Costs allocation - Table 1 - Cases in which the Claimant won

From the SelectedWorks of Inna Uchkunova Winter 2014 Costs allocation - Table 1 - Cases in which the Claimant won Inna Uchkunova Oleg Temnikov Available at: https://works.bepress.com/inna_uchkunova/1/

Total awards examined: 65 Awards rendered in the period 2000-(September) 2014 in which the Claimant appeared as the overall winner Awards in which the tribunal has taken into account the costs follow the event principle; the relative success of the parties or has taken this principle as a starting point and has cited reasons militating against its application: 51 Awards in which the tribunal has upheld the pay your own way approach : 4 Awards in which the conduct of the parties alone served as the main reason for the decision of the tribunal: 1 Other awards: 9 Cases in which the costs were not shifted 1 Santa Elena v. Costa Rica, ARB/96/1, Award (17 February 2000) 2 Metalclad v. United Mexican States, ARB(AF)/97/1, Award (30 August 2000) 3 Maffezini v. Spain, ARB/97/7, Award (13 November 2000) 4 Middle East Cement v. Egypt, ARB/99/6, Award (12 April 2002) no reasons were provided special circumstances of the case: 20 the case related to an expropriation which occurred twenty years before the institution of proceedings. It is not clear whether this factor influenced the decision of the tribunal. It merely stated: 109 Taking into consideration the circumstances of the case, the Tribunal decides that each party shall bear the expenses incurred by it in connection with the arbitration, and that the costs of the proceeding, including the fees and expenses of the members of the Tribunal and the charges for the use of the facilities of the ICSID, shall be borne by them in equal shares. no reasons were provided the tribunal referred to equitableness the decision is likely due to the fact that the claimant did not succeed on all of its claims 130 it is equitable in this matter for each party to bear its own costs and fees, as well as half the advance payments made to ICSID. 99 As for the expenses and legal costs of counsel for the parties, the Tribunal decides that each party shall bear the entirety of its own expenses and legal fees for its own counsel, considering that each party has been successful on the key points of their respective positions. 176 Taking into account that Claimant succeeded

5 Marvin Feldman v. Mexico, ARB(AF)/99/1, Award (16 December 2002) 6 Tecnicas Medioambientales Tecmed S.A. v. United Mexican States, ARB (AF)/00/2, Award (29 May 2003) 7 Autopista Concesionada de Venezuela, C.A. ( Aucoven ) v. Venezuela, ARB/00/5, Award (23 September 2003) 8 MTD Equity v. Chile, ARB/01/7, Award (25 May 2004) 9 CMS v. Argentina, ARB/01/8, Award (12 May 2005) partially with certain of its claims and that Respondent succeeded partially with objecting to the claims, in accordance with ICSID Rule 47 (i) (j), the Tribunal decides that each Party should bear any legal fees and costs occurred to it in connection with the proceeding, and that the costs occurring for ICSID and the arbitrators shall be borne in equal portions of 50% by each Party. 208 considering that both parties have partly won and partly lost, and that the percentage of victory and loss did not have any measurable effect on the amount of costs. Accordingly, the Tribunal decides that each party bear half of the costs of the arbitration 200 Taking into account that the Claimant has been successful only with respect to some of its claims and that the challenges or defenses filed by the Respondent were also admitted partially, each Party will bear its own costs, expenses and legal counsel fees. The costs incurred by the Arbitral Tribunal and ICSID will be shared equally between the Claimant and the Respondent. ; conduct-based approach 424 The parties concur that the Tribunal has discretion in matters of costs under Article 61(2) of the ICSID Convention. The Tribunal agrees with Aucoven that in exercising its discretion the Tribunal should give effect to Clause 60(2) of the Concession Agreement, which reflects a principle common to both Venezuelan and international law, namely, that a party injured by a breach must be fully compensated for its losses and damages, which include arbitration costs (Cl. PHR, 364). On the other hand, the Tribunal also agrees with Venezuela that the loser pays principle is not absolute, in particular when the claimant succeeds only partially (Ven. PHR, pp. 150-151). 425 Considering all circumstances of this case, including in particular that Venezuela breached the Concession Agreement; that it unsuccessfully challenged jurisdiction; that Aucoven s claim for lost profits, which was by far the largest one which required the most efforts in terms of evidence and briefing, was not granted; that Aucoven changed its economic analysis of lost profits at a late stage of the proceedings; the Arbitral Tribunal deems it fair and reasonable that the cost burden be shared equally between the parties each bearing its own legal expenses and 50 % of the arbitration costs. 252 Taking into account that neither party has succeeded fully in its allegations, the Tribunal decides that each party shall bear its own expenses and fees related to this proceeding and 50 % of the costs of ICSID and the Tribunal. no reasons were provided

the decision is likely due to the fact that the claimant did not succeed on all of its claims 10 Enron v. Argentina, ARB/01/3, Award (22 May 2007) 11 LG&E Energy Corp. v. Argentina, ARB/02/1, Award (25 July 2007) 12 Sempra v. Argentina, ARB/02/16, Award (28 September 2007) 13 Archer Daniels v. United Mexican States, ARB(AF)/04/05, Award (21 November 2007) 14 Duke v. Ecuador, ARB/04/19, Award (18 August 2008) 15 Duke v. Peru, ARB/03/28, Award (18 August 2008) 472 Each party shall bear the expenses incurred by it in connection with the present arbitration. The arbitration costs, including the fees of the members of the Tribunal, shall be borne in equal shares by the parties. 453 Considering the decisions regarding the various issues in this case, each party shall bear the legal costs incurred by it in connection with the present arbitration and the arbitration costs shall be borne in equal shares by the parties. 112 the tribunal took into account that recently, tribunals have made recourse to the basic principle costs follow the event or loser-pays-rule according to which the cost of the arbitration should be borne by the unsuccessful party. The outcome of the case becomes the most significant factor in determining the allocation of costs. 113 In the present case, not all Claimants claims are successful; likewise, some of the Respondent s defences prevail. This result would call for an equitable allocation of costs. The Tribunal decides therefore that each party should bear its own costs, expenses and attorney s fees. no reasons were provided the decision is likely due to the fact that the claimant did not succeed on all of its claims operative paragraph ; conduct-based approach 302 The proceedings were expeditiously and efficiently conducted by the representatives of both Parties, both of whom seek an award of costs and fees. Both parties have partly won and partly lost, but the percentage of victory and loss had no measurable effect on the cost of the arbitration. no reasons were provided the decision is likely due to the fact that the claimant did not succeed on all of its claims 490 In the exercise of its discretion in matters of allocation of costs and considering all circumstances of this case, the Tribunal finds it fair that the parties bear the costs of the arbitration equally and that each party bears its own legal and other costs. 495, 497 the parties had agreed on the allocation of the arbitration costs; it was left for the tribunal to decide on the costs for legal representation

16 Continental Casualty Company v. Argentina, ARB/03/9, Award (5 September 2008) 17 Saipem S.p.A. v. Bangladesh, ARB/05/7, Award (30 June 2009) 18 ATA Construction v. Jordan, ARB/06/07, Award (18 May 2010) 19 Meerapfel Söhne v. CAR, ARB/07/10, Award (12 May 2011) 499 Although Claimant was successful during the jurisdictional phase of this arbitration, Respondent raised serious arguments against jurisdiction, many of which raised novel and difficult issues related to the unique investment protection regime at issue here. As for the merits phase, Claimant has succeeded only in part: it has prevailed in one of its two claims; in relation to that claim, it has succeeded on two of the five alleged breaches of the LSA; and it has been awarded damages representing roughly half of the overall damages that were being sought. 318 the practice of ICSID tribunals in apportioning costs is neither clear nor uniform. In a number of cases the principle the loser pays, commonly applied in international commercial arbitration, has been followed; in many others the tribunals decided that the parties were to bear equal shares of the fees and expenses of the arbitrators and of the charges for the use of Centre s facilities and services. In their decisions on awarding costs, besides assessing them against the unsuccessful party, arbitral tribunals have often taken into account the nature of the dispute, the novelty of the legal issues, and the conduct of the parties in the proceedings. 319 the Claimant is succeeding in only one of the many claims of breaches of the BIT it has put forward, namely only in relation to the restructuring of the LETEs no reasons were provided the decision is likely due to the fact that the claimant did not succeed on all of its claims 215 Taking into consideration all the circumstances of the case and in the exercise of its discretion in cost matters, the Tribunal decides that each party shall bear the expenses which it incurred in connection with the arbitration. The parties shall also bear the costs of the proceeding, including the fees and expenses of the members of the Tribunal and the fees of ICSID, in equal shares. no reasons were provided the decision is likely due to the fact that the claimant did not succeed on all of its claims operative paragraph 133 (6) no reasons were provided the decision is likely due to the fact that in this case the respondent failed in its objections to jurisdiction and its counter-claim, while the claimant did not succeed in all of its claims 455 Pursuant to Article 61 of the Washington Convention the arbitral tribunal has a large margin of discretion. The tribunal deemed it equitable, having regard to all the circumstances of the case, that each party shall bear its own

20 Impregilo v. Argentina, ARB/07/17, Award (21 June 2011) 21 Tza Yap Shum v. Peru, ARB/07/6, Award (7 July 2011) 22 El Paso v. Argentina, ARB/03/15, Award (31 October 2011) 23 SGS v. Paraguay, ARB/07/29, Award (10 February 2012) costs and the costs of arbitration shall be shared by the parties. ; complexity of the issues 385 The Arbitral Tribunal notes that the present case has given rise to a number of important and complex legal issues and that both Parties have raised weighty arguments in support of their respective positions. The Argentine Republic s jurisdictional objections have been almost entirely rejected, and both Parties have been only partly successful in regard to the merits of the case. In view of the issues in the case as a whole, the Arbitral Tribunal finds it reasonable to order that each Party shall bear its own costs and expenses and shall pay half of the costs for ICSID s and the Arbitral Tribunal s work. ; conduct-based approach 296 the tribunal noted that the principle that each party should bear its own costs is a principle generally accepted in public international law. It has been recognized in the practice of the ICJ as well as a number of arbitral tribunals. 298 the tribunal also noted that more recently tribunals have chosen to order the losing party to bear in whole or in part the costs of arbitration as well as the legal costs of the winning party. 299 in its view it is not fair for the winning party to bear the costs; in some cases however considerations of the financial resources of the losing party have played a role. 300-302 the tribunal emphasized that the problem with this approach is determining who won and who lost. This is why the tribunal, taking also into account the conduct of the parties, decided that it would be fair to split the arbitration costs and to order that each party should bear its own costs. the tribunal took into account the relative success of the parties 750 The Convention and the Arbitration Rules give ICSID tribunals broad discretion in awarding costs. The practice in apportioning costs has sometimes followed the principle the loser pays while in many other cases the decision has been that the Parties were to bear their own costs and share equally the fees and expenses of the arbitrators as well as the charges for the use of the Centre s facilities and services. 751 Regarding the present case, the Tribunal notes that the Claimant has been successful on the jurisdictional issue but only in part as to the merits of the case and the damages claimed. There are therefore good reasons to decide, as is hereby decided, that each Party shall bear its own costs connected with the proceedings as well as half of the fees and expenses of the arbitrators and the charges for the use of the Centre s facilities and services. pay your own way; conduct-based approach 192 The Tribunal believes that both sides have presented their positions ably and in good faith, and neither has caused

24 Inmaris Perestroika v. Ukraine, ARB/08/8, Award (1 March 2012) 25 Marion & Reinhard Unglaube v. Costa Rica, ARB/08/1 & ARB/09/20, Award (16 May 2012) 26 EDF International v. Argentina, ARB/03/23, Award (11 June 2012) 27 Antoine Goetz v. Burundi, ARB/01/2, Award (21 June 2012) undue delay or expense in the proceeding. However, Respondent has not paid its portion of the costs associated with this proceeding, and has forced Claimant to bear the entire cost itself. The Tribunal finds that Respondent should pay its share, and, therefore, awards to Claimant half of the costs of the arbitration, i.e., the amount of the ICSID costs and fees that Respondent should have advanced. The Tribunal does not believe it is appropriate to make any other award with respect to costs and fees. pay your own way; conduct-based approach 436 While Claimants prevailed in this arbitration, the facts of the dispute and the parties own contractual relationship were complex and, at times, ambiguous. The Tribunal also notes that, due to the deficiencies in both Parties presentations, the Tribunal was essentially forced to perform damages calculations de novo. 437 In light of these circumstances, the Tribunal declines to award costs to either side, and decides that each party shall bear its own costs and fees. ; conduct-based approach 328 There is ample precedent in international tribunals for directing that the prevailing party should have its costs and expenses (including legal and expert fees) as well as its share of the cost of the proceeding, on those issues on which it has prevailed, paid by the opposing party. In contrast, tribunals have also often determined that each party should pay its own expenses and that the fees and expenses of the members of the tribunal, as well as the costs for use of the Centre, should be divided evenly. 330 In the present case, Claimants have prevailed on one claim out of many. Counsel for each party has zealously represented their clients, and they have, on the whole, cooperated with the Tribunal in expediting the process. The Tribunal does not find in the record other important facts or equities which would serve to influence our decision on costs and expenses strongly in favor of one side or the other. 1345 Having considered the Parties arguments, the Tribunal finds that both sides have presented some meritorious arguments, each side winning on some issues while losing on others. The Tribunal thus finds appropriate to direct each side to bear its own legal expenses, including fees for attorneys and experts. The costs of arbitration, including the fees of the arbitrators and the administrative expenses of the Centre, shall be divided on an equal (50/50) basis. no reasons were provided the proceedings were suspended twice and were considerably delayed due to the liquidation of the estate of the deceased Mr. Goetz. (See 302) 306 it is not clear whether this influenced the decision of

28 Occidental v. Ecuador, ARB/06/11, Award (5 October 2012) 29 Mr. Franck Charles Arif v. Moldova, ARB/11/23, Award (8 April 2013) 30 Rompetrol v. Romania, ARB/06/3, Award (6 May 2013) the tribunal with regard to costs, but it noted that [g]iven all the circumstances it decides that each party shall bear its costs as well as 50% of the arbitration costs. conduct-based approach relating to substantive conduct 872 The Tribunal recalls, in particular, that it dismissed the Claimants Application for Provisional Relief. 873 The Tribunal also recalls that, while the Respondent s challenge to the jurisdiction of the Tribunal was dismissed earlier and, in the present Award, the Claimants have been awarded significant damages, the Tribunal has found that the Claimants breached Clause 16.1 of the Participation Contract and were guilty of an actionable violation of Article 74.11 of the HCL, which violation contributed to the prejudice which they suffered when the Caducidad Decree was issued. 874 Thus, in the exercise of its discretion, the Tribunal decides that each party shall bear its own legal costs and that the fees and expenses of the Tribunal and theadministrative charges of ICSID shall be borne equally as between the Claimants and the Respondent. 630 There are two strands of ICSID jurisprudence in relation to costs, with one strand favouring the principle that the fees and expenses of the Centre and of the arbitrator should be shared equally, and that each party should bear its own legal fees and expenses. The second and perhaps more modern strand is for the costs to be awarded on the basis of the relative success of the parties in the arbitration. 631 In the current case, Claimant has been successful on the issue of jurisdiction, has established a breach by Respondent of the fair and equitable treatment standard of the France-Moldova BIT, and has established his right to restitution and damages. On the other hand, his claims for expropriation, denial of justice and moral damages have failed, as well as his claims of specific undertakings, unreasonable or arbitrary measures, full protection and security, discrimination and compensation. The questions of liability and the quantification of damages in relation to the border stores occupied a significant part of the proceedings. The Tribunal is not satisfied that Respondent s jurisdictional objections justify an award of costs in favour of Claimant. 632 For these reasons, the Tribunal decides that each party should bear equally the costs and expenses of the arbitration, and each party should bear its own legal fees and costs. costs follow the event 297 the Claimant has succeeded in making out only a very limited number of the claims of fact and law on which its request for relief in this Arbitration was based Against that must be set the fact that the Respondent was itself responsible for launching the unsuccessful preliminary objections phase, which delayed the arbitral process by somewhat over a year;

31 Ioan Micula v. Romania, ARB/05/20, Award (11 December 2013) likewise the Respondent was responsible for putting forward a largely unmeritorious challenge to the Claimant s new lead counsel, which the Tribunal dismissed in January 2010, but at the cost of some further delay. 298 The Claimant s costs submission cites, with apparent approval, commentaries and previous awards expressing themselves in favour of a principle that costs in ICSID proceedings should generally follow the event. Both Parties agree however that an ICSID Tribunal is endowed with a broad measure of discretion in this respect, a view which the Tribunal itself shares. The Tribunal can see no good reason not to apply a costs follow the event principle in the particular circumstances of this case. It does so, however, subject to the modification that the proceedings in this arbitration have consisted, not of one single event, but rather of the series of events listed in paragraph 297 above, in two of which the Claimant was successful, and in one of which the balance of success lay heavily (though not entirely) with the Respondent. That being so, the Tribunal finds that the most appropriate solution, as regards the costs of the Arbitration, is for them to be borne equally by the Parties, and that in the circumstances as described above no further order is called for, with the result that each Party will bear its own costs. the reasoning is somewhat ambiguous, but the tribunal refers to the 1326 Both sides argue that a costs award is warranted because they should prevail in the arbitration and because the other party has conducted the arbitration in a manner which has led to delay and increased costs. 1327 The Tribunal has considered all the circumstances of this case: the procedure (including the jurisdictional phase, the Parties requests for production of documents, the Claimants requests for provisional measures, the Respondent s request for revocation of provisional measures, the Claimants request for a site visit, the merits phase of the proceeding, the Claimants revised request for relief, and multiple hearings) as well as the Parties substantive arguments on jurisdiction, admissibility and the merits. As evidenced by Section II above, there were numerous procedural issues and difficult legal questions involved in the jurisdictional and merits phases. Many of these issues were far from clear-cut and involved meritorious arguments by both Parties. The Claimants have prevailed on jurisdiction and have established a breach of the fair and equitable standard under the BIT. They have, however, only been partially successful in regard to their claims for damages, which evolved during the proceedings. Of those 31 awards: Awards in which the tribunal has taken into account the costs follow the event principle; the relative success of the parties or has taken this principle as a starting point and has cited reasons militating against its application: 19 Awards in which the tribunal has upheld the pay your own way approach : 2

Awards in which the conduct of the parties alone served as the main reason for the decision of the tribunal: 1 Other awards: 9 Cases in which all or part of the costs were shifted to the losing party 1 Wena v. Egypt, ARB/98/4, Award (8 December 2000) 2 AIG Capital Partners, Inc. v. Kazakhstan, ARB/01/6, Award (7 October 2003) 3 CDC Group v. Seychelles, ARB/02/14, Award (17 December 2003) costs follow the event shifted legal costs relating to the merits phase; not clear with respect to arbitration costs 130 To this figure there should be added an appropriate sum to reimburse Claimant for attorney s fees and related costs, as reparation for losses sufficiently related to its central claims and in keeping with common practice in international arbitration. It will be recalled that the Tribunal, in its Decision on Jurisdiction, rejected Wena s claims for costs incurred in rebutting Egypt s objections to jurisdiction. Accordingly, the Tribunal shall only reimburse Claimant for that portion of its attorney s fees and costs incurred in presenting the merits of this arbitration. shifted seemingly part of the legal costs and part of the costs of arbitration sec. 14 The Respondent has failed to convince the Tribunal on its pleas of jurisdiction (including the plea regarding the constitution of the Tribunal), and on various defences raised disputing liability. It is only on the quantum of compensation awarded that the claim of the Claimants has stood reduced. In the circumstances the Tribunal has decided that a sum of USD 1.25 million (in words: one million two hundred and fifty thousand US dollars) should be paid by the Respondent as and by way of compensation for expenses incurred by the Claimants in connection with the arbitral proceedings. This includes the legal fees and expenses of the Claimants, as well as the fees and expenses of the arbitrators and charges of the Centre. no reasons provided from the circumstances it appears however that the tribunal applied the costs follow the event approach shifted part of the legal costs as well as the arbitration costs 4 Patrick H. Mitchell v. Congo, ARB/99/7, Award (9 February 63 CDC seeks indemnity costs in the sum of 124,295.15. The Republic disputes this amount on the ground that it is excessive. Pursuant to Art. 61 (2) of the ICSID Convention, I assess the costs to be paid by the Republic to CDC in the sum of 100,000.

2004) shifted part of the legal costs and part of the costs of arbitration 5 Ceskoslovenska obchodni banka, a.s. v. Slovak Republic, ARB/97/4, Award (29 December 2004) 6 Azurix Corp. v. Argentina, ARB/01/12, Award (14 July 2006) 100 Taking into account that Respondent did oppose without success the Tribunal s jurisdiction and that its objections to the merits of the claim have been rejected by the Tribunal, as well as its counter-claim, while Claimant has been successful with respect to a part of his claim only, the Tribunal finds appropriate that Respondent shall bear its own costs, expenses and counsel fees and that it shall contribute to Claimant s costs by the amount of US$ 35,000. The costs incurred by the Arbitral Tribunal and ICSID have been settled by Claimant in the amount of US$ 110,000 and by Respondent in the amount of US$ 70,000. The Tribunal decides that Respondent shall bear its share and shall further pay to Claimant the amount of US$ 60,000, who will bear the costs of the Tribunal he paid above the latter amount. shifted part of the legal costs and part of the arbitration costs 371 In the Tribunal s view, there was not, in the instant case, a situation as argued by the Slovak Republic, where one party only was clearly advocating arguments that compelled the other Party to reply with extensive and unnecessary arguments. Both Parties have argued their case to the best of their knowledge; there is no reason to determine the distribution of costs on the basis of the cost effectiveness of each argument put forward by a Party, all the more so as the statements submitted by the Parties would not allow the identification of the pertinent amounts in such respect 372 The Tribunal takes into account that the Slovak Republic did oppose without success the Tribunal s jurisdiction; that the proceedings related to SI s bankruptcy caused CSOB to request from the Tribunal provisional measures that were granted; and that its objections to the merits in respect of the existence of its cover losses obligation under the CA have been rejected by the Tribunal, whereas CSOB s claim for compensation has been granted in its prevailing part. Therefore, the Tribunal finds appropriate that the Slovak Republic bear its own costs, expenses and counsel fees and that it shall contribute to CSOB s costs by the amount of US$ 10,000,000. CSOB shall bear its own costs, expenses and counsel fees above this amount of US$ 10,000,000. ; conduct-based approach shifted only part of the arbitration costs 441 The Claimant has partially prevailed on the merits. The Tribunal declined to issue the provisional order requested by the Claimant and Argentina failed in its objections to the jurisdiction of the Tribunal and its challenge to the president of the Tribunal. The Claimant did not submit its own copy of envelopes 1 and 2 as requested by the Tribunal, and Argentina requested that the Claimant bear the costs related to this

7 ADC Affiliate Limited v. Hungary, ARB/03/16, Award (2 October 2006) procedural incident. For these reasons, the Tribunal decides: (1) that each party shall pay its own costs and counsel fees, and (2) that the arbitrators fees and expenses and the cost of the ICSID Secretariat shall be borne by Argentina, except for the amount of US$34,496 (thirty-four thousand four hundred ninety six U.S. dollars), which shall be borne by the Claimant and correspond to the said provisional measures and the procedural incident. costs follow the event; conduct-based approach shifted the legal costs, including the sum of US$ 350,000 paid to ICSID as deposit towards the fees and expenses of the arbitral Tribunal (See 527) 525 Both Parties sought the costs of this arbitration in the event that they were successful. 531 Further, it can be seen from previous awards that ICSID arbitrators do in practice award costs in favour of the successful party and sometimes in large sums (see for example CSOB v. Slovakia US$10 million). 532 In a recent article titled Treaty Arbitration and Investment Dispute: Adding up the Costs by M. Weiniger & M. Page, 2006 1:3 Global Arb. Rev. 44), the authors state that [r]ecently, some tribunals [in investment arbitration] have adopted a more robust approach, seeing no reason to depart form the principle that the successful party should have its costs paid by the unsuccessful party, as adopted in commercial arbitration. 533 In the present case, the Tribunal can find no reason to depart from the starting point that the successful party should receive reimbursement from the unsuccessful party. This was a complex, difficult, important and lengthy arbitration which clearly justified experienced and expert legal representation as well as the engagement of top quality experts on quantum Were the Claimants not to be reimbursed their costs in justifying what they alleged to be egregious conduct on the part of Hungary it could not be said that they were being made whole. 535 In addition to the obvious good sense of the passage cited above there are a number of features in this case which justify the Tribunal in ordering the Respondent to reimburse the Claimants the full amount of their legal and other expenses of this arbitration 536 The other factors are as follows. Firstly, the Tribunal has concluded that Hungary made no attempt to honour its obligations under the BIT. Hungary acted throughout with callous disregard of the Claimants contractual and financial rights. 538 Thirdly, the Respondent put forward an overly burdensome document request which the Tribunal ordered should be completely re-cast and which was. 539 Fourthly, not only did the Respondent change

8 PSEG Global Inc. v. Turkey, ARB/02/5, Award (19 January 2007) 9 Siemens v. Argentina, ARB/02/8, Award (6 February 2007) 10 Vivendi v. Argentina, ARB/97/3, Award (20 August 2007) counsel in mid-arbitration thereby causing some extra expense, but it also changed experts at the very last minute. shifted part of the legal costs and part of the arbitration costs 352 Although the Claimants did not prevail on the major portions of their monetary claims, they prevailed on jurisdiction and on liability in respect of certain breaches of the Treaty. To obtain justice, they had no option but to bring this arbitration forward and to incur the related costs. For this reason, the Tribunal considers it fair that the parties contribute to the cost in the proportion of 65% for the Respondent and 35% for the Claimants. 353 The Respondent shall accordingly pay 65% of the costs of the arbitration proceeding and of the legal costs and fees shifted only part of the arbitration costs 402 In order to take into account that the Claimant has not fully prevailed in these proceedings, the Tribunal determines that each party shall bear its own legal costs, and that Argentina and Siemens shall be responsible for 75% and 25%, respectively, of the fees and expenses of the Tribunal and the costs of the ICSID Secretariat. ; novel issues; conduct-based approach shifted only the legal costs as regards the jurisdictional phase 10.2.3 In our earlier Decision on Jurisdiction, we noted that Respondent s objections were not only without merit, but four of the five had also been taken before both the Original Tribunal and the ad hoc Committee and that one of these objections had been raised, each time unsuccessfully, before numerous other tribunals before which Argentina had appeared. In addition, we noted that Respondent s fifth jurisdictional objection had been raised for the first time eight and a half years into the proceedings. We concluded that all of Respondent s objections were unfounded, and had been raised inappropriately and, in the case of four of the five, in an attempt to reargue elements of the earlier decisions 10.2.4 The Tribunal accepts that, at the time the prior proceedings were initiated, the arguments and issues then in the dispute were important, complex and relatively novel. They remained so in this second phase of the proceedings. 10.2.5 As regards disputing parties comparative success in their claims and defences, Claimants have succeeded substantially in both the jurisdictional and substantive phases of these proceedings. Moreover, Respondent has on a number of occasions sought to reargue jurisdictional issues that had previously been determined by the Tribunal, the Original Tribunal and the ad hoc Committee. In so doing, it

11 Oko Pankki Oyj v. Estonia, ARB/04/6, Award (19 November 2007) 12 Desert Line Projects LLC v. Yemen, ARB/05/17, Award (6 February 2008) 13 Víctor Pey Casado v. Chile, ARB/98/2, Award (8 May 2008) unnecessarily extended and added considerably to the cost of these proceedings. 10.2.6 Given the background and history of the dispute, as well as all of the other circumstances of the case, the Tribunal concludes that it is appropriate that Claimants should receive reimbursement for the whole of their reasonable costs and counsel fees from Respondent, covering the jurisdictional phase of these proceedings which are hereby assessed at US$ 701,961.08. As regards the substantive phase, the Tribunal decides that disputing parties shall bear their own costs and counsel fees. The Tribunal further decides that disputing parties shall bear equally the arbitrators fees and expenses and the cost of the ICSID Secretariat, together with any related costs or charges regarding the use of the ICSID facilities. shifted the arbitration costs as well as part of the costs of legal representation 368 The Tribunal has made its decisions in favour of the Banks on both liability and quantum. Accordingly, subject to special factors indicating otherwise, the Tribunal determines that the Banks are entitled to compensation for their reasonable costs incurred in these arbitration proceedings as the successful party. 373 whilst the Banks claim has ultimately succeeded, the Banks case did not prevail on every legal and factual issue of alleged liability and quantum - far from it. This last factor requires an adjustment downwards to the quantum of the Bank s legal costs. ; conduct-based approach shifted part of the arbitration costs as well as part of the costs of legal representation 303 On the one hand, a party injured by a breach must be fully compensated for its losses and damages, which include arbitration costs and its own legal expenses. On the other hand, the loser-pays principle is not absolute, in particular when the Claimant succeeds only partially. 304 Considering all circumstances of this case, including in particular that the Respondent breached the BIT; that it unsuccessfully challenged jurisdiction; that it insufficiently cooperated in providing documents and testimonial evidence; that not all Claimant s claims were granted; the Arbitral Tribunal deems it fair and reasonable that the cost burden be shared between the Parties as follows. The Claimant, respectively the Respondent, will bear 30% respectively 70% of the arbitration costs. Additionally, the Respondent should contribute to the Claimant an amount of US$ 400,000.00 for legal expenses. ; conduct-based approach shifted part of the arbitration costs as well as part of the costs

of legal representation 14 Rumeli Telekom A.S. v. Kazakhstan, ARB/05/16, Award (29 July 2008) 15 Bernardus Henricus Funnekotter v. Zimbabwe, ARB/05/6, Award (22 April 2009) 16 Siag v. Egypt, ARB/05/15, Award (1 June 2009) 728 the tribunal recognized that the outcome of the case is a central element in its decision 729 as regards the costs for legal representation the tribunal took into account the fact that the proceedings were prolonged partly due to the many objections filed by the Respondent of which the tribunal thought to be incompatible with international arbitration practice 730 the tribunal noted that the usual practice in ICSID arbitration is for each party to bear its costs for legal representation, but in the circumstances of the case it decided to shift part of the costs to the Respondent shifted only part of the legal costs; the costs of arbitration were shared equally between the parties 819 To obtain justice, Claimants had no option but to bring this arbitration forward and to incur the related costs. Although they have prevailed on the substance of the dispute, they have failed on a number of their allegations and the amount of damages awarded is less than the one claimed. On this basis, the Tribunal considers fair that each party bear 50% of the costs of the arbitration proceeding (advances to ICSID) and that Respondent be condemned to pay 50% of Claimants legal costs and fees costs follow the event; economic position of the respondent shifted only the costs of arbitration 147 In different circumstances, the Tribunal would be minded to follow the general practice in international arbitration that, as submitted by the Claimants, successful party under an award should recover its legal costs. However, such an approach would not be completely appropriate, in the present case, taking into account the situation in Zimbabwe in 2001/2002 costs follow the event; conduct-based approach shifted part of the costs of legal representation; the arbitration costs were divided equally 616 As to the apportionment of costs, the Tribunal has drawn useful guidance from the travaux préparatoires of the ICSID Convention, which indicate that the wording chosen for Article 61(2) was specifically designed to allow the Tribunal to make the decision on the assessment of costs (as opposed to the wording which had initially been included in the Preliminary Draft and the First Draft, which embodied the principle that each party to arbitration should bear its own expenses and that the charges of the Centre as well as the fees of the tribunal should be borne equally by the parties). 617 In coming to its decision on costs, the Tribunal has also taken due note of the decisions made by previous ICSID

17 Sistem Mühendislik v. Kyrgyz Republic, ARB(AF)/06/1, Award (9 September 2009) Tribunals, in light of which it appears that the practice of such Tribunals has not been uniform and that the present Tribunal therefore has a broad discretion to apportion costs. In this respect, the Tribunal has derived assistance from the method adopted by the Arbitral Tribunal in Plama Consortium Limited v Republic of Bulgaria. 621 The Claimants have succeeded on the merits and Egypt s objections to the jurisdiction of the Tribunal were rejected in their totality, both at the jurisdictional phase and during the Tribunal s consideration of the merits. All of Egypt s defences on the merits have been dismissed. Moreover, in view of the repeated and belated re-formulated jurisdictional arguments advanced by Egypt, all of which have failed, the Tribunal is of the opinion that Egypt was responsible for greatly increasing the costs of these proceedings. 626 With regard to the costs of the Claimant s experts, the Tribunal recalls that it has accepted Egypt s submission that the DCF analysis presented by the Claimants expert, LECG, was an insufficiently certain basis upon which to calculate damages in the present case. As such, the Tribunal does not consider it appropriate to grant any recovery of LECG s fees.. 629 Finally, in coming to its decision on the allocation of costs, the Tribunal has also noted that Egypt has made a number of unsuccessful jurisdictional objections, some of which were filed late in the course of proceedings and which represented in modified form issues which had already been decided by the Tribunal. 630 In consideration of the above and taking into account all the circumstances of the present case, the Tribunal concludes that it would be appropriate, in the exercise of its discretion, to order Egypt to pay the Claimants the sum of USD 6,000,000 as a reasonable contribution towards their reasonable costs and expenses in this arbitration costs follow the event; conduct-based approach shifted part of the costs of legal representation; the arbitration costs were divided equally 202 The Tribunal considers that the reasonable costs of a successful Claimant incurred in pursuing a successful claim for compensation are, in principle, a part of the loss suffered as a result of the violation of the Claimant s rights, and accordingly recoverable from the Respondent. 203 It also accepts that in some cases disputes arise not from obvious breaches of legal obligations but from different conceptions, held in good faith, of the legal position. In such cases the costs of the resolution of the dispute through agreed procedures might be regarded as an extension of the costs incurred by each Party in making the initial agreement. Indeed, in some circumstances the parties may choose to leave to an

18 Cargill, Incorporated v. United Mexican States, ARB(AF)/05/2, Award (18 September 2009) arbitral tribunal the determination of their precise rights and duties, rather than themselves continue negotiations and increasingly detailed drafting of agreements. In such cases it seems more appropriate to regard the costs of arbitration as a cost of establishing the initial relationship between them, which in the absence of indications to the contrary is to be shared equally between them. 204 In many, perhaps most, cases it will not be possible to place the case at one or other of these extreme positions. In such circumstances the Tribunal must exercise its discretion and arrive at an apportionment of costs which it considers to be fair in the light of all the circumstances that gave rise to the dispute and in the light also of the manner in which the parties conducted the arbitral proceedings. 205 There are no settled principles concerning the apportionment of costs in ICSID proceedings and ICSID Additional Facility Proceedings. Studies have suggested that the most common solution is for ICSID fees and the costs of the Tribunal to be shared equally and for each Party to bear its own legal costs. In some cases, however, the loser pays principle has been applied. 206 In the present case the Tribunal notes that the Respondent did not appear in the first procedural meeting and that the Respondent unsuccessfully challenged the jurisdiction of the Tribunal in 2007. The Tribunal notes also that the opacity of the Claimant s financial arrangements contributed to the difficulty of determining the amount of its loss, and may also have been a factor contributing towards the development of the dispute. Once proceedings were under way, neither Party obstructed the progress of the proceedings. 207 In these circumstances the Tribunal considers it fair that the parties should each pay an equal share of the ICSID fees and the costs of the Tribunal, and that the Respondent should make a contribution to the legal fees incurred by the Claimant ; novel issues shifted the arbitration costs as well as part of the costs of legal representation 546 In this case, the Tribunal notes that both Parties have well argued a difficult and complicated case. Claimant was successful in establishing its claim on the basis of several articles of Chapter 11, although not on other bases, namely Articles 1103 and 1110. Moreover, although Claimant was successful in proving a breach of Article 1105, it was not persuasive with respect to its arguments to incorporate the effects of the antidumping duties in the assessment of damages. Simultaneously, although Respondent was not successful in its efforts to claim that the wrongfulness of these breaches was precluded as the complained of acts were legitimate countermeasures, Respondent s arguments presented issues of first impression and were based upon serious and considered legal questions. 547 With these considerations in mind, the Tribunal

19 Kardassopoulos & Fuchs v. Georgia, ARB/05/18 & ARB/07/15, Award (3 March 2010) 20 Gemplus and Talsud v. United Mexican States, ARB (AF)/04/3 & ARB (AF)/04/4, Award (16 June 2010) determines that Respondent shall be responsible for all of the costs of this arbitration and half of Claimant s costs of legal representation and assistance. Claimant, in turn, will maintain responsibility for the remaining half of its costs. costs follow the event; conduct-based approach shifted both party costs and arbitration costs 683 In the event that the Claimants are successful in all or any of their claims, the Respondent submits that it would not be fair or appropriate for Georgia to bear the costs of the arbitrations and/or the costs of the Claimants legal representation, noting that the prevalent approach in investment treaty arbitration has been to avoid the loser pays principle. Among the reasons identified by the Respondent in support of its argument that costs ought not be awarded against it are: (1) the delay with which the Claimants commenced arbitration proceedings, which caused Georgia to undertake a factual investigation of an unusually historical nature 684 The Respondent also submits that because the Claimants abandoned certain claims prior to the hearing, such as Mr. Fuchs expropriation claim and Mr. Kardassopoulos umbrella clause claim, Georgia has incurred unnecessary costs in relation to these claims. As a result, even if the Tribunal were to consider that costs follow the event, the Claimants success is mixed such that each Party should bear its own costs. 689 there is no reason in principle why a successful claimant in an investment treaty arbitration should not be paid its costs. In that case, the tribunal found relevant to its costs award the fact that the respondent State had made no attempt to honour its obligations under the BIT in issue and had acted throughout with callous disregard of the claimants contractual and financial rights. 690 In PSEG, while the claimants were only partially successful on the merits of their claim, the tribunal noted that in order [t]o obtain justice, they had no option but to bring this arbitration forward and to incur related costs, thereby ordering the Respondent to bear 65% of the costs associated with the arbitration. 692 The Tribunal finds that it is appropriate and fair in this case to award the Claimants their costs of the arbitrations, including legal fees, experts fees, administrative fees and the fees of the Tribunal. The Tribunal finds the total fees assessed by the Claimants to be reasonable, i.e. US $6,235,429, as well as total disbursements assessed, that is US $1,706,868. costs follow the event the claimants were not successful in all of their claims (See e.g. 15.9.; 15.11) despite this the tribunal shifted both party costs and arbitration costs

17-4 Among those cases discussed, the Claimants rely on the tribunal s award in Azinian, stating as follows (Claimants June Submission on Costs, para. 12): 12. The first NAFTA tribunal to issue a final award, Azinian, stated the principle that [i]n ordinary circumstances it is common in international arbitral proceedings that a losing claimant is ordered to bear the costs of the arbitration, as well as to contribute to the prevailing respondent s reasonable costs of representation. This practice serves the dual function of reparation and dissuasion. In that case, however, the tribunal concluded that in the special circumstances of the Azinian case the parties should bear their own costs. The Azinian tribunal set out the basic principles which it considered a NAFTA tribunal should consider in deciding the issue of costs. These were (i) the novelty of NAFTA as a dispute resolution mechanism (this was a particularly relevant factor in the Azinian case, as it was the first time a NAFTA tribunal issued an [] award and thus considered the issue of costs); (ii) whether the claimants presented its case in an efficient and professional manner; (iii) whether the respondent may be said to some extent to have invited litigation; and (iv) whether the persons most accountable for the claimant s wrongful behavior would be the least likely to be affected by an award on costs. 17-20 The Tribunal observes that the Claimants have prevailed overall on jurisdiction, liability, causation and (to a lesser extent) quantum, leading to an Award by this Tribunal for significant amounts to be paid by the Respondent to the Claimants (i.e. Gemplus and Talsud). In short, whilst falling short of their pleaded claims, the Claimants case has broadly prevailed in these proceedings; and the Respondent s case has not prevailed. 17-21 following the general principle expressed in Chorzow Factory, that reparation must, as far as possible, wipe out all the consequences of the illegal act, it is the Tribunal s view that compensation should include a claimant s reasonable costs 17-22 the tribunal referred to the general principle that the successful party should have its reasonable costs paid by the unsuccessful party, in accordance with the general position in other forms of transnational commercial arbitration 17-24 In short, this was never an easy, simple or straightforward case; and the Tribunal records its appreciation to both sides for the responsible conduct and presentation of their respective cases. 17-26 In this case, the Tribunal sees no good reason to second-guess, with the advantage of hindsight, the Claimants amount of costs; and it concludes that their claimed costs for these proceedings were both reasonably incurred and reasonable in amount rounded down to US$ 2.3 million for Gemplus and US$ 3 million for Talsud (making US$ 5.3 million in all). The Tribunal adds an amount of US$ 75,000