Team 26

INTERNATIONAL BANKING AND INVESTMENT LAW MOOT COURT COMPETITION 2012

COUR PERMANENTE D'ARBITRAGE
THE HAGUE


Europa Global Traction and Power Corporation Private Limited (EGTPC)
(Claimant)
V.
The Federal Republic of Asiania
(Respondent)



(Docket No 2/2012)

MEMORANDUM FOR RESPONDENT

Page 2 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

TABLE OF CONTENTS

Table of Contents ........ ...................................................................................................2
Table of Abbreviations..................3
Index of Authorities...................5
Cases..................................................................................................................5
Journal...10
Books.....14
Treatises.....15
Statement of Facts.....16
Questions Presented......19
Summary of Arguments.20
Arguments Advanced.....22
Prayer..45


Page 3 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

TABLE OF ABBREVIATIONS

Abbreviation Full form
/ Paragraph(s)
& And
/S./ss. Section(s)
A.C. Appeal Cases
All ER All England Law Reports
ARB Administrative Review Board
Art Article
BIT Bilateral Investment Treaty
CEO Chief Executive Officer
CLR Commonwealth Law Report
CPC Communist Party of Calona
Co. Company
Com. Commercial
Corp. Corporation
CPCA Calonian Prevention of Corruption Act
ed./eds. Editor(s)
edn. Edition
e.g. Example
ER English Reports
EU European Union
EWCA Civ. England and Wales Court of Appeals (Civil)
EWHC England and Wales High Court
GPG Global Peace Games
Govt. Government of Calona
HL House of Lords
Ibid Ibidem
ICSID International Centre for Settlement of
Investment Disputes
Page 4 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

ICJ International Court of Justice
Inc. Incorporation
Intl International
LCIA The London Court of International Arbitration
Ltd. Limited
MOU Memorandum of Understanding
NAFTA North Americal Free Trade Agreement
NGO Non
NLS Nakamuka Lighting Sloution
No. Number
OECD Organisation for Economic Cooperation and
Development
Ors. Others
PC Privy Council
PM Prime Minister
pp. Pages
Pty Proprietary
Pvt. Private
QB Queens Bench
Rep. Report
SBI Special Bureau of Investigation
Stadium Champs National Stadium
UKHL United Kingdom House of Lords
UN United Nations
UNCITRAL United Nations Commission on International
Trade Law
USA/US United States of America
v. Versus
Vic. Victoria
Vol Volume
Page 5 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

INDEX OF AUTHORITIES
CASES
A
Amco Asia Corporation v. Republic of Indonesia (Award, Supplemental Decisions and
Rectification, Resubmitted case), ICSID Case No. ARB/81/1 (Oct. 10,1990), 1 ICSID Rep.
569
American Manufacturing & Trading, Inc. v. Republic of Zaire (Award), ICSID Case No.
ARB/93/1 (Feb. 21, 1997), 36 I.L.M 1531 (1997)
Asian Agricultural Products ltd. (AAPL) v. Republic of Sri Lanka (Award), ICSID Case No.
ARB/8/7/3 (June 27, 1990)
Award in Case No. 5514 (Dec. 1990) (published in french), Collection of ICC Arbitral
Awards, 1991-1995, 459 (1997)
Azininan v. United Mexican States (Award), ICSID Case No. ARB(AF)/9/7/2 (Nov. 1,1999)
Azurix Corp. v. Argentine Republic (Jurisdiction), ICSID Case No. ARB/01/12 (Dec. 8,
2003)
B
Bechtel Enterprises International (Bermuda) Ltd. V. Overseas Private Investment Corp.,
AAA Case No. 50 T195 00509 02 (Sept. 3, 2003)
Benvenuti & Bonfant SRL v. The Government of the Peoples Republic of the Congo
(Award), IVSID Case No. ARB/7/7/2 (Aug. 15, 1980), translated in 1 ICSID Rep. 330
C
Case Concerning Avena and other Mexican Nationals (Mexico v. United States of America)
(Merits),I.C.J.(Mar.31,2004),http://212.153.43.18/icjwww/idocket/imus/imusjudgement/imus
_toc_judgement.htm. (last visited on May 7, 2004)
Case Concerning Electronics Sicular S.P.A (ELSI) (United States Of America v. Italy)
(Award), 1989 I.C.J. Rep. 15 (July 20)
Page 6 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

Case Concerning Military and Paramilitary Activities In and Against Nicaragua (Nicaragua v.
United States Of America) (Merits), 1986 I.C.J. Rep. (June 27)
Case Concerning The Factory at Chorzow (Indemnity), 1928 P.C.I.J. (Ser. A) No. 13 (Sept.
13)
Case Concerning the Factory at Chorzow (Jurisdiction), 1927 P.C.I.J. (Ser. A) No. 9 (July 26)
Case Of Certain Norwegian Loans (France v. Norway) (Merits), 1957 I.C.J. Rep. 9 (July 6)
Cayuga Indians (Great Britain) v. United States, R.I.A.A., vo.VI, 173 (Jan 22, 1926)
Claims og Gelbtrunk and Salvador Commercial Company, R.I.A.A., vol. XV, 463 (May 2,
1902)
CME Czech Republic B.V.v. The Czech Republic (Award), UNCITRAL Arbitration (Mar.
14, 2003)
CME Czech Republic B.V.v. The Czech Republic (Partial Award), UNCITRAL Arbitration
(Sept. 113, 2001)
CMS Gas Transmission Company v. Argentine Republic (Jurisdiction), ICSID Case No.
ARB/01/08 (July 17, 2003), 42 I.L.M 788 (2003)
Compania de Aguas del Aconquiia S.A. v. Argentine Republic (Decision on Annulment),
ICSID Case No. ARB/9/7/3 (July 3, 2002), 41 I.L.M. 1135 (2002)
Compania de Auguas del Aconquiia S.A. v. Argentine Republic (Award), ICSID Case No.
ARB/97/3 (Nov. 21, 2000), 40 I.L.M. 426 (2001)
Compania del Desarrollo de Santa Elena S.A. v. Republic Of Costa Rica (Award), ICSID
Case No. ARB/96/1 (Feb. 17, 2000)
Corfu Channel Case (United Kingdom v. Albania) (Assessment Of Compensation), 1949
I.C.J Rep. 244 (Dec. 15)
Corfu Channel Case (United Kingdom v. Albania) (Merits), 1949 I.C.J. Rep. 4 (Apr. 9)
D
Page 7 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

Difference Relating to Immunity from Legal Process of a Special Rapporteur of the
Commission on Human Rights (Advisory Opinion), 1999 I.C.J. Rep. 62 9Apr. 29)
Dispute Between Libyan American Oil Company (LIAMCO) And The Government of the
Libyan Arab Republic Relating To Petroleum Concessions 16,17 and 20, (Apr. 12, 1977), 62
I.L.R. 141
E
Enron Corporation v. The Argentine Republic (Jurisdiction), ICSID Case No. ARB/01/3 (Jan.
14, 2003)
Estate of Pellat (France) v. United Mexican States, R.I.A.A., vol. V, 534 (June 7, 1929)
(English translation provided by Merrill Translations, May3, 2004)
F
Fedax N.V. v. Republic of Venezuela (Award), ICSID Case No. ARB/96/3 (Mar. 9, 1998) 5
ICSID Rep. 200
Feldman v. United Mexican States (Award), ICSID Case No. ARB (AF)/99/1 (Dec. 16, 2002)
Foremost Tehran, Inc. v. The Government of the Islamic Republic of Iran, Award No. 220-
37/231-1 (Apr. 10, 1986), 10 Iran- U.S. Cl. Trib. Rep. 228
H
Himpurna California Energy Ltd. (Bermuda) v. Republic of Indonesia (Interim Award), 15
Mealeys Arb. Rep. A-1 (Sept. 26, 1999)
I
In the Matter of an Arbitration between the State of Kuwait and American Independent Oil
Company (Amoniol), (Mar. 24, 1982), 66 I.L.R. 518
INA Corp. v. The Government of the Islamic Republic of Iran, Award No. 184-161-1 (Aug.
12, 1985), 8 Iran-U.S Cl. Trib. Rep.373


Page 8 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

L
LaGrand Case (Germany v. United States of America) (Merits), 2001 I.C.J. Rep. 466 (June
27)
LaGrand Case (Germany v. United States of America) (Provisional Measures), 1999 I.CJ.
Rep. 9 (Mar 3)
Lanco International, Inc. v. The Argentine Republic (Jurisdiction), ICSID Case No.
ARB/97/6 (Dec. 8, 1998), 40 I.L.M. 457 (2001)
Lusitania Cases (United States v. Germany), R.I.A.A. vol. VII, 32 )Nov. 1, 1923)
M
Maffezini v. The Kingdom of Spain (Award and Rectification), ICSID Case No. ARB/97/7
(Nov. 13, 2000) (Spanish, and English translation)
Maffezini v. The Kingdom of Spain (Jurisdiction), ICSID Case No. ARB/97/7 (Jan. 25, 2000)
(Spanish, and English Translation
Maritime International Nominees Establishment v. The Republic of Guinea (Award), ICSID
Case No. ARB/84/4 (Jan. 6, 1988) 4 ICSID Rep. 61
Metaclad Corporation v. United Mexican States (Award), ICSID Case No. ARB(AF)/97/1
(Aug. 30,2000)
Middle East Cement Shipping and handling Co.S.A. v. Arab Republic of Egypt (Award),
ICSID Case No. ARB/99/6 (Apr. 12, 2002)
Mondev International Ltd. V. United States of America (Award), ICSID Case No.
ARB(AF)/99/2 (Oct. 11, 2002), 42, I.L.M. 85 (2003)
O
Oil Field of Texas, Inc. v. The Government of the Islamic Republic of Iran, Award No. 258-
43-1, (Oct. 8, 1988) 12 Iran-U.S Cl. Trib. 308
P
Pacific Reinsurance Mnagement Corp. v. Ohio Reinsurance, 935 F.2d 1019 (9
th
Cir. 1991)
Page 9 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

Philips Petroleum Company Iran v. The Islamic Republic of Iran, Award No. 425-39-2 (June
29, 1989), 21 Iran-U.s Cl. Trib. Rep. 79
S
S.D. Myres, Inc. v. Government of Canada (Partial Award) UNCITRAL Arbitration (Nov.
12, 2000), 40 i.l.m 1408 (2001)
Salini Costruttori S.P.A v. Kingdom of Morocco (Jurisdiction), ICSID Case No. ARB/00/4
(July 23, 2001), 129 Journal du Droit International 196 (2002), translated in 42 I.L.M 609
(2003)
Salome Lerma Vda. De Galvan (United Mexican States) v. United States of America,
R.I.A.A. vol. IV, 273 (July21, 1927)
Sapphire International Petroleums Ltd. V. National Iranian Oil Company, (Mar. 15, 1963), 35
I.L.R. 136
Seaco. Inc. v. The Islamic Republic of Iran, Award No. 531-260-2, (June 25, 1992) 28 Iran-
U.S. Cl. Trib. Rep. 198
SGS Societe Generale de Surveillance S.A. v. Republic of the Philippines (Jurisdiction),
ICSID Case No. ARB/02//6 (Jan 29, 2004)
SGS Societe Generale de Surveillance S.A. v.Islamic Republic of Pakistan (Jurisdiction),
ICSID Case No. ARB/01/12 (Aug. 6, 2003)
Southern Pacific Properties (Middle East) Limited v. Arab Republic of Egypt (Award),
ICSID Case No. ARB/84/3 (May 20, 1992), 3 ICSID Rep. 189
Sperry Intl Trade Inc. v. Israel, 689 F.2d 301 (2d Cir. 1982)
Starrett Housing Corporation v. The Government of the Islamic Republic of Iran
(Interlocutory Award), Award No. ITL 32-24-1, (Dec. 19, 1983), 4 Iran- U.S. Cl. Trib. Rep.
122
T
Tecnicas Medioambientales Tecmed S.A. v. The United Mexican States (Award), ICSID
Case No. ARBZ(AF)/00/2 (May 29, 2003), translated in 43 I.L.M. 133 (2004)
Page 10 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

Tippets v. TAMS-AFFA Consulting Engineers of Iran, Award No. 141-7-2 (June 22, 1984), 6
Iran-U.S. Cl. Trib. Rep. 219
U
United Painting Company, Inc. v.v The Islamic Republic of Iran, Award No. 458-11286-3
(Dec. 20, 1989), 23 Iran-U.S Cl. Trib. 351
United States v. Sperry Corp., 493 U.S 52 (1989)
W
Wena Hotels Limited v. Arab Republic of Egypt (Annulment Proceeding), ICSID Case No.
ARB/98/4, (Jan. 28, 2002), 41 I.L.M. 933 (2002)
Wena Hotels Limited v. Arab Republic of Egypt (Award), ICSID Case No. ARB/98/4 (Dec.
8, 2000), 41 I.L.M. 896 (2002)

JOURNALS
A
A.M. Shea, Discharge from Performance of Contracts by Failure of Condition, (1979),
Modern Law Review, Volume 42
Andreas Hans Roth, The Minimum Standard of International Law Applied to
Aliens,(1949), 127
Alexander Jolles, Consequences of Multi-tier Arbitration Clauses: Issues of Enforcement,
(2006), The Chartered Institute of Arbitrators
B
Bruno Zeller, Determining the Contractual Intent of parties under the CISG and Common
Law A Comparative Analysis, (2002), 4 Eur. L.J. Reform 629
C
C. F Amerasinghe, Jurisdiction of International Tribunals 70, Kluwer 2003
Page 11 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

Christopher F. Dugan, Don Wallace, Jr. Noah Rubins, Borzu Sabahi, Investor-State
Arbitration, Oxford University Press, Ch. XVIII, p.56
C. Schreuer, Consent to Arbitration
C. Schreuer, Convention Establishing the Multilateral Investment Guarantee Agency, Oct
11, 1985,Art. 12 (d) (i)
Christopher Schreuer, The ICSID Convention: A Commentary, (2001), 191-224,
Cambridge University Press
Christian Kessel Michael J.E. Herington, Retention of title in English law, (1994),
International Company and Commercial Law Review
Christopher Koch, Arbitrability- International and Comparative Perspectives, (2011),
Arbitration
Christopher Staughton, Interpretation of (commercial) contracts, (1990), Arbitration
D
David Foster, Umbrella clauses - a retreat from the Philippines?, (2006), International
Arbitration Law Review
Dugan, C. F, Jr. D. W, Rubins, N., Sabahi, B Governing Law in Investment Disputes
Investor State Arbitration, Oxford University Press, p 201
E
E. Jane Sidnell, W. J. Kenny and Debra Curcio- Lister Miller Thomson LLP, Managing
Consequential Damages in Contracts: Drafting an Enforceable Exclusion Clause
F
Frank Griffith Dawson, International Law and the Procedural Rights of Aliens before
National Tribunals, (1968), 17 Intl & Comp. L.Q. 404
G
Georges Delume, Consent to ICSID Arbitration, in The Changing World of International
Law in the Twenty-First Century,155, 164 (Kluwer 1998)
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George K. Foster, Striking a Balance Between Investor Protections and National
Sovereignty: The Relevance of Local Remedies in Investment Treaty Arbitration, (2011) 49
Colum. J. Transnatl L. 201
H
Hakeem Seriki, Umbrella clauses and investment treaty arbitration: all encompassing or a
respite for sovereign states and state entities?, (2007)
Hop Xuan Dang, Jurisdiction Clauses in State Contracts Subject to Bilateral Investment
Treaties, (2011), International Arbitration Law Review
J
Jolles, A., Consequences of Multi tier Arbitration Clauses: Issue of Enforcement, The
Chartered Institues of Arbitration, (2006), London, Sweet & Maxwell
Jeremy Thomas, Some recent commercial cases on termination for breach of contract ,
(2001), International Company and Commercial Law Review
Jean-George Betto, International Arbitration Awards Digest, (2002), International
Business Law Journal
K
Kathleen Scanlon, Country report for US, in Enforcement of Multi-tiered Dispute
Resolution Clauses, IBA Newsletter of Committee D (Arbitration and ADR), Vol.6 No.2,
October 2001
L
L. A. Lawreson, The Sale of Goods by Description - A Return to Caveat Emptor, (1991),
M.L.R. 1991, 54(1), 122-126
Loukas A. Mistellis and Stavros L. Brekoulakis, r. by Christopher Koch, Arbitrability
International and Comparative Perspectives, (2011), Publication Review
L.W. Everett, Waiving Right to Reject Goods, (1970), Arbitration
M
Page 13 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

M. Sornarajah, The International Law on Foreign Investment 7,(2004), Cambridge
University Press
O
OECD, Declaration on International Investment and Multinational Enterprises, (1976), 15
I.L.M. 967
OECD, Fair and Equitable Standard in International Investment Law, (2004) 8 note 32,
Working Papers in International Investment
OECD, International Investment Law: Understanding Concepts and Tracking Innovations,
(2008)
OECD, Interpretation of the Umbrella Clause in Investment Agreements, (2006), Working
Papers on International Investment
P
Peter Tiersma, The Language of Silence, (1995), Rutgers Law Review
Philip Naughton Q.C., Country report for England in Enforcement of Multi-tiered Dispute
Resolution Clauses, IBA Newsletter of Committee D (Arbitration and ADR), Vol.6 No.2,
October 2001
R
Robert N. Dobbings, The Layered Dispute Resolution Clause: from Boilerplate to Business
Opportunity (2005) Hastings Business Law Journal
S
Sir Robert Jennings & Sir Arthur Watts eds.,Oppenheims International Law, (1992), 931
Stefan A. Reisenfeld, Foreign Investments, in 8 Encyclopedia of Public International Law
246, (1990), Rudolf Bernhardt ed., Elsevier Science
Stephen M. Schwebel, Arbitration and the Exhaustion of Local Remedies Revisited, (1989)
23 Intl L. 951
Y
Page 14 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

YiraSegrera Ayala, Restoring the Balance in Bilateral Investment Treaties: Incorporating
Human Rights Clauses, (2009), artculo de investigacin
BOOKS
A
Anandan Krishnan, Words, Phrases & Maxims, Legally &Jusicially Defined, Lexis Nexis.
Arthur L. Corbin, Corbin on Contracts, 1 Volume edn., West Publishing Co.
B
Benjamin J., Sale of Goods, 6
th
edn., Sweet & Maxwell
Bryan A. Garner, Blacks Law Dictionary, 9
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edn., WEST
C
Chitty, Contracts, Volume-1, General Principles, 28
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edn., Sweet & Maxwell
Christopher S. Dugan, Don Wallace, Jr., Noah Rubins, BorzuSabahi, Investor State
Arbitration, Oxford University Press
G
Gary B. Born, International Commercial Arbitration, Volume-1, Wolters Kluwer Law &
Business.
J
J. Beatson, A. Burrows, J. Cartwright, AnsonsLaw od Contract, 29
th
edn.
L
Lord Mackay of Clashsern, Halsburys Laws of England Volume-41 Sale of goods and
Supply of services, 4
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edn., Lexis Nexis, Butterworths
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P. RamanathaAiyar, Advanced Law Lexicon, The Encyclopaedic Law Dictionary with Legal
Maxims, Latin Terms and Words & Phrases, 3
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edn., Lexis Nexis, ButterworthsWadhwa.
Page 15 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

S
Stephen Mayson, Derek French & Christopher Ryan, Company Law, 23
rd
edn., Oxford
University Press.
TREATIES
Analysis of Documents Concerning the Origin and the Formulation of the ICSID
Convention at pp34, 257-258
UK BIT, Art 1 of the Ecuador, (1994)
U.K. - Egypt BIT (1976), Art. 1 (a) (iii) United Nations Centre on Transnational
Corporation, Bilateral Investment Treaties 39 (1988)
US- Democratic Republic of the Congo BIT (1994)
Art. 1 (1) (b) Vienna Convention on the Law of Treaties,
Art. 31 Washington Convention,
Art. 25(1) North American Free Trade Agreement 1993
Page 16 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

FACTS HIGHLIGHTS
INTRODUCTION: The Federal Republic of Asiania is a developing country which was
under colonization of Erlandia since 1604 AD. The country got independence to Asiania on
1
st
January, 1960. Faced with an acute balance of payment crisis in 1995, the Asiania
Government was forced to embark upon a programme of economic liberalization. Related
programs lubricated by a steady, even if initially hesitant, inflow of foreign direct
investments, the Asianian economy grew by an average of 19.5% per year. However, there
was a serious inadequacy of the infrastructure facilities in the country. One of the core
infrastructure facilities is the stable supply of power. The state of power generation and
supply in Asiania at the turn of 1990s was abysmally low just 20 % of all demand. While
small increases in power generation were possible to achieve, through coal-based thermal
power plants, these were not good enough.
EGTPC: It was at this juncture that the Europa-Global Traction and Power Corporation
(EGTPC) began taking interest in investing in Asiania. It did have some investments in an
Antarctic country. However, a socialist government came to power and expropriated the
assets of this company. EGTPC was set up in 1971 in Morosova, the capital city of Atlantis.
The majority of the share-holders have been Atlantisians, with some 20% being held by
Erlandians. During a visit of the Prime Minister of Asiania to Morosova in March 1997, the
Government of Atlantis showed intense interest in concluding a reciprocal Investment
Protection Treaty. The treaty was negotiated in right earnest and the Governments of both the
countries authorized their respective ambassadors to the United Nations to execute the treaty
on 27th December, 1997 at the UN and subsequently by an exchange of letters confirmed that
the treaty came into force from the date of its signature. Soon after the return to Atlantis of
the EGTPC delegation, the company made an investment proposal to Asiania. According to
the proposal, EGTPC will, subject to the provision by the Province of Narnia, invest in
setting up two power plants in Narnia, one at Nonbay and the other at Domgiri.
NONBAY PLANT: The Nonbay plant would produce electricity by using liquefied natural
gas, the supply of which was to be contracted by the company with certain OPECs in West
Asia (EGTPC was already facing claims from these countries for breach of contract). The
Narnia Electricity Supply Board (NESB) would then buy this electricity at a stipulated rate
(double the rate for the current thermal power generated electricity). However, in this
Page 17 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

arrangement, the plant would have joint ownership of both EGTPC and NESB at the ratio of
60:40.
DOMGIRI PLANT: The Domgiri Project was to be tripartite between EGTPC, NESB and
Nuclear Power Corporation of Asiania (NPCA). Under this arrangement too, the nuclear
power plant would have joint ownership of EGTPC 60% and NPCA and NESB 40%. The
agreement would be in force for a period of 20 years, at the end of which period NESB could
buy up the entire equity by paying up the initial capital invested by EGTPC, namely US
$2650 million, plus the value of any additional funds invested in the plant.
PROPOSAL: The EGTPC proposal further revealed that the company would be raising the
above initial amounts (US $750 million + 2650 million) from a consortium of nine banks led
by Europa-Global Bank, an associate of the group of which EGTPC is a part. The cost of
servicing this loan would be added on to the liabilities of the above two plants. The loan
documentation would indicate not only EGTPC, but also NESB and NPCA as co-debtors.
The documents detailing these transactions would be as follows:
i. A Memorandum of Understanding between EGTPC and the Government of Asiania;
ii. An investment agreement in respect of Nonbay Plant and Domgiri Plant.
iii. An Indemnity and Guarantee by the Governments of Narnia and Asiania;
iv. A loan agreement between the Consortium of banks on the one side, and EGTPC, the
Governments of Asiania and Narnia on the other side.
v. An agreement between EGTPC and NESB, and another between the company and
NESB and NPCA on the modalities of reversion of full ownership to the plants upon
expiry of 20 years.
vi. An overarching agreement for notice to cure defaults.
After detailed discussion among the delegation of the company, and the Governments of
Asiania, Narnia and Atlantis, the proposal was accepted, despite the reservations expressed
by a World Bank expert group which evaluated the project proposal and concluded that it was
not economically viable, and thus could not be financed by the Bank.
ENVIRONMENTAL CONCERNS: However, there was unrest among the citizens
regarding this plant, in order the assuage the feelings of the general public, the National
Nuclear Regulatory Commission of Asiania made a special study.The Asiania Ministry of
Environment also cleared both the Plants after public hearings and extensive examination by
Page 18 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

experts. EGTPCs proposal was finally accepted. Even as the deal with EGTPC was being
considered, several NGOs began protesting against it. The Centre for Environmental
Litigation, a prominent NGO filed public interest litigation before the High Court of Narnia.
The High Court dismissed the petition as too premature.
DEFAULTS: Nonbay, its Phase I began producing electricity by 1st July, 2002, and its
Phase II was completed in 2005. The Domgiri Plant was declared critical on 25th March
2010, and soon began supplying power to NESB. However, trouble began with Domgiri Plant
from the month of May 2010, when the initial production in March-April itself was at least
25% short of the optimum promised by the company. The company replied that there was
nothing technically wrong with the centrifuge or the technology employed for the plant
however when the Nuclear Regulatory Commission of the Federation of Asiania gave its
considered view in November that the Centrifuge did not function or was not restored to the
standards originally contracted and that the company had breached its warranty as to fitness
of the Plant.
In early December, 2010 this star-crossed Plant (as described by the local Media) plunged
into further problems for a number of reasons. The supply of light water contracted by
EGTPC with the Nuclear Power Corporation of Atlantis was disrupted as a result of an earth
quake of high intensity in the latters light water plant. In March 2011 this brought the parties
opposing the EGTPC deal to power. They began clamouring for renegotiation of the entire
arrangement. Consequently, NESB began defaulting its payments to EGTPC for the power
supplied to it. Thirdly, there was a serious labour trouble in Nonbay Plant with a violent clash
of two powerful labour unions over the issue of underpayment. Finally, there was also a
change in the equity holding of EGTPC 75% of the shares have now come to be acquired by
Erlandians.
THE SUIT: Not receiving the contracted supply of power from EGTPC, NESB went to court
seeking attachment before judgment. The attachment was ordered, the company went on
appeal to the High Court which was rejected. EGTPC complained of this to the Governments
of Atlantis and Asiania. EGTPC has now invoked the compromisory clause and The Court of
Arbitration, sitting in London taking into account of the convenience of the Parties, is now
ready to hear the parties.

Page 19 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

QUESTIONS PRESENTED

1. WHETHER OR NOT THE COMPANY BREACHED THEIR WARRANTY AS TO
FITNESS SPECIFICALLY UNDERTAKEN THROUGH THE MEMORANDUM OF
UNDERSTANDING
2. WHETHER OR NOT THE EXPROPRIATION OF THE CLAIMANT COMPANY
THROUGH ATTACHMENT IS IN VIOLATION OF INTERNATIONAL LAW
3. WHETHER OR NOT THE FEDERAL REPUBLIC OF ASIANIA HAS FAILED TO
ACCORD FAIR AND EQUITABLE TREATMENT TO THE CLAIMANTS
INVESTMENT UNDER ARTICLE 2(3) OF THE TREATY IN NONBAY AND
DOMGIRI POWER PLANT PROJECT
4. WHETHER OR NOT THE EXTENT OF GOVERNMENT OF ASIANIA
RESPONSIBILITY FOR THE CONDUCT OF OTHER ORGANS AND ENTITIES
MAKES STATE LIABLE




Page 20 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

SUMMARY OF ARGUMENTS
ISSUE 1: WHETHER OR NOT THE COMPANY BREACHED THEIR WARRANTY
AS TO FITNESS SPECIFICALLY UNDERTAKEN IN THE MEMORANDUM OF
UNDERSTANDING
Claimant has breached the condition of Warranty as to fitness as per the terms undertaken in
the MOU. The Memorandum of Understanding between The Federal Republic of Asiania and
EGTPC expressly mentions the liability of EGTPC on warranty as to fitness and quality of
the entire plant and its various components as an essential element of the contract between
them. The breach of warranty as to fitness and quality was a breach of essential element of
the contract between Asiania and EGTPC and in turn led to to the termination of the
Agreements.
ISSUE 2: WHETHER OR NOT THE GOVERNMENT OF ASIANIA HAS IN
VIOLATION OF ARTICLE 3 OF THE TREATY, EXPROPRIATED THE
CLAIMANTS INVESTMENT IN THE NONBAY PLANT, OR SUBJECTED TO
MEASURES TANTAMOUNTING TO EXPROPRIATION
The claimants bear the general burden of proof in establishing that there has been a violation
of Asianias treaty obligations, as well as the particular burden of proof in relation to any
allegation of fact or assertions of law on which the claimants rely. In order to meet their
burden of proof, the claimant must establish the various elements of their case to standard of
reasonable probability.
ISSUE 3: WHETHER OR NOT THE FEDERAL REPUBLIC OF ASIANIA HAS IN
VIOLATION OF ARTICLE 2(3) OF THE TREATY, FAILED TO ACCORD FAIR
AND EQUITABLE TREATMENT TO THE CLAIMANTS INVESTMENT IN
NONBAY AND DOMGIRI POWER PLANT PROJECT
Claimants bear the burden the proof in establishing that there has been a breach by the
Respondent Government of its Treaty Obligations, and that burden requires the Claimants to
establish the various elements of their case to a standard of reasonable Probability. The
measures can be discerned in the circumstances of which the claimants complain, those
measures have to either discriminatory or arbitrary before any question arises of there being a
Page 21 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

breach of Article 2(3). Here, the Respondent will refer only to the question of discriminatory
treatment.
ISSUE 4: WHETHER OR NOT THE EXTENT OF GOVERNMENT OF ASIANIA
RESPONSIBILITY FOR THE CONDUCT OF OTHER ORGANS AND ENTITIES
MAKES STATE LIABLE
The state responsibility cannot be applied in cases as it falls under the exception to this
principle. As the claimants conduct is not attributable to the respondent, claimant cannot be
considered organ of the state. It was not acting on behalf of the state, or exercising an official
public governmental role when performing acts whose attributability is in question. Nor was
claimant exercising elements of governmental authority or acting under the control or at the
direction of Government of Narnia or Government of Asiania when performing the relevant
acts.


Page 22 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

ARGUMENTS ADVANCED
ISSUE 1
THE COMPANY BREACHED THEIR WARRANTY AS TO FITNESS
SPECIFICALLY UNDERTAKEN THROUGH THE MEMORANDUM OF
UNDERSTANDING
1.1 It is humbly submitted that the Claimant has breached the condition of Warranty as to
fitness as per the terms undertaken in the MOU. Under the principle of implied warranty,
products (goods or services) must be fit for the 'ordinary' use for which they are intended.
But where the manufacturer knows the buyer's particular use and the buyer relies on the
seller's expertise or judgment in choosing the product then an 'implied warranty for fitness
for a particular purpose' is created.
1
In other words, the seller warranties that the product
will be fit for the buyer's specific use. In the present matter the production of the
promised amount of electricity was the need and any reason as to any deficiency in
production led to a breach in implied warranty for fitness for a particular purpose.
1.2 Here EGTPC was well aware of the amount of electricity to be produced and the non-
functioning of the centrifuge created a breach. The outcome should be no different where
the seller does not specifically make a promise or an affirmation of fact that the goods
being offered would be suitable for the buyer's particular needs so long as the trier of fact
can reasonably infer from the factual circumstances that the seller had reason to know of
the buyer's purpose in wanting to purchase them and that the buyer was relying on the
seller's skill or judgment to furnish such goods.
1.3 In virtually every case where a party sues for breach of implied warranty for a particular
purpose, the party should also assert a cause of action for breach of an express warranty
based on the seller's promise or affirmation inferred from the facts.
2
The Memorandum of
Understanding between The Federal Republic of Asiania and EGTPC expressly mentions
the liability of EGTPC on warranty as to fitness and quality of the entire plant and its

1
U.C.C. 2-315. The buyer, of course, must actually be relying on the seller. (Official Comment 1 to 2-
315)
2
Sometimes a party alleges only a claim for breach of an implied warranty of fitness for a particular purpose.
See Kokomo Opalescent Glass Co. v. Arthur W. Schmid Intern., Inc., 371 F.2d 208 (7th Cir. 1966);
Outlook Windows Partnership v. York Intern. Corp., 112 F. Supp. 2d 877, 43 U.C.C. Rep. Serv. 2d 546 (D.
Neb. 2000); Circle Land and Cattle Corp. v. Amoco Oil Co., 232 Kan. 482, 657 P.2d 532, 35 U.C.C. Rep.
Serv. 403 (1983); Handy v. Holland Furnace Co., 11 Wis. 2d 151, 105 N.W.2d 299 (1960); Frisken v. Art
Strand Floor Coverings, 47 Wash. 2d 587, 288 P.2d 1087 (1955)

Page 23 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

various components as an essential element of the contract between them.
3
The non
restoration of the centrifuge to the original standards and short production of electricity
was an express breach of the contract. Even though a notice period was provided for
rectifying the problem, EGTPC couldnt rectify the same.
4
Thus, agreement between
EGTPC and Asiania stands terminated.
1.4 The breach of warranty as to fitness and quality was a breach of essential element of the
contract between Asiania and EGTPC. Article I (2) of Agreement Concerning the
Requirements of Notice to Cure Defaults and Settlement of Disputes defines Serious
default or Grave Default as the violation of an essential element of the contract
5
, and
in the present fact and circumstances the defaulting of the warranty as to fitness and
quality by EGTPC is expressly mentioned to be an essential element under the MOU.
1.5 Also, Article II of Agreement Concerning the Requirements of Notice to Cure Defaults
and Settlement of Disputes
6
provides that in case of any Serious Breach the agreement
stands terminated and any further obligation or liability arising from contract stands
terminated.

3
Annexure 3 33(3): An investment agreement in respect of Domgiri Plant between the company, NESB and
NPCA, with the Governments of Narnia and Asiania underwriting it: the agreement shall stipulate that
NESB shall purchase electric power solely from this plant and Domgiri Plant at a specified rates, to the
exclusion of any other sources of power in Asiania or elsewhere and that EGTPC shall undertake to assure
the warranty as to quality and fitness of the entire Plant and its various components, as an essential element
of the contract;

4
22 of the compromis
5
Article I (2) Serious default or grave breach includes violation of an essential element of contract in
respect of and in the context of each such agreement.

6
Article IISerious default or grave breach includes violation of an essential element of contractin respect
of and in the context of each such agreement
Page 24 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

ISSUE 2
THE GOVERNMENT OF ASIANIA HAS NOT, IN VIOLATION OF ARTICLE 3 OF
THE TREATY, EXPROPRIATED THE CLAIMANTS INVESTMENT IN THE
NONBAY PLANT, OR SUBJECTED TO MEASURES AMOUNTING TO
EXPROPRIATION
A. The claimants carry the burden of proof

2.1 The claimants bear the general burden of proof in establishing that there has been a
violation of Asianias treaty obligations, as well as the particular burden of proof in
relation to any allegation of fact or assertions of law on which the claimants rely.
2.2 In order to meet their burden of proof, the claimant must establish the various elements of
their case to standard of reasonable probability.
2.3 In this general context, the Respondent recalls that the general presumption of good faith
implies for the benefit of the host state as much as the benefit of the investor. In any
particular case, it is for the party seeking to overturn that presumption and asserting that
there has been a lack of good faith to prove its assertions. Bad faith- particularly on the
part of the state-is a serious allegation to make, and the burden of establishing that the
allegation is true is a heavy one.

B. Loss of or Damage to an Investment Does not of Itself mean that there has been a
Violation of an International Obligations

2.4 Investing in a foreign country is a commercial act. The investing company seeks its own
advantage, usually in the form of profits, and knowingly incurs certain commercial risks.
The mere fact that the advantages which were foreseen have not in fact materialised, or
have materialised to a lesser extent than was expected, does not in and of itself mean that
anything wrongful has occurred, either in terms of the applicable local law or in terms of
a Treaty designed to protect foreign investments. By undertaking commercial operations,
the foreign investor knows that it runs various risks, and it has no grounds for complaint
just because those risks have become reality. The possibility of loss is the inevitable
downside of the prospect of commercial profit.
Page 25 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

2.5 Thus in Case Concerning The Barcelona Traction, Light and Power Company, Limited
(Second Phase)
7
, where the Court, in particular the position of prejudice suffered by the
shareholders through loss and damage to the assets of the company in which they held
shares, observed that:
Persons suffer damage or harm in most varied circumstances. This in itself does not
involve the obligation to make reparation.
8

2.6 In Azinian v. United Mexican States
9
an ICSID Tribunal was called upon to consider the
operation of the investment protection provisions of the North American Free Trade
Agreement (NAFTA). The Tribunal noted that:
a foreign investor entitled in principle to protection under NAFTA may enter into
contractual relations with a public authority, and may suffer a breach by the authority,
and still not be in a position to state a claim under NAFTA. It is fact of life everywhere
that individuals may be disappointed in their dealings with public authorities, and
disappointed yet again when national courts reject their complaints.
10

2.7 The rejection of claim, like a loss of property, is not necessarily and in itself a breach of a
treaty provision designed to protect a foreign investors property.
2.8 Similarly in Waste Management v. Mexico
11
the Tribunal noted that:
It is not the function of the International law of expropriation as reflected in [the
applicable non-expropriation treaty article] to eliminate the normal commercial risks f a
foreign investor, or to place on Mexico the burden of compensating for the failure of a
business plan which was, in the circumstances, founded on too narrow a client base and
dependent for its success on unsustainable about customer uptake and contractual
performance. A failing enterprise is not expropriated just because debts are not paid or
other contractual obligations are not fulfilled.
12
Lack of commercial success is not
tantamount to expropriation.




7
1970 ICJ. Rep. No. 3,
8
Ibid.,page 37, paragraph 46.
9
ICSID Case No. ARB(AF)/97/2
10
Ibid., page 23, paragraph 83, emphasis is original.
11
ICSID Case No. RB(AF)/00/3
12
Ibid., page 67, paragraph 177.
Page 26 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT


C. Article 3 of the Treaty

2.9 The substantive provision in the agreement which seeks to protect foreign investors from
being deprived of their investment by the host State is the first sentence of paragraph 1 of
Article 3 of the Treaty. This reads:
Investments shall not be expropriated or nationalized either directly or indirectly
through measures tantamount to expropriation or nationalization ("expropriation")
except (1)for a public purpose;(2) in a non-discriminatory manner; (3) upon payment of
appropriate compensation; and (4) in accordance with due process of law and the
general principles of treatment provided for in Article II(3).
2.10 The rest of that paragraph (1) deals with the assessment of compensation. Paragraph
(2) of Article 3 provides that an investor affected by the expropriation has a right to a
review of his or its case by an independent authority. None of these provisions is directly
relevant to the principal obligation not to nationalize or expropriate foreign investments
2.11 The claimants do not allege any nationalization of their investment, nor has been of
any such nationalization. No question of nationalization therefore arises in this
arbitration. The claimants allegations relate solely to expropriation. The claimants do not
allege any direct or express formal expropriation of their investment, nor has there been
any such expropriation. No question of direct or express formal expropriation therefore
arises in this arbitration.

D. The law related to a foreign investment being subjected to measures tantamount to
expropriation
2.12 Taking of property has been defined by in paragraph 3 of article 10 of the Draft
Convention on the Responsibility of States for Injuries to Aliens
13
(And does not define
expropriation as asserted by the claimants).

13
See Revised Draft: International Responsibility of the State for Injuries caused in its Territory to the Person
and Property of Alians, Arts. 12-14, U.N. Doc. 1/CN.4/34/Add. 1 (1961); Roberto Ago, Third Report on
State Responsibility, 175, 176, U.N. Doc. A/CN.4/246 and Add. 1-3 (1971); Draft Articles on State
Responsibility of 1980, Arts. 7-8, Y.B. Intl L. Commn, vol. II, 30 (1980); Draft Articles on State
Responsibility of 1996, Art. 5, Y.B. Intl L. Commn, vol. II, part 2, 58 (1996); International Law
Commission, Commentaries to the Draft Articles on Responsibility of States for Internationally Wrongful
Acts, at 84-92, U.N. GAOR, 56
th
Sess.,Supp. No. 10, UN. Doc. A/56/10, chp.IV.E.2 (2001). The Articles
on Responsibility of Sates for Internationally Wrongful Acts, with their commentaries, were finally adopted
by the International Law Commission on August 9, 2001. James Crawford, International Law
Page 27 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

Not only an outright taking of property but also may such unreasonable interference
wiith the use, enjoyment, or disposal of property as to justify an inference that the owner
thereof will not be able to use, enjoy, or dispose of the property within a reasonable
period of time after the inception of such inference.
14

2.13 The Draft does not provide that all the interference constitute a taking of property, but
only those which are unreasonable: in the Explanatory Note accompanying Article 10
the authors state that:
The unreasonable of an interference with the use, enjoyment, or disposal of property
must be determined in conformity with the general principles of law recognized by the
principal legal systems of the world. No attempt has been made to popularize on the
expression used in the text, since the matter seems one best worked out by international
tribunals.
15

2.14 By referring only to unreasonable interference with the use, etc. of property, the
Draft acknowledges that even where loss is caused; if it is the result of reasonable
interference it will not constitute expropriation.
2.15 In S.D.Myers v. Canada
16
, The Tribunal said:
The term expropriation in Article 1110 must be interpreted in light of the whole body
of state practice, treaties and judicial interpretations of that term in International law
cases. In general, the term expropriation carries with it the condition of a taking by a
governmental-type authority of persons property with a view to transferring
ownership of the property to another person, usually the authority that exercised its de
jure de facto power to the takingThe general body of precedent usually does not
treat regulatory action as amounting to expropriation. Expropriations tend to involve the
deprivation of ownership rights, regulations a lesser interference. The distinction
between expropriation and regulation screens out most potential cases of complaints
concerning economic intervention by a state and reduces the risk that governments will
be subject to claims as they go about business of managing public affairs.
17


Commissions Articles on State Responsibity: Introduction and Commentaries, at IX-X (Cambridge Univ.
Press 2002)

14
Ibid, page 553
15
Ibid, page 559
16
UNCITRAL Arbitration (Nov. 13, 2000), 40 I.L.M. 1408 (2001)
17
Ibid 280, 69
Page 28 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

2.16 In the recent award in Waste Management v. Mexico
18
the tribunal considered
whether the conduct of Mexican authorities was tantamount to expropriation of the
investors interprise as such. It held that it was not. Even though the city had failed to
make available land needed for the full operation of the enterprise,a failure by a State
to provide its own land to an enterprise for some purpose is not converted into an
expropriation of the interprise just because the failure involves a breach of contract.
2.17 The Tribunal appears to have treated expropriation as requiring something like an
arbitrary intervention by the state amounting to a virtual taking or sterilising of the
enterprise
19
or the outright repudiation of the transactions
20
- arbitrary and
outright repudiation are the tests, and both exclude effects upon an investment which
result from reasonable measures taken by the governmental authorities within the law.
2.18 It is thus clearly established that the mere fact that loss has been suffered by a foreign
investor does not mean that the investment has been expropriated.In the present case,
Asiania has not expropriated EGTPCS investment. It attached the assets of the company
as compensation for not providing the required amount of power. This act of the company
was in accordance with the law.
E. The Claimants Claim to Compensation
2.19 The claimants assert that Asianias expropriatory actions have resulted in the total loss
of value of the claimants investments, but that no compensation has been paid, provided
for or offered, contrary to the requirements of Article 3(1) of the Treaty.
2.20 For the reasons set out earlier, The Respondent denies that conduct for which the
Government of Asiania is responsible has involved any measures that tantamount to
expropriation, and accordingly no question of the payment of compensation under Article
3(1)
21
arises. Moreover, the Respondent denies that the Claimants have suffered a total
loss of the value of their investments, as asserted by the Claimants.


18
ICSID Case No. ARB(AF)/00/3
19
Page 60, paragraph 160.
20
Ibid.
21
Treaty, Art 3
Page 29 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

ISSUE 3
THE FEDERAL REPUBLIC OF ASIANIA HAS NOT, IN VIOLATION OF ARTICLE
2(3) OF THE TREATY, FAILED TO ACCORD FAIR AND EQUITABLE
TREATMENT TO THE CLAIMANTS INVESTMENT IN NONBAY AND
DOMGIRI POWER PLANT PROJECT
3.1 In this case, the Claimants bear the burden the proof in establishing that there has been a
breach by the Respondent Government of its Treaty Obligations, and that burden requires
the Claimants to establish the various elements of their case to a standard of reasonable
Probability. The general Presumption is that the Respondent has acted in good faith and
in so far as the claimants seek to deny the Presumption, the burden of doing so rests with
the Claimants. The loss or damage to Investments does not of itself mean there has been a
violation of international obligation.

ARTICLE 2(3)

3.2 The Primary treaty obligation in the present context is Article 2(3) of the treaty. This
reads Investment shall at times be accorded fair and equitable treatment; shall enjoy full
protection and security and shall in no case be accorded treatment less than that required
by international law.
(a) Neither Party shall in any way impair or impede by arbitrary or discriminatory
measures the management, operation, maintenance, use, enjoyment, acquisition,
expansion or disposal of investment.
3.3 It is first to be noted that this provision is in two parts.
(i) The First sentence requires investments and returns of investors to be accorded
fair and equitable treatment
(ii) The second sentence , which is not expressed to exemplify Fair and equitable
treatment sets out a separate obligation not to impair or impede the management
etc.., of investments, but limits this degree of protection to the application of
arbitrary or discriminatory measures

A. Unreasonable or Discriminatory Measures

Page 30 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

3.4 The Claimants case does not fall in this context because their investment was subject to
measures as mentioned under Article 3(1) of the Treaty.
3.5 The measures can be discerned in the circumstances of which the claimants complain,
those measures have to either discriminatory or arbitrary before any question arises of
there being a breach of Article 2(3). Here, the Respondent will refer only to the question
of discriminatory treatment.

B. Fair and Equitable Treatment
Treaty Interpretation
3.6 Since the requirement to accord Fair and Equitable Treatment is set out in the treaty, the
meaning to be given to those terms is determined in accordance with the rules of
international law governing the interpretation of treaties.
3.7 The basic, general rule (which is also a rule of customary international law) is set out in
Article 31 (1) of the Vienna Convention on the law of treaties 1969. It reads:
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
3.8 Article 31 (2) elaborates on what is meant by the context of a treaty and Article 31(3)
sets out certain other matters which are to be taken into account together with the context.
Article 31(4) refers to the special meanings given to a term if parties so intended.
3.9 These various provisions do not in practice, and for present purposes, contribute
substantially to discerning in a manner which can be applied practically, the meaning to
be given to the terms Fair and Equitable beyond the requirement that those terms must
be understood in their ordinary meaning.

C. Importance of Surrounding Circumstances

3.10 What seems beyond question is that in any given case that meaning is heavily
circumstance-specific and fact-specific, and allows for a large measure of objective
appreciation of the relevant facts. Moreover, fair and equitable both when taken together
and when considered individually, is a relative notion rather than an absolute one. The
notion of fair and equitable implies a relationship between the treatment accorded and
external factors. What is a fair or equitable will be affected by the surrounding
circumstances.
Page 31 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

3.11 To similar effect an UNCITRAL Tribunal, in its Award of 3
rd
September 2001 in
Lauder V. Czech Republic, said
In the context of bilateral investment treaties, the fair and equitable standard is
subjective and heavily depends on a factual context.
22

3.12 As it was put by a NAFTA Tribunal, in its award of 11 October 2002 in Mondev v.
United states of America:A Judgment of what is fair and equitable cannot be reached in
the abstract; it must depend on the facts of the particular case. It is a essential business of
courts and tribunals to make judgment such as these.
23


D. Loss Per Se, and Simple Wrongfulness, Do not establish that Treatment is Unfair and
Inequitable

3.13 It is also apparent that treatment is not unfair or inequitable for the sole reason that it
has occasioned some loss to an affected person. Loss by itself does not make the
treatment occasioning the loss unfair or inequitable.
3.14 As with the expropriation, so too in the present context it has to be recalled that as
investment tribunals have repeatedly said, Investment Treaties are not insurance policies
against bad business judgments.
24

3.15 It is particularly the case that loss does not in itself amount to unfair and inequitable
treatment where the treatment involves no wrongful conducts on the part of the Host
State. Even where wrongful or otherwise improper conduct is in the issue, what may be
termed ordinary impropriety of treatment does not make it a breach of the obligation to
accord fair and equitable treatment; to reach the threshold some degree of particular
gravity in the impropriety is called for.

E. Decisions of international tribunals

3.16 Certain decisions of international tribunals are indicative of the sort of treatment
which has been held would not transgress the fair and equitable standard. In
UNCITRAL Tribunal, in its award of 3
rd
September 2001 in Lauder v. Czech

22
UNCITRAL Arbitration (3
rd
September 2001), page 67, paragraph 292, Respondents Legal Authorities M.
23
ARB(AF)-99-2 (Oct 11, 2002) , 42 I.L.M. 85 (2003)
24
Waste Management v. Mexico.
Page 32 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

Republic
25
,was called upon to consider, in the light of the treaty obligation to afford fair
and equitable treatment, the circumstances surrounding the conduct of the Czech
Authorities (primarily the media council) in relation to the grant and withdrawal of
certain exclusive rights to engage in media activities. The tribunal, in holding that there
had been no failure to accord fair and equitable treatment, took the existence or otherwise
of inconsistent conduct on the part of the media council as the touchstone for
determining whether there had been fair and equitable treatment, and found no such
inconsistent conduct to have been established; there had been, in the tribunals view,
objective and reasonable grounds for the various actions or inactions of the media council
of which complaint was made.
3.17 Essentially the same set of circumstances gave rise to an opposite conclusion a few
days late by another UNCITRAL tribunal in its partial award of 13
th
September 2001 in
CME Czech Republic B. v. Czech Republic. The tribunal found that the media Council
had intentionally undermined the claimants investment it had breached its obligations of
fair and equitable treatment by evisceration of the arrangements in reliance upon with
the foreign investor was induced to invest. The tribunal did not, however, explain in any
detail how it had reached this conclusion, having previously set out all the facts at length
in considering the principal claim of expropriation. In relation to fair and equitable
treatment the tribunal would have relied upon the media council having acted
intentionally to achieve a wrongful purpose.
3.18 The allegation that the Project was cancelled without justification has already been
addressed and shown to be itself unjustified. There were good grounds for the recession
of PPA, turning in particular on the conduct of the EGTPC. While the Claimants do not
consider the recession was lawful, the relevant Asiania Parties take a different View of
the legal position; and the issue has been submitted to the relevant Asianias Tribunals. It
is with respect, not for this tribunal to decide the merits of that dispute as to the meaning
and effects of the relevant laws. The Point for this tribunal to determine (apart from any
relevant question from attributality) is whether the Asiania Parties, by holding different
views from those of claimants were, by the fact alone, acting in any unfairly or
inequitably. The Respondent Government submits that a host respondent government
does not act unfairly or inequitably simply by holding legal view which differs from those
of the investor, and taking such action is appropriate to maintain its views.

25
Lauder v. Czech Republic (Partial Award) on 3rd September, 2001
Page 33 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

3.19 There was also an ill intention on the part of EGTPC. The Contract made by them
with the Govt of Asiania was also based on unfair and inequitable terms. The Investment
is said to be genuine when the investor also takes risk but in this all the amount of loan is
to be repaid by the Govt. of Asiania and Narnia and if any defaults it is to be charged first
on their assets. Moreover, if any losses suffered by the EGTPC and there was an
indemnity and guarantee by the Govt. of Asiania and Narnia.

F. Denial of Justice

3.20 As previously noted, the Claimants choose to bring into their claims of alleged
expropriation the quite separate question of the alleged denial of justice to which they had
been subjected.
3.21 There can never be complaint against the Respondent for the denial of justice just
because there under Article 6 it has been expressly mentioned that any of the parties can
resort to the local remedies and this has been in this case and the decisions of the local
remedies or local tribunals if not in their favor then it cannot be regarded be the decision
of the tribunal unfair and inequitable.
3.22 In relation to denial of justice generally in international law, three things are clear,
i. International tribunals are not courts of appeal from decisions of local courts; as it was
put in Waste Management v. Mexico, the tribunal was not a forum for the resolution
of contractual disputes and is not a further a court of appeal. And in Azinian v.
Mexico
26
, the tribunal said that
The Possibility of holding a state internationally liable for judicial decisions does
not, however entitles a claimant to seek international review of the national court
decisions as though the international jurisdiction seized has plenary appellate
jurisdiction. This is not true generally, and it is not true for NAFTA
27

ii. The mere fact that the local courts find against a foreign investor does not constitute a
denial of justice;
iii. There is similarity no denial of justice in the mere fact that the local courts might have
come to a decision which, in its terms of the local law which they were applying, was
arguably or even certainly wrong. This is apparent from the Judgment of a chamber of

26
ICSID Case No. ARB(AF)/97/2 (Nov. 1, 1999)
27
Ibid.,Page 29 , Paragraph 29
Page 34 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

the ICJ in the Electronica Sicula
28
case. In that case although the initial requisition of
the foreign investors property by the Mayor had been held by the Italian courts to
have been ultra vires as a matter of Italian Law, this was held not to have made the
conduct of the Italian Authorities Internationally wrongful. To similar Effect was the
finding of the tribunal in ADF Group v. United States of America
29
that showing an
act to be ultra vires under the internal law of the state
by itself does not necessarily render the measures grossly unfair or inequitable
under the customary international law standard of treatment embodied in Article
1105(1).Something more than Simple illegality or lack of authority under the
domestic law of a state is necessary
30

3.23 What is needed if a denial of justice is to be established is that the behavior of the
local courts demonstrates serious inadequacies in the administration of justice, or that
there has been obvious and malicious misapplication of the law by those courts, or (where
there has been an erroneous application of the law by the local courts) the result
constitutes either a breach of a treaty obligation or, possibly, a result so manifestly unjust
as to offend against the standards of justice recognized by civilized nations. Many
decisions testify to these requirements which have to be satisfied before a claim of denial
of Justice can be upheld.
3.24 In Mondev v. United States
31
a NAFTA tribunal formulated the test to be applied in
the context of denial of Justice arising from decisions of Domestic Courts as follows:
The test is not whether a particular result is surprising, but whether the shock or surprise
occasioned to an impartial leads, on reflection to justified concerns as to the judicial
propriety of the outcome, bearing in mind on the one hand that international tribunals are
not courts of appeal, and on the other hand that Chapter 11 of NAFTA( like other treaties
for the protection of investments) is intended to provide a real measure of protection. In
the end the question is whether, at an international level and having regard to generally
accepted standards of the administration of justice a tribunal can conclude in the light of
all the available facts that the impugned decision was clearly improper and discreditable,

28
1989 I.C.J. Rep 15 (July 20)
29
(ICSID Case No. ARB(AF)/00/1)
30
Ibid, Page 282, Paragraph 190
31
ICSID Case No. ARB(AF)/99/2 (Oct. 11, 2002), 42 I.L.M. 85 (2003)
Page 35 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

with the result that the investment has been subjected to unfair and inequitable
treatment.
32

3.25 It can from nowhere be proved that the judicial System to which they had recourse
was so defective as to result in a denial of justice in violation of international law. It can
be from nowhere proved that the particular decision reached by the local Tribunals,
whose standing and independence is beyond question, have in those proceedings
demonstrated serious inadequacies in the administration of justice, or that they have
obviously and maliciously misapplied the law, or that they have erroneously applied the
law, or that their decisions have led to a result so manifestly unjust as to offend against
the standards of justice. The decisions of Asiania Courts are correct as a matter of
Asiania Law.





32
Ibid.,Page 110, paragraph 127
Page 36 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

ISSUE 4
THE EXTENT OF GOVERNMENT OF ASIANIA RESPONSIBILITY FOR THE
CONDUCT OF OTHER ORGANS AND ENTITIES MAKES STATE LIABLE
4.1 It is humbly submitted that the Government of Asiania will not be held responsible for the
acts of NESB, NNPC and Government of Narnia. At the level of international law, the
question at issue is treated as one of determining whose conduct is to be attributed to a
State for the purposes of engaging its international responsibility. That question of
attributability is one of customary international law, there being no governing general
treaty on the same.
4.2 Consideration of the current state of customary international law may conveniently begin
with the Articles on State Responsibility adopted by the International Law Commission
33

(ILC) in 2001 and taken note of by the United Nations General Assembly in Resolution
56/83 of 12 December 2001. Those Articles are not a treaty, and although they were
taken note of by the General Assembly, they were not formally adopted or approved by
the Assembly. The terms of the Articles accordingly are useful guide to the present state
of customary international law, but are not a definitive statement of it.
4.3 In the commentary this is amplified as requiring that in each case the entity is
empowered by the law of the State to exercise functions of a public character normally
exercised by State organs
34
. As the ILC further explained, the decisive feature in such

33
International Law Commissions Articles on State Responsibility: Introduction and Commentaries
(Cambridge Univ. Press 2002)

34
313 See Revised Draft: International Responsibility of the State for Injuries caused in its Territory to the
Person and Property of Aliens, Arts. 12-14, U.N. Doc. 1/CN.4/34/Add. 1 (1961); Roberto Ago, Third
Report on State Responsibility, 175, 176, U.N. Doc. A/CN.4/246 and Add. 1-3 (1971); Draft Articles on
State Responsibility of 1980, Arts. 7-8, Y.B. Intl L. Commn, vol. II, 30 (1980); Draft Articles on State
Responsibility of 1996, Art. 5, Y.B. Intl L. Commn, vol. II, part 2, 58 (1996); International Law
Commission, Commentaries to the Draft Articles on Responsibility of States for Internationally Wrongful
Acts, at 84-92, U.N. GAOR, 56th Sess.,Supp. No. 10, UN. Doc. A/56/10, chp.IV.E.2 (2001). The Articles
on Responsibility of Sates for Internationally Wrongful Acts, with their commentaries, were finally adopted
by the International Law Commission on August 9, 2001. James Crawford, International Law
Commissions Articles on State Responsibility: Introduction and Commentaries, at IX-X (Cambridge Univ.
Press 2002) 313 See Revised Draft: International Responsibility of the State for Injuries caused in its
Territory to the Person and Property of Aliens, Arts. 12-14, U.N. Doc. 1/CN.4/34/Add. 1 (1961); Roberto
Ago, Third Report on State Responsibility, 175, 176, U.N. Doc. A/CN.4/246 and Add. 1-3 (1971); Draft
Articles on State Responsibility of 1980, Arts. 7-8, Y.B. Intl L. Commn, vol. II, 30 (1980); Draft Articles
on State Responsibility of 1996, Art. 5, Y.B. Intl L. Commn, vol. II, part 2, 58 (1996); International Law
Commission, Commentaries to the Draft Articles on Responsibility of States for Internationally Wrongful
Acts, at 84-92, U.N. GAOR, 56th Sess.,Supp. No. 10, UN. Doc. A/56/10, chp.IV.E.2 (2001). The Articles
on Responsibility of Sates for Internationally Wrongful Acts, with their commentaries, were finally adopted
by the International Law Commission on August 9, 2001. James Crawford, International Law
Page 37 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

cases is that these entities are empowered, if only to a limited extent or in a specific
context, to exercise specified elements of governmental authority.
35
Moreover, the
conduct of an entity must accordingly concern governmental activity and not other
private or commercial activity in which the entity may engage
36
. The example then given
illustrates clearly the distinction which has to be drawn:
Thus, for example, the conduct of a railway company to which certain police powers
have been granted will be regarded as an act of the State under international law if it
concerns the exercise of those powers, but not if it concerns other activities (e.g. the sale
of tickets or the purchase of rolling-stock).
4.4 The ILC also addressed the issue in its Commentary to Draft Article 2 of its draft articles
on State Immunity, where the ILC observed that in its draft Articles on State
Responsibility it had taken the view that government authority meant the same as
prerogatives de la puissance publique de lEtat
37
. The respondent submits that
governmental in this respect concerns the act of governance and means the exercise of
sovereign authority within the general administration of the affairs of the State and in
interests of the community as a whole and not primarily for commercial purposes.
Governmental functions are those which require the backing of the sovereign power, and
are thus incapable of being performed by private person or entities. If the entities in
question are not governmental, or at least were not exercising governmental powers,
they are not State Organs and their acts are not attributable to Government of Asiania.

A. Article 8 of the Articles on state Responsibility

4.5 Apart from such situations in which an entity has been empowered by the state to exercise
elements of governmental authority, Article 8 of the Articles of State Responsibility
envisages a further situation where the conduct of somebody which is not a State Organ
can be attributed to the state. Article 8 reads:
4.6 Article 8 Conduct directed or controlled by a state

Commissions Articles on State Responsibility: Introduction and Commentaries, at IX-X (Cambridge Univ.
Press 2002)
35
Ibid.

36
Ibid.

37
YBILC (43
rd
Session, 1991), vol. II, Chapter 2:See Article 2, Commentary, paragraph (12) footnote 36,
paragraphs (14)and (15)
Page 38 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

The conduct of a persons shall be considered an act of a state under international law if
the person or group of persons is in fact acting on the instructions of, or under the
directions or control of, that state is carrying out the conduct.
4.7 The ILCs Commentary on Article 8 makes several important elements:
1. As a general principle, the conduct of private persons or entities is not attributable
to the state under international law(Commentary, Page 103, Paragraph (1))
2. There is an exception to this general principle in two situations- The first involves
private persons acting on the instructions of the state in carrying out the wrongful
conduct. The second deals with a more general situation where private persons act
under the states direction or control ( Commentary, Page 104, Paragraph (1))
3. The first category is seen by the ILC involving primarily situations where state
organs supplement their action by recruiting or instigating private persons or groups
who act as auxiliaries while remaining outside the official structure of the state (
Commentary, Page 104, Paragraph (3))
4. The second category of act will be attributable to the state only if it is directed or
controlled the specific operation and the conduct complained of was an integral part
of the operation
(Commentary, Page 104, Paragraph (4))
5. The ILC relied on the analysis of the matter by the ICJ in Military and Paramilitary
Activities in and against Nicaragua
38
, in which the acts of the socio-called contras
were held not to be attributable to the United States, even though the United States
was found to have given support to them and was held responsible for its own support
to them and was held responsible for its own support for the contras (Commentary,
Paragraph (4))
6. So far as concerns state-owned and controlled companies and enterprises, the ILC
noted, in paragraph (6) of the commentary on Article 8 that-
a. international law acknowledges the general separateness of corporate entities at
the national level
b. the fact that state initially establishes a corporate entity, whether by a special
law or otherwise, is not sufficient basis for the attribution to the state of the
subsequent conduct of that entity

38
(Nicaragua v. United States of America)(Merits), 1986 I.C.J. Rep. (June 27)
Page 39 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

c. Since corporate entities, although owned by and in that sense subject to the
control of the state, are considered to be separate, prima facie their conduct in
carrying out their activities is not attributable to the state, i.e. the presumption is
one of non-attributality of conduct of the state;
d. But this is subject to unless they are exercising elements of governmental
authority: the example is given of conduct being attributed to a state in situations
in which there was evidence that the corporation was exercising public powers
or that the State was using its ownership interest in or control of a corporation
specifically in order to achieve a particular result i.e. the burden lies with the
party asserting that the exception to the general presumption applies;
e. The existence of the necessary degree of state authorization, control or direction is
a matter of fact, for which adequate evidence is necessary. Each case will depend
on its facts, in particular those concerning the relationship between the
instructions given or direction or control exercised and the specific conduct
complained of.the instructions, direction or control must relate to the conduct
which is said to have amounted to an internationally wrongful act (commentary,
Paragraph (7))

B. The law of State Immunity

4.8 The need for an entity, if its acts are to be attributable to the State, to have a close
connexion with the exercise of governmental authority in the State in respect of those
aspects of its conduct which are alleged to be wrongful is consistent with the law in the
analogous area of State immunity. Entities which are legally separate from the State may
in certain circumstances nevertheless be entitled to share in the jurisdictional immunity
which the States enjoys. The ILC adopted draft Articles on State Immunity in 1991.
39

4.9 These have subsequently been considered and amended by the Ad Hoc Committee on
jurisdictional Immunities of States and Their Property of the UN General Assembly
which adopted them in March 2004. Article 2(1)(b) of the draft of the Convention as
adopted by the Ad Hoc Committee
40
contains the following definition of State:
(b) State means

39
YBILC (1991) Volume II, Chapter 2.

40
UN Supplement No. 22 (A/59/22), page 5.
Page 40 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

(i) The state and its various organs of government;
(ii) Constituent units of a federal State or political subdivisions of the State, which are
entitled to perform acts in the exercise of the sovereign authority, and are acting in
that capacity;
(iii) Agencies or instrumentalities of the State or other entities, to the extent that they
are entitled to perform and are actually performing acts in the exercise of
sovereign authority of the State;
(iv) Representatives of the state acting in the capacity;
4.10 This definition shows that organs of govt (sub paragraph (i)) are essentially
different from agencies, instrumentalities or other entities (sub paragraph (iii)), and that
agencies, instrumentalities or other entities are only within definition of State in so far
as they are entitled to perform and are actually performing acts in the exercise of
sovereign authority of the State (a term which the ILC used as equivalent to prerogatives
de la puissance publique
41
). The ILCs Commentary to draft Article 2 makes it clear that
State enterprises or other entities established by the State performing commercial
transactionsare presumed not to be entitled to perform governmental functions, and
accordingly, a rule, are not entitled to invoke immunity from jurisdiction of the courts of
another State (paragraph (15)).
4.11 Since, as already noted, the ILCs Articles on State Responsibility are not a definitive
statement of the present state of customary international law, it is helpful to refer to
certain other statements which also purport to reflect customary international law.

C. Decisions of International Courts and Tribunals

4.12 In AMCO Asia Corporation v. Republic of Indonesia
42
the claimants contended that
the Respondent Government had, through a State organ or agency known as PT Wisma,
expropriated its investment in a hotel. PT Wisma had initially been established by the
Bank of Indonesia and an Indonesian private investor, but by the time material to the
dispute, had been wholly purchased by Inkopad, an army-based cooperative whose
purpose was to provide for the welfare of military personnel and their depedents. The

41
ILC Draft Articles on State Immunity, Article 2, Commentary, paragraph (12) footnote 36, paragraphs (12),
(14)and (15)

42
(Award, Supplemental Decisions and Rectification, Resubmitted case), ICSID Case No. ARB/81/1 (Oct.
10,1990), 1 ICSID Rep. 569
Page 41 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

respondent Government denied that PT Wismas acts could be attributed to it. In the
original award
43
an ICSID Tribunal upheld the Respondents position. In doing so the
tribunal:
Accepts that PT Wisma is registered as a limited liability company and that the acts of
such entities are not normally to be attributed to their shareholders.
4.13 So far as PT Wismas activities were linked to the Indonesian army, the tribunal
acknowledged:
That some economic activities which in some countries are taken care of by private or
public owned companies are run in Indonesia by people who belong to or are retired from
the military establishment. This fact cannot in the opinion of the Tribunal change the
legal evaluation that PT Wisma is an economic entity which has its own profit-seeking
goal. This goal is by nature not different from the objective of other private economic
entities, but is certainly very different from the normal purpose of a government: i.e.
public administration in its widest sense.
4.14 The position is well illustrated by the decision of a NAFTA (ICSID- Additional
Facility) tribunal on 30 April 2004 in Waste Management Inc. v. United Mexican
States
44
. The case involved a claim against Mexico based on the allegedly unlawful
conduct of the City of Acapulco, the State of Guerrero and a banking entity known as
Banobras. Mexico did not deny that the conduct of the first two was attributable to
Mexico, but the status of Banobras was more difficult. It was a development bank partly-
owned and substantially controlled by Mexican Government agencies, and had the
general objective of promoting and financing activities carried out by the Federal, State
and Municipal Governments of Mexico. Shares in Banobras were divided between the
public and private sector, with the former holding a minimum of 66%. The tribunal
concluded that From the material available to the Tribunal it is doubtful whether
Banobras is an organ of the Mexican State within the meaning of Article 4 of the ILCs
Articles on Responsibility of States for Internatinally Wrongful ActsThe mere fact that
a separate entity is majority owned or substantially controlled by the state does not make
it ipso facto an organ of the state. Nor it is clear that in its dealing with the City and the

43
The tribunals Award of 20 November 1984 was the subject of various consequent proceedings: ILR, vol.
89, pp. 514, 552, 580, 658. The holding of the original Award in relation to the status of PT Wisma was
expressly treated as definitively determined and as res judicata in the decision on Jurisdiction in the
resubmitted case.

44
ICSID Case No. ARB(AF)/00/3
Page 42 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

State in terms of the line of credit it was exercising governmental authority within the
meaning of Article 5 of those Articles.
45

4.15 Although the tribunal was prepared to assume for purposes of argument that the
conduct of Banobras was attributable to Mexico, it made it clear that this was indeed
purely for the sake of argument (and thus not a decision reached by the tribunal), and in
the event the tribunal found that Banobras conduct did not involve any internationally
wrongful conduct. It may also be noted that the tribunal similarly found that Mexicos
Permanent Commission of Commercial Arbitration of the National Chamber of
Commerce was not a State organ.
4.16 From the foregoing review of the law which determines whether an entitys acts are
attributable to the state, the following elements can be seen of central importance.
1. The law of Asiania is relevant to, but not decisive as to entitys status as an organ of
the state, its exercise of governmental authority and its subjection to the direction or
control of the state.
2. The fact that a state has established a separate company does b ot by itself mean that
its conduct is attributable to the state.
3. The conduct of state owned and state controlled companies with separate legal
personality is presumed not to be attributable to the state.
4. A private entitys conduct is presumed not to be attributable to the state.

D. The status of the various entities

1. In the light of the legal requirements set out above the particular relationships
between the Government of Asiania and Government of Narnia on the other hand and
the various entities on the other, can be assessed.

45
See Revised Draft: International Responsibility of the State for Injuries caused in its Territory to the Person
and Property of Aliens, Arts. 12-14, U.N. Doc. 1/CN.4/34/Add. 1 (1961); Roberto Ago, Third Report on
State Responsibility, 175, 176, U.N. Doc. A/CN.4/246 and Add. 1-3 (1971); Draft Articles on State
Responsibility of 1980, Arts. 7-8, Y.B. Intl L. Commn, vol. II, 30 (1980); Draft Articles on State
Responsibility of 1996, Art. 5, Y.B. Intl L. Commn, vol. II, part 2, 58 (1996); International Law
Commission, Commentaries to the Draft Articles on Responsibility of States for Internationally Wrongful
Acts, at 84-92, U.N. GAOR, 56
th
Sess.,Supp. No. 10, UN. Doc. A/56/10, chp.IV.E.2 (2001). The Articles
on Responsibility of Sates for Internationally Wrongful Acts, with their commentaries, were finally adopted
by the International Law Commission on August 9, 2001. James Crawford, International Law
Commissions Articles on State Responsibility: Introduction and Commentaries, at IX-X (Cambridge Univ.
Press 2002)

Page 43 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

2. The Respondents contends that all the actions of Government of Asiania and
Government of Narnia in relation to their respective guarantees were clearly made in
the exercise of private and commercial functions rather than public or governmental
acts.
3. The relationships between Government of Asiania and Government of Narnia and the
relevant entities have to be considered on a case by case basis.

E. Narnia Electricity Supply Board

1. Most of NESBs funding comes from the sale and distribution of electricity. NESB,
thus secures some of its funding from Government of Narnia but this is done by way
of loans at commercial rates of interest. These loans are repaid by NESB in
accordance with each loans terms and conditions and agreed tenure.
2. NESB operates independently of Government of Asiania although Government of
Asiania is entitled to give policy directions to NESB.
3. The acts of NESB which are relevant to this claim were purely commercial in nature
and were performed by NESB independently of Government of Asiania.
Accordingly, NESB conduct is not attributable to the respondent, NESB cannot be
considered organ of the state. It was not acting on behalf of the state, or exercising an
official public governmental role when performing acts whose attributability is in
question. Nor was NESB exercising elements of governmental authority or acting under
the control or at the direction of Government of Narnia or Government of Asiania when
performing the relevant acts.
F. National Nuclear Power Corporation of Asiania

1. NNPC is a public limited company and is not a state organ or a company carrying out
governmental functions. It was purely a commercial company. Its main motive was
to make profit making.
2. The Government of Asiania did not have control over the functioning of NNPC
rather it had only control on policy matters
4.17Accordingly, NNPC conduct is not attributable to the respondent, NNPC cannot be
considered organ of the state. It was not acting on behalf of the state, or exercising an
official public governmental role when performing acts whose attributability is in
Page 44 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

question. Nor was NNPC exercising elements of governmental authority or acting
under the control or at the direction of Government of Narnia or Government of
Asiania when performing the relevant acts









Page 45 of 45 MEMORIAL ON BEHALF OF THE RESPONDENT

CONCLUSION AND PRAYER FOR RELIEF

In light of the facts of the case, issues raised, arguments advanced and authorities cited,
Counsel for Respondent respectfully requests the Tribunal to adjudge and declare that:
1) The claimants are not entitled for appropriation of the assets
2) The claimants are not entitled for the Fair and Equitable Compensation as there has
been no treaty violation in that respect by the respondent
3) The claimant are liable for breach of warranty as to fitness specifically undertaken
through the memorandum of understanding
4) The respondent are not liable for any breach as per the principle of state
responsibility
5) All other contracts and agreements with the claimant should be terminated owing to
the grave nature of the breach

All of which is respectfully affirmed and submitted


Counsel for Respondent