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Award

TABLE OF ABBREVIATIONS
AWP Annual Work Program
BIT or Treaty Bilateral Investment Treaty; specifically, the Bilateral Investment Treaty concluded between the United States of America and the Republic of Kazakhstan Concerning the Encouragement and Reciprocal Protection of Investment, dated 19 May 1992
Caratube Caratube International Oil Company LLP
Caratube I arbitration Caratube International Oil Company LLP v Republic of Kazakhstan; ICSID Case No. ARB/08/12
CCC Consolidated Contractors (Oil and Gas) Company S.A.L.
CDC The Central Committee on Development of Deposits of the MEMR (the Central Development Committee)
CER Caspian Energy Research Limited Liability Company
CIOC Caratube International Oil Company LLP
Claimants Up to the decision on jurisdiction: Caratube International Oil Company LLP and Mr. Devincci Salah Hourani. Thereafter: Caratube International Oil Company LLP
Contract Contract [No. 954] for the Exploration and Production of Hydrocarbons within Blocks XXIV-20-C (partially); XXIV-21-A (partially), including Karatube Field (oversalt) in Baiganin District of Aktobe Oblast of the Republic of Kazakhstan between Ministry of Energy and Mineral Resources (Competent Authority) and Consolidated Contractors (Oil and Ga) Company S.A.L. (Contractor), dated 27 May 2002
Counter Memorial The Respondent’s Counter Memorial on Jurisdiction and the Merits dated 20 March 2015
CRP Cessation risk premium
Decision on Provisional Measures The Tribunal’s Decision on the Claimants’ Request for Provisional Measures dated 4 December 2014
Decision on "Leaked Documents" The Tribunal’s Decision on the Claimants’ Request for the Production of "Leaked Documents" dated 27 July 2015
Defense on Jurisdiction The Claimants’ Defense on Jurisdiction dated 17 September 2015
DCF Discounted cash flow
DLOM Discount for lack of marketability
Exh. C- Claimants’ Exhibits

Exh. CLA- Claimants’ Legal Exhibits
Exh. R- Respondent’s Exhibits
Exh. RL- Respondent’s Legal Exhibits
Extended MWP Revised Minimum Work Program agreed between CIOC and MEMR for the two-year extension period, dated 23 April 2007
FCP First Calgary Petroleum
FET Fair and equitable treatment
FIL Foreign Investment Law
FMV Fair market value
fn Footnote
FRV Full reparation value
FSU Former Soviet Union
Geology Committee The Committee on Geology and Subsoil Resources Management
GT Grant Thornton
ICSID International Centre for Settlement of Investment Disputes
IFM IFM Resources, Inc.
ILA International Law Association
ILC Articles International Law Commission, Draft Articles on Responsibility of States for Internationally Wrongful Acts with comments, November 2001, Supplement No. 10 (A/56/10), chap. IV.E.1
IRR Internal rate of return
JOR JOR Investment Inc. SAL
KNB National Security Service of the Republic of Kazakhstan
Law on Oil Kazakh Law on Oil of 28 June 1995
Memorial The Claimants’ Memorial dated 19 September 2014
MEMR The Ministry of Energy and Mineral Resources of the Republic of Kazakhstan
MFN Most-Favored Nation clause
MT Metric tonnes

MWP Minimum Work Program
NPV Net present value
p./pp. Page(s)
para./paras. Paragraph(s)
PCIJ Permanent Court of International Justice
PO1 Procedural Order No. 1 dated 20 June 2014
PO2 Procedural Order No. 2 on the Claimants’ Document Production Requests on Jurisdiction dated 24 July 2015
PO3 Procedural Order No. 3 on the Parties’ Remaining Document Production Requests dated 31 August 2015
PO4 Procedural Order No. 4 on the Respondent’s Supplemental Document Production Requests dated 14 September 2015
Request for Arbitration The Claimants’ Request for Arbitration dated 5 June 2013
Respondent The Repulic of Kazakhstan
Respondent’s First Post-Hearing Brief The Respondent’s First Post-Hearing Brief dated 4 March 2016
Respondent’s Reply PostHearing Brief The Respondent’s Reply Post-Hearing Brief dated 13 May 2016
Revised Work Program Revised Minimum Work Program agreed between CIOC and MEMR for the two-year extension period, dated 23 April 2007
SPE-PRMS Society of Petroleum Engineers Petroleum Resources Management System
Tr. [page:line] Transcript of the hearing on jurisdiction and the merits
TU Zapkaznedra The Western Kazakhstan Territorial Administration of Geology and Subsoil Use, based in Aktobe
UNCITRAL United Nations Commission on International Trade Law
US United States of America
Vienna Convention Vienna Convention on the Law of Treaties, concluded at Vienna on 23 May 1969
World Bank Guidelines The World Bank Group, Legal Framework for the Treatment of Foreign Investment: Volume II, Report to the Development Committee and Guidelines on the Treatment of Foreign Direct Investment dated 21 September 1992

Apotex III
TABLE OF CASES
Short NameFull NameExhibitNumber
AAPL v Sri LankaAsian Agricultural Products Ltd. v Republic of Sri Lanka, ICSID Case No. ARB/87/3, Final Award, 27 June 1990 As cited in Rumeli, CLA-16
AES v KazakhstanAES Summit Generation Limited and AES-Tisza Eromu Kft. v Hungary, ICSID Case No. ARB/07/22, Award, 23 September 2010 RL-141
AIGAIG Capital Partners, Inc. and CJSC Tema Real Estate Company v Republic of Kazakhstan, ICSID Case No. ARB/01/6, Award, 7 October 2003 CLA-4
Aguas del Tunari v BolivaAguas del Tunari S.A. v Republic of Bolivia, ICSID Case No. ARB/02/3, Decision on Respondent’s Objections to Jurisdiction, 21 October 2005 CLA-245
Alan CraigAlan Craig v Ministry of Energy of Iran; Water Engineering Service (Mahab); Khuzestan Water and Power Authority (KWPA); Khadamat Iran-Zemin Engineering Consultant Services Company (KIZ), Iran - United States Claims Tribunal Case No. 346, Award, 2 September 1983 CLA-205
AMCO IIAmco Asia Corporation and others v Republic of Indonesia, ICSID Case No. ARB/81/1, Award, 5 June 1990 CLA-98
Apotex Holdings Inc. and Apotex Inc. v United States of America, ICSID Case No. ARB(AF)/12/1, Award, 25 August 2014 RL-49
ArifFranck Charles Arif v Republic of Moldova, ICSID Case No. ARB/11/23, Award, 8 April 2013 RL-160
AscomAnatolie Stati, Gabriel Stati, Ascom Group S.A., Terra Raf Trans Trading Ltd. v Republic of Kazakhstan, SCC Case No. 116/2010, Award, 19 December 2013 CLA-33
AucovenAutopista Concesionada de Venezuela, C.A. v Bolivarian Republic of Venezuela, ICSID Case No. ARB/00/5, Decision on Jurisdiction, 27 CLA-257

September 2001
Azurix v ArgentinaAzurix Corp. v Argentine Republic, ICSID Case No. ARB/01/12, Award, 14 July 2006 CLA-86
Barberie v VenezuelaAnn Eulogia Garcia Cadiz (Loretta G. Barberie) v Venezuela, American-Venezuela Commission, 1890 As cited in Gentini, CLA-204
BayindirBayindir Insaat Turizm Ticaret Ve Sanayi A.S. v Islamic Republic of Pakistan, ICSID Case No. ARB/03/29, Award, 27 August 2009 RL-122
Benvenuti & Bonfant v CongoS.A.R.L. Benvenuti & Bonfant v People’s Republic of the Congo, ICSID Case No. ARB/77/2, Award, 8 August 1980 CLA-123
Biwater Gauff v TanzaniaBiwater Gauff (Tanzania) Limited v United Republic of Tanzania, ICSID Case No. ARB/05/22, Award, 24 July 2008 CLA-101
Cable Television NevisCable Television of Nevis, Ltd. and Cable Television of Nevis Holdings, Ltd. v Federation of St. Kitts and Nevis, ICSID Case No. ARB/95/2, Award, 16 December 1996 CLA-131
Caratube I arbitrationCaratube International Oil Company LLP v Republic of Kazakhstan, ICSID Case No. ARB/08/12, Award, 5 June 2012 CLA-8
CCL v KazakhstanCCL v Republic of Kazakhstan, SCC Case 122/2001, Jurisdictional Award, 2003 CLA-288
Cementownia "Nowa Huta" S.A. v TurkeyCementownia "Nowa Huta" S.A. v Republic of Turkey, ICSID Case No. ARB(AF)/06/2, Award, 17 September 2009 RL-31
Chorzow FactoryCase Concerning the Factory at Chorzow (Germany v Poland), ICJ Reports Series A. No. 17, 13 September 1928 CLA-102
CME v Czech RepublicCME Czech Republic B. V. (The Netherlands) v Czech Republic, UNCITRAL, Final Award, 14 March 2003 RL-199
CMSCMS Gas Transmission Company v Argentine Republic, ICSID Case No. ARB/01/8, Decision of the Tribunal on Objections to Jurisdiction, 17 July 2003 CLA-188
DLP v YemenDesert Line Projects LLC v Republic of Yemen, ICSID Case No. ARB/05/17, Award, 6 February 2008 CLA-34

Europe CementEurope Cement Investment and Trade S.A. v Republic of Turkey, ICSID Case No. ARB(AF)/07/2, Award, 13 August 2009 RL-30
Exxon MobilVenezuela Holdings B.V. and others v Bolivarian Republic of Venezuela, ICSID Case No. ARB/07/27, Award, 9 October 2014 RL-181
Gemplus v MexicoGemplus, S.A., SLP, S.A. and Gemplus Industrial, S.A. de C.V. v United Mexican States, ICSID Case No. ARB(AF)/04/3, and Talsud, S.A. v United Mexican States, ICSID Case No. ARB(AF)/04/4, Award in Conjoined Arbitrations, 16 June 2010 CLA-115
GeninAlex Genin and others v Republic of Estonia, ICSID Case No. ARB/99/2, Award, 25 June 2001 RL-136
GentiniGentini Case (of a general nature), Italian-Venezuelan Mixed Commission, 1903 CLA-204
GoetzAntoine Goetz and others v Republic of Burundi, ICSID Case No. ARB/95/3, Award, 10 February 1999 CLA-301
Gold Reserve v VenezuelaGold Reserve Inc. v Bolivarian Republic of Venezuela, ICSID Case No. ARB(AF)/09/1, Award, 22 September 2014 CLA-307
Henderson v HendersonHenderson v Henderson, High Court of Chancery, 3 Hare 100, [1843] EngRC 917, (1843) 67 E.R. 313, Sir James Wigram VC, 20 July 1843 RL-38
InceysaInceysa Vallisoletana S.L. v Republic of El Salvador, ICSID Case No. ARB/03/26, Award, 2 August 2006 As cited in Europe Cement, RL-30
Interocean v NigeriaInterocean Oil Development Company and Interocean Oil Exploration Company v Federal Republic of Nigeria, ICSID Case No. ARB/13/20, Decision on Preliminary Objections, 29 October 2014 CLA-207
James M Saghi v IranJames M. Saghi, Michael R. Saghi and others v Islamic Republic of Iran, Iran - United States Claims Tribunal Case No. 298, Award, 22 January 1993 CLA-305
KT Asia Investment GroupKT Asia Investment Group B.V. v Republic of RL-83

B.V.Kazakhstan, ICSID Case No. ARB/09/8, Award, 17 October 2013
Lahoud v DRCAntoine Abou Lahoud and Leila Bounafeh-Abou Lahoud v Democratic Republic of the Congo, ICSID Case No. ARB/10/4, Award, 7 February 2014 Link provided in Claimants’ Statement of Costs
Lemire v UkraineJoseph C. Lemire v Ukraine, ICSID Case No. ARB/06/18, Award, 28 March 2011 CLA-106
LETCOLiberian Eastern Timber Corporation v Republic of Liberia, ICSID Case No. ARB/83/2, Decision on Rectification, 17 June 1986 CLA-129
Metal-TechMetal-Tech Ltd. v Republic of Uzbekistan, ICSID Case No. ARB/10/3, Award, 4 October 2013 RL-97
Micula v RomaniaIoan Micula, Viorel Micula and others v Romania, ICSID Case No. ARB/05/20, Award, 11 December 2013 CLA-108
MTD v ChileMTD Equity Sdn. Bhd. and MTD Chile S.A. v Republic of Chile, ICSID Case No. ARB/01/7, Award, 25 May 2004 CLA-82
National Gas v EgyptNational Gas S.A.E. v Arab Republic of Egypt, ICSID Case No. ARB/11/7, Award, 3 April 2014 RL-82
Nova Scotia Power IncorporatedNova Scotia Power Incorporated v Bolivarian Republic of Venezuela, ICSID Case No. ARB(AF)/11/1, Award, 30 April 2014 RL-84
Occidental v EcuadorOccidental Petroleum Corporation and Occidental Exploration and Production Company v Republic of Ecuador, ICSID Case No. ARB/06/11, Award, 5 October 2012 CLA-55
Pac RimPac Rim Cayman LLC v Republic of El Salvador, ICSID Case No. ARB/09/12, Decision on the Respondent’s Jurisdictional Objections, 1 June 2012 CLA-225
PetrobartPetrobart Limited v Kyrgyz Republic, SCC Case No. 126/2003, Award, 29 March 2005 CLA-181
PhoenixPhoenix Action Ltd v Czech Republic, ICSID Case No. ARB/06/5, Award, 15 April 2009 RL-29
PSEG v TurkeyPSEG Global Inc. and Konya Ilgin Elektrik Uretim ve Ticaret Limited Sirketi v Republic of CLA-126

Turkey, ICSID Case No. ARB/02/5, Award, 19 January 2007
RomakRomak S.A. (Switzerland) v Republic of Uzbekistan, PCA Case No. AA280, Award, 26 November 2009 RL-28
RSM et al v GrenadaRSM Production Corporation and others v Grenada, ICSID Case No. ARB/10/6, Award, 10 December 2010 RL-39
Ruby RozRuby Roz Agricol LLP v The Republic of Kazakhstan, UNCITRAL, Award on Jurisdiction, 1 August 2013 CLA-17
RumeliRumeli Telekom A.S. and Telsim Mobil Telekomunikasyon Hizmetleri A.S. v Republic of Kazakhstan, ICSID Case No. ARB/05/16, Award, 29 July 2008 CLA-16
Saba FakesSaba Fakes v Republic of Turkey, ICSID Case No. ARB/07/20, Award, 14 July 2010 RL-20
Sapphire v NIOCSapphire International Petroleums Ltd. v National Iranian Oil Company, ad hoc Tribunal, Award, 1963 CLA-110
Siag v EgyptWaguih Elie George Siag and Clorinda Vecchi v Arab Republic of Egypt, ICSID Case No. ARB/05/15, Decision on Jurisdiction, 11 April 2007 CLA-297
SOABI v SenegalSociete Ouest Africaine des Betons Industriels v Republic of Senegal, ICSID Case No. ARB/82/1, Jurisdictional Decision, 1 August 1984, and Award, 25 February 1988 CLA-116
SoufrakiHussein Nuaman Soufraki v United Arab Emirates, ICSID Case No. ARB/02/7, Award, 7 July 2004 RL-12
SpaderSpader et al. Case, American-Venezuela Commission, 1903 CLA-203
SPP v EgyptSouthern Pacific Properties (Middle East) Limited v Arab Republic of Egypt, ICSID Case No. ARB/84/3, Award, 20 May 1992 CLA-117
Spyridon Roussalis v RomaniaSpyridon Roussalis v Romania, ICSID Case No. ARB/06/1, Award, 7 December 2011 CLA-77
SuezSuez, Sociedad General de Aguas de Barcelona S.A. and Interagua Servicios CLA-299

Integrales de Agua S.A. v Argentine Republic, ICSID Case No. ARB/03/17, Decision on Jurisdiction, 16 May 2006
Tecmed v MexicoTecnicas Medioambientales Tecmed, S.A. v United Mexican States, ICSID Case No. ARB(AF)/00/2, Award, 29 May 2003 CLA-76
TSA v ArgentinaTSA Spectrum de Argentina, S.A. v Argentine Republic, ICSID Case No. ARB/05/5, Award, 19 December 2008 RL-19
UsmonovUsmonov v the Department of Justice, Ruling No. 3k-88 of the Panel on Civil Law Cases of the Supreme Court of the Republic of Kazakhstan, 18 July 2001 RL-89
Vaccum Salt v GhanaVacuum Salt Products Ltd. v Republic of Ghana, ICSID Case No. ARB/92/1, Award, 16 February 1994 RL-80
Vivendi v ArgentinaCompania de Aguas del Aconquija S.A. and Vivendi Universal S.A. v Argentine Republic, ICSID Case No. ARB/97/3, Award, 20 August 2007 CLA-36
Vivendi IICompania de Aguas del Aconquija S.A. and Vivendi Universal S.A. v Argentine Republic, ICSID Case No. ARB/97/3, Decision on Jurisdiction, 14 November 2005 RL-48
Waste Management v MexicoWaste Management, Inc. v United Mexican States, ICSID Case No. ARB(AF)/00/3, Mexico’s Preliminary Objection concerning the Previous Proceedings, Decision of the Tribunal, 26 June 2002 RL-60
WenaWena Hotels Limited v Arab Republic of Egypt, ICSID Case No. ARB/98/4, Award, 8 December 2000 RL-165
Yukos v RussiaYukos Universal Limited (Isle of Man) v the Russian Federation, PCA Case No. AA 227, Final Award, 18 July 2014 RL-187

I. INTRODUCTION

A. The Parties and other actors

1. The Claimants

1.
The Claimants are (i) Caratube International Oil Company LLP ("Caratube" or "CIOC"), a Kazakh-incorporated company that is a limited liability partnership, with foreign ownership, and (ii) CIOC’s majority shareholder, Mr. Devincci Salah Hourani, a US national (jointly "the Claimants").1
2.
CIOC’s registered and principal office is located at (Exh. C-3):

92A Polezheva St.
Zhetysusskiy Region
Almaty
050050
Republic of Kazakhstan

3.
The Claimants are represented in this arbitration by Dr. Hamid G. Gharavi, Ms. Nada Sader and Mr. Sergey Alekhin (until 30 August 2017), whose contact details are as follows:

Dr. Hamid G. Gharavi
Ms. Nada Sader

DERAINS & GHARAVI
25, rue Balzac
75008 Paris, France

Tel. + 33 1 40 55 51 00

Emails: hgharavi@derainsgharavi.com

nsader@derainsgharavi.com

2. The Respondent

4.
The Respondent is the Republic of Kazakhstan ("the Respondent" or "Kazakhstan" or "the Republic").
5.
The Respondent is represented in this arbitration by Mr. Peter M. Wolrich, Mr. Geoffroy Lyonnet, Ms. Gabriela Alvarez Avila, Mr. Jerome Lehucher, Ms. Svetlana Evliya (no longer with the firm), Ms. Anna Kouyate (no longer with the firm), Mr. Yerzhan Mukhitdinov, Ms. Marie-Claire Argac, Ms. Lisa Arpin-Pont and Ms. Olena Stasyk, whose contact details are as follows:

Mr. Peter
M. Wolrich
Mr. Geoffroy Lyonnet
Mr. Jerome Lehucher
Ms. Marie-Claire Argac
Ms. Lisa Arpin-Pont
Ms. Olena Stasyk

CURTIS, MALLET-PREVOST, COLT & MOSLE LLP

6, avenue Velasquez

75008 Paris, France

Tel. +33 1 42 66 39 10

Emails pwolrich@curtis.com

glyonnet@curtis.com

jlehucher@curtis.com

margac@curtis.com

larpin-pont@curtis.com

ostasyk@curtis.com

Ms. Gabriela Alvarez Avila

CURTIS, MALLET-PREVOST, COLT & MOSLE LLP Ruben Dario 281, Piso 9 Col. Bosque de Chapultepec 11580 Mexico, D.F.

Mexico

Tel. +52 55 5282 1100

Email galvarez@curtis.com

Mr. Yerzhan Mukhitdinov

CURTIS, MALLET-PREVOST, COLT & MOSLE LLP

101 Park Avenue

New York, New York 10178, USA

Tel. +1 212 696 6000

Email ymukhitdinov@curtis.com

3. The Ministry of Energy and Mineral Resources of the Republic of Kazakhstan

6.
The Ministry of Energy and Mineral Resources of the Republic of Kazakhstan ("MEMR") negotiated, executed and performed the contract underlying the dispute in the present Arbitration on behalf of the Respondent. As will be seen in further detail below,2 this contract was initially entered into on 27 May 2002 between the MEMR and the international construction company Consolidated Contractors (Oil and Gas) Company S.A.L. ("CCC"). It was subsequently assigned to CIOC on 26 December 2002 by way of Amendment No. 1 to the Contract (Exh. C-1) (Memorial, paras. 85-87).3
7.
As will be seen in further detail in the relevant parts of this Award, the role of the MEMR in the present dispute is disputed between the Parties. According to the Respondent, in matters of subsoil use, it is the MEMR’s Monitoring Division that is responsible for monitoring the performance of contractors and their compliance with subsoil and petroleum regulations as well as with their contracts and work programs. It does so, inter alia, on the basis of the so-called 2-LKU Reports, which are prepared quarterly by all subsoil contractors (Counter Memorial, paras. 463-466). In the event of breaches by the subsoil user, it is further the Monitoring Division that has the power to sanction such non-performance and to terminate the subsoil user’s contract (Counter Memorial, paras. 458-459).
8.
While the Claimants do not dispute the MEMR’s responsibility in the monitoring and supervision of subsoil contractors in the performance of their contracts, they dispute the importance of the MEMR’s authority and thus its role in the present dispute, namely in relation with other monitoring and supervising authorities of the Respondent, in particular the competent regional centers of the Committee on Geological and Subsoil Resource Use, the Kaznedras. According to the Claimants, these Zapkaznedras are constituent parts of the MEMR and have the power to modify the contractors’ annual work programs. Importantly, the Claimants note that the MEMR’s monitoring of the subsoil contractors’ activities is based on targets decided in conjunction with the Zapkaznedras (Claimants’ Reply Post-Hearing Brief, para. 161).

4. The Committee on Geology and Subsoil Resources Management

9.
The Committee on Geology and Subsoil Resources Management (the "Geology Committee") is the organ of the Republic of Kazakhstan that controls and supervises subsoil use and is responsible for reviewing and approving projects for the exploration and development of oilfields. It is described by the Claimants as "the key decision-making body within the framework" (Memorial, para. 115.a). As just seen, the Geology Committee is based in Astana but has regional centers, the Kaznedras.

5. The Western Kazakhstan Territorial Administration of Geology and Subsoil Use

10.
The Geology Committee’s regional center that was competent with respect to CIOC was the Western Kazakhstan Territorial Administration of Geology and Subsoil Use (the "TU Zapkaznedra"), based in Aktobe. According to the Claimants, it was CIOC’s "main contact point for all reporting and performance issues in relation to the Contract" (Memorial, para. 115.a). The Claimants further submit that the TU Zapkaznedra received and reviewed quarterly reports from CIOC (the "LKU Reports"), detailing the latter’s actual expenditures over the period on operations and physical performance related to geological exploration and development (see Exh. C-79). Upon review, the TU Zapkaznedra would then transfer the LKU Reports to the Geological Committee and they would then be further transferred to the Monitoring Division of the Department for Direct Investments of the MEMR (see Memorial, para. 115.b). Furthermore, according to the Claimants, there were meetings in December each year between CIOC and the TU Zapkaznedra to review and approve the work progress and to adopt the annual work program4 for the following year (Memorial, para. 115.a). Finally, the Claimants state that the TU Zapkaznedra also received from CIOC (i) Well Drilling Designs for approval prior to commencing drilling operations; (ii) annual Geologic Reports, which detailed activities related to drilling, re-entry and logging of wells and oil production levels (Exh. C-80); and (iii) monthly oil production and well stock reports (Exh. C-81) (Memorial, para. 115.a).
11.
As just seen, the role and involvement in the present dispute of the TU Zapkaznedra is disputed between the Parties. In particular, the Respondent disagrees with the Claimants’ allegation that the TU Zapkaznedra played an important role in the monitoring and supervision of the subsoil users’ performance and compliance with their contract. They disagree with the allegation that the TU Zapkaznedra had the power to modify the contractors’ obligations under the work programs. According to the Respondent, the TU Zapkaznedra is not responsible to high-level monitoring of the subsoil users’ performance and compliance with their contract, but rather with the day-to-day work of the contractors. In addition, it reviews and approves annual work programs. The Respondent stresses that the TU Zapkaznedra "has no competence in matters of official approval or disapproval of the contractors’ performance, as it has no power to sanction the underperforming contractors". In the event of non-performance of obligations under the annual work program, it has no choice but to roll-over the contractors’ unfulfilled and outstanding obligations into the next calendar year, a step which therefore cannot be interpreted as an approval or a waiver of the contractors’ past performance (Counter Memorial, paras. 460-462; Respondent’s First Post-Hearing Brief, paras. 161-162).

6. JOR Investment Inc. SAL

12.
JOR Investment Inc. SAL ("JOR") is a Lebanese offshore company created in 2002 and held by Mr. Kassem Omar (Exh. C-215). As of 2002, JOR agreed to provide financing to CIOC through several loan agreements (see, e.g., Exhs. C-214, C-216, C-217, C-156). According to the Respondent, JOR was owned and managed by Mr. Issam Hourani between 2003 and 2007 (Counter Memorial, para. 1338). By contrast, it is the Claimants’ position that Mr. Issam Hourani has never been the owner of JOR (Claimants’ First Post-Hearing Brief, para. 10).

II. THE FACTS

13.
This section summarizes the factual background of this Arbitration. More detailed facts will be referred to in Chapter V entitled "Discussion" when appropriate.

A. The Contract

14.
As mentioned above in paragraph 6, Contract No. 954 for the Exploration and Production of Hydrocarbons was entered into between CCC and the MEMR on 27 May 2002 (the "Contract"). It was assigned to CIOC by means of Amendment No. 1 to the Contract dated 26 December 2002.
15.
The following provisions of the Contract are relevant to the present Arbitration.
16.
Following the Preamble, Clause 1 contains several definitions of terms used in the Contract and Clause 2 defined the purposes of the Contract.
17.
Clause 3 is entitled "Validity Term of the Contract" and calls for full quotation:

3.1 This Contract shall be effective from the moment of its state registration with the authorised State Agency upon obligatory issuance of the certificate of the registration of this Contract ("Effective Date of this Contract").

3.2 The Exploration period shall be for a period of 5 years (up to 2007) beginning from the Effective Date of this Contract and the Production period shall be for a period of 25 years (up to 2032) beginning from the date of commercial Production for each deposit.

3.3. The Validity term of this Contract shall include the Exploration and Production periods in accordance with Section 3.2 plus all extensions unless this Contract is earlier terminated as provided in this Contract.

3.4 The Validity Term of this Contract can be extended in accordance with the terms and conditions of this Contract and the procedures provided by the current legislation of the State.

3.5 In case of Production, the Contractor shall have the exclusive right to extend the Validity Term of this Contract for such period of time as the Contractor requires to realise the full commercial Production of the Deposit(s) and such extension shall be agreed by the Parties by written amendment to this Contract.

3.6 In case the Validity Term of this Contract is extended, this Contract must be amended in writing by both Parties, provided that such amendments do not contradict the terms and conditions of this Contract.

18.
Clause 7 lists the Parties’ "General Rights and Obligations" under the Contract. In particular, the "Contractor"’s general rights and obligations are listed under Clauses 7.1 and 7.2, and the general rights and obligations of the "Competent Authority", i.e. the MEMR, are listed under Clauses 7.3 and 7.4.
19.
Clause 8 of the Contract contains provisions with respect to the "Work Program", for instance providing under Clause 8.3 for the possibility to amend or agree additions to the Work Program.
20.
Clause 9 deals with the "Exploration Period", providing under Clause 9.1 for the possibility to extend this period in the following terms:

9.1 The period of Exploration shall consist of five consecutive years as agreed in this Contract and the Contractor shall have the right to extend the period of Exploration twice with a duration of each period of up to two years in accordance with the Legislation on Subsoil Use. The Parties shall in advance determine the areas for continued Exploration in the Contract Area and agree on the respective amendments to the Work Program.

21.
Clause 10 regulates the event of a "Commercial Discovery" in the following terms:

10.1 In the event that the Contractor discovers a Hydrocarbon Deposit which in its sole opinion is economically and technically suitable for Production, it shall immediately inform the Competent Authority and shall within 120 days prepare a report for an estimation of its reserves for submission to the authorised State Agency for confirmation of the reserves of the Deposit.

10.2 The Exploration Stage can be extended as provided in Section 9.1 for the period the Contractor determines necessary to properly evaluate the Deposit.

10.3 The authorised State Agency shall, pursuant to the procedure established by the legislation on Subsoil Use, provide a State expert evaluation of the reserves of the Deposit.

10.4 After confirmation by the authorised State Agency as provided in Section 10.3 above, the Contractor shall within 120 days prepare a feasibility study of the efficiency of the development of the discovered Deposit ("Development Plan") within the framework of the Work Program and shall submit it to Competent Authority.

10.5 A Commercial Discovery gives the exclusive right to the Contractor to proceed to the Production stage.

10.6 Upon a Commercial Discovery the Contractor shall be entitled to reimbursement of its expenses in connection with Exploration and shall be reimbursed during Production of the Commercial Discovery in accordance with this Contract and the Legislation of the Republic of Kazakhstan.

10.7 If, as a result of Exploration, there is no Commercial Discovery, the Contractor shall have no right to reimbursement of its expenses incurred by the Contractor during Exploration. However, the Contractor shall have the right to deduct those expenses against any revenues or income received in connection with activities under this Contract.

22.
With respect to the "Period of Production", Clause 11.1 granted the Contractor "the exclusive right of Production in the Contract Area for 25 consecutive years, plus any extensions".
23.
Clause 15 is entitled "Financing" and provides under Clause 15.1 that "[t]he Contractor assumes the responsibility for complete financing of its activities under this Contract in accordance with the Work Program agreed by the Parties".
24.
Clause 16 contains several provisions with respect to the taxes and other payments to be made by the Contractor.
25.
Clause 25 is entitled "Assignment of Rights and Obligations" and provides as follows:

25.1 Assignment of rights and obligations under this Contract to a Third Party, other than pledging the right for Subsoil use, shall be allowed only upon written consent of the Competent Authority. The Competent Authority may not deny assignment of the Subsoil use right to a Subsidiary, if the Contractor has given to the Competent Authority a guarantee of full performance of the obligations under the Contract jointly and severally with the Subsidiary.

25.2 The expenses related to the assignment of rights and obligations under this Contract shall be borne by the Contractor and shall not be reimbursed by the State.

25.3 If the Contractor assigns such rights and obligations under this Contract to a Subsidiary, registered in the territory of the Republic of Kazakhstan, then such Subsidiary will have all the rights and obligations and exemptions under this Contract.

25.4 As long as the Contractor keeps any participation in the Contract, the Contractor and the Third Party to whom the Contractor has assigned its rights and obligations, shall bear joint and several liability under the Contract.

26.
Under the heading "Applicable Law", Clause 26 contains the following choice-of-law clause:

26.1 This Contract and other agreements signed on the basis of this Contract shall be governed by the law of the State unless stated otherwise by the international treaties to which the State is a party.

26.2 The Contractor shall comply with the international standards for protection of the environment in the Contract Area.

27.
Clause 27 is entitled "Procedure for Dispute Resolution" and calls for full quotation:

27.1 The Parties shall take all measures to resolve all disputes and arising from the Contract by negotiations.

27.2 Referral to Arbitration. In the event that any dispute cannot be resolved by amicable settlement within sixty (60) days after notice in writing of such by one Party to the other Party, the Parties agree that their exclusive means of dispute resolution shall be (a) to submit the matter to arbitration for final settlement in accordance with the then current Rules of Conciliation and Arbitration of the International Centre for Settlement of Investment Disputes ("ICSID") if the Competent Authority has become a party to the ICSID Convention at the time a proceeding is instituted, or (b) to submit the dispute for resolution according to the Arbitration (Additional Facility) Rules of ICSID if the Competent Authority has not become a party to the ICSID Convention at the time when any proceeding is instituted. Any arbitral tribunal constituted pursuant to this Contract shall consist of three arbitrators, one appointed by the Contractor and one appointed by the Competent Authority, and a third arbitrator, who shall be president of the Tribunal and shall not be a resident of Kazakhstan, appointed by agreement of the Parties, or failing such agreement, by the Chairman of the Administrative Council of ICSID. In the event that the Contractor or the Competent Authority fails to appoint an arbitrator within ninety (90) calendar days after the notice of registration of a request for arbitration has been sent the remaining arbitrators shall be appointed in accordance with the Rules under ICSID.

27.3 If for any reason the request for the arbitration proceeding is not registered by ICSID or if ICSID fails or refuses to take jurisdiction over any matter submitted by the Parties under this Section 27, such matter shall be referred to and resolved by arbitration in accordance with the United Nations Commission on International Trade Law ("UNCITRAL") Arbitration Rules in effect at the date of submission of the matter. The seat of Arbitration shall be London, England. In such event the Parties hereby consent to the jurisdiction of the London Court of International Arbitration and all the provisions of this Article 27 shall equally apply to such arbitration.

27.4 Proceedings. The English language shall be used throughout the arbitral proceedings and the proceedings shall be held in London, England unless Otherwise agreed by the Parties. The Parties shall be entitled to be legally represented at the arbitration proceedings, however the absence or default of a Party shall not prevent or hinder the arbitration proceedings at any stage. All notices given by one Party to the other in connection with the arbitration shall be given in accordance with this Contract.

27.5 Arbitral Award. Any arbitral award made in respect of any matter submitted to arbitration pursuant to Section 27.2 shall be final and binding upon the Parties. Any award of a monetary sum shall be rendered in hard currency, free of any tax or any other deduction. The award shall include interest from a date determined by the arbitrators, at a commercial rate to be fixed by the arbitrators. Within three (3) months from the date determined by the arbitrators, full payment of any arbitral award shall be made. The arbitral award may provide for specific performance or any other remedy awarded by the arbitral tribunal.

27.6 Costs. The costs of the arbitration, including legal costs, shall be borne by the unsuccessful Party or, if neither Party is wholly successful, shall be borne by the Parties in such proportions as may be specified in the arbitral award or, if no such specification is made, shall be borne by the Parties in equal shares. Any costs, fees or Competent Authority charges incidental to enforcing the arbitral award shall, to the maximum extent permitted by law, be borne by the Party against whom such enforcement is made.

27.7 Enforcement and Consent. Each of the Parties hereby consents to submit to ICSID any dispute, controversy or claim arising out of or in connection with this Contact. Each of the Parties agrees that any judgement rendered by the arbitrators against it and entered in any court of record in London, England or any other competent court, may be executed against its assets in any jurisdiction. The Parties consent to being sued for enforcement of the award and any costs, fees or other charges for which they may be liable under this Article. Each of the Parties hereby agrees that all of the transactions contemplated by this Contract shall constitute and shall be deemed to constitute an investment within the jurisdiction of ICSID. The Competent Authority warrants that it is a structural subdivision and agent of the Government of the Republic of Kazakhstan.

27.8 Furthermore, it is hereby agreed that the Contractor is a resident of Lebanon, or in the event of assignment as a national of the resident country of the assignee, and therefore the Contractor shall be treated as a resident of Lebanon, or other country if appropriate, for purposes of the ICSID Convention.

27.9 Waiver of Immunity. Each of the Parties expressly and irrevocably waives any claim to immunity (including, but not limited to, sovereign immunity, immunity from service of process, immunity of property from award) from suit, execution, set-off, attachment or other legal process under any applicable law or in respect of any arbitral award rendered.

27.10 Continued Performance. If a matter is submitted to arbitration pursuant to Section 27.3 of this Contract the Parties shall, during the period of such arbitral proceedings and pending the resolution of such matter or the making of the arbitral award, continue to perform their respective obligations under this Contract so far as circumstances will allow and such performance shall be without prejudice to any final agreement, judgement or award made in respect of that matter. To the extent that the circumstances do not allow the performance of obligations under this Contract then the period for the performance of those obligations and any obligations relevant thereon shall be extended by the period between the date of the notice of arbitration to the date of compliance with the award.

28.
Clause 28 provides for the following "Guarantees of Contract Stability":

28.1 The provisions of the Contract shall remain unchanged during the Validity Term of this Contract.

28.2 Changes and additions to the Legislation of the Republic of Kazakhstan that deteriorate the position of the Contractor, made after the conclusion of the Contract shall not apply to the Contract.

28.3 In case of any changes and additions specified in Section 28.2, the Parties will, by a written agreement amend the Contract accordingly as to restore the initial economic interests of the Parties.

28.4 The Contractor shall enjoy all guaranties and protections provided by the Law on Foreign Investments.

29.
Finally, Clause 29, entitled "Conditions of Termination and Suspension of Contract Validity", also calls for full quotation:

29.1 The Competent Authority will mandatorily suspend the Contract if there was a direct threat to life or to health of people working or living in the zone of impact of works, conducted under the Contract.

29.2 The Competent Authority shall have the right to suspend the validity of this Contract in cases:

- of performance by the Contractor of the activity which is not stipulated by the Contract;

- of violation by the Contractor during its activity of the current legislation of the State regarding protection of Subsoil and environment and safety of works;

- of violation by the Contractor during its activity of the procedure regarding payment of taxes and other obligatory payments established by this Contract;

- of assignment by the Contractor in full or in part of the rights under the Contract to a Third Party with [sic] in violation of Article 25 of this Contract;

- of interruption by the Contractor of production within the framework of the Work Program for a period exceeding 180 (one hundred and eighty) days except for the cases related to Acts of God (force-majeure);

- of violation of the terms and conditions related to the observance of confidentiality of the geological and geophysical information under this Contract.

29.3 In case of suspension of the effect of this Contract, the Competent Authority shall notify the Contractor in writing about the reasons of such suspension and shall establish a reasonable period of time for their elimination. The Contractor shall have the right, in the event that it finds it impossible to eliminate the reasons for the suspension within the time period established by the Competent Authority, to apply to the Competent Authority for a longer time, providing justification for the additional time requirements and then the Competent Authority will consider the extension if the Competent Authority considers the justification reasonable. Provision of such extension for the Contractor may not be unreasonably denied.

29.4 Upon elimination of such reasons for the suspension of the Petroleum Operations and the Contract, the Petroleum Operation and the Contract shall be immediately resumed.

29.5 The Contract shall be terminated ahead of schedule only in the following cases:

- if the Contractor refuses to eliminate the reasons which caused the decision to suspend Exploration and Production, or if it does not eliminate such reasons within the time period sufficient for their elimination.

- if the Contractor fails to commence Petroleum Operations within the terms established by the Contract and does not provide a reasonable explanation;

- if it is impossible to eliminate the reasons which caused the suspension of Petroleum Operations, related to a threat to health and life of people.

-if the Contractor substantially violates[5] the obligations established by the Contract or Work Program;

- if the Contractor is recognised as bankrupt according to the current legislation of the State, except for the case when the right of Subsoil use is the subject of a pledge according to the current legislation of the State.

29.6 If either Party to the Contract commits a material breach of the Contract, the other Party to the Contract shall have the right to demand that such breach be remedied within a reasonable specified period of time. If such breach is not remedied within such period of time, the complaining Party shall have the right to terminate this Contract by giving ninety (90) days’ written notice to the defaulting Party. However, if the defaulting Party contests such material breach of the Contract, no termination shall occur unless an unremedied material breach shall have been judged by the final award of arbitration in accordance with Article 27 of this Contract.

29.7 The effect of this Contract may be terminated before the expiry of its Validity Term on the initiative of the Contractor at any time and on any ground, including ahead-of-schedule relinquishment of the whole Contract Area.

29.8 The Contract shall terminate for the reasons specified in Section 29.5 of the Contract, 60 days after the Contractor receives a written notice from the Competent Authority stating that the Contract is terminated ahead of time based on the decision of the Court.

29.9 The Parties shall not be exempt from performing current obligations which are already due upon termination of this Contract and which remain unfulfilled upon termination of this Contract. Upon termination of this Contract for any reason, including at the initiative of the Contractor as described in Section 29.7, the Contractor shall not be liable for any obligation which is not yet due, including any unexpended portion of its Work Program.

29.10 The authorised State Agency on emergencies shall have the right to submit proposals to the Competent Authority to suspend the Contract in the event of repeated violations by the Contractor of norms and rules of safe conduct of work.

B. The Work Programs under the Contract

30.
CIOC’s "Minimum Work Program" (also referred to as "MWP" or "Five-Year WorkProgram") for the exploration period was attached as Appendix 6 to the Contract (Exh. C-16) (Memorial, paras. 99 et seq. and paras. 130 et seq. See also Counter Memorial, paras. 451 et seq.). The MWP defined the essential works to be realized during the first five years and provided for a budget of USD 36,580,000 (Memorial, paras. 99-100. See also Counter Memorial, para. 451). The Respondent points out that the MWP was first outlined by CCC in its bid and then negotiated between the Respondent and CCC; it became an integral part of the Contract pursuant to Clause 1.5 of the Contract (Counter Memorial, paras. 451 and 455). It was not renegotiated following the assignment of the Contract to CIOC (Counter Memorial, para. 649).
31.
According to the Claimants, "[o]ne of the primary objectives of the Minimum Work Program was to demonstrate the commerciality of the supra-salt oil reservoirs discovered and partly appraised in the 1960’s. [...] Another objective [...] was to further explore the sub-salt reservoirs through the carrying out of a 3D seismic survey and the drilling of two sub-salt exploration wells" (Memorial, paras. 131-132).
32.
The Respondent submits that as the MWP was "a ‘minimum’ work program, contractors can and often do more than this minimum core work and contribute more than the minimum investment levels. In addition to making these minimum investments, contractors should foresee additional side infrastructure expenditures required for the successful operation of any oilfield project". Moreover, it is the Respondent’s position that the MWP’s "key objectives were [...] to further explore and develop the shallow supra-salt reservoirs, to carry out a 3D seismic study over the Contract Area in Contract Year 2 and to further explore the sub-salt reservoirs by drilling the two deep subsalt wells […] in Contract Years 3 and 4 respectively" (Counter Memorial, paras. 453 and 455).
33.
The MWP states that "[d]uring the subsequent years, the Work Program will be determined annually under the initial field development plan, as well as the appraisal work draft of the subsalt deposit". The Claimants explain that, based on this statement, the MWP was discussed between CIOC and TU Zapkaznedra every year by means of the "Annual Work Program" (or "AWP") to determine a more detailed work program and budget for the coming year and to reflect the reality on the ground both in terms of work and costs. The AWP also contained a summary of work and related investments undertaken during the previous year (Memorial, paras. 101 and 115.a). The Respondent specifies that the AWP is usually prepared by the contractor and then approved by a government agency. While the MWP is based on contract years, the AWPs are based on calendar years (Counter Memorial, para. 452).
34.
As will be seen in further detail later in the Award, the Parties disagree as to whether an AWP may modify the obligations set forth in the MWP. According to the Respondent, this is not the case, the AWP constituting an additional source of obligations for the contractor, which means that the latter must comply with the provisions of both the MWP and the AWP pursuant to Section 8.1 of the Contract (Respondent’s First Post-Hearing Brief, paras. 158 et seq.). By contrast, it is the Claimants’ position that "AWPs can and do modify the obligations set forth in the MWP" (Claimants’ First Post-Hearing Brief, para. 327).
35.
On 27 November 2006, CIOC requested a two-year extension of the exploration period and, on 20 January 2007, sent a proposed work program for the extension period to the MEMR (Exh. C-25).
36.
On 23 April 2007, CIOC and MEMR agreed and signed the minimum work program for the two-year extension period (the "Revised Work Program" or "Extended MWP"). This Revised Work Program replaced the previous Minimum Work Program (Exh. C-23; C-26; Memorial, para. 103).
37.
On 27 July 2007, CIOC and the MEMR entered into Amendment No. 3 to the Contract, which extended the exploration period by two years until 27 May 2009.

C. The performance of the Contract

38.
Following the assignment of the Contract to CIOC on 26 December 2002, CIOC took over the Caratube field in January 2003 (Exh. C-203; Memorial, paras. 88, 113 and 117).
39.
The performance of the Contract by CIOC is a major point of contention between the Parties. The Claimants submit that the Respondent was at all stages fully informed of CIOC’s performance and progress with respect to the Contract, and the supervision and monitoring by the Respondent of CIOC and the project were carried out by various organs and authorities of Kazakhstan (Memorial, paras. 114 et seq.). In particular, it is the Claimants’ position that the performance of the Contract by CIOC was closely monitored by TU Zapkaznedra, who was in charge of the day-today and year-to-year supervision of CIOC’s performance and who approved the latter’s activities on an ongoing basis (Memorial, paras. 152 et seq.).
40.
According to the Claimants, they spent more than five years to "de-risk" the "Contract Area"6, which was in a "deplorable state"7 when CIOC took it over in January 2003, making it ready to produce oil on a commercial scale, investing over USD 39 million between December 2002 and March 2008, and a further USD 18 million during the two-year extension of the exploration period (Memorial, paras. 80 et seq. and 118).8
41.
In particular, the Claimants allege that they started to prepare the performance of the Contract even before CIOC was granted access to the Contract Area in January 2003, hiring a full team of experienced supervisors to supervise and organize the works to be undertaken (Memorial, paras. 119 et seq.). It is the Claimants’ position that the MWP, which had been scheduled to begin in May 2002, was delayed due to the Respondent approving the assignment of the Contract and granting CIOC access to the Contract Area only at the end of December 2002 and January 2003 respectively. As soon as the Claimants took over the project site, they commenced "a large scale rehabilitation" of the Caratube field, which was not provided for in the MWP but necessary for CIOC to commence its operations, spending "substantial funds to develop the Contract Area, including for the installation of key infrastructure" (Memorial, paras. 125 et seq.).
42.
With respect to financing, on 5 August 2002, CIOC obtained a loan amounting to USD 200,000 from JOR. A second financing agreement was concluded in December 2002 for a total amount of USD 15 million, including the initial loan of USD 200,000. And in November 2004, JOR agreed to award CIOC an additional loan for ten years in the total amount of USD 25 million for the completion of the Contract. The Claimants assert that the Respondent was aware of the fact that CIOC had secured the funds for the investment via JOR (Memorial, para. 129).
43.
Concerning the activities anticipated under the MWP, the Claimants assert that by 2007 (i) CIOC had completed the development of 34 wells (as opposed to the 30 wells anticipated in the MWP) in the supra-salt formations in the Contract Area, drilling 24 new supra-salt wells of a total depth of 22,627 meters and re-entering 10 existing supra-salt wells, it being specified that 29 of these 34 wells were drilled in oil bearing deposits and capable of producing oil by the end of 2007; (ii) undertaken a full study of the subsoil water reserves, for which CIOC had commissioned the company Aktobegidrogeologiya OJSC, whose report on CIOC’s activities in relation to the water reserves was approved by TU Zapkaznedra on 28 March 2006 (Exh. C-105); (iii) completed a pilot oil production program, namely a preparatory exploratory study of the production capacity and characteristics of wells in the Contract Area, undertaken prior to taking the field to commercial production. The final version of the pilot program was approved by TU Zapkaznedra on 28 February 2003 and by the MEMR on 26 June 2003, say the Claimants. Upon recommendations by the MEMR and TU Zapkaznedra respectively, the pilot program was initially extended by two years to last until 2006 and again until the end of 2007, and its scope was expanded from 10 to 19 wells to obtain more data. An audit conducted at the conclusion of the pilot production testing phase allegedly confirmed that the pilot production program had achieved its necessary technical targets; (iv) completed a 3D seismic examination of the Contract Area, it being specified that the 3D survey was postponed, allegedly with TU Zapkaznedra’s approval, to 2004 in order for CIOC to conduct an analysis of old seismic data and to find a qualified geophysical company to perform the survey. According to the Claimants, TU Zapkaznedra also approved the important increases in the budgeted expenses for the 3D seismic study. On 11 February 2006, CIOC retained Saratov, a Russian company, for the performance of the 3D seismic study, for an amount of USD 1,050 million, including taxes. The Claimants submit that the 3D seismic study was approved by Saratov in August 2007 and by CIOC, with some points of criticism, in September 2007. Following an independent review by Aral Petroleum Capital, the 3D seismic report was approved by TU Zapkaznedra on 1 November 2007; and (v) was in the process of drilling two exploratory deep wells in the deeper sub-salt formation (having already taken several steps in this regard), it being alleged by the Claimants that CIOC and the MEMR had already agreed that this work, as anticipated in the MWP, would be carried out under the Revised Work Program, after the completion of the 3D seismic study.
44.
In addition to the foregoing points, the Claimants further assert that CIOC had also completed, on 1 December 2007, an estimate of the supra-salt field reserves, which was confirmed, on 29 February 2008, by the MEMR’s Geology Committee. According to the Claimants, under Clause 10.4 of the Contract, the Claimants were thus entitled to prepare a field development plan, i.e. a firm plan of the efficient development of the hydrocarbon discoveries, after which commercial production could commence. On this basis, CIOC allegedly retained Caspian Energy Research ("CER"), the same Kazakh company that had prepared the estimation of the supra-salt field reserves, to prepare this field development plan, which was completed in March 2008. The Claimants argue that the MEMR then refused to approve the field development plan because the Contract had already been terminated (Memorial, paras. 133-151; Claimants’ First Post-Hearing Brief, para. 261).
45.
The Respondent disagrees with the Claimants’ representation of CIOC’s performance of the Contract. As will be seen in further detail below,9 it is the Respondent’s position that CIOC systematically committed material breaches throughout the life of the Contract and was in a persistent state of material breach of its obligations under the Contract, the MWP and the AWPs. According to the Respondent, CIOC’s non-performance affected virtually all areas of its activity, including financial commitment, 3D seismic study, deep drilling, shallow drilling, trial production and completion and adequacy of the installations. Furthermore, it is the Respondent’s position that it notified CIOC of its breaches and gave it reasonable time to cure (Counter Memorial, paras. 438 et seq . See also Counter Memorial, paras. 644 et seq .).
46.
In particular, the Respondent submits that, from the beginning, CIOC was only interested in taking advantage of the known supra-salt deposits and the existing Soviet wells to immediately produce oil for its own benefit, rather than to fulfill its contractual obligations and to carry out essential exploration works. The Respondent states that as early as 2003, CIOC was in material breach of the Contract, the MWP and the 2003 AWP. The Respondent points out that, on 8 December 2003, TU Zapkaznedra notified CIOC that the latter’s performance at the end of the 3rd quarter of 2003 was only 44.1% of its minimum obligations and raised the issue of the delay in the implementation of the 3D study. Furthermore, during CIOC’s annual performance review on 29 December 2003, TU Zapkaznedra expressed several points of criticism with respect to CIOC’s performance (Counter Memorial, paras. 646-660).
47.
According to the Respondent, CIOC was also in breach of its obligations under the 2004 and 2005 AWP. TU Zapkaznedra strongly criticized CIOC for its faulty performance in 2004. Moreover, on 17 January 2005, the MEMR sent CIOC a Notice of Breach, pointing out numerous breaches. For the Respondent, none of CIOC’s explanations set forth in its letter dated 9 March 2005 are valid. With respect to CIOC’s failure to conduct the 3D study, the Respondent states that CIOC assured the MEMR that the 3D seismic study would be carried out in full and that the first deep subsalt well would be drilled in 2005. According to the Respondent, the MEMR relied on CIOC’s assurances and on the fact that the Contract was only half way through the initial 5-year exploration phase in its decision to not take further action. However, the Respondent submits that, in spite of its assurances and guarantees, by the end of 2005, CIOC had not conducted the 3D study or even started to drill the first deep sub-salt well, prompting further criticism by TU Zapkaznedra, inter alia, with respect to CIOC’s continued focus on production over exploration (Counter Memorial, paras. 661-677).
48.
Furthermore, the Respondent submits that in 2006, CIOC was at a record low of its performance and in material breach of its obligations under the MWP and the 2006 AWP. The Respondent asserts that, on 28 February 2006, TU Zapkaznedra sent a Notice to CIOC, warning the latter that non-fulfillment of its outstanding obligations would entail appropriate actions in accordance with Kazakh legislation. A further Notice was allegedly sent to CIOC on 18 August 2006. According to the Respondent, as a result of further breaches that were revealed during an inspection by the Aktobe Department of Environmental Protection, on 11 October 2006, CIOC was fined and ordered to suspend trial production activities until it obtained the State environmental expertise on the project for the development of the Caratube field (supra-salt). But CIOC allegedly never complied with this Order, prompting the initiation of court proceedings and the confirmation of the suspension by the Specialized Inter-Departmental Economic Court of Aktobe. The Respondent submits that, at the same time, on 20 October 2006, the MEMR strongly criticized CIOC’s failures in matters of trial production and extended the term of the trial production until 31 December 2007 for CIOC to fulfill its trial production obligations. In a meeting held on 29 November 2006, TU Zapkaznedra noted CIOC’s breaches with respect to the 2006 performance and, on 11 December 2006, it notified CIOC that the latter would be put on the list of companies whose performance of financial obligations amounted to less than 30% (Counter Memorial, paras. 678-690).
49.
With respect to CIOC’s performance in 2007, the Respondent points out, inter alia, that by May 2007, CIOC still had not completed the 3D study. Moreover, CIOC could not fulfill its financial obligations even though they had been reduced by 51%. According to the Respondent, CIOC’s under-performance during the first four contract years until 2006 was critical, as there was only one year left under the initial MWP to complete and cure CIOC’s overdue obligations. Hence, on 25 March 2007, the MEMR allegedly notified CIOC of all of its breaches at the time, granting CIOC one month to cure them, subject to unilateral termination. Given CIOC’s failure to respond to the Notice of Breach, on 24 September 2007, TU Zapkaznedra once again sent the Notice of Breach to CIOC. Moreover, on 7 September 2007, the Aktobe Prosecutor’s Office issued a "Recommendation on elimination of disregard of the rule of law". And on 1 October 2007, given CIOC’s continued underperformance, the MEMR sent a Notice of Termination of Operations, expressly mentioning the Notice of Breach dated 25 March 2007, which allegedly had been received by CIOC on 28 March 2007 (a fact which the Claimants denied). The Respondent also states that, in a meeting held on 1 November 2007, TU Zapkaznedra found the 3D study presented by CIOC to be deficient and requiring correction and follow-up formatting. However, based on the explanations given in the Claimants’ letter of 3 October 2007, the MEMR authorized CIOC, by Notice of Resumed Operations dated 27 November 2007, to resume operations, while at the same time demanding the cure of the on-going material breaches within one month. The Respondent further states that on 3 December 2007, the MEMR sent a Notice of Breach of Obligations to CIOC "as part of a general standard action taken for nonperforming contractors" at the end of 2007. This Notice was followed by another Notice dated 7 December 2007, by which TU Zapkaznedra warned CIOC that, in case of the non-fulfillment of work targets for 2007, the appropriate corrective actions would be taken (Counter Memorial, paras. 691-706).
50.
Finally, with respect to CIOC’s performance during 2008, the Respondent submits that due to CIOC’s "persistent and uncured material breaches", the MEMR ordered the termination of the Contract on 30 January 2008 and sent the Notice of Termination to CIOC on 1 February 2008, it being specified that TU Zapkaznedra was not copied to this correspondence, which explains why TU Zapkaznedra still sent a notice to CIOC regarding the latter’s financial obligations on 20 February 2008 (Counter Memorial, paras. 707-712).

D. The two-year extension of the Exploration Period in 2007

51.
In November 2006, Mr. Devincci Hourani, in his capacity as CIOC’s President, requested a two-year extension of the Contract’s exploration period pursuant to Clauses 9.1 and 10.2 of the Contract and Article 43(1) of the 2004 Subsoil Law (Exh. C-21) (Memorial, para. 164).10 According to the Respondent, CIOC, inter alia, represented at the time that "a new well will be drilled in the subsalt zone, as per CDP-3D data" (Counter Memorial, paras. 416-418).
52.
As was seen, on 20 January 2007, CIOC submitted a proposed minimum work program for the extension period (2007-2009) (Exh. C-25) (Memorial, para. 164).11
53.
On 16 February 2007, the MEMR approved the two-year extension of the exploration period, with the Revised Work Program, and notified this decision to CIOC on 21 February 2007 (Exh. C-22). On the same day, CIOC concluded a contract for the estimation of the oil reserves at the Caratube field with CER (Exh. C-159).
54.
On 23 April 2007, the requested extension and the Revised Work Program were approved by TU Zapkaznedra (Exh. C-23). According to the Claimants, the extension was further approved by the MEMR Working Group on 6 June 2007 (Exh. C-24) and by the MEMR’s Geology Committee on 29 June 2007 (Exh. C-232). The Revised Work Program (Exh. C-26) thus replaced the previous framework.
55.
As will be seen later in further detail later in this Award, it is the Respondent’s position that CIOC made misrepresentations of key facts, in particular regarding the successful completion of the 3D seismic study and its capacity of drilling deep wells shortly after the extension, throughout the 2007 extension process (Memorial, para. 165; Counter Memorial, paras. 420-424; Claimants’ First Post-Hearing Brief, paras. 193-195).12
56.
On 27 July 2007, Amendment No. 3 to the Contract, which provided for the extension of the exploration period until 27 May 2009, was entered into between CIOC and the MEMR, represented by the Minister of Energy and Mineral Resources (Memorial, para. 166; Counter Memorial para. 425; Claimants’ First Post-Hearing Brief, para. 196).
57.
The Revised Work Program set forth "the major objectives of works to be performed during the extension period 2007-2009 (27.05.2007 - 27.05.2009)" in the following terms:

Under the Work Program, the following scope of works was performed in 2006:

1. Drilling of persalt wells is almost completed (except for the one, as per recommendations of the Designer’s supervision ad MEMR CDC).

2. Main stage of logging and CDP-3D seismic survey is completed: field works, processing and interpretation. Based on the results of these works, new data on structural and tectonic structure of the entire section were obtained (persalt, subcornice and subsalt) and prospective objects are to be drilled in the licensed area (including the main block - Southeastern flank) (Figure 5).

3. Lab analyses of core, bottomhole and surface samples are almost finished. Thereby, a basis for reserves estimation of all subsalt pay strata of the field upon pilot exploitation completion (December 2007) are almost completed.

During the extension period, it is planned to complete works on follow-up exploration of persalt, subcornice and subsalt complexes of formations in the Caratube field and adjacent territories of the licensed area: required drilling and logging suite, testing and lab analyses and other works, necessary for implementation of the Caratube field development stage.

[...]

As per the extension work program for 2007-2009, main emphasis will be laid on follow-up exploration and study of lower parts of the section: subcornice and subsalt complexes (Figure 6).

Main geologic-geophysical objectives of this stage:

1. Delineation and defining of potential structures of subcornice and subsalt complexes, prospectivity of which was confirmed by oil shows in wells ## G-69, G-25, G-38 and others.

2. Performance of Full Logging Suite (including hydrodynamic survey and geotechnical study) and a complex of lab analyses of core, samples from well productive strata.

To implement the aforesaid geologic-geophysical tasks, construction of deep wells is planned:

1. Subcornice complex:

- 2 wells (TD 2800-3200 m) in the western part of the license territory. Total drilling volume is 6000 linear m.

2. Subsalt complex:

- 2 wells (TD 4800-5200 with penetration of subsalt horizons P1, P2) in the area of a big subsalt uplift (N-S trend). Total drilling volume is 10000 linear m.

3. Implementation of this program also provides for a certain volume of drilling to study persalt and salt section within the Caratube licensed area:

- 4 wells/4500 linear m.

Thus, implementation of the Work Program during the extension period for 2007-2009 will almost complete the following stages:

1) Exploration stage

2) Pilot exploitation stage

3) Stage of final reserves estimation in the Caratube field

4. And it will give a start to the stage of commercial exploitation of the field within the Caratube licensed area up to 2032 as per the Contract.

5. It cannot be excluded that under certain circumstances, if additional surveys are required, pursuant to RoK Law "On subsoil" (Article 43), exploration extension for more 2 years is possible.13

58.
On 30 July 2007, CIOC submitted to TU Zapkaznedra the 2007 revised AWP (Exh. C-94).14

E. Termination of the Contract

59.
As with the performance of the Contract, the facts surrounding the termination of the Contract are also disputed between the Parties.
60.
On 7 September 2007, the Prosecutor’s Office of Aktobe Oblast sent to the MEMR a "Recommendation on elimination for disregard of the rule of law" (Exh. C-35; Memorial, paras. 236 et seq . ; Counter Memorial, paras. 696-698; Claimants’ First Post-Hearing Brief, paras. 224 et seq.). This Recommendation concluded as follows (Exh. C-35):

As the results of this audit demonstrate, despite the continued nonperformance of the terms of the Contract and of the work programs by the Contractor ("Caratube International Oil Company LLP"), the Technical Council of the Authorized Agency (i.e. TU "Zapkaznedra") annually approves work programs and, moreover, carries over part of the unfulfilled obligations of the current year to the following year. This shows the Competent Authority, i.e. the Ministry of Energy and Mineral Resources of the Republic of Kazakhstan’s lack of appropriate monitoring of the activities of the subsoil user and failure to take measures to rectify noncompliance with the terms of the Contract.

Given the preceding, on the basis of Article 83 of the Constitution of the Republic of Kazakhstan, Article 25 of the Law of the Republic of Kazakhstan "On the Prosecutor’s Office",

YOU ARE INVITED to:

Review this recommendation on the elimination of disregard of the rule of law, in order to:

1. Take measures to notify Caratube International Oil Company LLP of the necessity to address the abovementioned breaches for the elimination of the discovered legal breaches and for prevention in the future.

2. Settle an issue of unilateral termination of the Contract in connection with the existing breaches of obligations provided in the work programs.

61.
On 24 September 2007, CIOC received a letter from TU Zapkaznedra (signed by the acting head of TU Zapkaznedra, Mr. Nadyrbaev15), to which the following "Notice of Breach of Obligations under Contract No. 954 of May 27, 2002" from the MEMR (signed by Mr. Akchulakov), dated 25 March 2007, was attached (Exh. C-37):

The Ministry of Energy and Mineral Resources of the Republic of Kazakhstan as the authority empowered to execute and fulfill subsoil use contracts, according to Article 70 of the Law of the Republic of Kazakhstan On Subsoil and Subsoil Use, hereby notifies you that:

You have violated the following terms and conditions of Contract for Exploration and Production of Hydrocarbons within the Blocks XXI-20-C (partly) and XXN-21-A (partly) including the Karatube Field (oversaline) in Baiganin District, Aktobe Region, No. 954 of May 27, 2002:

- the working program has not been fulfilled (cl. 8.1);

- Iong-term environmental forecast under the Contract has not been submitted to the Competent Authority (cl. 7. 2.18);

- risk, property and liability insurance program has not been submitted for approval of the Competent Authority (cl. 18.1);

- the program for annual remittance of 3% of capital costs to the liquidation fund has not been fulfilled in full (cl. 19.5).

Therefore, you are required to remedy all Contract violations specified above within one month and to provide the Competent Authority with all the appropriate documents confirming that the violations have been remedied. You are also required to report on the measures taken in order to remedy and prevent failure to fulfill your contractual obligations.

Should you fail to remedy the above Contract violations, in accordance with the Law of the Republic of Kazakhstan On Subsoil and Subsoil Use, the Competent Authority may unilaterally dissolve the Contract for Exploration and Production of Hydrocarbons within the Blocks XXI-20-C (partly) and XXN-21-A (partly) including the Karatube Field (oversaline) in Baiganin District, Aktobe Region, No. 954 of May 27, 2002.

62.
The Claimants submit that they did not receive the 25 March 2007 Notice prior to 24 September 2007 and the Respondent had never before referred to it (Memorial, para. 244). The Claimants point out that the 25 March 2007 Notice (which was drafted in the Kazakh language, rather than in Russian or English as prescribed by the Contract and the practice between the Parties) also did not contain any reference to the approval in February 2007 of the extension of the Contract’s exploration phase by the same Ministry, i.e. the MEMR.
63.
It is the Claimants’ position that the 25 March 2007 Notice was "concocted" and backdated by the MEMR, upon the receipt of the Prosecutor’s instruction to terminate CIOC’s Contract.
64.
Assuming that the 25 March 2007 Notice was sent, it is the Claimants’ position that it was waived by the subsequent approvals of the Contract extension dated 23 April, 6 June and 29 June 2007, which were confirmed by the 27 July 2007 Amendment No. 3 to the Contract (Claimants’ First Post-Hearing Brief, paras. 237-249).
65.
By contrast, the Respondent insists that the 25 March 2007 Notice was not backdated. Rather, the Respondent argues that, as evidenced by the MEMR’s log book (Exh. R-186), the Notice was sent by registered mail with return receipt requested on 25 March 2007 and received by CIOC on 28 March 2007. The Respondent further alleges that CIOC chose not to respond to the 25 March 2007 Notice because it was seeking to obtain the extension of the Contract and did not want to jeopardize the finalization of the extension by drawing the Respondent’s attention to CIOC’s various breaches of the Contract (Counter Memorial, para. 701. See also the Respondent’s Post-Hearing Brief, paras. 186 et seq.).16
66.
On 28 September 2007, CIOC received the so-called "Prescriptive Order" (Exh. C-129). It was signed by Mr. Baikadamov, who was part of the TU Zapkaznedra’s Technical Committee that had approved CIOC’s AWPs for 2004 and 2005 (Memorial, para. 249).
67.
On 1 October 2007, the MEMR notified to CIOC a "Notice of Termination of Operations" (Exh. C-38), stating as follows:

The Ministry of Energy and Mineral Resources of the Republic of Kazakhstan, as the competent authority for execution and performance of subsoil use contracts, in accordance with Article 70 of Law No. 2828 of the Republic of Kazakhstan "On Subsoil and Subsoil Use" dated January 27, 1996 (hereinafter referred to as the Law) has sent you a notice of your violation of the terms of Contract No. 954 of May 27, 2002 for the exploration and production of raw hydrocarbons within the blocks XXIV-20-C (partial) and XXIV-21-A (partial), including the Caratube suprasalt field in the Baiganinsky district of the Aktyubinsk Region (The Ministry of Energy and Mineral Resources reference No. 14-02-2498 of March 25, 2007). You received this notice on March 28, 2007.

The notice stated the timeframes for submission of the information on the reasons for your failure to fulfil the contractual obligations, as well as on remediation of the violation and the actions taken. Appropriate information and the documents confirming remediation of the violations have not been submitted to the Competent Authority within the timeframe established.

For this reason, in accordance with Article 45-2, clause 2 of the Law, the Competent Authority is hereby requesting immediate termination of operations under Contract No. 954 of May 27, 2002, pending decision on unilateral termination of the contract.

68.
On 3 October 2007, Mr. Hussam Hourani, in his capacity as director of CIOC, replied to the Respondent’s Notices of 25 March and 1 October 2007, rejecting the Respondent’s allegations of breach of CIOC’s obligations (Exh. C-39). CIOC also claimed that it had not received the Notice dated 25 March 2007 before 24 September 2007 and that it should not be possible to rely on such Notice as the basis for the termination of the Contract. Moreover, CIOC referred to the fact that the MEMR had agreed to and approved the extension of the Contract and the revised Work Programs earlier in 2007.
69.
By letter dated 17 October 2007 (Exh. C-145), the MEMR requested CIOC to give "detailed information on fulfillment of the prescriptive order", i.e. the Notice of 25 March 2007. On behalf of CIOC, Mr. Hussam Hourani replied on 18 October 2007 (Exh. C-146), reiterating the explanations provided in CIOC’s letter dated 3 October 2007.
70.
On 22 November 2007, Mr. Batalov, as the Executive Secretary of the MEMR, wrote to the Aktobe Regional Prosecutor’s Office, stating in particular as follows (Exh. R-178; Claimants’ First Post-Hearing Brief, paras. 262-264):

Given that the delivery receipt of the registered letter [i.e. the Notice of 25 March 2007], by which the notice of violation of contractual obligations was sent to the Contractor, has no precise information as to on whom it was served and in order to comply with the procedures prescribed by Section 29 of the Contract, the Ministry of Energy decided to resend to the Contractor the notice of violation of the Contract and of the resuming of operations under the Contract, having duplicated it by fax.

71.
Thereafter, on 27 November 2007, Mr. Batalov notified to CIOC a "Notification for Resumed Operations", allowing CIOC to resume operations under the Contract. At the same time, the letter listed several further alleged breaches by CIOC of its obligations under the Contract, requesting the latter to remedy such breaches within one month of receipt of the Notification (Exh. C-148). The Claimants point out, inter alia, that no mention was made of the extension of the exploration phase of the Contract, of CIOC’s comments as expressed in its letter dated 3 October 2007, or of why a thirty-day period, rather than a "reasonable period" as commanded by the Subsoil Law and the Contract, was given to CIOC to cure alleged breaches (Claimants’ First Post-Hearing Brief, paras. 265-267).
72.
On 3 December 2007, Mr. Batalov, as the Executive Secretary of the MEMR, notified to CIOC the "Notice of non-performance of obligations", stating in relevant part as follows (Exh. C-41):

[…] [Y]ou are in violation of your obligations under Contract No. 954 of May 27, 2002 for the exploration and production of hydrocarbons within the blocks XXIV-20-C (partial) and XXIV-21-A (partial), including the Caratube post-salt field in the Baiganinsky district of the Aktyubinsk Region (hereinafter referred to as the Contract).

For this reason, you shall:

- within ten days of receipt of the present notice, submit to the Competent Authority the information on the reasons for your failure to fulfil the contractual obligations;

- Within one month of receipt of the present notice, remedy the failure to fulfil the obligations under the Contract and submit all the required documents to confirm such remediation.

In event of your failure to fulfil the requirements of the present notice within the allowed time, the Competent Authority will take the steps to terminate the Contract as provided for by the legislation of the Republic of Kazakhstan.

73.
On 7 December 2007, TU Zapkaznedra sent a further notice of breach to CIOC (Exh. R-49), indicating that CIOC’s performance of its financial obligations under the Contract was below 50%.
74.
On 13 December 2007, CIOC responded to the Notice of non-performance of obligations, concluding, inter alia, that CIOC "does not demonstrate any backlog in implementation of the 2007 Work Program (the program has been completed in its entirety) or in other aspects of operation" (Exh. C-42).
75.
On 29 December 2007, TU Zapkaznedra reviewed the 2007 AWP and approved the AWP for 2008, rolling over CIOC’s non-performed obligations to the next year (Exh. C-43) (Claimants’ First Post-Hearing Brief, para. 271; Respondent’s First PostHearing Brief, para. 167).
76.
On 30 January 2008, the MEMR issued an Ordinance, ordering to "[t]erminate Contract No. 954 of 27 May 2002, signed with Caratube International Oil Company LLP […] due to failure of completion of notice requirements within the specified period" (Exh. C-44).
77.
The Ordinance was notified to CIOC’s regional office in Aktobe by letter dated 1 February 2008 and signed by Mr. Batalov of the MEMR. According to the Claimants, CIOC’s head office in Almaty received the notification of the termination of the Contract on 11 February 2008, and Mr. Hussam Hourani, as CIOC’s director, responded to it by letter dated 12 February 2008 (Memorial, paras. 263-264; Exh. C-28).
78.
According to the Respondent, various letters were exchanged and a (unscheduled) meeting took place (the content of which is disputed) between the Claimants and the Respondent after the termination of the Contract. However, the MEMR confirmed its position to terminate the Contract by letter dated 14 May 2008 (Exh. C-170; Counter Memorial, paras. 717-719). By contrast, the Claimants assert that they protested against the termination of the Contract by letters dated 4 and 11 March 2008. According to the Claimants, these letters remained unanswered. In particular, the Claimants insist that no meeting took place following their letters, and they never received the Respondent’s letter dated 14 May 2008 (which, in any event, merely dismissed the Claimants’ arguments), but saw it for the first time during the Caratube International Oil Company LLP v Republic of Kazakhstan (ICSID Case No. ARB/08/12) arbitration (the "Caratube I arbitration") (Claimants’ First Post-Hearing Brief, paras. 274-276).
79.
Following the termination of the Contract, CIOC retained physical control of the Contract site until April 2009, say the Claimants. According to the Claimants, in April 2009, CIOC lost the effective control of the Caratube oilfield, which became de facto controlled by KNB officers. In particular, the latter allegedly seized documents, electronic storage media and computers belonging to CIOC on the grounds of an investigation into the alleged misappropriation by Mr. Issam Hourani of CIOC from a certain Mr. Adonis Derbas. According to the Claimants, there is no evidence that such documents, disks and computers were ever returned to CIOC. The Claimants further submit that, in parallel to the confiscations of CIOC property by the KNB, Kazakh authorities confiscated the land belonging to CIOC. As of mid-April 2009, all oil wells at the Caratube field have been sealed and the site is under the supervision of the KNB, say the Claimants (Memorial, paras. 287-296; Claimants’ First PostHearing Brief, para. 277).

F. Political context

80.
On 23 May 2007, Mr. Rakhat Aliyev, then son-in-law of the President of the Republic of Kazakhstan, Nursultan Nazarbayev, was accused of being involved in the kidnapping of two bankers of the Kazakh bank, Nurbank, and the Ministry of Internal Affairs commenced criminal proceedings against him. According to the Claimants, this happened upon the personal instructions by President Nazarbayev to the Prosecutor General and the Minister of Interior.
81.
The Claimants submit that on the next day, 24 May 2007, commenced a harassment campaign against Mr. Aliyev and those who were perceived of as assisting him, including the Hourani family. During the course of this campaign, Mr. Aliyev was allegedly stripped of his diplomatic immunity and removed by President Nazarbayev from his post as the Kazakh Ambassador to Austria. The Claimants allege that these and several other actions against Mr. Aliyev were motivated by the falling out in April 2007 between President Nazarbayev and Mr. Aliyev (Memorial, paras. 173 et seq . ; Claimants’ First Post-Hearing Brief, paras. 197 et seq .).
82.
The Claimants argue that the Hourani family thus became "collateral damage" of this alleged dispute between President Nazarbayev and Mr. Aliyev (Memorial, paras. 177-183). In particular, the Claimants allege that the Respondent engaged in various acts of harassment against the Claimants and disrupted their activities (Memorial, paras. 184 et seq.; Claimants’ First Post-Hearing Brief, paras. 199 et seq.; Claimants’ Reply Post-Hearing Brief, paras. 100 et seq.). The Claimants point out that the same Prosecutor General’s office that declared that "the economic foundation of the Aliyev criminal group in Kazakhstan has been effectively liquidated" also allegedly instructed a local prosecutor to expropriate the Claimants in September 2007 (Memorial, para. 182).
83.
Furthermore, the Claimants allege that on 24 May 2007, in conformity with President Nazarbayev’s personal instructions, the Prosecutor General’s Office suspended the KTK TV Channel’s broadcasting for three months and permanently shut down the Karavan newspaper "on obscure grounds", it being specified that Mr. Devincci Hourani is a minority shareholder in KTK TV, and his sister-in-law, Ms. Gulshat Hourani, is a shareholder in Karavan (Claimants’ First Post-Hearing Brief, paras. 199-201).
84.
According to the Claimants, on 28 May 2007, Mr. Sami Sabsabi filed a short and unsubstantiated criminal complaint against Mr. Issam Hourani for an alleged beating and extortion that Mr. Sabsabi claimed to have occurred at an unidentified date in 2005. The Claimants submit that on this basis, on 1 June 2007, the Respondent initiated a criminal case, "without even proof that any beating or extortion took place, nor evidence of the underlying circumstances". The Claimants point out that Mr. Derekh, who owed Mr. Sabsabi money, cannot be considered as an independent witness in support of Mr. Sabsabi’s case, the testimonies of Messrs. Derekh and Sabsabi given to Colonel Kim at the time were fraught with unexplainable inconsistencies, and Colonel Kim’s investigations were seemingly limited to Mr. Issam Hourani. However, on 20 June 2007, Colonel Kim allegedly ordered the search, not of Ruby Roz, where the beating had allegedly taken place, but of Universal Oilfield Supply Holdings LLP, owned by Mr. Kassem Omar, not by Mr. Issam Hourani (Claimants’ First Post-Hearing Brief, paras. 203-215; Claimants’ Reply Post-Hearing Brief, paras. 102-103).
85.
The Claimants further submit that, on 22 October 2007, Almaty police seized the legal and accounting documents of 16 separate legal entities located at Polezhaeva St., 92 A, including CIOC, taking around 1,380 binders of documents, including over 100 binders of CIOC’s documents.17 In March 2008, documents were returned to Ruby Roz and some of the other companies, including CIOC, it being however alleged by the Claimants that the seized documents were returned incompletely and without any order (Memorial, paras. 229 et seq.).
86.
Moreover, the Claimants submit that from June 2007 onwards, CIOC was subjected to a disruptive "avalanche of State inspections and audits checking [CIOC’s] compliance with laws and regulations, in particular with respect to environment, customs, tax, immigration, and labor laws, and safety", some of which culminating in further measures against CIOC or its management, such as the initiation of criminal proceedings, the seizure of documents, the detention of equipment or the freezing of bank accounts (Memorial, paras. 234 et seq.; Claimants’ First Post-Hearing Brief, paras. 216-221).
87.
The Claimants argue that the alleged harassment of the Hourani family by the Respondent continued after the termination of the Contract (see, e.g., Memorial, paras. 299 et seq.).
88.
The Claimants also point out that the Respondent’s alleged acts of harassment were not limited to CIOC, but were also directed against all of the other investments of the extended Hourani family. For the Claimants, this, coupled with the timing and reasons given to justify these other takings, confirms that the alleged taking of CIOC was motivated by reasons not attributable to CIOC or the Houranis, nor any of their companies.18
89.
The Claimants submit that there is direct written and oral evidence proving that the taking of CIOC had nothing to do with CIOC or Mr. Devincci Hourani themselves, but rather was motivated by the broader, unrelated dispute between President Nazarbayev and Mr. Aliyev, which fact alone establishes a breach of international and Kazakh law, say the Claimants.19
90.
The Respondent rejects the Claimants’ above-mentioned allegations of a politically motivated harassment campaign by the Respondent against the Claimants. It avers that there was no harassment of the Claimants, no expropriation of CIOC and no violation of FET or any other treaty obligation by the Respondent (assuming that the Respondent had such obligations toward CIOC), insisting that CIOC’s Contract was terminated for CIOC’s material breaches, without there being any State action or political motivation behind the termination (for a summary on the Respondent’s position, see infra, paras. 783 et seq . See also Counter Memorial, paras. 918 et seq .).

G. Dispute resolution procedures in relation with the present dispute

91.
The factual context underlying the present dispute has given rise to several dispute resolution procedures, in particular ICSID arbitrations opposing the Respondent, including Devincci Salah Hourani and Issam Salah Hourani v Republic of Kazakhstan (ICSID Case No. ARB/15/13) (pending) and UNCITRAL case Ruby Roz (finished with a negative award on jurisdiction). Most importantly, on 16 June 2008, CIOC alone brought ICSID arbitration proceedings against the Respondent under the Treaty Between the United States of America and the Republic of Kazakhstan Concerning the Encouragement and Reciprocal Protection of Investment, dated 19 May 1992 (the "BIT") - the Caratube I arbitration. The Caratube I tribunal dismissed the case for lack of jurisdiction in an award dated 5 June 2012 (the "Caratube I award"; Exh. CLA-8), and ordered CIOC to pay costs to the Respondent. The dispositive part of the Caratube I award reads as follows:

The Tribunal decides and orders that:

1. The Tribunal does not have jurisdiction over the Claimant’s claims herein.

2. Costs: The Claimant pay the Respondent USD 3.2 million, comprising USD 3 million for its legal costs and USD 200,000 to recoup part of monies paid for ICSID deposit.

92.
The Caratube I award was challenged, but ultimately upheld, in annulment proceedings before an Ad Hoc Committee. Following the Ad Hoc Committee’s order dated 14 March 2013 for the continued stay of enforcement of the Caratube I award, on 21 February 2014, the Ad Hoc Committee rendered its Decision on the Annulment Application of Caratube International Oil Company LLP (Exh. CLA-127), unanimously deciding as follows:

1. The application of Caratube International Oil Company LLP for annulment of the Award issued by the Tribunal on June 5, 2012 is dismissed.

2. Each of the Parties shall bear its own legal fees and expenses, and Caratube International Oil Company LLP shall bear the direct costs of the proceeding, comprising the fees and expenses of the Committee and the costs of using the ICSID facilities, in their entirety.

3. The stay of enforcement of the Award is declared automatically terminated in accordance with Rule 54(3) of the ICSID Arbitration Rules.

93.
As will be seen in further detail in the later sections of this Award, both the Claimants and the Respondent have relied in this Arbitration on the Caratube I award, in particular for purposes of asserting or denying this Tribunal’s jurisdiction. As will also be seen in further detail below, each Party contests the reliance by the adverse Party on the Caratube I tribunal’s findings.

III. PROCEDURAL HISTORY

94.
On 5 June 2013, the Claimants submitted their Request for Arbitration, requesting the institution of arbitration proceedings against the Respondent "in accordance with the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, dated March 18, 1965 (the ‘ ICSID Convention’), the Law of the Republic of Kazakhstan on Foreign Investments, dated December 27, 1994 (the ‘ FIL’), the Treaty Between the United States of America and the Republic of Kazakhstan Concerning the Encouragement and Reciprocal Protection of Investment, dated May 19, 1992 (the ‘ BIT’ or the ‘ Treaty’), and the Contract No. 954 between the Ministry of Energy and Mineral Resources of the Republic of Kazakhstan and [CIOC], dated May 27, 2002 (the ‘ Contract’)" (Request for Arbitration, para. 1). In their Request for Arbitration, the Claimants based the jurisdiction of this ICSID Tribunal on - and asserted rights under - the FIL, the Contract, and the BIT (Request for Arbitration, paras. 89 et seq .).
95.
On 28 June 2013, the ICSID Secretary-General registered the Request for Arbitration under the ICSID Convention.
96.
The Parties made efforts but failed to agree on the method of constitution of the Tribunal. By letter dated 1 October 2013, the Claimants informed ICSID that it opted for the formula provided in Article 37(2)(b) of the ICSID Convention. In accordance with that provision, the Claimants appointed Professor Laurent Aynes, and the Respondent appointed Mr. Bruno W. Boesch. Both party-appointed arbitrators accepted their appointments.
97.
By letter of 20 December 2013, Counsel for the Claimants confirmed that the Parties had agreed to appoint Dr. Laurent Levy as President of the Tribunal. By letter dated 27 December 2013, Dr. Laurent Levy accepted the nomination to act as President of the Tribunal.
98.
On 7 January 2014, the ICSID Secretary-General confirmed the constitution of the Tribunal and the beginning of the arbitration proceedings pursuant to ICSID Arbitration Rule 6. She further informed the Parties that Ms. Milanka Kostadinova, ICSID Senior Counsel, would act as Secretary of the Tribunal.
99.
By letter of 15 January 2014, the Claimants requested Mr. Boesch to resign from the Tribunal pursuant to Article 8 of the ICSID Arbitration Rules. In the same letter, the Claimants expressed their intention to submit a proposal for Mr. Boesch’s disqualification, should he fail to resign from the Tribunal, pursuant to Articles 57 and 14(1) of the ICSID Convention.
100.
On 21 January 2014, the Tribunal informed the Parties that Mr. Boesch considered himself independent and impartial and therefore did not intend to resign from the Tribunal. By separate letter of the same day, the Tribunal further informed the Parties that Prof. Laurent Aynes had become partner in the law firm Darrois Villey Maillot Brochier beginning 1 January 2014 and that Prof. Aynes did not consider these circumstances to affect his independence and impartiality.
101.
By email of 22 January 2014, the Claimants confirmed their intention to file a proposal for the disqualification of Mr. Boesch. The Proposal for Disqualification was submitted by the Claimants on 28 January 2014, in conformity with the Tribunal’s letter of 21 January 2014.
102.
On 29 January 2014, the arbitration proceeding was suspended pursuant to ICSID Arbitration Rule 9(6).
103.
On 12 February 2014, the Respondent filed its observations on the Claimants’ Proposal for Disqualification, in conformity with the calendar set forth in the Tribunal’s letter of 4 February 2014.
104.
On 13 February 2014, Mr. Boesch provided his explanations in accordance with ICSID Arbitration Rule 9 and the calendar in the Tribunal’s letter of 4 February 2014.
105.
On 28 February 2014, the Parties simultaneously filed further observations with respect to the Proposal for Disqualification.
106.
On 20 March 2014, the Unchallenged Arbitrators, i.e. Dr. Levy and Prof. Aynes, issued their Decision on the Proposal for Disqualification of Mr. Bruno Boesch, deciding to uphold the Claimants’ Proposal.
107.
By letter dated 20 March 2014, the Secretary-General communicated the Unchallenged Arbitrators’ Decision to the Parties and invited the Respondent to appoint a new arbitrator, pursuant to ICSID Arbitration Rule 11(1). The Parties were further invited to consent to the publication of said Decision.
108.
By letter of 28 April 2014, Dr. Jacques Sales accepted his appointed as arbitrator nominated by the Respondent.
109.
On 2 May 2014, the Secretary to the Tribunal confirmed the reconstitution of the Tribunal and the lifting of the suspension of the proceedings as of 29 April 2014. Moreover, the Secretary informed the Parties of the Tribunal’s wish to use an assistant and to appoint Dr. Silja Schaffstein to that effect, with the specification, inter alia, that she would work at all times under the specific instructions and continuous control and supervision of the President of the Tribunal, and that she would also be subject to the same confidentiality obligations as the Members of the Tribunal and would sign a declaration to that effect. Dr. Schaffstein’s CV was submitted to the Parties for approval.
110.
The first session of the Tribunal was held on 4 June 2014 at the World Bank Paris Conference Centre. Present at the session were:

Members of the Tribunal:

Dr. Laurent Levy Prof. Laurent Aynes Dr. Jacques Sales

ICSID Secretary :

Ms. Milanka Kostadinova

Assistant to the Tribunal:

Dr. Silja Schaffstein

Attending on behalf of the Claimants:

Dr. Hamid G. Gharavi, Derains & Gharavi Ms. Nada Sader, Derains & Gharavi Mr. Sergey Alekhin, Derains & Gharavi

Attending on behalf of the Respondent:

Mr. Peter M. Wolrich, Curtis, Mallet-Prevost, Colt & Mosle LLP Mr. Geoffroy Lyonnet, Curtis, Mallet-Prevost, Colt & Mosle LLP Ms. Gabriela Alvarez Avila, Curtis, Mallet-Prevost, Colt & Mosle LLP Mr. Jerome Lehucher, Curtis, Mallet-Prevost, Colt & Mosle LLP

111.
Following the first session, on 20 June 2014, the President of the Tribunal issued Procedural Order No. 1 ("PO1").
112.
By letter of 14 July 2014, the Claimants submitted a request for provisional measures based on Article 47 of the ICSID Convention and Rule 39 of the ICSID Arbitration Rules. In paragraph 82 of their letter, the Claimants set forth the following request for relief:

82. [...] Claimants request the Arbitral Tribunal to order the Republic of Kazakhstan to:

82.1. Disclose any role it had, whether as direct or indirect funder or instigator, as well as all associated internal and external documents (be it emails, letters, memos, notes, minutes, invoices, instructions and the like), in relation to the two websites, www.justicefornovikova.com and www.rakhataliyev.com, the "protests" that occurred in London on June 19, 2014, including correspondence with the company Envisage Promotions Ltd. and/or any other company, individual or the like and to take all measures required for the immediate closure of these websites;

82.2. Justify the fierceness and timing of the prosecution by Kazakhstan of the allegations of murder against the Houranis and the associated lobbying before Lebanese authorities, including Ministers, prosecutors and ambassadors regarding the investigations relating to the death of Ms. Anastasya Novikova, which were closed multiples times;

82.3. Undertake that Kazakhstan will refrain from taking any direct or indirect measures or any action that would aggravate the dispute and/or jeopardize the integrity and the legitimacy of this arbitration and the equality of the Parties, including any assault or the like or threats and intimidation against the Hourani family and any potential witnesses and their families, including Messrs. Issam Hourani, Omar Antar, Kassem Omar, Hussam Hourani, and Nader Hourani (Mr. Devincci’s cousin) and Ms. Hiam Hourani (Mr. Devincci’s sister); and

82.4. Undertake that Kazakhstan comply with the fundamental principle of the presumption of innocence of the Hourani family and of the prohibition of unlawful attacks on one’s honor and reputation, and refrain from taking any direct or indirect measures or any action that would violate these principles, including but not limited to refraining from directly or indirectly organizing, instructing, funding, encouraging and/or the like of protests, articles, books, and websites alleging murder perpetrated by Hourani family.

113.
On 14 August 2014, the Respondent submitted its response to the Claimants’ request for provisional measures, in conformity with the Tribunal’s letters dated 17 and 25 July 2014. In the conclusion to its response, the Respondent requested the Tribunal to reject in their entirety all of the Claimants’ requests for provisional measures and to be awarded the costs the Respondent incurred in connection with the Claimants’ request, including but not limited to legal fees and expenses and expert fees and expenses.
114.
On 26 August 2014, the Claimants requested that a hearing on provisional measures be held on 8 October 2014, in conformity with the Tribunal’s letter dated 19 August 2014.
115.
By letter of 28 August 2014, Dr. Jacques Sales informed the Parties that he had been nominated on the initiative of Curtis, Mallet-Prevost, Colt & Mosle LLP (by partners different from the partners handling the present case) to act as co-arbitrator in two related ICC arbitrations. Dr. Sales further informed the Parties that at its session of 12 June 2014, the ICC International Court of Arbitration had decided to confirm his appointment in one, but not the other ICC case. Finally, Dr. Sales declared that his appointment in the mentioned ICC case would not affect his independence and impartiality in the present Arbitration.
116.
On 2 September 2014, the Tribunal confirmed that a hearing on provisional measures would take place at the World Bank Paris Conference Centre on 8 October 2014.
117.
On 19 September 2014, the Claimants submitted their Memorial (the "Memorial"), in conformity with the Tribunal’s email of 17 September 2014. The Memorial was accompanied by fact witness statements of (i) Mr. Devincci Hourani; (ii) Mr. Omar Antar; and (iii) Mr. Harvey Jackson. The Memorial was further accompanied by two expert reports of Mr. Sven Tiefenthal and the Damages Report of Grant Thornton ("GT").
118.
On 8 October 2014, the hearing on provisional measures took place in Paris. In attendance at the hearing were:

Members of the Tribunal:

Dr. Laurent Levy Prof. Laurent Aynes Dr. Jacques Sales

ICSID Secretary:

Ms. Milanka Kostadinova

Attending on behalf of the Claimants:

Dr. Hamid G. Gharavi, Derains & Gharavi

Ms. Nada Sader, Derains & Gharavi

Mr. Sergey Alekhin, Derains & Gharavi

Ms. Elina Vilchinskaya, Derains & Gharavi

Mr. Fadi Hajjar, Derains & Gharavi

Mr. Etienne Vimal du Monteil, Derains & Gharavi

Parties:

Mr. Devincci Hourani

Attending on behalf of the Respondent:

Mr. Peter M. Wolrich, Curtis, Mallet-Prevost, Colt & Mosle LLP Mr. Geoffroy Lyonnet, Curtis, Mallet-Prevost, Colt & Mosle LLP Ms. Gabriela Alvarez Avila, Curtis, Mallet-Prevost, Colt & Mosle LLP Mr. Jerome Lehucher, Curtis, Mallet-Prevost, Colt & Mosle LLP Ms. Mira Suleimenova, Curtis, Mallet-Prevost, Colt & Mosle LLP Ms. Anna Kouyate, Curtis, Mallet-Prevost, Colt & Mosle LLP Ms. Marie-Claire Argac, Curtis, Mallet-Prevost, Colt & Mosle LLP Ms. Inna Khlystova, Curtis, Mallet-Prevost, Colt & Mosle LLP

Witnesses:

Mr. Andrey Kravchenko Prof. Martha Olcott

Parties:

Mr. Marat Beketayev, Ministry of Justice of the Republic of Kazakhstan Mr. Almat Madaliyev, Ministry of Justice of the Republic of Kazakhstan Mr. Kazbek Shaimerdinov, Ministry of Justice of the Republic of Kazakhstan Mr. Kairgeldy Sakenov, General Prosecutor Office of the Republic of Kazakhstan

119.
On 10 October 2014, pursuant to the Tribunal’s instructions at the hearing of 8 October, the Claimants amended their request for relief as initially set forth in their request for provisional measures. The amended request for relief read as follows:

2. Claimants request the Arbitral Tribunal to order to Republic of Kazakhstan to:

2.1. Withdraw as "partie civile" from the criminal proceedings launched with Ms. Novikova’s family on July 24, 2012 against three (i.e. Messrs. Issam, Devincci and Hussam Hourani) out of the four (being Mr. Rakhat Aliyev) persons specifically accused of the murder of Ms. Novikova, and cease any direct or indirect interference with or before the Lebanese authorities in relation to these criminal proceedings, unless expressly required by the Lebanese judges in relation to Kazakhstan’s status as "partie civile," including encouraging directly or indirectly, be it financially or otherwise, members of the family of Ms. Novikova or any third parties to initiate, maintain or provide testimonies in the criminal proceedings against the Hourani family, until a Final Award is rendered, or to order any other measures that the Tribunal deems appropriate.

2.2. Proceed with investigations, before all organs of the State, including the KNB, the Prosecutor General’s Office, and the Ministry of Interior in relation to their direct or indirect involvement with the websites (www.justicefornovikova.com and www.rakhataliyev.com) and the demonstrations carried out in London on June 19, 2014 against the Hourani family and to report as soon as possible in writing to the Tribunal as to the conclusions:

- If Kazakhstan confirms that the State has direct or indirect involvement with the websites and the demonstrations, ORDER Kazakhstan to take all the measures for the immediate closing of all the websites;

- If Kazakhstan finds that the State has no direct or indirect involvement therewith, ORDER Kazakhstan (i) to make a declaration that Kazakhstan has no involvement in the websites or the demonstration held in London on June 19, 2014, and that it condemns these acts as being in violation of the presumption of innocence, for Mr. Devincci Hourani to use if and when appropriate and (ii) to make all necessary investigations to find out who is at the origin of same, including with Ms. Novikova’s family, who Kazakhstan has access to, and to take every measure necessary so that the instigators and/or authors of these websites and demonstrations cease the same;

2.3. Undertake that Kazakhstan will refrain from taking any direct or indirect measures or any action that would aggravate the dispute and/or jeopardize the integrity and the legitimacy of this arbitration and the equality of the Parties, including any assault or the like or threats and intimidation against the Hourani family and any potential witnesses and their families, including Messrs. Kassem Omar, Hussam Hourani, and Nader Hourani (Mr. Devincci’s cousin) and Ms. Hiam Hourani (Mr. Devincci’s sister);

2.4. Undertake that Kazakhstan comply with the fundamental principle of the presumption of innocence of the Hourani family and of the prohibition of unlawful attacks on one’s honor and reputation, and refrain from taking any direct or indirect measures or any action that would violate these principles, including but not limited to refraining from directly or indirectly organizing, instructing, funding, encouraging and/or the like of protests, articles, books, and websites alleging murder perpetrated by Hourani family; and

2.5. To order any other measures that the Tribunal deems appropriate, including any variations to the above requested orders.

120.
On 16 October 2014, the Respondent commented on the Claimants’ amended requests for provisional measures.
121.
Thereafter, by correspondence of 13, 16 and 18 November 2014 and 2 December 2014, the Claimants submitted additional information on new developments with respect to the Claimants’ allegations of harassment by the Respondent, on which the Claimants relied in relation to their request for provisional measures. The Claimants amended items 2.2 and 2.3 of their amended alternative requests for provisional measures in accordance with the alleged new developments and stressed the urgency of the matter. Moreover, in their correspondence of 2 December 2014, the Claimants also enquired whether the evidentiary hearing could be held already in July or August 2015, should the Claimants choose to waive their right to file a Reply Memorial.
122.
By letter dated 3 December 2014, the Tribunal confirmed its availability, in principle, for an evidentiary hearing in July 2015.
123.
On 4 December 2014, the Tribunal issued its Decision on Provisional Measures, deciding to deny the Claimants’ Amended Request for Provisional Measures. The Tribunal also decided that "[e]ach Party shall bear its own costs, whereas the Tribunal’s costs will be determined in the Final Award".
124.
On 5 December 2014, the Respondent objected to the Claimants’ proposal to waive their Reply Memorial.
125.
On 9 December 2014, the Claimants submitted to the Tribunal a copy of the Notice of Dispute re Pharm Industry Corporation/Mr. Devincci Hourani and Mr. Issam Hourani v Republic of Kazakhstan. The Notice of Dispute indicated that the Claimants would propose the same Tribunal to handle this new arbitration.
126.
By letter dated 12 December 2014, the Claimants requested leave from the Tribunal to exercise their right to waive their Reply Memorial within 15 days of receipt of the Respondent’s Counter Memorial on Jurisdiction and the Merits. The Claimants also suggested a revised procedural calendar should they choose to waive their Reply Memorial.
127.
By email of 16 December 2014, the Respondent reiterated its objections to the possibility of the Claimants waiving their Reply Memorial and the suggested procedural calendar.
128.
By letter dated 23 December 2014, the Tribunal granted the Claimants’ request to provisionally reserve hearing dates for a 5-day hearing on the merits. The Tribunal also granted the Claimants’ request for leave to exercise their right to waive their Reply Memorial.
129.
On 21 January 2015, the Tribunal further informed the Parties that it had provisionally reserved the weeks of 2 and 9 November 2015 for an evidentiary hearing on the merits, while also keeping the hearing dates in February 2016 reserved, which were fixed in PO1.
130.
By letter of 3 February 2015, the Claimants informed the Tribunal of further allegations of harassment by the Respondent and requested the Tribunal to take certain measures.
131.
In conformity with the Tribunal’s letter dated 5 February 2015, by letter of 13 February 2015, the Respondent provided its comments on the Claimants’ letter of 3 February and asked the Tribunal to deny the measures requested by the Claimants. Also on 13 February 2015, the Claimants provided further comments on the Respondent’s communication of the same day.
132.
In conformity with the Tribunal’s letter dated 18 February 2015, on 24 February 2015, the Respondent commented on the Claimants’ letter of 13 February 2015.
133.
Also on 24 February 2015, the Claimants informed the Tribunal of yet further allegations of harassment by the Respondent and reiterated their request that the Tribunal take appropriate measures. In particular, the Claimants informed the Tribunal of the death of Mr. Rakhat Aliyev.
134.
On 27 February 2015, the Tribunal noted in particular the Parties’ "agreement with and unfailing commitment to the fundamental premise that any party to an arbitration must adhere to certain procedural duties, including to conduct itself in good faith and not to aggravate the dispute". The Tribunal further drew the Parties’ attention to their obligations as expressed in paragraph 154 of the Tribunal’s Decision on the Claimants’ Request for Provisional Measures dated 4 December 2014.
135.
On 20 March 2015, the Respondent submitted its Counter Memorial on Jurisdiction and the Merits (the "Counter Memorial"), in conformity with the Tribunal’s letter of 4 March 2015. The Counter Memorial was accompanied by fact witness statements of (i) Mr. Mirbulat Ongarbaev; (ii) Mr. Andrey Kravchenko; (iii) Ms. Natalya Galantsova; (iv) Ms. Olga Semenishina; (v) Mr. Aleksandr Kim; and (vi) Mr. Sami Derekh. The Counter Memorial was further accompanied by expert reports of (i) IFM on Compliance; (ii) IFM on Reserves; (iii) Mr. Mangat Thapar; (iv) Prof. Kulyash Ilysova; (v) Prof. Martha Brill Olcott; (vi) Prof. Hadi Slim; and (vii) Vladimir Brailovsky. Moreover, the Counter Memorial contained a request that the Tribunal bifurcate the proceedings and decide the issue of jurisdiction in a separate award.
136.
Also on 20 March 2015, the Claimants informed the Tribunal of further alleged acts of harassment by the Respondent, namely relating to the Respondent’s alleged involvement in demonstrations targeting the Hourani family that took place in London on 19 June 2014 and 16 November 2014, and made a corresponding application for provisional measures.
137.
On 31 March 2015, the Respondent replied to the Claimants’ correspondence dated 20 March 2015, requesting the Tribunal to deny any provisional measures and instruct the Claimants to stop aggravating the present dispute by filing unsubstantiated allegations. The Claimants commented on the Respondent’s communication by email of 2 April 2015.
138.
By letter dated 3 April 2015, the Claimants objected to the Respondent’s request for bifurcation and exercised their option to waive the Reply Memorial. The Claimants also proposed a procedural calendar providing for the evidentiary hearing to take place in November 2015.
139.
Concerning the Claimants’ request for provisional measures as formulated in their correspondence of 20 March and 2 April 2015, as well as the Respondent’s request set forth in its email of 31 March 2015, the Tribunal denied both Parties’ requests by letter dated 9 April 2015.
140.
Concerning its request for bifurcation, on 13 April 2015, the Respondent commented on the Claimants’ objections to bifurcation and submitted that if the Respondent’s request were denied, the Tribunal should split the hearing in two to safeguard the Respondent’s due process rights, with the Claimants’ opening statement and examination of fact and expert witnesses taking place in November 2015 and the Respondent’s opening statement and examination of fact and expert witnesses, followed by cross-examinations, taking place in February 2016.
141.
By letter dated 27 April 2015, the Tribunal denied the Respondent’s requests to bifurcate the proceedings and to split the hearing in two. As an alternative solution, the Tribunal proposed the submission by the Parties of Skeleton Arguments prior to the evidentiary hearing.
142.
By letter of 13 May 2015, the Respondent rejected the Tribunal’s alternative suggestion of Skeleton Arguments and reiterated its request to split the hearing in two. By letter of the same day, the Claimants accepted the Tribunal’s proposal for Skeleton Arguments and suggested a procedural calendar for the ensuing conduct of the proceedings up until the hearing.
143.
On 20 May 2015, the Tribunal confirmed its decision to deny splitting the hearing in two and granted the Respondent a further opportunity to express its view on the Claimants’ proposal for a procedural calendar.
144.
On 26 May 2015, the Parties agreed on a schedule limited to the document production phase, which was approved by the Tribunal on 28 May 2015.
145.
On 5 June 2015, pursuant to Section 15 of PO1, as amended by the Tribunal’s letter of 28 May 2015, the Parties exchanged requests for the production of documents.
146.
By letter dated 30 June 2015, the Respondent requested an extension of its 3 July 2015 deadline until 24 July 2015 "to provide responses along with any applicable objections to Claimants’ over 150 requests".
147.
On 1 July 2015, the Tribunal granted the Claimants leave to comment on the Respondent’s request of 30 June 2015 and suspended the 3 July 2015 deadline "for now", extending it until 13 July 2015.
148.
In conformity with the Tribunal’s letter of 1 July 2015, on 6 July 2015 the Claimants objected to the extension of the Respondent’s deadline. However, the Claimants stated that "[a]lternatively, the Arbitral Tribunal is requested to reject the Respondent’s request for an extension of time, at least insofar as documents pertaining to jurisdiction are concerned, namely Claimants’ Requests 1 to 3, and grant a part of the extension requested by Respondent for the remaining documents […]".
149.
By letter of 8 July 2015, the Tribunal modified the procedural timetable for this arbitration, including for the document production procedure, providing for separate document production procedures for documents pertaining to jurisdiction, on the one hand, and the remaining documents, on the other hand. At the end of the document production procedure on jurisdiction, on 24 July 2015, the Tribunal issued Procedural Order No. 2 on the Claimants’ Document Production Requests on Jurisdiction ("PO2").
150.
In parallel to the document production procedure on jurisdiction, by letter of 3 June 2015, the Claimants requested leave to produce on the record certain documents that were allegedly publicly available on the internet and that were part of around 60,000 documents that were obtained through the hacking of the Respondent’s government systems and later leaked on a publicly available website known as "KazakhLeaks". The Respondent immediately objected to the transfer of the Claimants’ letter to the Tribunal.
151.
On 8 June 2015, the Secretary to the Tribunal informed the Parties that the Claimants’ letter of 3 June 2015 had been transmitted to the Tribunal, albeit without attachments, upon the Tribunal’s request.
152.
In conformity with the Tribunal’s letter of 10 June 2015, on 17 June 2015, the Respondent submitted its comments to the Claimants’ letter of 3 June 2015, together with a legal opinion by Monsieur le Batonnier Bernard Vatier on the admissibility of the leaked documents (which the Respondent referred to as "stolen documents"). At the end of its letter of 17 June 2015, the Respondent requested that the Tribunal:

• Order that all of the Stolen Documents, including the 11 Stolen Documents, are inadmissible in this Arbitration;

• Order specifically that the Privileged Stolen Documents, including the 4 Privileged Stolen Documents, are inadmissible in this Arbitration;

• Order that Claimants, as well as their experts and witnesses, may not rely upon, refer to or make use of any of the Stolen Documents, including the 11 Stolen Documents;

• Order specifically that Claimants, as well as their experts and witnesses, may not rely upon, refer to or make use of any of the Privileged Stolen Documents, including the 4 Privileged Stolen Documents;

• Declare that the summaries of the 11 Stolen Documents in Claimants’ Letter are inadmissible and will not be taken into account or relied upon by the Tribunal and cannot be relied upon by Claimants; and

• Should the Tribunal grant Claimants an opportunity to respond to this letter prior to the Tribunal’s decision on admissibility, order Claimants to address only the issue of the admissibility of the Stolen Documents without any further reference to or discussion of the contents of those documents.

153.
In conformity with the Tribunal’s letter of 22 June 2015, on 29 June 2015 the Claimants commented on the Respondent’s letter of 17 June 2015. Enclosed with the Claimants’ letter was the legal opinion of Monsieur le Batonnier Jean-Marie Burguburu.
154.
On 3 July 2015, the Respondent submitted further comments on the Claimants’ letter of 29 June 2015, together with an additional legal opinion by Monsieur le Batonnier Vatier. The Respondent maintained its request for relief as set out in its letter of 17 June 2015.
155.
On 6 July 2015, the Claimants commented on the Respondent’s letter of 3 July 2015.
156.
On 27 July 2015, the Tribunal issued its Decision on the Claimants’ Request for the Production of "Leaked Documents", authorizing the submission by the Claimants on the record of non-privileged leaked documents, but not of privileged leaked documents (namely privileged attorney-client communications).
157.
On 31 July 2015, the Respondent wrote that it would not be able to comply with document production request No. 2 in PO2, because the documents responsive to this request were privileged (namely the so-called "Client-Attorney Email") and confidential.
158.
Following the Respondent’s letter of 31 July 2015, by letter dated 3 August 2015, the Claimants requested a clarification with respect to the Tribunal’s Decision on the Claimants’ Request for the Production of "Leaked Documents", namely as to whether particular documents, namely the so-called "Requested Email", should be considered as admissible non-privileged documents, or rather non-admissible privileged documents.
159.
In response to the Respondent’s letter of 31 July 2015, on 12 August 2015, the Tribunal confirmed that, as a privileged document, the "Client-Attorney Email" was inadmissible as evidence in this arbitration. The Tribunal invited the Claimants to provide further comments with respect to the other allegedly confidential documents responsive to document production request No. 2 (on jurisdiction) in PO2.
160.
By letter of 14 August 2015, the Respondent submitted a Supplemental Request for the Production of Documents by the Claimants.
161.
By letter of the same date, with respect to the Claimants’ Document Request No. 2 (on jurisdiction), the Claimants put into question the privileged nature of the Client-Attorney Email and requested the production of an earlier version of said email, the so-called "Non-Privileged Email". The Claimants set forth the following prayer for relief:

On the basis of the foregoing, Claimants respectfully request that, with respect to Claimants’ Document Request No. 2:

i. Respondent be ordered to produce the Non-Privileged Email (i.e. the earlier non-privileged version of the Client-Attorney Email identified by Claimants) and alternatively, that Claimants be allowed to place on the record this Non-Privileged Email, which should be declared admissible for the reasons set out in the Tribunal’s decision of July 27, 2015;

ii. Respondent be ordered to produce a privilege log, as originally ordered by the Tribunal, for all documents in respect of which the Respondent can establish the existence of attorney-client privilege; and

iii. Respondent be ordered to produce all Documents that are not attorney-client privileged, redacting, if necessary and with full explanations, the portions of the documents that are privileged.

162.
In the same letter, regarding their Document Request No. 3 (on jurisdiction), the Claimants reserved their right to request negative inferences.
163.
On 19 August 2015, the Respondent commented on the Claimants’ request for clarification of 3 August 2015. In particular, the Respondent submitted that the Tribunal should consider the so-called Requested Email as privileged and thus inadmissible as evidence. The Respondent set forth the following prayer for relief:

[...] the Republic respectfully requests the Tribunal to:

◦ Declare that the Requested Email, including both the Cover Email and the Attached Documents, is inadmissible on the record and will not be taken into account or relied upon by the Tribunal and cannot be relied upon by Claimants in the Arbitration; and

◦ Should the Tribunal grant Claimants an opportunity to respond to this letter prior to the Tribunal’s decision on admissibility of the Requested Email, order Claimants to address only the issue of the admissibility without any further reference to or discussion of the contents of this document.

164.
Moreover, by letter of 21 August 2015, the Respondent commented on the Claimants’ letter dated 14 August 2015. Concerning in particular the Claimants’ Document Request No. 2 (on jurisdiction), the Respondent reiterated that both the Client-Attorney Email and its earlier version (the so-called "Non-Privileged Email") were covered by attorney-client privilege and thus inadmissible as evidence. The Respondent further stated that it would not be in a position to produce a privilege log as requested by the Claimants. Regarding the Claimants’ possible future request for negative inferences in relation to their Document Request No. 3 (on jurisdiction), the Respondent also reserved its right to respond thereto.
165.
On 25 August 2015, the Claimants replied to the Respondent’s letter of 19 August 2015 regarding the Requested Email. In particular, the Claimants reiterated that the Requested Email was not protected by any privilege and requested the Tribunal to admit it in its entirety.
166.
On 26 August 2015, the Tribunal issued its decision on the admissibility of the Client-Attorney Email/the Non-Privileged Email. The Tribunal reconfirmed its earlier decision to afford privileged documents the utmost protection. On this basis, the Tribunal confirmed its decision that the Client-Attorney Email/the Non-Privileged Email should not be admissible as evidence and relied upon in this arbitration, subject however to the Claimants choosing to submit such documents to an independent expert for assessment. Moreover, the Tribunal took note of the Parties’ respective reservations of rights regarding possible future requests for negative inferences in relation to the Claimants’ Document Request No. 3 (on jurisdiction).
167.
By letter of 27 August 2015, the Claimants commented on the Respondent’s request for the production of additional documents, submitting that such additional requests were inadmissible and unjustified.
168.
By letter dated 28 August 2015, the Claimants requested the Tribunal to order the Respondent to produce a privilege log in conformity with the Tribunal’s orders in PO2.
169.
On 29 August 2015, the Respondent submitted further comments on the Claimants’ letter of 25 August 2015 regarding the admissibility as evidence of the Requested Email. In particular, the Respondent insisted that the Requested Email was covered by attorney-client privilege and thus inadmissible as evidence. The Respondent also confirmed the prayer for relief set forth in its letter of 19 August 2015.
170.
In addition to PO2 on the Claimants’ Document Production Requests on Jurisdiction dated 24 July 2015 and its Decision on the Claimants’ Request for the Production of "Leaked Documents" dated 27 July 2015, on 31 August 2015, Tribunal issued its Procedural Order No. 3 on the Parties’ Remaining Document Production Requests ("PO3").
171.
By letter of 1 September 2015, the Tribunal granted the Claimants’ request set forth in their letters dated 3 and 25 August 2015 and authorized the production of the Requested Email, including its attachments. The Respondent’s request for the Tribunal to declare the Requested Email inadmissible was denied. However, the Tribunal stated that it would accept the submission of the Requested Email to an independent expert for assessment.
172.
In its letter of 2 September 2015, the Respondent reiterated its position regarding its refusal to produce a privilege log with respect to certain confidential information.
173.
In response to the Tribunal’s decision dated 1 September 2015, on 7 September 2015 the Respondent informed the Tribunal of its intention to submit the Requested Email to an independent expert for assessment. At the same time, the Respondent asked the Claimants to refrain from producing the Requested Email pending the resolution of this matter.
174.
Concerning the issue of the privilege log, on 8 September 2015, the Tribunal confirmed its order in PO2 with respect to the Claimants’ document production Request No. 2 (on jurisdiction) that the Respondent should produce a privilege log for the documents for which it claimed confidentiality.
175.
Following a request for clarification by the Claimants, also on 8 September 2015, the Tribunal clarified that the Claimants should not produce the Requested Email pending the independent expert’s assessment as to the confidential nature of the Requested Email.
176.
Furthermore, on 8 September 2015, the Claimants wrote to the Tribunal to inform it of further alleged acts of harassment by the Respondent against the Claimants. In their letter, the Claimants set forth the following request for relief:

Based on the foregoing, Claimants:

- (i) Submit that the launch of any further criminal procedures or the expansion thereof, or investigations since the Decision on Provisional Measures dated December 4, 2014, targeting the Houranis, in London, the U.S. or elsewhere, would constitute a breach of Kazakhstan’s obligation not to aggravate this dispute and/or jeopardize Claimants’ preparation of the Hearing, and (ii) request the Tribunal to order Respondent to disclose any such criminal complaints and/or investigations;

- Request the Tribunal to order Respondent to produce any direct and/or indirect communications between government officials, including the KNB, and Mr. Adonis Derbas and/or Mr. Serik Medetbekov that led Mr. Medetbekov to send the messages to Mr. Adonis Derbas referred to in his voice message of August 25, 2015. These documents are relevant and material to further demonstrate that Kazakhstan is still harassing the Hourani family worldwide and moreover to protect Claimants’ procedural safeguards; and

- Request the Tribunal to direct Respondent to refrain from taking any measures that would further aggravate the dispute or impair in any way the right of Claimants to prepare their claims and defenses in view of the upcoming submissions and hearings.

177.
On 11 September 2015, the Parties simultaneously informed the Tribunal on the progress of the production of documents and the due diligence undertaken in this respect, in conformity with the Tribunal’s orders in PO3.
178.
On 14 September 2015, the Tribunal issued Procedural Order No. 4 on the Respondent’s Supplemental Document Production Requests ("PO4").
179.
Also on 14 September 2015, the Claimants filed a Supplemental Request for the Production of Documents by the Respondent.
180.
Thereafter, by letter dated 16 September 2015, the Claimants informed the Tribunal that they were not aware of any further leaked documents aside from the ones that the Tribunal was made aware of through the Claimants’ letter of 3 June 2015. Therefore, the Claimants declared that they would not make any application for the production of any further leaked documents.
181.
On 17 September 2015, the Claimants submitted their Defense on Jurisdiction (the "Defense on Jurisdiction"), pursuant to the Tribunal’s instructions of 8 July 2015.
182.
On 18 and 22 September 2015 respectively, the Respondent and the Claimants commented on the adverse Parties’ alleged compliance or failure to comply with their respective document production obligations and made requests for corresponding negative inferences.
183.
In conformity with their agreement, on 25 September 2015, each Party put on the record the documents it wished to produce arising out of the document production phase. Moreover, on 28 September 2015, the Claimants produced further documents that it had inadvertently failed to produce on 25 September 2015.
184.
Also on 28 September 2015, each Party identified the factual and expert witnesses of the Adverse Party whom it intended to examine at the evidentiary hearing. Furthermore, the Claimants requested the Tribunal to order the production of two additional witnesses, namely Messrs. Akchulakov and Batalov, which the Respondent had not presented before the Tribunal as witnesses.
185.
In a further letter dated 28 September 2015, the Respondent responded to the Claimants’ requests for provisional measures set forth in their letter of 8 September 2015 and to their Supplemental Request for the Production of Documents dated 14 September 2015. In the letter’s conclusion, the Respondent requested the Tribunal to

(i) Reject in their entirety Claimants’ requests for provisional measures;

(ii) Reject Claimants’ Supplementary Document Request in its entirety;

(iii) Strike Ex. C-348 to Ex. C-350 from the record; and

(iv) Should the Tribunal decide to entertain Claimants’ allegations that Adonis Derbas is somehow seeking to extort the Houranis upon instructions of the Republic, the Republic respectfully requests that the Tribunal order forensic analysis of all the communications involving the Houranis, Adonis Derbas and Serik Medetbekov. This should include the production of all the "WhatsApp" and other messages of Devincci Hourani’s mobile phones to check all relevant elements. Such production could be made in the hands of the Tribunal which would order a forensic expert to proceed with all the appropriate examinations.

The Republic further respectfully requests that it be awarded the costs it has incurred in connection with Claimants’ requests for provisional measures, including but not limited to legal fees and expenses and expert fees and expenses.

186.
In another letter dated 28 September 2015, the Tribunal addressed the issues that arose out of the Parties’ respective communications concerning the Parties’ compliance with their disclosure obligations pursuant to PO3. Moreover, the Tribunal noted the Parties’ respective requests for negative inferences, referring a decision thereon to the Award.
187.
On 29 September 2015, following the receipt of the Claimants’ Defense on Jurisdiction dated 17 September 2015, the Tribunal granted leave to the Respondent to comment by no later than 7 October 2015 on two jurisdictional issues which appeared new, namely regarding (i) the Tribunal’s discretionary powers to extend (restore) the time-bar period under Article 185 of the Kazakh Civil Code; and (ii) the submission of two legal opinions by members of the Republic of Kazakhstan’s Working Group on the FIL with respect to the alleged registration requirement of foreign investors under the FIL. By letter of the same date, the Claimants commented on the Tribunal’s 29 September 2015 letter.
188.
By letter of 2 October 2015, the Respondent requested the Tribunal to allow the Respondent’s expert, Dr. Thapar, to testify at the evidentiary hearing and participate in an expert conferencing with the Claimants’ expert, Mr. Tiefenthal, even though the Claimants had chosen not to call Dr. Thapar. In addition, the Respondent offered the Tribunal the possibility to call its other expert, Professor Slim, who also had not been called by the Claimants, in order to make a presentation. Finally, regarding yet another of the Respondent’s experts, Professor Olcott, the Respondent asked the Tribunal to rely on her expert report, without it being necessary to hear her at the hearing.
189.
In a separate letter of 2 October 2015, the Respondent informed the Tribunal that, on 25 and 28 September 2015, the Claimants had produced on the record not only documents that arose out of the document production phase, but also several additional documents that did not arise out of this phase, in violation of the Parties’ agreed upon rules in PO1 and principles of due process. The Respondent objected to the Claimants’ filing of such additional documents and requested the Tribunal to strike these documents from the record, except for one document which had already been produced by the Respondent earlier in the proceeding.
190.
By letter of 5 October 2015, the Respondent requested the Tribunal to deny the Claimants’ request to order the Respondent to cause the production of Messrs. Akchulakov and Batalov as witnesses at the evidentiary hearing, submitting, inter alia, that such request was untimely, that Messrs. Akchulakov and Batalov were no longer under the Respondent’s control and authority, and that their testimonies were not relevant and material.
191.
By simultaneous, separate letters of 5 October 2015, both Parties reconfirmed to the Tribunal their inability to produce certain documents pursuant to PO3.
192.
By letter dated 6 October 2015, the Tribunal informed the Parties that it would be minded to grant the Respondent’s request to hear Dr. Thapar’s expert opinion at the evidentiary hearing, subject to the Claimants’ substantiated objection. However, the Tribunal stated that it would not wish to order ex officio to hear Professor Slim’s expert testimony, and confirmed that the oral testimony of Professor Olcott would not be necessary. In the same letter, the Tribunal rejected the Respondent’s request of 2 October 2015 to have several documents excluded from the record of the arbitration and granted the Claimants leave to produce such documents.
193.
Also on 6 October 2015, in a letter that was transmitted to the Tribunal after the latter rendered its decision of the same date, the Claimants objected to the Tribunal calling Dr. Thapar and Professor Slim as witnesses at the hearing. In the conclusion to their letter, the Claimants requested the Tribunal:

(i) to dismiss Respondent’s request contained in its letter of October 2, 2015; (ii) to adhere to the agreed-upon procedure of calling and examining the opposing Party’s witnesses as embodied in Procedural Order No. 1; and (iii) and not to allow post facto defenses of Kazakhstan and supporting oral testimonies such as those of Dr. Thapar and Professor Slim, moreover that have been contradicted by the acts and omissions of Kazakhstan contemporaneous with the facts in dispute and/or which are irrelevant to the points in dispute, to divert the Tribunal’s attention from the material points in dispute.

194.
In a separate letter also dated 6 October 2015, which considered the Tribunal’s 6 October decision, the Claimants reiterated their objections expressed in their prior letter, but stated that they would not object to the Tribunal hearing Dr. Thapar if the Tribunal so insisted upon consideration of the Claimants’ earlier letter.
195.
By letter of 7 October 2015, the Tribunal confirmed its decision of 6 October 2015 to hear Dr. Thapar’s expert advice at the hearing and to not order ex officio to hear Professor Slim’s expert testimony. In the same letter, the Tribunal granted the Claimants’ request to extend the Parties’ deadline to file their Skeleton Arguments until 14 October 2015. As a result, the Tribunal also granted the Respondent’s request to post-pone the pre-hearing conference call until the week of 19 October 2015.
196.
Also on 7 October 2015, in conformity with the Tribunal’s instructions, the Respondent submitted its comments on the two jurisdictional issues highlighted by the Tribunal in its letter dated 29 September 2015.
197.
On 8 October 2015, the Tribunal wrote to the Parties regarding the nomination of a person to act as an expert to assess whether the Requested Email, including the attachments thereto, was privileged and confidential. In particular, the Tribunal suggested several persons it would be ready to appoint as expert.
198.
By letter of 9 October 2015, in conformity with the Tribunal’s letter of 6 October 2015, the Claimants reiterated their request that the Tribunal order the Respondent to cause Messrs. Akchulakov and Batalov to appear for examination at the hearing.
199.
On 12 October 2015, the Respondent requested the Tribunal to order the Claimants to cause the production of Messrs. Kassem Omar, Fadi Hussein and Hussam Hourani to testify at the hearing and to draw negative inferences should the latter fail to do so.
200.
By letter dated 13 October 2015, the Tribunal ordered the Respondent to cause Messrs. Akchulakov and Batalov to appear as witnesses at the hearing.
201.
By a separate letter of the same date, the Tribunal confirmed that the pre-hearing conference call would take place on 23 October 2015 at 18:30 (Paris time). In the same letter, the Tribunal also decided several hearing organizational matters, inter alia, that the hearing time would be split equally between the Parties and that each Party would have a total time at the hearing of 29 hours.
202.
On 14 October 2015, following the Tribunal’s decision to grant each Party 29 hours of hearing time, the Respondent notified the Tribunal and the Claimants that it would call Professor Slim on its own time so that he would be able to make a presentation and answer the Tribunal’s questions.
203.
Also on 14 October 2015, the Parties simultaneously submitted their respective Skeleton Arguments, in conformity with the Tribunal’s letter of 7 October 2015.
204.
By letter dated 16 October 2015, the Claimants requested the Tribunal to deny the Respondent’s request for an order to cause the Claimants to produce Messrs. Kassem Omar, Fadi Hussein and Hussam Hourani to testify at the hearing.
205.
In a separate letter of the same date, the Claimants requested the Tribunal to dismiss the Respondent’s request contained in its letter of 14 October 2015 as to the participation of Professor Slim in the hearing.
206.
On 19 October 2015, the Tribunal invited the Parties to each submit a list of 15 exhibits that the Parties considered most fundamental to their respective case and that they wished the Tribunal to have studied and to have available for review during the hearing.
207.
Also on 19 October 2015, the Respondent submitted an errata sheet with respect to certain matters in its submissions that needed correction. The Respondent also requested the authorization to produce the registration card of the MEMR log book for the outgoing 25 March 2007 Notice of Breach, filed as Exh. R-121 in the Caratube I arbitration.
208.
In a separate letter of the same date, the Respondent confirmed that Messrs. Akchulakov and Batalov would be available and willing to testify at the hearing. In the same letter, the Respondent reiterated its request that the Tribunal order the Claimants to cause the production of Messrs. Kassem Omar, Fadi Hussein and Hussam Hourani to testify at the hearing and to draw negative inferences if they failed to appear.
209.
Moreover, on 19 October 2015, the Parties communicated to the Tribunal their joint agreement on the expert to be appointed by the Tribunal to assess whether the Requested Email, together with the attachments, was privileged and confidential.
210.
By letter dated 20 October 2015, the Tribunal informed the Parties that it would be minded to grant the Respondent’s request to produce the registration card of the MEMR log book for the outgoing 25 March 2007 Notice of Breach, subject to the Claimants’ objections.
211.
In a separate letter of the same date, the Tribunal decided to not prevent the Respondent from calling on Professor Slim to make an oral presentation at the hearing "as part of the Respondent’s team and on the Respondent’s own time".
212.
In yet another letter of 20 October 2015, the Claimants submitted their comments on the Respondent’s letter of 28 September 2015 concerning the Claimants’ request for provisional measures and their Supplementary Document Production Request. In the conclusion to their letter, the Claimants requested that the Tribunal

- grant in full Claimants’ Supplementary Document Production Request as detailed at paragraph 7 of Claimants’ Letter dated September 14, 2015;

- preserve Exhibits C-348 to C-350 on the record;

- reject Respondent’s request for the Tribunal to order a forensic analysis of all communications between, inter alia, Messrs. Devincci Hourani and Adonis Derbas; and

- strike out from the record Exhibit R-182 introduced by Respondent with its September 28, 2015 letter.

213.
By letter of 21 October 2015, the Tribunal decided to order the Claimants to cause Messrs. Kassem Omar and Fadi Hussein to appear as witnesses at the hearing, but not Mr. Hussam Hourani.
214.
On the same day, the Respondent reacted to the Tribunal’s letter of 20 October 2015 to clarify that Professor Slim would not act as part of the Respondent’s Counsel team, but as an independent expert, and that he would not take part in the Respondent’s opening statement as suggested by the Claimants. The Respondent further clarified that it requested Professor Slim to be allowed to make a 30 minute expert’s presentation or warm-up at the hearing, on the Respondent’s own time, and be available for questions from the Tribunal and from the Claimants.
215.
Also on 21 October 2015, the Claimants accepted the production by the Respondent of the registration card of the MEMR log book for the outgoing 25 March 2007 Notice of Breach. At the same time, the Claimants requested leave to produce as evidence a letter from President Mahmoud Abbas to Dr. Hamid Gharavi dated 4 December 2014. The Respondent promptly agreed to the Claimants introducing said letter into the record, which they did on 22 October 2015.
216.
On 22 October 2015, the Tribunal decided to allow Professor Slim to make a 30 minute expert presentation at the hearing, on the Respondent’s own time, and be available for questions from the Tribunal and the Claimants.
217.
By a separate letter of 22 October 2015, the Tribunal denied the Claimants’ Request for Provisional Measures as set forth in their letter of 8 September 2015. With respect to the costs incurred in connection with this request for provisional measures, the Tribunal found that each Party should bear its own costs, whereas the Tribunal’s costs would be determined in the Final Award. The Tribunal also denied the Claimants’ Supplemental Document Production Request set forth in their letter dated 14 September 2015. Moreover, the Tribunal denied the Respondent’s request to strike Exhibits C-348 to C-350 from the record, as well as the Claimants’ request to strike Exhibit R-182 from the record. Finally, the Tribunal also denied the Respondent’s request for an order of a forensic analysis of all the communications involving the Houranis, Adonis Derbas and Serik Medetbekov.
218.
By letter dated 23 October 2015, the Claimants informed the Tribunal that Mr. Kassem Omar would be willing, under certain conditions, to appear at the hearing. However, Mr. Fadi Hussein refused to appear at the hearing.
219.
In conformity with the Tribunal’s letter of 13 October 2015 and the Parties’ agreement, the pre-hearing conference call took place on 23 October 2015 at 18:30 (Paris time). The participants in the conference call were as follows:

Members of the Tribunal:

Dr. Laurent Levy Prof. Laurent Aynes Dr. Jacques Sales

ICSID Secretary:

Ms. Milanka Kostadinova

Assistant to the Tribunal:

Dr. Silja Schaffstein

Participating on behalf of the Claimants:

Dr. Hamid G. Gharavi, Derains & Gharavi Ms. Nada Sader, Derains & Gharavi Mr. Sergey Alekhin, Derains & Gharavi Ms. May Khoury, Derains & Gharavi Ms. Iryna Glushchenko, Derains & Gharavi

Participating on behalf of the Respondent:

Mr. Peter M. Wolrich, Curtis, Mallet-Prevost, Colt & Mosle LLP Mr. Geoffroy Lyonnet, Curtis, Mallet-Prevost, Colt & Mosle LLP Ms. Gabriela Alvarez Avila, Curtis, Mallet-Prevost, Colt & Mosle LLP Mr. Jerome Lehucher, Curtis, Mallet-Prevost, Colt & Mosle LLP Mr. Jeremy Eichler, Curtis, Mallet-Prevost, Colt & Mosle LLP

220.
Among other issues, the Parties agreed during the telephone conference to the appointment of Mr. Marc-Olivier Langlois as independent confidentiality advisor to assess the privileged and confidential nature of the Requested Email, including the attachments thereto.
221.
As also agreed during the pre-hearing conference call, by letter dated 24 October 2015 the Respondent expressed its wish to assure the Tribunal and Mr. Fadi Hussein that the Respondent would welcome Mr. Hussein’s appearance as a witness at the hearing and that such appearance would not and could not have any negative effects upon him.
222.
Following-up on the pre-hearing conference, on 26 October 2015, the Tribunal rendered a decision with respect to the scope of witness examinations by the Parties during the hearing.
223.
On the same day, the Parties submitted their lists of exhibits, pursuant to the Tribunal’s letter dated 19 October 2015.
224.
Also on 26 October 2015, the Claimants applied to (i) request leave to put on the record and rely at the hearing on four additional legal authorities; (ii) request leave to put on the record for informational purposes the witness statement produced by Mr. Fadi Hussein in the Caratube I arbitration; (iii) warn against the Tribunal’s decision to broaden the scope of the witness examination of Mr. Issam Hourani’s; (iv) address the Tribunal’s decision dated 22 October 2015 to allow Professor Slim to speak as an expert during the hearing, in particular request that the scope of Professor Slim’s expert presentation be limited to questions of Lebanese law that he addressed in his capacity as a legal expert; and (v) provide bullet points of the Claimants’ preliminary remarks as announced at Section I of their Skeleton Argument.
225.
By email of 27 October 2015, the Claimants requested that the Respondent issue a letter assuring that it would "refrain from harassing, threatening or prosecuting Mr. Kassem Omar and his family on the basis of any act that took place prior to, and during, his testimony".
226.
By letter dated 28 October 2015, the Respondent commented on the Claimants’ requests set forth in their letter of 27 October 2015. In particular, (i) the Respondent had no objections to the Claimants’ request to produce four additional legal authorities into the record; (ii) the Respondent also had no objections to the Claimants’ request to put on the record Mr. Fadi Hussein’s Caratube I witness statement, provided however that the latter would testify at the hearing; (iii) with respect to the Claimants’ concerns regarding the scope of Mr. Issam Hourani’s examination at the hearing, the Respondent submitted a list of issues for Mr. Issam Hourani’s cross-examination based upon documents signed by or referring to him; (iv) with respect to the scope of Professor Slim’s presentation, the Respondent insisted that Professor Slim be allowed to present his three expert opinions and be available for questioning with respect thereto. The scope of his presentation should therefore be limited by what he developed in his reports, rather than by "questions of Lebanese law"; and (v) regarding the appearance of Mr. Kassem Omar, the Respondent stressed that it would stand by its international obligations as set out in the ICSID Convention. The Respondent also confirmed that it would welcome Mr. Kassem Omar’s appearance as a witness at the hearing and that such appearance would not and could not have any negative effects upon him.
227.
By communications of the same date, the Claimants identified the topics on which they wished to examine Messrs. Akchulakov and Batalov; the Respondent identified the topics on which it wished to examine Mr. Kassem Omar.
228.
Also by letter of 28 October 2015, the Tribunal formally requested Mr. Fadi Hussein to appear as a witness at the hearing.
229.
By email of 29 October 2015, the President of the Tribunal (i) granted the Claimants’ request to produce four additional legal authorities into the record; (ii) granted the Claimants’ request to put on the record Mr. Fadi Hussein’s Caratube I witness statement, provided however that Mr. Fadi Hussein appeared to testify at the hearing; (iii) decided to limit the scope of Professor Slim’s presentation to his expert reports; and (iv) took note of the Respondent’s assurances with respect to Mr. Kassem Omar’s appearance as witness at the hearing.
230.
On 30 October 2015, Me Langlois issued his Report on the Application of Legal Privilege to the "Requested Email", concluding that while the "Cover Email" was not covered by privilege, the two documents attached to the Cover Email (the "Attached Documents") were indeed protected by the attorney-client privilege and the work product doctrine.
231.
Moreover, by email of 30 October 2015, Mr. Fadi Hussein informed Counsel for the Claimants that he would not appear at the hearing.
232.
By letter dated 31 October 2015, the Claimants requested leave from the Tribunal to place four further documents on the record. The Claimants further requested the Tribunal to rule on their request in time so as to allow the Claimants to rely on these documents during their opening statement on 2 November 2015. Furthermore, the Claimants requested that Professor Slim not be allowed to attend the hearing until his turn has come to testify.
233.
By email of the same day, the President of the Tribunal made use of his powers under PO1 to render an urgent decision, subject to later reconsideration by the full Tribunal. In particular, the President provisionally authorized the Claimants, until the Respondent had commented on the Claimants’ request and the full Tribunal rendered a decision, to make use of the documents in question, in particular during the opening statement, subject to a decision of reconsideration and provided that the Claimants made available at the opening of the hearing a sufficient number of copies of the documents.
234.
By letter also dated 31 October 2015, the Respondent requested the Tribunal to deny the Claimants’ requests of 31 October 2015. Alternatively, the Respondent set forth the following relief:

If for any reason the Tribunal were to grant Claimants’ request, the Republic requests, as a simple matter of due process, that it be accorded the right to respond to these documents properly after the hearing and requests the Tribunal to grant to Republic the following:

1) The right to provide a written reply with respect to these documents;

2) The right to produce documents and expert evidence in rebuttal;

3) The right to conduct its own forensic expertise of HS-38 as to the signing by Hussam Hourani of this document, including an order from the Tribunal requesting Claimants to produce whatever original documents the forensic expert requires for this purpose.

In light of the Republic’s objection, we respectfully submit that Claimants should not be allowed to use these new documents in any manner until the Tribunal shall have decided the matter.

235.
By email of 1 November 2015, the President of the Tribunal confirmed the full Tribunal’s agreement to the President’s decision to allow the Claimants’ filing of the documents. The Tribunal further granted the Claimants leave to comment during the hearing on the Respondent’s alternative requests for relief as set forth in the Respondent’s letter of 31 October 2015.
236.
The evidentiary hearing took place from 2 to 13 November 2015 at the ICC Hearing Centre in Paris. Attending the hearing were:

Members of the Tribunal:

Dr. Laurent Levy, President Prof. Laurent Aynes, Co-Arbitrator Dr. Jacques Sales, Esq., Co-Arbitrator

ICSID Secretariat:

Ms. Milanka Kostadinova, Secretary of the Tribunal

Assistant to the Tribunal:

Dr. Silja Schaffstein

On behalf of the Claimants:

Counsel:

Mr. Hamid Gharavi, Derains & Gharavi

Ms. Nada Sader, Derains & Gharavi

Mr. Sergey Alekhin, Derains & Gharavi

Mr. Solomon Ebere, Derains & Gharavi

Ms. May Khoury, Derains & Gharavi

Ms. Iryna Glushchenko, Derains & Gharavi

Mr. Iacopo Maravigna, Derains & Gharavi

Ms. Anastasia Medvedskaya, Derains & Gharavi

Mr. Lukas Palecek, Derains & Gharavi

Ms. Carmela Viccaro, Derains & Gharavi

Ms. Maritsa Aronstein, Derains & Gharavi

Parties:

Mr. Devincci Salah Hourani

Witnesses:

Mr. Omar Antar Mr. Issam Hourani Mr. Harvey Jackson Mr. Kassem Omar

Experts :

Mr. Sven Tiefenthal Mr. Colin Johnson, Grant Thornton Ms. Pascale Pasquer, Grant Thornton Mr. Sylvain Quagliaroli, Grant Thornton

On behalf of the Respondent:

Counsel:

Mr. Peter M. Wolrich, Curtis, Mallet-Prevost, Colt & Mosle LLP Mr. Geoffroy Lyonnet, Curtis, Mallet-Prevost, Colt & Mosle LLP Ms. Gabriela Alvarez-Avila, Curtis, Mallet-Prevost, Colt & Mosle LLP

Mr. Jerome Lehucher, Curtis, Mallet-Prevost, Colt & Mosle LLP

Ms. Mira Suleimenova, Curtis, Mallet-Prevost, Colt & Mosle LLP

Ms. Svetlana Evliya, Curtis, Mallet-Prevost, Colt & Mosle LLP

Ms. Anna Kouyate, Curtis, Mallet-Prevost, Colt & Mosle LLP

Mr. Yerzhan Mukhitdinov, Curtis, Mallet-Prevost, Colt & Mosle LLP

Ms. Marie-Claire Argac, Curtis, Mallet-Prevost, Colt & Mosle LLP

Ms. Lisa Arpin-Pont, Curtis, Mallet-Prevost, Colt & Mosle LLP

Ms. Olena Stasyk, Curtis, Mallet-Prevost, Colt & Mosle LLP

Mr. Abraham Sosa, Curtis, Mallet-Prevost, Colt & Mosle LLP

Mr. Jeremy Eichler, Curtis, Mallet-Prevost, Colt & Mosle LLP

Ms. Elizabeth Sadiq, Curtis, Mallet-Prevost, Colt & Mosle LLP

Ms. Veronica Akimkanova, Curtis, Mallet-Prevost, Colt & Mosle LLP

Ms. Naira Barsegyan, Curtis, Mallet-Prevost, Colt & Mosle LLP

Mr. Vincent Bouvard, Curtis, Mallet-Prevost, Colt & Mosle LLP

Parties:

Mr. Erlan Tuyakbayev, Director of the Department of State Property Rights of the Ministry of Justice of the Republic of Kazakhstan

Mr. Kazbek Shaimerdinov, Senior Expert of the Department of State Property Rights of the Ministry of Justice of the Republic of Kazakhstan

Mr. Rustem Umurzakov, Senior Assistant to the Prosecutor General of the Republic of Kazakhstan

Witnesses:

Mr. Bolat Akchulakov, General Director of Almex Petrochemical LLP

Mr. Askar Batalov, General Director of Kazinvest Adviser LLP

Mr. Samir Derekh, Honorary Consul of the Syrian Arab Republic in Kazakhstan Mr. Aleksandr Kim, Retired

Mr. Andrey Kravchenko, Deputy Prosecutor General of the Republic of Kazakhstan Ms. Natalya Galantsova, Public notary Mr. Mirbulat Ongarbaev, Retired

Ms. Olga Seminishina, General Director of K&C Audit Consulting LLP

Experts:

Professor Hadi Slim, Professor of Law at Francois-Rabelais University; Member of the Beirut Bar Association

Professor Kulyash Ilyasova, Professor and Chief Researcher at Caspian University Mr. Suresh Chugh, IFM Resources, Inc.

Dr. Mihir Sinha, IFM Resources, Inc.

Ms. Victoria Baikova, IFM Resources, Inc.

Dr. Mangat Thapar, International Geophysical Company, Inc.

Mr. Vladimir Brailovsky, Econom^a Aplicada, S.C.

Court Reporter:

Mr. Trevor McGowan, Court Reporter - The Court Reporter Ltd.

Interpreters:

Ms. Helen Bayless, Interpreter (Russian)

Ms. Ekaterina Dersin, Interpreter (Russian)

Ms. Olga Tammi, Interpreter (Russian)

Mr. Magdy Rizk, Interpreter (Arabic)

Ms. Sarah Rossi, Interpreter (French)

237.
By letter of 20 November 2015, the President of the Tribunal confirmed the various matters discussed and decided at the close of the hearing on 13 November 2015 ("Post-Hearing Order"). In particular, in the Post-Hearing Order the Tribunal asked the Parties to address the following questions in their Post-Hearing Briefs:

Question 1 : What are the implications of Exhibit C-155 of June 1, 2004 according to which Devincci Hourani (i) undertook to "pay, from his own personal income gained as net profit from the sale of the mentioned production, to [JOR] annual instalments of 20 % of the loan amount in addition to 14% interest rate on the above 20%" and (ii) undertook in addition "to pay all loans with the 14% annual interest within 10 years from the beginning of the 2nd year of commercial production."

Question 2 : What conclusion should the Tribunal draw from (i) the testimony of Samir Ali Derekh (who testified to be the Honorary Consul of Syria in Kazakhstan), who testified that the Hourani family were modest people who operated a restaurant in either Almaty or Astana when they arrived in Kazakhstan in the late 80’s or early 90’s, and (ii) the testimony of either Issam or Devincci Hourani, who affirmed that they came from a wealthy Palestinian family?

Question 3 : The Parties are invited to specify whether and how an Annual Work Program (AWP) may modify the obligations set forth in the Minimum Work Program (MWP), and, if so, what specific obligations as extended by the successive AWPs would be breached.

Question 4 : The Respondent may wish to specify which breaches of the extended MWP were committed, namely between 27 May 2007 and the Notice of the Termination of the Contract (assuming that the Respondent could not complain of violations of contractual obligations prior to the extension of the Contract). The fact that this question is addressed more specifically to the Respondent does of course not bar the Claimants from addressing it.

Question 5 : Why do neither Respondent nor CIOC make any reference, in correspondence between them prior to September-October 2007, to the Notice of Breach of March 25, 2007?

In particular:

- why did CIOC not respond to the Notice of Breach of March 25, 2007 before October 3, 2007?

- what probative value should be given to the computer log and the acknowledgement of receipt of the Notice of Breach of March 25, 2007?

- why did the Republic not react, prior to September 2007, to CIOC’s failure to respond to the Notice of Breach of March 25, 2007?

Question 6 : The Contract was extended for two years by the signing of Amendment N° 3 of July 27, 2007, just four months after the Notice of Breach of March 25, 2007 and seven months before the Notice of Termination of February 1, 2008? What comments do the Parties submit on that chronology?

Question 7 : Did the Claimants, in the period preceding the signing of Amendment N° 3 of July 27, 2007, misrepresent to Respondent that a good quality 3D seismic study had been completed? (Assuming, which is in dispute, that the 3D seismic study was defective).

Question 8 : What did the testimonies bring forth with respect to CIOC’s readiness, capacity and willingness to drill deep wells (location, financing, etc.)?

Question 9 : Based on the facts of this case, with respect to the activities carried out by the Claimants during the time the Contract was performed, were such activities in conformity with the Contract and do they qualify as activities of exploration, development and/or production? If it were admitted arguendo that the performance of the Contract by the Claimants was unsatisfactory during the period from 27 May 2002 until 27 May 2007, what is the position of each Party as to how the Claimants’ performance of the Contract has or would have evolved during the extended period until 27 May 2009, as well as a possible further two-year extension of the Contract until 27 May 2011? What legal consequences do the Parties draw from the foregoing?

Question 10 : Explain and comment on the curve presented by Mr. Tiefenthal with respect to the expected oil production starting from the production phase (see Mr. Tiefenthal’s Reserves Report, Figure No. 27): what would have happened during the period between the beginning of 2008 and the commencement of production to justify the ascent of that curve, compared to the results achieved by CIOC at the time of the termination of the Contract?

Question 11 : Is it possible to request the reparation of moral damages with respect to the loss of an investment within the framework of Article 25 of the ICSID Convention? If not, before which court or tribunal should this reparation be requested, assuming that the existence of moral damages is established?

238.
By email of the same date, the Claimants clarified that there was "an ‘element’ of contingency fee, ie a partial one, as opposed to a pure or exclusive contingency fee".
239.
On 23 November 2015, the Respondent wrote to inform that the Assistant of the General Prosecutor of Kazakhstan had been contacted by a person claiming to be Mr. Adonis Derbas, wishing to schedule a meeting to provide information regarding money laundering activities. He also claimed to have received threats and was offered money, including by members of the Hourani family, with a view to convincing him to testify against the Republic of Kazakhstan.
240.
On 15 January 2016, the Secretary of the Tribunal, Ms. Kostadinova, communicated to the Tribunal the corrected final Transcripts of the Hearing, agreed on by the Parties ("Tr.").
241.
Also on 15 January 2016, with reference to the Tribunal’s Post-Hearing Order, the Respondent submitted comments on the Claimants’ Exhibits C-459 to C-462, together with expert evidence and legal authorities. In particular, the Respondent submitted that the Claimants’ documents did not show that Exhibit HS-38, an exhibit attached to Prof. Had Slim’s Second Expert Report, was a fraudulent document.
242.
With reference to the Tribunal’s letter dated 19 January 2016, on 25 January 2016 the Claimants commented on the Respondent’s letter dated 15 January 2016 regarding the Claimants’ Exhibits C-459 to C-462. In particular, the Claimants submitted that the Tribunal should accord Exhibits C-359 to C-462 high evidential value in assessing Exhibit HS-38, which the Claimants considered to be inauthentic.
243.
With reference to the Tribunal’s letter of 27 January 2016, on 2 February 2016, the Respondent commented on certain statements in the Claimants’ letter of 25 January 2016.
244.
In conformity with paragraph 13.1 of PO1 and the Post-Hearing Order, on 4 March 2016, the Parties submitted their first Post-Hearing Briefs, together with annexes containing the Parties’ respective quotes and references. On 13 May 2016, the Parties submitted their Reply Post-Hearing Briefs, together with annexes containing the Parties’ respective quotes and references.
245.
On 17 May 2016, the Claimants requested leave from the Tribunal to place on the record six new documents, which they argued had been recently published on-line and thus discovered by the Claimants. The Respondent objected to the Claimants’ request by letter of 25 May 2016. By letter dated 26 May 2006, the Tribunal granted the Claimants’ request and the Claimants thereafter produced the six new documents on 31 May 2016.
246.
On 13 July 2016, the Parties filed their respective Statement of Costs in accordance with the Tribunal’s Post-Hearing Order and the Parties’ agreement of 12 July 2016 to extend the relevant time limits set forth in the Post-Hearing Order.
247.
On 25 July 2016, the Respondent submitted its Comments on Claimants’ Statement of Costs in accordance with the Post-Hearing Order and the Parties’ agreement of 12 July 2016. By email of 26 July 2016, the Claimants confirmed that they did not intend to provide comments on the Respondent’s Statement of Costs dated 13 July 2016.
248.
By email of 2 August 2016, the Claimants requested leave from the Tribunal to comment on the Respondent’s Comments on Claimants’ Statement of Costs dated 25 July 2016. By email of 3 August 2016, the Respondent objected to the Claimants’ request.
249.
On 4 August 2016, the Tribunal granted the Claimants leave to file their comments on the Respondent’s Comments on Claimants’ Statement of Costs by no later than 15 August 2016. The Respondent was granted leave to rejoin by no later than 26 August 2016.
250.
On 15 August 2016, the Claimants filed their comments on the Respondent’s Comments on Claimants’ Statement of Costs in accordance with the Tribunal’s email of 4 August 2016. Moreover, in conformity with the same email, on 26 August 2016, the Respondent submitted its comments on the Claimants’ letter of 15 August 2016. The Tribunal declared the proceedings closed on 12 September 2017.

IV. THE PARTIES’ PRAYERS FOR RELIEF

A. The Claimants’ Prayer for Relief

251.
In their Request for Arbitration (para. 136) the Claimants request the Tribunal to:

- declare that Kazakhstan has breached its obligations toward Claimants under Customary International Law, the FIL, the BIT and/or the Contract;

- order Kazakhstan to pay damages in favor of Claimants as a result of its breaches in an amount provisionally quantified at above 1 billion US dollars, representing loss of profits and/or loss of shareholder value, representing the fair market value of the seized assets, and for any alternative or supplementary claims that Claimants may raise;

- award moral damages in favor of Claimants for injury to its reputation and for the harassment and percussion they have been, and continue to be, subjected to by Kazakhstan;

- order Kazakhstan to immediately cease its breaches and adverse actions against Claimants;

- order Kazakhstan to pay in favor of Claimants the costs of this arbitration, including all expenses that Claimants have incurred, including all of the fees and expenses of the arbitrators, ICSID, legal counsel, experts and consultants, as well as internal costs;

- order Kazakhstan to pay interest pre-award and post-award at a rate of LIBOR +2 per cent, compounded semi-annually, on the above amounts as of the date these amounts are determined to have been due to Claimants; and

- order any other relief that the Tribunal deems appropriate.

252.
In their Memorial, the Claimants no longer base their claims on the BIT (Memorial, paras. 5-7). Their amended prayer for relief reads as follows (Memorial, para. 584):

584. Claimants respectfully request the Arbitral Tribunal, without prejudice to any other/further claims Claimants might be entitled to in this arbitration, to:

584.1. Find that it has jurisdiction over Mr. Devincci Hourani’s claim under the FIL, and Caratube’s claims under the FIL and/or the Contract;

584.2. Find that Respondent has breached its obligations towards Claimants under international law, the FIL, the Contract and/or Kazakh law;

584.3. Order Respondent to pay Claimants damages in the amount of USD 941.05 million for lost profits due to Respondent’s breaches of its obligations under international law, the FIL, the Contract and/or Kazakh law, which resulted in the taking of Claimants’ investment;

584.3.1. Alternatively, should the Tribunal deem that Claimants are not entitled to compensation on the basis of lost profits, to award Claimants compensation on the basis of the loss of opportunity or chance of making these profits, which Claimants submit is 99% (or any other figure the Tribunal deems appropriate);

584.4. Order Respondent to compensate Claimants in the amount of USD 50,000,000 their moral damages resulting from Respondents’ [sic] breaches;

584.5. Order Respondent to pay Claimants the costs of this arbitration, including all expenses that they have incurred, and including all of the fees and expenses of the arbitrators, ICSID, legal counsel, experts and consultants, as well as Claimant’s [sic] expenses in pursuing this arbitration;

584.6. Order Respondent to pay Claimant [sic] compound interest at a rate of LIBOR +2 compounded semi-annually, to be established on the above amounts as of the date these amounts are determined to have been due to Claimant [sic];

584.7. Order Respondent to pay the above amounts outside of the Republic of Kazakhstan without any right of set-off to Mr. Devincci Hourani, as Claimant and/or majority shareholders; and

584.8 Order any other and further relief as the Arbitral Tribunal shall deem appropriate.

253.
Furthermore, in their Defense on Jurisdiction (paras. 712-713) the Claimants submit the following prayer for relief:

The Relief Sought in relation to Respondent’s Preliminary Objections and Jurisdictional Defenses is simply to reject each and every single one of them with full costs.

254.
Finally, in their Post-Hearing Briefs, the Claimants request the Tribunal to grant the relief sought "at Section X of Claimants’ Memorial" (Claimants’ First Post-Hearing Brief, para. 580; Claimants’ Reply Post-Hearing Brief, para. 346).

B. The Respondent’s Prayer for Relief

255.
In its Counter Memorial (para. 1690) the Respondent requests the following relief:

For the reasons set forth above and to be developed during the further course of these proceedings, all of Claimants’ claims should be rejected in their entirety for lack of jurisdiction. The Republic respectfully requests that the Tribunal decide to bifurcate these proceedings and decide the issues of jurisdiction in a separate Award. In the event that the Tribunal were to find jurisdiction with respect to the claims asserted by either of the Claimants, those claims should nevertheless be dismissed for the substantive reasons set forth above and in this Counter Memorial. Should the Tribunal nonetheless find that the Republic has any liability to either of the Claimants, which the Republic firmly denies, the Tribunal should reject Claimants’ exaggerated damage claims. In addition, Claimants should be ordered to reimburse the Republic for all reasonable costs and expenses relating to this Arbitration including without limitation legal fees and expert fees.

256.
In its First Post-Hearing Brief (p. 136), the Respondent slightly modified its Prayer for Relief to state as follows:

For the reasons set forth above, in the Republic’s Counter Memorial and at the Hearing, CIOC and Devincci Hourani’s claims should be rejected in their entirety for lack of jurisdiction. In the event that the Tribunal were to find jurisdiction with respect to the claims asserted, those claims should nevertheless be dismissed for the substantive reasons put forward by the Republic. Should the Tribunal nonetheless find that Claimants are entitled to damages, which the Republic firmly denies, the Tribunal should reject the exaggerated damage claims of Claimants and only award damages for sunk costs as demonstrated by the Republic. In addition, Claimants should be ordered to reimburse the Republic for all reasonable costs and expenses relating to this Arbitration, including without limitation legal fees and expert fees, and to pay the Republic interest on the amount awarded to the Republic at a reasonable commercial rate as from the date of the Award.

257.
Finally, in their Reply Post-Hearing Brief (para. 178), the Respondent sets forth the following Prayer for Relief:

For the reasons set forth in the course of this Arbitration, the Republic respectfully requests that the Tribunal:

A) dismiss Claimants’ claims based upon the Republic’s preliminary objections on any one or more of the following grounds:

• Claimants’ claims constitute an abuse of process;

• Claimants’ claims are time-barred;

• Claimants’ claims are precluded on the basis of the res judicata principle; and/or

• Claimants’ claims are precluded on the basis of the collateral estoppel principle;

B) if the Tribunal were to find that Claimants’ claims are not to be dismissed on any of the above-mentioned grounds, dismiss:

• CIOC’s claims on any one or more of the following grounds: (i) CIOC did not meet the requirements of Article 25(2)(b) of the ICSID Convention; and/or (ii) CIOC did not make an investment within the meaning of Article 25(1) of the ICSID Convention;

• Devincci Hourani’s claims on the ground that Devincci Hourani did not make an investment within the meaning of Article 25(1) of the ICSID Convention; and

• Claimants’ claims under the FIL on any one or more of the following grounds: (i) Claimants did not make an investment under the FIL; (ii) Claimants do not qualify as a Foreign Investor under the FIL; (iii) there is no binding offer to ICSID arbitration in the FIL; and/or (iv) the FIL was repealed and cannot serve as a basis for ICSID jurisdiction;

C) if the Tribunal were to find that Claimants’ claims are not to be dismissed on any of the grounds mentioned in A) or B) above, dismiss all of Claimants’ claims on any one or more of the following grounds:

• CIOC obtained the extension of the Contract through misrepresentation; and/or

• The Republic rightfully terminated the Contract both as a matter of substance and procedure;

D) if the Tribunal were to find that it has jurisdiction, that CIOC did not obtain the extension of the Contract through misrepresentation and that the Republic wrongfully terminated the Contract:

• determine that Claimants are not entitled to any material damages on the ground that the termination of the Contract did not cause the Claimants any harm;

• in the alternative, dismiss Claimants’ claim for damages for Lost Profits and Lost Opportunity on the ground that Claimants failed to meet their burden of proof with respect to the existence and quantum of such damages;

• also in the alternative, determine (i) that CIOC’s material damages could under no circumstances exceed its sunk investment costs in the amount of USD 4.2 million or (ii) that Devincci Hourani’s material damages could under no circumstances exceed his sunk investment costs in the amount of USD 6,500 under the Full Reparation Standard or 92% of CIOC’s material damages under the FMV Standard, provided that there shall be no double recovery between CIOC and Devincci Hourani;

• reduce any material damages awarded to Claimants by at least 50% to account for their contribution to their alleged losses;

• reduce any damages awarded to Devincci Hourani to account for CIOC’s liability estimated at over USD 30 million; and

• dismiss Claimants’ claim for moral damages;

E) dismiss any and all other requests for relief made by Claimants, including inter alia Claimants’ requests for interest and for an award of costs as well as Claimants’ request that any amounts due to Claimants be paid to Devincci Hourani outside of the Republic without any right of setoff;

F) order Claimants to jointly and severally pay to the Republic all costs and expenses it incurred in relation to this Arbitration, including without limitation the fees and expenses of the Tribunal, legal fees and expert fees, plus interest; and

G) grant the Republic any other relief that the Tribunal deems to be appropriate.

V. DISCUSSION

258.
Following the analysis of preliminary issues (A.), including the applicable substantive law (1.) and the burden of proof (2.), the Tribunal will examine the Respondent’s objections to jurisdiction (B.) before discussing the Claimants’ claims (C.) and requests for damages (D.).
259.
In the course of its deliberations, the Tribunal has considered the positions of the Parties as summarized in the relevant sections of the present Award and as further detailed in their written submissions and oral arguments. The Tribunal has in particular noted the clarifications and specifications made by the Parties during the Hearing. That said, in the analysis that follows, the Tribunal has not considered it necessary to address expressly each and every one of these submissions and arguments for the purpose of this Award. Therefore, to the extent that any of the Parties’ submissions or arguments, relevant for the Tribunal’s findings, are not referred to expressly below, it should not be assumed that these have not been considered by the Tribunal but must be treated as being subsumed into this analysis.

A. PRELIMINARY MATTERS

1. Law applicable to the merits

a. The Claimants’ position

260.
The Claimants submit that the merits of their case are governed by international law and/or the Contract, and alternatively by Kazakh law, regardless of the legal basis of this Tribunal’s jurisdiction.

i. Customary international law

261.
According to the Claimants, customary international law with respect to the treatment of foreign investors and their investments must apply. In particular, the Claimants submit that such rules constitute mandatory rules of international law and form a minimum standard of protection. As such they must apply regardless of any choice of law by the Parties (Memorial, para. 316). The Claimants further argue that under Articles 4(1) and 8 of the Kazakh Constitution, norms of international law are incorporated into Kazakh law (Memorial, paras. 318-319; Claimants’ Reply PostHearing Brief, para. 17). This is further confirmed by Article 1084(1) of the Kazakh Civil Code which provides for the application of "international customs" to "civil relations with participation of foreign individuals or foreign legal entities or involving other foreign element" (Exh. CLA-22).
262.
According to the Claimants, the applicable international law rules include the duty to provide fair and equitable treatment and full protection and security, as well as protection against arbitrary measures and expropriation save for a public purpose and subject to effective, prompt and adequate compensation, and compliance with the principle of proportionality (Memorial, para. 321; Claimants’ Reply Post-Hearing Brief, para. 17).

ii. The Foreign Investment Law

263.
For the Claimants, "[t]he substantive provisions of the FIL apply whether or not jurisdiction is based thereon or on the Contract", because the Contract provides expressly for the application of the FIL (Exh. CLA-2) under Clause 28.4 according to which "[t]he Contractor shall enjoy all guaranties and protections provided by the Law on Foreign Investments" (Memorial, paras. 322 and 559); Claimants’ First PostHearing Brief, para. 299).
264.
According to the Claimants, the applicable substantive provisions of the FIL include (i) the stability clause in Article 6(1) FIL which, in the present case, stabilizes the investors’ investment position for the entire contractual term, namely for at least 32 years; (ii) Article 7 FIL, which protects the Claimants against nationalization, expropriation or any other measure having the same effects on foreign investments without "due process of law", "without discrimination", and "in the payment of immediate, adequate and effective compensation"; (iii) Article 8 FIL, which protects the Claimants against unlawful actions of State bodies and officials; and (iv) Article 9 FIL, which, in combination with Article 7 FIL, provides for a guarantee for compensation in case of expropriation for "losses caused by illegal suspension, restriction or termination of the business activities of a foreign investor" (Memorial, para. 323; Claimants’ First Post-Hearing Brief, para. 300).
265.
The Claimants submit that the FIL’s Most-Favored Nation clause ("MFN") in Article 4(1) FIL is also applicable. It extends to the Claimants’ investments and triggers the application of further rights by virtue of the Respondent’s obligations under other international legal instruments, including the obligation (i) to ensure fair and equitable treatment; (ii) to ensure full protection and security to the Claimants’ investments; (iii) to afford the Claimants’ investments a treatment no less than that required by international law; and (iv) to protect against expropriation, except in certain situations and under certain conditions (Memorial, para. 325; Claimants’ First Post-Hearing Brief, para. 300).

iii. The Contract

266.
The Claimants argue that the Contract may be relied upon regardless of whether the Tribunal will ultimately accept its jurisdiction under the FIL or the Contract, because the FIL imposes, indirectly through the MFN clause, on the Respondent the obligation to "observe any obligations it may have entered into with regard to [the Claimants’] investments" (Memorial, paras. 327 et seq.).

iv. Kazakh law

267.
For the Claimants, "[a] number of Kazahk legislative acts are also relevant to the dispute at hand, including the Kazakh Constitution, the Kazakh Civil Code, the Law on Subsoil, and the Law on Oil" (Memorial, paras. 330 et seq.; Claimants’ First PostHearing Brief, paras. 301-303). With respect in particular to the Subsoil Law, the Claimants submit that the applicable version is the one applicable at the time of the signature of the Contract, namely the Subsoil Law as amended in 1999 (the "1999 Subsoil Law") (Exh. CLA-43). The subsequent amendments of the Subsoil Law are not applicable by virtue of the stabilization clause in Clause 28 of the Contract and several other stabilization guarantees contained for instance in the Subsoil Law itself (Article 71), the FIL (Article 6), and the Kazakh Constitution (Articles 4 and 383(2)).
268.
The Claimants insist that the 1999 Subsoil Law provides very limited grounds for the termination of the Contract, including failure to commence contractual performance on time and substandard production levels. By contrast, the 2004 Subsoil Law, on which the Respondent relies, provides for a "sweeping right to terminate subsoil contracts following any violation, upon failure to conform to notice, granting a reasonable time to cure" (Memorial, para. 335; Claimants’ First Post-Hearing Brief, para. 302).
269.
The Claimants point to Article 45 of the 1999 Subsoil Law, which allegedly provides for separate procedures for the case of the suspension of a contract, on the one hand (Article 45(1)), and its unilateral termination by the Competent Authority, i.e. the MEMR, on the other hand (Article 45(2)) (Memorial, paras. 336 et seq). Because the Contract was never suspended, only Article 45(2) is relevant in the present case.20
270.
In relation with Article 45(2) of the 1999 Subsoil Law, the Claimants also refer to Article 70 of the same law. In particular, according to the Claimants, only if the subsoil user fails to comply with the written notice pursuant to Article 70 of the 1999 Subsoil Law "within the established period", can the MEMR terminate the Contract under Article 45(2) of the 1999 Subsoil Law (Memorial, para. 341).
271.
To determine the meaning of the term "substantial violation" (which the Claimants read as "material breach"), the Claimants rely on Article 401 of the Kazakh Civil Code (Exh. CLA-22), according to which "[a] violation of the agreement by one of the parties shall be deemed material if it entails for the other party such damage that it to a substantial degree loses something on which it had the right to count when concluding the agreement" (Memorial, para. 342).
272.
According to the Claimants, Kazakh scholars generally do not approve of the practice of unilateral termination of contracts by the State, considering it to violate the principle of equality of parties in civil-law relations (Memorial, paras. 343-344).
273.
The Claimants submit that the Kazakh Law on Oil of 28 June 1995 ("Law on Oil") (Exh. CLA-72) is also applicable, in particular Article 29 which regulates the modification and termination of oil contracts.
274.
Finally, the Claimants refer to the substantive and procedural safeguards provided in the 2006 Kazakh Law on Private Entrepreneurship (Exh. CLA-65) (Claimants’ First Post-Hearing Brief, para. 301).

b. The Respondent’s position

275.
According to the Respondent, the law governing the merits of the Claimants’ claims depends on the Tribunal’s jurisdictional basis. In particular, the Respondent argues that (i) the Claimants having withdrawn the BIT as a jurisdictional basis, they cannot create a right to BIT standards through customary international law, the FIL and the Contract, while at the same time avoiding any analysis of these instruments (under which they actually claim rights); (ii) the Claimants cannot assert rights under Kazakh law, international law and the Contract regardless of the Tribunal’s jurisdictional basis. If jurisdiction is found only under the Contract, Mr. Devincci Hourani’s claims must be dismissed as he is not a party to this Contract and therefore has no rights thereunder. Likewise, CIOC’s international law and FIL claims would have to be dismissed as they do not arise from the Contract. This means that the Claimants cannot claim breach of the BIT or of another instrument on the basis of which this Tribunal does not have jurisdiction (Counter Memorial, paras. 1149-1152).
276.
In any event, it is the Respondent’s position that, whatever this Tribunal’s jurisdictional basis may be, neither of the Claimants have any of the rights they allege, namely under customary international law, the FIL and the Contract. In this respect, the Respondent points out that the Claimants assert the alleged rights under customary international law, the FIL and the Contract not to plead any breach of them per se, but rather to assert through them a subsidiary right to plead claims under the standards set out in the BIT. However, the Claimants’ assertion of BIT rights or any other international law rights is necessarily premised on Kazakh law: those rights only exist if the Tribunal first finds that Kazakh law incorporates customary international law or that the Claimants have rights under the FIL and that the FIL incorporates the BIT standards. For the Respondent, neither is true (Counter Memorial, paras. 1154-1157).
277.
In particular, with respect to the Claimants’ claims under customary international law, the Respondent submits that customary international law is not incorporated into Kazakh law (although the principles of Kazakh law are consistent with international law) and it does not include the rights asserted by the Claimants. The Respondent rejects the Claimants’ interpretation of the Kazakh Constitution as directly incorporating certain principles of international law into the Kazakh legal system, and asserts to the contrary that neither Article 4(1) nor Article 8 of the Constitution has the effect of incorporating international principles and norms into Kazakh law. The Respondent points out that the Claimants’ claims are brought under the FIL and the Contract, which includes an express agreement that Kazakh law is the applicable law. For the Respondent, in conformity with Article 42(1) of the ICSID Convention, it is thus clear that only Kazakh law applies to the consideration of the Claimants’ claims under the FIL and the Contract and that customary international law does not apply in this case. Hence, the Claimants’ claims under customary international law are baseless and must fail (Counter Memorial, paras. 1160-1170).
278.
In addition, the Respondent argues that customary international law is limited: first, in the absence of a treaty or other instrument granting rights to an investor equivalent to those granted to states under customary international law (as is the case here), claims based thereon cannot be brought directly by an investor, because customary international law rights, as stand-alone rights, belong to states and must be brought by a state against another state; the investor has no standing to pursue such claims. Second, customary international law does not have the breadth the Claimants contend, the threshold for a finding of a violation of the international minimum standard remaining very high. The Respondent concludes that even if customary international law could apply in this case, it could not be a basis for the Claimants’ claims (Counter Memorial, paras. 1171-1179; Respondent’s Reply Post-Hearing Brief, para. 125).
279.
Furthermore, with respect to the Claimants’ claims under the FIL, it is the Respondent’s position that the provisions in the FIL on which the Claimants rely do not provide for the application of customary international law (Respondent’s Reply Post-Hearing Brief, para. 125). Moreover, as seen in further detail below under paragraph 792, the Respondent submits that neither of the Claimants has any rights under the FIL and in any event the FIL does not include a right to the BIT standards.
280.
Based on the foregoing, the Respondent contends that the only rights at issue in this case are CIOC’s rights under the Contract and rights arising from general principles of Kazakh law (Counter Memorial, paras. 1194-1195).

c. Analysis

281.
This Arbitration is governed by (i) the ICSID Convention; (ii) the 2006 ICSID Arbitration Rules (the "Arbitration Rules"); and (iii) the rules set forth in PO1.
282.
Article 42(1) of the ICSID Convention reads 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.

283.
As was seen earlier, Clause 26 of the Contract contains the following choice-of-law clause:

26.1 This Contract and other agreements signed on the basis of this Contract shall be governed by the law of the State unless stated otherwise by the international treaties to which the State is a party.

26.2 The Contractor shall comply with the international standards for protection of the environment in the Contract Area.

284.
The Parties agree that Clause 26.1 of the Contract provides for the application of Kazakh law. Therefore, in accordance with the terms and specifications set forth in Article 42(1) of the ICSID Convention and Clause 26.1 of the Contract, as well as the considerations set forth below at paragraphs 286 et seq., the Tribunal finds that it must apply Kazakh law to resolve disputes arising under the Contract.
285.
It is recalled that Mr. Devincci Hourani is not a party to the Contract and, thus, the choice of law in Clause 26.1 does not apply to him. That said, for the reasons set forth below in paragraphs 689 et seq., the Tribunal finds that it does not have jurisdiction over Mr. Devincci Hourani’s claims. Therefore, the question of the law governing his claims becomes moot.
286.
The Claimants do not object to the application, as a matter of principle, of Kazakh law. Indeed, at the Hearing, Counsel for the Claimants stated that "Kazakh law [...] [is] a good law [...] it’s a wonderful law, and we ask you to apply it" (Tr. Day 1, p. 166, lines 14-15 and p. 167, line 3). However, the Parties are in dispute over the specific provisions of Kazakh law to be applied by this Tribunal, as well as their interpretation. The Tribunal will determine the applicable provisions of Kazakh law, their content, scope and interpretation in the relevant passages of this Award.
287.
Moreover, the Claimants object to the Respondent’s contention that this Tribunal must only apply Kazakh law, to the exclusion of customary international law and the FIL. As was seen above, the Claimants submit that this Tribunal must also apply customary international law and the FIL, irrespective of whether this Tribunal finds jurisdiction under the Contract or the FIL.21
288.
Regarding customary international law, at first sight Article 42(1) of the ICSID Convention would appear to suggest that international law cannot be applied in the presence of a choice of law clause in favor of a particular domestic law, without any mention of international law. However, in accordance with the opinions expressed by a number of authors, including Professor Schreuer (Exh. CLA-53), this Tribunal opines that it would not be appropriate and in accordance with the context, system and goals of the ICSID Convention to disregard international law as a consequence of the choice of law clause in Clause 26.1 of the Contract. Observing "a general reluctance [among Tribunals applying Article 42(1) of the ICSID Convention] to abandon international law in favor of the host State’s domestic law", Professor Schreuer pertinently states as follows:

The complete exclusion of standards of international law as a consequence of an agreed choice of law pointing towards a domestic legal system would indeed lead to some extraordinary consequences. It would mean that an ICSID tribunal would have to uphold discriminatory and arbitrary action by the host State, breaches of its undertakings which are evidently in bad faith or amount to a denial of justice as long as they conform to the applicable domestic law, which is most likely going to be that of the host State. It would mean that a foreign investor, simply by assenting to a choice of law, could sign away the minimum standards for the protection of aliens and their property developed in customary international law. Such a solution would hardly be in accordance with one of the goals of the Convention, namely ‘.promoting an atmosphere of mutual confidence and thus stimulating a larger flow of private international capital into those countries which wish to attract it’.

[…]

The weight of the arguments outlined above strongly militates in favour of the preservation of the international minimum standards, even in the absence of a reference to international law in a choice of law clause. Apart from the highly undesirable results that may arise from a complete disregard for international law and the incompatibility of such a course of action with the purpose and overall system of the Convention, it is doubtful whether this problem can be adequately dealt with in terms of choice of law. The mandatory rules of international law, which provide an international minimum standard of protection for aliens, exist independently of any choice of law made for a specific transaction. They constitute a framework of public order within which such transactions operate. Their obligatory nature is not open to the disposition of the parties. This assertion is quite different from questions of applicable law under the conflict of laws. International law does not thereby become the law applicable to the contract. The transaction remains governed by the domestic legal system chosen by the parties. However, this choice is checked by the application of a number of mandatory international rules such as the prohibition of denial of justice, the discriminatory taking of property or the arbitrary repudiation of contractual undertakings".22

289.
In support of his opinion, Professor Schreuer points to a number of ICSID cases where international law was thus taken into consideration, even in the presence of a choice of law in favor of a domestic law. Professor Schreuer further states that "ICSID tribunals have frequently applied rules of customary international law either under the first or second sentence of Art. 42(1)".23
290.
Accordingly, the Tribunal finds that it cannot disregard, but must take into account international law, in particular mandatory rules of international law, when deciding the present dispute. In accordance with Clause 26.1 of the Contract, this Tribunal will apply Kazakh law to the merits of the dispute as the law chosen by the Parties. However, in doing so, it will afford a supplemental and corrective function to international law, supplementing and informing the Parties’ choice of law by the application of relevant international law rules.24
291.
Given that this Tribunal finds that it can take into consideration international law on the basis of Article 42(1) of the ICSID Convention, in addition to applying the law chosen by the Parties, the Tribunal considers that it can take into account international law irrespective of whether it finds jurisdiction under the Contract or the FIL.
292.
The Tribunal will determine the applicable customary international law principles as well as their content and scope in the relevant passages of this Award.
293.
The Parties have debated the question of whether international law, in particular customary international law, could also be applied on the basis that it forms part of Kazakh law, namely by means of Articles 4(1) and 8 of the Kazakh Constitution or Article 1084(1) of the Kazakh Civil Code.
294.
In the opinion of the Tribunal, the issue can ultimately remain undecided as the Tribunal finds that it can take into consideration international law, namely customary international law, on the basis of Article 42(1) of the ICSID Convention.
295.
Finally, regarding the FIL, it is undisputed that the Contract provides in Clause 28.4 that "[t]he Contractor shall enjoy all guaranties and protections provided by the Law on Foreign Investments". For the reasons set forth below in paragraphs 627 and 652 et seq., the Tribunal finds that, by means of Clause 28.4 of the Contract, the substantive guarantees and protections provided under the FIL in any event apply between CIOC and the Respondent in their contractual relations in the capacity of supplementary contractual provisions. For the Tribunal, it can thus dispense with examining whether the FIL also applies independently of the Contract.

2. Burden of proof

a. The Claimants’ position

296.
The Claimants assert that the Respondent has the burden of proof of all preliminary objections, namely the affirmative defenses of collateral estoppel, res judicata, statute of limitations and abuse of process. However, the Claimants disagree with the Respondent’s position as regards the latter’s other jurisdictional objections, that is ratione personae, ratione materiae and ratione voluntatis. According to the Claimants, in light of the circumstances of this case, especially the ICSID clause contained in the Contract and the fact that Mr. Devincci Hourani has been a US national since July 2001 and registered as the owner of CIOC since 2004, there is a quasi-irrefutable presumption in favor of this Tribunal’s jurisdiction. It is therefore the Respondent who bears the burden of proof to overcome this presumption and successfully raise a challenge to jurisdiction.
297.
Furthermore, the Claimants submit that, contrary to the Respondent’s allegation, the Caratube I award does not contradict the Claimants’ position but rather supports it. It discussed the burden of proof issue exclusively in relation to the BIT and also flagged that in the presence of an ICSID clause, there is a strong presumption in favor of jurisdiction so that it would be for the Respondent to challenge jurisdiction.
298.
For the Claimants, this presumption in favor of jurisdiction is reinforced by the fact that the Respondent argued in the Caratube I arbitration, that is after the dispute had been in existence for some time already, that CIOC should have based jurisdiction on the ICSID clause in the Contract rather than on the BIT. The Respondent further threatened during the annulment proceedings that it would bring a counterclaim in an arbitration based on the Contract’s ICSID clause. Moreover, the Claimants submit that the Respondent’s reliance in the Caratube I arbitration on the Contract’s ICSID clause constitutes a waiver by the Respondent of its right to raise a jurisdictional challenge based on that clause (Defense on Jurisdiction, paras. 40-49).

b. The Respondent’s position

299.
The Respondent distinguishes between the burden of proof (or burden of persuasion) and the burden of producing evidence. The burden of proof requires the party who submits a claim, an affirmative defense or a counterclaim to prove the facts it alleges in support of its claim, affirmative defense or counterclaim. The burden of proof as to the Claimants’ claims thus lies exclusively with the Claimants throughout this case; and it never shifts. They have a duty to show that it is more probable than not, by a preponderance of evidence, that the facts they allege are true. In other words, they have to prove the factual basis of each of their claims as a whole and the Tribunal should decide, in consideration of the evidence presented by both Parties, whether the Claimants have discharged their burden of proof. If the Claimants fail to successfully discharge their burden of proof on an issue, such issue should be decided to their detriment (Counter Memorial, paras. 25-31; Respondent’s First Post-Hearing Brief, paras. 21-26).
300.
In response to the Claimants’ argument that this Tribunal should take "limited access to documents into consideration when assessing the evidence and the question of the burden of proof", the Respondent argues that the Claimants have the burden of proving their allegations (which the Respondent disputes) that relevant documents on which they seek to rely were seized by the Respondent, that they did not have access to those documents and that those documents were never returned to the Claimants (Counter Memorial, paras. 32-34). According to the Respondent, in any event, even if the Tribunal were to admit that certain specific and relevant documents were in the sole possession of the Respondent, the Claimants would still have the burden of proof with respect to all of their claims, while the burden of presentation of evidence with regard to those documents could be on the Respondent (Counter Memorial, paras. 35-36).
301.
According to the Respondent, while it has the burden of proving the four affirmative defenses to jurisdiction (i.e. abuse of process, statute of limitations, collateral estoppel and res judicata), the Claimants must show that this Tribunal has jurisdiction over the present dispute pursuant to the instruments under which the Claimants bring their claims. This was also confirmed by the Caratube I tribunal. This is not altered by the fact that the Respondent has raised objections to this Tribunal’s jurisdiction (Counter Memorial, paras. 37-44; Respondent’s Reply PostHearing Brief, para. 41).
302.
In particular, the Respondent submits that CIOC must demonstrate that (i) the parties agreed to treat CIOC as a foreign national and that Mr. Devincci Hourani has control over CIOC; (ii) CIOC made an investment within the meaning of Article 25(1) of the ICSID Convention; and (iii) CIOC meets the jurisdictional requirements under the FIL and/or the Contract. In turn, Mr. Devincci Hourani has the burden to prove that, inter alia, (i) he made an investment in CIOC within the meaning of the ICSID Convention; and (ii) he meets the jurisdictional requirements under the FIL (Counter Memorial, paras. 45-46). In this respect, the Respondent points out that the Caratube I tribunal found that there was "not sufficient evidence of exercise of actual control over CIOC by Devincci Hourani" (Counter Memorial, para. 48) and that he did not make an investment within the meaning of the ICSID Convention. It is the Respondent’s position that the Claimants have not satisfied their burden of proof in that they have not even established a prima facie case for jurisdiction. Moreover, a mere showing of prima facie jurisdiction does not shift the burden of proof, which remains with the proponent. When all of the evidence is submitted to the Tribunal by the parties, after the shifting of the burden of producing evidence, the Tribunal must decide, in light of all of the evidence, whether the moving party has met its burden of proof by a preponderance of the evidence.
303.
The Respondent rejects the Claimants’ argument according to which the Respondent has the burden of proof as regards jurisdiction because there would be some allegedly quasi-irrefutable presumption of jurisdiction. According to the Respondent, even if the existence of such a presumption were established, this would only shift the burden of producing evidence, but not the ultimate burden of proof by a preponderance of the evidence, which continues to lie unchangeably with the Claimants (Counter Memorial, paras. 48-49; Respondent’s First Post-Hearing Brief, paras. 24-26; Respondent’s Reply Post-Hearing Brief, para. 41).
304.
The Respondent further argues that the Claimants must prove the merits of their claims, in particular that the Respondent has committed the alleged breaches on which the Claimants’ claims rest. This implies proof, not only that the Respondent breached its obligations, but also that the Respondent owed such obligations to the Claimants in the first place (Counter Memorial, paras. 50-53).
305.
Moreover, according to the Respondent, the Claimants also have the burden of proving that they suffered the alleged damages and that those damages are the consequence of the alleged breaches. They also have the burden of proof with respect to the quantum of the alleged damages, in particular that such damages are not speculative and uncertain (Counter Memorial, paras. 54-58).
306.
In summary, the Respondent submits that the Claimants have the burden of proving that "(i) the Tribunal has jurisdiction over the dispute, (ii) the Contract was wrongfully terminated by the Republic, (iii) this wrongful termination by the Republic was due to State action and not to the Republic’s actions as a co-contractor, (iv) the Republic acted in contravention of each of the various substantive provisions of the FIL or the Contract under which Claimants are bringing their claims and (v) any damages allegedly suffered by Claimants was caused by the Republic’s conduct and actually existed in the amount claimed by Claimants" (Counter Memorial, para. 60). It is the Respondent’s position that the Claimants have not met their burden of proof with respect to any of the above (Respondent’s Reply Post-Hearing Brief, para. 42).

c. Analysis

307.
Regarding the issue of the burden of proof, the Parties agree that the Respondent has the burden of proof with respect to its affirmative defenses of collateral estoppel, res judicata, statute of limitations and abuse of process. The Parties also agree that, in general, the Claimants have the burden of proof of the merits of their claims, including the alleged damages.
308.
The Parties are in disagreement over which Party has the burden of proving this Tribunal’s jurisdiction ratione personae, ratione materiae and ratione voluntatis pursuant to the jurisdiction granting instruments relied upon by the Claimants, namely the ICSID Convention coupled with the Contract and the FIL. In other words, the question is which Party bears the burden of proving that the requirements set forth in those instruments are met in the present case. While the Claimants submit that "the burden of proof is squarely on the [Respondent]" (Defense on Jurisdiction, para. 47), namely in the presence of a "quasi-irrefutable" presumption in favor of jurisdiction, the Respondent on the other hand insists that "the burden of proof lies squarely on Claimants to demonstrate that this Tribunal has jurisdiction", namely that "the jurisdictional requirements under Article 25 of the ICSID Convention and under the consent-granting documents, i.e., the FIL and the Contract, are satisfied" (Counter Memorial, para. 43).
309.
For the reasons set forth below, the Tribunal finds that the Claimants have the burden of proving that this Tribunal has jurisdiction.
310.
The Claimants do not appear to dispute the general premise that a claimant has the burden of proving that all the requirements for the tribunal’s jurisdiction are met. They do not take issue with the authorities relied upon by the Respondent in support of this general premise. However, the Claimants suggest that, in the circumstances of the present case, the burden of proof has shifted to the Respondent, in particular in the presence of "the crystal-clear ICSID clause contained in the Contract", the Respondent’s reliance in the Caratube I arbitration on the "exclusive jurisdiction clause in the contract"25 and its affirmation that it would bring counterclaims in an arbitration based on that clause,26 and the undisputable fact that Mr. Devincci Hourani is of US nationality and the registered owner of CIOC since well before the occurrence of the present dispute. For the Claimants, in these circumstances there is a "quasi-irrefutable" presumption in favor of this Tribunal’s jurisdiction and the Respondent thus has the burden of proof to overcome it.
311.
The Claimants do not rely on any authorities in support of their position. Rather, they assert that their position is confirmed by the Caratube I tribunal who allegedly found that "in the presence of an ICSID clause there is a strong presumption in favor of jurisdiction, and therefore that the burden of proof is on the Respondent to challenge jurisdiction in the presence of such a clause" (Defense on Jurisdiction, para. 46).
312.
The Tribunal cannot follow the Claimants’ line of argument. The Caratube I award merely declared in general terms that in many cases an ICSID arbitration clause contained in an investment contract has been held to imply an agreement to treat a locally incorporated company as a national of another Contracting State and that such an agreement has been considered to give that company standing in the dispute. The Caratube I tribunal further stated that, unlike an investment contract, the acceptance of an offer to arbitrate contained in an investment treaty "cannot create an assumption that the claimant fulfills the conditions of that offer" (Exh. CLA-8, para. 331). However, the Caratube I tribunal did not go beyond such general statements. In particular, it did not pronounce itself on the question of whether the ICSID clause in the Contract in the present case would create any presumption (let alone a "strong" or "quasi-irrefutable" one) in favor of jurisdiction. Rather, it pointed out that the ICSID clause in the Contract had not been relied upon by the Claimants.
313.
Moreover, the Caratube I tribunal did not find that the existence of a "strong presumption" in favor of jurisdiction would give rise to a shift of the burden of proof to the Respondent to show that the jurisdictional requirements are not met. To the contrary, with respect to the burden of proof, the Caratube I tribunal rejected the argument of the strong presumption in favor of the specific question of existence of foreign control and concluded that "the burden is on Claimant to show that it fulfils the criteria set out by Article 25(2)(b) of the ICSID Convention and Article VI(8) of the BIT". The Caratube I tribunal therefore endorsed the general premise (undisputed by the Claimant in the Caratube I arbitration) "that Claimant bears the burden of proof to establish that the Tribunal has jurisdiction over the present dispute" (Exh. CLA-8, paras. 363-368).
314.
In light of the foregoing, the Tribunal finds that the Claimants have provided no persuasive reason that would justify shifting to the Respondent the burden of proving this Tribunal’s jurisdiction. That said, the Tribunal observes that the Parties seem to agree that the burden of producing evidence, defined by the Respondent as the "obligation of each party to produce evidence in support of its arguments as a case progresses" (Counter Memorial, para. 28), may shift between the parties depending on the nature and strength of the evidence presented by each party in support of their respective arguments.
315.
The Claimants have submitted that "they have limited and incomplete case documentation in their possession and no inventory even of the missing documents" and that this Tribunal should take such limited access to documents into consideration when assessing the evidence and the question of the burden of proof "to the extent necessary, when and where appropriate" (Memorial, para. 32). While the Respondent has not taken issue with the Rumeli and Vivendi cases relied upon by the Claimants in support of their assertion, it stresses however that the Claimants must demonstrate (but failed to do so) that relevant documents on which they seek to rely were seized, that they did not have access to those documents and that those documents were never returned to them. Furthermore, the Respondent stresses that, in any event, the burden of proof is still on the Claimants to prove their claims and does not shift to the Respondent, although the latter could be held to bear the burden of presenting specific, relevant documents in its sole possession (Counter Memorial, paras. 32-35).
316.
It is noted that the tribunal in the Vivendi case found that the evidence produced by the claimants was incomplete, but that "it is well settled that the fact that damages cannot be fixed with certainty is no reason not to award damages when a loss has been incurred" and that when settling damages "approximations are inevitable".27 In the Rumeli case, on the other hand, the tribunal was faced with the question of the weight to be given to circumstantial evidence, particularly with regard to allegations of collusion, and found that "[i]t is undisputable that submission of direct evidence on these points is very difficult". The Rumeli tribunal also referred to the case in AAPL v Sri Lanka where an ICSID tribunal listed international rules regarding evidence and concluded that "in cases where proof of a fact presents extreme difficulty, a tribunal may thus be satisfied with less conclusive proof, i.e. prima facie evidence". Finally, the Rumeli tribunal noted that it would consider the party’s attitude in the proceedings, namely as to drawing adverse inferences from the parties’ behavior.28
317.
Concerning first of all the assessment of evidence, this Tribunal generally refers to Article 34(1) of the ICSID Arbitration Rules according to which the Tribunal shall be the judge of the probative value of any evidence adduced.
318.
With respect to the Claimants’ allegation that their access to documents has been limited and incomplete in this case due to the behavior of the Respondent, namely various alleged acts of harassment, including the seizure of documents belonging to CIOC, the Tribunal agrees in principle with the Respondent that the Claimants must prove their allegations. At the same time, the Tribunal finds that it may take into consideration a party’s diligence in discharging its burden of proof, as well as the good faith or lack thereof on the part of the other party. In this regard, it is worth noting that both Parties have a duty to contribute to the manifestation of the truth, including a duty to abstain from any behavior designed to prevent the other party from proving its case. The Tribunal may thus take into consideration the fact that a party did not have access to its documents and give the appropriate weight to this circumstance when assessing the evidence produced on the record. As was just seen, this approach is corroborated by the decisions in the Rumeli and AAPL cases. Having said this, the Tribunal will determine in the relevant passages of this Award whether the Claimants have met their burden of proof in light of the foregoing considerations "if and to the extent necessary, when and where appropriate" (Memorial, para. 32).
319.
In line with the foregoing, the Tribunal further agrees in principle with the Respondent that while the burden of proof thus is on the Claimants to prove their claims, the Respondent could be held to bear the burden of presenting specific and relevant documents in its possession. In this regard, as noted by the tribunal in the Rumeli case, negative inferences may be drawn as a result of a Party’s failure to abide with their burden to produce specific, relevant documents. The Tribunal refers to its earlier correspondence (e.g. its second letter of 28 September 2015) where it declared that it would consider in its Award any motivated requests for negative inferences as set forth in the post-hearing briefs. Both Parties have made such requests in their post-hearing briefs. The Tribunal has considered these requests where appropriate in this Award, even though it has not considered it necessary to address expressly each and every one of them. Therefore, to the extent that any of the Parties’ requests for negative inferences, relevant for the Tribunal’s findings, are not referred to expressly below, it should not be assumed that these have not been considered by the Tribunal but must be treated as being subsumed into the Tribunal’s analysis.
320.
Finally, the Claimants argue that the Respondent has waived its right to object to the Tribunal’s jurisdiction, namely by arguing that the Respondent itself "affirmatively and officially clearly relied on the ICSID clause that it executed, and that such reliance occurred moreover once the dispute had arisen" (Defense on Jurisdiction, paras. 10 and 48).
321.
In particular, the Claimants refer to the following extract of the Respondent’s Counter Memorial in the Caratube I arbitration where the Respondent allegedly relied on the ICSID clause in the Contract to object to the Caratube I tribunal’s jurisdiction under the BIT:

This provision [Clauses 27.2 and 27.3 of the Contract] shows that the Parties fully intended that all disputes arising from this Contract would be resolved via the means provided for in the Contract and not through the Treaty. This freely negotiated provision memorializes the agreement of the parties presently before this Tribunal and as such it is evidence of their mutual intent to be bound by an agreement to settle all disputes arising from the Contract in one of two arbitral fora. Specifically, the Contract provides that such disputes should be resolved in an ICSID arbitration or, if for some reason ICSID arbitration is not possible, in an ad hoc arbitration under the UNCITRAL Rules. The Parties’ careful planning and clear intent to commit to settling disputes arising from the Contract pursuant to the Contract is abundantly shown by the fact that not only is ICSID arbitration included, UNCITRAL arbitration is also included as a back-up provision. The comprehensive structure of this dispute resolution mechanism proves that the Parties intended to leave nothing open to surprise and intended to provide a mechanism to resolve all disputes arising from the Contract.

(Exh. R-24, para. 58).

322.
The Claimants further rely on the following extract of the hearing transcript in the Caratube I arbitration:

[…] if you find that this was a contractual wrongful termination as opposed to a sovereign act, is that there is an exclusive jurisdiction clause in the contract, and we submit that that clause should apply to ordinary contractual claims. This Tribunal does have jurisdiction over treaty claims, but we submit that any decision on ordinary contractual claims would be ultra vires as this Tribunal has been constituted.

[…]

Finally, we’ve also maintained as a jurisdictional objection that CIOC has waived its right to bring contract claims in the treaty arbitration, to the extent that you were to find that these are contract claims as opposed to treaty claims, and that’s because of the exclusive jurisdiction clause in the contract which I mentioned to you earlier by which CIOC waived its right to bring claims arising from the contract in a treaty claim forum as opposed to a contract claim forum.

(Exh. C-351, p. 190, lines 13-21 and p. 194, lines 10-19)

323.
Finally, the Claimants rely on the following extract of the hearing transcript in the annulment proceedings:

The other point that I should mention in passing: they are implying that the reason they didn’t bring the suit under the contract was because it was so obvious that there was jurisdiction under the ICSID Convention. Well, we all know very well that if you are suing under a BIT under the ICSID Convention, the state cannot make counterclaims in the same proceeding, whereas if you are suing under a contract, the state can make counterclaims in the same proceeding. My own interpretation is that that was the reason why the contract wasn’t raised as a source of jurisdiction. And in this new case there will be counterclaims by the state -- I can assure you of that -- and that’s something which obviously they hoped to avoid by trying to convince the Tribunal that there was ICSID jurisdiction. But that’s speculation.

(Exh. C-352, p. 84, lines 9-24)

325.
The Tribunal agrees that the Respondent’s reliance in the Caratube I arbitration on the ICSID clause in the Contract is significant and cannot be ignored, the Respondent insisting that the parties before the Caratube I tribunal, i.e. CIOC and the Republic of Kazakhstan, had clearly expressed their agreement in that clause to settle all disputes arising out of the Contract in an ICSID arbitration or, alternatively, an UNCITRAL arbitration. However, the Tribunal cannot quite follow the Claimants’ argument that in objecting to the Caratube I tribunal’s jurisdiction by relying on the ICSID clause in the Contract the Respondent waived its right to raise any objection to this Tribunal’s jurisdiction based on that clause. In particular, for the Tribunal, while the Respondent’s reliance on the ICSID clause in the Caratube I arbitration certainly goes far, it does not go as far as asserting that there would have been jurisdiction had the tribunal been established under the ICSID clause in the Contract. In other words, while the Respondent argued in the Caratube I arbitration that CIOC should have initiated an ICSID arbitration based on Clause 27 of the Contract, in doing so, the Respondent did not clearly and unambiguously accept the validity of that Clause or state that it would accept the jurisdiction of an ICSID tribunal seized on the basis of Clause 27 of the Contract. To the contrary, as in this Arbitration, in the Caratube I arbitration the Respondent argued that the conditions under Article 25(2)(b) of the ICSID Convention were not met, such as the requirement of actual control by Mr. Devincci Hourani over CIOC.
326.
Therefore, the Tribunal will examine the Respondent’s jurisdictional objections in the following chapter of this Award.

B. JURISDICTION

327.
As a preliminary remark, the Tribunal points out that it has adopted the Parties’ characterizations and thus subsumes under the heading "jurisdiction" what they have themselves dealt with under that heading.
328.
In the present chapter, the Tribunal will first examine whether it is precluded from examining its jurisdiction based on one of the preliminary "jurisdictional" objections raised by the Respondent, namely (1.) abuse of process; (2.) statute of limitations; (3.) collateral estoppel; or (4.) res judicata. Assuming that this is not the case, the Tribunal will then examine whether it has (5.) jurisdiction over CIOC’s claims based on Article 25 of the ICSID Convention and one of the consent-granting instruments, i.e. the Contract and/or the FIL; and (6.) jurisdiction over Mr. Devincci Hourani’s claims based on Article 25 of the ICSID Convention and the FIL.
329.
Before delving into this analysis however, the Tribunal notes that there is a dispute between the Parties as to whether the Respondent has raised its objections to the Tribunal’s jurisdiction in a timely fashion (see Memorial, para. 521. See also the Tribunal’s letter of 27 April 2015 and the Parties’ preceding exchange of correspondence, namely the Claimants’ letter of 3 April 2015 and the Respondent’s letter of 13 April 2015 regarding the Respondent’s request for bifurcation).
330.
The Respondent claims that this is the case and that its four preliminary objections have been submitted in accordance with paragraph 14.3 of PO1 and Rule 41 of the ICSID Arbitration Rules. In addition, the Respondent insists that its jurisdictional objections are "very serious indeed and were clearly identified at the First Session" (Counter Memorial, paras. 61-65).
331.
Paragraph 14.3 of PO1 reads as follows:

The Respondent reserved the right to request bifurcation of jurisdictional issues after the first round of pleadings. If this matter is raised by the Respondent and accepted by the Claimants or the Tribunal, an alternative calendar shall be prepared at that time.

332.
Furthermore, Rule 41(1) of the ICSID Arbitration Rules provides as follows:

Any objection that the dispute or any ancillary claim is not within the jurisdiction of the Centre or, for other reasons, is not within the competence of the Tribunal shall be made as early as possible. A party shall file the objection with the Secretary-General not later than the expiration of the time limit fixed for the filing of the counter-memorial, or, if the objection relates to an ancillary claim, for the filing of the rejoinder— unless the facts on which the objection is based are unknown to the party at the time.

333.
Based on these provisions, the Tribunal finds that the Respondent was entitled to file its jurisdictional objections - at the latest - with its Counter Memorial, as it did. The Tribunal therefore considers that the Respondent’s jurisdictional objections were raised in a timely fashion.

1. Abuse of process

a. The Respondent’s position

334.
According to the Respondent, the Claimants’ claims constitute an abuse of process in that (i) the Claimants have abused the international arbitration system by engaging in improper claim-splitting and bringing repetitive claims where those claims could and should have been brought in one proceeding; and (ii) Mr. Devincci Hourani is bringing a claim even though no investment in good faith from him exists (Counter Memorial, para. 106; Respondent’s First Post-Hearing Brief, paras. 27-35).
335.
The Respondent submits that a tribunal acting under the ICSID Convention can apply the doctrine of abuse of process and declare a claim inadmissible in order to prevent the abusive exercise of a valid procedural right and the resulting abuse of the ICSID system. The Respondent points to Articles 41 and 44 of the ICSID Convention, which, according to the Respondent, have often been referred to by ICSID tribunals when analyzing the abuse of process doctrine. Referring to several cases where tribunals have applied general international law, in particular the principles of good faith and abuse of right, the Respondent asserts that "there can be no doubt that the doctrine of abuse of right is not only applicable in an ICSID arbitration, it is a duty of a tribunal sitting pursuant to the ICSID Convention to protect the integrity of the ICSID system and thus to enforce the doctrine of abuse of process" (Counter Memorial, paras. 107-120).
336.
It is the Respondent’s position that the Claimants’ claims in this arbitration are brought in violation of the abuse of process principle because both of the Claimants could and should have brought all of their claims in the Caratube I arbitration. The claim to ICSID jurisdiction in the Caratube I arbitration turned on essentially the same subject matter as in the present one. And the facts underlying the two cases on which the claim to ICSID jurisdiction is based are identical, i.e. that CIOC is controlled by Mr. Devincci Hourani and that the latter made an investment in an objective sense. Moreover, the Respondent alleges that at the time of bringing the Caratube I arbitration, both of the Claimants were already aware of and able to bring all of their claims, which arose from the same alleged facts as the ones now relied on, but they chose not to do so for no explicable reason. Therefore, it is the Respondent’s position that the Claimants did not bring all of their claims already in the Caratube I arbitration "for no apparent reason other than to preserve its opportunity to bring the serial claim it now has brought", and such conduct constitutes an abuse of the system of international arbitration. This applies to both of the Claimants, with the Respondent pointing out that Mr. Devincci Hourani, who was not a party to the Caratube I arbitration, was nevertheless an active participant in that arbitration, attending the First Session, submitting written witness statements, and attending the hearing on jurisdiction and the merits during which he was also examined. It is on this basis that the Respondent requests this Tribunal "to dismiss CIOC’s claims, because CIOC could have invoked the FIL and the Contract as bases for ICSID jurisdiction during the Caratube I Arbitration and by electing not to invoke them committed an abuse of process. Similarly, Mr. Devincci Hourani, who actively participated during the Caratube I Arbitration, tactically chose not to be a Claimant and his claims must equally be dismissed to avoid an abuse of process". For the same reasons, the Tribunal should also declare the withdrawal of Mr. Devincci Hourani’s claim under the BIT as having been with prejudice (Counter Memorial, paras. 121-132).
337.
The Respondent rejects the Claimants’ argument according to which they are entitled to bring their claims again because the Caratube I tribunal denied jurisdiction. For the Respondent, the fact that the Claimants’ substantive underlying rights were not affected by the Caratube I award does not explain their failure to bring all the bases of alleged consent to ICSID jurisdiction at once. The Respondent insists that the additional bases of consent to ICSID jurisdiction do not cure the flaws that made the Caratube I tribunal dismiss ICSID jurisdiction and therefore there is no justification for the Claimants’ serial jurisdictional claims (Respondent’s First PostHearing Brief, paras. 29-30).
338.
Furthermore, for the Respondent, Mr. Devincci Hourani is abusing the ICSID system by asserting jurisdiction based on an alleged investment arising from his ownership of CIOC when there is already a finding by the Caratube I tribunal that Mr. Devincci Hourani did not make an investment in CIOC. Moreover, it is the Respondent’s position that Mr. Devincci Hourani’s claims should be dismissed because he is nothing more than a frontman and his purported acquisition of CIOC was a transaction devoid of bona fides, with the result that the present Arbitration constitutes an attempt by Mr. Devincci Hourani to abuse the ICSID system. In support of this position, the Respondent points to Cementownia "Nowa Huta" S.A. v Turkey (Exh. RL-31) and Europe Cement Investment & Trade S.A. v Republic of Turkey (Exh. RL-30), which the Respondent describes as "of particular importance in the analysis of the doctrine of abuse of process" (Counter Memorial, paras. 133140; Respondent’s First Post-Hearing Brief, paras. 32-33). In the Cementownia case, the tribunal concluded that

The Claimant has intentionally and in bad faith abused the arbitration; it purported to be an investor when it knew that this was not the case. This constitutes indeed an abuse of process. In addition, the Claimant is guilty of procedural misconduct: once the arbitration proceeding was commenced, it has caused excessive delays and thereby increased the costs of the arbitration. (Exh. RL-31, para. 159)

339.
Moreover, in the Europe Cement case, the tribunal, referring to the Inceysa and Phoenix cases, noted that:

In [those] cases, the lack of good faith was present in the acquisition of the investment. In the present case, there was in fact no investment at all, at least at the relevant time, and the lack of good faith is in the assertion of an investment on the basis of documents that according to the evidence presented were not authentic. The Claimant asserted jurisdiction on the basis of a claim to ownership of shares, which the uncontradicted evidence before the Tribunal suggests was false. Such a claim cannot be said to have been made in good faith. If, as in Phoenix, a claim that is based on the purchase of an investment solely for the purpose of commencing litigation is an abuse of process, then surely a claim based on the false assertion of ownership of an investment is equally an abuse of process. (Exh. RL-30, para. 175)

340.
The Respondent observes that the Caratube I tribunal already assessed the evidence of Mr. Devincci Hourani’s alleged investment, which is the same evidence as now before this Tribunal, and found that such investment did not exist. In this regard, the Respondent draws special attention to the following findings of the Caratube I tribunal:29
341.
First, Mr. Devincci Hourani, as a newly naturalized US citizen, acquired his stake in CIOC for the total amount of USD 6,500, and the Caratube I tribunal observed that when this transaction (on paper) took place, CIOC was already a holder of the Contract for which it had allegedly paid USD 9.4 million and in relation with which CIOC sought relief of around USD 1 billion. The Respondent points out that this prompted the Caratube I tribunal to express doubts as to Mr. Devincci Hourani’s investment in CIOC, and specifies that CIOC never submitted evidence of payment of this amount by Mr. Devincci Hourani or as to whether this transaction was ever perfected (Counter Memorial, paras. 142-143).
342.
Second, the Respondent submits that Mr. Devincci Hourani had no know-how or expertise to offer CIOC and that the Caratube I tribunal noted that Mr. Devincci Hourani admitted himself that "[o]ther than when I was the Director of CIOC I have not been actively involved in the day to day running of CIOC". In addition, new evidence now shows that Mr. Devincci Hourani did not have the right to be a Director of CIOC as he held a business visa at the time, which expressly prohibited him from being employed in Kazakhstan (Counter Memorial, para. 144).
343.
Third, with respect to the Claimants’ argument that they contributed significant capital, including in the form of loans from JOR to CIOC, the Respondent alleges that neither of the Claimants ever provided any financing of CIOC’s operations and they knew that the loans from JOR could not be considered "significant contributions". The Respondent points out that the Caratube I tribunal, after examining all the evidence regarding JOR, concluded as follows:

From the above considerations it follows that, even if Devincci Hourani acquired formal ownership and nominal control over CIOC, no plausible economic motive was given to explain the negligible purchase price he paid for the shares and any other kind of interest and to explain his investment in CIOC. No evidence was presented of a contribution of any kind or any risk undertaken by Devincci Hourani. There was no capital flow between him and CIOC that contributed anything to the business venture operated by CIOC. (Exh. CLA-8, para. 455)

344.
The Respondent alleges that "CIOC was wholly financed, on incredulous financing terms by the Lebanese Company JOR which was at all relevant times owned and controlled by Kassem Omar and Issam Hourani and which Claimants now characterize as a ‘family company’" (Counter Memorial, para. 147). In this regard, the Respondent draws the Tribunal’s attention to several financing agreements entered into between CIOC and JOR. For instance, JOR and CIOC concluded an agreement on 5 August 2002, by which JOR agreed to provide financing to CIOC, it being specified that at that time CIOC was owned by Mr. Fadi Hussein whom the Houranis claim to be a distant relative. The Respondent alleges that Mr. Hussein incorporated CIOC with charter capital of only USD 7,000 and that he only actually contributed USD 3,500 of his own fund. The Respondent further draws the Tribunal’s attention to the fact that CIOC allegedly agreed during a board meeting held on 5 September 2002 to subsume the previously agreed on loan into a larger financing agreement with JOR, even though the latter was only incorporated on 10 September 2002. Therefore, according to the Respondent, "CIOC received funds from an entity that had yet to be legally incorporated and before it could legally hold a bank account" and "under the law applicable to Lebanese off shore companies such as JOR, such companies were prohibited from providing financing to foreign companies" (Counter Memorial, para. 148).
345.
The Respondent alleges that on 2 December 2002, JOR and CIOC entered into the first of the financing agreements memorialized in the September 2002 board minutes (Exh. C-217), namely an agreement for a loan from JOR to CIOC in the amount of USD 15 million at an interest rate of 14 percent. The Respondent points to three provisions in particular of this agreement, namely paragraphs six, eight and nine, which it alleges give actual control over CIOC and the Contract to JOR and render Messrs. Fadi Hussein’s and Devincci Hourani nominal ownership over CIOC meaningless (Counter Memorial, para. 149).
346.
The Respondent further notes that JOR and CIOC entered into another financing agreement on 3 November 2004 in the amount of USD 25 million at an interest rate of zero percent (Exh. C-156), it being pointed out that the interest rate in the first financing agreement was subsequently reduced to zero percent also and that zero interest rate agreements are not typical in Lebanon with the prevailing rate being significantly higher (Counter Memorial, para. 150).
347.
The Respondent quotes the following passage from the Caratube I award in relation with the above mentioned financing agreements:

From the time of its establishment JOR was the main capital provider to CIOC. It was contributing to CIOC before CIOC finalised the transfer of the Contract from CCC and before JOR itself was formally registered in Lebanon. At the time Devincci Hourani purchased his share in CIOC, JOR provided CIOC with open credit lines of USD 15 million. The loan was granted at 14% interest p.a. but CIOC never paid any interest under the loan agreements. (Tr., day 4, p. 169) The interest was ultimately cancelled. (Exh. CLA-8, para. 453)

348.
For the Respondent, there is no rational business motive underlying the financing agreements between JOR and CIOC. In particular, it cannot be motivated by Mr. Devincci Hourani’s alleged personal guarantee contained in an agreement between JOR and Mr. Devincci Hourani purportedly dated 1 June 2004 (Exh. C-155), in which the latter apparently agrees to repay the loan at fourteen percent interest from his personal profits during the production phase of the Contract. The Respondent points out that this agreement therefore presumes that CIOC would reach the production phase and that Mr. Devincci Hourani would make a profit from that production. The document in Exh. C-155 must in any event be treated with the greatest skepticism as it is so flawed that it does not in fact create any obligations for Mr. Devincci Hourani.
349.
The Respondent quotes the following passages from the Caratube I award with respect to Mr. Devincci Hourani’s alleged personal guarantee:

From the above it follows that the evidence presented does not confirm that Devincci Hourani’s alleged contribution to CIOC as his investment included a substantial personal guarantee of CIOC’s debt to JOR. His alleged personal guarantee referred to a loan that was annulled by the parties. Even assuming that the loan was still in place, it was already secured on the same assets and revenue stream. Devincci Hourani’s alleged personal guarantee did not contribute anything to the economic arrangement existing between CIOC and JOR. (Exh. CLA-8, para. 450)

[...]

Another aspect of Devincci Hourani’s ‘personal guarantee’ of CIOC’s debts is that no evidence was provided that JOR ever tried to enforce the security against him or against CIOC, once the problems with the Caratube project started. (Exh. CLA-8, para. 448)

350.
It is the Respondent’s position that neither Mr. Fadi Hussein nor Mr. Devincci Hourani was a bona fide owner of CIOC and that the real parties in interest are JOR and those who controlled JOR, namely Messrs. Kassem Omar and Issam Hourani (Counter Memorial, paras. 156-157). JOR as a Lebanese company has no right to ICSID jurisdiction and could not benefit from a bilateral investment treaty between Kazakhstan and Lebanon as no such treaty was in place during the relevant time period. At the time CCC assigned the Contract to CIOC, Lebanon was not a party to the ICSID Convention. Moreover, Mr. Issam Hourani is not a Kazakh citizen and Mr. Kassem Omar is a stateless or Palestinian person. Therefore, they could not benefit from ICSID jurisdiction or treaty protection (Counter Memorial, para. 158).
351.
Finally, the Respondent points out that there exists a contradiction between the Claimants’ abuse of process and statute of limitations arguments in that, as a defense regarding abuse of process, the Claimants assert that their BIT, FIL and Contract based claims are different, but when they argue that the statute of limitations was interrupted they assert that those claims are identical (Respondent’s Reply Post-Hearing Brief, para. 44).

b. The Claimants’ position

352.
It is the Claimants’ position that their claims do not constitute an abuse of process. The Claimants’ first argument in support of their position is that the Respondent has the burden of proving any alleged abuse of process, it being recalled that the applicable threshold is very high and that tribunals in investment arbitrations have only very rarely upheld abuse of process objections, namely in very specific circumstances, typically involving fraud, misrepresentation or bad faith, such as the involvement of mock or puppet investors, last-minute artificial corporate restructuring for the sole purpose of internationalizing a dispute or asserting specific rights and protections before a particular dispute settlement body, or even fraudulent transactions. For the Claimants, the Respondent has not satisfied its burden of proof regarding its abuse of process defense.
353.
In particular, the Respondent has not proven that the abuse of process doctrine applies to this type of proceeding, and the Claimants submit that it does not: there is no general basis (neither in the ICSID Convention, nor in the FIL, nor in the Contract) for denying jurisdiction or rendering an investor’s claim inadmissible on the basis of non-textual grounds, such as the abuse of process doctrine.
354.
In any event, the Claimants point out that, in the exceptional cases where tribunals have applied the abuse of process doctrine in international proceedings, this was done to bar the exercise of an existing jurisdiction and not to bar the existence of the tribunal’s jurisdiction.
355.
Concerning in particular the Cementownia and Europe Cement cases relied upon by the Respondent, the Claimants argue that the circumstances of the present case are materially different and do not warrant a finding of abuse of process. The Claimants recall, among other facts, that Mr. Devincci Hourani has been a US national since 2001 and a majority shareholder in CIOC since 2004, i.e. years before the present dispute arose. In addition, the Claimants insist that their good faith is presumed.
356.
Moreover, the doctrine’s application must be supported by positive authority. It must be applied restrictively as it clashes with an ICSID tribunal’s mandatory obligation to exercise its jurisdiction when it exists. (Defense on Jurisdiction, paras. 206-212 and 259-270; Claimants’ Reply Post-Hearing Brief, para. 7).
357.
Second, the Claimants argue that the Respondent’s abuse of process defense on the basis of "serial pleadings" must be dismissed, because (i) the Contract provided for and anticipated multiple proceedings on jurisdiction (indeed Article 27.3 of the Contract allows the Parties to re-litigate the matter in the event of a negative finding on jurisdiction with respect to claims asserted before an ICSID tribunal). The Respondent itself endorsed the Contract’s dispute resolution mechanism during the Caratube I arbitration (Defense on Jurisdiction, paras. 214-215); (ii) neither the ICSID Convention, nor the FIL, nor the Contract, preclude the Claimants from bringing the present claim. The Claimants point to the Petrobart case where the tribunal allegedly rejected a similar defense (Defense on Jurisdiction, paras. 228229); (iii) the concept of "improper claim splitting" or "serial proceedings" does not apply in investment arbitration. The rule in Henderson v Henderson, relied upon by the Respondent, has never been applied in investment arbitration. In the rare occasion that is has been applied in commercial arbitration, this was done by domestic enforcement or annulment courts (in countries that recognize this rule) and not by the arbitral tribunal, it being specified that the application of this rule is in any event wholly discretionary. Moreover, the Respondent cannot rely on the RSM et al v Grenada case in support of its position, as this case is completely irrelevant in that it did not address the question of abuse of process on the basis of "serial proceedings" (Defense on Jurisdiction, paras. 216-227); (iv) the present case in any event falls outside the scope of application of the Henderson v Henderson rule, were it found to be applicable. According to the Claimants, the rule commands a party to submit its entire case before a court of competent jurisdiction. However, the Caratube I tribunal found that it did not have jurisdiction based on Article VI(8) of the US-Kazakhstan BIT. Furthermore, it is established that a dismissal of a claim for lack of jurisdiction does not prejudice underlying rights, which may be asserted in separate proceedings (Defense on Jurisdiction, paras. 230-234); (v) there can be no abuse of process as the Claimants had not asserted claims under the FIL and the Contract in the Caratube I arbitration, nor have they waived their right to do so in subsequent proceedings (which was confirmed by the Caratube I ad hoc committee). The Claimants point out in this respect that ICSID tribunals (e.g. the CME tribunal) have rejected the existence of abuse of process and allowed parallel proceedings relating to the same claims but brought on the basis of different legal instruments. Moreover, there is no risk of conflicting outcomes in the present case, as the Caratube I arbitration was not brought on the basis of the Contract or the FIL and Mr. Devincci Hourani was not a party to that arbitration (Defense on Jurisdiction, paras. 235-242); (vi) in any event, "claim splitting" applies only to claims, and the question of whether a particular claim is a new or a same one depends upon whether a new right is asserted in that claim. According to the Claimants, the present arbitration concerns a new right (that is to settle the dispute between CIOC and Mr. Devincci Hourani, on the one hand, and Kazakhstan, on the other hand, under the Contract and the FIL), and this new right was not asserted before the Caratube I tribunal (Defense on Jurisdiction, paras. 243-245); and (vii) in any event, the Respondent did not show any evil intent to abuse on the part of the Claimants. In the Caratube I arbitration the Respondent raised its jurisdictional objection to CIOC’s BIT claim (which the Claimants had brought in good faith) only in its Counter Memorial and thus prevented CIOC from presenting an alternative jurisdictional basis in that arbitration, it being observed that the introduction of an alternative jurisdictional basis at that late stage of the proceedings, in any event, would not have been rational, fair or cost-effective. The Claimants explain that Mr. Devincci Hourani’s withdrawal of his BIT claim was motivated exclusively by a concern to allow this arbitration to proceed to the merits without any interruptions and timeconsuming debates on res judicata issues. Furthermore, the Claimants - not the Respondent - are the ones carrying the burden of this second arbitration in that they have sustained further delay in securing an award on the merits and compensation and are shouldering the costs of this arbitration (Defense on Jurisdiction, paras. 246-254; Claimants’ Reply Post-Hearing Brief, paras. 8-9).
358.
Third, the Claimants submit that the Respondent’s abuse of process defense on the basis that Mr. Devincci Hourani’s investment lacks bona fides must be rejected. In response to the Respondent’s argument, according to which the Caratube I tribunal has already found that Mr. Devincci Hourani did not make an investment in CIOC and, as a result, Mr. Devincci Hourani is engaging in an abuse of process by bringing this arbitration, the Claimants stress that the question of the existence of an investment is different from the question of abuse of process. If this Tribunal finds that Mr. Devincci Hourani has not made an investment, such finding does not entail a finding of abuse of process. However, if this Tribunal finds that it has jurisdiction, it must at the same time reject the Respondent’s abuse of process allegations (Defense on Jurisdiction, paras. 255-257; Claimants’ Reply Post-Hearing Brief, para. 10). In relation with the Respondent’s abuse of process doctrine, but also more broadly with regard to the Respondent’s argument that jurisdiction must be denied for lack of a bona fides investment and lack of actual control within the meaning of Article 25(2)(b) of the ICSID Convention, the Claimants aver that Mr. Devincci Hourani is a bona fide investor and that the Claimants’ investment is also bona fide.
359.
First, the Claimants point out that the Respondent’s theory that Mr. Devincci Hourani is a mere puppet fronting for his brother Mr. Issam Hourani has evolved since the Caratube I arbitration, where the Respondent alleged that the Houranis had obtained ownership of CIOC via corporate raids and bullying, using their influence and relations with Mr. Aliyev, and suggesting that Mr. Devincci Hourani was fronting for Mr. Aliyev (Defense on Jurisdiction, paras. 273-274).
360.
Second, the Claimants submit that the Respondent has not explained why Mr. Devincci Hourani would front for his brother Mr. Issam Hourani, and why, if CIOC belonged to Mr. Issam Hourani since the outset, there would have been a need to change the legal ownership from Mr. Fadi Hussein to Mr. Devincci Hourani, it being specified that both are foreigners for purposes of the ICSID Convention (Defense on Jurisdiction, para. 275).
361.
Third, the Claimants allege that the Respondent’s theory of Mr. Devincci Hourani acting as a frontman is not supported by any evidence. For instance, the Respondent relies on the unsubstantiated personal opinion of Ms. Natalya Galantsova, a former employee of the Almaty Prosecutor’s Office, who has never worked for CIOC but for a company owned by Mr. Kassem Omar, Universal Oilfield Supply Holdings LLP, during the limited time period between March 2007 and February 2008. The Claimants further point to the "unsubstantiated insinuation" by the Respondent that the share transfer agreement, whereby Mr. Devincci Hourani acquired CIOC’s shares for USD 6,500, may well never have been perfected. These insinuations are wrong and do not prove the Respondent’s allegations of abuse of process. The Claimants point out that, at the relevant time, the Respondent acknowledged Mr. Devincci Hourani’s status as CIOC’s shareholder. For instance, on 7 July 2004, the Almaty Department of Justice re-registered CIOC, following Mr. Devincci Hourani’s acquisition in May 2004 of 85% of CIOC’s shares. Moreover, the Almaty Department of Justice once again re-registered CIOC in June 2005, shortly after Mr. Devincci Hourani acquired further 7% of CIOC’s shares from Mr. Waheeb Antakli in April 2005. The Claimants stress that this Tribunal is not bound by determinations made obiter dicta (and on the exclusive basis of the BIT) by the Caratube I tribunal in relation to any alleged doubts as to Mr. Devincci Hourani’s investment (as opposed to his ownership of the shares, which was never contested) in CIOC. Rather, this Tribunal must make its own determinations of fact and law based on the evidence before it (Defense on Jurisdiction, paras. 276-289).
362.
The Claimants further underline that it is overly simplistic to argue, as does the Respondent, that Mr. Devincci Hourani paid merely USD 6,500 for his shares in CIOC, only to now claim USD 1 billion. The Claimants stress, inter alia, that they invested tens of millions of US Dollars during Mr. Devincci Hourani’s ownership of CIOC, in a speculative, risky and high-return petroleum industry subject to extensive and costly obligations (Defense on Jurisdiction, paras. 290-291).
363.
Moreover, for the Claimants, the fact that the money ultimately invested by CIOC was borrowed from JOR is irrelevant, as it is generally recognized in ICSID case law that a loan is an investment, and investing through loans is common practice. It is undisputed that the loans from JOR to CIOC exist and were used by CIOC for the purposes of the investment in dispute. There was nothing irregular or irrational about these loans, it being further specified that the loans were not interest-free. Rather, the Claimants point out, among other facts, that the interest rate of 14% provided for in the loan agreement of 2 December 2002 was later replaced and secured by a personal guarantee by Mr. Devincci Hourani (see Exhs. C-373, C-155 and C-158). As regards the loan of USD 25 million (which was never drawn), it must be taken into consideration, inter alia, that it was entered into at a time when JOR and CIOC were controlled by the same brothers-in-law and when the need for the loan was merely prospective. The fact that no interest was provided for with respect to this loan is in any event irrelevant. What matters is the undisputed fact that a USD 15 million loan was genuinely contracted, drawn and spent for purposes of the investment, and this was disclosed, known and approved by the Respondent (Defense on Jurisdiction, paras. 292-301). The Claimants also reject the Respondent’s allegation that the loan agreement of 2 December 2002 shows that CIOC was actually controlled by JOR. To the contrary, the provisions in the agreement with which the Respondent takes issue (and which constitute boilerplate clauses) confirm the bona fide nature of the transaction (Defense on Jurisdiction, para. 302).
364.
For the Claimants, the patent typographical errors in the agreement dated 1 June 2004 (Exh. C-155), pointed out by the Respondent, have no impact as the agreement clearly defines Mr. Devincci Hourani on behalf of CIOC as the borrower and JOR as the lender. Moreover, the reference to a meeting dated 25 November 2006 is the result of a desire for full transparency rather than bad faith. The Claimants point out that a meeting did in fact take place on 25 November 2006 between Mr. Devincci Hourani, on behalf of CIOC, and JOR. During this meeting, the reimbursement of the loans granted by JOR was discussed, as well as JOR’s renunciation of interest in exchange for a personal guarantee of the payment by Mr. Devincci Hourani. JOR has claimed reimbursement of the loan and, by way of an agreement between JOR and Mr. Devincci Hourani dated 2 December 2014 (Exh. C-372), on 21 February 2015 Mr. Devincci Hourani has started reimbursing by paying USD 3 million (Defense on Jurisdiction, paras. 303-306).
365.
For the Claimants, the Respondent’s allegation that Mr. Devincci Hourani had no know-how or expertise to offer CIOC is irrelevant. In particular, a contribution by Mr. Devincci Hourani of know-how or expertise is not required to satisfy the investment test and investors need not have direct knowledge or expertise in the industry at hand in order to qualify as investors (Defense on Jurisdiction, para. 307).
366.
Fourth, the Claimants insist that Mr. Devincci Hourani is no sham investor, but acquired the CIOC shares in 2004 and 2005 (i.e. 3 years before the dispute arose) and obtained the US nationality in 2001 (i.e. 6 years before the dispute arose). The Claimants are thus not attempting to unduly fall within ICSID jurisdiction (Defense on Jurisdiction, para. 309).
367.
Fifth, the Claimants assert that Mr. Devincci Hourani was an occupying executive and always played an active or apparent role as an investor with the full knowledge of the Respondent, it being pointed out that this is not a requirement under the ICSID Convention. The Respondent cannot claim ex post facto that Mr. Devincci Hourani did not have the right to be a Director of CIOC because he held a business visa that does not allow employment. The Respondent knew at the time that Mr. Devincci Hourani was CIOC’s Director and, in any event, the Respondent’s allegation is not supported by any evidence, but is based solely on the allegations of Ms. Galantsova. The Respondent’s allegation is further contradicted by Article 7.1.13 of the Contract and Article 25(1) of the FIL, which allow CIOC to hire foreign personnel (Defense on Jurisdiction, paras. 310-315).
368.
Sixth, the Claimants underline that the present dispute was international from day one. Therefore, the assignment of the Contract to CIOC and Mr. Devincci Hourani’s acquisition of CIOC’s shares did not internationalize the dispute or create any new rights. This also means that Mr. Devincci Hourani’s alleged fronting for JOR would not have created a new ICSID jurisdiction because this jurisdiction would have existed in any event under the FIL or the Contract as CIOC would have been controlled by a foreign national all the same (Defense on Jurisdiction, paras. 316320).
369.
Seventh, the Claimants submit that the Saba Fakes case must be distinguished in several regards, including in light of the fact that Mr. Devincci Hourani was known to the Respondent at all material times and blessed as a foreign investor (not only in CIOC, but also in other oil projects and other strategic industries), including by President Nazarbayev and his daughter, Ms. Dariga Nazarbayeva, until the dispute arose (Defense on Jurisdiction, paras. 321-325).
370.
Eighth and finally, the Claimants argue that even if it were admitted arguendo that Mr. Devincci Hourani acted as a puppet, this would not allow the Tribunal to dismiss jurisdiction, in the absence of a showing that it was done at the time the dispute arose to gain access to ICSID jurisdiction. The Claimants repeat that Mr. Devincci Hourani has been a US national and majority shareholder of CIOC since well before the present dispute (or even the probability of a dispute) arose (Defense on Jurisdiction, paras. 326-330).

c. Analysis

371.
The Tribunal is faced with the preliminary questions whether it has the authority to apply the doctrine of abuse of process and, if so, how it should apply this doctrine in the circumstances of the present case.
372.
Regarding the first question, the Parties do not seem to dispute the general premise that the abuse of process doctrine may be applied by international tribunals in order to preserve the integrity of the tribunal and avoid the abuse by one party of the arbitral procedure.
373.
However, the Claimants submit that the abuse of process doctrine cannot be relied upon by an international tribunal as the sole basis for dismissing an entire case for lack of jurisdiction. In other words, the doctrine of abuse of process does not apply in situations where a respondent requests the tribunal to deny jurisdiction or declare a claim inadmissible. Rather, an international tribunal may only decline to exercise a jurisdiction that it has assumed, because it considers that the arbitral process is being abused to the extent that it would be improper to proceed to hear the merits of the dispute. In support of this position, the Claimants rely inter alia on the Pac Rim decision on jurisdiction, quoting the following passage (Exh. CLA-225, para. 2.10):

[T]he Respondent’s jurisdictional objection based on Abuse of Process by the Claimant does not, in legal theory, operate as a bar to the existence of the Tribunal’s jurisdiction; but rather, as a bar to the exercise of that jurisdiction, necessarily assuming jurisdiction to exist.

374.
It is observed that the Pac Rim tribunal then added: "For present purposes, the Tribunal considers this to be a distinction without a difference".
375.
The Tribunal agrees that the distinction made by the Claimants is irrelevant in the present case, given that the Respondent in any event has not established the existence of an abuse of process by the Claimants to the point of convincing this Tribunal that it would be improper for it to assume or exercise its jurisdiction over the dispute brought before it. In reaching this conclusion the Tribunal has considered the following elements:
376.
First, the Tribunal agrees that the general principle of the prohibition of abuse of process applies in the context of multiple proceedings before international tribunals. The Respondent has invoked as legal bases for the application of the abuse of process doctrine, inter alia, Article 41 of the ICSID Convention (according to which the Tribunal is the judge of its own jurisdiction) and Article 44 of the ICSID Convention (which grants broad procedural powers to the Tribunal to conduct the arbitration proceedings). Moreover, the Respondent has invoked several general principles of international law, such as the principles of good faith and the prohibition of abuse of right. In the opinion of the Tribunal, the application of the abuse of process doctrine may be based on the Tribunal’s power to determine the conduct of the arbitration proceedings and the principles regarding the Parties’ general obligation to participate in the proceedings in good faith and not abuse the rights granted to them, for example the right to rely on an arbitration agreement to commence an arbitration.
377.
Second, regarding the specific content of the abuse of process doctrine, both Parties have referred among other sources to both the Interim and the Final Reports on Res Judicata and Arbitration by the International Law Association ("ILA").30 With respect to the abuse of process doctrine, the Tribunal refers to the ILA Interim Report on Res Judicata which states that "[i]nternational law recognizes a doctrine of abuse of process, but it is extremely rarely applied" (Exh. RL-36, p. 60). Moreover, in the ILA Final Report on Res Judicata, the ILA International Commercial Arbitration Committee expressed its preference for a cautious approach to the abuse of process doctrine (CLA-176, para. 60):

The Recommendations have also chosen a cautious approach to procedural unfairness or abuse. In arbitration, party autonomy to a large extent reigns and parties and their counsel should be given wide discretion in determining their strategies. Costs, psychological influences, relational elements, cross-cultural considerations, persuasiveness, political constraints and other aspects may be responsible for not instituting certain claims or for not raising certain causes of action or issues of fact or law, and caution is in order to avoid res judicata amounting to a patronizing review of what parties and counsel ought to have done in managing their case.

378.
This cautious approach is reflected in international law and practice and the Parties do not dispute that the abuse of process doctrine is only rarely applied by international tribunals and subject to a high threshold to prove an abuse of process. In particular, the Parties do not seem to dispute that there has been no case to date where an investment arbitral tribunal qualified as abusive the assertion of related claims in multiple proceedings (RL-40, para. 7.30). Professor Lowe confirms that the fact of bringing multiple proceedings as such does not constitute an abuse of process. According to this author "[the] [abuse of process] doctrine arises not from the fact of multiple proceedings but rather from the inherently vexatious nature of the particular proceedings in the forum" (Exh. CLA-233, pp. 202-203).
379.
Against this background, the Tribunal finds that it is not enough to argue for the purposes of applying the abuse of process doctrine that a claimant could have asserted a particular claim already in earlier proceedings. The assertion of a particular claim that could have been raised in another or earlier arbitration proceeding must also qualify as abusive. In this regard, it is worth mentioning that the doctrines of res judicata and collateral estoppel are built on the general premise that a party is not precluded from asserting, but rather has the right to raise a claim or issue in further or other proceedings where that claim or issue has not already been finally decided between the same parties in an earlier decision, under pains of suffering a denial of justice. In this respect, it is worth mentioning that many civil law countries do not generally recognize the abuse of process doctrine, but may subscribe to a doctrine of abuse of right (Exh. RL-36, p. 50). For the Tribunal, this further confirms the cautious approach to the abuse of process doctrine, focusing not on the fact of multiple proceedings or on whether a particular claim or issue could have been raised in earlier proceedings, but on whether the assertion of such particular claim or issue in further proceedings constitutes an abuse.
380.
For the Respondent, CIOC could have raised its FIL and Contract claims in the Caratube I arbitration and Mr. Devincci Hourani could have been a party already to that arbitration. But the Claimants deliberately chose not to raise all of their claims in the Caratube I arbitration for no reason other than to preserve such claims for a future, serial and abusive action.
381.