Applicant 2012m- banking and investment law moot

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INTERNATIONAL BANKING AND INVESTMENT LAW MOOT COURT COMPETITION, 2012


PERMANENT COURT OF ARBITRATION, THE HAGUE

CASE CONCERNING INVESTMENT IN TWO POWER PLANTS IN FEDERAL REPUBLIC OF
ASIANIA
(Docket No 2/2012)


EUROPA-GLOBAL TRACTION AND POWER CORPORATION PRIVATE
LIMITED (EGTPC)
(APPLICANT)

v.

THE FEDERAL REPUBLIC OF ASIANIA
(RESPONDENT)



MEMORIAL FOR THE APPLICANT
EUROPA-GLOBAL TRACTION AND POWER CORPORATION PVT. LTD.

Team 21A
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TABLE OF CONTENTS

TABLE OF ABBREVIATIONS ........................................................................................................ i
INDEX OF AUTHORITIES ........................................................................................................... ii
STATEMENT OF JURISDICTION ................................................................................................ ix
FACT HIGHLIGHTS .................................................................................................................... x
QUESTIONS PRESENTED ......................................................................................................... xiii
SUMMARY OF ARGUMENTS .................................................................................................... xiv
ARGUMENTS ADVANCED ........................................................................................................... 1
[PART I: JURISDICTION] ............................................................................................................ 1
A. THAT THIS TRIBUNAL HAS JURISDICTION TO ARBITRATE OVER THIS DISPUTE. .......... 1
1. THAT THIS TRIBUNAL IS COMPETENT TO DECIDE UPON ITS JURISDICTION UNDER
WELL SETTLED RULES OF ARBITRATION LAW. ............................................................. 1
1.1 That the doctrine of Competence-Competence is applicable in the instant case . 1
1.1.1 That the doctrine is expressly provided under Article 23 of UNCI TRAL
Rules, 1976 ...................................................................................................... 1
2. THAT THIS TRIBUNAL HAS JURISDICTION OVER BOTH TREATY CLAIMS AND
CONTRACT CLAIMS. ....................................................................................................... 2
2.1 That this Tribunal has jurisdiction ‘ratione materiae’ over treaty claims ........... 2
2.1.1 That the dispute involves an ‘investment’ by the Applicant ...................... 2
2.1.2 That the change in equity holding of EGTPC does not bar the
jurisdiction of this Tribunal .......................................................................... 3
2.2 That the parties to the dispute sought resolution through negotiation and
consultation ............................................................................................................ 5
2.3 That the local remedies have been exhausted ....................................................... 7
2.3.1 That the decision of High Court was final ................................................... 7
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2.3.2 Arguendo, exceptions to local remedies applies ........................................... 8
3. THAT THIS TRIBUNAL HAS JURISDICTION RATI ONE MATERI AE OVER CONTRACT
CLAIMS. .......................................................................................................................... 8
3.1 That this tribunal has jurisdiction under Article I I (3) (c) of treaty ..................... 8
3.2 That this Tribunal has jurisdiction under Article VI (2)(a) of the Treaty and
Article I I I of the Agreement. ............................................................................... 10
[PART II: MERITS] .................................................................................................................. 10
LAW APPLICABLE TO THE MERITS OF THE DISPUTE .......................................................... 10
A. THAT RESPONDENT’S ACTIONS AMOUNT TO EXPROPRIATION. .................................... 10
1. THAT RESPONDENT EXPROPRIATED APPLICANT’S ASSETS. ........................................ 11
1.1 That the order for attachment before judgement has substantially deprived the
Applicant of his use and enjoyment over its assets ............................................. 12
1.2 That there was interference with applicants’ Treaty based Legitimate
Expectations ......................................................................................................... 14
1.3 That the act of judiciary is attributable to the State ............................................ 14
2. THE EXPROPRIATION OF APPLICANTS’ ASSETS IS UNLAWFUL. .................................... 15
2.1 That the mode of expropriation was not in accordance with the due process of
law ......................................................................................................................... 16
2.2 That the Respondent has violated Fair and Equitable Treatment Clause of the
Treaty .................................................................................................................... 17
2.3 That the Respondent’s actions are Arbitrary and Disproportionate .................. 18
2.4 That no compensation has been offered by the Respondent ............................... 19
B. THAT THE RESPONDENT HAS COMMITTED A GRAVE BREACH OF THE CONTRACT. .. 19
1. THAT THE NON PAYMENT AMOUNTS TO BREACH OF THE CONTRACT. ...................... 20
1.1 That the ‘Consideration’ is the Essential Element of the Contract ........................... 20
1.2 That breach of an essential element shall be construed as grave breach of the
contract. ................................................................................................................ 21
1.2.1 That there should be Contextual Interpretation of the Agreement......... 21
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1.2.2 That according to English Law Principle- Fundamental Breach goes to
the root of the Contract. .............................................................................. 22
1.2.3 That there is ‘Fundamental Non Performance’ according to the
UNI DROI T Principles of Commercial Contracts. ..................................... 23
3. THAT COUNTER CLAIM SOUGHT BY RESPONDENT SHALL NOT BE ALLOWED. ............ 23
3.1 That the partial Non-Performance does not amount to breach of the Agreement.
............................................................................................................................... 24
3.1.1 That there was no substantial Deprivation ................................................ 24
3.2 That the reasons for Non Performance attributable to the Respondent. ........... 25
PRAYER ................................................................................................................................... xix


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TABLE OF ABBREVIATIONS

[ ] Paragraph
Art. / Arts. Article / Articles
BIT Bilateral Investment Treaty
Co. Company
CUP Cambridge University Press
e.g. Exempli gratia
ed. Edition
eds. Editors
et al. Et alia (and others)
et seq. Et sequens (and the following ones)
FET Fair and equitable treatment
i.e. Id est (that is)
ibid. Ibidem
ICJ International Court of Justice
ICSID International Centre for Settlement of Investment Disputes
ILC International Law Commission
ILC International Law Reporter
OUP Oxford University Press
Para Paragraph
Sec. Section
UNO United Nations Organisation
UNTS United Nations Treaty Series
USD United States Dollar
v. Versus
VCLT Vienna Convention of the Law of Treaties
Vol. Volume
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INDEX OF AUTHORITIES

Cases
1. Bank of Credit and Commerce International SA v Ali [2002] 1 A.C. 251. ................. 22
2. Bannerman v White [1861] 10 CB NS, 844 ................................................................. 20
3. Bannerman v White [1861] 10 CB NS, 844. ................................................................ 20
4. Bolton v. Mahadeva [1972] 1 W.L.R. 1009 ................................................................. 24
5. Bolton v. Mahadeva [1972] 1 W.L.R. 1009. ................................................................ 24
6. Boone v. Eyre [1779] 1 H Bl. 273; Broom v. Davis [1794] 7 East 480 ....................... 24
7. Commonwealth v Verwayen (1990) 170 CLR 394,491 NSWSC 896 ......................... 24
8. Compare Hoening v. Isaacs [1952] 2 All E.R. 176 ..................................................... 24
9. Downing v Al Tameer Establishment (2002] EWCA Civ 721 .................................... 24
10. Investors Compensation Scheme Ltd. v. WestBromwich Building Society [1998] 1
W.L.R. 896 ................................................................................................................... 22
11. Mannai Investment Co Ltd. v. Eagle Star Assurance Co. Ltd [1997] 2 W.L.R. 945 ... 22
12. Maple Flock CO. Ltd v. Universal Future Products (Wembley) Ltd [1934] 1 KB 148
...................................................................................................................................... 22
13. Mareva Compania Naviera SA v. International Bulkcarriers SA, [1975] 2 Lloyd’s
Rep 509. ....................................................................................................................... 13
14. Nicaragua v United States of America and South West Africa, 27 June 1986 (I.C.J
Rep. 14). ......................................................................................................................... 5
15. Prenn v Simmonds [1971] 1 W.L.R. 1381. .................................................................. 21
16. Reardon Smith Line v Hansen-Tangen, [1976] 1 W.L.R. 989 ..................................... 21
17. Robert A Munro & Co. Ltd v. Meyer [1930] 2 KB 312. .............................................. 22
18. Suisses Atlantique Societe d’ Armement MaritimeSA v. NV ROtterdamsche Kolen
Centrale[1967] 1 A.C. 361 ......................................................................................... 22
19. Tridon v Tridon Australia [2002] ................................................................................ 24
20. Williams v. Roffey Bros. & Nicolls (Contractors) Ltd. [1991] 1 Q.B. 1. .................... 24



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Articles
1. Andrew Newcombe,‘The Boundaries of Regulatory Expropriation in International
Law’, (2005) 20 FILJ ................................................................................................... 11
2. Christoph Schreuer, ‘Travelling the BIT Routes: Of Waiting Periods, Umbrella
Clauses and Fork s in the Road’ [2004] 5 JWIT 231 ..................................................... 6
3. David Capper, Worldwide Mareva Injunctions, (1991) 54 TMLR, ............................ 13
4. Judith Gill, ‘Contractual Claims and Bilateral Investment Treaties: A Comparative
Review of the SGS Cases’ (2004) 21 J. Int'l Arb. ....................................................... 9
5. K.A. Byrne, ‘Regulatory Expropriation and State Intent’ (2000) 38 Canadian YB
ofInt'l L 89. .................................................................................................................. 19
6. Michael Prior, ‘The Nature of the Mareva Injunction’, (1991) 6 Int'l Legal Prac. 122.
...................................................................................................................................... 16
7. S. Fietta, ‘Expropriation and the “Fair and Equitable” Standard: The Developing Role
of Investor’s “Expectations” in International Investment Arbitration’, (2006) 23 JIA
375................................................................................................................................ 13
8. Silvia D’ Ascoll and Katherin Maria Scherr, ‘The Rule of Prior Exhaustion of Local
Remedies in the International Law doctrine’(2007) ...................................................... 7
9. U Kriebaum, ‘Regulatory Takings: Balancing the Interests of the Investor and the
State’ (2007) 8 J World Investment & Trade............................................................... 15
10. WD Verwey and NJ Schrijver, ‘The Taking of Foreign Property Under International
Law: A New Legal Perspective?’ (1984) Netherlands Ybk Intl L 3. .......................... 12

Treatises
1. Commentaries on UNIDROIT Principles on International Commercial Contracts,
International Institute for the Unification of Private Law (UNIDROIT), Rome, 2004.
...................................................................................................................................... 23
2. Emmanuel Gaillard and John Savage (eds.), Fouchard, Gaillard, Goldman on
International Commercial Arbitration (Kluwer Law International, The Hague,
Boston, London: 1999) .................................................................................................. 1
3. Gary Born, International Commercial Arbitration: Commentary and Materials, 2
nd

edn. (Transnational Publishers, Ardsley, New York: 2001) .......................................... 1
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4. Howard M. Holtzmann and Joseph E. Neuhaus, A Guide to the UNCITRAL Model
Law on International Commercial Arbitration: Legislative History and Commentary
(Boston: 1989) ............................................................................................................... 1
5. International Law Commission Articles on Responsibility of States for Internationally
Wrongful Acts, 2001 .................................................................................................... 14
6. UNCITRAL Rules, 1976 (As revised in year 2010). .................................................... 1
7. Vienna Convention on Law of Treaties (adopted 23 May 1969,entered into force at
27 Jan. 1980) 1155 UNTS 331 ..................................................................................... 8

Arbitral Awards
1. ADC v. Hungary, Final Award, 2 October 2006, (ICSID Case No. ARB/03/16) ....... 16
2. Alps Finance and Trade AG v.Slovakia, Final Award, Mar. 5, 2011 (Ad hoc
UNCITRAL arbitration). ............................................................................................... 5
3. Amco Asia Corporation and Others v. Republic of Indonesia, Resubmitted Case,
Final Award, 31 May 1990 (ICSID Case No. ARB/81/1) ........................................... 11
4. Amco Asia Corporation and others v. Republic of Indonesia, Resubmitted Case,
Award, 31 May 1990 (ICSID Case No. ARB/81/1) ................................................... 16
5. Burlington Resources Inc. v. Republic of Ecuador, Decision on Jurisidction ,2 June
2010 (ICSID Case No. ARB/08/5) ................................................................................ 6
6. CME Czech Republic B.V. v The Czech Republic, Partial Award, 13 September 2001
(UNCITRAL) ............................................................................................................... 11
7. Consorzio Groupement LESI and ASTALDI v Algeria, Decision on Jurisdiction, 12
July 2006 (ICSID Case No ARB/05/3; IIC 150 (2006). ................................................ 9
8. Continental Casualty Company v Argentina, Award, 5 September 2008 (ICSID Case
No ARB/03/9) .............................................................................................................. 12
9. Corn Products v.United Mexican States, Decision on Responsibility, 15 January 2008,
( ICSID Case No. ARB (AF)/04/01)............................................................................ 11
10. Enron Corporation and Ponderosa Assets, L.P. v. Argentine Republic, Final Award,
22 May 2007 (ICSID Case No. ARB/01/3) ............................................................... 18
11. Eureko v. Poland, Partial Award, 19 August 2005. ....................................................... 9
12. Generation Ukraine Inc. v. Ukraine, Final Award, 16 September 2003 (ICSID Case
No. ARB/00/9). .............................................................................................................. 2
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13. Generation Ukraine Inc. v. Ukraine, Final Award, Sept. 16, 2003 (ICSID Case No.
ARB/00/9). ..................................................................................................................... 4
14. Lauder v Czech Republic, Final Award, 3 September 2001 (UNCITRAL Arbitration
– SCC Rules).................................................................................................................. 5
15. LG&E Energy Corp and ors v Argentina, Decision on Liability, 3 October 2006
(ICSID Case No ARB 02/1) (2007) ............................................................................. 18
16. Loewen v. United States, Award on the Merits, 26 June 2003 (ICSID Case No.
ARB(AF)/98/3). ........................................................................................................... 15
17. Martini Case (Italy v Venezuela) (1930) 2 RIAA 974 ................................................. 14
18. Marvin Feldman v. Mexico, Final Award, 16 December 2002, (ICSID ARB (AF)/99/1
...................................................................................................................................... 12
19. Metalclad Corp v. United Mexican States, Final Award, 30 August 2000 (ICSID Case
No. ARB (AF)/97/1), ................................................................................................... 11
20. Metalclad Corp v. United Mexican States, Final Award, 30 August 2000 (ICSID Case
No. ARB(AF)/97/1) ..................................................................................................... 11
21. Metalclad v Mexico, ICSID Case No.ARB(AF)/97/1, Award, 25 August 2000, IIC
161 (2000), ................................................................................................................... 17
22. Methanex Corporation v. United States of America, , Final Award of the Tribunal, 7
th

August 2005, (UNCITRAL Arbitration Rules). .......................................................... 15
23. Occidental Petroleum Corporation and Occidental Exploration and Production
Company v. Ecuador, Decision on Jurisdiction, 9 September 2008, (ICSID Case No
ARB/06/11) .................................................................................................................. 17
24. Occidental v Ecuador, Final Award, July 1 2004 (London Court of International
Arbitration, Case No.UN3467) ...................................................................................... 5
25. Oil Field of Texas Inc v Iran (1986) 12 Iran-USCTR 308, 318-19 ............................. 15
26. Plama Consortium Limited v. Republic of Bulgaria, Decision on Jurisdiction, 8
February 2005 (ICSID Case No. ARB/03/24). .............................................................. 3
27. Robert E. Brown case (United States v Great Britain) (1923) 6 RIAA 120 ............... 14
28. Salini Costruttori S.p.A.and Italstrade S.P.A v. Kingdom of Morrocco, Final Award,
23 July 2001 (ICSID Case No. ARB/00/4) .................................................................... 6
29. Salini v Morocco, Final Award, 23 July 2001 (ICSID Case No. ARB/00/4); .............. 5
30. Saluka Investments BV v Czech Republic, Partial Award, 17 March 2006 (PCA-
UNCITRAL Arbitration Rules) ............................................................................ 14, 15
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31. SD Myers Inc v Canada, First Partial Award and Separate Opinion, 13 November
2000 (Ad hoc—UNCITRAL Arbitration Rules).......................................................... 11
32. SGS S.A. v. Rep. of the Phil.,Objections to Jurisdiction, Jan. 29, 2004 (ICSID Case
No. ARB/02/6). .............................................................................................................. 9
33. SGS v. Pakistan, Decision on Jurisdiction, 6 August 2003 ( ICSID Case No.
ARB/01/13) .................................................................................................................... 5
34. Suez and Ors v Argentina , Final Award (ICSID Case No ARB/03/19) ..................... 14
35. Tecmed v. Mexico, Final Award, 24 May 2003 (ICSID No. ARB(AF)/00/2) . .......... 18
36. Técnicas Medioambientales Tecmed, S.A. v. United Mexican States, Award, 29 May
2003 (ICSID Case No. ARB(AF)/00/2)....................................................................... 18
37. Tecnicas Medioambientes S.A. v The United Mexican States, Award, 29 May 2003,
43 I.L.M. 133 (2004).................................................................................................... 17
38. The Interhandel case (Switzerland v. United States) (1959) ICJ Reports 6 .................. 7
39. Tippets, Abbet, McCarthy, Stratton v. TAMS – AFFA Consulting Engineers of Iran,
(1984) 6 Iran-USCTR. 225 .......................................................................................... 11
40. Tippets, Abbet, McCarthy, Stratton v. TAMS – AFFA Consulting Engineers of Iran,
Final Award, 29 June 1984, 6 Iran-USCTR ............................................................... 12
41. Tokios Tokeles v. Ukraine , Decision on jurisdiction, 29 April 2004. ........................ 14
42. Waste Management, Inc. v. United Mexican States, Final Award, 30 April 2004
(ICSID Case Nr. ARB(AF)/ 00/3) ............................................................................... 17

Books
1. A Newcombe and L Paradell, Law and Practice of Investment Treaties: Standards of
Treatment (Kluwer Law International 2009) ............................................................... 34
2. A Reinisch, ‘Legality of Expropriations’ in A Reinisch, Standards of Investment
Protection (OUP, Oxford 2008) ................................................................................. 31
3. A.Newcombe and L Paradell, Law and Practice of Investment Treaties: Standards of
Treatment (Kluwer Law International The Hague 2009) ............................................ 27
4. August Reinisch, ‘Expropriation’, in Peter Muchlinski, FedericoOrtino, and Christoph
Schreurer, (eds), ........................................................................................................... 34
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5. C Schreuer, ‘The Concept of Expropriation under the ECT and other Investment
Protection Treaties’ in C Ribeiro, Investment Arbitration and the Energy Charter
Treaty (JurisNet, Huntington NY 2006) ...................................................................... 28
6. C. McLachlan, L.Shore and M. Weiniger, International Investment Arbitration:
Substantive Principles (Oxford University Press London 2000 ) ............................... 26
7. Chittharanjan Felix Amerasinghe, Local Remedies in International Law(2
nd

Edn,Grotius Publications, Cambridge University 2004) ............................................. 23
8. Elizabeth A. Martin (ed), Oxford Dictionary of law (7
th
edn, OUP London 2009) ..... 17
9. Emmanuel Gaillard and John Savage (eds.), Fouchard, Gaillard, Goldman on
International Commercial Arbitration(Kluwer Law International, The Hague 1999) 16
10. Gary Born, International Commercial Arbitration: Commentary and Materials (2
nd

edn, Transnational Publishers, New York 2001) ........................................................ 16
11. Halsbury's Laws of England, 19(1) (5th edn, LexisNexis 2010) ................................. 38
12. Howard M. Holtzmann and Joseph E. Neuhaus, A Guide to the UNCITRAL Model
Law on International Commercial Arbitration: Legislative History and Commentary
(Boston 1989)............................................................................................................... 16
13. J. Beatson, Anson’s Law of Contract (28
th
edn, Oxford University Press 2006) ......... 36
14. J. Beatson, Anson’s Law of Contract (28
th
edn, Oxford University Press, 2006) ........ 39
15. Norbert Horn and Stefan Kroll, Arbitrating foreign investment disputes (Kluwer Law
International, The Hague The Netherlands 2004). ....................................................... 20
16. R. Dolzer and C. Schreuer, Principles of International Investment Law (Oxford
University Press, 2008) 92 ........................................................................................... 26
17. R. Dolzer and C. Schreuer, Principles of International Investment Law (Oxford
University Press Oxford 2008) .................................................................................... 24
18. S. Schill, ‘Fair and Equitable Treatment as an Embodiment of the Rule of Law’, in R.
Hofman and C. J. Tams (eds.), ICSID: Taking Stock after 40 Years, (OUP London
2007) ............................................................................................................................ 29
19. Stephen Schwebel, ‘The Severability of the Arbitration Agreement’ in Stephen
Schwebel, International Arbitration: Three Salient Problems (Grotius 1987) ........... 16
20. UNCTAD, Bilateral Investment Treaties 1995-2006: Trends in Investment Rule-
Making (United Nations, New York 2007).................................................................. 28
21. Vandevelde, K., J., ‘A Unified Theory of Fair and Equitable Treatmen’, (2010) 43
N.Y.U. Journal of International Law & Politics .......................................................... 33
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22. Z.Douglas, The International Law of Investment Claims (Cambridge University
Claims 2009) ................................................................................................................ 17


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STATEMENT OF JURISDICTION

Europa Global Traction and Power Corporation Private Ltd. (EGTPC), the Applicant in the
instant case, has the honour to submit this Memorial before the Tribunal, in pursuance of
Article VI (2) of The Reciprocal Protection of Investment Treaty between state of Atlantis
and State of Asiania read with Article III(1) of Agreement Concerning the requirement of
Notice to cure defaults and Settlement of disputes.



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FACT HIGHLIGHTS

-I-
Background: The Federal Republic of Asiania is a developing country, which was colonised
by Erlandia in 1604 A.D. It got independence on 1st January, 1960. The newly independent
country soon adopted a constitution on 15th July, 1960, providing for a federal structure. For
almost three decades since independence, successive governments in Asiania followed
protectionist policies under the so-called Mixed Economy, resulting in the economy being
shackled by extensive regulation, protectionism and licensing system leading to corruption
and nurturing a lackadaisical pattern of economic growth. Faced with an acute balance of
payment crisis in 1995, the Asiania Government was forced to embark upon a programme
of economic liberalisation and expansion to be carried out in a significant part through
privatization of state owned enterprises and attraction of foreign direct investment.
-II-
Power Generation : Rebuilding its economy by opening it up to foreign direct investment
Asiania found that one of the stumbling blocks in attracting foreign investment was the
serious inadequacy of the infrastructure facilities in the country. One of the core
infrastructure facilities is the stable supply of power, without which there was no hope of
ensuring productivity in all sectors, including agricultural. The state of power generation and
supply in Asiania at the turn of 1990’s was abysmally low– just 20 % of all demand. Coal
based thermal plants was not enough to generate power.
-III-
Europa Global Traction and Power Corporation(EGTPC) and Treaty: It was at this
juncture that the EGTPC began taking interest in investing in Asiania. It did have some
investments in an Antarctic country. However, a socialist government came to power and
expropriated the assets of this company. This forced the company to look elsewhere. EGTPC
was set up in 1971 in Morosova, the capital city of Atlantis. The majority of the share-holders
have for a long time been Atlantisians, with some 20% being held by Erlandians. During a
visit of the Prime Minister of Asiania to Morosova in March 1997, the Government of
Atlantis showed intense interest in concluding a reciprocal Investment Protection Treaty
and following this the treaty was negotiated which came on force on 27th December 1997.
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-IV-
The Proposal: The prime reason of the Atlantis’ interest in concluding the treaty was the
potential expansion of the business interest of EGTPC.A delegation of the company was sent
to Asiania. Soon after return, the Company made an investment proposal .According to the
proposal EGTPC, invest in setting up two power plants in Narnia, one at Nonbay and the
other at Domgiri and both these plants would produce power enough to meet the demands of
Narnia and four other Provinces of Asiania. The Nonbay plant would produce electricity
by using liquefied natural gas, the supply of which was to be contracted by the company
with certain OPECs The Narnia Electricity Supply Board (NESB) would then buy this
electricity at a stipulated rate (which was the double the rate for the current thermal power
generated electricity). However, in this arrangement, the plant would have joint ownership of
both EGTPC and NESB at the ratio of 60:40. The agreement would be in force for a period of
20 years, at the end of which period NESB could buy up the entire equity. The Domgiri
Project was to be tripartite – between EGTPC, NESB and Nuclear Power Corporation of
Asiania (NPCA).Under this arrangement too, the nuclear power plant would have joint
ownership of EGTPC 60% and NPCA and NESB 40%.
-V-
Acceptance of Proposal and following criticism: After detailed discussion among the
delegation of the company, and the Governments of Asiania, Narnia and Atlantis, the
proposal was accepted. The World Bank evaluated the project proposal and concluded
that it was “not economically viable, and thus could not be financed by the Bank”.
Even as the deal with EGTPC was being considered, several NGOs began protesting
against it. They argued that the Nonbay and Domgiri projects were unacceptable in view of
its potential harm to the environment. But at its backdrop, MOU was signed and construction
began of the 2 plants.
-VI-
The Dispute: May 2010: when it became clear that because of some deficiency in the
working of the centrifuge, the Plant could only produce half of what it began producing as
soon as it became critical on 25
th
March 2010.
30
th
May 2010: NESB wrote a strongly worded letter to EGTPC on 30th of May, reminding
the company that the warranty as to fitness of the plant, and that this should be rectified
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within a period of one month. However, this did not happen,Nuclear Regulatory Commission
gave its considered view after its visit to the Plant in November that the Centrifuge did not
function or was not restored to the standards originally contracted and that the company had
breached its warranty as to fitness of the Plant. The company denied this and said that
the situation could soon be rectified.
December 2010: The supply of light water contracted by EGTPC with the Nuclear Power
Corporation of Atlantis was disrupted as a result of an earth quake as a consequence the
Domgiri Plant stopped supplying electricity to Narnia. Secondly, and more importantly,
there was an election in Narnia in March 2011 which brought the parties opposing the
EGTPC deal to power. Consequently, NESB began defaulting its payments to EGTPC
for the power supplied to it. Thirdly, there was a serious labour trouble in Nonbay Plant
with a violent clash of two powerful labour unions .Finally, there was also a change in
the equity holding of EGTPC– 75% of the shares have now come to be acquired by
Erlandians.
-VII-
Proceedings: Not receiving the contracted supply of power from EGTPC, NESB went to
court seeking attachment before judgment, of all assets of the former. The attachment was
ordered, the company went on appeal to the High Court which rejected the appeal.
EGTPC immediately complained of this to the Governments of Atlantis and Asiania as a
disguised attempt at expropriation without appropriate compensation. EGTPC, on its part,
described the defaults of payments by NESB as a serious breach of the various agreements,
and also demanded further compensation. It has now invoked the compromissory clause
in the agreement on dispute settlement for arbitration of the dispute before the Permanent
Court of Arbitration on the basis of the UNCITRAL Rules of Arbitration, and strictly
on the basis of application of the applicable law between the parties. Both the parties
appoint an arbitrator each, but fail to agree on the third arbitrator, and therefore, the
Secretary-General of Permanent Court of Arbitration (PCA) has nominated a third arbitrator
from the Kingdom of Hollandia. The Court of Arbitration, sitting in London taking into
account of the conv.enience of the Parties, is now ready to hear the parties.

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QUESTIONS PRESENTED

I. WHETHER THE PRESENT TRIBUNAL HAS JURISDICTION TO ARBITRATE OVER
THE DISPUTE?

II. WHETHER THE RESPONDENT HAS VIOLATED ITS OBLIGATIONS UNDER THE
BIT ?

III. WHETHER THE VARIOUS AGREEMENTS BETWEEN THE TWO PARTIES HAVE
BEEN BREACHED?

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SUMMARY OF ARGUMENTS

I. THIS TRIBUNAL HAS JURISDICTION TO ARBITRATE OVER THIS DISPUTE.
It is humbly submitted that the Tribunal has jurisdiction over both the Treaty claims and
Contract claims of the Applicant. This tribunal has jurisdiction over treaty claims as all the
pre requisites given under Article VI of the treaty which includes negotiation and
consultation, exhaustion of local remedies have been fulfilled. Moreover, the Tribunal has
jurisdiction over Applicants contract claims arising under various Agreements by virtue of
Article II (3) (c) of Reciprocal Investment Treaty which provides for an “umbrella clause”
and Article III of ‘The Agreement Concerning the Requirements of Notice to Cure Defaults
and Settlement of Disputes’.
II. THAT RESPONDENT’S ACTIONS AMOUNT TO EXPROPRIATION.
It is contended that the Respondent has expropriated the Applicant’s assets indirectly, which
is prohibited by the General Principles of International Law and the Investment Protection
Treaty signed between the two countries. The Applicant submits that, one, the Respondent
expropriated its investments by substantially depriving the Applicant of its rights over its
investments and by not fulfilling the Treaty based legitimate expectations of the Applicant.
Two, the expropriation was unlawful since it does not fall under any of the exceptions
provided by the Treaty.
III. THAT RESPONDENT HAS COMMITTED A GRAVE BREACH OF THE CONTRACT.
The Respondent failed to make the payments to the Applicant for the power supplied to it.
The Applicant submits before the Tribunal that this Default in payment amounts to grave
breach of the contract. The Applicant shall demonstrate this contention by dividing it into
two equal parts, one, the non payment amounts to a breach of the contract and
Consideration is an essential element of the Contract and secondly the violation of an
essential element of the agreement is a ‘grave breach’ of the Contract.
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ARGUMENTS ADVANCED
[PART I: JURISDICTION]
A. THAT THIS TRIBUNAL HAS JURISDICTION TO ARBITRATE OVER THIS DISPUTE.
It is the Applicant’s submission that Article 1 read with Article 23 of the UNCITRAL Rules,
1976
1
gives this Tribunal the inherent power to rule on its jurisdiction in a matter when parties
to the dispute have referred to arbitration under UNCITRAL Rules.
In the present dispute, it is pertinent to note that the consent to arbitrate is recorded under
Article VI (2) of The Reciprocal Protection of Investment Treaty (hereinafter “the Treaty”)
between state of Atlantis and State of Asiania read with Article III(1) of Agreement
Concerning the requirement of Notice to cure defaults and Settlement of disputes (hereinafter
“the Agreement”).
1. THAT THIS TRIBUNAL IS COMPETENT TO DECIDE UPON ITS JURISDICTION UNDER WELL
SETTLED RULES OF ARBITRATION LAW.
1.1 That the doctrine of Competence-Competence is applicable in the instant case
The doctrine of Competence-Competence states (Kompetenz-Kompetenz/Compétence de la
Compétence) that the arbitral tribunal has the competence to determine its own jurisdiction
without involving the courts. This doctrine finds wide recognition in international
arbitration.
2

1.1.1 That the doctrine is expressly provided under Article 23 of UNCI TRAL
Rules, 1976
This Arbitral Tribunal has been constituted under the UNCITRAL Rules, 1976. The
UNCITRAL Rules expressly grant the Arbitral Tribunal unfettered authority to decide on its
own jurisdiction under Article 23 of the UNCITRAL Rules. Article 23 provides for pleas as to

1
UNCITRAL Rules, 1976 (As revised in year 2010).

2
Emmanuel Gaillard and John Savage (eds.), Fouchard, Gaillard, Goldman on International Commercial
2
Emmanuel Gaillard and John Savage (eds.), Fouchard, Gaillard, Goldman on International Commercial
Arbitration (Kluwer Law International, The Hague 1999) ¶ 397; Gary Born, International Commercial
Arbitration: Commentary and Materials (2
nd
edn, Transnational Publishers, New York 2001) 85; Howard M.
Holtzmann and Joseph E. Neuhaus, A Guide to the UNCITRAL Model Law on International Commercial
Arbitration: Legislative History and Commentary (Boston 1989) ¶ 478; Stephen Schwebel, ‘The Severability
of the Arbitration Agreement’ in Stephen Schwebel, International Arbitration: Three Salient Problems
(Grotius 1987) 2.
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the jurisdiction of the arbitral tribunal and 23(1) states that, “The arbitral tribunal shall have
the power to rule on its own jurisdiction, including any objections with respect to the
existence or validity of the arbitration agreement...”
2. THAT THIS TRIBUNAL HAS JURISDICTION OVER BOTH TREATY CLAIMS AND CONTRACT
CLAIMS.
The present matter is concerned with dispute between EGTPC and the Federal Republic of
Asiania. The Reciprocal Protection of Investment Treaty read along with the ‘Agreement
Concerning the Requirement of Notice to Cure Defaults and Settlement of Disputes’ gives
this Tribunal jurisdiction to hear both the treaty and the contract claims.
2.1 That this Tribunal has jurisdiction ‘ratione materiae’
3
over treaty claims
The Applicant submits that this Tribunal’s jurisdiction in the instant case is governed by the
scope of dispute resolution mechanism of the Treaty
4
. Article VI of Reciprocal Protection
Investment Treaty controls the scope of Tribunal’s jurisdiction in several respects. It provides
that in event of an ‘investment dispute’ [Art VI (1)], the parties to the dispute should initially
and without delay ‘seek resolution through consultation and negotiation’. If the dispute
cannot be settled amicably, the national or the company concerned shall ‘earnestly seek to
exhaust the local remedies’ available in the host Party. Upon exhaustion of local remedies, if
the dispute still remains unresolved, the applicant may choose to submit the dispute, under
one of the following alternatives, for resolution: (a)In accordance with any applicable,
previously agreed dispute settlement procedures; or (b) in accordance with the terms of
paragraph 3 [Art VI(2)].
5

2.1.1 That the dispute involves an ‘investment’ by the Applicant
Article VI (1) of the Treaty defines investment dispute.
6
In view of the definition provided in
the Treaty, the Applicant asserts that in order to avail the jurisdiction of this Tribunal, it is

3
Elizabeth A. Martin (ed), Oxford Dictionary of law (7
th
edn, OUP London 2009) (Jurisdiction Ratione
Materiae, otherwise known as subject-matter jurisdiction refers to the court's authority to decide a particular
case).
4
Z.Douglas, The International Law of Investment Claims (Cambridge University Claims 2009); Generation
Ukraine Inc. v. Ukraine, Final Award, 16 September 2003 (ICSID Case No. ARB/00/9).

5
See Annexure 1.

6
ibid.

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necessary that the dispute was over an investment made in the host party. Article I (b) of the
Treaty defines investment as every kind of investment in the territory of one party owned or
controlled directly or indirectly by nationals or companies of the other party, such as equity,
debt and investment contract; and includes, (ii) a company or shares of stock or other
interests in a company or interests in the assets thereof; and (v) any right conferred by law or
contract, and any licence and permits pursuant to law.
This dispute satisfies the aforementioned conditions. First, EGTPC made an investment
contract with the State of Asiania whereby it contributed US $3400 million for 60% of
ownership interest over the assets in the territory of Asiania where the Nonbay and Domgiri
Plants
7
were established; and second, this control over the plant would be directly by the
nationals of the other party, as majority of the share holders of EGTPC were Atlantisians
(EGTPC was set up in Atlantis), with some meagre 20% being held by Erlandians.
8

Moreover, the present dispute also satisfies the conditions mentioned under Article VI (1) as
it is a dispute arising out of an agreement which was made in furtherance of the Treaty and
there was an alleged breach of various rights like expropriation and fair and equitable
treatment (discussed under merits of the case).
2.1.2 That the change in equity holding of EGTPC does not bar the
jurisdiction of this Tribunal
Article I(2) of the Treaty provides that “Each party reserves the right to deny to any company
the advantages of this Treaty if nationals of any third country control such company and ,in
the case of a company of the other party, that company has no substantial business activities
in the territory of the other Party or is controlled by nationals of a third country with which
denying Party does not maintain normal economic relations.”
9

The Applicant submits that in the case of Plama v. Bulgaria
10
, decision on the jurisdiction
rendered by an ICSID tribunal under the Energy Charter Treaty provides guidance for the

7
See Compromis, ¶ 10.

8
See Compromis, ¶ 7.

9
See Annexure 1.

10
Plama Consortium Limited v. Republic of Bulgaria, Decision on Jurisdiction, 8 February 2005 (ICSID Case
No. ARB/03/24).

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interpretation of the meaning of the denial of benefits clauses under Art.17 (1) of ECT
11
which is similar to the above clause. It was noted by the Tribunal that since both the
conditions are inclusive, both must be met before the Contracting Party can invoke Art. 17(1).
In the present case too, though equity shareholding of EGTPC was changed to include 75 %
of Erlandians, who were nationals of third country but the company still had substantial
business activities in Asiania. Alternatively, the second optional condition cannot be deduced
directly as the facts are silent on the point whether State of Asiania had normal economic
relations with Erland. Moreover, the burden of proof lies with the respondent State. The same
was held in the case of Generation Ukraine v. Ukraine.
12

Arguendo, even assuming that State of Asiania did not have normal economic relations with
Erland even than this denial of benefit clause does not operate automatically and therefore,
requires a positive action by the host State.
The ICSID Tribunal in Plama v. Bulgaria
13
clarified that “the existence of a ‘right’ is distinct
from the exercise of that right…” It further held that:
“The exercise would necessarily be associated with publicity or other notice so as to become
reasonably available to investors and their advisers. To this end, a general declaration in a
Contracting State’s official gazette could suffice; or a statutory provision in a Contracting
State’s investment or other laws; or even an exchange of letters with a particular investor or
class of investors.”
In view of the above, the Applicant in the present case submits that this right was not
exercised by the State of Asiania and no publicity or other notice so as to become reasonably
available to the investors and their advisors. Moreover, presuming that the demand for
renegotiation be taken as a notice in the present case, this notice would be prospective in

11
Energy Charter Treaty, Art. 17 provides “Each Contracting Party reserves the right to deny the advantages of
this part (part III) to: (1) a legal entity if citizens or nationals of other state own or control such entity and if
that entity has no substantial business activities in the area of the Contracting Party in which it is
organized…”.

12
Generation Ukraine Inc. v. Ukraine, Final Award, Sept. 16, 2003 (ICSID Case No. ARB/00/9).
13
See supra note 10, ¶ 155-165.

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nature and the Tribunal would have jurisdiction to hear all disputes which arose prior to the
notice.
14

2.2 That the parties to the dispute sought resolution through negotiation and
consultation
The second procedural requirement before approaching this Tribunal is that parties to the
dispute should have initially sought resolution through negotiation and consultation. The
substantive content of this step in dispute resolution may not be onerous, but the obligation is
real, for an investor must at least notify the host State of the grounds in the dispute in writing
and have the willingness to discuss and settle the dispute before arbitration or litigation.
15

In a very recent case of Alps Finance Trade AG v. Slovak Republic,
16
an UNCITRAL Tribunal
had to consider whether Alps had satisfied the obligation contained in Article 9 of the
Switzerland-Slovakia BIT which requires that ‘consultations will take place’ and that they
‘do not result in a solution within six months’ before the matter can be referred to arbitration.
The Tribunal held that the negotiation clause in the BIT was not an obstacle to its
jurisdiction
17
as all that was required was that ‘consultations be at least attempted’ and that
six months had elapsed without any resulting solution. The rationale of the clause is to avoid
‘that a State be brought before an international investment tribunal all of a sudden, without
being given the opportunity to discuss the matter with the other party’.
18

The general view is that, where the applicant has taken reasonable steps to bring the dispute
to the State’s attention and resolve the matter amicably, negotiations would have be
considered to have been taken. Accordingly, the only cases where tribunals have enforced the

14
ibid.

15
Norbert Horn and Stefan Kroll, Arbitrating foreign investment disputes (Kluwer Law International, The
Hague The Netherlands 2004).

16
Alps Finance and Trade AG v..Slovakia, Final Award, Mar. 5, 2011 (Ad hoc UNCITRAL arbitration).

17
Salini v. Morocco, Final Award, 23 July 2001 (ICSID Case No. ARB/00/4); Lauder v. Czech Republic,
Final Award, 3 September 2001 (UNCITRAL Arbitration – SCC Rules); SGS v. Pakistan, Decision on
Jurisdiction, 6 August 2003 ( ICSID Case No. ARB/01/13);Occidental v. Ecuador, Final Award, July 1 2004
(London Court of International Arbitration, Case No.UN3467) ;See generally, Nicaragua v. United States of
America and South West Africa, 27 June 1986 (I.C.J Rep. 14).

18
See supra note 17.
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negotiation clause were where the applicant did not give the State any notice at all, or only
very short notice, of its claim prior to commencement of the arbitration.
19

In Burlington v. Ecuador,
20
where the applicant had only informed the State of the dispute by
submission of its request for arbitration, the ICSID Tribunal found that the applicant had
deprived the State of the “opportunity to redress the problem before the investor submits the
dispute to arbitration” and that, as a result, the Tribunal lacked jurisdiction over the
applicant’s claim (therefore holding that the duty to give proper notice of the claim was not
just a procedural but a jurisdictional requirement).In Salini v.Morroco,
21
the host country
argued that the request to arbitrate was premature because the various documents relied upon
by the applicant as notifications of dispute were inadequate. The tribunal refused to adopt a
formalistic approach to the treaty and held that the attempt to reach settlement did not need to
be comprehensive or detailed.
But the Applicant submits that the present case is entirely different on facts. The
consultations between both the parties began in early 2010 when it was alleged by Asiania
that there were problems in the centrifuge and as soon as the conflict was brought in notice
efforts were made by EGTPC to resolve the matter amicably and for this purpose they
brought technical personnel from the manufacturing centre to examine the problem and they
were at work for a month. But in spite of this the NESB began defaulting its payments to
EGTPC for even the power supplied to it which amounted to US $39 million. Following this,
NESB got a decree passed for attachment before judgment EGTPC immediately complained
of this to Government of Asiania and Atlantis with the intention that the disguised attempt of
expropriation should be avoided thereby, took reasonable steps to bring the dispute to the
State’s notice. Moreover, with regard to the contract dispute, the NESB took the position that
payment default is curable if EGTPC pays up losses suffered by NESB and finds alternative
sources of power to resume, makes the position clear that sufficient steps were taken by
EGTPC to resolve the matter but such negotiations were unsuccessful. Moreover, it is clearly
mentioned in the facts that the State of Asiania gave its consent for starting the Arbitration
proceedings by taking positive steps by appointing an arbitrator. In light of the above

19
Christoph Schreuer, ‘Travelling the BIT Routes: Of Waiting Periods, Umbrella Clauses and Fork s in the
Road’ [2004] 5 JWIT 231 <http://www.univie.ac.at/intlaw/pdf/68.pdf> accessed 14 October 2012.

20
Burlington Resources Inc. v. Republic of Ecuador, Decision on Jurisidction, 2 June 2010 (ICSID Case No.
ARB/08/5).
21
Salini Costruttori S.p.A.and Italstrade S.P.A v. Kingdom of Morrocco, Final Award, 23 July 2001 (ICSID
Case No. ARB/00/4).
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submission, the Applicant asserts that the jurisdictional requirements have been fulfilled by
the company in the instant case.
2.3 That the local remedies have been exhausted
The obligation to exhaust domestic remedies forms part of customary international law,
recognised as such in the case law of the International Court of Justice.
22
This rule is based on
the interpretation that a State must be given the opportunity to redress an alleged wrong
within the framework of its own domestic legal system before its international responsibility
can be called into question before regional or international organs.
23
In order to meet the
exhaustion requirement, a victim must have obtained a final decision from the highest court
to which recourse is available. The Applicant asserts that the final decision in the instant case
implies that appeals have been taken to the highest possible level.
24

2.3.1 That the decision of High Court was final
It is submitted before this Tribunal that the decision of the High Court was final and no
further appeals were available.
Moreover, when an appellate court reviews an interlocutory order, its decision on the matters
contained in the order is final. The court enters an interlocutory judgment, which makes that
part of the case final. Therefore, if a case proceeds to trial after an interlocutory judgment is
entered, and an appeal from the trial court judgment follows, the matters decided by the
interlocutory judgment cannot be reviewed by the court again.
25

Therefore, it can be said that all the local remedies were exhausted and even than the
Applicant was not satisfied with the decision as to expropriation and so this gives jurisdiction
to PCA to try the matter.


22
The Interhandel case (Switzerland v. United States) (1959) ICJ Rep 6.

23
Silvia D’ Ascoll and Katherin Maria Scherr, ‘The Rule of Prior Exhaustion of Local Remedies in the
International Law doctrine’(2007) <papers.ssrn.com/sol3/papers.cfm?abstract_id=964195> last accessed at
13

May 2012.

24
ibid.

25
‘West's Encyclopedia of American Law’1 ( 2
nd
edn, West Publishing Company 1998).

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2.3.2 Arguendo, exceptions to local remedies applies
Article VI (2) of the Treaty explicitly provides that the applicant should “earnestly” seek to
exhaust local remedies. Article 31 of Vienna Convention
26
provides that terms in the treaty
must be given an ordinary meaning, therefore, it can be concluded that certain exceptions to
local remedies can be availed of by the Applicants.
27
One of the main exceptions is a pattern
in the defects in the administration of justice. An absence of adequate due process guarantees
as a basis for exception to the exhaustion rule. One of the prominent commentator on
exhaustion rule has suggested that “although not all forms of denial of justice may have the
result of exempting the applicant” from the exhaustion requirement, an absence of due
process would seem to have the effect of rendering remedies obviously futile...and fairness
cannot be expected to prevail.
28

In the present case there were defects in the administration of justice as there was absence of
due process of law. The judicial actions taken by the State of Asiania were disproportionate
and uncalled for. Moreover, all the procedural safeguards which the Applicant was entitled to
were also denied.
3. THAT THIS TRIBUNAL HAS JURISDICTION RATI ONE MATERI AE OVER CONTRACT
CLAIMS.
It is submitted that this Tribunal has jurisdiction over Applicants contract claims arising
under various Agreements by virtue of Article II (3) (c) of Treaty and Article III of the
Agreement.
3.1 That this tribunal has jurisdiction under Article I I (3) (c) of treaty
Article II (3) (c) of treaty contains what is commonly referred to as an “umbrella clause”. It
provides that “Each Party shall observe any obligation it may have entered into with regard
to investments”.

26
Vienna Convention on Law of Treaties (adopted 23 May 1969,entered into force at 27 Jan. 1980) 1155
UNTS 331 (art. 3l) stipulates that: “A treaty shall be interpreted in good faith in accordance with the
ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and
purpose.
27
Chittharanjan Felix Amerasinghe, Local Remedies in International Law (2
nd
edn, Grotius Publications,
Cambridge University 2004) 335-36.

28
ibid.
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An umbrella clause is a provision in a BIT that guarantees the observation of obligations
assumed by the host State vis-à-vis the investor.
29
They put contractual commitments under
the BIT’s protective umbrella.
30
Found in many BITs, it implied that each Contracting State
must observe all investment obligations it has assumed with respect to investors from the
other Contracting State.
31
The idea behind the metaphor is that umbrella clause brings
otherwise independent arrangements between a Contracting State and private investors from
the other Contracting State under the treat’s umbrella of protection to all breaches of relevant
investor State contract.
The Tribunal in SGS v. Philippines
32
decided that the umbrella clause applies to all breaches
of the relevant investor-State contract. The Tribunal, therefore, had jurisdiction over
contractual disputes arising under the Agreement, including any purely contractual claims
that were not also premised on the BIT’s substantive provisions.
Moreover, in an award rendered in Eureko v. Poland,
33
the Tribunal stated: “Any obligation”
is capacious; it means not only obligations of a certain type, but ‘any’-that are to say, all-
obligations. It can be inferred that these obligations also take into account the performance of
contractual duties and responsibility which arise under the contract.The same was held by the
tribunal in Consorzio Groupement
34
where it stated that “the effect of umbrella clauses is to
transform the violations of the State’s contractual commitmemts into violations of the treaty
umbrella clause and by this give jurisdiction to the Tribunal over the matter.”
Therefore, the umbrella clause applies to all ‘grave breach’ of contracts by the State of
Asiania (in its own behalf as well as on behalf of the Province of Narnia, National Nuclear
Power Corporation of Asiania and Narnia Electricity Board) thereby giving jurisdiction to the

29
R. Dolzer and C. Schreuer, Principles of International Investment Law (Oxford University Press Oxford
2008) 153.

30
See supra note 19.

31
Judith Gill, ‘Contractual Claims and Bilateral Investment Treaties: A Comparative Review of the SGS Cases’
(2004) 21 J. Int'l Arb.

32
SGS S.A. v. Rep. of the Phil., Objections to Jurisdiction, Jan. 29, 2004 (ICSID Case No. ARB/02/6).

33
Eureko v. Poland, Partial Award, 19 August 2005.

34
Consorzio Groupement LESI and ASTALDI v. Algeria, Decision on Jurisdiction, 12 July 2006 (ICSID Case
No ARB/05/3; IIC 150 (2006).

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Tribunal over the Contractual claims of the parties. The breach of contract, violates the
umbrella clause of the treaty, which indirectly gives this tribunal to hear the dispute in hand.
Moreover, Para 33 (8) of the Memorandum of Undertaking clearly provides that The
Memorandum of Undertaking and all actions and documentation there under shall be deemed
in furtherance of and to give effect to the Treaty. Therefore, this tribunal clearly has
jurisdiction to adjudicate the matter.
3.2 That this Tribunal has jurisdiction under Article VI (2)(a) of the Treaty and
Article I I I of the Agreement.
It is provided under Article VI (2)
35
It is submitted before this hon’ble Tribunal that the treaty
expressly provides that if even after complying with all the procedural requirements of this
treaty, the dispute still remains unresolved; the parties to this dispute can submit the dispute
according to previously agreed dispute settlement procedure.
In this present case Article III
36
of the Agreement provides for the procedure resolution of
Dispute under the auspices of Permanent Court of Arbitration in accordance with the
UNCITRAL Rules. Therefore, it can be concluded that there is no conflict between the treaty
and the contract between the parties, the ultimate jurisdiction to preside over the matter lies
with the present Tribunal.
[PART II: MERITS]
LAW APPLICABLE TO THE MERITS OF THE DISPUTE
According to Article 35 of UNCITRAL Rules, when there is absence of choice of law clause,
the general principles of conflict of law supplemented by principles recognised by
International Law is applicable. The treaty claims should be decided in accordance with the
provisions of the BIT and of International Law as the BIT’s governing law.
A. THAT RESPONDENT’S ACTIONS AMOUNT TO EXPROPRIATION.
It is contended that the Respondent has expropriated the Applicant’s assets indirectly, which
is prohibited by the General Principles of International Law and also by the Investment
Protection Treaty signed between the two countries. The Applicant submits that, one, the

35
See Annexure 1.

36
See Annexure 2.
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Respondent expropriated its investments by substantially depriving the Applicant of its rights
over its investments and by not fulfilling the Treaty based legitimate expectations of the
Applicant. Two, the expropriation was unlawful since it does not fall under any of the
exceptions provided by the Treaty.
1. THAT RESPONDENT EXPROPRIATED APPLICANT’S ASSETS.
The Treaty
37
prohibits Expropriation directly or indirectly unless it is for a public purpose
done in a non discriminatory manner upon payment of appropriate compensation with due
process of law and general principles of treatment provided under Article II(3).
38

Expropriation is the taking or deprivation of the property of foreign investors by a host
state.
39
Indirect Expropriation may occur even when the legal title remains with the owners,
40

where the host state adopts certain measures that deprive the owners of the possibility of
utilizing their investment.
41
There may be no discernible intent to expropriate, even though
expropriation is an inevitable result of the government measure.
42

Although there is no doctrine of binding precedent in International Law, the decisions of
previous Tribunals on questions of principle are valuable and persuasive for subsequent
Tribunals.
43
In the past confiscatory taxation, denial of access to infrastructure or necessary

37
See Annexure 1.

38
See Annexure 1, Article 3 (1).

39
C. McLachlan, L.Shore and M. Weiniger, International Investment Arbitration: Substantive Principles
(Oxford University Press London 2000 ) 290-298.

40
Amco Asia Corporation and Others v. Republic of Indonesia, Resubmitted Case, Final Award, 31 May 1990
(ICSID Case No. ARB/81/1) ¶ 220; SD Myers Inc v. Canada, First Partial Award and Separate Opinion, 13
November 2000 (Ad hoc—UNCITRAL Arbitration Rules) ¶ 281,283; Tippets, Abbet, McCarthy, Stratton v.
TAMS – AFFA Consulting Engineers of Iran, (1984) 6 Iran-USCTR. 225;R. Dolzer and C. Schreuer,
Principles of International Investment Law (Oxford University Press, 2008) 92; A.Newcombe and L
Paradell, Law and Practice of Investment Treaties: Standards of Treatment (Kluwer Law International The
Hague 2009) 327.

41
CME Czech Republic B.V. v. The Czech Republic, Partial Award, 13 September 2001 (UNCITRAL) ¶ 608;
Metalclad Corp v. United Mexican States, Final Award, 30 August 2000 (ICSID Case No. ARB(AF)/97/1) ¶
103.

42
Andrew Newcombe, ‘The Boundaries of Regulatory Expropriation in International Law’, (2005) 20 FILJ
274.

43
Corn Products v. United Mexican States, Decision on Responsibility, 15 January 2008, ( ICSID Case No.
ARB (AF)/04/01), ¶ 77; Metalclad Corp v. United Mexican States, Final Award, 30 August 2000 (ICSID
Case No. ARB (AF)/97/1), ¶ 108.
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raw materials, imposition of unreasonable regulatory regimes, among others have been
considered to be expropriatory actions.
44

In the instant case, the Respondent filed a suit in the domestic court and sought attachment
before judgment,
45
of all the assets of the Applicant. The attachment was ordered and then the
Applicant went to the High Court in Appeal which was rejected.
46
It is submitted by the
Applicant that this was a disguised attempt by the Respondent to expropriate the assets of the
Applicant.
1.1 That the order for attachment before judgement has substantially deprived the
Applicant of his use and enjoyment over its assets
A deprivation or taking of property may occur under International Law through interference
by the State in the use of the property or with the enjoyment of its benefits, even where legal
title to the property is not affected.”
47

In the present case, even though the legal title of the property is not affected, but the order
deprives the Applicant of its rights, intangible assets. Under the traditional expropriation
standard the terms ‘deprivation’ and ‘expropriation’ were often used interchangeably.
48
The
impact a governmental measure on the Applicant’s ability to use and enjoy its investment, or
in other words the fact of deprivation, has come to be regarded as a primary condition for
establishing a breach of the expropriation standard.
49
In Continental Casualty v Argentina,
50

the Tribunal similarly pointed to impact as a criterion in determining the expropriatory
character of a government’s conduct:

44
Marvin Feldman v. Mexico, Final Award, 16 December 2002, (ICSID ARB (AF)/99/1) ¶ 103.

45
Attachment is the seizing of a person’s property to secure a judgment or to be sold in satisfaction of a
judgment. Also termed (in Civil Law) as ‘provisional seizure’. [Bryan A. garner, Black’s Law Dictionary
(8
th
edn, Thomson West Publication 2004)].

46
See Compromis, ¶ 24.

47
Tippets, Abbet, McCarthy, Stratton v. TAMS – AFFA Consulting Engineers of Iran, Final Award, 29 June
1984, 6 Iran-USCTR 225.

48
WD Verwey and NJ Schrijver, ‘The Taking of Foreign Property Under International Law: A New Legal
Perspective?’ (1984) Netherlands Ybk Intl L 3. More recently, similar findings were made in UNCTAD,
Bilateral Investment Treaties 1995-2006: Trends in Investment Rule-Making (United Nations, New York
2007) 45-6.

49
C Schreuer, ‘The Concept of Expropriation under the ECT and other Investment Protection Treaties’ in C
Ribeiro, Investment Arbitration and the Energy Charter Treaty (JurisNet, Huntington NY 2006) 145.

50
Continental Casualty Company v. Argentina, Award, 5 September 2008 (ICSID Case No ARB/03/9) ¶ 276.
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Memorial for Applicant
One may distinguish between: (a) outright suppression or deprivation of the right of
ownership, usually by its forced transfer to public entities; (b) limitations and hampering with
property, short of outright suppression or deprivation, interfering with one or more key
features, such as management, enjoyment, transferability, which are considered as tantamount
to expropriation, because of their substantial impact on the effective right of property. Both
these types of measures entail indemnification under relevant international treaties…
51
.
The Applicant asserts that the order for attachment effectively, is equivalent to a freezing
injunction which is used in order to freeze assets and monies, pending the outcome of the
claim.
52
It is usually made without notice, and often before the claim has been issued
provided, the party seeking it has a good arguable case, there is a real risk of dissipation of
the assets before a judgment could be enforced and it is just and convenient for the court to
do so.
53
The rights in property are described as a bundle of rights and, in terms of real
property, usually include the right to occupy the land, put it to reasonable use and alienate it.
Owing to the order allowing for attachment before judgment, the Applicant lost all its powers
of control, in specific context of the right to dissipate all its assets.
The Applicant is deprived of an essential right over all of its assets. Since the attachment was
ordered against all of the assets, the term ‘assets’ is inclusive of cash, inventory, real estate,
accounts receivable and goodwill owned by a party
54
in and outside a particular country.
Therefore, it is undisputable that there has been a substantial deprivation from the ownership
of the Applicant’s assets.




51
ibid.

52
Mareva Compania Naviera SA v.. International Bulkcarriers SA, [1975] 2 Lloyd’s Rep 509. (Based on the
Common Law remedy ‘Mareva Injunction’).

53
David Capper, Worldwide Mareva Injunctions, (1991) 54
TMLR,<http://onlinelibrary.wiley.com/doi/10.1111/j.1468-2230.1991.tb00890.x/pdf> accessed on 04
October 2010.

54
Bryan A. garner, Black’s Law Dictionary (8
th
edn, Thomson West Publication 2004).

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1.2 That there was interference with applicants’ Treaty based Legitimate
Expectations
The investment-backed expectations of an investor are crucial in assessing whether the host
state has expropriated the investment.
55
On the basis of the Tribunals decision in Suez and
Ors v. Argentina,
56
and Saluka Investments B.V v. The Czech Republic,
57
Applicant as an
investor investing in Respondent State had certain expectations about the nature of the
treatment which had been created by the Respondent State’s laws, regulations, declared
policies, and statements. But Respondent through its actions subsequently frustrated and
thwarted those legitimate expectations by attempting to expropriate the Applicant’s
investment in such manner. In Tokios Tokeles v.. Ukraine,
58
the Tribunal held that the
Respondent’s obligations with respect to ‘investment’ relate not only to the physical property
of investors but also of the business operations associated with that physical property.
59

In the present case, it is submitted that irresponsible behaviour of the Respondent towards the
Applicant failed to fulfil the basic obligations legitimately expected by the investor on the
basis of their Treaty.
1.3 That the act of judiciary is attributable to the State
It is submitted by the Applicant that the act of judiciary is attributable to the State. According
to the ILC’s Articles on Responsibility of States for Internationally Wrongful Acts, the
conduct of a State is considered an act of that State under International Law “whether the
organ exercises legislative, executive, judicial or any other functions, whatever position it

55
S. Fietta, ‘Expropriation and the “Fair and Equitable” Standard: The Developing Role of Investor’s
“Expectations” in International Investment Arbitration’, (2006) 23 JIA 375; S. Schill, ‘Fair and Equitable
Treatment as an Embodiment of the Rule of Law’, in R. Hofman and C. J. Tams (eds.), ICSID: Taking Stock
after 40 Years, (OUP London 2007) 11.

56
Suez and Ors v Argentina, Final Award (ICSID Case No ARB/03/19)

57
Saluka Investments BV v. Czech Republic, Partial Award, 17 March 2006 (PCA-UNCITRAL Arbitration
Rules) ¶ 262.

58
Tokios Tokeles v. Ukraine, Decision on jurisdiction, 29 April 2004.

59
ibid, ¶ 92.

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holds in the organization of the State, and whatever its characterization as an organ of the
central Government or of a territorial unit of the State,”
60

Another principle which has been laid down by various arbitral awards is that a denial of
justice may also amount to an expropriation.
61
Judicial expropriation has been recognised in
arbitral awards like Loewen v.. United States
62
etc.
which As observed by the Iran-US Claims tribunal in Oil Field of Texas v. Iran,
63
‘it is well
established in International Law that the decision of a court depriving an owner of the use and
benefit of its property may amount to expropriation of such property that is attributable to the
state of that court.
1. THE EXPROPRIATION OF APPLICANTS’ ASSETS IS UNLAWFUL.
It is contended before the Tribunal, that the indirect expropriation of the Applicant’s
investment was unlawful. It fails to fulfil the requisites of a legal expropriation as laid down
in the Investment Protection Treaty of the two States.
64
The expropriation was unlawful
because, one, the order for attachment of Applicant’s assets before judgment was not for
public purpose and not in accordance with the due process of law [2.1]. Two, it violates the
Fair and Equitable Treatment clause of the Treaty [2.2], three, it was disproportionate in
context of the dispute between the two parties and thus completely unnecessary, [2.3] and
four, that no compensation has been given to the Applicant [2.4].
Methanex v. United States
65
and Saluka v. Czech Republic
66
awards are notable for their
departure from the classical method under the assessment of the legality of the conduct of the

60
International Law Commission Articles on Responsibility of States for Internationally Wrongful Acts, 2001,
Article 4.

61
See Robert E. Brown case (United States v. Great Britain) (1923) 6 RIAA 120; Martini Case (Italy v.
Venezuela) (1930) 2 RIAA 974. (Early international decisions in Robert E. Brown and Martini illustrate an
overlap between denial of justice and expropriation)

62
Loewen v. United States, Award on the Merits, 26 June 2003 (ICSID Case No. ARB(AF)/98/3).

63
Oil Field of Texas Inc v. Iran (1986) 12 Iran-USCTR 308, 318-19 (Concerning a dispute over Italian
property in Tunisia).

64
See Annexure 1, Article III.

65
Methanex Corporation v. United States of America, , Final Award of the Tribunal, 7
th
August 2005,
(UNCITRAL Arbitration Rules).

66
Saluka Investments BV v. Czech Republic, Partial Award, 17 March 2006 (PCA-UNCITRAL Arbitration
Rules).
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host state was undertaken as part of establishing whether an expropriation was lawful and not
as part of establishing whether an expropriation had occurred.
67

1.1 That the mode of expropriation was not in accordance with the due process of
law
Due process is regarded as one of the ‘conduct requirements’ that must be satisfied for an
expropriation to be lawful.
68
The existence of methods for review of the expropriation under
national law is not relevant.
69
There must be methods to satisfy the requirement of “due
process of law” in the context of the particular case.
70

In practice, such injunctions are generally passed ex-parte, where the party seeking it presents
an arguable claim over a certain sum provided that the court has a jurisdiction over the
property, and most importantly, wherein there is a substantial risk of dissipation is involved.
71

It is contended that this act of allowing attachment is arbitrary since this order goes against
the general principles of International Law and also Principles of natural justice. The
Respondent had also committed a breach by defaulting on payment for the Power supplied to
them. If the claim is regarding the contractual rights and obligations, EGTPC was not the sole
party at fault. The judgment given by the local court of the country is not fair and impartial,
because of the fact that it is based on the account given by one side that is the host
government against a foreign investor i.e. the applicant in the present appeal.
In Amco v. Republic of Indonesia
72
the tribunal concluded that in order to comply with due
process, any sanction for an investor’s failure to fulfil its investment obligations should have
been preceded by a warning.
73
It held that the purpose and function of the warnings was

67
U Kriebaum, ‘Regulatory Takings: Balancing the Interests of the Investor and the State’ (2007) 8 J World
Investment & Trade 717, 726.

68
A Reinisch, ‘Legality of Expropriations’ in A Reinisch, Standards of Investment Protection (OUP, Oxford
2008) 171.

69
ADC v. Hungary, Final Award, 2 October 2006, (ICSID Case No. ARB/03/16).

70
ibid.

71
Michael Prior, ‘The Nature of the Mareva Injunction’, (1991) 6 Int'l Legal Prac. 122.

72
Amco Asia Corporation and others v. Republic of Indonesia, Resubmitted Case, Award, 31 May 1990
(ICSID Case No. ARB/81/1) ¶ 98.

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to give the addressee of the warnings the opportunity to remedy the failures (if any)
mentioned therein; and even in cases where such remedy could not be offered or made, in
fact or in law …, to give him the opportunity to discuss the administration’s grievances and
to defend himself against the same.
74

The facts in the present case suggest that there was no warning given to the Applicant by the
Respondent prior to taking any such action against the Applicant which had the impact of
depriving the Applicant from a substantial use and enjoyment of its property.
1.2 That the Respondent has violated Fair and Equitable Treatment Clause of the
Treaty
Article II (3) (a) of the BIT between the two States imposes an obligation of Fair and
Equitable Standard to be accorded to the investments and shall in no case be less than
required by international Law.
75

There are two theories which govern the standards of Fair and Equitable Treatment Clause
(FET) in the practice of International Law, enhanced FET and a unified FET. Enhanced Fair
and Equitable Treatment clause would be in line with the object and purpose of the BIT,
namely “to establish favourable conditions” for investment. In this case FET guarantees
investors’ expectations and legal certainty.
76
In Occidental, the tribunal stressed that the
stability of the legal and business framework are essential elements of FET.
77

A unified theory of FET which harmonizes the four distinct inquiries of past tribunals,
78
1)
whether the conduct was “arbitrary, grossly unfair, unjust, or idiosyncratic”; 2) whether the

73
ibid., ¶ 198. (The tribunal held that such requirement was not only established in Indonesian law, but also
formed part of general principles of law.).

74
ibid.

75
Annexure 1, Article III (3) (a) - Investment shall at all times be accorded fair and equitable treatment; shall
enjoy full protection and security and shall in no case be accorded treatment less than that required by
International Law.

76
Tecnicas Medioambientes S.A. v. The United Mexican States, Award, 29 May 2003, 43 I.L.M. 133 (2004) ¶
154.

77
Occidental Petroleum Corporation and Occidental Exploration and Production Company v. Ecuador,
Decision on Jurisdiction, 9 September 2008, (ICSID Case No ARB/06/11) ¶ 83; Metalclad v. Mexico, ICSID
Case No.ARB(AF)/97/1, Award, 25 August 2000, IIC 161 (2000), ¶ 99.

78
Vandevelde, K., J., ‘A Unified Theory of Fair and Equitable Treatmen’, (2010) 43 N.Y.U. Journal of
International Law & Politics 376.

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conduct “involved a lack of due process leading to an outcome which offends judicial
propriety”;
79
3) whether the conduct “substantially changed the legal and business framework
under which the investment was decided”; and 4) whether the conduct was “in breach of
representations made by the host State which were reasonably relied on by the applicant.”
80

Whether assessed under the enhanced or unified FET theory, Respondent’s actions would
violate both standards. The enhanced FET theory emphasizes on stability of the legal
framework in the host state. On the basis of the arguments on the indirect expropriation of
Applicant’s property, it is clear that Respondent has failed to ensure FET to the investment of
applicant.
1.3 That the Respondent’s actions are Arbitrary and Disproportionate
The Investment Protection Treaty, under its Article II (3)(a)
81
prohibits either of the parties to
impair or impede by arbitrary or discriminatory measures the management, operation,
maintenance, use, enjoyment, acquisition, expansion or disposal of investments.
The Applicant submits that the order in the present case goes beyond the normal procedure of
the law. Therefore, Respondent violated its obligation provided under this Article also.
For an act of a party to be proportionate there has to be a reasonable nexus between the act
and the purpose.
82
The disadvantages caused by the measure must not be disproportionate to
the aims used.’
83
In accordance with this test, any loss can be weighed against the aims
pursued by the measure at issue.
84


79
Waste Management, Inc. v. United Mexican States, Final Award, 30 April 2004 (ICSID Case Nr. ARB(AF)/
00/3) ¶ 98.

80
Enron Corporation and Ponderosa Assets, L.P. v. Argentine Republic, Final Award, 22 May 2007 (ICSID
Case No. ARB/01/3) ¶ 264.

81
See Annexure I.

82
August Reinisch, ‘Expropriation’, in Peter Muchlinski, FedericoOrtino, and Christoph Schreurer, (eds),
The Oxford Handbook of International Investment Law (OUP Oxford 2008) 450.

83
A Newcombe and L Paradell, Law and Practice of Investment Treaties: Standards of Treatment (Kluwer
Law International 2009) 363-6. See Técnicas Medioambientales Tecmed, S.A. v. United Mexican States,
Award, 29 May 2003 (ICSID Case No. ARB(AF)/00/2) (‘there must be a reasonable relationship of
proportionality between the charge or weight imposed to the foreign investor and the aim sought to be
realized by any expropriatory measure...’) and LG&E Energy Corp and ors v. Argentina, Decision on
Liability, 3 October 2006 (ICSID Case No ARB 02/1) (2007) ¶ 195.

84
Tecmed v. Mexico, Final Award, 24 May 2003 (ICSID No. ARB (AF)/00/2).
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Memorial for Applicant
In the case at hand, no causal link can be established between the act of the Respondent and
their claimed objective. It is further contended that there is no justification provided by the
Respondent for taking such an action which had a drastic impact of substantially depriving
the applicant from using its assts. Moreover, the reputation of Applicant in the international
market has been badly affected which has reduced its future opportunities of getting into any
investment project with any other party.
1.4 That no compensation has been offered by the Respondent
It is further contended that Respondent had a mala fide intent of expropriating the Applicant’s
property. If all the circumstances point towards a plan to deprive the investor of its
investment, an underlying motive to expropriate can be construed.
85
In the case of a de facto
expropriation, the intent is latent, yet can be determined from an examination of all the
circumstances, in particular, the result of government measures.
86

In the present case, the whole process of going to the court directly, by skipping the stage of
negotiation and consultation for such breach of the contract and seeking attachment before
judgment was undertaken to evade the compensation which Respondent would have paid to
the applicant had it expropriated the assets directly.
Thus Applicant requests the Tribunal that the Injunction order be cancelled and just and
proper compensation shall be given to the Applicant for the losses incurred in that duration
along with the damages due to opportunity costs.
B. THAT THE RESPONDENT HAS COMMITTED A GRAVE BREACH OF THE CONTRACT.
The Respondent failed to make the payments to the Applicant for the power supplied to it.
87

The Applicant submits before the Tribunal that this Default in payment amounts to grave
breach of the contract. The Applicant shall demonstrate this contention by dividing it into two
equal parts, one, the non payment amounts to a breach of the contract and Consideration is an
essential element of the Contract [1] and secondly the violation of an essential element of the
agreement is a ‘grave breach’ of the Contract [2]. In furtherance to that, the Respondent shall
not be allowed to seek counter-claim [3].

85
Christopher Schreuer, ‘The Concept of Expropriation under the ETC and other Investemnt Protection
Treaties’ (2005) < www.transnational-dispute-management.com> accessed on 1 October, 2012.

86
K.A.Byrne,‘Regulatory Expropriation and State Intent’ (2000) 38 Canadian YB ofInt'l L 89.

87
See Compromis, ¶ 23.
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1. THAT THE NON PAYMENT AMOUNTS TO BREACH OF THE CONTRACT.
Agreement
88
between the two parties in the present dispute define the expression ‘breach’ or
‘default’ of an obligation for the purpose of any agreement between EGTPC and the
Government which shall include, without limitation, default in respect of any payments by
any party specified in any such agreement.
89

In March 2011, an election in Narnia brought the parties opposing the EGTPC deal to power.
They began clamouring for renegotiation of the entire arrangement. Consequently, NESB
began defaulting its payments to EGTPC for the power supplied to it. Its two defaults
amounted to US $ 39 million.
90
The facts of the present case clearly suggest that Respondent
failed to make payments for consecutively two times on purpose in order to give effect to
their intentions. This is a violation of the obligation undertaken by the Government in the
Investment agreements, underwritten by Government of Asiania and Narnia, where NESB
was to purchase power solely from these two Plants at a specified rate.
91
Therefore, this shall
fall in the provision under Article I (1) (b), according to which default in payment shall
amount to breach of the contract.
1.1 That the ‘Consideration’ is the Essential Element of the Contract
Essential element of a contract is that primary obligation which goes to the root of the
agreement without which the agreement would not have existed. It serves as the basis of the
agreement. The party would not have contracted if the assurance had not been given.
92
In the
present case, money provided by NESB in return of the power provided by EGTPC is the
consideration of the agreement. A consideration, in the sense of the law, may consist in some
right, interest, profit or benefit accruing to one party for some forbearance, detriment, loss or
responsibility given, suffered, or undertaken by the other.
93
In English Law, a consideration is

88
See Annexure II.

89
See Annexure II, Article I.

90
See Compromis, ¶ 23.

91
See Compromis, ¶ 12.

92
Bannerman v. White [1861] 10 CB NS, 844.

93
Thomas v. Thomas (1842) 2 Q.B. 851 at p. 859; Bolton v. Madden (1873) L.R. 9 Q.B. 55, at 56.

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Memorial for Applicant
necessary for the formation of every simple contract; a promise made without consideration
is not actionable as a claim.
94

1.2 That breach of an essential element shall be construed as grave breach of the
contract.
The Agreement Concerning the Requirements of Notice to Cure Defaults and Settlement of
Disputes
95
defines failure to make any payment as breach of the obligation for the purposes
of a specific agreement.
96
It is contended that even though the failure to make payment is
termed as simple breach in the agreement, but in this case the non payment falls under the
‘grave breach’ clause
97
. This contention can stand the test of all the three laws applicable in
contractual claims, one, the contextual interpretation of the agreement between EGTPC and
Asiania reflects this as a serious default [1.2.1], two, according to the English Law failure to
fulfil a primary obligation goes to the root of the contract which amounts to a fundamental
Breach of the Contract [1.2.2], three, according to the UNIDROIT Principles of Commercial
Contracts such failure to perform an obligation amounts to a fundamental non-performance
[1.2.3].
1.2.1 That there should be Contextual Interpretation of the Agreement.
The written Agreement between the two parties explicitly mentions that to understand the
term ‘default’ or ‘breach’ in respect of any obligation under or arising out of any such
agreement shall be interpreted both literally and contextually, taking into account the whole
agreement in question. The same rule applies mutatis mutandis, to ‘serious default’ or ‘grave
breach’.
98

The Common Law has laid down the Principle of interpretation of Contracts that in order for
the agreement to be understood, it must be placed in context.
99
In a landmark judgment
100


94
J. Beatson, Anson’s Law of Contract (28
th
edn, Oxford University Press 2006) p. 91.

95
See Annexure II.

96
Article I (1) (c).

97
See Annexure II, Article I (2).

98
Annexure II , Article I (3).

99
Prenn v. Simmonds [1971] 1 W.L.R. 1381.

100
Reardon Smith Line v. Hansen-Tangen, [1976] 1 W.L.R. 989, 995-997.
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Memorial for Applicant
House of Lords observed that in a commercial contract it is certainly right to know the
commercial purpose of the contract and this in turn presupposes knowledge of the genesis of
the transaction, the background, the context, the market in which the parties are operating...
What the court must do, must be to place itself in thought in the same factual matrix in which
the parties were.”
101
Thus, the ‘factual matrix’
102
of the present dispute suggests the
substantial consideration which applicant was getting in return of its investment on the two
power plants set up in Asiania, was the amount to be paid by NESB to EGTPC making it the
essential element of the contract notwithstanding the fact that it has not been explicitly
mentioned in such manner in the agreement. Therefore, the failure to make payments shall
be construed as ‘serious breach’ in the terms of the agreement.
1.2.2 That according to English Law Principle- Fundamental Breach goes to
the root of the Contract.
It is submitted that the breach in the present contract goes to the root of the contract which
makes the breach a fundamental or grave breach of the contract. It has been said that a
fundamental term is no more than a condition
103
that is the term which the parties have agreed
either expressly or impliedly goes to the root of the contract, so that any breach of that term
without reference to the facts and circumstances, will allow the innocent party to treat himself
as discharged.
104
The main test for deciding whether the breach goes to the root of the
Contract is the ratio quantitatively which the breach bears to the contract as a whole.
105

In the case at hand, the proportion in which the breach has affected the other party goes to the
extent that their basic purpose of their investments and Contracts thereto was frustrated for
that specific duration and thus, making it a breach which goes to the root of the Contract.


101
ibid.

102
The concept was evolved by the House of Lords in landmark Judgments like Mannai Investment Co Ltd. v.
Eagle Star Assurance Co. Ltd [1997] 2 W.L.R. 945; Investors Compensation Scheme Ltd. v. WestBromwich
Building Society [1998] 1 W.L.R. 896; Bank of Credit and Commerce International SA v. Ali [2002] 1 A.C.
251.

103
Halsbury's Laws of England, 19(1) (5th edn, LexisNexis 2010) ¶ 110.

104
Suisses Atlantique Societe d’ Armement MaritimeSA v. NV ROtterdamsche Kolen Centrale[1967] 1 A.C.
361 at 422.

105
Maple Flock CO. Ltd v. Universal Future Products (Wembley) Ltd [1934] 1 KB 148, CA; Robert A Munro
& Co. Ltd v. Meyer [1930] 2 KB 312.

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Memorial for Applicant
1.2.3 That there is ‘Fundamental Non Performance’ according to the
UNI DROI T Principles of Commercial Contracts.
UNIDROIT Principles on International Commercial Contracts define ‘Non-performance’ as
failure by a party to perform any of its obligations under the contract, including defective
performance or late performance.
106
For the purposes of the Principles the concept of “non-
performance” includes both non-excused and excused non-performance.
107
In addition to this,
the Principles lay down the conditions, as to when will a failure to perform amount to
fundamental non-performance of the Contract, which consider the following questions, that
whether the non-performance substantially deprives the aggrieved party of what it was
entitled to expect under the contract (a); strict compliance with the obligation which has not
been performed is of essence under the contract (b); the non-performance is intentional or
reckless (c); the non-performance gives the aggrieved party reason to believe that it cannot
rely on the other party’s future performance (d).
108

Since, in the present case, failure to make payment by NESB was intentional measure to
deprive the Applicant of its basic expectation, the consideration which forms the essence of
the Contract. This non payment has also caused the Applicant further losses, the Applicant
could not pay the promised salary to its contract employees which led to serious labour
troubles at the Nonbay Plant and thus affecting the production of Power there also.
But the Applicant submits that by using the doctrine of election
109
, the applicant shall waive
its right to terminate the contract even though this a grave breach of the Contract and request
the Tribunal to grant compensation to the Applicant equivalent to the non payment and its
interest thereto, along with the damages caused due to opportunity costs and other losses
incurred following the breach of the contract by the Respondent.
2. THAT COUNTER CLAIM SOUGHT BY RESPONDENT SHALL NOT BE ALLOWED.
Without any prejudice to the issue that whether the Tribunal has Jurisdiction to decide the
Counter claim presented by the Respondent or not, it is submitted by the Applicant that the

106
Article 7.1.1 UNIDROIT Principles.

107
Commentaries on UNIDROIT Principles on International Commercial Contracts, International Institute for
the Unification of Private Law (UNIDROIT), Rome, 2004.

108
UNIDROIT Principles,Article 7.3.1 (2).

109
J. Beatson, Anson’s Law of Contract (28
th
edn, Oxford University Press, 2006) p. 62.
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Memorial for Applicant
claim presented by the Respondent in opposition to or deduction from the claim of the
Applicant
110
is supported neither by the facts nor by the law. To demonstrate this contention
the Applicant will give a two-fold argument, firstly, that nothing in the contract suggests that
partial non-performance of any obligation shall amount to a breach of the Contract [3.1],
secondly, the partial non-performance of its obligations by the Applicant was because of the
actions and circumstances prevailing in the host State [3.2].
2.1 That the partial Non-Performance does not amount to breach of the
Agreement.
The agreements signed between the parties lay down the rule that partial non performance of
any of the obligations shall result in the breach of the agreement. In addition, according to the
general principles of English Law, the doctrine of substantial performance
111
applies in this
case. Where substantial portion of actual obligation is performed the contract is held to be
substantially performed.
112

2.1.1 That there was no substantial Deprivation
The Respondent approached the court in order to get the contract terminated on the ground of
not receiving contracted amount of power from the Domgiri Plant.
113
It is submitted by the
Applicants that underperformance of Domgiri Plant did not deprive the Respondent
substantially which would entitle the Respondent to terminate the contract.
In context of their claim against the warranty as to fitness of the plant
114
, it is submitted that
the Respondent has waived its right to rescind the contract on that breach of the contract
which disentitles him to depend on it as a ground to seek either termination or renegotiation
of the entire contract.
115


110
Bryan A. garner, Black’s Law Dictionary (8
th
edn, Thomson West Publication 2004)..

111
Boone v. Eyre [1779] 1 H Bl. 273; Broom v. Davis [1794] 7 East 480; Bolton v. Mahadeva [1972] 1 W.L.R.
1009; Williams v. Roffey Bros. & Nicolls (Contractors) Ltd. [1991] 1 Q.B. 1.

112
Compare Hoening v. Isaacs [1952] 2 All E.R. 176; Bolton v. Mahadeva [1972] 1 W.L.R. 1009.

113
See Compromis ¶ 24.

114
See Compromis ¶ 23 and 26.

115
Downing v. Al Tameer Establishment (2002] EWCA Civ 721; See also ACD Tridon v. Tridon Australia
[2002]; Commonwealth v. Verwayen (1990) 170 CLR 394,491 NSWSC 896 at [55].

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Memorial for Applicant
2.2 That the reasons for Non Performance attributable to the Respondent.
The Applicant asserts that the Applicant’s failure to supply the contracted supply of Power
from Dec. 2010, is justifiable, owing to change in the normal course of things. The supply of
light water was disrupted because of an earth quake in NPCA’s light water plant. Alternative
source of supply could not immediately be identified, and the Domgiri Plant stopped
supplying electricity to Narnia.
116
Two consecutive default in payments by NESB resulted in
underpayment of the employees which in turn led to serious labour troubles at Nonbay
affecting the production of Power there also.
117

The UNIDROIT Principles of International Commercial Contracts also provide for such
exemption under ‘Force majeure’
118
. Non-performance by a party is excused if that party
proves that the non-performance was due to an impediment beyond its control and that it
could not reasonably be expected to have taken the impediment into account at the time of the
conclusion of the contract or to have avoided or overcome it or its consequences.
Therefore, The Applicant requests the Tribunal to order that, this temporary non-performance
on the part of the Applicant does not amount to breach of any of the agreements between the
two parties and that the Respondent’s claim is liable to be rejected.

116
See Compromis ¶ 23.

117
ibid.

118
Article 7.1.7 UNIDROIT Principles.
1
st
International Banking and Investment Law Moot Court Competition, 2012
xix
Memorial for Applicant
PRAYER

In light of the facts of the case, issues raised and arguments advanced, Applicant respectfully
requests the Tribunal to determine that:
1. This Tribunal has Jurisdiction over both the treaty and the contractual claims of the
Applicant.
2. The tribunal should find that the respondent has expropriated Applicants assets and
thus shall be liable to pay compensation
3. The respondent has committed a serious default of the contract, thus shall be liable to
pay damages.

All of which is respectfully affirmed and submitted
Applicant