International Centre for Settlement of Investment Disputes AWARD
Total Page:16
File Type:pdf, Size:1020Kb
International Centre for Settlement of Investment Disputes ICSID CASE NO. ARB/05/22 BIWATER GAUFF (TANZANIA) LTD., CLAIMANT V. UNITED REPUBLIC OF TANZANIA, RESPONDENT AWARD RENDERED BY AN ARBITRAL TRIBUNAL COMPOSED OF GARY BORN, ARBITRATOR TOBY LANDAU QC, ARBITRATOR BERNARD HANOTIAU, PRESIDENT Date of dispatch to the parties: July 24, 2008 TABLE OF CONTENTS PAGE CHAPTER I. PARTIES AND GENERAL BACKGROUND TO THE DISPUTE .................... 1 CHAPTER II. PROCEDURAL HISTORY .................................................................................. 7 A. INSTITUTION OF THE PROCEEDINGS .......................................................................................... 7 B. FIRST SESSION OF THE TRIBUNAL AND PROCEDURAL ORDER NO. 1 ......................................... 9 C. FIRST REQUESTS FOR PRODUCTION OF DOCUMENTS: PROCEDURAL ORDER NO. 2 ................ 13 D. CLAIMANT’S REQUEST FOR PROVISIONAL MEASURES ON CONFIDENTIALITY: PROCEDURAL ORDER NO. 3...................................................................................................... 13 E. CLAIMANT’S REQUEST FOR A SWORN STATEMENT FROM THE REPUBLIC: LETTER OF THE ARBITRAL TRIBUNAL DATED 22 NOVEMBER 2006.......................................................... 16 F. SECOND REQUESTS FOR PRODUCTION OF DOCUMENTS: PROCEDURAL ORDER NO. 4 ............ 16 G. PETITION FOR AMICUS CURIAE STATUS: PROCEDURAL ORDER NO. 5 AND SUBSEQUENT PROCEDURE............................................................................................................................. 16 H. APPLICATION FOR SECURITY FOR COSTS................................................................................ 19 I. EXCHANGE OF WRITTEN MEMORIALS .................................................................................... 20 J. HEARINGS AND PROCEDURAL ORDER NO. 6............................................................................ 21 K. SUBMISSIONS ON COSTS.......................................................................................................... 23 L. FURTHER EXCHANGES ............................................................................................................ 24 CHAPTER III. RELEVANT FACTS AND CONTRACTS ........................................................ 25 A. BACKGROUND TO THE CONCLUSION OF THE LEASE CONTRACT ............................................ 25 B. THE LEASE CONTRACT............................................................................................................ 33 C. THE SIPE, POG AND DELEGATED CAPITAL WORKS .............................................................. 38 D. PERFORMANCE OF THE LEASE CONTRACT.............................................................................. 39 1. Overview .......................................................................................................................... 39 2. The Mobilisation Period: 19 February – 1 August 2003 .................................................. 42 3. The Enhanced Monitoring Period: 1 August 2003 (Commencement) – 1 August 2004 .................................................................................................................................. 43 4. August 2004: Request for Interim Review ....................................................................... 44 5. October – December 2004: The Request for Re-Negotiation........................................... 48 6. January – May 2005: The Re-Negotiation Process .......................................................... 50 E. TERMINATION OF THE LEASE CONTRACT: 12 MAY – 7 JUNE 2005......................................... 54 CHAPTER IV. JURISDICTION OF THE ARBITRAL TRIBUNAL ......................................... 63 (1) BGT’s Position........................................................................................................................ 63 A. BGT HAS STANDING UNDER THE ICSID CONVENTION ......................................................... 63 1. Legal dispute..................................................................................................................... 63 2. Arising directly out of an investment ............................................................................... 64 (a) Duration ..................................................................................................................... 64 (b) Regularity of profit and return ................................................................................... 65 (c) Risk ............................................................................................................................65 (d) Substantial commitment............................................................................................. 65 (e) Development of the host State ................................................................................... 66 3. Between Contracting State and National of another Contracting State............................ 67 4. Written consent.................................................................................................................68 5. Prior attempts at settlement .............................................................................................. 70 B. BGT QUALIFIES FOR PROTECTION UNDER THE TREATY ........................................................ 76 1. BGT is a protected investor for the purposes of the BIT.................................................. 76 i 2. BGT’s investment is protected by the BIT ....................................................................... 76 3. BGT’s causes of action arise under the BIT..................................................................... 78 (2) The Republic’s Position .......................................................................................................... 79 A. BGT’S CLAIMS DO NOT ARISE DIRECTLY OUT OF AN INVESTMENT ..................................... 79 B. BGT HAS NOT ESTABLISHED THAT THIS PROCEEDING HAS BEEN AUTHORISED ................. 80 C. ICSID LACKS JURISDICTION OVER BGT’S TIA CLAIMS........................................................ 82 D. BGT DID NOT OBSERVE THE REQUIRED “COOLING-OFF” PERIOD ........................................ 82 (3) Decision of the Arbitral Tribunal............................................................................................ 84 A. THE MEANING OF “INVESTMENT”........................................................................................... 84 B. BGT’S AUTHORISATION OF THESE PROCEEDINGS.................................................................. 89 C. JURISDICTION OVER THE TIA CLAIMS.................................................................................... 90 D. OBSERVANCE OF THE SIX-MONTH SETTLEMENT PERIOD....................................................... 94 E. CONCLUSIONS ......................................................................................................................... 97 CHAPTER V. THE CLAIMS ..................................................................................................... 99 (1) Overview................................................................................................................................. 99 (2) The Amici Brief..................................................................................................................... 100 A. BACKGROUND TO THE AMICI BRIEF ...................................................................................... 100 B. THE AMICI’S SUBMISSIONS.................................................................................................... 104 C. RELEVANCE........................................................................................................................... 112 (3) Expropriation......................................................................................................................... 112 A. BGT’S POSITION ................................................................................................................... 112 1. Acts constituting expropriation....................................................................................... 112 2. Repudiation of the Lease Contract ................................................................................. 114 3. Occupation of City Water’s facilities, usurpation of management control and deportation of City Water’s managers............................................................................ 117 4. Accumulation of Acts..................................................................................................... 118 5. Conclusion...................................................................................................................... 120 B. THE REPUBLIC’S POSITION.................................................................................................... 121 1. BGT had nothing that could have been expropriated ..................................................... 121 2. BGT’s own decisions and actions defeat its claim ......................................................... 128 3. Causation ........................................................................................................................ 129 C. DECISION OF THE ARBITRAL TRIBUNAL ............................................................................... 132 1. General principles and preliminary issues...................................................................... 132 2. Conduct Amounting to Expropriation ...........................................................................