Respondent's Counter-Memorial on the Merits
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INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES Bay View Group, LLC, and The Spalena Company LLC v. Republic of Rwanda ICSID Case No. ARB/18/21 RESPONDENT’S COUNTER-MEMORIAL TABLE OF CONTENTS I. INTRODUCTION AND SUMMARY .................................................................................................... 1 II. STATEMENT OF FACTS ..................................................................................................................... 4 A. Background ................................................................................................................................ 4 1. The Republic of Rwanda ......................................................................................................... 4 2. The history of mining in Rwanda ............................................................................................ 5 3. ITRI and the ITSCI programme ................................................................................................ 9 B. The Contract between Rwanda and NRD ................................................................................ 13 1. Negotiations and entry into the Contract ............................................................................. 13 2. The rights and obligations under the Contract ..................................................................... 14 3. Licences issued pursuant to the Contract ............................................................................. 17 C. Spalena’s purchase of HC Starck Resources GmbH, NRD’s parent company .......................... 25 D. Summary of NRD’s operations from 2011 to 2014 .................................................................. 26 1. Day-to-day operation of NRD................................................................................................ 26 2. NRD’s financial position and NRD borrowing from MSA ...................................................... 30 3. Ongoing environmental damage .......................................................................................... 31 E. Extensions to the Licences ....................................................................................................... 32 F. Licence extensions expire and NRD is operating without Licences ......................................... 35 G. 2014 Law and regulation .......................................................................................................... 38 H. NRD’s applications and position under the 2014 Law ............................................................. 41 I. NRD’s legal disputes and their consequences ......................................................................... 49 1. Shareholder dispute: ownership of NRD was disputed ........................................................ 50 2. Consequences of the shareholder dispute ........................................................................... 52 3. Further legal disputes ........................................................................................................... 53 J. The decision to prevent NRD from receiving tags from iTSCi .................................................. 54 K. Treatment of other investors following enactment of the 2014 Law ...................................... 55 1. Under the 2014 Law .............................................................................................................. 55 2. Treatment under ITRI/iTSCi .................................................................................................. 58 L. The Five Concession Areas are not currently operated by Ngali mining, but were put to tender to private companies in 2016 ....................................................................................... 58 III. THE TRIBUNAL LACKS JURISDICTION OVER THIS DISPUTE ............................................................ 60 IV. THE CLAIMANTS HAVE FAILED TO ESTABLISH A VIOLATION OF ARTICLE 5 OF THE USA-RWANDA BIT 61 A. Rwanda treated the Claimants’ alleged investments consistently with the FET obligations contained within the MST standard ......................................................................................... 62 i 1. The concept of FET within the MST as set out in customary international law ................... 62 2. The Claimants have failed to prove any changes to the MST ............................................... 65 3. In any event, on the Claimants’ own authority, the FET standard requires manifest unfairness or inequity ................................................................................................................... 66 4. Rwanda acted consistently with the MST, and in a fair, and equitable manner in enacting and implementing the 2014 Law .................................................................................................. 67 5. Rwanda used the ITRI/iTSCi system consistently with the MST ........................................... 78 6. Rwanda used and allowed the use of the police and court systems consistently with the minimum standard of treatment and the FET standard ............................................................... 80 7. The Claimants did not have a protected expectation to long term licences ........................ 83 B. Rwanda treated the Claimants’ investments transparently .................................................... 98 1. A duty to treat investments transparently is not provided for in the USA-Rwanda BIT and in any event is not part of the MST, so does not apply .................................................................... 99 2. Rwanda treated Claimants’ investments transparently ..................................................... 100 C. Rwanda provided full protection and security to the claimants’ alleged investments ......... 103 1. Content of the FPS obligation at customary international law ........................................... 103 2. The actions by Ben Benzinge did not breach the FPS standard and in any event are not attributable to Rwanda ............................................................................................................... 104 3. The actions taken by illegal miners do not breach the FPS standard and in any event are not attributable to Rwanda ........................................................................................................ 107 V. THE CLAIMANTS’ EXPROPRIATION CLAIM UNDER ARTICLE 6 OF THE USA-RWANDA BIT IS UNJUSTIFIED AND WRONG ................................................................................................................. 109 A. Article 6 of the USA-Rwanda BIT is only engaged if it is established that an expropriation occurred ...................................................................................................................................... 111 B. The Claimants cannot show that they had any interests in property capable of being expropriated ............................................................................................................................... 112 C. The Claimants cannot show that there has been a direct expropriation ........................... 114 D. The Claimants cannot show that there has been an indirect expropriation ...................... 115 1. The Claimants have failed to establish that the “re-application” process was equivalent to an indirect expropriation ............................................................................................................ 116 VI. THE CLAIMANTS’ HAVE FAILED TO ESTABLISH A VIOLATION OF ARTICLES 3 AND 4 OF THE USA- RWANDA BIT ....................................................................................................................................... 117 A. The Claimants’ have failed to establish a violation of Article 3 of the USA-Rwanda BIT ....... 117 1. The Respondent did not expropriate the Claimants’ Investment and therefore the Claimants cannot show a breach of Article 3 of the USA-Rwanda BIT ....................................... 118 2. The delayed decision on NRD’s long-term licence applications was due to its own failure to submit the required documentation and cannot amount to a breach of Article 3 of the USA- Rwanda BIT ................................................................................................................................. 118 3. Rwanda’s involvement in the ownership dispute between Roderick Marshall and Ben Benzinge does not amount to a breach of Article 3 of the USA-Rwanda BIT ............................. 121 ii B. The Claimants’ have failed to establish a violation of Article 4 of the USA-Rwanda BIT ....... 123 VIII. REQUEST FOR RELIEF ................................................................................................................... 128 APPENDIX I: Mining industry market conditions during NRD’s operation ......................................... 129 ANNEX I: Abbreviations and Definitions ............................................................................................. 132 ANNEX II: Witness Statements and Expert Reports ............................................................................ 136 ANNEX III: Factual Exhibits .................................................................................................................. 137 ANNEX IV: Legal Authorities................................................................................................................ 143 iii 1. This Respondent’s Counter-Memorial (the “Counter-Memorial”)