FDI INTERNATIONAL ARBITRATION MOOT, 2021 TEAM: CHARLESWORTH S

INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES

ICSID CASE NO. ARB(AF)/20/78

VEMMA HOLDINGS INC.

(CLAIMANT)

V.

THE FEDERAL REPUBLIC OF MEKAR

(RESPONDENT)

SKELETAL BRIEF FOR RESPONDENT

SKELETAL BRIEF FOR RESPONDENT TEAM: CHARLESWORTH S

ARGUMENTS

[ISSUE I]THE TRIBUNAL DOES NOT HAVE JURISDICTION OVER THE PRESENT DISPUTE
1. Tribunal does not have jurisdiction under Article 9, CEPTA.
1.1. CLAIMANT has not made a valid investment.1
1.1.1. CLAIMANT purchased Caeli Airways for non-commercial reasons such as promoting
tourism in Bonooru,2 and with the expectation of profit.3
1.1.2. CLAIMANT has not assumed any risk4 owing to its ownership structure and the benefits
it receives from Bonooru.5
1.2. CLAIMANT does not fulfil the rationae personae requirements for jurisdiction.
1.2.1. CEPTA does not contemplate State-State Arbitration.
1.2.2. State-owned ‘enterprises’ (SoE) like CLAIMANT are outside the CEPTA’s scope of
protection.
1.2.2.1. The ordinary meaning6 of ‘Enterprise of a Party’ results in an absurd and
unreasonable interpretation.7 Recourse to supplementary means of interpretation,8
like the 1994 Bonooru-Mekar BIT,9 is thus warranted.
1.2.2.2. The removal of the phrase ‘whether privately-owned or government-owned’10 from
the CEPTA indicates a clear intention of the parties to exclude SoEs.11
2. Tribunal does not have jurisdiction under the ICSID Additional Facility Rules (“AF Rules”).
2.1. State-State Arbitration is not provided for under the AF Rules.12
2.2. CLAIMANT’s conduct is attributable to Bonooru under the Broches Test.13
2.2.1. CLAIMANT is an agent of the State owing to the substantial degree of direction & control
exercised by Bonooru.14

1 Morocco v. Salini, ¶52 (ICSID).

2 Moot Case, pg. 32.
3 Moot Case, pg. 73; Andrew Rozanov, Dealing with Sovereign Wealth Funds.
4 Id.
5 Seo Jin Hae v. Republic of Korea, ¶130-132 (ICSID).
6 Article 31, VCLT.
7 Mark Villiger, VCLT Commentary, pg. 447.
8 Article 32, VCLT.
9 ILC Report 1966, YBILC II 223, ¶20.
10 Moot Case, ln. 2407.
11 Moot Case, pg. 87.
12 Article 2, ICSID AF Rules.
13 Aron Broches, Selected Essays, (Martinus Nijhoff), pg. 202.

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2.2.2. CLAIMANT exercised governmental functions in purchasing and operating Caeli Airways.15

14 Maffezini v. Spain, Jurisdiction, ¶83-87 (ICSID).

15 Flemingo Duty Free v. Poland, ¶436 (UNCITRAL).

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[ISSUE II] AMICUS SUBMISSIONS BY THE EXTERNAL ADVISORS TO CPUR MUST BE

ALLOWED & BY CBFI MUST BE REJECTED
1. Fulfillment of Requirements under Article 9.19, CEPTA & Article 41, AF Rules.
1.1. The Submissions should assist the tribunal by bringing a different perspective or insight
than that of the parties.16
1.1.1. The ‘External Advisors’ are uniquely qualified, through their involvement in Caeli’s
privatization, to provide new information the tribunal cannot otherwise access.17
1.1.2. CBFI’s submissions are duplicative of the parties’18 and only address the ‘broader
context’. 19
1.2. The Submissions should address a matter within the scope of the dispute.20
1.2.1. The External Advisors’ submissions address the existence of a valid investment, which
is at issue. Alternatively, applicants are permitted to present new jurisdictional issues.21
1.2.2. CBFI’s submissions do not address matters within the scope of the dispute.
1.3. The applicant must have a ‘significant interest’ in the dispute.22
1.3.1. The External Advisors have a significant interest since corruption and its impact on
standing under ISDS has direct implications for their professional activities.23
1.3.2. CBFI does not have a significant interest in the proceedings beyond a mere ‘general’
interest in upholding international norms.24
1.4. The applicant must be independent from the disputing parties.25
1.4.1. The External Advisors fulfil this requirement since they are independent advisors and
not regular employees of either CLAIMANT or RESPONDENT.26
1.4.2. Owing to strong links27 between CBFI and CLAIMANT and conflict of interest28
resulting from the participation of Lapras Legal Capital, CBFI is not independent.

16 Supra 12, Article 41 (3)(a).

17 Infinito Gold v. Costa Rica, PO 2, ¶31-33 (ICSID).
18 Apotex v. USA, (BNM), ¶26 (ICSID); Gary Born, Amicus Participation, ICSID Review vol 34.
19 Bear Creek Mining v. Peru, PO 6, ¶38 (ICSID).
20 Supra 12, Article 41 (3)(b).
21 Micula v. Romania, (ICSID); Charanne Investments v. Spain, ¶56 (SCC).
22 Supra 12, Article 41 (3)(c).
23 Electrabel v. Hungary, ¶29 (ICSID).
24 Apotex v. USA, Appleton, ¶38 (ICSID); Resolute Forest v. Canada, ¶4.6 (PCA).
25 Border Timbers v. Zimbabwe, PO 2, ¶49 (ICSID)
26 Id. ¶56.
27 Philip Morris v. Uruguay, ¶55 (ICSID).
28 Supra 26.

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1.5. The Submissions must not disrupt the proceedings or unfairly prejudice either party.29
1.5.1. The External Advisors’ submissions grant the PARTIES sufficient time to respond and
the financial cost of the same can be mitigated through a ‘cost order’ by the tribunal.30
1.5.2. CBFI’s submissions are disruptive because their likely utility is minimal and responding
to them will entail unnecessary expenditure of time and money.31 Additionally, its
hostile statements unfairly prejudice RESPONDENT.32
2. Fulfillment of Requirements under the UNCITRAL ‘Rules on Transparency’ in treaty-based
Investor-State Arbitration.
2.1. Additionally, the submission must involve a ‘matter of public interest’.33
2.1.1. The External Advisors’ submissions are crucial for the furtherance of the public
interest34 in ensuring that corruption is dealt with effectively in ISDS.35
2.1.2. CBFI’s submissions do not further any public interest and are based on a narrow
business interest.36

29 Supra 12, Article 41 (3).

30 Philip Morris, PO 3, ¶31; Masdar Solar v. Spain, Award, ¶16 (ICSID).
31 Resolute Forest, supra 24, ¶4.5.
32 RFP v. Canada, PO 6 (ICSID).
33 Article 1 (4) (a), UNCITRAL Transparency Rules.
34 Id.
35 Supra 17.
36 Supra 24, ¶43.

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[ISSUE III] RESPONDENT DID NOT VIOLATE THE MINIMUM STANDARD OF TREATMENT
UNDER ARTICLE 9.9 OF CEPTA

1. CLAIMANT has not suffered a denial of justice with respect to its investment.37
1.1. RESPONDENT did not meet the standard required to establish delay in judicial proceedings
under denial of justice.38
1.1.1. The Mekari Courts were overburdened with cases and took about 27 months on
average to settle commercial matters.39
1.2. The Mekari Courts did not administer justice in a seriously inadequate way as enforcing the
Sinnoh Arbitral Award does not violate Article V of the New York Convention.40
1.3. No clear and malicious misapplication of law was done while enforcing the Sinnoh Arbitral
Award.
2. There was no fundamental breach of due process with respect to CLAIMANT’s investment.41
2.1. RESPONDENT adhered to the standards of procedural propriety.42
2.2. RESPONDENT has acted in a transparent manner.
2.2.1. Sufficient reasons were provided while conducting the CCM investigations and
enforcing the Sinnoh Arbitral Award.43
2.2.2. RESPONDENT acted in a comprehensible and predictable manner.44
3. RESPONDENT did not treat CLAIMANT arbitrarily with respect to its investment.45
3.1. The CCM investigations occurred in light of CLAIMANT’S anti-competitive behaviour and
thus served a legitimate purpose.46
3.2. The CCM investigations and enforcement of the Sinnoh Award were based on legal
standards and not on discretion, prejudice, or personal preference.47
3.3. The CCM Investigations weren’t conducted for reasons different from those put forward by
RESPONDENT.48

37 Azinian v. Mexico, ¶102-103 (ICSID AF).

38 Krederi v. Ukraine, ¶457 (ICSID).
39 Moot Case, pg. 30.
40 Supra 37.
41 Waste Management v Mexico, ¶98 (ICSID AF).
42 Metaclad Corp v. Mexico (ICSID AF).
43 Tecmed v. Mexico, ¶124 (ICSID AF).
44 Id. ¶160.
45 USA v. Italy, ¶128 (ICJ).
46 Christoph Schreuer, Protection Against Arbitrary and Discriminatory Measures.
47 Id.
48 Id.

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3.4. RESPONDENT never took any measure against CLAIMANT that was in willful disregard of
due process and proper procedure.49
4. RESPONDENT did not discriminate against CLAIMANT with respect to its investment.50
4.1. There was no basis of comparison between CLAIMANT and other airlines in light of unlike
circumstances.51
5. RESPONDENT did not engage in abusive treatment of CLAIMANT.
5.1. CCM investigations came within the ambit of ‘authorized conduct’, which includes bona
fide police powers of the state.52
5.1.1. The police powers doctrine provides the State with an inherent right to regulate in public
interest by acting in a bona fide, non-discriminatory and proportionate manner in
accordance with due process. 53
6. RESPONDENT did not frustrate CLAIMANT’s legitimate expectation.54
6.1. For legitimate expectations to arise, the representation made to the investor must be
specific and unambiguous.55
6.2. CLAIMANT’s legitimate expectations need to be balanced with the RESPONDENT’S sovereign
right to regulate domestic matters in public interest.56

49 Id.
50 South American Silver v Bolivia, ¶710 (UNCITRAL).
51 Id.
52 Supra 27, ¶292-294.
53 James Crawford, Brownlie’s Principles of Public International Law, pg. 624.
54 Thunderbird v. Mexico, ¶142 (ICSID).
55 Siemens AG v. Argentina (ICSID).
56 EDF v. Romania, ¶219 (ICSID).

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[ISSUE IV] IN ANY EVENT, IF THIS TRIBUNAL FINDS THAT RESPONDENT VIOLATED ARTICLE
9.9 CEPTA, CLAIMANT’S COMPENSATION MUST BE CALCULATED BY THE ‘MARKET VALUE’
STANDARD

1. The damage caused to CLAIMANT’s investments arose out of its unreasonably aggressive market
strategies and not RESPONDENT’s actions.57
2. As specified by Article 9.21 CEPTA, if monetary damages are awarded, they must be according
to the market value.58
2.1. Violation of Article 9.12 is outside the scope of the present matter.59
3. Article 9.11 of CEPTA i.e. Compensation for Losses is not applicable in the present matter.
3.1. CLAIMANT’s investment did not suffer losses due to armed conflict or civil strife.60
3.2. CLAIMANT’s investment did not suffer losses due to a state of emergency.61
3.3. CLAIMANT’s investment did not suffer losses due to a natural disaster.62
4. Article 9.7 (MFN) cannot be invoked as no substantial issue other than the violation of Article
9.9 can be raised before this Tribunal.63
5. Alternatively, paragraph 2 to Article 9.7 (MFN) states that substantive obligations in other
international investment treaties do not in themselves constitute a “treatment” and cannot result
in a breach of MFN.64
6. The Discounted Cash Flow Model for calculating fair market value has been held as too speculative
due to heavy dependence on future investments and hence must not be applied.65

57 Pey Casado v. Chile (I), ¶217 (ICSID).

58 Moot Case, pg.82.
59 Moot Case, pg. 86.
60 ICRC Opinion Paper (2008).
61 Scott Sheeran, Reconceptualizing States of Emergency: Theory & Politics.
62 Burke-White, Investment Protection in Extraordinary Times: Interpretation of Non-Precluded Measures in

BITs.
63 Moot Case, pg. 86.
64 Moot Case, pg. 76.
65 AIG v. Kazakhstan, ¶12.1.4 (ICSID).