Arbitration — Parties to agreement — Request submitted by persons other than a party to valid arbitration agreement

Applicable law — Agreement of parties as to law applicable to corporate transactions and governance — Agreement consonant with Article 42(1) of icsid Convention

Jurisdiction — Request for arbitration instituted by persons not competent — Lack of authority or capacity to act on behalf of Claimant — No board of directors or shareholder ratification — Absence of documentary evidence relating to authority or representation

Parties — Request for arbitration instituted by persons not competent — Request submitted by persons other than a party to valid arbitration agreement — Lack of authority or capacity to act on behalf of Claimant — No board of directors or shareholder ratification — Absence of documentary evidence relating to authority or representation

Jurisdiction — Competence of icsid and the Tribunal — Article 25 prerequisites of icsid competence — Legal dispute arising out of investment — Dispute arising between Contracting State and national of another Contracting State — Consent to submit dispute to Centre

Non-appearance — Absence of representation on the part of Zaire — Oral phase inevitable — Issues of competence and merits joined

Treaties — Alleged violation of 1984 Zaire–US Bilateral Investment Agreement — Requirement of consultation and negotiation

State responsibility — Obligation of protection and security of investment — Measures necessary to ensure full enjoyment of rights — Zaire responsible for inability to prevent consequences

Expropriation — No expropriation found — Failure to respect minimum standard of treatment — Soldiers acted individually — Armed forces not found to have expropriated property

Compensation — Method of calculating compensation — What is plausible and realistic in the circumstances — Not reasonable to expect same levels of compensation as in Switzerland or Germany

Applicable law — Bilateral investment treaty — Interpretation of applicable domestic legislation

Municipal law — Interpretation — Definition of “investor” — Date of entry into force — Retroactive application of substantial and procedural provisions — Succession of new legislation providing for different methods of dispute settlement — Unilateral consent to icsid jurisdiction by Contracting State in its national laws — Consent effective when claim filed

Jurisdiction — Consent — Unilateral consent given by Contracting State in its law — Requirement of prior good faith effort to settle dispute amicably

Procedure — Ruling allowing parties four weeks to file post-hearing memoranda, but no new documents to be submitted — Party’s attempt to submit additional correspondence rejected

Procedure — Witness testimony based on forged documents — Testimony allowed but Tribunal to assess probative value after cross-examination — Objections to evidence not relevant to merits of claim

Procedure — Burden of proof on Claimant — Articles 33 to 37 of the icsid Convention — Evidentiary value of unsworn witness statement

Foreign investment — Burden of proof — Broad definition in the applicable law — Sources of finance irrelevant for this purpose

Expropriation — Indirect taking or measure of tantamount effect — Compulsory transfer of property rights — Privatization of farming co-operatives — Government decision in principle to transfer and privatize land — Invasion of property by villagers while decision pending — Alleged damage by animals and occupation leading to failure of joint venture — Dissolution of joint venture — Combined impact of incidents did not constitute expropriation

Costs — Claim not frivolous in view of the difficult issues of fact and law — No order for costs

Jurisdiction — Consent to arbitrate — icsid arbitration clauses in agreements between government and company — Company did not establish its consent to icsid jurisdiction — Institution of domestic court proceedings did not amount to consent to jurisdiction — Participation of Attorney-General and references to Agreement do not amount to consent

Nationality — Requesting parties met nationality requirements — No agreement that requesting parties should be treated as nationals of a Contracting State

Parties — Relation between Federation and constituent subdivision or agency — Proper party to Agreement was nia and not Federation — No designation of nia as proper party under Article 25(1) of icsid Convention — Substitution of Federation not appropriate

Procedure — Failure to name correct party to proceedings — No formal designation of nia under Article 25(1) — No relevant documentation furnished to satisfy essential requirements to demonstrate consent

Applicable law — Internal or international law — No requirement that agreement as to applicable law be in writing or express — Article 42(1) of icsid Convention applies in absence of agreement — Internal law and rules of international law applicable — Substance of internal law consistent with international law — International law prevails if any inconsistency — International law controlling in light of parties’ divergent positions

Expropriation — Purpose of expropriation does not alter legal character of taking — State’s obligation to pay adequate compensation remains — Determination of date of expropriation — Date on which “interference” deprive downer of rights — Practical and economic use of property irretrievably lost — Property ceased to have resale value

Valuation — Fair market value calculated by reference to “highest and best use” — Factors arising after date of expropriation excluded — Tribunal cannot perform appraisal after twenty years — Requirement to make assessment of parties’ conflicting valuations — Reasonable and air approximation of value

Compensation — Amount should reflect additional sum money would have earnedhadit been reinvested at generally prevailing rates of interest

Interest — No uniform rule on determination of interest — Product of exercise of judgment in light of circumstances and considerations of fairness — Amount should reflect additional sum money would have earned had it been reinvested at generally prevailing rates of interest — Not purpose of compound interest to attribute blame or punish delay in compensation — Compound interest ensures compensation is appropriate — Simple interest inappropriate when owner unable to use or sell property over many years — Full compound interest inappropriate when owner remains in possession and is able to exploit to limited extent

Interpretation — Article 25(1) of the icsid Convention — Characterization of a legal dispute — Conflict of rights vs. conflict of interests — Question of legal rights and obligations in connection with investment — Characterization of “investment” — Loans and promissory notes as investment — Purchase and assignment of promissory notes foreseen

Treaties — Bilateral investment treaty — Investment broadly defined under treaty — Standard approach of bilateral and multilateral investment treaties — Practice of State Party consistent in relation to its other bilateral and multilateral investment treaties — State Party has not exercised right under Article 25(1) of the icsid Convention to exclude any class of investment

Municipal law — Promissory notes issued in compliance with Commercial Code and Law on Public Credit — Payments authorized at highest level of government — Budgetary appropriation by Congress to finance payments

Jurisdiction — icsid jurisdiction specifically provided for in bilateral investment treaty — Sources of applicable law including internal law, the Investment Agreement, general principles of international law

State responsibility — nafta Article 201(2) — State internationally responsible for acts of local or provincial governments — Exemptions of Article 1108(1) do not extend to states or local governments

Expropriation — nafta Article 1105 — Requirement of fair and equitable treatment — Duty to ensure “transparency” — nafta Article 1110 — Prohibition of expropriation — Deliberate and acknowledged takings — Applies equally to outright seizure or covert or incidental interference — Effect to deprive owner of use or expected benefit of property — Measure tantamount to expropriation — Permitting or tolerating conduct of municipality — Participation or acquiescence in deprivation of rights — Indirect expropriation — Reliance on representations of federal government — Absence of substantive basis for denial of permit — Subsequent Ecological Decree barring operation of landfill

Municipal law — Limited extent of municipal authority — Denial of permit improper — Municipality acting outside authority

Damages — Arising under nafta Articles 1105 and 1110 — Compensation for complete frustration of meaningful return on investment — nafta Article 1135 — Award of monetary damages and applicable interest for violation of Chapter 11 — Claim for negative effect on other business operations — Causal relationship too remote and uncertain — Expenses — Evidential weight of tax returns and independent audit documents — Difficulty in verifying expense items does not invalidate claims

Valuation — Fair market value of a going concern — History of profitable operation — Estimate of future profits subject to discounted cash flow analysis — nafta Article 1110(2) — Fair market value of investment immediately before expropriation — Valuation based on going concern value, asset value including declared tax value of tangible property and other criteria — Expenses from different projects aggregated and allocated to another project — Concept of “bundling” not applicable in the circumstances

Remediation — Requirement of remediation accounted for in calculation of damages

Interest — nafta Article 1135(1) — Inclusion of interest in calculation of damages — Integral part of compensation — Interest to run from date when international responsibility engaged — Selection of appropriate date from which to impose interest

Municipal law — Choice between two laws — International Commercial Arbitration Act — Exclusive application to international commercial arbitration — Relationship between Claimant and Respondent not regulatory in nature but concerned treatment of investors — Grounds for annulment

Applicable law — nafta Chapter 11 arbitration restricted to claims for breach of Chapter 11 and Chapter 15 obligations — Interpretation of Article 1105 — Minimum standard of protection — Tribunal misstated applicable law to include Chapter 18 obligation of transparency — Obligation to ensure transparent and predictable framework for investment — Matter beyond scope of submission to arbitration

Expropriation — nafta Article 1110 — Measures tantamount to expropriation — State permitted or tolerated conduct of municipality amounting to unfair and inequitable treatment in breach of Article 1105 — Analysis infected by erroneous application of principle of transparency — Matter beyond scope of submission to arbitration

Expropriation — nafta Article 1110 — Implementation of Ecological Decree — Effect of barring operation of landfill — Indirect expropriation — Alternative and independent finding of expropriation

Damages — Excessive damage claim — No deliberate attempt to deceive Tribunal — Arguable basis for claim — No evidence of fraud — Aggressive claim for damages — No basis for annulment

Interest — Inclusion of interest in calculation of damages — Interest flows only from date of proper finding of expropriation — Prior interest and compounding effects excluded from award

Expropriation — Taking of property — Contractual rights — Decision by municipal authorities to annul contract — Annulment upheld by successive decisions of administrative tribunals and appeal courts

Jurisdiction — Acceptance of jurisdiction of municipal courts not fatal to icsid jurisdiction — Claimant not entitled to seek international review of municipal court decisions — icsid tribunal has no plenary appellate jurisdiction — Not enough for Tribunal to disagree with determination of municipal courts — Government action validated by municipal courts — Municipal courts disavowed at international level — Whether denial of justice or a pretence of form to achieve internationally unlawful end — Whether fundamental departure from established principles under municipal law

Municipal law — Whether decisions of municipal courts in breach of international obligations — International arbitral tribunals not bound by decisions of national courts — Possibility of holding State internationally responsible for national court decisions — Claimant not entitled to seek international review of national court decisions — icsid tribunal has no plenary appellate jurisdiction — Requirement of denial of justice or a pretence of form to achieve internationally unlawful end — Whether fundamental departure from established principles under municipal law — Relevant standards for annulment under municipal law — Whether fundamental departure from established principles under municipal law

Parties — Permissibility of claims made by non-national of nafta party — Objections decided only after determination of liability on merits — Exclusion of recovery on account of non-qualified investments

Procedure — Procedure in municipal courts — Denial of justice — Pretence of form — Clear and malicious misapplication of law — Relevant standards for annulment under municipal law — Fundamental departure from established principles under municipal law

Applicable law — Relation between concession contract, bilateral investment treaty and icsid Convention — Dispute with provincial authorities relating to interpretation and application of contract to be submitted to administrative courts

Jurisdiction — Jurisdiction issue joined to merits — Failure to designate or consent to application of icsid Convention to province under Article 25(1) and 25(3) does not deprive Tribunal of jurisdiction — Local forum clause in concession contract does not divest Tribunal of jurisdiction for claims against State

State responsibility — Attribution of responsibility for actions of political subdivisions — Responsibility not limited by federal or decentralized character of State — No factual basis for attribution — State’s obligation under bilateral investment treaty to pursue in good faith and with reasonable efforts the resolution of the dispute — State’s constructive role in renegotiation process

Municipal law — Impossibility of separating claims for breaches of contract from bilateral investment treaty violation without prior resort to administrative courts — Claimant required under contract to assert its rights in proceedings before administrative courts prior to invoking icsid procedure — Claimant not precluded from asserting its rights in administrative courts — No evidence that courts lacked independence or fairness or would have denied Claimant’s rights procedurally or substantively — No principle of exhaustion of remedies

Procedure — Exhaustion of remedies — Requirement incompatible with Article 8 of bilateral investment treaty and Article 26 of icsid Convention — Resort to administrative courts required under contract for purposes of interpretation and application

Interpretation — Terms of agreement providing for binding arbitration — Requirement of joint submission to arbitration contrary to objective of bilateral investment treaty — Construction incompatible with international rules for interpretation of this type of agreement — Concept of investment interpreted broadly — Slovak Republic has not made declaration limiting scope of icsid jurisdiction

Jurisdiction — Slovak Republic has not made declaration limiting scope of icsid jurisdiction — Consent of parties to icsid jurisdiction creates presumption that they considered transaction to be investment covered by icsid Convention

Municipal law — Question of consent to icsid jurisdiction not answered by reference to national law but by international law as expressed in Article 25(1) of icsid Convention

Parties — State parties distinguished from private parties — Determination of real party in interest — Effect of assignment of interest

Procedure — Effect of assignments on real party in interest — Determination of standing made by reference to date proceedings instituted — Absence of beneficial ownership by claimant or transfer of risk does not affect standing

Treaties — Entry into force of bilateral investment treaty — Provision for date of entry into force — Requirement of notice of completion of constitutional formalities — Provisions interpreted in light of principle of effectiveness — Effect of notice of entry into force published in Official Gazette — Effect of unilateral declaration to assume contractual obligation

Jurisdiction — Requirement fulfilled by generic consent given in bilateral investment treaty — Consent cannot be unilaterally withdrawn — Choice of dispute settlement mechanisms at the option of the investor under bilateral investment treaty — No requirement of exhaustion of local remedies

Parties — Characterization as “investors”– Status of individual members in consortium — Investors signed concession agreement in individual capacity — Investors individually liable for viability of project to extent of equity share — Investors considered parties to concession agreement for the purposes of the bilateral investment treaty

Procedure — Submission of disputes under concession agreement to domestic courts — No requirement of exhaustion of local remedies in generic consent to icsid jurisdiction given in bilateral investment treaty

Treaties — Applicability of bilateral investment treaty — Relationship to concession agreement — Characterization of “investment”for purposes of treaty — Investors signed concession agreement in individual capacity — Investors individually liable for viability of project to extent of equity share — Choice of dispute settlement mechanisms at the option of the investor — Submission to binding international arbitration — icsid Article 26 consent — No requirement of exhaustion of local remedies

Jurisdiction — Competence of arbitration tribunal — Failure to exhaust domestic remedies — Article 26 of the icsid Convention — Consent to icsid conditioned on prior exhaustion of domestic remedies

Jurisdiction — Competence of arbitration tribunal — Failure to exhaust domestic remedies — Whether constituting waiver or forfeiture of right to submit dispute to international arbitration — More favourable provision applied due to most-favoured-nation clause

Treaties — Most-favoured-nation (mfn) clause — Failure to exhaust domestic remedies — Reference to other bilateral investment treaties — Ejusdem generis — mfn applies with respect to dispute settlement arrangements — Public policy limitations of application of third treaty

Jurisdiction — Standing — Article 25 of the icsid Convention — Shareholder of corporation — Personal investment as foreign investor

Jurisdiction — Competence of arbitration tribunal — Parties to the dispute — Whether private corporation is a State entity — Structural definition of ownership and control — Functional definition of performing activities of a public nature

Jurisdiction — Competence of arbitration tribunal — Time of the dispute — Critical date — Natural sequence of events that led to a dispute

Provisional measures — Application requesting Claimant to post guarantee for costs

State responsibility — Attribution of responsibility for acts and omissions of public agency — Functions of public agency assessed by structural and financial tests — Mixed governmental and commercial nature of agency’s functions — Public agency governed by private law but exercising public functions governed by public law — Functions of public nature entail responsibility — Agency not discharging public function in providing advice and financial information — Decision to increase investment cannot be considered a commercial activity

Municipal law — Loan authorization given on assumption of prior contract — No legally binding contract concluded under Spanish law — No legal obligation with regard to loan — Disinvestment negotiations did not lead to conclusion of contract

Municipal law — Statute of limitations under Spanish law on claims for compensatory damages against State not applicable to claims filed under icsid Convention

Procedure — Consent to arbitration — nafta Article 1121 — Conditions precedent to submission of claim — Waiver of right to initiate or continue parallel proceedings in municipal court — Waiver implies unilateral abdication of rights — Waiver must be clear, explicit and categorical — nafta Articles 1121(3) and 1137(1)(b) — Submission of waiver in conjunction with icsid Additional Facility Rules Article 2 notice — Nature and effectiveness of waiver — Observance of formalities

Municipal law — Reliance on Mexican legislation in domestic proceedings — No express invocation of nafta breaches — Domestic proceedings fall within Article 1121 prohibition — Measures complained of in both proceedings have same factual and legal basis — Claim for breach of contract in municipal law may coexist with claim based on nafta Article 1105

Jurisdiction — Based on consent — Fulfilment of conditions precedent necessary for jurisdiction — Procedural conditions — Failure to comply with nafta Article 1121 requirements

Jurisdiction — Article 25 of the icsid Convention — Intergovernmental agreement required that investment be in an “approved project” — Mutual fund — Waiver under Rule 27 of the Arbitration Rules — Estoppel

Jurisdiction — Article 25 of the icsid Convention — Intergovernmental agreement required that investment be made in the territory of the Contracting Party

Treaties — Interpretation of intergovernmental agreement — Extrinsic materials not to be used to interpret the agreement — Note verbale a source of confusion rather than clarity

Costs — Claimant appearing in person — Inequality of the position of the parties — Respondent’s successful argument not raised until second round of pleadings — No order for costs