SKELETON BRIEF FOR RESPONDENT

Transcription

1 2013 FDI MOOT Asia-Pacific Regional Rounds August Seoul, Korea SKELETON BRIEF FOR RESPONDENT CONTIFICA ASSET MANAGEMENT CORP. (Claimant) v. REPUBLIC OF RURITANIA (Respondent) PUSAN NATIONAL UNIVERSITY SCHOOL OF LAW Myung-jun Chung Dalrae Jin Heongu Kang Jiyun Lee

2 JURISDICION I. THE TRIBUNAL DOES NOT HAVE JURISDICTION AND THE CLAIM SUBMITTED BY CLAIMANT ARE INADMISSIBLE A. The Tribunal has no jurisdiction. 1. A jurisdiction cannot be admitted unless acceptance of agenda is at presence. A cooling-off period has not been undergone owing to unilateral offer on the side of Claimant. There is no responsibility to answer the offer of Claimant. B. The claim is an abuse of process, constituting Treaty Shopping. 2. The conduct of Claimant in present case is a classic example of a deplorable practice of treaty shopping, based on the following three reasons. First, when the share transfer occurred, Claimant already anticipated the tougher regulation would be adopted. Second, the share transfer was made with the absurdly low price. Third, the clear intention to bring the claims under the BIT was found in a memorandum produced by Claimant in Exhibit RX1. All these taken together, shares in Freecity Breweries Inc. (hereinafter FBI ) as well as IP rights were transferred to Claimant for the exclusive purpose of commencing this arbitration, constituting treaty shopping. Consequently, the claims of abusing the process are inadmissible and should be dismissed. II. THE DISPUTE WITH THE STATE PROPERTY FUND OF RURITANIA MAY NOT BE DECIDED BY THIS TRIBUNALS A. Respondent is not a party of the share purchase agreement. 1

3 3. Tribunal should find there is no jurisdiction on the dispute with regard to the share purchase agreement because no contractual commitments were entered into by Ruritania. A party to the Share Purchase Agreement is not the State, but State Property Fund of Ruritania ( the Fund ), a separate entity with its own legal personality, established by an Act adopted by the Parliament of Ruritania. The Fund is not on behalf of, or but as agents of the State. Consequently, even if there had been a breach of obligations by the Fund as Claimant argues, the Fund should be independently liable. B. The Umbrella Clause should not be applicable. 4. The tribunal should reject the Claimant s argument contractual breaches should be considered as breaches of the BIT, because article 6 of BIT regarding an Umbrella clause, is not applicable in this present case. Under the treaty s wide proper umbrella clause provision as found in El Paso case 1, the umbrella clause will not extend the Treaty protection to breaches of an ordinary commercial contract entered into by the State or a State-owned entity, but will cover additional investment protections... The umbrella clause prohibits only the use of sovereign prerogatives to avoid or otherwise interfere with municipal law obligations. Therefore, not every breach of municipal law obligation is a violation of the umbrella clause. Thus any disputes between Claimant and the Fund under the Share Purchase Agreement are inadmissible in this arbitration. 5. Consequently, all disputes arising out of or in connection with the present Agreement should be finally settled under the Rules of Arbitration of the International Chamber of Commerce under article 14.2 of the share purchase agreement, not in the present arbitration. 1 El Paso Energy International Company v. The Argentine Republic 2

4 MERITS III. RESONDENT S ENACTMENT OF MAB ACT AND IMPOSE OF LABELING REQUIREMENT DOES NOT CONSTITUTE ANY VIOLATION OF ITS OBLIGATION UNDER THE BIT AND INTERNATIONAL LAW A. The enactment of MAB act does not constitute expropriation, but is a reasonable regulation, and thus did not constitute the violation of FET obligation. 6. The enactment of the Regulation of Sale and Marketing of Alcoholic Beverages Act ( MAB Act ) was especially for the public benefit, an exception of Expropriation. Pursuant to article 4.1(a) of BIT, contracting state s conducts for the public benefit do not constitute expropriation. Moreover according to article 12.2(c) of International Covenant on Economic, Social and Cultural Rights, state has authority to take steps to prevent, and control diseases, including the alcoholism. The purpose of MAB act is to address the problems of alcohol addiction and exposure of the youth to alcohol, 2 definitely for the public benefit and thus does not constitute expropriation. 7. Claimant s argument Respondent violated FET obligation to protect Claimant s legitimate expectation of continuous and stable investment in Ruritania is baseless because the enactment of MAB act was fully foreseeable. During the course of elections, the measures to reduce consumption of alcohol were discussed in general terms, known as the New Way program. 3 In addition, judging from the facts Claimant s share acquisition from Contifica Spirits S.P.A. was occurred in two month later the New Way party secured the majority in 2 Statement of Defense 13 3 Procedural Order No.2 9 3

5 Ruritanian parliament, 4 it can be said the Claimant already anticipated the tougher regulation towards marketing and sale of alcohol would be adopted. Consequently Claimant s argument on its legitimate expectation is completely meritless. 8. As a regulation itself, the content of MAB act was reasonable to regulate alcoholism for Ruritania s population s health B. Labeling requirement does not constitute expropriation, but implemented reasonably, and thus did not constitute the violation of FET obligation. 9. Labeling requirement was implemented in non-discriminatory way, not constituting expropriation under article 4.1(b) of BIT. Unlike Claimant s argument labeling requirement was specifically toward FREEBREW, labeling requirement imposed on all products containing Reyhan concentrate, 5 definitely fair and equitable treatment. 10. Moreover labeling requirement was based on the scientific HRI report, and issued with Respondent s legitimate authority. Even though Claimant points out some minor technical details based on the opinion of its own expert it does not confirm the consumption of Reyhan concentrates are safe enough. Furthermore as the government of Ruritania, Respondent was entitled to adopt a cautious approach rather than wait for years to obtain unassailable evidence of the risk, because waiting for the higher reliability can be neglecting Ruritanian s public health, making the situation worse. In other words, the issue of labeling requirement was necessary and based on reliable report. C. Claimant s trademark and trade dress rights were not expropriated under the BIT and international law. 4 Statement of Defense 6 5 Statement of Defense 15 4

6 11. Claimant s argument of expropriation of trademark and trade dress rights is meritless because Claimant still has the valid rights under the records of the Ruritanian Trademarks Office. 6 Additionally the warrant made in article APPENDIX 7 of the share purchase agreement was within the limit of the Fund s knowledge at the time of signing the agreement. Therefore labeling requirement based on the new knowledge found later does not constitute the violation of Estoppels. IV. The arrest of Messrs Goodfellow and Straw does not constitute a breach of its obligation to provide full protection and security A. In principal, the scope of full protection and security does not include moral damages. 12. In principle, full protection and security was limited to the economic value, not including moral damages. Even though the process detaining Messrs Goodfellow and Straw was not perfectly lawful as Respondent admitted, arresting them under criminal suspicion does not cause any economic damages to the Claimant. Additionally, Claimant may argue the detention may cause the bad reputation, however reputation itself does not have any economic values. 13. Alternatively, even if the Tribunal recognizes detention of Messrs Goodfellow and Straw caused economic damages, the amount of damages is insignificant, contrary to Claimant s contention. As Claimant also admitted, FBI sales already fell by a further 20%, with its revenues in the last quarter of 2011 falling to 10% of the revenue for the same period of , before the commence of the investigation against Messrs Goodfellow and Straw on 1 6 Statement of Defense 16 7 Statement of Claimant 19 5

7 December In other words, Claimant s economic value was already too low to compare before and after the detention. B. Even if full protection and security also covers moral damages as an exception, the present situation is not the case, since there was no physical duress. 14. Even though there is a case, which acknowledges full protection and security also covers moral damages, it is hard to apply the DLP case 8 to the present case because facts are completely different. In DLP case, the Claimant was suffered from the harsh physical duress. However in the present case, there was actually no physical harm against the executives of FBI and Contifica Group at all. Therefore DLP case rule should not apply to the present case. V. CLAIMANT S CONTENTION ON THE AMOUT OF DAMAGES IS GROSSLY EXAGGERATED AND UNSUBSTANTIATED A. The sales of Claimant s subsidiaries are not contained as investment of Article 1.(1) of BIT 15. On the subjective point of view, the sales of Claimant s subsidiaries are not contained as investment because the subsidiaries are located outside of Ruritania. Pursuant to Article 1 of the BIT, to be investment, investors of the other Contracting State should make an investment in the territory of the Contracting State. However, the subsidiaries are located outside of Ruritania as well as not in Cronos. Hence, it cannot be said claimant s subsidiaries made an investment intended by BIT and the Contracting States, Ruritania and Cronos. 8 Desert Line Projects LLC v. Yemen 6