baxter memo.pdf

7/28/2019 Baxter memo.pdf

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Memorial for the Claimant

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CONTENTS

Table of Contents 2

List of Authorities 5

List of Abbreviations 9

Statement of Facts 10

Pleadings: 14

PART ONE: The Procedure

I.

PROFESSOR IRCAUNDAS PUBLISHED VIEWS SHOW A 15MANIFEST LACK OF INDEPENDENCE AND IMPARTIALITY.

A. The views advocated, and the strength of the language, in Professor Iracundas writingsillustrate the strength of commitment to her views and amount to a prejudgment of a pivotal

matter in the dispute.

1. The content of Professor Iracundas writings show a prejudgment of a pivotal matter in thedispute.

2. The vigour with which Professor Iracunda writes shows a manifest lack of impartiality.

B. Professor Iracundas writings highlight that she would face significant professionalembarrassment should she contradict herself in practice.

II. PROFESSOR IRACUNDAS MEMBERSHIP OF WILDERNESS 21

DEMONSTRATES A MANIFEST LACK OF INDEPENDENCE

AND IMPARTIALITY

A. Professor Iracunda has morally prejudged the matter and is not impartial, nor independent.

1. The IBA Guidelines substantiate an unacceptable connection to Wilderness.

2. The Suez factors demonstrably show a lack of impartiality and independence

III. THE TRIBUNALS FAILURE TO EXCLUDE DR RANAPUERS 23

EXPERT REPORT CONSTITUTED A SERIOUS DEPARTURE

FROM A FUNDAMENTAL RULE OF PROCEDURE.

A. The Belo Rano Rule requiring exclusion is a fundamental rule of procedure

1. As a general principle of law, Article 5(5) is an elementary cornerstone of procedure.

B. The Tribunals decision not to exclude was a serious departure in the circumstances.


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1. Dr Ranapuer had no valid reason for failing to attend the oral hearing, requiring the

Tribunal to exclude his report.

2. Additionally, there were no exceptional circumstances to negate the substance of Article

5(5)

i. The fact that there is a limited pool of experts does not constitute an exceptional

circumstance.

ii. Expediency in utilising Dr Ranapuers report should not take precedence over the

rights of the party.

PART TWO: The Merits

I. THE TRIBUNAL ERRED IN LAW IN INTERPRETING 27THE DEFINITION OF INVESTMENT, PURSUANT TO

ARTICLE 25(1)

A. Introduction

B. The preamble contained within the ICSID Convention is not representative of the

overarching intention

C. Alternatively, the contribution requirement should not be considered to be within the

definition of investment due to the difficulty of ascertaining it

2. THE TRIBUNAL MANIFESTLY EXCESSED THEIR 32

POWERS IN DECLINING JURISDICTION UNDER

THE SALINICRITERIA

A. The Tribunal was incorrect in not following the award set out in Malaysian Historical

Salvors (MHS), and therefore, ultimately, the Salini criteria should not have been applied

B. The Tribunal, in any event, erred in law due to the application of the Salini criteria,

pursuant to ICSID jurisprudence


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III. THE CONTRIBUTION REQUIREMENT CANNOT 38

BE INFERRED FROM THE AGREEMENT BETWEEN

THE PARTIES

A. In assessing the Bilateral Investment Treaty, the parties did not agree that the

investment must contribute to the economic development of Bela Rano Insularo

2. THE TRIBUNAL ERRED IN FACT AS EVEN IF THE 41

CONTRIBUTION PREREQUISITE IS HELD TO BE

ESSENTIAL, THE TRANSACTION MEETS THIS

STANDARD

A. Introduction

B. The Tribunal misinterpreted the threshold in which should be applied

C. The statement made by the spokeswoman, and the consequences which resulted, can

be used as evidence to suggest that Max Solutions contributed to Bela Rano Insularos

economic development

D. The fact that the frogs were removed by nature is merely subsidiary to the claim that

Max Solutions contributed to Bela Rano Insularos development

E. The assertion that Max Solutions did not compensate Bela Rano Insularo with revenue

from its ventures is not evidence that they did not contribute to the Islands economic

development

F. Conclusion

IV. PURSUANT TO ARTICLES 41(2) AND 52(4), THE AD HOC COMMITTEE HAS

THE POWER TO DECIDE WHETHER THE TRANSACTION IN QUESTION

QUALIFIES AS AN INVESTMENT 46

A. ON THE OUTSET, THE ANNULMENT COMMITTEE HAS THE POWER TO

DETERMINE AS TO WHETHER THE REMOVAL OF THE SIRENO KANTO

QUALIFIES AS AN INVESTMENT 46


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1. Introduction 46

2. The relevant articles within the ICSID Convention enable the annulment Committee to

decide that the transaction qualifies as an investment 46

3. The jurisdiction should go to the Centre, and not to the Tribunal. 47

Request for Relief 49

INDEX OF AUTHORITIES

Books

Born International Arbitration (2009)

D. Carreau, Droit international conomique (3e

edition, Dalloz, Paris, 2007)

P. Juillard

Gaillard Fouchard, Gaillard, Goldman on International Commercial Arbitration

Savag

Poudret Comparative Law of International Commercial Arbitration

Besson (2 ed, trans. Berti & Ponti, 2007)

Redfern International Arbitration

Hunter (5th edition. 2009)

Articles

JD Mortenson, The Meaning of Investment: Travaux and the Domain of International

Investment Law

51 Harvard International Law Journal (2010) at 311


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Compaa de Aguas del Aconquija SA and Vivendi Universal SA v Argentina,

Decision on Argentinas Request for Annulment of the Award, ICSID Case NoARB/97/3, 3rd August 2010

Conoco Phillips Company and Others v Venezuela, ICSID Case no ARB/07/30February 27 2012

ConocoPhillips Company and Others v Venezuela, Decision on the proposal to

disqualify L Yves Fortier, QC, Arbitrator, ICSID Case no ARB/07/30 February

27 2012

Continental Casualty Company v Argentina, Decision on Application for Partial

Annulment, ICSID Case No ARB/03/9, despatched 16th September 2011

Enron Corporation and Panderosa Assets, L.P. v The Argentine Republic, ICSIDCase No. ARB/01/3, Decision on Jurisdiction (Ancillary Claim), 2 August 2004,para.25.

Fraport AG Frankfurt Airport Services Worldwide v Philippines, Decision on the

Application for Annulment, ICSID Case No. Arb/03/25, 17 December 2010

GEA Group Aktiengesellschaft v. Ukraine, ICSID Case No. ARB/08/16

(Germany/Ukraine BIT), Award of 31 March 2011

InterAguas Servicios Integrales del Agua S.A. v. The Argentine Republic ICSID

Case No. ARB/03/17

Jan de Nul NV and Dredging International NV v Egypt, Decision on Jurisdiction,

ICSID Case No. ARB/04/13, 16 June 2006

Joseph Charles Lemire v Ukraine, Decision on jurisdiction and liability, ICSID

Case No. ARB/06/18, 14 January 2010.

L.E.S.I. S.p.A. et ASTALDI S.p.A. v. Algeria ICSID Case No. ARB/05/3, July 12

2006

Liberian Eastern Timber Corp (LETCO) v The Government of the Republic of

Liberia, ICSID Case No. ARB/83/2, Award, 31 March 1986,

Malaysian Historical Salvors Sdn Bhd v Malaysia, Decision on the Application

for Annulment, ICSID Case No ARB/05/10, 28th February 2009

Malicorp Ltd. v Egypt, Award, ICSID Case No. ARB/08/18, 31 January 2011,

para.109.

MCI Power Group LC and New Turbine Inc. v Ecuador, Award, ICSID Case No.

ARB/03/6, 26 July 2007


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IBA Guidelines on Conflicts of Interest in International Arbitration (22nd May

2004)

ICSID Convention

Vienna Convention

Belo Rano Insularo,Model Rules on the Taking of Evidence in International

Arbitration

LIST OF ABBREVIATIONS

Art. / Arts. Article / Articles

BIT Bilateral Investment Treaty

BRI Belo Rano Insularo

[The] Convention ICSID Convention

e.g. For example

ed. Edition

eds. Editors

et seq. Et sequens (and the following...)

GASP The Global Athletics Season Preview

i.e. That is...

ibid. Ibidem (as above)

ICJ International Court of Justice

ICSID International Centre for Settlement of Investment Disputes

ICSID Convention Convention on the Settlement of Investment Disputes between

states and Nationals of other States

IIA International Investment agreement

No. Number

p. Page

pp. Pages

para. Paragraph

s. Section

Sireno Kanto Sireno Kanto Frogs

v. Versus


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STATEMENT OF FACTS

Factual Background

1. In January 2002,1 Max Solutions, Inc. (hereinafter referred to as the Claimant) acompany from the nation of Oscania entered into an agreement with the Government of

Bela Rano Insularo (hereinafter referred to as the Respondent) to procure from the

Respondent State the majority of the population of the native, highly poisonous Sireno

Kanto frogs (Sireno Kanto). This was the exception of a small number to be confined

within a designated nature reserve.

2. On the basis of the aforementioned agreement, in late 2003 the Respondent Statesubmitted a successful bid to host the 2008 Global Athletics Season Preview (GASP) to

the GASP International Competition Council (the Council).23

3. The constituent contractual term was that the Respondent would pay the Claimant permonth on the basis of the quantity of frogs removed from the island. The only caveat

specified by the contract was that, at all times, the frogs must be treated humanely.

Under the terms of the agreement, neither party was obligated to commence performance

of any obligations until January 2006. All contractual aspects were agreed to be fulfilled

by December 2007.

4. On 26 January 2006, scientists at Bela Rano Insularo University (BRIU) announcedthat they had discovered conclusive evidence of a previously unknown disease among the

Sireno Kanto. Consequently, this disease was expected to impact 95% of the species

population fatally within five years.4

5. In February 2006, the Bela Rano Insularo (BRI) media began circulating storiesconcerning the Claimants operations on the island. As a corollary of those reports, the

company confirmed that, in addition to removing the frogs from the island, it was

identifying the remaining healthy Sireno Kanto and transporting them to a secure

holding location in a nearby country. Half of those frogs were then to be sold to a

pharmaceutical corporation for the purposes of medical research into allergy treatments.

1See clarification 21.


3Clarification 97: The Respondent was required by the Council to demonstrate that it provided an effective means

of eliminating the problems posed by the islands frog population however the Council did not specify a particular

method for such.



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10.All nominees had accepted their appointments by February 13 2007 and accordingly theICSID informed the parties that the Tribunal was deemed to be constituted and the

proceedings to have begun on that date.

11.On 1 March 2007, the Claimants filed a proposal to disqualify Dr. Irancunda pursuant toArticle 57 of the ICSID Convention (Convention), alleging a lack of impartiality and

independence. This was voiced in her academic writings Rethinking ICSID. ICSID

confirmed receipt of the proposal on the same day and declared that the proceedings were

suspended indefinitely. This was until a decision on the proposal was made in accordance

with Arbitration Rule 9 (6).

12.On 23 March 2007, the Respondent filed its submissions in response to thedisqualification proposal. On 7 April 2007, Dr. Iracunda issued a statement in relation tothe proposal to challenge her appointment averring that she would perform her role in a

fully impartial and independent manner. The Claimants proposal was subsequently

dismissed and Dr. Iracunda was confirmed by her co-arbitrators on the Tribunal.

13.The parties agreed that all proceedings of the arbitration would be governed by the BelaRano Model Rules on the Taking of Evidence in International Arbitration.

14.In May 2009, an initial hearing was held. This considered the Claimants objections tothe Tribunals jurisdiction. The Respondents had prior submitted an Expert Report from

Dr. Herbert Ranapauer, the lead scientist at the frog research unit at BRIU. This report

addressed the nature and expected consequences of the disease which afflicted the Sireno

Kanto.7

Dr. Ranapauer is one of only three scientists worldwide who have a detailed

knowledge of these matters. On the morning of the initial hearing, Dr. Ranapauer

informed the parties that he would no longer be attending as he had recently joined

Wilderness and believed that participating in the arbitration would be tantamount.

15.In response, the Claimant requested the report be rejected on the grounds that Dr.Ranapauer was no longer available for cross-examination. Accordingly, the Tribunal

requested that the Respondent attempt to secure the attendance of Dr. Ranapauer for asubsequent date. This request was subsequently refused by Dr. Ranapauer and thus no

further attempts were made by the Tribunal, or either party, to secure his participation.8

The Tribunal rejected the Claimants motion to exclude the report. The Tribunal did so

7 Clarification 108: The Respondent notified the Claimant of its intention to rely on such an opinion pursuant to

Article 5.1 of the BRI rules on taking of evidence.



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to legal opinions arising from previous ICSID arbitral awards. For instance, inter alia,

the judgment of the Annulment Committee in Malaysian Hisotircal Salvors, SDN, BHDv. Malaysia, explicitly states that by the terms of the Agreement...the contract is an

investment. 20 It continues;

The Committee is unable to see what support the Sole Arbitrator could have

mustered to sustain the conclusion that the Contract and its implementation did

not constitute an investment within the meaning of that Agreement. On the

contrary, (and subject to the consideration noted below in paragraph 81 of this

Decision), it is clear that the Contract and its performance by the Salvorconstitute an investment as that term is defined by the Agreement.21

Indeed, other instances, such as Abaclat and Others v Argentina show solely an analysis

of the BIT in question, and concludes that the term investment ...constitutes acontribution which qualifies as investment per se under Article 1(1) of the BIT.22

Thus, the pertinent aforementioned quotations show that ProfessorIracundas remarks

are manifestly partisan. They show she has prejudged the matter of defining aninvestment.

26.It is evident from the underlying rationale ofProfessor Iracundas writings that she isespousing a floodgates, and speculative argument.23 It is stated that the previous

dangerous interpretation of investment, which it is apparently necessary to steer clear

of, creates the potential for dozens of ICSID claims which would require impoverished

states to divert valuable resources to defend.24 She is markedly militating against wide

definitions, as a policy defence mechanism. Such contentions from Professor Iracundaclearly indicate that no matter the argument or how compelling evidence is, she will tend

against any wide definition. This is despite the fact that it is agreed in a BIT and it is

despite the fact that this should be, at least partially, what her arbitral award is foundedupon. Indeed, in the penultimate paragraph, reference is made, objectively to others,

within the arbitral system, becoming concerned of the overexpansive approaches toICSID jurisdiction.25 This is supposed issue is swiftly followed by an obvious cry for

What is needed [emphasis added], is to save developing countries from ICSID. These

two paragraphs present irrelevant considerations being considered. That is, matters other

than that of the sole merits, facts and circumstances of the case, as presented by the

20Malaysian Historical Salvors Sdn Bhd v Malaysia, Decision on the Application for Annulment, ICSID Case No

ARB/05/10, 28th February 2009, para 61.21 Malaysian Historical Salvors Sdn Bhd v Malaysia, Decision on the Application for Annulment, ICSID Case NoARB/05/10, 28th February 2009, para 61.22 Abaclat and ors v Argentina, Decision on Jurisdiction and Admissibility, ICSID Case No ARB/07/5, 4th August2011, para 371. See also, Abaclat and ors v Argentina, Decision on Jurisdiction and AdmissibilityDissenting

Opinion of Professor Georges Abi-Saab, ICSID Case No ARB/07/5, 4th August 2011, para. 65 et seq.23

The Record, p.6, lines 311- 323; p.7, lines 351-356.24 The Record, pp.6, lines 314- 317.25 The Record, pp.6-7, lines 351- 356.


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parties.26 This illustrates that Professor Iracunda, cannot be relied upon to give

independent judgement in the present instance. From a purely objective stance, shedemonstrably shows she lacks independent judgement.27

27.Professor Iracunda continues, from markedly stating her view on the interpretation ofinvestment, to note that there is ...no reason to accept... the purportedly dangerous

view that an investment may exist should it satisfy its associated definition in the

instrument giving rise to the dispute.28 Professor Iracunda continues to note most

pertinently, inter alia, that, for those disputes under the ICSID Convention, interpretation

of investment must be construed as to contribute to the economic development of the

Host State.29 This view is shown to be partial in light of previous awards rendered by

ICSID Tribunals.30

The instance of Malaysian Historical Salvors, Professor Shahabudeen

makes reference to the distinct approaches of the Committee members which illustrate a

titanic struggle between ideas.

31

He, contrary to the other members, and aligning withProfessor Iracunda, argued that the economic prerequisite was an essential characteristic

of an investment. Nonetheless, the majority in this instance annulled the initial award,

disagreeing with such. Indeed, in the respective cases ofL.E.S.I. S.p.A. et ASTALDI

S.p.A. v. Algeria, andPhonexic Action v. the Czech Republic,both awards dismissed the

supposed prerequisite that a contribution to development should be fundamental to

interpreting an investment.32 These prior awards display a clear disparity in interpretation

of the matter, and Professor Iracunda is firmly positioning herself on one side of the

debate. This renders her as manifestly lacking in independent judgement should the

Claimant proffer the alternative view.

28.Pursuant to Professor Iracunda militating against wide interpretations, Professor Iracundacannot be more express in presenting a prejudgement in saying that:

26Perenco Ecuador Limited v Ecuador and Empresa Estatal Petroleos del Ecuador, Decision on Challenge to

Arbitrator, ICSID Case No ARB/08/6, 8th December 2009, para 46.27 Suez and ors v Argentina, Decision on Second Proposal for the Disqualification of a Member of the ArbitralTribunal, ICSID Case No ARB/03/19, 12th May 2008, para 29.28

The Record, p.7, line 325.29 The Record, p.7, lines 342-344.30

E.g., Malaysian Historical Salvors Sdn Bhd v Malaysia, Decision on the Application for Annulment, ICSID CaseNo ARB/05/10, 28th February 2009; See also, Malaysian Historical Salvors, Dissenting Opinion of JudgeMohamed Shahabuddeen; Phoenix Action Limited v Czech Republic, Award, ICSID Case No ARB/06/5, 9th April2009;L.E.S.I. S.p.A. et ASTALDI S.p.A. v. Algeria (ICSID Case No. ARB/05/3, Decision of 12 July 2006) para73(iv); Pey Casado and Prsident Allende Foundation v Chile, Annulment Proceeding, ICSID Case No ARB/98/2,28th September 2010.31

Malaysian Historical Salvors Sdn Bhd v Malaysia, Decision on the Application for AnnulmentDissentingOpinion of Judge Mohamed Shahabuddeen, ICSID Case No ARB/05/10, 28th February 2009, para. 62.32L.E.S.I. S.p.A. et ASTALDI S.p.A. v. Algeria (ICSID Case No. ARB/05/3, Decision of 12 July 2006) para 73(iv);

Phoenix Action Limited v Czech Republic, Award, ICSID Case No ARB/06/5, 9th April 2009, para 85.


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Only the Salini criteria reflect this reality, and only the inclusion within the Salini

criteria of the requirement of a contribution to the development of the Host Statefulfills the true purpose of the ICSID Convention Moreover, only new

development can suffice.33[Emphasis added]

This excerpt expressly states that only the Salini criteria can, effectively, be utilised to

establish an investment, and that only new development will suffice.34

This is referringto the fundamental basis on which Professor Ircaunda would make a decision. This is

manifestly partisan in that it ignores other methods of interpretation of what aninvestment is.35 For instance, inter alia, consideration of the BIT alone, the double-

barrelled test, or analysing the BIT in the same way as Article 25 of the Convention.36

Indeed, it was most aptly noted in Abaclat, that one approach is the Salini criteria, but

this was not the right approach as it presents as contradictory to the ICSID

Conventions aims, on the facts.37

Thus, Professor Iracunda is unashamedly, and

manifestly closing her mind and restricting her capacity to be able to consider methods of

analysing other than the Salini criteria. This is from openly stating that only the Salini

criteria can be used to negate the aforementioned problems, and adhere to the policyconsiderations. Therefore, Professor Iracunda has outlined her own overarching

principles on which to base a decision, no matter the facts of individual cases. She haslaid down the fundamental principles on which to decide the present dispute.

29.Thus, ProfessorIracundas writings indicate the fundamental framework in which shewill narrow, confine and focus her mind. The above extracts demonstrably show a lack of

independent judgement on matters which go to the heart of the case. It is evident that

Professor Iracunda will clearly be influenced by her own pre-made judgement andopinions on the interpretation of investment. It cannot be ignored that there is an

indubitable show of impartiality by Professor Iracunda. It is clear that she may be

influenced by her own research and fiercely voiced opinion, be it consciously or

unconsciously, on these questions of law. Of which, determine how beneficial the award

is for the claimant or respondent.

2. The vigour with which Professor Iracunda writes shows a manifest lack of impartiality.

30.The style, and choice of words, with which Professor Iracunda authors her works presenther as manifestly lacking in independent and impartial judgement. It is acknowledged by

33The Record, p.7, lines 344-347.


35Ibid., at note 31, para 73.36

Abaclat and ors v Argentina, Decision on Jurisdiction and AdmissibilityDissenting Opinion of ProfessorGeorges Abi-Saab, ICSID Case No ARB/07/5, 4th August 2011, paragraph 66; Abaclat and ors v Argentina,Decision on Jurisdiction and Admissibility, ICSID Case No ARB/07/5, 4th August 2011, paras. 363-71;Romak S.A.

v. The Republic of Uzbekistan (PCA Case No. AA280), Award of 26 November 2009, para.180 and para.207; GEAGroup Aktiengesellschaft v. Ukraine, ICSID Case No. ARB/08/16 (Germany/Ukraine BIT), Award of 31 March2011, paras.137143.37Ibid., at note 23, para 363.


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the Claimant that, mere showing of opinion, even if relevant, is not sufficient to sustain a

challenge for lack of impartiality. However, a manifest illustration of lack of independentjudgment, through aligning oneself to a fundamental issue, and declaring this the only

means of analysing a situation, to enable one to move away from a dangerous

alternative presents the author in a bias light. 3831.For Professor Iracunda, it is evident that her opinions transcend mere expression of a

view.Despite the contention within her statement that what constitutes development is a

matter of fact; her comments go further than an opinion.39 They are forceful statements

about the direction of ICSID and the fundamental framework of what decision making

must be. Her contention is void in that what she writes is not mere legal opinion in the

abstract, but rather a personal framework for her to abide by in deciding upon the facts of

each case. She narrows her mind to a decision making skeleton which, inevitably, causesfor her to manifestly lack impartial and independent judgement.

32.The use of intense words throughout her works surpass a mere personal style of writing.For instance, the widely utilised concept that investment may be solely defined under an

instrument was expressly denounced as dangerous and to move away from it is

necessary. Such absolute words clearly lack flexibility, particularly in deemingsomething dangerous.40 Indeed, such rigidity continues, inter alia, from this in stating that

there is ...no reason to accept... this aforementioned view.41 This illustrates the closed

mind of Professor Iracunda. She has evidently shut herself off on this matter and, from

her own research in coming to this conclusion, could not be persuaded otherwise.

Moreover, persuasion that such is a pejorative view to ICSID and the present case, is

down to the parties, on the facts of that case. Proffering a remedy to the matter, Professor

Iracunda continues to demand that investment must be construed as to contribute to

the economic development of the Host State.42 Indeed, in reaching this, it is stated that

only the Salini criteria can, effectively, be utilised to establish an investment and thatonly new development will suffice.

43Theemployment of such superlatives as must

use a certain view, and only would the Salini do, gives the clear and obvious

impression, objectively, that these select words cogently show she lacks the capacity to

decide contrary to those opinions which she adheres to.

33.Comparison can be drawn to the instance of Perenco Ecuador Ltd. v Ecuador (& Others).Judge Brower, in that instance, was disqualified for expression of his opinion in an

interview. The Committee in this instance based their reasoning upon, inter alia, much

like Professor Iracunda, that there was passionate vocabulary use. This is in that the

vocabulary selection, being forceful as it was, was enough to constitute evidence of a

lack of impartiality or independence.44

Indeed, it was expanded that divining the trueinterpretation of why Judge Brower used these words is not necessary, and indeed futile.

It is sufficient that it is an objective, obvious and reasonable interpretation of such.45

In

38Ibid., at note 17, para.45.39

The Record, p.9-10, lines 486-491.40 The Record, pp.6-7, lines 308-311.41 The Record, p.7, line 325.42

The Record, p.7, lines 342-344.43

The Record, p.7, lines 344-347.44Ibid., at note 26, para 49.45Ibid., at note 23, para. 53;


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applying this, it is evident that academic writing, and indeed all written language, gives

the possibility of a range of intensifying words, and capabilities to temper language.Professor Iracunda could state that the Salini criteria is convincing but not the only

solution, or, as she did, can state that the Salini criteria must be the only means of

consideration.

B. Professor Iracundas writings highlight that she would face significant professional

embarrassment should she contradict herself in practice.

34.In consideration of the aforementioned lack of impartiality and independence, it can beseen that Professor Iracunda would face significant personal, and professional,embarrassment should she renege on her own fiercely-advocated views.

35.It is averred that Professor Iracunda has positioned herself as leading and spearheadingthe school of thought that advocates a development-inclusive interpretation of an

investment.

46

The aforementioned content, and language, contained within the writingsof Professor Iracunda, outline a framework by which to decide arbitral matters pertaining

to the interpretation of investment. This is fiercely advocated. Indeed, should she reject

her own extensive works, and research, and articles by issuing a contradictory award, it is

inevitable criticism may follow. She cannot, arguably, be seen to issue a powerfulsuggestion on the system, and quite publically and openly renege on her broad

overarching views, which quite clearly lay the basis and overriding framework in whichto base a judgement

36.It was stated in Urbaser SA (& Others) v. Argentina, that the mere showing of opinion isnot sufficient to disqualify an arbitrator. However, it was noted that;

For such a challenge to succeed there must be a showing that such opinion orposition is supported by factors related to and supporting a party to the

arbitration (or a party closely related to such party), by a direct or indirect

interest of the arbitrator in the outcome of the dispute...47

In applying this notion, it can be seen that, coupled with Professor Iracundas clear and

obvious prejudgement of the dispute, and the ferocity with which this stance is held, that

her indirect interest, or even direct interest, is in ensuring her academic opinions are seen

through, and implemented. This is for the reasons outlined above.48 She cannot be seen to

issue an award which flies in the face of her very forceful, already written, opinions

37.Professor Iracunda, and in the Decision of the Two Members, present an obfuscated, andartificial contention that Arbitrators and Scholars are two dramatically distinct roles for

one person. Whilst, it is accepted that an Arbitrator and Scholar can remain in distinct

roles, and, occasionally, maintain impartiality and independence in these respective roles,

this is trivialising the matter. When such scholarly opinions are assessed in the context of

a particular set of circumstances, on the facts, we see that she is more than a mereScholar, analysing and researching investment law. She is a leading proponent in this


47Ibid., at note 17, para.4548 The Record, p.6, lines 308-323; p.7, lines 351-362


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school of thought. She is a strong and consistent, perhaps even dogmatic, advocate of this

view. Thus, the matter cannot be divided as distinctly as the Two Members and ProfessorIracunda so declare. It is not in black and white as contended by the Two Members, and

Professor Iracunda. A Scholar can publish extensively, but when their writings are

considered on a spectrum we can see there are acceptable analyses of ICSID and matters,ranging through to unacceptable stances being advocated and vehemently adhered to.

What matters, is the context surrounding these opinions, as investigated above.49

38.Therefore, despite the two roles being distinct, Professor Iracunda as a leading proponentof her views, quite clearly cannot retain the capacity to decide contrary to her own

dogmatic views. This clearly shows a manifest lack of independence and impartiality.

II. PROFESSOR IRACUNDAS MEMBERSHIP OF WILDERNESS

DEMONSTRATES A MANIFEST LACK OF INDEPENDENCE AND

IMPARTIALITY

39.Professor Iracundas membership ofWilderness demonstrably shows a manifest lack ofimpartiality and independence. In actively joining an organisation, and then taking the

additional step to provide monetary support for their activities, Professor Iracundaillustrates an unacceptable connection, and an evident prejudgement of the associated

activities of the Claimant.

A. Professor Iracunda has morally prejudged the matter and is not impartial, nor

independent.

40.Contrary to the Responding view that there is nothing to suggest that Professor Iracundais partisan or lacks independent judgement, it is evident that a there is a clear nexus inProfessor Iracunda being a member, and active supporter, of an organisation opposed andconcerned with the subject-matter of the present dispute, the removal of the Sireno Kanto

frogs. This impartiality, considered qualitatively, has little accompanying guidance from

the ICSID convention. Thus, consideration of methodology hailing from case law, and

the International Bar Association is apposite.50

1. The IBA Guidelines substantiate an unacceptable connection to Wilderness.

41.Professor Iracunda manifestly lacks the ability to independently judge the present disputein that she has already adjudged the Claimant morally for their actions. The IBAGuidelines indicate, pursuant to General Standard 2(c) and (d), respectively, that doubts

are justifiable should the possibility arise that an arbitrator may be influenced by facts

other than the merits of the case, and justifiable doubts necessarily exist as to the

arbitrators impartiality or independence ...if the arbitrator has a significant financial or

personal interest in the matter at stake.51

This guidance can be applied with reference to

49Ibid., at note 17, para 52.

50Ibid., at note 27, para 33; para 34; IBA Guidelines on Conflicts of Interest in International Arbitration, 22 May

2004, p.3, para 2.51 IBA Guidelines on Conflicts of Interest in International Arbitration, 22 May 2004, p.8, General Standard 2(d).


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Professor Iracunda supporting and furthering the aims of wilderness fiscally, and by

providing personal support for their activities in actively associating her name with theorganisation by being a member.52 Such associations connote a significant personal

interest in the matter at stake. In turn, this indicates that there is a risk of Professor

Iracunda considering extraneous matters, such as the consequences of her decision inawarding in favour of the Claimant. This may be considered to be providing the implicit

support for the previous activities of the Claimant in the subject-matter of the dispute, of

which, Wilderness has staged numerous, vociferous protests against.53 Substantiation for

this can be seen in Dr Ranapuer being approached on the same grounds.54

Thus,

Professor Iracunda lacks independence, and impartiality as there is a clear moral

prejudgment by Professor Iracunda, against the Claimant. This renders representations by

the Claimant futile.42. It should be noted that the above arguments do not provide the only interpretation of

Professor Iracundas connection to wilderness, but, objectively, it can be considered areasonable interpretation.55 It is a reasonable interpretation, considering Professor

Iracundas membership, that she supports their strong rebuke of the treatment of the

Sireno Kanto frogs. This may not be true. It cannot be known, save for ProfessorIracunda, precisely her true state of mind on this matter. However, it is strikingly clear

that a reasonable third party, knowing of Wilderness, their protest, and Professor

Iracundas membership, couldconclude that there is a chance of Professor Iracunda

being partisan, dependent, or otherwise manifestly influenced by Wilderness and her own

connecting views.

2. The Suez factors demonstrably show a lack of impartiality and independence56

43.Under the factors laid down in Suez pertinent to a relationship with a party, appropriateapplication can be seen. Wilderness, being an interested organisation, can be seen to beintertwined into the subject matter of the dispute. A manifest lack of independent

judgment and impartiality is illustrated from Professor Iracundas membership in, andfinancial support of, Wilderness. They elucidate the prejudgement of Professor Iracunda.

The proximity of the connection, the intensity of the interactions, the degree ofdependence for benefits from Wilderness, and the materiality or significance of such

benefits, are apposite considerations.57

44.It is contended that the proximity and intensity of interactions, of Professor Iracunda toWilderness, are direct and continued. Professor Iracunda has intentionally, and actively,

taken the step to align herself with Wilderness and their associated aims and activities.

Subsequent to such, she has given regular donations on an annual basis. This provides acontinued support, not only by associating herself, but in going one step further and

52 The Record, p.8, lines 409-413.53 The Record, p.3, lines 155-156; p.8, lines 403-407.54

The Record, p.4, lines 175-180.55

Ibid., at note 26, para 53.56Ibid., at note 26, para 35.57Ibid., para 35.


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providing monetary support. Therefore, there is evident moral prejudgement of the

Claimants actions, just as Wilderness has.58

45.As can be seen from the materiality of the benefits derived from Wildernesss success,

and the degree of dependence upon a party for benefits, Professor Iracunda has a

compelling reason to be partial towards Wilderness. Then, by extension, partial injudging her award. This factor can be construed as, by supporting Wilderness, Professor

Iracunda doesnot derive merely financial benefits, but emotional benefits in seeing

Wilderness succeed. Arguably, an emotional gain can be substantially stronger, and

indeed more entrenched in ones mind, as a significant benefit, than just a monetary

one.5946.These factors elucidate the fact that Professor Iracunda has a manifest lack of ability to

exercise independent judgment in this matter.

III. THE TRIBUNALS FAILURE TO EXCLUDE DR RANAPUERS EXPERT

REPORT CONSTITUTED A SERIOUS DEPARTURE FROM A FUNDAMENTAL

RULE OF PROCEDURE.

47.The Claimant requests annulment of the Tribunals decision not to exclude Dr.Ranapuers Expert Report. This is on the grounds that admission of the report constituted

a serious departure from a fundamental rule of procedure.

48.The application to the present ad hoc Committee is made pursuant to Article 52(1)(d) ofthe ICSID Convention which states:

(1) Either party may request annulment of the award by an application in

writing addressed to the Secretary-General on one or more of the following

grounds:

...(d) that there has been a serious departure from a fundamental rule of

procedure;60

49.Consideration of this ground for an annulment application, it is submitted, is to be

analysed within the confines of the Bela Rano Model rules on the Taking of Evidence inInternational Arbitration.61 Such rules governed the Tribunals decision making process

in deciding not to exclude Dr Ranapuers Expert Report.

50.Therefore, as contended below, the Tribunal flew in the face of an obviouslyfundamental rule of procedure in making a serious departure it. 62

58 OPIC Karimum Corporation v Venezuela, Decision on the Proposal to Disqualify Professor Philippe Sands,Arbitrator, ICSID Case No ARB/10/14, 5th May 2011, para 22.59Ibid., at note 26, para 35.60 Article 52(1)(d) ICSID Convention.61

The Record, lines 163-166.62 Compaa de Aguas del Aconquija SA and Vivendi Universal SA v Argentina, Decision on Argentinas Requestfor Annulment of the Award, ICSID Case No ARB/97/3, 3rd August 2010, para 245; CDC Group Public Limited

Company v Seychelles, Decision on Annulment, ICSID Case No ARB/02/14, (2007) 11 ICSID Rep 237, 29th June


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A. The Belo Rano Rule requiring exclusion is a fundamental rule of procedure

51.The Tribunal failed to correctly apply the most pertinent Article of the Belo Rano ModelRules.63 Article 5(5) clearly states as follows:

If a Party-Appointed Expert whose appearance has been requested pursuant to

Article 8.1 fails without a valid reason to appear for testimony at an Evidentiary

Hearing, the Arbitral Tribunalshalldisregard any Expert Report by that Party-

Appointed Expert related to that Evidentiary Hearing unless, in exceptional

circumstances, the Arbitral Tribunaldecides otherwise.64[emphasis added]

52.Article 5(5) is a fundamental rule of procedure. It is contained within the agreed rules togovern the procedure with which the parties have submitted themselves to. Indeed, thisrule, in and of itself, demonstrably shows that should an Expert fail to appear without

valid reason then the Tribunal must disregard their report. This leaves little flexibility andshows the gravitas of the rule. The only caveat to such is when exceptional circumstances

warrant otherwise. This presents a substantial threshold to be attained before allowing the

black and white rule to be disapplied.

1. As a general principle of law, Article 5(5) is an elementary cornerstone of procedure.

53.It is contended that, pursuant to general principles of arbitral law, Article 5(5) is afundamental rule of procedure. The notion of a Tribunal preventing a party from

addressing evidence pitted against them, and adducing cross-examination, demonstrably

shows a breach of natural justice and is contrary to the ...essential fairness of the

proceeding.65

This stance is echoed in Wena Hotels, by the ad hoc Committee, whichnoted that it was a fundamental rule of procedure for a party to be heard and to produce

...all arguments and evidence in support of a defence or claim.66

Moreover, it iscogently argued that inBorn, that the right to present a case includes the right to make

submissions on evidence presented by the opponent.67 It continues in noting that failure

to give such a right means the Tribunal ...will be subject to an annulment.68

Therefore,

Article 5(5) is manifestly a fundamental rule of procedure.

2005, para 48; Wena Hotels Limited v Egypt, Decision on annulment application, ICSID Case No ARB/98/4,(2004) 6 ICSID Rep 129, (2002) 41 ILM 933, (2003) 130 Clunet 167, 28th January 2002, para 56.63

Belo Rano Model Rules on the Taking of Evidence in International Arbitration.64

Ibid., Article 5(5).65 CDC Group Public Limited Company v Seychelles, Decision on Annulment, ICSID Case No ARB/02/14, (2007)11 ICSID Rep 237, 29th June 2005, para 49.66 Wena Hotels Limited v Egypt, Decision on annulment application, ICSID Case No ARB/98/4, (2004) 6 ICSIDRep 129, (2002) 41 ILM 933, (2003) 130 Clunet 167, 28th January 2002, para. 5767

Born,International Arbitration (2009), pp. 25823; See also, Gaillard & Savage (eds),Fouchard, Gaillard,Goldman on International Commercial Arbitration (1999), pp. 947948, para. 1638; Poudret & BessonComparative Law of International Commercial Arbitration (2 ed, trans. Berti & Ponti, 2007) paras. 546554.68 Born,International Arbitration (2009), pp. 25823.


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B. The Tribunals decision not to exclude was a serious departure in the circumstances.

54.The Tribunals decision not to exclude Dr Ranapuers report showed a clear and seriousdeparture from Article 5(5) of the Belo Rano Model Rules.69

55.It is axiomatic that a departure in such circumstances is only serious where it issubstantial and such as to deprive the party of the benefit or protection which the rule

was intended to provide.70

In the present instance, the violation of Article 5(5) wassuch as that, had the Tribunal not considered irrelevant matters, then they would have

reached a result substantially different from what was awarded.71

1. Dr Ranapuer had no valid reason for failing to attend the oral hearing, requiring the

Tribunal to exclude his report.

56.The Tribunal departed in a serious manner from Article 5(5) in not immediatelyexcluding Dr. Ranapuers report upon finding out his reasons for his absence. DrRanapuers reasoning consisted of having being approached by Wilderness and being

convinced to provide assistance to the Tribunal. Dr Ranapuer believed such actions

which give ...implicit approvalof the Claimants supposed treatment of the Sireno

Kanto.72

This presents an obfuscated understanding of the matter before the Tribunal. As

noted by Professor Iracunda, the matter does not concern the Sireno Kanto frogs in any

means.73

They are only tangentially related, objectively speaking. Thus, this subjective

belief of Dr Ranapuer that participation in the arbitration impinges on his beliefs shows

that the Tribunal should have presumed to exclude the report automatically pursuant to

Article 5(5).

2. Additionally, there were no exceptional circumstances to negate the substance ofArticle 5(5)

57.It is manifestly apparent that, ion considering the decision-making procedure of theTribunal, they have failed to consider the procedure correctly. This, as was stated in

Wena Hotels, has impacted detrimentally upon the legal rights of the Claimant and sorequires annulment.74

i. The fact that there is a limited pool of experts does not constitute an exceptional

circumstance.

58.The fact that there is only two other scientists who have detailed knowledge of suchmatters, is not an exceptional circumstance warranting admission of the Expert Report.

Whilst it is acknowledged that this is a relatively low pool of experts to select from, this

69Ibid., at note 63.

70 Continental Casualty Company v Argentina, Decision on Application for Partial Annulment, ICSID Case NoARB/03/9, despatched 16th September 2011, para 96.71

Ibid., para 96.72

The Record, lines 177-180.73 The Record, lines 495-499.74Ibid., at note 66, para 58; para 37.


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does not prevent retention of a different expert. No cogent reason is adduced as to why

they could not be contacted to assist BRI, in place of Dr Ranapuer. Indeed, it is evidentthat it is misconceived to declare the information to be from no other source when, in

fact, it was.75

ii. Expediency in utilising Dr Ranapuers report should not take precedence over

the rights of the party.

59.In addition, whilst it may be more expedient to use Dr Ranapuers report, instead of thatof another expert, this should not be considered to trump the fundamental rights of the

Claimant, bestowed onto them by the Belo Rano Model Rules. An unequal footing in

terms of rights makes a mockery of the ICSID arbitral system. Monetary, and time,considerations should never be considered superior to a parties access to justice under the

ICSID convention. Indeed, reference to a specific instance of such is made in theFraportcase,76 to theRice Trading (Guyana) case. Here, a party was permitted to adduce

additional evidence subsequent to the oral hearing, and failed to allow the opposing party

the opportunity to comment on such.77

This, the Committee in Fraport indicates, is afundamental rule of procedure being absolutely breached.

60.Therefore, it is contended that the decision not to exclude Dr Ranapuers reportconstituted a serious departure from a fundamental rule of procedure.

75The Record, lines 184-185.

76 Fraport AG Frankfurt Airport Services Worldwide v Philippines, Decision on Application for Annulment, ICSID

Case No ARB/03/25, 17th December 2010, para 200.77

Rice Trading (Guyana) Ltd v. Nidera Handelscompagnie BV(Hague Court of Appeal) (28 April 1998) (1998)

XXIII Ybk Comm Arb, p. 731.


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PART TWO: The Merits

I. THE TRIBUNAL ERRED IN LAW IN INTERPRETING THE DEFINITION OF

INVESTMENT, PURSUANT TO ARTICLE 25(1)

61.Claimant asserts that the Tribunal erred in law in ruling that the term investmentincludes the requirement of contribution to the economic development of the host State.

A. Introduction

62.It is submitted that the Tribunal exceeded its power in declining jurisdiction and thedefinition of the term investment does not, in law, require there to be a contribution to

the economic development of the host State.

63.This area of law can be difficult to discern and is the most contentious. It is furtherclouded by the ICSID Conventions omission to include the definition of the term

investment, albeit intentional. Article 25(1) reads:

The jurisdiction of the Centre shall extend to any legal dispute arising directly out of an

investment, between a contracting stateand a national of another contracting state, which the

parties to the dispute consent in writing to submit to the Centre.78

(emphasis added)

64.This omission of defining the term investment shows the drafters intentions of settingthe level of discretion and refrained from including a definition in order to leave the

maximum freedom for its application in practice.79 The often cited Report of the World

Banks Executive Directors attempted to justify as to why the drafters of the ICSID

Convention omitted the definition of investment. It was quite explicit in stating that:

78 ICSID Convention, Article 25(1)

79Malicorp Ltd. v Egypt, Award, ICSID Case No. ARB/08/18, 31 January 2011, para.109.


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No attempt was made to define the term investment given the essential requirement of

consent by the parties.80

65.According to academics, such as,Juillardand Carreau, the absence of this definition isdue to the fact that the meaning of Investment varies on a case-by-case basis.

81

Therefore, an examination of equivalent cases by other ICSID Tribunals will assist in

determining the approach to be taken and will be shown that the addition of the

contribution requirement is inconsistent with the majority of prior case law. Moreover, it

is relevant to consider the intentions of the parties at the time of the Bilateral Investment

Treaty concerning the Encouragement and Reciprocal Protection of Investment between

the Government of the Republic of Oscania and the Government of Bela Rano Insularo

(BIT or the Treaty).

66.Therefore, in order to be subject to ICSID jurisdiction, there must be an investment andthe claims put forward by either party must arise directly out of an investment, part of the

ratione materiae of an investment, as highlighted inJoseph Charles Lemire v Ukraine.82

67.ICSID practice under Article 25 derives predominantly from the power of an arbitralTribunal to decide on its own jurisdiction, pursuant to Article 41. This will be discussed

below. Therefore, the approach adopted in the Convention gives parties wide discretionto describe the term investment and conversely, gives full discretion on the Tribunal to

define investment. Moreover, the Tribunal has an obligation to rule on its own

jurisdiction (the Competenz-Competenz). This has been accepted by prior ICSID

jurisprudence.83

68.In interpreting the Washington Convention Tribunals employ either an objective orsubjective approach. The former necessitates a deeper understanding of the Salini criteria

whilst the latter requires a look at the parties consent. It is the Claimants position that the

80Report of the Executive Directors on the Convention on the Settlement of Investment Disputes between States

and Nationals of Other States. Doc. ICSID/2, 1 ICSID Reports, 1993, 23, para.26.

81 D. Carreau, P. Juillard, Droit international conomique (3e edition, Dalloz, Paris, 2007)

82 Joseph Charles Lemire v Ukraine, Decision on jurisdiction and liability, ICSID Case No. ARB/06/18, 14 January

2010.

83Ibid., at note 79, para.98.


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73.The respondents will most likely contend that it is evident that investment requires somesort of contribution to the host State, from the mere appearance of the term economic

development within the Conventions preamble. However, it is the Claimants

submission that the preamble should only be treated as persuasive, at best. Such a

synopsis cannot be a strong interpretation of what the ICSID Convention desires and the

extrapolation of the condition from this meagre phrase does not represent the overarching

theme of the Convention.

74.This preamble based interpretation, in addition, can be quite problematic. In analysingthe preamble, one would be questioning that an objective approach, which was

constructed under the guise of object and purpose, actually vitiates precisely the

bargain which ICSID was designed to enable.87 Therefore, suggesting that such an

approach is not what the drafters of the Convention intended.

75.Moreover, the words of the preamble themselves are too broad to correlate to thecharacteristics of the condition. Even though, the term economic development is stated

within both the condition and the preamble, the latter does not specify as to what the

development is for. Therefore, the preamble cannot be used as precedent to rely upon

what the Convention is set out to achieve. It is too broad in nature to come to a

conclusion.

76.Consequently, it is submitted that as this approach cannot and should not be used tointerpret the Convention, the realisation of the words economic development cannot be

used to infer that the definition ofinvestment requires a contribution to the economic

development of the host State.

77.In addition, the variability of ICSID jurisprudence with the omission of any languagesuggesting economic development is further evidence that the drafters of the Convention

did not intend to include a mandatory and strict condition.

78.Therefore, such an omission implies that there is no obligation to consider the condition.However, even though the preamble has clear intentions in requiring future ICSID cases

to consider the economic development, it doesnt necessarily mean that it is a condition

87Julian Davis Mortenson, The Meaning of Investment: Travaux and the Domain of International Investment

Law 51 Harvard International Law Journal (2010) at 311.


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86.The Claimants submit that every case must be examined in the lights of its owncircumstances95 and in this instance, the Tribunal was incorrect in distinguishing

Malaysian Historical Salvors.96

87.The Tribunal inMalaysian Historical Salvors97declined the applicability of the Salinicriteria, stating that the approach is consonant with the intention of the Parties to the

ICSID Convetion and therefore, doesnt solely focus on Article 25.

88.In addition, it was ruled inMHS98that the BITs lack of conflict with Article 25(1) of theWashington Convention allowed it to assign the definition of investment which was

contained within the applicable BIT. Moreover, it concluded that the previous Tribunals

failure to apply the UK-Malaysia BIT constituted a manifest excess of power.99

89.It is further submitted that, although it is agreed that there is no obligation to followprecedence within ICSID arbitration, this itself does not preclude Tribunals from

following past awards. In agreeing upon Dr. Albert Viators dissenting opinion, the

decision inMalaysian Historical Salvors100was made by both a former President of the

International Court of Justice and the current Vice-President and therefore, produces

weight that this decision should be followed.

90.The Tribunal in theLETCO case found that though it was not bound by the precedentsestablished by other ICSID Tribunals, it is nonetheless instructive to consider their

interpretations.101 Therefore, it is contended that the approach which the Tribunal took

95 Enron Corporation and Panderosa Assets, L.P. v The Argentine Republic, ICSID Case No. ARB/01/3, Decision

on Jurisdiction (Ancillary Claim), 2 August 2004, para.25.

96ibid., at note 94.

97ibid

98ibid

99ibid

100ibid

101Liberian Eastern Timber Corp (LETCO) v The Government of the Republic of Liberia, ICSID Case No.

ARB/83/2, Award, 31 March 1986,


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application of the Salini criteria and alternatively, even if it was right to do so, they erred

in fact (discussed below). Max Solution did, in fact, make a contribution to the economic

development of Bela Rano Insularo.

95.Firstly, it should be noted that the Tribunal has declined jurisdiction only on the basis ofnot being able to establish one criterion within the Salini criteria. It is submitted

therefore, that the Tribunal has treated these criterions as jurisdictional requirements and

not characteristics of an investment and ultimately, goes against the Tribunals approach

in Salini v Morocco107 and the views of Professor Schreuer.

96.From considering prior case law and ICSID jurisprudence, many Tribunals have taken anapproach in which they reflect upon the parties agreement and thus shifted the focus

mainly on the BIT. This would then supersede the ICSID Convention and is in replace of

imposing a stringent autonomous definition, as in Salini.108 The Tribunal inBiwater

Gauff Ltd. v Tanzania109refused to find any connection between the partys consent

under the BIT and the protection within Article 25 stating:

Article 25 of the ICSID Convention was not premised on any particular internal rate of return

threshold or any conception of economic return.110

97.Therefore, arguing that the purpose of Article 25 is not interrelated with the applicableBIT. The Tribunal continued to state:

even if the Republic could demonstrate that any, or all, of the Salini criteria are not satisfied

in this case, this would not necessarily be sufficientin and of itselfto deny jurisdiction.111

98.Therefore, the Claimants submit that the Tribunal should not have considered the Salinicriteria. This approach, as used by the Tribunal, should not be the sole mechanism in


108Ibid

109Biwater Gauff (Tanzania) Ltd. v Tanzania, Award, ICSID Case No. ARB/05/22, 31 March 2006.

110Ibid., para.A3.

111Ibid.,para.318.


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Ukraine.116 The Tribunal, moreover, found that the contribution requirement is of little

value, as it mostly reflects the consequences of the other criteria.

101. It is further submitted that the criteria should be considered in their totality andnot individually.117 Due to the uncertainty of such an approach, there is a need to refer to

prior case law. The Tribunal in this instance notices this and states in the award:

It is only appropriate that ICSID Tribunals attempt to interpret vague terms in the Convention

in the way that is most consistent with prior case law.

102. It then proceeded to apply the Salini criteria. This justification of using thecriteria was not righteous, as mentioned above. The Tribunal has only listedMalaysian

Historical Salvors118

a case which disagreed with the Salini criteria and concluded not to

follow the award. However, there are many other types of precedent in which support the

view of such cases. For example, the Tribunal inM.C.I. Power Group L.C. v Ecuador,119

noted that the elements within the Salini criteria must be considered as mere examples

and not necessarily as elements that are required for the existence of an investment for

purposes of Article 25of the ICSID Convention.

103. In addition, the Respondents contend that the Salinicriteria determine the outerlimits of ICSIDs jurisdiction with regard to the nature of the disputes.120 Therefore,

such an argument precludes any party from giving a broad definition of the term

investment.

116 Alpha Projektholding GMBH v Ukraine, Award, ICSID Case No. ARB/07/16, 8 November 2010, paras.311-312

117Jan de Nul NV and Dredging International NV v Egypt, Decision on Jurisdiction, ICSID Case No. ARB/04/13,

16 June 2006, para.91.


119MCI Power Group LC and New Turbine Inc. v Ecuador, Award, ICSID Case No. ARB/03/6, 26 July 2007,

para.A2.

120Abaclat and others v Argentina, Decision on Jurisdiction and Admissibility, ICSID Case No. ARB/07/5, 4

August 2011, para.341.


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III. THE CONTRIBUTION REQUIREMENT CANNOT BE INFERRED FROM THE

AGREEMENT BETWEEN THE PARTIES

104. Claimant asserts that the Bilateral Investment Treaty does not give rise to thepresumption that an investment requires there to be contribution to the economic

development of the host State. Moreover, the Tribunal erred in not assessing the Treaty.

A. In assessing the Bilateral Investment Treaty, the parties did not agree that the

investment must contribute to the economic development of Bela Rano Insularo

105. The term investment is characterised within the Treaty and needs to be lookedat because that instrument is the medium through which the Contracting States involved

have given their consent to the exercise of jurisdiction of ICSID.121 Moreover, ICSID

case law have commonly looked upon the consent of the parties and in doing so defined

the term investment. As mentioned above, it is submitted that in interpreting the

Treaty, Article 31(1)of the Vienna Conventionshould be abided by. Therefore, a

Tribunal manifestly excesses its powers if it does not apply the relevant rules of

interpretation governing its competence properly.122

106. On the outset, it is contended that no reasonable inference can be drawn that theparties agreed that there was to be contribution to the economic development of the host

State. Therefore, a deeper understanding of the consent of the parties and an analysis of

the applicable Treaty is needed.

107. Under the Bipartite test, as expounded in CSOB v Slovakia,123 once Article 25 hasbeen looked upon, it is relevant to consider the Bilateral Investment Treaty in which both

parties agreed upon. If this approach shall be adopted, the double barrelled test does

121Ibid., at note 94, para.58. [malay]

122 Fraport AG Frankfurt Airport Services Worldwide v Philippines, Decision on the Application for Annulment,

ICSID Case No. Arb/03/25, 17 December 2010, para.76.

123Ceskoslovenska Obchodni Banka AS v Slovakia, ICSID Case No. ARB/97/4.


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not mean that one definitionhas to fit into the other definition, namely the one deriving

from the spirit of the ICSID Convention.124

108. It is contended that the BIT, analogous to Article 25, does not define the terminvestment. It merely provides examples of different types of investments. Therefore

the language of the BIT shall be considered and moreover, the Treaty would act as a lex

specialis with regard to Article 25ICSID Convention.125 This shows the pertinence of

addressing the BIT and highlights the Tribunals incompetence in not doing so.

109. In addition, the BITs aptness in being considered is further applicable due to theinconclusive remark that anythingcan be an investment if is agreed by the States in the

BIT. In adopting an example used in SGS v Paraguay,126

one would not say that a

simple contract for the sale of goodswould constitute an investment within the meaning

of Article 25(1), even if defined as such in a BIT. Therefore, it is essential to reflect upon

the wording of the Treaty and such an approach necessitates the consent of the parties at

the time of the contract.

110. The Claimants submit that the Tribunal erred in finding that the contribution tothe economic development of the host State was a prerequisite to the definition of an

investment and moreover, inadvertently erred in not using the Treaty as a mechanism

to conclude that the contribution requirement is not a condition in which to be satisfied.

The award given by the Tribunal did not analyse the Treaty but only stipulated relevant

articles.

111. It is submitted, therefore, that an assessment of the phrasing within the BIT, doesnot give rise to an inference that the condition of contributing to the economic

development of the host State is not contained within the definition of investment and

likewise, not consented upon by the parties. In support of this, it has been suggested by

some that a BIT requiring consent precludes the need to define investment.127


125ibid., at note 120, para.305. [aba]

126 SGS Socit Gnrale de Surveillance SA v Paraguay, Award on Jurisdiction, ICSID Case No. Arb/07/29, 12

February 2010, para.93.

127 Report of the Executive Directors on the Convention on the Settlement of Investment Disputes Between States

and Nationals of Other States, 1965, 1 ICSID Rep. 28, 28 (1993)


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112. At the outset, it should be noted that the definition of investment contained withinthe BIT cannot expand the ICSID Convention but it is possible for it to confirm or

restrict an ICSID notion.128 It is contended that the non-exhaustive list contained in

Article 1 of the Treaty is an attempt to broaden the Convention [hence, the phrases

every asset and Forms that an investment may take include (emphasis added)] and

thus, is not the object of a bilateral arrangement between two contracting States. A BIT

should be used supplementary to the Convention and ought to confine and clarify the

definition contained within Article 25.

113. Furthermore, according to some commentators, the majority of BITs include thearea of the investments economic activity.

129Therefore, evidence in which further

proves that this BIT is a minority and is inconsistent with previous Treaties.

114. Moreover, in an attempt to analyse the list of definitions in Article 1, it isaxiomatic that the parties did not agree upon contributing to the economic development

of the host State. There is no indication that an investment would include contribution

and nor is there any focus towards the host States economy. In addition, Article 1

continues to state:

that has the characteristics of an investment, including such characteristics as thecommitment of capitalor other resources, the expectation of gain or profit, or the assumption of

risk (emphasis added).

115. Therefore, as can be seen, in defining the investment, Article 1mentionscharacteristics of an investment by stating requirements which are included within the

Salini criteria. However, there is no mention of the necessity of contribution to the

economic development of the host State. This further supports that this, allegedly most

important criterion, is an added condition. This begs the question that how can one agree

upon something which was not stipulated within the BIT.


129J.W. Salacuse and N.P. Sullivan, Do BITs Really Work? An Evaluation of Bilateral Investment Treaties and

their Grand Bargain, (2005) Harvard International Law Journal, at 67.


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116. An example, to the contrary, is ofArticle 1(6) of theEnergy Charter Treatywhich defined investment as every kind of asset but then continued on to refer to any

investment associated with an economic activity in the energy sector. This omission

suggests that such a requirement is not included within the definition of investment and

since this lapse in the wording cannot be integrated within Article 25, the ad hoc

Committee should find that the definition does not include contribution.

2. THE TRIBUNAL ERRED IN FACT AS EVEN IF THE CONTRIBUTION

PREREQUISITE IS HELD TO BE ESSENTIAL, THE TRANSACTION MEETS THIS

STANDARD

117. Claimant asserts that, in the alternative, the Tribunal erred in fact as thetransaction within question satisfies the standard to be applied.

A. Introduction

118. The Claimants contend that the transaction carried out by Max Solutions was toeradicate the Sireno Kanto from Bela Rano Insularo and did so to satisfy the criterion

contained within Salini. Therefore, a Tribunal should consider and analyse the factualrecords only to the extent that it is necessary to consider its own jurisdiction.

130

B. The Tribunal misinterpreted the threshold in which should be applied

119. It is contended that the test to be applied to such a criterion is not one ofsignificance. It is agreed, however, that it must be clear on the outset to be satisfied.

Applying a high threshold precluded the Tribunal from satisfying the criterion and

moreover, limited the method in which the Tribunal in Salini intended.

120. In support of the above, the case ofPatrick Mitchell v Congo stated:



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inspection does not give rise to the cancellation of the contract and ultimately, proves

that Bela Rano Insularo prevented Max Solutions from carrying out the activities in

which they were agreed to carry out. Moreover, if the contract was not cancelled at such

a time, it is submitted that Max Solutions would have removed 80% of the Sireno Kanto

population by the end of December 2006. In addition, it is interesting to note that the

contract required performance from January 2006 and two months later, Max Solutions

have removed 3% of the Sireno Kanto population. It seems unjust that the government of

Bela Rano Insularo would cancel the contract so soon.

129. Therefore, this precludes any contention that Max Solutions actions cannot beattributed to the development of the economic development of Bela Rano Insularo as the

Sireno Kanto frogs became extinct due to the poisonous disease contained within them.

E. The assertion that Max Solutions did not compensate Bela Rano Insularo with

revenue from its ventures is not evidence that they did not contribute to the Islands

economic development

130. The Tribunal attempted to vindicate that there was no contribution to Bela RanoInsularos development because Max Solutions obtained income from their ventures,

namely, selling symphonies which the Sireno Kanto produced and selling healthy Sireno

Kanto to a pharmaceutical company. The additional rejection of this criterion is based on

Max Solutions not providing the government of Bela Rano Insularo with any of this

revenue and thus there is no contribution.

131. Regarding the selling of the frog symphonies, it is submitted that the distributionof these opuses did in fact, contribute to Bela Rano Insularos economic development. It

is accepted that Bela Rano Insularo is a small island nation with a problem relating to the

lack of tourism. Max Solutions confirmed that they were planning to sell these

symphonies to overworked people from around the world. Therefore, the purpose of

foreign consumption was to increase knowledge of Bela Rano Insularo, and ultimately,

increase tourism.

132. In the alternative, however, it is submitted that any future revenue in which MaxSolutions obtains from selling the frog symphonies cannot be used as an inference that

Max Solutions was not going to share the profits with the government of Bela Rano


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Insularo. Max Solutions were merely in the planning stage of the distribution as the

contract was cancelled two months before the croaking season starts (May-November). It

is impossible to state, conclusively, that the government would not obtain any revenue in

the near future.

133. In addition, the Tribunal did not address the purpose of what the pharmaceuticalorganisation was to do with the healthy Sireno Kanto. This was used for medical

research for the development of allergy immunity treatments.137 Therefore, a reasonable

inference can be drawn that this research was going to be used to treat the potential

tourists who would arrive at Bela Rano Insularo. Moreover, it is immaterial that the

pharmaceutical company was at a nearby country due to the mere nature of the

development of Bela Rano Insularo. As they do not have the capability to remove frogs

from their island, it is likely that they would not have such a facility.

134. More importantly, it is submitted that Max Solutions has yet to receive anyincome from the medical research in which the pharmaceutical organisation was to carry

out. In adopting the claimants accepted example inMalaysian Historical Salvors,138

before Max Solutions could receive any profit and return, the treatment would have had

to be discovered, treated, approved by the regulatory authority and accepted by the

market. Therefore, it is immaterial that the government of Bela Rano Insularo would not

receive any income as Max Solutions themselves would have obtained any return in the

distant future and ultimately, would have provided contribution to Bela Rano Insularos

economic development by other means, as previously stated.

F. Conclusion

135. It is apparent from the outset that Max Solutions contributed to Bela RanoInsularos economic development. The whole purpose of the contract was to eradicate a

problem in which the island sustained. It is inconsequential that the Sireno Kanto died by

nature as Max Solutions had already removed some frogs and therefore met the low

threshold in which should be applied.

137 The Record, lines 83-89.



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grants the present ad hoc Committee the power conferred upon the arbitral Tribunal

under Article 41(2).140. Following the above proposition, Article 41 (2) states that: Any objection by a

party to the dispute that that dispute is not within the jurisdiction of the Centre, or for

other reasons is not within the competence of the Tribunal, shall be considered by theTribunal which shall determine whether to deal with it as a preliminary question or to

join it to the merits of the dispute.144

By way of this section, the Claimant submits that

the question of whether the dispute is within the jurisdiction of the Centre shall be

determined by the present ad hoc Committee.

141. Therefore, it is contended that the ad hoc Committee can, pursuant to theseArticles, decide as to whether there is an existence of an investment. The ICSID

Convention, in any event, has supremacy over the Tribunal and cannot be statedotherwise.

3. The jurisdiction should go to the Centre, and not to the Tribunal.

142. As the present Committee will undoubtedly be aware, in order for the Centre tohave jurisdiction, four conditions must be met. Three of these conditions derive fromArticle 25 itself and the other results from the general principle of law of non-

retroactivity. The condition which is most pertinent at present is a condition rationemateriae: the dispute must be a legal dispute arising directly out of an investment.145

Therefore, if the dispute does not arise directly out of an investment, it is outside of the

authority of ICSID.

143. It is widely accepted that as the Convention does not define the term investmentthat a broad approach to the interpretation of this term in Article 25 is warranted

146

andfurther inAES v. Argentina that the terms used should not be given a restrictive

interpretation.147

144. The Report of the Executive Directors addressed this broad interpretation to theterm, when saying in paragraph 22:

theterm jurisdiction of the Centre is used in the Convention as a convenient expression to

mean the limits within which the provisions of the Convention will apply and the facilities of the

Centre will be available for conciliation and arbitration proceedings. ()148

144 Article 41 (2) ICSID Convention.

145Joseph Charles Lemire v. Ukraine, Decision on Jurisdiction and Liability , 14 January 2010.

146Fedax v. Venezuela, Decision on Jurisdiction, 11 July 1997 referencing C. F. Amerasinghe: The Jurisdiction of

the International Centre for the Settlement of Investment Disputes, Indian Journal of International Law, Vol. 19,

1979, 166-227, at 181.

147AES Corporation v. Argentina, Decision on Jurisdiction, 26 April 2005.

148Report of the Executive Directors on the Convention on the Settlement of Investment Disputes Between States

and Nationals of Other States, International Bank for Reconstruction and Development, 18 March 1965, p.43.


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REQUEST FOR RELIEF

1. The Claimant humbly requests for relief, under the aforementioned, in that:a. The Tribunal was properly constituted subsequent to a dismissed challenge

against Professor Iracunda, as she possesses the qualities required under the

ICSID Convention.b. The Tribunal did not depart, in a serious manner, from a fundamental rule of

procedure in admitting Dr. Ranapuers Expert Report.c. In declining jurisdiction, the Tribunal exceeded its powers. The ICSID

Convention demonstrably does not required that an investment, so-called,

contributes to the development of Belo Rano Insularo.

d.

Even if contribution to BRI is considered essential, the above transaction,removal of the Sireno Kanto, meets this standard.

e. The annulment Committee has the power to decide whether the transaction inquestion is indeed an investment, as this concerns the Centres jurisdiction.

Respectfully submitted on the 27 September 2012 by

BAXTER

On behalf of the Claimant

baxter memo.pdf

Documents