The Claimant has authorised to act on its behalf and to receive communications and notifications in this arbitration:
(i) Mr. George Burn
Ms. Sophie Palmer
Ms. Louise Woods Salans LLP
Millennium Bridge House
2 Lambeth Hill
London EC4V 4AJ
Tel.: +44 (0)20 7429 6000
Fax: +44 (0)20 7429 6001
Email: gbun@salans. com ; firstname.lastname@example.org ; lwoods@salans. com
(ii) Ms. Ioana Petculescu
SCP Salans & Associés
5 boulevard Malesherbes
Tel.: +33 1 42 68 93 12 Fax:+33 1 42 68 71 70 Email: email@example.com
Ms. Karen Mills
Mr. Ilman F. Rakhmat
KarimSyah Law Firm
Level 7, Plaza Mutiara
Lingkar Mega Kuningan Kav. 1 & 2
Republic of Indonesia
Tel.:+62 21 577 1177
Fax:+62 21 577 1947
Email: firstname.lastname@example.org , email@example.com;
with copies to: firstname.lastname@example.org, email@example.com, firstname.lastname@example.org, email@example.com; firstname.lastname@example.org
Michael Hwang Chambers
8 Marina Boulevard
#06-02 Marina Bay Financial Centre, Tower 1
Tel: +65 6634 6250
Fax: +65 6834 3400
Bar Association of India
F-21/22 Hauz Khas Enclave
110016, New Delhi
Tel.: +91 (11)2686 2980
Fax: +91 (11)696 4718
B. Cremades y Asociados
Calle Goya, 18, segunda planta
Tel.: +34 91 423 72 00
Fax: +34 91 576 97 94
"Until an organ for the settlement of disputes arising under the agreement is established, disputes that may arise shall be entitled through conciliation or arbitration in accordance with the following rules of procedure:
a) In case the parties to the dispute agree on conciliation, the agreement shall include a description of the dispute, the claims of the parties to the dispute and the name of the conciliator whom they have chosen. The parties concerned may request the Secretary General to choose the conciliator. The General Secretariat shall forward to the conciliator a copy of the conciliation agreement so that he may assume his duties.
b) The task of the conciliator shall be confined to bringing the different view points and making proposals which may lead to a solution that may be acceptable to the parties concerned. The conciliator shall, within the period assigned for the completion of his task, submit a report thereon to be communicated to the parties concerned. This report shall have no legal authority before a court should the dispute be referred to it.
a) If the two parties to the dispute do not reach an agreement as a result of their resort to conciliation, or if the conciliator is unable to issue his report within the prescribed period, or if the two parties do not accept the solutions proposed therein, then each party has the right to resort to the Arbitration Tribunal for a final decision on the dispute.
b) The arbitration procedure begins with a notification by the party requesting the arbitration to the other party to the dispute, clearly explaining the nature of the dispute and the name of the arbitrator he has appointed. The other party must, within sixty days from the date on which such notification was given, inform the party requesting arbitration of the name of the arbitrator appointed by him. The two arbitrators are to choose, within sixty days from the date on which the last of them was appointed arbitrator, an umpire who shall have a casting vote in case of equality of votes. If the second party does not appoint an arbitrator, or if the two arbitrators do not agree on the appointment of an Umpire within the prescribed time, either party may request the Secretary General to complete the composition of the Arbitral Tribunal.
c) The Arbitration Tribunal shall hold its first meeting at the time and place specified by the Umpire. Thereafter the Tribunal will decide on the venue and time of its meetings as well as other matters pertaining to its functions.
d) The decisions of the Arbitration Tribunal shall be final and cannot be contested. They are binding on both parties who must respect and implement them. They shall have the force of judicial decisions. The contracting parties are under an obligation to implement them in their territory, no matter whether it be a party to the dispute or not and irrespective of whether the investor against whom the decision was passed is one of its nationals or residents or not, as if it were a final and enforceable decision of its national courts. "
"[i]n order to bring a swift resolution to [the Claimant’s] claim, [the Respondent] is agreeable that a tribunal be constituted for the sole purpose of determining the threshold issue of [the Claimant’s] locus standi to bring this claim under the OIC Agreement and for hearing [the Respondent’s] preliminary objections to the claim. Such agreement by [the Respondent] is subject and limited only to the terms as set out herein, any variation thereto nullifying such agreement.
[The Respondent] will appoint Fall S. Nariman SC as its party nominated arbitrator; accept the appointment of Michael Hwang SC as [the Claimant’s] party arbitrator and agree to Dr. Bernardo Cremades to be the Chairman of the tribunal (collectively "the Tribunal") provided [the Claimant confirms its] agreement to all of the following:
1. The Tribunal will first decide the threshold issue of whether Article 17 of the OIC Agreement contains an offer by each contracting party to arbitrate disputes with nationals of another contracting party, entitling the latter to accept such offer by commencing arbitration proceedings;
2. If the Tribunal decides that [the Claimant] does have locus standi to bring its claim under Article 17, it will decide [the Respondent’s] application containing preliminary objections and request for security for costs before issuing any directions for a hearing on the merits;
3. If the Tribunal rules in favour of [the Claimant] in relation to the preliminary objections' application any further jurisdictional or admissibility objections, the merits and any counterclaim will be submitted to the same Tribunal;
4. The UNCITRAL Arbitration Rules in effect on the date of this letter will apply to these arbitration proceedings, except to the extent the same varied by the term of this letter and without prejudice to the conditions for conciliation and arbitration imposed by Article 17 of the CIC Agreement. For the avoidance of doubt, the Chairman of the Tribunal will be, appointed by the agreement of the parties and will not act as an umpire as provided by Article 17.2 of the OIC Agreement. All decisions will be made by the majority of the Tribunal; and
5. The seat of the arbitration proceedings will be Singapore and any hearing on the preliminary objections shall be held in Singapore on 17 April, 2012 or thereafter. Any further hearings on the merits, if any, will be held in London at such later dates as shall be agreed by the parties and the Tribunal. "
A. THE OIC AGREEMENT
The Government of the Member States of the Organisation of the Islamic Conference signatory to this Agreement,
In keeping with the objectives of the Organisation of the Islamic Conference as stipulated in its Charter,
In implementation of the provisions of the Agreement for Economic, Technical and Commercial Cooperation among the Member States of the Organisation of the Islamic Conference and particularly the provisions of Article I of the said Agreement,
Endeavouring to avail of the economic resources and potentialities available therein and to mobilize and utilize them in the best possible manner, within the framework of close cooperation among Member States,
Convinced that relations among the Islamic States in the field of investment are one of the major areas of economic cooperation among these states through which economic and social development therein can be fostered on the basis of common interest and mutual benefit,
Anxious to provide and develop a favourable climate for investments, in which the economic resources of the Islamic countries could circulate between them so that optimum utilization could be made of these resources in a way that will serve their development and raise the standard of living of their peoples,
Have approved this Agreement,
And have agreed to consider the provisions contained therein as the minimum in dealing with the capitals and investments coming in from the Member States,
And have declared their complete readiness to put the Agreement into effect, in letter and in spirit, and of their sincere wish to extend every effort towards realizing its aims and objectives. "
"4. Capital: all assets (including everything that can be evaluated in monetary terms) owned by a contracting party to this Agreement or by its nationals, whether a natural person or a corporate body and present in the territories of another contracting party whether these were transferred to or earned in it, and whether these be movable, immovable, in cash, in kind, tangible as well as everything pertaining to these capitals and investments by way of rights or claims and shall include the net profits accruing from such assets and the undivided shares and intangible rights.
5. Investment: the employment of capital in one of the permissible fields in the territories of a contracting party with a view to achieving a profitable return, or the transfer of capital to a contracting party for the same purpose, in accordance with the Agreement.
6. Investor: the Government of any contracting party or natural corporate person [sic], who is a national of a contracting party and who owns the capital and invests it in the territory of another contracting party.
Nationality shall be determined as follows.
(a) Natural Persons:
Any individual enjoying the nationality of a contracting party according to the provisions of the nationality law in force therein.
(b) Legal Personality:
Any entity established in accordance with the laws in force in any contracting party and recognized by the law under which its legal personality is established. "
32.1. Permit the transfer of capital among them and their utilization among them in the fields permitted for investment in accordance with their law (Article 2);
32.2. Endeavour to open up various fields and investment opportunities to the capital on the widest possible scale (Article 3);
32.3. Endeavour to offer various incentives and facilities for attracting capital and encouraging their investments in their territories (Article 4);
32.4. Provide the necessary facilities and grant the required permits for entry, exit residence and work for the investor and his family and those working in connection with the investment (Article 5);
32.5. Encourage the local private sector to cooperate and participate in investments in contracting parties (Article 6);
32.6. Recognise that the rights and obligations of the investor which were established prior to the notice of a withdrawal by a contracting party shall not be affected by the withdrawal. (Article 7)
"1. The investors of any contracting party shall enjoy, within the context of economic activity in which they have employed their investments in the territories of another contracting party, a treatment not less favourable than the treatment accorded to investors belonging to another State not party to this Agreement, in the context of that activity and in respect of rights and privileges accorded to those investors.
2. Provisions of paragraph 1 above shall not be applied to any better treatment given by a contracting party in the following cases:
i. Rights and privileges given to investors of one contracting party by another contracting party in accordance with an international agreement, law or special preferential arrangement.
ii. Rights and privileges arising from an international agreement currently in force or to be concluded in the future and to which any contracting party may become a member and under which an economic union, customs union or mutual tax exemption arrangement is set up.
iii. Rights and privileges given by a contracting party for a specific project due to its special importance to that state. "
"The investor shall be bound by the laws and regulations in force in the host state and shall refrain from all acts that may disturb public order or morals or that may be prejudicial to the public interest. He is also to refrain from exercising restrictive practices and from trying to achieve gains through unlawful means. "
35.1. The host state must not adopt or permit the adoption of any measures that could affect directly or indirectly the ownership of the investor, except:
i. when the expropriation is in the public interest in accordance with the law and without discrimination and on prompt and effective compensation.
ii. when the preventive measure is issued in accordance with an order from a competent legal authority. (Article 10)
35.2. The host state shall undertake to guarantee the free transfer to any contracting party of the capital and its net proceeds in cash without the investor being subject to any banking, administrative or legal restrictions and without any charges or taxes on the transfer. The transfer shall also be effected in the currency in which the investment was made or any other convertible currency. Furthermore, the transfer must be effected within the period normally required for the completion of bank procedures and without delay. However, procedural measures instituted for exchange control in the host state for administrative purposes or to prevent the illegal transfer abroad of its national, shall not be considered as a restriction, (Article 11)
35.3. The host state shall guarantee for the investor the freedom to dispose of the ownership of the invested capital by selling it, wholly or partly, by liquidation, cession, or grant or by any other means. (Article 12).
35.4. The investor shall be entitled to compensation for any damage resulting from any action of a contracting party or one of its public or local authorities or its institutions in the following cases:
i. Violation of any of the rights or guarantees accorded to the investor under this Agreement;
ii. Breach of any of the international obligations or undertakings imposed on the contracting party and raising under the Agreement for the benefit of the investor or the non-performance of whatever is necessary for its execution whether the same is intentional or due to negligence;
iii. Non-execution of a judicial decision requiring enforcement directly connected with the investment;
iv. Causing, by other means or by an act or omission, damage to the investor in violation of laws in force in the state where the investment exists.
Furthermore, the compensation should be equivalent to the damage suffered by the investor and should be monetary if it is not possible to restore the investment. The assessment of monetary compensation should be concluded within six months from the date when the damage was sustained. (Article 13).
35.5. Article 14 of the OIC Agreement deals with the treatment accorded to investors in cases of hostility and civil disobedience.
35.6. Article 15 provides that the OIC shall establish, through the Islamic Development Bank, and in accordance with the provisions of its Agreements as a subsidiary of the Organisation, an Islamic Institution for the Guarantee of Investments which is to take charge of the insurance of property invested in the territories of the contracting parties.
"The host state undertakes to allow the investor the right to resort to its national judicial system to complain against a measure adopted by its authorities against him, or to contest the extent of its conformity with the provisions of the regulations and laws in force in its territory, or to complain against the non-adoption by the host state of a certain measure which is in the interest of the investor, and which the state should have adopted, irrespective of whether the complaint is related, or otherwise, to the implementation of the provisions of the Agreement to the relationship between the investor and the host state.
Provided that if the investor chooses to raise the complaint before the national courts or before an arbitral tribunal then having done so before one of the two quarters he loses the right of recourse to the other. "
The English version:
"Until an organ for the settlement of disput.es arising under the agreement is established, disputes that may arise shall be entitled through conciliation or arbitration in accordance with the following rules of procedure [...]" (emphasis added)
The Arabic version:
لاو إلى ان يتم إنشاء جهاز لتسوية المنازعات الناشئة عن هذه الاتفاقية يحل ما يكون ص ألمنازعات ض طريق (emphasis added) 'التوفيق او التعكيم وفقاً للقواعد و الاجراءات الاتية[...]
The French version:
"En attendant la création, d'un organisme pour !.e règlement des litiges résultant de cet. Accord, les litiges qui pourraient de présenter seront réglés [sic] par conciliation ou par voie d'arbitrage conformément aux règles suivantes [...]" (emphasis added)
Article 31: General Rule of Interpretation
"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 meaty which was made between all the parties in connection with the conclusion of the treaty;
b) any instrument which was made by one of more parties in connection with the conclusion of the meaty and accepted by the other parties as an instrument related to the mealy.
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 parlies 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. ’’
Article 32: Supplementary Means of Interpretation
"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. "
Article 33: Interpretation of Treaties Authenticated in two or more Languages
"1. When a treaty has been authenticated in two or more languages, the text is equally authoritative in each language, unless the treaty provides or the parties agree that, in case of divergence, a particular text shall prevail.
2. A version of the treaty in a language other than one of those in which the text was authenticated shall be considered an authentic text only if the treaty so provides or the parties so agree.
3. The terms of the treaty are presumed to have the same meaning in each authentic text.
4. Except where a particular text prevails in accordance with paragraph I, when a comparison of the authentic texts discloses a difference of meaning which the application of articles 31 and 32 does not remove, the meaning which best reconciles the texts, having regard to the object and purpose of the treaty, shall be adopted. "
72.1. Articles 31(2)(a) and (b): The Parties have not identified any agreement or instruments in relation to the conclusion of the OIC Agreement that form part of its context within the meaning of Articles 31 (2)(a) and (b);
72.2. Articles 31(3) and (4): Although there is no subsequent agreement between the Contracting Parties to the OIC Agreement regarding its interpretation or the application of its provisions within the meaning of Article 31(3)(a), the Respondent relies on the OIC Charter and the establishment of the IICJ as relevant to the interpretation of the OIC Agreement. It also argues that the term ‘established’ in the opening phrase of Article 17 of the OIC Agreement has a special meaning intended by the Contracting Parties for the purposes of Article 31(4) VCLT. The Respondent also alleges that there is subsequent practice for the purposes of Article 31 (3)(b) in the application of Article 17 of the OIC Agreement that confirms that there was never any intention by the State Parties to give advance consent to arbitrate disputes with investors.
72.3. Article 31(3)(c): Other relevant rules of international law applicable to relations between the parties. In respect of the interpretation of a treaty relating to a subject matter such as the settlement of investment disputes which has undergone a rapid transformation between the date of the Treaty and the date of interpretation, then the Tribunal must consider in this context the rule of inter-temporal interpretation.
72.4. Article 32: Supplementary means of interpretation. The Parties have not relied on any travaux préparatoires as supplementary means of interpretation within the meaning of Article 32.
72.5. Article 33: Authentic texts: The OIC Agreement is authenticated in three languages, "each version being equally authentic" (Article 25 of the OIC Agreement). This arbitration is being conducted in English, and the Parties and the Tribunal have worked with the English and (to a limited extent) French texts.
The opening phrase of the English text contains a clumsy and ambiguous use of the word ‘entitled’ in the phrase "...disputes that may arise shall be entitled through conciliation or arbitration... ", The French and Arabie texts, referred to earlier, translate to the English ‘resolved’, which is a much more natural and meaningful term in English than the term in fact used. The Tribunal considers that the interpretation of ‘entitled’ in the sense of ‘entitled to resolution’ gives the same meaning in each authentic text (Article 33(3) VCLT) and best reconciles the text in regard to the object and purpose of the OIC Agreement (Article 33(4) VCLT).
The preamble of the OIC Agreement refers to the anxiety of the Signatories to develop ‘a favourable climate for investment’. The OIC Agreement contains typical investment protection provisions, including guarantees of adequate protection and security, incentives, freedom of movement of personnel, most favoured-nation protection rights, protection against expropriation, free transfer and disposition of capital, compensation for the violation of rights, and national treatment. The object and purpose of the OIC Agreement is investment, promotion and protection by conferring a broad range of rights on investors, and Article 17 must be interpreted in good faith in light of this object and purpose.
Article 17 is subject to only a single temporal limitation, being the opening phrase "until an Organ for the settlement of disputes arising under the Agreement is established", which the Tribunal considers below. Apart from this phrase, the text of Article 17, and particularly Article 17(2), describe an unexceptional arbitration procedure covering commencement of the arbitration, appointment of the tribunal, meetings, the final and binding effects of awards, and the obligation to enforce awards. The subject matter of the clause is the generic and undefined term ‘disputes’. The interpretation of Article 17 in good faith in accordance with the ordinary meaning to be given to the terms of the treaty and their context and in light of the object and purpose is to make a contemporary interpretation that favours the object of investment promotion and protection. The Tribunal considers that the intention of the Contracting Parties to the OIC Agreement was to create a dispute resolution mechanism that might develop with international law. This interpretation requires Article 17 to be construed as containing an open offer to investors by all state parties, including the Republic of Indonesia, which the Claimant in this case has accepted by commencing the arbitration.
‘‘The party requesting an interim measure under paragraph 2 (a) to (c) shall satisfy the arbitral tribunal that:
(a) Harm not adequately reparable by an award of damages is likely to result if the measure is not ordered, and such harm substantially outweighs the harm that is likely to result to the party against whom the measure is directed if the measure is granted; and
(b) There is a reasonable possibility that the requesting party will succeed on the merits of the claim. The determination on this possibility shall not affect the discretion of the arbitral tribunal in making any subsequent determination
1. Article 17 of the OIC Agreement establishes investor-State dispute resolution provisions between the Contracting Parties and investors of other Contracting Parties;
2. In accordance with the above paragraph, the Respondent has consented to arbitrate the dispute with the Claimant arising from the Claimant’s avowed investment in Bank Century and as described in the Notice for Arbitration;
3. The Tribunal reserves the determination of its jurisdiction to the merits phase of the arbitration, where the questions to be determined include whether the Claimant can establish its status as an ‘investor’ within the meaning of the OIC Agreement;
4. The applications for security for costs by the Respondent is dismissed;
5. The costs of the jurisdictional phase of the arbitration are reserved for the merits phase of the arbitration.
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