INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES IN THE MATTER BETWEEN BLACK WATER MINING WAKANDA LTD.1 ST CLAIMANT

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1 CLAIMANT S MEMORIAL MT - J TEAM CODE: MT-J INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES 2018 IN THE MATTER BETWEEN BLACK WATER MINING WAKANDA LTD.1 ST CLAIMANT BLACKWATER (PTY) LTD..2 ND CLAIMANT WALLSTREET LTD.3 RD CLAIMANT AND THE REPUBLIC OF WAKANDA RESPONDENT MEMORIALS FOR CLAIMANTS

2 Contents LIST OF ABBREVIATIONS... 3 LIST OF AUTHORITIES... 4 STATEMENT OF JURISDICTION... 6 STATEMENT OF RELEVANT FACTS... 7 ISSUES FOR DETERMINATION... 8 SUMMARY OF ARGUMENTS... 9 SUBSTANTIVE ARGUMENTS Issue 1: Jurisdiction, admissibility and locus standi Issue 2; Unlawful expropriation ISSUE 3; The state impaired the Claimants investment through unreasonable or discriminatory measures ISSUE 4; Whether the State has violated the FET standard at Article 2(2) of the BIT PRAYERS

3 LIST OF ABBREVIATIONS 1. ICSID: International Centre for Settlement of Investment Disputes 2. BIT: Bilateral Investment Treaty 3. UNCTAD: United Nations Conference on Trade and Development 4. FET: Fair and Equitable Treatment 3

4 LIST OF AUTHORITIES Extraction of Valuable Minerals Act CAP 247, Statutes of Wakanda International Centre for Settlement of Investment Disputes Convention Mars- Wakanda Bilateral Investments Treaty (claimant exhibit No. 17) Report of the Executive Directors of the Convention Blacks Law Dictionary, 8ed Amoco International Finance Corporation v Iran(1987) 15 Iran-USCTR 189 ADC v Hungary (2016) ICSID Bear Creek mining co. v Republic of Peru (ICSID) Cable Television of Nevis ltd. v. Federation of St. Kitts and Nevis Award of 13 January 1997, ICSID Case No. ARB/95/2 CSOB v. Slovakia ICSID Case No. ARB94/7, Decision on Jurisdiction of 24 May 1999 Kaiser v Bauxite co. v Jamaica ICSID Case No. 73/3, Decision on Jurisdiction of 6 July 1975, 1 ICSID Repts. 286, 303 ( 1999) S. P Subedi: International Investment Law (Hart Publishing, 2010) Tradex v Albania Hellas S.A. 1 Case No. ARB/94/2, Decision on Jurisdiction of 24 December 1996, 14 ICSID Rev. Foreign Inv.L.J. 197, (1999) Getting The Deal Through GTDT. ICSID - Arbitration Getting The Deal Through GTDT. Retrieved May 2, 2018, from 4

5 Legal Definitions Legal Terms Dictionary USLegal, Inc.. Jurisdiction RationeMateriae Law and Legal Definition USLegal, Inc.. Retrieved May 12, 2018, from Christoph H. Schreuer, The ICSID Convention: A Commentary (2001) R. Doak, B., Crawford, J., &Reisman, W.M. (2005). Foreign Investment Disputes. Netherlands: Kluwer Law International. Siag & Veechi v Egypt(2009) ICSID Saluka Investment (Netherlands) v The Czech Republic (2006) Parmanent Court of Arbitration Texaco v Libya(1977) ILR 389 5

6 STATEMENT OF JURISDICTION The applicants recognize the tribunal s jurisdiction ratione voluntatis (Article 25(1))which is based on mutual consent in accordance to Article 8(3) of the BIT. They further recognize jurisdiction ratione materiae (Article 25(1)) which goes to the core of the underlying dispute. 6

7 STATEMENT OF RELEVANT FACTS The first claimant, is a mining company incorporated in Wakanda with seventy percent owned by the second and third claimants; companies incorporated in Mars. They have been engaging in mining and exploration activities at One Tree Hill, Wakanda, from In 2017, upon the discovery of REEs at One Tree Hill, the respondent state proceeded to cancel the claimant s license (SCP 351), through a twitter post and an announcement by the Wakanda National Television; without prior notice or any compensation. The state then proceeded to assert that it would personally develop One Tree Hill. Both parties have submitted the dispute before ICSID through a written consent. The respondents have however strongly denied jurisdiction of the tribunal regarding the subject matter. 7

8 ISSUES FOR DETERMINATION 1. Whether the arbitral tribunal has jurisdiction over the subject matter of the dispute 2. Whether the claimant s investments were unlawfully expropriated 3. Whether there was a violation of the fair and equitable treatment standards in the BIT 4. Whether the state impaired the claimants investments through unreasonable or discriminatory measures 8

9 SUMMARY OF ARGUMENTS 1. Whether the tribunal has jurisdiction over the subject matter of the dispute. The claimants assert that the tribunal has the requisite jurisdiction over the subject matter in dispute pursuant to article 25 of the ICSID convention that gives it power to determine legal disputes arising out of investments between a state party and a national of another state party. Both Wakanda and Mars are state parties to the convention. The first claimant is seventy percent owned by nationals of Wakanda hence the requirements in article 25 have been attained and the tribunal should hold the same pursuant to article 41 of the ICSID convention. 2. Whether the claimant s investments were unlawfully expropriated. The claimants aver that their investments were expropriated as a result of the revocation of their license, SCP351, by the respondent without compliance with article 5 of the Mars- Wakanda BIT that provides that an expropriation shall be for a public purpose, non discriminatory, following due process of the law and subject to compensation. 3. Whether there was a violation of the Fair and Equitable standards of Treatment. The claimants submit that there was a violation of FET standards by the respondents contrary to article 2 of the Mars-Wakanda BIT by revocation of their license upon the discovery of REEs, which violated their legitimate expectation, was done arbitrarily and without regard to the due process of the law and transparency. 4. Whether the claimants investment were impaired by unreasonable measures. The claimants aver that the revocation of their license upon discovery of REEs amounted to an unreasonable measure which impaired their investment in violation of article 2(2) of the BIT. 9

10 SUBSTANTIVE ARGUMENTS Issue 1: Jurisdiction, admissibility and locus standi This preliminary issue is a matter under Article 41 (1) of the ICSID Convention where the very fabric of the doctrine of kompetenz kompetenz is woven. The claimants therefore seek to persuade the tribunal into making a determination that it has the kompetenz of entertaining the subject matter of this case. Jurisdiction Ratione Materiae, subject-matter jurisdiction, is the court's authority to decide a particular case. It is the jurisdiction over the nature of the case and the type of relief sought; the extent to which a court can rule on the conduct of persons or the status of things. 1 The jurisdiction ratione materiae under Article 25(1) is thus exercised over any legal dispute arising directly out of an investment. Therefore, ICSID s subject-matter jurisdiction, as defined in Article 25(1), has three components: 2 a) A legal dispute existed. b) The foregoing legal dispute arose directly out of an investment c) The dispute was between a contracting state (Wakanda) and a national of another contracting state (Mars). 1 Legal Definitions Legal Terms Dictionary USLegal, Inc.. Jurisdiction RationeMateriae Law and Legal Definition USLegal, Inc.. Retrieved May 12, 2018, from 2 United Nations, (2003). Part 1. International Centre for Settlement of investment disputes (p.7 ). New York and Geneva : United Nations. Retrieved from 10

11 A. THE LEGAL DISPUTE. Legal dispute means any dispute concerning a legal right or obligation or concerning a fact relevant to the determination of a legal right or obligation. 3. Subject to Part V par 26 of the Report of the Executive Directors of the Convention; The expression legal dispute has been used to make clear that while conflicts of rights are within the jurisdiction of the Centre, mere conflicts of interests are not. The dispute must concern the existence or scope of a legal right or obligation, or the nature or extent of the reparation to be made for breach of a legal obligation. In Kaiser Bauxite co. v Jamaica 4 ; the tribunal in considering whether there was a legal dispute between the parties made a finding that the dispute concerning the alleged legal rights and obligations stemming from particular provisions of Kaiser s agreements with the government was a legal dispute. According to Part II (par 4 to 25) of the request; the claimants have complied with the Institutions Rule 2(1)(e) which requires the claimant to demonstrate the legal nature of the dispute. The claimants have ensured that the request contains information concerning the issues in dispute indicating that there is, between the parties, a legal dispute arising directly out of an investment. 3 Christoph H. Schreuer, The ICSID Convention: A Commentary (2001) 4 ICSID Case No. 73/3, Decesion on Jurisdiction of 6 July 1975, 1 ICSID Repts. 286, 303 ( 1999) 11

12 Furthermore, as evidenced by par 30 of the fact sheet, the parties acted within the spirit of clause IV of 1981 Model Clause that provides; for purposes of Article 25(1), ICSID, the parties agree that any dispute in relation to or arising out of the agreement is a legal dispute arising directly out of an investment. As demonstrated above the claimants have therefore satisfactorily established that a legal dispute actually existed. Breach of the BIT as well as unlawful expropriation by the claimants amounts to a legal dispute within the spirit of Article 25 (1) of the ICSID Convention. B. Arising directly out of an investment An investment is an; acquisition of property rights or contractual rights for the establishment or in the conduct of an industrial, commercial, agricultural, financial or service enterprise. 5 A foreign investment was defined in Tradex v Albania Hellas S.A. 6 to include any kind of investment in the territory of the Republic of Albania (the host state) owned directly or indirectly by a foreign investor consisting of inter- alia moveable or immoveable, tangible or intangible property and any other property rights. Subject to Part V par 26 of the Report of the Executive Directors of the Convention; the legal dispute must be directly arising out of an investment. Therefore, it is reasonable to conclude that the mining rights and activities issued by SEP 256 and SCP 351 (Para 10 to 16/Claimant s Exhibit No. 11 & 14) to the foreign investors can be deemed as 5 R. Doak, B., Crawford, J., &Reisman, W.M. (2005). Foreign Investment Disputes. Netherlands: Kluwer Law International. 6 Case No. ARB/94/2, Decision on Jurisdiction of 24 December 1996, 14 ICSID Rev. Foreign Inv.L.J. 197, (1999) 12

13 investments. A violation of these rights brings the matter within the jurisdiction of the tribunal under Article 25. C. Between a contracting state and a national of another contracting state In Cable Television of Nevis ltd. V. Federation of St. Kitts and Nevis 7 ; the tribunal noted that; the consent to ICSID arbitration can only take effect in the case on the matter of jurisdiction of ICSID if the contracting state is a party to the to the dispute. It is manifest that from all the circumstances, the Mars investors were dealing with the Government of Wakanda thus the consent to ICSID arbitration (par 30) is effective and therefore the institution has jurisdiction. A noteworthy criteria of establishing jurisdiction ratione materiae is equally manifested in the Salini test. 8 This criteria is described as follows: a) a commitment of resources to the host state s economy; This commitment is evidenced by the fact that BMW spent millions of dollars exploring and defining the resource at One Tree Hill (par 5). b) a certain duration of this commitment; The claimants exhibited a five-year commitment before the license was revoked. c) the assumption of risk and the expectation of profit; 7 Award of 13 January 1997, ICSID Case No. ARB/95/2. 8 Getting The Deal Through GTDT. ICSID - Arbitration Getting The Deal Through GTDT. Retrieved May 2, 2018, from 13

14 d) a contribution to the host state s economic development. Recent decisions have supported the idea that the Salini criteria should be applied with some flexibility and suggested that not all of them necessarily need to be fulfilled for there to be an investment. Issue 2; Unlawful expropriation Black s Law Dictionary 9, defines expropriation as the action of taking private property for the use of the public. This is the taking of assets of foreign companies or investors by host state against the wishes or without the consent of the company or investor concerned 10. In Amoco v. Iran 11, the Iran-United States Claims Tribunal stated that expropriation may extend to any right which can be the object of a commercial transaction, that is any right which can freely sold and bought, hence has monetary value. Subject to Article 5 of the Mars-Wakanda BIT 12, the property of a contracting party shall only be expropriated for a public purpose, without discrimination and subject to prompt, adequate and effective compensation. These requirements are equally provided for under customary international law 13 relating to foreign direct investment including the requirement that due process of the law must be followed. Any expropriation that does not comply with the previously mentioned provisions is deemed unlawful. Therefore, the claimants aver that there was lack of due process of the law and lack of compensation by the respondent. 1) Taking of investments of foreign investors by the state for a public purpose 9 Blacks Law Dictionary, 8ed 10 S. P Subedi: International Investment Law (Hart Publishing, 2010) 11 Amoco International Finance Corporation v Iran(1987) 15 Iran-USCTR (PExb17) 13 ibid 14

15 According to Article 1 of the Mars-Wakanda BIT, an investment means any kind of asset including both movable and immovable property and other property rights and resources. Additionally, investment is defined in the model international investment agreement on investment for sustainable development 14 to include rights conferred pursuant to the law such as licenses. The claimants were issued mining licenses; the SEP 256 and SCP 351 both in 2012 under the Extraction of Valuable Minerals Act 15 (paragraphs 13-15of the statement of claim and claimant Exhibit 5). The said licenses were issued pursuant to Article 17 of the Extraction of Valuable Minerals Act which provides that the terms of the special licenses shall be as the commissioner deems fit. The said licenses 16 were signed by the state secretary and bear the seal of the department of extraction of valuable minerals. This signifies that the claimant had an investment in Wakanda. The twitter post 17 by the minister of extraction, petroleum and Rocks that he had revoked all the mining licenses issued between 2010 and 2016 followed by an announcement by the state that they would develop One Tree Hill themselves is evidence of unlawful expropriation. (paragraph 22 of the statement of claim and the witness statement of Mr. Anthony Joshua 18 ) Further, the state has not justified the taking of the claimant s investment as is required in article 5 of the Mars-Wakanda BIT (CExhb17). The public purpose principle is a requirement under Article 5. It implies differentiating things taken merely for private purposes of the ruler from those taken for reasons related to economic preferences in the country. In this case, the 14 International Institute for Sustainable Development, CAP 247 Statutes of Wakanda 16 CExhb 12 & CExb Claimant Exhibit 5. 15

16 state simply stated that they had revoked mining licenses issued between 2010 and 2016 the moment the claimants announced the discovery of a large deposit of REEs at One Tree Hill. It is noteworthy that the REEs have a very high demand worldwide due to the fact that they have a variety of uses such as in electronic appliances. This illustrates that the revocation of the license followed by a declaration by the state that it would develop One Tree Hill itself was motivated by greed and was not in any way done for a public purpose. 2) It must be non-discriminatory Black s Law Dictionary, 19 defines discrimination as denying someone equal protection of the law and failure to treat all persons the same. The aspect of discrimination arises upon discovery of REEs followed by revocation of the license by the minister despite the fact that the said licenses were issued by the department of mining 20. Equally, the denial of equal protection of the law as shall be demonstrated subsequently is evidenced through the failure of the state to follow due process of the law. It is therefore the claimant s averment that there was an element of discrimination from the state. 3) It must follow due process of the law The host state must comply with the principles of natural justice in order for an expropriation to be deemed lawful. In ADC v Hungary 21 the arbitral tribunal stated that, due process of the law in expropriation demands actual and substantive legal procedures that enable the foreign investor to raise its objection against the depriving actions of the state about to be taken. The basic legal mechanisms that guarantee due process of the law include a reasonable advance notice. No prior or subsequent notice of the expropriation was issued (paragraph 19 of the 19 Blacks Law Dictionary, 8ed 20 CExhb13 21 (2016) ICSID 16

17 statement of claim and managing director s statement 22 ). The claimants were equally not given an opportunity to give reasons why their investments should not be expropriated in violation of the principles of natural justice. In Siag & Veechi v Egypt 23, the arbitral tribunal stated that the claimants ought to have received the notice that the Touristic Development Agency was considering expropriating their license. The tribunal held that failure to provide such a notice was a procedural abuse. In this case, the failure of the state to provide notice of the expropriation amounted to a blatant violation of customary international law as regards the conditions for lawful expropriation. 4) Payment of full compensation It is the claimants averment that there was no compensation given to them in gross violation of the Mars-Wakanda BIT that requires that compensation must be given in cases of expropriation. The BIT further provides that the compensation must be prompt, adequate and effective. The requirement that it shall be prompt implies that it shall be given without delay. The expropriation occurred in August 2017 yet the claimants, pursuant to paragraph 19 of the statement of claim and the witness statement by the managing director of the first claimant 24 have not received any compensation. The requirement that compensation shall be adequate implies that it shall amount to the genuine value of the investment expropriated immediately before the expropriation. Pursuant to paragraph 5 of the statement of claim, millions of dollars were spent developing one tree hill. It is clear from the witness statement that exploration activities are arduous, expensive and risky hence the large amount of money put in by the claimants. It is noteworthy that the claimant had to go through the 22 CExhb5 23 Siag & Veechi v Egypt(2009) ICSID 24 (CExhb5) 17

18 process of collecting the geological data even before they could begin the exploration process due to the fact that the Department of Extraction of Valuable Minerals had very little data on One Tree Hill. This in addition to the large amount of money spent cumulatively up to 2017 by the claimants entitled them to compensation by the respondent state. Further to that, the REEs have a high market value. One of the main principles as regards foreign investments under customary international law is the international minimum standard of treatment. In Saluka Investment (Netherlands) v The Czech Republic 25 the tribunal stated that the Minimum Standard of Treatment is binding upon the state and that it provides a minimum guarantee to foreign investors; it provides no more than minimal protection. Part and parcel of the International Minimum Standard of Treatment is payment of just compensation upon expropriation. In the present case the respondent has not only violated the Mars-Wakanda BIT but has also violated its obligation in international law as regards the International Minimum Standard of Treatment by failing to provide compensation to the claimants. According to the 1992 World Bank Guidelines section IV (1) on Expropriation and Unilateral Alterations or Termination of Contracts ; A state may not expropriate or otherwise take in whole or in part a foreign private investment in its territory, or take measures which have similar effects, except where this is done in accordance with applicable legal procedures, in pursuance in good faith of a public purpose, without discrimination on the basis of nationality and against the payment of appropriate compensation. In the present instance, the respondent state has wholly disregarded the applicable legal procedures in the expropriation of the claimants investments displaying total disregard to the requirement of good faith in dealing with foreign investors. 25 (2006) Parmanent Court of Arbitration 18

19 In Texaco v Libya 26, it was stated that the recognition by international law of the right to nationalize is not a sufficient ground to empower the state to disregard its commitment. In a nutshell, the actions of the state to expropriate the claimants investments without adhering to the requirements for lawful expropriation in particular the failure to follow the due process of the law and the failure to compensate can only be termed as arbitrary and capricious hence unlawful. It is the claimants prayer that the tribunal may grant those damages in light of the same. ISSUE 3; The state impaired the Claimants investment through unreasonable or discriminatory measures. Article 2(2) of the BIT provides that the Contracting Party shall not in any way impair by unreasonable or discriminatory measures the management, maintenance, use, enjoyment or disposal of investments in its territory of nationals or companies of the other Contracting Party. The claimants submit that the respondent state purposefully frustrated and impaired the claimant s investments through unreasonable measures. Investments include rights such as licenses gotten in compliance with the laws of the host state. In the present case, the claimants got their licenses through following the procedure laid out in article 13 of the extraction of Valuable Minerals Act 27 hence it qualifies as an investment. According to the witness statement by BMW managing director, up until mid-2013, BMW's activities at One Tree Hill were conducted without interference by the State. However, from June 2015, BMW's relationship with certain State agencies began to deteriorate. In one instance, armed Wakanda Forest Service (WFS) officers denied Mr. Anthony Joshua and a potential investor access 26 (1977) ILR CAP 247, Statutes of Wakanda 19

20 to part of the area covered by SEP 256. This is just a tip of the iceberg as regards the actions of the respondent state to frustrate the claimants management, use and enjoyment of their investments. Subsequently, the state arbitrarily revoked the license of the claimants via a twitter post without any prior notice. The respondent state then proceeds to state that they will develop one tree hill, after the claimants have put in their finances to explore and discover the rare earth elements. It is noteworthy that this move to revoke the license happens the moment the claimants announce a discovery of a world class deposit of REEs as is required of them by law; to give regular updates of their exploration. The Special Collection Permit, SCP 351(CExhb13) gave the claimants power to explore, mine and dispose of any minerals recovered subject to payment of required fees and royalties. It therefore follows that the unreasonable actions of the state impaired the use, enjoyment and disposal of the claimants investment. The discriminatory actions of the state can be inferred from their consistent efforts to frustrate the claimants up to the point where they single out mining licenses gotten between 2010 and 2016 and revoke them without giving any proper reasons or notice. In the Barcelon Traction case, it was stated that when a state admits into its territory foreign investments of foreign nationals, it is bound to extend to them the protection of the law available and assumes obligations concerning the treatment to be accorded to them. The respondent state cannot use national standard as a means of evading the international minimum standard of treatment. In the present case, unreasonable measures exercised by the state to impair the claimant s investments such as the revocation of their license upon the discovery of minerals are in themselves a violation of the fair and equitable treatment principle under customary international law. 20

21 It is therefore the claimant s submission that the state has violated its obligation under article 2(2) of the BIT by impairing the claimants investments through unreasonable measures hence the tribunal should award the claimants damages in light of the same. ISSUE 4; Whether the State has violated the FET standard at Article 2(2) of the BIT. Fair and Equitable Treatment (FET) According to Schill s definition adopted by UNCTAD 28, Fair and equitable Treatment does not have a consolidated and conventional core meaning as such nor is there a definition of the standard that can be applied easily. According to Nicolas Angelet 29, Fair and Equitable Treatment is a standard of international investment law which, with some terminological variants such as just and equitable treatment or equitable treatment, sets a quality requirement separate from domestic law for the interference of host State for regulatory and adjudicatory systems with foreign investments. FET is a central in international investment law. With its evolving nature, it has also been established as customary international law. 30 It contains certain elements 31 even as affirmed by Article 2(2) of the Mars-Wakanda BIT: 1. protection of the investors legitimate expectations 2. Protection against discrimination and arbitrary treatments and the principles of due justice 3. The denial of justice and transparency 28 UNCTAD Series on International Investment Agreements II, New York and Geneva 2012, pp 3 29 Max Planck Encyclopedia of Public International Law 30 Marcela Klien Bronfman, Fair and Equitable Treatment: An Evolving Standard, March UNCTAD Series on International Investment Agreements II, New York and Geneva 2012, pp XVI 21

22 In Ioan Micula v Romania 32 it was stated that the determination of the content of FET standard does not depend on idiosyncratic views but rather on state practice, judicial and arbitral case law as well as other sources of international law. Article 2(2) of the Mars-Wakanda BIT contained a FET clause in which the contracting state agreed to, inter alia adhere to the aforementioned elements. However it is the claimants submission that the government of Wakanda failed to adhere and therefore violated these elements and this will be proven by the examination of the elements as follows. Legitimate expectations This is an element that applies the principles of fairness and reasonableness to a situation where a person has an expectation or interest in a public body or private parties retaining a longstanding practice or keeping a promise 33. Legitimate expectations arise as a result of change in circumstances. Since an investment may not go on for short and precise duration, it may be subject to certain aspects of change. If these changes are as a result of state action, then it is only fair that the state consider the affected investors in their various modifications. There are certain conditions that investor expectation must fulfill in order to be seen as legitimate expectation. They include: 1. The expectation must be based on conditions offered by the State. This includes informal promises by the host State. 2. The conditions and expectations must exist at the time of the investment 3. The expectations must be reasonable Ioan Micula v Romania (ICSID Case No.ARB/05/20) 33 last accessed 12 th May Laura Isotalo, Climate Compatible Investment Treaty Law: The Role of Legitimate Expectations, pp

23 According to paragraph 14 of the fact sheet, it is clear that in any mining exploration, the goal is to find as well as to keep that which is found. Consequently and in this knowledge, the Government of Wakanda issued two lisences, the Special Extracting Permit(SEP 256) which granted BMW full and exclusive liberty and license to prospect and explore for all minerals in the licensed area ; and the Special Collection Permit (SCP351)which granted BMW the right to develop and further explore One Tree Hill over a 21 year period. This right has been violated in that immediately BMW discovers the minerals, the government of wakanda Takes over and revokes their licenses. In the newspaper Wakanda Times- Exhibit No. 15, the government stated simply that it had reviewed the licenses issued between 2010 and 2016 and had revoked all of them due to certain irregularities. The claimants had duly applied for these licenses, they had duly received the licenses. In case there was a default in the issuance, it is the submission of the claimants that the government should take responsibility and compensate BMW for the loses and time spent in the exploration of the mines. In Tecmed v Mexico 35, the dispute concerned the replacement of an open license for the operation of a landfill site by a license of limited duration. It was held that this was a breach of the FET standard in the Spain- Mexico BIT since it infringed on the legitimate expectations of the investors. Discrimination and arbitrary treatment and the principles of due justice As much as the claimants cannot allege that they were discriminated by Wakanda, it is clear that they have been subjected to arbitrary treatment. Arbitrary treatment is a measure that inflicts damage on the investor without serving any legitimate purpose and without a rational 35 Tecmed v Mexico, ICSID Case No ARB(AF)/00/2 23

24 explanation, but instead rests on prejudice or bias. 36 It may also be defined as a total and willful disregard to the due process of the law. BMW, during the inquiry committee that was set up by the government, was not given notice neither was it invited to show cause why its license should not be revoked and to represent its case on the allegations of illegality. Further, BMW only got to hear about the revoked license from a newspaper headline and a twitter post by the Ministry of Extraction, petroleum and Rocks (paragraph 18). Principles of natural justice dictate that one should not be condemned unheard, and that one should be accorded a fair hearing. Moreover one should be granted due notice before such steps are taken before them. All these were not granted to BMW before the revocation of the license. Denial of justice and transparency The claimants have been denied justice and transparency. When the claimants applied for an application for judicial review, the High Court of Wakanda only declared that the license SEP 251 was void ab initio. In order to succeed in an application for judicial review, one must show that the decision or act complained of was tainted with illegality, irrationality and procedural impropriety. The Ministry in its orders of revocation had acted with irrationality and procedural impropriety. This is because it did not provide sufficient or adequate reasons for its actions and it did not act fairly by even compensating the victims after the revocation was ordered. In light of all these, it is accordingly that the claimants claim that the local proceedings were a farce. The only ground to overlooking the ground of FET is in a situation of Lesivo which occurs when the executive branch of a state has the right to call out seemingly counterproductive government 36 Joseph C. Lemire v Ukraine, ICSID Case No ARB/06/18, adopted by the UNCTAD, UNCTAD Series on International Investment Agreements II, New York and Geneva 2012, pp 78 24

25 decisions and contracts particularly since they are injurious to the interest of the state. However, best trade practices demand that lesivo should be minimally used except in truly exceptional circumstances such as in cases of corruption, since they could easily be misused by the government and could well violate guaranteed minimum standards of treatment for investors. 37 In this case there is no indication that this is a lesivo since there are no reasons given for the revocation of the license. Reparations The claimants are seeking an order that the state pay monetary damages to the claimants as a result of the injuries suffered. According to the UNCTAD 38, various FET breaches have been awarded full market value as per the rules of international law. In light of this the claimants plead that the court should be guided by the Chorzow Factory case 39 where it was stated that the tribunals in considering the unique circumstances of the case should order reparation which: must, so far as possible wipe out all the consequences of the illegal act and re-establish the situation which would, in all probability, have existed if that act had not been committed. PRAYERS The claimant prays that the tribunal finds that; 1. It has the requisite jurisdiction over the subject matter 37 Merrill and Ring Forestry LP v. The government of Canada, UNCiTRAL<ICSID 38 UNCTAD Series on International Investment Agreements II, New York and Geneva 2012, pp Case Concerning German Interests in Polish Upper Silesia (German v Poland), Merits, 1928, PCIJ, Series A, No. 17, p.47 25

26 2. The claimants investments were unlawfully expropriated and that they should be awarded damages for the same. 3. The respondents violated the FET standards and that they should be awarded damages for the same. 4. The respondents impaired the claimants investments through unreasonable or discriminatory means 5. The state should pay the claimants costs for the proceedings 6. The claimant prays for any other relief deemed just and fit by the tribunal 26