IN THE INTERNATIONAL CHAMBERS OF COMMERCE OF FACTS ... Accordance with International Law of the Unilateral Declaration of Independence In ... Armed Activities on the Territory of the

TEAM ALIAS: PADILLA

IN THE INTERNATIONAL CHAMBERS OF COMMERCE

PETER EXPLOSIVE

(CLAIMANT)

v.

REPUBLIC OF OCEANIA

(RESPONDENT)

ON SUBMISSION TO THE INTERNATIONAL CHAMBERS OF COMMERCE

MEMORANDUM for THE CLAIMANT

PETER EXPLOSIVE

-Index of Authorities-

MEMORANDUM for THE CLAIMANT [ ii ]

TABLE OF CONTENTS

TABLE OF CONTENTS ........................................................................................... II

INDEX OF AUTHORITIES ...................................................................................... V

QUESTIONS PRESENTED .................................. ERROR! BOOKMARK NOT DEFINED.

STATEMENT OF FACTS ........................................................................................ XI

SUMMARY OF PLEADINGS ..................................................................................... 1

PLEADINGS AND AUTHORITIES............................................................................. 3

I. THE CLAIMANT IS AN INVESTOR PURSUANT TO ARTICLE 1.2 OF THE EUROASIA

BIT. 3

A. The secession of Fairyland from Eastasia was lawful in the eyes of

International Law........................................................................................................... 3

1. People of Fairyland had the right to self-determination. ........................... 4

2. Secession happened with the free will of the people. ................................... 4

3. Intervention by Euroasia took place through invitation. ........................... 5

B. The Claimant was a national of Euroasia under national as well as

international law. ........................................................................................................... 7

1. The Claimant is a national according to laws of Euroasia. ........................ 7

2. The Claimant is a national of Euroasia under international law. ............. 7

II. WHETHER THE CLAIMANT MAY INVOKE ARTICLE 8 THE EASTASIA BIT

PURSUANT TO THE ARTICLE 3 OF THE EUROASIA BIT. ................................................... 8

A. MFN provisions apply to dispute resolution clauses. .......................................... 9

1. Interpretation of the Most Favored Nation clause by other tribunals has

been broad. ............................................................................................................... 9

2. Other cases, which have taken a contrary approach, should be

differentiated from the present case. .................................................................... 10

B. Text of the MFN clause in the Euroasia BIT. .................................................... 11


MEMORANDUM for THE CLAIMANT [ iii ]

1. Dispute resolution comes within the ambit of ‘treatment’ and ‘activities

related to investment’. ........................................................................................... 11

2. Exclusion clause does not expressly exclude expansion to dispute

resolution provisions. ............................................................................................. 12

III. WHETHER THE CLAIMANT WAS REQUIRED TO COMPLY WITH THE PRE-ARBITRAL

STEPS AS PROVIDED IN ARTICLE 9 OF THE EUROASIA BIT PRIOR TO BRINGING HIS

CLAIM BEFORE THE TRIBUNAL. ...................................................................................... 13

A. Resort to domestic courts not a mandatory requirement. .................................. 13

B. Resort to domestic courts of Oceania would have been futile. .......................... 14

1. Futility of courts of Oceania due to the Executive Order passed on 1st

May 2014. ................................................................................................................ 14

I. THE CLAIMANT MADE A PROTECTED INVESTMENT UNDER ARTICLE 1 OF THE

EUROASIA BIT. ................................................................................................................ 16

A. The investment need not comply with the host nation’s laws and regulations. . 16

B. The Clean Hands Doctrine Is Not A Part Of General Principles Of

International Law......................................................................................................... 18

C. Alternatively, the Clean Hands Doctrine is inapplicable in the present dispute

19

1. Investment was made before the alleged illegality .................................... 19

2. The high threshold for proving corruption has not been met. ................. 19

II. RESPONDENT HAS VIOLATED THE FAIR AND EQUITABLE STANDARD OF TREATMENT.

20

A. The fair and equitable standard of treatment is higher than customary

international law .......................................................................................................... 21

B. The Claimants legitimate expectation were breached by the respondent state’s

conduct ......................................................................................................................... 21

III. THE CLAIMANT’S INVESTMENT WAS EXPROPRIATED BY THE RESPONDENT ..... 22

A. The Effects Of The Executive Order Are Indirectly Expropriatory In Nature. .. 22

B. The Executive Order is not an exercise of police powers of state. .................... 24


MEMORANDUM for THE CLAIMANT [ iv ]

C. In any event, the measure is not covered under Article 10 of the Euroasia BIT.

25

1. The Determination of threat to international peace and security cannot

be done without a formal determination of the United Nations Security

Council. ................................................................................................................... 25

2. The provision cannot be considered a self-judging exception in the

absence of an express provision. ...................................................................... 26

3. The Sanctions are violative of international law as they do not meet the

conditions of necessity under Article 25 of the RSIWA. .................................... 28

IV. THE CLAIMANT HAS NOT CONTRIBUTED TO THE DAMAGE SUFFERED BY HIS

INVESTMENT AND IS OWED FULL COMPENSATION. ............................................................. 30

A. The Executive Order amounts to an internationally wrongful act. ................... 30

B. There has been no willful or negligent blamable conduct on behalf of the

Claimant ....................................................................................................................... 31

C. Alternatively, there is no causal link between the acts of the Claimant and the

damage suffered by his investment. ............................................................................. 32

PRAYER FOR RELIEF ................................................................................... 34


MEMORANDUM for THE CLAIMANT [ v ]

INDEX OF AUTHORITIES

Cases

Abaclat and Others v. Argentine Republic .............................................................................. 13

Accordance with International Law of the Unilateral Declaration of Independence in Respect

of Kosovo, Advisory Opinion, I.C.J. 2010 (July 22), p. 403, 423, para 123. ........................ 4

Accordance with International Law of the Unilateral Declaration of Independence In Respect

Of Kosovo, Advisory Opinion, I.C.J. 2010 (July 22). ........................................................... 5

ADC Affiliate Limited and ADC & ADMC Management Limited v. The Republic of

Hungary, Award, ICSID Case No. ARB/03/16 ................................................................... 24

ANDREW PAUL NEWCOMBE LAW AND PRACTICE OF INVESTMENT TREATIES : Standards of

Treatment, 358 ..................................................................................................................... 24

Armed Activities on the Territory of the Congo (Democratic Republic of the Congo v.

Uganda), Judgment, I.C.J. Reports 2005 (19th Dec.), p. 168 para , at 43-45 ......................... 6

AWG Group Ltd. v. Argentine Republic, Decision on Jurisdiction, ICSID Case No.

ARB/03/19, (3rd Aug. 2006 .................................................................................................. 12

BG Group Plc. v. The Republic of Argentina, UNCITRAL, 147 (Dec 2007 .......................... 15

Biwater Gauff (Tanzania) Ltd. v. United Republic of Tanzania, Award, ICSID Case No.

ARB/05/22 ........................................................................................................................... 31

Camuzzi Int’l S.A. v. Argentine Republic, Decision on Jurisdiction, ICSID Case No.

ARB/03/7 (10th June 2005) .................................................................................................... 9

Case Concerning East Timor (Portugal. v. Australia.) I.C.J. 1991 (Feb. 22) ............................ 4

Case Concerning East Timor (Portugal. v. Australia.) I.C.J. 1991 (Feb. 22) at p.104. ............. 6

CME Czech Republic B.V. v. The Czech Republic, Partial Award, UNCITRAL, 604 .......... 23

CMS Gas Transmission Company v. The Republic of Argentina, Award, ICSID Case No.

ARB/01/8 ............................................................................................................................. 27

COMPAÑIA DEL DESARROLLO DE SANTA ELENA S.A. V. REPUBLIC OF COSTA RICA,

Award, ICSID Case No. ARB/96/1 ..................................................................................... 24

Daimler Financial Services AG v. Argentine Republic, Dissenting Opinion of Judge Charles

N. Brower, ICSID Case No. ARB/05/1, 19 ......................................................................... 12


MEMORANDUM for THE CLAIMANT [ vi ]

EDF (Services) Limited v. Romania, ICSID Case No. ARB/05/13, 221 ................................ 20

Enron Corporation and Ponderosa Assets, L.P. v. Argentine Republic, Award ICSID Case

No. ARB/01/3 ...................................................................................................................... 27

Fraport AG Frankfurt Airport Services Worldwide v. The Republic of the Philippines,

Award, ICSID Case No. ARB/03/25, 305 ........................................................................... 17

Gabcikovo-Nagymaros (Hungary v. the Slovak Republic), 1997 I.C.J. 7, 51-52 ................... 27

Gas Natural SDG, S.A. v. Argentine Republic, Decision on Jurisdiction, ICSID Case No.

ARB/03/10, ............................................................................................................................ 9

Gas Natural SDG, S.A. v. Argentine Republic, Decision on Jurisdiction, ICSID Case No.

ARB/03/10, 31, .................................................................................................................... 10

Gemplus S.A., SLP S.A., Gemplus Industrial S.A. de C.V. v. The United Mexican States,

Award, ICSID Case No. ARB(AF)/04/3 ............................................................................. 32

Gustav F W Hamester GmbH & Co KG v. Republic of Ghana .............................................. 19

Hochtief AG v. Argentine Republic, , Decision on Jurisdiction, ICSID Case No. ARB/07/31 9

İÇKALE İNŞAAT LIMITED ŞIRKETI v. TURKMENISTAN, ICSID Case No. ARB/10/24

.............................................................................................................................................. 13

Impregilo S.p.A v. Argentine Republic, Award, ICSID Case No. 07/17 ............................ 9, 10

Impregilo S.p.A v. Argentine Republic, Award, ICSID Case No. 07/17, (21st June 2011 ........ 9

Iran-United States, Iran-United States Claims Tribunal, Case No. A/18 1984 (6th April). ....... 8

Joseph Charles Lemire v. Ukraine, Award, ICSID Case No. ARB/06/18, 157 ....................... 32

Legal Consequences of the Construction of a Wall in Occupied Palestinian Territory,

Advisory Opinion, I.C.J. 2004 (July 8), p. 136 para 118 ....................................................... 4

LG&E Energy Corp., LG&E Capital Corp., and LG&E International, Inc .v. Argentine

Republic, Decision on Liability, ICSID Case No. ARB/02/1 .............................................. 27

Maffezini v. Kingdom of Spain, Decision on Jurisdiction, ICSID Case No. ARB/97/7 ........... 9

Maffezini v. Kingdom of Spain, Decision on Jurisdiction, ICSID Case No. ARB/97/7, .......... 9

Middle East Cement Shipping and Handling Co. S.A. v. Arab Republic of Egypt, Award,

ICSID Case No. ARB/99/6 .................................................................................................. 23

Military and Paramilitary Activities in and Against Nicaragua (Nicaragua v. United States),

Separate Opinion of Justice Schwebel, I.C.J. 1986 (June 27) 14, para 98 ............................ 6

MTD Equity Sdn. Bhd. and MTD Chile S.A. v. Republic of Chile, Decision on Annulment

ICSID Case No. ARB(AF)/04/3, 101 .................................................................................. 31

National Grid plc v. Argentine Republic, Decision on Jurisdiction, UNCITRAL, (20th June

2006 ........................................................................................................................................ 9


MEMORANDUM for THE CLAIMANT [ vii ]

National Grid PLC v. The Argentine Republic, Award, UNCITRAL (3rd Nov 2008 ............. 12

Nottebohm Case (Liechtenstein v Guatemala) Second Phase, ICJ Rep 1955 ........................... 8

OCCIDENTAL PETROLEUM CORPORATION AND OCCIDENTAL EXPLORATION AND PRODUCTION

COMPANY V. THE REPUBLIC OF ECUADOR, Award, ICSID Case No. ARB/06/11 ................. 24

Opinion No.4 of the Arbitration Commission of the Peace Conference on Yugoslavia (1992)

31 ILM 150 ............................................................................................................................ 5

Plama Consortium Limited v. Republic of Bulgaria, ICSID Case No. ARB/03/24 ................ 10

Quebec Secesion Reference 1998:265, “Canadian Supreme court held that referendum is way

to asses will of the people to secede.” .................................................................................... 5

Renta 4 S.V.S.A, Ahorro Corporación Emergentes F.I., Ahorro Corporación Eurofondo F.I.,

Rovime Inversiones SICAV S.A., Quasar de Valors SICAV S.A., Orgor de Valores

SICAV S.A., GBI 9000 SICAV S.A. v. The Russian Federation, SCC No. 24/2007, 101 . 11

RosInvestCo UK Ltd. v. The Russian Federation, SCC Case No. V079/2005 ....................... 10

Salini Costruttori S.p.A. and Italstrade S.p.A. v. The Hashemite Kingdom of Jordan; ICSID

Case No. ARB/02/13 ........................................................................................................... 10

Second report on State responsibility, by Mr. James Crawford, Special Rapporteur,pg ......... 18

SGS v. Pakistan ........................................................................................................................ 14

Siemens A.G. v. Argentine Republic, Decision on Jurisdiction, ICSID Case No. ARB/02/8 . 9,

10

Soufraki v. UAE......................................................................................................................... 7

Starrett Housing Corp. v. Iran, 16 IRAN-U.S. C.T.R, at 154. ................................................. 23

Suez, Sociedad General de Aguas de Barcelona S.A ................................................................ 9

Suez, Sociedad General de Aguas de Barcelona S.A. and InterAguas Servicios Integrales del

Agua S.A. v. Argentine Republic, Decision on Jurisdiction, ICSID Case No. ARB/03/17 .. 9

Técnicas Medioambientales Tecmed, S.A. v. The United Mexican States, Award, ICSID

Case No. ARB (AF)/00/2 ..................................................................................................... 23

The Republic of Nicaragua v. The United States of America, ICJ .......................................... 17

Velásquez Rodríguez v Honduras, Inter-American Court of Human Rights, Series C, No 4,

170 (1988 ............................................................................................................................. 31

Veteran Petroleum Limited (Cyprus) v. The Russian Federation, Interim Award, Jurisdiction

and Admissibility ................................................................................................................. 16

Vivendi Universal S.A. v. Argentine Republic/AWG Group Ltd. v. Argentine Republic,

Decision on Jurisdiction, ICSID Case No. ARB/03/19, (3rd Aug. 2006 ................................ 9


MEMORANDUM for THE CLAIMANT [ viii ]

Waguih Elie George Siag and Clorinda Vecchi v. The Arab Republic of Egypt, Award,

ICSID Case No. ARB/05/15, 326 ........................................................................................ 20

Wena Hotels Ltd. v. Arab Republic of Egypt, ICSID Case No. ARB/98/4 ............................ 20

Western Sahara, Advisory Opinion I.C.J. 1975 (Oct. 16) p.12, 33 and 68................................ 4

Western Sahara, Advisory Opinion I.C.J. 1975 (Oct. 16) p.12, para.54-59 .............................. 4

Wintershall Aktiengesellschaft v. Argentine Republic, ICSID Case No. ARB/04/14. ........... 10

Yukos Universal Limited (Isle of Man) v Russian Federation, PCA Case No 227, 1363....... 18

Other Authorities

ARTICLES ON RESPONSIBILITY OF STATES FOR INTERNATIONALLY WRONGFUL ACTS ................ 29

Chatham House International Law Discussion Group, “The Principle Of Non-Intervention In

Contemporary International Law: Non-Interference In A State’s Internal Affairs Used To

Be A Rule Of International Law: Is It Still?”,(28thFeb.2007)................................................ 6

Fourth Report on State Responsibility, Special Rapporteur, , U.N. Doc. A/CN.4/444/Add.1

(25 May 1992). ....................................................................................................................... 4

General Assembly Resolution 3314 (XXIX), art.7, U.N. Doc. A/RES/3314 (Dec. 14, 1974). . 6

OECD Draft Convention on the protection of foreign property of 1967 7 ILM 118 .............. 21

Report of the Special Rapporteur, Manley O. Hudson, on the topic of nationality including

statelessness, 21 February 1952: ILC Ybk 1952 Vol. II p.11; ............................................... 7

Resolution Dated 6th April 2011, on future European International Investment Policy .......... 21

ROSALYN HIGGINS, “THE TAKING OF PROPERTY BY THE STATE: RECENT DEVELOPMENTS IN

INTERNATIONAL LAW” ......................................................................................................... 24

S.C. Res. 541 , (Nov. 18, 1983). ................................................................................................ 6

The Nationality of the Investor Christopher F. Dugan, Don Wallace, Jr., Noah Rubins, Borzu

Sabahi, .................................................................................................................................... 7

YILS (1978) Vol. II, 16, U.N. Doc. A/CN.4/SER.A/1978/Add.1 (Part 2). ............................... 9

Treatises

A CASSESE, SELF DETERMINATION OF PEOPLES: A LEGAL APPRAISAL, 1995. ........................... 4

Agreement between the Republic of Oceania and the Republic of Euroasia for the Promotion

and Reciprocal Protection of Investments art.1.2, Jan. 1 1995, Exhibit C1. ......................... 3

C.F. AMERASINGHE, LOCAL REMEDIES IN INTERNATIONAL LAW, 2 ND ED.

(2004 .................................................................................................................................... 14


MEMORANDUM for THE CLAIMANT [ ix ]

DANIEL THURER & THOMAS BURRI, SELF- DETERMINATION, MAX PLANCK ENCYCLOPEDIA OF

PUBLIC INTERNATIONAL LAW, (Dec. 2008 ............................................................................. 5

G.A. Res. 45/150, U.N. GAOR, 45th Sess., at para 3, U.N. Doc. A/RES/45/150 (Dec. 18,

1990); ..................................................................................................................................... 5

G.A. Res. 2625, U.N. GAOR, 25th Sess, U.N. Doc A/25/2625 (1970). .................................... 4

JAMES BRIERLY,THE LAW OF NATIONS:AN INTRODUCTION TO INTERNATIONAL LAW OF

PEACE, 402 (6th ed., 1963). ..................................................................................................... 6

JAMES CRAWFORD MATERIAL ON THE RESPONSIBILTY OF THE STATE FOR INTERNATIONALLY

WRONGFUL ACTS, UN LEGISLTAIVE SERIES (2012) pg. 83, at para 333-336. ......................... 18

Jan Paulsson, DENIAL OF JUSTICE IN INTERNATIONAL LAW (2005 .......................... 14

JOHN DUGARD & DAVID RAIC, THE ROLE OF RECOGNITION IN LAW AND THE PRACTICE OF

SECESSION: INTERNATIONAL LAW AND PERSPECTIVES 133 (2006). ...................................... 6

MALCOLM SHAW, TITLE TO TERRITORY IN AFRICA: INTERNATIONAL LEGAL ISSUES 91 (1986 ..... 4

MALCOM SHAW, INTERNATIONAL LAW 188(7th ed. 2014); ........................................................ 4

NORAH GALLAGHER &WENHUA SHAN, CHINESE INVESTMENT TREATIES: POLICIES AND

PRACTICE 144 (2009) (considering applying MFN clauses to procedural rights (dispute

settlement) more controversial than applying it to substantive protection) at 348. ............... 9

PROF RUDOLF DOLZER AND CHRISTOPH SCHREUER, “PRINCIPLES ON INTERNATIONAL

INVESTMENT LAW”, 2nd ed., .................................................................................................. 14

Report of the International Law Commission, 53rd Session, 2 Y.B.INT’L.L., 199 (2001 ....... 4

RUDOLF DOLZER & CHRISTOPH SCHREUER, PRINCIPLES OF INTERNATIONAL INVESTMENT LAW

256(2d ed. 2008). ................................................................................................................. 11

RUTH TEITELBAUM,,WHO 'S.AFRAID OF MAFFEZINI? RECENT DEVELOPMENTS IN THE

INTERPRETATION OF MOST FAVORED NATION CLAUSES, 22 J. INT'L ARB. (2005) p. 225,

233 .......................................................................................................................................... 9

TASLIM OLAWALE ELIAS, THE MODEL LAW OF TREATIES 185, (1974). .................................... 4

Treaties

, U.N. CHARTER art. 1 ............................................................................................................. 4

Harvard draft convention on the responsibility of states towards aliens ................................. 23

International Covenant on Economic, Social and Cultural Rights, art. 1, para 1, Dec. 16,

1966, 993 U.N.T.S. 3 ............................................................................................................. 4

Nat’l Grid pic v. Argentine Rep., Decision on Jurisdiction, UNCITRAL ............................... 11


MEMORANDUM for THE CLAIMANT [ x ]

Suez, Sociedad General de Aguas de Barcelona SA and Vivendi Universal SA v. The

Argentine Rep., Decision on Jurisdiction, ICSID Case No. ARB/03/19, 55-59 ................. 11

U.N. CHARTER, art.39. .......................................................................................................... 25

Vienna Convention on the Law of Treaties, art. 31 ................................................................. 11

Statement of facts -

MEMORANDUM for THE CLAIMANT [ xi ]

STATEMENT OF FACTS

INTRODUCTION

On 1 January 1992, the Republic of Oceania (“Oceania”) and the Republic of Euroasia

(“Euroasia”) concluded the Agreement for the Promotion and Reciprocal Protection of

Investments (the “Euroasia BIT”). The Euroasia BIT came into force on 23 October 1995. On

1 January 1992, the Republic of Oceania and the Republic of Eastasia (“Eastasia”) concluded

the Agreement for the Promotion and Reciprocal Protection of Investments (the “Eastasia

BIT”). The Eastasia BIT came into force on 1 April 1993.

INVESTMENT IN OCEANIAN TERRITORY

In February 1998, a Fairyland resident, Peter Explosive (“Claimant”), invested in a decrepit

company Rocket Bombs Ltd. (“Rocket Bombs”). Later, in March 1998, he became a

president and sole member of the Board of Directors of the company. Rocket Bombs had lost

its license in November 1997 before the Claimant acquired it which took a toll on the local

community of Valhalla.

Upon acquiring the company, the Claimant, in order to resume arms production, immediately

sought for an environmental license which required him to upgrade his machinery and hence

applied for a subsidy as it was very expensive. To expedite the decision of the Ministry of

Environment regarding the subsidy, he had a meeting with the President of the National

Environment Authority of Oceania. On 23rd July 1998, he obtained the license.

He managed to obtain multiple contracts, the most vital one being a contract with Euroasia

for arms production entered into on 1st January 1999. Over the years, the company became

very prosperous which benefited the local communities.

SECESSION OF FAIRYLAND BY EUROASIA

Historically, Fairyland belonged to Euroasia. Owing to multiple wars over the years,

Fairyland ended up a part of Eastasia. The people identified themselves as Eastasians which

led to a referendum being held on 1 November 2013 by the people to determine their

Statement of facts -

MEMORANDUM for THE CLAIMANT [ xii ]

territorial status. Upon a unilateral decision and legal intervention by Euroasia on 1 March

2014 and on 23 March 2014 Fairyland was once again a part of Euroasia. The re-unification

was dissented by the state of Oceania and Eastasia though it was recognized by other nation

states.

EXECUTIVE ORDER

On 1 May 2014, the President of Oceania issued an executive order severing economic ties

with Euroasia. The order issued a number of sanctions against certain sectors of economy

including the arms sector. The sanctions targeted Rocket Bombs as it was the only company

that was designated by the sanctions in the arms sector.

This led to a rapid decrease in the value of its shares and led to the deterioration of Rocket

Bombs. Simultaneously, all the Oceanian companies that contracted with Rocket Bombs

issued formal notices, declaring that pursuant to the Executive Order they were no longer

bound by the provisions of the respective contracts and they had no intention to perform

them,

-Pleadings and Authorities-

MEMORANDUM for THE CLAIMANT [ 1 ]

SUMMARY OF PLEADINGS

JURISDICTION

The Tribunal has jurisdiction. FIRST, the Claimant is an investor pursuant to Article 1.2 of

the Euroasia BIT because he has been recognised as a national of Euroasia by the State of

Euroasia. His nationality confirms with the international law because of lawful secession of

Fairyland and reunification with Euroasia. He has also invested in the state of the contracting

party through acquiring shares of Rocket Bomb. SECOND, the Claimant can invoke the MFN

clause to import a more favorable dispute resolution clause from another BIT. The

importation of an Article which does not include the recourse to local courts clause will

relieve the Claimant from the requirement of going to local courts. The tribunal will have

jurisdiction to hear the case on merits. THIRD, should the tribunal not allow to use of MFN

clause to invoke a more favorable dispute resolution clause from the Eastasia BIT, the

Claimants further argue that the pre-arbitral steps were not necessary and thus the Claimant

can directly come before this tribunal. Pre-arbitral steps were not necessary because they

were procedural in nature and did not have a binding nature. The courts of Oceania were not

in a position to provide the Claimant with an effective remedy due to the Executive order.

MERITS

If the tribunal finds that it has jurisdiction and rules on the merits of the case, Peter Explosive

submits that, FIRST, the investment made by the claimant is a protected investment. The

Euroasia treaty does not contain a compliance with law requirement, and the clean hands

doctrine is inapplicable since it is not a general principle of international law. The investment

was completed before the alleged illegality and the high threshold of proof in corruption

cases has not been met. SECOND, Respondent violated the Fair and Equitable Treatment

guaranteed in Article 2 of the Oceania - Euroasia BIT. Respondent did not follow due process

in promulgating the executive order and has violated Peter Explosive’s legitimate

expectations of a stable economic and legal environment. THIRD, Respondent expropriated

Peter Explosive’s investment. The executive order was indirectly expropriatory in nature, and

is not covered under the police powers exception. Further, the expropriation cannot be

justified under Article 10 of the Oceania – Euroasia BIT. The executive order is not in

furtherance of maintenance of international peace and security, and Article 10 is not of a self-



judging nature. Further, Oceania’s act is not precluded from wrongfulness because of

necessity under customary international law. FOURTH, the claimant has not contributed to the

damage suffered by his investment and is owed full compensation.



PLEADINGS AND AUTHORITIES

ARGUMENTS ON JURISDICTION

The tribunal has the jurisdiction to hear and decide the case on merits because (I) the

Claimant is an ‘investor’ pursuant to Article 1.2 of the Euroasia Bilateral Investment Treaty

[‘BIT’]; (II) the Claimant can invoke the Most Favored Nation [‘MFN’] clause in Article 3 of

the Euroasia BIT to invoke a more favorable dispute resolution clause from the Article 8 of

the Eastasia BIT; (III) Alternatively, if the MFN Clause cannot be invoked, then the

Claimant did not have to abide by the pre-arbitral steps as envisaged in Article 9 of the

Euroasia BIT.

I. THE CLAIMANT IS AN INVESTOR PURSUANT TO ARTICLE 1.2 OF THE EUROASIA BIT.

Article 1.2 of the BIT1 requires an investor to be a ‘natural person’ who has ‘invested in the

territory of the contracting party. The Claimant is a ‘natural person’ according to Article 1.2.a

of the Euroasia BIT due to (A) the lawful secession of fairyland with Euroasia, as a

consequence of which (B) he became a national of Euroasia. The Claimant has invested in the

company of Rocket Bombs, which is situated in the country of Oceania by acquiring 100%

shares and complete control over the company.

A. The secession of Fairyland from Eastasia was lawful in the eyes of International

Law.

The Claimant was a resident of Fairyland and in August 2013 the people of Fairyland decided

to secede from the state of Eastasia and reunite with the state of Euroasia. Subsequent to a

referendum that took place in November 2013, followed by an intervention from Euroasia on

1st March 2014, Fairyland seceded from Eastasia and joined Euroasia on 23rd March 2014.

This Secession was legal because [1] it was in furtherance of the people’s right to self-

determination, [2] conducted in consonance with the free will of the people and [3] with the

help from Euroasia through an invitation from Fairyland.

1 Agreement between the Republic of Oceania and the Republic of Euroasia for the Promotion and Reciprocal

Protection of Investments art.1.2, Jan. 1 1995, Exhibit C1.



1. People of Fairyland had the right to self-determination.

The people of Fairyland exercised their right to self-determination to secede from Eastasia.

The right to self-determination is envisaged not only in Article 1.2 and Article 55 of the

United Nations Charter but also is recognized by Courts2, various international instruments3

and is even considered a jus cogens4 norm. The Friendly Relations Declaration of 19705

[‘Friendly Relations’] is an authoritative document, which defines self-determination as a

right of people that lets them ‘freely determine, without external interference, their political

status and to pursue their economic, social and cultural development’6. The International

Court of Justice in the Kosovo Advisory Opinion has opined that declarations of

independence of territories, in furtherance of their right to self-determination, are not

prohibited under international law.7 This principle lets people determine their political status

where such determination may lead to independence or integration with another state8, and

consequently it includes the right to secede from a state9. People of Fairyland can exercise

their right to self-determination to determine their political status, being a group with a

similar ethnic identity.10 In furtherance of the determination of their political status, they

became a part of Euroasia and seceded from Eastasia.

2. Secession happened with the free will of the people.

2Western Sahara, Advisory Opinion I.C.J. 1975 (Oct. 16) p.12, para.54-59; Case Concerning East Timor

(Portugal. v. Australia.) I.C.J. 1991 (Feb. 22), p. 84, para 29; Legal Consequences of the Construction of a Wall

in Occupied Palestinian Territory, Advisory Opinion, I.C.J. 2004 (July 8), p. 136 para 118.

3 See, U.N. CHARTER art. 1; International Covenant on Economic, Social and Cultural Rights, art. 1, para 1,

Dec. 16, 1966, 993 U.N.T.S. 3; International Covenant on Civil and Political Rights, art. 1, para 1, Dec.16,1966,

999 U.N.T.S. 171; TASLIM OLAWALE ELIAS, THE MODEL LAW OF TREATIES 185, (1974).

4 Report of the International Law Commission, 53rd Session, 2 Y.B.INT’L.L., 199 (2001); MALCOLM SHAW,

TITLE TO TERRITORY IN AFRICA: INTERNATIONAL LEGAL ISSUES 91 (1986); Fourth Report on State Responsibility,

Special Rapporteur, para 91 at 511-512, U.N. Doc. A/CN.4/444/Add.1 (25 May 1992).

5 G.A. Res. 2625, U.N. GAOR, 25th Sess, U.N. Doc A/25/2625 (1970).

6 Id.

7 Accordance with International Law of the Unilateral Declaration of Independence in Respect of Kosovo,

Advisory Opinion, I.C.J. 2010 (July 22), p. 403, 423, para 123.

8 MALCOM SHAW, INTERNATIONAL LAW 188(7th ed. 2014); Western Sahara, Advisory Opinion I.C.J. 1975 (Oct.

16) p.12, 33 and 68.

9 Id. (Shaw) at 187.

10 See A CASSESE, SELF DETERMINATION OF PEOPLES: A LEGAL APPRAISAL, 1995.



In furtherance of their right to self-determination, the people of fairyland held a regional

referendum. Right to self-determination can be exercised through expressing the free will of

people.11 A referendum is an effective way of ascertaining the free will of the people and thus

can be used to realize their right to self-determination.12 Historically, Fairyland was a part of

Euroasia13 and majority of the people living in fairyland were of Euroasian origin including

the Claimant. They associated with Euroasia and wanted to re-unite with Euroasia14. The

referendum, which took place on 1st November 201315, voted in favor of leaving the state of

Eastasia and reuniting with their home state of Euroasia16. The legality of the referendum can

be traced through the Eastasian Constitution, which allowed each territory to organize

referendums pertaining to matters within their jurisdiction17. The declaration of independence

by the people of Fairyland is therefore compatible with both, the laws of Eastasia and

International Law. .18 Friendly Relations also announces the duty of the state ‘to respect this

right in accordance with the provisions of the Charter’19 and the act of non-recognition of

people’s right to self-determination by Eastasia goes against the spirit of the UN charter.

3. Intervention by Euroasia took place through invitation.

The International Court of Justice noted in Kosovo Advisory Opinion, that the right to self-

determination is limited only when it clashes with jus cogens norms and violates the same.20

11 DANIEL THURER & THOMAS BURRI, SELF- DETERMINATION, MAX PLANCK ENCYCLOPEDIA OF PUBLIC

INTERNATIONAL LAW, (Dec. 2008), http://opil.ouplaw.com/view/10.1093/law:epil/9780199231690/law-

9780199231690-e873.

12 G.A. Res. 45/150, U.N. GAOR, 45th Sess., at para 3, U.N. Doc. A/RES/45/150 (Dec. 18, 1990); Opinion

No.4 of the Arbitration Commission of the Peace Conference on Yugoslavia (1992) 31 ILM 150; Quebec

Secesion Reference 1998:265, “Canadian Supreme court held that referendum is way to asses will of the people

to secede.”; Supra n.10 “stated that referendum is the basic requirement for the legitimation of secession”

13 Moot Court Compromis, Procedural Order No. 3.

14 Moot Court Compromis, Statement of Uncontested Facts at p. 35.

15 Moot Court Compromis, Statement of Uncontested Facts at 5.

16 Moot Court Compromis, Procedural Order No. 3, at p.61.

17 Moot Court Compromis, Procedural Order No.2 at p.55.

18 “Written statement by US to UN international court in connection with hearings of Kosovo, April 17 2009.;

said by Vladimir Putin, President, Russian Federation, Address Before the State Duma deputies, Federation

Council members, heads of Russian regions and civil society representatives in the Kremlin” (Mar. 18, 2014)

19 Supra n. 5

20 Accordance with International Law of the Unilateral Declaration of Independence In Respect Of Kosovo,

Advisory Opinion, I.C.J. 2010 (July 22).



The clash with jus cogens norms is either restricted to armed intervention and ‘use of force’

as was in the case of Turkish Republic21, or cases where there are grave human rights

violations, promotion of discrimination or apartheid22. In this case there has been no violation

of jus cogens norms as there has been no use of force against Eastasia as the armed force

merely entered the Eastasian territory23. The threshold for the use of force against a state is

very high under international law and has to include elements of coercion or “dictatorial

interference”.24

It is also the duty of states to promote the right to self-determination of people and facilitate

it.25 In fact, under international law, territories have the right to seek support from other states

in order to determine their right to self-determination26 and intervention with consent is not

unlawful27. The same has been applied by the ICJ in Democratic Republic of the Congo v.

Uganda,28 where the state assumed without discussion that a government could consent to the

presence of foreign troops on its territory. The act of sending armed forces was done in

response to a letter by the Fairyl-and authorities on 23rd January 2014 to Euroasia asking for

intervention29 [after being denied their right to self-determination], which was in furtherance

of such right of the people of Fairyland. The intervention was lawful under eyes of

21 S.C. Res. 541 , (Nov. 18, 1983).

22 JOHN DUGARD & DAVID RAIC, THE ROLE OF RECOGNITION IN LAW AND THE PRACTICE OF SECESSION:

INTERNATIONAL LAW AND PERSPECTIVES 133 (2006).

23 Moot Court Compromis, Procedural Order No. 3.

24 Military and Paramilitary Activities in and Against Nicaragua (Nicaragua v. United States), Separate Opinion

of Justice Schwebel, I.C.J. 1986 (June 27) 14, para 98; JAMES BRIERLY,THE LAW OF NATIONS:AN

INTRODUCTION TO INTERNATIONAL LAW OF PEACE, 402 (6th ed., 1963).

25Supra n. 5, “Every State has the duty to promote, through joint and separate action, realisation of the principle

of equal rights and self-determination of peoples”; Case Concerning East Timor (Portugal. v. Australia.) I.C.J.

1991 (Feb. 22) at p.104.

26 General Assembly Resolution 3314 (XXIX), art.7, U.N. Doc. A/RES/3314 (Dec. 14, 1974).

27Chatham House International Law Discussion Group, “The Principle Of Non-Intervention In Contemporary

International Law: Non-Interference In A State’s Internal Affairs Used To Be A Rule Of International Law: Is It

Still?”,(28thFeb.2007),https://www.chathamhouse.org/sites/files/chathamhouse/public/Research/International%2

0Law/il280207.pdf

28 Armed Activities on the Territory of the Congo (Democratic Republic of the Congo v. Uganda), Judgment,

I.C.J. Reports 2005 (19th Dec.), p. 168 para , at 43-45; Military and Paramilitary Activities in and Against

Nicaragua (Nicaragua v. United States), I.C.J. 1986 (June 27) 14 at para 246 “intervention which is already

allowable at the request of the state government” Moot Court Compromis, Statement of Uncontested Facts at p.

35.

29 Moot Court Compromis, Statement of Uncontested Facts at p. 35.



international law as an unlawful intervention should be, as Oppenheim’s International Law

puts it, “forcible or dictatorial, or otherwise coercive, in effect depriving the state intervened

against of control over the matter in question. Interference pure and simple is not

intervention”30.

B. The Claimant was a national of Euroasia under national as well as international

law.

The Claimant, by virtue of the secession became a part of Euroasia and a national of

Euroasia. In 1952, the ILC Special Rapporteur on Nationality considered the effects of

secession on nationality and concluded that the predecessor state is obliged to withdraw the

nationality of individuals of the transferred territory as now the sovereignty has been placed

upon the successor state to confer nationality.31

1. The Claimant is a national according to laws of Euroasia.

It is an accepted principle in International law that nationality of an individual is solely within

the jurisdiction of the state, which by its own legislation may rule upon acquisition of

nationality32. Article 1.2.a of the Euroasia BIT renounces the same principle where, a natural

person is one whose nationality is according to laws of that particular state. The Citizenship

Act of Euroasia allowed for residents of Fairyland to apply for Euroasian nationality. On 23rd

March 2014, under the Citizenship Act of Euroasia, the Claimant was declared a national of

Euroasia by the Euroasian authorities and was subsequently given an identity card and a

passport.33 As is clear from the facts of the case, the Claimant clearly was a national of

Euroasia according to laws of Euroasia.

2. The Claimant is a national of Euroasia under international law.

The Claimant had previously applied for renunciation of Eastasian nationality on 2nd March

201434, which did not comply with the formal procedural requirements of Eastasian law. As

Euroasia does not allow for dual nationality, and the Claimant currently possesses dual

30 SIR ROBERT JENNINGS & SIR ARTHUR WATTS, OPPENHEIM’S INTERNATIONAL LAW, 432, (1920):“the

interference must be forcible or dictatorial, or otherwise coercive, in effect depriving the state intervened

against of control over the matter in question. Interference pure and simple is not intervention” 31 Report of the Special Rapporteur, Manley O. Hudson, on the topic of nationality including statelessness, 21

February 1952: ILC Ybk 1952 Vol. II p.11; 32 Soufraki v. UAE; The Nationality of the Investor Christopher F. Dugan, Don Wallace, Jr., Noah Rubins,

Borzu Sabahi, ISBN :9780379215441 (18th September 2008), can be accessed at

http://oxia.ouplaw.com/view/10.1093/law:iic/9780379215441.book.1/law-iic-9780379215441-chapter-

12?rskey=206f0d&result=1&prd=IC. 33 Moot Court Compromis, Procedural Order No. 2. 34 Moot Court Compromis, Procedural Order No.3.



nationality, the principle of ‘real and effective’ nationality as prescribed in the case of

Nottebohm35 should be used to ascertain his nationality. The tribunal in this case held that

under international law, a person is considered to be a national of the state with which he has

‘stronger factual ties’ and all relevant factors would be considered in the determination of the

same, including but not limited to ‘habitual residence, center of interests, family ties,

participation in public life and other evidence of attachment’36. Later the Iran-US claims37

tribunal heavily relied on the principle of ‘real and effective nationality’ when posed with the

question of dual nationality. The tribunal held that the person’s nationality with the state with

which he has stronger factual ties would be predominant38. The principle of ‘real and

effective’ nationality is applicable in the present case due to the dual nationality of the

Claimant. The Claimant holds a closer connection to the state of Euroasia, as the vast

majority of Fairyland population including the Claimant does not associate with Eastasia and

are of Euroasian origin.39 The family of the Claimant has its roots in Euroasia, as Fairyland

was historically a part of Euroasia prior to World War in 1914 when Eastasia annexed the

territory of Fairyland.40 The center of interest and origin of the Claimant’s family life from

Euroasia along with their will to secede to Euroasia are evidence of the fact that they hold

very close ties with Euroasia and always wanted to be associated with it rather than Eastasia.

Applying the test, the tribunal should consider the Claimant a national of Euroasia according

to international law thus having jurisdiction ratione personae to hear the case on merits.

II. WHETHER THE CLAIMANT MAY INVOKE ARTICLE 8 THE EASTASIA BIT PURSUANT TO THE

ARTICLE 3 OF THE EUROASIA BIT.

The Claimant has not resorted to domestic courts of Oceania for a period of 24 months and

has directly approached the tribunal for dispute resolution. Although the Claimant has not

resorted to domestic courts, the tribunal has jurisdiction rationae materiae by invocation the

MFN clause under Article 3 of the Euroasia BIT, regardless of the requirement under Article

9.2 of the Euroasia BIT. The MFN clause seeks to prevent any discrimination or less

35 Nottebohm Case (Liechtenstein v Guatemala) Second Phase, ICJ Rep 1955 (6th April) p.4.

36 Id.

37 Iran-United States, Iran-United States Claims Tribunal, Case No. A/18 1984 (6th April). 38 Id. 39 Moot Court Compromis, Statement of Uncontested Facts at para 14

40 Moot Court Compromis, Procedural Order 3.



favorable treatment towards all investors regardless of their nationality.41 The Claimant is

invoking the MFN clause to import a more favorable dispute resolution clause embedded in

Article 8 of the Eastasia BIT which does not require the investor to resort to domestic courts

before arbitration. The applicability of invocation of MFN clause is challenged by the

respondent but (A) there is nothing in international law which prohibits the tribunal from

applying MFN clause to issues of jurisdiction and in addition (B) the text of Article 3 of the

BIT shows the intention of the parties to include importation of dispute resolution clauses

within the scope of the MFN clause.

A. MFN provisions apply to dispute resolution clauses.

From the scholarly point of view, it has been quite settled that MFN clause can be used to

bypass procedural requirements, which may seem arbitrary or discriminatory42, as the consent

to arbitration is already imbedded in the basic treaty43. [1] Various tribunals with a similar

factual matrix have interpreted MFN clauses to include importation of dispute resolution

clauses. [2] In cases where tribunals have not allowed MFN to be invoked for importing a

dispute resolution clause, the factual matrix has been different from the case before us and

should not be considered by this tribunal.

1. Interpretation of the Most Favored Nation clause by other tribunals has been

broad.

The jurisdictional scope of the Most Favored Nation clause has been discussed and decided

upon by various tribunals44. The tribunal in the seminal case of Maffezini v. Kingdom of

Spain45, allowed the Claimant, who was an Argentinian to successfully invoke the MFN

41 YILS (1978) Vol. II, 16, U.N. Doc. A/CN.4/SER.A/1978/Add.1 (Part 2).

42 RUTH TEITELBAUM,,WHO 'S.AFRAID OF MAFFEZINI? RECENT DEVELOPMENTS IN THE INTERPRETATION OF

MOST FAVORED NATION CLAUSES, 22 J. INT'L ARB. (2005) p. 225, 233. 43 NORAH GALLAGHER &WENHUA SHAN, CHINESE INVESTMENT TREATIES: POLICIES AND PRACTICE 144 (2009)

(considering applying MFN clauses to procedural rights (dispute settlement) more controversial than applying it

to substantive protection) at 348. 44 Maffezini v. Kingdom of Spain, Decision on Jurisdiction, ICSID Case No. ARB/97/7, (25th Jan. 2000);

Siemens A.G. v. Argentine Republic, Decision on Jurisdiction, ICSID Case No. ARB/02/8 (3rd Aug. 2004);

Camuzzi Int’l S.A. v. Argentine Republic, Decision on Jurisdiction, ICSID Case No. ARB/03/7 (10th June 2005);

Gas Natural SDG, S.A. v. Argentine Republic, Decision on Jurisdiction, ICSID Case No. ARB/03/10, (17th June

2005); Suez, Sociedad General de Aguas de Barcelona S.A. and InterAguas Servicios Integrales del Agua S.A. v.

Argentine Republic, Decision on Jurisdiction, ICSID Case No. ARB/03/17, (16th May 2006); National Grid plc

v. Argentine Republic, Decision on Jurisdiction, UNCITRAL, (20th June 2006); Suez, Sociedad General de

Aguas de Barcelona S.A., and Vivendi Universal S.A. v. Argentine Republic/AWG Group Ltd. v. Argentine

Republic, Decision on Jurisdiction, ICSID Case No. ARB/03/19, (3rd Aug. 2006); Impregilo S.p.A v. Argentine

Republic, Award, ICSID Case No. 07/17, (21st June 2011); Hochtief AG v. Argentine Republic, , Decision on

Jurisdiction, ICSID Case No. ARB/07/31 (24th Oct. 2011). 45 Maffezini v. Kingdom of Spain, Decision on Jurisdiction, ICSID Case No. ARB/97/7, (25th Jan. 2000).



clause in the Argentina- Spain BIT to import a more favorable clause from the Chile-Spain

BIT, which did not require any prior recourse to domestic courts in contrast to the basic

treaty. The tribunal allowed the such importation because it considered that “dispute

settlement arrangements are inextricably related to the protection of foreign investors”46 and

that more favorable dispute settlement procedures should be within the ambit of MFN clause

because international arbitration under treaty law is essentially for the protection of rights of

the investors47. The case of Siemens v. Argentina48 and Gas Natural v. Argentina49 following

the reasoning of Maffezini expanded the scope of MFN to jurisdictional clauses noting that

dispute resolution is a treatment to foreign investors and investments, which is an ‘advantage’

accessible through the MFN clause50. Recently, tribunals in RosInvest v. Russia51 and

Impregilo v. Argentina52 reaffirmed the Maffezini principle. In all these cases, the investors

were allowed to bypass an 18-month period before domestic courts by invocation of the MFN

clause. The tribunals in all these cases allowed the invocation by giving the MFN clause a

broad meaning. The Claimant in the present case is trying to invoke jurisdiction of this

tribunal on similar grounds, not having resorted to domestic courts for a period of 24 months.

The tribunal should consider the interpretation of MFN by these tribunals due the similar fact

scenario.

2. Other cases, which have taken a contrary approach, should be differentiated from

the present case.

Apart from the abundance of case laws in favor of importing jurisdictional clauses, some

tribunals have taken a contrary approach and limited the scope of the MFN clause, inter alia

Plama v. Bulgaria, Salini v. Jordan, Wintershall v. Argentina53. The interpretation of the

tribunals in these cases should be distinguished from the present case for several reasons. In

Plama and Salini cases, the tribunals rejected use of MFN clause to import dispute resolution

clause because the Claimants attempted to replace UNCITRAL rules with ICSID arbitration

by trying to import the dispute settlement provision from a third treaty. The tribunals

46 Id, at 54. 47 Id, at 52-56. 48 Siemens A.G. v. Argentine Republic, Decision on Jurisdiction, ICSID Case No. ARB/02/8 (3rd Aug. 2004). 49 Id. 50 Id, at 102; Gas Natural SDG, S.A. v. Argentine Republic, Decision on Jurisdiction, ICSID Case No.

ARB/03/10, 31, (17th June 2005). 51 RosInvestCo UK Ltd. v. The Russian Federation, SCC Case No. V079/2005, 131-13 (2007).

52 Impregilo S.p.A v. Argentine Republic, Award, ICSID Case No. 07/17, (21st June 2011) 53 Plama Consortium Limited v. Republic of Bulgaria, ICSID Case No. ARB/03/24; Salini Costruttori S.p.A.

and Italstrade S.p.A. v. The Hashemite Kingdom of Jordan; ICSID Case No. ARB/02/13, Wintershall

Aktiengesellschaft v. Argentine Republic, ICSID Case No. ARB/04/14.



observed the MFN clause couldn’t be used to overcome an exception provided in the basic

BIT, where in Salini the basic BIT provided for express exclusion to ICSID arbitration.54

Similarly in Wintershall v. Argentina, the tribunal noted that MFN clause cannot be used to

replace a dispute resolution mechanism with another as it would be difficult to determine

which dispute resolution mechanism is more favorable. The Plama line of cases differ from

Maffezini line of cases and the latter should be taken into consideration by the tribunal in the

present case due to similarity of circumstances of the present case with Maffezini line of

cases. Claimants request that this bypass through the MFN clause should be allowed because

such bypass does not create new rights but just reduces the time frame to invoke arbitral

proceedings, to which parties have already agreed.

B. Text of the MFN clause in the Euroasia BIT.

Article 3 of the Euroasia BIT i.e., the MFN clause should be interpreted in light of the rules

embodied in the Vienna Convention55. [1] Article 3(1) in general enough terms would include

in its scope, importation of jurisdictional issues. The Article given ‘ordinary meaning’ does

not limit the scope of the MFN clause to any particular provisions of the BIT. [2] The

separate limitation or exclusion clause [Article 3(2)] does not exclude dispute resolution from

the scope of Article 3(1).

1. Dispute resolution comes within the ambit of ‘treatment’ and ‘activities related to

investment’.

First, in Suez v. Argentina the tribunal held that the Claimant was entitled to use more

favorable Articles of a third party BIT in establishing his case56 in case the word ‘treatment’

is not defined in the BIT. The word ‘treatment’ does not include the host state’s acceptance of

international arbitration as was declared by the tribunal in Renta 457. Similarly, tribunals such

as in the case of Siemens have previously interpreted clauses drafted in a similar manner,

54 RUDOLF DOLZER & CHRISTOPH SCHREUER, PRINCIPLES OF INTERNATIONAL INVESTMENT LAW 256(2d ed. 2008).

“The two sets of cases may be distinguishable on factual grounds. The cases in which the tribunals accepted the

applicability of the MFN clauses to dispute settlement all concerned procedural obstacles. The cases in which

the effect of the MFN clauses was denied concerned attempts to extend the scope of jurisdiction substantively to

issues not covered by the arbitration clause.”

55 Vienna Convention on the Law of Treaties, art. 31, May 23, 1969. 56 Suez, Sociedad General de Aguas de Barcelona SA and Vivendi Universal SA v. The Argentine Rep., Decision

on Jurisdiction, ICSID Case No. ARB/03/19, 55-59 (3rd Aug. 2006); Nat’l Grid pic v. Argentine Rep., Decision

on Jurisdiction, UNCITRAL, 92-93 (20th June 2006).

57 Renta 4 S.V.S.A, Ahorro Corporación Emergentes F.I., Ahorro Corporación Eurofondo F.I., Rovime

Inversiones SICAV S.A., Quasar de Valors SICAV S.A., Orgor de Valores SICAV S.A., GBI 9000 SICAV S.A. v.

The Russian Federation, SCC No. 24/2007, 101.



where the tribunal has concluded that given an ordinary meaning, the word ‘treatment’ is

wide enough to encompass dispute resolution mechanism. In the Euroasia BIT, the word

‘treatment’ is not defined and given a general meaning would include state’s acceptance to

include dispute resolution in the light of above cases. Second, ‘activities related to

investment’ given ordinary meaning would definitely include dispute resolution as was in

noted in Siemens, where a narrow MFN clause was used to import a jurisdictional clause.58

The MFN clause of Euroasia BIT extends to ‘activities related to investment’ and should be

interpreted in their ordinary meaning and in the light of the Siemens decision. The title of the

document itself is “Agreement between… protection of investments”, where the treaty

includes dispute resolution clauses clearly indicating that dispute resolution clauses are an

activity related to protection of investment.59

2. Exclusion clause does not expressly exclude expansion to dispute resolution

provisions.

Further Article 3(2) provides for certain exclusions to the ambit of application of MFN

including sub-regional agreements, cross border agreements, tax agreements etc. The

principle of expressio unius est exclusio alterius should be applied to Article 3(2) of the

Euroasia BIT. In the case of Suez, the tribunal interpreted Article 4(3) of the Spain- Argentina

BIT 60, which also did not include dispute settlement mechanism in the exclusions clause, and

interpreted that the failure of the parties to provide certain exclusions to the rule of MFN and

not include dispute settlement mechanism in it shows that the MFN includes dispute

settlement mechanism61. Similarly when the UK- Argentina BIT was in question before the

tribunal in the case of National Grid, the tribunal declared that when specific items are

mentioned in the exclusion clause, all others which are not provided for are presumed to not

be a part of the exclusion clause, thus settling the principle of ‘expressio unius est exclusio

alterius’62. In Euroasia BIT, the dispute settlement mechanism is not expressly excluded

58 Supra note 56.; Supra note 48. 59 Daimler Financial Services AG v. Argentine Republic, Dissenting Opinion of Judge Charles N. Brower,

ICSID Case No. ARB/05/1, 19 (15th Aug 2012). 60 ‘The treatment shall not extend to the privileges which either Party may grant to investors of a third State by

virtue of its participation in a free trade area; a customs union; a common market; a regional integration

agreement; or an organization of mutual economic assistance by virtue of an agreement concluded prior to the

entry into force of this Agreement, containing terms similar to those accorded by that Party to participants of

said organization’ 61 Supra note 56; AWG Group Ltd. v. Argentine Republic, Decision on Jurisdiction, ICSID Case No.

ARB/03/19, (3rd Aug. 2006); Supra note 12, at para. 58.

62 National Grid PLC v. The Argentine Republic, Award, UNCITRAL (3rd Nov 2008), Supra note 12, at para.

82.



similar to the above cases. Investment treaties are drafted with precision and it is not possible

for parties to have ‘forgotten’ to add the exception of dispute settlement, as submission to

arbitration is an equally important matter for investors as tax agreements63, if they intended to

exclude the same.

For all the above reasons, the Claimants request the tribunal to allow importation of Article 8

of the Eastasia BIT by the virtue of Article 3 of the Euroasia BIT i.e., the MFN clause.

III. WHETHER THE CLAIMANT WAS REQUIRED TO COMPLY WITH THE PRE-ARBITRAL STEPS AS

PROVIDED IN ARTICLE 9 OF THE EUROASIA BIT PRIOR TO BRINGING HIS CLAIM BEFORE THE

TRIBUNAL.

The Claimant was not required to comply with the pre-arbitral steps as provided in Article

9(2) of the Euroasia BIT as (A) the requirement to go to domestic courts for a period of 24

months was not a mandatory requirement and the tribunal has jurisdiction to hear the case on

merits in spite of the Claimant having skipped domestic Courts. (B) The courts of Oceania

were futile and could not have provided justice to the Claimants.

A. Resort to domestic courts not a mandatory requirement.

The non-compliance with the requirement under Article 9(2) of the Euroasia BIT does not

take away jurisdiction of the tribunal because going to the domestic courts was not a

mandatory requirement. The requirement was a procedural requirement and not a

jurisdictional one. In Abaclat, the tribunal faced with a similar requirement that that the

requirement is a question of admissibility64 and Claimant’s failure to resort to domestic courts

for 18 months prior to arbitration did not preclude them from the jurisdiction of the

arbitration tribunal.65 The tribunal in the case of Turkmenistan noted that when such a clause

is under question, the legal nature of the requirement should be assessed. Assessing the legal

nature of the requirement, the tribunal noted that resort to domestic courts is not a pre-

requisite to arbitration as consent to arbitration is unconditional and comes into effect when

treaty enters into force.66 The tribunal held the requirement as a procedural requirement,

63 RosInvestCo UK Ltd. v. The Russian Federation, Award on Jurisdiction, SCC Case No. V079/2005, 135 (12th

Sep 2010) 64 Abaclat and Others v. Argentine Republic, ICSID Case No. ARB/07/, 496. 65 Supra note 64, at 580. 66 İÇKALE İNŞAAT LIMITED ŞIRKETI v. TURKMENISTAN, ICSID Case No. ARB/10/24, 240.



which would affect the admissibility of the claim and not the jurisdiction of the tribunal.67 In

the present case, the requirement is a question of admissibility and the reasoning of Abaclat

should be referred to. It would not be efficient to send the investor back to domestic courts

and terminate the current proceedings and thus the case should be admissible due to the

futility of Oceania courts and should be heard on merits by the tribunals as was also held in

the case of SGS v. Pakistan68.

B. Resort to domestic courts of Oceania would have been futile.

The requirement of resorting to domestic courts of Oceania is not an effective measure of

dispute resolution for the Claimant under the present circumstances. The usefulness of such a

requirement has always been under question and such a provision has been called

“nonsensical from a practical point of view”69 by tribunals. Schreuer has also noted that this

requirement creates an additional financial burden on the investor apart from leading to delay

in justice. It is majorly unlikely to solve the dispute within the time frame and the investor

will mostly eventually appeal to the arbitration forum after the expiry of the term70.

1. Futility of courts of Oceania due to the Executive Order passed on 1st May 2014.

In the present circumstances, the courts of Oceania were ineffective and could not have

rendered justice to the investor. Even if the Claimants were to resort to domestic courts of

Oceania, it would not have been ‘effective’ due to the Executive Order passed on 1st may

2014, which was not enforceable at law against Oceania71. Futility of courts is an accepted

exception even to jurisdictional requirement of ‘exhaustion of local remedies’ in public

international law72. Although the requirement before in case is not of ‘exhaustion of local

remedies’, the exception would still be applicable. In Abaclat, the decrees and laws in effect

in Argentina precluded the Claimant from bringing claims before the domestic courts and

thus the tribunal held that such resort to domestic courts was mere theoretical.73 Abaclat in its

majority opinion found that the Claimant’s preclusion from the 18-month period before

67 Id. 68 SGS v. Pakistan. 69 Supra note 53, at 224. 70 PROF RUDOLF DOLZER AND CHRISTOPH SCHREUER, “PRINCIPLES ON INTERNATIONAL INVESTMENT LAW”, 2nd

ed., 266. 71 S.9, Moot Court Compromis, Procedural Order No. 3, at p 53. 72 Such as in the case of the customary international law rule of exhaustion of local remedies (see, e.g., C.F.

AMERASINGHE, LOCAL REMEDIES IN INTERNATIONAL LAW, 2 ND ED. (2004), pp. 204-209; Jan

Paulsson, DENIAL OF JUSTICE IN INTERNATIONAL LAW (2005), pp. 101-102).

73 Supra note 64, at 583.



domestic courts would not take away the jurisdiction of the tribunal because the requirement

was inconsistent with the objects and purpose of the treaty, which provided parties with ‘fair

and efficient’ methods of dispute resolution.74 The tribunal used “weighing of interests” of

the parties as the interest of the Claimant is to be provided with an ‘effective’ dispute

resolution forum compared to respondents interest of solving the dispute within their dispute

resolution framework. Weighing the interests of parties, it would be unfair to deprive the

investor the right to effective dispute settlement of arbitration for not adhering to the 24-

month domestic litigation requirement75. In BG group Plc. v. Republic of Argentina, the

regular operations of courts of Argentina came under pressure due to emergency law and the

tribunal ruled that where the recourse to domestic judiciary is unilaterally hindered by the

host state then resort to domestic courts would be absurd and unreasonable under Article 32

of VCLT76. The tribunal also noted that the government of Argentina would have

collaborated with judiciary to pass the judgment in their favor77, rendering the purpose of

domestic courts useless. Even if the Claimant in Oceania courts challenged the

constitutionality of the Executive Order, such would have not helped the Claimants due to

various factors such as deference of courts with the executive branch. It was also highly

unlikely that the tribunal would have set aside the Executive Order and even if it did, it would

have taken 3-4 years78, rendering the resort to courts futile and an ineffective measure, not

being able to provide justice in a period of 24 months.

74 Id, at 579. 75 Id, 580-584. 76BG Group Plc. v. The Republic of Argentina, UNCITRAL, 147 (Dec 2007). 77 Id, at 155. 78 Moot Court Compromis, Procedural Order No. 3, at p 60.



ARGUMENTS ON MERITS

I. THE CLAIMANT MADE A PROTECTED INVESTMENT UNDER ARTICLE 1 OF THE

EUROASIA BIT.

The Claimant made a protected investment as per Article 1.1. Of the Eastasia BIT and on

count of the reasons mentioned below, the Claimant’s investment is a protected one as (A)

The Euroasia treaty does not contain a compliance with law requirement, (B) The Clean

Hands Doctrine is inapplicable since it is not a general Principle International Law. Further,

the investment is a protected one as (C) The investment was complete before the occurrence

of the alleged illegality. Further, the high threshold for proving corruption in an Arbitral

Tribunal has not been met.

A. The investment need not comply with the host nation’s laws and regulations.

It is submitted that the investment in Rocket Bombs Ltd. is a protected investment regardless

of the alleged illegality of the investment. The investment of Peter Explosive cannot be

governed under the provisions of the Eastasia BIT as Mr. Explosive is a national of the state

of Euroasia. Further, The Euroasia BIT does not mention any requirement of compliance with

the host nation’s law. Thus, this requirement cannot be imposed upon the definition of an

investment under Article 1 of the Euroasia BIT. This criterion defines an investment as

“every kind of asset directly or indirectly invested….. (b) Shares of companies or any other

form of participation in a company.”

It’s a well-established principle that Treaties are to be interpreted “in accordance with the

ordinary meaning to be given to the terms of the treaty in their context and in light of its

object and purpose”.79 Further, the tribunal should consider applying the principles laid down

in Veteran Petroleum80 wherein it was held that the principles of international law relevant

for treaty interpretation do not permit an arbitral tribunal to impose new requirements which

were not included by the drafters of the treaty.81 Imposing any further requirement which has

not been explicitly mentioned in the BIT or cannot reasonably be inferred, would amount to

reconstruction and not interpretation of the treaty, thus eroding its ordinary meaning and the

79 Vienna Convention on the Law of Treaties, art. 31, May 23, 1969. 80 Veteran Petroleum Limited (Cyprus) v. The Russian Federation, Interim Award, Jurisdiction and

Admissibility

UNCITRAL, PCA Case No. AA 228, 411 (30th Nov 2009). 81 Id, at 415.



intent underlying the BIT. It is not open to the tribunal to add any requirements which the

parties could have added but which they intentionally omitted to add.82 Arbitral tribunals

have discussed the doctrine of lex specialis in interpreting the definition of investment. It was

held in Fraport vs. Phillipines that “In bilateral investment treaties which incorporate an

ICSID arbitration option, the word "investment" is a term of art, whose content in each

instance is to be determined by the language of the pertinent BIT which serves as a lex

specialis with respect to Article 25 of the Washington Convention.”

Its is submitted that upon application of the rules of Lex Specialis83 to the present dispute, the

term “investment” would have to be construed in light of the language of the BIT. Therefore,

in light of the Article (1) under the BIT, the term is to be strictly construed according to the

applicable definition, limiting the meaning of the term to that which is provided in the BIT.84

The alleged facts where by the mention of a meeting which lead to the beginning of the

production cycle of the Claimants, and thus establishing him as an investor with BIT abiding

invetments should not be looked with bias of good or bad faith. As the tribunal in Saba Fakes

vs. Turkey85 while discussing the legality requirement in international investment law,

observed that “the principles of good faith and legality cannot be incorporated……an

investment might be ‘legal’ or ‘illegal’, made in ‘good faith’ or not, it nonetheless remains an

investment”86. Further, the tribunal also remarked that “bilateral investment treaties are at

liberty to condition their application and the whole protection they afford…to a legality

requirement of one form or another”87.

In the present dispute, The Claimant acquired shares in a company existing within the host

nation of Oceania.88 Imposing the requirement of compliance with the host nation’s laws and

regulation, in the form of the application of the Clean Hands Doctrine would go against the

principles of treaty interpretation as enshrined in International Law. In light of the rule of lex

specialis as explained in Fraport vs Phillipines, the investment of the Claimant is a protected

investment as defined in Article (1) of the Euroasia BIT. The applicable BIT, i.e. the Euroasia

BIT does not mention the requirement for compliance with law for an investment, and this

82 Id. 83 The Republic of Nicaragua v. The United States of America, ICJ (1986). 84 Fraport AG Frankfurt Airport Services Worldwide v. The Republic of the Philippines, Award, ICSID Case

No. ARB/03/25, 305 (16th Aug 2007). 85 Id, at 112. 86 Id. 87 Id, at 113. 88 Moot Court Compromis, Statement of Uncontested Facts at p.32



requirement cannot be reasonably inferred from the intention of the parties. Thus, Mr.

Explosive’s shares in Rocket Bombs Ltd., satisfy the definition of an investment under

Article 1(b) of the Euroasia BIT, as the acquisition of shares in Rocket Bombs Ltd. satisfies

the criterion of an investment under Article 1 of the Euroasia BIT. Further, the investment is

a protected one since legality of the investment is an irrelevant factor.

B. The Clean Hands Doctrine Is Not A Part Of General Principles Of International

Law.

It is submitted that the Clean hands doctrine is in-applicable since it is not a general principle

of law and cannot be applied in the absence of an express provision in the Euroasia BIT.

It is submitted that for a principle to be considered a general principle of international law, it

must be widely accepted and recognized. It has been accepted that the definition of the

concept is “fairly long standing and divided”89 Further, no acceptable definition of Clean

Hands Doctrine has been elaborated under International Law. The tribunal in Yukos vs

Russian Federation90held that the doctrine is not a part of general principles of International

law. It has mostly been employed in the context of diplomatic protection and its implication

has not be regularly advocated.91 Further, the doctrine has been described as being vague92.

It is further submitted through the observation made by James Crawford where -by he

concluded that the clean hands doctrine should not be considered as a new “circumstance

precluding wrongfulness”, which supports the conclusion that “It is not possible to consider

the ‘clean hands’ theory as an institution of general customary law.”93 Therefore, it is evident

that the clean hands doctrine cannot be considered widely accepted, and is thus not a general

principle of international law.

The investment made by Mr. Peter Explosive is a protected one under the Euroasia BIT since

the clean hands doctrine is not considered a part of general principles of international law,

and thus cannot be applied by the tribunal as per Article 9(7) of the Euroasia BIT.

89 Second report on State responsibility, by Mr. James Crawford, Special Rapporteur,pg. 83 para 334. 90 Yukos Universal Limited (Isle of Man) v Russian Federation, PCA Case No 227, 1363 (2014) 91 JAMES CRAWFORD MATERIAL ON THE RESPONSIBILTY OF THE STATE FOR INTERNATIONALLY WRONGFUL ACTS,

UN LEGISLTAIVE SERIES (2012) pg. 83, at para 333-336. 92 ALAIN PELLET AND IAN, [2004] 1 YILC 12, 190. 93 ROUSSEAU, DROIT INTERNATIONAL PUBLIC, p. 177, at para. 17



C. Alternatively, the Clean Hands Doctrine is inapplicable in the present dispute

The clean hands doctrine in the present dispute since the requirements for it have not been

met. (1) Investment was made before the alleged illegality, and (2) The high threshold for

proving corruption has not been met.

1. Investment was made before the alleged illegality

Clean hands doctrine is applicable only when the illegality is manifest at the time of making

the investment. Requirement of “compliance of law” for an investor as a jurisdictional

objection is to be limited to any illegality at the time of initiating of the investment. Tribunals

in both Fraport94 and Gustav95 made this distinction and explained that the Tribunal’s

jurisdictional questions are to be limited to the initiation of the investment and not during the

course of performance of the investment. It has also been observed that further questions of

illegality may be discussed at the merits stage with regards to substantive rights but shall not

bar the jurisdiction of the tribunal.96

As per Article 1(b) of the BIT, Mr. Explosive’s investment is deemed to be complete when he

acquired the shares in Rocket Bombs Ltd. The shares were acquired in February 1998

whereas the environmental license to resume arms production was granted on 23rd July 1998.

The allegations of corruption are with regards to the license granted to Rocket Bombs by the

President of the National Environment Authority, and not the transfer of shares.97

In the present dispute, the Claimant made an investment as defined in the Euroasia BIT98,

since the acquisition of shares alone satisfies the requirement and the investment was free

from any illegality. Since the investment had been made before the alleged illegality, this

precludes the applicability of the Clean Hands Doctrine, and thus the investment made by Mr.

Explosive is a protected investment.

2. The high threshold for proving corruption has not been met.

It is submitted that the allegations of corruption have not been proven to the high threshold

required in International Tribunals.To satisfy allegations of corruption, the allegations

demand clear and convincing evidence. Dealing with corruption, multiple arbitral tribunals

94 Supra note 6, at 345. 95 Gustav F W Hamester GmbH & Co KG v. Republic of Ghana, Award, ICSID Case No. ARB/07/24 (18th June

2010). 96 Id, at 129. 97 Moot Court Compromis, Statement of Uncontested Facts at p.32 98 Agreement between the Republic of Oceania and the Republic of Euroasia for the Promotion and Reciprocal

Protection of Investments art.1(b), Jan. 1 1995, Exhibit C1.



have held that the allegations of corruption must be proved to a high threshold. This burden is

upon the respondent,99 i.e. the party raising the issue of illegality must satisfy this high

threshold of proof for the tribunal to act upon these allegations.100

Corruption, in investment arbitrations has to be proved to a clear and convincing standard of

proof. The Tribunal in EDF Services101 set this high threshold for corruption and observed

that “Corruption must be proven and is notoriously difficult to prove since, typically, there is

little or no physical evidence. The seriousness of the accusation of corruption in the present

case, considering that it involves officials at the highest level of the Romanian Government at

the time, demands clear and convincing evidence.” This standard of proof has been further

applied in disputes dealing with corruption by other International Tribunals.102 In the

Hilmarton case, it was observed that witness testimony alone is not enough to satisfy this

burden. This standard was explained further in the Westinghouse case wherein the tribunal

remarked that failure to show evidence of payments and the existence of an agreement

between the official and the investor fell short of this high standard of proof.

In the present dispute, the respondent has alleged that Mr. Explosive bribed the President of

the National Environment Authority in order to expedite the procurement of the license.103

These allegations are based on the testimony of the President of the National Environment

Authority who has concluded a non-prosecution agreement with the General Prosecutor’s

Office.104 The testimony of the President without any other supporting evidence clearly falls

short of the “Clear and Convincing” standard of proof which is to be employed. Rendering

the clean hands doctrine is inapplicable in the present dispute.

II. RESPONDENT HAS VIOLATED THE FAIR AND EQUITABLE STANDARD OF

TREATMENT.

The Respondent has failed to provide fair and equitable treatment to the Claimant as (A) the

standard set under The Euroasia BIT is higher than customary international law, and (B) the

respondent has violated the legitimate expectations of the Claimant.

99 Wena Hotels Ltd. v. Arab Republic of Egypt, ICSID Case No. ARB/98/4. 100 EDF (Services) Limited v. Romania, ICSID Case No. ARB/05/13, 221. 101 Id. 102 Waguih Elie George Siag and Clorinda Vecchi v. The Arab Republic of Egypt, Award, ICSID Case No.

ARB/05/15, 326 (1st June 2009). 103 Moot Court Compromis, Statement of Uncontested Facts at p.19 104 Moot Court Compromis, Procedural Order No. 3, at (PARA 5)



A. The fair and equitable standard of treatment is higher than customary

international law

It is submitted that as the minimum standard of treatment is treated as a part of customary

international law.105 This was also acknowledged in the parallel terms which were received

under the EU parliamentary Resolution,106 where it was stated that the FET standard is

defined on the basis of level of treatment established by the international customary law.107

However, where the language of the BIT is more expansive, the standard of treatment to be

followed is the one set under the treaty. The current standard of treatment to be followed is

mentioned under Article 2.2 of the Euroasia BIT108 as fair and equitable treatment. This

standard of treatment is wider in scope than the minimum standard of treatment under

Customary International Law and entails good faith, legitimate expectations of the investors

and due process.109 Due process includes the substantive legal right of the investor to be

heard.110

B. The Claimants legitimate expectation were breached by the respondent state’s

conduct

It is submitted that legitimate expectations is considered the central pillar of the Fair and

Equitable Treatment Standard.111 It has been observed that the most important function of the

FET standard is the protection of the legitimate expectations of the investor.112

The legitimate expectations of the investor have multiple components, viz. The objective

conduct of the host state, reliance on this conduct by the investors, and the frustration of an

investor’s expectation by subsequent conduct of the host state. The fair and equitable

standard includes a requirement for the government to maintain a stable legal framework.113

This requirement is a part of the legitimate expectation of the investor. Further, a repudiation

of a contract by the host state amounts to a violation of the fair and equitable treatment

standard.

105 OECD Draft Convention on the protection of foreign property of 1967 7 ILM 118, 120 (1968) 106 Resolution Dated 6th April 2011, on future European International Investment Policy 107 Id. Para 19 108 Article 2.2 Euroasia BIT p. 41 109 RDC vs Guatemala award para 219 110 ADC vs hungary, award para 435 111 Rudolf Dolzer, Fair and equitable treatment : today’s contours, page 17.

http://digitalcommons.law.scu.edu/scujil/vol12/iss1/2/ 112 Electrabel vs hungary decision on jurisdiction para 7.75 113 Occidental vs Ecuador para 183



In the present dispute, the executive order promulgated by the President of Oceania has

imposed sanctions on Rocket Bombs Ltd.114 The sanctions have terminated all contracts with

Rocket Bombs, and banned business operations with them.115 Further, the sanctions were

published without giving the Claimant an opportunity to claim his legal right to be heard and

to protect his investment.116

It is evident that respondent have not followed due process since the Executive Order did not

give the Claimant a reasonable time to claim his legitimate rights and protect his investment.

Further, the termination of the existing contracts is a repudiation of contractual rights of the

investor and thus violate the fair and equitable standard of treatment. Further, the banning of

future business operations with Rocket Bombs Ltd. is a substantial change in the legal

framework of the host nation, and denies the Claimant the right to earn profits from his

investment.

This denial of earning profits from his investment as a result in the change of the legal

framework is in violation of the legitimate expectations of the Claimant. Therefore, it is

evident that the respondent has violated the fair and equitable standard of treatment since the

standard to be followed is higher than the minimum standard of treatment. This standard has

been violated as the respondent has not followed due process, and has violated the legitimate

expectations of the investor.

III. THE CLAIMANT’S INVESTMENT WAS EXPROPRIATED BY THE RESPONDENT

The acts of the Republic of Oceania are expropriatory in nature as (A) The effects of the

executive order are indirectly expropriatory in nature, (B) The measures undertaken by

Oceania are not in furtherance of police powers of state, and (C) In any event, the measures

of the Republic of Oceania are not covered under Article 10 of the Euroasia BIT.

A. The Effects Of The Executive Order Are Indirectly Expropriatory In Nature.

It is submitted that the Executive Order is a measure tantamount to expropriation and is thus

unlawful as per Article 4 of the Euroasia BIT. It is settled law that, Expropriation may be of a

direct, or an indirect nature. An indirect expropriation is deemed to have taken place when

measures taken by a state interfere with the property rights to the extent as to render them

114 Moot Court Compromis, p 36 115 Id. 116 Moot Court Compromis p 57



useless in nature.117 This standard has been mentioned in the Euroasia BIT as well.118 Further,

any substantial deprivation of the rights of use and enjoyment of the property of the investor

is an indirect expropriation.

This standard of “substantial deprivation” is explained as “any unreasonable interference with

the use, enjoyment or disposal of property as to justify an inference that the owner thereof

will not be able to use, enjoy or dispose of the property within a reasonable period of time

after the inception of such interference.” 119

Further in Tecmed120, it was held that an act amounts to an expropriation if due to the actions

of the respondent, the assets involved have lost their value or economic use for their holder.

Measures which neutralize the benefit of the property of the foreign owner are subject to

expropriation claims,121 and interference with the contract rights of the investor, leading to a

termination of the contract by the investors business partners are also considered as indirect

expropriation.122 Further, it is not required that there be a formal transfer of title of the

property. The investor may still retain nominal control and ownership of the property but the

investment would be considered indirectly expropriated if there has been a deprivation of the

use and benefit of the investment.123 Furthermore, a deprivation of rights for a temporary

period of time, and not permanent has also been held to be an expropriatory measure.124

In the present dispute, the executive order imposes sanctions on persons engaged in certain

sector of the economy.125 As a result of this executive order, there has been a rapid decrease

in the value of the shares of the company, deterioration of the business and also an inability

on the part of Mr. Peter Explosive to sell the shares of the company. Further, it makes future

contracts with the investor illegal. In pursuance of the executive order, the business partners

of the investor have terminated their contracts with the company.126

It is manifest that there has been a substantial deprivation of the economic value of the

investment made by Mr. Explosive. Mr. Explosive is not able to enjoy his economic rights

117 Starrett Housing Corp. v. Iran, 16 IRAN-U.S. C.T.R, at 154. 118 Agreement between the Republic of Oceania and the Republic of Euroasia for the Promotion and Reciprocal

Protection of Investments art.4, Jan. 1 1995, Exhibit C1. 119 Harvard draft convention on the responsibility of states towards aliens - article 10 120 Técnicas Medioambientales Tecmed, S.A. v. The United Mexican States, Award, ICSID Case No. ARB

(AF)/00/2, 115 (29th May 2003). 121 CME Czech Republic B.V. v. The Czech Republic, Partial Award, UNCITRAL, 604 (13th Sep 2001). 122 Id at 603. 123 Middle East Cement Shipping and Handling Co. S.A. v. Arab Republic of Egypt, Award, ICSID Case No.

ARB/99/6, 107 (12th Apr 2002). 124 Wena Hotels Ltd. v. Arab Republic of Egypt, Decision, ICSID Case No. ARB/98/4, 98-99 (5th Feb 2002). ; Id. 125 Moot Court Compromis, Statement of Uncontested Facts at 36. 126 Id.



due to the termination of the contracts as a direct result of the executive order dated 1st May

2014. Further, he is also not able to dispose of his property which meets the standard of

substantial deprivation of an investment. The Executive Order has resulted in rapid

devaluation of the shares of Rocket Bombs Ltd. and the Claimants inability to dispose of his

investment is a measure tantamount to expropriation. This devaluation is not temporary in

nature since the request for arbitration was filed in September, 2015.127 Therefore, the

executive order has indirectly and unlawfully expropriated the investment of the Claimant.

B. The Executive Order is not an exercise of police powers of state.

It is submitted that the Executive Order of the President of Oceania is not an exercise of the

police powers of the state since it is discriminatory, unreasonable and disproportional in

nature. The Police Powers of State are the powers of a sovereign state to regulate investment

in pursuance of a public purpose. A state does not incur responsibility for the legitimate and

bona fide exercise of sovereign police powers128. However, this use of police powers is

subject to an analysis of reasonableness and proportionality. These government regulations

must be non-discriminatory in nature.129 Further, substantial deprivation of property rights are

not covered by police powers of a state.130 Regulatory measures must be reasonable in nature.

The measure must be reasonable and appropriate with respect to the goals to be achieved.

The measure must be proportional to the goals of the legislature.131 Proportionality of the

measure is determined by examining the effect, not the intention of the legislature or the

alleged purpose of the measure.132 The administrative goal to be achieved should be balanced

against the investors interests and the true nature and effect of the measure.133 Any regulatory

action is also subject to the due process analysis which includes a reasonable time for the

investor to claim its legitimate rights and the substantive legal right to be heard.134

127 Moot Court Compromis, Request for Arbitration, at 2. 128 ANDREW PAUL NEWCOMBE LAW AND PRACTICE OF INVESTMENT TREATIES : Standards of Treatment, 358 129 Saluka Investments BV (The Netherlands) v The Czech Republic, Partial Award, UNCITRAL, 263 (17th Mar

2006). 130 ROSALYN HIGGINS, “THE TAKING OF PROPERTY BY THE STATE: RECENT DEVELOPMENTS IN INTERNATIONAL

LAW” (1982) 176 Rec. Des Cours, 331 131 Supra note 4, at 122. 132 COMPAÑIA DEL DESARROLLO DE SANTA ELENA S.A. V. REPUBLIC OF COSTA RICA, Award, ICSID Case No.

ARB/96/1, 153 (17th Feb 2000) 133 OCCIDENTAL PETROLEUM CORPORATION AND OCCIDENTAL EXPLORATION AND PRODUCTION COMPANY V. THE

REPUBLIC OF ECUADOR, Award, ICSID Case No. ARB/06/11, 450 (5th Oct 2012). 134 ADC Affiliate Limited and ADC & ADMC Management Limited v. The Republic of Hungary, Award, ICSID

Case No. ARB/03/16, 435 (2nd Oct 2006).



In the present dispute, the Executive Order has only been applied to people working in certain

sectors of the economy. The Executive Order is not in furtherance of any public purpose and

is in fact unreasonable since it is applicable only to Rocket Bombs Ltd. in the arms sector.135

Further, the measure has resulted in a substantial deprivation of property rights of the

Claimant, and the effect of the Executive Order is tantamount to an expropriatory measure.136

The sanctions were published without giving the Claimant an opportunity to claim his legal

right to be heard and to protect his investment.137

Therefore it is evident that the Executive Order cannot be considered as a regulatory measure

protected under the police powers of state since the effect of the order is to substantially

deprive the investor of his property and is thus clearly disproportionate in nature. The

Executive Order also falls short of the due process analysis of the police powers exception

since it did not give the Claimant a reasonable time to claim his legitimate rights and protect

his investment. Therefore, the executive order cannot be considered as a regulatory measure

protected under the police powers exception, and is a measure tantamount to expropriation

under Art. 4 of the Euroasia BIT.

C. In any event, the measure is not covered under Article 10 of the Euroasia BIT.

The Claimant, having taken a measure tantamount to expropriation cannot invoke Article 10

of the Euroasia BIT. It is submitted that the respondent cannot invoke the defence of

Essential Security Interest of the Sate as (1) The determination of threat to international peace

and security cannot be done without a formal determination of the Security Council, (2) The

provision cannot be considered a self-judging exception in the absence of an express clause,

and (3) The requirements for the invocation of necessity Under Article 25 of the Articles on

Responsibility of States for Internationally Wrongful Acts (‘RSIWA’) have not been met.

1. The Determination of threat to international peace and security cannot be done

without a formal determination of the United Nations Security Council.

It is submitted that a determination of a threat to international peace and security can only be

done by the Security Council. A state may not unilaterally determine this and impose

sanctions. Article 39 of the United Nations Charter explicitly mentions that only the Security

Council is authorized to determine the existence of a threat to peace.138 Further, after this

135 Moot Court Compromis, Statement of Uncontested Facts at 36. 136 Id. 137 Moot Court Compromis, Procedural Order No. 2., at 57. 138 U.N. CHARTER, art.39.



determination, the Security Council must make a recommendation with regards to the

measures to be taken “to maintain international peace and security”139 Any sanctions by the

member states are only to be imposed after this determination by the Security Council.140

Any enforcement measures cannot be taken “without the authorization of the Security

Council”.141 Sanctions as envisaged under Article 41 encompass multiple kinds of sanctions

such as, diplomatic sanctions, economic sanctions and military sanctions.142

In the present dispute, it is evident that the Security Council has failed to come to a resolution

with regards to determination of threat to international peace.143 It is also manifest that the

executive order imposes a system of sanctions144 on the state of Euroasia. Further, the state of

Oceania also broke off diplomatic relations with the Euroasia.145

It is submitted that the respondent was in violation of international law since sanctions as

envisaged under Article 41146 have been imposed. Economic and diplomatic sanctions can

only be imposed upon a formal recognition of threat to international peace, and a subsequent

recommendation of the Security Council to impose certain kinds of sanction. It is evident

from the facts of the current dispute that the Security Council has failed to come to a decision

with regards to this declaration and thus, the sanctions cannot be imposed since the

requirements of Article 39 of the UN charter have not been met.147 This unilateral

determination of threat to peace, and subsequent imposition of sanctions by the republic of

Oceania are thus in violation of International Law, and cannot be considered legal.

2. The provision cannot be considered a self-judging exception in the absence of

an express provision.

It is submitted that Article 10 of the Euroasia BIT cannot be considered of a self-judging

nature since there is no express provision to that respect, and as such, the standard of

necessity as under Article 25 of the RSIWA must apply. A non-precluded measure such as

the one under Article 10 of the Euroasia BIT is considered self-judging in nature only in the

presence of an express provision demanding that the state may take measures “it considers

necessary”. In the absence of such a clause, the standard of necessity as under Article 25 of

139 Id. 140 Id, art.41. 141 Id, art. 53. 142 Supra note 25. 143 Moot Court Compromis, Procedural Order No. 2., at 56. 144 Moot Court Compromis, Statement of Uncontested Facts, at 36. 145 Id, at 35. 146 Supra note 25. 147 Supra note 23.



the RSIWA is applicable. This has been observed in by the tribunal in Enron148 that “truly

exceptional and extraordinary clauses such as a self-judging provision normally must be

expressly drafted to reflect that intent, as otherwise there can well be a presumption about not

having that meaning in view of its exceptional nature.”149(Emphasis added)

The same was observed in CMS150and the tribunal held that “when states intend to creat for

themselves a right to determine unilaterally the legitimacy of extraordinary measures

importing non-compliance with obligations assumed in a treaty, they do so expressly.”151

Further, it was also observed that the judicial review is not limited to merely a good faith

review, but a substantive review that the state of necessity as claimed by the state meet the

conditions laid down by customary international law and thus, whether they are able to

preclude wrongfulness.152(Emphasis added)

Further the provision may also not be considered implicitly self-judging as this is subject to

the review of evidence presented before the Tribunal.153 The position of states towards the

support of self-judging clauses emerged after the decision in the Nicaragua Case.154 The

International Court of Justice, in the Gabcikovo-Nagyamaros155 case, while discussing the

conditions of necessity under international law observed that “the State concerned is not the

sole judge of whether those conditions are met.”(Emphasis added).

The customary international law of necessity was recognized in the Gabcikovo-

Nagyamaros156 case that the condition of “necessity is a ground recognized by customary

international law.”157 In the present dispute, Article 10 of the Euroasia BIT discussed the non-

precluded measures which a state may take in exemption of liability under the BIT. It

provides that “Nothing in this Agreement shall be construed to prevent either Contracting

148 Enron Corporation and Ponderosa Assets, L.P. v. Argentine Republic, Award ICSID Case No. ARB/01/3

(22nd May 2007). 149 Id at 335. 150 CMS Gas Transmission Company v. The Republic of Argentina, Award, ICSID Case No. ARB/01/8 (17th Jul

2003). 151 Id at 370. 152 Id at 374. 153 LG&E Energy Corp., LG&E Capital Corp., and LG&E International, Inc .v. Argentine Republic, Decision

on Liability, ICSID Case No. ARB/02/1, 212 (3rd Oct 2006) 154 Supra note 35, at 370. 155 Gabcikovo-Nagymaros (Hungary v. the Slovak Republic), 1997 I.C.J. 7, 51-52 (Sept. 25,1997). 156 Id. 157 Id at 40.



Party from taking measures to fulfil its obligations with respect to the maintenance of

international peace or security.”158

It is evident from the facts of the dispute that Article 10 of the BIT does not contain an

express provision regarding the self-judging nature of the non-precluded measure envisaged.

Therefore, in light of the decisions cited, it is manifest that Article 10 may not be considered

as a self-judging clause, and the standard of necessity as under customary international law

must be met.

3. The Sanctions are violative of international law as they do not meet the conditions

of necessity under Article 25 of the RSIWA.

It is submitted that since Article 10 of the Euroasia BIT is not of a self-judging nature, the

threshold of necessity as reflected in customary international law must be met.

It is submitted that as per article 25 of the RSIWA159, the internationally wrongful act may

be precluded from wrongfulness only where there is grave and imminent peril to the essential

security interests of the nation, and the measure is the only way to deal with the peril.160

Further, it was clarified in CMS161 that “Article 25 of Articles on State Responsibility

adequately reflects the state of customary international law on the question of necessity.”162

The imminent peril is to be interpreted in a restricted manner and the defence of necessity

may be invoked only where the essential security interest of the nation, or the international

community as a whole has been impaired.163 Further, the plea of necessity is to be rejected if

there are other lawful means available in order to protect the essential security interests of the

international community.164 The grave and imminent peril is to be established objectively and

not merely apprehended as possible.165 The defence of necessity as embodied in Article 25 of

the RSIWA is not intended to cover conduct which is, in principle regulated by the primary

obligations.166 Measures not sanctioned under Chapter VII of the Charter of the United

158 Agreement between the Republic of Oceania and the Republic of Euroasia for the Promotion and Reciprocal

Protection of Investments art.10, Jan. 1 1995, Exhibit C1. 159 Article 25, RSIWA 160 25 (1) (a) Id. 161 Supra note 35. 162 Id at 315,331. 163 Id at 358. 164 Israeli wall advisory opinion para 140. 165 Commentary on arsiwa, article 25, pg 173 166 Id at 174.



Nations is not covered under Article 25.167 In any case, the measure invoking necessity must

be the only way available to safeguard the essential security interests.168

In the present dispute, Oceania has broken off diplomatic relations with the state of Euroasia

and the Executive Order of the President of Oceania introduced a system of economic

sanctions against certain individuals.169 Further, there has been no declaration of the

annexation as illegal, either by the community as a whole170, or by the Security Council.171

The sanctions imposed by Oceania are targeted economic sanctions and are in the form of

primary obligations under Chapter VII of the United Nations. There is no threat to the

essential security interests of the Oceania, or the international community as a whole since

the secession was an exercise of the right to self-determination and was lawful as per

international law. Further, this executive order was not the only way available to safeguard

the essential security interest in peril, if any, since Oceania could have applied to the United

Nations General Assembly under Article 11 of the UN Charter.172

The conditions of necessity mention that there must exist grave and imminent peril to an

essential security interest, and that the measure must be the only way available to safeguard

these essential security interests of the nation, or the international community as a whole.173

These conditions have clearly not been met as there was no threat to any essential security

interests, and even if there was, this executive order was not the only way available to

safeguard these interests. Therefore, the executive order is an internationally wrongful act

cannot be precluded under the Article 25 defence of necessity under customary international

law.174

Further, even if these conditions of necessity have been met, the defence of necessity is not

available for primary obligations under Chapter VII of the United Nations Charter. The

economic sanctions, being sanctions as envisaged under Article 41 of the Charter, relate to

primary obligations of Oceania. These sanctions can only be justified if the conditions of

167 Id at 175. 168 Supra note 51. 169 Moot Court Compromis, Executive Order., at 52. 170 Moot Court Compromis, Statement of Uncontested Facts, at 36. 171 Moot Court Compromis, Procedural Order No. 2., at 56. 172 U.N. CHARTER, art.11. 173 Supra note 48, 49. 174 ARTICLES ON RESPONSIBILITY OF STATES FOR INTERNATIONALLY WRONGFUL ACTS , ART. 25



Article 39 of the Charter are met. In the present factual matrix, these conditions have not been

met175, and thus these sanctions are unlawful and should be lifted.

IV. THE CLAIMANT HAS NOT CONTRIBUTED TO THE DAMAGE SUFFERED BY HIS

INVESTMENT AND IS OWED FULL COMPENSATION.

Mr. Peter Explosive is owed full compensation for the damages suffered to his investment

and has not contributed to the damage suffered by it as (A) The executive order is an

internationally wrongful act, (B) There has been no wilful or negligent conduct on behalf of

the claimant. (C) Alternatively, there is no causal link between the acts of the claimant and

the damage suffered by his investment.

A. The Executive Order amounts to an internationally wrongful act.

The Executive Order amounts to an internationally wrongful act. The executive order176

promulgated by the President of the Republic of Oceania is an illegal sanction and is

indirectly expropriatory in nature. This is a violation of the international obligation of the

Republic of Oceania.

Oceania has contributed to the fault in damaging the investment of the Claimants and

sincerely impaired them. The concept of Contributory fault is discussed in Article 39 of the

Articles of State Responsibility177. It deals with a situation “where damage has been caused

by an internationally wrongful act of a State, which is accordingly responsible for the

damage in accordance with articles 1 and 28, but where the injured State, or the individual

victim of the breach, has materially contributed to the damage by some wilful or negligent act

or omission”178.

Claimants submits that the above mentioned concept is a manifestation of the principle of

fairness. The principle requires the conduct of the injured state, “or of any person or entity in

relation to whom reparation is sought” 179 to be taken into account. In the present case the

conduct of the Respondent by issuing the executive order.

This article is applicable only in cases where the act of the state amounts to an internationally

wrongful act. An internationally wrongful act is the act or omission of a state which is

175 Supra note 32. 176 Moot Court Compromis, P. 52 177 Articles on Responsibility of States for Internationally Wrongful Acts, art. 39, 2001. 178Supra note 174, p. 258 179 Id.



attributable to the state under international law, and constitutes a breach of an international

obligation of the state.180

The conduct may be attributed to the state by a person acting on behalf of the state. A state is

responsible for “acts of its agents undertaken in their official capacity and for their

omissions”181. A violation of obligations under a Bilateral Investment treaty have been held

to be a breach of an international obligation of a state182

In the present dispute, the executive order promulgated by the President of the Republic of

Oceania183 amounts to an action tantamount to expropriation as per Article 4 of the Euroasia

Treaty. Since this expropriation has not been compensated, this expropriation is unlawful and

in violation of the Euroasia BIT. Thus, the Republic of Oceania has committed an

internationally wrongful act.

B. There has been no willful or negligent blamable conduct on behalf of the

Claimant

It is submitted that the Claimant has not conducted himself in a willful or negligent manner.

For the doctrine of contributory fault to be applicable, there must be willful or negligent

blamable conduct on behalf of the injured state or individual victim of the breach. To address

this asks for the application of Article 39 of the RSIWA184. Further, Article 39 is only

applicable in cases where the actions or omissions “which can be considered willful or

negligent”.185 The act or omission must also be willful or negligent. The standard of

negligence is a “manifest lack of due care on the part of the victim of the breach for his or her

own property or rights”186 Commercially imprudent behavior without due care may also be

considered willful or negligent blamable conduct.187

In the present dispute, Mr. Explosive has not acted in a willful or negligent blamable manner.

The contract concluded by Peter Explosive with Euroasia was a commercial contract in

180 Supra at note 3, Art. 2. ; United States Diplomatic and Consular Staff in Tehran, Judgment, I.C.J. Reports

1980, p 3, at p 29, para 56 181 Velásquez Rodríguez v Honduras, Inter-American Court of Human Rights, Series C, No 4, 170 (1988);

Biwater Gauff (Tanzania) Ltd. v. United Republic of Tanzania, Award, ICSID Case No. ARB/05/22 (24th July

2008) 182 Compañiá de Aguas del Aconquija S.A. and Vivendi Universal S.A. v. Argentine Republic, Award, ICSID

Case No. ARB/97/3 (21st Nov 2000) 183 Moot Court Compromis, Statement of Uncontested Facts at p. 36. 184 Supra note 3. 185 Supra note 4, at 259. 186 Id. 187 MTD Equity Sdn. Bhd. and MTD Chile S.A. v. Republic of Chile, Decision on Annulment ICSID Case No.

ARB(AF)/04/3, 101 (21st Mar 2007).



furtherance of business activities.188 The previous contract concluded with the government of

Euroasia had expired on 1 January 2014.189 The new contract was concluded on 28 February

2014 arms was concluded before the Euroasian armed forces entered the territory of fairyland

which occurred on the 1st of March 2014. The contracted was concluded after negotiations

with the Minister of National Defence and is therefore commercially prudent in nature.

It is therefore concluded that Mr. Explosive has not acted in a willful or negligent manner,

and thus Article 39 of Responsibility of states for Internationally Wrongful Acts is

inapplicable in the present dispute. Therefore, there is no comparative fault of the investor,

Mr. Peter Explosive.

C. Alternatively, there is no causal link between the acts of the Claimant and the

damage suffered by his investment.

It is submitted alternatively that even if, there has been negligent conduct by the Claimant,

there is no causal link between these acts and the damage suffered by his investment. It has

been held that “proof of causation requires that (A) cause, (B), effect and (C) a logical link

between the two be established.”190 For there to be an unbroken chain of causation, “the

offenders must be deemed to have foreseen the natural consequences of their wrongful acts”.

Further, this act must materially contribute to the damage suffered.191 This contribution must

be material and significant in nature.192 This was explained by the Tribunal in Gemplus193. It

was held that any fault which has contributed to the injury must be synonymous with

culpability, and any act falling short of this culpability would not be considered. The tribunal

also observed that the investor would not be held liable if he could not have reasonably

known the circumstances of the dispute.194

In the present dispute, Mr. Explosive has concluded a contract with the State of Euroasia for

the supply of arms, dated 28th February, 2014.195 The state of Euroasia sent in armed forces

into the state of Fairyland, after the conclusion of the contract. While Mr. Explosive is a

national of Euroasia, a private entrepreneur cannot be reasonably expected to know the future

188 Moot Court Compromis, Statement of Uncontested Facts at p. 35. 189 Id. 190 Joseph Charles Lemire v. Ukraine, Award, ICSID Case No. ARB/06/18, 157 (28th Mar 2011) 191 Supra note 11, at 258. 192 Supra note 13. 193 Gemplus S.A., SLP S.A., Gemplus Industrial S.A. de C.V. v. The United Mexican States, Award, ICSID Case

No. ARB(AF)/04/3, 10-11 (16th Jun 2010) 194 Id. 195 Moot Court Compromis, Statement of Uncontested Facts at p. 36.



actions of a government. Further, there is no material contribution by the conclusion of this

new contract and the supply of arms since the contract became effective on 1st April, for the

modernization of the arms of the State of Euroasia whereas the Armed forces entered

Fairyland on 1st March, 2014.

Thus, there exists no causal link between the acts of the Claimant and the damage suffered by

him as per the Executive Order dated 1st May 2014.196 There has been no further supply of

arms to the state of Euroasia. Thus, it is submitted that the acts of the Claimant have not

contributed materially to the injury suffered by his investment, and the consequences of the

action are not foreseeable and are remote in nature. Therefore, Mr Peter Explosive has not

contributed to the damage suffered by his investment in any way whatsoever and is owed full

compensation as per the standards in International Law.

196 Id.

-Conclusion-


PRAYER FOR RELIEF

For the foregoing reasons, CLAIMANT respectfully requests this Tribunal to find, adjudge and

declare that:

1. The tribunal has jurisdiction to resolve the dispute on merits;

2. The investment is a protected investment under Article 1 of the Eastasia BIT;

3. The respondent has violated the fair and equitable standard of treatment under Article

2 of the Euroasia BIT;

4. The Republic of Oceania has expropriated the Claimant’s investment by the

implementation of the sanctions and introduction of Executive Order of 1 May 2014;

5. The claimant has not contributed to the damage suffered by his investment;

6. Award the Claimant compensation in value no less than 120,000,000 USD, with

interest as of the date of issuance of the award.

Respectfully submitted on behalf of the CLAIMANT

Sd/-

Counsel for the CLAIMANT

Documents

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