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International Arbitration Forum

Gokul Das Binani and Madhu Binani v. Republic of North Macedonia

Case summary

At a glance

Parties
Gokul Das Binani and Madhu Binani (Indian nationals) v. Republic of North Macedonia
Case no.
PCA Case No. 2018-38; Swiss Federal Tribunal judgment 4A_156/2020
Forum and rules
UNCITRAL Arbitration Rules, administered by the PCA; seat Geneva
Treaty
Investment agreement signed 17 March 2008 (the judgment anonymises the States; the claimants are Indian nationals)
Court
Swiss Federal Tribunal, First Civil Law Court: Judges Kiss (presiding), Niquille and Rüedi
Underlying award(s)
Termination Order and Award on Costs of 17 February 2020
Outcome
The Federal Tribunal dismissed the claimants' appeal against the costs award (1 October 2020).
Amount
Arbitral costs award: EUR 653,089.31 in legal costs and USD 132,502.67 in arbitration costs, with interest at 2.25% a year. Federal Tribunal: court fees of CHF 9,000 and CHF 10,000 in costs to the State, payable jointly by the claimants.

The dispute

On 3 August 2017 two Indian nationals began arbitration against the Republic over an investment protected by an agreement signed on 17 March 2008. The case was conducted under the UNCITRAL Rules, administered by the PCA and seated in Geneva. The claimants paid only USD 20,000 of their USD 50,000 deposit towards costs. They asked several times for more time, citing a claimant's health, and their Indian and then their Serbian counsel stopped acting for them. They never filed their Statement of Claim. The tribunal terminated the proceedings for non-payment of the deposit and ordered the claimants to pay all of the State's costs. The claimants appealed to the Swiss Federal Tribunal. They attacked only the order to pay EUR 653,089.31 in legal costs, arguing that they had been denied the right to be heard and equal treatment, and that the amount was so excessive at such an early stage that it breached public policy.

Key holdings

  1. An award that ends the arbitration on procedural grounds, here for non-payment of the deposit, is a final award. It can therefore be appealed on all the grounds in Article 190(2) of the Swiss Private International Law Act (PILA). consid. 2
  2. The claimants had enough time to answer the State's costs application. Their deadline was extended to 30 September 2019, which gave them more than six weeks. Their Serbian counsel withdrew only on 2 October 2019, after the deadline had passed. consid. 5.2
  3. The arbitral tribunal did not refuse the extension the claimants requested on 14 November 2019. They filed their response the next day, before the State had commented, so the request became moot. In any case they showed no prejudice. consid. 5.3
  4. In arbitration, the right to be heard does not give an absolute right to a second round of written submissions. The State had filed its reply without being invited, and the claimants could have answered in the same way. They raised no complaint during the more than two months before the award, so raising it now is contrary to good faith. consid. 5.4
  5. A costs award breaches substantive public policy only if it is out of all proportion to the costs the party needed to defend its rights, to a shocking degree. The award of EUR 653,089.31 did not meet that test. The claimants could not rely on their own repeated delays to argue that the State should have held back from preparing its defence on the merits. consid. 6.1, 6.4
  6. The appeal was dismissed. The claimants must jointly pay court fees of CHF 9,000 and CHF 10,000 in costs to the State. Operative part

Procedural history

  1. 3 August 2017The claimants file their notice of arbitration.
  2. 5 December 2018First procedural hearing. Procedural Order No. 1 sets 1 April 2019 as the deadline for the Statement of Claim.
  3. 14 May 2019Procedural Order No. 2 extends the deadline for the Statement of Claim to 15 July 2019 and warns that the proceedings will be terminated if the deposit is not paid.
  4. 31 July 2019The State files a costs application and says it will not pay the outstanding deposit.
  5. 17 February 2020Termination Order and Award on Costs: the proceedings are terminated and the claimants are ordered to pay EUR 653,089.31 and USD 132,502.67, with interest.
  6. 18 March 2020The claimants appeal to the Swiss Federal Tribunal. Suspensive effect is granted on 11 June 2020.
  7. 1 October 2020The Swiss Federal Tribunal dismisses the appeal.

Tribunal, counsel and experts

For the claimant
Aurélie Conrad Hari · Nathalie Aymon
For the respondent
Vanessa Liborio Garrido de Sousa

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Keywords

Summary generated with AI from the published documents — refer to the award for the authoritative text.

Case ID
PCA Case No. 2018-38
Country
Treaty
India - Macedonia BIT (2008)