V ICC LEX MERCATORIA INTERNATIONAL COMMERCIAL …

ORGANIZED BY:

V ICC LEX MERCATORIA

INTERNATIONAL COMMERCIAL ARBITRATION MOOT

ENGLISH CHAPTER

CASE PROBLEM

2016

2

UNDER THE ARBITRATION PROCEEDINGS

IN ACCORDANCE WITH THE 2012 RULES OF ARBITRATION OF

THE INTERNATIONAL CHAMBER OF COMMERCE (PARIS)

REQUEST FOR ARBITRATION

1 May 2016

Claimant:

MM LuxYachts Ltd.

2067-N, Zapadstan, Bornshtolm,

Redwoody street 77, bldg. 54

Claimant's Counsel:

Zagrebelsky & Partners

4763-S, Zapadstan, Bornshtolm,

Swift street 63, bldg. 2, business center "White Tower"

Respondent

JSC Trust Me Bank

568392, Centrostan, Centrinsk,

Lengthy street 43, bldg. 5

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1. MM LuxYachts Ltd. (the "Claimant", "Seller") files the present Request for Arbitration

(the "Request") against JSC Trust Me Bank (the "Respondent") pursuant to Article 4(1) of the 2012

Rules of International Arbitration of the International Chamber of Commerce (the "2012 ICC Rules").

2. The Claimant and the Respondent shall be jointly referred to as the Parties.

3. The Claimant reserves its right to amend its position and claims against the Respondent to any extent at

any further stage of the proceedings.

I. FACTUAL CIRCUMSTANCES

2.1. The Parties Involved

2.1.1. The Claimant

4. The Claimant is a company established under the laws of the State Zapadstan with the following

registered address:



5. The Claimant's business is concentrated on the yacht design, construction and delivery since the 1930's

when the company was organized by Mr. Howard Schmidt.

6. As of the present date the Claimant is managed by his son - Mr. Stewart Schmidt - who also acts as the

Claimant's Executive Chief for the last 20 years.

7. The Claimant has also acted as a Seller under the Shipbuilding Contract (as defined infra para. 16) made

with Magnifestum Ltd. (the "Buyer") on 23 February 2015.

8. The Claimant is represented in this arbitration by:

John Zagrebelsky




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2.1.2. The Respondent

9. The Respondent is a commercial bank established under the laws of the State Centrostan with the bank

license No. 450-NN issued on 24 April 2009 and with the following registered address:



10. The Respondent's bank license permits to effect any loan and payment guarantee activities in Centrostan

and internationally.

11. According to the media, for the last 7 years the Respondent has been acting as the Buyer's bank.

2.1.3. The Buyer

12. The Buyer under the Shipbuilding Contract (as defined in para. 16 below) - Magnifestum Ltd. - is a

company owned by the Centrostan individual Ivan Aivazov, who also acts as its President, established

and functioning under the laws of Centrostan with the following registered address:


Lengthy street 21, bldg. 9, office center "Icarus"

13. The Buyer serves as an investment vehicle of Mr. Aivazov, who is named as No. 17 in Centrostan Forbes

list.

2.2. The Shipbuilding Contract and L/C

14. On occasion of the 30th birthday of his fourth wife, Ilona, on 1 February 2015, Mr. Aivazov has

announced a tender for construction of luxury yacht, to be named "Queen Ilona" (the "Yacht").1

15. The project provided that the yacht cabin should be plenteously encrusted with the carpeting, redwood,

gilding, electronics and decorated with art objects. Additionally, a big room with special temperature and

humidity control was reserved for storage of Ilona's natural fur coats, exclusive models of top branded

dresses and shoes.

16. As a result of the tender, where several yacht manufacturers participated, on 23 February 2015, the

Claimant and the Buyer entered into Shipbuilding Contract No. 765-U providing the construction,

exclusive design and delivery of 49.8 meters long luxury motor yacht (the "Shipbuilding Contract").2

1 Exhibit C-1. Yacht News Article on the announcement of tender of 1 February 2015.

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17. The final price for the Yacht was fixed at the amount of USD 22 000 000.3

18. The Yacht was to be constructed, delivered to the Seller's port in Zapadstan, Shtockhold, and accepted by

the Buyer not later than on 24 February 2016.4

19. Payment provisions of the Shipbuilding Contract provided that 50% of the price should be paid not later

than by 1 March 2015, 50% - by the irrevocable letter of credit (the "L/C") issued by the Buyer's bank,

i.e. the Respondent or the Issuing Bank, upon presentation of:5

a. The notarized copy of the Shipbuilding Contract;

b. The Claimant's Invoice;

c. The Certificate of Quality of the Yacht;

d. The Certificate of Origin of the Yacht; and

e. The Act of Acceptance (the "Acceptance Act").

20. The L/C was to be opened by the Respondent within 14 calendar days from the date of signing the

Shipbuilding Contract.6

21. On 5 March 2015, the Respondent notified the Claimant's corresponding bank that it has opened the L/C

under the instruction of the Buyer for the amount of USD 11 000 000 pursuant to the provisions of

Uniform Customs and Practice for Documentary Credit, 2007 revision, Publication No. 600 of the ICC,

Paris ("UCP 600").7

22. One year later the Yacht was constructed and prepared for launching.

2.3. Yacht's Acceptance

23. On 23 February 2016, at the Seller's port in Zapadstan, Shtockhold, the Yacht was taken by Mr. Aivazov

and his crew at the official ceremony with the representatives of the Parties.

2 Exhibit C-2. The Shipbuilding Contract No. 765-U of 23 February 2015. 3 Exhibit C-2. The Shipbuilding Contract No. 765-U of 23 February 2015, Clause 1.1.1. 4 Exhibit C-2. The Shipbuilding Contract No. 765-U of 23 February 2015. Clause 2.3.1(b). 5 Exhibit C-2. The Shipbuilding Contract No. 765-U of 23 February 2015. Clause 2.3.1(b). 6 Exhibit C-2. The Shipbuilding Contract No. 765-U of 23 February 2015, Clause 2.3.1(b). 7 Exhibit C-3. The L/C of 5 March 2015.

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24. Ms. Ilona Aivazova arrived one week before the official ceremony, and personally supervised the heavy

work related to reloading of the truck with her armoire and famous paintings to be placed on the walls of

the main room in the Yacht.

25. On 24 February 2016, the representatives of the Claimant and Buyer signed the Acceptance Act of

the Yacht.8

2.4. Claimant's Request for Payment under the L/C and Ungrounded Respondent's Refusal

26. On 7 March 2016, the Claimant made a presentation to the Respondent under the L/C and requested to

effect payment of the remaining 50% of the purchase price of the Yacht.9

27. The Respondent immediately informed the Buyer of that fact, provided it with the copies of the received

documents and stated that it was planning to effect payment of the credit under the L/C within the next

3 days.10

28. On 8 March 2016, the Buyer objected to it and stated that the payment of credit should not be made for

the following reasons:11

a. Mr. Aivasov had not signed the Acceptance Act. The signature of Mr. Aivazov on the Acceptance

Act did not belong to him;

b. The Seller did not present the "National Passenger Ship Safety Certificate" (the "Ship Safety

Certificate"), i.e. the document issued by the Centrostan Maritime Register, that "Queen Ilona" is

certified for use in Centrostan.

29. Finally, the Claimant allegedly owed a significant amount to the Buyer due to the defects of the Yacht

and the Buyer allegedly set-off this amount to the remaining 50% of the purchase price of the Yacht.

30. On 10 March 2016, the Respondent refused to effect payment of the credit under the L/C to the

Claimant.12

31. The Respondent justified his refusal as a result of the analysis of the Buyer's signature on the Acceptance

Act.

8 Exhibit C-4. Act of Acceptance of the Yacht of 24 February 2016. 9 Exhibit C-5. Claimant's letter to the Respondent of 7 March 2016. Exhibit C-6. Claimant's Invoice No. 001243 issued under the

Shipbuilding Contract. Exhibit C-7. Certificate of Quality of the Yacht of 30 January 2016. Exhibit C-8. Certificate of Origin of the

Yacht of 2 February 2016. Exhibit C-4. Act of Acceptance of the Yacht of 24 February 2016. 10 Exhibit C-9. Respondent's letter to the Buyer of 7 March 2016. 11 Exhibit C-10. Buyer's letter to the Respondent of 8 March 2016. 12 Exhibit C-11. Respondent's letter to the Claimant of 10 March 2016.

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32. The Respondent also stated that the "Ship Safety Certificate " was not presented.

33. Thus, as of the present date the Respondent still failed to effect to the Claimant payment of the remaining

50% of the purchase price of the Yacht from the L/C.

II. LEGAL GROUNDS

3.1. There Was No Obligation of The Claimant to Provide a Ship Safety Certificate to

the Respondent

34. Notwithstanding the Buyer's claims, the Claimant was not obliged to present any Ship Safety Certificate

as a part of its presentation to the Respondent under the L/C for obtaining the payment.

35. Under Clause 2.3.1 of the Shipbuilding Contract:13

"The Buyer hereby guarantees that USD 11 000 000 will be paid by the irrevocable letter of credit

to be issued by JSC TRUST ME BANK (the "Issuing Bank") within 14 calendar days of the date of

signing of the present Contract. Payment under such Letter of Credit shall be made upon

presentation of the following documents:

a. A notarized copy of Shipbuilding Contract No. 765-U of 23.02.2015;

b. Invoice of the Builder;

c. Certificate of quality of the yacht;

d. Certificate of origin of the yacht;

e. Act of acceptance of the yacht."

36. As per Article 10 of the L/C:14

"THIS LETTER OF CREDIT IS ISSUED WITHOUT PREJUDICE TO THE SHIPBUILDING

CONTRACT NO. 765-U OF 23.02.2015, WHICH SHALL HAVE A FULL EFFECT WITH

REGARD TO THE TERMS OF THIS LETTER OF CREDIT."

13 Exhibit C-2. The Shipbuilding Contract No. 765-U of 23 February 2015, Clause 2.3.1(b). 14 Exhibit C-3. The L/C of 5 March 2015, Article 10.

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37. Thus, as there was no contractual obligation of the Claimant regarding presentation of the Ship Safety

Certificate to the Respondent in order to obtain payment under the L/C, the Respondent should have

effected payment amounting to USD 11 000 000 to the Claimant.

38. Additionally, the Claimant in any case would be unable to obtain this document as it was not in the

possession of the Yacht "Queen Ilona" and in order to get such a certificate a physical inspection of the

Yacht should be done.

39. Finally, as Mr. Aivasov in fact uses the yacht in Centrostan, it proves that he has received the Ship Safety

Certificate.

40. Thus, there was no breach on the part of the Claimant and its request for payment under the L/C of

7 March 201615

has been legitimate and grounded.

3.2. The Claimant Has Presented to the Respondent the Acceptance Act Binding the Claimant and

the Buyer

41. The Claimant has complied with the requirements set out by the L/C for obtaining payment to be effected

by the Respondent.

42. As stated above, on 24 February 2016, Mr. Aivazov signed the Acceptance Act.16

43. The mere analysis of the Acceptance Act leads to a conclusion that the Buyer had intention to be bound

by it as its consent is confirmed by the signature of the Buyer's President, Ivan Aivasov, and the

corporate seal.

44. Thus, the Claimant, by presenting the Acceptance Act, has made a complying presentation to the

Respondent.

III. ARBITRATION AGREEMENT AND APPLICABLE RULES OF PROCEDURE

45. Article 10 of the L/C provides the following:17

15 Exhibit C-5. Claimant's letter to the Respondent of 7 March 2016. Exhibit C-6. Claimant's Invoice No. 001243 issued under the

Shipbuilding Contract. Exhibit C-7. Certificate of Quality of the Yacht of 30 January 201. Exhibit C-8. Certificate of Origin of the

Yacht of 2 February 2016. Exhibit C-4. Act of Acceptance of the Yacht of 24 February 2016. 16 Exhibit C-4. Act of Acceptance of the Yacht of 24 February 2016. 17 Exhibit C-3. The L/C of 5 March 2015.

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CONTRACT NO. 765-U OF 23.02.2015, WHICH SHALL HAVE A FULL EFFECT WITH

REGARD TO THE TERMS OF THIS LETTER OF CREDIT."

46. Under Clause 10.1.2 of the Shipbuilding Contract:18

"All disputes between the parties will be resolved by ICC arbitration in accordance with the best

principles of international trade law. The language of the arbitration shall be English. The place of

arbitration shall be Centrinsk, Centrostan."

47. As follows from the above, the L/C has incorporated the Arbitration Clause of the Shipbuilding Contract,

thus, the dispute between the Parties shall be resolved by the Arbitral Tribunal constituted under the 2012

ICC Rules.

IV. APPLICABLE SUBSTANTIVE LAW

48. As stated by Clause 10.1.2 of the Shipbuilding Contract:



arbitration shall be Centrinsk, Centrostan." [Claimant's emphasis]

V. CONSTITUTION OF THE ARBITRAL TRIBUNAL

49. The Arbitration Clause of the Shipbuilding Contract does not provide the number of arbitrators that are to

resolve this dispute.

50. As the 2012 ICC Rules are the applicable law of procedure, according to Article 12(2) of the 2012 ICC

Rules:

"Where the parties have not agreed upon the number of arbitrators, the Court shall appoint a sole

arbitrator, save where it appears to the Court that the dispute is such as to warrant the

appointment of three arbitrators."

51. The Claimant respectfully request the ICC Court of International Arbitration to follows its usual practice

in disputes of such value and complexity; accordingly the dispute shall be decided by the panel of three

arbitrators.

18 Exhibit C-2. The Shipbuilding Contract No. 765-U of 23 February 2015, Clause 10.1.2.

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VI. NOMINATION OF ARBITRATOR

52. The Claimant hereby nominates Mr. Ken Collins as its arbitrator in the present arbitration.

53. The contact details of Mr. Collins are as follows:

698752, Zapadstan, Bornshtolm,

Khundi Street, 45

[email protected]

VII. PRAYERS FOR RELIEF

54. The Claimant respectfully request the Arbitral Tribunal to issue an Award:

a. Ordering the Respondent to pay the Claimant damages amounting to USD 11 000 000;

b. Ordering the Respondent to pay the Claimant any interest accrued on the amount of damages stated

in sub-paragraph (a) above;

c. Ordering a post-award interest on the amount of damages claimed in sub-paragraph (a) above from

the date of the award till the date of payment;

d. Ordering the Respondent to pay the costs of these arbitration proceedings, including the costs of the

Arbitral Tribunal, legal and other costs incurred by the Claimant on a principle of full indemnity.

55. The Claimant also reserves the right to change and supplement its preliminary requests for relief at a later

stage.

Respectfully submitted,

John Zagrebelsky

Zagrebelsky & Partners, Partner

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LIST OF EXHIBITS

Exhibit C-1. Yacht News Article on the announcement of tender of 1 February 2015

Exhibit C-2. The Shipbuilding Contract No. 765-U of 23 February 2015

Exhibit C-3. The L/C of 5 March 2015

Exhibit C-4. Act of Acceptance of the Yacht of 24 February 2016

Exhibit C-5. Claimant's letter to the Respondent of 7 March 2016

Exhibit C-6. Claimant's Invoice No. 001243 issued under the Shipbuilding Contract of

23 February 2016

Exhibit C-7. Certificate of Quality of the Yacht of 30 January 2016

Exhibit C-8. Certificate of Origin of the Yacht of 2 February 2016

Exhibit C-9. Respondent's letter to the Buyer of 7 March 2016

Exhibit C-10. Buyer's letter to the Respondent of 8 March 2016

Exhibit C-11. Respondent's letter to the Claimant of 10 March 2016

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Exhibit C-1

YACHT News News for Yacht enthusiasts

Benedict Kumberbutch

01.02.15 - 14:44

On occasion of the 30th birthday of his 4th wife Ilona, on February 1st of this year Mr. Aivazov

announced a tender for construction of luxury yacht, to be named "Queen Ilona".

Yacht specifications are as follows:

1. Overall length should be 49.8 meters;

2. Deadweight shall be 3 250 tons;

3. The Yacht's average speed on sea trial undertaken in both directions over a measured distance,

with clean hull, in calm weather and sea not exceeding Beaufort 3 and 2 respectively and with

draft 4.5 m shall be at least 14.5 knots at 2x1500 (1600)kW, corresponding to 100% of max.

continuous power at approx. (2x1500) at 1200 revolutions per minute or (2x1600) at 1000

revolutions per minute.

All bidders interested in this tender please submit your proposals by 15 February 2015 to Magnifestum

Ltd. ([email protected]).

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Exhibit C-2

SHIPBUILDING CONTRACT No. 765-U

BETWEEN

MM LuxYachts Ltd. (AS "BUlLDER")

2067-N, Zapadstan, Bornshtolm, Redwoody street 77, bldg. 54

AND

Magnifestum Ltd. (AS "BUYER'')

578356, Centrostan, Centrinsk, Lengthy street 21, bldg. 9

23 February 2015

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ARTICLE 1. THE YACHT, DESCRIPTION AND CLASS

1.1. Description and Standard

1.1.1. The Yacht shall be built at the Builder's yard at Bornshtolm, Zapadstan, and be designed, constructed, equipped, completed and delivered by the Builder to the Seller's port in Zapadstan, Shtockhold, and accepted by the Buyer not later than on 24 February 2016.

1.1.2. In the event of inconsistency between this Shipbuilding Contract and the Specifications and/or the Drawings, this Shipbuilding Contract shall prevail. In the event of inconsistency between the Specifications and the Drawings, the Specifications shall prevail. In case of inconsistency between any of the Drawings, the later in date shall prevail.

1.1.3. The Yacht shall be designed and built in accordance with first class shipbuilding practice in Western Stromland for new yachts of similar type and characteristics as the Yacht, specifically encrusting with the carpeting, redwood, gilding, electronics and decoration with art objects should be effected by the Builder with the materials of the Buyer.

1.2. Main Dimensions and Characteristics:

a. Overall length: 49,8 m

[…]

b. Cargo capacity:

The Yacht's deadweight shall be 3250 tons (of 1000 kg each) on international summer freeboard, corresponding to a mean draft in saltwater (specific gravity 1.025) of 6,225 m. The specified deadweight shall include fuel, provisions, stores, freshwater, crew and passengers in addition to spare parts in excess of the requirements of Class.

c. Speed:

The Yacht's speed on a sea trial undertaken in both directions over a measured distance, with clean hull, in calm weather, wind and sea not exceeding Beaufort 3 and 2 respectively and with draft 4,5 m shall be at least 14,5 knots at 2x1500 (1600)kW, corresponding to 100 % of max. continuous power at approx. (2x1500) at 1200 revolutions per minute or (2x1600) at 1000 revolutions per minute.

ARTICLE 2. PRICE AND PAYMENT TERMS

2.1. Original Contract Price

The original contract price is USD 22 000 000.

2.2. Currency

All payments by the Buyer to the Builder under the Contract shall be made in USD.

2.3. Terms and Method of Payment

2.3.1. The Original Contract Price shall be paid as follows:

a. 1st Instalment:

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The sum of USD 11 000 000 - 50%

shall be paid upon the Builder's invoice not later than by 1 March 2015. The invoice shall be paid by the Buyer five (5) Banking Days after the receipt of the Builder's invoice according to the bank details stated in the invoice.

b. The Buyer hereby guarantees that USD 11 000 000 will be paid by the irrevocable letter of credit to be issued by JSC Trust Me Bank (the "Issuing Bank") within 14 working days of the date of signing of the present Contract. Payment under such Letter of Credit shall be made upon presentation of the following documents:

(i) Notarized copy of issued under Shipbuilding Contract No. 765-U of 23.02.2015;

(ii) Invoice of the Builder;

(iii) Certificate of quality of the yacht;

(iv) Certificate of origin of the yacht;

(v) Act of acceptance of the yacht.

The details of the Issuing Bank are as follows:

BIC 586327418

CORRESPONDENT ACCOUNT NO. 30101810400000000444 WITH GENERAL DEPARTMENT OF BANK OF CENTROSTAN



TEL.: +5 (888) 974 2515

2.3.2. The Builder may retain the Yacht until full payment has been made in accordance with the agreed payment terms. If the Builder is unable to present a final account at delivery, the Buyer may require the Yacht to be delivered in return for a bank guarantee or other security, satisfactory to the Builder, for the reasonably estimated balance owed to the Builder. Costs of such guarantee to be for Builder's account.

2.3.3. Failure by the Buyer to pay on time any part of the Contract Price shall entitle the Builder to charge interest at the rate of 3 months Libor plus 1,5% (percent) per annum thereon.

ARTICLE 3. APPROVAL OF PLANS AND DRAWINGS AND INSPECTION DURING CONSTRUCTION

3.1. Approval of Plans and Drawings

3.1.1. As soon as possible after the Date of Contract the Builder shall put forward a proposed detailed building schedule, including a schedule for testing. The Buyer shall make its comment on the schedule as soon as possible and at the latest within 7 days. The schedules shall be issued by the Builder in writing not later than 30 days after the Date of Contract.

3.1.2. The Buyer’s approval or non approval of drawings shall not affect any of the Builder’s obligations hereunder, including the Builder’s obligation to deliver the Yacht fully approved by

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the Regulatory Bodies, or the Builder’s responsibility hereof.

3.2. Appointment of Buyer's Representative

3.2.1. The Buyer may send to and maintain at the Builder’s yard, at the Buyer's own cost and expense, one or more representatives, of whom only one shall be duly authorised in writing by the Buyer (herein called the "Representative") to act on behalf of the Buyer in attending the tests and inspections relating to the Yacht, its machinery, equipment and outfitting, and in any other matters for which he is specifically authorised by the Buyer. Unless otherwise advised by the Buyer in writing, the Representative shall have no general authority to change the Contract or to approve plans and drawings. The Representative shall, however, be authorised to hut any and all approvals must be given by the Representative and be in writing.

[…]

3.3. Responsibility of Buyer

3.3.1. The Buyer shall undertake and assure that the Representative and his assistant(s) shall carry out their duties hereunder in accordance with normal shipbuilding practice and in such a way as to avoid any unnecessary increase in building cost, delay in the construction of the Yacht, and/or any disturbance to the construction schedule of the Builder.

[…]

ARTICLE 4. DELIVERY DATE AND DELIVERY

4.2. When and how effected

Provided that the Buyer has fulfilled all of its obligations under the Contract, delivery of the Yacht shall be effected forthwith upon acceptance thereof by the Buyer by the concurrent delivery by each of the parties hereto to the other of an Act of Acceptance signed by each party affixed by their corporate seals. Both parties have the right to make reservations or notes in the Protocol, or in a separate document signed by the parties "for acknowledgement of receipt only".

[…]

ARTICLE 5. WARRANTY OF QUALITY

5.1. Extent of Builder's responsibility

Save as provided for below, and provided always that the deficiencies have been rectified within a reasonable time, the Builder shall have no responsibility for defects or the consequences thereof (including loss of profit and loss of time) discovered after the Delivery and Acceptance of the Yacht.

5.2. Guarantee

5.2.1. The Builder undertakes to repair and rectify at its own cost and expense and free of charge to the Buyer, any defects - including latent defects or deficiencies - concerning the Yacht or parts thereof, which are caused by faulty design, defective material and/or poor workmanship on the part of the Builder, its servants, employees or Subcontractors, but excluding defects arising after delivery due to normal wear and tear or improper handling of the Yacht or caused or aggravated by omission or improper use or maintenance of the Yacht on the part of the Buyer, its servants and excluding Buyer's Supplies.

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5.2.2. The Builder's liability as stated herein shall terminate if the defects as aforesaid have not been discovered within the Guarantee Period of 12 months, or any longer period which is obtained from any of the subsuppliers of equipment to this Contract.

5.2.3. Any such defects shall he notified to the Builder as soon as possible after discovery, and at the latest within 8 days after expiry of the Guarantee Period. Such notice shall include particulars of the deficiency in such detail as can reasonably be expected.

5.2.4. If defects could only be discovered on dry docking the Yacht, notice of such defect(s) need not be tendered before the Yacht is in the dock, but must be tendered before the Yacht leaves the dry-dock.

5.3. Rectification of Defects

5.3.1. If the Builder is liable for defects as aforesaid, its obligations shall be as follows:

a. The Builder shall rectify the defect or cause the defect to be rectified at its own costs. Provided the defect is remedied within a reasonable time, the Builder shall have no other liability for any damage or loss caused as a consequence of the defect, except for repair or renewal of the Yacht's part/parts that have been damaged as a direct and immediate consequence of the defect without any intermediate cause, and provided such part or parts can be considered to form a part of the same equipment or same system. The Builder shall in any event not be liable for any consequential losses as stated herein over and above USD 1 000 000.

b. The repairs, replacements and/or rectifications shall be made at the Builder's yard.

5.3.2. However, the Buyer may, after having notified the Builder in writing, cause the necessary repairs, replacements and/or rectifications to be carried out elsewhere. In such case, the Builder shall at its own costs be entitled to forward necessary replacement parts or materials.

5.3.3. The Builder's liability shall in such case be limited to pay the cost of repairs including travelling and forwarding expenses (unless paid by Subcontractors), but limited to the price of the work which the Builder would normally charge at its yard.

5.3.4. In any case, the Builder shall co-operate with the Buyer to find proper solutions to rectify the deficiency.

a. The Yacht shall in any case be taken at the Buyer’s cost and expense to the place elected for repair and modification, ready for such repairs and modifications. Docking expenses and access works being necessary for performance of the guarantee work shall be for the Builder's account.

b. The Builder shall have the ownership of replaced parts. The Buyer will return such parts to the Builder at Builder's request and at Builder’s expense. If the Builder fails to present such request within a reasonable time, the Buyer has no responsibility for the replaced parts.

ARTICLE 6. TAXES AND DUTIES

6.1. Taxes and Duties in the country of the Builder

6.1.1. The Builder shall bear and pay all taxes and duties imposed in the country of the Builder in connection with the execution and/or performance of the Contract, excluding any taxes and duties imposed in the country of the Builder upon the Buyer's Supplies.

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6.2. Taxes and Duties outside the country of the Builder

6.2.1. The Buyer shall bear and pay all taxes and duties imposed outside the country of the Builder in connection with the execution and/or performance of the Contract, except for taxes and duties imposed upon those items to be procured by the Builder for construction of the Yacht.

[…]

ARTICLE 7. BUYER'S SUPPLIES

[…]

7.2. Responsibility of Builder

The Builder shall be responsible for storing and handling with due diligence the Buyer’s Supplies after delivery thereof at the Builder’s yard, and shall, at its own cost and expense, install them in or on the Yacht, unless otherwise provided herein or agreed by the parties hereto, provided, always, that the Builder shall not be responsible for the quality, efficiency and/or performance of any of the Buyer's Supplies.

ARTICLE 8. NOTICES

8.1. Address

Any and all notices and communications in connection with the Contract shall be addressed as follows:

To the Builder:



tel. +9 7654 89 34

fax +9 6754 87 35

e-mail: info@luxyachts@zs

To the Buyer:



tel. +4 7655 34 33

fax +4 4555 32 12

e-mail: [email protected]

8.2. Language

Any and all written notices and communications in connection with the Contract shall be in the English language.

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ARTICLE 9. ENTIRE CONTRACT

The Contract contains the entire contract and understanding between the parties hereto and supersedes all prior negotiations, representations, undertakings and agreements on any subject matter of the Contract.

ARTICLE 10. GOVERNING LAW AND ARBITRATION

10.1. Governing Law

10.1.1. The parties hereto agree that the validity and interpretation of the Contract and of each Article and part thereof shall be governed by the best principles of international trade law.

10.1.2. All disputes between the parties will be resolved by ICC arbitration in accordance with the best principles of international trade law. The language of the arbitration shall be English. The place of arbitration shall be Centrinsk, Centrostan.

________________________ MM LuxYachts Ltd. Name: Stuart Schmidt Position: Executive Chief

________________ Magnifestum Ltd. Name: I. Aivasov Position: President

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Exhibit C-3

--------------------------- Message Header ---------------------------------------

Swift Input : FIN 700 Issue of an Irrevocable Standby Credit of Credit

Sender : CSHURTUXXX

TRUST ME BANK (JOINT STOCK COMPANY)

CENTROSTAN ENG

Receiver : BZSTUXXX

--------------------------- Message Text -----------------------------------------

JSC TRUST ME BANK 568392, Centrostan, Centrinsk,


TEL.: +5 (888) 974 2515

+5 (888) 797 3160

SWIFT: XXUUIIFF

E-MAIL: [email protected]

Ref. No. 45/ZZ

5 March 2015

1. WE, JSC TRUST ME BANK ("ISSUING BANK"), HEREBY ISSUE OUR IRREVOCABLE STANDBY LETTER OF CREDIT NUMBER # 578932 BY ORDER AND FOR THE ACCOUNT OF MM LUXYACHTS

LTD. ("APPLICANT", "BENEFICIARY"), AVAILABLE FOR PAYMENT AT SIGHT FOR A MAXIMUM

AMOUNT OF U.S. DOLLARS $ 11 000 000 (THE "AGGREGATE AMOUNT") EFFECTIVE

IMMEDIATELY COMMENCING 6 MARCH 2015, AGAINST PRESENTATION OF:

1.1. A STATEMENT IN THE FORM OF ANNEX 1 SIGNED BY AN AUTHORIZED

REPRESENTATIVE OF BENEFICIARY.

1.2. A NOTARIZED COPY OF SHIPBUILDING CONTRACT NO. 765-U OF 23.02.2015.

1.3. INVOICE OF THE APPLICANT.

1.4. CERTIFICATE OF QUALITY OF THE YACHT ISSUED UNDER SHIPBUILDING CONTRACT

NO. 765-U OF 23.02.2015.

1.5. CERTIFICATE OF ORIGIN OF THE YACHT ISSUED UNDER SHIPBUILDING CONTRACT

NO. 765-U OF 23.02.2015.

1.6. ACT OF ACCEPTANCE OF THE YACHT CONSTRUCTED UNDER SHIPBUILDING CONTRACT

NO. 765-U OF 23.02.2015; AND

1.7. NATIONAL PASSENGER SHIP SAFETY CERTIFICATE OF THE YACHT CONSTRUCTED

UNDER SHIPBUILDING CONTRACT NO. 765-U OF 23.02.2015.

mailto:MAIL@CTBANK

21

2. THIS STANDBY LETTER OF CREDIT COVERS ALL PAYMENTS DUE BY MAGNIFESTUM LTD. UNDER SHIPBUILDING CONTRACT NO. 765-U OF 23.02.2015 BETWEEN THE APPLICANT AND

MAGNIFESTUM LTD.

3. SPECIAL CONDITIONS:

3.1. ALL BANKING CHARGES ARE FOR APPLICANT’S ACCOUNT.

3.2. SPELLING AND TYPOGRAPHICAL ERRORS ARE NOT TO BE CONSIDERED

DISCREPANCIES, EXCEPT FOR NUMBERS AND AMOUNTS.

3.3. DRAFTS EXCEEDING THE TOTAL AMOUNT OF THIS STANDBY LETTER OF CREDIT ARE

ACCEPTABLE, PROVIDED THAT THE ISSUING BANK'S LIABILITY SHALL NOT EXCEED

THE TOTAL AMOUNT PERMITTED BY THIS STANDBY LETTER OF CREDIT.

4. THIS STANDBY LETTER OF CREDIT EXPIRES AT 5:00 P.M., CENTRINSK TIME, ON 11 MARCH 2016 (THE “EXPIRATION DATE”) FOR THE PRESENTATION OF THE REQUIRED DOCUMENTS TO

US.

ISSUING BANK: JSC TRUST ME BANK, CENTRINSK

BIC 586327418

CORRESPONDENT ACCOUNT NO. 30101810400000000444 WITH GENERAL DEPARTMENT OF BANK

OF CENTROSTAN

BENEFICIARY: MM LUXYACHTS LTD.

2067-N, ZAPADSTAN, BORNSHTOLM,

REDWOODY STREET 77, BLDG. 54

BENEFICIARY'S BANK:

BANK OF ZAPADSTAN

2 KING LOVE STREET, BORNSHTOLM, ZAPADSTAN

SWIFT: BHFAGF22

ACCOUNT NO. 30118810700000000777 IN

BIC: 044525889

PAYMENT TYPE: 08

LETTER OF CREDIT TYPE: IRREVOCABLE, COVERED (DEPOSITED)

LETTER OF CREDIT EXPIRY DATE: 11 MARCH 2016

LETTER OF CREDIT PERFORMANCE METHOD: PAYMENT AGAINST PRESENTATION OF DOCUMENTS

5. PAYMENT PURPOSE (INCLUDING DESCRIPTION OF GOODS AND/OR WORK, SERVICES, CONTRACT NUMBER AND DATE):

PAYMENT FOR 50% (FIFTY PER CENT) OF THE PURCHASE PRICE OF THE MOTOR YACHT UNDER

SHIPBUILDING CONTRACT NO. 765-U OF 23.02.2015 BETWEEN MM LUXYACHTS LTD. AND

MAGNIFESTUM LTD.

VAT NOT INCLUDED.

6. ADDITIONAL TERMS AND CONDITIONS:

6.1. PARTIAL PAYMENT: NOT PERMITTED

22

6.2. PERFORMANCE OF THE LETTER OF CREDIT TO A THIRD PARTY: NOT PERMITTED

6.3. EXPENSES OF OTHER BANKS SHALL BE BORNE BY THE BENEFICIARY.

7. TERM OF PRESENTATION OF THE DOCUMENTS TO THE NOMINATED BANK:

WITHIN THE LETTER OF CREDIT EXPIRY DATE

8. EACH DEMAND UNDER THIS STANDBY LETTER OF CREDIT WILL BE HONORED WITHIN 3 DAYS FROM THE DATE OF RECEIPT OF SUCH DEMAND.

9. DEMANDS MAY BE PRESENTED TO THE ISSUING BANK IN PERSON, FACSIMILE, OR BY

COURIER. PRESENTATIONS OF DEMANDS BY FACSIMILE TRANSMISSION ARE PERMITTED TO

THE ISSUING BANK UPON REQUEST.

10. THIS LETTER OF CREDIT IS ISSUED WITHOUT PREJUDICE TO THE SHIPBUILDING

CONTRACT NO. 765-U OF 23.02.2015, WHICH SHALL HAVE A FULL EFFECT WITH REGARD TO

THE TERMS OF THIS LETTER OF CREDIT.

11. THIS STANDBY LETTER OF CREDIT IS SUBJECT TO THE UNIFORM CUSTOMS AND PRACTICE

FOR DOCUMENTARY CREDIT, 2007 REVISION, PUBLICATION NO. 600 OF THE INTERNATIONAL

CHAMBER OF COMMERCE, PARIS.

PLEASE DIRECT ANY CORRESPONDENCE INCLUDING DRAWING OR INQUIRY TO US AT JSC TRUST

ME BANK, 568392, CENTROSTAN, CENTRINSK, LENGTHY STREET 43, BLDG. 5

JSC TRUST ME BANK

HEAD OF DEPARTMENT OF DOCUMENTARY OPERATIONS

JOHN MALIGANN

23

ANNEX 1

DATE: [______]

JSC TRUST ME BANK

568392, CENTROSTAN, CENTRINSK,

LENGTHY STREET 43, BLDG. 5

RE: LETTER OF CREDIT NO. 578932 DATED 05 MARCH 2015

DEAR SIRS:

THIS IS A DEMAND FOR PAYMENT OF [ELEVEN MILLION] DOLLARS ($ 11 000 000) UNDER THE

ABOVE-REFERENCED STANDBY LETTER OF CREDIT. WE CERTIFY THAT AMOUNT DRAWN REPRESENTS

THE AMOUNT OR THE AGGREGATE OF THE AMOUNTS DUE TO US THAT WAS NOT PAID WHEN DUE

AND THAT REMAINS UNPAID AS OF THE DATE DRAWN.

PLEASE PAY THE AMOUNT DEMANDED HEREUNDER TO THE FOLLOWING ACCOUNT:

[SPECIFY DETAILS]

MM LUXYACHTS LTD.

By: ________________

Title: _______________

ENCLOSED:

[PLEASE ADD INFORMATION ABOUT THE DOCUMENTS ENCLOSED TO THE REQUEST]

24

Exhibit C-4

7 March 2016

To: JSC Trust Me Bank



Re.: Letter of Credit No. 578932

Dear Sirs,

This is a demand for payment of eleven million dollars (USD 11 000 000) under the above-referenced standby Letter

of Credit. We certify that amount drawn represents the amount or the aggregate of the amounts due to us that was

not paid when due and that remains unpaid as of the date drawn.

We will greatly appreciate you transferring the remaining 50% (USD 11 000 000) of the purchase price of the

yacht to MM LuxYachts Ltd. at your earliest convenience.

Please transfer the amount demanded hereunder to the following bank account:

BANK OF ZAPADSTAN

2 KING LOVE STREET, Bornshtolm, Zapadstan

SWIFT: BHFAGF22

ACCOUNT NO. 30118810700000000777 IN

BIC: 044525889

Thank you for your swift cooperation.

Sincerely,

___________

Stuart Schmidt

Executive Chief

MM LuxYachts Ltd.

Enclosed:

1. The notarized copy of the Shipbuilding Contract;

2. Invoice No. 001243 dated 23 February 2016;

3. Certificate of Quality of the Yacht of 30 January 2016;

4. Certificate of Origin of 2 February 2016;

5. Act of Acceptance of 24 February 2016.

25

Exhibit C-5



Magnifestum Ltd.



Invoice Number: 001243

Invoice Date: 23 February 2016

INVOICE No. Description Vol. Unit Price in USD SUM in USD

1 Construction, exclusive design and

delivery of 49.8 meters long luxury

motor yacht under Shipbuilding

contract NO. 765-U dated 23 February

2015 (the remaining 50% of the

purchase price)

1 pc. 11 000 000 11 000 000

Total: 11 000 000

With VAT* 12 980 000

Please transfer payment to:

BANK OF ZAPADSTAN

2 KING LOVE STREET, BORNSHTOLM, ZAPADSTAN

SWIFT: BHFAGF22

ACCOUNT NO. 30118810700000000777 IN

BIC: 044525889

*VAT Payable to Zapadstan authority

26

Exhibit C-6

30 January 2016

Magnifestum Ltd.



Ref: Shipbuilding Contract NO. 765-U - motor yacht

Certificate of Quality

Shipbuilding Contract NO. 765-U

To Whom It May Concern:

49.8 meters long motor yacht in the quantity of 1 piece under Shipbuilding contract NO. 765-U was

shipped from our factory located in Bornshtolm, Zapadstan on 28 January 2016.

The 49.8 meters long motor yacht was manufactured according to requirements of drawing of LY- 49.8

and specifications of LY 2001.4854-01.

Sincerely,

Mr. Stewart Schmidt Mr. Peter Novells

Executive Chief Quality Manager

27

Exhibit C-7

Magnifestum Ltd.



Ref: Shipbuilding Contract NO. 765-U - motor yacht

CERTIFICATE OF ORIGIN OF PRODUCT

The following company declares that 49.8 meters long motor yacht manufactured under Shipbuilding Contract

NO. 765-U, that was produced by MM LuxYachts Ltd., conforms to all conditions specified in Shipbuilding

contract NO. 765-U and is of Zapadstan origin.

Bornshtolm, Zapadstan Date: February 2, 2016

_______________________

Mr. Stewart Schmidt

Executive Chief

Ref: Shipment # 1209

28

Exhibit C-8

MM LuxYachts Ltd.



-to-

Magnifestum Ltd.



Date: 24 February 2016

Act of Acceptance

to Shipbuilding Contract NO. 765-U, dated 23 February 2015

Magnifestum Ltd. hereinafter referred to as the “Buyer” and MM LuxYachts Ltd. hereinafter referred to as the

“Builder”, have entered into this Act of Acceptance relating to the provision by the Contractor to the Client of

the following services:

Construction, exclusive design and delivery of 49.8 meters long luxury motor yacht.

This Act constitutes proof of the transfer and acceptance of the services performed and ground for payment of

the cost of such services.

The cost of services totals USD 22 000 000,00 (twenty two million US dollars and zero Cents) exclusive of the

VAT according to invoice No. 001243 dated 23 February 2016.

________________________

MM LuxYachts Ltd.

Name: Stuart Schmidt

Position: Executive Chief

________________

Magnifestum Ltd.

Name: I. Aivasov

Position: President

29

Exhibit C-9

JSC Trust Me Bank



March 7, 2016

To: Ivan Aivazov

Magnifestum Ltd., President



Dear Mr. Aivazov,

We would like to inform you that on 7 March 2016 MM LuxYachts Ltd. has made a presentation under

irrevocable standby Letter of Credit No. 578932 of 5 March 2015.

After short review of the received documents we are planning to honor the presentation and effect payment of

USD 11 000 000 under the above Letter of Credit within next 3 days.

For your consideration see attached the correspondence and documents presented by MM LuxYachts Ltd. on

7 March 2016.

Best regards,

____________

Head of Department of Documentary Operations

John Maligann

Enclosed:

1. Letter of MM LuxYachts Ltd. of 7 March 2016;

2. Notarized copy of the Shipbuilding Contract;

3. Invoice No. 001243 dated 23 February 2016;

4. Certificate of Quality of the Yacht of 30 January 2016;

5. Certificate of Origin of 2 February 2016;

6. Act of Acceptance of 24 February 2016.

30

Exhibit C-10

MAGNIFESTUM LTD. 578356, Centrostan, Centrinsk,


8 March 2016 JSC Trust Me Bank 568392, Centrostan, Centrinsk, Lengthy street 43, bldg. 5

I highly appreciate you notifying me of MM LuxYachts Ltd. demand regarding remaining 50% (USD 11 000 000)

payment of the purchase price of the yacht under the Letter of Credit No. 578932 of 5 March 2015.

Please be informed that the payment of credit should not be processed.

First, I did not sign the Act of Acceptance of 24 February 2016 that was presented by MM LuxYachts Ltd. The

signature that appears on the Act of Acceptance does not belong to me, you may check my bank documents for

confirming this.

Second, I failed to find in the documents presented by MM LuxYachts Ltd. any National Passenger Ship Safety

Certificate for the yacht manufactured under Shipbuilding Contract NO. 765-U, i.e. the document issued by the

Centrostan Maritime Register that "Queen Ilona" is certified for use in Centrostan. I suppose that this is a

serious deficiency.

Third, you should also be informed that MM LuxYachts Ltd. made serious defects in the construction of the

yacht that resulted in destruction of the yacht's interior. As of the present date the damages incurred by us

amount to approximately USD 18 000 000. Based on this, we are setting-off the remaining price to the amount

of our damages, thus, the request of MM LuxYachts Ltd. for payment is ungrounded.

If you have any further questions in regards to this payment feel free to contact us.

Sincerely,

I. Aivasov, President, MAGNIFESTUM LTD.

31

Exhibit C-11

JSC Trust Me Bank



March 10, 2016

MM LuxYachts Ltd.



Re.: Letter of Credit No. 578932

In response to your letter dated 7 March 2016 we regret to inform you that we are not able to effect payment

under the Letter of Credit No. 578932 of 5 March 2015 as you requested.

After examination of your presentation dated 7 March 2016 we found out that the Act of Acceptance of

24 February 2016 was not signed by the authorized representative of Magnifestum Ltd., Mr. Ivan Aivasov. The

signature on the Act of Acceptance appears not to belong to him.

We also noticed that the National Passenger Ship Safety Certificate is missing in the documents presented to us

for payments.

Thus, the above does not qualify your presentation as complying and we are unable to effect any payment to MM

LuxYachts Ltd. under the Letter of Credit No. 578932.

Sincerely,

___________

Zane Hill

Head of Credit Department

JSC Trust Me Bank

32

IN THE MATTER OF ARBITRATION

IN ACCORDANCE WITH THE 2012 RULES OF ARBITRATION OF THE INTERNATIONAL CHAMBER

OF COMMERCE (PARIS)

ANSWER TO REQUEST FOR ARBITRATION

1 June 2016

ICC Case № 2016/MHM

Claimant MM LuxYachts Ltd.



Claimant's Counsel Zagrebelsky & Partners


Swift street 63, bldg. 2, business center "White

Tower"

Respondent JSC Trust Me Bank



Respondent's Counsel Smart Law Bureau

050000 Centrinsk, Centrostan

33, Industrial Deadend

33

1. JSC Trust Me Bank, the Respondent in the ICC arbitration № 2016/MHM, hereby submits this Answer to

the Request for Arbitration (the "Answer") pursuant to Article 5 of the Rules of Arbitration of the ICC in

force as from 1 January 2012 (the "2012 ICC Rules").

2. The terms and abbreviations in the present Answer shall have the same meaning as in the Request for

Arbitration (the "Request") of MM LuxYachts Ltd. (the "Claimant") of 1 May 2016 unless specified

otherwise.

I. GENERAL OBJECTIONS TO THE CLAIMS

3. The Claimant requests the Arbitral Tribunal to award the sums that it is merely not entitled to.

4. Its claims are supported and grounded neither by the facts, nor by the law.

5. For this reason alone the Claimant's relief requested should be rejected in full.

6. The fact that the Respondent has not specifically objected to a particular statement made by the Claimant

should not be considered as an acceptance or admission by the Respondent of this statement.

II. FACTS

1.1. Important Factual Issues

7. The Respondent does not intend to repeat the story told by the Claimant.

8. However, there is a chain of circumstances of a key importance that has been intentionally veiled by the

Claimant that the Arbitral Tribunal should bear in mind in their analysis of the case.

9. First, the Claimant was obliged to present the Ship Safety Certificate in order to obtain payment under the

L/C and failed to perform its obligation, thus, its request for payment has been rightfully rejected.

10. Second, the Buyer's representative, Mr. Aivasov, did not sign the Acceptance Act as the Claimant alleged,

thus, the Claimant again failed to comply with the requirement of the L/C for obtaining payment.

11. Thus, the Respondent had no obligation to effect payment under the L/C in the amount of USD 11 000 000

as the Claimant failed to meet the established requirements.

34

1.2. The Claimant Failed To Make a Complying Presentation under the L/C

12. As the Claimant correctly stated, on 7 March 2016, the Claimant made a presentation under the L/C in order

to obtain payment amounting to the half of the price of the Yacht.19

The Claimant presented the following

documents:20

a. The Claimant's invoice for the Yacht;

b. The Certificate of Quality of the Yacht;

c. The Certificate of Origin of the Yacht; and

d. The Act of Acceptance.

13. Shortly after receipt of the above document the Respondent informed the Buyer that it was, in fact, just

planning to effect the payment under the L/C to the Claimant:21

"After short review of the received documents we are planning to honor the presentation and effect

payment of USD 11 000 000 under the above Letter of Credit within next 3 days."

14. After examination of the Claimant's presentation the Respondent has determined that the Buyer did not sign

the Acceptance Act.

15. In fact, the signature on the Acceptance Act does not belong to Mr. Aivasov the sample of which is on his

credit card available to the Respondent.22

16. Furthermore, the Respondent also determined that the Claimant failed to provide the Ship Safety Certificate

required by the provisions of the L/C.

17. As the Claimant's presentation did not conform to the provisions of the L/C, on 10 March 2016, the

Respondent informed the Claimant that it was unable to effect payment under the L/C:23

19 Exhibit C-5. Claimant's letter to the Respondent of 7 March 2016. 20 Exhibit C-6. Claimant's Invoice No. 001243 issued under the Shipbuilding Contract. Exhibit C-7. Certificate of Quality of the Yacht

of 30 January 201. Exhibit C-8. Certificate of Origin of the Yacht of 2 February 2016. Exhibit C-4. Act of Acceptance of the Yacht of

24 February 2016. 21 Exhibit C-9. Respondent's letter to the Buyer of 7 March 2016. 22 Exhibit R-1. Copy of the credit card of Mr. Aivasov. 23 Exhibit C-11. Respondent's letter to the Claimant of 10 March 2016.

35

"After examination of your presentation dated 7 March 2016 we found out that the Act of Acceptance of

24 February 2016 was not signed by the authorized representative of Magnifestum Ltd., Mr. Ivan

Aivasov. The signature on the Act of Acceptance appears not to belong to him.

We also noticed that the National Passenger Ship Safety Certificate is missing in the documents

presented to us for payments.

Thus, the above does not qualify your presentation as complying and we are unable to effect any

payment to MM LuxYachts Ltd. under the Letter of Credit No. 578932."

18. Thus, the Respondent has rightfully refused the Claimant to effect payment under the L/C as the Claimant

failed to comply with the requirements of the L/C.

1.3. The ICC Arbitration Against the Claimant

19. In this arbitration the Claimant purported to conceal the fact that the Buyer has already initiated the ICC

arbitration against the Claimant.

20. On 25 March 2016, the Buyer filed a Request for Arbitration against MM LuxYachts Ltd., i.e. the Claimant

in the present arbitration (ICC Case No. 1998/MHM).24

21. The claims of the Buyer are as follows:

a. The Acceptance Act shall be declared as invalid;

b. MM LuxYachts Ltd. shall reimburse the Buyer the damages in the amount of USD 18 000 000

constituting the loss incurred by the defects of the Yacht and destruction of the interior design of

the Yacht's cabin;

c. Taking into account the set-off of the remaining 50% of the purchase price of the Yacht, i.e.

USD 11 000 000, MM LuxYachts Ltd. shall pay USD 7 000 000.

22. Thus, as of the present date the invalidity of the Acceptance Act and the claims of the Buyer are subject to

the arbitration under ICC Case No. 1998/MHM.

24 Exhibit R-1. Copy of the credit card of Mr. Aivasov

Letter of the Secretariat of the ICC Court of International Arbitration under ICC Case No. 1998/MHM of 26 March 2016.

36

III. PROCEDURE

3.1. Lack of Jurisdiction Over the Claims Submitted by the Claimant

23. The Respondent, with all respect to the Arbitral Tribunal, states that it does not have jurisdiction to consider

the claims raised by the Claimant in the present arbitration.

24. The Claimant's position is that the Arbitration Clause of the Shipbuilding Contract was incorporated in the

L/C and, thus, extended to the Respondent.

25. As it follows from Clause 10.1.2 of the Shipbuilding Contract its scope extends to the parties to it, i.e. the

Claimant and the Buyer:




26. The Claimant's position is based on Article 10 of the L/C:


CONTRACT NO. 765-U OF 23.02.2015, WHICH SHALL HAVE A FULL EFFECT WITH REGARD

TO THE TERMS OF THIS LETTER OF CREDIT." [Respondent's emphasis]

27. The above Article of the L/C does not specifically provide the incorporation of the provisions of the

Shipbuilding Contract in the L/C.

28. Further, the Respondent did not provide its consent to be bound by the Arbitration Clause of the

Shipbuilding Contract with the Claimant.

29. Thus, the Arbitral Tribunal would lack jurisdiction to hear this case.

30. Below the Respondent provides its position on the procedure and merits of this dispute without prejudice to

its objections to jurisdiction of the Arbitral Tribunal.

3.2. Applicable Rules of Procedure and Number of Arbitrators

31. The L/C does not specify the applicable Rules of procedure that shall apply to this dispute.

37

32. According to Arbitration Clause of the Shipbuilding Contract "[a]ll disputes … will be resolved by ICC

arbitration".

33. On 1 May 2016, the Claimant proposed the application of the 2012 ICC Rules to the procedure and

constitution of panel of three arbitrators for this case.

34. The Respondent has no objections to application of the 2012 ICC Rules and constitution of the Arbitral

Tribunal in a manner stated above. This fact does not imply the Respondent's consent to the jurisdiction of

the Arbitral Tribunal constituted under the above Rules.

3.3. Request for Suspension of the Proceedings

35. As stated above, as of the present date there is a pending ICC arbitration against MM LuxYachts Ltd., i.e.

the Claimant in the present arbitration (ICC Case No. 1998/MHM)25

initiated by the Buyer based on the

provisions of the Shipbuilding Contract.

36. The claims of the Buyer against MM LuxYachts Ltd. amount to USD 18 000 000 and constitute a

compensation of damages incurred by the Buyer due to the defects of the Yacht's construction omitted by

MM LuxYachts Ltd. and which resulted in the destruction of the Yacht's interior and Buyer's loss.

37. Thus, should the Arbitral Tribunal in ICC Case No. 1998/MHM decide that the Buyer's claims shall be

awarded, there will be no ground to effect payment to MM LuxYachts Ltd. under the L/C in the course of

the present arbitration.

38. The Respondent respectfully request the ICC Court and, should the request be dismissed by the ICC Court,

the Arbitral Tribunal, once it is constituted, to suspend these proceedings until the award under ICC Case

No. 1998/MHM, that will determine the overall balance of claims against MM LuxYachts Ltd., is rendered.

IV. LEGAL GROUNDS

39. The Respondent points out that its comments with regard to the claims of the Claimant stated below are

provided without prejudice to its position in the current proceedings.

40. The Respondent also reserves its right to amend its position on the merits to any extent.

25 Exhibit R-1. Copy of the credit card of Mr. Aivasov

Letter of the Secretariat of the ICC Court of International Arbitration under ICC Case No. 1998/MHM of 26 March 2016.

38

4.1. The Requirements for Payment Under the L/C

41. According to Article 1 of the L/C:

"WE, JSC TRUST ME BANK ("ISSUING BANK"), HEREBY ISSUE OUR IRREVOCABLE STANDBY

LETTER OF CREDIT NUMBER # 578932 BY ORDER AND FOR THE ACCOUNT OF MM

LUXYACHTS LTD. ("APPLICANT", "BENEFICIARY"), AVAILABLE FOR PAYMENT AT SIGHT

FOR A MAXIMUM AMOUNT OF U.S. DOLLARS $ 11 000 000 (THE "AGGREGATE AMOUNT")

EFFECTIVE IMMEDIATELY COMMENCING 6 MARCH 2015, AGAINST PRESENTATION OF:

a. A STATEMENT IN THE FORM OF ANNEX 1 SIGNED BY AN AUTHORIZED

REPRESENTATIVE OF BENEFICIARY.

b. A NOTARIZED COPY OF SHIPBUILDING CONTRACT NO. 765-U OF 23.02.2015.

c. INVOICE OF THE APPLICANT.

d. CERTIFICATE OF QUALITY OF THE YACHT ISSUED UNDER SHIPBUILDING CONTRACT

NO. 765-U OF 23.02.2015.

e. CERTIFICATE OF ORIGIN OF THE YACHT ISSUED UNDER SHIPBUILDING CONTRACT

NO. 765-U OF 23.02.2015.

f. ACT OF ACCEPTANCE OF THE YACHT CONSTRUCTED UNDER SHIPBUILDING

CONTRACT NO. 765-U OF 23.02.2015; AND

g. NATIONAL PASSENGER SHIP SAFETY CERTIFICATE OF THE YACHT CONSTRUCTED

UNDER SHIPBUILDING CONTRACT NO. 765-U OF 23.02.2015."[Respondent's emphasis]

4.2. The Respondent Is Not Entitled to Payment Under the L/C

42. On 7 March 2016, the Claimant presented the following documents to the Respondent under the L/C:



39



e. The Acceptance Act.

43. As the Claimant failed to present to the Respondent the Ship Safety Certificate, its presentation of 7 March

2016 cannot be qualified as the complying one, thus, the Claimant failed to meet the requirement of the L/C

for obtaining the requested payment.

44. The Claimant also failed to submit an Acceptance Act required by the L/C - the presented Acceptance Act is

obviously signed by any other person rather than the Buyer. The conclusion is justified by a simple

comparison of signatures of the Buyer's representative, Mr. Aivasov, on the Acceptance Act and its credit

card.

45. As stated above, on 25 March 2016, the Buyer initiated the ICC arbitration against MM LuxYachts Ltd., i.e.

the Claimant in the present arbitration, with claims amounting to USD 18 000 000 for reimbursement of

damages incurred by the Buyer due to the Yacht's defects.

46. For the above reasons, the Claimant does not have any ground to claim payment under the L/C.

V. GOVERNING LAW

47. In resolving of this dispute on the merits the Arbitral Tribunal is to apply:

a. The provisions of the L/C; and

b. The provisions of UCP 600.

VI. NOMINATION OF ARBITRATOR BY THE RESPONDENT

48. The Respondent nominates Mr. George Zaselsky as its arbitrator.

49. The contact details of Mr. Zaselsky are as follows:

ZASELSKY AND SONS LAW OFFICE

11 Main Street

40

050000 Centrinsk

Centrostan

VII. RELIEF SOUGHT BY THE RESPONDENT

50. On the basis of the above, the Respondent respectfully requests:

a. The Arbitral Tribunal to find that it lacks jurisdiction over the claims submitted by the Claimant in the

present arbitration;

b. The ICC Court of International Arbitration to suspend the proceedings until the award in ICC Case

No. 1998/MHM against the Claimant in present arbitration is issued;

c. The Arbitral Tribunal, once it is constituted, to suspend the proceedings until the award in ICC Case

No. 1998/MHM against the Claimant in present arbitration is issued;

d. The Arbitral Tribunal to reject all claims of the Claimant entirely on the merit; and

e. The Arbitral Tribunal to order the Claimant to reimburse the Respondent all costs related to this

arbitration.

Respectfully submitted,

Howard Smirnoff

41

LIST OF EXHIBITS

Exhibit R-1 Copy of the credit card of Mr. Aivasov

Exhibit R-2 Letter of the Secretariat of the ICC Court of International Arbitration under ICC Case

No. 1998/MHM of 26 March 2016

42

Exhibit R-1

43

Exhibit R-2

26 March 2016 1998/MHM Magnifestum Ltd. (Centrostan) vs/ MM LuxYachts Ltd (Zapadstan)

Counsel: Ms Maria Hauser-Morel (Tel: + 33 1 49 53 30 90)

Deputy Counsel: Ms Darya Shirokova (Tel: + 33 1 49 53 30 97)

(Fax: + 33 1 49 53 57 99)

(Email: [email protected])

MM LuxYachts Ltd. 2067-N, Zapadstan, Bornshtolm, Redwoody street 77, bldg. 54

By e-mail: [email protected] Dear Mesdames and Sirs, The Secretariat of the International Court of Arbitration of the International Chamber of Commerce (“Secretariat”) notifies you that, on 25 March 2016, it received a Request for Arbitration (“Request”) from Magnifestum Ltd. represented by Smart Law Bureau from Centrinsk (Centrostan), that names you as Respondent. Pursuant to Article 4(2) of the ICC Rules of Arbitration (“Rules”), this arbitration commenced on that date. The caption and reference of this arbitration are indicated above. Please include the reference 1998/MHM in all future correspondence. In all future correspondence, any capitalised term not otherwise defined will have the meaning ascribed to it in the Rules and references to Articles of the Rules generally will appear as: “(Article ***)”. We enclose a copy of the Request and the documents annexed thereto (Article 4(5)). Answer to the Request Your Answer to the Request (“Answer”) is due within 30 days from the day following your receipt of this correspondence (Article 5(1)). Please send us 3 copies of your Answer if you request one arbitrator or 5 copies if you request three arbitrators, together with an electronic version. You may apply for an extension of time for submitting your Answer by providing your comments on the number of arbitrators and, where appropriate, nominating an arbitrator (Article 5(2)). Such information will enable the International Court of Arbitration of the International Chamber of Commerce (“Court”) to take steps towards the constitution of the Arbitral Tribunal. If any of the parties refuses or fails to take part in the arbitration or any stage thereof, the arbitration will proceed notwithstanding such refusal or failure (Article 6(8)).

…/…

mailto:[email protected]

44

Exhibit R-2

1998/MHM Page 2

Joinder of Additional Parties No additional party may be joined to this arbitration after the confirmation or appointment of any arbitrator, unless all parties including the additional party otherwise agree (Article 7(1)). Therefore, if you intend to join an additional party and seek an extension of time for submitting your Answer, please inform us in your application for such extension. Constitution of the Arbitral Tribunal The arbitration agreement does not specify the number of arbitrators. Claimant has proposed to have three arbitrators and nominated Mr John Smith as co-arbitrator. For the sake of administrative efficiency and without prejudice to the Court’s decision or any agreement the parties may reach as to the number of arbitrators, we will invite the prospective arbitrator to complete a Statement of Acceptance, Availability, Impartiality and Independence, which we will send to all parties. Please comment on the number of arbitrators in your Answer or any request for an extension of time for submitting your Answer. If you agree to have three arbitrators, please nominate a co-arbitrator in your Answer or in any request for an extension of time for submitting your Answer (Article 12(4)). If you fail to nominate, the Court will appoint an arbitrator on your behalf (Article 12(4)). If the parties agree to have three arbitrators, the Court will appoint the president, unless the parties agree upon another procedure (e.g., the co-arbitrators nominating the president) (Article 12(5)). If the parties disagree, the Court will determine the number of arbitrators (Article 12(2)). Place of Arbitration The arbitration agreement provides that Centrinsk (Centrostan) is the place of arbitration. Language of Arbitration The arbitration agreement provides for English as the language of arbitration. Representation If you are represented by counsel, please provide the relevant contact details. Communication with the Secretariat Please provide your fax number and email address, as we may transmit correspondence by fax or email. Efficient Conduct of the Arbitration The Rules require the parties and the Arbitral Tribunal to make every effort to conduct the arbitration in an expeditious and cost-effective manner having regard to the complexity and value of the dispute (Article 22(1)). In 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 (Article 37(5)).

…/…

45

Exhibit R-2 1998/MHM Page 3

Amicable Settlement Parties are free to settle their dispute amicably at any time during an arbitration. The parties may wish to consider conducting an amicable dispute resolution procedure pursuant to the ICC Mediation Rules, which, in addition to mediation, also allow for the use of other amicable settlement procedures. ICC can assist the parties in finding a suitable mediator. Further information is available from the ICC International Centre for ADR at +33 1 49 53 30 53 or [email protected] or www.iccadr.org. Your Case Management Team Ms Maria Hauser-Morel, Counsel .................................................. (direct dial number +33 1 49 53 30 90) Ms Alina Leoveanu, Deputy Counsel ............................................. (direct dial number +33 1 49 53 30 91) Ms Darya Shirokova, Deputy Counsel ........................................... (direct dial number +33 1 49 53 30 97) Mr Mohammed Safyan, Assistant .................................................. (direct dial number +33 1 49 53 30 94) Mr Victor de Benito, Assistant………………. .............................. (direct dial number +33 1 49 53 30 93) Fax ................................................................................................................................ (+33 1 49 53 57 99) Email .............................................................................................................................. ([email protected]) While maintaining strict neutrality, we are at the parties’ disposal regarding any questions they may have concerning the application of the Rules. Finally, please find enclosed a note from the Court’s Secretary General that highlights certain key features of ICC arbitration, as well as a Note on Administrative Issues. Yours faithfully, Darya Shirokova Deputy Counsel Secretariat of the ICC International Court of Arbitration encl. (for Respondent only) - All correspondence exchanged to date - Request for Arbitration with documents annexed thereto - ICC Rules of Arbitration (see also www.iccarbitration.org) - ICC Dispute Resolution Brochure (see also www.iccarbitration.org) - Note to the Parties from the Secretary General - Note on Administrative Issues c.c. Smart Law Bureau

By email: [email protected]


http://www.iccadr.org/

http://www.iccarbitration.org/

46




CLAIMANT'S COMMENTS TO

RESPONDENT'S JURISDICTIONAL OBJECTIONS AND REQUESTS

11 June 2016

ICC Case No. 2016/MHM

Claimant:

MM LuxYachts Ltd.



Claimant's Counsel:




Respondent

JSC Trust Me Bank



Respondent's Cousel

Smart Law Bureau



47

1. The Claimant hereby submits its comments to the Respondent's objections to jurisdiction raised in the

Answer to the Request for Arbitration of 1 June 2016 (the "Answer").

2. As the Respondent attempted to present a limited and distorted picture of the factual circumstances and

apparently is evading its direct obligation to effect payment under the L/C by objecting to the jurisdiction

of the Arbitral Tribunal, the Claimant would like to provide comments to the Respondent's allegations.

I. CLAIMANT'S COMMENTS TO RESPONDENT'S JURISDICTIONAL OBJECTIONS AND

REQUESTS

1.1 Respondent's Position

3. First, according to the Respondent, the Arbitral Tribunal in the present case shall lack jurisdiction as the

Arbitration Clause of the Shipbuilding Contract does not cover the relations of the Parties to the L/C and

the Respondent provided no consent to such extension.

4. Second, the Respondent requested the ICC Court and the Arbitral Tribunal, once it is constituted, to

suspend these proceedings until the award in ICC Case No. 1998/MHM against MM LuxYacht Ltd., i.e.

the Claimant in the present arbitration, is rendered.

1.2 The Respondent Has Wrongfully Refused to Effect Payment Under the L/C

5. As the Respondent raised ICC Case No. 1998/MHM (the "Second ICC Arbitration") in its Answer the

Claimant would like to provide comments on the actual reasons of the Second ICC Arbitration.

6. At the Yacht's launching day, 24 February 2016, Mr. Aivazov signed the Acceptance Act26

and affixed the

Buyer's corporate seal to it.27

The document submitted by the Claimant with the Request is the original

copy of the document signed on that day.

7. On 5 March 2016, the Claimant was informed that a heavy storm has reached the Yacht and, as a result,

one of the yacht's doors suddenly opened, which led to the interior of the yacht getting flooded. This failure

permitted the ingress of a substantial volume of seawater.

8. As a result, the facing of the main room in the Yacht was significantly damaged and Ilona Aivasova's fur

coat room, including all its content, was severely destroyed.

26 Exhibit C-12. Centrostan Post Article "Big Boys, Big Toys" of 24 February 2016. 27 Exhibit C-4. Act of Acceptance of the Yacht of 24 February 2016.

48

9. Shortly after, Mr. Aivasov invited Mr. Schmidt to have an official meeting.

10. Mr. Schmidt agreed and the meeting was held on 6 March 2016 where also a lawyer of MM LuxYachts

Ltd. was present. The Claimant was surprised that the Respondent alleged that Mr. Aivazov did not sign

the Acceptance Act as:28

"Mr. Schneider was surprised with his [Mr. Aivasov's] request as on 24 February 2016 Mr. Aivasov

has signed the Acceptance Act of the Yacht (with broking a bottle of champagne over the border of

the Yacht) where I and Mr. Scheineder were in person."

11. Based on the above, the Buyer has intentionally defrauded the Respondent that he did not sign the

Acceptance Act and lately misled the Respondent.29

12. During the meeting the Claimant also provided the Buyer with the Certificate of Quality for the Yacht's

door evidencing its conformity to all necessary requirements.30

13. Therefore, the Buyer was acting in bad faith when he referred to a non-authentic signature of Mr. Aivazov

on 8 March 201631

and the Respondent has wrongfully refused to effect payment to the Claimant under the

L/C on 10 March 2016.32

1.3 The L/C Incorporated the Provisions of the Shipbuilding Contract

14. The Respondent submitted that the provisions of the L/C do not specifically provide that the Arbitration

Clause is incorporated in the L/C and, additionally, that the Respondent did not provide its consent to be

bound by the Arbitration Clause of the Shipbuilding Contract with the Claimant that is not a party to it.

15. The Claimant again points out that the L/C contains the following provision:33


CONTRACT NO. 765-U OF 23.02.2015, WHICH SHALL HAVE A FULL EFFECT WITH REGARD

TO THE TERMS OF THIS LETTER OF CREDIT." [Respondent's emphasis]

28 Exhibit C-13. Witness statement of John Zagrebelsky of 10 June 2016, para. 5. 29 Exhibit C-10. Buyer's letter to the Respondent of 8 March 2016. 30 Exhibit C-16. Certificate of Quality of the Yacht's Door of 8 December 2015. Exhibit C-13. Witness statement of John Zagrebelsky

of 10 June 2016. 31 Exhibit C-10. Buyer's letter to the Respondent of 8 March 2016. 32 Exhibit C-11. Respondent's letter to the Claimant of 10 March 2016. 33 Exhibit C-3. The L/C of 5 March 2015, Article 10.

49

16. Thus, the Claimant maintains its position that this arbitration shall be initiated upon the Arbitration Clause

of the Shipbuilding Contract and all the Respondent's objections in this regard shall be rejected.

1.4 No Ground for Suspension of the Proceedings

17. The Respondent stated that the claims of the Buyer in the Second Arbitration against the Claimant in the

present arbitration constitute the compensation of damages caused to the Buyer by the defects of the Yacht

allegedly omitted by MM LuxYachts Ltd. amounting to USD 18 000 000.

18. The Respondent requested the ICC Court and the Arbitral Tribunal to suspend the present arbitration until

the award in the Second Arbitration, deciding on the overall balance of claims, is rendered.

19. The Respondent's request is unjustified as the presentation made by the Claimant for obtaining payment

under the L/C is subject to consideration particularly in this arbitration with a party which issued such L/C

and not the Buyer. The decision on the opposite would lead to a significant procedural unfairness and

violation of the Claimant's right to present its position.

II. DECISION SOUGHT

20. Based on the above, the Claimant respectfully requests:

a. The ICC Court of International Arbitration to dismiss the Respondent's request to suspend the

arbitration;

b. The Arbitral Tribunal, once, it is constituted, to dismiss the Respondent's request to suspend the

arbitration;

c. The Arbitral Tribunal to award to the Claimant damages in the amount of USD 11 000 000 and all

interest accrued on the amount of damages;

d. Ordering a post-award interest on the amount of damages claimed in sub-paragraph (c) above from the

date of the award till the date of payment;

e. Ordering the Respondent to pay the costs of these arbitration proceedings, including the costs of the


Best regards,

John Zagrebelsky, Zagrebelsky & Partners, Partner

50

LIST OF EXHIBITS

Exhibit C-12. Centrostan Post Article "Big Boys, Big Toys" of 24 February 2016

Exhibit C-13. Witness statement of John Zagrebelsky of 10 June 2016

Exhibit C-14. Centrostan Post Article "Winter is Coming but Ilona Aivasova Is Left Without Her Fur

Coats" of 7 March 2016

Exhibit C-15. Printouts from Instagram website of 5 March 2016

Exhibit C-16. Certificate of Quality of the Yacht's Door of 8 December 2015

51

Exhibit C-12

Big Boys - Big Toys

By Arina Shoomer February 24, 2016 | 08:45 PM

Today a Forbes businessman, also well-known among celebrities for its noble parties, Mr. Aivazov celebrated

the boat christening ceremony of "Queen Ilona". The celebration seemed to be small, however, that was only a

part of the surprise prepared for his wife Ilona - a 2-day yacht party is already scheduled on 5-6 March 2016!

As you may guess, the entrance is allowed only to the Forbes people and their close vis-à-vis - celebrities and

models. However, we all known that Ms. Ilona Aivasova is famous for inviting all her friends…

The party will take place on a 49.8 meters yacht, "Queen Ilona", that was constructed by MM LuxYachts Ltd., a

Zapadstan company with a long-established reputation since 1930's.

Stay tuned, our special correspondent will keep a running commentary on the party!

Follow us on Instagram (@CentroPost) and Facebook (Centrostan Post).

52

Exhibit C-13




10 June 2016

WITNESS STATEMENT OF JOHN ZAGREBELSKY

Claimant:

MM LuxYachts Ltd.



Claimant's Counsel:




Respondent

JSC Trust Me Bank



Respondent's Cousel

Smart Law Bureau



53

1. I, the undersigned, John Zagrebelsky, hold the office of the partner of the law firm Zagrebelsky &

Partners established under the laws of Zapadstan. I also act as a co-counsel of MM LuxYachts Ltd. (the

"Claimant") in the current ICC proceedings against JSC Trust Me Bank (the "Respondent").

2. The Claimant and Respondent shall be jointly referred to as the "Parties".

3. I am giving this statement as a witness of MM LuxYachts Ltd. in connection with the above mentioned

arbitration proceedings on the opening of the irrevocable letter of credit on 5 March 2016 (the "L/C")

and negotiations between Mr. Schmidt, as a representative of the Claimant, and Mr. Aivasov, as a

representative of the Respondent, held on 6 March 2016.

Opening of the L/C by the Respondent on 5 March 2015

4. On 5 March 2016, our corresponding bank, Bank of Zapadstan, informed us that the Respondent opened

the L/C for the amount of USD 11 000 000 further to the provisions of Shipbuilding Contract No. 765-U

of 23 February 2015 (the "Shipbuilding Contract").

5. This message reached Mr. Schmidt on his vacation in South Africa, where he spent his time with friends

on safari. I was also travelling with Mr. Schmidt.

6. In turn, he sent to Mr. Aivazov a short text message, confirming that the Shipbuilding Contract reached

its full force and that "Queen Ilona" would be ready without any delay.

Negotiations between the Parties on 6 March 2016

7. After the accident with the yacht constructed by the Claimant for the Respondent under the Shipbuilding

Contract the representatives of the Parties, Mr. Schmidt, his project manager Graham Stone, and Mr.

Aivazov, have mutually agreed to have an informal meeting on this issue.

8. I have also participated in the meeting as the lawyer of Mr. Schmidt.

9. During the negotiations held on 6 March 2016, Mr. Aivazov accused Mr. Schmidt of a manufacturing

defect in the yacht's door that caused its opening during the storm.

10. Mr. Aivasov requested immediate repair of the defect and mentioned that the damages to the interior of

the Yacht and Ilona's fur coat room amounted to USD 18 000 000.

11. Mr. Schneider was surprised with this request as on 24 February 2016 Mr. Aivasov has signed the

Acceptance Act of the Yacht (with broking a bottle of champagne over the border of the Yacht) where I

and Mr. Scheineder were in person.

54

12. Further, Mr. Schmidt assured Mr. Aivazov that the door was produced by a well-known company with

high reputation and demonstrated the according quality certificate, thus, allegations to any defects in the

locking system should be excluded.34

13. Mr. Stone, the project manager of the Yacht, denying any responsibility for the accident, as a good will

gesture, offered to Mr. Aivazov a 2% discount from the purchase price of the Yacht, should the

remaining part of the payment (amounting to USD 11 000 000) be effected by the end of the week.

14. This suggestion made Mr. Aivazov mad. He said that the 2% discount from the total price was "a joke, as

I paid much more for the Ilona's latest Louboutin collection, destroyed by the accident".

15. Mr. Aivasov requested immediate repair of the defect and mentioned that the damages to the interior of

the Yacht and Ilona's fur coat room amounted to USD 18 000 000.

16. Then I suggested to Mr. Aivazov that one of the possible reasons that caused the destruction of

Mr. Aivasov's property was a party on the Yacht during the storm where the people were not in the sober

condition and simply forgot to properly lock the door.

17. Thus, I placed before Mr. Aivasov's face the articles and photographs from the media and social networks

from the party on the Yacht as, obviously, his shouting and claims were a complete bluffing and

speculations.35

18. Then Mr. Aivasov shouted on us, promised to sue me for libeling, to file a complaint with my bar and

after that immediately left the room.

The foregoing witness statement was given in the English language. I will give testimony at the oral hearing in

Centrinsk, Centrostan, also in English.

I hereby confirm that the facts and data presented in my written witness statement are true and accurate.

Bornshtolm, Zapadstan

10 June 2016

John Zagrebelsky

34 Exhibit C-16. Certificate of Quality of the Yacht's Door of 8 December 2015. 35 Exhibit C-12. Centrostan Post Article "Big Boys, Big Toys" of 24 February 2016. Exhibit C-14. Centrostan Post Article "Winter is

Coming but Ilona Aivasova Is Left Without Her Fur Coats" of 7 March 2016. Exhibit C-15. Printouts from Instagram website of 5

March 2016.

55

Exhibit C-14

WINTER IS COMING, BUT ILONA AIVAZOVA IS LEFT WITHOUT FUR COATS

By Kareta Muzhdan March 5, 2016 | 10:45 AM

It is not a secret how much Mr. Aivazov, a name known to all who read Forbes, loves his fourth wife, Ilona.

The legends of her collections of fur coats, Louboutin, haute couture dresses are told around the rich world.

It seems that Mr. Aivazov decided to start a new collection for his wife, upscaling what seemed to be

impossible to upscale - a collection of yachts!

The first yacht was obviously named after his wife "Queen Ilona", the nickname he gave her a long time ago.

In order to memorize this remarkable purchase, today Mr. Aivazov is opening a two-day party on the yacht,

that will be attended only by socialites and celebrities.

Obviously, the party will be just like the Aivazovs like it: extravagant and over the top.

Centrostan Post is going to follow this story and will make sure to give you all the details.

https://www.centrostanpost.cst/?gfe_rd=cr&ei=KaVJV5fKBMSBaIXMlpgO&gws_rd=ssl

https://www.centrostanpost.cst/?gfe_rd=cr&ei=KaVJV5fKBMSBaIXMlpgO&gws_rd=ssl

56

Exhibit C-15

IlonaAivazova

1,596 likes

#Yacht #BestHusbandEver March 5, 2016

57

IlonaAivazova

2,798 likes

#AivazovParty #Yacht #WeKnowHowtoPartAY March 5, 2016

58

Kegan Millan

1,001 likes

#AivazovParty #Yacht #HavingFUN March 5, 2016

59

FancyLifeMagazine

Aivazovs boarding their new Yacht before the party

14,459 likes March 5, 2016

#AivazovParty

60

Exhibit C-16

1205 WEST TRADE STREET SUNCHAN, 5264 CHINA

8 December 2015

MM LuxYachts Ltd. 2067-N, Zapadstan, Bornshtolm, Redwoody street 77, bldg. 54 Ref: DWT-120A Wood Door

Certificate of Quality

Sales contract no. 676A

To Whom It May Concern:

DWT-120A Wood Door in the quantity of 1 piece, for motor yachts, for your order, Sales Contract No. 676A, was shipped from our factory located in Suagnchan, China on 5 December 2015.

The door was manufactured according to requirements of drawing of DWT-120A-00-002 and

specifications of YD 1451.304249.004-06.

Sincerely,

Nicolas Swang Mathew Osborn Executive Vice President Quality Manager

61

IN THE MATTER OF AN ARBITRATION BEFORE

THE INTERNATIONAL COURT OF ARBITRATION

INTERNATIONAL CHAMBER OF COMMERCE

ICC Case No. 2016/MHM

BETWEEN:

MM LuxYachts Ltd. (Zapadstan)

Claimant

vs.

JSC Trust Me Bank (Centrostan)

Respondent

TERMS OF REFERENCE

Arbitral Tribunal:

Mr. Henry Donohue (President)

Mr. Ken Collins

Mr. George Zaselsky

62

These Terms of Reference have been prepared in accordance with Article 23 of the ICC Arbitration Rules in

force as from 1 January 2012 (the "2012 ICC Rules").

THE PARTIES (ARTICLE 23(1)(A) OF THE 2012 ICC RULES)

1. The Claimant and Respondent are referred to collectively as "the Parties".

2. The Claimant, MM LuxYachts Ltd., is a company organized and existing under laws of Zapadstan. It has its

registered office at 2067-N, Zapadstan, Bornshtolm, Redwoody street 77, bldg. 54. The Claimant is

represented in this arbitration by John Zagrebelsky, Zagrebelsky & Partners firm. Names and addresses for

communications are specified in para. 5 below.

3. The Respondent is JSC Trust Me Bank, a bank organized and existing under the laws of Centrostan with

registered address at 568392, Centrostan, Centrinsk, Lengthy street 43, bldg. 5. The Respondent is

represented in this arbitration by Mr. Howard Smirnoff, Smart Law Bureau. Names and addresses for

communications are set out in para. 6 below.

NAMES OF COUNSEL TO THE PARTIES AND ADDRESSES AT WHICH NOTIFICATIONS AND

COMMUNICATIONS IN THE COURSE OF THE ARBITRATION SHOULD BE MADE (ARTICLE

23(1)(B) OF THE 2012 ICC RULES)

4. Communications to the Claimant should be addressed to its counsel whose address is as follows:

Mr. John Zagrebelsky




Email: [email protected]

5. Communications to the Respondent should be sent to both Respondent and its counsel whose addresses are

as follows:

Mr. Howard Smirnoff

Smart Law Bureau



Email: [email protected]

6. Any addition or change to the Party's legal representation must be notified to the other Parties and to the

Arbitral Tribunal within 48 hours.

7. Communications to the Parties or one of the Parties shall be valid if sent to the postal and/or email addresses

in paras. 5-6 respectively above. Communications from the Parties to the Arbitral Tribunal shall be valid if

sent to each member of the Arbitral Tribunal at the postal and/or email addresses in para. 16 below.

8. Any changes or amendment as to the contact details mentioned in paras. 5-6 above must be notified

immediately to all Parties, to the Arbitral Tribunal, and to the Secretariat of the International Court of

Arbitration of the ICC ("the ICC Secretariat").

9. In order to comply with a time limit, a communication must: if made by email, be transmitted prior to the

expiration of the time limit (local time at the sender's place of business); if made by courier or postal service,

be handed over to the courier or postal service prior to the expiration of the time limit (local time at the

sender's place of business).

63

10. A copy of any communication by any Party to the Arbitral Tribunal shall be sent simultaneously to the

opposing Parties and to the ICC Secretariat, addressed to Ms. Daria Shirokova, whose contact details are as

follows:

Address: Secretariat of the ICC International Court of Arbitration, 38 Cours Albert 1er,

75008 Paris, France

Telephone number: + 33 1 49 53 30 97

Fax: + 33 1 49 53 57 99

E-mail: [email protected]

11. As a general rule, the Parties should send to the Arbitral Tribunal copies of correspondence passing between

their legal representatives only if and when the same relates to a matter upon which the Arbitral Tribunal is

requested to take action by one or more of the Parties.

12. Notifications from the Arbitral Tribunal will usually be made by the President on behalf of himself and his

co-arbitrators.

13. Short notifications and communications (up to 20 pages) may be transmitted by e-mail only (either .doc or

searchable .pdf). More voluminous notifications and communications shall be transmitted by e-mail and by

hard copy (to be dispatched not later than on the following working day, in double-sided A5 format). In case

any exhibits enclosed in said written notifications and communications are too voluminous to be attached to

the e-mail, Parties shall submit them as hard copy and on a DVD (CD) or a memory stick together with the

above-referenced hard copy document(s).

14. Each communication shall indicate its distribution (principal addressees and copies), specifying the mode of

transmission.

15. Email's subject line shall include the phrase: "ICC 2016/MHM - subject", i.e. "ICC 2016/MHM - Claimant's

Submission On Costs".

16. The Arbitral Tribunal may, at any stage of the proceedings, decide that any or all of the notifications and

communications together with any exhibits shall be in hard copies or simultaneously in hard copies and

electronic formats.

17. Article 3 of the ICC Rules shall apply to any notification or communication and time period arising during

the course of this Arbitration, it being understood that the date of receipt by the Arbitral Tribunal shall be

decisive in all respects.

ARBITRAL TRIBUNAL (ARTICLE 23(1)(E) OF THE ICC RULES)

18. At its session of 30 June 2016, the International Court of Arbitration of the International Chamber of

Commerce ("ICC Court") appointed pursuant to Article 12(8) of the ICC Rules

as co-arbitrators:

Mr. Ken Collins

698752, Zapadstan, Bornshtolm,

Khundi Street, 45


and

Mr. George Zaselsky



64

ZASELSKY AND SONS LAW OFFICE

11 Main Street

050000 Centrinsk

Centrostan


and

as the President of the Arbitral Tribunal (at it session on 14 July 2016):

Mr. Henry Donohue

44859, Oceania, Nemo,

Sea Street, 56

By email: [email protected].

19. By signing these Terms of Reference, the Parties confirm, subject to the jurisdictional objections, that they

are not aware of any grounds upon which to challenge or object to any member of the Arbitral Tribunal.

20. By executing these Terms of Reference, the members of the Arbitral Tribunal confirm their acceptance of

their appointment.

SUMMARY OF UNDISPUTED FACTS

21. On 1 February 2015, the President of Magnifestum Ltd., a company established under the laws of

Centrostan, announced a tender for design, construction and delivery of a motor yacht with the total length -

49.8 meters (the "Yacht").

22. On 23 February 2015, the Claimant and Magnifestum Ltd. (the "Buyer") concluded Shipbuilding Contract

No. 765-U (the "Shipbuilding Contract") as per results of the tender.

23. The total value of the Shipbuilding Contract constituted USD 22 000 000.

24. The Shipbuilding Contract is subject to the best principles of international trade law.

25. The Yacht was to be constructed, delivered to the Claimant's port in Zapadstan, Shtockhold, and accepted by

the Buyer not later than on 24 February 2016.

26. Payment provisions of the Shipbuilding Contract provided that 50% of the price should be paid not later than

by 1 March 2015, 50% - by the irrevocable letter of credit (the "L/C") issued by the Buyer's bank, i.e. the

Respondent, upon presentation of:





e. The Act of Acceptance.

27. On 5 March 2015, the Respondent notified the Claimant's corresponding bank that it has opened the L/C

under the instruction of the Buyer for the amount of USD 11 000 000 pursuant to the provisions of Uniform



65

Customs and Practice for Documentary Credit, 2007 revision, Publication No. 600 of the ICC, Paris ("UCP

600").

28. On 23 February 2016, at the Claimant's port in Zapadstan, Shtockhold, the Yacht was taken by Mr. Aivazov

and his crew at the official ceremony with the representatives of the Parties.

29. On 5 March 2016, a heavy storm has reached the Yacht and, on the same day, the interior of the main room

of the Yacht has been severely damaged.

30. On 6 March 2016, the representatives of the Parties had an official meeting to negotiate the issues arisen.

31. On 7 March 2016, the Claimant made a presentation to the Respondent under the L/C and requested to effect

payment of the remaining 50% of the purchase price of the Yacht.

32. On 10 March 2016, the Respondent refused to effect payment of the credit under the L/C to the Claimant.

33. The Respondent justified his refusal as a result of the analysis of the Buyer's signature on the Acceptance

Act and lack of the National Passenger Ship Safety Certificate (the "Ship Safety Certificate") in the

Claimant's presentation.

34. On 25 March 2016, the Buyer filed a Request for Arbitration against MM LuxYachts Ltd., i.e. the Claimant

in the present arbitration (ICC Case No. 1998/MHM).

AGREEMENT TO ARBITRATE

35. The Parties have disagreements with regard to the arbitration agreement.

36. The Claimant states that as per Article 10 of the L/C the L/C incorporated the following Arbitration Clause

of the Shipbuilding Contract (Clause 10.1.2):




37. The Respondent disagrees with the above. According to the Respondent, as it follows from Clause 10.1.2 of

the Shipbuilding Contract, its scope extends to the parties to it, i.e. the Claimant and the Buyer.

38. The Respondent argues that the provisions of L/C does not specifically provide the incorporation of the

provisions of the Shipbuilding Contract in the L/C.

39. Further, the Respondent stated that it did not provide its consent to be bound by the Arbitration Clause of the

Shipbuilding Contract with the Claimant. Thus, the Arbitral Tribunal, according to the Respondent, lacks

jurisdiction to hear this case.

THE PROCEDURE TO DATE

40. On 1 May 2016, the Claimant filed a Request for Arbitration dated 1 May 2016 ("RfA") against the

Respondent. The Claimant nominated Mr. Ken Collins as co-arbitrator. The Claimant proposed English as

the language of the arbitration and Centrinsk, Centrostan, as the place of arbitration in accordance with the

provisions of the L/C.

41. On 1 June 2016, the Respondent filed an Answer to the RfA ("Answer"). The Respondent nominated Mr.

George Zaselsky as co-arbitrator. The Respondent agreed with the proposed by the Claimant the language

and place of arbitration and pointed out that this acceptance does not affect its position on jurisdiction.

66

42. The Respondent in the Answer objected to jurisdiction of the Arbitral Tribunal and requested the ICC Court

and the Arbitral Tribunal to suspend the proceedings under the present case due to arbitration initiated

against the Claimant on 25 March 2016 (ICC Case No. 1998/MHM).

43. On 11 June 2016, the Claimant submitted its comments to the Respondent's jurisdictional objections and

requests.

44. On 30 June 2016, the ICC confirmed the arbitrators nominated by the Parties - Mr. . Mr. Ken Collins and

Mr. George Zaselsky.

45. On 14 July 2016, the ICC court at its session appointed Mr Henry Donohue as President of the Arbitral

Tribunal upon the proposal of the Oceanian National Committee. On 15 July 2016, the Parties were duly

informed.

46. On 29 July 2016, the file was transmitted to the Arbitral Tribunal pursuant to Article 16 of the 2012 ICC

Rules.

PLACE OF ARBITRATION (ARTICLE 23(1)(F) OF THE ICC RULES)

47. The place of the arbitration is Centrinsk, Centrostan under the Arbitration Clause of the Shipbuilding

Contract.

48. Notwithstanding the fact that the Parties have disagreements on the arbitration agreement and jurisdiction of

the Arbitral Tribunal over the dispute the Parties agree that the place of arbitration shall be Centrinsk,

Centrostan.

49. All awards (whether final, interim or partial) and all procedural orders, directions and instructions shall be

deemed as having been made in Centrinsk, Centrostan.

50. After consultation with the Parties and pursuant to Article 18(2) of the ICC Rules the Arbitral Tribunal may

conduct hearings and meetings at any location it considers appropriate.

51. Pursuant to Article 18(3) of the ICC Rules the Arbitral Tribunal may deliberate at any location it considers

appropriate.

SUMMARY OF THE PARTIES’ RESPECTIVE POSITIONS (ARTICLE 23(1)(C) OF THE ICC

RULES)

52. The purpose of the following summary is to satisfy the requirements of Article 23(1)(c) of the ICC Rules,

without prejudice to any other or further allegations, arguments and contentions contained in the submissions

already filed and/or forthcoming in the course of this Arbitration. Accordingly, the Arbitral Tribunal shall

be entitled, subject to Article 19 of the ICC Rules and other procedural requirements, such as, inter alia,

procedural time limits, to take into consideration further allegations, arguments, contentions and oral or

written submissions. No statement or omission in the summary is to be interpreted as a waiver of an issue of

fact or law. By signing these Terms of Reference, none of the Parties subscribes to or acquiesces in the

summary of the position of the other Parties set forth below.

Summary of the Claimant’s claims and relief sought

53. On 7 March 2016, the Claimant made a presentation to the Respondent under the L/C for obtaining of the

half of the Yacht's price - USD 11 000 000.

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54. On 10 March 2016, the Respondent refused to effect payment under the L/C and stated that the Claimant

should also have presented the Ship Safety Certificate.

55. According to the Claimant, the Claimant was not obliged to present any Ship Safety Certificate as a part of

its presentation to the Respondent under the L/C for obtaining the payment from the Respondent.

56. According to Clause 2.3.1 of the Shipbuilding Contract and Article 10 of the L/C, there was no contractual

obligation of the Claimant regarding presentation of the Ship Safety Certificate to the Respondent in order to

obtain payment amounting to USD 11 000 000, the Respondent should have effected payment under the L/C

to the Claimant.

57. Additionally, the Claimant in any case would have failed to obtain this document as it was not in the

possession of the Yacht "Queen Ilona" and in order to get such a certificate a physical inspection of the

Yacht should be done.

58. Finally, the Buyer's representative is using the Yacht in Centrostan which, thus, means that he has received

the Ship Safety Certificate.

59. The Claimant also stated that it has complied with the requirement set out by the L/C for obtaining payment

to be effected by the Respondent as the Acceptance Act was signed by the duly authorized representative of

the Buyer on 24 February 2016 that was confirmed by the Claimant's witness and co-counsel in this

arbitration - John Zagrebelsky.

60. Thus, there was no breach on the part of the Claimant and its request for payment under the L/C of 7 March

2016 has been legitimate and grounded and the Respondent should have effected payment under the L/C.

61. The relief requested by the Claimant is as follows:

a. Ordering the Respondent to pay the Claimant damages amounting to USD 11 000 000;

b. Ordering the Respondent to pay the Claimant any interest accrued on the amount of damages stated in

sub-paragraph (a) above;

c. Ordering a post-award interest on the amount of damages claimed in sub-paragraph (a) above from the

date of the award till the date of the payment;

d. Ordering the Respondent to pay the costs of these arbitration proceedings, including the costs of the


62. The Claimant also reserved the right to change and supplement its preliminary requests for relief at a later

stage.

Summary of Respondent’s jurisdictional objections, defenses on the merits and relief sought

63. The Respondent in its Answer stated that on 25 March 2016 the Buyer initiated the ICC arbitration against

MM LuxYachts Ltd., i.e. the Claimant in the present arbitration (ICC Case No. 1998/MHM) based on the

provisions of the Shipbuilding Contract.

64. The Respondent also stated that these proceedings depend on the award that is to be rendered in ICC Case

No. 1998/MHM and, thus, requested the ICC Court and the Arbitral Tribunal to suspend the proceedings

until the award under ICC Case No. 1998/MHM, that will determine the overall balance of claims against

MM LuxYachts Ltd., is rendered.

65. The Respondent also reserved its right to refer with the same claim to the Arbitral Tribunal, once it is

constituted, should this Respondent's request be dismissed by the ICC Court of International Arbitration.

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66. The Respondent made a reservation that it provided comments on the merits of the dispute without prejudice

to its position on lack of jurisdiction in this arbitration.

67. The Respondent submitted that as the Claimant failed to present to the Respondent the Ship Safety

Certificate to be provided in accordance with the provisions of the L/C for obtaining the payment amounting

to USD 11 000 000 its presentation of 7 March 2016 cannot be qualified as the complying one, thus, the

Claimant failed to meet the requirement of the L/C for obtaining the requested payment.

68. Additionally, the Claimant also failed to submit an Acceptance Act required by the L/C. The presented

Acceptance Act was not signed by the representative of the Buyer.

69. Thus, the Respondent's refusal of 10 March 2016 to pay the Claimant under the L/C was grounded and

justified.

70. The Respondent's relief requested may be summarized as follows:

a. The Arbitral Tribunal to find that it lacks jurisdiction over the claims submitted by the Claimant in the

present arbitration;

b. The ICC Court of International Arbitration to suspend the proceedings until the award in ICC Case No.

1998/MHM against the Claimant in present arbitration is issued;

c. The Arbitral Tribunal, once it is constituted, to suspend the proceedings until the award in ICC Case No.

1998/MHM against the Claimant in present arbitration is issued;

d. The Arbitral Tribunal to reject all claims of the Claimant entirely on the merit; and

e. The Arbitral Tribunal to order the Claimant to reimburse the Respondent all costs related to this

arbitration.

Summary of Claimant's comments to Respondent's jurisdictional objections and requests

71. In its comments to Respondent's jurisdictional objections and request, on 11 June 2016, the Claimant

maintained its position that this arbitration shall be initiated upon the Arbitration Clause of the Shipbuilding

Contract and all the Respondent's objections in this regard shall be rejected.

72. The Claimant also stated that on 24 February 2016 the representative of the Buyer did sign the Act of

Acceptance with the presence of the Claimant's representatives at the official ceremony. That fact the

Claimant supported by the testimony of its counsel in the present arbitration and the original copy of the Act

of Acceptance (according to the Claimant) that was signed on 24 February 2016.

73. The Claimant also believed that the Buyer has intentionally defrauded the Respondent that he did not sign

the Acceptance Act and lately misled the Respondent which resulted in the Respondent's wrongful refusal to

effect payment to the Claimant under the L/C on 10 March 2016.

74. According to the Claimant, the Respondent's request for suspension of the proceedings was unjustified as the

presentation made by the Claimant for obtaining payment under the L/C is subject to consideration

particularly in this arbitration with a party which issued such L/C and not the Buyer.

75. The Claimant maintained the relief requested in its Request of 1 May 2016.

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ISSUES TO BE DETERMINED BY THE ARBITRAL TRIBUNAL (ARTICLE 23(1)(D) OF THE ICC

RULES)

JURISDICTIONAL ISSUES

76. The Tribunal preliminarily has identified the following issues to be determined (but not necessarily all of

these and only these, and not in the following order).

(i) Whether the Arbitration Clause in the Shipbuilding Contract extends to the Parties of this arbitration;

(ii) Whether it is necessary to suspend the current proceedings until the award under ICC Case

No. 1988/MHM against the Claimant in present arbitration is rendered; and

(iii) Is the Tribunal entitled to decide in this arbitration the issue of validity of the Act (that is subject to

consideration in ICC Case No. 1998/MHM) and the amount to be finally paid to the Claimant.

SUBSTANTIVE ISSUES

Claims of the Claimant against the Respondent

77. Provided the Tribunal finds that it was jurisdiction to hear Claimant’s claims, it shall consider:

(i) Whether the Acceptance Act was properly signed by the Buyer's representative to satisfy the

requirements of UCP 600;

(ii) The effect of discrepancies between the list of documents for payment under the L/C provided by the

provisions of the Shipbuilding Contract and the L/C;

(iii) Whether the Claimant effected a complying presentation to the Respondent on 10 March 2016;

(iv) Whether the Claimant is entitled to damages in the amount of USD 11 000 000 and any interest accrued

on the amount of damages under applicable law.

Other issues

78. The Tribunal shall be free to rule on any other issues it decides in one or more partial awards or procedural

orders and to join to the merits any or all of the preliminary or other issues that have been or might be

referred to it.

APPLICABLE SUBSTANTIVE LAW

79. As stated by Clause 10.1.2 of the Shipbuilding Contract:



arbitration shall be Centrinsk, Centrostan." [Claimant's emphasis]

80. The L/C does not provide for applicable substantive law. As required by Article 21(2) the Arbitral Tribunal,

in the absence of the agreement of the Parties, will apply to it the rules of law which it determines to be

appropriate.

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APPLICABLE PROCEDURAL RULES AND OTHER MATTERS (ARTICLE 23(1)(G) OF THE 2012

ICC RULES)

81. The rules governing these arbitration proceedings shall be the ICC Rules of Arbitration in force as from

1 January 2012, and such other mandatory rules as are applicable to an international commercial arbitration

taking place in Centrinsk, Centrostan, as the seat of the arbitration, and, where these rules are silent, such

other rules as may be agreed in writing by the Parties or, in the absence of such agreement, as may be

determined by the Arbitral Tribunal.

82. Further details of the applicable procedural rules and a timetable shall be established by the Tribunal by way

of the procedural orders after consultation with the Parties.

LANGUAGE

83. The arbitration proceedings shall be conducted in the English language.

84. Any document submitted by a Party to the Tribunal in support of its case in any language other than English

shall be accompanied by a translation into English of the whole document or relevant part(s) thereof.

85. A Party shall not be required to translate a document produced to another Party pursuant to a request to

produce that document to the other Party, but if that document is submitted to the Arbitral Tribunal in

support of a Party's case, that Party shall also provide a translation.

CONFIDENTIALITY

86. Unless the Parties expressly agree in writing to the contrary, the Parties and their counsel shall keep

confidential and not disclose to any non-party the existence of the arbitration, all non-public materials and

information provided in this Arbitration by the other Party, and orders or awards made in this Arbitration

("Confidential Information").

87. If a Party wishes to involve in this Arbitration a non-party – including a witness, expert, stenographer,

translator or any other person – the Party shall make reasonable efforts to secure the non-party’s advance

agreement to preserve the confidentiality of the Confidential Information.

88. Notwithstanding the foregoing, a Party may Disclose Confidential Information to the extent necessary to:

a. prosecute or defend this Arbitration or proceedings related to it (including enforcement or annulment

proceedings), or to pursue a legal right;

b. respond to legitimate subpoena, governmental request for information or other compulsory process;

c. make disclosures required by law or rules of a securities exchange;

d. seek legal, accounting or other professional services, or satisfy information requests of potential

acquirers, investors or lenders, provided that in each case that the recipient agrees in advance to preserve

the confidentiality of the Confidential Information.

89. Upon the request of any Party, and pursuant to Article 22(3) of the Rules, the Arbitral Tribunal may make

orders concerning the confidentiality of the proceedings and may take measures for protecting trade secrets

and confidential information.

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DECISIONS OF THE TRIBUNAL

90. After consultation with the co-Arbitrators, the President of the Arbitral Tribunal shall be empowered to

execute Procedural Orders alone.

91. The Arbitral Tribunal shall be free to decide any issue by way of a partial or interim award, or by its final

award, as it may deem appropriate.

92. All awards, whether partial, interim or final, shall be in writing and shall state the reasons upon which the

award is based.

EXTENSIONS OF TIME

93. Extensions of time for the parties’ submissions may be agreed between the parties, subject to the approval of

the Arbitral Tribunal.

94. Applications for extensions of time which are not agreed should be made to the Arbitral Tribunal with a

written statement as to why the extension of time is required and for what period of time.

95. The Arbitral Tribunal may request the Court to grant the extensions of the time limit for rendering the Final

Award.

ADMINISTRATIVE SECRETARY

96. Taking into account a complexity of this case the Arbitral Tribunal may appoint an administrative secretary.

97. An administrative secretary shall be subject to the same requirements of impartiality and independence as

those required from an arbitrator.

98. The fees and expenses of the secretary will be paid on the basis of hourly rate the tribunal find appropriate

and will be treated by the parties as arbitration expenses.

DISPOSAL OF THE DOCUMENTS

99. Three months after the Secretariat of the ICC Court notifies the final award to the Parties, the arbitrators

shall be at liberty to destroy the documents submitted throughout the course of the proceeding, unless the

Parties have specifically asked for the documents to be returned to the counsel who initially sent them. This

will be done at the entire cost of the requesting Party.

These Terms of Reference are signed by the Arbitral Tribunal and by the duly authorized representatives of the

Parties on 25 August 2016, in eight counterparts, on the date(s) shown below.

For the Claimant

John Zagrebelsky

Zagrebelsky & Partners, Partner

_______________________

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For the Respondent

Howard Smirnoff

Smart Law Bureau

________________________

For the Arbitral Tribunal

_______________________________,

Mr. Ken Collins, Co-arbitrator

_______________________________,

Mr. George Zaselsky Co-arbitrator

_______________________________

Mr. Henry Donohue, President

Place of arbitration: Centrinsk (Centrostan)

Date: 25 August 2016

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