Skadden, Arps
FOREIGN DIRECT INVESTMENT INTERNATIONAL
MOOT COMPETITION (“FDI MOOT”)
PROBLEM 2010
Malibu, California, USA
22-24 October 2010
hosted by the
Pepperdine University School of Law
organized by the
Center for International Legal Studies, Salzburg, Austria
and co-founded by
Suffolk University Law School, Boston, Massachusetts, USA
Pepperdine University School of Law, Malibu, California, USA
German Institution of Arbitration (DIS), Cologne, Germany
Centre of European Law, King's College London, London, United Kingdom
www.fdimoot.org
Monday, April 12, 2010
-2Table
of Contents
MINUTES OF THE FIRST SESSION OF THE ARBITRAL TRIBUNAL 2
ANNEX 1 9
TREATY BETWEEN THE REPUBLIC OF BERISTAN AND THE UNITED FEDERATION
OF OPULENTIA CONCERNING THE ENCOURAGEMENT AND RECIPROCAL
PROTECTION OF INVESTMENTS 9
ANNEX 2 16
UNCONTESTED FACTS 16
ANNEX 3 18
EXCERPT FROM JOINT VENTURE AGREEMENT BETWEEN 18
BERITECH S.A. AND TELEVATIVE INC. DATED 18 OCTOBER 2007 18
ANNEX 4 19
IMPORTANT NOTE TO TEAMS ON CLARIFICATIONS 19
MINUTES OF THE FIRST SESSION OF THE ARBITRAL TRIBUNAL
TELEVATIVE INC. [Claimant]
vs.
THE GOVERNMENT OF THE REPUBLIC OF BERISTAN [Respondent]
(ICSID Case No. ARB/X/X)
Malibu, California, 15 March 2010
The first session of the Arbitral Tribunal was held on 15 March 2010 from 2:00-5:00 p.m.
at the Pepperdine University School of Law, Malibu, California, United States of America.
Present at the session were:
The Members of the Tribunal
XXX, President
YYY, Arbitrator
Monday, April 12, 2010
-3ZZZ,
Arbitrator
ICSID Secretariat
XYZ, Secretary of the Tribunal
Representing the Claimant
Brownlie & Partners
Representing the Respondent
Wälde Associates LLP
The President of the Tribunal opened the session and welcomed the participants. It was
agreed to consider the matters listed on the Provisional Agenda, which is attached to these
Minutes as Attachment 1.
1. Constitution of the Tribunal and the Tribunal Members’ Declarations
It was noted that the Tribunal had been properly constituted in accordance with Article
37(2)(b) of the ICSID Convention and the ICSID Arbitration Rules. The parties expressed their
agreement that the Tribunal had been properly constituted. Copies of the Declarations signed by
the members of the Tribunal pursuant to ICSID Arbitration Rule 6(2) were distributed prior to the
first session.
2. Representation of the Parties
It was noted that the Claimant is represented by:
Brownlie & Partners
and that the Respondent is represented by:
Wälde Associates LLP
3. Apportionment of Costs and Advance Payments to the Centre
The parties agreed that, in accordance with Article 61 of the ICSID Convention and Rule
14 of the ICSID Administrative and Financial Rules, the parties would defray the expenses of the
proceeding in equal parts, without prejudice to the final decision of the Tribunal as to costs.
It was recalled that the Centre had requested in Case No. ARB/x/x each party to pay an
amount of US$25,000 to defray the costs of the proceeding during its first three to six months.
The Claimant made the payment requested on 16 November 2009 and the Respondent on 25
November 2009.
4. Fees and Expenses of Tribunal Members
The parties agreed that in addition to receiving reimbursement for any direct expenses
reasonably incurred, each member of the Tribunal would receive:
- a fee of US$3,000 (three thousand United States dollars), or such other fee as may
be set forth from time to time in the Centre’s Schedule of Fees, for each day of
meetings or each eight hours of other work performed in connection with the
proceeding; and
Monday, April 12, 2010
-4-
subsistence allowances and reimbursement of travel and other expenses within
limits set forth in Rule 14 of the ICSID Administrative and Financial Rules and
the Memorandum on the Fees and Expenses of ICSID Arbitrators.
5. Applicable Arbitration Rules
It was noted that, pursuant to Article 44 of the ICSID Convention, the proceedings would
be conducted in accordance with the ICSID Arbitration Rules in force since 10 April 2006.
6. Place of Proceedings
It was confirmed that seat of arbitration shall be Pepperdine University School of Law,
Malibu, California, United States of America, in accordance with the agreement of the Parties
and following upon the Arbitral Tribunal’s consultation with the Secretary General of ICSID in
accordance with Article 62 and 63 of the ICSID Convention, and Arbitration Rule 13(3). This is
without prejudice to holding sessions with the parties at any other place, with the agreement of
the parties and after consulting the Secretary General of the Centre if appropriate. In addition, it
was agreed that the Tribunal may meet without the parties at any other place as convenient.
7. Procedural Languages
At the election of the parties, the language of the proceedings shall be English. It was
agreed that all memorials, witness statements, expert reports, observations, and the like filed by
the Claimant or by the Respondent shall be in English. Consequently, it was agreed that neither
the Claimant nor the Respondent shall be required to provide the other Party with Beristian or
Opulentian translations and the English version of the originally filed instrument shall be the sole
authoritative version.
It was also agreed that the Tribunal will render its decisions in English only. The every
day communications from the Secretariat to the parties shall be made in English. In the case of
communications from the Secretariat conveying instructions from the Tribunal, these will be
made in English only.
8. Records of Hearings
The parties agreed that the records of the hearings shall be kept, and that there will be
transcripts of each hearing. It was agreed that complete sound recordings would be made of this
session and subsequent sessions.
9. Means of Communication and Copies of Instruments
It was agreed that ICSID Administrative and Financial Regulation 24 shall govern
communications between the parties. It was agreed that all communications and written
instruments in these proceedings were to be addressed to the Centre. It was further agreed that
written instruments were to be submitted to the Centre in an original and five copies, except that
brief communications that were not substantive applications or submissions could be transmitted
by facsimile and e-mail. The Centre would arrange for the appropriate distribution of copies.
It was noted that, except as otherwise required by the Arbitration Rules, decisions of the
Tribunal could be communicated to the parties through instructions to the Secretariat.
Monday, April 12, 2010
-5It
was agreed that the date of filing of an instrument shall be the date of its dispatch by
international courier, and that the parties will send a note, by fax, on the day of dispatch to the
Secretary of the Tribunal informing him or her of such dispatch. It was also agreed that an
electronic version of the text of the instrument shall simultaneously be sent to the Secretary of the
Tribunal via e-mail. The dies a quo for the commencement of periods of time will be the day at
which a written pleading with its translation and all its enclosures is received by the other party, a
fact that will be certified by the Secretary of the Tribunal.1
10. Quorum
The parties agreed that all three members of the Tribunal shall be present at its sittings.
11. Decisions of the Tribunal by Correspondence or Telephone Conference
In accordance with ICSID Arbitration Rule 16(2), the Tribunal may take decisions by
correspondence among its members, or by any other appropriate means of communication,
provided that all members are consulted.
12. Delegation of Power to Fix Time-Limits and to Sign Procedural Orders on Behalf of the
Tribunal
In accordance with ICSID Arbitration Rule 26(1), the President of the Tribunal will have
the power to fix time-limits for the completion of the various steps of the proceedings and to sign
procedural orders on behalf of the Tribunal, after consultation with the other members of the
Tribunal as far as possible.
13. Pre-Hearing Conference
It was agreed that ICSID Arbitration Rule 21 shall govern with respect to pre-hearing
conferences.
14. Written and Oral Procedures
It was agreed that the proceedings herein shall be comprised of both written and oral
procedures. The Parties and the Tribunal have agreed on a procedure to the effect that at this
stage the Tribunal shall only address the following:
(a) whether the Tribunal has jurisdiction in view of Clause 17 (Dispute Settlement) of the
Joint Venture Agreement (“JV Agreement”);
(b) whether the Tribunal has jurisdiction over Claimant’s contract-based claims arising
under the JV Agreement by virtue of Article 10 of the Beristan-Opulentia BIT.
(c) whether Respondent materially breached the JV Agreement by preventing Claimant
from completing its contractual duties and improperly invoking Clause 8 (Buyout) of
the JV Agreement;
(d) whether Respondent’s actions or omissions amount to expropriation, discrimination, a
violation of fair and equitable treatment, or otherwise violate general international law
1
For the purposes of the FDI Moot Competition, submissions shall be by email only to admin@fdimoot.org
Monday, April 12, 2010
-6or
applicable treaties; and
(e) whether Respondent is entitled to rely on Article 9 (Essential Security) of the
Beristan-Opulentia BIT as a defense to Claimant’s claims.
If the Arbitral Tribunal confirms its jurisdiction and finds the Respondent to be liable, a separate
second stage on remedies will follow.
15. Summary of Parties Contentions
The Parties and the Tribunal have agreed on the following summary of their positions:
Claimant
- Claimant, Televative Inc., contends that after a period of good relations extending almost
two years, the parties (including Televative, Beritech S.A. and Sat-Connect) had nearly
completed development of the required technology – the satellites, the launch rockets, the
terrestrial gateways and network infrastructure, and compatible handheld and desktop
communication devices. Claimant alleges that this success was due largely to Claimant’s
own significant efforts and the transfer of its advanced technology to the joint venture,
Sat-Connect S.A. The next step would have been for Sat-Connect to deploy the systems
and network while working with Claimant to ensure it was properly operational.
- At this point, however, Beritech S.A. informed Claimant that it was buying-out
Claimant’s interest in the joint venture under the buyout provision (Clause 8) of the JV
Agreement. Claimant contends that Respondent was behind this decision and that it was
taken without proper notice to Claimant and without any opportunity to respond to the
false charges that were raised against Claimant. These charges involve allegations that
Claimant leaked information about Sat-Connect’s technology and systems to the
Government of Opulentia, where Claimant is incorporated and domiciled.
- According to Claimant, upon being informed of the forced buyout by Beritech, Beristian
military personnel removed Claimant’s personnel from all offices, sites and facilities of
the Sat-Connect project.
- Claimant contends that its expulsion from the Sat-Connect project, the forcible removal of
its personnel by members of the Beristian military, and the improper buyout of its interest
in Sat-Connect were the product of a conspiracy against Claimant and violate Claimant’s
rights under general international law and applicable treaties, and in particular Articles 2,
4 and 10 of the Beristan-Opulentia BIT.
- Claimant asserts Respondent illegally expropriated its interest in Sat-Connect, because
Beristan now has all of Claimant’s contributions of capital, research and development to
the Sat-Connect project and does not want to pay Claimant market-based prices for its
interest in Sat-Connect. Under the buyout provision, Beritech paid significantly less than
what Claimant would receive if it were to sell its interest to an arms-length buyer, because
the buyout provision only returns Claimant’s paid-in investment – without including
compensation for potential future profits as well as for the intellectual property, know
how and trade secrets that have been developed and are now controlled by Sat-Connect.
- Claimant alleges that Respondent also breached the fair and equitable treatment standard
to which Claimant is entitled under the Beristan-Opulentia BIT by reason of the arbitrary
and unfair expulsion of Claimant for motives unrelated to Claimant’s performance of the
Monday, April 12, 2010
-7JV
Agreement, through the abusive exercise of Beritech’s rights under Clause 8 of the JV
Agreement to buyout Claimant, and the discriminatory efforts to favour local Beristian
personnel, who ultimately replaced Claimant’s seconded personnel.
- Claimant also asserts that Respondent breached the JV Agreement by preventing
Claimant from completing its contractual duties and improperly invoking the buyout
clause in the JV Agreement. Claimant argues that it can assert these contract claims by
virtue of Article 10 of the Beristan-Opulentia BIT.
- Claimant contends that the dispute resolution provisions of the JV Agreement are
irrelevant, as the present claims are brought under the Beristan-Opulentia BIT and are
therefore distinct from any contract claims.
- Finally, Claimant argues that the alleged national security concerns are based solely on
Respondent’s own unsubstantiated assertions. Moreover, these concerns were foreseeable
given the substance of the JV Agreement. Claimant absolutely denies leaking any
information to the Opulentian government.
Respondent
- Respondent contends that Claimant’s claims are inadmissible and the Tribunal lacks
jurisdiction because Claimant’s claims are contractual in nature and Claimant has
improperly reformulated them as claims arising under the Beristan-Opulentia BIT.
Respondent urges that Claimant should respond to Respondent’s notice of arbitration in
the separate arbitration proceedings that Respondent has already commenced pursuant to
the dispute settlement clause in the JV Agreement.
Alternatively,
- Respondent claims that Beritech was entitled to rely on Clause 8 of the JV Agreement
(buyout) because Claimant breached the confidentiality provision of that Agreement
(Clause 4) by leaking information about the Sat-Connect project—including information
about the technology, systems, intellectual property and encryption to be used and other
trade secrets—to the Government of Opulentia.
- Respondent alleges that Claimant leaked information from the Sat-Connect project to the
Government of Opulentia. Respondent further asserts that the advanced satellite and
telecommunications technology of the Sat-Connect project, which included systems that
are being used by the Beristian armed forces, directly implicate the national security of
Beristan. Respondent argues that Claimant’s removal from the Sat-Connect project was
justified on national security grounds.
- Respondent denies that it violated any terms of the Beristan-Opulentia BIT, or otherwise
violated general international law or applicable treaties. Respondent urges that Claimant
is not entitled to compensation or any other remedies.
16. Pleadings: Number, Sequence, Time Limits
It was agreed that, contrary to the usual practice of four consecutive written pleadings (a
memorial by the Claimant, a counter-memorial by the Respondent, a reply and a rejoinder), there
would be only one simultaneous submission of written pleadings: a memorial by the Claimant
and a counter-memorial by the Respondent.2
After consultation with the parties and due
2
This limitation is a concession to the strictures of the FDI Moot competition.
Monday, April 12, 2010
-8deliberation
by the Tribunal, the President announced that the pleadings are to be submitted
within the following time-limit:
The Claimant shall file its memorial by Sunday, 19 September 2010.
The Respondent shall file its counter-memorial by the same date, Sunday, 19
September 2010.
17. Dates of Subsequent Sessions
It was decided that Arbitration Rule 43 and ICSID Arbitration Rule 13(2) shall govern
with respect to the scheduling of sessions of the Tribunal subsequent to the first session. It was
agreed that the hearing on 22 October 2010 will be tentatively scheduled for 4:00 pm3
and
continue the following two days.
18. Production of Evidence
Without prejudice to the power of the Tribunal to request the parties to produce any
further evidence at any stage of the proceeding, it was agreed that each pleading is to be
accompanied by the documentation on which it relies, and by signed statements of the witnesses
and experts on which it relies.
The Tribunal may allow a party to submit documentation at another time due to
extraordinary circumstances.4
19. Publication of the Decisions Relating to the Proceedings and of the Award
In accordance with Article 48(5) of the Convention the president invited the parties to
consider whether they would consent to publish the award or any decisions rendered by the
Tribunal.
20. The Award
It was agreed that in accordance with ICSID Arbitration Rule 46 the preparation of the Award
would be drawn up and signed within 120 days after the closure of the proceedings. The Tribunal
may, however, extend this period by a further 60 days if it would otherwise be unable to draw up
the award.
II. Other Matters
There being no further business, the President adjourned the meeting at 05:00 p.m.
Sound recordings were made of the session and deposited in the archives of the Centre.
3
This time is subject to adjustment to accommodate the competition schedule.
4
The FDI Moot Competition will be based exclusively on the facts and evidence provided by the organizers.
Pleadings should not be accompanied by the documentation or by signed statements of the witnesses and experts;
references to the evidence provided by the organizers will suffice. Further relevant facts may come forward in the
course of clarifications issued by the organizers in response to Requests for Clarification.
Monday, April 12, 2010
-9Secretary
of the Tribunal President of the Tribunal
Malibu, California, 15 March 2010 Malibu, California, 15 March 2010
ANNEX 1
TREATY BETWEEN THE REPUBLIC OF BERISTAN AND THE UNITED FEDERATION OF
OPULENTIA CONCERNING THE ENCOURAGEMENT AND RECIPROCAL PROTECTION OF
INVESTMENTS
The Republic of Beristan and the United Federation of Opulentia (hereinafter referred to as
the “Contracting Parties”) desiring to establish favourable conditions for improved
economic co-operation between the two countries, and especially for investment by
nationals of one Contracting Party in the territory of the other Contracting Party; and
acknowledging that offering encouragement and mutual protection to such investments
based on international agreements will contribute towards stimulating business ventures
that will foster the prosperity of both Contracting Parties,
Hereby agree as follows:
Article 1
DEFINITIONS
For the purposes of this Agreement:
1. The term "investment" shall be construed to mean any kind of property invested before
or after the entry into force of this Agreement by a natural or legal person being a
national of one Contracting Party in the territory of the other, in conformity with the
laws and regulations of the latter.
Without limiting the generality of the foregoing, the term "investment" comprises:
a) movable and immovable property and any other right " in rem" including, in so far as
they may be used for investment purposes, real guarantees on others' property;
b) shares, debentures, equity holdings and any other negotiable instrument or
document of credit, as well as Government and public securities in general;
c) credit for sums of money or any right for pledges or services having an economic
value connected with investments, as well as reinvested income as defined in paragraph
5 hereafter;
d) copyright, commercial trade marks, patents, industrial designs and other intellectual
and industrial property rights, know-how, trade secrets, trade names and goodwill;
e) any right of a financial nature accruing by law or by contract and any license,
concession or franchise issued in accordance with current provisions governing the
Monday, April 12, 2010
-10exercise
of business activities, including prospecting for cultivating, extracting and
exploiting natural resources.
2. The term "investor" shall be construed to mean any natural on legal person being a
national of a Contracting Party who effected, is effecting, or intending to effect,
investments in the territory of the other Contracting Party.
3. The term "natural person", in reference to either Contracting Party, shall be construed to
mean any natural person holding the nationality of that State.
4. The term "legal person", in reference to either Contracting Party, shall be construed to
mean any entity established in the territory of one of the Contract in accordance with
the respective national legislation such as public establishments, joint-stock
corporations or partnerships, foundations or associations regardless of whether their
liability is limited or otherwise.
5. The term "income" shall be construed to mean the money that has yielded or is still to
yield by an investment, including in particular, profits, interest income, income from
capital investment, dividends, royalties, returns for assistance and technical services
and miscellaneous other considerations, including reinvested income and capital gains.
6. The term "territory" shall be construed to mean in addition to the areas lying within the
land boundaries, the "maritime zones". The latter also comprise the marine and
submarine zones over which the Contracting Parties have sovereignty, or exercise
sovereign or jurisdictional rights, according to the International law.
Article 2
PROMOTION AND PROTECTION OF INVESTMENTS
1. Both Contracting Parties shall encourage Inventors of the other Contracting Party to
invest in their territory, and shall authorize these investments in accordance with their
legislation.
2. Both Contracting Parties shall at all times ensure treatment in accordance with
customary international law, including fair and equitable treatment and full protection
and security of the investments of investors of the other Contracting Party.
3. Both Contracting Parties shall ensure that the management, maintenance, enjoyment,
transformation, cessation and liquidation of investments effected in their territory by
investors of the other Contracting Party, an well as the companies and firms in which
these investments have been made, shall in no way be subject to unjustified or
discriminatory measures.
Article 3
NATIONAL TREATMENT AND THE MOST FAVOURED NATION CLAUSE
1. Both Contracting Parties, within the bounds of their own territory, shall offer
investments effected by, and the income accruing to, investors of the other Contracting
Party no less favourable treatment than that accorded to investments effected by, and
income accruing to its own nationals or investors of Third States.
Monday, April 12, 2010
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2. The treatment accorded to the activities connected with the investments of investors of
either Contracting Party shall not be less favourable than that accorded to similar
activities connected with investments made by their own investors or by investors of
any Third Country.
3. The provisions of 1) and 2) of this Article do not apply to any advantages or privileges
which one Contracting Party grants or may grant at some future time to Third States by
virtue of its membership in Customs or Economic Unions, Common Market associations,
Free Trade Areas, regional or subregional Agreements, international multilateral
economic Agreements, or Agreements entered into in order to prevent double taxation
or to facilitate cross-border trade.
Article 4
NATIONALIZATION OR EXPROPRIATION
1. (1) The Investments to which this Agreement relates shall not be subject to any measure
which might limit permanently or temporarily their joined rights of ownership,
possession, control or enjoyment, save where specifically provided by law and by
judgments or orders issued by Courts or Tribunals having jurisdiction.
(2) Investments of investors of one of the Contracting Parties shall not be directly or
indirectly nationalized, expropriated, requisitioned or subjected to any measures having
similar effects in the territory of the other Contracting Party, except for public purposes,
or national interest, against immediate full and effective compensation, and on
condition that these measures are taken on a non-discriminatory basis and in
conformity with all legal provisions and procedures.
(3) The just compensation shall be equivalent to the real market value of the investment
immediately prior to the moment in which the decision to nationalize or expropriate is
announced or made public, and shall be calculated according to internationally
acknowledged evaluation standards. Whenever there are difficulties in ascertaining the
market value the compensation shall be calculated on the basis of a fair appraisal of the
establishment's constitutive and distinctive elements as well as of the firm’s activities
components and results. Compensation shall include interest calculated on a six-month
LIBOR basis accruing from the date of nationalization or expropriation to the date of
payment. In the event of failure to reach an agreement between the investor and the
Contracting Party having liability, the amount of the compensation shall he calculated
following the settlement of dispute procedure provided by Article 11 of this Agreement.
Once the compensation has been determined it shall be paid promptly and
authorization for its repatriation in convertible currency issued.
2. The provisions of paragraph 1. of this Article shall also apply to income from an
investment, and, in the event of winding-up, to the proceeds of liquidation.
Article 5
COMPENSATION FOR DAMAGES OR LOSSES
Should Investors of one of the two Contracting Parties incur losses in their investments in
the territory of the other Contracting Party, due to war or other forms of armed conflict,
Monday, April 12, 2010
-12states
of emergency or other similar events, the Contracting Party in which the affected
investment has been made shall offer adequate compensation. Compensation payments
shall be freely transferable in convertible currency without undue delay.
The Investors concerned shall receive the same treatment as the nationals of the
Contracting Party having liability, and, at all events shall be treated no less favourably than
investors of Third States.
Article 6
REPATRIATION OF CAPITAL, PROFITS AND INCOME
1. Each of Contracting Parties shall guarantee that after inventors have complied with all
their fiscal obligations, as well as all relevant administrative procedures, they may
transfer the following abroad, without undue delay, in any convertible currency:
(a) capital and additional capital amounts used to maintain and increase
investments;
(b) net income, dividends, royalties, payments for assistance and technical services,
interest and any other profits;
(c) the proceeds of the total or partial sale liquidation of an investment;
(d) funds to repay loans relating to an investment and interest due thereon;
(e) remuneration and allowances paid to nationals of the other Contracting Party in
respect of subordinate work and services performed in relation to an investment
effected in its territory, in the amount and manner prescribed by current national
legislation and regulations.
2. While considering the provisions of Article 3 of this Agreement, the Contracting Parties
undertake to apply to the transfers mentioned in paragraph 1 of this Article, the same
treatment that is accorded to investments effected by investors of Third States, if this is
more favourable.
3. Both Contracting Parties may adopt provisions governing the manner of complying with
the fiscal obligations referred to in paragraph 1 above.
Article 7
SUBROGATION
In the event that one Contracting Party or any of its institutions has provided an insurance
guarantee in respect of non-commercial risks for investments effected by one of its
investors in the territory of the other Contracting Party, and has made payments on the
basis of that guarantee, the other Contracting Party shall recognize the assignment of the
rights of the insured investor to the Contracting Party guarantor and its subrogation shall
not exceed the original rights. In relation to the transfer of payments to the Contracting
Party or its Institution by virtue of such subrogation, the provisions of Articles 4, 5 and 6 of
this Agreement shall apply.
Monday, April 12, 2010
-13Article
8
TRANSFER PROCEDURES
The transfers referred to in Articles 4, 5, 6 and 7 shall be effected without undue delay and,
at all events, within six months, provided that all fiscal obligations have been met. Transfers
shall be made in a convertible currency at the prevailing exchange rate applicable on the
date of the transfer.
Article 9
ESSENTIAL SECURITY
Nothing in this Treaty shall be construed:
1. to require a Party to furnish or allow access to any information the disclosure of which it
determines to be contrary to its essential security interests; or
2. to preclude a Party from applying measures that it considers necessary for the
fulfillment of its obligations with respect to the maintenance or restoration of
international peace or security, or for the protection of its own essential security
interests.
Article 10
OBSERVANCE OF COMMITMENTS
Each Contracting Party shall constantly guarantee the observance of any obligation it has
assumed with regard to investments in its territory by investors of the other Contracting
Party.
Article 11
SETTLEMENT OF DISPUTES BETWEEN INVESTORS AND
THE CONTRACTING PARTIES
1. For the purpose of resolving disputes with respect to investments between a
Contracting Party and an investor of the other Contracting Party that concern an
obligation of the former under this Agreement in relation to an investment of the latter,
if the dispute cannot be settled amicably within six months of the date of a written
application, the investor in question may in writing submit the dispute, at his discretion,
for settlement to:
(a) the Contracting Party's Court, at all instances, having territorial jurisdiction;
(b) an ad hoc Arbitration Tribunal, in accordance with the Arbitration Rules of the
UN Commission on International Trade Law (“UNCITRAL”);
(c) the International Centre for the Settlement of Investment Disputes, for the
application of the arbitration procedures provided by the Washington
Monday, April 12, 2010
-14Convention
of 18th March 1965 on the Settlement of Investment Disputes
between States and Nationals of other States.
2. Each Contracting Party hereby consents to the submission of any investment dispute for
settlement by binding arbitration in accordance with the choice specified in the written
submission of the investor under paragraph 1(b) or (c) above. Such consent, together
with the written submission of the investor given under paragraph 1, shall satisfy the
requirement for:
(a) written consent of the parties to the dispute for purposes of Chapter II of the
ICSID Convention (Jurisdiction of the Centre) and for purposes of the Additional
Facility Rules; and
(b) an "agreement in writing" for purposes of Article II of the United Nations
Convention on the Recognition and Enforcement of Foreign Arbitral Awards,
done at New York, June 10, 1958 ("New York Convention").
3. Both Contracting Parties shall refrain from negotiating through diplomatic channels any
matter relating to any arbitration procedure or judicial procedures that may have been
instituted until these procedures have been concluded, and one of the Contracting
Parties has failed to comply with the ruling of the arbitration tribunal or the judgment of
the court of law within the terms prescribed by ruling or the judgment, or any other
terms that may derive from international or internal law applicable to the case at issue.
Article 12
SETTLEMENT OF DISPUTES BETWEEN THE CONTRACTING PARTIES
1. Any disputes which may arise between the Contracting parties relating to the
interpretation and application of this Agreement shall, as far as possible, be settled
amicably through diplomatic channels.
2. In the event that the dispute cannot be settled within three months from the date on
which one of the Contracting Parties notifies, in writing, the other Contracting Party, the
dispute shall, at the request of one of them, be laid before an ad hoc Arbitration Tribunal
as provided in this Article.
3. The Arbitration Tribunal shall be constituted in the following manner: within two
months from the receipt of the request for arbitration, each Contracting Party shall
appoint a member of the Tribunal. These two members shall then select a national of a
Third State to act as Chairman. The Chairman shall be appointed within three months
from the date on which the other two members are appointed.
4. If the appointments have not been agreed within the time provided by paragraph 3 of
this Article, either of the Contracting Parties, in default of any other arrangement, may
apply to the President of the International Court of Justice to make the appointments
within three months. In the event that the President of the Court in a national of one of
the Contracting Parties or he is otherwise prevented from discharging the said function,
the application shall be made to the Vice President of the Court. If the Vice-President of
the Court is a national of one of the Contracting Parties or he is equally prevented from
Monday, April 12, 2010
-15discharging
the said function for any reason, the most senior member of the
International Court of Justice, who is not a national of one of the Contracting Parties,
shall be invited to make the appointments.
5. The Arbitration Tribunal shall rule with a majority vote, and its decisions shall be
binding. Both Contracting Parties shall pay the costs of their own arbitrator and of their
own costs at the hearings. The President's costs and any other costs shall be divided
equally between the Contracting Parties. The Arbitration Tribunal shall lay down its
own procedures.
Article 13
RELATIONS BETWEEN GOVERNMENTS
The provisions of this Agreement shall be enforced irrespective of whether or not
diplomatic or consular relations exist between the Contracting Parties.
Article 14
APPLICATION OF OTHER PROVISIONS
1. Whenever any issue is governed both by this Agreement and by another International
Agreement to which both the Contracting Parties are parties, or whenever it is governed
otherwise by general international law, the most favourable provisions, case by case,
shall be applied to the Contracting parties and to their investors.
2. Whenever, as a result of laws, regulations, provisions or specific contracts, one of the
Contracting Parties has adopted a more advantageous treatment for the investors of the
other Contracting Party than that provided in this Agreement, they shall be accorded
that more favourable treatment.
Article 15
ENTRY INTO FORCE
This Agreement shall become effective on the date on which both Contracting Parties have
notified the other of the effected performance of their respective constitutional procedures.
Article 16
DURATION AND EXPIRY DATE
1. This agreement shall remain effective for 10 years as from the date in which the
notification procedures indicated in Article 15 have been effected and it shall be tacitly
renewed for further periods of 5 years, unless either Party terminates it by giving prior
written notice thereof one year before any expiry date.
2. In the case of investments effected prior to the expiry dates of the present agreement, as
provided in Article 16, the provisions of Articles 1 to 14 shall remain effective for a
further five years after the aforementioned dates.
Monday, April 12, 2010
-16IN
WITNESSS WHEREOF, the undersigned being duly authorized thereto by their respective
Governments, have signed the present Agreement.
DONE AT Beristal, this twentieth day of March, in the year one thousand nine hundred
ninety six, in English.
FOR THE GOVERNMENT OF THE REPUBLIC
OF BERISTAN
FOR THE GOVERNMENT OF THE UNITED
FEDERATION OF OPULENTIA
ANNEX 2
UNCONTESTED FACTS
1. Claimant, Televative Inc., is a successful multinational enterprise that
specializes in satellite communications technology and systems. It is a leading
developer of new technologies in this field. Televative is a privately held
company that was incorporated in Opulentia on 30 January 1995.
2. The Government of Beristan established a state-owned company, Beritech S.A.,
in March 2007. The Beristian government owns a 75% interest in Beritech. The
remaining 25% of Beritech is owned by a small group of wealthy Beristian
investors, who have close ties to the Beristan government.
3. Beritech and Televative signed a joint venture agreement (the “JV Agreement”)
on 18 October 2007 to establish the joint venture company, Sat-Connect S.A.,
under Beristian law. The Government of Beristan has co-signed the JV
Agreement as guarantor of Beritech’s obligations. Sat-Connect’s corporate
offices are located in Beristal, the capital city of Beristan.
4. Televative owns a 40% minority share in Sat-Connect, while Beritech owns a
60% majority stake. Of the nine members of Sat-Connect’s board of directors,
Beritech has the right to appoint 5 directors, while Televative can appoint 4. A
quorum of the board of directors is obtained with the presence of 6 members.
5. Sat-Connect was established for the purpose of developing and deploying a
satellite network and accompanying terrestrial systems and gateways that will
provide connectivity and communications for users of this system anywhere
within the vast expanses of Euphonia. Euphonia is a region encompassing
almost one-fifth of the world’s surface, which includes Beristan, six other
countries, and the Euphonian Ocean.
Monday, April 12, 2010
-17-
6. The satellite and communications technology that Sat-Connect will deploy can
be used for civilian or military purposes. Several segments of the Beristian
armed forces will use the Sat-Connect system.
7. The ownership structures for these entities is illustrated below:
Diagram of Ownership Structures:
8. On August 12, 2009, The Beristan Times published an article in which a highly
placed Beristian government official raised national security concerns by
revealing that the Sat-Connect project had been compromised due to leaks by
Televative personnel who had been seconded to the project. The official
indicated it was believed that critical information from the Sat-Connect project
had been passed to the Government of Opulentia. Both Televative and the
Government of Opulentia have made statements to deny this published story.
9. On August 21, 2009, the chairman of the Sat-Connect board of directors,
Michael Smithworth, made a presentation to the directors in which he
discussed the allegations that had appeared in the August 12th
article in The
Beristan Times. The content of this meeting is disputed by Claimant.
10. On August 27, 2009, Beritech, with the support of the majority of Sat-Connect’s
board of directors, invoked Clause 8 of the JV Agreement, to compel a buyout of
Televative’s interest in the Sat-Connect project. Six directors were present at
this meeting and one director, Alice Sharpeton, who had been appointed by
Televative, refused to participate and left the meeting before its end. She later
filed a protest that she had no prior notice concerning the proposed agenda for
the meeting. Beritech then served notice on Televative on August 28, 2009,
requiring the latter to hand over possession of all Sat-Connect site, facilities
and equipment within 14 days and to remove all seconded personnel from the
project.
11. Thereafter, on September 11, 2009, staff from the Civil Works Force (“CWF”),
the civil engineering section of the Beristian army, secured all sites and
facilities of the Sat-Connect project. Those personnel of the project who were
Government of the Republic of Beristan
Beritech S.A.
7
5
%
Sat-Connect
S.A.
Televative, Inc.65% 35%
Monday, April 12, 2010
-18associated
with Televative were instructed to leave the project sites and
facilities immediately, and were eventually evacuated from Beristan.
12. Televative’s total monetary investment in the Sat-Connect project stands at US
$47 million.
13. On October 19, 2009, Beritech filed a request for arbitration against Televative
under Clause 17 of the JV Agreement. Beritech has paid US$47 million into an
escrow account, which has been made available for Televative and is being held
pending the decision in this arbitration. Televative has refused to accept this
payment and has refused to respond to Beritech’s arbitration request.
14. On October 28, 2009, Claimant requested arbitration in accordance with ICSID’s
Rules of Procedure for the Institution of Conciliation and Arbitration
Proceedings and notified the Government of Beristan. In its request for
arbitration, Claimant states that jurisdiction is established by the BIT between
Beristan and Opulentia (Annex 1) and because both countries are contracting
states to the ICSID Convention.
15. Beristan and Opulentia are ICSID Contracting States and have ratified the ICSID
Convention. Beristan and Opulentia have also ratified the Vienna Convention
on the Law of Treaties. Beristan and Opulentia have long had polite yet tense
relations.
16. On 1 November 2009, the ICSID Secretary General registered for arbitration this
dispute brought by Claimant Televative against the Government of Beristan.
ANNEX 3
EXCERPT FROM JOINT VENTURE AGREEMENT BETWEEN
BERITECH S.A. AND TELEVATIVE INC. DATED 18 OCTOBER 2007
Clause 4 – Confidentiality
(1) All matters relating to this Agreement and the Sat-Connect project, including all
Confidential Information, shall be treated by each of the parties, including the JV
company Sat-Connect, as confidential. Each of the parties and Sat-Connect agree that
it will keep confidential, will not disclose, and will not allow to be disclosed any said
matters or Confidential Information, directly or indirectly, to any person or entity not
authorized under this Agreement, without the prior written approval of the SatConnect
board of directors except (i) where the information properly comes into the
public domain, (ii) as required by law, or (iii) as may be necessary to enforce the
terms hereof.
Monday, April 12, 2010
-19(2)
Confidential Information shall include all trade secrets, data, know-how, materials,
products, technology, formulae, computer programs, specifications, compositions,
improvements, inventions, discoveries, current and planned research and
development, systems, structures, architectures, manuals, business plans, software,
marketing plans, financial information, and other information developed during the
Sat-Connect project, or disclosed or submitted, orally, in writing, or by any other
media, to the Sat-Connect project by one of the parties. The parties shall not use any
of the Confidential Information for any purpose other than for or in connection with
the purposes of this Agreement.
(3) Any dissemination of Confidential Information shall be only with written prior
approval and in connection with the purposes of this Agreement, and shall be only to
the employees, agents or affiliates who have a need to know said Confidential
Information in order to carry out proper purposes and responsibilities related to this
Agreement and the Sat-Connect project. Further, any such dissemination will be
made only after such employees, agents and affiliates have agreed to comply with
the terms and provisions of this Clause 4.
(4) Any breach of this Clause 4 shall be deemed a material breach of the Agreement.
This Clause will survive for 3 years after the expiration or termination of this
Agreement or dissolution of the Sat-Connect project.
Clause 8 – Buyout
If at any time Televative commits a material breach of any provision of this Agreement,
Beritech shall be entitled to purchase all of Televative’s interest in this Agreement.
Under such circumstances, Televative’s interest in this Agreement shall be valued as its
monetary investment in the Sat-Connect project during the period +time from the
execution of this Agreement until the date of the buyout.
Clause 17 – Dispute Settlement
The Agreement shall be governed in all respects by the laws of the Republic of Beristan.
In the case of any dispute arising out of or relating to this Agreement, any party may
give notice to the other party of its intention to commence arbitration. The parties must
then attempt to settle the dispute amicably and, unless they agree otherwise, cannot
commence arbitration until 60 days after the notice of intention to commence arbitration.
The dispute shall then be resolved only by arbitration under the rules and provisions of
the 1959 Arbitration Act of Beristan, as amended. Each party waives any objection which
it may have now or hereafter to such arbitration proceedings and irrevocably submits to
the jurisdiction of the arbitral tribunal constituted for any such dispute.
ANNEX 4
IMPORTANT NOTE TO TEAMS ON CLARIFICATIONS
Registered teams may request clarification of additional relevant legal and factual issues in
connection with the problem.
Monday, April 12, 2010
-20Each
team may pose 8 questions by 4 June and a further 8 by 6 August 2010.
Each team shall post its questions on an internet bulletin board accessible to all registered teams,
i.e., each team can see the questions posted by other teams. Details about the URL and access
credentials will be given to all teams after the registration deadline for teams has passed.
The organisers’ responses (clarifications) will be posted on 20 June and 22 August 2010
respectively. Otherwise, the organisers will decide in their sole discretion as to the relevance of
the requested information, and whether and how to respond in the best interests of a fair and
educational competition.