2016 FDI MOOT

Africa Regional Rounds

SKELETAL BRIEF FOR CLAIMANT

(Claimant)

v.

REPUBLIC OF OCEANIA

(Respondent)
 BASDEVANT TEAM.

1. JURISDICTION:

a. The claimant is an investor pursuant to article 1.2 of the Euroasia BIT;

i. It is established international law that an individual’s nationality is determined

ii. The tribunal should depend on the definition of “investor’ within the BIT which
exclusively rests on nationality and does not attach any additional requirements or
grounds of disqualification.

iii. Thus, the question of nationality is a question of Euroasian domestic laws

b. The claimant was not required to comply with the pre-arbitral steps as provided
in Article 9 of the Euroasia BIT, prior to bringing his claims before the tribunal;

(1) There was no obligation on the parties to comply with the provision for the
Domestic remedies. The language of the provision was permissive and optional
rather than obligatory and compulsory. This constitutes an implied waiver on the
part of the parties.

(2) In any case the requirement was futile. The Apotex case, propositioned the “the
‘obvious futility’ threshold which “requires an actual unavailability of recourse
or recourse that is proven to be ‘manifestly ineffective’.1

(a) Unavailability.

i. The executive order explicitly prohibited any claims pursuant to its application.
Section 9 of the order reads;

“This order is not intended to, and does not, create any right or benefit,
substantive or procedural, enforceable at law by any party against the Republic of
Oceania.

(b) Manifestly ineffective.

i. There are neither competent relief nor a genuine prospect of it offered by the
domestic courts.

1
. Apotex, Inc. v. United States of Amerimerica (ICSID Case No. ARB(AF) 12/1)

1
 BASDEVANT TEAM.

ii. The judiciary is biased as an organ of the state that issued the executive order and
insists that the claimant is still an Eastasian.

iii. There is existing prejudice against the claimant in the form of criminal proceeding
against the claimant.

iv. Any insistence that the claimant should have pursued the local courts is
unrealistic. The domestic courts lack the impartiality and flexibility of the
International tribunals.

(c) MFN Clause.

i. The MFN clause should be interpreted as giving the claimant the benefit of the
Eastasia BIT’s more favourable dispute resolution process.2

c. The claimant is entitled to invoke Article 8 of the Eastasia BIT pursuant to Article 3
of the Euroasia BIT.

i. The clear and unambiguous MFN provision stipulates that the clause shall relate
to ‘investment matters regulated by this agreement’. (Article 3.1)

ii. Any interpretation should not be allowed to override the purpose and wording of
the clause by restricting the scope of the word “treatment”.

iii. The exceptions listed in the BIT to be covered by the MFN treatment do not bar
this invocation.(Article 3.2)

2. ADMISSIBILITY & MERITS:

a. Claimant made a protected investment in terms of Article 1.1 of the Eastasia BIT.

i. An investment made “in accordance with host state law” need only comply with
“domestic laws governing the admission of investments in the host State” In other
words, the investment need not comply with “domestic laws that are unrelated to
the very nature of investment regulation”.3 The acquisition of the Rocket Bomb

2
. Maffezini v Spain (ICSID Case No ARB/97/7)

3
. Saba Fakes v. Republic of Turkey, ICSID Case No. ARB/07/20, award (July 14, 2010)

2
 BASDEVANT TEAM.

shares suffices to legitimise the investment made by the claimant.

ii. Article 1.1 under the Euroasian BIT should not be interpreted in isolation but
within the context of the BIT as guided by the preamble which emphasises the
creation and maintenance of “favourable and stable conditions for investments’
and stimulating business initiatives with investors.

iii. Based on the fair and equitable standard in Article 2.2, the Respondent created a
legitimate expectation for Claimant that his investment was, indeed, made in
accordance with the law and, in the event of breach, would be entitled to treaty
protection. Professor Walde emphasised that the investor’s actions must be based
on affirmative action of the state.4

iv. A high threshold should be applied on the respondent’s allegation of corruption

v. The tribunals should apply the Flexible Clean Hands Doctrine, which allows a
tribunal to find that a corrupt investor’s claim is admissible under certain
circumstances where the host state is guilty of Participation and Condonation. 5

vi. The tribunal exercises its discretion to determine:

(a) the conduct of both parties;

(b) the seriousness of the illegality;

(c) whether refusing to allow the claim would act as a deterrent to others from entering
into similar schemes; and

(d) whether denying relief would be proportionate to the illegality involved.6

vii. In the La Grand case the Clean Hands Doctrine was held not to apply against
Germany, since the US’s breach of its international obligations was more
significant than Germany’s.7 Similarly in the Avena Case, it was held that
Mexico’s conduct ‘”was not beyond reproach”, and “would not constitute a

4
. (International Thunderbird Gaming Corporation v. Mexico, UNCITRAL (NAFTA) 26/01/06,2006)

5
. Kevin Lim, “Upholding Corrupt Investors’ Claims Against Complicit or Compliant Host States — Where Angels
Should Not Fear to Tread), (2012) Yearbook on International Investment Law & Policy 2011/2012.

6
. ibid
7
. LaGrand ( Germany v. United States of America) [2001] ICJ Reports.

3
 BASDEVANT TEAM.

ground of objection to the admissibility of Mexico's claim8.”

viii. In light of the doctrine of state responsibility, states have to bear the
consequences of corruption and assume full responsibility for the actions of their
organs. Injustice will be dealt if this the respondent is granted absolution for the
mistreatment of the claimant and his investment.

b. The claimant’s investment was expropriated by the respondent.

i. Expropriation is interference with the use of property which has the effect of
depriving the owner, in whole or in significant part, or the use or reasonably-to-
be-expected economic benefit of property even if not necessarily to the obvious
benefit of the host State. 9This was the effect of the Executive Order by the,
Respondent on the claimant.

ii. Respondent’s actions amount to indirect expropriation since they produced the
effect of depriving Claimant of substantial benefits from, and use of his
investment.

iii. Respondent’s expropriation was not for a public purpose, was in a discriminatory
manner, and was not on payment of adequate compensation.

iv. The conduct of the respondent contravenes the Fair and Equitable Treatment
under Article 2(2) Of the Euroasia-Oceania -Bit.

v. The instantaneous order, without provisions for “the payment of prompt, adequate
and effective compensation is unreasonable and unfair.

vi. The unilateral and arbitrary execution of the order with an annunciation of any
right to participate or pursue legal action contravenes due process of law.

vii. The differential treatment of the claimant was in bad faith and lacked
proportionality, tantamount to unjust discrimination.

viii. The respondent failed to respect Claimant’s legitimate expectations by

8
. Mexico v. United States of America [2004] ICJ Reports.
9
. Metalclad Corporation v United Mexican States, ICSID Case No. ARB(AF)/97/1, Award of August 30, 2000, para. 103.

4
 BASDEVANT TEAM.

Respondent's legal and business framework.

c. The damage suffered by the claimant is solely attributable to the respondent.

i. A responsible state is obliged to make full reparation for the injury “caused by the
intentionally wrongful act of a State.”10

ii. There is a legitimate causal link between the state’s conduct and the injury caused
to the claimant.

iii. The Commentaries to the ILC Draft Articles provide that;

“... [the principle of contributory fault] allows to be taken into account only those
actions or omissions which can be considered as wilful or negligent, i.e. which
manifest a lack of due care on the part of the victim of the breach for his or her own
property or rights […] It follows that something which is not wilful, negligent or
otherwise culpable falls out with the principle ...”11

iv. The claimant did not contribute to the damage. His business ties with the
Euroasian government can in no way be described as careless or imprudent.

10
. Draft Articles on Responsibility of States for Internationally Wrongful Acts, with Commentaries 2001,
United Nations 2008. Article 39.

11
. ibid, 54.