Environmental Permit N December, 2002

Transcription

1 ENVIRONMENTAL PERMIT OF DECEMBER 30, 2002 ON BAKU-TBILISI-CEYHAN PIPELINE ISSUED BY THE MINISTRY OF ENVIRONMENT AND NATURAL RESOURCES PROTECTION OF GEORGIA Code MD1 Ministry of Environment and Natural Resources Protection of Georgia Environmental Permit N December, Environmental Permit is issued for Baku-Tbilisi-Ceyhan Pipeline Co. (BTC co.) 2. Activity Transportation of crude oil (construction of oil pipeline). 3. Location Territory of Georgia. 4. Documentation prepared by ERM, URS, Dzelkva and other consulting bodies. 5. Documentation submitted for consideration Environmental and Social Impact Assessment (ESIA) of Baku-Tbilisi-Ceyhan Pipeline. 6. Environmental Permit is issued based on the Decision #54 of November 30, 2002 of the State Ecological Examination Commission. 7. Validity of the Environmental Permit valid during a period as set forth by the Host Government Agreement. 8. Conditions under the Environmental Permit Environmental Permit is legally effective with attached Conditions under the Environmental Permit see appendix 16 pp. Environmental Permit is issued by the Ministry of Environment and Nature Resources Protection of Georgia Name and Title of the official - authorized to singe the Decision of the State Ecological Examination Commission : G.Jhorjholiani Head, Department of Environmental Permits and State Ecological Examination of the Ministry of Environment and Natural Resources Protection of Georgia Name and Title of the official - authorized to singe the Environmental Permit : N.Chkhobadze Minister of Environment and Natural Resources Protection of Georgia

2 Each page of the Georgian and English language originals of the Conditions under the Environmental Permit is signed and sealed: - by Nino Chkhobadze, Minister of Environment and Nature Resources Protection of Georgia on behalf and in the name of the Ministry of Environment and Nature Resources Protection of Georgia - by Ed Johnson on behalf and in the name of BTC Co. Appendix to the Environmental Permit on Baku-Tbilisi-Ceyhan pipeline of December 30, 2002 on BTC Pipeline issued by the Ministry of Environment and Natural Resources Protection of Georgia /officially published in newspaper: Sakartvelos Respublika, N292, December 3, 2002 in Georgian language/ Conditions under the Environmental Permit of December 30, 2002 on Baku-Tbilisi-Ceyhan Pipeline (Appendix to the Environmental Permit) Continuing Activities under the Environmental Permit for the BTC Environmental and Social Impact Assessment (ESIA) 1. Risk Assessment a) BTC Co. shall revise the Environmental Risk Assessment (ERA) incorporating any additional data for those pipeline route sections that are environmentally sensitive or are clearly exposed to risks (in particular, geo-hazards, and third party intervention). b) If required by the above study, BTC Co. will elaborate additional risk mitigation measures. c) BTC Co. shall ensure that the risk mitigation measures are feasible with respect to technical, technological, management, supervision and monitoring aspects of the project. d) BTC Co. shall submit any new information pertaining to the risk assessment to the Ministry of Environment and Natural Resources Protection of Georgia (MoE) at least four weeks prior to construction start-up. 2. Geohazards a) BTC Co. shall undertake additional studies of the landslide hazard areas, specifically the Tskhratskaro, Tsikhisjvari, Kodiana, Tkemlana and Minadze sections. Independent international experts, Georgian experts and BTC Co. representatives shall meet and review technical assessment of potential landslide areas which may warrant further study. This group shall aim to identify appropriate methodologies and BTC Co. shall implement any such methodology changes if such are necessitated by the findings of such study/investigation. b) BTC Co. shall study landsliding events and model the slope stability to be undertaken in light of natural, technogenic and seismic factors.

3 c) BTC Co. shall specially focus on the areas where the pipeline route crosses dry gullies and areas exposed to the risk of the debris flow events. d) The results of those areas that were previously agreed will be provided three weeks in advance of construction of the relevant pipeline section. 3. Biodiversity a) BTC Co. shall give more extensive consideration to biodiversity protection measures, with special focus to be placed on the specific issues concerning management of the protected and highly sensitivity areas, including Bedeni Plateu, Santa, Mt Tavkvetily, Naranis Veli. b) BTC Co. shall specify information on the Red Date Book species and the full list of the protected species and shall place same on the map with the scale of 1:50000 or larger. c) BTC Co. shall identify wildlife assessment parameters, indicators and scope of study. d) BTC Co. shall identify supervision methods. BTC Co. shall identify specific issues of forest reinstatement by forest functional categories (water-protective, antierosive, reinstatement). e) BTC Co. shall render assistance to the relevant state authorities of Georgia in the preparation of the management plans for the protected areas along the pipeline construction corridor. f) BTC Co. shall identify biodiversity monitoring measures include in the Monitoring Plan and shall make periodic submissions of the additional information pertaining to this issue to the Ministry of Environment and Natural Resources Protection of Georgia (at least once in a year). g) BTC Co. shall place special focus on sensitive and protected species of the biodiversity and shall carry out its activities in away as to rule out any disturbance, damage to the habitats and feeding grounds to the maximum extent, in any phase of the project. 4. River and Gully Crossings Review by an independent international engineering consultant (mutually agreed on, and directed by, BTC Co., Georgian International Oil Corporation - GIOC and the MoE) of the designs for water course crossings and, if necessary, modification of the design to provide an adequate safety level. 5. Protection of Groundwater Deposits a) In the case of crossing of ground water deposits by the pipeline, BTC Co. shall apply approaches and principles intended to minimize the possibility of ground water contamination. b) In the case of crossing of ground water deposits by the pipeline, BTC Co. shall apply all efforts to locate the pipeline route outside zones I, II and III for water sanitation protection. c) If crossing of the mentioned zones is justified, BTC Co. shall design and implement special measures for pipeline protection, leakage prevention and immediate response to leakage, which measures shall be separately reflected in management, monitoring and the oil spill response plan. d) Mitigations measures for Borjomi, Tsalka and Ktsia-Tabatskuri sections are formulated separately herein. 6. Facilities for Leakage Prevention

4 Quality Assessment/Quality Control (QA/QC) system during construction in accordance with international standards. Hydro testing of the pipeline in accordance with international standards. State of the art leak detection system throughout. Regular patrolling of the route. Corrosion protection measures, including: - Cathodic protection surveys; - Pipeline protective coating; - Pigging surveys; - Monitoring crude quality. Pipeline design to international standards. Community awareness programmes aimed at prevention of third party intervention. 7. Response to Failure Situations (Oil Leakage) The Oil Spill Response Plan shall include, but not be limited to: (i) environmental mapping of habitats vulnerable to potential petroleum spills in the entire BTC pipeline; (ii) situational scenarios of potential spillages and responses, taking into consideration local circumstances; (iii) plans for the provision of relevant petroleum spill clean up equipment, materials and services; (iv) plans for the deployment of relevant equipment and emergency response notification details of the organization required to handle petroleum spill response; and (v) plans for the treatment and disposal of resulting contaminated materials. 8. Management and Monitoring Plans The mitigation measures that are contained in the ESIA shall be implemented by means of management plans. These management plans shall be provided to GIOC in accordance with World Bank rules and guidelines. BTC Co. shall provide a Monitoring Programme which contains, inter alia, -- Parameters to be measured; -- Methods for monitoring; -- Sampling locations; -- Detection limits, indicating relevant legislation and standards; -- Government responsibilities within the monitoring programme; -- Allocation of responsibilities; -- frequency and timing; -- Progress and reporting of results. BTC Co. shall identify the responsibilities and arrangements for mitigation and monitoring (BTC Co., contractor, third party and government authorities and provide these details to MoE and GIOC). BTC shall provide the results of its Monitoring Programme to MoE and GIOC on a routine basis during construction and at appropriate frequency thereafter. 9. Borjomi Zone a) Tskhratskaro-Bakuriani-Kodiana, Tsalka and Ktsia-Tabatskuri sections of the proposed pipeline route cross the areas of environmental, economic and historical significance for Georgia. Especially significant is area of Borjomi gorge (which at the same time involves geologically hazardous high risk sections).

5 b) BTC Co. shall prior to the completion of the design of the section of the route, provide at least the following alternatives in the revised Route Report, both of which cross the Akhalkalaki district: i. The Central Corridor ii. The eastern section of the Karakaia route in combination with western section of central Corridor. c) BTC Co. shall consider socio-economic factors regarding the Borjomi Area in the Route Report. d) BTC Co. shall provide commencement of studies, configuration of the selected route, together with cartographic (at least at a 1:10,000 scale) and air photograph materials. e) BTC Co. shall submit results of the studies of alternative routes to the Ministry of Environment and Natural Resources Protection of Georgia (MoE), at least 6 weeks before commencement of construction works at this section (from KP 175 to KP 191,5). f) If as a result of above studies it is indicated that Tskhrastkaro-Tsikhisjvari-Kodiana (Borjomi Gorge) section has no alternatives, BTC Co. shall apply Best Available Technology, Best Practices and multiple lines of protection and redundancy in design, construction and operation to achieve as close to zero risk as possible. g) In the case of crossing of ground water deposits by the pipeline, BTC Co. shall apply all efforts to locate the pipeline route outside zones I,II and III for water sanitation protection. h) BTC Co. shall perform preliminary studies of the Borjomi area to be utilized in the event of drinking water contamination resulting from an oil spill. i) BTC Co. shall immediately notify the ministry (MoE) and local authorities about leakage of any volume. j) BTC Co. shall provide additional design and operational measures to secure the integrity of the pipeline in event of third party intervention in a manner which will allow sufficient time for information to reach project operations staff and State security services and enable access to Borjomi Area. Based upon risks which are foreseeable under the prevailing conditions, including risks associated with attempts to tap the pipeline, acts of vandalism, and attempts to disrupt the project by small organized groups, BTC Co. shall institute a programme, including but not confined to the following: - installation of a fiber optic or similar sensor system to detect earth movements, illegal excavation, or third party intrusion; - utilization of marker tape with electronic alarm to detect breakage/interference/ - employment by BTC Co. of year around, permanent local, national, unarmed security presence equipped with all terrain vehicles, as appropriate, and communication systems, all suited to the requirements for the terrain and circumstances; - construction and maintenance of all-weather access roads for monitoring of pipeline operations and ROW maintenance, emergency response (consistent with ERA predicted detection and intervention time) and State security services. BTC Co. shall provide additional mitigation measures for the specific section including: - extra sensitive leak detection system (s), other that the visual inspection, capable of detecting and responding to small subsurface leaks. - installation in total of 2 block valves and 2 check valves between KP 176 and external catchment areas aimed at surface water protection that meet or exceed the requirements of any spill risk employed as a second line of defense. - employ local, internationally trained oil spill response personnel with equipment to be permanently stationed locally.

6 - provide a modeling of oil spill pollution for each kilometer. - reconditioning and maintenance of existing access roads and access tracks, and construction and maintenance of new access roads all to achieve all weather and all year round access to the pipeline ROW for monitoring, maintenance, security and emergency response. - undertaking year round ground water monitoring along the pipeline ROW (distance between two determined location to be not more than 1000m and as determined by additional studies). - monitor drinking water supplies and Borjomula river water at places to be agreed with the Ministry of Environment and Natural Resources Protection of Georgia (MoE), and develop alternate water supply plan(s) for all drinking and mineral water supplies to be implemented in the case of contamination due to an oil spill from the BTC pipeline. 10. Tsalka and Ktsia-Tabatskuri Zone The route passes through surface and ground fresh and mineral waters formation and transit territories, in Tsalka and Ktsia-Tabatskuri district and thus are high-risk zones. With respects to the Tsalka section: a) BTC Co. shall undertake a risk assessment for the oil spill and shall elaborate such approach for the prevention of oil spills (as the highest priority), which will minimize the risk of oil spills and the resulting possibility of underground water contamination. BTC Co. shall separately elaborate a preventive approach to oil spills for this particular section; this approach shall be in accordance with the standards set forth in the HGA. b) The detection system for spilling and pipeline security shall be intensified. New technologies, as well as experience of the company in the other countries (including Europe and USA) and in other projects shall be taken into consideration. c) The oil spill response plan, to be approved in accordance with the HGA, shall include a specific section covering the Tsalka and Ktsia-Tabatskuri sections of the pipeline. d) BTC Co. shall provide a special plan describing mitigation measures applicable for the construction phase to be carried out for the Ktsia-Tabatskuri section. e) BTC Co. shall propose a minor re-route in this section to further minimize the risk to lake Tsalka in accordance with international standards. 11. During the Construction BTC Co. shall: - Elaborate local projects regarding laying of temporary access roads to the pipeline corridor; these projects shall be submitted to the MoE for approval; - Agree issues related to water supply and discharge of waste water during operation of camps working during operation of camps working during the pipeline construction period with MoE for each particular case; - Before carrying out works for pipeline crossings on rivers, which have significance from the fish farming point of view, assess expected damage to ichtiofauna and the need of compensation for rehabilitation of ichtiofauna species. 12. Additional Study of the Existing Environment For the purposes of additional study (assessment) of the potential environmental impacts of the pipeline and its infrastructure on the highly sensitive areas, BTC Co. shall prepare an environmental monitoring program and its phased implementation plan. BTC Co. shall gather detailed data which would promote refinement of potential oil spill risk assessment and shall elaborate measures as an integral part of the program and the plan. BTC Co. shall prepare the environmental monitoring program and plan for both short-term (construction phase) and long-term (operational phase) monitoring. The foregoing program

7 and the plan shall be provided to the Ministry of Environment and Natural Resources Protection of Georgia (MoE). To regularly control the pipeline sections that cross the geohazards areas and are exposed to the increased risks, BTC Co. shall prepare long-term erosion (landslide) control plan prior to the pipeline operation with a view to put in place required measures to prevent the pipeline disintegration in a timely manner. This plan shall be provided to, and discussed with, the Ministry of Environment and Natural Resources Protection of Georgia (MoE) pursuant to the Protocol. BTC Co. shall produce an optimal strategy, program and the plan for waste management, which will provide for treatment and/or disposal of pipeline related waste, produced during the construction period, as well as the operations stage. The waste management strategy shall be based on the principle of minimization of produced waste and shall provide maximum utilization and application of the class (types of wastes), which could further be processes and recycled. Waste management strategy, program and plan shall be provided to, and discussed with, the MoE. BTC Co. shall elaborate a comprehensive program of environmental management and relevant plan therefore. The above plan shall be provided to, and discussed with, the MoE. The information on complying with the issues provided by the plan shall be regularly submitted to the MoE. 13. Host Government Agreement (HGA) Matters In accordance with the HGA, BTC Co., shall diligently implement the agreed activities set forth above. The results shall be published in reports available to the public and submitted to the MoE, and BTC Co. shall meet on a routine basis with the MoE to discuss the progress and the completion of the obligations set forth above. Should BTC Co. fail to fulfill its obligations set forth herein, the MoE may take action in accordance with the HGA to ensure BTC Co. s compliance with such obligations. Notwithstanding anything to the contrary herein, and in strict accordance with HGA Article 12.3 which states in part, that BTC Co. shall obligated regardless of fault or causation, to take all action necessary to remedy the harm and the restore the land and other harmed matter(s) to the maximum practicable extent to their prior condition and use, all in accordance with and as required by the standards and practices set forth in Article 12 and Appendix 3, and incur all expenses necessary to so remedy the harm, it being further agreed that if and to the extent that any harm cannot be so fully remedied, BTC Co. shall pay full, adequate and fair compensation in respect of any such unremedied harm. The agreed activities herein are being undertaken in furtherance of the ESIA under the HGA and nothing contained herein shall act to alter, amend or otherwise modify the terms and conditions of the HGA and dispute hereunder shall be subject to the provisions of Article 17 thereof.

8 Parts of the Host Government Agreement referenced in the Conditions (para 13) under the Environmental Permit of 30 November, 2002, N0011 /officially published in newspaper: Sakartvelos Respublika, N292, December 3, 2002 in Georgian language/ Host Government Agreement Between and Among The Government of Georgia and The MEP Participants (Appendix 1, as amended and restated 28 April 2000, attached to and made part of the Intergovernmental Agreement dated 18 November 1999) Article 12 Environment, Health, Safety and Social Impact 12.1 The applicable environmental, health and safety standards and practices for the Project shall be as set forth in Appendix 3 attached hereto and shall be applicable notwithstanding any conflicting standards and practices otherwise required or approved by Georgian Law. The Parties hereby agree to the standards and practices set forth in Appendix 3 and the State Authorities hereby consent to any action taken by or on behalf of the MEP Participants and other Project Participants in conformity therewith. If a spillage or release of Petroleum occurs from the Facilities or in conducting Project Activities, or any other event occurs which is causing or likely to cause material environmental damage or material risk to health and safety, the MEP Participants shall take all necessary action as set forth in Appendix 3 and, on request by or on behalf of the MEP Participants, the State Authorities shall, in addition to any indemnification obligations the State Authorities may have under the Project Agreements, make available under Section 7.4 any goods, works or services available to the State Authorities and not otherwise readily available to the MEP Participants or their Contractors to assist in any remedial or repair effort The applicable social impact standards and practices for the Project shall be effected as set forth in Appendix 3 attached hereto. The Parties hereby agree to the standards and practices set forth in Appendix 3 and the State Authorities hereby consent to any action taken by or on behalf of the MEP Participants and other Project Participants in conformity therewith Notwithstanding the provisions of Article 10 or any other term of any Project Agreement, solely in respect of any loss or damage arising from or related to any adverse environmental, health or safety event or occurrence, the MEP Participants shall be obligated, regardless of fault or causation, to take all action necessary to remedy the harm and to restore the land and other harmed matter(s) to the maximum practicable extent to their prior condition and use, all in accordance with and as required by the standards and practices set forth in this Article 12 and Appendix 3, and incur all expenses necessary to so remedy the harm, it being further agreed that if and to the extent that any harm cannot be so fully remedied, the MEP Participants shall pay full, adequate and fair compensation in respect of any such unremedied harm; provided, however, that if and to the extent any such loss or damage relating to the environment, health or safety is caused by or arises from any breach of any Project Agreement

9 and/or breach of duty by any State Authority, the State Authorities shall indemnify and hold the MEP Participants and other Project Participants harmless with respect thereto, including for all costs and liabilities incurred by the MEP Participants or Project Participants for thirdparty loss or damage. Notwithstanding the foregoing, (i) the MEP Participants shall not be liable to the State Authorities for HOU03: any punitive or exemplary damages and (ii) nothing herein is intended to or shall limit the rights of the MEP Participants against any third parties in respect of any loss or damage arising from or related to adverse environmental, health or safety events or occurrences. Article 17 Dispute Resolution and Applicable Law 17.1 The provisions of this Article 17 shall be valid and enforceable notwithstanding the illegality, invalidity, or unenforceability under the law specified in Section of any other provisions of this Agreement. Arbitration pursuant to this Article 17 shall not be subject to the condition of exhaustion of local remedies such as that referred to in Article 26 of the ICSID Convention. In order to provide prior notice and a reasonable opportunity for the Parties to resolve disputes without resorting to arbitration, as a condition to any Party or Parties submitting a dispute to arbitration under this Article 17, the Party or Parties shall provide written notice of the dispute to all other Parties and shall submit the dispute to arbitration only after the passage of thirty (30) days from the date of delivery of such notice on all Parties pursuant to Article 22 of this Agreement; provided, however, that where a Party has given notice of dispute(s) it shall not be necessary for any other Party to give a similar notice in order to participate in the arbitration of such dispute(s); and provided, further, that once a dispute is submitted to arbitration no additional notice of dispute(s) shall be required in order for any Arbitrating Party to add, to modify or to redefine those disputes which it seeks to resolve in such arbitration. Any dispute arising under this Agreement, or in any way connected with this Agreement (including its formation and any questions regarding arbitrability or the existence, validity or termination of this Agreement), between (i) the Government (which shall be the sole proper party to represent the State, and all State Authorities) and (ii) one or more of the MEP Participants, may be submitted to arbitration pursuant to this Article 17. The MEP Participants may submit any dispute to arbitration jointly and may assign rights granted under this Agreement among themselves for purposes of arbitration, it being further understood and agreed that the foregoing shall not require that, in an arbitration to which more than one MEP Participant is a party, the MEP Participants must take a joint position on any or all disputed issues. In addition, any MEP Participant that demonstrates to the reasonable satisfaction of the arbitral tribunal that it has a genuine interest in the issues in dispute and agrees to be bound by any award in respect of any fact or matter determined in the proceeding may intervene in any arbitration proceeding in which it is not already a party, subject only to its willingness to accept the record as previously established in the proceeding prior to its notice of intervention Except as otherwise expressly provided in the State_s reservation to the ICSID Convention, the Government and all other Parties hereby consent to arbitrate any such dispute pursuant to the ICSID Convention and the ICSID Arbitration Rules. The Government shall take any actions or decisions as may be necessary to ensure the effectiveness of the State Authorities_ consent to ICSID jurisdiction for all disputes arising under this Agreement or in any way connected with this Agreement. In the event of any conflict between the ICSID Arbitration Rules and the arbitration provisions of this Agreement, this Agreement shall govern. For purposes of Article HOU03: (1) of the ICSID Convention and for

10 any other purposes related to this Agreement, any dispute among the Parties shall be considered a legal dispute arising directly out of an investment. As of the Effective Date any dispute among the Parties shall be considered a legal dispute arising directly out of investment activities which have_effectively started_ and which have obtained all necessary permissions and authorisations in accordance with the relevant legislation of the State on foreign capital. If and to the extent the State_s reservation to the ICSID Convention is later modified or rescinded such that any disputes heretofore not subject to arbitration under the ICSID Convention become eligible for ICSID arbitration, the Government and all other Parties consent to arbitrate all such eligible disputes pursuant to the ICSID Convention and the ICSID Arbitration Rules If, for any reason, and notwithstanding the consent granted in Section 17.2, ICSID arbitration is not available for the resolution of any such dispute (including by reason of the State_s reservation to the ICSID Convention), then the dispute shall be finally resolved under the Rules of Arbitration of the International Chamber of Commerce (_ICC Rules_). In the event of any conflict between the ICC Rules and the arbitration provisions of this Agreement, this Agreement shall govern An arbitral tribunal constituted pursuant to this Agreement shall consist of three (3)arbitrators, one of which shall be appointed by the Arbitrating Party or Arbitrating Parties first requesting arbitration, and one of which shall be appointed by the opposing Arbitrating Party or Arbitrating Parties. The third arbitrator, who shall be the presiding arbitrator of the arbitral tribunal, shall be appointed by agreement of the first two arbitrators appointed. If either of the first two appointments are not made within thirty (30) days after the request for arbitration, or if the first two arbitrators fail to agree on a third arbitrator within thirty (30) days after the later of them shall have been appointed, the unfilled appointment will be made, upon the request of any Arbitrating Party, by the International Chamber of Commerce, acting in accordance with the provisions addressing appointment of arbitrators in the ICC Rules. With respect to arbitration proceedings held under the ICSID Convention and ICSID Arbitration Rules, the Parties agree that the period of time to which reference is made in Article 38 of the ICSID Convention shall be extended to ninety (90) days after the submission of a request by an Arbitrating Party to the International Chamber of Commerce to appoint a third and presiding arbitrator. The Parties agree that, regardless of the payment scales otherwise prescribed by any institution administering an arbitration under this Agreement, the Arbitrating Parties shall compensate the members of the arbitral tribunal at rates sufficient to secure their service as arbitrators With respect to any arbitration proceedings arising under this Agreement, additional or alternative procedural rules may be adopted at any time by written agreement of the Arbitrating Parties The Parties agree that the seat of any arbitration held pursuant to this Agreement shall be Geneva, Switzerland, unless the Arbitrating Parties agree in writing to hold the arbitration in another country that has ratified or acceded to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. The language used during any arbitration proceeding shall be the English language and the HOU03: English language text of this Agreement will be used and relied upon for all purposes by the arbitral tribunal. Interpretation of any live proceedings of the arbitration and translation of written arguments and documentation shall be provided if requested by any Arbitrating Party, at the expense of such requesting Arbitrating Party The Parties shall provide the arbitral tribunal with reasonable opportunity to inspect the Facilities as may be necessary for the determination of a dispute. Each Arbitrating Party shall, at the request of an opposing Arbitrating Party or the arbitral tribunal, make

11 available to the arbitral tribunal and the opposing Arbitrating Party all documents and witnesses substantially relevant, as determined by the tribunal, to the dispute An arbitral tribunal_s award issued pursuant to this Article 17 shall be final and binding on the Arbitrating Parties upon being rendered, and the Arbitrating Parties undertake to comply with any such award without delay. Judgment on the award may be entered and execution had in any court having jurisdiction, or application may be made for a judicial acceptance of the award and an order of enforcement and execution, as applicable Subject to Section 9.2(i), if monetary damages are included in a final award, the award shall be rendered and payment shall be made in Dollars and, in accordance with the terms of this Agreement as relate to amounts due and payable, shall include interest calculated at the Agreed Interest Rate from the date of the event, breach, or other violation giving rise to the dispute to the date when the award is paid in full. The arbitral tribunal may also order any interim or conservatory measures it deems appropriate With respect to arbitration proceedings held under the ICSID Convention and ICSID Arbitration Rules, the Parties agree any ad hoc committee appointed in accordance with Article 52 of the ICSID Convention shall not stay enforcement of an award unless the Arbitrating Party requesting annulment posts an irrevocable and unconditional bank guaranty in the full amount that the award directs the Arbitrating Party requesting annulment to pay. With respect to arbitration proceedings held under the ICC Rules, the Arbitrating Parties hereby waive the right to judicial intervention in the proceedings themselves and also waive the right to have any interim or conservatory order or any final award annulled or set aside by the courts of any jurisdiction other than the jurisdiction in which the arbitration is held Each State Authority hereby waives any claim to immunity in regard to any proceedings to enforce this Agreement or to enforce any interim or conservatory order or any final award rendered by an arbitral tribunal constituted pursuant to this Agreement, including immunity from service of process, immunity from jurisdiction of any court, and immunity of any of its property from pre-judgment attachment based on an interim or conservatory order or from execution based on a final award; provided, however, that notwithstanding anything to the contrary in this Agreement, the waiver of immunity with respect to property in this Section shall not apply to (i) property to the extent used or intended for use for the exercise of diplomatic rights, including the State_s diplomatic missions, consular posts, special missions, HOU03: missions to international organisations or to international conferences and including their furnishings, means of transportation and funds held in bank accounts for use in funding such missions, posts, organisations and/or conferences; (ii) property of a military character or used or intended for use for military purposes; (iii) property constituting or forming part of the essential cultural heritage of the State or part of its archives and not placed or intended to be placed on sale, including museums, archaeological sites and artifacts, libraries and related historical preservation and research facilities, cemeteries, monuments and other similar property; (iv) property forming part of an exhibition of objects of scientific or historical interest which is outside the Territory and not placed or intended to be placed on sale; (v) ships and aircraft to the extent used for governmental service; (vi) physical assets being used to perform the essential government functions, such as Parliament and governmental buildings and their furnishings; (vii) property of the judiciary, such as court buildings and their furnishings; and (viii) property of public health care, welfare and educational, as well as that of the police and other law enforcement, systems Nothing in this Article 17 shall preclude the agreement to use other dispute resolution procedures (including use of internationally recognised independent experts) for any particular (or particular type of) dispute (including, in particular, any dispute respecting

12 the EIA and/or the final design of the Facilities under Appendix 3 of this Agreement), but in the absence of such separate written agreement the provisions of this Article 17 shall control This Article 17 shall be governed in accordance with the substantive law of England, but excluding any rules or principles of English law that would (i) prevent adjudication upon, or accord presumptive validity to, the transactions of sovereign states or (ii) require the application of the laws of any other jurisdiction to govern this Article Environmental Standards (Appendix 3 Code of Practice to the Host Government Agreement) 3.1 With respect to minimising potential disturbances to the environment, including the surface, subsurface, sea, air, watercourses and reservoirs, lakes, flora, fauna, landscapes, ecosystems and other natural resources and property, the MEP Participants shall, in conducting all Pipeline Activities and with respect to the Facilities, conform to the environmental standards and practices set forth in this Appendix 3 as well as those generally observed by the international community with respect to Petroleum pipeline projects comparable to the Project, but in no event shall such environmental standards and practices be less stringent than the relevant standards and practices applied in the Netherlands (and, with respect to mountainous and earthquake-prone terrain as well as whenever the Netherlands has no relevant standard or practice, the relevant standards or practices, if any, of Austria) in respect of comparable projects (the _Environmental Standards_). For the avoidance of doubt, whenever the Environmental Standards refer to or are drawn from the standards and practices of any particular country or jurisdiction (such as the Netherlands or Austria), those environmental standards and practices: (i) do not include the laws of that country or jurisdiction defining or establishing the legal standard of liability (such as negligence, strict liability or the like) of Persons for harm arising from any environmental events, occurrences or noncompliance, it being agreed that the provisions of the Agreement (including, in particular, Articles 10 and 12) relating to what constitutes, and the consequences of, the MEP Participants_ breach of obligations shall apply; (ii) do not include the regulatory administrative structure or procedures (including those for licensing, permitting and regulatory approvals) of that country or jurisdiction, it being agreed that the regulatory administrative structure and procedures, including environmental permitting as set forth in Section 7.3 of the Agreement, of Georgia shall apply; (iii) in those instances in which the particular environmental standard or practice assumes or is based upon technical standards or practices of a country or jurisdiction which are not identical or comparable to the Applicable Technical Standards, the MEP Participants shall either (a) follow those standards and practices which are compatible with the Applicable Technical Standards in order to achieve environmental protections substantially comparable to those of the country or jurisdiction or (b) comply with such country or jurisdiction_s environmental standard or practice to the extent reasonably practicable under the circumstances, taking into account the use of the Applicable Technical Standards; and HOU03: (iv) do not include environmental standards and practices beyond those applicable to Petroleum pipelines and pipeline operations.