international court of arbitration don-balt...

INTERNATIONAL COURT OF ARBITRATION

INTERNATIONAL CHAMBER OF COMMERCE

DON-BALT PLUS

18V Lesnaya Birzha Street

347 900 Taganrog

Russian Federation

as Claimant

and

SP APPERI S.R.L.

Via P. Ercolani 5B San Secondo

06012 Citta di Castello PG

Italy

as Respondent

ARBITRATION CASE NO. 22125/MHM

FINAL AWARD

Arbitral Tribunal Mr. Roman Prekop, Sole Arbitrator

Place of Arbitration: Vienna, Austria

TABLE OF CONTENTS

LIST OF ABBREVIATIONS .............................................................................................. 4

I. PARTIES AND THEIR REPRESENTATIVES ........................................................ 10

A. CLAIMANT ........................................................................................................ lO

B. RESPONDENT .................................................................................................... 10

II. ARBITRAL TRIBUNAL .......................................................................................... 11

Ill. PROCEDURAL HISTORY ...................................................................................... 11

IV. BASIC FACTS AND DESCRIPTION OF THE DISPUTE ....................................... 21

V. ARBITRATION AGREEMENT ............................................................................... 25

VI. APPLICABLE PROCEDURAL RULES .................................................................. 25

VII. LANGUAGE OF ARBITRATION ........................................................................... 26

VIII. PLACE OF ARBITRATION .................................................................................... 26

IX. LAW APPLICABLE TO THE MERITS ................................................................... 26

X. BURDEN OF PROOF .............................................................................................. 26

XI. THE PARTIES' POSITIONS AND REQUESTED RELIEF ..................................... 27

A. CLAIMANT'SPOSITION ...................................................................................... 27

(1) Jurisdiction ............................................................................................. 27

(2) Applicable Substantive Law ................................................................... 29

(3) Merits ..................................................................................................... 31

(4) Claimant's Request for Relief.. ............................................................... 34

B. RESPONDENT'S POSITION AND REQUEST FOR RELIEF ......................................... 34

( 1) Jurisdiction ............................................................................................. 34

(2) Applicable substantive law ..................................................................... 35

(3) Merits ..................................................................................................... 35

XII. THE ARBITRAL TRIBUNAL'S FINDINGS AND CONCLUSIONS ...................... 36

A. JURISDICTION OF THE ARBITRAL TRIBUNAL. ...................................................... 36

(1) Validity of the Arbitration Agreement at the time of its conclusion ......... 36

(2) Effects of Respondent's Request for Admission and its actual admission

into the CP procedure ............................................................................. 3 7

B. LAw APPLICABLE TO MERITS ............................................................................ 45

C. MERITS ............................................................................................................ 47

(1) Established facts ..................................................................................... 47

(2) Request and its basis ............................................................................... 49

(3) Analysis and conclusion ........................................................................ .49

2

XIII. DECISION ON COSTS OF ARBITRATION ........................................................... 53

XIV. DISPOSITIVE SECTION ......................................................................................... 55

3

LIST OF ABBREVIATIONS

2nd Case Management 2nd Case Management Conference Call held on August I,

Conference Call 2017

ACCP Law of August 1, 1895 Austrian Code of Civil Procedure,

RGBI. Nr. 113/1895 as amended by the 2013 Amendment

to the Austrian Arbitration Act - "SchiedsRAG 2013",

BGBI. I Nr. 118/2013 in force as of January 1, 2014

Additional Agreement No. 1 Additional Agreement No. 1 to the Contract dated

February 26, 2015

Additional Agreement No. 2 Additional Agreement No. 2 to the Contract dated March

12,2015

Additional Agreement No. 3 Additional Agreement No. 3 to the Contract dated June

22,2015

Answer Answer to the Request for Arbitration

Arbitral Tribunal Arbitral Tribunal consisting of the Sole Arbitrator

Arbitration Arbitration initiated by Claimant by filing its Request for

Arbitration dated July 7, 2016

Arbitration Agreement Article 7 of the Contract

Article 172 Report Report prepared by the Judicial Commissioner m

connection with the Respondent's CP

Austrian Insolvency Code Austrian Insolvency Code (Insolvenzordnung - IO) StF:

RGBI. Nr. 337/1914

Civil Code of the Russian Civil Code of the Russian Federation No. 146-FZ, as

Federation amended

Claimant DON-BALT PLUS

Commercial Register Commercial Register of Perugia's Chamber of

Commerce, Industry, Crafts and Agriculture

Contract Contract No. DB-SP-2015 dated February 24, 2015

4

Court of Perugia Court ofPerugia, Italy

CP or Composition Concordato preventivo procedure under the Italian

Proceedings Bankruptcy Code

EU Insolvency Regulation Council Regulation (EC) No. 1346/2000 of 29 May 2000

on insolvency proceedings

Exhibit C-1 Contract No. DB-SP-2015 dated February 24, 2015,

Additional Agreement No. 1 dated February 26, 2015,

Additional Agreement No. 2 dated March 12, 2015,

Additional Agreement No. 3 dated June 22, 2015,

Specification No. 1 dated April 7, 2015, Specification No.

2 dated May 20, 2015, Specification No. 3 dated May 20,

2015, including Annexes No. 1 and No. 2 to the Contract

no. DB-SP-2015 (all in bilingual Russian and English

versions)

Exhibit C-2 Claimant's swift transactions dated March 3, 2015, March

24, 2015, and April27, 2015 in the Russian language

Exhibit C-3 Respondent's invoices dated April 14, 2015 and the

respective CMRs (2 pages) in the English language

Exhibit C-4 Extract from the Commercial Register dated June 1, 2016

in the Italian language, including its Russian translation

Exhibit C-5 Claimant's letter dated June 21, 2016 in the Italian

language, including its Russian translation

Exhibit C-6 Claimant's confirmation of authority of the director of

Don-Bait Plus in the Russian language

Exhibit C-7 "Copies of plaintifft statement of claim and copies of the

Annexes to the statement of claim in the quantity

sufficient to provide to the defendant, the court referee,

and the court Secretariat' as referred to in the Request

for Arbitration

Exhibit C-8 Claimant's swift transactions dated March 3, 2015, March

5

24, 2015 and April 27, 2015 in the Russian language

including their English translations

Exhibit C-9 Respondent's invoices dated April 14, 2015 and the

respective CMRs (3 pages) in the English language

Exhibit C-10 Extract from the Commercial Register dated June 1, 2016

in the Italian language, including its Russian and English

translations

Exhibit C-11 Claimant's letter dated June 21, 2016 m the Italian

language, including its English translation

Exhibit C-12 Extract from the Commercial Register dated November

23, 2016 in the Italian language, including its English

translation

Exhibit C-13 Claimant's agreement on rendering of legal services dated

May 30, 2016 in the Russian language, including its

English translation, as well related payment transfers in

the Russian language, including their English translations

Exhibit C-14 Claimant's swift transactions to the ICC Secretariat dated

July 7, 2016, September 7, 2016, November 15, 2016,

January 20, 2017 in the Russian language, including their

English translations

Exhibit C-15 Claimant's "decision of member of limited liability

company" dated January 25, 2016 in the Russian

language including its English translation

Exhibit C-16 Claimant's power of attorney to Mr. Igor Varenik:ov dated

December 21, 20 16 in the English language

Exhibit C-17 Parties' Reconciliation Statement No. 135/1 dated

October 1, 2015 in its bilingual English and Russian form

Exhibit C-18 "Copies of plaintifft statement of claim and copies of the

Annexes to the statement of claim in the quantity

sufficient to provide to the Defendant, the Court

6

Arbitrator and the Court Secretariat" as referred to in the

Full Statement of Claim

Exhibit C-19 Report of the Judicial Commissioner dated April 7, 2017

in the Italian language, including its English translation

Exhibit C-20 Extract from the Commercial Register dated May 19,

2017 in the Italian language, including its English

translation

Exhibit CL-1 Extracts from the Italian Civil Code, Italian Civil

Procedure Code and Italian Bankruptcy Code including

the English translations

Exhibit CL-2 Extracts from the Civil Code of the Russian Federation

No. 146-FZ, as amended, including the English

translations

Exhibit CL-3 Extracts from the Law of the Russian Federation on

International Arbitration No. 5338-1, as amended,

including the English translations

Full Statement of Claim Claimant's Full Statement of Claim

Full Statement of Defence Respondent's Statement of Defence

ICC International Chamber of Commerce

ICC Court The International Court of Arbitration of the International

Chamber of Commerce

ICC Rules Rules of arbitration of the International Chamber of

Commerce

ICC Secretariat Secretariat of the International Court of Arbitration of the

International Chamber of Commerce

Italian Bankruptcy Code Legge fallimentare: Regio Decreto 16 marzo 1942 n. 267

Italian Civil Code Codice Civile: Regio Decreto 16 marzo 1942 n. 262

Italian Civil Procedure Code Codice di procedura civile: Regio Decreto 28 ottobre

1949 n. 1443

7

Judicial Commissioner Mr. Enrico Bianchini

Law of the Russian Federation Law of the Russian Federation on International

on International Arbitration Arbitration No. 5338-1, as amended

Party Claimant or Respondent

Parties Claimant and Respondent

Pre-arbitration Notice Claimant's letter dated June 21, 2016

Procedural Order No. 1 Procedural Order No. 1 dated December 7, 2016

Procedural Order No. 2 Procedural Order No. 2 dated March 3, 2017

Procedural Order No. 3 Procedural Order No. 3 dated May 31, 2017

Procedural Order No. 4 Procedural Order No. 4 dated July 20, 2017

Procedural Order No. 5 Procedural Order No. 5 dated September 21, 2017

Recast Insolvency Regulation Regulation (EU) 2015/848 of the European Parliament

and of the Council of 20 May 2015 on insolvency

proceedings (recast)

Reconciliation Statement Reconciliation Statement No. 135/1 dated October I,

2015

Reply to Supplement to Full Respondent's Reply to Supplement to Full Statement of

Statement of Claim Claim

Request for Admission Respondent's request for admission to an amicable

agreement procedure filed on March 9, 2016

Request for Arbitration Request for arbitration titled "Statement of Claim" dated

July 7, 2016

Respondent SP APPERI S.R.L.

Respondent's Letter Respondent's letter dated November 15, 2016

Rome I. Regulation Rome I. Regulation No. 593/2008 on the law applicable

to contractual obligations

Sole Arbitrator Mr. Roman Prekop

8

Spapperi N.T. Spapperi N.T. S.r.l.

Spapperi N.T. 2017 Email Email from the em ail address

[email protected] sent by Ms. Boni Paola

on behalf ofSpapperi N.T. S.r.l. on August 16,2017

Specification No. 1 Specification No. 1 to the Contract dated April 7, 2015

Specification No. 2 Specification No. 2 to the Contract dated May 20, 2015

Specification No. 3 Specification No. 3 to the Contract dated May 20, 2015

Supplement to Full Statement Claimant's Supplement to Full Statement of Claim

of Claim

Supervising Judge Mr. Umberto Rana

Terms of Reference Terms of Reference approved by the ICC Court on

February 23, 2017

9

I. PARTIES AND THEIR REPRESENTATIVES

A. CLAIMANT

1. DON-BALT PLUS, Claimant, is a limited liability company (in Russian: "000",

referred to in this arbitration as "L TD" or "LLC") established under the laws of the

Russian Federation with its registered office at:

18V Lesnaya Birzha Street 347 900 Tagamog Russian Federation

2. The following email addresses were used by Claimant m these arbitration

proceedings: 1

[email protected] [email protected]

3. Claimant is represented by Mr. Igor Varenikov, an external legal counsel, with the

address of: Tekuceva Street 234, office 914, Rostov-na-Donu, Russian Federation.

B. RESPONDENT

4. SP APPERI S.R.L., Respondent, is a company established under the laws of Italy with

its registered office at:

Via P. Ercolani 5B San Secondo 06012 Citta di Castello PG Italy

5. The following addresses were used by Respondent in these arbitration proceedings:2

[email protected] [email protected] [email protected] [email protected] [email protected]

See ICC Secretariat's letter dated November 14, 2016, and the Arbitral Tribunal's Procedural Order No. 2 (on

Conduct of Arbitration) dated March 3, 2017.

See ICC Secretariat's letter dated November 14, 2016, Respondent's Letter, and Arbitral Tribunal's Procedural

Order No. 2 (on Conduct of Arbitration) dated March 3, 2017.

10

6. Respondent is not represented by an external legal counsel m these arbitration

proceedings.

7. Claimant and Respondent are each hereinafter referred to as a "Party" or collectively

referred to as the "Parties".

11. ARBITRAL TRIBUNAL

8. The Arbitral Tribunal consists of a sole arbitrator (the "Arbitral Tribunal").

9. The International Court of Arbitration (the "ICC Court") of the International

Chamber of Commerce (the "ICC") directly appointed Mr. Roman Prekop as the sole

arbitrator (the "Sole Arbitrator").

10. The office address and contact details of the Sole Arbitrator are as follows:

Roman Prekop c/o Barger Prekop s.r.o. Carlton Savoy Courtyard Mostova2 811 02 Bratislava Slovak Republic [email protected] 00421 2 3211 9890

Ill. PROCEDURAL IDSTORY

11. Claimant initiated this arbitration (the "Arbitration") by filing its request for

arbitration (titled "Statement of Claim") dated July 7, 2016 (the "Request for

Arbitration") under the rules of arbitration of the International Chamber of

Commerce (the "ICC Rules").

12. Claimant filed the Request for Arbitration together with seven annexes, marked as no.

1 through 7. For ease of reference, the Arbitral Tribunal will refer to these annexes as

Exhibits C-1 through C-7. 3

Contract no. DB-SP-2015 dated February 24,2015, additional agreement no. 1 dated February 26,2015, additional

agreement no. 2 dated March 12, 2015, additional agreement no. 3 dated June 22, 2015, specification no. 1 dated

April 7, 2015, specification no. 2 dated May 20, 2015, specification no. 3 dated May 20, 2015, including annexes

no. 1 and no. 2 to the Contract no. DB-SP-2015 (all in bilingual Russian and English versions) (the "Exhibit C-1"),

Claimant's swift transactions dated March 3, 2015, March 24, 2015, and April 27, 2015 in the Russian language

11

13. By letter dated July 29, 2016, the Secretariat of the International Court of Arbitration

of the International Chamber of Commerce (the "ICC Secretariaf') informed

Claimant, among other things, that it received the Request for Arbitration on July 19,

2016 and that pursuant to Article 4(2) of the ICC Rules in force as from January 1,

2012, the Arbitration commenced on July 19, 2016. Also, the ICC Secretariat

informed Claimant that this Arbitration is to be referred to as 22125/MHM, and

acknowledged receipt of the filing fee.

14. By letter dated August 23, 2016, the ICC Secretariat informed Respondent that the

Arbitration commenced on July 19, 2016 and transmitted a copy of the Request for

Arbitration to Respondent. The ICC Secretariat invited Respondent to file its Answer

to the Request for Arbitration (the "Answer") within 30 days, noting that pursuant to

Article 6(8) of the ICC Rules the Arbitration would proceed despite a refusal or a

failure to participate in the Arbitration or any of its stages. Respondent received the

copy of the Request for Arbitration on August 25, 2016.

15. By email dated October 17, 2016, the ICC Secretariat informed the Parties that the 30-

day time limit for Respondent to submit its Answer had expired without any such

Answer having been submitted. With reference to Article 6(3) of the ICC Rules, the

ICC Secretariat informed the Parties that the matter was not referred to the ICC Court

and that the Arbitral Tribunal will decide any question of jurisdiction after providing

parties with an opportunity to comment.

16. By letter dated October 27, 2016, the ICC Secretariat informed the Parties that the ICC

Court (i) set Vienna, Austria as the place of arbitration (Article 18(1) of the ICC

Rules), (ii) determined to submit the Arbitration to one arbitrator and take the steps for

the appointment of the sole arbitrator (Articles 12(2) and 13(3) of the ICC Rules), and

(iii) fixed the advance on costs (Article 36(2) of the ICC Rules).

(the "Exhibit C-2"), Respondent's invoices dated April 14, 2015 and the respective CMRs (2 pages) in the English

language (the "Exhibit C-3"), extract from the Italian commercial register dated June I, 2016 in the Italian

language, including its Russian translation (the "Exhibit C-4"), Claimant's letter dated June 21, 2016 in the Italian

language, including its Russian translation (the "Exhibit C-5"), Claimant's confirmation of authority of the director

of "Don-Bait Plus" in the Russian language (the "Exhibit C-6"), and "Copies of plaintiffs statement of claim and

copies of the Annexes to the statement of claim in the quantity sufficient to provide to the defendant, the court

referee, and the court Secretariat' (the "Exhibit C-7'').

12

17. On November 10, 2016, the ICC Court decided on the appointment of Mr. Roman

Prekop as the Sole Arbitrator. By letter dated November 14, 2016, the ICC Secretariat

informed the Parties of such appointment.

18. On November 15, 2016, the Arbitral Tribunal received the case file from the ICC

Secretariat.

19. By letter dated November 15, 2016, Respondent informed the ICC Secretariat that it

had filed a request for "composition proceedings" (in Italian: concordato preventivo)

under the Italian Bankruptcy Code4 with the Court of Perugia, Italy (the "Court of

Perugia") and stated that any "initiative concerning the dispute in question should be

taken by the Judicial Commissioner to be appointed by the Court of Perugia" (the

"Respondent's Letter").

20. By letter dated November 16, 2016, the Arbitral Tribunal informed the ICC Secretariat

and the Parties that it received the case file and commenced the Arbitration.

21. By email dated November 17, 2016, the ICC Secretariat informed the Arbitral

Tribunal and the Parties that the time limit for establishing the Terms of Reference

was January 14, 2017.

22. By letter dated November 22, 2016, the Arbitral Tribunal noted that Claimant

proposed English as the language of this Arbitration and that Respondent did not

comment on the language of this Arbitration despite the ICC Secretariat's invitation to

do so. The Arbitral Tribunal invited Respondent to comment on whether it agrees with

Claimant's proposal that the English language would be used as the language of this

Arbitration or to provide comments to the Arbitral Tribunal by December 5, 2016. The

Arbitral Tribunal also informed the Parties that it intended to issue a procedural order

dealing with the language of this Arbitration as soon as practicable.

23. Within the set deadline, the Arbitral Tribunal did not receive any comments from the

Respondent regarding the language of this Arbitration.

24. On December 7, 2016, the Arbitral Tribunal issued Procedural Order No. 1 on the

Language of Arbitration (the "Procedural Order No. 1") in which it decided that

English will be the language of this Arbitration.

Legge fallimentare: Regio Decreta 16 marzo 1942 n.267 (the "Italian Bankruptcy Code").

13

25. On December 12, 2016, the Arbitral Tribunal provided the Parties with drafts of the

Terms of Reference (Article 23 of the ICC Rules), Procedural Order No. 2 on Conduct

of Arbitration, and the Procedural Timetable (Article 24 of the ICC Rules) for their

comments to be provided by December 20, 2016. The Arbitral Tribunal also invited

the Parties to confirm their availability on the following proposed dates for the case

management conference (Article 24 of the ICC Rules): December 21, 22, 28, or 29,

2016.

26. By letter dated December 15, 2016, Claimant provided its comments to the draft of the

Terms of Reference and confirmed its availability for the case management conference

call with preference for December 22, 20 16. The Arbitral Tribunal did not receive any

comments from Respondent in these respects within the set deadline.

27. By letter dated December 20, 2016, the Arbitral Tribunal invited both Parties to

participate in the case management conference call to be held on December 22, 2016

at 10 a.m. (CET).

28. By letter dated December 21, 2016, the ICC Secretariat informed the Arbitral Tribunal

and the Parties of the ICC Court's decision to extend the time limit for establishing the

Terms ofReference until January 31,2017.

29. On December 22, 2016, the Arbitral Tribunal held the case management conference

call. Respondent did not participate in this case management conference call.

30. By letter dated December 29, 2016, the Arbitral Tribunal invited the Parties to provide

their comments to the revised versions of the draft of the Terms of Reference,

Procedural Order No. 2, and the Procedural Timetable as well as to the case

management conference call minutes by January 16, 2017.

31. By letter dated January 10, 2017, Claimant "accepted" the revised drafts of the Terms

of Reference, Procedural Order No. 2, and Procedural Timetable without any

comments. The Arbitral Tribunal did not receive any comments from Respondent

within the set deadline.

32. On January 17, 2017, the ICC Secretariat provided the Arbitral Tribunal with certain

formal comments on the draft of the Terms of Reference. The Arbitral Tribunal

incorporated these comments into the final draft of the Terms of Reference.

14

33. By letter dated January 20, 2017, the Arbitral Tribunal invited the Parties (i) to provide

comments to the fmal draft of the Terms of Reference incorporating the

ICC Secretariat's comments or (ii) if Parties had no comments, to duly execute the

Terms of Reference in four originals and send them to the Arbitral Tribunal by

January 27, 2017.

34. By letter dated January 27, 2017, the ICC Secretariat informed the Arbitral Tribunal

and the Parties of the ICC Court's decision to extend the time limit for establishing the

Terms of Reference until February 28, 2017.

35. On January 30, 2017, the Arbitral Tribunal received four signed originals of the Terms

of Reference from Claimant. Respondent neither provided any comments on the fmal

draft of the Terms of Reference, nor did it submit the signed originals within the set

deadline.

36. By letter dated February 1, 2017, the Arbitral Tribunal informed the Parties that it

would submit the Terms of Reference, signed by Claimant and the Arbitral Tribunal,

to the ICC Court for approval in accordance with Article 23(2) of the ICC Rules.

37. By letter dated February 22, 2017, the ICC Secretariat informed the Parties and the

Arbitral Tribunal that Claimant paid the advance of costs fixed by the ICC Court in the

amount ofEUR 30,700 in its entirety.

38. By letter dated February 24, 2017, the ICC Secretariat informed the Parties and the

Arbitral Tribunal that the ICC Court approved the Terms of Reference on February 23,

2017 (the "Terms of Reference"). By the same letter, the ICC Secretariat invited

Respondent to sign the Terms of Reference, as approved by the ICC Court, and return

it to the ICC Secretariat within 15 days from the day following the receipt of such

letter.

39. On March 3, 2017, the Arbitral Tribunal issued the Procedural Order No. 2 on

Conduct of Arbitration (the "Procedural Order No. 2") and the Procedural

Timetable.

40. By a separate letter dated March 3, 2017, the Arbitral Tribunal informed the Parties

that the Arbitral Tribunal received Claimant's hard-copy submission introduced as

"Statement of Claim" dated February 20, 2017 with 12 annexes. Annex 1 corresponds

15

to Exhibit C-1 and the additional eleven annexes are for the ease of reference referred

to as Exhibits C-8 through C-18.5

41. By the same letter, the Arbitral Tribunal informed the Parties that unless Claimant

informs the Arbitral Tribunal otherwise by March 27, 2017, the Arbitral Tribunal

would consider Claimant's submission dated February 20, 2017 as the Full Statement

of Claim referred to in the Procedural Timetable (the "Full Statement of Claim").

42. By letter dated March 29, 2017, the Arbitral Tribunal informed the Parties that it did

not receive any comments from Claimant pursuant to the Arbitral Tribunal's invitation

of March 3, 2017. Therefore, the Arbitral Tribunal informed the Parties that the

Arbitral Tribunal considered Claimant's submission referred to in its letter of March 3,

2017 as the Full Statement of Claim.

43. By the same letter, the Arbitral Tribunal invited Respondent to submit its Full

Statement of Defence, as referred to in the Procedural Timetable (the "Full Statement

of Defence"), by April 26, 2017. The Arbitral Tribunal did not receive the Full

Statement of Defence within the set deadline.

44. By letter dated May 18, 2017, the Arbitra1 Tribunal invited the Parties to provide their

comments on the draft Procedural Order No. 3, in which the Arbitral Tribunal

introduced an additional round of submissions, and a draft modified Procedural

Claimant's swift transactions dated March 3, 2015, March 24, 2015 and April 27, 2015 in the Russian language

including their English translations (the "Exhibit C-8"), Respondent's invoices dated April 14, 2015 and the

respective CMRs (3 pages) in the English language (the "Exhibit C-9"), extract from the Italian commercial

register dated June I, 2016 in the Italian language, including its Russian and English translations ('Exhibit C-10"),

Claimant's letter dated June 21, 2016 in the Italian language, including its English translation ("Exhibit C-11"),

extract from the Italian commercial register dated November 23,2016 in the Italian language, including its English

translation (the "Exhibit C-12"), Claimant's agreement on rendering of legal services dated May 30, 2016 in the

Russian language, including its English translation, as well related payment transfers in the Russian language,

including their English translations (the "Exhibit C-13"), Claimant's swift transactions to the ICC Secretariat dated

July 7, 2016, September 7, 2016, November 15, 2016, January 20, 2017 in the Russian language, including their

English translations (the "Exhibit C-14"), Claimant's "decision of member of limited liability company" dated

January 25, 2016 in the Russian language including its English translation (the "Exhibit C-15"), Claimant's power

of attorney dated December 21,2016 in the English language (the "Exhibit C-16"), and the Parties' "reconciliation

statement" no. 135/1 dated October 1, 2015 in its bilingual English and Russian form (the "Exhibit C-1T'), and

"Copies of plaintiffS statement of claim and copies of the Annexes to the statement of claim in the quantity sufficient

to provide to the Defendant, the Court Arbitrator and the Court Secretariat" (the "Exhibit C-18").

16

Timetable by May 29, 2017. The Arbitral Tribunal did not receive any comments from

the Parties in this respect within the set deadline.

45. On May 31, 2017, the Arbitral Tribunal issued the Procedural Order No. 3 (the

"Procedural Order No. 3") and modified Procedural Timetable.

46. By the Procedural Order No. 3, in light of Article 32 of Procedural Order No. 2, the

Arbitral Tribunal invited Claimant to submit legal authorities and factual exhibits

referred to in the Full Statement of Claim, and to supplement its legal argumentation

in relation to the parallel continuation of this Arbitration and the Respondent's

"concordato preventivo" proceedings by also taking into account (i) information

stemming from the applicable extract from the register of companies of Respondent,

(ii) applicability of Council Regulation (EC) No. 1346/2000 on insolvency

proceedings (the "Insolvency Regulation"), and (iii) the applicability of Austrian

arbitration law, as provided in Sections 577 through 618 of the ACCP6 (the "ACCP")

(and including a question of whether Respondent's statutory representative or a

"judicial commissioner" is to act on behalf of Respondent in this Arbitration), by June

12, 2017, in the form of a Supplement to Full Statement of Claim (the "Supplement

to Full Statement of Claim").

4 7. The Arbitral Tribunal also granted Respondent a time period to provide its comments

to Claimant's submission, in the form of a Reply to Supplement to Full Statement of

Claim, by June 26, 2017 (the "Reply to Supplement to Full Statement of Claim").

48. Be letter dated July 4, 2017, the Arbitral Tribunal informed the Parties that (i) it

received the Supplement to Full Statement of Claim with annexes (for the ease of

reference, the Arbitral Tribunal will refer to these annexes as Exhibits C-19 through C-

21 and CL-1 through CL-3)7 via e-email on June 7, 2017, and as a hard copy on June

Law of August I, 1895 Austrian Code of Civil Procedure, RGBI. Nr. 113/1895 as amended by the 2013

Amendment to the Austrian Arbitration Act- "SchiedsRAG 2013", BGBI. I Nr. I 18/2013 in force as of January I,

2014.

Report of the judicial commissioner dated April 7, 2017 in the Italian language, including its English translation

(the "Exhibit C-19"), extract from the Italian commercial register dated May 19, 2017 in the Italian language,

including its English translation (the "Exhibit C-20"), "copies of the Supplement to the full statement of claim and

copies of the appendices to the statement of claim in an amount sufficient to provide to Respondent, Arbitrator and

the Secretariat of !CC Court" (the "Exhibit C-21 "), as well as the extracts from the Italian Civil Code, Italian Civil

Procedure Code and Italian Bankruptcy Code including the English translations (the "Exhibit CL-1"), extracts

17

14, 2017, and that (ii) it did not receive the Reply to Supplement to Full Statement of

Claim as at the date of the Arbitral Tribunal's letter. The Arbitral Tribunal also

informed the Parties that it was finishing the review of the submissions received and

would revert to the Parties with, among other things, the proposal of further steps, and

the proposed date of the 2nd Case Management Conference Call (the "2nd Case

Management Conference Call") and its draft agenda.

49. By letter dated July 12, 2017, the Arbitral Tribunal (i) proposed that the 2nd Case

Management Conference Call take the form of a telephone conference call on

Tuesday, August 1, 2017, 10 a.m. (CET), or Monday, August 7, 2017, 10 a.m. (CET),

and (ii) invited the Parties to indicate their availability on these days by July 18, 2017

by e-mail or, if so preferred, by mail.

50. The Arbitral Tribunal also proposed the following items to be discussed during the 2nd

Case Management Conference Call: (i) potential oral hearing or the Arbitral

Tribunal's power to decide on the case solely on the basis of documents submitted by

the Parties, (ii) cut-off date, (iii) the date and place of the oral hearing, if any, (iv)

Parties' submissions on costs, (v) closure of this Arbitration, (vi) anticipated date of

the issuance of the fmal award, (vii) necessary adjustments of the Procedural

Timetable, and (viii) miscellaneous matters.

51. By letter dated July 13, 2017, Claimant informed the Arbitral Tribunal that it could

attend the 2nd Case Management Conference Call on August 1, 2017 at 10:00 am

(CET) and had no comments to the draft agenda. Respondent did not indicate its

availability or raise any objections within the set deadline.

52. On July 20, 2017, the Arbitral Tribunal issued the Procedural Order No. 4 (the

"Procedural Order No. 4") and modified Procedural Timetable. By the Procedural

Order No. 4, the Arbitral Tribunal ordered that the 2nd Case Management Conference

Call take place on Tuesday, August 1, 2017, 10 am (CET).

from the Civil Code of the Russian Federation including the English translations (the "Exhibit CL-2"), and extracts

from the Law of the Russian Federation on International Arbitration including the English translations (the

"Exhibit CL-3").

18

53. By letter dated August 1, 2017, the ICC Secretariat informed the Arbitral Tribunal that

on July 27, 2017, the ICC Court extended the time limit for rendering the fmal award

until October 31,2017.

54. On August 1, 2017, 10 a.m. (CET), the Arbitral Tribunal held the 2nd Case

Management Conference Call. While Claimant participated, Respondent did not

participate in this 2nd Case Management Conference Call.

55. During the 2nd Case Management Conference Call, among other things, Claimant

confirmed that it did not request an oral hearing and requested the Arbitral Tribunal to

decide the case solely on the basis of the documents. As Respondent has not requested

an oral hearing in this Arbitration, the Arbitral Tribunal informed that it would decide

this case solely on the basis of the documents submitted by the Parties. Also, the

Arbitral Tribunal outlined the further course of the proceedings and took the minutes

of the 2nd Case Management Conference Call.

56. By letter dated August 2, 2017, the Arbitral Tribunal invited the Parties to provide

their comments to the draft of the 2nd Case Management Conference Call minutes and

the revised version of the Procedural Timetable by August 10, 2017. The revised

version of the Procedural Timetable indicated that no oral hearing would take place in

this Arbitration (Article 25(6) of the ICC Rules).

57. By letter dated August 14, 2017, the Arbitral Tribunal informed the Parties that it

received Claimant's letter dated August 9, 2017 stating that Claimant had no

comments to the draft 2nd Case Management Conference Call minutes and the revised

version of the Procedural Timetable. The Arbitral Tribunal also informed the Parties

that it received no comments on the draft documents from Respondent within the set

deadline.

58. At the same time, the Arbitral Tribunal issued the fmal 2nd Case Management

Conference Call minutes and the modified Procedural Timetable.

59. On August 16, 2017, the Arbitral Tribunal received an email from the email address

[email protected] sent by Ms. Boni Paola on behalf of a company

named Spapperi N.T. S.r.L ("Spapperi N.T."), with its address at Via Pietro Ercolani

5/B, 06012 San Secondo di Citta di Castello (PG) Italy. This email stated that:

"Spapperi N T. S.r.l. was been constituted by sale of the business branch of Spapperi

19

Sr. I.. For this reason the company Spapperi NT S.r.l. has no interest and purpose in

following the practice as in the subject. Please forward the correspondence relating to

the !CC Case 22125 I MHM only and exclusively to those concerned, so to the

following e-mail addresses of Spapperi S.r.l.: - [email protected] - Avv. Marco

Bianchini <bianchini@beclex. it> Thanks for cooperation" (the "Spapperi N. T. 2017

Email").

60. By letter dated August 17, 2017, Claimant submitted its submission entitled "Petition

for inclusion in the arbitration No. 22125/MHM of the Claimant's updated list of

expenses" (the "Claimant's Statement of Costs"). Respondent did not provide its

Statement of Costs within the set deadline. The Parties have not made any further legal

or factual submission after August 17, 2017.

61. On September 21, 2017, the Arbitral Tribunal issued the Procedural Order No. 5 (the

"Procedural Order No. 5") in which the Arbitral Tribunal (i) declared this

Arbitration closed in accordance with Article 27(a) of the ICC Rules with regard to the

issue of whether or not Claimant's principal claim is justified and if so, to which

amount, and (ii) informed the Parties that it would submit the draft award to the ICC

Court for approval on or around October 15, 2017.

62. By letter dated October 20, 2017, the ICC Secretariat informed the Arbitral Tribunal

that on October 19, 2017, the ICC Court extended the time limit for rendering the fmal

award until November 30, 2017.

63. Each of the above-referenced Arbitral Tribunal's letters (including the attached Terms

of Reference, procedural orders, modified procedural timetables, case management

conference call minutes, including their draft forms referred to in paragraphs 20, 22,

24, 25, 27, 30, 33, 36, 39, 40, 42, 43, 44, 45, 48, 49, 52, 56, 57, and 61 above) have

been sent to the Parties via email and courier. The courier deliveries upon the

registered offices of the Parties, indicated in above paragraphs 1 and 4, have been

evidenced by the courier's confirmations of due delivery. At the same time, none of

the Arbitral Tribunal's em ails sent to the email addresses outlined in the above

paragraphs 2 and 5 had been returned to the Arbitral Tribunal as having been sent to

an unknown or invalid email address.

20

IV. BASIC FACTS AND DESCRIPTION OF THE DISPUTE

64. The present dispute arose out of Contract No. DB-SP-2015 dated February 24, 2015,

for the supply of certain agricultural equipment and spare parts for the total amount of

EUR 605,584.60 (the "Contract") between Claimant, as a buyer, and Respondent, as

a seller.8

65. Article 2.2 of the Contract provides for the contract value of EUR 605,584.60 as

follows:

"The total amount of the Contract is 605.584,60 (six hundred and five thousand and five hundred eighty-four euro and sixty cents) euro."

66. Article 3.1 of the Contract provides that the goods were to be shipped in accordance

with three individual specifications as follows:

"The seller agrees to ship the Goods in accordance with the signed specifications M!1, M!2, M!3, where the parties stipulate the cost and quantity of the delivered Goods."

67. Article 3.2 of the Contract provides for the following delivery schedule:

"The shipment of goods must take place in accordance with the schedule below: The agreed Goods in the Specification M!1 must be shipped before April 15, 2015. The agreed Goods in the Specification M!2 must be shipped before June 1, 2015. The agreed Goods in the Specification M!3 must be shipped before July 1, 2015."

Exhibit C-1.

21

68. Pursuant to Article 4.1 of the Contract, the Parties agreed to the following payment

schedule:

26.02.2015 105,584.60 Euro

18.03.2015 100,000.00 Euro

03.04.2015 100,000.00 Euro

08.05.2015 100,000.00 Euro

05.06.2015 100,000.00 Euro

03.07.2015 100,000.00 Euro

69. In Additional Agreement No. 1 to the Contract dated February 26, 2015 (the

"Additional Agreement No. 1"),9 the Parties agreed to ''postpone the payment in the

amount of 105.584,60 Euro, according to the schedule set out in item 4.1 of the

Contract M DB-SP-2015 dtd 02.24.2015 by 60 ba[n]king days."

70. Following the Additional Agreement No. 1, Claimant paid EUR 105,584.60 to

Respondent on March 3, 2015.10

71. In Additional Agreement No. 2 to the Contract dated March 12, 2015 (the "Additional

Agreement No. 2"), 11 the Parties amended the delivery schedule as follows:

"Shipment must take place in accordance with the schedule below: The agreed Goods in the Specification M 1 must be shipped before April 20, 2015. The agreed Goods in the Specification M2 must be shipped before June 1, 2015. The agreed Goods in the Specification M3 must be shipped before July 1, 2015."

72. In Article 2 of the Additional Agreement No. 2, the Parties agreed on a new payment

schedule and postponed the payment of EUR 100,000.00 from March 18, 2015 until

Exhibit C-1.

10 Exhibit C-8.

11 Exhibit C-1.

22

March 25, 2015, and also postponed the payment of EUR 100,000.00 from March 4,

2015 until May 20,2015. 12

73. Following the Additional Agreement No. 2, Claimant paid EUR 100,000.00 to

Respondent on March 24, 2015. 13

74. In Specification No. 1 to the Contract dated April 7, 2015 (the "Specification No. 1"),

the Parties specified certain agricultural machines and spare parts and their total

purchase price in the amount ofEUR 103,094.60.14

75. Respondent shipped the agricultural equipment and spare parts in the value of EUR

103,094.60 on April18, 2015.15

76. Claimant paid a further EUR 100,000.00 to Respondent on April27, 2015.16

77. In Specification No. 2 to the Contract dated May 20, 2015 (the "Specification No. 2"),

the Parties specified certain agricultural machines and spare parts and their total

purchase price in the amount of EUR 300,102.40.17

78. In further Specification No. 3 to the Contract dated May 20, 2015 (the "Specification

No. 3"), the Parties specified certain agricultural machines and spare parts and their

total purchase price in the amount ofEUR 202,387.60.18

79. By subsequent Additional Agreement No. 3 to the Contract dated June 22, 2015 (the

"Additional Agreement No. 3")/ 9 the Parties amended the Contract, among other

things, so that the further payments and deliveries take place in 2016 as follows:

12

13

14

15

16

17

18

19

"1. The Parties have agreed that the remaining amount of money for the supply of agricultural machinery and spare parts in the amount of 300 584,60 EUR

Exhibit C-1.

Exhibit C-8.

Exhibit C-1.

Exhibits C-9 and Exhibit C-19.

Exhibit C-8.

Exhibit C-1.

Exhibit C-1.

Exhibit C-1.

23

under the contract M2 DB-SP-2015 dtd 24.02.2015, must be paid by the Buyer no later than 30.04.2016. Because of the delayed supply time stated in Art.2, the parties agree that the price of the Goods can be reconsidered and agreed between them, and before the payment, according to changes in price of raw materials and labor. 2. The Parties have agreed that the goods to be agreed for the supply in the Specification M22 and Specification M23 will be shipped by the Seller to the Buyer no later than 22.06.2016. 3. The remaining conditions of the contract No DB-SP-2015 dtd 24.02.2015 to leave unchanged."

80. On September 28,2015, Spapperi S.r.l. sold part of its business to Spapperi N.T?0

81. On March 9, 2016, Respondent filed a request for admission to an amicable agreement

procedure (referred to as the "concordato preventivo" procedure) with its creditors

with the Court of Perugia (the "Request for Admission"). Respondent relied on

paragraph 6 of Article 161 of the Italian Bankruptcy Code and submitted the request in

the "bianco" form, i.e., without certain required documents. 21

82. On June 21, 2016, Claimant sent a letter to Respondent titled "Prior-arbitration notice"

(the "Pre-arbitration Notice").22 In that letter, Claimant argued that Respondent

failed to timely fulfill its obligations under Specification No. 2 and Specification No.

3, causing Respondent to fall into arrears in the amount of BUR 202,490.00. Also,

Claimant argued that Respondent approached the Court of Perugia without first

notifying its creditor. Claimant requested that Respondent return BUR 202,490.00 to

Claimant for the undelivered goods by June 30, 2016, and advised that in the event no

such payment is made, the unperformed part of the Contract is terminated.

83. On July 19, 2016, Claimant delivered the Request for Arbitration to the ICC

Secretariat.

84. On September 23, 2016, Respondent supplemented the Request for Admission with all

of the required documents. 23

20 Exhibit C-20.

21 Exhibit C-20.

22 Exhibit C-11.

23 Exhibit C-20.

24

85. On the basis of the Court ofPerugia's decision dated December 22, 2016, Respondent

was admitted to the "concordato preventivo" procedure (in English: composition

proceedings) and the Court of Perugia appointed the "commissario giudiziale" (in

English: judicial commissioner) - Mr. Enrico Bianchini (the "Judicial

Commissioner")?4 This decision was registered in the Italian commercial register

("Commercial Register")25 on December 28, 2016?6 Also, the extract from the

Commercial Register provides that Mr. Umberto Rana is to act as a "guidice delegato"

(in English: supervising judge) of the Respondent's CP procedure (the "Supervising

Judge").

V. ARBITRATION AGREEMENT

86. Article 7 of the Contracr7 provides for the following arbitration agreement (the

"Arbitration Agreement"):

"7. GOVERNING LAW AND ARBITRATION

Any dispute, controversy or claim arising out of this Contract or in connection with it, including its performance, breach, termination or validity thereof shall be settled amicably by the parties.

If the parties are unable to resolve all disputes themselves, they must apply to the Court of Arbitration of the International Chamber of Commerce in Vienna Austria."

VI. APPLICABLE PROCEDURAL RULES

87. The Arbitration has been conducted in accordance with the ICC Rules. As this

Arbitration commenced in 2015, the ICC Rules with effect as of January 1, 2012

apply.

88. Since the place of the Arbitration is Vienna, Austria, the Austrian arbitration law,

provided in Sections 577 through 618 of the Austrian Code on Civil Procedure,

applies.

24

25

26

27

Exhibit C-20.

Commercial Register of Perugia's Chamber of Commerce, Industry, Crafts and Agriculture (in Italian: Camera di

Commercio Industria Artigianato e Agricoltura di Perugia).

Exhibit C-20.

Article 8 of the Russian version of the Contract, Exhibit C-1.

25

VII. LANGUAGE OF ARBITRATION

89. The Arbitration Agreement does not provide for the language of the proceedings.

90. As determined in Procedural Order No. 1 dated December 7, 2016, the language of

this Arbitration is English.

VIII. PLACE OF ARBITRATION

91. The place of arbitration was not provided in the Arbitration Agreement. On October

27, 2016, the ICC Court fixed Vienna, Austria as the place of this Arbitration, subject

to Article 18(2) and 18(3) of the ICC Rules.

IX. LAW APPLICABLE TO THE MERITS

92. The Arbitration Agreement does not provide for the applicable law. The Arbitral

Tribunal reserved its decision on law applicable to the merits of the dispute until this

fmal award on merits in accordance with Article 21 of the ICC Rules.28

93. In accordance with Article 32 of the Procedural Order No. 2, the Arbitral Tribunal is,

after giving the Parties an opportunity to comment, free to assess the legal relevance of

factual fmdings and may establish the contents of the applicable law (especially its

public policy provisions) in addition to the Parties' legal argumentation and may

render a decision based on legal grounds different from those submitted by the Parties.

X. BURDEN OF PROOF

94. Section V (Evidence) of the Procedural Order No. 2, stipulates, among other things,

that:

"Each Party shall have the burden of proving the facts it relied on to support its claim or defense."

95. Section VI (Submissions) of the Procedural Order No. 2, stipulates, among other

things, that:

28

"A Party shall substantiate all facts, arguments, or/and denials presented by it in the submission in which a Party presents such facts, arguments and/or denials or in an annex to such submission. If a Party substantiates its position

Article 31 of the Procedural Order No. 2.

26

by reference to legal authorities, such as statutory provisions, case law or commentaries, it shall annex to its submission a copy of such authorities (together with translations as per paragraph 2 of this Procedural Order No.2)."

XI. THE PARTIES' POSITIONS AND REQUESTED RELIEF

A. CLAIMANT'S POSITION

(1) Jurisdiction

96. In the Full Statement of Claim Claimant submits that, according to an extract from the

Register of Companies of Chamber of Commerce, Industry and Agriculture of

Perugia, Respondent "gave to the court of Perugia a notarized request for introduction

of procedures "concordato preventivo" on March 9, 2016 (the "CP" or the

"Composition Proceedings").29

97. Claimant also submits that the CP is "governed by Article 160 of the Bankruptcy Law

of Italy, as well as the amended legislative decree number 8312012, converted into

Law No. 134/2012 and Legislative Decree No. 6912013, converted into Law

No. 9812013."30

98. In this respect, Claimant argues that the CP can be adopted by a debtor "in case the

company is: in a situation of temporary and reversible financial difficulties; or in a

state of insolvency (e.g. unable to meet the obligations and pay debts in the normal

course of business), as an alternative to bankruptcy. On the basis of negotiated

solution with creditors, CP aims either to eliminate of the company's assets (and the

partial satisfaction of the creditors demands from the income produced by the sale of

such assets) or at their reorganization I restructuring with a continuation of the . . . ,31 economzc actzvztv.

99. Claimant argues that "[i}t is a general rule, that as a creditor, the Plaintiff has the

right to choose - to submit their claims to the debtor in accordance with the Law on

Bankruptcy, or use the general order of action proceedings. Guided by the provisions

29 Full Statement of Claim, p. 2, Exhibits C-20.

30 Full Statement of Claim, p. 2, see also Exhibits CL-I.

31 Full Statement of Claim, p. 2.

27

of Article 186-bis and Article 161 of the Bankruptcy Law of Italy, dated March 16,

1942, N 267, the Claimant considers that the case of financial restructuring of the

[Respondent} before the Court of Perugia in no way prevents the proceedings of this

dispute before the International Court of Arbitration of the International Chamber of

Commerce, and it can be carried out in parallel. "32

100. In the Supplement to the Full Statement of Claim, Claimant refers to EU Regulation

No. 2015/84833 and argues that such legislation covers bankruptcy procedures that

"relate to the liquidation of insolvent companies[. . .]". Claimant argues that according

to Article 161 (1) of the Italian Bankruptcy Code, the CP "refors to the pre-bankrupt,

when there is only a probability of bankruptcy"34 and that Article 186-bis of the Italian

Bankruptcy Code provides for the "continuation of business activities by the debtor in

the procedure of concordato preventivo."35

101. On this basis, Claimant argues that "if the main bankruptcy procedure opened against

the Respondent, he could not continue entrepreneurial activities, as he would be in a

state of liquidation and accordingly, would not be admitted to the pre-bankrupt

concordato preventivo procedure."36

102. On this basis, Claimant submits that it has the right to choose "to submit their claims

to the debtor in accordance with the Law of Bankruptcy, or to use the general order of

action proceedings. "37 In other words, Claimant "does not see any obstacles to the

recovery of the debt from the Respondent in the framework of the arbitration

proceedings. "38

103. In this respect Claimant submitted an excerpt from a report prepared by the Judicial

Commissioner in connection with Respondent's CP (the "Article 172 Report") and

32

33

34

35

36

37

38

Full Statement of Claim, p. 2.

Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency

proceedings (recast).

Supplement to Full Statement of Claim, p. 1.



Full Statement of Claim, p. 2.


28

argues that "on page 62 of the Report of the Judicial Commissioner of07 April 2017

on the procedure ofConcordato Preventivo N. 2512016 CP. "SPAPPERJ S.R.L." (a

copy of the extract from the report is attached) indicates that SPAPPERJ S.R.L. does

not admit guilt in the dispute with LLC Don Bait-Plus in connection with which for the

company LLC Don-Balt Plus a risk fond was created to cover the maximum amount of

the dispute, which is 202.490.00 Euros and is unsecured."39 On this basis, Claimant

infers that while the dispute at hand "is not resolved, the debt of [Respondent] in

relation to [Claimant] remains unconfirmed and cannot be paid''.40

104. Claimant also adds that the "abandonment of this statement of claim" would limit its

"right to a fair and impartial proceeding guaranteed by the Rome Convention" and

"will also give the Respondent a preferential position before the other party of the

dispute and stimulates him to the subsequent (unfair) fulfzllment of contractual

obligations" .41

(2) Applicable Substantive Law

105. Claimant submits that the Parties did not agree on the applicable law in the Contract.42

106. In this context, Claimant refers to Article 7 of the 1961 European Convention on

International Commercial Arbitration, according to which, the arbitrators, in absence

of any indication of the parties, shall apply the law established in accordance with the

rules of conflict that the arbitrators deem applicable. According to Claimant, "the rules

if . ll . l . d "43 o natzona egzs ation are use .

107. Claimant further refers to Article 1211 of the Civil Code of the Russian Federation44,

according to which, in absence of an agreement between the parties on the subject of

applicable law to the contract, the law of the country where the main business of the

party is located applies. Claimant proposes that "the fondamental of close connection

39 Supplement to Full Statement of Claim, p. 2, Exhibit C-19.

40 Supplement to Full Statement of Claim, p. 2.

41 Supplement to Full Statement of Claim, p. 2.



44 Exhibits CL-2.

29

is the main priority binding in respect of contractual obligations in the absence of

autonomy of the will ofparties."45

108. Claimant submits that the "[p}resumption of International law, as general rule for

delivery contracts, presumes that the place of performance is the location of the

seller." Claimant in this regard refers to Article 4 of Rome I Regulation No. 593/2008

on the law applicable to contractual obligations (the "Rome I Regulation"), according

to which "a contract of sale of goods is governed by the law of the country where the

seller has his habitual business location."46

109. Claimant further submits that Article 1211 of the Civil Code of the Russian

Federation47 "refers to the seller's rights, that is, to the Italian law."48 Claimant also

submits that, even though the Contract was signed in the city of Taganrog, Russian

Federation, "reverse reference to the Russian law is not possible. "49

110. Claimant adds that under Article 1190 of the Civil Code of the Russian Federation50

any reference to a foreign law is a "reforence to the material and not to conflict of

laws of the country."51 Claimant also adds that Article 28 of the Russian law on the

International Commercial Arbitration52 determines "any reference to the law or legal

system of a State construed as directly referring to the substantive law of that State

d . if!" t l ,53 an not to zts con zc ru es.

111. In light of the above, Claimant concludes that the present dispute is "guided by

substantive and procedural law of Italy. "54



47 Exhibits CL-2.



50 Exhibits CL-2.


52 Exhibits CL-3.



30

(3) Merits

112. Claimant refers to the Contract as a contract "signed for the supply of agricultural

machinery, in accordance with Appendix 1 and spare parts, in accordance with Annex

No. 2 [. . .}to the total amount for 605 584,60 Euro."55

113. Claimant submits that it made three payments under the Contract for the supply of

goods: (i) EUR 105,584.60 on March 3, 2015, (ii) EUR 100,000.00 on March 24,

2015, and (iii) EUR 100,000.00 on April27, 2015.56

114. Claimant submits that Article 3.1 of the Contract required Respondent to ship the

goods in accordance with Specification Nos. 1, 2, and 3 and that (i) the goods the

Parties agreed in Specification No. 1, had to be shipped before April20, 2015 and (ii)

the goods agreed in Specification No. 2 and No. 3 had to be shipped no later than on

June 22, 2016.

115. Claimant argues that "[h}owever, accepting the obligations under the Contract,

[Respondent} did not fulfil them properly carried out a delivery 18.04.2015, in the sum

of 103 094.60 Euros. Supply of goods, specified in Specification number 2 and number

3, [Respondent} did not perform in specified period."57

116. In respect ofltalian law and the Contract, Claimant argues as follows: "Article 1372 of

the Civil Code of Ital/8 determined - a contract is legally binding on the parties.

According to Article 13 7 5 of the Code, the contract executed in good faith. The

provision of Article 9 of the Contract does not permit its unilateral termination. [. . .}

In virtue of Article 1373 of Italian Civil Code, seller's unilateral refUsal of the

contract during the period of its execution, not allowed."59

117. On this basis, Claimant argues that "[t}aking into account the fact that [Respondent}

in secrecy, without prior notification to [Claimant}, initiated the procedure of its

financial insolvency on 09.03.2016. The Purchaser in a few days prior to the date of

55 Full Statement of Claim, p. I.

56 Full Statement of Claim, p. I.


58 Codice Civile: Regio Decreta 16 marzo 1942 n. 262 (the "Italian Civil Code")

59 Full Statement of Claim, pp. 1-2.

31

peiformance of delivery had serious reason to believe that the execution will not take

place. In order to protect the company's interests, in accordance with Article 1453

and Article 1454 of the Civil Code of Italy, [Claimant} sent to [Respondent} on the

21th of June a written request for the return of the 202 490,00 Eurosfor undelivered

goods. In the request, [Claimant} stated that if the requirement not fulfilled within the

specified period of time the contract considered as terminated at its unexecuted part

from Ft of July 2016."60

118. Claimant further states that "[hjowever, Respondent ignored the written requirements

of [Claimant) and not responded to the claim. As a result the substantial breach of the

Contract by [Respondent} caused [Claimant} such damage that it largely deprived

him of what he was entitled to expect in the conclusion of the Contract. In connection

with the above, [Claimant], according to Article 8 of the contract, decided to appeal

to the judicial protection of violated rights."61

119. Claimant argues that in accordance with Article 2697 of the Italian Civil Code, a

''party that wants to defend its rights in court, has to prove the facts underlying this

right".62 In this connection, Claimant submitted, among other things, (i) the respective

contractual documentation (such as the Contract, additional agreements and

specifications), (ii) bank SWIFT confirmations of money transfers, (iii) invoices and

international way of bills, (iv) extracts from Commercial Register, (v) a Pre-arbitration

Notice, (vi) evidence of legal and other costs, (vii) Reconciliation Statement No. 135/1

dated October 1, 2015, (viii) excerpt from the Article 172 Report, (viii) citations of

selected parts ofltalian and other laws, and (xi) respective English translations.

120. In respect of the calculation of the amount sought, Claimant argued that "[a]ccording

to the Contract [. . .], [Respondent] undertook to deliver the Goods to [Claimant} to

the amount of605 584.60 Euros on time, before 22.06.2016. Respondent, in breach of

the Contract and [Additional Agreement No. 2 and Additional Agreement No. 3], has

carried out only one shipment of the goods worth 103 094.60 Euros. Thus, it has

formed arrears to [Claimant}, as a result of fraud over the paid but not delivered




32

Goods, in the sum of 202 490.00 Euros. The amount payable determined by

[Claimant] as follows: The 305 584.60 Euros (sum of the three payments made by

[Claimant] for the Goods} - 103 094.60 Euros (the amount of goods which was

actually shipped) = 202 490.00 Euros (the amount of debt by [Respondent]."63

121. Claimant submits that Respondent shipped goods on April 18, 2015 in the value of

BUR 103,094.60 onll4 and that Respondent failed to supply goods under

Specification No. 2 and Specification No. 3 within the set deadline65•

122. Claimant argues that Respondent is withholding BUR 202,490.0066.

123. Claimant also submits that (i) Claimant sent to Respondent "a written request for

return of EUR 202.490 for undelivered goods" on June 21, 2016 and that

(ii) Respondent ignored such request.67

124. Claimant argues that Respondent breached the Contract and caused damage to

Claimant as "[Respondent] largely deprived him of what [Claimant} was entitled to

expect in the conclusion of the Contract. "68

125. Claimant also argues that the existence and amount of Respondent's debt is proven in

the Reconciliation Statement No. 135/1 dated October 1, 2015 (the "Reconciliation

Statement"), which "is made on the basis of calculations by the parties as of

111012015 and approved by the Respondent without objection."69


64 Full Statement of Claim, p. I, Exhibits C-9.



67 Full Statement of Claim, p. 2, Exhibits C-1.


69 Full Statement of Claim, pp. 3-4, Exhibits C-17.

33

(4) Claimant's Request for Relief

126. In its Full Statement of Claim, Claimant requests as follows:

"I) Terminate the contract signed between the Company "Don-Bait Plus" and Spapperi S.r.l. at its unexecuted part, guided by Article 1453 of Italian Civil Code.

2) Recover from the Respondent Spapperi S.r.l. in favor of the Plaintiff "DonBait Plus Ltd" the prepayment for undelivered goods in the sum of 202 490.00 Euros.

3) Recover from the Respondent the arbitration expenses incurred by the Plaintiff in connection with this dispute, according to Article 91 of the Civil Procedural Code of Italy and in accordance with Paragraph 4 of Article 37 of the Arbitration Rules of the !CC, namely:

- The application fee to the court, in the sum of 3 000 US dollars;

- The arbitrator fees and expenses, in the sum of EURO 23 11 0;

- The !CC administrative costs, in the sum of EURO 7 590;

- The cost of legal fees in the sum of 180 000 Russian rubles that equivalent to EURO 2 930.00 on the date the Statement of Claim was submitted, at the rate of National Bank of Russia. "70

127. In the Claimant's Statement of Costs, Claimant submitted "an updated list of expenses

and supporting documents" and requested that the updated list be included in this

Arbitration with the total costs amounting to EUR 35,837.80.

128. The above claims fully correspond to the claims as outlined in Section VI of the Terms

of Reference, save for the costs of arbitration, which Claimant further specified in the

Claimant's Statement of Costs.

B. RESPONDENT'S POSITION AND REQUEST FOR RELIEF

(1) Jurisdiction

129. In this Arbitration, Respondent sent only one letter in English and Italian languages. In

the Respondent's Letter, Respondent states in English that "[s]topped and without

prejudice to any right, action and except for ritual and merit about reason of defense

of [Respondent] for the unfounded requests of [Claimant], with the present letter we


34

want communicate that [Respondent} has filed with the Court of Perugia the demand

for composition proceedings ex art.l60 et seq. Bankruptcy law (as attested by the

Chamber of Commerce business profile enclosed). This being so, all and every

initiative concerning the dispute in question should be taken by the Judicial

Commissioner to be appointed by the Court of Perugia. Yours faithfully [Respondent}

Director Dr. Simona Spapperi."

130. In the Italian version of the above text, Respondent words the phrase "the demand for

composition proceedings ex art.l60 et seq. Bankruptcy law" as "domanda di

concordato preventivo ex art. 160 e ss Legge Fallimentare" (emphasis added).

131. In its letter, Respondent does not expressly challenge the existence and validity of the

Arbitration Agreement or the ICC as the institution to administer the dispute arising

under or in connection with the Contract. However, Respondent's reference to the

Composition Proceedings ( condordato preventivo) and an "initiative" of the judicial

commissioner to be appointed by the Court of Perugia can be understood as a

challenge raising questions as to whether the Arbitration Agreement is valid and

enforceable, whether Respondent has the capacity to be a party to the arbitration

agreement and the arbitration proceedings, and whether the Arbitral Tribunal may

continue adjudicating the pending dispute and issue the fmal award.

(2) Applicable substantive law

132. Respondent has not made any statement in relation to the applicable substantive law.

(3) Merits

133. The Respondent's Letter can be understood, in particular its words "defense of

[Respondent} for the unfounded requests of [Claimant}" as the Respondent's general

denial of Claimant's claims raised in this Arbitration.

35

XII. THE ARBITRAL TRIBUNAL'S FINDINGS AND CONCLUSIONS

A. JURISDICTION OF THE ARBITRAL TRIBUNAL

134. The Arbitral Tribunal will first address the question of its jurisdiction71 . In this respect,

the Arbitral Tribunal relied on the Parties' submissions and applied the legal

principles, case law and commentaries within the scope of their submissions.

135. Pursuant to Article 592 of the ACCP and Article 6(3) of the ICC Rules, the Arbitral

Tribunal has the power to rule on its own jurisdiction. In exercising this power, the

Arbitral Tribunal concludes that is has jurisdiction over the present dispute and must

hear and evaluate the present dispute and issue the fmal award.

136. In reaching this conclusion, the Arbitral Tribunal has analyzed (1) whether the Parties

entered into a valid Arbitration Agreement, and (2) whether Respondents' Request for

Admission and the actual admission into the CP procedure (i) affects the validity and

enforceability of the Arbitration Agreement, (ii) affects Respondent's capacity to be a

party to this Arbitration, and (iii) prevents the Arbitral Tribunal from continuing to

decide on the pending dispute and rendering the fmal award. These questions are

analyzed in turn below. The above list of issues to be determined is a more specific

elaboration of the issue listed in paragraph 24 of the Terms of Reference.

(1) Validity of the Arbitration Agreement at the time of its conclusion

137. The place of this Arbitration, as fixed by the ICC Court, is Vienna, Austria. Hence,

Austrian law is the lex arbitri in this Arbitration. The ACCP requires the Arbitral

Tribunal to assess the validity of the Arbitration Agreement under Austrian law.

138. Article 581(1) ofthe ACCP provides that "[a}n arbitration agreement is an agreement

by the parties to submit to arbitration all or certain disputes which have arisen or

which may arise between them in respect of a defined legal relationship, whether

contractual or not." An arbitration agreement is invalid only in case the minimum

defmed requirements are not met.72

71 See paragraph 24(a) of the Terms of Reference.

72 Zeiler: Austrian Arbitration Law, Neuer Wissenschaftlicher Verlag, 2016, p. 33.

36

139. Here, the Arbitration Agreement meets the requirements set out in Article 581(1) of

the ACCP. The Arbitration Agreement is an agreement included in the Contract

between Claimant and Respondent to submit all of their disputes under or in

connection with the Contract to arbitration.

140. The Arbitral Tribunal is mindful that the Arbitration Agreement contains certain

ambiguity. In particular, the Arbitration Agreement refers to "the Court of Arbitration

of the International Chamber of Commerce in Vienna Austria", although the seat of

the ICC is Paris, France.

141. This ambiguity, however, does not affect the validity of the Arbitration Agreement.

The Arbitral Tribunal is of the view that such ambiguity must be understood as an

agreement that the ICC would administer arbitral proceedings commenced on the basis

of the Arbitration Agreement and that the venue of such arbitral proceedings would be

Vienna, Austria.

142. This interpretation of the Arbitration Agreement is also in line with common practice73

and, notably, is further reinforced by the Parties' steps. In particular, Claimant has

filed the Request for Arbitration with the ICC Secretariat, by which it effectively

confirmed that the Arbitration Clause refers to the ICC Court.

143. Similarly, Respondent directed the Respondent's Letter to the ICC Secretariat, and did

not deny that the Arbitration Clause refers to the ICC.

144. On this basis, and noting the Parties' common communication toward the ICC without

objection, the Arbitral Tribunal fmds that the Parties entered into a valid Arbitration

Agreement under Austrian law.

(2) Effects of Respondent's Request for Admission and its actual admission into

the CP procedure

145. As outlined above, Respondent's Request for Admission and its actual admission into

the CP procedure raises certain questions as to their effects on this Arbitration. The

Arbitral Tribunal has specifically invited the Parties to address these effects, if any, by

its Procedural Order No. 3.

73 Webster/Biihler: Handbook of!CC Arbitration, Sweet & Maxwell, 3rd ed., 2014, para. 6-70.

37

146. As explained below, the Arbitral Tribunal has analyzed these effects first under Italian,

and subsequently under EU law and Austrian law. The reason for analyzing these

effects from the Italian law perspective is that the CP procedure is a proceeding under

the Italian Bankruptcy Code. International arbitration practice has confirmed that, in

general terms, proceedings under the bankruptcy law of one state may have effects on

arbitral proceedings having their legal seat in another state. 74 The Arbitral Tribunal's

analysis of the effects of Respondent's Request for Admission and the actual

admission into the CP procedure under Italian law is set out in Section (i) below.

147. Consequently, the Arbitral Tribunal analyzed whether the present circumstances fall

within the scope of an EU regulation, whether the EU Insolvency Regulation or the

Recast Insolvency Regulation. 75 As this analysis showed that the effects of the CP on

this Arbitration are governed by the laws of Austria, the Arbitral Tribunal proceeded

with the analysis of the effects of the CP under Austrian law. The effect of the EU

Insolvency Regulation is discussed in more detail in Section (ii) below and the

analysis of the effects of Respondent's request for admission and the actual admission

into the CP procedure under Austrian law is set out in Section (iii) below.

(i) Italian law

148. The CP procedure 1s primarily governed by Article 160 et seq. of the Italian

Bankruptcy Code. The Arbitral Tribunal fmds, in essence as advocated by Claimant,

that under the Italian Bankruptcy Code, the CP procedure aims at reaching an

agreement with creditors and allowing the company to continue an economic

activity.76

74

75

76

The decision of the High Court of Justice dated October 2, 2008, no. [2008] EWHC 2155 (Comm), and the decision

of the Supreme Court of Judicature, Court of Appeal dated July 9, 2009, no. [2009] EWCA Civ 677.

Council Regulation (EC) No. 1346/2000 of 29 May 2000 on insolvency proceedings (the "EU Insolvency

Regulation") which is directly applicable in all EU Member States, except Denmark, and which applies to

insolvency proceedings opened after its entry into force. The provisions of the Regulation (EU) 2015/848 of the

European Parliament and of the Council of 20 May 2015 on insolvency proceedings (recast) (the "Recast

Insolvency Regulation") applies only to insolvency proceedings opened after 26 June 2017 (Article 84 of the

Recast Insolvency Regulation).

Full Statement of Claim, p. 2

38

149. The Italian Bankruptcy Code allows the debtor to apply for the CP procedure if it is in

a state of a crisis.77 To apply, the debtor is to file the request for the CP with the local

court. The filing of the request with the local court is registered in the Commercial

Register on the next day. The request for a CP must contain a composition plan and

other documentation specified in paragraphs 2 and 3 of Article 161 of the Italian

Bankruptcy Code. Paragraph 6 of Article 161 of the Italian Bankruptcy Code,

however, allows the debtor to file a request without concurrently submitting the

composition plan and other required documents and to supplement these documents

only later.

150. The Italian Bankruptcy Code does not hold that a debtor's request for admission or an

actual admission into a CP procedure renders an arbitration agreement invalid,

unenforceable, inoperable, terminated or otherwise ineffective.

151. Rather, in connection with the CP procedure, the Italian Bankruptcy Code78 provides

only for very limited circumstances where a valid arbitration agreement may be

terminated. Put simply, a debtor may ask the judicial commissioner to allow the debtor

to unilaterally terminate a contract that has not yet been completed as of the date of the

request for the CP procedure, but, in any case, such termination does not extend to the

arbitration clause contained in such contract.79 Also, on the basis of Article 169bis of

the Italian Bankruptcy Code, a prominent Italian author advocates that a debtor may

request a court to terminate an arbitration agreement while maintaining the validity of

the rest of the contract but only before the arbitral proceedings on the basis of such

arbitration agreement have been commenced. 80

152. Also, the Italian Bankruptcy Code provides that from the date the application for a CP

is registered in a Commercial Register, creditors cannot - under the penalty of

invalidity - commence or continue enforcement procedure or interim measures.

However, the Italian Bankruptcy Code does not hold that a creditor's request for

77 Art 160 of the Italian Bankruptcy Code.

78 Para. 1 in art. 169bis of the Italian Bankruptcy Code.

79 Para. 3 in art. 169bis of the Italian Bankruptcy Code.

80 Briguglio: Arbitrato e concordato preventivo, in Rivista dell' Arbitrato, vol. 2, 106, p. 239 ff.

39

admission or an actual admission into a CP procedure suspends or terminates other

(already) pending court or arbitration proceedings.

153. The Italian Bankruptcy Code also provides that despite the debtor being admitted into

the CP procedure, the debtor retains the power to administer his assets and continue

trading under the supervision of a judicial commissioner.81 Pursuant to Article 172 of

the Italian Bankruptcy Code, the judicial commissioner is to draw up a report

including, among other things, a list of the debtor's assets, a report on the causes

leading to the CP and on the debtor's conduct. The Italian Bankruptcy Code also

provides that the debtor's acts beyond the ordinary course of business are subject to a

written consent of the supervising judge.

154. However, the Italian Bankruptcy Code does not require that a judicial commissioner

and/or a supervising judge replace the debtor in a pending court or arbitration

proceeding. Nor does the Italian Bankruptcy Code require that a judicial commissioner

and/or a supervising judge be joined into such proceedings.

155. In certain instances, in addition to the judicial commissioner, the court also appoints a

liquidator. In more detail, the CP procedure ends upon the creditors' and court's

approvals of the proposed agreement between the debtor and its creditors. The

proposed agreement may take form of the "concordato preventivo liquidatorio"82, if

all of the assets of the debtor are to be sold, or by way of"concordato preventivo con

continuita aziendale", if not all of the assets, but rather the whole of the business is to

be sold83• In case the "concordato preventivo liquidatorio" is approved, a court having

jurisdiction will appoint a "liquidatore" (in English: liquidator) to assist with the sale.

156. Italian law is unclear as to whether the liquidator (in Italian: liquidatore) must be

joined in a pending court proceeding. While certain Italian court decisions suggest that

the liquidator must be joined in the court proceedings,84 other decisions suggest that

81

82

83

84

Article 167 of the Italian Bankruptcy Code.

Article 182 of the Italian Bankruptcy Code.

Article 186-bis of the Italian Bankruptcy Code.

Grand Chamber of the Court of Cassation, n. 4779/1987; Tribunal of Rome April, 29 1996; Court of Cassation n.

5055/2001, Court of Cassation 10250/2001, Court of Cassation n. 17748/2001; Court of Appeals of Florence

February 15, 2012; Tribunal of Vercelli January 18, 2013; Tribunal of Pescara n. 16/2016; Court of Cassation, n.

11460/2017.

40

the liquidator is not to be joined to the pending court proceedings as a party, but rather

as an intervening party only. 85 These court decisions however do not address

arbitration proceedings, and, therefore, their applicability to arbitration is questionable.

Rather, it can be argued that a liquidator cannot have a locus standi in arbitration

proceedings, as he or she is not a party to the arbitration agreement. Most importantly,

however, the "liquidatore" (liquidator) must not be confused with the function of the

"commissario giudiziale" Gudicial commissioner) and the evidence on record in this

Arbitration shows that no "liquidator", but the "judicial commissioner" has been

appointed in the pending CP procedure.

157. Finally, the Italian Bankruptcy Code does not stipulate that in the case of the CP

procedure, the respective local court would be the exclusive court forum to adjudicate

a creditor's claims against a debtor.

158. Based the above, the Arbitral Tribunal concludes that the Italian Bankruptcy Code is

unequivocal in that where a debtor applies for a CP procedure and such application is

registered in the Commercial Register and later approved by the respective court that

also appoints a judicial commissioner and selects a supervising judge, (i) the existing

arbitration clauses are not adversely affected (save for actions for interim measures

based on an arbitration clause), (ii) arbitrations pending at the time of the court's

approval of the CP procedure are not stayed or terminated, and (iii) the debtor

undergoing the CP procedure does not lose its legal capacity to act in arbitration

proceedings and neither the judicial commissioner nor the supervising judge replaces

or joins the debtor in court or arbitration proceedings.

159. On this basis, the Arbitral Tribunal disagrees with Respondent's contention that given

its filing of the CP procedure "all and every initiative concerning the dispute in

question should be taken by the Judicial Commissioner to be appointed by the Court of

Perugia" or the Judicial Commissioner in fact appointed. That the Judicial

Commissioner exercised its supervisory power is proven, among other things, by the

fact that he refers to this Arbitration is his Article 172 Report.

85 Cass. n. 10738/2000; Court of Cassation n. 9643/2004; Cass. n. 7661/2005; Cass. n. 27897/2013; Court of

Cassation n. 9663/1999; Court of Cassation n. 81 02/2013.

41

160. Although the Judicial Commissioner has supervisory powers over Respondent's

action, it is not to take over all of the Respondent's initiative, which retains its

capacity and power to guide its business.

161. Therefore, the Arbitral Tribunal finds that Respondent's request for admission and the

actual admission into the CP procedure (i) does not affect the validity and

enforceability of the Arbitration Clause, (ii) does not require this Arbitration to be

stayed or terminated, and (iii) does not affect Respondent's capacity to be a party to

this Arbitration and does not require that the Judicial Commissioner and/or the

Supervising Judge be joined in this Arbitration.

162. Accordingly, under Italian law, Respondent's Request for Admission and the actual

admission into the CP procedure does not prevent the Arbitral Tribunal from

continuing to decide on the pending dispute and rendering the fmal award.

(ii) EU Insolvency Regulation

163. The EU Insolvency Regulation is directly applicable in all EU Member States (except

Denmark). It applies to insolvency proceedings opened after its entry into force on

May 31, 2002. Although the EU Insolvency Regulation has been repealed by the

Recast Insolvency Regulation pursuant to Article 84 of the Recast Insolvency

Regulation, it continues to apply to insolvency proceedings opened before June 27,

2017.

164. Pursuant to Article 1(1) of the EU Insolvency Regulation, the EU Insolvency

Regulation "shall apply to collective insolvency proceedings which entail the partial

or total divestment of a debtor and the appointment of a liquidator." For the purposes

of this regulation, "insolvency proceedings" means "the collective proceedings

referred to in Article I (1). These proceedings are listed in Annex A." In respect of

Italy, this Annex A refers to, among other things, "concordato preventivo".

165. Further, for the purposes of the EU Insolvency Regulation, a "liquidator" means "any

person or body whose fonction is to administer or liquidate assets of which the debtor

has been divested or to supervise the administration of his affairs. Those persons and

bodies are listed in Annex C." In respect ofltaly, this Annex C refers to, among other

things, to "commissario giudiziale".

42

166. Article 4 of the EU Insolvency Regulation provides that "[sjave as otherwise provided

in this Regulation, the law applicable to insolvency proceedings and their e.ffocts shall

be that of the Member State within the territory of which such proceedings are opened

[. . .}". One of the exceptions to this general rule is set out in Article 15 of the EU

Insolvency Regulation, which provides that "[tjhe effect of insolvency proceedings on

a lawsuit pending concerning an asset or a right of which the debtor has been divested

shall be governed solely by the law of the Member State in which that lawsuit is

pending."

167. When interpreting Article 15 of the EU Insolvency Regulation, the Austrian Supreme

Court held that Austrian law applied to all proceedings pending in Austria brought by

a claimant for remuneration under a contract of work against a respondent in respect of

which insolvency proceedings were subsequently opened in Italy86. This decision

deals with Italian bankruptcy proceedings and not concordato preventivo proceedings,

however, as concordato preventivo proceedings are subject to the EU Insolvency

Regulation just like the Italian bankruptcy proceedings, the Austrian Supreme Court

conclusion also applies to condordato preventivo proceedings.

168. On the basis of such broad interpretation of Article 15, this Arbitration regards a

lawsuit concerning assets or rights of which Respondent has been divested within the

meaning of Article 15 of the EU Insolvency Regulation. Therefore, the effects of the

CP procedure opened in Italy on the Arbitration pending in Austria are to be governed

by the laws of Austria. Also, Claimant's analysis based on the Recast Insolvency

Regulation has to be rejected.

(iii) Austrian law

169. The equivalent or most similar insolvency proceeding to concordato preventivo

recognized by Austrian law is the "Sanierungsverfahren mit Eigenverwaltung" (in

English: reorganization proceedings with self-administration).

86 "All procedures concerning in particular assets in bankruptcy[. .. } and claims of creditors in bankruptcy[ .. } are

considered as proceedings [. .. ]. The effects of the insolvency of the petitioner on the objective legal case are

determined exclusively in according to lex fori processus, therefore Austrian law." In the decision of the Austrian

Supreme Court (OGH) dated January 24, 2006, no. 10 Ob 80/05w.

43

170. In this respect, the Austrian Insolvency Code87 does not indicate that a request for

opening or an actual opening of the reorganization proceedings with self

administration renders an arbitration agreement invalid, unenforceable, inoperable,

terminated or otherwise ineffective.

171. To the contrary, the Austrian Insolvency Code provides (i) that if the court opens the

reorganization proceedings with self-administration, the debtor retains the right to

make dispositions with respect to the insolvency estate, but is supervised by a court

appointed reorganization administrator,88 (ii) that under the reorganization proceedings

with self-administration, the debtor does not lose control over the assets to an

insolvency administrator, allowing the debtor to retain control over its business and,

also, the proceedings themselves, 89 and (iii) for "litigation authority'' (in German:

Prozessfohrungsbefognis) as follows: "The debtor shall be entitled to engage in

litigation and other proceedings in the matters of self-administration."90 The Austrian

Insolvency Code does not provide that the reorganization administrator must be joined

into a pending court or arbitration proceedings.

172. From the procedural point of view, pursuant to Articles 7(1)(2) of the Austrian

Insolvency Code91 - which is generally applicable to all proceedings within the scope

of the Austrian Insolvency Code - "[a} ll pending litigation in which the debtor is the

claimant or respondent, [. . .} shall be stayed upon the opening of the insolvency

proceedings. [. . .} The proceeding may be initiated by the insolvency receiver, the

debtor's eo-litigants, and by the opposing party." Arguably, this provision applies not

only to court litigation, but also to arbitration proceedings and that, therefore, an

arbitration pending in Austria is automatically stayed until it recommences upon,

among other things, a claimant's motion.

173. On the basis of the above, the Austrian Insolvency Code is unequivocal in that the

Arbitration Agreement is not adversely affected and that Respondent is to be treated as

87 Insolvenzordnung StF: RGBI. Nr. 33711914.

88 Article 169 of the Austrian Insolvency Code.



44

maintaining its legal capacity to act in arbitration proceedings even when undergoing

the reorganization proceedings.

174. Also, the Arbitration was automatically stayed as of the date of the opening of the

concordato preventivo proceedings i.e., on December 22, 2016 until the Claimant's

first motion seeking the continuance of the proceedings. Claimant has several times

insisted and continuingly acted so that this Arbitration continues. 92 In this respect, the

Arbitral Tribunal concludes that the Claimant's first motion proposing that the

Arbitration is to continue since the date of the opening of the concordato preventivo

proceedings was made on December 22, 2016 when the Claimant, as evidenced by the

"Minutes", without any reservation actively participated in the First Case Management

Conference Call and, among other things, addressed the contents of the draft Terms of

Reference, Procedural Order No. 2 (on Conduct of Arbitration), and Procedural Time

Table with a view of submitting its statement of claim within 30 days from the date of

the Terms of Reference. The Arbitral Tribunal also notes that Claimant made such

motion also on January 9, 2017 when the Arbitral Tribunal received Claimant's letter

in which Claimant, among other things, "accepted" the draft Procedural Order No. 2.

175. Accordingly, the Arbitral Tribunal finds that under Austrian law, Respondent's

Request for Admission and the actual admission into the CP procedure does not

prevent the Arbitral Tribunal from continuing to decide on the pending dispute and

rendering the final award, and that it is entitled to hear and decide on Claimant's

claim, regardless of Respondent's and the Judicial Commissioner's non-participation

in this Arbitration, under both Italian and Austrian law.

176. On this basis, the Arbitral Tribunal rules that it has jurisdiction to hear the present case

and render a fmal award.

B. LAW APPLICABLE TO MERITS

177. The Arbitral Tribunal reserved its decision on law applicable to the merits of the

dispute, until this fmal award on merits.93 In this respect, Article 21 of the ICC Rules,

provides that:

92 E.g., Full Statement of Claim, p. 2, and Supplement to the Full Statement of Claim, 2"d page.

93 See paragraph 28 of the Terms of Reference and Procedural Order No. 2, para. 31.

45

"The parties shall be free to agree upon the rules of law to be applied by the arbitral tribunal to the merits of the dispute. In the absence of any such agreement, the arbitral tribunal shall apply the rules of law which it determines to be appropriate"

178. Article 21 of the ICC Rules provides considerable flexibility in this regard, requiring

only that the arbitral tribunal applies the rules of law which it determines to be

appropriate. This provision relieves arbitral tribunals of the need to apply the formal

conflict-of-law rules.94

179. The present dispute arose between a Russian company (Claimant) and an Italian

company (Respondent). Under the Contract, Respondent has committed to sell and

Claimant has committed to buy the agricultural equipment and spare parts subject to

the delivery conditions "FCA"95 San Secondo, Italy.96

180. It is well-recognized that contracts on the sale of goods are typically governed by the

law of the seller. In fact, the ICC arbitral tribunals often consider the law of the seller's

place of business as being most closely connected to the contract unless there are

indicators to the contrary.97

181. This general maxim is reflected in vanous legal instruments such as the Rome I.

94

95

96

97

98

99

Regulation98 and the Hague Convention on the Law Applicable to Contracts for the

International Sale of Goods.99

Fry/Greenberg/Mazza: The Secretariat's Guide to !CC Arbitration. A Practical Commentary on the 2012 !CC

Rules of Arbitration from the Secretariat of the !CC International Court of Arbitration, (Paris, International

Chamber of Commerce, 2012), para. 3-756.

Free Carrier (FCA)- Incoterms 2010 Rules.

Article 1.1 of the Contract.

Fry/Greenberg/Mazza: The Secretariat's Guide to !CC Arbitration. A Practical Commentary on the 2012 !CC

Rules of Arbitration from the Secretariat of the !CC International Court of Arbitration, (Paris, International

Chamber of Commerce, 2012), para. 3-757.

Article 4(l)(a) of the Rome L Regulation provides that "a contract for the sale of goods shall be governed by the

law of the country where the seller has his habitual residence."

Article 8 of the Hague Convention on the Law Applicable to Contracts for the International Sale of Goods provides

that"[. . .} the contract is governed by the law of the State where the seller has his place of business at the time of

conclusion of the contract."

46

182. Also, Article 1211(1) of the Civil Code of the Russian Federation100 and Article

1211(2) of the Civil Code of the Russian Federation101 provides that a party with

decisive importance for the content of a sale contract is the seller.

183. The Arbitral Tribunal notes that (i) Respondent, as the seller, has its place of business

in Italy, (ii) Respondent was required to effect the decisive performance of the

Contract, i.e. the supply of agricultural equipment and spare parts, (iii) Claimant

agrees that the Italian law should be the law applicable to the present dispute, and

(iv) nothing in the submitted documents in this Arbitration suggests that the Parties

would have expected, at the time of conclusion of the Contract, a different law to

apply.

184. After giving due regard to all relevant circumstances, such as those mentioned above,

the Arbitral Tribunal (as also suggested by Claimant) deems the application of Italian

law as the substantive law applicable to the merits of this Arbitration to be reasonable

and, therefore, determines that Italian law is the law applicable to the merits of this

Arbitration.

C. MERITS

(1) Established facts

185. The Arbitral Tribunal will now address the merits of this Arbitration, including

whether Respondent breached the Contract, and if yes, what are the consequences of

such breach under the applicable law.102

186. The evidence on record shows the following:

187. Claimant and Respondent entered into the Contract on February 24, 2015. Under the

Contract, Claimant was to pay to Respondent the Contract price in six monthly

installments due on February 26, March 18, April3, May 8, June 5, and July 3, 2015.

100 Exhibit CL-2.

101 Exhibit CL-2.

102 See paragraph 24(b) of the Terms of Reference.

47

188. Under the Contract, the Parties were to specify the goods in Specifications Nos. 1 to 3.

Respondent was to ship goods under those Specifications in three deliveries - by April

15, June 1, and July 1, 2015.

189. By means of the Additional Agreement No. 1 and Additional Agreement No. 2, the

Parties amended the above payment due dates and shipment dates. In particular, the

due date of (i) the first installment was set to 60 banking days from February 26, 2015,

(ii) the second installment to March 25, 2015, and (iii) the third installment to May 20,

2015.

190. As evidenced by Exhibits C-14 and C-17, Claimant timely paid the first three

installments in the total amount of BUR 305,584.60.

191. On April 7, 2015, the Parties agreed on the Specification No. 1, which specified

certain goods in the value of BUR 103,094.60. Respondent delivered these goods to

Claimant on Aprill8, 2015.

192. Thereafter, on May 20, 2015, the Parties agreed on the Specification No. 2 and

Specification No. 3, which specified certain goods in the value of BUR 300,102.40

and BUR 202,387.60, respectively.

193. On June 22, 2015, the Parties significantly extended the due dates of the last three

installments in the total value of BUR 300,584.60 as well as the delivery dates of

goods specified in Specifications No. 2 and No. 3. In particular, the Parties set the due

date of all three installments to April 30, 2016 and the fmal delivery dates of the goods

under Specifications No. 2 and No. 3 to June 22, 2016.

194. Also, in October 2015, in the Reconciliation Statement the Parties confirmed the

balance of their "mutual accounts according to the Contract."103 The Reconciliation

Statement shows that as of October 1, 2015 the amount of balance was BUR

202,490.00 for Claimant.

195. The evidence on record does not show that Claimant paid the BUR 300,584.60

instalment to Respondent.

103 Exhibit C-17.

48

196. In June 2016, the Parties discussed Respondent's obligation to deliver the goods and

Respondent conditionally promised to deliver the goods under the Contract. 104 In

particular, Respondent promised to deliver the goods to Claimant provided that the

Parties would agree on increasing the "contract value".

197. By letter dated June 21, 2016 -i.e., one day before the fmal delivery date of goods

under Specifications No. 2 and No. 3 - Claimant informed Respondent that

Respondent failed to timely deliver to Claimant the goods under Specifications 2 and 3

and that on June 15, 2016 Claimant learned of Respondent's filing for the admission

for the CP procedure.

198. In the above letter, Claimant had not asked for the delivery of the goods under

Specifications No. 2 and No. 3, but argued that Respondent owes it EUR 202,490.00.

Claimant requested that Respondents pay this amount by the end of June 2016.

Claimant argued that if Respondent fails to pay, the Contract will be automatically

terminated in its still unperformed part on July 1, 2016.

(2) Request and its basis

199. In this Arbitration, Claimant refers to Article 8 of the Contract1 05 and Articles 13 72,

1373, 1375, 1453, 1454, and 2697 of the Italian Civil Code and requests that the

Arbitral Tribunal (i) terminate the Contract in its unexecuted part on the basis of

Article 1453 of the Italian Civil Code and (ii) oblige Respondent to pay Claimant "the

prepayment for undelivered goods" in the amount of202,490.00.

(3) Analysis and conclusion

200. The Arbitral Tribunal relied on the Parties' submissions and applied the iura novit

curia principle strictly within the scope of their submissions.

201. Pursuant to Article 1375 of the Italian Civil Code, the Contract has to be executed in

accordance with good faith.

104 Exhibit C-11.

105 Article 9 of the Russian version of the Contract, Exhibit C-1.

49

202. Pursuant to Article 1372 of the Italian Civil Code, the Contract has a "force of law

between the parties" and "cannot be dissolved except for mutual consent or for a

cause permitted by law."

203. A party can unilateraly terminate a contract governed by the Italian Civil Code by a

withdrawal (in Italian: recesso unilaterale). Pursuant to Article 1373 of the Italian

Civil Code, a party can exercise this withdrawal right if the parties agreed that a party

would have such right.

204. Also, a party can ask a court to terminate a contract governed by the Italian Civil Code

for a breach of contract (in Italian: risoluzione del contralto per impedimenta).

Pursuant to Article 1453 of the Italian Civil Code, a party can exercise this right if the

contract provides for a mutual counter-performance and one of the parties fails to

perform its obligation. This article also provides that a party can demand either

performance or termination, that a right to claim damages remains unaffected, and that

the other party can no longer perform its contractual obligation after receiving the

court action on termination.

205. Article 1454 of the Italian Civil Code provides that a party can serve a termination

notice to the breaching party and provide for an adequate additional period for

performance, wherefore the contract will be terminated upon the expiry of this period

"by operation of law."

206. Pursuant to Article 2697 of the Italian Civil Code, a party asserting certain rights in

judicial proceedings must prove the underlying facts. The party asserting invalidity of

such facts or claiming that such right has been modified or extinguished, must prove

the facts underlying such defense.

207. Article 8 of the Contract106 provides that "[t}he unilateral termination ofthe Contract

is not allowed."

208. The Arbitral Tribunal understands Claimant to propose that Article 8 prevents each

Party from unilateraly terminating the Contract by restoring to a "withdrawal" under

Article 1373 of the Italian Civil Code, but that Article 8 does not exclude the Arbitral

106 Article 9 of the Russian version of the Contract, Exhibit C-1.

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Tribunal's power to terminate the Contract on the basis of Article 1453 of the Italian

Civil Code. 107

209. The Arbitral Tribunal agrees with this proposition from Claimant. First, Article 1453

of the Italian Civil Code applies to contracts that provide for mutual counter

performance. As the Contract provides for the obligation of Claimant to pay the price

and the obligation of Respondent to deliver the goods, the Contract clearly falls within

the scope of Article 1453.

210. Second, Article 1453 of the Italian Civil Code, unlike Article 1373, does not provide

for a unilateral termination of a contract by a party, but rather entitles a party to ask the

court to "constitutively" terminate the contract. Therefore, Article 8 cannot be viewed

as eliminating a Party's right to apply to the Arbitral Tribunal for termination of the

Contract.

211. In accordance with Article 1453 of the Italian Civil Code, the Arbitral Tribunal is to

terminate the Contract if Respondent breached the Contract.

212. The Arbitral Tribunal understands Claimant to argue that Respondent breached the

Contract by (i) not delivering the goods under Specifications No. 2 and No. 3 by June

22, 2016, (ii) applying for a CP procedure "in secrecy, without prior notification to

[Respondent]", and/or (iii) failing to pay to Claimant EUR 202,490.00 after receiving

the Claimant's Pre-arbitration Notice.

213. The Arbitral Tribunal addresses these argued breaches in turn below.

214. As to the Claimant's first argument, the Arbitral Tribunal considers it proven that no

delivery of the goods under Specifications No. 2 and No. 3 took place by June 22,

2016. Such fact in itself means that Respondent breached the Contract in this respect.

It is true that one day before June 22, 2016 Claimant requested that Respondent return

the EUR 202,490.00 prepayment. This unilateral request, however, could not change

the contents of the Contract that has the "force of law" between the Parties and in

particular Respondent's obligation to deliver the goods.

107 "[ .. .]does not permit its unilateral termination[. .. ] appeals to the Court to terminate the contract[. . .]", p. 2 of

Full Statement of Claim.

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215. Despite having ample opportunity, Respondent has not proposed any argumentation or

evidence to substantiate reasons for not delivering the goods under Specifications No.

2 and No. 3 to Claimant. From the applicable law point of view, Respondent is to

present its defense and bear the burden of proof for the justification of its actions and

the Arbitral Tribunal cannot spontaneously speculate about Respondent's prospective

defense and justification. Also, from the evidentiary point of view, the Arbitral

Tribunal fmds no conclusive evidence that would provide justifiable reasons for which

Respondent has not delivered the goods Specifications 2 and 3 to Claimant.

216. On this basis, the Arbitral Tribunal considers the present situation a breach of

Respondent's obligation to deliver the goods under Specification No. 2 and No. 3 to

Claimant by June 22,2016.

217. As to the Claimant's second argument, the Arbitral Tribunal does not find the

Claimant's argumentation as persuasive. The Contract does not provide an explicit

provision obliging Respondent to notify Claimant of its filing for a CP procedure. The

Arbitral Tribunal also does not believe that the Italian Civil Code's requirement that

Respondent excercises its obligations under the Contract in good faith would oblige

Respondent to notify Claimant of filing for a CP procedure. It does not appear such

general requirement under the Italian Civil Code would substitute the Contract's

provisions in such a way so as to impose an obligation on Respondent.

218. As to the Claimant's third argument, such argument is rejected. The Contract does not

provide Claimant with a right to seek the return of its prepayment. Hence, Claimant

cannot legitimately seek such repayment simply because it has doubts as to whether

Respondent will perform its obligation to deliver the goods. The Contract neither

provides Claimant with a right to unilateraly alter the Contract's provisions or

unilateraly terminate the Contract for the Respondent's actual or suspected future

failure to perform. Therefore, Respondent could not be obliged to return the pre

payment on the basis of a Claimant's letter, be it the Pre-arbitration Notice or any

other letter.

219. As the Arbitral Tribunal fmds that Respondent breached the Contract, it must

terminate the Contract under Article 1453 of the Italian Civil Code as requested by

Claimant and the effects of such termination will apply.

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220. In essence, Claimant requests that the Contract be terminated in its unexecuted part. In

general, a court's power to partially terminate a contract for continuing or periodical

performance, including also a contract consisting of several deliveries which leaves

the already consumed part of the contract unaffected, is well recognized under Italian

Civil Code, in particular by its Article 1453 in connection with Article 1458(1)108 and

applicable case law.109 Also, as a natural consequence of a contract's termination

pursuant to Article 1453 of the Italian Civil Code, if a party paid a portion of a price

for goods, the delivery obligation of which has been terminated, the party receiving

such payment has to return it to the other party. 110

221. On this basis, the Arbitral Tribunal is empowered by the Italian Civil Code to partially

terminate the Contract as requested by Claimant with the effect rendering the part of

the Contract providing for the delivery of the goods under Specification No. 1 and the

respective payment in the amount of EUR 103,094.60 unaffected and obliging

Respondent to return the already received pre-payment in the amount of EUR

202,490.00 for the terminated delivery.

Xlli. DECISION ON COSTS OF ARBITRATION

222. General principle. Pursuant to Article 37(1) of the ICC Rules, "[tjhe costs of the

arbitration shall include the fees and expenses of the arbitrators and the !CC

administrative expenses fixed by the Court, in accordance with the scale in force at the

time of the commencement of the arbitration, 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 for the arbitration."

223. Claimant's costs. In its statement of costs dated August 17, 2017, Claimant submitted

the following summary of its costs in the Arbitration and supported them with

evidence:

108

109

110

(i) Legal fees: EUR 3,781.21;

"Termination of a contract for non-peiformance has retroactive effect as between the parties, except in case of

contracts for continuous of periodic peiformance, with respect to which the effect of the termination does not affect

the peiformance already made."

E.g., Supreme Court no. 23657/2004, Supreme Court no. 10700/2005.

See, e.g., Gazzoni: Manualle di Diritto Privata, Xlll Edizione aggiomata, 2007, p. 1034.

53

(ii) Translation and other administrative costs: BUR 1,356.59; and

(iii) ICC Court related costs and expenses: BUR 30,700.00 (i.e., filing fee of BUR

2,712.00 +provisional advance on costs BUR 9,288.00 +BUR 3,350.00 towards

the advance on costs + BUR 15,350.00 as a substitution for the Respondent's

share of the advance on costs).

224. Respondent's costs. Despite having been invited by the Arbitral Tribunal, Respondent

neither submitted its own statement of costs, nor provided comments to the Claimant's

Statement of Costs.

225. Decision on costs. Pursuant to Article 37(4) ofthe ICC Rules, "[t]hefinal award shall

fix the costs of the arbitration and decide which of the parties shall bear them or in

what proportion they shall be borne by the parties."

226. Pursuant to Article 37(5) of the ICC Rules, "[i}n making decisions as to costs, the

arbitral tribunal may take into account such circumstances as it considers relevant,

including the extent to which each party has conducted the arbitration in an

expeditious and cost-effective manner." The Arbitral Tribunal enjoys discretion in

allocating the costs of arbitration.

227. The Arbitral Tribunal considers as appropriate to apply the "costs follow the event

principle", under which the unsuccessful party covers the costs of the prevailing party.

As Claimant was fully successful with its claim on the merits in this Arbitration, the

Arbitral Tribunal deems it appropriate that Respondent bear all reasonable costs of this

Arbitration and reimburse Claimant for all such costs.

228. The Arbitral Tribunal consequently decides that Respondent should bear in full the

costs of arbitration fixed by the ICC Court at its session of November 9, 2017 at BUR

30,700 (this amount includes fees and expenses of the Arbitral Tribunal and the ICC

administrative expenses). Taking into account the nominal value of the Claimant's

claim on the merits in this Arbitration, the Arbitral Tribunal also considers the

Claimant's legal, translation and other administrative costs in the amount EUR

5,137.80 as reasonable and justified.

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XIV. DISPOSITIVE SECTION

229. In consideration of the above, the Arbitral Tribunal renders the following

AWARD:

1. The Arbitral Tribunal has jurisdiction to hear and decide on the present ICC case

no. 22125/MHM between limited liability company DON-BALT PLUS

(Claimant) and SP APPERI S.R.L. (Respondent).

2. The Contract No. DB-SP-2015 dated February 24, 2015 between Claimant and

Respondent is terminated in its unexecuted part. The executed part of the

Contract providing for the delivery of the goods under Specification 1 and the

respective payment ofEUR 103,094.60 is unaffected.

3. Respondent is ordered to pay to Claimant the prepayment for undelivered goods

in the amount ofEUR 202,490.00.

4. Respondent is ordered to pay to Claimant for costs incurred in connection with

the present ICC case no. 22125/MHM

EUR 30,700.00 towards the costs of arbitration fixed by the ICC Court; and

EUR 5,137.80 for Claimant's legal and other costs.

5. All other requests and claims of the Parties are dismissed.

Place of Arbitration: Vienna, Austria

Date: November 20, 2017

Roman Prekop, the Sole Arbitrator

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