FDI Moot 2010 Clarification Requests (4 June) Responses
181
Sat-Connect Chair Appointment
Who appointed the Chairman of the Sat-Connect board under the terms of the JV agreement?
The Chairman is elected by a majority of the board of directors.
180
Sat-Connect Chair's Privileges
What additional privileges did the Chairman of Sat-Connect have?
The chairman presides over board of director meetings and may set the agenda for meetings.
178
Beristan Times Article
May a copy of the Beristan Times article be made available?
Except from “Space - Beristan's New Frontier: Securing the Border” from The Beristan Times, 12
August 2009: August 2009: “....The Government's new high-tech take on defense is not limited to
satellite surveillance, positioning and targeting systems. The armed services are already looking at
upgrading their communications systems with powerful satellite and ground systems using encrypted
communications. One project likely to supply the military in the coming years is being developed by
Sat-Connect. Sat-Connect is a Beristan company established as a joint venture with the Opulentian
technology leader, Televative. Sat-Connect spokespersons say, "the system will provide secure
extensible telecommunications services for both civilian and military uses at better quality and lower
cost while providing greater geographic coverage than anything currently available." Still, questions
have been raised about the suitability of the system for military purposes. A government defense
analyst, speaking off the record, noted that there are more and more foreign laws compelling
disclosure of encryption ciphers, keys, and pads to national security services. Most of these are antiterrorist
measures, but the same analyst pointed out that many are blunt instruments, and that foreign
personnel are in fact seconded to the Sat-Connect project. Most surprisingly, the analyst indicated that
there have been leaks not only involving encryption technology, but also concerning the technology,
systems, and intellectual property of the Sat-Connect project. Earlier this year, Televative was one of
three Opulentian technology firms from which the Opulentian government authorities are alleged to
have received access to civilian encryption keys. Televative acknowledged receiving requests, but has
denied permitting unlawful access. Opulentian legal scholars are divided on whether legislation
enacted in the fallout of the allegations will stop abuses or simply give them legal cover ...”
177
Essential Security in Other BITs
Is Beristan a party to another bilateral investment treaty (with a third party) that lacks an essential
security clause? If so, could the contents of that treaty be made available?
Beristan has concluded numerous treaties, some of which have essential security clauses with slightly
varying formulations.
176
Provision of Agenda in Advance of Board Meeting
Does Beristan law require that prior notice concerning a proposed agenda be provided to participants
of a board meeting for a company incorporated in Beristan?
Beristan Law requires 24 hours prior notice for all board meetings.
175
Notice of Arbitration
Did Beritech give notice to Televative of its intention to commence arbitration prior to filing a request
for arbitration? If so, when?
Beritech served notice on 11 September of their desire to settle amicably, and failing that, to proceed
with arbitration.
174
Elias 8. - the BIT
When did the BIT become effective [Annex1, 15]?
The BIT became effective on 1 January 1997. Neither party has given notice of its termination.
173
Elias 7. - Intellectual property protection
Are there any other treaties, especially treaties on the protection of intellectual property, to which
Beristan and/or Opulentia are parties?
Both countries are members of the WTO.
172
Elias 6. - validity of Buy-out clause
Is the Buy-out Clause, especially the agreement on the value of Televative's interest, in JV Contract
[Annex3, 8] valid under the law of Beristan?
This question asks for a legal (not factual) conclusion.
171
Pinto 8 - Televative personnel
How long did it take to replace the Televative seconded personnel with local Beristan personnel and
what were the credentials of the replacement personnel?
Beritech moved expeditiously to hire replacement personnel from among individuals with relevant
expertise in the Beristan labor market.
170
Pinto 7 - arbitration request
What is the content of the arbitration request (request for relief) in the arbitration proceedings, initiated
by Beritech - what are the governing arbitration rules? Where is the seat of arbitration?
Beritech sought declaratory relief that it properly exercised its rights under the JV Agreement and
damages against Televative. The seat of the arbitration is Beristal, Beristan.
169
Pinto 6 - records of 21 August 2009 meeting
Are there any records of the August 21, 2009 meeting? Were any other board meetings between the
publication of the article (12.08) and the board meeting (21.08)?
The minutes from the August 21, 2009 meeting of the board of directors reflect that the chairman of
the board made a presentation concerning the August 12th article in The Beristan Times, that one
director raised the potential relevance of clause 8 of the JV Agreement, and that there was discussion
among those present. There were no other board meetings between 12 and 21 August.
168
Pinto 5 - Beristan Times
Is the Beristan Times an independent journal? Does the Respondent state have any shares in it?
The Government does not own any shares in the Beristan Times and it is considered “independent”.
167
Pinto 4 - management of Sat-Connect
What is the management of Sat-Connect? Are there any board members, appointed by the
Government of Opulentia? (within the facts we only have information on property interests and JV
Agreement; does Beritech have a special contract with the government or is it subject to special
national legislation, military rules, etc.)
No board members are appointed by the Government of Opulentia.
166
Pinto 3 - nature of Sat-Connect project
What was the nature of the Sat-Connect project? What was its intent - who were the potential
administrators, users, ...? Was it a purely military infrastructure? (in the facts it is mentioned civilian or
military purposes - who is to decide and when? does the Respondent state have any national
legislation dealing with the question?)
See paragraphs 5 and 6 of Annex 2, Uncontested Facts. Beristan has a Telecommunications Act of
1996, which was passed in view of the privatization of telecommunications services in Beristan.
165
Pinto 2 - value of IP rights
What was the value of the intellectual property rights, not compensated to Claimant, due to the forced
buyout?
The Claimant alleges that the value of the intellectual property over the life of the technology would be
in excess of US$ 100 million.
162
Elias 4. - Relationship of the high rank official to the Beritech
What is the relationship between the Beristian high rank official who accused Televative of leak of
confidential information and the Beritech?
There is no evidence of any direct relationship between the Beristian government official and
Beritech.
161
Elias 3. - Beritech´s activities
What are the other Beritech´s business activities besides the participation in the Sat-Connect?
Beritech is a telecommunications services provider in Beristan, established a few months before
establishment of the Sat-Connect JV. It mission statement and bylaws do not restrict its scope of
activities to the JV.
160
Elias 2. - Expelled personnel
Were the expelled personnel employees of the Sat-Connect? And if so, how the Beristan law deals
with the termination of the labour contracts?
The expelled personnel were employees of Televative who were specifically seconded to the SatConnect
project by Televative.
159
Elias 1. - International Covenants
Is Opulentia or Beristan a party to the International Covenant on Civil and Political Rights or
International Covenant on Economic, Social and Cultural Rights?
Yes
156
Buyout procedure
Did Alice Sharpeton participate in the voting?
No.
155
CWF intervention
What was the legal basis for the intervention of the Civil Works Force?
Executive Order.
154
Sat-Connect system
What companies or states other than Beristan would use the Sat-Connect system?
Prospectively, several countries in the Euphonia region.
153
JV agreement
In what capacity has the State of Beristan co-signed the JV agreement?
As Guarantor.
152
JV agreement
What were the rights and obligations of Beristan as guarantor, pursuant to the JV agreement
As guarantor, Beristan would assume the obligations of Beritech under the JV Agreement upon
Beritech’s default.
149
Bengzon 6
With respect to Beristan’s corporate laws, what are the rules regarding board meetings and
fundamental business transactions; particularly, how is a quorum established; how is notice of board
meeting agenda given to the directors so they are informed, in advance, of the issues to be discussed
at a meeting; is a compelled buyout of a shareholder a fundamental business transaction, and what is
the voting requirement for a fundamental business transaction, i.e. simple majority of directors (50% +
1) or super-majority (66.67%)?
Sat-Connect’s bylaws are in conformity with Beristan corporate law. See question 176 above. All
decisions taken by a board of directors under this law can be by majority, subject to meeting the
company’s quorum requirement.
148
Bengzon 5
Were any of the governments of the other six countries located within Euphonia aware of, using, or
contemplating the use of the Sat-Connect satellite system?
It was publicly known that the system was being developed and that Sat-Connect was interested in
selling services and licensing technology to other companies and governments in the region.
147
Bengzon 4
Subsequent to the signing of the Beristan-Opulentia BIT and prior to the August 12, 2009 article, were
there any changes in Beristan and Opulentia’s political attitude towards each other; specifically, after
the BIT became effective, did Beristan developed any negative attitudes towards foreign investment?
No
146
Bengzon 3
Is Opulentia or its maritime zones, if any, located within Euphonia?
Yes
145
Bengzon 2
Does Opulentia have export control laws that require Opulentian companies to obtain licenses from
the Opulentian government in order to export and re-export certain technologies, goods, and/or
services to Beristan?
Yes,
144
Bengzon 1
Was the Treaty Between the Republic of Beristan and the United Federation of Opulentia Concerning
the Encouragement and Reciprocal Protection of Investments ratified in accordance with Beristian
constitutional procedures and has any other bilateral investment treaty or telecommunications treaty
been ratified by Beristan?
The Beristan-Opulentia BIT was properly ratified.
143
Investor? Inventor?
There is a term 'inventors' in Article 2(1) and 6(1) of BIT between Opulentia and Beristan. This is BIT
so I guess it supposed to be 'investors', isn't it?
“Investors” is correct.
142
New York Convention
Are the two concerned parties of this case, Beristan and Opulentia, the contracting parties and both of
them ratified 'New York Convention'?
Both Beristan and Opulentia have ratified the “New York Convention”.
141
Euphonia and Opulentia
Do six other countries in Euphonia include the United Federation of Opulentia?
It will be helpful to know the relationship between Opulentia and Sat Connect S.A. regarding this case.
Opulentia is one of the six other countries.
140
Participation of directors at the meeting
How many directors attended the meeting on August 21, 2009 when the chairman of the Sat-Connect
S.A. board of directors made a presentation to the directors? Also, I'd like to know 'Alice Sharpeton'
participated in that meeting in particular.
It could be 'prior notice' if almost directors participated in that meeting, so I need to clarify this fact as
well. All members of the board of directors were present.
139
Waldock 7 Expulsion of Personnel
Which provisions of Beristanian law were invoked by Beristan as the legal basis for expulsion of
personnel associated with Televative and were the procedures provided by such law complied with
during actual expulsion?
Executive Order.
138
Waldock 6 Buyout Procedure
Please clarify the mechanics of buyout procedure both as envisaged by applicable law and other
agreements between the parties and as actually implemented, particularly whether the actual title to
shares in the JVCo has passed on to Beritech, whether the meeting of Sat-Connect, which was left by
one of the directors, still remained quorate under applicable law?
At the August 27th
, 2009, Sat-Connect board meeting, the board of directors, upon approving the
buyout, voted to suspend Televative’s shares in the Sat-Connect joint venture. Subsequent to the
August 27
th
meeting, the Sat-Connect board of directors submitted Televative’s shares in the SatConnect
joint venture to be held in escrow, along with the $47 million submitted by Beritech, pending
the decision of the arbitral tribunal in the proceedings commenced by Beritech.
136
Waldock 4 -Governing law with respect to JV Agreement
Does Beristan law incorporate UNIDROIT or other commonly accepted principles of contract law and
in particular the principle of good faith?
Yes.
135
Waldock 3 - Beritech and Beristan
What is the nature and degree of relations between Beristan and Beritech, i.e. in terms of participation
in Board of Directors and Management Board, sufficiency of the shareholding for passing all matters
requiring shareholder approval, whether the nominees of Beristan vote per their own discretion or
under direct instructions from Government, what matters are delegated to the Board of Directors and
management respectively, has there been any instructions in regard to the actions of Beritech in
relation to Sat-Connect, does Beritech perform any public function?
See Annex 2, Uncontested Facts, paragraph 2. The Minister of Telecommunications of Beristan is a
member of the board of directors of Beritech.
133
Amicable Settlement
Had Televative undertaken any attempt to settle the dispute amicably and in particular has it made a
written application for the settlement of the dispute envisaged by Article 11(1) of the BIT and when and
has Beritech sent notice of its intention to commence arbitration as provided for in clause 17 of the
JVA?
On September 12, 2009,Televative submitted a written notice to Beristan of a dispute under the
Beristan-Opulentia BIT, in which Televative notified Beristan their desire to settle amicably, and failing
that, to proceed with arbitration pursuant to Article 11 of the BIT. As noted in paragraph 13 of Annex 2,
Beritech filed a request for arbitration against Televative under Clause 17 of the JV Agreement
October 19, 2009.
130
Barros Clarification #5
Clause 17 of the Joint Venture Agreement states that the agreement shall be governed in all respects
by the laws of the Republic of Beristan. Do international commercial principles such as the UNCITRAL
Arbitration Rules apply?
The UNCITRAL Arbitration Rules do not apply. However, the 1959 Arbitration Act of Beristan was
amended in February 2007 to conform to the 1985 UNCITRAL Model Law on International
Commercial Arbitration, as amended in 2006.
127
Barros Clarification #2
Who was present at the board meeting on the 21st of August 2009? What were the contents of the
meeting?
All nine board members were present.
126
Is Opulentia part of Euphonia? Is all the information about the Sat-Connect project in the public
domain?
Yes, Opulentia is within the region of Euphonia. Not all information concerning the Sat-Connect
project is in the public domain.
121
Guerrero Cl.4
What proportion of Sat-Connect project's segments was intended to be used by Beristan Armed
Forces with reference to commercial exploitation?
There was no intention that any particular “proportion” of the Sat-Connect project was to be used by
Beristan Armed Forces.
120
Guerrero Cl.3
How is the issue of expropriation governed by the laws of the Republic of Beristan?
The Beristan Constitution states, “Private property shall not be taken for public use without just
compensation and due process.”
118
Guerrero Cl.1
At what operational stage is the arbitral tribunal requested by Respondent on 19 October 2009? Did
the arbitral tribunal decide about its jurisdiction? What was the Claimant's conduct during the
arbitration?
The arbitration was commenced by Beritech. Despite Televative’s refusal to participate, the tribunal
has been constituted and determined that the seat of the arbitration shall be Beristal.