On July 8, 1987, the International Centre for the Settlement of Investment Disputes (hereinafter called "the Centre" of "ICSID") received a Request for Arbitration from Asian Agricultural Products Ltd. (Hereinafter called "AAPL." or "the claimant"), a Hong Kong corporation.
The Request stated that AAPL wished to institute arbitration proceedings against the Democratic Socialist Republic of Sri Lanka (hereinafter called "Sri Lanka" or "the Respondent") under the terms of the ICSID Convention to which Sri Lanka is a contracting Party, and in reliance upon Article 8(1) of the Agreement between the Government of the United Kingdom of Great Britain and Northern-Ireland and the Government of Sri Lanka for the Promotion and Protection of Investments of February 13, 1980 (hereinafter called "the Bilateral Investment Treaty") which entered into force on December 18, and was extended to Hong Kong by virtue of an Exchange of Notes with effect as of January 14, 1981.
Article 8(1) of the Bilateral Investment Treaty, invoked as expressing Sri Lanka’s consent to ICSID Arbitration, reads as follows:
Each contracting Party hereby consents to submit to the International Centre for the Settlement of Investment Disputes (...) for settlement by conciliation or arbitration under the Convention on the settlement of Investment Dispute between States and Nationals of the Other States opened for signature at Washington on 18 March, 1965 any legal disputes arising between that Contracting Party and national or company of the other Contracting Party concerning an investment of the latter in the territory of the former.
On September 30, 1987, the Centre received a communication from AAPL to the effect that Professor Berthold Goldman has been appointed as member of the Tribunal in conformity with Rule 5(1) of the Arbitration Rules. He accepted his appointment as arbitrator on October 8, 1987.
The Republic of Sri Lanka appointed Dr. Samuel K. B. Asantc by a letter dated October 20, 1987. He accepted his appointment on October 28, 1987.
Dr. Ahmed S. EL-Kosheri was appointed as the third arbitrator and President of the Tribunal on December 24, 1987, by the Chairman of the Administrative Council of ICSID in consultation with the Parties. He accepted his appointment on January 4, 1988.
Accordingly, the Tribunal became constituted as of January 5, 1988, and the declaration provided for under Arbitration Rule 6 was signed by each arbitrator.
At the first session of the Tribunal, held on February 23, 1988 at the Offices of the World Bank in Washington, D.C., the Parties declared that they were satisfied that the Tribunal had been properly constituted in accordance with the provisions of Section 2, Chapter IV of the Convention and of Chapter I of the Arbitration Rules (Minutes of said Session, Item I,(c)).
The Parties and the Tribunal established the framework within which the pleadings have to take place, comprising two consecutive rounds of written submissions followed by oral hearings to be electronically recorded without requiring the production of verbatim transcripts (Items 10-12 of the Minutes).
It was also agreed upon in that First Session that the Arbitration Rules in effect after September 26, 1984, shall apply (Item 2); that the language of the proceeding would be English (Item 8); and that the place of the proceedings will be Washington, D.C. at the seat of the Centre (Item 9).
The Claimant’s Memorial, submitted on April 13, 1988, focused mainly on the "bases for the claim", consisting of;
(i) - the unconditional obligation of "full protection and security" provided for in Article 2 of the Bilateral Investment Treaty;
(ii) - the more specific and clearly defined obligation stated in Article 4(2) of that Treaty requiring adequate compensation of the destruction of the Claimant’s property under circumstances not justified by combat action or necessities of the situation; and
(iii) - finally, the Claimant indicated that the Government’s liability extends to cover "damage caused under customary rules of international law on State responsibility" (lines 9 and 10 on page 6 of the Claimant’s Memorial).
The remedy required was expressed by the Claimant in terms of evaluating "the market value of the undertaking on the basis of discounted cash flow (DCF) theory", in order to establish the "going concern value" of Serendib Seafoods Ltd on January 28, 1978, the date of the destruction of its property.
The Respondent’s Counter-Memorial, submitted on June 18, 1988, placed the emphasis on different aspects; mainly to illustrate that the Serendib venture "was a failure from the outset", and its "fitful efforts to restructure was overtaken in January 1987, by the civil war between Tamil separatists and the Sri Lankan Government". Thus, the large majority of AAPL's claimed damages should be denied since they are based on "the illusion of expected profitability."
Moreover, according to the Respondent's account of the facts, the destruction of Serendib’s property was due to intense combat action between the Tamil rebels known as the "Tigers", who were allegedly operating out of Serendib’s farm and reported by Governmental sources as having violently resisted the counter-insurgency operation conducted by the Special Task Force (STF), and which aimed to drive the Tiger rebels out of the area.
Equally, with regard to the relevant dispositions of the Bilateral Investment Treaty, the Respondent’s Counter-Memorial gave the Treaty an interpretation different from that advanced by the Claimant. Particularly, the expression "full protection and security" used in Article 2 has to be construed as simply incorporating the standard which requires "due diligence" on the part of the States, and does not impose strict liability. As to Article 4(2), the Government’s liability thereunder would not arise except in case the Claimant succeeds in providing the proof that the counter-insurgency actions were not reasonably necessary or that the governmental security forces caused excessive destruction during their combat against the Tamil rebels.
The Claimant’s Reply to the Respondent’s Counter-Memorial was duly submitted on August 18, 1988. The first part of the Reply contained an elaboration of the factual aspects of the case from the Claimant’s point of view, especially those related to the events of January 28, 1987. According to Claimant, there was no "battle" at the farm site, but rather "a murderous over-reaction by the STF which led to the destruction and civilian deaths".
Furthermore, no access to the farm was permitted before February 10, 1987, either by the Batticaloa Citizens’s Committee for National Harmony or by Serendib’s staff, in order that "all evidence of the brutal actions in area could be obliterated".
In the second part of the Reply, the Claimant started by indicating that the Sri Lanka/U.K. Bilateral Investment Treaty "should be considered tantamount to" an agreement between the two Parties as to the applicable rules of law, within the context of Article 42 of the ICSID Convention. Nevertheless, it has to be understood that the Treaty itself is not limited to the explicit statement of certain substantive rules, but renders applicable additional rules incorporated therein, either by reference or by implication. Moreover, the Claimant’s Reply states that the "rules of customary international law", as well as the "Law of Sri Lanka as the host country", may be regarded as supplementary "alternative source of applicable law" (p. 29 of the Reply).
With regard to the specific issue of the Standard of Liability under the general pattern followed by Bilateral Investment Treaties, the basic argument developed by the Claimant amounts to an assertion that the traditional "due diligence" criterion applicable under the minimum standard of customary international law had been replaced by a new type of "strict or absolute liability not mitigated by concepts of due diligence" (p. 54 of the Claimant's Reply).
In case the strict liability argument based on Article 2 and on the most-favoured nation clause contained in the Bilateral Investment Treaty, would not be assested by the Tribunal, the Claimant presented "as an alternative submission only" another argument based on Article 4(2) (p. 56 of the Claimant's Reply), and ultimately on article 4(1) "which remains the fall-back provision in cases of war destruction" (ibid, p. 57).
Under this alternative argument, the applicability of Article 4(2) cannot be avoided except in case Sri Lanka would succeed in carrying out its onus probandi by providing convincing proof that the destruction of January 28, 1987 was caused "in combat action", and was required by "the necessity of the situation".
At the end of the Claimant’s reply, AAPL’s submissions were formulated as requesting the Tribunal to:
1. Determine the liability of the Government of Sri Lanka to compensate AAPL for the unlawful requisition and destruction of its investments;
2. Award to AAPL restitution or adequate compensation in the amount of freely transferable U.S. Dollars of not less than $ 8,067,368 (eight million sixty-seven thousand three hundred sixty-eight) on account of the requisition and destruction of its investment, increased by the additional costs, including all direct and indirect costs of the present proceedings, as well as interest at commercial rates;
3. Order the Respondent to assume the guarantee which AAPL had accepted for the loan by EAB/Deutsche Bank to SSL, or to pay in escrow the additional amount of U.S. t 888,000 (eight hundred-eighty thousand), representing the principal of the outstanding loan amount to be paid by AAPL if and when Deutsche Bank prevails in a call on the guarantor for the guarantee subscribed on September 15, 1984;
4. Deny the Counter-claim by the Respondent for costs and attorneys-fees.
On October 20.1988 the Government of Sri Lanka submitted its Rejoinder mainly devoted to emphasizing two issues: (i)—on the one hand, the incorrectness of AAPL’s construction of the interrelation between Article 2(2) and Article 4(2) of the Sri Lanka/U.K. Bilateral Investment Treaty; and (ii)—on the other hand, the refutation of AAPL’s claimed damages.
According to the Respondent’s Rejoinder, Article 4(2) is not an exemption from the rule contained in Article 2(2), since both articles "share a common standard of liability (that of governmental negligence)", but "the two provisions concern damages arising in distinct situations and caused by distinct patties" (p. 6 of the Rejoinder), Moreover, Article 4(2) could not be considered superseded by operation of Article 3 (the most-favoured-nation clause) as a result of the subsequent conclusion of the Sri Lanka/Switzerland Investment Treaty. In the Respondent’s own words, such convention "meets the same problem as AAPL’s absolute liability theory; because Article 4 of the Treaty creates potential liability, and does not limit liability, its exclusion from a subsequent treaty could not increase U.K. investor’s rights under the Treaty" (p. 10 of the Rejoinder).
The Respondent's propositions concerning the claimed damages are composed of three elements:
(a) - Serendib's desperate financial situation as reflected in the Memorandum of Understanding dated December 22, 1986 could hardly become reversed to evidence future expected profitability;
(b) - the inclusion of assets and other elements which were never touched by the destruction, such as the hatchery on the west coast;
(c) - the speculative nature of the projections concerning any possible future profitability.
The Respondent’s position on the various legal and factual issues led to the following conclusions:
(i) - that the STF operation on January 28, 1987, was a legitimate exercise of sovereignty;
(ii) - that any damage which occurred at the Serendib shrimp farm on that date was either necessary under the circumstances or not caused by the Government;
(iii) - that AAPL's financial loss due to destruction of assets remains unproven;
(iv) - that AAPL suffered no loss of any reasonably foreseeable future profits (p. 39 of the Rejoinder).
The oral phase of the proceedings took place from April 17 to April 20, 1989 at the seat of the Centre in Washington, D.C.
As indicated in the Summary Minutes of the Hearing of the Arbitral Tribunal, oral presentations were made by counsels to both Patties, and counsel to each party was given the opportunity to respond to the presentation made by the other.
The Tribunal heard also an oral presentation from Mr. Deva Rodrigo, advisor to the Claimant, and Mr. Victor Santiapillai, Managing Director of Serendib Seafoods Ltd., appeared before the Tribunal as witness called by AAPL. After giving his evidence, he was examined, and cross-examined by Counsel to each Party, and responded to the questions put to him by the members of the Arbitral Tribunal.
Before declaring the hearing adjourned on April 20, 1989, the Tribunal requested the Parties to submit certain additional documents and information, together with their respective comments thereon.
The Arbitral Tribunal having met for deliberation in Paris on Monday 26 and Tuesday 27 June 1989, and having considered the various issues pending before it, felt necessary to request further clarifications from both Parties about certain important points deemed not sufficiently pleaded during the previous hearing. A procedural Order was issued consequently on June 27, 1989, inviting both Parties to provide the Arbitral Tribunal with their considered points of view, together with all supporting documents, on the following:
(A) - Within the context of Article 4.1 of the Sri Lanka/United Kingdom Bilateral Agreement of February 13th, 1980, for the Promotion and Protection of Investments, is there any existing precedent or established practice concerning restitution, indemnification, compensation or other settlement allocated to Sri Lanka nationals and companies, or to nationals and companies of any Third State in the circumstances specified in said Article 4(1)? If so how was the quantum calculated?
(B) - Even if there is no precedent or established practice what are the applicable rules and standards under the Sri Lanka domestic legal system with regard to investment losses suffered by private persons owing to any of the circumstances mentioned in the said Article 4(1)?
(C) - What are the legal obligations of Sri Lanka under international law with regard to investment losses suffered owing to any of the circumstances mentioned in Article 4(1) by nationals of companies of Third States, whether these States have or have not concluded Bilateral Investment Agreements with Sri Lanka?.
At a later stage, and as a result of consultations undertaken between the members of the Tribunal, a new invitation was addressed on December 26, 1989, to Counsel to both Parties in the following terms:
Taking into consideration that the members of the Tribunal deem appropriate receiving from Counsels of both Parties their reflections and comments about the Decision rendered in July 1989 by the International Court of Justice in the case between the U.S.A. and Italy related to the scope of protection extended to a foreign investor under bilateral treaty;
Therefore, both Counsels are kindly invited to submit within the coming four weeks their comments about the legal reasoning stated in said Decision and the what extent they deem said reasoning relevant in adjudicating the pending Arbitration Case.
Counsel to the Respondent dispatched his comments in a letter dated January 26, 1990, and Counsel to the Claimant expressed his comments in a faxed letter dated January 29, 1990.
As an "alternative submission only", the Claimant envisaged a supplementary argument based on Article 4(2) of the Sri Lanka/U.K. Bilateral Investment Treaty which could be relied upon in case the Tribunal "unexpectedly" would deem that Article applicable.
The Claimant’s position in this respect was clearly stated at page 57 of his Reply to the Respondent’s Counter-Memorial, which reads as follows:
As stated above, Article 4(2) of the SL/UK Treaty provides for an exemption from the strict liability rule of Article 2(2). Article 4(2) provides for restitution and freely transferable compensation if the destruction of property in situation of war or civil disturbances was not required by the necessity of the situation. This standard of compensation goes beyond the duty of granting "restitution", "indemnification", or "compensation" or "other settlement" provided for by Art 4(1) of the Treaty, which remains the fall-back provision in cases of war destruction.
It is clear from the above quotation that the Claimant invokes Article 4 of the Treaty in its entirety, but considers the present case filling within the scope of the specific rule contained in Article 4(2), which evidently provides a better type of remedy that due under Article 4(1).
During the written phase of the procedures, the Claimant deemed sufficient to formulate his claims for "adequate compensation" on the basis of said Article 4(2) without suggesting what could be the ultimate remedy available if the Tribunal—contrary to his submissions—would arrive to the conclusion that conditions required for the applicability of the paragraph in question are missing in the present case, and accordingly the rules referred to in paragraph (1) of Article 4 constitute the proper legal framework within which the pending issues have to be adjudicated.
The only indications provided for in the Claimant's written pleadings with regard to such alternative are limited to what was previously mentioned in two reported passages:
(i) - the short reference on page 6 of the Claimant's Memorial to the Government’s liability "under customary rules of international law on State responsibility" (supra, § 7, (iii);
(ii) - the closing sentence on page 57 of the Reply to the Respondent’s Counter-Memorial containing a precise reference to the remedies "provided for by Article 4(1) of the Treaty, which remains the fell-back provision in cases of war destruction" (supra, § 27 at the end of the quotation).
we were told that we had not based our claim on 4(1) which therefore has to be deleted from the discussions. We have in our Memorial and in our Reply generally based our contention on the Bilateral Investment Treaty of the United Kingdom extended to Hong Kong and improved eventually by way of incorporation by reference of most-favoured-nation provisions deriving from other Investment Treaties. And we maintain this position. We have started by saying that 2. paragraph 2 enshrines an absolute or strict standard of liability and certainly more than due diligence. And that there are some exceptions in the UK Treaty, namely the specific war situation in Article 4 in general, without making a distinction between 4(1) and 4(2). And in any way, if I refer to 4(2), I have implicitly to bring into discussion 4(1). (Text provided by ICSID's Secretariat, as enclosure to a letter dated April 10, 1990, in response to an earlier request from the President of the Arbitral Tnbunal to cheek the electronically recorded tapes of the hearing).
At a later stage of the proceedings, the Arbitral Tribunal issued the above-mentioned Order of June 27, 1989 (supra, § 130), which invited both Parties to provide the Tribunal with their considered points of view about certain aspects related to Article 4(1) and the results that could be obtained through its implementation.
By his letter dated September 14, 1989, the Claimant’s Counsel provided the Tribunal with answers to the questions put to both Parties without raising any objection to the eventual adjudication of the case under Article 4(1). Moreover, the last sentence of said letter explicitly emphasized that:
...there can be no doubt that in the present case the provisions of Article 4(1) of the Sri Lanka/UK Agreement are applicable, and being lex specialis, supersede any general principle of International Law which otherwise may govern the issues at stake.
In Sri Lanka’s Counter-Memorial, the Respondent adopted arguments aimed to contradict the Claimant's initial submissions. The Government’s main arguments at that phase of the proceedings can be summarized as follows:
(A) - "The language ‘full protection and security’ is common in bilateral investment treaties, and it incorporates, rather than overrides, the customary international legal standard of responsibility. This international legal standard requires due diligence on the part of the States and reasonable justification for any destruction of property, but does not impose strict liability" (Government's Counter-Memorial, p. 27);
(B) - The "standards for liability under Articles 2(2) and 4(2) are essentially identical. In both instances, a requirement of reasonableness is imposed on Government action. Under the international law standard embodied in Article 2(2), the Government incurs liability if it foils to act with due diligence. Under Article 4(2), the Government incurs liability if its actions are not reasonably necessary" (Ibid., p. 28);
(C) - "Article 4(2) sets forth the standard for compensation in the event the Government is found to have violated its obligations under Article 2(2). That is, if the Government could have prevented the destruction of the form through due diligence". In case it has been proven that the Government’s lack of due diligence caused "unnecessary destruction, then the Government would both have violated its obligation under 2(2) and owe restitution or compensation under Article 4(2)" (Ibid, p. 28-29);
(D) - The burden of proof has to be assumed by the Claimant, by proving "that through due diligence, the Government could have prevented Batticaloa from filling under terrorist control, thus obviating the need for counter-insurgency action. If AAPL fails to prove that the security action itself was avoidable, then its burden is to prove that the Government caused excessive destruction during the operation of January 28, 1987" (Ibid., p. 29);
(E) - "To the extent there was excessive destruction, the Government of Sri Lanka is ready to compensate AAPL for its proportionate ownership". But, it is questionable "whether the Tribunal may determine that there was excessive destruction, without second-guessing tactical decisions made by commanders during the heat of combat" (ibid., p. 41).
(F) - "By investing in an area which it knew contained a vehement, and potentially violent, separatist presence, AAPL assumed the risk that its investment would be caught up in the sri Lankan civil war" (Ibid., p. 41).
The Government’s Rejoinder focused essentially on the arguments developed in the Claimant’s Reply, by ascertaining that:
(A) - AAPL’s alleged "absolute liability theory" based on Article 2.(2) concerns damages arising in situations and caused by parties other than those concerned by Article 4(2). In essence, according to the Respondent, Article 2(2) "establishes the general standard of protection owed to foreign investors against damage caused by third parties"; but Article 4(2) "applies to damages caused by the Government itself" (Respondent’s Rejoinder, p. 6);
(B) - Contrary to the Claimant’s assertion that Article 4(2) establishes an "exemption" to the strict liability standard of Article 2(2), Article 4(2) "creates rather than limits liability" (Ibid., p. 8);
(C) - There are no "authorities" suggesting that "full protection and security" clauses are "among the innovative provisions of modem BIT’s", and there is "no historical support for AAPL’s absolute liability theory" (Ibid., p. 8-9); and
(D) - "The absence of liability-creating provisions analogous to Article 4 of the Treaty in other Sri Lanka BITs, such as the treaty with Switzerland, means only that under those treaties investment losses due to destruction caused by the Government in response to civil strife, whether necessary or not, are covered by the general "fiir and equitable treatment" standard found in virtually every BIT, or that investors are left to their traditional remedies under customary international law" (Ibid., p. 10-11).
Finally, it has to be noted that throughout the arbitration proceedings, the Government of Sri Lanka maintained that:
(i) - the destruction was not attributable to the governmental security forces but caused by the rebels;
(ii) - there was effectively a "combat" between the Government’s Special Task Force (STF) and the Tigers insurgents; and
(iii) - there is no proof that the destruction of the property was "not required by the necessity of the situation".
Therefore, from the Respondent’s point of view the liability provided for in Article 4(2) can not be sustained due to the absence of all three of its sine qua non conditions. Hence, the applicability of Article 4(1) could have been logically envisaged.
Nevertheless, the Government of Sri Lanka refrained from dwelling upon its interpretation of said Article 4(1), its scope of application, as well as the extent of the responsibility that may emerge thereunder.
The reasons for such silence became perfectly clear during the oral phase of the arbitral proceedings, since Mr. Hornick, Counsel of the Respondent, indicated during his oral argument on April 19, 1989, that there was no need to elaborate upon Article 4(1), since in his understanding "AAPL is not claiming" thereunder (Transcript of the electronic taping provided on April 12, 1990 by ICSID Secretariat upon request from the Tribunal’s President).
With regard to the "applicable rules and standards under the Sri Lankan domestic legal system", the letter dated September 13, 1989, addressed by the Respondent’s Counsel in response to the Tribunal's Order stated the following:
1. If a Sri Lankan individual or company wished to make a claim against the Sri Lankan Government for any losses suffered owing to the war, etc., it may file an action in a district court in Sri Lanka for compensation. The action will have to be based on a cause of action arising in delict (tort). The law relating to delict is based on Roman Dutch Law which provides a remedy under lex aquilian principles, namely, for intentional or negligent wrongdoing. There is no special legislation or other basis whereby liability is incurred in the absence of fault. Any person making a claim against the Government would have to file an action in the district court. The prescription ordinance of Sri Lanka, which may be availed of by the Government as any other defendant, states (Sections 9):
No action shall be maintainable for any losses, injury or damage, unless the same shall be commenced within two years from the time when the cause of action shall have arisen.
2. It may also be relevant to note that the State (Liability in Delict) Act of 1969 based on the English Crown Liability in Delict Act permits an individual to file an action against the Government in respect of delicts committed by its officers or agents, Under this Act, vicarious liability attaches to the State for the wrongful acts of its servants.
(i) - Which elements have to be taken into consideration in calculating the Claimant’s property rights to be compensated; and
(ii) - What quantum reflects the full value of the elements constituting the Claimant's property right to be compensated.
With regard to the first point, the elements enumerated in the Claimant’s Memorial included the following:
(A) - 50% of the physical direct losses sustained by Serendib Company on January 28, 1987, which comprise:
(1) - loss of revenue from stocks of shrimp existing by then in the ponds;
(2) - value of farm structure and equipment destroyed, damaged or missing;
(3) - loss of investment in technical staff training at the firm;
(4) - compensation payable to dependents of dead staff members;
(5) - pond rehabilitation to resume operations.
(B) - The "going concern value" of the Claimant's 50% share-holding percentage in Serendib Company on January 28, 1987.
(C) - 50% of the projected lost profits for a reasonable period of 18 months ( Claimant's Memorial, p. 14-16).
According to the final form submitted by the end of the ora! hearing on April 19, 1989, expressing the Claimant’s conclusions, the Tribunal was requested to award AAPL compensation that includes the following elements:
(A) - 48.2% of the value of assests destroyed, comprising
(1) - physical assets;
(2) - financial assets;
(3) - intangible assets.
(B) - 48.2% of Serendib’s net projected future earnings.
(i) - AAPL’s Claims is "largely based on the illusion of expected profitability" (Government’s Counter-Memorial, p. 42);
(ii) - AAPL’s claim "is based on blatant double (or triple) counting. AAPL claims entitlement not only to its share of "going concern value" of Serendib, but also to indemnification for physical losses and lost prospective profits. Yet AAPL cannot be entitled to both, because any measurement of the "going concern value" of Serendib on January 28, 1987, includes a valuation of the net book value of both Serendib’s assets and its future profitability" (Ibid., p. 43);
(iii) - "In the event the Tribunal finds the Government liable to AAPL for damage sustained by Serendib, the Tribunal must chose either to undertake a going concern valuation or to determine damages for "physical loss" and lost prospective profits, but cannot logically award both" (Ibid., p. 43).
Nevertheless, the Tribunal takes into consideration that AAPL as Claimant in the present Arbitration has considered its investment in Serendib a total loss, and submitted in its final conclusions dated April 19, 1989, that:
... AAPL is willing to give up its shares of Serendib Seafoods Ltd, should the Respondent pay adequate compensation.
The Tribunal equally notes that the Respondent Government did not raise any objection, with regard to said offer.
In implementation of Article 61 (2) of ICSID Convention , the Tribunal exercises the discretionary power accorded thereto in the following manner:
(i) - in assessing the fees and expenses incurred by the Claimant in preparation and presentation of its case, all the amounts figuring in AAPL's final Statement of May 7, 1990 under Items I, 4, 5 and 6 in the Section entitled "Statement of expenditure incurred by AAPL and its officers "have to be excluded, since they are not proven necessary" in connection with the proceedings ", and the rest which is totalling US $ 164,917.20 (One Hundred, Sixty Four Thousands, Nine hundred Seventeen, and Twenty Cents) has to be shared on the basis of two thirds by the Claimant and one third by the Respondent;
(ii) - the Respondent has to bear all the fees and expenses incurred in preparation and presentation of its case;
(iii) - the costs of the arbitration, including the arbitrators' fees and the administrative charges of the Center, have to be shared on the basis of 40% by the Claimant and 60% by the Respondent.
THE TRIBUNAL DECIDES AS FOLLOWS:
1. The Republic of Sri Lanka shall pay to Asian Agricultural Products Ltd., the sum of U.S. Dollars FOUR HUNDRED AND SIXTY THOUSAND (U.S. $ 460,000) with interest on this amount at the rate of ten percent (10%) per annum from July 9, 1987 to the date of effective payment.
2. The Two Parties are invited to envisage adopting a solution that would permit, upon reception of the payment due under the preceding paragraph, to conclude an agreement according to which Asian Agricultural Products Ltd. undertakes all the steps required in order to transfer free of charge all its shares in Serendib SEAFOODS LTD. to the Government of Sri Lanka or any other entity the Government may nominate, provided that in exchange the new owner of the shares assumes any potential liability under the European Asian Bank Guarantee previously granted by AAPL as shareholder to the benefit of Serendib Company.
3. All other submissions of the Parties are rejected.
4. The Republic of Sri Lanka shall bear the amount of U.S. $54,972.40 (Fifty Four Thousands Nine Hundred Seventy Two, and Forty Cents) which represents one third of the relevant fees and expenses incurred by Asian Agricultural Products Ltd. for the preparation and presentation of its case.
5. The Republic of Sri Lanka shall bear the fees and expenses it incurred for the preparation and presentation of its case.
6. The Republic of Sri Lanka shall bear sixty percent (60%) of the arbitrators' fees and expenses and the charges of use of the facilities of the Centre, and the remaining forty percent (40%) shall be borne by Asian Agricultural Products Ltd.
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