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Team 129R

5th National Law School International Arbitration Moot Court Competition, 2012
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In the matter of an Arbitration at, Somali City, Democratic Republic of Calona under the Calona-Nolania Bilateral Investment Treaty
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Wayne Electronics.........................................................................................................Claimant

v. Democratic Republic of Calona……........................................................................Respondent

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(Arb/Cas/12/35)
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Memorandum for Respondent

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Table of Contents Table of Abbreviations I Index of Authorities IV Statement of Jurisdiction XI Statement of Facts XII Questions Presented XV Summary of Pleadings XVI Arguments Advanced 1 I. The Tribunal Does Not Have Jurisdiction Over The Claims Brought Before It. 1 A. The undertaking of the Claimant does not amount to an investment. 1 B. The Tribunal does not have jurisdiction over contractual matters. 2 1. The Tribunal does not have jurisdiction over contractual disputes because of an exclusive dispute resolution clause. 2 2. The terms of the contract are broad enough to incorporate associated claims. 3 3. Arguendo, if both forums have jurisdiction, the one under the contract should prevail. 3 C. Contract breaches do not lead to a violation of BIT in the present matter. 4 1. The acts of the Respondent do not violate the National Treatment requirement. 4 2. The acts of the Respondent do not violate the fair and equitable requirement. 5 a. The Government of Calona has maintained the stability in the legal order. 5 b. The Government of Calona has complied with the contractual obligations. 6 c. The Government has observed due process in its actions. 7 d. The Government has adhered to the principle of good faith. 7 3. Article X is not an umbrella clause which would allow adjudication of contractual disputes. 7 a. The interpretation of Article X as an umbrella clause is unjustified. 8 b. The consequences of such an interpretation would make it unreasonable for such an interpretation. 8 D. The Multi-Tier Arbitration Clause precludes jurisdiction of this Tribunal. 9 E. The issue of expropriation is based on corruption and the Tribunal does not have jurisdiction over it. 10 II. The actions of the government of Calona including the seizure of Wayne Calona’s assets, did not result in violation of the BIT as it does not constitute expropriation. 11 A. The actions of the Government of Calona do not amount to expropriation. 11 1. The seizure of Wayne’s assets was a temporary measure. 11 2. Termination of contract would not lead to expropriation as the State acted as a contractual party. 11 3. The State action is a non-compensable regulation within police powers. 12 4. The actions of the Government do not amount to indirect expropriation. 13 a. The measures are not severe in light of their purpose and so they can reasonably be viewed as having been adopted and applied in good faith. 13 b. The impugned governmental acts are proportional to the object and which is for a bon fide public purpose. 14 c. The measure was not discriminatory. 15 B. Argunedo, even if the acts amount to expropriation by the Government of Calona, it is legal. 16 1. Public purpose exempts the Government from the requirement to compensate. 16 2. There has been no violation of the principles of due process. 17 III. The Respondent is entitled to avoid the contract. 18 A. Respondent can avoid the contract on the ground of defective alternatives provided by the Claimant, which were not in compliance with the essential terms of the contract. 18 1. The Claimant’s misrepresentation gives rise to a right to avoid the contract. 18 2. Claimant has fundamentally breached the contract by not providing capacitors which could handle the load of the floodlights. 19 3. Stipulation for the sale of goods was ‘condition’ a breach of which by the Claimant gives rise to a right to avoid. 19 4. Reliance on seller’s skill and judgment raises an implied condition of fitness. 20 5. The obligation imposed on the Claimant by the contract is not divisible. 20 B. Claimant is liable for the delay in the delivery of the original consignment, thereby giving Respondent a right to avoid the contract. 21 1. Claimant cannot exclude liability by due to manufacturing issues with its suppliers. 21 2. Claimant’s silence does not amount to an acceptance to vary the terms of the contract. 21 3. The Claimant did not undertake ‘best endeavors’ as mandated by the contract. 22 4. The Claimant is liable for the acts of the sub-contractors. 23 C. Documents and evidence from a private arbitration cannot be used in a different arbitration. 23 D. The contract was obtained by the Claimant through bribery and therefore, is void on the ground of corruption. 24 Prayer for Relief 25

Table of Abbreviations

¶¶/¶ - Paragraph
ICSID- International Centre for Settlement of Investment Disputes
OECD- Organization for Economic Cooperation and Development
ILM- International Legal Materials
FILJ- Fordham International Law Journal
ILR- International Law Reports
UNCITRAL- United Nations Commission on International Trade Law
UNCTAD- United Nations Conference on Trade and Development
NAFTA- North American Free Trade Agreement
S.A..- South Africa
ICJ- International Court of Justice
BIT- Bilateral Investment Treaty
U.S.A. - United States of America
Int’l- International
Econ- Economic
ICC- International Criminal Court
Arb- Arbitration
Ch- Chapter
ICJ- International Court of Justice
Cir. – Circuit
Trib. – Tribunal
Mex- Mexico
J. – Journal
Vol.-Volume
CTR- Claims Tribunal
AJIL- American Journal on International Law
UNTS- United Nations Treaty Series
ECR- European Court Reports
CMLR- Common Market Law Reports
W. Bank- World Bank
Austl.- Australian
Cl.- Claims
EHRR- European Human Rights Reports
ECHR- European Court of Human Rights
U.N. – United Nations
Rep. – Representative
Transnat’l L – Transnational Law
GA- General Assembly
R.I.A.A.- Reports of International Arbitral Awards
p. – Page
L.R.- Law Report
H.L.- House of Lords
QB- Queen’s Bench
Co. – Company
Lloyd’s Rep.- Lloyd’s Law Reports
M.& G – Macnaghten and Gordon's English Chancery Reports
W.L.R.- Weekly Law Reports
A.C.-Appeal Cases
Anr. - Another
Ch.d.- Chancery Division
CISG-Convention of International Sale of goods
All ER- All England Law Reports
CBNS- Common Bench Reports, New Series (England)
Minn.- Minnesota Reports
I.C.L.R. – International Construction Law Review
EWHC- England and Wale High Court
Comm.- Commercial
FSR-Fleet Street Reports
ORB- Official Referees’ Business
No.- Number
QBD- Queen’s Bench Division
SC- Supreme Court
ILM-International legal materials
YB Comm Arb – Yearbook Commercial Arbitration
Art. – Article
Ltd. – Limited pp. – Pages
v. – Versus

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Index of Authorities ICSID Cases ADF Group Inc. v. United States of America, ICSID Case No. ARB(AF)/00/1, 6 ICSID Reports, 470, 2003. 7 Azurix Corp. v. Argentine Republic., ICSID (W. Bank) Case No. ARB/01/12, Award, Jul. 14, 2006. 11 CME (The Netherlands) v. Czech Republic, 9 ICSID Reports 264, Partial Award, 13 September, 2001. 13 Compania de Aguas del Aconquija S.A. and Compagnie Generale des Eaux v. Argentine Republic, 6 ICSID Reports 340 41 I.L.M. 1135 (2002), 2 Compañia del Desarrollo de Santa Elena, S.A. v. Costa Rica, ICSID Case No. ARB/96/1, Award of Feb. 17, 2000 16 Consortium R.F.C.C. v. Kingdom of Morocco, ICSID Case No. ARB/00/6, Final Award, 22 December 2003. 11 El Paso Energy v. Argentina, ICSID Case No. ARB/03/15, Decision on Jurisdiction, 27 April 2006. 9 Eureko B.V. v. Republic of Poland, 12 ICSID Reports 335, Partial Award and Dissenting Opinion, 19 August 2005. 15 Feldman v. Mexico, 18 ICSID Review FILJ (2003) 488, Award, 16 December 2002 5 Generation Ukraine Inc. v. Ukraine, ICSID Case No. ARB/00/9, Award, 16 September 2003. 5 Genin v. Estonia, 17 ICSID Review FILJ (2002) 395 Award, 25 June 2001. 7 Holiday Inns S.A. and others v. Morocco (“Holiday Inns”), ICSID Case No. ARB/72/1, 1 ICSID Reports 645 1974. 8 Holiday Inns S.A. and others v. Morocco (“Holiday Inns”), ICSID Case No. ARB/72/1, Decision on Jurisdiction, 12 May 1974. 3 Impreglio v. Pakistan, 12 ICSID Reports 245, Decision on Jurisdiction, 22 April 2005 6 Joy Mining v. Egypt, 19 ICSID Review- FILJ (2004), Award, 6 August 2004 1 Klöckner Industrie-Anlagen GmbH, et al. v. United Republic of Cameroon, ICSID Case No. ARB/81/2, Decision on Annulment, 3 May 1985 2 Lanco International Inc. v. Argentine Republic, 40 ILM 457 (2001) 2 Lauder (U.S.) v. Czech Republic 9 ICSID Reports 66, Award, 3 September 2001. 16 LG & E Energy Corp and ors v. Argentina, (2007) 46 ILM 3. 5 LIAMCO v. Libya, 62 ILR 140, 20 ILM 1 (1981). 15 Liberian Eastern Timber Corporation v. Liberia, ICSID Case No ARB/83/2, Award 1986. 14 M. Sornarajah, “The Taking of Foreign Property”, in A. H. Qureshi, X. Gao (ed. by), International Economic Law, Vol. IV, London, Routledge, 2011, 16 Methanex Corp. v. United States, Final Award, pt. IV, ch. D, 44 I.L.M. 1345 (2005) 13 Noble Ventures v. Romania, ICSID Case No. ARB/01/11, Award, 12 October 2005 6 Pan American/BP v. Argentina, ICSID Case No. 03/13, Decisions on Preliminary Objections, 27 July 2006. 8 Pope & Talbot, Inc. (U.S.) v. Canada, , 40 I.L.M. 258 (2001) (NAFTA Ch. 11 Arb. Trib. 2000), ¶102. 4 Press Compania Naviera S.A. & Others v. Belgium, 101,103 6 ICSID Reports 340 41 I.L.M. 1135 (2002); 14 RFCC v. Morocco, 20 ICSID Review-FILJ (2005) 391 Award, 22 December 2003. 6 Salini Costrutorri SpA and Italstrade SpA v. Kingdom of Morocco, ICSID Case No. ARB/00/4, 1 J.D.I. 196 (2002) 2 SD Myers, Inc. v. Canada, 40 I.L.M. 1408, 1440 11 SGS v. Phillipines, ICSID Case No. ARB/02/6, 8 ICSID Reports 518, 2004. 11 Southern Pacific Properties (Middle East) Limited v. Arab Republic of Egypt (“SPP”), ICSID Case No. ARB/84/3, Decision on Jurisdiction, 1985. 3 TECMED S.A. v. Mexico, (2003) 43 I.L.M. 133 5 Tradex Hellas S.A. v. Republic of Albania, 14 ICSID ReviewF.I.L.J. 161 (1999) Decision on Jurisdiction, 24 December 1996 2 Waste Management, Inc. v. United Mexican States (II), ICSID Case No. ARB(AF)/00/3, Final Award, 30 April 2004, 11 Court Cases Ali Shipping v. Shipyard ‘Trogir’, 1 Lloyd’s Rep. at 651. 23 Ashford Shire Council v. Dependable Motors Proprietary Ltd., (1960) 3 W.L.R. 999 19 Ashington Piggeries Ltd. and Anr. v. Christopher Hills Ltd., (1972) A.C. 441. 19 British Waggon Co. v. Lea, (1880) 5 QBD 149. 22 Case of the former King of Greece and Others v. Greece, (2001) 33 EHRR 21 14 Cf Domb v. Isoz,(1980) 1 All ER 942. 21 Cutter v. Powell, (1795) 101 ER 573 19 Dolling- Baker v. Merrett, 1 W.L.R. (Eng. C.A. 1990). 23 Entores Ltd v. Miles Far East Corpn., (1955) 2 QB 327 21 Fairline Shipping Corpn. v. Adamson, (1975) QB 180 21 Felthouse v. Bindley, (1862) 11 CBNS 869. 21 Financings Ltd v. Stimson, (1962) 3 All ER 386. 21 Glaholm v. Hays, (1841) 2 M.& G. 257. 18 Hanson v. Nelson, 82 Minn 220. 21 Harbutt’s Plasticine Ltd. v. Wayne Tank and Pump Co. Ltd., (1970) 1 QB 477. 18 IBM UK Limited v. Rockware Glass Ltd., (1980) FSR 335 (CA). 22 International Holdings Ltd. and Rhodia UK Ltd. v. Huntsman International LLC, (2007) EWHC 292 22 James v. United Kingdom, (1986) 8 E.H.R.R. 123 12 Lamare v. Dixon, (1873) L.R. 6 H.L. 414 17 Midland Land Reclamation Ltd. and Leicestershire County Council v. Warren Energy Limited, (1995) ORB No. 254. 22 Mugler v. Kansas, 123 U.S. 623 (1887). 13 Pennzoil Exploration and Production Co. v. Ramco Energy Ltd., Partial Award in ICC Case No. 7319 of 1992. 3 Re Hall & Baker, (1878) 9 Ch. D. 538 20 Sporrong and Lonnroth v. Sweden, (1982) 5 EHRR 85; 14 Stevenson and Sons v. Maule and Son, (1920) SC 335. 22 U.G.S. Finance Ltd. v .National Mortgage Bank of Greece, (1964) 1 Lloyd’s Rep. 446. 18 Wena Hotels v. Egypt, 41 ILM 896 (2002). 23 Other Tribunals American Bell International v. Iran, 12 YB Comm Arb 292. 23 Hauer v. Land Rheinland-Pfalz, [1980] 3 C.M.L.R. 42 11 ICC Award No. 1110 of 1963, YCA 1996, at 47 et seq. ,Arb.Int'l 1994, at 282 et seq. 10 Saluka v. Czech Republic, UNCITRAL Partial Award 2006, 263; 12 SEDCO Inc. v. Iran, ITL 59-129-3. Iran-U.S. C.T.R., March 27, 1986. 7 Sedco, Inc. V. Nat’l Ir. Oil Co., (1986) 10 Iran- US CTR 180, 16 Starret Housing Corp. v. Islamic Republic of Iran, 4, Iran-US Cl. Trib. Rep. 122. 12 TECMED, Supra n.27; Phelps Dodge Corp. and Overseas Private Investment Corp. and Iran, 10 Iran U.S. C.T.R. 157 11 Tippetts v. TAMS-AFFA Consulting Engineers of Iran, 6 Iran-U.S. C.T.R. 219, 29 June 1984. 13 Articles/Reports A.F.M. Maniruzzaman, ‘Expropriation of Alien Property and the Principle of Non-Discrimination in International Law of Foreign Investment: An Overview,’ 8 J. Transnat’l L. & Policy 57-59, 67-70. 15 Aisbett, Emma, Karp, Larry, and McAusland Carrol, ‘Compensation for Indirect Expropriation in International Investment Agreement: Implication of National Treatment and Right to Invest’, 2010 Journal for Globalisation and Development, Vol. 1, Issue 2 13 Alexander Jollies, Consequences of Multi-Tier Arbitration Clauses : Issues of Enforcement, Reprinted from (2006) 72 Arbitration 329–338 Sweet & Maxwell Limited. 9 Alexis Mourre, ‘Arbitration and Criminal Law: Reflections on the Duites of the Arbitrator’, 22(1) Arb Int’l 95,99 (2006); 10 Amir Rafat, ‘Applicability of the Public-Purpose Principle to Cases Arising under International Law from the Expropriation of Alien Private Property,’ 43 U. Det. L.J. 375 1965-1966. 14 B. Stern, “In Search of the Frontiers of Indirect Expropriation”, in A. W. Rowe (ed. by), Contemporary Issues in International Arbitration and Mediation, Leiden, Martinus Nijhoff Publishers, 2007 13 B. Weston, ‘Constructive Takings’ under International Law: A Modest Foray into the Problem of ‘Creeping Expropriation,; Virginia Journal of International Law, 1975, Volume 16, pp. 103-175 at 112. 12 Ben Mostafa, ‘The Sole Effects Doctrine, Police Powers and Indirect Expropriation under International Law,’ 15 Austl. Int'l L.J. 267 2008. 12 Chew, P. K. (1994). “Political risk and U.S. investments in China: chimera of protection and predictability?” Virginia Journal of International Law, vol. 34, pp. 615-683. 6 Christoph Schreuer, ‘Fair and Equitable Treatment in Arbitral Practice’, 6 J. World Investment & Trade, 357 (2005) 5 Commentaries to the Draft Articles on the Responsibility of States for Internationally wrongful acts, adopted by International Law Commission at its 53rd session 2001, Official Records of the General Assembly, 56trh session, Supplement No. 10 (A/56/10), ch IV.E.2, p.87. 7 G. Christie “What Constitutes a Taking of Property underInternational Law?” British Yearbook of International Law, 1962 pp. 307-338. 12 ICSID Annual Report, 198512 23 I.L.M. (1984), 1 In the matter of Cross Border Trucking Services, No-USA-Mex-98-2008-01, Final Report 6 February 2001. 4 Joern Rimke, ‘Force Majeure and Hardship: Application in international trade practice with specific regard to CISG and the UNDROIT principles of international commercial contracts’ Pace review on the Convention on Contracts for International sale of goods, Kluwer (1999-2000), 20 Julian Bailey, ‘Unconditional Bank Guarantee’, International Construction Law Review, 2004 I.C.L.R 57. 22 L Yves Fortier, CC, QC and Stephen L Drymer, ‘Indirect Expropriation in the Law of International Investment: I Know It When I See It, or Caveat Investor,’ 13 Asia Pac. L. Rev. 79 2005. 13 Louis B Sohn & Richard Baxter, Draft Convention on the International Responsibility of States for Injuries to the Economic Interests ofAliens, (1961) 55 AJIL 545, at p 553. 12 Matti S. Kurkela, ‘Criminal Law in International Arbitration-Notes to Arbitrators’, ICC Task Force on Criminal Law and Arbitration, March 2006. 10 Quinley, K.M., Managing Political Risks, March 2002, The Risk Report, Volume XXIV, No.7, p.1. 6 Rudolf Dolzer, ‘Fair and Equitable Treatment: A Key Standard in Investment Treaties’, 39 Int’l Law. 87 (2005) 5 Stephen Vascianne, ‘Fair and Equitable Treatment’, 70 British Yearbook of Int’l Law 99 (2000); 5 Tarcisio Gazzini, ‘Drawing the Line between Non-compensable Regulatory Powers and Indirect Expropriation of Foreign Investment- An Economic Analysis of Law Perspective’, 7 Manchester J. Int'l Econ. L. 36 2010. 5, 15 Books A. Newcombe, ‘The Boundaries of Regulatory Expropriation in International Law’, in P. Kahn and T. W. Wälde (ed. by), New Aspects of International Investment Law, Leiden, Martinus Nijhoff Publishers, 2007 16 A. Reinisch, “Legality of Expropriations”, in A. Reinisch (ed. by), Standards of Investment Protection, Oxford, Oxford University Press, 2008, p. 174 16 B. H. Weston, “Community Regulation of Foreign-Wealth Deprivations: A Tentative Framework for Inquiry”, in R. S. Miller and R. J. Stanger (eds. by), Essays on Expropriation, Ohio State University Press, 1967 15 B. Stern, “In Search of the Frontiers of Indirect Expropriation”, in A. W. Rowe (ed. by), Contemporary Issues in International Arbitration and Mediation, Leiden, Martinus Nijhoff Publishers, 2007, 13 Christoph. H. Schreuer, The ICSID Convention: A Commentary, Edn. II, Cambridge University Press, 2009. 2 de Sabla Claim (US v. Panama), (1933) 6 RIAA 358. 16 H. W. Baade, ‘Permanent Sovereignty Over Natural Wealth and Resources’, in R. S. Miller and R. J. Stanger (eds.), Essays on Expropriation, Ohio State University Press, 1967, 16 Halsbury’s Law of England, Fourth Edition, Butterworths Lexis Nexis, London 2002. 17 Ian Brownlie, Principles of Public International Law, 70 (5th ed. 1998); 16 J.Beatson, Anson’s Law of Contract, 28th edition, Oxford University Press, 2002. 19 M. Endicott, ‘Remedies in Investor-State Arbitration: Restitution, Specific Performance and Declaratory Awards’, in P. Kahn, T. W. Wälde (ed. by), New Aspects of International Investment Law, Leiden, Martinus Nijhoff Publishers, 2007, 16 P. Malanczuk, Akehust’s Modern Introduction to International Law, 7th Edition, 1997 14 Peter Mulchinski, Fedrico Ortino & Christoph Shreuer, The Oxford Handbook of International Investment Law, Oxford University Press, New York, 2008. 13 R Dolzer, ‘Generalklauseln in Investitions schutzvertragen’ in Negotiating for Peace, Liber Amicorum Tono Eitel (2003) 291, 4 Rudolf Dolzer, The Impact of International Investment on Domestic Administrative Law, International Law and Politics, Vol. 37:953, November 2006. 5 S. P. Subedi, International Investment Law - Reconciling Policy and Principle, Oxford, Hart Publishing, 2008, 16 ICJ Cases Elettronica Sicula SpA (ELSI) United States v. Italy, (1989) ICJ 15 at 42. 9 Norwegian Shipowners' Claims (Norway v. United States), 1 U.N. R.I.A.A. 307, 332 14 Oscar Chinn Case, (Britain v. Belgium). [1937], P.C.I.J. (Ser. A/B) No. 70. 6

Miscellaneous
1967 OECD Draft Convention on the Protection of Foreign Property………………….....…....15
The Restatement of the Law: The Foreign Relations Law of the United, American Law Institute, 1987……………………………………………………………………….……….......................14
Restatement (Third) of Foreign Relations Law of the United States § 712 Cmt. G (1987)……………………………………………………………………………………….........13
Restatement of the Law Third, the Foreign Relations of the United States, American Law Institute, Volume 1, 1987,…………………………………………………………………......…12
GA Resolution 1803 (XVII), 14 December 1962, …………………………………………........15

Statement of Jurisdiction

Wayne Electronics, the Claimant in the instant case, has invoked the jurisdiction of this Tribunal flowing from Article XIII of the Treaty Concerning the Encouragement and Reciprocal Protection of Investment September 4, 1998 which states that:
“Any dispute in connection with this agreement shall be resolved by arbitration as is appropriate for such disputes, in accordance with the Arbitration Rules prescribed herein.”
Respondent has the honour to submit this Statement of Defence pursuant to Article 19 of the International Arbitration Rules under Article XIII of the Treaty Concerning the Encouragement and Reciprocal Protection of Investment (September 4, 1998) between the Democratic Republic of Calona and the Kingdom of Nolania, Pursuant to Article 21 of the aforementioned Rules; Respondent has also challenged the jurisdiction of this Tribunal.

Statement of Facts
I
Democratic Republic of Calona after independence opted to constitute itself as a socialist State. Faced with economic crisis however, Calona became a free market economy and entered into several Bilateral Investment Treaties, one with the neighbouring country of Nolania. Along with the immense opportunities however, there was considerable risk for the investors as the failures in the justice delivery system in Calona was apparent, reaching till the Supreme Court where there was a huge backlog of cases.
II
In 1998, Calona and Nolania entered into a BIT to encourage investments between two states. In 2008, Calona won the bid to host the 15th edition of the Global Peace Games in 2011. In order to enhance its infrastructure the Government of Calona entered into several contracts with leading global companies. One such contract was with Wayne Electronics which was one of the most prominent suppliers of generators in the region in addition to other electronic equipments.
III
The contract was for the supply of 50 high-power generators and 25000 high-power capacitors for use in the new floodlight system at the main stadium, Champs’ National Stadium where the Games where to take place. The contract contained a clause permitting Wayne Enterprises to procure goods from another sub-supplier in case of capacitors. The contract between the two parties came into effect on January 1, 2010. Companies The Government indicated that the Stadium had to be completed by the December 30, 2010 and therefore, timely delivery of both parts of the consignment was essential, Stadium by the authorities.
IV
Wayne decided to procure the individual capacitors required from Star Technologies Pvt. Ltd., a company incorporated in Nolania, as customized capacitors were not produced by Wayne Enterprises or their subsidiary, Wayne Calona. Wayne Electronics had assured the Government of Calona that Star Technologies had top credentials and a good supply record, as indicated on Star’s website. The Communist Party of Calona however alleged that Wayne Enterprises had given bribes to obtain the contract, a claim that died down due to lack of public support. Wayne Enterprises completed the first delivery of 50 high-power generators to Calona on June 30, 2010. However, two of the generators supplied by Wayne Electronics proved insufficient, on testing, to handle the load of providing power to an entire section of the stadium. Negotiations were held between both the parties and a settlement agreement was signed which stipulated that Wayne Electronics would deliver two new generators as replacements on or before July 25, 2010. The above replacement was done on July 22, 2010 and the replacements tested successfully. Also a dispute resolution clause was added in the agreement if further differences were to crop up.
V
Star Technologies intimated Wayne on October 15, about an expected delay of about 20 days due to unavoidable manufacturing issues which was informed to the Ministry of Sports, Calona, to which Wayne did not receive a reply. The Ministry of Sports, Calona by an email dated November 13, 2010, sought an update on the status of delivery. To Wayne’s reminder of the earlier intimation regarding a delay in the delivery, the Ministry of Sports reiterated the essentiality of timely delivery and asked Wayne to find suitable alternatives. Wayne provided the alternative option of standard capacitors generally used in floodlights, that which did not adhere to the exact specifications of the contract, but which could be manufactured by Wayne’s subsidiary in Calona and sent within 15 days. The same was accepted by the Ministry of Sports as the capacitors would reach by early-December.
VI
Unfortunately, this arrangement proved to be futile for Wayne Electronics as on being tested, there were substantial indications that the capacitors would be unable to handle the load of the floodlights in the Stadium. The Ministry of Sports, perturbed by the abrupt change of events, entered into talks to acquire low quality capacitors from a local manufacturer on December 4, 2010 which were compliant with the requirement of the floodlights at the Champs’ Stadium. Owing to a Herculean exertion, the stadium lighting was finally completed on December 30, 2010. This came as bolt from the blue for Wayne Enterprises, as the required installation time indicated to them was considerably longer. Under pressure from its investors to take legal action, Ms. Sersee Lanning, the legal counsel for the company, began flexing her resources to gain knowledge of all relevant documents of the transaction.
VII
One of Wayne’s subsidiaries, Nakamuka Lighting Solutions (“NLS”), was involved in providing customized light bulbs to the Government of Calona, for the construction of the Champs’ National Stadium. During the course of proceedings, on 15th November, 2010, between the Government and NLS, the former permitted NLS to deliver late, as it did not expect the delivery of the capacitors by Wayne Enterprises on the expected date of 28th November, 2010. However the government stated in reply that no such communication was made to Wayne Enterprises. Subsequently the Government voiced their displeasure unequivocally with regards to Wayne’s performance and stated that the contract was terminated with immediate effect as failure to deliver the capacitors on time violated the essence of the contract.
VIII
On 20th January, 2011, goaded by the inability of Wayne to deliver the capacitors on time on grounds of incompetence, CCP raised the issue of bribery again. Under public demands the Special Prosecutor appointed by Calona’s Special Bureau of Investigation (“SBI”), filed criminal charges against Wayne Enterprises and its subsidiaries, under the Calonian Prevention of Corruption Act (“CPCA”). The Special Prosecutor filed an application seeking an order for the freezing of Wayne Calona’s properties under the CPCA. The lower court granted the application, and the SBI immediately seized all assets of Wayne Calona, including their factory and bank accounts, valued approximately at $22 million and appeal against the order was dismissed by both Courts of Appeal and the Supreme Court. Wayne Calona on 25th January, 2011, issued a statement condemning the actions of the Government. Owing to the seizure of its assets in Calona and the refusal of the Government to pay the purchase price as per the contract, Wayne Enterprises has approached this Arbitral Tribunal, validly constituted under the BIT.

Questions Presented * I. Whether the Tribunal has jurisdiction over the claims brought before it? II. Whether the actions of the government of Calona including the seizure of Wayne Calona’s assets result in violation of the Calona-Nolania BIT? III. Whether the respondent is entitled to avoid the contract?

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Summary of Pleadings I. The Tribunal does not have jurisdiction over the claims brought before it.
The Tribunal does not have jurisdiction over the claims that have been brought before it by the Claimant. The undertaking of the Claimant does not amount to an investment as under the BIT between the two countries or under general arbitral practice.
The Tribunal does not have jurisdiction over claims which are in essence based on the performance of a contract. The existence of an exclusive jurisdictional clause in the contract precludes the jurisdiction of the Tribunal in hearing contractual claims between the two parties. Furthermore, the terms of the clause are broad enough to incorporate associated claims arising out of the performance of the contract whether in statute, tort or treaty. Even if both forums are said to have jurisdiction over the matters, the forum constituted under the contract must prevail under the principle of generalia specialibus non derogant over the jurisdiction of this Tribunal. Also, the breaches of contract if any, do not amount to breaches of BIT in the present matter. The acts in question do not violate the principle of natural treatment. Even if there was a differential treatment on part of the Respondent State, it was justifiable in this particular matter because of the proven incompetency of the Claimant. There is also no violation of fair and equitable treatment standards. The Government has maintained stability in the legal order by charging the Claimant under the CPCA and the actions taken against the Claimant are hence justified. The Government of Calona has complied with its contractual obligations and has not acted in a way beyond that of an ordinary contracting party. Also the Government has observed due process in its actions. Moreover the Government has adhered to the principles of good faith.
Article X of the BIT is not an umbrella clause and does not provide for adjudication of contractual disputes. The interpretation of this clause as one which elevates breaches of contract into breaches of treaty as proposed by the Claimant is unjustified. The consequences of such an interpretation would be extremely unreasonable as it would emasculate other provisions of the BIT and would place the State with regards to the investor at an unfair position.
The Multi-Tier Arbitration Clause in the contract precludes jurisdiction of the Tribunal as the parties have under the contract agreed to first seek to resolve their disputes through negotiation before pursuing alternate remedies.
The issue of expropriation is essentially based on allegations of corruption against the Claimant. Hence under well established principles of arbitral practice, the Tribunal does not have jurisdiction over such claims. II. the actions of the government of Calona including the seizure of Wayne Calona’s assets, did not result in violation of the Calona-Nolania BIT.

The Respondent contends that the actions of the Government of Calona do not violate the BIT. This is because the actions of the Government do not amount to expropriation; and alternatively, the expropriation is legal under the BIT. An expropriation occurs only when there is a lasting removal of the ability of an owner to make use of its economic rights. The freezing of properties and seizure of assets was only an interim order passed by the lower court, and hence, temporary. Therefore it does not amount to expropriation of assets including the bank accounts and factories. A contractual breach of payment can only amount to an expropriatory measure when the State acts in capacity of the sovereign. However, in the present case, the State acted in its contractual capacity to terminate the contract on legitimate grounds of breach of essential terms, i.e., time by Wayne Enterprises. Therefore even this act does not amount to expropriation.

Furthermore, the seizure cannot be said to be indirect expropriation because it does not fulfil the requirements under the BIT, which are of a measure so severe that it could not reasonably have been applied in good faith; a discriminatory measure or a measure which has not been made for public purpose. In fact it is a measure which is not discriminatory and has been made for a bona fide pubic purpose. The State action is a non-compensable regulation within police powers for the forfeiture of property for a social purpose which is trying for corruption charges. Regardless of the magnitude of its effect on an investment, a legitimate public purpose may suffice to cast a measure as being in the nature of the normal exercise of police powers. Thus, the State is not responsible for loss of property or for other economic disadvantage resulting from a measure undertaken for a public purpose. As far as public purpose is concerned, it is up to the discretion of the government of what are the imperatives of public need or of national interest. Hence, dealing with corruption is an object which is proportional to the measure of seizure of property of Wayne Calona which was charged with corruption. The measure was not discriminatory because political motive per se does not constitute a sufficient proof of a purely discriminatory measure. Although the fact is that the seizure tool place after the public support amounted for the allegation upon the charges of corruption, this is not the basis on which the property was frozen and assets were seized. Republic of Calona being a socialist welfare State, had primary goals of social purpose and therefore took the measure against corruption. It must thus be noted that the Government, filed charges only after the investigation was carried out by the Special Bureau of Investigation.
Argunedo, even if the acts amount to expropriation by the Government of Calona, it is legal. It is contended by the Respondent that even if the acts amount to expropriation, they are legal because the impugned actions do not violate the requirements under the BIT. Article VI of the BIT states that investments made by nationals of one Contracting Party shall not be expropriated by the other Contracting Party, either directly or indirectly, except in such circumstances where the expropriation would be legal under international law. Under customary international law, for an expropriation to be legal, it has to be for a public purpose, non-discriminatory, compensation must be granted, and due process must be observed. It has already been asserted by the respondent that the measure of the Government was aimed at a bona fide public purpose and that it was not discriminatory. The right to compensation is excluded in case of bona fide regulations within the police powers of the State such as imposition of criminal penalties for public purpose. Lastly Wayne Calona cannot allege denial of justice or an opportunity to challenge the orders before the judiciary because there were interim appeals that were filed against the interim order of seizure, which was speedily dismissed by both the Court of Appeals as well as the Supreme Court of Calona. For the above reasons, the act of the government was legally done, as it did not violate any of the BIT requirements. III. The respondent is entitled to avoid the contract.
The Respondent is entitled to avoid the contract as there has been a fundamental breach of the terms of the contract or the essence of the contract which was time. The alternatives, provided by Claimant, were incapable of handling the load of the floodlights as specifically required in the Stadium. It is known that the contractual party can rescind the contract in case the conditions of the contract were not fulfilled. However, the Claimant cannot escape his liability under the contract because of factors beyond the control of party. This is because the Claimant was under the ‘best endeavour’ obligation to make the delivery of the specified goods on time. Mere silence on the part of Respondent to the letter written by Claimant asking for an extension of time does not qualify as acceptance to the same. Moreover, in case of instantaneous communication, acceptance is complete only when the offeree accepts the offer and communicates it to the offeror. The contract may be performed by the promisor or any other person nominated on his behalf, but the liability for non-performance of contractual obligations always remains on the promisor. The Claimant cannot bring in evidence from a private arbitration to an altogether different arbitration in order to prove the intention of Respondent as it is barred by the inherent nature of privacy in arbitration. Furthermore, the Respondent is entitled to avoid the contract as it had been procured by the Claimant through bribery and corrupt practices were involved. Therefore, the Respondent can terminate the contract.

Arguments Advanced

I. The Tribunal Does Not Have Jurisdiction Over The Claims Brought Before It.
Respondent contends that the Tribunal does not have jurisdiction over the matters brought before it. The undertaking of the Claimant does not amount to an investment [A] and the Tribunal does not have jurisdiction over contractual claims because of an exclusive dispute resolution clause in the contract [B]. Further, contractual breaches do not lead to a violation of the Treaty Concerning the Encouragement and Reciprocal Protection of Investment (“BIT”) in the present matter [C] and the Multi-Tier Arbitration Clause in the contract precludes jurisdiction of this Tribunal [D]. Finally, the issue of expropriation is based on corruption and the Tribunal does not have jurisdiction over it [E].
The undertaking of the Claimant does not amount to an investment.
The undertaking of the Claimant under the Contract does not amount to an investment under the definition of “investment” contained in the BIT. A contract for the sale of goods cannot be considered as an investment. In the case of Joy Mining v. Egypt, it was noted that in 1999, ICSID refused to register a request for arbitration of a dispute arising out of a supply contract for the sale of goods. Also in 1985 the Secretary General of ICSID refused a request of arbitration as there was existence of mere commercial sale and this did not fall under the definition of investment. In this case, there was a contract between the Claimant and the Respondent State for the supply of electronic equipment necessary for the Games. It therefore was a mere supply contract for commercial sale and did not amount to an “investment” under the definition of the BIT. Hence the Tribunal does not have jurisdiction with regards to disputes arising out of the undertaking of the Claimant
The Tribunal does not have jurisdiction over contractual matters.
The Tribunal does not have jurisdiction on contractual disputes because of an exclusive dispute resolution clause [1] and the terms of the contract are broad enough to incorporate associated claims [2]. Arguendo, if both forums have jurisdiction, the one constituted by the contract should prevail. [3]
The Tribunal does not have jurisdiction over contractual disputes because of an exclusive dispute resolution clause.
In a case where the essential basis of a claim brought before an international tribunal is a breach of contract, the Tribunal will give effect to any valid choice of forum clause in the contract. The essential or fundamental basis of the claims is contractual in this case and the claims regarding the performance of the contract and damages are all purely contractual claims. Further, this tribunal does not have jurisdiction where the parties have agreed to submit to an exclusive dispute resolution mechanism in the contract, under the principle of pacta sunt servanda. An international tribunal cannot have jurisdiction over claims for a breach of a particular contract not containing a clause for such arbitration regardless of whether or not the Tribunal has jurisdiction over related claims arising under a bilateral investment treaty.

The terms of the contract are broad enough to incorporate associated claims.
The term “arising out of, in connection with, or in conjunction with” in the contract is universally regarded as a broad clause. Courts and tribunals have consistently held that the “arising out of or relating to or in connection with” formulation encompasses any and all disputes touching on the contract in question regardless of whether they sound in contract, tort, statute or a treaty. A clause that is worded “all disputes arising in connection with the present contract” must be construed to encompass a broad scope of arbitral issues and every dispute between the parties that has a significant relationship to the contract regardless of the label attached to the dispute. Therefore this tribunal does not have jurisdiction over such claims as the contract between the parties had similar wording.
Arguendo, if both forums have jurisdiction, the one under the contract should prevail.
The principle of generalia specialibus non derogant (general words do not derogate from special words) should apply: the specific agreement of the contract takes precedence over the general agreement in the BIT and therefore the dispute should be subject to the resolution as given in the contract and not the BIT. Even if both had jurisdiction in the particular matter, the contractual dispute resolution mechanism should prevail because the parties are identical and claims for breach of BIT include claims for pure breach of contract.

Contract breaches do not lead to a violation of BIT in the present matter.
The Respondent maintains that the alleged breaches of contract in this case do not lead to a violation of Fair and Equitable Treatment [1] or National Treatment [2] under the BIT and Article X cannot be said to be an umbrella clause which would allow adjudication of contractual disputes [3]. 1. The acts of the Respondent do not violate the National Treatment requirement.
National treatment refers to the post-entry treatment of foreign investors. Determination of the violation of this standard is done in three stages, (1) identification of the relevant subjects for comparison; (2) consideration of the relative treatment each comparator receives and (3) consideration of whether any factors exist that justify any deviation in the treatment. The comparison should be made between the claimant/ or its investment and any other domestic investors or investments operating in the same business or economic sector.
The relevant subjects for comparison in the present matter are Wayne Calona and the local manufacturer as they are in the same sector of producing capacitors, hence, in like circumstances. The difference in treatment by the Government was that the local manufacturer was given additional installation time. However, even if there is differentiation, it is widely accepted that differentiations are justifiable if rational grounds are shown. There were various factors which justify the deviations in the treatment. First, Wayne Calona’s products failed to meet the requirement for the Stadium twice upon testing. Second, Wayne had never produced customized capacitors, and the local manufacturer could produce capacitors which met the Government’s requirement.
The acts of the Respondent do not violate the fair and equitable requirement.
The requirement of fair and equitable treatment has been defined as the good faith principle under which foreign investors expect the host State to act in a consistent manner without arbitrarily revoking any pre-existing decisions. Some of the contexts in which the standard has been applied concern compliance with stability [a], contractual obligations [b], due process [c] and action in good faith [d].
The Government of Calona has maintained the stability in the legal order.
Stability of the legal and business framework in the state party is an essential element of fair and equitable treatment. The parties act on the basis of the law which exists at the time of investment. If the regulation had existed at all times and no de jure change has been made, then the stability of the legal framework cannot be said to have changed. Since the Calonian Prevention of Corruption Act was a law which always existed and is not something which came into being later, there has been no instability in the legal or business framework.
To determine whether violation of this standard has taken place, the reasonableness of the investor’s expectation is taken into consideration and for that reason it is important to consider the vicissitudes of the socio-legal-economic nature. All investments come with a number of additional political risks which the investors expect to face. Hence, detrimental reliance upon legitimate expectation should be adjudged reasonable or unreasonable as per the facts and circumstances. The government is not a guarantor of the investment because investments are exposed to the danger of ruin or extinction if circumstances change and no rights are violated by the government. Thus, where there was tremendous public support to indict Wayne Enterprises for the crime of corruption, the investor’s expectation that no action would be taken against him, is unreasonable.
The Government of Calona has complied with the contractual obligations.
The obligation to observe contractual obligations towards the investor is covered under this standard because pacta sunt servanda and is an obvious application of the stability standard. However, the Claimant’s reliance on this standard would depend on whether the impugned activity by the host state would involve puissance publique, i.e., the activity beyond that of an ordinary contracting party.
In the present matter, the State did not act as a sovereign when it refused to pay. In fact, the Government terminated the contract because of the failure on the part of Wayne Enterprises to comply with the essence of the contract, which was time.
The Government has observed due process in its actions.
There is a violation of due process when there is a denial of justice by the lack of notice or the lack of an opportunity to challenge judicially the propriety of the taking. Breach of contract by a State party does not as such entail a breach of international law unless there is denial of justice by the courts of the state in proceedings brought by the other contracting party. Thus, where Wayne Enterprises could easily approach the courts, they did not. Hence, they cannot claim that there has been denial of justice because they did not even approach the courts.
The Government has adhered to the principle of good faith.
The principle of good faith requires that every right be exercised with honestly and loyalty. In the present case, the state has neither acted fraudulently, or in bad faith nor did it willfully discriminate against the foreign investor, hence there is no prima facie case that this standard has been violated.
Article X is not an umbrella clause which would allow adjudication of contractual disputes.
The Respondent maintains that Article X of the BIT cannot be regarded as an umbrella clause which converts breaches of contract into breaches of the BIT. Such an interpretation is unjustified [a] and the consequences of accepting the Claimant’s arguments would prevent such an interpretation [b]. a. The interpretation of Article X as an umbrella clause is unjustified.
In the interpretation of an Article of the BIT, the object and purpose projected by that Article and by the BIT as a whole must be given effect to. That object and purpose must be ascertained in the first instance, from the text itself of the particular article and the rest of the BIT. Applying these norms, there is no convincing basis for accepting the Claimant’s contention that the particular Article of the BIT has the effect of entitling a Contracting Party’s investor, in the face of a valid forum selection contract clause, to elevate its claims grounded solely in a contract to claims grounded on the BIT and accordingly bring such contract claims to the Tribunal constituted under the BIT for resolution and decision. Also the “obligations” referred to in the BIT do not talk of contractual obligations. The obligations referred to may be embedded in the municipal, legislative or administrative or other unilateral measures of a Contracting Party.
Article 31 of the Vienna Convention on the Law of Treaties, requires an interpretation in good faith of the particular clause of the treaty. The interpretation of Article X, keeping in mind good faith, cannot be said to be an umbrella clause which elevates contractual breaches to breaches of the BIT. Also the object and purpose of such a clause cannot be such, because if Article X were to convert breaches of contract into breaches of BIT, then the investor may at will nullify any freely negotiated dispute settlement clause in a contract.
The consequences of such an interpretation would make it unreasonable for such an interpretation.
If the Tribunal were to accept the argument that Article X was an umbrella clause it would eviscerate the parties’ specific dispute resolution clause in the contract in this case. It has been recognized that Tribunals should avoid interpretations of contract provisions, which would render the clauses totally ineffective or violative of “common sense”. If the Claimant’s logic were to be accepted, then it would negate routine forum selection clauses in thousands of State-investor contracts where States subject to BITs make routine commitment to investor. Any contractual dispute between a State and a foreign party can in that case be referred to international arbitration merely by virtue of the existence of a BIT. Claimant’s interpretation of Article X would effectively emasculate the substantive protection contained in Articles IV, V and VI. Also, since the particular Article is not specifically worded, it cannot be read in the extraordinarily expansive manner as suggested by the Claimant keeping in mind the principle of in dubio pars mitior est sequenda. It has been held that an important principle of international law should not be held to have been tacitly dispensed with by international agreement in absence of words making clear an intention to do so. Hence interpreting Article X as an umbrella clause in unjustified.
The Multi-Tier Arbitration Clause precludes jurisdiction of this Tribunal.
Clause 4 of the contract between Claimant and the Respondent State can be read to be a multi-tier arbitration clause. It states that parties in case of a dispute arising out of a contract will first seek to negotiate a settlement before pursuing alternate remedies. Therefore Claimant cannot directly invoke the jurisdiction of the Tribunal for breaches of contract without first seeking to negotiate a settlement with the other Contracting Party, before pursuing alternate remedies. A tribunal should consider a request for arbitration as inadmissible if the parties agreed in a binding and unequivocal manner to first engage in other steps to resolve their dispute. In this case it is clear from the wording that it is not merely a permissive or non-mandatory provision. Hence the multi-tier dispute settlement clause must be respected when it is not a non-mandatory provision.
The issue of expropriation is based on corruption and the Tribunal does not have jurisdiction over it.
The issue of expropriation raised by the Claimants under the BIT is based on allegations of corruption. Accordingly, the Tribunal constituted under the BIT does not have jurisdiction to decide on the matter. When an issue of bribery was raised previously in arbitration, Tribunals have found a lack of jurisdiction over the dispute. When corruption is alleged by one of the parties, the criminal law of the lex contractus has to be applied. In this case, the law of the Respondent State is to be applied and the jurisdiction for doing the same vests with the Courts of the Respondent State. The Courts have already ruled on the particular matter dismissing the appeals of the Claimant against the measures of expropriation and hence the matter cannot be brought to the Tribunal constituted under the BIT.

II. The actions of the government of Calona including the seizure of Wayne Calona’s assets, did not result in violation of the BIT as it does not constitute expropriation.
The Respondent contends that the actions of the Government of Calona do not violate the BIT. This is because the actions of the Government do not amount to expropriation [A]; and alternatively, the expropriation is legal under the BIT [B]. A. The actions of the Government of Calona do not amount to expropriation.
The Respondent asserts that the impugned acts of the Government of Calona do not amount to expropriation since the seizure of assets was a temporary measure [1], as the State terminated the contract in the capacity of a contractual party [2]; and as the regulation is within the State’s police powers [3]. 1. The seizure of Wayne’s assets was a temporary measure.
An expropriation occurs only when there is a lasting removal of the ability of an owner to make use of its economic rights, i.e., when it is ‘permanent’ and ‘irreversible’. The freezing of properties and seizure of assets was only an interim order passed by the lower court, and hence, temporary. Therefore it does not amount to expropriation.
Termination of contract would not lead to expropriation as the State acted as a contractual party.
A contractual breach can be a confiscatory measure only if the state acted as a sovereign or puissance publique. A mere refusal to make contractual payments or non-performance of a contractual obligation does not amount to expropriation. In the present case, the State acted in its contractual capacity to terminate the contract on legitimate grounds of breach of essential terms by Wayne Enterprises, hence it cannot be said to have acted in its sovereign capacity.
The State action is a non-compensable regulation within police powers.
The exercise of police powers precludes the measure being regarded as expropriatory when it is a non-discriminatory regulation for a public purpose or a recognised social purpose or the general welfare. Expropriation in pursuance of a policy calculated to enhance social justice within the community can properly be described as being ‘in the public interest’. The seizure of properties for legal proceedings, forfeiture for crime does not amount to expropriation. Foreign investors should not unjustly enrich themselves by conducting themselves in a manner detrimental to the general welfare.
In the present matter, the properties have been seized with a view to tackle corruption which is to enhance social justice in the socialist welfare State of Calona. Hence, it is a regulation for a genuine public purpose which resulted in forfeiture for criminal charges of corruption.
The actions of the Government do not amount to indirect expropriation.
The acts of the Government do not amount to indirect expropriation because they do not fulfil the requirements under Article VI of the BIT as well as other elements of indirect expropriation. Thus, the acts do not amount to expropriation because the measures are not severe in light of their purpose and so they can reasonably viewed as having been adopted and applied in good faith [a]; the governmental acts are proportional to the object which is a bon fide public purpose [b] and the measure was not discriminatory [c]. a. The measures are not severe in light of their purpose and so they can reasonably be viewed as having been adopted and applied in good faith.
The assumption of control by a government does not automatically justify a conclusion that the property has been taken by the government. Regardless of the magnitude of its effect on an investment, a legitimate public purpose may suffice to cast a measure as being in the nature of the normal exercise of police powers. Governmental measures culminating in economic consequences could be justified under the sovereign right of the state to act for a social purpose. Even if the regulation results in a total deprivation of value, the State is not responsible for loss of property or for other economic disadvantage resulting from forfeiture for crime since it is for a public purpose.
Therefore, regardless of the intensity or the effect of deprivation of economic benefit, if a regulation is made within the police powers of the State for a public purpose, then it would not result in expropriation. Hence, property can be forfeited for the purpose of criminal charges of corruption without it amounting to expropriation.
The impugned governmental acts are proportional to the object and which is for a bon fide public purpose.
There must be a reasonable relationship of proportionality between the means employed and the aim sought to be realized by any measure depriving the person of his possession. Expropriation can be required for public good or public welfare. Generally, a host country’s determination of what is in its public interest is accepted. It is not the Tribunal’s role to substitute its own judgment for the discretion of the government of what are the imperatives of public need or of national interest. Therefore, whereas in the present case, the Government of Calona believes that corruption must be dealt with a heavy hand, it cannot be disputed as not serving a public purpose. Judicially trying the enterprise for criminal charges is the social purpose for which the interim order was passed by the Judiciary. This was proportional to the object, which was public purpose, of the socialist welfare State of Calona.
The measure was not discriminatory.
The intentionally discriminatory nature of the state measures aimed at excluding foreign control from the host state market would result in establishing expropriation. The concept of discrimination entails two elements; first where the measures directed against a particular party must be for reasons unrelated to the substance of the matter, and second, discrimination entails like persons are being treated in an unequal manner. Political motive per se does not constitute a sufficient proof of a purely discriminatory measure.
There was no political motive behind the seizure of property. Being a socialist welfare State, the Government, filed charges only after the investigation was carried out by the Special Bureau of Investigation and not merely on the basis of political support being on the side of the Communist Party of Calona. The measure was therefore, based on an investigation and for a public purpose. It was in no way intended to accrue benefits to any local manufacturers. This is seen from the fact that the Government seized only Wayne Calona’s property which was based in Calona itself and not Wayne Enterprises. This shows that the seizure was to indict only those were found corrupt by the enquiry.
Argunedo, even if the acts amount to expropriation by the Government of Calona, it is legal.
The State has the right to expropriate national and alien property as an expression of its economic sovereignty. However, when expropriation is in breach of contractual or treaty obligations, it has to be considered illegal. It is contended by the Respondent that even if the acts amount to expropriation, they are legal because the impugned actions do not violate the requirements under the BIT which are essential under international law such as public purpose, non-discrimination, compensation [1] and due process [2]. 1. Public purpose exempts the Government from the requirement to compensate.
Expropriation in response to criminal conduct by a foreign investor or in response to a violation of penal or other laws of a host country is legitimate and is not compensable as compensation will negate the punitive purpose behind these takings. Also, the notion of ‘police powers’ is interpreted broadly, so that bona fide regulations such as imposition of criminal penalties exclude the right to compensation. Hence, seizure of Wayne Calona’s properties for criminal charges would not require compensation.
There has been no violation of the principles of due process.
In the present case, the expropriation was done by an order of the judiciary and by observance of the principles of due process. In fact, there were interim appeals that were filed against the interim order of seizure, which was speedily dismissed by both the Court of Appeals as well as the Supreme Court of Calona. Hence, Wayne cannot allege denial of justice or an opportunity to challenge the orders before the judiciary.

III. The Respondent is entitled to avoid the contract.
The Respondent submits that Claimant did not comply with the terms of the contract in providing reasonable alternatives in working condition, thereby giving Respondent a right to avoid the contract [A]. Claimant is also liable for unreasonable delay in delivering the original consignment [B]. Further, Claimant cannot use information from a different private arbitration before the present tribunal [C] and the contract is void on the grounds of corruption [D]. A. Respondent can avoid the contract on the ground of defective alternatives provided by the Claimant, which were not in compliance with the essential terms of the contract.
Claimant’s misrepresentation gives rise to a right to avoid the contract [1]; the contract in issue was fundamentally breached [2]; the stipulation in the contract for sale is a condition [3]; there exists an implied term as to the fitness of goods when reliance is placed on seller’s skill and judgement [4] and the contract is not divisible [5]. 1. The Claimant’s misrepresentation gives rise to a right to avoid the contract.
A person who has been induced to enter into a contract is entitled to the remedy of rescission or to damages in lieu of rescission. When there has been an innocent misrepresentation; the party misled may plead the misrepresentation as a defence to an action against him for specific performance of the contract. Thus, it will be refused where the party against whom it is sought would not have entered into the contract but for misrepresentation. In the instant case, Claimant made a representation that industry-standard capacitors are being generally used in floodlights but those statements proved false as the capacitors provided were unable to handle the load of floodlights. Therefore, Respondent, due to its reliance on the misrepresentation, can avoid he contract.
Claimant has fundamentally breached the contract by not providing capacitors which could handle the load of the floodlights.
A fundamental breach occurs when the term which the parties have agreed either expressly or impliedly and which goes to the root of the contract is breached and which thus, allows the innocent party to treat itself as discharged. Fundamental breach is a matter of construction based on the intention of the contracting parties. In the present case, the contract specified that all capacitors even if they do not conform to the technical specifications provided in the Annex 1 of the contract, must fit the bill i.e. they must be working or capable to handle the load of floodlights. Therefore, Claimant breached the essential term of the contract, as industry-standard capacitors were not able to handle the load of floodlights and hence Respondent can validly avoid the contract.
Stipulation for the sale of goods was ‘condition’ a breach of which by the Claimant gives rise to a right to avoid.
A condition is a stipulation essential to the main purpose of the contract, breach of which give rise to repudiate the contract and to claim damages. When there is a contract of sale of goods by description, there is an implied condition that the goods correspond with the description. The buyer is not bound to accept and pay for the goods which are not in accordance with the description of the goods. Respondent contracted for industry-standard capacitors which needed to be in workable condition. This was a necessary condition to which Claimant was privy to. The essential condition was not complied with by the Claimant and hence Respondent can avoid the contract.
Reliance on seller’s skill and judgment raises an implied condition of fitness.
In the case of Ashford Shire Council v. Dependable Motors Proprietary Ltd., the Court stated that when the buyer expressly or by implication makes known to the seller the particular purpose for which the goods are required so as to show that the buyer relies on the seller’s skill and judgement and the goods are of description which it is in the course of seller’s business to supply, there is an implied condition that the goods shall be reasonably fit for such purpose. The particular purpose must be made know so as to show reliance on seller’s skill and judgement to supply goods. In the present case Respondent relied on the skill and judgement of the Claimant in supplying goods which indicates that there was an implied term about the fitness of goods. But the subsequent failure of capacitors to comply with the fitness, which was promised by the Claimant, provides reasonable opportunity to Respondent to avoid the contract.
The obligation imposed on the Claimant by the contract is not divisible.
The obligation is not divisible, when it must be completely performed before the other party is obliged to perform. Any breach of the ‘entire’ obligation would destroy the commercial point of exchange, so that the whole party’s side of the bargain is the necessary condition for the performance of the other. The result of failure to perform an entire obligation completely and precisely may be to deprive the party in breach of any payment for whatever performance there has been. In the present matter, the obligation imposed by the Respondent was for ‘entire’ obligation as the basic intent of contract, was to showcase the infrastructure of the event hosted by the Respondent State which could have only been possible if the reputed company (Claimant) would have provided all the goods of the reqired quality.
Claimant is liable for the delay in the delivery of the original consignment, thereby giving Respondent a right to avoid the contract.
The contract mandated the timely delivery of the original consignment and therefore, Claimant cannot exclude liability on the term of ‘beyond the control of the party’ [1]; Mere silence on part of the Respondent does not constitute acceptance [2]; Acceptance must be communicated in case of instantaneous communication [3]; and the ‘all best endeavour’ obligation was not complied with by the Claimant [4]. 1. Claimant cannot exclude liability by due to manufacturing issues with its suppliers.
The concept of Force Majeure comes into picture, when a party is excused of non-performance, if it proves that non-performance was due to an impediment beyond its control, and it could not have reasonably been foreseen by it at the time of making of the contract, nor could it have avoided or overcome its consequences. Claimant cannot raise the issue of unavoidable manufacturing issues to exclude liability as the same was reasonably known and foreseen to the parties entering in the contract which can be implied from the letter of Respondent to Claimant stating that supply issues are not uncommon also proving that they were foreseeable while entering into the contract.
Claimant’s silence does not amount to an acceptance to vary the terms of the contract.
When the offeree is silent following the offer of a bilateral contract, a distinction must be drawn between the act of acceptance and communication of acceptance. It is not necessary that acceptance be communicated before it becomes effective, but there must be an act of silence. Thus, offeror cannot bind the offeree against the latter’s will by expressly stipulating that, if the offeree does nothing, he will be bound to a contract, or to a variation of an existing contract. In the present case, contractual terms mandated timely delivery of capacitors. Claimant varied the terms, promising to deliver the capacitors, but with a delay of 20 days. In cases of instantaneous communications, the contract is complete when the acceptance is received by the offeror and the contract is made at a place where the acceptance is received. The analysis of instantaneous communication applies to communication by telex or telephone or fax or email or electronic data exchange. Claimant, therefore, cannot assume acceptance out of Respondent’s silence.
The Claimant did not undertake ‘best endeavors’ as mandated by the contract.
The purpose of a ‘best endeavour’ clause in the contract is not to impose an obligation to achieve a particular objective but rather requires a party to ‘do their best’ in achieving a particular objective. The obligation of best endeavours requires the party to use all the reasonable courses he can. In other words, a party must take all steps which a reasonable person acting in their own interests and desiring to achieve that result would take. The reasoning as to what amounts to best endeavours must be considered at the time of performance or breach of the undertaking and not at the time of the creation of the contract. The Claimant was under the ‘best endeavour’ obligation to make the delivery on time as stipulated in the contract. Instead, Claimant assumed the correctness of its position and did not expend any resources to comply with the contractual stipulation.
The Claimant is liable for the acts of the sub-contractors.
When a contract is of such a nature that no personal skill or superintendence on the part of the promisor is required for its performance, it may as a rule be performed either by promisor himself or by some other proper person nominated by him for the purpose, though in such a case the relationship between the contracting parties remains unaffected and the liability for non-performance remains with the promisor. In the present case, the intention of the Respondent was to only deal with the Claimant who was provided an opportunity to obtain the goods not available with it through a sub-supplier. The incapability of Star Technologies in not providing the goods within stipulated time, does not extinguish the liability of Claimant, being the contracting party.
Documents and evidence from a private arbitration cannot be used in a different arbitration.
In the case of Dolling- Baker v. Merrett, the English court of appeal held that there is an implied obligation of confidentiality arising out of the nature of the arbitration itself and the implied obligation of confidentiality applied to documents prepared and used in the arbitration or disclosed or produced in the course of the arbitration, or transcripts or notes of the evidence in the arbitration of the award. The case of Ali Shipping v. Shipyard ‘Trogir’, accepted the confidentiality of documents and award of the arbitration as inherent in any arbitration but stated certain exceptions to the general rule: The confidentiality is not provided for arbitration documents, if the same is consented by both the parties, required under compulsion of law, with the leave of court, disclosure for protecting the legitimate interest of the arbitrating party and in the interest of public at large. Claimant seeks to rely on another arbitration to highlight on the possible intention of the Respondent. This reliance is barred because of the private nature of the previous arbitration proceedings.
The contract was obtained by the Claimant through bribery and therefore, is void on the ground of corruption.
The host state may be relieved from its contractual obligations from the main contract because of corruption or may sometimes consider it unenforceable. Corruption causes a defect in the consent to the Respondent state. The state is not subject to any contractual obligation concluded by its corrupt official because it was not able freely to exercise its choice. In the present matter, the contract was procured by the Claimant through bribery and therefore, it suffers from this defect of consent. The Respondent can thus avoid the contract as the same is procured with bribery.

Prayer for Relief

In light of the facts of the case, issues raised and arguments advanced, Counsel for Claimant respectfully requests the Tribunal to: 1) Hold that the Tribunal does not have jurisdiction over the present matter. 2) To declare that the actions of the Government of Calona including seizure of Wayne Calona’s assests were not in violation of Calona-Nolania BIT. 3) Hold that the State of Calona is entitled to avoid the contract for the failure of Claimant to fulfil the contractual terms.

All of which is respectfully affirmed and submitted.

Sd/-
Counsel for Respondent

--------------------------------------------
[ 2 ]. Problem File, Annexure 1.
[ 3 ]. Joy Mining v. Egypt, 19 ICSID Review- FILJ (2004), Award, 6 August 2004 at ¶52.
[ 4 ]. ICSID Annual Report, 198512 23 I.L.M. (1984), 237, at p 6.
[ 5 ]. Problem File, Annexure 2.
[ 6 ]. Problem File, Annexure 7, Clause 4.
[ 7 ]. Compania de Aguas del Aconquija S.A. and Compagnie Generale des Eaux v. Argentine Republic, 6 ICSID Reports 340 41 I.L.M. 1135 (2002), Decision on Annulment, 3 July 2002 at ¶ 98.
[ 8 ]. Problem File, Annexure 7, Clause 4; Christoph. H. Schreuer, The ICSID Convention: A Commentary, Edn. II, Cambridge University Press, 2009.
[ 9 ]. Klöckner Industrie-Anlagen GmbH, et al. v. United Republic of Cameroon, ICSID Case No. ARB/81/2, Decision on Annulment, 3 May 1985, Tradex Hellas S.A. v. Republic of Albania, 14 ICSID ReviewF.I.L.J. 161 (1999) Decision on Jurisdiction, 24 December 1996; Salini Costrutorri SpA and Italstrade SpA v. Kingdom of Morocco, ICSID Case No. ARB/00/4, 1 J.D.I. 196 (2002) Decision on Jurisdiction, 23 July 2001, Lanco International Inc. v. Argentine Republic, 40 ILM 457 (2001) Preliminary Decision on Jurisdiction, 8 December 1998.
[ 10 ]. Problem File, Annexure 7, Clause 4.
[ 11 ]. Pennzoil Exploration and Production Co. v. Ramco Energy Ltd., Partial Award in ICC Case No. 7319 of 1992.
[ 12 ]. J.J. Ryan & Son Inc. v. Rhone Poulenc Textile, S.A. 863 F.2d 315, 321 (4th Cir.1988).
[ 13 ]. Problem File, Annexure 7, Clause 4.
[ 14 ]. Southern Pacific Properties (Middle East) Limited v. Arab Republic of Egypt (“SPP”), ICSID Case No. ARB/84/3, Decision on Jurisdiction, 1985.
[ 15 ]. Holiday Inns S.A. and others v. Morocco (“Holiday Inns”), ICSID Case No. ARB/72/1, Decision on Jurisdiction, 12 May 1974.
[ 16 ]. Problem File, Annexure 1, Article V.
[ 17 ]. Problem File, Annexure 1, Article IV.
[ 18 ]. Supra, n. 23.
[ 19 ]. Pope & Talbot, Inc. (U.S.) v. Canada, , 40 I.L.M. 258 (2001) (NAFTA Ch. 11 Arb. Trib. 2000), ¶102.
[ 20 ]. Id.
[ 21 ]. In the matter of Cross Border Trucking Services, No-USA-Mex-98-2008-01, Final Report 6 February 2001.
[ 22 ]. Problem File, ¶19.
[ 23 ]. R Dolzer, ‘Generalklauseln in Investitions schutzvertragen’ in Negotiating for Peace, Liber Amicorum Tono Eitel (2003) 291, at 296-305.
[ 24 ]. Problem File, ¶¶13, 18.
[ 25 ]. Problem File, ¶9.
[ 26 ]. Problem File, ¶19.
[ 27 ]. Stephen Vascianne, ‘Fair and Equitable Treatment’, 70 British Yearbook of Int’l Law 99 (2000); Christoph Schreuer, ‘Fair and Equitable Treatment in Arbitral Practice’, 6 J. World Investment & Trade, 357 (2005); Rudolf Dolzer, ‘Fair and Equitable Treatment: A Key Standard in Investment Treaties’, 39 Int’l Law. 87 (2005); Tarcisio Gazzini, ‘Drawing the Line between Non-compensable Regulatory Powers and Indirect Expropriation of Foreign Investment- An Economic Analysis of Law Perspective’, 7 Manchester J. Int'l Econ. L. 36 2010.
[ 28 ]. TECMED S.A. v. Mexico, (2003) 43 I.L.M. 133 (ICSID (W. Bank) (“TECMED”), ¶ 122.
[ 29 ]. Rudolf Dolzer, The Impact of International Investment on Domestic Administrative Law, International Law and Politics, Vol. 37:953, November 2006.
[ 30 ]. LG & E Energy Corp and ors v. Argentina, (2007) 46 ILM 3.
[ 31 ]. Supra, n.1.
[ 32 ]. Feldman v. Mexico, 18 ICSID Review FILJ (2003) 488, Award, 16 December 2002, ¶ 171.
[ 33 ]. Problem File, ¶24.
[ 34 ]. Generation Ukraine Inc. v. Ukraine, ICSID Case No. ARB/00/9, Award, 16 September 2003.
[ 35 ]. Quinley, K.M., Managing Political Risks, March 2002, The Risk Report, Volume XXIV, No.7, p.1.
[ 36 ]. Chew, P. K. (1994). “Political risk and U.S. investments in China: chimera of protection and predictability?” Virginia Journal of International Law, vol. 34, pp. 615-683.
[ 37 ]. Supra, n. 23.
[ 38 ]. Oscar Chinn Case, (Britain v. Belgium). [1937], P.C.I.J. (Ser. A/B) No. 70.
[ 39 ]. Problem File, ¶9, 24.
[ 40 ]. Noble Ventures v. Romania, ICSID Case No. ARB/01/11, Award, 12 October 2005, ¶ 182; RFCC v. Morocco, 20 ICSID Review-FILJ (2005) 391 Award, 22 December 2003.
[ 41 ]. Impreglio v. Pakistan, 12 ICSID Reports 245, Decision on Jurisdiction, 22 April 2005. (“Impreglio”).
[ 42 ]. Problem File, ¶22.
[ 43 ]. SEDCO Inc. v. Iran, ITL 59-129-3. Iran-U.S. C.T.R., March 27, 1986.
[ 44 ]. Commentaries to the Draft Articles on the Responsibility of States for Internationally wrongful acts, adopted by International Law Commission at its 53rd session 2001, Official Records of the General Assembly, 56trh session, Supplement No. 10 (A/56/10), ch IV.E.2, p.87.
[ 45 ]. Genin v. Estonia, 17 ICSID Review FILJ (2002) 395 Award, 25 June 2001.
[ 46 ]. Problem File, Annexure 1, Article X.
[ 47 ]. SGS Société Générale de Surveillance S.A v. Islamic Republic of Pakistan, ICSID Rev. FILJ 301 (2003) ¶ 165.
[ 48 ]. ADF Group Inc. v. United States of America, ICSID Case No. ARB(AF)/00/1, 6 ICSID Reports, 470, 2003.
[ 49 ]. Supra, n. 20.
[ 50 ]. Id.
[ 51 ]. Article 31, Vienna Convention on the Law of Treaties, 1969, 1155 U.N.T.S. 331, 8 I.L.M. 679.
[ 52 ]. Pan American/BP v. Argentina, ICSID Case No. 03/13, Decisions on Preliminary Objections, 27 July 2006.
[ 53 ]. Holiday Inns S.A. and others v. Morocco (“Holiday Inns”), ICSID Case No. ARB/72/1, 1 ICSID Reports 645 1974.
[ 54 ]. Supra, n. 46.
[ 55 ]. El Paso Energy v. Argentina, ICSID Case No. ARB/03/15, Decision on Jurisdiction, 27 April 2006.
[ 56 ]. Elettronica Sicula SpA (ELSI) United States v. Italy, (1989) ICJ 15 at 42.
[ 57 ]. Alexander Jollies, Consequences of Multi-Tier Arbitration Clauses : Issues of Enforcement, Reprinted from (2006) 72 Arbitration 329–338 Sweet & Maxwell Limited.
[ 58 ]. Id.
[ 59 ]. Problem File, Annexure 1, Article VI.
[ 60 ]. ICC Award No. 1110 of 1963, YCA 1996, at 47 et seq. ,Arb.Int'l 1994, at 282 et seq.
[ 61 ]. Alexis Mourre, ‘Arbitration and Criminal Law: Reflections on the Duites of the Arbitrator’, 22(1) Arb Int’l 95,99 (2006); Matti S. Kurkela, ‘Criminal Law in International Arbitration-Notes to Arbitrators’, ICC Task Force on Criminal Law and Arbitration, March 2006.
[ 62 ]. Problem File, ¶25.
[ 63 ]. SD Myers, Inc. v. Canada, 40 I.L.M. 1408, 1440 (NAFTA Arb. 2000), ¶282.
[ 64 ]. TECMED, Supra n.27; Phelps Dodge Corp. and Overseas Private Investment Corp. and Iran, 10 Iran U.S. C.T.R. 157; Hauer v. Land Rheinland-Pfalz, [1980] 3 C.M.L.R. 42, 13 December 1979.
[ 65 ]. Problem File, ¶25.
[ 66 ]. Waste Management, Inc. v. United Mexican States (II), ICSID Case No. ARB(AF)/00/3, Final Award, 30 April 2004, (“Waste Management”), ¶170.
[ 67 ]. Consortium R.F.C.C. v. Kingdom of Morocco, ICSID Case No. ARB/00/6, Final Award, 22 December 2003.
[ 68 ]. Impregilo, Supra n. 40, ¶260; Azurix Corp. v. Argentine Republic., ICSID (W. Bank) Case No. ARB/01/12, Award, Jul. 14, 2006. (“Azurix”).
[ 69 ]. SGS v. Phillipines, ICSID Case No. ARB/02/6, 8 ICSID Reports 518, 2004.
[ 70 ]. Waste Management, Supra n.64, ¶174.
[ 71 ]. Supra, n. 7
[ 72 ]. Problem File, ¶22.
[ 73 ]. Ben Mostafa, ‘The Sole Effects Doctrine, Police Powers and Indirect Expropriation under International Law,’ 15 Austl. Int'l L.J. 267 2008.
[ 74 ]. Louis B Sohn & Richard Baxter, Draft Convention on the International Responsibility of States for Injuries to the Economic Interests ofAliens, (1961) 55 AJIL 545, at p 553.
[ 75 ]. Saluka v. Czech Republic, UNCITRAL Partial Award 2006, 263; G. Christie “What Constitutes a Taking of Property underInternational Law?” British Yearbook of International Law, 1962 pp. 307-338.
[ 76 ]. Starret Housing Corp. v. Islamic Republic of Iran, 4, Iran-US Cl. Trib. Rep. 122.
[ 77 ]. B. Weston, ‘Constructive Takings’ under International Law: A Modest Foray into the Problem of ‘Creeping Expropriation,; Virginia Journal of International Law, 1975, Volume 16, pp. 103-175 at 112.
[ 78 ]. James v. United Kingdom, (1986) 8 E.H.R.R. 123. (“James”).
[ 79 ]. Restatement of the Law Third, the Foreign Relations of the United States, American Law Institute, Volume 1, 1987, Section 712, Comment g.
[ 80 ]. D.J. Harris et al., Law of the European convention on Human Rights, (1995) at 535.
[ 81 ]. Supra, n. 1.
[ 82 ]. Problem File, ¶1.
[ 83 ]. Problem File, ¶24.
[ 84 ]. Peter Mulchinski, Fedrico Ortino & Christoph Shreuer, The Oxford Handbook of International Investment Law, Oxford University Press, New York, 2008.
[ 85 ]. Tippetts v. TAMS-AFFA Consulting Engineers of Iran, 6 Iran-U.S. C.T.R. 219, 29 June 1984.
[ 86 ]. L Yves Fortier, CC, QC and Stephen L Drymer, ‘Indirect Expropriation in the Law of International Investment: I Know It When I See It, or Caveat Investor,’ 13 Asia Pac. L. Rev. 79 2005.
[ 87 ]. B. Stern, “In Search of the Frontiers of Indirect Expropriation”, in A. W. Rowe (ed. by), Contemporary Issues in International Arbitration and Mediation, Leiden, Martinus Nijhoff Publishers, 2007, p. 29.
[ 88 ]. CME (The Netherlands) v. Czech Republic, 9 ICSID Reports 264, Partial Award, 13 September, 2001.
[ 89 ]. Aisbett, Emma, Karp, Larry, and McAusland Carrol, ‘Compensation for Indirect Expropriation in International Investment Agreement: Implication of National Treatment and Right to Invest’, 2010 Journal for Globalisation and Development, Vol. 1, Issue 2; Azurix, Supra n.66, ¶311; Methanex Corp. v. United States, Final Award, pt. IV, ch. D, 44 I.L.M. 1345 (2005) (NAFTA Ch. 11 Arb. Trib. 2005) ¶7 (“Methanex”).
[ 90 ]. Restatement (Third) of Foreign Relations Law of the United States § 712 Cmt. G (1987); Mugler v. Kansas, 123 U.S. 623 (1887).
[ 91 ]. Problem File, ¶25.
[ 92 ]. Press Compania Naviera S.A. & Others v. Belgium, 101,103 6 ICSID Reports 340 41 I.L.M. 1135 (2002); Sporrong and Lonnroth v. Sweden, (1982) 5 EHRR 85; Case of the former King of Greece and Others v. Greece, (2001) 33 EHRR 21, ¶ 89.
[ 93 ]. P. Malanczuk, Akehust’s Modern Introduction to International Law, 7th Edition, 1997, 205.
[ 94 ]. Norwegian Shipowners' Claims (Norway v. United States), 1 U.N. R.I.A.A. 307, 332 (Perm. Ct. Arb. 1922); Amir Rafat, ‘Applicability of the Public-Purpose Principle to Cases Arising under International Law from the Expropriation of Alien Private Property,’ 43 U. Det. L.J. 375 1965-1966.
[ 95 ]. The Restatement of the Law: The Foreign Relations Law of the United, American Law Institute, 1987, p. 200; James, Supra n.76.
[ 96 ]. Liberian Eastern Timber Corporation v. Liberia, ICSID Case No ARB/83/2, Award 1986.
[ 97 ]. Problem File, ¶¶9, 24.
[ 98 ]. Methanex, Supra n.87, ¶7.
[ 99 ]. Eureko B.V. v. Republic of Poland, 12 ICSID Reports 335, Partial Award and Dissenting Opinion, 19 August 2005.
[ 100 ]. A.F.M. Maniruzzaman, ‘Expropriation of Alien Property and the Principle of Non-Discrimination in International Law of Foreign Investment: An Overview,’ 8 J. Transnat’l L. & Policy 57-59, 67-70.
[ 101 ]. LIAMCO v. Libya, 62 ILR 140, 20 ILM 1 (1981).
[ 102 ]. Problem File, ¶1.
[ 103 ]. Problem File, ¶24.
[ 104 ]. Tarcisio Gazzini, ‘Drawing the Line between Non-compensable Regulatory Powers and Indirect Expropriation of Foreign Investment- An Economic Analysis of Law Perspective’, 7 Manchester J. Int'l Econ. L. 36 2010.
[ 105 ]. GA Resolution 1803 (XVII), 14 December 1962, ¶4.
[ 106 ]. B. H. Weston, “Community Regulation of Foreign-Wealth Deprivations: A Tentative Framework for Inquiry”, in R. S. Miller and R. J. Stanger (eds. by), Essays on Expropriation, Ohio State University Press, 1967, p. 119; 1967 OECD Draft Convention on the Protection of Foreign Property; A. Reinisch, “Legality of Expropriations”, in A. Reinisch (ed. by), Standards of Investment Protection, Oxford, Oxford University Press, 2008, p. 174.; S. P. Subedi, International Investment Law - Reconciling Policy and Principle, Oxford, Hart Publishing, 2008, p. 125.; M. Endicott, ‘Remedies in Investor-State Arbitration: Restitution, Specific Performance and Declaratory Awards’, in P. Kahn, T. W. Wälde (ed. by), New Aspects of International Investment Law, Leiden, Martinus Nijhoff Publishers, 2007, pp. 517-552; de Sabla Claim (US v. Panama), (1933) 6 RIAA 358.
[ 107 ]. H. W. Baade, ‘Permanent Sovereignty Over Natural Wealth and Resources’, in R. S. Miller and R. J. Stanger (eds.), Essays on Expropriation, Ohio State University Press, 1967, pp. 17-18.
[ 108 ]. Supra, Argument Advanced, II, A, 4, c.
[ 109 ]. Supra, Argument Advanced, II, A, 4, b.
[ 110 ]. Ian Brownlie, Principles of Public International Law, 70 (5th ed. 1998); Compañia del Desarrollo de Santa Elena, S.A. v. Costa Rica, ICSID Case No. ARB/96/1, Award of Feb. 17, 2000; Sedco, Inc. V. Nat’l Ir. Oil Co., (1986) 10 Iran- US CTR 180.
[ 111 ]. Lauder (U.S.) v. Czech Republic 9 ICSID Reports 66, Award, 3 September 2001.
[ 112 ]. M. Sornarajah, “The Taking of Foreign Property”, in A. H. Qureshi, X. Gao (ed. by), International Economic Law, Vol. IV, London, Routledge, 2011, p. 21.
[ 113 ]. A. Newcombe, ‘The Boundaries of Regulatory Expropriation in International Law’, in P. Kahn and T. W. Wälde (ed. by), New Aspects of International Investment Law, Leiden, Martinus Nijhoff Publishers, 2007, p. 394.
[ 114 ]. Problem File, ¶25.
[ 115 ]. Halsbury’s Law of England, Fourth Edition, Butterworths Lexis Nexis, London 2002.
[ 116 ]. Lamare v. Dixon, (1873) L.R. 6 H.L. 414.
[ 117 ]. Id.
[ 118 ]. Problem File, Annexure XIII.
[ 119 ]. Problem File, Annexure XVI.
[ 120 ]. Harbutt’s Plasticine Ltd. v. Wayne Tank and Pump Co. Ltd., (1970) 1 QB 477.
[ 121 ]. U.G.S. Finance Ltd. v .National Mortgage Bank of Greece, (1964) 1 Lloyd’s Rep. 446.
[ 122 ]. Problem File, Annexure XIV.
[ 123 ]. Glaholm v. Hays, (1841) 2 M.& G. 257.
[ 124 ]. J.Beatson, Anson’s Law of Contract, 28th edition, Oxford University Press, 2002.
[ 125 ]. Problem File, Annexure XIV.
[ 126 ]. Ashford Shire Council v. Dependable Motors Proprietary Ltd., (1960) 3 W.L.R. 999.
[ 127 ]. Ashington Piggeries Ltd. and Anr. v. Christopher Hills Ltd., (1972) A.C. 441.
[ 128 ]. Problem File, Annexure XIV.
[ 129 ]. Cutter v. Powell, (1795) 101 ER 573.
[ 130 ]. Re Hall & Baker, (1878) 9 Ch. D. 538, at p.545.
[ 131 ]. Problem File, ¶6.
[ 132 ]. Joern Rimke, ‘Force Majeure and Hardship: Application in international trade practice with specific regard to CISG and the UNDROIT principles of international commercial contracts’ Pace review on the Convention on Contracts for International sale of goods, Kluwer (1999-2000), 197-243.
[ 133 ]. Problem File, Annexure XII.
[ 134 ]. Financings Ltd v. Stimson, (1962) 3 All ER 386.
[ 135 ]. Felthouse v. Bindley, (1862) 11 CBNS 869.
[ 136 ]. Fairline Shipping Corpn. v. Adamson, (1975) QB 180.
[ 137 ]. Hanson v. Nelson, 82 Minn 220.
[ 138 ]. Problem File,¶ 10.
[ 139 ]. Problem File, Annexure IX.
[ 140 ]. Entores Ltd v. Miles Far East Corpn., (1955) 2 QB 327 at 333-334.
[ 141 ]. Cf Domb v. Isoz, (1980) 1 All ER 942.
[ 142 ]. Julian Bailey, ‘Unconditional Bank Guarantee’, International Construction Law Review, 2004 I.C.L.R 57.
[ 143 ]. International Holdings Ltd. and Rhodia UK Ltd. v. Huntsman International LLC, (2007) EWHC 292 (Comm).
[ 144 ]. IBM UK Limited v. Rockware Glass Ltd., (1980) FSR 335 (CA).
[ 145 ]. Midland Land Reclamation Ltd. and Leicestershire County Council v. Warren Energy Limited, (1995) ORB No. 254.
[ 146 ]. Problem File, Annex II, ¶ 3.
[ 147 ]. Problem File,¶ 16.
[ 148 ]. British Waggon Co. v. Lea, (1880) 5 QBD 149.
[ 149 ]. Stevenson and Sons v. Maule and Son, (1920) SC 335.
[ 150 ]. Problem File, Annex II, ¶ 5.
[ 151 ]. Dolling- Baker v. Merrett, 1 W.L.R. (Eng. C.A. 1990).
[ 152 ]. Ali Shipping v. Shipyard ‘Trogir’, 1 Lloyd’s Rep. at 651.
[ 153 ]. Problem File, ¶20.
[ 154 ]. Wena Hotels v. Egypt, 41 ILM 896 (2002).
[ 155 ]. American Bell International v. Iran, 12 YB Comm Arb 292.
[ 156 ]. Art. 50, Vienna Convention on the Law of Treaties, 1969, 1155 U.N.T.S. 331, 8 I.L.M. 679.