|ANE||Administracão Nacional de Estradas, the national roads administration of Mozambique|
|BIT||Agreement between the Government of the Italian Republic and the Government of the Republic of Mozambique on the Promotion and Reciprocal Protection of Investments dated 14 December 1998|
|C-[number]||Claimants' Exhibit [number]|
|CL-[number]||Claimants' Legal Authority [number]|
|CM||Claimants' Memorial on the Merits, 19 March 2018|
|CMC or the Claimants||The Claimants collectively|
|CMC Africa Austral||Claimant CMC Africa Austral, LDA, a wholly owned subsidiary of CMC Ravenna incorporated under the laws of Mozambique|
|CMC Maputo||Claimant CMC Ravenna S.C.R.L. Maputo Branch, a branch of CMC Ravenna registered in Mozambique|
|CMC Ravenna||Claimant Cooperativa Muratori & Cementisti – CMC Di Ravenna Società Cooperativa, incorporated under the laws of Italy|
|COA||Claimants' Comments to the Respondent's Observations Concerning the Achmea Decision, 18 March 2019|
|Cotonou Convention||Partnership Agreement between the members of the African, Caribbean and Pacific Group of States, of the one part, and the European Community and its Member States, of the other part, signed in Cotonou on 23 June 2000|
|Cotonou Arbitration Rules||Arbitration rules adopted by decision of the Council of Ministers at the first meeting following the signing of the Cotonou Convention|
|CRB||Claimants' Response to Bifurcation, 3 August 2018|
|CRMJ||Claimants' Reply on the Merits and Counter-Memorial on Jurisdiction, 4 February 2019|
|DEN||Direcção de Estradas Nacionais, the Engineer/Supervisor on the Lot 3 Project|
|ECJ||European Court of Justice|
|EDF||European Development Fund|
|Engineer||DEN, the Engineer/Supervisor of the Lot 3 Project|
|Joint Declaration||Declaration of 22 EU Member States of 15 January 2019 on the Legal Consequences of the Achmea Judgment and on Investment Protection|
|Lot 3 Contract||Public Works Contract No 307/DEN/04 for the Lot 3 Project|
|Lot 3 Project||Road Rehabilitation project between Namacurra and the Ligonha River, Lot 3, Section E|
|Ministry||The Ministry of Public Works and Housing of Mozambique|
|R-[number]||Respondent's Exhibit [number]|
|RA or Amended Request||Claimants' Amended Request for Arbitration, 23 June 2017|
|RCM||Respondent's Counter-Memorial on the Merits, 2 November 2018|
|Revised Cotonou Convention||Cotonou Convention as revised on 25 June 2005 and on 22 June 2010|
|RL-[number]||Respondent's Legal Authority [number]|
|ROA||Respondent's Observations Regarding the European Court of Justice's Achmea Decision, 31 January 2019|
|ROJ||Respondent's Objections to Jurisdiction and Memorial in Support Thereof, 20 July 2018|
|RRA||Respondent's Reply on Achmea Observations, 1 April 2019|
|RRB||Respondent's Request for Bifurcation, 20 July 2018|
|RRJ||Respondent's Reply on Jurisdiction, 1 April 2019|
|RRM||Respondent's Rejoinder on the Merits, 1 April 2019|
|Tr. [date]||Transcript of hearing on date given [date]|
|VCLT||Vienna Convention on the Law of Treaties, 23 May 1969|
a. Cooperativa Muratori & Cementisti – CMC Di Ravenna Società Cooperativa ("CMC Ravenna"), a company incorporated under the laws of Italy with its head office in Ravenna, Italy;
b. CMC Ravenna S.C.R.L. Maputo Branch ("CMC Maputo"), a branch of CMC Ravenna registered in Mozambique; and
c. CMC Africa Austral, LDA ("CMC Africa Austral"), a wholly owned subsidiary of CMC Ravenna incorporated under the laws of Mozambique with its head office in Maputo, Mozambique.
Members of the Tribunal :
Mr. John M. Townsend President
Mr. J. Brian Casey Arbitrator
Mr. Peter Rees QC Arbitrator
ICSID Secretariat :
Ms. Ella Rosenberg Secretary of the Tribunal
Ms. Anna Devine Paralegal
For the Claimants :
Mr. Luis Gonzalez Garcia Matrix Chambers
Mr. Alan Del Rio LDR Consultants
For the Respondent :
Mr. Juan Basombrio Dorsey & Whitney LLP
Ms. Erica Chen Dorsey & Whitney LLP
Court Reporter :
Mr. David Kasdan Worldwide Reporting LLP
a) The Claimants shall inform the Tribunal and the Respondent, no later than April 22, 2019, whether they have been able to arrange for Mr. Gridella to attend the hearing.
b) If Mr. Gridella does not attend the hearing, the Respondent may make an application to the Tribunal concerning what consequence, if any, should follow from Mr. Gridella's failure to attend. Such application is to be made orally, during the time period reserved for Mr. Gridella's testimony in paragraph 7 below, and the Claimants will be given an opportunity to respond to such application at that time. Both parties should expect questions from the Tribunal in this connection.
What we have here is an obvious prior failure by the Claimants' counsel to secure Mr. Gridella's commitment to appear at the hearing, not any allegedly "new" concern by Mr. Gridella. […] If Mr. Gridella does not appear to testify at the hearing, both of Mr. Gridella's witness statements, and all references in the memorials to him, must be stricken from the record.
Second, Respondent strongly objects to the request by the Claimants to now call their own witness. The Tribunal will recall that, during the first pre-hearing conference, the Claimants objected when the Respondent sought to call its own witness to testify at the hearing. Claimants said that this was not allowed under the Procedural Orders – that a party cannot call its own witness to testify. As a result, the Respondent did not call its own witness and this agreement was reflected in the list of witnesses jointly provided by the parties. Respondent has not called Mr. Alicandri to testify, he was not included in the jointly-agreed list of witnesses for the hearing agenda, and therefore the Claimants cannot unilaterally call him as a witness because they have previously taken the position that a party cannot call its own witnesses and the Respondent accepted that position to its prejudice.
Mr. Alicandri also has not provided a witness statement on the new issues on which the Claimants now seek to call him, and therefore that also would render his testimony improper, because the Respondent would lack prior knowledge of his testimony which creates a Due Process problem. A witness cannot testify on new matters, and therefore there is nothing that he could say at the hearing, if the Respondent does not want to call him to testify. In addition, he clearly cannot testify about Mr. Gridella's alleged "concerns," because that is inadmissible hearsay.
Further, the Tribunal's most recent procedural order indicates that it will decide the motion to strike Mr. Gridella's witness statements after it hears argument on the motion at the hearing. Therefore, there will be uncertainty when the hearing starts as to whether Mr. Gridella's witness statements will even be considered. If Mr. Gridella's witness statements remain part of the record, that renders the Claimants' current request moot. This alone has introduced sufficient uncertainty into the opening statements – the Respondent does not believe that there can be any reference to Mr. Gridella's witness statements in the opening statement if he is not present to testify, but we will not have a ruling from the Tribunal when the hearing starts. It is very difficult to prepare for a merits hearing not knowing whether the testimony of a key witness like Mr. Gridella will be part of the record or not – this is a very serious problem caused by the Claimants. The preferred approach would have been that the witness statements of Mr. Gridella are stricken prior to the start of the hearing, as they should be.
The addition of Mr. Alicandri would create further difficulties, and forces the parties to have to argue in the alternative in a totally unworkable way. Again, these problems are all the creation of the Claimants' prior failure to secure Mr. Gridella's attendance at the hearing, and the addition of Mr. Alicandri would simply complicate things further. Any sympathy that the Tribunal may have initially had for the Claimants' own predicament, should be disregarded given the misrepresentations about Mr. Gridella's employment status. At this late stage in the proceedings, and certainly during the hearing, the Respondent cannot be left guessing which Claimants' witness will be considered by the Tribunal. How can the Respondent prepare for a hearing under those circumstances?
Therefore, the Tribunal must stay the course with the decision it has made in the most recent procedural order – it will hear the motion to strike Mr. Gridella's testimony at the hearing, and it must deny the Claimants' request to unilaterally call Mr. Alicandri because that is not allowed as previously argued by the Claimants themselves and because the Respondent cannot be left guessing regarding what new testimony Mr. Alicandri will provide.
In the alternative, if the Tribunal is inclined to depart from the procedural orders and allow the Claimants to unilaterally call Mr. Alicandri (which the Tribunal should not do), then it must be on the strict condition that Mr. Gridella's two witness statements, and all references in the memorials to them, are stricken from the record immediately – that is, now before the hearing. Respondent must have clarity as to what evidence is going to be part of the record at the hearing. Due process demands that.
Respondent objects to the entire content of Mr. Del Rio's email referring to Mr. Gridella's asserted reasons for not appearing at the hearing, except for the admission by Claimants' counsel that they misrepresented to the Tribunal during the prehearing conference that Mr. Gridella was unemployed when he signed the two witness statements. The rest of the details are entirely "hearsay." Mr. Gridella has not testified to any of those assertions, including his purported reasons for refusing to testify at the hearing. The hearsay evidence is improperly being presented by the Claimant's counsel.
Respondent will not have an opportunity to cross-examine Mr. Gridella about said hearsay evidence, and therefore it is inadmissible and cannot be included in the record.
With respect to Mr. Alicandri, he would be providing new testimony at the hearing that the Respondent and this Tribunal have never seen in a witness statement. In his initial email, Mr. Del Rio stated that Mr. Alicandri would "speak about the non-attendance of Mr. Gridella." That is new evidence and is also hearsay evidence. Mr. Alicandri also cannot speak to substantive issues that he has not testified about before. He cannot testify about what Mr. Gridella has testified. Claimants' cannot substitute witnesses to cover Mr. Gridella's absence – that is exactly what they want to do with Mr. Alicandri and it would be highly improper. Allowing Mr. Alicandri to testify as to new matters would be a serious violation of the Respondent's due process rights, because the Respondent does not know what he is going to say. There are no surprise witnesses in international arbitration. Claimants' counsel also fails completely to address the point that they are contradicting themselves. Claimants do not dispute that they had previously taken the position that a party cannot call its own witness to testify under the procedural orders. Respondent therefore also did not do so, when the parties agreed on the list of witnesses. Claimants are now estopped from taking a contrary position. Therefore, Mr. Alicandri cannot be called by the Claimants.
Mr. Gridella is the only witness of the Claimants who has asserted that there was a settlement agreement. Therefore, it is critical that the Respondent have the right to cross-examine him. If Mr. Gridella does not appear at the hearing, and his witness statements are stricken as they must be, the Claimants have no witness to dispute the Respondent's position that there was no settlement agreement. In sum, the Claimants cannot prove their case. Claimants should seriously consider whether they want to go forward with this hearing, which will result in significant expense. Claimants will not be the first party that had to abandon a case because it could not secure the cooperation of its key witness. Respondent reminds that Claimants that it has requested that, as part of the Tribunal's award if it finds for the Respondent, that the Tribunal order reimbursement by the Claimants of all fees and costs incurred by the Respondent in these proceedings.
Mr. Gridella has not testified to any of those assertions, including his purported reasons for refusing to testify at the hearing. The hearsay evidence is improperly being presented by the Claimant's counsel. Respondent will not have an opportunity to cross-examine Mr. Gridella about said hearsay evidence, and therefore it is inadmissible and cannot be included in the record.
Witness Statement of Mr. Gridella
11) […] Mr. Gridella's two witness statements will remain part of the record, and […] may be discussed by both parties in their opening statements. However, the Tribunal reserves for determination in its award the question of what weight, if any, should be given to Mr. Gridella's witness statements, or any part of them. The parties are free to present their arguments on that subject in their opening statements at the hearing, in their closing arguments at the hearing, or in their post-hearing briefs, as each party may elect.
Testimony of Mr. Alicandri
14) No new witness statement of Mr. Alicandri is needed or will be accepted.
16) Upon consideration of the Respondent's objection, the two additional declarations made by E.U. member states are accepted into the record of this arbitration.
18) The Tribunal prefers accurate translations to inaccurate translations. Based on the Claimants' representation in their email to the Secretary of April 11, 2019 that these are "small amendments," and in the absence of any showing by the Respondent that the amendments would result in the translations being inaccurate or in prejudice to the Respondent, the amended translations are accepted into the record.
1. Having heard nothing from the Claimants about the attendance of Mr. Gridella at the hearing by the April 22 deadline set in P.O. No. 6, the Tribunal assumes that he will not be attending the hearing.
2. The Tribunal has received the Respondent's Objections to P.O. No. 7 and Motion for Reconsideration dated April 22. The Tribunal would like to receive a response from the Claimants, but understands that it may be difficult for the Claimants to provide one before the Hearing commences. We would be grateful if the Claimants would advise us when they will be able to respond.2
We have considered the arguments heard this morning and presented in writing in the motion itself and the subsequent e-mails. We conclude that we do not change Procedural Order 7. So we will be most interested in the Parties' thoughts as this hearing proceeds concerning what weight, from full weight to none, or any point in between, should be given to Mr. Gridella's witness statement.3
Members of the Tribunal :
Mr. John M. Townsend President
Mr. J. Brian Casey Arbitrator
Mr. Peter Rees QC Arbitrator
Assistant to the President
Mr. Stijn Winters Assistant to the President
ICSID Secretariat :
Ms. Ella Rosenberg Secretary of the Tribunal
Ms. Maria-Rosa Rinne Paralegal
For the Claimants :
Mr. Luis Gonzalez Garcia Matrix Chambers
Mr. Alan Del Rio LDR Consultants
Mr. Tomás Timbane TTA Advogados
Mr. Enrico Alicandri CMC
Ms. Valentina Casasola CMC
For the Respondent :
Mr. Juan Basombrio Dorsey & Whitney LLP
Ms. Erica Chen Dorsey & Whitney LLP
Ms. Teresa Filomena Muenda Attorney, Mozambique
Cecilio Maria da Conceição Grachane Former General Director of the National Road Administration (ANE), Mozambique
Angelo Vasco Matusse Deputy Attorney General, Mozambique
Ismael Faruc Nurmahomed National Road Administration (ANE), Mozambique
Court Reporter :
Ms. Laurie Carlisle Carlisle Reporting
On behalf of the Claimants :
Mr. Enrico Alicandri CMC
Mr. Tomás Timbane TTA Advogados
On behalf of the Respondent :
Mr. Cecilio Maria da Conceição Grachane Former General Director of National Road Administration (ANE), Mozambique
Ms. Teresa Filomena Muenda Attorney, Mozambique
|A||Namacurra — Malei||28,153 Km|
|1||B||Malei - Mocuba||53,047 Km|
|C||Mocuba — Nampevo||70,450 Km|
|Total Lot 1||151,750 Km|
|2||D||Nampevo - Alto Molocuè||117,180 km|
|3||E||Alto Molocuè - Rio Ligonha||106,020 km|
|Total Lot 3||374.85 km|
55.2 When the Supervisor has received the full and detailed particulars of the Contractor's claim that he requires, he shall, without prejudice to Article 21.4 after due consultation with the Contracting Authority and, where appropriate, the Contractor, determine whether the Contractor is entitled to additional payment and notify the parties accordingly.
68.5 In the absence of an amicable settlement or settlement by conciliation within the maximum Time Limits specified, the dispute shall:
a) in the case of a national contract, be settled in accordance with the national legislation of the State of the Contracting Authority; and
b) in the case of a transnational Contract, be settled, either:
i) if the Parties to the Contract so agree, in accordance with the national legislation of the State of the Contracting Authority or its established international practices; or
ii) by arbitration in accordance with the procedural rules adopted in accordance with the [Cotonou] Convention.24
68.3 The parties may agree that the procedures for the conciliation referred by article 68.3 of General Conditions of Contract are the same of [sic] the Sub clause 5 of "Procedural Rules on Conciliation and Arbitration of contracts financed by European development Found" [sic] adopted by Decision No 3/90 ACP-CEE Council of Ministers dated 29 March 1990 (Official Journal No L 382/95 on 31.12.90).
The intervention of the European Communities agency in the amicable settlement may be made by the delegation of the European agency in Mozambique or by the Departments of the Head offices of the European Communities agency, in accordance with the agreements made by the parties and the agency.
62.1 Upon the expiration of the Maintenance Period, or where there is more than one such period, upon the expiration of the latest period, and when all defects or damage have been rectified, the Supervisor shall issue to the Contractor a Final Acceptance Certificate and a copy thereof to the Contracting Authority stating the date on which the Contractor completed his obligations under the Contract to the Supervisor's satisfaction. The Final Acceptance Certificate shall be given by the Supervisor within 30 days after the expiration of the above stated period, or as soon thereafter as any Works as instructed, pursuant to Article 61, have been completed to the satisfaction of the Supervisor.
62.2 The Works shall not be considered as completed until a Final Acceptance Certificate shall have been signed by the Supervisor and delivered to the Contracting Authority, with a copy to the Contractor.
62.3 Notwithstanding the issue of the Final Acceptance Certificate, the Contractor and the Contracting Authority shall remain liable for the fulfillment of any obligation incurred under the Contract prior to the issue of the Final Acceptance Certificate, which remains unperformed at the time such Final Acceptance Certificate is issued. The nature and extent of any such obligation shall be determined by reference to the provisions of the Contract.36
The Final Acceptance Certificate states that "the Engineer certifies that the Contractor, CMC di Ravenna Soc. Coop. Arl, completed his obligations under the Contract, with effect from 24 March 2011."37
|Claim No.||Subject ofClaim||AmountClaimed by theContractor||Revision/Recommendation of the Engineer|
|2||Delayed access for diversion construction||470,512.79||65,295|
|5||Increase of quantity of cut to spoil||6,783,895.8644||1,432,983|
|10||Unforeseen days off||45,725.8545||18,033|
|Unnumbered||Unforeseen days off / "CMC/NO D agree"||9,017|
|14||Additional borrow pits||1,750,570.08||915,597|
|Totals (all claims)||12,759,498.18||2,440,925|
The Engineer awarded nothing for the remaining 16 claims of the Contractor.
After a careful analysis of the contents attached to your letter, we regret to inform you that the sponsors offered do not cover the additional costs actually incurred at the time for the execution of the Contract.
We request that your position be reviewed and that the costs and financial charges actually incurred by us be recognized.
We reiterate that it is our firm intention to reach a friendly agreement, but we emphasize that if such agreement is not reached, we intend to initiate the legal procedures established in the Contract and in the law governing it.
We also pointed out that in the negotiations related to the assignment of Lot 2, our Company was always very clear that our availability to complete the work was strictly linked to the satisfactory resolution about Lot 3[…]47
With reference to your above letter.
We draw your attention to the fact that this is a "unit price" contract, not a "cost plus fee" contract. We consider that the amounts included in Engineer's determination represent a correct evaluation of extension of time and additional payments in relation to your claims.
We take note that you reserved your rights in relation with the Engineer's determination; however, we invite you to submit a request of payment for the amounts included in this determination.48
We herein enclose the interim payment application No.27 of 23 July 2009 according to your letter with Ref:203/DAC/DIPRO/09 of 07.07.09, for your appreciation and approval.
Once again we reiterate that it is our intention to reach a friendly agreement to recognize the costs and financial fees actually borne by us for the execution of the construction Works and, if that does not happen, activate the legal proceedings indicated in the Contract and in the law governing it.49
The contractor filed claims and measurement items in the amount of 12,498.18 [sic] Euros (that means 53% of the original contract value).
The Engineer found that the contractor was entitled to 2,440,925 Euros for claims and 105,524.09 Euros for measurements (see chapter 6.3 below).53
Sections 6.3.1-6.3.22 of the Final Project Report describe the Claimants' claims and the Engineer's decision on each claim.54
|Description||Claimed||Letter CMC no.|
|1||Borrow pits demining - increase of borrow pit quantity due to technical reasons||167,000||117L/CMCRL/FB/rl 221L/CMCRL/FB/rl|
|2||Delay of payment by the Contracting Authority of compensations||470,000||144L/CMCRL/FB/rl|
|3||Late issuance of documentation required for the importation of materials and parts by the Contracting Authority||1,400,000||210L/CMCRL/FB/rl 318L/CMCRL/FB/rl|
|4||Exaggerate increase of cut to spoil||9,500,000||267L/CMCRL/FB/rl 465L/CMCRL/FB/rl|
|6||Disruption due to lack of/ late payment||195,000||314L/CMCRL/FB/rl|
|7||Interests on the above mentioned amounts||1,500,000||(estimated)|
This letter serves as a confirmation that we are not in agreement with the amounts indicated in the Certificate #27 (Final Account) presented by the supervisor's representative, on the 20 July 2009 and only received by us – see email on the 12 October 2009. There is a discrepancy of approximately 8,257,785.96 € between our amounts and those of the Supervisor´s Representative and this is made up of the measured works as well as the claims that were already presented in November 2005.
Thus, our acceptance to payment for the indicated amount as being due according to the Certificate #27 shall in no manner be interpreted as an acceptance from our side.61
The Claimants' 14 October 2009 letter does not explain how they calculated the EUR 8,257,785.96 "discrepancy," nor did they do so during the hearing on the merits.62
1. CMC completed in November 2007, the rehabilitation of Lot III between Alto Molocue and Rio Ligonha having initated in may [sic] 2005, integral part of of the Namacurra – Rio Ligonha project funded by the European Union.
10. After various correspondence exchanges, the Contractor with his last letter sent on the 16.10.09 reiterates the respective claims and threatens to lodge an appeal in the arbitration court to manage the resolution of the problem.66
11. The Contractor does not demand immediate payment of the outstanding amounts but accepts that, once the debt is acknowledged by ANE, the disbursement shall be effected throughout the year of 2010.
12. The performance considered during the last 20 years, the revealed capacity to respond whenever it was requested and the quality of the Works executed make CMC one of the best Contractors that have operated (and operate) within the Country.
13. In view of the above and having considered the verifications that were effected in the claims presented, we hereby propose you, the following actions to permanently solve the problem:
a. Negotiate with the contractor a reasonable compensation proposal considering the proposal put forward in annex 2;
b. To advance with the schedule proposal in the payment of the amounts to be reached in the negotiations.67
|DESCRIPTION||Amount (Euros) Requested by Builder||Amount assessed (Euros) Recommended by ANE|
|1||Demining of borrow pits, increase of borrow pits due to technical reasons||167,133||167,133||0.00|
|2||Delay on payment compensations by the Employer||470,513||300,000|
|3||Employers delay in documentation issue necessary to import materials and parts||1,393,193||550,000|
|4||Unreasonable increase of cut to spoil||6,783,896||250,000||4,250,000|
|5||Unforeseen days off||45,726||--|
|6||Disruption due to lack/ delay in payments||195,396||100,000||--|
|7||Increase in the number of quarries||1,750,570||700,000||--|
|8||Revision of price labour costs||584,429||300,000||150,000|
|9||Hard rock excavation||123,755||--||123,755|
|10||Additional cement for stabilization||81,286||--||--|
|11||Various works after provisional acceptance of Works not certified by the Engineer||2,456,157||1,480,000|
|12||Interest on amounts above indicated (approximate calculation)||1,750,000||0.00|
|GENERAL TOTAL EVALUATED FOR THE NEGOTIATIONS||8,370,888|
|Annex II to Engineer's FinalDecision of 11 May 2009(C-28)||Claimants'Letter of 6 October 2009 (C-33)||Annex 2 to Mr. Nunes' letter to the Minister of 20 October 2009 (C-12)|
|Item numbers and amounts claimed||Item numbers and amounts awarded||Item numbers and amounts claimed||Item numbers and amounts claimed||Item numbers and amounts recommended|
|1: 0||1: 0|
|2: 470,512.79||2: 65,295||2: 470,000||2: 470,513||2: 300,000|
|3: 167,133||3: 0||1: 167,000||1: 167,133||1: 167,133|
|4: 21,417.60||4: 0||(See no. 3)||(See no. 3)|
|5: 6,783,895.66||5: 1,432,983||4: 9,500,000||4: 6,783,896||4: 4,500,000|
|6: 83,366,46||6: 0||5: 83,000|
|7: 57,311.13||7: 0|
|8: 195,396||8: 0||6: 195,000||6: 195,396||6: 100,000|
|9: 1,371,775.50||9: 0||3: 1,400,000||3: 1,393,19371||3: 550,000|
|10: 45,725.85||10: 18,033||5: 45,726||5: 0|
|11: 161,408.62||11: 0|
|12: 190,795.82||12: 0|
|13: 54,701.3||13: 0|
|14: 1,750,570.08||14: 915,597||7: 1,750,570||7: 700,000|
|15: 584,428.95||15: 0||8: 584,429||8: 450,000|
|16: 123,754.95||16: 0||9: 123,755||9: 123,755|
|17: 81,285.59||17: 0||10: 81,286||10: 0|
|18: 19,628.51||18: 0|
|19: 84,266.92||19: 0|
|20: 512,123.25||20: 0|
|11: 2,456,157||11: 1,480,000|
|Total: 12,759,498.18||Total: 2,440,925||Total: 11,815,000 (without interest)||Total: 14,052,053 (without interest)||Total: 8,370,888|
On the basis of what above mentioned, ANE hereby proposes to CMC Ravenna the agreement on Euro 8,220,888 against Euro 15,802,053, covering all the additional costs and financial charges incurred during the execution of the Construction Contract, according to the enclosed table.
In accordance with what agreed and negotiated, the payments of the amount subject of the agreement may be made in installations during the year 2010.
We request to the Contractor CMC Ravenna, in case of agreement on what above mentioned, to provide a written confirmation of the acceptance of the above described conditions within the maximum time limit of 7 days from the receipt of the present letter.76
ROAD REHABILITATION NAMACURRA- RIO LIGONHA
LOT 3: ALTO MOLOCUE – RIO LIGONHA
SUMMARY OF SUBMITTED CLAIMS
|Description||Amount (Euros) requested by theContractor||Evaluated amount (Euros) Recommended by ANEapproved work approved|
|1||Demining of borrow pits. Increase of borrow pits due to technical reason||167,133.00||167,133.00||0.00|
|2||Delay on payment of compensation to local people by Contracting Authority||470,512.79||0.00||300,000.00|
|3||Delay on submission of the required documentation by the Contracting Authority for custom clearance material||1,393,193||0.00||550,000.00|
|4||Increase of quantities of cut to spoil||6,783,895.86||250,000.00||4,250,000.00|
|5||Unexpected Additional holidays||45,725.85||0.00||0.00|
|6||Disruption due to delay on payments||195,396.00||100,000.00||0.00|
|7||Increase of borrow pits||1,750,570.08||700,000.00||0.00|
|8||ROP cost of labour||584,428.95||300,000.00||0.00|
|10||Increase of cement for stabilization||81,285.59||0.00||0.00|
|11||Extra works post TOC||2,456,157||1,480,000.00|
|12||Interest on above amounts (rough calculation)||1,750,000||0.00||0.00|
|RECOMMENDED TOTAL AMOUNT||8,220,888.00|
We acknowledge receipt of your letter Ref. 036/DG/2009, that we appreciate.
We agree with your proposal to set the amount of Euro 8,220,888 clarifying that is additional to the amount already certified and processed for the payment with IPC no. 27.79
48. I submitted two invoices to ANE in January 2010. To the best of my recollection invoicing would have been delayed to have it brought into the 2010 financial year.
49. As the Claimant was not in receipt of the agreed settlement monies I requested a meeting with Nelson Nunes [General Director ANE] in the intervening three months. He had by now left ANE and was no longer in a position to help in the matter.
50. I believe Nunes left ANE in approximately March 2010. I was then informed that monies were not available at the moment and that monies were more readily available at the start or end of each year.93
We acknowledge receipt of your letter on subject - by which you request the payment of an amount equal to Euro eight millions and seven hundred and seventy nine thousand, nine hundred and eight and thirty eight cents (Euro 8,779,908,38), related to the project, and Euro five hundred and thirty thousand (Euro 530,000) for interest due to the overdue payment – which induces us to provide the following considerations:
1) with reference to our letter no. 036 dated 30/10/2009 - which is the ground of your requests and by which we were able to reanalyse the disputed matter - we determine that there are not any grounds to comply with it as far as:
a) our records show that the financial execution of the contract is [quiet], and there is not a balance to paid to you
b) the referred amounts mentioned in your letter could be paid only if you present the reasons and the relevant connections with the contract
c) considering the public administration principles, in particular the legality, the transparency and the justice, the payments without any basis are illegal. [initialed]
Therefore, whatever decision shall comply with the abovementioned principles.
2) It shall be mentioned that on your claim, in the amount of Euro 11,242,898.04, was approved the payment of Euro 2,440,925, as per Engineer's determination (annex 1), which was duly made.
3)We remind you that the amount of Euro 2,440,925 was determined on the basis of the above mentioned determination, as final amount to be paid for your claims (cfr pg. 8/9 and 9/9 of the annex 1) This fact was duly communicated and accepted, as demonstrated by the proofs of payments(annex 2).
In these terms, we transmit the issue to your consideration with the aim to clarify our position; however we are available to provide the required collaboration.97
We acknowledge receipt you letter ref. 54/AJ/DG/2001, and we comment as follow.
We agree on the fact that no payment shall be made to the Contractor if no records are present in your register and accounts.
We agree on the principles of legality, transparency and justice, which are not just an obligation in our modus operandi, but they are part of Ethics Code of our company in the development of his activities.
However, it seems that there are some missing documents mentioned by ANE in the above letter, meaning correspondence, minutes of meetings and other documents during 2009, which were the basis of the issuance of your letter 036/DG/2009 on 30/10/2009.
Such letter represents the final decision resulting from a process, which at that stage had a different evaluation by ANE.
It does not correspond to the truth that the Engineer's evaluation, NOD (before leaving the Project) can be considered a final determination accepted by us, because the Contract was completed in 2011 (Final acceptance of the Work), therefore the final account can be issued only now.
Together with the issuance of the invoice related to the amounts approved by the Engineer representative and by the Engineer on April 2009, CMC stated clearly its disagreement in relation to such amounts, reserving the right to claim the payment of the residual amounts. This invoice was also used to utilize the outstanding EU funds while awaiting an amicable settlement of the dispute.
We highlight that, on middle 2009, CMC was requested by ANE to complete the Lot 2 Works and our position was duly recorded: we accepted such task only against ANE availability to settle (or attempt to settle) amicably the situation of Lot 3. On the second half of 2009, various meetings took place between CMC (nerio gridella), the general director of ANE, Eng. Nelson Nunes, with the aim to achieve an agreement after a reevaluation of our claim.
We are confident that a further analysis of our documentation used for the transaction will achieve the same result of 2009. For these purposes:
1) we will sent copies of all proper documentation, which can clarify any doubts in relation to the subject, and
2) we request an urgent meeting with ANE, to be held before the 20/08/2011, date mentioned in our letter 14/DAFO/MC/JC dated 26/07/2011, to analyse and discuss the subject.98
Associados LDA ("Consultec"). Consultec's Opinion is dated June 2011. While ANE's letter of 8 August 2011 appears to have been based largely on the Consultec Opinion, the Respondent offered no explanation of why ANE had obtained the Opinion as early as June 2011 or of why it had not shared the Opinion earlier than November 2011.101
V – CONCLUSION
40. The present Contract concluded by a public entity for the execution of a public work is an administrative contract (see art. 38 of decree 54/2005 dated 13.12)
41. The contractual principles of stability of contracts and financial equilibrium expressed in the idea of an "honest equivalence of performance" apply to the administrative contracts.
42. These principles are established, in the case sub judice, by various contractual provisions, in GCC and Particular Conditions (see art. 21, 48, 53 and 55). [initialed]
43. On this basis, the reimbursement to the Contractor for additional cost due to extra works, exceptional risk, inter alia, is expression of these principles.
44. However the costs due to extra work, in this case, were considered on the basis of the unit prices without any right of adjustment because such unit prices did not achieve the 15% of the Contract price to allow the right of adjustment of those unit prices.
45. On the other hand, the exceptional risks alleged by the Contractor do not cover neither the errors made by him during the preparation of the tender, which are foreseeable errors, nor the risks due to climatic conditions.
46. The right of compensation of the Contractor, based on the claims submitted to the Engineer, shall have contractual grounds and not vague considerations for compensation due to good business relations.
47. As a matter of fact, the last argumentation provided by the Contractor in his "Request to resolution of pending contractual issues" is based on the follow:
According to what above mentioned and considering the last correspondence received on matter, which we appreciate but disagree, we hereby request that our proposal of compensation will be evaluated according to our relation, which during 20 years ensured high standard of reciprocal trustworthiness, respect, esteem and consideration.
48. These arguments have extra contractual grounds, uncertain and subjective basis, and they can be enforced only on the basis of a superior public interest, which we do not know.
49. If ANE wishes express now his doubts about an amount signed to be paid for the claims, from our point of view, ANE can be always do that, because the main issue is the public interest involved.
50. The powers of ANE in this subject, related to public interest, debilitate strongly the resoluteness of his offer according to the principles regulating the relations between privates. [initialed]
51. However ANE could do that only if he pleads the existence of defect or arising errors or a contractual interpretation but the concept of exceptional risks.
52. It is up to ANE, then, the demonstration that such arising defects or such errors of interpretation, which determined the offer of 8,220,888,00 Euros, will represent an economical advantage of the Contractor, absolutely undue under the Contract, an actual unjust enrichment, with prejudice of a public interest, which should be restored.102
We make reference to your letter 036/DG/09 dated 30/10/2009, to our letter 2179/09/CMC/NG dated 2/11/2009 and to our invoices no.E0105-28 and E0105-29.
After about 2 years and half and following several approach to your institution regarding the payment of the due amount of 8,220,888 Euro, we continue to record an incomprehensible position from your side, despite the opinion provided by the independent consultant appointed by you (Consultec LDA), which states "It is up to ANE, then, the demonstration that such arising defects or such errors of interpretation, which determined the offer of 8,220,888, will represent an economical advantage of the Contractor, absolutely undue under the Contract, an actual unjust enrichment, with prejudice of a public interest, which should be restored.
The opinion gives to ANE the onus to proof that such payment is not due and constitutes an unjust enrichment.
Therefore, on the basis that until now there has not been such evidence of arising defects or errors of interpretation which substantiate the lack of payment, and considering that there is no any other possible process to follow in order to solve this dispute, we hereby request the payment of the disputed amount within 30 days from the date of reception of this letter, otherwise we will apply to the competent authorities to be indemnified.104
The Claimants received no formal response to this letter.105 Indeed, nothing more appears to have been communicated between the Claimants and ANE on this subject for more than two years.
27. I say that every meeting I was involved in with ANE between 2014 to 2016 incorporated negotiations around the three project disputes Lichinga -Litunde and Montepuez -Ruaça road projects as well as the Lot 3 Project. There was never a meeting solely about the Lot 3 Project and it was only discussed as part of a global settlement and never at length.
28. It is my understanding that the Lot 3 Project dispute is quite a sensitive issue to the Government of Mozambique due to the fact that the matter was not resolved under the stewardship of the Director of ANE nor under the stewardship of the Minister of Public Works. This caused the Prime Minister to decide to intervene in an attempt to facilitate the process and lead it to an amicable settlement.
29. There was constant reluctance from ANE to entertain any settlement against the Lot 3 Project. The Claimant was specifically instructed during negotiations to mark the Lot 3 project as zero. ANE also stated to me during meetings that the settlement offer letter for the figure of approximately €8.2 Million was never registered in their offices and related to an already used protocol number. I asked to see the letter to which this protocol number related. This was never shown to me.
30. Sometime in 2015 the President of Mozambique became involved in trying to settle the Claimants' issues. This occurred due to the Claimants' position in Mozambique, which it had acquired from working in the country for such a long period of time.
• 18 August 2015: meeting between CMC and "the President of Mozambique at his office. This meeting lasted for approximately 20 minutes. [Claimants] explained to him the difficult position that the Claimants now found themselves in and explained to him about the fifty million euro outstanding to its account."107 Mr. Alicandri further states that "[t]o my surprise, during our meeting the President of Mozambique immediately phoned the Minister of Public Works and tasked him to sort out the issues urgently to allow the Lichinga and Montepuez Projects to proceed. The President told the Minister that all the South African, Portuguese and Italian companies were leaving Mozambique because they were unable to deal with the current Government. The Minister of Public Works was further told that he had better find a solution, unless his intention was to work with Chinese contractors only. No action was required from Claimant's representatives on foot of the meeting."108
• 20 August 2015: meeting between the Claimants and "the Minister for Public Works, Mr. Atanásio Mugunhe, the Director General of ANE, and Mr. Cecilio Grachane, of the Road Fund. All three projects in dispute (Lichinga, Montepuez, and Lot 3) were discussed without any exact amounts been given. The Claimants' representatives explained its proposal but there was no response from the Government. I recall that while waiting to be received by the Minister for that meeting, there was a tense exchange between Mr. Cecilio Grachane and myself. He informed me that CMC was just a problem, that I was a guest in his country and he could chase me out of Mozambique whenever he wanted."109
• 21 August 2015: meeting between the Claimants and "ANE's Director General's assistant Mr. Mahave; ANE's Contract Manager, Mrs. Tânia Comiche; CMC AA's Contract Manager, and Mr. Francisco Pereira."110
• 1 September 2015: meeting between the Claimants and "ANE's Director General, Mr. A. Mugunhe; ANE's Contract Manager, Mrs. Tânia Comiche, ANE's Technical Director, Mr. Adérito Guilamba, Mr. Paolo Porcelli and CMC AA's Contract Manager Mr. Pereira. The subject of this meeting was again to discuss settlement of the Claimants' outstanding issues on its projects in Mozambique. The Lot 3, Montepuez and Lichinga projects were discussed, but no exact amounts were discussed. The Claimants explained their settlement proposal. No response was received from those present at the meeting."111
• 22 September 2015: meeting among "ANE's Director General Mr. A. Mugunhe, ANE's Contract Manager Mrs. Tânia Comiche, ANE's Technical Director, Mr. Adérito Guilamba, ANE's Director General's assistant Mr. Mahave, CMC AA's Contract Manager Mr. Pereira and [Mr. Alicandri]."112
• 26 October 2015: "Mr. Paolo Porcelli and [Mr. Alicandri] met with the Minister of Public Works in Mozambique, Mr. Carlos Bonnete; ANE's Director General, Mr. Atanásio Mugunhe; the Road Funds Chairman, Cecilio Grachane, and ANE's Technical Director Adérito Guilamba. The Minister of Public Works. Mr. Bonnete, tasked Mr. Atanásio Mugunhe with reaching settlement on the outstanding issues on the Claimants' projects in Mozambique. After this meeting the Prime Minister got involved as the Minister of Public Works didn't help to solve the Claimants' issues."113
• 17 December 2015: Mr. Alicandri attended a "meeting to discuss settlement of issues on a number of projects. This meeting was held at the Prime Minister's Cabinet. The persons present at this meeting were the Prime Minister of Mozambique, Mr. Carlos do Rosario; the Minister of Public Works of Mozambique, Mr. Carlos Bonnete; the Director General of ANE, Mr. Atanásio Mugunhe; the Roads Fund Chairman, Cecilio Grachane; ANE's Technical Director Mr. Adérito Guilamba; CMC AA's Contract Manager, Mr. Francisco Pereira and [Mr. Alicandri]."114 About this meeting, Mr. Alicandri stated that "I view this meeting as one of the most important meetings which I attended. The aforementioned meeting was important as not only was it agreed that it was mutually beneficial to find an amicable settlement on the outstanding issues but also because a settlement proposal was requested by the Prime Minister of Mozambique to be provided to the Claimants by ANE and the Minister for Public Works."115
• December 2015 – February 2016: Mr. Alicandri recalls that a number of other meetings occurred after the 17 December 2015 meeting. He states that "[d]uring these meetings the Claimants and ANE were encouraged to reconcile their settlement offers to arrive at a possible joint submission of a settlement amount. I perceived there was constant resistance on behalf of ANE to any settlement of the issues on its projects."116
• February 2016: Mr. Alicandri "attended a meeting in ANE's office. This meeting was also attended by Mr. Adérito Guilamba and Mr. Atanásio Mugunhe. The Government never came back with a counter-proposal." Mr. Alicandri further recalls that from this meeting onwards, "it was my firm opinion that no settlement could be reached in relation to the Lot 3 Project or any other projects involving the Claimants."117
• September/November 2016: Mr. Alicandri recalls that "Mr. Paolo Porcelli and Mr. Roberto Macri, the CEO of CMC Muratori Cementisti CMC Di Ravenna Soc. CMC Coop. had a further meeting with the President of Mozambique. I understand that during this meeting the Claimants' issues on its projects in Mozambique were discussed at a high level, but nothing detailed was discussed."118
There are some serious issues with this exhibit, C49. Number 1, there's absolutely no authentication for this exhibit anywhere in the file. […]
There's no witness that authenticates C49. There's no authentication of any kind. The only thing there is is there's a reference in a sentence in the Claimants' Memorial.
[T]his document was created on January 25, 2018. This document was created by CMC after this arbitration began.
This document is in Italian. The Government of Mozambique cannot confirm a debt in a foreign language.
You cannot even read the seal. There's no authentication to who signed it.124
Government on notice of a dispute under Article 9(3) of the BIT.125 That letter stated:
We refer to letter Ref. 1, by means of which you have submitted the proposal for the amount of Euro 8,220,888.00 to resolve amicably the pending claims, and our letter Ref. 2, by means of which we accept such proposal.
The payment of the amount indicated above should have been done next, but V Excias never complied with the agreement, which gave rise to a dispute.126
Since the year 2009 we have tried several times to contact V Excias to resolve the matter without any result, and we intend now to make one more attempt to assert our rights, for which we notify you that we are our desire to initiate a friendly resolution period of 6 months from the receipt of this letter, and this will be the last attempt before advancing with arbitration in the most appropriate forms and terms.
We make the dispute for a purpose which, in the event that this attempt proves to be unsuccessful, we intend to submit the dispute for resolution by ICSID, considering that the Governments of Italy and Mozambique have signed the ICSID Convention and Bilateral Investment ICSID will have jurisdiction over the dispute.127
In accordance with the letter dated 18 August 2016 in epigraph, we
have to mention the following:
1. We note that the issuer does not have the name of the person who represents it.
2. We note the insistence in claiming the value of 8,220,888,00 Euro.
3. According to points 4 and 5 of our letter No. 568 / DAC / DIPRO / 15 dated September 9, 2015, we must inform you that we have not received any additional information that might be subject to analysis.128
a. That the Claimants are not "investors" as defined in the BIT;
b. That the Claimants do not have an "investment" in Mozambique as required by the BIT;
c. That the present dispute does not arise out of an "investment" made by a "National of another Contracting State" as required by Article 25 of the ICSID Convention;
d. That the Claimants' claims are purely contractual;
e. That, to the extent that the Claimants have a claim, that claim must be submitted to arbitration under the rules adopted pursuant to the Cotonou Convention, to the exclusion of an ICSID tribunal; and
f. That, to the extent that Mozambique may have consented to ICSID arbitration, that consent was nullified by the decision of the European Court of Justice in Slovak Republic v. Achmea.
The Tribunal takes up each of these objections in the paragraphs that follow, taking the first two objections together.
The term 'investment' shall be construed to mean any investment effected by a legal or a natural person of a Contracting Party in the territory of the other Contracting Party, in conformity with the laws and regulations of the Contracting Parties.
The term "Investment" comprises in particular, but not exclusively:
a) movable and immovable property and the ownership rights in rem ;
b) shares, debentures, equity holdings or any other instruments of credit, as well as Government and public securities;
c) credits for sums of money or any performance having economic value connected with an investment, as well as reinvested incomes and capital gains;
d) copyrights, commercial trade marks, patents, industrial designs, intellectual and industrial property rights, know-how, trade names and goodwill connected with an investment;
e) capital expenditures effectively made under licence and franchising in accordance with the law, including those expenditures connected with the right to search for, extract and exploit natural resources;
f) any increases in value of the original investment.
Any modification in the form of the investment does not imply a change in the nature of the investment thereof.132
The Respondent argues that the phrase "any investment" used in Article 1(1) is more restrictive than the more common "every kind of asset."133
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.
a. GEA Group Aktiengesellschaft v. Ukraine, in which the Tribunal stated:
The Tribunal agrees with Respondent that neither the Settlement Agreement nor the Repayment Agreement – in and of themselves – constitute 'investments' under Article 1 of the BIT or (if needed) Article 25 of the ICSID Convention. As legal acts they are not the same as the investment in Ukraine itself. In particular, (a) the Settlement Agreement merely established an inventory of undelivered goods and recorded the difference as a debt owed by Oriana to KCH; and (b) the Repayment Agreement merely establishes a means for the repayment by Oriana to KCH of Oriana's debts.151
The Respondent argues that the GEA Group tribunal "further explained that the Settlement Agreement and the Repayment Agreement were not 'investments' because they involved 'no contribution to, or relevant economic activity within, Ukraine.' Id. at ¶ 162. […] To paraphrase the GEA Group tribunal, this settlement agreement involved no contribution to, or relevant economic activity within, Mozambique."152
b. Orascom TMT Investments S.à r.l. v. Algeria, in which the tribunal stated:
In these circumstances, the Claimant cannot bring claims in this arbitration that OTH decided to settle, as the settlement clearly resolved the dispute that the Claimant has brought before this Tribunal.153
The Respondent argues that: "[f]or the reasons discussed in Orascom, because the alleged settlement agreement herein also is allegedly binding, the Claimants can no longer bring any investment treaty claims pursuant to the underlying Contract or project, because the settlement extinguished such claims. Thus, even if the Claimants had made investments in terms of the Contract or project, those claims have ceased to exist and are inadmissible."154
c. Azpetrol International Holdings B.V., et al. v. Republic of Azerbaijan.155 The Respondent argues, in reliance on Azpetrol, that "[b]ecause the parties concluded a binding settlement agreement through the exchange of emails, the tribunal held that there was no jurisdiction to hear the claim under the ECT and the ICSID Convention. Id. at ¶ 2. The tribunal reasoned that there was no 'legal dispute' between the claimants and the respondent as required by Article 25(1) of the ICSID Convention or 'dispute' as required by Article 26(1) of the ECT and, consequently, no jurisdiction to hear the claim. Id. at ¶ 105."156
a. Contribution of money or other assets of economic value. The Respondent argues that the Claimants have not contributed anything. On the contrary, they are claiming approximately 8.2 million euros.159
b. Duration. The Respondent argues that, as nothing has been contributed, there has also not been a contribution with a certain duration.160
c. Risk. The Respondent argues that the type of risk associated with the alleged settlement agreement was purely commercial, citing: Poštová Banka, a.s., ISTROKAPITÁL SE v. The Hellenic Republic ("A commercial risk covers […] the risk that one of the parties might default on its obligations, which risk exists in any economic relationship");161 and Romak S.A. v. The Republic of Uzbekistan, ("All economic activity entails a certain degree of risk. As such, all contracts – including contracts that do not constitute an investment – carry the risk of nonperformance. However, this kind of risk is pure commercial, counterparty risk, or, otherwise stated, the risk of doing business generally").162 The Respondent asserts that the risk of possible non-payment of a settlement agreement is an ordinary commercial risk, not an investment risk.163
d. Contribution to Mozambique's economic development. The Respondent argues that the settlement agreement did not require the Claimants to perform any functions or construct any projects in Mozambique.164
The development in practice from a descriptive list of typical features towards a set of mandatory legal requirements is unfortunate. The First Edition of the Commentary cannot serve as authority for this development.
To the extent that the "Salini test" is applied to determine the existence of an investment, its criteria should not be seen as distinct jurisdictional requirements each of which must be met separately. In fact, tribunals have pointed out repeatedly that the criteria that they applied were interrelated and should be looked at not in isolation but in conjunction.173
a. Contribution of money or other assets of economic value. The Claimants argue that they made contributions during the Lot 3 Project in the form of know-how, money, equipment and qualified personnel.174
b. Duration. The Claimants point out that the Lot 3 Contract had a duration of 2 years and that the project was concluded in 2007.175
c. Risk. The Claimants argue that an element of risk is inherent in construction projects like the Lot 3 Project, such as delays resulting from weather conditions, the expropriation of land, and customs barriers of imported materials.176
d. Contribution to Mozambique's economic development. The Claimants argue that a contribution to the economy and development of the host country is inherent in public infrastructure works such as the Lot 3 Project. Because it substantially improving the Rio Ligonha road, the Lot 3 Project had a positive impact on the economy of Mozambique by, inter alia, improving the efficient transport of goods and persons.177
The jurisdiction of the Centre shall extend to any legal dispute arising directly out of an investment, between a Contracting State […] and a national of another Contracting State, which the parties to the dispute consent in writing to submit to the Centre.
The drafters of the ICSID Convention left the term "investment" undefined. One widely (but not universally) applied analysis of the term "investment" is derived from Salini v. Morocco, which identified a series of elements that constitute an investment:
The doctrine generally considers that investment infers: contributions, a certain duration of performance of the contract and a participation in the risks of the transaction […] In reading the Convention's preamble, one may add the contribution to the economic development of the host State of the investment as an additional condition.
In reality, these various elements may be interdependent. Thus, the risks of the transaction may depend on the contributions and the duration of performance of the contract. As a result, these various criteria should be assessed globally even if, for the sake of reasoning, the Tribunal considers them individually here.180
The parties to a dispute cannot by contract or treaty define as investment, for the purpose of ICSID jurisdiction, something which does not satisfy the objective requirements of Article 25 of the Convention.181
This so-called "double-keyhole" test, explicitly endorsed by other ICSID tribunals, requires a claimant to meet the requirements of both the Convention and the BIT in order for the Tribunal to have jurisdiction over its claim.
It is those bilateral and multilateral treaties which today are the engine of ICSID's effective jurisdiction. To ignore or depreciate the importance of the jurisdiction they bestow upon ICSID, and rather to embroider upon questionable interpretations of the term "investment" as found in Article 25(1) of the Convention, risks crippling the institution.182
With regard to the risks incurred by the Italian companies, these flow from the nature of the contract at issue. The Claimants, in their reply memorial on jurisdiction, gave an exhaustive list of the risks taken in the performance of the said contract. Notably, among others, the risk associated with the prerogatives of the Owner permitting him to prematurely put an end to the contract, to impose variations within certain limits without changing the manner of fixing prices; the risk consisting of the potential increase in the cost of labour in case of modification of Moroccan law; any accident or damage caused to property during the performance of the works; those risks relating to problems of coordination possibly arising from the simultaneous performance of other projects; any unforeseeable incident that could not be considered as force majeure and which, therefore, would not give rise to a right to compensation; and finally those risks related to the absence of any compensation in case of increase or decrease in volume of the work load not exceeding 20% of the total contract price. It does not matter in this respect that these risks were freely taken. It also does not matter that the remuneration of the Contractor was not linked to the exploitation of the completed work. A construction that stretches out over many years, for which the total cost cannot be established with certainty in advance, creates an obvious risk for the Contractor.185
[A]ny juridical person which had the nationality of a Contracting State other than the State party to the dispute on the date on which the parties consented to submit such dispute to conciliation or arbitration and any juridical person which had the nationality of the Contracting State party to the dispute on that date and which, because of foreign control, the parties have agreed should be treated as a national of another Contracting State for the purposes of this Convention. (emphasis added)
a. Toto Costruzioni Generali S.P.A. v. Republic of Lebanon ("Toto Costruzioni Generali").188 In this arbitration, the Respondent says, Toto "request[ed] the Tribunal to award US$3,834,454.78 for damages suffered for extra works and charges due to wrong instructions, misleading information and erroneous design."189 The tribunal held that: "Toto's claims appear to relate to the standard duties in a construction contract, i.e., an alleged failure by an employer to comply with his obligations towards the contractor. It does not involve the use of sovereign authority or 'puissance publique.' […] Consequently, such a claim does not fall within the scope of Article 2, paragraph 3 of the Treaty."190
b. Abaclat and Others. v. Argentine Republic ("Abaclat v. Argentina"),191 in which the tribunal stated:
[A]n arbitral tribunal has no jurisdiction where the claim at stake is a pure contract claim. […] A claim is to be considered a pure contract claim where the Host State, party to a specific contract, breaches obligations arising by the sole virtue of such contract. This is not the case where the equilibrium of the contract and the provisions contained therein are unilaterally altered by a sovereign act of the Host State. This applies where the circumstances and/or the behaviour of the Host State appear to derive from its exercise of sovereign State power. Whilst the exercise of such power may have an impact on the contract and its equilibrium, its origin and nature are totally foreign to the contract.192
c. Bureau Veritas, Inspection, Valuation, Assessment and Control BIVAC BV v. Republic of Paraguay.193 The Respondent asserts that this case is similar to the present dispute in that it concerned the nonpayment of an allegedly admitted debt. According to the Respondent, the Bureau Veritas tribunal "conclude[d] that the conduct that lies at the heart of the dispute, and which has been repeated over time […] is the refusal on the part of Paraguay to pay an outstanding debt that is owed under the Contract."194 The Bureau Veritas tribunal also observed that: "It is important to recognize that beyond the refusal to pay there are no other acts that the Claimant really seeks to remedy. Whilst Paraguay has not paid a contractual debt that it has recognized […] as being owed, the Claimant has not argued that it has interfered in any other way with the Claimant's rights under the Contract."195 The Bureau Veritas tribunal went on to say that:
There is nothing inherent in the fact that such conduct is undertaken by a State in its capacity as a contracting party that might as such endow them with the quality of sovereign acts such as to catalyse responsibility under an international treaty obligation relating to fair and equitable treatment. There has been no reliance by Paraguay on the powers of a public authority that might not - by analogous means - also be available to a private person or corporation. Attempts to mislead, distort, conceal or otherwise confuse a contractual partner are strategies open to and used by both public and private persons.196
In the Tribunal's view the facts show 'mere breach by a State of a contract with an alien (whose proper law is not international law)' and that accordingly no violation of […] the BIT arises.197
The Respondent asserts that this case is similar to Bureau Veritas, in that the Respondent did not use its sovereign authority to alter the contractual relationship unilaterally. The Respondent acted as a private party and acted upon the determination of an independent consulting firm when it decided that there were no grounds for additional payments to the Claimants.198
d. Tulip Real Estate B.V. v. Republic of Turkey,199 where the tribunal said that "the determination of whether a claim arises under a BIT involves an inquiry into the 'essential basis' or 'normative source' of that particular claim. In order to amount to a treaty claim, the conduct said to amount to a BIT violation must be capable of characterisation as sovereign conduct, involving the invocation of puissance publique. This principle has been affirmed by numerous previous investment tribunals."200
Claimants have asserted that each of them has standing to bring the instant claims that seek to enforce the alleged payment obligations under the alleged settlement agreement. They cannot now argue that they do not have privity with the settlement agreement. And second, the Claimants assert that the case does not deal with the same matters because the Claimants' claims do not involve issues of performance under the Contract. […] That argument is also incorrect. The claims overlap because the gravamen of the BIT claims and contract claims is exactly the same—the alleged nonpayment under the alleged settlement agreement.206
• breached the just and fair treatment standard under Article 2(3) of the Treaty;
• violated its obligation under Article 2(3) of the Treaty not to impair investments by unjustified or discretionary [sic] measures;
• breached its obligation under Article 2(4) of the Treaty by failing to observe in good faith specific undertakings entered into with the Claimants; and
• failed to afford the Claimants no less favourable treatment than afforded to investors and investments of third countries as required by the Most Favoured Nation clause in Article 3 of the Treaty.209
95. […] A state may breach a treaty without breaching a contract, and vice versa, and this is certainly true of these provisions of the BIT. The point is made clear in Article 3 of the ILC Articles, which is entitled 'Characterization of an act of a State as internationally wrongful':
The characterization of an act of a State as internationally wrongful is governed by international law. Such characterization is not affected by the characterization of the same act as lawful by internal law.
96. In accordance with this general principle (which is undoubtedly declaratory of general international law), whether there has been a breach of the BIT and whether there has been a breach of contract are different questions. Each of these claims will be determined by reference to its own proper or applicable law—in the case of the BIT, by international law; in the case of the Concession Contract, by the proper law of the contract, in other words, the law of Tucumán. […]213
Of course, it is apparent that several of Claimants' claims under the Treaty will stem from Respondent's alleged failure to pay for SGS's services under the Contract. That is an action that may (or may not) also constitute a contractual breach, but we are not called upon to decide that question as such. We are called upon to decide whether Respondent's actions, such as its alleged non-payment, breach the aforementioned Articles of the Treaty. In doing so, we are in concert with the well-established jurisprudence regarding the distinction between contract claims and treaty claims.215
• An act/omission of the host State which in and of itself amounts to a violation of the Treaty.
• An act/omission of the host State which arises out of a contract, which amounts to a breach of contract, and in addition amounts to a violation of the Treaty.
• An act/omission of the host State which is purely a breach of contract, but in breaching the contract the host State has unilaterally altered the equilibrium of the contract by way of a sovereign act (puissance publique).216
Any dispute arising between the authorities of an ACP State and a contractor, supplier or provider of services during the performance of a contract financed by the Fund shall:
a) in the case of a national contract, be settled in accordance with the national legislation of the ACP State concerned; and
b) in the case of a transnational contract be settled either:
i) if the Parties to the contract so agree, in accordance with the national legislation of the ACP State concerned or its established international practices; or
ii) by arbitration in accordance with the procedural rules which will be adopted by decision of the Council of Ministers at the first meeting following the signing of this Agreement, upon the recommendation of the ACP-EC Development Finance Cooperation Committee.229
No treaty, convention, agreement or arrangement of any kind between one or more Member States of the Community and one or more ACP States may impede the implementation of this Agreement.231
The Contracting Authority and the Contractor shall make every effort to amicably settle disputes relating to the Contract which may arise between them, or between the Supervisor and the Contractor.232
68.5 In the absence of an amicable settlement or the settlement by conciliation within the maximum Time Limit specified, the dispute shall:
a) in the case of a national contract, be settled in accordance with the national legislation of the State of the Contracting Authority; and
b) in the case of a transnational Contract, be settled, either:
i) if the parties to the Contract so agree, in accordance with the national legislation of the State of the Contracting Authority or its established international practices; or
ii) by arbitration in accordance with the procedural rules adopted in accordance with the Convention.234
In case an investor or entity of one of the Contracting Parties have stipulated an investment agreement in accordance with the relevant applicable laws in force, the procedure foreseen in such investment agreements shall apply.246
(3) Article 30 of Annex IV of the Cotonou Agreement provides that any dispute arising between the authorities of an ACP State and a contractor, supplier or provider of services during the performance of a transnational contract financed by the European Development Fund shall be settled by arbitration in accordance with the procedural rules to be adopted by decision of the ACP-EC Council of Ministers upon the recommendation of the ACP-EC Development Finance Cooperation Committee.
(4) Provision should be made for applying the general regulations, the general conditions and the rules governing the conciliation and arbitration procedure referred to in the previous recitals to contracts financed from the resources of the ninth European Development Fund and any future Fund.269
Disputes regarding contracts financed from the resources of the European Development Fund which, under the general regulations and general conditions governing such contracts, must be settled in accordance with the conciliation and arbitration procedure for the said contracts, shall be settled in accordance with the procedure adopted by Decision No 3/90 of the ACP-EC Council of Ministers of 29 March 1990.270
a. Lanco International Inc. v. Argentine Republic.277 The Claimants state that in the Lanco case, "the respondent relied on an exclusive jurisdiction clause in a concession agreement and argued that 'as regard any dispute that may arise under that contract recourse must be had to the Federal Contentious-Administrative Tribunals of the City of Buenos Aires, which is the jurisdiction freely agreed upon by the parties after the entry into force of the ARGENTINA-U.S. Treaty.' The tribunal rejected this objection and upheld the investor's right under the BIT to opt for ICSID arbitration."278
b. Garanti Koza v Turkmenistan,279 in which the tribunal stated that "[t]he fact that the Contract provides for resolution of disputes arising under the Contract in the Arbitration Court of Turkmenistan does not deprive this Tribunal of jurisdiction over claims pleaded and arising under the BIT."280
c. Companiá de Aguas del Aconquija S.A. and Vivendi Universal S.A. v. Argentine Republic,281 in which the tribunal stated that, "[w]here 'the fundamental basis of the claim' is a treaty laying down an independent standard by which the conduct of the parties is to be judged, the existence of an exclusive jurisdiction clause in a contract between the claimant and the respondent state or one of its subdivisions cannot operate as a bar to the application of the treaty standard."282
d. Siemens AG v Republic of Argentina.283 The Claimants argue that "[t]he tribunal in Siemens v Argentina agreed with the Vivendi ad-hoc Committee that an exclusive jurisdiction clause in a contract 'does not preclude an international tribunal' from considering the merits of a treaty cause of action."284
e. SGS Société Générale de Surveillance S.A v Paraguay.285 The Claimants assert that "in SGS v. Paraguay, in answer to the question of whether a contractual forum selection clause could divest an ICSID tribunal of jurisdiction over claims for breach of treaty, the tribunal held that the answer was 'undoubtedly negative' and that the contractual clause could be 'readily disposed of.'"286
a. Contractual. The Claimants point out that Article 68.1 of the General Conditions provides that Article 68 only applies to "disputes relating to the contract." This contractual dispute settlement mechanism would therefore not be applicable to these BIT claims.289
b. Performance. The Claimants argue that the express terms of the Lot 3 Contract clearly show that disputes only fall under the Cotonou Convention when they arise out of the performance of a contract financed by the EDF. They point to Article 30 of Annex IV of the Revised Cotonou Convention which states "Any dispute arising […] during the performance of as contract financed by the multi-annual financial framework of cooperation under this Agreement."290 The Claimants state that the performance of the Contract was completed in November 2007 and that, by March 2009, the Engineer confirmed that he was working on the issuance of the final certificate. This means that the performance of the Lot 3 contract was completed before the events that gave rise to this dispute occurred, i.e. the 30 November 2009 settlement offer and the non-transparent and arbitrary conduct that crystalized in August 2011.291
c. Financed. The Claimants argue that the settlement does not arise out of works that were financed by the EDF, because the settled claims were for additional works that were to be paid for by Mozambique, not the EDF.292
If a matter is governed both by this Agreement and by another international agreement to which both Contracting Parties are signatories, or by general international law provisions, the most favourable provisions shall be applied in either Contracting Party to the investors of the other Contracting Party.307
Cotonou follows a long tradition of trade and development aid partnerships between Europe and its former dependent countries, now grouped in the ACP group of states, under the Yaoundé and later Lomé Conventions. From 1963 until the beginning of this year when the Lomé IV convention was replaced with the Cotonou Agreement, the EIB has channeled over EUR 9 billion into investment in the ACP countries.311
The successor to the Lomé Conventions, the Cotonou Agreement has been partly implemented on a provisional basis since August 2000. One important dimension – the financial implementation provisions – had to be delayed pending ratification by the fifteen EU Member States. This is now done. The Cotonou philosophy, based on a more effective political dimension and a higher degree of flexibility in the provision of aid in order to reward performance and results, can now be fully implemented.314
The ACP States and the Community and its Member States, within the scope of their respective competencies, affirm the need to promote and protect either Party's investments on their respective territories, and in this context affirm the importance of concluding, in their mutual interest, investment promotion and protection agreements which could also provide the basis for insurance and guarantee schemes.318
Any dispute arising between the authorities of an ACP State or the relevant organization or body at regional or intra-ACP level and a contractor, supplier or provider of services during the performance of a contract financed by the multiannual financial framework of cooperation under this Agreement […]325
Furthermore, international agreements concluded by the Union, including the Energy Charter Treaty, are an integral part of the EU legal order and must therefore be compatible with the Treaties. Arbitral tribunals have interpreted the Energy Charter Treaty as also containing an investor-State arbitration clause applicable between Member States. Interpreted in such a manner, that clause would be incompatible with the Treaties and thus would have to be disapplied.342
a. As the Cotonou Convention (to which the EU itself is a party) is an integral part of EU law, and as Achmea has affirmed the supremacy of EU law over investor-state arbitration agreements, the arbitration clause in the Italy-Mozambique BIT is void to the extent that it conflicts with the Cotonou Convention.344 In addition, the arbitration provision in the BIT is void because Italy's interpretation of Achmea terminates, because of reciprocity, Mozambique's obligations.345
b. The Claimants cannot invoke the arbitration clause in the BIT, according to the Respondent, because doing so would require an international tribunal to decide on the application of EU law (specifically, the Cotonou Convention) and render an award which cannot be reviewed by EU courts, neither of which is permitted by Achmea.346
The Achmea Decision contains no reference to the ICSID Convention or to ICSID Arbitration. Therefore, and in view of the above mentioned determinative differences between the Achmea case and the present one, the Achmea Decision cannot be understood or interpreted as creating or supporting an argument that, by its accession to the EU, Hungary was no longer bound by the ICSID Convention.349
BITs are reciprocal bilateral treaties negotiated between two sovereign State parties. The general purpose of BITs is of course primarily to protect and promote foreign investment; but it is to do so within the framework acceptable to both of the State parties. These two aspects must always be held in tension. They are the yin and yang of bilateral investment treaties and cannot be separated without doing violence to the will of the states that conclude such352 treaties.
a. An article by John I. Blanck (Attorney Advisor at the United States Department of State) entitled "Slovak Republic v. Achmea BV: The Death Knell for Intra-EU BITs?"353 That article states:
More broadly, the issue raised by the CJEU, that an investment arbitration might result in the lack of effectiveness and uniformity of EU law, might occur when an EU member state is a respondent in any BIT arbitration, not just pursuant to intra-EU BIT ones. The United States has nine BITs with EU member states, and if U.S. investors were to bring claims before an arbitral tribunal pursuant to any of these BITs, the potential for EU law to be interpreted or applied also exists.
b. An article by Laurens Ankersmit entitled "Achmea: The Beginning of the End for ISDS in and with Europe?"354 That article states:
More complex is the question of the future of extra-EU BITs—those concluded between EU member states and nonmember states. The thrust of the ECJ's reasoning makes it clear that arbitration clauses contained in such agreements are not immune from challenge. Indeed, tribunals under such treaties may very well potentially remove disputes involving questions of EU law and EU remedies from EU member state courts. As a result, EU member states may be required to terminate these agreements, and the enforceability of awards before EU member state courts is in doubt.
a. Regarding Vattenfall AB and others v. Federal Republic of Germany :355
In the Joint Declaration, Italy has stated that the Achmea decision does apply to a treaty involving non-EU Member States. Vattenfall is outdated and cannot be used to interpret the Joint Declaration because it predates the Joint Declaration. Further, for purposes of reciprocity what the tribunal concluded in Vattenfall is irrelevant. What matters is the view of the Republic of Italy. […] Vattenfall is also inapposite because it did not involve two competing international treaties between the same parties with arbitration provisions. In contrast, this dispute involves the Cotonou Convention and Italy-MZ BIT with competing arbitration provisions and this Tribunal must decide which treaty prevails. […] Further, nothing in Vattenfall contradicts the conclusion that while Cotonou Convention arbitration is consistent with the Achmea decision because a Cotonou Convention tribunal is formed under EU law, an ICSID tribunal offends Achmea because it is not formed under EU law […].356
b. Regarding Opinion 1/17 of the Advocate General:357
The arguments of the Advocate General do nothing to change the result in these proceedings. The Advocate General is not the ECJ. The ECJ opinion prevails on its own terms. But relevant for purposes of reciprocity, Italy, the other Contracting State to the Italy-MZ BIT, has declared in the Joint Declaration that the Achmea decision does apply to an international agreement which includes non-EU States […] Thus, the Joint Declaration of Italy and twenty-two EU Member States disputes the Advocate General's view. The Advocate General is not a party to the Italy-MZ BIT, and cannot force Italy to afford reciprocity to Mozambique under the Italy-MZ BIT.358
c. Regarding Greentech Energy Systems A/S, GWM Renewable Energy I S.P.A., GWM Renewable Energy II S.P.A. v. The Kingdom of Spain :359
Greentech, like Vattenfall, predates the Joint Declaration, and thus is not useful in evaluating the effect of the Joint Declaration. […] Italy, and twenty-two other EU Member States, declared that the Achmea decision applies to treaties with non-EU Member States despite the Greentech and Vattenfall, therefore rejecting those decisions.360
d. Regarding Masdar Solar & Wind Cooperatief U.A. v. Kingdom of Spain;361 and UP and C.D Holding :362
Claimants also cite to Masdar v. Spain and UP and C.D v. Hungary to argue that the Achmea judgment does not apply to multilateral treaties such as the ECT. […] Claimants argue that the considerations are different between relationships involving EU Member States and those involving a non-EU Member State and EU Member State. […] [T]he Joint Declaration indicates that the Achmea decision may be applied more broadly to multilateral treaties such as the ECT, and thus the reasoning of the cited decisions is outdated after the Joint Declaration.363
The Achmea decision held that an EU Member State cannot enter into an investment treaty whereby issues of EU law are referred for decision to an international tribunal, instead of an EU court. That is because EU courts have exclusive jurisdiction to decide issues of EU law. Before this Tribunal is the issue of whether the arbitration provisions of the Cotonou Convention govern this dispute. The EU itself is a party to the Cotonou Convention, and thus the Cotonou Convention is part of EU law. International agreements entered into by the EU itself are a part of EU law. […] Thus, this Tribunal must determine whether, as a matter of EU law—that is, under the Cotonou Convention—this dispute must be decided in a Cotonou Convention arbitration, instead of an ICSID Convention arbitration. Application of the Italy-MZ BIT in these proceedings does involve EU law.364
No treaty, convention, agreement or arrangement of any kind between one or more Member States of the Community and one or more ACP States may impede the implementation of this Agreement.365
a. Regarding Eskosol v. Italy, the Respondent stated:
4. The Eskosol […] tribunal derived its jurisdiction from the ICSID Convention, and there was nothing in the ECT Treaty, applicable BIT or Achmea decision that 'deprived' that tribunal of ICSID Convention jurisdiction. In sharp contrast, in the case before this Tribunal, the situation is completely different. […]
5. Under Article 91, the arbitration provisions of the Cotonou Convention expressly preempt application of the arbitration provisions of the Italy-Mozambique BIT […]. Therefore, this Tribunal lacks any preexisting international law-based jurisdiction under the ICSID Convention. Here, Eskosol 's holding that t