Claimants' Memorial
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THE INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES ICSID CASE NO. ARB/20/11 PETERIS PILDEGOVICS AND SIA NORTH STAR CLAIMANTS V. THE KINGDOM OF NORWAY RESPONDENT CLAIMANTS’ MEMORIAL 11 MARCH 2021 1 I. INTRODUCTION ______________________________________________________ 6 II. THE PARTIES ________________________________________________________ 9 A. The Claimants ______________________________________________________ 9 a. Peteris PildegoviCs _________________________________________________ 9 b. SIA North Star ___________________________________________________ 10 B. The Respondent ___________________________________________________ 10 III. OVERVIEW OF THE LEGAL FRAMEWORK _______________________________ 11 C. The Agreement between the Government of the Kingdom of Norway and the Government of the Republic of Latvia on the Mutual Promotion and Protection of Investments of 1992 (the Latvia-Norway BIT) _______________________________ 11 D. The ICSID Convention, Regulations and Rules __________________________ 12 E. The United Nations Convention on the Law of the Sea of 1982 (UNCLOS) ___ 13 F. The Convention on Future Multilateral Cooperation in North-East Atlantic Fisheries of 1980 (NEAFC) ______________________________________________ 15 G. The 1920 Svalbard Treaty ___________________________________________ 17 IV. FACTS _____________________________________________________________ 21 A. The Barents Sea snow crab fishery ___________________________________ 21 a. The arrival of sNow Crabs iN the BareNts Sea aNd the develoPmeNt of a New commercial fishery ____________________________________________________ 21 b. Norway’s shiftiNg sNow Crab PoliCies __________________________________ 26 B. Claimants’ investments in the territory of Norway _______________________ 43 a. BaCkgroUNd to ClaimaNts’ investmeNts ________________________________ 45 b. InvestmeNts by Peteris PildegoviCs iN the territory of Norway _______________ 53 c. InvestmeNts by North Star iN the territory of Norway ______________________ 69 d. ClaimaNts’ iNvestmeNts sUPPorted Norway’s eCoNomiC develoPmeNt _________ 81 C. Norway’s acknowledgement and acceptance of Claimants’ investments in its territory ______________________________________________________________ 86 D. Norway’s adverse actions against Claimants’ investments _______________ 94 a. Norway’s eNforCemeNt aCtioNs agaiNst ClaimaNts’ iNvestmeNts _____________ 96 b. Norway’s ProseCUtioN of North Star __________________________________ 102 c. The adverse CoNseqUeNCes of Norway’s aCtioNs agaiNst ClaimaNts’ iNvestmeNts and Claimants’ mitigation efforts ________________________________________ 106 2 d. Norway’s smear CamPaigN agaiNst ClaimaNts __________________________ 109 V. APPLICABLE LAW AND PRINCIPLES OF INTERPRETATION ________________ 112 A. The Law Applicable to Jurisdiction __________________________________ 112 B. The Law Applicable to the Merits ____________________________________ 114 C. Rules Governing the Interpretation of the BIT and of the ICSID Convention _ 115 VI. THE TRIBUNAL HAS JURISDICTION OVER THE DISPUTE __________________ 119 A. The case concerns a “legal dispute” _________________________________ 120 B. The dispute is between an “investor” of one contracting party to the BIT and “national” of an ICSID Contracting Party (Latvia) on the one hand, and another contracting party to the BIT and another ICSID Contracting Party (Norway) on the other hand __________________________________________________________ 121 C. The dispute is “in relation to” and “arising directly out of” investments ___ 123 a. “Arising directly out of” (iN the ICSID CoNveNtioN) aNd “in relation to” (iN the BIT) reqUire that a reasoNably close coNNeCtioN exist betweeN the disPUte aNd the investmeNts ________________________________________________________ 123 b. The TribUNal mUst view ClaimaNts’ iNvestmeNts as a whole based oN the PriNCiPle of the unity of the investment ___________________________________________ 125 D. The dispute relates to “investments” ________________________________ 128 a. ClaimaNts’ iNvestmeNts are withiN the terms of the BIT ___________________ 128 b. ClaimaNts’ iNvestmeNts are withiN the terms of the ICSID CoNveNtioN _______ 139 E. The investment was made within the ratione temporis scope of the BIT ____ 144 F. The territorial requirement under the BIT and the ICSID Convention is met _ 145 a. ClaimaNts’ iNvestmeNts are iN the territory of Norway withiN the defiNitioN of the BIT 145 b. The territoriality reqUiremeNt UNder aN iNvestmeNt treaty mUst be examiNed iN resPeCt of the whole of the iNvestmeNt ___________________________________ 154 c. Any territoriality reqUiremeNt foUNd iN the ICSID CoNveNtioN has beeN met ___ 158 G. Claimants “Invested” their investments in Norway _____________________ 158 H. Claimants’ investments were invested in accordance with the laws and regulations of Norway _________________________________________________ 159 I. The present dispute is one which the parties have consented in writing to submit to ICSID ______________________________________________________ 161 3 J. The three-month waiting period found in Article IX(2) of the BIT has been respected ___________________________________________________________ 161 VII. NORWAY’S ILLEGAL ASSERTION OF SOVEREIGNTY OVER THE BARENTS SEA SNOW CRAB FISHERY __________________________________________________ 162 A. Norway’s bad faith designation of snow crab as a sedentary species under Article 77 UNCLOS constitutes an abuse of right in violation of Article 300 UNCLOS 163 B. Norway has acted in breach of Claimants’ acquired rights _______________ 167 C. Norway’s violations of the Svalbard Treaty ____________________________ 171 VIII. NORWAY’S VIOLATIONS OF THE BIT __________________________________ 186 A. Norway has breached the obligation to provide compensation in the case of expropriation (Article VI of the BIT) ______________________________________ 187 a. The law oN exProPriatioN __________________________________________ 187 a. Norway’s aCts CoNstitUte aN exProPriatioN _____________________________ 193 b. Norway’s aCts CoNstitUte aN UNlawfUl exProPriatioN ______________________ 201 B. Norway has breached the obligation to provide equitable and reasonable treatment and protection (Article III of the BIT) ____________________________ 201 a. The law oN eqUitable aNd reasoNable treatmeNt aNd proteCtioN ____________ 201 (i) The obligation not to act arbitrarily ___________________________________ 203 (ii) The obligation to refrain from acting in bad faith ______________________ 204 (iii) The obligation to respect specific and general legitimate expectations of an investor ___________________________________________________________ 204 (iv) The obligation to respect certain standards regarding transparency and consistency of the State’s actions and its investment framework _______________ 207 (v) The obligation not to cause a denial of justice ________________________ 209 b. Norway’s Acts Have BreaChed the ObligatioN to Provide EqUitable aNd ReasoNable TreatmeNt aNd ProteCtioN foUNd iN ArtiCle III of the BIT _______________________ 211 (i) The obligation not to act arbitrarily ___________________________________ 211 (ii) The obligation to refrain from acting in bad faith ______________________ 214 (iii) The obligation to respect specific and general legitimate expectations of an investor ___________________________________________________________ 214 (iv) The obligation to respect certain standards regarding transparency and consistency of the State’s actions as well as of its investment framework ________ 219 (v) The obligation not to cause a denial of justice ________________________ 221 4 C. Norway has breached the obligation to provide most favoured nation treatment found in Article IV of the BIT (Article IV of the BIT) _________________________ 229 a. The Law oN Most FavoUred NatioN TreatmeNt __________________________ 229 b. Norway’s Acts Have BreaChed the ObligatioN to Provide Most FavoUred NatioN TreatmeNt (ArtiCle IV of the BIT) ________________________________________ 233 D. Norway has breached the obligation to accept investments in accordance with its laws (Article III of the BIT) ___________________________________________ 236 IX. REPARATION ______________________________________________________ 237 A. Overview of Claimants’ position on reparation _________________________ 237 B. Restitution ______________________________________________________ 238 C. Financial Compensation ___________________________________________ 244 a. StaNdard of ComPeNsatioN _________________________________________ 244 b. ValUatioN methodologies __________________________________________ 252 D. Quantification of Claimants’ damages ________________________________ 267 a. The ActUal aNd the “But for” SceNarios _______________________________ 267 b. CalCUlatioN of ClaimaNts’ lost Profits PredatiNg the valUatioN date ___________ 272 c. CalCUlatioN of the loss of valUe sUstaiNed by ClaimaNts’ iNvestmeNts as of the valuation date: the DCF method and the market approach ____________________ 280 d. CoNClUsioN oN the qUaNtifiCatioN of ClaimaNts’ damages __________________ 289 E. Pre-award and post-award interest __________________________________ 290 X. PRAYER FOR RELIEF _______________________________________________ 291 5 I. INTRODUCTION 1. This Case CoNCerNs Norway’s illegal destrUCtioN of ClaimaNts’ investmeNts in a sNow crab fishing, proCessiNg aNd distribUtioN enterprise in Norway. 2. A joiNt veNtUre was established in January