|Frequently Used Abbreviations and Acronyms|
|ADB||Asian Development Bank|
|ADL||Anti-Dummy Law (CBII-4)|
|Arbitration Rules||ICSID 2006 Rules of Procedure for Arbitration Proceedings|
|ARCA||Amended and Restated Concession Agreement for the Build-Operate-And-Transfer Arrangement of the Ninoy Aquino International Airport Passenger Terminal III dated November 26, 1998 signed between the Government and PIATCO (CBII-55)|
|BIT or Treaty||Agreement between the Federal Republic of Germany and the Republic of the Philippines on the Promotion and Reciprocal Protection of Investments dated April 18, 1997 (CA-1)|
|Blue Ribbon Committee||Senate Committee on Accountability of Public Officers and Investigations|
|BOT law||Republic Act No. 7718 entitled "An Act Authorizing the Financing, Construction, Operation and Maintenance of Infrastructure Projects by the Private Sector and for Other Purposes" (CBII-12)|
|BSP||Bangko Sentral ng Pilipinas|
|[CA] [RL]||[Claimant] [Respondent] Legal Authority|
|[CE] [RE]||[Claimant] [Respondent] Exhibit|
|C-Mem.||Respondent’s Counter-Memorial on the Merits and Memorial on Jurisdiction, including counterclaims dated November 19, 2012|
|Clark||Clark Field Airport|
|Concession Agreement||Concession Agreement for the Build-Operate-And-Transfer Arrangement of the Ninoy Aquino International Airport Passenger Terminal III dated July 12, 1997, signed between the Government and PIATCO (CBII-43)|
|Datacenta Agreement||Agreement for the Provision of Consultancy Services in relation to tax and efficiency planning in respect of Terminal III dated August 22, 1997 signed between PIATCO and Datacenta Ltd. (RE-326)|
|DOJ||Philippine Department of Justice|
|DOTC||Philippine Department of Transportation and Communication|
|EPC Contract||Agreement entered into by PIATCO and Takenaka for the construction of Terminal 3 dated March 31, 2000 (CBII-104)|
|FAG||Flughafen Frankfurt Main AG (currently known as Fraport AG Frankfurt Services Worldwide)|
|Fraport||Fraport AG Frankfurt Services Worldwide|
|Hearing||Hearing on jurisdiction, liability and counterclaims held from September 16 through 26, 2013|
|Hr. Tr. [Day #], [page]||Transcript of the hearing on jurisdiction, liability and counterclaims held from September 16 through 26, 2013|
|ICC||NEDA Investment Coordination Committee|
|ICC-CC||ICC Cabinet Committee|
|ICC Arbitration||ICC arbitration proceedings, Philippine International Air Terminals Co., Inc. (Philippines) vs. The Government of the Republic of the Philippines (Acting through the Department of Transportation and Communications and the Manila International Airport Authority), ICC Case No. 12610/TE/MW/AVH/JEM/MLK|
|ICSID or the Centre||International Centre for Settlement of Investment Disputes|
|[ICSID-#]||Documents filed in the ICSID 1 arbitration proceedings|
|ICSID 1||Fraport AG Frankfurt Airport Services Worldwide v. Republic of Philippines (ICSID Case No. ARB/03/25)|
|ICSID 1 Award||Award rendered on August 16, 2007, in Fraport AG Frankfurt Airport Services Worldwide v. Republic of Philippines (ICSID Case No. ARB/03/25) (CBII-409)|
|ICSID 1 Tr. [Day #] [page]||Transcript of the hearing on jurisdiction and liability in Fraport AG Frankfurt Airport Services Worldwide v. Republic of Philippines (ICSID Case No. ARB/03/25) held from January 6 through 17, 2006|
|ICSID Annulment||Annulment proceedings in Fraport AG Frankfurt Airport Services Worldwide v. Republic of Philippines (ICSID Case No. ARB/03/25)|
|ICSID Annulment Decision||ICSID ad hoc Committee’s Decision in the annulment proceedings in Fraport AG Frankfurt Airport Services Worldwide v. Republic of Philippines (ICSID Case No. ARB/03/25) dated December 23, 2010 (CBII-417)|
|ICSID Convention||Convention on the Settlement of Investment Disputes Between States and Nationals of Other States dated March 18, 1965|
|IRR||1994 Implementing Rules and Regulations (CBII-13)|
|KfW||Kreditanstalt für Wiederaufbau|
|MASO||MIA-NAIA Association of Service Operators|
|Mem.||Claimant’s Memorial on Liability dated August 17, 2012|
|MIAA||Manila International Airport Authority|
|NAIA||Ninoy Aquino International Airport|
|NBI||National Bureau of Investigation|
|NEDA||Philippine National Economic Development Authority|
|O&M Agreement||Operations & Maintenance Agreement dated July 27, 2001 signed between PIATCO and PTI (CBII-189)|
|PAGC||Presidential Anti-Graft Commission|
|PAGS||Philippine Airport & Ground Services, Inc.|
|PAIRCARGO||People’s Aircargo & Warehousing Co., Inc.|
|PBAC||Prequalification Bids and Awards Committee|
|PEZA||Philippine Economic Zone Authority|
|PHB1||Post-hearing briefs dated March 3, 2014|
|PHB2||Reply post-hearing briefs dated on April 2, 2014|
|PIATCO||Philippine International Air Terminals Co., Inc.|
|Pooling Agreement||FAG-PAICARGO-PAGS-PTI Shareholders Agreement, dated July 6, 1999 (CBII-80)|
|PTH||Philippine and Ground Services Terminals Holdings, Inc.|
|PTI||Philippine Airport and Ground Services Terminals, Inc.|
|Rej.||Respondent’s Rejoinder on the Merits and Reply on Jurisdiction, including counterclaims dated June 10, 2013|
|Rep.||Claimant’s Reply on the Merits and Counter-Memorial on Jurisdiction, including counterclaims dated April 5, 2013|
|Request||Request for Arbitration submitted by Fraport AG Frankfurt Services Worldwide against the Republic of the Philippines dated March 30, 2011|
|SEC||Securities and Exchange Commission|
|Skeleton||Skeleton Submissions dated September 3, 2013|
|Sur-Rej.||Claimant’s Sur-Rejoinder on Jurisdiction, including counterclaims dated July 12, 2013|
|Security Bank||Security Bank Corporation|
|OGCC||Office of Government Corporate Counsel|
|VCLT||Vienna Convention on the Law of Treaties dated May 23,1969|
Fraport requests that the Arbitral Tribunal in this case issue an award:
(a) Accepting jurisdiction of Fraport’s claims and rejecting the Philippines objection to jurisdiction;
(b) Denying jurisdiction to the counterclaims of the Philippines;
(c) Declaring that the Philippines breached its obligations under the Germany-Philippines BIT, Philippines laws and regulations and international law;
(d) Ordering the Philippines to pay Fraport damages with respect to all injury caused to Fraport as a result of the Philippines’ breaches, in an amount to be determined;
(e) Ordering the Philippines to reimburse Fraport for the costs of this arbitration, including its legal fees and expenses, the fees and expenses of the Tribunal and the fees of the Centre;
(f) Ordering the Philippines to pay pre-award and post-award interest at rates to be determined; and
(g) Ordering such other relief as the Tribunal deems just and proper.2
For all the reasons set forth above and in its prior submissions, Respondent respectfully requests that the Tribunal (1) dismiss Claimant’s claims in their entirety for lack of jurisdiction, inadmissibility, or on the merits; (2) enter a decision in favor of Respondent in respect of all of its counterclaims; and (3) order Claimant to bear all costs and expenses incurred by Respondent in defending against Claimant’s claims.3
Witness Statements :
- Statement of Mr. Peter Henkel dated August 15, 2012 ("Henkel III")7;
- Statement of Dr. Dietrich F.R. Stiller dated August 17, 2012 ("Stiller IV"); and
- Statement of Mrs. Dôrte Ochs dated August 9, 2012 ("Ochs") (hereinafter "Ochs (ICSID 2)").
- Joint Legal Opinion of Justices Jose R. Melo (ret.) and Artemio G. Tuquero (ret.), and Dean Raul C. Pangalangan signed on December 12 and 18, 2011 ("Joint Legal Opinion") (hereinafter "Melo-Tuquero-Pangalangan I (ICSID 2)").
- PricewaterhouseCoopers ("PwC") Supplemental Opinion by Ms. Claudia Nestler and Dr. Michael Hammes dated August 16, 2012 ("PwC Report III"); and
- Memorandum of Professor Amedeo Odoni dated August 14, 2012 ("Odoni II").
Witness Statements :
- Witness Statement of Secretary Leila De Lima dated November 19, 2012 ("De Lima I");
- Witness Statement of Major General Jose Angel A. Honrado AFP (ret.) dated November 16, 2012 ("Honrado"); and
- Witness Statement of Mr. Dennis Villa-Ignacio dated November 19, 2012 ("Villa-Ignacio").
Legal Opinions :
- Legal Opinion of Dean Dando L. Concepcion dated November 20, 2012 ("Concepcion") (hereinafter "Concepcion I (ICSID 2)");
- Expert Opinion of Professor Rudolf Dolzer dated November 15, 2012 ("Dolzer") (hereinafter "Dolzer II (ICSID 2)");
- Opinion of Sir Elihu Lauterpacht dated November 16, 2012 ("Lauterpacht"); and
- Legal Opinion of Professors Christoph Schreuer, Ursula Kriebaum and Christina Binder dated November 18, 2012 ("Schreuer") (hereinafter "Schreuer-Kriebaum-Binder I (ICSID 2)").
Expert Reports :
- Statement of Mr. Raul Manlapig (Ove Arup & Partners) dated November 16, 2012 ("Arup");
- Expert Statement of Mr. Tim Lunt (Gleeds Cost Management Ltd.) dated November 12, 2012 ("Gleeds");
- Statement of Mr. Richard Francis Klenk dated November 15, 2012 ("Klenk");
- Expert Opinion of Professor Dr. Mark Pieth dated November 9, 2012 ("Pieth I (ICSID II)");
- Expert Report of Mr. Rex E. Pingle dated November 16, 2012 ("Pingle I (ICSID II)");
- Expert Report of Dr. Michael B. Rosenzweig dated November 19, 2012 ("Rosenzweig I (ICSID II)"); and
- Expert Report of Mr. Howard M. Silverstone dated November 19, 2012 ("Silverstone I (ICSID II)") (hereinafter "Silverstone I (ICSID 2)").
Witness Statement :
- Statement of Professor Dr. Jürgen Taschke dated April 4, 2013 ("Taschke").
Expert Reports :
- Statement of Mr. John M. Niehuss dated April 2, 2013 ("Niehuss II") (hereinafter "Niehuss I (ICSID 2)");
- Expert Report of Dr. Richard de Neufville dated April 5, 2013 ("de Neufville"); Statement of Professor David W. Kennedy dated April 5, 2013;
- PwC Supplemental Opinion by Ms. Claudia Nestler and Dr. Michael Hammes dated March 2013 ("PwC Report IV") (hereinafter "PwC II (ICSID 2)");
- Expert Report and Disclosure of Mr. Thomas W. Golden dated April 5, 2013; and
- URS Report on the Status of NAIA Terminal 3 by Mr. Mike Jackson dated April 2013 ("URS Report").
Legal Opinions :
- Reply Joint Legal Opinion of Justices Jose R. Melo (ret.) and Artemio G. Tuquero (ret.), and Dean Raul Pangalangan dated April 4, 2013 ("Reply Joint Legal Opinion") (hereinafter "Melo-Tuquero-Pangalangan II (ICSID 2)"); and
- Legal Opinion of Justice Jose C. Vitug dated April 5, 2013 ("Vitug I") (hereinafter "Vitug I (ICSID 2)").
Witness Statements :
- Supplemental Witness Statement of Secretary Leila De Lima dated June 7, 2013 ("De Lima II");
- Supplemental Witness Statement of Mr. Dennis Villa-Ignacio dated June 7, 2013 ("Villa-Ignacio II");
- Witness Statement of Dr. Norbert Lôsch dated June 2, 2013;
- Witness Statement of Secretary Alberto G. Rómulo dated June 6, 2013; and
- Witness Statement of Mr. F. Arthur Villaraza dated June 7, 2013.
Legal Opinions :
- Second Opinion of Professor Rudolf Dolzer dated June 2013 ("Dolzer II");
- Supplemental Legal Opinion of Dean Dando L. Concepcion dated June 10, 2013 ("Concepcion II") (hereafter "Concepcion II (ICSID 2)");
- Supplementary Legal Opinion by Professors Christoph Schreuer, Ursula Kriebaum and Christina Binder dated June 10, 2013 ("Schreuer II");
- Opinion of Law of Professor Jan Paulsson dated June 4, 2013; and
- Legal Opinion of Justice Reynato S. Puno (ret.) dated June 10, 2013 (hereafter "Puno (ICSID 2)").
Expert Reports :
- Supplemental Expert Statement of Mr. Tim Lunt (Gleeds Cost Management Ltd.) dated June 9, 2013 ("Gleeds II");
- Supplemental Statement of Ove Arup & Partners by Messrs. Raul Manlapig and Ashok Raiji dated June 10, 2013 ("Arup II");
- Supplemental Expert Opinion of Professor Dr. Mark Pieth dated June 9, 2013 ("Pieth II (ICSID II)");
- Supplemental Expert Report of Mr. Rex E. Pingle dated June 10, 2013 ("Pingle II (ICSID II)");
- Rejoinder Report of Dr. Michael B. Rosenzweig dated June 10, 2013 ("Rosenzweig II (ICSID II)");
- Supplemental Expert Report of Mr. Howard M. Silverstone dated June 10, 2013 ("Silverstone II (ICSID II)") (hereafter "Silverstone II (ICSID 2)"); and
- Expert Report of Mr. Brent C. Kaczmarek (Navigant Consulting, Inc.) dated June 10, 2013.
Witness Statement :
- Statement of Mr. Sanim Aydin dated July 3, 2013.
Legal Opinions :
- Second Supplemental Joint Legal Opinion of Justices Jose R. Melo (ret.) and Artemio G. Tuquero (ret.), and Dean Raul Pangalangan dated July 9, 2013 ("See. Supp. Joint Legal Opinion") (hereafter "Melo-Tuquero-Pangalangan III (ICSID 2)"); and
- Reply Legal Opinion of Justice Jose C. Vitug dated July 11, 2013 ("Vitug II") (hereafter "Vitug II (ICSID 2)").
Expert Reports :
- Supplemental Expert Report and Disclosure of Mr. Thomas W. Golden dated July 12, 2013;
- Statement of Dr. Richard de Neufville dated June 28, 2013 ("de Neufville II"); Supplemental Statement of Professor David W. Kennedy dated July 12, 2013;
- PwC Second Supplemental Expert Report by Ms. Claudia Nestler and Dr. Michael Hammes dated July 10, 2013 ("PwC Report V");
- Supplemental Statement of Mr. John M. Niehuss dated July 12, 2013 ("Niehuss III") (hereafter "Niehuss II (ICSID 2)"); and
- Expert Report and Disclosure of Glenn Ware, Esq. (PwC) dated July 12, 2013.
- By letter of 16 August 2013, Respondent requested leave to submit 27 new documents to rebut new evidence and new arguments alleged asserted by Claimant in its Sur-Rejoinder. By letter of August 21, 2013, Claimant objected to Respondent’s request. By letter of August 23, 2013, the Tribunal granted Respondent leave to submit the said new documents, namely exhibits RE-2045 through RE-2071, submitted on August 31, 2013, subject to Claimant’s opportunity to submit documents in response.
- By letter of August 29, 2013, Claimant requested leave to admit into the record (and produced) 5 newly received letters from Credit Suisse and BNP Paribas, regarding the ownership of bank accounts by Messrs. Endler and Struck, that were proposed to stand in lieu of Messrs. Endler and Struck’s cross-examinations. Respondent objected to that suggestion on September 1, 2013. In its Procedural Order No. 3, the Tribunal admitted in the record Claimant’s letters (exhibit CE-372), and confirmed that the witnesses were to be heard at the hearing.
- By letter of August 29, 2013, Respondent requested leave to introduce 5 new documents containing updates on related Philippine proceedings, which Claimant commented by email of September 1, 2013. By cover letter of September 2, 2013, to Procedural Order No. 3, the Tribunal partially granted Respondent’s request. Respondent submitted into the record exhibits RE-2072 through RE-2075 on September 3, 2013, and exhibits RE-2076 and RE-2077 on September 4, 2013.
- Claimant submitted exhibits CE-307 through CE-333 on September 6, 2013 responsive to (i) the documents that Respondent introduced further to its letter of August 29, 2013, and (ii) the 27 new documents submitted by Respondent on August 31, 2013.
|On behalf of Claimant:|
|Mr. Michael Nolan||Milbank, Tweed, Hadley & McCloy LLP ("Milbank")|
|Mr. Edward Baldwin||Milbank|
|Ms. Elitza Popova-Talty||Milbank|
|Mr. Brett Lowe||Milbank|
|Mr. Hugh Carlson||Milbank|
|Mr. Mark McCrone||Milbank|
|Ms. Angel Anderson||Milbank|
|Dr. Sabine Konrad||McDermott Will & Emery ("McDermott")|
|Ms. Lisa M. Richman||McDermott|
|Mr. Arne Fuchs||McDermott|
|Ms. Andrea Alegrett||McDermott|
|Mr. Edgardo G. B al ois||Siguion Reyna Montecillo & Ongsiako ("SRMO")|
|Mr. Cesar P. Manalaysay||SRMO|
|Mr. Victorio H. Macasaet||SRMO|
|Ms. Lesley A. Benn||Outside Consultant|
|Mr. Martin Glock||Fraport AG|
|Mr. Peter Henkel||Fraport AG|
|Ms. Dôerte Ochs||Fraport AG|
|Mr. Matthias Engler||Fraport AG|
|Mr. Wilhelm Bender||Former Chairman of the Executive Board of Fraport|
|Mr. Johannes Endler||Former employee of Fraport|
|Mr. Manfred Schôlch||Former Vice-Chairman of Fraport|
|Mr. Dietrich Stiller||Partner of Clifford Chance, Germany|
|Mr. Bernd Struck||Former employee of Fraport|
|Experts: Mr. Mike Jackson||URS|
|Mr. Ryan Murphy||PwC|
|On behalf of Respondent:|
|Solicitor General Francis H. Jardeleza||Office of the Solicitor General|
|Mr. Bernard G. Hernandez||Assistant Solicitor General, Office of the Solicitor General|
|Mr. Eric Remegio o. Panga||Assistant Solicitor General, Office of the Solicitor General|
|Mr. Dando D. Leyva||Senior State Solicitor, Office of the Solicitor General (Counsel)|
|Ms. Jane E. Yu||Senior State Solicitor, Office of the Solicitor General|
|Ms. Josephine D. Arias||State Solicitor, Office of the Solicitor General|
|Ms. Rebecca E. Khan||State Solicitor, Office of the Solicitor General|
|Ms. Charisse G. Olalia||State Solicitor, Office of the Solicitor General|
|Justice Florentino P. Feliciano||Supreme Court of the Philippines (retired)|
|Ms. Carolyn B. Lamm||White & Case LLP|
|Ms. Abby Cohen Smutny||White & Case LLP|
|Mr. Frank Vasquez||White & Case LLP|
|Mr. William Currier||White & Case LLP|
|Mr. Hansel Pham||White & Case LLP|
|Ms. Anne Smith||White & Case LLP|
|Mr. Frank Panopoulos||White & Case LLP|
|Mr. Lee Steven||White & Case LLP|
|Mr. Eckhard Hellbeck||White & Case LLP|
|Mr. Matthew Leddi cotte||White & Case LLP|
|Mr. Brody Greenwald||White & Case LLP|
|Mr. Jonathan Ulrich||White & Case LLP|
|Mr. Michael Daly||White & Case LLP|
|Mr. Karthik Nagaraj an||White & Case LLP|
|Ms. Leah Witters||White & Case LLP|
|Mr. Daniel Hickman||White & Case LLP|
|Mr. Luke Engan||White & Case LLP|
|Mr. Ziad Haider||White & Case LLP|
|Ms. Amara Levy-Moore||White & Case LLP|
|Mr. Nikolaos Tsolakidis||White & Case LLP|
|Mr. Roland Hartung||White & Case LLP|
|Ms. Kim Quarantello||White & Case LLP|
|Mr. Jeffery Stellhom||White & Case LLP|
|Ms. Erin Vaccaro||White & Case LLP|
|Mr. Jacob Bachmaier||White & Case LLP|
|Mr. Timothy Perry||White & Case LLP|
|Mr. Robert Kosik||White & Case LLP|
|Ambassador Jose L. Cuisia Jr.||Philippine Embassy|
|Ms. Maria Andrelita S. Austria||Deputy Chief of Mission, Philippine Embassy|
|Ms. Ariel Peñaranda||Consul General and Legislative Affairs Minister, Philippine Embassy|
|Ms. Arlene Magno||First Secretary and Consul for Consular Affairs, Philippine Embassy|
|Mr. Emil Fernandez||First Secretary and Consul and Minister for Cultural Affairs, Philippine Embassy|
|Ms. Lilibeth Almonte-Arbez||Second Secretary and Consul for Economic Affairs, Philippine Embassy|
|Ms. Corina Reyes||Third Secretary and Vice Consul for Political Affairs, Philippine Embassy|
|Ms. Shiena Escoto-Tesorero||Third Secretary and Vice Consul for Administrative and Legal Affairs, Philippine Embassy|
|Ms. Ma. Perla E. Dumo||Manager, Legal Office, MIAA|
|Ms. Irene P. Montalbo||Manager, Finance Department, MIAA|
|Ms. Joycelyn B. Mapanao||Manager, Accounting Division, MIAA|
|Ms. Leila De Lima (via video-conference)||Secretary, Department of Justice|
|Mr. Jose Angel Honrado||General Manager, MIAA|
|Mr. Venner M. Mendoza||Former Computer-Aided Design Operator, Wintrack Builders|
|Mr. Alberto Rómulo||Former Executive Secretary to the President (retired)|
|Mr. Dennis Villa-Ignacio||Special Prosecutor of the Philippines|
|Mr. Juval Aviv||Interior Inc.|
|Mr. Brent Kaczmarek||Navigant Consulting, Inc.|
|Mr. Matthew Shopp||Navigant Consulting, Inc.|
|Ms. Yelena Aleksandrovich||Navigant Consulting, Inc.|
|Mr. Richard Francis Klenk||Independent Consultant|
|Mr. Tim Lunt||Gleeds Cost Management Ltd.|
|Mr. Raul Manlapig||Ove Arup & Partners|
- By letters of January 17, 2014, the Parties respectively requested leave from the Tribunal to introduce into the record additional documents in accordance with paragraph 4 of Procedural Order No. 4. In its letter, Respondent further requested leave from the Tribunal to introduce into the record "copies of brief, motions, and decisions filed from October onward in the Philippine just compensation proceedings."11 As directed by the Tribunal, Claimant filed its observations on Respondent’s further request by letter dated January 22, 2014. By letter dated January 24, 2014, Respondent submitted unsolicited comments. By letter of the same date, the Tribunal granted the Parties leave to introduce the additional documents into the record, namely Claimant’s exhibits CE-334 through CE-373 and legal authorities CA-180 and CA-181, and Respondent’s exhibits RE-2123 through RE-2139, respectively submitted by the Parties on January 17, 2013, and denied Respondent’s further request.
- By letter of February 13, 2014, Respondent requested leave from the Tribunal to introduce into the record (i) documents relating to the Philippines’ efforts to extradite Mr. Alfonso Liongson from the United States, (ii) a cover letter attached to the Draft Memorandum from Clifford Chance to Fraport dated September 6, 2006 (CBII-309) and (iii) the ICSID Brown Book. By letter dated February 17, 2014, the Tribunal granted the Respondent’s leave to introduce into the record these documents, namely Respondent’s exhibits RE-2140 and RE-2141 and legal authority RL-508.
- By letter of March 12, 2014, Claimant requested leave from the Tribunal to introduce into the record three documents relating to new developments in the Philippine court. By letters dated March 17, 2014, Respondent submitted its observations, including its request to be permitted to introduce into the record its own additional documents were the Tribunal to grant Claimant’s request. As directed by the Tribunal, Respondent provided further observations by letter dated March 19, 2014. By letter dated March 20, 2014, the Tribunal decided to grant the Parties leave to submit their respective documents into the record, namely Claimant’s exhibits CE-374 through CE-376, submitted on March 20, 2014, and Respondent’s exhibits RE-2142 through RE-2145, submitted on March 21, 2014. The Parties had the opportunity to provide their comments in their second PHBs.
- By letter of April 14, 2014, Respondent requested leave from the Tribunal to introduce into the record the Philippine Supreme Court decision in People v. Henry Go (G.R. No. 168539). On April 21, 2014, Claimant provided its observations. On April 22, 2014, the Tribunal decided to grant Respondent leave to introduce into the record the aforementioned decision, namely exhibit RE-2146, submitted on April 24, 2014. Claimant provided its comments on this document by letter of April 28, 2014 and in its reply submission on costs on May 19, 2014.
- By letter of June 6, 2014, Respondent requested leave from the Tribunal to introduce into the record a one-page Philippine Supreme Court Resolution issued in the domestic expropriation proceedings. On June 9, 2014, the Tribunal decided to grant Respondent leave to introduce into the record the aforementioned document, namely exhibit RE-2147, submitted on June 9, 2014. Claimant provided its comments on this document by letter of June 13, 2014.
- By letter of September 9, 2014, Respondent requested leave from the Tribunal to introduce into the record a Manifestation filed by Respondent to the Supreme Court in the Philippine expropriation proceedings. By letter of September 15, 2014, Claimant submitted its observations. By letter of September 16, 2014, the Tribunal denied Respondent’s request.
SECTION 9.2 ICC Clearance. - In case of projects involving substantial government undertakings as defined under the ICC guidelines hereto attached as Annex B, the concerned Agency/LGU shall, prior to the approval of the Notice of Awards, submit the draft contract to the ICC for clearance on a noobjection basis, specifically on the extent of the final government undertaking to be provided to the project, if any, within seven (7) calendar days from the date the decision to award the contract is made. If the draft contract includes government undertakings within the scope of an earlier ICC approval, then the submission will only be for the information of the ICC. However, should it include additional provisions or provisions different from the original scope of government undertakings, then the draft contract will have to be reviewed by the ICC. In which case, the ICC shall act on the final draft contract within fifteen (15) working days upon submission of complete documentation. Unless otherwise previously notified in writing by the ICC, failure to act within this prescribed period shall mean that the concerned Agency/LGU may proceed with contract award. The concerned Head of Agency/LGU shall approve the Notice of Award within seven (7) calendar days from the date the clearance by the ICC on a no-objection basis for the contract has been received. The Notice of Award shall then be issued within seven (7) calendar days from the approval thereof.
Annex B of the IRR is entitled "ICC Guidelines for the Review of Projects Proposed to be Financed under the Various Private Sector Investment (PSI) Schemes."
The ICC conducted an ad referendum to facilitate the approval, on a no objections basis, of the BIT agreement between DOTC and PIATCO. The ad referendum was able to gather four signatures - OP, CCAP, BSP and NEDA.
Ad referendum approval requires six signatures.
The ICC noted the BOT agreement.40
• The First Supplement dated August 27, 1999, concerned inter alia an extension of time for the Philippines to deliver clean possession of the Project site and the deletion of an access tunnel between Terminal 2 and 3.66
• The Second Supplement dated September 4, 2000, concerned subterranean structures and transferred responsibility for clearing the Project site from the Government to PIATCO.67
• The Third Supplement was executed on June 22, 2001, regarded the construction of a surface access road connecting Terminals 2 and 3.68
• On October 16, 2001, the Third ARCA Supplement was presented to the ICC for approval.69 The ICC deferred action pending an explanation from the DOTC and MIAA as to why the previous ARCA supplements had not been presented for its approval.70
• A Fourth Supplement was drafted in March 2001, to reflect changes international banks requested as pre-conditions for the drawdown of longterm financing and modifying inter alia the Government’s obligations regarding attendant liabilities, force majeure, incremental and consequential costs, and other "special obligations," but was not executed.71
39. Fraport’s indirect investment in PIATCO by means of interests in cascade companies allowed Fraport to make equity investments required by its agreements with its fellow project participants all of which comply with Philippine laws requiring control of public utilities by Philippine nationals. The following is an overview of Fraport’s acquisition of its direct and indirect interests in PIATCO:
(a) Under four agreements dated July 6, 1999 (the "1999 Share Purchase Agreements and Share Subscription Agreements"), Fraport acquired 25% of PIATCO, 40% of PTI and 40% of PTH, and PTI acquired 11% of PIATCO.
(b) Fraport’s shareholdings were increased pursuant to two agreements dated May 5, 2000 (the "2000 Share Purchase Agreements"). Under these two agreements Fraport acquired an additional 5% of PIATCO, and PTI acquired another 24% of PIATCO.
(c) In 2001, Fraport acquired a 40% stake in PAGS. PAGS holds a 10% direct shareholding in PIATCO. PAGS also has 12.6% indirect shareholding in PIATCO as a result of PAGS’s 60% shareholding in PTH and PTH’s 60% shareholding in PTI, which owns 35% of PIATCO. This results in Fraport having an additional 9.04% indirect interest in PIATCO.
40. Accordingly, Fraport owns directly 30% of PIATCO; Fraport owns indirectly through its direct investment in PTI 14% of PIATCO; Fraport owns indirectly through its direct investment in PTH 8.4% of PIATCO, and Fraport owns indirectly through its direct investment in PAGS 9.04% of PIATCO. The result is Fraport’s 61.44% direct and indirect ownership in PIATCO.81
• Approval of the Project, the ARCA, and the three ARCA Supplements by the ICC;
• Confirmation of the DOTC’s authority to enter into agreements such as the ARCA on behalf of the Philippine Government;
• Legal opinions from the Philippine DOJ and SEC as to the legality of the ARCA and its Supplements and PIATCO’s shareholding structure, respectively; and
• Approval of a direct agreement between the Government and Senior Lenders applicable in case of PIATCO’s insolvency, as called for in the ARCA.
• The PAIRCARGO Consortium lacked the initial financial qualifications and PBAC had erred in calculating the basis for the consortium’s financial prequalification.
• Post-award modifications to the 1997 Concession Agreement provided financial advantages to PIATCO that were not available during the bidding process and required the government to provide a "form of security" for loans to PIATCO. Therefore, the Agreement was void as contrary to public policy.
• The ARCA provided for a direct guarantee by the Government, in the event of PIATCO’s default, which was prohibited by the BOT law.
• A provision requiring that the Government pay compensation to PIATCO if it temporary took over the terminal in a time of war hampered the Government’s exercise of its police powers and contravened the Philippine Constitution.
• The provisions in the 1997 Concession Agreement and the ARCA granting PIATCO exclusive rights to control service provider concessions at Terminal 3 and requiring the Government to terminate existing NAIA service provider contracts were impermissible.
(i) having a right of recommendation under the Pooling Agreement;
(ii) being the Financial Arranger in the Project;
(iii) placing non-Filipino officials in management roles at PIATCO and PTI;
(iv) having a veto power over PTI’s corporate decisions; and
(v) having a right to appoint PIATCO board members in excess of limitations.215
• The nationality requirement apply to the "operation of a public utility" (rather than the pre-operation construction phase), so that Fraport could not have violated Section 2-A of the ADL prior to Terminal 3 entering into service (which did not occur prior to the expropriation).218
• Section 2-A of the ADL does not apply to shareholder conduct.219
• Fraport never controlled PIATCO, the Chengs did.220
• US $2.6 million in payments were made to the Chengs and Top Victory’s accounts within 23 days of DOTC’s approval of the Second Supplement to ARCA. The Second Supplement added demolition of below-ground structures to PIATCO’s responsibilities, thus allegedly allowing it to enter into a kickback scheme with a subcontractor, Wintrack (described infra)227
• US $2.3 million in payments were made to the Chengs over the four months surrounding the approval by DOTC Secretary Pantaleon Alvarez (who allegedly had close connections to the Chengs) of PIATCO’s request to relax the required 70:30 debt-equity financing ratio for to the Terminal 3 Concession. This approval was required to continue to fund the construction of Terminal 3, as PIATCO’s Philippine shareholders could not or would not increase their equity investment and Fraport was not legally allowed to do SO .228
• US $4.9 million in payments were made to the Chengs and Top Victory in the weeks prior to and after DOTC’s approval of PTI as the contractor-operator of Terminal 3 and of the Third Supplement to the ARCA. The Third Supplement changed the terms of the agreement with respect to the construction of a road, which allegedly provided the opportunity for further corruption.229
• US $850,000 in payments were made to the Chengs in the weeks following DOTC’s approval of Fraport’s purchase of additional shares in PAGS, one of the cascade companies.230
• Respondent has not produced any evidence of bribery, relying solely on the inferences of its experts.240 Fraport strongly objects to Respondent’s expert witness Juval Aviv, calling him a "complete fraud."241
• Moreover, Respondent has not shown how allegedly corrupt officials were responsible for the five Government approvals that it specifically alleges were procured through bribery, given the number of other officials involved; ignores the other 33 Government approvals that PIATCO received; and has "wild inconsistencies" in the timing between the allegedly corrupt payments and the approvals allegedly procured thereby, including a number made after President Arroyo’s announcement that the Philippines would not honor the Concession Agreement.242
• The Philippines has not indicted or convicted a single Government official for receiving bribes in connection with the Terminal 3 concession, nor are there any ongoing investigations.243 The only indictment of Fraport officials (but not the Government officials involved) was in 2005 for signing the Third Supplement to the ARCA which was alleged to have been illegally advantageous to PIATCO.244 Moreover, every investigation into corruption with respect to the Terminal 3 Concession has been dismissed.245
• Respondent has not alleged any corruption with respect to the award of the Terminal 3 Concession or Fraport’s making of its investment.246
• Many of the witnesses relied upon by Respondent for its allegations have previously contradicted their statements or claimed no knowledge or any corruption on the part of Fraport.247
• Liongson, in fact, did provide public relations services.248
• The Wintrack contract was made more than 3 years after the award of the Project. Everyone involved in the Wintrack contract was exonerated.249
• Schedule 7 did not set forth a process for the awarding of contracts to subcontractors, but only allowed Schedule 7 sub-contractors to be considered in the rating of the bids by Takenaka.250
• Respondent conflates PIATCO’s and Fraport’s actions.251
• If Respondent’s allegations demonstrate any wrongdoing, the evidence shows that Fraport may have been the victim of an embezzlement scheme by the Chengs.252
• President Arroyo’s declaration that the Terminal 3 Concession would not be honored;
• The DOJ’s declaration that the 1997 Concession Agreement and the ARCA were void;
• The "coercion" applied to Fraport by Secretary Climaco and others to renegotiate the concession agreements;
• Respondent’s alleged refusal to perform duties under the concession agreements necessary to bring Terminal 3 into commercial operation, such as installing immigration and customs facilities and requiring PAL and other carriers to move their international operations to Terminal 3;
• The Supreme Court’s Agan decision nullifying the Terminal 3 concession; and
• The taking of physical possession of Terminal 3 by Philippine armed forces.266
• deviations from the original Bid documents, combined with the failure to allow AEDC to match the terms of PIATCO’s bid, placed PIATCO in a more favorable position than other project bidders, in contravention of the BOT law;269 and
• the PAIRCARGO Consortium did not meet the financial qualifications at the time the Concession was awarded.
• Post-award modifications to the 1997 Concession Agreement provided financial advantages to PIATCO that were not available during the bidding process and required the Government to provide a "form of security" for loans to PIATCO. Therefore, the Agreement was void as contrary to public policy.
• The ARCA provided for a direct guarantee by the Government, in the event of PIATCO’s default, which was prohibited by the BOT law.
• Respondent claims that Fraport knew that PIATCO had "misrepresented its qualifications" and "was not financially qualified."
• Respondent argues that Fraport should have been aware that the 1997 Concession Agreement and the ARCA both contained an illegal Government guarantee in the event PIATCO defaults on its payments to the creditors financing the Terminal 3 Project.272
• Negotiated contracts based on unsolicited BOT proposals (as is the case here) and amendments thereto are not required to conform to public bidding requirements.274
• The determination of whether the PAIRCARGO Consortium met the financial pre-qualification requirements to bid on the Concession is within the discretion of PBAC, which had already found that it did.275
• The BOT law does not prohibit certain Government guarantees; regardless, the concession agreements do not carry such guarantees.276
• Representations by Philippine authorities that the requirements of the original bid process - including financial prequalification - had been duly observed;307
• The warranty of validity contained in the ARCA;308 and
• Memoranda of support from President Ramos and President Estrada.309
• Fabricating charges of corruption against individuals associated with Fraport, when no Philippine official has been charged;
• Reviving of baseless ADL charges after many years’ delay, in response to the annulment of the ICSID 1 Award in order to manufacture a defense for this arbitration;
• Persecuting Fraport’s local arbitration counsel with charges based on statements made during the ICSID 1 arbitration;
• Attempting to coerce Fraport into renegotiating the terms of its investment, demanding to oust the Chengs, and pretending to negotiate with Fraport in good faith, via Secretary Climaco, while planning to seek the nullification of the Concession;
• Misusing police and prosecutorial resources to harass Fraport and manufacture a defense for this arbitration, rather that bona fide criminal investigations;
• Failing to pay compensation due for the expropriation of Terminal 3;
• Mischaracterizing the failure of its requests of Germany for mutual legal assistance to the ICSID 1 Tribunal, suggesting that Fraport was at fault and had something to hide.312
• And generally, "misusing its sovereign power by prosecuting Fraport’s employees and international counsel for the express purpose of gaining an advantage in the arbitration as well as Philippine counsel."313
• Its inability to achieve corruption convictions does not indicate that the charges were fabricated and, in particular, it was hampered from using the evidence available to it by confidentiality agreements from the first ICSID proceedings and the ICC arbitration.
• The timing of ADL charges was dictated by private complainants and, regardless, Fraport violated the ADL.
• The libel complaints were filed by private parties, whose actions cannot be attributed to Respondent.
• Respondent did not mislead German authorities in its requests for mutual legal assistance and, therefore, property characterized these requests to the ICSID 1 Tribunal.
• Fraport has not shown that Climaco was planning to seek nullification of the concession, nor that it was bullied into terminating its investment, which it lost because of its own illegality.
• Respondent has never denied its obligation to pay compensation due, once properly determined.315
• The Court had no basis for its exercise of jurisdiction. According to Fraport, Section 2 of Rule 65 of the Philippine Rules of Court, relied upon by the Agan petitioners, provides for the court to prohibit further proceedings, which was not actually the relief sought (or ordered).
• Petitioners’ allegations rested upon issues of fact, whereas Rules 65 may only be invoked to decide issues of law or grave abuses of discretion related to the lack of jurisdiction.
• The Supreme Court decided, improperly and without any legal basis, that it had original jurisdiction over the matter due to "extraordinary circumstances," when the validity of contracts are normally issues to be addressed at the trial court level.
• The Supreme Court improperly decided to waive requirements of standing, despite recognizing that the petitioners lacked standing to bring a case,
• President Arroyo publicly announced the decision not to honor the Terminal 3 Concession 10 days before oral arguments, thus improperly exerting political pressure on the judiciary.316
• The Court improperly reversed the DOTC Prequalification, Bids, and Award Committee’s earlier determination that PIATCO was qualified to be awarded the Terminal 3 Concession without extending it any deference, discussing the factual circumstances considered, or articulating a standard of judicial review to PBAC’s fact finding or application of the law to those facts, which is inconsistent with the requirements of Philippine law.
• The Court failed to consider the doctrine of estoppel as applied to Fraport and PIATCO’s reliance on the assurances of Philippine officials.317
• Counterclaims Nos. 1 through 3 involve various costs associated with completing or remediating aspects of Terminal 3 in accordance with the original Bid documents.
• Counterclaim No. 4 is for lease payments and real-estate taxes for the land where Terminal 3 is located incurred by Respondent for which PIATCO would have been responsible upon the Terminal becoming operational.
• Counterclaim No. 5 is for the tax benefits that Fraport received from Terminal 3’s Special Economic Zone status, which was intended to benefit only "legitimate investment."
• Counterclaim No. 6 is for all costs associated with administering PIATCO’s bid and the Concession, including costs associated with challenges to PIATCO’s pre-qualification.
• Counterclaims Nos. 7 and 8 are for lost revenue and other "economic and social opportunities" caused by the failure of the Terminal to become operational as of January 1999.
• Counterclaims No. 9 through 11 are for set-offs against any Award rendered in favor of Fraport by (i) the amounts owed to Respondent under the above counterclaims, (ii) the amount of bribes paid by Fraport, any fines or penalties imposed by Philippine courts against Fraport, and the amount of Fraport’s "ill-gotten gains," and (iii) the amount of compensation awarded to PIATCO by the Philippine expropriation court.
• Counterclaim No. 12 is a request for costs and legal expenses.
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.
In the absence of any definition of "investment" under the ICSID Convention, the BIT and international law, as the law governing the BIT, assume relevance to establish jurisdiction ratione materiae.
For the purpose of this Agreement:
1. [T]he term "investment" shall mean any kind of asset accepted in accordance with the respective laws and regulations of either Contracting State, and more particularly, though not exclusively:
(a) movable and immovable property as well as other rights in rem, such as mortgages, liens, ledges, usufructs and similar rights;
(b) shares of stocks and debentures of companies or interest in the property of such companies;
(c) claims to money utilized for the purpose of creating an economic value or to any performance having an economic value;
(d) intellectual property rights, in particular copyrights, patents, utility-model patents, registered designs, trade-marks, trade-names, trade and business secrets, technical processes, know-how, and goodwill;
(e) business concessions conferred by law or under contact, including concessions to search for, extracts or exploit natural resources;
any alteration of the form in which assets are invested shall not affect their classification as an investment [...].
In addition, the Tribunal shall apply provisions of Philippine law to the extent the latter establishes conditions that are relevant for determining its jurisdiction, whether or not the BIT makes reference to such provisions.
1.1 Respondent’s Position
A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.
Cognizant that the good faith interpretation of a treaty encompasses the principle of effet utile, however, the Tribunal does not regard it as appropriate to treat the term "accepted" as surplusage. Rather, recalling that the ordinary meaning of the term "accepted" includes "received," the Tribunal considers that "accepted" refers to the point in time when the investment is received in the host State, or, in other words, at the time the investment is made.
(a) which of Claimant’s "investments" are to be considered for jurisdictional purposes;
(b) which are Respondent’s jurisdictional objections.
Fraport’s investments in the NAIA 1PT 3 Project span a period of several years, from 1999 and ending in 2002-2203. A report prepared by PricewaterhouseCoopers ("PWC") and submitted with the Memorial set forth the investment made by Fraport per years. Fraport made several types of investments, as defined under Article 1 of the BIT. The BIT states that investments include "shares of stock and debentures of companies or interest in the property of such companies". Fraport’s investments include (1) equity investments in PIATCO and in a "cascade" of Philippine companies that have ownership interests in PIATCO; (2) loans to PIATCO and the cascade companies; (3) payments to Takenaka and the Project lenders specifically for the construction of the Terminal (resulting, inter alia, in subrogation rights); and (4) services rendered. Fraport’s investments also include Fraport’s interest both in the concession and the Terminal building itself, as these constitute "interest in the property" of PIATCO.392
The list of investments indicated by Claimant being not disputed by Respondent, the Tribunal shall consider that Claimant’s investments are so identified.
(i) Fraport violated the Anti-Dummy Law394 (hereinafter "Jurisdictional Objection 1");
(ii) Fraport engaged in Corruption and Fraud395 (hereinafter "Jurisdictional Objection 2");
(iii) Fraport knew of PIATCO’s Misrepresentations to obtain the Concession Award396 (hereinafter "Jurisdictional Objection 3").
No franchise, certificate, or any other form of authorization for the operation of a public utility shall be granted except to citizens of the Philippines or to corporations or associations organized under the laws of the Philippines at least sixty per centum of whose capital is owned by such citizens. [...] The participation of foreign investors in the governing body of any public utility enterprise shall be limited to their proportionate share in its capital, and all the executive and managing officers of such corporation or association must be citizens of the Philippines.400