(b) The Treaty stipulated that disputes relating to its interpretation or application should be submitted to arbitration. It further stipulated (by Article 8) that disputes concerning compensation due by virtue of Article 8(1) and (3) should be submitted to ad hoc arbitration.
(c) The Respondent objected that the Tribunal had no jurisdiction over claims based on Article 2 of the Treaty, and that its jurisdiction in relation to claims under Article 3 was limited to disputes concerning the amount of any compensation due, and did not extend to the question whether any compensation at all was in principle payable,
(d) Pursuant to an order of the Tribunal the proceedings were divided into two consecutive stages, The first dealt with the issues of jurisdiction. Oral and written evidence and submissions were advanced, culminating in an oral hearing on 18 January 2007. In its Award on Jurisdiction, dated 15 May 2007, the Tribunal ruled that it had no jurisdiction under Article 2, but that it did have jurisdiction to determine whether the Respondent had expropriated the Claimant's property and, therefore, whether any compensation was in principle due under Article 3.
(e) The Claimant did not attempt to overturn the adverse ruling of the Tribunal in relation to Article 2, but the Respondent instituted proceedings in the High Court in London to set aside that part of the Award which asserted jurisdiction over the claim under Article 3. These proceedings terminated in a judgment of Mr, Justice Simon on 5 December 2007 upholding the decision of the Tribunal on this issue.
(f) The outcome of this phase was that the arbitration remained alive, but in a much curtailed form: only one of the two bases of claim could thenceforth be pursued and there was much less scope for a close examination of facts and motives than there would have been under the standard of fair and equitable treatment set by Article 2.
(g) Although, as appears from the Award on Liability, a substantial body of subsidiary issues remained for consideration, the dispute about whether the Respondent was liable to "compensate" the Claimant for an "expropriation" of an investment, within the meaning of Article 3, and if so what the amount of the compensation should be was essentially a question of principle. This was the subject of the second stage of the arbitration, at which further evidence and submissions were advanced, leading to an oral hearing during February 2008.
(h) In the course of this hearing the Respondent introduced a new issue, namely whether the proceedings should be completely halted, on the ground that an executive of the Claimant was said to have engaged in conduct, related to the matters in issue In the arbitration, which was contrary to international public policy.
(i) Ultimately, in Its Award on Liability the Tribunal rejected the application to halt the arbitration on the grounds of public policy and rejected several other submissions by the Respondent but It concluded that there had been no expropriation and therefore rejected the claim in its entirety (see paragraphs 71-89 of the Award on Liability).
"...the arbitral tribunal, taking into account the circumstances of the case, shall be free to determine which party shall bear such costs or may apportion such costs between the parties if It determines that apportionment is reasonable." (Article 40, paragraph 2)
For "tribunal fees", by contrast, the Rules require that
"...the costs of arbitration shall in principle be borne by the unsuccessful party..." (Article 40 paragraph 1)
but the same Rule permits a tribunal to apportion the costs between the parties --
"...If it determines that apportionment is reasonable, taking into account the circumstances of the case."
(a) The Claimant shall pay £400,000 in respect of representational costs and £34,657.59 in respect of tribunal fees; i.e. a total of £434,657.59, to the Respondent within 30 days of the date of this Award.
(b) In the event that payment of the above amount is not made within 30 days of the date of this Award, simple interest shall accrue on that amount at the rate of 8% per annum from the date of this Award until the date of payment.
(c) The fees and expenses of the Tribunal, as detailed in Appendix A to this Award, shall be paid forthwith from the escrow account.
(d) The balance of funds held on deposit after paying the Tribunal's fees and expenses shall be repaid to the Respondent,
(e) All other claims and reliefs sought by the Parties are dismissed,
FINANCIAL SUMMARY as at 28 January 2010
|From Claimant: 09-Oct-06 Appointment Fee 03-Sep-07 Deposit 19-Jun-09 Deposit||200.00 50,000.00 60,000.00 15,000.00||125,200.00|
|From Respondent: 01-Jun-06 Appointment Fee 05-Sep-07 Deposit 26-J un-09 Deposit||293.75 50,000.00 60,000.00 15,000.00||125,293,75|
|Bank Interest Credited||2,772.82|
|TOTAL FUNDS RECEIVED & CREDITED||253,266.57|
|LESS COSTS OF ARBITRATION:|
|Tribunal’s fees: Lord Michael Mustill - to 17Aug09 Dr Julian Lew - to 17Aug09 Sir Christopher Greenwood - to 17Aug09||72,025,00 69,600.00 64,850,00||206,475.00|
|Tribunal's expenses: Lord Michael Mustill Dr Julian Lew Sir Christopher Greenwood||1,003.00 73.33 230.00||1,306.33|
|Fees of Secretary to the Tribunal 1 July06 to 6Dec07 7Dec07 to 29Jul09||7,872,62' 25,900.0.0||33,772.62|
|LCIA's accrued administrative charges||2,391.67|
|TOTAL COSTS OF ARBITRATION y||243,945,62|
|BALANCE OF FUNDS as at 28 JANUARY 2010||9,320.95|
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