（2005年7月19日）
【提要】申請人作為出租人，被申請人作為投資人，雙方簽訂房屋租賃合同，房屋的承租人是被申請人計劃成立的合資企業(yè)。合同租期為5年，并約定了免租期。考慮到合資企業(yè)因受非典的影響而未能如期成立開業(yè)，雙方后又達(dá)成補充協(xié)議，將起租日推遲了5個月。由于合同的承租人合資企業(yè)最終未能成立，被申請人提前終止了合同。申請人因此提起仲裁，要求被申請人承擔(dān)相應(yīng)的賠償責(zé)任。
［Summary］ A lease contract for a building was entered into by the Claimant as the lessor and the Respondent as the investor. A Respondent-invested joint venture in the process of incorporation was named as the lessee. The parties agreed in the contract that the leasing period was 5 years and they also agreed on the rent-free periods. Due to the threat of SARS，the joint venture was not able to open its business as planned. Taking that into consideration，the parties later concluded a supplemental contract，in which the commencement date was postponed for 5 months. Finally， the joint venture， the lessee of the lease contract， would not come into legal existence at all，and the Respondent made an early termination to the contract. Hence the Claimant submitted the dispute to arbitration and requested for compensation by the Respondent.
The above facts were not challenged by the Respondent. However，one of the issues at dispute was that in determining compensation，whether the Tribunal should apply Article 4.1 of the contract providing the liquidated damages in case of the exercise of the contractual right of early termination，or apply Article 13.1 providing compensation for actual losses in case of breach. Another issue at dispute was that whether the parties' agreement on the rent-free periods should be revoked as a result of the early termination of the contract by the Respondent.
The Tribunal was of the opinion that because the Respondent issued the termination notice after the deadline for exercising its contractual right of early termination under Article 4.1 of the contract，such termination constituted a breach of contract，and the Respondent shall bear the relevant liabilities and compensate for the actual losses of the Claimant in accordance with Article 13.1 of the contract. The parties' agreement on the rent-free periods was partly a consideration against the Respondent's commitment of leasing the building for a period of five years. Considering that the Respondent terminated the lease contract less than three months after the new commencement date set by the supplemental contract， the Respondent should not enjoy the benefit of such rent-free periods and had to pay all the rent due.
［Key words］ House leasing early termination of contract rent- free periods
The China International Economic and Trade Arbitration Commission （ The CIETAC）， on the basis of the arbitration clause contained in the Lease Contract signed by and between the Claimant B Company （the Claimant） and W Company （ the Respondent） on 13 March 2003 （the Lease Contract）， as well as the written Application for Arbitration submitted by the Claimant to the CIETAC on 18 June 2004，has taken cognizance of the case.S
On 20 October 2004， the Arbitral Tribunal was formed according to the Arbitration Rules to hear the case.
On 13 January and 28 March 2005 respectively，the Arbitral Tribunal held two oral hearings. The agents of both the Claimant and the Respondent attended the hearing， presented their respective cases， examined the evidence submitted by the opposing party， and answered the questions raised by the Arbitral Tribunal.
This Award was rendered by the Arbitral Tribunal on 19 July 2005.
The facts and disputes， opinions of the Tribunal and the Award are set out as follows:
Part A Facts and Disputes
On 13 March 2003， the Claimant as the Lessor signed the Lease Contract with the Respondent （formerly known as W Compamy） for the lease of premises at “Level 1 and Level 2 of Building X” （the Leased Premises or the Premises）. The Respondent was acting on behalf of the Lessee of the Lease Contract， S Company， a joint venture in the process of establishment in which the Respondent was contemplating to invest at the time. According to Article 4.1 of the Lease Contract，the lease period shall begin on March 16， 2003 and expire on March 15， 2008.
On 14 March 2003， the Claimant delivered the Leased Premises to the Respondent in accordance with the provisions of the Lease Contract.
On 8 August 2003， taking into consideration that S Company was unable to carry on its business as a licensed training school in the Leased Premises due to the threat of SARS in China， the Claimant and the Respondent entered into the Supplemental Contract to the Lease Contract（the Supplemental Contract）， in which the parties agreed to change the lease period to begin on 16 August 2003 and expire on 15 August 2008.
On 5 November 2003， the Respondent notified the Claimant in writing of its intention to terminate the Lease Contract for the reason that the Respondent would not “be creating a Joint Venture company between the planned partners”， and therefore would not be opening S Company at the Leased Premises.
The Respondent has already paid an amount of USD 186，905.70 to the Claimant for the lease of the Leased Premises， and the Claimant acknowledged the receipt of the said amount.
The Claimant held that the early termination of the Lease Contract by the Respondent resulted in a breach of contract， and set out its final claims against the Respondent as follows:
1. The Respondent shall pay compensation in the amount of USD 519，178.67 and RMB 547，082.88 to the Claimant according to， without limitation， Article 13.1 of the Lease Contract and provisions of relevant PRC laws. （hereinafter “Claim 1”）
2. The Respondent shall pay compensation in the amount of USD 518，664.76 to the Claimant according to， without limitation， Article 4. 1 of the Lease Contract， only under the condition that the preceding claim is not agreed to by the Arbitral Tribunal （hereinafter “Claim 2”）. and
3. The Respondent shall reimburse the Claimant for all the costs and expenses it has incurred or will incur in the future in the course of the arbitration proceedings， including and without limitation to the arbitration fee paid in advance by the Claimant and its attorney fee of RMB 100，000 （hereinafter “Claim 3”）.
The Claimant put forward the following reasons and explanations for its claims:
1. Claim 1
1.1 Claim 1 should be legally protected by the Arbitral Tribunal.
A. The early termination caused by the Respondent does not fully comply with the provision of Article 4.1 of the Lease Contract as the notice of termination was not delivered on or before 15 October 2003 and the reason indicated therein was not out of the control of the Respondent，therefore， the Respondent's early termination constitutes a breach of the Lease Contract.
B. Since the early termination is a breach of the Lease Contract by the Respondent，then:
a. The legal result shall be more severe than the one as provided in Article 4.1;
b. The actual losses of USD 519，178.67 and RMB 547，082.88 due to the breach of the Respondent and suffered by the Claimant are much higher than the compensation of USD 350，449.12 （7.5 months rent and management fee） as provided by Article 4.1;
c. The Claimant makes a proper and reasonable claim based on Article 13.1， under which “the party in breach shall compensate the other party for the loss， damage， costs and expenses suffered or incurred by the other party as a result of such breach”. Therefore， the Claimant claims the losses arising from the breach by the Respondent that shall be legally protected by this Tribunal.
C. According to Article 113 of the PRC Contract Law， the party failing to perform contractual duties shall compensate the other party losses caused by breach of contract.
1.2 Calculation of the Losses
A. The actual losses due to the breach of the Respondent and suffered by the Claimant are calculated by considering the following factors:
a. After receiving the Respondent's notice of termination and upon the effort of the Claimant， the Premises has been partly leased from 1 February 2004 and will be entirely leased to other tenants until 1 July 2005. The total rent and management fees that the Claimant has received and is entitled to receive during this period is RMB 4，791，230.53， equivalent to USD 578，895.73 （at the sale-buy exchange rate of 100/ 827.65 as published by the PRC Central Bank on 11 January 2005），and the rent rate on average is a little bit lower than that granted to the Respondent.
b. The Claimant shall have received and be entitled to receive USD 1，051，347.35， the total rent and management fees commencing from 16 August 2003 to 1 July 2005， had the Respondent not broken and terminated the Lease Contract.
c. Considering the commitments restated by the Respondent to lease the Premises for five years and at its request， the Claimant agreed in good faith to change the Lease Period to begin from 16 August 2003 rather than 16 March 2003， the date when the Respondent actually occupied the Premises， and granted the Respondent five months free of charge in addition to the rent-free period of six months. It would be unreasonable for the Respondent， who has only leased the Premises for less than three months， to be given the right to eleven months free of rent. Therefore， the rent for the six months of rent-free periods （from 16 August 2003 to 15 January 2004 and from 16 June 2004 to 15 July 2004） shall not be exempted， which has been included in the above （a） and （b）. The rent and management fees totaling USD 233，632.75， from 16 March 2003 when the Premises was actually occupied by the Respondent to 16 August 2003， shall also be part of the losses suffered by the Claimant due to the early termination of the Respondent.
d. The Claimant has already paid commissions totaling RMB547，082.88 to its agencies for finding， as tenants， the Respondent and F Company （one of the new tenants）.
e. USD 186，905.70 has already been paid by the Respondent to the Claimant.
B. The amount of actual losses due to the breach of the Respondent and suffered by the Claimant shall be calculated in the following formula:
USD 1，051，347.35-USD 578，895.73 + USD 233，632.75 + RMB 547，082.88
Therefore， the amount of the actual losses is USD 706，084.37 plus RMB 547，082.88. Upon deduction of USD 186，905.70， the Respondent is liable to pay USD 519，178.67 and RMB 547，082.88.
2.Claim 2
2.1 If the actual losses of USD 519，178.67 and RMB 547，082. 88 are not fully agreed to by the Arbitral Tribunal， the Claimant shall， at least based on Article 4.1 of the Lease Contract， be entitled to compensation of the sum of the rent and management fees of USD 355， 120.64 payable commencing from 16 March 2003 to 5 November 2003，the date of the Respondent's notification of termination， plus 7.5 months of rent and management fees （USD 350，449.12）， totaling USD705，569.76. Upon deduction of USD 186，905.70 already paid by the Respondent， the Respondent is still liable to pay USD 518，664.76.
2.2 Reasons for supporting Claim 2:
A. If the Arbitral Tribunal does not agree that the early termination by the Respondent has resulted in a breach of contract and consequently does not fully agree with Claim 1， the termination shall be considered as the similar situation provided in Article 4.1.
B. The Respondent acknowledged at the first hearing that the early termination conducted by the Respondent resulted in adoption of Article 4.1 of the Lease Contract. Based on the facts relating to the case，the minimum compensation payable by the Respondent to the Claimant shall be the rent and management fees commencing from 16 March 2003 to the Respondent's notification date of 5 November 2003，plus 7.5 months of rent and management fees.
2.3 According to the fact that the Premises was actually occupied by the Respondent on 16 March 2003 and Article 4.1 which provides that the Respondent shall pay “Rent， Management Fee and other fees or charges under Article 9.1 hereinafter which have accrued prior to the actual termination date of this Contract” and “rent-free period shall be revoked”，the rent and management fee accrued shall be calculated from 16 March 2003.
3.Claim 3
Early termination conducted by the Respondent directly gives rise to this case，therefore， any arbitration fee and attorney fee paid previously by the Claimant and any relevant costs shall be reimbursed by the Respondent.
The Respondent's main arguments in its written defense are summarized as follows:
1.On Claim 1 （the Principal Claim）
The Claimant finds that the Respondent committed a contractual breach by its early termination of the Lease Contract，and therefore now considers that the corresponding compensation should be based on actual losses in accordance with Article 13.1 of the Lease Contract.
As the Claimant thereby agrees with the position of the Respondent that damages should be computed on an actual basis， the only issue at hand is the determination of the amount of such actual losses.
In that regard， the Claimant evaluates its actual losses at USD 519， 178.67 and RMB 547，082.88 with the following formula:
USD 1，051，347.35-USD 578，895.73 + USD 233，632.75 + RMB 547，082.88-
USD 186，905.70
Except for the deduction of USD 186，905.70 which the Claimant has finally acknowledged， the Claimant's assessment of its actual losses is incorrect as explained below.
1.1 On the USD 472，451.62 （USD 1，051，347.35—USD 578，895.73）
When computing the amount of rent and management fees that the Respondent would have paid pursuant to the Lease Contract until the Leased Premises are entirely leased to new tenants， the Claimant has conveniently neglected to take into consideration the rent-free periods provided by the Supplemental Contract.
Indeed， pursuant to Article 2.3 of the Supplemental Contract， the Claimant granted to the Respondent two rent-free periods for a total of six months， as follows:
—five months from 16 August 2003 to 15 January 2004， and
—one month from 16 June 2004 to 15 July 2004.
Consequently， the Claimant would not have received from the Respondent any rent for these six months. In other words， the Claimant has not suffered from any loss for these periods in relation to the termination of the Lease Contract.
Therefore， the rent for these six months of rent-free periods （that is USD 223，910.40） shall be deducted in computing the Claimant's actual losses following termination of the Lease Contract:
—Total rent and management fees that should have been paid by the Respondent to the Claimant from 16 August 2003 to 1 July 2005: USD 1，051，347.35
—Less the rent for the six months of rent-free periods: USD 223，910.40
—Less the rent and management fees received by the Claimant from new tenants during the period from 16 August 2003 to 1 July 2005: USD 578，895.73
Actual losses following termination:USD 248，541.22
In conclusion， for the period up to 1 July 2005，when the Leased Premises will be entirely re-leased，the Claimant has incurred an actual loss of USD 248，541.22 in relation to the Respondent's termination.
1.2 On the USD 233，632.75
The amount of USD 233，632.75 claimed by the Claimant corresponds to five months of rent and management fees for the period from 16 March 2003 to 16 August 2003. However， in the Supplemental Contract，the Claimant and the Respondent agreed to postpone the beginning of the lease period from 16 March 2003 to 16 August 2003.
As a result， there is no reason for the Respondent to be liable for the payment of rent and management fees before 16 August 2003， since the Lease Contract was not in effect before this date.
Moreover， the contention that the Respondent occupied the Leased Premises during this five-month period is simply wrong as the Respondent never used or occupied the Leased Premises.
1.3 On the RMB 547，082.88
The Claimant has demanded reimbursement by the Respondent of RMB 547，082.88 corresponding to commissions paid by the Claimant to agencies for finding， as tenants， the Respondent and F Company.
Such commissions should not be regarded as losses incurred by the Claimant as the cost of agencies is，in fact， included in the rent charged by the Claimant to his tenants.
1.4 Conclusion on the Principal Claim
In light of the above， the Principal Claim shall be rejected as:
—both the amounts of USD 233，632.75 and RMB 547，082.88 shall be excluded from any compensation to be paid by the Respondent to the Claimant; and
—the Respondent shall be liable for payment to the Claimant of an amount of USD 61，635.52 corresponding to the Claimant's actual losses in relation to the termination of the Lease Contract， following deduction of the rent and management fees already received from the Respondent:
USD 248，541.22-USD 186，905.70 = USD 61，635.52
2. On Claim 2 （the Alternative Claim）
As an alternative to its Principal Claim， the Claimant relies on Article 4.1 of the Lease Contract to request payment of USD 518，664. 76，calculated in the following formula:
USD 355，120.64 （the rent and management fees payable commencing from 16 March 2003 to 5 November 2003，the date of the Respondent's notification of termination）+USD 350，449.12 （7.5 months of rent and management fees）-USD 186，905.70 （sum already paid by the Respondent）
2.1 As explained in §1.2 above， the Claimant is not entitled to the payment of USD 233，632.75 representing five months of rent and management fees for the period from 16 March 2003 to 16 August 2003，as it corresponds to a period during which the Lease Contract was not in effect and the Respondent was neither occupying or using the Premises at that time. Therefore， this amount should not be included.
2.2 On the USD 471，987.01 （USD 355，120.64-USD 233， 632.75+USD 350，449.12）
（1） For the purpose of the Alternative Claim， the Claimant finds that Article 4.1 of the Lease Contract is applicable， while its Principal Claim is based on Article 13.1.
As the Respondent terminated the Lease Contract outside the scope of the provisions of the Lease Contract， such termination shall be regarded as a breach for which Article 13.1， and not Article 4.1， is relevant.
Indeed， the Claimant states as a fact that “the said termination of the Lease Contract made much early by the Respondent certainly results in its breach of the Contract”.
（2） Furthermore， even where Article 4.1 of the Lease Contract would be applicable， this stipulation provides for liquidated damages consisting of （i） the retrospective revocation of all rent free periods and （ii） a compensation equivalent to 7.5 months of rent and management fees. The application of this provision results in a total amount of damages of USD 471，987.01.
However， as demonstrated in §1.1 above， the actual losses incurred by the Claimant are only USD 248，541.22， an amount far below that of the Alternative Claim.
And pursuant to Article 114 of the PRC Contract Law，when “the liquidated damages stipulated grossly exceed the loss incurred， a party may petition a people's court or an arbitral tribunal to reduce the amount appropriately”.
In the present case，since the liquidated damages greatly exceed the actual losses， the liquidated damages should be reduced accordingly. Therefore， after deduction of the USD 186，905.70 for amounts already paid to the Claimant， the Respondent should be liable towards the Claimant of an amount not exceeding USD 61，635.52.
2.3 Conclusion on the Alternative Claim
In light of the above， the Alternative Claim shall be rejected as （i）USD 233，632.75 corresponding to the rent and management fees for a period when the Lease Contract was not in effect，（ii） Article 4.1 is not applicable to the termination of the Lease Contract for breach and， even if it were，its application would result in liquidated damages which greatly exceed the actual losses incurred by the Claimant.
3. On the Request to Have the Costs of these Arbitral Proceedings Borne by the Respondent
Through its continuous written offers of assistance and compensation， the Respondent has shown its good faith in searching for an equitable solution to amicably settle the termination of the Lease Contract. It is unfair to require the Respondent to bear all the Claimant' s expenses in relation to the arbitration proceedings and the Respondent's expenses in relation to these proceedings should be entirely borne by the Claimant.
Part B Opinions of the Tribunal
Based on the written statements and evidence submitted as well as the oral arguments made by the parties during the hearings， the Tribunal hereby issues the following opinions:
1.Governing Law
The conflict rules guiding the Tribunal to determine the governing law of this case are those of the forum （Chinese conflict rules）. The General Principles of Civil Law （Art. 145） and the Contract Law （Art. 126） of the People's Republic of China （“PRC”） provide that in case of a contract with foreign elements， the parties have the right to choose the governing law， which， as comprehended by the Tribunal， means the parties' autonomy with respect to the governing law shall be respected.
Article 15.1 of the Lease Contract provides:
“The formation， validity， interpretation， performance of this Contract and the settlement of any dispute regarding this Contract shall be governed by the published and publicly available laws and regulations of the People's Republic of China”.
Article 4 of the Supplemental Contract provides:
“This Supplemental Contract shall be governed by， construed and interpreted in accordance with the published and publicly available laws and regulations of the People's Republic of China.”
The above-mentioned clauses reflect the Parties' mutual intention that the Tribunal shall apply the PRC laws to resolve the present dispute between the parties relating to the Lease Contract. Therefore， the PRC substantive laws as chosen by both parties shall be applicable to the present dispute.
2.The Lease Contract and its Termination
The Lease Contract was entered into by the Claimant as the Lessor and the Respondent as the Investor on 13 March 2003. S Company，a joint venture in the process of incorporation at the time of conclusion of the Lease Contract，was named as the Lessee that would ratify the Lease Contract after its incorporation and be the only counter party with the Claimant （see Article 4.1 of the Lease Contract quoted below）. The fact that S Company never comes into legal existence does not render the Lease Contract invalid because the Claimant and the Respondent （“the Parties”） properly executed on it and the Respondent executed on it “as the Investor of the Lessee and on its own behalf”，and it was partially performed.
The Lease Contract was amended by the Supplemental Contract concluded on 8 August 2003 by the Parties in the same way the Parties signed the Lease Contract on 13 March 2003. Therefore， the effective Lease Contract will be that as amended by the Supplemental Contract.
The Parties acknowledged that the Lease Contract was terminated on 5 November 2003 by a written notice from the Respondent to the Claimant， for the reason that the Respondent would not “be creating a Joint Venture company between the planned partners”， and therefore would not be opening S Company at the Leased Premises. It is the Tribunal's understanding that the Parties do not dispute on such termination and their mutual intent is that the Lease Contract will no longer be performed.
3.Respondent's Termination Amounts to a Breach of Contract
The second paragraph of Article 4.1 of the Lease Contract provides:
“Upon due ratification of this Contract by the Lessee， the Lessor recognizes that the Investor shall have no rights or obligations under this Contract and the Lessor shall look solely and exclusively to the Lessee. In the event that the Lessee is not established or has not duly ratified this Contract on or before 15 September 2003 due to any reason which is out of the control of the Investor， the Investor may terminate this Contract by fourteen （14） days' notice to the Lessor， to be given on or before 15 October 2003， provided that the Investor shall pay to the Lessor （i） the Rent，Management Fee and other fees or charges under Article 9.1 hereinafter which have accrued prior to the actual termination date of this Contract， notwithstanding the rent-free period granted by the Lessor under Article 5.3（1） which rent-free period shall be revoked with retrospective effect upon service of the notice to terminate under this Article 4.1 by the Investor; and （ii） a compensation equivalent to seven and a half （7.5） months Rent and Management Fee.”
The Respondent has a contractual right of termination under the above article if it notified the Claimant with a written termination notice on or before 15 October 2003. It is established that the relevant termination notice was issued by the Respondent on 5 November 2003， twenty days after the deadline that such termination right could be exercised. There are other circumstances contemplated by the Lease Contract （e.g.，Article 13 and 14） where the Respondent may exercise the right of termination， but they are not applicable to the present dispute. The Claimant alleged that the termination by the Respondent should be considered as a breach of contract. The Tribunal noticed that the Respondent did not challenge such allegation but rather admitted it was a breach. The Tribunal believes the unilateral termination made by the Respondent of the Lease Contract on 5 November 2003 will not be deemed as an exercise of its contractual right but a breach of contract. The Respondent，as the party in breach， shall bear the relevant liabilities.
4.Liquidated Damages or Actual Losses
Article 4.1 of the Lease Agreement （quoted above） provides for liquidated damages， which the Tribunal intends to follow should the termination by the Respondent on 5 November 2003 be found as an exercise of its contractual right. However， as indicated above， such termination act of the Respondent is considered not as an exercise of contractual right but a breach of contract and Article 4.1 is therefore not applicable.
The relevant provision of the Lease Contract in this respect is Article 13. Article 13.1 stipulates:
“Each Party shall be responsible for the full and proper performance of their respective obligations （in whatever names called） under this Contract without prejudice to Article 13.2 and 13.3， the party in breach shall compensate the other party for the loss， damage， costs and expenses suffered or incurred by the other party as a result of such breach.”
This article provides the principle of compensation for actual losses in case of breach. While the Claimant put forward its claim of actual losses as the principal claim and the claim based on liquidated damages as an alternative claim， the Respondent advocates that any compensation should be based on actual losses.
The Tribunal is of the opinion that when determining， under the PRC law， any damages in case of breach of contract， the Tribunal should first look into the actual losses suffered by the aggrieved party，though the parties may have also agreed on liquidated damages.
5.Commencement Date and Rent-free Periods
Article 4.1 of the Lease Contract provides: “The lease period shall begin on 16 March 2003 （the ‘Commencement Date'） and expire on 15 March 2008 （‘Lease Period'）”. The Commencement Date was later changed by the Supplemental Contract （Article 2.2） from 16 March 2003 to 16 August 2003.
Article 2.1 of the Supplemental Contract provides:
“（a） The Lessee has required the Lessor to alter the Lease Period under article 4.1 of the Lease Contract on the basis that it is unable to carry on its business as a licensed training school in the Leased Premises due to the threat of the virus known as Severe Acute Respiratory Syndrome （‘Sars'） in the People's Republic of China. “……
“（d） The Lessor acknowledges that the postponement of the Commencement Date is made on the basis of mutual agreement of the Parties and in no event that such postponement shall be deemed as a breach of the Lease Agreement by the Lessee.”
It is clear that the Parties had reached a new agreement in respect of the new Commencement Date and therefore the Tribunal will not look into the period before the new Commencement Date.
Regarding the rent-free periods， this was first stipulated in the Lease Contract （Article 5.3） and then amended by the Supplemental Contract. The amended Article 5.3 provides as follows:
“Notwithstanding article 5.2 above， the Lessor hereby grants to the Lessee the following rent-free periods:
“（1） five （5） months in the first year of the Lease Period， from 16 August 2003 to 15 January 2004; and
“（2） one （1） month in the second year of the Lease Period， from 16 June 2004 to 15 July 2004.
“The Lessee shall continue to be liable to pay the Management Fee during the relevant rent-free periods.”
The Tribunal is of the opinion that such rent-free periods of six months are partly a consideration against the Respondent's commitment of leasing the Premises for a period of five years. Considering that the Lease Contract was terminated less than three months after the new Commencement Date and even within the new rent-free period， and such early termination has resulted in the loss of expected rent that the Claimant would otherwise have received from the Respondent， it would be unreasonable if the Respondent would still enjoy the benefit of such rent-free periods.
6. Calculation of Rent and Management Fees
The Tribunal noticed that the Respondent admitted that certain rent and management fees should be paid to the Claimant but it did not agree with the calculation set forth by the Claimant. The Claimant alleged that the amount of rent and management fees payable should be USD 519， 178.67， while the Respondent said that the amount should be USD 61， 635.52.
The following figures， as observed by the Tribunal， are agreed to by the Parties or have not been challenged by either of the Parties:
a. The Claimant shall have received and be entitled to receive USD 1，051，347.35， which are the total rent and management fees accruing from 16 August 2003 to 1 July 2005 had the Respondent not terminated the Lease Contract.
b. The Premises has been partly leased from 1 February 2004 and will be entirely leased to other tenants until 1 July 2005， the total rent and management fees that the Claimant has received and is entitled to receive during this period are RMB 4，791，230.53， equivalent to USD 578，895.73 （at the exchange rate of 100:827.65 as published by the PRC Central Bank on 11 January 2005）.
c. USD 186，905.70 has been paid by the Respondent to the Claimant.
The following figures are disputed between the Parties:
a. USD 233，632.75 claimed by the Claimant corresponding to five months of rent and management fees for the period from 16 March 2003 to 16 August 2003. The Claimant argued that the amount should be paid since the Premises were actually occupied by the Respondent during this period，which was denied by the Respondent. The Tribunal is of the opinion that since the Commencement Date of the Lease Period was rescheduled by the Supplemental Contract to 16 August 2003，it would not be reasonable for the Respondent to pay any rent and management fees for the period before that date.
b. USD 223，910.40， corresponding to the rent for six months of rent-free periods， was insisted by the Respondent to be deducted from the Claimant's actual losses. As discussed before in the opinion of the Tribunal， the Respondent shall not be entitled to the rent-free periods in this case and hence the rent for such periods shall not be excluded from the Claimant's actual losses.
Therefore， the Tribunal is of the opinion that the rent and management fees to which the Claimant is entitled should be the total rent and management fees accruing from 16 August 2003 to 1 July 2005 （USD 1， 051，347.35）， less the amount the Claimant has received from the Respondent （USD186，905.70）， less further the amount the Claimant has received and is entitled to receive by re-leasing the Premises to other tenants during the same period （USD 578，895.73）. The total amount due and payable to the Claimant is USD 285，545.92 as calculated as follows:
USD 1，051，347.35 USD 186，905.70 USD 578，895.73 = USD 285，545.92
7. The Commissions
The Claimant alleged that it has paid commissions to its agencies for finding， as tenants， the Respondent and F Company， totaling RMB 547，082.88. The Respondent argued that such commission is in fact included in the rent charged by the Claimant to his tenants. The Tribunal finds as a fact that the Claimant paid a commission of RMB 385，780.20 for finding the Respondent as a tenant and paid a commission of RMB 161，302.68 to an agency for finding F Company as a new tenant. The Tribunal is of the opinion that commissions to agencies for finding tenants are the usual costs of a lessor， which will normally be included in the rental charge to tenants. The incurrence of such a commission is not a direct result of a breach of contract. However， if a lessor has to pay extra commission that would otherwise be saved but for the first tenant's breach of contract，the lessor should be proportionately reimbursed for such extra costs.
In respect of the commission for finding the Respondent as a tenant， the Respondent would have rented the Premises for five years （the Lease Period） in the absence of early termination. The period that the Respondent is liable for payment of rent and management fees is roughly two years （16 August 2003 to 1 July 2005）， 40% of the entire length of the Lease Period. If such commission is amortized equally into the rent of five years， then the Respondent is liable for reimbursement of 60% of the commission the Claimant had paid to the agency for finding the Respondent as a tenant. The amount of the reimbursement of commission will be RMB 231，468.12 calculated as follows:
RMB 385，780.20 x 60% = RMB 231，468.12
In respect of the commission for finding F Company as a new tenant， since it has been included in the rent that the Claimant will receive from F Company， the commission belongs to the usual cost of the Claimant and shall not be reimbursed by the Respondent.
8.The Attorney Fee
In accordance with Article 59 of the Arbitration Rules， the Tribunal has the power to decide that the losing party shall pay the winning party as compensation a proportion of expenses reasonably incurred by the winning party in dealing with the case. The amount of compensation shall not in any case exceed 10% of the total amount awarded to the winning party. The attorney fee of RMB 100，000 is the expenses reasonably incurred by the Claimant because of the breach of contract by the Respondent. Based on the overall situation of the case，the Tribunal by exercising its discretion decides that reimbursement of 50% of the above-mentioned attorney fee would be a reasonable compensation for the expenses incurred by the Claimant.
9.The Claims made by the Claimant
The first claim is that the Respondent shall pay to the Claimant as compensation USD 519，178.67 and RMB 547，082.88. Based on the forgoing analysis， the Tribunal partially endorsed this claim that the Respondent shall pay to the Claimant as compensation of actual losses USD 285，545.92 and RMB 231，468.12.
The second claim， compensation in the amount of USD 518，664.76 to the Claimant according to Article 4.1 of the Lease Contract， is an alternative one to the first claim， which obviously will not be considered by the Tribunal.
The third claim is the reimbursement of the attorney fee in the amount of RMB 100，000. As discussed above， this claim will be partially endorsed by the Tribunal that the Respondent shall pay to the Claimant 50% of the attorney fee incurred by the Claimant.
10.The Arbitration Fee
Considering that the Respondent committed a breach of contract and the claims put forward by the Claimant are partially supported， the Tribunal decides that the Claimant shall bear 40% of the arbitration fee and the Respondent shall bear the rest 60%.
Part C The Award
The Tribunal awards as follows:
（1）The Respondent shall pay to the Claimant damages in the amount of USD 285，545.92 and RMB 231，468.12.
（2）The Respondent shall pay to the Claimant RMB 50，000 as expenses incurred by the Claimant.
（3）The Claimant shall bear 40% of the arbitration fee and the Respondent shall bear the rest 60%.
（4）The Respondent may choose to make the total payment awarded above in USD or in RMB according to the official exchange rate between USD and RMB published by the PRC Central Bank on the date of the actual payment. The Respondent shall make the above payments within 30 days from the date of this award. An annual interest of 7% shall be charged on a late payment.
This Award， being final and binding on both parties， is rendered in Beijing， People's Republic of China， on 19 July 2005.
