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memo for FDI Moot

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Team Code IA404

4TH INTERNATIONAL BANKING AND INVESTMENT LAWMOOT COURT COMPETITION, 2015

ASK

IN THE AD-HOC ARBITRATION TRIBUNAL FORMED UNDER THE TREATY AT JAIPUR, SOUTHERIA

IN THE MATTER CONCERNING BILATERAL INVESTMENT TREATY BETWEEN:

CLAIMANT:Posiedon Petroleum and Natural Gas Limited (PPNGL) Southeria

-AND-

RESPONDENT: The Government of the Republic of Southeria

TABLE OF CONTENTS

ABBREVIATIONS5STAETEMENT OF FACTS7ISSUES RAISED10SUMMARY OF ARGUMANTS111.The Tribunal has jurisdiction over the claims submitted by the Claimant.141.1.Jurisdiction has to be determined solely based on criteria mentioned in the BIT.14A.The Tribunal has jurisdiction Rationae Materiae.14B.The Tribunal has jurisdiction Ratione Personae.15C.The Tribunal has jurisdiction Ratione Voluntatis.162.Respondent has breached its obligation to provide fair and equitable treatment162.1.The FET standard in Article 3 of the BIT is an autonomous standard172.2.The respondent has violated the said standard on certain grounds18A.Legitimate expectations and stable predictable legal framework for investment19B.Good faith21C.Arbitrary23D.Respondents measures were unreasonable243.Respondent has violated the Article 5 of the BIT by illegitimately expropriating the claimants property without providing compensation253.1.The actions of the Respondent constitute an indirect expropriation25A.By introducing retrospective tax laws25B.By attaching Eiropa PPNGLs shares in Southeria PPNGL and restricting any sale of share.273.2.Even if the taking is lawful, Respondent owes full and effective compensation as the BIT does not contain any exception to the payment of Compensation283.3.The Police power exception cannot be taken by the Respondents304.Respondent cannot invoke the BITs essential security clause to justify its actions314.1.Respondent is precluded from self -judging article 11(2)31A.Article 11(2) is not self-judging because it is not explicitly declared to be.31B.To interpret a BIT clause as being self-judging would violate international rules on treaty interpretation32C.Treaty provisions that allow international actors to act as judges in their own causes are invalid334.2.Articles on State Responsibility are applicable when determining whether necessity to take action for the protection of essential security interest existed344.3.The Respondent failed to fulfil the conditions set out in Article 25 of Articles on State Responsibility35A.There was no grave and immanent peril35B.The conduct of the Respondent cannot be accepted as the only way36Prayer38

INDEX OF AUTHORITIES

STATUTES, CONVENTIONS AND TREATIES:

Vienna Convention on the Law of treaties (entered into force 23 May 1969)15, 27, 32

Books Referred:

1. Alexandra Diehl, The Core Standard of International Investment Protection (2012)152. Andrew Newcombe and LlusParadell, Law and Practice of Investment Treaties: Standards of Treatment (2009)153. Brownlie, Ian, Public International Law, Oxford University Press, 6th Edition, 2003194. Jeswald W Salacuse, The Law of Investment Treaties (2015)165. Jeswald WSalacuse, The Law of Investment Treaties (2014)156. Kenneth-Vandevelde, United States Investment Treaties: Policy and Practice (Kluwer, 1992)29, 317. Mc Lachlan, Shore & Weigner, International Investment Arbitration: Substantive Principles, (2008)228. OConnor, J.F, Good Faith In English Law, Brookfield USA: Dartmouth Publishing Company,1990209. Rudolf-Dolzer-and-Christoph-Schreuer, Principles of International Investment Law-(Oxford-University Press,-2008)23,2610. Sornarajah Muthucumaraswamy, The International Law on Foreign Investment (3rd Ed 2010)11

Cases Cited:

1. AES Summit Generation Ltd v Republic of Hungary, ICSID Case no ARB/07/22, Award (September 23 2010)21, 342. Ata Construction, Industrial and Trading Company v The Hashemite Kingdom of Jordan, ICSID Case no ARB/08/2, Award (May 18, 2010)213. Azurix Corp v The Argentine Republic, ICSID Case no ARB/01/12, Award ( 14 July 2006)19,284. Bin-Cheng, General Principles of Law as Applied by International Tribunals (Cambridge, 2006)315. Biwater Gauff (Tanzania) Ltd v United Republic of Tanzania, ICSID Case no ARB/05/22, Award (24 July 2008)266. CMS Gas Transmission Company v The Argentine Republic , ICSID Case no ARB/01/8, Award (12 May 2005 )29,347. Compaa Del Desarrollo De Santa Elena, S A v TheRepublic of Costa Rica,ICSID Case no ARB/96/1, Final Award (17 February, 2000)288. Continental Casualty Co v Argentina Republic, ICSID Case no ARB/03/9, Award(5 Sept 2008)179. Enron-Corporation-and-Ponderosa-Assets, L P v-Argentine-Republic, ICSID-Case-no ARB/01/3 , Award(22- May-2007)30,3210. Genin, Eastern Credit Ltd Inc and A S Baltoil v Republic of Estonia, ICSID Case No ARB/99/2, Award (25 June 2001)12, 2311. Lauder (US) v Czech Republic, UNCITRAL, Final Award (September 3, 2002).1812. M C I Power Group L C and New Turbine, Inc v Republic of Ecuador, ICSID Case no ARB/03/6 Award, (31 July 2007)25, 3313. Metalpar S A and Buenos Aires S A v The Argentine Republic, ICSID Case no ARB/03/5, Decision So breJurisdiccionDictada (27 April 2006)1614. Middle East Cement Shipping and Handling Co S A v Arab Republic of Egypt, ICSID Case no ARB/99/6 Award (12 April 2002)2315. Middle East Cement Shipping and Handling Co S A v Arab Republic of Egypt, ICSID Case no ARB/99/6, Award (12 April, 2002)2516. Mondev Intl Ltd v United States, ICSID Case no ARB(AF)/99/2, Award (11 Oct 2002)15,2117. Parkerings - Compagniet A S v Republic of Lithuania, ICSID Case no ARB/05/8, at para1818. S D Myers, Inc v Government of Canada, Partial Award, NAFTA(13 November, 2000)2319. Sempra Energy International v. Argentine Republic, ICSID Case no ARB/02/16, Award (28 September, 2007)25,32,3420. Siemens A G v Argentina Republic, ICSID Case no ARB/02/8, Award(6 Feb 2007)16.2721. Tecnicas Medioambientales Tecmed S A v The United Mexican States, ICSID Case no ARB(AF)/00/2,Award (May 29 2003)2822. Telenor Mobile Communications AS v Hungary, ICSID Case no ARB/04/15 Decision on Jurisdiction (13 September 2006)23

Articles and Reports:

Case Concerning Elettronica Sicula (ELSI), 20 July 1989, ICJ Rep (1989) 1521Case Concerning the Gabcikovo- Nagymaros Project (Hungary v Slovakia), Judgment, I.C.J. Reports 199733Felipe Mutis Tllez, Conditions and Criteria For The Protection of Legitimate Expectations Under International Investment Law, 27 ICSID Rev- 43217,18

LIST OF ABBREVIATIONS

ASRArticles on State Responsibility

ArtArticle

BITEiropa - Southeria Bilateral investment treaty

CILCustomary International Law

DTAADouble Taxation Avoidance agreement

FETFair and equitable treatment

HonbleHonorable

ICCInternational Chamber of Commerce

ICJInternational Court of Justice

ICSIDInternational Convention for settlement of Investment Disputes

ILCInternational Law commission

IMSInternational Minimum Standard

IPOInitial Public Offering

NAFTANorth American Free Trade Agreement

Para/ParasParagraph

PPNGLPoseidon Petroleum and Natural Gas Limited

UNUnited Nations

UNCITRALUnited Nation Commission on International Trade Law

vVersus

VCLTVienna Convention on law of treaties

STATEMENT OF FACTS

IPoseidon Petroleum and Natural Gas Limited (PPNGL) Southeria is one of the largest and arguably the most prominent independent oil and gas exploration and production companies in Southeria, operating in Southeria since 1996.The group has been operating in Southeria for about 15 years It has made extensive discoveries of oil and natural. PPNGL Southeria has also considerably increased its assets in the form of refineries and oil and natural gas transport rolling stock. In 2007, Eiropa PPNGL listed the Southerian part of its business, PPNGL Southeria Limited, on the National and Tongo Stock Exchanges of Southeria raising US$2 billion and retaining 62% holding.IIThe same year the Poseidon Holding company of which Eiropa PPNGL has been the principal subsidiary, decided to reorganize the structure of the group assets by permitting its Australian subsidiary, PPNGL (Aurora), to acquire controlling shareholding in the Eiropa PPNGL, with the result that the Eiropa PPNGLs stake in PPNGL Southeria was to be reduced to 10 percent after the transaction. In 2011 PPNGL (Aurora) sold 40% of PPNGL Southeria shares to Upanishad Resources Private Ltd, a global natural resources company, for approximately US$7.5 billion, retaining a 22% holding. In 2012, it further sold an aggregate 11.5% holding in PPNGL Southeria Limited for a net cash consideration of US$1.3bn, retaining 0.5% shareholding.IIIPPNGL Southeria filed a dispute notice against the Southerian Internal Revenue over a $1.6 billion tax claim for the fiscal year ended March 2007. The dispute notice was filed under the terms of a Eiropa-Southeria Investment Treaty, and the Southerian Government and PPNGL Southeria immediately started negotiations to find a resolution to the dispute. The tax claim related to transactions carried out to reorganise the companys structure in 2007 leading to British Petroleum (Aurora) acquiring controlling shareholding in the British PPNGL, with the result that the Eiropa PPNGLs stake in PPNGL Southeria was to be reduced to 10 percent after the transaction.IV The tax departments investigation, which started in January 2014, has meant that Eiropa PPNGL has not been able to proceed with the sale of its 10% stake in PPNGL Southeria, valued at about $700 million. Eiropa PPNGL was in fact generally restricted from any sale of its stock (valued at US$1.1bn as at 30 June 2014) to PPNGL (Aurora). As a result of the tax notice and embargo, Eiropa PPNGL shares were seen opening down 25% on the day that the news of the dispute went vira

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