The Tribunal Lacks Jurisdiction Ratione Personae and Materiae .

The Tribunal lacks

jurisdiction ratione personae and materiae (a) because Claimants are shell companies, (b)

because Claimants are owned and controlled by Menalcorp Melein, and (c) because

Claimants are mere nominees who do not own or control the claimant shares that are the

subject of these proceedings.

The Menal corp have publicly conceded in uncontested facts that they effectively own and

control Claimants’ nominal investment in Menal corp tranma1.

It is nonetheless clear that one of the principal purposes of the complex legal structure

adopted at the Mneal corp’ behest was to render opaque, but preserve, the Menal corp’

continuing de facto ownership and control of the claimant shares. In furtherance of this goal,

the Menal corp interposed into the chain of nominal ownership and control legal entities and

individuals who appeared to receive limited indicia of ownership and/or control, but who in

fact acquired no genuine ownership interest in any of the relevant assets, nor any powers that

would diminish the Menal corp’ continued effective control in fact over those shares.

The object and purpose of the Treaty is to promote and protect foreign investments and

foreign investors. The Treaty was never intended to protect Menal corp investors investing in

Nambia, and does not provide a remedy for host State nationals. Under rules and principles

of international law, a shell company dominated and controlled by host State nationals has no

right to bring a claim against the host State.

The respondent follows the holding of the Partial Award in Saluka Investments BV (The

Netherlands) v. The Czech Republic, of 17 March 2006 2. That tribunal, of which the late Sir

Arthur Watts was the distinguished chairman, held:

1
Uncontested facts para 25
2
Saluka Investments BV (The Netherlands) v. The Czech Republic, of 17 March 2006
.The Tribunal has some sympathy for the argument that a company which has no real

connection with a State party to a BIT, and which is in reality a mere shell company

controlled by another company which is not constituted under the laws of that State, should

not be entitled to invoke the provisions of that treaty. Such a possibility lends itself to abuses

of the arbitral procedure, and to practices of ‘treaty-shopping’ which can share many of the

disadvantages of the widely criticized practice of ‘forum shopping’.

“What Claimant and its parent company did in the present case, however, is not prospective

nationality planning but a retrospective gaming of the system to gain jurisdiction for an

existing dispute based on existing facts over which there would not otherwise be jurisdiction.

This is an abuse of the international arbitration system and process.”(pac rim3)

The respondent contends that the Claimant‟s claims amount to an abuse of process for two

reasons, ―1. Menal corp last minute re-organization to take advantage of BIT benefits after

setting itself up is abusive in nature. 2. Claimnat attempt to take a dispute centered between it

and the affected communities to a forum where the communities have only limited

discretionary rights is abusive in nature (public interest argument - because this dispute is, in

fact, not a dispute between an investor and a host State but a dispute between an investor and

the local communities of which the State is only an intermediary.)

The respondent argues that this is a purely political dispute and therefore that the Parties

dispute is not a “legal dispute” under Article 25 of the IC- SID Convention, nor relates to a

investment dispute under BIT Article1.

3
pac rim
THE respondent agrues , based on the Claimant‟s own evidential materials 4, that one of the

principal purposes of the change in the Claimant’s nationality was the access thereby gained

to the protection of investment rights under BIT and its procedure for international arbitration

available against the Respondent.

Respondent argues that in the absence of a specific Treaty provision defining the quality of

ownership and control, the quality of ownership and control needs to be determined pursuant

to the applicable rules and principles of international law. In addition, under the rules of

treaty interpretation, Article1(9) of the Treaty itself needs to be interpreted in accordance

with general international law. On the basis of this premise, Respondent asserts that: General

international law ignores nominal or record ownership in favour of real or beneficial

ownership in order to determine the nationality of a claim5

Because Menal corp6 have admitted that they are the beneficial owners of Tranma and its

shares, argues Respondent, Claimant cannot be the true owner of the Nambia shares that

Claimant claims it owns.

Respondent further asserts that the nominal ownership by Claimant of the nambia shares does

not qualify as an Investment because no injection of foreign capital into the Nmabia took

place as a result of its acquisitions.

In respondent view, the claimant ’s lack of power to interfere in the management of menal

tranma (as it is only a wholly owned subsidiary )and the its veto powers lead to the

conclusion that they were meant to be unfettered, in order to allow the Menalcorp to retain

“control” of the nambia shares.

4
Uncontested facts para25,notice of arbitration para 6 , 7
5
PAC RIM PARA 104
6
Uncontested facts para 25
That the claimant can only exercise the voting rights(control argument ) attached to the

tranma shares in accordance with Mnealcorp’s directions.

Hence , a transfer of shares, bereft of all the rights normally attached to them, does not

transfer the beneficial interest.

In ADC Affiliate Limited and ADC & ADMC Management Limited v. The Republic of

Hungary7 there is no “genuine link” between the Claimants and Cyprus. They also reiterate

that it is a Canadian interest, rather than one of Cyprus, that stands behind this dispute

This important question of timing was also explained in the Phoenix award 8: ―International

investors can of course structure upstream their investments, which meet the requirement of

participating in the economy of the host State, in a manner that best fits their need for

international protection, in choosing freely the vehicle through which they perform their

investment. … But on the other side, an international investor cannot modify downstream the

protection granted to its investment by the host State, once the acts which the investor

considers are causing damages to its investment have already been committed.

That the claimant is a criminal enterprise as it has been constituted – bypassing the laws and

regulations , by warming the pockets of government representatives

7
ADC Affiliate Limited and ADC & ADMC Management Limited v. The Republic of
Hungary, ICSID Case No. ARB/03/16 
8
Phoenix v. Czech Republic, supra, note 5, §§ 94-95.