INTERNATIONAL CENTRE FOR SETTLEMENT OF INVESTMENT DISPUTES WASHINGTON, D.C. In the arbitration proceeding between THE ROMPETROL GROUP N.V. Claimant and ROMANIA Respondent ICSID Case No. ARB/06/3 ___________________________________________ Award ___________________________________________ Members of the Tribunal: Sir Franklin Berman, KCMG, QC, President Mr. Donald Francis Donovan, Esq. The Honourable Marc Lalonde PC, OC, QC Secretary of the Tribunal: Ms. Aurélia Antonietti Representing the Claimant: Representing the Respondent: Mr. Barton Legum Mr. Michael E. Schneider Ms. Ioana Petculescu Dr. Veijo Heiskanen Dentons, Paris Mr. Matthias Scherer Lalive, Geneva and and Mr. George Burn Dentons, London Dr. Victor Tanasescu Ms. Carina Tanasescu Tanasescu & Asociatii, Bucharest and Dr. Crenguta Leaua Mr. Marius Grigorescu Leaua & Asociatii, Bucharest Date of dispatch to the Parties: 6 May 2013 TABLE OF CONTENTS A. PROCEDURAL BACKGROUND ........................................................................ 5 A1. Request for Arbitration and Notice of Registration ................................ 5 A2. Constitution of the Arbitral Tribunal ....................................................... 6 A3. The First Session ..................................................................................... 6 A4. Decision on Jurisdiction and Admissibility ............................................. 6 A5. Written submissions on the Merits .......................................................... 7 A6. Requests for Production of Documents ................................................... 7 A7. Proposal for disqualification of a counsel by the Respondent ................ 8 A8. The Hearing on the Merits ....................................................................... 8 A9. Post-Hearing submissions and correspondence .................................... 10 B. THE FACTUAL BACKGROUND ...................................................................... 12 B1. Privatisation of Rompetrol S.A. ............................................................ 12 B2. Changes in structure and ownership ...................................................... 13 B3. The Underlying Dispute ........................................................................ 13 C. THE ARGUMENTS OF THE PARTIES ............................................................ 14 C1. Claimant’s arguments ............................................................................ 15 C1.A. The Request for Arbitration .................................................................. 15 C1.B. Memorial on the Merits ......................................................................... 20 C1.C. Claimant’s Reply ................................................................................... 24 C2. Respondent’s arguments ........................................................................ 31 C2.A. Respondent’s Answer to the Request for Arbitration ........................... 31 C2.B. The Respondent’s Counter-Memorial (Statement of Defence) ............. 33 C2.C. The Respondent’s Rejoinder ................................................................. 40 D. THE HEARING ................................................................................................... 44 D1. Opening Statements ............................................................................... 44 D1.A. Claimant ................................................................................................ 44 D1.B. Respondent ............................................................................................ 46 D2. Fact Witnesses ....................................................................................... 48 D2.A. Claimant’s Witnesses ............................................................................ 48 D2.B. Respondent’s Witnesses ........................................................................ 52 D3. Expert Witnesses ................................................................................... 53 D3.1. Legal Experts ......................................................................................... 53 2 D3.1.A. Claimant .................................................................................... 53 D3.1.B. Respondent ................................................................................ 54 D3.2. Damages Experts ................................................................................... 56 D3.2.A. Claimant .................................................................................... 57 D3.2.B. Respondent ................................................................................ 58 D4. Closing Statements ................................................................................ 61 D4.A. Claimant ................................................................................................ 61 D4.B. Respondent ............................................................................................ 63 D4.C. The Tribunal .......................................................................................... 65 E. POST-HEARING SUBMISSIONS ..................................................................... 66 E1. Claimant ................................................................................................ 66 E1.A. Claimant’s First Post-Hearing Brief ...................................................... 66 E1.B. Claimant’s Answer to the Respondent’s Post-Hearing Brief ................ 69 E2. Respondent ............................................................................................ 71 E2.A. Respondent’s First Post-Hearing Brief .................................................. 71 E2.B. Respondent’s Answer to Claimant’s First Post-Hearing Brief ............. 75 F. COSTS SUBMISSIONS ...................................................................................... 76 F1. Claimant’s Costs Submissions .............................................................. 76 F2. Respondent’s Costs Submissions .......................................................... 77 G. THE TRIBUNAL’S FINDINGS .......................................................................... 77 Part I: PREMINARY ISSUES ............................................................................. 77 A. The inadmissibility objection ................................................................ 81 B. Local remedies ...................................................................................... 83 C. The European Convention on Human Rights (ECHR) ......................... 85 D. Local law ............................................................................................... 88 E. Burden and standard of proof ................................................................ 90 F. Damage .................................................................................................. 96 H. THE INTERPRETATION AND APPLICATION OF THE BIT ........................ 98 Part II.A: THE FACTUAL EVIDENCE ............................................................ 104 (a) The Rompetrol and Petromidia privatisations ..................................... 104 (b) The Libyan receivable ......................................................................... 106 (c) The Talpes report ................................................................................. 108 (d) The instigation of the criminal investigations (the Talpes report) ...... 110 (e) The alleged procedural irregularities in the criminal investigations ... 120 3 (f) The GPO (DIICOT) prosecutors ......................................................... 125 Part II.B: SPECIFIC FACTUAL ALLEGATIONS ........................................... 132 (g) The attachment of RRC shares ............................................................ 132 (h) The arrest and attempted imprisonment of Messrs. Patriciu and Stephenson ........................................................................................... 134 (i) The PNA and GPO press releases ....................................................... 136 (j) The interception of Mr. Patriciu’s and/or RRC’s telephone conversations ....................................................................................... 138 (k) The requests for information from banks ............................................ 141 (l) The tax controls ................................................................................... 143 Summary ............................................................................................................ 145 I. LOSS AND DAMAGE ...................................................................................... 151 J. DIRECT DAMAGE AND MORAL (REPUTATIONAL) DAMAGE ............. 157 K. OTHER RELIEF ................................................................................................ 160 L. COSTS ................................................................................................................ 161 M. CONCLUSIONS ................................................................................................ 162 4 A. PROCEDURAL BACKGROUND A1. Request for Arbitration and Notice of Registration 1. On 20 December 2005, the International Centre for Settlement of Investment Disputes (“ICSID”) received a request for arbitration dated 14 December 2005 (“the Request”) from The Rompetrol Group N.V. (“TRG” or “the Claimant”) against the Republic of Romania (“Romania” or “the Respondent”). 2. TRG was described in the Request as a company
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