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PART 4: ISSUE C - DENIAL OF BENEFITS (01) Introduction 4.1. This third issue regarding denial of benefits arises under CAFTA Article 10.12.2, which permits (but does not require) a CAFTA Party, subject to CAFTA Articles 18.3 and 20.4, to: ―... deny the benefits of [Chapter 10 of CAFTA] to an investor of another Party that is an enterprise of such other Party and to investments of that investor if the enterprise has no substantial business activities in the territory of any Party, other than the denying Party and persons of a non-Party, or of the denying Party, own or control the enterprise.‖ “Enterprise” is a broadly defined term under CAFTA Articles 10.28 and 2.1, meaning “any entity constituted or organized under applicable law, whether or not for profit, and whether privately-owned or governmentally-owned, including any corporation, trust, partnership, sole proprietorship, joint venture, or other association” and a branch of such enterprise. (The full texts of these CAFTA provisions are set out in the Annex to Part 1 above). 4.2. The Tribunal was informed by the Parties that this case is the first time that an arbitration tribunal has been required to address the issue of denial of benefits under CAFTA Article 10.12.2. 4.3. In these circumstances, the Tribunal (as invited by the Parties) considered whether it was desirable for the Tribunal to draw on past decisions by tribunals addressing provisions on denial of benefits under other treaties, particularly the Energy Charter Treaty. The Tribunal has chosen not to do so here given their different wording, context and effect. (These decisions include Plama v. Bulgaria; LLC AMTO v. Ukraine (under the Energy Charter Treaty) and Petrobart v. Kyrgyz Republic; Generation Ukraine v. Ukraine (under the USA-Ukraine BIT); and, as tangentially raised, Part 4 - Page 1
EMELEC v. Ecuador (under the USA-Ecuador BIT) and CCL Oil v. Kazakhstan (under the USA-Kazakhstan BIT)). 4.4. As expressly worded in CAFTA, it is significant that the “benefits” denied under CAFTA Article 10.12.2 include all the benefits conferred upon the investor under Chapter 10 of CAFTA, including both Section A on “Investment” and Section B on “Investor-State Dispute Settlement.” Section B specifically includes CAFTA Article 10.16(3)(a) providing for ICSID arbitration, as here invoked by the Claimant for its claims under CAFTA to establish the Tribunal‟s jurisdiction to decide those CAFTA claims against the Respondent. This jurisdictional issue under CAFTA does not therefore resemble the more limited issue under Article 17(1) of the Energy Charter Treaty, although in this respect it resembles the position under Article 1113(1) of NAFTA. The Tribunal is not aware of any decision as to denial of benefits under NAFTA; and none was brought to its attention by the Parties. 4.5. For these reasons, the Tribunal determines that, in the present case, it must interpret the relevant text of CAFTA by itself, in accordance with the relevant principles for treaty interpretation under international law as codified in the Vienna Convention on the Law of Treaties. (02) The Respondent’s Case 4.6. The Respondent contends that it has properly, fully and timeously denied all relevant benefits to the Claimant under CAFTA Article 10.12.2 on 3 August 2010 (the day after the Tribunal‟s Decision of 2 August 2010), whereby the Respondent (as a CAFTA Party) may and did deny the benefits of CAFTA (including the provision on dispute resolution here invoked by the Claimant) to an enterprise of another Party, i.e. the Claimant, if “the enterprise has no substantial business activities in the territory of any Party, other than the denying Party, and persons of a non-Party, or of the denying Party own or control the enterprise.” Part 4 - Page 2
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IN THE MATTER OF AN ARBITRATION BEF
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One-Time Acts .....................
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Glossary of Defined Terms “CAFTA
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African Holding Company of America,
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Waste Management, Inc. v. United Me
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1.4. Prior to 2 March 2012, the Cla
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C: The Tribunal’s Decision of 2 A
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1.23. The Respondent: The Responden
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under cover of a letter also dated
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G: The Parties’ Claims for Relief
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c. Piercing the corporate veil (Mem
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H: The Jurisdictional Issues 1.46.
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(02) CAFTA 1.4. CAFTA Article 10.1:
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2. At least 90 days before submitti
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measure alleged to constitute a bre
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(03) The ICSID Convention 1.13. ICS
Page 33 and 34: (5) ILC Articles on State Responsib
Page 35 and 36: proof or the Claimant‟s allegatio
Page 37 and 38: 2.11. Burden of Proof: As far as th
Page 39 and 40: 2.19. In presenting this main objec
Page 41 and 42: precedented regulatory obstacles de
Page 43 and 44: 2.32. In its Post-Hearing Submissio
Page 45 and 46: SID Convention, nor relates to a
Page 47 and 48: But on the other side, an internati
Page 49 and 50: for such disputes would constitute,
Page 51 and 52: scribed in its early pleadings form
Page 53 and 54: 2.65. The Tribunal considers that t
Page 55 and 56: vestment (which by themselves are n
Page 57 and 58: minated; nothing more could have be
Page 59 and 60: to arbitrarily change or add new re
Page 61 and 62: 2.86. Accordingly, treating the rel
Page 63 and 64: 2.93. The Tribunal notes that this
Page 65 and 66: ability and not merely as a possibl
Page 67 and 68: 2.105. Having reached these several
Page 69 and 70: Tribunal‟s jurisdiction to determ
Page 71 and 72: 3.5. The Respondent also submits th
Page 73 and 74: cause there was only one applicatio
Page 75 and 76: leged de facto ban on mining was no
Page 77 and 78: Claimant, it came to light only in
Page 79 and 80: that led to the revocation should b
Page 81 and 82: for the purpose of deciding the Rat
Page 83: distinction made in the Commerce Gr
Page 87 and 88: would qualify for treaty protection
Page 89 and 90: 4.17. (iii) Timeliness: The Respond
Page 91 and 92: the Respondent submits, to require
Page 93 and 94: ditiously resolved” (paragraph l)
Page 95 and 96: provided the Respondent with its No
Page 97 and 98: 4.44. The Claimant contends further
Page 99 and 100: lomatic protection within the meani
Page 101 and 102: Party [i.e. as the host State] whic
Page 103 and 104: there were and are certain activiti
Page 105 and 106: 4.74. It will be recalled that the
Page 107 and 108: der different arbitration rules, th
Page 109 and 110: 4.91. It follows that this third co
Page 111 and 112: Convention. 145 In the Respondent
Page 113 and 114: further express requirement of havi
Page 115 and 116: Legislativa was fully aware that th
Page 117 and 118: made before and after the Claimant
Page 119 and 120: 5.33. As established by the Interna
Page 121 and 122: 5.40. As also summarized above, the
Page 123 and 124: Government had always treated the C
Page 125 and 126: PART 6: ISSUE E - LEGAL AND ARBITRA
Page 127 and 128: 6.10. The Claimant submits that, un
Page 129 and 130: tion ratione temporis (i.e. the con
Page 131 and 132: Party to also put in a witness stat
Page 133 and 134: ture arbitration proceedings. Indee
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this arbitration with the least exp
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abused the Tribunal's indulgence in
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avoided; but, instead, the Responde
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“a U.S. investor organized under
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The Respondent acknowledges, of cou
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Claimant submits that under the cir
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ment in the communications with the
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6.76. The Claimant submits that the
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PART 7: THE OPERATIVE PART 7.1. For
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