denied.

7.24. Similarly, the success fees payable to [Claimant's lawyers] are, in the current situation, speculative. Their existence could not be reasonably foreseeable by [Respondent], and it should not be forced to bear their cost. Thus, [Claimant]'s claim for these costs will also be denied.

7.25. The Tribunal finds that the costs of the arbitration as fixed by the Court at … shall be borne by [Respondent] in its entirety.

7.26. In addition to the costs of the arbitration as fixed by the Court, the Tribunal will award [Claimant] the following in respect of its costs of the arbitration.

The table below summarises such additional costs as follows:

7.27. In its most recent prayers for relief …, [Claimant] for the first time requested interest on its costs and legal fees incurred in connection with this arbitration. The Arbitral Tribunal had allowed such updated prayers for relief following [Claimant]'s request during the hearing to amend the amount claimed downwards so to reflect the figures reached in [Claimant's expert]'s latest expert report. No other amendment to the prayers for relief was allowed by the Tribunal.²⁷ For this very reason, no interest on [Claimant]'s costs and legal fees will be awarded.

7.28. Finally, [Respondent] shall bear its own legal and other costs.

VIII. The award

8.1. The Tribunal hereby makes the following Award:

A. The Tribunal confirms its jurisdiction in the present arbitration (as found in Procedural Order No. 2) with respect to all claims and counterclaims amongst [Claimant] [Claimant's parent company] and [Respondent] arising out of the Management Agreement.

B. [Respondent] will pay [Claimant] forthwith the sum of [amount].

C. [Respondent] will pay [Claimant] forthwith [amount] in respect of the costs of the arbitration as determined by the ICC Court (subject to reduction by the amount of any payment made by [Respondent] pursuant to the Partial Award …).

D. [Respondent] will pay [Claimant] forthwith the following amounts in respect of the additional costs of this arbitration: ...

E. [Respondent] will pay [Claimant] interest at 5 per cent per annum on Item B commencing 1 April 2012 until full payment is made.

F. The Management Agreement is terminated.

G. [Respondent] is to bear its own legal costs.

H. All other requests and claims of either party are rejected.'

---

---

1
… [Claimant]'s parent company, also signed the Management Agreement.

---

2
Moreover, "Procedural Order No. 1 by Consent" … provides in section 10 that "[i]n principle, the venue of the Witness Hearing shall be in [the capital city of State X], at a place to be subsequently determined. Consideration will be given to other venues, such as Paris, upon motion of a party, if the circumstances warrant."

---

3
The exceptions, to which we will devote considerable attention herein, are the allegation by [Respondent] that [Claimant] voluntarily abandoned the Hotel project, and the events surrounding and occurring at a series of meetings between the parties ...

---

4
[Claimant's General Manager]'s first witness statement.

---

5
[Respondent's Chairman]'s first witness statement.

---

6
[Claimant's Vice-President Finance and Controlling]'s first witness statement.

---

7
Transcript, Day 1 ...

---

8
Transcript, Day 1 ...; [Claimant's Vice-President Finance and Controlling]'s first witness statement.

---

9
[President and CEO of Claimant's parent company's] first witness statement.

---

10
... In this regard, Claimant relies on the following sources: Julian Lew, "Anti-Suit Injunctions Issued by National Courts to Prevent Arbitration Proceedings", in Anti-Suit Injunctions in International Arbitration, IAI Series on International Arbitration No. 2 Emmanuel Gaillard ed., Juris Publishing, 2005 (Relying, for its part, in Salini Construttori S.p.A. v. The Federal Democratic Republic of Ethiopia, Addis Ababa Water and Sewerage Authority in 21 ASA Bull. 59 (2003) and 20(3) Mealy's IAR 11 (2005)); and Gary B. Born, "International Commercial Arbitration", Kluwer Law International 2009, 2923 - 2926.

---

11
[Respondent] relies on Article 251 of the Code of Civil Procedure.

---

12
Editor's note: This provision deals with the time frame within which an arbitral shall be rendered.

---

13
See [Respondent]'s letter…

---

14
Ibid.

---

15
See [Respondent]'s letter...

---

16
Ibid.

---

17
Ibid.

---

18
See [Respondent]'s email ...

---

19
See [Respondent]'s letter ...

---

20
Ibid.

---

21
Lew, supra note [10].

---

22
[Claimant's expert]'s third report.

---

23
Mauro Rubino-Sammartano, "Costs Awards in Arbitration", Journal of International Arbitration, Kluwer Law International 2011 Volume 28 Issue 2, p. 113; Stefan Michael Kröll, Loukas A. Mistelis et al. (eds), International Arbitration and International Commercial Law: Synergy, Convergence and Evolution, Kluwer Law International 201, p. 145; Michael Bühler, "Awarding Costs in International Commercial Arbitration: an Overview", ASA Bulletin, Kluwer Law International 2004 Volume 22 Issue 2, p. 250.

---

24
Gary B. Born, International Arbitration: Law and Practice, Kluwer Law International 2012, p. 66

---

25
José Rosell, "Arbitration Costs as Relief and/or Damages", Journal of International Arbitration, Kluwer Law International 2011 Volume 28 Issue 2 , pp. 123-124; Martin Illmer and Ingrid Naumann, "Anti-suit Injunctions in Support of Arbitration Agreements under the Brussels Regulation: A Comment on the Advocate General's Opinion in the West Tankers Reference by the House of Lords - Note - 4 September 2008 - European Court of Justice", ASA Bulletin, Kluwer Law International 2008 Volume 26 Issue 4, p. 825.

---

26
Jeff Waincymer , Procedure and Evidence in International Arbitration, Kluwer Law International 2012, pp. 1246-1251; Michael Bühler, "Awarding Costs in International Commercial Arbitration: an Overview", ASA Bulletin (Kluwer Law International 2004 Volume 22 Issue 2 ) pp. 274-276.

---

27
Transcript, Day 3 …

---