'1. Background

1.1. Introduction

1. Throughout these proceedings there have been one Claimant and one Respondent, as set out below …

2. The Claimant … is a … construction company specialized in sea and port infrastructure. Since 1997 it has been a member of [a] group of companies, which is one of [its country]'s leading construction, concession, environmental development and industrial groups.

3. The Respondent … is a … company engaged in the sale, design, construction and repair of vessels, machinery and equipment. [Respondent] is part of [a group], whose companies specialize in the design and construction of dredging equipment and custom-built vessels for various offshore purposes. [Respondent] frequently contracts for the supply of engineering packages for dredging vessels and appurtenances.

1.2. The dispute

4. The dispute between the Parties concerns a contract for the delivery of drawings and specific hardware for the construction of a split hull hopper vessel, entered into on 22 September 2005 (further: the Contract). The dispute is centred upon the designs and drawings, which according to the Claimant are defective, resulting in abnormal and extensive damage to … the vessel which was built following these drawings.

5. On 3 February 2010, the Claimant filed a request with ICC for arbitration relating to the above described dispute.

2. Procedure

2.1. Introduction

6. By letter of 4 February 2010, the Secretariat of the ICC International Court of Arbitration acknowledged receipt of the Request for Arbitration and initiated the necessary procedures noting the Claimant's request of 2 February 2010, and the Exhibit supplied with it, viz. a copy of the Contract.

7. On 24 February 2010, the Secretariat notified the Respondent of the Request for Arbitration and informed it that the appointment of a Sole Arbitrator had been proposed.

8. On 24 March 2010, the Respondent submitted its Answer and Counterclaim. The Respondent did not agree to a Sole Arbitrator, but proposed an Arbitral Tribunal consisting of three Arbitrators, one of whom should be thoroughly familiar with Dutch law and one of whom should be a specialist in the field of dredging. The entire claim was disputed, including the Claimant's right of action.

9. The matter subsequently proceeded as follows.

- On 31 March 2010, the Secretariat wrote to the Parties, acknowledging receipt of the Respondent's Answer and Counterclaim.

- On 9 April 2010, the Claimant requested the ICC International Court of Arbitration to proceed with the arbitration.

- On 19 April 2010 the Respondent recognized the Court's jurisdiction after having identified the proper legal entity to be involved in the arbitration.

- On 21 April 2010 the Secretariat wrote to the Parties, inviting the Claimant's further comments.

- On 27 April 2010, the Claimant acknowledged the Respondent's comments.

- On 30 April 2010, the Secretariat wrote to the Parties, inviting the Respondent's further comments.

- Also on 30 April 2010, the Claimant submitted a Reply to the Counterclaim, in which the Respondent's entire Counterclaim was disputed.

- On 4 May 2010 the Respondent acknowledged the jurisdiction of the ICC International Court of Arbitration.

- On 5 May 2010 the Secretariat informed the Parties that the matter would be submitted to the Court.

- On 28 May 2010 the Secretariat informed the Parties of the decision of the Court of 27 May 2010, that the matter would be submitted to a Sole Arbitrator. The advance on costs was set at [amount].

- On 14 June 2010, [a specialist in maritime law] accepted the appointment as Sole Arbitrator.

- On 18 June 2010, the Parties were informed of the decision of the Court of 17 June 2010, regarding the appointment of the Sole Arbitrator. The case file was sent to the Sole Arbitrator.

- On 2 July 2010, the Parties were informed that the case had been transferred to another ICC team.

- On 19 July 2010, the Secretariat confirmed receipt of the advance on costs.

2.2. The Terms of Reference

10. On 6 August 2010, the Sole Arbitrator forwarded to the Parties his draft of the Terms of Reference document and requested the Parties to respond and to comment by 12 August 2010. The Sole Arbitrator indicated his preference to have this document agreed and signed by correspondence in order to reduce costs.

11. By email of 8 August 2010, counsel for the Claimant replied that he could not contact his clients at such short notice during the holiday period. He proposed 30 August 2010 as the final date for comments on the draft Terms of Reference. On 12 August 2010, the Sole Arbitrator agreed, by email, to the proposed date. On the same day, counsel for the Respondent concurred, also by email.

12. Again on 12 August 2010, the ICC Secretariat suggested certain changes to the draft Terms of Reference and to the draft Provisional Timetable. On 13 August 2010, the ICC Secretariat informed the Sole Arbitrator that the deadline for submission of the Terms of Reference had been extended by the ICC Court to 31 October 2010.

13. On 11 October 2010, the Respondent submitted its comments on the draft Terms of Reference. On 15 October 2010, the Sole Arbitrator submitted to the Parties the final draft of the Terms of Reference (as defined in Article 18, § 1, ICC Rules of Arbitration 1998) and of the Provisional Procedural Timetable (as referred to in Article 18, § 4, ICC Rules of Arbitration 1998).

14. In the Terms of Reference, both the Claimant's and the Respondent's respective Claim and Counterclaim were explained and a brief summary of their arguments was given. The Sole Arbitrator did not, at that time, deem it useful to identify a list of issues to be determined, in view of the Parties' wide-ranging arguments.

15. The jurisdiction of the ICC International Court of Arbitration is based on Article 14, § 1 of the Contract, which provides:

All disputes arising in connection with this Agreement or breach thereof shall be finally settled by arbitration. Arbitration shall be conducted under the Rules of Conciliation and Arbitration of the International Chamber of Commerce by one or more arbitrators appointed in accordance with those Rules. Arbitration shall take place in Brussels, Belgium. The language shall be English.

Neither Party has challenged the validity of the arbitration clause in the Contract. Consequently the Sole Arbitrator has jurisdiction over the matter at hand.

16. As regards the applicable law, Article 14, § 2 of the Contract provides:

This Agreement shall be governed by the laws of the Kingdom of The Netherlands.

The Parties have agreed that the substantive law governing the contract is that of the Kingdom of The Netherlands (cf. the Claimant's Request for Arbitration, no. 17, and the Respondent's Answer, no. 9).

17. The proceedings are governed by the ICC Rules of Arbitration in force as of 1 January 1998. Where these rules are silent, such other rules govern as the parties, or, failing their agreement, the Sole Arbitrator may from time to time settle, after having heard the parties' point of view on the matter (Article 15 ICC Rules 1998). The place of arbitration is Brussels, Belgium.

18. The further course of the arbitral proceedings is described in the next paragraphs. A separate list of all submissions made and all exhibits tendered by both Parties is included in chapter 4.

2.3. The Provisional Timetable

19. Together with the Terms of Reference, the following Provisional Timetable was agreed upon …

20. On 7 December 2010, at the Respondent's request an extension of the time limit for the submission of their Second Submission by one month was granted. The remaining dates were adapted accordingly.

21. Following the production of new Exhibits by the Respondent, the Provisional Timetable was amended as follows:

22. The Respondent subsequently requested that the Hearing be postponed until after the summer holidays, to mid-September 2011.

2.4. The hearing …

23. The parties were duly summoned for the Hearing … which was entirely devoted to the parties' oral presentations regarding their expert evidence and their legal views on the case.

24. The following persons attended for the Claimant …

25. The following persons attended for the Respondent …

26. The Hearing was organized informally. In order to save costs no transcript was made, as neither of the Parties required this. All the witnesses were experts who gave their professional opinion, after which a discussion of their particular points of view generally ensued.

2.5. The procedure following the hearing

27. At the Hearing, the Sole Arbitrator requested the Parties to comment in more detail on certain issues, inter alia the Claimant's right of suit, which had been disputed by the Respondent from the very beginning of the arbitral proceedings.

28. The Parties agreed to the following Amended Provisional Timetable …

29. On 16 February 2012 a Procedural Order was issued, allowing the Claimant to file its Final Submissions on 17 February 2012, and correspondingly postponing the Respondent's date for filing its Final Submissions to 2 March 2012.

30. The Parties did not apply for an additional Hearing. The Sole Arbitrator did not appoint an independent expert.

31. On 18 June 2012, the proceedings were closed as per Article 22 (1) of the ICC Rules of Arbitration. On 25 July 2012, the proceedings were re-opened pursuant to Article 22 (1) of the Rules, inviting the Parties to submit their cost statements.

2.6. The time limit for the award

32. The deadline for rendering the Award would have expired on 18 May 2012. The deadline has been extended by the ICC International Court of Arbitration in accordance with Article 24 (2) of the ICC Rules of Arbitration, first, at its session of 5 April 2012, to 31 July 2012, and subsequently, at its session of 2 August 2012, to 28 September 2012.

3. Findings of fact

3.1. Introduction

33. First, the Sole Arbitrator sets out the relevant facts and his findings on the facts. The relevant documents were contained both in the Exhibits for the Claimant and in those for the Respondent. Reference is made to both where necessary. The method of numbering of the Exhibits is set out in chapter 4.

34. The dispute basically concerns structural damage to [the vessel], and the consequences thereof, in the amount of … (Claimant's Final Submissions, p. 20; Claimant's Exhibit II-16, … Expert Report, summary at p. 35). The amount is divided into three heads:

- repair costs: [amount]

- loss of profits: [amount]

- adjustment costs: [amount]

35. In May 2005, the Claimant contacted the Respondent with a query about the supply of an engineering package and specific hardware for a 1,000 m3 split hull hopper vessel.

36. On 22 September 2005, a contract was entered into by the Parties for the delivery of building drawings and plans for the construction of a split hull hopper vessel, later to be transformed into a hopper dredger. This ship was intended to work at the Claimant's site ...

37. The Contract price was [amount] ex works - The Netherlands.

38. The main characteristics of the vessel are described in the Brief Technical Specifications of a Twin Screw Split Hull Hopper Vessel.

39. According to the Claimant, the parties agreed that the vessel "should be suitable for loading, transporting and unloading heavy rocks and boulders etc. dumped in the vessel from considerable height".

40. According to the Respondent, the Technical Specification is clearly different: "capable to transport sand, silt, clay, gravel and in principal also rock, stones, stone-chipping etc. For rock transport a [Respondent-]type hopper lining is recommended, and can be provided against additional price. Hopper lining is not included in the deadweight specification" (Brief Technical Specification of a Twin Screw Split Hull Hopper Vessel, Claimant's Exhibit II-6).

41. The descriptions used by the Parties during the contract negotiations are set out in more detail in the next chapter, on the formation of the Contract.

42. The Claimant states that the Respondent, despite the name on the technical specifications, in fact designed a dredger vessel instead of a hopper vessel. The Respondent denies this and states that it designed exactly what was stipulated in the Contract and the Technical Specifications, namely a split hull hopper vessel, taking into account the information provided by the Claimant regarding the use of the vessel. According to the Respondent, the vessel has been designed for loads of sand and water, as well as for loads of rocks and sand, or rocks and stones or stone chippings. The stress calculations have been made taking into account the loads that were to be transported in the vessel's hold. If the vessel was built according to the drawings prepared by the Respondent, and if it was used and loaded in a manner not exceeding its agreed design criteria, it would be perfectly capable to transport rocks and sand.

43. The Claimant apparently informed the Respondent that it would be loading and transporting quarry run, consisting of rocks not heavier than 50 kilograms. These rocks would be loaded into the vessel from ashore by trucks. The dumping height would be between 3 and 4 metres. Heavier material than quarry run, i.e. bigger rocks, were to be loaded into the vessel by means of a crane or back digger.

44. In the Respondent's view, it had no reason to doubt the correctness of this information, and it consequently assumed that the weight of the rocks (not more than 50 kilograms) and the dumping height (between 3 and 4 metres), as indicated earlier, was accurate. The Respondent states that such figures are normal and that they would be expected in the circumstances described by the Claimant.

45. The Respondent claims that it applied a safety factor 10 with respect to the load specified by the Claimant. The design allows rocks of up to 500 kilograms being loaded into the vessel from 3 to 4 metres height.

46. Design, calculations and drawings were under supervision of … a reputable international Classification Society. [That Classification Society] has approved all calculations and drawings prepared by the Respondent and submitted to them for approval

47. After conclusion of the Contract, the Claimant entered into a contract with [a shipyard in its country], for the building of the vessel. Although the Respondent quoted for the construction of the vessel, the Claimant chose [that] shipyard as they offered a lower price for the construction.

48. The vessel was delivered by [the shipyard] to [a bank] (further: [the Bank]), on 26 September 2007. Prior to delivery, the shipbuilding contract between the Claimant and [the shipyard] was assigned to [the Bank], who reimbursed the Claimant for the instalments paid under the building contract. On 26 September 2007, the Claimant and [the Bank] entered into a lease agreement in respect of the vessel. [The Bank] further concluded a purchase and sale undertaking agreement with [the Claimant's parent company], who undertook to purchase the vessel from [the Bank] at the end of the lease period.

49. The Claimant states that the vessel was built according to the plans delivered by the Respondent. Nevertheless, important permanent deformations and even tears in the structural reinforcements occurred within a short period after the commissioning of [the vessel]. The Claimant discovered these during a routine inspection inside the dry compartments of the hulls in July 2008.

50. The Claimant subsequently commissioned an external report, which concludes that the vessel has been wrongly designed by the Respondent. According to the Claimant, the structure does not meet even the most optimistic load conditions. The damage is not caused by certain building defects, which were also discovered. The main cause of the damage, according to the report, is the vessel's unfitness for pyramidal loads.

51. The Respondent claims that the Claimant must have discovered, or should have discovered, the deformations and damage at a much earlier date, as they must have been visible and easy detectable, even without removing the hopper lining. According to the Respondent, the Claimant chose not to stop operations, thus aggravating the damage to the vessel's construction.

52. On 20 August 2008, the Claimant notified the Respondent about the damage to the vessel. On 16 September 2008, the Claimant informed the Respondent that it considered the structural damage to be due to faulty design, and it required the Respondent to repair the vessel within a period of 7 days.

53. On 6 October 2008 the Respondent rejected all liability and stated that the damage was due to faulty loading of the vessel.

54. The Claimant further pursued its claim by letter of their counsel … on 19 May 2009. On 2 February 2010, the Request for Arbitration followed.

3.2. The Contract

55. The Contract itself was made on 22 September 2005 (Claimant's Exhibits I and II-3, Respondent's Exhibit 1-F). The Parties are in agreement as to the applicable version of the Contract, which has been duly signed.

56. Prior to the Contract, there is remarkably little documentation available on the contract negotiations. The most complete set of correspondence is contained in the [Claimant's expert's] Report (Claimant's Exhibit 11-16, Appendix B). On 9 May 2005, … the Respondent's representative in [the Claimant's country] sent an email to the Claimant inquiring, inter alia, about the material that would be loaded ... The Claimant's answer to this email, if any, is not produced.

57. On 19 July 2005, the Respondent sent a revised offer for the engineering and hardware package (Respondent's Exhibit 1-D). This offer refers to an earlier offer of 6 June 2005, which is not produced. A number of Annexes to the Contract, however, are dated 6 June 2005, so it may be assumed that they formed part of the original offer. The offer of 19 July 2005 also refers to a meeting at the Claimant's offices on 14 July 2005, of which no minutes are made available. The offer of 19 July 2005 finally refers, in § 6, to the Respondent's standard trading conditions, and an English version of these conditions is attached to the offer.

58. On 28 July 2005, a slightly revised offer was sent to the Claimant (Respondent's Exhibit I-E, Claimant's Exhibit II-9). It is stated that § 6 of the previous offer (regarding the standard trading conditions) remains unchanged.

59. On 2 August, the Respondent sent the Claimant a form "Additional Required Information for Design" (dated 28 July 2005) for completion. The Claimant returned the completed form to the Respondent on 30 August 2005 (Claimant's Exhibit II-11. The Claimant indicated, under the question "nature of soil", "rock". Under the question "characteristics of soil", the "grain size (diameter)" box was not completed. Under "loading method", the Claimant indicated that rocks would be loaded "by means of dumping trucks in the hopper from ashore", obviously meaning "by means of trucks unloading into the hopper from ashore". Under the separate question "dumping height", to be indicated in metres, no specific dumping height was indicated by the Claimant. A hopper lining, type sandwich panels (steel-wood-steel) was required.

60. On 19 September 2005, the Respondent wrote, with regard to the contract negotiation, not once but twice that consequential damage was not acceptable (Claimant's Exhibit II-16, Appendix B- 5, no. 8, concerning Article 10, §§ 2-3 of the Contract).

61. The Contract consists of a basic text of 21 Articles divided over 25 pages. In Article 1, § 2 reference is made to a total of 7 Annexes.

62. In Annex III (Scope of Supply, Claimant's Exhibit II-5) reference is made, in §§ 1-3, to the design drawings and calculations to be delivered.

63. In Annex I (Brief Technical Specification of a Twin Screw Split Hull Hopper Vessel, Claimant's Exhibit II-6), the ship's characteristics include, in § 3, letter d, the following description:

Capable to transport sand, silt, clay, gravel and in principal [note: sic, what is meant is "in principle"] also rock, stones, stone-chipping etc. For rock transport a [Respondent-]type hopper lining is recommended, and can be provided against additional price. Hopper lining is not included in the deadweight specification.

64. None of the other Annexes contain any additional information on the cargo to be carried or the method of loading.

65. On 13 October 2005, the Respondent sent a fax to the Claimant in which it made an offer for a station keeping system, to be employed at the dumping site (Claimant's Exhibit II-12). Here a reference is made to the vessel's being used for the dumping of rock, but again, no further details are given.

66. Finally, there are minutes of two meetings, one held on 5 October 2005 … (Respondent's Exhibit I-G), the other on 3 and 4 November 2005 … (Respondent's Exhibit I-H), which contain details as to the envisaged future conversion from hopper to dredger, but again no details on the material to be loaded or the loading method are mentioned.

67. On 30 November 2005, a much more detailed Technical Specification was apparently sent to the Claimant (Claimant's Exhibit II-16, Appendix E). Here, the description of the hopper is in a separate section (Section H, as of page 56). Section H.8 reads, in relevant part, as follows (page 57):

An additional dismountable hopper protection is provided to spread the impact forces when loading heavy rocks or stones from a large falling height.

This is actually the only indication that goes somewhat to support the Claimant's position on the specifications, but it is still very vague.

3.3. The request for arbitration

68. As mentioned above, the Claimant filed a request for arbitration under the Contract with the ICC International Court of Arbitration. The following claims were made:

- damages for breach of contract in the amount of [amount];

- interests;

- legal costs;

- conservatory and interim measures, if required. At that time no more details were included.

4. The parties' written submissions and exhibits

4.1. The Parties' submissions

69. As mentioned above, the Claimant's Request for Arbitration was submitted on 2 February 2010. The Respondent's Reply and Counterclaim were submitted on 24 March 2010.

70. Subsequently, the following written submissions were communicated by the Parties, in chronological order:

1. the Claimant's brief on the right of claim, on 9 April 2010;

2. the Respondent's reply to the Claimant's submission of 9 April 2010, on 19 April 2010;

3. the Claimant's brief on the Respondent's corporate identity, on 27 April 2010;

4. the Claimant's reply to the Respondent's counterclaim, on 30 April 2010;

5. the Respondent's reply to the Claimant's brief on corporate identity, on 4 May 2010.

71. Actual written submissions, first under the Provisional Timetable, and later subject to, additional agreements, were exchanged as follows:

1. the Claimant's first submissions regarding the claim, on 30 November 2010;

2. the Respondent's first submissions, replying to the claim and bringing a counterclaim, on 31 January 2011;

3. the Claimant's rejoinder, on 28 February 2011;

4. the Respondent's second submissions, on 31 March 2011;

5. the Claimant's request to bar from the proceedings new evidence produced by the Respondent, on 7 April 2011;

6. the Respondent's answer to the Claimant's request, on 12 April 2011;

7. the Claimant's third written submissions, on 31 May 2011;

8. the Respondent's third written submissions, on 30 June 2011;

9. the Claimant's written introductory comments submitted at the hearing, on 12 September 2011;

10. the Respondent's written introductory comments submitted at the hearing, on 12 September 2011;

11. the Claimant's fourth written submissions (post-hearing brief), on 30 November 2011;

12. the Respondent's fourth written submissions (post-hearing brief), on 31 January 2012;

13. the Claimant's final written submissions, on 17 February 2012;

14. the Respondent's final written submissions, on 2 March 2012.

4.2. Numbering of the exhibits

72. The Terms of Reference did not contain specific instructions as to the submission of exhibits. Consequently, the Parties have not followed a uniform system of numbering their exhibits. It would therefore appear useful, for the avoidance of doubt, to sum up the exhibits which were submitted by both Parties. They are, where necessary, referred to with the numbers set out in the tables below.

4.3. Exhibits for the Claimant

73. The Claimant submitted the following exhibits …

4.4. Exhibits for the Respondent

74. The Respondent submitted the following exhibits …

5. Summary of the Parties' claims and counterclaims

75. For clarity's sake, before analysing the legal aspects of the matter, it may be useful to reiterate the claims which both Parties have made. The respective have not evolved since the initiation of the Arbitral Proceedings, so a short summary may suffice.

76. The Claimant's Claim is one for damages due to breach of contract. In its Final Submissions of 17 February 2012, the Claimant seeks the following relief:

- an award of damages for breach of Contract, in the amount of …;

- dismissal of the Respondent's Counterclaim;

- an order that the Respondent pay the legal and other costs of the arbitration.

77. The Respondent's Counterclaim is one for payment of an overdue invoice. In its Final Submissions of 2 March 2012, the Respondent seeks the following relief:

- an award that the Claimant pay the Respondent's invoice in the amount of …;

- an award that the Claimant pay the statutory interests set out in Article 119a Dutch Civil Code as of 18 August 2008 until the final date of payment;

- dismissal of the Claimant's Claim;

- an order that the Claimant pay the legal and other costs of the arbitration, including attorney's fees and reasonable expert's fees;

- any further or other relief that the Sole Arbitrator may deem appropriate.

6. The Sole Arbitrator's analysis and conclusions

6.1. Introduction

78. Although the dispute between the Parties presents a high degree of technical complexity, its essence is in fact straightforward. The Claimant's position is that the drawings, which were delivered by the Respondent pursuant to the Contract, led the Claimant to construct a vessel which was from the beginning not up to the tasks for which the Claimant had intended it. The Claimant submits that the vessel's inadequacy is due solely and exclusively to its conception, and not to any errors or defects in its construction, which was carried out entirely according to the Respondent's drawings. Consequently, in the Claimant's view, the Respondent is fully liable for the damage, both direct and consequential which ensued.

79. The Respondent strongly refutes this point of view. The Respondent's position is that it delivered tailor-made drawings that were entirely within the specifications set out in the Contract; that would enable the construction of a split hopper vessel fully compliant with professional standards; and that were approved by … a reputable classification society.

80. During the hearing in September 2011 it became quite clear that there was a remarkable gap between the Parties' positions on the Contract. They both defended, equally in good faith and with detailed technical arguments, almost diametrically opposed points of view.

The Claimant explained in detail its working procedures and submitted unequivocally that any vessel which is used for this kind of task must be able to withstand extreme working conditions. The Claimant stated that [the vessel] was employed within its normal scope and ambit of operation, and that the work which is carried out was to be generally expected from this type of vessel, i.e. a split hull hopper. Otherwise it is simply inadequate, and the designers should have taken this into account when the drawings were produced.

The Respondent explained that any ship built according to its drawings would be more than adequate for the work normally expected from this type of vessel, and that the Claimant's working procedures actually amounted to misuse. The Respondent agreed that it would be technically possible to build a vessel as required by the Claimant, but it would be prohibitively expensive; had the Claimant really required drawings to such unusual specifications, it should have specifically notified and informed the Respondent, allowing it to reconsider its standard design and enabling it to make the necessary adaptations.

The Respondent further stated that the vessel's capacity already outperformed the normally anticipated work requirements by a factor 10, allowing rocks of 500 kilograms to be dropped into the vessel's hold from a height of 3 to 4 metres.

81. The crucial question, therefore, would appear to relate to the construction of the Contract and to an analysis of the extent of either Party's contractual duties under the applicable law. Before arriving at that point, however, attention must logically be devoted to two important preliminary questions. The first question concerns the Claimant's right of claim, which is disputed by the Respondent. Obviously, should it turn out that the Claimant does not have a right of claim as against the Respondent, the case would end there. The second preliminary question pertains to the exemptions and limitations of liability contained in the Contract, which must be reviewed separately. Should the Respondent be entitled to rely on valid exemption or limitation clauses, these will obviously limit the area of possible dispute on contractual duties and liabilities.

82. It would thus appear that the logical order to approach the various problems in this case is as follows:

1. Does the Claimant have the required standing to bring an action as against the Respondent? Cf. Section 6.2.

2. Is the Respondent entitled to rely on contractual defences, exemptions and limitations, and to what extent? Cf. Section 6.3.

3. Within the contractual framework derived from the previous question, what is the precise extent of the Respondent's contractual duties vis-a-vis the Claimant? Cf. Section 6.4.

4. Insofar as any liability were to attach to the Respondent, what is the quantum of damages? Cf. Section 6.5.

83. By way of preliminary remark the Sole Arbitrator agrees that the Contract as such is not a shipbuilding contract, a point which has been stressed repeatedly by the Respondent. Subject to its qualification in Dutch law (an issue which will be dealt with further on), it could be said that the Contract is one for the services of a naval architect, pure and simple, whose design and drawings will subsequently be used by a shipbuilder. The Contract, nevertheless, shows certain characteristics which are inherent to shipbuilding contracts. This is not surprising as the Respondent is also a shipbuilder and its standard trading conditions are geared to this activity. Neither Party has cited any Dutch legal authority on this subject. Shipbuilding contracts are, however, very much an international matter for which a number of widely used standard contract forms exist, and therefore reference may be usefully made to foreign practice. Consequently, at some instances the Sole Arbitrator has referred to English law, albeit only for comparative purposes and to ascertain the industry standard.

6.2. The right of claim

6.2.1. Area of dispute

84. From the very beginning of the proceedings, the Parties have disagreed strongly on the issue whether the Claimant has any standing to bring a claim for the repair costs of [the vessel] (in the amount of …), as it is a matter of certainty that it is not the owner of the ship.

6.2.2. The Claimant's position

85. The Claimant's position on its right of suit is set out at various instances throughout its submissions (starting with the Request for Arbitration, 2 February 2010 …). Although it is undisputed that the Claimant is not the owner of [the vessel], its point is that all rights pertaining to the ship were validly transferred to it pursuant to the lease agreement which it made with the owner.

6.2.3. The Respondent's position

86. The Respondent's position was explained in detail from the beginning (Reply and Counterclaim, 24 March 2010 …). It has remained unchanged throughout the proceedings, although it has become more detailed. Summarised, the Respondent submits that the alleged transfer is ineffective, and that even if it were valid, it could not conceivably transfer onto the Claimant a right of suit which the owner itself does not have, i.e. a contractual right of action as against the Respondent.

6.2.4. The Sole Arbitrator's analysis and conclusions

87. From the above it is clear that the Claimant has created a particularly complex legal situation. It would appear to be a matter of certainty that the Claimant is, in the present context, the only party who could ever bring an action in contract as against the Respondent. The Claimant obviously is the Respondent's sole co-contracting party and it has never assigned or otherwise transferred its rights under the present contract. No other person involved in the Claimant's contractual context - the first person coming to mind is [the Bank], the actual owner of [the vessel] … - could in the present situation bring a claim in contract as against the Respondent. They would have to resort to extra-contractual claims, the most obvious one being in tort. This would undoubtedly create a new and different series of complex legal questions.

The question also arises as to whether the Sole Arbitrator has jurisdiction to evaluate the legal status of a contract between the Claimant and a third party which is not a party to the present proceedings. The Sole Arbitrator finds that this question should be answered in the affirmative. First, both Parties have submitted extensive arguments as to the legal consequences of the lease agreement, thus admitting -implicitly but as a matter of certainty - the Sole Arbitrator's jurisdiction over this issue. Secondly, from a practical point of view it is quite simply impossible to determine the extent, if any, of the Claimant's right of suit without considering its pre­ existing agreement with [the Bank].

88. The core of the Respondent's argument is that the Claimant may well have a contractual right of action, but there is no actionable interest as such: the Claimant does not own [the vessel] and consequently it has no personal interest in any compensation for the damage to the ship.

89. The existence of the Claimant's right of suit as such is subject to [the law of the country where it is incorporated], according to Dutch conflict of laws rules. At the time when the arbitral proceedings were initiated, this rule was set out in Article 3, letter a, Act on the Conflict of Laws in Corporations,¹ which stated:

Article 3

The law applicable to a corporation governs, next to the incorporation, specifically the following subjects:

a) its entitlement to legal personality (bezit van rechtspersoonlijkheid), or to the capacity to be bearer of rights and duties, to perform legal acts, and to bring actions in law.

This point is not contested by the Parties, so it requires no further attention. For the avoidance of doubt, insofar as Dutch law might at all be concerned, the interest in bringing a legal action (procesbelang) is a relatively straightforward concept. An action which is brought without the claimant having a proper interest in it will be declared inadmissible by the judge for lack of interest: he does not have "standing to sue" in the sense of the "ius agendi" (the right to bring a legal action). This rule has been codified in Article 3:303 Dutch Civil Code. It is known as the adage "no interest, no action" - "point d'intérêt, point d'action".² It is precisely this interest which the Respondent submits that the Claimant lacks.

90. The Claimant has submitted the lease agreement which it has made with the actual owner of [the vessel], i.e. [the Bank] (Claimant's Exhibit II-14). This contract contains a wide­ranging assignment of rights ...

The sworn translation (Claimant's Exhibit II-14) reads as follows:

Likewise, and in light of the fact that the property has been chosen by the Lessee, the latter expressly waives possible claims due to latent defects, defects in construction or analogous causes in the property against the Lessor, with the latter assigning and the Lessee being subrogated in all rights, actions or obligations that may pertain to it as owner of the same against the supplier or shipbuilder. To this effect and at the moment when the Lessee so requests, the corresponding assignment, subrogation and representation document of the Owner/Lessor will be formalized in favour of the Lessee.

91. A first point to be noted is that the Claimant fails to cite the entire clause in its submissions regarding the right of suit. The clause is cited only once (Claimant's Fourth Submissions …), and the second sentence is left out.

92. The assignment itself is obviously governed by [the law of Claimant's country of incorporation], as it is contained in a contract made between two … entities [incorporated in that country] which are domiciled in [that country] and which have not made an express choice of law. This contract does not contain any foreign element and consequently private international law does not come into the picture.

93. The law which governs the debtor's position is subject to the 1980 Rome Convention.³ Article 12 provides:

Article 12 - Voluntary assignment

1. The mutual obligations of assignor and assignee under a voluntary assignment of a right against another person ("the debtor") shall be governed by the law which under this Convention applies to the contract between the assignor and assignee.

2. The law governing the right to which the assignment relates shall determine its assignability, the relationship between the assignee and the debtor, the conditions under which the assignment can be invoked against the debtor and any question whether the debtor's obligations have been discharged.

Article 12, § 1 naturally confirms the conclusion made in the previous paragraph, that [the law of their country of incorporation] applies to the relationship between the Claimant and [the Bank]. As to the debtor's position, i.e. the Respondent, under Article 12, § 2 this is also governed by [the same] law, being the law governing the right to which the assignment relates.⁴

94. The Parties, for that matter, agree that [the aforementioned] law is the governing law for this aspect of the case.

95. The Claimant has stated throughout the proceedings that the above-cited contractual provision in its lease contract with [the Bank] entitles it to all damages which normally would have been due to the owner of [the vessel].

96. The Respondent has equally adamantly maintained that there are basically three main reasons which bar the Claimant from claiming compensation for the damage to the ship. First, the Claimant is not the owner, but a simple lessee who is not under any duty to repair the ship. Secondly, even if [the Bank] had validly assigned its rights to the Claimant, that would make no difference in outcome as [the Bank] does not have a claim in contract as against the Respondent, and consequently there is nothing to claim. Thirdly, the assignment is not effective under [the law applicable to the assignment] as certain formalities have not been observed.

97. This legal constellation causes serious problems. First, the Parties' explanations, despite the express request by the Sole Arbitrator to elaborate on the question, remain superficial, notwithstanding the impressive volume of their submissions. Thus, the Claimant counters the Respondent's arguments on the validity, under [the law applicable to the assignment], of the assignment or the subrogation (although the latter mechanism seems hardly adapted to the present position) by a very brief and simple reference to [a provision of that law], which states: "… Obligations may be modified: [...] By subrogating a third party in the creditor's rights."

This, however, is a very general statutory rule dealing with the principle of novation, and it is unlikely that [the] law does not contain more precise rules relating to both assignment and subrogation (which are obviously different concepts). …

98. On the other hand, the Respondent also contents itself with a number of general and largely unsubstantiated statements on [the law applicable to the assignment]. The Respondent states that its references to [that] law are based on the legal opinion of [a lawyer], but this opinion is not submitted, nor is it clear to which aspects of [the] law it refers (Respondent's Fourth Submissions …). Where the assignment of rights is concerned, the Respondent submits that no transfer of rights took place because under [the law applicable to the assignment], the transfer would require a specific agreement in order to give effect to the transfer, separate from the transfer set out in Article 1 of the lease agreement between the Claimant and [the Bank], as described above (Respondent's Fourth Submissions …). This statement, however, is not supported by any reference to a statutory rule or to case law.

99. As it has been established that the lease agreement between the Claimant and [the Bank] is governed by [the aforementioned] law, the rules of construction of [that law] apply. In the Sole Arbitrator's opinion the construction of Article 1 of the lease agreement as proposed by the Respondent would lead to an unfair and truly Kafkaesque situation. As a party to the Contract of 22 September 2005, the Claimant is the only party who has, from a procedural point of view, the required title to sue its co-contracting party. But the Claimant can never have a legitimate interest (insofar as the damage to the ship itself is concerned), because it is not the owner, and all the repair costs which it paid remain for its own account because it was, as lessee, not under any duty to make such repairs. On the other hand, the owner [the Bank] would obviously have a legitimate interest, but it has no contractual relationship with the Respondent, nor did it pay for the repairs. Thus, the right of suit embedded in the Contract becomes completely devoid of meaning, and the result would be that no one could ever bring an action as against the Respondent for an (alleged) breach of contract. The Sole Arbitrator deems this result to be unfair and unacceptable. With regard to the reasoning below, the Sole Arbitrator relies on three specific rules for the construction of contracts in the [the aforementioned law], which state:

If the wording appears to be contrary to the self-evident intention of the contracting parties, the latter shall prevail.

If any clause in a contract allows for various meanings, it should be understood in the one most adequate to produce an effect.

Wording which may have different meanings should be understood in the meaning which conforms the most to the contract's nature and object.

100. One might object that this situation is of the Claimant's own making, and that it could easily have been avoided had the Claimant transferred its contractual right of suit to the present owner of [the vessel], i.e. [the Bank]. This, however, is prevented by Article 11 of the Contract of 22 September 2005, which states, in relevant part:

The present Agreement is personal and neither of the parties may assign or transfer same to any other physical or legal party, whether voluntary or by legal obligations, without the prior agreement in writing by the other party. [...]

In other words, the more practical and legally elegant solution is excluded by the Contract itself. An exclusion of this type, however, is customary in shipbuilding contracts.⁵ Although, as remarked above, the present Contract is not a shipbuilding contract, it does show its heritage.

101. With regard to a possible assignment of (the benefits under) the Contract, it would have been common practice to include a qualification that the other party's consent thereto should not be "unreasonably withheld". In English law, this reasonability test is well established.⁶ In Dutch law, with its emphasis on reasonableness and fairness throughout the Civil Code, the result would arguably not be different.⁷ Had the Claimant transferred its contractual rights to the present owner, there is little doubt that [the Bank] could have brought the claim for damages to the ship without the problems that the Claimant is now encountering. It is, for that matter, noteworthy to remark that even in the English legal system, which is extremely strict on privity of contract, it has been established (in a landmark House of Lords decision) that a first buyer (in the present case, this would be the Claimant) would be entitled to enforce claims against the builder (in the present case, this would be the Respondent, not as builder but as designer) for the benefit of the on-purchaser (in the present case, this would be [the Bank]).⁸ This is not unlike the present situation, where the Claimant has been assigned the owner's rights.

102. As to the Respondent's arguments against the validity of the assignment in the lease contract, the following remarks may be made. The Respondent's qualification of the Claimant as a mere lessee appears to be too simplified. First, the leasing agreement bears a number of the hallmarks of a financial lease: the reference to the property having been chosen by the lessee; and the statement - in the title itself of the lease agreement - that the lessor does not have any maintenance duties. Secondly, although it is true that the lease contract does not offer the Claimant an option to buy the vessel at the end of the lease agreement, a separate contract has been made (called "Purchase and Sale Undertaking Agreement", Claimant's Exhibit II-14, translation in Exhibit III-13) regarding a future acquisition (not an option) by … the Claimant's parent company … for a residual value of [amount]. Although [the vessel] will technically be acquired by another legal entity than [the Claimant], it is clear that the intention of the parties (with full knowledge of [the Bank], as the contract of sale refers extensively to its agreement with the Claimant) is that the vessel remain within the same group of companies. Finally, some questions may arise as to the accuracy of some of the translation work, as the contract between the Claimant and [the Bank] is referred to in the first set of translations (delivered with Series II of the Claimant's Exhibits, specifically Exhibit II-14) as a "lease agreement'', whereas in the second set of translations (Series III of the Claimant's Exhibits, specifically Exhibit III-13) the same contract is called a "vessel charter party" by an obviously different translator. That would then amount to a bareboat charter, which would be a very common occurrence for the financing of a newbuilding.

103. The Respondent's second objection, that even if [the Bank] had validly assigned its rights to the Claimant, that would make no difference in outcome as [the Bank] does not have a claim in contract as against the Respondent, is based on a strictly literal reading of the English translation of the lease agreement. Again, there may be a linguistic problem here. The original … text, as cited above refers to "…". The Sole Arbitrator is prepared to construe this as "all rights, actions or obligations that might correspond with ownership of the same [i.e. the vessel]", meaning that all rights and claims attach to the Claimant as if it were the owner of the ship ([third of the three provisions quoted in § 99 above]). The idea, it is submitted, was to reunite the procedural right of action in contract (which lay with the Claimant) with the required interest to bring such an action (which lay with the owner) in one and the same person. This interpretation gives meaning to a provision which would otherwise be useless ([second of the three provisions quoted in § 99 above]). Thus it represents the intention of the parties to the lease agreement, or charter party as the case may be ([first of the three provisions quoted in § 99 above]).

104. The Respondent's third objection, that the assignment is not valid under [the law applicable to the assignment], has been answered by the Claimant with a reference to the [provision of that law quoted in § 97 above]. The Respondent has not shown any objective evidence as to the incorrectness of this statement; and its objection is consequently dismissed.

105. Conclusion. In the Sole Arbitrator's opinion the assignment in the lease agreement suffices to provide the Claimant with the required interest to bring a claim as against the Respondent under the Contract of 22 September 2005.

6.3. The extent of the contractual liability provisions

6.3.1. Area of dispute

106. The Parties agree that the relevant provisions in the Contract pertaining to the Respondent's liability are as follows:

Article 8 - Delay and liability and adjustment of contract price

8.1. Under no circumstances [Respondent] shall be liable for any delay or default caused by the information being provided by the OWNER and/or caused by delay in providing information by the YARD and being required by [Respondent] for the due fulfilment of this Agreement.

Notification as to the nature of the information will be given to the OWNER and the YARD by email, telefax or letter, not more than 20 (twenty) days prior to the date on which the information is required.

8.2. Under no circumstances shall [Respondent] be liable for any other damage caused by delay in delivery, beyond the provisions established in this Article.

8.3. [Respondent] shall be under no obligation with respect to the defects discovered after the expiration of the period of guarantee specified above.

[Respondent] shall also be under no obligation for any consequential damage or losses occasioned by any defects, discovered either during or after the guarantee period, or for any demurrage or for any loss of time in operating or repairing the vessel or both, caused by such defects.

Article 10 - Guarantees

10.1. [Respondent] guarantee that the components to be supplies as per ANNEX III, are made of the best materials with first class workmanship, brand new and unused, and that said components, parts and spare parts comply in all respects with the quality and specification as set in this Agreement and appertaining documents.

10.2. Should the components supplied by [Respondent] as per ANNEX III, prove to be defective on account of the use of faulty materials or bad workmanship, within a period of 12 months from the date of delivery of the VESSEL, but not later than 24 months from the date of effectiveness of this Agreement, then [Respondent] undertakes to replace or repair, free of charges and as soon as feasible, such detective parts, on the conditions as stipulated hereinafter. Provided always that improper use, improper storage and fair wear and tear shall not be covered by [Respondent]'s obligations under this Article.

Costs of transport of detective parts to [Respondent] are borne by [Respondent].

10.3. The guarantee mentioned in clause 10.1. hereof is limited to the free repair or replacement of defective or inadequate parts, provided that claims in writing giving all relevant details are received by [Respondent] within the guarantee period mentioned in clause 10.2 hereof or at the latest within 7 (seven) days of the expiry thereof.

If the repair or replacement is carried out elsewhere than at [Respondent]'s premises, then the liability of [Respondent] will be limited to the amount the repair or replacement would have cost if carried out at [Respondent]'s premises.

The above provided there has been no communication/information by the OWNER, on which [Respondent] not has taken steps, or has been but [Respondent] has not sent the standard replacement parts in a period of 48 hours, and in the case of replacement parts of List B, no later than in 13 weeks.

In case the opening hydraulic cylinder breaks down during the guarantee period, [Respondent] will give one opening hydraulic cylinder to OWNER in a period of thirteen weeks.

10.4. When deemed necessary by [Respondent], a duly authorised representative of [Respondent] shall be sent to inspect a written claim within a period of 15 (fifteen) days from the date of receipt of said claim by [Respondent].

OWNER has the obligation to provide this representative free access to the VESSEL at his own risk. When [Respondent] do not deem it necessary to send a representative as referred to, then [Respondent] shall notify OWNER within a period of 7 (seven) days from the date of receipt of a claim about the nature of the actions to be taken.

10.5. Other than stated in clauses 10.1 and 10.2 hereof, [Respondent] will not be liable for any further consequential damages.

107. According to the Respondent, these provisions are to be complemented by [Respondent]'s standard trading conditions which are referred to both in the Contract and in the offer. Of particular relevance is Article 6 of these Conditions, which reads as follows:

6 - Guarantee and liability

6.1. [Respondent] guarantees the quality of workmanship and materials for a period of six months from the date upon which the goods and/or services are ready for delivery. The guarantee is limited to faults which are discovered within the aforesaid period and which are reported to [Respondent] by the Customer by letter, email, telegram, telefax or telex within two weeks of being discovered.

Subject to these conditions being met, [Respondent] will rectify the faults in construction and/or replace faulty components at its premises free of charge. If, following consultation with [Respondent], the Customer arranges for the repair and/or replacement to be effected elsewhere, liability shall be limited to the amount which the repair or replacement would have cost if carried out at [Respondent]'s premises during normal working hours.

6.2. Unless expressly stated in [Respondent]'s offer, the contents of catalogues, illustrations or drawings, and statements as to capacity, output, power or other characteristics of the goods shall not be binding upon [Respondent].

6.3. Subject to the foregoing liability in respect of guarantee, [Respondent] shall be released from any liability whatsoever as from the day upon which the goods and/or services are ready for delivery. The Customer shall protect and indemnify [Respondent] and its employees or agents against claims or actions by third parties in respect of any damage and/or injury caused or alleged to have been caused subsequent to delivery of the goods, including claims or action made on grounds of product liability.

6.4. Where [Respondent] makes available to the Customer services of personnel or furnishes written or verbal advice, [Respondent] and its personnel shall under no circumstances be liable for any damage arising therefrom.

108. The [Respondent's] standard trading conditions further refer to more general standard trading conditions, as follows:

9 - Special conditions

9.1. In addition to these General Conditions, the "General Yardconditions", filed by the "Netherlands' Shipbuilding Industry Association" (VNSI) at the Clerk's Record office of the District Court in Rotterdam on the 10th April 2000 and printed overleaf, shall apply to all work such as overhaul, repair, conversion or machining to be performed by [Respondent] to any object owned or used by the Customer and to all work relating to the erection of plant and machinery outside [Respondent]'s premises.

6.3.2. The Claimant's position

109. The Claimant submits that the Respondent cannot rely on any contractual provisions with regard to its liability for alleged errors and defects in the plans and drawings for [the vessel].

110. The Claimant submits that the Respondent's standard trading conditions cannot be relied upon, for two reasons. First, the above-cited Article 6 is overruled by the specific provisions in the Contract, as set out in Articles 8 and 10. Secondly, the reference in the Respondent's standard trading conditions to yet other, more general standard trading conditions forms a prohibited cascade of provisions.

111. The Claimant further submits that the drawings are not "components" in the sense of Article 10, § 2, and that any defects in the drawings should be subject to an implied warranty. The Claimant states two reasons for this: first, the limitation of liability to the repair of any defect in the drawing itself, or to the replacement of the defective drawing, is unreasonable and unfair; and secondly, the contractual provision should be construed contra proferentem, meaning that it should be understood to refer to mechanical components and not to intellectual work such as the ship's design.

112. The Claimant submits that the concept of consequential damage should not be held to include the damage caused to the ship. Finally, the Claim has been brought within the time limit.

6.3.3. The Respondent's position

113. The Respondent takes a diametrically opposite view. The Respondent submits that the contractual provisions on liability are perfectly valid and that thus its liability is limited to remedying any defect in the drawings, if any. All other damage is consequential and has been validly excluded. The relevant clauses are not unfair or unreasonable and there is no cause for a construction contra proferentem.

114. Furthermore the Respondent submits that its own standard trading conditions as well as the Dutch "General Yardconditions" have been validly incorporated in the Contract.

115. Finally, the Respondent submits that the Claim is time-barred because of the operation of a contractual alternative time limit, and because the Claimant has not acted with sufficient despatch.

6.3.4. The Sole Arbitrator's analysis and conclusions

6.3.4.1. Issues to be resolved

116. The definition of the contractual framework in which the Parties operate gives rise to a number of separate questions:

- Do [Respondent]'s General Conditions form part of the Contract?

- Do the Dutch "General Yardconditions" form part of the Contract?

- How should the above cited Articles 8 and 10 of the Contract be construed?

- Within the thus established framework, what is the extent, if any, of the Respondent's contractual liability?

6.3.4.2. The Respondent's standard trading conditions

117. The Dutch Civil Code contains a specific set of rules on standard trading conditions: Book 6 - General part of the law of obligations (Algemeen deel van het verbintenissenrecht), Chapter 5 - Contracts in general (Overeenkomsten in het algemeen), Section 3 - General conditions (Algemene voorwaarden). This particular section, however, does not apply to the present case, following Article 6:247, § 2:

Article 6:247

2. To contracts between parties who both act in the course of their professional practice or business and who do not both have their domicile or habitual residence in The Netherlands, the present section does not apply, irrespective of the law governing the contract.

118. This point is explicitly raised by the Respondent (Reply and Counterclaim, 31 January 2011 …). It does not appear to have been answered by the Claimant, who implicitly applies the above-mentioned Section 6.5.3 to the present case by relying on Article 6:233 Civil Code, which is part of that section (Third Submissions, 31 May 2011 … and the annexed opinion …). Somewhat surprisingly, the Respondent subsequently replies to this argument (Third Submissions, 30 June 2011 …), without repeating its initial position that Section 6.5.3 as a whole does not apply, which may raise the question whether the Respondent at that time still persists in its initial defence.

119. First, it should be clearly noted that this discussion can only pertain to the Respondent's standard trading conditions (i.e. the Respondent's own General Conditions and the Dutch "General Yardconditions"). In other words, this has no impact upon Articles 8 and 10, which are provisions in the Contract itself and thus cannot be labelled as standard trading conditions. In the Sole Arbitrator's opinion, this makes the present part of the discussion of minor importance, as it should be clear, from a mere first reading of the Contract, that the emphasis will be on the validity and meaning of the Contract's own provisions. The argument must nevertheless be answered.

120. Secondly, it is a matter of certainty that the Respondent's argument as to the non-applicability of Section 6.5.3 is correct, even if Dutch law applies to the case. This is clearly shown in a recent decision of the Dutch Supreme Court, in which the non-applicability of Section 6.5.3 is confirmed with regard to a contractual relationship between professional parties, one of which was domiciled in The Netherlands and the other in the UK.⁹ Advocate-General M.H. Wissink added, however, that the rule would not set aside the applicability of Section 6.5.3 if the parties were to expressly state that they accept the Section's applicability as a consequence of their choice of Dutch law.¹⁰

121. In view of the above, the Respondent is basically right when it states that a party that wishes to set aside a specific clause in standard trading conditions can only rely on the very general rule in Article 6:248 Dutch Civil Code, which provides:

Article 6:248

1. An agreement does not only have the legal effects which the parties have agreed upon, but also those which, depending on the nature of the agreement, arise from the law, the customs, or the requirements of reasonableness and fairness.

2. A rule which is binding upon the parties as a consequence of their agreement is not applicable insofar, in the circumstances of the case, this would be unacceptable under standards of reasonableness and fairness.

122. This rule, however, pertains to the construction of the contract. It has nothing to do with the question whether or not the [Respondent] standard trading conditions form part of the Contract. The matter of construction and interpretation will be dealt with further on.

123. The facts surrounding the issue of the standard trading conditions are as follows. On 19 July 2005, the Respondent sent a letter to the Claimant regarding a "revised offer for engineering/hardware package for a 1000m[#SUPERSCRIPT_START#]3[#SUPERSCRIPT_END#] split hull hopper vessel" (Respondent's Exhibit I­D). On page 3 of that offer, in § 6, it is stated, clearly legibly: "The [Respondent] Holland General Sales Conditions are applicable to this offer. Attached you receive a signed copy." The copy of the standard trading conditions is on the following page, again in a clearly legible, albeit smaller,

typescript. All texts are in the English language.

124. On 13 October 2005 the Respondent sent an additional offer for station keeping equipment in which reference was made to [Respondent]'s General Conditions, on page 4 (Claimant's Exhibit 12).

125. Both Parties agree that the Respondent's standard trading conditions were also attached to the Contract itself, as Annex VII, which is referred to in Article 1, § 2 of the Contract.

126. If Section 6.5.3 does not apply, the conclusion that the Respondent's standard trading conditions are part of the Contract would seem to be unavoidable.

127. It would seem highly unlikely that the Respondent intended to renounce its primary defence regarding the non-applicability of Section 6.5.3 by answering the Claimant's argument based upon Article 6:233 Civil Code, and that thus the exception described above, that the parties can expressly accept the applicability of Section 6.5.3 as a consequence of their choice in favour of Dutch law, would consequently apply.

128. Nevertheless, for the avoidance of doubt, the consequences of the position in which Section 6.5.3 would apply are set out in the following paragraphs, because, in the Sole Arbitrator's opinion, this would not at all change the outcome.

129. In the (subsidiary) hypothesis that Section 6.5.3 does apply to the present case, it is required, in order to rely on standard trading conditions as against a contracting party, that the contracting party has accepted the applicability of these conditions. This follows from Article 6:231, letter c, Dutch Civil Code:

Article 6:231

For the purpose of this section the following definitions are used:

a) standard terms and conditions: one or more contractual provisions or stipulations, drafted to be included in a number of agreements, with the exception of provisions and stipulations that indicate the essence of the performance under the obligation, as far as these last meant provisions and stipulations have been formulated clear and unambiguous;

b) user: the person who uses standard terms and conditions in an agreement;

c) counterparty: the person who has accepted the applicability of the standard terms and conditions of the user by signing a written document or in another way.

130. It is, however, a peculiarity of Dutch law that a contracting party may be bound by standard trading conditions even if it did not know their contents. This follows from Article 6:232 Dutch Civil Code:

Article 6:232

A counterparty is also bound by the standard terms and conditions if, at the moment the agreement was made, the user understood or should have understood that it did not know the contents of these terms and conditions.

In other words, even if the user was not led to rely in good faith on the assumption that the contracting party knew and accepted the contents of the standard trading conditions, the contracting party will still be held to them because of its acceptance of the applicability of standard trading conditions. In other words, a party "may want that which it does not know". The contracting party's being bound does not stem from its acceptance, but from the law itself, as an exception to Article 3:35 Civil Code. This rule is justified because without it, the application of contractual terms and conditions of which a party has no actual knowledge would not be possible, whereas this answers to a clear public need, and because their actual contents may be subject to judicial review.¹¹

131. Consequently, it must be determined whether the circumstances of the present case would allow the conclusion that the Claimant accepted the Respondent's standard trading conditions, or that, at least, the Claimant accepted that standard trading conditions would apply.

132. From the above-described facts regarding the communication to the Claimant of the standard trading conditions, it is clear that the Claimant was, or should have been, aware that the Respondent intended to rely on its conditions. The Claimant never specifically responded to this intention, although there were extensive discussions and correspondence before the Contract was made.

133. In Dutch case law such acceptance is relatively easily arrived at, certainly between professional parties. In one particularly illustrative case, the Dutch Supreme Court held that Petermann, an internationally operating German trading company, had induced its co-contracting party Frans Maas, a Dutch freight forwarder, to rely in good faith on the fact that Petermann had agreed to the applicability of the Dutch Fenex Conditions (standard trading conditions of the Dutch freight forwarding industry), although these conditions were only incorporated by reference in a pre-printed Dutch footer on the Frans Maas letterhead.¹² The Dutch Supreme Court expressly agreed with the reasoning of the Court of Appeal at The Hague, against whose judgment the appeal to the Supreme Court was directed. The Court's reasoning reflects Dutch legal thinking on the subject (office translation and synthesis):

Indeed, after the claimant had also asked, in its request for an offer on 17 December 1990, for "communication of your conditions for delivery" ("Mitteilung Ihrer Lieferkonditionen") (which included standard trading conditions), the defendant stated, on 20 December 1990, by way of the text on its letterhead, that its freight forwarding activities were subject to the Fenex conditions. As the claimant has not requested any further explanation and subsequently issued the relevant instruction without further ado, the defendant was entitled to assume that the claimant agreed to its conditions, the more so as a professional co-contracting party was involved.

The foregoing is not changed by the fact that the reference to those conditions was made in a pre­printed text, nor by the fact that a German principal and a Dutch freight forwarder are involved. The claimant should, as an internationally operating trader, have been aware that such a common practice as reference to conditions would be used, the more so as similar conditions are used by German freight forwarders. Neither does the Court deem it crucial that the reference text is in the Dutch language, which the Claimant states not to understand. It cannot be understood why this would simply entitle the claimant to ignore the text, the more so because it is hardly credible that deciphering such a reference would pose an insurmountable problem to a German company [note: the German and Dutch languages are not unalike].

The above considerations lead to conclude that by the implicit acceptance by the claimant of the defendant's offer, including the reference to the Fenex conditions, these conditions, together with the arbitral clause contained therein, form a part of the contract between the parties.

134. The above-cited reasoning was explicitly upheld by both the Dutch Supreme Court and its Advocate-General L. Strikwerda. The considerations are perfectly transposable to the present case. As described above, the Claimant knew, or should have known, that the Respondent intended to rely on standard trading conditions, the text of which was communicated to the Claimant. Between 28 July 2005, when the text of the standard trading conditions was communicated as an annex to the Respondent's revised offer, and 22 September 2005, when the Contract was made, the Claimant made no inquiries about the standard trading conditions, the scope of their applicability or their contents. The standard trading conditions were in English, the language of the Contract, so the Claimant was perfectly able to understand them. In an international context, the Claimant should have been aware that the use of standard trading conditions is a widespread and common practice.

135. The Claimant's reference to Article 6:233 Dutch Civil Code does not help. This Article provides as follows:

Article 6:233

A clause in standard trading conditions is voidable:

a) if it is unreasonably burdensome upon the counterparty, in view of the nature and other content of the contract, the way in which the standard trading conditions were made, the interests of each party of which the other has constructive knowledge, and the other circumstances of the case; or

b) if the user has not given its counterparty a reasonable opportunity to take due note of the standard trading conditions.

136. The Claimant argues that Article 6 of the standard trading conditions, as cited above, is unreasonably burdensome in the sense of Article 6:233 Dutch Civil Code (Third Submissions, 31 May 2011 … and the annexed opinion …).

137. This position is incorrect, because it fails to take into account the exception contained in Article 6:235, § 1 Dutch Civil Code:

Article 6:235

1. The grounds for nullity set out in Articles 6:233 and 6:234 cannot be relied upon by:

a) a legal entity referred to in Article 2:360 Civil Code which, at the latest at the time when the contract was made, has published its annual report, or to which, at the latest at that time, Article 2:403, § 1, Civil Code has been applied;

b) a party to which the provisions under a) do not apply if, at the indicated time, it employs fifty or more persons or if it is shown from an entry subject to the Corporate Registry Act (Handelsregisterwet) 2007 that it employs fifty of more persons.

138. According to its own website, the Claimant has 190 employees (on 17 July 2012). Obviously the Claimant, as a corporate entity, also makes public its annual reports. Consequently the Claimant cannot rely on Article 6:233 Dutch Civil Code in order to have Article 6 of the Respondent's standard trading conditions voided.

139. Conclusion. In view of the above, the Respondent's standard trading conditions are part of the Contract and they are, in principle, binding upon the Claimant.

6.3.4.3. The reference to the Dutch "General Yardconditions"

140. A cascade of standard trading conditions, by reference upon reference, such as in the above-cited Article 9 of the Respondent's General Conditions, is generally frowned upon in Dutch law. The assumption is that standard trading conditions often remain unread, and consequently the applicability of other conditions by further reference should not be too easily accepted; in fact, by way of general rule, they should not be applied following Articles 3:33 and 3:35 Dutch Civil Code.¹³ These Articles state:

Article 3:33

A legal act requires the intent to create a legal effect, which has been expressed through a statement.

Article 3:35

Against he who has construed another's statement or behaviour, in accordance with the meaning that he could reasonably attach to it under the specific circumstances, as a statement with a certain tendency by the other person addressed to him, the lack of an intent corresponding with that statement cannot be relied upon.

[141]. Although the above considerations appear to have been applied mainly in consumer cases,¹⁴ it has been submitted by authoritative authors that the principle is sound in relations between professional parties as well.¹⁵ There is no reason, nor has there been sufficient argument by the Respondent, to deviate from an apparently well-established consensus in authoritative Dutch legal writings.

142. For that matter, the marked difference with the Respondent's own General Conditions is that the Dutch "General Yardconditions" are only incorporated by reference. Although the Respondent has made these conditions available as Exhibit III-E, they were not at any time before the conclusion of the Contract sent to the Claimant, or at least there is no discernible evidence of this. It is consequently likely that the Claimant was not aware of their contents. In these circumstances it can hardly have been the Claimant's intention to agree to these standard trading conditions as per Article 3:33 Dutch Civil Code. Nor can the lack of response by the Claimant to the Respondent's own General Conditions have inspired in the Respondent a reasonable confidence that the Claimant was in agreement with the Dutch "General Yardconditions" as per Article 3:35 Dutch Civil Code.

143. Conclusion. In view of the above, the Dutch "General Yardconditions" are not part of the Contract and they are therefore not binding upon the Claimant.

6.3.4.4. Construction of the contractual warranty: substance

144. In view of the above conclusions, the contractual clauses which must be reviewed are Articles 8 and 10 of the Contract and Article 6 of the Respondent's standard trading conditions. The relevant clauses of the Contract deal with three distinct questions: first, the warranty provided by the Respondent as designer and supplier of parts; secondly, the extent of the compensation due; and thirdly, the time during which the warranty is effective.

145. As regards the scope and substance of the warranty, in Article 10 of the Contract express reference is made to all deliverables contained in Annex III (as per Article 1, § 2 of the Contract), entitled "Scope of Supply of the Engineering for a Split Hull Hopper Vessel". This Annex contains a brief description of the designs to be delivered by the Respondent (§§ 1-3). In the Sole Arbitrator's opinion, there is no reason why the designs and drawings delivered by the Respondent would not be covered by Article 10 under the generic qualification "bad workmanship". The argument by the Claimant, that it assumed that the wording of Article 10 only applied to tangible equipment, cannot be followed. In complex contract negotiations between equal professional parties, such an "assumption" must remain at the risk of the party that makes it. Otherwise, the Claimant should have asked for clarification or it should have had the paragraph deleted or altered. The question of "bad workmanship" has been, coincidentally, the subject of a leading English case, in which it was held that design errors could be characterized as such.¹⁶

146. The Claimant has raised two specific objections against the above reasoning: the clause must be invalidated under Article 6:248 Dutch Civil Code, as it is unreasonable and unfair; and the clause must be construed contra proferentem.

147. In Dutch law, the construction of contracts is left entirely to the judiciary, to learned authors, and in general to those practising the law. They may be guided by a few general statutory rules, set out in Articles 6:248 and 3:35 BW. Thus Dutch law does not contain, inter alia, an express contra proferentem rule, a principle on which the Parties strongly disagree both as to its existence as well as to its application. It may be surprising for a … contracting party [from another European country] to find that the rule does not exist in Dutch law, but it is a fact that the principles of construction of contracts differ considerably throughout the European legal systems.¹⁷ Dutch law in this respect clearly differs from both the Principles of European Contract Law (PECL, which contain the contra proferentem rule in Articles 5:103-107) and the UNIDROIT Principles (Articles 4.4.-4.7), but that obviously does not change the outcome.

148. In Dutch law, the construction of a contract relies upon the establishment of the meaning of statements made by the contracting parties and of the legal consequences that have arisen therefrom. This construction is subject to the rules of reasonableness and fairness.¹⁸ Hence a contracting party may be bound by its actions, even if it did not intend this. This is based upon the reliance principle: actions which inspired in the other party a justified confidence that they were actually intended, related to the demands of social life (maatschappelijk verkeer), entitle the other party to rely on them as if they were truly intended.¹⁹1t is not surprising that a contracting party used to operating under a Napoleonic civil law system does not realise all the practical consequences of such a rule. The influence of the concepts of reasonableness and fairness in Dutch law can hardly be overestimated,²⁰ but the rule certainly has its limits.

149. The rule in Article 6:248 Dutch Civil Code is heavily qualified by the requirement that the unfairness or unreasonableness of a certain term or condition must be unacceptable. This implies that the judge must apply the rule with great restraint. It is an inescapable conclusion that, as explained above, it is very rarely applied in relations between professional parties.²¹

150. If the rule were actually applied to Article 10, this could support the conclusion, in the Sole Arbitrator's opinion, that the very limited liability as to the quality of the drawings is unfair and unreasonable. But an at first sight unfair or unreasonable provision is not, in Dutch law, necessarily unacceptable. In a recent case the Dutch Supreme Court has expressly stated that where professional parties are concerned, the rule must be applied with "extra" restraint.²² The case concerned a company (GTI) which had undertaken to install a new central heating system in a public building. Due to a sub-contractor's established negligence there was a gas explosion which caused considerable damage. GTI's standard trading conditions contained a time bar of one year, which the building's owner (the Municipality of Noordoostpolder) was not aware of because it had not received a copy of the conditions. The Municipality's claim proved to be time-barred. The Municipality submitted that the time-bar provision constituted legal entrapment (a valkuil, literally translated a pitfall) and that reliance on it was unreasonable and unfair, and hence unacceptable. The argument failed. The Supreme Court said, inter alia (office translation):

- that the Municipality, as a (in the sense of Article 6:235 Dutch Civil Code) [note: as cited above] "large" and professionally acting co-contracting party, should be deemed to comprehend the importance of standard trading conditions which it accepted when the contract was made, which are made available at no cost, and which are customary in the trade involved, and that the risk is upon the Municipality when it does not request a copy of the standard trading conditions, even when considerable damage has been caused which it wants the user of the standard trading conditions to compensate,

- that in contracts between professionally or commercially acting large parties, extra restraint is generally in order where the question is the refusal to apply, based on Article 6:248, § 2 Dutch Civil Code, exemption clauses or clauses used instead of this, such as the present one which constitutes a shortening of the limitation period for a claim which has already been acknowledged.

151. In another, older case²³ the Dutch Supreme Court had ruled that reliance on exemption clauses is not contrary to good faith, i.e. that it does not go against reasonableness and fairness. This case is specifically worth mentioning because it concerns a contract between a shipyard and a ship owner. The yard De Schelde had effected repairs to a ship owned by Matatag. The replacement of a length of diesel oil piping had been subcontracted to SKS Piping. The work was not done properly, nor was it adequately supervised. The piping leaked and caused considerable cargo damage. The owner's action for damages against De Schelde failed, because the yard was allowed to rely on standard trading conditions (Cebosene), which excluded consequential damage. The Supreme Court held (office translation):

The contract in question is one between two companies - viz. a shipping company and a shipyard - which belong to industry sectors that regularly trade with one another and in which standardisation of contracts through general conditions with exemptions is a daily occurrence.

152. It is thus well established in Dutch law that "large" contracting parties acting professionally or commercially, are not, or only in a very limited way, entitled to protection against exemption clauses.²⁴ It may naturally be assumed that large contracting parties have sufficient expertise, and hold a market position such that they do not need protection against contract clauses which they have agreed to.²⁵ This restrictive application of the reasonableness and fairness test to

commercial contracts has been a marked tendency in Dutch law since the nineties of the previous century.²⁶

153. The Claimant's second argument with regard to the contractual limitation of liability is that it must be construed contra proferentem. This argument is even more problematic than the first one. First, it is doubtful whether there is much to construe or interpret. In order for a contract to be interpreted, it must obviously be in need of interpretation, i.e. there must be some ambiguity or obscurity. The text of Article 10, § 2 is sufficiently clear as it refers to all deliverables under Annex III of the Contract, and that includes the drawings, as explained above. Secondly, in the Sole Arbitrator's opinion it is far from clear that the clause was drafted exclusively by the Respondent and that thus any construction must be to its disadvantage. From the language of the Contract, and from the fact that the specific clauses derogate considerably from the Respondent's standard trading conditions, it would seem more likely that there was actual negotiation between the Parties, which is supported by the correspondence preceding the making of the Contract (cf. Chapter 3.2).

154. Even if one were inclined to accept the possibility of a contra proferentem construction, the question is whether this is at all feasible in Dutch law.²⁷ The Claimant has defended this point extensively (Third Submissions, 31 May 2011 … and the attached legal opinion …) and the Respondent has equally extensively denied it (Third Submissions, 30 June 2011 …). The Claimant's arguments are nonetheless hardly convincing. The Sole Arbitrator has carefully reviewed the case law which both Parties have referred to. First, the leading Supreme Court cases cited by the Respondent²⁸ confirm its position on construction contra proferentem, i.e. that it is not a rule in Dutch law, but merely a consideration of fact that may be taken into account, depending on the circumstances of the case. The Sole Arbitrator would agree with the Respondent that (as already indicated above) such circumstances are not present in the case at hand. Secondly, the example cited by the

Claimant as an application of the contra proferentem rule²⁹ has been criticized.³⁰ In a case such as the present one, there is no reason to deviate from obviously well-established case law of the highest court in favour of relatively obscure decisions by hierarchically much lower courts.

155. The effect of Article 10 is in the Sole Arbitrator's opinion only further reinforced by Article 8. In other words, the Respondent does not need to rely on Article 8 in order to have the benefit of the limitation of liability in Article 10. Insofar as necessary, however, the Sole Arbitrator would agree with the Respondent that the reference to a guarantee period "above" instead of "below" is a mere and obvious material mistake, which should have no influence upon the meaning of the clauses.

156. Insofar as Article 6 of the Respondent's standard trading conditions is concerned, although, as explained above, they form part of the Contract, for the present purposes the Sole Arbitrator finds that the general rules in Article 6 are overruled by the specific liability rules contained in the Contract itself. It is therefore not necessary to expand on the relationship between the Contract and the standard trading conditions attached to it.

157. For that matter, both the Respondent's standard trading conditions and the Dutch "General Yardconditions" are fairly comparable to internationally used conditions such as the SAJ³¹ and AWES³² forms, and thus not at all unusual.

158. In the Sole Arbitrator's opinion the result thus arrived at accurately represents the present state of Dutch law. This is reflected in the staunch defence, in legal writings, of the pacta sunt servanda principle,³³ and in somewhat pithy statements like "commerce does not require legal fairness, but legal certainty''.³⁴

6.3.4.5. Construction of the contractual warranty: compensation

159. In the Sole Arbitrator's opinion, there can be no doubt that consequential damage has been validly excluded from the Respondent's liability. First, in Article 8, § 3, second sentence, of the Contract it is stated, specifically with regard to consequential damage, that the Respondent "shall also be under no obligation for any consequential damage or losses occasioned by any defects, discovered either during or after the guarantee period, or for any demurrage or for any loss

of time in operating or repairing the vessel or both, caused by such defects" (italics added). As will be discussed below, the Parties disagree as to the existence of any warranty period. This, however, does not have any influence upon this provision, as it operates expressly outside of any warranty period. This Article in itself would suffice, in the Sole Arbitrator's opinion, to exclude consequential damage.

160. In view of the above, any contractual liability that may attach to the Respondent is limited to "direct" damage, as opposed to "consequential" or "indirect" damage. The question remaining is what is to be understood by these expressions. The distinction is not made in the Dutch Civil Code. These concepts are, however, extremely common in practically all types of (international) contract, and they reflect the understandable worry of any contracting party that it should be liable for unforeseeable and potentially catastrophic damage, caused by an initial breach of a duty incumbent upon it, but then cascading down a line of causally linked occurrences.

161. The expressions are so generic that their exact meaning has been defined in various manners.³⁵ The most common definition, however, would seem to be that consequential damage is all damage suffered by a party, as a consequence of a breach of duty, in its property other than that directly affected by the breach.³⁶ The classic example (from the 18th century) is that of a sick cow (for which a seller would be liable) which subsequently infects an entire herd, eventually leading to the buyer's bankruptcy.³⁷ Although the concept of direct damage thus appears to have been developed primarily in the law of sale of goods,³⁸ it has been expanded to the law of obligations (not only contract) in general. In the present case, the similarity is remarkable: a breach of duty (if there is any will be discussed further on) by the service provider leads to relatively limited direct damage (a defective design, like the sick cow) and very considerable consequential damage (a ship being built according to this design, leading to the need for extensive repairs, to corresponding downtime and thus to loss of income and profit). The suggestion made by the Claimant, that "for resolving whether damage qualifies as direct damage [it] seems to be decisive whether the damage can be attributed to the default/breach of contract" (Claimant's Third Submissions, 31 May 2011, and the attached legal opinion …), appears to be based on a minority position.³⁹ In the Sole Arbitrator's opinion the submission is arguably incorrect, because it mingles the concepts of damage and causation. It appears hard to reconcile, for that matter, with the above-cited decision in Matatag/ De Schelde,⁴⁰ where cargo damage on board of a ship that had occurred as a consequence of badly installed diesel oil piping was considered, without much comment, as "consequential damage" for the purposes of the scope of application of an exemption clause. That damage was less remote than the one in the present case.

162. Furthermore, the Claimant's interpretation, even if it were upheld, does not help with regard to the present Contract. The Contract itself clearly defines the extent to which the Respondent is liable in Article 10, and thus it indicates what "direct damage" means in its context. In Article 10, § 2 it is provided that, should any of the delivered components (as set out in Annex III to the Contract and thus including the drawings) prove to be defective (the drawings are covered by the reference to bad workmanship, as explained above), the Respondent undertakes to replace or repair only the defective parts. In Article 10, § 3 it is repeated that the warranty (defined in Article 10, § 1) is limited to this free repair or replacement of defective or inadequate parts. And in Article 10, § 5 it is repeated once more that the Respondent will not be liable for any further consequential damages (italics added).

163. The Respondent has, before the Contract was made, very clearly and unequivocally indicated that it did not agree to any liability for consequential damage. On 19 September 2005, the Respondent wrote, with regard to the contract negotiation, not once but twice that consequential damage was not acceptable (Claimant's Exhibit 11-16, Appendix B-5 …, concerning Article 10, §§ 2-3 of the Contract). This incidentally shows that Article 10 was certainly subject to negotiations and that the Claimant was aware of its contents (cf. also Chapter 3.2, on the formation of the Contract).

164. It is a matter of certainty that, had the Respondent knowingly, and thus intentionally, delivered defective drawings, it would be liable without any limitation, and it would not be able to rely on any contractual clause to that effect.⁴¹ In the Sole Arbitrator's opinion, nevertheless, there is no indication whatsoever of intentional behaviour.

165. In Dutch law, there is considerable difference of opinion to what extent, if any, a contracting party may exempt itself from liability for wilful misconduct or gross negligence, either by itself or by its servants and agents.⁴² In the Sole Arbitrator's opinion, however, there is no indication whatsoever of such behaviour, nor is any hard evidence to this effect brought forward by the Claimant.

6.3.4.6. Construction of the contractual warranty: time bar

166. The relevant dates for the application of the contractual time bars are as follows, as derived from Article 10, § 2 of the Contract.

167. As the Contract contains a specific time bar, it stands to reason that the general time bar of 6 months contained in Article 6, § 1 of the Respondent's standard trading conditions, which in the present case basically covers the same occurrences, cannot apply.

168. In the system as set out in the Contract, the alternative time limit would lead to all claims being time-barred on 22 September 2007, which is, in the wording of the Contract, "not later than 24 months from the date of effectiveness of this Agreement" (Respondent's Final Written Arguments, 2 March 2012 …); that is, if by "effectiveness" is meant the date of entry into force of the Contract.

169. Although the vessel was, judging at first sight from the dates, built with normal despatch (although it is certainly possible to build it faster), this would mean that the possibility of stating a claim as against the Respondent would be time-barred even before the vessel was delivered, not only with regard to the drawings and designs, but also with regard to the hardware and software delivered. In the Sole Arbitrator's opinion, this constitutes unacceptable unreasonableness in the sense of Article 6:248 Dutch Civil Code, as explained above. It leads to an quasi-absolute exemption from all liability, as it is unlikely that the Claimant would be able to establish the existence of defects (with the exception of immediately obvious ones) before the sea trials and the delivery of the vessel; as indicated above, this would apply not only to the drawings, but also to all other components delivered by the Respondent. Furthermore, this clause may well constitute a "pitfall" (valkuil) for the Claimant, as it may not have realized, during negotiations, that the expression "date of effectiveness" meant "date of entry into force".

170. The Sole Arbitrator finds that there is no evidence that the Claimant should have discovered the damage to the ship earlier, and that thus the requirement of Article 6:89 Dutch Civil Code, that the Claimant should have notified the Respondent timely and with despatch as of the moment that the damage was discovered or should have been discovered, has not been met. It is not clear why a brand-new vessel should be thoroughly inspected earlier than the Claimant did (within a year after its delivery), nor does the Respondent offer any evidence as to the statement that the damage must have been clearly visible at an earlier time.

171. Had the outcome of the case specifically hinged on this aspect, the Sole Arbitrator would devote more attention to it and review more case law (in view of the rare application of Article 6:248 Dutch Civil Code between professional parties), but the reality of the matter is that there are a number of other aspects which make that the Claimant's action cannot succeed.

6.3.4.7. Extent of the Respondent's potential liability within the contractual framework

172. From the above considerations, the following final picture emerges.

173. The Respondent is held to its contractual duty of warranty until one year after the delivery of the vessel. The second limb of the provision that the warranty cannot extend to more than two years after the "date of effectiveness" of the Contract is unreasonable and unfair and consequently inacceptable in the sense of Article 6:248 Dutch Civil Code.

174. The complaint which the Claimant has made is timely.

175. The limitation of the duty to compensate to direct damage as defined in the Contract is valid in Dutch law. The Claimant cannot rely on Article 6:248 Dutch Civil Code to set aside the unequivocal rule set out in the Contract regarding the duty to compensate, nor is it entitled to a contra proferentem construction of the contractual rule.

176. Consequential damage has been validly excluded in Articles 8 and 10 of the Contract.

177. Conclusion. Under Article 10, §§ 2, 3 and 5 of the Contract, the Respondent is liable only for the replacement of any defective drawings and designs. As a matter of legal certainty under Dutch law, the duty to compensate for any other damage has been validly excluded. This means that the Claimant cannot obtain compensation for either the structural damage caused to [the vessel] or the loss of income and profit caused by the vessel's downtime.

6.4. The Respondent's contractual duties

6.4.1. Area of dispute

178. Although the conclusions above are in fact fatal to the Claimant's action, the Sole Arbitrator deems it useful to briefly address this point obiter because, as explained above, it is at the heart of the matter.

179. The Parties agree that the Contract is one, in Dutch law, for opdracht. This is a specific contract, the essence of which is that one party renders services for which the other pays. It is, in Dutch law, notwithstanding its specific regulation in Book 7 Civil Code, a generic concept which encompasses agency (lastgeving), mediation (bemiddeling), commercial agency (agentuur), medical treatment (medische behandelingsovereenkomst), and travel contracts (reisovereenkomst). There would appear to be no translation in the English language which covers the exact same concept; it will be further referred to as "contract for services". The contract is defined as follows:

Article 7:400

1. A contract for services is the contract under which the first party, the service provider, has undertaken vis-à-vis the second party, the principal, to perform work other than that under an employment contract and consisting of something different than the making of a tangible construction, the storage of property, the publication of a work, or the carriage or organisation of carriage of passengers or goods.

2. Articles 401-412 apply unless another result derives from the law, from the content or nature of the contract for services or any other legal act, or from custom, without prejudice to Article 413.

180. The rights and duties of the contracting parties are enumerated in general in Articles 7:401-7:412 Dutch Civil Code.⁴³ The Parties most strongly disagree, however, on the precise extent of the rights and duties which such a contract entails for the principal and the service provider.

6.4.2. The Claimant's position

181. The Claimant submits that the Respondent was, or should have been, perfectly aware of the use that [the vessel] would be put to. The Respondent is a reputable specialist in the field of dredgers and related ship types, and it should have made certain that it was completely informed about the requirements of its customer. Therefore the Respondent is in breach of contract for delivering a design that failed to take into account the particular circumstances in which the ship would be used.

6.4.3. The Respondent's position

182. The Respondent stresses the fact that the Claimant is just as much a professional, and that it has extensive experience with this type of vessel. The Respondent states that there have been extensive negotiations and technical discussions; that the Claimant was asked specifically to define the requirements to which the vessel should answer; and that at no time the Claimant disclosed the conditions in which the vessel would be used, and which, in the Respondent's view, amount to misuse.

6.4.4. The Sole Arbitrator's analysis and conclusions

183. It would appear reasonably certain that in the present Contract the design risk is upon the designer. From the construction of Article 10 as explained above, it follows that it was included in the contractual warranty; this, however, has severely, but validly, limited the designer's liability. Had the Respondent also contracted for the building of a ship, this would have been no different. This is the only practical meaning that may be attached to the Respondent's letter to the Claimant of 12 January 2006 (Claimant's Exhibit II-16, Appendix B-10 to the [expert] Report), in which an offer is made for the building of the vessel and in which it is mentioned that in that case the Respondent will assume the design risk. The offer was never accepted and from its contents no consequences can be derived with regard to the first (present) Contract, the more so as any such inference would be barred by the entire agreement clause in Article 15 of the present Contract. And finally, the 2006 offer also incorporates the [Respondent] General Conditions, with their limitation of liability clauses, as well as the Dutch "General Yardconditions".

184. Hypothetically speaking, had there been no valid contractual limitation of liability, the outcome would not, in the Sole Arbitrator's opinion, have been any different. Opdracht is a very wide­ranging specific contract which leaves a substantial amount of the contractual content to the general rules of contract law. This is certainly true where exemption clauses and standard trading conditions are concerned.⁴⁴

185. The standard of care incumbent upon the service provider is that of a normally prudent, reasonable and diligent person placed in the same circumstances. In other words, the onus of proof as to whether this contractual duty of care has in any way been breached is on the principal, in the present case the Claimant. There is neither a reversal of the burden of proof nor a presumption of fault or of liability.

186. The Claimant devotes detailed attention to the duties of a service provider (Fourth Submissions, 30 November 2011 …).⁴⁵ Nevertheless, the excerpts which the Claimant cites from authority are so generally formulated as to prove nothing more than that a service provider must act according to the above-described standard of care.

187. There is no specific statutory information duty incumbent upon the principal. The contract is made in the principal's interest and it is left entirely up to its discretion to what extent it wants to cooperate in the performance of the service. Without the required information, however, the service provider will often not be capable of performing the service adequately, but the service provider obviously cannot be held liable for this situation.⁴⁶ In the eyes of the law a service provider does not generally have an interest in the good performance of the service. This is only in the principal's interest, to whom it is in principle left to defend that interest as it sees fit.

188. In the present case, the Claimant essentially deduces that the Respondent's drawings were inherently defective, because the vessel could not be used in the way that the Claimant intended to use it. This, however, would appear to be the proverbial bridge too far, at least where the applicable Dutch law is concerned. Even if no contractual exemption from or limitation of liability were to apply, the Claimant's statement reflects a basically incorrect train of thought.

189. The Respondent agreed with the Claimant on a number of general specifications. On 30 August 2005, the Respondent requested the Claimant to complete a data sheet on which hard figures could be incorporated. The Claimant sent this sheet to the Respondent with a minimum of data (Claimant's Exhibit II-11, d. Chapter 3.2 above). In those circumstances there is no evidence that the Respondent should have been aware that the working conditions for [the vessel] would be any different than those which it had assumed until then.

190. In its own expert report … (Claimant's Exhibit II-16), the Claimant's operations are described as follows (Claimant's Exhibit II-16 …):

The work to be carried out by the [vessel] is tipping, fundamentally that of a material called "Quarry Run", which one can define as being the remainder from a quarry front, i.e. the product resulting from a quarry's operations that cannot be classified, being made up of loose material generally weighing less than 50 kg, although there may on occasions be some heavier rocks. The loaded ship sails to the zone where the dikes are under construction for the future … port, gets into position and unloads through the bottom.

In order to prepare the loading system a study is made on the height of the ships (waterline and height of the freeboard in the area of the hopper), the draught in the loading zone and the tidal range (the difference between high tide and low tide for spring tides, the highest of the year).

For this a ramp was designed, as high as it is wide, being adapted for the ships that are going to work on the site (page 10).

As one can see from the drawings, the ramp is 7 m high over the maximum low water level (mean low water springs), i.e. in the worst of cases the ship's flotation distance from the level of the truck is 7 m, in all other cases, which is the majority, this is reduced almost to the half, 3.75 m (page 12).

The width of the ramp is suitable for being able to spread the truck's tipping over the length of the hopper. The "dumper" type trucks being used have a capacity of 110 tons/unit (page 13).

Also among the works to be carried out by the ship on site is transporting concrete or heavy rock blocks, work which is carried out with a different process, with the ships being loaded with mechanical loading means such as a back-digger or a crane, but never with loading directly from trucks. This work has been carried out to date with other ships with lower capacity, even though these are also carried out on some occasions by the [vessel].

In the following pictures one can see how the process for loading concrete blocks using cranes is done carefully without impacts on the hopper protections (page 18).

Likewise, the loading of heavy rockfill is carried out using a back digger in an ordered manner so as to avoid damaging the ships (page 19).

The same explanation was given by [the] fleet supervisor for the Claimant, at the Hearing on 12 September 2011.

191. In rather stark contradiction to these statements, the Respondent has produced photographs showing loading operations of a vessel said to be [the vessel in this dispute] (Respondent's Exhibit II-B). The veracity of these photographs was not denied by the Claimant, but there appears to be discussion as to the date on which they were made. The latter point is not of particular importance: they were certainly made after the delivery of the vessel, at a time when nothing could be done about the vessel's construction, and they are not instrumental in deciding whether the Respondent should have been aware, at the time the Contract was made, of the Claimant's operation methods. On the photographs, one sees a dumper truck loaded with large rocks, some of them larger than the man standing next to the truck in the photograph. Such rocks may easily weigh 2 metric tons, and in another photograph one sees the dumper truck emptying its load directly into the ship's hold. This is remarkably at odds with the Claimant's description, lending credibility to the Respondent's version. It is likely, and at least there is no evidence at all to the contrary, that the Respondent worked on the factual assumptions contained in the Claimant's explanation, and these appear to be incorrect.

192. The Respondent has inquired, at least two times, expressly about the cargo that would be loaded (Claimant's Exhibits II-4, II-10 and II-11). On the information sheet that was returned by the Claimant on 30 August 2005 (and which the Respondent requested that it be completed in as much detail as possible), there was a separate section for indicating the diameter and the weight of the rocks that would be loaded. In the Sole Arbitrator's opinion, it is normal, under these circumstances, that the Respondent did not know that loading conditions such as those shown on the photographs would prevail.

193. As mentioned above (cf. Chapter 3.2), the only element which somewhat supports the Claimant's factual position is the description contained in the Technical Specification of 30 November 2005 (Claimant's Exhibit II-16, Appendix E …). The Sole Arbitrator is of the opinion that this does not suffice to refute all the other elements described above, as the qualification remains altogether too vague. A "heavy" rock may be one of 500 kilogrammes (as suggested by the Respondent) and not necessarily one of 2,000 kilogrammes.

194. The Claimant cites case law in support of its position that the Respondent's behaviour was not up to the required standard of care (Claimant's Fourth Submissions, 30 November 2011 …). The case concerns a building contract.⁴⁷ In the relevant chapter of the Dutch Civil Code, i.e. Book 7, Title 12, on building contracts, it is stated, inter alia:

Article 7:754

The builder must, both upon the conclusion and during the performance of the contract, warn the principal about errors in the work as instructed, insofar as he was, or should have been, aware of these. The same applies in case of defects or unsuitability of things supplied by the principal, including the land on which the principal has the work performed, and of errors or defects in plans, drawings, designs, calculations, specifications and estimations, or performance instructions supplied by the principal.

The Respondent disputes that the case is relevant (Respondent's Fourth Submissions, 31 January 2012 …). The Sole Arbitrator agrees. In the cited case, the builder's negligence was established as it should have been aware, as a specialist, that certain instructions of its client, who was not a specialist, were incorrect. It is hard to see how this case could be compared to the one at hand, where the Respondent (the equivalent of the builder in the cited case) did not receive incorrect instructions or data, but data which proved to be insufficient but which were inquired after on at least two occasions.

195. Conclusion. Even if the Claimant's submissions regarding the defectiveness, or rather the inadequacy, of the Respondent's design were correct, the Claimant fails to prove that in the specific circumstances of the case the Respondent was aware, or at least should have been aware, of the strenuous requirements with which the vessel would have to comply in order to successfully withstand the extreme conditions in which it would be working.

6.5. Remaining issues

196. In view of the above conclusions, that the Respondent may rely on its contractual limitation of liability, and that in any case there is insufficient evidence of a distinct breach of a duty incumbent upon the Respondent, the Sole Arbitrator deems it unnecessary to further deal with the two remaining questions: whether [the vessel] is objectively inadequate for the type of work for which the Claimant has used the vessel; and whether the various heads of damages enumerated by the Claimant, and disputed by the Respondent, have been calculated correctly. Any further considerations on these matters could not lead to any different result.

6.6. The counterclaim

197. As to the counterclaim, the reasoning may be kept very brief. On 18 July 2008, the Respondent sent an invoice to the Claimant in the amount of …, for costs occasioned by the commissioning of [the vessel], ending in November 2007. The invoice was received by the Claimant and not disputed or protested. The invoice had been the subject of letters by the Respondent to the Claimant on 7 December 2007 (Respondent's Exhibit II-F) and on 21 March 2008 (Respondent's Exhibit II-F). According to these letters, the matter was also discussed at the Claimant's offices on 20 February 2008. As far as can be ascertained, the Claimant has not replied either to the letters or to the invoice. In those circumstances the invoice must be deemed to have been accepted. The reasoning developed by the Respondent in its submissions is upheld (Respondent's Second Submissions, 31 March 2011 …). In fact, the Claimant's only defence against the Counterclaim, that it would be allowed to set off the Counterclaim against its own Claim for damages (Claimant's Final Written Submissions, 17 February 2012 …) is tantamount to an implicit admission that the Respondent's invoice is due (otherwise no set-off would be necessary).

198. In Dutch law, interest is calculated following Article 6:119a Dutch Civil Code, which provides:

Article 6:119a

1. The compensation due for a delay in the payment of a sum of money, consists in case of a commercial contract of the statutory interest on that sum from the day following the day which was agreed upon as the final day for payment until and including the day on which the debtor has paid the sum due. A commercial contract means a contract for remuneration which obliges one or more parties to deliver or to do something and which has been concluded between one or more physical persons acting in their professional or commercial practice or business, or legal persons.

2. Where no expiry date for payment has been agreed upon, the statutory interest shall be due by force of law:

a) as of 30 days following the date on which the debtor has received the invoice, or

b) if the date of receipt of the invoice is uncertain, or if the debtor has received the invoice earlier than the performance, as of 30 days after the beginning of the day on which performance was received;

[...]

3. At the end of each year, the amount on which the statutory interest is calculated is increased with the statutory interest due for that year.

[...]

199. The amount of interest should be calculated applying the above described statutory rules. The starting date for the calculation of interest is 17 August 2008, i.e. 30 days following the invoice date on 18 July 2008 (Article 6:119a, § 2-a). The interest rate varies according to the applicable Dutch statutory rate (Article 6:119a, § 1). Compound interest rules apply (Article 6:119a, § 3). This leads to the calculation shown below. The amount as of 17 August 2012 (start of a new year) cannot be shown as it depends on the date of actual payment. …

200. Conclusion. The Counterclaim is founded. The Claimant is ordered to pay to the Respondent its invoice in the amount of … plus interest at the statutory rate until the date of payment.

7. Costs

201. As explained in Chapter 5, neither Party has initially given a full detail of their costs, although they were, in general, claimed in the various submissions. On 25 July 2012, the Sole Arbitrator reopened the proceedings in order to request both Parties to submit their review of costs which they wished to recoup by 1 August 2012 and to submit comments on each other's costs by 6 August 2012.

202. The rule governing the power of the Sole Arbitrator to decide on costs is set forth in Article 31 ICC Rules:

The costs of the arbitration shall include the fees and expenses of the arbitrators and the ICC administrative expenses fixed by the Court, in accordance with the scale in force [...], as well as the fees and expenses of any experts appointed by the Arbitral Tribunal and the reasonable legal and other costs incurred by the parties [...]

203. The result of this Arbitration is that the Respondent has been successful and its Counterclaim has been upheld. The Claimant has been unsuccessful and its Claim has been dismissed. As a matter of principle, the Sole Arbitrator rules that the Respondent is entitled to be paid its reasonable costs by the Claimant. The Claimant is not entitled to be paid any costs.

204. On 31 July 2012, the Respondent submitted its review of costs, indicating that it wishes to recover costs in the amount of … including its advance on the costs of arbitration in the amount of ...

205. On 1 August 2012, the Claimant submitted its review of costs, indicating that it wishes to recover costs in the amount of … plus its advance on the costs of arbitration in the amount of ...

206. On 6 August 2012, the Respondent submitted comments on the Claimant's costs.

207. By way of preliminary remark, it should be noted that the amount mentioned by the Claimant as having been paid as advance on the costs of arbitration is clearly erroneous. Both Parties paid equal advances in the amount of …, as confirmed in the Secretariat's letter of 19 July 2010 to the Parties and to the Sole Arbitrator.

208. Consequently, the legal and other costs on which the Sole Arbitrator is to decide pursuant to the above-mentioned Article 31 are in the amount of … for the Respondent. What is left to decide is to what extent these costs are reasonable.

209. The Sole Arbitrator has a large measure of discretion as to the determination of allowable reasonable costs. Somewhat surprisingly, the Claimant submitted no comment at all on the Respondent's costs.

210. The Respondent's costs are divided into the following heads:

- External legal fees ([Respondent's country]) [amount]

- External legal fees ([Claimant's country]) [amount]

- External expert fees [amount]

- Translation costs [amount]

- Travelling costs for hearing [amount]

- Costs [Respondent's] engineers [amount]

211. Generally, reasonable costs include the fees and expenses of legal counsel, the costs of experts, consultants and witnesses, other costs associated with the production of documents or attendance at hearings and the costs of interpreters and translators.⁴⁸

212. Thus, the Sole Arbitrator is of the opinion that there is little room for discussion on the items "external expert fees", "translation costs" and "travelling costs for the hearing". They appear entirely normal.

213. The costs for [Respondent's] engineers falls within the general heading of "in-house costs". This is an area which is somewhat disputed and in which the decision may go both ways.⁴⁹ In the present case, however, it would appear reasonable to expect from in-house engineers of a specialized firm that they are familiar with the work performed by their firm and that they may be required, for any number of plausible reasons, to acquaint or re-acquaint themselves with the specifics of the work regarding a certain contract. In the Sole Arbitrator's view, this does not represent a special cost incurred by the Respondent for the purposes of the arbitration; rather, it is part of its normal operating expenses. For this reason, no allowance will be made for these costs.⁵⁰

214. The remaining question concerns the legal fees. The fees for the Respondent's … lawyers [in its home country] ([amount]) are literally double those of the Claimant's … lawyers (in its home country] [amount]). Here the question as to reasonableness may obviously arise. Nevertheless, the Sole Arbitrator does not believe that there are indications that the legal fees paid by the Respondent are inherently unreasonable. The Respondent has employed one reputable … law firm [in its country],⁵¹ and the invoices submitted by the Respondent clearly refer to the present case.⁵² Neither Party has submitted details as to time spent and hourly rates, so it may well be that the Dutch lawyers simply spent more time on the preparation of the case. Furthermore, the Claimant's invoice for the services of a … lawyer [in the Respondent's country] regarding aspects of [local] law is also relatively high [amount]) in comparison to that of the … lawyers [in the Claimant's country], so it would appear that both Parties accept the fact that … legal services [in the Respondent's country] are more expensive. That assumption is supported by the fact that, as mentioned above, the Claimant has not commented on the Respondent's costs.

215. The Sole Arbitrator nevertheless feels that two items are outside the reasonableness criterion as described above. The Respondent claims fees paid to a … law firm [in the Claimant's country] in the amount of …; it has been explained above, in § 98, that the relevant opinion was not part of the exhibits and that it was not particularly helpful in determining the outcome of a specific question regarding [the law applicable to the assignment]. Consequently, this part of the costs is not allowed. Furthermore, the Respondent has submitted, in its comments on the Claimant's costs, that the Claimant is not entitled to any VAT. As a professional enterprise, the Claimant is entitled to claim any VAT paid from the [local] Tax Authorities or set off the same with VAT amounts due to the [local] Tax Authority (Respondent's Reply on Costs, 6 August 2012). That argument would seem to be correct, but it cuts both ways. The Respondent, too, has claimed VAT as all its [local] lawyers' invoices include … VAT. This should consequently be deducted from the amount claimed, reducing it to [amount].

216. The reasonable costs awarded to the Respondent are thus as follows:

-External legal fees ([Respondent's country]) [amount]

-External expert fees [amount]

-Translation costs [amount]

-Traveling costs for hearing [amount]

The total amount awarded is …

217. As regards the arbitration costs, including the ICC administrative fees, out-of-pocket expenses and arbitrators' fees, the general approach is that the winning party should be reimbursed by the losing party.

218. The International Court of Arbitration having fixed the ICC costs at the amount of …, both the Claimant and the Respondent having advanced [amount], the Claimant shall refund the Respondent the amount of …

8. Award

In view of the above, the Sole Arbitrator, in this present Award, decides as follows.

a) The Claimant's Claim is dismissed in full.

b) The Claimant is ordered to pay the Respondent the sum of [amount].

c) The Claimant is ordered to pay the Respondent interest, at the rate p.a. defined in Article 6:119a Dutch Civil Code, until full payment.

d) The Claimant is to bear the Respondent's legal and other costs in the amount of …

e) The Claimant is to bear the costs of the arbitration, fixed by the Court at [amount].'

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1
Wet conflictenrecht corporaties: wet van 17 december 1997, houdende regels van internationaal privaatrecht met betrekking tot corpora ties. This Act has been repealedon 1 January 2012 and replaced by the new Book 10 of the Dutch Civil Code, which is a general codification of private internationallaw. The above-mentionedArticle3 hasbeenliterallycopiedintoArticle 10:119.

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2
H.J. Snijders, M. Ynzonides and G.J. Meijer, Nederlands burgerlijk procesrecht, Deventer, Kluwer, 2002, no. 58.

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3
1980 Rome Convention on the law applicable to contractual obligations, Official Journal C 027, 26 January 1998, pp. 34–46. On 20 September 2007, the date of the lease agreement and hence the assignment, Regulation 593/2008, which replaces the Rome Convention, had not yet been enacted.

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4
For a general explanation of Dutch private international law on this matter and the way in which it has beenchangedbythe Rome Convention, cf. L. Strikwerda, Inleiding tot het Nederlandse Intemationaal Privaatrecht, Deventer, Kluwer, 2008, nos. 189–192.

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5
S. Curtis, The Law of Shipbuilding Contracts, London, LLP, 2002, 217–225.

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6
Abu Dhabi National Tanker Company v. Product Star Shipping Company Limited (No 2) [1993] 1 Lloyd's Rep. 397. Leggatt LJ said: "Where A and B contract with each other to confer a discretion on A, that does not render B subject to A's uninhibited whim. In my judgment the authorities show that not only must the discretion be exercised honestly and in good faith, but, having regard to the provisions of the contract by which it is conferred, it must not be exercised arbitrarily, capriciously or unreasonably." Cf. also S. Curtis, The Law of Shipbuilding Contracts, London, LLP, 2002, 221.

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7
The dictum by Lord Justice Leggatt, cited in the previous footnote, could be perfectly transposed into Dutch law.

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8
Linden Gardens Trust Ltd v. Lenesta Sludge Disposals Ltd and Others, [1994] 1 A.C. 85. Lord Browne-Wilkinson said: "In such a case, it seems to me proper, as in the case of the carriage of goods by land, to treat the parties as having entered into the contract on the footing that Corporation [note: the first buyer] would be entitled to enforce contractual rights for the benefit of those who suffered from defective performance but who. under the terms of the contract, could not acquire any right to hold McAlpine [the builder] liable for breach. It is truly a case in which the rule provides 'a remedy where no other would be available to a person sustaining loss which under a rational legal system ought to be compensated by the person who has causedit'."

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9
NLSC (HR) 11May 2102, NJ2012, 318, RvdW2012, 726, LJN BW0730.

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10
Conclusion by Advocate-General M.H. Wissink,§ 3.13, and ref. cited.

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11
R.H.C. Jongeneel, "Gebondenheid", in B. Wessels, R.H.C. Jongeneel and M.L. Hendrikse, Algemene voonoaarden, in Recht en praktijk, vol. 143, Deventer, Kluwer, 2006, (103) 114; Jac. Hijma and M.M. Olthof, Compendium Nederlands vermogensrecht, Deventer, Kluwer, 2011, 330–331.

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12
NLSC (HR) 2 February 2001, NJ 2001, no. 200, LJN AA9767.

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13
R.H.C. Jongeneel, "Gebondenheid", in B. Wessels, R.H.C. Jongeneel and M.L. Hendrikse, Algemene voorwaarden, in Recht en praktijk, vol. 143, Deventer, Kluwer, 2006, (103) 113; L.J.H. Molenberg, Het collectief actierecht voor consumentenorganisaties op het terrein van de algemene voorwaarden, Arnhem, Gouda Quint, 1995, 173–174.

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14
Cf. the references to case law in R.H.C. Jongeneel, "Gebondenheid", in B. Wessels, R.H.C. Jongeneel and M.L. Hendrikse, Algemene voonoaarden, in Recht en praktijk, vol. 143, Deventer, Kluwer, 2006, (103) 113: CA Arnhem 19 October 1993, TvC 1994, p. 27, case note J. Rinkes; CA The Hague 22 March 2005, LJN AT1762, where a further reference to other standard trading conditions was deemed unreasonably burdensome (for consumers).

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15
R.H.C. Jongeneel, "Gebondenheid", in B. Wessels, R.H.C. Jongeneel and M.L. Hendrikse, Algemene voonoaarden, in Recht en praktijk, vol. 143, Deventer, Kluwer, 2006, (103) 113, and ref. cited.

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16
Aktiebolaget Gotaverken v. Westminster Corporation of Monrovia and Another, [1971] 2 Lloyd's Rep. 505. Mr. Justice Donaldson (ashethen was)said(at p. 512): "The contract,as varied,requiredGotaverkento supply watertighthatchcovers. This required good workmanship both in the design and the execution,and ifthere were design errors, I see no reason why these should not be characterised and attract liability as bad workmanship. The alternative view would be that Gotaverken escaped all liability [ ...] which seems an improbable result for the parties to have intended."

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17
A.S. Hartkamp and C.H. Sieburgh, Algemeen overeenkomstenrecht, in Asser-serie, vol. 6, Verbintenissenrecht, III, Kluwer, Deventer, 2010, no. 355.

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18
A.S. Hartkamp and C.H. Sieburgh, Algemeen overeenkomstenrecht, in Asser-serie, vol. 6, Verbintenissenrecht, III, Kluwer, Deventer, 2010, no. 362

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19
A.S. Hartkamp and C.H. Sieburgh, Algemeen overeenkomstenrecht, in Asser-serie, vol. 6, Verbintenissenrecht, III, Kluwer, Deventer, 2010, no. 122.

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20
Cf., in general: A.S. Hartkamp and C.H. Sieburgh, Algemeen overeenkomstenrecht, in Asser-serie, vol. 6, Verbintenissenrecht, III, Kluwer, Deventer, 2010, nos. 391–457.

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21
R.H.C. Jongeneel, "Aansprakelijkheidsbeperking", in B. Wessels, R.H.C. Jongeneel and M.L. Hendrikse, Algemene voorwaarden, in Recht en praktijk, vol. 143, Deventer, Kluwer, 2006, (281) 295.

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22
NLSC (HR) 15 October 2004, NJ 2005, 141, LJN AP1664; subsequently remanded to CA Den Bosch 5 February 2008, LJN BC4957.

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23
NLSC (HR) 31 December 1993, NJ 1995, 389 (De Schelde/Matatag). On this case, cf. also J.M. van Dunne, Verbintenissenrecht, Deel 1: contractenrecht, Deventer, Kluwer, 2004, 431–434.

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24
C. te Ronde, "'Terughoudende toetsing bij derogerende werking redelijkheid en billijkheid in geval van professionele partijen'. Hof Den Bosch 5 februari 2008 LJN BC4957", MvV2008, 124–128.

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25
R.P.J.L. Tjittes, "Enige opmerkingen over de beperkte rol van redelijkheid en billijkheid in het ondernemerscontract", Contracteren 2001, (31) 33–35.

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26
H.N. Schelhaas, "Pacta sunt servanda bij commerciële contractanten. Over redelijkheid & billijkheid en objectieve uitleg bij handelscontracten", NTBR 2008, (150) 154–157, reviewing cases.

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27
In Dutch law, construction is subject to criteria set by the Supreme Court in the leading Haviltex case: NLSC (HR) 13 March 1981, NJ 1981, 635, note CHJB (Ermes/Haviltex). For a recent example, cf. NLSC (HR) 17 February 2006, LJN AU9717 (Royal & Sun Alliance/Universal).

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28
NLSC (HR) 14 September 1993, Nf 1993, no. 760: in a consumer insurance policy, construction contra proferentemis not a rule, but a general view which may be taken into account depending on the circumstances of the case; NLSC(HR) 18 October 2002, NJ 2003, no. 258: collective employee insurance, where the contra proferentem principle is, as a general view (again not as a rule), not contrary to the Haviltex criteria; NLSC (HR) 10 October 2003, NJ 2004, no. 22; NLSC (HR) 3 October 2008, NJ 2009, no. 80; adde NLSC (HR) 9 September 1994, NJ 1995, no. 285: in a consumer insurance policy, the judge is not obliged to opt for an interpretation more in favour of the insured, if in reasonableness he deems a clause drafted by the insurer to be clear in a particular sense.

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29
Civ. Ct. Utrecht 11 August 2010, LJN BN3799 (cited in the Claimant's Third Submissions, attached legal opinion …, and in the Respondent's Third Submissions, 30 June 2011 …).

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30
Cf. www.prolaw.nl/archives/2010/08/18.

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31
The Shipbuilders' Association of Japan, 1974.

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32
Standard Shipbuilding Contract of the Association of European Shipbuilders and Shiprepairers, 1999.

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33
H.N. Schelhaas, "Pacta sunt servanda bij commerciële contractanten. Over redelijkheid & billijkheid en objectieve uitleg bij handelscontracten", NTBR 2008, (150) 160.

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34
R.P.J.L. Tjittes, "Enige opmerkingen over de beperkte rol van redelijkheid en billijkheid in het ondememerscontract", Contracteren 2001, (31) 32

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35
Cf. generally in Dutch law: T.F.E. Tjong Tjin Tai, "Directe schade in het contractenrecht", MvV 2007, 226–231. The author extensively reviews Dutch case law and authorities on the concept of direct damage as opposed to consequential or indirect damage.

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36
Jac. Hijma and M.M. Olthof, Compendium Nederlands vermogensrecht, Deventer, Kluwer, 2011, no. 364.

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37
R.-J. Pothier, Traité des obligations, I, Paris, Debure, Orleans, Rouzeau, 1764, nos. 166–167.

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38
Jac. Hijma, Koop en ruil, in Asser-serie, vol. 5, Bijzondere overeenkomsten, I, Kluwer, Deventer, 2007, no. 475.

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39
The suggestion is made by T.F.E. Tjong Tjin Tai, "Directe schade in het contractenrecht", MvV2007, (226) 230. The author is certainly an authoritative scholar, but the suggestion is clearly personal and is not supported by any case law.

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40
NLSC (HR) 31 December 1993, NJ 1995, 389 (Matatag/De Schelde)

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41
NLSC (HR) 20 februari 1976, NJ 1976, no. 486 (pseudovogelpest, Newcastle Disease or NCD). Coincidentally and somewhat ironically, this decision is about livestock, too.

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42
For a thorough review, cf. J.M. van Dunne, Verbintenissenrecht. Deel 1: contractenrecht, Deventer, Kluwer, 2004, 409–460.

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43
Cf. generally: T.F.E. Tjong Tjin Tai, Opdracht incl. de geneeskundige behandelingsovereenkomst en de reisovereenkomst, in Asser­serie, vol. 7, Bijzondere overeenkomsten, IV, Kluwer, Deventer, 2009, nos. 98–111; K.F. Haak and R. Zwitser, Opdracht aan hulppersonen, Deventer,Kluwer,2003,123–135.

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44
T.F.E. Tjong Tjin Tai, "Algemene voorwaarden en opdracht", in B. Wessels, RH.C. Jongeneel and M.L. Hendrikse, Algemene voorwaarden, in Recht en praktijk, vol. 143, Deventer, Kluwer, 2006, 543–545

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45
The Claimant's arguments are based upon the above cited monograph by Tjong Tjin Tai, which is identified as the leading authority on the subject in Dutch law. The Sole Arbitrator would agree to this.

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46
K.F. Haak and R Zwitser, Opdracht aan hulppersonen, Deventer, Kluwer, 2003, 134.

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47
NLSC (HR) 11 June 2011, LJN BM1733. The Claimant refers to the judgment of the Court of Appeal under review: CA 's Gravenhage 16 December 2008; but as far as the Sole Arbitrator has been able to ascertain, this has not been reported.

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48
Y. Derains and E.A. Schwartz, A Guide to the New ICC Rules of Arbitration, Deventer, Kluwer Law International, 1998, p. 337; A. Redfern and M. Hunter, Law and Practice of International Commercial Arbitration, London, Sweet & Maxwell, 2003, no. 8-90; W.L. Craig, W.W. Park and J. Paulsson, International Chamber of Commerce Arbitration, ICC Publication no. 594, Oceana, 2000, 394; J. Fry, S. Greenberg and F. Mazza, The Secretariat's Guide to ICC Arbitration, ICC Publication no. 729, 2012, no. 3-1490; B.__PARAGRAPH__Hanotiau, "The Parties' Costs in International Arbitration", in Evaluation of Damages in International Arbitration, ICC Publication no. 668, 2006, 213.

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49
Cf. the examples given by B. Hanotiau, "The Parties' Costs in International Arbitration", in Evaluation of Damages in International Arbitration, ICC Publication no. 668, 2006, 215–216.

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50
Cf. B. Hanotiau, "The Parties' Costs in International Arbitration", in Evaluation of Damages in International Arbitration, ICC Publication no. 668, 2006, 216, with reference to ICC Case no. 6293.

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51
Retaining several law firms for one and the same case has been held to be unreasonable: cf. B. Hanotiau, "The Parties' Costs in International Arbitration", in Evaluation of Damages in International Arbitration, ICC Publication no. 668, 2006, 219, with reference to ICC Case no. 5726.

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52
Other motives which were relied upon to hold legal costs unreasonable equally do not apply here. There is no evidence that the work of the lawyers was not related to an alleged participation in the arbitration. The amount claimed is supported by invoices. The submissions and witness statements were not useless and dealt with issues which were relevant to the arbitration. Cf. B. Hanotiau, "The Parties' Costs in International Arbitration", in Evaluation of Damages in International Arbitration, ICC Publication no. 668, 2006, 219, with reference to ICC Cases no. 6564, 8032, 5731 and 6959.

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