"Cable" or "claimants" or "the Requesting Parties" means Cable Television of Nevis Limited and Cable Television of Nevis Holdings, Ltd.
"the Constitution" means the Constitution of Saint Christopher and Nevis.
"the Convention" means the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, referred to in Clause 16 of the Agreement.
"Federation" means the Federation of St. Christopher (St. Kitts) and Nevis.
Basically the Respondent has submitted that, notwithstanding the Agreement and the High Court proceedings, ICSID is without the jurisdiction in the dispute on the following grounds:
(a) the alleged dispute is not within the competence of the Arbitral Tribunal;
(b) the Arbitral Tribunal is not competent to countenance the substitution of a Contracting State, namely, the Federation, in lieu of NIA, as a party to these proceedings;
(c) the institution of the High Court Proceedings for an Injunction does not amount to consent to ground jurisdiction for the purposes of the Convention;
(d) the Request for Arbitration does not comply with the requirements of the Institution Rules in several material particulars, and the said noncompliance is fatal in that it cannot be overcome;
(e) Cable Television of Nevis Limited was not in existence at the time it purported to enter into the Agreement on which it relies for its Request for Arbitration and, consequently, the Agreement is irrelevant in so far as that Company is concerned; and
(f) Cable Television of Nevis Holding Ltd. is an Offshore Company and, as such, is prohibited from carrying on business within Nevis and any dispute that arises as a result cannot be described as a legal dispute for the purposes of the Convention;
The Federation is established by Section 1 of Chapter 1 of the Constitution of Saint Christopher and Nevis (hereinafter called "the Constitution") which sets out as follows:
(1) "The island of Saint Christopher (which is otherwise known as Saint Kitts) and the island of Nevis shall be a sovereign democratic Federal State which may be styled Saint Christopher and Nevis or Saint Kitts and Nevis or the Federation of Saint Christopher and Nevis or the Federation of Saint Kitts and Nevis."
(2) "The territory of Saint Christopher and Nevis shall comprise all areas that were comprised in the associated state of Saint Christopher and Nevis immediately before September 19, 1983, together with such other areas as may be declared by Parliament to form part of the territory of Saint Christopher and Nevis."
In contrast to the foregoing, the Federation, as distinct from the Government of Nevis, is specifically referred to only three times in the Agreement, (1) — at Clause 3 — the parties, i.e., the Government of Nevis and Cable, recognise that the Government of St. Kitts-Nevis (hereinafter, Federation) currently imposes a levy of Three Dollars ($3.00) EC per month per cable television company subscriber; (2) — at Clause 4 — "Government and Cable shall within thirty (30) days of the date of execution hereof obtain from the Governments (sic) of St. Kitts and Nevis (Federation) an appropriate ruling under which Cable shall receive a one hundred percent (100%) tax holiday"; and (3) — at paragraph d. of Clause 6 — "If currency exchange rates, other than the free market are established by the Government or the Federation, Cable may, at Cables option, use the best official exchange rate available."
However, Cable, in the first sentence on page 4 of their Response to Objections to Jurisdiction, mentions that the "Federation has argued that, because the High Court sitting in Nevis has found that the NIA can sue and be sued even when the Attorney-General of the Federation refuses to give his fiat, this establishes that Nevis is an entity separate from the Federation..." In the penultimate sentence of that paragraph, Cable states that this decision is certainly not authority for the proposition "that Nevis is a state separate from the Federation..." The Respondent never sought to establish chat Nevis is a state. In fact at point (88) of the Respondent’s Submissions in its Objections to Jurisdiction, the Respondent sets out that the "Federation is a federal sovereign democratic State, whereas the NIA is a semi-autonomous Department within that State," and, later in the said Objections, submits that the relationship between NIA and the Federation is analogous to the relationship between the Government of Northern Ireland and the United Kingdom, with one not per se an agent of the other. Cable’s counsel, however, by letter dated April 30, 1996, sets out the following:
"Respondent argues that ICSID lacks jurisdiction not because the Nevis Island Administration ("NIA") is a separate sovereign patty but rather because NIA is a subdivision or agency of the Federation of St. Kitts and Nevis (the "Federation") which has not been designated to ICSID by the Federation. Cable went to some trouble to review and analyse in their Response the Federation Constitution because that document makes it clear that NIA and the Federation are one and the same, both being creatures of that Constitution. Nowhere in that document are the words "subdivision" or "agency" or any equivalent expression used to describe NIA. This is one of a number of assertions by the Respondent in its "Observations" for which no legal authority, either in the Federation Constitution or elsewhere, is cited."
The relevant provisions of the ICSID Convention relating to consent are set out in Articles 25, 26 and 36 as follows:
Article 25: Jurisdiction of the Centre
"The jurisdiction of the Centre shall extend to any legal dispute arising directly out of an investment, between a Contracting State (or any constituent subdivision or agency of a Contracting State designated to the Centre by that State) and a national of another Contracting State, which the parties to the dispute consent in writing to submit to the Centre."
Article 25 (3):
"Consent by a constituent subdivision or agency of a contracting state shall require the approval of that State unless that State notifies the Centre that no such approval is required."
"Consent of the parties to arbitration under this Convention shall, unless otherwise stated, be deemed consent to such arbitration to the exclusion of any other remedy. A Contracting State may require the exhaustion of local administrative or judicial remedies as a condition of its consent to arbitration under this Convention."
Article 36 (2):
"The request shall contain information concerning the issues in dispute, the identity of the parties and their consent to arbitration in accordance with the rules of procedure for the institution of arbitration proceedings."
First of all, as indicated earlier, the Attorney-General has not consented to ICSID jurisdiction. The only consent apparently given by the Attorney-General is his Fiat dated August 25, 1995, a copy of which is set out at paragraph (95) of the Respondents Observations Refuting Requesting Parties’ Responses to Objections to Jurisdiction. The Fiat reads as follows:
"This is to certify that the Attorney-General gives his consent for the institution of legal proceedings by the Nevis Island Administration for an Injunction to restrain Cable Television of Nevis Limited from increasing the rate charged for Cable service without first going to Arbitration."
The salient points in the Fiat are (1) the legal proceedings are to be instituted by NIA, not the Federation, and (2) Cable is to be restrained from increasing the rate prior to going to arbitration, which, when read with the High Court summons and other documents filed in the proceedings, means arbitration under Clause 16 of the Agreement.
The final ground is based on the letter dated March 18, 1996 from the Honourable Vance Amory, Premier of Nevis, to ICSID on NIA letterhead. The letter deals mainly with the coming into effect of the Public Utilities Commission Ordinance which was passed by the Nevis Island Assembly and, on December 13, 1995 assented to by the Deputy Governor-General. The Tribunal, on March 12, 1996 — its first session, had requested information about the Ordinance and this letter was issued in response thereto. The letter gave details as to the date when certain matters required under the Ordinance were dealt with and continued as follows:
..."However, the [NIA] having regard to all the circumstances, thought it only prudent to proceed with the utmost circumspection.
Section 11 of the Ordinance, requires each public utility to file tariffs showing all rates within sixty days of the coming into operation of the Ordinance. Having the greatest deference and respect to the Arbitration Tribunal, the Administration did not wish to give even the appearance that it was exercising parallel jurisdiction over the matter before the Tribunal, or even worse, that it was proceeding in a high handed manner or preempting the Tribunal. Therefore our exercise of restraint.
We are pleased to welcome the request of the Tribunal and wish you to note for record purposes that the Commission will be functional by the 30th April, 1996."
Cable is basing its third ground on the above reference by the Premier to parallel jurisdiction as an acknowledgment that ICSID has jurisdiction over the matter. Firstly, this is a statement by Nevis and not the Federation, so the Federation cannot be bound by it, whatever weight it may carry, and, secondly, the words "parallel jurisdiction" are capable of several interpretations and do not necessarily constitute an acknowledgment of ICSID jurisdiction especially in the light of the fact that the letter was issued at the request of the Tribunal which had already had its first session on March 12, 1996 at which NIA or the Federation, call it what you will, had lodged objections to ICSID jurisdiction. One interpretation, and this is probably the correct one, is the NIA did not wish to give even the appearance of dealing with Cable under the Public Utilities Commission Ordinance until the ICSID Arbitral proceedings were completed.
The Respondent, in support at paragraph (115) of Objections to Jurisdiction, suggests that, "in order to invoke the authority of the Arbitral Tribunal to consider the merits of an investment dispute, there must be, in the first place, a request for arbitration meeting the following requirements:
(a) the request must contain information concerning the issues in dispute;
(b) the request must contain information concerning the identity of the parties to the dispute; and
(c) the request must contain information concerning the parties’ consent to arbitration in accordance with the rules of procedure for the institution of arbitration proceedings."
The foregoing are all required under Rule 2 of the Rules, which deals with the Contents of the Request. The Request appears to establish a prima facie for ICSID arbitration in that it contains inter alia the following as required under the Rules:
(a) the issue in dispute — the failure of NLA to agree to the increased rates and the High Court injunction;
(b) the indentity of the parties — the Requesting Parties on the one side and the Federation on the other, the Requesting Parties having been set out as nationals of U.S.A., a Contracting State, with the Federation at that time being the other Contracting State; and
(c) information concerning the parties’ consent to the arbitration — Clause 16 of the Agreement and the High Court documentation, there being no intention by the Requesting Parties to treat NIA as a party and hence no need to deal with the constituent subdivision or agency of a Contracting State aspect.
Accordingly, having regard to the submissions by Counsel on behalf of the Respondent on this issue, the Tribunal is in full agreement with the decision by the ICSID Secretary-General to register the Request on November 14, 1995 pursuant to Article 36 (3) of the Convention, as communicated to the parties by his Notice of Registration dated November 14, 1995.
Article 42 (1) of the Convention provides as follows:
"The Tribunal shall decide a dispute in accordance with such rules of law as may be agreed by the parties. In the absence of such agreement, the Tribunal shall apply the law of the Contracting State party to the dispute (including its rules on the conflict of laws) and such rules of international law as may be applicable."
Stated very briefly, in the Northumberland case, a written agreement was entered into on July 24, 1882 between W of the one part and D as trustee for an intended company to be called the N. Company, of the other part. N Company was incorporated the next day, i.e. July 25, 1882 and did not, after such incorporation, enter into any further agreement in writing with W, but acted upon the agreement of July 24, 1882, took possession in October 1882 of certain lands as intended under the agreement of July 24, 1882 and expended upon it a large sum of money, amounting to about 40,000 pounds sterling. In October 1884, N company passed a resolution for voluntary winding-up and, on December 29, 1884, an order was made for carrying on the winding up under the supervision of the court. W became bankrupt and S, his trustee, inter alias, on the interest of W under the agreement of July 24, 1882, took out a summons asking that they might be admitted as creditors for damages sustained by them in respect of the breach by N company of that agreement on the footing that the agreement was one by which the N company was bound. Mr. Justice Chitty held that, if D contracted for the company, then, as the company was not in existence at the time, the agreement could not be ratified by the company, and that, if he contracted as trustee, then, whatever daims he might have against the company if they took the benefit of the agreement, there was no contract between the company and W. An appeal followed. Set out below are excerpts from the decisions of the three appeal court judges. While, admittedly, this case is somewhat similar to the other cases which are not considered relevant since they dealt with pre-incorporation contracts entered into by agents or promoters, the rationale of the decisions are pertinent to the present issue:
Cotton, L.J:- (p.20)
"But it is said that we ought to hold that there was a contract entered between the company and Wallis on the same terms (except so far as they were subsequently modified) as those contained in the contract of July 24, 1882. In my opinion that will not hold. It is very true that there were transactions between Wallis and the company in which the company acted on the terms of that contract entered into with Wallis by the person who said he was trustee for them. But why did the company do so? The company seems to have considered, or rather its directors seem to have considered, that the contract was a contract binding on the company. But the erroneous opinion that a contract entered into before the company came into existence was binding on the company, and the acting on that erroneous opinion, does not make a good contract between the company and Mr. Wallis, and all the acts which occurred subsequently to the existence of the company were acts proceeding on the erroneous assumption that the contract of July 24, was binding on the company...We are not therefore authorised to infer a contract as it was inferred in those cases where there was no other explanation of the conduct of the parties. In my opinion the decision of Mr. Justice Chitty was right, and the appeal must therefore fail."
Lindley, L. J.:-(p.21)
"The more closely the facts are looked into the more plain is that everything which the company did, from the taking of possession down to the very last moment, was referable to the agreement of July 24, 1882, which the directors erroneously supposed to be binding on the company. I therefore cannot come to any other conclusion than the conclusion at which Mr. Justice Chitty arrived."
Lopes, L. J. :- (p.21)
"The question is whether there was a contract between Wallis and the company. There no doubt was an agreement between a man called Nunneley, who was agent for Wallis, and a man named Doyle, who described himself as trustee for the company. But at that time the company was not incorporated, and therefore it is perfectly clear that the agreement was inoperative as against the company. It is also equally clear that the company, after it came into existence, could not ratify that contract, because the company was not in existence at the time the contract was made. No doubt the company, after it came into existence, might have entered into a new contract upon the same terms as the agreement of July 24, 1882, and we are asked to infer such a contract from the conduct and transactions of the company after they came into existence. It seems to me impossible to infer such a contract, for it is clear to my mind that the company never intended to make any new contract because they firmly believed that the contract of the July 24 was in existence, and was a binding, valid contract. Everything that was done by them after their incorporation appears to me to be based upon the assumption that the contract of July 24, 1882, was an existing and binding contract. I think, therefore, that the appeal ought to be dismissed."
Cable on the other hand referred to the following ICSID cases: Liberian Eastern Timber Corporation (LETCO) v. the Government of Liberia 26 I.L.M. 647, 651—52 (1987), AMCO Asia Corporation and others v. the Republic of Indonesia 23 I.L.M. 351, 361—62 (1984), Alcoa Minerals of Jamaica v. the Government of Jamaica as discussed in John T. Schmidt, Arbitration under the Auspices of ICSID: Implications of the Decision on Jurisdiction in Alcoa Minerals of Jamaica Incorporated, Inc. v. Government of Jamaica 17 Harv. Int’l L.J., 90, 102-3 (1976) and the aforementioned Holiday Inns v. Morocco case. Cable had also in paragraph 6 of its counsel’s reply dated April 30, 1996, to the Respondent’s "Observations Refuting Requesting Party’s Responses to Objections to Jurisdiction" set forth the following position:
"Respondent argues that Requesting Party the Operating Company was incorporated subsequent to the date of the Agreement, and is thus a "non-party" in these proceedings. The Agreement upon which the Request for Arbitration is based is dated September 1986. The Holding Company Requesting Party was incorporated on May 6, 1986 (see Tab 1 to our Response). The Operating Company Requesting Party was incorporated April 2, 1987. Thus, there was a Requesting Party in existence on the date of the Agreement, and the Agreement makes it apparent on its face that the organization of the Operating Company was contemplated by both parties. Cable respectfully submits that it is not unusual to encounter legal requirements of various countries of the world concerning the legal structure under which one must invest in those countries. It is also common for compliance with those requirements to take some time to complete. It is respectfully submitted that the organization of the Operating Company after the Agreement was signed is not legally relevant. While Mr. Byron makes numerous assertions of violations of local law of the Federation, he cites no legal authority for any of these assertions, and, since they are irrelevant in any case, Cable requests that the Tribunal disregard these assertions. Since it took the Federation several years to approve and ratify the Convention under which these proceedings are being conducted, and which Convention the Respondent had designated in the Agreement, perhaps Cable can be forgiven this short delay in causing the second of its entities to be organised."
To put the record straight on one point made by Cables Counsel in this paragraph, the U.K cases referred to in paragraph 5 above were submitted by Mr. Byron through ICSID by letter dated June 24, 1996, for the Tribunal’s consideration and formed part of his argument at the hearing on July 1 and 2, 1996.
On this matter of consent, it may be helpful to quote extensively from the Holiday Inns v. Morocco case as discussed by Pierre Lalive (p. 144-145) as follows:
"A similar insuperable difficulty confronted the second part of the Moroccan objection to jurisdiction raised against Holiday Inns S.A., Switzerland. The Government had signed an agreement which expressly identified one of the parties as the company ‘Holiday Inns S. A., Spielhof 3, Glarus Switzerland." Now the same Government was contending that, although it had intended to confer jurisdiction upon ICSID in respect of that company, Holiday Inns, Glarus failed to meet the requirements of Article 25 of the Convention because it was not legally in existence at the date of the Basic Agreement (and in particular had then "no nationality at all").
The relevant facts have been outlined above and were not in dispute: at the time of signing the contract, the two American partners (H.I. and O.RC.) had already decided that, in keeping with a frequent business practice, they would perform the Project through two wholly owned subsidiaries to be created for the purpose. The Moroccan Government was fully aware of this fact, as shown in particular by the very designations in the Agreement of the "Parties of the Second Part" and also by the signing, following the Governments request, of a "letter of guarantee" of the same date by the two American mother companies). The Government appears also to have known full well that on the date of signing, the preparations made by the H.I. group in order to create a Swiss subsidiary had not been completed. The Charter and ByLaws of the company were signed a few weeks later, on 30 December 1966, and the formalities came to an end on 1 February 1967 with the formal registration of the new company in the Commercial Register, a registration which, under the Swiss Code of Obligations (Article 643), is necessary to confer legal personality upon a stock corporation.
Several distinct arguments were put forward by the claimants to meet the Moroccan objection. First, under the personal law of the company, which was undoubtedly Swiss law, a stock corporation in a process of constitution is not entirely devoid of existence and the legal acts made on its behalf do have some effects. Secondly, whatever the position may have been in Swiss private law, the Government, when it signed the Basic Agreement with Holiday Inns, Glarus, Switzerland, had thereby recognised its legal personality and existence, in so far as Moroccan law and the international legal order were concerned; the requirements laid down by the Convention were thus fulfilled (independently of the formalities and the type of company or legal person contemplated by Swiss internal law). Thirdly, in any event, it was stressed that the Government had knowingly contracted with a corporation in a process of creation and that it could not in good faith rely on the absence of Swiss registration on the date of the contract. All the less so since it had no legitimate interest whatever in objecting to a fact (ulterior registration) which had not caused the slightest damage to the Government and had been totally accepted by it. The claimants believed, in other words, that the Government was precluded from raising that objection under the principle of good faith in an international sense.
To sum up, the claimants counter-attacked by emphasizing the "artificial" character of the Moroccan objections, which interpreted the Washington Convention in an extraordinarily formalistic and narrow manner. The Moroccan theory on the date of consent amounted, in their submission, to an exclusion of all expression of intent subject to suspensive conditions and to a requirement that all conditions be met simultaneously at the precise minute when the contract was signed. The Convention (as well as the Basic Agreement) was therefore deprived of a large part of its effectiveness, contrary to the evident intention of its signatories and contrary, in the concrete case, to the recognised intention of the Moroccan State itself to accept the jurisdiction of ICSID for "any dispute" relating to the contract and the "Moroccan Project". Furthermore, the Government’s position, however ably presented by its counsel before the Tribunal, happened to be in flat contradiction to its own attitude both at the time of signing the Basic Agreement and afterwards. The Government had started to perform the contract long after the respective dates of registration of Holiday Inns, Glarus, and of the coming into force of the Washington Convention between all the States concerned, and it had at all times (prior to the arbitration proceedings) treated Holiday Inns, Glarus as a Contracting Party.
CHAPTER 7 - Sixth Issue: Cable Television of Nevis Holdings Limited is by the terms of its incorporation under the Nevis Business Corporation Ordinance, 1984, an offshore company. An offshore company is prohibited from carrying on business within Nevis and, accordingly, if an offshore company does so carry on business, any dispute that arises as a result cannot be described as a legal disputefor the purposes of the Convention. Cable cannot be heard to say that Cable Television of Nevis Holdings Limited is a party to a disputefor the purposes of the Convention.
In summary, the Tribunal concludes in respect of the Respondent’s Objections to Jurisdiction as follows:
(1) The Tribunal decides that the proper party to the Agreement is NIA and not the Federation, and that NIA is a constituent subdivision or agency of the Federation which has not been designated as such to ICSID as required by Article 25 (1) of the Convention. Accordingly, the Tribunal has no jurisdiction (paragraphs 2.08, 2.15 to 2.17, 2.25, 2.27, and 2.32 to 2.33);
(2) The Tribunal decides that substitution of the Federation for the Government of Nevis as a party is not appropriate and that the Federation is not eligible to be named as a party to the proceedings (paragraphs 2.17, 2.27 and 3.02);
(3) The Tribunal decides that the references in the High Court documentation to Clause 16 of the Agreement are merely statements of fact and do not amount to consent by any person or persons to ICSID jurisdiction and that the consent of the Federation to arbitration as a party or to enable NIA to do so on its own behalf has not been established by the documentation in the High Court case (paragraph 4.17);
(4) The Tribunal decides in respect of the Rules:
(a) Rule 2 (1) (a) has not been complied with, since the Federation is incorrectly named as a party to the proceedings (paragraph 5.06);
(b) Rule 2(1) (b) has not been complied with, since the correct party should be NIA which is a constituent subdivision or agency of the Federation and has not been designated to ICSID as such by the Federation (paragraph 5.07);
(c) Rule 2 (1) (c) has not been complied with in that no relevant documentation has been furnished in respect of NIA as a constituent subdivision or agency of the Federation (paragraph 5.12); and
(d) Rule 2 (1) (d) has not been complied with in its entirety in that, while the Requesting Parties meet the nationality requirements, the agreement of the parties that they should be treated as nationals of another Contracting State has not been established (paragraphs 5.22 and 5.24);
(5) The Tribunal decides that the operating company, Cable Television of Nevis Limited, has not established its consent to ICSID jurisdiction since all the conditions required to ground such jurisdiction have not been met (paragraph 6.34); and
(6) The Tribunal holds that Cable Television of Nevis Holdings Ltd., an offshore Company, could be a proper party to ICSID Arbitral proceedings if the jurisdiction hurdle in relation to such proceedings were overcome (paragraph 7.02).