TEAM MBANEFO

INTERNATIONAL CENTRE ON THE

SETTLEMENT OF INVESTMENT DISPUTES
ICSID Arbitration V2018/003858

FriendsLook PLC. & Ors.

(Claimant)

v.

Republic of Tyrea
(Respondent)

SKELETON BRIEF FOR THE RESPONDENT


 I. Provisional Measures

A. THIS TRIBUNAL MUST GRANT THE PROVISIONAL MEASURES

REQUESTED BY THE RESPONDENT

1. The provisional measures claimed by the Respondent are necessary and urgent
Urgent: Tyrea is a developing economy and the chance to host the World Expo in 2025
would be a big boost to the same. However, the Claimant’s anti-Tyrea propaganda around
the world would cause significant damage to the same. The final decision on the bid is to
be made in January 2020 and hence the requested measure needs to be given urgently as
it cannot wait for the final decision of the tribunal.1

Necessary: Along with the bid for the World Expo the Respondent also intends to attract
FDI via bond issuance and painting such a picture would raise the overall costs of the
same. These would lead to an irreparable damage as not only would it cost the economy
in terms of tourism but also employment, literacy, health and poverty levels of the
country, things that can’t be put in terms of money and hence the measures so requested
are necessary2.

2. The Claimant’s actions are aggravating the dispute

Various ICSID tribunals have identified non-aggravation of the dispute as a basis for
grant of provisional measures.3 The tribunal in World Duty Free v. Kenya, observing the
same rule, recommended the parties to avoid any action that “would aggravate or exacer-
bate the dispute” and that “any public discussion should be an accurate report.”

The Claimant’s have hired lobbyists and have launched a large scale media campaign to
disparage the Respondents. This is affecting the Respondent’s economy since its
downgrading by Amnesty International, directly affects present investor confidence
which is leading to loss in investments. Further, the unstable political climate in Tyrea is
exacerbated directly by the claimant’s sponsoring of this content as “popular” on their

1 Biwater Gauff v. Tanzania (2006), Procedural Order No. 1

2 Metalclad v. Mexico (2000)
3 Occidental v. Ecuador (2007)

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 own platforms. Thus, this Tribunal must grant provisional measures to prevent further
aggravation of the dispute.

3. In any case, the Claimant’s actions are a violation of the Respondent’s right to
privacy of the proceedings
Under rule 32(2) of the Arbitration Rules read with ICSID Administrative and Financial
Regulation 22, that minutes and records of proceedings will be published, only with
consent of the parties to a dispute, after taking due permission from the tribunal.

The Claimants have already disseminated the Request for Arbitration, as well as the
Respondent’s Response to Arbitration.

Since no such decision to open the hearings to the public has been taken by the Tribunal,
the Claimant’s should not be allowed to unilaterally disseminate the hearings of this
proceeding.4

II. Jurisdiction and Admissibility

B. THIS TRIBUNAL DOES NOT HAVE JURISDICTION RATIONE

PERSONAE

4. The Respondent is not a Contracting State on the date of institution of proceedings

The obligation to submit to the jurisdiction of an ICSID tribunal flows from a state’s prior
to be bound by the Convention. This principle is inherent in the requirement under Article
25 of one of the parties being a Contracting State. However, a Contracting State that
denounces the Convention under Article 71, after six months, ceases to be a Contracting
State, and only arbitrations that a state had consented to being bound by while it was a
Contracting State, may be instituted against it.

In the facts of the instant case, since on the date of institution of the proceedings the
Republic of Tyrea was not a Contracting State, the present arbitration proceeding could
not have been instituted against it.

5. In any case, The Claimant did not timely exercise the right to consent to jurisdiction
of the Center prior to the denunciation of the Convention on the Settlement of

4 World Duty Free v. Kenya (2006)

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 Investment Disputes between States and Nationals of Other States (“the
Convention”) by the Respondent
Article 72 of the Convention provides that a notice of denunciation by a Contracting state
“shall not affect the rights or obligations under this Convention… arising out of consent
to the jurisdiction of the Centre” given by one of the parties before such notice is recieved
by the depositary. Per the decision by the Tribunal in Fábrica v. Venezuela, the rights
emanating from consent to jurisdiction of a Contracting State are governed by the special
rule in Article 72. According to this, the Claimant must perfect consent before the receipt
of the denunciation notice by the depositary to avail the protection of Article 72.

Since the present dispute was instituted after receipt of the denunciation notice by the
depositary, the claimant failed to perfect consent to the Center’s jurisdiction.

C. THIS TRIBUNAL DOES NOT HAVE JURISDICTION OVER THE

MULTI PARTY CLAIM

6. The Respondent did not consent to arbitrate in multipartite arbitration proceedings

It is a generally accepted principle in international commercial arbitration, borne out by
the Tribunals in Suez and Interaguas and in Suez and Vivendi, that the Host state must
consent to multi party proceedings in the absence of any rule in the governing instrument.

Since the Respondent did not specifically consent to multi party proceedings, and it
objected to the joinder from the beginning in its rule 45(1) application, multi party
arbitrations would prima facie not be within the scope of jurisdiction of this Tribunal.

7. In any case, the BIT does not allow for resolution of multiple investment disputes
through a single arbitration proceeding
As the tribunal in Giovanni Alemanni v. Argentina has clarified, the crux of the issue of
Respondent’s specific consent to arbitrate in multipartite proceedings hinges on the
existence of a single dispute.

However, in the instant dispute, the Claimants are praying for relief on the basis of,
several unrelated investments made at different points in time, and of their respective
legitimate expectations in response to separate negotiations. Further, their claims are also
based on different BITs. Since prima facie the interests represented on all sides are not
equal the present claims cannot be adjudicated on a multipartite basis.

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 III. Merits & Liability

D. THE RESPONDENTS DID NOT VIOLATE THE FAIR AND

EQUITABLE TREATMENT STANDARD (“FET”) AS SET OUT IN
ARTICLE 3(1) & 6 OF THE BIT

8. Investments in Tyrea of the Claimants were not expropriated

It is the degree of interference that is essential to distinguish between expropriation and a
legitimate regulatory measure.5 Only because rights of the Claimants are affected doesn’t
by default mean expropriation. State has the right to reserve certain rights for public
policy measure.

9. Alternatively, blocking of websites can have no economic impact on international

business
The Claimants are an MNC with operations in many countries around the world.
Temporary blocking till they comply with the Law 0808-L cannot have any significant
effect on them. “Expropriation” requires a substantial deprivation of investments.
Advertising content and Pro feature are not investments6 and cannot be said to be
expropriated.

10. The Claimant’s physical assets/ investments in Tyrea remain intact

The mere exercise of regulatory power by a government that cause delay or impediments
in the business cannot be said to be expropriation until there is a substantive deprivation
of investments.7

The Claimant’s physical assets are not rendered useless by Law 0808-L(“the Law”).
Further, there was no measure that was taken by the government that prevented the
Claimant’s from disposing off their assets. The investments of the Claimants remain
intact and the only effect of the law is suspension of their virtual platform pending their
compliance with the valid media regulations of Tyrea.

11. Law 0808-L sets a universal standard and not discriminating against the Claimants

5 Tecmed v. Mexico
6 Article 1(a)(iv), BIT
7 Telenor Mobile Communications v. Hungary (2006)

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 The general standard for the same is of ‘like circumstances’ which is always dependant
on the context8 of the issue and the measure under challenge9. In the present case, the
Claimants have been subject to a universal standard and the same is considered on a case
to case basis10 and if the Claimants so desire, they can rectify the mistake and have the
ban lifted. In addition, the burden to prove discrimination is on the Claimant. 11

12. Claims for breach of the FET should be examined in accordance with the
international minimum standard of protection
In Genin v Estonia, tribunals found that FET standard is “indeed, an international
minimum standard”12 and Without an express provision, the Claimant’s claims should be
examined under the minimum standard.

i) No specific assurance were provided by the respondents

The BIT does not provide stabilization clause. As affirmed by the tribunals in Total v
Argentina and Parkerings v Lithuania, without a specific stabilization clause in the
BIT or a specific promise, states’ power to change legislation is not prevented by
FET standard. Hence the amendemnt in Article 51 (social networking filtering and
control) by the decree no. 0578/201-D is not in violation of FET.

ii) Claimant’s expectations were not reasonable

Tribunals have repeatedly observed that it would be unreasonable for an investor to
expect that circumstances that existed at the time of making the investment would
remain completely unchanged. The Tribunal in Continental Causalty v. Argentina
opined as “it would be unconscionable for a country to promise not to change its
legislation as time and needs change.”

The Tyrea-Novanda and Tyrea-Kitao BIT were ratified on 10 September 2000 and 25
May 2001. At that time Tyrea was under the civil war due to the conflicts between
the Minyar and the Tatyar. The claimants knew the circumstances under which they

8 Pope & Talbot, Para 75.

9 Corn Products Para 118
10 Moot Problem. Line 751-755.
11 Noble Ventures Inc. v. Romania, ¶ 180.
12 Genin v Estonia (Award), Para. 9, 367

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 have to run their business in the country and high volatile situation that exists in
Tyrea.

13. Respondent did not violate Article 6 of the BIT

i) Respondent acted within its legitimate police power
The concept of public purpose under international law is broadly defined and falls
within the discretion of the host state. Thus, the host state must be accorded a wide
margin of discretion in deciding what constitutes public purpose. 13 

In this case the decree was enacted inorder to reduce the tension between the Minyar
and the Tatyar groups who were using the social media platforms provided by the
claimants for spreading hate speech. The Respondent acted on the basis of substantial
evidence that conclusively linked the Claimant’s activities to the violent activities in
the country. 14

ii) The Respondent’s measures were non-discriminatory

To determine if a measure is discriminatory, arbitral tribunals have relied upon
whether there had been any ‘capricious, irrational or absurd differentiation’ in the
treatment of different entities in ‘like circumstances’. 15 Discrimination must be based
on the nationality of the investor. 16

Law No. 0808-L clearly established a universal standard without any distinction as
to any particular entity or person. The decision to block Claimants’ platforms was
made in accordance with the applicable laws of Tyrea and based on a fair case-by-
case.

iii) No specific commitments were given to the claimants

The statements made by the representative of the government at ‘A new web era in
Tyrea’ international conference on December 2014 doesn’t amount to any specific
promises provided to the claimant. Tribunals require assurances to be “definitive,

13 Amoco International Finance Corporation v. Iran, Iran-U.S. Claims Tribunal Case No. 310- 56- 3 (July 14,
1987), 145; Antoine Goetz et consorts v. République du Burundi, Award, ICSID Case No. ARB/95/3 (February
10, 1999), 126
14 Exhibit 2
15 Enron Corporation and Ponderosa Assets, L.P. v. Argentine Republic, Award, ICSID Case No. ARB/01/3282.
16 Parkerings-Compagniet AS v. Republic of Lithuania, Award, ICSID Case No. ARB/05/8 (2007),371.

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 unambiguous and repeated” 17. Such statements may give rise to economic decision
of an investor, to make an investment, but cannot be regarded as a basis for a legal
guarantee claim. 18 Also as showed in b) page 1

iv) The measures were proportionate

As the LG&E Tribunal underlined, one should always pay due regard to “the context
within which a measure was adopted and the host State’s purpose” 19 and a measure
cannot be deemed expropriatory, if it is necessary to achieve an exigent regulatory
purpose.20

In the same way the respondent had to necessary action to make sure the social
stability in the country which needed the measures to be taken.

E. THE COMPENSATION REQUESTED BY THE CLAIMANTS IS

SPECULATIVE

14. The DCF Method represents the true and rational value of the investment.21
In case of an unlawful expropriation there is a primary obligation to compensate in a
manner that establishes the status-quo22. The best way to value high growth companies
with a going concern is with a classic DCF valuation. 23

17 Metalclad Corporation v. Mexico, ICSID Case No.ARB(AF)/97/1, Award, of August 30,2000

18El Paso Energy International Company v. Argentina, ICSID Case No.ARB/03/15, Award of October
3,2011,395
19 LG&E Energy Corp., and LG&E International, Inc.v. Argentine Republic, ICSID Case No. ARB/02/1, 194
20Caroline Henckels, Proportionality and Deference in Investor-State Arbitration: Balancing Investment
Protection and Regulatory Autonomy (2015)., pp.252,253

21 CMS Gas vs. Argentina [2005]

22 The Chorzów Factory Case [1928].

23 Total S.A. v. Argentina [2010]

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