Data

Date:: 03-10-2003
Country:: Arbitral Award
Number:: 12111
Court:: ICC International Court of Arbitration 12111
Parties:: Unkown

Keywords

SALES CONTRACT - BETWEEN A ROMANIAN MANUFACTURER AND AN ENGLISH COMPANY - GOVERNED BY UNIDROIT PRINCIPLES - GOODS TO BE DELIVERED DIRECTLY TO BUYER'S CUSTOMERS - GOODS ALLEGEDLY DEFECTIVE - PARTIES' FAILURE TO SETTLE CUSTOMERS' CLAIMS - SALES CONTRACT TERMINATED

DAMAGES - CONTRIBUTION OF AGGRIEVED PARTY TO HARM - APPORTIONMENT OF CONTRIBUTION TO THE HARM - DAMAGES REDUCED (ART. 7.4.7)

INTEREST - TO BE PAID FROM DATE AMOUNT DUE UNTIL FULL PAYMENT MADE (ART. 7.4.9(2))

Abstract

Claimant, a Romanian manufacturer, entered into a contract with Defendant, an English company, for the sale of goods to be delivered to customers of the latter in a third country. Some of the customers complained that the goods delivered by Claimant were not in conformity with the agreed technical standards and refused payment. Defendant urged Claimant directly to contact the customers in order to find an amicable solution, but Claimant did not take any such step. On its part Defendant refused to permit its bank to honour the letter of credit opened in favour of Claimant on the ground of minor discrepancies in the documents submitted by Claimant.The dispute arose when Claimant requested Defendant to pay the outstanding invoices for the goods delivered as well as the cost of the raw materials Claimant had bought to manufacture the goods ordered but subsequently rejected by Defendant, and Defendant refused to do so invoking the defects of the goods.

In a preliminary award (see ICC Award (Partial) No. 12111 of 6 January 2003) the Arbitral Tribunal decided that the rules of law applicable to the substance of the dispute were the UNIDROIT Principles of International Commercial Contracts.

As to the merits of the case the Arbitral Tribunal rejected Claimant’s request for the payment of the raw materials. According to the Tribunal the parties' failure to settle the customers' claims demonstrated that they were no longer interested in further deliveries of the goods and intended to put an end to the contract. However, since both Claimant and Defendant refused to cooperate in order to find a mutually acceptable solution, also Claimant was prevented from claiming damages for the deliveries that were no longer performed, and in this respect the Tribunal invoked Art. 7.4.7 of the UNIDROIT Principles according to which the amount of damages may be reduced when the loss results from an action or omission of the party claiming damages. With respect to the claim of payment of the invoices relating to the goods actually delivered, the Tribunal decided in favour of Claimant, also in view of the fact that, despite the alleged defects of the goods, Defendant's customers were able to use the goods for other purposes and had consequently paid the price to Defendant, though with some delay. The Tribunal also awarded Claimant interest on the corresponding amount and in accordance with Art. 7.4.9 of the UNIDROIT Principles decided that interest was due from the date the amount was due until full payment had been made.

Fulltext

INTERNATIONAL CHAMBER OF COMMERCE INTERNATIONAL COURT OF ARBITRATION
Case No. 12111/ACS/FM
FINAL AWARD

[…]

1. FACTS

1.1 The Purchase Orders of 24 April 2001
By letter dated 28 February 2001 Defendant contacted Claimant and provided the later with a technical data sheet for the manufacture by Claimant of "bleached kraft paper, 80 g/sqm,for pizza base to Italy" (Claimant's exhibit 29).
By letter dated 1 March 2001, Claimant confirmed to Defendant that its had the possibility to produce the order "at the physical and mechanical characteristics specified in the technical sheet" enclosed to Defendant's letter of 28 February 2001, and provided the later with price conditions (Respondent's exhibit I). Claimant agreed to a test order being conclusive for a quantity of 200 to 250 tons.
On 24 ApriI 2001 Defendant placed five order confirmations with Claimant (orders Nos. KT -2709,300,24.4,311274 and 18.5) for the delivery of bleached kraft without optical agents for a price of USD 520/MT Ex works, to be received by Defendant clients in Italy (Ondulati Santerno Spa, Toscana Ondulati Spa, IBO Ondulati Srl, Smurfit Spa and Ondulati Nord Est Spa) (Respondent's exhibit 2).

By letter dated 10 May 2001, making specific reference to "bleached kraft paper for Italy", Claimant agreed to the following:
"We hereby confirm that Defendant Trading Ltd, London is our distributor far the Italian market. This exclusivity envisage (sic) achieving a quantity of minimum 5.000 MT per year.
The present agreement cover (sic) a period of minimum 1 year from today. Prices to be negotiated for each individual lot." (Respondent's exhibit 4)

1.2 The Contract of 25 May 2001
On 18 May 200 l Defendant sent to Claimant a draft purchase contract prepared in English (Claimant's Exhibit 19). Claimant in return, sent to Defendant on 24 May 2001 a draft "contract de vanzare-cumparare" in Romanian (Claimant's Exhibit 19).

On 25 May 2001 Claimant and Defendant agreed to the terms of a contract in English entitled "Purchase/Sale Contract n° KT/P/01/2001" (hereinafter the "PSC" or the "Contract") supplemented by an addendum no. 01 (hereafter the "Addendum"), whereby Claimant
sold to Defendant quantities of "bleached kraft paper without optical agents" to be produced in Romania under the technical characteristics defined in a technical sheet No. 1/2001 (the "Technical Data Sheet", incorporated into the Contract) for prices in USD/MT Ex works Claimant Constanta determined in relation with lots stipulated in the Addendum. It is to be noted that the five order confirmations placed by Defendant were specifically mentioned in the Addendum and therefore incorporated in the Contract.

According to article 4 or the Contract payments were to be made by telegraphic transfer from Barclays Bank to Exim Bank within seven days after date of CMR against remittance of (i) the commercial invoice, (i i) the CMR, (iii) the packing list, (iv) the Euro l Certificate and (v) the certificate of alimentary.
Article 11 " Quality reception and claims" provided that quality inspection was to take place at destination according to the Technical Data Sheet and that claims were to be notified (i) for hidden defects within 30 days and (ii) for quality and size within 14 days, from goods arrival at destination.
Article 14 "Disputes" of the Contract provided:
"the present contract is governed by international law; any dispute arising in connection with this contract will be settled in an amiable way and, should this fail,, by authority of the International Chamber of :Commerce of Paris."

Further negotiations seem to have been going on between the parties on other aspects, in particular the acquisition by Defendant of the majority of Claimant' share capital in connection with the privatisation of the Romanian company. Indeed, on 19 June 2001, Defendant sent a letter of intent for the joint acquisition, with an Italian company, CCM DI CARLO CRESPI, of 89% of the share capital of Claimant (Claimant's exhibit 30 and Respondent's exhibit 22). Defendant's application for the purchase of Claimant does not seem to have led to any result, since Claimant withdrew its application by fax of 2 October 2001 (Respondent's exhibit 22):
« We have to inform you with regret about our cancelling our participation to the above [privatisation of Claimant SA].
This is due to the withdrawal of our Italian partners further to the huge difficulties we have encountered in selling the goods delivered by Claimant to this market."

1.3 Deliveries
By fax dated 5 June 2001, Claimant informed Defendant that its had not been delivered with, the pulp required to process the paper.
By fax dated 26 June 2001, Defendant requested Claimant to instruct its bank to open an irrevocable letter of credit in favour of Claimant for the payment an amount of USD 92,400 and requested Claimant to proceed to "immediate production/delivery" (Claimant's exhibit 26). This letter of credit was confirmed by Transilvania bank.
Since the sale was made ex works Constanta, delivery at Claimant' mill, Claimant sent on 6 July 2001 a fax to Defendant stating that the loading time was to take place on 12-15 July 2001 (Respondent's exhibit 25). On 7 July 2001, Defendant confirmed that one of the purchase orders (order No. 22.5) had been cancelled further to Claimant' request and indicated that the letter of credit was amended accordingly (reduced to USD 80,850).

It confirmed loading and dispatch for 12-15 July 2001. Loading actually took place from 13 to 17 July 2001.

Claimant issued seven invoices in connection with Defendant' order confirmations and Claimant' previous pro-forma invoice:

1. Invoice No. 1 EX/ 13.07.01 for an Amount of USD 11.270.60 (Toscana Ondulati S.p.a.);
2. Invoice No.2 EX/14.07.01 for an amount of USD 11.305.25 (IBO Ondulati S.r.l.) ;
3. Invoice No.3 EX/15.07.01 for an amount of USD 11,407.00 (Toscana Nord Est S.p.a.);
4. Invoice No.4 EX/16.07.0 l for an amount of USD 11,312.40 (IBO Ondulati S.r.l.);
5. Invoice No.5 EX/16.07.0 1 for an amount of USO Il,247.50 (Smurfit Sisa S.p.a.);
6. Invoice No.6 EX/17 .07.01 for an amount of USO Il,221.10 (Smurfit Sisa S.p.a.); and
7. Invoice No.7 EX/17.07.01 for an amount of USO Il,341.00 (Ondulati Santerno S.p.a.),
thus a total of USD 79,104,85.
Defendant issued the following invoices to its customers:
1. Invoice No. 014 for an amount of USD 15,573.92 (Toscana Ondulati S.p.a); 2. Invoice No. 015 for an amount of USD 15,621.80 (IBO Ondulati S.r.l.);
3. Invoice No. 016 for an amount of USD 15,866.10 (Toscana Nord Est S.p.a.);
4. Invoice No. 017 for an amount of USD 15,631.68 (IBO Ondulati S.r.l.);
5. Invoice No. 018 for an amount of USD 15,623.80 (Smurfit Sisa S.p.a.);
6. Invoice No. 019 for an amount of USD 15,587.13 (Smurfit Sisa S.p.a.);
7. Invoice No. 020 for an amount of USD 15,465.00 (Ondulati Santerno S.p.a.), thus a total ofUSO 109,369,43, payable within 90 days.

1.3 Payment or the Letter or Credit

On 18 July 2001, Claimant was informed by Banca Transilvania the Letter of Credit had been amended : (i) the expiring date had been extended to 31 July 200 l and (ii) the list of documents had been changed (Claimant's exhibit 7).

On 1 August 200 l, Barclays bank claimed to have found discrepancies in the documents submitted by Claimant for the payment
of the Letter of Credit (it seems that the CMR and EUR l copies had been submitted in the Romanian language instead of
English). Barclays bank was checking with Defendant (applicant) whether Defendant would renounce these discrepancies. On 2 August
200 l Barclays bank informed Claimant that Defendant had rejected the documents submitted by Claimant.
Meanwhile, on 31 July 200 l, Defendant had faxed to Claimant a claim from its client Ondulati Nordset S.p.a. (invoice No.3), dated 25 July 2001, stating:

"GOODS WITH NON CONFORMITY
By this fax we are sorry to inform you that we have put into production the paper KBV 90 gr. received from CLAIMANT SA in width 214 cm and we have faced very big problems of curving but mainly of non sticking, and this because of big discrepancy in the humidity profile.
Tomorrow we shall try the width 221 but by a summary check it will show the same problem as the 214.
For these reasons we shall contact you to agree on the possible return of the goods. "
On 7 August 2001 Defendant made a payment to Claimant of the amount of USD 22,468 corresponding to the deliveries made to Smurfit (invoices Nos. 5 and 6).
It seems that the parties agreed to arrange far Claimant and Defendant' representatives to make a trip to ltaly. However this trip did not take place.
On 25 September 2001 Smurfit made a claim against the quality and the colour of the paper delivered (Respondent's exhibit 12, re. invoices Nos. 5 and 6).
Around this time, Claimant' marketing and export manager of Claimant contacted by phone Defendant's agent in Italy to inquire about (i) the test made by the Italian clients on the paper (ii) possibilities for its mill to develop further business in Italy and (ii) data about quantities that could be sold, problems that had to be cured in order to improve the quality (Respondent's Exhibit 13).
On 1 October 2001, Claimant requested from Defendant payment of the outstanding portion of the seven invoices (USD 56,636.25) and inquired about the enforcement of the Contract for the remaining quantities by the end of the year (5,000 to 7,000 tons of bleached kraft paper) (Claimant's exhibit 11).
On 2 October 2001, Defendant answered claiming that four of its clients were facing problems with the paper delivered by Claimant:

-Ondulati Nordest (invoice 3): Defendant referred to its fax of 31 July 2001, and stated it was trying to find another customer which would mean "a drastic reduction in the price";
-Smurfit (invoices 5 and 6): although the initial test had found the goods in order, it seemed that, apart the colour which was not white, the paper could not be glued and could only be used at extremely low machine speed;
-Ibo Ondulati (invoice 2) and Ondilati Santerno (invoice 7): had claimed that, the degree of whiteness was below the technical parameters but had agreed to make payment. Defendant stated that it would pay Claimant as soon as it would have received their written confirmation ;

-Toscana Ondulati (invoice l): Defendant had no information.
On 5 October 2001, Defendant forwarded to Claimant Smurfit's decision as to the goods. The alternative was (a) return of the goods, (b) re-sell of the goods to another client or (c) use the goods for other purposes with a 20% discount on the value of the goods with payment in December. On 10 October 2001, Defendant requested a reply to its fax of 5 October 2001.

It seems that on 12 October 2001 Claimant contacted ATF Arienti (Smurfit) requesting information on the quality of the paper as well as the behaviour of the machines. It was also informing the Italian client that Mr. Alexandru Marinescu would travel to
Italy from 24 to 31 October 2001. On the same day Defendant sent a fax to Claimant requesting the latter to comply with the exclusivity Claimant had granted to Defendant for the Italian market (Claimant' letter of 10 May 2001) and not to contact Defendant's clients in Italy.
On 17 October 2001 Claimant sent a letter to Defendant claiming urgent payment and contending that payment could not be suspended until acceptance of the goods by Defendant's Italian clients, to "the quality, behaviour or efficiency of the paper in the production process as they are not contractual elements" (Respondent' s exhibit 26).
On 18 October 200 l Defendant replied that (i) Claimant had breached the deadline of delivery. It further referred to the quality problems on the paper (low degree of whiteness, important variations of substance and humidity : 2.6-4.2% instead of the contractual 6%, and variation exceeding the contractual limit of +/-4% for the width of the reel) which had been raised by Defendant representatives present at Claimant during the production of the goods and later by the Italian clients. It contended it could not make the requested payment until after these claims were "not duly solved by the party who has generated it"(Respondent's exhibit 16). On 22 October 2001 Defendant informed Claimant that a visit of Claimant' representative to Italy at this stage would serve no purpose, adding "the situation could have been completely different had Claimant accepted our suggestion of visiting the clients immediately after receipt of the first claim (obtaining a visa would have not been a problem)" (Respondent' s exhibit 16).

It seems that on 25 October 2001 Smurfit and Ondulati Nordest returned the goods to Claimant. Defendant issued on 24 October 200 l the following three credit notes:
-Invoice No. 018 for an amount of USD 1,000.00 (Smurfit Sisa S.p.a.); -Invoice No. 019 for an amount of USD (Smurfit Sisa S.p.a.);
-Invoice No. 016 for an amount of USD 15,866.10 (Toscana Nord Est S.p.a.).
On 9 November 2001 Defendant's agent in Italy forwarded to Defendant the results of laboratory analysis consisting in comparing paper owned by Smurfit and Ondulati lot with Claimant' paper. He stated "I enclose a chart with the different values compared. As you can see the breaking length and the Dennison are OK while Bursting, opacity and Whiteness are far below the minimum indicated in their chart" (Respondent's exhibit 18).

By letter dated 15 November 2001, Defendant informed Claimant of the status of the pending invoices and of the fact that Smurfit and Onludalti Nordest were returning the goods while IBO Ondulati, Toscana Ondulati and Ondulati Santerno had used the goods delivered. It further confirmed that payments of Claimant' invoices for the three latter companies had been made to Defendant. Defendant claimed to have suffered a total cost of USD 22,633.31 and claimed that this amount, plus the value of the goods returned to Claimant (USD 18,480), were to be deducted from the balance due to Claimant by Defendant, thus leaving an outstanding amount of USD 15,522.89 payable "upon receipt of al! invoices and due payment from clients (Smurfit for the goods actually used) and final calculations as well as resliution of the claim concerning the breach of Contract KT/0l/2001 by Claimant through their repeated direct interventions in our relationship with the ltalian clients as well as the damages resulting due to this breach"(Respondent's exhibit 19).
On 14 December 2001 SGS issued a certificate upon Claimant' request confirming that 21 rolls had been returned to Claimant and stating that some rolls were damaged (Claimant's exhibit 14).
On 25 February 2002 Claimant requested payment of the amount of USD 56,636.25, corresponding to the five outstanding invoices "increased with the commercial interest and inflation rate" (Claimant's Exhibit 16).
On 2 May 2002 Claimant filed a request for arbitration against Defendant.
2. FURTHER PROCEDURE

The seat of the arbitration is Paris, France. This is the Tribunal' s second and final award (the "Final Award"). The first award (the "Preliminary Award") was made on 6 January 2003, having been approved by the Court on 13 December 2002.

This Final Award is to be read in conjunction with the Preliminary Award. For the sake of brevity, sections 2.1 to 2-3 inclusive of the Preliminary Award are not repeated but are to be read as incorporated herein.

2.1. Preliminary Award and Second Provisional Timetable

In the preliminary Award, the following decision was made on the applicable law to the Contract:

“- the rules of law applicable to the merits of the dispute are the Unidroit Principles of International Commercial Contracts;

- the costs of the arbitration shall be decided upon in the final award.”

Pursuant to the notification of the Preliminary Award, on 8 January 2003, the Tribunal issued the following Second Timetable
for the conduct of the arbitration:
"1. Claimant is to submit its Statement on the merits by 29 January 2003, at the latest.
2. Respondent is to submit its Statement on the merits by 19 February 2003, at the latest.

3. If by 28 February 2003, Claimant has informed the Tribunal that it does not wish to file a further brief, a hearing shall be held in Paris during the week of 24 march 2003. Instructions will be issued on due time by the Tribunal as the exact time

and location.

4. Should there not be a second exchange of briefs and should a party wish to hear witnesses, it shall so inform the Arbitral Tribunal by 14 March 2003, at the latest, giving the names of such witnesses together with a short summary of the subjects on which each witness is expected to testify.
5. Should Claimant wish a second round of briefs, Claimant 's Statement of Reply shall be filed by 12 March 2003 and Respondent shall submit its Statement of Rejoinder by 2 April 2003. In such a case, a hearing shall be held during the week of 28 April 2003.
6. Should there be a second exchange of briefs and should a party with to hear witnesses, it shall so inform the Arbitral Tribunal by 16 April 2003, at the latest, giving the names of such witnesses together with a short summary of the subjects on which each witness is expected to testify.

7. All dates in the present Provisional Procedural Timetable are dates of receipt.
8. Depending on the parties ' replies to paragraphs 4 and, as the case may be, 6 above, the Sole Arbitrator shall decide in due time whether the reserved dates as above shall be used to hear the witnesses and/or to the oral presentations.”

Claimant's Statement on the merits was submitted on 4 February 2003 and Respondent's Statement on the merits was submitted on 18 February 2003. By fax dated 6 March 2003,Claimant indicated its wish to file a Statement of reply. The Second Procedural Timetable was therefore amended on 12 March 2003.
Claimant's statement of Reply was submitted on 3 ApriI 2003 and Respondent's Statement of reply was submitted on 23 ApriI 2003.
2.3. Hearing of 27 May 2003

By fax dated 19 May 2003, Claimant informed the Tribunal that it intended to submit a statement made by Mr. Constantin Ene

and to call two witnesses: Mssrs. Alexandru Marinescu, generaI manager of Claimant, and Mrs Andreia Maria Serban Financial

manager of Claimant Respondent did not call any witness.
The hearing took place in Paris on 27 May 2003, both parties being present. Both parties made their respective opening statements. Claimant renounced to submit Mr. Constantin Ene's statement and to hear him. The two above witnesses called by Claimant were examined and cross-examined. Thereafter both parties were invited to make their final presentation. The hearing was closed at 4.30 pm.
Claimant requested at the end of the hearing the possibility to file a post-hearing brief. Respondent stated that it did not intend to file any post-hearing brief but did not object to Claimant alone filing the document. Accordingly, Claimant was instructed to file by 15 July 2003 at the latest its post-hearing brief.
Both parties were finally instructed to file their respective statement of fees and expenses by 15 July 2003 at the latest.
On 15 July 2003, Claimant filed its post-hearing brief and submitted the quantification of its costs. Respondent did not file any document.
The proceedings were closed on 17 July 2003 in accordance with article 22 of the ICC Rules of Arbitration.
The time-limit to render the award was extended by the Court to 30 June 2003, to 30 September 2003 and to 31 December 2003.
2.4 Relief prayed for by the Parties

- Claimant requests payment by Respondent to pay of the amount of USD 58,204.14 representing:

- USD 38,156.25 - the value of the bleached Kraft Paper delivered to the Buyer and not paid;
- USD 13, 767 – the expired raw materials bought for manufacturing the bleach Kraft Paper ordered by Defendant;
-USD 2,714 – costs made with the visit to Claimant’ representatives in Italy;
-USD 1,526.24 – Romanian legal interest, calculated until 31 March 2002 in accordance with Governmental Ordinance no. 9/2000, for the amount of USD 411,000. As will be further explained in section 3.3 of this Final award, it was made application of article 30.4 of the ICC Rules.

3. DISCUSSION
The rules of law applicable to the merits of the disputes are the Unidroit Principles of Intemational Commercial Contracts. In accordance with article 17-2 of the ICC Rules, the Tribunal shall take account of the provisions of the Contract and of the relevant trade usages.

3.1 Claimant's Claims

3.1.1. Goods delivered and unpaid (USD 38,156.25)

Deliveries of the goods took place in Romania between 13 and 17 July 200 l with a final destination to Italy. The Contract provided that claims with respect to quality of the paper were to be made by the purchaser within 30 days from goods arriving at destination for hidden defects and within 14 days for quality and size (article 11 of he Contract).
1 The Tribunal notes that Defendant has admitted to have been on the premises at the time the paper was manufactured and has referred to criticisms it made at this time (letter dated 18 October 2001, Respondent's exhibit 16). However no reservation was made by Defendant at the time of delivery and dispatch to its clients in Italy. The Tribunal will therefore limit its duty to claims made on the quality of the goods (i) within the deadline set forth under the contract and (ii) spontaneously filed with Defendant.

The tribunal notes that the first claim was filed on 25 July 2001 by Toscana Nordest in connection with the delivery of paper corresponding to Invoice No.3 EX/15.07.01 for an amount of USD 11,407.00. It was forwarded to Claimant by Defendant on 31 July 2001. The dispatch had occurred on 15 July 2001. The claim is therefore not time- barred. No other claim was made before 25 September 2001 (claim made by Smurfit Sisa in connection with Invoices 5 and 6), which is well after expiration of both the 14 and the 30 day time-limits set forth under article 11 of the Contract.
Smurfit and Toscana Nordest actually returned the goods in December 2001 to Claimant. No claim for payment is made by Claimant in connection with these invoices since (i) Claimant has been paid by Defendant for invoices 5 and 6 relating to Smurfit and (ii) Claimant does not request payment for goods returned (invoices 3, 5 and 6).
The Tribunal considers that Claimant is therefore entitled in principle to payment for all remaining invoices corresponding to goods delivered under the Contract.
As far as quantum is concerned (USD 38,156.25), the Tribunal notes that it lower than the amount requested by Claimant from Defendant on 25 February 2002 (USD 56,636.25, corresponding to five outstanding invoices ). These five outstanding invoices were:

l. Invoice No.1 EX/13.07.0 1 far an amount of USO 11,270.60 (Toscana Ondulati S.p.a.);
2. Invoice No.2 EX/14.07.01 far an amount of USO 11,305.25 (IBO Ondulati S.r.l.);
3. Invoice No.3 EX/15.07.01 far an amount of USO 11,407.00 (Toscana Nord j Est S.p.a.);
4. Invoice No.4 EX/16.07.0 1 far an amount of USD 11,312.40 (IBO Ondulati S.r.l.);
5. Invoice No.7 EX/17.07.01 far an amount of USO 11,341.00 (Ondulati Santerno S.p.a.).
The difference results from the fact Claimant has chosen to deduct from this amount the value of the goods returned to Claimant by Defendant as estimated by Defendant to a value of USD 18,480 (Defendant letter of 19 October 2001 ; see Claimant' s Statement of reply, para. 10), leaving a balance of USD 38,236.25.
As this stage two comments may be made.
Firstly, It result from Defendant's letter of 19 October 2001 and Claimant's present claim far payment that although the delivery made to Defendant under the Contract was split into seven invoices all issued by Claimant against Respondent, such delivery concern a single contractual and economical transaction. Accordingly, the Parties agreed to compensate these invoices among themselves.
Secondly, Claimant seems to have made a mistake in calculating the balance since it "demands Respondent to pay the amount of 38,156.25" (see Claimant's Statement of reply, para. 10), and not USD 38,236.25. failing an explanation, the Tribunal shall retain the amount of USD 38,156.25 claimed by Claimant.
The Tribunal notes that the amount of USD 18,480 corresponds to (i) parts of the goods delivered and paid by Defendant (Smurfit) for USD 22.468,60 (Invoices 5 and 6) before Smurfit filed a claim on 25 September 2001 and to (ii) the goods delivered to Toscana Nordest (Invoice No. 3 for USD 11,407).
Thus the tribunal will retain the amount of USD 18,480. for the value of the goods delivered under the Contract and invoiced under the three invoices Nos. 3, 5 and 6).
Claimant having received payment of USO 22,468,60 for invoices 5 and 6 and been ". retumed a value of 18,480 (total USD 40,948,60), for a higher value than the amount of the three invoices (USD 33,875.60), the relevant balance of USD 7,073 will be deducted from the four remaining invoices. The four remaining invoices correspond to goods delivered under the Contract and unpaid, for a total amount of USD 45,229.25:
-Invoice No. 1 EX/13.07.01 for an amount of USD 11,270.60 (Toscana , Ondulati S.p.a.);
-Invoice No.2 EX/14.07.01 for an amount of USD 11,305.25 (IBO Ondulati S.r.l.);
-Invoice No. 4 EX/ 16.07.01 for an amount of USD 11,312.40 (IBO Ondulati S.r.l.); and
-Invoice No.7 EX/17.07.01 for an amount of USD 11,341.00 (Ondulati Santerno S.p.a.).
It is to be noted that by letter or 15 November 2001, Defendant admitted that its above clients had "used all the goods delivered despite their objections concerning colour etc. -for other purposes than those initially ordered for ; these clients have made the payment of these goods to DEFENDANT TRADING with great delay" (Respondent' s exhibit 19).
Accordingly the Tribunal wil1 grant Claimant claim for payment for the amount of USD 45,229.25:, less USD 7,073, i.e., USD 38,156.25.
3.1.2 Expired raw materials (13,767 USD)
The Tribunal notes how little co-operation occurred between the parties when the first difficulty arose with the Italian customer with respect to the quality of the goods manufactured by Claimant and commercialised by Defendant.
On the other hand, Respondent's allegation that is could not obtain any visa to go to Italy is not supported by an contemporary documentary evidence. It appears also that Toscana Nordest's claim did not give rise to any immediate reaction from Claimant.
On the other hand, Defendant representative admitted during the hearing of 27 May 2003 that it could have renounced the discrepancies raised by the Barclays Bank on the Letter of Credit and accepted payment but instead chose not to do so in view of the claim filed by Toscana Nordest on 25 July 2003.
The parties lack of co-operation in immediately solving the outstanding claims made by the Italian customers and even in the subsequent months makes it hard to contemplate how they would have handle further orders and deliveries of the same goods after this test order. The Tribunal considers therefore that both parties' attitude resulted in a repudiation of the Contract which was hence terminated and prevent each of them from requesting damages in connection with the performance of the Contract.
This solution is consistent with the Unidroit Principles which provide under Section 4 "Damages", article 7.4.7 that the amount of damages may be reduced when the damage result of an action or an omission of the party which is claiming damages.
Claimant’s claim is therefore rejected.

3.1.3 Costs of visit of Claimant' representatives in Italy (2,714 USD)

In view of the parties' lack of co-operation (See section 3.1.2), Claimant's claim is rejected.

3.1.4 Warehouse costs and custom fee (2,040.65 USD)
In view of the parties' lack of co-operation (See section 3.1.2), Claimant' s claim is rejected.
3.1.5 Romanian legal interest (1,526.26 USD)

In accordance with article 7.4.9 of the Unidroit Principles which provides that a party is untitled to interest on the unpaid
amount as from the date such amount became due until full payment, Claimant is awarded interest on the amount granted
under Section 3.1.5 above, i.e., USD 38,156.25 at the Romanian legal rate from the such amount became due, i.e., 31 July
2001 (date of expiration of the Letter of Credit issued by Barclays bank) until full payment.

3.2 Respondent’ Counterclaim
Defendant filed a counterclaim for damages for "investment loss" in an amount of USD 411,000 in its Answer to the Request for Arbitration based on Claimant' alleged:
(i) failure respect the delay for delivery as stipulated in article 2 of the Contract "Total quantity and delivery time ";
(ii) breach of the Exclusivity Agreement dated 10 May 2001;
(iii) delivery of the faults goods and failure to cooperate to resolve this situation.
At its session of 22 November 2002, in accordance with article 30.2 of the ICC Rules, the ICC Court fixed separate advances on costs for claims and counterclaims.
in accordance with article 30.2 of the ICC Rules, the ICC Court fixed separate advances on costs for claims and counterclaims.
Respondent having not settled the advance on costs fixed by the Court within the deadlines and postponement given by the Secretariat by letters dated 16 and 31 January 2003, pursuant to Article 30.4 of the ICC Rules, the Secretariat notified on 26 February 2003 to the Parties and to the Sole Arbitrator that, Respondent having not paid the costs on the date fixed by the Secretary General, the "counterclaims shall therefore be considered as withdrawn as of close of business on February 26, 2003". It also informed Respondent that the latter "might reintroduce its counterclaims in another proceeding at a later date".
Accordingly, the Sole Arbitrator shall not rule on Defendant's counterclaims.
4. COSTS
The rule governing the power of the Tribunal to render an award on costs is set forth in Article 31 of the ICC Rules which provides:
"The costs of the arhitration shall include the fees and expenses of the arhitrators and the ICC administrative expenses fixed by the Court, in accordance with the scale in force [...] , as well as the fees and expenses of any experts appointed by the Arbitral Tribunal and the reasonable legal and other costs incurred by the parties [...]".
As regards the arbitration costs, including the ICC administrative fees, out of pocket expenses and arbitrators' fees, the general approach is that the winning party should be reimbursed by the losing party. In view of the fact that Claimant has succeeded on the issue of the applicable law (Preliminary Award) and its main claim (payment of invoices), the Tribunal considers appropriate that Respondent bear 75% of the arbitration costs.
The same rule is applicable to legal costs incurred by the parties, which are usually assessed by the Arbitrators. In the present case, Claimant' s legal costs are reasonable :

1. Mail-TNT: USD 466.16 and EUR 364.14 ;
2. Costs for the hearing from Paris : USD 2,552 and EUR 1,283.38 (lawyers) and EUR 3,494 (witness); and
3. Lawyer's fee: USD 9.600, thus a total of USD 12,181.16 and EUR 5,141,52.

The International Court of Arbitration having fixed the ICC costs to the amount of USD 11,000 and Claimant having advanced the totality of such amount, Respondent shall refund Claimant the amount of USD 8,250.

As to the parties' legal and other costs, the Arbitral Tribunal applies the same principle and decides that (i) Respondent will refund to Claimant the amounts of USD 3,045.44 and EUR 3,856.14, corresponding to 75% of Claimant' legal costs.

[…]

INTERNATIONAL CHAMBER OF COMMERCE INTERNATIONAL COURT OF ARBITRATION
Case No. 12111/ACS/FM
FINAL AWARD
Sole Arbitrator :
Me Jane Willems
20 avenue de Wagram 75008 Paris
France
appointed by the International Court of Arbitration at its session of 5 July 2002 upon proposal
of the French National Committee .
.In the matter of the arbitration between:
S.C. Palas S.A., a company registered under Romanian law, having its offices at 6 Celulozei Street. 8700 Constanta, Romania;
represented by its Counsel : Constantin Benclinov, Esq., Raluca Maria Luiza Curelea, Esq., Benclinov & Associate
Benclinov & Associates 61 Unirii Bld. Bl. F3 A. 128, sector 3 , Bucarest -Romania
Tel. : 0040946701 98 Fax : 00 40 9342 01 33
E-mail: benclinov@fx.ro
CLAIMANT,
hereinafter referred to as "Palas" or "Claimant"
Knox Trading Ltd., a company registered under the laws of England (no. 03938927), having its offices at 2 Palgrave Gardens, Regents ParkLondon NW1 6EL, United Kingdom ;

Respondent is not represented by Counsel.
RESPONDENT,
'
hereinafter referred to as "Knox" or "Respondent"

1. FACTS

1.1 The Purchase Orders of 24 April 2001
By letter dated 28 February 2001 Knox contacted Palas and provided the later with a technical data sheet for the manufacture by Palas of "bleached kraft paper, 80 g/sqm,for pizza base to Italy" (Claimant's exhibit 29).
By letter dated 1 March 2001, Palas confirmed to Knox that its had the possibility to produce the order "at the physical and mechanical characteristics specified in the technical sheet" enclosed to Knox's letter of 28 February 2001, and provided the later with price conditions (Respondent's exhibit I). Palas agreed to a test order being conclusive for a quantity of 200 to 250 tons.
On 24 ApriI 2001 Knox placed five order confirmations with Palas (orders Nos. KT -2709,300,24.4,311274 and 18.5) for the delivery of bleached kraft without optical agents for a price of USD 520/MT Ex works, to be received by Knox clients in Italy (Ondulati Santerno Spa, Toscana Ondulati Spa, IBO Ondulati Srl, Smurfit Spa and Ondulati Nord Est Spa) (Respondent's exhibit 2).

By letter dated 10 May 2001, making specific reference to "bleached kraft paper for Italy", Palas agreed to the following:
"We hereby confirm that Knox Trading Ltd, London is our distributor far the Italian market. This exclusivity envisage (sic) achieving a quantity of minimum 5.000 MT per year.
The present agreement cover (sic) a period of minimum 1 year from today. Prices to be negotiated for each individual lot." (Respondent's exhibit 4)

1.2 The Contract of 25 May 2001
On 18 May 200 l Knox sent to Palas a draft purchase contract prepared in English (Claimant's Exhibit 19). Palas in return, sent to Knox on 24 May 2001 a draft "contract de vanzare-cumparare" in Romanian (Claimant's Exhibit 19).

On 25 May 2001 Palas and Knox agreed to the terms of a contract in English entitled "Purchase/Sale Contract n° KT/P/01/2001" (hereinafter the "PSC" or the "Contract") supplemented by an addendum no. 01 (hereafter the "Addendum"), whereby Palas
sold to Knox quantities of "bleached kraft paper without optical agents" to be produced in Romania under the technical characteristics defined in a technical sheet No. 1/2001 (the "Technical Data Sheet", incorporated into the Contract) for prices in USD/MT Ex works Palas Constanta determined in relation with lots stipulated in the Addendum. It is to be noted that the five order confirmations placed by Knox were specifically mentioned in the Addendum and therefore incorporated in the Contract.

According to article 4 or the Contract payments were to be made by telegraphic transfer from Barclays Bank to Exim Bank within seven days after date of CMR against remittance of (i) the commercial invoice, (i i) the CMR, (iii) the packing list, (iv) the Euro l Certificate and (v) the certificate of alimentary.
Article 11 " Quality reception and claims" provided that quality inspection was to take place at destination according to the Technical Data Sheet and that claims were to be notified (i) for hidden defects within 30 days and (ii) for quality and size within 14 days, from goods arrival at destination.
Article 14 "Disputes" of the Contract provided:
"the present contract is governed by international law; any dispute arising in connection with this contract will be settled in an amiable way and, should this fail,, by authority of the International Chamber of :Commerce of Paris."

Further negotiations seem to have been going on between the parties on other aspects, in particular the acquisition by Knox of the majority of Palas' share capital in connection with the privatisation of the Romanian company. Indeed, on 19 June 2001, Knox sent a letter of intent for the joint acquisition, with an Italian company, CCM DI CARLO CRESPI, of 89% of the share capital of Palas (Claimant's exhibit 30 and Respondent's exhibit 22). Knox's application for the purchase of Palas does not seem to have led to any result, since Palas withdrew its application by fax of 2 October 2001 (Respondent's exhibit 22):
« We have to inform you with regret about our cancelling our participation to the above [privatisation of Palas SA].
This is due to the withdrawal of our Italian partners further to the huge difficulties we have encountered in selling the goods delivered by Palas to this market."

1.3 Deliveries
By fax dated 5 June 2001, Palas informed Knox that its had not been delivered with, the pulp required to process the paper.
By fax dated 26 June 2001, Knox requested Palas to instruct its bank to open an irrevocable letter of credit in favour of Palas for the payment an amount of USD 92,400 and requested Palas to proceed to "immediate production/delivery" (Claimant's exhibit 26). This letter of credit was confirmed by Transilvania bank.
Since the sale was made ex works Constanta, delivery at Palas' mill, Palas sent on 6 July 2001 a fax to Knox stating that the loading time was to take place on 12-15 July 2001 (Respondent's exhibit 25). On 7 July 2001, Knox confirmed that one of the purchase orders (order No. 22.5) had been cancelled further to Palas' request and indicated that the letter of credit was amended accordingly (reduced to USD 80,850).

It confirmed loading and dispatch for 12-15 July 2001. Loading actually took place from 13 to 17 July 2001.

Palas issued seven invoices in connection with Knox' order confirmations and Palas' previous pro-forma invoice:

1. Invoice No. 1 EX/ 13.07.01 for an Amount of USD 11.270.60 (Toscana Ondulati S.p.a.);
2. Invoice No.2 EX/14.07.01 for an amount of USD 11.305.25 (IBO Ondulati S.r.l.) ;
3. Invoice No.3 EX/15.07.01 for an amount of USD 11,407.00 (Toscana Nord Est S.p.a.);
4. Invoice No.4 EX/16.07.0 l for an amount of USD 11,312.40 (IBO Ondulati S.r.l.);
5. Invoice No.5 EX/16.07.0 1 for an amount of USO Il,247.50 (Smurfit Sisa S.p.a.);
6. Invoice No.6 EX/17 .07.01 for an amount of USO Il,221.10 (Smurfit Sisa S.p.a.); and
7. Invoice No.7 EX/17.07.01 for an amount of USO Il,341.00 (Ondulati Santerno S.p.a.),
thus a total of USD 79,104,85.
Knox issued the following invoices to its customers:
1. Invoice No. 014 for an amount of USD 15,573.92 (Toscana Ondulati S.p.a); 2. Invoice No. 015 for an amount of USD 15,621.80 (IBO Ondulati S.r.l.);
3. Invoice No. 016 for an amount of USD 15,866.10 (Toscana Nord Est S.p.a.);
4. Invoice No. 017 for an amount of USD 15,631.68 (IBO Ondulati S.r.l.);
5. Invoice No. 018 for an amount of USD 15,623.80 (Smurfit Sisa S.p.a.);
6. Invoice No. 019 for an amount of USD 15,587.13 (Smurfit Sisa S.p.a.);
7. Invoice No. 020 for an amount of USD 15,465.00 (Ondulati Santerno S.p.a.), thus a total ofUSO 109,369,43, payable within 90 days.

1.3 Payment or the Letter or Credit

On 18 July 2001, Palas was informed by Banca Transilvania the Letter of Credit had been amended : (i) the expiring date had been extended to 31 July 200 l and (ii) the list of documents had been changed (Claimant's exhibit 7).

On 1 August 200 l, Barclays bank claimed to have found discrepancies in the documents submitted by Palas for the payment
of the Letter of Credit (it seems that the CMR and EUR l copies had been submitted in the Romanian language instead of
English). Barclays bank was checking with Knox (applicant) whether Knox would renounce these discrepancies. On 2 August
200 l Barclays bank informed Palas that Knox had rejected the documents submitted by Palas.
Meanwhile, on 31 July 200 l, Knox had faxed to Palas a claim from its client Ondulati Nordset S.p.a. (invoice No.3), dated 25 July 2001, stating:

"GOODS WITH NON CONFORMITY
By this fax we are sorry to inform you that we have put into production the paper KBV 90 gr. received from PALAS SA in width 214 cm and we have faced very big problems of curving but mainly of non sticking, and this because of big discrepancy in the humidity profile.
Tomorrow we shall try the width 221 but by a summary check it will show the same problem as the 214.
For these reasons we shall contact you to agree on the possible return of the goods. "
On 7 August 2001 Knox made a payment to Palas of the amount of USD 22,468 corresponding to the deliveries made to Smurfit (invoices Nos. 5 and 6).
It seems that the parties agreed to arrange far Palas and Knox' representatives to make a trip to ltaly. However this trip did not take place.
On 25 September 2001 Smurfit made a claim against the quality and the colour of the paper delivered (Respondent's exhibit 12, re. invoices Nos. 5 and 6).
Around this time, Palas' marketing and export manager of Palas contacted by phone Knox's agent in Italy to inquire about (i) the test made by the Italian clients on the paper (ii) possibilities for its mill to develop further business in Italy and (ii) data about quantities that could be sold, problems that had to be cured in order to improve the quality (Respondent's Exhibit 13).
On 1 October 2001, Palas requested from Knox payment of the outstanding portion of the seven invoices (USD 56,636.25) and inquired about the enforcement of the Contract for the remaining quantities by the end of the year (5,000 to 7,000 tons of bleached kraft paper) (Claimant's exhibit 11).
On 2 October 2001, Knox answered claiming that four of its clients were facing problems with the paper delivered by Palas:

-Ondulati Nordest (invoice 3): Knox referred to its fax of 31 July 2001, and stated it was trying to find another customer which would mean "a drastic reduction in the price";
-Smurfit (invoices 5 and 6): although the initial test had found the goods in order, it seemed that, apart the colour which was not white, the paper could not be glued and could only be used at extremely low machine speed;
-Ibo Ondulati (invoice 2) and Ondilati Santerno (invoice 7): had claimed that, the degree of whiteness was below the technical parameters but had agreed to make payment. Knox stated that it would pay Palas as soon as it would have received their written confirmation ;

-Toscana Ondulati (invoice l): Knox had no information.
On 5 October 2001, Knox forwarded to Palas Smurfit's decision as to the goods. The alternative was (a) return of the goods, (b) re-sell of the goods to another client or (c) use the goods for other purposes with a 20% discount on the value of the goods with payment in December. On 10 October 2001, Knox requested a reply to its fax of 5 October 2001.

It seems that on 12 October 2001 Palas contacted ATF Arienti (Smurfit) requesting information on the quality of the paper as well as the behaviour of the machines. It was also informing the Italian client that Mr. Alexandru Marinescu would travel to
Italy from 24 to 31 October 2001. On the same day Knox sent a fax to Palas requesting the latter to comply with the exclusivity Palas had granted to Knox for the Italian market (Palas' letter of 10 May 2001) and not to contact Knox's clients in Italy.
On 17 October 2001 Palas sent a letter to Knox claiming urgent payment and contending that payment could not be suspended until acceptance of the goods by Knox's Italian clients, to "the quality, behaviour or efficiency of the paper in the production process as they are not contractual elements" (Respondent' s exhibit 26).
On 18 October 200 l Knox replied that (i) Palas had breached the deadline of delivery. It further referred to the quality problems on the paper (low degree of whiteness, important variations of substance and humidity : 2.6-4.2% instead of the contractual 6%, and variation exceeding the contractual limit of +/-4% for the width of the reel) which had been raised by Knox representatives present at Palas during the production of the goods and later by the Italian clients. It contended it could not make the requested payment until after these claims were "not duly solved by the party who has generated it"(Respondent's exhibit 16). On 22 October 2001 Knox informed Palas that a visit of Palas' representative to Italy at this stage would serve no purpose, adding "the situation could have been completely different had Palas accepted our suggestion of visiting the clients immediately after receipt of the first claim (obtaining a visa would have not been a problem)" (Respondent' s exhibit 16).

It seems that on 25 October 2001 Smurfit and Ondulati Nordest returned the goods to Palas. Knox issued on 24 October 200 l the following three credit notes:
-Invoice No. 018 for an amount of USD 1,000.00 (Smurfit Sisa S.p.a.); -Invoice No. 019 for an amount of USD (Smurfit Sisa S.p.a.);
-Invoice No. 016 for an amount of USD 15,866.10 (Toscana Nord Est S.p.a.).
On 9 November 2001 Knox's agent in Italy forwarded to Knox the results of laboratory analysis consisting in comparing paper owned by Smurfit and Ondulati lot with Palas' paper. He stated "I enclose a chart with the different values compared. As you can see the breaking length and the Dennison are OK while Bursting, opacity and Whiteness are far below the minimum indicated in their chart" (Respondent's exhibit 18).

By letter dated 15 November 2001, Knox informed Palas of the status of the pending invoices and of the fact that Smurfit and Onludalti Nordest were returning the goods while IBO Ondulati, Toscana Ondulati and Ondulati Santerno had used the goods delivered. It further confirmed that payments of Palas' invoices for the three latter companies had been made to Knox. Knox claimed to have suffered a total cost of USD 22,633.31 and claimed that this amount, plus the value of the goods returned to Palas (USD 18,480), were to be deducted from the balance due to Palas by Knox, thus leaving an outstanding amount of USD 15,522.89 payable "upon receipt of al! invoices and due payment from clients (Smurfit for the goods actually used) and final calculations as well as resliution of the claim concerning the breach of Contract KT/0l/2001 by Palas through their repeated direct interventions in our relationship with the ltalian clients as well as the damages resulting due to this breach"(Respondent's exhibit 19).
On 14 December 2001 SGS issued a certificate upon Palas' request confirming that 21 rolls had been returned to Palas and stating that some rolls were damaged (Claimant's exhibit 14).
On 25 February 2002 Palas requested payment of the amount of USD 56,636.25, corresponding to the five outstanding invoices "increased with the commercial interest and inflation rate" (Claimant's Exhibit 16).
On 2 May 2002 Palas filed a request for arbitration against Knox.
2. FURTHER PROCEDURE

The seat of the arbitration is Paris, France. This is the Tribunal' s second and final award (the "Final Award"). The first award (the "Preliminary Award") was made on 6 January 2003, having been approved by the Court on 13 December 2002.

This Final Award is to be read in conjunction with the Preliminary Award. For the sake of brevity, sections 2.1 to 2-3 inclusive of the Preliminary Award are not repeated but are to be read as incorporated herein.

2.1. Preliminary Award and Second Provisional Timetable

In the preliminary Award, the following decision was made on the applicable law to the Contract:

“- the rules of law applicable to the merits of the dispute are the Unidroit Principles of International Commercial Contracts;

- the costs of the arbitration shall be decided upon in the final award.”

Pursuant to the notification of the Preliminary Award, on 8 January 2003, the Tribunal issued the following Second Timetable
for the conduct of the arbitration:
"1. Claimant is to submit its Statement on the merits by 29 January 2003, at the latest.
2. Respondent is to submit its Statement on the merits by 19 February 2003, at the latest.

3. If by 28 February 2003, Claimant has informed the Tribunal that it does not wish to file a further brief, a hearing shall be held in Paris during the week of 24 march 2003. Instructions will be issued on due time by the Tribunal as the exact time

and location.

4. Should there not be a second exchange of briefs and should a party wish to hear witnesses, it shall so inform the Arbitral Tribunal by 14 March 2003, at the latest, giving the names of such witnesses together with a short summary of the subjects on which each witness is expected to testify.
5. Should Claimant wish a second round of briefs, Claimant 's Statement of Reply shall be filed by 12 March 2003 and Respondent shall submit its Statement of Rejoinder by 2 April 2003. In such a case, a hearing shall be held during the week of 28 April 2003.
6. Should there be a second exchange of briefs and should a party with to hear witnesses, it shall so inform the Arbitral Tribunal by 16 April 2003, at the latest, giving the names of such witnesses together with a short summary of the subjects on which each witness is expected to testify.

7. All dates in the present Provisional Procedural Timetable are dates of receipt.
8. Depending on the parties ' replies to paragraphs 4 and, as the case may be, 6 above, the Sole Arbitrator shall decide in due time whether the reserved dates as above shall be used to hear the witnesses and/or to the oral presentations.”

Claimant's Statement on the merits was submitted on 4 February 2003 and Respondent's Statement on the merits was submitted on 18 February 2003. By fax dated 6 March 2003,Claimant indicated its wish to file a Statement of reply. The Second Procedural Timetable was therefore amended on 12 March 2003.
Claimant's statement of Reply was submitted on 3 ApriI 2003 and Respondent's Statement of reply was submitted on 23 ApriI 2003.
2.3. Hearing of 27 May 2003

By fax dated 19 May 2003, Claimant informed the Tribunal that it intended to submit a statement made by Mr. Constantin Ene

and to call two witnesses: Mssrs. Alexandru Marinescu, generaI manager of Palas, and Mrs Andreia Maria Serban Financial

manager of Palas Respondent did not call any witness.
The hearing took place in Paris on 27 May 2003, both parties being present. Both parties made their respective opening statements. Claimant renounced to submit Mr. Constantin Ene's statement and to hear him. The two above witnesses called by Palas were examined and cross-examined. Thereafter both parties were invited to make their final presentation. The hearing was closed at 4.30 pm.
Claimant requested at the end of the hearing the possibility to file a post-hearing brief. Respondent stated that it did not intend to file any post-hearing brief but did not object to Claimant alone filing the document. Accordingly, Claimant was instructed to file by 15 July 2003 at the latest its post-hearing brief.
Both parties were finally instructed to file their respective statement of fees and expenses by 15 July 2003 at the latest.
On 15 July 2003, Claimant filed its post-hearing brief and submitted the quantification of its costs. Respondent did not file any document.
The proceedings were closed on 17 July 2003 in accordance with article 22 of the ICC Rules of Arbitration.
The time-limit to render the award was extended by the Court to 30 June 2003, to 30 September 2003 and to 31 December 2003.
2.4 Relief prayed for by the Parties

- Claimant requests payment by Respondent to pay of the amount of USD 58,204.14 representing:

- USD 38,156.25 - the value of the bleached Kraft Paper delivered to the Buyer and not paid;
- USD 13, 767 – the expired raw materials bought for manufacturing the bleach Kraft Paper ordered by Knox;
-USD 2,714 – costs made with the visit to Palas’ representatives in Italy;
-USD 1,526.24 – Romanian legal interest, calculated until 31 March 2002 in accordance with Governmental Ordinance no. 9/2000, for the amount of USD 411,000. As will be further explained in section 3.3 of this Final award, it was made application of article 30.4 of the ICC Rules.

3. DISCUSSION
The rules of law applicable to the merits of the disputes are the Unidroit Principles of Intemational Commercial Contracts. In accordance with article 17-2 of the ICC Rules, the Tribunal shall take account of the provisions of the Contract and of the relevant trade usages.

3.1 Claimant's Claims

3.1.1. Goods delivered and unpaid (USD 38,156.25)

Deliveries of the goods took place in Romania between 13 and 17 July 200 l with a final destination to Italy. The Contract provided that claims with respect to quality of the paper were to be made by the purchaser within 30 days from goods arriving at destination for hidden defects and within 14 days for quality and size (article 11 of he Contract).
1 The Tribunal notes that Knox has admitted to have been on the premises at the time the paper was manufactured and has referred to criticisms it made at this time (letter dated 18 October 2001, Respondent's exhibit 16). However no reservation was made by Knox at the time of delivery and dispatch to its clients in Italy. The Tribunal will therefore limit its duty to claims made on the quality of the goods (i) within the deadline set forth under the contract and (ii) spontaneously filed with Knox.

The tribunal notes that the first claim was filed on 25 July 2001 by Toscana Nordest in connection with the delivery of paper corresponding to Invoice No.3 EX/15.07.01 for an amount of USD 11,407.00. It was forwarded to Palas by Knox on 31 July 2001. The dispatch had occurred on 15 July 2001. The claim is therefore not time- barred. No other claim was made before 25 September 2001 (claim made by Smurfit Sisa in connection with Invoices 5 and 6), which is well after expiration of both the 14 and the 30 day time-limits set forth under article 11 of the Contract.
Smurfit and Toscana Nordest actually returned the goods in December 2001 to Palas. No claim for payment is made by Palas in connection with these invoices since (i) Palas has been paid by Knox for invoices 5 and 6 relating to Smurfit and (ii) Palas does not request payment for goods returned (invoices 3, 5 and 6).
The Tribunal considers that Palas is therefore entitled in principle to payment for all remaining invoices corresponding to goods delivered under the Contract.
As far as quantum is concerned (USD 38,156.25), the Tribunal notes that it lower than the amount requested by Palas from Knox on 25 February 2002 (USD 56,636.25, corresponding to five outstanding invoices ). These five outstanding invoices were:

l. Invoice No.1 EX/13.07.0 1 far an amount of USO 11,270.60 (Toscana Ondulati S.p.a.);
2. Invoice No.2 EX/14.07.01 far an amount of USO 11,305.25 (IBO Ondulati S.r.l.);
3. Invoice No.3 EX/15.07.01 far an amount of USO 11,407.00 (Toscana Nord j Est S.p.a.);
4. Invoice No.4 EX/16.07.0 1 far an amount of USD 11,312.40 (IBO Ondulati S.r.l.);
5. Invoice No.7 EX/17.07.01 far an amount of USO 11,341.00 (Ondulati Santerno S.p.a.).
The difference results from the fact Palas has chosen to deduct from this amount the value of the goods returned to Palas by Knox as estimated by Knox to a value of USD 18,480 (Knox letter of 19 October 2001 ; see Claimant' s Statement of reply, para. 10), leaving a balance of USD 38,236.25.
As this stage two comments may be made.
Firstly, It result from Knox's letter of 19 October 2001 and Claimant's present claim far payment that although the delivery made to Knox under the Contract was split into seven invoices all issued by Claimant against Respondent, such delivery concern a single contractual and economical transaction. Accordingly, the Parties agreed to compensate these invoices among themselves.
Secondly, Claimant seems to have made a mistake in calculating the balance since it "demands Respondent to pay the amount of 38,156.25" (see Claimant's Statement of reply, para. 10), and not USD 38,236.25. failing an explanation, the Tribunal shall retain the amount of USD 38,156.25 claimed by Palas.
The Tribunal notes that the amount of USD 18,480 corresponds to (i) parts of the goods delivered and paid by Knox (Smurfit) for USD 22.468,60 (Invoices 5 and 6) before Smurfit filed a claim on 25 September 2001 and to (ii) the goods delivered to Toscana Nordest (Invoice No. 3 for USD 11,407).
Thus the tribunal will retain the amount of USD 18,480. for the value of the goods delivered under the Contract and invoiced under the three invoices Nos. 3, 5 and 6).
Palas having received payment of USO 22,468,60 for invoices 5 and 6 and been ". retumed a value of 18,480 (total USD 40,948,60), for a higher value than the amount of the three invoices (USD 33,875.60), the relevant balance of USD 7,073 will be deducted from the four remaining invoices. The four remaining invoices correspond to goods delivered under the Contract and unpaid, for a total amount of USD 45,229.25:
-Invoice No. 1 EX/13.07.01 for an amount of USD 11,270.60 (Toscana , Ondulati S.p.a.);
-Invoice No.2 EX/14.07.01 for an amount of USD 11,305.25 (IBO Ondulati S.r.l.);
-Invoice No. 4 EX/ 16.07.01 for an amount of USD 11,312.40 (IBO Ondulati S.r.l.); and
-Invoice No.7 EX/17.07.01 for an amount of USD 11,341.00 (Ondulati Santerno S.p.a.).
It is to be noted that by letter or 15 November 2001, Knox admitted that its above clients had "used all the goods delivered despite their objections concerning colour etc. -for other purposes than those initially ordered for ; these clients have made the payment of these goods to KNOX TRADING with great delay" (Respondent' s exhibit 19).
Accordingly the Tribunal wil1 grant Claimant claim for payment for the amount of USD 45,229.25:, less USD 7,073, i.e., USD 38,156.25.
3.1.2 Expired raw materials (13,767 USD)
The Tribunal notes how little co-operation occurred between the parties when the first difficulty arose with the Italian customer with respect to the quality of the goods manufactured by Palas and commercialised by Knox.
On the other hand, Respondent's allegation that is could not obtain any visa to go to Italy is not supported by an contemporary documentary evidence. It appears also that Toscana Nordest's claim did not give rise to any immediate reaction from Palas.
On the other hand, Knox representative admitted during the hearing of 27 May 2003 that it could have renounced the discrepancies raised by the Barclays Bank on the Letter of Credit and accepted payment but instead chose not to do so in view of the claim filed by Toscana Nordest on 25 July 2003.
The parties lack of co-operation in immediately solving the outstanding claims made by the Italian customers and even in the subsequent months makes it hard to contemplate how they would have handle further orders and deliveries of the same goods after this test order. The Tribunal considers therefore that both parties' attitude resulted in a repudiation of the Contract which was hence terminated and prevent each of them from requesting damages in connection with the performance of the Contract.
This solution is consistent with the Unidroit Principles which provide under Section 4 "Damages", article 7.4.7 that the amount of damages may be reduced when the damage result of an action or an omission of the party which is claiming damages.
Claimant’s claim is therefore rejected.

3.1.3 Costs of visit of Palas' representatives in Italy (2,714 USD)

In view of the parties' lack of co-operation (See section 3.1.2), Claimant's claim is rejected.

3.1.4 Warehouse costs and custom fee (2,040.65 USD)
In view of the parties' lack of co-operation (See section 3.1.2), Claimant' s claim is rejected.
3.1.5 Romanian legal interest (1,526.26 USD)

In accordance with article 7.4.9 of the Unidroit Principles which provides that a party is untitled to interest on the unpaid
amount as from the date such amount became due until full payment, Claimant is awarded interest on the amount granted
under Section 3.1.5 above, i.e., USD 38,156.25 at the Romanian legal rate from the such amount became due, i.e., 31 July
2001 (date of expiration of the Letter of Credit issued by Barclays bank) until full payment.

3.2 Respondent’ Counterclaim
Knox filed a counterclaim for damages for "investment loss" in an amount of USD 411,000 in its Answer to the Request for Arbitration based on Palas' alleged:
(i) failure respect the delay for delivery as stipulated in article 2 of the Contract "Total quantity and delivery time ";
(ii) breach of the Exclusivity Agreement dated 10 May 2001;
(iii) delivery of the faults goods and failure to cooperate to resolve this situation.
At its session of 22 November 2002, in accordance with article 30.2 of the ICC Rules, the ICC Court fixed separate advances on costs for claims and counterclaims.
in accordance with article 30.2 of the ICC Rules, the ICC Court fixed separate advances on costs for claims and counterclaims.
Respondent having not settled the advance on costs fixed by the Court within the deadlines and postponement given by the Secretariat by letters dated 16 and 31 January 2003, pursuant to Article 30.4 of the ICC Rules, the Secretariat notified on 26 February 2003 to the Parties and to the Sole Arbitrator that, Respondent having not paid the costs on the date fixed by the Secretary General, the "counterclaims shall therefore be considered as withdrawn as of close of business on February 26, 2003". It also informed Respondent that the latter "might reintroduce its counterclaims in another proceeding at a later date".
Accordingly, the Sole Arbitrator shall not rule on Knox's counterclaims.
4. COSTS
The rule governing the power of the Tribunal to render an award on costs is set forth in Article 31 of the ICC Rules which provides:
"The costs of the arhitration shall include the fees and expenses of the arhitrators and the ICC administrative expenses fixed by the Court, in accordance with the scale in force [...] , as well as the fees and expenses of any experts appointed by the Arbitral Tribunal and the reasonable legal and other costs incurred by the parties [...]".
As regards the arbitration costs, including the ICC administrative fees, out of pocket expenses and arbitrators' fees, the general approach is that the winning party should be reimbursed by the losing party. In view of the fact that Claimant has succeeded on the issue of the applicable law (Preliminary Award) and its main claim (payment of invoices), the Tribunal considers appropriate that Respondent bear 75% of the arbitration costs.
The same rule is applicable to legal costs incurred by the parties, which are usually assessed by the Arbitrators. In the present case, Claimant' s legal costs are reasonable :

1. Mail-TNT: USD 466.16 and EUR 364.14 ;
2. Costs for the hearing from Paris : USD 2,552 and EUR 1,283.38 (lawyers) and EUR 3,494 (witness); and
3. Lawyer's fee: USD 9.600, thus a total of USD 12,181.16 and EUR 5,141,52.

The International Court of Arbitration having fixed the ICC costs to the amount of USD 11,000 and Claimant having advanced the totality of such amount, Respondent shall refund Claimant the amount of USD 8,250.

As to the parties' legal and other costs, the Arbitral Tribunal applies the same principle and decides that (i) Respondent will refund to Claimant the amounts of USD 3,045.44 and EUR 3,856.14, corresponding to 75% of Palas' legal costs.

5. ORDER

IN VIEW OF THE ABOVE, the Sole Arbitrator decides, in the present Final Award, that:

1. Claimant claim for payment of goods delivered is awarded for the amount of USD 38,156.25 with interest at the Romanian legal rate from 31 July 2001 until full payment;

2. All other claims made by Claimant are rejected;

3. Respondent will bear 75% of the costs of the arbitration and Claimant 25%, as fixed by the International Court of Arbitration of the ICC at USD 11,000. Respondent will accordingly reimburse to Claimant the sum of USD 8,250;
4. Respondent will bear 75% of Claimant's requested legal costs. Respondent will accordingly pay to Claimant the amounts of USD 3,045.44 and EUR 3,856.14.

Place of arbitration:Paris
On13 October 2003
Me Jane Willems Sole Arbitrator}}

Source

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