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[Public version -- redacted to exclude confidential information] INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES In the arbitration proceedings between NIKO RESOURCES (BANGLADESH) LTD. (Claimant) and BANGLADESH PETROLEUM EXPLORATION & PRODUCTION COMPANY LIMITED (“BAPEX”) (Second Respondent) BANGLADESH OIL GAS AND MINERAL CORPORATION (“PETROBANGLA”) (Third Respondent) (jointly referred to as Respondents) ICSID Case No. ARB/10/11 and ICSID Case No. ARB/10/18 DECISION ON THE CORRUPTION CLAIM Members of the Tribunals Mr Michael E. Schneider, President Professor Campbell McLachlan QC Professor Jan Paulsson Secretary of the Tribunals Ms Frauke Nitschke Date of Decision: 25 February 2019 Table of Contents GLOSSARY AND ABBREVIATIONS........................................................... viii 1 INTRODUCTION .................................................................................. 1 2 THE ARBITRATIONS AND RELATED PROCEEDINGS............................ 7 2.1 Corruption issues during the jurisdiction phase .......................... 8 2.2 The Proceedings related to the Payment Claim ......................... 10 2.2.1 The Tribunals’ First and Second Decision on the Payment Claim ........................................................................... 10 2.2.2 The Tribunals’ Third Decision on the Payment Claim and the Respondents’ requests for reconsideration .................................. 12 2.3 The Proceedings on the Compensation Declaration .................. 15 2.4 The Corruption Claim and the proceedings relating to it .......... 17 2.4.1 Initial consultation of the Parties and decision on treating the Corruption Claim as a matter of priority (Procedural Order No 13) ............................................................ 18 2.4.2 Organising the procedure on the Corruption Claim (Procedural Order No 14) ............................................................ 21 2.4.3 Scope and Nature of the Tribunals’ Examination, the Targeted Period and the Procedural Time Table (Procedural Order No 15) . 21 2.4.4 Issues concerning the collection of evidence (Procedural Orders No 14 and 15) ................................................................. 26 2.4.5 Requested intervention with the Canadian authorities ............... 35 2.4.6 The Duggan Affidavit .................................................................. 40 2.4.7 Confidentiality Issues (Procedural Order No 17) .......................... 44 2.4.8 The Parties’ written submissions on the merits of the Corruption Claim ....................................................................... 49 2.4.9 The 30 January 2017 Status Conference .................................... 51 2.4.10 The Respondents’ New Application for an Intervention by the Tribunals before the Canadian Courts and Procedural Order No 18 ................................................................................ 53 2.4.11 Other Pre-Hearing Evidentiary Issues addressed in Procedural Order No 18 and the Pre-Hearing Conference on 10 April 2017 ............................................................................. 59 2.4.12 The Pre-Hearing Conference of 10 April 2017 and Procedural Order No 19 .............................................................. 67 2.4.13 The Hearing on the Merits of the Corruption Claim (24 to 29 April 2017) ................................................................... 73 2.4.14 Post-Hearing developments (Procedural Orders Nos 20 and 21) .. 75 ii 2.4.15 The Tribunals’ Post-Hearing questions to the Parties .................. 78 2.4.16 The “Deloitte Audit” and the Claimant’s claim for privilege (Procedural Order No 22) ............................................................ 84 2.4.17 The Respondents’ further RCMP application ............................... 91 2.5 The Alam Proceedings and Judgment (Writ Petition No 5673 of 2016), the Claimant’s Request for Provisional Measures and the Tribunals’ Decision pertaining to the Exclusivity of the Tribunals’ Jurisdiction ................................................... 93 2.6 Other relevant proceedings before the courts in Bangladesh and their repercussions in the Arbitrations ............................ 103 2.6.1 The BELA Proceedings (Writ Petition 6911 of 2005) .................. 103 2.6.2 The Money Suit No 224 of 2008 ................................................ 107 2.6.3 Criminal Proceedings in Bangladesh ......................................... 108 2.7 Proceedings in Canada and the United States ......................... 112 3 THE RELIEF REQUESTED ............................................................... 114 4 THE FACTUAL BACKGROUND ......................................................... 119 4.1 The JVA and its negotiation history ....................................... 119 4.2 The GPSA and its negotiation history ..................................... 146 5 THE RESPONDENTS’ NEW OBJECTIONS TO THE TRIBUNALS’ JURISDICTION ................................................................................ 162 5.1 The nature of the Respondents’ new objections ...................... 163 5.2 The availability of ICSID arbitration for the Claimant’s claims 166 5.3 Jurisdiction to decide whether the Agreements are void ab initio ................................................................................. 171 6 THE REQUEST FOR AVOIDANCE OF THE AGREEMENTS – THE LEGAL GROUNDS INVOKED..................................................... 175 6.1 The Parties’ positions – an overview ....................................... 175 6.2 Avoidance by reference to Article 102 of the Constitution ...... 176 6.2.1 Is the Supreme Court’s jurisprudence with respect to Article 102 Writ Petitions applicable in the present Arbitrations? ........ 177 6.2.2 The relevant cases .................................................................... 181 6.2.3 The principles of the Article 102 jurisprudence relevant for the present decision ................................................................. 185 6.3 The BELA Judgment and its relevance .................................... 189 iii 6.4 The Alam Judgment and its relevance for the Tribunals’ decision .................................................................................. 191 6.4.1 The admissibility of the production of the Alam Judgment in the Arbitrations .................................................................... 192 6.4.2 The Alam Judgment and the Tribunals’ exclusive jurisdiction .. 193 6.4.3 The asserted res judicata effect of the BELA Judgment ............. 196 6.4.4 The factual assumptions in the Alam Judgment ....................... 197 6.4.5 The legal findings of the Alam Judgment and their relevance for the Tribunals’ decision ........................................................ 204 6.5 The remedies under the Contract Act ..................................... 209 6.5.1 The positions of the Parties....................................................... 209 6.5.2 The relevant provisions ............................................................. 210 6.5.3 Applicability of Section 23 Contract Act .................................... 212 6.5.4 Lobbyists and the “exercise of personal influence” (Section 163 of the Penal Code) ................................................ 215 6.5.5 Causation in the application of Section 19 of the Contract Act . 221 7 THE EVIDENCE – QUESTIONS OF PRINCIPLE.................................. 223 7.1 The burden of proof and how it can be shifted ........................ 223 7.2 The standard of proof ............................................................. 227 8 THE EVIDENCE AVAILABLE IN THE ARBITRATIONS ....................... 231 8.1 The Joint Investigation through Mutual Legal Assistance (Canada, Bangladesh and U.S.) ................................................ 232 8.2 The evidence from the Joint Investigation in the Arbitrations prior to the Corruption Claim ................................................. 239 8.3 The Respondents’ use of the Joint Investigation in the proceedings on the Corruption Claim ..................................... 244 8.4 Collection of evidence in the course of the proceedings .......... 250 8.4.1 Potential Witness Testimony ..................................................... 251 8.4.2 Documentary Evidence ............................................................. 260 8.5 Are there gaps in the evidence available? ............................... 272 8.6 Inferences and Conclusion on the available evidence .............. 278 9 THE GOVERNMENTAL ACTS ALLEGEDLY PROCURED BY CORRUPTION .................................................................................. 283 9.1 Niko’s Marginal Fields Project and its qualification for having its proposal considered ................................................ 285 iv 9.2 The Government’s decision to proceed with the Niko project . 295 9.3 The Framework of Understanding (FOU) or the Study Contract298 9.4 The Marginal Fields Procedure ................................................ 302 9.5 The Chattak Field and the inclusion of Chattak East .............. 304 9.5.1 The identification of the Chattak Gas Field until the completion of MFE .................................................................... 304 9.5.2 The Chattak Field in the negotiations until the end of the Awami League Government ................................................ 307 9.5.3 The attempted compromise at the end of the Awami League period .......................................................... 314 9.5.4 The Chattak