i Team Winiarski GERMAN INSTITUTION OF ARBITRATION UNDER THE UNCITRAL ARBITRATION RULES ADMINISTERED BY THE DIS CONTIFICA ASSET MANAGEMENT CORP. v Claimant REPUBLIC OF RURITANIA Respondent Memorial for Respondent i
ii TABLE OF CONTENTS TABLE OF AUTHORITIES... iv STATEMENT OF FACTS... 1 ARGUMENTS... 5 I. THE TRIBUNAL DOES NOT HAVE JURISDICTION OVER THE CLAIMANT S CLAIMS... 5 A. CLAIMANT CANNOT BE REGARDED AS AN INVESTOR... 5 B. THERE IS NO BONA FIDE INVESTMENT MADE BY CLAIMANT AND IS THEREFORE NOT COVERED BY THE BIT... 6 1. THE GOOD FAITH PRINCIPLE... 6 2. THE BONA FIDE REQUIREMENT NEEDS TO BE TAKEN INTO ACCOUNT... 7 3. THE TIMING OF THE INVESTMENT... 7 4. THE SUBSTANCE OF THE TRANSACTION... 8 5. THE TRUE NATURE OF THE OPERATION... 8 II. IN ANY EVENT, THE ACQUISITION OF THE SHARES BY THE CLAIMANT IS AN ABUSE OF PROCESS... 9 A. DEFINITION OF ABUSE OF PROCESS... 9 B. THIS CLAIM IS AN ABUSE OF PROCESS... 9 III. THE TRIBUNAL DOES NOT HAVE JURISDICTION OVER CAM S CLAIMS BASED ON THE ALLEGED BREACH OF THE SHARE PURCHASE AGREEMENT BY THE STATE PROPERTY FUND OF RURITANIA AND THOSE CLAIMS ARE NOT ADMISSIBLE... 10 A. THE TRIBUNAL LACKS JURISDICTION OVER CAM S CLAIMS BASED ON THE ALLEGED BREACH OF THE SHARE PURCHASE AGREEMENT.... 11 1. RURITANIA IS NOT OBLIGED TO OBSERVE ANY COMMITMENTS IN RELATION TO THE SHARE PURCHASE AGREEMENT... 11 2. IN CASE THE CLAIMANT ASKS THE COURT TO FIND RURITANIA RESPONSIBLE FOR ACTS OF THE STATE FUND, RESPONDENT SUBMITS THAT THE STATE FUND IS NOT A STATE ENTITY FOR PURPOSES OF JURISDICTION OF THIS TRIBUNAL... 11 3. THE ACTS OF THE FUND CANNOT BE ATTRIBUTED TO RURITANIA... 13 4. THE UMBRELLA CLAUSE SHOULD BE EMPLOYED IN A NARROW FASHION... 13 5. IN CASE THERE THE ABOVEMENTIONED CONSIDERATIONS ARE NOT TAKEN INTO ACCOUNT, CERTAIN CONDITIONS SHOULD BE READ IN THE UMBRELLA CLAUSE, THAT ARE NOT MET IN THE PRESENT CASE... 15
iii B. IN THE ALTERNATIVE, IF THE TRIBUNAL CONSIDERS THAT IT HAS JURISDICTION OVER CAM S CLAIMS IN RELATION TO THE SHARE PURCHASE AGREEMENT, THESE CLAIMS ARE NOT ADMISSIBLE... 16 1. THE TRIBUNAL SHOULD STAY THE PROCEEDINGS, GIVEN THE FACT THAT THE ESSENTIAL BASIS OF THE TREATY CLAIM IS CONTRACTUAL AND IT SHOULD FAVOUR THE APPLICATION OF THE EXCLUSIVE FORUM CLAUSE IN THE SHARE PURCHASE AGREEMENT... 16 2. THE PRINCIPLE GENERALIA SPECIALIBUS NOT DEROGANT SHOULD LEAD THE TRIBUNAL TO GIVE EFFECT TO THE EXCLUSIVE FORUM CLAUSE FOUND IN THE SHARE PURCHASE AGREEMENT... 16 3. THE LATER IN TIME EXCLUSIVE FORUM CLAUSE IN THE SHARE PURCHASE AGREEMENT SHOULD TAKE PRECEDENCE... 17 4. THE CLAIMANT CANNOT BRING FORWARD A CLAIM CONCERNING THE SHARE PURCHASE AGREEMENT, SINCE IT DOES NOT COMPLY WITH ITS OWN CONTRACTUAL OBLIGATIONS... 18 III. THE MAB ACT DID NOT CAUSE A VIOLATION OF THE BIT... 18 A. THE MEASURES DID NOT CAUSE AN UNLAWFUL EXPROPRIATION AND THEREFORE DID NOT VIOLATE ART. 4(1) OF THE BIT.... 18 B. THE MEASURES DID NOT CAUSE A VIOLATION OF THE FAIR AND EQUITABLE TREATMENT (FET) STANDARD AND THEREFORE IT DID NOT BREACH ART. 2 (1) B OF THE BIT.... 21 C. THE MEASURES DID NOT CAUSE A VIOLATION OF THE FULL PROTECTION AND SECURITY (FPS) STANDARD AND THEREFORE THEY DID NOT BREACH ART. 2 (1) B OF THE BIT.... 22 V. DAMAGES ALLEGEDLY INCURRED BY CAM S SUBSIDIARIES OUTSIDE RURITANIA ARE NOT COMPENSABLE.... 25 A. THE SALES CONTRACTS OF SUBSIDIARIES LOCATED OUTSIDE OF RURITANIA CANNOT QUALIFY AS AN INVESTMENT.... 27 B. IN ANY EVENT, EVEN IF THE SUBSIDIARIES AND THEIR PROFITS WERE TO BE SEEN AS INVESTOR AND INVESTMENT, NO CAUSALITY CAN BE ESTABLISHED BETWEEN THE MAB ACT AND THE LOSS OF THEIR PROFITS.... 30 C. THE CLAIMANT CANNOT CLAIM DAMAGES FOR THE LOSS OF THE SUBSIDIARIES SALES AS THERE IS NO GOING CONCERN.... 31
iv TABLE OF AUTHORITIES Books H Lauterpacht, The Development of International Law by the International Court (Stevens and Sons 1958) Crawford, Brownlie s Principles of Public International Law, (8 th edition OUP 2012) R Dolzer and C Schreuer, Principles of International Investment Law (2 nd edition, Oxford University Press 2012) Chapter in book R Kolb, General Principles of Procedural Law, in Andreas Zimmermann and others (eds), The Statute of the International Court of Justice: A Commentary, second edition (OUP 2012), 904 Journals Yael Ribco Borman, Treaty Shopping Through Corporate Restructuring of Investments: legitimate Corporate Planning or Abuse of Rights? (2011) 24, Hague Yearbook of International Law, 359 Eric De Brabandere, Good Faith, Abuse of Process and the initiation of Investment Treaty Claims, (2012) 3(3), Journal of International Dispute Settlement, 609 J Combacau and D Alland,' "Primary" and "Secondary" Rules in the Law of State Responsibility: Categorizing International Obligations', (1985), Netherlands Yearbook of International Law, 26, 81 Daniel Bodansky & John R Crook, Introduction and Overview to the ILC articles on State Responsibility, (2002) 96(4) American Journal of International Law 773
v J Harb Definition of Investment Protected by International Treaties: An On-Going Hot Debate, (2011) 12(3) International arbitration Quarterly Law Review 17 Wells, Double Dipping in Arbitration Awards? An Economist Questions Damages Awarded to Karaha Bodas Company in Indonesia, (2003) 19 Arbitration International 471 Investment Arbitration Cases Abaclat v Argentina Abaclat and others (Case formerly known as Giovanna a Beccara and Others) v Argentine Republic, ICSID Case No ARB/07/5, Decision on Jurisdiction and Admissibility, 4 August 2011 AES v Hungary AES Summit Generation Limited and AES Tisza Eromu kft. v The Republic of Hungary ICSID Case No ARB/07/22, Award, 23 September 2010 Genin v Estonia Alex Genin, Eastern Credit Limited, Inc. and A.S. Baltoil v. the Republic Estonia, ICSID Case No. ARB/99/2, Award, 25 June 2001, 17 ICSID Review F.I.L.J. 395 (2002) Alpha v Ukraine Alpha Projektholding GmbH v Ukraine, ICSID Case No ARB/07/16, Award, 8 November 2010 AMCO v Indonesia Amco Asia Corporation, Pan American Development Ltd, PT Amco Indonesia v Republic of Indonesia, ICSID Case No ARB/81/1, Decision on Jurisdiction, 25 September 1983 Archer Daniels v Mexico Archer Daniels Midland Company and Tate and Lyle Ingredients Americas Inc v. the United
vi Mexican States, ICSID Case No ARB(AF)/04/5, Award, 21 November 2007 Azurix v Argentina Azurix Corp. v. The Argentine Republic, ICSID Case No. ARB/01/12, Award, 14 July 2006 Bayindir v Pakistan Bayindir Insaat Turizm Ticaret Ve Sanayi S. A. (Scedil) v. Islamic Republic of Pakistan, ICSID case No. ARB/03/29, Decision on Jurisdiction, 14 November 2005 Bayview v Mexico Bayview Irrigation District et al v United Mexican States, ICSID Case No ARB(AF)/05/1, Award, 19 June 2007 BG v Argentina BG Group Plc v The Republic of Argentina, UNCITRAL Arbitration, Final Award, 24 December 2007 Bosh v Ukraine Bosh International Inc and B&P Ltd Foreign Investments Enterprise v Ukraine, ICSID Case No ARB/08/11, Award, 25 October 2012 BIVAC v Paraguay Bureau Veritas, Inspection, Valuation, Assessment and Control, BIVAC BV v The Republic of Paraguay, ICSID Case No ARB/07/9, Decision on Objections to Jurisdiction, 29 May 2009 Burlington v Ecuador Burlington Resources Inc v Republic of Ecuador, ICSID Case No ARB/08/5, Decision on Liability, 14 December 2012
vii Canadian Cattlemen v United States The Canadian Cattlemen for Fair Trade v United States, UNCITRAL Arbitration, Award on Jurisdiction, 28 January 2008. Cementownia v Turkey Cementownia 'Nowa Huta' SA v Republic of Turkey, ICSID Case No. ARB (AF)/06/2, Award, 17 September 2009 CSOB v Slovakia Jurisdiction Ceskoslovenska Obchodni Banka, A. S. v. Slovak Republic, Decision on Jurisdiction, 24 May 1999, 14 ICSID Review FILJ 251 (1999) Chemtura v Canada Chemtura Corporation v Government of Canada (formerly Crompton Corporation v Government of Canada), UNCTITRAL Arbitration, Award, 2 August 2010 CME v Czech Republic CME Czech Republic B.V. v. Czech Republic, UNCITRAL arbitration, Partial Award, 13 September 2001 CMS v Argentina CMS Gas Transmission Company v. The Argentine Republic, ICSID Case No. ARB/01/8, Decision on Jurisdiction, 17 July 2003 Continental v Argentina Continental Casualty Company v The Argentine Republic, ICSID Case No ARB/03/9, Award, 5 September 2008 Desert Line v Yemen Desert Line Projects LLC v Republic of Yemen, ICSID Case No ARB/05/17, Award, 6 February 2008
viii EDF v Romania EDF Limited v Romania, ICSID Case No ARB/05/13, Award, 8 October 2009 El Paso v Argentina El Paso Energy International Company v The Argentine Republic, ICSID Case No ARB/03/15, Decision on Jurisdiction, 27 April 2006 EnCana v Ecuador EnCana Corporation v. Republic of Ecuador, LCIA Case No. UN3481, Award, 3 February 2006, 45 ILM 901 Fedax v Venezuela Fedax N.V. v.the Republic of Venezuela, ICSID Case No. ARB/96/3, Decision on Jurisdiction, 11 July 1997, ILM 1378 (1998) Global Trading v Ukraine Global Trading Resource Corp and Globex International Inc v Ukraine, ICSID Case No ARB/09/11, Award, 1 December 2010 Grand River v United States Grand River Enterprises Six Nations et al v United States, UNCITRAL Arbitration, Award, 12 January 2011 Impregilo v Pakistan Impregilo S.p.A. v. Islamic Republic of Pakistan, ICSID No. ARB/03/3, Decision on Jurisdiction, 22 April 2005, 12 ICSID Reports 245, 12 ICSID Reports Inceysa Vallisoletana v El Salvador Inceysa Vallisoletana SL v El Salvador, ICSID Case No ARB/03/26, Award, 2 August 2006 Joy Mining v Egypt Joy Mining Machinery Limited v. Arab Republic of
ix Egypt, ICSID Case No. ARB/03/11, Award on Jurisdiction, 6 August 2004, 19 ICSID Review FILJ 486 (2004) Kardassopoulos v Georgia Ioannis Kardassopoulos v The Republic of Georgia, ICSID Case No ARB/05/18, Decision on Jurisdiction, 6 July 2007 Lauder v Czech Republic Ronald S Lauder v The Czech Republic, UNCITRAL Arbitration, Final Award, 3 September 2001 Lemire v Ukraine Joseph Charles Lemire v Ukraine, ICSID Case No. ARB/06/18, Award, 28 March 2011 LESI and Astaldi v Algeria LESI, S.p.A. and Astaldi S.p.A v. People s Democratic Republic of Algeria, ICSID Case No. ARB/05/3, Decision on Jurisdiction, 12 July 2006 LG&E v Argentina LG&E Energy Corp., LG&E Capital Corp., and LG&E International, Inc. v. Argentine Republic, ICSID Case No. ARB/02/1, Award, 25 July 2007 Maffezini v Spain Emilio Augustin Maffezini v. Kingdom of Spain, ICSID Case No. ARB/97/7, Decision on Jurisdiction, 25 January 2000, 40 ILM 1129 (2001) Methanex v United States Methanex Corp v United States, NAFTA Arbitration, Final Award on Jurisdiction and Merits, 9 August 2005 44 ILM 1345 Middle East Cement Middle East Cement Shipping and Handling Co
x v Egypt S.A. v. Arab Republic of Egypt, ICSID Case No. ARB/99/6, Award, 12 April 2002, 18 ICSID Review FILJ 602 (2003) MINE v Guinea Maritime International Nominees Establishment v Republic of Guinea, ICSID Case No ARB/84/4, Decision on Partial Annulment, 4 ICSID Reports (1997) Mobil v Venezuela Mobil Corporation, Venezuela Holdings B.V. v. Bolivarian Republic of Venezuela, ICSID Case No. ARB/07/27, Decision on Jurisdiction, 10 June 2010 Olguín v Paraguay Eudoro Armando Olguín v Republic of Paraguay, ICSID Case No ARB/98/5, Award, 26 July 2001 Pan American v Argentina Pan American Energy LLC and BP Argentina Exploration Company v The Argentine Republic, ICSID Case No ARB/03/13, Decision on Preliminary Objections, 27 July 2006 Pantechniki v Albania Pantechniki S.A. Contractors & Engineers (Greece) v The Republic of Albania, ICSD Case No. ARB/07/21, Award, 30 July 2009 Patrick Mitchell v Congo Patrick Mitchell v. Democratic Republic of Congo, ICSID Case No. ARB/99/7, Extracts of Award, 9 February 2004 Phoenix Action v Czech Republic Phoenix Action Ltd v Czech Republic, ICSID Case No ARB/06/5, Award 15 April 2009
xi Romak v Uzbekistan Romak SA v The Republic of Uzbekistan, UNCITRAL Arbitration, PCA Case No AA280, Award, 26 November 2009 Salini v Morocco Salini Construttori S.p.A and Italstrade S.p.A v Kingdom of Morocco ICSID Case No. ARB/00/4, Decision on Jurisdiction, 23 July 2001, 16 ICSID Review FILJ 469 (2001) Saluka v Czech Republic Saluka Investments BV v. Czech Republic, UNCITRAL Arbitration Partial Award, 17 March 2006 IIC 210 SD Myers v Canada - Final Award SD Myers Inc v Government of Canada, NAFTA Arbitration, Final Award, 30 December 2002 SD Myers v Canada - Second Partial Award SD Myers Inc v Government of Canada, NAFTA Arbitration, Second Partial Award, 21 October 2002 SGS v Pakistan SGS Société Générale de Surveillance S.A. v. Islamic Republic of Pakistan, ICSID Case No. ARB/01/13, Decision on Objections to Jurisdiction, 6 August 2003, 18 ICSID Review FILJ 307 (2003) SGS v Philippines SGS Société Générale de Surveillance S.A. v. Republic of the Philippines, ICSID Case No. ARB/02/6, Decision on Jurisdiction and Separate Declaration, 29 January 2004, 8 ICSID Reports 2005
xii Siag v Egypt Waguih Elie Goerge Siag and Clorinda Vecchi v The Arab Republic of Egypt, ICSID Case No. ARB/05/15, Award, 1 June 2009 Siemens v Argentina Siemens AG v The Argentine Republic, ICSID Case No. ARB/02/8, Award, 6 February 2007 SPP v Egypt Award Southern Pacific Properties (Middle East) Ltd v Arab Republic of Egypt, ICSID Case No ARB/84/3, Award, 20 May 1992 SPP v Egypt Jurisdiction Southern Pacific Properties (Middle East) Ltd v Arab Republic of Egypt, ICSID Case No ARB/84/3, Decision on Objections to Jurisdiction, 14 April 1988 Suez v Argentina Suez, Sociedad General de Aguas de Barcelona S.A. and Vivendi Universal S.A. v The Argentine Republic, ICSID Case No ARB/03/19, Decision on Liability 30 July 2010 Tecmed v Mexico cnicas edioa ientales ec ed, S.A. v. nited Mexican States, ICSID Case No. ARB (AF)/00/2, Award, 29 May 2003, 43 ILM 133 (2003) Telenor v Hungary Telenor Mobile Communications v The Republic of Hungary, ICSID Case No ARB/04/15, Award, 13 September 2006 Toto v Lebanon Toto Costuzioni Generali SpA v The Republic of Lebanon, ICSID Case No ARB/07/12, Decision on Jurisdiction, 11 September 2009
xiii Vivendi v Argentina Annulment Compania de Aquas del Aconquija SA and Compagnie Générale des Eaux v The Argentine Republic, ICSID case No. ARB/97/3, Decision on Annulment, 3 July 2002, 41 ILM 1135 (2002) Vivendi II v Argentina Award Compania de Aquas del Aconquija SA and Vivendi Universal (formerly Compania de Aquas del Aconquija SA and Compagnie Générale des Eaux) v The Argentine Republic, ICSID case No. ARB/97/3, Award, 20 August 2007 Wena Hotels v Egypt Wena Hotels Limited v Arab Republic of Egypt, ICSID Case No. ARB/98/4, Award, 8 December 2000 Zhinvali v Georgia Zhinvali Development Ltd v Republic of Georgia, ICSID Case No ARB/00/1, Award, 24 January 2003, 10 ICSID Reports (2007)
1 STATEMENT OF FACTS 1. Claimant is Contifica Asset Management Corp., a company incorporated under the laws of the State of Cronos. Claimant is a member of the Contifica group. The parent company of the Contifica group is Contifica Enterprises Plc., which is incorporated in Prosperia. 1 2. Respondent, the Republic of Ruritania, and the State of Cronos are parties to the BIT. 2 3. On 30 June 2008 Contifica Spirits S.p.A., which is a fully owned subsidiary of Contifica Enterprises Plc., and the State Property Fund of Ruritania entered into a share purchase agreement providing for the acquisition of all shares in Freecity Breweries Inc. ( FBI ). 3 FBI was founded in 1928 and had been a successful and profit-generating asset for years. It was sold because the financial crisis had severely affected Ruritania s economy, so a fall in profits might be expected. FBI s most famous and popular brand of beer is FREEBREW, which has a distinct taste that is due to the addition of Reyhan concentrate. FREEBREW is traditionally sold in iconic 0.8 l. bottles. 4. Following acquisition of FBI, Contifica Group made investments in the technology, design and equipment of FBI, which resulted in increased output and worker safety. 5. On 17 March 2010, the shares in FBI were transferred from Contifica Spirits to Claimant. On the same day Claimant acquired rights to the principal intellectual property used by FBI. This included Ruritanian-registered trademarks on brands, FREEBREW amongst others, and trade dress registrations regarding the designs of the beer bottles, including the 0.8 l. bottle. 6. On 20 November 2010, the Ruritanian parliament adopted the Regulation of Sale and Marketing of Alcoholic Beverages Act ( MAB Act ) (Exhibit 3), which restricted Sale and Marketing of Alcoholic Beverages. 7. This act prohibited the marketing of any alcoholic beverages on television and at sporting events, made it illegal to serve beer at sport facilities, outdoors and at any place from 9 pm till 9 am, imposed a requirement that trademarks/brands of beer be written in the same font and 1 p. 2 par. 2 Exhibit 1 3 Exhibit 2 1
2 colour as all the other text on the label and sale of alcohol in containers of over 0.5 l. was also prohibited. 8. Implementation of these regulations resulted in FBI s sales dropping by approximately 60% during the first two quarters of 2011 with the company incurring loss of net income of around 10 million US dollars and loss of revenue of 60%. 9. On 15 June 2011 the government-funded Human Health Research Institute ( HRI ) released a report claiming that consumers of FREEBREW beer were exposed to a higher risk of cardiac complications due to the effects of Methyldioxidebenzovat, an active chemical ingredient found in Reyhan concentrate. 10. This report was founded on a controlled clinical study where a sample group of 150 adult males aged 25-50 were observed in a period of 10 years. The test subjects had a daily dosage of 0.15-0.18 grams of Methyldioxidebenzovat added to their drinks. 11. On 30 June 2011, the Ministry of Health and Social Security adopted an ordinance, which requires any product, not only beer, containing Reyhan concentrate to be labelled with an explicit warning that This product contains Reyhan concentrate, consumption of which according to the results of scientific research may lead to higher risk of cardiac complications. 12. In July 2011, FBI was provided with access to the report and the underlying materials and discovered that in 2005 an interim report, which came to the same conclusions, was sent by the HRI to the Ministry of Health and Social Security. 13. On 20 August 2011, FBI wrote to the Ministry of Health and Social Security pointing out numerous flaws in the analysis conducted by the HRI as well as its process of raw data collection. FBI requested that the labeling requirement be lifted pending further investigation of the matter. 14. On 25 August 2011 the Ministry denied this request. 15. Following introduction of the new labeling regulations on FREEBREW, according to audited IFRS reports FBI sales fell by a further 20%, with its revenue in the last quarter of 2011 falling to 10% of the revenue for the same period of 2009. FBI was forced to implement a large-scale redundancy program terminating employment of over half of its employees.
3 16. On 15 March 2012, the Board of Directors of FBI having considered the financial position of the company decided to partially suspend production decreasing the output to 5 000 000 dekaliters per annum. 17. As the result of the fall in revenue and profit, FBI failed to comply with financial covenants established by the credit facilities with its various lenders. Negotiations with the lenders continue to this day. 18. On 15 September 2012, lenders agreed not to declare default and not to enforce their security rights over various FBI assets subject to being provided with an additional security package consisting of pledge of (1) all of FBI s tangible assets (2) all shares in FBI and (3) any claims and recovery that CAM may receive in this arbitration. 19. On 19 December 2011, Messrs Goodfellow and Straw, FBI and Contifica Group executives, were notified of criminal proceedings against them for alleged involvement in bribery of the officials of the State Property Fund of Ruritania in connection with the acquisition of the FBI shares. 20. On 23 December 2011 Messrs. Goodfellow and Straw were detained in the Freecity International Airport to stop them from fleeing justice. They were detained in a cell in the Freecity International Airport until 3 January 2012. 21. On 23 December 2011, footage of their detention was shown on Ruritania s most popular TV channel. A spokesman for the Prosecutor s Office said that [the law enforcement agencies of Ruritania] will not let people responsible for corruption escape investigation. 22. The criminal investigation against them was terminated due to insufficient evidence on 20 June 2012. 23. Pursuant to Article 8 of the BIT, any disputes arising out of or relating to an investment between a foreign investor and the Contracting State shall at the request of the investor be submitted to arbitration under the UNCITRAL Rules administered by the German Institution for Arbitration. This offer to submit dispute to arbitration made by the Republic of Ruritania is now accepted by the Claimant. 24. Claimant offered to the Republic of Ruritania an amicable settlement of the dispute repeatedly. On 10 December 2011, Claimant explained in a letter to the President and the Minister of Foreign Affairs of the Respondent that the MAB Act and the labelling
4 requirement with respect to FREEBREW breached Ruritania s obligations under the BIT. On 31 May 2012, on another letter to the President of Ruratia, Claimant expressly invoking Article 8 of the BIT. No response was received to any of these letters. 25. On 30 September 2012 Claimant filed a notice of arbitration in accordance with the UNCITRAL Rules administered by the DIS.
5 ARGUMENTS I. THE TRIBUNAL DOES NOT HAVE JURISDICTION OVER THE CLAIMANT S CLAIMS According to the BIT, In order to bring a claim there has to be an Investment between a Contracting State and an Investor of the other Contracting State. 4 In the current situation the Claimant is not an Investor as foreseen by the BIT and even more specifically, there is no bona fide investment. Consequently, in the absence of the requirements to bring a claim, the Tribunal lacks jurisdiction. A. CLAIMANT CANNOT BE REGARDED AS AN INVESTOR In Saluka v Czech Republic the Tribunal stipulated that a company which has no real connection with a State party to a BIT, and which is in reality a mere shell company controlled by another company which is not constituted under the laws of that State, should not be entitled to invoke the provisions of that treaty. 5 Such a possibility leads itself to abuses of the arbitral procedure. Under the BIT the investor is the owner, possessor or shareholder of an investment in the territory of the other Contracting State. 6 In the present situation, as admitted by the Claimant, the shares in FBI were originally acquired by Contifica Spirits S.P.A., a company incorporated in Posteriana, which manages the alcohol beverages production assets of the Contifica group. Neither Posteriana, nor Prosperia (the State where the parent company of the group is incorporated) have entered into a bilateral investment treaty with the Republic of Ruritania. The claimant is not a genuine entity of the State of Cronos as it is controlled by the parent company and is functioning as a mere shell company. Therefore, the Claimant cannot be regarded as an Investor. 4 Article 8 of The republic of Ruritania and The State of Cronos BIT 5 Saluka v Czech Republic [240] 6 Article 1.3 BIT
6 B. THERE IS NO BONA FIDE INVESTMENT MADE BY CLAIMANT AND IS THEREFORE NOT COVERED BY THE BIT 1. THE GOOD FAITH PRINCIPLE The principle of good faith has been repeatedly defined by the International Court of Justice (ICJ) as one of the basic principles governing the creation and performance of legal obligations. 7 It has been recognised in the law of treaties 8 and has been referred to by numerous courts and tribunals, among which are also included the Appellate Body of the World Trade Organisation 9 and ICSID tribunals. 10 Parties to an arbitration proceeding must conduct themselves in good faith. This duty, as the Methanex tribunal found, is owed both to the other disputing party and to the Tribunal. 11 In Phoenix Action v. Czech Republic the Tribunal concluded that only investments that are made in compliance with the international principle of good faith and do not attempt to misuse the system are protected. 12 The Tribunal contemplated the concept of good faith to be related to honesty, truthfulness, and restraint from taking unfair advantage. 13 The recent decision of the tribunal in Abaclat v Argentina extensively discussed the role of good faith in investment arbitration. 14 The violation of the good faith principle in the acquisition of the Investments undermines not only the right to invoke the protection of an agreement, but also the investment alleged to have been made by the party which is seeking protection. 15 7 Territorial dispute (Libya v Chad), ICJ Reports 6 (1994) at 22, Para 41; Nuclear Tests - ICJ report 1974 p. 268 46- p. 473 49; Armed action (Honduras v. Nicaragua) ICJ report 1988 p. 105 94 8 VCLT article 26 and 31 9 WTO Appellate Body WT/DS/08/AB/R 24 February 2000 US Tax Treatment for foreign sales corporations 166- WT/DS/184/AB/R 24 July 2001 10 Amco v Indonesia.; SPP v. Egypt [63]; Inceysa v. El Salvador [230]; Mobilv. Venezuela [170] 11 Methanex v United States of America [54]; Cementownia v Republic of Turkey [153] 12 Phoenix v The Czech Republic [113]; Yael Ribco Borman, Treaty Shopping Through Corporate Restructuring of Investments: legitimate Corporate Planning or Abuse of Rights? 13 Phoenix v The Czech Republic [107], see also Inceysa v El Salvador [230] 14 Abaclat v Argentine Republic [647] [649]. 15 Abaclat v Argentine Republic [116]
7 Based on the facts of the case and the aforementioned expressed decisions it is concluded that the Claimant s conduct in bringing the claim fails to meet the requisite standard of good faith conduct and is manifestly ill-founded. 2. THE BONA FIDE REQUIREMENT NEEDS TO BE TAKEN INTO ACCOUNT The Tribunal in Phoenix Actions, after emphasizing the importance of the Vienna Convention in the interpretation of the BIT, held that the principle of non-retroactivity and the principle of good faith also need to be taken into account. 16 It noted that sometimes relying on the ordinary meaning of the term investment is insufficient and that a contextual analysis of the existence of a protected investment needs to be conducted and that the purpose of the international protection of the investment needs to be taken into consideration. 17 It took the good faith requirement into account, since the traditional criteria needed to be supplemented. The basic features of an investment have been described as involving certain duration, a certain regularity of profit and return, assumption of risk, a substantial commitment and significance for the host State s development. 18 In the present situation these criteria are not entirely relevant and need to be supplemented with the good faith requirement. Accordingly, there are several considerations that need to be taken into account in order to evaluate whether or not there is a bona fide investment. 19 3. THE TIMING OF THE INVESTMENT The timing of the investment is a first factor to be taken into account to establish whether or not the Claimant s engaged in an abusive attempt to get protection under the BIT. 20 The transfer of the shares of FBI to CAM took place two months after the New Way party secured the majority in parliament. The party took a hard stance towards the marketing and sale of alcohol in their election manifesto and at the time the transfer occurred. Contifica group already anticipated that tougher regulations and laws governing the sale and marketing 16 Phoenix v The Czech Republic [77] 17 Phoenix v The Czech Republic [79] 18 Fedax v. Venezuela [21]-[33]; Salini v Kingdom of Morocco [56] 19 Phoenix vthe Czech Republic, Section VI (F) 20 Phoenix vthe Czech Republic[ 136]
8 of beer would be adopted in the near future. Claimant was well aware of the situation in Ruritania at the time of transfer of the shares and the future restrictions on the sale of alcohol. The Claimant knew that he was going to be affected by the new adopted rules and regulations, and with that the possibility that it will come to a dispute. In the memorandum, dated 1 March 2010 and right after the New Way party secured the majority, it is clearly stated that the restructuring needs to be implemented quite quickly. This is an affirmation that the CEO of the Contifica group and the General Counsel of FBI were well aware of the political changes and the new regulations that affected their business. 21 4. THE SUBSTANCE OF THE TRANSACTION As the Tribunal in Phoenix Action stated, when the Claimant paid a low price for the acquisition of shares, this can raise the necessarily doubt about the existence of an investment and requires an in depth inquiry into the circumstances of the transaction at stake. 22 In the present case the Claimant paid the absurd low price of less than USD 5000 for the acquisition of the shares, while the Claimant argues that the shares are an investment valued at over USD 300 million. The disproportionality between the value assigned to the shares then and the value assigned to them now - some 60,000 times greater - is another example of the implausibility of the claim. 5. THE TRUE NATURE OF THE OPERATION The final consideration relates to the nature of the operation. After the acquisition of the FBI shares by Claimant on 17 March 2010 there was, besides the required reconfiguration of the bottling line in light of the new MAB Act, no further economic activity in the market place performed or even intended by CAM. In line with the reasoning of the Tribunal in Phoenix Action, you cannot come to another conclusion that the Claimant made an investment for the sole purpose of bringing an international claim against Ruritania, 23 and not for the purpose of engaging in economic activity. 21 Exhibit RX1 22 Phoenix v The Czech Republic [119] 23 Phoenix v The Czech Republic [140]
9 II. IN ANY EVENT, THE ACQUISITION OF THE SHARES BY THE CLAIMANT IS AN ABUSE OF PROCESS A. DEFINITION OF ABUSE OF PROCESS Absence of good faith may indicate an abuse of process either in seeking to obtain jurisdiction through improper means or by some taint, such as fraud, 24 in the manner in which the original investment was made. Abuse of process is a concept that is derived from, and for that reason narrower than, the principle of good faith in general international law. 25 As famously noted by Hersch Lauterpacht [t]here is no right however well established, which could not, in some circumstances, be refused recognition on the ground that it has been abused. 26 These principles have equally been referred to by the Permanent Court of International Justice (PCIJ), the International Court of Justice (ICJ) 27 and the WTO Appellate Body, 28 and have therefore been labelled as general principles of international law or as rules of customary international law. 29 It is thus beyond doubt that the principles of abuse of right and abuse of process are applicable in investment law. B. THIS CLAIM IS AN ABUSE OF PROCESS An abuse of rights is deemed to exist when the claimant creates a legal friction in order to gain access to an international arbitration procedure to which it was not entitled. 30 In regard to the corporate restructuring of the company; in line with the Tribunal in Saluka Investments BV v. Czech republic, 31 it is recognised that there is an abuse of the arbitral 24 Inceysa v El Salvador 25 Eric De Brabandere, Good Faith, A use of Process and the initiation of Invest ent reaty Clai s Journal of International Dispute Settlement, Vol 3, No3 (2012) 609-636, 618 26 H Lauterpacht, The Development of International Law by the International Court (Stevens and Sons 1958) 164; 27 Eric De Brabandere, Good Faith, A use of Process and the initiation of Invest ent reaty Clai s Journal of International Dispute Settlement, Vol 3, No3 (2012) 609-636, 619 28 United States Import Prohibition of Certain Shrimp and Shrimp Products, Report of the Appellate Body (12 October 1998), WT/DS58/AB/R, Para 158. 29 R Kolb, General Principles of Procedural Law, in Andreas Zimmermann and others (eds), The Statute of the International Court of Justice: A Commentary, second edition (OUP 2012) 904 at 49. 30 Phoenix v The Czech Republic [143]; Cementownia v. Turkey [154] 31 Saluka v The Czech Republic[240]
10 procedure when a company which has no real connection with a State party to a BIT, and which is in reality a mere shell company controlled by another company which is not constituted under the laws of that State, that company should not be entitled to invoke the provisions of that treaty. The purported investor, CAM, acquired the FBI shares for the precise purpose of commencing the present arbitration. Such abusive treaty-shopping is directly at odds with the fundamental object and purpose of the UNCITRAL arbitration rules and the BIT, which are meant to encourage international investment. 32 The sole purpose of the transfer was to get the benefits of the BIT and protect their investment. The Memorandum from Lucas Goodfellow to Adam Straw is an affirmation of the latter. In the memorandum it is clearly stated that the restructuring needs to happen quickly and that they were looking for an existing group company in a country, which has an investor-friendly environment. The transfer of the assets to Cronos was only executed in order to achieve further protection of the Contifica Group. 33 Therefore the Tribunal lacks jurisdiction over the claims set forward by the Claimant. III. THE TRIBUNAL DOES NOT HAVE JURISDICTION OVER CAM S CLAIMS BASED ON THE ALLEGED BREACH OF THE SHARE PURCHASE AGREEMENT BY THE STATE PROPERTY FUND OF RURITANIA AND THOSE CLAIMS ARE NOT ADMISSIBLE In the present case, Respondent argues that pursuant to the Share Purchase Agreement, the Claimant cannot bring claims that are related to the Share Purchase Agreement before this Tribunal, for several reasons. First and foremost, the Tribunal lacks jurisdiction to hear any such claims, given the fact that the State Fund is not a State organ and actions of the Fund cannot be attributed to the Respondent. Also, even if the acts of the State Fund can be considered as acts of the Respondent, the jurisdiction of the Tribunal should not be extended over the contract claims. In the alternative, even if it finds that it does have jurisdiction, these claims are not admissible. 32 Phoenix v The Czech Republic [34] 33 Exhibit RX1
11 It will be proven, therefore, that the tribunal lacks jurisdiction over such claims. A. THE TRIBUNAL LACKS JURISDICTION OVER CAM S CLAIMS BASED ON THE ALLEGED BREACH OF THE SHARE PURCHASE AGREEMENT. 1. RURITANIA IS NOT OBLIGED TO OBSERVE ANY COMMITMENTS IN RELATION TO THE SHARE PURCHASE AGREEMENT The two parties in the Share Purchase Agreement are two private parties. Ruritania has never made any commitments towards the investors in relation to the purchase of FBI shares. The only entity that has entered into an agreement is the State Fund, which has a separate legal personality 34 and should not be confused for Ruritania. Since Ruritania is not a party to the Share Purchase Agreement, the premise [of the Umbrella Clause] - that a party to the BIT has entered into an obligation with regard to an investment - is inexistent. 35 2. IN CASE THE CLAIMANT ASKS THE COURT TO FIND RURITANIA RESPONSIBLE FOR ACTS OF THE STATE FUND, RESPONDENT SUBMITS THAT THE STATE FUND IS NOT A STATE ENTITY FOR PURPOSES OF JURISDICTION OF THIS TRIBUNAL The Jurisdiction of this Tribunal is limited, according to Article 8 of the Ruritania-Cronos BIT, to disputes concerning Investments between a Contracting State and an Investor of the other Contracting State. 36 However, in the present case, the State Fund of Ruritania is not a State organ, meaning that the dispute that has arisen is one between two private parties, and therefore the Dispute Settlement clause of the BIT cannot be activated. At first, the Tribunal in Salini has mentioned that where a State has organised a sector of activity through a distinct legal entity, ( ) it does not follow a priori that the State has extended its jurisdiction offer in a BIT 37 to other entities. Therefore, it has to be found whether the State Fund is a State organ and whether the actions of the Fund can be attributed to the State, which has offered its consent to arbitration. 34 Procedural Order 2, Question 5 35 Azurix v Argentina [52] 36 Article 8(1) Cronos Ruritania BIT 37 Impregili v Pakistan [212]; Salini Morocco [59] [61]
12 To support this position, the Respondent would like to argue that the Fund is not a State organ for jurisdictional purposes by referring the Tribunal to Maffezzini v Spain and the two tests that were developed in that case. 38 The first one of these tests is a structural one. 39 The State Fund has a separate legal personality, 40 and as stated in Maffezini, the intent of the State to create still another a corporate entity, ( ) even if State owned, is not sufficient to raise the presumption of an entity being an organ of the State. 41 In the case at hand, the State has created the Fund and granted it a separate legal personality. If the abovementioned quote from the Maffezini case is applied in the present case, it would create a presumption that the State Fund is a private organ for purposes of jurisdiction. The second test is a functional test. 42 It is meant to examine whether the functions of the entity are governmental or commercial. 43 As the Tribunal has stated in CSOB v Slovakia, in determining whether an entity exercised governmental functions, the focus must be on the nature of these activities and not on their purpose. 44 Hence, while it cannot be denied that the purpose of the functions of the State Fund is governmental, the privatization of FBI and the actions of selling FBI s shares are financial transactions, that have to be characterized as commercial. 45 Moreover, it is stipulated in the facts of the case that Ruritania is responsible for the appointment of the managing bodies. 46 In a case with similar facts, Impregilo v Pakistan, the Tribunal found that, even if Pakistan exercised strict control on a separate entity, that entity was not a State organ. 47 Therefore, a similar conclusion has to be reached by the Tribunal in the present case as well. 38 Maffezini v Spain [75] 39 Ibid. [77] 40 Procedural Order 2, Question 5 41 Maffezini v Spain [84] 42 Maffezini v Spain [79] 43 Ibid. [80] 44 CSOB v Slovak Republic [20] 45 Ibid. 46 Procedural Order 2, Question 5 47 Impregilo v Pakistan [209]
13 3. THE ACTS OF THE FUND CANNOT BE ATTRIBUTED TO RURITANIA In case the Claimant argues that the acts of the Fund have to be attributed to the State of Ruritania, Respondent replies by claiming that the conditions for the international responsibility of a State are not met in the present case. Such conditions are to be found in the Articles on Responsibility of States for Internationally Wrongful Acts. However, Article 4 of the Articles cannot be applied, since the Fund is not a State organ, as was previously proven. Furthermore, Article 5 of the Articles on Responsibility of States is not applicable, given the fact that there is no clear indication in the facts of the case that the Fund was empowered by the Law of the State to exercise governmental authority and in the alternative, it did not act in a governmental capacity, as was previously mentioned. The question here is not one of ownership rights over the entity at hand. 48 Last, Article 8 of the Articles of the Responsibility of States is not applicable as well. This is mainly because this Article asks for the conduct of a person or group of persons, which is not the case here. Additionally, Article 8 acknowledges the general separateness of corporate entities at the national level. 49 4. THE UMBRELLA CLAUSE SHOULD BE EMPLOYED IN A NARROW FASHION The Umbrella Clause in the present case has to be construed narrowly. Respondent asks the Tribunal to decide that the umbrella clause found in Article 6(2) of the applicable BIT does not elevate any contract breach to a treaty breach, bearing in mind the unspecific nature of the wording of the Clause. 50 In SGS v Pakistan, the tribunal found that an umbrella clause can be used only in exceptional cases, such as in this case, when a State might refuse to go to such arbitration at all and leave 48 Article 5 of the Articles on the Responsibility of States, Commentary 3 49 Article 8 of the Article on the Responsibility of States, Commentary 6 50 SGS v Pakistan [173]
14 the investor only the option of going before the ordinary courts of the Contracting Party (which actions need not amount to denial of justice ). 51 Moreover, the Tribunal in Joy Mining stated that exceptional circumstances, under which an obligation of the State can be transformed to a treaty breach, only include cases of a clear violation of treaty rights or a massive violation of treaty rights. 52 None of these conditions are fulfilled in the case before the Tribunal; therefore, the Respondent declares that no contract violations in the present case can be transformed to form allegations of treaty breaches. Any other interpretation might have undesirable consequences that the Tribunal has to avoid. Such consequences include the consideration that a broad interpretation of the umbrella clause would possibly lead to an insurmountable amount of complaints based on an overwhelming number of State contracts that would fall under the jurisdiction of investment tribunals. 53 Moreover, a broad interpretation of the umbrella clause would render the protections to be found in BITs (such as Fair and Equitable Treatment clauses) superfluous, since there would be no real need to demonstrate a violation of those substantive treaty standards if a simple breach of contract, or of municipal statute or regulation, by itself, would suffice to constitute a treaty violation on the part of a Contracting Party and engage the international responsibility of the Party. 54 Finally, such an expansive view would lead investors to nullify at will any freely negotiated dispute settlement clause in a State contract. 55 For all these reasons, the Tribunal is asked to find that it lacks jurisdiction over the alleged breaches of the Share Purchase Agreement. 51 Ibid. [172] 52 Joy Mining v Egypt [81] 53 SGS v Pakistan [168] 54 Ibid. 55 Ibid.
15 5. IN CASE THERE THE ABOVEMENTIONED CONSIDERATIONS ARE NOT TAKEN INTO ACCOUNT, CERTAIN CONDITIONS SHOULD BE READ IN THE UMBRELLA CLAUSE, THAT ARE NOT MET IN THE PRESENT CASE First of all, Tribunals have argued that there is a condition to be met for the application of an umbrella clause. According to these Tribunals, only contracts that the State has entered into as a sovereign (acta jure imperii) and not as a merchant (acta jure gestionis) can fall under the protective scope of the umbrella clause. 56 In this case, Respondent argues that the nucleus of this case is a commercial question and that there was no act of the State as a sovereign. A knowledge qualification term in a contract, such as the alleged breach under the Share Purchase Agreement, is a very common contract term and it is a term that can be carried out by a private entity and can be considered to be of commercial nature. Moreover, another condition is that according to the Tribunal in Burlington v Ecuador, there has to be privity of contract. In other words, both the State and the Claimant, and not any subsidiaries have to be parties to the contract. 57 In that case the Tribunal found that it lacked jurisdiction, due to the fact that a subsidiary of Burlington had signed a contract with Ecuador. In the present case, Contifica Spirits S.p.A. and not CAM is privy to the Share Purchase Agreement, a fact that has to lead the tribunal to declare that it lacks jurisdiction over CAM s claim in relation to the Share Purchase Agreement. 56 El Paso v Argentina [85]; Pan American - Argentina [109] 57 Siemens v Argentina [204]; Burlington v Ecuador [233]
16 B. IN THE ALTERNATIVE, IF THE TRIBUNAL CONSIDERS THAT IT HAS JURISDICTION OVER CAM S CLAIMS IN RELATION TO THE SHARE PURCHASE AGREEMENT, THESE CLAIMS ARE NOT ADMISSIBLE 1. THE TRIBUNAL SHOULD STAY THE PROCEEDINGS, GIVEN THE FACT THAT THE ESSENTIAL BASIS OF THE TREATY CLAIM IS CONTRACTUAL AND IT SHOULD FAVOUR THE APPLICATION OF THE EXCLUSIVE FORUM CLAUSE IN THE SHARE PURCHASE AGREEMENT In Vivendi, the Ad Hoc Committee stated that [i]n case where the essential basis of a claim brought before an international tribunal is a breach of contract, the tribunal will give effect to any valid choice of forum clause in the contract. 58 In the present case, both requirements are met. First of all, the essential basis of the claim brought by CAM is contractual, since the treaty claim at hand, namely the one pertaining to a breach of the protection afforded by an umbrella clause, only means to vindicate private contractual rights under the Agreement. The ultimate complain of the Claimant is that the Respondent has violated the guarantee that the products of FBI do not pose any health threats other than those ordinary for alcoholic beverages. 59 In addition, there is an exclusive forum clause under Article 14.2 of Annex 7 of the Share Purchase Agreement that would lead to adjudication of the matter by an ICC Tribunal - that needs to be enforced. 2. THE PRINCIPLE GENERALIA SPECIALIBUS NOT DEROGANT SHOULD LEAD THE TRIBUNAL TO GIVE EFFECT TO THE EXCLUSIVE FORUM CLAUSE FOUND IN THE SHARE PURCHASE AGREEMENT In SPP v Egypt it was declared that [a] specific agreement between the parties to a dispute would naturally take precedence with respect to a bilateral treaty between the investor s State and Egypt, while such a bilateral treaty would in turn prevail with respect to a multilateral 58 Vivendi I Annulment [98] 59 Statement of Claim 29
17 treaty such as the Washington Convention. [The dispute settlement cause] thus reflects the maxim generalia specialibus non derogant. 60 This principle dictates that a more specific agreement will trump a more general one. This maxim has been examined in similar cases as the one before the Tribunal. 61 In SGS v Philippines, while the Tribunal found that it had jurisdiction over an umbrella clause claim, it found that a contractual forum selection clause is more specific than a dispute settlement clause found in a BIT, therefore finding that the claim was not admissible. 62 Hence, in a similar fashion, the Tribunal should consider that the exclusive forum selection clause found in the Share Purchase Agreement is more specific than the dispute settlement clause in the BIT and it should find the treaty claim inadmissible. 3. THE LATER IN TIME EXCLUSIVE FORUM CLAUSE IN THE SHARE PURCHASE AGREEMENT SHOULD TAKE PRECEDENCE The Tribunal in BIVAC, after finding that it had jurisdiction over an umbrella clause, considered that [t]he parties could have included a provision in [the forum selections clause in the contract] to the effect that the obligations it imposed were without prejudice to any rights under the BIT, including the possible exercise of jurisdiction by 63 a treaty tribunal under the umbrella clause. This thought was premised on the fact that in that case, the contractual forum selection clause post-dated the dispute settlement clause in the BIT. This consideration has led the tribunal to find a claim under the umbrella clause inadmissible. In the present case, the exclusive forum clause in the Share Purchase Agreement was signed on 30 June 2008, 64 post-dating the BIT that was signed on 15 March 1997, 65 and there is no indication that there is a provision in the contract designed to exclude the right to resort to arbitration under the BIT from the exclusive forum clause in the contract. 60 SPP Egypt [149] [150] 61 Zhinvali v Georgia [335] [342]; MINE v Guinea [6.3] [6.4]; Klockner v Cameroon [17] 62 SGS v Philippines [141] 63 BIVAC v Paraguay [146] 64 Statement of Claim 7 65 Statement of Claim 1
18 4. THE CLAIMANT CANNOT BRING FORWARD A CLAIM CONCERNING THE SHARE PURCHASE AGREEMENT, SINCE IT DOES NOT COMPLY WITH ITS OWN CONTRACTUAL OBLIGATIONS The Claimant in the present case tries to carefully select which clauses and terms of the Share Purchase Agreement to apply, picking only the ones favourable to its interests. While bringing forward a claim for a breach of the Guarantee of Article 14.2 of Annex 7 of the Share Purchase Agreement, it conveniently tries to escape the application of other provisions of the same Agreement, namely the provision on the exclusive forum selection. The Tribunal in SGS v Philippines held that a party to a contract cannot claim on that contract without itself complying with it. 66 Other tribunals have come to similar conclusions. 67 For this reason, umbrella clauses have been considered as inadmissible. Therefore, in a similar way, the Tribunal should declare the claim of the Claimant inadmissible, since the Claimant has not complied with the exclusive forum clause found in the Share Purchase Agreement. III. THE MAB ACT DID NOT CAUSE A VIOLATION OF THE BIT A. THE MEASURES DID NOT CAUSE AN UNLAWFUL EXPROPRIATION AND THEREFORE DID NOT VIOLATE ART. 4(1) OF THE BIT. While the Claimant is still the legal owner of all shares of FBI, it pursues that the measures have caused an indirect expropriation. In order for this to happen, the economic effects of the measures on the investment must be significant. 68 Although Claimants revenues have indeed dropped, this case does not involve an indirect expropriation. The revenues have dropped, but the investment itself is still intact and the Claimant is still the legal owner of its investment. 69 66 SGS v Philippines [154] 67 Saluka v The Czech Republic [57]; Toto v Lebanon [202]; BIVAC v Paraguay [148]; Bosh v Ukraine [258] 68 Cement Shipping A v Egypt [107] 69 ECtHR, Sporrong & Lonnroth v Sweden (23 September 1982) Series A, 52 par 63