THE INTERANTIONAL COURT OF ARBITRATION OF THE INTERNATIONAL CHAMBER OF COMMERCE. Case 28000/AC

Transcription

1 HSU THE INTERANTIONAL COURT OF ARBITRATION OF THE INTERNATIONAL CHAMBER OF COMMERCE Case 28000/AC PETER EXPLOSIVE Claimant v. REPUBLIC OF OCEANIA Respondent 19 SEPTEMBER 2016 HSU team

2 TABLE OF CONTENTS List of Abbreviations... iii List of Authorities... vii List of Case Law... xi List of Legal Sources... xv Statement of Facts... 1 Summary of Arguments... 3 Arguments... 5 A. The Arbitral Tribunal has jurisdiction over the present case under the Euroasia Oceania BIT... 5 I. The annexation of Fairyland by Euroasia was consistent with international law.. 5 II. Claimant is a national of euroasia and therefore may rely on the euroasianoceania bit III. CLAIMANT may invoke Article 3 of the Euroasia-Oceania BIT in order to access and rely upon the dispute resolution provisions of the Eastasia-Oceania BIT. 12 IV. Claimant was not required to comply with the pre-arbitral steps as provided in article 9 of the Euroasia-Oceania bit prior to bringing his claims before the tribunal 15 V. The Clean Hands doctrine is not applicable to this case i. The MFN Clause cannot be used to bind CLAIMANT to unfavorable terms of another BIT ii. The Clean Hands Doctrine is not a validly recognized principle of International Law iii. RESPONDENT cannot avoid liability for the acts of its officials iv. CLAIMANT s investments are legal and, thus, covered by this Arbitral Tribunal s jurisdiction B. RESPONDENT expropriated CLAIMANT s investments I. Claimant suffered an indirect expropriation of its investments due to Respondent s economic sanctions II. The expropriation of Claimant s investments was unlawful III. The economic sanctions imposed by Respondent cannot be considered mere regulatory measures IV. The economic sanctions were not undertaken by Respondent in order to safeguard essential security interests C. CLAIMANT did not contribute to the losses suffered by its investment i

3 I. Claimant has suffered losses within the meaning of article 5 of the Euroasia- Oceania BIT II. The supply of weapons to Euroasia cannot be deemed as contributory fault III. The Executive Order was the main cause to the losses Request for Relief ii

4 LIST OF ABBREVIATIONS & And Section / Paragraph/Paragraphs ARfA Answer to Request for Arbitration Arbitral Tribunal / Tribunal Panel consisting of Mr. Luc Picard (President of the Arbitral Tribunal), Ms. Cheryl Crusher and Prof. Thomas Riker. Art. Article/Articles BIT Bilateral Investment Treaty CLAIMANT/Peter Explosive Peter Explosive Comm. Commentary Eastasia-Oceania BIT Agreement between the Republic of Oceania and the Republic of Eastasia for the Promotion and Reciprocal Protection of Investments e.g. Exempli gratia; for example ed./eds. Editor/Editors/Edition etc. Et cetera, and so on iii

5 Euroasia-Oceania BIT Agreement between the Republic of Oceania and the Republic of Euroasia for the Promotion and Recciprocal Protection of Investments Ibid. Ibidem, in the same place ICC International Chamber of Commerce ICDR ICSID ICSID Rules International Centre for Dispute Resolution International Centre for Settlement of Investment Disputes International Centre for Settlement of Investment Disputes Arbitration Rules 2006 ICJ International Court of Justice ILC Articles International Law Commission Draft Articles on Responsibility of States for Internationally Wrongful Acts IMF International Monetary Fund Inc. Incorporated Lex arbitri The procedural law of the seat of arbitration, e.g. the place where arbitration will take place Mr. Mister Ms. Miss iv

6 No. Number New York Convention New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards p./pp. page/pages Parties Peter Explosive Republic of Oceania PCA Permanent Court of Arbitration PO1 Procedural Order Number 1 PO2 Procedural Order Number 2 PO3 Procedural Order Number 3 RfA Request for Arbitration RESPONDENT/ Oceania Republic of Oceania UNCITRAL UNCITRAL Rules UNCTAD UNHCR v/v./vs. United Nations Commission on International Trade Law Arbitration Rules of United Nations Commission on International Trade Law United Nations Conference on Trade and Development United Nations High Commissioner for Refugees Versus; against v

7 VCLT Vol. Vienna Convention on the Law of Treaties 1969 Volume vi

8 LIST OF AUTHORITIES ALEXANDROV, Stanimir A. ROBBINS, Joshua M. BEYANI, Chaloka BROWNLIE, Ian Proximate Causation in International Investment Disputes Yearbook on International Investment Law and Policy, p Armed activities on the territory of the Congo: the ICJ judgment in the context of the current peace process in the great lakes region. a summary of a meeting of the international law discussion group at chatham house Chatham House 27th January 2006 The relations of nationality in public international law The British Year Book of International Law, London, vol [cited as: ALEXANDROV & ROBBINS] [cited as: BEYANI] [cited as: BROWNLIE] DOLZER, SCHREUER, Christopher. Rudolf; Principles of International Investment Law, 2 nd Edition, Oxford University Press 2012 [cited as: DOLZER/SCHREUER] DUGAN, Christopher F. RUBINS, Noah SABAHI, Borzu WALLACE JR., Don GAILLARD, Emmanuel Investor-State Arbitration Oxford University Press 2008 Available at: /law:iic/ book.1/law- iic chapter- 12?rskey=pnbVSd&result=1&prd=I C Establishing Jurisdiction Through a Most-Favored-Nation Clause The New York Law Journal, Volume 233, vii [cited as: DUGAN ET. AL.] [cited as: Gaillard]

9 No June 2005 HAILBRONNER, Kay KINSELLA, N. Stephan Kinsella; RUBINS, Noah D. KUNZ, J. L. KUNZ, J. L. LLAMAZON, Aloysius SINCLAIR, Anthony C. MORBOE, Irmgard. Nationality in public international law and European law. Available at: nner.pdf. International Investment, Political Risk and Dispute Resolution: A Practicioner s Guide, Oceana TM L option de nationalité Recueil des cours 1930 I (Paris, Sirey), vol. 31, pp ;, Nationality and option clauses in the Italian Peace Treaty of 1947 American Journal of Inter-national Law (Washington, D.C.) vol. 41, No. 3 (July 1947) Investor Wrongdoing in Investment Arbitration: Standards Governing Issues of Corruption, Fraud, Misrepresentation and Other Investor Misconduct in Albert Jan van den Berg (ed), Legitimacy: Myths, Realities, Challenges, ICCA Congress Series, Volume 18, Kluwer Law International 2015 Calculation of Compensation and Damages in International Investment Law Oxford International Arbitration Series 2009 [cited as: HAILBRONNER] [cited as: KINSELLA ET. AL.] [cited as: KUNZ 1930] [cited as: KUNZ 1947] [cited as: LLAMAZON & SINCLAIR] [cited as: MORBOE] viii

10 MUCHLINSKI, Peter T; ORTINO, Federico Ortino; SCHREUER Christoph The Oxford Handbook of International Investment Law Oxford University Press 2013 [cited as: MUCHLINSKI and ORTINO and SCHREUER] Organisation for Economic Co-operation and Development s Directorate for Financial and Enterprise Affairs Most-Favoured-National Treatment in International Investment Law Working Papers on International Investment 2004/ [cited as: OECD s MFN paper] O CONNELL, D.P. PELLET, Alain REZEK, J. F. State Succession in Municipal Law and International Law Cambridge, United Kingdom, Cambridge University Press, Vol. I 1967 The Opinions of the Badinter Arbitration Committee: A second breath for the self-determination of peoples 3 E.J.I.L Le droit international de la nationalité Collected Courses of the Hague Academy of International Law, 1986-III (Dordrecht, Martinus Nijhoff, 1987), vol. 198 [cited as: O CONNELL] [cited as: PELLET] [cited as: REZEK] SALACUSE, W. Jeswald The Law of Investment Treaties, 2 nd Edition, Oxford International Law Library 2015 [cited as: SALACUSE] United Nations Conference on Trade and Development UNCTAD Most-Favoured-Nation Treatment Issues in International Investment [cited as: UNCTAD s MFN paper] ix

11 Agreements II 2010 United Nations Conference on Trade and Development Expropriation: UNCTAD Series on Issues in International Investment Agreements II, United Nations Publication 2012 [cited as: UNCTAD] United International Commission Nations Law ILC Draft articles on Responsibility of States for Internationally Wrongful Acts, with commentaries 2001 Available at: ts/english/commentaries/9_6_2001.p df [cited as: ILC Articles] WOOD, Michael The principle of non-intervention in contemporary international law: non interference in a state s internal affairs used to be a rule of law: is it still? Chatham House 28th February 2007 [cited as: WOOD] x

12 LIST OF CASE LAW Sweden CME Czech Republic v. The Czech Republic UNCITRAL Arbitration Proceedings Partial Award 13 September 2001 [cited as: CME PARTIAL] The Netherlands Guyana v. Suriname (UNCLOS Annex VII Tribunal) PCA Awards Series (2007) Yukos Universal Limited (Isle of Man) v. The Russian Federation, UNCITRAL PCA Case No. AA 227 Veteran Petroleum Limited (Cyprus) v. The Russian Federation, UNCITRAL PCA Case No. AA 228 Hulley Enterprises Limited (Cyprus) v. The Russian Federation, UNCITRAL PCA Case No. AA 226 Liechtenstein v. Guatemala (Nottebohm case) ICJ 1955 Greece v United Kingdom of Great Britain and Northern Ireland International Court of Justice In: United Nations, Reports of International Arbitral Awards, 1963 Date: July 1, 1952 [cited as: GUYANA V. SURINAME] [cited as: YUKOS CASE] [cited as: YUKOS CASE] [cited as: YUKOS CASE] [cited as: NOTTEBOHM CASE] [cited as: AMBATIELOS CASE] xi

13 The Republic of Nicaragua v. The United States of America ICJ 1986 [cited as: NICARÁGUA V. UNITED STATES] United Kingdom Niko Resources (Bangladesh) Ltd. v. Bangladesh Petroleum Exploration & Production Company Limited ("Bapex") and Bangladesh Oil Gas and Mineral Corporation ("Petrobangla") ICSID Case No. ARB/10/18 Gustav F W Hamester GmbH & Co KG v. Republic of Ghana ICSID Case No. ARB/07/24 [cited as: NIKO RESOURCES V. BANGLADESH] [cited as: HAMESTER V. GHANA] United States of America Siemens A.G. v. The Argentine Republic ICSID Case No. ARB/02/8 International Thunderbird Gaming Corporation v. The United Mexican States UNCITRAL - NAFTA Teinver S.A., Transportes de Cercanías S.A. and Autobuses Urbanos del Sur S.A. v. The Argentine Republic ICSID Case No. ARB/09/1 Emilio Agustín Maffezini v. The Kingdom of Spain ICSID Case No. ARB/97/7 Gas Natural SDG, S.A. v. The [cited as: SIEMENS V. ARGENTINA] [cited as: INTERNATIONAL THUNDERBIRD GAMING CORPORATION V. THE UNITED MEXICAN STATES] [cited as: TEINVER V. ARGENTINA] [cited as: MAFFEZINI V. SPAIN] [cited as: GAS NATURAL xii

14 Argentine Republic ICSID Case No. ARB/03/10 Hochtief AG v. The Argentine Republic ICSID Case No. ARB/07/31 Suez, Sociedad General de Aguas de Barcelona S.A., and InterAguas Servicios Integrales del Agua S.A. v. The Argentine Republic ICSID Case No. ARB/03/17 Wena Hotels Limited v Egypt, Award ICSID Case No ARB/98/4 Enron Corporation and Ponderosa Assets LP v Argentina ICSID Case No ARB/01/3 Waste Management Incorporated v Mexico ICSID Case No ARB(AF)/00/3 Técnicas Medioambientales Tecmed SA v Mexico ARB(AF)/00/2, 10 ICSID Rep 130 Too v. Greater Modesto Insurance Associates and the United States of America, Iran US CT, Award No Iran US CTR 378. S.D. Myers, Inc. v. Government of Canada UNCITRAL - NAFTA CMS Gas Transmission Company v. The Republic of Argentina ICSID Caso No. Arb/01/8 V. ARGENTINA] [cited as: HOCHTIEF V. ARGENTINA] [cited as: SUEZ INTERAGUAS V. ARGENTINA] [cited as: WENA HOTELS] [cited as: ENRON] [cited as: WASTE MANAGEMENT] [cited as: TECMED] [cited as: GREATER MODESTO] [cited as: S.D. MEYERS] [cited as: CMS] xiii

15 El Paso Energy International Company v. The Republic of Argentina Award ICSID Caso No. Arb/03/15 31 October 2011 El Paso Energy International Company v. The Republic of Argentina Decision of the ad hoc committee on the application for annulment of the Argentine Republic ICSID Caso No. Arb/03/15 22 September 2014 MTD Equity Sdn Bhd and MTD Chile S.A. v. Chile Decision on annulment ICSID Caso No. Arb/01/7 21 March 2007 [cited as: EL PASO] [cited as: EL PASO ANNULMENT] [cited as: MTD ANNULMENT] xiv

16 LIST OF LEGAL SOURCES Accordance with International Law of the Unilateral Declaration of Independence in Respect of Kosovo Available at: [cited as: KOSOVO ADVISORY OPINION] Declaration on Principles of International Law concerning Friendly Relations and Co-operation among States in accordance with the Charter of the United Nations Available at: [cited as: UN FRIENDLY RELATIONS PRINCIPLES] International Covenant on Civil and Political Rights Available at: cpr.aspx [cited as: ICCPR] The Universal Declaration of Human Rights Available at: [cited as: UDOHR] The United Nations Draft Articles on Nationality of Natural Persons in relation to the Succession of States with commentaries Available at: [cited as: UN ARTICLES ON NATIONALITY] xv

17 Treaty between the Principal Allied Powers and Austria Available at: GERMAIN-EN-LAYE] Treaty between the Principal Allied Powers and Roumania respecting Bessarabia Available at: 15.html [cited as: TREATY OF PARIS (ROMANIA)] Treaty of Peace Between the Allied and Associated Powers and Hungary Available at: pdf [cited as: ; PEACE TREATY OF TRIANON] [cited as: TREATY OF SAINT- Treaty of Peace with Germany Available at: [cited as: TREATY OF VERSAILLES] Vienna Convention on Succession of States in Respect of Treaties Available at: ntions/3_2_1978.pdf [cited as: VIENNA CONVENTION ON SUCCESSION OF STATES IN RESPECT OF TREATIES] Vienna Convention on the Law of Treaties Available at: /volume-1155-i english.pdf [cited as: VCLT] xvi

18 STATEMENT OF FACTS 1. CLAIMANT, Peter Explosive, is a national of Euroasia and resident in Fairyland, a province which was formerly part of Eastasia and is now part of Euroasia. 2. CLAIMANT was responsible for an investments made in the Republic of Oceania (RESPONDENT), starting February 1998 until May CLAIMANT was considered an Eastasian national when he acquired the integrality of the shares of a crippled Oceanian company called Rocket Bombs Ltd (the COMPANY ), a company specialized in arms production for the arms industry. The COMPANY had no environmental license at the time the investment was made, and CLAIMANT needed such license to revitalize the COMPANY, whose deterioration compromised the local community of Valhalla s welfare. 4. The Environment Act 1996 of Oceania allowed CLAIMANT to try a request for subsidies to purchase the necessary environmental-friendly technology. These subsidies, however, were never once given to any company since the issuance of the Act in 1996 until To secure its production line and investments, CLAIMANT had a meeting with the President of the Oceanian National Environment Authority, acquiring in the same month of July 1998 the environmental license. 6. On August, RESPONDENT denied CLAIMANT s subsidy request for the environmental technology. CLAIMANT then approached Euroasia s Minister of National Defence, making a contract which would allow payment advances, thus CLAIMANT would have the necessary funds to acquire such technologies. 7. By May 2014, CLAIMANT s investments were ruined by the RESPONDENT s President Executive Order, which blocked all property from persons who were considered to contribute to the secession of Fairyland and its incorporation to Euroasia. 8. Fairyland has historically been part of Euroasia, though due to constant wars, it was reclaimed by Eastasia. On November 2013, Fairylanders decided by referendum to reunite their province back to their homeland, being peacefully 1

19 reunited four months later, and subsequently formally declared reunited by the Euroasian government. 9. Nonetheless, some countries have not recognized the Fairylanders right to self-determination, including RESPONDENT and Eastasia. RESPONDENT has issued and Executive Order imposing sanctions to CLAIMANT and his COMPANY (the only persons in the arms industry to receive such sanctions). With the sanctions, all of CLAIMANT s customers declared that they were no longer bound to their contracts with the COMPANY, making CLAIMANT unable to continue his business, and also incapable to sell it to a third party. 10. CLAIMANT is also facing criminal proceedings in Oceania, accused of bribery of Oceania s convicted National Environmental Agency President. 2

20 SUMMARY OF ARGUMENTS 11. The Arbitral Tribunal has jurisdiction over the case at hand under the Euroasia- Oceania BIT, as CLAIMANT is a resident of Fairyland, a province that was lawfully annexed by Euroasia. Both the referendum held by the people of Fairyland and Euroasia s military intervention in Fairyland are in conformity with the right of the people from Fairyland to self-determination and with the principle of non-intervention, 12. As a consequence of the legal annexation, Art. 15, b of the Vienna Convention on Succession of States in Respect of Treaties should be applicable to the present case, which determines that in the event of annexation, the treaties of the successor State will be in force in respect of the territory to which the succession of States relates from the date of the annexation. 13. Nonetheless, even if this Tribunal finds that the annexation was not lawful, CLAIMANT's has rightfully obtained the Euroasian nationality, as not only has Euroasia issued an identity card and a passport for CLAIMANT, but CLAIMANT also has emotional, historical and economical attachments to Euroasia. 14. Moreover, Claimant submits that it may invoke the MFN clause of the Euroasia-Oceania BIT in order to access and rely on the dispute resolution provision of the Eastasia-Oceania BIT, as this is in line with the wording of such clause, as well as with the purpose and object of the Euroasia-Oceania- BIT. This conclusion is also supported by the understanding of the majority of arbitral tribunals that have dealt with similar matters and with the purpose of the MFN clause. However, should this Tribunal decides otherwise, it should be noted that CLAIMANT was not required to comply with the pre-arbitral steps contained in Article 9 of the Euroasia-Oceania BIT. 15. Also, CLAIMANT s investment enjoys protection under the Euroasia-Oceania BIT as the clean hands doctrine is not applicable to the present case. Not only can such doctrine not be accessed through the Euroasia-Oceania BIT MFN clause, but it is also not recognized under international law. Notwithstanding, even if this Tribunal decides otherwise, said doctrine was not violated. 3

21 16. If this Tribunal finds that it has jurisdiction over the dispute, it shall consider that by virtue the economic sanctions imposed by RESPONDENT it has indirectly and unlawfully expropriated CLAIMANT s investment. In this respect, it should be noted that said sanctions cannot be considered s mere regulator measures, nor as measures to guarantee security interests. 17. Finally, CLAIMANT submits that it has not in any way contributed to the damages suffered by its investment in Oceania. On the contrary, the RESPONDENT caused losses to CLAIMANT s investment by issuing the Executive Order on Blocking Property of Persons Contributing to the Situation in the Republic of Eastasia. 4

22 ARGUMENTS A. The Arbitral Tribunal has jurisdiction over the present case under the Euroasia Oceania BIT 18. The Arbitral Tribunal has jurisdiction over the present dispute for five reasons. First, CLAIMANT is a resident of Fairyland, a province that was legally annexed by Euroasia. Therefore, the Vienna Convention on Succession of States in Respect of Treaties is applicable thereto, which leads to the application of the Euroasia-Oceania BIT to the present case (Section I). Second, CLAIMANT is a national of Euroasia, and therefore may rely on the Euroasia-Oceania BIT (Section II). 19. Moreover, contrary to RESPONDENT s allegations in its ARfA, Claimant may invoke the MFN clause of the Euroasia-Oceania BIT in order to access and rely on the dispute resolution provision of the Eastasia-Oceania BIT (Section III). Even if this Tribunal understands that CLAIMANT may not invoke the MFN clause, CLAIMANT was not required to comply with the pre-arbitral steps contained in Article 9 of the Euroasia-Oceania BIT (Section IV). 20. Finally, CLAIMANT s investment enjoys protection under the Euroasia-Oceania BIT as the clean hands doctrine is not applicable to the present case and, even if this Tribunal decides otherwise, said doctrine was not violated (Section V). I. THE ANNEXATION OF FAIRYLAND BY EUROASIA WAS CONSISTENT WITH INTERNATIONAL LAW 21. Oceania, Euroasia and Eastasia are all parties to the Vienna Convention on Succession of States in Respect of Treaties, which is applicable to the effects of a succession of States occurring in conformity with international law and the principles embodied in the Charter of the United Nations1. According to its Article 15, subparagraph b, in cases of annexation of territories, treaties of the successor State are in force in respect of the territory to which the succession of States relates from the date of the annexation. 1 Vienna Convention on Succession of States in Respect of Treaties, Article 6. 5

23 22. In the present case CLAIMANT submits that such Convention applies to the effects of the annexation of Fairyland by Euroasia in respect of treaties including the Euroasia-Oceania BIT, as Fairyland was legally incorporated by Euroasia. 23. The annexation of Fairyland occurred in conformity with international law and with the principles embodied in the Charter of the United Nations, more specifically with the principles of self-determination of people and non-intervention. 24. The principle of equal rights and self-determination of people is enshrined in the Charter of the United Nations and encompasses all people s rights to freely determine their political status and to pursue their economic, social and cultural development, to establish a sovereign and independent State, the free association or integration with an independent State or the emergence into any other political status freely The annexation represents the prevalence of local citizens selfdetermination right, as the vast majority of people living in Fairyland voted for the re-unification with Euroasia 3. Most of Fairyland s population is of Euroasian origin, speaks the Euroasian language and do not identify with Eastasia Euroasia complied with the duty of non-intervention on the external affairs of Eastasia, as the annexation occurred as a consequence of a referendum held on 1 st November 2013 by Fairyland authorities, in which the majority decided in favor of the succession of Fairyland from Euroasia The succession did not occur due to Euroasia s intervention, but rather due to the referendum held by the authorities of Fairyland. The Commission of the Conference on Yugoslavia recognized, similarly, that the creation of Croatia, Bosnia, and Serbia and the breakup of Yugoslavia were caused by declarations of independence and referendums and not by intervention of other countries In Quebec, The Supreme Court of Canada recognized the existence and importance of the right of self-determination 7. According to Canadian Constitution, 2 UN Friendly Relations Principles 3 Case Files, p Case Files, p Case Files, p. 5 6 Pellet, p Reference re Secession of Quebec, [1998] 2 S.C.R. 217, 134, 154 6

24 however, a province would have to negotiate succession with the rest of Canada, should its people decide for succession on a referendum Here, Eastasian Constitution does not contain any provision regulating succession from the Republic. Whereas in Canada in Canada the right of selfdetermination is recognized and the law establishes a few steps and conditions for its exercise, Eastasian government pursues to deprive Fairyland people of such right based on the silence of the Constitution. 30. As there are no legal requirements for succession within Eastasian domestic law regarding succession, a peaceful referendum is a lawful way of people exercising their right to self-determination. In this sense, when considering Kosovo s declaration in favor of independence, the International Court of Justice ( ICJ ) decided that such declaration was not illegal per se Moreover, there was no forcible or dictatorial interference, or otherwise coercive, which could lead to a depravation of Eastasia s control over the matter in question 10. On the contrary, only 4 (four) months after the referendum was held and the population decided in favor of succession, the armed forces of Eurasia peacefully entered the territory of Fairyland, upon request of legal authorities ICJ understand that an illegal intervention requires the use of force or military and financial support to groups engaged in military activities 12, which did not occur on the present case. 33. In Armed Activities on the Territory of the Congo, the ICJ found that Uganda had beached several of its obligations under international law as it occupied Iuturi with no consent of the population and actively extended military, logistics, economics and financial support to irregular forces operating within the occupied territory. 34. Euroasia, on the other hand, was requested to intervene by the legal authorities of Fairyland and never supported irregular terrorist groups. It only intervened upon request of legal authorities, in attendance to a request that has solid foundation on Fairyland s population s right to serf-determination. 8 Id., Kosovo Advisory Opinion, Wood, p Case Files, p Nicaragua v. U.S, 246; UN Friendly Relations Principles, Art. 3(1) 7

25 35. In Armed Activities on the Territory of the Congo, Uganda was considered in breach of international law as it violated the most basic international humanitarian law and human rights. Its armed forces committed acts of torture and other forms of inhuman treatment of the Congolese civilian population, trained child soldiers and incited ethnic conflicts Euroasia armed forces entrance within the territory of Fairyland was bloodless and rather peaceful 14, in opposition to the facts described in Armed Activities on the Territory of the Congo. 37. Similarly, on Nicarágua v. United States, ICJ relied on the support provided by the United States to rebels seeking to overthrow Nicaragua s government to assert there has been a breach of the non-intervention duty Euroasia did not support rebels or armed groups. It only acted upon request of legal authorities and on behalf a population that, by virtue of a referendum, legally decided to be a part of its territory. Therefore, there is no breach of international law and Euroasia was lawfully annexed Fairyland. 39. As the annexation of Fairyland by Euroasia is lawful, the requirements for the application of the Vienna Convention on Succession of States in Respect of Treaties are fulfilled. 40. As a consequence, in accordance with Article 15, subparagraph b thereof, the Euroasia-Oceania BIT is in force within Fairyland s territory from the date of succession. The referendum that trigged the succession was held on November On 23 March 2014, Euroasia officially declared Fairyland a part of Euroasian Territory. The expropriation acts were initiated with an Executive Ordered on Blocking Property of Persons Contributing to the Situation in the Republic of Eastasia on 1 st May 2014, when Fairyland was a territory of Euroasia 16. The arbitral proceeding was initiated on 11 September Therefore, the Euroasia-Oceania BIT is applicable to the present case. II. CLAIMANT IS A NATIONAL OF EUROASIA AND THEREFORE MAY RELY ON THE EUROASIAN-OCEANIA BIT. 13 Beyani, p Case files, p Nicaragua v. U.S, Case files, pp Case files, p. 14 8

26 41. Even if this Tribunal understands that the annexation of Fairyland was unlawful and, thus, does not allow for the application of the Vienna Convention on Succession of States in Respect of Treaties to the present case, the Euroasia-Oceania BIT is still applicable to the present case, as CLAIMANT is a national of Euroasia. 42. Nationality is a legal status that embraces a set of mutual rights and obligations towards a political entity 18. It is the bound between the person and the State, the core of the person s political status. As previously stated, by virtue of the self-determination right, people are free to determine their political status 19 and, therefore, their nationality. 43. In fact, many authors have asserted the existence of an independent right of option as an attribute of the principle of self-determination The right of option as an expression of the right to self-determination played an important role on decolonization and after Second World War. There are innumerous treaties recognizing the right of option between the successor State and the predecessor State as a way of granting peoples right to self-determination In recent cases of succession of States in Eastern and Central Europe, where questions of nationality were solely resolved through domestic legislation of the State concerned, at least two States established the possibility of choice, to be exercised by the person. According to article 3, paragraph 1, of the Law on State Citizenship in the Slovak Republic, of 19 January 1993, every individual who was on 31 December 1992 a citizen of the Czech and Slovak Federal Republic and did not acquire the citizenship of Slovakia ipso facto, had the right to opt for the citizenship of Slovakia. 46. Moreover the United Nation s Draft Articles on Nationality of Natural Persons underscores the respect for the will of persons affected by a succession of States. According to the commentaries thereto, persons concerned are not reduced to a purely passive role as regards the impact of the succession of States on their individual status Hailbronner, p. 1, 4 19 ICCPR, Art. 1(1) 20 Kunz, pp. 111/ Treaty of Versailles, Art. 37, 85, 91, 106 & 113; Treaty of Saint-Germain-en-Laye, Art ; Treaty of Paris (Romania), Art. 3-4; Peace Treaty of Trianon, Art. 40 & UN Articles on Nationality, p. 30, 5 9

27 47. In this sense. RESPONDENT s attempt to impose Eastasian nationality to CLAIMANT is in violation to CLAIMANT s right to self-determination. 48. CLAIMANT expressly renounced its Eastasian nationality on 2 March 2014, right after the annexation of Fairyland by Euroasia. On 23 March 2014, Euroasian authorities recognized CLAIMANT as a national of the Republic of Euroasia, and he was subsequently issued an Euroasian identity card and passport. 49. Even though CLAIMANT did not comply with the formal requirements of the Eastasian Citizenship Law to renounce his citizenship, Eastasian law shall play no important role on the matter. According to the preamble of the Draft Articles on Nationality of Natural Persons in relation to the Succession of States, issued by the United Nations, albeit nationality is essentially governed by domestic law, international law imposes certain restrictions on the freedom f action of he State s in this matter. 50. The applicable rules of public international law recognize the rights of states to set the rules for granting nationality to a person in their domestic laws. However, the international law of diplomatic protection limits the weight that tribunals should accord to the decisions of national institutions to their domestic laws In Liechtenstein v Gualemala, the ICJ refused to recognize the naturalization of a person by Guatemala by applying international public law. According to ICJ, nationality place[s] itself on the plane of international law. It is international law which determines whether [it] is entitled to exercise protection Therefore, neither a state s grant of nationality to a person under its own laws nor its espousal of a resulting claim is determinative at the international level, and an international tribunal retains its right to independently examine the issue of nationality. 53. Such provision is of paramount importance as the sole application of domestic law may lead to conflicts of law. In the present case, the conflict arises out of the fact that Euroasian authorities recognized CLAIMANT as a national of the Republic of Euroasia. However, Eastasia did not officially recognize CLAIMANT s 23 Dugan et. al., p Nottebohm Case, p

28 renunciation of Eastasian citizenship and the Euroasia Citizenship Act does not allow Euroasian nationals to possess dual nationality There are two criteria set forth by international public law to assert nationality. The first criteria is the right of option to solve the conflict, which CLAIMANT exercised in favor of Euroasia. The second criteria was set forth on Liechtenstein vs Guatemala, according to which nationality should be determined in light of the ties between the person concerned and the state whose nationality is involved: The real and effective nationality, based on stronger factual ties between the person concerned and one of these States whose nationality is involved In this same line, Article 11 of the Draft Articles on Nationality of Natural Persons in relation to the Succession of States enables individuals to choose between the predecessor and the successor State, in accordance with the connection it maintains therewith. 56. Moreover, according to Article 5 of the Draft Articles on Nationality of Natural Persons in relation to the Succession of States, the person that has its habitual residence in the territory affected by the succession of States is presumed to acquire the nationality of the Successor State, i.e. Euroasia. 57. The presumption relies on the fact that the nationality should not be based on formality or artifice, but on a real connection between the individual and the State 27. Nationality, therefore, should be asserted with regards to the social fact of attachment, the genuine connection of existence, interests and sentiments, together with the existence of reciprocal rights and duties between the person and the political entity CLAIMANT clearly stated its wish to maintain its attachments with Euroasia. In fact, CLAIMANT is emotionally and historically attached to Euroasia, as its grandparents were born nationals of Euroasia 29. There is also a connection of legal and economic interests, as CLAIMANT s most crucial contract was concluded with the Ministry of National Defense acting on behalf of Euroasia. In the views of 25 Case Files, pp Nottebohm Case, p Rezek, p Dugan et. al., p. 291, Nottebohm Case, p. 23, 4 29 Case Files, p

29 UNHCR experts, there is also substantial connection with the territory concerned through residence itself 30. In view of the above, CLAIMANT s strong ties to Eurasia, as well as the identity card and passport the Euroasian authorities conferred CLAIMANT demonstrate that CLAIMANT is a national of Euroasia. As a consequence, CLAIMANT should be considered by the Arbitral Tribunal as an Euroasian citizen under Article 1.2(a) of the Euroasia-Oceania BIT, who, therefore, may rely on such BIT to pursue its claims. III. CLAIMANT MAY INVOKE ARTICLE 3 OF THE EUROASIA-OCEANIA BIT IN ORDER TO ACCESS AND RELY UPON THE DISPUTE RESOLUTION PROVISIONS OF THE EASTASIA-OCEANIA BIT. 59. In the context of investment treaties, the MFN clause is governed by the ejusdem generis principle, according to which the clause is only applicable to matters belonging to the same category of subjects as that to which the clause itself relates In the present case, the MFN clause contained in Article 3 of the Euroasia-Oceania BIT provides that: ( ) each Contracting Party shall, within its own territory, accord to investments made by investors of the other Contracting Party, to the income and activities related to such investments and to such other investment matters regulated by this Agreement, a treatment that is no less favourable than that accorded to its own investors or investors from third-party countries While said clause does not expressly refer to dispute resolution provisions, Claimant submits that the expression activities related to such investments and such other investment matters regulated by this Agreement should be interpreted as encompassing Article 8 of the Eastasia-Oceania BIT. 62. Pursuant to the general rules of treaty interpretation set forth in Article 31 of the United Nation s Vienna Convention on the Law of Treaties ( VCLT ), a 30 O Connell, p OECD MFN Paper, 9-12; Ambatielos case, 107; Maffezini vs. Spain, RfA, 41 12

30 treaty should be interpreted in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose In this sense, it should initially be noted that the expression activities related to such investments and such other investment matters regulated by this Agreement is not limited by any substantive standard indicating that the intention of the Contracting Parties to the Euroasia-Oceania BIT was to exclude dispute settlement mechanisms from the MFN clause s scope. In fact, the only restriction to the application of the most favorable treatment is the provision contained in paragraph 2 of the MFN clause, which deals with advantages and privileges accorded by virtue of that the Contracting Party s binding obligations deriving from its membership in a customs or economic union, common market, or free trade area, or as a result of regional or subregional Moreover, the wording of the MFN clause shall be interpreted in light of the purpose of the Euroasia-Oceania BIT, which is the promotion and reciprocal protection of investments 35, as well as in light of the preamble of such BIT, in which the Contracting Parties recognize the importance of providing effective means of asserting claims and enforcing rights with respect to investments under national law as well as through international arbitration. 65. Considering the purpose and the preamble of the Euroasia-Oceania BIT, it is Claimant s submission that the MFN clause should cover Article 8 of the Eastasia-Oceania BIT, for it constitutes a crucial element of investment protection under both the Euroasia-Oceania and the Eastasia-Oceania BITs. By establishing that if a dispute cannot be amicably settled by the parties within 6 months, it may be referred to arbitration, said article provides investors with the assurance that the disputes that may arise from their investments will be solved through a neutral and effective means of dispute settlement, rather than be subject to the possible delays and political pressures of national courts VCLT, Art. 31(1) 34 RfA, p RfA, p Gas Natural v. Argentina, 29; Gaillard. p. 3 13

31 66. This conclusion is also supported by several arbitral tribunals, which have decided that dispute resolution provisions are a fundamental part of the most favorable treatment owed to investors and their investments In Siemens v. Argentina, the Tribunal examined a MFN clause that contained very similar wording to that of Article 3 of the Euroasia-Oceania BIT ( a less favorable treatment of activities related to investments than granted to its own national ). The Tribunal upheld its jurisdiction by affirming that access to dispute settlement mechanisms is part of the protection offered under the BIT and part of the treatment of foreign investors and investments and of the advantages accessible through a MFN clause In this respect, it is worth noticing that while there are also arbitral tribunals that have denied the extension of the MFN clause to dispute resolution provisions, the conclusion reached by such tribunals are not applicable to the present case. According to UNCTAD s MFN paper, in the majority of the cases that these tribunals have analyzed, claimants have attempted to extend via the MFN clause - the scope of the mandate of the arbitral tribunal beyond that specifically established in the basic treaty In the case at hand, however, Claimant is not trying to extend the scope of the mandate of the arbitral tribunal, nor to create consent to arbitration where there is none. Claimant is merely invoking the MFN clause to avoid discussions regarding procedural pre-steps that shall harm Claimants means of asserting its claims. Out of the twelve cases examined in the UNCTAD s MFN paper, in which claimants invoked the MFN clause solely to override procedural issues, only three decided against the application of the MFN clause Finally, this Tribunal should also consider that the application of the MFN clause to Article 8 of the Eastasia-Oceania BIT is in line with the basic purpose of the MFN clause. As a rule, such clauses act as a source of international obligations other than those included in the basic treaty to ensure that investors are not discriminated against for being foreigners and are given the treatment afforded to any other foreign investors. In this sense, MUCHLINSKI, ORTINO and SCHREUER argue 37 Maffezini v. Spain, 54; Gas Natural v. Argentina 29; Hochtief v. Argentina, 68; Suez InterAguas v. Argentina, Siemens v. Argentina, UNCTAD MFN paper, pp Teinver v. Argentina,

32 that the fact that new obligations, including procedural ones, can arise from MFN clauses is perfectly legitimate, as this is exactly the purpose of such a clause In view of the arguments above, Article 8 of the Eastasia-Oceania BIT is clearly encompassed by the expression activities related to such investments and such other investment matters regulated by this Agreement and, thus, should be accessed through the MFN clause. IV. CLAIMANT WAS NOT REQUIRED TO COMPLY WITH THE PRE-ARBITRAL STEPS AS PROVIDED IN ARTICLE 9 OF THE EUROASIA-OCEANIA BIT PRIOR TO BRINGING HIS CLAIMS BEFORE THE TRIBUNAL 72. Even if this tribunal understands that CLAIMANT may not rely on the MFN clause to access the dispute resolution provisions of the Eastasia-Oceania BIT, this Tribunal has jurisdiction based on Article 9 of the Euroasia-Oceania BIT. 73. Article 9 of the Euroasia-Oceania BIT ( Dispute Resolution Clause ) encompasses a few pre-arbitral proceedings that RESPONDENT alleges to be mandatory. First, it provides for amicable settlement between the parties. Secondly, if the dispute is no amicably settle, it may be sumitted to the competent judicial or administrative courts of the Contracting Party in whose territory the investment is made. After 24 months from the date of notice of proceedings before de courts, the dispute may be referred to arbitration. It is worth noticing that, in this case, any pending court proceedings should be dismissed. 74. Contrary to RESPONDENT allegations, court proceedings are not mandatory pre-steps set forth by the dispute resolution agreement. 75. Similarly to the MFN clause, the Dispute Resolution Clause shall also be interpreted in light of the treaty s objects and purpose, as per Article 31 of the VCLT. The effectiveness of the dispute resolution clause is one of the foundations of the Euroasia-Oceania BIT, set forth on its preamble: providing effective means of asserting claims and enforcing rights with respect to investments under national law as well as through international arbitration. 76. International arbitration is quoted on the preamble of the Euroasia- Oceania BIT as the main dispute resolution mechanism for a party to assert its claims. It is not reasonable to interpret the dispute resolution clause as establishing 41 Muchlinski/Ortino/Schreuer, pp

33 a condition that could lead to a 24 months delay on the commencement of the main dispute resolution mechanism provided for the Euroasia-Oceania BIT. 77. The Dispute Resolution Clause must be interpreted in a manner that grants the parties the possibility to assert their claims within a reasonable time period and through the Euroasia-Oceania BIT s core dispute resolution mechanism: international arbitration. 78. The Dispute Resolution Clause does not require the exhaustion of domestic remedies as that concept is understood under international law, nor does it mention a decision on the merits by the national or administrative courts. It merely states that, if the dispute has not been resolved within 24 months, parties are free to dismiss court proceedings and have their disputes ultimately decided by international arbitration. 79. The Dispute Resolution Clause is therefore different, in this specific point, from the dispute resolution clause contained on the Agreement Between Argentine Republic and the Kingdom of Spain for the Promotion and Reciprocal Protection of Investments, (Argentine-Spain BIT) interpreted in Maffezini vs Spain as establishing mandatory pre-arbitral mandatory steps. 80. On Maffezini vs Spain, the claimant alleged that the arbitration agreement allowed the parties to commence arbitral proceedings even after a decision on the merits was rendered by judicial courts. According to the claimant, the tendency is that one of the parties will always be unhappy with the outcome of a lawsuit, and therefore pursue international arbitration. Hence, an arbitral tribunal would always have the last say. There would be no sense on imposing pre-arbitral court proceedings, which would only delay the inevitable outcome. 81. The tribunal decided that claimant s interpretation of the dispute resolution agreement on Maffezini vs Spain: ( )would deprive this provision of any meaning, a result that would not be compatible with generally accepted principles of treaty interpretation, particularly those of the Vienna Convention on the Law of Treaties. 82. CLAIMANT s interpretation the Dispute Resolution Clause, on the other hand, does not deprive the provision of its meaning. The Euroasia-Oceania BIT allows the parties to seek redress from national courts or trough administrative 16

34 proceedings should it consider that the dispute can be properly and timely resolved thereby. Court and administrative proceedings are therefore not mandatory and, as a consequence, nor is arbitration. The investor has the right to pursue its claims in a manner it considers appropriate considering the circumstances of the dispute. 83. Moreover, the wording of the Dispute Resolution Clause supports the conclusion that the party has the right to seek the dispute resolution method that better fits the circumstances of its case and not to mandatorily trigger court proceedings when it knows in advance that such proceedings will be ineffective. 84. Whereas Article 7 of the Euroasia-Oceania BIT establishes that should a dispute arise between the Contracting States, it shall upon request of either Contracting Party be submitted to arbitration, the Dispute Resolution Clause states that if the dispute cannot be settled amicably, it may be submitted to the competent judicial or administrative Courts of the Contracting Party in whose territory the investment was made. And it follows: where, after twenty four months from the date of notice on the commencement on the proceedings before the courts mentioned on paragraph 2 above, the dispute between an investor one of the Contracting Parties has not been resolved, it may be referred to international arbitration. 85. It is important to stress that the dispute resolution clause interpreted in Maffezini v. Spain also contained the word shall, indicating that for that Treaty court proceedings were mandatory: If the dispute cannot thus be settled within six months following the date on which the dispute has been raised by either party, it shall be submitted to the competent tribunal ( ). 86. Therefore, the Dispute Resolution Provision does not contain prearbitral steps, but rather grants the parties the possibility to choose the dispute resolution mechanism that better suits the specifics of its case. As a consequence, this tribunal has jurisdiction based on the Dispute Resolution Clause contained in Article 9 of the Euroasia-Oceania BIT. V. THE CLEAN HANDS DOCTRINE IS NOT APPLICABLE TO THIS CASE 87. RESPONDENT argues that if this Tribunal decides that the MFN clause of the Euroasia-Oceania BIT brings the application of the dispute resolution provision included in Article 8 of the Eastasia-Oceania BIT to the present case, 17

35 then it should also bring the application of Article 1.1. of such BIT, whereby investments must be made in accordance with the laws and regulations of the host State. Since, in RESPONDENT s view, CLAIMANT s investment has allegedly been made in violation of RESPONDENT s law, it cannot enjoy protection under Euroasia-Oceania BIT RESPONDENT s allegations, however, cannot prevail as (i) the MFN clause is not applicable to unfavorable terms of another BIT; and (ii) the Clean Hands doctrine set forth in Article 1.1 of the Eastasia-Oceania is not accepted under any international tribunal: the clean hands doctrine. Even if this Tribunal understands that the Clean Hands Doctrine is applicable (iii) RESPONDENT cannot avoid liability for the acts of its officials; and (iv) CLAIMANT s investments are legal and, thus, covered by this Arbitral Tribunal s jurisdiction i. The MFN Clause cannot be used to bind CLAIMANT to unfavorable terms of another BIT 89. In its ARfA, RESPONDENT attempts to argue that should this Tribunal decide that the MFN clause contained in the Euroasia-Oceania BIT can be used to the access the dispute resolution provision of the Eastasa-Oceania BIT, then it should also be used to access the legality ( clean hands ) clause inserted on its Article However, RESPONDENT s argument is absolutely contrary to the purpose of the MFN clause. The simple purpose of such clause is to widen the rights of the investor and ensure that the relevant parties treat each other in a manner at least as favourable as they treat third parties 44. It is not meant to bind investors to unfavorable terms of other BITs. 91. Moreover, under RESPONDENT s logic, the MFN clause would entail the observance of all the provisions contained in the Eastasia-Oceania BIT. As was decided in Siemens v. Argentina, a benefit by the operation of an MFN clause does not carry with it the acceptance of all the terms of the treaty which provides for such benefit Case Files, p Case Files, p.15, 6 44 Dolzer/Schreuer, p Dolzer, p. 206; Siemens v. Argentina, DoJ,