T -N BIT”) · CEMEX Caracas Investments B.V. and CEMEX Caracas II Investments B.V. v. Venezuela,...

TEAM: ELIAS

IN THE MATTER OF AN ARBITRATION PURSUANT TO

AGREEMENT ON THE PROMOTION AND RECIPROCAL PROTECTION OF INVESTMENTS BETWEEN

THE REPUBLIC OF TYREA AND THE FEDERATION OF NOVANDA

(“TYREA-NOVANDA BIT”)

AND

AGREEMENT ON THE PROMOTION AND RECIPROCAL PROTECTION OF INVESTMENTS BETWEEN

THE REPUBLIC OF TYREA AND THE UNION OF KITOA

(“TYREA-KITOA BIT”)

AS WELL AS

ICSID RULES OF PROCEDURE FOR ARBITRATION PROCEEDINGS

(“ICSID ARBITRATION RULES”)

BETWEEN

FRIENDSLOOK PLC, SPEAKUP MEDIA INC., AND WHISTLER INC. CLAIMANTS

AND

THE REPUBLIC OF TYREA RESPONDENT

ICSID Case No. ARB/18/155

TRIBUNAL

Dr. Gabriella Utterson (President)

Dr. Henry Jekyll

Mr. Edward Hyde QC

MEMORIAL ON BEHALF OF RESPONDENT

i

TABLE OF CONTENTS

TABLE OF CONTENTS ____________________________________________________ I

INDEX OF AUTHORITIES ________________________________________________ IV

LIST OF ABBREVIATIONS _____________________________________________ XXVI

STATEMENT OF FACTS ___________________________________________________ 1

ARGUMENTS _____________________________________________________________ 4

PART I: PROVISIONAL MEASURES ________________________________________ 4

I. Respondent seeks rights susceptible to protection by provisional measures ________ 4

A. Claimants’ actions threaten the aggravation of this dispute ______________________ 4

B. Claimants’ actions threaten the integrity of this proceeding ______________________ 6

II. The RPM satisfies the threshold requirements for grant of provisional measures ___ 6

A. The Tribunal has prima facie jurisdiction to grant the requested measures __________ 7

B. Respondent has a prima facie case on the merits of the dispute ___________________ 7

C. The requested measures are urgent _________________________________________ 8

D. The requested measures are necessary _______________________________________ 9

E. The requested measures are proportionate to the anticipated harm ________________ 10

PART II: JURISDICTION _________________________________________________ 11

I. The Tribunal lacks ratione voluntatis jurisdiction _____________________________ 11

A. The Tribunal has no jurisdiction following Respondent’s Notice _________________ 11

1. Article 72 ICSID Convention regulates the effects of denunciation on Respondent’s

obligation to arbitrate ________________________________________________ 11

2. The critical date under Article 72 ICSID Convention is the date of receipt of a notice

of denunciation _____________________________________________________ 12

3. The requisite consent under Article 72 ICSID Convention was achieved after the

critical date ________________________________________________________ 13

ii

4. Registration of Claimants’ claim by ICSID Secretary General does not determine the

Tribunal’s jurisdiction ________________________________________________ 14

B. Claimants cannot claim a right to ICSID arbitration under Article 9(1) of the BITs __ 15

C. Claimants cannot claim a right to ICSID arbitration under Article 9(2) of the BITs __ 15

II. The Tribunal should decline jurisdiction over Claimants’ multi-party claim ______ 16

A. Respondent has not consented to multi-party arbitration _______________________ 16

1. The Tribunal must assess its jurisdiction to adjudicate a multi-party claim _______ 16

2. Respondent has not consented to multi-party arbitration under the ICSID Convention

or the BITs ________________________________________________________ 17

3. Exercise of inherent powers by the Tribunal does not extend to filling jurisdictional

requirements _______________________________________________________ 18

B. The claims are not closely connected ______________________________________ 19

1. The multi-party claim does not arise from a single dispute ___________________ 19

2. Claimants’ investments are not the same and were not made jointly ____________ 20

3. Claimants or their claims are not affiliated ________________________________ 20

PART III: MERITS _______________________________________________________ 22

I. Respondent’s measures constitute a legitimate exercise of its police powers _______ 22

A. Respondent has exercised its police powers for a public purpose _________________ 23

1. Respondent is afforded the ‘margin of appreciation’ to take measures in pursuit of a

public purpose ______________________________________________________ 23

2. In any event, Respondent’s actions were motivated by a ‘demonstrable’ public

purpose ___________________________________________________________ 24

B. Respondent exercised its police powers in good faith __________________________ 24

C. Respondent’s measures were non-discriminatory _____________________________ 25

D. Respondent’s measures were proportional to their aim _________________________ 26

II. Alternatively, Respondent did not breach its obligations under the BITs __________ 27

A. Respondent’s measures did not breach Article 6 of the BITs ____________________ 27

B. Respondent has not violated its FET obligation under Article 3(1) of the BITs ______ 28

1. Respondent’s conduct did not give rise to legitimate expectations _____________ 29

2. Claimants should have taken Respondent’s history of ethnic violence into account 30

3. Claimants deliberately decided to breach Amending Law 2018 _______________ 30

iii

PART IV: DAMAGES _____________________________________________________ 32

I. Claimants’ calculation of damages is erroneous and speculative ________________ 32

A. There is no causal link between Respondent’s measures and the alleged lost profits for

Claimants’ failed market expansion _______________________________________ 32

B. Claimants’ use of the DCF method of valuation is not appropriate _______________ 33

1. Claimants are not going concerns in Tyrea ________________________________ 34

2. Claimants have not furnished a business plan in support of their projections of future

cash flow __________________________________________________________ 34

3. The discount rate used in the Damages Report does not reflect the country risk in

Tyrea _____________________________________________________________ 35

4. Claimants operate in a sector with high regulatory pressure __________________ 36

C. Claimants cannot simultaneously use the DCF method and request “Direct Damages” 36

D. Damages Report does not take account of Claimants’ contributory fault ___________ 37

II. The appropriate method of valuation is the asset-based approach _______________ 38

PRAYER FOR RELIEF ____________________________________________________ 39

iv

INDEX OF AUTHORITIES

ARBITRAL DECISIONS

Citation Abbreviation

Abaclat and Others v. Argentina, ICSID Case No. ARB/07/5, Procedural

Order No. 3 (27.01.2010).

Abaclat (PO3)

Abaclat and Others v. Argentina, ICSID Case No. ARB/07/5, Decision on

Jurisdiction and Admissibility (04.08.2011).

Abaclat

(Jurisdiction)

Abaclat and Others v. Argentina, ICSID Case No. ARB/07/5, Dissenting

Opinion to Decision on Jurisdiction and Admissibility (Georges Abi-

Saab) (04.08.2011).

Abaclat (Abi-Saab)

ADC Affiliate Limited and ADC & ADMC Management Limited v.

Hungary, ICSID Case No. ARB/03/16, Award (02.10.2006).

ADC

ADF Group Inc. v. United States of America, ICSID Case No. ARB

(AF)/00/1, Award (09.01.2003).

ADF

AIG Capital Partners, Inc. and CJSC Tema Real Estate Company Ltd. v.

Kazakhstan, ICSID Case No. ARB/01/6, Award (07.10.2003).

AIG

Alpha Projektholding GmbH v. Ukraine, ICSID Case No. ARB/07/16,

Award (08.11.2010).

Alpha-

Projektholding

Ambiente Ufficio S.p.A. and others v. Argentina, ICSID Case No.

ARB/08/9, Decision on Admissibility and Jurisdiction (08.02.2013).

Ambiente-Ufficio

(Jurisdiction)

Ambiente Ufficio S.P.A. and Others v. Argentina, ICSID Case No.

ARB/08/9, Dissenting Opinion of Santiago Torres Bernárdez (02.05.2013).

Ambiente-Ufficio

(Torres)

American Manufacturing & Trading, Inc. v. Republic of Zaire, ICSID Case

No. ARB/93/1, Award (21.02.1997).

AMT

Amoco International Finance Corporation v. Iran, National Iranian Oil

Company, Iran-US Claims Tribunal, Award No. 310-56-3 (14.07.1987).

Amoco-IUSCT

v

Antoine Goetz et consorts v. République du Burundi, ICSID Case No.

ARB/95/3, Award (10.02.1999).

Goetz

Asian Agricultural Products Ltd. v. Sri Lanka, ICSID Case No. ARB/87/3,

Final Award (27.06.1990).

AAPL

Autopista Concesionada de Venezuela, C.A v. Venezuela, ICSID Case No.

ARB/00/5, Award (23.09.2003).

Autopista-

Concesionada

Azurix Corp. v. Argentina, ICSID Case No. ARB/01/12, Award

(14.07.2006).

Azurix

Bayindir Insaat Turizm Ticaret Ve Sanayi A.S. v. Islamic Republic of

Pakistan, ICSID Case No. ARB/03/29, Award (27.08.2009).

Bayindir

Bernhard von Pezold and others v. Zimbabwe, ICSID Case No. ARB/10/15,

Directions Concerning Claimants' Application for Provisional Measure of

12 June 2012 (13.06.2012).

Bernhard-Pezold

(PM)

Bernhard von Pezold and Others v. Zimbabwe, ICSID Case No.

ARB/10/15, Award (28.07.2015).

Bernhard-Pezold

BG Group Plc. v. Argentina, UNCITRAL, Award (24.12.2007). BG-Group

Biwater Gauff (Tanzania) Limited v. Tanzania, ICSID Case No.

ARB/05/22, Procedural Order No. 1 (31.03.2006).

Biwater (PO1)



Biwater (PO2)



Biwater (PO3)

BP Exploration v. Libya, 53 ILR 296 Award (10.10.1973). BP-Exploration

BSG Resources Limited (in administration), BSG Resources (Guinea)

Limited and BSG Resources (Guinea) SÀRL v. Guinea, ICSID Case No.


BSG-Resources

(PO3)

Burimi SRL and Eagle Games SHA v. Albania, ICSID Case No


Burimi (PO2)

vi

Burlington Resources Inc. v. Ecuador, ICSID Case No. ARB/08/5,

Procedural Order No. 1 (29.06.2009).

Burlington (PO1)

Cable Television of Nevis, Ltd. and Cable Television of Nevis Holdings,

Ltd. v. Federation of St. Kitts and Nevis, ICSID Case No. ARB/95/2, Award

(13.01.1997).

Cable-Television

Caratube International Oil Company LLP v. Kazakhstan, ICSID Case No.

ARB/08/12, Decision Regarding Claimant’s Application for Provisional

Measures (31.07.2009).

Caratube (PM)

CEMEX Caracas Investments B.V. and CEMEX Caracas II Investments

B.V. v. Venezuela, ICSID Case No. ARB/08/15, Decision on the Claimant's

Request for Provisional Measures (03.03.2010).

CEMEX (PM)

Champion Trading Company, Ameritrade International, Inc. v. Egypt,

ICSID Case No. ARB/02/9, Award (27.10.2006).

Champion-Trading

Charanne and Construction Investments v. Spain, SCC Case

No. V062/2012, Award (21.01.2016).

Charanne

Chemtura Corporation v. Canada, UNCITRAL, Award (02.08.2010). Chemtura

Churchill Mining and Planet Mining Pty Ltd v. Indonesia, ICSID Case No.


Churchill-Mining

(PO3)

City Oriente Limited v. Ecuador and Empresa Estatal Petróleos del Ecuador

(Petroecuador) I, ICSID Case No. ARB/06/21, Decision on Provisional

Measures (19.11.2007).

City-Oriente (PM)

CME Czech Republic B.V. v. Czech Republic, UNCITRAL, Final Award

(14.03.2003).

CME (Final-

Award)

CMS Gas Transmission Company v. Argentina, ICSID Case No.

ARB/01/8, Award (12.05.2005).

CMS

Continental Casualty Company v. Argentina, ICSID Case No. ARB/03/9,

Award (05.09.2008).

Continental-

Casualty

Convial Callao S.A. and CCI - Compañía de Concesiones de Infraestructura

S.A. v. Peru, ICSID Case No. ARB/10/2, Decision on Application for

Provisional Measures (22.02.2011).

Convial (PM)

vii

Copper Mesa Mining Corporation v. Ecuador, PCA Case No. 2012-2,

Award (15.03.2016).

Copper-Mesa

Corn Products International, Inc. v. Mexico, ICSID Case No. ARB

(AF)/04/1, Decision on Responsibility (15.01.2008).

Corn-Products

(Responsibility)

Crystallex International Corporation v. Venezuela, ICSID Case No.

ARB(AF)/11/2, Award (04.04.2016).

Crystallex

Daimler Financial Services AG v. Argentina, ICSID Case No. ARB/05/1,

Award (22.08.2012).

Daimler

Duke Energy Electroquil Partners & Electroquil SA v. Ecuador, ICSID

Case No. ARB/04/19, Award (18.08.2008).

Duke-Energy

ECE Projektmanagement v. Czech Republic, UNCITRAL, PCA Case No.

2010-5, Award (19.09.2013).

ECE-

Projektmanagement

El Paso Energy International Company v. Argentina, ICSID Case No.

ARB/03/15, Award (31.10.2011).

El-Paso

Electrabel v. Hungary, ICSID Case No. ARB/07/19, Award (25.11.2015). Electrabel

Emilio Agustín Maffezini v. Spain, ICSID Case No. ARB/97/7, Decision

on Request for Provisional Measures (28.10.1999).

Maffezini (PM)

Emilio Agustín Maffezini v. Spain, ICSID Case No. ARB/97/7, Award

(13.11.2000).

Maffezini

Enron Corporation and Ponderosa Assets, L.P. v. Argentina, ICSID Case

No. ARB/01/3, Award (22.05.2007).

Enron

Eskosol S.p.A. in liquidazione v. Italy, ICSID Case No. ARB/15/50,


Eskosol (PO3)

Fábrica de Vidrios Los Andes, C.A. and Owens-Illinois de Venezuela, C.A.

v. Venezuela, ICSID Case No. ARB/12/21, Award (13.11.2017).

Fábrica-de-Vidrios

Fireman’s Fund Insurance Company v. Mexico, ICSID Case No.

ARB(AF)/02/1, Award (17.07.2006).

Fireman’s-Fund

viii

Fouad Alghanim & Sons Co. for General Trading & Contracting, W.L.L.

and Fouad Mohammed Thunyan Alghanim v. Jordan, ICSID Case No.


Fouad-Alghanim

(PO2)

Frontier Petroleum Services Ltd. v. Czech Republic, UNCITRAL, Award

(12.11.2010).

Frontier-Petroleum

Gabriel Resources Ltd. and Gabriel Resources (Jersey) v. Romania, ICSID

Case No. ARB/15/31, Decision on Claimants Second Request for


Gabriel-Resources

(PM2)

Gemplus S.A., SLP S.A., Gemplus Industrial S.A. de C.V. v. Mexico,

ICSID Case No. ARB(AF)/04/3, Award (16.06.2010).

Gemplus

Giovanni Alemanni and Others v. Argentina, ICSID Case No. ARB/07/8,

Decision on Jurisdiction and Admissibility (17.11.2014).

Alemanni

(Jurisdiction)

Giovanni Alemanni and Others v. Argentina, ICSID Case No. ARB/07/8,

Concurring Opinion of Mr J Christopher Thomas (17.11.2014).

Alemanni

(Thomas)

Glamis Gold, Ltd. v. United States of America, UNCITRAL, Award

(08.06.2009).

Glamis

Gold Reserve Inc. v. Venezuela, ICSID Case No. ARB(AF)/09/1, Award

(22.09.2014).

Gold-Reserve

Helnan International Hotels v. Egypt, ICSID Case No ARB/05/19, Decision

on Claimant’s Request for Provisional Measures (17.05.2006).

Helnan-

International (PM)

Hydro S.r.l. and others v. Albania, ICSID Case No. ARB/15/28, Order on


Hydro-SrL (PM)

Impregilo S.p.A. v. Argentina, ICSID Case No. ARB/07/17, Award

(21.06.2011).

Impregilo

International Quantum Resources Limited, Frontier SPRL and Compagnie

Minière de Sakania SPRL v. Congo, ICSID Case No. ARB/10/21,


IQRL (PO3)

Ioan Micula, Viorel Micula, S.C. European Food S.A, S.C. Starmill S.R.L.

and S.C. Multipack S.R.L. v. Romania, ICSID Case No. ARB/05/20, Final

Award (11.12.2013).

Micula

ix

Ioannis Kardassopoulos v. Georgia, ICSID Case No. ARB/05/18, Award

(03.03.2010).

Kardassopoulos

Joseph Charles Lemire v. Ukraine, ICSID Case No. ARB/06/18, Decision

on Jurisdiction and Liability (14.01.2010).

Lemire

(Jurisdiction/Liability)

Khan Resources Inc., Khan Resources B.V., and Cauc Holding Company

Ltd. v. Mongolia, PCA Case No. 2011-09, Award (02.03.2015).

Khan-Resources

Lanco International Inc. v. Argentina, ICSID Case No. ARB/97/6,

Jurisdiction of the Arbitral Tribunal (08.12.1998).

Lanco

(Jurisdiction)

Lao Holdings N.V. v. Lao People's Democratic Republic, ICSID Case No.

ARB(AF)/12/6, Ruling on Motion to Amend the Provisional Measures

Order (30.05.2014).

Lao-Holdings (PM)

LG&E Energy Corp., LG&E Capital Corp., and LG&E International, Inc.

v. Argentina, ICSID Case No. ARB/02/1, Decision on Liability

(03.10.2006).

LG&E (Liability)

Libananco Holdings Co Limited v. Turkey, ICSID Case No ARB/06/8,

Decision on Preliminary Issues (23.06.2008).

Libananco

(Preliminary-Issues)

Loewen Group, Inc. and Raymond L. Loewen v. United States of America,

ICSID Case No. ARB(AF)/98/3, Award (26.06.2003).

Loewen

Marfin Investment Group v. The Republic of Cyprus, ICSID Case No.

ARB/13/27, Award (26.06.2018).

Marfin

Marvin Roy Feldman Karpa v. Mexico, ICSID Case No. ARB(AF)/99/1,

Award (16.12.2002).

Marvin-Feldman

Metalclad Corporation v. Mexico, ICSID Case No. ARB(AF)/97/1,

Decision on a Request by the Respondent for an Order Prohibiting the

Claimant from Revealing Information (27.10.1997).

Metalclad (PM)

Metalclad Corporation v. Mexico, ICSID Case No. ARB(AF)/97/1, Award

(30.08.2000).

Metalclad

Methanex Corporation v. United States of America, UNCITRAL, Final

Award (03.08.2005).

Methanex

x

Middle East Cement Shipping and Handling Co. S.A. v. Egypt, ICSID Case

No. ARB/99/6, Award (12.04.2002).

Middle-East-

Cement

Millicom International Operations B.V. and Sentel GSM S.A. v. Senegal,

ICSID Case No. ARB/08/20, Decision on the Application of Provisional

Measures (09.12.2009).

Millicom (PM)

Mr Franck Charles Arif v. Moldova, ICSID Case No. ARB/11/23, Award

(08.04.2013).

Arif

National Grid plc v. Argentina, UNCITRAL, Award (03.11.2008). National-Grid

Noble Energy and Machala Power v. Ecuador and Conelec, ICSID

Case No. ARB/05/12, Decision on Jurisdiction (05.03.2008).

Noble-Energy

(Jurisdiction)

Noble Ventures, Inc. v. Romania, ICSID Case No. ARB/01/11, Award

(12.10.2005). Noble-Ventures

Nova Group Investments, B.V. v. Romania, ICSID Case No. ARB/16/19,


Nova-Group (PO7)

Occidental Exploration and Production Company v. Ecuador, LCIA Case

No. UN3467, Award (01.07.2004).

Occidental

OI European Group B.V. v. Venezuela, ICSID Case No. ARB/11/25,

Award (10.03.2015).

OI-European-

Group

Oxus Gold v. Uzbekistan, UNCITRAL, Award (17.12.2015). Oxus

Parkerings-Compagniet AS v. Lithuania, ICSID Case No. ARB/05/8,

Award (11.09.2007).

Parkerings

Philip Morris Brands Sàrl, Philip Morris Products S.A. and Abal Hermanos

S.A. v. Uruguay, ICSID Case No. ARB/10/7, Award (08.07.2016).

Philip-Morris

Phoenix Action, Ltd. v. Czech Republic, ICSID Case No. ARB/06/5,

Decision on Provisional Measures (06.04.2007).

Phoenix (PM)

Plama Consortium Limited v. Bulgaria, ICSID Case No. ARB/03/24,

Decision on Jurisdiction (08.02.2005).

Plama

(Jurisdiction)

xi

Plama Consortium Limited v. Bulgaria, ICSID Case No. ARB/03/24, Order

(06.09.2005).

Plama (Order)

PNG Sustainable Development Program Ltd. v. Papua New Guinea, ICSID

Case No. ARB/13/33, Decision on Claimant Request for Provisional

Measures (21.01.2015).

PNG (PM)

Pope & Talbot Inc. v. Canada, UNCITRAL, Interim Award (26.06.2000). Pope-&-Talbot

(Interim-Award)

Pope & Talbot Inc. v. Canada, UNCITRAL, Award on the Merits of Phase

2 (10.04.2001).

Pope-&-Talbot

PSEG Global, Inc., The North American Coal Corporation, and Konya

Ingin Electrik Üretim ve Ticaret Limited Sirketi v. Turkey, ICSID Case No.

ARB/02/5, Award (19.01.2007).

PSEG

Quiborax S.A., Non Metallic Minerals S.A. and Allan Fosk Kaplún v.

Bolivia, ICSID Case No. ARB/06/2, Decision on Provisional Measures

(26.02.2010).

Quiborax (PM)

Ronald S. Lauder v. Czech Republic, UNCITRAL, Final Award

(03.09.2001).

Lauder

RosInvestCo UK Ltd. v. Russia, SCC Case No. V079/2005, Final Award

(12.09.2010).

RosInvestCo

RSM Production Corporation v. Saint Lucia, ICSID Case No. ARB/12/10,

Assenting Reasons of Gavan Griffith (12.08.2014).

RSM (Griffith)

Rumeli Telekom A.S. and Telsim Mobil Telekomunikasyon Hizmetleri

A.S. v. Kazakhstan, ICSID Case No. ARB/05/16, Award (29.07.2008).

Rumeli

Rusoro Mining Ltd. v. Venezuela, ICSID Case No. ARB(AF)/12/5, Award

(22.08.2016).

Rusoro

Saipem S.p.A. v. The People's Republic of Bangladesh, ICSID Case No.

ARB/05/07, Award (30.06.2009).

Saipem

Saluka Investments B.V. v. Czech Republic, UNCITRAL, Partial Award

(17.03.2006).

Saluka (Partial-

Award)

xii

S.D. Myers, Inc. v. Canada, UNCITRAL, Partial Award (13.11.2000). SD-Myers (Partial-

Award)

Sempra Energy International v. Argentina, ICSID Case No. ARB/02/16,

Award (28.09.2007).

Sempra

Sergei Paushok, CJSC Golden East Company and CJSC Vostokneftegaz

Company v. Mongolia, UNCITRAL, Award on Jurisdiction and Liability

(28.04.2011).

Paushok

(Jurisdiction/Liability)

SGS Société Générale de Surveillance S.A. v. Pakistan, ICSID Case No.


SGS (PO2)

SGS Société Générale de Surveillance S.A. v. The Philippines, ICSID Case

No. ARB/02/6, Decision on Objections to Jurisdiction (29.01.2004).

SGS (Jurisdiction)

Siemens A.G. v. Argentina, ICSID Case No. ARB/02/8, Award

(17.01.2007).

Siemens

Southern Pacific Properties (Middle East) Ltd. v. Egypt, ICSID Case No.

ARB/84/3, Award (20.05.1992).

SPP

Spyridon Roussalis v. Romania, ICSID Case No. ARB/06/1, Award

(07.12.2011).

Roussalis

Starrett Housing Corporation et al v. Iran, Iran-US Claims Tribunal,

Interlocutory Award (19.12.1983).

Starrett-Housing

(Interlocutory-Award)

Starrett Housing Corporation et al v. Iran, Iran-US Claims Tribunal, Award

No. 314-24-1 (14.08.1987).

Starrett-Housing

Suez, Sociedad General de Aguas de Barcelona, S.A.and Vivendi

Universal, S.A. v. Argentina, ICSID Case No. ARB/03/19, Order in

response to a Petition for Participation as Amicus Curiae (19.05.2005).

Suez (Order)


Universal, S.A. v. Argentina, ICSID Case No. ARB/03/19, Decision on

Liability (30.04.2010).

Suez (Liability)


Universal, S.A. v. Argentina, ICSID Case No. ARB/03/19, Award

(09.04.2015).

Suez

xiii

Técnicas Medioambientales Tecmed, S.A. v. Mexico, ICSID Case No.

ARB (AF)/00/2, Award (29.05.2003).

Tecmed

Teinver S.A., Transportes de Cercanías S.A. and Autobuses Urbanos del

Sur S.A. v. Argentina, ICSID Case No. ARB/09/1, Decision on Provisional

Measures (08.04.2016).

Teinver (PM)

Telenor Mobile Communications A.S. v. Hungary, ICSID Case No.

ARB/04/15, Award (13.09.2006).

Telenor

Tenaris S.A. and Talta- Trading e Marketing Sociedade Unipessoal Lda v.

Venezuela, ICSID Case No. ARB/11/26, Award (29.01.2016).

Tenaris

Tethyan Copper Company Pty Limited v. Pakistan, ICSID Case No.

ARB/12/1, Decision on Claimant Request for Provisional Measures

(13.12.2012).

Tethyan-Copper

(PM)

Tidewater Inc., v. Venezuela, ICSID Case No. ARB/10/5, Award

(13.03.2015).

Tidewater

Tokios Tokelés v. Ukraine, ICSID Case No. ARB/02/18, Order No. 1

(01.07.2003).

Tokios-Tokelés

(PO1)

Tokios Tokelés v. Ukraine, ICSID Case No. ARB/02/18, Order No. 3

(18.01.2005).

Tokios-Tokelés

(PO3)

Total S.A. v. Argentina, ICSID Case No. ARB/04/01, Decision on Liability

(27.12.2010).

Total (Liability)

Transglobal Green Energy, LLC and Transglobal Green Energy de Panama,

S.A. v. Panama, ICSID Case No. ARB/13/28, Decision on Provisional

Measures relating to Security for Costs (21.01.2016).

Transglobal (PM)

United Utilities (Tallinn) B.V. and Aktsiaselts Tallinna Vesi v. Estonia,

ICSID Case No. ARB/14/24, Decision on Respondent’s Application for


United-Utilities

(PM)

US v. Iran, Decision No. 130-A28-FT, 36 Iran-US Claims Tribunal Reports

5 (19.12.2000).

US/Iran

Valle Verde Sociedad Financiera SL v. Venezuela, ICSID Case No

ARB/12/18, Decision on Provisional Measures (25.01.2016).

Valle-Verde (PM)

xiv

Venezuela US, S.R.L. (Barbados) v. Venezuela, PCA Case No. 2013-34,

Interim Award on Jurisdiction (26.07.2016).

Venezuela-SrL

(Jurisdiction)

Víctor Pey Casado and President Allende Foundation v. Chile, ICSID Case

No. ARB/98/2, Decision on Provisional Measures (25.09.2001).

Pey-Casado (PM)

Victor Pey Casado and President Allende Foundation v. Chile, ICSID Case

No. ARB/98/2, Resubmission Award (13.09.2016).

Pey-Casado

(Resubmission-

Award)

Waste Management Inc. v. Mexico ("Number 2"), ICSID Case No.

ARB(AF)/00/3, Award (30.04.2004).

Waste-

Management

Wena Hotels Ltd. v. Egypt, ICSID Case No. ARB/98/4, Award

(08.12.2000).

Wena-Hotels

World Duty Free Company v. Kenya, ICSID Case No. ARB/00/7 Award

(04.10.2006).

World-Duty-Free

JUDGMENTS


Article 3, Paragraph 2, of the Treaty of Lausanne (Turkey/Iraq Frontier),

Advisory Opinion No. 12 (21.11.1925)1925 P.C.I.J. (Ser. B), p. 4.

Turkey/Iraq-

Frontier

Aegean Sea Continental Shelf (Greece v. Turkey), Judgment (19.12.1978)

I.C.J. Reports 1978, p. 3.

Greece/Turkey

Ambatielos case (merits: obligation to arbitrate) (Greece v. UK), Judgment

(19.05.1953) I.C.J. Reports 1953, p. 10.

Greece/UK

Armed Activities on the Territory of the Congo (New Application: 2002)

(Democratic Republic of the Congo v. Rwanda), Jurisdiction and

Admissibility, Judgment (03.02.2006) I.C.J. Reports 2006, p. 6.

Congo/Rwanda

Border and Transborder Armed Actions (Nicaragua v. Honduras),

Jurisdiction and Admissibility, Judgment (20.12.1988) I.C.J. Reports 1988,

p. 69.

Nicaragua/Honduras

xv

Case concerning the Factory at Chorzów (Germany v. Poland), Merits

(13.09.1928) P.C.I.J., Series A, No. 17, p. 47.

Chorzów Factory

Certain Criminal Proceedings in France (Congo v. France), Provisional

Measures Order (17.06.2003) I.C.J. Reports 2003, p. 102.

Congo/France

Electricity Company of Sofia and Bulgaria (Belgium v. Bulgaria),

Judgment (05.12.1939) P.C.I.J. Series A/B, No 79, p. 199.

Belgium/Bulgaria

Elettronica Sicula S.P.A. (ELSI) (USA v. Italy), Judgment (20.07.1989)


ELSI

Fisheries Jurisdiction (UK v. Iceland), Jurisdiction of the Court, Judgment

(02.02.1973) I.C.J. Reports 1973, p. 3.

UK/Iceland

Interpretation of Convention of 1919 concerning Employment of Women

during the Night, Advisory Opinion (15.11.1932) P.C.I.J. (ser. A) No. 50.

PCIJ 1919

Convention

James and others v. United Kingdom, [1986] ECHR 2. James

Interpretation of Peace Treaties with Bulgaria, Hungary and Romania

(Second phase), Advisory Opinion (18.07.1950) I.C.J. Reports 1950,

p. 221.

ICJ Peace-Treaties

LaGrand (Germany v. USA), Judgement (27.06.2001) I.C.J. Reports 2001,

p. 466.

LaGrand

Land and Maritime Boundary (Cameroon v. Nigeria; Equatorial Guinea

intervening), Judgement (10.10.2002) I.C.J. Reports 2002 p. 303.

Cameroon/Nigeria

Legal Consequences for States of the Continued Presence of South Africa

in Namibia (South West Africa) notwithstanding Security Council

Resolution 276 (1970), Advisory Opinion, I.C.J. Reports 1971 p. 16.

ICJ Continued-

Presence

Legality of Use of Force (Serbia and Montenegro v. Belgium), Preliminary

Objections, Judgment, I.C.J. Reports 2004 p. 279.

ICJ Serbia/Belgium

Passage through the Great Belt (Finland v. Denmark), Order (29.07.1991),


Finland/Denmark

xvi

Passage through the Great Belt (Finland v. Denmark), Order (29.07.1991),

I.C.J. Reports 1991, Separate Opinion of Judge Shahabuddeen, p. 28.

Finland/Denmark

(Shahabuddeen)

Pressos Compania Naviera S.A. and others v. Belgium [1995] ECHR 47. Pressos Compania

Rainbow Warrior (New Zealand v. France) (1990) 20 RIAA 226. Rainbow Warrior

Status of Eastern Carelia Case, Advisory Opinion (23.07.1923) P.C.I.J.

Series B. No. 5, p. 27.

Eastern-Carelia

Territorial Dispute (Libyun Aruh Jamuhiriyu/Chad), Judgment, I.C.J.

Reports 1994, p. 6, 22.

ICJ Libya/Chad

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Brownlie I, Principles of Public International Law (OUP 2008). Brownlie

Bouchet MH, Clark E, and Groslambert B, Country Risk Assessment: A

Guide to Global Investment Strategy (Wiley 2003).

Bouchet/Clark/

Groslambert

Collins L, Provisional and Protective Measures in International Litigation

(Martinus Nijhoff 1992).

Collins

Crawford J, Brownlie’s Principles of Public International Law (OUP

2012).

Crawford

Dolzer R and Stevens M, Bilateral Investment Treaties (Martinus Nijhoff

1995).

Dolzer/Stevens

xvii

Gazzini T, Interpretation of International Investment Treaties (Hart

Publishing 2016).

Gazzini

Hanquin X, Jurisdiction of the International Court of Justice (Brill 2017). Hanquin

Hirsch M, The Arbitration Mechanism of the International Centre for the

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Hirsch

Kantor M, Valuation for Arbitration: Compensation Standards, Valuation

Methods and Expert Evidence (Wolters Kluwer 2008).

Kantor

Kazazi M, Burden of Proof and Related Issues, A Study on Evidence before

International Tribunals (Kluwer Law International 1996).

Kazazi

Malatesta A and Sali R, The Rise of Transparency in International

Arbitration (Juris Publishing 2013).

Malatesta/Sali

Manciaux S, Investissement Etrangers et Arbitrage entre états

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Manciaux/(2004)

Marboe I, Calculation of Compensation and Damages in International

Investment Law (OUP 2017).

Marboe

McLachlan C, Shore L, and Weiniger M, Investment Claims (OUP 2017). McLachlan/Shore/

Weiniger

Miles CA, Provisional Measures Before International Courts and

Tribunals (CUP 2017).

Miles

Montt S, State Liability in Investment Treaty Arbitration: Global

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Montt

O’Malley ND, Rules of Evidence in International Arbitration: An

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Parra A, The History of ICSID (OUP 2012). Parra/(2012)

Petrochilos G, Procedural Law in International Arbitration (OUP 2004). Petrochilos

xviii

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Ripinsky S and Williams K, Damages in International Investment Law

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Ripinsky/Williams

Schreuer C et al., The ICSID Convention: A Commentary (CUP 2011). Schreuer/(2011)

Sinclair, The Vienna Convention on the Law of Treaties (Manchester

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Sourgens FG, Duggal K, and Laird IA, Evidence in International

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Laird

Villiger ME, Commentary on the 1969 Vienna Convention on the Law of

Treaties (Martinus Nijhoff 2009).

Villiger

Waincymer J, Procedure and Evidence in International Arbitration

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ARTICLES AND CONTRIBUTIONS TO COLLECTED WORKS


Alexandrov SA, ‘The Compulsory Jurisdiction of the International Court of

Justice: How Compulsory is It?’ (2006) 5(1) Chinese Journal of

International Law 29.

Alexandrov

Alvarez JE, ‘The Once and Future Foreign Investment Regime’ in

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Benz

xix

Bjorklund AK, ‘Causation, Morality, and Quantum’ (2009) 32(2) Suffolk

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Bjorklund/(2009)

Bjorklund AK, ‘The National Treatment Obligation’ in Yannaca-Small K

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Bjorklund/(2018)

Bjorklund AK and Brosseau J, ‘Sources of Inherent Powers’ in Ferrari F

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Caron DD, ‘Interim Measures of Protection: Theory and Practice in Light

of the Iran United States Claims’ (1986) 46 Zeitschrift Für Ausländisches

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Caron

Castro de Figueiredo R, ‘Euro Telecom v. Bolivia: The Denunciation of the

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Castro-Figueiredo

Christie K, Ogut E, and Turtoi R, ‘Chapter 20: Compensation for

Expropriation’ in Legum B (ed), The Investment Treaty Arbitration Review

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Ciupagea

Delaume GR, ‘ICSID Arbitration Proceedings’ (1986) 4(2) International

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de Luca A and Sacerdoti G, ‘Investment Dispute Settlement’ in Krajewski

M and Hoffmann RT (eds), Research Handbook on Foreign Direct

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de-Luca/Sacerdoti

xx

Demirkol B, ‘Does an Investment Treaty Tribunal Need Special Consent

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Demirkol

Dörr O, ‘Article 31’ in Dörr O and Schmalenbach K (eds), Vienna

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Dörr

Durney M, ‘Legal Effects and Implications of the Denunciation of the

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Planck Yearbook of United Nations Law 221.

Durney

El-Hage J, ‘How Many Tribunals Apply the Customary Necessity Rule to

the Argentine Cases? An Analysis of ICSID Decisions with respect to the

Interaction Between Article XI of the U.S-Argentina BIT and the

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International Investment Law and Policy 2011-2012 (OUP, 2013).

El-Hage

Fitzmaurice M and Merkouris P, ‘Canons of Treaty Interpretation: Selected

Case Studies from the World Trade Organisation and the North American

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and the Vienna Convention on the Law of Treaties: 30 Years On (Brill

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Fitzmaurice/

Merkouris

Fouret J, ‘Denunciation of the Washington Convention and Non-

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Giroud S and Moss S, ‘Mass Claims Processes under Public International

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Giroud/Moss

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Higgins R, ‘The Taking of Property by the State: Recent Developments in

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xxi

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Investment Agreements’ in Yannaca-Small K (ed), Arbitration Under

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Kaufmann-

Kohler/Antonietti

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Times (Kluwer Law International 2011).

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Kownacki NE, ‘Prospects for ICSID Arbitration in Post-Denunciation

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Manciaux S, ‘Le Vénézuela se retire du CIRDI’ (2012) Revue de

L’Arbitrage 218.

Manciaux/(2012)

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Martinez/Pekar

McCarl R, ‘ICSID Jurisdiction over International Mass Investment

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of International Law 173.

McCarl

Mezgravis A and González C, ‘Denunciation of the ICSID Convention:

Two Problems, One Seen and One Overlooked’ (2012) 9(7) TDM.

Mezgravis/González

Montanes MT, ‘Introductory Note to Bolivia’s Denunciation of the

Convention on the Settlement of Disputes Between States and Nationals of

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Montanes

xxii

Muchlinski P, ‘Caveat Investor? The Relevance of the Conduct of the

Investor under the Fair and Equitable Treatment Standard’ (2006) 55(3)

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Nolan MD, Sourgens FG and Carlson H, ‘Leviathan on life-support?

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and Policy 2011-2012 (OUP 2013).

Nolan/Sourgens/

Carlson

Okongwu C and McHugh EB, ‘Chapter 24: Causation’ in Legum B (ed),

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Okongwu/McHugh

Ortino F, ‘Transparency of Investment Awards’ in Nakagawa J (ed),

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(Routledge 2013).

Ortino

Parra A, ‘Participation in the ICSID Convention’, in Hobér K et al. (eds),

Between East and West: Essays in Honour of Ulf Franke 383 (Juris

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Pearsall PW and Heath JB, ‘Causation and Injury in Investor State

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Plagakis S, ‘Webcasting’ in Nakagawa J (ed), Transparency in

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Using Domestic Class Actions’ (2017-2018) 4 McGill Journal of Dispute

Resolution 1.

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Treaty Arbitration’ in Beharry CL (ed), Contemporary and Emerging

Issues on the Law of Damages and Valuation in International Investment

Arbitration (Brill/Nijhoff 2018).

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Sabahi/Duggal/Birch

Schreuer C, ‘Denunciation of the ICSID Convention and Consent to

Arbitration’ in Waibel M et al. (eds), The Backlash against Investment

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Schreuer/(2010)

xxiii

Schumacher KF and Klönne H, ‘Discounted Cash Flow Method’ in Beharry

CL (ed), Contemporary and Emerging Issues on the Law of Damages and

Valuation in International Investment Arbitration (Brill/Nijhoff 2018).

Schumacher/Klönne

Shany Y, ‘Toward a General Margin of Appreciation Doctrine in

International Law?’ (2005) 16(5) The European Journal of International

Law 907.

Shany (2005)

Shany Y, ‘Jurisdiction and Admissibility’ in Cesare Romero et al (eds.) The

Oxford Handbook of International Adjudication (OUP 2014).

Shany (2014)

Sinclair A and Repousis O, ‘An Overview of Provisional Measures in

ICSID Proceedings’ (2017) 32(2) ICSID Review 431.

Sinclair/Repousis

Steinberger H, ‘Judicial Settlement of International Disputes’ in Bernhardt

R (ed), Encyclopedia of Public International Law (vol. III, 1997).

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Szczudlik KB, ‘Mass Claims under ICSID’ (2016) 4(2) Wroclaw

Review of Law Administration & Economics 70.

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Tejera VJ, ‘Unravelling ICSID's Denunciation: Understanding the

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20(3) ILSA J. Int'l & Comp. L. 423.

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Thirlway H, ‘The Indication of Provisional Measures by the International

Court of Justice’ in Bernhardt R (ed), Interim Measures indicated by

International Courts (Springer-Verlag 1994).

Thirlway

Tzanakopoulos A, ‘Denunciation of the ICSID Convention under the

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Vannieuwenhuyse G, ‘Bringing a Dispute concerning ICSID Cases and the

ICSID Convention before the International Court of Justice’ (2009) 8(1)

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Vannieuwenhuyse

Voon T and Mitchell A, ‘Denunciation, Termination, and Survival: The

Interplay of Treaty Law and International Investment Law’ (2016) 31(2)

ICSID Review 413.

Voon/Mitchell

xxiv

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Muchlinski P, Ortino F and Schreuer C (ed), The Oxford Handbook of

International Investment Law (OUP 2008).

Wälde/Sabahi

Wick DM, ‘The Counter-Productivity of ICSID Denunciation and

Proposals for Change’ (2012) 11(2) Journal of International Business and

Law 239.

Wick

Williams DAR and Kirk A, ‘Chapter 6: Balancing Party Autonomy,

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Kaplan N and Moser MJ (eds) Jurisdiction, Admissibility and Choice of

Law in International Arbitration: Liber Amicorum Michael Pryles (Kluwer

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Williams/Kirk

Wychera B and Mimnagh W ‘The Nature of State Consent Expressed in

BITS’ in Klausegger C et al. (eds), Austrian Yearbook on International

Arbitration (Manz’sche Verlags- und Universitätsbuchhandlung 2019).

Wychera/Mimnagh

MISCELLANEOUS


Damodaran A, ‘Measuring Company Exposure to Country Risk: Theory

and Practice’ (2003)

<https://papers.ssrn.com/sol3/papers.cfm?abstract_id=889388>.

Damodaran

Draft Articles on Responsibility of States for Internationally Wrongful

Acts, with commentaries (2001) II.2 Yearbook of the International Law

Commission 31.

DARSIWA

History of the ICSID Convention, Vol. II-1 (ICSID Publication 1968). ICSID-History (1)

History of the ICSID Convention, Vol. II-2 (ICSID Publication 1968). ICSID-History (2)

ICSID Secretariat, Proposals for Amendment of the ICSID Rules —

Working Paper, Vol. 3, August 2, 2018.

ICSID-Rules

(WP2018)

ILC, ‘Draft Articles on the Law of Treaties with Commentaries’ (1966) 2

Yearbook of the International Law Commission 265.

ILC Draft-VCLT

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=889388

xxv

ILC, ‘Fragmentation of International Law: Difficulties Arising from the

Diversification and Expansion of International Law’ A/CN.4/L.682 78

(13.04.2006).

ILC

(Fragmentation)

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before International Investment Tribunals, Rapporteur: Campbell

McLachlan (2019) <http://www.idi-iil.org/en/publications/egalite-des-

parties-devant-les-tribunaux-internationaux-dinvestissements/>.

IDI (Equality-of-

Parties)

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Disputes Designed for Use in Bilateral Investment Agreements (1969) 8(6)

ILM 1341.

Model Clauses

(1969)

OECD, Draft Convention on the Protection of Foreign Property (1967). OECD: Protection

of Property

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Settlement of Investment Disputes Between States and Nationals of Other

States of March 18, 1965, 1 ICSID Reports 23 (1993).

IBRD: Executive

Director’s Report

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Expropriation, UNCTAD/DIAE/IA/2011/7 (2012).

UNCTAD:

Expropriation

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Vol II: Report to the Development Committee and Guidelines

<http://documents.worldbank.org/curated/en/955221468766167766/pdf/m

ulti-page.pdf>.

World Bank

Guidelines

http://www.idi-iil.org/en/publications/egalite-des-parties-devant-les-tribunaux-internationaux-dinvestissements/

http://www.idi-iil.org/en/publications/egalite-des-parties-devant-les-tribunaux-internationaux-dinvestissements/

http://documents.worldbank.org/curated/en/955221468766167766/pdf/multi-page.pdf

http://documents.worldbank.org/curated/en/955221468766167766/pdf/multi-page.pdf

xxvi

LIST OF ABBREVIATIONS

¶(¶¶) Paragraph/Paragraphs

Amending Law 2018 Law 0808-L of 12 January 2018 Amending the Law on

Media and Information

Blocking Ordinances Ordinances dated 28 February 2018, 1 March 2018, and 2

March 2018

Damages Report Expert Report on Damages submitted on 29 June 2018

DCF Discounted Cash Flow

Ex.C/Ex.R Claimants’ Exhibit/Respondent’s Exhibit

FET Fair and Equitable Treatment

ff Following pages/paragraphs

First Decree Decree No. 0578/201-D of 12 January 2018

ICSID Convention Convention on the Settlement of Investment Disputes

between States and Nationals of Other States, 1968

ICJ International Court of Justice

ILC International Law Commission

Media Law 2013 Law on Media and Information No. 1125-L on 10

September 2013

Notice Respondent’s Notice denouncing the ICSID Convention

dated 5 January 2018

PO Procedural Order

Response Response to the Request for Arbitration dated 3 September

2018

RPM Respondent’s Request for Provisional Measures dated 21

December 2018

Second Decree Decree No. 0599/201-D of 11 February 2018

SOUF Statement of Uncontested Facts

the BITs Agreements on the Promotion and Reciprocal Protection of

Investments of Tyrea with Novanda (2000) and Kitoa

(2001)

UNCTAD United Nations Conference on Trade and Development

VCLT Vienna Convention on the Law of Treaties, 1969

1

STATEMENT OF FACTS

Parties to the dispute

1. Claimants: FriendsLook plc (“FriendsLook”) is a company incorporated under the laws of the

Federation of Novanda. Whistler Inc. (“Whistler”) and SpeakUp Media Inc. (“SpeakUp”) are

two companies incorporated under the laws of the Union of Kitoa.

2. Respondent: The Republic of Tyrea (“Tyrea”) is a transitioning economy, which recently

emerged from a civil war between the two major ethnicities in the country, Minyar and Tatyar,

in September 2012.

Background to the investments

3. Respondent entered into two BITs with Novanda in 2000 and Kitoa in 2001, the latter with a

different preamble. Novanda, Kitoa, and Tyrea acceded to the ICSID Convention in January

1995, October 1995, and December 2000 respectively.

4. Respondent enacted the Media Law 2013 on 10 September 2013 to liberalise the Internet and

to reduce control over media and press. This law was described as “the ground for the advent”

of foreign investors in Tyrea.

5. During an international conference in December 2014, Respondent promised its best efforts to

“facilitate the establishment and use of new internet possibilities for the people of Tyrea”.

6. Following deliberations in November 2017, Tyrea denounced the ICSID Convention on 5

January 2018 through a notice to the President of the World Bank.

Investments

7. Given Tyrea’s sizeable population and the lack of large competitors, FriendsLook invested in

Tyrea by opening a local office and launching a Tyrean version of its website in January 2015.

Shortly thereafter, in June 2015, Whistler and SpeakUp followed suit.

8. Claimants’ platforms became the most commonly used and influential social media networks

in Tyrea, considered synonymous with the Internet itself. The number of users engaging with

their platforms has been increasing exponentially since their launch, while popularity of

domestic platforms has simultaneously waned.

2

Events leading to the dispute

9. Due to their vast reach, Claimants’ social media networks were considered ideal by Tyrean

radical communities to make their views available to wide audiences. Since 2016, radical

groups have resorted to these networks for spreading hate speech and promoting ethnic violence

between Minyar and Tatyar using fake profiles and false information.

10. In 2017, violent altercations between Minyar and Tatyar groups were reported for the first time

in Tyrea since the civil war of 2012. In the beginning of 2018, ethnic violence promoted through

social media resulted in hundreds of casualties.

11. According to the survey of the Tyrean Communications Agency, by 1 January 2018 almost

every inhabitant of Tyrea over the age of 10 had an account on at least one of the social media

platforms available in the country.

Dispute

12. In order to tackle the increasing ethnic violence promoted through social media, Respondent

enacted Amending Law 2018 on 12 January 2018. This law established that every social media

platform must: first, develop an algorithm capable of filtering and blocking content against

Respondent’s public order and or/morality; second, collect the personal information of existing

and new users; and third, provide Tyrean authorities with users’ personal information and

private messaging.

13. On the same day, Respondent promulgated the First Decree setting a deadline of 60 days to

comply with the requirements of Amending Law 2018.

14. On 28 January 2018, a representative of SpeakUp, Ms. Parlante, met with the Tyrean Minister

of Telecommunications, Information Technology and Mass Media, and expressed concerns

about the user identification system and short time to develop a screening algorithm.

15. However, the situation in Tyrea deteriorated rapidly and the police was unable to control the

ethnic rampage. This prompted Respondent to issue the Second Decree on 11 February 2018,

reducing the deadline for compliance with Amending Law 2018 and moving it forward to 28

February 2018.

3

16. Although Claimants had in place certain generic filters, the algorithms developed were

defective. They did not screen hate speech posts and required lengthy human analysis.

Moreover, it took longer to flag fake accounts than it took for users to create them. Moreover,

although the user identification systems were in place, Claimants deliberately refused to block

unverified accounts.

17. Therefore, the Tyrean Communication Authority blocked Claimants’ platforms by means of

the Blocking Ordinances.

18. Amending Law 2018 prescribed penalties based on the gravity of transgressions. Given the lack

of popularity of Wink and TruthSeeker, which made them less convenient for radicalist groups,

these social media platforms were not blocked for their non-compliance with this law. Instead,

there are criminal proceedings regarding the imposition of fine pending against them.

Arbitration

19. Claimants filed a Request for Arbitration on 29 June 2018, registered by the ICSID Secretary

General on 16 July 2018. Claimants, inter alia, requested the Tribunal to find Tyrea liable for

the breach of the BITs and accordingly demanded USD 69,134,875.00, USD 26,760,460.00,

and USD 27,094,600.00 as damages.

20. Respondent filed its Response, denying all of Claimants’ claims and raising objections to the

jurisdiction of the Tribunal. It also contested Claimants’ calculation of damages.

21. On 21 December 2018, Respondent submitted a Request for Provisional Measures, asking the

Tribunal to order Claimants to refrain from “promoting, stimulating, or instigating the

publication of propaganda, presenting their case selectively outside this Tribunal, or otherwise

jeopardizing Tyrea’s rights in this dispute”.

4

ARGUMENTS

PART I: PROVISIONAL MEASURES

22. Claimants have launched an aggressive, one-sided media campaign against the Tyrean

Government parallel to this arbitration proceeding to “expedite bilateral resolution of the

disagreement with Tyrea”.1 They have also engaged a public relations firm in furtherance of

the same.2 To prevent the consequent aggravation of this dispute, Respondent filed a Request

for Provisional Measures on 21 December 2018 before the Tribunal (“RPM”). Its RPM evinces

rights susceptible to protection [I.] and meets the threshold conditions for grant of provisional

measures [II]. Consequently, it must be granted.

I. RESPONDENT SEEKS RIGHTS SUSCEPTIBLE TO PROTECTION BY PROVISIONAL

MEASURES

23. An investment dispute must be protected from damage during an arbitral process.3 Thus, Article

47 ICSID Convention gives tribunals the broad discretion to recommend binding provisional

measures to preserve the “rights of either party”.4 This includes all “rights relating to the

dispute”,5 whether substantive or procedural.6 In casu, the RPM intends to protect Respondent’s

right to non-aggravation of the dispute [A.] and its procedural integrity [B.], which are self-

standing procedural rights.7

A. CLAIMANTS’ ACTIONS THREATEN THE AGGRAVATION OF THIS DISPUTE

24. Disputing parties are bound by a good faith duty not to aggravate the dispute or its resolution,8

by eroding the trust and confidence between disputants, generating external pressure on the

opposing party, or attempting a trial by media.9 To maintain or restore peace between parties,10

their behaviour may be regulated or restricted through interim relief.11

1 SOUF, ¶25. 2 SOUF, ¶25. 3 Born, 871; Benz, 145. 4 Quiborax (PM), ¶105; PNG (PM), ¶103. 5 Plama (Order), ¶40; Churchill-Mining (PO3), ¶48. 6 Biwater (PO1), ¶71; Convial (PM), ¶82. 7 Burlington (PO1), ¶60; Kaufmann-Kohler/Antonietti, 516. 8 Belgium/Bulgaria, 199; Pey-Casado (PM), ¶¶67-76; Caratube (PM), ¶127. 9 Biwater (PO2), ¶135; Schreuer/(2011), 759. 10 Tokios-Tokelés (PO1), ¶2; Lao-Holdings (PM), ¶13. 11 Bernhard-Pezold (PM), ¶7.

5

25. This includes restrictions on the parties’ use of media.12 In this light, the Biwater Guaff and

World Duty Free tribunals restricted claimants from using public discussions to broadcast

inaccurate information about the case or antagonise the respondent.13 Further, the Abaclat and

United Utilities tribunals prevented claimants from publishing their pleadings and witness

statements, which carry the inherent risk of a biased portrayal of the dispute in media.14

26. Tyrea attributes the aggravation of the present dispute to a media campaign and lobbying by

Claimants. Respondent has identified digital media titles published globally from July 2018 to

August 2019 that critique its conduct vis-à-vis Claimants.15 This includes the publication of

Claimants’ Request for Arbitration and witness statement.16 Further, Tyrea’s Response was also

circulated and its context was distorted to suggest that Tyrea is opposed to the freedom of

expression.17 First, these publications paint a biased and inaccurate picture of the dispute, to

the prejudice of its peaceful resolution. Second, this media propaganda led to increased violence

among protestors in Tyrea,18 contrary to the very purpose of Respondent’s disputed social

media regulations. Additionally, the media campaign and Claimants’ lobbyists exert pressure

upon Respondent to revoke its measures in the interest of its international reputation and

political stability.

27. Claimants cannot dissociate themselves from these actions. They have accepted responsibility

for the publication of their Request for Arbitration and witness statement.19 Tyrea’s Response

was only dispatched to Claimants and the ICSID Secretariat.20 Moreover, it is known that

Claimants have engaged a public relations firm and employed “unofficial” measures to expedite

the resolution of this dispute.21 Finally, by their own admission, they have resorted to lobbying

in the past to secure their economic interests.22 Cumulatively, this demonstrates possible danger

to Respondent’s rights due to Claimants’ actions, sufficient to warrant provisional measures

against them.23

12 Teinver (PM), ¶210; Kinnear/Diop, 47. 13 Biwater (PO2), ¶137; World-Duty-Free, ¶13. 14 Abaclat (PO3), ¶¶102-104; United-Utilities (PM), ¶114. 15 PO3, ¶9; RPM, ¶¶3-5. 16 PO3, ¶7. 17 RPM, ¶3. 18 PO2, ¶5. 19 PO3, ¶7. 20 Response, 22. 21 SOUF, ¶25. 22 Request for Arbitration, ¶13. 23 Finland/Denmark (Shahabuddeen), 34; Thirlway, 24; Kazazi, 326-327.

6

28. Alternatively, given the widespread media scrutiny of this case,24 both the peaceful resolution

of this dispute and Respondent’s underlying right to regulate its affairs are at risk. In such

situations, tribunals grant preventive provisional measures to restrict claimants from

contributing to media discourse, even if there is no direct link between such media scrutiny and

claimants.25 Similarly, the RPM must be granted to avoid further aggravation of this dispute.

B. CLAIMANTS’ ACTIONS THREATEN THE INTEGRITY OF THIS PROCEEDING

29. To ensure the integrity of the proceedings, a party must be afforded the opportunity to present

its position without any external influence.26 Thus, a tribunal may recommend any provisional

measure to preserve a party’s right of defence,27 prevent the frustration of the effectiveness of

an award,28 and to prevent one party from taking justice in its own hands.29 For instance, the

ADC tribunal ordered the confidentiality of all documents produced in the arbitration to

preserve the integrity of the arbitral process.30

30. In the present case, Claimants have attempted to unilaterally secure their interests through the

aforementioned media campaign and lobbying. Their biased criticism of Respondent has

provoked violent clashes among Tyreans discontent with the governmental measures in

dispute.31 This threatens to defeat Amending Law 2018’s objective to secure peace and stability

in Tyrea.32 External influence from the media and lobbyists to roll back Amending Law 2018

may also render an award in recognition of Tyrea’s right to regulate, as requested in its

Response,33 meaningless – consequently frustrating the integrity of the proceeding.

II. THE RPM SATISFIES THE THRESHOLD REQUIREMENTS FOR GRANT OF PROVISIONAL

MEASURES

31. Article 47 ICSID Convention does not reveal the pre-conditions for granting provisional

measures. However, jurisprudence constante directs this Tribunal to consider its prima facie

jurisdiction [A.], the requesting party’s prima facie case on merits [B.], as well as the

24 PO2, ¶13; PO3, ¶2. 25 United-Utilities (PM), ¶102; Biwater (PO2), ¶146. 26 Nova-Group (PO7), ¶235; Libananco (Preliminary-Issues), ¶78. 27 Hydro-SrL (PM), ¶3.32; Sinclair/Repousis, 433. 28 Eskosol (PO3), ¶33; Millicom (PM), ¶42. 29 City-Oriente (PM), ¶55. 30 ADC, ¶68. 31 PO2, ¶5. 32 SOUF, ¶15. 33 Response, ¶16.

7

urgency [C.], necessity [D.], and proportionality [E.] of the measures before granting a request

for provisional measures.34 Tyrea’s RPM meets these five criteria.

A. THE TRIBUNAL HAS PRIMA FACIE JURISDICTION TO GRANT THE REQUESTED MEASURES

32. Admittedly, the competence of a Tribunal to grant provisional measures depends upon its prima

facie jurisdiction over the dispute.35 At the outset, it must be noted that the party requesting

provisional measures in this case is a Respondent state. To compel a respondent to establish

jurisdiction would force it to act against its own interests,36 in serious departure from

fundamental rules of procedure.37 Thus, Tyrea must not be compelled to demonstrate this

Tribunal’s jurisdiction.

33. In any event, a finding of prima facie jurisdiction must be confined to an initial analysis, i.e.

“at first sight”.38 When the parties agree that a tribunal has prima facie jurisdiction, the tribunal

can confirm the same based on parties’ consent.39 In the present case, Claimants assert that:

first, they are investors from states that have concluded BITs offering ICSID arbitration with

Tyrea; and second, the present dispute concerns their ‘investments’ in Tyrea.40 Respondent does

not dispute the foregoing. Thus, this Tribunal has the requisite prima facie jurisdiction.

34. Pertinently, an assessment of a tribunal’s jurisdiction at this stage is preliminary and does not

finally pre-judge its jurisdiction.41 Hence, Tyrea’s RPM does not preclude it from challenging

this Tribunal’s jurisdiction subsequently.42

B. RESPONDENT HAS A PRIMA FACIE CASE ON THE MERITS OF THE DISPUTE

35. The party requesting the provisional measures must demonstrate that it has a prima facie

credible case on the merits,43 in order to prevent vexatious claims for interim relief.44 This

analysis should not judge the merits of the case before its final resolution, but be restricted to

an assessment of the possibility of success on the merits.45 The Paushok tribunal accordingly

34 IQRL (PO3), ¶40; Fouad-Alghanim (PO2), ¶¶49-50; Gazzini/Kolb, 171. 35 Tokios-Tokelés (PO3), ¶11; Luttrell, 398-400. 36 Miles, 161. 37 RSM (Griffith), ¶¶4-6. 38 Millicom (PM), ¶42. 39 BSG-Resources (PO3), ¶74; United-Utilities (PM), ¶114. 40 Request for Arbitration, ¶¶2-3. 41 SGS (PO2), ¶¶20-21; Transglobal (PM), ¶26; PNG (PM), ¶104. 42 Valle-Verde (PM), ¶¶75-78; Phoenix (PM), ¶29; Fouad-Alghanim (PO2), ¶70. 43 PNG (PM), ¶¶120-121; Tethyan-Copper (PM), ¶117. 44 Collins, 225; Caron, 237-238. 45 Pey-Casado (PM), ¶48; Congo/France, 122; Maffezini (PM), ¶13.

8

limited itself to evaluating whether the requesting party had made a reasonable case, which, if

the facts alleged were proven, might lead the tribunal to render an award in its favour.46

36. It is improper to burden respondents to proffer their prima facie defence on the merits of the

case in advance of claimants pleading their case.47 In any event, Respondent enacted Amending

Law 2018 to prevent online hate speech and curb ethnic violence,48 in exercise of its regulatory

powers. The Blocking Ordinances against Claimants’ social media platforms are an outcome

of their wilful disregard of the requirements of this law,49 despite being forewarned of the

consequences of non-compliance.50 In any case, Claimants retain their physical assets in Tyrea

as well as, admittedly, the ability to derive profits from the same.51 If the foregoing is

established as true, Respondent’s actions cannot be characterised as breaches of Articles 3 and

6(1) of the BITs. Thus, it has a prima facie case on the merits.

C. THE REQUESTED MEASURES ARE URGENT

37. Article 47 ICSID Convention deliberately omits any reference to “imminent danger” to the

requesting party’s rights.52 Thus, a relief claimed is sufficiently urgent when the underlying

right cannot await the outcome on the merits.53 However, the desired level of urgency depends

upon the type of provisional measure requested.54 When the requested measure seeks to protect

the integrity of the proceedings or ensure the effectiveness of the final award, it is deemed

urgent ipso facto.55 This is because such rights exist only for the duration of the proceedings.56

In this light:

The Burlington tribunal found that when the measures are intended to protect against

the aggravation of a dispute during the proceedings, the urgency requirement is fulfilled

by definition.57

46 Paushok (Jurisdiction/Liability), ¶55. 47 RSM (Griffith), ¶¶7-9. 48 SOUF, ¶13-15. 49 SOUF, ¶20. 50 Ex.C6, ¶7. 51 Ex.C7, 18. 52 ICSID-History (2), 815. 53 Tokios-Tokelés (PO3), ¶8; Eskosol (PO3), ¶36. 54 Biwater (PO1), ¶76; Quiborax (PM), ¶153. 55 Teinver (PM); ¶235; Hydro-SrL (PM), ¶3.29. 56 Miles, 269. 57 Burlington (PO1), ¶74.

9

The City Oriente tribunal deemed the grant of provisional measures urgent to restrain a

pressuring mechanism intended to defeat the very rights that the requesting party sought

to protect vide treaty arbitration.58

38. Through its RPM, Tyrea seeks the protection of similar procedural rights – the non-aggravation

of the dispute and its procedural integrity.59 These are threatened by Claimants’ efforts to

exercise media and political pressure against it. The protection of these rights is only material

during the course of these proceedings and cannot await the Tribunal’s final award.

Accordingly, the interim relief sought is urgent.

D. THE REQUESTED MEASURES ARE NECESSARY

39. Evaluating the necessity of interim relief entails an assessment of ‘substantial harm’ that a

requesting party seeks to avoid through the interim measures.60 Notably, if the anticipated harm

cannot be fully remedied with a subsequent award for damages or compensation, it is

considered sufficiently significant to warrant the award of provisional measures.61 In case of

procedural rights such as the confidentiality of proceedings,62 which Tyrea seeks to protect, the

grant of provisional measures is always necessary since a subsequent award of damages cannot

repair procedural unfairness.63

40. Additionally, a tribunal’s mandate under Article 47 ICSID Convention extends to preventing

risk of harm in proceedings,64 which involves an assessment of probabilities.65 Thus,

manifestation of significant harm need not be demonstrated with certainty - it must be more

likely than not to occur if provisional measures are not taken.66 The media campaign by

Claimants has already impacted the political stability in Tyrea.67 Further discussion of the

dispute is likely to inflame these tensions, causing significant harm.

58 City-Oriente (PM), ¶69. 59 RPM, ¶9. 60 Convial (PM) ¶86; Lalive, 134; Waincymer, 696. 61 Metalclad (PM), ¶8; Helnan-International (PM), ¶34; CEMEX (PM), ¶49. 62 PNG (PM), ¶113. 63 Nova-Group (PO7), ¶¶239-240; Miles, 259; Petrochilos, 106. 64 Gabriel-Resources (PM2), ¶72. 65 Finland/Denmark, 17. 66 Biwater (PO3), ¶¶ 144-145. 67 PO2, ¶5.

10

E. THE REQUESTED MEASURES ARE PROPORTIONATE TO THE ANTICIPATED HARM

41. In assessing proportionality, a tribunal should check whether one party’s need for provisional

measures outweighs the hardships to which the other party would be subjected, if the measures

were granted.68 In the context of discussions and publications relating to a dispute, it must

balance any general interest in transparency against specific interests in confidentiality of

certain information or documents.69

42. In Tyrea’s view, the balance of inconvenience tilts in its favour. The requisite transparency in

this case can be guaranteed by the publication of the Tribunal’s procedural orders and awards,

which offer a balanced and objective picture of the dispute. Beyond this, Claimants have no

right to publish the any material under an alleged general rule of transparency,70 are under no

legal obligation to publish the arbitration documents, and thus, will suffer no harm if the

requested measures are granted.

43. Conversely, Tyrea stands to lose its bid for the World Expo 2030,71 suffer from aggravated

volatility among its population,72 bear an increased cost for the proposed issuance of sovereign

bonds,73 and succumb to increased political pressure even if an award is rendered in its favour.

In fact, a biased media campaign would thwart the primary objective of transparency in

investor-state arbitration: dissemination of accurate information concerning governmental

affairs.74 Thus, the RPM must be granted.

68 Burimi (PO2), ¶35; Eskosol (PO3) ¶36. 69 Abaclat (PO3), ¶79; Biwater (PO3), ¶112. 70 Ortino, 121; Malatesta/Sali, 110. 71 RPM, ¶¶3,8. 72 PO2, ¶5. 73 RPM, ¶10. 74 Plagakis, 94; Malatesta/Sali, 110.

11

PART II: JURISDICTION

I. THE TRIBUNAL LACKS RATIONE VOLUNTATIS JURISDICTION

44. Respondent ratified the ICSID Convention on 15 December 2000.75 However, on 5 January

2018, it notified the President of the World Bank Group of its intention to denounce the

Convention.76 This Notice precludes the Tribunal’s jurisdiction over claims filed after its

receipt [A.]. The continued operation of Articles 9(1) [B.] or 9(2) [C.] of the BITs cannot

override Respondent’s denunciation. Accordingly, the Tribunal must decline jurisdiction over

the claims filed on 29 June 2018.

A. THE TRIBUNAL HAS NO JURISDICTION FOLLOWING RESPONDENT’S NOTICE

45. Article 72 ICSID Convention governs the effect of Respondent’s denunciation of the

Convention on its obligation to submit to ICSID arbitration [1.]. Under this Article, Respondent

must submit to ICSID arbitration only if the consent to arbitrate was achieved before its notice

of denunciation was received by the Centre [2.]. Since the requisite consent in the present case

was achieved after 5 January 2018 [3.], this Tribunal lacks jurisdiction, despite the registration

of Claimants’ Request for Arbitration by the ICSID Secretary General [4.].

1. Article 72 ICSID Convention regulates the effects of denunciation on

Respondent’s obligation to arbitrate

46. ICSID Convention contains two types of provisions: first, provisions that address states in their

capacity as Contracting States to this Convention;77 and second, provisions that address states

as parties in ICSID arbitration proceedings following their consent.78 This is because

ratification of the ICSID Convention does not imply consent to ICSID Arbitration.79 The latter

is only achieved through an express subsequent agreement between a host state and an

investor.80

47. Articles 71 and 72 ICSID Convention demonstrate a similar division of responsibilities: Article

71 addresses denouncing states in their capacity as former Contracting States to the

75 SOUF, ¶2. 76 Ex.R1. 77 Articles 4-7, 14, and 18-24 ICSID Convention. 78 Article 26, 27, 36, 37, 41-44, 49(2), 50, 51, 52, and 53 ICSID Convention. 79 Preamble ¶7 ICSID Convention; Mezgravis/González, 8; Alvarez, 651. 80 Article 25(1) ICSID Convention; Durney; 241; Cable-Television, ¶¶4.02-4.17.

12

Convention.81 Conversely, Article 72 specifically regulates rights and obligations of a state

arising from its consent to the Centre’s jurisdiction.82 International law recognises the hierarchy

of such a saving clause,83 over a general rule on treaty termination.84 Thus, only Article 72

applies as lex specialis to the effect of a state’s denunciation on its obligation to submit to ICSID

arbitration. 85

2. The critical date under Article 72 ICSID Convention is the date of receipt of a

notice of denunciation

48. Article 72 sets the critical date as the date of receipt of notice of denunciation – a state is only

bound by obligations arising from consent achieved before this date.86 As per the customary

principle of ordinary interpretation,87 the plain meaning of this Article is that a state is not

obligated to submit to ICSID arbitration if consent for the same was achieved after its notice of

denunciation.88 This reference to the date of the notice, instead of the effective date of

denunciation as under Article 71 ICSID Convention, was deliberately introduced89 in the First

Preliminary Draft of the Convention:

“[t]he denunciation shall take effect [twelve] months after receipt by the Bank of

such notice; provided that the obligations of the State concerned arising out of

undertakings given prior to the date of such notice shall remain in full force and

effect.”90

49. In the present case, Tyrea’s Notice was sent to the World Bank and made public on 5 January

2018.91 Thus, it only has an obligation to arbitrate disputes for which the requisite consent given

before this date.

81 Wychera/Mimnagh, 414. 82 Castro-Figueiredo, 14; Schreuer/(2010), 355. 83 ILC (Fragmentation), 78; ILC Draft-VCLT, 265. 84 Villiger, 873; UK/Iceland, 18; Rainbow Warrior, ¶106. 85 Parra/(2010), 383. 86 Fábrica-de-Vidrios, ¶269; Voon/Mitchell, 417. 87 LaGrand, 501; Crawford, 28-29. 88 Schreuer/(2011), 1280-1281; Tejera, 432; Montanes, 970. 89 Castro-Figueiredo, 17. 90 ICSID-History (1), 172-173. 91 Ex.R1; PO2, ¶7.

13

3. The requisite consent under Article 72 ICSID Convention was achieved after the

critical date

50. Article 72 ICSID Convention compels former Contracting States to adhere to

“obligations....arising out of consent to the jurisdiction of the Centre.” However, all provisions

in the Convention pertaining to the Centre’s jurisdiction are only triggered by reciprocal

consent between the host state and the investor92 – for example, Articles 25, 26, 36, and 46.

Moreover, the drafting history of the ICSID Convention,93 the comments to the 1969 ICSID

Model Clauses,94 and decisions of ICSID tribunals,95 all emphasise that an “obligation” to

arbitrate only arises once a state’s offer to arbitrate has been accepted by the investor. Thus,

“consent” in Article 72 must be understood to mean mutual or perfected consent.96 An

interpretation that accepts a unilateral offer as ‘‘consent’’ for the purposes of Article 72 would

lead to the absurd result that consent can exist before the ‘date of consent’ as defined in

Institution Rules 2(3).97

51. This interpretation can be confirmed by reference to customary rules of treaty interpretation,

which direct that treaties must be interpreted as a whole.98 The general rule99 in Article 25(1)

ICSID Convention prevents one disputing party from unilaterally withdrawing its consent, only

after mutual consent of the disputants has been achieved.100 Thus, the Convention’s provisions

on the “Jurisdiction of the Centre” do not prohibit withdrawal of consent if it has not been

perfected.101 Article 72 ICSID Convention, which was intended to protect irrevocability of

“consents to arbitration already given”,102 must be similarly interpreted to preserve states’

obligations once “mutual consent” has been achieved.103

52. Customary rules of treaty interpretation also allow recourse to the circumstances prevailing

during a treaty’s conclusion.104 While consent given through BITs was not envisaged at the

time of drafting the ICSID Convention,105 offers of arbitration were not deemed to create

92 Schreuer/(2010), 356; Parra/(2012), 158. 93 ICSID-History (1), 274–275; Broches/(1972), 353. 94 Model Clauses (1969), Comment 20. 95 AMT, ¶5.23; SGS (Jurisdiction), ¶31. 96 Fábrica-de-Vidrios, ¶¶274-282; Manciaux/(2012), 222. 97 Schreuer/(2010), 361. 98 Fitzmaurice/Merkouris, 155; Sinclair, 130-131. 99 Mezgravis/González, 15. 100 Vannieuwenhuyse, 126; Plama (Jurisdiction), ¶140. 101 Wick, 261; IBRD: Executive Director’s Report, Article V, Section 23. 102 Fouret, 73-75; ICSID-History (2), 1009. 103 Tzanakopoulos, 82; Hirsch, 50. 104 Greece/Turkey, 32-33; Dörr, 579. 105 Sourgens, 68; Manciaux/(2004), 122.

14

international obligations unless they were accepted.106 In this regard, the drafting history

clarifies the following:

“...a general statement [in favor of submission of claims to the Centre] would not

be binding on the State which had made it until it had been accepted by an

investor. If the State withdraws its unilateral statement by denouncing the

Convention before it has been accepted by any investor, no investor could later

bring a claim before the Centre.”107

53. Based on the foregoing, the term “consent” under Article 72 must be interpreted as mutual or

reciprocal consent. In the present case, Respondent made a standing offer to arbitrate in Article

9(1) of the BITs; such offers becomes binding upon subsequent acceptance.108 Claimants only

accepted this offer on 29 June 2018, nearly six months following Respondent’s notice of

denunciation. However, as explained in Section [I.][A.][2.] of Part II above, such consent

should have been perfected before the notice of denunciation was received by the Centre.

Accordingly, this Tribunal has no jurisdiction.

4. Registration of Claimants’ claim by ICSID Secretary General does not determine

the Tribunal’s jurisdiction

54. The ICSID Secretary General registered Claimants’ Request for Arbitration on 16 July 2018.

Article 36(3) of the Convention compels the Secretary General to register a request unless it is

manifestly outside the Centre’s jurisdiction. This implies that the determination of jurisdiction

by the Secretary General is not final, but only a screening procedure to prevent abuse of the

ICSID Convention.109 It is not an exercise of jurisdictional authority,110 and consequently does

not bind a tribunal in its determination of its own competence.111 This is confirmed by Article

41(1) ICSID Convention, which designates the Tribunal as the sole judge of its competence.112

Thus, the registration of Claimants’ Request for Arbitration does not pre-judge the Tribunal’s

jurisdiction.

106 IBRD: Executive Director’s Report 28; ICSID-History (1), 274–275. 107 ICSID-History (2), 1010. 108 Dolzer/Stevens, 131-132; Lanco (Jurisdiction), ¶33; Broches/(1972), 67. 109 Reed/Paulsson/Blackaby, 76; de-Luca/Sacerdoti, 216. 110 ICSID-History(2), 774; IBRD: Executive Director’s Report ¶20. 111 AMT, ¶5.01. 112 Amerasinghe/(2009), 441.

15

B. CLAIMANTS CANNOT CLAIM A RIGHT TO ICSID ARBITRATION UNDER ARTICLE 9(1) OF

THE BITS

55. Article 9(1) offers investors the option to invoke the Centre’s jurisdiction under the ICSID

Convention. In respect of such clauses, the tribunal in Fábrica de Vidrios noted that:

“ICSID arbitration is only available if the conditions for access to ICSID

arbitration in the investment treaty and the ICSID Convention have been

satisfied.....It is a proposition that follows inexorably from the fact that the BIT

and the ICSID Convention are two separate legal instruments in international

law”.113

56. This is a consequence of the bifurcated or dual consent required for ICSID arbitration.114 Hence,

once a state has withdrawn its consent with immediate effect under Article 72 ICSID

Convention, it cannot be compelled to submit to ICSID Arbitration pursuant to a BIT alone.115

A state’s right to revoke its unilateral consent under Article 72 ICSID Convention cannot be

withdrawn or modified by means of a different treaty.116 To do so would limit Article 72 to a

rather minimal effect, contrary to the express intention of parties under the ICSID

Convention.117 Thus, after the critical date under Article 72 ICSID Convention, Claimants

cannot resort to ICSID arbitration under Article 9(1) of the BITs.

C. CLAIMANTS CANNOT CLAIM A RIGHT TO ICSID ARBITRATION UNDER ARTICLE 9(2) OF

THE BITS

57. Article 9(2) of the BITs preserved Claimants’ right to arbitrate under the ICSID’s Additional

Facility Rules as long as Tyrea did not accede to the ICSID Convention. Interpreted according

to its ordinary meaning,118 the provision ceased to operate upon Tyrea’s ratification of the

Convention on 15 December 2000.119 This interpretation can be confirmed by the circumstances

prevailing at the time of the BITs’ conclusion,120 i.e. 2000-2001. At the time, Tyrea was in the

process of ratifying the ICSID Convention. Thus, Article 9(2) was only intended to provide a

113 Fábrica-de-Vidrios, ¶261. 114 Alexandrov, 36. 115 Voon/Mitchell, 420. 116 Article 43 VCLT. 117 Kownacki, 547; Vannieuwenhuyse, 130. 118 ICJ Serbia/Belgium, 318 ; ICJ Libya/Chad, 22. 119 SOUF, ¶2. 120 ICJ Continued-Presence; 31; Turkey/Iraq-Frontier, 24.

16

transitory dispute settlement mechanism until such ratification was complete. The Venezuela

SRL tribunal gave a similar interpretation to an identical clause in the Venezuela-Barbados

BIT.121

58. Admittedly, Tyrea’s denunciation of the ICSID Convention prevents the arbitration of this

dispute before an international arbitral forum. However, as confirmed by the ICJ in the

Interpretation of Peace Treaties case, policy considerations cannot justify attributing a meaning

to a treaty provision contrary to its letter and spirit.122 A treaty’s object and purpose, the

principle of effet utile, or good faith cannot be used as a source of obligation where none would

otherwise exist.123 Thus, Article 9(2) of the BITs cannot compel Respondent to arbitrate under

the ICSID’s Additional Facility Rules in contravention of the limited undertaking provided

therein.

II. THE TRIBUNAL SHOULD DECLINE JURISDICTION OVER CLAIMANTS’ MULTI-PARTY

CLAIM

59. Claimants have submitted their respective claims as a multi-party dispute arising from two

different BITs. However, the Tribunal has no jurisdiction over this multi-party claim because

Respondent did not consent to multi-party arbitration [A.]. Additionally, the multi-party claim

is inadmissible since there is no linkage between its constituent claims [B.].

A. RESPONDENT HAS NOT CONSENTED TO MULTI-PARTY ARBITRATION

60. Respondent submits that the adjudication of multi-party claim necessitates an assessment of the

Tribunal’s jurisdiction to do so [1.]. Respondent did not consent to multi-party arbitration

through the ICSID Convention or the BITs [2.], and the exercise of inherent powers by the

Tribunal does not allow it to fill jurisdictional gaps [3.]. Thus, the Tribunal must decline its

jurisdiction in the present case.

1. The Tribunal must assess its jurisdiction to adjudicate a multi-party claim

61. Jurisdiction is the legal power of courts or tribunals, defined in their governing agreements, to

take cognizance of and to deal with matters before them.124 Due to the consensual nature of

121 Venezuela-SrL (Jurisdiction), ¶¶83-90. 122 ICJ Peace-Treaties, 229. 123 Cameroon/Nigeria, 297-304; Nicaragua/Honduras, 105-106; US/Iran, ¶58. 124 Steinberger, 49.

17

jurisdiction in international law,125 no state can be obliged to submit disputes to international

arbitration without its consent.126 In the case of institutional dispute settlement, the scope of a

state’s consent is analysed at two different levels:

“a) “general jurisdiction” which defines the objective range and outer limits of the ambit

for all cases, according to the constitutive instrument of the organ (e.g. the ICJ Statute),

or the framework convention (e.g. the ICSID Convention;

b) “special jurisdiction” which defines the subjective range and limits of the ambit of

jurisdiction of the organ in a particular case, according to the specific jurisdictional title

bearing the consent of the parties, on the basis of which the case is brought before the

organ”.127

62. Any question of the scope of disputing parties’ consent pertains to the ambit of “special

jurisdiction” of a tribunal.128 Consequently, whether there exists consent to multi-party

arbitration must be decided as a jurisdictional issue.129 The arbitral tribunal has the final

authority to decide this issue in exercise of its Kompetenz-Kompetenz,130 irrespective of the

ICSID Secretary General’s preliminary determination under Article 36(3) ICSID

Convention.131

2. Respondent has not consented to multi-party arbitration under the ICSID

Convention or the BITs

63. A state’s consent must be established through definitive evidence with regard to its existence

and its scope.132 Thus, consent “must always be manifest and unequivocal.”133 Silence or non-

exclusion in the applicable legal instruments cannot be interpreted as the consent of parties,134

by resorting to interpretative tools. 135

125 Eastern-Carelia, p. 27; Congo/Rwanda, ¶88. 126 Williams/Kirk, 87; Greece/UK, 19. 127 Abaclat (Abi-Saab), ¶12. 128 Abaclat (Abi-Saab), ¶126; Shany (2014), 787; Hanquin, 186. 129 Demirkol, 619; Ambiente-Ufficio (Jurisdiction), ¶112; Szczudlik, 83. 130 Delaume, 224. 131 ICSID-Rules (WP2018), 834. 132 Daimler, ¶175; McCarl, 192. 133 Ambiente-Ufficio (Torres), ¶82. 134 Gazzini, 140; Nolan/Sourgens/Carlson, 514. 135 Szczudlik, 96 ; ICJ 1919 Convention, 377.

18

64. The ICSID Convention did not envisage multi-party claims,136 since collective proceedings

were almost non-existent at the time of its conclusion.137 Instead, Article 25 ICSID Convention

contemplates the Centre’s jurisdiction over disputes between a Contracting State and a national

of another Contracting State, without any explicit mention of multi-party proceedings. Pursuant

to Article 31(1) VCLT, a treaty must be interpreted primarily according to “the ordinary

meaning to be given to the terms.”138 The language of Article 25 only demonstrates unequivocal

consent for claims brought by an investor from one Contracting State.

65. Similarly, Article 9 of the BITs refers to disputes between one Contracting Party and a national

of the other Contracting Party concerning obligations “under this Agreement”. A plain reading

of these clauses demonstrates that Tyrea has not consented to joint claims submitted by

investors from different nations arising under multiple agreements. Tyrea’s domestic legislation

on collective claims cannot overcome this limitation, since “decision on jurisdiction within the

ICSID framework is a question to be answered on the basis of international law.”139

66. Thus, the ICSID Convention and the BITs do not demonstrate Respondent’s consent to multi-

party arbitration. In the absence of such manifest consent in the governing instruments,

respondent states must provide another consent or “secondary consent” for these specific kind

of proceedings.140 In the present case, Respondent has not done so and consequently, the

Tribunal must decline jurisdiction.

3. Exercise of inherent powers by the Tribunal does not extend to filling

jurisdictional requirements

67. Article 44 ICSID Convention empowers an arbitral tribunal to decide procedural questions not

covered by the Convention, the Arbitration Rules, or the parties’ agreement. This “inherent

power” must only be exercised “to close any apparent gaps” in a specific proceeding.141 This

power was not granted to allow tribunals to adopt a full set of procedural rules governing a

specific kind of proceeding or fill jurisdictional requirements such as the lack of consent.142

Consequently, it is sparingly exercised by ICSID tribunals in matters such as admission of

136 Giroud/Moss, 499. 137 Gazzini, 138; Szczudlik, 95. 138 ICJ Serbia/Belgium, 318 ; ICJ Libya/Chad, 22. 139 Ambiente-Ufficio (Jurisdiction), ¶153. 140 Abaclat (Abi-Saab), ¶177. 141 Schreuer/(2011), 688. 142 Bjorklund/(2019), 23.

19

amicus curia briefs143 or granting a stay on proceedings in recognition of a forum selection

clause.144

68. Thus, Claimants cannot rely on Article 44 ICSID Convention to overcome Tyrea’s lack of

consent to multi-party arbitration. In any case, even if the Tribunal were to use its inherent

powers to conduct a multi-party proceeding, the consequent introduction of new rules of

procedure145 in existing arbitration rules for this purpose requires further consent of both

parties,146 which Respondent does not give.

B. THE CLAIMS ARE NOT CLOSELY CONNECTED

69. Respondent states cannot be placed under undue burden to defend against claims that differ

materially in a single proceeding.147 Furthermore, multi-party claims are only admitted when

the joint adjudication of like claims would lead to procedural efficiency.148 Thus, the

admissibility of a multi-party claim requires homogeneity in the constituent claims.149 This

primarily depends on whether a single dispute exists [1.]. Additionally, the tribunal should

assess whether the investment is the same or was made jointly by the claimants [2.]; and

whether the investors or the claims are affiliated [3.].150 The present multi-party claim does not

meet these criteria.

1. The multi-party claim does not arise from a single dispute

70. Under the ICSID Convention,151 Arbitration Rules,152 and Institution Rules,153 an ICSID

tribunal only has jurisdiction over “a” dispute. Thus, the existence of a single dispute is essential

before any claim for a multi-party arbitration is accepted.154 For a single dispute to exist, “the

interest represented on each side of the dispute has to be in all essential respects identical for

143 Suez (Order), ¶¶10, 16. 144 SGS (Jurisdiction), ¶173. 145 Radovic, 17; Szczudlik, 98. 146 Abaclat (Jurisdiction), ¶522; Abaclat (Abi-Saab), ¶194; Radovic, 14. 147 IDI (Equality-of-Parties), 484; Martinez/Pekar, 362. 148 Ambiente-Ufficio (Jurisdiction), ¶80. 149 Abaclat (Jurisdiction), ¶¶540-543. 150 ICSID-Rules (WP2018), 834; Ambiente-Ufficio (Jurisdiction), ¶161. 151 Article 25 ICSID Convention. 152 Rule 1 ICSID Arbitration Rules. 153 Rule 2 ICSID Institution Rules. 154 Alemanni (Jurisdiction), ¶292; Alemanni (Thomas), ¶13.

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all of those involved on that side of the dispute.”155 This necessitates that the dispute must arise

from identical standards of protection afforded to investors in the underlying BITs.156

71. These standards of protection must be interpreted according to their object and purpose,

reflected in the preambles of the BITs.157 In this light, the Lauder tribunal used the preamble of

the BIT to determine the context of the FET standard.158 Moreover, the CME tribunal

recognised that the rights protected by two treaties with similar or identical provisions may be

different and not yield the same results as they may have different contexts, object and purpose,

and travaux préparatoires.159

72. In the present case, both BITs contain distinct preambles. Pertinently, only the Tyrea-Kitoa BIT

links the subject matter of the investments, i.e. technology, with the FET standard. This will

occasion differing interpretations of the FET standard, a standard in dispute, under the two

BITs. Hence, a single dispute contemplating identical rights does not exist.

2. Claimants’ investments are not the same and were not made jointly

73. The investments in the present dispute were made by Friendslook, Whistler, and SpeakUp, each

of whom operates a distinct social media network and separate local offices in Tyrea.160 Further,

they did not make these investments jointly: FriendsLook established its operations in Tyrea in

January 2015, whereas Whistler and SpeakUp did so in summer 2015.161 Thus, the investments

were not the same or made jointly by Claimants.

3. Claimants or their claims are not affiliated

74. Arbitral tribunals may proceed with a multi-party claim in the event of investors affiliated

through family ties,162 joint corporate structures,163 unrelated joint venture partners,164 or as

shareholders in the same local company.165 However, the present claim does not envisage an

analogous situation. The three investors are distinct legal entities incorporated in different

155 Alemanni (Jurisdiction), ¶292; IDI (Equality-of-Parties), 484. 156 Kabra, 453. 157 Bayindir, ¶155. 158 Lauder, ¶292. 159 CME (Final-Award), ¶433 160 SOUF, ¶¶7-9. 161 SOUF, ¶6. 162 Bernhard-Pezold, ¶¶118ff. 163 Noble-Energy (Jurisdiction), ¶¶188ff. 164 Suez (Liability), ¶¶1ff. 165 Goetz, ¶89.

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countries,166 with their own businesses and customers.167 Additionally, they do not have a

common parent company,168 or a common majority shareholding.169 Hence, they cannot be

considered affiliated.

166 SOUF, ¶¶7-9. 167 SOUF, ¶¶7-9. 168 Ex.C7. 169 PO2, ¶9.

22

PART III: MERITS

75. Claimants commenced their operations in Tyrea in 2015,170 soon after the country emerged

from a civil war.171 However, ethnic tensions between communities continued to plague Tyrea

in the years to come.172 Respondent promulgated Amending Law 2018 in this context to compel

social media platforms in its territory to employ content filtering algorithms and collect user

data.173 Given the worsening situation, it was forced to move forward the deadline for

compliance with this law.174 Claimants failed to comply with the aforesaid requirements within

the stipulated deadline – prompting the Blocking Ordinances against their platforms.175

76. Respondent submits that its “measures” – cumulatively, the promulgation of Amending Law

2018, the shortening of the deadline for its compliance, and the Blocking Ordinances – are a

legitimate exercise of its regulatory powers [I.]. Alternatively, its measures do not entail a

breach of Articles 6 or 3(1) of the BITs [II.].

I. RESPONDENT’S MEASURES CONSTITUTE A LEGITIMATE EXERCISE OF ITS POLICE

POWERS

77. Unless expressly stipulated by contracting parties, bilateral investment treaties do not modify

rights of a state arising from customary international law,176 such as its regulatory power to

adapt its legal order as necessary.177 Thus, states may lawfully exercise regulatory powers, even

if it affects the investor’s interests.178 This is known as the “police powers” doctrine.179

78. An exercise of police powers must be aimed at securing a public purpose [A.], constitute a bona

fide exercise of a state’s sovereign power [B.], and be non-discriminatory [C.].180 Moreover,

the means employed to achieve the public purpose must be proportionate to their purported

170 SOUF, ¶6. 171 SOUF, ¶1. 172 SOUF, ¶¶13-14. 173 Ex.C2. 174 Ex.C3. 175 Ex.C4. 176 El-Hage, 459: Montt, 232. 177 Total (Liability), ¶115. 178 Brownlie, 532. 179 Chemtura, ¶266: Marfin, ¶838. 180 Saluka (Partial-Award), ¶255; Methanex, ¶7; Continental-Casualty, ¶276; Marvin-Feldman, ¶103; Philip-

Morris, ¶307; SD-Myers (Partial-Award), ¶281.

23

aim [D.].181 Respondent’s measures meet the aforesaid criteria and are consequently allow a

derogation from Articles 3(1) and 6 of the BITs.

A. RESPONDENT HAS EXERCISED ITS POLICE POWERS FOR A PUBLIC PURPOSE

79. Contrary to Claimants’ allegations,182 Tyrea’s measures were not intended to block content that

is opposed to its perception of morality, but rather to put an end to the rampant violence

spreading across the country.183 International law accords Tyrea the margin of appreciation to

take such regulatory measures [1.]. Alternatively, the balance of probabilities in this regard is

also in Tyrea’s favour [2.].

1. Respondent is afforded the ‘margin of appreciation’ to take measures in pursuit

of a public purpose

80. Regulatory measures are designed to pursue the general welfare of a state,184 including political,

economic, or social ends.185 Since the state is best equipped to secure public welfare in its

territory,186 it is afforded the right to determine what constitutes a legitimate public interest

warranting regulatory action.187 Thus, a state may reasonably exercise its margin of appreciation

in this regard.188 The actions of a state premised on a public purpose are prima facie valid in

international law.189

81. In the present case, extremist groups saw Claimants’ platforms as ideal for dissemination of

hate speech and promotion of ethnic violence in Tyrea,190 using fake profiles and spreading

false information.191 These actions have aggravated tensions in Tyrea.192 Thus, Tyrea must be

afforded the margin of appreciation to determine the measures necessary to prevent the same in

public interest. This Tribunal should defer to its reasonable judgment and refrain from

reviewing the same.

181 Tecmed, ¶122. 182 Request for Arbitration, ¶13. 183 SOUF, ¶19. 184 Saluka (Partial-Award), ¶255. 185 Saluka (Partial-Award), ¶259; OECD: Protection of Property, 18. 186 Benvenisti, 843; Shany (2005), 907. 187 Maffezini, ¶67; Higgins, 331. 188 Glamis, ¶¶625, 803–805; Saluka (Partial-Award), ¶272. 189 James, ¶47; Pressos Compania, ¶37. 190 SOUF, ¶12; Ex.R3. 191 SOUF, ¶13. 192 SOUF, ¶13.

24

2. In any event, Respondent’s actions were motivated by a ‘demonstrable’ public

purpose

82. Arguably, an arbitral tribunal may evaluate whether a host state’s actions were set to achieve a

genuine public interest,193 independent of private gain194 and political ambitions.195 Here, the

veracity of a fact, including the genuineness of a public interest,196 must be assessed through a

balance of probabilities.197 The evidence adduced by both parties on the issue is evaluated to

determine the assertion that is more likely to be true.198

83. Starting in 2016, extremist groups used Claimants’ platforms to promote ethnic violence in

Tyrea,199 through fake profiles and false information.200 Given the history of violence between

Tyrea’s Minyar and Tatyar communities,201 the situation escalated rapidly.202 In 2017, violent

altercations between these communities were reported for the first time since the 2012 Civil

war.203 By January 2018, the casualties ran into hundreds.204 Respondent acted in this context

to compel social media platforms operating in its territory to employ content filtering algorithms

and collect user data.205 Even following the promulgation of Amending Law 2018, Tyrean

police was unable to control the increasing rampage,206 necessitating the shortened deadline for

compliance with this law.

84. Thus, Respondent’s measures were prompted by a demonstrable need to secure public safety

and welfare in Tyrea. Its exhibits confirm and corroborate the facts asserted in its Response,

tilting the balance of probabilities in its favour.

B. RESPONDENT EXERCISED ITS POLICE POWERS IN GOOD FAITH

85. Any authority exercising its discretionary sovereign power must not abuse its rights in the

process.207 Thus, sovereign actions must be taken in good faith to constitute a legitimate

193 ADC, ¶432. 194 UNCTAD: Expropriation, 34. 195 BP-Exploration, 317. 196 Methanex, ¶20. 197 Kardassopoulos, ¶229; Bernhard-Pezold, ¶177; Amerasinghe/(2005), 242. 198 Sourgens/Duggal/Laird, 80; O’Malley, 208. 199 SOUF, ¶12; Ex.R3. 200 SOUF, ¶13. 201 SOUF, ¶1. 202 Ex.R2. 203 SOUF, ¶14. 204 SOUF, ¶14. 205 Ex.C2. 206 SOUF, ¶19. 207 Saipem, ¶160.

25

exercise of police powers.208 In this regard, the Occidental tribunal assessed whether the host

state’s actions were based on objective reasons and facts.209

86. In violation of the aforesaid requirements of Amending Law 2018, Claimants implemented a

defective algorithm incapable of screening hate speech on social media.210 Further, they also

refused to block unverified user accounts solely due to the anticipated unpopularity of this

measure, despite having the means to do so.211 In light of these violations, Respondent was

forced to block Claimants’ platforms in its territory by means of the Blocking Ordinances.212

The foregoing indicates that Respondent’s measures were taken in good faith, based on

objective and reasoned welfare concerns.

C. RESPONDENT’S MEASURES WERE NON-DISCRIMINATORY

87. To establish discrimination, the investor must prove that it was subjected to a different treatment

in comparable circumstances without reasonable justification, typically based on its nationality

or similar characteristics.213 Here, a comparable enterprise must be used to contrast the

treatment meted out to the foreign investor.214 Differential treatment must be assessed between

“directly competing” investors,215 even if they broadly operate in the same markets.216

88. In their Request for Arbitration,217 Claimants refer to the continued operation of domestic social

media platforms, namely TruthSeeker and Wink, in Tyrea. However, the different treatment of

these websites cannot be considered discriminatory. The point of comparison between different

social media platforms can only be their functions and popularity. Claimants’ websites operate

as multi-functional global social networks.218 Conversely, both Wink and TruthSeeker offer

limited functions to their users: while Wink is merely a local messenger application,

TruthSeeker is solely intended to dispel the spread of false information.219

208 Fireman’s-Fund ¶¶176-177. 209 Occidental, ¶¶162–163. 210 SOUF, ¶19. 211 SOUF, ¶20. 212 Ex.C4. 213 Crystallex, ¶715; Pope-&-Talbot, ¶75. 214 Crystallex, ¶715. 215 Bjorklund/(2018), ¶¶21.22ff; Pope-&-Talbot, ¶¶77ff. 216 ADF, ¶¶155-156; Loewen, ¶139; Champion-Trading, ¶¶154ff. 217 Request for Arbitration, ¶12. 218 SOUF, ¶¶7-9. 219 SOUF, ¶13.

26

89. Moreover, Claimants’ platforms were the most influential in Tyrea,220 their reach ranging from

27-30 million people.221 In fact, FriendsLook has almost five time more users than

TruthSeeker.222 Neither TruthSeeker nor Wink is popularly used for spreading hate speech and

promoting violence.223 Even after Claimants’ platforms were blocked, the popularity of these

domestic websites did not increase substantially.224

90. Therefore, the domestic platforms in Tyrea cannot be considered comparable to Claimants in

their functions or popularity. In any case, despite the difference in these platforms, Respondent

has also initiated criminal proceedings concerning the imposition of fine on Tyrean

platforms,225 in accordance with Amending Law 2018.226 Consequently, its measures cannot be

catalogued as discriminatory.

D. RESPONDENT’S MEASURES WERE PROPORTIONAL TO THEIR AIM

91. To be proportionate, a measure must achieve a balance or a reasonable relationship between the

means employed by the host state and the aim sought,227 even if the investor’s assets are

incidentally affected in the process.228 In ascertaining the reasonable relationship, the need to

diffuse a serious emergency, social crisis or public unrest must be taken into account.229

92. In casu, Respondent tried to control the outbreak of hate speech and communal violence by

implementing Amending Law 2018.230 This attempt did not succeed, since Claimants did not

comply with the requirements set therein.231 Given that the violence across Tyrea was

worsening and the police was not able to respond to the rampage,232 Respondent had to block

the means used by extremist groups to effectively disseminate their ideas. This necessitated the

blocking of Claimants’ platforms, which were the most commonly used and influential

platforms in Tyrea,233 synonymous to the Internet itself.234 Therefore, there is clear relationship

220 Ex.R2. 221 Ex.R3. 222 SOUF, ¶22. 223 SOUF, ¶22. 224 PO2, ¶16. 225 PO3, ¶11. 226 Ex.C2. 227 Azurix, ¶311; LG&E (Liability), ¶195. 228 Tecmed, ¶139; ELSI, 21-22, 40-41. 229 Tecmed, ¶133. 230 Ex.C2. 231 SOUF, ¶¶19-20. 232 SOUF, ¶19. 233 Ex.R2. 234 SOUF, ¶10.

27

between Respondent’s measures and their intended objective to secure internal peace. Any

effect on Claimants investments and revenues in the process is purely incidental.

II. ALTERNATIVELY, RESPONDENT DID NOT BREACH ITS OBLIGATIONS UNDER THE BITS

93. Articles 6 and 3(1) of the BITs prescribe the standards of treatment that Tyrea affords to covered

investors and their investments. Should the Tribunal find that Respondent’s measures do not

constitute a valid exercise of its police powers, its measures did not breach Article 6 [A.] or

Article 3(1) [B.].

A. RESPONDENT’S MEASURES DID NOT BREACH ARTICLE 6 OF THE BITS

94. In Article 6 of the BITs, Tyrea undertakes to refrain from directly or indirectly expropriating

covered investments, unless the requirements in the Article are met. In the present case, it has

acted consistently with this undertaking.

95. Direct expropriation entails an actual transfer of property, especially ownership rights,235 to the

host state of an investment.236 However, the blocking of Claimants’ websites does not entail

any transfer of tangible or intangible property rights to Respondent. Hence, it does not amount

to a direct expropriation.

96. Indirect expropriation refers to measures that have the effect of substantially depriving

investors of the economic value of their property, approaching total impairment.237 Thus, the

loss of benefits or expected profits alone does not amount to an expropriation,238 especially if

the investor remains in control of its investments.239 Expropriatory measures, which destroy the

investment in question,240 must be distinguished from a mere restriction or regulation of the

right to use an investment.241 Interference with an investment’s expected benefits must be

equivalent in intensity, seriousness, and duration of effects to an outright seizure of property.242

97. In the present case, the restriction on Claimants’ social media platforms does not entail a

complete erosion of their investments. The Blocking Ordinances do not permanently restrict

235 National-Grid, ¶145; El-Paso, ¶265. 236 Enron, ¶243; Sempra, ¶280; BG-Group, ¶259. 237 Metalclad, ¶103; Lauder, ¶200; Fireman’s-Fund ¶176; Occidental, ¶89; Telenor, ¶¶64-65; Waste-Management,

¶160. 238 Waste-Management, ¶159; LG&E (Liability), ¶191. 239 Pope-&-Talbot (Interim-Award), ¶102; Chemtura, ¶247; Enron, ¶245; BG-Group, ¶271; Roussalis, ¶¶355-357. 240 Corn-Products (Responsibility), ¶93. 241 SD-Myers (Partial-Award), ¶¶283-287; Pope-&-Talbot, ¶93; BG-Group, ¶268; Impregilo, ¶270. 242 ECE-Projektmanagement, ¶4.813.

28

market access to Claimants.243 In fact, Amending Law 2018 specifies that non-compliance with

this law may entail a permanent or temporary blocking “depending on the gravity of, and

possibility to, cure the particular transgression”. 244 The continued blocking of Claimants’

platforms is attributable to their own negligence, since they decided to cease their efforts to

comply with this law.245

98. Further, the investment must have suffered substantial economic erosion as a whole to

constitute expropriation, especially when rights arising from the investment cannot be

dissociated from it,246 or a significant part of it.247 Here, Claimants’ investments in Tyrea

encompass their social media networks as well as their physical infrastructure, which includes

their offices and equipment.248 By their own admission, these may be used as regional head

offices to expand their operations to neighbouring countries and earn profits.249 Thus, Claimants

retain control over a significant part of their investments.

B. RESPONDENT HAS NOT VIOLATED ITS FET OBLIGATION UNDER ARTICLE 3(1) OF THE BITS

99. Under both customary and autonomous interpretations of the FET standard,250 a breach of FET

depends on the reasonableness and proportionality of a state’s measures in the specific

circumstances of the case.251 Therefore, the tribunal must balance the legal interests of an

investor against countervailing factors such as:

“- the State’s sovereign right to pass legislation and to adopt decisions for the

protection of its public interests, especially if they do not provoke a

disproportionate impact on foreign investors;

- the legitimate expectations of the investor, at the time he made his investment;

- the investor’s duty to perform an investigation before effecting the investment;

243 Ex.C4. 244 Ex.C2. 245 PO2 ¶4; SOUF, ¶20. 246 Telenor, ¶67; LG&E (Liability), ¶198. 247 Noble-Ventures, ¶216. 248 Ex.C7, 15. 249 Ex.C7, 18. 250 El-Paso, ¶¶330ff; Saluka (Partial-Award), ¶291; Rumeli, ¶611; Duke-Energy, ¶337. 251 Noble-Ventures, ¶181; Waste-Management, ¶99; Continental-Casualty, ¶255. Oxus, ¶313: El-Paso, ¶373;

Electrabel, ¶7.77.

29

- the investor’s conduct in the host country.”252

100. As discussed in Section [I.] of Part III, Respondent exercised its right to regulate its internal

affairs in a non-discriminatory and proportionate manner. Additionally, there was no violation

of legitimate expectations [1.]; Claimants were aware or should have been aware of the ethnic

tensions in Tyrea [2.]; and deliberately decided to breach Amending Law 2018 [3.].

1. Respondent’s conduct did not give rise to legitimate expectations

101. Admittedly, the inherent guarantee in the FET standard to ensure transparency in a legal

framework compels the respect for investors’ legitimate expectations.253 However, as held by

the Parkerings tribunal, investors cannot expect domestic laws to remain stagnant over time.254

Therefore, FET, or its “legitimate expectations” component, does not imply that the legal order

of a host state will remain unchanged.255 Immutability of a legal order or similar protections are

granted through express stabilisation clauses, not by means of FET.256

102. On the contrary, legitimate expectations only arise from specific assurances or representations

made by a state, which the investor takes into account to make its investment.257 These refer to

explicit promises to potential investors,258 intended to confer legal rights.259 However, policy

statements, for instances from a political representative of the host state, to promote and

encourage investment do not constitute “specific assurances”.260

103. In the present case, Claimants cannot demonstrate the existence of such specific

representations: first, the official statement by the Tyrean Parliament in 2013 only sought to

highlight Tyrea’s new legal framework liberalising the Internet for prominent international

players, including but not limited to Claimants.261 Second, at a 2014 Conference, Respondent

committed itself to provide new Internet possibilities to the Tyrean people, not to Claimants.262

Third, no stabilisation clause is contemplated in the BITs. Therefore, Respondent submits that

it never made specific assurances giving rise to any expectations of stagnation in its legal

252 Lemire (Jurisdiction/Liability), ¶285. 253 El-Paso, ¶348; Saluka (Partial-Award), ¶302. 254 Parkerings, ¶332. 255 El-Paso, ¶368; Continental-Casualty, ¶258. 256 Impregilo, ¶¶290-291; Micula, ¶529; Charanne, ¶490; Total (Liability), ¶¶117, 429. 257 Glamis, ¶¶621-622; Parkerings, ¶331; Methanex, ¶10. 258 Parkerings, ¶331. 259 Frontier-Petroleum, ¶468. 260 PSEG, ¶241; Continental-Casualty, ¶395; El-Paso, ¶392. 261 SOUF, ¶3. 262 SOUF, ¶5.

30

framework. Its general statements concerning freedom of the Internet did not intend to confer

any legal rights upon Claimants.

104. Further, under Article 2 of the BITs, Respondent has undertaken to protect foreign investments

“within the framework of its laws and regulations”. Article 17 of Tyrea’s President Act allows

the President to amend operative decrees in the country.263 Thus, the shortening of the deadline

for compliance with Amending Law 2018 vide the Second Decree is not a breach of Claimants’

rights under the BIT.

2. Claimants should have taken Respondent’s history of ethnic violence into account

105. An investor’s legitimate expectations from investing in a developed economy would differ from

those arising from an economy in transition.264 Therefore, investors must assess the different

risks or potential pitfalls of investing in a certain country before making their investments.265

Moreover, they must assume risks such as disturbances, strikes or even revolutions associated

with such countries, which might affect their property rights.266

106. Claimants were aware or should have been aware of the ethnic violence that has tainted

Respondent’s history. Tyrea emerged from a civil war in 2012, caused by tensions between the

major ethnicities in the country.267 It has been known to restrict the freedom of media in the

face of political unrest.268 By investing in this transitioning economy, Claimants assumed the

economic and political risks associated with the same.

3. Claimants deliberately decided to breach Amending Law 2018

107. A claim for a breach of FET should not arise from harm suffered by the investor due to its own

conduct.269 Accordingly, the investor’s conduct must be analysed to determine the

responsibility of the state and, eventually, the magnitude of its wrongdoing.270 In this regard,

the Maffezini tribunal frowned upon the investor’s wilful disregard of national law to avoid

263 Ex.C3. 264 El-Paso, ¶¶359ff. 265 Muchlinski, 542. 266 Starrett-Housing (Interlocutory-Award), ¶73. 267 SOUF, ¶1. 268 SOUF, ¶12. 269 Muchlinski, 547. 270 McLachlan/Shore/Weiniger, ¶7.239.

31

additional costs or technical difficulties.271 This notion has also been crystallised in Article 39

of the ILC’s Articles on State Responsibility.

108. In casu, Claimants did not comply with the requirements of Amending Law 2018. Their

algorithm failed to screen and block the promotion of hate speech or ethnic violence.272 No

attempts were made to rectify the same.273 Further, despite having a user identification

mechanism in place, Claimants refused to block unverified accounts due to the perceived

unpopularity of this action.274 Thus, their wilful disregard of Amending Law 2018 cannot entail

Tyrea’s responsibility for a breach of Article 3(1) of the BITs.

271 Maffezini, ¶¶70-71. 272 SOUF, ¶19. 273 PO2, ¶4. 274 SOUF, ¶20.

32

PART IV: DAMAGES

109. Should the Tribunal find that Respondent has breached its obligations under the BITs,

Respondent disputes the Damages Report submitted by Claimants.275 The report contains a

calculation of direct damages, lost profits in Tyrea, and lost profits from the loss of opportunity

for market expansion. This is calculated using the DCF method, with a discount rate of 5%.

However, such calculation is erroneous and speculative [I.]. The only appropriate method for

the calculation of damages in this case is the asset-based approach [II.].

I. CLAIMANTS’ CALCULATION OF DAMAGES IS ERRONEOUS AND SPECULATIVE

110. First, the lost profits for the failed market expansion claimed in the Damages Report are not a

consequence of Respondent’s measures [A.]; second, the use of the DCF method is not

appropriate in the present case [B.]; third, Claimants’ request for both DCF valuation and direct

damages leads to double recovery [C.]; and fourth, the Damages Report does not take account

of Claimants’ contributory fault [D.]. Thus, the Damages Report is erroneous and speculative.

A. THERE IS NO CAUSAL LINK BETWEEN RESPONDENT’S MEASURES AND THE ALLEGED LOST

PROFITS FOR CLAIMANTS’ FAILED MARKET EXPANSION

111. Pursuant to Article 31 ILC Articles on State Responsibility, the obligation to tender full

reparation arises from injury caused by the illegal act of a state. A state’s obligation to

compensate is not an automatic consequence of finding a breach of international law,276 but is

conditional upon the existence of a causal link between the wrongful act and the injury

suffered.277

112. In the context of investor-state relations, a state bears responsibility for injuries traceable to a

breach of the applicable BIT, rather than actions of third parties..278 In the Damages Report,

Claimants request lost profits for their failure to expand into Alcadia and Larnacia,279 attributing

this loss to Respondent’s Blocking Ordinances. However, their Request does not adduce any

evidence in furtherance of this allegation. Thus, the lost opportunity for market expansion

cannot be traced back to Respondent’s alleged breach of the BITs. In fact, given that Alcadia

275 Ex.C7. 276 Pearsall/Heath, 89. 277 Ripinsky/Williams, 135; Pey-Casado (Resubmission-Award), ¶¶217-218. 278 Okongwu/McHugh, 265; Pearsall/Heath, 90. 279 Ex.C7.

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and Larnacia have the same ethnic population as Tyrea,280 it is likely that Claimants were

stopped by these countries from expanding into their territories to prevent the misuse of social

media for the promotion of ethnic violence. Given the absence of any direct or proximate link

between the lost profits and the breach of a BIT,281 Claimants’ request for lost profits should be

dismissed.

B. CLAIMANTS’ USE OF THE DCF METHOD OF VALUATION IS NOT APPROPRIATE

113. The DCF method involves a calculation of projected future cash flows with the application of

a discount rate that accounts for certain risk factors.282 Even with the calculation of a discount

rate, such projection is at best speculative, since future profits are more vulnerable to

commercial and political risks than tangible assets.283

114. In this light, arbitral tribunals are reluctant to award damages based on the DCF method, given

its inherent uncertainty.284 However, if this Tribunal decides otherwise, Claimants must satisfy

most or all the pre-conditions for application of the DCF method,285 which they have failed to

do. These pre-conditions are as follows:

- The enterprise must be a going concern [1.];

- There must be reliable projections of its future cash flow in the form of a

business plan [2.];

- The price at which the enterprise will be able to sell its products or services can

be determined with reasonable certainty:

- The business plan can be financed with self-generated cash;

- It should be possible to calculate a meaningful discount rate including a

reasonable country risk premium that represents the political risk in the host

state [3.];

280 SOUF, ¶1. 281 Bjorklund/(2009), 449; Wälde/Sabahi, 1094. 282 Rubins/Sinha/Roberts, 186. 283 Article 36, Commentary 27 DARSIWA; Amoco-IUSCT, ¶238; Wälde/Sabahi, 1074. 284 Khan-Resources, ¶¶392-393; Metalclad, ¶120; Autopista-Concesionada, ¶362. 285 Rusoro, ¶¶758-760; OI-European-Group, ¶660; Khan-Resources, ¶392.

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- The enterprise is active in a sector with low regulatory pressure, or if the

regulatory pressure is high, its scope and effects must be predictable [4.].286

1. Claimants are not going concerns in Tyrea

115. The World Bank describes a going concern as an enterprise with income-producing assets that

has been in operation for a sufficient period to generate the data required for the calculation of

future income.287 Without an established performance record of several years, its financial

expectations cannot be capitalised,288 rendering projections of future cash flows uncertain and

speculative.289 In this light, tribunals do not consider enterprises with less than three years of

financial performance as going concerns.290

116. In the present case, Claimants only have evidence of income revenues for the year 2016 and

2017.291 This cannot constitute the requisite historical record of financial performance to

characterise Claimants as going concerns.

2. Claimants have not furnished a business plan in support of their projections of future

cash flow

117. To prove reliable projections, there should be a detailed business plan prepared in tempore

insuspecto, i.e. at a time without suspicion, by the company officers and verified by an impartial

expert.292 This constitutes the necessary evidence for a Tribunal to assess the accuracy of an

investor’s forecast of its future performance.293 In this light, the CMS tribunal noted that while

internal business plans relied in a claimant’s expert report could be a starting point of valuation,

these business plans must be checked for assumptions.294

118. In the present case, Claimants have not submitted any business plans produced by their

company officers to support their projected cash flow.295 Moreover, the Damages Report also

relies exclusively on the internal documents of Claimants,296 without giving this Tribunal an

286 Rusoro, ¶759. 287 World Bank Guidelines, Guideline IV(6). 288 Wälde/Sabahi, 1079; Wena-Hotels, ¶123. 289 Tenaris, ¶527; Metalclad, ¶120; Autopista-Concesionada, ¶362. 290 Tecmed, ¶186; SPP, ¶188; Tenaris, ¶524. 291 Ex.C7. 292 Rusoro, ¶759; AAPL, ¶106. 293 Marboe, ¶5.10. 294 CMS, ¶¶422, 439ff. 295 PO2, ¶2. 296 Ex.C7.

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opportunity to evaluate the same. Consequently, the reliability of their projections is speculative

at best.

119. The calculations in the Damages Report also reflect the unreliability of Claimants’ projections.

In their revenue projections for 2018, Claimants only consider the costs incurred by their

operations for the two months before the blocking of their platforms.297 Thus, their profits for

2018 have been inflated by subtracting the costs for two months from the projected revenues

for the entire year.298 This calculation is unfounded, since the projected profits for 2018 must

account for the corresponding operating costs for the full year.

3. The discount rate used in the Damages Report does not reflect the country risk in

Tyrea

120. The DCF method determines the value of a business by projecting future net cash flows and

discounting them to their present value.299 The discount rate used for this purpose must account

for several variables such as: the expected rate of inflation; the “real rate of interest” that reflects

the value of money in hand as compared to receipts in the future; and the rate of risk involved

in the transaction in light of all relevant circumstances such as market risk and country risk,

amongst others.300 Claimants’ Damages Report applies a discount rate of 5%,301 to account for

these variables.302

121. In the calculation of a discount rate, “country risk” refers to the risk associated with investing

in a country, especially developing or emerging economies.303 The risk of doing business in

such economies is elevated due to increased political, economic, and social concerns.304

Accordingly, the Tidewater tribunal noted that in determining the value of an investment, due

consideration must be given to the risk associated with investing in a specific country since it

might affect the prospects of the likely cash flow of the business going forward.305 This country

risk “includes all possible damaging actions or factors for the business of foreign firms that

297 Ex.C7. 298 Ex.C7. 299 Gotanda, 91. 300 Starrett-Housing, ¶336; Ciupagea, 246. 301 Ex.C7. 302 PO3, ¶1. 303 Marboe, ¶25.53. 304 Schumacher/Klönne, 222. 305 Tidewater, ¶¶186-190; Damodaran, 3ff.

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emanate from any social group, political authority, or governmental body in the host

country.”306

122. In the present case, Tyrea is a country that recently emerged from a civil war and is still

recovering from its political and economic aftermath.307 In the past, its temporary shift to a

more liberal economy had suffered due to tensions within its territory.308 Thus, it is a

transitioning economy that is experimenting with its shift to democratic governance. Investing

in this country entails high political and economic risks for any potential investor. Tribunals

have applied a minimum discount rate ranging from 10%-15%, given the inherent risk of

investing in unstable developing economies,309 even when faced with country risk premiums as

low as 4%.310 This is to prevent the unjust enrichment of investors in developing countries by

treating them like investors in stable, developed economies.311 Thus, the discount rate of 5%

used by Claimants is too low.

4. Claimants operate in a sector with high regulatory pressure

123. To justify the use of the DCF method, an enterprise should be operating in a sector with low

regulatory pressure.312 In the present case, Respondent first attempted the liberalisation of its

media laws in 2013, in the immediate aftermath of a civil war in 2012. It has recently moved

from a military dictatorship to a democracy, slowly loosening its control over freedom of

expression.313 Further, it has been known to restrict the freedom of media in the face of political

unrest in the past.314 With tensions between two major ethnicities in its territory still existing,315

it can be reasonably expected that Internet in Tyrea would be subject to high regulatory

pressure. In such volatile situations, the use of the DCF method is not appropriate.

C. CLAIMANTS CANNOT SIMULTANEOUSLY USE THE DCF METHOD AND REQUEST “DIRECT

DAMAGES”

124. Along with lost profits calculated using the DCF method, Claimants request the entire cost

incurred for investing in Tyrea as “Direct Damages”. However, the DCF method calculates the

306 Bouchet/Clark/Groslambert, 17. 307 SOUF, ¶1. 308 SOUF, ¶2. 309 CMS, ¶411; Alpha-Projektholding, ¶483. 310 Gold-Reserve, ¶842. 311 AMT, ¶7.15. 312 Rusoro, ¶¶758-760 313 SOUF, ¶¶1, 3. 314 SOUF, ¶12. 315 SOUF, ¶1.

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net profit that an investor would receive in the future, after recovering its invested capital and

operational expenses.316 Thus, “sunk costs” cannot be claimed while using the DCF method

because it would lead to double counting of invested capital.317 By requesting both lost profits

and sunk costs, Claimants are attempting double recovery for the value of their investments,

which is prohibited under customary international law.318

D. DAMAGES REPORT DOES NOT TAKE ACCOUNT OF CLAIMANTS’ CONTRIBUTORY FAULT

125. Customary international law provides that in the assessment of reparation, a claimant’s

contribution to the injury, whether deliberate or negligent, must be taken into consideration in

the calculation of the quantum of damages.319 The tribunal in Occidental held that although the

cancellation of the claimant’s exploration rights by Ecuador was an unlawful expropriation, this

cancellation was provoked by the claimant’s failure to obtain necessary governmental

approvals; therefore, the award was reduced by 25%.320

126. In the present case, Claimants knowingly failed to comply fully with Amending Law 2018 by

refusing to block unverified user accounts, although the user identification mechanism was

implemented in due time.321 This amounts to a wilful contribution to the alleged injury suffered.

127. Moreover, after the occurrence of an alleged injury, the injured party must take reasonable steps

to reduce its losses.322 Where such steps have not been taken even if it is reasonable to do so,

the injured party cannot expect to receive full compensation for its losses.323 This customary

principle is applicable in the calculation of compensation, irrespective of whether it is expressly

provided in the treaty.324

128. In casu, Claimants made no efforts to comply with Amending Law 2018 after their sites were

blocked.325 This reasonable step could have been taken to mitigate its losses, since curing the

possible transgression could have led to the reinstatement of its operational rights under

316 Kantor, 198-199; Macgregor/Maclay, 264; Siemens, ¶355; Suez, ¶104; Christie/Ogut/Turtoi, 239-240. 317 Macgregor/Maclay, 262; Articler 36, Commentary 26 DARSIWA. 318 Chorzów Factory, 59; Sabahi/Duggal/Birch, 343. 319 Article 39 DARSIWA; Gemplus, ¶11.12, RosInvestCo, ¶¶634-635. 320 Occidental, ¶679. 321 SOUF, ¶20. 322 Article 31, Commentary 11 DARSIWA; AIG, ¶10.6.4. 323 CME (Final-Award), ¶482. 324 Middle-East-Cement, ¶167. 325 PO2, ¶4.

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Amending Law 2018.326 However, the Damages Report fails to take account of Claimants’

contributory fault and is consequently erroneous.

II. THE APPROPRIATE METHOD OF VALUATION IS THE ASSET-BASED APPROACH

129. Under this approach, the difference between current values of the assets and the liabilities

represents the value of investments.327 This approach is preferred by tribunals in situations

where the enterprise is not a going concern, has no established record of profitability, or has no

prospect of being profitable irrespective of the state’s measures.328 This method is especially

recommended for businesses in early stages where future profits and/or cash flows cannot be

reliably determined,329 because this method does not require speculations, projections, or

assumptions.330

130. As discussed in Section [I.][B.] of Part IV above, Claimants are not going concerns in Tyrea

and have not based their future cash flow projections on reliable calculations or a detailed

business plan. Therefore, any valuation of their future profits would be speculative and

uncertain. The asset-based method is best suited in these circumstances.

326 Ex.C2. 327 Marboe, ¶4.134. 328 Copper-Mesa, ¶¶7.24-7.26; Arif, ¶576. 329 Marboe, ¶¶4.136-4.137; Rusoro, ¶¶775-789; Siemens, ¶¶355, 362-389; Metalclad, ¶¶120ff. 330 Rubins/Sinha/Roberts, 195.

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PRAYER FOR RELIEF

In light of the foregoing submissions, Respondent respectfully requests this tribunal to find that:

(i) The provisional measures requested by Respondent should be granted;

(ii) It does not have ratione voluntatis jurisdiction over the present dispute;

(iii) It has no jurisdiction over the multi-party claim;

(iv) Respondent did not breach its obligations under Articles 3(1) or 6 of the BITs and its

actions were a lawful exercise of its regulatory powers;

(v) Claimants are not entitled to damages as requested;

(vi) Respondent is entitled to all fees and costs associated with these proceedings.

T -N BIT”) · CEMEX Caracas Investments B.V. and CEMEX Caracas II Investments B.V. v. Venezuela,...

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Transcript of T -N BIT”) · CEMEX Caracas Investments B.V. and CEMEX Caracas II Investments B.V. v. Venezuela,...