Case Tribunal Treaty Claim Facts related to Denial of Benefits or Denial Resolution

of Advantages
PAN AMERICAN 182. The Respondent then invokes Article I(2)
ENERGY LLC & of the BIT to show that PAE, as a company
BP established in Delaware, does not enjoy the
EXPLORATION On 23 May 2003, Pan American Energy LLC advantages of the BIT because it has “no
COMPANY V. THE and BP Argentina Exploration Company, both substantial business activities” in Argentina
ARGENTINE companies incorporated in the State of Delaware (ibid., §§ 118-120).
REPUBLIC of the United States of America (hereinafter
“First Claimants”), filed a Request for 221. With respect to Argentina’s invocation of
ICSID CASE NO. Arbitration, dated 22 May 2003, against the the “denial of benefits” clause in Article I(2)
ARB/03/13 Republic of Argentina (hereinafter of the BIT with respect to PAE – that entity, The denial of
“Government”, “Argentina” or “Respondent”) though being a US company, would not have benefits alleged
with the International Centre for Settlement of substantial business contacts with the United by the Argentine
BP AMERICA Investment Disputes (hereinafter “ICSID” or States and is controlled by nationals of a third Republic was
PRODUCTION ICSID BIT US - “Centre”). country –, the Claimants have convincingly rejected.
COMPANY, Argentina The First Claimants allege that Argentina, shown that, as a matter of fact, PAE is
PAN AMERICAN through its own actions and omissions and those controlled
SUR SRL, of certain of its agencies, has violated several of by BP America and BP Argentina, which
PAN AMERICAN its obligations under the Treaty Concerning the are both US companies and have both
FUEGUINA, SRL Reciprocal Encouragement and Protection of substantial business contacts in the United
AND PAN Investment between the Argentine Republic and States.
AMERICAN the United States of America of 14 November
CONTINENTAL 1991 (hereinafter the “BIT”), as well as 222. On the basis of the foregoing
SRL V. THE international law and Argentine law. considerations, the Tribunal also dismisses the
ARGENTINE Sixth Preliminary Objection.
REPUBLIC

ICSID CASE NO.

ARB/04/8
1. On July 26, 2001, the International Centre for
Settlement of Investment Disputes (ICSID or the
Centre) received from CMS Gas Transmission 129. The Republic of Argentina has also
 CMS GAS Company (CMS), an entity incorporated in the requested that CMS provide evidence, in
TRANSMISSION United States of America, a Request for connection with Article I(2) of the BIT, that it The denial of
COMPANY V. THE ICSID BIT US - Arbitration against the Republic of Argentina is not controlled by nationals of a third country benefits was
ARGENTINE Argentina (Argentina). The request concerns the alleged and that it has substantial business activities in rejected.
REPUBLIC suspension by Argentina of a tariff adjustment the United States. Upon review of the
formula for gas transportation applicable to an submissions of the parties, the Tribunal
ICSIC CASE NO. enterprise in which CMS has an investment. In concludes that CMS has provided such
ARB/01/8 its request, the Claimant invokes the provisions evidence and the record is abundantly clear
of the 1991 "Treaty between the United States of on this matter.
America and the Argentine Republic Concerning
the Reciprocal Encouragement and Protection of
Investment." (The Argentina-U.S. Bilateral
Investment Treaty or BIT).
According to Argentina, the Treaty requires a
direct relationship between the investor and the
investment. In the instant case, this direct
relationship does not exist because SNI and not
Siemens is the holder of the shares in SITS. It
follows that only SNI could raise claims in
relation to its investment and SNI is not party
to these proceedings.1 According to Argentina,
On May 23, 2002, the International Centre for this understanding is reaffirmed by “the
SIEMENS AG V. Settlement of Investment Disputes (hereinafter application of a criterion so strong as the The denial of
THE ARGENTINE BIT “ICSID” or “the Centre”) received from Siemens effective seat when assigning nationality to benefits alleged
REPUBLIC ICSIC Argentina - A.G. (hereinafter “Siemens” or “the Claimant”) a legal persons.”2 by Argentina
Chile request for arbitration against the Argentine (based on Art. 4
ICSID CASE NO. Republic (hereinafter “the Respondent” or Siemens refutes the notion that such a direct –nationality of
ARB/02/8 “Argentina”). On June 7, 2002, the Centre relationship is required by the Treaty. the companies- of
acknowledged receipt of the request in There is no reference in the Treaty to a direct the BIT) was
accordance with Rule 5 of the ICSID Rules of relationship between the investor and the rejected.
Procedure for the Institution of Conciliation and investment as a requirement to entitle it to
1
Memorial on Jurisdiction, paras. 294-295.
2
Ibid. para. 293
 Arbitration Proceedings (hereinafter the
“Institution Rules”) and informed the Claimant
that it would not take further action until it has
received the prescribed lodging fee as provided
by Institution Rule 5(1)(b). On June 13, 2002,
the Centre acknowledged receipt of the
prescribed lodging fee by the Claimant and
transmitted a copy of the request to Argentina
and to the Argentine Embassy in Washington,
D.C. in accordance with Institution Rule 5(2).
3
Rejoinder on Jurisdiction, para.186.
protection The Contracting Parties in adopting
this approach “did not intend to require direct
ownership of the assets covered by the
definition; this conclusion is supported by the
absence of any exclusion expressly set forth in
the Treaty in order to limit the typical broad
reference involved in the asset-based
definition.”3
136. The arguments of the Respondent
against protection of indirect investments
are based on the extraordinary nature of
such protection requiring specific coverage
in the Treaty, on the fact that there is such
specific reference only in Article 4 and on
the criterion defining the nationality of a
company by its seat. The arguments on
indirect investments revolve around two
different meanings of indirect: indirect
meaning that the shareholder of the local
company controls it through another
company, and indirect meaning that a
shareholder may claim damage suffered by
a company in which it holds shares. These
two distinct situations appear intertwined
in the parties’ arguments. The Tribunal
will consider first the arguments related to
indirect investment understood as an
investment by an investor through
interposed companies.
143. The Tribunal considers further that

1.1 The Claimant, a U.S. corporate vehicle
wholly-owned by a U.S. national, Eugene J.
Laka, seeks damages, at one time quantified in
excess of USD 9.4 billion, for the spoliation of
its alleged investment in commercial property in
Kyiv.
GENERATION 1.2 The Claimant contends that it was strongly
UKRAINE INC. V. ICSID BIT US - encouraged by the Government in late 1992 to
UKRAINE Ukraine invest in Ukraine; that it established a local
investment vehicle in February 1993 (called
ICSID CASE NO. Heneratsiya Ltd.); and that, after it duly
ARB/00/09 identified and achieved approval of a specific
project, local authorities obstructed and
interfered with the realisation of that project over
the course of the ensuing six years in a manner
which was tantamount to expropriation and
therefore proscribed under the Ukraine-U.S.
Bilateral Investment Treaty. It asserts that it is
the Respondent has failed to establish that
the effective seat criterion for determining
nationality of a company limits the
possibility of advancing indirect claims
under the Treaty. In the opinion of the
Tribunal, the two matters are unrelated. If
indirect claims are permitted, those
would be permitted irrespective of the
criterion chosen in the Treaty to
determine the nationality of investors.
144. For the above reasons, the Tribunal
considers that Siemens has ius standi in
these proceedings as an investor in SITS
through SNI.
Ukraine can deny the Claimant the advantages
of Article I (2) of the BIT if it can be shown The denial of
that either there is third country control over benefits alleged
the Claimant or no substantial business by Ukraine was
activities of the Claimant in the United States. rejected.
In the present case the Claimant “has failed to
provide sufficient evidence with regard to third
country control and substantial business
activities”.
15.9 Even if the Tribunal accepts these facts,
the Respondent is still a long way from
displacing the clear manifestation of control by
a U.S. national (Mr Laka), who owns 100% of
the share capital of the Claimant, Generation
Ukraine. This admissibility objection is
 therefore entitled to remedies in ICSID
arbitration.
1.3 Ukraine denies that its conduct toward the
Claimant was violative of the Bilateral
Investment Treaty and argues that, at any rate,
the Claimant has proven no damages. Even
without considering those issues, however,
Ukraine contends that the case must be dismissed
for lack of jurisdiction.
Petrobart Limited (hereinafter called “Petrobart”)
PETROBART LTD Arbitration is a company registered in Gibraltar.
V. THE KYRGYZ Institute of Energy On 23 February 1998, Petrobart as Supplier and
REPUBLIC the Charter the state joint stock company
Stockholm Treaty (ECT) Kyrgyzgazmunaizat (hereinafter called “KGM”)
CASE NO. Chamber of as Purchaser concluded Goods Supply Contract
126/2003 Commerce No. 1/98-PB (hereinafter called “the Contract”)
On 12 January 1998, the Kyrgyz Government
promulgated Decree No. 28 on Measures for
Improving the Supply of Natural Gas to
Consumers of the Kyrgyz Republic and
Stabilising the Activity of the State Joint Stock
Company Kyrgyzgazmunaizat, in which it was
noted that the situation regarding the supply of
natural gas to consumers remained difficult and
that KGM’s losses amounted to more than 1
million Soms per day. The Decree provided,
inter alia, that the Ministry of Finance should
therefore dismissed and hence it is
unnecessary to consider whether or not the
Claimant conducts or conducted substantial
business activities on the territory of the
U.S.
The Republic argues that Petrobart conducts
business via two persons, Mr. Josif Todorovski
and Mr. Ratko Zatazelo, who, as the Republic
understands, are probably citizens of Serbia
and Montenegro and not residents of Gibraltar
and who do not conduct business activities in
or from Gibraltar. Petrobart objects that the The denial of
Kyrgyz Republic, when raising this point, is benefits alleged
again not acting in accordance with the parties’ by The Kyrgyz
agreement from October 2004 that the parties, Republic was
in the further proceedings, should limit rejected.
themselves to answering the specific questions
asked by the Arbitral Tribunal. Petrobart also
suggests that the argument should be rejected
as having been raised too late. The Kyrgyz
Republic responds that the point was raised in
its reply to one of the questions asked by the
Arbitral Tribunal.
Petrobart provides the following information
about its status and activities. Petrobart is
managed by Pemed Ltd, a company registered
in England with its principal office in London,
which is handling many of Petrobart’s strategic
and administrative matters.
find funds amounting to 50 million Soms to pay
for the natural gas supply during the winter
heating season of
1997-1998 and that this amount should be repaid
by KGM within a year.
On 21 January 1998, Petrobart, in order to be
able to fulfil its obligations under the Contract,
concluded a contract with the Uzbek company
GAO Uzneftegazdobicha.
According to this contract, Petrobart would buy
from Uzneftegazdobicha 120,000 metric
tons of gas condensate from February to
December 1998 with the possibility to increase
the quantity. The price would be USD 95 per
metric ton, and the total value of the contract was
indicated as being USD 11,400,000.
Petrobart therefore has substantial business
activities in the Area of a Contracting Party,
i.e. the United Kingdom, in the meaning of
Article 17 of the Treaty. As regards the two
individual employees mentioned by the
Kyrgyz Republic, Mr. Todorovski is a national
of both the United Kingdom and Macedonia,
whereas Mr. Zatazelo is a Serbian national
who is permanently resident in France.
The Arbitral Tribunal refers to its reasoning
above under 2 as regards Petrobart’s objections
that the Kyrgyz Republic did not act in
conformity with the parties’ agreement and
that it also raised its arguments regarding the
applicability of the Treaty too late. For the
same reasons as under 2, the Arbitral Tribunal
is not prepared to reject the Republic’s
arguments on formal grounds but will proceed
to an examination of the merits.
The Arbitral Tribunal attaches weight to the
information about Petrobart provided by
Petrobart itself which, in the Arbitral’s
Tribunal’s view, contradicts the view that
Petrobart is a company owned or controlled
by citizens or nationals of a state other than
the United Kingdom and that Petrobart has
no substantial business in the United
Kingdom. The Arbitral Tribunal therefore
considers that the conditions for application
of Article 17(1) of the Treaty are not present
in this case.
§59.- The Respondent submits that the claims
brought by the Claimant are inadmissible by The denial of
 §25.- The Claimant has commenced this operation of Article 17(1) of the ЕСТ and benefits alleged
arbitration pursuant to Article 26 ЕСТ alleging alleges that Article 17(1) ЕСТ requires the by Ukraine was
LIMITED Arbitration Energy that the Respondent has breached various termination of this arbitration. rejected.
LIABILITY Institute of Charter provisions of the ЕСТ.
COMPANY the Treaty (ECT) The Claimant refers in particular to Articles (і) Arbitrabilitv and Article 17Ш:
AMTO V. Stockholm 10(1), 10(12), and 22(1), and seeks §60.- The Respondent's first submission is that
UKRAINE Chamber of compensation and other relief. The Respondent the State's 'right' to deny advantages under
Commerce asserts that the Arbitral Tribunal does not have Article 17 is not subject to arbitration, so that
CASE NO. jurisdiction over this dispute, and denies any the State is the sole and exclusive judge of
080/2005 violation of the ЕСТ. whether the Investor has the characteristics
The Respondent also denies the Claimant's described in Article 17(1). This submission has
claims for compensation, and asserts a a terminological basis, as Article 26(1) entitles
counterclaim based on the unfounded allegations an Investor to submit to arbitration an alleged
of the Claimant in this arbitration. The Claimant dispute relating to the State's 'obligations', and
asserts that the Tribunal has no jurisdiction under Article 17 refers not to a State's obligations but
Article 26 ЕСТ over the counterclaim, and in any a 'right' to deny advantages. Therefore, the
event the counterclaim is unfounded. Arbitral tribunal has no jurisdiction rationae
materiae.
A dispute regarding an obligation includes a
dispute relating to the existence of an
obligation. Indeed, this is the essence of the
competence/competence principle in
international arbitration. The State might assert
'rights', 'powers,' 'privileges' or 'immunities' to
deny, annul or evade an obligation, but the
legal description of the objection does not
detach it from the Claimant's assertion of the
existence and breach of an obligation. The
Respondent's exercise of its 'right' to deny
advantages is an aspect of the dispute
submitted to arbitration by the Claimant, and
within the jurisdiction of this Arbitral Tribunal.
Accordingly, the Respondent's submission

The Claimant, Tokios Tokelės, alleges that
governmental authorities in Ukraine engaged in a
series of actions with respect to Taki spravy that
TOKIOS TOKELĖS breach the obligations of the bilateral investment
V. UKRAINE BIT Ukraine treaty between Ukraine and Lithuania (“Ukraine-
ICSID – Lithuania Lithuania BIT” or “Treaty”).
ICSID CASE NO. The Claimant contends that, beginning in
ARB/02/18 February 2002, the Respondent engaged in a
series of unreasonable and unjustified actions
against Taki spravy that adversely affected the
Claimant’s investment. The Claimant alleges that
governmental The Claimant, Tokios Tokelės,
alleges that governmental authorities in Ukraine
engaged in a series of actions with respect to
Taki spravy that breach the obligations of the
bilateral investment treaty between Ukraine and
Lithuania (“Ukraine-Lithuania BIT” or
“Treaty”).
The Claimant contends that, beginning in
February 2002, the Respondent engaged in a
series of unreasonable and unjustified actions
against Taki spravy that adversely affected the
Claimant’s investment. The Claimant alleges that
governmental authorities took these actions in
response to the Claimant’s publication in January
2002 of a book that favorably portrays a leading
4
See, e.g., Compañia de Aguas del Aconquija S.A. and Vivendi Universal (formerly Compagnie Générale des Eaux) v. Argentine Republic, Decision on Annulment, Case
No. ARB/97/3 (July 3, 2002). “In the Committee’s view, the Tribunal, faced with such a claim and having validly held that it had jurisdiction, was obliged to consider and to
decide it.” Id. at para. 112. “[T]he Committee concludes that the Tribunal exceeded its powers in the sense of Article 52(1)(b), in that the Tribunal, having jurisdiction over
the Tucumán claims, failed to decide those claims.” Id. at para. 115.
that the Tribunal has no jurisdiction over its
exercise of its 'right' to deny advantages
pursuant to Article 17 ЕСТ is rejected.
These investment agreements confirm that
state parties are capable of excluding from the The denial of
scope of the agreement entities of the other benefits is not
party that are controlled by nationals of third included in the
countries or by nationals of the host country. Ukraine-
The Ukraine-Lithuania BIT, by contrast, Lithuania BIT,
includes no such “denial of benefits” provision reason why the
with respect to entities controlled by third- Tribunal cannot
country nationals or by nationals of the include such
denying party. We regard the absence of such provision as it
a provision as a deliberate choice of the has not been
Contracting Parties. In our view, it is not for included into the
tribunals to impose limits on the scope of BITs BIT by the
not found in the text, much less limits nowhere Parties.
evident from the negotiating history. An
international tribunal of defined jurisdiction
should not reach out to exercise a jurisdiction
beyond the borders of the definition. But
equally an international tribunal should
exercise, and indeed is bound to exercise, the
measure of jurisdiction with which it is
endowed.4
 Ukrainian opposition politician, Yulia
Tymoshenko.
87. Respondent's contention, essentially, is that
Claimant has failed to prove that it is a legal
entity owned or controlled by citizens or
nationals of a Contracting Party to the ECT
PLAMA Energy By letter of 24 December 2002, Plama within the meaning of Article 17(1) of the ECT The denial of
CONSORTIUM Charter Consortium Limited ("Plama" or "the and, therefore, is not entitled to the benefits of benefits alleged
LIMITED V. THE ICSID Treaty (ECT) Claimant"), a Cypriot company, filed a request Part III of the ECT. The evidence, Respondent by Bulgaria was
REPUBLIC OF - for arbitration with the International says, shows that PCL was and is owned by rejected.
BULGARIA BIT Cyprus - Centre for Settlement of Investment Disputes EMU, which is not a national of an ECT
Bulgaria ("ICSID" or "the Centre") against the Republic Contracting Party. According to Respondent,
ICSID CASE NO. of Bulgaria ("Bulgaria" or "the Respondent"). Claimant has failed to prove with credible
ARB/03/24 The request invoked the ICSID arbitration evidence that Mr. Vautrin ultimately owns or
provisions of the Energy Charter Treaty ("ECT") controls EMU. Therefore, pursuant to Article
and the most favored nation ("MFN") provision 17(1), its claims are inadmissible.
of a bilateral investment treaty ("BIT") entered
into in 1987 between the Government of the 88. Claimant rejects Respondent's argument
Republic of Cyprus and the Government of that it is not entitled to the benefits of Part III
the People’s Republic of Bulgaria, the because of Article 17(1), stating that Mr.
Agreement on Mutual Encouragement and Vautrin is a national of France, a Contracting
Protection of Investments ("the BIT"), which Party to the ECT, and owns and controls the
would import into the BIT the ICSID arbitration company, EMU, which in tum controls PHL,
provisions of other BITs entered into by which controls Claimant.
Bulgaria. 89. In its Decision on Jurisdiction, the Arbitral
Tribunal decided that Article 17(1)
of the ECT has no relevance to the Tribunal's
jurisdiction to determine Claimant's claims
against Respondent under Part III of the Treaty
(para. 21 supra). It confirms this decision. The
Tribunal will, therefore, examine Respondent's
arguments concerning the ownership and
control of PCL in order to determine whether

1. On 27 September 2000, the Acting Secretary-
General of ICSID registered a notice for the
institution of arbitration proceedings, lodged by
Waste Management Inc. (“Claimant”) under the
WASTE ICSID Arbitration Additional Facility Rules
MANAGEMENT ICSID NAFTA (“the Rules”) against the United Mexican States
INC. V. THE (“Respondent”). The Claimant alleged that the
UNITED Respondent is liable under Articles 1110 and
MEXICAN STATES 1105 of NAFTA for the actions of various state
organs concerning the Claimant’s investment in
ICSID CASE NO. an enterprise to provide waste management
ARB(AF)/00/03 services to the City of Acapulco in the State of
Guerrero.
5
NAFTA, Article 1113(2).
they justify a denial of the benefits of Part III
to Claimant. As already indicated, the burden
of proof to establish ownership and control is
on Claimant.
95. In these circumstances, the Arbitral
Tribunal decides that Mr. Vautrin owns and
controls PCL. Since Mr. Vautrin is a French
national (Exh. 1 to Mr. Vautrin's First
Declaration, 25 March 2004), and France is a
Contracting Party to the ECT, Respondent
cannot rely on Article 17(1) of the ECT to
deny to PCL the benefits of Part III of the
Treaty.
80. Chapter 11 of NAFTA spells out in detail
and with evident care the conditions for
commencing arbitrations under its provisions.
In particular it distinguishes between claims
brought by an investor of another Party in its
own right and claims brought by an investor on
behalf of a local enterprise. The relevant
provisions cover the full range of possibilities,
including direct and indirect control and
ownership. They deal with possible “protection
shopping”, i.e. with situations where the The denial of
substantial control or ownership of an benefits alleged
enterprise of a Party lies with an investor of a by the United
non-party and the enterprise “has no Mexican States
substantial business activities in the territory of was rejected.
the Party under whose law it is constituted or
organized”.5 In other words NAFTA addresses
situations where the investor is simply an
intermediary for interests substantially foreign,
and it allows NAFTA protections to be
withdrawn in such cases (subject to prior
notification and consultation).
There is no hint of any concern that
investments are held through companies or
enterprises of non-NAFTA States, if the
beneficial ownership at relevant times is with a
NAFTA investor.

85. Where a treaty spells out in detail and with

precision the requirements for maintaining a
claim, there is no room for implying into the
treaty additional requirements, whether based
on alleged requirements of general
international law in the field of diplomatic
protection or otherwise. If the NAFTA Parties
had wished to limit their obligations of conduct
to enterprises or investments having the
nationality of one of the other Parties they
could have done so. Similarly they could have
restricted claims of loss or damage by
reference to the nationality of the corporation
which itself suffered direct injury. No such
restrictions appear in the text. It is not disputed
that at the time the actions said to amount to a
breach of NAFTA occurred, Acaverde was an
enterprise owned or controlled indirectly by
the Claimant, an investor of the United
States. The nationality of any intermediate
holding companies is irrelevant to the
present claim. Thus the first of the
Respondent’s arguments must be rejected.
 4.7. In summary, the Respondent contends that
the Claimant has never had “substantial
business activities” in the USA (as a CAFTA
Party) and that it is and has been owned and
controlled always by persons of a non-CAFTA
Party. Whereas the Respondent submits that
the ownership/control part of this test under
As asserted by the Claimant (but denied by the CAFTA Article 10.12.2 is disjunctive, El Salvador’s
Dominican Respondent), the claims pleaded by the Claimant requiring either ownership or control by request for
PAC RIC Republic – (with the Enterprises) allege: (i) the “persons of a nonParty”, the Respondent application of the
CAYMAN LLC V. ICSID Central Respondent‟s arbitrary and discriminatory asserts in this case that the Claimant is both denial of benefits
THE REPUBLIC America conduct, lack of transparency, unfair and owned and controlled by Pacific Rim, a was accepted,
OF EL SALVADOR United States inequitable treatment in failing to act upon the Canadian company and a legal person of a since Claimant as
Free Trade Enterprises' applications for a mining non-CAFTA Party, which has at all relevant an investor and
CASE NO. Agreement exploitation concession and environmental times wholly owned the Claimant. The investments in El
ARB/09/12 (CAFTA) Respondent contends that these facts, Salvador can
permits following the Claimant‟s discovery of
and the effectively admitted by the Claimant during receive no
Investment valuable deposits of gold and silver under these arbitration proceedings, suffice to justify benefits of
Law of El exploration licenses granted by MINEC for the CAFTA. CAFTA
the Respondent‟s denial of benefits under
Salvador Respondent; (ii) the Respondent's failure to may not apply.
protect the Claimant's investments in accordance CAFTA Article 10.12.2, validly made in a
with the provisions of its own law and (iii) the timely manner on 3 August 2010.
Respondent‟s unlawful expropriation of the
4.92. Decisions: Accordingly, for these several
investments of the Claimant (with the reasons above, the Tribunal decides that as
Enterprises) in El Salvador. from 3 August 2010 the Respondent has
established under CAFTA to the required
standard and burden of proof, as a matter
of fact and international law, that the
Claimant as an investor and its investments
in El Salvador can receive no benefits from
Part 10 of CAFTA upon which the
Claimant‟s CAFTA claims necessarily
 depend; and accordingly that the Centre
(ICSID) and this Tribunal can have no
jurisdiction or other competence in respect of
any such CAFTA claims. This decision
regarding the Denial of Benefits issue,
however, does not affect the Claimant‟s other
Non-CAFTA claims, as next explained by the
Tribunal below, in Part 5 of this Decision.
CCL OIL V.
KAZAKHSTAN

EMELEC V-
ECUADOR