TEAM HERCZEGH

INTERNATIONAL CENTRE FOR THE SETTLEMENT OF INVESTMENT DISPUTES

ICSID CASE No. ARB/08/21

MAX SOLUTIONS, INC.

(APPLICANT)

v.

THE GOVERNMENT OF BELA RANO INSULARO

(RESPONDENT)

Saint-Petersburg State University

Saint-Petersburg • Russia

MEMORIAL FOR RESPONDENT Team: Igor Kungurov • Ksenia Malmygina • Maria Strekalova •

Alexander Sysoev • Maxim Usynin

Coaches: Yulia Beketova • Sergey Usoskin

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TABLE OF CONTENTS

LIST OF AUTHORITIES .............................................................................................................. iii

LIST OF LEGAL SOURCES ......................................................................................................... x

STATEMENT OF FACTS ............................................................................................................. 1

SUMMARY OF ARGUMENTS .................................................................................................... 4

ARGUMENTS ................................................................................................................................ 6

I. DR. IRACUNDA’S PARTICIPATION IN ARBITRATION DOES NOT JUSTIFY ANNULMENT OF THE AWARD ............................................................................................. 6

A. Annulment under Article 52(1)(a) may not be based on alleged lack of independence ........ 6

B. Applicant cannot invoke Article 52(1)(d) with respect to Dr. Iracunda’s participation in the proceedings .................................................................................................................................. 8

C. Dr. Iracunda was Independent ................................................................................................ 9

1. Dr. Iracunda was independent ............................................................................................. 9

(i) Academic views of Dr. Iracunda ................................................................................... 10

(ii) Dr. Iracunda’s membership in Wilderness ................................................................... 12

(iii) Dr. Iracunda’s conduct during the course of deliberations ......................................... 14

(iv) Lack of disclosure by Dr. Iracunda ............................................................................. 15

2. In any event there is no “manifest” lack of qualities required by Article 14(1) ................ 16

II. THE TRIBUNAL DID NOT MANIFESTLY EXCEED ITS POWERS BY HOLDING THAT CONTRIBUTION TO DEVELOPMENT IS REQUIRED ........................................... 17

A. The Tribunal properly determined that it lacked jurisdiction ............................................... 17

1. The asset should be an “investment” under the ICSID Convention for the Tribunal to have jurisdiction ............................................................................................................................. 18

2. Contribution to the development of the host State is required for an asset to be considered an “investment” under the ICSID Convention ...................................................................... 20

(i) The ordinary meaning of an “investment” cannot be established solely on the basis of dictionaries’ definition ....................................................................................................... 21

(ii) The meaning of “investment” should be established in light of the object and purpose of the ICSID Convention ................................................................................................... 21

(iii) The contribution to the development criterion derives from the circumstances of the ICSID Convention’s conclusion ........................................................................................ 22

B. Alternatively, the excess of powers is not manifest ............................................................. 23

1. Failure to exercise jurisdiction is not ipso facto a manifest excess of powers .................. 24

2. The alleged excess of power is not manifest ..................................................................... 24

III. TRIBUNAL’S FINDINGS ON LACK OF CONTRIBUTION TO DEVELOPMENT DO NOT JUSTIFY ANNULLMENT OF THE AWARD .............................................................. 26

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A. Max Solutions’ activities did not contribute to the development of Bela Rano Insularo .... 26

B. Alternatively, the excess of powers is not manifest ............................................................. 28

IV. THE AD HOC COMMITTEE IS NOT EMPOWERED TO RULE CONCLUSIVELY ON WHETHER THE APPLICANT MADE AN INVESTMENT ........................................... 28

A. Article 52(4) does not empower the committee to rule on jurisdiction of the Centre .......... 29

B. Res judicata effect of the ad hoc committee's decision is limited to annulment of the award ................................................................................................................................................... 30

C. If the case is resubmitted the new tribunal would decide de novo on jurisdiction ............... 31

V. ADMISSION OF DR. RANAPUER’S REPORT DOES NOT JUSTIFY ANNULLMENT OF THE AWARD ..................................................................................................................... 32

A. Admission of Dr. Ranapuer’s report without cross-examination did not violate a fundamental rule of procedure .................................................................................................. 32

1. The Tribunal admitted Dr. Ranapuer’s report in accordance with applicable rules of procedure ............................................................................................................................... 33

(i) The Bela Rano Model Rules were the applicable rules ................................................ 33

(ii) The Tribunal properly exercised its discretion to admit Dr. Ranapuer’s report .......... 34

2. Admission of untested written evidence is not a violation of a fundamental rule of procedure ............................................................................................................................... 36

B. Max Solutions’ right to be heard was observed ................................................................... 37

C. In any event there was no serious departure from a rule of procedure ................................. 39

1. Substantially the same award would have been rendered if Dr.Ranapuer’s report was excluded ................................................................................................................................. 39

2. Tribunal’s decision did not deprive Max Solutions of the ultimate benefits provided by the right to confrontan expert ................................................................................................ 40

PRAYER FOR RELIEF ............................................................................................................... 42

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LIST OF AUTHORITIES

ABBREVIATION FULL CITATION AWARDS AND DECISIONS IN ICSID ARBITRATIONS

Aguas Del Tunari SA v. Bolivia

Aguas Del Tunari v. Bolivia, ICSID Case No. ARB/02/3, Decision of October 21,2005

Amco v. Indonesia (Preliminary Award)

Amco Asia Corporation v. Indonesia, ICSID Case No. ARB/81/1 Decision of May 10,1988

(1988)3 ICSID Rev.—FILJ 166 Bayindir v. Pakistan Bayindir v. Pakistan,

ICSID Case No. ARB/03/29, Decision of November 14,2005

BIVAC v. Paraguay BIVAC v. Paraguay, ICSID Case No. ARB/07/9, Decision of May 29,2009

CSOB v. Slovakia CSOB v. The Slovak Republic, ICSID Case No. ARB/97/4, Decision of May 24,1999

Daimler v. Argentina (Sep. Op. Bello Janeiro)

Daimler Financial Services v. Argentina, ICSID Case No. ARB/05/1, Sep. Op. Bello Janeiro, August

16,2012 Enron v. Argentina Enron Corporation v. Argentina,

ICSID Case No. ARB/01/3, Award of May 22,2007 Fedax v. Venezuela Fedax N.V. v. Venezuela,

ICSID Case No. ARB/96/3, Decision of July 11,1997 Generation Ukraine, Inc. v. Ukraine

Generation Ukraine v. Ukraine, ICSID Case No. ARB/00/9, Award of September 16,2003

Helnan v. Egypt Helnan International v. Egypt, ICSID Case No. ARB/05/19, Award of July 3,2008

Jan de Nul v. Egypt Jan de Nul N.V. et al v. Egypt, ICSID Case No. ARB/04/13, Decision of June 16,2006

Joy Mining v. Egypt Joy Mining Machinery Limited v. Egypt, ICSID Case No. ARB/03/11, Award of August6,2004

LG&E v. Argentina LG&E Energy Corp., et al v. Argentina, ICSID Case No. ARB/02/01, Decision of October 3,2006

MCI v. Ecuador M.C.I. Power Group L.C. v. Ecuador, ICSID Case No. ARB/03/6, Award of July 31,2007

MHS v. Malaysia MHS v. Malaysia, ICSID Case No. ARB/05/10, Award of May 27,2007

Phoenix v. Czech Phoenix Action, Ltd. v. Czech Republic, ICSID Case No. ARB/06/5, Award, April 15,2009

PSEG v. Turkey PSEG Global, Inc., et al v. Turkey, ICSID Case No. ARB/02/5, Decision of June 4,2004

Saba Fakes v. Turkey Saba Fakes v. Turkey, ICSID Case No. ARB/07/20, Award of July 14,2010

Saipem v. Bangladesh Saipem v. Bangladesh, ICSID Case No. ARB/05/7, Decision of March 21,2007

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Salini v. Jordan Salini CostruttoriS.p.A. et al. v. Jordan, ICSID Case No. ARB/02/13, Decision of November 9,2004

SGS v. Pakistan SGS v. Pakistan, ICSID Case No. ARB/01/13, Decision of August 6,2003

SGS v. Paraguay SGS v. Paraguay, ICSID Case No. ARB/07/29, Award of February 10,2012

TECO v. Guatemala TECO Guatemala Holdings, LLC v. Guatemala, ICSID Case No. ARB/10/23, Minutes of May 23,2011

Tradex v. Albania Tradex Hellas S.A. v. Albania, ICSID Case No. ARB/94/2, Award of April 29,1999

TSA v. Argentina TSA Spectrum de Argentina S.A. v. Argentina, ICSID Case No. ARB/05/5, Award of December 19,2008

Zhinvali v. Georgia Zhinvali Development Ltd. v. Georgia, ICSID Case No. ARB/00/1, Award of January 24,2003

ANNULMENT DECISIONSAmco v. Indonesia (II) (Annulment)

Amco Asia Corporation and others v. Indonesia, ICSID Case No. ARB/81/1, Decision of December 17,1992

Azurix v. Argentina (Annulment)

Azurix Corp. v. Argentina, ICSID Case No. ARB/01/12, Decision of September 1,2009

CDC v. Seychelles (Annulment)

CDC Group v. Seychelles, ICSID Case No. ARB/02/14, Decision of June 29,2005

CMS v. Argentina (Annulment)

CMS Gas Transmission Company v. Argentina, ICSID Case No. ARB/01/8, Decision of September 25,2007

DEI Bermuda v. Peru (Annulment)

Duke Energy v. Republic of Peru, ICSID Case No. ARB/03/28, Decision of March 1,2011

Enron v. Argentina (Annulment)

Enron Creditors Recovery Corp. v. Argentina, ICSID Case No. ARB/01/3, Decision of July 30,2010

Fraport v. Philippines (Annulment)

Fraport AG v. Philippines, ICSID Case No. ARB/03/25, Decision of December 23,2010

Helnan v. Egypt (Annulment)

Helnan International Hotels v. Egypt, ICSID Case No. ARB/05/19, Decision of June 14,2010

Klöckner v. Cameroon (Annulment)

Klöckner Industrie-Anlagen GmbH v. Cameroon, ICSID Case No. ARB/81/2 Decision of May 3,1985

114 JDI 163 (1987) Lucchetti v. Peru (Annulment)

Empresas Lucchetti, S.A. v. Peru, ICSID Case No. ARB/03/4, Decision of September 5,2007

MCI v. Ecuador (Annulment)

M.C.I. Power Group, L.C. v. Ecuador, ICSID Case No. ARB/03/6 Decision of October 19,2009

MHS v. Malaysia (Annulment)

MHS v. Malaysia, ICSID Case No. ARB/05/10, Decision of April 16,2012

MINE v. Guinea (Annulment)

MINE v. Guinea, ICSID Case No. ARB/84/4, Decision of January 6,1988

Mitchell v. DRC Mitchell v. DRC, ICSID Case No. ARB/99/7, Decision of November 1,2006

MTD v. Chile (Annulment)

MTD Equity Sdn. Bhd. v. Chile, ICSID Case No. ARB/01/7, Decision of March 21,2007

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Rumeli v. Kazakhstan (Annulment)

Rumeli Telekom A.S. v.Kazakhstan, ICSID Case No. ARB/05/16, Decision of March 25,2010

Sempra v. Argentina (Annulment)

Sempra Energy International v. Argentina, ICSID Case No. ARB/02/16, Decision of June 29,2010

Soufraki v. UAE (Annulment)

Soufraki v. UAE, ICSID Case No. ARB/02/7, Decision of June 5,2007

Togo Electricite c. Togo (Annulment)

Togo Electricité с. La RepubliqueTogolaise Affaire CIRDI N° ARB/06/07 Decision le 6 septembre 2011

Transgabonais v. Gabon (Annulment)

Compagnie d'Exploitation du Chemin de Fer Transgabonais v. Gabonese Republic,

ICSID Case No. ARB/04/5 Décision, le 11 mai 2010 (2011) 26 (1) ICSID Rev.-FILJ

Wena v. Egypt (Annulment)

Wena Hotels Limited v. Egypt, ICSID Case No. ARB/98/4, Decision of February 5,2002

Vivendi v. Argentina (I) (Annulment)

Compañiá de Aguas del Aconquija S.A. v. Argentina, ICSID Case No. ARB/97/3, Decision of June 3,2002

Vivendi v. Argentina (II) (Annulment)

Compañía de Aguas del Aconquija S.A. v. Argentina, ICSID Case No.ARB/97/3, Decision of August 20,2007

DECISIONS ON PROPOSALS FOR DISQUALIFICATION OF ARBITRATORSAmco v. Indonesia (Arbitrator Challenge)

Amco Asia Corporation and others v. Indonesia, ICSID Case No. ARB/81/1, Decision, June 26,1982

Broms v. US (Arbitrator Challenge)

US v. Iran, Dec. No. 130-A28-FT IUSCTR Challenge by United States to Judge Broms of May 7,2001

ConocoPhillips v. Venezuela (Arbitrator Challenge)

ConocoPhillips Company and others v. Venezuela, ICSID Case No. ARB/07/30, Decision of February 27,2012

National Grid v. Argentina (Arbitrator Challenge)

National Grid P.L.C. v. The Argentine Republic, LCIA Case No. UN 7949 Decision on the Challenge

PIP SARL v. Gabone (Arbitrator Challenge)

PIP Sàrl c. République Gabonaise, Affaire CIRDI ARB/08/17, La décision, le 12 novembre

2009 SGS v. Pakistan (Arbitrator Challenge)

SGS v. Pakistan, ICSID Case No. ARB/01/13, Decision of December 19,2002

Skubiszewski v. Iran (Arbitrator Challenge)

Iran v. US, Challenge by Iran to President Skubiszewski of August 25,1999

415 IUSCTR, vol. 38 Suez v. Argentina (Arbitrator Challenge)

Suez, Sociedad General de Aguas de Barcelona S.A. v. Argentine Republic,

ICSID Case No. ARB/03/19, Decision of October 22,2007 Tidewater v. Venezuela (Arbitrator

Tidewater Inc., v. Venezuela, ICSID Case No. ARB/10/5, Decision of December 23,2010

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Challenge) Urbaser v. Argentina (Arbitrator Challenge)

Urbaser S.A. et al. v. Argentina, ICSID Case No.ARB/07/26, Decision of August 12,2010

OTHER DECISIONSAl-Khawaja and Tahery vs. United Kingdom (ECHR)

Al-Khawaja and Tahery v. UK App nos. 26766/05 and 22228/06, Judgment, December

15,2011 Libya v. Chad (ICJ) Territorial Dispute (Libyan Arab Jamahiriya/Chad),

Judgment I.C.J. Reports 1994 Nagel v. Czech Republic (SCC)

Nagel v. Czech Republic, SCC Case No. 49/2002, Final Award of September 9,2003

Oil Platforms Jurisdiction (ICJ)

Oil Platforms (Iran v.USA), Judgment, I.C.J. Reports 1996

Swiss Supreme Court (3 January 2011)

Alejandro Valverde Belmonte v. (WADA), Federal Supreme Court, Decision 4A_386/2010 of January 3,

2011 Swiss Supreme Court (19 June 2006)

X. Gesellschaft, Y. Gesellschaft v. Z. Gesellschaft, Tribunal Fédéral, Ière Courcivile, 4P.74/2006, June 19,2006

Swiss Supreme Court (27 March 2006)

Rückversicherungs-Gesellschaft X. AG v. Versicherungs-Gesellschaft Y., Ière Courcivile, 4P.23/2006, March 27,2006

TREATISES Douglas Douglas, Zachary

The International Law of Investment Claims, (2009)CUP

Nacimiento Nacimiento, Patricia Recognition and Enforcement of Foreign Arbitral Awards: A

Global Commentary on the New York Convention, (2010)Kluwer Law International

O’Malley (2012) O’Malley, Nathan D. Rules of Evidence in International Arbitration: an Annotated

Guide, (2012)Informa Publishing

Schreuer/Commentary Schreuer, Christoph H., et al, The ICSID Convention: A Commentary

(2009), 2d ed., CUP Waincymer Waincymer, Jeffrey

Procedure and Evidence in International Arbitration, (2012) KluwerLaw International

Zuberbuhler Zuberbuhler, T., et al, Commentary on the IBA Rules on the Taking of Evidence in

International Arbitration, (2012) Eleven Publishing

JOURNAL ARTICLES Alonso Alonso, José María

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Deliberation and Drafting Awards in International Arbitration

Liber Amicorum Bernardo Cremadesn (2010) La Ley

Broches Broches, Aron Observation on the Finality of ICSID Awards

6 ICSID Rev.-FILJ (1991) Buhler/ Dorgan Buhlerm, Michael, Dogan, Caroll,

Witness Testimony Pursuant to the 1999 IBA Rules of Evidence in International Commercial Arbitration – Novel or

Tested Standards? (2000) JIA Vol.17(1)

Cairns Cairns, David Oral Advocacy and Time Control in InternationalArbitration

InArbitration Advocacy in Changing Times (2011) KluwerLaw International

Caron Caron, David, Reputation and Reality in the ICSID Annulment Process,

7 ICSID Rev.-FILJ (1992)

Carlson Carlson, Marinn, The Examination and Cross-Examination of Witnesses,

in Arbitration Advocacy in Changing Times, (2010)Kluwer Law International

Cole Cole, Tony et al, Power-Conferring Treaties: The Meaning of ‘Investment’ in

the ICSID Convention, (2011)L.J.Int’l.L , vol.24

Daele Daele, Karel, Challenge and Disqualification of arbitrators in

International Arbitration, (2012)Kluwer Law International

Feldman Feldman, Antony The Annulment Proceedings and theFinality of ICSID

Arbitration Awards, (1987) 2 ICSID Rev.-FILJ

Giardina Giardina, Andrea, ICSID: A Self-Contained, Non-National Review System, in: International Arbitration in the 21st Century (1994)

Hwang Hwang, Michael, Fong, Jennifer, Definition of ‘‘Investment’’—A Voice from the Eye of the

Storm, (2011), Asian.J.I.L. vol. 1

Jermini Jermini,Cesare Witnesses and the right to be heard in international

arbitration: some remarks on recent decisions of the Swiss

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Federal Court, (2004) ASA Bulletin vol. 22(3)

Knahr Knahr, Christina, Annulment and Its Role in the Context of Conflicting Awards

in The Backlash against Investment Arbitration (2010)

Krishnan Krishnan, Devashish A Notion of ICSID Investment,

(2009) TDM 1 Malintoppi Malintoppi, Loretta

Independence, Impartiality, and Duty of Disclosure of Arbitrators

Oxford Handbook of International Investment Law (2008) OUP

Marboe Marboe, ICSID Annulment Decisions: Three Generations,

in International Investment Law for the 21th Century (2009) OUP

Marchili Marchili, Silvia ICSID Annulment: A Saga of Virtue and Vice

in Investment Treaty Arbitration and International Law, Vol. 5 (2012) JurisNet

O’Malley (2010) O‘Malley, Nathan D. An Annotated Commentary on the 2010 IBA Rules of

Evidence, (2010) ICLR, vol. 27(4)

Rubins

Rubins, Noah, The Notion of “Investment” in International Arbitration,

in Arbitrating Foreign Investment Disputes (2004) Kluwer Law International

Shenton W. Shenton, Explanatory Note on the IBA Supplementary Rules on the

Taking of Evidence, (1985) YCA Vol. X

MISCELLANEOUSBackground Paper on Annulment for the Administrative Council of ICSID

Background Paper on Annulment For the Administrative Council of ICSID of August 10, 2012

History of the ICSID Convention Vol. II

Convention on the Settlement of Investment Disputes between States and Nationals of Other States, Documents Concerning

the Origin and the Formation of the Convention, Vol.II (1968)

IBA Guidelines on Conflicts of Interest in International

The IBA Guidelines on Conflicts of Interest in International Arbitration, available at www.ibanet.org

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Arbitration ICSID Arbitration Rules

ICSID Rules of Procedure for Arbitration Proceedings, available at https://icsid.worldbank.org/

Oxford Dictionary Oxford Dictionaries, OUP available at http://oxforddictionaries.com/

Report of the Executive Directors

Report of the Executive Directors of the IBRD on the Convention on the

Settlement of Investment Disputes between States and nationals of Other States, available at

https://icsid.worldbank.org/ Short Oxford Dictionary 

The New Shorter Oxford English Dictionary, Thumb Index Edition, 1993 Edition, Clarendon Press 

World Bank’s Articles of Agreement

International Bank for Reconstruction and Development Articles of Agreement, available at

http://web.worldbank.org/

2010 IBA Rules IBA Rules on the Taking of Evidence in International Arbitration (2010), available at http://www.ibanet.org/

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LIST OF LEGAL SOURCES

INTERNATIONAL TREATIES

ICSID Convention Convention on the Settlement of Investment Disputes between States and Nationals of Other States, 575

U.N.T.S. 159 New York Convention Convention on the Recognition and Enforcement of

Foreign Arbitral Awards, 330 U.N.T.S. 3 VCLT Vienna Convention on the Law of Treaties, 1155

U.N.T.S. 331

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STATEMENT OF FACTS

1. The Applicant, Max Solutions Inc., is a company incorporated in Oscania. The Respondent,

Bela Rano Insularo is stable small island nation.

Origins of the dispute

2. Bela Rano’s territory has until recently been populated by Sireno Kanto frogs. The frogs

can provoke allergic reaction in foreigners lacking immunity against them. In January 2002

Bela Rano hired Max Solutions to remove the frogs. Under the contract Max Solutions was

obliged to complete performance by December 2007.

3. Max Solutions had been falling behind in performance of the contract, eventually forcing

Bela Rano to cancel it. Max Solutions had commenced removal of frogs in January 2006.

While it had had several years to prepare for the operation by March 2006 (i.e. in two

months) it managed to remove only 3% of the total population. This meant that if Max

Solutions continued to perform at the same rate it would have only been able to remove

approximately 36% of the frogs by the date of completion stipulated in the contract (i.e. in

24 months).

4. In a separate development, on 26 January 2006, scientists at Bela Rano University

announced that 95% of the frogs would be dead by 2011 because of a disease affecting

them. In due course this prediction proved to be correct.

ICSID arbitration and application for annulment

5. Bela Rano has a BIT with the Republic of Oscania. Both states are parties to the ICSID

Convention.

6. In December 2006 Max Solutions filed a request for ICSID arbitration, relying on the

Oscania-Bela Rano BIT. It nominated Mr. Viator, a commercial arbitration practitioner

with no investment law experience as its arbitrator. Bela Rano in turn appointed Dr.

Iracunda, an experienced investment law scholar and arbitrator. Dr. Honesta, another

experienced investment arbitration specialist, was appointed as the president of the

Tribunal.

7. In an award rendered in 2009 the Tribunal found that it lacked jurisdiction, because Max

Solutions had no investment covered by the ICSID Convention. Dr.Honesta and Dr.

Iracunda voted for the adoption of the award, while Mr. Viator dissented.

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8. Max Solutions filed an application for annulment. It asserts that the Award should be

annulled because the Tribunal improperly refused to exercise jurisdiction, improperly

admitted Dr. Ranapuer’s report and because Dr. Iracunda was partial.

Dr. Iracunda

9. Shortly after Dr. Iracunda was appointed Max Solutions unsuccessfully challenged her

alleging lack of independence. Max Solutions relied on two grounds for its challenge. First,

before the arbitration commenced Dr. Iracunda authored a book and several articles, which

discussed the notion of “investment” under the ICSID Convention. Second, Dr. Iracunda

was a member of Wilderness, an international NGO. While Wilderness protested against

Max Solutions’ (and indeed Bela Rano’s) actions with respect to Sireno Kanto, parties

agree that there is no evidence of Dr. Iracunda’s direct or indirect involvement in those

protests. Max Solutions’ challenge was rejected by the two remaining arbitrators in a

reasoned decision.

10. In a bitter dissent attached to the Award Mr. Viator accused Dr. Iracunda of being partial.

The first reason he gave was that Dr. Iracunda refused to re-read authorities she had already

been familiar with, when Mr. Viator prompted her to re-read them. Quite confusingly the

second reason was that during the course of deliberations Dr. Iracunda shared with other

arbitrators some legal authorities that she considered may be helpful and shared her view as

to the legal issues involved with fellow arbitrators.

Dr. Ranapuer’s report

11. During the course of arbitration Bela Rano submitted an expert report dealing with the

effect of the disease on the Sireno Kanto frogs. Dr. Ranapuer, a leading scientist in the

area, authored the report. It contained conclusions substantially similar to those announced

by the scientists at Bela Rano University in January 2006, i.e. that 95% of Sireno Kanto

frogs would die by 2011, but provided a more detailed elaboration of those conclusions.

12. Max Solutions requested Dr. Ranapuer’s appearance at the hearings for the purpose of

cross-examination. For personal reasons he refused to attend. Dr. Ranapuer explained that

he decided his participation in arbitration would help Max Solutions, while he was

unwilling to provide such assistance due to Max Solutions inhumane treatment of Sireno

Kanto frogs. The parties agree that Dr. Ranapuer was not obliged by the terms of his

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engagement to attend the hearing and while Bela Rano had attempted to persuade him to

attend he still refused.

13. Max Solutions asked the Tribunal to exclude Dr. Ranapuer’s report from the record due to

his failure to attend. No issue was raised with respect to Dr. Ranapuer’s independence. The

Tribunal rejected this request. It decided to consider Dr. Ranapuer’s report, as it provided

information available from no other source. At the same time in the Award the Tribunal

relied exclusively on Dr. Ranapuer’s conclusion that most frogs would die from the disease

by 2011.

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SUMMARY OF ARGUMENTS

14. DR. IRACUNDA. Bela Rano submits that Dr. Iracunda participation in the Tribunal does

not justify annulment of the Award for three reasons. Firstly, Bela Rano invites the

Committee to confirm the finding of Azurix v. Argentinaad hoc committee that annulment

due to improper constitution of the Tribunal under Article 52(1)(b) of the ICSID

Convention may not be based on alleged lack of independence of an arbitrator. Secondly,

Applicant cannot invoke breach of the fundamental rule of procedure with respect to Dr.

Iracunda’s alleged lack of independence, because this ground was not invoked in the

request for annulment.Thirdly, Applicant has failed to prove that she lacked independence

and that the alleged lack of independence was “manifest”. As found in Urbaser v.

Argentina and confirmed by other authorities arbitrator’s academic views do not affect her

impartiality. By the same token, only arbitrator’s personal views may affect her impartiality

and there is no evidence Dr. Iracunda was in any way involved with Wilderness’ protests

against Max Solutions. Finally, once the proceedings started an arbitrator is entitled to form

a tentative view and discuss it with fellow arbitrator without jeopardizing her impartiality.

15. TRIBUNAL’S FINDING THAT CONTRIBUTION TO THE DEVELOPMENT IS

REQUIRED. Respondent submits that the Award should not be annulled as the Tribunal

did not exceed its powers. Firstly, the Tribunal properly determined that in order for it to

have jurisdiction transaction should constitute an “investment” under Article 25(1) of the

ICSID Convention and contribution to the development of the host State is one of its

jurisdictional requirements. Secondly, failure to exercise jurisdiction is not ipso facto a

manifest excess of powers and the alleged excess of powers was not manifest. Lack of

consistent practice of ICSID tribunals with respect to interpretation of the notion of

“investment” under the ICSID Convention confirms that the alleged misinterpretation of

the Convention is not “obvious” and hence it cannot be manifest.

16. TRIBUNAL’S FINDING THAT THERE WAS NO CONTRIBUTION TO THE

DEVELOPMENT. Respondent submits that the Tribunal’s findings on the lack of

contribution to the development of Bela Rano Insularo do not justify annulment of the

Award. Firstly, the Tribunal properly determined that Max Solutions activities had not

contributed to the development of Bela Rano. Secondly, the excess of powers in any event

was not manifest.

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17. AD HOC COMMITTEE’S POWERS. The ad hoc committee does not have a power to

pronounce conclusivelyon whether Max Solutions’ assets constitute an investment under

the ICSID Convention. Firstly, Article 52(4) of the ICSID Convention does not empower

the committee to rule on the jurisdiction of the Centre. Secondly, res judicata effect of the

ad hoc committee’s decision is limited only to the annulment of the award itself. Finally, if

a new Tribunal is constituted it would decide the issues of jurisdiction de novo.

18. DR. RANAPUER’S REPORT. The Respondent submits admission of Dr. Ranapuer’s

report did not result in a serious departure from fundamental rules of procedure for three

reasons. Firstly, the Tribunal properly exercised its’ discretion granted to it by the

applicable rules, which expressly permitted the Tribunal to admit an expert report, where

the expert had not been cross-examined. Secondly, the right to cross-examine does not

reflect procedural standard in international arbitration, and, thus is not a fundamental rule

of procedure. Furthermore, the Tribunal observed Max Solutions’ right to be heard,

because this right does not include the right to cross-examine and Applicant could have

responded to the report by other means. Finally and in any event, the departure was not

serious. Had the report been excluded the Tribunal would have been able to rely on public

announcement substantially similar to Dr. Ranapuer’s report, and, therefore, would not

have rendered a substantially different award. Moreover, the Tribunal did not deprive

Applicant of benefit and protection provided by cross-examination, because these benefits

could be achieved by other means.

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ARGUMENTS

I. DR. IRACUNDA’S PARTICIPATION IN ARBITRATION DOES NOT JUSTIFY

ANNULMENT OF THE AWARD

19. Max Solutions requests annulment of the Award, because it alleged that one of the

arbitrators, Dr. Iracunda, was partial. Bela Rano Insularo submits that there are three

reasons why the request should be rejected. Firstly, annulment of an award under Article

52(1)(a) of the ICSID Convention may not be based on alleged lack of independence [A].

Secondly, Applicant cannot invoke Article 52(1)(d) of the ICSID Convention with respect

to Dr. Iracunda’s participation in the proceedings[B]. Finally, Dr. Iracunda was

independent and impartial [C].

A. ANNULMENT UNDER ARTICLE 52(1)(A) MAY NOT BE BASED ON ALLEGED LACK OF

INDEPENDENCE

20. An award may be annulled on the basis of Article 52(1)(a) if “the Tribunal was not

properly constituted”.1 The ICSID Convention does not define the meaning of “proper

constitut[ion]”. It should be given its ordinary meaning within its context and in light of the

object and purpose of the ICSID Convention.2 For the reasons set out below this notion

does not include arbitrator’s lack of independence and the latter cannot serve as a basis for

annulment of the Award under Article 52(1)(a).

21. Firstly, given its ordinary meaning this notion requires compliance with the provisions of

the ICSID Convention and ICSID Arbitration Rules dealing with the constitution of the

tribunal. Such provisions consist of Articles 37-40 (dealing with appointment of arbitrators)

and Articles 56-58 of the ICSID Convention (dealing with procedure for challenge), Rules

1-12 of the ICSID Arbitration Rules.3 Therefore application of Article 52(1)(a) should be

                                                            1Schreuer/Commentary, p.935.

2VCLT, Articles 31 and 32.

3Background Paper on Annulment for the Administrative Council of ICSID, §79.

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7  

strictly limited to “Constitution of the Tribunal” section of the ICSID Convention.4 By

contrast the requirements established by Article 14 of the ICSID Convention relate to the

composition rather than constitution of the tribunal and may not be relied upon for the

purposes of Article 52(1)(a).

22. Secondly, the purpose of an annulment committee is not to reconsider a case as an

appellate body.5 Therefore, Article 52(1)(a) should not be interpreted as a source for a de

novo challenge of an arbitrator after the award is rendered.6

23. Thirdly, the interpretation suggested by Bela Rano has been adopted in a recent decision of

the ad hoc committee in Azurix v. Argentine Republic. Azurix decision is highly persuasive

as it provided a detailed analysis to support its findings as to the scope of Article

52(1)(a).7While the ad hoc committee inVivendi IIconsidered the alleged lack of

independence of an arbitrator to raise an issue under Article 52(1)(a), it did so only in

passing and without explaining its reasons for such interpretation.8 Therefore, Bela Rano

calls on the Committee to follow Azurix rather than Vivendi II.

24. Finally, a useful comparison can be made with the United Nations Convention on the

Recognition and Enforcement of Foreign Arbitral Awards, a document adopted seven years

before the ICSID Convention. Under Article V(1)(d) of the New York Convention the

court may refuse enforcement of an arbitral award if the composition of the arbitral tribunal

was not in accordance with parties’ agreement. Hence a broader notion of “composition” is

used, which encompasses individual qualities of arbitrators including their independence.9

                                                            4ICSID Convention, Articles 37-40.

5ICSID Convention, Article 53(1); see also Azurix v. Argentina (Annulment), §282;

Background Paper on Annulment for the Administrative Council of ICSID, §73.

6Azurix v. Argentina (Annulment), §280.

7Ibid., §274-284.

8Vivendi v. Argentina (II) (Annulment), §201

9Nacimiento, p.288.

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25. To conclude, Max Solutions may not rely on Dr. Iracunda’s alleged lack of independence

as the basis for annulment under Article 52(1)(a), because it does not interfere with the

constitution of the Tribunal.

B. APPLICANT CANNOT INVOKE ARTICLE 52(1)(D) WITH RESPECT TO DR. IRACUNDA’S

PARTICIPATION IN THE PROCEEDINGS

26. Max Solutions may attempt to invoke Article 52(1)(d) as an additional ground for

annulment of the Award on the basis of Dr. Iracunda’s alleged lack of independence. The

Applicant is not entitled to invoke such a new ground at this stage.

27. A complete application for annulment should be submitted within 120 days of the date of

the award.10 Grounds for annulment listed in paragraphs (a)-(e) of Article 52(1) are distinct

from each other11 and therefore each of them should be addressed separately and in detail

in the application for annulment.12 Failure to include an express reference to a ground listed

in Article 52(1) when describing the factual basis for the application should result in the

party’s inability to invoke such new ground in the course of annulment proceedings.13 This

will be the case even if the applicant relies on the facts already stated in the original

application for annulment or has invoked this ground with respect to a different set of

factual circumstances in the application.14 The reason is that addition of a new ground for

annulment is de facto a new application for annulment submitted outside of the 120-day

period.15

                                                            10ICSID Convention, Article 52(2).

11Togo Electricite c. Togo (Annulment), §74.

12ICSID Arbitration Rules, Rule 50(1)(c)(iii); see also Togo Electricite c. Togo (Annulment),

§72.

13Transgabonais v. Gabon (Annulment), §120.

14Schreuer/Commentary, p.1053, §535.

15Wena v. Egypt (Annulment), §19.

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28. The Applicant has indicated Dr. Iracunda’s alleged lack of independence as a ground for

annulment of the Award under Article 52(1)(a).16 It failed to refer to Article 52(1)(d).

While Applicant has invoked Article 52(1)(d) it has done so only with respect to admission

of Dr. Ranapuer’s report.17 The Award was issued in 2009,18 hence the Applicant may not

invoke a new ground for annulment in a memorial submitted on 27 September 2012.

29. Finally, even if Article 52(1)(d) may be invoked as a ground for annulment in such a

manner, the Award should not be annulled as Dr. Iracunda was independent and impartial.19

C. DR. IRACUNDA WAS INDEPENDENT

30. Applicant has failed to prove that Dr. Iracunda had not been independent [1]. Furthermore,

none of the circumstances relied on by Max Solutions demonstrate a “manifest” lack of

independence [2].

1. Dr. Iracunda was independent

31. Under Article 14 of the ICSID Convention arbitrators must be “independent”. Parties to the

present case agree that the notion of “independence” encompasses both independence and

impartiality.20 Hence in order to be independent an arbitrator needs to both lack close

relationship with a party to the arbitration of a financial, professional or personal nature21

and be “free …from favoritism, not [be] biased in favor of one party more than another”.22

                                                            16ICSID Convention, Article 52(1)(a).

17Uncontested facts, Record, line 214.

18Uncontested facts, Record, lines 187-188.

19See §30-55 infra.

20Challenge decision, Record, lines 278-280.

21Daele, p.270.

22Tidewater v. Venezuela (Arbitrator Challenge), §37.

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32. Before proceeding to the specific circumstances relied on by the Applicant, Bela Rano

Insularo would like to make two general observations. Firstly, Applicant bears the burden

of proof in demonstrating lack of impartiality.23 Secondly, if none of the facts relied on by

the Applicant evidence lack of impartiality on their own, their combination similarly would

not evidence it.24

(i) Academic views of Dr. Iracunda

33. Partiality arises only if arbitrator’s previous statements prevent her from giving due

consideration to the positions of the parties from the standpoint of a reasonable third

person.25 Indeed, the IBA Guidelines include previously expressed academic opinions into

the Green List.26 This demonstrates a consensus of the international arbitration community

that such statements create no conflict of interest from an objective point of view.27

34. Within the ICSID framework, tribunals uniformly held that academic opinions limited to

the analysis of general investment law issues do not affect arbitrators’ impartiality.28 The

rationale is that a scholar is able to change her view, to take into account the arguments of

the parties, and thus can be relied on to consider the facts of the case impartially.29

                                                            23ICSID Convention, Article 57.

24Amco v. Indonesia (Arbitrator Challenge), §5; SGS v. Pakistan (Arbitrator Challenge),

p.405; Daele, pp.252-254.

25Urbaser v. Argentina (Arbitrator Challenge), §50.

26IBA Guidelines on Conflicts of Interest in International Arbitration, p.24; see also

Malintoppi,p.799.

27IBA Guidelines on Conflicts of Interest in International Arbitration,p.18.

28Saipem v. Bangladesh (Arbitrator Challenge) inMalintoppi,p.799;Urbaser v. Argentina

(Arbitrator Challenge), §54.

29Urbaser v. Argentina(Arbitrator Challenge), §5.

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35. In the present case, Max Solutions relies on extracts from Dr. Iracunda’s book which

discuss the notion of “investment” under the ICSID Convention.30 There are two reasons

why these extracts do not create any doubts as to the impartiality of Dr. Iracunda. Firstly,

the book had been written before the dispute was submitted to arbitration and with no

reference to the case.31 Secondly, Dr. Iracunda had clearly stated that she would be fully

open-minded and able to change her opinion on any point if persuaded.32

36. Indeed arbitrators do change their positions with respect to complex issues during

proceedings.33 For example, one of the most experienced scholars and arbitrators Professor

Albert Van den Berg changed his opinionwith respect to the necessity argument

betweenEnron v. Argentina, where the argument was rejected34 and LG&E v. Argentina, in

which Professor Van Den Berg also sat as arbitrator, where it was accepted.35

37. Furthermore, the passages relied on by the Applicant address one of the most fundamental

and recurring issues in the ICSID system. There are strong policy reasons for not treating

such an opinion as affecting arbitrator’s impartiality. Firstly, if this position is adopted, the

number of qualified arbitrators able to consider new cases will be significantly reduced.

This is because most of them have commented on a plethora of issues regularly arising in

such arbitrations.36 Secondly, if a previously expressed generic academic view precluded a

person from serving as an arbitrator, leading practicing arbitrators would inevitably refrain

                                                            30Challenge Decision, Record, lines 301 - 362.

31Ibid., lines 287, 301-362.

32Ibid., lines 483-484.

33Daimler v. Argentina (Sep. Op. Bello Janeiro), p.2.

34Enron v. Argentina, §310.

35LG&E v. Argentina, §257.

36Urbaser v. Argentina (Arbitrator Challenge), §48; PIP SARL v. Gabone (Arbitrator

Challenge), §30; Suez v. Argentina (Arbitrator Challenge), §36.

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from expressing their opinion on significant international investment law issues at all. As a

result, the development of scholarship in investment arbitration would be put under serious

threat.37

38. Finally, Max Solutions argues that Dr. Iracunda used rather colorful language to express

her opinion.38 However, the style and specific expressions used by a scholar have never

justified the removal of an arbitrator. Indeed in Urbaserone of the grounds for challenge of

Professor McLachlan was his use of the word “heretical” to describe an award supporting

the challenging party’s position,39 yet the challenge against him was rejected.40

(ii) Dr. Iracunda’s membership in Wilderness

39. In the present case the Applicant argues that Dr. Iracunda “morally prejudged” her position

in the dispute due to her membership in Wilderness.41 Hence the Applicant appears to be

challenging Dr. Iracunda's impartiality and not her independence.42

40. If an arbitrator has previously taken a specific position in regard to the ongoing case,43 this

may give raise to justifiable doubts as to her independence.44 However, those should be

personal views of an arbitrator, not a position taken by an organization or an institution of

                                                            37Urbaser v. Argentina (Arbitrator Challenge), §54.

38Challenge Decision, Record, lines 440-443.

39Urbaser v. Argentina (Arbitrator Challenge), §22.

40Ibid., §59.

41Challenge Decision, Record, lines 412-413.

42Ibid., line 412.

43IBA Guidelines on Conflicts of Interest in International Arbitration, p.23.

44Ibid., p.18.

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which the arbitrator is a member.45Views of an organization do not necessarily reflect its

member’s personal views.46Therefore, arbitrator’s membership in an organization does not

automatically result in the lack of impartiality and requires careful evaluation of the reality

of the situation, and analysis of whether the member shares organization’s views on the

precise subject.47

41. Dr. Iracunda is a member of Wilderness, a large international non-governmental charity

with members in over 78 countries. The organization is involved in wide range of activities

along with an extensive number of other NGOs.48 Its decisions have no binding effect on

its members,49 as membership in Wilderness entails no specific obligations.50

42. While Wilderness protested against Max Solutions’ actions in Bela Rano Insularo,51 this is

irrelevant. Dr. Iracunda was a passive member of the organization. Indeed the parties

agreed that she had not been involved in anyof Wilderness’ activities or projects,52

including its strong protests against Max Solutions’ treatment of Sireno Kanto frogs. The

Applicant has adduced no evidence demonstrating that Dr. Iracunda supports Wilderness’

position with respect to Max Solutions. Nor is there any evidence that Dr. Iracunda has

expressed any personal opinion as to Max Solutions’ activities. To conclude, Dr. Iracunda's

membership in Wilderness does not affect her impartiality.

                                                            45ConocoPhillips v. Venezuela (Arbitrator Challenge), §63.

46Ibid.

47Amco v. Indonesia (Arbitrator Challenge), §3; Vivendi v. Argentina (II) (Annulment),

§214; Zhinvali v. Georgia, §24.

48Challenge Decision, Record, lines 400-403.

49Challenge Decision, lines 461-465.

50Clarifications, No. 41.

51Challenge Decision, Record, lines 403-407.

52Clarifications, No.136.

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(iii) Dr. Iracunda’s conduct during the course of deliberations

43. Bela Rano Insularo submits that, firstly, Mr. Viator’s dissenting opinion is inadmissible

evidence and should be disregarded by the Committee. Secondly, Dr. Iracunda’s conduct

during the course of deliberations does not evidence lack of impartiality.

44. According to Rule 15 of the ICSID Arbitration Rules deliberations should remain secret.

This secrecy is necessary to

produce a true discussion and argument and not to become a mere

exchange of cautiously expressed and selected views.53

Each arbitrator bears anobligation to keep the content of deliberations confidential54 even

after the award is issued.55 To ensure that this rule is respected, any material resulting from

a breach of secrecy of deliberations should be declared inadmissible evidence.56

45. Mr. Viator issued a dissenting opinion, which includes a detailed description of the process

of deliberations, particularly the content of discussions he had with Dr. Iracunda.57 Hence,

this dissenting opinion should be suppressed and may not be relied upon by the Applicant.

46. In any event there has not been anything reproachable in Dr. Iracunda’s conduct during the

deliberations. The test to be applied is an objective one, where doubts as to the arbitrator’s

impartiality need to be established by an objective and factual basis that would explicitly

                                                            53Broms v. US (Arbitrator Challenge), p.390.

54ICSID Arbitration Rules, Rule 6.

55IBA Guidelines on Conflicts of Interest in International Arbitration, Rule 9.

56Skubiszewski v. US (Arbitrator Challenge), p.431; Broms v. US (Arbitrator Challenge),

p.392.

57Dissenting Opinion, Record, lines 862 – 881.

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evidence her misconduct.58 Mere expression of an opinion different from the position of

one of the parties does not evidence lack of independence of an arbitrator.59

47. At the deliberations Dr. Iracunda expressed her views regarding the term “investment”

under the ICSID Convention. Such exchange of ideas between arbitrators is a standard and

essential part of the deliberations stage, which commences at the same time as the arbitral

proceedings themselves.60 It does not evidence partiality or bias.

48. To conclude, Dr. Iracunda’s conduct during the course of deliberations does not evidence

her lack of impartiality.

(iv) Lack of disclosure by Dr. Iracunda

49. The test for disclosure adopted by the ICSID Arbitration Rules is a subjective one.61 The

primary purpose of disclosure serves to inform the parties about what the arbitrator in good

faith considers requiring disclosure.62 Failure to disclose certain facts cannot evidence lack

of impartiality or serve as a ground for challenge of an arbitrator.63

50. Dr. Iracunda did not disclose her membership in Wilderness or her publications.64

However, she was not required to disclose those facts. A useful guidance for similar

                                                            58National Grid v. Argentina (Arbitrator Challenge), §85; Broms v. US (Arbitrator

Challenge), p.394.

59Suez v. Argentina (Arbitrator Challenge), §35.

60Alonso, p.133.

61ICSID Arbitration Rules, Rule 6(2).

62IBA Guidelines on Conflicts of Interest in International Arbitration, p.9; see also

Waincymer,p.314.

63IBA Guidelines on Conflicts of Interest in International Arbitration,p.18; see also

ConocoPhillips v. Venezuela (Arbitrator Challenge), §60.

64Clarifications, No. 50.

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situations may be found in the IBA Guidelines on Conflicts of Interest in International

Arbitration,65 where both circumstances fall into the Green List.Hence there is an

international consensus that they need not be disclosed.66 Therefore Dr. Iracunda’s conduct,

which complied withthe IBA Guidelines cannot be viewed as an act of bad faith and

evidence her bias.

51. To conclude, the Applicant has failed to present any evidence that can raise reasonable

doubtsas to Dr. Iracunda’s lack of independence and impartiality. Therefore, she fully

complied with Article 14(1) of the ICSID Convention.

2. In any event there is no “manifest” lack of qualities required by Article 14(1)

52. Annulment of an award is an extraordinary remedy.67 Therefore, the standard for

challenges of arbitrators should be applied respectively in the annulment proceedings.68

Hence only a manifest lack of qualities required by Article 14(1) can serve as a basis for

annulment.69

53. Manifest lack of qualities should be established by objective evidence.70 It is established

only if the lack of independence is obviousgoing far beyond reasonable doubts.71

Furthermore, a clear relationship should exist between the facts relied upon by the

                                                            65IBA Guidelines on Conflicts of Interest in International Arbitration, p. 5.

66IBA Guidelines on Conflicts of Interest in International Arbitration, p.24.

67Broches, p.327.

68Schreuer/Commentary, p.936, §123.

69ICSID Convention, Article 57.

70Suez v. Argentina (Arbitrator Challenge), §40.

71Ibid.

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17  

Applicant and that the allegations of Dr. Iracunda’s lack of independence.72 Such facts

should notbe merely “supposed or inferred”.73

54. The Applicant relies on the facts that do not themselves evidence lack of impartiality. The

argument that Dr. Iracunda had an unfavorable view or moral prejudice against Max

Solutions due to her membership in Wilderness is based on nothing other than Max

Solutions’ subjective inference. Dr. Iracunda’s natural tendency to share her views with

fellow arbitrators early in the proceedings and knowledge of case-law and scholarship do

not clearly evidence that she prejudged any of the issues in arbitration. Finally, Dr.

Iracunda’s academic views cannot objectively evidence her partiality in favor of Bela Rano

Insularo’s case.

55. The circumstances relied on by the Applicant do not demonstrate a manifest lack of

independence of Dr. Iracunda and cannot serve as a basis for the annulment of the Award.

II. THE TRIBUNAL DID NOT MANIFESTLY EXCEED ITS POWERS BY HOLDING

THAT CONTRIBUTION TO DEVELOPMENT IS REQUIRED

56. ICSID Convention establishes two conditions that must be satisfied74 for the Award to be

annulled on the ground of the tribunal’s excess of powers.75 First, the Tribunal should have

actually exceeded its powers. Second, such excess should be “manifest”. Bela Rano will

demonstrate that neither of these requirements is met in the present case.

A. THE TRIBUNAL PROPERLY DETERMINED THAT IT LACKED JURISDICTION

57. The Tribunal held that in order for it to have jurisdiction conditions provided in Article 25

of the ICSID Convention need to be satisfied and that presence of an “investment” is one of

                                                            72SGS v. Pakistan (Arbitrator Challenge), p.402.

73Ibid.,p.403.

74CDCv. Seychelles (Annulment), §39.

75ICSID Convention, Article 52(1)(b).

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such conditions.76 Max Solutions appears not to dispute these conclusions of the Tribunal,

but rather argues that

the ICSID Convention does not require that an “investment” contribute to

the development of the Host State.77 

58. Bela Rano will accordingly limit its submission to demonstrating that the Tribunal was

correct in finding that in order to fall within Article 25 the transaction should constitute an

“investment” under the ICSID Convention [1] and contribution to the development of the

host State is required for a project to be an “investment” under the ICSID Convention [2].

Respondent will separately demonstrate that Max Solutions’ activity did not contribute to

the economic development of Bela Rano Insularo.78

1. The asset should be an “investment” under the ICSID Convention for the Tribunal to

have jurisdiction

59. The jurisdiction of the Centre is limited to

…dispute[s] arising directly out of an investment … which the parties to

the dispute consent in writing to submit to the Centre.79

60. This provision requires that the tribunal follow a twofold test in determining its jurisdiction

rationemateriae over the dispute, namely, whether (i) the transaction in question is within

the consent of the parties and (ii) constitutes an “investment” under the ICSID Convention.80

61. The Convention “does not imply unlimited freedom for the parties”81 in submitting to the

Centre any dispute they consider to be an “investment” one.82 By reference to the

                                                            76Uncontested facts, Record, line 630.

77Uncontested facts, Record, lines 202-203.

78See Submission IIIinfra.

79ICSID Convention, Article 25(1).

80Schreuer/Commentary, p.117; Rubins, pp.289–290; AguasDel Tunari SA v. Bolivia, §278;

CSOB v. Slovakia, §68.

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independent notion of an “investment” Article 25(1) of the ICSID Convention sets forth the

“outer limits”83 of the Centre’s jurisdiction “which cannot be extended or derogated from

even by agreement of the parties”.84

62. Although the annulment committee’s holding in MHS provides that the parties “by the terms

of their consent … could define jurisdiction under the [ICSID] Convention”,85 its rationale is

not correct and should not be applied here. The committeerecognized objective content of the

notion of “investment” under Article 25(1) of the ICSID Convention andagreed thatordinary

sales may never constitute investments.86 Hence the decision in MHSmay not be interpreted

as denying existence of an objective meaning of the notion of investment.

63. The Report of the Executive Directors indeed reads as “no attempt was made to define the

term investment”.87 Bearing in mind Contracting States’ failure to agree upon the precise

definition of the term,88 the wording thus refers to their willingness to establish

ajurisdictional limit of the Centre and leave it for interpretation by the tribunals. Annulment

                                                                                                                                                                                       81Schreuer/Commentary,p.117;Report of the Executive Directors, §25; Mitchell v. DRC

(Annulment), §31; Phoenix v. Czech Republic, §82; Generation Ukraine Inc. v. Ukraine,

§8.2; CSOB v. Slovakia, §68.

82Cole,p.313; SGS v. Paraguay, §93.

83History of the ICSID Convention, Vol.II,p.566.

84TSA v. Argentina, §134; see also Saba Fakes v. Turkey, §108; BIVAC v. Paraguay, §94;

Joy Mining v. Egypt, §49-50; CSOB v. Slovakia, §68.

85MHS v. Malaysia (Annulment), §71.

86Ibid.,§72.

87Report of the Executive Directors, §27.

88Schreuer/Commentary,pp.114-116.

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committee in MHS was thus wrong in its finding that the content of the term “investment” in

the multilateral treaty was to be determined by a particular BIT.89

64. To conclude, the transaction in question should fall within the notion of an “investment”

under the ICSID Convention for the tribunal to have jurisdiction.90

2. Contribution to the development of the host State is required for an asset to be

considered an “investment” under the ICSID Convention

65. Although the ICSID Convention does not provide a definition of an “investment”,91 it has a

separate objective meaning.92 The notion of an “investment” is to be interpreted

in good faith in accordance with the ordinary meaning … in [its] context

and in the light of [the ICSID Convention’s] object and purpose.93

Recourse can be made to the supplementary means of interpretation, including the

preparatory work and circumstances of conclusion in order to confirm the interpretation.94

The said rules of interpretation reflect customary international law and are applicable in the

instant case.95

                                                            89MHS v. Malaysia (Annulment), §73.

90Jan de Nul v. Egypt, §90; SGS v. Paraguay, §91; Hwang,p.99.

91Report of the Executive Directors, §27; Schreuer/Commentary,p.114.

92See Section A(1)infra.

93VCLT, Article 31(1).

94MHSv. Malaysia (Annulment), §57.

95Libya v. Chad (ICJ),pp.21-22; MHS v. Malaysia (Annulment),p.22-23.

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(i) The ordinary meaning of an “investment” cannot be established solely on the basis of

dictionaries’ definition

66. While recognized dictionaries can be used to determine the ordinary meaning of a notion,96

this would not be enough to define the notion of an “investment” under the ICSID

Convention. Wide dictionary meaning97 does not reflect intentions of the contracting States

to provide a “comprehensive definition”98 of the notion and thus to

[transcend] the frontier of the ordinary meaning of the term

“investment” in the ICSID Convention.99

For this reason, the drafters of the ICSID Convention agreed that “ordinary commercial

transactions” which will fall under the ordinary dictionary definition “would not be covered

by the Centre’s jurisdiction”.100

(ii) The meaning of “investment” should be established in light of the object and purpose of

the ICSID Convention

67. The requirement that a project needs to contribute to the development of the host State to

constitute an investmentderives from the object and purpose of the ICSID Convention

reflected in its Preamble.101 It provides that

                                                            96Oil Platforms Jurisdiction (ICJ),p.818.

97Black’s Law Dictionary,p.902.

98Historyof the ICSID Convention, Vol.II, p.261 (Tunisia), see also Japan (p.542), Israel

(p.552-553), UK (p.452-453);

99Douglas,p.165.

100Schreuer/Commentary,p.117.

101Hwang,p.119; Schreuer/Commentary,p.116;Report of the Executive Directors, §9.

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the Contracting States [are] considering the need for international

cooperation for economic development, and the role of private

international investment therein.102

68. It was stressed during the preparation of the ICSID Convention that

thejurisdiction of the Center should be limited in accordance with the

purposes sought to be achieved by the Convention.103.

Several delegations expressly named role played by the foreign investment in the economic

development of the host States by as one of the criteria of a protected investment.104

(iii) The contribution to the development criterion derives from the circumstances of the

ICSID Convention’s conclusion

69. The circumstances of the treaty’s conclusion should be taken into account in its

interpretation.105 The ICSID Convention was negotiated under the World Bank

auspices.106The mandate of the World Bank extends to assistance in development of

member states by facilitation of the investment for productive purposes.107 Accordingly the

World Bank would act ultra vires if it created a general jurisdictional mechanism for

resolution of legal disputes.108

70. Furthermore, the World Bank could not

                                                            102 ICSID Convention, Preamble.

103Historyof the ICSID Convention, Vol.II,p.566.

104Historyof the ICSID Convention, Vol.II,p.364, 550.

105VCLT, Article 32.

106Schreuer/Commentary,p.2;Mitchell v. DRC (Annulment), §28.

107Articles I(i) and (ii) of the World Bank’s Articles of Agreement.

108Krishnan,p.4.

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23  

draw up such a Convention [outside its mandate] and to offer it to States

on a “take it or leave it basis”.109

ICSID’s operations need to fall within the World Bank’s mandate, since the latter provides

the Centre with offices, services and facilities as well as covers all the expenses of the

Centre’s secretariat.110 For this reason the jurisdictional requirement of contribution to the

development reflects the limited scope of the World Bank’s mandate and serves to prevent

consideration by the Centre of disputes arising out of transactions which do not serve the

World Bank’s purposes.

71. To conclude, the Tribunal was correct in holding that the notion of an “investment” in

Article 25(1) of the ICSID Convention extends only to assets contributing to the economic

development of the host State.111 This is confirmed by the object and purpose of the

Convention, travauxpreparatoires and circumstances of its’ conclusion.

B. ALTERNATIVELY, THE EXCESS OF POWERS IS NOT MANIFEST

72. The Tribunal’s excess of powers should be “manifest” in order to constitute a valid ground

for annulment of the Award.112 Otherwise finality of an award is guarded by exclusion of

any appeal against it as well as by the tribunal’s power to determine its own jurisdiction.113

Bela Rano will accordingly demonstrate that a jurisdictional error is not necessarily a

manifest excess of powers [1], and the highly controversial nature of the definition of

investment renders the alleged Tribunal’s error not manifest in any event [2].

                                                            109History of the ICSID Convention, Vol.II,p.453.

110Schreuer/Commentary,p.14.

111Fedax v. Venezuela, §43; CSOB v. Slovakia, §64; Mitchell v. DRC (Annulment), §23-48;

Phoenix v. Czech Republic, §83.

112ICSID Convention, Article 52(1)(b).

113ICSID Convention, Articles 41, 53(1).

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1. Failure to exercise jurisdiction is not ipso facto a manifest excess of powers

73. Max Solutions might argue that any jurisdictional mistake committed by the Tribunal leads

to manifest excess of powers. However Article 52(1)(b) of the ICSID Convention “does not

distinguish between findings on jurisdiction and findings on the merits”.114 Hence the test of

manifestness should apply “equally if the question is of jurisdiction”.115 The opposite

conclusion would lead to unlimited reassessment of the tribunals’ competence by the

annulment committees and “threaten the stability of the [ICSID] system”.116

2. The alleged excess of power is not manifest

74. The word “manifest” in Article 52(1)(b) of the ICSID Convention requires an alleged excess

of powers be “obvious”117, i.e. “self-evident rather than the product of elaborate

interpretations”.118Where “the issue is debatable … the tribunal’s determination is

conclusive”.119

                                                            114Soufraki v. UAE (Annulment), §118; See also MTD v. Chile (Annulment), §54; Lucchetti

v. Peru (Annulment), §101; Schreuer/Commentary, p.942.

115Soufraki v. UAE (Annulment), §119.

116Schreuer/Commentary,pp.941-942; Marchili,pp.291-292.

117Vivendi v. Argentina (II) (Annulment), §245; Azurix v. Argentina (Annulment), §68;

Soufraki v. UAE (Annulment), §39; MCI v. Ecuador (Annulment), §49; Rumeli v.

Kazakhstan (Annulment), §96; Helnan v. Egypt (Annulment), §55; Mitchell v. DRC

(Annulment), §20; Background Paper on Annulment for the Administrative Council of

ICSID, §84.

118Wena v. Egypt (Annulment), §25; See also CDC v. Seychelles (Annulment),§41; Enron v.

Argentina (Annulment), §69; Sempra v. Argentina (Annulment), §213; Paulsson,pp.380,

392; See also VCLT, Article46(2).

119Feldman,p.101.

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75. In the present case the Tribunal’s finding that it lacked jurisdiction over the dispute is

challenged by Max Solutions on the ground of alleged misinterpretation of the notion of

“investment” contained in Article 25(1) of the ICSID Convention. However, this notion is

not defined,120 and consistent practice of ICSID tribunals on its interpretation is

lacking.121There are several awards supporting requirement of contribution to

development.122 Moreover ad hoc committees in Mitchell and MHS interpreted the notion of

“investment” differently (the former holding that contribution to development is required123

and the latter denying this proposition).124 This fact leads to the conclusion that the

Tribunal’s alleged error in interpretation cannot be regarded as “obvious” or “self-

evident”.125

76. For those reasons the interpretation adopted by the Tribunal and the one that may be

adopted by the Committee “are both tenable”.126 In such a case under Article 52(1)(b)

standard

the latter [cannot] replace the former’s view … by its own in the course of an

annulment procedure.127

                                                            120See Section II(A)(2) above.

121Marchili,p.293; MHS v. Malaysia (Annulment), §57.

122Bayindir v. Pakistan, §137; Jan de Nul v. Egypt, §91; Helnan v. Egypt, §77; Saipem v.

Bangladesh, §99; Fedax v. Venezuela, §43; CSOB v. Slovakia, §88; Joy Mining v. Egypt,

§53.

123Mitchell v. DRC (Annulment), §27-33.

124MHS v. Malaysia (Annulment), §80.

125Marchili,p.293.

126Marboe, p.209.

127Ibid.

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77. Bela Rano invites the Committee not to follow the approach adopted by the ad hoc

committee in MHS v. Malaysia. In MHS the annulment committee recognize the

differences among ICSID tribunals and … commentators on the meaning of

“investment”,128

acknowledged the “extensive analysis [provided by the Sole Arbitrator] in support of his

conclusion129and thus itself confirmed the lack of manifestness in the alleged error.

Nonetheless it disregarded the limits of its powers under Article 52(1)(b) and replaced the

tribunal’s finding by its own.

78. The present annulment Committee is thus precluded from annulling the Award, as the

excess of powers was not manifest.

III. TRIBUNAL’S FINDINGS ON LACK OF CONTRIBUTION TO DEVELOPMENT

DO NOT JUSTIFY ANNULLMENT OF THE AWARD

79. If the Committee decides that contribution to the economic development of the host State is

required under Article 25(1) of the ICSID Convention, the Tribunal still correctly declined

to exercise jurisdiction over the dispute, because Max Solutions activities did not contribute

to the development of Bela Rano Insularo [A], or, in the alternative, the excess of powers

was not manifest [B].

A. MAX SOLUTIONS’ ACTIVITIES DID NOT CONTRIBUTE TO THE DEVELOPMENT OF BELA

RANO INSULARO

80. The ICSID Convention requires a specific contribution to the development of the host state,

which “benefit[s] [state’s] public interest in a material way or serve[s] to benefit [state’s]

economy”130 to qualify a transaction as investment. That distinguishes ordinary commercial

                                                            128MHS v. Malaysia (Annulment), §57.

129Ibid, §61.

130MHS v. Malaysia , §131.

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contracts, which always have some indirect impact on the economy of a state,131 be it

historical, cultural or tourist benefit, from investment protected by the ICSID Convention.132

81. In accordance with ICSID jurisprudence contribution to the development might be present if

an investor either implements public projects falling within the initial competence of a

state133(1), or contributes in the form of financing the state budget134 (2), or creates

manufacturing facilities, which would directly develop the economy of the host state.135

82. Normal commercial services such as legal services in Mitchell make no “contribution to the

economic development or at least the interests of the State”.136 Similarly, in the present case

Max Solutions made no contribution to the economic development of Bela Rano Insularo,

since the contract in question constituted an ordinary services agreement.137 Max Solutions

made no contribution in terms of “know-how, equipment and personnel”,138 since the

contract did not require it to transfer technology, equipment to Bela Rano Insularo or to train

local residents.139

                                                            131Id, §125.

132Id, §138.

133Salini v. Jordan, §57; Bayindir Pakistan, §137; Jan de Nul v. Egypt, §92; Saipem v.

Bangladesh, §7.

134CSOB v. Slovakia, §88; Fedax v. Venezuela, §43; Joy Mining v. Egypt, §47, 61; SGS v.

Pakistan, §139.

135PSEG v. Turkey, §124; MCI v. Ecuador, §165.

136Mitchell v. DRC (Annulment), §39.

137Uncontested facts, Record, line 36.

138Bayindir v. Pakistan,§115.

139Uncontested facts, Record, line 52.

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83. Under these circumstances the Tribunal properly determined that Max Solutions’ contract

with Bela Rano government was not an investment.

B. ALTERNATIVELY, THE EXCESS OF POWERS IS NOT MANIFEST

84. While there was no contribution to the economic development of Bela Rano Insularo,140

Max Solutions still might argue, that the said requirement was met due to the potential

indirect impact of its activities on future tourism industry. In Mitchell the committee

indicated that the contribution does not need to “always be sizable or successful”.141

85. However such contribution is not “obvious and unquestioned”,142 rather it would be subject

to elaborate deliberations. Thus by allegedly failing to recognize this contribution the

Tribunal could not have committed an error of “manifest” nature, which would justify the

annulment of the Award.143 Where the issue itself is not self-evident, the excess of powers

cannot be “manifest” as required by Article 52(1)(b) of the ICSID Convention.

IV. THE AD HOC COMMITTEE IS NOT EMPOWERED TO RULE

CONCLUSIVELY ON WHETHER THE APPLICANT MADE AN INVESTMENT

86. Bela Rano submits that the annulment committee does not have a power to pronounce

conclusively on whether Max Solutions’ assets constitute an investment under the ICSID

Convention. Bela Rano will demonstrate it, by showing: firstly, that Article 52(4) of the

ICSID Convention does not empower the committee to rule on the jurisdiction of the Centre

[A]. Secondly, res judicata effect of the ad hoc committee’s decision is limited only to the

annulment of the award [B]. And finally, if a new Tribunal is constituted it would decide the

issues of jurisdiction de novo [C].

                                                            140See Section IV(A) above.

141Mitchell v. DRC (Annulment),§33.

142Mitchell v. DRC (Annulment),§30.

143See Section II(B) above.

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29  

A. ARTICLE 52(4) DOES NOT EMPOWER THE COMMITTEE TO RULE ON JURISDICTION OF THE

CENTRE

87. Max Solutions misinterprets article 52(4) of the ICSID Convention. According to the latter

provisions of Article 41 … shall apply mutatis mutandis to proceeding

before the Committee”

The phrase “mutatis mutandis” means that the provision is applicable with all the

adaptations necessary to make it suitable to the annulment proceeding.144Hence reference to

Article 41 confirms the power of the ad hoc committee to be the judge of itsown

competence in the course of the annulment proceedings, e.g. to decide whether to hear a

request for the annulment.145

88. A passing reference to Article 41 in Article 52(4) does not vest upon the committee the

authority to rule on jurisdiction of the Centre. Firstly, Article 41(2) affirms that only the

tribunal is competent to hear jurisdictional objections. The language used in the provision

denies its broad interpretation, e.g. mutatis mutandis application. For example, Article 41(2)

specially describes arbitration proceedings (division into preliminary stage and hearing the

merits of the case) and hence is not applicable to annulment proceedings. Furthermore, the

committee is not entitled to review the substance of the tribunal’s decision as to jurisdiction

or merits.146Finally, where the drafters of the Convention intended to empower an organ to

pronounce upon the Centre’s jurisdiction they did so expressly.147

89. The fact that the issue in dispute goes to the jurisdiction of the Centre does not change this

conclusion.Max Solutions’ appears to be arguing that the committee’s decision is premised

upon jurisdiction of the Centre and hence the committee should be able to inquire into it.

This argument is misguided for two reasons. Firstly, the only conditions of committee’s

jurisdiction are that (i) an award was rendered within the ICSID system and (ii) an                                                             144Schreuer/Commentary, p.1057, §553.

145Schreuer/Commentary, p.1058, §554.

146Knahr, p.152; MTD v. Chile (Annulment), §54; CMS v. Argentina (Annulment), §44.

147ICSID Convention, Article 36(3).

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30  

application was lodged within 120 days. Secondly, there are sound practical reasons for not

requiring a committee to conduct independent inquiry into the Centre’s jurisdiction over the

case. By the time the case reached committee Centre’s jurisdiction has already been

examined by two bodies – the Secretary-General and the tribunal.

90. To conclude, Article 52(4) ICSID Convention does not empower an ad hoc committee to

decide on the jurisdiction of the Centre.

B. RES JUDICATA EFFECT OF THE AD HOC COMMITTEE'S DECISION IS LIMITED TO ANNULMENT

OF THE AWARD

91. The core purpose of the annulment procedure is to decide whether tribunal met all the

necessary requirement of the ICSID Convention while passing an award. Hence, the

decision that an ad hoc committee adopts is either to annul the award (in whole or in part) or

to refuse annulment.148 It is this decision of the annulment committee that has a res judicata

effect.149

92. Bela Rano does not dispute the power of the committee to include into the reasoning of the

decision its analysis of whether the transaction in question qualifies as an investment under

ICSID Convention.

93. However, the reasoning contained in the decision does not have res judicata effect.150 A

different interpretation would undermine the purpose of the annulment procedure and

violate Article 53(1) of ICSID Convention that clearly defines annulment as a “remedy

other than an appeal”.151 For this reason the “ad hoccommittee only has the power to annul

the award”152 and

                                                            148ICSID Convention, Article 52(6).

149Giardina, p.216.

150Amco v. Indonesia (II) (Annulment), §7.15.

151Sсhreuer/Commentary, p.901, §8; Klöckner v. Cameroon (Annulment), §3.

152Schreuer/Commentary, p.901, §10; Caron, p.23.

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may not amend or replace the award by its own decision, whether in respect of

jurisdiction or the merits.153

94. Therefore, res judicata effect of the committee’s decision is limited only to the annulment

of the award.

C. IF THE CASE IS RESUBMITTED THE NEW TRIBUNAL WOULD DECIDE DE NOVO ON

JURISDICTION

95. In case the Award is annulled a new tribunal in resubmission proceedings is not bound by

the reasoning of the ad hoc committee.154 While Bela Rano does not dispute that the

reasoning of the ad hoc committee could be taken into consideration by the new tribunal, the

latter would have the power to decide on its own within its competence.155

96. Article 52(6) of the ICSID Convention states that “a dispute shall … be submitted to a new

Tribunal”. Thus all the requirements of the ICSID Convention concerning ordinary

arbitration proceedings should be applied to it, including Article 41. Nothing should prevent

the new tribunalfrom employing its right to decide over the case submitted to it by the

parties, in particular over the question already considered in the ad hoc committee’s

reasoning. To assert the contrary would undermine the competence of the new tribunal and

thus the guarantees provided by the Convention.

97. Furthermore, Bela Rano interpretation is supported by the previous decisions of the

tribunals in resubmitted cases.156 In Vivendi II Tribunal decided de novo on the issue had

                                                            153MINE v. Guinea (Annulment), §4.04; Wena v. Egypt (Annulment), §79; CDC v. Seychelles

(Annulment), §70; Fraport v. Philippines (Annulment), §277.

154Giardina, p.217.

155Lucchetti v. Peru (Annulment), §97.

156Giardina, p.214.

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already been under consideration of the ad hoc committee.157 Similarly, the new tribunal in

Amco II ruled again on jurisdiction in apreliminary award.158

98. Thus the Tribunal in the resubmission proceedings would decide de novo on jurisdiction

despite the previously expressed position of the ad hoc committee.

V. ADMISSION OF DR. RANAPUER’S REPORT DOES NOT JUSTIFY ANNULLMENT

OF THE AWARD

99. Under 52(1)(d) of the ICSID Convention an ad hoc committee may annul an award if there

was a (i) serious (ii) departure from (iii) a fundamental rule of procedure. These three

conditions must be satisfied cumulatively.159 Tribunal’s decision to admit Dr. Ranapuer’s

report without his cross-examination satisfies none of these conditions. To prove this the

Respondent will show three things: the Tribunal’s admission of Dr. Ranapuer’s report did

not violate a fundamental rule of procedure [A], Max Solutions’ fundamental right to be

heard was ensured [B], and in any event the departure was not serious [C].

A. ADMISSION OF DR. RANAPUER’S REPORT WITHOUT CROSS-EXAMINATION DID NOT

VIOLATE A FUNDAMENTAL RULE OF PROCEDURE

100. Below Bela Rano Insularo will demonstrate that the Tribunal admitted Dr. Ranapuer’s

report in full compliance with applicable rules of procedure [1], and in any event

admission of untested written evidence does not violate a fundamental rule of procedure

[2].

                                                            157Vivendi v. Argentina (I) (Annulment), §73; Vivendi v. Argentina (II), §2.6.2.

158Amco v. Indonesia (Preliminary Award), §23.

159Schreuer/Commentary, p.980.

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1. The Tribunal admitted Dr. Ranapuer’s report in accordance with applicable rules of

procedure

(i) The Bela Rano Model Rules were the applicable rules

101. Parties are free to modify rules of arbitration conducted under the ICSID Convention,

except mandatory ones.160 However, rules of evidence are not mandatory and may and

indeed have been modified by parties’ agreement.161 Hence parties validly agreed that

production of evidence “...would be governed…” by the Bela Rano Model Rules, which

are identical in all respects to the 2010 IBA Rules on the Taking of Evidence in

International Arbitration (“2010 IBA Rules”).162

102. Parties intended to replace the ICSID Arbitration Rules provisions governing taking of

evidence (in particular, Rules 34-37).163 This is demonstrated by the choice of word

“govern”, which means “to control”, “serve to decide”,164 to determine the role of the

2010 IBA Rules. Despite the fact that Preamble to the 2010 IBA Rules provides that these

rules “…are designed to supplement…”165 use of the word “rules” indicates the intention

that they should be binding.166 Hence, the only rules governing production of evidence

were the 2010 IBA Rules.

                                                            160ICSID Convention, Article 44;Schreuer/Commentary, p.679, §20.

161See e.g. TECO v. Guatemala, §15.

162Uncontested Facts, Record, lines 163-166.

163Schreuer/Commentary, p.677, §14.

164Oxford Dictionary.

1652010 IBA Rules, Preamble, §1.

166O’Malley(2010), p.465.

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(ii) The Tribunal properly exercised its discretion to admit Dr. Ranapuer’s report

103. It is generally for the tribunal to rule on the admissibility of and weight to be given to the

evidence.167 Hence the Tribunal was entitled to consider and rule on any objections to the

admissibility of Dr. Ranapuer’s report.

104. If Max Solutions based its’ request to reject Dr. Ranapuer’s report on the considerations of

fairness or equality of the parties168 the Tribunal retained discretionary power to determine

whether these considerations had been met.169 It is not for the Committee to second-guess

how the Tribunal exercises its discretion, unless an exercise of discretion amounts to a

serious departure from fundamental rule of procedure.170 Hence, that decision of the

Tribunal is not reviewable.

105. To the extent Max Solutions objected on the basis of Dr. Ranapuer unavailability for

cross-examination, the Tribunal was entitled to admit the report if there were exceptional

circumstances that justified admission.171

106. The 2010 IBA Rules do not define what would constitute an “exceptional circumstance”

justifying admission of a written report. However in interpreting this provision two factors

need to be considered. First, the tribunal is vested with discretion to decide whether to

admit the report despite the absence of an expert,172 and an exercise of discretionary power

is an act of implementation of the rule of procedure, not a departure from that

                                                            1672010 IBA Rules, Article 9.1.

1682010 IBA Rules, Article 9.2 (g).

169Subcommittee’s Commentary to the 2010 IBA Rules, p.25.

170Enron v. Argentina (Annulment), §192.

1712010 IBA Rules, art.5.5.

172See e.g. Zhinvali v. Georgia, §81; Enron v. Argentina (Annulment), §170; see also Tradex

v. Albania, §77-79; Nagel v. Czech Republic (ICC), §38.

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rule.173Second, “exceptional” means “unusual, not typical”.174 Thus an event “outside [of]

the usual course of events” will “justify a departure” from the default rule175 and

admission of the report. Hence, the threshold for admission of a written report produced

by an expert who was not cross-examined is not high.

107. In the present case the admission of Dr. Ranapuer’s report was justified by the

“exceptional circumstances”. They resulted from a combination of several factors: (i) the

report’s substance was not contested by Max Solutions; (ii) it was sufficiently reliable

since it was produced by a leading scientist;176(iii) the report was relevant to the case;177

(iv) availability of other experts at the time the issue arose being uncertain178and the time

they would have required to prepare a report. Finally, neither the Tribunal nor the parties

could legally compel Dr. Ranapuer to attend the hearing. The 2010 IBA Rules do not

provide a mechanism of compelling expert testimony,179 and Dr. Ranapuer’s contract did

not require him to attend the hearing.180 As a result the Tribunal was justified in admitting

an uncontested report from a rare expert in the field by the exceptional circumstances.

108. Furthermore, the 2010 IBA Rules require that each party shall act in good faith in the

taking of evidence.181 Baseless objections to the admissibility of evidence are considered

                                                            173Azurix v. Argentina (Annulment), §210.

174Short Oxford Dictionary.

175Enron v. Argentina (Annulment), §196.

176Uncontested Facts, Record, line 170.

177Award, Record, lines 764-768.

178Uncontested Facts, Record, lines 183-185.

179See 2010 IBA Rules, Articles 4.9 and 5; see also Azurix v. Argentina (Annulment), §217.

180Clarifications, No. 49.

1812010 IBA Rules, Preamble, §3.

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to be a breach of good faith.182 Max Solutions failed to demonstrate any valid reason for

cross-examination, e.g.evidence contradicting the report, or issues requiring clarification

by Dr. Ranapuer. Hence, Max Solutions was relying on a formality to exclude a valuable

item of uncontested evidence. This is a clear abuse, which was properly disregarded by the

Tribunal.

109. To conclude, the Dr. Ranapuer’s expert report was admitted in full compliance with the

applicable rules.

2. Admission of untested written evidence is not a violation of a fundamental rule of

procedure

110. Under Article 52(1)(d) only a violation of a fundamental rule of procedure may lead to the

annulment of an award.183 “Fundamental” rules are limited to a “set of minimal standards

of procedure to be respected as a matter of international law”.184 Hence, only procedural

principles of special importance, which are universally accepted, would qualify as

“fundamental”.185

111. The admission of evidence without cross-examination does not constitute a ground for

annulment. This is because the rules of evidence are not themselves fundamental rules of

procedure.186 More importantly, the right to cross-examine is not universally accepted.

Civil law jurisdictions do not require experts to be cross-examined by parties and do not

grant such a right to them.187 Furthermore, even in criminal proceedings in common law

                                                            182O’Malley(2012), p.224.

183ICSID Convention, Article 52(1)(d).

184Wena v. Egypt (Annulment), §57; CDC v. Seychelles (Annulment), §49; see also History

of the ICSID Convention, Vol. II, pp.271, 423, 480, 517.

185Schreuer/Commentary, p.980, §280.

186CDC v. Seychelles (Annulment), §59.

187Buhler/Dorgan, p.10.

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jurisdictions evidence given by a person unavailable for cross-examination is admissible if

the evidence is sufficiently reliable.188 Hence, the right to cross-examine a witness does

not constitute a universally accepted rule of procedure.

112. As a result, even if cross-examination of Dr. Ranapuer had been required, admission of his

report in the absence of cross-examination did not violate a fundamental rule of procedure.

B. MAX SOLUTIONS’ RIGHT TO BE HEARD WAS OBSERVED

113. Respondent accepts that the right to be heard is a fundamental rule of procedure.189

However the Tribunal observed this right. Firstly, the right to be heard does not include a

right to cross-examine. Secondly, the rights included in the right to be heard were

observed by the Tribunal in the present case.

114. While the 2010 IBA Rules reflects a procedural standard within international

arbitration,190they do not require cross-examination in all cases. Further, the right to be

heard does not presume a right to orally question a person.191 Indeed, the Swiss Supreme

Court has repeatedly confirmed that admission of evidence of a witness, who was not

cross-examined despite one of the parties requesting it, does not violate the right to be

heard.192

                                                            188Al-Khawaja and Tahery vs. United Kingdom (ECHR), §147.

189Wena v. Egypt (Annulment), §57; see also Azurix v. Argentina (Annulment), §212, CDC v.

Seychelles (Annulment), §49.

190O’Malley(2010), p.465.

191See e.g. DEI Bermuda v. Peru (Annulment), §258; Swiss Supreme Court (7 January

2004), §4.1; Swiss Supreme Court (3 January 2011), §7; see also Jermini, p.606; Cairns,

p.188; O’Malley (2012), p.127.

192See e.g. Swiss Supreme Court (19 June 2006), cons. 6.3, Swiss Supreme Court (27 March

2006),cons. 4.2.

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38  

115. There are clear practical considerations explaining why the right to cross-examine experts

is not encompassed by the right to be heard.193An expert report is based on expert’s

professional knowledge and expertise, and his/her credibility may be challenged in writing

and does not require expert’s personal presence. This distinguishes experts from witnesses

of fact, whose credibility often turns on whether they appear at a hearing so the tribunal

may observe their behavior when giving evidence.194

116. None of the rights which are encompassed by the right to be heard was violated by the

Tribunal. The right to be heard consists of the right to state party’s claim or defense and to

produce all arguments and evidence in support of it.195 However, the right to state party’s

claim or defense does not imply a right to obtain evidence from the opposing party.196

Further, this right gives the party an opportunity to respond adequately to the evidence

presented by the other party.197 “Adequate[ly]” means “satisfactory, acceptabl[y]”198.

Therefore, the right to respond to the evidence and the right to state a defense do not

include a right to demand any evidence, including testimony of an expert.199

117. The Tribunal’s decision to admit Dr. Ranapuer’s report did not deprive Max Solutions of

its right to submit further evidence in its favor or to challenge credibility of Dr.

Ranapuer’s report or conclusions made therein. Max Solutions could have challenged Dr.

Ranapuer’s conclusions, submitted other evidence or drawn the Tribunal’s attention to

contradictions made in the report. Furthermore, the Tribunal did not violate Max

                                                            193Cairns, p.188.

194O’Malley(2012), p.155.

195Wena v. Egypt (Annulment), §57.

196Azurix v. Argentina (Annulment), §215.

197Wena v. Egypt (Annulment), §57.

198Oxford Dictionary.

199Azurix v. Argentina (Annulment), §218.

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Solutions’ right to respond adequately to Dr. Ranapuer’s expert report, since this right

does not always presume actual confrontation of the other party’s expert (cross-

examination).200As a result, all the rights included in right to be heard were ensured by the

Tribunal.

C. IN ANY EVENT THERE WAS NO SERIOUS DEPARTURE FROM A RULE OF PROCEDURE

118. Under Article 52(1)(d) of the ICSID Convention only a serious departure from the rule of

procedure may lead to the annulment of an award. “Serious” presumes that

the departure must be substantial and be such as to deprive a party of the benefit

or protection which the rule was intended to provide.201

Such a departure must potentially have caused the tribunal to render an award

“substantially different from what it would have awarded had the rule been observed”.202

119. The decision of the Tribunal to consider Dr. Ranapuer’s report without his cross-

examination was not a serious departure from the rules of procedure. Firstly, even if the

report was not admitted, the Tribunal would have in all likelihood rendered substantially

the same award. Secondly, it did not deprive Max Solutions of the benefit or protection

provided by these rules.

1. Substantially the same award would have been rendered if Dr. Ranapuer’s report

was excluded

120. Dr. Ranapuer’s report stated that 95% of Sireno Kanto would naturally die by 2011.203 This

statement led the Tribunal to the conclusion that Max Solutions’ removal activities had no

                                                            200O’Malley(2012), p.131.

201MINE v. Guinea (Annulment), §5.05; Wena v. Egypt (Annulment), §58.

202Wena v. Egypt (Annulment), §58; CDC v. Seychelles (Annulment), §49; see also

Schreuer/Commentary, p.982, §286.

203Award, Record, lines 765-767; Clarifications, No. 28.

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40  

contribution to the economic development of Bela Rano Insularo.204However, the Tribunal

emphasized that this evidence was not in itself determinative.205

121. Moreover, even if Dr. Ranapuer’s report was rejected, the Tribunal still would have been

able to rely on the conclusions announced by the scientists at Bela Rano Insularo

University. They were public record and in the relevant respect (extermination of Sireno

Kanto by 2011) made exactly the same conclusion as Dr. Ranapuer.206 Hence, the Tribunal

would not have rendered a substantially different award if it rejected Dr. Ranapuer’s report.

2. Tribunal’s decision did not deprive Max Solutions of the ultimate benefits provided

by the right to confront an expert

122. The two principal purposes of cross-examination are to elicit evidence from the expert, or

to impeach the credibility of his conclusions.207However, these purposes can be achieved

by other means.208 Firstly, Max Solutions could obtain the evidence on the same subject

(death of Sireno Kanto frogs) from other sources. Secondly, the party is entitled to impeach

credibility of expert’s conclusions by challenging their substance.209 Hence, Max

Solutions’ inability to cross-examine Dr. Ranapuer did not deprive it of the ultimate benefit

or protection provided by the rule permitting it to cross-examine him.

123. Bela Rano Insularo demonstrated that Dr. Ranapuer’s report was admitted by the Tribunal

without a serious departure from the fundamental rules of procedure. Indeed (i) the

Tribunal properly exercised its discretion in admitting the report, (ii) ensured all the rights

of Max Solutions, and, finally (iii) did not deprive the Claimant of benefit or protection

                                                            204Award, Record, lines 764-768.

205Award, Record, lines 801-802.

206Uncontested Facts, Record, lines 75-81.

207Carlson, p.202.

208Zuberbuhler, p.121.

2092010 IBA Rules, Article 9.2.

TEAM HERCZEGH

41  

provided by the relevant procedural rules. Hence, admission of Dr. Ranapuer’s report does

not justify annulment of the award.

TEAM HERCZEGH

42  

PRAYER FOR RELIEF

Respondent respectfully requests this ad hoc Committee to find that:

(1) Dr. Iracunda’s participation in the Tribunal does not justify the annulment of the Award.

(2) The Award should not be annulled as the Tribunal did not exceed its powers, and

contribution to development is required for an investment.

(3) The Award may not be annulled due to the Tribunal’s findings with respect to Max

Solutions’ lack of contribution to the development.

(4) The ad hoc Committee does not have a power to pronounce conclusively on whether

Max Solutions’ assets constitute an investment under the ICSID Convention.

(5) The admission of Dr Ranapuer’s report did not result in a serious departure from

fundamental rules of procedure.

Respectfully submitted on 27 September 2012.

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Team HERCZEGH.

On Behalf of Respondent,

The Government of Bela Rano Insularo.