Baxter Memo PDF

Team Baxter Memorial for the Claimant
2012 Foreign Direct Investment International Arbitration Moot
Memorial for the Claimant

In the proceedings between:
MAX SOLUTIONS INC.
(Claimant)
v. BELA RANO INSULARO
(Respondent)
before the
Ad hoc committee for the ICSID Convention
Counsel for the applicant, Baxter
CONTENTS Table of Contents List of Authorities List of Abbreviations Statement of Facts Pleadings: PART ONE: The Procedure PROFESSOR IRCAUNDAS PUBLISHED VIEWS SHOW A 15 MANIFEST LACK OF INDEPENDENCE AND IMPARTIALITY. A. The views advocated, and the strength of the language, in Professor Iracundas writings illustrate the strength of commitment to her views and amount to a prejudgment of a pivotal matter in the dispute. I. 1. The content of Professor Iracundas writings show a prejudgment of a pivotal matter in the dispute. 2. The vigour with which Professor Iracunda writes shows a manifest lack of impartiality. B. Professor Iracundas writings highlight that she would face significant professional embarrassment should she contradict herself in practice. II. PROFESSOR IRACUNDAS MEMBERSHIP OF WILDERNESS DEMONSTRATES A MANIFEST LACK OF INDEPENDENCE AND IMPARTIALITY 21 2 5 9 10 14
A. Professor Iracunda has morally prejudged the matter and is not impartial, nor independent. 1. The IBA Guidelines substantiate an unacceptable connection to Wilderness. 2. The Suez factors demonstrably show a lack of impartiality and independence III. THE TRIBUNALS FAILURE TO EXCLUDE DR RANAPUERS EXPERT REPORT CONSTITUTED A SERIOUS DEPARTURE FROM A FUNDAMENTAL RULE OF PROCEDURE. 23
A. The Belo Rano Rule requiring exclusion is a fundamental rule of procedure 1. As a general principle of law, Article 5(5) is an elementary cornerstone of procedure. B. The Tribunals decision not to exclude was a serious departure in the circumstances.
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1. Dr Ranapuer had no valid reason for failing to attend the oral hearing, requiring the Tribunal to exclude his report. 2. Additionally, there were no exceptional circumstances to negate the substance of Article 5(5) i. The fact that there is a limited pool of experts does not constitute an exceptional circumstance. ii. Expediency in utilising Dr Ranapuers report should not take precedence over the rights of the party.
PART TWO: The Merits I. THE TRIBUNAL ERRED IN LAW IN INTERPRETING THE DEFINITION OF INVESTMENT, PURSUANT TO ARTICLE 25(1) A. Introduction B. The preamble contained within the ICSID Convention is not representative of the overarching intention C. Alternatively, the contribution requirement should not be considered to be within the definition of investment due to the difficulty of ascertaining it 2. THE TRIBUNAL MANIFESTLY EXCESSED THEIR POWERS IN DECLINING JURISDICTION UNDER THE SALINI CRITERIA 32 27
A. The Tribunal was incorrect in not following the award set out in Malaysian Historical Salvors (MHS), and therefore, ultimately, the Salini criteria should not have been applied B. The Tribunal, in any event, erred in law due to the application of the Salini criteria, pursuant to ICSID jurisprudence
III.
THE CONTRIBUTION REQUIREMENT CANNOT BE INFERRED FROM THE AGREEMENT BETWEEN THE PARTIES
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A. In assessing the Bilateral Investment Treaty, the parties did not agree that the investment must contribute to the economic development of Bela Rano Insularo 2. THE TRIBUNAL ERRED IN FACT AS EVEN IF THE CONTRIBUTION PREREQUISITE IS HELD TO BE ESSENTIAL, THE TRANSACTION MEETS THIS STANDARD A. Introduction B. The Tribunal misinterpreted the threshold in which should be applied C. The statement made by the spokeswoman, and the consequences which resulted, can be used as evidence to suggest that Max Solutions contributed to Bela Rano Insularo s economic development D. The fact that the frogs were removed by nature is merely subsidiary to the claim that Max Solutions contributed to Bela Rano Insularos development E. The assertion that Max Solutions did not compensate Bela Rano Insularo with revenue from its ventures is not evidence that they did not contribute to the Islands economic development F. Conclusion IV. PURSUANT TO ARTICLES 41(2) AND 52(4), THE AD HOC COMMITTEE HAS THE POWER TO DECIDE WHETHER THE TRANSACTION IN QUESTION QUALIFIES AS AN INVESTMENT 46 41
A. ON THE OUTSET, THE ANNULMENT COMMITTEE HAS THE POWER TO DETERMINE AS TO WHETHER THE REMOVAL OF THE SIRENO KANTO QUALIFIES AS AN INVESTMENT 46
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1. Introduction
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2. The relevant articles within the ICSID Convention enable the annulment Committee to decide that the transaction qualifies as an investment 46 3. The jurisdiction should go to the Centre, and not to the Tribunal. 47
Request for Relief
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INDEX OF AUTHORITIES
Books Born D. Carreau, P. Juillard Gaillard Savag Poudret Besson Redfern Hunter Articles JD Mortenson, The Meaning of Investment: Travaux and the Domain of International Investment Law 51 Harvard International Law Journal (2010) at 311
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International Arbitration (2009) Droit international conomique (3e edition, Dalloz, Paris, 2007)
Fouchard, Gaillard, Goldman on International Commercial Arbitration
Comparative Law of International Commercial Arbitration (2 ed, trans. Berti & Ponti, 2007) International Arbitration (5th edition. 2009)
CH. Schreuer J.W. Salacuse N.P. Sullivan Reports
The ICSID Convention: A commentary (2001) Do BITs Really Work? An Evaluation of Bilateral Investment Treaties and their Grand Bargain (2005) Harvard International Law Journal
Report of the Executive Directors on the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. Doc. ICSID/2, 1 ICSID Reports, 1993 Report of the Executive Directors on the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, 1965, 1 ICSID Rep (1993)
Cases Abaclat and ors v Argentina ICSID Case No ARB/07/5 February 28 2009 Abaclat and ors v Argentina, ICSID Case No ARB/07/5, 4th August 2011 Abaclat and others v Argentina, Decision on Jurisdiction and Admissibility, ICSID Case No. ARB/07/5, 4 August 2011 AES Corporation v Argentina, Decision on jurisdiction, ICSID Case No. ARB/02/17, 26 April 2005 Alpha Projektholding GMBH v Ukraine, Award, ICSID Case No. ARB/07/16, 8 November 2010 Alpha Projektholding GMBH v Ukraine, Decision on Challenge to Arbitrator, ICSID Case No ARB/07/16, March 19 2010 Bayindir Insaat Turizm Ticaret ve Sanayi A v Pak istan, Decision on Jurisdiction, ICSID Case No. Arb/03/29, 14 November 2005, Biwater Gauff (Tanzania) Ltd. v Tanzania, Award, ICSID Case No. ARB/05/22, 31 March 2006 CDC Group Public Limited Company v Seychelles, Decision on Annulment, ICSID Case No ARB/02/14, (2007) 11 ICSID Rep 237 Ceskoslovenska Obchodni Banka AS v Slovakia, ICSID Case No. ARB/97/4
Compaa de Aguas del Aconquija SA and Vivendi Universal SA v Argentina, Decision on Argentinas Request for Annulment of the Award, ICSID Case No ARB/97/3, 3rd August 2010 Conoco Phillips Company and Others v Venezuela, ICSID Case no ARB/07/30 February 27 2012 ConocoPhillips Company and Others v Venezuela, Decision on the proposal to disqualify L Yves Fortier, QC, Arbitrator, ICSID Case no ARB/07/30 February 27 2012 Continental Casualty Company v Argentina, Decision on Application for Partial Annulment, ICSID Case No ARB/03/9, despatched 16th September 2011 Enron Corporation and Panderosa Assets, L.P. v The Argentine Republic, ICSID Case No. ARB/01/3, Decision on Jurisdiction (Ancillary Claim), 2 August 2004, para.25. Fraport AG Frankfurt Airport Services Worldwide v Philippines, Decision on the Application for Annulment, ICSID Case No. Arb/03/25, 17 December 2010 GEA Group Aktiengesellschaft v. Ukraine, ICSID Case No. ARB/08/16 (Germany/Ukraine BIT), Award of 31 March 2011 InterAguas Servicios Integrales del Agua S.A. v. The Argentine Republic ICSID Case No. ARB/03/17 Jan de Nul NV and Dredging International NV v Egypt, Decision on Jurisdiction, ICSID Case No. ARB/04/13, 16 June 2006 Joseph Charles Lemire v Ukraine, Decision on jurisdiction and liability, ICSID Case No. ARB/06/18, 14 January 2010. L.E.S.I. S.p.A. et ASTALDI S.p.A. v. Algeria ICSID Case No. ARB/05/3, July 12 2006 Liberian Eastern Timber Corp (LETCO) v The Government of the Republic of Liberia, ICSID Case No. ARB/83/2, Award, 31 March 1986, Malaysian Historical Salvors Sdn Bhd v Malaysia, Decision on the Application for Annulment, ICSID Case No ARB/05/10, 28th February 2009 Malicorp Ltd. v Egypt, Award, ICSID Case No. ARB/08/18, 31 January 2011, para.109. MCI Power Group LC and New Turbine Inc. v Ecuador, Award, ICSID Case No. ARB/03/6, 26 July 2007
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Mitchell v The Democratic Republic of Congo, Decision on the Application for Annulment of the Award, ICSID Case No.ARB/99/7, 27 October 2006 OPIC Karimum Corporation v Venezuela, ICSID Case No ARB/10/14, 5th May 2011 Perenco Ecuador Limited v Ecuador and Empresa Estatal Petroleos del Ecuador, Decision on Challenge to Arbitrator, ICSID Case No ARB/08/6 December 8 2009 Pey Casado and Prsident Allende Foundation v Chile, Annulment Proceeding, ICSID Case No ARB/98/2, September 28 2010 Phoenix Action Limited v Czech Republic, Award, ICSID Case No ARB/06/5, April 9 2009
Rice Trading (Guyana) Ltd v. Nidera Handelscompagnie BV (Hague Court of Appeal) (28 April 1998) (1998) XXIII Ybk Comm Arb, p. 731. Romak S.A. v. The Republic of Uzbekistan (PCA Case No. AA280), Award of 26 November 2009 Salini Costruttori S.p.A. v Morocco, ICSID Case No. ARB/00/4, 16 July 2001. SGS Socit Gnrale de Surveillance SA v Paraguay, Award on Jurisdiction, ICSID Case No. Arb/07/29, 12 February 2010, SGS Socit Gnrale de Surveillance v. Islamic Republic of Pakistan , ICSID Case No. ARB/01/13, December 19, 2002 Suez and ors v Argentina, Decision on Second Proposal for the Disqualification of a Member of the Arbitral Tribunal, ICSID Case No ARB/03/19 May 12 2010 Suez and ors v Argentina, ICSID Case No ARB/03/19, 12th May 2008 Suez, Sociedad General de Aguas de Barcelona S.A ICSID Case No. ARB/03/17 October 22, 2007 Urbaser SA and Consorcio de Aguas Bilbao Bizkaia, Bilbao Biskaia ur Partzuergoa v Argentina, ICSID Case No ARB/07/26 August 12 2010 Wena Hotels Limited v Egypt, Decision on annulment application, ICSID Case No ARB/98/4, (2004) 6 ICSID Rep 129 Statutes and Treaties
IBA Guidelines on Conflicts of Interest in International Arbitration (22 nd May 2004) ICSID Convention Vienna Convention Belo Rano Insularo, Model Rules on the Taking of Evidence in International Arbitration
LIST OF ABBREVIATIONS Art. / Arts. BIT BRI [The] Convention e.g. ed. eds. et seq. GASP i.e. ibid. ICJ ICSID ICSID Convention Article / Articles Bilateral Investment Treaty Belo Rano Insularo ICSID Convention For example Edition Editors Et sequens (and the following...) The Global Athletics Season Preview That is... Ibidem (as above) International Court of Justice International Centre for Settlement of Investment Disputes Convention on the Settlement of Investment Disputes between states and Nationals of other States IIA No. p. pp. para. s. Sireno Kanto v. International Investment agreement Number Page Pages Paragraph Section Sireno Kanto Frogs Versus
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STATEMENT OF FACTS Factual Background 1. In January 2002,1 Max Solutions, Inc. (hereinafter referred to as the Claimant) a company from the nation of Oscania entered into an agreement with the Government of Bela Rano Insularo (hereinafter referred to as the Respondent) to procure from the Respondent State the majority of the population of the native, highly poisonous Sireno Kanto frogs (Sireno Kanto). This was the exception of a small number to be confined within a designated nature reserve. 2. On the basis of the aforementioned agreement, in late 2003 the Respondent State submitted a successful bid to host the 2008 Global Athletics Season Preview (GASP) to the GASP International Competition Council (the Council). 23 3. The constituent contractual term was that the Respondent would pay the Claimant per month on the basis of the quantity of frogs removed from the island. The only caveat specified by the contract was that, at all times, the frogs must be treated humanely. Under the terms of the agreement, neither party was obligated to commence performance of any obligations until January 2006. All contractual aspects were agreed to be fulfilled by December 2007. 4. On 26 January 2006, scientists at Bela Rano Insularo Univer sity (BRIU) announced that they had discovered conclusive evidence of a previously unknown disease among the Sireno Kanto. Consequently, this disease was expected to impact 95% of the species population fatally within five years.4 5. In February 2006, the Bela Rano Insularo (BRI) media began circulating stories concerning the Claimants operations on the island. As a corollary of those reports, the company confirmed that, in addition to removing the frogs from the island, it was identifying the remaining healthy Sireno Kanto and transporting them to a secure holding location in a nearby country. Half of those frogs were then to be sold to a pharmaceutical corporation for the purposes of medical research into allergy treatments.
See clarification 21. See clarification 60.
Clarification 97: The Respondent was required by the Council to demonstrate that it provided an effective means of eliminating the problems posed by the islands frog population however the Council did not specify a particular method for such.
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See clarification 28.
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The Claimants are contractually entitled to 10% of all royalties which may result from any potential products of this research. With the remaining Sireno Kanto, the Claimants confirmed that they were planning to sell recordings of the sounds made by the frogs during their annual croaking season (May-November) after discovering their relaxation qualities. Neither this use, or that specified in the preceding paragraph were ever discussed with the Respondents. Accordingly, they are not due to receive any income from either venture.5 6. On 1 March 2006, the Claimants announced the intended acceleration of operations, estimating that by the end of December that year, 80% of the Sireno Kanto population would be removed from BRI. The Respondents requested the opportunity to inspect the Claimants newly envisioned operations in order to verify this claim. However, the Claimant refused. 7. Consequently, on 13 March 2006, the Respondents cancelled the contract with the Claimant, citing inadequate performance. As of that time, the Claimants had only removed 3% of the islands Sireno Kanto population.
Procedural History 8. The contract between the parties did not contain an explicit choice of forum clause. On 4 December 20066, following extensive negotiations, the Claimant filed a Request for arbitration to the International Centre for Settlement of Investment Disputes (ICSID) against the Respondent. The Claimant submitted this request pursuant to Article 24 of the Bilateral Investment Treaty (BIT) concerning the Encouragement and Reciprocal Protection of Investment between the Government of the Republic of Oscania and the Government of Bela Rano Insularo. 9. On 15 December 2006, the Claimant appointed Mr Albert Viator, a leading arbitration practitioner as its nominee to the Tribunal and proposed the appointment of Dr. Humberto Honesta, a retired academic and experienced commercial and investment arbitrator as chair. Subsequently, on 9 February 2007, the Respondent agreed to the appointment of Dr Honesta as chair of the Tribunal and appointed Professor Alessandra Iracunda as its own nominee for arbitrator.
There is no evidence to suggest that the Claimant was aware of the potential commercial uses of the Sireno Kanto at the time the agreement between the parties were reached. The contract did not contain any explicit clause obliging the Claimant to specify such uses to the Respondents following clarification 52.
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10. All nominees had accepted their appointments by February 13 2007 and accordingly the ICSID informed the parties that the Tribunal was deemed to be constituted and the proceedings to have begun on that date. 11. On 1 March 2007, the Claimants filed a proposal to disqualify Dr. Irancunda pursuant to Article 57 of the ICSID Convention (Convention), alleging a lack of impartiality and independence. This was voiced in her academic writings Rethinking ICSID. ICSID confirmed receipt of the proposal on the same day and declared that the proceedings were suspended indefinitely. This was until a decision on the proposal was made in accordance with Arbitration Rule 9 (6). 12. On 23 March 2007, the Respondent filed its submissions in response to the disqualification proposal. On 7 April 2007, Dr. Iracunda issued a statement in relation to the proposal to challenge her appointment averring that she would perform her role in a fully impartial and independent manner. The Claimants proposal was subsequently dismissed and Dr. Iracunda was confirmed by her co-arbitrators on the Tribunal. 13. The parties agreed that all proceedings of the arbitration would be governed by the Bela Rano Model Rules on the Taking of Evidence in International Arbitration. 14. In May 2009, an initial hearing was held. This considered the Claimants objections to the Tribunals jurisdiction. The Respondents had prior submitted an Expert Report from Dr. Herbert Ranapauer, the lead scientist at the frog research unit at BRIU. This report addressed the nature and expected consequences of the disease which afflicted the Sireno Kanto.7 Dr. Ranapauer is one of only three scientists worldwide who have a detailed knowledge of these matters. On the morning of the initial hearing, Dr. Ranapauer informed the parties that he would no longer be attending as he had recently joined Wilderness and believed that participating in the arbitration would be tantamount. 15. In response, the Claimant requested the report be rejected on the grounds that Dr. Ranapauer was no longer available for cross-examination. Accordingly, the Tribunal requested that the Respondent attempt to secure the attendance of Dr. Ranapauer for a subsequent date. This request was subsequently refused by Dr. Ranapauer and thus no further attempts were made by the Tribunal, or either party, to secure his participation. 8 The Tribunal rejected the Claimants motion to exclude the report. The Tribunal did so
Clarification 108: The Respondent notified the Claimant of its intention to rely on such an opinion pursuant to Article 5.1 of the BRI rules on taking of evidence.
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on the basis that it should still be considered as it contained information which was not available from any other source.9 16. On 29 July 2009, the Tribunal issued an award declining jurisdiction over the case. The Tribunal considered that the Claimants activities did not constitute an investment under Article 25 (1) of the ICSID Convention, as they did not contribute adequately to the development of the Respondent State. Mr Viator, dissenting, stated that the ICSID Convention does not require that an investment contribute to the development of the Host State. He noted that Dr. Iracunda had been closed-minded on the issue throughout the Tribunals discussions. 17. The Claimant now requests relief from to the present Committee.
For example, the report included, inter alia, significantly more evidence on the likely impact of the disease on the Sireno Kanto than was available at that time from any publicly accessible source. See clarification 93.
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PART ONE: The Procedure
18. The Claimant has applied to the current ad hoc Committee on the basis that the initial challenge against Professor Alessandro Iracunda should have been successful at first instance. The failure of the Two Members to disqualify Professor Iracunda from the initial proceedings has, it is averred, rendered the initial Tribunal improperly constituted.10 19. This challenge is pursuant to the dismissal of a proposal by the Claimants, dated 1 March 2007. 20. As a preliminary consideration, the Claimants have approached the present ad hoc Committee under the Article 57 and Article 14(1), respectively. Article 57 states that a party may propose the disqualification of any of the three arbitrators ... on account of any fact indicating a manifest lack of the qualities required by paragraph (1) of Article 14.11 In turn, Article 14(1) presents the standard to be applied. It requires, inter alia, that those presiding on a Panel shall ...persons of high moral character ... who may be relied upon to exercise independent judgment...12 Thus, any fact that may illustrate a manifest lack of the aforementioned qualities would demand the disqualification of Professor Iracunda. 13 21. A pertinent observation would also be the inclusion of the traditional concepts of impartiality, alongside independence, within the Claimants and Respondents understanding of Article 14(1). This concurrence is also found in case law. 14 These concepts will be considered distinct in the Claimants submissions below. 15
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ICSID Convention, Article 52(1)(a). Ibid., Article 57(1). 12 Ibid., Article 14(1). 13 See, inter alia, SGS Socit Gnrale de Surveillance v. Islamic Republic of Pakistan , ICSID Case No. ARB/01/13, Decision on Claimants Proposal to Disqualify Arbitrator of December 19, 2002, p.5 14 See, inter alia, Suez, Sociedad General de Aguas de Barcelona S.A., and InterAguas Servicios Integrales del Agua S.A. v. The Argentine Republic , ICSID Case No. ARB/03/17 and Suez, Sociedad General de Aguas de Barcelona S.A., and Vivendi Universal S.A. v. The Argentine Republic , ICSID Case No. ARB/03/19, Decision on the Proposal for the Disqualification of a Member of the Arbitral Tribunal, October 22, 2007 (Suez Aguas Decision), at para. 28; See also, ConocoPhillips Company and Others v Venezuela, Decision on the proposal to disqualify L Yves Fortier, QC, Arbitrator, ICSID Case no ARB/07/30, 27th February 2012, para.54; SA and Consorcio de Aguas Bilbao Bizkaia, Bilbao Biskaia ur Partzuergoa v Argentina, Decision on Claimants Request to Disqualify an Arbitrator, ICSID Case No ARB/07/26, 12th August 2010, para 36. 15 Suez and ors v Argentina, Decision on Second Proposal for the Disqualification of a Member of the Arbitral Tribunal, ICSID Case No ARB/03/19, 12th May 2008, para 28. See also, Alpha Projektholding GMBH v Ukraine,
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22. The Claimant respectfully submits that, when contemplating the aforementioned notions of independence and impartiality, the ad hoc Committee bear in mind an overarching principle; the protection of a partys fundamental rights from partisan and dependent arbitrators. 16 I. PROFESSOR IRCAUNDAS PUBLISHED VIEWS SHOW A MANIFEST LACK OF INDEPENDENCE AND IMPARTIALITY. A. The views advocated, and the strength of the language, in Professor Iracundas writings illustrate the strength of commitment to her views and amount to a prejudgment of a pivotal matter in the dispute. 23. Professor Iracunda, having authored, inter alia, Re-Thinking ICSID Arbitration and several other articles, has displayed an obvious and clear appearance of a lack of independence, and especially, impartiality. The question to be considered on this matter is whether the opinions expressed by Professor Iracunda are specific and clear enough to give cause for a reasonable and informed third party to find that she may only rely on such opinions without proper consideration of the relevant facts, circumstances and arguments as presented by the parties of the dispute. 17 In other words, an objective third party may see an obvious appearance of a lack of freedom to give an opinion based solely on the facts and circumstances of the case. This is owing to Professor Iracunda already having prejudged them. 1. The content of Professor Iracundas writings show a prejudgment of a pivotal matter in the dispute. 24. The initial except from Professor Iracundas Rethinking ICSID, alongside other articles, addresses the meaning of the term investment in Article 25 of the ICSID Convention, and particularly the relevance to that meaning of the contribution of a transaction to the economic development of the Host State.18 25. The writings of Professor Iracunda display, ab initio, views which clearly militate towards the broad concept of commercial autonomy, and, pertinently, limit the scope of what Professor Iracunda can be persuaded as constituting an investment. She clearly, within the second paragraph, demonstrably shows that is its necessary to move past, what is unequivocally deemed dangerous, the view that an investment can be solely defined under the instrument containing the consent.19 This clearly limits Professor Iracundas thought process. It indicates a comprehensive prejudgment on what is a pivotal matter in the present case. She is demanding adherence to the necessary view that investment can not only be considered under the agreement instrument. This is contrary
Decision on Challenge to Arbitrator, ICSID Case No ARB/07/16, 19th March 2010, para 35; Nigel Blackaby et al., Redfern and Hunter on International Arbitration 26768 (5th ed. 2009), paras. 477. 16 ConocoPhillips Company and Others v Venezuela, Decision on the proposal to disqualify L Yves Fortier, QC, Arbitrator, ICSID Case no ARB/07/30, 27th February 2012, para.55. 17 Urbaser SA and Consorcio de Aguas Bilbao Bizkaia, Bilbao Biskaia ur Partzuergoa v Argentina, Decision on Claimants Request to Disqualify an Arbitrator, ICSID Case No ARB/07/26, 12th August 2010, para.44. 18 The Record, pp.6-7, lines 300- 362. 19 The Record, pp.6-7, lines 308-311.
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to legal opinions arising from previous ICSID arbitral awards. For instance, inter alia, the judgment of the Annulment Committee in Malaysian Hisotircal Salvors, SDN, BHD v. Malaysia, explicitly states that by the terms of the Agreement...the contract is an investment. 20 It continues; The Committee is unable to see what support the Sole Arbitrator could have mustered to sustain the conclusion that the Contract and its implementation did not constitute an investment within the meaning of that Agreement. On the contrary, (and subject to the consideration noted below in paragraph 81 of this Decision), it is clear that the Contract and its performance by the Salvor constitute an investment as that term is defined by the Agreement.21 Indeed, other instances, such as Abaclat and Others v Argentina show solely an analysis of the BIT in question, and concludes that the term investment ...constitutes a contribution which qualifies as investment per se under Article 1(1) of the BIT.22 Thus, the pertinent aforementioned quotations show that Professor Iracundas remarks are manifestly partisan. They show she has prejudged the matter of defining an investment. 26. It is evident from the underlying rationale of Professor Iracundas writings that she is espousing a floodgates, and speculative argument.23 It is stated that the previous dangerous interpretation of investment, which it is apparently necessary to steer clear of, creates the potential for dozens of ICSID claims which would require impoverished states to divert valuable resources to defend. 24 She is markedly militating against wide definitions, as a policy defence mechanism. Such contentions from Professor Iracunda clearly indicate that no matter the argument or how compelling evidence is, she will tend against any wide definition. This is despite the fact that it is agreed in a BIT and it is despite the fact that this should be, at least partially, what her arbitral award is founded upon. Indeed, in the penultimate paragraph, reference is made, objectively to others, within the arbitral system, becoming concerned of the overexpansive approaches to ICSID jurisdiction.25 This is supposed issue is swiftly followed by an obvious cry for What is needed [emphasis added], is to save developing countries from ICSID. These two paragraphs present irrelevant considerations being considered. That is, matters other than that of the sole merits, facts and circumstances of the case, as presented by the
20
Malaysian Historical Salvors Sdn Bhd v Malaysia, Decision on the Application for Annulment, ICSID Case No ARB/05/10, 28th February 2009, para 61. 21 Malaysian Historical Salvors Sdn Bhd v Malaysia, Decision on the Application for Annulment, ICSID Case No ARB/05/10, 28th February 2009, para 61. 22 Abaclat and ors v Argentina, Decision on Jurisdiction and Admissibility, ICSID Case No ARB/07/5, 4th August 2011, para 371. See also, Abaclat and ors v Argentina, Decision on Jurisdiction and Admissibility Dissenting Opinion of Professor Georges Abi-Saab, ICSID Case No ARB/07/5, 4th August 2011, para. 65 et seq. 23 The Record, p.6, lines 311- 323; p.7, lines 351-356. 24 The Record, pp.6, lines 314- 317. 25 The Record, pp.6-7, lines 351- 356.
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parties. 26 This illustrates that Professor Iracunda, cannot be relied upon to give independent judgement in the present instance. From a purely objective stance, she demonstrably shows she lacks independent judgement.27 27. Professor Iracunda continues, from markedly stating her view on the interpretation of investment, to note that there is ... no reason to accept... the purportedly dangerous view that an investment may exist should it satisfy its associated definition in the instrument giving rise to the dispute.28 Professor Iracunda continues to note most pertinently, inter alia, that, for those disputes under the ICSID Convention, interpretation of investment must be construed as to contribute to the economic development of the Host State.29 This view is shown to be partial in light of previous awards rendered by ICSID Tribunals. 30The instance of Malaysian Historical Salvors, Professor Shahabudeen makes reference to the distinct approaches of the Committee members which illustrate a titanic struggle between ideas.31 He, contrary to the other members, and aligning with Professor Iracunda, argued that the economic prerequisite was an essential characteristic of an investment. Nonetheless, the majority in this instance annulled the initial award, disagreeing with such. Indeed, in the respective cases of L.E.S.I. S.p.A. et ASTALDI S.p.A. v. Algeria, and Phonexic Action v. the Czech Republic, both awards dismissed the supposed prerequisite that a contribution to development should be fundamental to interpreting an investment.32 These prior awards display a clear disparity in interpretation of the matter, and Professor Iracunda is firmly positioning herself on one side of the debate. This renders her as manifestly lacking in independent judgement should the Claimant proffer the alternative view. 28. Pursuant to Professor Iracunda militating against wide interpretations, Professor Iracunda cannot be more express in presenting a prejudgement in saying that:
26
Perenco Ecuador Limited v Ecuador and Empresa Estatal Petroleos del Ecuador, Decision on Challenge to Arbitrator, ICSID Case No ARB/08/6, 8th December 2009, para 46. 27 Suez and ors v Argentina, Decision on Second Proposal for the Disqualification of a Member of the Arbitral Tribunal, ICSID Case No ARB/03/19, 12th May 2008, para 29. 28 The Record, p.7, line 325. 29 The Record, p.7, lines 342-344. 30 E.g., Malaysian Historical Salvors Sdn Bhd v Malaysia, Decision on the Application for Annulment, ICSID Case No ARB/05/10, 28th February 2009; See also, Malaysian Historical Salvors, Dissenting Opinion of Judge Mohamed Shahabuddeen; Phoenix Action Limited v Czech Republic, Award, ICSID Case No ARB/06/5, 9th April 2009; L.E.S.I. S.p.A. et ASTALDI S.p.A. v. Algeria (ICSID Case No. ARB/05/3, Decision of 12 July 2006) para 73(iv); Pey Casado and Prsident Allende Foundation v Chile, Annulment Proceeding, ICSID Case No ARB/98/2, 28th September 2010. 31 Malaysian Historical Salvors Sdn Bhd v Malaysia, Decision on the Application for Annulment Dissenting Opinion of Judge Mohamed Shahabuddeen, ICSID Case No ARB/05/10, 28th February 2009, para. 62. 32 L.E.S.I. S.p.A. et ASTALDI S.p.A. v. Algeria (ICSID Case No. ARB/05/3, Decision of 12 July 2006) para 73(iv); Phoenix Action Limited v Czech Republic, Award, ICSID Case No ARB/06/5, 9th April 2009, para 85.
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Only the Salini criteria reflect this reality, and only the inclusion within the Salini criteria of the requirement of a contribution to the development of the Host State fulfills the true purpose of the ICSID Convention Moreover, only new development can suffice.33 [Emphasis added] This excerpt expressly states that only the Salini criteria can, effectively, be utilised to establish an investment , and that only new development will suffice. 34This is referring to the fundamental basis on which Professor Ircaunda would make a decision. This is manifestly partisan in that it ignores other methods of interpretation of what an investment is. 35 For instance, inter alia, consideration of the BIT alone, the doublebarrelled test, or analysing the BIT in the same way as Article 25 of the Convention. 36 Indeed, it was most aptly noted in Abaclat, that one approach is the Salini criteria, but this was not the right approach as it presents as contradictory to the ICSID Conventions aims, on the facts.37 Thus, Professor Iracunda is unashamedly, and manifestly closing her mind and restricting her capacity to be able to consider methods of analysing other than the Salini criteria. This is from openly stating that only the Salini criteria can be used to negate the aforementioned problems, and adhere to the policy considerations. Therefore, Professor Iracunda has outlined her own overarching principles on which to base a decision, no matter the facts of individual cases. She has laid down the fundamental principles on which to decide the present dispute. 29. Thus, Professor Iracundas writings indicate the fundamental framework in which she will narrow, confine and focus her mind. The above extracts demonstrably show a lack of independent judgement on matters which go to the heart of the case. It is evident that Professor Iracunda will clearly be influenced by her own pre-made judgement and opinions on the interpretation of investment. It cannot be ignored that there is an indubitable show of impartiality by Professor Iracunda. It is clear that she may be influenced by her own research and fiercely voiced opinion, be it consciously or unconsciously, on these questions of law. Of which, determine how beneficial the award is for the claimant or respondent.
2. The vigour with which Professor Iracunda writes shows a manifest lack of impartiality. 30. The style, and choice of words, with which Professor Iracunda authors her works present her as manifestly lacking in independent and impartial judgement. It is acknowledged by
33 34
The Record, p.7, lines 344-347. The Record, p.7, lines 344-347. 35 Ibid., at note 31, para 73. 36 Abaclat and ors v Argentina, Decision on Jurisdiction and Admissibility Dissenting Opinion of Professor Georges Abi-Saab, ICSID Case No ARB/07/5, 4th August 2011, paragraph 66; Abaclat and ors v Argentina, Decision on Jurisdiction and Admissibility, ICSID Case No ARB/07/5, 4th August 2011, paras. 363-71; Romak S.A. v. The Republic of Uzbekistan (PCA Case No. AA280), Award of 26 November 2009, para.180 and para.207; GEA Group Aktiengesellschaft v. Ukraine, ICSID Case No. ARB/08/16 (Germany/Ukraine BIT), Award of 31 March 2011, paras.137143. 37 Ibid., at note 23, para 363.
18
the Claimant that, mere showing of opinion, even if relevant, is not sufficient to sustain a challenge for lack of impartiality. However, a manifest illustration of lack of independent judgment, through aligning oneself to a fundamental issue, and declaring this the only means of analysing a situation, to enable one to move away from a dangerous alternative presents the author in a bias light. 38 31. For Professor Iracunda, it is evident that her opinions transcend mere expression of a view. Despite the contention within her statement that what constitutes development is a matter of fact; her comments go further than an opinion.39 They are forceful statements about the direction of ICSID and the fundamental framework of what decision making must be. Her contention is void in that what she writes is not mere legal opinion in the abstract, but rather a personal framework for her to abide by in deciding upon the facts of each case. She narrows her mind to a decision making skeleton which, inevitably, causes for her to manifestly lack impartial and independent judgement. 32. The use of intense words throughout her works surpass a mere personal style of writing. For instance, the widely utilised concept that investment may be solely defined under an instrument was expressly denounced as dangerous and to move away from it is necessary. Such absolute words clearly lack flexibility, particularly in deeming something dangerous.40 Indeed, such rigidity continues, inter alia, from this in stating that there is ...no reason to accept... this aforementioned view.41 This illustrates the closed mind of Professor Iracunda. She has evidently shut herself off on this matter and, from her own research in coming to this conclusion, could not be persuaded otherwise. Moreover, persuasion that such is a pejorative view to ICSID and the present case, is down to the parties, on the facts of that case. Proffering a remedy to the matter, Professor Iracunda continues to demand that investment must be construed as to contribute to the economic development of the Host State.42 Indeed, in reaching this, it is stated that only the Salini criteria can, effectively, be utilised to establish an investment and that only new development will suffice. 43 The employment of such superlatives as must use a certain view, and only would the Salini do, gives the clear and obvious impression, objectively, that these select words cogently show she lacks the capacity to decide contrary to those opinions which she adheres to. 33. Comparison can be drawn to the instance of Perenco Ecuador Ltd. v Ecuador (& Others). Judge Brower, in that instance, was disqualified for expression of his opinion in an interview. The Committee in this instance based their reasoning upon, inter alia, much like Professor Iracunda, that there was passionate vocabulary use. This is in that the vocabulary selection, being forceful as it was, was enough to constitute evidence of a lack of impartiality or independence.44 Indeed, it was expanded that divining the true interpretation of why Judge Brower used these words is not necessary, and indeed futile. It is sufficient that it is an objective, obvious and reasonable interpretation of such. 45 In
38 39
Ibid., at note 17, para.45. The Record, p.9-10, lines 486-491. 40 The Record, pp.6-7, lines 308-311. 41 The Record, p.7, line 325. 42 The Record, p.7, lines 342-344. 43 The Record, p.7, lines 344-347. 44 Ibid., at note 26, para 49. 45 Ibid., at note 23, para. 53;
19
applying this, it is evident that academic writing, and indeed all written language, gives the possibility of a range of intensifying words, and capabilities to temper language. Professor Iracunda could state that the Salini criteria is convincing but not the only solution, or, as she did, can state that the Salini criteria must be the only means of consideration. B. Professor Iracundas writings highlight that she would face significant professional embarrassment should she contradict herself in practice. 34. In consideration of the aforementioned lack of impartiality and independence, it can be seen that Professor Iracunda would face significant personal, and professional, embarrassment should she renege on her own fiercely-advocated views. 35. It is averred that Professor Iracunda has positioned herself as leading and spearheading the school of thought that advocates a development -inclusive interpretation of an investment.46 The aforementioned content, and language, contained within the writings of Professor Iracunda, outline a framework by which to decide arbitral matters pertaining to the interpretation of investment. This is fiercely advocated. Indeed, should she reject her own extensive works, and research, and articles by issuing a contradictory award, it is inevitable criticism may follow. She cannot, arguably, be seen to issue a powerful suggestion on the system, and quite publically and openly renege on her broad overarching views, which quite clearly lay the basis and overriding framework in which to base a judgement 36. It was stated in Urbaser SA (& Others) v. Argentina, that the mere showing of opinion is not sufficient to disqualify an arbitrator. However, it was noted that; For such a challenge to succeed there must be a showing that such opinion or position is supported by factors related to and supporting a party to the arbitration (or a party closely related to such party), by a direct or indirect interest of the arbitrator in the outcome of the dispute... 47 In applying this notion, it can be seen that, coupled with Professor Iracundas clear and obvious prejudgement of the dispute, and the ferocity with which this stance is held, that her indirect interest, or even direct interest, is in ensuring her academic opinions are seen through, and implemented. This is for the reasons outlined above. 48 She cannot be seen to issue an award which flies in the face of her very forceful, already written, opinions 37. Professor Iracunda, and in the Decision of the Two Members, present an obfuscated, and artificial contention that Arbitrators and Scholars are two dramatically distinct roles for one person. Whilst, it is accepted that an Arbitrator and Scholar can remain in distinct roles, and, occasionally, maintain impartiality and independence in these respective roles, this is trivialising the matter. When such scholarly opinions are assessed in the context of a particular set of circumstances, on the facts, we see that she is more than a mere Scholar, analysing and researching investment law. She is a leading proponent in this
46 47
The Record, p.9, lines 440-448. Ibid., at note 17, para.45 48 The Record, p.6, lines 308-323; p.7, lines 351-362
20
school of thought. She is a strong and consistent, perhaps even dogmatic, advocate of this view. Thus, the matter cannot be divided as distinctly as the Two Members and Professor Iracunda so declare. It is not in black and white as contended by the Two Members, and Professor Iracunda. A Scholar can publish extensively, but when their writings are considered on a spectrum we can see there are acceptable analyses of ICSID and matters, ranging through to unacceptable stances being advocated and vehemently adhered to. What matters, is the context surrounding these opinions, as investigated above. 49 38. Therefore, despite the two roles being distinct, Professor Iracunda as a leading proponent of her views, quite clearly cannot retain the capacity to decide contrary to her own dogmatic views. This clearly shows a manifest lack of independence and impartiality. II. PROFESSOR IRACUNDAS MEMBERSHIP OF WILDERNESS DEMONSTRATES A MANIFEST LACK OF INDEPENDENCE AND IMPARTIALITY 39. Professor Iracundas membership of Wilderness demonstrably shows a manifest lack of impartiality and independence. In actively joining an organisation, and then taking the additional step to provide monetary support for their activities, Professor Iracunda illustrates an unacceptable connection, and an evident prejudgement of the associated activities of the Claimant. A. Professor Iracunda has morally prejudged the matter and is not impartial, nor independent. 40. Contrary to the Responding view that there is nothing to suggest that Professor Iracunda is partisan or lacks independent judgement, it is evident that a there is a clear nexus in Professor Iracunda being a member, and active supporter, of an organisation opposed and concerned with the subject-matter of the present dispute, the removal of the Sireno Kanto frogs. This impartiality, considered qualitatively, has little accompanying guidance from the ICSID convention. Thus, consideration of methodology hailing from case law, and the International Bar Association is apposite. 50 1. The IBA Guidelines substantiate an unacceptable connection to Wilderness. 41. Professor Iracunda manifestly lacks the ability to independently judge the present dispute in that she has already adjudged the Claimant morally for their actions. The IBA Guidelines indicate, pursuant to General Standard 2(c) and (d), respectively, that doubts are justifiable should the possibility arise that an arbitrator may be influenced by facts other than the merits of the case, and justifiable doubts necessarily exist as to the arbitrators impartiality or independence ...if the arbitrator has a significant financial or personal interest in the matter at stake.51 This guidance can be applied with reference to
49 50
Ibid., at note 17, para 52. Ibid., at note 27, para 33; para 34; IBA Guidelines on Conflicts of Interest in International Arbitration, 22 May 2004, p.3, para 2. 51 IBA Guidelines on Conflicts of Interest in International Arbitration, 22 May 2004, p.8, General Standard 2(d).
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Professor Iracunda supporting and furthering the aims of wilderness fiscally, and by providing personal support for their activities in actively associating her name with the organisation by being a member. 52 Such associations connote a significant personal interest in the matter at stake. In turn, this indicates that there is a risk of Professor Iracunda considering extraneous matters, such as the consequences of her decision in awarding in favour of the Claimant. This may be considered to be providing the implicit support for the previous activities of the Claimant in the subject-matter of the dispute, of which, Wilderness has staged numerous, vociferous protests against.53 Substantiation for this can be seen in Dr Ranapuer being approached on the same grounds. 54 Thus, Professor Iracunda lacks independence, and impartiality as there is a clear moral prejudgment by Professor Iracunda, against the Claimant. This renders representations by the Claimant futile. 42. It should be noted that the above arguments do not provide the only interpretation of Professor Iracundas connection to wilderness, but, objectively, it can be consider ed a reasonable interpretation.55 It is a reasonable interpretation, considering Professor Iracundas membership, that she supports their strong rebuke of the treatment of the Sireno Kanto frogs. This may not be true. It cannot be known, save for Professor Iracunda, precisely her true state of mind on this matter. However, it is strikingly clear that a reasonable third party, knowing of Wilderness, their protest, and Professor Iracundas membership, could conclude that there is a chance of Professor Iracunda being partisan, dependent, or otherwise manifestly influenced by Wilderness and her own connecting views. 2. The Suez factors demonstrably show a lack of impartiality and independence56 43. Under the factors laid down in Suez pertinent to a relationship with a party, appropriate application can be seen. Wilderness, being an interested organisation, can be seen to be intertwined into the subject matter of the dispute. A manifest lack of independent judgment and impartiality is illustrated from Professor Iracundas membership in, and financial support of, Wilderness. They elucidate the prejudgement of Professor Iracunda. The proximity of the connection, the intensity of the interactions, the degree of dependence for benefits from Wilderness, and the materiality or significance of such benefits, are apposite considerations. 57 44. It is contended that the proximity and intensity of interactions, of Professor Iracunda to Wilderness, are direct and continued. Professor Iracunda has intentionally, and actively, taken the step to align herself with Wilderness and their associated aims and activities. Subsequent to such, she has given regular donations on an annual basis. This provides a continued support, not only by associating herself, but in going one step further and
52 53
The Record, p.8, lines 409-413. The Record, p.3, lines 155-156; p.8, lines 403-407. 54 The Record, p.4, lines 175-180. 55 Ibid., at note 26, para 53. 56 Ibid., at note 26, para 35. 57 Ibid., para 35.
22
providing monetary support. Therefore, there is evident moral prejudgement of the Claimants actions, just as Wilderness has. 58 45. As can be seen from the materiality of the benefits derived from Wi ldernesss success, and the degree of dependence upon a party for benefits, Professor Iracunda has a compelling reason to be partial towards Wilderness. Then, by extension, partial in judging her award. This factor can be construed as, by supporting Wilderness, Professor Iracunda does not derive merely financial benefits, but emotional benefits in seeing Wilderness succeed. Arguably, an emotional gain can be substantially stronger, and indeed more entrenched in ones mind, as a significant benefit, than jus t a monetary one.59 46. These factors elucidate the fact that Professor Iracunda has a manifest lack of ability to exercise independent judgment in this matter.
III. THE TRIBUNALS FAILURE TO EXCLUDE DR RANAPUERS EXPERT REPORT CONSTITUTED A SERIOUS DEPARTURE FROM A FUNDAMENTAL RULE OF PROCEDURE. 47. The Claimant requests annulment of the Tribunals decision not to exclude Dr. Ranapuers Expert Report. This is on the grounds that admission of the report constituted a serious departure from a fundamental rule of procedure. 48. The application to the present ad hoc Committee is made pursuant to Article 52(1)(d) of the ICSID Convention which states: (1) Either party may request annulment of the award by an application in writing addressed to the Secretary-General on one or more of the following grounds: ... (d) that there has been a serious departure from a fundamental rule of procedure;60 49. Consideration of this ground for an annulment application, it is submitted, is to be analysed within the confines of the Bela Rano Model rules on the Taking of Evidence in International Arbitration. 61 Such rules governed the Tribunals decision making process in deciding not to exclude Dr Ranapuers Expert Report. 50. Therefore, as contended below, the Tribunal flew in the face of an obviously fundamental rule of procedure in making a serious departure it. 62
58
OPIC Karimum Corporation v Venezuela, Decision on the Proposal to Disqualify Professor Philippe Sands, Arbitrator, ICSID Case No ARB/10/14, 5th May 2011, para 22. 59 Ibid., at note 26, para 35. 60 Article 52(1)(d) ICSID Convention. 61 The Record, lines 163-166. 62 Compaa de Aguas del Aconquija SA and Vivendi Universal SA v Argentina, Decision on Argentinas Request for Annulment of the Award, ICSID Case No ARB/97/3, 3rd August 2010, para 245; CDC Group Public Limited Company v Seychelles, Decision on Annulment, ICSID Case No ARB/02/14, (2007) 11 ICSID Rep 237, 29th June
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A. The Belo Rano Rule requiring exclusion is a fundamental rule of procedure 51. The Tribunal failed to correctly apply the most pertinent Article of the Belo Rano Model Rules.63 Article 5(5) clearly states as follows: If a Party-Appointed Expert whose appearance has been requested pursuant to Article 8.1 fails without a valid reason to appear for testimony at an Evidentiary Hearing, the Arbitral Tribunal shall disregard any Expert Report by that PartyAppointed Expert related to that Evidentiary Hearing unless, in exceptional circumstances, the Arbitral Tribunal decides otherwise.64[emphasis added] 52. Article 5(5) is a fundamental rule of procedure. It is contained within the agreed rules to govern the procedure with which the parties have submitted themselves to. Indeed, this rule, in and of itself, demonstrably shows that should an Expert fail to appear without valid reason then the Tribunal must disregard their report. This leaves little flexibility and shows the gravitas of the rule. The only caveat to such is when exceptional circumstances warrant otherwise. This presents a substantial threshold to be attained before allowing the black and white rule to be disapplied. 1. As a general principle of law, Article 5(5) is an elementary cornerstone of procedure. 53. It is contended that, pursuant to general principles of arbitral law, Article 5(5) is a fundamental rule of procedure. The notion of a Tribunal preventing a party from addressing evidence pitted against them, and adducing cross-examination, demonstrably shows a breach of natural justice and is contrary to the ...essential fairness of the proceeding. 65 This stance is echoed in Wena Hotels, by the ad hoc Committee, which noted that it was a fundamental rule of procedure for a party to be heard and to produce ...all arguments and evidence in support of a defence or claim. 66 Moreover, it is cogently argued that in Born, that the right to present a case includes the right to make submissions on evidence presented by the opponent.67 It continues in noting that failure to give such a right means the Tribunal ...will be subject to an annulment.68 Therefore, Article 5(5) is manifestly a fundamental rule of procedure.
2005, para 48; Wena Hotels Limited v Egypt, Decision on annulment application, ICSID Case No ARB/98/4, (2004) 6 ICSID Rep 129, (2002) 41 ILM 933, (2003) 130 Clunet 167, 28th January 2002, para 56. 63 Belo Rano Model Rules on the Taking of Evidence in International Arbitration. 64 Ibid., Article 5(5). 65 CDC Group Public Limited Company v Seychelles, Decision on Annulment, ICSID Case No ARB/02/14, (2007) 11 ICSID Rep 237, 29th June 2005, para 49. 66 Wena Hotels Limited v Egypt, Decision on annulment application, ICSID Case No ARB/98/4, (2004) 6 ICSID Rep 129, (2002) 41 ILM 933, (2003) 130 Clunet 167, 28th January 2002, para. 57 67 Born, International Arbitration (2009), pp. 25823; See also, Gaillard & Savage (eds), Fouchard, Gaillard, Goldman on International Commercial Arbitration (1999), pp. 947948, para. 1638; Poudret & Besson Comparative Law of International Commercial Arbitration (2 ed, trans. Berti & Ponti, 2007) paras. 546554. 68 Born, International Arbitration (2009), pp. 25823.
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B. The Tribunals decision not to exclude was a serious departure in the circumstances. 54. The Tribunals decision not to exclude Dr Ranapuers report showed a clear and serious departure from Article 5(5) of the Belo Rano Model Rules. 69 55. It is axiomatic that a departure in such circumstances is only serious where it is substantial and such as to deprive the party of the benefit or protection which the rule was intended to provide. 70 In the present instance, the violation of Article 5(5) was such as that, had the Tribunal not considered irrelevant matters, then they would have reached a result substantially different from what was awarded. 71 1. Dr Ranapuer had no valid reason for failing to attend the oral hearing, requiring the Tribunal to exclude his report. 56. The Tribunal departed in a serious manner from Article 5(5) in not immediately excluding Dr. Ranapuers report upon finding out his reasons for his absence. Dr Ranapuers reasoning consisted of having being approached by Wilderness and being convinced to provide assistance to the Tribunal. Dr Ranapuer believed such actions which give ...implicit approval of the Claimants supposed treatment of the Sireno Kanto.72 This presents an obfuscated understanding of the matter before the Tribunal. As noted by Professor Iracunda, the matter does not concern the Sireno Kanto frogs in any means. 73They are only tangentially related, objectively speaking. Thus, this subjective belief of Dr Ranapuer that participation in the arbitration impinges on his beliefs shows that the Tribunal should have presumed to exclude the report automatically pursuant to Article 5(5). 2. Additionally, there were no exceptional circumstances to negate the substance of Article 5(5)
57. It is manifestly apparent that, ion considering the decision-making procedure of the Tribunal, they have failed to consider the procedure correctly. This, as was stated in Wena Hotels, has impacted detrimentally upon the legal rights of the Claimant and so requires annulment.74 i. The fact that there is a limited pool of experts does not constitute an exceptional circumstance. 58. The fact that there is only two other scientists who have detailed knowledge of such matters, is not an exceptional circumstance warranting admission of the Expert Report. Whilst it is acknowledged that this is a relatively low pool of experts to select from, this
69 70
Ibid., at note 63. Continental Casualty Company v Argentina, Decision on Application for Partial Annulment, ICSID Case No ARB/03/9, despatched 16th September 2011, para 96. 71 Ibid., para 96. 72 The Record, lines 177-180. 73 The Record, lines 495-499. 74 Ibid., at note 66, para 58; para 37.
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does not prevent retention of a different expert. No cogent reason is adduced as to why they could not be contacted to assist BRI, in place of Dr Ranapuer. Indeed, it is evident that it is misconceived to declare the information to be from no other source when, in fact, it was.75 ii. Expediency in utilising Dr Ranapuers report should not take precedence over the rights of the party. 59. In addition, whilst it may be more expedient to use Dr Ranapuers report, instead of that of another expert, this should not be considered to trump the fundamental rights of the Claimant, bestowed onto them by the Belo Rano Model Rules. An unequal footing in terms of rights makes a mockery of the ICSID arbitral system. Monetary, and time, considerations should never be considered superior to a parties access to justice under the ICSID convention. Indeed, reference to a specific instance of such is made in the Fraport case, 76 to the Rice Trading (Guyana) case. Here, a party was permitted to adduce additional evidence subsequent to the oral hearing, and failed to allow the opposing party the opportunity to comment on such. 77 This, the Committee in Fraport indicates, is a fundamental rule of procedure being absolutely breached. 60. Therefore, it is contended that the decision not to exclude Dr Ranapuers report constituted a serious departure from a fundamental rule of procedure.
75 76
The Record, lines 184-185. Fraport AG Frankfurt Airport Services Worldwide v Philippines, Decision on Application for Annulment, ICSID Case No ARB/03/25, 17th December 2010, para 200. 77 Rice Trading (Guyana) Ltd v. Nidera Handelscompagnie BV (Hague Court of Appeal) (28 April 1998) (1998) XXIII Ybk Comm Arb, p. 731.
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PART TWO: The Merits I. THE TRIBUNAL ERRED IN LAW IN INTERPRETING THE DEFINITION OF INVESTMENT, PURSUANT TO ARTICLE 25(1) 61. Claimant asserts that the Tribunal erred in law in ruling that the term investment includes the requirement of contribution to the economic development of the host State. A. Introduction 62. It is submitted that the Tribunal exceeded its power in declining jurisdiction and the definition of the term investment does not, in law, require there to be a contribution to the economic development of the host State. 63. This area of law can be difficult to discern and is the most contentious. It is further clouded by the ICSID Conventions omission to include the definition of the term investment, albeit intentional. Article 25(1) reads: The jurisdiction of the Centre shall extend to any legal dispute arising directly out of an investment, between a contracting stateand a national of another contracting state, which the parties to the dispute consent in writing to submit to the Centre.78 (emphasis added) 64. This omission of defining the term investment shows the drafters intentions of setting the level of discretion and refrained from including a definition in order to leave the maximum freedom for its application in practice.79 The often cited Report of the World Banks Executive Directors attempted to justify as to why the drafters of the ICSID Convention omitted the definition of investment. It was quite explicit in stating that:
78
ICSID Convention, Article 25(1) Malicorp Ltd. v Egypt, Award, ICSID Case No. ARB/08/18, 31 January 2011, para.109.
79
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No attempt was made to define the term investment given the essential requirement of consent by the parties.80 65. According to academics, such as, Juillard and Carreau, the absence of this definition is due to the fact that the meaning of Investment varies on a case-by-case basis. 81 Therefore, an examination of equivalent cases by other ICSID Tribunals will assist in determining the approach to be taken and will be shown that the addition of the contribution requirement is inconsistent with the majority of prior case law. Moreover, it is relevant to consider the intentions of the parties at the time of the Bilateral Investment Treaty concerning the Encouragement and Reciprocal Protection of Investment between the Government of the Republic of Oscania and the Government of Bela Rano Insularo (BIT or the Treaty). 66. Therefore, in order to be subject to ICSID jurisdiction, there must be an investment and the claims put forward by either party must arise directly out of an investment, part of the ratione materiae of an investment, as highlighted in Joseph Charles Lemire v Ukraine. 82 67. ICSID practice under Article 25 derives predominantly from the power of an arbitral Tribunal to decide on its own jurisdiction, pursuant to Article 41. This will be discussed below. Therefore, the approach adopted in the Convention gives parties wide discretion to describe the term investment and conversely, gives full discretion on the Tribunal to define investment. Moreover, the Tribunal has an obligation to rule on its own jurisdiction (the Competenz-Competenz). This has been accepted by prior ICSID jurisprudence. 83 68. In interpreting the Washington Convention Tribunals employ either an objective or subjective approach. The former necessitates a deeper understanding of the Salini criteria whilst the latter requires a look at the parties consent. It is the Claimants position that the
80
Report of the Executive Directors on the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. Doc. ICSID/2, 1 ICSID Reports, 1993, 23, para.26.
81
D. Carreau, P. Juillard, Droit international conomique (3e edition, Dalloz, Paris, 2007)
82
Joseph Charles Lemire v Ukraine, Decision on jurisdiction and liability, ICSID Case No. ARB/06/18, 14 January 2010.
83
Ibid., at note 79, para.98.
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ad hoc Committee should adopt a subjective view and should not be one of a restrictive nature.84 69. Additionally, the Claimants contend that the concept of investment should be conformed within the Bilateral Investment Treaty, pursuant to Article 31 of the Vienna Convention on the Law of Treaties (Vienna Convention), which states: A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.85 70. In addition, the Tribunal in Phoenix Action Ltd. v Czech Republic,86 in expanding upon the Salini hallmarks, added that the assets be invested in accordance with the laws of the host State and that only bona fide investments can be protected. B. The preamble contained within the ICSID Convention is not representative of the overarching intention 71. As the intention of the parties needs to be considered in order to seek an investment and ultimately, exclude there to be the requirement of contribution within the definition, it is relevant to address the preamble contained within the ICSID Convention. The preamble summarises the object and purpose of the Convention and the aims in which it would like to pursue. This approach should be the prerequisite when interpreting the definition of investment within the Convention. 72. The preamble, on the outset, elucidates what the Convention is set out to achieve. It states: Considering the need for international cooperation for economic development, and the role of private international investment therein.
84
See AES Corporation v Argentina, Decision on jurisdiction, ICSID Case No. ARB/02/17, 26 April 2005. Article 31 of the Vienna Convention Phoenix Action Ltd v Czech Republic, Award, ICSID Case No. ARB/06/05, 9 April 2009.
85
86
29
73. The respondents will most likely contend that it is evident that investment requires some sort of contribution to the host State, from the mere appearance of the term economic development within the Conventions preamble. However, it is the Claimants submission that the preamble should only be treated as persuasive, at best. Such a synopsis cannot be a strong interpretation of what the ICSID Convention desires and the extrapolation of the condition from this meagre phrase does not represent the overarching theme of the Convention. 74. This preamble based interpretation, in addition, can be quite problematic. In analysing the preamble, one would be questioning that an objective approach, which was constructed under the guise of object and purpose, actually vitiates precisely the bargain which ICSID was designed to enable. 87 Therefore, suggesting that such an approach is not what the drafters of the Convention intended. 75. Moreover, the words of the preamble themselves are too broad to correlate to the characteristics of the condition. Even though, the t erm economic development is stated within both the condition and the preamble, the latter does not specify as to what the development is for. Therefore, the preamble cannot be used as precedent to rely upon what the Convention is set out to achieve. It is too broad in nature to come to a conclusion. 76. Consequently, it is submitted that as this approach cannot and should not be used to interpret the Convention, the realisation of the words economic development cannot be used to infer that the definition of investment requires a contribution to the economic development of the host State. 77. In addition, the variability of ICSID jurisprudence with the omission of any language suggesting economic development is further evidence that the drafters of the Convention did not intend to include a mandatory and strict condition. 78. Therefore, such an omission implies that there is no obligation to consider the condition. However, even though the preamble has clear intentions in requiring future ICSID cases to consider the economic development, it doesnt necessarily mean that it is a condition
87
Julian Davis Mortenson, The Meaning of Investment: Travaux and the Domain of International In vestment Law 51 Harvard International Law Journal (2010) at 311.
30
in which should be abided by. In Pey Casado v Chile,88 the Tribunal deliberated the Conventions preamble and concluded that the requirement of contribution to the economic development was referred in the preamble but as a consequence not as a condition. Therefore, it is submitted that the Respondents extrapolated this requirement from the Preamble which is misrepresentative of what the drafters intended. 79. Furthermore, it is submitted that the Tribunal should not use the preamble based interpretation to define investment. While it is accepted that the Preamble refers to the prerequisite of economic development, it would be disproportionate to attribute a meaning which is not ostensible from the phrasing. 80. Even if it is found that the preamble can be used as a device to interpret the condition, it is the Applicants alternative submission that it is accepted that the requirement forms part of the purpose and aim of the Convention, but it does not produce a separate criterion in which has to be satisfied. C. Alternatively, the contribution requirement should not be considered to be within the definition of investment due to the difficulty of ascertaining it 81. Some Tribunals have taken a diverse approach regarding the criterion of economic development of the host state. Evidently, most of these cases have one thing in common: they have rejected the criterion due to the difficulty or impossibility to ascertain it. Therefore, in support of the Tribunals decision in Pey Casado v Chile89, as aforementioned, the Tribunal should not rule that the requirement is a condition in which needs to be satisfied as it is a consequence. The reasoning behind the Tribunal in such a case was due to the fact that the requirement was difficult to ascertain. 82. Generally, these cases have the same resulting view and conclude that the condition is implicitly integrated within the three previous elements. For example, in L.E.S.I. S.p.A et ASTALDI S.p.A v Algeria,90 the Tribunal deemed it unnecessary that the investment
88
Pey Casado and President Allende Foundation v Republic of Chile, Award, ICSID Case No. ARB/98/2. ibid L.E.S.I S.p.A. et ASTALDI S.p.A. v Algeria, Award, ICSID Case No. ARB/05/3, 4 November 2008.
89
90
31
contributed to the economic development of the host State. It is a condition which is difficult to establish and that it was already included in the three classical conditions set out in the Salini test91 83. Another example is that of the Tribunals decision in Phoenix Actions Ltd v Czech Republic.92 It was accepted that the requirement of the contribution to the economic development of the host state was a criterion within the ICSID Convention but refused its applicability due to that it is impossible to ascertain the more so as there highly diverging views on what constitutes development. 84. Therefore, the Claimants contend that the condition of contributing to the economic development of the host State should not be a criterion in which it is possible to define the term investment due to the impossibility of ascertaining it. Moreover, the contribution requirement is integrated within the other three criteria and it is therefore impossible to conclude that the contribution requirement is a separate criterion in which has to be satisfied. 2. THE TRIBUNAL MANIFESTLY EXCESSED THEIR POWERS IN DECLINING JURISDICTION UNDER THE SALINI93 CRITERIA 85. Claimant asserts that the Tribunal erred in law in adopting the Salini criteria and consequently using the test to produce jurisdictional characteristics. A. The Tribunal was incorrect in not following the award set out in Malaysian Historical Salvors (MHS),94 and therefore, ultimately, the Salini criteria should not have been applied
91
Bayindir Insaat Turizm Ticaret ve Sanayi A v Pakistan, Decision on Jurisdiction, ICSID Case No. Arb/03/29, 14 November 2005, para.137. (Citing LESI v Algeria).
92
Ibid., at note 86. [phoenix] See Salini Costruttori S.p.A. v Morocco, ICSID Case No. ARB/00/4, 16 July 2001.
93
94
Malaysian Historical Salvors Sdn Bhd v Malaysia, Decision on the Application for Annulment, ICSID Case No. ARB/05/10, 28 February 2009, para.58.
32
86. The Claimants submit that every case must be examined in the lights of its own circumstances95 and in this instance, the Tribunal was incorrect in distinguishing Malaysian Historical Salvors.96 87. The Tribunal in Malaysian Historical Salvors97 declined the applicability of the Salini criteria, stating that the approach is consonant with the intention of the Parties to the ICSID Convetion and therefore, doesnt solely focus on Article 25. 88. In addition, it was ruled in MHS98 that the BITs lack of conflict with Article 25(1) of the Washington Convention allowed it to assign the definition of investment which was contained within the applicable BIT. Moreover, it concluded that the previous Tribunals failure to apply the UK-Malaysia BIT constituted a manifest excess of power.99 89. It is further submitted that, although it is agreed that there is no obligation to follow precedence within ICSID arbitration, this itself does not preclude Tribunals from following past awards. In agreeing upon Dr. Albert Viators dissenting opinion, the decision in Malaysian Historical Salvors100 was made by both a former President of the International Court of Justice and the current Vice-President and therefore, produces weight that this decision should be followed. 90. The Tribunal in the LETCO case found that though it was not bound by the precedents established by other ICSID Tribunals, it is nonetheless instructive to consider their interpretations.101 Therefore, it is contended that the approach which the Tribunal took
95
Enron Corporation and Panderosa Assets, L.P. v The Argentine Republic, ICSID Case No. ARB/01/3, Decision on Jurisdiction (Ancillary Claim), 2 August 2004, para.25.
96
ibid., at note 94. ibid ibid ibid ibid
97
98
99
100
101
Liberian Eastern Timber Corp (LETCO) v The Government of the Republic of Liberia, ICSID Case No. ARB/83/2, Award, 31 March 1986,
33
in Malaysian Historical Salvors, 102 in refusing the application of the Salini criteria, is to be considered. 91. In addition, even though Article 53(1) of the ICSID Convention states that an award shall be binding on the parties103, it does not expressly limit this binding force to the specific dispute settled through an award. 92. Moreover, in adopting a more pragmatic approach in defining the term investment, the Tribunal in MHS104 stated that such an approach would take in consideration the features identified in Salini,105 but in conjunction with the circumstances of the case. Therefore, it is contended that the ad hoc Committee should accept this pragmatism in defining an investment under the Convention and also under the applicable BIT. B. The Tribunal, in any event, erred in law due to the application of the Salini criteria, pursuant to ICSID jurisprudence 93. The Salini criteria can be traced back to Professor Christoph Schreuer in which he described and elucidated characteristics typical of investments found to satisfy the Conventions jurisdictional criterion. 106 The Tribunal is relying upon these criteria in its decision of finding the lack of jurisdiction in such a matter. 94. If the claimant was to fail the Salini criteria, the contributions would not qualify as an investment under Article 25. However, some Tribunals have applied this test mandatorily and cumulatively and therefore, there is a sliding scale in which the criteria can be applied. If one criterion has not been established, the rest must be strongly applied. The Tribunal has declined to establish the last criterion, the economic development of the host State, and therefore there is not an investment under Article 25 as the other criterions have been met tenuously. The Claimants contend that the Tribunal erred in the
102
Ibid., at note 94. Article 53(1) of the ICSID Convention. Ibid., at note 94. Ibid., at note 93. Christoph H. Schreuer, The ICSID Convention: A commentary (2001).
103
104
105
106
34
application of the Salini criteria and alternatively, even if it was right to do so, they erred in fact (discussed below). Max Solution did, in fact, make a contribution to the economic development of Bela Rano Insularo. 95. Firstly, it should be noted that the Tribunal has declined jurisdiction only on the basis of not being able to establish one criterion within the Salini criteria. It is submitted therefore, that the Tribunal has treated these criterions as jurisdictional requirements and not characteristics of an investment and ultimately, goes against the Tribunals approach in Salini v Morocco107 and the views of Professor Schreuer. 96. From considering prior case law and ICSID jurisprudence, many Tribunals have taken an approach in which they reflect upon the parties agreement and thus shifted the focus mainly on the BIT. This would then supersede the ICSID Convention and is in replace of imposing a stringent autonomous definition, as in Salini.108 The Tribunal in Biwater Gauff Ltd. v Tanzania109 refused to find any connection between the partys consent under the BIT and the protection within Article 25 stating: Article 25 of the ICSID Convention was not premised on any particular internal rate of return threshold or any conception of economic return.110 97. Therefore, arguing that the purpose of Article 25 is not interrelated with the applicable BIT. The Tribunal continued to state: even if the Republic could demonstrate that any, or all, of the Salini criteria are not satisfied in this case, this would not necessarily be sufficient in and of itself to deny jurisdiction.111 98. Therefore, the Claimants submit that the Tribunal should not have considered the Salini criteria. This approach, as used by the Tribunal, should not be the sole mechanism in
107
Ibid., at note 93. Ibid Biwater Gauff (Tanzania) Ltd. v Tanzania, Award, ICSID Case No. ARB/05/22, 31 March 2006. Ibid., para.A3. Ibid., para.318.
108
109
110
111
35
assessing as to whether there is an investment. The BIT therefore should be considered as the second partite with Article 25 being the first. The analysis of the Treaty shall be addressed below. Moreover, the mere rejection of one characteristic of an investment does not preclude the Tribunal from declining jurisdiction. 99. Supplementary to the above, the criteria themselves are not a necessity in any dispute regarding the definitio n of investment. It was stated in Biwater Gauff Ltd. v Tanzania112 that there is no basis for a rote, or overly strict, application of the five Salini criteria in each case.113 The Tribunal continued to accept this standing and asserted that the criteria are not fixed or mandatory as a matter of law114 It concluded that since the Convention did not provide a strict objective definition of the term investment, ICSID Tribunals should not impose one. Therefore, it is submitted that there is no obligation to apply the criteria and should not have been applied in the current case. Furthermore, the application of the Salini criteria is not consistent and does not offer a viable legal framework. 1.2.8. In support of the above, the specific term of economic development was addressed in the case of Salini v Morocco115; a case heavily relied upon in the Tribunals decision. It was stated: One may add the contribution to the economic development of the host State of the investment as an added condition. (emphasis added) 100. Moreover, whilst some ICSID cases have concluded that the last criterion,
contribution to the economic development of the host State, is integrated within the other requirements, some have gone to the extremities that applying the Salini criteria produces a universal definition of investment. This is an approach which is contradictory to the intentions of the drafters of the Convention as was stated in Alpha Projektholding v
112
Ibid. Ibid., para.312. Ibid. Ibid., at note 93.
113
114
115
36
Ukraine.116 The Tribunal, moreover, found that the contribution requirement is of little value, as it mostly reflects the consequences of the other criteria. 101. It is further submitted that the criteria should be considered in their totality and not individually. 117 Due to the uncertainty of such an approach, there is a need to refer to prior case law. The Tribunal in this instance notices this and states in the award: It is only appropriate that ICSID Tribunals attempt to interpret vague terms in the Convention in the way that is most consistent with prior case law. 102. It then proceeded to apply the Salini criteria. This justification of using the
criteria was not righteous, as mentioned above. The Tribunal has only listed Malaysian Historical Salvors118 a case which disagreed with the Salini criteria and concluded not to follow the award. However, there are many other types of precedent in which support the view of such cases. For example, the Tribunal in M.C.I. Power Group L.C. v Ecuador,119 noted that the elements within the Salini criteria must be considered as mere examples and not necessarily as elements that are required for the existence of an investment for purposes of Article 25 of the ICSID Convention. 103. In addition, the Respondents contend that the Salini criteria determine the out er limits of ICSIDs jurisdiction with regard to the nature of the disputes. 120 Therefore, such an argument precludes any party from giving a broad definition of the term investment.
116
Alpha Projektholding GMBH v Ukraine, Award, ICSID Case No. ARB/07/16, 8 November 2010, paras.311-312
117
Jan de Nul NV and Dredging International NV v Egypt, Decision on Jurisdiction, ICSID Case No. ARB/04/13, 16 June 2006, para.91.
118
Ibid., at note 94.
119
MCI Power Group LC and New Turbine Inc. v Ecuador, Award, ICSID Case No. ARB/03/6, 26 July 2007, para.A2.
120
Abaclat and others v Argentina, Decision on Jurisdiction and Admissibility, ICSID Case No. ARB/07/5, 4 August 2011, para.341.
37
III. THE CONTRIBUTION REQUIREMENT CANNOT BE INFERRED FROM THE AGREEMENT BETWEEN THE PARTIES 104. Claimant asserts that the Bilateral Investment Treaty does not give rise to the
presumption that an investment requires there to be contribution to the economic development of the host State. Moreover, the Tribunal erred in not assessing the Treaty. A. In assessing the Bilateral Investment Treaty, the parties did not agree that the investment must contribute to the economic development of Bela Rano Insularo 105. The term investment is characterised within the Treaty and needs to be loo ked
at because that instrument is the medium through which the Contracting States involved have given their consent to the exercise of jurisdiction of ICSID. 121 Moreover, ICSID case law have commonly looked upon the consent of the parties and in doing so defined the term investment. As mentioned above, it is submitted that in interpreting the Treaty, Article 31(1) of the Vienna Convention should be abided by. Therefore, a Tribunal manifestly excesses its powers if it does not apply the relevant rules of interpretation governing its competence properly. 122 106. On the outset, it is contended that no reasonable inference can be drawn that the
parties agreed that there was to be contribution to the economic development of the host State. Therefore, a deeper understanding of the consent of the parties and an analysis of the applicable Treaty is needed. 107. Under the Bipartite test, as expounded in CSOB v Slovakia,123 once Article 25 has
been looked upon, it is relevant to consider the Bilateral Investment Treaty in which both parties agreed upon. If this approach shall be adopted, the double barrelled test does
121
Ibid., at note 94, para.58. [malay]
122
Fraport AG Frankfurt Airport Services Worldwide v Philippines, Decision on the Application for Annulment, ICSID Case No. Arb/03/25, 17 December 2010, para.76.
123
Ceskoslovenska Obchodni Banka AS v Slovakia, ICSID Case No. ARB/97/4.
38
not mean that one definitionhas to fit into the other definition, namely the one deriving from the spirit of the ICSID Convention.124 108. It is contended that the BIT, analogous to Article 25, does not define the term investment. It merely provides examples of different types of investments. Therefore the language of the BIT shall be considered and moreover, the Treaty would act as a lex specialis with regard to Article 25 ICSID Convention.125 This shows the pertinence of addressing the BIT and highlights the Tribunals incompetence in not doing so. 109. In addition, the BITs aptness in being considered is further applicable due to the
inconclusive remark that anything can be an investment if is agreed by the States in the BIT. In adopting an example used in SGS v Paraguay,126 one would not say that a simple contract for the sale of goodswould const itute an investment within the meaning of Article 25(1), even if defined as such in a BIT. Therefore, it is essential to reflect upon the wording of the Treaty and such an approach necessitates the consent of the parties at the time of the contract. 110. The Claimants submit that the Tribunal erred in finding that the contribution to
the economic development of the host State was a prerequisite to the definition of an investment and moreover, inadvertently erred in not using the Treaty as a mechanism to conclude that the contribution requirement is not a condition in which to be satisfied. The award given by the Tribunal did not analyse the Treaty but only stipulated relevant articles. 111. It is submitted, therefore, that an assessment of the phrasing within the BIT, does
not give rise to an inference that the condition of contributing to the economic development of the host State is not contained within the definition of investment and likewise, not consented upon by the parties. In support of this, it has been suggested by some that a BIT requiring consent precludes the need to define investment.127
124
Ibid., at note 120, para.351. ibid., at note 120, para.305. [aba]
125
126
SGS Socit Gnrale de Surveillance SA v Paraguay, Award on Jurisdiction, ICSID Case No. Arb/07/29, 12 February 2010, para.93.
127
Report of the Executive Directors on the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, 1965, 1 ICSID Rep. 28, 28 (1993)
39
112.
At the outset, it should be noted that the definition of investment contained within
the BIT cannot expand the ICSID Convention but it is possible for it to confirm or restrict an ICSID notion.128 It is contended that the non-exhaustive list contained in Article 1 of the Treaty is an attempt to broaden the Convention [hence, the phrases every asset and Forms that an investment may take include (emphasis added)] and thus, is not the object of a bilateral arrangement between two contracting States. A BIT should be used supplementary to the Convention and ought to confine and clarify the definition contained within Article 25. 113. Furthermore, according to some commentato rs, the majority of BITs include the area of the investments economic activity. 129 Therefore, evidence in which further proves that this BIT is a minority and is inconsistent with previous Treaties. 114. Moreover, in an attempt to analyse the list of definitions in Article 1, it is
axiomatic that the parties did not agree upon contributing to the economic development of the host State. There is no indication that an investment would include contribution and nor is there any focus towards the host States economy. In addition, Article 1 continues to state: that has the characteristics of an investment, including such characteristics as the commitment of capital or other resources, the expectation of gain or profit, or the assumption of risk (emphasis added). 115. Therefore, as can be seen, in defining the investment, Article 1 mentions
characteristics of an investment by stating requirements which are included within the Salini criteria. However, there is no mention of the necessity of contribution to the economic development of the host State. This further supports that this, allegedly most important criterion, is an added condition. This begs the question that how can one agree upon something which was not stipulated within the BIT.
128
129
J.W. Salacuse and N.P. Sullivan, Do BITs Really Work? An Evaluation of Bilateral Investment Treaties and their Grand Bargain, (2005) Harvard International Law Journal, at 67.
40
116.
An example, to the contrary, is of Article 1(6) of the Energy Charter Treaty
which defined investment as every kind of asset but then continued on to refer to any investment associated with an economic activity in the energy sector. This omission suggests that such a requirement is not included within the definition of investment and since this lapse in the wording cannot be integrated within Article 25, the ad hoc Committee should find that the definition does not include contribution. 2. THE TRIBUNAL ERRED IN FACT AS EVEN IF THE CONTRIBUTION PREREQUISITE IS HELD TO BE ESSENTIAL, THE TRANSACTION MEETS THIS STANDARD 117. Claimant asserts that, in the alternative, the Tribunal erred in fact as the
transaction within question satisfies the standard to be applied. A. Introduction 118. The Claimants contend that the transaction carried out by Max Solutions was to
eradicate the Sireno Kanto from Bela Rano Insularo and did so to satisfy the criterion contained within Salini. Therefore, a Tribunal should consider and analyse the factual records only to the extent that it is necessary to consider its own jurisdiction. 130 B. The Tribunal misinterpreted the threshold in which should be applied 119. It is contended that the test to be applied to such a criterion is not one of
significance. It is agreed, however, that it must be clear on the outset to be satisfied. Applying a high threshold precluded the Tribunal from satisfying the criterion and moreover, limited the method in which the Tribunal in Salini intended. 120. In support of the above, the case of Patrick Mitchell v Congo stated:
130
41
Contribution to the economic development of the host state characteristic of an investment is an essential although not sufficient characteristic or unquestionable criterion of the investment.131 (emphasis added) 121. Even though the above states that the criterion is essential, the quotation supports
the view that the criterion does not need to be met with sufficiency. The Tribunal in Patrick Mitchell132continued to conclude that the criter ion does not have to be sizeable or successful and therefore, a mere appearance of any action carried out by Max Solutions which seemingly contributed to Bela Rano Insularos economic development would satisfy the condition. 122. In addition, the case of Phoenix, 133 in building upon the articulation of Salini134 in Jan de Nul,135 held that six elements should be taken into account when determining if an investment is protected by the ICSID Convention and named the pertinent requirement as: an operation made in order to develop an economic activity in the host State. Subsequently, the Tribunal added that extensive scrutiny is not necessary. 123. Therefore, a lower threshold needs to be applied when interpreting Max Solutions activities and whether they in fact contributed to Bela Rano Insularos economic development. Nevertheless, the contribution must impact positively on Bela Rano Insularos development.136 C. The statement made by the spokeswoman, and the consequences which resulted, can be used as evidence to suggest that Max Solutions contributed to Bela Rano Insularos economic development
131
Mitchell v The Democratic Republic of Congo, Decision on the Application for Annulment of the Award, ICSID Case No.ARB/99/7, 27 October 2006, para.33.
132
ibid Ibid., at note 86. Ibid., at note 93. Ibid., at note 94, para.91. Christoph H. Schreuer, The ICSID Convention: A commentary (2001), at 125.
133
134
135
136
42
124.
The Tribunal has justified their inability to satisfy the criterion from stating that
the spokeswomans comments were merely for politically-motivated optimism. It is submitted that this is a twist from the truth. It is agreed upon that the spokeswoman made such comments to entice more viewers and ultimately, more tourists. However, the GASP International Competition Council (Council) allowing Bela Rano Insularo to host the Olympic games can be deemed favourable to the activities of Max Solutions. Therefore, it is ostensible from the outset that Max Solutions contributed to Bela Rano Insularos development immediately upon agreeing to enter into the contract. 125. It cannot be contended that these politically optimistic statements were
speculative and that they materialised nothing. It is therefore contended, in the alternative, that these announcements resulted in the government opening bids for the construction of hotels and resorts and consequently, Bela Rano Insularo received a significant amount of money. Therefore, such politically-motivated optimism did in fact contribute to the economic development of Bela Rano Insularo. D. The fact that the frogs were removed by nature is merely subsidiary to the claim that Max Solutions contributed to Bela Rano Insularos development 126. It has already been contended by the Claimants that the standard in which needs
to be set is lower than the one applied that is that the criterion must be clear and significant. There must be some appearance of contribution and therefore, all that needs to be proven is that Max Solution contributed to Bela Rano Insularos economic development, albeit de minimis. 127. The Tribunal have concluded that Max Solutions activities cannot be attributed to
the extinction of the Sireno Kanto as they were removed by nature and not by the actions of Max Solutions. However, on the outset, the Applicant contends that Max Solutions did in fact contribute to the economic development of Bela Rano Insularo. It is already been stated that 3% of the Sireno Kanto had been removed. 128. It is essential to note that the government of Bela Rano Insularo had cancelled the
contract only twelve days after Max Solutions declared that it extended its operations and declined the governments request in inspecting there operations. This was on the basis of inadequate performance. Therefore, it is the Claimants view that the refusal of the
43
inspection does not give rise to the cancellation of the contract and ultimately, proves that Bela Rano Insularo prevented Max Solutions from carrying out the activities in which they were agreed to carry out. Moreover, if the contract was not cancelled at such a time, it is submitted that Max Solutions would have removed 80% of the Sireno Kanto population by the end of December 2006. In addition, it is interesting to note that the contract required performance from January 2006 and two months later, Max Solutions have removed 3% of the Sireno Kanto population. It seems unjust that the government of Bela Rano Insularo would cancel the contract so soon. 129. Therefore, this precludes any contention that Max Solutions actions cannot be
attributed to the development of the economic development of Bela Rano Insularo as the Sireno Kanto frogs became extinct due to the poisonous disease contained within them. E. The assertion that Max Solutions did not compensate Bela Rano Insularo with revenue from its ventures is not evidence that they did not contribute to the Islands economic development 130. The Tribunal attempted to vindicate that there was no contribution to Bela Rano
Insularos development because Max Solutions obtained income from their ventures, namely, selling symphonies which the Sireno Kanto produced and selling healthy Sireno Kanto to a pharmaceutical company. The additional rejection of this criterion is based on Max Solutions not providing the government of Bela Rano Insularo with any of this revenue and thus there is no contribution. 131. Regarding the selling of the frog symphonies, it is submitted that the distribution of these opuses did in fact, contribute to Bela Rano Insularos economic development. It is accepted that Bela Rano Insularo is a small island nation with a problem relating to the lack of tourism. Max Solutions confirmed that they were planning to sell these symphonies to overworked people from around the world. Therefore, the purpose of foreign consumption was to increase knowledge of Bela Rano Insularo, and ultimately, increase tourism. 132. In the alternative, however, it is submitted that any future revenue in which Max
Solutions obtains from selling the frog symphonies cannot be used as an inference that Max Solutions was not going to share the profits with the government of Bela Rano
44
Insularo. Max Solutions were merely in the planning stage of the distribution as the contract was cancelled two months before the croaking season starts (May-November). It is impossible to state, conclusively, that the government would not obtain any revenue in the near future. 133. In addition, the Tribunal did not address the purpose of what the pharmaceutical organisation was to do with the healthy Sireno Kanto. This was used for medical research for the development of allergy immunity treatments. 137 Therefore, a reasonable inference can be drawn that this research was going to be used to treat the potential tourists who would arrive at Bela Rano Insularo. Moreover, it is immaterial that the pharmaceutical company was at a nearby country due to the mere nature of the development of Bela Rano Insularo. As they do not have the capability to remove frogs from their island, it is likely that they would not have such a facility. 134. More importantly, it is submitted that Max Solutions has yet to receive any
income from the medical research in which the pharmaceutical organisation was to carry out. In adopting the claimants accepted example in Malaysian Historical Salvors,138 before Max Solutions could receive any profit and return, the treatment would have had to be discovered, treated, approved by the regulatory authority and accepted by the market. Therefore, it is immaterial that the government of Bela Rano Insularo would not receive any income as Max Solutions themselves would have obtained any return in the distant future and ultimately, would have provided contribution to Bela Rano Insularos economic development by other means, as previously stated. F. Conclusion 135. It is apparent from the outset that Max Solutions contributed to Bela Rano
Insularos economic development. The whole purpose of the contract was to eradicate a problem in which the island sustained. It is inconsequential that the Sireno Kanto died by nature as Max Solutions had already removed some frogs and therefore met the low threshold in which should be applied.
137
The Record, lines 83-89. Ibid., at note 94.
138
45
IV. PURSUANT TO ARTICLES 41(2) AND 52(4), THE AD HOC COMMITTEE HAS THE POWER TO DECIDE WHETHER THE TRANSACTION IN QUESTION QUALIFIES AS AN INVESTMENT A. ON THE OUTSET, THE ANNULMENT COMMITTEE HAS THE POWER TO DETERMINE AS TO WHETHER THE REMOVAL OF THE SIRENO KANTO QUALIFIES AS AN INVESTMENT 136. Claimant asserts that the ad hoc Committee has the power, pursuant to Articles 41(2) and 52(4), to decide as to whether the transaction qualifies as an investment, and does so in such a case. This shall be determined as a preliminary question, only. 1. Introduction 137. Following the initial Tribunals decision to decline jurisdiction139, the Claimant submits that the present Committee has the power, pursuant to Articles 41 (2) and 52 (4) of the ICSID Convention (the Convention) to determine whether the transaction between the parties constitutes an investment under the provisions of the Convention. The Claimants make this submission on the basis that it is an issue which goes to the jurisdiction of the Centre, not of the Tribunal. 138. Moreover, it is contended that the ad hoc Committee has full discretion as to whether to annul an award and should do in this instance. 140
2. The relevant articles within the ICSID Convention enable the annulment Committee to decide that the transaction qualifies as an investment 139. Article 52 (4) of the ICSID Convention provides that: The provisions of Articles 41-45, 48, 49, 53 and 54, and of Chapters VI and VII shall apply mutatis mutandis to proceedings before the Committee.141 As the present panel will appreciate, the effect of this subsection is that necessary revisions must be made to the way in which the specified provisions are read in order to make them suitable 142 and thus applicable to the present Committee, for example references to the Tribunal must be read as the ad hoc Committee.143 For the purposes of the Claimants submission, Article 52(2) effectively
139
See paragraph 190 of the Uncontested Facts.
140
Compania de Aguas Aconquija S.A. and Compagnie Generale Des Eaux v Argentina, Decision on Annulment, 3 July 2002, para.66.
141
Article 52 (4) ICSID Convention. The ICSID Convention: A Commentary, Christopher H. Schreuer, Page 1042. Ibid.
142
143
46
grants the present ad hoc Committee the power conferred upon the arbitral Tribunal under Article 41(2). 140. Following the above proposition, Article 41 (2) states that: Any objection by a party to the dispute that that dispute is not within the jurisdiction of the Centre, or for other reasons is not within the competence of the Tribunal, shall be considered by the Tribunal which shall determine whether to deal with it as a preliminary question or to join it to the merits of the dispute.144 By way of this section, the Claimant submits that the question of whether the dispute is within the jurisdiction of the Centre shall be determined by the present ad hoc Committee. 141. Therefore, it is contended that the ad hoc Committee can, pursuant to these Articles, decide as to whether there is an existence of an investment. The ICSID Convention, in any event, has supremacy over the Tribunal and cannot be stated otherwise.
3. The jurisdiction should go to the Centre, and not to the Tribunal. 142. As the present Committee will undoubtedly be aware, in order for the Centre to have jurisdiction, four conditions must be met. Three of these conditions derive from Article 25 itself and the other results from the general principle of law of nonretroactivity. The condition which is most pertinent at present is a condition ratione materiae: the dispute must be a legal dispute arising directly out of an investment.145 Therefore, if the dispute does not arise directly out of an investment, it is outside of the authority of ICSID. 143. It is widely accepted that as the Convention does not define the term investment that a broad approach to the interpretation of this term in Article 25 is warranted 146 and further in AES v. Argentina that the terms used should not be given a restrictive interpretation.147 144. The Report of the Executive Directors addressed this broad interpretation to the term, when saying in paragraph 22: the term jurisdiction of the Centre is used in the Convention as a convenient expression to mean the limits within which the provisions of the Convention will apply and the facilities of the Centre will be available for conciliation and arbitration proceedings. ()148
144
Article 41 (2) ICSID Convention. Joseph Charles Lemire v. Ukraine, Decision on Jurisdiction and Liability , 14 January 2010.
145
146
Fedax v. Venezuela, Decision on Jurisdiction, 11 July 1997 referencing C. F. Amerasinghe: The Jurisdiction of the International Centre for the Settlement of Investment Disputes, Indian Journal of International Law, Vol. 19, 1979, 166-227, at 181.
147
AES Corporation v. Argentina, Decision on Jurisdiction, 26 April 2005.
148
Report of the Executive Directors on the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, International Bank for Reconstruction and Development, 18 March 1965, p.43.
47
145. The Claimant submits that the in determining whether there was an investment for the purposes of jurisdiction; the Committee must look at the contractual agreements as a whole and not just at certain aspects. Determining whether there is an inv estment is a matter of substance and not form.149 146. Directly relates to dispute and not to investment; accordingly, investments may also be of an indirect character. It is apparent that the term directly relates in this Article to the dispute and not to the investment.150 147. In addition, the second requirement mentioned by Article 25 is that of the consent to arbitration. The parties have agreed that the claim should go to arbitration, pursuant to Article 25 of the Treaty and that this consent is the cornerstone of the jurisdiction of the centre.151 It is worth noting that consent alone will not suffice to bring a dispute within its jurisdiction. From the outset, therefore, consent is apparent as the agreement between the parties is contained within the Bilateral Investment Treaty,152 as has been discussed. Moreover, this consent may be on a conditional basis. In the AUCOVEN case, ICSID did not have jurisdiction until a condition subsequent had been satisfied, this condition, in this instance, is that the transaction within question is an investment, under Article 25 of the ICSID Convention.
149
H&H Enterprises Investments v. Egypt, Decision on Respondents Objections to Jurisdiction, 5 June 2012. Fedax v. Venezuela, Decision on Jurisdiction, 11 July 1997
150
151
Report of the Executive Directors of the International Bank for Reconstruction and Development on the Convention, 18 March 1965.
152
See Eudoro Armando Olguin v Republc of Paraguay, ICSID Case No. ARB/98/5, 8 August 2000.
48
REQUEST FOR RELIEF
1. The Claimant humbly requests for relief, under the aforementioned, in that: a. The Tribunal was properly constituted subsequent to a dismissed challenge against Professor Iracunda, as she possesses the qualities required under the ICSID Convention. b. The Tribunal did not depart, in a serious manner, from a fundamental rule of procedure in admitting Dr. Ranapuers Expert Report. c. In declining jurisdiction, the Tribunal exceeded its powers. The ICSID Convention demonstrably does not required that an investment, so -called, contributes to the development of Belo Rano Insularo. d. Even if contribution to BRI is considered essential, the above transaction, removal of the Sireno Kanto, meets this standard. e. The annulment Committee has the power to decide whether the transaction in question is indeed an investment, as this concerns the Centres jurisdiction.
Respectfully submitted on the 27 September 2012 by
BAXTER
On behalf of the Claimant
49

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Team Baxter Memorial for the Claimant

2012 Foreign Direct Investment International Arbitration Moot

Memorial for the Claimant

MAX SOLUTIONS INC.

Ad hoc committee for the ICSID Convention

Counsel for the applicant, Baxter

Team Baxter Memorial for the Claimant

Team Baxter Memorial for the Claimant

Team Baxter Memorial for the Claimant

Team Baxter Memorial for the Claimant

Request for Relief

Fouchard, Gaillard, Goldman on International Commercial Arbitration

Team Baxter Memorial for the Claimant

CH. Schreuer J.W. Salacuse N.P. Sullivan Reports

Team Baxter Memorial for the Claimant

Team Baxter Memorial for the Claimant

Team Baxter Memorial for the Claimant

Team Baxter Memorial for the Claimant

See clarification 21. See clarification 60.

See clarification 28.

Team Baxter Memorial for the Claimant

See clarification 44.

Team Baxter Memorial for the Claimant

See clarification 94.

Team Baxter Memorial for the Claimant

Team Baxter Memorial for the Claimant

PART ONE: The Procedure

Team Baxter Memorial for the Claimant

Team Baxter Memorial for the Claimant

Team Baxter Memorial for the Claimant

Team Baxter Memorial for the Claimant

Team Baxter Memorial for the Claimant

Team Baxter Memorial for the Claimant

Team Baxter Memorial for the Claimant

Team Baxter Memorial for the Claimant

Team Baxter Memorial for the Claimant

Team Baxter Memorial for the Claimant

Team Baxter Memorial for the Claimant

Team Baxter Memorial for the Claimant

Team Baxter Memorial for the Claimant

Team Baxter Memorial for the Claimant

Ibid., at note 79, para.98.

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Team Baxter Memorial for the Claimant

Team Baxter Memorial for the Claimant

Team Baxter Memorial for the Claimant

Team Baxter Memorial for the Claimant

ibid., at note 94. ibid ibid ibid ibid

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Team Baxter Memorial for the Claimant

Team Baxter Memorial for the Claimant

Ibid. Ibid., para.312. Ibid. Ibid., at note 93.

Team Baxter Memorial for the Claimant

Ibid., at note 94.

Team Baxter Memorial for the Claimant

Ibid., at note 94, para.58. [malay]

Ceskoslovenska Obchodni Banka AS v Slovakia, ICSID Case No. ARB/97/4.

Team Baxter Memorial for the Claimant

Ibid., at note 120, para.351. ibid., at note 120, para.305. [aba]

Team Baxter Memorial for the Claimant

Ibid., at note 86, para.96.

Team Baxter Memorial for the Claimant

An example, to the contrary, is of Article 1(6) of the Energy Charter Treaty