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TABLE OF ABBREVIATIONS
1945 Mining Law Mining Law and Regulations, Official Gazette No. 121 dated 18 January 1945
1999 Mining Law Presidential Decree No. 295 dated 5 September 1999, Official Gazette Special Ed. No. 5,382 dated 28 September 1999
2001 Mining Regulations Decree No. 1,234, Official Gazette No. 37,155 dated 9 March 2001
AARN(s) Authorisation(s) to Affect Renewable Natural Resources
Addendum to the V-ESIA of the Brisas Project or Addendum to the V-ESIA Addendum to the Environmental and Socio-Cultural Impact Assessment (V-ESIA) of the Brisas Project, July 2005 (C-187)
Additional Esperanza Contract Contract between Gold Reserve and MINCA dated 7 May 2004 (C-1285)
Additional Facility Rules Rules Governing the Additional Facility for the Administration of Proceedings by the Secretariat of the International Centre for Settlement of Investment Disputes in effect from April 2006
Additional Yusmari Contract Contract between Gold Reserve and MINCA dated 7 May 2004 (C-1286)
AOT Authorisation to Occupy Territory
Arbitration (Additional Facility) Rules Schedule C to the Additional Facility Rules (as defined above) - Arbitration (Additional Facility) Rules
ARD Acid Rock Drainage
Bárbara, Zuleima and Lucia Assignment Contract Assignment and Delegation Contract for Exploration and Exploitation of Alluvial and Hard-Rock Gold and Diamonds between Placer Dome de Venezuela, C.A. and Compañía Aurífera Brisas del Cuyuni, C.A. dated 16 October 1998 (C-8)
Barbarita Concession Barbarita Mining Title, Official Gazette of Bolivar State, Special Ed. No 218 dated 10 June 2005
Belanger I First Witness Statement of Mr Belanger dated 20 September 2010
Belanger II Second Witness Statement of Mr Belanger dated 29 July 2011
Brewer-Carias I First Expert Legal Opinion of Mr Brewer-Carias dated 15 September 2010

Brewer-Carías II Second Expert Legal Opinion of Mr Brewer-Carías dated 28 July 2011
Brisas Company Compañiá Aurífera Brisas del Cuyuni, C. A.
Brisas or Alluvial Concession or Brisas Mining Title Brisas Mining Title dated 11 April 1988, Official Gazette No. 33,947 dated 18 April 1988
Brisas Project Unicornio and Brisas Concessions
Brisas Project Feasibility Study Brisas Project Feasibility Study dated February 2001 (C-170); supplemented by Letter from Gold Reserve to MEM (now MINAMB) dated 27 November 2002 (C-575)
Brown & Kowal II (Joint Expert Procedure) Joint Expert Procedure Rebuttal Report of Dr Brown & Dr Kowal dated 3 July 2013
Burrows I First Expert Report of Dr Burrows dated 14 April 2011
Burrows II Rejoinder Report of Dr Burrows dated 8 December 2011
Burrows II (Joint Expert Procedure) Joint Expert Procedure Rebuttal Report of Dr Burrows dated 3 July 2013
C-YYY Exhibit filed by Claimant
Canada-Venezuela BIT or the BIT or the Treaty The Agreement Between the Government of Canada and the Government of the Republic of Venezuela for the Promotion and Protection of Investments dated 1 July 1996, which entered into force on 28 January 1998
Carpio I Witness Statement of Mr Carpio dated 11 April 2011
CIMVal Canadian Institute of Mining, Metallurgy and Petroleum on Valuation of Mineral Properties
Claimant or Gold Reserve Gold Reserve Inc.
Claimant’s Comments on Reports of the Experts Submitted in Response to Procedural Order No. 2 Claimant’s Comments on Reports of the Experts Submitted in Response to Procedural Order No. 2 dated 5 August 2013
Claimant’s Joint Expert Procedure Post-Hearing Brief Claimant’s Joint Expert Procedure Post-Hearing Brief dated 23 December 2013
Claimant’s Post-Hearing Brief Post-Hearing Brief of Gold Reserve Inc. dated 16 March 2012
Claimant’s Response to Respondent’s Comments on Second Post-Hearing Brief Claimant’s Response to Respondent’s Comments on Second Post-Hearing Brief dated 18 July 2012
Claimant’s Second Post-Hearing Brief Claimant’s Second Post-Hearing Submission (Comments on Respondent’s Annex A) dated 25 May 2012

Construction Permit or Phase I Permit Authorisation to Affect Natural Resources to Gold Reserve de Venezuela-Compañia Aurífera Brisas del Cuyuni for the Infrastructure and Services Construction Phase of the Brisas Project for Exploitation and Processing of Gold and Copper Mineral dated 27 March 2007
Counter-Memorial Counter-Memorial on Merits and Jurisdiction of the Bolivarian Republic of Venezuela, 14 April 2011
CVG Corporación Venezolana de Guayana
DCF Discounted Cash Flow
De los Rios I First Expert Report of Professor De los Rios dated 7 April 2011
EAE Strategic Envioronmental Evaluation; MinAmb Official Letter No. 2353 dated 31 July 2006 (C-455)
EIA Environmental Impact Study; Letter from Gold Reserve to MARN (now MinAmb) dated 14 October 1998 (C-617)
El Pauji Concession El Pauji Mining Title, published Official Gazette No. 34,011 dated 20 July 1988
Feasibility Study "Geo-exploratory and Techno-economic Feasibility Study," MEM (now MIBAM) Official Letter DM-DT-04 dated 24 February 1994 (C-405)
FET Fair and Equitable Treatment
Herrera I Witness Statement of Mr Herrera dated 23 March 2011
ICSID or the Centre International Centre for Settlement of Investment Disputes
Inspection Report MIBAM Inspection Report dated 11 March 2008 (C-78)
Iribarren I First Legal Opinion of Mr Iribarren Monteverde dated 5 December 2011
Kaczmarek II Second Expert Report of Mr Kaczmarek (Navigant) dated 27 July 2011
Kaczmarek II (Joint Expert Procedure) Joint Expert Procedure Second Supplemental Report of Mr Kaczmarek (Navigant) dated 3 July 2013
Lambert I (Joint Expert Procedure) Joint Expert Procedure Supplemental Report of Mr Lambert dated 24 May 2013
LCT Locked-Cycle Tests

May 2006 Update Letter from Gold Reserve to MIBAM dated 12 May 2006 (C-453)
Memorial Memorial on the Merits of Gold Reserve Inc. dated September 24, 2010
Memorial on Jurisdiction Memorial on Jurisdiction of the Bolivarian Republic of Venezuela dated 22 December 2010
MFN Most Favoured Nation
MIBAM Resolution dated 25 May 2009 MIBAM Resolution No. DM/No. 050/2009 dated 25 May 2009, Official Gazette No. 39,186 dated 25 May 2009
MIBAM Resolution dated 17 June 2010 MIBAM Official Letter No. 281/10 dated 17 June 2010
MIBAM or MEM Ministry of Mines, initially known as the Ministry of Energy and Mines, then later as the Ministry of the People’s Power for Basic Industries and Mining
MinAmb or MARN Ministry of the Environment, initially known as the Ministry of the Environment and Natural Resources, then later as the Ministry of the People’s Power for the Environment
Opening Act MIBAM Notice of Commencement of Administrative Proceedings No. MPPIBAM-DVM-DGFCM-ITR No. 1-IFMLC-001-09 dated 4 November 2009 (C-128)
Ortiz I First Expert Legal Opinion of Mr Ortiz-Alvarez dated 20 September 2010
Ortiz II Second Expert Legal Opinion of Mr Ortiz-Alvarez dated 27 June 2011
Pingle II Second Expert Report of Mr Pingle dated 23 July 2011
R-XX Exhibit filed by Respondent
Rejoinder Rejoinder on Merits and Jurisdiction of the Bolivarian Republic of Venezuela dated 9 December 2011
Reply Reply on the Merits of Gold Reserve Inc. dated 29 July 2011
Request for Arbitration Claimant’s Request for Arbitration dated 21 October 2009
Respondent or Venezuela Bolivarian Republic of Venezuela
Respondent’s Comments on Claimant’s Second Post-Hearing Brief Respondent’s Comments on Claimant’s Second Post-Hearing Brief dated 8 June 2012

Respondent’s Comments on the Joint Expert Procedure Reports Respondent’s Comments on the Joint Expert Procedure Reports dated 5 August 2013
Respondent’s Joint Expert Procedure Post-Hearing Brief Respondent’s Joint Expert Procedure Post-Hearing Brief dated 23 December 2013
Respondent’s Post-Hearing Brief Post-Hearing Brief of the Bolivarian Republic of Venezuela dated 16 March 2012
Revocation Order MinAmb Administrative Order No. 088-08 dated 14 April 2008 (C-121)
Rigby II (Joint Expert Procedure) Joint Expert Procedure Rebuttal Report of Dr Rigby, Mr Swanson and Dr Tinucci dated 3 July 2013
Rivero I Witness Statement of Mr Rivero dated 23 September 2010
Rodriguez I First Witness Statement of Mr Rodríguez dated 23 March 2011
Romero I Witness Statement of Mr Romero dated 27 January 2011
SAE Strategic Environmental Evaluation
Suspension Order MIBAM Act No. MIBAM-DGFCM-ITRG No. 1-IFMLC-001-09 dated 18 March 2009 (C-94)
Transcript, February 2012, [day, page: line] Transcript of the hearing on jurisdiction and merits held from 13 to 17 February 2012
Transcript, October 2013, [day, page: line] Transcript of the hearing implementation of Procedural Order No. 2 held from 15 to 16 October 2013.
Tribunal Arbitral Tribunal constituted as of 9 March 2010
TIPS Treasury Inflation Protected Securities
Unicornio Concession or Unicornio Mining Title Unicornio Mining Title dated 12 February 1998, Official Gazette No. 36,405 dated 3 March 1998 (C-5)
Unicornio Termination Decision MIBAM Official Letter No. 281/10 dated 17 June 2010 (C-129)
V-ESIA of the Brisas Project 2005 or V-ESIA Environmental and Socio-Cultural Impact Assessment (V-ESIA) of the Brisas Project, July 2005 (C-178)
WACC Weighted Average Cost of Capital

CHAPTER I. THE PARTIES

A. Claimant

1.
Claimant in this arbitration is Gold Reserve Inc. (hereinafter "Gold Reserve" or "Claimant"). Gold Reserve is a mining company incorporated under the laws of the Yukon Territory in Canada and is listed on the Toronto Venture Exchange and the NYSE Amex. Claimant’s registered address is at Suite 200, 926 West Sprague Avenue, Spokane, Washington 99201, United States. Claimant is represented in this arbitration by Ms Abby Cohen Smutny, Mr Darryl S. Lew, Mr Hansel Pham, Mr Petr Polásek and Mr Michael Roche of White and Case LLP (Washington, United States).

B. Respondent

2.
Respondent in this arbitration is the Bolivarian Republic of Venezuela (hereinafter "Venezuela" or "Respondent"). It was originally represented in this arbitration by Dr Ronald E.M. Goodman, Ms Melida Hodgson and Mr Alberto Wray of Foley Hoag LLP (Washington, United States). Their authority was revoked by letter dated 10 May 2011.1 Venezuela was then represented by the Attorney-General; Venezuelan counsel, Mr Antonio Guerrero and Mr Luis Torres Darias (appointed on 22 February 2011); and Mr Paolo di Rosa and Ms Gaela Gehring Flores of Arnold & Porter LLP (as of 12 May 2011). On 27 September 2011, Respondent informed the Tribunal that Foley Hoag LLP had been reappointed to represent Respondent, and on 28 September 2011, Respondent revoked the authority of the Venezuelan counsel, Mr Antonio Guerrero and Mr Luis Torres Darias. Venezuela is also presently represented by Dr Manuel Enrique Galindo Ballesteros, Procurador General (E) de la República of the Procuraduría General de la República.

CHAPTER II. THE PARTIES’ CLAIMS AND PRAYERS FOR RELIEF

3.
The dispute has its origins in a number of mining concessions, known as the "Brisas Concession" and the "Unicornio Concession", and mining rights held indirectly by Claimant in Venezuela.
4.
Claimant submits that Respondent has violated Articles II, III and VII of the Treaty between the Government of Canada and the Government of Venezuela for the Promotion and Protection of Investments, which entered into force on 28 January 1998 (the "BIT"). Respondent disputes this.
5.
Claimant requests that the Tribunal :

1) Hold that Respondent breached its obligations under Article II of the BIT;

2) Hold that Respondent breached its obligations under Article III of the BIT;

3) Hold that Respondent breached its obligations under Article VII of the BIT;

4) Award Claimant compensation in the total amount of US$ 1,735,124,200, plus interest running from 14 April 2008 up through the date of the award at the US Prime Rate of interest plus 2 percent, compounded annually;2

5) Award Claimant compensation on such other basis as the Tribunal may deem to be warranted;

6) Award Claimant the amount of the legal fees and costs incurred in these proceedings; and

7) Award Claimant interest on the full amount of the Award so established, up to the date of payment, at the interest rate equivalent to the annualized yield on US dollar-denominated Venezuelan Government bonds, compounded annually.3

6.
Respondent requests that the Tribunal:

1) Find that the Tribunal lacks jurisdiction to hear Gold Reserve’s claims with respect to the Brisas and Unicornio Concessions in accordance with Article XII of the BIT;

2) Find that Claimant has failed to state a claim with respect to its Choco 5 claim and that this claim is therefore not admissible;

3) If it has jurisdiction to hear Claimant’s claims, find that Claimant’s claims should be dismissed in their entirety; and

4) Award Venezuela compensation for all the expenses and costs associated with defending against the claims.4

CHAPTER III. SUMMARY OF THE MAIN FACTS OF THE CASE

A. Introduction

7.
The subsequent summary is intended to provide a general overview of the issues in dispute between the Parties. It is not intended to be an exhaustive description of all facts considered relevant by the Tribunal. These will be addressed in the context of the Tribunal’s analysis of the issues in dispute, and will be supplemented by relevant facts, including those provided by witnesses and experts in their written statements and reports and in the course of oral examination at the hearings.
8.
Mining of minerals in Venezuela generally works in the following way. While the minerals belong to the State, a private party is permitted to exploit those minerals when the State grants it a concession, which, through conditions in the concession and mining law and regulations, gives that party a set of rights and obligations. The Ministry of Mines (initially known as the Ministry of Energy and Mines, or "MEM", then later as the Ministry of the People’s Power for Basic Industries and Mining, or "MIBAM"), oversees the concessionaire’s compliance with a mining title, law and regulations. Concessionaries must file an annual report with MIBAM, and MIBAM must verify whether they have complied with their obligations.
9.
The Ministry of the Environment (initially known as the Ministry of the Environment and Natural Resources, or "MARN", then later as the Ministry of the People’s Power for the Environment, or "MinAmb") issues permits and approves environmental impact studies to ensure that the concessionaire exploits the mine in accordance with Venezuelan environmental standards.

B. Concessions Held by Claimant

The Brisas Concession

10.
The Brisas (or Alluvial Gold Exploitation) Concession covers the near-surface gold resources located within the 500-hectare Brisas property. The Brisas property is in the Kilometre 88 mining district in South-Eastern Venezuela. The Brisas Concession was for 20 years, and could be renewed for two additional ten-year terms if so requested six months before expiration ("Brisas Concession" or "Alluvial Concession").

The Unicornio Concession

The Brisas Project

13.
Following the grant of the Unicornio Concession, which underlay the Brisas Concession, for reasons of better coordination and efficiency Gold Reserve planned to exploit the two Concessions together as part of a larger Brisas Project ("Brisas Project").

C. Events Subsequent to the Acquisition of the Brisas and Unicornio Concessions

14.
In August 1993, Gold Reserve submitted to MIBAM a "Geo-exploratory and Techno-economic" Feasibility Study regarding the Brisas Concession. MIBAM approved this study on 24 February 1994 ("Feasibility Study").8
15.
From 1993 to 1998, Claimant9 applied for and was granted by MinAmb six Authorisations to Affect Natural Resources ("AARNs"), each for one-year term, regarding the Brisas Concession, which allowed Claimant to, for example, build roads or clear land.
16.
Claimant submitted an Environmental Impact Study ("EIA") on the project for the exploitation of alluvial gold in the Brisas Concession to MinAmb on 14 October 1998.10 Claimant informed the MinAmb of the underlying Unicornio Concession it had obtained earlier that year and stated its intention to exploit both Concessions in an integrated or comprehensive manner. It also requested that MinAmb grant it authorisation to affect resources for the purposes of the exploitation of the Alluvial Concession in accordance with the study.
17.
MinAmb approved the EIA on 28 October 1999,11 but did not grant Claimant the authorisation to exploit the Brisas Concession. MinAmb instead stated that it would assess the environmental impact for the other areas in the expanded project.
18.
Claimant applied for and was granted a one-year extension to submit its feasibility study for the Unicornio Concession. On 22 February 2001, it submitted to MIBAM the "Unicornio Concession Technical Financial and Environmental Feasibility Study".12 The study in fact referred to both Concessions or the Brisas Project. It was supplemented on 27 November 2002 and again throughout the project ("Brisas Project Feasibility Study"). After requesting additional information, MIBAM approved this study on 6 January 2003 as complying with the Special Advantage No. 5 of the Unicornio Concession.13
19.
Claimant had also examined the possibility of exploiting the Brisas and Unicornio Concessions together with the neighbouring Las Cristinas properties. In September 2001, Corporación Venezolana de Guayana ("CVG"), the State-owned regional development corporation, announced that it would pursue the combined Las Cristinas-Brisas project. Respondent later elected not do so.
20.
On 25 June 2004 and 14 December 2005 respectively, MinAmb authorised Claimant to occupy Zuleima and Bárbara, two parcels of land adjoining the Brisas and Unicornio Concessions.14
21.
On 29 July 2005, Claimant submitted the Brisas Project Environment and Socio-Cultural Impact Study to MinAmb, and requested that MinAmb issue the AARN for the phase of construction of the Infrastructure and Services and for the phase of gold and copper mineral exploitation for the Brisas Project (hereinafter "V-ESIA of the Brisas Project" or "V-ESIA").15 On 31 July 2006, MinAmb informed Gold Reserve that it intended to conduct a "Strategic Environmental Evaluation" ("EAE") to complement the studies submitted so far.16 On 19 December 2006, MinAmb invited Claimant and CVG to conduct a EAE.17 MinAmb indicated that rather than issuing a single permit, it would prefer to issue separate permits for each phase of the work. On 30 January 2007, Claimant submitted an updated V-ESIA in respect of which it renewed the request made on 29 July 2005.18 On 9 February 2007, MinAmb approved Claimant’s V-ESIA for part of the works of the Brisas Project.19
22.
On 27 March 2007, MinAmb issued the "Authorization to Affect Natural Resources for the Infrastructure and Services Construction Phase of the Brisas Project for the Exploitation of Gold and Copper Mineral" (the "Construction Permit", also referred to as "Phase I Permit").20 The effect of the Construction Permit was that, provided Gold Reserve complied with certain conditions specified in the Construction Permit, and provided the MinAmb signed an Initiation Act formally recognising that Claimant had so complied, Claimant could begin construction.
23.
On 16 May 2007, Claimant provided MinAmb with evidence of its compliance with the Construction Permit conditions, and requested that MinAmb sign the Initiation Act.21 MinAmb did not respond to this request. On 11 July 2007, Claimant sent another written request.22 MinAmb then advised Claimant that it would not sign the Initiation Act until Claimant addressed its concerns over the location of a proposed alternative access road to the Brisas Project site. On 25 July 2007, Claimant submitted a plan to re-route the road, which was approved by MinAmb on 14 August 2007.23
24.
On 14 April 2008, MinAmb issued Administrative Ruling No. 088-08 declaring the "absolute nullity" of the Construction Permit and revoking it for "reasons of public order."24
25.
The Brisas Concession was set to expire on 18 April 2008, 20 years after it had initially been granted. On 17 October 2007, more than six months before the date of the expiry, Claimant had submitted to MIBAM an application to extend the Brisas Concession.25 It attached a certificate of compliance that MIBAM had issued on 14 September 2007, which stated that Claimant had fully complied with the provisions of the corresponding 1999 Mining Law and was "solvent".26 In August 2008, MinAmb told Claimant that it had been advised by MIBAM that the Brisas Concession had expired in April 2008. Upon enquiring with MIBAM, Claimant was told that there had been an omission as MIBAM had received the request for an extension, but had not properly filed it.27 On 18 March 2009, MIBAM issued a Suspension Order suspending all mining activities in the Brisas Concession, stating that there was no evidence in the file of an administrative act extending the Brisas Concession.28
26.
On 25 May 2009, MIBAM issued a resolution denying Claimant’s requested extension and terminating the Brisas Concession, citing Claimant’s lack of solvency and alleged failure to comply with a number of Special Advantages.29
27.
In October 2009, the Government seized Claimant’s assets and occupied the site of the Brisas Project. On 20 October 2009, MIBAM commenced an administrative proceeding to revoke the Unicornio Concession.30 Claimant filed a challenge to termination proceeding on 18 November 2009,31 then discontinued that challenge on 4 March 2010.
28.
On 17 June 2010, MIBAM terminated the Unicornio Concession on two grounds: first, Claimant had allegedly failed to commence exploitation within 7 years, in violation of Article 61 of the 1999 Mining Law; second, Claimant had breached Special Advantage No. 10 regarding the hiring of interns.32

CHAPTER IV. THE PROCEDURE

A. Institution of the Proceedings

29.
On 21 October 2009, ICSID received a Request for the institution of arbitration proceedings under the ICSID Arbitration (Additional Facility) Rules (hereinafter "the Additional Facility Rules") on behalf of Gold Reserve against Venezuela.
30.
On 23 October 2009, ICSID transmitted copies of the Request, its accompanying documentation and Claimant’s letter dated 21 October 2009 to Respondent.
31.
On 9 November 2009, pursuant to Article 4(5) of the Additional Facility Rules, the Secretary-General of ICSID registered the Request for Arbitration and, on the same day, in accordance with Article 4 of Schedule C of the Additional Facility Rules (hereinafter "the Arbitration (Additional Facility) Rules"), dispatched to the Parties the Notice of Registration, inviting them to proceed to the constitution of the Arbitral Tribunal.
32.
By letter to the Secretary-General of ICSID dated 8 January 2010, Claimant noted that the Parties had failed to reach agreement on the number of arbitrators and the method of their appointment within 60 days of the registration of the Request for Arbitration. Claimant also invoked Article 9(1) of the Additional Facility Rules.
33.
On 11 January 2010, the Secretary-General informed the Parties that the Tribunal would be constituted in accordance with that Article (i.e., the Tribunal would be comprised of three arbitrators, with one arbitrator appointed by each party and the third, the President of the Tribunal, appointed by agreement of the Parties). The Secretary-General also informed Respondent that pursuant to Article 9(1) of the Additional Facility Rules, Claimant had appointed Professor David A.R. Williams QC, a national of New Zealand, as arbitrator and proposed Professor Hans van Houtte as President of the Tribunal. The Secretary-General invited Respondent to name an arbitrator and either to concur in the appointment of Professor van Houtte as President or to propose another person.
34.
On 7 February 2010, Respondent appointed Professor Pierre-Marie Dupuy as arbitrator.
35.
Professor Williams accepted his appointment on 14 January 2010 and Professor Dupuy on 9 February 2010.
36.
By letter dated 9 February 2010, Claimant noted that after 90 days from the registration of the Request for Arbitration the Tribunal had not been constituted and the Parties had not agreed to extend the time for doing so. Claimant requested that, pursuant to Article 6(4) of the Additional Facility Rules, the Chairman of the Administration Council appoint the President of the Tribunal.
37.
By email of 27 February 2010, Claimant informed the Secretariat that the Parties had agreed to extend the time for the constitution of the Tribunal.
38.
By letters dated 4 March 2010, Claimant and Respondent advised the Secretariat of their agreement to appoint Professor Piero Bernardini as the presiding arbitrator. The Secretariat acknowledged receipt of these letters by letter dated 5 March 2010.
39.
Professor Bernardini accepted his appointment on 9 March 2010.
40.
On 9 March 2010, the Secretary-General of ICSID informed the Parties that, having received from each arbitrator the acceptance of his appointment, the Arbitral Tribunal (the "Tribunal") was deemed to have been constituted, and the proceedings were deemed to have begun on that date. The Secretary-General designated Mrs. Katia Yannaca-Small to serve as Secretary of the Tribunal. By letter dated 9 September 2010 the Secretariat informed the Parties and the Tribunal that Mrs. Yannaca-Small had been replaced as Secretary by Ms Janet Whittaker. By letter dated 16 November 2012, the Centre informed the Tribunal and the Parties that Ms Ann Catherine Kettlewell, ICSID Counsel, had been appointed as Secretary of the Tribunal in replacement of Ms Janet Whittaker.

B. The First Session

41.
By agreement of the Parties, the First Session of the Tribunal concerning the procedural rules and the agenda of the arbitration was held on 23 April 2010 via teleconference.
42.
This First Session considered matters listed on an agenda circulated to the Parties by the Secretary of the Tribunal on 24 March 2010, as well as the Parties’ joint proposals of 16 April 2010 regarding these matters (attached to the Minutes as Annex 1).
43.
The Minutes of the First Session, signed by the arbitrators and the Secretary of the Tribunal, were transmitted to the Parties on 20 May 2011. The First Session was also audio recorded. The Secretary sent audio recordings in CD-ROM format to the Tribunal and the Parties on 21 May 2010.

C. Exchange of Written Pleadings

45.
In accordance with this agenda, Claimant filed its Memorial dated 24 September 2010, together with exhibits; international legal authorities; Venezuelan legal authorities; the expert reports of Mr Brent C. Kaczmarek of Navigant Consulting, Mr Richard J. Lambert, Mr Allan R. Brewer-Carias, Professor Luis A. Ortiz-Alvarez and Mr Rex E. Pingle; the witness statements of Mr Arturo Rivero Acosta, Mr Robert A. McGuiness and Mr A. Douglas Belanger; and the joint witness statement of Ms Jane Spooner and Ms Mani M. Verma.
46.
By letter dated 19 January 2011, Respondent requested an extension of time until 9 May 2011 for the filing of the Counter-Memorial in light of Claimant’s refusal to date to produce documents requested by Respondent. Respondent also suggested that the due date for Claimant’s Reply be 15 August 2011 and the due date for Respondent’s Rejoinder be 21 November 2011. By letter dated 20 January 2011 the Tribunal invited Claimant to comment on Respondent’s letter by 24 January 2011. On 24 January 2011, Claimant replied objecting to Respondent’s request for an extension. Respondent replied by email dated 25 January 2011, and Claimant replied to this response in its letter of the same date.
47.
In its Procedural Order No 1, dated 3 February 2011, the Tribunal granted a one-month extension of the period for filing Respondent’s Counter-Memorial and the subsequent written submissions. It therefore directed that Respondent file its Counter-Memorial by 14 April 2011; that Claimant file its Reply by 15 July 2011; and that Respondent file its Rejoinder by 17 October 2011.
48.
On 14 April 2011, Respondent submitted its Counter-Memorial on the Merits together with exhibits; legal authorities; and the expert reports of Mr James C Burrows, Professor Isabel De Los Rios, Professor Henrique Iribarren and Dr Neil Rigby.
49.
By letter to the Tribunal dated 1 July 2011, Claimant requested an extension from 15 July 2011 to 29 July 2011 to file its Reply, and a corresponding extension until 14 November 2011 for Respondent to file its Rejoinder. Claimant cited as its reasons for the request the Tribunal’s shortening by one week of the initial time period agreed on for submitting the Reply, and the need to address jurisdictional issues.
50.
On 4 July 2011, the Tribunal invited Respondent to comment on Claimant’s requested extension by 6 July 2011.
51.
By letter to the Tribunal dated 6 July 2011, Respondent informed the Tribunal that it agreed with Claimant’s proposed extension.
52.
By email to the Parties dated 7 July 2011, the Tribunal confirmed that the revised dates were to be as follows: Claimant would file its Reply by 29 July 2011, and Respondent its Rejoinder by 14 November 2011.
53.
On 29 July 2011, Claimant filed its Reply, together with the expert reports of AATA, TetraTech and Mr Mehrdad Nazari; the reply expert reports of Mr Rex E. Pingle, Professor Luis A. Ortiz-Alvarez, Mr Richard A. Lambert, Mr Brent C. Kaczmarek (of Navigant Consulting), and Mr Allan R. Brewer-Carías; the witness statements of Mr Coromoto Gallegos; the reply joint witness statement of Ms Jane Spooner, Ms Mani M. Verma and Mr Christopher R. Lattanzi; and the reply witness statements of Mr Arturo Rivero Acosta, Mr Douglas Belanger and Mr Brad Yonaka.
54.
By letter dated 11 October 2011, Respondent requested that the deadline for filing its Rejoinder be extended to 3 February 2011, and accordingly that the hearing, due to begin on 6 February 2012, be postponed, citing as its reason that Foley Hoag had been reinstated as counsel for Respondent. On 12 October 2011, the Tribunal invited Claimant to comment on Respondent’s letter. By letter dated 17 October 2011, Claimant objected to Respondent’s requests. Respondent reiterated its request in its email dated 19 October 2011.
55.
In its letter of 20 October 2011, the Tribunal directed that the deadline for filing Respondent’s Rejoinder be extended until 5 December 2011. The Tribunal noted that Respondent had been given almost four months to prepare its Rejoinder, and that Respondent’s reasons for its request were based on decisions it had made with respect to changing its counsel twice since filing its Counter-Memorial.
56.
Respondent objected to the Tribunal’s decision by letter dated 26 October 2011. By its letter dated 27 October 2011, the Tribunal explained that in making its decision of 20 October, it had been guided by the Parties’ agreement regarding the schedule for the proceeding (ICSID Arbitration Rule 20(2)), and by the rule of equality of treatment (ICSID Convention Article 52(l)(d)).
57.
Respondent, in its letter dated 31 October 2011, again requested the Tribunal to reconsider its decision. Claimant responded on 1 November 2011, again reiterating its opposition to Respondent’s request.
58.
By letter dated 5 November 2011, the Tribunal, while correcting the reference previously made to the ICSID Convention and the ICSID Arbitration Rules by referring to the corresponding Article 33(2) of the Arbitration (Additional Facility) Rules, confirmed Respondent’s time limit for filing the Rejoinder and the hearing dates.
59.
By letter dated 29 November 2011, Respondent requested that, if the hearing was postponed to 9 February 2012 (see below for details of this request), it be granted a three-day extension (from 5 December to 8 December) for the filing of its Rejoinder.
60.
Claimant, in its letter of 29 November 2011, objected to Respondent’s request.
61.
Respondent, by email dated 30 November 2011, reiterated its request but confirmed that English translations of expert reports on damages would be submitted on 8 December, witness statements in English and Spanish as well as exhibits to the Rejoinder by midday on 9 December, and English translations of legal expert reports on a rolling basis as available.
62.
By email dated 29 November 2011, and on the basis of Respondent’s undertakings as detailed above, Claimant withdrew its objection to Respondent’s request for an extension.
63.
By letter to the Parties dated 1 December 2011, the Tribunal agreed to extend the date for submission of Respondent’s Rejoinder, subject to Respondent’s commitments that a) it would file its expert reports on damages together with its Rejoinder; b) it would file the exhibits to its Rejoinder and all witness statements in both English and Spanish by noon on 9 December; and c) it would provide translations of its legal expert reports on a rolling basis as soon as they become available.
64.
On 8 December 2011, Respondent filed its Rejoinder on Jurisdiction and the Merits, together with exhibits; the witness statements of Mr Francisco Salas, Mr Sergio Rodriguez, Mr Alejandra González Moreno and Mr Pedro Romero; the second expert reports of Professor Henrique Iribarren, Professor Isabel De Los Rios, Dr Neil Rigby of SRK Consulting (both an environmental report and a mining report), and Mr James C. Burrows of CRA.

D. The Organization of the Hearing of February 2012

65.
The Tribunal and the Parties had confirmed in the First Session that the hearing would commence on 5 December 2011 and that ten hearing days would be reserved. On 3 November 2010, the Tribunal informed the Parties that these dates were no longer possible for the Tribunal and sought the Parties’ agreement on a fresh set of dates. On 12 November 2010, the Tribunal informed the Parties that the hearing would take place from 6 February to 17 February 2012.
66.
By letter dated 4 February 2011, the Tribunal expressed a preference for Paris as the venue of the hearing, and invited the Parties to comment on this proposal no later than 18 February 2011.
67.
On 17 February 2011, Claimant requested that the hearing be held in Washington, DC. By email dated 18 February 2011, Respondent made the same request.
68.
By letter dated 23 February 2011, the Tribunal informed the Parties that it agreed to hold the hearing in Washington, D.C.
69.
In its letter of 21 November 2011, the Tribunal explained that one of its members needed to undergo a medical procedure shortly before the hearing, and proposed delaying the commencement of the hearing until 9 February 2012, and sitting on Saturday 11 February 2012, to make up the lost time.
70.
By letter dated 22 November 2011, Claimant agreed to the Tribunal’s proposition. By letter dated 9 November 2011, Respondent also agreed to the Tribunal’s proposition, subject to the granting of a three-day extension for the filing of its Rejoinder.
71.
On 30 November 2011, the Tribunal wrote to the Parties confirming that the hearing would commence on 9 February 2012, and that the Tribunal would also sit on Saturday 11 February 2012.
72.
By email to the Parties dated 16 December 2011, the Tribunal proposed draft procedural rules for the hearing. It invited the Parties to confer about the rules and submit their joint comments by 9 January 2012.
73.
On 9 January 2012, the Parties submitted their joint comments. In these, they requested that the hearing day start at 9:00 a.m. rather than 9:30 a.m., and agreed that time should be shared equally and that they would submit a draft joint detailed hearing schedule.
74.
On 18 January 2012, the Tribunal transmitted to the Parties the final procedural rules of the hearing.
75.
By letter dated 26 January 2012, Respondent informed the Tribunal that the Attorney-General for Venezuela had passed away. The Tribunal acknowledged receipt of this letter by letter of the following day, expressing its deep regret for this sad event. Respondent then requested, by email dated 1 February 2012, that the commencement of the hearing be postponed to 13 February.
76.
By letter of 2 February 2012, Claimant indicated that it would object to Respondent’s proposal if that proposal were to reduce the time available to Claimant to conduct direct examination of its own witnesses and cross-examination of Respondent’s witnesses.
77.
On 2 February 2012, the Tribunal agreed to Respondent’s request to delay the commencement of and hence shorten the hearing, due to the passing away of the Venezuelan Attorney-General. The Tribunal noted the following points by way of guidance to assist the Parties to agree upon a schedule for the hearing:

1. "The principle of equal sharing of the available hearing time set forth in Rule 2.1 of the Procedural Rules for the Hearing does not apply in this new situation, which is attributable to Respondent. Claimant, therefore, is entitled to more time than one-half of the five hearing days;

2. Unless more time is available, Claimant’s opening submissions should last no longer than 4 hours and 30 minutes. Respondent is entitled to use equal time to make its opening submissions;

3. Claimant may call its own fact and expert witnesses in accordance with Rule 3.2 of the Procedural Rules for the Hearing, which limits the scope of direct examination to new issues rising since the exchange of witness statements; and

4. In the event that the Parties do not submit a hearing schedule reflecting the Tribunal’s positions set forth at 1-4 above by Tuesday, 7 February 2012, the hearing schedule shall be fixed by the Tribunal."

78.
In its letter of 6 February 2012, Claimant, in accordance with Item 16 of the Minutes of the First Session of the Tribunal and Rule 4.2 of the Final Procedural Rules for the Hearing, requested to introduce into the record a press release announcing that as of 1 February 2012 Gold Reserve was listed on the Toronto Stock Exchange.
79.
By letter dated 7 February 2012, the Tribunal granted Claimant’s request.
80.
By letter dated 7 February 2012, Respondent requested that the principle of equal time for both sides be respected, that Claimant not be allowed to present its own fact and expert witnesses, and that, if Claimant was to be permitted to do so, it must explain which new issues have arisen since the exchange of witness statements and why those new issues must be presented by a witness.
81.
Claimant responded in its letter of 7 February 2012, and Respondent replied to this response in its own letter of 8 February 2012. Claimant sent a further letter on 7 February 2012.
82.
By letter dated 8 February 2012, the Tribunal directed as follows:

1. "That its directions of 2 February 2012 were confirmed;

2. That Claimant should specify no later than 9 February 2012 which "new issues" raised in Respondent’s Rejoinder and enclosed witness statements and expert reports would be addressed by each of its witnesses and experts, and that no witnesses or experts called by Claimant would be heard in the absence of this indication;

3. That the hearing schedule would be as follows:

Monday, 13 February: Claimant’s statement of its case (Tribunal’s questions, if any)

Tuesday, 14 February: Respondent’s statement of its case (Tribunal’s questions, if any)

Wednesday, 15 February: With continuation on

Thursday, 16 February: Examination of witnesses and experts called by Claimant (with actual examination time to be adjusted by the Tribunal if necessary)

A Douglas Belanger Arturo Rivero Acosta Coromoto Gallegos 15 minutes 30 minutes 15 minutes
Pedro Romero 45 minutes
Sergio Rodriguez 45 minutes
Angel Carpio 30 minutes
Allan Brewer-Carias 30 minutes
Rex E Pingle 45 minutes
Brent Kaczmarek, Navigant 1 hour
Dr Burrows, CRA 3 hours
Micon International, Ltd 30 minutes
Richard J Lambert 45 minutes
Tetra Tech 30 minutes
A ATA International, Inc. 30 minutes
Mehrdad Nazari 15 minutes
SRK Consulting 3 hours

Friday, 17 February: Time for completion of witnesses’ and experts’ examination, then 2 hours per party to make closing arguments and answer Tribunal’s questions

4. That the Tribunal reserved any decision regarding the filing of post-hearing briefs following consultation with the Parties at the end of the hearing."

83.
In its letter of 9 February 2012, Claimant specified the new issues raised in Respondent’s Rejoinder and enclosed witness statements and expert reports.
84.
By letter dated 10 February 2012, Respondent replied to Claimant’s letter. Claimant then responded by its own letter of the same date. Respondent sent a further letter dated 11 February 2012. Claimant again replied by letter of the same date.

E. Respondent’s Requests for Production of Documents

85.
In accordance with the procedure set out in Section 16 of the Minutes of the First Session, Respondent submitted its requests for production of documents to Claimant on 15 November 2010. On 17 November 2010, Claimant invited Respondent to explain the relevance of each of its requests. Respondent replied on 24 November 2010. By letter dated 1 December 2010, Claimant refused to produce the requested documents.
86.
On 10 December 2010, Claimant filed its requests for production of documents with the Tribunal and attached the above-mentioned letters as exhibits.
87.
By letter to the Parties dated 14 December 2010, the Tribunal requested that Claimant state in more detail the reasons for its objections to each of Respondent’s requests. Claimant responded on 24 December 2010, and Respondent replied to this response on 14 January 2011. By letter dated 19 January 2011, the Tribunal then invited Claimant to reply in brief to Respondent’s letter of 14 January by 26 January 2011. Claimant filed its reply as directed on 26 January 2011.
88.
In its Procedural Order No 1 dated 3 February 2011, the Tribunal noted which requests had been withdrawn, granted certain requests, and refused others.
89.
On 7 February 2011, Claimant supplied Respondent with a USB drive containing copies of the non-proprietary documents that the Tribunal had requested that Claimant produce. This was supplemented by a USB drive provided by Claimant on 9 February 2011. Claimant also invited Respondent to contact it to make arrangements in accordance with the Tribunal’s order that Claimant allow Respondent’s experts to access proprietary documents. By letter dated 11 February 2011, Claimant informed Respondent that it did not have any documents pertaining to requests 32 and 54.
90.
By email dated 11 February 2012, Respondent inquired whether Claimant could provide "view only" access to the proprietary documents remotely or at Gold Reserve’s offices in Colorado. Claimant replied on 14 February 2011, rejecting these propositions but confirming that it could make the documents available in the manner directed by the Tribunal, namely at its Spokane offices.
91.
On 16 February 2011, Respondent informed Claimant that some of the non-proprietary documents provided on a USB drive were illegible and requested clear copies of them.
92.
In a further email of the same date, Respondent proposed the week of 28 February 2011 for inspecting the proprietary documents at Claimant’s Spokane offices. Claimant agreed to the proposed dates by email the same day.
93.
By email dated 17 February 2011, Claimant provided clearer copies.
94.
By letter dated 3 November 2011, Respondent explained that Claimant had only granted Respondent access to the geological block model on Claimant’s premises, and had not allowed Respondent to make copies. Respondent alleged that a copy of the model appeared in the expert report of Mr Lambert, an expert of Claimant. Respondent requested that the Tribunal direct Claimant to provide Respondent’s experts equal access to the block model, including the right to make copies.
95.
Claimant responded in its letter of 4 November 2011, claiming that Claimant’s expert was not provided greater access to the block model than was provided to Respondent’s experts and that it had permitted Respondent to take print-outs of the model (which Respondent did not do). Claimant further stated that it was prepared to allow Respondent’s experts to take screen shots of the block model.
96.
By letter dated 7 November 2011, the Tribunal noted Claimant’s offer, and invited counsel for the Parties to coordinate to arrange the necessary access. The Tribunal also reserved the right to intervene further in the matter if necessary.

F. The Issue of Jurisdiction

97.
By letter dated 22 December 2010, pursuant to Rule 45(2) of the Arbitration (Additional Facility) Rules, Respondent objected to the competence of the Tribunal to decide the dispute and requested that the Tribunal suspend the proceedings on the merits, fix a time limit within which the Parties might file observations on the objections, and deal with the objections as a preliminary question. Claimant replied on 23 December 2010 proposing to respond to Respondent’s objections by 14 January 2011 and submitting that Rule 45(4) of the Arbitration (Additional Facility) Rules does not automatically suspend proceedings on the merits.
98.
By letter dated 29 December 2010, the Tribunal directed Claimant to file observations on Respondent’s jurisdictional objections by 14 January 2011; Respondent to file a reply by 31 January 2011; and Claimant to file a rejoinder by 14 February 2011. The Tribunal confirmed that the proceedings had not been suspended and directed Respondent to continue preparing its Counter-Memorial for submission on 7 March 2011.
99.
Claimant submitted its observations on Respondent’s jurisdictional objections on 14 January 2011.
100.
By letter dated 19 January 2011, Respondent proposed that, should its request for an extension for filing its Counter-Memorial be granted, it would abandon its request for a bifurcated proceeding, file pleadings on jurisdiction prior to or with its Counter-Memorial, and a one-day hearing on jurisdiction could ensue. By letter dated 24 January 2011, Claimant agreed that if the Tribunal thought that further pleadings were warranted, Respondent should submit these with its Counter-Memorial and Claimant should submit its rejoinder to Respondent’s objections with its Reply. Claimant also submitted that an oral hearing was unnecessary and that, should oral arguments be necessary, they could be heard during the hearing on the merits rather than in a separate one-day hearing.
101.
As directed, Respondent filed its response to Claimant’s observations of 14 January on 31 January 2011.
102.
Claimant submitted its rejoinder by letter dated 14 February 2011.
103.
By letter dated 25 February 2011, the Tribunal stated the following:

"The Tribunal refers to Respondent’s request of 22 December 2010, that the proceedings on the merits be suspended and that its jurisdictional objections be treated as a preliminary matter separate from the merits.

In accordance with its letter of 29 December 2010, the Tribunal has examined the observations filed by both Parties with respect to this request. The Tribunal is of the opinion that the reasons adduced by Respondent do not warrant the suspension of the proceedings on the merits. Accordingly, Respondent’s jurisdictional objections are joined to the merits in accordance with Arbitration (Additional Facilities) Rule 45(5). The procedural calendar fixed by Procedural Order No. 1 of 3 February 2011 (see para. 18) remains unchanged."

G. Claimant’s Request for Production of Documents

104.
In accordance with the procedure set out in Section 16 of the Minutes of the First Session, on 6 May 2011, Claimant requested that Respondent produce documents relating to the pre-arbitration analysis of its experts, Dr Neil Rigby and SRK Consulting. Claimant also requested that to the extent that the documents were in the custody and control of the two experts, as opposed to Respondent, that the Tribunal request Respondent and the two experts to make reasonable efforts to produce the documents, including by seeking the consent of third parties, or producing the documents with confidential information redacted or subject to a confidentiality undertaking.
105.
By 16 May 2011, since Respondent had not replied, Claimant filed its request for production of documents with the Tribunal, attaching the letter mentioned above.
106.
By letter dated 17 May 2011, the Tribunal invited Respondent to respond to Claimant’s request by 25 May 2011.
107.
By letter dated 24 May 2011, Respondent requested an extension of time for submitting its response until 1 June 2011, and noted that Claimant had agreed with this request.
108.
By letter to the Parties dated 25 May 2011, the Tribunal granted Respondent’s request.
109.
On 1 June 2011, Respondent filed its response, in which it objected to all of Claimant’s requests. Respondent alleged that Claimant had failed to establish that the documents were relevant and material to the outcome of its case, or in Respondent’s possession.
110.
Claimant responded in its letter of 2 June 2011, and Respondent replied to this in its letter of 8 June 2011.
111.
On 9 June 2011, the Tribunal wrote to the Parties as follows:

"Having considered the content of the request, Respondent’s comments thereon, and the Parties’ subsequent correspondence about this matter, the Tribunal has decided to dismiss Claimant’s request."

H. The Hearing of February 2012

112.
The hearing on jurisdiction and merits took place in Washington, D.C., United States of America, on 13 to 17 February 2012. The following individuals were present at the hearing:

Members of the Tribunal

Professor Piero Bernardini, President
Professor Pierre-Marie Dupuy, Arbitrator
Professor David A. R. Williams QC, Arbitrator

ICSID Secretariat

Ms Ann Catherine Kettlewell, Acting Secretary of the Tribunal

Representing Claimant

Mr James H. Coleman, Gold Reserve Inc.
Mr Rockne J. Timm, Gold Reserve Inc.
Mr A. Douglas Belanger, Gold Reserve Inc.
Mr Robert McGuinness, Gold Reserve Inc.
Ms Mary Smith, Gold Reserve Inc.
Mr Arturo Rivero, Gold Reserve Inc.
Mr Coromoto Gallegos, Gold Reserve Inc.
Mr David P. Onzay, Gold Reserve Inc.
Ms Abby Cohen Smutny, White & Case LLP
Mr Darryl S. Lew, White & Case LLP
Mr Francis A. Vasquez, Jr., White & Case LLP
Mr Jaime M. Crowe, White & Case LLP
Mr Hansel T. Pham, White & Case LLP
Mr Petr Polásek, White & Case LLP
Mr Michael A. Roche, White & Case LLP
Mr Robert Williams, White & Case LLP
Ms Leah E. Witters, White & Case LLP
Ms Courtney E. Hague, White & Case LLP
Ms Nancy H. Hull, White & Case LLP
Mr Mario Velez, White & Case LLP
Ms Allison Navone, White & Case LLP
Mr Frederick LaMontagne III, White & Case LLP
Ms Gabriela Isabel Yvette Lopez Davila, White & Case LLP
Mr William Butler, White & Case LLP
Ms Jane S^qqx\qv, Micon International
Mr Mani M. Verma, Micon International
Mr Christopher R. Lattanzi, Micon International
Mr John G. Aronson, AATA International
Mr Robert K. Simons, AATA International
Mr Allan R. Brewer-Carías, Baumeister & Brewer
Ms Caterina Ballaso, Baumeister & Brewer
Mr Richard J. Lambert, Scott Wilson Roscoe Postle Associates, Inc.
Mr Brent C. Kaczmarek, Navigant Consulting, Inc.
Mr Garrett Rush, Navigant Consulting, Inc.
Mr Mehrdad Nazari, Prizma LLC
Mr Luis A. Ortiz-Alvarez, Raffalli de Lemos Halvorssen Ortega y Ortiz
Mr Rex E. Pingle, PMD International, Inc.
Mr Mike E. Henderson, Tetra Tech
Ms Amy L. Hudson, Tetra Tech

Representing Respondent

Dr Ronald Goodman, Foley Hoag LLP
Ms Mélida Hodgson, Foley Hoag LLP
Mr Alberto Wray, Foley Hoag LLP
Ms Tafadzwa Pasipanodya, Foley Hoag LLP
Ms Christina Beharry, Foley Hoag LLP
Ms Diana Tsutieva, Foley Hoag LLP
Mr Diego Cadena, Foley Hoag LLP
Ms Analía González, Foley Hoag LLP
Dr Constantinos Salonidis, Foley Hoag LLP
Mr Yuri Parkhomenko, Foley Hoag LLP
Mr Kenneth Figueroa, Foley Hoag LLP
Mr Moin Ghani, Foley Hoag LLP
Ms Michelle Miller, Foley Hoag LLP
Ms Angelica Villagran, Foley Hoag LLP
Ms Carmen Roman, Foley Hoag LLP
Professor Henrique Iribarren Monteverde, Universidad Católica Andrés Bello
Professor Isabel de los Ríos, Universidad Central de Venezuela
Vice Minister Sergio Rodríguez, Bolivarian Republic of Venezuela
Mr Pedro Romero, Bolivarian Republic of Venezuela
Mr Angel Carpio, Bolivarian Republic of Venezuela
Dr Lizett Carrero, Bolivarian Republic of Venezuela
Dr Neal Rigby, SRK Consulting
Dr James Burrows, Charles River Associates
Mr Francis Brown, Charles River Associates
Mr Daniel Powers, Charles River Associates

I. Post-Hearing Submissions

113.
The hearing was recorded and a transcript provided to the Parties. By letter dated 29 February 2012, the ICSID Secretariat invited the Parties to make corrections to the transcript no later than 29 March 2012.
114.
By letter dated 16 February 2012, the Tribunal invited the Parties to respond to a list of questions.
115.
By further letter to the Parties dated 21 February 2012, the Tribunal invited the Parties to make the following post-hearing submissions:

1. "A joint proposal for corrections to the transcript, to be delivered to the Secretary of the Tribunal no later than one month from the date of receipt of the audio of the hearing;

2. Post-hearing briefs, containing a summary of the Parties’ relevant arguments as well as an answer to the questions posed by the Tribunal in its letter of 16 February 2012. These briefs should not exceed 50 pages (letter size, double spaced, font Times New Roman 12), and should not include any additional evidence, only references to existing documents on the file. They should be exchanged simultaneously and submitted to the Tribunal by 16 March 2012, at which point the Tribunal would decide whether reply briefs are necessary."

116.
On 16 February 2012, both Respondent and Claimant submitted their post-hearing briefs.
117.
By letter dated 20 March 2012, Respondent objected to Claimant’s submission with its posthearing brief of new evidence (namely, Appendix B, Memorandum from the Ministers of Mining, Energy and Petroleum, and Foreign Relations to the President of the Republic dated 23 August 2011).
118.
Claimant responded to Respondent’s objection by letter dated 20 March 2012.
119.
The Tribunal, in its letter of 22 March 2012, granted Claimant leave to submit its Memorandum on the grounds that the Memorandum in part met the request the Tribunal made at the hearing for information regarding the status and plans for further development of the Brisas Project.
120.
By letter dated 21 February 2012, Respondent submitted its corrections to the transcript of the hearing.
121.
The Tribunal then wrote to the Parties on 22 March 2012, reiterating the request made in its letter of 21 February 2012 that the Parties submit a joint proposal on corrections by 29 March 2012. The Tribunal granted until 12 April 2012 for the filing of a joint proposal.
122.
On 6 April 2012, Claimant communicated to the Tribunal the Parties’ agreed amendments to the transcript to the Tribunal.
123.
On 25 May 2012, in response to the Tribunal’s directions of 30 April 2012, Claimant submitted additional materials, and Respondent submitted brief comments on Appendix A to Claimant’s post-hearing brief. Respondent’s submission indicated that "upon review of Claimant’s revised Annex A, in a format and manner that more easily allows for a comparison, if necessary, Venezuela will supplement these comments in order to better respond to the Tribunal’s invitation."33 By letter dated 26 May 2012, Claimant objected to Respondent’s brief comments in response to the Tribunal’s directions of 30 April. On 2 May 2012, Respondent expanded on its observations with regards to Appendix A to Claimant’s post-hearing brief and requested leave to file, by 8 June 2012, brief comments on Claimant’s submission of 25 May.
124.
By letter dated 30 May 2012, the Tribunal confirmed receipt of Respondent’s comments contained in its letter dated 28 May 2012 and granted both Parties leave to submit comments. On 8 June 2012, Respondent filed a response to Claimant’s submission of 25 May 2012. On 18 June 2012, Claimant filed observations on Respondent’s submissions of 28 May 2012 and 8 June 2012.
125.
By letter dated 21 June 2012, Respondent’s requested leave to file further comments on Claimant’s submission of 18 June 2012. On the same day, Claimant objected to Respondent’s request.
126.
On 25 July 2012, the Tribunal issued Procedural Order No. 2 concerning additional evidence from the Parties’ experts. Specifically, Procedural Order No. 2:

"invites the Parties to request their experts to confer and produce jointly a report estimating:

a) the loss of reserves as a result of the absence of a layback agreement within the North Parcel;

b) the changes required to adjust the "Brisas Project’s" mine plan due to the absence of a layback agreement within the North Parcel;

c) the impact on the fair market value of the "Brisas Project" of (a) and (b) above."34

127.
Procedural Order No. 2 requested that the joint report responding to the directions of the Tribunal be filed by 15 November 2012, and that the Parties’ comments thereto be filed by 14 December 2012.

J. Implementation of Procedural Order No. 2

128.
On 4 September 2012, Claimant requested that the deadlines indicated in Procedural Order No. 2 be amended to allow additional time for the Parties’ experts to confer and present the joint report, and to provide the Parties extra time to comment on the joint report. At the request of the Tribunal, by letter dated 12 September 2012, Respondent agreed that additional time to comply with Procedural Order No. 2 was necessary but instead proposed another procedural calendar.
129.
In its 12 September 2012 letter, Respondent also raised objections to Procedural Order No. 2, in part because it considered that "[t]he three questions posed by the Tribunal have been considered and addressed by Claimant on site prior to this arbitration and by the Parties and their experts in all the pleadings in this case."35 Respondent further considered that Procedural Order No. 2 required unnecessary additional expense; nonetheless, Respondent indicated its willingness to assist in the compliance with Procedural Order No. 2 provided certain confidentiality restrictions concerning the requested access to the drill-hole data base and geological block model be imposed.
130.
On 18 September 2012, Claimant commented on Respondent’s objections of 4 September 2012. In its letter, Claimant stated that the Tribunal "has the authority to request further expert evidence" and that Respondent had "[failed] to raise its objection in a timely manner."36 Claimant also objected to Respondent’s request for certain confidentiality restrictions concerning the requested access to the drill-hole data base and geological block model.
131.
After considering the Parties’ requests to modify Procedural Oder No. 2, on 20 September 2012, the Tribunal amended the procedural calendar.
132.
By letter dated 10 December 2012, Claimant informed the Tribunal that it had not heard from Respondent concerning the Tribunal’s request in Procedural Order No. 2. Respondent, by letter dated 14 December 2012, indicated that it would report back within seven business days, and advanced the possibility of requesting an amendment to the procedural calendar. Respondent also requested leave to submit a substantive response to Claimant’s letter of 10 December 2012. By letters dated 14 December 2012 and 18 December 2012, Claimant submitted its objections. On 19 December 2012, the Tribunal granted Respondent’s leave to comment, by 17 January 2013, on Claimant’s letters of 18 September 2012 and 10 December 2012.
133.
On 21 December 2012, the Tribunal informed the Parties that it would advise them concerning the implementation of Procedural Order No. 2 in the first weeks of January 2013.
134.
By email dated 4 January 2013, Respondent proposed a new timetable for the implementation of Procedural Order No. 2. On 8 January 2013, Claimant commented on Respondent’s email. The Parties submitted further comments concerning the issue by separate letters dated on the same day.
135.
On 14 January 2013, the Tribunal indicated to the Parties that it would advise them concerning the implementation of Procedural Order No. 2 after receiving Respondent’s comments on Claimant’s letters of 18 September 2012 and 10 December 2012.
136.
As instructed by the Tribunal by letter dated 19 December 2012, Respondent submitted, on 18 January 2013, comments on Claimant’s letters of 18 September 2012 and 10 December 2012. On 21 January 2013, as previously indicated by the Tribunal, the Tribunal issued directives to the Parties concerning the implementation of Procedural Order No. 2. In its directives, the Tribunal requested the Parties to agree on a new procedural calendar by 31 January 2013 and that failure to do so would result in "the schedule [being] set by the Tribunal" or alternatively, "the Tribunal may appoint an expert to provide advice regarding the issues indicated in Point 2.1 of Procedural Order No. 2 "37
137.
By letter dated 25 January 2013, Claimant requested clarification from the Tribunal concerning Procedural Order No. 2. On the same day, Respondent submitted comments on Claimant’s letter, and on 29 January 2013, the Tribunal advised the Parties that "the Order [was] clear and [did] not need clarification."38
138.
On 29 January 2013, Claimant requested the Tribunal "to modify the terms of Procedural Order No. 2 to incorporate a Tribunal-appointed mining expert... to ensure that the Tribunal is presented with a meaningful basis to assess the merits of the highly technical aspects... disputed between the parties."39 In its letter, Claimant also proposed a revised procedural calendar concerning the implementation of Procedural Order No. 2. By letter dated 30 January 2013, the Tribunal asked Respondent to comment on Claimant’s letter by 31 January 2013, and specifically, to comment on Claimant’s proposed revised calendar. Respondent did so by letter dated 31 January 2013.
139.
On 1 February 2013, the Tribunal confirmed the following procedural calendar agreed by the Parties:

"The Parties’ experts to submit their report(s) on 26 April 2013; The Parties submit their observations on 24 May 2013; and Any hearing to be scheduled during the first half of June 2013 "40

140.
On 20 February 2013, Respondent requested that Claimant to produce a limited set of documents and that they be delivered directly to the experts. On 21 February 2013, Claimant objected to this request and suggested that Respondent allowed both sets of metallurgical experts to discuss the scope of what should be considered.
141.
On 26 February 2013, Respondent filed a request for the Tribunal to decide on production of documents. By email dated 28 February 2013, the Tribunal informed the Parties that they would rule on Respondent’s request by 1 March 2013. On the same date, Claimant filed observations on Respondent’s request of 26 February 2013. Shortly after, Respondent submitted a letter amending the request filed on 26 February 2013, and indicated they had not yet reviewed Claimant’s letter.
142.
On 1 March 2013, the Tribunal issued a decision, allowing Claimant to respond to Respondent’s letter of 28 February 2013. On 5 March 2013, Claimant filed a response to Respondent’s letter. By letter of 6 March 2013, the Tribunal granted Respondent permission to submit a short comment on Claimant’s letter by 8 March 2013, and also granted Claimant permission to file a reply by 11 March 2013.
143.
On 8 March 2013, Respondent submitted comments on Claimant’s letter of 5 March 2013, and Claimant then submitted a reply on 11 March 2013.
144.
On 12 March 2013, the Tribunal issued a decision on Respondent’s amended request for production of documents dated 28 February 2013.41
145.
By letter of 25 March 2013, Claimant requested to the Tribunal to set specific hearing dates estimated a hearing of two (2) days to be sufficient. On 26 March 2013, Respondent proposed a two-day hearing on 6 and 7 June 2013 or 10 and 11 June 2013.
146.
On 28 March 2013, the Tribunal informed the Parties of its availability to hold the hearing on any two days on 25, 26 or 27 June 2013, and invited the Parties to confirm their availability for those dates by 5 April 2013.
147.
By letter of 1 April 2013, Claimant indicated its unavailability during the dates suggested by the Tribunal and requested that the hearing be held during the first two weeks of June in Washington, D.C. By letter of 5 April 2013, Respondent also expressed availability issues and suggested that the hearing be held in Paris, during 25, 26 or 27 June, 2013, or 13, 14 or 15 June 2013. Alternatively, Respondent suggested that the hearing be held in Washington, D.C., 10, 11 or 12 June 2013.
148.
On 9 April 2013, the Tribunal informed the Parties that due to other commitments it would not be available on the dates proposed in their exchange, and indicated that its earliest availability would be 14, 15, 16 and 17 October 2013, and that its preference for location would be Paris, France.
149.
By letter of 10 April 2013, Claimant indicated that it would be available on 15 and 16 October 2013 for the hearing and requested that the Parties be allowed to file reply expert reports with their comments on the expert reports to be filed on 24 May 2013. By email of 4 April 2013, the Tribunal invited Respondent to comment on Claimant’s letter by 15 April 2013.
150.
On 12 April 2013, Respondent confirmed its availability to hold the hearing anytime from 14 to 17 October 2013. Also, in the same letter, Respondent expressed disagreement on Claimant’s proposal to submit reply expert reports but suggested that, in the event the Tribunal required additional expert reports, the Parties’ comments be submitted subsequent to the second expert reports. On the same day, Claimant responded to Respondent’s letter providing further arguments in favour of its proposal to file reply expert reports.
151.
On 15 April 2013, the Tribunal acknowledged receipt of the Parties’ exchanges regarding the hearing dates and amended the procedural calendar as follows:

"The Parties’ experts to submit their report(s) on April 26, 2013;

Each Party’s expert to submit a report in reply to the individual report of the other Party’s expert on May 24, 2013;

The Parties to submit their observations on 24 June 2013;

The hearing to be held in Paris on 15 and 16 October 2013."42

152.
By letter of 22 April 2013, Claimant requested that the deadline to file the expert reports be extended to 10 May 2013, the reply report on 14 June 2013 and the Parties’ observations on 12 July 2013. The Tribunal, by letter for 23 April 2013, invited Respondent to comment on Claimant’s letter.
153.
By email of 25 April 2013, Respondent sent a communication to the Tribunal indicating that they had reached an agreement with Claimant’s counsel regarding the deadlines suggested by Claimant on its letter for 22 April 2013. Claimant later confirmed this joint agreement by email.

"The Parties requested that the deadlines be as follows:
The Parties’ Experts will file their initial reports on 10 May 2013
The Parties’ Experts will file their reply reports on 28 June 2013
The Parties’ Counsel will file their comments on the experts’ reports on 5 August 2013."43

154.
On 26 April 2013, the Tribunal confirmed the amended procedural calendar proposed by the Parties.
155.
By email of 7 May 2013, Respondent, on behalf of the Parties, requested that the deadline to file the initial expert reports be extended to 24 May 2013. Shortly after, Claimant confirmed its agreement. The Tribunal, by letter of the same date, granted the requested extension to the Parties.
156.
On 24 May 2013, Claimant and Respondent filed their respective expert reports pursuant to Procedural Order No. 2 and further procedural calendar amendments.
157.
On 31 May 2013, the Parties submitted the translations of their expert reports.
158.
By email of 27 June 2013, Respondent, on behalf of the Parties, requested that the deadline for the submission of the reply expert reports be extended to 3 July 2013. Claimant confirmed this agreement. On 28 June 2013, the Tribunal indicated they had no objection to the Parties’ amendment to the procedural calendar.
159.
On 3 July 2013, the Parties filed their respective reply expert reports pursuant to Procedural Order No. 2 and further amendments.
160.
By letter of 5 July 2013, Claimant raised an objection to Respondent’s reply expert submission and requested that the expert report by Mr Pekka Toukkola be stricken from the record, on the grounds that Mr Toukkola was a newly introduced expert and the amendment to Procedural Order No. 2 indicated that each Party’s expert would submit a report in reply to the individual report of the other. Claimant also objected to the content of the issues addressed in Mr Toukkola’s report.
161.
On 10 July 2013, Claimant submitted the translations of its reply expert reports. On the same date, Respondent indicated it would be submitting its translations by 11 July 2013.
162.
On 11 July 2013, Respondent submitted the translations of its reply expert reports.
163.
On 12 July 2013, Respondent submitted comments on Claimant’s request to strike Mr Toukkola’s report form the records, challenging all grounds presented by Claimant, and requested that the request be disregarded.
164.
On the same date, Claimant submitted further comments and identified the relevant emails to the issue raised as exhibit C-1485 and C-1486, which had been submitted with RPA’s Supplemental Report dated 24 May 2013.
165.
By letter dated 15 July 2013, Respondent commented on Claimant’s letter of 12 July 2013, stating that the email exchanges had reached its expert, but that the expert had not seen it until after the submission of the reply expert reports.
166.
On 17 July 2013, the Tribunal issued a communication in reference to Claimant’s request of 5 July 2013 and Respondent’s reply of 12 July 2013, stating that Mr Toukkola’s report would not be stricken from the record and that the Parties would have an opportunity to comment on it and to cross-examine Mr Toukkola at the hearing. By letter of the same date, Claimant objected to the Tribunal’s decision not to strike Mr Toukkola’s expert report, asserting it had been denied equal opportunity.
167.
On 18 July 2013, the Tribunal invited Respondent to submit comments on Claimant’s objection of 17 July 2013. By letter of the same date, Respondent expressed disagreement with Claimant’s assertions.
168.
On 23 July 2013, having considered the correspondence from the Parties in regards to Mr Toukkola’s expert report, the Tribunal further decided that:

"The Decision is confirmed. Claimant shall have until August 5, 2013 to file a short expert reply to Mr Tuokkola’s Expert Report. No further changes shall be made to the Provisional Timetable."44

169.
On July 31, 2013, Claimant, on behalf of the Parties, submitted a letter to the Tribunal with corrections to be made to the reply expert reports. Respondent later confirmed its agreement by separate communication. On 5 August 2013, the Parties filed their Comments on the Joint Procedure Reports. In addition, Claimant filed the Third Supplemental Expert Report of Richard Lambert.
170.
By letter of 6 August 2013, Claimant requested that the Tribunal direct Respondent to withdraw new exhibits introduced with their Comments filed on 5 August 2013, and all corresponding references to the same, claiming that Procedural Order No. 2 directed the Parties to submit comments, and that "such comments plainly were not to include new exhibits but rather were limited to observations and argument based on the reports of the experts."45
171.
As instructed by the Tribunal, Respondent submitted its comments on 8 August 2013 on Claimant’s letter of 6 August 2013, and it requested that the Tribunal deny Claimant’s request that Respondent be directed to withdraw its exhibits.
172.
By email of 8 August 2013, Claimant raised issue with Respondent’s letter of the same date, expressing it was "an addendum to its brief’ and that it went beyond the Tribunal’s invitation for comment.46 Further, it requested that, should the Tribunal consider Respondent’s arguments, Claimant be allowed to respond.
173.
On 12 August 2013, Claimant submitted the translations of its Comments on the Joint Procedure Expert Reports and of its Third Supplemental Expert Report. Respondent submitted the translations of its Comments on the Joint Expert Procedure on 13 August 2013.
174.
On 19 August 2013, the Tribunal addressed the Parties in response to Claimant’s request of 6 August 2013 and Respondent’s reply of 8 August 2013, noting that Procedural Order No. 2 did not prohibit the Parties from filing additional exhibits with their comments on the expert reports. The Tribunal denied Claimant’s request but granted leave for it to file any additional exhibits no later than 26 August 2013.

K. The Organization of the Hearing of October 2013

175.
On 22 August 2013, Respondent sent correspondence to the Tribunal stating that the Parties had not reached an agreement regarding the procedure for the Joint Expert Procedure Hearing. Respondent proposed organizing the hearing around the areas of Mine Design and Mine Planning, Metallurgy, and Valuation and Financial Issues; outlined a presentation procedure for experts and suggested that counsel had the opportunity to give opening and closing statements.47 By letter of 23 August 2013, the Tribunal invited Claimant to comment on Respondent’s proposal by 28 August 2013.
176.
As requested by the Tribunal, on 26 August 2013, Claimant reiterated its position regarding Respondent’s submission of new exhibits, while it did not present new evidence, it offered an update for exhibit C-1495, filed as exhibit C-1563. On the same date, Claimant sent a second letter in response to Respondent’s letter of 22 August 2013. Claimant confirmed that the Parties had not reached an agreement regarding the hearing and that, in fact, Claimant did not request a hearing and did not consider it necessary. Further, Claimant rejected the procedure suggested by Respondent and offered an alternative one, and requested that a pre-hearing conference be organized, should the Tribunal deem the hearing necessary.
177.
By instructions of the Tribunal, on 28 August 2013 and 29 August 2013, Respondent and Claimant presented their respective replies in support of their initial arguments.48
178.
By letter of 2 September 2013 the Tribunal referred to the Parties’ exchanges in regards to the hearing and noted, as per paragraph 3.6 of Procedural No. 2, the hearing had been requested by Respondent, the Tribunal considered it necessary and this hearing would take place on 15 and 16 October 2013. The Tribunal proposed dates for a pre-hearing conference call. The Parties indicated their availability for 5 September 2013. The Secretary of the Tribunal, by email of 2 September 2013, requested that the Parties conferred on a convenient time to hold the conference call, as per the Tribunal’s instructions. Each Party submitted their preferred times by email on that same date.
179.
On 3 September 2013, the Tribunal issued a communication to the Parties regarding Claimant’s submission of exhibit C-1563 in its letter of 26 August 2013, inviting Respondent to inform the Tribunal of any objections no later than 5 September 2013. The Tribunal also informed the Parties that the pre-hearing conference call would be held at 9:30 a.m. on 5 September 2013 and outlined some of the Parties agreement regarding the main subject areas of the hearing. Further, the Tribunal indicated that the Parties should identify sub-issues for the main areas to "make the expert’s examination more conducive to the better understanding of the individual issues."49
180.
On 5 September 2013, a pre-hearing conference call was held to discuss the hearing procedures. The following participants were present in the call:

Members of the Tribunal

Professor Piero Bernardini, President
Professor Pierre-Marie Dupuy, Arbitrator
Professor David A. R. Williams QC, Arbitrator

ICSID Secretariat

Ms Ann Catherine Kettlewell, Secretary of the Tribunal

Representing Claimant

Ms Abby Cohen Smutny, White & Case LLP
Mr Hansel Pham, White & Case LLP
Mr Petr Polásek, White & Case LLP
Mr A. Douglas Belanger, Gold Reserve Inc

Representing Respondent

Dr Ronald E.M. Goodman, Foley Hoag LLP
Ms Mélida Hodgson, Foley Hoag LLP
Ms Tafadzwa Pasipanodya, Foley Hoag LLP

181.
The pre-hearing conference call was recorded, and the audio recording was made available to the Parties and the Tribunal at the FTP site created by the Secretariat.
182.
On 5 September 2013, Respondent submitted its objections to Claimant’s exhibit C-1563. By letter of 6 September 2013, the Tribunal informed the Parties of its decision to include Claimant’s exhibit C-1563 in the record.
183.
On 9 September 2013, the Tribunal issued Procedural Order No. 3 outlining the rules and procedure for the Joint Expert Procedure Hearing.
184.
Pursuant to Procedural Order No. 3, by letter of 12 September 2013, Respondent, on behalf of the Parties, submitted to the Tribunal a joint outline of the sub-topics within the three main subject areas, previously agreed on during the 5 September 2013 pre-hearing conference call. Claimant confirmed its agreement by separate email, on the same date. By letter of 13 September 2013, the Tribunal confirmed the sub-topics which had been jointly selected by the Parties.
185.
On 14 September 2013, Respondent submitted a letter informing the Tribunal that the two of the reply expert reports filed on 3 July 2013 contained numerical errors and that it intended to file amended reports with the correct values. Claimant, by letter of the same date, objected and requested that Respondent to submit the proposed corrections before filing corrected reports, and to provide the underlying spreadsheets and calculations in electronic format. Claimant also reserved the right to object to the proposed corrections.
186.
The Tribunal, by letter of 16 September 2013, granted Respondent leave to submit corrections to the expert reports by 23 September 2013, and invited Claimant to respond to said corrections two days thereafter, on 25 September 2013.
187.
On 23 September 2013, Respondent filed corrected Joint Expert Procedure Reply Reports of Dr James Burrows and of Dr Neal Rigby, Mr Bret Swanson, and Dr John Tinucci. By letter of 24 September 2013, Claimant requested an extension to present comments on the corrected reports submitted by Respondent. On the same date, the Tribunal granted Claimant’s request for an extension to submit its response to Respondent’s corrections by 27 September 2013.
188.
Pursuant to the Tribunal’s instructions, by letter of 27 September 2013, Claimant stated that it did not object to Respondent’s corrections of 23 September 2013.
189.
By email dated 7 October 2013, Claimant expressed that the Parties were disagreeing on the interpretation of Procedural Order No. 3 and requested a conference call to discuss the rolling order of witnesses and experts, and the estimated examination time. By letter of the same date, Respondent replied to Claimant’s letter and submitted a proposed schedule for the hearing. Claimant, by letter of the same date, reiterated its request for a conference call and elaborated on the issues on which there was disagreement.
190.
Pursuant to Procedural Order No. 3, on 5 September 2013, the Parties submitted their list of experts per subject topic.
191.
By letter of 8 October 2013, the Tribunal acknowledged receipt of the Parties’ exchange and informed them that it would not be available for a conference call, but it would consider their position and decide on the hearing schedule. By letter of the same date, Respondent replied to Claimant’s second letter of 7 October 2013, and maintained its position regarding the hearing schedule. By letter of the same date, Claimant submitted a reply to Respondent’s letter.
192.
On 8 October 2013, the Parties submitted the demonstrative exhibits for the Hearing on Joint Expert Procedure, pursuant to Procedural Order No. 3.
193.
On 9 October 2013, having considered the arguments of the Parties, the Tribunal issued a hearing schedule.
194.
By letter of 9 October 2013, Claimant requested clarification on the interpretation of paragraph 4 of Procedural Order No. 3, regarding the direct examination of experts for the hearing. On the same date, Claimant submitted another letter with objections to twelve (12) of Respondent’s demonstrative exhibits. Claimant requested that the Tribunal directed Respondent not to use the exhibits or to seek leave to introduce their content into the record.
195.
On 10 October 2013, Respondent submitted a letter regarding its interpretation of paragraph 4 of Procedural Order No. 3. The Tribunal issued a response to the Parties on the same date, providing the clarification requested by Claimant, and invited Respondent to comment on Claimant’s objections to its demonstrative exhibits.
196.
As per the Tribunal’s instruction, Respondent submitted a response to Claimant’s objections by the established deadline, and requested that the Tribunal denied Claimant’s request. Claimant issued a response to Respondent’s letter, withdrawing its objection to certain exhibits but maintaining the others.
197.
By email of 10 October 2013, Claimant requested that the Tribunal reconsider its interpretation of the paragraph 4 of Procedural Order No. 3 regarding the direct examination of experts.
198.
By letter of 11 October 2013, the Tribunal addressed Claimant’s concern regarding direct examination and indicated that Claimant’s reasons for its objections were convincing and directed Respondent not to use the exhibits in question at the hearing. By letter of the same date, Respondent reiterated its request for the Tribunal to deny Claimant’s request regarding its demonstrative exhibits.
199.
By letter of 14 October 2013, the Tribunal reconsidered its decision and allowed Respondent to use demonstrative exhibits 16, 17, 22 and 23 during the hearing, but confirmed its decision regarding exhibits 18, 19, 20, 21, 24 and 25. However, the Tribunal advised that "The fact that the six demonstrative exhibits are not allowed does not preclude Respondent to directly examine its experts for a "short reply to issues raised in the opposing of expert(s) last report which have not been previously commented," as provided by Procedural Order No. 3, paragraph 4(i)(b)."50 On the same date, Respondent requested the Tribunal to reconsider its decision, and Claimant later objected to this request for reconsideration and submitted a letter in which it summarised the views of its experts regarding the content of the exhibits in question.

L. The Hearing of October 2013

200.
The Hearing on Joint Expert Procedure took place on 15 and 16 October 2013, at the World Bank, Paris. The following individuals were present:

Members of the Tribunal

Professor Piero Bernardini, President
Professor Pierre-Marie Dupuy, Arbitrator
Professor David A. R. Williams QC, Arbitrator

ICSID Secretariat

Ms Ann Catherine Kettlewell, Secretary of the Tribunal

Representing Claimant:

Counsel:
Ms Abby Cohen Smutny, White & Case LLP
Mr Darryl S. Lew, White & Case LLP
Mr Hansel T. Pham, White & Case LLP
Mr Petr Polásek, White & Case LLP
Mr Michael A. Roche, White & Case LLP
Mr Reuben Blum, White & Case LLP
Mr Kees De Ridder, White & Case LLP

Parties:
Mr James H. Coleman, QC, Gold Reserve, Inc.
Mr Rockne J. Timm, Gold Reserve, Inc.
Mr A. Douglas Belanger, Gold Reserve, Inc.
Mr Douglas E. Stewart, Gold Reserve, Inc.

Experts:
Mr Richard J. Lambert, RPA Ltd.
Dr Kathleen A. Altman, RPA Ltd.
Mr Mike E. Henderson, Tetra Tech
Mr Erik Spiller, Tetra Tech
Mr Dave Hallman, Tetra Tech
Mr Cameron Wolf, Tetra Tech
Mr Brent C. Kaczmarek, Navigant Consulting, Inc.
Mr Garrett W. Rush, Navigant Consulting, Inc.

Representing Respondent:

Counsel:
Dr Ronald EM. Goodman, Foley Hoag LLP
Ms Mélida Hodgson, Foley Hoag LLP
Ms Tafadzwa Pasipanodya, Foley Hoag LLP
Ms Christina Beharry, Foley Hoag LLP
Ms Alexandra Meise Bay, Foley Hoag LLP
Ms Natalia Tchoukleva, Foley Hoag LLP
Mr Pedro Ramirez, Foley Hoag LLP
Mr Peter Hakim, Foley Hoag LLP
Ms Angélica Villagrán, Foley Hoag LLP
Ms Carmen Roman, Foley Hoag LLP

Party:
Mr Armando Giraud Torres, Petróleos de Venezuela, S.A.

Experts:
Dr James Burrows, Charles River Associates
Dr Francis Brown, Charles River Associates
Mr Leonard Kowal, Charles River Associates
Mr Kevin Moran, Charles River Associates
Mr Michael Loreth, Charles River Associates
Dr Neal Rigby, SRK Consulting Inc.
Mr Bret Swanson, SRK Consulting Inc.
Dr John Tinucci, SRK Consulting Inc.
Ms Lisa Brown, SRK Consulting Inc.
Mr Pekka Tuokkola

201.
The President of the Tribunal, during the Hearing on Joint Expert Procedure, stated that the Tribunal did not see basis for further reconsideration regarding Respondent’s demonstrative exhibits.
202.
By letter of 17 October 2013, Claimant referred to an agreement during the hearing, by which Respondent would be able to reference the demonstrative exhibits only if Claimant was given the opportunity to submit a brief letter summarising the views of its expert regarding the contents of the demonstratives; the deadline for this letter was 23 October 2013. Claimant further explained that it would not be filing said letter, but it would address observations regarding this matter in its post-hearing brief.
203.
On the same date, Claimant submitted a second letter proposing that both Parties file their corrections to the hearing transcripts by 25 October 2103 and that post-hearing briefs be filed by 20 December 2013.
204.
By letter of 18 October 2013, Respondent addressed Claimant’s letters of the previous day. Respondent presented no objections to Claimant’s addressing any further observations regarding the content of the demonstrative exhibits, and it also suggested slightly different deadlines for the corrections to the transcripts and post-hearing briefs: 1 November 2013 and 23 December 2013, respectively. By email of the same date, Claimant agreed with Respondent’s proposed schedule.
205.
On 22 October 2013, the Tribunal issued Procedural Order No. 4 concerning procedural matters, which established deadlines for the Parties’ submissions. Corrections to the hearing transcripts would have to be submitted by 1 November 2013, and the Tribunal would issue a decision by 10 November 2013. Post-hearing briefs would be due on 23 December 2013.

M. Post-Hearing Submissions

206.
On 30 October 2013, the Parties submitted joint corrections to the hearing transcripts.
207.
On 5 December 2013, Respondent requested that the final version of the hearing transcripts be finalized and that an official transcript be introduced into the record, so that the Parties would be able to cite it in their post-hearing briefs.
208.
On the same date, Claimant sought confirmation on acceptable formatting of the post-hearing brief. Respondent confirmed its agreement by email.
209.
By letter of 6 December 2013, the Tribunal accepted the changes and corrections to the hearing transcripts proposed by the Parties and it advised on the post-hearing brief formatting inquiry.
210.
By email of 19 December 2013, Respondent, on behalf of the Parties, informed the Tribunal that the Parties had agreed to extend the page limit of the post-hearing brief. Claimant later confirmed this agreement. On 20 December 2013, the Tribunal informed the Parties that it had no objection to the page limit extension.
211.
On 23 December 2013, the Parties submitted their post-hearing briefs.
212.
On 30 December 2013, Claimant submitted the Spanish translation of its post-hearing brief, Respondent submitted its Spanish translation on 2 January 2014.

N. Submission on Costs

213.
By letter of 19 March 2014, Claimant requested the opportunity to submit the amount of the legal fees and expenses it incurred in connection with these proceedings in support of its claims for compensation, including for its costs.
214.
On 20 March 2014, the Tribunal clarified that statement of fees and costs is normally filed by the Parties following the closure of the proceedings according to Article 44 of the Arbitration (Additional Facility) Rules. At the closing, the Tribunal should fix a time limit to that effect.
215.
On 28 April 2014, the Tribunal invited the Parties to submit their respective submissions on costs costs by 26 May 2014.
216.
On 20 May 2014, the Tribunal invited the Parties to submit comments on the other party’s respective submission on costs by 9 June 2014.
217.
On 23 May 2014, Claimant filed its submission on costs. On 26 May 2014, Respondent filed its submission on costs. Both submissions were acknowledged and forwarded by the Secretary to the Tribunal on 26 May 2014.
218.
On 2 June 2014, Claimant informed the Tribunal that the Parties had agreed that it was not necessary to submit observations on the costs submissions as invited by the Tribunal’s letter of 20 May 2014.
219.
On 3 June 2014, the Tribunal indicated that it had no objection to the Parties' agreed waiver of the right to comment on the other party's cost statement.
220.
On 10 July 2014, Claimant submitted further information in reference to the Tribunal’s request at the February 2012 hearing for information regarding the status and plans for further development of the Brisas Project. On 11 July 2014, Respondent requested leave to submit comments to the information provided by Claimant. On 21 July 2014, pursuant to the Tribunal’s instructions, Respondent submitted its response to Claimant’s submission of 10 July 2014. On 23 July 2014, the Tribunal decided not to admit into the record the information submitted by Claimant since it was unauthorized and untimely and also decided not to admit into the record Respondent’s letter of 21 July 2014 to the extent it develops arguments in reply.

O. Closure of Proceedings

221.
On 23 July 2014, the Tribunal declared the proceeding closed in accordance with Article 44 of the Arbitration (Additional Facility) Rules.

CHAPTER V. THE TRIBUNAL’S JURISDICTION

A. The Parties’ Positions

Respondent’s Position

222.
According to Article I(g) of the BIT, in the case of Canada an "investor" must be both "any enterprise incorporated or duly constituted in accordance with applicable laws of Canada" and one "who makes the investment in the territory of Venezuela". According to Respondent, Claimant does not satisfy these requirements.
223.
Respondent submits that Claimant is not a bona fide Canadian enterprise within the object and purpose of the BIT. Following its incorporation under the laws of the Yukon Territory in Canada in October 1998 (shortly after the entry into force of the BIT in January 1998) and the corporate reorganization in 1999 by which it acquired indirectly the shares of the Venezuelan subsidiary, Claimant never moved its operations to Canada, where it had only as a registered agent a Canadian law firm. It continued to operate as the original US company under the same management and board of directors, making decisions regarding the so-called Brisas Project from its seat in Spokane, Washington. According to Respondent, this paper company with no genuine connections to Canada is not the kind of Canadian entity that the Contracting States had in mind to protect under the BIT.
224.
Alternatively Respondent argues that, should it be held that Claimant satisfy the first prong of the definition of "investor" based on a strict reading of the BIT, based on the same strict reading Claimant fails to satisfy the second prong since it is not the one "who made the investment in the territory of Venezuela". The fact that its investment consists in the indirect ownership of the shares of the Brisas Company or in the mining rights held by the latter in Venezuela, as it has alleged in various sections of the Reply, does not make it the one "who made the investment in Venezuela".
225.
Respondent states that the Brisas Company has in fact acquired the Brisas and Unicornio Concessions prior to Claimant’s existence. Claimant did not have to expend any capital to indirectly "acquire" the shares of the Venezuelan subsidiary due to the share-to-share swap by which the 1999 corporate reorganization of Gold Reserve Corp, was achieved.
226.
It was Gold Reserve Corp, that made the economic contribution to the so-called Brisas Project, Claimant having misrepresented to Venezuela and the Tribunal what constituted its alleged investment of nearly US$ 300 million to the project by purposefully conflating Gold Reserve Inc. with Gold Reserve Corp, in order to piggyback on Gold Reserve Corp.’s history of investments in Brisas and Unicornio Concessions. Claimant’s equivocal statements to the Venezuelan authorities and to the Tribunal regarding its association with the Brisas Company were made also in the Request for Arbitration. The Tribunal should deny the BIT protection to Claimant on the grounds of abuse of rights.
227.
Respondent contends that Claimant had not effectively rebutted the lack of significant business connections to Canada. It failed also to present evidence attesting its allegedly active role in making the investment even after the 1999 acquisition. Even if Claimant raised the funds as it alleges, at most it acted as fundraiser and not as actual maker of investments for the Brisas Project, which was Gold Reserve Corp.
228.
Claimant’s nexus to Canada contrasted with its significant links to the United States, Claimant itself stating that it does not carry on any business in Canada, no offices, employees or any physical assets being in Canada. On 30 November 2011, Claimant received a notice of delisting from Toronto Stock Exchange for failure to meet certain listing requirements.
229.
In Respondent’s submission, "to make the investment in the territory of Venezuela", as required by Article I(g) of the BIT, means to effect, originate or cause the investment to be completed. In terms of economics, investment is "putting money to work, in the hope of making more money", which comports with the object and purpose of the BIT, as mentioned in its preamble, i.e. the "promotion" of investments by the investor of one Contracting Party in the territory of the other Contracting Party as "conducive to the stimulation of business initiative and to the development of economic cooperation between them". The particular wording for the definition of "investor" under the BIT must be given full effect. The 1999 corporate reorganization did not constitute "making the investment" since it was a share-to-share intragroup swap without any capital expenditure.
230.
Respondent further submits that "acquiring an investment" is not equivalent to "making an investment", as the term "make" requires some kind of capital flow or movement of funds to Venezuela, which was absent in the present case. Claimant’s reference to the definition of "investment" as including assets "owned or controlled" "directly or indirectly" by an investor overlooks the fact that in any case Claimant must have also "made" the investment.
231.
It is a well-established principle that an investment will not be protected if it has been created in violation of national or international principles of good faith or "if its creation itself constitutes a misuse of the system of international investment protection under ICSID Convention."51 The proper test against abuse of a legal personality is the test of genuine connection — the mere fact of Claimant being incorporated in Canada does not fulfil the ordinary meaning of the term "investor" under the BIT.
232.
Respondent suggests that Claimant’s attempt to benefit from the BIT constitutes an abuse of rights. As explained by the International Court of Justice in the Barcelona Traction52 case, international law mandates "lifting the corporate veil" to prevent misuse of the privileges of legal personality. Claimant took on the Canadian domicile by setting up a mailbox presence there and now seeks to benefit from the protection of the BIT by evading bona fide compliance with its legal requirements. Claimant has made equivocal representations to the Venezuelan authorities and the Tribunal regarding the nature of its association with the Brisas Project, including referring to Gold Reserve Inc. as the company that made the investment in 1992, i.e. six to seven years prior to its alleged acquisition of the investment in Venezuela.
233.
Arbitral tribunals have routinely found that misrepresentations of a corporate identity are indicative of abuse. Respondent refers to evidence that Claimant engaged in abusive treatyshopping for more than a decade by the shifting of legal domiciles to gain access to various treaties. These facts give rise to abuses of rights and establish a basis on which the protection of the BIT should be denied. The Tribunal should look beyond the formal satisfaction of the nationality requirement and ascertain whether the alleged investor is the entity that made the investment by considering the underlying economic reality. The facts of this case demonstrate that corporate nationality has been misused by Claimant and therefore should be disregarded by the Tribunal.

Claimant’s Position

234.
Claimant contends that Respondent’s arguments that Claimant does not qualify as "investor" under the BIT because (i) it did not "make" an investment in the territory of Venezuela and (ii) it does not have a sufficient connection with Canada, have no merit and should be dismissed.
235.
It is undisputed that Claimant was incorporated in 1998 under the laws of the Yukon Territory in Canada and that in 1999 it acquired the shares of Gold Reserve Corp., thereby acquiring indirectly the shares of the Venezuelan subsidiary that held mining rights in that State’s territory.
236.
However, according to Respondent, "making" an investment in the territory of the other Contracting Party to the BIT does not include "acquiring" such an investment. There was in fact no investment "made" in Venezuela for such acquisition, but only an investment made in the United States.
237.
This argument should, in Claimant’s view, be rejected as being contrary to the ordinary meaning of the terms of the BIT in light of its object and purpose. Claimant referred to the dictionary definition of "to make" which includes "to acquire", "to gain through behaviour or effort..." This is confirmed by the Spanish and French texts of the BIT regarding the definition of "investor". The Energy Charter Treaty provides that "make an investment" means establishing new investments or "acquiring all or part of existing investments."53
238.
Claimant notes that Respondent itself accepts that there is no real distinction between making an investment and acquiring an investment when arguing that Gold Reserve Inc. "by acquiring shares in Gold Reserve Corp, made an investment in the United States."54
239.
Claimant rejects Respondent’s interpretation that it is only the entity that acquires assets in Venezuela directly, not indirectly or through an investor of a third State, that "makes" the investment. Claimant says that this interpretation cannot be reconciled with the definition of investment in Article 1(f) of the BIT, which provides that investment means "any kind of asset owned or controlled by an investor of one Contracting Party either directly or indirectly, including through an investor of a third State, in the territory of the other Contracting Party...". Respondent’s interpretation is not supported by the ordinary meaning to be given to the terms of the BIT in context, including its preamble.
240.
Claimant also argues that the acquisition of investments held by third parties is likely to be followed by further capital investments by the acquiring party and by stimulated economic activities for the host State. It says that the investment treaty decisions referred to by Respondent do not support Respondent’s interpretation that an investment would not be covered by the BIT unless Claimant had purchased interests in a local company directly, rather than purchasing interests in a third party that owned the local company and then contributing substantial sums to the local company’s operations. Claimant invested millions of dollars raised in the Canadian market toward development of the Brisas Project.
241.
According to Claimant, the decision in Encana v. Ecuador55 demonstrates that Respondent’s objection is without merit. In that case, the relevant treaty had the same definition of investor and investment as the BIT in this case. The issue in dispute was the same as the present case, namely whether Encana qualified as an investor under the treaty in view of its acquisition of the shares of two local companies through another Canadian company, Pacalta, which owned directly said shares. The tribunal in that case concluded that there was no doubt that Encana qualified as an investor under the treaty.
242.
The reference made by Respondent to Article XVI of the BIT is incorrect. This provision is misread. It protects investments made before and after the entry into force of the BIT, and only excludes those disputes arising from actions taken by the Contracting States prior to the BIT’s entry into force.
243.
Claimant further contends that no "genuine link" between a State and its national is required under the BIT for a national of that State to qualify as an investor in addition to nationality. The customary rules relied upon by Respondent, which relate to the right of diplomatic protection, do not apply where special agreements are in place between States regarding claims that may be presented, except where rules of ius cogens apply (such are not the customary international rules of diplomatic protection). Nothing in Article XII(7) of the BIT, which refers to "applicable rules of international law", supports the conclusion that customary rules regarding diplomatic protection should apply.
244.
While States may impose other conditions in their agreements, such as limiting covered investors to those that have "substantial business activities" within the territory of their State of incorporation, there is no basis for a tribunal to impose such a requirement where there is none. As Claimant is incorporated in Canada, it satisfies the requirement of the BIT and as such is eligible to claim the BIT protection.
245.
Although irrelevant, Claimant nonetheless notes its substantial connections to Canada. It successfully raised significant capital through the Canadian capital markets, nearly all of which was directed to its activities in Venezuela. Contrary to Respondent’s assertion, the percentage of Canadian ownership of its shares rose from 52% to 68% during the period 1998-2005. The Canadian Government intervened on several occasions in support of Claimant in dealing with Venezuelan officials. The local authorities clearly understood that Claimant was a Canadian company, its Canadian identity having been a matter of public record for more than a decade.
246.
Claimant submits that there is therefore no basis to deny Claimant the BIT protection, since it qualifies as an investor under the BIT. Exceptional circumstances must exist to justify a denial of treaty rights by disregarding legal personality through piercing the corporate veil, as it was the case in the Barcelona Traction case referred to by Respondent. None of the other cases cited by Respondent in support of its abuse of rights argument provides any basis to deny Claimant the BIT protection.
247.
Claimant argues that it manifestly did not engage in illegitimate "treaty shopping". Treaty shopping occurs when an already existing claim against a State belonging to a party with no treaty protection is transferred to an entity entitled to treaty protection for the sole purpose of obtaining access to such a remedy. This is not Claimant’s case since it was incorporated in Canada and made its investment in Venezuela nearly a decade before the events leading to the dispute.

B. The Tribunal’s Analysis

250.
Both conditions are clearly satisfied in the present case; Gold Reserve was incorporated in 1998 under the laws of the Yukon Territory in Canada and does not possess Venezuelan nationality. No objections have been raised by Venezuela regarding either condition.
251.
Respondent argues that despite being a duly incorporated Canadian company, Gold Reserve should not be entitled to the protections of the BIT because its management is headquartered in the United States (and it is essentially one and the same with the US based Gold Reserve Corp.); the Canadian entity is therefore characterized as a "shell company". Conversely, counsel for Claimant stated at the hearing that "Gold Reserve’s decision to incorporate in Canada was not motivated primarily by investment treaty concerns",56 citing instead other reasons including attracting investment and taxation advantages as the primary motivation for establishing a Canadian parent.57
253.
Respondent argued that the present case involves an "extreme" set of facts not seen before in other ICSID cases. Yet, it has not identified any particular facts that make it so "extreme" when compared to other cases of alleged "shell" companies where jurisdiction has been held to exist. There is nothing exceptional in the circumstances of the present case to distinguish it from, for example, the Saluka case, in which respondent alleged that claimant was no more than a shell company within a corporate chain, established for no other purpose than to take advantage of the protections offered by the Netherlands-Czech BIT.
254.
The tribunal in Saluka found as follows:

"In dealing with the consequences of that way of acting, the Tribunal must always bear in mind the terms of the Treaty under which it operates. Those terms expressly give a legal person constituted under the laws of The Netherlands...the right to invoke the protection of the Treaty. To depart from that conclusion requires clear language in the Treaty, but there is none...The parties having agreed that any legal person constituted under their laws is entitled to invoke the protection of the Treaty, and having so agreed without reference to any question of their relationship to some other third State corporation, it is beyond the powers of this Tribunal to import into the definition of "investor" some requirement relating to such a relationship having the effect of excluding from the Treaty’s protection a company which the language agreed by the parties included within it."60

257.
By virtue of the corporate restructuring, Claimant has become the indirect owner of the share capital of the Venezuelan company, Brisas Company, which held title to mining rights and concessions in Venezuela. There is no dispute that indirect ownership or control of mining rights constitutes an investment under the BIT. Indeed, the definition of investment in Article I(f) expressly includes "rights, conferred by law or under contract, to undertake any economic and commercial activity, including any rights to search for, cultivate, extract or exploit natural resources".
258.
In addition, the definition of "investment" includes "shares, stock, bonds and debentures or any other of participation in a company, business enterprise or joint venture" (under Article I(f)(ii)). Therefore, both the indirect share ownership of a Venezuelan subsidiary and the mining rights and concessions held by such subsidiary constitute protected investments under the BIT.
263.
In EnCana v. Ecuador,63 the Tribunal considered jurisdiction under the Canada-Ecuador BIT which has a similar definition of investment. In particular, that BIT included the same "enterprise... who makes the investment" language found in the Canada-Venezuela BIT.
264.
In the EnCana v. Ecuador case, the Canadian parent company similarly acquired the shares in the previous parent company whose subsidiaries had been granted mining concessions in Ecuador. All but one of these concession contracts had been granted before EnCana acquired the shares. While jurisdiction was hotly contested in the case, at no stage did either party or the tribunal find any issue with the fact that the concession contracts had been granted to the subsidiary companies before EnCana acquired the parent company. The fact that EnCana acquired the parent which owned the companies who held the concessions was considered by all to be sufficient to constitute the "making" of an investment.
266.
Further cases cited by the Parties support this conclusion. For example, in Millicom v. Senegal65 the investment was acquired through an internal restructure.
267.
Millicom (a Dutch company) acquired indirect ownership of the local subsidiary which held the relevant concession two years after the concession had been granted to the subsidiary. This ownership was acquired through an internal transaction (the local subsidiary having always been part of the Millicom group). The tribunal did not consider the indirect control exercised by claimant to be problematic, nor was the fact that it had acquired the shares after the issue of the concession even raised as an issue by respondent. The only distinguishing factor was that a Dutch company had always been involved in the ownership structure of the local subsidiary, so in that sense the Netherlands-Senegal BIT had always been relevant.
268.
In Aguas del Tunari v. Bolivia,66 the tribunal made it clear that the insertion of a Netherlands company into the ownership structure after the concession had been granted (but before the dispute arose) did not create any jurisdictional problems, as it did not affect any of the undertakings contained in the underlying concession agreement. The tribunal found it had jurisdiction under the Netherlands-Bolivia BIT.
269.
Similarly, in Mobil v. Venezuela, the tribunal held that restructuring in order access treaty protections after a dispute had arisen would be an abuse of process, but to do so in order to gain protection for future disputes was "a perfectly legitimate goal."67
272.
In conclusion, it is the Tribunal’s view that Claimant satisfies the definition of investor both as a Canadian incorporated company and as a company that made an investment in Venezuela. The Tribunal therefore has jurisdiction to hear the claim.

CHAPTER VI. NATURE AND EXTENT OF CLAIMANT’S INVESTMENT

273.
This Chapter considers the nature and extent of Claimant’s mining rights that existed at the time of the alleged BIT breaches by Respondent. In particular, this Chapter examines whether the Brisas and Unicornio Concessions were validly terminated and whether Claimant had any legal right to use/access the other parcels of land included in the so-called "Brisas Project".
274.
As noted above, Claimant’s mining rights were owned indirectly through the Brisas Company which held the relevant concessions in Venezuela. Claimant indicates that the reference date for the determination of the extent of its mining rights should be April 2008, this being the date on which the Construction Permit was revoked by Respondent71 and Respondent contends the Brisas Concession expired.72 Respondent has not challenged the use of April 2008 as the relevant date for damage assessment purposes (if required).
275.
In addition to the Brisas and Unicornio Concessions, Claimant asserts that in April 2008 it enjoyed rights regarding parcels adjacent to the Concessions. Given the size of the Brisas Project, there was the need to site infrastructure on such parcels of land in order to mine rationally and according to best industry practices so as to ensure optimum recovery of mineral resources.
276.
The parcels as to which Claimant asserts it acquired rights in April 2008 to use for infrastructure and services for the exploitation of the Brisas Project were: Bárbara, Zuleima, NLEAV1, NLSAV1, Esperanza, Yusmari, the North Parcel (NLNA1-NLNV1), El Pauji, Morauana, Venamo, Cuyuni and Mireya.

A. Brisas Project

Claimant’s Position

277.
According to Claimant, its investment in Venezuela consisted in the mining rights indirectly owned through the ownership and control of the Brisas Company, the entity holding such rights in Venezuela.73 It is therefore to be determined which were Claimant’s mining rights when, in April 2008, measures were taken by Respondent that, in Claimant’s opinion, were in violation of the standards of treatment guaranteed by the BIT.
278.
Claimant observed that it informed the Administration of its intention to develop the expanded Brisas Project in 1999. It gained a one year extension to submit the Brisas Project Feasibility Study, submitted in February 2001. The extension was required because it needed more time to address the "project" as a whole - being the Brisas and Unicornio Concessions along with surrounding mining properties needed to support project infrastructure. Many other documents and permits following this time referred to the Brisas Project. In particular, the V-ESIA addressed the Project as a whole, which included the surrounding properties. Claimant noted that the Construction Permit issued in 2007 referred to the "Brisas Project".
279.
Claimant contended that internal MinAmb documents evidence that "the Administration considered the Brisas Project as an integrated project encompassing several parcels,"74 along with approvals gained feasibility studies, the V-ESIA and the various permits and authorisations issued which all refer to the Brisas Project.
280.
According to Claimant, during the entire course of the works to develop the so-called "Brisas Project", Respondent had never raised any objections regarding the merit of the Project, its environmental impact, its planning, its compliance with law or the Mining Titles. This was so even when, in 2005, President Chávez announced that all contracts with foreign companies had to be reviewed to ensure that they provided "maximum benefit" to the State. However, Claimant says its reliance on the government’s continued good faith evaluation and support of the Brisas Project was misplaced.

Respondent’s Position

281.
Respondent maintains that Claimant was granted the Brisas (alluvial) and Unicornio (hard-rock) Concessions and entered into work contracts authorizing the exploitation of various parcels of land, none of which it ever exploited, subject to the conditions set out in the Mining Titles, the concessions, the work contracts and the additional contractual requirements. It says that Claimant misrepresents the operation of Venezuelan law with respect to the obligation to exploit and the granting of extensions of concessions and, in addition, it ignores the importance of the regulatory environmental regime regarding its Mining Titles. "Brisas Project" was neither a "Project" nor "poised for success", as alleged by Claimant.75
282.
Respondent states that the "Brisas Project" described by Claimant consisted of an enormous mine pit (comprising of two concession areas, an alluvial one overlying an underground hard rock concession) and 12 surrounding parcels of land to use for waste rock and liquid storage area, a crushing plant, a processing plant and other infrastructure. Respondent contends that Claimant incorrectly states that it had acquired rights of use for these parcels and that it was in compliance with all its obligations under the mining rights.

The Tribunal’s Analysis

284.
Throughout the Parties’ pleadings, written and oral, reference has been made to the "Brisas Project" as a term meant to cover more than just one Mining Title or mining right. The term was introduced by Claimant when, having been granted the Unicornio Concession on 3 March 1998, it felt the need to combine its development with that of the Brisas Concession, the latter lying on top of the former. Claimant considered it was reasonable that, for a number of reasons, the two concessions should be considered "in an integrated manner as one comprehensive mining project"76.
285.
Starting in late 1998, Claimant focused on the notion of "Brisas Project", introducing this new concept in its correspondence with the Venezuelan Administration. The EIA for the Brisas Concession filed on 14 October 1998, although not yet referring to the Brisas Project, mentions the underlying concession obtained earlier that year with the prospect of "assessing it comprehensively."77 This was followed by an exchange of communications from MinAmb on 28 January 1999, requesting modifications for the environmental assessment of the new project78 and from Claimant on 7 May 1999, responding to the MinAmb and referring, for the first time to the "Brisas Project."79 Reference to the Brisas Project continued to be made throughout 1999 by Claimant, but not yet by Respondent which referred rather to an "expanded project."80
286.
The process leading to the introduction of the concept of an expanded project comprising more than just one Mining Title culminated in February 2001 with the filing by Claimant of the Brisas Project Feasibility Study where, despite the title, the content referred to the Brisas Project as comprising the Brisas and Unicornio Concessions as well as NLEAV1-NLSAV1, Bárbara, Zuilema, NLNA1-NLNV1, ALUPLATA, VELAPLATA, El Pauji Mining Concession, Morauana and a strip of land for easements.81 This study was updated by Claimant in November 2002 confirming the components of the Brisas Project.82 NLEAV1 and NLSAV1, Bárbara and Zuleima parcels were made part of the Feasibility Study as "comprising the Brisas Project."83
287.
The Brisas Project Feasibility Study, submitted in 27 November 2002, was approved by MIBAM on 6 January 2003 as being in compliance with Special Advantage No. 5 of the "relevant mining title,"84 where the "relevant Mining Title" for the Ministry was the Unicornio Concession. The Parties disagree whether or not, despite this qualification, the Ministry’s approval related comprehensively to all Mining Titles and rights covered by the Brisas Project Feasibility Study.
288.
Reference by Claimant to the "Brisas Project" became common in its relations with the Administration. All studies prepared and filings made by Claimant since that time referred to this concept, including the V-ESIA.85 As updated, the V-ESIA referred to the two Concessions, Brisas and Unicornio, and the various mining parcels comprising the Brisas Project. The Study was approved by MinAmb on 9 February 2007, without objections or comments on the use of the concept of Brisas Project.86
289.
Following approval of the V-ESIA, MinAmb issued on 27 March 2007 the Phase I Permit.87 This document lists in the "whereas" section all mining rights to which it refers as part of the Brisas Project. The references made in the Phase I Permit’s text regarding MIBAM88 suggest that MIBAM was aware of it and its content. Several other documents in the file originating from MIBAM and MinAmb during those years refer to the Brisas Project.89
290.
Respondent referred initially to the Brisas Project in its Counter-Memorial as "imaginary."90 Then, in its Rejoinder, it referred to it as a unilateral reference by Claimant to its various mining interests not in accordance with Venezuelan law, the latter not recognising or regulating a mining project made of multiple parcels.91 Claimant, for its part, was aware that under Venezuelan mining law each mining right is subject to a separate regulation, as evidenced by the fact that in March 2006 it proposed to MIBAM, without success, to amend the Mining Law to regulate the concept of "Mining Project."92
291.
The Tribunal recognizes that there was for some time a measure of misunderstanding between the Parties as to existence and material consistency of the "Brisas Project", a concept the use of which had initially been a unilateral initiative of Claimant. Nevertheless, as soon as the competent Venezuelan authorities, including MIBAM and MinAmb, actually agreed to explicitly use the same formulation for identifying the integrated project, Claimant was entitled to believe that the two sides had finally reached an agreement on the existence of the "Brisas Project", if not necessarily on the exact scope and consistency thereof. This was at least the case in March 2007, when the Phase I Permit was issued.
292.
The Tribunal finds that the Administration’s conduct, as evidenced by the lack of reaction and, more than that, by its explicit reference to the concept of the "Brisas Project" in a number of official documents, founded Claimant’s expectation that it could rely on Venezuela’s acceptance of this concept as a practical way of dealing comprehensively with all Mining Titles and rights it intended to exploit. This was particularly the case with respect to the environmental consideration of mining activity, due to the obvious need for an integrated evaluation of its effects on the environment. In a document issued by MinAmb on 27 May 2004, one reads:

"The Brisas Project, with an investment of 67 million dollars to date, out of a required 400 million dollars, is a mixed large mining project (alluvial and vein) and is considered by the Ministry of Energy and Mines as a project of National Interest in view of its dimensions and its social and economic effects for the country."93

In another document issued by MIBAM on 26 September 2006 it is stated as "Recommendations" to Claimant:

"Proceed before MARN for the Environmental permits for this mining right, as this forms part of the Brisas Project, which will contribute to the economic and technological development of the Mining Projects, which to this date are quite diminished."94

The time for a change of the State policy regarding mining activities and, more specifically, the Brisas Project had yet to come.

293.
Respondent’s position denying any value to the concept of "Brisas Project" is unwarranted. The Administration’s conduct reinforced Claimant’s reasonable expectation that further steps would be taken by Respondent to permit the full exploitation of the Brisas and Unicornio Concessions through the use of adjoining parcels of land included within the concept of the "Brisas Project".

B. The Brisas Concession

Claimant’s Position

294.
The Brisas Concession was acquired by the Brisas Company in April 1988. In November 1992, Gold Reserve Corp.’s Venezuelan subsidiary acquired the Brisas Company. Following the reorganization of Gold Reserve group in early 1999, Claimant became the indirect owner of the Brisas Company and, accordingly, of the Brisas Concession.
295.
Claimant refers to its successful efforts, with the support and approval of the Government, to bring the Brisas Concession into compliance with the Mining Title and mining law. It says that the mining rights under the concession were therefore unlawfully terminated by Respondent with effect from the date of expiration of its initial term, i.e. from 18 April 2008.95
296.
Claimant had filed a timely request in October 2007 to extend the Brisas Concession, as acknowledged by Respondent.96 When six months passed without a decision by MIBAM, Claimant contends that the extension was granted by operation of Article 25 of the 1999 Mining Law. It refutes Respondent’s assertion that the 1999 Mining Law is not applicable.97 The May 2009 Resolution purporting to terminate the Brisas Concession relied on Article 25 of the 1999 Mining Law98 and, in addition, the Supreme Court ruled in November 2011 that Article 25 of the 1999 Mining Law applies to concessions granted prior to such law, including where the concession has a special advantage regarding its extension (like the Brisas Concession).99
297.
Claimant sees no merit in Respondent’s argument that in order to benefit from the positive administrative silence the concessionaire must be "solvent", since the decision regarding whether or not the condition is satisfied must be taken within the six-month time provided by the 1999 Mining Law. In addition, MIBAM repeatedly confirmed Claimant’s "solvencia" by issuing certificates of compliance, the last one in September 2008.100
298.
Claimant said it had no reason to doubt its compliance with its obligations as concessionaire, given the certifications of compliance repeatedly received from MIBAM. It had a legitimate expectation as a matter of Venezuelan law that the Brisas Concession would be extended, as contemplated also by the Feasibility Study that had been approved by MinAmb in 2003.
299.
Under Article 25 of the 1999 Mining Law, MIBAM had six months to decide on the Concessionaire’s request for extension. If no response was received, the extension would be deemed to have been granted according to the principle of positive administrative silence. MIBAM improperly failed to recognize the extension and more than one year after the concession was extended by operation of law revoked it for reasons that were without a basis in law or fact.
300.
Claimant also contends that Respondent’s argument that the Administration is free to decide in its discretion whether a concession should be extended is wrong. As explained by Professors Brewer-Carias and Ortiz-Alvarez, a decision whether a concession is to be extended is based on the standard of "pertinence" under the Mining Law, which is an indeterminate legal concept that does not provide for a discretionary decision. Instead, the decision should be based on whether or not an extension is necessary to meet the needs of the project.101
301.
Contrary to what is asserted by Respondent,102 MIBAM had no discretion to decide whether to grant an extension, Article 25 of the 1999 Mining Law only requiring the Ministry to determine whether an extension, would be "pertinent". Such determination is based on constitutional and other principles to ensure that it is not arbitrary and is based on "criteria of rationality, proportionality, equity and justice."103
302.
On 3 October 2008, MIBAM sent Claimant forms for payment of the surface tax due for the Brisas Concession through 18 April 2008 (as if the concession had expired on that date). Assuming this to be due to an oversight, Claimant filed a reconsideration appeal with the office issuing the tax forms.
303.
On 28 November 2008, the office rejected the appeal concluding that the Brisas Concession expired as of 18 April 2008 in the absence of any evidence that the requested extension had been granted.104
304.
On 18 March 2009, MIBAM ordered the "immediate suspension" of all mining activities on the Brisas Concession, the preparation of inventories and the safekeeping of the concession’s assets which were to revert to the State.105 On 25 May 2009 the Brisas Concession was declared terminated.106
305.
Claimant notes that MIBAM’s Resolution terminating the Brisas Concession was based on three internal memoranda prepared by the Ministry’s offices, two dated 29 April 2009107 and one dated 12 May 2009,108 which purported to find Claimant to be non-compliant with obligations related to the concession. The two April memoranda asserted that Claimant did not comply with Special Advantages Nos. 5-9 and 11-14 of the Brisas Mining Title. They post-dated Claimant’s 21 April 2009 notice of dispute under the BIT which was also addressed to the Minister of Mines Rodolfo Sanz.109
306.
Claimant asserts that MIBAM acted unlawfully because the determination of non-compliance did not support termination of the Brisas Concession. The requested extension had been supported by MIBAM’s own written certification unequivocally stating that Claimant "has fully complied with the provisions of the above [Mining] Law, its Regulations and Mining Titles and is, therefore, declared Solvent as of 14 September 2007."110 Another certificate of compliance was issued one year later, on 2 September 2008, again confirming that Claimant was "solvent."111
307.
Claimant replies as follows to the alleged non-compliance with the Special Advantages referred to in the April 2009 memoranda:

(i) Special Advantage No. 5 related to the payment of the 3% exploitation tax of gold refined. Such taxes had been paid, as confirmed in the tax payment forms submitted to MIBAM.

(ii) Special Advantage No. 6 related to the obligation to use for exploitation the period of 20 years for which the Concession was granted. Under the Mining Law, "exploitation" means not only the physical extraction of minerals but also performing activities "necessary in order to extract minerals, with the unequivocal intention of economically exploiting the concession". These preparatory activities to develop the Brisas Concession had been performed by Claimant, as shown by the technical, economic and environmental studies ultimately approved by the Administration. The theory of Respondent’s legal expert, Professor Iribarren, that "exploitation" is synonymous with "extraction"112 finds no support in the text of the law.

(iii) Special Advantage No. 7 related to the commencement of exploitation within three years from the date of publication of the Mining Title in 1988 in the Official Gazette. This term having already expired when Claimant acquired the concession in 1992, MIBAM allowed it to cure the deficiencies of the prior owner, including extending the time-limit to submit a feasibility study. The latter was approved in February 1994.113

(iv) Special Advantage No. 8 related to the manufacturing and refining of the extracted minerals within Venezuela. The limited quantities of minerals extracted by Claimant from 1992 to 1997 were manufactured and refined in Venezuela, as reported to MIBAM in Claimant’s annual reports. For the future, the feasibility studies contemplated a processing plant in Venezuela to that purpose.

(v) Special Advantage No. 9 related to the transfer to Venezuela of mining technology and to the requirement to establish a training program for personnel. It required that 95% of the non-laborer employees were to be Venezuelan citizens within ten (10) years from the commencement of exploitation. According to Claimant, technology transfer and development of research activities were achieved by delivering technical reports and information and making donations. A training program for employees had been implemented and the targeted level of 95% for Venezuelan non-laborer employees had been achieved.

(vi) Special Advantage No. 11 related to measures to be taken to protect the environment. Claimant had submitted a highly detailed environmental impact assessment for the Brisas Concession to MinAmb in late 1994 and to MIBAM in early 1995, which was approved by MinAmb in October 1999. The V-ESIA containing environmental protection measures was submitted in July 2005, supplemented in January 2007 and then approved in February 2007 by MinAmb.

(vii) Special Advantage No. 12 contemplated constituting a company to carry out the industrialization and marketing of minerals, with 20% of the shares to be transferred to a State institution "when the Ministry so requests". The Ministry never requested the transfer of shares of any company.

(viii) Special Advantage No. 13 related to the costs of two paid internships each year for mining or geology students, to be paid by Claimant. Claimant met and even exceeded this requirement.

(ix) Special Advantage No. 14 required maintaining the performance bond that had been posted. This was done on an annual basis through November 2009, as shown by the annual reports to MIBAM.

308.
The 12 May 2009 Memorandum, relied upon in the MIBAM Resolution dated May 2009 denying the extension of the Brisas Concession, related to Claimant’s alleged failure to obtain certain environmental permits. Claimant states that it could not have obtained these permits due to MinAmb’s improper treatment of Claimant, either by refusing to act on the application to extend the exploration permit or by revoking the Construction Permit on 14 April 2008.
309.
Claimant refers to a number of changes in policy that occurred at the time the Brisas Concession was terminated. For example, President Chávez announced in his January 2009 "Address to the Nation", that the Administration planned to develop the Cristinas and Brisas concession areas jointly with a new joint venture partner, Rusoro.114 On 23 August 2011, President Chávez signed and approved a "Strategic Action Plan for the Orinoco Oil Belt and Mining Arch" establishing a plan to develop the State’s mining resources, expressly including those found at Brisas.115
310.
Claimant alleges that, as political priorities for the Chávez regime shifted, Respondent acted first to frustrate and then to expropriate the Brisas Project. This change began when, having granted on 27 March 2007 the Construction Permit to Claimant, MinAmb refused to sign the Initiation Act. The signature of this Initiation Act was required under Condition No. 9 to the Construction Permit before any authorized activity could begin.
311.
According to Claimant’s expert on Venezuelan law, Professor Brewer-Carias, the Initiation Act was no more than a "procedural formality" to be signed following Claimant’s satisfaction of other conditions imposed by the Construction Permit, so as to formally certify such satisfaction.116 As such, contrary to the contentions of Respondent and its expert Professor de los Rios,117 the signing of the Initiation Act was not discretionary for the Administration once the concessionaire had complied with the conditions imposed by the Construction Permit. Claimant had satisfied said conditions and had so notified MinAmb on 16 May 2007 requesting that the Initiation Act be signed on 24 May 2007,118 explaining to the Ministry that, in compliance with Condition No. 23, molybdenum was not part of its exploitation plan for the Brisas Project.119
312.
Claimant refutes Respondent’s explanation in this arbitration that MinAmb’s refusal to sign the Initiation Act was motivated by its concern over the environmental impacts the Brisas Project would cause,120 saying that this is not supported by contemporaneous evidence as no such concerns were communicated to Claimant at the time. On the contrary, after the issuance of the Construction Permit, MinAmb requested in mid-July 2007 that the main access road be moved to satisfy MIBAM’s requirements. Claimant had agreed to construct this alternative access road, which was finally approved by MIBAM on 14 August 2007. Claimant states that, if Respondent’s story were true, then it clearly acted in bad faith misleading Claimant into believing that the Initiation Act would be signed and the Phase II AARN would be issued.
313.
Following repeated requests that the Initiation Act be signed and Claimant’s compliance with MinAmb’s request that a proposed alternative access road be provided, a meeting was held on 1 October 2007 with Minister Ortega and Vice-Minister Garcia. As recounted by Mr Rivero, the president of Gold Reserve Venezuela, in his witness statement, following Claimant’s presentation of the Brisas Project and answers to questions from Minister Ortega, the latter told Claimant that even if Brisas Project were different, "there is nothing I can do because this issue is in the hands of the President", Vice-Minister Garcia adding that the future of the Brisas Project "is out of our control."121 This was an alarming development for Claimant since it now appeared that the future of the Project would be decided as a political matter by President Chávez.
314.
Claimant states that it sent a letter to President Chávez on 19 November 2007 requesting a meeting to discuss the future of the Brisas Project,122 with no response from the President’s office. Eventually, a meeting was held on 28 January 2008 with the Vice-Minister of Presidential Relations, Fidel González, who promised to look into the matter. However, nothing was heard further from him. Claimant’s additional requests to MIBAM and MinAmb concerning the need to sign the Initiation Act were ignored.
315.
On 14 April 2008, the Revocation Order was issued by MinAmb declaring the "absolute nullity" of the Construction Permit and revoking it "for reason of public order."123 Claimant alleges that the Revocation Order was a factually baseless, legally flawed and plainly pretextual action to terminate the Brisas Project and deprive Claimant of its investment.
316.
Contrary to what was stated in the Revocation Order, Claimant says there was no "uncontrolled mining" by a "large number of miners" at the Brisas Project, as attested to by MIBAM’s inspection one month before the Revocation Order was issued.124 Nor was Claimant going to engage "irrational mining practices", the operating and environmental plan having been thoroughly reviewed and approved by the Administration.
317.
The Revocation Order had no valid legal basis according to Claimant. The Emergency Decree referred to by the Revocation Order did not prevent MIBAM and MinAmb from granting permits to explore or exploit minerals, as shown by the fact that each Ministry had issued a variety of mining permits during the life of this Decree. In any case, the Emergency Decree had expired nine months prior to the issuance of the Revocation Order, on 26 June 2007. As opined by Professor Brewer-Carias, no circumstances existed regarding the issuance of the Construction Permit justifying a declaration of absolute nullity and further, the declaration of absolute nullity was inconsistent with the "reason of public order" cited as an additional basis for the Revocation Order.125
318.
Respondent claims that under Articles 91 and 109 of the Organic Law on the Environment, the Revocation Order was lawful because it was "founded" upon the Ministry’s authority to revoke annual permits that are contrary to Venezuela’s environmental laws and its constitutional obligation to protect the environment, promote a sustainable development and protect the rights of indigenous people.126 Claimant says this argument is misplaced. First, the Revocation Order does not refer to the Organic Law on the Environment or to any violation of environmental laws and new reasons cannot be added after the Revocation Order had been issued. Second, even if Respondent had revoked the Construction Permit due to a real concern of grave and irremediable environmental damage, it would still be required to compensate Claimant for damages, as opined by Professor Brewer-Carias.127
319.
The Revocation Order was also unlawful because it was issued without allowing Claimant an opportunity to be heard in advance. Claimant pursued legal avenues in Venezuela to challenge the Order, but eventually waived those rights when initiating this arbitration. Contrary to Respondent’s view,128 Claimant had no option to appeal against MinAmb’s failure to sign the Initiation Act since no negative decision had been communicated to Claimant.
320.
Claimant contends that the government’s motive for revoking the Brisas concession became apparent on 23 May 2008 when Mr Rivero received a portion of a "MIBAM Power Point presentation" from a friend who had contacts at MIBAM. The document records that one of the "GOALS" of the government’s action was "to reduce the presence of transnational monopoly capital in gold and diamond exploitation: American companies (Hecla), Canadian companies (Cristalex and Gold Reserve)". It also states that "IMMEDIATE ACTIONS" include the "Suspension of the environmental permits granted to the companies Cristalex and Gold Reserve, for the exploitation of the Las Cristinas mines."129
321.
Subsequent thereto, Claimant continued to be presented with irrational propositions regarding the Brisas Project, such as Vice-Minister Garcia’s unfeasible proposal that minerals be mined underground rather than through open-pits. The open-pit operating plan and associated environmental and social impact assessment had been previously approved by MIBAM and MinAmb in the Brisas Project Feasibility Study and V-ESIA, respectively.
322.
Starting in June 2008, statements made by MinAmb,130 MIBAM131 and President Chávez no longer expressed environmental concerns, but rather the political objective to recover gold mines to the State.132 This series of public announcements culminated with President Chávez "Annual Message to the Nation" on 13 January 2009, which confirmed the government’s intention "to exploit and control the gold fields Las Cristinas this year, one of the largest gold fields in the Americas... estimated to hold approximately 35.2 million gold ounces..,"133
323.
The reasons why the government had terminated the Brisas Project by revoking the Construction Permit had therefore become clear to Claimant in the light of these public announcements and statements. Claimant contends that subsequent government actions directed at the Brisas Project were equally arbitrary and unlawful.
324.
According to Article 25 of the 1999 Mining Law, which was applicable in this case, the requested extension of the Brisas Concession was tacitly granted by application of the positive administrative silence due to MIBAM’s failure to notify the concessionaire that it had been denied the extension within the following 6 months.134
325.
Once the concession extension was granted by a "tacit administrative act", Respondent could not revoke the grant of the extension since the individual rights created by such act could only be revoked in circumstances of absolute nullity and in accordance with a proper administrative procedure providing Gold Reserve any due process in connection with such revocation.135

Respondent’s Position

326.
The Brisas Concession had been granted on 18 April 1988 to the Brisas Company for a term of twenty years, with the option of requesting a ten-year renewal under the 1945 Mining Law. Claimant’s Venezuelan subsidiary, Gold Reserve de Venezuela, acquired the rights to the Brisas Concession in November 1992, when it acquired the Brisas Company. Pursuant to the Brisas Mining Title, Claimant undertook a number of obligations (Special Advantages). Respondent states Claimant utterly failed to comply with these obligations.
327.
Thus, in breach of the Special Advantage No. 7, which required the concessionaire to begin exploiting within three years of the publication of the Mining Title in the Gaceta Oficial, Claimant’s exploration program lasted more than five years. During a five-year period through 1998, Claimant was granted yearly AARN’s to complete the exploration program. The latter was completed in early 1999.136
328.
According to Respondent, Claimant was in no hurry to start exploiting the Brisas Concession since it took the company three years from the date of receipt of MinAmb’s observations to finalize the necessary EIA, which was done in October 1998, ten years after the granting of the concession.137 MinAmb only partially approved the EIA in October 1999.138
329.
From 1999, Claimant focused on the new so-called "Brisas Project", invoking the lack of environmental permits on other parcels adjacent to the Brisas Concession as preventing them from going forward with the exploitation of the Brisas Concession. Respondent recalls that this situation was worrisome for MIBAM whose Technical Evaluation Division issued a Memorandum to the Director de Fiscalización y Control Minero on 1 July 2005 suggesting an inspection of the concession area and mentioning that delays by MinAmb in issuing the necessary permits, as alleged by Claimant as the reason for their delay, do not interrupt the time period for beginning exploitation under the mining law.
330.
On 29 July 2005, Claimant submitted the V-ESIA,139 requesting the issuance of an AARN "for the infrastructure construction stage and exploitation of gold and copper for the Brisas Project."140 The study was partially approved by MinAmb on 9 February 2007.141
331.
On 27 March 2007, MinAmb granted Claimant an AARN authorising the construction of infrastructure and services for Phase I of its proposed "Brisas Project" (known as Phase I Permit).142 The permit stated that it did not authorize Claimant to affect natural resources for exploration or exploitation of minerals. It also specified that Claimant would need an Acta de Inicio to be signed before it commenced the permitted activities. In exercise of its discretion, Respondent says the Acta de Inicio was never signed by MinAmb. On 14 April 2008, MinAmb annulled the Phase I Permit due to serious concerns regarding its potential environmental impact.143
332.
Contrary to what is stated by Claimant,144 Respondent contends the Phase I Permit was extremely limited and significant work remained before MinAmb could determine whether to authorize the Brisas Project development. Such authorization was in no way guaranteed since MinAmb had identified a number of significant environmental concerns during its review of the project. Additional environmental permits also depended upon the results of the EAE to be conducted based on Claimant’s cooperation with the CVG and Crystallex to comply with the Ministry’s requirements to minimize the cumulative impact of the neighbouring projects.
333.
From the very beginning of the process, Respondent states that MinAmb had grave concerns about the Brisas Project, mainly due to the fact that it was to be located in an ecologically and culturally sensitive area. The concerns related in particular to water resources management (including the Acid Rock Drainage and Metal Leading problem), biodiversity protection (regarding in particular the massive land clearing to construct the mine and associated infrastructure), the socio-economic impacts (regarding in particular the protection of indigenous peoples’ rights), the Environmental Management Plan and the mine closure.
334.
Regarding any and all such concerns, Respondent found Claimant’s V-ESIA of the Brisas Project 2005 and other documents to be deficient due to the failure to analyze critical issues, as noted by Respondent’s technical experts SRK.
335.
Due to the tremendous size, scope and predicted adverse impacts of the Brisas Project, Respondent observes that MinAmb’s approach was deliberately very cautious, as required under Venezuelan law. In addition, MinAmb had grave concerns about the cumulative effects of the project when considered in the context of other mining projects in the immediate proximity, specifically another massive open-pit gold mine proposed by Crystallex’s Las Cristinas project, immediately to the north of the Brisas Concession. This had led MinAmb to notify Claimant, on 31 July 2006, of the need to conduct EAE, the result of which would be used to determine whether to grant the requested authorization.145
336.
Claimant’s response at the time was to minimize the Ministry’s requirements asserting, on 27 October 2006,146 that it had complied with them despite the fact that on such a date no joint studies had been completed by the two companies.
337.
In a meeting held on 22 December 2006, and in subsequent letters sent to both companies that same month, MinAmb’s requirements were specified.147 As of April 2008, Respondent submits that Claimant had not complied with those requirements.
338.
Respondent notes that prior to commencing even the initial construction and site preparation activities authorized in the Phase I Permit, Claimant had to satisfy a number of permit conditions, one of which was to obtain MinAmb’s signature of the Initiation Act. Contrary to Claimant’s contention, Respondent states that the Initiation Act was not a "simple administrative formality". Like any other permit condition, the Initiation Act was a valid exercise of ministerial authority so that MinAmb was not compelled to sign it. No less than twelve letters were sent by Claimant to MinAmb and to President Chávez as a part of an intense lobbying campaign to obtain the signature of the Initiation Act. As of April 2008, Respondent asserts that it was Claimant’s own delays that were responsible for slowing the Brisas Project down.
339.
Following the issuance of the Phase I Permit in March 2007, MinAmb continued to consider the subsequent phases of the Brisas Project, growing increasingly concerned about the environmental impacts that those phases would generate. As a result of these concerns, consistent with its legal obligation to protect the environment, MinAmb annulled the permit on 14 April 2008.148 In addition to the fundamental environmental concerns, Respondent notes that Claimant had failed to adequately address impacts to indigenous people and as of April 2008 had not completed an environmental study that was satisfactory to MinAmb nor complied with the Ministry’s requirements to study with Crystallex cumulative impacts, to develop joint infrastructure plans or to contribute to the EAE.
340.
Claimant alleges that certain press statements made by MinAmb subsequent to the revocation of Phase I Permit suggest an improper motivation of such revocation. According to Respondent, these statements have no weight since they do not represent the official position of the Ministry or the Venezuelan Government. Gold Reserve’s president himself, Douglas Belanger, cautioned its investors in that regard not to consider "rumors" reported in the press.149
341.
According to Respondent, Phase I Permit was revoked pursuant to MinAmb’s statutory authority to annul permits that are contrary to Venezuelan law and its constitutional obligations to protect the environment, promote sustainable development and protect the rights of indigenous people. Based on the significant environmental and socio-cultural risks that were at stake, MinAmb determined that Claimant was not entitled to any further development authorization.
342.
Respondent’s position is that sixteen years after the Brisas Concession was granted, Claimant was yet to exploit the parcel as required by the Mining Title. MIBAM refused to extend the Brisas Concession by the MIBAM Resolution dated 25 May 2009.150 The decision was based on a series of investigations and analysis reporting on Claimant’s non-compliance with its concessionary obligations, in particular the obligation to exploit the Brisas Concession. Due to such non-compliance, although Claimant had submitted a timely request for extension it could not benefit from the silencio administrativo positivo under Article 25 of the 1999 Mining Law so that the concession’s term could not be extended. Respondent observes that only concessionaires that are "solvent" are entitled to request an extension according to MIBAM.151
343.
Respondent maintains that MIBAM’s refusal to extend the Brisas Concession was in accordance with Venezuelan law. Contrary to the allegations of Claimant’s expert, Professor Ortiz-Alvarez, a concessionaire has no automatic right to the extension of its mining interest under the law, Venezuela having broad discretion to administering mining concession, as explained by Respondent’s expert, Professor Iribarren.152 There was no need to provide Claimant with any notice regarding the expiry of the Brisas Concession when it came to the end of its term on 18 April 2008.
344.
Accordingly, on 4 July 2008 the Dirección de Fiscalización issued to Claimant tax payment forms requesting payment of taxes through 18 April 2008. When the extension request was discovered, it was noted that contrary to Claimant’s normal practice, no copies of such request had been filed to MinAmb in its monthly, quarterly and annual reports. Following issuance of the tax forms, Claimant filed a recurso de reconsideración on 23 October 2008, requesting the office to correct the tax payment forms to provide for tax payment through 30 June 2008 rather than 18 April 2008, considering that the concession had been extended by operation of silencio administrativo positivo under Article 25 of the 1999 Mining Law.153 Claimant was informed by the Dirección de Fiscalización on 23 December 2008 that no new tax forms would be issued, and that the decision regarding Claimant’s extension request was MIBAM’s responsibility.154
345.
A recurso jerárquico was filed by Claimant on 9 February 2009 against the decision of the Dirección de Fiscalización. The recurso was denied by MIBAM by resolution of 29 June 2009 arguing that the Dirección de Fiscalización had acted appropriately in the absence of any act granting the extension of the concession.155 Claimant was advised that it could file an appeal to nullify the decision with the Saia Politico-Administrativa of the Tribunal Supremo de Justicia. However, Claimant did not do so.156
346.
The MIBAM Resolution dated 25 May 2009 denied Claimant’s request to extend the term of the Brisas Concession.157 Respondent notes that the decision was based on a series of investigations and recommendations by various offices within the Ministry, as recorded by two memoranda of 29 April 2009 emphasizing that Claimant had failed to comply with numerous concessionary obligations, most importantly the requirement to exploit the Brisas Concession.158 Another memorandum of 12 May 2009 recommended that the requested extension be denied because, although the request had been timely, the concessionaire was not "solvent" at the time of such request.159
347.
In MIBAM Resolution dated 25 May 2009 which terminated the Brisas Concession, MIBAM explained that although Gold Reserve had submitted a timely request for an extension, silencio administrativo positivo could not extend the Brisas Concession’s term because Claimant had not been in compliance with its obligations under the Concession at the time of its extension. It stated that only concessionaires that are "solvent" with Venezuela could request an extension of their concession. Claimant was not solvente with Venezuela since it had failed to comply with many obligations under the concession and the Mining Title, specifically Special Advantages Nos. 5, 6, 7, 8, 9, 11, 12, 13 and 14.
348.
Under the Special Advantage No. 6, Claimant was required to use the Brisas Concession for exploitation in gold within the initial term of the concession. Respondent contests Claimant’s expert’s view that the term "exploitation" under Venezuelan law means not only the physical extraction of minerals but also performing all activities "necessary in order to extract minerals, with the unequivocal intention of economically exploiting the concession and in proportion to the nature of the substance and the magnitude of the deposit."160 According to Respondent’s expert, Professor Iribarren, there is clearly a difference between exploration and exploitation so that the mine is not in exploitation when only exploratory activities have been done.161 Respondent notes that this interpretation was shared by Claimant which in 2003 requested that MIBAM count the activities related to the extraction of minerals from the moment when the environmental authorizations are granted.162 This request was denied by MIBAM.
349.
Claimant argues that it cannot be blamed for not complying with its obligation to exploit the Brisas Concession since MinAmb, although approving its environmental study, failed to grant the necessary authorization to exploit the concession.163 Respondent asserts that this is disingenuous, since Claimant planned to affect twelve other parcels in conjunction with its mining of the Brisas Concession, as shown by the V-ESIA it submitted in July 2005. It was appropriate for MinAmb to seek to understand Claimant’s plans for each of these concessions in order to evaluate the effects of these activities on the environment. In any case, Claimant received numerous environmental permits that it never fully utilized.
350.
Respondent contends that, under the Special Advantage No. 7, Claimant was required to begin exploitation within three years of the publication of the Brisas Mining Title in the Gaceta Oficial, an obligation that was violated by Claimant. Respondent rejects Claimant’s argument that it did not violate its obligation because three years had already passed when it obtained the Brisas Concession. According to Respondent, Claimant knowingly took a risk in purchasing the concession and cannot now say that MIBAM acted unlawfully for holding the concessionaire to its obligations.
351.
MIBAM found Claimant to be in violation also of the Special Advantage No. 8 requiring the concessionaire to manufacture or refine extracted minerals in Venezuela. Respondent does not accept Claimant’s allegation that its plan for future production, as laid out in its feasibility study, evidenced its plans to manufacture or refine gold in Venezuela. As explained by Respondent’s expert Professor Iribarren, this obligation had in any case to be fulfilled not later than at the end of the legal term for the commencement of exploitation.164
352.
According to the MIBAM Resolution dated 25 May 2009, Claimant was also in breach of its obligation under the Special Advantage No. 9 by not transferring technology to the mining sector and to the country. The funding of conferences and meetings, as alleged by Claimant, is not sufficient to meet the technology transfer obligation according to Respondent.
353.
Under the Special Advantage No. 12, Claimant had the obligation to carry out extraction activities and to market extracted minerals, as well as to transfer twenty percent of the companies’ shares to a State company. Respondent states that Claimant failed to comply with this obligation by never establishing a company for the extraction or marketing of minerals.
354.
Claimant also failed to pay exploitation taxes as required under the Special Advantage No. 5. Claimant claims to have fulfilled this obligation by paying these taxes on the limited quantity of gold extracted. As in the case of the Special Advantage No. 8, Claimant’s failure to comply with one special advantage did not excuse it from complying with other special advantages linked to exploitation.
355.
In addition, Claimant was found in violation of the Special Advantage No. 11 requiring it to take measures to protect the environment, the Special Advantage No. 13 requiring it to support Venezuela interns and the Special Advantage No. 14 requiring that it maintains a performance bond. Claimant has elaborated on how it fulfilled these obligations, but Respondent says it failed to challenge the Resolution within the Venezuela administrative proceedings. In any case, according to Respondent, the failure to comply with any one of the special advantages could result in the termination of a concession.
356.
Respondent maintains that Claimant’s breaches cannot be cured by the "Certifications of Compliance" it received from MIBAM’s technical officials. The individuals who issued them, the Fiscal Inspectors of Las Claritas, being among the lowest ranked officials, lacked the authority to grant such certifications under the 1999 Mining Law or the General Regulations of the Mining Law. Article 88 of the Mining Law makes no mention of the duties and authority of fiscal inspectors, stating simply that the National Executive through MIBAM shall oversee, monitor and control the activities of any person regarding issues governed by the law and its regulations. As mentioned by Respondent’s expert Professor Iribarren, these monitoring and supervisory obligations are exercised through the Ministry’s distinct internal divisions, offices, such as Inspectorías Técnicas Regionales or Inspectorías Fiscales having only, respectively, technical or tax-related competence.165
357.
Respondent asserts that Article 96.1 of the General Regulations of the Mining Law also fails to support Claimant’s position, since it addresses neither fiscal inspectors nor the authority of any entity to issue certificates of solvencia with Venezuela. Article 97 of the same General Regulations of the Mining Law nowhere provides for the authority of fiscal inspectors to issue such certificates as part of the detailed duties it describes for such inspectors. Without an express delegation of authority a technical functionary could not pronounce a concessionaire’s solvencia with Venezuela.
358.
According to Respondent, the certificate of solvencia attached to Claimant’s request for extension of 17 October 2007 reflects the limited capacity of the fiscal inspector signing it since it declares Claimant "solvent with this office", not with Venezuela. This was confirmed by the person who signed it, Mr Carpio, explaining that requesting or receiving certificates of solvencia "was not a common practice."166
359.
Claimant alleges that its due process rights under Venezuelan law were violated.167 Respondent replies that, throughout the process that denied the extension request to renew the Brisas Concession, MIBAM accorded Claimant due process of law. A recurso de reconsideración was opened to Claimant following MIBAM’s Resolution dated 25 May 2009, which terminated the Brisas Concession. However, it chose not to exercise this right.168
360.
Respondent maintains that the Brisas Concession was recovered in a manner consistent with Venezuelan law, specifically Article 102 of the 1999 Mining Law as well as the Special Advantage No. 15 under the Brisas Mining Title. Recovering of assets was peacefully executed almost five months after MIBAM’s Resolution dated 25 May 2009. An Acta de Recepción was signed, a copy of which was given to Claimant’s representatives. The recovery of assets was based on an inventory and only assets belonging to Brisas were recovered. As confirmed by Mr Rivero, president of Gold Reserve Venezuela, C.A., he was informed that the recovering of the Brisas Concession assets was not intended to affect Claimant’s right to the Unicornio Concession assets.169

The Tribunal’s Analysis

361.
It is agreed by the Parties that the Brisas Concession was granted on 18 April 1988 for an initial term of twenty years and that it was due to expire on 18 April 2008, but could be extended for two additional ten-year terms if so requested at least six months before the expiration date.
362.
Claimant’s request for extension was filed on 17 October 2007.170 It was therefore timely. It was accompanied by the most recent certificate issued by MIBAM stating that the company "has fully complied with the provisions of the above [Mining] Law, its Regulations and the Mining Titles and is, therefore, declared Solvent" as of 14 September 2007.171
363.
MIBAM acknowledged the timely filing of the application for extension in the MIBAM Resolution dated 25 May 2009 terminating the Brisas Concession.172 It disputed the validity and effects of the certificates of compliance and, specifically, Claimant’s compliance with Special Advantages Nos. 5-9 and 11-14 of the Brisas Mining Title.173 It declared the Brisas Concession terminated and that the company was not "solvent" with the obligations as described in two 29 April 2009 and one 12 May 2009 memoranda.174 Previously, on 18 March 2009, MIBAM had ordered the "immediate suspension" of all mining activities of the Brisas Concession, the preparation of inventories and the safekeeping of the concession assets, which were to revert to the State.175

Request for Extension - Positive Administrative Silence

364.
Prior to examining whether the relevant Special Advantages had been complied with, the Tribunal will examine the legal effects of the timely filed request for extension, in light of the absence of objection by MIBAM within six months thereafter.
365.
As held by the Venezuelan Supreme Court of Justice in its decision of 2 November 2011,176 requests for extension of mining titles, including mining titles issued prior to the 1999 Mining Law (like the Brisas Concession), are governed by Article 25 of the 1999 Mining Law and not by the 1945 Mining Law, as asserted by Respondent.177 The Resolution terminating the Brisas Concession makes explicit reference to Article 25 as applicable to Claimant’s extension request.178
366.
Article 25 of the 1999 Mining Law states the following:

"The concessions granted by the National Executive authorities in accordance with this law shall only be for exploration and subsequent exploitation. Their term shall not be longer than twenty (20) years from the date of publication of the Exploitation Certificate in the Official Gazette. However, such term may be extended for successive terms of no more than ten (10) years each, if requested by the concession holder within three (3) years before expiration of the initial term, and if approved by the Ministry of Energy and Mines, However, the extensions may never exceed the original term granted in the concession.
SINGLE PARAGRAPH. The concession holder may only request an extension after complying with all its obligations to the Republic, and such request shall be submitted within the above three-year term. However, the request shall be submitted six (6) months before expiration of the initial term, at the latest, and the Ministry shall make a decision within six (6) months. If no notice is given, this shall mean that the extension has been granted."179

367.
Under Article 25 of the 1999 Mining Law, therefore, an extension request will be considered granted where it is applied for in a timely manner by a "solvent" concessionaire and the authority fails to notify the concessionaire that the request has been denied within six months prior to the expiration of the original concession term based on the principle of positive administrative silence (silencio administrativo positivo). Respondent recognizes that the 1999 Mining Law "confers a positive effect to the Ministry’s administrative silence that was not present in either the 1945 Mining Law or in the relevant Regulations."180
368.
In the absence of any notice by MIBAM to the concessionaire within the six-month term that its request had been denied for lack of "solvency" or for any other reason, the extension must be deemed as granted by a "tacit administrative act" under Article 25 of the 1999 Mining Law, with "the same nature and... governed by the same rules" as any other administrative acts."181
369.
MIBAM did not give Claimant any notice in the six months after the extension request was filed. The Administration was consequently provided with the requisite time to investigate Claimant’s solvency and it is to be assumed that it did not discover during that time any reason not to extend the Concession. Consequently, this Tribunal finds that the extension of the Brisas Concession was granted according to the principle of positive administrative silence.
370.
The Tribunal shall now consider whether it is possible for the extension so granted to later be revoked by the Administration. In the opinion of Respondent’s expert, Professor Iribarren, administrative acts, allegedly granted through positive administrative silence, are revocable according to Venezuelan jurisprudence.182 In the present case, as opined by Professor Iribarren, even assuming the operation of positive administrative silence, "the action derived from that silence would have been validly revoked by the express response of the government denying the renewal contained in MIBAM act of 25 May 2009."183
371.
Contrary to Professor Iribarren’s opinion, Professor Brewer-Carias opines that "[i]n Venezuelan administrative law... no administrative act creating or declaring rights in favour of its addressee may be considered revocable. On the contrary, every administrative act that creates or declares rights in favour of a beneficiary, regardless of whether the product of an express administrative act or of a tacit administrative act is irrevocable."184
372.
Regarding an administrative act, Professor Brewer-Carias indicates that it is possible for the Administration to initiate "an administrative procedure to declare its absolute nullity" and reverse the extension, "but in such a case it has to respect the concessionaire’s due process rights and specifically the right to be heard and to defense". In the absence of this due process, the revocation would be null and void according to Article 19 of the Organic Law and Administrative Procedure.185 Initiating this procedure might have been an option for the Administration in order to review the tacit administrative act "to determine whether the granted extension was legitimate or not and whether the legal requirements had been satisfied, granting the beneficiary (i.e. the concessionaire) the right to participate to such administrative procedure."186
373.
The Tribunal agrees with Professor Brewer-Carias that any revocation of an extension previously granted could only be undertaken if the concessionaire’s due process rights were observed. It is evident that no such rights were observed in the present case. The manner in which the Revocation Order was dictated has further effects on Venezuela’s international obligations as it will be examined in Chapter VII.

Request for Extension - Solvency and Value of Compliance Certificates

374.
The above analysis does not require the Tribunal to determine whether Claimant was "solvent" when it applied for the extension. In the Tribunal’s view, the correct interpretation of Article 25 is that the Administration is provided with a six month period in which to verify solvency and to deny the extension should it deem the concessionaire to be insolvent. To hold otherwise would deprive Article 25 of any useful effect and would be contrary to the principle of positive administrative silence embodied in this provision. It would also mean that an extension granted by positive administrative silence could be unwound many years later (with many dollars invested during this period), if it were later discovered that a concessionaire was not solvent at the time of making the request. This cannot be correct. Nonetheless, because it is relevant to the later discussion on violations of the BIT, the Tribunal shall now review the concessionaire’s alleged breaches of the 1999 Mining Law and the corresponding Mining Titles.
375.
The value of the certificates of compliance as evidence of Claimant’s solvency is central to this issue. The certificates of compliance issued by MIBAM during the life of the project, including one month before the requested extension and confirmed one year later,187 are evidence that the authority had verified Claimant’s solvency. Since it has been disputed by Respondent, this point shall be considered hereafter.
376.
Pursuant to Article 88 of the 1999 Mining Law, MIBAM is the authority empowered to "oversee, monitor and control the activities carried out by any natural person or legal entity...as regards the issues governed by this law and its regulations". As a consequence of the permanent and continuous process of this supervision of mining activities, the concessionaires have the obligation to file monthly and annual reports before MIBAM about their activities. For its part, MIBAM must verify in a permanent way the compliance by the concessionaires of their duties and obligations, as prescribed in the 1999 Mining Law and its Regulations as well as in the provisions of existing mining titles and mining contracts.
377.
In order to demonstrate the compliance with such obligations, the supervising and controlling officials of MIBAM, upon request of the concessionaires, issue "compliance certificates" by which the Administration certifies facts that are within its competence. As generally stated in the certificates, after due verification and control including review of the administrative file and, at times, inspection at the site,188 the Ministry certifies that the concessionaire has given due compliance to the different clauses of the Mining Titles, the mining contracts,189 and the provisions of the 1999 Mining Law and its Regulations and declares the same "solvent". These "compliance certificates" are issued by the mining officers empowered to that effect on behalf of MIBAM.190
378.
Respondent’s contention that due to the "lower level" of public officers issuing certificates of compliance the latter may not be given a particular weight191 is not acceptable. As correctly noted by Claimant’s legal expert, the weight of the certificates depends on the power granted to the certifying officers by the competent authority, not by their position within the Administration.192 Under the 2001 Mining Regulations, the power and duty to "ensure that the holders of mining rights fulfil their obligations under the Mining Law, its regulations and all other applicable provisions" is entrusted to the Inspectoría Técnica Regional193 Under the Regulations, the Inspectoría Técnica Regional shall establish an Inspectoría Fiscal to better perform its functions.194
379.
As indicated by Claimant’s legal expert, the certificados de solvencia attesting that the concessionaire has complied with its mining duties, "are administrative acts with their own legal effects, issued by empowered public officers, as provided by article 96 of the General Regulation of the Mining Law, enacted pursuant to the general power granted to the Ministry by article 88 of the Law."195 The power of the Inspectorías Técnicas Regionales has been recognized and accepted by "high" level authorities of MIBAM. The General Director confirmed that the "lower level" Inspectors of Mines have the authority to certify Gold Reserve’s compliance with its obligations under the Mining Titles and concessions. In its 12 May 2009 memorandum entitled "Decision on the extension request of the Brisas del Cuyuni Concession term", the General Director of Mining Concessions explains that "whether or not the request should be granted depends on the inspections and reviews to be conducted by the competent Ministry officers."196 The General Director then states that the authors of the technical reports of 29 April 2009 are "the officers empowered to inspect and verify concessionaires’ compliance with their obligations."197 In other words, the same office that had until then declared Claimant to be "solvent" determined few months later its "insolvency" as the basis for the termination of the Brisas Concession. This contradiction must be reconciled under Venezuelan administrative law since all such officers are organs of a Ministry and therefore organs of Venezuela, regardless of their level in the public administration organization.
380.
It is therefore surprising that one of Respondent’s witnesses, Mr Angel Carpio, gave evidence that when issuing mining compliance certificates he "certified" the compliance of the concessionaire with his office, the Inspectoría las Claritas, not with Venezuela.198 As stated by Claimant’s legal expert, "his office, being part of MIBAM, is an organ of Venezuela and the concessionaire owes its duties to Venezuela, not to individual offices of MIBAM."199
381.
Since the power to issue the certificates of compliance is granted by MIBAM to officers of that Administration entrusted to control the activities subjected to the 1999 Mining Law, the certification relates to the compliance by Claimant with its obligations under the Mining Law and the Mining Title. This is confirmed by the formulation of the last part of most of the certificates, stating that the concessionaire "is solvent" or solvente por este concepto or "solvent with the Ministry of Basic Industries and Mining."200
382.
Regarding certificates of compliance, Claimant’s legal expert, Professor Brewer-Carías, opines that:

"in these constant relations between the concessionaires and the Administration, after verifying the compliance of obligations, the supervising authorities issue "compliance certificate" that as aforementioned, are administrative acts of certification. Nonetheless, if after all the day-to-day supervision and control of mining activities, after the filing of subsequent (monthly and annual) reports as to the compliance of obligations, and after issuing successive "compliance certificates", all confirming, both implicitly and explicitly, compliance with the terms of a concession and the applicable legislation, the Administration realizes, contrary to earlier determinations, that in a particular situation listed in Article 98 of the Law, the concessionaire has not fulfilled its obligations and that there is non-compliance, in order to contradict the previous administrative actions, the Administration must be extremely cautious in order to terminate the concession."201

383.
Commenting on the opinion of Respondent’s legal expert, Professor Iribarren, Professor Brewer-Carías adds that "such certificates of compliance, as a written acknowledgment of the verifications undertaken by the Inspectores regionales in exercise of their duty to verify and control the concessionaires mining activities are not issued to "invalidate" or supersede any power of any other offices in the Ministry of Mines,"202 adding that "nor are they to determine in a final, indisputable and irrevocable manner whether or not a concessionaire has met its essential obligations to exploit, and whether it has done so within the specific time frames.203 However, he further adds "nor can these certifications, once issued, be ignored in any subsequent evaluation of the compliance of the concession in relation to the time periods covered by these certifications."204 The other legal expert for Claimant, Professor Ortiz-Alvarez, expresses the opinion that "[t]he Administration cannot disregard the previous declarations of solvency without further arguments and new compelling evidence showing a serious or grave situation of breach by the concessionaire and addressing the legitimate expectations created by MIBAM’s earlier certifications to the contrary.205
384.
Respondent’s legal expert, Professor Iribarren, opines the following regarding the value of the certificates of compliance (certificados de solvencia):

"The experts Brewer-Carías and Ortiz-Alvarez, as proof of good standing, emphasize the issuance of what they call multiple certificates of good standing issued by officials of the Tax Inspectorate. In this regard, basing myself on the circumstances in which the certificates were issued and their content, I reiterate my opinion that these documents refer to verifications carried out by local officials in relation to compliance with specific activities whose execution had been provided for by the concession holder’s own plans, pertaining to the sphere of competence of those officials, and that they cannot take away from the authority of the Ministry of Mines to verify if, throughout the duration of the concession, the concession holder was or was not in good standing in regards to the Republic."206

Alleged Breaches of Special Advantages

386.
Pursuant to the above, MIBAM retained the authority to determine whether Claimant was in compliance with its essential obligations to Venezuela (solvente con la República). The Tribunal shall accordingly now examine Claimant’s breaches that have been alleged by Respondent as a ground for denying the requested extension and to declare the Brisas Concession terminated on the expiry of the initial term of 20 years, i.e. on 18 April 2008. MIBAM’s Resolution dated 25 May 2009 indicates that the following Special Advantages had been breached by Claimant, making the latter insolvent before Venezuela: Nos. 5, 6, 7, 8, 9, 11, 12, 13 and 14.207 They shall be examined in turn.
387.
Special Advantage No. 5. It provides for the payment by the concessionaire, as exploitation tax, the three percent (3%) of the market value in Caracas of the gold refined. Claimant relies on Mr Rivero’s statement explaining that, as confirmed by the tax payment forms submitted to MIBAM, taxes were paid on the limited amount of gold extracted by the prior owner and as by-product of Claimant’s exploration and development activities.208 Respondent has not disputed Claimant’s statement in that regard. It may be noted that this ground of alleged non-compliance, even if proven, would be disproportionate regarding the sanction of denial of the extension of the term of the Brisas Concession. However, the Tribunal is satisfied that the exploitation tax was regularly paid and that therefore there is no breach of Special Advantage No. 5.
388.
Special Advantages No. 6 and No. 7 refer to the exploitation phase generally; Special Advantage No. 8 refers to manufacturing or refining mineral; Special Advantage No. 9 refers to the transfer of mining technology to the mining industry, promotion of connected sectors, personnel training related to the extracting phase of the concession; Special Advantage No. 11 refers to the protection of natural resources as a consequence only of the process of extracting mineral; Special Advantages No. 12 refers to the constitution of a new company for the purpose of mineral extraction, industrialization and commercialization of extracted minerals contemplated as possible during the extraction of minerals; Special Advantages No. 13 refers to the incorporation of two intern students during the exploitation phase; and Special Advantage No. 14 refers to the bond regarding the above-mentioned Special Advantages. Since all these Special Advantages relate to the exploitation phase of the Brisas Concession, it is necessary to determine whether the Brisas Concession was in the exploration or in the exploitation phase at the time the extension of its term was requested.
389.
In the post-hearing phase, the Parties have debated whether the Phase I Permit, which was the last permit issued to Claimant before the termination of the Brisas Concession, related to exploitation or to exploration. Respondent has characterized the Phase I Permit as relating to "the construction of infrastructure and services for the exploration phase of the Brisas Project"209 while Claimant has contended that, consistent with its request for an "exploitation" AARN,210 the permit was for exploitation.211
390.
The language used by Claimant in its various requests for an AARN is different from the operative language of the Phase I Permit. Claimant had requested (Petitorio) an "Administrative Authorization for the Affectation of Natural Resources for the Phase of Construction of Infrastructure and Services and for the Phase of Gold and Copper mineral exploitation of the Brisas Project" (Autorización Administativa para la Afectación de Recursos Naturales para la Etapa de Construcción de Infrastructuras y Servicios y para la Etapa de Explotación del mineral de Oro y Cobre del Proyecto Brisas),212 while the Phase I Permit refers to an "Authorization to Affect Natural Resources....for the Infrastructure and Services Construction Phase of the Brisas Project for Exploitation and Processing of Gold and Copper Mineral" (Autorización...para llevar a cabo la Etapa de Construcción de Infraestructura y Servicios del Proyecto Brisas para la Explotación y Procesamiento de Mineral de Oro y Cobre),213 where the word Explotación is not mentioned as the object of the Etapa (as in Claimant’s request) but rather as the object of the Proyecto Brisas214 The same language of the Phase I Permit is used by MinAmb’s decision revoking the Permit.215
391.
The different language used by MinAmb when granting the Phase I Permit was likely due to the agreement reached with Claimant at the meeting of 13 February 2007. As recorded by the minutes of that meeting, Claimant had accepted the suggestion that the Project be divided into two phases: "Fase I: Ejecución de Obras Preliminares y Fase II: Construcción de Infraestructura y Explotación"216 The Tribunal is of the view that the division of exploitation into two phases217 had been accepted by Claimant to accommodate MinAmb’s environmental concerns in view of the issuance of the AARN it had repeatedly requested.
392.
However, the decision to divide construction and exploitation into two phases is not determinative of whether Claimant had commenced the exploitation phase under the 1999 Mining Law. Nor is the language used in the Phase I Permit determinative of this issue. For this purpose, the relevant reference point is the definition of "exploitation" provided in the 1999 Mining Law itself. It is to this definition that the Tribunal now turns for evaluating the fulfilment by the concessionaire of its obligations under such Law and the Brisas Mining Title.
393.
Article 58 of the 1999 Mining Law states:

"It is understood that a concession is considered in exploitation when its substances are being extracted from the mines, or when the necessary efforts are made for the unequivocal purpose of obtaining some economic profit from such substances based on their nature and the dimension of the deposit."218

394.
Prof Brewer-Carias explains the effect of Article 58 as follows:

"Exploitation, therefore, is being undertaken not only when the concessionaire is actually digging out minerals from the selected parcels, but also according to Article 58 of the 1999 Mines Law - as it was under the 1945 Mines Law regime (Article 24) - when the concessionaire is doing what is necessary in order to extract minerals, with the unequivocal intention of economically exploiting the concession and in proportion to the nature of the substance and the magnitude of the deposit. Consequently, a concession can be considered as being in exploitation without minerals actually being extracted..."219

395.
Respondent translates the definition of "exploitation" in the 1945 Mining Law (which it says also reflects the 1999 Mining Law) as "the concession is in exploitation when the substances to which the present Law refers are being extracted from it, or when doing what is necessary to achieve its extraction through the construction works that according to the case are appropriate to this end, and provided that it is worked by at least five labourers per day..."220
396.
The Tribunal notes that in Respondent’s view, even if according to both the 1945 and 1999 Mining Laws the concept of "exploitation" is extended to preparatory activities, such activities should be understood as "material" activities unequivocally aimed at extraction.221 In order to support the "materiality" aspect of the activity, Respondent offers a translation of Article 24 of the 1945 Mining Law (as set out in the