memorial for respondent team ago fifth annual foreign ... - FDI Moot

MEMORIAL FOR RESPONDENT
TEAM AGO
FIFTH ANNUAL FOREIGN DIRECT INVESTMENT
INTERNATIONAL MOOT COMPETITION
2-4 NOVEMBER 2012
_______________________________________________________________________
INTERNATIONAL CENTRE FOR SETTLEMENT OF
INVESTMENT DISPUTES
CASE NO. XX
BETWEEN:
MAX SOLUTIONS, INC. THE STATE OF
BELA RANO INSULARO
CLAIMANT/INVESTOR RESPONDENT/PARTY
MEMORIAL FOR RESPONDENT
HARVARD LAW SCHOOL
Danielle Bart, Jessica Beess und Chrostin, June Hwang,
Sarah Kalin, Diego Zambrano

TABLE OF CONTENTS
LIST OF AUTHORITIES ............................................................................................... iii
LIST OF LEGAL SOURCES ......................................................................................... vi
LIST OF ABBREVIATIONS ......................................................................................... xi
STATEMENT OF FACTS ............................................................................................... 1
SUMMARY OF ARGUMENTS ...................................................................................... 4
ARGUMENTS .................................................................................................................. 5
I. The Standard of Review for Annulment Decision ............................................... 5
II. The Award should be upheld because the Tribunal was properly
constituted. ..................................................................................................................... 6
A. Dr. Honesta and Mr. Viator properly dismissed the challenge to Professor
Iracunda. ...................................................................................................................... 6
B. Regardless, the Committee should uphold the Award as the Challenge Decision
was proper. .................................................................................................................. 9
III. The Annulment Committee is not empowered to override the Tribunal’s
judgment of its own competence, or decide whether the transaction qualifies as an
“investment” under the ICSID Convention. ............................................................ 12
A. Under ICSID Art. 41(1), the Tribunal is judge of its own competence. ........... 13
B. If the Committee reviews questions decided by the Tribunal, it will be
conducting an appeal of the Tribunal’s Award, and not a hearing on annulment. ... 15
IV. Regardless, the Award should be upheld because the Tribunal did not have
jurisdiction to hear the Max Solutions-Bela Rano dispute. .................................... 18
A. An investment must qualify under both the ICSID Convention and the BIT. .. 19
B. The Salini test is an established legal test for determining whether an
investment meets the jurisdictional requirements under the ICSID Convention. ..... 21
C. Regardless, Max Solutions’ transaction also failed to satisfy the BIT definition
of investment. ............................................................................................................ 31
V. The tribunal did not Manifestly exceed its powers in refusing jurisdiction
because the contract did not fulfill the Salini criteria. ............................................ 22
i

A. The tribunal did not manifestly exceed its powers in its analysis of the
economic development criterion, because it took into account all the important facts
and arguments. .......................................................................................................... 24
B. The Tribunal properly found that the remaining Salini requirements were only
met tenuously. Their ruling clearly does not constitute a manifest disregard of its
powers. ...................................................................................................................... 28
VI. The Tribunal properly admitted Dr. Ranapuer’s Expert Report into
evidence. ....................................................................................................................... 33
A. Consideration of Dr. Ranapuer’s Expert Report did not violate Claimant’s right
to be heard. ................................................................................................................ 33
B. The Tribunal did not seriously departure from a fundamental rule of procedure
regarding evidence by considering Dr. Ranapuer’s Expert Report. ......................... 34
C. Consideration of Dr. Ranapuer’s Expert Report did not impair the Tribunal’s
impartiality. ............................................................................................................... 36
ii

ARTICLES
LIST OF AUTHORITIES
Aronson Benjamin M. Aronson, A New Framework for ICSID Annulment
Jurisprudence: Rethinking the 'Three Generations', INT’L
CONSTITUTIONAL L. J., March 2012.
Delaume G. Delaume, Le Centre international pour le règlement des
différends relatifs aux investissements (CIRDI), JOURNAL DE DROIT
INTERNATIONAL (1982).
Tupman M.W. Tupman, Challenge and Disqualification of Arbitrators in
International Commercial Arbitration, 38 INT’L & COMP. L. Q. 44
(1989).
Scherer
Matthias Scherer, ICSID Annulment Proceedings Based on Serious
Departure from a Fundamental Rule of Procedure, CZECH (&
CENTRAL EUROPEAN) YEARBOOK OF INT’L ARB. (2011).
Schreuer (2003) Christoph Schreuer, ICSID Annulment Revisited, 30 LEGAL ISSUES
ECON. INTEGRATION 2, 103-122 (2003).
BOOKS
Broches Aron Broches, “Observations on the Finality of ICSID Awards” in
Selected Essays: World Bank, ICSID, and Other Subjects of Public
and Private International Law 299 (1995).
Dolzer &
Schreuer
Rudolf Dolzer & Christoph Schreuer, Principles of International
Investment Law (2008).
Gaillard Emmanuel Gaillard, “Identify or define? Reflections on the evolution
of the concept of investment in ICSID practice,” in International
Investment Law for the 21st Century, Oxford University Press
(2009).
History International Center for Settlement of Investment Disputes, History
of the ICSID Convention. Documents Concerning the Origin and the
Formulation of the Convention on the Settlement of Investment
Disputes between States and Nationals of Other States, Volume II.
McLachlan, Campbell McLachlan QC, Laurence Shore & Matthew Weiniger,
iii

Shore &
Weiniger
Reisman
International Investment Arbitration (2007).
W. Michael Reisman, Reflections on the Control Mechanism of the
ICSID System, in THE REVIEW OF INTERNATIONAL ARBITRAL
AWARDS, ed. Emmanuel Gaillard, Juris Publishing, Inc. (2010)
Schreuer (2001) Christoph Schreuer, The ICSID Convention: A Commentary,
Cambridge University Press (2001).
Schreuer (2009)
Schreuer, Three
Generations
Sheppard
Van Houtte
Yannaca-Small
MISCELLANEOUS
Christoph Schreuer, The ICSID Convention: A Commentary, 2d Ed.,
Cambridge University Press (2009).
Christoph Schreuer, Three Generations of ICSID Annulment
Proceedings, in ANNULMENT OF ICSID AWARDS, eds. Emmanuel
Gaillard and Yas Banifatemi, Juris Publishing, Inc. (2004)
Audley Sheppard, Arbitrator Independence in ICSID Arbitration, in
INTERNATIONAL INVESTMENT LAW FOR THE 21 ST CENTURY, eds.
Christina Binder, Ursula Kriebaum, August Reinisch, Stephan
Wittich, Oxford University Press (2009).
Hans Van Houtte, Article 52 of the Washington Convention – A Brief
Introduction, in ANNULMENT OF ICSID AWARDS, eds. Emmanuel
Gaillard and Yas Banifatemi, Juris Publishing, Inc. (2004)
Katia Yannaca-Small, Annulment of ICSID Awards: Limited Scope
But is There Potential ?, in ARBITRATION UNDER INTERNATIONAL
INVESTMENT AGREEMENTS: A GUIDE TO THE KEY ISSUES, ed. Katia
Yannaca-Small, Oxford University Press (2010)
IBA Guidelines International Bar Association Guidelines on Conflicts of Interest in
International Arbitration (2004).
IBA Rules IBA Rules on Taking of Evidence in International Arbitration (2010).
ICSID
Background
Paper
ICSID, Background Paper on Annulment for The Administrative
Council of ICSID (2012).
ICSID The ICSID Convention, Regulations and Rules.
iv

Convention
Kaufmann-
Kohler
Report of the
Executive
Directors
Gabrielle Kaufmann-Kohler, Annulment of ICSID Awards in contract
and Treaty Arbitrations: Are There Differences?, IAI-ASIL
Conference Paper, p. 2; Vivendi v. Argentine Republic, 41 ILM 1135
(2002), 66; Maritime International Nominees Establishment v.
Guinea, 4 ICSID Reports 61,, 4.09-4.10.
International Bank for Reconstruction and Development, Report of
the Executive Directors on the Convention on the Settlement of
Investment Disputes between States and Nationals of Other States
(18 March 1965), in 1 ICSID Reports 28 (1993).
SCC Rules The Arbitration Rules of the Arbitration Institute of the Stockholm
Chamber of Commerce.
UNCITRAL
Rules
UNIDROIT
Principles
United Nations Commission on International Trade Law, UNCITRAL
Arbitration Rules (as revised in 2010).
UNIDROIT Principles of International Commercial Contracts
(2010).
v

LIST OF LEGAL SOURCES
Abaclat Abaclat and Others (Case formerly known as Giovanna a Beccara
and Others) v. Argentine Republic, ICSID Case No. ARB/07/5,
Decision on Jurisdiction and Admissibility, (4 August 2011).
Abaclat Dissent
Amco II
Azurix
Bayindir
Camuzzi
Abaclat and Others (Case formerly known as Giovanna a Beccara
and Others) v. Argentine Republic, ICSID Case No. ARB/07/5,
Dissenting Opinion, Georges Abi-Saab, (28 October 2011).
Amco Asia Corporation and others v. Republic of Indonesia, ICSID
Case No. ARB/81/1, Decision on the Applications by Indonesia and
Amco Respectively for Annulment and Partial Annulment (17
December 1992).
Azurix Corp. v. Argentine Republic, ICSID Case No. ARB/01/10,
Decision on the Application for Annulment (14 July 2006).
Bayindir Insaat Turizm Ticaret Ve Sanayi A.S. v. Islamic Republic
of Pakistan, ICSID Case No. ARB/03/29, Decision on Jurisdiction
(14 November 2005).
Camuzzi International S.A. v. Argentine Republic [I], ICSID Case
No. ARB/03/2, Decision on Objections to Jurisdiction (11 May
2005).
CDC Group CDC Group plc v. Republic of the Seychelles, ICSID Case No.
ARB/02/14, Decision of the ad hoc Committee on the Application
for Annulment of the Republic of Seychelles (29 June 2005).
Consorzio L.E.S.I-
DIPENTA
CSOB
CMS
CMS Annulment
Decision
Consorzio L.E.S.I-DIPENTA v. People’s Democratic Republic of
Algeria, ICSID Case No. ARB/03/08, Award (10 January 2005).
Ceskoslovenska obchodní banka, a.s. v. Slovak Republic, ICSID
Case No. ARB/97/4, Decision of the Tribunal on Objections to
Jurisdiction (24 May 1999).
CMS Gas Transmission Company v. Republic of Argentina, ICSID
Case No. ARB/01/8, Decision of the Tribunal on Objections to
Jurisdiction (17 July 2003).
CMS Gas Transmission Company v. Argentine Republic, ICSID
Case No. ARB/01/8, Decision of the Ad Hoc Committee on the
Application for Annulment of the Argentine Republic (25
September 2007).
Consortium Consortium R.F.C.C. v. Kingdom of Morocco, ICSID Case No.
vi

R.F.C.C.
El Paso
Fraport I
Fraport II
Global Trading
Helnan
Jan de Nul
Joy Mining
Klöckner II
ARB/00/6, Decision of the ad hoc Committee on the Application for
Annulment of Consortium R.F.C.C (18 January 2006).
El Paso Energy International Company v. Argentine Republic,
ICSID Case No. ARB/03/15, Award (31 October 2011).
Fraport AG Frankfurt Airport Services Worldwide v. Republic of
the Philippines, ICSID Case No. ARB/03/25, Award (16 August
2007).
Fraport AG Frankfurt Airport Services Worldwide v. Republic of
the Philippines, ICSID Case No. ARB/03/25, Decision on the
Application for Annulment of Fraport AG Frankfurt Airport
Services Worldwide (23 December 2010).
Global Trading Resource Corp. and Globex International, Inc. v.
Ukraine, ICSID Case No. ARB/09/11, Award (1 December 2010).
Helnan International Hotels A/S v. Arab Republic of Egypt, ICSID
Case No. ARB 05/19, Decision on Jurisdiction (17 October 2006).
Jan de Nul N.V. and Dredging International N.V. v. Arab Republic
of Egypt, ICSID Case No. ARB/04/13, Decision on Jurisdiction (16
June 2006).
Joy Mining Machinery Limited v. Arab Republic of Egypt, ICSID
Case No. ARB/03/11, Award on Jurisdiction (6 August 2004).
Klöckner Industrie-Anlagen GmbH and others v. United Republic of
Cameroon and Société Camerounaise des Engrais, ICSID Case No.
ARB/81/2, Decision on Annulment (17 May 1990).
Lucchetti Industria Nacional de Alimentos, S.A. and Indalsa Perú, S.A. v.
Republic of Peru, ICSID Case No. ARB/03/4, Decision on
Annulment (5 September 2007).
M.C.I. Power
Group
MHS I
MHS Dissent
M.C.I. Power Group, L.C. and New Turbine, Inc. v. Republic of
Ecuador, ICSID Case No. ARB/03/6, Decision on Annulment (19
October 2009).
Malaysian Historical Salvors Sdn, Bhd v. Government of Malaysia,
ICSID Case No. ARB/05/10, Award on Jurisdiction (17 May 2007).
Malaysian Historical Salvors Sdn, Bhd v. Government of Malaysia,
ICSID Case No. ARB/05/10, Dissenting Opinion of Judge
Mohamed Shahabuddeen (16 April 2009).
vii

Malicorp
MCI
Millicom
Mobil
Malicorp Limited v. Arab Republic of Egypt, ICSID Case No.
ARB/08/18, Award (7 February 2011).
M.C.I. Power Group, L.C. and New Turbine, Inc. v. Republic of
Ecuador, ICSID Case No. ARB/03/6, Decision on Annulment (19
October 2009).
Millicom International Operations B.V. and Sentel GSM S.A. v.
Republic of Senegal, ICSID Case No. ARB/08/20, Decision on
Jurisdiction of the Arbitral Tribunal (16 July 2010).
Mobil Corporation and others v. Bolivarian Republic of Venezuela,
ICSID Case No. ARB/07/27, Decision on Jurisdiction (10 June
2010).
MINE Maritime International Nominees Estalishment v. Republic of
Guinea, ICSID Case No. ARB/84/4, Decision on the Application by
Guinea for Partial Annulment of the Arbitral Award dated January
6, 1988 (22 December 1989).
MTD MTD Equity Sdn. Bhd. and MTD Chile S.A. v. Republic of Chile,
ICSID Case No.ARB/01/7, Decision on Annulment (21 March
2007).
Noble
Patrick Mitchell
Phoenix
Repsol
Romak
Rumeli
Noble Energy Inc. and MachalaPower Cía. Ltd. v. Republic of
Ecuador and Consejo Nacional de Electricidad, ICSID Case No.
ARB/05/12, Decision on Jurisdiction (5 March 2008).
Patrick Mitchell v. Democratic Republic of the Congo, ICSID Case
No. ARB/99/7, Decision on the Application for Annulment of the
Award (1 November 2006).
Phoenix Action, Ltd. v. Czech Republic, ICSID Case No. ARB/06/5,
Award (15 April 2009).
Repsol YPF Ecuador S.A. v. Empresa Estatal Petróleos del Ecuador
(Petroecuador), ICSID Case No. ARB/01/10, Decision on the
Application for Annulment (8 January 2007).
Romak S.A. v. Republic of Uzbekistan, Award (26 November 2009).
Rumeli Telekom A.S. and Telsim Mobil Telekomunikasyon
Hizmetleri A.S. v. Republic of Kazakhstan, ICSID Case No.
ARB/05/16, Decision of the ad hoc Committee (25 March 2010).
viii

Saba Fakes
Saipem
Salini
Sempra
SGS v. Philippines
Soufraki
Suez
Toto Costruzioni
Transgabonais
Urbaser
Vieira
Saba Fakes v. Republic of Turkey, ICSID Case No. ARB/07/20,
Award (14 July 2010).
Saipem S.p.A. v. People's Republic of Bangladesh, ICSID Case No.
ARB/05/07, Decision on Jurisdiction and Recommendation on
Provisional Measures (21 March 2007).
Salini Costruttori S.P.A. and Italstrade S.P.A. v. Kingdom of
Morocco, ICSID Case No. ARB/00/4, Decision on Jurisdiction (16
July 2001).
Sempra Energy International v. Argentine Republic, ICSID Case
No. ARB/02/16, Decision on the Application for Annulment (7
February 2005).
SGS Société Générale de Surveillance S.A. v. Republic of the
Philippines, ICSID Case No. ARB/02/6, Decision of the Tribunal on
Objections to Jurisdiction (29 January 2004).
Hussein Nuaman Soufraki v. United Arab Emirates, ICSID Case
No. ARB/02/7, Decision on the Application for Annulment (5 June
2007).
Suez, Sociedad General de Aguas de Barcelona S.A. and Interagua
Servicios Integrales de Agua S.A. v. Argentine Republic, ICSID
Case No. ARB/03/17, Decision on the Proposal for the
Disqualification of a Member of the Arbitral Tribunal (22 October
2007).
Toto Costruzioni Generali S.P.A v. The Republic of Lebanon, ICSID
Case No. ARB/07/12, Decision on Jurisdiction (11 September
2009).
Compagnie d’Exploitation du Chemin de Fer Transgabonais v.
Gabonese Republic, ARB/04/5, Decision on the Application for
Annulment (7 March 2008).
Urbaser S.A. v Argentine Republic, ICSID Case No. ARB/07/26,
Decision on Claimant’s Proposal to Disqualify Professor Campbell
McLachlan, Arbitrator (12 August 2010).
Sociedad Anónima Eduardo Vieira v. Republic of Chile, ICSID
Case No. ARB/04/7, Decision of the ad hoc Committee on the
Application for Annulment (10 December 2010).
Vivendi I Compañía de Aguas del Aconquija S.A. and Vivendi Universal S.A.
ix

Vivendi II
Wena
v. Argentine Republic, ICSID Case No. ARB/97/3, Decision on
Annulment (3 July 2002).
Compañía de Aguas del Aconquija S.A. and Vivendi Universal S.A.
v. Argentine Republic, ICSID Case No. ARB/97/3-Resubmission,
Decision on the Application for Annulment (20 August 2007).
Wena Hotels Limited v. Arab Republic of Egypt, ICSID Case No.
ARB/98/4, Decision on the Application for Annulment (5 February
2002).
x

Paragraph
LIST OF ABBREVIATIONS
Argentina The Argentine Republic
Art./ Arts. Article/ Articles
Bela Rano Bela Rano Insularo
Bela Rano Model Rules Bela Rano Model Rules on the Taking of Evidence in
International Arbitration
BIT Bilateral Investment Treaty
CD Challenge Decision
Contract Contract between Bela Rano Insularo and Max Solutions,
Inc.
DO Dissenting Opinion
Frogs Sireno Kanto frogs
GASP Global Athletics Season Preview
IBA International Bar Association
ICC International Chamber of Commerce
ICJ International Court of Justice
ICSID International Centre for Settlement of Investment Disputes
ICSID Arbitration Rules ICSID Rules of Procedure for Arbitration Proceedings
ICSID Convention ICSID Convention on the Settlement of Investment
Disputes between States and Nationals of Other States
inter alia Among other things
no. Number
p./ pp.
para.
Page/ Pages
Paragraph
Treaty Treaty Between the Government of Oscania and the
Government of Bela Rano Insularo Concerning the
Encouragement and Reciprocal Protection of Investment
UF Uncontested Facts
UNIDROIT International Institute for the Unification of Private Law
xi

Factual Background
STATEMENT OF FACTS
1. Bela Rano Insularo (“Bela Rano” or “Respondent”) is an independent island
nation, neither impoverished nor wealthy, that presently obtains the majority of its income
from exporting coffee and related products. 1 Previously, tourism was scarce on Bela Rano
due to the large number of poisonous Sireno Kanto frogs (“Frogs”) on the island.
However, in January 2006, scientists at the Frog Research Unit at Bela Rano Insularo
University announced the discovery of a previously unknown disease that was predicted to,
and did in fact, prove fatal to 95% of the Sireno Kanto within five years of its discovery. 2
With the remaining Frogs contained in limited government preserves 3 and since the island
hosted the Global Athletics Season Preview (“GASP”) in 2008, Bela Rano has experienced
an increase in tourism and has become an ecological hotspot. 4
2. Before the fatal frog disease was discovered, Bela Rano entered into a contract
(the “Contract”) with Claimant, Max Solutions, Inc. (“Max Solutions” or “Claimant”), a
private company from the nation of Oscania, for the removal of most of the Sireno Kanto
from Bela Rano. Both parties signed the contract in January 2002. By March 2006, when
scientists announced the disease, Max Solutions had removed only 3% of the Frogs from
the island. 5 At that point, there was no need for the contract for either Max Solutions or
Bela Rano, as there would soon be no Frogs, and Max Solutions would get paid only per
Frog it removed. Moreover, although Max Solutions claimed that it would remove 80% of
the Frogs by December 2006, it refused Bela Rano’s government the opportunity to inspect
its operations. 6 Bela Rano consequently cancelled the contract with Max Solutions on the
basis of inadequate performance. 7
1 UF, 1:5-11.
2 UF, 2:75-81.
3 UF, 3:126-127.
4 UF, 3:126-129.
5 UF, 3:110.
6 UF, 3:106-107.
7 UF, 3:108-110.
1

Procedural Background
3. On 4 December 2006, Max Solutions submitted a request for arbitration against
Bela Rano Insularo to the International Centre for Settlement of Investment Disputes
(“ICSID”) pursuant to Article 24 of the Treaty Between the Government of Oscania and
the Government of Bela Rano Insularo Concerning the Encouragement and Reciprocal
Protection of Investment (the “Treaty”).
4. Claimant appointed Mr. Albert Viator, an arbitration practitioner and experienced
commercial arbitrator, to the arbitral tribunal (the “Tribunal”) and Respondent appointed
Professor Alessandra Iracunda, a prominent investment law academic and experienced
arbitrator. Both party-appointed arbitrators accepted their respective appointments and
nominated Dr. Humberto Honesta as Chair of the Tribunal. Dr. Honesta accepted his
appointment on 13 February 2007.
5. On 1 March 2007, Claimant submitted a Proposal to disqualify Professor Iracunda
(the “Challenge”) in accordance with Article 57 of the ICSID Convention, claiming that
Professor Iracunda’s academic publications in the field of investment law and her
membership in the environmental organization Wilderness undermined her impartiality. 8
6. In accordance with Arbitration Rule 9(4), Mr. Viator and Dr. Honesta (the “Two
Members”) considered and ultimately dismissed the challenge to Professor Iracunda. 9
Consistent with prior dismissals on similar grounds, the Two Members observed that it is
common for legal scholars to act as arbitrators and that the mere expression of a viewpoint
on a relevant legal issue cannot suffice to disqualify an arbitrator. If publication of a view
did suffice, the Two Members found, only few scholars could arbitrate disputes and
professional arbitrators would feel pressured to refrain from publication in order to avoid
“viewpoint-based challenges.” 10 Such a development would, according to the Two
Members, significantly undermine the future development of international investment
law. 11
8 UF, 3:155
9 CD, 5:255
10 CD, 9:435
11 CD, 9:436-438
2

7. Additionally, the Two Members noted that Professor Iracunda stated her intention
to render her decision in the arbitration based on the facts of this particular case 12 in her
reply to the Challenge (the “Statement”). Claimant did not challenge the honesty of
Professor Iracunda’s statement, or her moral character. 13 Finally, the Two Members found
that mere membership in or donations to a large environmental organization that has no
membership requirements 14 did not indicate a lack of independence, especially since
Claimant did not present any evidence that Professor Iracunda personally participated in
any protest against the removal of the Frogs or issued any public statements on this
matter. 15 Indeed, it is uncontested that Professor Iracunda did not participate in
Wilderness’s activities or internal projects. 16 Moreover, as Professor Iracunda noted,
While there may be ecological issues present in the
surrounding context of this dispute, the dispute itself concerns a
business transaction and an international investment agreement,
not the removal of Sireno Kanto from Bela Rano Insularo. This
removal is a fact agreed by both sides, and so cannot be a matter
that I will be asked to decide. 17
8. Following the dismissal of the challenge to Professor Iracunda, the Tribunal
proceeded to the jurisdictional phase of the arbitration. In May 2009, the Tribunal held an
initial hearing on Respondent’s objections to the Tribunal’s jurisdiction. In support of its
position, Bela Rano submitted an Expert Report from Dr. Herbert Ranapuer, the lead
scientist at the Frog Research Unit at Bela Rano Insularo University, on the nature and
predicted effect of the frog disease. On the morning of the hearing, Dr. Ranapuer notified
the Tribunal and the Parties that he would not attend the arbitral proceedings since
members of Wilderness convinced him not to participate. The Tribunal admitted the Expert
Report because “it provided information available from no other source.” 18
9. On 29 July 2009, the Tribunal issued an award declining jurisdiction (the
“Award”), finding that Claimant’s activities did not contribute to the development of the
host state, Bela Rano, and consequently could not be considered an “investment” as
12 CD, 9:450-455
13 CD, 8:425.
14 Clarifications, p. 29.
15 CD, 9:460-465.
16 Clarifications, p. 19.
17 CD, 10:495-499.
18 UF, 4:180-185.
3

equired by Article 25(1) of the ICSID Convention. In reaching this conclusion, the
majority of the Tribunal applied the so-called Salini criteria, 19 that have been frequently
applied in investment arbitrations to determine whether a particular transaction constitutes
an “investment” under Article 25(1) of the ICSID Convention. Mr. Viator, the Claimant-
appointed arbitrator, issued a dissenting opinion, accusing Professor Iracunda of refusing
to consider alternative viewpoints on the definition of “investment.” After the Tribunal
declined jurisdiction over the case, Claimant applied to the present ad hoc Committee for
an annulment of the Award under Article 52 of the ICSID Convention.
SUMMARY OF ARGUMENTS
10. The standard of review for annulment decisions is exceptionally limited.
Accordingly, this Committee should reject Claimant’s application for annulment, as
Claimant’s arguments do not meet the necessary standard of a “material defect”
sufficiently egregious to jeopardize the finality of the Tribunal’s Award.
11. First, the Award should be upheld because the Tribunal was properly constituted
pursuant to the relevant provisions of the ICSID Convention. The Two Members properly
dismissed the initial challenge to Professor Iracunda and complied with all procedures as
well as substantive requirements in rendering the Challenge Decisions.
12. Second, the Award should be upheld because the Tribunal did not manifestly
exceed its powers. The Tribunal is the judge of its own competence and, in deciding that
competence, it must consider whether a dispute is outside the jurisdiction of the Centre.
The Tribunal acted within its powers in determining that the Contract between Bela Rano
and Max Solutions did not constitute an investment within the meaning of Article 25 of the
ICSID Convention. Moreover, the Tribunal’s reliance on the Salini criteria follows a long
and established line of persuasive precedent and commentary and therefore cannot be
considered to constitute a manifest excess of power.
13. Finally, the Award should be upheld because the Tribunal did not violate any
fundamental rule of procedure under Article 52(1)(d) of the ICSID Convention. On the
19 Salini, para. 52.
4

contrary, the Tribunal properly admitted Dr. Ranapuer’s Expert Report and afforded all
parties the full right to be heard.
14. For these reasons, the present Committee should uphold the Award and reject
Claimant’s application for annulment.
ARGUMENTS
I. THE STANDARD OF REVIEW FOR ANNULMENT DECISION
15. Annulment of an award is a narrow and exceptional remedy 20 that may only be
granted if the ad hoc Committee (the “Committee”) finds that one or more of the grounds
set forth in Article 52(1) of the ICSID Convention is clearly violated. 21 Even if the
Committee finds a violation under Article 52(1), the Committee may still exercise its
discretion and refuse to annul the award if it finds that the violation was not “material.” 22
This places a heavy burden of proof on the party seeking annulment, 23 in this case
Claimant, to prove that there was a material defect in the arbitration proceedings serious
enough to jeopardize the finality of the ICSID award.
16. In determining whether there is ground for annulment, the Committee’s task is to
focus on the legitimacy of the award 24 and whether the integrity of the arbitration
proceeding has been respected. 25 The Committee may not consider the merits of the case
and decide whether the award at issue was correct, or even whether the law was correctly
applied to the facts of the case. 26 Since the annulment process is not an appeal, the
Committee must not substitute the Tribunal’s determination on the merits for its own. 27
Finally, the Committee should bear in mind the importance of finality in ICSID
arbitrations and should reach its determination on the annulment guided by this goal of the
ICSID Convention.
20
See e.g., MINE, para. 4.04; CDC Group, para. 34; Repsol, para. 81.
21
See e.g., Klöckner II, para. 4.24; Wena, para. 18; Vivendi I, para. 62; Consortium R.F.C.C., para. 222.
22
Kaufmann-Kohler (2002), p. 2; VivendiII, para. 66; MINE, para. 4.09-4.10.
23
Schreuer (2001), p. 1200.
24
M.C.I. Power Group, para. 24.
25
Vieira, para. 236; Reisman, p. 198; Van Houtte, p. 12; Yannaca-Small, p. 608..
26
Soufraki, para. 20.
27
Amco II, para. 1.18; Patrick Mitchell, para. 19.
5

II. THE AWARD SHOULD BE UPHELD BECAUSE THE TRIBUNAL WAS PROPERLY
CONSTITUTED.
17. Dr. Honesta and Mr. Viator (the “Two Members”) properly dismissed the
challenge to Professor Iracunda pursuant to Articles 57 and 58 of the ICSID Convention
and Arbitration Rule 9(4). Even if the Challenge was not properly dismissed, the
Committee should uphold the Award because there was no material violation of the
ground set forth in Article 52(1)(a).
A. Dr. Honesta and Mr. Viator properly dismissed the challenge to Professor
Iracunda.
18. Under Article 52(1)(a) of the ICSID Convention, a party may request annulment
of an arbitral award on the ground that “the Tribunal was not properly constituted.” 28 The
meaning of “properly constituted” is not clearly defined in the text of the ICSID
Convention, but may be determined by reference to its object and purpose as well as the
context in which it appears. As a threshold matter, “constituted” would seem to refer to the
procedures involved in the initial constitution of the tribunal.
19. In turn, Articles 57 and 58 of the ICSID Convention provide each party with an
opportunity to challenge an arbitrator during the arbitral proceedings on substantive
grounds for non-compliance with the requirements of Article 14(1) of the ICSID
Convention. Given that Articles 57 and 58 already provide the parties with an opportunity
to challenge a tribunal member, Article 52(1)(a) cannot be interpreted as providing a
second bite at the apple.
20. Consequently, Article 52(1)(a) of the ICSID Convention cannot properly be
interpreted as providing a party the opportunity to challenge a member of the tribunal de
novo after the Tribunal has already dismissed a challenge to the arbitrator and issued an
award, as this would amount to a substantive challenge inconsistent with the purpose of
annulment proceedings. 29 As the tribunal in Consortium R.F.C.C. noted, “[e]ven the most
28 ICSID Convention, Article 52(1)(a).
29 Azurix, para. 280.
6

evident error of fact in an award is not itself a ground for annulment.” 30 The Committee’s
role, hence, does not encompass substantive review.
21. As such, Article 52(1)(a)’s reference to the proper constitution of the tribunal
should be interpreted as referring to the compliance with the provisions of the ICSID
Convention and the ICSID Arbitration Rules on the procedural constitution of the tribunal,
i.e. Articles 37-40 of the ICSID Convention (on the “Constitution of the Tribunal”) and
Arbitration Rules 1-12.
22. This interpretation is consistent with the established purpose of annulment
proceedings and the generally accepted view that ad hoc Committees are limited to
procedural review, rather than review of the merits. Additionally, this approach is
confirmed by previous decisions on Article 52(1)(a) annulment applications, which,
though not binding, are nonetheless persuasive precedent and should be awarded particular
consideration given the limited commentary available on this provision. To date, there
have only been four annulment proceedings on the basis of Article 52(1)(a) of the ICSID
Convention, 31 none of which were successful on this ground. This indicates that Article
52(1)(a) is a highly limited and narrow ground for annulment. 32
23. Although the reasons for challenging the president of the tribunal in Azurix were
substantively different, the present case mirrors Azurix procedurally, which is the relevant
context for determinations under Article 52(1)(a) of the ICSID Convention. In Azurix,
Argentina submitted a proposal to disqualify the president of the tribunal, Mr. Rigo
Sureda, pursuant to Article 57 of the ICSID Convention, arguing that Dr. Sureda’s
professional and financial interest in the law firm representing Azurix showed that he
manifestly lacked the qualities described in Article 14(1) of the ICSID Convention. 33 Just
as in the present case, the remaining two members of the tribunal considered the proposal
and dismissed it in accordance with Arbitration Rule 9(4). After the tribunal issued its
award, Argentina applied for annulment of the arbitral award on the basis of Article
30 Consortium R.F.C.C., para. 222.
31 Vivendi II, Azurix, Transgabonais, and Sempra.
32 ICSID Background Paper, para. 81.
33 Azurix at para. 260.
7

52(1)(a), referring to the first sentence of Article 57 of the ICSID Convention. 34 Argentina
claimed that the tribunal was improperly constituted, because Dr. Sureda lacked the
qualities required by Article 14(1). This mirrors Max Solutions’ arguments in the present
annulment proceedings. The Committee in Azurix found this reasoning unpersuasive. The
Committee reasoned that:
the procedure for challenging arbitrators on grounds of a manifest
lack of the qualities required [by] Article 14(1), is established by
other provisions of the ICSID Convention… and if that proposal
[for disqualification] is rejected in accordance with the procedure
established in Article 58 of the ICSID Convention and ICSID
Arbitration Rule 9 for deciding such proposals, then it cannot be
said that the tribunal was “not properly constituted” by reason of
non-compliance with the first sentence of Article 57. 35 (emphasis
added)
24. The Committee should apply the same reasoning in this case. As the procedural
history and Challenge Decision clearly show, the proposal to disqualify Professor Iracunda
was properly dismissed. Pursuant to Arbitration Rule 9(2) the proposal to disqualify
Professor Iracunda was transmitted to the Tribunal and pursuant to ICSID Arbitration Rule
9(3), Professor Iracunda replied to the Challenge, furnishing explanations. 36
25. In accordance with Article 58 of the ICSID Convention and ICSID Arbitration
Rule 9(4), the Two Members considered the Challenge and decided, after careful
deliberation, to dismiss it. In reaching their decision, the Two Members addressed both of
the substantive arguments against Professor Iracunda that Claimant submitted. 37 The fact
that Professor Iracunda did not disclose her publications or membership in Wilderness 38 is
irrelevant given that both of these facts were known to all parties and members of the
Tribunal and were properly considered in the Challenge Decision.
34 “A party may propose to a Commission or Tribunal the disqualification of any of its members on account
of any fact indicating a manifest lack of the qualities required by paragraph (1) of Article 14.” ICSID
Convention, Article 57.
35 Azurix at para. 279-280.
36 CD, Annex I.
37 See generally, CD.
38 Clarifications, p. 28.
8

26. Since it is apparent that all procedures relating to the constitution and challenge of
an arbitrator were complied with, the Tribunal must be considered ‘properly constituted'
within the meaning of Article 52(1)(a) of the ICSID Convention.
B. Regardless, the Committee should uphold the Award as the Challenge
Decision was proper.
27. If this Committee decides that Article 52(1)(a) of the ICSID Convention permits a
substantive, de novo, review of the challenge to Professor Iracunda, Claimant’s request for
annulment on this ground should still be dismissed because the Tribunal properly
dismissed the challenge to Dr. Iracunda.
28. Under Article 14(1) of the ICSID Convention, any arbitrator appointed to a
tribunal must be a person of
high moral character and recognized competence in the fields of
law, commerce, industry or finance, who may be relied upon to
exercise independent judgment.
Claimant and Respondent agree that, in this context, “independent judgment” means both
“independence” in the traditional sense as well as “impartiality.” 39 Article 57 of the ICSID
Convention permits a party to challenge an arbitrator on the basis “of any fact indicating a
manifest lack of the qualities required by paragraph (1) of Article 14.” (emphasis added)
This provision decrees a notably higher standard than other arbitral rules 40 that require the
challenging party to show merely “justifiable doubts” regarding an arbitrator’s impartiality
and independence. 41 In ICSID proceedings, the challenging party must prove manifest lack
of independence, rather than the mere appearance of a lack of impartiality. 42
29. As Professor Schreuer has noted, this standard imposes a heavy burden on
challenging parties, 43 requiring proof of
not only facts indicating the lack of independence, but also that the
lack is “manifest” or “highly probably”, not just “possible” or
“quasi-certain”. 44
39
CD, 6:279-280.
40
See e.g., UNCITRAL Rules, Articles 9-10; SCC Rules, Article 15; IBA Guidelines, General Standard 2;
etc.
41
Sheppard (2009), p. 133.
42
Tupman (1989), p. 44 referring to Amco II. See also, Schreuer (2001), p. 1200.
43 Schreuer (2001), p. 1200.
9

Since Claimant failed to prove that Professor Iracunda manifestly lacked the qualities
required by Article 14(1) of the ICSID Convention, Dr. Honesta and Mr. Viator properly
dismissed the Challenge.
30. Claimant contends that Professor Iracunda’s publications on the meaning of
“investment” in ICSID arbitrations as well as her membership in Wilderness indicate a
lack of impartiality that should have precluded Professor Iracunda from arbitrating the
underlying dispute. Neither of these reasons suffices to prove a manifest lack of the ICSID
Convention’s Article 14(1) qualifications. As the Two Members noted in their decision to
dismiss the Challenge, it is common practice for scholars to serve as arbitrators. Indeed, if
the expression of a viewpoint in publication could preclude a person from arbitrating a
dispute, this would either prevent scholars with expertise from arbitrating or prevent
experienced arbitrators from publishing. Commentators and tribunals alike have
recognized this fact.
31. In Urbaser, as in the present proceedings, claimant challenged the participation of
an arbitrator, Professor McLachlan, “based on the opinions expressed by Prof. McLachlan
in his writings as a scholar.” 45 The Urbaser Tribunal, like the Two Members, dismissed
this challenge, finding that Professor McLachlan’s scholarly writings did not impune his
independence and impartiality. 46 Permitting challenges based on scholarship would have a
significant, negative impact on the future development of investment law - a field in which
scholarly commentary is particularly important in the absence of binding precedent.
32. Similarly, Schreuer, for instance, writes that
a person’s personal convictions may be known from published
writings or public statements... [but] a supposed or real
predisposition of this kind is not an obstacle to independent
judgment in a particular case for a person of high moral
character. 47
Claimant has not challenged Professor Iracunda’s moral character and the mere publication
of her opinions cannot suffice to show a manifest lack of impartiality, especially in light of
her Response to the Challenge (the “Statement”). In her Statement, Professor Iracunda
44
Suez, para. 41, referring to Amco II, p. 8.
45
Ubaser, para. 30.
46
Urbaser, para. 50-59.
47
Schreuer (2008), p. 513.
10

expressly acknowledged that her role as arbitrator was fundamentally different from her
role as scholar. As a scholar, Professor Iracunda is free to voice her opinions and to
contradict herself in the future; as arbitrator, Professor Iracunda stated that she would be
bound by the facts of the case before her and her decision would be tailored to those
facts. 48 Neither Respondent nor Claimant has ever challenged the honesty of Professor
Iracunda’s Statement. 49
33. Claimant’s contention that Professor Iracunda’s membership and annual
donations to Wilderness impugn her impartiality is frivolous and was correctly dismissed
by the Two Members. Claimant has asserted no facts to indicate that Professor Iracunda
personally participated in or even supported Wilderness’s protests involving the Sireno
Kanto frogs. Indeed, it is undisputed that “[m]embership of Wilderness entails no specific
duties or responsibilities” 50 and that Professor Iracunda was not involved in any of
Wilderness’s activities or internal projects. 51 Merely being a member in a large
international organization surely cannot be sufficient to demonstrate a manifest lack of
independence and impartiality. Moreover, membership in an organization does not make
an arbitrator partial, in particular where that organization is not a party to the dispute.
34. In short, Claimant clearly failed to meet the “heavy burden” imposed by Article
57, and Article 52(1)(a) of the ICSID Convention does not permit them a chance to re-
arbitrate their case. Consequently, granting Claimant’s request for an annulment under
these circumstances would endanger rather than safeguard the integrity of the arbitral
process.
35. Last, even if this Committee finds a violation of Article 52(1)(a) of the ICSID
Convention, it should exercise its discretion and refuse to annul the Award because any
defect in the proceedings was not material. As commentators and cases have noted, 52 the
ad hoc Committee retains a measure of discretion in deciding applications for annulment,
even if it finds an annullable error. In Amco II, for instance, the tribunal stated that the ad
hoc Committee should refuse to exercise its discretion to annul an award where
48 CD, 9:478-489.
49 CD, 8:425-428.
50 Clarifications, p. 29
51 Clarifications, p. 19
52 See e.g., MINE para. 4.10; Vivendi I para. 66; Consortium R.F.C.C. para. 226.
11

“annulment would unwarrantably erode the binding force and finality of ICSID Awards.” 53
Granting Claimant’s request for annulment under Article 52(1)(a) of the ICSID
Convention after all applicable procedures were complied with in the initial Challenge
Decision surely would constitute an ‘unwarrantable erosion of the binding force and
finality’ of the Award, as it would encourage future Claimants to bring an ad hoc claim
appealing any failed challenge to an arbitrator if the resulting award does not go their way.
III. THE ANNULMENT COMMITTEE IS NOT EMPOWERED TO OVERRIDE THE
TRIBUNAL’S JUDGMENT OF ITS OWN COMPETENCE, OR TO DECIDE WHETHER THE
TRANSACTION QUALIFIES AS AN “INVESTMENT” UNDER THE ICSID CONVENTION.
36. Committees and commentators have repeatedly rejected the notion that an
annulment committee has the authority to review the substantive analysis of a tribunal. 54
There are sound and unambiguous bases for this position in the language of the
Convention, and these bases have been thoroughly explored by annulment committees. 55
There is no exception for questions relating to jurisdiction. 56
37. Under Article 41(1) of the ICSID Convention, the Tribunal is the judge of its own
competence. An annulment committee may not delve into the substantive aspects of a
tribunal’s decision on jurisdiction; it may only annul a tribunal’s award if, in rendering that
award, the tribunal committed some gross or manifest overstepping of its delegated
authority. This is consistent with the clear language of the Convention, which, as a treaty,
should be “interpreted in good faith in accordance with the ordinary meaning to be given to
the terms of the treaty in their context and in the light of its object and purpose.” 57 It is
also consistent with the clear and widely accepted framework of annulment: a remedy with
a high threshold and limited application. 58
53
Amco II, para. 1.20.
54
See, Schreuer (2009), p. 902, 906; Dolzer and Schreuer (2008), p. 279;
55
Schreuer (2009), p. 902, FN 19.
56
Soufraki, paras. 118, 119.
57
See, McLachlan et al. (2007), p. 15.
58
See, e.g., Wena para.18; CDC Group, para. 34; Repsol, para. 81.
12

A. Under ICSID Art. 41(1), the Tribunal is judge of its own competence.
38. The plain language of ICSID Art. 41(1) directly incorporates into the Convention
the international law principle of kompetenz kompetenz according to which the Tribunal is
itself the proper judge of its own jurisdiction. Reading the language for its ordinary
meaning, and in light of its context, the provision is unambiguous: each ad hoc committee
has exclusive power to judge its own competence. This is standard in arbitral procedure
and there are similar rules in other arbitration fora, including UNCITRAL and the ICC, as
well as at the ICJ. 59
39. In discussing Art. 41(1), the Report of the Executive Directors describes this
exclusive authority as “the prerogative of Commissions and Tribunals to determine their
own competence,” 60 a description supported by the General Counsel of the World Bank
(one of the main architects of the ICSID Convention), who put great weight in the finality
of the tribunal’s jurisdictional determination. 61 In other words, the principle was not
blindly incorporated into the Convention’s text. Rather, the drafters aimed to
prevent a frustration of the arbitration proceedings through a
unilateral denial of the tribunal’s competence. 62
Under the ICSID Convention, it is left to the Tribunal to determine the scope of its own
authority. As outlined in Article 41(2), this determination can include an assessment of
whether the dispute falls within the jurisdiction of the Centre. 63 Respect for the directive of
Article 41 and the principle behind it demands that an annulment committee should only
annul a jurisdictional award that is grossly out of step with the Tribunal’s clear authority to
decide its own competence. 64
i. The language of Article 52(4) of the ICSID Convention does not permit
the Committee to conduct a substantive review of the Tribunal’s Award on
jurisdiction.
59 Schreuer (2009), p. 517.
60 Report of the Executive Directors, para. 38.
61 Schreuer (2009), p.523, citing History of the ICSID Convention Vol. II, pp. 440, 534, 910.
62 Schreuer (2009), p. 518.
63 Azurix, para. 67.
64 Azurix, para. 64.
13

40. In the same way that a tribunal is the judge of its own competence, the language
of Article 52(4) of the ICSID Convention, operating with Article 41(2), makes an
annulment committee the judge of its own competence. Nothing more invasive should be
read into the interaction of these clauses. As it relates to Article 41, Article 52(4) simply
provides that the Committee has the same power to decide its own jurisdiction as any other
ad hoc ICSID committee would have. The purpose this provision serves is to outline the
procedure through which the jurisdiction of an annulment committee will be decided, and
it is consistent with the kompetenz kompetenz principle embodied in Article 41(2).
Although it may be argued that Article 52(4) suggests, through use of the language
“mutatis mutandis,” that an annulment committee has different or expanded powers with
regard to jurisdiction decisions under Art. 41(2), such a reading ignores the purpose of
Article 52(4), which is clearly procedural.
41. Quite simply, Art. 52(4) uses the language previously written about the Tribunal
as a reference for describing the procedures an annulment committee is expected to follow.
It does not change the fact that, with respect to the Tribunal’s decision on jurisdiction,
the role of the annulment committee is to guarantee the procedural propriety of the
Tribunal’s determination – the Committee’s authority does not extend to re-consideration
of the substantive elements of that determination.
42. This interpretation derives from the ordinary meaning of Art. 52(1), which
indicates that the Committee does not have the authority to conduct a substantive review of
the Tribunal’s decisions. This is further supported by the travaux préparatoires and later
writing by the ICSID Secretariat, which notes that annulment
is not a procedure by way of appeal requiring consideration of the
merits of the case, but one that merely calls for an affirmative or
negative ruling…. 65
In sum, Art. 52(4) is not an escape-hatch that allows dissatisfied parties to request
substantive review based on the nature of the objection. It simply applies to annulment
committees the basic procedural and structural formats described for tribunals. Annulment
remains a proscribed remedy through which an annulment committee may, at its
65 ICSID Background Paper, para. 16, quoting History of the ICSID Convention Vol. II, pp. 218, 219.
14

discretion, reject a decision that has gone grossly beyond the procedural bounds of the
tribunal’s power.
ii. Nothing in the Convention allows the annulment committee to conduct a
substantive review of the Tribunal Award.
43. Within the text of the Convention, the annulment committee’s powers of review
are outlined exhaustively in Art. 52(1). The five grounds for annulment listed there are the
only grounds envisioned by the system and nothing in those provisions allows the
Committee to conduct a substantive review of the Tribunal Award. In fact, the travaux of
the Convention indicate that the drafters explicitly rejected ideas that would have required
substantive review: “manifestly incorrect application of the law” was considered and
rejected as a ground for annulment. 66 Furthermore, as noted above, the drafters repeatedly
emphasized that annulment would not require consideration of the merits of a case. 67 This
limitation of the Committee has been widely recognized. 68 By and large, this has ensured
that decisions rendered by annulment committees bring about the “legal destruction of the
original decision without replacing it.” 69
B. If the Committee reviews questions decided by the Tribunal, it will be
conducting an appeal of the Tribunal’s Award, and not a hearing on
annulment.
44. The Committee’s review of the substance of the Tribunal’s decision would
effectively constitute an appeal of that decision, which is impermissible in the ICSID
system. As Article 53 of the ICSID Convention explicitly states, tribunal awards bind the
parties, and they are not subject to appeal. In an appeal, the
appeals body may substitute its own decision on the merits for the
decision that it has found to be deficient. 70
66
ICSID Background Paper, p. 26; ICSID Background Paper on Annulment, para. 16 citing History, pp. 218,
219.
67
Id.
68
See e.g., Amco II, para. 1.17; Wena, para. 18; Mitchell, para.19; MTD, para. 31; CMS, para. 136; CDC,
para. 31.
69 Schreuer (2003), pp.103-122, 104 (2003).
70 Schreuer (2009), p. 901.
15

In other words, the appeals body issues a decision based on a substantive evaluation of the
original judgment. Under ICSID, in contrast, the only remedies available to a dissatisfied
disputant are those outlined in the Convention. 71 While these remedies include annulment,
the unambiguous exclusion of the possibility of appeal precludes substantive review.
However, substantive review for the purpose of appeal is exactly what the claimant is
requesting here, when it argues that the annulment committee has the power to decide
whether a transaction qualifies as an investment. 72 This kind of request simply was not
accommodated by the drafters or by the actual text of the Convention. As Schreuer has
noted, annulment is not a remedy for alleged mistakes of fact or law. 73
45. What is more, the few decisions that have crossed this line have been widely
criticized. 74 These include Klöckner I, Amco I, and Mitchell. In Klöckner I and Amco I,
annulment committees issued awards based on perceived deficiencies in the substantive
analysis of the original tribunals. The annulment committee in Klöckner I found a manifest
excess of power based on the tribunal’s failure to adequately illustrate the existence of the
legal principle underlying its denial of the claim. 75 Similarly, the annulment committee in
Amco I found a manifest excess of power based on the tribunal’s failure to fully apply the
relevant law. 76 As the history of these cases suggests, annulment committees that cross the
line and stray into appeals when they revisit the merits of disputes are heavily
criticized. Instead, annulment committees should be concerned exclusively with “looking
into the process of decision.” 77
46. In this case, the Tribunal’s Award begins directly with consideration of the
jurisdiction of the Convention. 78 Under Article 41(2) of the ICSID Convention, this is an
element for a tribunal’s consideration when it is determining its jurisdiction. 79 The
Tribunal drew authority from cases and from accepted commentary on the Convention’s
71
ICSID Art. 53(1).
72
UF, 4:205-208.
73
See, Schreuer (2009), p. 902.
74
Schreuer (2009), p. 903.
75
Klöckner I.
76
Amco I.
77
Schreuer (2009), p. 903, quoting Lucchetti, para. 97.
78 Award:13, 626 et seq.
79 ICSID Art. 41(2).
16

jurisdiction, and then applied the principles of those sources to the facts of the dispute. 80 It
discussed the meaning of “investment” under the Convention, and then conducted a factual
analysis largely geared to determining whether the transaction at issue satisfied that
definition. 81 The Tribunal's award is about nothing but the meaning and satisfaction of the
investment requirement under the ICSID Convention. Review of that issue by the
annulment committee would necessarily be substantive review.
47. Annulment committees have properly dismissed similar requests in the past. For
example, in Lucchetti, the annulment committee declined to reconsider the substance of the
tribunal’s decision regarding its rationae temporae. The annulment committee explained
its position by saying:
It is no part of the Committee’s function, as already indicated
above, to purport to substitute its own view for that arrived at by
the Tribunal…. The Committee is concerned solely with the
process by which the Tribunal moved from its premise to its
conclusion. 82
Describing its role, the annulment committee in Soufraki made a similar point, writing that
it had no jurisdiction to review the merits of the original award. 83 The Soufraki tribunal
went on to find that the tribunal was acting within its power to decide its own competence
when it considered various conflicting forms of evidence regarding the claimant’s
nationality. 84 The committee did not annul the original award. In each of these cases the
annulment committee had to decide whether to annul an award based on an alleged error in
the tribunal’s determination on jurisdiction. In each case, the annulment committee
confined its analysis to the procedure used by the tribunal, avoiding substantive review.
This is the approach that the present ad hoc Committee should take in considering
Claimant’s request for annulment.
80 Award: 13, 635 et seq.
81 Award: 13, 635 et seq.
82 Lucchetti, para. 112.
83 Soufraki, para. 20, quoting L. Reed, J. Paulsson and N. Blackaby, Guide to ICSID Arbitration, p. 99. See
also, Soufraki, para. 23.
84 Soufraki, para. 52 et seq.
17

IV. REGARDLESS, THE AWARD SHOULD BE UPHELD BECAUSE THE TRIBUNAL DID NOT
HAVE JURISDICTION TO HEAR THE MAX SOLUTIONS-BELA RANO DISPUTE.
48. The Award should be upheld, because the Tribunal correctly determined that it
could not hear the merits of a dispute over which it had no jurisdiction.
49. There are two widely accepted theories regarding when a tribunal has jurisdiction
to hear an investment treaty dispute. A decision based on one faction’s interpretation of the
law does not constitute a manifest excess of power. Further, it is not the role of the
Annulment Committee to apply its own interpretation of the law; it is simply to ensure that
the “manner in which the Tribunal approached” the Award was appropriate. 85
50. The Award should only be annulled if the Tribunal manifestly exceeded its
powers under Article 52(1)(b) of the ICSID Convention. The standard of review for
decisions on jurisdiction are the same as for any other subject matter. 86 In particular, when
jurisdiction is at issue, the applicant carries a “heavy burden” to establish that there has
been a manifest excess of power. 87 Since the Tribunal’s interpretation was reasonable and
since the Annulment Committee confers “special weight to the Arbitral Tribunal’s
interpretation of the jurisdictional instrument,” 88 the Award must be upheld as the Tribunal
did not manifestly exceed its powers by applying a widely accepted approach to the law.
51. One of the two widely accepted theories provides that the investment must only
satisfy Article 25 of the ICSID Convention for jurisdiction to exist. 89 The other theory
states that an investment must satisfy a “double-barreled test.” 90 The double-barreled test
requires that the investment at issue be an investment not only according to Article 25 of
the ICSID Convention, but also according to the applicable BIT. The Tribunal took the
latter approach. 91 Since both parts of the test had to be independently satisfied and the
Tribunal determined that the transaction at issue in the underlying arbitration was not an
85
Lucchetti, para. 97; see also CMS Annulment Decision, para. 136; MTD, para. 54.
86
MCI, para. 55.
87
Fraport II, para. 45.
88
Id. at para. 44.
89
See e.g. Joy Mining, para. 50; Mitchell, para. 31; Mobil, para. 156.
90
See e.g. Jan de Nul, para. 90; Malicorp, para. 107; El Paso, para. 142; Global Trading, para. 43.
91 Award, 16:794-797.
18

investment according to Article 25 of the ICSID Convention, 92 it could not hear the merits
of the case.
52. In determining whether a transaction constitutes an “investment” within the
meaning of Article 25 of the ICSID Convention, countless tribunals have considered and
applied the well-established legal test known as the Salini test. The Tribunal in this case
correctly held that one of the Salini factors was clearly not satisfied and the others were
only tenuously satisfied. 93 On the basis of these findings, the Tribunal held that the
transaction was not an investment according to Article 25 of the ICSID Convention, and
thus it did not have jurisdiction. 94
A. An investment must qualify under both the ICSID Convention and the BIT.
53. The Award should be upheld, because the Tribunal was acting within its power to
decline jurisdiction after it held that the ICSID Convention’s definition of investment was
not satisfied. Arbitral jurisprudence and scholarly works clearly establish this requirement.
54. The ICSID Convention states that the Centre’s jurisdiction is limited to those
disputes that arise “directly out of an investment.” 95 In relevant part, Article 25 of the
ICSID Convention states that:
(1) The jurisdiction of the Centre shall extend to any legal dispute
arising directly out of an investment, between a Contracting State
(or any constituent subdivision or agency of a Contracting State
designated to the Centre by that State) and a national of another
Contracting State, which the parties to the dispute consent in
writing to submit to the Centre. . . . 96
55. Arbitral jurisprudence often refers to a “double-barreled test” for determining
whether an investment has taken place. 97 The first prong of the test is that Article 25 of the
ICSID Convention must be satisfied. The second prong is that the investment definition in
the relevant BIT must be satisfied. See Jan de Nul (stating that it is commonly understood
that jurisdiction exists if the dispute arises out of an investment within the meaning of
92
Award, 16:785.
93
Award, 16:801-805.
94
Award, 16:804-805.
95
ICSID Convention, Article 25.
96
Id.
97
See, e.g., Jan de Nul, para. 90; Malicorp, para. 107; El Paso, para. 142.
19

Article 25 of the ICSID Convention and the BIT); 98 Malicorp (stating that a “double test”
needs to be satisfied, namely the investment needs to satisfy both the applicable BIT and
the ICSID Convention); 99 El Paso (stating that it is well known that an investment must
satisfy both the ICSID Convention and the BIT); 100 Global Trading (stating that it is
“beyond argument that there are two independent parameters that must both be satisfied”
namely the ICSID Convention and the BIT). 101
56. Another way to view jurisdiction is that Article 25 of the ICSID Convention sets
the outer limits of the Centre’s jurisdiction and that the parties themselves can decide what
to consent to within those limits. In that case, the BIT definition is viewed as lex
specialis. 102 But the weight of authority establishes that even if the BIT does operate as lex
specialis, the term “investment” still has its own independent meaning according to the
ICSID Convention, which also needs to be independently satisfied. In Joy Mining, the
tribunal stated that the parties cannot define a transaction to be an investment simply by
including it in a treaty; the investment also needs to satisfy the objective requirements of
the ICSID Convention. 103 Thus, even if one views Article 25 as simply setting the outer
limits of the Centre’s jurisdiction, the investment still needs to satisfy Article 25
independently of the BIT as there is no guarantee that the BIT correctly defines investment
in a way that legally falls within the scope of Article 25. See e.g., Mobil (observing that
parties can only consent to jurisdiction within the boundaries created by Article 25 of the
ICSID Convention); 104 Mitchell (noting that the ICSID Convention has supremacy over
the BIT and States cannot simply determine any operation to be an investment under
ICSID). 105 Additionally, arbitrators such as Georges Abi-Saab have stated that the
argument that the BIT definition should be imported since the ICSID Convention does not
define investment, does not “withstand scrutiny,” because terms such as investment have
their own independent meanings that are imported into the Convention. 106 The Tribunal
98 Jan de Nul, para. 90.
99 Malicorp, para. 107.
100 El Paso, para. 142.
101 Global Trading, para. 43.
102 Fraport I, para. 305.
103 Joy Mining, para. 50.
104 Mobil, para. 156.
105 Mitchell, para. 31.
106 Abaclat Dissent, paras. 39-40.
20

eached its decision in accordance with these persuasive authorities and hence cannot be
considered to have manifestly exceeded its powers.
57. The jurisdictional analysis in the instant case mirrors that in Historical Salvors.
Like the Tribunal in the present case, the tribunal in Historical Salvors applied the double-
barreled test 107 and held that since the contract failed to meet the investment definition in
Article 25, there was no need to address the BIT definition. 108 While Claimants may point
to the fact that the Historical Salvors award was subsequently annulled, it is important to
acknowledge that the arbitration community was surprised, and to some degree dismayed,
with the level at which the ad hoc committee was engaging in the substance of the
dispute. 109 The ad hoc Committee, acting like an appellate court rather than an annulment
committee, did not respect its role as it applied its own interpretation of the law and
annulled an award that was largely supported by arbitral jurisprudence. 110 Judge Mohamed
Shahabuddeen issued a strongly worded dissenting opinion in which he advocated the
position that Article 25 of the ICSID Convention establishes certain jurisdictional outer
limits, which “consent cannot breach. 111 The annulment of Historical Salvors represents
the exception and not the rule, as the weight of authority supports the opinion that the
investment needs to satisfy both Article 25 and the BIT. In any event, application of the
double-barreled test does not constitute “manifest excess of powers” as envisioned in
Article 52(1)(b) of the ICSID Convention.
B. The Salini test is an established legal test for determining whether an
investment meets the jurisdictional requirements under the ICSID
Convention.
58. Determining whether a transaction is an investment according to Article 25 of the
ICSID Convention is fundamental to establishing the Centre’s jurisdiction. Arbitral
jurisprudence has identified the Salini test as a permissible legal test to determine whether
such an investment has taken place.
107 MHS, para. 55.
108 Id. at para. 148.
109 Aronson, p. 24.
110 See, e.g., MHS, paras. 60-61.
111 MHS Dissent, paras. 6-13.
21

59. In Salini, the tribunal held that the term “investment” infers (a) a contribution; (b)
a certain duration of performance of the contract; (c) a participation in the risks of the
transaction by the investor; and (d) a contribution to the economic development of the host
state. 112 As articulated by Schreuer, the Salini test has a fifth criteria, namely that there be
some regularity of profit and return. 113 Another variation of the Salini test that is often
cited is the version put forth in Phoenix Action where the tribunal listed the four Salini
criteria and added two more: that the assets be invested in accordance with the laws of the
host State and that the assets be invested bona fide. 114
60. Though not all of the criteria of the Salini test need to be satisfied, the failure of a
transaction to meet one of the criteria increases the emphasis and importance placed on the
other factors. For example, in Joy Mining, the tribunal acknowledged that the Salini test
application will differ in various cases and will depend on the particular fact pattern of the
individual case. 115 Similarly, the tribunal in Noble Energy noted that the Salini test is
appropriate, but that the criteria can be interrelated and should be examined together. 116
61. The Salini test has been applied for over a decade in investment-treaty arbitrations
and the widespread use of the Salini test in the arbitration community indicates that it is an
appropriate and acceptable legal test for determining whether an investment has taken
place according to Article 25 of the ICSID Convention. 117
62. At best, tribunals have expressed differences in opinion as to its applicability. A
decision based on one of two equally valid legal theories cannot amount to a manifest
excess of power.
V. THE TRIBUNAL DID NOT MANIFESTLY EXCEED ITS POWERS IN REFUSING
JURISDICTION BECAUSE THE CONTRACT DID NOT FULFILL THE SALINI
CRITERIA.
63. The Tribunal was reasonable in finding no jurisdiction in this case. Framed
properly, the question here is not whether the contract fulfilled the Salini requirements.
112 Salini, para. 52.
113 Schreuer (2001), p. 140.
114 Phoenix, para. 114.
115 Joy Mining, para. 53.
116 Noble, para. 128.
117 Jan de Nul, paras. 91-92; Saipem, para. 99; Bayindir, para. 130; Helnan, para. 77; Millicom, para. 80.
22

Rather, it is whether the Tribunal ignored or failed to take into account specific facts to
such an egregious extent that it “manifestly” exceeded its powers. In other words, Claimant
cannot contend that the tribunal failed to properly weigh the evidence in its Salini analysis
because
[a]n ad hoc committee is not a court of appeal and cannot therefore
enter, within the bounds of its limited mission, into an analysis of
the probative value of the evidence produced by the parties. 118
Claimant must show a “lack of jurisdiction . . . evident on the face of the award.” 119
Respondent merely needs to show that the tribunal acted “reasonabl[y]” or held a position
that was “tenable.” 120
64. Subject to the variations noted supra in para. 59, the Salini elements are: (I) a
contribution by the investor, (II) regularity of profits and returns, (III) significant duration,
(IV) risks assumed under the contract, and (V) a contribution to the development of the
host state. 121 Although the development criterion has faced some criticism, a recent
annulment committee decision and Professor Schreuer have reaffirmed its importance. 122
In Patrick Mitchell, the ad hoc committee made clear that in prior cases where tribunals
had rejected the factor
it was doubtless covered by the very purpose of the contracts in
question – all of which were State contracts – which had an
obvious and unquestioned impact on the development of the host
State. 123
65. Even if the Tribunal in this case ignored numerous other cases and relied solely
on these authorities, that is enough to avoid a challenge on the basis of manifest excess of
powers, because there is no stare decisis in ICSID arbitration. Additionally, given the
reputation and tenure of commentators such as Christoph Schreuer who support this
viewpoint, the Committee should at least recognize that it is a tenable position. 124
66. Max Solutions cannot show that the Tribunal failed to take into account important
facts in the negotiations between the parties. Max Solution’s investment was a mere
118
Rumeli, para. 96.
119
Id.
120
Id. para. 96
121
See generally, Salini; Phoenix.
122
Patrick Mitchell para. 30; Schreuer, p.171-174.
123
Patrick Mitchell, para. 30.
124
See, Schreuer (2009) p. 171-174.
23

service contract that was not intended to contribute to economic development and even if it
was, the project was not significant enough to satisfy this requirement. The only way the
Award on jurisdiction can be annulled is through a re-evaluation of the substance of the
dispute, but such an evaluation lies beyond the scope and role of the annulment
committee. 125
A. The Tribunal did not manifestly exceed its powers in its analysis of the
economic development criterion, because it took into account all the important
facts and arguments.
67. Under the manifest standard, the Committee merely needs to find that the
Tribunal evaluated competing arguments and analyzed the evidence. 126 In finding that
there was no contribution to economic development, the Tribunal made three crucial
findings that were fully informed. First, the Tribunal reasonably focused on actual results
in finding that “no significant economic development has as yet occurred.” 127 Second, the
Tribunal was correct in dismissing the idea that Max Solutions cannot take credit for the
work done by the disease. Third, the Tribunal considered the effect of the contract with
Max Solutions on the GASP and reached the tenable conclusion that this was not a
contribution to economic development, even if intentions are relevant.
i. The Tribunal was reasonable when it found that no significant
economic development had as yet occurred.
68. In order to satisfy the economic development criterion, a party must show that its
contribution has, or will in the future, contribute(d) to economic growth. 128 In previous
cases, parties have fulfilled this requirement by showing that funds generated through an
investment have become available to the host state. 129 Other parties have failed to meet this
requirement if they could not show that future development was assured because a project
125 Schreuer, Three Generations, p. 42.
126 Rumeli para. 78, 96.
127 Award, 16: 781-783.
128 See generally e.g., Salini; Toto Custruzioni; Joy Mining.
129 Abaclat, para. 378.
24

could not “be compared with the concept of ‘contrats de développement económique.” 130
In the instant case, Max Solutions cannot show a contract comparable to the “contrats de
developpement economique.” This means that, on its face, the Contract does not have a
substantial link to the economic development of Bela Rano.
69. Max Solutions argues that it is responsible for Bela Rano’s hosting of the GASP.
But, they cannot take credit for a deal that was reached because of Bela Rano’s
commitment to displace the Frogs. 131 The absurdity of Max Solutions’ claim to take credit
for the GASP can be illustrated through a hypothetical. Imagine a contract between two
parties for the sale of a home. Before signing the contract, the purchaser asks the seller to
hire an exterminator to take care of the rat problem in the house. Just as the exterminator
lays the first mouse-trap, he finds the rat has passed away. Can the exterminator take credit
for the home sale? Of course not. They merely provided a service that can be undertaken
by many other parties.
70. Even assuming the faulty premise that Max Solutions was responsible for the
GASP, the Tribunal had the power to hold that the GASP, by themselves, did not have a
substantial effect on the economy of Bela Rano on the scale of the construction of
highways, financial infrastructure, the dredging of the Suez Canal, or tourism
infrastructure. 132 This was a reasonable position. In most cases where the economic
development requirement is fulfilled, tribunals find that a company is engaging in activities
that usually “fall under the tasks to be carried out by the State or other public
authorities” 133 as in Salini, where the company was building infrastructure, or in SGS,
where the investor controlled the Philippines’ custom houses. 134 This kind of activity is not
present in this case. Moreover, unlike in Abaclat, Claimant in the present case cannot show
that Bela Rano’s finances have been improved because of the Contract. Max Solutions
provided a mere services contract 135 unrelated to any activities that are usually carried out
by the country. This is easily distinguishable from the infrastructure projects in Salini,
130 Joy Mining, para. 57.
131 UF, 1:30-35.
132 Salini; CSOB; Helnan.
133 Salini, para. 57.
134 See generally, SGS.
135 Award, 14:694.
25

Bayindir, and other cases. At the very least, the Tribunal held a tenable position and for
that reason it did not manifestly exceed its powers.
71. Moreover, even if Max Solutions enabled the GASP to be held on Bela Rano,
they cannot claim responsibility for the new hotels and resorts that were built. Perhaps
those investors are entitled to ICSID protection, but not Max Solutions who provided a
mere service to remove Frogs.
72. Many ICSID cases and commentators have argued that intentions, rather than
actual results (like the GASP in this case), are the relevant starting point in a ‘contribution
to economic development’ analysis. 136 When tribunals and commentators argue in favor of
this position, however, they are referring to cases in which the parties completed a contract
but the project was not profitable. 137 For example, Emmanuel Gaillard explains this
position by referring to a case in which an oil field exploration did not lead to any oil
discoveries. 138 That is not our case. In the present case, the disease, rather than Max
Solutions, exterminated 95% of the Frogs. Max Solutions was never in a position to
complete the Contract, because of the Frog disease. The Tribunal reasonably found, based
on this fact, that Max Solutions could not take credit for eliminating the Frog-problem.
More specifically, the Tribunal evaluated the effects of the disease as well as the possible
future impact on economic growth, and simply found that the evidence was insufficient to
find a contribution to Bela Rano’s development within the meaning of the Salini criterion.
In sum,
. . . the Tribunal was merely expressing its failure to be convinced
by the evidence put before it
and that is its prerogative. 139 The ad hoc Committee does not have the power to re-evaluate
the evidence and decide differently. The Committee may only annul the Tribunal’s Award
if it finds that the Tribunal failed to take an important factor into account. Here, they did
not. The Tribunal did not deny jurisdiction because Max Solution’s project failed, but
136 Consorzio, para. 13; Saba Fakes, para. 111; G. Delaume, 'Le Centre international pour le règlement des
différends relatifs aux investissements (CIRDI)', Journal de droit international (1982) 775, at 801; Emmanuel
Gaillard, “Identify or define? Reflections on the evolution of the concept of investment in ICSID practice,” in
International Investment Law for the 21st Century.
137 Phoenix, para. 133.
138 Emmanuel Gaillard, “Identify or define? Reflections on the evolution of the concept of investment in
ICSID practice,” in International Investment Law for the 21st Century. P. 16.
139 Rumeli, para. 97
26

ather because there was no contribution to economic development given that they never
fully performed and never could. The disease did the work they contracted to do.
73. Finally, the Committee should take note that tribunals seem to consider intentions
only when there are no available results. 140 For example, in Toto Costruzioni, the tribunal
surmised that a motorway under construction would in the future facilitate transportation
as the parties intended. 141 The tribunal did so, however, because the actual results were not
available yet. Where results are available, as they are here, it is the Tribunal’s prerogative
to analyze the evidence before it. Intentions become relevant only when results are far in
the future or unavailable. Looking at actual results when they are available, rather than at
mere intentions, is not a manifest disregard of the tribunal’s powers.
ii. The tribunal correctly found that Max Solutions cannot take credit for the
work done by the disease, because a party cannot contribute to a state’s
economic development where the purpose of the contract becomes moot.
74. The Tribunal found that
[t]he Claimant cannot take credit for potential economic benefits
that will be generated whether or not it undertakes its work…
[because] the frogs were being ‘removed’ by nature. 142
In doing so, it was embracing the reasonable position that the economic development
requirement cannot be fulfilled by a contractor who never fully, or even substantially,
performed due to an intervening force. The Tribunal may rely on international law
doctrines that support this approach. The doctrine of hardship, for example, excuses
performance if “the occurrence of events fundamentally alters the equilibrium of the
contract either because the cost of a party's performance has increased or because the value
of the performance a party receives has diminished.” 143 This doctrine is embraced by
UNIDROIT and by the ICC, which adopted a hardship clause in 2003. 144 Even in Salini
there was mention of the risks of unforeseeable incidents that “. . . [do] not give rise to a
140 See, e.g. Salini; L.E.S.I.; Joy Mining; Jan de Nul; Bayindir; CSOB; Patrick Mitchell
141 Toto Custruzioni, para. 86.
142 Award, 15-16: 767-774.
143 UNIDROIT Art. 6.2.2.
144 ICC Hardship Clause 2003
27

ight to compensation.” 145 This doctrine affects the fundamental Salini question of whether
Max Solutions can take credit for the effects of the disease.
75. In the present case, the Tribunal embraced the reasonable position that the disease
constituted an event that ‘fundamentally altered the equilibrium of the contract’ because
the value of Max Solution’s performance became zero. The purpose of the Contract—to
remove the Frogs—became moot because of the disease. Given that the disease was
unforeseeable, 146 Max Solutions cannot take advantage of its effect. The disease gave rise
to a hardship on the part of Bela Rano because they were no longer receiving any benefits
from Max Solutions and yet the company was still removing the healthy Frogs. 147
Therefore, this doctrine strengthens the tribunal’s reasoning and shows that they held a
tenable position.
B. The Tribunal properly found that the remaining Salini requirements were
only met tenuously. Their ruling clearly does not constitute a manifest
disregard of its powers.
In order to “manifestly” exceed its powers in the interpretation of the Salini
requirements, a tribunal must “altogether fail to take into account” an important factor in
the negotiation between the parties and elevate to jurisdictional conditions criteria which
prior cases show is not necessary. 148 In this case the Tribunal did neither. The Tribunal
took into account all of the evidence that the parties presented, including the fact that the
Contract was a “services contract” that provided substantial know-how, and evaluated
these facts in accordance with prior Salini cases. The Committee should therefore find that
the Tribunal did not manifestly exceed its powers.
145 Salini, para. 55.
146 UF, 2: 75-80.
147 UF, 2: 85.
148 MHS II, para. 80.
i. The tribunal correctly found that a mere services contract was a
substantial contribution only in a “tenuous” way.
28

76. In general, a party makes a substantial contribution when it provides significant
resources to a country. This includes, for example, the actual construction of a highway,
like in Toto Costruzioni, or infrastructure, like the dredging of the Suez Canal Jan de
Nul. 149 It is difficult for services contracts to meet this requirement. The tribunal in Joy
Mining rejected a contract that provided mere services even though it involved activities
such as
engineering and design, production and stocking of spare parts . . .
supervision of installation, inspection . . . training and technical
assistance. 150
The tribunal found that these activities did not constitute a substantial contribution because
the contract provided “entirely normal commercial terms” and the activities constituted “a
normal activity of the company.” 151 If the contract in Joy Mining was found not to be a
substantial contribution, then finding that Max Solution’s activities only met the
requirement “tenuously” is reasonable.
77. The Tribunal in the present case held that
it is far from clear that [Max Solution’s] contribution can
genuinely be viewed as ‘substantial’, except from Max Solutions’
own perspective. 152
In its analysis, the Tribunal took into account and considered both parties’ positions. It
considered that Max Solutions provided a services contract, 153 which included the
provision of personnel and know-how. 154 Nonetheless, it concluded that the criterion had
only been met tenuously. This is not a manifest excess of powers because the Tribunal
considered all the evidence before it. To ask the ad hoc Committee to reject the analysis
employed by the tribunal is akin to asking the Committee to act like a court of appeals.
78. SGS, Romak, and other cases where a services contract was found to be a
substantial contribution can be distinguished because they involved activities that required
substantial investment directly related to the sovereignty of the countries and over a large
149
See generally, Toto Costruzioni; Jan de Nul.
150
Jan de Nul, para. 37.
151
Id. para. 56.
152
Award, 14: 694-696.
153
Award, 14: 694-710.
154 Id.
29

period of time. 155 Here, Max Solutions did not need to invest one cent in a long-term
project. Its expenditures were short term and limited to personnel and materials. 156 Thus,
the Tribunal was “reasonable” in finding that this was tenuous.
ii. The Tribunal did not manifestly exceed its powers in finding that Max
Solutions only tenuously fulfilled the regularity of profits requirement.
79. With regards to regularity of profit and return, the Tribunal found that the
expectation of being paid on a “bounty” basis meant that the requirement was only met
tenuously. 157 The Tribunal was at the very least “reasonable” because in every single case
that has found this criterion to have been fulfilled, there has been “regular remuneration”
rather than bounty payments. 158 In Helnan, for instance, the claimants operated an
international hotel for 26 years over which they made high profits and had regular
income. 159 Most ICSID cases are similar to Helnan: there is typically nothing resembling
bounty payments. 160
80. Claimant may argue that expectations of profits from pharmaceutical companies
and from the sale of the Sireno Kanto’s songs should also be taken into account. This
argument fails, however, because neither form of income was contemplated by the
Contract. When ICSID tribunals evaluate a contract, they do not focus on possible
downstream income, but rather on the profits and returns provided by the contract in
question. Moreover, this argument is again based on the merits of the underlying dispute
and its consideration therefore lies beyond the scope of the ad hoc Committee’s proper
role.
iii. Max Solutions did not take sufficient risks in the sense envisioned by the
Salini criteria.
155
See, Romak.
156
Award, 14: 695-670.
157
Award, 14: 678-690.
158
Helnan, para. 77.
159
Id.
160
See, e.g., Salini; L.E.S.I.; Joy Mining; Jan de Nul; Bayindir; CSOB; Patrick Mitchell;
30

81. The Tribunal found that “the risk entailed in ‘bounty’ payment may be a regular
commercial risk” and thus this criterion was only satisfied tenuously. 161 The Tribunal also
recognized that Max Solutions took other substantive risks like contracting under a tight
schedule and an inflexible deadline. 162 Therefore, the Tribunal clearly took all the evidence
available into account and then exercised its power to decide that this was a “regular
commercial risk.” Even an analysis on the merits would show no substantial risks of the
type envisioned in the Salini test. Bela Rano is a politically safe place, 163 the Sireno Kanto
were plentiful and easy to catch, 164 and Max Solutions was given the freedom to do with
the Frogs as they wished so long as the Frogs were treated humanely. 165 This is not a
contract riddled with risks. Moreover, the contract’s performance lasted less than 2 years
and was seen as a one-off event. Therefore, the Tribunal was reasonable in finding this
criterion was only met tenuously.
C. Regardless of the application of the Salini criteria, Max Solutions’ transaction
also failed to satisfy the BIT definition of investment.
82. The second prong of the double-barreled test involves determining whether the
operation was an investment according to the BIT. Because the operation failed to meet the
standard of an investment according to the Salini test and hence failed to be an investment
under Article 25 of the ICSID Convention, the BIT definition need not be considered.
However, even if the BIT were considered, the Tribunal would still find that the
transaction was not an investment.
83. Article 1 of the BIT defines investment as follows:
161 Award, 15: 738-739.
162 Award, 15: 738-743.
163 UF, 1: 13.
164 UF, 1: 15-18.
165 UF, 1: 49-50.
166 Award, 11:548-551
every asset that an investor owns or controls, directly or indirectly,
that has the characteristics of an investment, including such
characteristics as the commitment of capital or other resources, the
expectation of gain or profit, or the assumption of risk. 166
31

84. The BIT’s definition of investment outlines many of the same conditions as the
Salini test. An investment requires a commitment of capital, which is analogous to the first
Salini criterion; expectation of gain or profit, which is analogous to the requirement
articulated by Schreuer; and assumption of risk, which is analogous to the third Salini
criterion. It is unclear from the plain reading of the definition whether these are necessary
conditions. If they are necessary, then the Tribunal’s analysis regarding the Salini test
confirms that the operation was not an investment.
85. However, even if the definition simply provides illustrative characteristics that
would be sufficient, but not necessary, for a transaction to qualify as an investment, the
operation would still fail to be an investment because there is no asset at issue. The BIT
definition clearly refers to an “asset that an investor owns or controls, directly or
indirectly” (emphasis added) - in the present case there is no asset.
86. Typically investments take the form of concession agreements, 167 loan
agreements, 168 construction agreements, 169 or shares held by majority, minority or even
indirect shareholders. 170 All of those arrangements have in common that they involve
assets; the investor’s have made financial investments in operations taking place within the
host State. Max Solutions’ Contract with Bela Rano was for the removal of Frogs and the
compensation was on a bounty basis. Max Solutions had no assets invested in Bela Rano,
except for whatever physical set-up was required to identify and remove the Frogs. In
essence, this was a sales contract for the purchase of the Frogs. Generally, one-off sales
contracts are not considered investments unless the BIT unambiguously states otherwise.
For instance, the tribunal in Romak held that one-off sales contracts are not normally
considered investments, but the tribunal also noted that States can opt to contract around
this if they do so unequivocally. 171 Bela Rano did not do so.
87. Thus, even under the BIT, there still was no investment and the Tribunal was
correct to reject jurisdiction.
167 See CMS, para. 65.
168 See CSOB, para. 77.
169 See Salini, para. 45.
170 See Camuzzi, para. 81.
171 Romak, para. 205.
32

VI. THE TRIBUNAL PROPERLY ADMITTED DR. RANAPUER’S EXPERT REPORT INTO
EVIDENCE.
88. The Committee may annul the Award pursuant to Article 52(1)(d) of the ICSID
Convention if it finds a “serious departure from a fundamental rule of procedure”
(emphasis added). This ground is concerned with the integrity and fairness of the arbitral
process and excludes the tribunal’s failure to observe ordinary arbitration rules. 172 Ad hoc
committees have thus consistently held that “not every departure from a rule of procedure
justifies annulment.” 173 In fact, only two annulment requests have successfully
demonstrated an ICSID tribunal’s serious departure from a fundamental rule of procedure
in the past. 174 In order to amount to a ground for annulment, the departure from a rule of
procedure must be serious and the rule must be fundamental. 175
89. None of the factual findings in this case support a violation of a particular
fundamental rule of procedure. Annulment requests often plead the lack of impartiality,
violation of the right to be heard, absence or abuse of deliberation among the arbitrators,
and violation of the rules of evidence. 176 Even if one were to accept the allegation that a
fundamental rule of procedure has been violated, the alleged violations did not constitute a
“serious departure.”
A. Consideration of Dr. Ranapuer’s Expert Report did not violate Claimant’s
right to be heard.
90. The right to cross-examine the author of an expert report used in the arbitration is
not a fundamental rule of procedure in itself. However, the principle that both sides must
be heard on all issues affecting their legal position is. 177 Not excluding the Expert Report
despite Dr. Ranapuer’s unavailability to be cross-examined did not deny Claimant’s right
to be heard.
172
ICSID Background Paper, para. 99.
173
Scherer, para. 12.03, quoting MINE, para. 4.06.
174
Id.; see generally, Amco II; Fraport II.
175
Schreuer (2001), paras. 227-228.
176
Id. para. 234.
177
Id. at p. 976. See esp. ICSID Arbitration Rules, 20-21, 27, 31-32, 37, 39, 40-42, 44, 49, 50, 54, 55.
33

91. Claimant had every opportunity to express itself and present its case. In Fraport,
the Committee concluded that the tribunal ought not to have considered the new evidence
in its deliberations without granting both parties the opportunity to make submissions. 178
The ad hoc committee annulled the award because the tribunal deprived Fraport the
opportunity to rebut Philippines’ claim that the prosecutor did not have the evidence that
was before the tribunal. 179 The Tribunal’s decision to consider Dr. Ranapuer’s Expert
Report despite Dr. Ranapuer’s unavailability to be cross-examined is distinguishable from
the case in Fraport because Max Solutions had the opportunity to request that the Expert
Report be excluded and to submit additional evidence.
92. To be certain, the Tribunal must afford both parties the opportunity to make
submissions if new evidence is received and considered by the Tribunal to be relevant. The
Tribunal did exactly so. Unlike the precedent annulments based on violations of the right
to be heard, Claimant had sufficient opportunities to submit new evidence, including
additional expert reports. Claimant enjoyed its right to be heard, consisting of the
opportunity to adduce evidence and argument on its claim and in rebuttal of those of its
opponents. 180 The Tribunal’s decision to rely on the Expert Report was made only after
taking in all the evidence from both parties as well as having received the Claimant’s
request to exclude the report. As the Tribunal is the ultimate judge of the probative
evidence, the Committee lacks to the power to weigh the evidence brought before the
Tribunal. 181
B. The Tribunal did not seriously departure from a fundamental rule of
procedure regarding evidence by considering Dr. Ranapuer’s Expert Report.
93. Although Articles 5 and 8 of the Bela Rano Model Rules provide rules on the
taking of evidence with regard to evidentiary hearing and party-appointed experts, they are
neither “fundamental” within the meaning of 52(1)(d) nor has the Tribunal committed a
“serious departure” from them.
94. Article 8.1 of the Bela Rano Model Rules states that
178 Fraport II, para. 231-234.
179 Id. para. 218, 234.
180 Scherer, para. 12.30. See also, Fraport II, para. 186, citing History, pp. 271, 423, 480, 517.
181 Rumeli, para. 96. See also, ICSID Arbitration Rule 34(1).
34

[e]ach witness (which term includes, for the purposes of this
Article, witnesses of fact and any experts) shall . . . appear for
testimony at the Evidentiary Hearing if such person’s appearance
has been requested by any Party or by the Arbitral Tribunal. 182
In turn, Article 5.5 of the Bela Rano Model Rules provides that if a party-appointed expert
whose appearance has been requested pursuant to Article 8.1 fails
without a valid reason to appear for testimony at an Evidentiary
Hearing, the Arbitral Tribunal shall disregard any Expert Report by
that Party-Appointed Expert related to that Evidentiary Hearing
unless, in exceptional circumstances, the Arbitral Tribunal decides
otherwise. 183
95. First, this procedural rule is not fundamental. Article 52(1)(d) does not concern
the Tribunal’s failure to observe ordinary arbitration rules, 184 but stems from the principle
of due process. 185 Proof of procedural impropriety in the proceedings before the tribunal,
therefore, is not sufficient to meet the threshold of Article 52(1)(d). 186
96. Second, even if this provision were a fundamental procedural rule, the Tribunal’s
proceedings cannot be deemed a serious departure from it. Dr. Ranapuer had a valid reason
to decline participation in the hearing. He decided not to participate in the arbitration after
joining Wilderness because he did not want to implicitly approve Max Solutions’ treatment
of the Sireno Kanto, which he believed his participation would signify. An academic’s
concern about managing his public and professional image is a legitimate reason to decline
participation in a hearing. Even if his reasons were not valid, Article 5.5 of the Bela Rano
Model Rules grant the Arbitral Tribunal the ultimate authority to assess whether the
circumstance allows the admission of an expert report without the expert’s testimony at the
hearing. Additionally, Rule 34(1) provides that the Tribunal shall be the judge of the
admissibility of any evidence. 187 The Tribunal determined that Dr. Ranapuer’s report was
the only existing source on the matter and properly admitted Dr. Ranapuer’s report into
evidence.
182
Bela Rano Model Rules, Article 8.1, which is identical to IBA Rules, Article 8.1. UF, 4:165.
183
Id. Article 5.5.
184
ICSID Background Paper, para. 99.
185
Scherer, paras. 12.01, 12.02, 12.03.
186
Schreuer (2001), paras. 227-228.
187
ICSID Arbitration Rule 34(1). See also, Schreuer (2001), para. 256.
35

C. Consideration of Dr. Ranapuer’s Expert Report did not impair the Tribunal’s
impartiality.
97. Claimant may allege that the Tribunal’s failure to exclude Dr. Ranapuer’s Expert
Report despite their request to reject it constituted a denial of equal treatment. If the
Tribunal had failed to consider Claimant’s request to exclude the Expert Report, an
examination into a serious procedural defect may be warranted. However, the Tribunal
deliberated on the Claimant’s request and concluded that the expert report should be
utilized despite Dr. Ranapuer’s unavailability at the hearing. In doing so, the Tribunal
stated legitimate reasons: Dr. Ranapuer is one of only three scientists in the world who
have a detailed knowledge of Sireno Kanto and that his Expert Report provided
information available from no other source. There is no evidence of unequal treatment of
the parties and the Tribunal gave sufficient reasons for its reliance on the Expert Report. It
is not the role of the Committee to evaluate the substance of the Tribunal’s decision as
52(1)(d) is intended to protect each party’s due process rights.
36

REQUEST FOR RELIEF
98. For the aforementioned reasons, Respondent respectfully asks this ad hoc
Committee to:
(1) Deny Claimant’s request for annulment under Article 52(1)(a);
(2) Deny Claimant’s request for annulment under Article 52(1)(b);
(3) Deny Claimant’s request for annulment under Article 52(1)(d); and
(4) Uphold the Tribunal’s Award.
Respectfully submitted on 27 September 2012
AGO
On behalf of Respondent
Bela Rano Insularo
37