Claimant Memorial (NALSAR)

TEAM XUE
INTERNATIONAL CHAMBER OF COMMERCE

UNDER THE ICC RULES OF ARBITRATION 2012 ADMINISTERED BY
THE ICC INTERNATIONAL COURT OF ARBITRATION
PETER EXPLOSIVE
Claimant
v.
REPUBLIC OF OCEANIA
Respondent
ICC ARBITRATION CASE NO. 28000/AC
MEMORIAL FOR CLAIMANT
TABLE OF CONTENTS
LIST OF ABBREVIATIONS .............................................................................................................. ii

INDEX OF AUTHORITIES .............................................................................................................. iv
INDEX OF INTERNATIONAL COURT CASES ..............................................................................x
INDEX OF ARBITRAL DECISIONS ............................................................................................... xi
LIST OF STATUTES AND TREATIES .......................................................................................xvii
STATEMENT OF FACTS .................................................................................................................. 1
SUMMARY OF ARGUMENTS.......................................................................................................... 3
ARGUMENTS ...................................................................................................................................... 4
Arguments On Jurisdiction ..................................................................................................................... 4
I.
The Claimant is an investor pursuant to Article 1(2) of the Oceania-Euroasia BIT. ......... 4
II.
The non-compliance with all pre-arbitral steps under Article 9 of the Euroasia BIT
does not constitute a Jurisdictional Bar to this Tribunal .................................................................... 11

III. In Arguendo, the Claimant may rely on Article 8 of the Oceania-Eastasia BIT by virtue
of Article 3 of the Oceania-Euroasia BIT ................................................................................................... 15
Arguments On Merits ................................................................................................................... 21

I.
The Claimants investment is a protected one .............................................................................. 21
II.
The Respondent expropriated the Claimants Investment ..................................................... 25
III.
There was no contributory fault on the part of the Claimant with regard to the making
of the investments. ............................................................................................................................................. 35

IV.
Compensation ............................................................................................................................................ 39
REQUEST FOR RELIEF .................................................................................................................. 40
LIST OF ABBREVIATIONS
Paragraph
Paragraphs
AO
Advisory Opinion
ARSIWA
Articles on Responsibility of State of Internationally Wrongful Acts
Art.
Article
BIT
Bilateral Investment Treaty
Co.
Company
ECtHR
European Court of Human Rights
ed.
Edition
eds.
Editors
EO
Executive Order
et al
et Alia
FET
Fair and Equitable Treatment
i.e.
Id est (that is)
ICC
International Chamber of Commerce
ICCPR
International Covenant on Civil and Political Rights
ICGJ
International Courts of General Jurisdiction
ICJ
International Court of Justice
ICSID
International Centre for Settlement Of Investment Disputes
ICTY
International Criminal Tribunal for Yugoslavia
Id.
Idem
ILC
International Law Commission
IUCTR
Iran-United States Claims Tribunal Report
Ltd.
Limited
MFN
Most-Favoured Nation
NAFTA
The North American Free Trade Agreement
NEA
National Environment Authority of Oceania
Oceania-Eastasia
Agreement between the Republic of Oceania and the Republic of
BIT
Eastasia for the Promotion and Reciprocal Protection of Investments
Oceania-Euroasia
Agreement between Republic of Oceania and the Republic of Euroasia
BIT
for the Promotion and Reciprocal Protection of Investments
ii
Page Number
PO
Procedural Order
PCA
Permanent Court of Arbitration
PCIJ
Permanent Court of International Justice
pp
Pages
RIAA
Reports of International Arbitral Awards
SCC
Stockholm Chamber of Commerce
Sec.
Section
Separate Op.
Separate Opinion
UN
United Nations
UNCITRAL
United Nations Commission on International Trade Law
UNCTAD
United Nations Conference on Trade and Development
USD
US Dollars
v.
Versus
VCLT
Vienna Convention of Law of Treaties
VCSST
Vienna Convention on the Succession of States
Vol.
Volume
iii
INDEX OF AUTHORITIES
SHORT REFERENCE
FULL REFERENCE
ARTICLES
Mads Andenas & Stefan Zleptnig
Andenas/Zleptnig
Proportionality: WTO Law: in Comparative

Perspective
In Texas International Law Journal (2007).
Lea Brilmayer & Natalie Klein
Brilmayer/Klein
Land and Sea: Two Sovereignty Regimes in

Search of a Common Denominator
In Faculty Scholarship Series (2001).
George C. Christie
Christie
What Constitutes a Taking of Property

Under International Law?
In Duke Law Review (1962).
Alberto Crivellaro
Crivellaro
Arbitration Case Law on Bribery: Issues of

Arbitrability, Contract Validity, Merits and
Evidence
In ICC institute of World Business Law:
Arbitration-Money Laundering, Corruption
and Fraud (2003).
Rudolf Dolzer
Dolzer
Indirect Expropriations: New

Developments
In NYU Journal of Law (2002).
Rudolf Dolzer & Margrete Stevens
Dolzer/Stevens
Bilateral Investment Treaties

In Kluwer Law International (2009).
Peter Feldman & August Reinisch
Feldman/Reinisch
Legality of Expropriation: Standards of

Investment Protection
iv
In Oxford Handbook of International

Investment Law (2008).
Todd J. Grierson-Weiler & Ian A. Laird
Grierson-Weiler/Laird
Standards of Treatment
Ori J. Herstein
Herstein
A Normative Theory of the Clean Hands

Defense
In Cornell Law Faculty Publication (2011).
R. Higgins
Higgins
The Taking of Property by the State: Recent

Developments in International Law
In Recueil des Cours (1982).
William J. Lawrence
Lawrence
Application of the Clean Hands Doctrine in

Damage Actions
In Notre Dame Law Review (1982).
Rahim Moloo
Moloo
A comment on the Clean Hands Doctrine in

International law
In The Fordham Law Journal (2010).
David R. Mummery
Mummery
The Content of the Duty to Exhaust Local

Remedies
In American Journal of International Law
(1965).
Yannick Radi
Radi
Domesticating the Trojan Horse

In European Journal of International Law
(2007).
Raeschke-Kessler/Gottwald
Hilmar Raeschke-Kessler & Dorothee
Gottwald
Corruption
August Reinisch
Reinisch
Expropriation
W. Michael Reisman & Robert D. Sloane
Reisman/Sloane
Indirect Expropriation and its Valuation in

the BIT Generation
In Yale Law School Legal Scholarship
Repository (2004).
Christoph Schreuer
Schreuer (I)
Nationality of Investors: Legitimate

Restrictions vs. Business Interests,
In The ICSID Review Foreign Investment
Law Journal (2009).
Christoph Schreuer
Schreuer (II)
Consent to Arbitration
Georg Schwarzenberger
Schwarzenberger
International Law as Applied by

International Courts and Tribunals
In The International Law Quarterly (1950).
BOOKS
Chittharanjan Amerasinghe
Amerasinghe
The Clean Hands Doctrine

Diplomatic Protection (2008).
Anne Bayefsky
Bayefsky
Self Determination and International Law:

Quebec and Lessons Learned (2000).
vi
Blacks Law
Bryan A. Garner
Blacks Law Dictionary (2004).
Yehuda Zvi Blum
Blum
Historic Titles in International Law (1965).

Charles Nelson Brower & Jason D.
Brower/Brueschke
Brueschke
The Iran-United States Claims Tribunal
(1998).
Ian Brownlie
Brownlie
International Law and the Use of Force by

States (1963).
Jonathan Doak & Claire McGourlay
Doak/McGourlay
Evidence in Context (2008).

Christopher F. Dugan, Don Wallace Jr. &
Dugan/Wallace/Sabahi
Borzu Sabahi
Investor-State Arbitration
(2008).
Robert Yewdall Jennings
Jennings
The Acquisition of Territory in International

Law (1963).
N. Stephan Kinsella & Noah D. Rubins
Kinsella/Rubins
International Investment, Political Risk and

Dispute Resolution: A Practioners Guide
(2005).
Lassa Francis Lawrence Oppenheim
Oppenheim
Oppenheims International Law: Peace

(2003).
M. Sornarajah
Sornarajah
The International Law on Foreign Investment

(2012).
Richard W. Stewart, Edgar F. Raines &
Stewart/Raines/CMH
Center of Military History

Operation Urgent Fury: The Invasion of
vii
Grenada, October 1983 (2008).

MISCELLANEOUS LEGAL SOURCES
Gary Born, Marija Scekic
Born/Scekic
Pre-Arbitral Procedural Requirements: A

Dismal Swamp
(2015).
Expert Opinion of Christoph Schreuer in
Christoph Schreuer,
Wintershall v. Argentina
Wintershall Aktiengesellschaft v. Republic of

Argentina,
ICSID Case No. ARB/04/14,
(Legal Opinion of Christoph Schreuer)
Hague Conference (2010), Report on
International Law Association, The Hague
Meaning of Armed Conflict
Conference (2010), Use of Force, Final

Report on the Meaning of Armed Conflict in
International Law.
Hersch Lauterpacht, Norwegian Loans
International Court of Justice, (1957), Certain
Case
Norwegian Loans, (France v. Norway),

Separate Opinion of Judge Hersch
Lauterpacht, 1957 I.C.J. 9 (July 6).
Accordance with International Law of the
ICJ AO on Kosovo
Unilateral Declaration of Independence in

Respect of Kosovo,
Advisory Opinion, I.C.J. Reports 2010, p.
403.
Responsibility of States for Internationally
ARSIWA
Wrongful Acts 2001, 53 UN GAOR Supp.

(No. 10) at 43, U.N. Doc. A/56/83 (2001).
Second Report on Diplomatic Protection
Second Report on Diplomatic Protection
U.N. Doc.A/CN.4/514
(2001).
Third Report on Diplomatic Protection
Third Report in Diplomatic Protection
U.N. Doc. A/CN.4/523
viii
(2002).
UNCTAD: Series on Issues in International
UNCTAD (I)
Investment Agreement II
(UNCTAD/DIAE/IA/2010/1).
UNCTAD: Series on issues in international
UNCTAD (II)
investment agreements, An Overview

(UNCTAD/ITE/IIT/13).
UNCTAD: Series on Issues in International
UNCTAD (III)
Investment Agreements, 2012

(E.12 II. D.7).
ix
INDEX OF INTERNATIONAL COURT CASES
SHORT REFERENCE
FULL REFERENCE
Ambatielos (I)
Ambatielos Case (Merits)

(Greece v. United Kingdom)
Judgment 1953 I.C.J (May. 19).
Ambatielos Case
Ambatielos (II)
(Greece v. United Kingdom)

Judgment 1956 International Commission of
Arbitration (Mar. 6).
Anglo-Iranian Oil Co.
Anglo-Iranian Oil Co. Case
(United Kingdom v. Iran)

Preliminary Objection 1952 I.C.J. (Jul. 22).
Jurisdictional Immunities of the State
Case regarding State Immunity
(Germany v. Italy: Greece Intervening)

Judgment I.C.J. (Feb. 3, 2012).
Case Concerning the Factory at Chorzow
Chorzow Factory Case
(Claim for Indemnity) (Merits), P.C.I J.

Judgment No. 13, Ser. A., No. 17 (28
September 1928).
Prosecutor v. Dusko Tadic aka Dule,
Prosecutor v. Dusko Tadic
(Decision on the Defence Motion for

Interlocutory Appeal on Jurisdiction),
IT-94-1, International Criminal Tribunal for
the former Yugoslavia (ICTY), 2 October
1995.
The Case Concerning the Rights of
Case Concerning Rights of Nationals Of The
Nationals of The United States of America
United States of America In Morocco
in Morocco
(France v. United States of America)

Judgment 1952 I.C.J. (Aug. 27).
INDEX OF ARBITRAL DECISIONS
ARBITRAL DECISIONS
ADC Affiliate Limited and ADC & ADMC
ADC v. Hungary
Management Limited v. The Republic of

Hungary,
ICSID No. ARB/03/16, Award, (Oct. 2,
2006).
Suez, Sociedad General de Aguas de
Aguas Provinciales v. Argentina
Barcelona S.A., and InterAguas Servicios

Integrales del Agua S.A. v. The Argentine
Republic,
ICSID Case No. ARB/03/17, Decision on
Jurisdiction (May. 16, 2006).
Amoco International Finance Corporation v.
Amoco v. Iran
The Islamic Republic of Iran,

15 Iran-US CTR 189, Award No. 310-56-3,
(Jul. 14, 1987).
Azurix Corp. v. The Argentine Republic,
Azurix v. Argentina
ICSID Case No. ARB/01/12, Award, (Jul.

14, 2006).
BP Exploration Co. (Libya) v. Hunt
BP Exploration Co. (Libya) v. Hunt
Ad-Hoc Arbitral Tribunal

(No 2) [1983] 2 AC 352.
Camuzzi International S.A. v. The Argentine
Camuzzi v. Argentina
Republic,
Objection to Jurisdiction (May. 11, 2005).
Champion Trading Company, Ameritrade
Champion Trading v. Egypt
International, Inc. v. Arab Republic of Egypt,

Jurisdiction, (Oct. 21, 2003).
CME Czech Republic B.V. v. The Czech
CME v. Czech Republic
xi
Republic,
UNCITRAL, Partial Award, (Sep. 13, 2001).
CMS Gas Transmission Company v. The
CMS Gas Transmission Co. v. Argentina
Argentine Republic,
ICSID Case No. ARB/01/8, Award, (May 12,
2005).
Marvin Roy Feldman Karpa v. The United
Feldman v. Mexico
Mexican States,
ICSID Case No. ARB(AF)/99/1, Award,
(Dec. 16, 2002).
Claim of Finnish Shipowners against Great
Finnish Ships Arbitration
Britain in Respect of the Use of Certain

Finnish vessels during the War,
3 RIAA 1479, Award, (May 9, 1934).
Firemans Fund Insurance Company v. The
Firemans Fund Insurance Co. v. Mexico
United Mexican States,

ICSID Case No. ARB(AF)/02/01, Award.
(Jul. 17, 2006).
GAMI Investments, Inc. v. The Government
GAMI Investments v. Mexico
of the United Mexican States,

UNCITRAL, Award, (Nov. 15, 2004).
ITT Industries v. The Government of the
ITT Industries Inc. v. Iran
Islamic Republic of Iran,

2 Iran-US CTR, Award No. 47-156-2, (May
26, 1983).
James v. United Kingdom,
James v. United Kingdom
ECHR 2, Judgement, (Feb. 21, 1986).

LG&E Energy Corp., LG&E Capital Corp.,
LG&E v. Argentina
and LG&E International, Inc v. Argentine

Republic,
Liability, (Oct. 3, 2006).
xii
Emilio Agustin Maffezini v. The Kingdom Of
Maffezini v. Spain
Spain,
Jurisdiction (Jan. 25, 2000).
Metalclad Corporation v. United Mexican
Metalclad v. Mexico
States,
ICSID Case No. ARB(AF)/97/1, Award,
(Aug. 30, 2000).
Metal-Tech v. Republic of Uzbekistan,
Metal-Tech v. Uzbekistan
ICSID Case No. ARB/10/3, Award, (Oct. 4,

2013).
National Grid v. Argentina
National Grid plc v. The Argentine Republic,

UNCITRAL (1976), Decision on
Jurisdiction.
Gas Natural SDG, S.A. v. The Argentine
Natural Gas v. Argentina
Republic,
ICSID Case No. ARB/03/10, Decision of the
Tribunal on Preliminary Questions on
Jurisdiction (Jun. 17, 2005).
Norwegian Shipowners Claims
Norwegian Shipowners' claims,

1 RIAA 307, Award, (Oct. 13, 1922).
Eudoro Armando Olguin v. Republic of
Olguin v. Paraguay
Paraguay,
ICSID Case No. ARB/98/5, Award, (26. Jul,
2001).
Phelps Dodge Corp. v. Islamic Republic of
Phelps Dodge Corp. v. Iran
Iran,
Iran-US CTR, Award No. 217-99-2, (Mar.
19, 1986).
Phillips Petroleum Company Iran v. The
Phillips Petroleum Co. v. Iran
Islamic Republic of Iran, The National

Iranian Oil Company,
xiii
(Jun. 29, 1989).

Plama Consortium Limited v. Republic of
Plama v. Bulgaria
Bulgaria,
Jurisdiction (Feb. 8, 2005).
Pope & Talbot Inc. v. The Government of
Pope & Talbot v. Canada
Canada,
UNCITRAL, Interim Award, (Jun. 26, 2000).
Renta 4 S.V.S.A, Ahorro Corporacin
Renta 4 and Ahorro v. Russia
Emergentes F.I., Ahorro Corporacin

Eurofondo F.I., Rovime Inversiones SICAV
S.A., Quasar de Valors SICAV S.A., Orgor de
Valores SICAV S.A., GBI 9000 SICAV S.A. v.
The Russian Federation,
Stockholm Chamber of Commerce, SCC
Arbitration (24/2007).
Rosinvestco UK Ltd. v. The Russian
Rosinvest v. Russia
Federation,
Stockholm Chamber of Commerce, SCC
Arbitration V (079/2005).
Rudloff Case (interlocutory)
Rudloff Case
American-Venezulean Mixed Claims

Commission, Decision on Merits, 9 RIAA
(1959).
S.D. Myers, Inc. and Government of Canada
S.D. Myers Case
UNCITRAL (1976), Partial Award, (Aug.

25, 2001).
Saba Fakes v. Republic of Turkey
Saba Fakes v. Turkey
ICSID Case No. ARB/07/20, Award, (Jul.

14, 2010).
Salini v. Jordan
Salini Costruttori S.p.A. and Italstrade S.p.A.

v. The Hashemite Kingdom of Jordan,
ICSIS Case No. ARB/02/13, Decision on
xiv
Jurisdiction, (Nov. 9, 2004).

Sea-Land Service, Inc. v. The Islamic
Sea-Land Case
Republic of Iran, Ports and Shipping

Organization of Iran,
Iran-US CTR, Award No. 135-33-1, (Jun. 20,
1984).
Siemens A.G. v. The Argentine Republic,
Siemens v. Argentina

Jurisdiction, (Aug. 03, 2004).
Hussein Nuaman Soufraki v. The United
Soufraki v. UAE
Arab Emirates,
ICSID Case No. ARB/02/7, Award, (Jul. 7,
2004).
Sporrong and Lonnroth v. Sweden,
Sporrong and Lonnroth v. Sweden
5 EHRR 35, Judgement, (Sept. 23, 1982).

Starrett Housing Corporation, Starrett
Starrett Housing Corp. et al v. Iran
Systems, Inc., Starrett Housing International,

Inc. v. The Government of the Islamic
Republic of Iran, Bank Markazi Iran, Bank
Omran, Bank Mellat,
16 Iran-U.S. C.T.R. at 112, Award No. 31421-1, (Aug. 14 1987).
Suez, Sociedad General de Aguas de
Suez et al v. Argentina
Barcelona, S.A. and Vivendi Universal, S.A.

v. Argentine Republic,
Liability, (Jul. 30, 2010).
Tecnicas Medioambientales Tecmed, S.A. v.
Tecmed v. Mexico
The United Mexican States

ICSID No. ARB(AF)/00/2, Award, (May 29
2003).
xv
Tippetts, Abbett, McCarthy, Stratton v.
Tippets, Abbet, McCarthy, Stratton v. TAMS-
Consulting Engineers of Iran
AFFA Consulting Engineers of Iran, The

Islamic Republic of Iran, Civil Aviation
Organization, Plan and Budget
Organization, Iranian Air Force, Ministry of
Defence, Bank Melli, Bank Sakhteman,
Mercantile Bank of Iran and Holland,
(Jun. 22, 1984).
Tokios Tokeles v. Ukraine,
Tokios Tokeles v. Ukraine
ICSID No. ARB/02/08, Decision on

Jurisdiction (Apr. 29, 2004).
Wena Hotels Ltd. v. Arab Republic of Egypt,
Wena Hotels Ltd. v. Egypt
ICSID Case No. ARB/98/4, Award (Dec. 8,

2000).
Wintershall Aktiengesellschaft v. Argentine
Wintershall v. Argentina
Republic,
ICSID Case No. ARB/04/14, Award, (Dec. 8,
2008).
World Duty Free Company v. Republic of
World Duty Free Company v. Kenya
Kenya
ICSID Case No. ARB/00/7, Award, (Oct. 4,
2006).
xvi
LIST OF STATUTES AND TREATIES

SHORT REFERENCE
FULL REFERENCE
STATUTES AND TREATIES
Treaty between the Federal Republic of
Argentine-German BIT
Germany and the Republic of Argentina on

the Encouragement and Reciprocal
Protection of Investments,
Argentina-Germany, Nov. 8, 1993.
Helsinki Final Act,
Helsinki Final Act
1st August 1975, 14 I.L.M. 1292.

ICCPR
International Covenant on Civil and Political

Rights,
19th December 1966, 999 U.N.T.S. 171.
Charter of the United Nations,
UN Charter
24th October 1945, 1 U.N.T.S. XVI.

Vienna Convention on the Law of Treaties,
VCLT
23rd May 1969, 1155 U.N.T.S. 331.

VCSST
Vienna Convention on Succession of States in

Respect of Treaties,
23rd August 1978, 1946 U.N.T.S. 3.
xvii
STATEMENT OF FACTS
1.
On 1 April 1993, the Republic of Oceania (Respondent) and the Republic of Eastasia
entered into a Bilateral Investment Treaty (the Oceania-Eastasia BIT). On 23 October
1995, the Respondent and the Republic of Euroasia entered into a Bilateral Investment
Treaty (the Oceania-Euroasia BIT) as well.
The Investment and Subsequent Contracts
2.
Mr. Peter Explosive (Claimant) invested in Oceania in February 1998 by purchasing

100% shares in Rocket Bombs Ltd., an arms production company that was a decrepit
enterprise due to the loss of its environmental license. The halt of production had left
the local town of Valhalla without a means of living.
3.
The Claimant began to modernise the production line to meet the requirements of the
Oceania Environment Act, 1996, and was granted an Environmental License from the
National Environment Authority of Oceania on 23 July 1998. After commencing arms
production, the Claimant contracted with several parties, of which the contract with the
Ministry of National Defence of Euroasia was the most crucial.
4.
The Claimants first contract with Euroasia was for a period of 15 years, from 1
January 1999 to 1 January 2014. The Claimant concluded a second contract with the
Ministry of National Defence of Euroasia on 28 February 2014.
Transfer of the Territory of Fairyland and Subsequent Actions
5.
Due to multiple wars over the last 100 years, the region of Fairyland had found itself
within Eastasian territory, although historically it had been a part of Euroasia. On 1
November 2013, the residents of Fairyland decided in a referendum, conducted by the
authorities of Fairyland, to reunite with Euroasia. On 1 March 2014, the reunification
occurred peacefully, and on 23 March 2014, Euroasia declared fairyland as part of its
territory.
6.
The government of Eastasia, however, declared the referendum as unlawful and

carrying no effect. The residents of Fairyland sought an intervention from Euroasia.
The armed forces of Euroasia entered and acquired the territory of Fairyland facing
absolutely no resistance from Eastasian forces. On 28 March 2014, the transfer was
declared as illegal by Eastasia, and there was a termination of diplomatic relations
between the two countries.
7.
The situation in Fairyland divided the international community into two camps: one
camp deeming the transfer an unlawful annexation and the other recognizing the
transfer of territory. There was no international adjudication upon the said matter.
8.
Oceania, belonging to the camp alleging it to be an unlawful annexation, passed an

Executive Order on Blocking Property of Persons Contributing to the Situation in the
Republic of Eastasia (Executive Order). The Order imposed a system of sanctions.
9.
The sanctions were introduced against persons engaged in certain sectors of the
Euroasian economy. The Order also included a ban on business operations with such
persons, thereby suspending existing contracts and making future contracts with them
illegal. Also, the sanctions prohibited those affected by the Order from engaging legal
help while approaching the domestic courts of Oceania for a recourse.
10.
The Claimant, who was engaged in the arms production sector, as well as his
investment Rocket Bombs Ltd. were impacted by the sanctions. It was the only
company in the arms production sector targeted by the sanctions. As a result of the
sanctions, there was a deterioration of Rocket Bombs business, and an immediate
decrease in the Claimants share values. The Claimant was also unable to sell his
shares. Additionally, every Oceanian company that had contracted with Rocket Bombs
Ltd issued notices pursuant to the Executive Order repudiating their contracts.
Actions of the General Prosecutors Office
11.
On the basis of an anonymous tip given in 2013, the General Prosecutors Office of
Oceania began conducting an investigation into corruption in the NEA. In November
2013, the investigation resulted in the initiation of criminal proceedings against
officials in the NEA.
12.
The President of the NEA was the main accused as per the General Prosecutors Office.
The President had been in office since 1996. On 1 February 2015, the President and
other officials of the NEA were convicted of accepting bribes.
13.
On 5 May 2015, the Claimant was informed that he was under investigation with
regard to the environmental license granted 17 years ago. On 23 June 2015, the
General Prosecutors Office initiated criminal proceedings against the Claimant.
14.
The matter regarding the alleged participation of the Claimant in the corruption scandal
is still pending in the national courts of Oceania, and no conclusive proof has been
provided regarding his involvement.
SUMMARY OF ARGUMENTS
15.
JURISDICTION. The ICC Tribunal has Jurisdiction. First, the Claimant is an investor
pursuant to Article 1 of the Oceania-Euroasia BIT since he fulfills the requirements of
having made an investment and of being a national of Euroasia in consonance with both
national and international law. Under International Law, the Claimant is a Euroasian
national due to the transfer of Fairyland through the Effective Control Doctrine as well
as the principle of Self Determination, and furthermore the transfer was not effected
through an unlawful threat or use of force. Second, the pre-arbitral steps in Article 9 of
the Oceania-Euroasia BIT are not binding, and do not constitute a Jurisdictional Bar to
this Tribunals Jurisdiction. Even if the pre-arbitral steps were found to constitute a
jurisdictional bar, complying with the pre-arbitral steps would be futile in the instant
case. Third, in arguendo the Tribunal finds that the Claimant had to comply with the
pre-arbitral steps, the Claimant may rely on Article 8 of the Oceania-Eastasia BIT by
virtue of the MFN clause contained in Article 3 of the Oceania-Euroasia BIT keeping
with the principle of non-discrimination that it embodies. Such an extension does not
violate the principles of effet utile and ejusdem generis, and does not violate any public
policy considerations. Further, the consent can be constructed from the extension of the
MFN clause.
16.
MERITS OF THE CLAIM. First, the Claimant made a protected investment with
reference to Article 1(1) of the Oceania-Eastasia BIT. The Clean Hands Doctrine
contained in the Article is not applicable because of the involvement of the States own
agent in the act of corruption. Second, the Respondent has expropriated the Claimants
investment by implementing the Executive Order, and therefore has violated its
obligations under the Oceania-Euroasia BIT. This amounts to indirect expropriation,
and the Respondent must provide adequate compensation for the substantial
depravation suffered by the Claimants investment. Third, the Claimant did not
contribute to the damages suffered by his investment since Oceania failed to establish a
nexus between the acts of the Claimant and the expropriation. Furthermore, the
Minimum Standards of Treatment have not been accorded to the Claimants
investment, and this amounts to a breach of the Claimants legitimate expectations.
ARGUMENTS
ARGUMENTS ON JURISDICTION
I. THE CLAIMANT IS AN INVESTOR PURSUANT TO ARTICLE 1(2) OF THE OCEANIAEUROASIA BIT.
17.
The Claimant is an investor pursuant to Article 1(2) 1 of the Oceania-Euroasia BIT,

fulfilling both the requirements of the said article, namely: (i) that the Claimant has
made an investment in the territory of one of the contracting parties,2 and (ii) that the
Claimant is a natural person of one of the contracting parties.3
A.
THE CLAIMANT HAS MADE AN INVESTMENT IN THE TERRITORY OF ONE OF

THE CONTRACTING PARTIES.
18.
In February 1998, the Claimant purchased 100% of the shares in Rocket Bombs Pvt.
Ltd., located in Oceania, and became its president and the sole member of its board of
directors.4 Article 1(1)(b)5 of the Oceania-Euroasia BIT provides that an investment in
the form of shares of a company constitutes a valid investment under the BIT. Further,
the numerous factories6 belonging to Rocket Bombs would constitute an investment in
immovable property, falling under the ambit of Article 1(1)(a).7 The contractual rights
procured by the Claimant would constitute an investment under Article 1(1)(c) 8 of the
Oceania-Euroasia BIT. This fulfils the first requirement under Article 1(2) of the
Oceania-Euroasia BIT, i.e., that of an investment in the territory of one of the parties, in
this case Oceania.
B.
19.
THE CLAIMANT IS A NATIONAL OF ONE OF THE CONTRACTING PARTIES.
In the instant case, the second requirement for the Claimant to be construed as an
investor under the Oceania-Euroasia BIT is that the individual must be a national of one
Oceania-Euroasia BIT at Art. 1(2), p 41.
Id.
Oceania-Euroasia BIT at Art. 1(2)(a), p 41.
Uncontested Facts at 2, p 32.
Oceania-Euroasia BIT at Art. 1(1)(b), p 40.
Uncontested Facts at 3, 6, 11, 12 , pp 32-34.
Id at Art. 1(1)(a), p 40.
Id at Art. 1(1)(c), p 40.
of the two contracting parties. The decision of the Tribunal in the case of Soufraki v.
UAE,9 as well as a multiplicity of expert opinions,10 show that the nationality of the
investor must be that of one of the parties to the BIT invoked for the Tribunal to have
jurisdiction over the claim. The tribunal in Champion Trading v. Egpyt found that for
questions of nationality, it is generally required that domestic law be referred to11. The
same was upheld by the Soufraki12 case, which showed that nationality is contingent
upon the national law of the States involved, and therefore that while investment
treaties are generally governed by international law, for the purposes of determining
nationality, national law is applicable.
20.
In the instant case, both Eastasia and Euroasia have granted the claimant nationality.
Eastasia permits dual nationality,13 and therefore the Claimants act of taking a second
nationality would not be barred by Eastasian law. Moreover, Euroasia too has granted
the Claimant nationality in accordance with its citizenship act, and therefore, the
requirements of national law of both Euroasia and Eastasia are satisfied. Moreover, in
Olguin vs Paraguay,14 the tribunal found that so long as the Claimant possessed the
nationality of one of the contracting parties of the BIT under which the claim was
invoked, the tribunal had jurisdiction over the matter. In the instant case, it is contended
that as the Oceania-Euroasia BIT has been invoked and the Claimant has acquired
Euroasian nationality in compliance with Euroasian law, the tribunal has jurisdiction to
hear the matter.
21.
However, in the instant case, it must be noted that both Article 1(3)(a)15 and Article
1(3)(b)16 of the Oceania-Euroasia BIT require compliance with international law for the
determination of the status of the territory of both Oceania and Euroasia. Therefore, in
the event that the tribunal finds that the question of nationality must be resolved in
Soufraki v. UAE at 55, 84.
10
Schreur (I) at 521; Sornahrajah at p 323.
11
Champion Trading Company v. Egypt at s 3.4.1, pp 282-289.
12
Soufraki v. UAE at 55.
13
PO3 at 2, p 59.
14
Olguin v. Paraguay at 61.
15
Oceania-Euroasia BIT at Art. 1(3)(a), p 41.
16
Id at Art. 1(3)(b), p 41.
consonance with international law, it is pertinent to determine the nationality of the

Claimant with the aid of the applicable international law as well.
22.
The Claimant was initially an undisputed national of Eastasia and a resident of

Fairyland,17 which was a part of Eastasia. The Claimant has attempted to revoke his
Eastasian nationality, and has gained Euroasian nationality as per the Citizenship Act of
Euroasia. 18 However, the Claimant did not comply with all the requirements for
revocation of nationality laid down by Eastasian law,19 and since Euroasian law does
not permit dual nationality,20 the Claimants nationality, as under international law, is in
question.
23.
The Claimants nationality must therefore be determined with reference to the rules of
customary international law and the Vienna Convention on Succession of States with
Respect to Treaties which govern the interplay of nationality and territory. Customary
international law provides that the transfer of territory from one state to another state
would cause the residents of such territory to cease to be nationals of the predecessor
state. 21 Therefore, if Fairyland has lawfully transferred to Euroasia, the residents of
Fairyland, including the Claimant, shall have lost their Eastasian nationality. Further,
the Claimant specifically shall gain Euroasian nationality as of 23 March 2014, which
he has been granted by the government of Euroasia under the Citizenship Act of
Euroasia..
24.
In addition to this, Article 15 of the Vienna Convention on the Succession of States in

Respect of Treaties clearly states that in the event that a part of a territory of a state
transfers to another state, that part shall cease to be governed by the treaties of the
predecessor state and shall instead be governed by the treaties of the successor state.22
Therefore, in the instant case, with the transfer of Fairyland from Eastasia to Euroasia,
Fairyland shall cease to be governed by Eastasian treaties and shall instead be governed
by Euroasian treaties, such as the Oceania-Euroasia BIT in the present matter.
17
18
PO2 at 4, p 56.
19
PO3 at 2, p 59.
20
PO2 at 4, p 56.
21
Oppenheim at p 219.
22
VCSST at Art. 15.
25.
It is therefore submitted that Fairyland transferred from Eastasia to Euroasia since: (a)
Euroasia acquired Fairyland through the principle of Effective Control, (b) The territory
transferred by virtue of the principle of self-determination of states, (c) Euroasia has in
no manner violated international law through either an unlawful use of force or the
threat of an unlawful use of force. Consequently, the residents of Fairyland have ceased
to be Eastasian nationals and are no longer governed by Eastasian treaties, but are
instead governed by Euroasian Treaties. Moreover, Peter Explosive specifically, post
the loss of his Eastasian nationality, has now acquired Euroasian nationality.
1.
26.
Euroasia acquired Fairyland by means of Effective Control of Territory.
Under international law, when one party has established effective, de facto control over
a certain portion of territory, and such territorial claim is uncontested effectively, the
territory acquiesces to the nation claiming sovereignty.23 This Effective Control test
has been utilized in a multitude of cases.24 There are two primary requirements for an
Effective Control claim to be successful. The first is that the territory be effectively and
de facto controlled by the party claiming sovereignty who must have the intent to
govern the territory as its own;25 this intent may be shown administratively, politically
or militarily. 26 The second requirement is that such a claim fails to be contested
effectively as the former sovereign has ceased to maintain a minimum degree of
sovereign activity in the territory.27
27.
In status quo, Euroasian forces have established complete and uncontested de facto
control over Fairyland by virtue of the deployment of their armed forces in Fairyland,
whose presence has not been met with any military resistance whatsoever from
Eastasia.28 Moreover, Euroasia has shown its intent to govern Fairyland as part of its
own territory by declaring Fairyland as part of Euroasia on 23 March 2014.29 It has
23
Blum at p 102.
24
Id. at p 104.
25
Brilmayer/Klein at pp 715-716.
26
Blum at pp 100, 101, 110, 118.
27
Jennings at p 30.
28
29
Id.
therefore established effective, de facto control over Fairyland, and has further shown
the intent to govern the territory as its own. The first requirement is therefore satisfied.
28.
Secondly, it is required that the claim be uncontested effectively due to the former
sovereigns inability to maintain a minimum degree of sovereign activity in the
territory.
29.
In status quo, Eastasia has failed to deploy any forces whatsoever to counter the
Euroasian forces deployed in Fairyland. 30 It has consequently allowed Euroasia to
establish complete control over the territory. Thereby, it is apparent that Eastasia has no
control over the territory, and by extension, has failed to maintain a minimum degree of
sovereign activity in the territory. Thus, Eastasia has failed to effectively contest the
Euroasian claim over Fairyland. Therefore, the second requirement of the Effective
Control test is also satisfied.
30.
Eastasia is also one of the only nations in history to have failed to militarily respond to
the deployment of military forces of another state in its territory. It is pertinent to refer
to the 1983 Invasion of Grenada, wherein the State of Grenada - a country covering an
area of around 220 Square miles - deployed its own military forces to rebut an invasion
by the United State of America in its territory, despite the fact that its own forces were
grossly outmatched in manpower.31
31.
In summation, it is submitted that by means of the Doctrine of Effective Control,

Euroasia has established effective control over Fairyland and has shown intent to
govern the same as its own territory, satisfying the first requirement of the test.
Moreover, Eastasia has been unable to contest such a claim effectively, by virtue of its
failure to maintain a minimum degree of sovereign activity in the territory, and
therefore the second requirement of the test is also satisfied. Therefore, Fairyland has
acquiesced to Euroasia from Eastasia, and the people of Fairyland have subsequently
lost their Eastasian nationality in keeping with the principles of international law.
2.
Fairyland transferred from Eastasia to Euroasia in keeping with the right

of self-determination.
30
Id.
31
Stewart/Raines/CMH at Introduction.
32.
Article 1(2) of the United Nations Charter states that all people have the right of selfdetermination, and that the upholding of such a right is one of the purposes of the
United Nations.32 In addition to this, Article 1(1) of the International Covenant on Civil
and Political rights also states that all individuals have the right of self-determination,
by virtue of which they may freely determine their own political status.33
33.
However, both Article 1(2) of the United Nations Charter and Article 1(1) of the
International Covenant on Civil and Political Rights fail to define the extent, scope, or
applicability of the right of self-determination. It is therefore submitted, as shown
below, that the right of self-determination includes both internal and external selfdetermination, and by virtue of the latter allows for the people of a state to, in exercise
of their right of external self-determination, secede from the state.
34.
Numerous eminent jurists, such as Thomas M. Franck, have found that a right to
secession by virtue of the will of the people exists, and that such a right is provided by
the principle of external self-determination. 34 This is relevant in the context of the
Advisory Opinion on Kosovo provided by the International Court of Justice,35 which
found that a declaration of independence is a manifestation of the will of the people and
that such a declaration cannot be considered illegal. It therefore concluded that over the
course of the twentieth century, a right of independence of peoples was created by the
international law of self determination.36
35.
The same is upheld by Part 8 of the Helsinki Final Act of 1st August 1975,37 which
expressly provides for the existence of both the right of internal and external selfdetermination of peoples. It further finds that as a part of this principle, all peoples have
the right to, in full freedom, determine their internal and external political status as they
wish.
36.
Furthermore, Procedural Order No. 2 of the Record finds that the every province is
entitled to conduct a referendum which is within their exclusive competence. It is
32
UN Charter at Art. 1(2).
33
ICCPR at Art. 1(1).
34
Bayefsky at p 75.
35
ICJ AO on Kosovo.
36
ICJ AO on Kosovo at 79, 82.
37
Helsinki Final Act at Part 8.
submitted that a unilateral declaration of independence would be within the exclusive

competence of the province, as the authorities of Fairyland would have the right to
declare independence. The same was upheld by the ICJ in its advisory opinion on
Kosovo, wherein it found that a unilateral declaration of independence by the Assembly
of Kosovo38 was not illegal or against international law.39
37.
Therefore, it is apparent that international law, as it stands, recognizes that all people
have the right of external self-determination, which by extension permits for a right to
secede. Moreover, the people of Fairyland have shown, through the referendum held on
1st November 2013, that they desire to exercise this legal right of external selfdetermination, and in the exercise of such right, Fairyland has transferred from Eastasia
to Euroasia.
3.
Euroasia has neither used nor threatened to use force and thus has not
violated the UN Charter.
39.
Article 2(4) of the UN Charter prohibits the use of force or the threat of use of force
against the territorial integrity or political independence of one state by another state.40
The International Criminal Tribunal for Yugoslavia found that for a question of use of
armed force to arise, there must be an armed conflict in effect.41 Therefore, for a use of
force
to
be
present,
there
must
be
an
armed
conflict
in
existence.
There are two requirements for an armed conflict to be in effect. The first is that there
must be organized Armed Groups in existence. The second is that these Armed Groups
must be engaged in fighting of some intensity.42
40.
In the instant case, the second requirement is not fulfilled. There has been no fighting
whatsoever, since although Euroasia forces were indeed deployed in Fairyland, at no
point of time were they ever militarily engaged by Eastasian forces or even hostile
combatants. Therefore, it is apparent that no fighting of any manner took place.
38
ICJ AO on Kosovo at 76.
39
Id at 121.
40
UN Charter at Art. 2(4).
41
Prosecutor v. Dusko Tadic at 70.
42
Hague Conference (2010), Report on Meaning of Armed Conflict at p 2.
10
41.
Resultantly, as no fighting of any intensity has occurred, it cannot be said that there is
an armed conflict in existence. Since the use of force is purely contingent on the
existence of an armed conflict, and no armed conflict currently exists, it cannot be
stated that there has been a use of force by Euroasia.
42.
It is further submitted that no threat of force has occurred either. Ian Brownlie has
defined the threat of force as an express or an implied promise made by a government
that it would resort to force in the event that certain demands of that government are not
complied with.43
43.
In the instant case, Euroasia has made no demands of Eastasia, and therefore it is
apparent that it has not executed a threat of force. Therefore, in summation, it is the
contention of the Claimant that there has been no use of force, nor a threat of the use of
force by Euroasia, and thus, Euroasias actions do not violate Article 2(4) of the UN
Charter.
44.
In conclusion, it is submitted that the territory of Fairyland has transferred lawfully

from Eastasia to Euroasia for three primary reasons: (i) The territory has transferred by
the Doctrine of Effective Control; (ii) The right of self-determination of people as
exercised by the people of Fairyland has effected the transfer; (iii) Euroasia has, in
effecting the transfer, exercised no unlawful use of force in compliance with the UN
Charter.
45.
In consonance with Article 15 of the Vienna Convention on Succession of States in

Respect of Law of Treaties and principles of customary international law, Fairyland is
now governed by Euroasian treaties, and Peter Explosive has gained Euroasian
nationality. Therefore, since Peter Explosive has an investment in Oceania and is a
Euroasian national, he is an investor within the definition laid down by Article 1(2) of
the Oceania-Euroasia BIT.
II.
THE NON-COMPLIANCE WITH ALL PRE-ARBITRAL STEPS UNDER ARTICLE 9

OF THE EUROASIA BIT DOES NOT CONSTITUTE A JURISDICTIONAL BAR TO
THIS TRIBUNAL
46.
Article 9 of the Oceania-Euroasia BIT lays down two pre-arbitral steps: firstly, that the
investor must attempt at amicable settlement to the extent possible, and secondly, that
the investor may litigate in national courts for a period of twenty four months. It is
43
Brownlie at p 364.
11
submitted that these provisions do not constitute a jurisdictional bar for this Tribunal,
since (1) The Claimant has complied with the pre-arbitral requirement of attempting
amicable settlement; (2) The provision relating to litigating in National Courts of
Oceania for a minimum period of twenty-four months is optional and (3) even if the
Tribunal finds that the requirement to litigate in national courts of Oceania is
mandatory, complying with this requirement would be futile, thereby exempting the
Claimant from complying.
C.
THE CLAIMANT HAS COMPLIED WITH THE PRE-ARBITRAL REQUIREMENT OF

ATTEMPTING AMICABLE SETTLEMENT.
47.
The first pre-arbitral step laid down in Article 9 of the Oceania-Euroasia BIT is that the
investor shall attempt amicable settlement to the extent possible. 44 The Claimant
complied with this requirement by sending a notice to the Oceanian Ministry of Foreign
Affairs along with copies to Ministries of Finance, Defence and Environment on 23
February 2015.45 The Claimant filed the Request for Arbitration on 11 September 2015
after receiving no reply whatsoever from the Respondent.46 Amicable settlement can
only result in a final settlement if both parties are committed to the process. 47 Not
responding to the notice sent by the Claimant, where he expressed his intention to
proceed to arbitration if negotiations could not be reached successfully, shows that the
Respondent had no commitment to finding an amicable solution. The Claimant, by
sending the notice that was not replied to, thereby fulfilled the requirement under
Article 9(1) of the Oceania-Euroasia BIT by attempting amicable settlement to the
extent possible.
44
Oceania-Euroasia BIT at Art. 9, p 44.
45
PO3 at 4, p 60.
46
Request for Arbitration, p 3.
47
Kinsella/Rubins at Part III, p 3.
12
D.
THE REQUIREMENT TO LITIGATE IN NATIONAL COURTS OF OCEANIA IS NOT

MANDATORY.
48.
A treaty should be interpreted in good faith, giving the words their ordinary meaning
keeping in mind context and the purpose of the treaty.48 Further, parties intention is to
be understood only insofar as the text of the treaty is concerned.49
49.
In the Oceania-Euroasia BIT, Article 9(2) states that in the event that an amicable
settlement cannot be reached, the dispute may be submitted to the local or national
Courts of the contracting party in which the investment is made. Using the word may
in Article 9(2) in contrast to shall in Article 9(1) shows the optional nature of the prearbitral step contained in Article 9(2). In the case of Wintershall v. Argentina,50 the
Tribunal held that the pre-arbitral steps contained in the German-Argentine BIT51 were
mandatory only because of the presence of the word shall. The Tribunal even stated
that had the word may been used, complying with the pre-arbitral step would be
optional.52
E.
IN ARGUENDO, COMPLYING WITH THE PRE-ARBITRAL STEPS WOULD BE

FUTILE.
50.
A local remedies rule, whether under a BIT or as an established rule of customary

international law,53 is subject to certain exceptions.54 One of these exceptions, known as
the futility exception, arises when there is no effective remedy available to the investor
within the national boundaries of the state in which he invests.55 In such a situation, the
non-compliance with pre-arbitral steps and the non-exhaustion of local remedies is not
a jurisdictional bar either to an international arbitral tribunal or for diplomatic
protection.56
48
VCLT at Art. 31.
49
Expert Opinion of Christoph Schreuer in Wintershall v. Argentina.
50
Wintershall v. Argentina at 119.
51
Argentine-German BIT at Art.10.
52
53
Second Report on Diplomatic Protection at p 10.
54
Third Report on Diplomatic Protection at pp 17-18.
55
ARSIWA at Art. 44.
56
Dugan/Wallace/Sabahi at p 347.
13
51.
It would be futile, in the instant case, for the Claimant to submit his dispute for
resolution before national courts for the stipulated minimum period of twenty-four
months. This is because neither under international nor national law can Oceanian
National Courts adjudicate claims brought directly under an international treaty. The
only other remedy, therefore, available to the Claimant would be to try and set aside the
Executive Order by approaching the Oceanian Constitutional Tribunal, which would be
a lengthy process, taking up to 3 or 4 years. Further, the Tribunal has historically shown
deference to the Executive Branch in matters of foreign policy.57
52.
The presently applicable test for futility is that of no reasonable possibility of an

effective remedy.58 In the instant case, not only does the local court have no jurisdiction
over the dispute in question, but there is also a consistent and well-established series of
precedent adverse to the investor that has been established by the only Tribunal that he
may approach. Further, Section 9 of the Executive Order makes it even more
improbable that the Claimant will get any relief from the national Constitutional
Tribunal. Even approaching the said Constitutional Tribunal would not provide the
Claimant with the compensation that he seeks, but would at best merely set aside the
Executive Order. The Third Report on Diplomatic Protection states that where such a
situation exists, the investors non-compliance with pre-arbitral steps would not prevent
him from submitting the dispute to an international tribunal or to resort to diplomatic
protection.
53.
The old test for measuring futility, as laid down in the Finnish Ships Arbitration, was of
obvious futility.59 This test has been criticized as being too strict in order to serve its
purpose. 60 The new test has been used since the Norwegian Loans Case, where Sir
Hersh Lauterpacht stated that the new position is that of no reasonable possibility of an
effective remedy as opposed to obvious futility.61
54.
In the instant case not only does the Claimant not have a reasonable possibility of an
effective remedy but also resorting to national courts would be obviously futile since
57
PO3 at 6, p 60.
58
Second Report on Diplomatic Protection at p 10.
59
Finnish Ships Arbitration Case at 1504.
60
Mummery at p 390.
61
Separate Op. of Lauterpacht in the Norwegian Loans Case at p 48.
14
Section 1(b) of the Executive Order of 1 May 2014 prohibits a person from engaging
professionally with the blocked person in any way, 62 which would mean that the
Claimant would not be able to even hire a lawyer to help him seek any relief.
III.
IN ARGUENDO, THE CLAIMANT MAY RELY ON ARTICLE 8 OF THE OCEANIAEASTASIA BIT BY VIRTUE OF ARTICLE 3 OF THE OCEANIA-EUROASIA BIT
55.
Even if the Tribunal holds that the Claimant was bound to comply with the pre-arbitral
steps contained in Article 9 of the Oceania-Euroasia BIT, it is submitted that the
Claimant may rely on Article 8 of the Oceania-Eastasia BIT by virtue of the MFN
clause contained in Article 3 of the Oceania-Euroasia BIT. The Claimants submissions
under the same are five-fold; (1) The Claimant would, under the Euroasia BIT, suffer
discriminatory treatment, making him eligible to invoke the MFN Clause; (2) such
extension of the MFN clause does not violate the ejusdem generis rule; (3) such
extension of the MFN clause does not violate the principle of effet utile; (4) such
extension of the MFN clause to dispute resolution would constitute a valid consent of
the host state to international arbitration and (5) no public policy considerations of
Oceania are violated by such extension of the MFN clause.
A.
THE CLAIMANT WOULD SUFFER DISCRIMINATORY TREATMENT UNDER THE

OCEANIA-EUROASIA BIT.
56.
The MFN clause is based upon the principle of non-discrimination.63 The International
Court of Justice (ICJ) has stated that the pertinent and applicable terms to explain the
consequences of the principle of non-determination are uniformity and equality of
treatment of investors or their investments.64 In the case of Maffezini the Tribunal noted
that this uniformity can be achieved as regards not only substantive treaty rules but also
procedural ones.65
57.
Forcing an investor to litigate in national courts for a period of a few months does not
serve any purpose in terms of settling the dispute, but results in a waste of time, money
62
EO at 1(b), p 52.
63
Maffezini v. Spain at 42.
64
Case Concerning the Rights of Nationals of the United States of America in Morocco at 20.
65
15
and effort of the investor.66 In the instant case, if forced to comply with the pre-arbitral
steps, the Claimant would have to litigate in national Courts for two years even though
the Executive Order prohibits him from hiring a lawyer.67 An Eastasian investor, on the
other hand, would not have to comply with all the pre-arbitral steps.68 Therefore, the
said discrimination mandates the invocation of the MFN clause in Article 3 of the
Oceania-Euroasia BIT.
B.
EXTENDING THE MFN CLAUSE IN ARTICLE 3 OF THE OCEANIA-EUROASIA

BIT TO DISPUTE SETTLEMENT DOES NOT VIOLATE THE EJUSDEM GENERIS
RULE.
58.
The principle of non-discrimination does not apply in all situations but rather applies
only in similar situations or circumstances. 69 This is encapsulated in the ejusdem
generis rule.70 If the ejusdem generis rule is not satisfied, then the third-party treaty
would be res inter alios acta in respect of the investor. 71 The Commission of
Arbitration in the case of Ambatielos held that most-favoured nation treatment might
also cover the administration of justice as long as the ejusdem generis rule is satisfied.72
59.
The ejusdem generis rule states that the MFN clause can only extend to those matters,
the genus or type of which is inherent in the MFN clause itself. 73 Article 3(1) of the
Oceania-Euroasia BIT states that the MFN clause extends to matters regulated by this
Agreement. 74 The Oceania-Euroasia BIT regulates dispute resolution between an
investor and contracting state in Article 9.75 Therefore, dispute resolution is a subject
that would fall under the ambit of the MFN clause in Article 3.
66
Born/Scekic at p 228.
67
EO at 1(b), p 52.
68
Oceania-Eastasia BIT at Art. 8, p 49.
69
UNCTAD (I) at p 7.
70
UNCTAD (II).
71
Anglo-Iranian Oil Co. Case at p 20.
72
Ambatielos (II) at p 107.
73
Id.
74
75
16
60.
Article 3(2) of the Oceania-Euroasia BIT restricts the application of the MFN clause.
However, the Oceania-Eastasia BIT does not fall under any of the restricted categories
mentioned in the Article. A BIT is fundamentally different from an agreement to
facilitate cross-border trade, since it does not require that there be a transfer of
ownership of goods or services. 76 Therefore, the Claimant is not estopped from
invoking the MFN clause in Article 3(1) by virtue of the restrictions mentioned in
Article 3(2).
C.
EXTENDING THE MFN CLAUSE IN ARTICLE 3 OF THE EUROASIA TO DISPUTE

RESOLUTION DOES NOT VIOLATE THE PRINCIPLE OF EFFET UTILE.
61.
Effet utile is a tool of interpretation that assumes that the parties intended every part of
the contract to be effective and to have some purpose.77 Therefore, while interpreting a
treaty, such interpretation must be used so as to ensure that no provision is rendered
useless.78
62.
In the instant case, extending the MFN clause to dispute resolution does not violate the
principle of effet utile. The principle of effectiveness is a mode of interpreting a
provision so as to most effectively fulfill the objectives of a provision or treaty.79 The
dispute resolution provision of the Oceania-Euroasia BIT contained in Article 9 would
be effective regardless of the extension in the present case as it would apply effectively
to any Claimant who chooses to be bound by it. The MFN clause does not reduce the
effectiveness of Article 9, but merely provides investors with a choice to invoke the
dispute resolution clause of another BIT. Further, not extending the MFN clause to
dispute resolution would deprive it of its intended effect, which is to be derived from its
text.80
D.
THE EXTENSION OF THE MFN CLAUSE PROVIDES ADEQUATE CONSENT TO

THIS TRIBUNALS JURISDICTION.
76
Black's Law at pp 844, 1529.
77
78
Id.
79
VCLT at Art. 31.
80
Id; Expert Opinion of Christoph Schreuer in Wintershall v. Argentina.
17
63.
The Tribunal in Salini v. Jordan was the first to hold that a MFN clause, unless it
explicitly mentions the contrary, cannot be extended to dispute resolution. 81 This
decision, followed in reasoning by Plama v. Bulgaria,82 is based on the assumption that
the MFN clause applies only to substantive matters.83 This assumption is not based on
preceding authorities, such as the Ambatielios Case,84 and has no base in law or logic.
64.
However, in light of the contradictory case law, the best approach is considered to be
one that pays close attention to the wording of the MFN clause.85 As submitted above,
Article 3(1) clearly includes dispute resolution. 86 When the MFN clause includes
dispute resolution, consent can be drawn from the dispute resolution of the secondary
treaty that is being relied upon.87 Article 8 of the Oceania-Eastasia BIT clearly states
that the contracting parties, one of them being Oceania, declare that they unreservedly
and bindingly consent to the submission of a dispute before an International Arbitral
Tribunal.88 As stated by Professor Christoph Schreuer, where the host state undertakes,
as is the case, to give consent to arbitration in the future, refusing such consent would
amount to a breach of contract.89
E.
EXTENDING THE MFN CLAUSE TO DISPUTE RESOLUTION DOES NOT VIOLATE

ANY PUBLIC POLICY CONSIDERATIONS OF OCEANIA.
65.
The Tribunal in Maffezini v. Spain, while extending the MFN Clause to dispute
resolution, ensured such extension would not result in rampant treaty shopping by
investors.90 For the same, they laid down four scenarios where the MFN Clause could
not be extended to dispute resolution clauses citing grounds of public policy. 91 These
81
Salini v. Jordan at 119.
82
Plama v. Bulgaria at 119.
83
Schreuer (II) at p 853.
84
Ambatielos (II) at p 107.
85
86
87
88
Oceania-Eastasia BIT at Art. 8, p 49.
89
90
91
Id.
18
four scenarios are: (1) when the contracting parties have opted for a highly
institutionalized system of arbitration (such as that under the NAFTA), then the
investor may not use the MFN Clause to bypass those requirements; (2) where the
dispute resolution clause in the basic BIT contains a fork-in-the-road provision and
the investor has made a non-reversible choice, the investor cannot use the MFN clause
to change his choice by relying on the dispute resolution clause of another BIT; (3)
Where the parties have conditioned their consent to arbitration upon the exhaustion of
local remedies, then the MFN clause cannot be used to bypass such condition and (4)
the investor cannot use the MFN clause to change the forum of international arbitration
or dispute resolution.92
66.
In the instant case, neither have the parties opted for a highly institutionalized dispute
resolution mechanism, as is present in the NAFTA, nor have they opted for a fork-inthe-road provision.93 As a result, the first two exceptions stated by Maffezini do not
apply. The third exception does not apply since a mere waiting period, as stated by the
Maffezini Tribunal itself and affirmed by scholars94, does not constitute a pre-condition
to international arbitration.95 The fourth exception also does not apply in the present
case since consent to the ICC as a forum of arbitration under the ambit of the ICC is
present in both the BITs.96 There is no attempt being made by the Claimant to change
the forum of international arbitration.
67.
The case of Plama v. Bulgaria, while giving a decision contrary to Maffezini, did so on
the main grounds of Bulgarias predominant treaty practice. In the instant case, Oceania
does not have any consistent treaty practice,97 which means that the MFN clause would
have to be interpreted purely on its merits and the reasoning of the Tribunal in Plama
would not apply. Further, although the Tribunal in Plama did state that unless explicitly
mentioned that the MFN clause cannot extend to dispute resolution, there have been
92
Id.
93
94
95
96
Oceania-Euroasia BIT at Art. 9, p 44; Oceania-Eastasia BIT at Art. 8, p 49.
97
PO2 at 8, p 57.
19
several case law 98 and scholarly opinion 99 that have disagreed with this reasoning.
Therefore, the test laid down in Maffezini should be used by this Tribunal.
98
Siemens v. Argentina; RosiInvest v, Russia; National Grid v. Argentina; Renta 4 v. Ahorro; Natural Gas v.
Argentina; Camuzzi v. Argentina; Aguas Provinciales v. Argentina.
99
Radi at p 764.
20
ARGUMENTS ON MERITS
I.
68.
THE CLAIMANTS INVESTMENT IS A PROTECTED ONE
The Clean Hands Doctrine finds its application through Article 1(1) of the OceaniaEastasia BIT. The phrase, in accordance with the laws is the embodiment of the
same doctrine. It is the Respondents contention that the Claimants investment is not a
protected one with reference to this Article.100
69.
The Republic of Oceania, in its answer to the request for arbitration, 101 has raised
claims regarding the protection that is to be granted to the investments made by Peter
Explosive in Rocket Bombs Ltd., and not regarding the investment itself.
70.
Furthermore, the Republic of Oceania is contesting the manner in which Mr. Explosive
was granted the license, and not whether there was an investment in the first place
within the meaning of the applicable BIT i.e., the Oceania-Eurosia BIT. Since the issue
raised is not regarding the investment itself, which is the necessary requirement for a
claim to be brought forth in front of this tribunal under the Oceania-Euroasia BIT, it
passes the jurisdictional bar and is a claim regarding the merit of the manner in which
Mr. Explosive was granted the license.
A.
THE CLEAN HANDS DOCTRINE WILL NOT APPLY TO MR. PETER EXPLOSIVE
AND THE INVESTMENTS MADE IN ROCKET BOMBS LTD.
71.
The doctrine of Clean Hands is a principle of equity 102 as well as of international

law.103 It is a doctrine that prevents a tribunal from accepting claims from a party when
that party itself has been a part of an illegality with a nexus to the dispute. 104
Although the doctrine is a flexible one, it can be amended only to ensure that there is
justice, and it cannot be adapted to save oneself from the injustice committed. 105 The
application of the Clean Hands Doctrine by the State of Oceania will be negated; (A)
because the Respondent failed to provide the requisite standard of evidence and (B) due
to the involvement of the State of Oceanias own agent in the act of corruption.
100
Oceania-Eastasia BIT at Art. 1(1), p 46.
101
Answer to Request for Arbitration at 4, p 16.
102
Herstein at p 38.
103
Moloo at p 33.
104
Id.
105
Amerasinghe at p 254.
21
1.
72.
The Standard of Proof for Corruption is beyond reasonable doubt.
The General Prosecutors Office convicted the President of the National Environment
Authority of Oceania and other officials on 1st February 2015 based on the charges of
corruption.106 Mr. Peter Explosive was also subject to the investigations of the General
Prosecutor, and later on the 23rd of July, 2015 criminal proceedings were initiated
against him.107 While there has not been any conclusive proof as to the involvement of
Mr. Explosive in the matter of corruption, the involvement of the agent of State of
Oceania, i.e., the President of the NEA, is thoroughly established and criminal
sanctions have been imposed on him.
73.
Since it is the State of Oceania seeking application of the Clean Hands Doctrine under
Article 1(1) of the Oceania-Eastasia BIT,108 its own hands must be clean, which is not
so in this matter. The involvement of the President of the NEA in the corruption
scandal automatically negates the Respondent partys ability to bring in a claim under
this doctrine since allowing the claim would lead to an inequitable advantage 109 to the
State of Oceania.
74.
The arrest of the President of the NEA by the Prosecutors office indicates that
corruption is a matter dealt with by the criminal justice system in Oceania, thus
corruption is not a civil matter. The charges imposed upon the President of the NEA are
also criminal in nature.
75.
In arguendo, the Clean Hands Doctrine has not been formally accepted in
international law.110 There are no common grounds of its applicability, as each tribunal
interprets it differently.111
76.
Therefore, the facts presented to the Tribunal are not sufficient to prove any illegality
on the part of Mr. Peter Explosive.
77.
Since it has been established that corruption is a criminal matter in Oceania, the
standard of proof would be beyond reasonable doubt.112 From the Record, there is no
106
107
Id.
108
Oceania-Eastasia BIT at Art. 1(1), p 46.
109
Lawrence at p 4.
110
Saba Fakes v. Turkey at 134-136.
111
World Duty Free Company v. Kenya at 107-108.
22
evidence that directly establishes the involvement of Peter Explosive in the matter of
corruption. The evidence gathered by the General Prosecutors office is also not subject
to the scrutiny of this tribunal, because it has not been presented to it.
78.
The only matter that creates a suspicion on the part of Peter Explosive, as is contended
by the Respondent, 113 is the private meeting that was held between him and the
President of the NEA in July 1998. However, the basis of this allegation can only be
founded on a lower standard of proof than beyond reasonable doubt, which requires
that whatever evidence is presented to the tribunal, must conclusively prove the
matter of allegation and the action that took place for the allegation to be brought
forth.114
79.
A higher standard of proof is required to establish corruption,115 because of the impact

it has on the investments made by a party through Foreign Direct Investment. This is
because the accusation of corruption carries with it a moral and criminal implication in
that it indicates that the investor might have used unscrupulous means to procure an
investment in the host state. While it is pertinent for the investors themselves to prove
good faith on their part, it is for the host state alleging corruption to show that there is
proof beyond the standards of just circumstantial evidence and the preponderance of
probabilities for the accusation of corruption to hold true.
80.
In the case of Metal-Tech Ltd v. Uzbekistan,116 it was stated by the Tribunal that to
sustain the allegation of corruption, the red flags117 raised must conclusively establish
that one of the parties was corrupt and engaged in illegal activities to make an
investment. The requirement of a higher standard of proof should be understood in the
context of the implications that an allegation of corruption will create. The implications
are that firstly the investors investment will not receive the protection which is to be
granted to legally made investments, and secondly it casts a doubt on the ability of the
host state to create an environment that is optimal for investors. While the second
112
Doak/McGourlay at pp 96-104.
113
Answer to Request for Arbitration at 2, p. 16.
114
Metal-Tech v. Uzbekistan at 164-166.
115
Crivellaro at p 116.
116
Metal-tech v. Uzbekistan at 164-166.
117
World Duty Free Company v. Kenya at 115.
23
concern must be dealt with by the state, the first is, many a time, used by a host state to
escape the liability of investment protection.118
81.
In Peter Explosives case, the only possible red flag is the private meeting that was
held between him and the President of the NEA, and the subsequent granting of the
license. Mr. Peter Explosive procured the license for Rocket Bombs Ltd. on the basis of
good faith. The loss of the environmental license of Rocket Bombs Ltd., and the
consequent stoppage of production had a severe impact on the local community of
Valhalla. The companys deterioration led to the decline of the town itself. 119 To
ensure that there would be no further depreciation, Mr. Explosive commenced the
production while procuring the environmental license.
B.
82.
OCEANIAS OWN HANDS ARE UNCLEAN
The President of the NEA of Oceania, who is an agent of the state, was involved in the
corruption scandal, thereby negating the invocation of the Clean Hands Doctrine by
the State of Oceania. The International Law Commissions Draft Articles on
Responsibility of States for Internationally Wrongful Acts mandates that there is a
fundamental principle of state responsibility wherein there is an accountability of states
for violations of international law, and the further requirement to make reparations for
the same. There is a growing international consensus on anti-corruption and the signing
of multilateral anti-corruption conventions;120 hard corruption is to be considered as a
violation of international law.
83.
Accountability, as foreseen by the International Law Commission, is the requirement of

states to have to bear the consequences of corruption and assume full responsibility for
the actions of its agents and organs.121 In international law, a state is responsible for
acts committed by its officials, of whatever status, in their official capacity, even in
situations when the officials exceed their authority, contravene instructions, or violate
internal law.122 When a public official (i.e., the President of the NEA) accepts a bribe to
exercise his public duties in a certain manner, which was the licensing of the production
118
Wena Hotels v. Egypt at 111-115.
119
120
Raeschke-Kessler/Gottwald at pp 590-601.
121
ARSIWA at Art. 39.
122
Id.
24
line of Rocket Bombs Ltd. in the present case, then the acts of that official are
attributed to the State itself under public international law.
84.
Since it is established in the Record that the President of the NEA of Oceania was, in
fact, convicted for accepting bribes,123 it would be against the principles of equity to
uphold the claim brought forth by the Republic of Oceania regarding the application of
the Clean Hands Doctrine due to the participation of its own agent in the act of
corruption.
II.
85.
THE RESPONDENT EXPROPRIATED THE CLAIMANTS INVESTMENT
The Claimant contends that the Respondent State has indeed expropriated the
Claimants investment in Rocket Bombs Ltd. by implementing the Executive Order of
1st May 2014. The argument is four-fold. Firstly, the Respondent States actions
amount to indirect expropriation. Secondly, that the expropriation in question is
unlawful under the BIT. Thirdly, that the regulatory measure fails the test of
proportionality. Fourthly, in arguendo the measure is a regulation for the publics
interest, the actions of the Respondent still amount to expropriation by virtue of the
Sole Effect doctrine. Therefore, the Claimant must be duly compensated for the losses
suffered.
A.
THE RESPONDENTS REGULATORY MEASURE RESULTED IN AND AMOUNTED

TO AN INDIRECT EXPROPRIATION OF THE CLAIMANTS INVESTMENT.
86.
Article 4 of the Oceania-Euroasia BIT explicitly prohibits indirect expropriation. 124

Indirect expropriation was recognized in the case law of arbitral tribunals and of the
Permanent Court of International Justice as early as in the 1920s. 125 The European
Court of Human Rights recognized the concept of indirect or de facto expropriation in
the leading case of Sporrong and Lonnroth v. Sweden.126 According to the classical
definition for indirect expropriation laid down in the case of Starrett Housing v. Iran, it
is a concept acknowledged under international law that involves total or near-total
123
124
125
Norwegian Shipowners Claims at p 334; Chorzow Factory Case at p 8.
126
Sporrong and Lonnroth v. Sweden at 63.
25
depravation of an investment by the States actions without a formal transfer of title or

outright seizure.127
87.
The Metalclad award illustrated the expansive scope given to expropriation. 128 The
Tribunal observed that interferences of a covert or incidental nature that pertain to the
use of property, which effectively deprive the owner, in whole or in significant part, of
the use or reasonably expected economic benefit of the concerned property even if it is
not necessarily for the obvious benefit of the host state would also constitute
expropriation.129
88.
On the basis of State practice, doctrines and arbitral awards, indirect expropriations are
characterized by the following cumulative features: (a) an Act attributable to the State;
(b) interference with property rights or other protected legal interests; (c) of such
degree that the relevant rights or interests lose all or most of their value or the owner is
deprived of control over the investment; (d) even though the owner retains the legal
title or remains in physical possession.130
89.
With reference to (a), in this case, the measure of implementing the Executive Order is
the said Act attributable to the Respondent States administrative decree, which has
resulted in the expropriation of the Claimants investment. This is analogous to the
reasoning used in
Suez v. Argentina where the Tribunal affirmed that when a host
State invokes its regulatory power to enact measures that reduce the benefits the
investor receives from the investment without actually altering or affecting the
investors legal title indeed results in an indirect expropriation or regulatory taking.131
90.
With reference to (b), the Iran-US Claim Tribunal has found that a governmental
interference may amount to an expropriation if it denies property owners fundamental
rights of ownership, use, enjoyment or management of business.132 It is contended that
the two broad rights of the Claimant that were expropriated are: (i) contractual rights
127
Starrett Housing Corp. et al v. Iran at p 294.
128
Sornarajah at p 372.
129
Metalclad v. Mexico at 103.
130
UNCTAD (III).
131
Suez et al v. Argentina at 121.
132
ITT Industries Inc. v. Iran at pp 351-352.
26
and (ii) rights over the share value.

91.
Tribunals have recognized that intangible rights, particularly contractual rights, can be
expropriated.133 The following is the principle laid down in the Rudloff case which has
been affirmed by several tribunals:
The taking away or destruction of rights acquired, transmitted, and defined by a
contract is as much a wrong, entitling the sufferer to redress, as the taking away
or destruction of tangible property.134
92.
Furthermore, the Tribunal in Starrett Housing acknowledged that there are several
precedents in international law in which measures of expropriation or taking, primarily
aimed at physical property, have been deemed to compromise also rights of a
contractual nature closely related to the physical property. 135 In Amoco International
Finance Corp v. Iran, it was held that expropriation may extend to any right that may
be the object of a commercial transaction.136 The Tribunal in Tokios Tokeles v. Ukraine
stated that all business operations associated with the physical property of the investors
are covered by the term investment which includes contractual rights.137
93.
The Executive Order effectively made Mr. Peter Explosive a blocked person, and made
it illegal for him to pursue existent or future contracts. Therefore, all of the contracts
that had been entered into during the course of running his investment Rocket Bombs
Ltd. stood cancelled. In Norwegian Shipowners Claims, Norway v. United States, it
was recognized that the cancellation of existing contracts amounts to expropriation.138
Moreover, the effects of cancellation of contracts have been held to be irreversible and
permanent.139
94.
Additionally, the Claimant could not conduct the business by virtue of the Executive
133
Phillips Petroleum Co. v. Iran at 76; Starrett Housing Corp. et al v. Iran at p 156.
134
Rudloff Case at p 250; Norwegian Shipowners Claims at p 325; Chorzow Factory Case at p 9.
135
Starrett Housing Corp. et al v. Iran at p 156.
136
Amoco v. Iran at 108.
137
Tokios Tokeles v. Ukraine at 92-93.
138
Norwegian Shipowners Claims at p 334.
139
S.D. Myers Case at 287-288.
27
Order as all the Oceanian companies that contracted with Rocket Bombs Ltd. issued
formal notices, declaring that pursuant to the Executive Order they were no longer
bound by the respective contracts, and that they had no intention to perform them.140
Interference with contractual rights leading to a breach or termination of the contract by
the investors business partner constitutes indirect taking.141
95.
The CME v. Czech Republic decision embodies a very indirect finding of expropriation:
there was no physical taking of the property by the State but the tribunal held that the
commercial value of the investment had been destroyed. The Czech Media Council, a
regulatory authority, was held to have interfered with the investors investment by
having created a legal situation that enabled the investors local partner to terminate the
contract on which the investment depended. 142 Therefore, the tribunal upheld the
investors claim that contractual rights had been expropriated by the interference of a
regulatory body of the host state.143 The Claimant contends that the facts of this case
are analogous to the present scenario since the threshold of government action resulting
in an expropriation of contractual rights has been met.144
96.
With regards to rights over share value, in GAMI Investments v. Mexico, it was held
that foreign shareholders in a domestic company can submit investment claims.145 Mr.
Peter Explosive was a party to the applicable BIT by virtue of his purchase of shares in
Rocket Bombs Ltd., which constituted an investment under Article 1(1)(b) of the
Oceania-Euroasia BIT.146 In the present case, the Claimant saw a rapid decrease in the
value of his shares, and moreover was unable to sell the shares to a third person.147
97.
With reference to (c), in the CME v. Czech Republic case, an ad hoc tribunal relied on
140
141
CME v. Czech Republic at 526.
142
Id at 591.
143
Id at 591.
144
Feldman/Reinisch at p 420.
145
GAMI Investments v. Mexico at 114-115.
146
Oceania-Euroasia BIT at Art. 1(1)(b), p 40.
147
28
the broad concepts of destruction of the commercial value of an investment and denial
of benefits to the investor in its finding of an indirect expropriation. 148 The tribunal
stated that a deprivation occurs whenever a State takes steps that effectively neutralize
the benefit of the property for the foreign owner. 149 In the present case, the
introduction of the sanctions resulted in the deterioration of Rocket Bombs business
and a rapid decrease in the value of the shares. 150 The Claimant was unable to sell his
shares in Rocket Bombs Ltd., and furthermore the value of the shares reduced to almost
zero.151
98.
In the CMS v. Argentina case, an ICSID tribunal endorsed the concept of substantial
depravation as determinative for establishing whether an indirect expropriation had
taken place.152 Specifically relying on cases like CME v. Czech Republic,153 Metalclad
v. Mexico, 154 and Pope & Talbot v. Canada, 155 the CMS tribunal thought that the
essential question was to establish whether the enjoyment of the property has been
effectively neutralized.156 In the present case, Peter Explosive could neither conduct
nor sell his business.157 Production came to a complete standstill since all of Rocket
Bombs suppliers were operating within the territory of Oceania.158
99.
In conclusion, it is submitted that the Claimants investment was indirectly

expropriation by virtue of a regulatory taking, and this is a violation of the applicable
BIT on the part of the Respondent State.
148
149
Id.
150
151
152
CMS Gas Transmission Co. v. Argentina at 263.
153
154
Metalclad v. Mexico at 103.
155
Pope & Talbot v. Canada at 96.
156
CMS Gas Transmission Co. v. Argentina at 262.
157
158
29
B.
THE EXPROPRIATION IN QUESTION IS UNLAWFUL UNDER THE BIT.
100. Article 4 of the Oceania-Euroasia BIT lays down the following conditions for a lawful
expropriation: (i) expropriation effected for a public purpose, (ii) under due process of
law, (iii) on a non-discriminatory basis and (iv) accompanied by provisions for payment
of prompt, adequate and effective compensation. 159 The above four conditions are
clearly lacking in the present case.
101. First, the Executive Order does not meet the public purpose criteria as it is not in the
genuine interest of the public,160 and was made for purely extraneous political reasons.
Thus, the expropriation does not satisfy the test of suitability, necessity and
proportionality161 in order to be excluded for a public purpose.162
102. In BP Exploration Co (Libya) v. Hunt, the ad hoc arbitral tribunal held that the taking
of a foreign oil company did not qualify as a public purpose as it was an act of political
retaliation. Here, the reason for the taking, which resulted in an expropriation, was
Libyas belief that the United Kingdom had prompted Iran to occupy certain Persian
Gulf islands. The tribunal concluded that the taking of the companys property, rights
and interests violated public international law as it was made for purely extraneous
political reasons and was arbitrary and discriminatory in character. Thereby,
political retaliation would not satisfy the public purpose exception.163
103. In the present scenario, Oceania is a third party observer to the ongoing international
dispute between Euroasia and Eastasia regarding the territory of Fairyland. The transfer
of territory was peaceful and bloodless,164 and no international adjudicatory body has
deemed the actions of Euroasia to be unlawful.165 These facts clearly establish that the
situation in Fairyland is not a threat to the national security of Oceania nor is it a
genuine public interest of its people. The Executive Order unfairly attributed the
conduction of the Claimants enterprise to be a causal factor contributing to the cross-
159
160
ADC v. Hungary at 432.
161
Tecmed v. Mexico at 122.
162
Andenas/Zleptnig at p 384.
163
BP Exploration Co (Libya) v. Hunt.
164
165
30
border dispute. It has been held that if the host State invokes a pre-eminent public
interest in such a situation, the investor may contend that this interest has no
meaningful role to play in the actual conflict at stake.166
104. Second, the due-process principle requires (a) that the expropriation comply with
procedures established in domestic legislation and fundamental internationally
recognized rules in this regard and (b) that the affected investor has an opportunity to
have the case reviewed before an independent and impartial body. 167 The second
condition is clearly lacking since the Claimant has no recourse to domestic courts or
administrative tribunals in order to challenge the measure or when the State engages in
abusive conduct in this case as per Section 9 of the Executive Order.168
105. In the case of ADC v. Hungary, the Tribunal noted that the basic legal mechanisms of
reasonable advance notice, a fair hearing and an unbiased and impartial adjudicator
must be provided for, and the affected investors must have a reasonable chance to claim
their legitimate rights through the prescribed legal procedure.169 If these requirements
are not met, the argument that the actions are taken under due process of law rings
hollow.170
106. Third, Rocket Bombs was the only company affected in the arms production sector. In
the context of investment treaties, and the obligation that flows to not discriminate
against foreign investors, a measure is considered discriminatory if there is an intent to
discriminate or if the measure itself has a discriminatory effect. 171 In its holding of
discrimination, the LG&E Tribunal indicated no intent on the part of Argentina; rather
it relied on the fact that the effect of the measures was patently discriminatory.172
107. In the present case, Rocket Bombs Ltd. was the only enterprise in the arms production
sector to be effected by the implementation of the Executive Order.
108. Fourth, the requirement of prompt, adequate and effective compensation has not been
166
Christie at p 311..
167
UNCTAD (III) at p 79; ADC v. Hungary at 435.
168
EO at 9, p 53.
169
170
Id.
171
LG&E v. Argentina at 146.
172
LG&E v. Argentina at 148.
31
met. According to R. Dolzer and M. Stevens, the meaning of these terms in an

expropriation clause are as follows: prompt means without any undue delay,
adequate means equivalent to the fair market value of the expropriated investment and
effective means that payment is made in a convertible currency. 173 The Executive
Order doesnt mention any compensation, and no communication has been made by the
Respondent in this regard. Numerous awards of the Iran-United States Claims Tribunal
affirm that the payment of prompt compensation is an important consideration when
determining the lawfulness of a taking under customary international law. 174 Thus, the
expropriation in question fails on the count of lawfulness.
109. Moreover, as per Article 27 of the Vienna Convention, the Respondent may not invoke
the provisions of the Executive Order to justify the failure to perform the applicable
BIT.175
110. Compliance of the procedure to pass a measure with domestic law does not preclude it
from being internationally wrongful since the measure may still breach international
obligations without contravening the States internal law.176 According to the Record,
the President of the Republic Oceania was indeed competent to pass the Executive
Order.177 However, as per the above stated principle, the effect of the Order may yet
lead to an unlawful expropriation.
111. In arguendo that this is a lawful expropriation, the Feldman tribunal held that:
if there is a finding of expropriation, compensation is required, even if the
taking is for public purpose, non-discriminatory and in accordance with due
process.178
112. Finally, the Respondent State may not invoke the Essential Security Interest clause179 to
justify the sanctions imposed. Obligations with respect to the maintenance of
international peace and security arise under Chapter VII of the UN Charter. Such
obligations arise only when the Security Council determines as per Article 39 of the
173
Dolzer/Stevens at p 112.
174
Brower/Brueschke at p 499.
175
VCLT at Art. 27.
176
UNCTAD (III) at p 93.
177
PO2 at 7, p 56.
178
Feldman v. Mexico at 98; Reinisch at pp 171,199-203.
179
32
Charter that a threat to international peace and security exists.180 No such determination
has been made by the United Nations Security Council in the present dispute.
C.
THE REGULATORY MEASURE QUESTION FAILS THE TEST OF

PROPORTIONALITY.
113. In investor-state arbitration, the Tecmed v. Mexico case was the first instance where an
arbitral tribunal relied on the proportionality analysis. The dispute arose out of the
decision of the environmental authority to deny renewal of a permit to operate a landfill
of hazardous waste. After finding that the deprivation had been total, the tribunal
proceeded to consider whether the measure was proportional to the public interest
presumably protected and to the investment protection granted while determining
whether the measure was expropriatory in nature. A reasonable, proportional
relationship must exist between the weight imposed on the investor and the aim sought
to be achieved by the measure. 181 The amount of the ownership depravation and
whether it was compensated for or not are very important considerations in the
proportionality analysis.
114. Imposition of unreasonable regulatory regimes has been considered to be an
expropriatory action. 182 When States enter into bilateral investment treaties, they
become bound by them and the investment-protection obligations undertaken must be
honored rather than ignored by citing the States right to regulate.183
115. The Respondent affected the Order to mitigate any consequences of a political situation
that it had condemned; the very same political situation that has been welcomed by a
sizeable number of members of the international community. 184 Additionally, the
Claimants investment had also substantially improved the conditions of the people of
Valhalla by creating opportunities, and thus this could be seen as a positive
consequence in the interest of the public of Oceania.185 Furthermore, the Claimant has
faced substantial depravation as a consequence of this measure. The Claimant contends
180
ARSIWA at Art. 39.
181
Tecmed v. Mexico at 122, Azurix v. Argentina at 311, James v. United Kingdom at 50, 63.
182
Feldman v. Mexico 106.
183
184
185
Uncontested Facts at 12, pp 34-35.
33
that the reasonable relationship of proportionality between the charge or weight

imposed to the foreign investor and the aim sought to be realized by the expropriatory
measure is lacking in this case.186
D.
IN ARGUENDO THE REGULATORY MEASURE IS A REGULATION FOR THE

PUBLIC INTEREST, THE ACTIONS OF THE RESPONDENT STILL AMOUNT TO
EXPROPRIATION BY VIRTUE OF THE SOLE EFFECT DOCTRINE.
116. Tribunals have increasingly accepted that the expropriation must be analyzed in
consequential rather than formal terms.187 When the State affects a total or substantial
depravation, compensation must be paid, even if compelling public interests had
justified adopting the measures at stake.188
117. The sole effect doctrine states that the effect of a governmental action, rather than its
purpose or intent, is a major factor, or even the sole factor, in determining whether or
not a taking has occurred.189 Whatever might have been the intentions of the Oceanian
government, the fact that the Claimants investment faced substantial depravation
clearly establishes that the investment was indeed expropriated. The predominance of
the effect of a governmental measure over the intent of the government was apparent in
the Norwegian Shipowners case and the Chorzow Factory case. 190 This has been
affirmed in several Iran-US Claims Tribunal awards as well.191
118. One explicitly states that even acceptable motivations would not change its view that
certain measures have an expropriatory effect. 192 Financial, economic and social
concerns may not relieve the host state from compensating the investor once
depravation has been caused.193
119. Furthermore, the conclusion in a UNCTAD study shows that indirect expropriation
may occur even though the host country disavows any intent to expropriate the
186
Tecmed v. Mexico at 122.
187
Reisman/Sloane at p 121.
188
Firemans Fund Insurance Co. v. Mexico at 176.
189
Dolzer at p 78.
190
Higgins at p 323.
191
Tippetts, Abbett, McCarthy, Stratton v. Consulting Engineers of Iran at 65.
192
Phelps Dodge Corp v. Iran at 27.
193
Id at 28.
34
investment. 194 The critical point is the objective effect of a measure and not the
governments subjective intentions.195
120. The Oceania-Euroasia BIT clearly refers to the effect and not the intent of the Host
State in the expropriation clause contained in Article 4(1).196
III.
THERE WAS NO CONTRIBUTORY FAULT ON THE PART OF THE CLAIMANT

WITH REGARD TO THE MAKING OF THE INVESTMENTS.
121. The environmental license was granted to Rocket Bombs Ltd. on the 23rd of July, 1998
and production commenced subsequently. Mr. Explosive continued the upgrading of
the production line to ensure that it met the standards set by the Environment Act of
1996. The commencement of arms production ensured the rehiring of workers from
Valhalla, and there were improvements in the town due to the re-creation of a means of
living.
122. For contributory fault to be established, there must be a nexus between the cause and
the effect.197 The accusation of the State of Oceania with regard to the contributory
fault of Mr. Peter Explosive is unfounded because the State has failed to show that
there was a connection between the actions of Mr. Explosive and the expropriation that
occurred. The Executive Order was an extraordinary measure whose effect was much
higher than any foreseeable damage that could have been produced by the investments
and the continuation of trade by the Claimant.
A.
THE EXECUTIVE ORDER BREACHED THE MINIMUM STANDARDS OF

TREATMENT.
123. There is an obligation on a host state to ensure that an investment made under a BIT is
given protection and security. Article 4(1) of the Oceania-Euroasia BIT states that any
action whose effect is tantamount to expropriation must be compensated for by the
State. 198 The actions of Oceania do not fall under the public purpose exception
194
UNCTAD (III) at p 43.
195
Sea-Land Case at 207.
196
197
ARSIWA at Art. 39.
198
35
contained in the same article, thereby violating the BIT and international law.199 The
purpose of the Oceania-Euroasia BIT, as can be interpreted from the Preamble is to
promote investments by creating favourable conditions200 within their territories for
the making and operation of such investments. The notion of favourable conditions
can conceivably cover a wide range of political, economic and social situations. While
there is not any specific mention of what conditions would be perceived as favourable
in the BIT, it can be presumed that a country is to create favourable conditions through
its laws, policies and administrative actions.201
124. The principle of good faith in investment law202 imposes three forms of liability on a
host state. They are: (i) Detrimental Reliance Upon Legitimate Expectation; (ii)
Regulatory Transparency; and (iii) Abuse of Authority.203
125. Legitimate expectations form a part of Fair and Equitable Treatment. There are three
features of FET which have been identified and reaffirmed in the cases of Tecnicas
Medioambientales Tecmed S. A. v. The United Mexican States 204 and Metalclad
Corporation v. The United Mexican States. 205 The three features and their relevant
application to the present dispute are that:
126. First, they are based on the conditions offered by the host state at the time of investing.
Here, when the investment was made by the Claimant under the Oceania-Euroasia
BIT,
206
the conditions offered were that of a stable and predictable business
environment.
127. Second, by the inclusion of Article 2(2) in the Oceania-Euroasia BIT,207 the FET clause
was included bilaterally by the parties.
128. Third, there is the need for the Claimant to make an investment and for the same to be
enforceable by law. Mr. Peter Explosive made his investments in Rocket Bombs Ltd. as
199
UNCTAD (III).
200
Grierson-Weiler/Laird at pp 275-284.
201
Id.
202
Id.
203
Schwarzenberger at pp 300-302.
204
Tecmed v. Mexico at 88-90.
205
Id.
206
Uncontested Facts at 2 on p 32.
207
36
per Article 1(1) of the Oceania-Euroasia BIT, and the license for the commencement of
production was obtained according to the provisions of the Environment Act of
Oceania, 1996.
129. Accordingly, Oceania has the duty to compensate the Claimant for the damages
suffered by his investment. The passing of the Executive Order by the Republic of
Oceania was in response to the alleged violation of International Law by Euroasia.208
The acquisition of Fairyland by Euroasia was bloodless and peaceful. 209 Hence, the
passing of the Executive Order would not fall under the purview of Article 10 of the
Euroasia BIT,210which is the Essential Security Interest clause.
130. In the present case, the Claimants investments were accorded treatment below the
Minimum Standards prescribed by international law as the Claimants investment was
the only one to be affected by the passing of the Executive Order by the President of
Oceania in the entire arms production sector. There was no cause that necessitated
Oceania to take up the measure of passing the Executive Order 211 since it has not been
established that the fulfillment of contractual obligations on the part of the Claimant has
indeed contributed to the situation in Fairyland.
131. States while entering into BITs with other states take upon themselves the obligation to
ensure the fulfillment of promises towards specific investments. 212 The obligation
involves the need to provide a transparent and predictable regulatory environment for
the investments made. The passing of the Executive Order was only discussed in the
media by citing unnamed sources thereby not passing the standard of reasonability that
is required for the regulation to be transparent. In the Tecmed tribunal, it was held that
the BITs minimum standard provision, in light of the good faith principle established
by International Law, requires the contracting parties to provide to international
investments treatment that does not affect the basic expectations that were taken into
account by the foreign investor while making the investment. Mr. Explosive therefore
208
Metalclad v. Mexico at 82-85; Tecmed v. Mexico at 88-90.
209
Uncontested Facts at 14, p. 35.
210
211
ARSIWA at Art. 39.
212
Grierson-Weiler/Laird at pp 272-290.
37
had the legitimate expectation that his investment would receive protection, and any
changes in the investment environment would be duly notified to him.
132. Since the transfer of the territory of Fairyland to Euroasia did not have any foreseeable
impact on the Republic of Oceania directly or indirectly, the Executive Orders impact
was not reasonable. Therefore, the Order failed to ensure a transparent and
predictable framework.213
B.
THE NATURE OF SANCTIONS IMPOSED ON PETER EXPLOSIVE ARE AGAINST

THE PRINCIPLES OF INTERNATIONAL LAW
133. The principle of jure gestionis mandates that a states immunity to pass regulatory
orders does not extend to every matter affected by the passing of such an order. The
fulfillment of contractual obligations by the Claimant with Euroasia was not a violation
of International Law, because private and commercial matters do not fall within the
extension of sovereign immunity used by states to justify regulatory measures taken up
by them. The passing of the Executive Order, which imposed sanctions upon Mr.
Explosive and Rocket Bombs Ltd., was of a sovereign nature, but the impact of it on
the investments made by Mr. Explosive should be identified under jure gestionis and
therefore, violating the principles of international law.
134. Additionally, the Claimants continuation of arms trade with Euroasia is not a violation
of international law because according to jure gestionis, sovereign immunity cannot be
used by states to claim that they have the absolute right to regulate trade and contractual
obligations of the parties operating within the state.214
135. Moreover, the claim that Mr. Explosive contributed to the damages suffered by his
investments by virtue of his own conduct of continuing the supply of weapons to
Euroasia is merely speculative. Mr. Explosive did not in any manner contribute to the
situation in Fairyland or the subsequent actions taken up Euroasia. Therefore, due to the
lack of a causative link between the actions of Mr. Explosive, and the expropriation, it
is evident that the claimant did not contribute to the damages suffered by his own
investments and was, in fact, a victim of the arbitrary actions taken up by the state of
Oceania.
213
ADC v. Hungary at 144-145.
214
Case regarding State Immunity at 109-120.
38
IV.
COMPENSATION
136. The Chorzow Factory case concerned a taking in violation of a treaty, and the view of
the Permanent Court of Justice was that in circumstances of takings in violation of
treaties, restitution was the proper remedy for the international wrong.
137. In the case of wrongful/unlawful expropriation, the adversely affected investor shall
have the right beyond compensation, to reparation. Indemnification in this case
includes not only losses, but also lucrum cessans (lost earnings/ loss of profits).
Therefore, losses include the loss of earnings due to expropriation, calculated from the
profits the investment generated.215
138. The principle of reparation is also provided in the International Law Commissions
Draft Articles on the Responsibility of States for Internationally Wrongful Acts, which
is considered to be a codification of customary rules: The compensation shall cover
any financially assessable damage including loss of profits insofar as it is established.
139. Article 2(4) of the Oceania-Euroasia BIT provides that not only the returns from an
investment but also returns from reinvested returns would enjoy the same protection as
the original investment made.216 In the present case, the setting up more factories and
continually modernizing the production line on the part of the Claimant constitutes
reinvesting the returns gained from the original investment. Therefore, the Claimant
must receive compensation for these as well under the BIT.
215
Chorzow Factory Case at p 8.
216
39
REQUEST FOR RELIEF
For the aforementioned reasons, the Claimant respectfully asks the Tribunal to find that:
1. The Claimant is an investor pursuant to Article 1(2) of the Oceania-Euroasia BIT;
2. The pre-arbitral steps in Article 9 of the Oceania-Euroasia BIT are not binding; or
3. The Claimant may rely on Article 8 of the Oceania-Eastasia BIT by virtue of the MFN
clause contained in Article 3 of the Oceania-Euroasia BIT.
If the Tribunal finds that it has jurisdiction, the Claimant asks the Tribunal to conclude that:
1. The Claimant made a protected investment especially in light of the Clean Hands Doctrine
with reference to Article 1(1) of the Oceania-Eastasia BIT;
2. The Respondent has indirectly expropriated the Claimants investment and must provide
compensation for the same; and
3. The Claimant did not contribute to the damage suffered by his investment.
Respectfully submitted on 19 September 2016 by
XUE
On Behalf of the Claimant

Mr. Peter Explosive
40

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TEAM XUE

INTERNATIONAL CHAMBER OF COMMERCE

MEMORIAL FOR CLAIMANT

LIST OF ABBREVIATIONS .............................................................................................................. ii

does not constitute a Jurisdictional Bar to this Tribunal .................................................................... 11

Arguments On Merits ................................................................................................................... 21

The Claimants investment is a protected one .............................................................................. 21

The Respondent expropriated the Claimants Investment ..................................................... 25

of the investments. ............................................................................................................................................. 35

REQUEST FOR RELIEF .................................................................................................................. 40

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European Court of Human Rights

Fair and Equitable Treatment

Id est (that is)

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International Criminal Tribunal for Yugoslavia

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The North American Free Trade Agreement

National Environment Authority of Oceania

Agreement between the Republic of Oceania and the Republic of

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Agreement between Republic of Oceania and the Republic of Euroasia

for the Promotion and Reciprocal Protection of Investments

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Stockholm Chamber of Commerce

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