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As a preliminary point, the Tribunal accepts [...] that Respondent's jurisdictional objections fall to be considered within the framework of the ICSID Convention and applicable international law. It adopts the conclusion of the ICSID Tribunal in ICSID caseNo. ARB/97/4, Ceskoslovenska obchodní banka, a.s. v. Slovak Republic in its decision on Objections to Jurisdiction of 24 May 1999 at para. 35:

"the question of whether the parties have effectively expressed their consent to ICSID jurisdiction is not to be answered by national law. It is governed by international law as set out in Article 25(1) of the ICSID Convention".


Article 25(1) of the Convention provides:

"The Jurisdiction of the Centre shall extend to any legal dispute arising directly out of an investment, between a Contracting State (or any constituent subdivision or agency of a Contracting State designated to the Centre by that State) and a national of another Contracting State, which the parties to the dispute consent in writing to submit to the Centre. When the parties have given their consent, no party may withdraw its consent unilaterally."

Are Claimants Nationals of a Contracting State?

It is not disputed that Claimants are both entities incorporated in Bermuda. The Parties further agree that Claimants are to be treated as nationals of Bermuda for the purpose of determining nationality under the ICSID Convention.
Bermuda is an overseas territory of the United Kingdom. The United Kingdom signed the ICSID Convention on 26 May 1965. It deposited its ratification of the Convention on 19 December 1966 and the ICSID Convention entered into effect in the United Kingdom on 18 January 1967.

Article 70 of the ICSID Convention provides that the Convention:

"shall apply to all territories for whose international relations a Contracting State is responsible, except those which are excluded by such State by written notice to the depositary of this Convention either at the time of ratification, acceptance, or approval or subsequently." (Emphasis added).

The United Kingdom, which is responsible for the international relations of Bermuda and concludes treaties on its behalf, did not exclude Bermuda under the provisions of Article 70 of the Convention. On the contrary, it expressly extended the application of the Convention to Bermuda by statute. (See Arbitration (International Investment Disputes) Act 1966 (Application to British possessions, etc.) Order 1967 (Statutory Instruments, 1967, No. 159, 10 February 1967).
A review of ICSID Documents and Publications, Designations by Contracting States regarding Constituent Subdivisions or Agencies reveals that Bermuda has been designated, on May 7, 1968, as competent to become a party to disputes submitted to ICSID and that no approval on the part of the United Kingdom is required by Bermudan entities which intend to submit disputes to ICSID.
Further support for the proposition that Bermudan entities may bring claims under the ICSID Convention may be found in the Decision on Jurisdiction of the Tribunal in ICSID Case No. ARB/03/28, Duke Energy International Peru Investments No. 1, Ltd v. Republic of Peru, of 1 February 2006 at paras. 139-140.
For these reasons, the Tribunal concludes that Claimants are nationals of a Contracting State and that they have standing to refer disputes to ICSID arbitration.

have Claimants Made an "Investment" under Article 25(1) of the ICSID Convention?

[...] The Tribunal accepts that [...] certain criteria have been established by ICSID tribunals to determine whether an investment exists within the meaning of Article 25(1) of the ICSID Convention, notably in ICSID Case No. ARB/00/4, Salini Costruttori S.p.A and Italstrade S.p.A v. Kingdom of Morocco. (See Decision on Jurisdiction of 23 July 2001).

The criteria identified by the Salini Tribunal were:

(i) a contribution of money or other assets of economic value (what Professor Christoph Schreuer describes as a "substantial commitment" in his authoritative work: "The ICSID Convention: A Commentary": Cambridge University Press 2001);

(ii) a certain duration;

(iii) an element of risk; and

(iv) significance for the host State's development.


The Tribunal considers that these four criteria are satisfied in this case, for the following reasons:

a. Substantial commitment

(i) It is not contested that [...] Claimants had committed sums in excess of US$ [...] to fund natural gas exploration, development and production activities in Bangladesh;

(ii) substantial resources of natural gas have been discovered [...] and gas is being delivered to the Bangladeshi domestic market;

(iii) pursuant to their obligations under [...] the PSCs, Claimants have built spur pipelines to connect each of the three producing gas fields to the Petrobangla trunk pipeline. They have committed funds for Petroleum operations pursuant to [...] the PSCs; provided technical services, technology and personnel; complied with their obligations to conduct geological studies; geophysical mining programmes; drilled exploration wells; and provided Petrobangla with irrevocable bank guarantees.

b. A certain duration

(i) in ICSID Case No. ARB/05/07, Saipem S.p.A. v. People's Republic of Bangladesh, Bangladesh acknowledged that a two year period would generally be sufficient to satisfy the Salini standard. Other cases, notably Salini itself, suggest a period of two to five years;


c. An element of risk


(ii) In addition, as Claimants point out, rightly in the Tribunal's view, there is an inevitable element of risk inherent in any such long-term commitment to explore for and, if found, to develop and exploit natural gas resources in a developing economy heavily reliant upon the availability of gas for that very economic development.

d. Significance for the host State's development

The Tribunal accepts that the activities of Claimants amount, as they submit, to a "significant contribution to the economic development of Bangladesh". They involve the opening up and exploitation of three major gas fields which provided much needed gas to the Bangladesh domestic market. That source of power is acknowledged by Bangladesh to be a significant factor in the country's ongoing development. [...]

Accordingly, the Tribunal concludes that Claimants have made an investment under Article 25(1) of the ICSID Convention.

Is the Tariff Dispute a Dispute Arising Directly out of Claimants' Investment?

[...] The Tribunal has concluded that Claimants' decision to enter into the PSCs constituted an investment for the purpose of Article 25(1) of the ICSID Convention. The PSCs themselves contemplated the conclusion of the GPSAs in the event that the gas fields proved capable of producing gas in commercial quantity. The Tribunal notes that the concept of the [...] tariff was first introduced [in] the PSCs.

Under the terms of the PSCs, it had to be incorporated into the GPSAs:


This dispute arises out of the interpretation of the tariff provision in the PSCs and the GPSAs. [...] On a plain reading of the agreements before it, the Tribunal concludes that any such dispute is a matter arising directly out of the investment (as the Tribunal has found it to be) by Claimants.

Did Bangladesh Consent to ICSID Arbitration?

As a matter of fact, there exists an ICSID arbitration agreement between Bangladesh, Claimants and Petrobangla in the PSCs [...].



The Tribunal in ICSID Case No. ARB/82/1, Société Ouest Africaine des Bétons Industriels (SOABI) v. Republic of Senegal, noted that an arbitration agreement:

"must be given, just as with any other agreement, an interpretation consistent with good faith... the interpretation, must take into account the consequences which the parties must reasonably and legitimately be considered to have envisaged as flowing from their undertakings." (pp. 205 & 206, ICSID Reports, Volume 2 at Legal Authorities: Claimants' Counter-Memorial on Jurisdiction, No. 41)


In this regard, the Tribunal accepts [...] that:

(i) the PSCs served as the precondition for Claimants' investment and set forth the framework of the relationship between Bangladesh, Petrobangla and the Claimants;

(ii) the PSCs expressly contemplated the negotiation and conclusion of the GPSAs between Claimants and Petrobangla [...]; and

(iii) the provisions of the GPSAs expressly acknowledge their provenance in the PSCs and the PSCs require the incorporation into the GPSAs of certain terms, including the [...] tariff provision.


As [an expert witness] noted [...]:

"the interconnection of the PSCs and the GPSAs is such that, in my opinion, they cannot be separated and have to be considered as a whole.

Viewed in that light,... the dispute mechanism provided for in the PSCs (to which, on any analysis, [Bangladesh] is a party) has to be regarded as covering disputes concerning the GPSAs."


The Tribunal agrees with that conclusion.


Articles 4, 5 and 8 of the ILC Articles provide as follows:

Article 4(1) "The conduct of any State organ shall be considered an act of that State under international law, whether that organ exercises legislative, executive, judicial or any other function, whatever position it holds in the organisation of the State, and whatever its character as an organ of the central government or of a territorial unit of the State.

(2) An organ includes any person or entity which has that status in accordance with the internal law of the State."

Article 5 "The conduct of a person or entity which is not an organ of the State under Article 4 but which is empowered by the law of that State to exercise elements of governmental authority shall be considered an act of the State under international law, provided the person or entity is acting in that capacity in the particular instance."

Article 8 The conduct of a person or group of persons shall be considered an act of a State under international law, if the person or group of persons is in fact acting on the instructions of, or under the direction or control of, that State in carrying out the conduct."


The two-step test adopted by the Maffezini Tribunal to evaluate whether the actions of a private corporation created to promote the industrial development of the Spanish province of Galicia were attributable to the Spanish State involved, first, an assessment of the corporation "from a formal or structural point of view" (Idem, para. 77). So far as that first stage was concerned, the Maffezini Tribunal took the view that direct or indirect state-ownership or control:

"(gave) rise to a rebuttable presumption that [the entity] is a State entity." (Idem).

The second stage of the test was a so called "functional test, which looks to the functions of, or role to be performed by the entity." (Idem, para. 99)—whether it was: "acting as an agent for the government or is discharging an essentially government function." (Idem).

In the Maffezini case, the Tribunal concluded that the entity's conduct could be attributed to the Spanish government, because it had been created by government decree; it had been created to carry out governmental functions in the field of regional development; and it was 88% state owned.

[S] ubsequent decisions includ [ed]:

• Wena Hotels Ltd c. Arab Republic of Egypt, (ICSID Case No. ARB / 98/4), Award, December 8, 2002;

• Nykomb Synergetics Technology Holding AB v. The Republic of Latvia, Stockholm Chamber of Commerce, Award, December 16, 2003;

EnCana Corp. v. Republic of Ecuador. LCIA case UN3481, Award, 3 February 2006 ;

Helnan International Hotels A / s v. Arab Republic of Egypt , (ICSID Case No. ARB / 05/19), Decision on Objection to Jurisdiction, October 17, 2006 ;

• the earlier case of Wintershall AG v. Government of Qatar, Partial Award, February 5, 1998;

in which issues of state attribution had been considered.


[T]he ICSID Tribunal in Saipem S.p.A. v. People's Republic of Bangladesh (to which reference has been made above) in its Decision on Jurisdiction and Recommendation on Provisional Measures [...] noted that:

"Petrobangla appears to be part of the State under Bangladesh law" (Idem, para. 145).

and further that Bangladesh's own legal experts had confirmed that: "Petrobangla is a statutory public authority" within the meaning of the Bangladesh Constitution and is thus:

"included in the definition of the State, the same as Parliament." (Idem).

The Saipem Tribunal concluded:

"[a]t this jurisdictional stage, there is no indication that... Petrobangla could manifestly not qualify as [a] state organ... at least de facto ". (Idem, para. 149).


Claimants submit that international law and ICSID jurisprudence demonstrate that actions of state organs, non-governmental organisations and private corporations are attributable to the State under the following circumstances:

(i) on an application of ILC Article 4, the conduct of any state organ— as defined by the internal law of the State—will be attributed to the State under international law, regardless of the state organ's classification or functions;

(ii) in the context of ILC Article 5, ICSID tribunals will have regard to the following factors when considering whether a person or an entity which is not de jure an organ of the State is authorized to exercise governmental authority:

• Government participation in the creation of the entity

• whether the entity operates in a regulated field

• whether the entity was created in part to carry out a government function

• whether the entity is subject to the policy consideration of the State

• whether the entity's funds are considered public moneys; and

(iii) in the context of ILC Article 8, the conduct of a private corporation is attributable to the State under international law when the corporation is acting under the instructions, direction or control of the State.


They submit, further, that in order to determine whether the entity is under state control, ICSID tribunals will have regard to:

• direct or indirect state ownership

• direct or indirect state control

• whether or not the leadership of the entity is partially or fully comprised of government officials and employees who can be appointed or dismissed by the State.

The Tribunal considers that to be a fair and accurate summary of attribution with respect to both jurisdiction and the merits. For purposes of jurisdiction, the Tribunal turns to consider whether there is evidence before it to confirm that Petrobangla is a de jure state organ.

The Tribunal has before it evidence that:

(i) Article 152 of the Bangladeshi constitution defines the "State" as including Parliament, the Government and "statutory public authorities", that is to say:

"any authority, corporation or body the activities or the principal activity of which are authorised by an Act, ordinance, order or instrument having the force of law in Bangladesh";

(ii) Petrobangla was set up as a public sector statutory body by the Government of Bangladesh's enactment of the Bangladesh Oil, Gas and Mineral Corporation Ordinance (Ordinance No. XXI) of 1985 ("Ordinance No. XXI") to manage and control mineral resources, including natural gas owned by Bangladesh;


(iv) Petrobangla, as a public statutory body, is subject to judicial review pursuant to Article 102 of the Bangladeshi Constitution, a provision which applies exclusively to entities performing functions in connection with the affairs of Government or of a local authority;

(v) the expert evidence of [an expert witness], who opined [...] that: "it is clear that it [Petrobangla] qualifies as an organ of the PROB within the meaning of [ILC] Article 4" - a view with which another expert [...] concurred;

(vi) the provisions of the PSCs themselves which record that [...]

(vii) the opinion of [an expert witness] concerning the incorporation of ICSID arbitration agreement in both PSCs and all three GPSAs:

"All five agreements contain provisions, in identical terms, for disputes to be referred to the Centre for ICSID arbitration. This is particularly significant because [Bangladesh] had not designated Petrobangla under Article 25(1) of the Convention. It follows that the provision for ICSID arbitration in the GPSAs could not have had any effect unless Petrobangla was contracting as an organ of the State." [...]; and

(viii) Article [...] of the GPSAs, read in its entirety, which provides:


As Claimants point out, this clause is "boiler plate" language found in many international contracts. It is designed to preclude a claim by Petrobangla to sovereign immunity in the event of a dispute arising under the GPSAs. That being so, it begs the question why such a waiver provision should be necessary, unless there was, in fact, recourse to a claim of sovereign immunity to be waived.

As [an expert witness] has rightly observed:

"what is significant about [an article of the GPSAs regarding state immunity] ... is that the issue of state immunity could not have arisen unless Petrobangla was acting as an organ of the State." [...]

For all these reasons, and specifically Bangladesh's express review and approval of the GPSAs, including the ICSID arbitration agreements that incorporated in each of them, the Tribunal concludes that Bangladesh must be considered as having consented to ICSID arbitration.

Was there a Binding Award or Failure to Comply with Notice Procedures?

There are two further matters with which the Tribunal must deal in this section of its Award. First, the status of the Legal Opinion of [a Bangladeshi Senior Counsel], which, in Bangladesh's Objection to Jurisdiction, was said to constitute an award binding between the Parties. [...]
In all the aforesaid circumstances, the Tribunal accepts Claimants' submission that the allegation that [the] Opinion amounted to an Award binding on the Parties should be rejected and it hereby rejects the allegation.
Finally, it is alleged by Bangladesh that the Claimants failed to comply with the notice procedures, which required notice to be given to the Chairman of Petrobangla. [...]
In the Tribunal's opinion, it is not necessary to determine whether or not the requirements of the GPSAs as to notice were followed scrupulously. In the circumstances of this case, it would be inconceivable to assert that a technical failing (even assuming that there had been one) should constitute a ground, much less the only ground, upon which to decline to accept jurisdiction on this dispute.
Accordingly, and for the reasons set out above, the Tribunal confirms its conclusion that it has jurisdiction to determine this dispute of which it gave notice to the Parties on 21 August 2007.


Not for the first time in ICSID arbitration proceedings, the question has arisen whether Petrobangla's acts may be attributed to Bangladesh. The Tribunal has already referred to the ILC's Articles on State Responsibility in its consideration of Bangladesh's Jurisdictional Objection, but, in the context of its review of the merits and the question of the attribution of acts of Petrobangla to Bangladesh under international law, it is appropriate that the Tribunal consider them again, especially the question of whether Petrobangla is authorized to exercise governmental authority (ILC Article 5) or if it is directed or controlled by Bangladesh (ILC Article 8).
In this case, the Tribunal has found on the evidence and the concessions made by Bangladesh that Petrobangla is indisputably a de jure organ of Bangladesh (see, in particular, paragraph 147 above).

The Tribunal is also satisfied that Bangladesh authorised Petrobangla to exercise governmental authority and that Petrobangla did so. Article 143 of the Bangladesh Constitution:

"... vest(s) in the Republic, in addition to any other land or property lawfully vested... all minerals and other things of value underlying any land of Bangladesh...."

As the Tribunal has already noted, by Ordinance No. XXI, Bangladesh delegated to Petrobangla its authority over state-owned minerals. As the PSC Recitals record, among those functions was the authority to enter into petroleum agreements with investors such as Claimants. And it was in that context that Petrobangla imposed the [...] tariff deduction.


Section 9(1) of Ordinance No. XXI provides that among Petrobangla's priorities shall be:

(9)(1)(b) to prepare and implement programmes for the exploration and development of oil, gas and mineral resources;
(9)(1)(c) to produce and sell oil, gas and mineral resources; and
(9)(1)(d) to perform such other functions as the Government may, from time to time, assign to the Corporation."



Noteworthy, too, are the contents of Petrobangla's 2005 Annual Report.

It records that Petrobangla is "empowered and entrusted" with, inter alia :

1. Exploration and development of Oil, Gas and Mineral Resources as per the policies of the Government of the People’s Republic of Bangladesh;

2. Overall control and coordination of the production, transmission and marketing of gas, condensate, oil and mineral resources produced in the country;

3. Conduct necessary research required in Oil, Gas and Mineral Exploration;

4. Enter into Production Sharing Contracts (PDSCs) with International Oil Companies (IOCs).;

5. To implement important projects to develop the gas and mineral sector with the annual government fund.

6. Any other functions and responsibilities as directed by the Government. "

Petrobangla's Annual Report in the record of this Arbitration also makes clear that Petrobangla's Chairman is directly accountable to the Minister and Secretary of the Ministry of Energy & Mineral Resource's Energy and Mineral Resource Division and its funds are public funds of Bangladesh. The terms of Section 6 of Ordinance No. XXI make it clear that members of the Board of Directors of Petrobangla, including its Chairman, are Government of Bangladesh appointees, who serve on such "terms and conditions as the Government may determine" and whose powers and functions are "as may be prescribed or assigned to them by the Government."

Having regard to the test to be applied in order to determine whether an entity, which is not a de jure organ of the State, is authorized to exercise governmental authority, the Tribunal concludes that Petrobangla would fulfil all of them (even if, contrary to the Tribunal's conclusion, it were not, in fact, a de jure organ of the State) for the following reasons:

(i) Bangladesh plainly participated in the creation of Petrobangla - see Ordinance No. XXI;

(ii) Petrobangla operates in a regulated field: all minerals are exclusively owned by Bangladesh and Petrobangla is the principal vehicle by which Bangladesh implements its decisions concerning its gas and other mineral resources;

(iii) Petrobangla was created to carry out government functions, albeit Bangladesh exercised rights and powers of review and approval of the GPSAs in this case;

(iv) it is subject to policy considerations of the State - section 5(2) of Ordinance No. XXI provides that:

"the Board [of Petrobangla] in discharging its functions... shall be guided on questions of policy by such instructions as may be given to it by the Government... if any question arises as to whether any question is a question of policy or not, the decision of the Government shall be final"; and

(v) Petrobangla's funds are considered public funds.


The evidence before the Tribunal also leads it to conclude that Petrobangla's actions would be attributable to Bangladesh on the basis that Bangladesh directs or controls Petrobangla:

(i) Petrobangla is wholly owned by Bangladesh;

(ii) Petrobangla is under the administrative control of the Ministry of Energy and Mineral Resources, which approved the terms of all three GPSAs;

(iii) the constitution of Petrobangla's Board of Directors is exclusively comprised of Government or Ministry appointees (see section 5.6 of Ordinance No. XXI).


Bangladesh's response to such overwhelming evidence of Petrobangla's standing is to suggest that:

(i) Petrobangla's signature of the PSCs as a party in its own right alongside Bangladesh is evidence of its status as a separate entity; and

(ii) the language of [the] GPSAs confirms that:

"execution, delivery and performance by [Petrobangla] of this agreement constitute private and commercial acts..."


Accordingly, Bangladesh contends that: "performance under GPSAs is an independent separate private act of Petrobangla, it cannot in any way be deemed that Petrobangla is functioning under its statutory duty and therefore a 'State.'" [...]

Bangladesh further contends that Petrobangla can only be treated and/or deemed as "State" when it performs its duties under its statutory functions set out in section 9 of Ordinance No. XXI—which, it is argued—do not include a duty or function to purchase natural gas from a contractor. [...] Finally, it is alleged by Bangladesh that entering into commercial purchase and sale agreements for gas constitutes the undertaking of independent commercial acts on the part of Petrobangla rather than manifestations of a duty performed by a State or an indicator of a state contract for which Bangladesh could be made responsible. [...]

The Tribunal does not accept that these contentions are sustainable. In addition to the matters addressed above, the Tribunal agrees with Claimants' proposition that the mere fact that Petrobangla and Bangladesh each signed the PSCs individually is irrelevant to the question of whether Petrobangla's subsequent actions in negotiating, entering into and, allegedly, breaching the GPSAs are attributable to Bangladesh under international law. The Tribunal agrees with [an expert witness]'s statement that:

"[the fact that Petrobangla is a separate legal entity under Bangladeshi law] is not in any way determinative of the question of jurisdiction... the status of Petrobangla for the purposes of this arbitration is ultimately a matter to be determined in accordance with international law rules on attribution." [...]

Petrobangla is acknowledged to be an organ of the State, it exercises governmental authority, it is directed and controlled by Bangladesh and, as Claimants rightly submit, it acts as an agent of the State. In Conforce Ltd v. Titas Gas Transmission and Distribution Co. 33 DLR 1990, s33, and having already held that: "[Petrobangla] is undisputedly a statutory public authority", the Bangladesh courts determined that in circumstances in which Petrobangla entered into a gas supply contract "... as a subsidiary ofthe Government authorised to deal with [gas]", it was entering into a contract "necessitated for performing the function of the state as a sovereign power."
Furthermore, Bangladesh itself is a signatory to the PSCs which contain the disputed tariff provision; Bangladesh required, as the language of the PSCs themselves makes clear, that the tariff provision be incorporated into the GPSAs; and Bangladesh was involved in the decision to apply the tariff.



An Issue of Construction

At the heart of the dispute on the merits is the interpretation of [the provision regarding the tariff] of the PSCs, [...] and [the provision regarding the tariff] of [GPSA 1] (and its corresponding equivalents [...] in the [GPSA 2] and [GPSA 3]).

[T]he two PSCs provided that:

"The Parties agree that in the event that Contractor elects to sell its share of Natural Gas to the Bangladesh domestic market, Petrobangla and Contractor shall enter into a Natural Gas sales and purchase agreement under which Petrobangla shall agree to purchase the Natural Gas to which Contractor is entitled under this Contract..."

[T]he two PSCs further required that any such agreement had to include provisions to the effect that:

[...] Petrobangla shall agree to provide access to its Pipeline system, provided there is spare capacity at the time, for all Natural Gas to which Contractor is entitled to (sic) under the Contract, and which Contractor dedicates to the domestic market.

[...] Contractor will build and operate any required spur line from the fields from which it is producing Natural Gas in the Contract Area to the nearest agreed upon point of the transmission company' trunk Pipeline, which point shall become the Measurement Point.

[...] The transmission company shall be entitled to receive [the percentage] of Contractor’s total Natural Gas measured at the Measurement Point during a Calendar Year under a delivery schedule to be agreed upon between Contractor and the transmission company to cover tariffs and losses incurred when Contractor uses a Pipeline operated by the transmission company to supply Natural Gas to the Bangladesh domestic market. (Emphasis added)


[The GPSAs] provided, in identical terms, as follows:

"As described in [...] the PSC, if Buyer or any of its entity (sic) under it is the transmission company, Buyer shall be entitled to receive [the percentage] of Seller’s total volume of Gas (cost recovery gas + profit gas) measured at the Measurement Point during a Contract Year under a delivery schedule pursuant to this Article [...] on a Calendar Month basis to cover Tariffs and losses incurred when Seller uses Buyer’s Trunk Pipelines and/or any other pipeline and associated facilities not built by Seller and owned and operated by Buyer to supply Gas to the Bangladesh domestic market." (Emphasis added)

In order to fulfil their sales commitments, Claimants transport gas from the field through its spur line to Petrobangla's trunk pipeline. The intersection between the spur pipeline and the trunk pipeline is the "Measurement Point". For the purpose of gas sales to Petrobangla pursuant to the GPSAs, however, the "Measurement Point" is also the "Delivery Point", at which the "risk of loss of and title to and property of the Gas to be delivered by Seller to Buyer under the terms of [the GPSA] shall pass to [Petrobangla]." [...]

Applicable Rules of Construction


[...] [T]he PSCs and [GPSA 1] provide that:

"The validity, interpretation and implementation of this Agreement shall be governed by the laws of the People's Republic of Bangladesh."

[GPSA 2 and GPSA 3 add] the words:

"To the extent that no Bangladeshi law exists concerning any matter related to this Agreement the common law of England shall apply."


In the standard text-book on the Indian Contract Act 1872 (adopted in Bangladesh as the Bangladesh Contract Act 1872) it is stated:

"The object of construction is to discover the mutual intention of parties. 'The expression 'construction', as applied to a document,...includes two things: first the meaning of the words; and secondly, their legal effect, or the effect which is to be given to them'. [Chateney v Brazilian Submarine Telegraph Co [1891] 1 QB 79 per Lindley LJ at 85, [1886-90] All ER Rep 1135 at 1138.] Although, the former is referred to as interpretation, [State of Jammu and Kashmir v Thakur Ganga Singh AIR 1960 SC 356 at 359] and the latter as construction, these terms are used interchangeably. Once the true meaning of the words in the instrument has been ascertained as a fact, construction becomes a question of law." (See Pollock and Mulla Contract Act 12th Edition 2001—published by Butterworths, page 255)


Parties to a written contract often disagree about its meaning. Words are frail packages for expressing the true intentions of parties to a contract, although it is only by reason of the words used that such intent can be ascertained. The traditional way of construing a written contract (in England, Bangladesh and India) was at one time to concentrate on its literal wording without reference to anything which had previously passed between the parties. But in 1970 in Prenn vs. Simmonds: (1971 (3) ALL E.R. 237 (HL)), the House of Lords (Lord Wilberforce delivering the main Speech) stated that in order for the agreement to be understood, it must be placed in its context:

"The time has long passed when agreements, even those under seal, were isolated from the matrix of facts in which they were set and interpreted purely on internal linguistic considerations. There is no need to appeal here to any modern, anti-literal, tendencies, for Lord Blackburn's well-known judgment in River Wear Comrs v. Adamson provides ample warrant for a liberal approach. We must, as he said, enquire beyond the language and see what the circumstances were with reference to which the words were used, and the object, appearing from those circumstances, which the person using them had in view. Moreover, at any rate since 1859 (Macdonald vs. Longbottom) it has been clear enough that evidence of mutually known facts may be admitted to identify the meaning of a descriptive term." (at pages 239-240)

In India, where the Indian Contract Act 1872 governs (the Bangladesh Contract Act 1872 is identical), the case of Prenn vs. Simmonds has been noticed and approved by India's Supreme Court in Godhra Electricity Co. Ltd., & Anr. vs. The State of Gujarat & Anr. (AIR 1975 SC 32). In that case the Supreme Court of India said:

"Para 11. In the process of interpretation ofthe terms of a contract, the court can frequently get great assistance from the interpreting statements made by parties themselves or from their conduct in rendering or in receiving performance under it. Parties can, by mutual agreement, make their own contracts; they can also by mutual agreement, remake them. The process of practical interpretation and application, however, is not regarded by the parties as a remaking of the contract; nor do the courts so regard it. Instead, it is merely a further expression by the parties of the meaning that they give and have given to the terms of their contract previously made."

There is no decision of a Court in Bangladesh which has been brought to the attention of the Tribunal in which any different view was taken as to how contracts are to be interpreted.

Whilst there is a debate between the Parties as to the extent to which, if at all, rules of international law are applicable to this dispute [...], there does appear to be a measure of common ground as to the relevant principles of Bangladeshi law to be applied by the Tribunal in its efforts to construe the relevant Articles of the Agreements. [...]
Mindful of the above, [...] the Tribunal has considered the relevant provisions of these PSCs and GPSAs in the light of the submissions of the Parties and of the rules of construction that it is required to apply.

The PSCs


The Tribunal accepts that under the provisions of [...] the PSCs, three discrete eventualities were anticipated:

(i) the export of natural gas in the form of LNG by Claimants;

(ii) the sale of Claimants' share of Natural Gas to the Bangladesh domestic market pursuant to a sales and purchase agreement with Petrobangla; and

(iii) the sale by Claimants of their share of Natural Gas in the domestic market to a third party - subject to a right of first refusal on Petrobangla's part.

Of those three eventualities, the first and third have not arisen at all, because Petrobangla has purchased all of Claimants' Natural Gas. As already mentioned, in the Preamble to each of the three GPSAs, it is recorded:


... B Under [...] the PSCs Buyer has agreed to purchase Seller's share of Gas under PSC for use within the territory of Bangladesh" [...]


On the basis of an election by Claimants to sell Natural Gas to the Bangladesh domestic market, Claimants and Petrobangla are required to enter into a Natural Gas sales and purchase agreement, committing Petrobangla to purchase Claimants' entitlement to Natural Gas. [The PSCs prescribe] that any such agreement: "shall contain provisions generally used in the international Petroleum Industry" AND the specific provisions identified [in the PSCs].

Leaving aside Articles [...] for present purposes, Article [...] imposes, in the opinion of the Tribunal, a clear obligation upon Petrobangla to afford access to its pipeline system for all Natural Gas to which Claimants are entitled under the PSC and which they have dedicated to the domestic market—subject only to the proviso that there be spare capacity in the pipeline at the time. Article [...] imposes an equally clear obligation upon Claimants to build and operate any required spur pipeline and the point at which the spur connects with Petrobangla's trunk pipeline becomes the Measurement Point.

[The provision regarding the tariff] comprises a number of elements:

(i) an entitlement on the part of Petrobangla to [the percentage] of Claimants' total Natural Gas; (a) measured at the Measurement Point during a Calendar year; and (b) pursuant to a delivery schedule agreed between the Claimants and the Respondent; and

(ii) the application of a [the percentage] levy to cover tariffs and losses incurred when Claimants use a pipeline operated by the transmission company to supply Natural Gas to the Bangladesh domestic market.

In the opinion of the Tribunal, [...] the PSC sets out a framework for the supply of Natural Gas by Claimants to the Bangladesh domestic market through Petrobangla, for which the pricing mechanism is set out [...]. All of the sub-clauses [...] need to be read together (and in the context of the PSC read as a whole). The principal purpose of the transaction for which provision is made in [...] the PSC is to enable Claimants to dispose of their Natural Gas on the Bangladesh domestic market—not to third party buyers. So far as Claimants are concerned, without a pipeline of their own, access to the Petrobangla trunk pipeline to bring their Natural Gas to the domestic market was an indispensable element. To that extent, the obligation upon Petrobangla to afford access to its pipeline [...] was a critical part of the package and one for which it was primarily in Claimants' interest to make proper provision. That, in the judgment of the Tribunal, is the true purpose and intent of [the provision regarding the tariff].
Initially Claimants [...] sought clarification from Petrobangla of Occidental's interpretation of [the provision regarding the tariff] of the PSC. It was stated that: "the Contractor interprets [the provision regarding the tariff] of the PSC to apply when gas is sold to third-parties under Article [...] . In this case [the percentage] of the Contractor's share of the total volume of the Gas could be provided to Petrobangla to cover tariffs and losses. This is obviously somewhat different to Petrobangla's interpretation and we respectfully request Petrobangla's opinion."

But [the provision regarding third party sales] of the PSC was an alternative to [the provision regarding the tariff]. [The provision regarding the tariff] read as follows:

"The transmission company shall be entitled to receive [a percentage] ([the percentage]) of Contractor's total Natural Gas measured at the Measurement Point during a Calender Year under a delivery schedule to be agreed upon between Contractor and the transmission company to cover tariffs and losses incurred when Contractor uses a Pipeline operated by the transmission company to supply Natural Gas to the Bangladesh domestic market."


Whilst [the provision regarding third party sales] read as follows:

"Contractor has the option to sell Contractor’s share of Natural Gas in the domestic market to a third party, subject to Petrobangla's right of first refusal. Petrobangla shall cooperate with Contractor to facilitate such sale."

Each of the three GPSAs executed pursuant to the PSCs made clear that [the provision regarding third party sales] was not at all applicable, since the Buyer (Petrobangla) had agreed to purchase Seller's (Occidental's) share of Gas under the PSC "for use within the territory of Bangladesh". Under [the provision regarding the tariff], it was only when the Parties had agreed that the Contractor had elected to sell its share of Natural Gas to the Bangladesh domestic market that Petrobangla and the Contractor were to enter into a Natural Gas sales and purchase agreement (as reflected in the [GPSAs]).

It is therefore suggested by Claimants that it was intended that the [the percentage] levy prescribed in [the PSC] would fall to be paid only if Claimants were to use the pipeline:

(i) to transport gas to which they, Claimants, still had title; and

(ii) to a third party buyer—not Petrobangla—in the Bangladesh domestic market.

But the Tribunal cannot accept such a "stand-alone" literal interpretation of [the provision regarding the tariff], because it is advanced without reference to the contractual (and factual) context and circumstances. Besides, if that were right, why should the application of the tariff be dealt with in a provision addressing only sales to Petrobangla or, indeed, be mentioned at all? Third party sales are the subject of a separate regime [...]. Petrobangla has an obligation to cooperate with Claimants to facilitate any such third party sale, to the extent that it has not exercised its right of first refusal. But there is nothing in the language of the PSC to import the wording of [the provision regarding the tariff] [...] into [the provision regarding third party sales]. If, indeed, it were so critical to establish that the [the percentage] levy would only apply to non-Petrobangla third party sales, [...] it is difficult to appreciate why that was not made clear in express terms. Why, if that were intended, was the provision included instead in a regime specifically applicable to sales to Petrobangla rather than to third parties?

There is plainly no question in the [GPSAs] of a non-Petrobangla third party sale. Under the terms of these GPSAs:

(i) Petrobangla (or one of its entities) would be the "transmission company" as well as the buyer;

(ii) in that capacity, it had an entitlement to receive the [the percentage] levy; and

(iii) the point is made that the levy relates to use by Claimants of ANy pipeline or associated facility NOT built by them AND owned and operated by Buyer to supply Gas to the Bangladesh domestic market.

In the judgment of the Tribunal, what had been agreed in the [GPSAs] was, in effect, an access fee, without payment of which, Claimants' Natural Gas would not be delivered to the domestic market in Bangladesh.

By injecting the concept of the passing of title ("the Delivery Point") into contractual provisions which are premised upon measurement and not title, [the provision regarding the tariff] of the [GPSAs] would be totally meaningless and redundant: the interpretation as suggested by Claimants would preclude Claimants ever being liable to pay the [the percentage] under the GPSA, because it is admitted by Claimants that under any one of the GPSAs [...] the Measurement Point was fixed at a point before the Gas entered into Petrobangla's pipeline and no provision was made in any of the GPSAs for shifting of the Measurement Point. It is also difficult to accept that [the provision regarding the tariff] of the [GPSAs] were never intended to apply to sales to Petrobangla, but only to sales to third parties, as contended for by Claimants, since such sales (to third parties) were never contemplated within a GPSA framework for which the [the percentage] provision was expressly drafted.
Besides, on the basis of the plain language of the relevant Clause in each of the three GPSAs, it appears clear to the Tribunal that the Parties had intended the Buyer's trunk pipeline to be used by the Contractor, not on the basis that it had title to the Gas that passed through the Buyer's trunk pipeline, but because the Contractor had: "elected to sell its share of Natural Gas to the Bangladesh market" [...] and the Bangladesh market could only be reached through the trunk pipeline owned and operated by Petrobangla.
Then there is the point about unequivocal conduct. In its outline summary of the facts (paragraphs 77-104) above, the Tribunal traced the initial exchanges between the Parties following Claimants' election to sell their Natural Gas to the Bangladesh domestic market and to avail themselves of GTCL's pipeline in order to do so.

The Tribunal has drawn particular attention to the correspondence leading up to Petrobangla's letter of 1 July 1999, which concluded with Petrobangla's request that Claimants:

"Make necessary deductions from the future invoices and correct the present one." [...]


By a letter dated 6 July 1999, [the Claimants] sought clarification of this interpretation, stating that it was Claimants' understanding that:

"Petrobangla takes ownership of all gas produced from [...] at the Measurement Point. As the Measurement Point is prior to the Gas entering the GTCL system then in effect it is not OBL that is using the GTCL system but Petrobangla. On this basis Petrobangla’s claim that [the percentage] be deducted for OBL’s usage of the GTCL system is erroneous." [...]

This letter concluded as follows:

"this is obviously somewhat different to [Respondent's] interpretation and we therefore respectfully request Petrobangla's opinion." [...]

Notwithstanding the absence of any formal written response to that letter, the Tribunal finds that Claimants proceeded to act on the basis that the true interpretation was as stated in Petrobangla's letter of 1 July 1999 in which Claimants had been requested to "make the necessary deductions from the future invoices [i.e. apply the [the percentage] tariff] and correct the present one." The invoices for February 1999 to October 1999, were duly corrected as requested by Petrobangla (unequivocally and without reservation) and they were later duly reflected in the Contractor's own Audited Accounts [...]. Such corrections could only be attributed (in the absence of any reliable evidence to the contrary) to an acceptance of Petrobangla's interpretation.
Thereafter, moreover, throughout the almost four year period from November 1999 to July 2003 (in the course of which, some 54 further signed monthly invoices [...] were issued by Claimants), deductions were duly made by Claimants from each monthly invoice. Every one of those invoices was endorsed with the words: "Less [the percentage] per GPSA [...]". The deliberate use of these words seems to the Tribunal to be clearly indicative of the fact that Claimants acknowledged Respondent's entitlement to [the percentage] tariff for access to the GTCL trunk pipeline. The words endorsed on the invoices are again unequivocal: they are not at all suggestive (as contended by Claimants) of "segregating the disputed amount on their invoices in order to ensure that the nondisputed portion of the invoices would not be delayed." [...]
Thus Claimants having accepted Petrobangla's interpretation as contained in its letter dated 1 July 1999, and having unconditionally acted upon this interpretation for a continuous period of over four years (until July 2003), the issue (at least as regards [GPSA 1]) stood settled.
Until a fresh dispute was first raised in September 2003, neither Party had any doubt (or had expressed any doubt) as to the correctness of this mutual (and mutually accepted) interpretation of [...] the GPSA. The consistent and undisputed conduct of the Parties over such a long period reflects the actual intention of the Parties—viz. that as a matter of construction of the relevant provision [...], Petrobangla was entitled to receive [the percentage] of Claimants' total Natural Gas measured at the Measurement Point, irrespective of the fact that the risk and title to the gas that passed through the Petrobangla pipeline after the Measurement Point was that of Petrobangla.
The reason given during the hearing as to why Claimants accepted Bangladesh's interpretation of the relevant clauses for such a long period is not at all convincing in the Tribunal's view. If the contractual arrangement (worded as it was) was to be treated as Claimants would have the Tribunal interpret it, there could be no possible situation in which the [the percentage] tariff could ever be levied by Petrobangla. If that were the result, the clause would be otiose and meaningless. On settled rules of construction applicable in this case, as stated by Claimants' Counsel: "an interpretation which renders meaningless or redundant a contract provision should be avoided."
In respect of [GPSA 1], although on a strict textual stand-alone interpretation of the relevant paragraph [...], it might be said that the [the percentage] tariff would have been payable only "when" Claimants "used" the pipeline, and not "whenever the pipeline was used", it was the latter interpretation that was mutually treated, by a long course of conduct, as the basis upon which the said paragraph was given effect and applied by both Claimants and Respondent.
The Tribunal has taken careful note of the opinions of Claimants' experts [...].

However, the Tribunal is inclined to give weight to Bangladesh's expert's [...] observation that:

"the 'international practice' that [Claimants] refer to are practices that are employed with respect to privately owned pipelines in North America and Europe. These practices are not necessarily universal in countries that have a government owned national pipeline grid similar to Bangladesh. For instance, Iraq and Algeria require Contractors to pay for pipeline transportation despite the fact that the contractors do not have title to the gas or oil during transportation in these pipeline systems. It is entirely normal in countries with a national government owned pipeline grid to require Contractors to pay for transport cost or pay a transport tariff, if such Contractors benefit from the national pipeline system in some form." [...]

For these reasons, the Tribunal concludes as a matter of construction of the relevant clause of [GPSA 1] that the [the percentage] tariff is applicable to sales of Claimants' Natural Gas to Petrobangla for the Bangladesh domestic market. Since the same language in identical terms as in [GPSA 1] was adopted in [...] the later GPSAs [...], the Tribunal also concludes as a matter of construction of the relevant clauses of those two later GPSAs that the [the percentage] tariff is likewise applicable in the case of the [other] GPSAs to sales of Claimants' Natural Gas to Petrobangla for the Bangladesh domestic market.

Acquiescence, Laches, Estoppel and Waiver

While the Tribunal's findings as to the proper interpretation of the language of the Agreements in the context of all relevant circumstances renders an investigation of these further contentions moot, the Tribunal considers it appropriate to make the following observations.
The Tribunal has set out at paragraphs 78 to 80 above the development of the correspondence between the Parties leading up to Claimants' letter of 6 July 1999. [...]
It is not disputed that, as regards invoices rendered by Claimants for gas supplied between February and October 1999, corrections as requested by Petrobangla were duly made by Claimants in their Audited Accounts. [...] It appears to the Tribunal (in the absence of any reliable evidence to the contrary) that the most likely inference to be drawn is that such corrections could only be attributed to an acceptance of Petrobangla's interpretation to the extent of reflecting it in Claimants' own financial statements.
Thereafter, as the Tribunal has already noted, throughout the four year period from November 1999 to July 2003, deductions were duly made by Claimants from each of some 54 monthly invoices, every one of which was endorsed with the words: "Less [the percentage] per GPSA [...]".
All invoices were signed by responsible executives of Claimants—the Finance Manager or a Director. As Leading Counsel for Respondent remarked at the hearing, it would have been very easy to make a reservation of Claimants' rights even as they submitted the invoices, but they chose never to do so.
In the judgment of the Tribunal, and irrespective of its determination that, on a proper construction of the PSCs and GPSAs, Respondent's interpretation is to be preferred, as of 1999, the issue had been settled, so far as [GPSA 1] was concerned. Claimants had apparently accepted Petrobangla's position as contained in its letter dated 1 July 1999, and they had acted upon this interpretation for a continuous period of over four years until the dispute resurfaced in August 2003.
This course of conduct followed by Claimants and Petrobangla over such a lengthy period is, in the Tribunal's opinion, itself a testament to the actual intentions of the Parties to [GPSA 1]— i.e. that the transmission company of Petrobangla was entitled to receive [the percentage] of the Claimants' total gas measured at the Measurement Point, irrespective of the fact that the risk and title to the gas that passed through the Petrobangla pipeline after the measurement point was that of Petrobangla. There is now no scope for going back on what is a closed chapter in the relations between the Parties in respect of [GPSA 1].

The same conclusion applies in respect of [GPSA 2]. In [...] the Side Letter Agreement, it is stated that: "the Seller and Buyer hereby agree to interpret [the provision regarding the tariff] of "[GPSA 2] in the same way as [the provision regarding the tariff] of [GPSA 1]." [GPSA 1] was interpreted and acted on by both Parties as contended for by Bangladesh, for a continuous period of more than four years, and [GPSA 2] must be interpreted "in the same way". Counsel for Claimants contended that [...] the Side Letter Agreement only applied (as the opening words showed) where agreement concerning the proper interpretation of [GPSA 1] "is reached" between the Parties. And since no agreement was "reached", the latter part of [...] the Side Letter had no application. The Tribunal finds it difficult to accept this contention: the overriding purpose and intent of clause 5 was that the relevant clause in [GPSA 2] (identical with that contained in [GPSA 1]) was that it was to be interpreted "in the same way" as the relevant clause in [GPSA 1].

[GPSA 3] was identically worded, so far as the tariff provision was concerned. And the [...] [GPSA 3] Side Letter Agreement—although it kept the issue of the [the percentage] Tariff alive—also acknowledged that "a disagreement had arisen" concerning the proper interpretation of [...] the PSC and [...] of [GPSA 3] in relation to the application of the [the percentage] tariff. The Side Letter called for that dispute to be referred to arbitration.
[GPSA 3] was signed by the Parties on 8 November 2004. [...]

The Tribunal notes that:

(i) although the wording of [the provision regarding the tariff] of [GPSA 3] is identical to that of [the provision regarding the tariff] of [GPSA 1], significantly [the provision regarding the tariff] of [GPSA 3] had been adopted some 15 months after the attempted revival by Claimants of the [the percentage] tariff dispute, but the same language as in [GPSA 1] was adopted;

(ii) paragraph 1 of the [GPSA 3] Side Letter Agreement makes reference to the PSC (and to [GPSA 3]) for the limited purpose of establishing that the meaning to be applied to the terms defined in [GPSA 3] and in the PSC of 11 January 1995 and used in the Side Letter is to be the same;

(iii) the "disagreement" to be referred to arbitration concerns only "the proper interpretation of [GPSA 3] in relation to the application of a [the percentage] tariff", nothing else;

(iv) it was open to the Parties in November 2004 to consider and negotiate a change in the language of Article [...] before signing [GPSA 3], but they elected not to do so: the same interpretation that is given in this Arbitration to Article [...] of [GPSA 1] must follow in the case of the construction of Article [...] of [GPSA 3] as well.

The arbitration contemplated in the [GPSA 3] Side Letter has now taken place. On the basis of the record before it and the Parties' submissions, the Tribunal has construed the disputed provisions of the GPSA agreements and come to a conclusion as to their proper interpretation.


As a result, and with regard to [GPSA 1] the submission and prayer of Claimants that they are not liable to pay [the percentage] tariff is rejected upon a true and proper construction. Besides, re-visiting a dispute settled over the course of several years (and which settlement had been acted upon by both Parties) precludes Claimants from attempting to revive it. The Tribunal [...] upholds Respondent's plea of estoppel by convention.
As Lord Denning stated in Amalgamated Investment & Property Co Ltd (in liquidation) vs. Texas Commerce International Bank Ltd : 1982 QB 84 at 121 = 1981 (3) All E.R. 577 at 583, quoted in Sarker (see below) evidence of subsequent conduct is available: "not so as to construe the contract but [to] see how the parties themselves acted on it. Under the guise of estoppel we can prevent either party from going back on the interpretation they themselves gave to it." Estoppel by convention is a rule of evidence which is applicable wherever the Evidence Act 1872 prevails (Sarker: Law on Evidence (in India, Pakistan, Bangladesh, Burma, Ceylon, Malaysia and Singapore) 16th Edition 2004, Wadhwa & Co. page 1958). The Indian Evidence Act 1872 applies in Bangladesh where it is enacted as the Bangladesh Evidence Act 1872.

With regard to Claimants' claim that they are not obliged to pay the [the percentage] tariff in respect of [GPSA 2], the same is also rejected. The Tribunal has had regard to, and applies, the language used in [...] the [GPSA 2] Side Letter Letter Agreement, viz. that: "the Seller and Buyer hereby agree to interpret [GPSA 2] in the same way as Article [...] of [GPSA 1] ." Article [...] of [GPSA 1] was interpreted and acted on by both Parties as contended for by Bangladesh, for a continuous period of more than four years. In the Tribunal's view, it is fair and just that the dispute under [GPSA 1] should be resolved by reference to the course of dealing—by the interpretation which the Parties themselves put upon their agreement—and on the basis of which they conducted their affairs for several years. And since the Parties have agreed that [the provision regarding the tariff] of [GPSA 2] must be interpreted "in the same way", as the relevant clause under [GPSA 1], the claim under [GPSA 2] must also fail.

So far as [GPSA 3] is concerned, Claimants' claim that [the percentage] tariff is not payable in respect of [GPSA 3]. That claim is likewise rejected. In the course of these arbitration proceedings, as envisaged under the terms of the [GPSA 3] Side Letter, the Tribunal has concluded that, upon a proper interpretation of the identical provisions in each of the three GPSAs, which relate solely to Gas supplies to the Bangladesh domestic market, the [the percentage] tariff was, and is, payable to Respondent. The overriding difficulty for Claimants is that, on the interpretation for which they contend, there is no situation under any of the three GPSAs in which the provision could possibly apply. In effect, in no event would Claimants ever be liable to pay, or to be called upon to pay, what, in essence, was an access fee for the use of Petrobangla's pipeline.



Article 61(2) of the ICSID Convention requires the Tribunal to:

"....assess the expenses incurred by the Parties in connection with the proceedings and (to) decide how and by whom those expenses, the fees and expenses ofthe members of the Tribunal and the charges for the use of the facilities of the Centre shall be paid."

The Tribunal further concludes that Claimants' costs of US$ [...] in respect of their attendance at the second procedural hearing in The Hague on 5 August 2008 and their costs incurred in replying to Respondent's "unauthorised" Counter-Memorial on the Merits of 10 March 2008 (US$ [...]) should be met and paid by Respondent in any event.
The Tribunal rejects Claimants' additional or alternative claim for recovery of their costs of their Supplemental Reply Memorial on the Merits.
On the basis of the Tribunal's Decision in respect of the Jurisdictional Objection raised by Respondent, it is clear that Claimants have prevailed on this point. Their costs of US$ [...] attributable to that phase of the Arbitration are therefore likewise susceptible to recovery from Respondent and must be paid by Respondent.

It is equally clear, however, that in the Merits phase of this Arbitration, Respondent has prevailed. Accordingly, the Tribunal:

(i) disallows the costs of US$ [...] incurred by Respondent prior to August 2008 and its costs of preparation for and attendance at the August 2008 second procedural hearing (US$ [...]); but

(ii) allows the costs itemised at paragraphs 15, 16, 17, 19 and 20 of Respondent's Costs Submission, totalling US$ [...]; and

(iii) denies Claimants' claim for their fees and expenses of and attendant upon the Hearing on the Merits.

The Tribunal therefore awards Claimants a total of US$ [...] in respect of their legal fees and expenses itemised at paragraphs 263, 264 and 266 above, to the recovery of which the Tribunal determines they are entitled in any event, and awards Respondent a total of US$ [...] in respect of its legal fees and expenses, leaving a net balance to be paid by Respondent to Claimants of US$ [...].
So far as the fees and expenses of the Tribunal and the costs attributable to the use of the services of the Centre are concerned, the Tribunal, having regard to the overall conduct of the Arbitration and its outcome, determines that these costs and expenses should be borne equally by the Parties.



On the basis of the foregoing reasons, the Tribunal unanimously decides as follows:

(i) The Tribunal confirms that it has jurisdiction over the Parties' dispute;

(ii) The Tribunal rejects the Claimants' claims on the merits;

(iii) The Respondent shall pay to the Claimants US$ [...] for their legal fees and expenses; and

(iv) The fees and expenses of the Tribunal and the costs attributable to the use of the services of the Centre shall be borne by the Parties in equal shares.

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