TC-11

11TH DR. PARAS DIWAN MEMORIAL INTERNATIONAL ENERGY LAW MOOT

COURT COMPETITION, 2021

IN THE INTERNATIONAL COURT OF JUSTICE, THE HAGUE, NETHERLANDS

IN THE PROCEEDINGS BETWEEN

REPUBLIC OF TUNA (APPLICANT)

V.

FEDERAL STATES OF HIGA (RESPONDENT)

(APPLICATION NO.____/2021)

MOST RESPECTFULLY SUBMITTED

MEMORIAL ON BEHALF OF APPLICANT
 MEMORIAL ON BEHALF OF APPLICANT

TABLE OF CONTENTS

LIST OF ABBREVIATIONS..............................................................................................................V

INDEX OF AUTHORITIES............................................................................................................. VII

STATEMENT OF FACTS................................................................................................................. XI

STATEMENT OF JURISDICTION................................................................................................XIII

ISSUES RAISED............................................................................................................................. XIII

SUMMARY OF ARGUMENTS..................................................................................................... XIV

ARGUMENTS ADVANCED..............................................................................................................1

I. WHETHER ICJ HAS JURISDICTION OVER THE BILATERAL DISPUTE BETWEEN

GOVT. OF TUNA AND REPUBLIC OF HIGA? ASSUMING ICJ HAS JURISDICTION
WHETHER ICJ CAN ADJUDICATE THE ISSUES RAISED BY HIGA?...................................1

A. THAT ICJ CAN ADJUDICATE OVER THE DISPUTE....................................................................1

i. THAT THE INSTANT DISPUTE EXISTS BETWEEN SUBJECTS HAVING ACCESS TO THE
COURT........................................................................................................................................1

ii. THAT THE PRESENT DISPUTE FALLS UNDER THE SUBJECT MATTER OF BIT.........................2

iii. EXHAUSTION OF LOCAL REMEDIES IS NOT POSSIBLE IN THE INSTANT CASE....................2

B. ICJ CANNOT ADJUDICATE THE ISSUES RAISED BY HIGA......................................3

i. THE ACTION OF STATE OF HIGA VIOLATES THE DOCTRINE OF LEGITIMATE EXPECTATION.

3

ii. THAT THE UNILATERAL ACTS OF STATES HAVE A BINDING EFFECT.................................4

iii. THAT THE ACTS OF THE REPUBLIC OF HIGA ARE BARRED BY ESTOPPEL.......................5

a. THAT THERE MUST BE A REPRESENTATION....................................................................6

b. THAT THE REPRESENTATION MUST BE AUTHORIZED AND UNCONDITIONAL.....................7

C. THAT THE PARTY CLAIMING ESTOPPEL MUST HAVE RELIED ON THE REPRESENTATION...7
ii
 MEMORIAL ON BEHALF OF APPLICANT

II. WHETHER THE THREAT OF TERMINATION OF PPA BY GOVT. OF TUNA ON THE

GROUND OF NON-ALLOCATION OF COAL BLOCK FOR CAPTIVE CONSUMPTION TO
TPGCL’S THERMAL POWER PLANT IS AGAINST THE LEGITIMATE EXPECTATIONS
OF POWER DEMAND SITUATION OF STATE OF HIGA?.......................................................8

A. THAT THE STATE OF HIGA HAS BREACHED THE INTERNATIONAL OBLIGATIONS................8

i. THE INTERNATIONALLY WRONGFUL ACT IS ATTRIBUTABLE TO THE STATE OF HIGA............8

a. THAT THE RESPONDENT HAVE FAILED TO PROVIDE FULL PROTECTION AND SECURITY

TO THE INVESTORS.................................................................................................................9

b. THAT THE RESPONDENT HAVE FAILED TO FULFILL THE LEGITIMATE EXPECTATIONS OF

THE PETITIONERS..................................................................................................................10

c. THAT THE ACTS OF RESPONDENT IN VIOLATION TO THE PRINCIPLE OF PACTA SUNT

SERVANDA............................................................................................................................11

B. THAT STATE OF HIGA BREACHED STATE RESPONSIBILITY ON ITS PART...........................12

III. WHETHER THE GOVT. OF HIGA IS RESPONSIBLE FOR THE BILATERAL DISPUTE
WITH THE GOVT. OF TUNA MAKING THEM LIABLE FOR THE COMPENSATION?.....12

A. THAT THERE WAS A SUBSTANTIAL ECONOMIC ACTIVITY.............................................13

I. THAT THE GOVT. OF TUNA QUALIFIES TO BE AN INVESTOR.........................................13

II. THAT THERE WAS AN INVESTMENT IN THE POWER PROJECT........................................13

B. THERE WAS AN EXISTENCE OF OBLIGATION WHICH WAS BREACHED.............................15

C. THAT TUNA HAS SUFFERED A FINANCIAL LOSS AS A RESULT OF THE BREACH.............16

I. THAT THERE WAS AN INDIRECT EXPROPRIATION BY HIGA...........................................16

II. THAT THE EXPROPRIATION WAS WITHOUT THE PHYSICAL ACT OF THE HOST
COUNTRY.....................................................................................................................17

III. THAT THE EXPROPRIATION WAS UNLAWFUL..................................................................17

a. THAT THERE IS A NEAR-TOTAL DESTRUCTION OF THE INVESTMENT’S ECONOMIC

VALUE.

………………………………………………………………………………………..18

iii
 MEMORIAL ON BEHALF OF APPLICANT

b. THAT THE INVESTOR HAS BEEN DEPRIVED OF THE CONTROL OVER THE

INVESTMENT………………………………………………………………………………………...18

c. THAT THE EFFECTS OF THE MEASURE ARE PERMANENT.................................................18

d. That IT WAS NOT DONE IN ACCORDANCE OF THE PUBLIC POLICY....................................19

D. THAT THE CONDUCT IS ATTRIBUTABLE TO THE RESPONDENT AND THEY SHOULD BE

LIABLE FOR COMPENSATION.......................................................................................................19

I. That THERE WAS A DEGREE OF INTERFERENCE WITH THE PROPERTY RIGHT....................19

ii. That there is character of governmental measures.

………………………………………………………………………………………………………19
iii. That the interference of measures with reasonable and investment - backed measures.
……………………………………………………………………………………………………...19
PRAYER …………………………………………………………………………………………...21

iv
 MEMORIAL ON BEHALF OF APPLICANT

LIST OF ABBREVIATIONS

ABBREVIATION FULL FORM

& And

§ Section

¶ Paragraph

BIT Bilateral Treaty

COD Commercial Operation Date

FDI Foreign Direct Investment

GATT General Agreement on Trade and Tariff

Govt. Government

GDP Gross-Domestic Product

ICJ International Court of Justice

ICSID International Centre for Settlement of Investment Disputes

MFN Most Favoured Nation

MoU Memorandum of Understanding

MOC Ministry of Commerce and Industry

MoEF Ministry of Environment and Forest

MW Megawatts

v
 MEMORIAL ON BEHALF OF APPLICANT

NDC National Determined Goals

PPAs Power Purchase Agreements

Rep. Report

REC Renewable Energy Certificates

TPGCL Tuna Power Generation Limited

UNCTAD United Nation Conference on Trade and Development

UNCITRAL United Nations Commission on International Trade Law

Vs./V Versus

WTO World Trade Organization

vi
 MEMORIAL ON BEHALF OF APPLICANT

INDEX OF AUTHORITIES
CASES

1. Abaclat and Others v. Argentine Republic, ICSD Case No. ARB/07/5..................................2

2. AMCO v. Republic of Indonesia 89 ILR, pp. 366.................................................................11
3. Asian Agriculture Products Ltd. v Sri Lanka, a, ICSID Case No. ARB/87/3, (1990).............9
4. Barcelona Traction, Light and Power Company Limited, (Belg. v. Spain), Judgment, 1970
I.C.J. Repg. 3..........................................................................................................................15
5. Cameroon v. Nigeria), Judgment, 2002 I.C.J...........................................................................6
6. CMS Gas Transmission Company v. The Republic of Argentina, ICSID Case No. ARB/01/8
................................................................................................................................................18
7. Continental Casualty Company v. The Argentine Republic, ICSID Case No. ARB/03/9.......4

8. Corfu Channel, (Great Britain and Northern Ireland v.Albania) Merits, Judgment, I.C.J.
Reports....................................................................................................................................12
9. Corfu Channel, Merits, Judgment, I.C.J. Reports , p. 4, at p. 23, (1949................................12
10. Dickson Car Wheel Company (U.S.A.) v. United Mexican States, UNRIAA, vol. IV (Sales
No. 1951.V.1).........................................................................................................................11
11. Duke Energy Electroquil Partners & Electroquil SA v. Ecuador, ICSID Case No.
ARB/04/19................................................................................................................................4
12. Elettronica Sicula S.p.A. (ELSI) (U.S. v. It.), Judgment, 1989 I.C.J. Rep. 15, ¶44 (July 20). 6
13. Elettronica Sicula S.pg.A. (ELSI) (U.S. v. It.), Judgment, 1989 I.C.J. Repg. 15....................6
14. Factory at Chorzów, Jurisdiction, Judgment No. 8, P.C.I.J., Series A, No. 9, (1927)............8
15. Interhandel (Switzerland v. U.S.), Preliminary Objections, 1959 I.C.J. Repg. 6.....................2
16. ITT Industries, Inc v. The Islamicc Republic of Iran, IUSCT Case No. 156.........................18
17. Land and Maritime Boundary between Cameroon and Nigeria (Cameroon v. Nigeria),
Judgment, 2002 I.C.J. Rep. 303, ¶303 (Oct. 10)......................................................................6
18. Legal Status of Eastern Greenland (Den. V. Nor.), Judgement, 1933 P.C.I.J. (ser. A/B) No.
53, ¶201 (Sept. 5).....................................................................................................................7
19. Legal Status of Eastern Greenland (Den. V. Nor.), Judgement, 1933 P.C.I.J. (ser. A/B) No.
53, at 192 (Sept. 5)...................................................................................................................6
vii
 MEMORIAL ON BEHALF OF APPLICANT

20. Legal Status of Eastern Greenland (Den. V. Nor.), Judgment, 1933 PG.C.I.J........................6
21. Legality of Use of Force (Serb. and Montenegro v. U.K.), Preliminary Objections, 2004
I.C.J. Rep. 1307, at 1326 (Dec. 15)..........................................................................................1
22. Marvin Roy Feldman Karpa v. United Mexican States, ICSID Case No. ARB(AF)/99/1......4
23. MCO v. Republic of Indonesia 89 ILR, 366..........................................................................11
24. Metalclad Corporation v. United Mexican States, ICSID Case No. Arb/AF/97/1................10
25. Military and Paramilitary Activities in and Against Nicaragua (Nicar. v. U.S.), Judgment,
1986 I.C.J. Rep. 14, ¶415 (June 27)...................................................................................6, 12
26. New Zealand v. France, France-New Zealand Arbitration Tribunal, 82 I.L.R. 500 (1990).. . .8
27. Nicar. v. U.S.), Judgment, 1986 I.C.J. Repg. 14,...................................................................12
28. Nuclear Tests Case (Austl. v. Fr.), Judgment, 1974 I.C.J. 253................................................4
29. Occidental Exploration and Production Co. v. Ecuador, LCIA Case No. UN3467...............10
30. Parkerings‐Compagniet AS v. Lithuania, ICSID Case No. ARB/05/8....................................4
31. Phosphates in Morocco, Judgment, P.C.I.J., Series A/B,No. 74, (1938................................12
32. Reparation for Injuries, I.C.J. Repg. 174, (1949).....................................................................8
33. Ronald S. lauder vs. the Czech Republic, UNICTRAL (1976), Award, (Sept. 3, 2001).......17
34. Salini Costruttori S.PG.A. And Itals Trade S.PG.A.v. Kingdom of Morocco, ICSID Case
No. ARB/00/4.........................................................................................................................14
35. Saluka Investments BV (the Netherlands v the Czech Republic), Partial Award, I.C.G.J. 368
................................................................................................................................................10
36. Southern Pacific Properties (Middle East) Limited v. Arab Republic of Egypt, ICSID Case
No ARB/84/3............................................................................................................................4
37. Southern Pacific Properties (Middle East) Limited v. Arab Republic of Egypt, ICSID Case
No ARB/84/3, Award, ¶82 (May 20, 1992).............................................................................4
38. Starrett Housing Corpg. v. Iran, 16 IRAN-U.S. C.T.R.,........................................................19
39. Técnicas Medioambientales Tec med, S.A. v. The United Mexican States, ICSID Case No.
ARB (AF)/00/2.........................................................................................................................4
40. Técnicas Medioambientales Tec med, S.A. v. The United Mexican States, ICSID Case No.
ARB (AF)/00/2, Preliminary Matters, ¶154 (May 29, 2003)...................................................4
41. Temple of Preah Vihear (Cambodia v. Thai.), Preliminary Objections, 1962 I.C.J. 6............4

viii
 MEMORIAL ON BEHALF OF APPLICANT

42. The Payment of Various Serbian Loans Issued in France (Fr. v Serb‐Croat‐Slovene),
Judgement, 1929 P.C.I.J. (ser A) No. 20 ¶38 (July 12)............................................................6
43. The Payment of Various Serbian Loans Issued in France (Fr. v Serb‐Croat‐Slovene),
Judgment, 1929 PG.C.I.J..........................................................................................................6
44. TokiosTokeles vs. Ukrain, ISID Case No. ARB/02/18..........................................................17
45. Wena Hotels Ltd v. Arab Republic of Egypt, ICCSID Case No. ARB/98/4.........................18

STATUTES

1. Conference for the Codification of International Law, The Hague (A/CN.4/96) (1930)........8
2. Draft articles on Responsibility of States for Internationally Wrongful Acts..........................8
3. Harvard Draft Convention on International Responsibility of States for Injuries to Aliens,
art.10(5), (1961.......................................................................................................................18
4. Int’l Law Comm’n, Report on Unilateral Acts of States, U.N. Doc. A/CN.4/525, at 102
(2002.........................................................................................................................................4
5. International Law Commission Draft Articles on Diplomatic Protection Art.15(a) United
Nation (2006)...........................................................................................................................3
6. Model Text for the Indian Bilateral Investment Treaty.........................................................13
7. The Energy Charter Treaty, Trade Amendment and Related Documents, Art. 10(1) (1994...9
8. United Nation Conference On Trade and Development, Expropriation, Series on Issues in
International Investment Agreements II, at 6-7, UNCTAD/DIAE/IA/2011/7 (2012)...........16
9. United Nation Conference On Trade and Development, Taking of Property, Series on issues
an International Investment Agreements, at 20, UNCTAD/ITE/IIT/15 (2000).....................17
10. Vienna Convention on Law of Treaties art. 26, May 23, 1969................................................2

OTHER AUTHORITIES

1. Conference for the Codification of International Law, held at The Hague in 1930.................8
2. Emmanuel Voyiakis, Estoppel, Oxford Bibliographies (April 11, 2021)................................5
3. Francisco Orrego Vicuña, Regulatory Authority and Legitimate Expectations: Balancing the
Rights of the State and the Individual under International Law in a Global Society 5(3)
INTERNATIONAL LAW FORUM DU DROIT INTERNATIONAL, 188, 193 (2003).......................10
4. MALCOLM N. SHAW, INTERNATIONAL LAW, (Cambridge university press, 6th Ed.)11
5. Malcolm N. Shaw, International Law, pg 105, (Cambridge university press, 6th ed.)...........11

ix
 MEMORIAL ON BEHALF OF APPLICANT

6. OECD, "Indirect Expropriation" and the "Right to Regulate" in International Investment

Law" 1-22 (OECD Working Papers on International Investment No. 04, 2004)..................17
7. Samuel K. B. Asante, International Law and Foreign Investment: A Reappraisal, 37(3) THE
INTERNATIONAL AND COMPARATIVE LAW QUARTERLY 588, 590 (1988).............................15
8. Trevor Zeyl, Charting the Wrong Course: The Doctrine of Legitimate Expectations in
Investment Treaty Law 49(1) ALBERTA L.REV........................................................................3
9. Vyoma Jha, India's Twin Concerns over Energy Security and Climate Change: Revisiting
India's Investment Treaties through a Sustainable Development Lens, 5(1) TRADE L. &
DEV. 109, 133 (2013).............................................................................................................10

BOOKS

1. BLACK’S LAW DICTIONARY 1720 (Bryan A. Garner ed., 10th ed. 2014...................................2
2. IAN BROWNLIE, PRINCIPLES OF PUBLIC INTERNATIONAL LAW 534 (OUP, 5th Ed., 1998).. .17
3. ISABELLE BUFFARD ET AL., INTERNATIONAL LAW BETWEEN UNIVERSALISM AND
FRAGMENTATION, 325 (Martinus Nijhoff Publishers, 2008).................................................11
4. JESWALD W. SALACUSE, THE LAW OF INVESTMENT TREATIES 245 (2nd Edition, OUP,
2015).........................................................................................................................................9
5. RUDOLF DOLZER & CHRISTOPH SCHREUER, PRINCIPLES OF INTERNATIONAL INVESTMENT
LAW 245 (OUP, 2nd Ed. 2012)..............................................................................................15
6. STEPHEN MATHIAS, THE STATUTE OF THE INTERNATIONAL COURT OF JUSTICE 779
(Andreas Zimmerman et al. eds., 2nd ed. 2012)........................................................................1

x
 MEMORIAL ON THE BEHALF OF APPLICANT

STATEMENT OF FACTS
THE STATES

Republic of Tuna (hereinafter referred as Tuna) and Federal States of Higa (hereinafter referred
as Higa) are two neighboring coastal nations. Tuna has expertise in power production both
renewable and non-renewable sources of energy.

BACKGROUND

Higa organized the 1st Energy Global Investors’ meet on 25.02.2018 as a step to attract
investments to maximize the domestic power production. Tuna participated in the Energy Global
Investors’ meet and committed the Govt. of Higa to set up: (a)10,000 MW capacity of wind
power projects in the state of Xia; and (b)Ultra-mega thermal power project of 3000 MW
capacity with coal sourced from captive coal mine to be allotted to the concerned developer by
Higa.

Tuna appointed its leading power producer TPGCL to spearhead Tuna’s investments and
construction of power projects in Higa. Tuna entered into a BIT with Higa. It stated that all
disputes shall be raised against Tuna and jurisdiction over the issues involved shall rest on ICJ.

THE CONTROVERSY

RE: WIND POWER PROJECT

In early 2019, TPGCL entered into several PPAs with the distribution companies of Higa for
generation of power using wind and solar energy. In this regard, the distribution companies had
approached CERC of Higa seeking determination of the tariff as well as approval of the PPAs.
By mid-June TPGCL had made substantial investments of INR 12000 crores towards setting up
of the wind/solar energy projects.

During the 1st week of June 2019, Higa encountered several reports of its citizens contracting to
a novel COVID-19 and State of Xia became a hotspot for COVID-19. On 05.06.2019, Higa
announced nation-wide lockdown whereby, all government, commercial and private
establishments were directed to be closed except for those providing essential services. Power

xi
 MEMORIAL ON THE BEHALF OF APPLICANT

generation, transmission and distribution were recognized as essential services and were exempt
from the lockdown.

On 29.08.2019, distribution companies approached the CERC and requested for withdrawal of
the PPAs to CERC, since the lockdown had impacted the collection and revenue of the
distribution licensees owing to the reduced demand. With the issue of withdrawal of the PPAs,
Tuna with due delicacy requested the Govt. of Tuna that this would severely cause a grave
irreparable financial injury, since Tuna had already made substantial economic investments in
lieu of the assurances and commitments made by Higa.

RE: THERMAL POWER PROJECT

On 06.07.2018, MoC allocated Xia Coal Blocks as source of fuel to TPGCL which were located
approx. 260 kms from the proposed power plant. Premised on Higa’s commitments and
assurances, TPGCL initiated project. On 27.12.2018, Xia issued a Notification under its Wildlife
(Protection) Act classifying 625.82 Sq. Km of the Xia National Park and Wildlife Sanctuary as
Critically Tiger Habitat (CTH). However, the area demarcating the CTH did not include the area
of Coal Blocks and as such there were no restrictions on coal mining in the allotted mining lease
area. On 08.10.2019, the Conservator, Xia Tiger Reserve submitted a revised proposal for
creating the Buffer Zone surrounding the core area of Xia Tiger Reserve. The area suggested to
be a part of the Buffer Zone in the said revised proposal by the Expert Appraisal Committee, for
the first time, it included the mining lease area of about 139 Hectare of the Xia Coal Blocks.
EAC instead suggested allocation of alternative coal blocks in lieu of Xia Coals Blocks which
was denied by the Govt. of Tuna. With Xia Coal Blocks declared as a no-go area, TPGCL was
left with no fuel source. However, they had to keep up with their commitments to meet the date
of COD, hence they arranged for an alternative coal source by importing them which became a
much costlier option for them. Two months later, TPGCL issued a notice for the termination of
the PPA and sought for the damages.

xii
 MEMORIAL ON THE BEHALF OF APPLICANT

STATEMENT OF JURISDICTION
The Republic of Tuna and the Federal States of Higa hereby submit the present dispute to the
International Court of Justice [“The Court”], pursuant to Article 36(1) of the Court’s Statute, in
accordance with the Bilateral Investment Treaty for adjudication of the differences between the
parties on questions relating to Renewable Power Project and Thermal Power Project. The
Applicant submits to the jurisdiction of the Court pursuant to Article 36(1) of its Statute.

xiii
MEMORIAL ON THE BEHALF OF APPLICANT

ISSUES RAISED
I.
WHETHER ICJ HAS JURISDICTION OVER THE BILATERAL DISPUTE
BETWEEN GOVT. OF TUNA AND REPUBLIC OF HIGA? ASSUMING ICJ
HAS JURISDICTION WHETHER ICJ CAN ADJUDICATE THE ISSUES
RAISED BY HIGA?

II.
WHETHER THREAT OF TERMINATION OF PPA BY GOVT. OF TUNA ON
THE GROUND OF NON-ALLOCATION OF COAL BLOCKS FOR CAPTIVE
CONSUMPTION TO TPGCL’S THERMAL POWER PLANT IS AGAINST
THE LEGITIMATE EXPECTATIONS OF POWER DEMAND SITUATION
OF STATE OF HIGA?

III.
WHETHER THE GOVT. OF HIGA IS RESPONSIBLE FOR THE
BILATERAL DISPUTE WITH THE GOVT. OF TUNA? IF SO, THEN, UPTO
WHAT EXTENT IS IT LIABLE FOR THE COMPENSATION?

xiii
 MEMORIAL ON THE BEHALF OF APPLICANT

SUMMARY OF ARGUMENTS
I. WHETHER ICJ HAS JURISDICTION OVER THE BILATERAL DISPUTE BETWEEN GOVT.
OF TUNA AND REPUBLIC OF HIGA? ASSUMING ICJ HAS JURISDICTION WHETHER ICJ CAN
ADJUDICATE THE ISSUES RAISED BY HIGA?

It is humbly submitted before this hon’ble court that ICJ has the jurisdiction over the Bilateral
dispute between the Govt. of Tuna and Federal Republic of Higa as both the parties have
consented dispute exists between subjects having access to the Court and dispute falls under the
subject matter of BIT. Also, the exhaustion of local remedy is not possible in the instant case.
Further, even when the ICJ has jurisdiction, it cannot adjudicate upon the issues herein raised by
Govt. of Higa as there has been a violation of legitimate expectation of Govt. of Tuna by Federal
state of Higa. Also, the acts of States of Higa are barred by estoppel.

II. WHETHER THE THREAT OF TERMINATION OF PPA BY GOVT. OF TUNA ON THE

GROUND OF NON-ALLOCATION OF COAL BLOCK FOR CAPTIVE CONSUMPTION TO
TPGCL’S THERMAL POWER PLANT IS AGAINST THE LEGITIMATE EXPECTATIONS OF
POWER DEMAND SITUATION OF STATE OF HIGA?

It is humbly submitted before this Hon’ble Court that threat of termination of PPA by Govt. of
Tuna is not against the legitimate expectations of power demand situation of State of Higa as
Higa has breached international obligations. Higa have failed to provide full protection and
security to the Tuna. Govt. of Tuna followed BIT signed by the parties but Govt. of Higa failed
to create stable, equitable, favorable condition for Tuna and to protect the investment made by
the Govt. Tuna. It also failed to protect the legitimate expectations of the Applicant by causing
procedural impediments in the project. Thus, these acts of Higa breach the principle of pacta
sunt servanda and constitute breach of state responsibilities.

III. WHETHER THE GOVT. OF HIGA IS RESPONSIBLE FOR THE BILATERAL DISPUTE WITH

THE GOVT. OF TUNA? IF SO, THEN, UPTO WHAT EXTENT IS IT LIABLE FOR THE

COMPENSATION?

It is humbly submitted before this Hon’ble court that, the Federal States of Higa is directly
responsible for the breach of obligations which it owed towards the investor state, i.e., Republic

xiv
 MEMORIAL ON THE BEHALF OF APPLICANT

of Tuna. Govt. of Higa (hereinafter, referred as host state), have failed to honour it’s state
obligation and have not honoured it’s International Minimum standard which followed the
principle of Fair and Equitable Treatment. The minimum standard of treatment is infringed by
conduct attributable to the state and harmful to the Applicant which is grossly unjustified.
Further, host state has indirectly expropriated the investment made by the investors without any
physical act. The expropriation lacked any backing of public policy. Also, the investor has been
deprived of the control over the investment and such effects of the measure are permanent.
Hence, making the host state liable of compensation to the investors.

xv
 MEMORIAL ON THE BEHALF OF APPLICANT

ARGUMENTS ADVANCED

I. WHETHER ICJ HAS JURISDICTION OVER THE BILATERAL DISPUTE

BETWEEN GOVT. OF TUNA AND REPUBLIC OF HIGA? ASSUMING ICJ HAS
JURISDICTION WHETHER ICJ CAN ADJUDICATE THE ISSUES RAISED BY
HIGA?
1. It is humbly submitted that ICJ can adjudicate over the dispute[A]. Even when, ICJ has
jurisdiction, it cannot adjudicate the issues raised by Higa [B].

A. THAT ICJ CAN ADJUDICATE OVER THE DISPUTE.

2. For ICJ, to have jurisdiction, certain conditions as laid down in ICJ Statute need to be
fulfilled. The dispute must exist between subjects that have access to the Court[i]. Also,
the present dispute falls under the subject matter of the BIT

[ii]. Further, exhaustion of local remedies was not possible[iii].

I. THAT THE INSTANT DISPUTE EXISTS BETWEEN SUBJECTS HAVING

ACCESS TO THE COURT.

3. The present dispute has arisen between Republic of Tuna and Federal States of Higa.
Article 34 of the Statute establishes a strict monopoly whereby only States can have
access to contentious jurisdiction of the Court. 1This is further extended by Article 35 of
the Statute which provides that the Court shall be open to the state parties to the ICJ
Statute. Article 35(1) lays that ‘The Court can exercise its judicial function only in
respect of those states which have access to it under article 35.’ Only States which have
access to the Court, therefore, are in a position to confer jurisdiction upon it. 2 Thus,
Article 35 regulates the access to the Court, which is a precondition to the exercise of

1
STEPHEN MATHIAS, THE STATUTE OF THE INTERNATIONAL COURT OF JUSTICE 779 (Andreas Zimmerman et al.
eds., 2nd ed. 2012).
2
Legality of Use of Force (Serb. and Montenegro v. U.K.), Preliminary Objections, 2004 I.C.J. Repg. 1307, at 1326
(Dec. 15).
1
 MEMORIAL ON THE BEHALF OF APPLICANT

the Court’s jurisdiction whereby only States can have access to contentious jurisdiction
of the Court.3

4. In the present case, as both Republic of Republic of Tuna and Federal States of Higa
are States and are parties to the ICJ Statute,4 they can confer jurisdiction upon ICJ.

II. THAT THE PRESENT DISPUTE FALLS UNDER THE SUBJECT MATTER OF BIT.

5. It is humbly submitted that Bilateral Investment Treaty is signed between State of Tuna
and State of Higa.5 In the instant treaty, the member states have agreed to refer any
disputes arising between them on questions of law related to trade and commerce to the
ICJ.6 The treaty is binding on both the parties by virtue of ‘pacta sunt servanda’7 and
therefore must be performed in good faith.
6. In the instant case by virtue of Bilateral Investment Treaty, Republic of Tuna and
Federal States of Higa have consented to the jurisdiction of ICJ.8
7. Trade is the business of buying and selling or goods and services,9 and commerce is the
exchange of goods and services, esp. on a large scale involving transportation between
cities, states and countries.10International commerce is the trade and other business
activities between countries.11 Further, trade dispute is understood to be a dispute
between two or more countries arising from trade agreement or other matters related to
international commerce.12 In the instant case, there is a dispute with respect to PPA and
investment made by an investor which falls within the ambit of trade and commerce.

III. EXHAUSTION OF LOCAL REMEDIES IS NOT POSSIBLE IN THE INSTANT CASE.

3
STEPHEN MATHIAS, supra note 1.
4
Compromis, ¶1.
5
Compromis, ¶ 6.3.
6
Compromis, ¶ 6.3.
7
Vienna Convention on Law of Treaties art. 26, May 23, 1969. 1155 U.N.T.S. 331. [hereinafter Vienna
Convention on Law of Treaties].
8
Compromis, ¶ 6.3.
9
BLACK’S LAW DICTIONARY 1720 (Bryan A. Garner ed., 10th ed. 2014).
10
Id. at 325.
11
Id.
12
Id. at 1721.
2
 MEMORIAL ON THE BEHALF OF APPLICANT

8. The Applicant contends that the exhaustion of the local remedy is not mandatory to
bring an action before the Hon’ble ICJ. In the Interhandel case,13 the Hon’ble Court
stated that ‘Exhaustion of Alternate Remedies is applicable, when domestic
proceedings are pending and when both the domestic and international proceedings
are designed to obtain the same result.’14
9. Local remedies need not be exhausted if there are no reasonably available local
remedies to provide effective redress, or the local remedies provide no reasonable
possibility of such redress.15 Moreover, BIT provides that in case of any dispute
against Government of Tuna and jurisdiction over the issues shall rest on ICJ.16
10. The slow judicial process in a developing country shall also be taken into account.
Moreover, both the parties duly recognized the inabilities of domestic courts of Higa
in adjudicating over energy law disputes.17
11. It is pertinent to note that an urgent and efficient remedy is required as the financial
condition of investor has been gravely affected by the measures of the State of Higa.18
Moreover, it is for the respondent to convince the Court that there were effective
remedies in its domestic legal system that were not exhausted.19Thus, exhaustion of
local remedies is not affordable and thus, the claims are admissible in the ICJ.

B. ICJ CANNOT ADJUDICATE THE ISSUES RAISED BY HIGA.

12. It is humbly submitted that even when ICJ has jurisdiction, it cannot adjudicate the
issues raised by Higa as the Action of State of Higa violates the doctrine of Legitimate
Expectation[i]. Further, the Unilateral acts of states have a binding effect. [ii] Also, the
acts of the Republic of Higa are barred by the Doctrine of estoppel[iii].

I. THE ACTION OF STATE OF HIGA VIOLATES THE DOCTRINE OF

LEGITIMATE EXPECTATION.
13
Interhandel (Switzerland v. U.S.), Preliminary Objections, 1959 I.C.J. Repg. 6, at 27 (March 21).
14
Abaclat and Others v. Argentine Republic, ICSD Case No. ARB/07/5, Decision on Jurisdiction and Admissibility,
¶ 247 (Aug. 4, 2011).
15
International Law Commission Draft Articles on Diplomatic Protection Art.15(a) United Nation (2006).
16
Compromis, ¶ 6.3.
17
Compromis, ¶ 6.3.
18
Compromis, ¶ 24.
19
Elettronica Sicula S.pg.A. (ELSI) (U.S. v. Italy), Judgment, 1989 I.C.J. Repg. 15, at 46 ¶ 59 (July 20).
3
 MEMORIAL ON THE BEHALF OF APPLICANT

13. The Applicants contend that the actions of State of Higa is detrimental to the
investment made by Govt. of Tuna and runs contrary to the initial assurances 20 and is
against the legitimate expectations of the State of Tuna which arose due to the specific
statements as well as conduct of the Govt. of Higa.
14. It is not uncommon for an investor and the host state to have opposing interests. This
can be attributed to the inherent disharmony between their interests in certain
situations. To protect the legitimate expectations that arise on the side of the parties,
the Doctrine of Legitimate Expectation is applied to preserve consistency and
predictability in international investment law.21
15. The first tribunal to deal with this doctrine in the existing legal and economic
framework was Tecmed in Técnicas Medioambien tales Tecmed, S.A. v. The United
Mexican States.22
16. Further, in Parkerings v. Lithuania,23 the tribunal held that the conditions in the host
State at the time of entering into the agreement bear on the legitimacy of the investor’s
expectations.24 In the present case, the conditions at the time of entering into
agreement were shown to be very conducive for investment. To that end, the
Government of Higa, in its 1st Energy Global Investor’s meet ensured fair and
equitable treatments and promotional measures. One of these measures was assured
allotments of coal mines for captive consumption and providing land to the project
developer.25

II. THAT THE UNILATERAL ACTS OF STATES HAVE A BINDING EFFECT.

17. According to the International Law Commission, a unilateral act of state can be defined
as:

20
Compromis, ¶ 23.
21
Trevor Zeyl, Charting the Wrong Course: The Doctrine of Legitimate Expectations in Investment Treaty Law
49(1) ALBERTA L.REV. 203, 204-209 (2011).
22
Técnicas Medioambientales Tec med, S.A. v. The United Mexican States, ICSID Case No. ARB (AF)/00/2,
Preliminary Matters, ¶154(May 29, 2003).
23
Parkerings‐Compagniet AS v. Lithuania, ICSID Case No. ARB/05/8, Merits, ¶335(Sept. 11, 2007).
24
Duke Energy Electroquil Partners & Electroquil SA v. Ecuador, ICSID Case No. ARB/04/19, Merits, ¶340(Aug.
18, 2008).
25
Compromis, ¶ 4.10.
4
 MEMORIAL ON THE BEHALF OF APPLICANT

An unequivocal expression of will which is formulated by a state with the intention of

producing legal effects in relation to one or more other states or International
Organization, and which is known to that State or International Organizations.26
18. Declarations or representations made by way of unilateral acts, concerning legal and
factual situations, can have the effect of creating legal obligations. 27 Legitimate
expectations can be based on the host state’s legal order, 28 contractual
commitments29and government representations30. Whether a statement is made orally or
in writing makes no essential difference.31
19. The declaration of the Government of Higa regarding allotment of coal mines for
captive consumption and land free from all encumbrances was nothing less than a
promise which has created a legal obligation on them to actually provide for as
amenable conditions for investment as was promised when Govt. of Tuna was a
potential investor. The denial of allocation for alternate coal blocks, 32 resulted into no
fuel source for its thermal power plant to TPGCL, 33 amounts to retracting on the
promise made earlier which goes against the very principle of good faith.

III. THAT THE ACTS OF THE REPUBLIC OF HIGA ARE BARRED BY

ESTOPPEL.

20. As it is most commonly described, estoppel is a rule of international law that bars a
party from going back on its previous representations when those representations have
induced reliance or some detriment on the part of others.34
21. It is further submitted that estoppel is not a mere rule of evidence or procedure. The
substantive character of the rule finds support in the writings of several authors. As

26
Int’l Law Comm’n, Report on Unilateral Acts of States, U.N. Doc. A/CN.4/525, at 102 (2002).
27
Nuclear Tests Case (Austl. v. Fr.), Judgment, 1974 I.C.J. 253, ¶43 (Dec 20, 1974).
28
Marvin Roy Feldman Karpa v. United Mexican States, ICSID Case No. ARB(AF)/99/1, Award, ¶128 (Dec. 16,
2002).
29
Continental Casualty Company v. The Argentine Republic, ICSID Case No. ARB/03/9, Award, ¶261 (Sept. 5,
2008).
30
Southern Pacific Properties (Middle East) Limited v. Arab Republic of Egypt, ICSID Case No ARB/84/3, Award,
¶82 (May 20, 1992).
31
Temple of Preah Vihear (Cambodia v. Thai.), Preliminary Objections, 1962 I.C.J. 6, ¶31 (June 15).
32
Compromis, ¶ 23.
33
Compromis, ¶ 22.
34
Emmanuel Voyiakis, Estoppel, Oxford Bibliographies (April 11, 2021)
https://www.oxfordbibliographies.com/view/document/obo-9780199796953/obo-9780199796953-0058.xml.
5
 MEMORIAL ON THE BEHALF OF APPLICANT

stated by Sir Frederick Pollock, "estoppel is often described as a rule of evidence, as

indeed it may be so described. But the whole concept is more correctly viewed as a
substantive rule of law".35
22. In the case of Temple of Preah Vihear, Judge Alfaro made the following observations
regarding the binding value of the Doctrine of Estoppel in Public International Law:
The primary foundation of this principle is the good faith that must prevail in
international relations as inconsistency of conduct or opinion on the part of a State to
the prejudice of another is incompatible with good faith. A secondary basis of the
principle is the necessity for security in contractual relationships. A State bound by a
certain treaty to another State must rest in the security that a harmonious and
undisturbed exercise of the rights of each party and a faithful discharge of reciprocal
obligations denote a mutually satisfactory state of things which is permanent in
character and is bound to last as long as the treaty is in force.36

A. THAT THERE MUST BE A REPRESENTATION.

23. A representation is the first element required to establish estoppel. A representation can
arise from a declaration or from silence.37 While using the words ‘declaration’ and
‘conduct’ interchangeably, it has been observed in numerous cases that for a declaration
to qualify the claim of estoppel, it must be clear, consistent and unequivocal. 38 Further
in the case of Land and Maritime Boundary between Cameroon and Nigeria 39 it was
observed that “an estoppel would only arise if by its acts or declarations Cameroon had
consistently made it fully clear that it had agreed to settle the boundary dispute
submitted to the Court by BIT avenues alone.”
24. In the instant case, it can be seen that the State of Higa, in its bid to discharge the
obligations declared that it would allot the coal mines for captive consumption in terms
of applicable laws and land free from all encumbrance. 40
This incontestably shows that

35
Temple of Preah Vihear, supra note 31.
36
Id.
37
Elettronica Sicula S.pg.A. (ELSI) (U.S. v. It.), Judgment, 1989 I.C.J. Repg. 15, ¶44 (July 20).
38
The Payment of Various Serbian Loans Issued in France (Fr. v Serb ‐Croat ‐Slovene), Judgment, 1929 PG.C.I.J.
(ser. A) No. 20 ¶38 (July 12); Military and Paramilitary Activities in and Against Nicaragua (Nicar. v. U.S.),
Judgment, 1986 I.C.J. Repg. 14, ¶415 (June 27).
39
Land and Maritime Boundary between Cameroon and Nigeria (Cameroon v. Nigeria), Judgment, 2002 I.C.J.
Repg. 303, ¶303 (Oct. 10).
40
Compromis, ¶ 4.10.
6
 MEMORIAL ON THE BEHALF OF APPLICANT

by its clear representation, the Government of Higa, conveyed in very certain terms that
there would be allotment of coal mines for the production of thermal energy.

b. THAT THE REPRESENTATION MUST BE AUTHORIZED AND UNCONDITIONAL.

25. An authorized representation means that it must be made by a competent organ of the
state. The question of proper authority was first discussed in the Legal Status of
Eastern Greenland case.41 The reasoning given by the Court clearly shows that the
Court was not concerned with the fact that whether the authority making the
representation actually has the authority or not. The main consideration is that whether
the authority is competent to bind the State.
26. The question of un-conditionality of the representations was answered by the World
Court in the case of Legal Status of Eastern Greenland.42 In this case, Norway argued
that her representation to Denmark was conditional on Danish cooperation on a
separate issue of sovereignty over the Spitsbergen Island. The Court held, however, that
the Norwegian representation was unconditional because it was not made in the course
of negotiations. Thus, Denmark’s claim for estoppel failed on the ground of
conditionality of the representation.

C. THAT THE PARTY CLAIMING ESTOPPEL MUST HAVE RELIED ON THE

REPRESENTATION.

27. The final element of the principle is that the party claiming estoppel must have relied
on the representation. In a number of cases, it has been provided that the party invoking
the rule must have relied upon the statements or conduct of the other party, either to its
own detriment or to the other's advantage. What it really means is that these statements,
or this conduct, must have brought about a change in the relative positions of the
parties, worsening that of the one, or improving that of the other, or both.43
28. In this case, relying on the pro-investment measures taken by the Govt. of Higa, most
important of them being the commitment and assurance Govt. of Tuna decided to invest
41
Legal Status of Eastern Greenland (Den. V. Nor.), Judgment, 1933 PG.C.I.J. (ser. A/B) No. 53, at 192 (Sept. 5).
42
Id.
43
Temple of Preah Vihear, supra note 31.
7
 MEMORIAL ON THE BEHALF OF APPLICANT

a huge amount and later due to the failure on the part of Govt. Of Higa, Tuna suffered a
loss of more than INR. 800 Cr.44 Thus, on the basis of a representation made by the host
state, the investor decided to invest which led to a huge detriment to it’s position.

II. WHETHER THE THREAT OF TERMINATION OF PPA BY GOVT. OF TUNA

ON THE GROUND OF NON-ALLOCATION OF COAL BLOCK FOR
CAPTIVE CONSUMPTION TO TPGCL’S THERMAL POWER PLANT IS
AGAINST THE LEGITIMATE EXPECTATIONS OF POWER DEMAND
SITUATION OF STATE OF HIGA?
29. It is humbly submitted before this Hon’ble Court that threat of termination of PPA by
Govt. of Tuna is not against the legitimate expectations of power demand situation of
State of Higa as Higa has breached the international obligations [A]. Also, Higa has
breached state responsibility on its part. [B]

A. That The State of Higa Has Breached The International Obligations.

30. There is an internationally wrongful act of a State when conduct consisting of an action
or omission:45 is attributable to the State under international law[i] which Constitutes a
breach of an international obligation of the State.

I. THE INTERNATIONALLY WRONGFUL ACT IS ATTRIBUTABLE TO THE

STATE OF HIGA

31. One of the conditions for the existence of an internationally wrongful act of the State is
that the conduct is attributable to the State should constitute a breach of an international
obligation of that State. The terminology of breach of an international obligation of the
State is long established and is used to cover both treaty and non-treaty obligations.
32. In its judgment on jurisdiction in the Factoryat Chorzów case, PCIJ used the words
“breach of an engagement”.46 ICJ referred explicitly to these words in the Reparation
for Injuries case.47 The arbitral tribunal in the “Rainbow Warrior” affair referred to

44
Compromis, ¶ 24.
45
Draft Articles on Responsibility of States for Internationally Wrongful Acts, art. 2, (A/56/10) (2001). [hereinafter
as Draft Articles on Responsibility of States].
46
Factory at Chorzów, Jurisdiction, Judgment No. 8, PG.C.I.J., Series A, No. 9, pg. 21 (1927).
47
Reparation for Injuries, I.C.J. Repg. 174, (1949).
8
 MEMORIAL ON THE BEHALF OF APPLICANT

“any violation by a State of any obligation”. 48 In practice, terms such as “non-execution

of international obligations”, “acts incompatible with international obligations”,
“violation of an international obligation” or “breach of an engagement” are also used. 49
The Respondent have failed to provide full protection and security to the investors[a]
and have failed to fulfill the legitimate expectations of the Applicant. [b] and the acts of
Respondent in violation to the principle of Pacta Sunt Servanda. [c]

A. THAT THE RESPONDENT HAVE FAILED TO PROVIDE FULL PROTECTION AND

SECURITY TO THE INVESTORS.
33. The core element under this standard is an obligation on the part of a contracting state
to exercise due diligence in providing physical protection and security from injurious
acts by government agents or third parties to the investor and its investment. 50 Due
diligence can be defined as ‘reasonable measures of prevention which a well
administered government could be expected to exercise under similar circumstances.51
34. Art. 10(1) of Energy Charter also states that “States shall encourage and create stable,
equitable, favorable and transparent conditions for Investors of other Contracting
Parties to make Investments in its Area. Such conditions shall include a commitment to
accord at all times to Investments of Investors of other Contracting Parties fair and
equitable treatment. The Investments shall also enjoy the most constant protection and
security and no Contracting Party shall in any way impair by unreasonable or
discriminatory measures their management, maintenance, use, enjoyment or
disposal.”52
35. With Xia Coal Blocks declared as a no-go area, TPGCL was left without a fuel source
for its thermal power plant.53 As per the PPA, it was bound to supply power from the
date of its COD.54 On 01.12.2019, TPGCL achieved COD and was forced to procure
imported coal/other forms of alternate coal to ensure continuous supply of power which
was a much costlier option.55

48
New Zealand v. France, France-New Zealand Arbitration Tribunal, 82 I.L.R. 500 (1990).
49
Conference for the Codification of International Law, The Hague (A/CN.4/96) (1930).
50
JESWALD W. SALACUSE, THE LAW OF INVESTMENT TREATIES 245 (2nd Edition, OUP, 2015).
51
Asian Agriculture Products Ltd. v Sri Lanka, a, ICSID Case No. ARB/87/3, (1990) ¶ 77.
52
The Energy Charter Treaty, Trade Amendment and Related Documents, Art. 10(1) (1994).
53
Compromis, ¶ 22.
54
Id.
55
Id.
9
 MEMORIAL ON THE BEHALF OF APPLICANT

36. Art. 10(5)(b) of Energy Charter states that “Each Contracting Party shall, as regards
the Making of Investments in its Area, endeavor to progressively remove existing
restrictions affecting Investors of other Contracting Parties.”56
37. Thermal Power Project developers were assured of allotment of coal mines for captive
consumption in terms of applicable laws and land was to be provided free from all
encumbrances by Higa to the project developer, after payment of contractually agreed
rates. 57
Intra-state Open Access clearance for the whole tenure of the project or 25
years whichever is earlier was promised to be granted. 58 But Govt. of Higa’s actions
were detrimental to the investments made by Govt. of Tuna/ TPGCL and runs contrary
to the initial assurances.59

b. THAT THE RESPONDENT HAVE FAILED TO FULFILL THE LEGITIMATE EXPECTATIONS

OF THE PETITIONERS.

38. It is submitted that the Respondent failed to protect the legitimate expectations of the
Applicant by causing procedural impediments in the project. A well settled principle of
customary international law is FET, which covers the notion of "legitimate
expectations" is a key element of the substantive aspect of the standard.60
39. To the extent that earlier policies might have created legitimate procedural and
substantive expectations for investors, they may not be abandoned without
compensating the investor if the result would be so unfair as to amount to an abuse of
power.61 In regulating its domestic energy or climate-related policies, the host State will
need to understand the implications of the FET standard and the investor's "legitimate
expectations", which are based on the principles of the State ensuring a stable business
environment"62 and "a transparent and predictable framework for investors' business
planning and investment".63 Investment decisions in the renewable energy sector are
56
The Energy Charter Treaty, supra note 52, Art. 10(5)(b).
57
Compromis, ¶ 4.10.
58
Compromis, ¶ 4.5.
59
Compromis, ¶ 22.
60
Saluka Investments BV (the Netherlands v the Czech Republic), Partial Award, I.C.G.J. 368 (Perm. Ct. Arb.
2006) ¶ 483, 484.
61
Francisco Orrego Vicuña, Regulatory Authority and Legitimate Expectations: Balancing the Rights of the State
and the Individual under International Law in a Global Society 5(3) INTERNATIONAL LAW FORUM DU DROIT
INTERNATIONAL, 188, 193 (2003).
62
Occidental Exploration and Production Co. v. Ecuador, LCIA Case No. UN3467 (UNCITRAL 2004) PG. 183;
Saluka Investments BV, supra note 60, pg. 303.
63
Metalclad Corporation v. United Mexican States, ICSID Case No. Arb/AF/97/1, PG. 99, 40 ILM 55 (2001).
10
 MEMORIAL ON THE BEHALF OF APPLICANT

especially marked by the continued benefit from support schemes during a given
period. Thus, investors have a "legitimate expectation" that the legal and regulatory
framework of the support scheme will remain stable and predictable.64

c. THAT THE ACTS OF RESPONDENT IN VIOLATION TO THE PRINCIPLE OF PACTA SUNT

SERVANDA.
40. “Every treaty in force is binding upon the parties to it and must be performed by them
in good faith”.65 International courts and tribunals emphasize the importance of Art. 26
in its meta-function, as pillar of treaty law, and therewith value the objective of treaty
stability,66 and upheld the rule’s cardinal importance as meta-rule by extensively
referring to pacta sunt servanda as incorporated in Art. 26.
41. One of the crucial general principle of international law is that of pacta sunt servenda,
or the idea that international agreements are binding. The law of treaties rest
inexorably upon this principle since the whole concept of binding international
agreements can only rest upon the presupposition that such instruments are commonly
accepted as possessing that quality.”67
42. Trust and confidence are inherent in international cooperation 68. Premised on this
commitments and assurances of Higa to investors, TPGCL initiated project works in
terms of the PPAs, alongside completion of preliminary procedures for extracting coal
from the allotted coal mines.69 But State of Higa breached trust and confidence of Tuna
their actions were detrimental to the investments made by Govt. of Tuna and runs
contrary to the initial assurances.70

B. THAT STATE OF HIGA BREACHED STATE RESPONSIBILITY ON ITS PART.

43. “Every internationally wrongful act of a State entails the international responsibility of
that State”.71 In the Phosphates in Morocco case, PCIJ affirmed that when a State

64
Vyoma Jha, India's Twin Concerns over Energy Security and Climate Change: Revisiting India's Investment
Treaties through a Sustainable Development Lens, 5(1) TRADE L. & DEV. 109, 133 (2013).
65
Vienna Convention on Law of Treaties, supra note 7.
66
ISABELLE BUFFARD ET AL., INTERNATIONAL LAW BETWEEN UNIVERSALISM AND FRAGMENTATION, 325 (Martinus
Nijhoff Publishers, 2008).
67
MCO v. Republic of Indonesia 89 ILR, 366.
68
MALCOLM N. SHAW, INTERNATIONAL LAW, 105 (Cambridge university press, 6th Ed. 2008).
69
Compromis, ¶18.
70
Compromis, ¶ 22.
71
Draft Articles on Responsibility of States, supra note 45, art. 1.
11
 MEMORIAL ON THE BEHALF OF APPLICANT

commits an internationally wrongful act against another State international

responsibility is established “immediately as between the two States”. 72 ICJ has applied
the principle on several occasions, such as in the Corfu Channel case,73 in the Military
and Paramilitary Activities in and against Nicaragua case.74 That every internationally
wrongful act of a State entails the international responsibility of that State, and thus
gives rise to new international legal relations additional to those which existed before
the act took place.
44. Higa conducted the 1st Energy Global Investors’ and aimed to attract investors to
establish power projects and manufacturing facilities in the state and assured fair and
equitable treatment as well as promotional measures for all investors.75 But it breached
the state responsibility (protection of investment, fair and equitable treatment and
legitimate expectation) on its part.

III. WHETHER THE GOVT. OF HIGA IS RESPONSIBLE FOR THE

BILATERAL DISPUTE WITH THE GOVT. OF TUNA MAKING THEM
LIABLE FOR THE COMPENSATION?
45. It is humbly submitted that Govt. of Higa, is completely responsible for the breach of
BIT. Govt. of Tuna acts as an investor having a substantial economic activity[A], which
is of significant value. Further, there was an existence of obligation which was
breached [B]. Tuna has suffered a financial loss as a result of the breach[C]. Further,
these losses are directly caused by the breach, making the whole conduct attributable to
the Govt. of Higa making them liable for the compensation[D].

A. THAT THERE WAS A SUBSTANTIAL ECONOMIC ACTIVITY.

46. Without defining ‘substantial economic activity’, it may be difficult to reconcile and
determine the assets that will be eligible or ineligible for protection under the BIT. As
the Preamble of the BIT itself recognizes, the promotion and the protection of
72
Phosphates in Morocco, Judgment, PG.C.I.J., Series A/B,No.74, pg. 10 (1938).
73
Corfu Channel, (Great Britain and Northern Ireland v. Albania) Merits, Judgment, I.C.J. Reports, 4, at ¶. 23,
(1949).
74
Military and Paramilitary Activities in and Against Nicaragua (Nicar. v. U.S.), Judgment, 1986 I.C.J. Repg. 14, ¶
283- ¶. 292 (June 27).
75
Compromis, ¶4.
12
 MEMORIAL ON THE BEHALF OF APPLICANT

investments of investors of one Party in the territory of the other Party will be
conducive to the stimulation of mutually beneficial business activity. 76 The Govt. of
Tuna qualifies to be an investor[i], while making an investment in the establishment of
the power projects[ii].

I. THAT THE GOVT. OF TUNA QUALIFIES TO BE AN INVESTOR.

47. The BIT between both the parties define investor as “a natural or juridical person of a
Party, other than a branch or representative office, that has made an investment in the
territory of the other Party’.77 There are two basic requirements of qualifying to be an
investor, on the basis of this definition, i.e. there has to be a natural or juridical person
and investment is made by such person.
48. BIT further defines juridical person as ‘a legal entity that is constituted, organized and
operated under the laws of that Party and that is directly or indirectly owned or
controlled by a natural person of that Party or by a legal entity’ 78‘that is constituted,
organized and operated under the law of that Party and that has substantial business
activities in the territory of that Party.’ 79Thus, TPGCL is an investor and the investment
made by it qualifies to be an investment under the BIT.

ii. THAT THERE WAS AN INVESTMENT IN THE POWER PROJECT.

49. BIT defines investment as “an enterprise constituted, organized and operated in good
faith by an investor in accordance with the law of the Party in whose territory the
investment is made, taken together with the assets of the enterprise.”80
50. Enterprise means ‘any legal entity constituted, organized and operated in compliance
with the law of a Party, including any company’.81Further the BIT provides that an
enterprise may have any other interests of the enterprise which involve substantial
economic activity and out of which the enterprise derives significant financial value.82

76
Model Text for the Indian Bilateral Investment Treaty, The Preamble.
77
Id., art. 1.5.
78
Id., art. 1.5(b).
79
Id., art. 1.5(a).
80
Id., art1.4.
81
Id, art.1.3.
82
Id., art. 1.4(h).
13
 MEMORIAL ON THE BEHALF OF APPLICANT

In this regard, Tuna Power Generation Company Ltd. (“TPGCL”)83 was constituted in
good faith by the Govt. of Tuna in the territory of Higa, for establishing solar project
and wind project, and thus, it qualifies to be an enterprise.
51. The basic characteristics of an investment are ‘the commitment of capital or other
resources, certain duration, the expectation of gain or profit, the assumption of risk
and a significance for the development of the Party in whose territory the investment
is made.84
52. By initiating the project works in terms of the PPAs, through TPGCL, Tuna had made
investment. This investment was made for the development of renewable energy
which was for a certain duration specified with an expectation of gain or profit and
with an assumption of risk. Risk can be defined as the probability that expected
returns from an investment will not be realized. 85 A construction that stretches out
over many years, for which the total cost cannot be established with certainty in
advance, creates an obvious risk for the Contractor.86
53. Tuna had made substantial investments towards setting up of the projects, and by
achieving financial closure, submitting bank guarantees to the nodal agencies as
required under the respective contracts.87 Tuna has already exposed itself to the
financial risk that was required on it’s behalf while devoting itself to make an
expected investment of INR 28,000 Cr., (which is of significant value) out of which
major portion of this investment was facing a peril. Thus, investment made by
TPGCL in the territory of Higa, qualifies all the essentials enshrined in the definition
given under BIT. Hence, it qualifies the definition of investment under BIT.

B. THERE WAS AN EXISTENCE OF OBLIGATION WHICH WAS BREACHED.

54. “No Party shall subject investments made by investors of the other Party to measures
which constitute a violation of customary international law through fundamental
breach of due process”.88
83
Compromis ¶ 6.2.
84
Model Text for the Indian Bilateral Investment Treaty, supra note 78, art. 1.4.
85
JESWALD W. SALACUSE, supra note 50.
86
Salini Costruttori S.PG.A. And Itals Trade S.PG.A. v. Kingdom of Morocco, ICSID Case No. ARB/00/4,
Decision on Jurisdiction, at 623, (July 23, 2001), 42 ILM 609 (2003).
87
Compromis ¶ 7.
88
Model Text for the Indian Bilateral Investment Treaty, supra note 78, art. 3.1(ii).
14
 MEMORIAL ON THE BEHALF OF APPLICANT

55. International Minimum Standard is a well settled principle of customary international

law.89The basic premise of International Minimum Standard is that ‘an alien is
protected against unacceptable measures of the host state by rules of international law
which are independent of those of the host state.’ 90 Host States are enjoined by
international law to observe an international minimum standard in the treatment of
aliens and alien property.91 Therefore, when a State admits into its territory foreign
investments of foreign nationals, whether natural or juristic persons, it is bound to
extend to them the protection of the law and assumes obligations concerning the
treatment to be afforded them.92

56. As per the BIT, Higa had agreed to cause its distribution companies to enter into
Power Purchase Agreements(“PPAs”) to procure the entire capacity of the power
generated from the power projects developed by TPGCL.93Also, in the 1st Energy
Global Investor’s Meet, Govt. of Higa had assured to it’s investors that the unutilized
banked energy would be considered a deemed purchase by the distribution companies
of Higa at the pooled power purchase cost. 94 This formed part of an assurance to the
investors in the signing of the BIT with the Govt. of Higa. 95Each Party shall accord in
its territory to investments of the other Party and to investors with respect to their
investments full protection and security.96

57. The nation-wide lockdown had reduced the power demand of the Federal States of
Higa, the distribution companies of Higa by wanting for a withdrawal of the PPAs, 97
with the full knowledge of the investment made by the Govt. of Tuna was a tactful
and unfair act by the distribution companies of Higa. The standard obliged the host
State to adopt all reasonable measures to protect assets and property from threats or
89
Saluka Investments BV, supra note 60, ¶ 483-484.
90
RUDOLF DOLZER & CHRISTOPH SCHREUER, PRINCIPLES OF INTERNATIONAL INVESTMENT LAW 245 (OUP, 2nd
Ed. 2012).
91
Samuel K. B. Asante, International Law and Foreign Investment: A Reappraisal, 37(3) THE INTERNATIONAL AND
COMPARATIVE LAW QUARTERLY 588, 590 (1988).
92
Barcelona Traction, Light and Power Company Limited, (Belg. v. Spain), Judgment, 1970 I.C.J. Repg. 3, ¶ 33
(Feb.5).
93
Compromis ¶6.4.
94
Compromis ¶ 4.4.
95
Compromis, Clarification, ¶25.
96
Model Text for the Indian Bilateral Investment Treaty, supra note 78, art. 3.2
97
Compromis, ¶12.
15
 MEMORIAL ON THE BEHALF OF APPLICANT

attacks which may target particularly foreigners or certain groups of foreigners. 98

Hence, the minimum standard of treatment is infringed by conduct attributable to the
state and the foreigners have been subjected to discrimination and prejudice.

C. THAT TUNA HAS SUFFERED A FINANCIAL LOSS AS A RESULT OF THE BREACH.

58. The Applicant contends that the Respondent has violated the principles of International
Law by indirectly expropriating the Applicant’s property[i]. There has been
expropriation without the physical act of the host country[ii]. Further, the expropriation
was unlawful [iii].

I. THAT THERE WAS AN INDIRECT EXPROPRIATION BY HIGA.

59. Indirect expropriation involves total or near-total deprivation of an investment but

without a formal transfer of title or outright seizure. 99 Indirect expropriation is
significantly extreme regulatory actions diminishing the nature of the investor’s
property rights over the investment and constitutes a form of expropriation or
dispossession.100 The investor remains in the possession of the investment, the amount
and nature of the benefits originally contemplated are significantly reduced.101
60. In the present case, substantial investment in the construction of the project had already
been made and any such hindrance as to the part of the distribution licensees for the
withdrawal of the PPAs would result in a heavy financial turmoil for the Govt. of Tuna.
Now, if the distribution licensees do not purchase the energy, after the generation
activities starts, the plant would be nothing but a scrap for the Govt. of Tuna and a
fruitless source of disappointment.

II. THAT THE EXPROPRIATION WAS WITHOUT THE PHYSICAL ACT OF THE
HOST COUNTRY.

98
Saluka Investments BV, supra note 60.
99
United Nation Conference On Trade and Development, Expropriation, Series on Issues in International
Investment Agreements II, at 6-7, UNCTAD/DIAE/IA/2011/7 (2012). [Hereinafter referred as UNCTAD
Expropriation Series].
100
JESWALD W. SALACUSE, supra note 50, at 265.
101
Id.
16
 MEMORIAL ON THE BEHALF OF APPLICANT

61. Customary International Law defines expropriation as the seizure of the legal title of
property.102 It is not the physical invasion of the property which characterizes the
nationalizations or expropriations that have assumed importance, but the erosion of
rights associated with the ownership by the state interference. 103 The decisive element
in an indirect expropriation is the substantial loss of control or economic value of a
foreign investment without a physical value.104
62. In Lauder vs. the Czech Republic,105 the tribunal stated that “indirect expropriation or
nationalization is a measure that does not involve an overt taking, but that effectively
neutralizes the enjoyment of the property.”106 The tribunal in the case of Tokeles vs.
Ukrain,107 that the States obligation with respect to property or the use of property are
well established by the international law.

III. THAT THE EXPROPRIATION WAS UNLAWFUL.

63. The Expropriation was unlawful because it had resulted in a near-total destruction of
the investment’s economic value[a] the investor has been deprived of the control over
the investment [b]and the effects of the measure are permanent[c]. It was not done in
accordance of the public policy[d].

A.THAT THERE IS A NEAR-TOTAL DESTRUCTION OF THE INVESTMENT’S

ECONOMIC VALUE.
64. Expropriation or deprivation of property,108 could also occur through interference by a
state in the use of that property or with the enjoyment of the benefits even where the
property is not seized and the legal title to the property is not affected. 109 In the CMS v.
Argentina, tribunal held that a substantial deprivation occurred when the enjoyment of

102
OECD, "Indirect Expropriation" and the "Right to Regulate" in International Investment Law" 1-22 (OECD
Working Papers on International Investment No. 04, 2004).
103
United Nation Conference On Trade and Development, Taking of Property, Series on issues an International
Investment Agreements, at 20, UNCTAD/ITE/IIT/15 (2000).
104
IAN BROWNLIE, PRINCIPLES OF PUBLIC INTERNATIONAL LAW 534 (OUP, 5th Ed., 1998).
105
Ronald S. lauder vs. the Czech Republic, UNICTRAL (1976), Award, (Sept. 3, 2001).
106
Id. ¶ 200.
107
TokiosTokeles vs. Ukrain, ISID Case No. ARB/02/18, Decision on jurisdiction, 29 April 2004.
108
United Nation Conference On Trade and Development , Expropriation , Series on Issues in International
Investment Agreements II, 6-7, UNCTAD/DIAE/IA/2011/7 (2012). [Hereinafter referred as UNCTAD
Expropriation Series].
109
Id.
17
 MEMORIAL ON THE BEHALF OF APPLICANT

property had been effectively neutralized.110 In addition, the tribunal in ITT Industries
v. Iran settled and established that expropriation occurs when government actions deny
the rights of ownership, use and enjoyment of an investment.111

b. THAT THE INVESTOR HAS BEEN DEPRIVED OF THE CONTROL OVER THE
INVESTMENT.

65. It is submitted that the Claimant has been deprived of the property. In CME v. Czech
Republic Tribunal concluded that a deprivation takes place when host states adopt
measures that effectively neutralize the benefit of the property for the foreign owner. 112
In Starrett Housing case, it was held that even if the property was not seized or
transferred there was an expropriation.113

c. THAT THE EFFECTS OF THE MEASURE ARE PERMANENT.

66. It is general rule that the act of the respondent would be liable for the expropriation
when the effects of the actions are permanent in nature. However, the tribunal in Wena
Hotels case, found that the negative effects over the enjoyment of the investment
amounted to expropriation even though the analyzed measure did not permanently
deprive the investor of its fundamental rights of ownership.114

d. THAT IT WAS NOT DONE IN ACCORDANCE OF THE PUBLIC POLICY.

67. The expropriation of property must be motivated by legitimate welfare objective. 115 The
Applicant submits that the actions taken by the Respondent are not relevant to or
according to the principle of Public Policy.116 The taking of the company’s property,
rights and interests “violated public international law as it was made for purely
extraneous political reasons and was arbitrary and discriminatory in character”.

110
CMS Gas Transmission Company v. The Republic of Argentina, ICSID Case No. ARB/01/8, ¶ 262 (July 17,
2003), 42 ILM 788 (2003).
111
ITT Industries, Inc v. The Islamicc Republic of Iran, IUSCT Case No. 156, Award at 352 (May 26, 1983).
112
CME Czech Republic B.V. v. The Czech Republic, UNICTRAL (1976), Partial Award, ¶ 150, (Sept 13, 2001).
113
Starrett Housing Corpg. v. Iran, 16 IRAN-U.S. C.T.R., ¶ 154, (Aug. 14, 1987).
114
Wena Hotels Ltd v. Arab Republic of Egypt, ICCSID Case No. ARB/98/4 Decision on Interpretation ¶ 120 (Oct.
31, 2005).
115
Harvard Draft Convention on International Responsibility of States for Injuries to Aliens, art.10(5), (1961).
116
UNCTAD Expropriation Series, supra note 44, at 32-33.
18
 MEMORIAL ON THE BEHALF OF APPLICANT

D. THAT THE CONDUCT IS ATTRIBUTABLE TO THE RESPONDENT AND THEY SHOULD

BE LIABLE FOR COMPENSATION.

68. Indirect expropriation requires compensation fulfilling the 3 criteria’s, i.e., degree of
interference with the property right [i], character of governmental measures [ii], and the
interference of measures with reasonable and investment-backed expectations[iii].

I. THAT THERE WAS A DEGREE OF INTERFERENCE WITH THE PROPERTY

RIGHT.

69. The interference has to be substantial in order to constitute expropriation, i.e. when it
deprives the foreign investor of fundamental rights of ownership, or when it interferes
with the investment for a significant period of time. 117 In Starret Housing Corp. v.
Iran,118 the tribunal held that, “It is recognized by international law that measures taken
by a State can interfere with property rights to such an extent that these rights are
rendered so useless that they must be deemed to have been expropriated, even though
the State does not purport to have expropriated them and the legal title to the property
formally remains with the original owner”.
ii. THAT THERE IS CHARACTER OF GOVERNMENTAL MEASURES.
70. It is observed by the court that any arbitrary regulation taken by the host country over
the investor’s investment would be considered as a wrongful act of the host state. 119 In
light of the facts,120 the State of Higa has vehemently disregarded the substantial
investments made by the Govt. of Tuna by not granting an extension for the SCOD in
view of the force majeure events which had hindered the construction process.
iii. THAT THE INTERFERENCE OF MEASURES WITH REASONABLE AND INVESTMENT-
BACKED EXPECTATIONS.

71. In Tecnicas Medioambientales Tecmed S.A case,121the tribunal attempted to determine

whether the Mexican government’s measures were “reasonable with respect to their
goals, the deprivation of economic rights and the legitimate expectations of who

117
OECD, supra note 106, at 3.
118
Starrett Housing Corpg. v. Iran, 16 IRAN-U.S. C.T.R., ¶ 122, (Aug. 14, 1987).
119
JESWALD W. SALACUSE, supra note 50, at 330.
120
Compromis ¶11.
121
TecnicasMedioambientalesTecmed S.A, v. The United Mexican States, ICSID Case No. ARB(AF/00/2),
Award, (May 29, 2003).
19
 MEMORIAL ON THE BEHALF OF APPLICANT

suffered such deprivation”. To evaluate if the actions attributable to the Respondent

violates the Agreement, such expectations should be considered legitimate and should be
evaluated in light of the Agreement and of international law.122
72. Therefore, the respondents must compensate for the losses which shall be adequate and
be at least equivalent to the fair market value. Valuation criteria shall include going
concern value, asset value including declared tax value of tangible property, and other
criteria, as appropriate, to determine fair market value.123
73. In the light of the facts, the financial investment of INR 12000cr. which was already
made by the Govt. of Tuna, should be compensated to them as the vehement request of
the distribution companies about the withdrawal of the PPAs will cause a huge
irreparable financial loss to the Govt. of Tuna. And this arbitrary conduct on the part of
the distribution companies is attributable to the State of Higa. The claimants have not
only been denied the right over their under-constructed power plant but also the effect of
this act was permanent and it was not done in accordance with the public policy; rather
the respondent have vehemently denied to take responsibility for their wrongful acts by
shifting the burden of their responsibility to the domestic laws, 124which it recognized to
have less expertise in adjudication over the energy law disputes.125

122
Id ¶50.
123
Model Text for the Indian Bilateral Investment Treaty, supra 78, art. 5.1.
124
Compromis, ¶13.
125
Compromis, ¶6.3.
20
 MEMORIAL ON THE BEHALF OF APPLICANT

PRAYER
In the light of the issues raised, arguments advanced and authorities cited, the Counsels for the
Applicant humbly prays before this Hon’ble International Court of Justice to kindly adjudge and
declare:

1. That the claim made by Applicant fall within the jurisdiction of ICJ.
2. That this Hon’ble Court cannot adjudicate the issues raised by the Respondents, even
when the Court has jurisdiction.
3. That the acts of respondent in violation to the principle of pacta sunt servanda.
4. That the state of Higa has breached it’ s international obligation by causing indirect
expropriation to the host state and should liable to pay for the loss, i.e., INR 12000cr.

And pass any other appropriate order as the tribunal may deem fit. And for this act of Kindness,
the Applicant as in duty bound, shall forever pray.

Most Respectfully Submitted

Sd/- Agents for Applicant

The Republic of Tuna

21