Team: LADREIT GERMAN INSTITUTION OF ARBITRATION UNDER THE UNCITRAL ARBITRATION RULES ADMINISTERED BY THE DIS IN THE PROCEEDING BETWEEN CONTIFICA ASSET MANAGEMENT CORP. v. (CLAIMANT) REPUBLIC OF RURITANIA (RESPONDENT) MEMORANDUM FOR CLAIMANT 9 AUGUST 2013
CLAIMANT S SKELETON SUBMISSIONS Unless otherwise stated, Claimant adopts all abbreviations as used in the Record. I. THE TRIBUNAL HAS JURISDICTION OVER THE PRESENT DISPUTE AS THE CLAIMANT IS AN INVESTOR UNDER THE BIT AND ITS ACQUISITION OF FBI WAS BONA FIDE (A) The Tribunal has jurisdiction since: 1. Art. 8(1) permits international arbitration as a method of dispute resolution and Art. 8(2) entitles the Investor to submit the dispute to the DIS. 2. The Claimant is an Investor under Art. 1(3) and the present dispute concerns its investment in FBI, an Investment as per Art. 1. The dispute was not settled amicably despite Claimant s efforts. As the BIT contains no further requirements to qualify as an investor under the BIT, Claimant should be subject to no further requirements to qualify as an Investor. [See: Tokios Tokelès v. Ukraine] [See: Art. 8(1)] (B). Claimant s acquisition of FBI was bona fide as: 1. It occurred prior to Claimant becoming aware of matters which would lead to this dispute; 2. Claimant continued to invest in the Respondent through FBI for over 2 years before commencing the current arbitration; and [See:-Statement of Claim Para 9 & 27] 2
3. The Claimant acquired FBI as its parent company decided that the Contifica Group would benefit from the more desirable business and taxation environment of Cronos; forum shopping was not one of the considerations in the acquisition. [See:-Exhibit RX1] [See: Phoenix Action v Czech Republic] II. THE TRIBUNAL S JURISDICTION ENCOMPASSES THE BREACH OF WARRANTY UNDER THE SHARE PURCHASE AGREEMENT PURSUANT TO ART. 6(2) AND IS ADMISSIBLE (A) The Tribunal has jurisdiction since: 1. The breach of warranty would also be a breach of Respondent s obligation under Art. 6(2) to fulfil any other obligations it may have entered into with an Investor as Contifica Spirits assigned its rights under the SPA to Claimant. Any other obligations is to be interpreted in accordance with its ordinary meaning and would include contractual obligations. [See: A31 Vienna Convention] [See: Eureko B.V. v. Poland: Any obligations is capacious; it means not only obligations of a certain type, but any that is to say, all obligations ] 2. Respondent would be in breach of a treaty obligation under Art. 6(2) if it did not fulfil its obligation under the SPA. [See: Christoph Schreur: Clauses of this kind have been added to some BITS to provide additional protection to investors beyond the traditional standard. They are often referred to as umbrella clauses because they put contractual commitments under the BIT s protective umbrella. They add the compliance with investment contracts, or other undertakings of the host State, to the BIT s substantive standards. ] 3
3. Clause 14.2 SPA does not exclude the jurisdiction of the Tribunal. Claimant has the right to seek the international responsibility of Respondent on the basis of the BIT since Respondent would be in breach of Art. 6(2). [See: Emmanuel Gaillard] 4. The nature of the Breach of Warranty also falls within the scope of Art. 8(1) as it is a Dispute concerning Investments between a Respondent and an Investor. (B) Claimant s action under Art. 6(2) is admissible as the acts of the Fund would be attributable to the Respondent because: 1. The Fund is an organ of Ruritania and it was acting as such when it entered into the SPA. 2. The Fund was established and empowered by an Act adopted by Ruritania. Its very nature and the functions it undertakes are government related. It was acting in a governmental authority when it sold the shares in FBI to Claimant. 3. The Fund s Governors and Director-General are appointed by Respondent and was acting on the instructions and under the control of the Respondent when it entered into the SPA. [See: Art. 4, 5 & 8 of ILC Articles on Responsibility of States for Internationally Wrongful Acts] [See: PO2 Para 5] [Foremost Tehran, Inc. v. The Government of the Islamic Republic of Iran] 4
III. THE MAB ACT & THE ORDINANCE EXPROPRIATED CLAIMANT S INVESTMENT IN FBI AND/OR WERE A BREACH OF RESPONDENT S OBLIGATION TO PROVIDE FAIR & EQUITABLE TREATMENT TO CLAIMANT (A) The MAB Act & the Ordinance (together the Measures ) amount to an unlawful expropriation under Art. 4 since: 1. The cumulative effect of the Measures was to interfere with FBI to such a degree that it deprived Claimant in significant part of the reasonably-to-be-expected economic benefit of its investment in FBI to which Respondent has paid no compensation. [See: Metalclad Corp. v United Mexican States] 2. Notably, the effects of the Measures (i) deprived Claimant of the use of its FREEBREW Trademark, (ii) the use of its trademarked FREEBREW Iconic Bottle; and (iii) devastated FBI s sales. [See: Para 11-13 Statement of Claim] 3. As set out in the exception under Art. 4(1)(a)-(d), the public purpose for which the Measures were allegedly adopted by Respondent does not alter the legal character of the expropriation, for which compensation must be paid. [See: Art. 4(1)(a)-(d)] [See: Compania del Desarrollo de Santa Elena v Costa Rica] (B) The Measures were a breach of Respondent s obligation to provide Fair & Equitable Treatment to Claimant under Art. 2 for the reason that: 1. In view of the Contracting States intention to create favourable conditions for foreign Investors, the obligation to accord F&E treatment should be interpreted as an obligation to treat Investors fairly in all the circumstances. 5
2. Notwithstanding a Sovereign State s right to regulate, F&E Treatment extends to include the obligation to treat Claimant fairly during the process of implementing the Measures. Specifically, the discriminatory nature together with the lack of transparency and proportionality of the Measures were a failure to treat Claimant fairly in all the circumstances. [See: A31 Vienna Convention; Preamble of BIT] [See: TECMED S.A. v The United Mexican States] 3. The unfairness done to Claimant is particularly illustrated by the fact that the Measures adopted were based upon a flawed analysis conducted by HRI, which Claimant s independent scientist was unable to correct due to the lack of consultation. [See: Para 15 & 17 Statement of Claim] IV. CLAIMANT IS ENTITLED TO MORAL DAMAGES AS RESPONDENT FAILED TO PROVIDE FULL PROTECTION & SECURITY UNDER ART.2 (A) Claimant is entitled to be compensated due to the following: 1. As set out by Respondent in its Defence, admittedly, the legal procedures regarding Messrs. Goodfellow & Straw s arrest were not complied with. This wrongful detainment was a breach of the guarantee of Full Protection & Security and has caused (i) psychological distress to the Executives; and (ii) damage to the reputation of Claimant. Claimant is entitled to compensation for such losses in the form of moral damages. [See: Lusitania Case] [See: Desert Line Projects LLC v The Republic of Yemen] 6
2. Customary international law requires Respondent to make full reparation for the injuries it has caused, such injuries include moral injury. [See: Art. 31 ILC Articles on State Responsibility of States for Internationally Wrongful Acts] V. CLAIMANT IS ENTITLED TO COMPENSATION FOR THE LOSS OF SALES BY CLAIMANT S SUBSIDIARIES (A) The loss of sales by Claimant s subsidiaries are recoverable since: 1. FBI was integrated into the Contifica Group s global procurement network and Claimant s other branches or subsidiaries, which supplied bottles, cans, yeast, hops and barley to FBI, fell within the ambits of the term Investment as defined in Art. 1. [See: PO2 Para 20] 7
PRAYER FOR RELIEF Claimant respectfully asks the Tribunal to find that: (1) the Tribunal has jurisdiction over the present dispute; (2) the Tribunal s jurisdiction encompasses the breach of warranty under the Share Purchase Agreement; (3) the acts of the Fund are attributable to Respondent; (4) Respondent failed to fulfill its obligations under the Share Purchase Agreement; (5) Respondent has failed to fulfill its substantive treaty obligation under Art. 6(2); (6) Respondent s enactment of the Measures constitutes unlawful expropriation of Claimant s investment; (7) Respondent has failed to provide fair and equitable treatment to Claimant with respect to its investment; (8) Claimant is entitled to moral damages; and (9) Claimant is entitled to compensation for the loss of sales by Claimant s subsidiaries. RESPECTFULLY SUBMITTED ON AUGUST 09, 2013 BY -----/signed/----- Albert Chan, Anson Douglas, Holly Cheng On behalf of the Claimant, Contifica Asset Management Corp. 47B Framero Avenue, Univo, State of Cronos 8