Alfaro WinningClaimant

Memorial For The Claimant Team Code- Alfaro
GERMAN INSTITUTION OF ARBITRATION

UNDER THE UNCITRAL ARBITRATION RULES ADMINISTERED BY THE DIS
CONTIFICA ASSET MANAGEMENT CORP. Claimant
v.
REPUBLIC OF RURITANIA Respondent
___________________________
MEMORIAL ON BEHALF OF THE CLAIMANT
22 SEPTEMBER 2013
__________________________
i
INDEX
TABLE OF ABBREVIATIONS……………………………………………………….. v
LIST OF AUTHORITIES................................................................................................... vii
STATEMENT OF FACTS..................................................................................................... 1
Arguments on Jurisdiction
ISSUE 1: THE TRIBUNAL HAS JURISDICTION OVER THE CLAIMS SUBMITTED BY THE
CLAIMANT. ................................................................................................................................ 3
I. Jurisdiction has to be determined solely based on criteria mentioned in the BIT. ......... 3
A. The Tribunal has jurisdiction Rationae Materiae. ...................................................... 3
B. The Tribunal has jurisdiction Ratione Personae. ....................................................... 4
C. The Tribunal has jurisdiction Ratione Voluntatis. ...................................................... 5
II. Prospective corporate restructuring does not amount to abuse of process or illegal
treaty shopping. ...................................................................................................................... 5
A. Corporate restructuring to obtain the benefits of a favorable legal regime is not

illegal. ................................................................................................................................. 5
B. Restructuring was completed in accordance with laws of Ruritania prior to the

dispute................................................................................................................................. 7
C. There was no ‘specific foreseeable dispute’ based on which the Contifica Group
acted.................................................................................................................................... 8
ISSUE 2: THE TRIBUNAL HAS JURISDICTION OVER THE CLAIMS BASED ON BREACH OF
SHARE PURCHASE AGREEMENT ............................................................................................. 10
I. Disputes concerning investments fall within the ambit of Cronos-Ruritania BIT........ 10
A. The present claims fall within the ambit of Article 6 (2) “umbrella clause” of the
BIT. ...................................................................................................................................10
ii
II. The Acts of the State Property Fund of Ruritania are attributable entirely the
Respondent. .......................................................................................................................... 12
A. The State Property Fund of Ruritania (“SPFR”) is a State establishment under the
management and control of the Respondent..................................................................... 12
B. The acts of the SPFR are attributable to the Respondent as per the rules of
Customary International Law………………………………………………………………….13
Arguments on Merits
ISSUE 3: RURITANIA VIOLATED ITS OBLIGATIONS UNDER THE BIT AND INTERNATIONAL
LAW TOWARDS CAM BY ADOPTING CERTAIN MEASURES REGULATING THE SALE OF
ALCOHOL AND FURTHER REQUIREMENTS FOR THE MARKETING OF FREEBREW BEER. .. 17
I. The Standard of Fair and Equitable Treatment (“FET”) is a higher one than that of the
Minimum standard of Treatment under International law. .................................................. 17
II. Ruritania has violated Article 2 of the BIT by not conforming to the principles of fair
and equitable treatment and full protection and security. .................................................... 19
A. The Respondent has violated Legitimate Expectations of the Claimant. .................. 19
Legitimate Expectations concerning Intellectual Property .............................................. 20
B. The Respondent did not follow Due Process norms………………………………………23

C. The Respondent’s actions lacked Proportionality .................................................... 23
D. The Respondent did not act in Good Faith ............................................................... 24
III. Ruritania has violated Article 3 of the BIT by violating national treatment principles
and arbitrarily impairing the investor’s right to use its Investment ..................................... 25
A. The Respondent has violated Article 3(a) of the BIT ................................................ 25
B. The Respondent has violated Art 3 (c) of the BIT ..................................................... 26
iii
IV. Ruritania has violated the Article 4 of the BIT by illegitimately expropriating the
Claimant’s property without provision of compensation. .................................................... 27
A. The actions of the Respondent constitute an indirect expropriation ......................... 27
B. The Cronos-Ruritania BIT does not contain any exception to the payment of
compensation. ................................................................................................................... 28
C. The Police power exception cannot be taken by the Respondents ............................ 29
ISSUE 4: MORAL DAMAGES SHOULD IN PRINCIPLE BE AWARDED TO THE CLAIMANTS .. 30
I. The Tribunal can award damages suffered by the Claimant and its Executives since it
constitutes an internationally wrongful act. ......................................................................... 30
II. Moral Damages should be awarded to the Claimant for the actions of the Respondent
....................................................................................................................................31
ISSUE 5: LOSS OF SALES BY CAM’S SUBSIDIARIES CONSTITUTES A RECOVERABLE ITEM

OF DAMAGE ............................................................................................................................. 33
I. CAM as a parent company can claim damages caused to its subsidiaries.................... 33
II. Even otherwise, CAM as majority shareholder can claim damages on behalf the
subsidiaries. .......................................................................................................................... 33
III. ‘Loss of sales’ forms a part of the definition of ‘investment’ under article 1 of the
BIT ...................................................................................................................................34
RELIEF SOUGHT .............................................................................................................. 36
iv
TABLE OF ABBREVIATIONS
Sl. No. Abbreviation Full Form

1. ¶ Para No.
2. Art. Article
3. BIT Bilateral Investment Treaty
4. CAM Contifica Asset Management Corporation
5. Chap. Chapter
6. Ed. Edition
7. Eds. Editors
8. FBI Freecity Breweries Inc.
9. FET Fair and Equitable Treatment
10. FTC Free Trade Commission
11. HRI Human Health Research Institute
12. ICCPR International Covenant on Civil and Political Rights.
13. ICJ International Court of Justice
14. ICSID International Centre for Settlement of Investment Disputes
15. ILC International Law Commission
16. J.W.I.T. Journal of World Investment and Trade
17. MAB Act Regulation of Sale and Marketing of Alcoholic Beverages
Act
18. MDB Methyldioxidebenzovat
19. NAFTA North American Free Trade Agreement
20. No. Number
21. O.U.P. Oxford University Press
22. p. Page No.
23. PCA Permanent Court of Arbitration
24. PCIJ Permanent Court of International Justice
25. Rep. Reports
26. SPA Share Purchase Agreement
27. SPFR State Property Fund of Ruritania
v
28. U.S.A. United States of America

29. UDHR The Universal Declaration of Human Rights.
30. UN United Nations
31. UNCITRAL United Nations Commission on International Trade Law
32. UNCTAD United Nations Conference on Trade and Development
33. v. Versus
34. VCLT Vienna Convention on the Law of Treaties
35. Vol. Volume
36. WIPO World Intellectual Property Organization
37. YBIL Yearbook of International Law
vi
LIST OF AUTHORITIES
ARTICLES
Sl. No. Abbreviation Full Citation

1. Dolzer 1 Rudolf Dolzer, “The Impact of International Investment
Treaties on Domestic Administrative Law”, 37 New York
University Journal of International Law and Politics (2006)
2. Gaffney J. Gaffney, and J. Loftis, “The “Effective Ordinary
Meaning” of BITs and the jurisdiction of Treaty Based
Tribunals to hear Contract Claims”, 8 W.I.T 5 (2007).
3. Mann Mann, “British Treaties for the Promotion and Protection of
Investments”, Further Studies in International Law (1990).
4. Sabahi Borzu Sabahi, “Compensation and Restitution in Investor-
State Arbitration: Principles and Practice”, Oxford
University Press (2011)
5. Schneidarman D. Schneidarman, “Constitutionalizing Economic
Globalization: Investment Rules and Democracy’s
Promise”, New York: Cambridge University Press (2008)
6. Schreuer 1 Christoph Schreuer and Ursula Kriebaum, “At What Time
Must Legitimate Expectations Exit?” Jacques Werner and
Arif Hyder Ali (eds), A Liber Amicorum: Thomas Walde—
Law Beyond Conventional Thoughts, Cameron
Publications (2009).
7. Schreuer 2 Christoph Schreuer, “Nationality Planning”, Fordham
Conference, London, 27 April 2012. Revised 12 October
2012, available at
http://www.univie.ac.at/intlaw/wordpress/wpcontent/upload
s/2012/11/nationality-PlanningFordhamrevised.pdf.
8. Schreuer 3 Christoph Schreuer, “Travelling the BIT Route: Of Waiting
Periods, Umbrella Clauses and Forks in the Road”, 5
J.W.I.T (2004).
9. Tudor
Ioana Tudor, “Actual Situations in which the FET Standard
vii
has been applied in International Law”, The Fair and

Equitable Treatment Standard in the International Law of
Foreign Investment, Oxford University Press (2008)
10. Vadi Valentina S. Vadi, “Trade Mark Protection, Public Health
and International Investment Law: Strains and Paradoxes”,
EJIL (2009), Vol. 20 No. 3.
11. Vandevelde Kenneth J Vandevelde, “A Unified Theory of Fair and
Equitable Treatment” 43 New York University Journal
International, Law & Politics (2010–11)
12. Weiler T.J. Weiler, “Methanex Corp. v. U.S.A.: Turning the Page
on NAFTA Chapter Eleven?” Journal of World Investment
and Trade 6 (2005)
13. Wittich Stephan Wittich, “Non-Material Damage and Monetary
Reparation in International Law” 15 Finnish YBIL (2004)
BOOKS

1. Bainbridge David Bainbridge, The Authoritative Guide to the
Application of the Paris Convention for Protection of
Industrial Property, Longman Publication, London (5th Ed.
2002)
2. Beale Hugh Beale, Chitty on Contracts, Vol.1, General
Principles, Sweet & Maxwell (30th Ed. 2008)
3. Dolzer 2 Rudolf Dolzer and Christoph Schreuer, Principles of
International Investment Law, Oxford Publications (2nd Ed.
2012)
4. Gray Christine Gray, Judicial Remedies in International Law, 85,
Clarendon Press (1990)
5. Muthucumaraswamy Sornarajah Muthucumaraswamy, The International Law on
Foreign Investment (3rd Ed. 2010).
viii
6. Newcombe Andrew Newcombe and Lluís Paradell, Law and Practice

of Investment Treaties: Standards of Treatment, Kluwer
Law International (2009)
CASES
ICSID

1. ADC Affiliate Award ADC Affiliate Limited and ADC & ADMC Management
Limited v. The Republic of Hungary, Award of the Tribunal,
ICSID Case No. ARB/03/16 (2 October, 2006)
2. Aguas del Tunari Aguas del Tunari, S.A. v. Republic of Bolivia, Jurisdiction,
Jurisdiction ICSID Case No. ARB/02/3 (21 October, 2005)
3. Amco Jurisdiction Amco Asia Corporation and others v. Republic of
Indonesia, Decision on Jurisdiction, ICSID Case No.
ARB/81/1 (10 May, 1988)
4. Antoine Award Antoine Goetz and others v. Republic of Burundi, Award,
ICSID Case No. ARB/95/3, (10 February, 1999).
5. Arif Award Mr Frank Charles Arif v. Republic of Moldova, Award,
ICSID Case No. ARB/11/23 (8 April, 2013)
6. Azurix Award Azurix Corp. v. The Argentine Republic, Award, ICSID
Case No. ARB/01/12 (14 July, 2006)
7. Biwater Award Biwater Gauff (Tanzania) Ltd. v. United Republic of
Tanzania, Award, ICSID Case No. ARB/05/22 (24 July,
2008)
8. CMS Gas Award CMS Gas Transmission Company v. The Argentine
Republic, Award, ICSID Case No. ARB/01/8 (12 May,
2005)
9. CMS Gas CMS Gas Transmission Company v. The Argentine
Jurisdiction Republic, Decision of the Tribunal on Objections to
Jurisdiction, ICSID Case No. ARB/01/8 (17 July, 2003)
10. Desert Line Award Desert Line Projects LLC v. The Republic of Yemen,
ix
Award, ICSID Case No. ARB/05/17 (6 February, 2008)

11. El Paso Award El Paso Energy International Company v. The Argentine
Republic, Award, ICSID Case No. ARB/03/15 (31 October,
2011)
12. Enron Award Enron Corporation Ponderosa Assets, L.P v. Argentine
Republic, Award, ICSID Case No. ARB/01/3 (22 March,
2007)
13. Europe Cement Europe Cement Investment & Trade S.A. v. Republic of
Award Turkey, Award, ICSID Case No. ARB(AF)/07/2 (13
August, 2009)
14. Fedax Jurisdiction Fedax N.V. v. The Republic of Venezuela, Decision of the
Tribunal on Objections to Jurisdiction, ICSID Case No.
ARB/96/3 (11 July, 1997)
15. Feldman Award Marvin Feldman v. Mexico, Award, ICSID Case No.
ARB(AF)/99/1 (16 December, 2002)
16. Impregilo Impregilo S.P.A. v. Islamic Republic of Pakistan, Decision
Jurisdiction on Jurisdiction, ICSID Case No. ARB/03/3 (22 April, 2005)
17. Jan De Nul Award Jan de Nul N.V., Dredging International N.V. v. Arab
Republic of Egypt, Award, ICSID Case No. ARB/04/13 (6
November, 2008)
18. L.E.S.I. – Dipenta Consorzio Groupement L.E.S.I. – Dipenta v. People’s
Award Democratic Republic of Algeria, Award, ICSID Case No.
ARB/03/08 (10 January, 2005)
19. Lanco Jurisdiction Lanco International v. The Argentine Republic, Jurisdiction
of the Arbitral Tribunal, ICSID Case No. ARB/97/6 (8
December, 1998)
20. Lemire Award Joseph Charles Lemire v. Ukraine, Award, ICSID Case No.
ARB/06/18 (28 March, 2011)
21. LG & E Award LG & E Energy Corp., LG & E Capital Corp., and LG & E
International, Inc. v. Argentine Republic, Award, ICSID
Case No. ARB/02/1 (25 July, 2007)
22. Loewen Award The Loewen Group, Inc. and Raymond L. Loewen v. United
States of America, Award, ICSID Case No. ARB(AF)/98/3
x
(26 June, 2003)

23. M.C.I. Power Group M.C.I. Power Group L.C. and New Turbine, Inc. v.
Award Republic of Ecuador, Award, ICSID Case No. ARB/03/6
(31 July, 2007)
24. Maffezini Emilio Agustín Maffezini v. The Kingdom of Spain,
Jurisdiction Decision of the Arbitral on Objections to Jurisdiction,
ICSID Case No. ARB/97/7 (25 January, 2000)
25. Metalclad Award Metalclad Corporation v. The United Mexican States,
Award, ICSID Case No. ARB(AF)/97/1 (30 August, 2000)
26. Middle East Cement Middle East Cement Shipping and Handling Co. S.A. v.
Award Arab Republic of Egypt, Award, ICSID Case No. ARB/99/6
(12 April, 2002)
27. Mobil Corporation Mobil Corporation, Venezuela Holdings, B.V. v. Bolivarian
Jurisdiction Republic of Venezuela, Decision on Jurisdiction, ICSID
Case No. ARB/07/27 (10 June 2010)
28. Mondev Award Mondev International Ltd. v. United States of America,
Award, ICSID Case No. ARB(AF)/99/2 (11 October, 2002)
29. Noble Venture Noble Ventures, Inc. v. Romania, Award, ICSID Case No.
Award ARB/01/11 (12 October, 2005)
30. Pac Rim Jurisdiction Pac Rim Cayman LLC v. The Republic of El Salvador,
Decision on the Respondent’s Jurisdictional Objections,
ICSID Case No. ARB/09/12 (1 June, 2012)
31. Philippines SGS Société Générale de Surveillance S.A. v. Republic of
Jurisdiction the Philippines, Decision of the Tribunal on Objections to
Jurisdiction, ICSID Case No. ARB/02/6 (29 January, 2004)
32. PSEG Award PSEG Global, Inc., The North American Coal Corporation,
and Konya Ingin Electrik Üretim ve Ticaret Limited Sirketi
v. Republic of Turkey, Award, ICSID Case No. ARB/02/5
(19 January, 2007)
33. Phoenix Award Phoenix Action, Ltd. v. The Czech Republic, Award
ICSID Case No. ARB/06/5 (15 April, 2009)
34. Salini v. Jordan Salini Costruttori S.P.A. and Italstrade S.P.A. v. The
Jurisdiction Hashemite Kingdom of Jordan, Decision on Jurisdiction,
xi
ICSID Case No. ARB/02/13 (15 November, 2004)

35. Salini v. Morocco Salini Costruttori S.P.A. and Italstrade S.P.A. v. Kingdom
of Morocco, Decision on Jurisdiction, ICSID Case No.
ARB/00/4 (23 July, 2001)
36. Santa Elena Award Compañía Del Desarrollo De Santa Elena, S.A. v. The
Republic of Costa Rica, Final Award, ICSID Case No.
ARB/96/1 (17 February, 2000)
37. Sempra Award Sempra Energy International v. Argentine Republic,
Award, ICSID Case No. ARB/02/16 (28 September, 2007)
38. SGS v. Pakistan SGS Société Générale de Surveillance S.A. v. Islamic
Jurisdiction Republic of Pakistan, Decision of the Tribunal on
Objections to Jurisdiction, ICSID Case No. ARB/01/13 (6
August, 2003)
39. Siemens Award Siemens A.G. v. The Argentine Republic, Award, ICSID
Case No. ARB/02/8 (6 February, 2007)
40. Suez Jurisdiction Suez, Sociedad General de Aguas de Barcelona S.A., and
Inter Aguas Servicios Integrales del Agua S.A. v. Argentina,
Decision on Jurisdiction, ICSID Case No. ARB/03/17,
(May 16, 2006)
41. Tecmed Award Tecnicas Medioambientales Tecmed S.A. v. The United
Mexican States, Award, ICSID Case No. ARB(AF)/00/2
42. Telenor Jurisdiction Telenor Mobile Communications AS v. Hungary, Decision
on Jurisdiction, ICSID Case No ARB/04/15 (13 September
2006)
43. Tokios Tokeles Tokios Tokeles v. Ukraine, Award, ICSID Case No.
Award ARB/02/18 (26 July, 2007)
44. Tokios Tokeles Tokios Tokeles v. Ukraine, Decision on Jurisdiction, ICSID
Jurisdiction Case No. ARB/02/18 (29 April, 2004)
45. Vivendi I Award Compañia De Aguas Del Aconquija S.A. and Vivendi
Universal v. Argentine Republic, Award, ICSID Case No.
ARB/97/3 (21 November, 2000)
46. Waste Management Waste Management, Inc. v. United Mexican States, Award,
Award ICSID Case No. ARB(AF)/00/3 (30 April, 2004)
xii
UNCITRAL

1. CME Partial Award CME Czech Republic B.V. (The Netherlands) v. The Czech
Republic, Partial Award, UNCITRAL Arbitration
Proceedings (13 September, 2001)
2. Société Générale Société Générale v. Dominican Republic, Preliminary
Jurisdiction Objections to Jurisdiction, UNCITRAL, LCIA Case No.
UN7927 (19 September, 2008)
3. Encana Award EnCana Corporation v. Republic of Ecuador, Award,
UNCITRAL Arbitration Proceedings (3 February, 2006)
4. HICEE Partial HICEE B.V. v. The Slovak Republic, Partial Award, PCA
Award Case No. 2009-11, UNCITRAL Arbitration Proceedings
(23 May, 2011)
5. Saluka Jurisdiction Saluka Investments B.V. v. The Czech Republic, Decision
on Jurisdiction over the Czech Republic’s Counterclaim,
UNCITRAL Arbitration Proceedings (7 May, 2004)
6. Saluka Partial Saluka Investments B.V. v. The Czech Republic, Partial

Award Award, UNCITRAL Arbitration Proceedings (17 March,
2006)
7. UPS Award United Parcel Service of America Inc. v. Government of
Canada, Award on Merits, UNCITRAL Arbitration
Proceedings (24 May, 2007)
8. Yukos Interim Yukos Universal Limited (Isle of Man) v. The Russian
Award Federation, Interim Award on Jurisdiction and
Admissibility, PCA Case No. AA227, UNCITRAL
Arbitration Proceedings (30 November, 2009)
MISCELLANEOUS
xiii
1. Bosnia and Application of the Convention on the Prevention and

Herzegovina v. Punishment of the Crime of Genocide (Bosnia and
Serbia and Herzegovina v. Serbia and Montenegro), Judgment, I.C.J.
Montenegro Reports 2007
2. Canada-Protection Canada-Protection of Pharmaceutical Products, Report of
of Pharmaceutical the Panel, WT/DS114/R (17 March 2000)
Products
3. Chevreau Case France v. Great Britain, American Journal of International
Law, 1931.
4. Eureko Partial Eureko B.V. v. Republic of Poland, Partial Award, BIT (19
Award August, 2005)
5. Foremost Tehran Foremost Tehran, Inc., et al v. Islamic Republic of
Case Tehran, Award No. 10-7174, 10 Iran-United States Claims
Tribunal Reports.
6. Germany v. Poland Case concerning Certain German Interests in Polish Upper
Case Silesia (Germany v. Poland), 1928, PCIJ, Series A No. 17.
7. Lotus Case S.S. Lotus (France v. Turkey), 1927 P.C.I.J. (ser. A) No. 10
(September 1927)
8. Mavrommatis Mavrommatis Palestine Concessions (Greece v. Great
Palestine Case Britain), Judgment of 30 August 1924, 1924 PCIJ (Ser. A)
No. 2.
9. Methanex Case Methanex Corporation v. United States of America, Final
Award of the Tribunal on Jurisdiction and Merits, NAFTA
(3 August, 2005)
10. Midland Bank Case Midland Bank & Trustee Co. Ltd. v. Green, [1981] A.C.
513.
11. Neer Claim L. F. H. Neer and Pauline Neer (U.S.A.) v. United Mexican
States, Reports of International Arbitral Awards, Volume
IV (15 October, 1926)
12. Nykomb Award Nykomb Synergetics Technology Holding AB, Stockholm v.
The Republic of Latvia, Award, The Arbitration Institute of
The Stockholm Chamber of Commerce (16 December,
2003)
xiv
13. Pope & Talbot Pope & Talbot Inc. v. The Government of Canada, Award
Award on Merit on the Merits of Phase 2, NAFTA (10 April, 2001)
14. Qatar v. Bahrain Dissenting Opinion of Judge Shahabuddeen, Maritime
(Dissenting Opinion) Delimitation and Territorial Questions between Qatar and
Bahrain (Qatar v. Bahrain), I.C. J. Reports 1995.
15. Revere Copper Case Revere Copper and Brass Incorporated v. Overseas Private
Investment Corporation, Award, United States Court of
Appeals, 17 ILM 1978.
16. Roberts Claim Harry Roberts (U.S.A.) v. United Mexican States, Reports
of International Arbitral Awards, Volume IV, (2 November,
1926)
17. S.D. Myers Partial S.D. Myers, Inc. v. Government of Canada, Partial Award,
Award NAFTA (13 November, 2000)
18. South West Africa South West Africa (Ethiopia v. South Africa; Liberia v.
Case, Preliminary South Africa), Preliminary Objections, Judgment of 21
Objections. December 1962, 1962 ICJ Rep. 319.
19. Tadic Case Prosecutor v. Dusko Tadic, International Tribunal for the
Former Yugoslavia, Case IT-94-1-A (1999), ILM, vol. 38,
No.6 (November 1999)
20. Thunderbird Award International Thunderbird Gaming Corporation v. The
United Mexican States, Award, NAFTA (26 January, 2006)
21. Wal-mart Case Wal-Mart Stores Inc. v. Samara Bros, Inc 529 U.S. 205
22. Yeager Award Yeager v. Islamic Republic of Iran, Award No. 324-10199-
1, Iran-United States Claims Tribunal, The Hague (2
November, 1987)
MISCELLANEOUS

1. Garner: Black’s Law Bryan A. Garner (Ed.), Black’s Law Dictionary, 9th Edition,
Dictionary. Thomas Reuters Publication.
2. Guide to Paris Guide to Paris Convention for the Protection of Industrial
Convention Property, available at
xv
http://www.wipo.int/export/sites/www/freepublications/en/i
ntproperty/611/wipo_pub_611.pdf
3. http://www.adamsmi http://www.adamsmith.org/sites/default/files/research/files/
th.org/sites/default/fi plain-packaging.pdf, accessed on 6 Aug 2013,
les/research/files/plai
n-packaging.pdf
4. http://www.huffingto http://www.huffingtonpost.co.uk/peter-sheridan/plain-
npost.co.uk/peter- tobacco-packaging-will-crea_b_2224498.html accessed on
sheridan/plain- 6 Aug 2013.
tobacco-packaging-
will-
crea_b_2224498.htm
l
5. ICCPR International Covenant on Civil and Political Rights.
6. ILC Articles Draft articles on Responsibility of States for Internationally
Wrongful Acts, 2001, available at
http://untreaty.un.org/ilc/texts/instruments/english/draft%20
articles/9_6_2001.pdf
7. ILC Commentary. Commentary on Draft articles on Responsibility of States
for Internationally Wrongful Acts, 2001, available at
http://untreaty.un.org/ilc/texts/instruments/english/comment
aries/9_6_2001.pdf
8. Lanham Act Lanham Trade-Mark Act of 1946, 50 Stat. 427 (Jul. 5,1946)
9. NAFTA, Notes on NAFTA, Notes on Interpretation of Certain Chapter 11
Interpretation of Provisions, 31st July 2001, available at
Certain Chapter 11 http://www.sice.oas.org/tpd/nafta/Commission/CH11unders
Provisions tanding_e.asp
10. Paris Convention Paris Convention for the Protection of Industrial Property,
1883 available at
http://www.wipo.int/treaties/en/ip/paris/trtdocs_wo020.html
11. UDHR The Universal Declaration of Human Rights.
12. UN Conventions on UN Conventions on Jurisdictional Immunities of State and
Jurisdictional their Properties, available at
xvi
Immunities of State http://untreaty.un.org/ilc/texts/instruments/english/conventi

and their Properties ons/4_1_2004.pdf
13. UNCTAD: FET United National Conference on Trade and Development,
“FAIR AND EQUITABLE TREATMENT”, UNCTAD
series on Issues in International Investment Agreements II,
2012, available at
http://unctad.org/en/Docs/unctaddiaeia2011d5_en.pdf
14. VCLT Vienna Convention on the Law of Treaties, 1969, United
Nations, Treaty Series, vol. 1155, available at:
http://www.refworld.org/docid/3ae6b3a10.html
xvii
Statement of Facts
Involved Entities
1. The Claimant, Contifica Asset Management Corp. (“CAM”) is a company

incorporated under the laws of the State of Cronos. It is a part of the Contifica group,
a major international conglomerate with its parent company, Contifica Enterprises Plc
incorporated in Prosperia.
2. The Respondent is the Republic of Ruritania.
3. The State Property Fund of Ruritania (“SPFR”) is a state establishment incorporated
under the laws of Ruritania. Until 2008, it owned Freecity Breweries Inc. (“FBI”),
Ruritania’s oldest and largest brewery.
4. Contifica Spirits S.p.A, a fully owned subsidiary of Contifica Enterprises Plc., was the
successful party in the international tender announced by SPFR for the sale of FBI.
Transaction Summary
5. 30 June 2008- Contifica Spirits signed the SPA (“SPA”) with SPFR providing for the
acquisition of all shares in FBI for USD 300,000,000.
6. There were significant improvements made to the Brewery which increased the output
and the safety standards. The Brewery was also integrated into the global procurement
network of the Contifica Group company with subsidiaries of the Claimant supplying
various raw materials as to the Brewery.
7. 17 March 2010- As part of intra group restructuring, shares in FBI transferred from
Contifica Spirits to the Claimant. Further, Claimant acquired rights to the principle
intellectual property used by FBI, by way of assignment of the respective
registrations. This assignment included Ruritania registered trademarks and trade-
dress regulations.
Measures of the Respondent concerning marketing and regulation of alcohol in Ruritania
8. 20 November 2010- The Parliament of Ruritania adopted the Marketing of Alcoholic

Beverages (“MAB”) Act which severely affected the Claimant’s rights to market and
sell its products.
9. 30 June 2011- The Ministry of Health and Social Security adopted an ordinance
requiring a labelling condition for all products containing Reyhan Concentrate. This
was done based on a report highlighting the effects of high daily doses of
1
methyldioxydebnzovat (“MDB”) on men for a period of 10 years. This ordinance was

passed within 15 days of the final report having been submitted to the Ministry.
10. 25th August 2011- A request made by the Claimant for lifting the labelling
requirement pending further studies was denied by the Ministry.
11. The measures resulted in significant loss of revenue for the Claimant as well as a
reduced production of various products.
12. 15 September 2012- The creditors of the Claimant agreed not to enforce their security
rights over FBI assets subject to the Claimant pledging all of FBI’s tangible assets,
shares, claims and recoveries to the creditors.
Unlawful detention and loss of reputation.
13. 23rd Dec 2011- Employees of the Contifica group were detained at the Freecity
International Airport without any warrant of arrest against them. They were detained
until 3rd January 2012 when they were released without any explanation.
14. During this period a video of their detention was leaked to the media by the police and
was aired on the most popular TV channel in Ruritania on the same day.
15. There was no apology tendered by the Ruritanian authority for the detentions nor was
any compensation offered.
2
ARGUMENTS ON JURISDICTION
ISSUE 1: THE TRIBUNAL HAS JURISDICTION OVER THE CLAIMS SUBMITTED BY THE
CLAIMANT.
I. Jurisdiction has to be determined solely based on criteria mentioned in the BIT.
1. The Cronos-Ruritania Bilateral Investment Treaty (“BIT”) constitutes the governing

law for the present proceedings that have been instituted for the alleged violation of
various treaty provisions. Consent of the parties forms the basis of every arbitral
proceeding. In a contract-based arbitration, the consent is specific to the disputes that
arise from that contract. A treaty-based arbitration is a unique category of contract-
based arbitration where the Contracting States consent to claims by all the present and
potential investors subject to the satisfaction of the nationality requirement along with
the fulfillment of requirements for a valid investment.1
A. The Tribunal has jurisdiction Rationae Materiae.
2. The BIT defines investment in broad, illustrative and non-exhaustive terms by using
the phrase ‘…investment include in particular, but not exclusively…’.2 This definition
of investment covers investments in any other form that may not have been mentioned
in the definition clause.
3. The requirements for an ‘investment’ as per Article 1 (1) of the BIT have been
fulfilled and the acquisition of shares in FBI through assignment constitutes a valid
investment protected under Article 1 (1) (b) of the BIT. The shares in FBI also include
the associated intellectual property rights that are protected under Article 1 (1) (d) of
the BIT. Also, the contributions by the claimant’s subsidiaries are protected under
Article 1 (1) (c) of the BIT.
1
Muthucumaraswamy, p. 306.
2
Article 1 (1), BIT.
3
4. The Claimant is a member of the Contifica Group3 and has been instrumental in
transforming the FBI into a successful business venture. All the suppliers of raw
material to the FBI are either branches or direct subsidiaries of the Claimant.4 The
Claimant installed a new production line at the aluminum can plant to serve the needs
of FBI along with the realignment of the agricultural business of the Claimant to
stream line it with the requirements at the FBI.5 The fact that all these events took
place before the Claimant acquired the shares shows that the Claimant has been
making bona fide investments in Ruritania since 2008. Therefore, the tribunal has
jurisdiction rationae materiae over the claims filed by the Claimant.
B. The Tribunal has jurisdiction Ratione Personae.
5. The place of incorporation or the ‘nationality’ of an entity is the sole requirement for
it to qualify as an ‘investor’ under the BIT.6 The Claimant, a member of the Contifica
Group since 20037, is a duly incorporated company under the laws of the State of
Cronos.8
6. It is submitted that since the Contracting States are free to choose the applicable test
for determining who shall qualify as an investor, the jurisdiction of the present
tribunal stands restricted to what the parties have decided and laid down in the BIT.9
The provisions of the BIT binds the tribunal and it cannot impose upon the parties a
definition of ‘Investor’ other than what the contracting parties to the treaty have
themselves agreed.10
7. No such general principle of international law exists which requires an investigation
into how a corporation operates when the applicable treaty solely requires the investor
to be organized in accordance with the laws of a host state.11
3
Statement of Claims, ¶ 4.
4
Procedural Order 2, ¶ 20.
5
6
Article 1 (3) (b), BIT.
7
8
9
Tokios Tokeles Jurisdiction, ¶ 18.
10
Saluka Jurisdiction, ¶ 240.
11
Yukos Interim Award, ¶ 415.
4
8. According to the VCLT, the words of a treaty provision should be given a plain and
simple meaning.12 As per the BIT, if the entity is incorporated according to the law of
the contracting state, it shall be entitled to protection of the BIT.13
C. The Tribunal has jurisdiction Ratione Voluntatis.
9. The Contracting States have consented to resolve the disputes concerning investments
through international arbitration at the option of the investor.14 The States further
consented to submit to the jurisdiction of the tribunal constituted as per the provisions
of Article 8 (2) of the BIT.
10. The procedural requirement of making an effort to amicably settle the dispute has
been complied with. The Claimant made repeated offers to the Government of
Ruritania to settle the disputes amicably15 and finally a letter was sent to the President
of Ruritania on 31st May 2012, expressly invoking Article 8 of the BIT.16 However,
no response was received. Due to non-receipt of any response within three months,
the Statement of Claim was filed on 30th September 2012.
II. Prospective corporate restructuring does not amount to abuse of process or

illegal treaty shopping.
A. Corporate restructuring to obtain the benefits of a favorable legal regime is not

illegal.17
11. It is an established principle of international law that unless a conduct is specifically

prohibited, it is permitted.18 No general principle of international law exists that
prohibits corporate restructuring to avail the benefits of a favorable legal system.
12
Article 31(1), VCLT.
13
ADC Affiliate Award, ¶ 333.
14
Article 8 (1), BIT.
15
16
Ibid.
17
Aguas Del Tunari Jurisdiction, ¶ 330.
5
12. Restructuring of investments is a usual business practice19 and the investors are free to
restructure in a manner that best fits their need.20 Corporate restructuring for obtaining
protection of a particular BIT has been held to be a perfectly legitimate goal.21
13. The sole evidence relied upon by the Respondent to show the mala fide intention is
the highly confidential memorandum RX1. Although the Ruritanian law allows for
such information to be used for other purposes, the procedural law applicable to the
present arbitration proceeding is the UNCITRAL Rules, 2006 which grants the
Tribunal power to decide on the admissibility of evidence.22
14. The Claimant submit that the memorandum should not be admissible in the present
proceedings as it was disclosed solely for the purposes of criminal investigation23 and
the same have been terminated.24 However, should the tribunal admit the
memorandum, it should nevertheless dismiss the respondent’s claims based in the
memorandum for the reasons mentioned below.
15. The Contifica Group had the option of choosing between USA, Switzerland and
Cronos and all these three states have a BIT with Ruritania.25 The Contifica Group
could have initiated proceedings against the Respondent under all the three BITs and
hence it is evident that the intention behind the restructuring is not to abuse the
process but to avail the favorable tax regime available in Cronos,26 which is a
perfectly legitimate objective.
16. The freedom of structuring for the purpose of obtaining access to a favorable legal
regime is subject to the timing of the restructuring.27 The high probability of the
existence of a dispute is the determining factor to gauge the validity of a
restructuring.28 Corporate restructuring prior to the dispute is allowed,29 but if it is
18
Lotus Case, ¶ 99.
19
HICEE Partial Award, ¶ 103.
20
Phoenix, ¶ 94.
21
Mobil Corporation Jurisdiction, ¶ 204.
22
Art 19(2), UNCITRAL Rules, 2006
23
Statement of Defense, ¶ 8.
24
25
Procedural Order No. 3, ¶ 6.
26
Memorandum, Exhibit RX1, ¶ 3.
27
Schreuer 2, p. 18.
28
Pac Rim Jurisdiction, ¶ 2.99.
29
Tokios Tokeles Jurisdiction, ¶ 56; Phoenix, ¶ 95; Mobil Corporation Jurisdiction, ¶ 205.
6
done during the pendency of a dispute,30 it is considered to be an illegitimate

restructuring. In the present case, the restructuring was complete before the outbreak
of dispute.
B. Restructuring was completed in accordance with laws of Ruritania prior to the

dispute.
17. The transfer of shares to the Claimant was planned in February 201031 and assignment
took place on 17th March 2010, as a part of the intra-group restructuring.32 As on 17th
March 2010, there was no dispute in existence between the Contifica Spirits and the
Respondent or any other entity of the Respondent.
18. The Contifica Group had made their intentions clear while entering into the SPA
(“SPA”) with the Fund. The incorporation of the assignment clause with a stipulation
that rights under the SPA could be assigned to any member of the Contifica Group 33
demonstrates that the Contifica Group reserved the right to restructure their
investment as per the contingencies faced by the Group. The Shares were transferred
in accordance with the assignment clause in the SPA. Not only was the assignment
duly disclosed34 as required by the law of Ruritania, it was also acknowledged by the
SPFR.35
19. Further, the parties to a contract are free to decide the terms of their contract and it is
not for the tribunal to inquire into the inadequacy of the consideration if there is intent
to develop economic activities,36 and the parties have freely consented to a nominal
consideration.37
30
Phoenix, ¶ 136.
31
Memorandum, Exhibit RXI.
32
33
Clause 11. 1, Exhibit No. 2.
34
35
36
Phoenix, ¶ 119.
37
Midland Bank Case, p. 513,532.
7
20. The purchase of property for a nominal price is an accepted type of transaction all
over the world when other interests and risks are associated with the business38 and
therefore purchase of shares for 5000 USD constitutes a valid consideration.
21. Furthermore, as per the law of Ruritania, the benefits of warranties are assignable to a
third party and the third party has a right to institute a claim against the seller.39 The
warranty and representation regarding products of the FBI40 has been breached and
the Claimant has a legal right under the law of Ruritania to file a claim based on the
breach of that warranty.
22. The investment that has been made by the Contifica Group remains intact in
Ruritania. The process of restructuring does not affect the investment in anyway and
the restructuring took place as a routine exercise to avail a favorable tax regime
existing in Cronos.41
C. There was no ‘specific foreseeable dispute’ based on which the Contifica Group
acted.
23. A dispute is a disagreement on a point of law or fact, a conflict of legal views or of

interests between two persons.42 It must concern the existence or scope of a legal right
or obligation, or the nature or extent of the reparation to be made for breach of a legal
obligation.43 There is a clear distinction between a ‘dispute’ and ‘events giving rise to
a dispute’44 and the present tribunal is vested with jurisdiction only over ‘disputes
concerning investments…’ and not ‘events giving rise to a dispute’.45
24. Further, the existence of a dispute presupposes a certain degree of communication
between the parties. One party must have taken up the matter with the other party to
the dispute and the latter party must have opposed the claims either directly or
38
Société Générale Jurisdiction, ¶ 36.
39
40
Clause 9.2.1, Exhibit No. 2.
41
Memorandum, Exhibit RX1.
42
Mavrommatis Palestine Case, p 11.
43
Fedax Jurisdiction, ¶ 15.
44
Maffezini Jurisdiction, ¶ 95.
45
Article 8 (1), BIT.
8
indirectly46 or in other words, it has to be shown that claim of one party has been
positively opposed by the other.47
25. In the present case, the MAB Bill came in the public domain on 20th June 2010.48 This
is the first instance when the world at large became aware of the intention of the
government to regulate the manufacturing and selling of alcohol. In opposition to the
provisions of the MAB bill, the Association of Alcoholic Beverages Producers and
Importers submitted a memorandum to the Parliament against the adoption of the
draft act.49
26. This is the instance when the dispute arose between the parties as there is a
communication of disagreement between the parties to the dispute. The restructuring
was complete prior all these events and neither the Claimant nor the Contifica Group
had no knowledge about the Draft bill till it became a public document.
46
Maffezini Jurisdiction, ¶ 96.
47
South West Africa Case Preliminary Objections, ¶ 328.
48
49
9
ISSUE 2: THE TRIBUNAL HAS JURISDICTION OVER THE CLAIMS BASED ON BREACH OF
SHARE PURCHASE AGREEMENT
I. Disputes concerning investments fall within the ambit of Cronos-Ruritania BIT.
27. Breach of an investment contract can simultaneously give rise to independent claims
under a treaty as well as a contract as both claims requires different inquiries.50 Rights
asserted under a contract and those under a treaty are essentially different 51 and both
have to be claimed under their respective dispute resolution clause. 52 The present
claims are against the Republic of Ruritania for violation of BIT and not against the
SPFR under the SPA.
28. If a breach of contract at the same time violates a treaty applicable between an
investor and the host state, it will give rise to the international responsibility of the
host state.53 The jurisdiction of the present tribunal is to analyze the breach of a
warranty as per the principles of international law.54 For this tribunal to assume
jurisdiction, there has to be a breach of a substantive treaty provision,55 which in the
present case is Article 6 (2) of the BIT.
A. The present claims fall within the ambit of Article 6 (2) “umbrella clause” of the
BIT.
29. A treaty has to be interpreted literally by giving ordinary meaning to the terms of the
treaty.56 The preamble and title of the treaty highlight the purpose of the treaty. 57 The
objective of the BIT is clear from the title of the treaty, which is to ‘protect foreign
50
Impregilo Jurisdiction, ¶ 258.
51
Azurix Award, ¶54.
52
Vivendi I Award, ¶ 102; Lanco Jurisdiction, ¶ 28; Azurix Award, ¶ 79.
53
Noble Ventures Award, ¶ 53.
54
Tecmed Award, ¶ 120.
55
SGS v. Pakistan Jurisdiction, ¶ 162.
56
Article 31 (1), VCLT.
57
Siemens Award, ¶ 81.
10
investment’. The title is further supported by the preamble that mandates creation of
‘favorable conditions’ and ‘ensure protection of investments’.58
30. The function of incorporating article 6 (2) or the ‘umbrella clause’ is to enforce the
objectives of the treaty in both letter and spirit. The umbrella clause provides
additional protection to the investors beyond the traditional international standards. It
adds compliance with investment contracts or any other undertaking of the host state
to the treaty’s substantive protection and therefore the violation of a contract becomes
a violation of the BIT.59
31. By virtue of Article 6(2), the states committed themselves to honor every obligation
they undertook. The SPA is an investment contract that contains a specific warranty.60
Breach of this warranty is a breach of the investment contract. Article 6(2) makes it a
breach of BIT61 for the host state for failing to fulfill its contractual obligations, which
it had assumed with regards to the specific investment62 or in other words, the tribunal
has jurisdiction over a breach of contract that would constitute at the same time, a
violation of breach of the BIT.63
32. The cardinal rule of interpretation of treaties is that each and every operative clause
has to be interpreted as meaningful rather than meaningless64 by giving ordinary
meaning to the terms of a treaty provision.65 The term “any other obligation” is
indicative of the intention to cover each and every obligation that is not covered under
the BIT.66 This view is further supported by the use of “entered into with an investor”,
which clearly shows that a reference is being made to investment contracts since an
investor cannot enter into a BIT with the host state. Any otherwise interpretation of
the umbrella clause would render the Article useless and would be contrary to the
principle of effet utile.67
58
Title and Preamble, BIT.
59
Schreuer 3, p. 250.
60
Clause 9.2.1, Exhibit No. 2.
61
Schreuer 3, p. 250.
62
Philippines Jurisdiction, ¶ 128; Eureko Partial Award, ¶ 260.
63
Salini v. Morocco, ¶ 62.
64
Eureko Partial Award, ¶ 248.
65
Gaffney, p. 22.
66
Noble Venture Award, ¶ 51.
67
Gaffney, p. 22.
11
33. The placement of the umbrella clause within the structure of the BIT also shows the
intention of the state parties to treat the umbrella clause as a substantive provision and
violation68 of the same would amount to violation of the treaty and hence invoke the
right to approach the present Tribunal.
34. The concluding submission is that by virtue of incorporation of an umbrella clause
such as article 6(2) in a BIT, the violation of the SPA becomes violation of the BIT.69
II. The Acts of the State Property Fund of Ruritania are attributable entirely the
Respondent.
35. In the absence of an agreed definition on the term “contracting state” in the BIT,
reference may be made to an internationally agreed definition of the term ‘State’.
State has been defined to include –‘agencies and instrumentalities of the state or other
entities, to the extent that they are entitled to perform and are actually performing acts
in the exercise of sovereign authority of the State’.70
A. The State Property Fund of Ruritania (“SPFR”) is a State establishment71 under

the management and control of the Respondent.
36. The SPFR is an entity incorporated by the Respondent.72 Further, the government of
Ruritania appoints the principle managing bodies of the Fund and hence it is evident
that the management of the Fund is under the control of the government.
37. The alleged wrongful act of the Fund that is sought to be attributed is the breach of
warranty given in the SPA.73 It would be useful to examine the circumstances and
manner in which the warranty was given to substantiate why this wrongful act of the
Fund ought to be attributed to the Respondent.
68
69
SGS v. Philippines, ¶ 128; L.E.S.I. - Dipenta Award, ¶ 25; Noble Venture Award, ¶ 62; LG & E, ¶ 175 and
70
Article 2(1) (b)(iii), UN Conventions on Jurisdictional Immunities of State and their Properties.
71
Statement of Claim, ¶ 5.
72
73
12
38. The decision to privatize assets was taken by the government of Ruritania to remedy
the impact of the financial crisis. It was as a result of this specific decision of the
government that the Fund released an international tender to sell FBI. 74 This clearly
shows that the decision maker in the present case is the government of Ruritania and
the Fund is merely the implementing agency of the government. The Fund did not
have the power to exercise any discretion and is bound to implement the decision of
the government since both structurally and functionally it a part of the government.
39. Had the SPFR not been under the control of the Respondent, it would not have
entered into the SPA on the directions of the government. The sale of shares through
the SPA was done pursuant to the policy of “privatization” of the government,
implying that the ownership and control of the SPFR vested with the government.
Black’s Law Dictionary, an accepted source of definition by the International Court of
Justice,75 defines ‘Privatization’ as –
“The Act or process of converting a business or industry from governmental
ownership or control to private enterprise”.76
40. The definition of ‘privatization’ conclusively establishes that the ownership and
control of the Fund vested with the Respondent.
41. Independent legal status of the SPFR under the domestic law of Respondent77 does
not exempt the Respondent from liability under the international law if the method of
creation and management of the entity is controlled by the State.78
B. The acts of the SPFR are attributable to the Respondent as per the rules of
Customary International Law.
42. It is submitted that the status of the SPFR under the domestic law of Ruritania is
immaterial in the perspective of international law,79 which the present Tribunal is
74
75
Qatar v. Bahrain (Dissenting Opinion), p. 61. Also, Applicability of the Obligation to Arbitrate under Section
21 of the United Nations Headquarters Agreement of 26 June 1947, Advisory Opinion, I.C.J. Reports 1988, p.
63 (Separate Opinion of Judge Shahabuddeen).
76
Garner: Black’s Law Dictionary, p. 1316.
77
Statement of Defense, ¶ 11.
78
Salini v. Jordan Jurisdiction, ¶ 82-83.
79
Nykomb Award, ¶ 4.2, p. 33.
13
obliged to apply.80 The Republic of Ruritania is responsible to the Claimant for the
actions of the SPFR. The breach of warranty under SPA amounts to an internationally
wrongful act since it leads to violation of Article 6 (2) of the treaty.
43. Further, for the purposes of attribution of responsibility to a state, there is no
distinction between acta jure gestionis or commercial acts and acta jure imperii or the
governmental acts81 and even the ILC Articles do not prescribe such as distinction.82
44. The legal distinction between the SPFR and the Respondent under the domestic law
gives rise to a question whether the act committed by a legally distinct entity, that is
in violation of international law, is attributable to the Respondent state.83 The BIT
does not provide an answer to this question. The rules of attribution are found in
general rules of international law that supplements the BIT. With regards to the
general rules of international law on international responsibility, reference has to be
made to the Articles on State Responsibility by the International Law Commission
(“ILC Articles”).
45. As per ILC Articles, there must exist a close linkage with the state. Such linkage can
arise from the fact that
a. the entity performing the act is part of the state structure84; or
b. is authorized to and in fact exercises governmental powers specific to the state
in relation to the act in question, even though it may be a separate entity85; or
c. is the act in question is performed under the direct control or instructions or
directions of the state, even if the entity is a private party86
46. The attribution of acts to the state is not limited to the acts of the organs of the state
that are formally recognized as per its domestic law. Otherwise a state can
conveniently avoid responsibility under the international law by invoking its domestic
laws. It is generally accepted that a state is also responsible for the acts of those
entities that were in fact acting on behalf of the state.87
80
81
82
83
Noble Ventures Award, ¶ 69.
84
Art 4, ILC Articles.
85
Art 5, ILC Articles.
86
Art 8, ILC Articles; Jan De Nul Award, ¶ 157.
87
Yeager Award, p. 103, ¶ 42.
14
47. The appointment of managerial bodies by the government88 clearly shows that the
government has the power to direct these bodies to carry out the process of
privatization and this power has in fact been exercised since the privatization
happened ‘as a result of’ the decision of the government.89
48. The SPFR shall be considered as an organ of the Respondent if it ‘exercises
legislative…or any other function’,90 or is wholly dependent upon the Respondent.91
The SPFR is wholly dependent on the Respondent since the government retains the
right to appoint the principle managing bodies of the SPFR and the SPFR makes
periodic contributions to the government.92
49. Use of ‘any other function’ signifies the intention to include all those functions that
are confined to the exclusive domain of the state. ‘Privatization’ involves selling of
the state owned assets to private entities93 and hence is a function that falls within the
specific domain of ‘state function’.
50. The ‘state organ’ covers all those entities that act on its behalf. 94 The SPFR is a state
establishment, which owns FBI. The fact that the FBI was sold pursuant to the policy
of privatization itself is a conclusive evidence of the SPFR being owned by the
Respondent.
51. As per the laws of Ruritania, by virtue of being the 100% shareholder of the FBI, the
SPFR was empowered to sell state owned assets to the Contifica Group. This proves
that the SPFR was clearly representing the Respondent in the process of privatizing
state owned assets and in furtherance of that, entering into the SPA on behalf of the
Respondent95 and is therefore attributable to the Respondent.
52. Further, the SPFR was exercising governmental authority while entering into the
SPA. For the Respondent to be liable under Article 5, the SPFR must exercise
governmental authority while entering into the SPA. This is evident from the fact that
the decision to release international tender to sell FBI was taken ‘as a result’ of the
88
89
90
Art 4(1), ILC Articles.
91
Bosnia and Herzegovina v. Serbia and Montenegro, ¶ 395.
92
93
Garner: Black’s Law Dictionary, p. 1316.
94
ILC Commentary, Article 4, ¶ 1.
95
15
decision of the government policy of privatization.96 The SPFR was acting under the
express authority conferred on it by the decision of the government of Ruritania in
consonance with the officially approved privatization policy.97
53. Lastly, for attribution under Art 8 of the ILC Articles, it has to be determined whether
the SPFR acted under the instruction or directions of the Respondent. The degree of
control exercised does not require a very high threshold under the international law
and has to be evaluated on factual circumstances of each case.98 The proof required is
that of direction or control exercised by the government is with respect to the specific
conduct or action and not generally with respect to the overall functioning of the
SPFR.99
54. The SPFR may be a legally independent entity as per the domestic law, but with
respect to the particular action that amounts to an internationally wrongful act, there
were directions from the Respondent state.
55. Individually the events leading to the SPA may not conclusively prove the existence
of control and direction exercised by the government of Ruritania on the Fund, but
when these events are viewed together, they provide the most compelling evidence of
the fact that the SPFR was exercising public authority when entering into the SPA.100
Firstly – SPFR created by an Act of the Parliament of Ruritania.
Secondly – The government appoints the principle decision-making bodies of
the SPFR.
Thirdly – The decision of privatization taken by the government.
Lastly – The SPFR implements the decision of privatization taken by the
government.
A conjoint reading of all these events clearly shows that the SPFR is an organ of the
state under Art 4, which was actually and factually exercising public authority for the
purpose of Article 5 and lastly, was acting under the directions from the government,
as per Art 8 of the ILC Articles.
96
97
98
Tadic Case, p. 1518, ¶ 117.
99
Bosnia and Herzegovina v. Serbia and Montenegro, ¶ 400.
100
Methanex Award, Part III, Chapter B, ¶ 3.
16
ARGUMENTS ON MERITS
ISSUE 3: RURITANIA VIOLATED ITS OBLIGATIONS UNDER THE BIT AND INTERNATIONAL
LAW TOWARDS CAM BY ADOPTING CERTAIN MEASURES REGULATING THE SALE OF
ALCOHOL AND FURTHER REQUIREMENTS FOR THE MARKETING OF FREEBREW BEER.
56. The Claimant submits that

a. since the BIT incorporates the autonomous Fair and Equitable (“FET”)
standard of treatment, a greater degree of protection is afforded to the
Claimant, as compared to the Minimum Standard of Treatment (“MST”) under
International Law;
b. that the Respondent has not fulfilled the conditions of Art 2 of the BIT
guaranteeing Fair and Equitable Treatment and Full Protection and Security;
c. the Respondent has violated the National Treatment and Non impairment
principle in Art 3 of the BIT; and
d. the Respondent has unlawfully expropriated the investment of the Claimant in
contravention of Art 4 of the BIT.
I. The Standard of Fair and Equitable Treatment (“FET”) is a higher one than
that of the Minimum standard of Treatment under International law.
57. The standards of treatment of Investors as laid down in customary international law
and subsequently, BITs can be broadly classified as being either qualified or
unqualified clauses.101 An unqualified one102, as in this case103, is one where there is
no reference to the MST.
58. The Minimum Standard affords the bare minimum protection to the investor since it is
the lowest level of protection afforded to aliens, even in the absence of a specific
clause to that effect.104 It has received considerable discussion as being a part of
101
UNCTAD: FET, p. 17.
102
Ibid.
103
Art 2, Cronos-Ruritania BIT.
104
Saluka Partial Award, ¶ 292-294.
17
customary international Law.105 Consequently, any reference to the Minimum

Standard signifies the application of the standard in only very serious acts of
maladministration can be seen as violating the treaty106 thereby increasing the
threshold of liability.107 This formulation of investor treatment is most evident in
NAFTA Art. 1105, which has been clarified by the FTC as being equivalent to the
customary international law standard.108 This interpretation was accepted in the
decision in Mondev.109
59. Consequently, an autonomous FET standard does not require serious acts of
maladministration or egregious action by the State. Violations of the standard may
occur even if the actions of the State have been unfair towards the Claimant.110 The
Claimant respectfully submits that this is the standard which ought to be followed in
the present case.
60. The Tribunal in Saluka noted that NAFTA Tribunals, owing to the presence of the
Minimum Standard of Treatment in Art. 1105, required a higher degree of
inappropriateness from the States111 whereas in other BITs (including the present
one), the FET standard requires a considerably lesser degree of inappropriateness [on
the part of the State]112 and thus imparts an autonomous character to the FET Standard
free from the MST.113
61. Prof. F A Mann believes that it is both pointless and misleading to equate the two
concepts because fair and equitable treatment envisages conduct ‘which goes far
beyond the minimum standard and affords protection to a greater extent and according
to a much more objective standard than any previously employed form of words.’ 114
62. The VCLT gives guidance as to the interpretation of treaties in good faith and in
accordance with the objective meaning given in the context of its aims and
105
Neer claim, p. 60-66; The Roberts claim, p. 77-81.
106
UNCTAD: FET, p. 13.
107
Ibid, p. 23.
108
NAFTA, Notes on Interpretation of Certain Chapter 11 Provisions.
109
Mondev Award, ¶ 121-125.
110
UNCTAD: FET, p. 13.
111
Saluka Partial Award, ¶ 292.
112
Ibid, ¶ 293.
113
114
Mann, pp. 234-238.
18
objectives.115 It is using this principle that the Claimant submits that in the absence of
a qualified FET clause and, in reading the Preamble of the BIT, the Fair and Equitable
standard of Treatment is one which affords a greater degree of protection to the
Investor and consequently requires a lower standard of proof.
II. Ruritania has violated Article 2 of the BIT by not conforming to the principles of
fair and equitable treatment and full protection and security.
63. The Respondent has already accepted that the actions constitute a violation of the Full
Protection and Security clause in Article 2 thus the Claimant does not wish to put
forward arguments on that point and seeks damages for the breach of the Treaty.116
64. The Claimant submits that the following aspects of the Fair and Equitable Treatment
have not been complied with by the Respondent:
a. Legitimate Expectations
b. Due Process
c. Proportionality
d. Good Faith
A. The Respondent has violated Legitimate Expectations of the Claimant.
65. The aspect of Legitimate Expectation has been referred to as a dominant element of
the Fair and Equitable Treatment standard.117 Foreign investors take relevant business
decisions based on the existing legal framework of the host State.118 Tribunals and
scholars agree that investors’ legitimate expectations rely on the stability,
predictability and consistency of the host State’s legal and business framework.119
66. The tribunal in Thunderbird defined legitimate expectation as a condition which
creates reasonable and justifiable expectations on the part of an investor to act in
reliance on said conduct, and that a failure to honour those expectations could cause
115
Art 31(1), VCLT.
116
117
118
Schreuer 1, p. 273.
119
Vandevelde, p. 66.
19
the investor to suffer damages.120 The concept includes not just explicit affirmations
given by the government but also the reasonable and basic expectations taken into
account by the investor.121
67. It is in light of these views that the Claimant submits that the actions of the
Respondent have not adhered to the Legitimate Expectations requirement on two
occasions
a. The change in the intellectual property regime of Ruritania; and
b. The incorrect stipulation that the products being sold by FBI were free from
risks other than those normally associated with alcohol.
68. The signing of the SPA along with long term investments made by the Contifica
Group show that they were acting upon the basic premise of a stable and secure
regulatory framework. A stable framework is a key requirement for the Investor to
invest in any particular State.122
69. Further, the explicit claim made by the Respondents regarding the safety of the
products manufactured was another reason for the Claimant to have pursued with the
investment. The acts of SPFR have been attributed to the Respondents in preceding
sections. The Claimant contends that owing to the presence of an interim report in
2005 that came up with the same conclusions (which was in the possession of the
Ministry of Health) the Respondents knowingly withheld the same and did not
disclose the presence of such a report to the Investor in 2008 when the SPA was
signed.123 The failure of disclosing such a report along with the Representation given
in the SPA124 led the investor to reasonably expect that the products of FBI did not
pose any additional risks. Further, the Claimant questions the timing of the release of
the final report, which was after FBI was transferred from SPRF.
Legitimate Expectations concerning Intellectual Property
120
Thunderbird Award, ¶ 147.
121
122
CMS Gas Award, ¶ 274; Enron Award, ¶ 259; PSEG Award, ¶ 252-53.
123
124
Cl. 9.2.1, SPA, p. 18 Statement of Claims.
20
70. The key assets in the investment included the IP Rights in the products of FBI125 and
there was a reasonable expectation regarding the stability of the basic IPR framework
within Ruritania. By failing to preserve one of the key conditions on which the
investment was made, the Respondents violated the legitimate expectations of the
Investor.
71. The purpose of a trademark is twofold126:
a. To serve as an effective linkage between the producer and the product (origin
function) ;and
b. Preventing consumers from consuming inferior/counterfeit goods in the
mistaken belief that such goods originate from another trader (quality
function).
72. The ability of a Trademark to be distinguishable is the key concept behind its
registration.127 By the Respondent’s introduction of the MAB Act, the ability of the
Claimant to distinguish its products from those of the others was significantly reduced
since it made it mandatory for alcohol manufacturers’ label to be on a white
background and text with similar font and colour, without any technique used to
highlight branding.128
73. International conventions afford protection to registered trademarks from being
invalidated. The Paris Convention grants protection to a registered trademark and is
subject only to specific exceptions, none of which are satisfied in this case. 129 The
WIPO Guide also states that “confusion can be caused, by the use of similar identical
trademarks of form of packaging.130 One of the justifications for requiring the
protection of marks is that the use of a confusingly similar mark will, in most cases,
amount to an act of unfair competition and be considered prejudicial to the interests of
those who will be misled.131 This confusion would be akin to unfair competition,
thereby being prejudicial to the interests of the Claimant.
125
126
Vadi, p. 774.
127
Bainbridge, p. 539.
128
Section 8, Exhibit No. 3.
129
Art 6 (a) and (b), Paris Convention.
130
Guide to Paris Convention, p. 90-91.
131
Ibid, p. 91.
21
74. The result of the MAB Act was the increase in likelihood of confusion caused because
of similarity in packaging which significantly reduced the marketability of the
Claimant’s products. Further, these requirements result in a higher likelihood of
counterfeiting132 of the Claimant’s products since there would be uniform labeling
requirements which would vitiate the very essence of trademark protection.
75. The actions of the Respondent, specifically the reduction of the size of the bottle,
impact the trade dress rights of the Claimant’s most famous product, Freebrew
beer.133 The Lanham Act defines ‘trade dress’ inclusively to include packaging and
design.134 Justice Scalia of the US Supreme Court remarked that the key differentiator
between product packaging and product design is whether that characteristic has
acquired secondary meaning in the eyes of the public.135 The Claimant submits that
Freebrew beer’s 0.8L bottle had acquired an iconic status136 in Ruritania and thus
would fall under the protection of trade dress regulations. The measure reducing the
bottling size of Freebrew eliminates such distinctiveness and strikes at the root of the
trade dress protection afforded to the 0.8L bottle of Freebrew thereby violating the
legitimate expectation of the Claimant.
B. The Respondent did not follow Due Process norms
76. Due Process refers to procedural fairness in all types of procedures in which the
investor may be involved with the organs of the state.137 The Tribunal in Waste
Management defined lack of due process as complete lack of transparency and
candour in administrative process.138 The Claimant contends that the actions leading
up to the labelling requirement and the manner in which the experiments were
conducted were in gross violation of due process norms. Specifically the Claimant
questions the acts of the Respondent on the following aspects
132
<http://www.adamsmith.org/sites/default/files/research/files/plain-packaging.pdf> See also,
http://www.huffingtonpost.co.uk/peter-sheridan/plain-tobacco-packaging-will-crea_b_2224498.html.
133
134
Sec 43, Lanham Act.
135
Walmart Case, p 209. See also Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844, 851
136
137
Tudor, p. 35.
138
Waste Management Award, ¶ 98.
22
a. The limited sample size of the study group- merely 150139

b. Gender restricted to males140
c. Excessively high concentration of methyldioxidebenzovat (“MDB”) – 625%
more than the amount in 1 bottle of FREEBREW.141
d. Daily dosage of MDB.142
e. Failure to take into account intervening circumstances
77. The Claimant questions the timing of the release of the final report since it came after
FBI was transferred to the Contifica Group.143 The Claimant also questions the
urgency in the passing of the ordinance within 15 days of the report being released. 144
Furthermore, a request for lifting the labeling requirements pending further studies
was also rejected.145 All these factors point to the lack of transparency and due
process in the preparation of the report as well as the passing of the ordinance.
C. The Respondent’s actions lacked Proportionality
78. It is important to ensure the measures do not cause more economic harm than what is
necessary to achieve those ends.146 The Tribunal in Tecmed laid down a
proportionality test which weighs the reasonableness of a measure to its goal, the
deprivation of the Claimant’s economic rights and the legitimate expectations of the
investor.147 There must be a reasonable relationship between the measures of the State
and the burden on the investor, taking into account the investor’s legitimate
expectation.
79. The Claimant puts forth that there was absence of proportionality in the actions of the
Respondents in
a. Enacting the MAB Act; and
139
140
Ibid.
141
Ibid. See also, Statement of Claims, ¶ 5; Procedural Order no. 3, ¶ 12;
142
Ibid.
143
Statement of claims, ¶ 14.
144
Ibid.
145
Ibid, ¶ 17.
146
Ibid.
147
Ibid, ¶ 122.
23
b. Issuing the ordinance with the labeling requirements.

80. The provisions of the MAB Act cannot be proven to have a reasonable nexus to the
objective sought to be achieved since;
a. Plain packaging norms have not yet been verified and proven to have an effect
when applied to products other than tobacco products.
b. There is no rationale behind reducing the bottle size and reducing alcohol
consumption amongst the population
c. Restricting the sale from only permanently operating catering establishments
and only within their premises cannot be said to reduce alcohol consumption.
81. The objective of the labeling requirement was to forewarn consumers regarding the
likely adverse impact of MDB contained in Reyhan.148 However, since this
requirement was based on a report which observed the effects of MDB in a much
higher concentration, the labeling requirement on Freebrew was not proportional and
unjustified.
D. The Respondent did not act in Good Faith
82. The actions of the Respondent in

a. Denial of Legitimate Expectations of the Claimant
b. Failure to accede to the representations request made to the Health Ministry. 149
c. Failure to respond to the settling of disputes amicably by the letters dated 10
Dec 2011 and 31 May 2012.
constitute bad faith on behalf of the Respondent. The Claimant submits that lack of
good faith is viewed as an aggravating measure for violation of FET rather than a
separate component of FET150 especially when the failure to negotiate in good faith is
accompanied by the discriminatory application of the law.151
83. Alternatively, lack of bad faith is not an essential characteristic to find a breach of
FET.152 In the C.M.S Award, the ICSID tribunal found that breach of FET requires an
148
149
Ibid, ¶ 17.
150
Azurix Award, ¶ 372; CMS Gas Award, ¶ 280.
151
152
Loewen Award, ¶ 132.
24
objective requirement, unrelated to deliberate intention or bad faith in adopting the

measures in question.153
84. In summary
a. The FET standard is an autonomous standard as per the Cronos-Ruritania BIT
which affords a greater degree of protection to the Claimant than the MST.
b. The acts and measures of the Respondent have violated the Legitimate
Expectations of the Investor, have not been carried out in a proportional
manner, have not followed the due process of law and the overall conduct of
the Respondent has shown a considerable lack of good faith.
III. Ruritania has violated Article 3 of the BIT by violating national treatment
principles and arbitrarily impairing the investor’s right to use its Investment
A. The Respondent has violated Article 3(a) of the BIT
85. The national treatment provision in Art 3(a) of the BIT requires the State to not
discriminate between investors of the host state and those of the Investing state.
Analysis of this provision requires two aspects-
a. Identical comparators of activities, and
b. Comparison of treatment towards Claimant and domestic investors
86. In identifying the comparator, there must be a comparable domestic investor whose
situation is the most similar to the foreign investor in all relevant respects, but for
nationality of ownership.154 In the present case, the similarity is with regards to the
sale of alcohol in general, and particularly of Beer.
87. The Claimant contends that the national treatment principle has been violated owing
to the de facto discriminatory treatment regarding the restriction on bottling sizes. De
facto discrimination is one which may arise from an ostensibly identical treatment
which, due to differences in circumstances, produces differentially disadvantageous
153
CMS Gas Award, ¶ 280.
154
Methanex Award, Part IV Chap B, ¶ 14.
25
effects.155 The regulation requiring all alcohol to be sold in 0.5L bottles inherently
discriminates against the investor since this particular quantity bottle was sold only by
the Claimant.156
B. The Respondent has violated Art 3 (c) of the BIT
88. The actions of the Respondent have resulted in a negative impact on the investment of
the Investor which constitutes a violation of the non-impairment principle laid down
in Art 3(c) of the BIT.
89. The Claimant contends that the discriminatory and arbitrary actions of the Respondent
directed against the Claimant have impaired the investment. The Tribunal in Saluka
stated that differential treatment without justification constitutes a violation of the non
impairment principle.157 By imposing a regulation disallowing alcohol to be packaged
in a bottle more than 0.5L, the Claimant’s main product line had to be immediately
revamped at a significant cost.
90. Further, the leaking of the security footage by the police158, the enforcement arm of
the government, along with the Prosecutors interview159 was a calculated tactic on the
part of the Respondent to deny the Claimant of the right to enjoy the investment. The
targeted action of circulating negative publicity about the investor and its officials has
been held to constitute a violation of the non-impairment clause.160
91. The enactment of the MAB Act also restricted severely the use of the trademarks
belonging to the Claimant.
92. Thus, the actions of the Respondent violated the national treatment principle of the
BIT and impaired the investments thereby contravening Article 3 of the BIT.
155
Feldman Award, ¶ 169; Pope & Talbot Award on Merits ¶79; SD Myers Partial Award ¶ 252 Canada-
Protection of Pharmaceutical Products, ¶ 7.94; Chile-Alcoholic beverages ¶ 7.150-7.159.
156
Procedural Order no 3, ¶ 16.
157
158
159
Ibid.
160
Saluka Award, ¶ 504.
26
IV. Ruritania has violated the Article 4 of the BIT by illegitimately expropriating the
Claimant’s property without provision of compensation.
A. The actions of the Respondent constitute an indirect expropriation
93. Expropriation may be defined as the taking or deprivation of the property of the
foreign investor by a host state.161 Indirect expropriation occurs when control or the
economic value of any property has been rendered ‘essentially useless’.162 The
Tribunal in Tecmed explained that an expropriation takes place where the act radically
deprives the investor of the economic use and enjoyment of the investment.163
94. In fact, it has been held that incidental interference in the use and benefit of the
investment alone is sufficient to establish the existence of expropriation. 164 Therefore,
expropriation may be ascertained even if control vests with the investor.165
95. In this case, even though the Investor can be said to have control over the production
of alcohol at FBI, all of FBI’s tangible assets, shares, and claims in this arbitration are
pledged to its creditors.166 Further, the intellectual property rights pertaining to the
trademarks have also been rendered useless by the provisions of the MAB Act which
nullifies any significant economic benefit arising from the investments.
96. Another determining factor to establish expropriation is the presence of substantial
deprivation, which has been identified through an effects based doctrine developed in
various instances.167 The Sole Effects doctrine is regarded as the dominant doctrine in
international investment law, which looks at the effects of the governmental measure
161
Feldman Award, ¶ 366-67; S.D. Myers Partial Award, ¶ 281, 283; Dolzer, p. 92; Newcombe, p. 327.
162
CME Partial Award, ¶ 604; Feldman Award, ¶ 100; Foremost Tehran Case, ¶ 280-282; Metalclad Award, ¶
103.
163
Tecmed Award, ¶ 115; Telenor Award, ¶ 67.
164
Dolzer, p. 108.
165
Ibid; EnCana Award, ¶ 172-183; Middle East Cement Award, ¶ 107; Waste Management Award, ¶ 141,
147;Revere Copper Case, ¶ 291-292
166
Ibid, ¶ 21.
167
M.C.I. Power Group Award, ¶ 300. See Telenor Jurisdiction, ¶ 65; LG & E Award, ¶ 188-191; Enron Award,
¶ 245.
27
on the investor, instead of the purpose behind it.168 This includes a substantial
deprivation of the rights of the Investor.169
97. The Doctrine has been applied successfully in the various decisions of arbitral
tribunals, all of whom have held in some degree that the intention behind adopting
any measure is not material in identifying an expropriatory conduct. 170
98. The Respondent’s measures have eroded the value of the investments of the Claimant,
which is evident from the decline in sales of 60% in the first two quarters of 2011,
loss of net income of 10 million dollars and loss of revenue of 60%.171 There was a
further 20% loss of revenue in the 4th quarter of 2011.172 The cumulative effect was
that the revenue of FBI was reduced to 10% of what it was at the same time in
2009.173 These facts point to the effective neutralization of the investments of the
Investor.
99. The test of expropriation need not always correspond to an economic one and that
suffering of substantive economic loss is not pre condition for finding of
expropriation.174 It may even correspond to a loss of rights.175 The loss of benefits
arising out of the intellectual property rights of the investor due to the actions of the
Respondents correspond to a loss of benefits from trademark rights of the Claimant.
B. The Cronos-Ruritania BIT does not contain any exception to the payment of
compensation.
100. Article 4 of the BIT prohibits any form of expropriation by the host state except when
it is for public purpose, is non-discriminatory, follows due process of law and is
against compensation. Thus a lawful expropriation necessarily requires payment of
168
Dolzer 1, p. 953; Tokios Tokeles Award, ¶ 120; Vivendi II Award, ¶ 7.5.20.
169
Sempra Award, ¶ 284.
170
Tokios Tokeles Award, ¶ 205; Vivendi Award, ¶ 7.5.20; Telenor Award, ¶ 70.
171
172
Ibid, ¶ 19.
173
Ibid.
174
Biwater Award, ¶ 464-465.
175
Biwater Award, ¶ 464; Sempra Award, ¶ 281.
28
adequate compensation. Failure to pay compensation would render the expropriation

unlawful and give the Claimant a claim for compensation and damages.176
101. The Cronos Ruritania BIT does not contain any provision which gives any exception
to the payment of compensation unlike other BITs where regulatory measures for the
public purpose are excluded from the scope of payment of compensation.177
Following the literal interpretation standard of the VCLT178, since there is no
exception for non payment of compensation, the Respondent is liable to pay the
Claimant’s damages for breach of the BIT.
C. The Police power exception cannot be taken by the Respondents
102. The Police powers exception gives the state a right to regulate in public interests
without that measure being rendered expropriatory and liable for compensation.179
However, this doctrine has been severely criticised since the conditions for the
application of the doctrine are identical to those of a lawful expropriation except the
obligation to pay compensation.180
103. Tribunals have held that the obligation to pay compensation is not extinguished
merely because the nature or purpose of regulation is in public interest, particularly if
the actions have a severe impact in diminishing the value of the investments.181
104. Moreover, the scope of the police powers exception was read in a limited sense by the
tribunal in Tecmed, to cover bona fide general taxation and measures necessary for the
maintenance of public order, provided it is not discriminatory.182
105. Thus, in the absence of any specific clause exempting the Respondent’s from paying
compensation and the limited scope of the police powers doctrine, the Respondent has
breached Art 4 of the Cronos-Ruritania BIT.
176
Vivendi II, Award, ¶ 7.5.21; Siemens Award, ¶ 259, 273; ADC Affiliate Award, ¶ 398 and 444.
177
US-Rwanda BIT, Annex B 4(b), Canada- Peru BIT Annex B13 (1) (c).
178
Art 31(1), VCLT.
179
Methanex Award, Part IV Chapter D ¶ 7; Saluka Partial Award, ¶ 262.
180
Azurix Award, ¶ 311. See also Weiler; Schneidarman.
181
Santa Elena Award, ¶ 71; Tecmed Award, ¶ 121; Metalclad Award, ¶ 111.
182
29
ISSUE 4: MORAL DAMAGES SHOULD IN PRINCIPLE BE AWARDED TO THE CLAIMANTS
106. Moral Damages should be awarded to the Claimant for the pain, suffering, mental
agony, trauma and loss of reputation for the Claimants as well as representatives of
the Claimant.
I. The Tribunal can award damages suffered by the Claimant and its Executives
since it constitutes an internationally wrongful act.
107. Various arbitral tribunals have recognized the capacity of investment tribunals to
award damages for actions against the investors.183 Actions that restrict the enjoyment
of the rights of the Claimant and its executives should necessarily be heard by this
Tribunal since the Treaty itself is titled Mutual Promotion and Protection of Foreign
Investment.
108. The following actions of the Respondent violate provisions of the UDHR and the
ICCPR
a. Arbitrary arrest and detention of the executives without justification.184
b. Restriction of freedom of movement without justification.185
c. Violation of privacy by the release of security video by the Police.186
109. Violations of these internationally accepted rules of human rights laws constitute an
internationally wrongful act by the state. Various noted authors have opined that
violation of a rule of international law is ipso facto consideration for payment of
damages.187 Further the investor suffered damage to reputation which can be decided
by this Tribunal.188 The Tribunal in the Europe Cement endorsed its competence to
redress potential reputational damage.189 The Tribunal in Desert Line Arbitration is
awarded moral damages for injury to credit and reputation of the Claimant’s
183
Desert Line Award, ¶ 290; Arif Award, ¶ 544; Lemire Award, ¶ 326.
184
Art 9 UDHR and Art 9 ICCPR.
185
186
187
Wittich, p. 337.
188
Sabahi, p. 138 ¶ 6.2.3.
189
Europe Cement Award, ¶ 181.
30
representatives in addition to the harassment caused to the employees and detention of

the personnel.190
110. The Claimant relies on ILC Articles on State Responsibility, which in its view
establish both that breach of an international obligation entails legal consequences
going beyond the obligation to make full reparation for loss, and that damages are not
an essential element of an international claim.191 This is without prejudice to the
Claimant’s submission that it had indeed suffered actual loss and is also entitled to
moral damages for harm to its reputation.
111. Art 31 of the ILC Articles imposes a liability to pay moral damage on the State for an
internationally wrongful act. The essence of Art 31 comes from the decision in the
Chorzow Factory Case192 which makes reparation an indispensable element of a
failure to apply a convention and there is no necessity for this to be stated in the
convention itself.
II. Moral Damages should be awarded to the Claimant for the actions of the
Respondent
112. Absent limiting terms in the Treaty, the level of damages awarded in international
investment arbitration is supposed to be sufficient to compensate the affected party
fully and to eliminate the consequences of the state’s action.193
113. The Tribunal in Lemire laid down the conditions194 in which moral damages can be
awarded-
a. the State’s actions imply physical threat, illegal detention or other analogous
situations;
b. the State’s actions cause a deterioration of health, stress, anxiety, other mental
suffering such as humiliation, shame and degradation, or loss of reputation,
credit and social position; and
c. both cause and effect are grave or substantial.”
190
Desert Line Award, ¶ 286.
191
Article 2 (9) r/w Art 31(6) and 31(7), ILC Articles.
192
Germany v. Poland Case.
193
Vivendi Award, ¶ 8.2.7.
194
Lemire Award, ¶ 333.
31
114. The Claimant argues that the actions of the state which included illegal detention195
and loss of reputation through the release of the detention video 196 conform to the test
laid down in Lemire and make the Respondents liable for moral damages.
195
196
Ibid, ¶ 24.
32
ISSUE 5: LOSS OF SALES BY CAM’S SUBSIDIARIES CONSTITUTES A

RECOVERABLE ITEM OF DAMAGES
I. CAM as a parent company can claim damages caused to its subsidiaries.
109.The right of a parent company to claim damages incurred by the subsidiaries has
been widely recognized.197 This view is reinforced by the definition of investment in
the BIT which grants equal recognition and protection to direct and indirect
investments.198 Thus, Investments made directly by an investor and investment by an
investor through a controlled entity are equally protected.
110.The jurisprudence of granting protection to subsidiaries has been aptly described in
the Amco decision,199 where the tribunal held that it goes against logic to grant
protection to the controlling entity but not to the controlled entity. 200 Another tribunal
in the UPS decision201 held that when the parent company is the sole owner of its
subsidiary, it does not matter to whom the loss is caused because ultimately, the
parent company bears the loss.202
II. Even otherwise, CAM as majority shareholder can claim damages on behalf the
subsidiaries.
111.By virtue of being the parent company, the Claimant is the majority shareholder in its
subsidiaries and therefore, has a right against the Respondent to claim damages
incurred by the subsidiaries.
112.The arbitral tribunals in Antoine203 has upheld the majority shareholders right to bring
a claim against the Respondent state for damages caused to the subsidiary. The
197
Art. 1117, NAFTA; UPS Award, ¶ 35; Amco Jurisdiction, ¶ 24.
198
Art. 1(1), BIT
199
Amco Jurisdiction.
200
Ibid, ¶ 24.
201
UPS Award.
202
Ibid, ¶ 35.
203
Antoine Award, ¶ 89.
33
tribunals in CMS204 and El Paso205 went to the extent of upholding rights of the
minority shareholders in bringing claims against the host state against the damages
incurred by their companies.
III. ‘Loss of sales’ forms a part of the definition of ‘investment’ under article 1 of the
BIT
1. The BIT defines investment in broad terms and expressly includes indirect
investments.206 The claimant has over 30 subsidiaries,207 which supply the necessary
items for facilitating production and manufacturing at FBI.
2. There was an installation of new production line at the aluminium plant specifically to
serve the needs of FBI. Additionally, to cater to the demands of FBI, the targets of the
hops and barley farm were reconsidered.208
3. The Claimant had meticulously planned and invested in its subsidiaries to support the
production and manufacturing at FBI. In any business venture, after the initial
investment, the investor takes into accounts the returns and reinvests those returns to
further expand the business.
4. The BIT in the definition of ‘returns’ has recognized the practice of reinvesting the
returns to expand the business. Further, investment specifically includes ‘returns
reinvested’ within the definition of investment and hence entitles it to the protection
of the BIT.209
5. Additionally, the contributions by the subsidiaries by sale of raw materials were being
used to create an economic value by increasing the production at FBI. The actions of
the respondent have significantly reduced the economic value of the investment made
by the subsidiaries and hence violated Article 1(1) (c) of the BI
204
CMS Gas Jurisdiction, ¶ 48.
205
El Paso Award ¶ 206.
206
Article 1(1), BIT.
207
208
209
Art 1(1) (c), Cronos-Ruritania BIT.
34
RELIEF SOUGHT
The Claimant respectfully prays to the Tribunal for the following relief-
 Declare that the Tribunal has jurisdiction over this dispute

 Declare that the Respondent has violated Article 2 of the Cronos Ruritania BIT and
has a right to receive damages.
 Declare that the Respondent has violated Article 3 of the Cronos Ruritania BIT and
has a right to receive damages.
 Declare that the Respondent has violated Article 4 by not paying due compensation
for expropriating the Claimant’s investment and has a right to receive damages.
 Moral Damages for violating international obligations owed to the Claimant
 Loss of sales for losses incurred by subsidiaries of CAM and Costs for Arbitration.
 That the arbitration proceed to the issue of determination of damages and relief.
Counsels for the Claimant

Team Alfaro
22 September 2013
35

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Memorial For The Claimant Team Code- Alfaro

GERMAN INSTITUTION OF ARBITRATION

CONTIFICA ASSET MANAGEMENT CORP. Claimant

REPUBLIC OF RURITANIA Respondent

A. The Tribunal has jurisdiction Rationae Materiae. ...................................................... 3

B. The Tribunal has jurisdiction Ratione Personae. ....................................................... 4

C. The Tribunal has jurisdiction Ratione Voluntatis. ...................................................... 5

A. Corporate restructuring to obtain the benefits of a favorable legal regime is not

B. Restructuring was completed in accordance with laws of Ruritania prior to the

I. Disputes concerning investments fall within the ambit of Cronos-Ruritania BIT........ 10

A. The Respondent has violated Legitimate Expectations of the Claimant. .................. 19

Legitimate Expectations concerning Intellectual Property .............................................. 20

B. The Respondent did not follow Due Process norms………………………………………23

D. The Respondent did not act in Good Faith ............................................................... 24

A. The Respondent has violated Article 3(a) of the BIT ................................................ 25

B. The Respondent has violated Art 3 (c) of the BIT ..................................................... 26

A. The actions of the Respondent constitute an indirect expropriation ......................... 27

C. The Police power exception cannot be taken by the Respondents ............................ 29

ISSUE 4: MORAL DAMAGES SHOULD IN PRINCIPLE BE AWARDED TO THE CLAIMANTS .. 30

ISSUE 5: LOSS OF SALES BY CAM’S SUBSIDIARIES CONSTITUTES A RECOVERABLE ITEM

I. CAM as a parent company can claim damages caused to its subsidiaries.................... 33

RELIEF SOUGHT .............................................................................................................. 36

Sl. No. Abbreviation Full Form

28. U.S.A. United States of America

Sl. No. Abbreviation Full Citation

has been applied in International Law”, The Fair and

Sl. No. Abbreviation Full Citation

6. Newcombe Andrew Newcombe and Lluís Paradell, Law and Practice

Sl. No. Abbreviation Full Citation

Award, ICSID Case No. ARB/05/17 (6 February, 2008)

(26 June, 2003)

ICSID Case No. ARB/02/13 (15 November, 2004)

Sl. No. Abbreviation Full Citation

6. Saluka Partial Saluka Investments B.V. v. The Czech Republic, Partial

Sl. No. Abbreviation Full Citation

1. Bosnia and Application of the Convention on the Prevention and

Sl. No. Abbreviation Full Citation

Immunities of State http://untreaty.un.org/ilc/texts/instruments/english/conventi

1. The Claimant, Contifica Asset Management Corp. (“CAM”) is a company

8. 20 November 2010- The Parliament of Ruritania adopted the Marketing of Alcoholic

methyldioxydebnzovat (“MDB”) on men for a period of 10 years. This ordinance was

I. Jurisdiction has to be determined solely based on criteria mentioned in the BIT.

1. The Cronos-Ruritania Bilateral Investment Treaty (“BIT”) constitutes the governing

A. The Tribunal has jurisdiction Rationae Materiae.

B. The Tribunal has jurisdiction Ratione Personae.

C. The Tribunal has jurisdiction Ratione Voluntatis.

II. Prospective corporate restructuring does not amount to abuse of process or

A. Corporate restructuring to obtain the benefits of a favorable legal regime is not

11. It is an established principle of international law that unless a conduct is specifically

done during the pendency of a dispute,30 it is considered to be an illegitimate

B. Restructuring was completed in accordance with laws of Ruritania prior to the

23. A dispute is a disagreement on a point of law or fact, a conflict of legal views or of

I. Disputes concerning investments fall within the ambit of Cronos-Ruritania BIT.

A. The State Property Fund of Ruritania (“SPFR”) is a State establishment71 under

56. The Claimant submits that

customary international Law.105 Consequently, any reference to the Minimum

A. The Respondent has violated Legitimate Expectations of the Claimant.

Legitimate Expectations concerning Intellectual Property

B. The Respondent did not follow Due Process norms

a. The limited sample size of the study group- merely 150139

C. The Respondent’s actions lacked Proportionality

b. Issuing the ordinance with the labeling requirements.

D. The Respondent did not act in Good Faith

82. The actions of the Respondent in