Caratube International Oil Company Llp Memorial
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Case 1:10-mc-00285-JDB Document 1-1 Filed 04/28/10 Page 216 of 332 IN THE MATTER OF AN ARBITRATION UNDER THE 1965 CONVENTION FOR THE SETTLEMENT OF INVESTMENT DISPUTES BETWEEN STATES AND NATIONALS OF OTHER STATES PURSUANT TO THE 1992 TREATY BETWEEN THE UNITED STATES OF AMERICA AND THE REPUBLIC OF KAZAKHSTAN CONCERNING THE RECIPROCAL ENCOURAGEMENT AND PROTECTION OF INVESTMENTS ICSID CASE NO. ARB/08/12 BETWEEN: CARATUBE INTERNATIONAL OIL COMPANY LLP Claimant v. THE REPUBLIC OF KAZAKHSTAN Respondent CARATUBE INTERNATIONAL OIL COMPANY LLP MEMORIAL . 14 May 2009 ALLEN & OVERY Allen & Overy LLP One Bishops Square London EI 6AD United Kingdom Tel: + 44 (0) 20 3088 0000 Fax: +44 (0) 20 3088 0088 Ref: JAEG/MPG/JJCS/AATS/ABT/HENJ/89588-0000IlLT:4291260 Case 1:10-mc-00285-JDB Document 1-1 Filed 04/28/10 Page 217 of 332 TABLE OF CONTENTS t. INTRODUCTION .......................................................................................................................... 5 1.1 Wi mess Statements, Expert Reports and supporting documents ........................................................ 5 1.2 Structut:e of this Memorial.. .............................................................................................................. 6 2. EXECUTIVE SUMMARY ............................................................................................................ 8 3. JURISDICTION .......................................................................................................................... 10 3.1 Kazakhstan and the United States of America have ratified the ICSID Convention ......................... 10 3.2 CIOC and Kazakhstan have a legal dispute ..................................................................................... ID 3.3 The dispute arises directly out ofCIDC's investment.. .................................................................... ID 3.4 The dispute is between a Contracting State and a national of another Contractin g State .................. 13 (a) Confirmation that CIOC is majority owned and controlled by Devined Hourani ................ 13 (b) Confirmation that Devincci Hourani is a US national.. ....................................................... 14 .e (c) Confirmation that the parties have agreed to treat ClOC as a "national of another Contracting State" ............................................................................................................. 17 3.5 CIOC and Kazakhstan have consented to submit this dispute to ICSlD for arbitration ..................... 18 4. STATEMENT OF FACTS .......................................................................................................... 19 4.1 Persecution of CIOC, its owner and employees .............................................................................. 19 (a) Political background ................................... :........................ : ............................................. 19 (b) Harassment of Devinc~i Hourani, his family, and CIOC's employees.. ............................... 20 (c) Harassment ofCIOC ......................................................................................................... 25 (d) Harassment since leaving Kazakhstan .................................................... ,........................... 27 (e) Summary of the connection between President Nazarbayev's dispute with Mr Rakhat Aliyevand the expropriation o~ CIOC's investment... ......................................................... 29 4.2 The Contract .................................................................................................................................. 30 (a) The Contract Area ............................................................................................................. 31 (b) Exploration rights under the Contract... .............................................................................. 32 (c) Commercial production rights under the Contract .............................................................. 32 4.3 Overview of the regulatory framework ........................................................................................... 32 4.4 Amendments to the Contract .......................................................................................................... 33 (a) The assignment of the rights under the Contract frqm CCC to CIOC .................................. 33 (b) Taxchanges ...................................................................................................................... 33 (c) The two-year extension of the Contract... ........................................................................... 34 4.5 Work programmes ......................................................................................................................... 35 (a) The Five-Year Work Programme ....................................................................................... 35 (b) Thc.2007-2009 Work Programme ...................................................................................... 35 (c) The relevant Annual Work Programmes ............................................................................ 36 4.6 CIOC's performance ....................................................................................................................... 38 (a) Infrastructure ..................................................................................................................... 38 2. Case 1:10-mc-00285-JDB Document 1-1 Filed 04/28/10 Page 218 of 332 (b) Drilling, rc-entry and development of supra-salt wells ....................................................... 39 (c) Pilot Production Programme .............................................................................................. 40 (d) Geophysical studies including 3D scismic survey and Caspian El1ergy Research Reserves Report ................................................................................................................ 40 (e) Sub-salt exploration wells .................................................................................................. 41 4.7 The Field Development Plan and the commercial production phase ................................................ 42 4.8 Notices alleging CIOC was in breach of the Contract ..................................................................... 43 (a) March 2007 Notice ............................................................................................................ 43 (b) October 2007 Notice .................... ~ ... : ................................................................................. 46 (c) November 2007 Notice ...................................................................................................... 46 (d) December 2007 Notice ...................................................................................................... 47 4.9 Approval ofCIOC's 2008 Annual Work Programme ................... ~ ................................................. .48 4.10 The February 2008 Notice and the wrongful termination of the Contract ....................................... .48 (a) Allegations in the February 2008 Notice ........................................................................... .49 e (b) CIOC's Response to the February 2008 Notice .................................................................. .49 4.11 Meeting of representatives of the M EMR and CIOC ...................................................................... 51 4.12 Events after the wrongful termination of the Contract... ............................ : ..................................... 52 5. MERITS OF THE CLAIl\-lS ........................................................................................................ S3 5.1 Overview of claims and general principles ............................................................. : ..... : ................. 53 (a) Applicable laws ................................................................................................................. 53 (b) Attribution ......................................................................................................................... 53 5.2 CJOC's claims for breaches of rights c<?nferred or created by the Treaty ......................................... 55 (a) Expropriation .................................................................................................................... 55 (b) Violation of the obligation to accord CIOe's investment fair and equitable treatment.. ....... 59 (c) Violation of the obligation to ensure that ClOGs investment shall enjoy full protection and security ....................................................................................................................... 66 (d) Violation of the obligation not to impair ClOGs investment by Jnreasonable or discriminatory measures .................................................................................................... 67 (e) Violation of the obligation to observe obligations entered into with invc:stors ..................... 69 (f) Violation of the obligation not to accord CIOe's investment treatment less than that required by international law ................................................................................... : ......... 71 5.3 ClOGs claims arising out of or relating to an investment agreement.. ............................................. 71 6. DAMAGES AND QUANTUM ...................................................................................................