(i) Ampal-American Israel Corp. ("Ampal"), a corporation incorporated under the laws of the State of New York, is a public company that was listed on the NASDAQ but filed for reorganization under Chapter 11 of the United States Bankruptcy Code following the destruction of its investment in EMG;¹

(ii) EGI-FUND (08-10) Investors LLC, a limited liability company incorporated under the laws of the State of Delaware ("EGI-Fund Investors");

(iii) EGI-Series Investments LLC, a limited liability company incorporated under the laws of the State of Delaware ("EGI-Series");

(iv) BSS-EMG Investors LLC, a limited liability company incorporated under the laws of Delaware ("BSS-EMG Investors"); and

(v) Mr. David Fischer, a national of Germany.

A dispute has arisen between the Claimants and the Respondent in respect of which the Claimants filed a request for arbitration (the "Request") on 2 May 2012 pursuant to:

(i) Article VII of the Treaty Between the United States of America and the Arab Republic of Egypt Concerning the Reciprocal Encouragement and Protection of Investments (the "US Treaty" or the "Egypt-US BIT")²;

(ii) Article 9 of the Agreement between the Arab Republic of Egypt and the Federal Republic of Germany concerning the Encouragement and Reciprocal Protection of Investments (the "Germany Treaty")³ (together, the "Treaties"); and

(iii) Article 36 of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, which entered into force on October 14, 1966 (the "ICSID Convention").

The Claimants have quantified their claims as follows⁴:

Summary of aggregate losses to the Claimants including interest and value leakage (US$ million) - Impact of the First Amendment assessed as at Date of the First Amendment

(i) EMG is engaged in three parallel contractual arbitrations involving EGPC, EGAS, and EMG’s main downstream customer, IEC. EMG initiated an ICC arbitration (seated in Geneva) against IEC to obtain declaratory relief in relation to the dispute that had arisen between them under their On-Sale Agreement as a result of EGPC/EGAS’s supply failures. To ensure that liability for the resulting harm was properly allocated to EGPC/EGAS, EMG then launched another ICC arbitration⁵ (again seated in Geneva) against both IEC and EGPC/EGAS pursuant to the Source GSPA and the Tripartite Agreement.⁶ EGPC/EGAS immediately contested the jurisdiction of the ICC tribunal, and initiated arbitration against EMG at CRCICA in Cairo, which it contends is the only proper contractual forum.⁷ There are thus three inter-related commercial arbitrations.⁸

(ii) There is also a parallel investment treaty arbitration against Egypt, initiated under the UNCITRAL Rules and Egypt’s investment treaty with Poland.⁹ In that proceeding, the claimants are Polish-Israeli national Yosef Maiman and three companies of the Merhav group of companies that he allegedly controls, including Ampal’s subsidiary, Merhav Ampal Group Ltd.¹⁰

(i) In respect of the first ICC arbitration in which EMG seeks declaratory relief against IEC, the parties in the present arbitration indicated at the evidentiary hearing that that arbitration had been suspended by EMG and IEC and that EMG and IEC have now brought coordinated claims against EGAS in the second ICC arbitration.¹¹

(ii) The tribunal in the second ICC arbitration issued its Final Award on 4 December 2015. In respect of jurisdictional matters, the ICC tribunal declared (i) that it lacked jurisdiction to adjudicate EMG’s GSPA Claims, (ii) that it had jurisdiction to adjudicate EMG’s Tripartite Agreement Claims and (iii) that EMG’s Tripartite Agreement Claims were admissible.

(iii) In respect of the CRCICA arbitration, the Tribunal notes that the Award on Jurisdiction was issued on 11 November 2013¹² and that the hearing on the merits occurred on 15-26 June 2015. In its Award on Jurisdiction, the CRCICA tribunal declared it had jurisdiction over the dispute.

(iv) In respect of the Maiman arbitration, by letter of 18 November 2015, the Maiman tribunal communicated to the parties in that arbitration the following: "the Tribunal has now decided that it has jurisdiction ratione personae. The Tribunal will provide the reasons for this decision subsequently, in its award. Consequently, the Tribunal declares the proceedings closed in respect of these issues in accordance with Article 31(1) of the UNCITRAL Arbitration Rules."

(i) while EMG proposed to consolidate all three commercial arbitration proceedings, under any rules and in any arbitral seat outside Egypt and IEC consented to this proposal, EGPC/EGAS declined;¹³

(ii) while the claimants in the UNCITRAL BIT proceeding sought to appoint Professor Reisman as co-arbitrator, whom EMG had already selected to serve on the CRCICA tribunal, with a view for a commonality between the tribunals, Egypt challenged Professor Reisman on that very basis;¹⁴ and

(iii) while the Claimants and other EMG shareholders offered to consolidate the two treaty arbitrations on 10 May 2013 before this Tribunal because the ICSID Claimants were unwilling to forego the protection of the ICSID Convention¹⁵, Egypt insisted that consolidation could occur only before the UNCITRAL tribunal.¹⁶ At the hearing, Egypt confirmed that this position was based on no reason other than "just testing" to see if the Claimants would agree.¹⁷ The Claimants remain unwilling to forego the protections of the ICSID Convention.¹⁸

(iv) It thus became clear, the Claimants aver, that consolidation, whether formal or informal, was not possible.¹⁹

In view of the complexity of the case and the real risk of contradictions between the four parallel arbitrations, the Tribunal has decided to issue now a decision on jurisdiction only. The present decision will be followed by an award on the merits and, if necessary, on quantum. The Tribunal considers that it is in its power to proceed in this way pursuant to Rule 41(2) of the ICSID Arbitration Rules.²²

On 29 November 2012, the Tribunal held a first session by telephone conference with the parties. Participating in the first session were:

Members of the Tribunal

- The Hon. L. Yves Fortier, CC, OQ, QC, President; Professor Francisco Orrego Vicuna, Arbitrator; and Professor Campbell McLachlan, QC, Arbitrator

ICSID Secretariat

- Ms. Natali Sequeira, Secretary of the Tribunal

Participating on behalf of the Claimants

- Mr. Noah D. Rubins, Dr. Ben Juratowitch, and Mr. Ben Love of the law firm of Freshfields Bruckhaus Deringer; and Mr. Niv Sever of the law firm of M. Firon & Co. Advocates

Participating on behalf of the Respondent

- Mr. Mohamed El Sheikh, Mr. Mahmoud El Kharashy, Mr. Mohamed Khalaf, Mr. Amr Arafa, Ms. Fatma Khalifa, Ms. Reem Hendy, Ms. Lela Kassem, Mr. Mohamed Shehata, and Mr. Abdelrahman Hassanien of ESLA; and Professor Emmanuel Gaillard, Dr. Yas Banifatemi, and Mr. Alexander Uff of the law firm of Shearman & Sterling LLP

A hearing on jurisdiction and the merits took place from 27 October to 6 November 2014 at the World Bank European Headquarters in Paris for the first week and, further to an agreement of the parties, as approved by the Tribunal, at the Paris office of Shearman & Sterling for the second week. In addition to the Members of the Tribunal, the Secretary of the Tribunal, and the Assistant to the Tribunal, present at the hearing were:

For the Claimants

- Mr. Jon Wasserman of Equity Group Investments; Mr. Alex Spizz, Chapter 7 Trustee of Ampal-American; Mr. Niv Sever of the law firm of M. Firon & Co. Advocates; Counselor Sarwat Abd El-Shahid, Mr. Girgis Abd El-Shahid, and Mr. César R. Ternieden of the Sarwat A. Shahid Law Firm; Ms. Lucy Reed, Mr. Noah D. Rubins, Mr. Ben Juratowitch, Mr. Ben Love, Mr. Robert Kirkness, Ms. Calista Harris, Mr. Yuri Mantilla, Mr. Kevin Clement of the law firm of Freshfields Bruckhaus Deringer LLP.

For the Respondent

- Counselor Mahmoud El Kharashy and Counselor Fatma Khalifa of the Egyptian State Lawsuits Authority; Professor Emmanuel Gaillard, Dr. Yas Banifatemi, Dr. Mohamed Shelbaya, Mr. Alexander Uff, Ms. Margaret Ryan, Mr. Youssef Daoud, Mr. Dimitrios Katsikis, Mr. Tsegaye Lanrendeau, Mr. Edward Taylor, Ms. Yasmine El Maghraby, Ms. Yael Ribco Borman, Ms. Alia El Sadda, Mr. Omar El-Sada, Ms. Victoria Cadiz of the law firm of Shearman & Sterling LLP.

The following witnesses were examined:

On behalf of the Claimants

- Fact witnesses: Mr. Sam Zell, Mr. David Fischer, Mr. Abdel Hamid Ahmed Hamdy, Mr. Maamoun A1 Sakka.

- Expert witnesses: Professor Sir Bernard Rix, Mr. Charles C. Freeny, Mr. Benjamin F. Schrader, Major General (ret.) Giora Eiland, Mr. Daniel Muthmann, Dr. Boaz Moselle, and Mr. James Nicholson.

On behalf of the Respondent

- Expert witnesses: Professor Ahmed Belal, Lord Leonard Hoffmann, Major General (ret.) Warren Whiting, Mr. Nicolas Pelham, Professor Kenneth J. Vandevelde, Mr. John Wood-Collins, and Mr. Tim Giles.

The Claimants request that the Tribunal grant the following relief:

(i) DISMISS all of Egypt’s objections to the jurisdiction of the Tribunal and the admissibility of the claims;

(ii) DECLARE:

a) that Egypt violated Article II(4) of the US Treaty (or Article 2(2) of the UK Treaty, applicable to the US Claimants through Article II(1) of the US Treaty), Article 2(2) of the Germany Treaty, and customary international law by failing to accord the Claimants’ investments fair and equitable treatment and impairing their investments through the adoption of unreasonable measures;

b) that Egypt violated Article II(4) of the US Treaty (or Article 2(2) of the UK Treaty, applicable to the US Claimants through Article II(1) of the US Treaty), Article 2(3) of the Germany Treaty, and customary international law by engaging in arbitrary and discriminatory measures against the Claimants’ investment because it was selling natural gas to Jews in Israel;

c) that Egypt has violated Article 2(2) of the UK Treaty (applicable to the US Claimants through Article II(1) of the US Treaty), Article 7(2) of the Germany Treaty, and customary international law by failing to observe obligations it has entered into with regard to the Claimants’ investments;

d) that Egypt has violated Article 2(2) of the UK Treaty (applicable to the US Claimants through Article II(1) of the US Treaty), Article 4(1) of the Germany Treaty, and customary international law by failing to provide the Claimants and their investments with full protection and security; and

e) that Egypt expropriated the Claimants’ investments without payment of adequate and effective compensation, a public purpose, or due process of law in violation of Article III(1) of the US Treaty, Article 4(2) of the Germany Treaty, and customary international law.

(iii) ORDER Egypt to pay compensation to the Claimants of no less than US$ 882.6 million and, to the extent applicable, DECLARE that the sum awarded has been calculated net of Egyptian taxes;

(iv) ORDER Egypt to pay pre- and post-award interest at Egypt’s sovereign borrowing rate (as updated), compounded annually, accruing until payment is made in full;

(v) ORDER Egypt to indemnify the Claimants in full with respect to any Egyptian taxes imposed on the compensation awarded to the extent that such compensation has been calculated net of Egyptian taxes;

(vi) ORDER Egypt to pay all of the costs and expenses of this arbitration, including the Claimants’ reasonable legal and expert fees, and the fees and expenses of the Tribunal; and

(vii) AWARD such other relief to the Claimants as the Tribunal considers appropriate.²⁴

The Respondent requests the Tribunal to :

(i) Stay this proceeding pending the issuance of Awards in each of CRCICA Case No. 829/2012 and ICC Case No. 18215/GZ/MHM, dismissing the claims made by EMG or awarding damages in respect of such claims;

(ii) Alternatively, dismiss the Claimants’ claims in their entirety for lack of jurisdiction and/or as inadmissible;

(iii) Alternatively, dismiss the Claimants’ claims on the merits;

(iv) In the event that the Tribunal finds that the Respondent is liable to the Claimants as a matter of principle, stay any decision on quantum pending the issuance of Awards in each of CRCICA Case No. 829/2012, ICC Case No. 18215/GZ and PCA Case No. 2012-26, dismissing the claims made by EMG or its shareholders (as applicable) or awarding damages in respect of such claims;

(v) In any event, order the Claimants jointly and severally to pay all of the costs of this arbitration as well as the Respondent’s legal costs and expenses in connection with this arbitration, including but not limited to its counsel’s fees and expenses and the fees and expenses of its experts; and

(vi) Grant the Respondent such further relief as the Arbitral Tribunal considers appropriate.²⁵

Article I(1)(b) of the US Treaty defines "company of a Party" as:

a company duly incorporated, constituted or otherwise duly organized under the applicable laws and regulations of a Party or its political subdivisions in which

(i) natural persons who are nationals of such Party, or

(ii) such Party or its subdivision or its agencies or instrumentalities have a substantial interest.

The Respondent thus avers that Article I(1)(b) contains two cumulative requirements for a company to benefit from the Treaty: (i) a company must be duly incorporated in one of the Contracting States, and (ii) natural persons who are nationals of that State (or the State of incorporation itself) must "have a substantial interest" in the company.²⁶

The Respondent thus concludes that "[i]n light of Mr. Maiman’s ownership of the majority of Ampal’s outstanding shares, and control over the company, it is clear that U.S. citizens do not 'have a substantial interest’ in Ampal, and that Ampal does not meet the ratione personae jurisdictional requirements of Article I(1)(b) of the Egypt-U.S. BIT"³²

In addition, the Respondent asserts that Ampal’s business activities and debts are in Israel and that Ampal is managed by non-US nationals.³³

Each Party reserves the right to deny the benefits of this Treaty to any company of either Party, or its affiliates or subsidiaries, if nationals of any third country control such company, affiliate or subsidiary; provided that, whenever one Party concludes that the benefits of this Treaty should not be extended for this reason, it shall promptly consult with the other Party to seek a mutually satisfactory resolution of this matter.⁴⁰

The Respondent contends that the requirements of Paragraphs 1 and 2 of the Protocol have been met in the present case and that, consequently, the Respondent has effectively denied Ampal the benefits of the US Treaty:

(i) By letter dated 27 January 2013, Egypt informed Ampal that it had exercised its right under Paragraph 1 of the Egypt-U.S. BIT to deny the benefits of that Treaty to Ampal in light of the control of that company by Mr. Maiman and his immediate family.⁴⁵ Egypt separately contacted the United States to inform it of its denial of benefits to Ampah⁴⁶

(ii) The Claimants do not contest that the substantive requirement for a denial of benefits is present in this case, namely, that Ampal is controlled by third party nationals within the meaning of Paragraphs 1 and 2 of the Protocol to the Egypt-U.S. BIT.⁴⁷

(iii) In response to the Respondent’s notification, the United States agreed by Diplomatic Note dated 19 March 2013 to hold consultations with Egypt.⁴⁸

(iv) The State Parties met in Washington, D.C. on 30 September 2013 and 9 December 2013 to consult in relation to Egypt’s denial of benefits to Ampah⁴⁹

(v) By Diplomatic Note dated 6 March 2014, the United States wrote to Egypt concluding that:

good faith consultations, and the absence of any expressed disagreement, between the United States of America and the Arab Republic of Egypt constitute a mutually satisfactory resolution of this matter, in accordance with Paragraph 1 of the Supplementary Protocol to the Treaty.⁵⁰

(vi) In response to the United States’ communication, Egypt confirmed by Diplomatic Note dated 17 April 2014 its understanding that, given the absence of any disagreement between the two Governments in relation to its denial to Ampal of the benefits of the Treaty, the consultations had resulted in a "mutually satisfactory resolution of the matter" within the meaning of Paragraph 1 of the Protocol.⁵¹

require the respondent, in effect, to monitor the ever-changing business activities of all enterprises... that attempt to make, are making, or have made investments in the territory of the respondent. This would include conducting, on a continuing basis, factual research, for all such enterprises, on their respective corporate structures and the extent of their business activities in those countries.⁵⁹

In respect of the Claimants’ argument that the Respondent’s denial of benefits cannot deprive Ampal of any Treaty protection, the Respondent argues that its offer to arbitrate is subject to its right to deny benefits. As Professor Vandevelde opines in his Expert Legal Opinion, a company controlled by third-country nationals "never has an unconditional, or vested, right to treaty protection",⁶¹ Accordingly, a State that invokes a denial of benefits provision after a claim has been submitted to arbitration does not withdraw consent to arbitration that was previously given, but rather exercises a right to deny benefits which was reserved within that consent. To hold otherwise would defeat the purpose of the denial of benefits provision in the Treaty opines Professor Vandevelde.⁶² The Respondent submits that tribunals interpreting similar provisions in US treaties have uniformly reached this conclusion⁶³ and that the Energy Charter Treaty decisions on which the Claimants rely are inapposite since Article 17(1) of the ECT does not condition a State’s consent to arbitration.⁶⁴

The highly convoluted and opaque structure through which Ampal holds its interest in EMG involves not only numerous related intermediary companies, the corporate and financial relationships (including intercompany debts) of which have never been established or explained, but also entirely fails to take account of intervening third party rights including loans, the terms of which are nowhere in the record of this arbitration.... All these matters potentially seriously impair the flow of funds up the corporate chain from EMG to Ampal, contrary to the premise of Ampal’s claim.⁶⁶

The Claimants argue that Ampal satisfies both criteria of Article I(1)(b) of the US Treaty.

In respect of the first criterion, the Claimants argue that US nationals have a "substantial interest" in Ampal:

(i) The fact that Mr. Maiman owns a majority of Ampal and controls the company does not preclude US nationals from having a "substantial interest" in the company aver the Claimants. According to the Claimants, "substantial interest" does not mean majority interest nor does it mean a controlling interest, otherwise it would have been stated explicitly in the Treaty.⁶⁸

(ii) The Claimants allege that based on a list dated 1 January 2008, the addresses of 1125 of the 1199 registered owners of voting shares are within the United States, with the US-registered owners holding 38.18% of Ampal’s voting share capital.⁶⁹ Similarly, in a list dated 1 January 2012, 1145 of the 1215 registered owners of voting shares have addresses within the United States, representing 41.42% of Ampal’s voting share capital.⁷⁰

(iii) The Claimants are, however, not in a position to produce direct evidence that these US residents are in fact US nationals: nationalities of shareholders in companies publicly-listed in the United States are not recorded.⁷¹ The Claimants nevertheless argue that the Tribunal should follow the Iran-US Claims Tribunal precedent whereby the Iran-US Claims Tribunal accepted evidence from which it drew a reasonable inference regarding shareholder nationality.⁷² The process used by the Iran-US Claims Tribunal can be used to estimate the percentage of shares in Ampal held by US nationals assert the Claimants:

- The relevant Ampal SEC filing from 2008, discloses that Ampal was 59.7% beneficially owned by a non-US national, Mr. Maiman.⁷³

- Based on US Department of the Treasury data, in 2008, 10.3% of portfolio investment in equity in US companies was foreign owned.⁷⁴

- It is thus reasonable to infer that, when a claim first arose, approximately 36.15% of Ampal was owned by US nationals.⁷⁵

- If the same calculation is undertaken for 2012, when the Request for Arbitration was filed, the percentage is 27.95%.

(iv) These numbers are estimates, not precise calculations. Nonetheless, the evidence provided by the Claimants is sufficient to establish prima facie that US nationals have a "substantial interest" in Ampah⁷⁶

The fact that a company is controlled by one individual is only relevant because it increases the percentage of a company’s share capital in respect of which the nationality of the beneficial owner needs to be proven by direct evidence, and therefore reduces the percentage of shares for which an inference may be drawn. Here, there is direct evidence that a majority of the share capital of Ampal-American is beneficially owned by non-US nationals. The question for the Tribunal, unaddressed by Egypt’s argument, concerns the use of indirect evidence to reach a conclusion about the ownership of the remaining shares.⁷⁷

a company incorporated in the United States and listed on a US stock exchange is one in which the United States has a substantial interest. The substantial interest that the United States has in such a company is highlighted by the bankruptcy proceedings pending before the US courts in connection with Ampal.... A US federal court (an organ of the United States) has appointed a trustee in bankruptcy, himself a US citizen, who now controls the company for the benefit of its creditors.

One of those creditors is the New York State Department of Taxation and Finance,...⁷⁹

Firstly, the Claimants argue that Egypt cannot unilaterally terminate the jurisdiction of the Tribunal. They explain that on Egypt’s case, and leaving aside its jurisdictional objections, the Centre was validly seized when Ampal filed its Request for Arbitration in May 2012, and had jurisdiction over the dispute for the next eight months until January 2013, when by its unilateral act, Egypt "terminated" the jurisdiction of the Centre and of this Tribunal.⁸⁰ However, the Claimants assert that (i) it is well-established that jurisdiction is to be determined in light of the situation that exists on the date the arbitral proceedings are instituted, not by subsequent events;⁸¹ and (ii) Egypt must confront Article 25(1) of the ICSID Convention which states that "When the parties have given their consent, no party may withdraw its consent unilaterally",⁸² Egypt is therefore prevented by Article 25(1) of the ICSID Convention from unilaterally withdrawing its consent by way of a purported denial of benefits after Ampal had already accepted Egypt’s offer to arbitrate and so perfected the arbitration agreement aver the Claimants.⁸³ A contrary result would retroactively eliminate a right to arbitration that had already been exercised say the Claimants.⁸⁴

[w]hether Egypt is seeking to deny a protection already obtained or subject that protection to later cancellation, its position involves retroactivity. Either approach requires Egypt to establish that the denial of benefits provision entitles it to avoid, responsibility for internationally wrongful acts where that responsibility had already crystalized at the time of the purported denial. On either approach, Egypt deems [sic] Treaty breaches that did in fact occur not to have occurred. For the Tribunal to find such a retroactive effect, the Tribunal would need to be satisfied that the US Treaty provision concerning denial of benefits rebuts the presumption against retroactivity.⁸⁵

Thirdly, the Claimants contend that the jurisdiction of an international tribunal is to be assessed at the time of that jurisdiction being invoked. In other words, consent is only necessary to initiate an arbitration, and conduct occurring thereafter is irrelevant to jurisdiction.⁸⁸ The Claimants rely on ten cases⁸⁹ in this respect which confirmed that any condition that can be invoked to defeat jurisdiction must be invoked prior to the seisin to have any effect. The Claimants rely in particular on the Right of Passage case.⁹⁰ They submit:

the Rights of Passage case concerned the effect of a condition embedded in Portugal’s consent to the jurisdiction of the International Court of Justice. By that condition, Portugal purported to ‘reserve[] the right to exclude from the scope of the present declaration, at any time during its validity, any given category or categories of disputes, by notifying the Secretary-General of the United Nations and with effect from the moment of such notification. ’ The court held that: ‘It is a rule of law generally accepted, as well as one acted upon in the past by the Court, that, once the Court has been validly seised of a dispute, unilateral action by the respondent State in terminating its Declaration, in whole or in part, cannot divest the Court of jurisdiction. ’ None of the cases relied on by Egypt took account of this rule. The alternative position advanced by Egypt - that benefits can be unilaterally denied at any time - is so obviously contrary both to this rule and to the object and purpose of the US Treaty that it could only be countenanced by this Tribunal if explicit treaty terms left it no choice.⁹¹

Article I(1)(b) of the US Treaty defines "company of a Party" as:

A company duly incorporated, constituted or otherwise duly organized under the applicable laws and regulations of a Party or its political subdivisions in which

(i) natural persons who are nationals of such Party, or

(ii) such Party or its subdivision or its agencies or instrumentalities have a substantial interest.

While the Claimants have not produced direct evidence that these US residents are in fact US nationals, the Tribunal adopts the reasoning of the Iran-US tribunal in the Flexi-Van case and draws a reasonable inference on the basis of the evidence proffered that the percentage of shares in Ampal held by US nationals as of 1 January 2008 and 1 January 2012 amounts to a substantial interest in that company.⁹⁴

Each Party reserves the right to deny the benefits of this Treaty to any company of either Party, or its affiliates or subsidiaries, if nationals of any third country control such company, affiliate or subsidiary; provided that, whenever one Party concludes that the benefits of this Treaty should not be extended for this reason, it shall first consult with the other Party to seek a mutually satisfactory resolution of this matter.⁹⁸ (Tribunal’s emphasis)

Each Party reserves the right to deny the benefits of this Treaty to any company of either Party, or its affiliates or subsidiaries, if nationals of any third country control such company, affiliate or subsidiary; provided that, whenever one Party concludes that the benefits of this Treaty should not be extended for this reason, it shall promptly consult with the other Party to seek a mutually satisfactory resolution of this matter.⁹⁹ (Tribunal’s emphasis)

2. the parties shall initially seek to resolve the dispute by consultation and negotiation....

3 (a) In the event that the legal investment dispute is not resolved under procedures specified above, the national or company concerned may choose to submit the dispute to the International Centre for the Settlement of Investment Disputes ("Centre ") for settlement by conciliation or binding arbitration, if within six (6) months of the date upon which it arose: (i) the dispute has not been settled through consultation and negotiation.... (Tribunal’s emphasis)

On 18 May 2011, Ampal (and EGI-Fund Investors) sent Egypt a letter informing it of the existence of a legal dispute under the Egypt-US Treaty and the object of the dispute and requesting consultations with Egypt pursuant to the terms of Article VII(2) of the Treaty.¹⁰⁰ The letter reads in relevant part as follows:

We hereby advise you of the existence of a legal investment dispute under the Treaty Between the United States of America and The Arab Republic of Egypt Concerning the Reciprocal Encouragement and Protection of Investments ("U.S.-Egypt BIT" or "Treaty"). As U.S. companies, we control shares in East Mediterranean Gas S.A.E. ("EMG"), the owner and operator of the "Peace Pipeline" between Al-Arish, Egypt and Ashkelon, Israel.

[...]

Pursuant to the terms of Article VII(2) of the Treaty, we hereby request consultations with your ministries in the interest of resolving this dispute. In the event that we are not able to resolve this dispute through consultations, we intend to submit the dispute to the International Centre for the Settlement of Investment Dispute ("ICSID") for settlement and binding arbitration. In such event, we will also encourage the other EMG shareholders to file for ICSID arbitration, and to pursue all other remedies available to such other EMG shareholders. We will also encourage EMG to pursue all of its remedies pursuant to all applicable contracts and laws.

In that arbitration, Ampal-American Israel Corporation ("Ampal-American") claims to be entitled to benefit from rights contained in the Treaty. However, based on the facts, albeit limited, which you have disclosed, we understand that Ampal-American, a company incorporated in New York, USA, is controlled by nationals of a country other than the United States of America. Indeed, it appears that Mr. Yosef Maiman and his family own approximately 62% of the voting shares of Ampal-American and control the company. The Arab Republic of Egypt understands that Mr. Maiman and his family are nationals of the State of Israel.

[...]

Pursuant to this provision [Paragraph 1 of the Protocol to the Treaty], the Arab Republic of Egypt hereby exercises its right to deny Ampal-American the benefits of the Treaty, For the avoidance of doubt, such denial of benefits includes each and every right under the Treaty, including Article VII thereof, and is effective as of the date on which Ampal-American became controlled by nationals of a country other than the United States of America.¹⁰¹ (Tribunal’s emphasis)

The Tribunal has seen and considered the many letters/notes exchanged between Egypt and the United States after 27 January 2013.¹⁰²

During the consultations, the United States expressed its view that the tribunal formed under Article VII may properly resolve any disputed factual issues of ownership or control. The United States has expressed no views on those or other factual issues in that arbitration.

The Department of State further acknowledges that the good-faith consultations, and the absence of any expressed disagreement, between the United States of America and the Arab Republic of Egypt constitute a mutually satisfactory resolution of this matter, in accordance with Paragraph 1 of the Supplementary Protocol to the Treaty.

The Department of State would appreciate the Arab Republic of Egypt confirming this understanding by return diplomatic note.

The exchange between the two State Parties ended with a Note from Egypt to the United States on 17 April 2014 which concluded as follows:

We note the Department of State’s acknowledgement of the good faith consultations that took place between the Government of the United States of America and the Government of the Arab Republic of Egypt pursuant to Paragraph 1 of the Supplementary Protocol of the Treaty. We also note the Department of State’s observation that, in the absence of any expressed disagreement between the two Governments, such consultations have resulted in a mutually satisfactory resolution of the matter.

In response to the Department of State’s invitation to the Arab Republic of Egypt to confirm this understanding, the Arab Republic of Egypt hereby confirms that the two Governments have conducted good faith consultations following its denial of the benefits of the Treaty to Ampal-American pursuant to Paragraph 1 of the Supplemental Protocol of the Treaty, and that a mutually satisfactory resolution of the matter has been achieved through these consultations.¹⁰⁵

The Tribunal noted earlier that, in 1986, after negotiations between the United States and Egypt with respect to changes to the Treaty which each country wished to introduce, a Supplementary Protocol was signed which, inter alia, required that a Party should "promptly", rather than "first" consult with the other Party to seek a mutually satisfactory resolution of this matter.

It is a rule of law generally accepted, as well as one acted upon in the past by the Court, that, once the Court has been validly seized of a dispute, unilateral action by the Respondent State in terminating its Declaration, in whole or in part, cannot divest the Court of jurisdiction.¹¹³

The highly convoluted and opaque structure through which Ampal holds its interest in EMG involves not only numerous related intermediary companies, the corporate and financial relationships (including intercompany debts) of which have never been established or explained, but also entirely fails to take account of intervening third party rights including loans, the terms of which are nowhere in the record of this arbitration.... All these matters potentially seriously impair the flow of funds up the corporate chain from EMG to Ampal, contrary to the premise of Ampal’s claim.¹¹⁴

attempted to show birth certificates of the Zell grandchildren on a restricted basis to the Tribunal and Egypt’s international counsel, without allowing Egypt or its representatives ESLA to view or independently verify them. These documents do not form part of the evidentiary record and thus cannot be relied on; moreover, this cannot remedy the Claimants’ procedural and due process violations, which have deprived Egypt of the opportunity to verify, assess and respond to the EGI Claimants’ alleged U.S. nationality.¹²³

[t]he Claimants have... still failed to prove a substantial U.S. interest in the EGI Claimants at the relevant dates for the Tribunal’s jurisdiction ratione personae, i.e. between 2008, from when their cause of action allegedly arose, and 2012, when they initiated this arbitration. To do so, they would have had to produce ‘[n]ationality certificates, passports or equivalent Documents’ covering the material period, in accordance with Egypt’s document request, which they have consistently refused to do.¹²⁵

(i) The Claimants assert that EGI-Series meets the treaty’s national requirements because EGI-Fund Investors has held a 91.67% interest in that company since August 2008.¹²⁷ The Claimants’ failure to demonstrate that EGI-Fund Investors meets the Treaty’s nationality requirements therefore applies mutatis mutandis to EGI-Series says the Respondent.¹²⁸

(ii) In any event, the selective and incomplete disclosure of evidence concerning the corporate structure of EGI-Series does not confirm the portion of that company alleged to be owned by EGI-Fund Investors asserts the Respondent. The Certificate of Formation of EGI-Series indicates that it is a "series limited liability company". The Claimants allege in their Reply that "EGI-Series Investment is composed of two series", the "EGI-EMG Series" and the "EGI-SSE I Series"¹²⁹. The evidence produced to support this contention is a "Supplement to EGI-Series Investments, L.L.C." dated 29 February 2009, pursuant to which the "EGI-SEE I Series" was created¹³⁰. The Respondent argues that this document is dated and that the Claimants have provided no evidence as to whether or not any further "series" of EGI-Series were established before 2012. In the event that EGI-Series is also composed of other "series", this could result in a dilution of EGI-Fund Investors’ ownership of that company’s capital and, consequently, any substantial interest in EGI-Series Investments by US nationals says the Respondent.¹³¹

(iii)The Respondent contends that the Claimants have produced no evidence explaining the nature of EGI-Fund Investor’s ownership interest in EGI-Series. According to a "Contribution Agreement" signed between those parties on 18 August 2008,¹³² EGI-Fund Investors was allocated a 100% "Series Percentage Interest" of the EGI-EMG Series of the LLC, as defined in a separate contract, a "Series Limited Liability Company Agreement" dated 14 March 2008, which the Claimants have chosen not to disclose. EGI-Fund Investors’ ownership of the "EGI-EMG Series" of EGI-Series cannot be assumed to result in the same proportion of ownership of the company’s entire capital says the Respondent.¹³³

In respect of EGI-Fund Investors, the Claimants argue that they have provided a Certificate of Managing Member of EGI-Fund Investors which (i) states that, since 17 April 2007, 92% of the membership interest in the company has been indirectly held by trusts established for the benefit of Samuel Zell, his three children and his minor grandchildren; and (ii) includes copies of the US passports of Samuel Zell and his three children.¹³⁴ According to the Claimants, this is sufficient to establish that US nationals have a substantial interest in EGI-Fund Investors.

The Claimants explain that the trust structure through which the Zell family members hold their interests in EGI-Fund Investors is complex. However, if the Tribunal considers that evidence beyond the Certificate of Managing Member is necessary to establish the "substantial interest" held by the Zell family, only one part of that structure need be examined aver the Claimants. That part is three Irrevocable Trusts (the JoAnn Zell Irrevocable Trust, the Kellie Zell Irrevocable Trust, and the Matthew Zell Irrevocable Trust) that hold interests in EGI-Fund Investors. The Claimants submit that those trusts made original capital commitments to EGI-Fund Investors totalling US$432 million¹³⁵- a "substantial" interest - corresponding to 43.2% of the capital of EGI-Fund Investors.¹³⁶ On 31 December 2008, the membership interest of the Irrevocable Trusts in EGI-Fund Investors increased to more than 90%.¹³⁷ The entire beneficial interest in those trusts is held by the grandchildren of Mr. Zell, a US citizen.¹³⁸ The structure is illustrated in the following diagram.¹³⁹

(i) At the hearing, the Tribunal accepted the Claimants’ proposal that a copy of the birth certificates of Mr. Zell’s grandchildren be kept available and under seal with the ICSID Secretariat;¹⁴⁵

(ii) Mr. Zell’s grandchildren were born in Illinois, Colorado and California;¹⁴⁶

(iii) There is only one reason why a person born in the US, to known parents, would fail to acquire US nationality at birth. That is if the person was not "subject to the jurisdiction" of the United States at that time.¹⁴⁷ The only basis for that would be if he or she was born to a foreign diplomatic officer.¹⁴⁸ There is no ground to think that any of the parents of the grandchildren was a foreign diplomatic officer. The US passports of Mr. Zell’s three children are on the record¹⁴⁹ and their spouses were all born in the United States.¹⁵⁰

(iv) If Egypt had a genuine objection to the evidence presented by the Claimants, it could have explored it in cross-examination of Mr. Zell. Egypt did not ask him a single question regarding his children or his grandchildren.

In respect of EGI-Series, the Claimants assert that a scries limited liability company under Delaware law may be composed of multiple series, each of which assumes its own rights and obligations, which cannot be enforced by or against any other series of the company or against the company as a whole.¹⁵¹ EGI-Series is composed of two series, the EGI-EMG Series (the series which holds an indirect interest in EMG) and the EG1-SSE I Series¹⁵²:

The Claimants submit that EGI-Fund Investors hold a 91.67% interest in the EGI-EMG Series of EGI-Series Investments,¹⁵³ EGI-Fund Investors holds a 78.22% direct interest in the EG1-SSE 1 Series, and trusts established for the benefit of the Zell family hold more than 90% of the interest in the Series as a whole.¹⁵⁴ Thus, even if the EG1-SSE I Series is taken into consideration, there is no diluting of the indirect interest held by members of the Zell family.¹⁵⁵

(i) admitted that he had not "seen the terms of any loans" from Mr. Fischer to Prudence Energy Ltd., nor any other reliable evidence of that loan despite claiming that Mr. Fischer’s investment took the form of a loan;¹⁶⁰ and

(ii) Confirmed that there is no evidence that Mr. Fischer still owned the alleged loan to Prudence Energy Ltd when he initiated this arbitration.¹⁶¹

The Claimants argue that Mr. David Fischer’s investment has been proved :

Exhibit C-41[b] is a Declaration of Trust issued by Line Holdings Limited (Gibraltar) in favor of DF Holdings Investments Limited. The property held in trust by Line Holdings Limited for the absolute benefit of DF Holdings Investments Limited is 15,000 shares (75%) in Prudence Energy Limited.

Exhibit C-41[d] is a Declaration of Trust issued by the same Line Holdings Limited, in favor of Mr. David Fischer. The property held in trust by Line Holdings Limited for the absolute benefit of Mr. Fischer is 20,000 shares (100%) in DF Holdings Investments Limited.

By these two trusts Mr. Fischer is the beneficial owner of 75% of Prudence Energy Ltd. Prudence Energy Ltd in turn owns 13.79% of EGI-EMG LP, the corporate vehicle created by the EGI group of investors to make their investment in EMG.....

[...]

The Declarations of Trust in question recite that they were executed "on the 2nd May 2012." Exhibit C-41[b] recites that although signed in 2012 it has "effect from the 26th June 2007," and Exhibit C-41[d] recites that it has "effect from the 25th June 2007." Egypt says in its Submission that this amounts to a claim of "retroactive effect" and adds that: "such allegations, however, is [sic] ineffective to overcome Mr. Fischer’s evident lack of standing in this arbitration."

The evidence that the Claimants have filed is sufficient proof of Mr. Fischer’s uninterrupted beneficial ownership of Prudence Energy Ltd from 26 June 2007 until 2 May 2012. The Declarations signed in May 2012 attest that the interests have been held since June 2007.

There were also equivalent Declarations of Trust issued by the same trustee to each of the same beneficiaries concerning the same trust property on 26 and 25 June 2007 respectively. These two Declarations signed in 2007 are provided... as Exhibits C-317 and C-318. When these were replaced on 2 May 2012 by the two new Declarations of Trust filed with the Request for Arbitration, they had to be cancelled; this is evidenced by the copies of the cancelled 2007 Declarations provided... as Exhibits C-319 and C-320.

As demonstrated by Exhibits C-41[e], C-41[f] and C-41[g]... the company created as Parolo Enterprises Limited ultimately changed its name to DF Holdings Investments Limited. This explains the difference in the name of the beneficiary entity listed in the Declaration of Trust of June 2007 (Exhibit C-317) (Parolo Enterprises Limited) and that listed in the Declaration dated 2 May 2012 (Exhibit C-41[b]) (DF Holdings Investments Limited). This change in name had no effect on the legal personality of the entity now named DF Holdings Investments Limited.

There cannot be any reasonable dispute about Mr. Fischer’s ownership of the investment at all relevant times,...¹⁶²

(i) The claim concerning renegotiations in the midst of non-deliveries - the Respondent argues that the framework governing EGPC and EGAS’s obligation to deliver gas to EMG is set out at Articles 2.1, 6, 7 and 16 of Annex 1 to the GSPA;¹⁷²

(ii) The claim that gas was withheld to compel renegotiation - the Respondent argues that this claim is the same as the previous one;¹⁷³

(iii) The claim concerning the First Amendment to the GSPA - the Respondent argues that any claims concerning the First Amendment, or the performance of the GSPA as amended, are entirely contractual in nature;¹⁷⁴

(iv) The claim concerning the failure to secure continuous gas supply - the Respondent argues that this is simply a different label for the Claimants’ claim that EGPC and EGAS allegedly failed to perform the GSPA;¹⁷⁵

(v) The claim concerning severe supply shortfalls and failure to protect the pipeline -the Respondent argues that these contentions are exclusively determined by the GSPA: no other instrument makes provisions for On-Sale Notices (Article 6 of Annex 1 to the GSPA), for force majeure (Section 16.3 of Annex 1 to the GSPA), for contractual termination rights (Section 2.5.2 of the GSPA) or for the circumstances under which EMG may have been legally entitled to receive gas (Articles 2.1, 6, 7 and 16 of Annex 1 to the GSPA);¹⁷⁶ and

(vi) The claim concerning the repudiation of gas supply obligations - the Respondent argues that EGPC and EGAS’s contractual termination rights are set forth at Section 2.5 of Annex 1 to the GSPA.¹⁷⁷

In any event, the Respondent avers that an arbitral tribunal constituted pursuant to a Treaty lacks jurisdiction over purely contractual claims. In support of its argument the Respondent cites the following ICSID decisions:

(i) Gustav F W Homester GmbH & Co KG v. Republic of Ghana ("Homester v. Ghana") —

As noted earlier in this Award, almost all of the allegations which make up Hamester’s claim of breach of the BIT, whether relating to allegations of arbitrary or discriminatory treatment; unfair and inequitable treatment; or expropriation, concern the conduct of Cocobod, in relation to Article 7 of the JVA. This conduct was contractual and not sovereign in nature. It is the Tribunal’s view that Hamester’s so-called ‘treaty claims, ’ however skilfully repackaged, are inextricably linked to the JVA and are in reality contract claims. To use the language of the award in the Vivendi Annulment case, ‘the essential basis’ of Hamester’s claims is purely contractual.¹⁷⁹

(ii) Malicorp Limited v. The Arab Republic of Egypt ([Malicorp v. Egypt")¹⁸⁰- the Respondent recalls that the Claimants seek to distinguish this case on the basis that the claimant in that case was a party to the contract and, in contrast, the Claimants are not parties to the GSPA. The Respondent argues that whether the Claimants are parties to the GSPA or not is irrelevant to the issue of whether, by resolving the contractual dispute concerning the performance and termination of the GSPA, one also resolves the Gas Supply Dispute and vice versa. On that issue, the tribunal in Malicorp was clear: a breach of contract may only amount to a violation of the treaty when the breach "could not be resolved by using the ordinary procedure"¹⁸¹. Because the Gas Supply Dispute before this Tribunal falls under the exclusive jurisdiction of the CRCICA tribunal says the Respondent, it "enables all submissions and arguments to be exhausted", with the conclusion that this ICSID Tribunal cannot have jurisdiction over the same dispute.¹⁸²

(i) Iberdrola Energia S.A. v. Republic of Guatemala ([Iberdrola v. Guatemala"]¹⁸³- the Respondent recalls that the Claimants seek to distinguish that award by asserting that the tribunal concluded that it had no jurisdiction because the claimant based its treaty claims on breaches of Guatemalan law, not breach of contract. The Respondent argues that this distinction is irrelevant: "the point remains that if the legal source of the obligation is not the treaty itself a tribunal constituted pursuant to that treaty does not enjoy jurisdiction over a dispute concerning the obligation’s breach".¹⁸⁴

(ii) Robert Azinian, Kenneth Davitian, & Ellen Baca v. The United Mexican States ("Azinian v. Mexico"]¹⁸⁵- the Respondent recalls that the tribunal in Azinian rejected the claimants’ claim for expropriation, finding that it was a disguised attempt to claim for wrongful termination of the concession contract which was pending before the courts of the host State. The Respondent argues that this decision applies mutatis mutandis to the present case as the Claimants’ claims are based on allegations of breach of contract and the dispute concerning the termination of the GSPA is pending before the appropriate forum under the GSPA, namely the CRCICA Tribunal.¹⁸⁶

The Respondent further argues that the Tribunal lacks jurisdiction because the Gas Supply Dispute falls exclusively within the jurisdiction of the CRCICA Tribunal, a tribunal constituted pursuant to the GSPA, and which has upheld its jurisdiction¹⁸⁷. The Respondent submits that the CRCICA Tribunal is considering, inter alia, the same issues which the Claimants seek to disguise as violations of the Treaties in these proceedings¹⁸⁸. The Respondent avers that both the commercial and investment fora could not have jurisdiction over the same claims.¹⁸⁹

until the dispute concerning the performance and the determination of the GSPA is resolves by the appropriate forum, the Claimants’ claims in this arbitration are inadmissible due to them being premature. At the very least, the Tribunal cannot exercise its jurisdiction over such claims because to do so could lead to conflicting decisions by the investment and commercial arbitral tribunals over what is essentially the same dispute and, even if it does not lead to conflicting decisions, may pave the way for the Claimants and EMG to recover twice for what is the same wrong and, correspondingly, the same loss.¹⁹³

The Claimants argue that Egypt’s objection depends entirely on the accusation that the Claimants have submitted contract claims disguised as treaty claims, which is untrue. The Claimants are not and do not pretend to be party to the Source GSPA or any other contractual instrument to which EMG is a party, but since shares in EMG are a protected investment held by the Claimants, breach of EMG’s contractual rights by Egypt is a fact relevant to whether Egypt has breached its treaty obligations.¹⁹⁵ As the annulment committee in Vivendi v. Argentina observed when annulling the tribunal’s award for refusing to interpret an underlying contract when assessing whether Argentina had breached its treaty obligations, "[i]t is one thing to exercise contractual jurisdiction... and another to take into account the terms of a contract in determining whether there has been a breach of a distinct standard, of international law."¹⁹⁶

(i) Malicorp v. Egypt¹⁹⁷- the Claimants argue that this decision does not support Egypt’s jurisdictional objection since the tribunal in that case took jurisdiction over the dispute and proceeded to decide whether Egypt had breached the applicable investment treaty.¹⁹⁸

(ii) Iberdrola v. Guatemala¹⁹⁹- the Claimants argue that unlike the claimant in Iberdrola, the Claimants’ case does not depend on breach of contractual obligations. Rather, even if entities under the instruction and control of the Egyptian State complied with all of their contractual obligations, Egypt breached the Treaties by, among other conduct, failing to uphold the sovereign assurances and commitments on which the Claimants relied to invest and failing to protect the Claimants’ investment as required by the Treaties.²⁰⁰

(iii) Azinian v. Mexico²⁰¹- the Claimants argue that this case is not relevant for the same reasons in respect of Iberdrola and Malicorp, mutatis mutandis.²⁰²

[t]he only claim that relies on whether the Source GSPA has been breached is the part of the Claimants’ umbrella clause claim specifically relying on the Source GSPA as an obligation binding on Egypt. For that claim, as in all others made by the Claimants to which any contract may be relevant, whether the contract has been breached under its governing English law is a question of fact for this Tribunal, which it has jurisdiction to decide as a fact. The question of international law is whether such a fact would then give rise to a breach of the umbrella clause.²⁰⁸

(i) In 1997, the Egyptian Parliament passed the Investment Guarantees and Incentives Law No. 8/1997²¹¹. The Investment Law contains in its Chapter 3 a sub-statute establishing the so-called free-zones regime (the "Free Zones Regime"). In accordance with the Free Zones Regime, companies benefiting from the free-zone status are treated as "offshore" for taxation and customs purposes, i.e. they are exempt from almost all taxes and customs duties.²¹²

(ii) EMG was formed on 19 April 2000 as a Free Zones company and, therefore, was not subject to most taxes or customs.²¹³

(iii) Subsequently, in light of the economic conditions prevailing at the time, the Egyptian Parliament adopted Law No. 114/2008 ("Law No. 114/2008")²¹⁴ which amended the Investment Law by excluding companies such as EMG operating in certain sectors, including petroleum production and transportation, from the Free Zones privileges.²¹⁵

(iv) In their Memorial, the Claimants allege that, by enacting Law No. 114/2008, the Respondent breached the obligation to accord fair and equitable treatment to their alleged investment, and the applicable umbrella clauses, and constituted an unlawful expropriation under the Treaties.²¹⁶

In this respect, the Respondent argues the following:

(i) Article XI of the US Treaty provides that:

With respect to its tax policies, each Party should strive to accord fairness and equity in the treatment of investments of nationals or companies of the other Party. Nevertheless, all matters relating to the taxation of nationals or companies of a Party, or their investments in the territories of the other Party or a subdivision thereof shall be excluded from this Treaty, except with regard to measures covered by Article III and the specific provisions of Article V.²¹⁸ (Emphasis added by the Respondent)

(ii) The Respondent contends that that Article XI is clear: it carves out of the Tribunal’s jurisdiction "ail matters relating to taxation", with the exception of measures relating to Article III (Expropriation) and Article V (Transfers) of that Treaty.²¹⁹

(iii) Accordingly, the Respondent argues that the claims of Ampal, EGI-Fund Investors, EGI-Series and BSS-EMG that Egypt’s promulgation of Law No. 114/2008 is contrary to its commitments under the US Treaty to accord fair and equitable treatment to investments, and constitutes an unreasonable and discriminatory measure which is contrary to Egypt’s obligation entered in regard to investments in its territory, are clearly excluded from the scope of that Treaty and are not subject to the Tribunal’s jurisdiction.²²⁰

(iv) The Respondent however concedes that the only tax claims that could fall within the scope of the US Treaty would be the Claimants’ claim concerning "measures covered by Article III", i.e. a measure the effect of which is tantamount to an unlawful expropriation or nationalisation.²²¹

It also has jurisdiction to determine whether that conduct violated any of the other provisions of the US Treaty. Article XI of the US Treaty provides that ‘all matters relating to taxation... shall be excluded from this Treaty, except with regard to measures covered by Article III. ’ To the extent a measure relating to taxation is covered by Article III — that is, constitutes an expropriation - the measure is not excluded from the Treaty. It is included within the scope of the Treaty, and all of the substantive protections in the treaty are applicable to it²²²

Article XI of the US-Egypt BIT is crystal clear. It says what it says that "all matters relating to the taxation of nationals or companies of a Party, or their investment in the territories of the other Party or a submission thereof shall be excluded from this treaty, except with regard to measures covered by Article III..." (Tribunal’s emphasis).

The Respondent argues that the requirement of legality is a condition for the jurisdiction of any tribunal constituted on the basis of an investment treaty. The Respondent avers that this was accepted by the Claimants.²²⁵ In support of its argument, the Respondent refers the Tribunal to:

(i) ICSID decisions which confirm the general requirement of international law that investments be procured legally and in good faith;²²⁶ and

(ii) the expert legal opinion of Professor Hervé Ascencio concerning the consequences of the Claimants’ illegal acts on the protection of their alleged investment under the applicable Treaties. Professor Ascencio remarks that the US Treaty contains a requirement that an investment be made in accordance with the host State’s laws and regulations.²²⁷ This requirement is found implicitly at Article II(2).²²⁸ In any event, Professor Ascencio underlines that the absence of any express legality requirement in a treaty does not bar the prohibition, under general international law, against protecting investments obtained illegally.²²⁹

Mr. Abdel Hamid Hamdy thanked the Board and stated that without the good relation between the shareholders and the full support of Mr. Hussein Salem who was always supporting us and paying the order with the shareholders which led that our negotiation with the Government is fruitful and that he was they were always brainstorming ideas to us which concluded all the amendment we achieved and as well Mr. Abdel Hamid Hamdy thanked Merhav Group for their support during such period and thanked Ms. Ellen Havdala for all her support as well.

Mr. Hamdy thanked the Board for their initiative regarding the above mention bonus which is on top of the generous bonus Mr. Hussein Salem gave to EMG team from his personal account which is very much appreciated (Mr. Hamdy pressed that the bonus they receive from Mr. Salem is way above the said bonus and he is amounting such to eliminate any misunderstanding in the future).²³⁴

The Respondent avers that the selection of EMG for the purchase of Egyptian gas from EGPC and its exportation, as well as the subsequent conclusion of the GSPA without the organisation of any public tender process was in violation of:

(i) Article 4 of EGPC’s Commercial Activity Regulation;²³⁷ and

(ii) Article 115 of the Egyptian Criminal Code.²³⁸

(i) Given that the above-mentioned violations of Egyptian law were committed in relation to the conclusion of the GSPA, they render the Claimants’ alleged investment illegal and outside of the Treaties’ scope of protection.²⁵⁶

(ii) This illegality affects all Claimants: "if the alleged investment was not lawful at the outset and thus was not protected under the Treaties when it was made, it cannot benefit from this protection simply because it was acquired by other entities later in time".²⁵⁷

(iii) The Tribunal therefore has no jurisdiction over the Claimants’ claims.²⁵⁸

the Claimants’ allegations overlook the fact that acts of corruption normally involve acts of State officials. Therefore, whether members of the former Egyptian government, among others, may have facilitated the procurement of the Claimants’ alleged investment cannot preclude the Respondent from invoking Messrs Salem and Maiman’s illicit acts. The relevant issues are: who is responsible for soliciting the corrupt acts, and who benefits from them. It was Messrs Salem and Maiman in both cases. If States were estopped from raising corruption defences in such circumstances, acts of corruption would never be sanctioned.²⁶⁵

This is obviously wrong. The Source GSPA was concluded on 13 June 2005, more than four years before EMG’s Board Meeting of 2 November 2009 took place and neither R-965 nor R-966 records anything about the procurement or conclusion of the Source GSPA. Even if Egypt’s version of events were to be accepted, the alleged facilitation of the 2009 First Amendment and the alleged payment of bonuses to EMG’s management in relation to the conclusion of those negotiations cannot be "directly relevant" to the negotiation and conclusion of the underlying agreement four years earlier, let alone the lawfulness of the Claimants’ investments in the EMG project, all of which had been made by the time of the First Amendment negotiations.

Egypt’s attempt to link its allegations of forgery to a ‘web of corruption ’ surrounding the Source GSPA is inconsistent with decisions by its own courts.²⁷²

The Respondent submits that EMG’s shareholders are using multiple arbitrations to advance duplicative claims in respect of the same interest:

(i) Mr. Maiman, the CEO of Ampal, the lead Claimant in these proceedings, confirmed his objective of maximising his chances of recovery, publicly announcing his intention to seek damages up to US$ 8 billion says the Respondent.²⁸⁵

(ii) The Respondent contends that Mr. Maiman, a non-US national, restructured his interest in EMG to seek the protection of the US Treaty. The Respondent argues that following the signature of the GSPA on 13 June 2005, Mr. Maiman embarked on a strategic restructuring of his interest in EMG, which at the time was held entirely through his wholly-owned Israeli company, Merhav (mnf) Ltd. Based on the available evidence produced by the Claimants, this involved a series of coordinated transactions between Mr. Maiman’s wholly-owned Merhav (mnf) Ltd. and two other Israeli companies under his control: Merhav-Ampal Energy Ltd. (a wholly owned subsidiary of Ampal, later called "Merhav-Ampal Group Ltd.") and Merhav Ampal Energy Holdings LP (a company formed in June 2007 as part of the reorganisation of Mr. Maiman’s interest in EMG). According to the Respondent, as a result of these transactions, Ampal would hold the majority of its interest in EMG (amounting to a 12.5% indirect interest) through its Israeli subsidiaries Merhav-Ampal Energy Ltd. and Merhav-Ampal Energy Holdings. With this restructuring, Mr. Maiman sought the protection of his interest under the US Treaty, in view of Ampal’s place of incorporation in New York, and notwithstanding that there was no US substantial interest involved says the Respondent.²⁸⁶

(iii) The Respondent also contends that Mr. Maiman’s engaged in insider transactions leading to Ampal’s bankruptcy. The Respondent argues that the documentary record shows that Ampal was employed as a vehicle for Mr. Maiman’s personal profit. Firstly, Mr. Maiman realised a personal gain of over US$25 million in connection with the restructuring of his interest in EMG.²⁸⁷ Secondly, Ampal paid to Mr. Maiman’s Merhav (mnf) Ltd. a total of 31.8% of its outstanding shares without receiving any cash consideration in return.²⁸⁸ Thirdly, through his position as President, Chief Executive Officer and Chairman of the Board of Ampal, Mr. Maiman paid himself a salary of over US$ 3 million in 2010 and nearly US$2 million in 2011.²⁸⁹ Fourthly, Ampal’s debt is significant: when it filed for voluntary bankruptcy before the Unites States Bankruptcy Court on the Southern District of New York in August 2012, a few months after it started this arbitration, its outstanding debt to its bondholders amounted to approximately $230 million.²⁹⁰ As Ampal’s CFO described in those proceedings, the company’s claims against the Respondent "represent the only mechanism by which Ampal can recover substantial funds that may be used to satisfy Ampal’s creditors".²⁹¹ The bankruptcy proceeding was converted into a liquidation proceeding under Chapter 7 of the United States Bankruptcy Code says the Respondent.²⁹²

(iv) The Respondent argues that Ampal advances its claim in this arbitration in respect of the exact same 12.5% indirect interest in EMG for which Ampal’s 100% subsidiary, Merhav-Ampal Group Ltd and its 50% subsidiary, Merhav Ampal Energy Holdings, claim in the parallel Maiman arbitration.²⁹³ According to the Respondent, the Claimants’ quantum experts, FTI, confirmed at the hearing that any compensation awarded to Ampal in this arbitration will be duplicative if any compensation awarded to Merhav-Ampal Group Ltd in the Maiman arbitration.²⁹⁴ The Respondent contends that the same is true of Ampal’s 50% interest in Merhav Ampal Energy Holdings and that the Claimants’ strategy constitutes an abuse of process.

(v) The Respondent avers that there is no basis under the relevant treaties or international law to consider that Egypt has consented to be subject to multiple, duplicative derivative claims brought by different levels of holding companies in respect of the same alleged loss to the same underlying shareholding.²⁹⁵ Accepting the duplicative use of derivative claims would require the most extreme caution as it gives the Claimants duplicative chances to prevail and creates risks of treaty shopping, double recovery and inconsistent outcomes says the Respondent.²⁹⁶ Egypt cannot be considered to have consented to the Tribunal’s jurisdiction over the claim brought by Ampal in this arbitration concludes the Respondent.

(vi) The Respondent contends that Ampal’s decision to cause its subsidiaries Merhav-Ampal Group Ltd and Merhav Ampal Energy Holdings to make claims under the Egypt-Poland BIT in the Maiman arbitration - thus asserting that those interests have Polish nationality for the purpose of the claim - constitutes a waiver of Ampal’s right to assert that the same 12.5% interest in EMG simultaneously has U.S. nationality and is protected, including being entitled to invoke arbitral jurisdiction, under the Egypt-US BIT.²⁹⁷

(vii) The Respondent avers that in both this arbitration and in the Maiman arbitration, the Claimants advance claims which directly concern the performance and termination of the GSPA ("Gas Supply Claims") as breaches of the Treaties, while EMG is at the same time already engaged in two commercial arbitrations in which it asserts the exact same claims. According to the Respondent, the Claimants thus seek the same relief in relation to the Gas Supply Claims as that which EMG seeks in the commercial arbitrations.²⁹⁸ The Respondent argues that these contractual claims are within the exclusive competence of the CRCICA Tribunal constituted pursuant to the GSPA’s arbitration clause which has issued an Award upholding jurisdiction.²⁹⁹ In response to the Claimants’ argument that compensation granted to EMG in the contractual arbitrations might not "ultimately find its way to the shareholders" because "EMG has significant debts to NBE, the National Bank of Egypt, and to the other creditors"³⁰⁰, the Respondent argues that this contradicts the premise of the Claimants’ damages claim, i.e. that EMG’s losses are sustained by its shareholders in proportion to their interest in the company.³⁰¹

(viii) According to the Respondent, EMG and its shareholders seek to multiply their chances of recovery in respect of the same contractual dispute concerning the performance and termination of the GSPA. They have created a situation in which they need to persuade only 2 out of 12 arbitrators seized of the Gas Supply Claims. The Respondent submits that the Claimants have improperly sought to instrumentalise the system of international arbitration to achieve an unprecedented abuse of process, which the Tribunal should decline to permit as lacking jurisdiction and/or as inadmissible.³⁰²

The Respondent explains that "tribunals have recognised that, while minority shareholders in a locally-incorporated company may benefit from the protection of an investment treaty, there is a need to set limits on such claims when they concern alleged measures by the host State directed at the rights of a local company."³⁰⁴ The Respondent avers that the need to establish a cut-off point reflects the risk that according unlimited protection to such investors could result in the proliferation of multiple proceedings against a host State and facilitate treaty/forum shopping and abuses of process.³⁰⁵ The Respondent argues that "foreign investors who passively hold shares through one or more intermediary entities incorporated in third States would not fall within the class of specific investors with which the State parties foresaw they would arbitrate investment disputes."³⁰⁶

(i) EGI-Fund - The Respondent argues that this company did not fund the Claimants’ purported investment, nor did it actively contribute to EMG: according to the Claimants’ Memorial, this company merely acquired its indirect minority 4.55% interest by purchasing a minority interest in EGI-EMG LP on 15 August 2008.³⁰⁷ This passive, indirect and very small interest cannot enjoy any protection under the Egypt-U.S. BIT.

(ii) BSS-EMG Investors - The Respondent argues that BSS-EMG only holds a 0,828% indirect interest in EMG. In addition, this company did not have any involvement in the local business of EMG, let alone the Egyptian gas sector.³⁰⁸

(iii) In view of the Tribunal’s decision to uphold the Respondent’s objection ratione personae over Mr. David Fischer, the Tribunal need not summarize the Respondent’s arguments specific to him in connection with the present submission.

[it] cannot be taken to have consented to disputes with investors who are so remotely connected to their alleged investment in Egypt. Article VII of the Egypt-US BIT allows for the submission to arbitration of a "legal investment dispute ", defined in relevant part as "an alleged breach of any right conferred or created by the Treaty with respect to an investment. [...] The dispute resolution provision in the [Treaty] thus confirm[s] that the Respondent consented only to arbitrate disputes with investors having a meaningful and active connection to an investment in its territory.³⁰⁹

In respect of Egypt’s allegation that EMG and its shareholders have made abusive claims, the Claimants argue that:

(i) It is not unusual or controversial for a company and its shareholders of different nationalities to have recourse to different fora to vindicate their rights.³¹⁷

(ii) The Claimants have suggested ways in which double compensation could be avoided³¹⁸, and have made representations to that effect.³¹⁹ The Respondent’s proposition that both treaty tribunals should stay their decisions on compensation is unacceptable: if each Tribunal stayed its decision on compensation pending a full award from the other tribunal, neither Tribunal would ever award compensation.³²⁰

(iii) According to the Claimants, Egypt has not referred to any authority to support "waiver" as a basis to decline jurisdiction over or support the inadmissibility of Ampal’s claims.³²¹

(iv) Dismissal of Ampal’s claims on the basis that its subsidiary is pursuing its own claims would be unjust in circumstances where only Ampal is entitled to the protection of the ICSID Convention say the Claimants.³²²

(v) The Claimants contend that there is no basis for the assertion that Ampal’s claims are beyond the scope of Egypt’s consent to arbitrate in the US Treaty.³²³ In addition, the possibility of overlapping claims was considered and explicitly addressed in the Poland Treaty³²⁴, which does not exclude these claims or those made before the Maiman tribunal say the Claimants.³²⁵

(vi) According to the Claimants, a contractual forum selection clause cannot deprive a tribunal of jurisdiction over treaty claims brought by a non-party to the contract, even where those treaty claims involve consideration of the underlying contractual rights.³²⁶

(vii) There can be no abuse of process where Egypt itself has obstructed consolidation between the parallel arbitrations aver the Claimants.³²⁷

(viii) The Claimants submit that if "duplication of chances" were a genuine concern for Egypt, it would not have: (1) commenced the CRCICA arbitration; (2) rejected any consolidation of that arbitration with the two ICC arbitrations; (3) rejected consolidation of the treaty arbitrations before this Tribunal; (4) challenged the appointment of Professor Reisman to two tribunals; (5) refused to allow Jonathan Fisher’s claim to be heard with his brother’s;³²⁸ or (6) refused to even engage with the Tribunal³²⁹ on how it might coordinate its deliberations with the UNCITRAL Tribunal.³³⁰ In this respect, the Claimants recall that they outlined during the evidentiary hearing a course of action that could be taken to minimize the risk of contradiction, if all parties in both investment arbitrations so consented.³³¹

Article 26 represents one of the singular progressive advantages of the ICSID Convention. It 'create[s] a rule of priority vis-à-vis other systems of adjudication in order to avoid contradictory decisions and to preserve the principle of ne bis in idem. ’ Article 26 operates as a key element of the parties’ agreement to arbitrate confirming the exclusivity of ICSID arbitration as the means of dispute resolution, where the parties have agreed to such a forum for the resolution of their dispute.³⁴³

Such an election would secure to Ampal in the present arbitration the advantages of the ICSID Convention, upon which it places special reliance, whilst removing the abuse constituted by the double pursuit of the same claim.³⁴⁴

In the case of Claimants EGI-Fund Investors and BSS-EMG Investors whose claims are based on the alleged breach of the US-Egypt Treaty, the answer to the Respondent’s objection is found in Articles I(1)(c) and I(1)(d) of the Treaty which provide as follows:

(c) "Investment’’ means every kind of asset owned or controlled and includes but is not limited to:

[...]

(d) "own or control" includes ownership or control that is direct or indirect, including ownership or control exercised through subsidiaries or affiliates. (Tribunal’s emphasis)

a) To deny the Respondent’s objections ratione personae in respect of Ampal, EGI-Fund and EGI-Series;

b) To uphold the Respondent’s objection ratione personae in respect of Mr. David Fischer;

c) To declare that both the Centre (ICSID) and the Tribunal have no jurisdiction over Mr. David Fischer’s claims in this arbitration by virtue of Articles 25(1) and 25(2)(b) of the ICSID Convention;

d) To deny the Respondent’s objection over the Claimants’ Gas Supply claims based on the alleged breach of the standards of fair and equitable treatment and unlawful expropriation;

e) To remain seized of the Respondent’s objection over the Claimants’ Gas Supply claims based on the alleged breach of the umbrella clause;

f) To deny the Respondent’s objection ratione materiae over the Claimants’ tax claims;

g) To deny the Respondent’s objection in respect of the alleged illegality of the GSPA;

h) To direct the Claimant Ampal to elect to pursue the MAGL portion of the claim in the present proceedings alone by 11 March 2016 or opt at that time for the pursuance of its claims in the alternative forum;

i) To deny the Respondent’s objection based on an alleged abuse of process by the Claimants subject to Ampal’s compliance with para, (h) above; and

j) To reserve its decision as to costs.