• Copy the reference
  • Tutorial video

Final Award

LIST OF MAIN DEFINED TERMS

Term Abbreviation
International Law Commission, Draft Articles on the Responsibility of States for Internationally Wrongful Acts 2001 ILC Articles
International Law Commission, Draft Articles on the Effects of Armed Conflicts on Treaties 2011 ILC Articles
2012 Rules of Arbitration of the International Chamber of Commerce 2012 ICC Rules
Expert Report of Mr A Şeref Acar dated 8 February 2018 (submitted by the Claimants) Acar Expert Report
Witness statement of Mr Mehmet Ercan Anil dated 3 March 2017 (submitted by the Claimants) Anil Witness Statement
The Respondent's Answer to the Request dated 15 June 2017 Answer
Expert Report of Professor Dr M Talat Birgönül dated 5 February 2018 (submitted by the Claimants) Birgönül Expert Report
Witness statement of Mr Ekrem Çalik dated 3 February 2017 (submitted by Claimants) Çalik Witness Statement
Claimants' Post-hearing Submission dated 18 April 2019 Claimants' PHB
"Democratic Federation of Northern Syria" DFNS
Dispute notices by the Claimants (April 2014 – November 2015) Dispute Notices
Expert Report of Mr Serhat Erkmen dated 24 March 2017 (submitted by the Claimants) Erkmen Expert Report
Mr İdris Yamantürk First Claimant
"Free Syrian Army" FSA
Güriş İnşaat ve Mühendislik Anonim Şirketi Güriş or the Fourth Claimant
Al Hasakah Cement LLC Hasakah
Term Abbreviation
Expert Report of Mr Torky Hasan of March 2018 (submitted by the Respondent) Hasan Expert Report
International Court of Arbitration of the International Chamber of Commerce ICC Court
International Court of Justice ICJ
"Islamic State of Iraq and Syria" ISIS
Syrian Law No 10 of 1991 on Investment Incentives Law 10
Most favoured nation MFN
Democratic Union Party (Partiya Yekîtiya Demokrat) PYD
Güriş Raqqa Cement Company Raqqa
The Respondent's Rejoinder dated 29 March 2018 Rejoinder
The Claimants' Reply dated 9 February 2018 Reply
The Claimants' Request for Arbitration dated 5 April 2016 Request
Syrian Arab Republic Respondent or Syria
Respondent's Post-hearing Submission of 16 April 2019 Respondent's PHB
Mr Tevfik Yamantürk Second Claimant
First Expert Report of Mr Ahmad Rudwan Sharabi (submitted by the Respondent) Sharabi First Expert Report
Second Expert Report of Mr Ahmad Rudwan Sharabi dated 26 March 2018 (submitted by the Respondent) Sharabi Second Expert Report
The Claimants' Statement of Claim dated 3 April 2017 SoC
The Respondent's Statement of Defence dated 18 December 2017 SoD
Syrian Pounds SYP
Mr Müşfik Yamantürk Third Claimant
Term Abbreviation
Agreement between the Republic of Turkey and the Syrian Arab Republic concerning the Reciprocal Promotion and Protection of Investments Treaty
Witness statement of Mr Temel Tüylü dated 3 March 2017 (submitted by the Claimants) Tüylü Witness Statement
Convention on the Law of Treaties (Vienna, 1969), 1155 UNTS 331 VCLT
Witness statement of Mr Ümit Yamantürk dated 1 March 2017 (submitted by the Claimants) Yamantürk Witness Statement
Expert Report of Mr Ali Youssef (submitted by the Respondent) Youssef Expert Report
"People's Protection Units" (Yekîneyên Parastina Gel) YPG

 

I. INTRODUCTION

1.
This Final Award is made pursuant to Article 31 of the 2012 Rules of Arbitration of the International Chamber of Commerce (the 2012 ICC Rules), the version in effect at the commencement of this arbitration.

A. The Parties and Legal Representatives

1. The Claimants

2.
The Claimants in this arbitration are as follows:

(i) Mr İdris Yamantürk, a national of Turkey (the First Claimant);1

(ii) Mr Tevfik Yamantürk, a national of Turkey (the Second Claimant);2

(iii) Mr Müşfik Yamantürk, a national of Turkey (the Third Claimant);3 and

(iv) Güriş İnşaat ve Mühendislik Anonim Şirketi, a joint-stock company established under the laws of Turkey4 (Güriş or the Fourth Claimant).5

3.
The First, Second and Third Claimants are the shareholders of Güriş, the Fourth Claimant.6
4.
The Claimants' address is Ankara Caddesi, No 222, Karaoǧlan Mahallesi, 06830, Gölbaşi, Ankara, Turkey.7
5.
Until 23 May 2016, the Claimants were represented in this arbitration by:

Mr Boǧaç Çekinmez
2052, Sokak No 40, 06800, Beysukent
Ankara, Turkey

6.
Since 23 May 2016, the Claimants have been represented in this arbitration by:

Dr Mehmet Karli (mkarli@kabinelaw.com)
Mr Tuvan Yalim (tyalim@kabinelaw.com)
Mr Selim Can Bilgin (scbilgin@kabinelaw.com)
Mr Alp Özzeybek (aozzeybek@kabinelaw.com)
Ms Gülce Keskin (gkeskin@kabinelaw.com)
Ms Özgecan Korkmaz (okorkmaz@kabinelaw.com)
Kabine Law Office
Levent Loft 1
Büyükdere Cad, No 201
D: 68 34394
Levent
Istanbul, Turkey

2. The Respondent

7.
The respondent in this arbitration is the Syrian Arab Republic (the Respondent or Syria).
8.
The Respondent is represented in this arbitration by:

Dr Moussa K Mitry (moussamitry@gmail.com)
Dr Amal Yazaji (amalyazji@gmail.com)
International Law Bureau
Althawara Street
Altayaran Building, 12th floor
PO Box 315, Damascus
Syrian Arab Republic

B. The Arbitral Tribunal

9.
The Tribunal is composed as follows:

(i) The Honorable Charles N Brower of Twenty Essex Chambers, 20 Essex Street, London WC2R 3AL, United Kingdom (cbrower@20essexst.com), nominated by the Claimants on 5 July 2018, following the recusal of Dr Kemal Dayinlarli by the International Court of Arbitration of the International Chamber of Commerce (the ICC Court), and confirmed by the ICC Court on 2 August 2018 pursuant to Article 13(2) of the 2012 ICC Rules.

(ii) Professor Nassib G Ziadé, Suite 701, Park Plaza, Building 247, Road 1704 Block 317, Diplomatic Area-Manama, Bahrain (nziade@ziadearbitration.com), appointed by the ICC Court on behalf of the Respondent on 24 November 2016 pursuant to Article 12(4) of the 2012 ICC Rules.

(iii) Dr Georgios Petrochilos of Three Crowns LLP, 104 avenue des Champs-Élysées, 75008 Paris, France (georgios.petrochilos@threecrownsllp.com), appointed as the President of the Tribunal by the ICC Court on 26 April 2018, following the resignation of Professor Piero Bernardini, pursuant to Article 12(5) of the 2012 ICC Rules.

10.
Further details regarding the constitution of the Tribunal, and the appointment of a Tribunal Secretary, are set out in Section II (Procedural History) below.

C. The Arbitration Agreement

11.

The Claimants have commenced these proceedings relying on Article VII of the "Agreement between the Republic of Turkey and the Syrian Arab Republic concerning the Reciprocal Promotion and Protection of Investments" (the Treaty).8 The Treaty was signed on 6 January 2004 and entered into force on 3 January 2006.9 Article VII of the Treaty (in its English authentic version10) provides as follows:

1. Disputes between one of the Parties and an investor of the other Party, in connection with his investment, shall be notified in writing, including detailed information, by the investor to the recipient Party of the investment. As far as possible, the investor and the concerned Party shall endeavor to settle these disputes by consultations and negotiations in good faith.

2. If these disputes, [sic] cannot be settled in this way within six months following the date of the written notification mentioned in paragraph 1, the dispute can be submitted, as the investor may choose, to:

(a) the International Center [sic] for Settlement of Investment Disputes (ICSID) set up by the "Convention on [the] Settlement of Investment Disputes Between States and Nationals of other States", in case both Parties become signatories of this Convention,

(b) an ad hoc court of arbitration laid down under the Arbitration Rules of Procedure of the United Nations Commission for International Trade Law (UNCITRAL),

(c) the Court of Arbitration of the Paris International Chamber of Commerce,

provided that, if the investor concerned has brought the dispute before the court of justice of the party to dispute and a final award has not been rendered within one year.

3. The arbitration awards shall be final and binding for all parties in dispute. Each Party commits itself to execute the award according to its national law.

In this Award, the Tribunal refers to and relies upon the English text of the Treaty, save where necessary to examine the other authentic versions.

12.

It is not disputed that the Claimants are "investor[s] of the [Republic of Turkey]" within the meaning of Article VII(1) of the Treaty. The Respondent has, however, formulated several other objections to the Tribunal's jurisdiction and the admissibility of the Claimants' claims, which are addressed in Section V.B below.

D. Place and Language of Arbitration

13.
The place of the arbitration is Switzerland (Geneva), as determined by the ICC Court pursuant to Article 18(1) of the 2012 ICC Rules.11
14.
The language of the arbitration is English, as determined by the Tribunal under Article 20 of the 2012 ICC Rules.12

II. PROCEDURAL HISTORY

A. The Pre-hearing Phase

15.
On 5 April 2016, the Claimants submitted their Request for Arbitration (the Request) to the Secretariat of the ICC Court (the Secretariat), nominating Dr Kemal Dayinlarli as an arbitrator.
16.
On 28 April 2016, the Secretariat acknowledged receipt of the Request and confirmed that, pursuant to Article 4(2) of the 2012 ICC Rules, the arbitration was deemed to have commenced on 5 April 2016.
17.
By letter dated 23 May 2016, the Secretariat transmitted a copy of the Request to the Respondent and requested it to file within 30 days its Answer, including its comments on the Claimants' proposals in the Request regarding the appointment of three arbitrators and the place and language of arbitration.
18.
On 25 July 2016, the Secretariat informed the parties that: (i) the Respondent had not submitted its Answer to the Request within the specified time-limit; and (ii) the ICC Court would determine the number of arbitrators under Article 12(2) of the 2012 ICC Rules and the place of arbitration pursuant to Article 18(1) of the 2012 ICC Rules.
19.
By letter dated 8 August 2016, the Secretariat informed the parties that the ICC Court had: (i) decided to submit the arbitration to a tribunal comprising three arbitrators; and (ii) fixed Switzerland (Geneva) as the place of the arbitration. In the same letter, the Secretariat also requested the Respondent to nominate an arbitrator within 15 days from the receipt of that letter.
20.
By its letter of 2 September 2016, the Secretariat informed the parties that the Respondent had not nominated an arbitrator within the time granted to it and that, consequently, the ICC Court would appoint an arbitrator on the Respondent's behalf under Article 12(4) of the 2012 ICC Rules. The Secretariat also indicated that the ICC Court would appoint the President of the Tribunal in accordance with Article 12(5) of the 2012 ICC Rules.
21.
On 24 November 2016, the Secretariat informed the parties that the ICC Court had: (i) confirmed Dr Dayinlarli's appointment as arbitrator upon the Claimants' nomination, pursuant to Article 13(1) of the 2012 ICC Rules; (ii) appointed Professor Nassib G Ziadé as arbitrator on behalf of the Respondent, pursuant to Article 12(4) of the 2012 ICC Rules; and (c) appointed Professor Piero Bernardini as the President of the Tribunal, pursuant to Article 13(4)(a) of the 2012 ICC Rules.
22.
On 13 December 2016, the Claimants submitted an Amendment to the Request: (i) seeking the removal of Güriş Raqqa Cement Company (Raqqa) and Al Hasakah Cement LLC (Hasakah),13 two companies incorporated in Syria, from the list of claimants named in the Request; and (ii) proposing certain amendments to their position in the Request regarding the Tribunal's jurisdiction, the admissibility of the claims, the Respondent's liability, and requests for relief. On 19 December 2016, the Tribunal invited the Respondent to comment on this Amendment, but no such comments were provided.
23.
On 22 December 2016, the Tribunal issued its Procedural Order No 1, determining English to be the language of this arbitration pursuant to Article 20 of the 2012 ICC Rules.
24.
On 30 December 2016, the Tribunal issued its Procedural Order No 2: (i) determining the rules of law applicable to the merits of the dispute, pursuant to Article 21 of the 2012 ICC Rules;14 and (ii) removing Raqqa and Hasakah from the list of Claimants, as requested in the Claimants' Amendment to the Request.
25.
On 10 January 2017, the Tribunal held a case management conference by telephone. In addition to the members of the Tribunal at the time, the following individuals participated in that conference:

(i) For the Claimants : Ms Burçin Seda Ürgen and Ms Berna Abadan (Güriş in-house lawyers); and Dr Mehmet Karli, Mr Tuvan Yalim, Mr Selim Can Bilgin, and Ms Özgecan Korkmaz (Kabine Law); and

(ii) For the Respondent: None.

26.
Following the case management conference (minutes of which were circulated by the Tribunal to the parties on 11 January 2017), the Tribunal issued the Terms of Reference on 12 January 2017 and its Procedural Order No 3 on 16 January 2017. In its Procedural Order No 3, the Tribunal established the procedural rules for the written and oral phases of the arbitration and the Procedural Timetable.
27.
On 26 January 2017, the Secretariat informed the parties that, pursuant to Article 23(3) of the 2012 ICC Rules, the ICC Court had approved the Terms of Reference signed by the Tribunal and the Claimants. In the same communication, the Secretariat also invited the Respondent to sign those Terms of Reference.
28.
Following various attempts to serve the Terms of Reference on the Respondent at the addresses specified by the Claimants, the Tribunal informed the parties on 2 March 2017 that the document had been successfully delivered to the Syrian Consulate in Istanbul.
29.
By letter of 3 March 2017, the Claimants requested a two-week extension of the deadline for submission of their Statement of Claim (the SoC).
30.
On 8 March 2017, the Tribunal—having received no comments from the Respondent on the Claimants' request to extend the deadline for submission of the SoC—issued Procedural Order No 4, granting the Claimants' requested extension and fixing new time-limits for the parties' written submissions.
31.
On 3 April 2017, the Claimants submitted their SoC, together with documentary evidence and the following witness statements and expert report:

(i) Witness statement of Mr Ümit Yamantürk dated 1 March 2017 (Yamantürk Witness Statement);

(ii) Witness statement of Mr Ekrem Çalik dated 3 February 2017 (Çalik Witness Statement);

(iii) Witness statement of Mr Mehmet Ercan Anil dated 3 March 2017 (Anil Witness Statement);

(iv) Witness statement of Mr Temel Tüylü dated 3 March 2017 (Tüylü Witness Statement); and

(v) Expert Report of Mr Serhat Erkmen dated 24 March 2017 (Erkmen Expert Report).

32.
By a letter dated 4 April 2017, the Tribunal wrote to the Syrian Permanent Missions to the UN in New York and Geneva and to the Syrian Consulate in Istanbul, inviting the Respondent to participate in this arbitration proceeding.
33.
By a letter to the Secretariat dated 7 April 2017 (which was received by the Secretariat on 7 May 2017), the Respondent, acting through its appointed counsel, stated "to have been just informed" of the Request, contested the validity of previous notifications to the Respondent, and requested a full set of documents regarding the proceeding.
34.
On 17 and 18 May 2017, the Tribunal welcomed the participation of the Respondent in the proceeding, expressed its view that the Respondent should be granted reasonable time to examine the file, and invited the Claimants' comments.
35.
By letter of 19 May 2017, the Claimants conveyed their agreement that the Respondent should be granted a reasonable extension of time to submit its Statement of Defence.
36.
On 23 May 2017, the Secretariat transmitted the documentation relating to the arbitration proceeding to the Respondent's counsel.
37.
On 25 May 2017, the Tribunal requested the Respondent to communicate views regarding any revisions to the Procedural Timetable resulting from the Respondent's participation in the arbitration.
38.
By its Procedural Order No 5 dated 30 May 2017, the Tribunal amended the Procedural Timetable to eliminate procedural steps that had become unnecessary following the Respondent's decision to participate in the arbitration.
39.
On 31 May and 2 June 2017, the Respondent acknowledged receipt of the Request and the full set of documents exchanged during the arbitration, while contesting the validity of the procedural steps taken in the proceedings before its participation.
40.
On 15 June 2017, the Respondent submitted its Answer to the Request (the Answer), which was received by the Secretariat on 22 June 2017 and transmitted to the parties the following day.
41.
On 30 June 2017, the Tribunal issued Procedural Order No 6, which: (i) granted the Respondent additional time to provide a summary of its position and requested reliefs, for inclusion in an updated version of the Terms of Reference; (ii) decided on a procedure for written submissions on certain jurisdictional issues raised in the Answer, and on the question of a possible bifurcation of these issues; and (iii) amended the Procedural Timetable.
42.
On 22 July 2017, the Respondent submitted a summary of its position and requested reliefs for inclusion in the Terms of Reference.
43.
On 11 August 2017, further to the timetable set out in Procedural Order No 6, the Claimants submitted their "Views on Bifurcation and Answer to Respondent's Pleas". On 19 August 2017, the Respondent submitted its Answer to Claimants' submission of 11 August 2017. On 11 September 2017, the Claimants submitted their Rejoinder to the Respondent's submission of 19 August 2017.
44.
On 11 September 2017, the parties and the Tribunal executed an Addendum to the Terms of Reference, incorporating a summary of the Respondent's position and relief sought by it.
45.
On 25 October 2017, following correspondence with the parties, the Tribunal issued Procedural Order No 7, which established a new Procedural Timetable (requiring as an immediate next step the filing of the Respondent's Statement of Defence (the SoD) on 18 December 2017) and confirmed that the proceeding would not be bifurcated.
46.
On 18 December 2017, the Respondent notified the Tribunal and the Claimants that it had transmitted by courier a hard copy of its SoD. This was accompanied by, among other documents, an expert report from Mr Ahmad Rudwan Sharabi (Sharabi First Expert Report).
47.
On 25 December 2017, the Claimants acknowledged receipt of the Respondent's SoD and sought an extension of time for their Reply because of the Respondent's delivery of its SoD a week later than 18 December 2017.
48.
By Procedural Order No 8 dated 28 December 2017, the Tribunal amended the Procedural Timetable to accommodate the Claimants' requested extension.
49.
On 25 January 2018, following the parties' requests, the Tribunal issued Procedural Order No 9, by which it amended the Procedural Timetable to extend the deadlines for the filing of the parties' remaining pre-hearing written submissions.
50.
On 9 February 2018, the Claimants submitted their Reply (the Reply), together with documentary evidence and the following two expert reports:

(i) Expert report of Professor Dr M Talat Birgönül dated 5 February 2018 (Birgönül Expert Report); and

(ii) Expert report of Mr A Şeref Acar dated 8 February 2018 (Acar Expert Report).

51.
On 27 February 2018, Professor Bernardini informed the parties of his decision to resign as an arbitrator due to health reasons.
52.
On 1 March 2018, the Claimants suggested a mechanism to designate a replacement for Professor Bernardini.
53.
On 5 March 2018, the Respondent submitted to the Secretariat a challenge against Dr Dayinlarli on the grounds that he was a citizen of Turkey, "an enemy government". The Secretariat acknowledged receipt of this challenge the following day, and requested comments from the Claimants and the two other arbitrators.
54.
By a letter dated 7 March 2018, the Respondent indicated that it disagreed with the Claimants' proposed mechanism to replace Professor Bernardini, noting that the replacement of the presiding arbitrator should be attended to after the ICC Court's decision on the Respondent's challenge to Dr Dayinlarli.
55.
By a letter dated 8 March 2018, the Secretariat informed the parties that the ICC Court had accepted Professor Bernardini's resignation pursuant to Article 15(1) of the 2012 ICC Rules; and that, in the absence of an agreement between the parties regarding a method for the nomination of the President of the Tribunal, the matter would be submitted to the ICC Court.
56.
On 9 March 2018, Dr Dayinlarli submitted his comments on the Respondent's challenge. Between 9 and 18 March 2018, the parties exchanged comments regarding the challenge.
57.
On 21 March 2018, the Respondent requested an extension of the deadline for its Rejoinder. The Claimants agreed to such an extension on the following day but argued that the proceeding should not be put on hold until the decision on the challenge was rendered.
58.
On 29 March 2018, the Respondent indicated that it had transmitted by courier a hard copy of its Rejoinder (the Rejoinder). The Rejoinder was accompanied by, among other documents, the following three expert reports:

(i) Second Expert Report of Mr Ahmad Rudwan Sharabi dated 26 March 2018 (Sharabi Second Expert Report);

(ii) Expert Report of Mr Torky Hasan of March 2018 (Hasan Expert Report); and

(iii) Expert Report of Mr Ali Youssef (undated) (Youssef Expert Report).

59.
By a letter dated 29 March 2018, the Secretariat notified the parties that the ICC Court had considered admissible the Respondent's challenge to Dr Dayinlarli but rejected it on the merits.
60.
By a letter dated 27 April 2018, the Secretariat informed the parties that, pursuant to Articles 13(4) and 15(1) of the 2012 ICC Rules, the ICC Court had appointed Dr Georgios Petrochilos as the President of the Tribunal.
61.
On 15 May 2018, the reconstituted Tribunal and the parties held a case management conference to discuss the status of the arbitration and next procedural steps.
62.
On 22 May 2018, in accordance with Article 11(3) of the 2012 ICC Rules, Dr Dayinlarli disclosed a new circumstance relating to his involvement in another unrelated proceeding involving the Claimants.
63.
On 3 June 2018, the Respondent submitted to the Secretariat another challenge to Dr Dayinlarli, based on the recent disclosure. The Secretariat acknowledged receipt of this challenge on 5 June 2018 and invited comments. Dr Dayinlarli provided comments on 11 June 2018.
64.
Following consultation with the parties and based on their agreement, by Procedural Order No 10 dated 18 June 2018, the Tribunal appointed Manish Aggarwal of Three Crowns LLP, New Fetter Place, 8-10 New Fetter Lane, London, EC4A 1AZ, as the Secretary to the Tribunal. Based on further correspondence with the parties, by Procedural Order No 11 dated 22 June 2018, the Tribunal supplemented Procedural Order No 10 so as to clarify that Mr Aggarwal could attend hearings and, upon the Tribunal's invitation, meetings and deliberations, provided always that his presence at meetings and deliberations would be for the sole purpose of supplying materials from the record and similar information as required by the Tribunal.
65.
On 28 June 2018, the ICC Court accepted the Respondent's challenge to Dr Dayinlarli.
66.
On 5 July 2018, the Claimants nominated the Honorable Charles N Brower as arbitrator. On 2 August 2018, pursuant to Article 13(2) of the ICC Rules, the ICC Court confirmed the appointment of Mr Brower.
67.
By Procedural Order No 12 dated 16 August 2018, pursuant to Article 15(4) of the 2012 ICC Rules and based on the parties' agreement, the Tribunal determined that there would not be any repetition of any prior steps of the proceedings before the reconstituted Tribunal. In addition, the Tribunal directed that an oral hearing on jurisdiction and the merits would take place during 17 to 21 December 2018.
68.
On 17 September 2018, following consultation with the parties, the Tribunal indicated that, further to its Procedural Order No 3, the hearing was to be held in Switzerland (Geneva), the place of the arbitration. In the period thereafter, the Tribunal assisted the parties in securing visas for their hearing delegations.
69.
On 13 November 2018, the Tribunal circulated for the parties' review and input a draft Procedural Order No 13 relating to the organisation of the hearing.
70.
On 18 November 2018, the Tribunal sent to the parties a seven-page list of issues, going to jurisdiction, admissibility, and the merits of the case, which it requested the parties to address in advance of the hearing or in the course of it.
71.
On 29 November 2018, the Tribunal held a pre-hearing conference call with the parties, telephonically. In addition to the members of the Tribunal and the Tribunal Secretary, the following individuals attended this conference:

(i) For the Claimants: Dr Mehmet Karli, Mr Tuvan Yalim, Mr Selim Can Bilgin, Ms Gülce Keskin, Mr Alp Özzeybek, and Mr Yusuf Kumtepe; and

(ii) For the Respondent: Dr Moussa Mitry.

72.
On 10 December 2018, based on discussions with the parties at the pre-hearing conference, the Tribunal issued Procedural Order No 13.
73.
On 12 December 2018, the Respondent requested leave to file a witness statement from an unspecified individual, who was claimed to have detailed information about the Claimants' facilities in Ain Issa. Following consultation with the parties, the Tribunal deferred its decision on the admissibility of this statement until the hearing.

B. Hearing

74.
The hearing was held in Geneva, Switzerland between 17 and 21 December 2018. In addition to the members of the Tribunal and the Tribunal Secretary, the following persons attended the hearing:

(i) For the Claimants :
Counsel
Dr Mehmet Karli
Mr Tuvan Yalim
Mr Selim Can Bilgin
Ms Özgecan Korkmaz
Mr Alp Özzeybek
Ms Gülce Keskin

Güris representatives
Mr Musa Yamantürk
Mr Derviş Koyuncu

(ii) For the Respondent :
Counsel
Dr Moussa K. Mitry
Dr Amal Yazaji
Ms Alaa Chahin
Ms Amira Alhussami
Mr Khaled Qaddour Alainyia

Other representatives
Ms Huda Alsawaf Known Douaji (State Counsel)
Mr Waseem Sulaiman (General Establishment of Geology)

75.
During the hearing, the Tribunal heard opening and closing submissions from both parties' counsel and evidence from the following witnesses and experts:

(i) For the Claimants :
Mr Ümit Yamantürk
Mr Ekrem Çalik
Mr Mehmet Ercan Anil
Mr Temel Tüylü
Mr Serhat Erkmen
Dr Talat Birgönül
Mr A Seref Acar

(ii) For the Respondent:
Mr Ahmad Rudwan Sharabi
Mr Ali Youssef
Mr Torky Hasan

76.
At the conclusion of the hearing, both parties confirmed that they had no objections to the arbitration process followed as at that date.15

C. The Post-hearing Phase

77.
On 21 December 2018, following discussions with the parties during the hearing, the Tribunal issued Procedural Order No 14. This set out further procedural steps to be taken by the parties, as well as the timeline for post-hearing submissions and costs submissions.
78.
On 31 December 2018, further to the Tribunal's directions in Procedural Order No 14, the Respondents submitted a witness statement from Mr Jassem Ali Almousa.
79.
On 21 January 2019, the Respondent submitted English and Arabic translations of the Turkish version of Article VII of the Treaty. The Respondent also confirmed that it no longer disputed that the "Agreement between the Government of the Italian Republic and the Government of the Syrian Arab Republic on the Promotion and Protection of Investments" (the Syria–Italy BIT) had been approved by the Syrian Parliament.
80.
On 21 January 2019, the Claimants submitted their English translations of the Turkish and Arabic versions of Article VII of the Treaty. On the same day, the Claimants requested leave from the Tribunal: (i) to submit observations and further documentary evidence in response to the statement of Mr Almousa; and (ii) to comment on the Respondent's English translation of the Turkish version of Article VII of the Treaty.
81.
On 28 January 2019, the Tribunal—after granting the Respondent an opportunity to comment on each of the Claimants' applications of 21 January 2019—directed the parties to comment on each other's English translations of the Turkish and Arabic versions of Article VII of the Treaty. In addition, the Tribunal granted the Claimants leave to submit observations or documentary evidence in response to Mr Almousa's statement.
82.
On 30 January 2019, the Claimants submitted comments on the Respondent's English translation of the Turkish version of Article VII of the Treaty.
83.
On 4 February 2019, the Tribunal noted that the Respondent had not commented on the Claimants' English translations of the Turkish and Arabic versions of Article VII of the Treaty and invited the Respondents to do so by no later than 6 February 2019. In addition, the Tribunal directed the Respondent to submit, by 6 February 2019, either an English translation of the Arabic version of Article VII of the Treaty or to confirm its agreement with the translation submitted by the Claimants. The Tribunal also extended the period for the parties to agree to corrections to the hearing transcript until 15 February 2019. In addition, based on the Respondent's 21 January 2019 communication regarding the Syria–Italy BIT, the Tribunal allowed into the record certain documents submitted by the Claimants at the hearing to establish that BIT's entry into force. Finally, the Tribunal transmitted to the parties for input a draft communication containing questions regarding the status of the Claimants' cement facilities, which the Tribunal proposed to send to the self-proclaimed "Democratic Federation of Northern Syria" (DFNS). This is an entity under the broad auspices of which operate the Democratic Union Party (or PYD), a pro-Kurdish party, and an armed group said to be linked to PYD, the People's Protection Units (or YPG).16 The PYD and YPG are said practically to control the territories in which the Claimants' facilities are located.
84.
On 6 February 2019, the Respondent provided its English translation of the Arabic version of Article VII of the Treaty. After receiving the parties' comments on the draft communication to the DFNS, on 13 February 2019 the Tribunal sent the communication to the individual charged with external affairs at the DFNS, who acknowledged the Tribunal's communication and agreed to assist with its queries.
85.
On 12 March 2019, the Tribunal directed the Respondent to provide its comments, if any, on the Claimants' proposed corrections to the hearing transcripts or identify any further corrections to those transcripts by no later than 18 March 2019. On 13 March 2019, the Respondent confirmed that it would not be providing comments or corrections. The hearing transcripts were finalised on 19 March 2019.
86.
On 25 March 2019, the Claimants requested an extension of the deadline for the filing of post-hearing briefs until 5 April 2019, and also requested leave to introduce additional exhibits and legal authorities into the record.
87.
On 26 March 2019, the Respondent objected to the Claimants' request.
88.
On 28 March 2019, after considering the parties' positions, the Tribunal directed the Claimants to submit only a list of the new documents that it intended to submit, while identifying the relevant factual developments since the hearing or the specific Tribunal questions at the hearing to which those documents pertained.
89.
On 29 March 2019, the Claimants submitted their list of new proposed exhibits and legal authorities.
90.
On 1 April 2019, the Respondent communicated to the Tribunal its objections to the proposed new exhibits and authorities. In addition, the Respondent submitted a list of categories of new documents that it wished to introduce into the record.
91.
On 2 April 2019, the Claimants responded to the Respondent's objections, also objecting in their turn to the new documents identified by the Respondent on 1 April 2019.
92.
On 4 April 2019, the Respondent responded to the Claimants' communication of 2 April 2019.
93.
On 5 April 2019, the Tribunal granted leave to both parties to place in the record the new documents identified by each of them. The Tribunal requested the parties to set out any comments on new documents in their post-hearing submissions. The Tribunal also extended the deadline for post-hearing submissions to 12 April 2019.
94.
On 5 and 6 April 2019, the parties submitted the new documents identified by them.
95.
On 8 April 2019, the Claimants objected to the admissibility of seven of the 14 new documents submitted by the Respondent. On the same day, the Respondent raised objections to the documents submitted by the Claimants, requesting that they be deemed inadmissible or that the Respondent be granted an additional two months to review them.
96.
On 10 April 2019, the Tribunal rejected both parties' applications of 8 April 2019, and directed them to submit their post-hearing submissions by 18 April 2019.
97.
Both parties filed their post-hearing submissions on 18 April 2019, and cost submissions on 6 May 2019.
98.
On 16 May 2019, the Tribunal informed the parties that, despite the Tribunal's requests, the relevant individual at the DFNS had not provided the requested information and that, in the circumstances, the Tribunal had no choice but to proceed on the basis that the requested information would not be forthcoming— whether at all or in a meaningful timeframe—and to determine the relevant issues on the evidence in the record. The Tribunal invited the parties to provide any observations on this matter by 20 May 2019. Neither party submitted such observations.
99.
On 26 June 2019, pursuant to Article 27 of the 2012 ICC Rules, the Tribunal declared the proceedings closed with respect to the matters to be decided in this Award.

D. Advances on Costs

100.
On 23 May 2016, the Secretariat advised the Claimants that, pursuant to Article 36(1) of the 2012 ICC Rules,17 the ICC Secretary-General had fixed the provisional advance on costs at EUR 132,000. This sum was duly paid by the Claimants.
101.
On 8 August 2016, the Secretariat notified the parties that, pursuant to Article 36(2) of the 2012 ICC Rules,18 the ICC Court had fixed the advance on costs at EUR 570,000, which—based on the amount in dispute then—was lower than normal and could be readjusted based on developments in the arbitration. The Claimants defrayed the entirety of the additional sum required.
102.
On 3 August 2017, the Secretariat notified the parties that, pursuant to Article 36(5) of the 2012 ICC Rules,19 the ICC Court had increased the advance on costs to EUR 655,000. The Claimants again defrayed the entirety of the additional sum.
103.
On 19 April 2019, the Secretariat notified the parties that, on 18 April 2019, the ICC Court had increased the advance on costs to EUR 850,000. Following the Respondent's indication of 6 May 2019 that it had "no intention to settle the amount requested", on 7 May 2019 the Secretariat invited the Claimants to pay the Respondent's share. This was paid by the Claimants along with their own share.

E. Time-limit for Rendering of this Award

104.
In accordance with Article 30(2) of the 2012 ICC Rules,20 the ICC Court extended the time-limit for the rendering of the final award under Article 30(1) of the 2012 ICC Rules21 at various stages of the proceedings.22 On 20 June 2020, the Tribunal submitted this Award to the ICC for the Court's scrutiny under Article 33 of the 2012 ICC Rules. On 30 July 2020, the Court approved this Award.

III. FACTUAL BACKGROUND

105.
The factual matrix of this dispute is unusually broad and heavily disputed, involving as it does an ongoing conflict of tragic proportions and staggering complexity. Some of the Claimants' claims required them to plead a broad-ranging case starting from the root causes of the conflict, said to go back to early-2011. The Claimants say that they have practically lost all control, use, and enjoyment of their investments. They blame circumstances of generalized armed conflict that are ultimately the responsibility of the Respondent, either because (i) the conflict is the outgrowth of internal revolt against what the Claimants characterize as the Respondent's harsh suppression of peaceful opposition, or (ii) the Respondent has ceded to Kurdish organizations control over areas in north-eastern Syria where the Claimants' investments are localized.
106.
The Respondent has also addressed these issues in defence. It denies in the strongest terms that the conflict was the result of an internal uprising. Rather, the conflict was brought about by intervention, military and other, by foreign countries, including prominently Turkey. The Respondent also says that, while of course it remains sovereign within the internationally recognized boundaries of the Syrian Arab Republic, the exigencies of conflict have forced its armed forces to retreat temporarily from territories in the north-east of the country. The Respondent denies any endorsement of, collaboration with, or control over Kurdish organizations. On this basis the Respondent says that none of the conduct of such organizations, operating in parts of its territory where the Respondent has no control, can entrain its international responsibility.
107.
The Tribunal is acutely aware that the conflict in Syria is one of the most complex in recent history and that the relevant facts are very closely contested—in these proceedings as in various world fora. As will be seen in Section V.C of this Award, however, the Treaty provisions that are engaged in this case require findings of fact that are discrete and either common ground between the parties or unchallenged by the Respondent. Thus, this Section III is intended to give a mere overview of the factual aspects of the case, reflecting the parties' pleaded positions. It will be clear from the narrative which aspects are common ground between the parties and which are not.

A. Summary of the Claimants' Position

109.
The Claimants assert that they decided to invest in the Syrian cement sector in 2004, based on: (i) an invitation by the Syrian government to Turkish investors; (ii) growth in economic relations between Syria and Turkey, following a political change in Syria in 2000; and (iii) the increased stability of the investment environment in Syria.26
110.
On 7 August 2005, the Claimants applied to the Syrian Supreme Council of Investments in order to benefit from Syrian Law No 10 of 1991 on Investment Incentives (Law 10) in relation to their future investments.27 This application was granted on 29 November 2005.28
111.
The Claimants incorporated Raqqa on 1 February 2006,29 and deposited US$1 million with the Syrian Central Bank shortly thereafter to demonstrate their "seriousness as an investor".30 On 5 June 2007, the Claimants incorporated Hasakah.31
113.
The Claimants say that Syria's stability and security took a turn for the worse early in 2011.38 Protests against the government, which started in March 2011, spread throughout the country.39 By 2012, the protests had turned into violent, armed conflict between the government and numerous opposition groups.40 The Claimants concede that the conflict spread to the areas of their cement facilities only in March 2012.41 They say, however, that their concerns about security and safety compelled them (i) to cease commercial activities at the Raqqa Plant in March 2011 and at the Hasakah Plant in April 2011 and (ii) to cease construction of the Raqqa Factory in June 2011.42 These decisions were taken by Güriş' "high management" in Turkey.43
115.
It is a principal contention of the Claimants that Syria's government intentionally withdrew its armed forces from the areas where Kurdish organizations, now under the umbrella of the DFNS, proclaimed self-governance.50 The Claimants say that the Syrian government has all but openly admitted this. They rely heavily on certain public statements by the President of Syria, Bashar al-Assad, which are said to characterize the Kurds as allies in the struggle against other enemies, notably Islamic groups.51 The Claimants note in that regard that certain civil-administration functions in DFNS-controlled areas are still performed by Syria's government, notably the payment of state pensions, schooling and teachers' salaries, and issuance of various official papers such as passports and civil-status certificates.52 Also, it is undisputed that the Syrian government maintains an official presence in cities, within small "security squares" comprising government offices on which Syria's flag is flown.53 On this basis, the Claimants say that actions and omissions by political or military organizations within DFNS- controlled areas (notably the PYD and the YPG)54 are attributable to the Respondent under international law.55
117.
The Claimants say that their requests for protection to the Syrian Ministries of Foreign Affairs and Economy in August 2013 were left without response.62 Also, in November 2013, the Claimants informed the Al-Yarubiyah Directorate of Free Zones that their office tools and equipment had been stolen or damaged, but again received no response.63 Between April 2014 and 30 November 2015, the Claimants sent various letters to the Respondent invoking their rights under the

Treaty and requesting amicable settlement,64 but once more received no response.65

B. Summary of the Respondent's position

118.
The Respondent rejects the Claimants' allegation that the events of March 2011 triggered a "revolution"66 and denies that the conflict in Syria may be characterised as a "civil war".67 It asserts that Syria has been the victim of a "war" waged by armed groups and terrorists, assisted, financed, and trained by various countries.68 Notably, it is said that "Turkey has been the main cause of the war in Syria" since March 2011,69 and that Turkey "supported, funded and armed men to fight the Syrian Army".70 The Respondent also notes that various efforts it made to resolve the crisis peacefully were rejected by opposition groups and the international community.71
119.
The Respondent confirms—indeed relies for its defence upon the assertion—that it has had "no control of the region where the alleged investments are, since mid-2012",72 but asserts that "the [C]laimants have no access to the alleged investment[s] since 2012 not because [of] the government of Syria and the use of excessive violence [by the Respondent's forces] but for only one reason[:] the imposed war on Syria by the governments of occidental states that pretend to form the [i]nternational community".73 The Respondent claims that the government's armed forces did not freely concede control over the north-eastern territories of the country, but rather lost "many battles" against the "Kurd militias" (which the Respondent says were supported by United States military personnel on the ground), the FSA and ISIS, and were then compelled to withdraw in order to protect civilians in other parts of the country.74 Since the middle of 2012, the Respondent "has had no [effective] sovereignty on the zone where the facilities of the Claimants are",75 and it "is not able to establish any law, rules or order and enforce them in the north east of Syria".76
120.
The Respondent denies that Syria's government co-operates with or controls PYD/YPG.77 It asserts that these "Kurdish militias are considered as terrorist groups by Syria"78 and their conduct is thus not attributable to the Respondent.79 The 2014 "Charter" for the "Rojava" areas in north-eastern Syria in fact asserted broad autonomy and rejected the current constitution of the Syrian Arab Republic (while affirming the territorial integrity of Syria and the status of the Rojava areas as an integral part of it).80
121.
The Respondent also asserts that the Claimants have failed to prove that: (i) "the Respondent committed any act to deprive the Claimants [of] their facilities"; (ii) "the Respondent omitted to act in a way that would have deprived the Claimants [of] the facilities (the Respondent lost control on the northeast and that is not an omission of act[ion]);" and (iii) "the Kurdish militias acted by order of the Syrian army (to interfere in the facilities of the Claimants)".81 According to the Respondent, the Claimants' facilities "are still there, nobody knows if anything is lost or not and how much it is worth", and "[i]f tomorrow Syria regains control and authority all over the north east, the Claimants will have full legal and actual titles to exploit their facilities".82 In connection with this last point, the Respondent asserted that its armed forces would regain control of the relevant areas immediately after United States personnel withdrew, following a change of policy announced in December 2018.83 The Respondent has not informed the Tribunal that this occurred.

IV. THE SCOPE OF THIS AWARD

122.
The Claimants request the Tribunal to grant the following relief:

(a) Find that the Tribunal has jurisdiction over Claimants' claims;

(b) Find that Respondent is liable for the losses of Claimants' losses [sic];

(c) Award damages to Claimants due to the losses suffered from the violations of Respondent: (i) calculated in accordance with the discounted cash flow method, in an amount no less than USD 88,381,126.75; or alternatively (ii) equal to the "sunk costs" of Claimants, in an amount no less than USD 54,690,066.96;

(d) Award interest on all monetary sums awarded, including pre-award and post-award interest;

(e) Order Respondent to pay Claimants the full costs of arbitration, including, without limitation, all arbitrators' fees and costs, all ICC administration fees, reasonable attorneys' fees and other fees and expenses incurred by Claimants in connection with [the] present dispute, including the internal costs expended by Claimants in documenting and presenting these claims, in an amount to be calculated at the conclusion of these proceedings and payable in internationally convertible currency.84

123.
For its part, the Respondent seeks relief to the following effect:

1- The Tribunal has no competence to resolve the dispute.

2- Subsidiar[ily], rejecting the Claim for form default.

3- More subsidiar[ily], rejecting the Claim at [the] substantive level as [it] fails to prove the facts and provided wrong calculation.

4- Ordering the Claimants to pay compensation (to be evaluated by the Arbitrator) to the Respondent for their malicious case by suing the Respondent without valid reason and by introducing wrong facts and arguments, in addition to compensation for the attorney's fees of the Respondent to the value of Seven hundred thousand Euros.

5- Ordering [t]he Claimant[s] to be in charge for [sic] the whole cost of the arbitration.85

124.
The foregoing requests come within the Tribunal's Terms of Reference.86 And as noted at paragraphs 323 et seq, this Final Award addresses all of the relief sought by the parties, though it is unnecessary to deal with all of the parties' arguments (moyens, in terms of Swiss law).

V. ANALYSIS

125.
In developing its reasoning and decisions on the issues considered below, the Tribunal has been ably assisted by the pleadings of the parties, for which the Tribunal records its gratitude. While the Tribunal has carefully considered the many arguments and voluminous evidence presented by the parties, it will not be necessary to address all of them in its analysis.
126.
The Tribunal's analysis is structured in four parts:

(i) The Tribunal starts by recalling the rules governing the arbitration proceedings, its jurisdiction, and the merits of the dispute (Sub-section A).

(ii) The Tribunal then turns to consider the existence, scope, and exercise of its jurisdiction (Sub-section B).

(iii) It then addresses the Respondent's liability for various alleged breaches of the Treaty (Sub-section C).

(iv) The Tribunal turns lastly to the Claimants' compensable harm and the quantum of compensation (Sub-section D).

A. Applicable Laws and Rules

1. The arbitration proceedings

127.
Article 19 of the 2012 ICC Rules provides as follows:

The proceedings before the arbitral tribunal shall be governed by the Rules and, where the Rules are silent, by any rules which the parties or, failing them, the arbitral tribunal may settle on, whether or not reference is thereby made to the rules of procedure of a national law to be applied to the arbitration.

128.
As recorded in paragraph 43 of the Terms of Reference, these arbitration proceedings are governed by:

(i) the mandatory provisions of Chapter 12 of the Swiss Private International Law Statute ("PILS");

(ii) the [2012] ICC Rules;

(iii) [the] Terms of Reference; [and]

(iv) any additional procedural rules that the Parties may agree on or the Arbitral Tribunal may determine in accordance with Article 19 of the ICC Rules after consultation with the Parties.

129.
In relation to point (iv), as already noted in Section II, the Tribunal has issued numerous Procedural Orders and directions, after consultation with the parties.

2. Jurisdiction

130.

It is common ground between the parties that the Tribunal has the power to rule on its own jurisdiction.87 It is also common ground that, the Claimants' claims being formulated under the Treaty, questions pertaining to the Tribunal's jurisdiction must be answered under the terms of the Treaty, in particular Article VII. As with every international treaty, its terms are to be interpreted in accordance with general international law. The relevant rules are codified in Articles 31–33 of the 1969 Vienna Convention on the Law of Treaties (VCLT).

3. The merits of the dispute

131.
Article 21 of the 2012 ICC Rules provides as follows:

1 The parties shall be free to agree upon the rules of law to be applied by the arbitral tribunal to the merits of the dispute. In the absence of any such agreement, the arbitral tribunal shall apply the rules of law which it determines to be appropriate.

2 The arbitral tribunal shall take account of the provisions of the contract, if any, between the parties and of any relevant trade usages.

3 The arbitral tribunal shall assume the powers of an amiable compositeur or decide ex aequo et bono only if the parties have agreed to give it such powers.

132.
In the Amendment to the Request for Arbitration, the Claimants proposed that "first and foremost, the Treaty between Turkey and Syria and relevant rules and principles of international law, and to the extent needed, the contracts between the parties and the relevant rules of Syrian law form the applicable law to the dispute".88 In its Procedural Order No 2 of December 2016, issued at a time when the Respondent was not participating in the proceedings, the Tribunal indicated that it "shall apply to the merits of the dispute the provisions of the Treaty, Syrian law and such rules of international law as may be applicable". This enumeration indicates that the Treaty is of course the Tribunal's starting point and ultimate analytical framework. Operating within that framework, it is for the Tribunal to determine the issues to which Syrian law and general international law may be applicable.
133.
The Respondent has suggested that the Tribunal should "apply the Syrian laws and regulations", as "the law of the host State should be applicable [in] all arbitration process[es]".89 The Tribunal agrees that Syrian law is to be taken into account in respect of a number of issues, as will be seen below. Further, the Tribunal recalls that in matters of international responsibility by way of treaty breach, "[a] party may not invoke the provisions of its internal law as justification for its failure to perform a treaty",90 and "[t]he characterization of an act of a State as internationally wrongful is governed by international law" and "not affected by the characterization of the same act as lawful by internal law".91 These are fundamental rules of international law. Rightly, the Respondent has not taken issue with them.

B. Jurisdiction and Admissibility

134.

This section of the Award examines the following issues relating to the Tribunal's jurisdiction to decide the Claimants' claims and the admissibility of those claims:

(i) whether the Treaty has entered into force;

(ii) if it did, whether the Treaty has been suspended;

(iii) whether the Claimants' claims should be dismissed because of a "default in form", on the grounds that the Claimants are allegedly claiming damages for harm caused to the assets held by two Syrian companies, Raqqa and Hasakah, rather than harm specifically directed to the Claimants' shareholding interests in those two Syrian companies;

(iv) whether the fact that the Hasakah Plant is located in a Free Zone where certain special regulations (notably fiscal) apply means that the Claimants' shareholding in Hasakah, the Syrian company that owns the Hasakah Plant, cannot be said to be an "investment" in Syria within the meaning of Article I(2) of the Treaty;

(v) whether the Claimants properly notified the dispute to the Respondent, and whether the arbitration was commenced more than six months after any such notification, as required by Articles VII(1) and VII(2) of the Treaty, respectively—these being analytically separate issues but nevertheless closely inter-related in the present case and conveniently addressed together;

(vi) whether, in light of the proviso relating to seising the host-State courts in Article VII(2) of the Treaty, the Claimants should have referred the dispute to the Syrian courts and waited for a period of one year before commencing this arbitration; and

(vii) whether the "clean hands" doctrine bars the Claimants from invoking the Treaty's protections.

Each of these issues is addressed in turn below.

1. Whether the Treaty has entered into force

135.

Article X(1) of the Treaty provides as follows:

Each Party shall notify the other in writing of the completion of the constitutional formalities required in its territory for the entry into force of this Agreement. This Agreement shall enter into force on the date of the latter of the two notifications. It shall remain in force for a period of ten years and shall continue in force unless terminated in accordance with paragraph 2 of this Article.

136.
In its Answer, the Respondent alleged that the Claimants had not provided sufficient proof that the States Parties to the Treaty, Syria and Turkey, had either completed the requisite constitutional formalities for the Treaty to enter into force or exchanged written notifications of the completion of such formalities.92 The Respondent did not pursue this objection in its subsequent submissions. In response to a question from the Tribunal at the hearing, the Respondent confirmed that the Treaty did enter into force.93
137.
Although the Respondent is no longer pursuing this jurisdictional objection, the Tribunal, having considered the materials in the record,94 is satisfied in any event that Syria and Turkey notified each other in writing of the completion of the constitutional formalities required in their respective territories for the Treaty's entry into force, and that accordingly the Treaty entered into force on 3 January 2006 in accordance with its Article X(1).
138.
The Tribunal notes further that, at the hearing, the Respondent confirmed that it has not taken any steps to date to denounce the Treaty, nor was it aware of any such steps by Turkey.95 Neither side has informed the Tribunal subsequently of a denunciation of the Treaty by either Syria or Turkey.

2. Whether the Treaty has been suspended

139.
The Respondent has not taken the position in formal diplomatic exchanges that the Treaty is to be regarded as terminated. Nor has the Treaty expired pursuant to the provisions in Article X(1) thereof. Further, although prompted specifically by the Tribunal, the Respondent did not indicate that it had given any notice to Turkey, in writing or otherwise, regarding the suspension of the Treaty, at any point.96
140.
The Tribunal is aware of events in recent months, following the closure of the proceedings, that indicate further deterioration in the relations between Syria and Turkey. While the Tribunal has not been informed by the parties that either of the two States has served a notice of suspension of the Treaty on the other State, it does bear in mind those recent developments in addressing the Respondent's arguments.
141.
The Respondent argues that the Treaty was suspended ipso facto, without notice, as a result of: (i) Turkey's hostility towards Syria, entailing a breach of the principles of economic cooperation and protection of investments on which the Treaty is premised; and (ii) the suspension of diplomatic relations between Turkey and Syria.97 At the hearing, the Respondent explained that the alleged suspension of the Treaty occurred no later than April 2011, when Turkey hosted a meeting of the FSA, an armed opposition group to Syria's government,98 and that since then there have been armed hostilities of varying intensity between Turkey and Syria. As for the legal consequences of the alleged suspension of the Treaty, the Respondent claims that "no claim [under the Treaty] whatever could be heard during the hostility period".99 In simple terms, on the Respondent's case, no obligations under the Treaty, and thus no entitlements on the part of the Claimants, could have arisen after April 2011.
142.
The Tribunal observes that there is no allegation by the Respondent that Turkish nationals or companies are treated as enemy nationals and their property as enemy property under Syrian law. Indeed, the Respondent has confirmed that the Claimants' rights of ownership over their shares remain fully valid and recognized within the Syrian legal order, as noted at paragraph 121 above.

(i) The requirement of written notice of suspension

143.

While Article X(2) of the Treaty contains a provision regarding denunciation, there is no provision in the Treaty concerning suspension. The matter therefore falls to be resolved by application of general international law. The question is whether any of the circumstances invoked by the Respondent—the occurrence of armed conflict/hostilities or the suspension of diplomatic relations between Turkey and Syria—is of itself capable of suspending the Treaty, without notice to that effect. In the Tribunal's view, the answer is in the negative.

144.
The Tribunal notes at the outset that Syria is a party to the VCLT but Turkey is not. However, both sides accept that the relevant provisions of the VCLT reflect customary international law and are applicable in the relations between Turkey and Syria.100 Under Articles 65(1) and 67(1) of the VCLT,101 suspension of the Treaty would require Syria to give Turkey written notice of its intention to suspend the Treaty.102 However, as noted above, no such notice was given by Syria at any point.103

(ii) No ipso facto suspension in present circumstances

145.
Although the absence of notice is dispositive of the Respondent's argument, the Tribunal is not persuaded in any event that the Treaty may be said to have been suspended ipso facto.
146.
The Tribunal considers that the contemporary customary international law rule on the impact of armed conflict on treaties is accurately codified in Article 3 of the 2011 Draft ILC Articles on the Effect of Armed Conflict on Treaties (the 2011 ILC Articles). This provides, in relevant part, that the "existence of an armed conflict does not ipso facto terminate or suspend the operation of treaties as between State Parties to the conflict". As may be seen in the sources cited by the ILC in support of this provision, Article 3 reflects the predominant State practice and scholarly authority.104 "Armed conflict" in the 2011 ILC Articles means "a situation in which there is resort to armed force between States or protracted resort to armed force between governmental authorities and organized armed groups".105 This characterization applies to the situation in Syria. It is of no moment in that regard if the situation is to be classified as an "international" armed conflict (as the Respondent contends) or a "non-international" armed conflict (as the Claimants contend).
147.
The effect of the general rule in Article 3 of the 2011 ILC Articles is that a further inquiry is necessary. As noted in the ILC's commentary, "in principle, the first step of the inquiry should be to establish whether the treaty so provides [ie, for its continued operation or otherwise], since it will, depending on the terms of the provision and its scope, settle the question of continuity".106 Article 4 of the 2011 ILC Articles thus provides that "[w]here a treaty itself contains provisions on its operation in situations of armed conflict, those provisions shall apply". The relevant treaty provisions are of course subject to the normal rules of treaty interpretation. There is no requirement that they should expressly stipulate that they operate in situations of armed conflict.107
148.

Turning to the Treaty, it does not contain a general provision authorizing derogation at times of armed conflict. To the contrary, several of its provisions indicate that the Treaty is intended to operate in situations of armed conflict. In particular, the "full protection at all times" standard in Article II(2)108 and the "war losses" clause in Article IV(3)109 recognize that the Treaty will continue to apply during times of armed conflict. Article IV(3) refers to "war", "insurrection", and "civil disturbance", thus capturing both inter-State and internal forms of conflict; and it makes no distinction or qualification for the event that the conflict may arise between the two States Parties, rather than between a State Party and a third State.110 These are important provisions which cannot be ignored in the present analysis.

149.
This conclusion is further supported by considering the factors relevant in ascertaining a treaty's susceptibility to apply at times of armed conflict. In that regard, Article 6 of the 2011 ILC Articles refers "to all relevant factors, including: (a) the nature of the treaty, in particular its subject matter, its object and purpose, its content and the number of Parties to the treaty...". An Annex to the Articles contains an "indicative list of treaties" whose subject-matter "involves an implication that they continue in operation, in whole or in part, during armed conflict".111 The list includes "[t]reaties of friendship, commerce and navigation and agreements concerning private rights". Bilateral investment treaties are, of course, a modern-day evolution of friendship, commerce and navigation treaties. The ILC also specifically refers to "bilateral investment treaties" as falling within the scope of "agreements concerning private rights".112 The Tribunal respectfully agrees with the ILC's approach, considering it to be consistent with other rules of general international law which protect private rights at times of uncertainty or dispute in international relations, such as the absence of international recognition or changes in boundaries (as the Tribunal indicates at paragraph 158 below).
150.
There is therefore, at the very least, a presumption that the Treaty did continue being in effect after April 2011. This presumption could be rebutted if the Treaty's provisions made it clear that the Treaty was intended to be suspended in periods of armed conflict. However, as discussed in paragraph 148 above, several provisions in the Treaty indicate, to the contrary, the States Parties' intent that it continue to apply at times of armed conflict.

(iii) Suspension of diplomatic relations immaterial

151.
The Tribunal is also unable to agree with the Respondent's suggestion that its suspension of diplomatic relations with Turkey entailed an ipso facto suspension of all treaties between the two States.113
152.
As Article 63 of the VCLT provides, "[t]he severance of diplomatic or consular relations between parties to a treaty does not affect the legal relations established between them by the treaty except insofar as the existence of diplomatic or consular relations is indispensable for the application of the treaty". Here, the Respondent did not assert that (and in any event it is difficult to see why) the existence of diplomatic or consular relations between Turkey and Syria is indispensable for the application of the Treaty.
153.

A well-known illustration of the application of the principle reflected in Article 63 of the VCLT relates to the 1955 Treaty of Amity, Economic Relations, and Consular Rights between the United States and Iran. This treaty has been held by the International Court of Justice (the ICJ) to have continued in force despite the breakdown in diplomatic relations between the two countries. As the ICJ explained in the first of a series of cases under this treaty,114United States Diplomatic and Consular Staff in Tehran :

The very purpose of a treaty of amity, and indeed of a treaty of establishment, is to promote friendly relations between the two countries concerned, and between their two peoples, more especially by mutual undertakings to ensure the protection and security of their nationals in each other's territory. It is precisely when difficulties arise that the treaty assumes its greatest importance, and the whole object of Article XXI, paragraph 2, of the 1955 Treaty was to establish the means for arriving at a friendly settlement of such difficulties by the Court or by other peaceful means. It would, therefore, be incompatible with the whole purpose of the 1955 Treaty if recourse to the Court under Article XXI, paragraph 2, were now to be found not to be open to the Parties precisely at the moment when such recourse was most needed. Furthermore, although the machinery for the effective operation of the 1955 Treaty has, no doubt, now been impaired by reason of diplomatic relations between the two countries having been broken off by the United States, its provisions remain part of the corpus of law applicable between the United States and Iran.115

(iv) The Respondent's reliance on a decision of the Eritrea-Ethiopia Commission

154.
The Tribunal has also carefully considered the decision of the Eritrea-Ethiopia Claims Commission relied upon by the Respondent in support of its argument for an ipso facto suspension of the Treaty.116 In the Tribunal's view, that decision (which pre-dates the 2011 ILC Articles) does not advance the Respondent's case.
155.
In that case, the treaty in question was a 1993 Protocol between Eritrea and Ethiopia under which Ethiopia had undertaken to pay pensions to former Ethiopian State employees who, following Eritrea's independence, had become Eritrean nationals and residents. The Claims Commission had to consider the impact that the 1998-2000 armed conflict between the two States had on Ethiopia's obligations under the Protocol. After noting that "modern doctrine does not provide settled guidance on significant points" related to this issue, the Commission observed that "[t]he parties' presumed intent is generally seen as a key factor in determining the treaty's wartime status".117 It acknowledged that, by their terms, some treaties clearly apply during hostilities (citing as examples the Hague Regulations and the 1949 Geneva Conventions).118 It also recognized that the "nature and purpose" of some treaties may "reveal an intention that the treaty continues to operate" (citing as an example "treaties confirming private rights to land").119 As for the 1993 Protocol, the Commission held that when "the intention to maintain a treaty in operation during hostilities is not plainly apparent from the text or the surrounding circumstances", then the "parties should be presumed to intend that such treaties should be at least suspended during the hostilities".120
156.
As already noted at paragraph 148 above, the present Treaty does in fact make it "plainly apparent" that it continues to operate at times of armed conflict.
157.
In addition, the 1993 Protocol which the Commission considered had a fundamentally different nature from the present Treaty. In that regard, the Commission concluded that the two Contracting States would not have intended for one of them to continue to pay State official/employee pensions to nationals of the other during a period of armed conflict. This obligation was intimately linked to Ethiopia's statehood—the very thing that the armed conflict imperilled.
158.

By contrast, the Treaty protects investors' economic rights, in essence property rights, which in principle—as the Eritrea-Ethiopia Claims Commission indeed recognized—transcend changes in sovereignty or statehood.121 The States Parties' obligations to promote and protect such rights as qualifying "investments" under the Treaty are not inexorably contingent upon the absence of armed conflict between the States Parties. The authority adduced and codified by the ILC bears this out clearly, as already noted above.

159.
For the foregoing reasons, the Tribunal concludes that the Treaty was not suspended ipso facto.
160.
For the sake of completeness, the Tribunal notes that, in its written pleadings, the Respondent had also argued that it had (tacitly or constructively) suspended the Treaty as a countermeasure against conduct by Turkey that the Respondent alleged was internationally wrongful.122 However, at the hearing, the Respondent confirmed that it was no longer relying on the doctrine of countermeasures as a foundation for the suspension of the Treaty.123 Accordingly, this issue does not arise for consideration.

3. Whether the Claimants' claims should be dismissed for "default in form"

161.
The Respondent contends that the Claimants' claims should be rejected because they are predicated on harm caused to the assets held by the two Syrian companies, Raqqa and Hasakah, rather than harm specifically directed to the Claimants' shareholding interests in those Syrian companies.124 The Respondent characterizes this as a "default in form", which the Tribunal understands to mean that the named Claimants do not have standing to pursue the claims presented.
162.
In response, the Claimants contend that: (i) their protected investments include their shares in the two Syrian companies; (ii) the harm allegedly suffered by the Claimants includes "loss" of these shares; and (iii) they "quantify the damages by calculating the value of the only enterprises run by these companies, which is an accurate reflection of the value of the companies, and thus, Claimants' shares in these companies".125 The Claimants assert that their claims are, therefore, not for "damages, compensation and returns for somebody else" as the Respondent contends, but for the Claimants themselves.126
163.
The Tribunal notes that all of the claims presented by the Claimants are based on the Treaty provisions setting out obligations owed to qualifying "investors", "investments", or both.
164.

Article I(1) of the Treaty defines an "investor" in the following terms:

The term "investor" means:

(a) natural persons deriving their status as nationals of either Party according to its applicable law,

(b) corporations, firms or business associations incorporated or constituted under the law in force of either of the Parties and having their headquarters in the territory of that Party.

165.

Further, Article I(2) of the Treaty defines an "investment", in relevant part, as follows:

The term "investment", in conformity with the hosting Party's laws and regulations, shall include every kind of asset in particular, but not exclusively:

(a) shares, stocks or any other form of participation in companies,

...

The said term shall refer to all direct investments made in accordance with the laws and regulations in the territory of the Party where the investments are made...

166.
There is no dispute that the First, Second and Third Claimants are natural persons of Turkish nationality, and that the Fourth Claimant is a company incorporated and headquartered in Turkey.127 Accordingly, all Claimants satisfy the Treaty definition of "investor" in Article I(1). Nor does the Respondent contest that the shares (directly) held by the Claimants in the two Syrian companies, Raqqa and Hasakah, also qualify as "investments" for the purposes of Article I(2) of the Treaty. Moreover, by virtue of their being qualifying "investors" with protected "investments", the Claimants are entitled under Article VII of the Treaty to bring to arbitration "[d]isputes... in connection with [the Claimants'] investment" against the Respondent.128
167.
The Respondent's objection is essentially that a shareholder's harm from measures/acts directed (primarily or exclusively) at the company is harm actionable only by the company, not the shareholder.129 The Tribunal is, however, not persuaded that this objection—which has been rejected by a multitude of investment-treaty tribunals130—is legally sound. As one of the many decisions on the issue put it, "modern investment treaty arbitration does not require that a shareholder can only claim protection in respect of measures that directly affect shares in their own right, but that the investor can also claim protection for the effect on its shares by measures of the host state taken against the company".131 In the Tribunal's view, if the Respondent's objection were accepted, the protections afforded by the Treaty to "shares, stocks or any other form of participation in companies" would be vanishingly limited.
168.

As other tribunals also have acknowledged, the reality is that foreign investment is typically effected through locally-incorporated companies, which often are operating companies; and as a result, more often than not, measures ultimately affecting the shareholders' interests are immediately directed at the local companies. It is infrequently the case that shareholders' rights such as management rights and an entitlement to dividends will have been targeted per se. To limit investment-treaty protection to such rare cases appears to this Tribunal to reduce effet utile without sound justification. The argument that the object of measures directed at a company is something other than the investors' shares rests on the premise that the distinction between shareholder rights and companies' rights under customary international law must be transposed into investment treaties. And that assumption further assumes that investment treaties are, on this critical point, but a codification of customary international law. Neither of these assumptions appears justified to this Tribunal. As the ICJ has recognized, investment treaties may regulate matters differently.132 Indeed, one would think that if States were happy to rest on customary international law, there would be little point in entering into investment treaties.

169.
For the above reasons, the Respondent's complaints regarding "default in form" do not affect the Tribunal's jurisdiction to hear the Claimants' claims concerning harm they allege to have suffered in respect of their shareholding interests.
170.
The Tribunal also notes that the harm which the Claimants have suffered is not simply a reduction in the economic value of their shares. As will be seen at paragraphs 295 et seq below, they have been deprived of effective control, use, and enjoyment of their shareholdings.

4. Whether an investment in a Syrian Free Zone company is covered by theTreaty

171.

The Respondent contends that the Claimants' investments in the Al-Yarubiyah Free Zone may not be characterized as an "investment" under the Treaty,133 because: (i) Article IX of the Treaty (quoted at paragraph 174 below) requires an "investment" to be "qualified so by the Syrian law and regulations";134 (ii) the Hasakah Plant, which was established in the Al-Yarubiyah Free Zone, does not fulfil the criteria for an "investment" under Syrian law; and (iii) the Al-Yarubiyah Free Zone is "legally considered as not part of... Syria" and has "never been subject to [i]nternational [i]nvestment [l]aw".135 In its Rejoinder, the Respondent indicated that it "is not challenging the Tribunal's ratione materiae [jurisdiction] over the Yaroubia project, but [seeking to] prov[e] that the activities in the free zone could not be [the] subject of the promotion and protection o[f] investment".136

172.
The Claimants retort that: (i) their assets qualify as "investments" under the definition in Article I(2) of the Treaty; (ii) Article IX of the Treaty relates to the legality of an investment activity under the laws of the host State, rather than allowing for the host State's legal framework to define what constitutes an "investment" within the meaning of the Treaty; and (iii) the Al-Yarubiyah Free Zone is legally a part of Syria within the meaning of Article I(4) of the Treaty.137
173.
The Tribunal agrees with the Claimants.
174.
As discussed at paragraph 166 above, the Claimants' shareholding interests in Hasakah qualify as "investments" within the meaning of Article I(2) of the Treaty. Article IX of the Treaty does not alter that conclusion. It provides in material part that the Treaty applies to "investments in the territory of one Party, made in accordance with its national laws and regulations, by investors of the other Party...". The key words are "made in accordance with", which are placed in a parenthetical sentence. They serve to exclude from the scope of the Treaty rights and interests which come within the terms of Article I(2) as covered "investments" but are in contravention of the host State's law. Article IX therefore serves as a requirement of lawfulness. It is not a general renvoi to domestic laws/regulations which may define "investments" for various purposes of internal law. In that regard Article IX merely reiterates Article I(2), which also provides that covered investments must be made "in conformity with the hosting [State] Party's laws and regulations" and "in accordance with the laws and regulations in the territory of the Party where the investments are made". By contrast, if Article IX served to define covered "investments" by mere cross-reference to internal law, as the Respondent argues, then the definitions set out in Article I(2) and its five sub-paragraphs would hardly have any effet utile.
175.
It is unnecessary in this Award to catalogue the circumstances in which Article IX may be engaged. What matters is that Article IX is not engaged in the present case. There is no allegation by the Respondent that the Claimants' investments in the Al-Yarubiyah Free Zone violated Syrian law in any way.
176.
Further, the notion of "territory" in Article I(2) of the Treaty is defined in Article I(4). This is couched in specific, comprehensive terms. These make it plain that, in respect of the Syrian Arab Republic, the Treaty applies to its "territory" without any qualification or exception, as well as maritime areas in which Syria exercises sovereign rights relating to natural resources.138
177.
There can be no question that the Al-Yarubiyah Free Zone is within the international borders of Syria. In establishing and regulating the Free Zone, Syria did so à titre de souverain, to the exclusion of any other State. That is the only relevant point for present purposes. What regulations—special, limited, or otherwise—Syria chooses to put in place in different parts of its territory is a matter for Syria, as sovereign in respect of all these parts. And while such regulations may be relevant to how the Treaty's provisions apply in various specific contexts, there is no suggestion that shareholder rights in Free Zone companies are any different than in any other part of Syria.

5. Sufficiency of dispute notice as starting point for the six-month period under Article VII

178.
The Respondent contests that the Claimants validly served on it notice of the present dispute. On this basis the Respondent goes on to say that the six-month waiting period between a notice of dispute and commencement of arbitration was not complied with.
179.
To recall, Article VII(1)–(2) of the Treaty (in its English text) provides, in relevant part:

1. Disputes between one of the Parties and an investor of the other Party, in connection with his investment, shall be notified in writing, including detailed information, by the investor to the recipient Party of the investment. As far as possible, the investor and the concerned Party shall endeavor to settle these disputes by consultations and negotiations in good faith.

2. If these disputes, [sic] cannot be settled in this way within six months following the date of the written notification mentioned in paragraph 1, the dispute can be submitted, as the investor may choose, to [arbitration]... (emphasis added).

180.
The Claimants assert as follows:

(i) In the period between April 2014 and 30 November 2015, they submitted to the Syrian Consulate in Istanbul six dispute notices addressed to various Syrian authorities, including the Syrian Ministry of Foreign Affairs and the Syrian Ministry of Economy (the Dispute Notices).139

(ii) The Syrian Consulate served both as the consular and diplomatic mission of the Syrian Arab Republic, and was the Respondent's only representative in Turkey at the relevant times.140 Thus, the Dispute Notices served as a written notification of the dispute to the Respondent under Article VII(1) of the Treaty.

(iii) The Claimants waited for a period of two years after the first Dispute Notice, and a period of approximately five months after the sixth Dispute Notice, before submitting their Request for Arbitration on 5 April 2016.141

181.
For its part, the Respondent argues as follows:

(i) The letters by the Claimants to the Hasakah Free Zones Authority on 12 November 2013142 and to the Ministry of Economy and Trade on 11 March 2014,143 which were sent before the Dispute Notices, were not "legally valid letters sent to the Respondent as per Article VII/1" of the Treaty. Each of these two bodies "has a legal personality independent from the legal personality of the Respondent" and "do[es] not represent the Syrian Arab Republic".144

(ii) The ICC Secretariat's service of the Request for Arbitration at the Respondent's addresses specified in that Request—namely, Syria's Permanent Missions to the UN (New York and Geneva), Syria's Embassy in Russia, the Syrian Consulate in Istanbul, and the Presidential Palace in Damascus—was not valid because: (a) the Permanent Missions represent the Respondent only at the UN;145 (b) the Syrian Embassy in Russia and the Syrian Consulate in Istanbul were not required under the Vienna Conventions on Diplomatic and Consular Relations to accept service of the Request and transmit it to the Syrian Government: only the Syrian Consulate in Paris, where the "ICC is based", had the authority to do so;146 and (c) the address given in the Request for the Presidential Palace was "incomplete and inaccurate".147

182.
In response to the Respondent's arguments, the Claimants say as follows:

(i) "Diplomatic missions and consular posts are the representatives of th[e] [sending] state in the receiving state".148

(ii) There are no geographical restrictions on the authority of consulates; and as consulates are in constant contact with authorities in their sending state, they can be expected to make the central government authorities aware of notifications addressed to them.149

(iii) The address of the Presidential Palace specified in the Request was accurate, and there is no basis to argue that DHL—a reputable international courier service—had provided misleading information to the ICC in confirming delivery of the Request at that address.150

183.
The Tribunal notes at the outset that the Respondent's objections do not call into question whether the Respondent is amenable to arbitration under Article VII(1) of the Treaty, which encompasses "[d]isputes between one of the Parties and an investor of the other Party". Rather, the Respondent's objections go to the question whether proceedings have been validly commenced by the Claimants and the Tribunal has been validly seised of the dispute.
184.
Starting with the service of a dispute notice under Article VII(1), the Treaty does not stipulate how such service is to be effected. Nor are there any specific provisions in the 2012 ICC Rules or general international law. In practice, service on States in investment-treaty cases is effected through various State organs or even, on occasion, State agencies.151 In the Tribunal's view, a notice will be validly served if service is effected in a manner that meets the purpose of informing the recipient State of the investor's complaint and the action expected of the State. It is thus sufficient for an investor/claimant under the Treaty to serve a dispute notice on a State organ or official, acting in a relevant official capacity, who can reasonably be expected to convey it to the government, enabling it to seek to resolve the complaint "by consultations and negotiations in good faith". This is a practical requirement, rather than a formal or rigid one. The question whether the requirement has been satisfied calls for an assessment of the circumstances of each case.
185.
As for the service of the Request for Arbitration, the 2012 ICC Rules provide in Article 4(5) that "[t]he Secretariat shall transmit a copy of the Request and the documents annexed thereto to the respondent for its Answer to the Request once the Secretariat has sufficient copies of the Request and the required filing fee". Further, Article 3(2) of the 2012 ICC Rules stipulates that: (i) "[a]ll notifications or communications from the Secretariat... shall be made to the last address of the party or its representative for whom the same are intended, as notified either by the party in question or by the other party"; and (ii) "[s]uch notification or communication may be made by delivery against receipt, registered post, courier, email, or any other means of telecommunication that provides a record of the sending thereof".
186.
Within this analytical framework, the Tribunal is unable to accept the Respondent's objections, for several reasons.
187.
First, the Respondent's contestation of the validity of the Claimants' letters to the Hasakah Free Zones Authority of 12 November 2013 and to the Ministry of Economy and Trade of 11 March 2014 need not be resolved. The Claimants have not placed reliance on these two letters—which, again, predate the Dispute Notices—to establish that they satisfied the notification requirement in Article VII(1) of the Treaty. In any event, Syria's Ministry of Economy and Trade is, of course, a State organ in the central government, one that is closely linked to the subject-matter of the Treaty, and one that reasonably can be expected to convey such communications further within the government.
188.
Secondly, the Tribunal notes that the Respondent does not expressly object to the validity of service of the Dispute Notices on the Syrian Consulate in Istanbul, on which the Claimants rely to establish compliance with Article VII(1) of the Treaty.
189.
To the extent that the Respondent's objection to the service of the Request for Arbitration on the Syrian Consulate in Istanbul may be read as applying also to the service of the Dispute Notices, the Tribunal considers that such service did meet the requirements in Article VII(1) of the Treaty. The Respondent accepts that, as a matter of principle, service via its Consulates is valid.152 Indeed, it is part of the consular functions to "protect[] in the receiving State the interests of the sending State" and to "further[] the development of commercial... relations between the sending State and the receiving State".153 Moreover, consulates operate under the authority of the Ministry of Foreign Affairs of their sending State, and are in close, regular contact with that Ministry. The Tribunal therefore considers that one could reasonably expect that the Dispute Notices would ultimately be transmitted onwards to the Syrian Ministry of Foreign Affairs (to which, among others, they were addressed on their face). Even if the Respondent had argued or established that such onward transmission did not occur in fact— which the Respondent has not done in any event—that would be of no moment. An investor would be entitled to assume that onward transmission would occur in the regular course.
190.
Accordingly, the Tribunal also holds that the six-month period specified in Article VII(2) of the Treaty started running from the date of the first Dispute Notice (ie, 25 April 2014). It follows that the Claimants' commencement of this arbitration on 5 April 2016 did not fall foul of the six-month period under Article VII(2).
191.
Finally, the Respondent's objections to the validity of the ICC Secretariat's service of the Request for Arbitration on Syria's Permanent Missions to the UN in New York and Geneva, the Syrian Embassy in Russia, and the Syrian Consulate in Istanbul also are unavailing. The Respondent's argument is that, because the ICC is headquartered in Paris, internal Syrian regulations mean that only the Syrian Consulate in Paris could properly have accepted service of the Request. Accepting for argument's sake that the effect of the Syrian regulations is as contended by the Respondent, compliance with them was exclusively a matter for the Syrian authorities. Thus, it was incumbent on these authorities to refuse service or return the Request to the ICC, thereby putting the ICC on notice that service had not been effected. That they failed to do so reasonably created an appearance of regularity of the service from the perspective of the ICC. That apparent regularity is dispositive of the Respondent's argument.
192.
As to the service effected at the Presidential Palace in Damascus, the Tribunal has been given no reason to believe that DHL provided misleading information to the ICC in confirming delivery at that address.
193.
For the foregoing reasons, the Tribunal rejects the Respondent's objections regarding validity of service and compliance with the six-month period, respectively under paragraphs (1) and (2) of Article VII of the Treaty.

6. Whether the Claimants should have first referred the dispute to the Syriancourts

194.
The English text of Article VII(2) of the Treaty gives access to arbitration "provided that, if the investor concerned has brought the dispute before the court of justice of the party to dispute and a final award has not been rendered within one year".
195.
The Respondent's position is that: (i) the recourse to local courts envisaged in the "provided that" clause of Article VII(2) is mandatory; and (ii) the Claimants should therefore have brought the present dispute before Syrian courts first, and only in the event that the courts had not issued a final decision within one year could the Claimants have pursued arbitration.154
196.

For their part, the Claimants make four arguments:

(i) The use of the double conditional in the Article VII proviso (ie, "provided that" and "if") confirms that recourse to local courts is merely optional.155

(ii) Even if the Tribunal were to interpret the proviso to Article VII(2) as mandatory, recourse to the courts in the present case would have been futile.156

(iii) Various other investment treaties concluded by the Respondent do not compel referral to domestic courts as a precondition to arbitration, thus affording more favourable treatment which may be availed of by the Claimants pursuant to Article III(2) of the Treaty.157

(iv) In any event, prior recourse to local courts concerns "the issue of the admissibility of claims and the Tribunal must find the present claims admissible since the Claimants cannot be rightfully expected to seek redress in the Syrian local courts at this stage".158

197.
In response, the Respondent relies on certain Syrian court judgments as evidence for the contention that its courts are functional, do make decisions in favour of foreign parties, and therefore recourse to the courts cannot be dismissed as manifestly futile.159 The Respondent also asserts that the most favoured nation (MFN) clause in Article III(2) of the Treaty cannot be invoked to avoid the requirement to resort to local courts.160
198.
The primary issue for the Tribunal's determination is whether Article VII(2) of the Treaty compelled the Claimants to refer this dispute to the Syrian domestic courts before commencing this arbitration. This issue has been characterized as going to the admissibility of the Claimants' claims in this arbitration.161 The other issues debated between the parties arise only if the Claimants were indeed required to have recourse to Syrian courts.
199.
The answer to this question turns on the proper meaning of Article VII(2) and is therefore one of treaty interpretation. The parties agree that the relevant rules of general international law are codified in the VCLT, specifically Articles 31-32.162

(i) The English-language version of the Treaty prevails

200.
The Tribunal starts its analysis by recalling that the Treaty was entered into in "the Turkish, Arabic and English languages", all of which versions are "equally authentic".163 The Treaty also provides that "[i]n case of any conflict of interpretation the English text shall prevail".164 In order to establish whether there is in fact such a conflict, the Tribunal first considers the text of Article VII(2) in each of the three authentic versions.
201.
The full text of Article VII(2) in the English-language version of the Treaty is set out at paragraph 11 above. The part material for present purposes reads as follows:

2. If these disputes, [sic] cannot be settled in this way within six months following the date of the written notification mentioned in paragraph 1, the dispute can be submitted, as the investor may choose, to:

...

(c) the Court of Arbitration of the Paris International Chamber of Commerce,

provided that, if the investor concerned has brought the dispute before the court of justice of the party to dispute and a final award has not been rendered within one year.

202.
As for the Turkish-language text of Article VII(2), the parties rely on conflicting English translations, as set out below (with the key portion of the text italicized):

(i) The Claimants' English translation : "If disputes cannot be settled in this way within six months following the date of the written notification mentioned in the first paragraph; and in the event that the investor concerned has brought the dispute before the courts of justice of the party to dispute and a final award has not been rendered within one year, the dispute can be submitted to the forums below as the investor may choose...".165

(ii) The Respondent's English translation : "If disputes are not resolved in this way for six months from the date of the written notification as outlined in paragraph (1), the disputed case shall be referred to the authorized court in the country hosting the investment, in case no decision is issued by this court for one year, the disputed case according to the investor's preference, shall be referred to [any one] [of the arbitration fora specified in Article VII(2)(a)-(c)]".166

203.
The Claimants' English translation is more reliable than the Respondent's, as the latter is an indirect translation of the Turkish original text into Arabic and thence to English.167 Accordingly, the Tribunal will rely on the Claimants' English translation.
204.
As for the Arabic-language text of Article VII(2), there is no material difference between the parties' respective English translations,168 which are set out below:

(i) The Claimants' English translation : "Provided that the concerned investor has raised the dispute before the courts of justice of the party who is a party in the dispute and that a final award has not been issued in respect of the dispute within a year".

(ii) The Respondent's English translation : "Provided the concerned investor has referred the dispute first to the courts of justice at the country that is a party to the dispute, and no final award has been issued within one year".

205.
The Arabic and Turkish texts address the issue of referral to domestic courts in different and conflicting terms. The use of the "in the event" phrase in the Turkish text indicates that referral of the dispute to the host State's courts is optional. By contrast, the Arabic version is clear that such referral is mandatory, as indeed the Claimants concede.
206.
Given this "conflict of interpretation" between the Turkish and Arabic authentic texts, and in light of the Treaty provision that in such an eventuality "the English text shall prevail", the Tribunal focuses on the interpretation of the authentic English text of Article VII(2).

(ii) The rules of the Vienna Convention on the Law of Treaties

207.
As already noted, it is common ground that the interpretative process is to be conducted in accordance with the rules of the VCLT. Article 31 of the VCLT sets out the "general rule" of treaty interpretation in the following terms:

1. A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.

2. The context for the purpose of the interpretation of a treaty shall comprise, in addition to the text, including its preamble and annexes:

(a) Any agreement relating to the treaty which was made between all the parties in connexion with the conclusion of the treaty;

(b) Any instrument which was made by one or more parties in connexion with the conclusion of the treaty and accepted by the other parties as an instrument related to the treaty.

3. There shall be taken into account, together with the context:

(a) Any subsequent agreement between the parties regarding the interpretation of the treaty or the application of its provisions;

(b) Any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation;

(c) Any relevant rules of international law applicable in the relations between the parties.

4. A special meaning shall be given to a term if it is established that the parties so intended.

208.
Article 32 of the VCLT provides for "supplementary means of interpretation" in the following terms:

Recourse may be had to supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion, in order to confirm the meaning resulting from the application of article 31, or to determine the meaning when the interpretation according to article 31:

(a) Leaves the meaning ambiguous or obscure; or

(b) Leads to a result which is manifestly absurd or unreasonable.

(iii) The meaning of the Article VII(2) proviso in the light of its object and purpose and the circumstances of its conclusion

209.
Starting with the ordinary meaning of the proviso to Article VII(2), its formulation is peculiar. Both sides say that it contains surplus words which, on the face of the clause, can lend themselves to ambiguity and conflicting interpretations. The parties disagree, however, as to which these words are.

- The first possible interpretation is that the double conditional at the beginning of the proviso ("provided that, if") is intentional, and thus the word "and" later in the sentence is strictly speaking unnecessary. On this reading, the word "and" may be ignored, such that the clause would read: "provided that, if the investor concerned has brought the dispute before the court of justice of the party to dispute, and a final award has not been rendered within one year". The result would be that recourse to the local courts is optional.

- The second possible interpretation is that the word "and" is key and the double conditional is to be ignored as a drafting error. On this reading, the clause would read: "provided that, if the investor concerned has brought the dispute before the court of justice of the party to dispute and a final award has not been rendered within one year". The result would be that recourse to the local courts is mandatory.

210.
The interpretations offered by both sides acknowledge the syntactic or linguistic infelicity on the face of the clause. As the Claimants put it at the hearing, the English text is "not the hallmark of clarity" and "there is an infelicitous side" to its language.169 Similarly, the Respondent acknowledged that "the English language [text] is not clearly drafted" and contains a "double conditional" (ie, "provided that" and "if") which is "misleading language-wise".170
211.
The Tribunal agrees with the parties that any ambiguity in the proviso results from a drafting infelicity rather than a more profound reason. The Tribunal has accordingly considered the wording of the proviso closely, in the light of its object and purpose within Article VII(2).
212.
The first point to note is that Article VII(2) is not formulated to offer the host State's courts as an option additional to arbitration. Had that been the case, such an option would have been set out in a separate sub-paragraph (d). Rather, the Treaty assumes that the domestic courts of the host State are available and open to the investor for disputes with the State, and that the investor may choose to resort to them. The proviso therefore deals with the coordination of jurisdictions— ie, whether resort to the domestic courts excludes resort to the arbitral fora set out in Article VII(2)(a)-(c).
213.
On the Respondent's own case, it is Turkey that proposed the inclusion of this proviso.171 The Respondent does not suggest that it opposed the proviso. As noted above, the Turkish-language version of Article VII(2) is unambiguous. It uses the phrase "in the event" to refer to recourse to the domestic courts, thus clearly formulating this as a possibility rather than a mandatory requirement. While this circumstance does not of course prejudge the meaning to be given to the English-language version, it does indicate the moving party's intention to spell out in what circumstances an investor could refer a dispute to arbitration notwithstanding the investor's earlier choice to submit the dispute to the domestic courts. If that were not spelled out, the host State could well object to arbitration, notably on grounds of lis pendens. Article VII(2) deals with this issue by providing that in such circumstances recourse to arbitration remains possible in one eventuality: that the domestic courts have not rendered a final decision within one year of their being seised. It follows that if the investor has not submitted the dispute to the local courts, the Article VII(2) proviso is not engaged at all. It also follows that if a final decision has been issued, the investor may not submit the same claim to arbitration.
214.
In the light of the foregoing, the Tribunal considers that the meaning and effect of the Article VII(2) proviso are clear, and its admittedly clumsy syntax is only a superficial difficulty. In construing a proviso, one must focus above all else on the terms of the relevant condition. Article VII(2) contains a double conditional which forms a compound conjunction: "provided that, if". The proviso thus operates only "if the investor concerned has brought the dispute before the court of justice of the [State] party to dispute". This main element drives the interpretation. It cannot be brushed aside or neutralized by drafting infelicities farther down in the sentence. Differently put, the Tribunal cannot legitimately ignore "if", nor can it read it as "shall", especially as it is immediately attached to the all-important "provided that" phrase.
215.
This, then, leaves the word "and", which features in the second part of the proviso: "and a final award has not been rendered within one year". A grammarian would say that "and" is unnecessary: the sentence can operate without it. But, recalling that the Treaty was negotiated between two States for which English is a foreign language, "and" serves to indicate that the condition it introduces is linked to "provided that". Thus, recourse to arbitration remains an option if the investor concerned has brought the dispute before the host State's courts, provided that the courts have not rendered a final decision within one year of being seised.
216.

This reading is more satisfactory than the competing reading whereby "provided that" introduces a requirement to resort to local courts for at least a year. The Tribunal acknowledges that such requirements are to be found, on occasion, in investment treaties.172 But the treaties in question use clear, mandatory terms to make prior recourse to domestic courts a precondition to resorting to arbitration, while Article VII(2) does not. As indicated above, the Tribunal considers that the Article VII(2) proviso serves to expand an investor's ability to resort to arbitration, rather than to condition it upon first giving the host State's courts an opportunity to resolve the dispute within one year.

217.
To conclude, the Tribunal considers that Article VII(2) does not require an investor to have recourse to the domestic courts of the host State before commencing arbitration. The Tribunal reaches this conclusion primarily as a matter of textual interpretation (Article 31(1) VCLT), taking into account the circumstances of the conclusion of the provision (Article 32 VCLT).

(iv) The relevance of other tribunals' decisions

218.
The Tribunal is aware that the tribunals in the Kılıç and İçkale cases reached divergent conclusions regarding the interpretation of similar provisions in another treaty.173 These decisions were addressed by the parties at some length. However, the Turkey-Turkmenistan treaty at issue in those cases did not specify which of its two authentic versions—English or Russian—would prevail in case of conflict. In the face of conflicting English and Russian versions, the tribunals focused on the Russian-language version, finding that version to be clear in requiring recourse to the local courts as a precondition to arbitration.174 By contrast, in the present case, the Treaty provides that "[i]n case of any conflict of interpretation the English text shall prevail". The Kılıç and İçkale decisions are therefore not germane in the present case.

(v) The negotiating history of the Treaty and the States Parties' treaty practice

219.
Bearing in mind the "supplementary means of interpretation" set out in Article 32 of the VCLT, the Tribunal specifically invited the parties to place on record, to the extent available, documents relating to the negotiating history of Article VII(2)—ie, travaux préparatoires in the broadest sense, such as joint negotiating records, minutes or protocols of negotiation, negotiating proposals put forward by either State Party, and even explanatory memoranda prepared by governments in the course of the conclusion or ratification of the Treaty. The parties did not produce such materials.
220.
As for other circumstances relating to the conclusion of the Treaty, the Claimants referred to the Respondent's contemporaneous treaty practice.175 This establishes that the Respondent did not require mandatory recourse to Syrian courts as a precondition to arbitration in any other investment treaty it has concluded, before or after the present Treaty.176 For its part, the Respondent did not provide evidence from its treaty practice or any other source indicating a policy of imposing resort to its courts as a precondition to arbitration.
221.
As already noted, the Respondent acknowledges that Turkey sought the inclusion of the proviso to Article VII(2).177 But this does not of itself establish that the proviso was intended to introduce a "mandatory" requirement, as the Respondent argues. As explained at paragraphs 212-214 above, the proviso does perform a useful function when read as optional.

*

222.
In light of its interpretation of Article VII(2) of the Treaty, the Tribunal concludes that there was no impediment to the Claimants' commencing these arbitration proceedings. The proviso in Article VII(2) is not engaged at all in this case. It is therefore unnecessary to decide the Claimants' two alternative arguments based on the MFN clause or the alleged futility of recourse to Syrian courts. The Tribunal does note, however, that the Respondent has not asserted that it would have been possible for its courts to resolve the present dispute by "final award" within a year.

7. Whether the "clean hands" doctrine precludes the Claimants from invoking the Treaty's protections

223.
The Respondent argues that Turkey's alleged contribution to the conflict in Syria attracts the application of a "clean hands" exception, which is said to prevent the Claimants from invoking the Treaty's protections.178
224.

The Tribunal cannot accept the Respondent's argument. No finding concerning the "clean hands" doctrine need or indeed can be made here. Assuming that a "clean hands" doctrine exists in general international law and applies in investor-State disputes, on any view the unclean hands must be those of the investor, not those of its home State.179 In addition, this Tribunal does not have jurisdiction under Article VII(2) of the Treaty—this being the sole source of the Tribunal's jurisdiction—to determine whether Turkey's conduct is internationally wrongful. And as Turkey is not a party to this arbitration, it is impermissible for the Tribunal to pass judgment on the lawfulness or otherwise of Turkey's conduct.180

225.
Accordingly, the Respondent's objection is to be dismissed.

C. Liability

226.
In this Sub-section, the Tribunal first examines whether, on the facts of the present case, Article IV(3) of the Treaty excludes the application of other substantive protections in the Treaty, and whether the Respondent has breached Article IV(3) (1). After answering both these questions in the negative, the Tribunal analyses the Claimants' allegation that the Respondent breached Article III(2) of the Treaty by failing to accord to them the more-favourable treatment that is due under Article 4 of the Syria-Italy BIT (2). The majority of the Tribunal concludes that the Respondent failed to comply with this obligation. In the remainder of the Section, the Tribunal explains why, in the light of its holding regarding the Respondent's failure to comply with Article III(2) of the Treaty in conjunction with Article 4 of the Syria-Italy BIT, it need not address the claims under Articles IV(1) and II(2) of the Treaty or the question of attribution of PYD/YPG's conduct to the Respondent (3-5).

1. Article IV(3) of the Treaty (War-Losses Clause)

227.

Article IV(3) of the Treaty provides as follows:

Investors of either Party whose investments suffer losses in the territory of the other Party owing to war, insurrection, civil disturbance or other similar events shall be accorded by such other Party treatment no less favourable than that accorded to its own investors or to investors of any third country, whichever is the most favourable treatment, as regards any measures it adopts in relation to such losses.

228.
It is common ground that the term "losses" is broad and covers physical destruction or loss of property as well as lesser forms of harm.

(i) Whether Article IV(3) excludes other Treaty protections

229.

The Respondent contends that Article IV(3) is a "special" provision which excludes application of the Treaty's other, substantive protections in relation to losses "owing to war, insurrection, civil disturbance or other similar events".181 The Claimants retort that Article IV(3) contains an additional protection against such losses and does not have the exclusionary effect contended for by the Respondent.182

230.
In light of the ordinary meaning of the terms of Article IV(3), interpreted in their context and in light of the Treaty's object and purpose, the Tribunal does not consider the Respondent's argument to be valid. In short, a lex specialis with exclusionary effect bears the hallmark of derogating from other provisions that are general by comparison. Article IV(3) lacks this necessary characteristic.
231.
The plain meaning of Article IV(3) is that the host State must accord to foreign investors MFN treatment and national treatment, "whichever is the most favourable", with regard to any measures it may adopt in respect of losses in certain circumstances. Doubtless the provision caters to specific circumstances, namely losses due to "war, insurrection, civil disturbance or other similar events". But it does not necessarily follow from this specificity that the treatment due under Article IV(3) shall be the "sole" or "exclusive" treatment, and the text of Article IV(3) does not say so. Nor does Article IV(3) say that its application is "to the exclusion of" other provisions in the Treaty. Indeed, Article IV(3) does not even refer to other provisions in the Treaty. If the States Parties' intent were that Article IV(3) would operate as an exclusion, exemption, or derogation clause, one would certainly expect them to have spelt out such a far-reaching result expressly.183
232.
The Tribunal acknowledges that Article IV(3) does not state that it is "without prejudice" to other Treaty provisions, including Article IV(1)-(2). But in the Tribunal's view, this was hardly necessary for the satisfactory operation of the Treaty. To the extent that other Treaty provisions may also be engaged in circumstances of "war, insurrection, civil disturbance or other similar events", these will apply in complementary manner.
233.
Starting with Article IV, this is entitled "Expropriation and Compensation" and comprises three paragraphs. The first two deal with the circumstances of permissible expropriation (paragraph (1)) and the calculation and payment of compensation (paragraph (2)). Neither of these two paragraphs states that it is "subject to" paragraph (3) or that it is inapplicable at times of war, insurrection, and the like. The Tribunal can well see that an investor should not be entitled to double recovery for a single harm, for example an expropriatory war-requisition. But that is not to exclude that there may be two separate legal bases for compensation of an investor's harm, respectively under paragraphs (1)-(2) and (3). Avoiding double recovery is a matter of sensible coordination of overlapping provisions rather than the a priori exclusion of one provision in favour of the other.
234.
Turning to consider other provisions in the Treaty, the Tribunal is unable to agree that they are to be regarded as excluded by the operation of Article IV(3). Notable among them is Article II(2), which sets out, among other duties, a duty of "full protection" of investments. Nothing in Article II(2) suggests that it ceases altogether to apply at times of war or armed conflict. Indeed, it is at such times that protection may be needed the most. That an investor may also be entitled to benefit from "measures [the host State] adopts in relation to [war, etc] losses" under Article IV(3) does not detract from the State's duty to afford protection under Article II(2) in the first place. The two duties are complementary. If their application overlaps on the facts of a certain case, the provisions must, again, be coordinated in a sensible way.184
236.
The conclusion that the Tribunal has reached under the Treaty accords with those reached by other investment-treaty tribunals which considered war-losses clauses as additive to those treaties' other protections.186 For example, in CMS v Argentina, the tribunal rejected the contention that Article IV(3) of the US-Argentina BIT, which is similar to Article IV(3) of the Treaty,187 excluded the application of other protections in that BIT. It held:

The plain meaning of the Article is to provide a floor treatment for the investor in the context of the measures adopted in respect of the losses suffered in the emergency, not different from that applied to nationals or other foreign investors. The Article does not derogate from the Treaty rights but rather ensures that any measures directed at offsetting or minimizing losses will be applied in a non-discriminatory manner.188

237.
In Total v Argentina, the tribunal considered a similar treaty provision,189 and held that it had "an opposite purpose to that of an exculpatory clause". Rather, such provisions grant "an additional guarantee in respect of situations in which the host State, even if not internationally obliged to do so, has provided for compensation for the losses suffered due to certain events to its own nationals or investors of third States".190 Numerous other tribunals have reached similar conclusions on the point of principle that war-losses clauses may complement other protections in investment treaties.191
238.
The Tribunal turns to consider the relationship between Article IV(3) and the general most-favoured-nation clause in the Treaty, Article III(2), at paragraphs 256 et seq below, in connection with the Claimants' claim under the latter provision.

(ii) Whether the Respondent breached Article IV(3) of the Treaty

239.
The Claimants argue that the Respondent breached Article IV(3) of the Treaty (already quoted at paragraph 227 above) by failing to extend to them the treatment due to Italian investors under Article 4 of the Syria-Italy BIT.192 The argument is that Italian investors are "investors of any third country" in terms of Article IV(3), and that since under Article 4 of the Syria-Italy BIT Syria "shall offer adequate compensation in respect of [war, etc] losses", Syria was obliged to offer adequate compensation also to the Claimants but failed to do so.
240.
The Respondent denies it had any such duty under Article IV(3).193
242.

Article IV(3) calls for a relative standard of treatment.194 It is engaged in case of "measures [that the host State] adopts in relation to... losses" suffered by investors "owing to war, insurrection, civil disturbance or other similar events". Whatever such measures, if any, Syria has adopted for its own nationals or those of third States, are also to be made available to Turkish investors under the Treaty.

245.
In conclusion, the Tribunal rejects the Claimants' argument that Article IV(3) of the Treaty affords them a right to "adequate compensation" under Article 4 of the Syria-Italy BIT. In consequence, the Tribunal rejects the Claimants' claim that the Respondent has breached Article IV(3).

2. Article III(2) of the Treaty (MFN Treatment)

246.

The Claimants rely on the MFN provision in Article III(2) of the Treaty as foundation for an entitlement to the more-favourable treatment that they say Italian investors are entitled to under Article 4 of the Syria-Italy BIT.200

247.

Article III(2) of the Treaty provides as follows:

Each Party shall accord to these investments, once established, treatment no less favourable than that accorded in similar situations to investments of its investors or to investments of investors of any third country, whichever is the most favourable.

248.

The effect of Article III(2) is limited by Article III(4) of the Treaty, which provides as follows:

The provisions of this Article shall have no effect in relation to following agreements entered into by either of the Parties:

(a) relating to any existing or future customs unions, regional economic organization or similar international agreements,

(b) relating wholly or mainly to taxation.

249.
The Claimants' argument may be summarized as follows:

(i) Under Article III(2), the Claimants are "entitled to receive more favourable treatment provided for in Syria's investment treaties with other countries".201

(ii) The Claimants merely "seek to rely on protection under a war-clause provided in a comparator treaty [ie, Article 4 of the Syria-Italy BIT] in order to broaden the scope of the war clause already stipulated in the Treaty [ie, Article IV(3)]".202

(iii) The application of an MFN clause in the manner proposed by the Claimants "is far more established and virtually undisputed" in investment treaty jurisprudence.203

250.

The Respondent argues as follows:

(i) The effect of allowing the Claimants to rely on Article III(2) of the Treaty in order to invoke Article 4 of the Syria-Italy BIT would be to "delete" Article IV(3) of the Treaty. Such misuse of MFN treatment is contrary to the "general principle of 'pacta sunt servanda'".204

(ii) Under Article III(4) of the Treaty, the MFN provision in Article III(2) has no effect in relation to "any agreement concluded [by Syria] with a country that is party to [a] regional organisation", such as Italy, which is a member of the EU.205

(iii) The Syria-Italy BIT "expired on 12 November 2018" and is "not valid anymore", and therefore "none of its terms can be applied".206

(iv) Pursuant to Article 30(4)(b) of the VCLT, "the text of [Article IV(3) of the Treaty] should be applicable" exclusively, because the Syria-Italy BIT came into force before the Treaty and "[t]he will of Syria and Turkey [was] to adopt [a] different concept for similar situations" in the Treaty.207

251.
The Tribunal is unable to accept the Respondent's arguments, which it addresses in turn below.

(i) "Treatment" includes protections under other investment treaties

252.

The natural, ordinary meaning of the terms "treatment accorded" in Article III(2) encompasses not only treatment that has in fact been accorded but also treatment that is legally required to be accorded. Such a requirement may arise from investment treaties between the host State and third States (as it may also arise under domestic law, given that the terms of Article III(2) are unqualified). This is indeed an uncontroversial proposition in international investment law,208 as well as general international law.209 As the ILC put it:

[T]he fact of favourable treatment may consist also in the conclusion or existence of an agreement between the granting State and the third State by which the latter is entitled to certain benefits. The beneficiary State, on the strength of the clause, may also demand the same benefits as were extended by the agreement in question to the third State. The mere fact that the third State has not availed itself of the benefits which are due to it under the agreement concluded with the granting State cannot absolve the granting State from its obligation under the clause.210

It is of course open to States to exclude from the "treatment" due under an MFN clause treatment that is due under other investment treaties.211 But the States Parties to the Treaty have not done so.

254.
The Tribunal is aware of the decision in the İçkale case, which read the terms "treatment no less favourable than that accorded in similar situations... to investments of investors of any third country" in the Turkey-Turkmenistan BIT212 to–

require[] a comparison of the factual situation of the investments of the investors of the home State and that of the investments of the investors of third States, for the purpose of determining whether the treatment accorded to investors of the home State can be said to be less favorable than that accorded to investments of the investors of any third State.213

The tribunal read the terms "in similar situations" as restricting the scope of the MFN clause to de facto discrimination only.

255.
The İçkale tribunal's reading seems inapposite under the Treaty, for at least three reasons.

- First, the natural reading of the "similar situations" test in Article III(2) is that it requires a showing of likeness; that is to say, that an investment of an investor of a third State, positioned in like circumstances as an investment under the Treaty, would be entitled to or has received more-favourable treatment. This analysis is of course unremarkable and consistent with the eiusdem generis principle, addressed below.214 It calls for an assessment of similarities and dissimilarities between investors or investments, in order to identify whether differential treatment would be warranted as a matter of international law. It is an altogether different matter to say that there is a further requirement of identifying an actual investment by an actual investor that has received more-favourable treatment in actual fact.

- Secondly, it is difficult to endorse a reading that would allow the States Parties altogether to defeat their Article III(2) MFN obligations by failing in fact to accord to third-State nationals the treatment to which they are legally entitled. That would be antithetical to the core idea of MFN treatment.

- Finally, it is difficult to see why, by virtue of Article III(4)(a), the States Parties would have agreed that Article III(2) is to have "no effect in relation to... customs unions, regional economic organization or similar international agreements" if the latter Article only covered de facto discrimination.

(ii) Article IV(3) does not displace Article III(2)

256.
The Respondent argues that if the Claimants were to be able to rely on Article III(2), this would amount to "deleting" Article IV(3), this provision being lex specialis to Article III(2).
257.
In the view of the majority of the Tribunal, the argument cannot prosper, either at the level of principle or at the level of treaty interpretation.215
258.
As a matter of principle, the very purpose of MFN clauses is to extend more-favourable treatment that is due under another instrument, whether a treaty or domestic law, in the stead of the treatment due under the basic treaty. Access to enhanced treatment by reference to another ("comparator") treaty cannot be said to "delete" any provision of the basic treaty, because "[b]y its very nature, an MFN clause promises something better than what is provided in the [basic] treaty".216
259.
The Tribunal is also unable to accept that Article IV(3) is to be read as excluding by necessary implication Article III(2). Such a reading would lead to the result that investors under the Treaty would be entitled to the benefit of war-losses measures, if any had been adopted by the host State, but they would not be entitled to any broader treatment that the host State may have in fact accorded, or undertaken to accord, on whatever basis, to similarly situated investors of a third State or the host State. On such a reading, if investors of certain countries had been granted benefits over and above a generalized war-reparations programme— say, a choice between indemnification or restitution of property, or compensation in foreign currency that can be freely repatriated—these benefits would not be available to investors under the Treaty. One can see no compelling justification for such a reading.
260.
Article III(2) and Article IV(3) both contain MFN obligations. Article III(2) is the broader provision, requiring that, "in similar situations", MFN "treatment" be accorded to "investments established". Article IV(3) provides for a highly specific form of MFN treatment, in extraordinary circumstances where "investments suffer losses... owing to war, insurrection, civil disturbance or other similar events". There, the duty to extend MFN treatment extends only to "measures [which the host State] adopts in relation to such losses". As may be seen from paragraph 244, extending the benefit of war-losses "measures" is a form of "treatment". Compliance with Article IV(3) will therefore be consistent with the obligation under Article III(2): the two articles are entirely concordant.
261.
It would be inimical to this concordance to treat Article IV(3) as making Article III(2) redundant. As already noted at paragraph 235, lex specialis requires more than just pointing to a more-specific provision. Far from being a mechanical rule of invariable application, lex specialis is an aid to interpretation whose "power is entirely dependent on the normative considerations for which it provides articulation: context, capacity to reflect State will, concreteness, clarity, definiteness".217 Article IV(3) does not in terms indicate that it is exclusive of any other provision in the Treaty, nor does it need to be read in that way to be given effet utile. This Article is directed to an issue which may be debated as a matter of customary international law, namely whether war-losses programmes, which are sometimes discretionary, must be extended to foreign nationals on a footing of equality. Article IV(3) is therefore a non-discrimination provision with a highly specific purpose. It implements, rather than displacing, Article III(2).

(iii) Article III(4) does not apply

263.
The Respondent argues further that Article III(4) (quoted at paragraph 248 above) excludes the application of Article III(2) because Italy "is party to [a] regional organisation", the European Union. The Tribunal is unable to agree.
264.
The Respondent's reading is inconsistent with the natural meaning of Article III(4). This provision is engaged only if either of the States Parties, Syria or Turkey, is a member of a customs union, regional economic organization, or similar arrangement. Then, the State Parties' obligations under the relevant agreements will be lex specialis and remain unaffected by their MFN obligations under the Treaty. The obvious rationale for this is that a customs union or economic organization will typically provide for freedoms and benefits going well beyond a bilateral relationship of mutual investment protection; and that such privileges should not automatically be extended outside the circle of States participating in the union or organization. Thus, the MFN-treatment obligation in Article III(2) may not be relied upon by a Turkish investor to claim the special benefits of a national of a State with which Syria may form a customs union or regional economic bloc. In that hypothesis, Article III(2) "shall have no effect", as Article III(4) states.
265.
The Claimants rely on Article III(2) to avail themselves of a protection to which Italian investors would be entitled under Article 4 of the Syria-Italy BIT. Such an entitlement arises exclusively under that BIT, not under a customs union or regional economic organization agreement. Article III(4) does not apply.

(iv) The expiry of the Syria-Italy BIT is immaterial

266.
The Respondent also argues that the expiry of the Syria-Italy BIT in November 2018 prevents the Claimants from relying on Article 4 of that BIT. The Tribunal is unable to see merit in this argument.
267.

As already noted, the natural meaning of the terms "treatment accorded" in Article III(2) encompasses more-favourable treatment that the host State is legally required to accord to third-State nationals. It follows, consistent with general international law, that the duty of the host State under Article III(2) arises when it undertakes to extend the relevant treatment to nationals of a third State220 and ceases when that obligation is terminated or suspended.221 As observed by another tribunal, the "[b]enefits available due to an MFN clause last as long as the treaty that grants them is in effect".222

268.
The Treaty entered into force on 3 January 2006,223 a little more than two years after the entry into force of the Syria-Italy BIT.224 Thus, from the entry into force of the Treaty, Article III(2) permitted a Turkish investor in Syria to rely on treatment due to Italian investors under the Syria-Italy BIT, including Article 4.225 The Syria-Italy BIT ceased to be in force on 12 November 2018, pursuant to its Article 14(1).226 Nevertheless, under Article 14(2), its provisions will "remain effective for a further period of five years" (ie, until 12 November 2023) in respect of investments made while the BIT was in force.
269.
It follows that Article 4 of the Syria-Italy BIT was in force at all possibly critical times for the present case, in 2011 (the Claimants' asserted date of breach by the Respondent) and in 2016 (the Claimants' Request for Arbitration); and in any event will "remain effective" until November 2023. The Claimants are plainly entitled to rely on Article 4, and the Respondent's contrary argument is to be rejected.

(v) The lex posterior argument is unavailing

270.
The Respondent argues that the Treaty followed later in time than the Syria-Italy BIT, and Article IV(3) of the Treaty was intended to set out a separate, self-contained regime on war losses, such that Article 4 of the Syria-Italy BIT cannot be applied. This argument is founded on the lex posterior rule in Article 30(4)(b) of the VCLT. This article applies in case of "successive treaties relating to the same subject-matter" and provides that:

When the parties to the later treaty do not include all the parties to the earlier one:... [a]s between a State party to both treaties and a State party to only one of the treaties, the treaty to which both States are parties governs their mutual rights and obligations.

271.
The Respondent's argument is predicated on the assumption that Article IV(3) of the Treaty sets out a self-contained regime which applies to the exclusion of any other investment protection. The Tribunal has already rejected this argument.
272.

In any event, the Tribunal considers that Article 30(4)(b) is not engaged at all. Article 30 would apply only if Syria, Turkey, and Italy were party to an earlier (multilateral) treaty while only two of them party to a later (bilateral) treaty.227 That is evidently not the case here. There are two sets of bilateral treaty relations, as between Syria and Italy and as between Syria and Turkey. By each of these bilateral treaties the contracting States may undertake to provide MFN treatment to the other State or its nationals.

273.

The scope of an MFN clause is a matter for the contracting States to define in their basic treaty, this being "the juridical link" that allows the contracting States to avail themselves of rights that one of them has accorded or may come to accord to a third State or its nationals.228 Here, it was for the States Parties, if they so wished, to restrict the MFN scope of Article III(2). The States Parties did indeed exclude certain benefits by virtue of Article III(4), as already discussed. But they did not restrict Article III(2) to treatment accorded by subsequent treaties only. No such restriction will be presumed in international law,229 and the Tribunal sees every good reason to read the words "treatment accorded" as encompassing both pre-existing treaties (such as the Syria-Italy BIT) and subsequent treaties.

274.
The only qualification in Article III(2) is that the more-favourable treatment must be "accorded in similar situations". As already discussed and is further discussed below, Article 4 of the Syria-Italy BIT does indeed concern treatment in similar situations as those which the Claimants faced.
275.
Accordingly, the Respondent's argument is to be rejected.

(vi) Whether the Respondent failed to comply with Article III(2)

(a) Article 4 of the Syria-Italy BIT accords more favourable treatment in "similar situations" as those of the Claimants

276.
Article 4 of the Syria-Italy BIT (in its English authentic version230) provides as follows in relevant part:

Should investors of either Contracting Parties incur losses or damages on their investments in the territory of the other Contracting Party due to war, other forms of armed conflict, a state of emergency, civil strife or other similar events, the Contracting Party in which the investment has been effected shall offer adequate compensation in respect of such losses or damages. Irrespective of whether such losses or damages have been caused by governmental forces or other subjects, compensation payments shall be freely transferable as provided for in article 8 of this Agreement.

277.
Read together, Article 4 of the Syria-Italy BIT and Article III(2) of the Treaty call for two inquiries.
278.
The first concerns the "eiusdem generis principle", namely the subject-matter(s) that are within the scope of Article III(2) and thus attract MFN treatment.231 The provision is cast in broad terms. It is not confined to certain categories of treatment, such as in respect of the acquisition, expansion, or management of investments. Rather, Article III(2) refers to "treatment no less favourable than that accorded in similar situations to... investments of investors of any third country". Thus, the subject-matter of Article III(2) comprises treatment that falls to be accorded under the Treaty in "situations" in which the Treaty finds application.
279.
Article 4 of the Syria-Italy BIT applies to a situation that is expressly covered by the Treaty. Article IV(3) of the Treaty concerns "losses... owing to war, insurrection, civil disturbance or other similar events". Article 4 of the Syria-Italy BIT concerns "losses or damages... due to war, other forms of armed conflict, a state of emergency, civil strife or other similar events". The two provisions evidently cover the same subject-matter, both being war-losses clauses. And while they are not word-for-word identical, both provisions include the generic "similar events" catch-all which expands their respective scope of application. The Tribunal has no difficulty concluding that these provisions are in pari materiæ, covering disturbances of various intensities and scale, whether inter-State ("war") or internal.
280.
The second inquiry, as foreshadowed above, is whether Article 4 provides for more-favourable treatment than that which the Treaty provides for. Plainly it does. Article 4 sets forth a direct obligation to "offer adequate compensation in respect of such losses or damages". By contrast, as already discussed, Article IV(3) of the Treaty sets forth a relative standard of treatment, requiring the host State to extend to investors "any measures it adopts in relation to such losses", without requiring the State to adopt such measures in the first place.
281.
The Tribunal concludes that Article 4 of the Syria-Italy BIT accords more-favourable treatment than that which is available in similar situations under Article IV(3) of the Treaty.

(b) The requirements of Article 4

282.
Having established that Article 4 of the Syria-Italy BIT may be invoked by the Claimants, the Tribunal turns to the specific obligation that this provision entrained on the Respondent's part.

Article 4 is not limited to harm inflicted by the host State

283.
The Tribunal is aware that a number of investment treaties provide for compensation for harm caused by the host State's "forces or authorities" (sometimes carving out action justified by military necessity or the exigencies of conflict). The Respondent has such treaties.232
284.

This feature is absent from Article 4 of the Syria-Italy BIT.233 Quite the opposite, Article 4 covers harm independently of the identity of those who caused it. The first sentence of the Article refers to "losses or damages... due to war, other forms of armed conflict, a state of emergency, civil strife or other similar events", without stipulating that such "losses or damages" must result from conduct attributable to the host State. Indeed, the clause is quite deliberately worded to be triggered solely by an objective occurrence, "losses or damages... due to" circumstances of war, etc. The second sentence puts this point beyond doubt, spelling out that the duty to compensate arises "[i]rrespective of whether such losses or damages have been caused by governmental forces or other subjects".

285.
The Tribunal acknowledges that one might more naturally expect to see the "irrespective" clause placed in the first sentence, as indeed is the case in the Arabic version of the Treaty.234 But the placement of the clause does not alter its meaning, which is plain on its face. The second sentence deals with "compensation payments" by virtue of the duty to "offer adequate compensation". The opening phrase of the second sentence makes clear that such payments arise "irrespective" of the person or entity who caused the harm. In that regard, the word "subjects" ("soggetti" in the Italian version; "أو ﻏﯿﺮھﺎ", ie "other forces", in the Arabic version) refers to the actor responsible for the "losses or damages" and is simply a formal term to denote persons or entities. The sheer breadth of the terms "or other subjects", set in the clause by contradistinction to "governmental forces", means that there is no need to engage in any analysis of attribution: harmful acts by any person or entity will suffice. 234F235
286.
It necessarily follows that it is immaterial whether the actor acted lawfully (for example in accomplishing a military mission) or unlawfully (for example in opposing the governmental forces, or for private gain). It is required, by contrast, that the relevant conduct be part of war or similar events, as discussed immediately below. Accordingly, actions or omissions by the PYD/YPG, which as noted at paragraph 120 are not regarded by the Respondent as attributable to it, may be captured by Article 4, provided they are causative of "losses or damages" that are "due to" circumstances encompassed within the provision.

The relevant harm must be "due to" war and similar events

287.
While Article 4 does not exclude conduct justified by military necessity, it does set forth a causal nexus that the investor's "losses or damages" must be shown to satisfy: such losses or damages must be "due to" war and similar circumstances.
288.
The natural meaning of due to is caused by, owing to, or by reason of. It is consistent with the unusual breadth of Article 4 to read the words "losses or damages... due to war... or other similar events" as requiring a pronounced degree of causal proximity, certainty, and directness. An investor must of course show "an uninterrupted and proximate"236 chain of causation between the "losses or damages" and the "war... or other similar events". But one must also be careful to exclude possible contributing or intervening events which interrupt the directness of causation (such as political hostility), as one must also exclude second-degree effects of war (such as a drop in demand, profiteering, inflation, or fluctuations in currency exchange rates). Article 4 may not be read as unlimited insurance against generalized adversity flowing from war and similar situations. Rather, and as the second sentence suggests by the words "caused by governmental forces or other subjects", the intent is to capture harmful events that occur in a theatre of war or conflict.

"Adequate compensation" for "losses or damages"

289.
The host State's duty under Article 4 is to "offer adequate compensation". This is a second-order duty, in that the provision does not require the host State to have caused, let alone wrongfully, the investor's "losses or damages". This is not, therefore, responsibility to make reparation for an internationally wrongful act. It is a purely economic responsibility to indemnify for harm incurred in certain extraordinary circumstances. Nevertheless, the notion of "adequate compensation" for "losses or damages" ("danni o perditi" in the Italian version; "اﻟﺨﺴﺎﺋﺮ أو اﻷﺿﺮار" in the Arabic version) corresponds to compensation for "any financially assessable damage including loss of profits" under the law of State responsibility.237
290.
In short, Article 4 requires the host State to offer compensation for harm, including loss of profit so far as it can be established. Such redress must be adequate to the harm suffered, that is, wipe out its consequences as far as monetary relief may do so. It follows that the compensation must also make allowance for the time-value of money for the period between the occurrence of the investor's compensable harm and the actual payment by the host State.

(a) The Claimants' compensable harm under Article 4

291.
As noted in paragraph 108 above, the Claimants' investments consist of:

(i) 91% of the shares in Raqqa, which (a) owned the Raqqa Plant and operated it in the period between April 2009 and March 2011, and (b) undertook various activities to construct the Raqqa Factory between April 2010 and June 2011;238 and

(ii) 87% of the shares in Hasakah, which owned the Hasakah Plant and operated it in the period between March 2010 and April 2011.239

292.
The Claimants assert that: (i) the conflict in Syria caused a suspension of commercial activities at the Raqqa Plant in March 2011 and the Hasakah Plant in April 2011, and a suspension of construction activities at the Raqqa Factory in June 2011; (ii) the conflict ultimately resulted in the Claimants' altogether losing access to the Raqqa Plant and Factory in July 2014 and the Hasakah Plant in March 2014; (iii) the pervasive lack of peace and security, due to the ongoing conflict, means that there is no certainty that the Claimants may in the foreseeable future be able to return and recommence operations or construction; and (iv) the harm suffered by the Claimants due to the conflict in Syria is, therefore, a complete deprivation of the substance of their shareholding interests in Raqqa and Hasakah.240
293.
The Respondent retorts that "there was no security reason [in] 2011" that could have caused a suspension of the operations or construction of the Claimants' facilities.241 The Respondent concedes that it has had "no control" and "no sovereignty" over the Ain Issa and Al-Yarubiyah regions "since mid 2012", but then goes on to assert that the Claimants' facilities "are still there, nobody knows if anything is lost or not and how much it is worth", and that "[i]f tomorrow Syria regains control and authority all over the north east, the Claimants will have full legal and actual titles to exploit their facilities".242
294.
On the evidence, the Tribunal concludes that the Claimants have suffered a lasting deprivation of the use, control, and enjoyment of their shareholdings in Raqqa and Hasakah. The Tribunal's reasoning is as follows.

(vii) The nature of the Claimants' deprivation of their investments

295.
As noted above, the Claimants are shareholders in businesses with underlying assets, both physical (such as sites, plant, and machinery) and economic (such as contracts, know-how, goodwill, and clientele). Although the Claimants argue that they "lost their shares" in Raqqa and Hasakah due to the conflict in Syria,243 it is undisputed that the two Syrian companies, Raqqa and Hasakah, remain legally constituted and in existence; and the Claimants' legal status as shareholders in these companies is intact and undisputed within Syria's legal order. The Tribunal also notes that there has been no evidence to suggest that rights recognized within Syria's legal order are not recognized in the DFNS-controlled areas.
296.
However, the Claimants' uncontested legal status as shareholders is not dispositive of an inquiry regarding the deprivation of their rights. The Claimants' shareholdings in Raqqa and Hasakah are nominal and hollow if these companies are effectively deprived of use and control of their assets. After all, these assets serve the businesses that these companies were established to conduct. Without these assets, there is no business for the companies to conduct or manage. In that situation, the shareholders of the companies are also practically deprived of the essential attributes of their shareholder rights, including their economic value.
297.
In applying this test on the facts of the case, two periods must be distinguished. In the first period, starting in March-April 2011 and ending in March 2012, the Claimants' decision to repatriate to Turkey senior management and to suspend commercial operations at the two Plants and the construction of the Raqqa Factory was made for prudential reasons. The Claimants indeed accept that, while there were sporadic incidents of insecurity and intimidation in their facilities, it would have been possible to continue operating.244 The Tribunal, while intending no criticism of the Claimants' decision, is bound to consider that the causal nexus required under Article 4 is not satisfied by prudential action to avoid potential harm. Rather, in the circumstances of this case, this nexus requires that the investor's action was the only viable course in the circumstances of the conflict— an inexorable necessity.
298.
The second period starts in April 2012, when on both sides' accounts intense conflict spread to the Ain Issa and Al-Yarubiyah areas and, a little later, the bulk of the Respondent's armed forces retreated from these areas. The Tribunal considers that from April 2012, continuing with commercial operations or construction activities was no longer viable, as a direct result of the evolution of the conflict. A reasonable operator has no real choice when harm is certain or near certain.
299.
The evidence is as follows:

(i) Mr Yamantürk's testimony was that "conflicts had not escalated in the Ain-Issa region too much after the initial events that began in March 2011".245

(ii) Similarly, Mr Çalik testified that the Claimants suspended commercial operations "before the events spread to [their] region starting from 2011", and that "[t]he events started affecting Raqqa and Yarubiya in March 2012".246

(iii) This account is confirmed by Mr Tüylü, whose testimony on these issues was not challenged. He testified that the "slight unrest" in the Ain Issa region in 2011 was "not serious in scale and there was not much trouble in the region during that time".247 Thus, "[i]n April [2011], when [the Claimants] pulled a large percentage of [their] laborers from the Yarubiyah plant, and in July [2011], when [the Claimants] pulled a large percentage of [their] laborers from the Ain-Issa plant [the Raqqa Factory], the conflicts had not yet jumped into the regions where the plants are located".248 As he said, "the main conflicts began in March 2012",249 as indeed he confirmed at the hearing: "incidents spread out to [the Plants'] region at a later stage".250

(iv) Mr Erkmen, the Claimants' expert on political matters and security, confirmed that the Ain Issa and Al-Yarubiyah regions did not become unsafe for commercial operations until the second half of 2011 at the earliest:

THE PRESIDENT:... I want to ask you now something about timing. If you have the two areas in mind that this case concerns, one is close to Ain Issa and the other one is close to Has[a]k[ah], can you tell us whether in 2011 the situation there was, in your view, unsafe for commercial operations?

MR ERKMEN: You mean in 2011?

THE PRESIDENT: I mean in 2011.

MR ERKMEN: No. When the incidents started we can't say that that region was unsafe, when the incidents started.

THE PRESIDENT: When would one start to say that these areas were unsafe? Is it in the middle of 2012? Is it earlier? Is it later?

MR ERKMEN: As of the second half of 2011, ie as clashes emerged sporadically – I'm sorry, in a distributed way in different places, we can say that, as of that period of time, it wouldn't be easy to conduct commercial activity in those regions. My answer a minute ago was about the period of time when the clashes initially started.251

(v) On the Respondent's account, by "mid 2012",252 the government's armed forces started withdrawing from the north-eastern territories of the country, including Ain Issa and Al-Yarubiyah, after losing "many battles" against the FSA and "Kurd militias", to prioritize the protection of civilians in other parts of the country.253 (UN reports confirm the Respondent's account of a retreat for strategic reasons.) After this retreat, the Respondent was unable to ensure the safety and security of persons and property in Ain Issa or Al-Yarubiyah.

(vi) The Tribunal also notes that Turkey suspended activities at its Embassy in Damascus in March 2012, which again suggests that the conflict in Syria attained a critical stage around that time.254

300.
One now turns to the evidence regarding the deprivation of the Claimants' use, control, and enjoyment of their investments in the period after April 2012. After the departure of the Claimants' senior management and the suspension of activity at Raqqa and Hasakah, the Claimants gradually lost any form of access to the companies' sites. This occurred around July 2014 for the Raqqa site, and around March 2014 for the Hasakah site.
301.
Starting with Raqqa, it is common ground that PYD/YPG has been in control of Ain Issa since the withdrawal of the Syrian government forces in 2012 (save for an interlude, when ISIS controlled Ain Issa between July 2014 and May 2015).255 The evidence adduced by the Claimants—which the Respondent says it is unable either to confirm or challenge—shows that the Raqqa site was ravaged by various events after July 2012. These include: (i) thefts of electronic devices by third parties in July 2012;256 (ii) demands by PYD/YPG for payments or equipment in the period September-December 2012;257 (iii) theft of personnel's belongings and an automobile by armed third parties in March 2013;258 (iv) theft of an earth digger, arson of a dormitory room, and a raid by various third parties in July 2013;259 (v) demands by PYD/YPG to operate the Raqqa Plant in early 2014;260 (vi) a seizure of equipment (two mixers and a concrete pump) by PYD/YPG in March 2014;261 and (vii) damage to dormitory rooms as a result of an armed clash between PYD/YPG and ISIS in July 2014.262
302.
The Claimants say that these events culminated in their withdrawing all remaining personnel from the Raqqa Plant in July 2014, thus losing any form of access to the site.263
303.
The Tribunal considers that the events in the period April 2012 – July 2014 show a pervasive absence of security and safety, compelling the Claimants' withdrawal of all remaining personnel due to the conflict in Syria.
304.
The information available in respect of the period after July 2014 is limited, but it is consistent with the events up to that time. Mr Anil testified that, based on information provided by local personnel who obtained photographs and information "remotely",264 the PYD or YPG started operating the Raqqa Plant jointly with third parties in April 2016.265 Mr Yamantürk testified that the Claimants learnt from people they "know from the region" that the Raqqa Plant "is being operated right now, by third parties".266 The Claimants also confirmed that they understand "from certain photos and occasional information received [from] the region that there have been attempts to operate the facilities".267 Following the hearing, the Respondent submitted a witness statement by Jassem Ali Almousa, indicating that the Raqqa Plant was intact and being operated. Although this statement has limited probative value, containing as it does second-hand information268 proffered by a person whom the Tribunal did not have an opportunity to examine, it is consistent with the Claimants' evidence.
305.
Turning to Hasakah, the evidence is as follows:

(i) The Syrian government armed forces withdrew from the Al-Yarubiyah area by March 2013 at the latest.269

(ii) The FSA controlled Al-Yarubiyah between March and October 2013.270

(iii) PYD/YPG has largely been in control of the area since November 2013 (save for an interlude of ISIS control between July 2014 and May 2015).271

306.
The Claimants say that they had no access to the Hasakah site during the period of FSA's control, between March and October 2013.272 They were able to regain access to the Hasakah Plant in October 2013, and found that it "was seriously damaged" and that "all of [their] portable materials, such as generators, computers, and the detachable equipment on the electrical panel, had been looted, and that the buildings and silos were damaged".273 Ultimately, in March 2014, PYD/YPG started efforts to put the Plant to production,274 following which the Claimants say they lost all access to it.275
307.
The Tribunal has no reason to question the evidence of the Claimants, which is consistent with the overall situation on the ground as the Tribunal understands it. The Tribunal concludes that the Claimants' loss of any access to the Hasakah site in March 2014 was also due to the conflict in Syria.

(viii) The Claimants' deprivation is not transient or ephemeral

308.
Summarizing the foregoing findings, from April 2012, the Claimants were forced by the circumstances of the conflict in Syria to abandon use, control, and enjoyment of their investments.276 Gradually, they lost any form of access to the underlying assets, which are being operated, perhaps intermittently and only to a degree, by PYD/YPG or for their benefit.
309.
While it is therefore the case that the Claimants' harm is ongoing, this is not a case of ephemeral or transient deprivation. It is a case of a lasting deprivation whose duration cannot be predicted with any certainty. This calls for judgement as to the compensation that is adequate to the nature and severity of the Claimants' harm. The Tribunal's assessment takes account of the factors set out below.
310.
On the one hand, the possibility that the Claimants' deprivation will be reversed cannot be ruled out as a matter of principle.

(i) It is common ground that Raqqa and Hasakah, being validly constituted and existing Syrian companies, remain legally entitled to exercise full ownership over their assets and to recommence their business. It is also common ground that Syrian law does not recognize that any third party, such as PYD/YPG, has a valid right to possess or use the companies' assets. The Claimants acknowledge that "[t]here is no legislative or administrative act preventing [them] from accessing... their investments".277 Nor do the Claimants suggest that PYD/YPG has prevented them, or would prevent them in future, from returning to the Plants and recommencing operations.278

(ii) All available evidence indicates that the Raqqa and Hasakah Plants are still operational and indeed have been operated by or for PYD/YPG, although it is not known to what degree and in what state of repair (or ill-repair). In this connection, the Tribunal records that, with the consent of the parties, it established contact with the individual charged with DFNS's foreign affairs and secured his promise to convey within the DFNS the Tribunal's inquiries regarding the Plants. The Tribunal, after consultation with the parties, addressed five specific questions to the DFNS concerning the legal and material status of the Plants.279 No response was forthcoming, despite follow-up by the Tribunal. The Tribunal is therefore constrained to make its findings based on the evidence in the record.

(iii) The Syrian Arab Republic continues to assert full sovereignty over the territory comprised within its internationally recognized borders. This includes the areas at present under the control of DFNS, where the PYD/YPG organizations operate and where the Claimants' facilities are located. The DFNS operates under political cover of a "Charter" which proclaims Syria's "territorial integrity".280 It follows that the arrangements set out in the Charter, seeking to establish a degree of autonomy for the regions of Afrin, Jazira, and Kobane, ultimately aspire to be endorsed by a new Constitution of the Syrian Arab Republic. In short, the present situation in the DFNS-controlled areas, which came about in a context of widespread conflict in Syria, is regarded as temporary both by the Syrian Arab Republic (which rejects it as an illegal state of affairs) and the DFNS itself. For its part, Turkey has also confirmed that it is "unequivocally committed to the territorial integrity and political unity of Syria".281

311.
On the other hand, there can be no certainty as to the end of the conflict and the normalization of the situation in the areas where the companies' facilities are located. Also, the Plants have limited operating lives: on the Respondent's case, 2027 (for the Hasakah Plant) and 2031 (for the Raqqa Plant).282 Even if one assumes that the Plants remain fully operational and in a good state of repair— which, on the evidence, is a highly optimistic assumption—most of the useful life of their plant and equipment has already been expended.
312.
In the circumstances, a duty of ongoing, periodic compensation for the Claimants' ongoing harm would be ill-suited to the reality of the situation. Rather, for the purposes of compensation the Claimants' deprivation should be treated as being permanent as of 2012, and compensation should be fashioned in a manner that takes account of the fact that the underlying assets may still be operational when the conflict ceases and the situation is normalized. This issue is addressed further in Section V.D below.

(ix) The Respondent has not offered the Claimants compensation

313.
It is common ground that the Respondent has not offered to provide compensation to the Claimants for the effective deprivation of their investments, in accordance with Article 4 of the Syria-Italy BIT in conjunction with Article III(2) of the Treaty. Indeed, in this arbitration the Respondent has rejected the notion that it has any such duty. The Respondent has therefore failed to comply with this Treaty obligation.
314.
The Respondent's breach attracts a duty to compensate the Claimants for the injury caused to them. This injury is equal to the amount that the Claimants stood to be offered under Article 4 plus the time-value of this amount until full payment. This issue is also addressed further in Section V.D below.

(x) The Respondent's defences of force majeure and necessity

315.
The Respondent has asserted force majeure and necessity arising from Syria's conflict as circumstances precluding the wrongfulness of any Treaty breaches on its part.283 However, it has not specifically explained how such defences would exclude responsibility under a war-losses indemnity clause such as Article 4 of the Syria–Italy BIT.
316.
For their part, the Claimants assert that such defences are "inapplicable" here.284 They argue that "if a provision applies—exclusively—to cases of war and civil strife, arguing that it cannot be applied as war and/or civil strife constitutes a circumstance precluding wrongfulness would inevitably reduce the clause into redundancy".285
317.
Both sides agree that force majeure and necessity are circumstances precluding wrongfulness, including a breach of treaty obligations, in the terms codified in the 2001 ILC Articles.286
318.
The Tribunal considers that the Respondent has not made out a defence based on either of these grounds.
319.
The obligation concerned here is to "offer adequate compensation" to investors. That is an obligation of monetary redress for harm already occurred. The obligation arises in case of "losses or damages on [investors'] investments in the territory of the other Contracting Party due to war, other forms of armed conflict, a state of emergency, civil strife or other similar events... [i]rrespective of whether such losses or damages have been caused by governmental forces or other subjects". As already noted, the obligation does not presuppose, let alone require, that the host State had a prior duty to avert or not to cause the "losses or damages".
320.

It is therefore a purely economic obligation in the nature of an indemnity which must be shown to be "materially impossible in the circumstances to perform"287 or to be precluded by conduct that is "the only way for the State to safeguard an essential interest against a grave and imminent peril".288 A demonstration of "material impossibility" or action necessary to "safeguard an essential interest against a grave and imminent peril" is fact-specific, requiring cogent evidence. Here, the Respondent has not explained, let alone demonstrated, how payment of money to the Claimants would satisfy either of these legal tests. The Tribunal observes in that regard that war or armed conflict, in themselves and without more, do not excuse non-compliance with monetary obligations.289

321.
The Respondent's defences are accordingly to be rejected for want of substantiation.
322.
For completeness, the Tribunal notes that a defence of force majeure is in any event unavailable where a State "has assumed the risk of that situation [of force majeure] occurring".290 By virtue of Article 4 of the Syria–Italy BIT, the Contracting Parties assumed the risk that "war, other forms of armed conflict, a state of emergency, civil strife or other similar events" might occur and cause "losses or damages" to investors. To insure against the occurrence of such harm, the Contracting Parties undertook to "offer adequate compensation". It is not open to the Respondent to invoke as force majeure the very risk against which it has undertaken to offer an indemnity.

3. Article IV(1) of the Treaty (Expropriation)

323.
Article IV(1) of the Treaty provides:

Investments shall not be expropriated, nationalized or subject, directly or indirectly, to measures of similar effects except for a public purpose, in a non-discriminatory manner, upon payment of prompt, adequate and effective compensation, and in accordance with due process of law and the general principles of treatment provided for in Article III of this Agreement.

324.
The Claimants assert as follows:

(i) "The prohibition on expropriation without compensation... protects the property of the investor even if the title is not taken or transferred to the expropriating party".291

(ii) "The expropriatory act can be a direct taking or can be an indirect deprivation of one or several of the essential characteristics of the relevant investment and properties".292

(iii) PYD/YPG forces, whose conduct is attributable to the Respondent under international law,293 attacked the sites of Raqqa and Hasakah Plants on numerous occasions and seized machinery and equipment; sought to take over the Plants for their own purposes; and eventually deprived the Claimants of access to the sites completely. In the result, the Claimants lost access to and enjoyment of their investments in Syria, this amounting to an unlawful, indirect expropriation of their investments.294

325.
The Respondent denies that the conduct of PYD/YPG is attributable to it.295 It also contends that the Claimants' investments have not been expropriated in any event, since their shareholdings in Raqqa and Hasakah "are legally still valid in Syria" and the Claimants "still have the right to sell the parts/shares to somebody else who might continue investing in the projects of the companies".296
326.
The Tribunal considers that the Claimants' claim under Article IV(1) does not arise for decision. The Tribunal has already held that the Claimants are entitled to "adequate compensation" for the deprivation of their shareholdings; and that, for the purposes of assessing this compensation, the Claimants' deprivation should be treated as being permanent as of 1 April 2012. As will also be clear from Section V.D below, a claim under Article IV(1), if successful, would lead to the same measure of compensation, since the compensable harm in such hypothesis would be the same, namely a permanent deprivation of the Claimants' investments. In these circumstances, where the Claimants' demand (petitum) is formulated as monetary relief predicated on one or more Treaty breaches,297 their claim under Article IV(1) is merely a possible legal foundation (moyen) which need not be decided upon.

4. Article II(2) of the Treaty (Fair and Equitable Treatment, Full Protection)

327.
Article II(2) of the Treaty provides:

Investments of investors of each Party shall at all times be accorded fair and equitable treatment and shall enjoy full protection in the territory of the other Party. Neither Party shall in any way impair by unreasonable or discriminatory measures the management, maintenance, use, enjoyment, extension, or disposal of such investments.

328.
The Claimants allege that the Respondent breached Article II(2) of the Treaty by failing to accord to the Claimants' investments fair and equitable treatment and full protection.298 The Respondent disagrees with the Claimants regarding the scope of these substantive obligations and denies that it has breached them, chiefly on grounds of non-attribution of the relevant conduct.299
329.
The Tribunal considers that the Claimants' claim under Article II(2) does not arise for decision, on the same grounds of judicial economy as those which apply to the claim under Article IV(1) (see paragraph 326 above).

5. Attribution of PYD/YPG's conduct to the Respondent

330.
The parties have devoted considerable energy in addressing the question of attribution of PYD/YPG's conduct to the Respondent. The Tribunal, recognizing the novel, delicate, and complex questions involved, records its appreciation for the parties' efforts. Nevertheless, in the light of the Tribunal's decision that the Claimants' claims under Articles IV(1) and II(2) need not be decided upon, this issue has become moot. Accordingly, this Award does not address it.

D. Quantum of compensation

331.
In accordance with the Tribunal's conclusions as to the nature and scope of the Claimants' compensable harm, at paragraphs 312 and 314 above, the Tribunal now proceeds to matters of quantification. It addresses in turn (i) the Claimants' "adequate compensation" under Article 4 of the Syria-Italy BIT as at the time of their deprivation, 1 April 2012, and (ii) interest until final and full payment.

1. Adequate compensation

332.
For an asset capable of generating revenue over its economic life, a revenue-based valuation methodology is in principle most apt to measure the value that the owner may fairly expect to receive from the asset. The Claimants' shareholdings can generate revenue in the form of dividends. There is no dispute between the parties as to these general principles.
333.
The soundness of any valuation methodology turns on the specific circumstances of each case and the reliability of the necessary data inputs. Recognizing this, the Claimants have presented two alternative monetary claims:

(i) The primary claim is for an amount of USD 88,381,126.75, said to represent: (a) the net present values of the Raqqa and Hasakah Plants, on a "but-for" basis "as of 2009" (ie, had it not been for the conflict), using a discounted cash flow (DCF) methodology; plus (b) the Claimants' historical investment costs ("sunk costs") in the Raqqa Factory.300

(ii) The alternative claim is for an amount of USD 54,690,066.96, said to represent the Claimants' sunk costs in the Raqqa and Hasakah Plants and the Raqqa Factory.301

The Tribunal observes that the Claimants' claims are formulated as overall figures expressed in US Dollars. In great part, these figures reflect underlying Syrian Pound values, consistent with the fact that the investments were localized in Syria, converted into US Dollars at an exchange rate prevailing in 2010.

334.
The Respondent contests the Claimants' DCF valuations and sunk-costs claim on several grounds302 but has not proposed any alternative valuation methodology or adduced its own quantification.
335.
Claims for compensation do not present binary choices between the parties' pleaded cases. As another tribunal put it: "Ultimately, the Tribunal must exercise its own arbitral discretion in assessing compensation by reference to the applicable legal principles and the particular facts, as determined by the Tribunal".303 And as both sides in this case accept, economic value is a matter of judgement rather than objective fact.304 As explained below, the Tribunal is not persuaded that the Claimants' DCF methodology is reliable in the circumstances. The Tribunal is convinced that the more appropriate approach is one based on the value of the capital the Claimants invested, as the appropriate metric of their sunk costs in the two companies. For the purposes of that approach, the Tribunal will rely on the evidence presented by the parties and debated between them, focusing on shareholders' equity.

(i) The Claimants' DCF valuations

336.
The Respondent argues that the use of the DCF method is not "appropriate in this case", primarily in the light of the short period during which the Raqqa and Hasakah Plants were operational (two years and one year, respectively).305
337.
The Claimants retort that "the DCF method does not necessarily require past performance data to be plugged in the model" and that "the DCF method [may be] based solely on projections (without past data), as long as the projections are reasonable, reliable and objective".306 Consistent with this position, the Claimants presented two different DCF-based valuations. First, a valuation by Mr Yamantürk (a witness of fact), submitted with the Claimants' SoC, presented "but-for" net present values for the Raqqa Plant (USD 24.16 million) and the Hasakah Plant (USD 59.51 million) at the "beginning of 2011".307 With their Reply, the Claimants submitted an expert report by Dr Birgönül, which presented different "but-for" net present values for the Raqqa Plant (USD 20.4 million) and the Hasakah Plant (USD 63.35 million) "in 2009".308 In their subsequent requests for relief, the Claimants relied only on the DCF valuations presented by Dr Birgönül. The Tribunal accordingly focuses on those latter valuations.
338.

The Tribunal agrees, as indeed does the Respondent's expert,309 that the DCF method, being an income-based approach, is in principle appropriate to value shares in a commercial enterprise. Nevertheless, the method relies on forward-looking parameters that are inherently uncertain. The appropriateness of DCF therefore depends on a number of factors, notably a track-record of financial performance, reliable projections of revenues, and a future outlook that can be reliably reflected in risk premia that inform the overall discount factor.310 And when a DCF method is adopted, it is typical to cross-check its results against other benchmarks, such as comparable arm's length transactions, stock-market valuations, or historical investment costs.311

339.
In the Tribunal's view, the DCF valuations presented by the Claimants are not appropriate in the circumstances of this case. The Tribunal recognizes that the circumstances are highly unusual and uncertain, but its task is nevertheless to adopt a valuation methodology that is apt to such circumstances. The difficulties with the Claimants' DCF valuations may be outlined as follows.
340.
First, the Claimants' valuation date is 2009. The intent is to capture a "but for" value, ie had it not been for the overall economic vagaries of conflict. That premise is inconsistent with the causal nexus required by Article 4 of the Syria-Italy BIT (as set out at paragraph 288 above),312 and also inconsistent with the Tribunal's decision as to the date on which the Claimants' entitlement to compensation arose, ie 1 April 2012. As Dr Birgönül testified, his revenue projections do not take into account the prevailing situation in Syria or what he called "black swan effects, such as the Arab Spring".313 Further, his discount rate of 8% purports to reflect "the cost of capital that any investor could earn... with an investment of comparable size and risk" in Syria in 2009,314 but as he conceded, it does not account for "the political risk [which would have been] very high" in 2012, leading to a "very high" discount rate.315
341.
Secondly, as Dr Birgönül also frankly admitted, "a track record of a couple of years for the two grinding plants" was "too narrow" a base to be able to use DCF as a reliable forward-looking method.316