Public Version INTERNATIONAL CENTRE FOR ICSID Case No. ARB/16/16 SETTLEMENT OF INVESTMENT DISPUTES BETWEEN GLOBAL TELECOM HOLDING S.A.E. Claimant and GOVERNMENT OF CANADA Respondent CLAIMANT’S REPLY ON MERITS AND DAMAGES & COUNTER-MEMORIAL ON JURISDICTION AND ADMISSIBILITY 5 November 2018 GIBSON, DUNN & CRUTCHER LLP Telephone House 2-4 Temple Avenue London EC4Y 0HB United Kingdom GIBSON, DUNN & CRUTCHER LLP 200 Park Avenue New York, NY 10166 United States of America Public Version TABLE OF CONTENTS I. EXECUTIVE SUMMARY ..............................................................................................1 II. THE KEY FACTS ARE NOT IN DISPUTE ...............................................................11 II.A. The Conditions Introduced In The 2008 AWS Auction Framework Were Designed To Attract Investors In The Wireless Telecommunications Market ......12 II.B. Set-Aside Spectrum Licenses Purchased At The 2008 AWS Auction Benefit From Enhanced Transferability And Divisibility Rights Subject Only To A Finite Five-Year Restriction On Transfer To Incumbents .....................................15 II.C. The 2008 AWS Auction Was A Resounding Success For Canada .......................27 II.D. After The 2008 AWS Auction, Two Arms Of The Canadian Government Engaged In Duplicative O&C Reviews To Reach Opposite Conclusions ............28 II.E. Canada Was Aware That Its Conditions On Mandatory Roaming and Tower/Site Sharing Were Not Achieving Their Intended Effect, But Did Not Implement Changes To These Policies Until 2013................................................31 II.F. Canada Introduced The 2013 Transfer Framework To Block New Entrants From Selling Set-Aside Spectrum Licenses To Incumbents And To Keep A New Entrant In The Canadian Telecommunications Market ................................33 II.G. Despite The Long-Anticipated Relaxation Of The O&C Rules, Over Its Investment On Unexplained National Security Grounds ...............................................................47 II.H. Canada Would Not Approve GTH’s Sale Of Wind Mobile To An Incumbent.....61 III. THE TRIBUNAL HAS JURISDICTION TO HEAR THIS DISPUTE & EACH OF GTH’S CLAIMS ARE ADMISSIBLE ..................................................68 III.A. The Tribunal Must Interpret Jurisdictional Requirements—Like Any Treaty Provision—In Accordance With The VCLT .........................................................69 III.B. GTH Is A Qualifying Investor Of Egypt As Required By Article I(g) Of The BIT And Article 25 Of The ICSID Convention.....................................................73 III.B.1. The BIT’s Only Requirement To Qualify As An Egyptian “Juridical Person” Is To Be Any Entity Established In Accordance With, And Recognized As, A Juridical Person By The Laws Of Egypt ....................75 The Ordinary Meaning Of The BIT Makes Clear That GTH Need Only Be Established In Accordance With, And Recognized As, A Juridical Person By The Laws Of Egypt ...75 i Public Version Supplementary Means Of Interpretation Confirm The Ordinary Meaning Of “Investor” .............................................83 GTH’s Interpretation Of “Investor” Best Reconciles Any Discrepancies Between The Authentic Texts ..........................85 GTH Qualifies As An Egyptian “Juridical Person”................86 III.B.2. III.C. The Tribunal Has Jurisdiction Over Claims Arising From Canada’s Treatment Of GTH’s Voting Control Application.................................................96 III.C.1. The BIT Permits The Arbitration Of Claims Arising From GTH’s Attempts To Exercise Its Right To Obtain Voting Control Of Wind Mobile ......................................................................................................98 The Ordinary Meaning Of Article II(4) Of The BIT Shows That It Does Not Apply............................................................99 Even if Article II(4) Was Relevant, Article II(4)(a), Not Article II(4)(b), Applies Because The Subject Of GTH’s Claim .................................................................................105 III.C.2. Canada Did Not Exclude The Telecommunications Sector From Its National Treatment Obligations .............................................................108 The Ordinary Meaning Of Article IV(2) And The Annex Establishes That Canada Did Not Exclude Investments In The Telecommunications Sector From Its National Treatment Obligations ...........................................................109 Supplementary Means of Interpretation Confirm The Ordinary Meaning Of Article IV(2) And The Annex ............117 III.D. The Tribunal Has Jurisdiction Over GTH’s Claim For Cumulative Breach Of FET Arising From Canada’s Overall Pattern Of Conduct ..............................120 ii Public Version III.D.1. In The Context Of A Cumulative Breach, The Date Of Breach Is The Date At Which The Cumulative Conduct Amounts To A Breach Of The BIT ..................................................................................................122 III.D.2. The BIT’s Three-Year Notice Period Begins On The Date The Investor Had Knowledge Of Both The Breach And The Damage Arising From That Breach ......................................................................126 III.D.3. The Duplicative O&C Reviews And Canada’s Failure To Maintain A Favorable Regulatory Environment Form Part Of Canada’s Composite Breach Of The FET Standard Under The BIT .....................128 III.E. GTH Has Standing To Bring Claims Relating To The Treatment Of Its Investment In Wind Mobile .................................................................................130 III.E.1. The Ordinary Meaning Of Article XIII Shows That GTH Has Standing To Bring Claims Relating To The Treatment Of Its Investment In Wind Mobile And The Returns On Its Investment .........131 III.E.2. Canada Relies On A Non-Existent Standard Of International Law .......139 IV. CANADA HAS BREACHED FUNDAMENTAL OBLIGATIONS UNDER THE BIT.........................................................................................................142 IV.A. Canada Has Breached Its Obligation To Accord GTH’s Investment Fair And Equitable Treatment .............................................................................................143 IV.A.1. Article II(2)(a) Prohibits Treatment Which Is Unfair, Arbitrary, Inconsistent, Non-Transparent, In Breach Of An Investor’s Legitimate Expectations Or Fails To Accord Due Process ....................144 The FET Standard In This BIT Is An Autonomous Treaty Standard .................................................................................147 The FET Standard Protects An Investor’s Legitimate Expectations ...........................................................................157 The FET Standard Protects An Investor From Unreasonable And Arbitrary Treatment ................................162 The FET Standard Requires A State To Act Transparently And With Due Process ...........................................................164 The Minimum Standard Of Treatment Affords Much Greater Protection Than The Standard Of Protection Alleged By Canada ................................................................166 IV.A.2. Canada Breached The FET Standard By Blocking GTH From Selling Wind Mobile To An Incumbent After Five Years, Contrary To Canada’s Intentions And GTH’s Expectations ......................................170 iii Public Version Canada Frustrated GTH’s Legitimate Expectation By Blocking The Sale Of Wind Mobile To An Incumbent .........171 Canada’s Decision To Block GTH’s Sale Of Wind Mobile To An Incumbent Was Unreasonable, Arbitrary & Disproportionate ....................................................................182 IV.A.3. Canada Breached The FET Standard Through Its Unreasonable, Arbitrary, And Non-Transparent Treatment Of GTH’s Efforts To Take Voting Control As Well As Its Failure To Accord Due Process ...189 IV.A.4. Canada Breached The FET Standard By Its Cumulative Conduct That Dismantled The Framework Upon Which GTH’s Investment Was Based ......................................................................................................199 FET Prohibits A Series Of Acts That Together Amount To A Breach Of FET ...................................................................200 Canada’s Complete Conduct For The Duration Of GTH’s Investment In Canada Amounts To A Cumulative Breach Of FET ...................................................................................202 IV.B. Canada Breached Its Obligation To Accord GTH’s Investment Full Protection And Security .......................................................................................212 IV.C. Canada Breached Its Guarantee Of Unrestricted Transfer Of Investments .........218 IV.D. Canada Breached Its Obligation To Accord National Treatment Protection ......221 V. CANADA MUST COMPENSATE GTH FOR DAMAGE CAUSED BY ITS BREACHES OF THE BIT ............................................................................223 V.A. The Standard Of Proof And The Assessment Of Damages .................................228 V.B. Canada’s Breaches Have Caused GTH Substantial Loss ....................................233 V.B.1. The But-For Scenarios Relating To Each Breach ..................................233 But For Canada’s Cumulative Breaches Or Canada’s Breaches By Its Treatment Of GTH’s Efforts To Take Voting Control, GTH Would Have Remained Invested In Canada (Scenarios 1 And 2) ..................................................233 GTH Would Have Sold Its Investment