De toute Cvidence, un Tribunal arbitral est prive des moyens dont dispose la Commission de la Communaute (ainsi que, au-dessus d'elle, la Cour de Justice dans sa fonction de contrble) pour se livrer a ces apprkciations Cconomiques complexes et ces etudes de marche. On se bornera a constater ici l'existence de cette difficult6 considerable, qui semble avoir CchappC a l'attention du Tribunal federal en son arrCt du 28 avril 1992 ainsi, d'ailleurs, qu'a un savant commentateur de cette decision (prof. L. Idot, Revue de I'arbitrage 1993, no 1, pp. 128-136); dans une interessante note a la suite de I'arrCt, l'auteur observe d'abord que si le Tribunal fCdCral a justement observi. que rien n'emdchait les arbitres d'appliquer le droit communautaire, le vrai problbme Ctait de savoir s'il y avait obligation pour eux d'appliquer ce droit, ce que I'arrCt semble admettre implicitement sans en expliquer les raisons. Quant a la question de savoir si l'application du droit communautaire de la concurrence "reprksente pour les arbitres une charge excessive", question negligee par I'arrCt, l'auteur y rCpond succinctement par la nCgative, de la faqon suivante : "il est evident qu'un arbitre ne dispose pas des mCmes moyens que la DG IV, mais on ne lui demande pas d'Ctablir la preuve de pratiques anticoncurrentielles complexes, requkrant des mois d'enquCte et il lui suffit de se prononcer sur la liceit6 d'un contrat".

PAR CES MOTIFS

Le Tribunal arbitral

Statuant a l'unanimiti

1. Dit que, en vertu de l'art. 21 du contrat du 23 octobre 1986 et de 1'Acte de mission des 23,27 et 30 octobre 1989 et suite a llarrCt du Tribunal fCdCral du 28 avril 1992, il est compCtent pour trancher le litige;

2. Dit que le contrat du 23 octobre 1986 est compatible avec le droit communautaire, et rejette en consequence la demande de S. S.p.A. tendant au prononce de la nullite, totale ou partielle, de ce contrat;

3.2 Sentence finale dans I'arbitrage CCI no 7047lJJA du 28 fkvrier 1994'

Security for costs - Procedural Rules to be applied by the Arbitral Tribunal - New Claims - Right to be heard: ('No) right to demand an interim or prelirninaly award; Refusal to hear a witness; right to the last word - Admissible evidence (telefax letters) - Applicable Law (to the substance) - Mandatory Rules of other laws - Authority of representatives (validity of agreement) - Brokerage contract - (no) Corruption or bribery -Interest.

Final Award between W., a Corporation organized and existing under the laws of the Republic of X. (Claimant) and F., a State agency (Defendant I). and a, a bank authorized and existing under Y. law (Defendant 2), rendered by the Arbitral Tribunal consisting of Messrs. Hilmar Raeschke-Kessler (Chairman). Me. Jean Patry and Prof. Dr. Dobrosav Mitrovic.

The place of Arbitration was Geneva, Switzerland.

A. FACTS

1.1) The Claimant is a corporation organized and existing under the laws of X. ...

On ...., the parties concluded a contract under the heading "Agreement", in which Defendant 1) is referred to as "Principal", Defendant 2) as "Guarantor" and the Claimant as "Consultant". The Amendments I - IV are part of the .... Agreement.

' See also above, p. 222, the decision on appeal of the Swiss Federal Tribunal of 30.12.1994

De toute Cvidence, un Tribunal arbitral est prive des moyens dont dispose la Commission de la Communaute (ainsi que, au-dessus d'elle, la Cour de Justice dans sa fonction de contrble) pour se livrer a ces apprkciations Cconomiques complexes et ces etudes de marche. On se bornera a constater ici l'existence de cette difficult6 considerable, qui semble avoir CchappC a l'attention du Tribunal federal en son arrCt du 28 avril 1992 ainsi, d'ailleurs, qu'a un savant commentateur de cette decision (prof. L. Idot, Revue de I'arbitrage 1993, no 1, pp. 128-136); dans une interessante note a la suite de I'arrCt, l'auteur observe d'abord que si le Tribunal fCdCral a justement observi. que rien n'emdchait les arbitres d'appliquer le droit communautaire, le vrai problbme Ctait de savoir s'il y avait obligation pour eux d'appliquer ce droit, ce que I'arrCt semble admettre implicitement sans en expliquer les raisons. Quant a la question de savoir si l'application du droit communautaire de la concurrence "reprksente pour les arbitres une charge excessive", question negligee par I'arrCt, l'auteur y rCpond succinctement par la nCgative, de la faqon suivante : "il est evident qu'un arbitre ne dispose pas des mCmes moyens que la DG IV, mais on ne lui demande pas d'Ctablir la preuve de pratiques anticoncurrentielles complexes, requkrant des mois d'enquCte et il lui suffit de se prononcer sur la liceit6 d'un contrat".

PAR CES MOTIFS

Le Tribunal arbitral

Statuant a l'unanimiti

1. Dit que, en vertu de l'art. 21 du contrat du 23 octobre 1986 et de 1'Acte de mission des 23,27 et 30 octobre 1989 et suite a llarrCt du Tribunal fCdCral du 28 avril 1992, il est compCtent pour trancher le litige;

2. Dit que le contrat du 23 octobre 1986 est compatible avec le droit communautaire, et rejette en consequence la demande de S. S.p.A. tendant au prononce de la nullite, totale ou partielle, de ce contrat;

3.2 Sentence finale dans I'arbitrage CCI no 7047lJJA du 28 fkvrier 1994'

Security for costs - Procedural Rules to be applied by the Arbitral Tribunal - New Claims - Right to be heard: ('No) right to demand an interim or prelirninaly award; Refusal to hear a witness; right to the last word - Admissible evidence (telefax letters) - Applicable Law (to the substance) - Mandatory Rules of other laws - Authority of representatives (validity of agreement) - Brokerage contract - (no) Corruption or bribery -Interest.

Final Award between W., a Corporation organized and existing under the laws of the Republic of X. (Claimant) and F., a State agency (Defendant I). and a, a bank authorized and existing under Y. law (Defendant 2), rendered by the Arbitral Tribunal consisting of Messrs. Hilmar Raeschke-Kessler (Chairman). Me. Jean Patry and Prof. Dr. Dobrosav Mitrovic.

The place of Arbitration was Geneva, Switzerland.

A. FACTS

1.1) The Claimant is a corporation organized and existing under the laws of X. ...

On ...., the parties concluded a contract under the heading "Agreement", in which Defendant 1) is referred to as "Principal", Defendant 2) as "Guarantor" and the Claimant as "Consultant". The Amendments I - IV are part of the .... Agreement.

' See also above, p. 222, the decision on appeal of the Swiss Federal Tribunal of 30.12.1994

I It was the purpose of the Agreement that Claimant was to assist Defendant 1) in the sale of military products and armaments to the State of Z., represented by the Ministry of Defence - MOD - among others of M-84-tanks manufactured in Y.

The Defendants signed the ... Agreement in B.

2) On ... Defendant 1) and MOD signed a contract on the delivery of 215 I

different M-84-tanks at the total sales price of US-$ 500.546.004,- and UKE 11.440.326,29 - the M-84-contract.

Prior to conclusion of the M-84 contract, the MOD supplied to Defendant 1) a circular - the MOD-circular - containing the request that contracts on the delivery of arms, ammunition and spare parts be made directly with the MOD without the participation of an agent or

I

intermediary.

The MOD also handed circular Nr. 4 A188 to Defendant 1). Circular Nr. 4 A188 u.a. obliges the partners to contracts with MOD to refrain from paying moneys to an agent. The partner also has to assure to the MOD that his prices do not contain commissions for agents or similar moneys. It is disputed between the parties whether Defendant 1) already knew of the MOD-circular and of circular Nr. 4 A188 when concluding the ...... Agreement with Claimant, and whether the MoD- circular is applied by the Z. authorities.

3) Defendant 1) was instigated by the MOD-circular to send the following letter to Claimant on ... :

"Dear Sirs,

Due to its impact on implementation of the contract signed on ......... between W, and F., with U. as Guarantor, please find enclosed hereto a copy of the Circular. At the time of signing the contract we were not aware of the content of the Circular. You were surely acquainted, at the time of contract signature, with the limitations imposed by this legal enactment."

On ......, Defendant 1) sent another letter to Claimant, reading as follows:

"Dear Sirs,

Since the Agreement, signed on ..... between W. and F., is not in accordance with the compulsory laws and regulations of both the State of Z. and Y., we are ready to negotiate with you the terms and conditions of termination of the said Agreement.

We are prepared to start the discussion on the termination by the end of July and would very much appreciate your information on the date of your arrival to B.... to that end.

In respect of the aforementioned, we do not expect you to proceed with the activities regarding the matter you are referring to in your letter dated ...."

Defendant 1) considers the letter of ....., to constitute the termination of the Agreement of. ....... The request to Claimant to cease its activities on behalf of Defendant 1) has been repeated in other letters subsequently.

4) On ....... , Defendant 1) and the MOD concluded a contract on the construction of M-84-training-facilities - construction-contract. (According to Amendment I to that contract, the construction price payable by the MOD to Defendant 1) was to be US-$39.109.528,00.

I It was the purpose of the Agreement that Claimant was to assist Defendant 1) in the sale of military products and armaments to the State of Z., represented by the Ministry of Defence - MOD - among others of M-84-tanks manufactured in Y.

The Defendants signed the ... Agreement in B.

2) On ... Defendant 1) and MOD signed a contract on the delivery of 215 I

different M-84-tanks at the total sales price of US-$ 500.546.004,- and UKE 11.440.326,29 - the M-84-contract.

Prior to conclusion of the M-84 contract, the MOD supplied to Defendant 1) a circular - the MOD-circular - containing the request that contracts on the delivery of arms, ammunition and spare parts be made directly with the MOD without the participation of an agent or

I

intermediary.

The MOD also handed circular Nr. 4 A188 to Defendant 1). Circular Nr. 4 A188 u.a. obliges the partners to contracts with MOD to refrain from paying moneys to an agent. The partner also has to assure to the MOD that his prices do not contain commissions for agents or similar moneys. It is disputed between the parties whether Defendant 1) already knew of the MOD-circular and of circular Nr. 4 A188 when concluding the ...... Agreement with Claimant, and whether the MoD- circular is applied by the Z. authorities.

3) Defendant 1) was instigated by the MOD-circular to send the following letter to Claimant on ... :

"Dear Sirs,

Due to its impact on implementation of the contract signed on ......... between W, and F., with U. as Guarantor, please find enclosed hereto a copy of the Circular. At the time of signing the contract we were not aware of the content of the Circular. You were surely acquainted, at the time of contract signature, with the limitations imposed by this legal enactment."

On ......, Defendant 1) sent another letter to Claimant, reading as follows:

"Dear Sirs,

Since the Agreement, signed on ..... between W. and F., is not in accordance with the compulsory laws and regulations of both the State of Z. and Y., we are ready to negotiate with you the terms and conditions of termination of the said Agreement.

We are prepared to start the discussion on the termination by the end of July and would very much appreciate your information on the date of your arrival to B.... to that end.

In respect of the aforementioned, we do not expect you to proceed with the activities regarding the matter you are referring to in your letter dated ...."

Defendant 1) considers the letter of ....., to constitute the termination of the Agreement of. ....... The request to Claimant to cease its activities on behalf of Defendant 1) has been repeated in other letters subsequently.

4) On ....... , Defendant 1) and the MOD concluded a contract on the construction of M-84-training-facilities - construction-contract. (According to Amendment I to that contract, the construction price payable by the MOD to Defendant 1) was to be US-$39.109.528,00.

5) In performance of the M-84-contract, Defendant 1) delivered tanks, I

ammunition, and spare parts to Z. The tanks were used by Z. in the war against I. The scope of deliveries and the considerations received I

by Defendant 1) from the MOD are disputed between the parties.

Defendant 1) has received an advance payment of US-$6.000.000,- I

on the construction-contract. It is disputed between the parties whether the construction-contract continues to exist and whether Defendant 1) I

has performed its obligations due to the MOD under that contract. i I

The payments made by the MOD to Defendant 1) were not transacted I

by Defendant 2) but by the National Bank of Y. I

6) After the Agreement of ...... was concluded the Claimant sent I

numerous telefax letters to Defendant I), relating mainly to the M-84- project between Defendant 1) and the MOD, but also to other projects I between Defendant 1) and the MOD. All letters are unsigned. The I Claimant continued to send such letters after ....... Prior to ......, Col. S., who was in charge of the M-84-project for Defendant I), confirmed the receipt of several such letters. The same was done by Mr. D., at the I time Y's ambassador to Z. ,

Defendant 1) alleges that the information contained in the letters was useless and did not promote its projects with the MOD, and that they

I

were the only activities performed by Claimant.

There is no dispute that Claimant was not directly involved in the negotiations between Defendant 1) and the MOD. It is disputed, however, whether Claimant was engaged in any activities involving the MOD in favour of Defendant I), other than writing the letters. The nature of Claimant's activities is also disputed.

11. Claimant requested the Defendants to pay the "Consultant's fees" pursuant to sect. 4 of the Agreement of ...... , and demanded Defendant 2) to open the letters of guarantee, pursuant to sect. 6 of the Agree- ment, for the M-84-contract and for the construction-contract. Those issues were negotiated between Claimant and Defendant 1) at B....., L ...... and C ....., without result.

By letter of ......., Defendant 1) directed Defendant 2) to make no payments whatsoever to Claimant.

B. Arbitration Procedure

C. REASONS

I. Procedural Issues

1. Valid Arbitration Clause (...I

2. Power of Attorney for Claimant's Counsels (...I

3. Sufficient Address of Claimant (. .

4. No Security on Costs

Defendants are of the opinion that they are entitled to demand from Claimant a security for the procedural costs. Defendant 1) moved the Arbitral Tribunal to order Claimant to deposit US-$600.000,- as security for procedural costs Defendant 2) made the same motion. The Arbitral Tribunal dismissed the motions in Order No. 5 sect. 3 of ....., and announced that the reasons will be given in the Arbitral Award. The decision is based on the following considerations:

Defendant 1) gave as the main reason for its motion that Claimant is an off-shore-company in X. without any assets, except US-$ 10.000,- distributed as the share capital. X. is the Claimant's state of domicile, and Y. has no bilateral convention of securing the costs of arbitral procedures. If Defendant were to win the case, Art. 26 of the ICC- rules could not be implemented and respected.

5) In performance of the M-84-contract, Defendant 1) delivered tanks, I

ammunition, and spare parts to Z. The tanks were used by Z. in the war against I. The scope of deliveries and the considerations received I

by Defendant 1) from the MOD are disputed between the parties.

Defendant 1) has received an advance payment of US-$6.000.000,- I

on the construction-contract. It is disputed between the parties whether the construction-contract continues to exist and whether Defendant 1) I

has performed its obligations due to the MOD under that contract. i I

The payments made by the MOD to Defendant 1) were not transacted I

by Defendant 2) but by the National Bank of Y. I

6) After the Agreement of ...... was concluded the Claimant sent I

numerous telefax letters to Defendant I), relating mainly to the M-84- project between Defendant 1) and the MOD, but also to other projects I between Defendant 1) and the MOD. All letters are unsigned. The I Claimant continued to send such letters after ....... Prior to ......, Col. S., who was in charge of the M-84-project for Defendant I), confirmed the receipt of several such letters. The same was done by Mr. D., at the I time Y's ambassador to Z. ,

Defendant 1) alleges that the information contained in the letters was useless and did not promote its projects with the MOD, and that they

I

were the only activities performed by Claimant.

There is no dispute that Claimant was not directly involved in the negotiations between Defendant 1) and the MOD. It is disputed, however, whether Claimant was engaged in any activities involving the MOD in favour of Defendant I), other than writing the letters. The nature of Claimant's activities is also disputed.

11. Claimant requested the Defendants to pay the "Consultant's fees" pursuant to sect. 4 of the Agreement of ...... , and demanded Defendant 2) to open the letters of guarantee, pursuant to sect. 6 of the Agree- ment, for the M-84-contract and for the construction-contract. Those issues were negotiated between Claimant and Defendant 1) at B....., L ...... and C ....., without result.

By letter of ......., Defendant 1) directed Defendant 2) to make no payments whatsoever to Claimant.

B. Arbitration Procedure

C. REASONS

I. Procedural Issues

1. Valid Arbitration Clause (...I

2. Power of Attorney for Claimant's Counsels (...I

3. Sufficient Address of Claimant (. .

4. No Security on Costs

Defendants are of the opinion that they are entitled to demand from Claimant a security for the procedural costs. Defendant 1) moved the Arbitral Tribunal to order Claimant to deposit US-$600.000,- as security for procedural costs Defendant 2) made the same motion. The Arbitral Tribunal dismissed the motions in Order No. 5 sect. 3 of ....., and announced that the reasons will be given in the Arbitral Award. The decision is based on the following considerations:

Defendant 1) gave as the main reason for its motion that Claimant is an off-shore-company in X. without any assets, except US-$ 10.000,- distributed as the share capital. X. is the Claimant's state of domicile, and Y. has no bilateral convention of securing the costs of arbitral procedures. If Defendant were to win the case, Art. 26 of the ICC- rules could not be implemented and respected.

These considerations are not conclusive. The ICC-Rules do not provide for security on costs. However, Art. 9 ICC-Rules states that in principle, Claimant and Defendant pay the advance on costs fixed by the ICC Court of Arbitration in equal shares, therefore the defendant has to pay half of the advance on costs. The provision expresses the mutual obligations of the parties who contractually agreed to submit to arbitration,

Craig/Park/Paulsson, loc. cit., p. 245.

In the present case, the Defendants preferred not to follow the ICC- Court of Arbitration's invitation to pay their share in the advance on costs. Therefore the burden to pay the total advance on costs or to ' I

I provide a bank-guarantee fell to Claimant alone, who had no other way of continuing the arbitration procedure, pursuant to Art. 9 sect. 3 ICC-Rules. Under these circumstances, the Arbitral Tribunal holds that Claimant would be unduly burdened if requested to provide an additional security to the Defendants for their costs.

Nor do the special circumstances of the case, in the opinion of the Arbitral Tribunal, justify to grant the Defendants' motion. The Defendants knew that Claimant is a corporation domiciled in X. on conclusion of the Agreement of ........ , as stated on page 1 of the Agreement. The Defendants were also aware, or should have been, that there is no bilateral convention securing the costs of arbitral procedures between Y. and X. Defendant 1) is a large state-owned Y. enterprise, whose director is appointed directly by the President of the Republic of Y., as the present director Lt. General J. informed the Tribunal at his hearing. Defendant 2) is a bank who is also owned by the Y. State. The Defendants signed the Agreement of ....... voluntarily, thereby accepting the arbitration clause in Art. 9 of the Agreement. If the Defendants were concerned about the enforceability of potential claims against the Claimant awarded to them in an arbitration procedure, it was up to them to ascertain this possibility before signing the Agreement. Having omitted this examination on conclusion of the Agreement of ...., this determines their position in the ensuing arbitration procedure.

5. Procedural Rules to be Applied by Arbitral Tribunal

In the Terms of Reference, Defendant 1) objected to the Arbitral Tribunal's applying procedural rules, including the mandatory provisions of the Swiss Statute on International Private Law - LDIP -, in addition to the ICC-Rules. However, already at the hearing of ......, Defendant 1) invoked several provisions of LDIP, and continued to do so in the course of the procedure. The Arbitral Tribunal therefore decided, in accordance with Art. 11 ICC-Rules, that on specific issues it must apply mandatory rules of the LDIP.

The dispute is an international arbitration procedure within the meaning of Art. 176 sect. 1 LDIP. In sect. 9 of the Agreement of ......, the Parties expressly agreed on Geneva as the venue of arbitration. It is generally agreed that the provisions of chapter 12 of LDIP are to be applied to arbitration procedures which meet the definitions of Art. 176 LDIP,

Lalive/PoudretReymond, Le droit de l'Arbitrage, Lausanne 1989, Art. 176, ann. 12; WalterlBoscW Brijnnimann, Internationale Schiedsgerichtsbarkeit in der Schweiz, Bern 1991, p.35 et seq.

6. Admissibility of Claimant's Motion under Sect. F 1 3 TOR

7. Admissibility of Claimant's Prayer for Relief as in its Replica (...)

cc) The majority of the Tribunal deems the motions for payment contained in the Replica to be admissible against Defendant 2), and within the limits of Art. 16 ICC-Rules. These motions were also contained in nuce in the Request for Arbitration, where Claimant alleged that Defendant 2) was obligated under clause 6 of the ....- Agreement to immediately open an irrevocable letter of guarantee in W.'s favour for the entire amount of W.'s fees. It specified

These considerations are not conclusive. The ICC-Rules do not provide for security on costs. However, Art. 9 ICC-Rules states that in principle, Claimant and Defendant pay the advance on costs fixed by the ICC Court of Arbitration in equal shares, therefore the defendant has to pay half of the advance on costs. The provision expresses the mutual obligations of the parties who contractually agreed to submit to arbitration,

Craig/Park/Paulsson, loc. cit., p. 245.

In the present case, the Defendants preferred not to follow the ICC- Court of Arbitration's invitation to pay their share in the advance on costs. Therefore the burden to pay the total advance on costs or to ' I

I provide a bank-guarantee fell to Claimant alone, who had no other way of continuing the arbitration procedure, pursuant to Art. 9 sect. 3 ICC-Rules. Under these circumstances, the Arbitral Tribunal holds that Claimant would be unduly burdened if requested to provide an additional security to the Defendants for their costs.

Nor do the special circumstances of the case, in the opinion of the Arbitral Tribunal, justify to grant the Defendants' motion. The Defendants knew that Claimant is a corporation domiciled in X. on conclusion of the Agreement of ........ , as stated on page 1 of the Agreement. The Defendants were also aware, or should have been, that there is no bilateral convention securing the costs of arbitral procedures between Y. and X. Defendant 1) is a large state-owned Y. enterprise, whose director is appointed directly by the President of the Republic of Y., as the present director Lt. General J. informed the Tribunal at his hearing. Defendant 2) is a bank who is also owned by the Y. State. The Defendants signed the Agreement of ....... voluntarily, thereby accepting the arbitration clause in Art. 9 of the Agreement. If the Defendants were concerned about the enforceability of potential claims against the Claimant awarded to them in an arbitration procedure, it was up to them to ascertain this possibility before signing the Agreement. Having omitted this examination on conclusion of the Agreement of ...., this determines their position in the ensuing arbitration procedure.

5. Procedural Rules to be Applied by Arbitral Tribunal

In the Terms of Reference, Defendant 1) objected to the Arbitral Tribunal's applying procedural rules, including the mandatory provisions of the Swiss Statute on International Private Law - LDIP -, in addition to the ICC-Rules. However, already at the hearing of ......, Defendant 1) invoked several provisions of LDIP, and continued to do so in the course of the procedure. The Arbitral Tribunal therefore decided, in accordance with Art. 11 ICC-Rules, that on specific issues it must apply mandatory rules of the LDIP.

The dispute is an international arbitration procedure within the meaning of Art. 176 sect. 1 LDIP. In sect. 9 of the Agreement of ......, the Parties expressly agreed on Geneva as the venue of arbitration. It is generally agreed that the provisions of chapter 12 of LDIP are to be applied to arbitration procedures which meet the definitions of Art. 176 LDIP,

Lalive/PoudretReymond, Le droit de l'Arbitrage, Lausanne 1989, Art. 176, ann. 12; WalterlBoscW Brijnnimann, Internationale Schiedsgerichtsbarkeit in der Schweiz, Bern 1991, p.35 et seq.

6. Admissibility of Claimant's Motion under Sect. F 1 3 TOR

7. Admissibility of Claimant's Prayer for Relief as in its Replica (...)

cc) The majority of the Tribunal deems the motions for payment contained in the Replica to be admissible against Defendant 2), and within the limits of Art. 16 ICC-Rules. These motions were also contained in nuce in the Request for Arbitration, where Claimant alleged that Defendant 2) was obligated under clause 6 of the ....- Agreement to immediately open an irrevocable letter of guarantee in W.'s favour for the entire amount of W.'s fees. It specified

US-$ 89.081.900,60 as the amount in which the credit facility was to be opened by Defendant 2) relating to the M-84-contract. The same applies to the construction-contract.

In the Request for Arbitration, Claimant alleged with respect to Defendant 2) that "the Guarantor breached its contractual commitment". In view of this, the damage claim against Defendant 2) mentioned in the Replica, pursuant to Art. 11 1 CO, is not basically new but is merely a legal conclusion drawn from facts communicated earlier in the Request for Arbitration. Sect. G I 12 Terms of Reference was to allow the Parties this.

The Terms of Reference state as "Issues to be Decided by the Arbitral Tribunal" under sect. G I 6:

"Is Defendant(2) also liable for the fees due to Claimant under the Agreement?"

However, this was clearly not final, as shown by the following sect. 12.

Claimants' claims resulting from Defendant's 2) breach of contract are discussed in detail in sect. 2.37 and sect. 5.4 of the Replica.

dd) A claim is new and not within the limits of Art. 16 ICC-Rules only if it raises issues of fact andlor law which are completely new compared with the issues in dispute so far,

Reiner, loc.cit., p. 178.

If, however, a claim is subsequently based on different legal reasoning, but still on the same facts, it is within the limits of Art. 16 ICC-Rules. An example is the Carte Blanche Arbitration. The ICC- award rendered there was confirmed by the US Court of Appeals, 2nd circuit,

Carte Blanche (Singapore) v. Carte Blanche International, US- Court of Appeals, 2nd cir. (1989) p. 6297 et seq.; cf. CraigParkIPaulsson, loc.cit., p. 255 et seq..

One party had brought forward a claim for damages against the other at the beginning of the arbitration, and had added the claim for consequential damages after the Terms of Reference had taken effect. The Arbitral Tribunal awarded damages and consequential damages. The US Court of Appeal held that the Arbitral Tribunal did not thereby exceed its authority.

8. Admissibility of Claimant's Prayer for Relief in its Final Brief (...>

a) Prayer for Relief against Defendant 1)

The Arbitral Tribunal deems the Prayer for Relief as presented by Claimant in its Final Brief against Defendant 1) to be admissible under the Terms of Reference.

aa) A motion filed in arbitration is a procedural act and also a party's unilateral declaration of intent. As such, it is subject to and may be in need of interpretation, as are other declarations of intent. It is generally agreed that the interpretation rule in Art. 18 CO is applicable to unilateral declarations of intent,

KramerISchmidlin, Berner Kommentar, Art.18 CO, ann. 50; von TuhrPeter, Allgemeiner Teil des Schweizerischen Obligationenrechts, Ziirich 1979, p. 286, fn 6.

As the real intent is to be elicited, "falsa demonstratio non nocet",

KramerISchmidlin, loc.cit., Art. 18 CO, ann. 83.

All circumstances in the entire context which may serve to detect or clear up the intentions of the parties must be taken into account,

KramerISchmidlin, loc.cit., Art. 18 CO, ann. 16.

bb) In the hearing of ....., Claimant declared that "there are absolutely no new allegations, no new claims ..." and "... we have not changed anything from the Replica".

US-$ 89.081.900,60 as the amount in which the credit facility was to be opened by Defendant 2) relating to the M-84-contract. The same applies to the construction-contract.

In the Request for Arbitration, Claimant alleged with respect to Defendant 2) that "the Guarantor breached its contractual commitment". In view of this, the damage claim against Defendant 2) mentioned in the Replica, pursuant to Art. 11 1 CO, is not basically new but is merely a legal conclusion drawn from facts communicated earlier in the Request for Arbitration. Sect. G I 12 Terms of Reference was to allow the Parties this.

The Terms of Reference state as "Issues to be Decided by the Arbitral Tribunal" under sect. G I 6:

"Is Defendant(2) also liable for the fees due to Claimant under the Agreement?"

However, this was clearly not final, as shown by the following sect. 12.

Claimants' claims resulting from Defendant's 2) breach of contract are discussed in detail in sect. 2.37 and sect. 5.4 of the Replica.

dd) A claim is new and not within the limits of Art. 16 ICC-Rules only if it raises issues of fact andlor law which are completely new compared with the issues in dispute so far,

Reiner, loc.cit., p. 178.

If, however, a claim is subsequently based on different legal reasoning, but still on the same facts, it is within the limits of Art. 16 ICC-Rules. An example is the Carte Blanche Arbitration. The ICC- award rendered there was confirmed by the US Court of Appeals, 2nd circuit,

Carte Blanche (Singapore) v. Carte Blanche International, US- Court of Appeals, 2nd cir. (1989) p. 6297 et seq.; cf. CraigParkIPaulsson, loc.cit., p. 255 et seq..

One party had brought forward a claim for damages against the other at the beginning of the arbitration, and had added the claim for consequential damages after the Terms of Reference had taken effect. The Arbitral Tribunal awarded damages and consequential damages. The US Court of Appeal held that the Arbitral Tribunal did not thereby exceed its authority.

8. Admissibility of Claimant's Prayer for Relief in its Final Brief (...>

a) Prayer for Relief against Defendant 1)

The Arbitral Tribunal deems the Prayer for Relief as presented by Claimant in its Final Brief against Defendant 1) to be admissible under the Terms of Reference.

aa) A motion filed in arbitration is a procedural act and also a party's unilateral declaration of intent. As such, it is subject to and may be in need of interpretation, as are other declarations of intent. It is generally agreed that the interpretation rule in Art. 18 CO is applicable to unilateral declarations of intent,

KramerISchmidlin, Berner Kommentar, Art.18 CO, ann. 50; von TuhrPeter, Allgemeiner Teil des Schweizerischen Obligationenrechts, Ziirich 1979, p. 286, fn 6.

As the real intent is to be elicited, "falsa demonstratio non nocet",

KramerISchmidlin, loc.cit., Art. 18 CO, ann. 83.

All circumstances in the entire context which may serve to detect or clear up the intentions of the parties must be taken into account,

KramerISchmidlin, loc.cit., Art. 18 CO, ann. 16.

bb) In the hearing of ....., Claimant declared that "there are absolutely no new allegations, no new claims ..." and "... we have not changed anything from the Replica".

"... and we have stated that in our Final Plea, that we are not asking for a double award. That is an award of $83-something million against the bank and of $63-odd million against the first defendant.

On page 47 of our Brief we have clearly stated, however, as a matter of law any amount of fees effectively received by W. from the S., in part or in whole execution of the arbitration award, shall be deducted from the amounts hereby claimed from the guarantor."

In the pleading of ....., Claimant writes:

"Thus, for the reasons discussed above, Claimant in its Final Brief was able to formulate the amount of its claim against the S. with more precision than in the Replica.

As a practical matter, this has resulted in a reduction in the amount claimed from Defendant(1) in Claimant's final Prayer for Relief. Nevertheless, the substance of W.'s claim against the S. remains the same - k, payment of its wrongfully- withheld fees based upon the S.'s receipt of payments from MOD under the M-84 and construction contracts."

To the Arbitral Tribunal' understanding the Claimant did not mean to extend its claims against Defendant 1) in its Final Brief but rather to withdraw and reduce them to the amounts specified in the Final Brief. Withdrawal of a complaint is possible at any time.

In its Final Brief, the Claimant requested separate Arbitral Awards against the Defendants, whereas it had moved for one Arbitration Award in the Replica. This does not bar admissibility. There was no intent to double the claim. Whether the Claimant is entitled to separate awards is an issue of merits.

b) Prayer for Relief against Defendant 2)

The majority of the Arbitral Tribunal deems the Prayer for Relief in Claimant's Final Brief against Defendant 2) admissible under the Terms of Reference.

The Arbitral Tribunal is unanimous that Claimant did not intend to double its claim by demanding separate Arbitral Awards against the Defendants in its Prayer for Relief. If this is so, the majority can see no relevant reasons barring the admissibility of the Prayer for Relief against Defendant 2).

In its Replica, the Claimant invoked sect. 6 of the .... Agreement - "Guarantor's liability" - to support its claims against Defendant 2). Claimant argued i.a., that Defendant 2) had undertaken to furnish Claimant with a bank guarantee for the entire amount of fees due to Claimant from Defendant 1); and that Defendant 2) had violated this obligation. The Claimant relied on Art. 11 1 CO for its claim against Defendant 2). Art. 111 CO secures the claim for damages in the amount of the interest in the performance of the contract,

Becker in Berner Kommentar, Art. 11 1, ann. 4; HonsellNogtI WiegandPestalozzi, loc.cit., Art. 11 1, ann. 18.

In its Final Brief, Claimant also relied on the claim derived from Art. 11 1 CO. Therefore there is no substantial change of the basis of claims directed against Defendant 2). As against Defendant I), the Claimant slightly reduced the claims against Defendant 2), as compared with the Replica, and to this extent withdrew the claim. This does not affect the admissibility.

9. No Violation of Defendants' Right to be Heard or Right of Defence

a) During the arbitration procedure Defendant 1) made several motions on mixed procedural and substantive issues, among others, that:

"... and we have stated that in our Final Plea, that we are not asking for a double award. That is an award of $83-something million against the bank and of $63-odd million against the first defendant.

On page 47 of our Brief we have clearly stated, however, as a matter of law any amount of fees effectively received by W. from the S., in part or in whole execution of the arbitration award, shall be deducted from the amounts hereby claimed from the guarantor."

In the pleading of ....., Claimant writes:

"Thus, for the reasons discussed above, Claimant in its Final Brief was able to formulate the amount of its claim against the S. with more precision than in the Replica.

As a practical matter, this has resulted in a reduction in the amount claimed from Defendant(1) in Claimant's final Prayer for Relief. Nevertheless, the substance of W.'s claim against the S. remains the same - k, payment of its wrongfully- withheld fees based upon the S.'s receipt of payments from MOD under the M-84 and construction contracts."

To the Arbitral Tribunal' understanding the Claimant did not mean to extend its claims against Defendant 1) in its Final Brief but rather to withdraw and reduce them to the amounts specified in the Final Brief. Withdrawal of a complaint is possible at any time.

In its Final Brief, the Claimant requested separate Arbitral Awards against the Defendants, whereas it had moved for one Arbitration Award in the Replica. This does not bar admissibility. There was no intent to double the claim. Whether the Claimant is entitled to separate awards is an issue of merits.

b) Prayer for Relief against Defendant 2)

The majority of the Arbitral Tribunal deems the Prayer for Relief in Claimant's Final Brief against Defendant 2) admissible under the Terms of Reference.

The Arbitral Tribunal is unanimous that Claimant did not intend to double its claim by demanding separate Arbitral Awards against the Defendants in its Prayer for Relief. If this is so, the majority can see no relevant reasons barring the admissibility of the Prayer for Relief against Defendant 2).

In its Replica, the Claimant invoked sect. 6 of the .... Agreement - "Guarantor's liability" - to support its claims against Defendant 2). Claimant argued i.a., that Defendant 2) had undertaken to furnish Claimant with a bank guarantee for the entire amount of fees due to Claimant from Defendant 1); and that Defendant 2) had violated this obligation. The Claimant relied on Art. 11 1 CO for its claim against Defendant 2). Art. 111 CO secures the claim for damages in the amount of the interest in the performance of the contract,

Becker in Berner Kommentar, Art. 11 1, ann. 4; HonsellNogtI WiegandPestalozzi, loc.cit., Art. 11 1, ann. 18.

In its Final Brief, Claimant also relied on the claim derived from Art. 11 1 CO. Therefore there is no substantial change of the basis of claims directed against Defendant 2). As against Defendant I), the Claimant slightly reduced the claims against Defendant 2), as compared with the Replica, and to this extent withdrew the claim. This does not affect the admissibility.

9. No Violation of Defendants' Right to be Heard or Right of Defence

a) During the arbitration procedure Defendant 1) made several motions on mixed procedural and substantive issues, among others, that:

The Arbitral Tribunal shall

- preliminary decide that the claims as in the Replica are not in the limits of the Terms of Reference and to reject them.

- to decide on the applicable law as a preliminary issue in order not to infringe Defendant's right to defence.

aa) The Arbitral Tribunal reserved decision on these motions until the Final Award. Defendant 1) thought this infringed its right to be heard and right to defence. La., it argued that it was deprived of defence against the claims raised in the Replica because they were not decided on by the Arbitral Tribunal.

bb) In the Arbitral Tribunal's opinion, Defendant's 1) right to be heard or right of defence has not been infringed during the arbitral procedure.

Under the Terms of Reference, the Parties have no right to demand an interim or preliminary award. Therefore, the Arbitral Tribunal's response to a Party's request for an interim or preliminary award is governed by Art. 11, 26 ICC-Rules, which leave it to the sole discretion of the Arbitral Tribunal to grant or to reject such a request,

Any interim or preliminary award automatically tends to delay the procedure. It is therefore the exception rather than the rule,

Reiner, loc.cit., p. 248 et seq.

Therefore a Party's right to be heard or right to defence is not infringed if the Arbitral Tribunal refuses such a motion.

After the briefs were submitted, a hearing was scheduled for .... to ....., for taking evidence and possibly for the Parties' Final Pleadings .

At the beginning of that session Defendant 1) reminded the Arbitral Tribunal to decide on its motion. The Arbitral Tribunal thereupon informed the Parties that it had discussed Defendant's 1) motion on ....., and would decide on it during or after the hearings. At the next hearing on ......, the Arbitral Tribunal issued its Order No. 5. Under sect. 5, it fixed ...... for the Final Pleadings. It was evident to Defendant 1) from the Order that the Arbitral Tribunal would not change its position as communicated. It therefore was or should have been aware that ....... was the last opportunity to present to the Arbitral Tribunal any arguments supporting its opinion.

Defendant 1) has in fact used its defences extensively at the hearing of ....., as documented by the nearly 200 pages of transcripts of the two days.

b) Defendant 1) deems its right to be heard and right to defence infringed if an Arbitral Award were rendered without hearing Mr. D. whom it called as a witness. The Arbitral Tribunal does not share this view.

aa) Mr. D. was Y's ambassador to Z. The Arbitral Tribunal has granted Defendant 1) sufficient time to present the witness at the hearing. Order No. 5 sect.2 made Defendant 1) aware that it was obliged to present the witness. The Arbitral Tribunal granted this opportunity on ......... by fixing a new hearing for ........ Defendant 1) thus had more than six weeks to produce the witness.

There is no procedural objection against the Claimant's renouncing the witness whom it had originally named itself. Each party to an arbitration procedure is free to name and to renounce witnesses as it deems fit. This does not infringe the equal chances of litigation of the respectively other party.

cc) In the present case, the Arbitral Tribunal never left Defendant 1) in any doubt that its motion would be rejected.

The Arbitral Tribunal shall

- preliminary decide that the claims as in the Replica are not in the limits of the Terms of Reference and to reject them.

- to decide on the applicable law as a preliminary issue in order not to infringe Defendant's right to defence.

aa) The Arbitral Tribunal reserved decision on these motions until the Final Award. Defendant 1) thought this infringed its right to be heard and right to defence. La., it argued that it was deprived of defence against the claims raised in the Replica because they were not decided on by the Arbitral Tribunal.

bb) In the Arbitral Tribunal's opinion, Defendant's 1) right to be heard or right of defence has not been infringed during the arbitral procedure.

Under the Terms of Reference, the Parties have no right to demand an interim or preliminary award. Therefore, the Arbitral Tribunal's response to a Party's request for an interim or preliminary award is governed by Art. 11, 26 ICC-Rules, which leave it to the sole discretion of the Arbitral Tribunal to grant or to reject such a request,

Any interim or preliminary award automatically tends to delay the procedure. It is therefore the exception rather than the rule,

Reiner, loc.cit., p. 248 et seq.

Therefore a Party's right to be heard or right to defence is not infringed if the Arbitral Tribunal refuses such a motion.

After the briefs were submitted, a hearing was scheduled for .... to ....., for taking evidence and possibly for the Parties' Final Pleadings .

At the beginning of that session Defendant 1) reminded the Arbitral Tribunal to decide on its motion. The Arbitral Tribunal thereupon informed the Parties that it had discussed Defendant's 1) motion on ....., and would decide on it during or after the hearings. At the next hearing on ......, the Arbitral Tribunal issued its Order No. 5. Under sect. 5, it fixed ...... for the Final Pleadings. It was evident to Defendant 1) from the Order that the Arbitral Tribunal would not change its position as communicated. It therefore was or should have been aware that ....... was the last opportunity to present to the Arbitral Tribunal any arguments supporting its opinion.

Defendant 1) has in fact used its defences extensively at the hearing of ....., as documented by the nearly 200 pages of transcripts of the two days.

b) Defendant 1) deems its right to be heard and right to defence infringed if an Arbitral Award were rendered without hearing Mr. D. whom it called as a witness. The Arbitral Tribunal does not share this view.

aa) Mr. D. was Y's ambassador to Z. The Arbitral Tribunal has granted Defendant 1) sufficient time to present the witness at the hearing. Order No. 5 sect.2 made Defendant 1) aware that it was obliged to present the witness. The Arbitral Tribunal granted this opportunity on ......... by fixing a new hearing for ........ Defendant 1) thus had more than six weeks to produce the witness.

There is no procedural objection against the Claimant's renouncing the witness whom it had originally named itself. Each party to an arbitration procedure is free to name and to renounce witnesses as it deems fit. This does not infringe the equal chances of litigation of the respectively other party.

cc) In the present case, the Arbitral Tribunal never left Defendant 1) in any doubt that its motion would be rejected.

bb) Defendant 1) requested the opportunity to trace Mr. D's address. Defendant 1) did not communicate any such address, but only the tele- phone number under which the Arbitral Tribunal tried to reach Mr. D., without success.

cc) The Arbitral Tribunal was unable to have Mr. D. examined as witness by letters rogatory, which would have been at its discretion under Art. 184 LDIP. The Claimant alleged, undisputedly, that there is at present no possibility between Switzerland and former Y. to obtain letters rogatory.

dd) Violation of the Defendants' right to be heard is ruled out also because they did not communicate what facts they expected Mr. D. to state. In addition, the decision of the Arbitral Tribunal is not based on facts submitted by Claimant and alleged to be confirmed by this witness.

c) The Defendants' right to be heard and right of defence is not infringed by the Arbitral Tribunal's Order of ....... concerning the sequence of written pleadings on the admissibility of Claimant's Final Prayer for Relief.

In order to defend itself adequately against Defendants' pleading that Claimant's Final Brief contained inadmissible new claims, Claimant first had to know the details of Defendants' allegations. The right to be heard and the right of defence is also due to Claimant, therefore it would be unreasonable to request that Claimant rebut the Defendants' allegations without knowing them, and then to allow the Defendants to comment on Claimants' defence. The Arbitral Tribunal has communicated its deliberations to the Parties. Its Order relies on Art. 1 1.26 ICC-Rules.

A defendant is generally entitled to the last word provided that the attack has come from the claimant. In the reverse situation, where the attack comes from the defendant, and the claimant has to plead defence, fair trial requires to grant the last word to the claimant. Fairness demands in this situation that defendant state his argument first and claimant be given the opportunity of defence.

10. Admissible Evidence

a) During the inspection of documents the Defendants recognized only part of the exhibits presented by Claimant, such as the telefax letters whose receipt was confirmed by Col. S., in charge for Defendant I), or by Mr. D. then Y.'s ambassador. Exhibits recognized by Defendant I) are undoubtedly admissible evidence.

b) Defendant 1) deems Claimant's telefax letters presented in copy inadmissible evidence except for those it expressly recognized as originals during the inspection of documents. The Arbitral Tribunal does not share this opinion. It holds that all unsigned telefax letters of which Claimant presented copies are admissible evidence.

This is obvious for the telefax letters to which Defendant 1) itself referred as evidence during the arbitration procedure. For example, it rejected Claimant's telefax letter of ........, presented as exhibit (...), but nevertheless referred to exhibit (...) to prove that it had received wrong information from the Claimant. Nor did Defendant 1) recognize the telefax letter of .......; but relied on exhibit to support its allegation that the information received from Claimant was self-explanatory and therefore useless.

The principle of good faith, as a governing concept of private law, also applies to procedural law,

BGE 84 I 62; 83 I1 348 et seq.; Merz in Berner Kommentar, Art. 2 cc, ann. 69.

It naturally governs the entire arbitration procedure,

cf. Yearbook Commercial Arbitration XVII 1992, p. 42, 52.

Defendant 1) would misuse its procedural rights by rejecting as evidence such exhibits presented by Claimant to which it has referred itself to support its own position.

bb) Defendant 1) requested the opportunity to trace Mr. D's address. Defendant 1) did not communicate any such address, but only the tele- phone number under which the Arbitral Tribunal tried to reach Mr. D., without success.

cc) The Arbitral Tribunal was unable to have Mr. D. examined as witness by letters rogatory, which would have been at its discretion under Art. 184 LDIP. The Claimant alleged, undisputedly, that there is at present no possibility between Switzerland and former Y. to obtain letters rogatory.

dd) Violation of the Defendants' right to be heard is ruled out also because they did not communicate what facts they expected Mr. D. to state. In addition, the decision of the Arbitral Tribunal is not based on facts submitted by Claimant and alleged to be confirmed by this witness.

c) The Defendants' right to be heard and right of defence is not infringed by the Arbitral Tribunal's Order of ....... concerning the sequence of written pleadings on the admissibility of Claimant's Final Prayer for Relief.

In order to defend itself adequately against Defendants' pleading that Claimant's Final Brief contained inadmissible new claims, Claimant first had to know the details of Defendants' allegations. The right to be heard and the right of defence is also due to Claimant, therefore it would be unreasonable to request that Claimant rebut the Defendants' allegations without knowing them, and then to allow the Defendants to comment on Claimants' defence. The Arbitral Tribunal has communicated its deliberations to the Parties. Its Order relies on Art. 1 1.26 ICC-Rules.

A defendant is generally entitled to the last word provided that the attack has come from the claimant. In the reverse situation, where the attack comes from the defendant, and the claimant has to plead defence, fair trial requires to grant the last word to the claimant. Fairness demands in this situation that defendant state his argument first and claimant be given the opportunity of defence.

10. Admissible Evidence

a) During the inspection of documents the Defendants recognized only part of the exhibits presented by Claimant, such as the telefax letters whose receipt was confirmed by Col. S., in charge for Defendant I), or by Mr. D. then Y.'s ambassador. Exhibits recognized by Defendant I) are undoubtedly admissible evidence.

b) Defendant 1) deems Claimant's telefax letters presented in copy inadmissible evidence except for those it expressly recognized as originals during the inspection of documents. The Arbitral Tribunal does not share this opinion. It holds that all unsigned telefax letters of which Claimant presented copies are admissible evidence.

This is obvious for the telefax letters to which Defendant 1) itself referred as evidence during the arbitration procedure. For example, it rejected Claimant's telefax letter of ........, presented as exhibit (...), but nevertheless referred to exhibit (...) to prove that it had received wrong information from the Claimant. Nor did Defendant 1) recognize the telefax letter of .......; but relied on exhibit to support its allegation that the information received from Claimant was self-explanatory and therefore useless.

The principle of good faith, as a governing concept of private law, also applies to procedural law,

BGE 84 I 62; 83 I1 348 et seq.; Merz in Berner Kommentar, Art. 2 cc, ann. 69.

It naturally governs the entire arbitration procedure,

cf. Yearbook Commercial Arbitration XVII 1992, p. 42, 52.

Defendant 1) would misuse its procedural rights by rejecting as evidence such exhibits presented by Claimant to which it has referred itself to support its own position.

c) The Arbitral Tribunal admits as evidence the unsigned telefax-letters which were neither presented in the original by the Claimant nor referred to by Defendant 1) in support of its own position.

Undisputedly, the Claimant's main shareholder Mr. A. is the author of the telefax-letters. Until the taking of evidence, the Defendant 1) did not deny having received the unsigned telefax-letters, but on the contrary alleged in its briefs that "Claimant was sending purported information on his own initiative without Defendant's 1) instructions or requests". Defendant 1) merely argued that the unsigned letters could not be accepted "as a form of performance", not being "valid information".

The taking of evidence established that the Defendant 1) received the unsigned telefax-letters. Col. S. stated that he received telexes or telefaxes from L. Questioned what he had done with the "about 40 letters" sent by Claimant to Defendant 1) , he declared that he studied the letters and grouped them. The director of Defendant I), Lt. General J., also confirmed the receipt of the letters in his statement. Therefore, the copies presented by the Claimant are admissible evidence.

d) The majority of the Arbitral Tribunal holds, contrary to Defendant's 1) opinion, that those of Claimant's exhibits are admissible evidence where Claimant was not a party, which Defendant 1) calls "top state secret", allegedly obtained by Claimant through illegal or secret channels, and of which Claimant did not present originals at the in- spection of documents. Defendant 1) deems those documents inadmissible.

aa) Defendant 1) did not assert that the copies presented by Claimant differ from the pertaining originals, and has referred to those exhibits itself.

For instance, Defendant 1) deems exhibit (...), a Memorandum of Understanding of ........ on dept-swapping between the states of Y. and Z., a state secret. The director of Defendant I), Lt. General J., has expressly referred to the dept-swap-agreement in his statement. The legal counsel of Defendant I) questioned Mr. A., the Claimants' main

shareholder, about the Memorandum, and it is referred to in the Agreement of ....... whose sect.6 subsect. 2 implies that the Parties know the dept-swap-agreement.

Exhibit (...) concerns the M-84-contract of ....... The counsel of Defendant 1) questioned Lt. General J. for details of the M-84- contract and about the construction-contract. Lt. General J. has given details on both contracts. Upon question of Claimant's counsel, Lt. General J. confirmed Claimant's allegation as to the value of the M-84-contract and of the deliveries made until then. The figures contained in the M-84-contract therefore are now undisputed.

The principle of fair trial demands to admit not only those questions and answers at the hearing of evidence which relate to these documents, but also the photocopies presented as exhibits by the Claimant. Any conclusions to be drawn from the Defendant's 1) allegation that Claimant gained access to these copies illegally concern the merits of the claims raised by Claimant. Besides, it has not been established by the Defendants that those copies have in fact been obtained illegally.

bb) Further, the majority of the Arbitral Tribunal hold that those exhibits presented by Claimant are admissible without restrictions to which Defendant 1) is a party. This follows from sect. H IV 3 of the Terms of Reference and from Order No. 5 sect. 1, of ....... Order No. 5 is directed not only to the Claimant but to all Parties. As the conclusion of the M-84-contract and of the construction-contract between the MOD and Defendant 1) is undisputed, it was Defendant 1) who had to present the originals of the contracts, which it possesses. Any obligations to secrecy it may have towards the MOD cannot be held against the Claimant because Defendant 1) in sect. 7 of the Agreement of ....... agreed to full cooperation, and to "exchange all information and documents necessary or desirable to enable each other to fulfill their duties under this Agreement".

c) The Arbitral Tribunal admits as evidence the unsigned telefax-letters which were neither presented in the original by the Claimant nor referred to by Defendant 1) in support of its own position.

Undisputedly, the Claimant's main shareholder Mr. A. is the author of the telefax-letters. Until the taking of evidence, the Defendant 1) did not deny having received the unsigned telefax-letters, but on the contrary alleged in its briefs that "Claimant was sending purported information on his own initiative without Defendant's 1) instructions or requests". Defendant 1) merely argued that the unsigned letters could not be accepted "as a form of performance", not being "valid information".

The taking of evidence established that the Defendant 1) received the unsigned telefax-letters. Col. S. stated that he received telexes or telefaxes from L. Questioned what he had done with the "about 40 letters" sent by Claimant to Defendant 1) , he declared that he studied the letters and grouped them. The director of Defendant I), Lt. General J., also confirmed the receipt of the letters in his statement. Therefore, the copies presented by the Claimant are admissible evidence.

d) The majority of the Arbitral Tribunal holds, contrary to Defendant's 1) opinion, that those of Claimant's exhibits are admissible evidence where Claimant was not a party, which Defendant 1) calls "top state secret", allegedly obtained by Claimant through illegal or secret channels, and of which Claimant did not present originals at the in- spection of documents. Defendant 1) deems those documents inadmissible.

aa) Defendant 1) did not assert that the copies presented by Claimant differ from the pertaining originals, and has referred to those exhibits itself.

For instance, Defendant 1) deems exhibit (...), a Memorandum of Understanding of ........ on dept-swapping between the states of Y. and Z., a state secret. The director of Defendant I), Lt. General J., has expressly referred to the dept-swap-agreement in his statement. The legal counsel of Defendant I) questioned Mr. A., the Claimants' main

shareholder, about the Memorandum, and it is referred to in the Agreement of ....... whose sect.6 subsect. 2 implies that the Parties know the dept-swap-agreement.

Exhibit (...) concerns the M-84-contract of ....... The counsel of Defendant 1) questioned Lt. General J. for details of the M-84- contract and about the construction-contract. Lt. General J. has given details on both contracts. Upon question of Claimant's counsel, Lt. General J. confirmed Claimant's allegation as to the value of the M-84-contract and of the deliveries made until then. The figures contained in the M-84-contract therefore are now undisputed.

The principle of fair trial demands to admit not only those questions and answers at the hearing of evidence which relate to these documents, but also the photocopies presented as exhibits by the Claimant. Any conclusions to be drawn from the Defendant's 1) allegation that Claimant gained access to these copies illegally concern the merits of the claims raised by Claimant. Besides, it has not been established by the Defendants that those copies have in fact been obtained illegally.

bb) Further, the majority of the Arbitral Tribunal hold that those exhibits presented by Claimant are admissible without restrictions to which Defendant 1) is a party. This follows from sect. H IV 3 of the Terms of Reference and from Order No. 5 sect. 1, of ....... Order No. 5 is directed not only to the Claimant but to all Parties. As the conclusion of the M-84-contract and of the construction-contract between the MOD and Defendant 1) is undisputed, it was Defendant 1) who had to present the originals of the contracts, which it possesses. Any obligations to secrecy it may have towards the MOD cannot be held against the Claimant because Defendant 1) in sect. 7 of the Agreement of ....... agreed to full cooperation, and to "exchange all information and documents necessary or desirable to enable each other to fulfill their duties under this Agreement".

I The Claimant needed the information on the contracts between MOD and Defendant 1) to advise Defendant 2) of its payment obligation, as is demonstrated by Defendant's 2) allegation, i.a., that it was unable to perform its contractual obligations because Claimant had failed to supply the necessary information to Defendant 2).

f) The majority of the Arbitral Tribunal does not share Defendant's 1) opinion that its right of defence might be violated if the exhibits in question were admitted as evidence. This cannot be so, because the director of Defendant l), Lt. General J., confirmed the relevant figures submitted by Claimant on the value of the MOD-contracts and of the deliveries performed until then.

11. Substantive Issues

1) Avvlicable Law to Agreement of ......

a) Pursuant to sect. 9, the Agreement between the Parties is "to be governed by and construed under the laws of Switzerland". The Arbitral Tribunal deems this clear and unequivocal. Both Parties desired that Swiss law should be applied to the Agreement in case of a legal dispute.

The Defendants' state of origin, Y., has joined the European Convention on International Commercial Arbitration in .... pursuant to Art. 7 of the Convention the parties are free to determine by agreement the law to be applied by the arbitrators to the substance of the dispute. Therefore internal Y. law did not hinder the Defendants to subject the Agreement to Swiss law as a neutral legal system, especially as it is undisputed that the Claimant originally wished to subject the contractual relationship to the law of Z.

It is standing practice in arbitration to recognize the choice of law made by the parties of their own free will even if the contract has no other connection with the law chosen,

cf. last ICC case No. 4629, Yearbook Commercial Arbitration XVIII 1993, p. 1 1, 16.

The parties' free choice of law is expressly recognized for Switzerland in Art. 187 LDIP,

Lalive/Poudret/Reymond, loc.cit., Art. 187 LDIP, am. 2, 5.

The Arbitral Tribunal need not clear up whether different opinions on the scope of applicable Swiss law exist among the counsels of Defendant 1). It agrees with the opinion stated by Me R. that "Swiss law has to be applied without any restrictions to the contract" and "this contract is intimately related to Swiss law".

b) The Defendants asserted that the mandatory laws of Y. must also be applied. As communicated in the Terms of Reference, the Arbitral Tribunal was willing to decide on this issue. However, the Defendants failed to inform the Arbitral Tribunal which mandatory rules of Y. they deem violated.

It is contrary to all experience that a state-owned institution such as Defendant I), whose director is appointed directly by the Head of State, engages in activities contrary to the mandatory laws of that country. The Arbitral Tribunal therefore saw no reason to investigate, without further evidence, whether mandatory rules of the Y. law could be violated. Besides, Defendant 1) did not even allege that the violation of the mandatory laws of Y. would be considered a violation of the international ordre public.

c) The Defendants also allege that mandatory laws of the State of Z. are violated; this will be discussed separately under 111.

2. Ageement of ..... Validly Signed by Claimant

In Defendant's 1) opinion, the Agreement of ...... is null because it was not validly signed by the Claimant. The power of attorney for H. who signed the Agreement on behalf of the Claimant was dated ..... whereas the Claimant did not exist as a corporation until ..... The Claimant has asserted that the date given as ...... in the letter of ...... by

I The Claimant needed the information on the contracts between MOD and Defendant 1) to advise Defendant 2) of its payment obligation, as is demonstrated by Defendant's 2) allegation, i.a., that it was unable to perform its contractual obligations because Claimant had failed to supply the necessary information to Defendant 2).

f) The majority of the Arbitral Tribunal does not share Defendant's 1) opinion that its right of defence might be violated if the exhibits in question were admitted as evidence. This cannot be so, because the director of Defendant l), Lt. General J., confirmed the relevant figures submitted by Claimant on the value of the MOD-contracts and of the deliveries performed until then.

11. Substantive Issues

1) Avvlicable Law to Agreement of ......

a) Pursuant to sect. 9, the Agreement between the Parties is "to be governed by and construed under the laws of Switzerland". The Arbitral Tribunal deems this clear and unequivocal. Both Parties desired that Swiss law should be applied to the Agreement in case of a legal dispute.

The Defendants' state of origin, Y., has joined the European Convention on International Commercial Arbitration in .... pursuant to Art. 7 of the Convention the parties are free to determine by agreement the law to be applied by the arbitrators to the substance of the dispute. Therefore internal Y. law did not hinder the Defendants to subject the Agreement to Swiss law as a neutral legal system, especially as it is undisputed that the Claimant originally wished to subject the contractual relationship to the law of Z.

It is standing practice in arbitration to recognize the choice of law made by the parties of their own free will even if the contract has no other connection with the law chosen,

cf. last ICC case No. 4629, Yearbook Commercial Arbitration XVIII 1993, p. 1 1, 16.

The parties' free choice of law is expressly recognized for Switzerland in Art. 187 LDIP,

Lalive/Poudret/Reymond, loc.cit., Art. 187 LDIP, am. 2, 5.

The Arbitral Tribunal need not clear up whether different opinions on the scope of applicable Swiss law exist among the counsels of Defendant 1). It agrees with the opinion stated by Me R. that "Swiss law has to be applied without any restrictions to the contract" and "this contract is intimately related to Swiss law".

b) The Defendants asserted that the mandatory laws of Y. must also be applied. As communicated in the Terms of Reference, the Arbitral Tribunal was willing to decide on this issue. However, the Defendants failed to inform the Arbitral Tribunal which mandatory rules of Y. they deem violated.

It is contrary to all experience that a state-owned institution such as Defendant I), whose director is appointed directly by the Head of State, engages in activities contrary to the mandatory laws of that country. The Arbitral Tribunal therefore saw no reason to investigate, without further evidence, whether mandatory rules of the Y. law could be violated. Besides, Defendant 1) did not even allege that the violation of the mandatory laws of Y. would be considered a violation of the international ordre public.

c) The Defendants also allege that mandatory laws of the State of Z. are violated; this will be discussed separately under 111.

2. Ageement of ..... Validly Signed by Claimant

In Defendant's 1) opinion, the Agreement of ...... is null because it was not validly signed by the Claimant. The power of attorney for H. who signed the Agreement on behalf of the Claimant was dated ..... whereas the Claimant did not exist as a corporation until ..... The Claimant has asserted that the date given as ...... in the letter of ...... by

lawyers M. is an error in writing, and has offered proof for this by another letter of the same lawyers.

Whether the date of the power of attorney given in exhibit (...) is a typographical error is irrelevant. In the Arbitral Tribunal's opinion, the Agreement is valid even if the Defendants' allegation is correct.

a) It is undisputed that Mr. A. and Mr. G. are the owners of Claimant. The hearing of evidence has convinced the Arbitral Tribunal that nobody at the Claimant's could oppose or act against their orders and directions. Mr. H. signed the Agreement of ...... in the presence of Mr. A. in Geneva. Mr. G. stated that he was not involved in the ne- gotiations with Defendant 1) about the Agreement .

Since Mr. H. signed in Mr. A.'s presence, the signature is, at the least, implicitly authorized. The Defendant 1) did not object when the Agreement, thus signed, was sent from Geneva to B. It protested for the first time during the arbitration procedure. Even if at the time when Mr. H. signed the Agreement, he was not formally authorized, the Arbitral Tribunal is satisfied that the Agreement has been ratified by Claimant's shareholders and officers.

b) The Arbitral Tribunal follows the practice in international arbitration to interpret questions of authority of representatives liberally. International trade usages demand that one overlooks formal flaws in corporate action if, as a matter of fact, corporate consent is evident,

There is no need to decide whether, as Defendant 1) alleged, under X. law only a written power of attorney is valid. Under sect. 9 of the Agreement of ...... , the valid conclusion of the Agreement is to be jud- ged according to Swiss law. Under Swiss law, the power of attorney granted by a business man to a representative requires no specific form and may even be implied,

BGE 94, I1 117; GuhllMerzlKummer, Das Schweizerische Obligationenrecht, 7. Aufl., p. 145 ff..

3. Mailing Address of Claimant does not invalidate Agreement

The Agreement of ...... is not invalidated for the reason that the Parties agreed to give merely the Claimant's mailing address in L. rather than the corporation's domicile in X.

a) Pursuant to Art. 11 CO agreements are generally informal unless a specific form is required by law. Art. 11 CO reflects the principle of freedom of contract. This includes that the parties are entirely free to agree upon any contractual contents, within the limits of mandatory law, Art. 19,20 CO.,

Bucher in HonsellNogtlWiegand, loc.cit., Vorbemerkungen vor Art. 1-40, ann. 10.

Therefore the Parties were free to use merely the Claimant's L. mailing address for identification purposes in the Agreement of .... .

b) Under sect. 16 of the Agreement the Claimant merely gave a telefax- or telex-number for the notices to be sent, but did not name a person as Defendant 1) named "Col. S.". The Tribunal holds that this does not affect the Agreement. If anything, this might be a lack of consent in a minor issue, which does not invalidate an agreement,

BGE 103 I1 190, 194.

Art. 2 sect. 1 CO expresses the general legal concept of favor contractus if the parties have agreed on all contractual issues of objective relevance,

KramerISchmidlin, Berner Kommentar, Art.2 Co, ann. 17 et seq.; Bucher, loc.cit., p. 126.

The Arbitral Tribunal is convinced that any incompleteness in sect. 16 of the Agreement did not prevent Defendant 1) from making contact with the Claimant while the Agreement was in force, as documented by its letter of ..... on whose legal effects Defendant 1) relies. Col. S.,

lawyers M. is an error in writing, and has offered proof for this by another letter of the same lawyers.

Whether the date of the power of attorney given in exhibit (...) is a typographical error is irrelevant. In the Arbitral Tribunal's opinion, the Agreement is valid even if the Defendants' allegation is correct.

a) It is undisputed that Mr. A. and Mr. G. are the owners of Claimant. The hearing of evidence has convinced the Arbitral Tribunal that nobody at the Claimant's could oppose or act against their orders and directions. Mr. H. signed the Agreement of ...... in the presence of Mr. A. in Geneva. Mr. G. stated that he was not involved in the ne- gotiations with Defendant 1) about the Agreement .

Since Mr. H. signed in Mr. A.'s presence, the signature is, at the least, implicitly authorized. The Defendant 1) did not object when the Agreement, thus signed, was sent from Geneva to B. It protested for the first time during the arbitration procedure. Even if at the time when Mr. H. signed the Agreement, he was not formally authorized, the Arbitral Tribunal is satisfied that the Agreement has been ratified by Claimant's shareholders and officers.

b) The Arbitral Tribunal follows the practice in international arbitration to interpret questions of authority of representatives liberally. International trade usages demand that one overlooks formal flaws in corporate action if, as a matter of fact, corporate consent is evident,

There is no need to decide whether, as Defendant 1) alleged, under X. law only a written power of attorney is valid. Under sect. 9 of the Agreement of ...... , the valid conclusion of the Agreement is to be jud- ged according to Swiss law. Under Swiss law, the power of attorney granted by a business man to a representative requires no specific form and may even be implied,

BGE 94, I1 117; GuhllMerzlKummer, Das Schweizerische Obligationenrecht, 7. Aufl., p. 145 ff..

3. Mailing Address of Claimant does not invalidate Agreement

The Agreement of ...... is not invalidated for the reason that the Parties agreed to give merely the Claimant's mailing address in L. rather than the corporation's domicile in X.

a) Pursuant to Art. 11 CO agreements are generally informal unless a specific form is required by law. Art. 11 CO reflects the principle of freedom of contract. This includes that the parties are entirely free to agree upon any contractual contents, within the limits of mandatory law, Art. 19,20 CO.,

Bucher in HonsellNogtlWiegand, loc.cit., Vorbemerkungen vor Art. 1-40, ann. 10.

Therefore the Parties were free to use merely the Claimant's L. mailing address for identification purposes in the Agreement of .... .

b) Under sect. 16 of the Agreement the Claimant merely gave a telefax- or telex-number for the notices to be sent, but did not name a person as Defendant 1) named "Col. S.". The Tribunal holds that this does not affect the Agreement. If anything, this might be a lack of consent in a minor issue, which does not invalidate an agreement,

BGE 103 I1 190, 194.

Art. 2 sect. 1 CO expresses the general legal concept of favor contractus if the parties have agreed on all contractual issues of objective relevance,

KramerISchmidlin, Berner Kommentar, Art.2 Co, ann. 17 et seq.; Bucher, loc.cit., p. 126.

The Arbitral Tribunal is convinced that any incompleteness in sect. 16 of the Agreement did not prevent Defendant 1) from making contact with the Claimant while the Agreement was in force, as documented by its letter of ..... on whose legal effects Defendant 1) relies. Col. S.,

in charge of the M-84-project for Defendant I), stated that "I sent faxes confirming that I received the letter, that the delegation is going, or that the delegation will be accepted or this sort of thing" .

4. W. = Mr. A. and Mr. G.

Defendant 1) thinks Claimant an "international paper vehicle" and the Agreement of ...... therefore invalid. The Arbitral Tribunal does not share this view.

It is undisputed under Swiss law that a foreign corporation's legal capacity is governed by the law of its place of registration so that a foreign corporation has fill legal capacity as granted to it by its domestic laws (art. 154 LDIP).

The taking of evidence has satisfied the Arbitral Tribunal that Claimant serves the purposes of Mr. A. and Mr. G. Their actions are therefore deemed Claimant's actions. Mr. A. is also undoubtedly the author of the letters sent by Claimant, which Defendant 1) no longer denies.

An agreement concluded with a nominee is valid unless some reason for nullity pursuant to Art. 19, 20 CO exists. It is sufficient if the business transacted between the nominee and the third party is actually intended and not void for other reasons. Indirect representation does not necessarily imply improper intentions of con- cealment,

Bucher in Schweizerisches Obligationenrecht, Allgemeiner Teil, Zurich 1979, p. 544; ZacWKunzle in Bemer Kommentar, Art. 32, ann. 178 et seq.

Whether the Agreement of ...... is invalid under ordre public international aspects will be discussed later, (below 111) where appropriate. The following considerations exclude the question of invalidity under Art. 19,20 CO.

5 . Sect. 2 4 of Agreement are Valid

Defendant 1) contests the claims on the grounds that sect. 2, 3 of the Agreement is invalid. The Arbitral Tribunal holds that the objection is unfounded.

a) Both Claimant and Defendant 1) referred to the Agreement as "brokerage-contract". This legal evaluation does not bind the Arbitral Tribunal. The majority holds that the Agreement combines elements of various types of contracts. Such "mixed" agreements are admissible and frequent under Swiss law,

Krarner in Berner Kommentar, Art. 19-20, ann. 58; Schluep in HonsellNogtlWiegand,loc.cit., Einleitung vor Art. 184 ff., ann. 7 et seq.; GuhlIMerzlKummer, a.a.O., p. 297 et seq.

Sect. 3 sentence 1 lists the services to be rendered by Claimant under the Agreement. They include elements of a mandate. The Agreement therefore consists of brokerage and mandate elements. The services to be rendered by the Claimant are consistent with both. As a brokerage agreement is indeed a qualified mandate,

Gautschi in Berner Kommentar, vor Art. 412, ann. 1 c),

it is justified to apply also the provisions on mandates to the relationship between Claimant and Defendant 1).

b) The Arbitral Tribunal considers valid the "exclusive appointment" in sect. 2 of the Agreement, including the stipulation that any contract concluded between Defendant 1) and a third party is held conclusively and irrebuttably the result of the efforts of Claimant.

The language of the Agreement is unequivocal and in no need of interpretation. Contractual stipulations of this nature are admissible,

in charge of the M-84-project for Defendant I), stated that "I sent faxes confirming that I received the letter, that the delegation is going, or that the delegation will be accepted or this sort of thing" .

4. W. = Mr. A. and Mr. G.

Defendant 1) thinks Claimant an "international paper vehicle" and the Agreement of ...... therefore invalid. The Arbitral Tribunal does not share this view.

It is undisputed under Swiss law that a foreign corporation's legal capacity is governed by the law of its place of registration so that a foreign corporation has fill legal capacity as granted to it by its domestic laws (art. 154 LDIP).

The taking of evidence has satisfied the Arbitral Tribunal that Claimant serves the purposes of Mr. A. and Mr. G. Their actions are therefore deemed Claimant's actions. Mr. A. is also undoubtedly the author of the letters sent by Claimant, which Defendant 1) no longer denies.

An agreement concluded with a nominee is valid unless some reason for nullity pursuant to Art. 19, 20 CO exists. It is sufficient if the business transacted between the nominee and the third party is actually intended and not void for other reasons. Indirect representation does not necessarily imply improper intentions of con- cealment,

Bucher in Schweizerisches Obligationenrecht, Allgemeiner Teil, Zurich 1979, p. 544; ZacWKunzle in Bemer Kommentar, Art. 32, ann. 178 et seq.

Whether the Agreement of ...... is invalid under ordre public international aspects will be discussed later, (below 111) where appropriate. The following considerations exclude the question of invalidity under Art. 19,20 CO.

5 . Sect. 2 4 of Agreement are Valid

Defendant 1) contests the claims on the grounds that sect. 2, 3 of the Agreement is invalid. The Arbitral Tribunal holds that the objection is unfounded.

a) Both Claimant and Defendant 1) referred to the Agreement as "brokerage-contract". This legal evaluation does not bind the Arbitral Tribunal. The majority holds that the Agreement combines elements of various types of contracts. Such "mixed" agreements are admissible and frequent under Swiss law,

Krarner in Berner Kommentar, Art. 19-20, ann. 58; Schluep in HonsellNogtlWiegand,loc.cit., Einleitung vor Art. 184 ff., ann. 7 et seq.; GuhlIMerzlKummer, a.a.O., p. 297 et seq.

Sect. 3 sentence 1 lists the services to be rendered by Claimant under the Agreement. They include elements of a mandate. The Agreement therefore consists of brokerage and mandate elements. The services to be rendered by the Claimant are consistent with both. As a brokerage agreement is indeed a qualified mandate,

Gautschi in Berner Kommentar, vor Art. 412, ann. 1 c),

it is justified to apply also the provisions on mandates to the relationship between Claimant and Defendant 1).

b) The Arbitral Tribunal considers valid the "exclusive appointment" in sect. 2 of the Agreement, including the stipulation that any contract concluded between Defendant 1) and a third party is held conclusively and irrebuttably the result of the efforts of Claimant.

The language of the Agreement is unequivocal and in no need of interpretation. Contractual stipulations of this nature are admissible,

BGE 72 I1 422; 100 11 361 ff.; 103 I1 133 ff.; Ammann in HonselINogtlWiegand, loc.cit., Art. 412, ann. 13; GuhliMerzi Kummer, loc.cit., p. 477; against the established practice of the Swiss Federal Court only Gautschi in Berner Kommentar, Art. 412, ann. 3 e).

The requirement of a causal connection between the efforts of the agent and the contract concluded between principal and third party may be waived. If an exclusive clause is combined with the waiver of causal connection, the agent retains his claim to compensation even if his activity has no connection at all with the contract concluded by the principal. The compensation clause in this case constitutes a commission guarantee,

BGE 100 I1 365.

The text of sect. 2 of the Agreement does not require the Claimant to prove its activities in favour of Defendant 1). The Arbitral Tribunal considers this to exonerate Claimant from the burden of proof. However, the dispute does not depend on this question since the Claimant did in fact establish its activities to the satisfaction of the Arbitral Tribunal.

c) Defendant 1) has challenged the validity of sect. 2 4 of the Agreement on the further grounds that it had not understood their significance. The Agreement had been drawn up by Claimant's counsel Mr. A.B. Defendant 1) had been represented by M. B. in the negotiations, who did not speak English. The Arbitral Tribunal holds the objection to be irrelevant. Defendant 1) failed to challenge the Agreement on the grounds of error, Art. 23, 3 1, sect. 1 CO.

Defendant 1) also failed to offer proof for its allegation. Mr. A.B. has stated that not only M.B. but also Mr. D. participated in the negotiations, most of which had taken place at the offices of Defendant 2). Defendant 1) did not call M.B. as a witness, and did not question Mr. D. about these allegations, neither during the taking of evidence nor at any other time of the hearings, although Mr. D. was present at all hearings of the Arbitral Tribunal representing

Defendant 2). On the other hand, the director of Defendant l), Lt. General J., stated when examined: "M.B. had put a lot of remarks on this contract". Lt. General J. took office on ....... He stated hrther:

"when I got the post of the director, I must say that I was astonished with the contract you mentioned in your question."

Upon question by the Arbitral Tribunal, he declared that he tried to get information from M.B. and General T. Lt. General T. preceded Lt. General J. in the office of director of Defendant 1); he had signed the Agreement of ..... on behalf of Defendant 1).

The Arbitral Tribunal is therefore convinced that Defendant I ) knew the contents of the Agreement.

d) The last sentence of sect. 2 of the Agreement provides that under special circumstances the exclusiveness may be rescinded for "particular products". Defendant 1) holds that the provision applies to the M-84-contract, and that it exercised the rights arising herefrom by sending the letter of ....

The Arbitral Tribunal differs from this opinion. The last sentence of sect. 2 obliges the Parties to follow a certain procedure when exclusiveness is to be rescinded. Defendant I) has to request a writing from the Claimant exceptionally waiving its exclusive appointment. The Arbitral Tribunal does not see such a request in the Defendant's 1) letter of ......

6. Services Rendered by Claimant

Defendant 1) contests the Claimant's right to fees from the M-84- contract on the grounds that Defendant I) did not require any services. This defence is not valid. The Arbitral Tribunal deems it sufficient that the Claimant did in fact render services to Defendant 1) in connection with the M-84-contract and other projects of Defendant 1) related to the sale of arms to Z., and that Defendant 1) never refused the services before its letter of ...... These facts are established to the satisfaction of the Arbitral Tribunal.

BGE 72 I1 422; 100 11 361 ff.; 103 I1 133 ff.; Ammann in HonselINogtlWiegand, loc.cit., Art. 412, ann. 13; GuhliMerzi Kummer, loc.cit., p. 477; against the established practice of the Swiss Federal Court only Gautschi in Berner Kommentar, Art. 412, ann. 3 e).

The requirement of a causal connection between the efforts of the agent and the contract concluded between principal and third party may be waived. If an exclusive clause is combined with the waiver of causal connection, the agent retains his claim to compensation even if his activity has no connection at all with the contract concluded by the principal. The compensation clause in this case constitutes a commission guarantee,

BGE 100 I1 365.

The text of sect. 2 of the Agreement does not require the Claimant to prove its activities in favour of Defendant 1). The Arbitral Tribunal considers this to exonerate Claimant from the burden of proof. However, the dispute does not depend on this question since the Claimant did in fact establish its activities to the satisfaction of the Arbitral Tribunal.

c) Defendant 1) has challenged the validity of sect. 2 4 of the Agreement on the further grounds that it had not understood their significance. The Agreement had been drawn up by Claimant's counsel Mr. A.B. Defendant 1) had been represented by M. B. in the negotiations, who did not speak English. The Arbitral Tribunal holds the objection to be irrelevant. Defendant 1) failed to challenge the Agreement on the grounds of error, Art. 23, 3 1, sect. 1 CO.

Defendant 1) also failed to offer proof for its allegation. Mr. A.B. has stated that not only M.B. but also Mr. D. participated in the negotiations, most of which had taken place at the offices of Defendant 2). Defendant 1) did not call M.B. as a witness, and did not question Mr. D. about these allegations, neither during the taking of evidence nor at any other time of the hearings, although Mr. D. was present at all hearings of the Arbitral Tribunal representing

Defendant 2). On the other hand, the director of Defendant l), Lt. General J., stated when examined: "M.B. had put a lot of remarks on this contract". Lt. General J. took office on ....... He stated hrther:

"when I got the post of the director, I must say that I was astonished with the contract you mentioned in your question."

Upon question by the Arbitral Tribunal, he declared that he tried to get information from M.B. and General T. Lt. General T. preceded Lt. General J. in the office of director of Defendant 1); he had signed the Agreement of ..... on behalf of Defendant 1).

The Arbitral Tribunal is therefore convinced that Defendant I ) knew the contents of the Agreement.

d) The last sentence of sect. 2 of the Agreement provides that under special circumstances the exclusiveness may be rescinded for "particular products". Defendant 1) holds that the provision applies to the M-84-contract, and that it exercised the rights arising herefrom by sending the letter of ....

The Arbitral Tribunal differs from this opinion. The last sentence of sect. 2 obliges the Parties to follow a certain procedure when exclusiveness is to be rescinded. Defendant I) has to request a writing from the Claimant exceptionally waiving its exclusive appointment. The Arbitral Tribunal does not see such a request in the Defendant's 1) letter of ......

6. Services Rendered by Claimant

Defendant 1) contests the Claimant's right to fees from the M-84- contract on the grounds that Defendant I) did not require any services. This defence is not valid. The Arbitral Tribunal deems it sufficient that the Claimant did in fact render services to Defendant 1) in connection with the M-84-contract and other projects of Defendant 1) related to the sale of arms to Z., and that Defendant 1) never refused the services before its letter of ...... These facts are established to the satisfaction of the Arbitral Tribunal.

a) The Arbitral Tribunal qualifies the letters sent by Claimant to Defendant 1) until ...... as proof of services rendered under the Agreement of .......

Col. S., in charge of the M-84-project for Defendant I), stated that he studied the letters and arranged them in three groups. Most letters had contained information on the exchange of delegations; these he kept to himself. The second group was saying "you must try to convince your partners or you must do everything to accept them nicely or so on". The third group he sent on to the higher intermediary if they contained something new such as the rocket launcher. He sent faxes to the Claimant confirming receipt of letters, or relating to the delegations. Col. S. also stated, upon question by the Arbitral Tribunal, that he confirmed the receipt of some of Claimant's letters by his signature and that he saw some letters by Claimant to Defendant 1) whose receipt had been confirmed by Mr. D., then Y. ambassador to Z.

The statements of Col. S. and of Lt. General J. the director of Defendant l), also establish that Defendant 1) did not object to the contents of the Claimant's letters it received until ..... did not inform Claimant until then that its services were not desired, considered irrelevant or unvaluable.

b) The legal relevance of the telexes sent by Col. S. to Claimant confirming the receipt of letters, or relating to the expected delegations, and of his acknowledgement of receipt put on the Claimant's letters, is to be assessed according to the understanding of the Claimant as the recipient party,

cf. BGE 102 I1 234, 246; 101 I1 329, 331; 105 I1 16, 18; KramerISchmidlin in Berner Kommentar, Art. 1, ann. 102; GuhllMerzlKummer, loc.cit., p. 91.

Defendant's 1) behaviour must also be seen in the light of sect. 2 of the Agreement, exonerating the Claimant from proof of its activities.

To the Claimant, Defendant's 1) unreserved acceptance of services signified approval. The Claimant could not understand the Defendant's

1) answering letters and acknowledgements of receipt otherwise. Defendant 1) therefore is barred under the principle of good faith,

cf. Guhl/Merz/Kummer, loc.cit., p. 91; Bucher, loc.cit., p. 104 et seq.,

from objecting that the services rendered by Claimant were not desired and had no value.

c) The statement of Col. S. concerning the Claimant's technical consultation is contrary to the Claimant's letters. The Arbitral Tribunal therefore holds that the witness is not credible on this point.

Col. S. said that Claimant recommended the high-frequency-radio- equipment by the American manufacturer HA., or by an other American manufacturer, whereas the MOD wanted equipment by R., an English manufacturer. This is incompatible with Claimant's letter of ...... where it says:

"Finally, please be advised that the M.O.D. is insisting to have the Communication System of the type J. RQ3 16HGlHP from R. (British) Company."

Col. S. further said that W. did not comment on the time required by MOD to take the engine off. This is contrary to the Claimant's letter of ...... which says, i.a.:

"... As we informed you, in the very near future the Directorate will be sending sample tanks to Z. to be tested. After the testing is completed, the Ministry of Defence wishes once again to determine the length of time it would take to remove the tank's engine and replace it with another one. In the interest of all parties involved, we would rather not see a repetition of the same experience Z. had with the above-mentioned personnel carrier. Therefore, please send with the sample tanks a professional mechanical team that is capable of removing and replacing a tank's engine in the fastest time possible. ..."

a) The Arbitral Tribunal qualifies the letters sent by Claimant to Defendant 1) until ...... as proof of services rendered under the Agreement of .......

Col. S., in charge of the M-84-project for Defendant I), stated that he studied the letters and arranged them in three groups. Most letters had contained information on the exchange of delegations; these he kept to himself. The second group was saying "you must try to convince your partners or you must do everything to accept them nicely or so on". The third group he sent on to the higher intermediary if they contained something new such as the rocket launcher. He sent faxes to the Claimant confirming receipt of letters, or relating to the delegations. Col. S. also stated, upon question by the Arbitral Tribunal, that he confirmed the receipt of some of Claimant's letters by his signature and that he saw some letters by Claimant to Defendant 1) whose receipt had been confirmed by Mr. D., then Y. ambassador to Z.

The statements of Col. S. and of Lt. General J. the director of Defendant l), also establish that Defendant 1) did not object to the contents of the Claimant's letters it received until ..... did not inform Claimant until then that its services were not desired, considered irrelevant or unvaluable.

b) The legal relevance of the telexes sent by Col. S. to Claimant confirming the receipt of letters, or relating to the expected delegations, and of his acknowledgement of receipt put on the Claimant's letters, is to be assessed according to the understanding of the Claimant as the recipient party,

cf. BGE 102 I1 234, 246; 101 I1 329, 331; 105 I1 16, 18; KramerISchmidlin in Berner Kommentar, Art. 1, ann. 102; GuhllMerzlKummer, loc.cit., p. 91.

Defendant's 1) behaviour must also be seen in the light of sect. 2 of the Agreement, exonerating the Claimant from proof of its activities.

To the Claimant, Defendant's 1) unreserved acceptance of services signified approval. The Claimant could not understand the Defendant's

1) answering letters and acknowledgements of receipt otherwise. Defendant 1) therefore is barred under the principle of good faith,

cf. Guhl/Merz/Kummer, loc.cit., p. 91; Bucher, loc.cit., p. 104 et seq.,

from objecting that the services rendered by Claimant were not desired and had no value.

c) The statement of Col. S. concerning the Claimant's technical consultation is contrary to the Claimant's letters. The Arbitral Tribunal therefore holds that the witness is not credible on this point.

Col. S. said that Claimant recommended the high-frequency-radio- equipment by the American manufacturer HA., or by an other American manufacturer, whereas the MOD wanted equipment by R., an English manufacturer. This is incompatible with Claimant's letter of ...... where it says:

"Finally, please be advised that the M.O.D. is insisting to have the Communication System of the type J. RQ3 16HGlHP from R. (British) Company."

Col. S. further said that W. did not comment on the time required by MOD to take the engine off. This is contrary to the Claimant's letter of ...... which says, i.a.:

"... As we informed you, in the very near future the Directorate will be sending sample tanks to Z. to be tested. After the testing is completed, the Ministry of Defence wishes once again to determine the length of time it would take to remove the tank's engine and replace it with another one. In the interest of all parties involved, we would rather not see a repetition of the same experience Z. had with the above-mentioned personnel carrier. Therefore, please send with the sample tanks a professional mechanical team that is capable of removing and replacing a tank's engine in the fastest time possible. ..."

On question by the Arbitral Tribunal, Col. S. declared that he has seen the letter exhibit (...).

d) The Arbitral Tribunal is also convinced that Claimant has rendered services to Defendant 1) as specified in sect. 3 of the Agreement relating to the construction-contract between Defendant 1) and MOD. This is shown by the Claimant's letters of ...... and of ......, both written prior to ...... .

The construction-contract between the Defendant 1) and the MOD was concluded on ....., after Defendant 1) had terminated the Agreement of ...... on ...... (the termination will be considered under No. 7). However, the termination of an agreement does not affect an agent's claim for compensation already accrued. If the agent has rendered his services before the termination, he is entitled to his fee if the contract between the principal and the third party is concluded after termina- tion of the agent's contract, provided there is psychologically a causal connection,

BGE 57 11 192 et seq.; 76 11 386; Ammann in HonsellNogti Wiegand, Art. 413 CO, ann. 8

7) Agreement of ..... Validly Terminated

Defendant 1) argues that it had terminated the Agreement of .... before the end of the initial term of 3 years set forth in sect. 12; Claimant objects to this. The Arbitral Tribunal deems the objection unfounded. Defendant 1) effectively terminated the Agreement of ..... . . by letter of

a) The language of Defendant's 1) letter of ...... to Claimant does not amount to termination. Nor can it be construed, in the opinion of the Arbitral Tribunal, as to communicate such an intention.

apparent for Claimant what, if any, legal consequences Defendant 1) wished to draw from these allegations.

b) However, Defendant's 1) letter of ..... must be interpreted as termination of the Agreement of ......

The language of the letter:

"... we are ready to negotiate with you the terms and conditions of termination of the said Agreement.

We are prepared to start the discussion on the termination by the end of July. ..."

could not, by a neutral recipient, be construed merely as an announcement of termination yet to come. Defendant's I ) intent to terminate the Agreement is also evident from the request that Claimant stop its activities.

Contracts for services and brokerage contracts are subject to termination by the principal at any time even if a fixed term has been agreed upon, Art. 404 CO. This provision is compulsory,

BGE 98 I1 307 et seq.; 109 I1 467; 115 I1 466.

111. In Particular: Agreement of ..... not Invalid due to Alleged Illicit Activities of Claimant

Since the beginning of the arbitration procedure, Defendant 1) has argued that the Agreement of .... is null, relying particularly on Art. 19 LDIP and Art. 19, 20 CO. Defendant 2), however, did not plead that the Agreement is void due to illicit activities of the Clai- mant. It pleaded so for the first time in its final oral pleadings on ....., the last day of the arbitration procedure .

To the Claimantirecipient the letter merely conveyed the information that Defendant 1) had received the MOD-circular attached in copy, and the allegation that Claimant had known the limitations imposed by the MOD-circular when concluding the Agreement of. ..... It was not

On question by the Arbitral Tribunal, Col. S. declared that he has seen the letter exhibit (...).

d) The Arbitral Tribunal is also convinced that Claimant has rendered services to Defendant 1) as specified in sect. 3 of the Agreement relating to the construction-contract between Defendant 1) and MOD. This is shown by the Claimant's letters of ...... and of ......, both written prior to ...... .

The construction-contract between the Defendant 1) and the MOD was concluded on ....., after Defendant 1) had terminated the Agreement of ...... on ...... (the termination will be considered under No. 7). However, the termination of an agreement does not affect an agent's claim for compensation already accrued. If the agent has rendered his services before the termination, he is entitled to his fee if the contract between the principal and the third party is concluded after termina- tion of the agent's contract, provided there is psychologically a causal connection,

BGE 57 11 192 et seq.; 76 11 386; Ammann in HonsellNogti Wiegand, Art. 413 CO, ann. 8

7) Agreement of ..... Validly Terminated

Defendant 1) argues that it had terminated the Agreement of .... before the end of the initial term of 3 years set forth in sect. 12; Claimant objects to this. The Arbitral Tribunal deems the objection unfounded. Defendant 1) effectively terminated the Agreement of ..... . . by letter of

a) The language of Defendant's 1) letter of ...... to Claimant does not amount to termination. Nor can it be construed, in the opinion of the Arbitral Tribunal, as to communicate such an intention.

apparent for Claimant what, if any, legal consequences Defendant 1) wished to draw from these allegations.

b) However, Defendant's 1) letter of ..... must be interpreted as termination of the Agreement of ......

The language of the letter:

"... we are ready to negotiate with you the terms and conditions of termination of the said Agreement.

We are prepared to start the discussion on the termination by the end of July. ..."

could not, by a neutral recipient, be construed merely as an announcement of termination yet to come. Defendant's I ) intent to terminate the Agreement is also evident from the request that Claimant stop its activities.

Contracts for services and brokerage contracts are subject to termination by the principal at any time even if a fixed term has been agreed upon, Art. 404 CO. This provision is compulsory,

BGE 98 I1 307 et seq.; 109 I1 467; 115 I1 466.

111. In Particular: Agreement of ..... not Invalid due to Alleged Illicit Activities of Claimant

Since the beginning of the arbitration procedure, Defendant 1) has argued that the Agreement of .... is null, relying particularly on Art. 19 LDIP and Art. 19, 20 CO. Defendant 2), however, did not plead that the Agreement is void due to illicit activities of the Clai- mant. It pleaded so for the first time in its final oral pleadings on ....., the last day of the arbitration procedure .

To the Claimantirecipient the letter merely conveyed the information that Defendant 1) had received the MOD-circular attached in copy, and the allegation that Claimant had known the limitations imposed by the MOD-circular when concluding the Agreement of. ..... It was not

The majority of the Arbitral Tribunal does not share the Defendants' opinion. The Agreement of ..... is not invalid due to an infringement of bona mores, Art. 19 LDIP, 19, 20 CO. It should be added that numerous decisions of the Arbitral Tribunal regarding this section I11 of the Reasons were unanimous.

1) Agreement not Invalid due to MOD-circular or Z. Law

a) To the Defendants, the invalidity of the Agreement follows from its infringement of the MOD-circular, which they deem to formulate the mandatory law of Z. The Arbitral Tribunal does not adopt this view.

aa) The Arbitral Tribunal holds that it is up to the Defendants to substantiate and prove that the MOD-circular is part of the mandatory law of Z., and to specify the mandatory provisions of Z. law on which the MOD-circular is based. The Defendants have said nothing in this respect. The Arbitral Tribunal therefore did not consider any potential effects of the MOD-circular on sect. 9 of the Agreement of .....

bb) Defendant 1) mainly alleged that the MOD-circular was handed over by the MOD shortly before conclusion of the M-84-contract, and was unknown to Defendant 1) before that time. Its director, Lt. General J., had to sign the MOD-circular in connection with the M-84-contract. Had he known the document earlier, he would have acted differently.

The Defendants' argument and the evidence taken establish to the Arbitral Tribunal nothing more than that the MOD-circular was part of the M-84-contract and the construction-contract concluded between Defendant 1) and MOD. It is therefore a contractual condition imposed by one contracting party - MOD - on the other party - Defendant 1) -. This does not suggest, however, that the MOD-circular expresses compulsory law of the State of Z.

The Claimant's objection that the MOD-circular was never applied in Z., and has been rescinded in the meantime anyway, is therefore irrelevant.

b) Defendant 1) also argues that the Agreement of ..... is void because the Claimant, a corporation domiciled in X., was unable to perform the services stipulated in sect. 3 of the Agreement in Z. due to compulsory provisions of Z. law. Under Art. 1 of the "Law No ... of .... Regulating Commercial Agencies" only such legal or natural persons may engage in commercial agency in Z. who are nationals of Z. The Claimant objects that Z. law is not applicable to it because its shareholders Mr. A. and Mr. G. are Z. nationals, which satisfies Z. law.

The majority of the Arbitral Tribunal holds that the law of Z. is not to be considered in this context. In sect. 9 of the Agreement the Parties expressly chose Swiss law, thereby expressing that any laws of third states conflicting with this Agreement should not be taken into account by the Arbitral Tribunal.

aa) Even if Swiss law is chosen, Art. 19 LDIP allows to consider such provisions of other laws which are compulsory in their own system, if this is demanded by such interests of one party which are held worth protecting and predominant by the Swiss law, and if the matter is clo- sely related to that other law.

It is disputed in arbitration whether Art. 19, belonging to chapter 1) of the LDIP, is applicable if the parties have contractually agreed on a specific law, and only the arbitration procedure is governed by chapter 12) of the LDIP due to the fact that Switzerland is the venue of ar- bitration. Pursuant to Art. 187 LDIP, the arbitral tribunal decides the dispute according to the rules of the law chosen by the parties, that is, the tribunal is bound by the parties' choice of law if they have agreed on a specific law,

cf. Lalive/Poudret/Reymond, loc.cit., Art. 187, ann. 2 et seq.

bb) It is generally agreed that the arbitral tribunal has to apply the mandatory rules of the private law governing the agreement. In the present case, the mandatory rules of the lex contractus include Art. 19, 20 CO. Any rules of Z. law, concerning details of agency, cannot come under Art. 19,20 CO.

The majority of the Arbitral Tribunal does not share the Defendants' opinion. The Agreement of ..... is not invalid due to an infringement of bona mores, Art. 19 LDIP, 19, 20 CO. It should be added that numerous decisions of the Arbitral Tribunal regarding this section I11 of the Reasons were unanimous.

1) Agreement not Invalid due to MOD-circular or Z. Law

a) To the Defendants, the invalidity of the Agreement follows from its infringement of the MOD-circular, which they deem to formulate the mandatory law of Z. The Arbitral Tribunal does not adopt this view.

aa) The Arbitral Tribunal holds that it is up to the Defendants to substantiate and prove that the MOD-circular is part of the mandatory law of Z., and to specify the mandatory provisions of Z. law on which the MOD-circular is based. The Defendants have said nothing in this respect. The Arbitral Tribunal therefore did not consider any potential effects of the MOD-circular on sect. 9 of the Agreement of .....

bb) Defendant 1) mainly alleged that the MOD-circular was handed over by the MOD shortly before conclusion of the M-84-contract, and was unknown to Defendant 1) before that time. Its director, Lt. General J., had to sign the MOD-circular in connection with the M-84-contract. Had he known the document earlier, he would have acted differently.

The Defendants' argument and the evidence taken establish to the Arbitral Tribunal nothing more than that the MOD-circular was part of the M-84-contract and the construction-contract concluded between Defendant 1) and MOD. It is therefore a contractual condition imposed by one contracting party - MOD - on the other party - Defendant 1) -. This does not suggest, however, that the MOD-circular expresses compulsory law of the State of Z.

The Claimant's objection that the MOD-circular was never applied in Z., and has been rescinded in the meantime anyway, is therefore irrelevant.

b) Defendant 1) also argues that the Agreement of ..... is void because the Claimant, a corporation domiciled in X., was unable to perform the services stipulated in sect. 3 of the Agreement in Z. due to compulsory provisions of Z. law. Under Art. 1 of the "Law No ... of .... Regulating Commercial Agencies" only such legal or natural persons may engage in commercial agency in Z. who are nationals of Z. The Claimant objects that Z. law is not applicable to it because its shareholders Mr. A. and Mr. G. are Z. nationals, which satisfies Z. law.

The majority of the Arbitral Tribunal holds that the law of Z. is not to be considered in this context. In sect. 9 of the Agreement the Parties expressly chose Swiss law, thereby expressing that any laws of third states conflicting with this Agreement should not be taken into account by the Arbitral Tribunal.

aa) Even if Swiss law is chosen, Art. 19 LDIP allows to consider such provisions of other laws which are compulsory in their own system, if this is demanded by such interests of one party which are held worth protecting and predominant by the Swiss law, and if the matter is clo- sely related to that other law.

It is disputed in arbitration whether Art. 19, belonging to chapter 1) of the LDIP, is applicable if the parties have contractually agreed on a specific law, and only the arbitration procedure is governed by chapter 12) of the LDIP due to the fact that Switzerland is the venue of ar- bitration. Pursuant to Art. 187 LDIP, the arbitral tribunal decides the dispute according to the rules of the law chosen by the parties, that is, the tribunal is bound by the parties' choice of law if they have agreed on a specific law,

cf. Lalive/Poudret/Reymond, loc.cit., Art. 187, ann. 2 et seq.

bb) It is generally agreed that the arbitral tribunal has to apply the mandatory rules of the private law governing the agreement. In the present case, the mandatory rules of the lex contractus include Art. 19, 20 CO. Any rules of Z. law, concerning details of agency, cannot come under Art. 19,20 CO.

The parties' authority of free choice of law is confirmed as an internationally valid principle by Art. 7 of the European Convention of 1961. The parties are to be enabled to subject their legal relations to the law they choose, and to exclude the national law which would otherwise apply. Therefore, provisions of the law which is excluded can only be recognized within the chosen law to the extent that they are part of the ordre public international,

Examples of this are provisions to fight corruption and bribery.

In the permanent practice of international arbitration, national provisions governing the law of agency are not considered to belong to the ordre public international,

Northrop Corp v. Triad Intern. Marketing S.A., 81 1 F.2d 1265 (9th Cir. 1987); Swiss Fed. Court, ASA Bulletin 1993, 253 et seq.

cc) The majority of the Arbitral Tribunal is also inclined to believe Claimant's allegation that the provisions of Z. law are not compulsory.

Undisputedly, the Writ of Attachment of ..... ,obtained by the Claimant in Z. from a state court, has not been set aside. The "Request for is- suing Writ of Attachment" describes the Claimant as a "X. Company". A state judge issuing a preliminary injunction has to make a full legal examination of the case. The majority of the Arbitral Tribunal does not suppose that the judge of Z. who issued the Writ of Attachment in favour of the Claimant failed to do so. Therefore it may be concluded that the Z. law invoked by Defendant 1) is not compulsory and even less belongs to the ordre public international .

2) Right of Defendant 1) to Terminate the Agreement after having Received the MOD-Circular

did. Defendant I) was aware before signing the M-84-contract that the Agreement of ...... was subject to immediate termination, as is evident from its letter of ...... to the Claimant and the termination of ......, shortly after.

a) Undisputedly, Defendant I ) knew the MOD-circular before signing the M-84-contract on... ... Defendant 1) thus could decide freely whether to terminate the Agreement of ..... before signing the M-84-contract, to eliminate any risk the MOD-circular might create with regard to the MOD, or to sign the M-84-contract without prior termination of the Agreement. Defendant 1) opted for the second alternative by signing the M-84-contract on ..... without having terminated the Agreement.

Defendant I) was therefore fully aware of the risks possibly arising in its relation with the MOD when signing the M-84-contract. However, this does not deprive Defendant 1) of its right to terminate the Agreement, which right it exercised on .... . This follows from Art.404 sect. 1 CO. As the termination was effected after signing the M-84- contract, it can not retroactively annul the claims accrued under the Agreement in favour of Claimant prior to the termination, for these had arisen automatically and simultaneously with the signature of the M-84-contract.

b) The Arbitral Tribunal deems irrelevant whether Defendant 1) sold, with the assistance of an agent, 20-mm anti-aircraft-guns to the MOD prior to the Agreement of ..... The Arbitral Tribunal was called to decide on this issue according to sect. G I 7 a) Terms of Reference. However, the question became obsolete and, in the opinion of the Arbitral Tribunal, irrelevant to the decision of the dispute when the Replica and the Duplica with their respective offers of proof were submitted later. The question was replaced by numerous new issues not contained in the Terms of Reference but rendering obsolete some problems raised there. The Arbitral Tribunal therefore makes no decision on this point.

The same considerations apply to sect. G I 7 b) Terms of Reference. The Arbitral Tribunal holds that Defendant 1) had the right to terminate the Agreement of ..... immediately, regardless of whether Defendant 1) knew the MOD-circular earlier, as Claimant undisputedly

The parties' authority of free choice of law is confirmed as an internationally valid principle by Art. 7 of the European Convention of 1961. The parties are to be enabled to subject their legal relations to the law they choose, and to exclude the national law which would otherwise apply. Therefore, provisions of the law which is excluded can only be recognized within the chosen law to the extent that they are part of the ordre public international,

Examples of this are provisions to fight corruption and bribery.

In the permanent practice of international arbitration, national provisions governing the law of agency are not considered to belong to the ordre public international,

Northrop Corp v. Triad Intern. Marketing S.A., 81 1 F.2d 1265 (9th Cir. 1987); Swiss Fed. Court, ASA Bulletin 1993, 253 et seq.

cc) The majority of the Arbitral Tribunal is also inclined to believe Claimant's allegation that the provisions of Z. law are not compulsory.

Undisputedly, the Writ of Attachment of ..... ,obtained by the Claimant in Z. from a state court, has not been set aside. The "Request for is- suing Writ of Attachment" describes the Claimant as a "X. Company". A state judge issuing a preliminary injunction has to make a full legal examination of the case. The majority of the Arbitral Tribunal does not suppose that the judge of Z. who issued the Writ of Attachment in favour of the Claimant failed to do so. Therefore it may be concluded that the Z. law invoked by Defendant 1) is not compulsory and even less belongs to the ordre public international .

2) Right of Defendant 1) to Terminate the Agreement after having Received the MOD-Circular

did. Defendant I) was aware before signing the M-84-contract that the Agreement of ...... was subject to immediate termination, as is evident from its letter of ...... to the Claimant and the termination of ......, shortly after.

a) Undisputedly, Defendant I ) knew the MOD-circular before signing the M-84-contract on... ... Defendant 1) thus could decide freely whether to terminate the Agreement of ..... before signing the M-84-contract, to eliminate any risk the MOD-circular might create with regard to the MOD, or to sign the M-84-contract without prior termination of the Agreement. Defendant 1) opted for the second alternative by signing the M-84-contract on ..... without having terminated the Agreement.

Defendant I) was therefore fully aware of the risks possibly arising in its relation with the MOD when signing the M-84-contract. However, this does not deprive Defendant 1) of its right to terminate the Agreement, which right it exercised on .... . This follows from Art.404 sect. 1 CO. As the termination was effected after signing the M-84- contract, it can not retroactively annul the claims accrued under the Agreement in favour of Claimant prior to the termination, for these had arisen automatically and simultaneously with the signature of the M-84-contract.

b) The Arbitral Tribunal deems irrelevant whether Defendant 1) sold, with the assistance of an agent, 20-mm anti-aircraft-guns to the MOD prior to the Agreement of ..... The Arbitral Tribunal was called to decide on this issue according to sect. G I 7 a) Terms of Reference. However, the question became obsolete and, in the opinion of the Arbitral Tribunal, irrelevant to the decision of the dispute when the Replica and the Duplica with their respective offers of proof were submitted later. The question was replaced by numerous new issues not contained in the Terms of Reference but rendering obsolete some problems raised there. The Arbitral Tribunal therefore makes no decision on this point.

The same considerations apply to sect. G I 7 b) Terms of Reference. The Arbitral Tribunal holds that Defendant 1) had the right to terminate the Agreement of ..... immediately, regardless of whether Defendant 1) knew the MOD-circular earlier, as Claimant undisputedly

3) No Joint Illicit Intentions of the Parties at the Time of the Closing of the Agreement

The Arbitral Tribunal holds that the Agreement of ..... would be null if the Parties, when closing the Agreement, had intended that Claimant was to effect the conclusion of a contract between MOD and the Defendant 1) by illicit means, such as bribery. The Defendants did not allege that the Parties jointly had such intentions, nor did the taking of evidence convince the Arbitral Tribunal of such intentions.

a) The Arbitral Tribunal has given special attention to this point because the language of sect. 2 of the Agreement exonerates the Claimant from any proof of its services. Combined with other circumstances, this provision might imply joint illicit intentions of the Parties. However, the copies of the Claimant's telefax letters to Defendant 1) establish that Claimant did indeed render services.

The Defendants did not allege other circumstances which might constitute illicit intentions of the Parties on conclusion of the Agreement. The Arbitral Tribunal holds that sect. 2 of the Agreement of ..... is not sufficient to prove joint illicit intentions.

b) The Arbitral Tribunal further holds that the amounts of fees agreed upon in sect. 4 and 5 of the Agreement and the pertaining Amendment I11 do not imply joint illicit intentions of the Parties. This does not prejudice the question whether the fees are justified by Claimant's services rendered, which will be discussed below.

Defendant 1) asserted that the stipulated fees are disproportionately high and unusual. The Arbitral Tribunal holds that this circumstance as such is not sufficient to invalidate the Agreement.

aa) Principal and agent are free to stipulate the fees due to the agent. A brokerage agreement is not invalid merely because an unusually high commission is agreed upon. Excessive fees may be cut back to the appropriate amount by the court at the principal's motion, under the conditions specified in Art. 417 CO. The reduction is not effected ex officio but only at the principal's request. If the principal pays the excessive fee without reservation it cannot be reclaimed,

BGE 83 I1 152; 88 I1 5 15; Gautschi in Berner Kommentar, Art. 417, ann. 3 b).

Art. 417 CO only applies to agency agreements concerning employment contracts or real estate purchase contracts. It is an exceptional provision, expressing in particular the political intention of Swiss law to prevent unjustified profits which would have undesirable effects on the real estate market of Switzerland,

BGE 11 1 I1 366 ff.; Ammann in HonsellNogt/Wiegand, Art. 41 7, ann. 2.

The nature of exceptional provisions forbids their analogous application to other matters.

bb) Mr. A.B, the lawyer who conducted the negotiations with the Defendants for the Claimant, explained, concerning the amount of fees, that he commenced the negotiations at 25% and went back to 15%, and to 20% for the spare parts. M.B. and Mr. D. , negotiating on behalf of Defendant I), could not decide on this. The decision was made by General T., then director of Defendant I), who accepted the 15% within 5 minutes. For Z., there were no "standard-commissions"; for "you don't get what you deserve, you get what you negotiate". He had signed contracts with 25% commissions on huge amounts. Mr. A. also stated that he took "whatever I could get".

The Claimant may have got the better of the Defendant 1) in negotiating the fees. However, Art. 21 CO shows that this does not invalidate the Agreement. Defendant 1) raised no substantiated objections to the statements of Mr. AB. and Mr. A. concerning the course of the negotiations and the amount of fees agreed upon. Neither M.B. nor Lt. General T. or Mr. D., who was present during the examination of Mr. AB, were called as witnesses.

The statements of Mr. AB. and Mr. A. do not point to illicit intentions of the Parties on conclusion of the Agreement especially as Defendant 1) asserted that until receipt of the MOD-circular it had no reason to be suspicious towards Claimant's intentions. The Arbitral Tribunal also

3) No Joint Illicit Intentions of the Parties at the Time of the Closing of the Agreement

The Arbitral Tribunal holds that the Agreement of ..... would be null if the Parties, when closing the Agreement, had intended that Claimant was to effect the conclusion of a contract between MOD and the Defendant 1) by illicit means, such as bribery. The Defendants did not allege that the Parties jointly had such intentions, nor did the taking of evidence convince the Arbitral Tribunal of such intentions.

a) The Arbitral Tribunal has given special attention to this point because the language of sect. 2 of the Agreement exonerates the Claimant from any proof of its services. Combined with other circumstances, this provision might imply joint illicit intentions of the Parties. However, the copies of the Claimant's telefax letters to Defendant 1) establish that Claimant did indeed render services.

The Defendants did not allege other circumstances which might constitute illicit intentions of the Parties on conclusion of the Agreement. The Arbitral Tribunal holds that sect. 2 of the Agreement of ..... is not sufficient to prove joint illicit intentions.

b) The Arbitral Tribunal further holds that the amounts of fees agreed upon in sect. 4 and 5 of the Agreement and the pertaining Amendment I11 do not imply joint illicit intentions of the Parties. This does not prejudice the question whether the fees are justified by Claimant's services rendered, which will be discussed below.

Defendant 1) asserted that the stipulated fees are disproportionately high and unusual. The Arbitral Tribunal holds that this circumstance as such is not sufficient to invalidate the Agreement.

aa) Principal and agent are free to stipulate the fees due to the agent. A brokerage agreement is not invalid merely because an unusually high commission is agreed upon. Excessive fees may be cut back to the appropriate amount by the court at the principal's motion, under the conditions specified in Art. 417 CO. The reduction is not effected ex officio but only at the principal's request. If the principal pays the excessive fee without reservation it cannot be reclaimed,

BGE 83 I1 152; 88 I1 5 15; Gautschi in Berner Kommentar, Art. 417, ann. 3 b).

Art. 417 CO only applies to agency agreements concerning employment contracts or real estate purchase contracts. It is an exceptional provision, expressing in particular the political intention of Swiss law to prevent unjustified profits which would have undesirable effects on the real estate market of Switzerland,

BGE 11 1 I1 366 ff.; Ammann in HonsellNogt/Wiegand, Art. 41 7, ann. 2.

The nature of exceptional provisions forbids their analogous application to other matters.

bb) Mr. A.B, the lawyer who conducted the negotiations with the Defendants for the Claimant, explained, concerning the amount of fees, that he commenced the negotiations at 25% and went back to 15%, and to 20% for the spare parts. M.B. and Mr. D. , negotiating on behalf of Defendant I), could not decide on this. The decision was made by General T., then director of Defendant I), who accepted the 15% within 5 minutes. For Z., there were no "standard-commissions"; for "you don't get what you deserve, you get what you negotiate". He had signed contracts with 25% commissions on huge amounts. Mr. A. also stated that he took "whatever I could get".

The Claimant may have got the better of the Defendant 1) in negotiating the fees. However, Art. 21 CO shows that this does not invalidate the Agreement. Defendant 1) raised no substantiated objections to the statements of Mr. AB. and Mr. A. concerning the course of the negotiations and the amount of fees agreed upon. Neither M.B. nor Lt. General T. or Mr. D., who was present during the examination of Mr. AB, were called as witnesses.

The statements of Mr. AB. and Mr. A. do not point to illicit intentions of the Parties on conclusion of the Agreement especially as Defendant 1) asserted that until receipt of the MOD-circular it had no reason to be suspicious towards Claimant's intentions. The Arbitral Tribunal also

considers that Defendant 2), who had participated in the negotiations, still assumed in its Final Statement of ..... that the Agreement of ..... was valid. Defendant 2) said that if supplied by the Claimant with all relevant elements, subject to its obligations under the Agreement it would have issued the required letter of guarantee. The Final

I

Statement was submitted after the taking of evidence in preparation of the Final Pleadings.

4) No Sufficient Allepations Concerning Illicit Activities of Ex- Ambassador D.

The Arbitral Tribunal holds that the Defendants have to prove that the Y. ex-ambassador to Z., D., was engaged with Claimant's approval in such illicit activities as to nullify the Agreement of ..... There is no conclusive statement of facts to that effect. l

a) Neither Defendant's 1) Answer to the Request for Arbitration of ...., nor Defendant's 2) Answer of ....., mention Ex-Ambassador D. In the Replica, the Claimant wrote concerning Ex-Ambassador D.: 1

"The Y. ambassador to Z. served as a conduit for communications between W. and the S. As he had no personal I

I

stake in the Agreement and was trusted by both parties, Mr. AO. frequently delivered information obtained by Mr. A. (or 1 Mr. G.) directly to Ambassador H. Indeed, the Ambassador often acknowledged receipt of these communications with his signature ...".

To this, Defendant 1) replied in its Duplica of ....., merely :

"... However, Claimant itself states that quires were communicated from Y. Ambassador or CPI employee Mr. N. This unsupported statement is the only one which should have to explain that Claimant was demanded for his services.

Indeed this statement can not be accepted, ...I1.

Ex-Ambassador D. is mentioned only once again in the Duplica in connection with exhibit, the Claimant's letter of .... to the Ambassador of Y. in Z. The Defendants have alleged nothing else concerning Am- bassador D.

The statement of Mr. S. heard as witness has satisfied the Arbitral Tribunal that Ex-Ambassador D. acknowledged the receipt of letters from Claimant to Defendant I), and that Defendant 1) indeed received those letters. The Arbitral Tribunal does not hold this to be illicit activities of Ex-Ambassador D., which could nullify the Agreement. As Defendant 1) failed to submit substantiated facts, the Tribunal need not decide whether Ex-Ambassador D. was authorized to accept Claimant's services on behalf of Defendant 1).

b) Defendant 1) was advised by written Order of the Chairman of .... that it would be excluded from presenting new facts after the extension granted for its Duplica had expired. The Order says:

"The deadline fixed for Defendant (1) to submitting his Duplica is hereby extended according to the request by Defendant (I) until

The Defendant (1) is advised that no additional extensions will be granted and he will be excluded from presenting new facts or evidence not contained in his Duplica posted on or before

!! . . . . . . .

5 ) Agreement not Invalid due to High Fees in Relation to Services Actually Rendered

The majority of the Arbitral Tribunal holds that the Agreement is not invalidated by the circumstance that the fees according to sect. 4 of the Agreement are disproportionately high for the services actually rendered by Claimant. The majority opinion is based on the following considerations:

considers that Defendant 2), who had participated in the negotiations, still assumed in its Final Statement of ..... that the Agreement of ..... was valid. Defendant 2) said that if supplied by the Claimant with all relevant elements, subject to its obligations under the Agreement it would have issued the required letter of guarantee. The Final

I

Statement was submitted after the taking of evidence in preparation of the Final Pleadings.

4) No Sufficient Allepations Concerning Illicit Activities of Ex- Ambassador D.

The Arbitral Tribunal holds that the Defendants have to prove that the Y. ex-ambassador to Z., D., was engaged with Claimant's approval in such illicit activities as to nullify the Agreement of ..... There is no conclusive statement of facts to that effect. l

a) Neither Defendant's 1) Answer to the Request for Arbitration of ...., nor Defendant's 2) Answer of ....., mention Ex-Ambassador D. In the Replica, the Claimant wrote concerning Ex-Ambassador D.: 1

"The Y. ambassador to Z. served as a conduit for communications between W. and the S. As he had no personal I

I

stake in the Agreement and was trusted by both parties, Mr. AO. frequently delivered information obtained by Mr. A. (or 1 Mr. G.) directly to Ambassador H. Indeed, the Ambassador often acknowledged receipt of these communications with his signature ...".

To this, Defendant 1) replied in its Duplica of ....., merely :

"... However, Claimant itself states that quires were communicated from Y. Ambassador or CPI employee Mr. N. This unsupported statement is the only one which should have to explain that Claimant was demanded for his services.

Indeed this statement can not be accepted, ...I1.

Ex-Ambassador D. is mentioned only once again in the Duplica in connection with exhibit, the Claimant's letter of .... to the Ambassador of Y. in Z. The Defendants have alleged nothing else concerning Am- bassador D.

The statement of Mr. S. heard as witness has satisfied the Arbitral Tribunal that Ex-Ambassador D. acknowledged the receipt of letters from Claimant to Defendant I), and that Defendant 1) indeed received those letters. The Arbitral Tribunal does not hold this to be illicit activities of Ex-Ambassador D., which could nullify the Agreement. As Defendant 1) failed to submit substantiated facts, the Tribunal need not decide whether Ex-Ambassador D. was authorized to accept Claimant's services on behalf of Defendant 1).

b) Defendant 1) was advised by written Order of the Chairman of .... that it would be excluded from presenting new facts after the extension granted for its Duplica had expired. The Order says:

"The deadline fixed for Defendant (1) to submitting his Duplica is hereby extended according to the request by Defendant (I) until

The Defendant (1) is advised that no additional extensions will be granted and he will be excluded from presenting new facts or evidence not contained in his Duplica posted on or before

!! . . . . . . .

5 ) Agreement not Invalid due to High Fees in Relation to Services Actually Rendered

The majority of the Arbitral Tribunal holds that the Agreement is not invalidated by the circumstance that the fees according to sect. 4 of the Agreement are disproportionately high for the services actually rendered by Claimant. The majority opinion is based on the following considerations:

a) The Arbitral Tribunal is unanimous that unusually high fees do not as such invalidate the Agreement. From the beginning, the Agreement was intended to bring about the M-84-contract between Defendant 1) and the MOD (inter alia), by means of services rendered by Claimant.

The purpose of the Agreement has been achieved in that Defendant 1 ) has concluded the M-84-contract with the MOD. Therefore the validity of the Agreement does not depend on the quantity of services the Claimant had to perform. It is sufficient that it did render services to Defendant 1) under the Agreement. Of this the Arbitral Tribunal is satisfied.

b) A principal may plead the agent's faulty performance of the contract, which may reduce the agent's fee or extinguish the claim altogether,

BGE 108 I1 198 f.; BGE 108 I1 64; BGE 110 I1 379; Weber in HonsellNogtIWiegand, Art. 394, Rz. 43.

This requires, however, that the contract has failed in part or altogether, or that the principal has sustained damages due to the agent's faulty performance.

Such circumstances do not exist here. The M-84-contract was concluded as intended by Defendant 1). Defendant 1) may not hold against Claimant that a price reduction of 13% was granted to the MOD. This was due to Defendant's own decision and not to any alleged lack of performance by Claimant. There is also no indication that Claimant infringed the interests of Defendant 1) by its services.

6) Agreement not Invalid because of Lobbying by Claimant

The Defendants plead that the Agreement of .... is void because of the Claimant's illicit lobbying activities. The majority of the Arbitral Tribunal does not share this view.

The Claimant stated in its Replica

"Of course, W. did in fact lobby MOD on the S.'s behalf and supply the S. with information on the status of its bids as well as the bids of its competitors. W.'s activities were in perfect accord with the laws of Switzerland, did not violate the laws of Z., and were well-received by the S. during the first year of the Agreement."

Defendant 1) deems the activities thus described illegal. The evidence obtained did not convince the majority of the Arbitral Tribunal that this is so.

a) Lobbying as such is not an illegal activity. Lobbying by private enterprises to obtain public contracts in third countries is frequently carried on with active support from the state, as witnessed by numerous visits of heads of government or heads of state, who are normally accompanied by representatives of commercial enterprises from the visitor's country, in the hope that they will secure public contracts for their enterprises from the country they visit.

b) Mr. A. described to the Arbitral Tribunal the Claimant's understanding of lobbying as follows :

"Lobbying for the S.; let me explain to you that Z. is a small community, and the people who work in the Ministry of Defence or in Ministry of Finance, those are officers, and some of them, we go together to the beach, we are friends, we went to school together, they come to our house, we go to their house. We are a small community, we are only ...... Z.'s, everyone knows each other. Lobbying means that when you have been trying to sell your equipment for more than 10 or 12 years, I lobby for the S. and convince the people in the committee face to face that why don't you try this M84, this is a very good tank, this is a tank which is virtually a T72 re- structured from inside to meet your requirements? On the other side you would get a better buy from that, why don't you give a chance for them to do that?

a) The Arbitral Tribunal is unanimous that unusually high fees do not as such invalidate the Agreement. From the beginning, the Agreement was intended to bring about the M-84-contract between Defendant 1) and the MOD (inter alia), by means of services rendered by Claimant.

The purpose of the Agreement has been achieved in that Defendant 1 ) has concluded the M-84-contract with the MOD. Therefore the validity of the Agreement does not depend on the quantity of services the Claimant had to perform. It is sufficient that it did render services to Defendant 1) under the Agreement. Of this the Arbitral Tribunal is satisfied.

b) A principal may plead the agent's faulty performance of the contract, which may reduce the agent's fee or extinguish the claim altogether,

BGE 108 I1 198 f.; BGE 108 I1 64; BGE 110 I1 379; Weber in HonsellNogtIWiegand, Art. 394, Rz. 43.

This requires, however, that the contract has failed in part or altogether, or that the principal has sustained damages due to the agent's faulty performance.

Such circumstances do not exist here. The M-84-contract was concluded as intended by Defendant 1). Defendant 1) may not hold against Claimant that a price reduction of 13% was granted to the MOD. This was due to Defendant's own decision and not to any alleged lack of performance by Claimant. There is also no indication that Claimant infringed the interests of Defendant 1) by its services.

6) Agreement not Invalid because of Lobbying by Claimant

The Defendants plead that the Agreement of .... is void because of the Claimant's illicit lobbying activities. The majority of the Arbitral Tribunal does not share this view.

The Claimant stated in its Replica

"Of course, W. did in fact lobby MOD on the S.'s behalf and supply the S. with information on the status of its bids as well as the bids of its competitors. W.'s activities were in perfect accord with the laws of Switzerland, did not violate the laws of Z., and were well-received by the S. during the first year of the Agreement."

Defendant 1) deems the activities thus described illegal. The evidence obtained did not convince the majority of the Arbitral Tribunal that this is so.

a) Lobbying as such is not an illegal activity. Lobbying by private enterprises to obtain public contracts in third countries is frequently carried on with active support from the state, as witnessed by numerous visits of heads of government or heads of state, who are normally accompanied by representatives of commercial enterprises from the visitor's country, in the hope that they will secure public contracts for their enterprises from the country they visit.

b) Mr. A. described to the Arbitral Tribunal the Claimant's understanding of lobbying as follows :

"Lobbying for the S.; let me explain to you that Z. is a small community, and the people who work in the Ministry of Defence or in Ministry of Finance, those are officers, and some of them, we go together to the beach, we are friends, we went to school together, they come to our house, we go to their house. We are a small community, we are only ...... Z.'s, everyone knows each other. Lobbying means that when you have been trying to sell your equipment for more than 10 or 12 years, I lobby for the S. and convince the people in the committee face to face that why don't you try this M84, this is a very good tank, this is a tank which is virtually a T72 re- structured from inside to meet your requirements? On the other side you would get a better buy from that, why don't you give a chance for them to do that?

They are refusing, they don't want even to look at those products from those countries at all, they were concentrating on the Americans and Europeans; but lobbying means convincing the people to agree to have the chance for the Y., to see their products and to test it, and if it goes through the test and the trial, they will be the ones who get the job.

The other one, I also lobbied the Minister of Finance that they talk to the people in the Ministry of Defence also to give them a chance, because Z. will really get benefit from that, they will reduce their debts. This is a part of lobbying, gathering information for them. It's not secret information to know what would be the number of tanks they want, how much ammunition they want, what would be the training procedures, what would be the best for the Y. to work, to bring their people to Z., to bring the people? This is part of the lobbying."

This describes some of the activities which the Claimant had undertaken in sect. 3 of the Agreement in favour of Defendant 1). The majority of the Arbitral Tribunal does not qualify this and the further statements of Mr. A. as illicit activities.

Upon question by the counsel of Defendant I), Mr. G. said, i.a. :

"Mr. Chairman, there are questions that you cannot give answers to; you want me to give them my secrets, the details of my contacts with the Ministry?"

To the question "do you do that work publicly or not" he answered "no". Mr. A. made similar statements.

To the majority of the Arbitral Tribunal, these and other statements of Mr. A. and Mr. G., which might imply secret activities, do not seem illegal. The statements must be considered in their context. Mr. G. also said he had acted "on behalf of the company", that is, he openly represented the Claimant. The majority of the Arbitral Tribunal qualifies the answers of Mr. A. and Mr. G. as not suggesting secret

activities but as trying not to disclose their professional know how to third persons. This is neither illicit nor illegal.

c) The Defendant 1) sees specific evidence of illicit lobbying activities in the Claimant's letter of ....., which runs:

"All the above is very valuable and confidential information to you. Please mention to your delegation coming to Z. that if they are questioned about any knowledge of an agent or consultant here in Z. or otherwise to reply as they know of no such thing."

Mr. A., credibly, explained this as protecting the Claimant's know how against other agents, of British or American companies. The majority of the Arbitral Tribunal does not see this as malicious intent or illicit activities.

7) No Evidence of Briberv by Claimant

The Defendants deduce from the amount of fees stipulated that on conclusion of the Agreement Claimant intended to use part of the expected fees to bribe officials of the MOD, without the Defendants' knowledge. The majority of the Arbitral Tribunal does not think so.

Defendant 1) put its suspicion forward for the first time in its Final Brief of ....., after the hearing of evidence, and repeated it in the oral Final Pleadings held on .... and .... .

a) These are new allegations of Defendant 1) not submitted within the time granted for stating facts, and contrary to Order No.5 sect.5 of ....., which said that the written submissions in preparation of the Final Pleadings must not contain new facts or allegations.

During the hearing of evidence the Defendants also refrained from asking one of the witnesses clearly whether the Agreement of ..... had anything to do with bribery.

They are refusing, they don't want even to look at those products from those countries at all, they were concentrating on the Americans and Europeans; but lobbying means convincing the people to agree to have the chance for the Y., to see their products and to test it, and if it goes through the test and the trial, they will be the ones who get the job.

The other one, I also lobbied the Minister of Finance that they talk to the people in the Ministry of Defence also to give them a chance, because Z. will really get benefit from that, they will reduce their debts. This is a part of lobbying, gathering information for them. It's not secret information to know what would be the number of tanks they want, how much ammunition they want, what would be the training procedures, what would be the best for the Y. to work, to bring their people to Z., to bring the people? This is part of the lobbying."

This describes some of the activities which the Claimant had undertaken in sect. 3 of the Agreement in favour of Defendant 1). The majority of the Arbitral Tribunal does not qualify this and the further statements of Mr. A. as illicit activities.

Upon question by the counsel of Defendant I), Mr. G. said, i.a. :

"Mr. Chairman, there are questions that you cannot give answers to; you want me to give them my secrets, the details of my contacts with the Ministry?"

To the question "do you do that work publicly or not" he answered "no". Mr. A. made similar statements.

To the majority of the Arbitral Tribunal, these and other statements of Mr. A. and Mr. G., which might imply secret activities, do not seem illegal. The statements must be considered in their context. Mr. G. also said he had acted "on behalf of the company", that is, he openly represented the Claimant. The majority of the Arbitral Tribunal qualifies the answers of Mr. A. and Mr. G. as not suggesting secret

activities but as trying not to disclose their professional know how to third persons. This is neither illicit nor illegal.

c) The Defendant 1) sees specific evidence of illicit lobbying activities in the Claimant's letter of ....., which runs:

"All the above is very valuable and confidential information to you. Please mention to your delegation coming to Z. that if they are questioned about any knowledge of an agent or consultant here in Z. or otherwise to reply as they know of no such thing."

Mr. A., credibly, explained this as protecting the Claimant's know how against other agents, of British or American companies. The majority of the Arbitral Tribunal does not see this as malicious intent or illicit activities.

7) No Evidence of Briberv by Claimant

The Defendants deduce from the amount of fees stipulated that on conclusion of the Agreement Claimant intended to use part of the expected fees to bribe officials of the MOD, without the Defendants' knowledge. The majority of the Arbitral Tribunal does not think so.

Defendant 1) put its suspicion forward for the first time in its Final Brief of ....., after the hearing of evidence, and repeated it in the oral Final Pleadings held on .... and .... .

a) These are new allegations of Defendant 1) not submitted within the time granted for stating facts, and contrary to Order No.5 sect.5 of ....., which said that the written submissions in preparation of the Final Pleadings must not contain new facts or allegations.

During the hearing of evidence the Defendants also refrained from asking one of the witnesses clearly whether the Agreement of ..... had anything to do with bribery.

b) Although the letters sent to Defendant 1) are unsigned, and merely indicate that Claimant sent them but do not identify Mr. A. as the author, the majority of the Arbitral Tribunal does not see this as substantive evidence of bribery or other illicit intentions of the Clai- mant.

Mr. A. has satisfied the Tribunal as to his motives. He said that an ad- dress was given, which was the fax of his L. lawyer.

This is in conformity with sect. 16 of the Agreement and therefore not to be construed as malicious intent, especially as Defendant 1) did not allege that its own purposes pursued with the Agreement were illicit. As Mr. A. said also, uncontestedly, Defendant 1) never protested that the letters were unsigned.

c) The Claimant has presented exhibits called "top state secrets" by Defendant 1). This does not point to bribery or other illicit activities. It merely shows that the Claimant had good contacts with the people making the decisions for Z., which was probably why Defendant 1) secured Claimant's services. Defendant's 1) director, Lt. General J., said that Defendant 1) had a special procedure "how to choose agents and consultants".

d) Defendant 1) sees the Claimant as an "international paper vehicle" because of its X. domicile. The majority of the Arbitral Tribunal holds that this also does not indicate any secret intentions of the Claimant, such as bribery or other illicit activities, on conclusion of the Agreement.

The Defendants failed to submit their suspicions in their written briefs before the hearing of witnesses. Their subsequent allegations must be regarded as speculative, and insufficient to convince the majority of the Arbitral Tribunal.

e) The majority also holds that bribery renders an agreement invalid. In arbitration proceedings, however, bribery is a fact which has to be alleged and for which evidence has to be submitted, and at the same time constitutes a defence, nullifying the claims arising from a contract. The consequences of this are decisive.

If a claimant asserts claims arising from a contract, and the defendant objects that the claimant's rights arising from the contract are null due to bribery, it is up to the defendant to present the fact of bribery and the pertaining evidence within the time limits allowed to him for presenting facts. The statement of facts the burden of proof are therefore upon the defendant. The word "bribery" is clear and unmistakable. If the defendant does not use it in his presentation of facts an Arbitral Tribunal does not have to investigate. It is exclusively the parties' presentation of facts that decides in what direction the arbitral tribunal has to investigate,

cf. Lionnet, Festschrift Ottoamdt Glossner, 1994, p. 209, 2 16 et seq.

If the claimant's claim based on the contract is to be voided by the defence of bribery, the arbitral tribunal, as any state court, must be convinced that there is indeed a case of bribery. A mere "suspicion" by any member of the arbitral tribunal, communicated neither to the parties nor to the witnesses during the phase to establish the facts of the case, is entirely insufficient to form such a conviction of the Arbitral Tribunal.

The majority of the Arbitral Tribunal is therefore convinced that neither the Agreement as such infringes the ordre public international, nor that Claimant's activity as performed in the particular circumstances violates the bona mores. The Claimant is therefore entitled to the fees stipulated in the Agreement from the Defendants, or the respective damages, to the extent these are due. This includes the fees and damages resulting from the M-84-contract and those resulting from the construction-contract.

b) Although the letters sent to Defendant 1) are unsigned, and merely indicate that Claimant sent them but do not identify Mr. A. as the author, the majority of the Arbitral Tribunal does not see this as substantive evidence of bribery or other illicit intentions of the Clai- mant.

Mr. A. has satisfied the Tribunal as to his motives. He said that an ad- dress was given, which was the fax of his L. lawyer.

This is in conformity with sect. 16 of the Agreement and therefore not to be construed as malicious intent, especially as Defendant 1) did not allege that its own purposes pursued with the Agreement were illicit. As Mr. A. said also, uncontestedly, Defendant 1) never protested that the letters were unsigned.

c) The Claimant has presented exhibits called "top state secrets" by Defendant 1). This does not point to bribery or other illicit activities. It merely shows that the Claimant had good contacts with the people making the decisions for Z., which was probably why Defendant 1) secured Claimant's services. Defendant's 1) director, Lt. General J., said that Defendant 1) had a special procedure "how to choose agents and consultants".

d) Defendant 1) sees the Claimant as an "international paper vehicle" because of its X. domicile. The majority of the Arbitral Tribunal holds that this also does not indicate any secret intentions of the Claimant, such as bribery or other illicit activities, on conclusion of the Agreement.

The Defendants failed to submit their suspicions in their written briefs before the hearing of witnesses. Their subsequent allegations must be regarded as speculative, and insufficient to convince the majority of the Arbitral Tribunal.

e) The majority also holds that bribery renders an agreement invalid. In arbitration proceedings, however, bribery is a fact which has to be alleged and for which evidence has to be submitted, and at the same time constitutes a defence, nullifying the claims arising from a contract. The consequences of this are decisive.

If a claimant asserts claims arising from a contract, and the defendant objects that the claimant's rights arising from the contract are null due to bribery, it is up to the defendant to present the fact of bribery and the pertaining evidence within the time limits allowed to him for presenting facts. The statement of facts the burden of proof are therefore upon the defendant. The word "bribery" is clear and unmistakable. If the defendant does not use it in his presentation of facts an Arbitral Tribunal does not have to investigate. It is exclusively the parties' presentation of facts that decides in what direction the arbitral tribunal has to investigate,

cf. Lionnet, Festschrift Ottoamdt Glossner, 1994, p. 209, 2 16 et seq.

If the claimant's claim based on the contract is to be voided by the defence of bribery, the arbitral tribunal, as any state court, must be convinced that there is indeed a case of bribery. A mere "suspicion" by any member of the arbitral tribunal, communicated neither to the parties nor to the witnesses during the phase to establish the facts of the case, is entirely insufficient to form such a conviction of the Arbitral Tribunal.

The majority of the Arbitral Tribunal is therefore convinced that neither the Agreement as such infringes the ordre public international, nor that Claimant's activity as performed in the particular circumstances violates the bona mores. The Claimant is therefore entitled to the fees stipulated in the Agreement from the Defendants, or the respective damages, to the extent these are due. This includes the fees and damages resulting from the M-84-contract and those resulting from the construction-contract.

IV. Fees Due to Claimant from Defendant 1)

1) The Arbitral Tribunal need not decide on Claimant's motions made in the Request for Arbitration and in the Replica because they were withdrawn and replaced by the motions in the Claimant's Final Brief of ......

2) Payment Claim Against Defendant 1) under the Agreement

Defendant 1) holds that any payment claims are directed exclusively against Defendant 2) as provided in sect.6 of the Agreement. The majority of the Arbitral Tribunal does not share this opinion.

Defendant 1) mainly relies on sect. 6 sentence 1 of the Agreement. Under this, however, Defendant 2) is merely a paying agent, leaving the Defendant 1) as the Party liable for the fees. Sect.4 subsect.2 of the Agreement says unequivocally: "said fees shall be payable by Prin- cipal to Consultant.. . ".

The majority opinion is confirmed by the Defendant's 2) expressly agreeing with Claimant's allegation that Defendant 2) acted merely "as a paying agent for fees".

3) Fees Due under the MOD-Contract for M-84-Tanks Delivered and Paid for

a) The hearing of evidence has confirmed the relevant figures of the contracts between Defendant 1) and MOD on which the Claimant's fees are based.

The Arbitral Tribunal is convinced that Defendant 1) until now has delivered 149 of the 215 M-84-tanks to the MOD under the M-84- contract, leaving 66 tanks still to be delivered. The Claimant has accepted the pertaining statements of Lt. General J., director of Defendant 1 ).

b) Pursuant to sect. F I 3 Terms of Reference and Order No.1 sect.2, the decisive date to fix the sums due to Claimant is ....., the day on which Claimant has submitted the Replica.

aa) The Arbitral Tribunal holds that Claimant is entitled to the 15% stipulated in sect.4 of the Agreement as fees from Defendant 1) for the 149 M-84-tanks delivered until now as far as Defendant 1) has been paid for the deliveries as provided in the Agreement.

As payments received by Defendant 1) under the M-84-contract, the Tribunal qualifies payments in cash or by set-off against Y.'s debts to Z. (sect.6 subsect.2 of the Agreement). The Tribunal also sees as cash payments from MOD to Defendant 1) the moneys destined for Defendant 1) and attached by Claimant in Z. prior to ....., which are US-$ 7 Mio. as stated undisputedly by Lt. General J.

bb) No fees are due to Claimant on ..... from Defendant 1) for the 66 M- 84-tanks not yet delivered. The claim for fees and damages concerning the 66 M-84-tanks does not become due until, and to the extent that, Defendant 1) receives payment for its outstanding deliveries as provided in the Agreement of.. . . . .

c) The Arbitral Tribunal holds that Claimant has to prove what moneys Defendant 1) received under the Agreement for the delivery of the 149 tanks until ...... The Arbitral Tribunal is satisfied that 60% of the total value of the M-84-contract has been paid to Defendant 1). As Lt. General J. stated the Defendant 1) so far has received about 60% of the "total contract price". The Claimant has not proven its allegation that Defendant 1) had received 75% of the total contract value, while Mr. A. stated that he was "in a position to give to the exact cent" the amount paid to Defendant 1).

aa) The Claimant's motion in the Replica :

"that the Arbitral Tribunal invite Defendant (1) to supply in a reasonable time all information and documents enabling Claimant to precisely establish the exact time, amounts and manner of payments made by MOD pursuant to the M-84 and construction contracts."

was to be dismissed as out of time.

IV. Fees Due to Claimant from Defendant 1)

1) The Arbitral Tribunal need not decide on Claimant's motions made in the Request for Arbitration and in the Replica because they were withdrawn and replaced by the motions in the Claimant's Final Brief of ......

2) Payment Claim Against Defendant 1) under the Agreement

Defendant 1) holds that any payment claims are directed exclusively against Defendant 2) as provided in sect.6 of the Agreement. The majority of the Arbitral Tribunal does not share this opinion.

Defendant 1) mainly relies on sect. 6 sentence 1 of the Agreement. Under this, however, Defendant 2) is merely a paying agent, leaving the Defendant 1) as the Party liable for the fees. Sect.4 subsect.2 of the Agreement says unequivocally: "said fees shall be payable by Prin- cipal to Consultant.. . ".

The majority opinion is confirmed by the Defendant's 2) expressly agreeing with Claimant's allegation that Defendant 2) acted merely "as a paying agent for fees".

3) Fees Due under the MOD-Contract for M-84-Tanks Delivered and Paid for

a) The hearing of evidence has confirmed the relevant figures of the contracts between Defendant 1) and MOD on which the Claimant's fees are based.

The Arbitral Tribunal is convinced that Defendant 1) until now has delivered 149 of the 215 M-84-tanks to the MOD under the M-84- contract, leaving 66 tanks still to be delivered. The Claimant has accepted the pertaining statements of Lt. General J., director of Defendant 1 ).

b) Pursuant to sect. F I 3 Terms of Reference and Order No.1 sect.2, the decisive date to fix the sums due to Claimant is ....., the day on which Claimant has submitted the Replica.

aa) The Arbitral Tribunal holds that Claimant is entitled to the 15% stipulated in sect.4 of the Agreement as fees from Defendant 1) for the 149 M-84-tanks delivered until now as far as Defendant 1) has been paid for the deliveries as provided in the Agreement.

As payments received by Defendant 1) under the M-84-contract, the Tribunal qualifies payments in cash or by set-off against Y.'s debts to Z. (sect.6 subsect.2 of the Agreement). The Tribunal also sees as cash payments from MOD to Defendant 1) the moneys destined for Defendant 1) and attached by Claimant in Z. prior to ....., which are US-$ 7 Mio. as stated undisputedly by Lt. General J.

bb) No fees are due to Claimant on ..... from Defendant 1) for the 66 M- 84-tanks not yet delivered. The claim for fees and damages concerning the 66 M-84-tanks does not become due until, and to the extent that, Defendant 1) receives payment for its outstanding deliveries as provided in the Agreement of.. . . . .

c) The Arbitral Tribunal holds that Claimant has to prove what moneys Defendant 1) received under the Agreement for the delivery of the 149 tanks until ...... The Arbitral Tribunal is satisfied that 60% of the total value of the M-84-contract has been paid to Defendant 1). As Lt. General J. stated the Defendant 1) so far has received about 60% of the "total contract price". The Claimant has not proven its allegation that Defendant 1) had received 75% of the total contract value, while Mr. A. stated that he was "in a position to give to the exact cent" the amount paid to Defendant 1).

aa) The Claimant's motion in the Replica :

"that the Arbitral Tribunal invite Defendant (1) to supply in a reasonable time all information and documents enabling Claimant to precisely establish the exact time, amounts and manner of payments made by MOD pursuant to the M-84 and construction contracts."

was to be dismissed as out of time.

The motion was submitted in the Replica of ....., the last day on which Claimant was allowed to introduce new facts, allegations and means of evidence into the arbitration procedure. Had the motion been granted, Claimant could have exceeded the term of preclusion ending on ....

bb) The majority of the Arbitral Tribunal emphasizes however, that its decision refers only to the 149 tanks proved to be delivered and the sums received by Defendant 1) from MOD so far, in the amount of 60%.

This Arbitral Award therefore does not preclude the Claimant from raising new claims in a new procedure against Defendant 1) if more M-84-tanks are delivered to the MOD and/or Defendant 1) receives more payments for the delivery of M-84-tanks, in addition to the 60% decided on herein, under the Agreement of ..... Any payments to Defendant 1) which exceed 60% do not become res judicata by this Award.

d) The Claimant demands the fees of 20% of the contract value for the spare parts and ammunition stipulated in the M-84-contract and in Amendment 111. The Arbitral Tribunal dismisses this claim.

Amendment 111 is subject to reasonable interpretation in the principle of good faith. Amendment 111 alters sect.5 of the Agreement. Both provisions show that they concern separate agreements on spare parts etc., as apparent from the language "value of all contracts". This obviously means subsequent contracts but not the original M-84- contract which was the object of the .....- Agreement.

The Claimant's claim concerning spare parts, ammunition and the training aids which are part of the M-84-contract is limited to fees and damages of 15% pursuant to sect.4 of the Agreement.

e) The majority of the Arbitral Tribunal holds that the following amounts are due to Claimant from Defendant 1) for the M-84-tanks delivered and paid for under the M-84-Agreement:

total value M-84-contract: US$ 500.546.004,-

60% thereof = US$300.327.602,40 + attachment = US$ 7.000.000,00

total - - US$ 307.327.602,40

15% thereof = US$ 46.099.140,36 ------------------ ------------------

Claimant therefore is entitled to fees and damages from Defendant 1) of US$ 46.099.140.36 for the deliveries of M-84-tanks which are calculated in US-Dollars.

The majority of the Arbitral Tribunal holds that Claimant is also entitled to the fees of 15% for the deliveries under the M-84-contract which the Defendant I) calculated in Pound Sterling. The text of sect.4 sentence 1 of the Agreement is unequivocal in that "the total value of all contracts entered into" is to be considered.

The allegation of Defendant 1) that the contract was restricted to military products manufactured in Y. and excludes components purchased in other western countries is contrary to the clear language and reasonable interpretation of the Agreement.

The value of the deliveries under the M-84-contract calculated in Pound Sterling is UKE 11.440.326.29 of which the Claimant has received 60% = UKE 6.864.195,77. The fees and damages of 15% due to Claimant are UKE 1.029.629.37.

4) Fees and Damages Related to Construction Contract

The majority of the Arbitral Tribunal holds that Claimant is also entitled to fees and damages of 10% under the construction-contract pursuant to sect.4 of the Agreement.

Defendant 1) did not substantively contest Claimant's allegation that the construction-contract results from direct negotiations between Defendant 1) and MOD and not from a tender. The applicable amount

The motion was submitted in the Replica of ....., the last day on which Claimant was allowed to introduce new facts, allegations and means of evidence into the arbitration procedure. Had the motion been granted, Claimant could have exceeded the term of preclusion ending on ....

bb) The majority of the Arbitral Tribunal emphasizes however, that its decision refers only to the 149 tanks proved to be delivered and the sums received by Defendant 1) from MOD so far, in the amount of 60%.

This Arbitral Award therefore does not preclude the Claimant from raising new claims in a new procedure against Defendant 1) if more M-84-tanks are delivered to the MOD and/or Defendant 1) receives more payments for the delivery of M-84-tanks, in addition to the 60% decided on herein, under the Agreement of ..... Any payments to Defendant 1) which exceed 60% do not become res judicata by this Award.

d) The Claimant demands the fees of 20% of the contract value for the spare parts and ammunition stipulated in the M-84-contract and in Amendment 111. The Arbitral Tribunal dismisses this claim.

Amendment 111 is subject to reasonable interpretation in the principle of good faith. Amendment 111 alters sect.5 of the Agreement. Both provisions show that they concern separate agreements on spare parts etc., as apparent from the language "value of all contracts". This obviously means subsequent contracts but not the original M-84- contract which was the object of the .....- Agreement.

The Claimant's claim concerning spare parts, ammunition and the training aids which are part of the M-84-contract is limited to fees and damages of 15% pursuant to sect.4 of the Agreement.

e) The majority of the Arbitral Tribunal holds that the following amounts are due to Claimant from Defendant 1) for the M-84-tanks delivered and paid for under the M-84-Agreement:

total value M-84-contract: US$ 500.546.004,-

60% thereof = US$300.327.602,40 + attachment = US$ 7.000.000,00

total - - US$ 307.327.602,40

15% thereof = US$ 46.099.140,36 ------------------ ------------------

Claimant therefore is entitled to fees and damages from Defendant 1) of US$ 46.099.140.36 for the deliveries of M-84-tanks which are calculated in US-Dollars.

The majority of the Arbitral Tribunal holds that Claimant is also entitled to the fees of 15% for the deliveries under the M-84-contract which the Defendant I) calculated in Pound Sterling. The text of sect.4 sentence 1 of the Agreement is unequivocal in that "the total value of all contracts entered into" is to be considered.

The allegation of Defendant 1) that the contract was restricted to military products manufactured in Y. and excludes components purchased in other western countries is contrary to the clear language and reasonable interpretation of the Agreement.

The value of the deliveries under the M-84-contract calculated in Pound Sterling is UKE 11.440.326.29 of which the Claimant has received 60% = UKE 6.864.195,77. The fees and damages of 15% due to Claimant are UKE 1.029.629.37.

4) Fees and Damages Related to Construction Contract

The majority of the Arbitral Tribunal holds that Claimant is also entitled to fees and damages of 10% under the construction-contract pursuant to sect.4 of the Agreement.

Defendant 1) did not substantively contest Claimant's allegation that the construction-contract results from direct negotiations between Defendant 1) and MOD and not from a tender. The applicable amount

of fees is therefore 10% and not 6%, pursuant to sect.4 of the Agreement.

The value of the construction-contract is US$ 39.109.528,OO. The circumstance that it was concluded between Defendant 1) and MOD after termination of the Agreement is irrelevant. 10% of US$ 39.109.528,OO is US$ 3.910.952,80.

Defendant 1) has received an advance payment on the construction- contract of US$ 6 million from MOD. The Claimant's claim is therefore governed by Amendment 11 which replaced sect.6 subsect.5 of the Agreement. Under sect.6 subsect.4, the due date set forth in sect.6 subsect.1 does not apply to advance payments under the construction-contract. Amendment I1 provides that the fees on the construction-contract are due in full when the first payment received by Defendant 1) from MOD under the construction-contract exceeds the fees due to Claimant.

This is the case, as Defendant 1) has received US$ 6 million from MOD, and the fees due to Claimant from the construction-contract are less. Since Defendant 1) did receive payment its objection that the contract has by now been terminated by the MOD is irrelevant, sect. 4, subsect.2 of the Agreement.

The Claimant therefore is entitled to fees and damages of US$ 3.910.952.80 from Defendant 1).

5) Interest

The Claimant demands 10% interest on the due claims calculated in US$ and 15% on those calculated in Pound Sterling. To prove the interest rates it has submitted an excerpt from the "Economist" of October 20126, 1990. Exhibit .... shows the interest rates for prime lending in the ..... and ....... valid on ......

The Claimant has maintained the interest claims in the Replica and in the Final Brief. Although the Defendants contested the interest rates, Claimant failed to specify its allegations or to offer hrther evidence.

a) The interest rates shown in exhibit ...... are daily interest rates which the Arbitral Tribunal knows to have become invalid long since. Claimant had to prove the applicable rate of interest for the entire period of time and failed to do so.

The Claimant is therefore entitled only to the statutory interest rate of 5% pursuant to Art. 104 sect.1 CO, proof of higher damages lacking.

b) Interest on monetary debts is payable upon default, Art. 104 sect.1 CO, default requiring the creditor's demand for payment, Art. 102 sect. 1 CO.

The Claimant put Defendant in default of its due claims from the M-84-contract by letter of ....., and by letter of .... for the fees resulting from the construction-contract.

The Claimant demanded interests on the M-84-contract from .... and on the construction-contract from ...... This is correct.

c) The Claimant is entitled to 5% interest from the dates of default on the amounts it first claimed in the Prayer for Relief in its Request for Arbitration.

Concerning the payments of MOD to the Defendant 1) from the M-84- contract, the Claimant alleged in the Request for Arbitration that Defendant 1) had "to date" received 25% of the M-84-contract value. The Request for Arbitration is dated ......

In the Replica of ....., the Claimant alleged that Defendant 1) had "to date" received about 75% of the total contract value, but failed to specify the dates of the alleged payments.

Claimant has to prove the amounts and due dates of its interest claim. It failed to supply the facts establishing the due date of interest on the fees exceeding the claims put forward in the Prayer for Relief in the Request for Arbitration. As it is now undisputed that the Defendant 1) has received 60% of the M-84-contract value the Claimant is entitled to interest on the higher amounts awarded only from .... .

of fees is therefore 10% and not 6%, pursuant to sect.4 of the Agreement.

The value of the construction-contract is US$ 39.109.528,OO. The circumstance that it was concluded between Defendant 1) and MOD after termination of the Agreement is irrelevant. 10% of US$ 39.109.528,OO is US$ 3.910.952,80.

Defendant 1) has received an advance payment on the construction- contract of US$ 6 million from MOD. The Claimant's claim is therefore governed by Amendment 11 which replaced sect.6 subsect.5 of the Agreement. Under sect.6 subsect.4, the due date set forth in sect.6 subsect.1 does not apply to advance payments under the construction-contract. Amendment I1 provides that the fees on the construction-contract are due in full when the first payment received by Defendant 1) from MOD under the construction-contract exceeds the fees due to Claimant.

This is the case, as Defendant 1) has received US$ 6 million from MOD, and the fees due to Claimant from the construction-contract are less. Since Defendant 1) did receive payment its objection that the contract has by now been terminated by the MOD is irrelevant, sect. 4, subsect.2 of the Agreement.

The Claimant therefore is entitled to fees and damages of US$ 3.910.952.80 from Defendant 1).

5) Interest

The Claimant demands 10% interest on the due claims calculated in US$ and 15% on those calculated in Pound Sterling. To prove the interest rates it has submitted an excerpt from the "Economist" of October 20126, 1990. Exhibit .... shows the interest rates for prime lending in the ..... and ....... valid on ......

The Claimant has maintained the interest claims in the Replica and in the Final Brief. Although the Defendants contested the interest rates, Claimant failed to specify its allegations or to offer hrther evidence.

a) The interest rates shown in exhibit ...... are daily interest rates which the Arbitral Tribunal knows to have become invalid long since. Claimant had to prove the applicable rate of interest for the entire period of time and failed to do so.

The Claimant is therefore entitled only to the statutory interest rate of 5% pursuant to Art. 104 sect.1 CO, proof of higher damages lacking.

b) Interest on monetary debts is payable upon default, Art. 104 sect.1 CO, default requiring the creditor's demand for payment, Art. 102 sect. 1 CO.

The Claimant put Defendant in default of its due claims from the M-84-contract by letter of ....., and by letter of .... for the fees resulting from the construction-contract.

The Claimant demanded interests on the M-84-contract from .... and on the construction-contract from ...... This is correct.

c) The Claimant is entitled to 5% interest from the dates of default on the amounts it first claimed in the Prayer for Relief in its Request for Arbitration.

Concerning the payments of MOD to the Defendant 1) from the M-84- contract, the Claimant alleged in the Request for Arbitration that Defendant 1) had "to date" received 25% of the M-84-contract value. The Request for Arbitration is dated ......

In the Replica of ....., the Claimant alleged that Defendant 1) had "to date" received about 75% of the total contract value, but failed to specify the dates of the alleged payments.

Claimant has to prove the amounts and due dates of its interest claim. It failed to supply the facts establishing the due date of interest on the fees exceeding the claims put forward in the Prayer for Relief in the Request for Arbitration. As it is now undisputed that the Defendant 1) has received 60% of the M-84-contract value the Claimant is entitled to interest on the higher amounts awarded only from .... .

V. Fees and Damages Due to Claimant from Defendant 2)

1) Obligation to Issue Bank Guarantee in Favour of Claimant

In the opinion of the majority of the Arbitral Tribunal the Defendant 2) was not only obliged under sect.6 of the Agreement of ..... to open bank guarantees in Claimant's favour after the M-84-contract and the construction-contract between Defendant I) and MOD were conclu- ded. Defendant 2) did also guarantee all payments due to Claimant, as follows from sect. 6 sentence 2 of the Agreement.

A guarantee agreement is void if the performance it guarantees is illegal or immoral,

BGE 76 I1 37 et seq.; 113 I1 436; Pestalozzi in HonsellNogtl Wiegandt, loc.cit., Art. 1 11, ann. 2 1.

The majority of the Arbitral Tribunal sees no grounds of nullity, for which the deliberations supra sect. 11,111, are referred to. Defendant 2) itself, in its Final Statement of ...., maintained its obligation to issue the required letter of guarantee.

a) The majority of the Arbitral Tribunal qualifies sect. 6 of the Agreement of .... as an independent promise of guarantee of Defendant 2) which is governed by Art. I11 CO. It does not agree with Defendant 2) that Art. 492 CO. et seq. are applicable.

The clear language of the heading and the entire contents of sect. 6 show that it is not merely an accessory surety. In international commerce, guaranty promises are regularly given by letter of guarantee.

b) By letter of guarantee, the guarantor's obligation is created solely by the promise itself, independent of the performance of the third party,

2) Clear Instruction of Claimant to Open Letter of Guarantee

Defendant 2) objected that neither Claimant nor Defendant 1) gave the necessary directions to issue the letter of guarantee; the majority of the Arbitral Tribunal deems this unfounded.

The Claimant's request in its letter of ...., and even more in the lawyer's letter of ..... was clear. Claimant unequivocally demanded to open an irrevocable letter of guarantee pursuant to sect.6 of the Agreement and advised Defendant 2) that it was held to be in breach of the Agreement and "fully responsible for all damages and legal consequences arising from that breach".

Any bank active in international commerce, having assumed an obligation as described in sect.6 of the Agreement, is aware of the necessary steps when it is requested to conform with the contract and to open the letter of guarantee as promised to the beneficiary. If the bank thinks it needs more information, it has, as a collateral obliga- tion, to inform the beneficiary accordingly and to obtain it from him,

cf. Bucher, 1oc.cit. p. 416.

Defendant 2) did not allege that it acted in such a way when receiving the Claimant's letters of .... and ...., and there is no evidence to that effect.

3) Directions of Defendant 1) to Defendant 2) Irrelevant

Defendant 2) asserted that Defendant 1) had forbidden by letter of .... to make payments to Claimant:

"Concerning the Agreement of the ..., concluded between this Direction and Your Bank for W.. we are informing you that we have undertaken the necessary steps to break this Agreement, since it is contrary to the forced regulations of Z.

BGE 75 IT 49.

This is the intent expressed by the Parties in sect.6 of the Agreement.

V. Fees and Damages Due to Claimant from Defendant 2)

1) Obligation to Issue Bank Guarantee in Favour of Claimant

In the opinion of the majority of the Arbitral Tribunal the Defendant 2) was not only obliged under sect.6 of the Agreement of ..... to open bank guarantees in Claimant's favour after the M-84-contract and the construction-contract between Defendant I) and MOD were conclu- ded. Defendant 2) did also guarantee all payments due to Claimant, as follows from sect. 6 sentence 2 of the Agreement.

A guarantee agreement is void if the performance it guarantees is illegal or immoral,

BGE 76 I1 37 et seq.; 113 I1 436; Pestalozzi in HonsellNogtl Wiegandt, loc.cit., Art. 1 11, ann. 2 1.

The majority of the Arbitral Tribunal sees no grounds of nullity, for which the deliberations supra sect. 11,111, are referred to. Defendant 2) itself, in its Final Statement of ...., maintained its obligation to issue the required letter of guarantee.

a) The majority of the Arbitral Tribunal qualifies sect. 6 of the Agreement of .... as an independent promise of guarantee of Defendant 2) which is governed by Art. I11 CO. It does not agree with Defendant 2) that Art. 492 CO. et seq. are applicable.

The clear language of the heading and the entire contents of sect. 6 show that it is not merely an accessory surety. In international commerce, guaranty promises are regularly given by letter of guarantee.

b) By letter of guarantee, the guarantor's obligation is created solely by the promise itself, independent of the performance of the third party,

2) Clear Instruction of Claimant to Open Letter of Guarantee

Defendant 2) objected that neither Claimant nor Defendant 1) gave the necessary directions to issue the letter of guarantee; the majority of the Arbitral Tribunal deems this unfounded.

The Claimant's request in its letter of ...., and even more in the lawyer's letter of ..... was clear. Claimant unequivocally demanded to open an irrevocable letter of guarantee pursuant to sect.6 of the Agreement and advised Defendant 2) that it was held to be in breach of the Agreement and "fully responsible for all damages and legal consequences arising from that breach".

Any bank active in international commerce, having assumed an obligation as described in sect.6 of the Agreement, is aware of the necessary steps when it is requested to conform with the contract and to open the letter of guarantee as promised to the beneficiary. If the bank thinks it needs more information, it has, as a collateral obliga- tion, to inform the beneficiary accordingly and to obtain it from him,

cf. Bucher, 1oc.cit. p. 416.

Defendant 2) did not allege that it acted in such a way when receiving the Claimant's letters of .... and ...., and there is no evidence to that effect.

3) Directions of Defendant 1) to Defendant 2) Irrelevant

Defendant 2) asserted that Defendant 1) had forbidden by letter of .... to make payments to Claimant:

"Concerning the Agreement of the ..., concluded between this Direction and Your Bank for W.. we are informing you that we have undertaken the necessary steps to break this Agreement, since it is contrary to the forced regulations of Z.

BGE 75 IT 49.

This is the intent expressed by the Parties in sect.6 of the Agreement.

For these reasons we consider that according to this Agreement you do not bear any obligations. Because of all of the above said kindly refuse any eventual demands for payment based on this Agreement.

To speak in favor of the above we are sending a copy of the letter of the ....., directed to W. and a notice which we have received from the Ministry of Defence of Z."

The Arbitral Tribunal deems this objection irrelevant. As Defendant 2) pleaded itself, sect.6 of the Agreement contains a "fully independent, separate and autonomous obligation of the bank as the guarantor".

An independent guarantee is issued for the specific purpose that the guarantor may not plead defences against the beneficiary originating from the relationship between guarantor and principal. Therefore, if the guarantor has effectively issued an independent guarantee he may not plead against the beneficiary that the principal - here Defendant 1) - instructed him to withhold payment,

Pestalozzi, in HonsellNogtlWiegand, Art. 1 1 1, ann. 20.

4) Payments by MOD to Defendant 1)

Defendant 2) also pleads that the MOD had effected the payments to Defendant 1) through a bank other than Defendant 2). The majority of the Arbitral Tribunal deems this not a valid defence.

Sect. 6 of the Agreement of ..... does not even suggest that the independent guarantee given by Defendant 2) was to be conditional upon the MOD making payments to Defendant 1) exclusively through Defendant 2). On the contrary, sect. 6 subsect.2 expressly declares that payments made by setting off Y.'s debt to Z. are considered "cash payment". The mode of payment from MOD to Defendant 1) is an internal matter between Defendant 1) and Defendant 2) and does not concern the guarantee issued to Claimant.

I 5) Y. Law not Applicable

I

Defendant 2) cannot be heard with the defence that under Y. law the contract between the guarantor (Defendant 2) and his principal (Defendant I ) must be in writing.

In the opinion of the majority, sect. 9 of the Agreement of ...... effectively excludes Y. law. Under Swiss law, neither the promise of guarantee to the beneficiary nor the guarantor's contract with the principal require a specific form,

BGE 101 11 327 et seq.; Pestalozzi in HonsellNogtl Wiegandt, I Art. l l1,ann. 9.

The relationship between guarantor and principal is normally a mandate within the meaning of Art. 394 CO, which does not require a specific form,

Gautschi in Berner Kommentar, Art. 395, ann. 49 a; Weber in HonsellNogtlWiegandt, Art. 395, ann. 10.

6) Amounts Due to Claimant from Defendant 2) I

a) The Arbitral Tribunal is unable to share the Claimant's opinion that it

I is entitled to sue Defendant 2) for the total value of the M-84-contract for failing its obligation to open the letter of credit.

Sect.6 of the Agreement is subject to interpretation by the Arbitral Tribunal, applying the principle of good faith, in order to define the obligations undertaken by Defendant 2).

The construction put forward by Claimant may be possible on the face of the contract. Defendant 2) has to issue an irrevocable Letter of Guarantee "for the entire amount of fees due to Consultant", and "said Letter of Guarantee shall be payable at first demand of Consultant", in the event Guarantor fails to effect payment of Consultant's fees within 15 days after payment is due.

For these reasons we consider that according to this Agreement you do not bear any obligations. Because of all of the above said kindly refuse any eventual demands for payment based on this Agreement.

To speak in favor of the above we are sending a copy of the letter of the ....., directed to W. and a notice which we have received from the Ministry of Defence of Z."

The Arbitral Tribunal deems this objection irrelevant. As Defendant 2) pleaded itself, sect.6 of the Agreement contains a "fully independent, separate and autonomous obligation of the bank as the guarantor".

An independent guarantee is issued for the specific purpose that the guarantor may not plead defences against the beneficiary originating from the relationship between guarantor and principal. Therefore, if the guarantor has effectively issued an independent guarantee he may not plead against the beneficiary that the principal - here Defendant 1) - instructed him to withhold payment,

Pestalozzi, in HonsellNogtlWiegand, Art. 1 1 1, ann. 20.

4) Payments by MOD to Defendant 1)

Defendant 2) also pleads that the MOD had effected the payments to Defendant 1) through a bank other than Defendant 2). The majority of the Arbitral Tribunal deems this not a valid defence.

Sect. 6 of the Agreement of ..... does not even suggest that the independent guarantee given by Defendant 2) was to be conditional upon the MOD making payments to Defendant 1) exclusively through Defendant 2). On the contrary, sect. 6 subsect.2 expressly declares that payments made by setting off Y.'s debt to Z. are considered "cash payment". The mode of payment from MOD to Defendant 1) is an internal matter between Defendant 1) and Defendant 2) and does not concern the guarantee issued to Claimant.

I 5) Y. Law not Applicable

I

Defendant 2) cannot be heard with the defence that under Y. law the contract between the guarantor (Defendant 2) and his principal (Defendant I ) must be in writing.

In the opinion of the majority, sect. 9 of the Agreement of ...... effectively excludes Y. law. Under Swiss law, neither the promise of guarantee to the beneficiary nor the guarantor's contract with the principal require a specific form,

BGE 101 11 327 et seq.; Pestalozzi in HonsellNogtl Wiegandt, I Art. l l1,ann. 9.

The relationship between guarantor and principal is normally a mandate within the meaning of Art. 394 CO, which does not require a specific form,

Gautschi in Berner Kommentar, Art. 395, ann. 49 a; Weber in HonsellNogtlWiegandt, Art. 395, ann. 10.

6) Amounts Due to Claimant from Defendant 2) I

a) The Arbitral Tribunal is unable to share the Claimant's opinion that it

I is entitled to sue Defendant 2) for the total value of the M-84-contract for failing its obligation to open the letter of credit.

Sect.6 of the Agreement is subject to interpretation by the Arbitral Tribunal, applying the principle of good faith, in order to define the obligations undertaken by Defendant 2).

The construction put forward by Claimant may be possible on the face of the contract. Defendant 2) has to issue an irrevocable Letter of Guarantee "for the entire amount of fees due to Consultant", and "said Letter of Guarantee shall be payable at first demand of Consultant", in the event Guarantor fails to effect payment of Consultant's fees within 15 days after payment is due.

However, the Parties obviously did not understand this literally when they concluded the Agreement - falsa demonstratio non nocet. The purpose of a bank guarantee cannot be to grant to the creditor a position stronger than the one he would have if the debtor had duly performed the contract.

This applies to the case in dispute. The bank guarantee intended to secure Claimant's contractual payment claims against Defendant l), meaning that Defendant 2) had to effect unconditional payment at first demand as is the usual purpose of the Letter of Credit in international commerce. But Claimant was not to have the right to enforce against Defendant 2) such claims which did not (yet) exist against Defendant 1). The Claimant's claim against Defendant 1) is conditional on the payments actually effected by the MOD including those made by set- off of Y.'s debts to Z. The real intention of the Parties therefore was that Claimant could enforce only such payment claims against Defendant 2), based on the Letter of Guarantee, which existed against Defendant 1). This applies equally to the damages based on Art. 11 1 CO.

b) For the amount of the claims due to the Claimant at present, it is referred to the deliberations supra No.lV. The liability of Defendant 2) is limited to the amounts owed by Defendant 1). The claims raised in excess of this are dismissed as without merits at present.

Here, too, it is emphasized that the claim against Defendant 2) is dismissed at present only because the claims exceeding the amounts that are hereby awarded are not yet due. The Claimant may therefore put forward the claims now dismissed in an arbitration procedure as soon as they have become due.

VI. Other Irrelevant Facts, Allegations or Opinions

The Arbitral Tribunal has examined but deemed irrelevant the numerous other allegations and defences put forward by the Parties, even where the witnesses have confirmed such assertions. In view of the complex and extensive allegations presented in this arbitral

dispute, the Arbitral Tribunal refrains from commenting in the Reasons on each factual or legal allegation it has deemed irrelevant.

VII. Costs I

1) The Claimant and the Defendants respectively moved to impose the costs on the other Party. The Arbitral Tribunal has to fix the costs according to the proportional success or failure of the substantive claims on which it had to decide.

The Claimant's success is approximately 50%, in proportion to the claims it raised. The Defendants had the same proportional success with their defence. The Arbitral Tribunal therefore deems appropriate that the Claimant and the Defendants each bear 50% of the costs, and that each Defendant has to bear 25% of the costs of arbitration.

The costs of arbitration include the fees of the Arbitrators and the administrative costs as fixed by the ICC-Court of Arbitration, Art. 20 sect. 2 ICC-rules.

The total costs of arbitration amounts to US$ 700.000,-

2) As the Claimant has paid the entire advance on costs, it has a claim against both Defendants jointly to be reimbursed 50% of the advance on costs.

The Defendants have to reimburse Claimant US$350.000,-

3) The same deliberations apply to the normal legal costs incurred by the Parties. Therefore, each Party has to bear its own costs, the costs of its lawyers and the costs of the witnesses named by it and heard by the Arbitral Tribunal. For the witnesses named by both Parties, the costs fall on the Party who presented the respective witness at the hearing.

However, the Parties obviously did not understand this literally when they concluded the Agreement - falsa demonstratio non nocet. The purpose of a bank guarantee cannot be to grant to the creditor a position stronger than the one he would have if the debtor had duly performed the contract.

This applies to the case in dispute. The bank guarantee intended to secure Claimant's contractual payment claims against Defendant l), meaning that Defendant 2) had to effect unconditional payment at first demand as is the usual purpose of the Letter of Credit in international commerce. But Claimant was not to have the right to enforce against Defendant 2) such claims which did not (yet) exist against Defendant 1). The Claimant's claim against Defendant 1) is conditional on the payments actually effected by the MOD including those made by set- off of Y.'s debts to Z. The real intention of the Parties therefore was that Claimant could enforce only such payment claims against Defendant 2), based on the Letter of Guarantee, which existed against Defendant 1). This applies equally to the damages based on Art. 11 1 CO.

b) For the amount of the claims due to the Claimant at present, it is referred to the deliberations supra No.lV. The liability of Defendant 2) is limited to the amounts owed by Defendant 1). The claims raised in excess of this are dismissed as without merits at present.

Here, too, it is emphasized that the claim against Defendant 2) is dismissed at present only because the claims exceeding the amounts that are hereby awarded are not yet due. The Claimant may therefore put forward the claims now dismissed in an arbitration procedure as soon as they have become due.

VI. Other Irrelevant Facts, Allegations or Opinions

The Arbitral Tribunal has examined but deemed irrelevant the numerous other allegations and defences put forward by the Parties, even where the witnesses have confirmed such assertions. In view of the complex and extensive allegations presented in this arbitral

dispute, the Arbitral Tribunal refrains from commenting in the Reasons on each factual or legal allegation it has deemed irrelevant.

VII. Costs I

1) The Claimant and the Defendants respectively moved to impose the costs on the other Party. The Arbitral Tribunal has to fix the costs according to the proportional success or failure of the substantive claims on which it had to decide.

The Claimant's success is approximately 50%, in proportion to the claims it raised. The Defendants had the same proportional success with their defence. The Arbitral Tribunal therefore deems appropriate that the Claimant and the Defendants each bear 50% of the costs, and that each Defendant has to bear 25% of the costs of arbitration.

The costs of arbitration include the fees of the Arbitrators and the administrative costs as fixed by the ICC-Court of Arbitration, Art. 20 sect. 2 ICC-rules.

The total costs of arbitration amounts to US$ 700.000,-

2) As the Claimant has paid the entire advance on costs, it has a claim against both Defendants jointly to be reimbursed 50% of the advance on costs.

The Defendants have to reimburse Claimant US$350.000,-

3) The same deliberations apply to the normal legal costs incurred by the Parties. Therefore, each Party has to bear its own costs, the costs of its lawyers and the costs of the witnesses named by it and heard by the Arbitral Tribunal. For the witnesses named by both Parties, the costs fall on the Party who presented the respective witness at the hearing.

VIII. Only one Arbitral Award

The Claimant requested in its Final Brief of ....., to render separate Arbitral Awards against each Defendant. It made clear, however, that this was not meant as a doubling of its claims. Nevertheless, the Arbi- tral Tribunal has to dismiss the motion.

The Claimant may demand the amounts awarded to it in the Final Award only once, regardless of whether payment is effected by Defendant 1) or Defendant 2). Two separate Final Awards would enable the Claimant to have both declared enforceable and seek enforcement separately against Defendant 1) and Defendant 2). It is generally undesirable to have two separately enforceable titles on an identical claim.

F o r t h e s e r e a s o n s the majority of the Arbitral Tribunal decides

t h e f o l l o w i n g :

I. The Defendants 1) and 2) shall pay to the Claimant:

1) US$46.099.140,36 plus 5% interest on US$ 8.908.190,- from ......, 5% interest on US$ 13.362.285,- from ......, 5% interest on US$ 23.828.665,36 from ......;

2) UKE 1.029.629,37 plus 5% interest on UK& 171.604,89 from ......., 5% interest on UK& 257.407,34 from ......., 5% interest on UK& 600.617,16 from .......;

The Final Prayer for Relief by Claimant exceeding these amounts is dismissed as without merits at present.

11. The costs of Arbitration are US$ 700.000,- of which Claimant bears 50% = US$350.000,- and the Defendants 1) and 2) 50% = US$350.000,-.

111. The Defendants 1) and 2) shall pay to the Claimant 50% of the advance on costs paid by Claimant = US$ 350.000,-.

IV. Each Party shall bear its own costs, the costs of its lawyers and of the witnesses it has presented.

3) US$3.910.953,- plus 5% interest from .......

VIII. Only one Arbitral Award

The Claimant requested in its Final Brief of ....., to render separate Arbitral Awards against each Defendant. It made clear, however, that this was not meant as a doubling of its claims. Nevertheless, the Arbi- tral Tribunal has to dismiss the motion.

The Claimant may demand the amounts awarded to it in the Final Award only once, regardless of whether payment is effected by Defendant 1) or Defendant 2). Two separate Final Awards would enable the Claimant to have both declared enforceable and seek enforcement separately against Defendant 1) and Defendant 2). It is generally undesirable to have two separately enforceable titles on an identical claim.

F o r t h e s e r e a s o n s the majority of the Arbitral Tribunal decides

t h e f o l l o w i n g :

I. The Defendants 1) and 2) shall pay to the Claimant:

1) US$46.099.140,36 plus 5% interest on US$ 8.908.190,- from ......, 5% interest on US$ 13.362.285,- from ......, 5% interest on US$ 23.828.665,36 from ......;

2) UKE 1.029.629,37 plus 5% interest on UK& 171.604,89 from ......., 5% interest on UK& 257.407,34 from ......., 5% interest on UK& 600.617,16 from .......;

The Final Prayer for Relief by Claimant exceeding these amounts is dismissed as without merits at present.

11. The costs of Arbitration are US$ 700.000,- of which Claimant bears 50% = US$350.000,- and the Defendants 1) and 2) 50% = US$350.000,-.

111. The Defendants 1) and 2) shall pay to the Claimant 50% of the advance on costs paid by Claimant = US$ 350.000,-.

IV. Each Party shall bear its own costs, the costs of its lawyers and of the witnesses it has presented.

3) US$3.910.953,- plus 5% interest from .......

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l'ensemble de ces prestations devant permettre a A de produire et commer- cialiser dans de brefs delais des couleurs indCltbiles compktitives et, en particulier, aptes a concurrencer celles de B.

Alors mCme que les connaissances que le Defendeur s'Ctait ainsi engage a transmettre a la Demanderesse ne faisaient encore l'objet, lors de la signature du contrat, ni d'une documentation ni de droits de propriCtC industrielle, en particulier de brevets, elles n'en constituaient pas moins un know-how ou savoir-faire transmissible. On peut en effet definir le know- how, a la suite de J.M. Mousseron (Aspects juridiques du know-how, Cahier de droit de l'entreprise 1972, p. 6) de "connaissance technique transmissible mais non immediatement accessible au public et non brevetee"; ou avec Engel (Contrats de droit suisse, Beme 1992, p. 721) de "savoir technique, commercial ou Cconomique, d'application pratique et de valeur patrimoniale, dont le titulaire a la maitrise et le profit"; ou encore, avec Frangois Dessemontet (Le savoir-faire industriel, thitse Lausanne 1974, p. 7) d'"ensemb1e des connaissances non brevetees utilisCes dans l'industrie"; ou enfin, avec Pedrazzini (Le contrat de licence, TDS VII, 1, 3, p. 118) de "connaissances (techniques mais aussi commerciales ou Cconomiques) qui n'ont besoin ni d'Ctre protegees par un brevet ni d'Ctre secretes, donc accessibles en soi aux tiers, mais que ceux-ci perdraient beaucoup de temps et d'argent ri rechercher et acquerir." Tel Ctait prCcisCment le but poursuivi par A en s'assurant le concours du Defendeur : Ctre en mesure de produire et commercialiser rapidement des couleurs compCtitives, domaine dans lequel elle avait perdu une grande partie de son savoir-faire et du march6 (cf. ch. 1 ci-dessus).

En conclusion, contrairement a ce que paraissent avoir envisagC les parties tant dans leurs Ccritures que dans leurs plaidoiries, la presence ou non d'une documentation et, moins encore, de droits de propriCtC industrielle n'est pas decisive pour admettre l'existence d'un know-how contractuel et pour qualifier le contrat tendant au transfert de ce know-how.

c. La qualification du contrat

Si, au vu de ce qui prCcitde, il ne fait pas de doute que le contrat conclu entre les parties a pour objet essentiel la mise a disposition du know-how ou savoir-faire du Demandeur, il convient d'emblee de relever que ce genre de contrat peut consister soit en une cession, soit en une licence (cf. notamment Engel, op. cit., p. 722, et Ivan Cherpillod : Les droits et obligations des parties au contrat de know-how apres l'expiration du contrat en droit suisse, Recueil des travaux prksentes aux deuxiitmes journCes juridiques yougoslavo-suisses, publications de I'ISDC no 5, Zurich 1986, p. 192-193). Dans le premier cas, qui s'apparente a une vente de brevet, le titulaire cede son savoir-faire a I'acquCreur qui pourra dCsormais l'utiliser sans limitation, notamment de durCe. Dans le second, qui s'apparente 9 une licence de brevet, le preneur bCneficie du savoir-faire pour la duree du contrat, moyennant paiement d'une redevance, mais ne peut plus l'utiliser aprits l'expiration du contrat, du moins aussi longtemps que ce know-how demeure secret. En l'espece, la limitation de la durCe du contrat a une periode initiale de trois ans et la rCmunCration sous la forme d'une commission, avec un minimum garanti, parlerait plut6t en faveur d'une licence. Toutefois, rien dans le contrat n'indique que A devrait renoncer a utiliser les connaissances transmises aprits l'expiration de celui-ci. Au contraire, l'art. 6 al. 3 impose au consultant, c'est-a-dire au Defendeur, une interdiction de concurrence pendant deux ans a dater de l'expiration du contrat, ce qui n'aurait aucun sens si la Demanderesse devait cesser, des 1'CchCance contractuelle, de fabriquer et commercialiser les couleurs indClebiles mises au point avec le concours du DCfendeur. Aussi les arbitres estiment-ils que le contrat avait pour objet le transfert definitif du know-how a la Demanderesse, alors mtme que la collaboration et la remunkration du DCfendeur Ctaient limitCes dans le temps.

La qualification d'un tel contrat est controversCe en droit suisse. Dans un recent arr6t (ATF 115 11 255 = JdT 1990 I 609 c. 2a), le Tribunal fCdCral s'est born6 a considCrer que la mise a disposition du savoir-faire contre une remuneration sous forme de commissions pouvait Ctre soumise aux ritgles du contrat de licence, qui constitue precisement un contrat sui aeneris ou innom6 (cf. ATF 92 I1 299 et Engel, op. cit., p. 718 ss). La doctrine est divisCe. Certains auteurs considitrent precisCment qu'il s'agit d'un contrat innommk, qui ne saurait Ctre soumis a la rkglementation d'aucun des types de contrats prCvus par le Code, notamment pas aux rkgles sur le mandat (cf. notamment Franqois Dessemontet : Les contrats de service, RDS 1987, p. 93 ss, spec.

l'ensemble de ces prestations devant permettre a A de produire et commer- cialiser dans de brefs delais des couleurs indCltbiles compktitives et, en particulier, aptes a concurrencer celles de B.

Alors mCme que les connaissances que le Defendeur s'Ctait ainsi engage a transmettre a la Demanderesse ne faisaient encore l'objet, lors de la signature du contrat, ni d'une documentation ni de droits de propriCtC industrielle, en particulier de brevets, elles n'en constituaient pas moins un know-how ou savoir-faire transmissible. On peut en effet definir le know- how, a la suite de J.M. Mousseron (Aspects juridiques du know-how, Cahier de droit de l'entreprise 1972, p. 6) de "connaissance technique transmissible mais non immediatement accessible au public et non brevetee"; ou avec Engel (Contrats de droit suisse, Beme 1992, p. 721) de "savoir technique, commercial ou Cconomique, d'application pratique et de valeur patrimoniale, dont le titulaire a la maitrise et le profit"; ou encore, avec Frangois Dessemontet (Le savoir-faire industriel, thitse Lausanne 1974, p. 7) d'"ensemb1e des connaissances non brevetees utilisCes dans l'industrie"; ou enfin, avec Pedrazzini (Le contrat de licence, TDS VII, 1, 3, p. 118) de "connaissances (techniques mais aussi commerciales ou Cconomiques) qui n'ont besoin ni d'Ctre protegees par un brevet ni d'Ctre secretes, donc accessibles en soi aux tiers, mais que ceux-ci perdraient beaucoup de temps et d'argent ri rechercher et acquerir." Tel Ctait prCcisCment le but poursuivi par A en s'assurant le concours du Defendeur : Ctre en mesure de produire et commercialiser rapidement des couleurs compCtitives, domaine dans lequel elle avait perdu une grande partie de son savoir-faire et du march6 (cf. ch. 1 ci-dessus).

En conclusion, contrairement a ce que paraissent avoir envisagC les parties tant dans leurs Ccritures que dans leurs plaidoiries, la presence ou non d'une documentation et, moins encore, de droits de propriCtC industrielle n'est pas decisive pour admettre l'existence d'un know-how contractuel et pour qualifier le contrat tendant au transfert de ce know-how.

c. La qualification du contrat

Si, au vu de ce qui prCcitde, il ne fait pas de doute que le contrat conclu entre les parties a pour objet essentiel la mise a disposition du know-how ou savoir-faire du Demandeur, il convient d'emblee de relever que ce genre de contrat peut consister soit en une cession, soit en une licence (cf. notamment Engel, op. cit., p. 722, et Ivan Cherpillod : Les droits et obligations des parties au contrat de know-how apres l'expiration du contrat en droit suisse, Recueil des travaux prksentes aux deuxiitmes journCes juridiques yougoslavo-suisses, publications de I'ISDC no 5, Zurich 1986, p. 192-193). Dans le premier cas, qui s'apparente a une vente de brevet, le titulaire cede son savoir-faire a I'acquCreur qui pourra dCsormais l'utiliser sans limitation, notamment de durCe. Dans le second, qui s'apparente 9 une licence de brevet, le preneur bCneficie du savoir-faire pour la duree du contrat, moyennant paiement d'une redevance, mais ne peut plus l'utiliser aprits l'expiration du contrat, du moins aussi longtemps que ce know-how demeure secret. En l'espece, la limitation de la durCe du contrat a une periode initiale de trois ans et la rCmunCration sous la forme d'une commission, avec un minimum garanti, parlerait plut6t en faveur d'une licence. Toutefois, rien dans le contrat n'indique que A devrait renoncer a utiliser les connaissances transmises aprits l'expiration de celui-ci. Au contraire, l'art. 6 al. 3 impose au consultant, c'est-a-dire au Defendeur, une interdiction de concurrence pendant deux ans a dater de l'expiration du contrat, ce qui n'aurait aucun sens si la Demanderesse devait cesser, des 1'CchCance contractuelle, de fabriquer et commercialiser les couleurs indClebiles mises au point avec le concours du DCfendeur. Aussi les arbitres estiment-ils que le contrat avait pour objet le transfert definitif du know-how a la Demanderesse, alors mtme que la collaboration et la remunkration du DCfendeur Ctaient limitCes dans le temps.

La qualification d'un tel contrat est controversCe en droit suisse. Dans un recent arr6t (ATF 115 11 255 = JdT 1990 I 609 c. 2a), le Tribunal fCdCral s'est born6 a considCrer que la mise a disposition du savoir-faire contre une remuneration sous forme de commissions pouvait Ctre soumise aux ritgles du contrat de licence, qui constitue precisement un contrat sui aeneris ou innom6 (cf. ATF 92 I1 299 et Engel, op. cit., p. 718 ss). La doctrine est divisCe. Certains auteurs considitrent precisCment qu'il s'agit d'un contrat innommk, qui ne saurait Ctre soumis a la rkglementation d'aucun des types de contrats prCvus par le Code, notamment pas aux rkgles sur le mandat (cf. notamment Franqois Dessemontet : Les contrats de service, RDS 1987, p. 93 ss, spec.

p. 137-138, oh il souligne que le contrat de savoir-faire a pour objet un transfert de bien immatkriel et ne constitue pas un contrat de service tombant sous le coup de I'art. 394 al. 2 CO; Engel, op. cit., p. 720-723, pour qui 1'ClCment essentiel est la communication definitive ou temporaire au preneur d'un certain savoir-faire; Beat Viktor Koller : Der Know-How-Vertrag nach schweizerischem Recht ..., these Zurich 1979, spec. p. 4 0 4 1 , pour qui la difference essentielle provient du fait que chacune des parties agit ici dans son propre intCrCt, et p. 171-172, ou il nie la possibilitk d'une repudiation immediate que postule l'art. 404 CO). D'autres soulignent l'analogie avec le contrat de vente (cf. notamment Etienne Nebel : Les contrats de recherche scientifique et technique, thkse Genkve 1972, spec. p. 61 et 67; Herbert Stumpf : Des Know-How-Vertrag, 3e Edition Heidelberg, 1977, p. 4243), ou avec le contrat de louage d'ouvrages, au sens du droit franqais, ou d'entreprise (Frangois Magnin : Know-how et propriete industrielle, Paris 1974, spec. p. 290-294, pour qui il se justifie d'etendre "au contrat de know-how tout entier la qualification de contrat d'entreprise"). Enfin, certains estiment qu'il s'agit essentiellement d'un contrat de service auquel les rbgles du mandat sont applicables en vertu du renvoi de I'art. 394 al. 2 CO (cf. notamment Jean- Nicolas Dmey : Vertrage auf Informationsleistung, innominat Vertrage, Festgabe Walter R. Schluep, Zurich 1988, p. 147 ss, spec. p. 164, oh il relkve neanmoins que l'application de l'art. 404 CO apparait inappropriee, mais que le problbme ne pourrait Ctre rCsolu que par une modification de la loi; Nebel, op. cit., p. 72-76, qui suggkre alors de n'attribuer qu'une portCe dispositive a I'art. 404 CO).

Cette dernibre qualification est celle invoquCe en l'espkce par le Defendeur, dont l'avocat confirma a A, aprks la lettre de rksiliation du 29 janvier 1991, que son client "repudiait le mandat" qui lui avait CtC confie par le contrat du 30 mars 1990 ! I1 fait valoir que ses prestations consistaient essentiellement en des services fournis a titre independant, sans garantie de resultat, dans I'intCr&t et pour le compte de A, repondant ainsi aux critkres determinants du mandat (cf. Walter Fellmann : Der einfache Auflrag, n. 91 ss ad art. 394). A tout le moins, les rkgles du mandat seraient-elles applicables en vertu du renvoi de l'art. 394 al. 2 CO et de la portCe trbs extensive conferee a cette disposition et, par 18-mCme, a I'art. 404 CO par le Tribunal federal (cf. notamment la jurisprudence citee par Dessemontet, op. cit., p. 118 et, plus recemment, ATF 115 I1 464 = JdT 1990 1 312, oh le Tribunal fedha1 confirme sa jurisprudence antbieure, sans toutefois trancher en l'espbce). Sans meconnaitre la disposition prCcitCe et le champ d'application trbs large

attribue par la jurisprudence a I'art. 404 CO, le Tribunal arbitral ne saurait se rallier en l'espbce a une telle qualification. Cela tout d'abord parce que, comme l'ont releve a juste titre de nombreux auteurs, une des caractCristiques du contrat de know-how consiste dans la transmission du savoir-faire, l'assistance technique et les services promis ne constituant en realit6 qu'un moyen d'assurer ce transfert (cf. notamment Dessemontet, op. cit., p. 137; Engel, op. cit., p. 172; Koller, op. cit., p. 9 et 41 : 1st jedoch die Arbeitsleistung nur ein Mittel zur Erfihlung, wobei der wesentliche Zweck in der Offenbarung von Kenntnissen und Erfahrungen liegt, so handelt es sich um einen Know-How-Vertrag; Magnin, op. cit., p. 314-315; Mousseron, p. 14). Ce dernier auteur, qui fait autorite en France, souligne que ce contrat engendre pour l'essentiel une obligation de communication, qui le distingue a la fois des contrats d'ktudes ou d'engineering et de ceux d'assistance technique. Tel est bien le cas en l'espkce. En effet, comme on l'a montrC sous lit. b. ci-dessus, le contrat avait essentiellement pour objet de transferer a A les connaissances et I'experience acquises par le DCfendeur dans le domaine des couleurs indelibiles pour permettre a la Demanderesse de fabriquer et commercialiser un produit cornpetitif. L'assistance a la fois technique et commerciale, comme l'etablissement d'une documentation qui manquait encore, ne constituaient que des moyens de parvenir a ce resultat, objet essentiel du contrat. PrCcisCment, et c'est la une deuxibme objection decisive a la thkse du DCfendeur, le contrat tendait a procurer A un rksultat, soit la possibilitk pour elle de produire et commercialiser des couleurs indelebiles aptes a concurrencer celles des autres specialistes, en particulier de B. L7art. 2.1 du contrat est cet egard trks significatif puisqu'il met comme premiere obligation a charge du DCfendeur de mettre a disposition ou rendre accessible tout le know-how contractuel. Or, une telle obligation de resultat est Ctrangere a la nature du mandat.

Enfin, la possibilitk de revocation ou repudiation en tout temps selon I'art. 404 CO serait a la fois contraire a la nature du contrat et a la volontk des parties. A sa nature car, comme le relkve notamment Dessemontet (op. cit., p. 138), un transfert de technologie s'etend gCnCralement sur plusieurs annees, ce qui implique un contrat d'une certaine durCe. I1 n'est en effet le plus souvent pas possible de transfkrer du jour au lendemain une experience, des connaissances et un savoir-faire acquis de longue date et ne se resumant pas en une seule formule. Cela est encore plus vrai lorsque, comme en l'espkce, il ne s'agit pas seulement de transmettre ce savoir-faire, mais encore de developper les principes de base, d'assurer la formation technique du

p. 137-138, oh il souligne que le contrat de savoir-faire a pour objet un transfert de bien immatkriel et ne constitue pas un contrat de service tombant sous le coup de I'art. 394 al. 2 CO; Engel, op. cit., p. 720-723, pour qui 1'ClCment essentiel est la communication definitive ou temporaire au preneur d'un certain savoir-faire; Beat Viktor Koller : Der Know-How-Vertrag nach schweizerischem Recht ..., these Zurich 1979, spec. p. 4 0 4 1 , pour qui la difference essentielle provient du fait que chacune des parties agit ici dans son propre intCrCt, et p. 171-172, ou il nie la possibilitk d'une repudiation immediate que postule l'art. 404 CO). D'autres soulignent l'analogie avec le contrat de vente (cf. notamment Etienne Nebel : Les contrats de recherche scientifique et technique, thkse Genkve 1972, spec. p. 61 et 67; Herbert Stumpf : Des Know-How-Vertrag, 3e Edition Heidelberg, 1977, p. 4243), ou avec le contrat de louage d'ouvrages, au sens du droit franqais, ou d'entreprise (Frangois Magnin : Know-how et propriete industrielle, Paris 1974, spec. p. 290-294, pour qui il se justifie d'etendre "au contrat de know-how tout entier la qualification de contrat d'entreprise"). Enfin, certains estiment qu'il s'agit essentiellement d'un contrat de service auquel les rbgles du mandat sont applicables en vertu du renvoi de I'art. 394 al. 2 CO (cf. notamment Jean- Nicolas Dmey : Vertrage auf Informationsleistung, innominat Vertrage, Festgabe Walter R. Schluep, Zurich 1988, p. 147 ss, spec. p. 164, oh il relkve neanmoins que l'application de l'art. 404 CO apparait inappropriee, mais que le problbme ne pourrait Ctre rCsolu que par une modification de la loi; Nebel, op. cit., p. 72-76, qui suggkre alors de n'attribuer qu'une portCe dispositive a I'art. 404 CO).

Cette dernibre qualification est celle invoquCe en l'espkce par le Defendeur, dont l'avocat confirma a A, aprks la lettre de rksiliation du 29 janvier 1991, que son client "repudiait le mandat" qui lui avait CtC confie par le contrat du 30 mars 1990 ! I1 fait valoir que ses prestations consistaient essentiellement en des services fournis a titre independant, sans garantie de resultat, dans I'intCr&t et pour le compte de A, repondant ainsi aux critkres determinants du mandat (cf. Walter Fellmann : Der einfache Auflrag, n. 91 ss ad art. 394). A tout le moins, les rkgles du mandat seraient-elles applicables en vertu du renvoi de l'art. 394 al. 2 CO et de la portCe trbs extensive conferee a cette disposition et, par 18-mCme, a I'art. 404 CO par le Tribunal federal (cf. notamment la jurisprudence citee par Dessemontet, op. cit., p. 118 et, plus recemment, ATF 115 I1 464 = JdT 1990 1 312, oh le Tribunal fedha1 confirme sa jurisprudence antbieure, sans toutefois trancher en l'espbce). Sans meconnaitre la disposition prCcitCe et le champ d'application trbs large

attribue par la jurisprudence a I'art. 404 CO, le Tribunal arbitral ne saurait se rallier en l'espbce a une telle qualification. Cela tout d'abord parce que, comme l'ont releve a juste titre de nombreux auteurs, une des caractCristiques du contrat de know-how consiste dans la transmission du savoir-faire, l'assistance technique et les services promis ne constituant en realit6 qu'un moyen d'assurer ce transfert (cf. notamment Dessemontet, op. cit., p. 137; Engel, op. cit., p. 172; Koller, op. cit., p. 9 et 41 : 1st jedoch die Arbeitsleistung nur ein Mittel zur Erfihlung, wobei der wesentliche Zweck in der Offenbarung von Kenntnissen und Erfahrungen liegt, so handelt es sich um einen Know-How-Vertrag; Magnin, op. cit., p. 314-315; Mousseron, p. 14). Ce dernier auteur, qui fait autorite en France, souligne que ce contrat engendre pour l'essentiel une obligation de communication, qui le distingue a la fois des contrats d'ktudes ou d'engineering et de ceux d'assistance technique. Tel est bien le cas en l'espkce. En effet, comme on l'a montrC sous lit. b. ci-dessus, le contrat avait essentiellement pour objet de transferer a A les connaissances et I'experience acquises par le DCfendeur dans le domaine des couleurs indelibiles pour permettre a la Demanderesse de fabriquer et commercialiser un produit cornpetitif. L'assistance a la fois technique et commerciale, comme l'etablissement d'une documentation qui manquait encore, ne constituaient que des moyens de parvenir a ce resultat, objet essentiel du contrat. PrCcisCment, et c'est la une deuxibme objection decisive a la thkse du DCfendeur, le contrat tendait a procurer A un rksultat, soit la possibilitk pour elle de produire et commercialiser des couleurs indelebiles aptes a concurrencer celles des autres specialistes, en particulier de B. L7art. 2.1 du contrat est cet egard trks significatif puisqu'il met comme premiere obligation a charge du DCfendeur de mettre a disposition ou rendre accessible tout le know-how contractuel. Or, une telle obligation de resultat est Ctrangere a la nature du mandat.

Enfin, la possibilitk de revocation ou repudiation en tout temps selon I'art. 404 CO serait a la fois contraire a la nature du contrat et a la volontk des parties. A sa nature car, comme le relkve notamment Dessemontet (op. cit., p. 138), un transfert de technologie s'etend gCnCralement sur plusieurs annees, ce qui implique un contrat d'une certaine durCe. I1 n'est en effet le plus souvent pas possible de transfkrer du jour au lendemain une experience, des connaissances et un savoir-faire acquis de longue date et ne se resumant pas en une seule formule. Cela est encore plus vrai lorsque, comme en l'espkce, il ne s'agit pas seulement de transmettre ce savoir-faire, mais encore de developper les principes de base, d'assurer la formation technique du

personnel (art. 2.2), d'assurer les rapports avec les fournisseurs (art. 2.3) et avec les clients, en particulier pour mettre au point les applications techniques (art. 2.4). I1 etait dbs lors de l'essence mCme de ce contrat que celui-ci s'etende sur une certaine dude, fixee en l'espbce a trois ans. Pour se convaincre qu'une facult6 de revocation ou de rkpudiation immediate serait manifestement contraire au contrat et la volonte des parties, il suffit d'imaginer I'hypothbse inverse, soit celle ou, sit6t aprbs avoir acquis les elements de base necessaires pour demarrer avec la production des couleurs indelebiles, la Demanderesse aurait prCmaturCment rompu le contrat, privant ainsi le DCfendeur de la rCmunCration contractuelle jusqu'a 1'Ccheant ! I1 ne fait pas de doute que C aurait protest6 contre une telle revocation et reclam6 son dQ jusqu'a 1'CchCance du contrat.

Une telle atteinte la volonte des parties ne pourrait se justifier que si le droit de revoquer ou repudier en tout temps Ctait dictC ici par des considerations d'ordre public l'emportant nettement sur le principe pacta sunt servanda. Selon la jurisprudence, la ratio leais de l'art. 404 CO est que le mandat implique g6nCralement une relation de confiance caractkriske au point que, si cette confiance disparait, le maintien du contrat n'a plus aucun sens (cf. en dernier lieu ATF 11 5 I1 464 = JdT 1990 I 3 12 c. 2a). Or, on ne saurait considerer que le contrat de know-how implique une telle relation de confiance caracterisee et reciproque. Elle n'est en tout cas pas plus forte que dans le contrat d'entreprise. Si le cessionnaire compte certes sur les connaissances et llexpCrience professionnelles du cedant, comme le maitre de l'ouvrage sur celles de I'entrepreneur, on ne saurait en particulier considerer que le lien n o d par le cCdant, comme par l'entrepreneur, postule qu'il puisse s'en liberer en tout temps. Or, si l'art. 377 CO autorise le maitre se departir du contrat en payant le travail dej& fait et en indemnisant complbtement I'entrepreneur, celui-ci ne peut en revanche se soustraire a ses obligations contractuelles.

En conclusion, le Tribunal arbitral estime que le contrat de know-how conclu entre les parties ne saurait Ctre qualifiC de mandat et que l'art. 404 CO est inapplicable en I'espece. Cette disposition serait inconciliable avec la volontk des parties, sans Ctre pour autant justifiee par une consideration d'ordre public. I1 serait paradoxal, et mCme inadmissible, que la soumission de ce contrat international au droit suisse ait pour consCquence de l'emporter sur le principe pacta sunt servanda qui est lui considirk comme relevant de

l'ordre public au sens de l'art. 190 al. 2 lit. e LDIP (cf. notamment TF, Bul. ASA 1992, p. 365 c. 2a et 381c. 6a).

d. La ~ortCe de l'art. 404 CO

Si I'on ne devait deja, pour les raisons indiqukes ci-dessus, ecarter l'application en I'espece des regles sur le mandat et, en particulier, de l'art. 404 CO, il y aurait lieu de s'interroger sur sa portee. Certes, dans une jurisprudence constante, mais neanmoins critiquee, le Tribunal fideral lui a reconnu un caractere impCratif. Mais, dans une Ctude rkcente, un auteur a mis judicieusement en question sa portee (Franz Werro : La distinction entre le pouvoir et le droit de resilier, Droit de la construction 1991, p. 55x3). 11 soutient en effet que si cette disposition confere aux parties le pouvoir intangible de mettre fin en tout temps au mandat, cela ne signifie pas necessairement qu'elles aient le droit de l'exercer en tout temps, notamment en violation de la duree fixCe dans le contrat. Si ce pouvoir de resilier est reconnu dans tous les contrats de service impliquant une intervention personnelle du dCbiteur, il ne dispense pas pour autant d'indemniser le dommage cause par la resiliation, que celle-ci intervienne en temps inopportun (art. 404 al. 2 CO) ou en violation du contrat. Cette interpretation seduisante conduirait en l'espbce A considkrer que si le Difendeur avait effectivement le pouvoir de rCpudier prCmaturCment, comme il I'a fait par sa lettre du 29 janvier 1991, il n'en demeurerait pas moins responsable du dommage causC par I'inexCcution de ses obligations contractuelles telles que definies ci-dessus. I1 n'est toutefois pas nCcessaire de s'arrCter plus longuement cette justification subsidiaire dbs lors que, de I'avis du Tribunal arbitral, le DCfendeur ne peut se prevaloir de l'art. 404 CO.

personnel (art. 2.2), d'assurer les rapports avec les fournisseurs (art. 2.3) et avec les clients, en particulier pour mettre au point les applications techniques (art. 2.4). I1 etait dbs lors de l'essence mCme de ce contrat que celui-ci s'etende sur une certaine dude, fixee en l'espbce a trois ans. Pour se convaincre qu'une facult6 de revocation ou de rkpudiation immediate serait manifestement contraire au contrat et la volonte des parties, il suffit d'imaginer I'hypothbse inverse, soit celle ou, sit6t aprbs avoir acquis les elements de base necessaires pour demarrer avec la production des couleurs indelebiles, la Demanderesse aurait prCmaturCment rompu le contrat, privant ainsi le DCfendeur de la rCmunCration contractuelle jusqu'a 1'Ccheant ! I1 ne fait pas de doute que C aurait protest6 contre une telle revocation et reclam6 son dQ jusqu'a 1'CchCance du contrat.

Une telle atteinte la volonte des parties ne pourrait se justifier que si le droit de revoquer ou repudier en tout temps Ctait dictC ici par des considerations d'ordre public l'emportant nettement sur le principe pacta sunt servanda. Selon la jurisprudence, la ratio leais de l'art. 404 CO est que le mandat implique g6nCralement une relation de confiance caractkriske au point que, si cette confiance disparait, le maintien du contrat n'a plus aucun sens (cf. en dernier lieu ATF 11 5 I1 464 = JdT 1990 I 3 12 c. 2a). Or, on ne saurait considerer que le contrat de know-how implique une telle relation de confiance caracterisee et reciproque. Elle n'est en tout cas pas plus forte que dans le contrat d'entreprise. Si le cessionnaire compte certes sur les connaissances et llexpCrience professionnelles du cedant, comme le maitre de l'ouvrage sur celles de I'entrepreneur, on ne saurait en particulier considerer que le lien n o d par le cCdant, comme par l'entrepreneur, postule qu'il puisse s'en liberer en tout temps. Or, si l'art. 377 CO autorise le maitre se departir du contrat en payant le travail dej& fait et en indemnisant complbtement I'entrepreneur, celui-ci ne peut en revanche se soustraire a ses obligations contractuelles.

En conclusion, le Tribunal arbitral estime que le contrat de know-how conclu entre les parties ne saurait Ctre qualifiC de mandat et que l'art. 404 CO est inapplicable en I'espece. Cette disposition serait inconciliable avec la volontk des parties, sans Ctre pour autant justifiee par une consideration d'ordre public. I1 serait paradoxal, et mCme inadmissible, que la soumission de ce contrat international au droit suisse ait pour consCquence de l'emporter sur le principe pacta sunt servanda qui est lui considirk comme relevant de

l'ordre public au sens de l'art. 190 al. 2 lit. e LDIP (cf. notamment TF, Bul. ASA 1992, p. 365 c. 2a et 381c. 6a).

d. La ~ortCe de l'art. 404 CO

Si I'on ne devait deja, pour les raisons indiqukes ci-dessus, ecarter l'application en I'espece des regles sur le mandat et, en particulier, de l'art. 404 CO, il y aurait lieu de s'interroger sur sa portee. Certes, dans une jurisprudence constante, mais neanmoins critiquee, le Tribunal fideral lui a reconnu un caractere impCratif. Mais, dans une Ctude rkcente, un auteur a mis judicieusement en question sa portee (Franz Werro : La distinction entre le pouvoir et le droit de resilier, Droit de la construction 1991, p. 55x3). 11 soutient en effet que si cette disposition confere aux parties le pouvoir intangible de mettre fin en tout temps au mandat, cela ne signifie pas necessairement qu'elles aient le droit de l'exercer en tout temps, notamment en violation de la duree fixCe dans le contrat. Si ce pouvoir de resilier est reconnu dans tous les contrats de service impliquant une intervention personnelle du dCbiteur, il ne dispense pas pour autant d'indemniser le dommage cause par la resiliation, que celle-ci intervienne en temps inopportun (art. 404 al. 2 CO) ou en violation du contrat. Cette interpretation seduisante conduirait en l'espbce A considkrer que si le Difendeur avait effectivement le pouvoir de rCpudier prCmaturCment, comme il I'a fait par sa lettre du 29 janvier 1991, il n'en demeurerait pas moins responsable du dommage causC par I'inexCcution de ses obligations contractuelles telles que definies ci-dessus. I1 n'est toutefois pas nCcessaire de s'arrCter plus longuement cette justification subsidiaire dbs lors que, de I'avis du Tribunal arbitral, le DCfendeur ne peut se prevaloir de l'art. 404 CO.