|Table of Abbreviations|
|Arbitration||Arbitration Rules of the United Nations Commission on International|
|Rules||Trade Law of 1976 (the UNCITRAL Rules)|
|Claimants||Mr [REDACTED] and Mrs [REDACTED]|
|Cs' Brief||Claimants' Brief on Jurisdiction (19 June 2009)|
|Cs’ S on J||Claimants' Submission on Jurisdiction (26 October 2009)|
|Cs' Reply||Claimants' Reply (13 November 2008)|
|Defense||Respondent's Statement of Defense (29 May 2008)|
|ECJ||European Court of Justice|
|Exh. C||Claimant’s Exhibit|
|Exh. CL||Claimant's Legal Authorities|
|Exh. R||Respondent's Exhibit|
|Exh. RL||Respondent's Legal Authorities|
|ICJ||International Court of Justice|
|ICSID||International Centre for Settlement of investment Disputes|
|Notice||Claimant's Notice of Arbitration (8 April 2008)|
|Parties||Claimant and Respondent|
|PO 1||Procedural Order No. 1 (1 March 2007)|
|Respondent||The Slovak Republic|
|R’s Rejoinder||Respondent’s Rejoinder to the Reply of the Claimants (7 April 2009)|
|R s S on J||Respondent's Submission on Jurisdiction (4 November 2009)|
|R's Reply||Respondent’s Reply to the Brief on Jurisdiction (28 July 2009)|
|SoC||Statement of Claim (6 November 2007)|
|SoD||Statement of Defence (29 May 2008)|
|Treaty or (Dutch-Slovak) BIT||Bilateral investment treaty; specifically "Agreement on encouragement and reciprocal protection of investments between the Kingdom of the Netherlands and Czech and Slovak Federal Republic" of 29 April 1991|
|Tribunal||The Arbitral Tribunal|
|Tr J. [page: line]||Transcript of the Hearing on Jurisdiction (17 November 2009)|
|Vienna Convention||Vienna Convention on the Law of Treaties of 23 May 1969 (entered into force on 27 January 1980).|
• Messrs. Martin Maisner. Ludovit Micinsky, Milos Olik, and Jiri Zeman of ROWAN Legal s.r.o, Nàmest¡e Slobody 11, 811 06 Bratislava, the Slovak Republic;
• Mr. [REDACTED] and Ms. [REDACTED] Ministry of Finance of the Slovak Republic, Stefanovicova 5. 81782 Bratislava 15, the Slovak Republic.
• Presiding Arbitrator : initially. Dr. Robert Briner, [REDACTED] resigned on 28 July 2009; from 7 September 2009, Professor Gabrielle Kaufmann-Kohler, Lévy Kaufmann-Kohler [REDACTED]
• Arbitrator appointed by the Claimants : Professor Mikhail Wladimirof [REDACTED]
• Arbitrator appointed by the Respondent : Dr Vojtéch Trapl [REDACTED]
1. To declare for justice, that the Republic Slovakia the agreement between Slovakia and the Netherlands has been violated concerning the mutual prolection of investments of 29 April 1991 by:
a. providing no safeguard for an honest and fair treatment of the below mentioned and more explicit " [REDACTED] investments" (article 3 sub 1).
b. hindering the operations, the management, the maintenance, the usage, the enjoyment, and the disposition of the investments by means of unreasonable and, or discriminatory measures (article 3 sub 1)
c. providing no entire certainty and protection for the investments (article 3 sub 2).
d. providing less certainty and protection to the investments as those are provided to the investors from Slovakia (article 3 sub 2).
e. taking measures, with the consequence that investment directly or indirectly is taken away (article 5).
2. ordering the government to pay accordingly an amount of SK 7,520,335,505 and £ 18,129,833.79, to be increased with the interest, as above mentioned and the interest, according to the Dutch legal system ex art 6:119a. to be calculated as from the date of 31.12 2007 until the date of complete/entire settlement, complying with this article, subsidiary to payment of a percentage of interest of 8 %. to be calculated as from 31.12.2007 until the date of complete/entire settlement, being the equivalent of the rental revenues, increased with the annual rental increases as from 14 April 2003 each year.
3. condemning the government to pay the costs of this arbitration, including the costs of the lawyers fees to be determined at 3% of the total sum, plus at this moment unknown other costs of this arbitration (translation, faxes, hotels, etc.) (SoC, Section XVI)
697. Given the above, the Respondent requires the Tribunal to decide to the below stated effect:
(a) The Tribunal dismisses the Statement of Claims submitted by Claimant 1 and Claimant 2 because it has no jurisdiction to decide on the merit of the claim
(b) Claimant 1 and Claimant 2 shall pay the costs of this arbitration proceeding including the costs of the Tribunal as well as the legal and other costs incurred by the Respondent, on a full indemnity basis
698 In case the Tribunal comes to a conclusion it has jurisdiction to decide on the merit of the claim, the Respondent requires the Tribunal to dismiss all the claims stated in the Statement of Claim and to render Arbitration Award to the below stated effect:
(a) The Respondent has not breached the BIT
(b) The Respondent has ensured the Claimants' investment fair and equitable treatment
(c) The Respondent has not impaired the operation, management, maintenance, use. enjoyment or disposal of the Claimants' investment and that it has not taken any unreasonable or discriminatory measures with regard to the Claimants' investment.
(d) The Respondent has accorded to the Claimants' investments full security and protection
(e) The Respondent has observed obligations it entered into with regard to the Claimants' investment
(f) The Respondent has not taken any illegal or unreasonable measures depriving, directly or indirectly, the Claimants of their investment
(y) Claimant 1 and Claimant 2 shall pay the costs of this arbitration proceeding including the costs of the Tribunal as well as the legal and other costs incurred by the Respondent, on a full indemnity basis.
(i) For the Claimants:
• Mr [REDACTED]
• Mr [REDACTED] and Mrs. [REDACTED]
• Mr. [REDACTED]
(ii) For the Respondent:
• Mr. Martin Maisner, ROWAN Legal s.r.o
• Mr. Ludovit Micinsky, ROWAN Legal s.r.o
• Mr. Milos Olik, ROWAN Legal s.r.o
• Mr Jiri Zeman, ROWAN Legal s.r o
• Ms. [REDACTED] Slovak Ministry of Finance
• Mr. [REDACTED] Slovak Ministry of Finance
(a) The dispute brought by the Claimants is not within the jurisdiction and the competence of the Arbitral Tribunal;
(b) Claimants shall jointly and severally pay the costs of this arbitration proceeding including the costs of the Arbitral Tribunal as well as the legal and other costs incurred by the Respondent, on a full indemnity basis. (R’s Reply, para 294)
• The Tribunal is competent ratione temporis, personae and materiae, The Claimants’ claims should be admitted;
• The State is responsible for the damage suffered by the Claimants and e The State should be sentenced to pay the costs of this pre-procedure.
(C's Brief, p. 9)
1) All disputes between one Contracting Party and an investor of the other Contracting Party concerning an investment of the latter shall if possible, be settled amicably.
2) Each Contracting Party hereby consents to submit a dispute referred to in paragraph (1) of this Article, to an arbitral tribunal, if the dispute has not been settled amicably within a period of six months from the date either party to the dispute requested amicable settlement.
3) The arbitral tribunal referred to in paragraph (2) of this Article will be constituted for each individual case in the following way: each party to the dispute appoints one member of the tribunal and the two members thus appointed shall select a national of a third State as Chairman of the tribunal. Each party to the dispute shall appoint its member of the tribunal within two months, and the Chairman shall be appointed within three months from the date on which the investor has notified the other Contracting Party of his decision to submit the dispute to the arbitral tribunal
4) If the appointments have not been made in the above mentioned periods, either party to the dispute may invite the President of the Arbitration Institute of the Chamber of Commerce of Stockholm to make the necessary appointments. If the President is a national of either Contracting Party or if he is otherwise prevented from discharging the said function, the Vice-President shall be invited to make the necessary appointments. If the Vice-President is a national of either Contracting Party or if he too is prevented from discharging the said function, the most senior member of the Arbitration Institute who is not a national of either Contracting Party shall be invited to make the necessary appointments
5) The arbitration tribunal shall determine its own procedure applying the arbitration rules of the United Nations Commission for international Trade Law (UNCITRAL).
6) The arbitral tribunal shall decide on the basis of the law, taking into account in particular though not exclusively:
• the law in force of the Contracting Party concerned:
• the provisions of this Agreement, and other relevant Agreements between the Contracting Parties;
• the provisions of special agreements relating to the investment;
• the general principles of international law.
7) The tribunal takes its decision by majority of votes; such decision shall be final and binding upon the parties to the dispute.
• The law in force of the place of the Contracting Party concerned, i.e. here Slovak law;
• The provisions of the BIT and other relevant agreements between the Parties, i.e. here the BIT;
• The provisions of special agreements relating to the investment;
• The general principles of international law.
Pursuant to Article 8(5) of the Bilateral Investment Treaty between the Netherlands and the State of S!ovakia of 24 April 1989, the Arbitral Tribunal shall determine its own procedure applying the arbitration rules of UNCITRAL (the Rules).
The Tribunal will issue procedural orders on specific procedural issues if and when needed. Procedural orders will be signed by the Presiding Arbitrator alone. Following consultation with his co-arbitrators (Section 3 of PO 1)
The Claimants further refer to Article 307 of the EC Treaty which provides that agreements concluded before the community treaties came into force remain effective and are not overridden by the Treaty's terms (Tr. J., 16:7-16) The Claimants also disagree with the Respondent’s contention that the applicable BIT and the EC Treaty cover the same subject matter: in the Claimants’ opinion the objectives of the two treaties are "totally different" (Tr. J., 17:2).
This said, the fact that this Tribunal has not found EC law to constitute an obstacle to its jurisdiction under the BIT is without prejudice to the application of any relevant provisions of EC law as part of Slovak domestic law. It shall be recalled that the dispute settlement clause contained in Article 8 (6) of the BIT stipulates the following choice of law provision:
The arbitral tribunal shall decide on the basis of the law, taking into account in particular though not exclusively:
• the law in force of the Contracting Party concerned; [...] (emphasis added).
The Tribunal first observes that both Parties have relied on Article 30 of the Vienna Convention in their respective submissions, albeit in order to reach different conclusions. Article 30 provides as follows:
1. [...] the rights and obligations of States Parties to successive treaties relating to the same subject matter shall be determined in accordance with the following paragraphs.
3. When all the parties to the earlier treaty are parties also to the later treaty but the earlier treaty is not terminated or suspended in operation under article 59, the earlier treaty applies only to the extent that its provisions are compatible with those of the later treaty (emphasis added).
Essentially, the Respondent contends that Article 30 cannot be applied to the resolution of the dispute between the Parties since the two treaties in question do not relate to the same subject matter (R)s Reply, para 69 et seq.). while the Claimants argue that it does, considering that "all BIT stipulations are absolutely reconcilable with the EC Treaty’’ (Tr. J,, 17:23-24).
As a last subsidiary claim, the Slovak Republic requests that the Tribunal ask a national court to make a referral to the ECJ in order to decide all questions relating to the application of the Dutch-Slovak BIT in the present dispute. Considering that the Tribunal has encountered no difficulty in deciding the issues raised by the Parties, the Tribunal sees no need to discuss this request.
To conclude with one general observation, it is certain that the intra-EU BIT compatibility with EC law has recently become a much debated topic. There are approximately 190 intra-EU BITs in force today,13 and at least four other arbitration cases based on intra-EU BITs have been recently brought before arbitral tribunals."14
b. Jurisdiction ratione personae
i. Respondent's position
The Respondent argues that the Claimants have not proved their Dutch nationality as the primary condition for the protection of their investment under the Dutch-Slovak BIT. According to the Respondent, the Claimants have effective nationality of Belgium as opposed to the Netherlands (SoD, Part A 3.; R's Reply, paras. 83 et seq.; Tr. J., 10 :1 et seq.).
More specifically, the Respondent puts forward the argument that the relevant documentation presented by the Claimants is insufficient to prove their nationality, on the contrary, several documents in the record demonstrate that the Claimants have dominant nationality of Belgium (R-146, R-147, C-47, see R's Reply, paras. 92-96, 126-128).
Finally, the Respondent contends that the Claimants' alleged companies such as [REDACTED] and T. cannot be considered investors under the Dutch-Slovak BIT as they do not satisfy the terms of Article 1(a) of the BIT, nor have they been incorporated in the Netherlands in order to be able to claim protection under the Dutch BIT (R's Reply,paras. 169-181. Tr. J., p, 72-73).
ii. Claimants’ position
The Claimants argue that they have fully demonstrated that they both hold Dutch nationality. As a result, their investment must be covered by the Dutch-Slovak BIT. The Claimants note specifically that not only they "from their birth onwards, have uninterruptedly had the Dutch nationality" (Cs’ Brief, p. 2. Exh. C-24 7. C-316 A, B, C, D), but also emphasize that the Dutch nationality is and has always been their only nationality (Tr. J., p. 28.5).
The Claimants also argue that the investments made via their companies must be afforded protection under the Dutch-Slovak BIT, since they are 100% owners and shareholders In these companies (Cs’ Brief, p. 2; Cs’ S on J, p. 5-7). It is also the Claimants' position that Mr. [REDACTED] companies were nothing but a "bank... to keep his money there" (Tr. J., p. 14:10-11). The Claimants thus deny that the Deed of Transfer of Claims (Exh. C-322) could have as its effect that the companies are obliged to make any claims in their own right (Tr. J., p. 84-87).
1. Nationality of Messrs. [REDACTED] and [REDACTED]
First, the Respondent contends that the Dutch nationality of the Claimants as proved by their Dutch passports and other documents (Exh. C-316 A, B, C, D) is merely prima facie evidence which has little relevance if an individual's nationality is found to be ineffective due to the lack of a genuine link between such an individual and the State (R's Reply, paras. 89-90).
It is correct, as asserted by the Respondent, that the Claimants have been permanent residents of Belgium for many years (Tr, J.. 27:13). However, the Respondent has not demonstrated that Dutch law requires an effective link such as permanent residence for the continuation of citizenship and that therefore the Claimants would have lost their Dutch nationality as a result of their permanent residence elsewhere.
Similarly, while the Respondent correctly relies on Dutch nationality legislation providing that in certain specific cases Dutch citizenship is lost at the moment of a voluntary acquisition of the citizenship of another country (SoD, para. 19), the Respondent has not shown that the Claimants have acquired Belgian nationality as a result of their permanent residence in Belgium or otherwise, in other words, there is no evidence that Belgium would in fact recognize the Claimants as Belgian citizens.
As far as ambiguous documentary evidence concerning the Claimants’ nationality is concerned, the Respondent was right to raise some concern about Mr. [REDACTED] application for an extract from the Criminal Record filed with the General Attorney’s Office (Exh. R-146), which referred to him as Belgian, rather than Dutch. However, following a question from the Tribunal at the hearing, it was explained that this must have been a mistake on the part of the Slovak authorities, as the same document also includes Mr. [REDACTED] Dutch passport number (Tr. J,, pages 77-78).
The Tribunal is satisfied with the explanations provided by the Claimants at the hearing regarding their Dutch citizenship (Tr. J. 76:1 - 79:12). This is especially so considering that the Tribunal has no reason to doubt that the Claimants have not lost their Dutch citizenship, nor that it is in fact the Claimants' only citizenship.
The Respondent has relied on Siag in support of its argument that an investor’s certificate of nationality constitutes merely prima facie evidence (R's Reply, para. 90). However, in Siag this remark was made in the context of emphasizing the importance of national law in determining an investor’s nationality. The Siag tribunal observed that while documents evidencing the claimants’ nationality are relevant. "they do not alleviate the requirement on the Tribunal to apply the Egyptian nationality law, which is the only means of determining Egyptian nationality’’21.
In the present case, the Respondent has not succeeded in establishing that the Claimants have either lost their Dutch citizenship pursuant to Dutch nationality law, or that they are dual citizens of both the Netherlands and Belgium. As a result, the Respondent's reliance on Champion Trading is also misplaced (R's Reply, para-105), since in that case the claimants had two nationalities and hence the tribunal applied the effective nationality principle in order to determine which one of the two was the claimants' dominant nationality.
The Claimants rely on Micula v. Romania22 to question the application of effective nationality principle in cases of a single, as opposed to dual citizenship. The Tribunal agrees with the rationale adopted in Micula where the tribunal, after having examined the Draft Articles on Diplomatic Protection and the ILC Special Rapporteur’s report on Diplomatic Protection concluded that:
There is thus a clear reluctance in public international law to apply the genuine link test where only a single nationality is at issue, such as the case at hand. (para. 94, emphasis added)
The tribunal concluded its analysis by noting that:
[W]hen dealing with a single nationality, the threshold for the Respondent State to show that the test is applicable is higher than in the cases of dual nationality and the use of the test should be limited to exceptional circumstances (Ibíd., para. 104, emphasis added)
Indeed, the Nottebohm case where the principle of effective nationality was applied in a case of a single nationality certainly represents such "exceptional circumstances". In that case the claimant had held German nationality from his birth, had genuine ties to Germany, and had in addition been living in Guatemala for 34 years. Shortly after the Second World War broke out, the claimant renounced his German nationality and became a naturalized citizen of Liechtenstein. The ICJ found that the only reason for his naturalization was the substitution of his status as a national of a belligerent State as opposed to that of a neutral State The ICJ's conclusion was that since Mr Nottebohm's nationality was not effective, Guatemala had no obligation to recognize a nationality granted in such circumstances.
Consequently there is no need for the Tribunal to consider the Parties' argument as to whether the Claimants could alternatively have brought their claims under the Belgian-Slovak BIT. However, the Tribunal notes in passing that in the absence of the Belgian nationality of the Claimants, the answer to this question would necessarily have been negative.
2. Investments made through Claimants' companies.
As noted above, the Respondent challenges the Tribunal’s jurisdiction over the Claimants’ investments made through companies such as [REDACTED] and [REDACTED] Companies") on the grounds that Article 1(b) of the Dutch-Slovak BIT limits the term "investor" to natural persons having the nationality of one of the contracting parties ano legal persons constituted under the law of one of the contracting parties.
Both Parties have advanced arguments as to whether the claims of these companies can be considered under different BITs, i.e., under BITs concluded between the Slovak Republic and the State where each of these companies is incorporated, in this context, the relevance of the definition of "investment" in Article 1 (a) of the Dutch-Slovak BIT, covering "every kind of asset invested either directly or through an investor of a third State" has also been discussed.
Evidence presented to the Tribunal demonstrates that Mr. [REDACTED] is the owner of the Companies (Exh. C - 248 A. B, C, Exh. C-309: Tr. J., p. 87-88). Hence, subject to the observations made below about the timing of Mr. [REDACTED] ’s acquisition of the BCT shares, an issue which may require further examination at the merits stage, the Tribunal is satisfied that Mr. [REDACTED] is the owner and shareholder of the Companies through which the acquisition of the BCT shares was made.
In this context, it is important to note that the nationality of the Companies and Mr. [REDACTED] right to claim investment protection under the Dutch-Slovak BIT as a natural person and owner of the Companies are two issues which should be kept separate from the legal point of view For purposes of jurisdiction, only the second one matters here.
This said, for the sake of completeness in view of the Parties' argumentation, the Tribunal notes that the Claimants expressly admit that only [REDACTED] is Dutch23, while [REDACTED], is incorporated under UK laws and [REDACTED] and [REDACTED] are Belgian (Cs'S on J, p. 3). In other words, they accept that the Companies, but for [REDACTED] do not hold Dutch nationality, namely, that they have not been constituted under the laws of the Netherlands pursuant to Article 1(b) of the applicable BIT.
This, however, is without prejudice to the investor's rights as a natural person Therefore, the Tribunal is inclined to follow the Claimants’ reasoning that the Companies were nothing more than a vehicle through which Mr. [REDACTED] being the owner of the Companies (Tr. J., 87:1 T), transferred his personal capital for investment in the Slovak Republic. As explained by the Claimants at the hearing with respect to one of the Companies in question:
[It] was nothing else than a Dutchman’s money deposit, not unlike a savings bank. There is essentially no difference. (Tr. J., 34: 7-9)
The Tribunal also notes in this context that it is nowadays by no means uncommon to set up sometimes complex corporate structures to make investments abroad and that arbitral tribunals have often been required to assess investments made through corporate vehicles under bilateral investment treaties.24
The question before this Tribunal is therefore whether, through his control and ownership of the Companies, Mr. [REDACTED] can be considered as an investor. In order to answer this question, recourse must first be had to the text of the BIT. The Tribunal observes that there is nothing in the BIT that precludes such an interpretation. Quite to the contrary, the text of the Treaty with respect to the protection of investments is quite broad.
The Tribunal believes its interpretation to be in line with the approach adopted by other tribunals. Generally speaking, even in cases where investors had chosen much more complex corporate structures for their investment than in the present case, tribunals have nonetheless found that the corporate structure does not change the nature of the investment, nor disqualify the claimant from invoking the protection of the treaty.
The conclusion which the Tribunal reaches is further supported by authors such as McLachlan, Shore and Weiniger, who state that "where the corporation is controlled by nationals of another State and the corporation has no substantial business activities and no management seat in the State of incorporation, the corporation may be regarded as the national of the State where control and management is located"25. This is so especially in the case where the shareholder is claiming direct injury to its own rights as opposed to injury to the corporation.26
The Tribunal's conclusion is also supported by a reference to Sedelmayer v Russia27. That case bears striking similarity to the present one. The claimant, a German citizen, sought protection under the German-Russian BIT as a natural person for the investments he had made through his wholly owned American company. The tribunal found that since the claimant’s company was "only a vehicle through which he transferred his own personal capital into Russia"28, in light of the object and purpose of the applicable treaty, Mr Sedelmayer had to be "regarded as an investor under the Treaty, even with respect to investments formally made by SGC International or the other companies"29.
At the hearing, in an answer to the Tribunal’s question about the purpose of the Deed, the Claimants' Counsel responded as follows:
To do with the deed of transfer, it is a pity that we acted in this way, because it is a little bit disturbing, the force. The deed itself, the meaning of this deed was only to give [REDACTED] the possibility, if necessary, to collect also and to act also as a Claimant for the other companies. This procedure is the only purpose of the deed, (emphasis added, Tr. J., 84:6-13)
The Tribunal has no reasons to doubt the sincerity of the Claimants' explanation.
c. Jurisdiction ratione materiae
i. Respondent’s position
The Respondent’s third jurisdictional objection relates to the alleged lack of the Tribunals jurisdiction ratione materiae. It is the Respondent's view that the claimed investments do not comply with the standard criteria of investment, such as the so-called Salini test (R's Reply, para. 186 et seq).
Finally, the Respondent contends that the Claimants have failed to sufficiently identify the alleged breach of the BIT, "as they have failed to identify the acts the Respondent was obliged to perform to prevent the conduct of individuals filing the BCT bankruptcy petition" (R's S on J, para. 2 et seq.).
ii. Claimants’ position
The Claimants also hold the view that they have fully proven that the allegedly illegal acts by the State judiciary, tax authorities and others, as well as the State’s failure to act when in fact intervention was required, amount to the Slovak Republic’s breaches of its obligations under the BIT (Tr. J., p. 53-62).
1. Existence of an investment
It is common ground between the Parties that the Tribunal’s jurisdiction is contingent upon the Claimants' having made an investment within the meaning of the BIT. Article 1(a) of the BIT defines the term ‘ investment" broadly and non-exhaustively:
[T]he term ‘investments' shall comprise every kind of asset invested either directly or through an investor of a third State and more particularly, though not exclusively:
i. movable and immovable property and all related properly rights;
ii. shares, bonds and other kinds of interests in companies and joint ventures, as well as rights derived there from;
iii. title to money and other assets and to any performance having an economic value;
iv. rights in the field of intellectual property, also including technical processes, goodwill and know-how;
v. concessions conferred by law or under contract, including concessions to prospect, explore, extract and win natural resources, (emphasis added)
The Tribunal thus concludes that since the Claimants' investment meets the definition of investment under the BIT, it is sufficient for the Tribunal's determination of an existence of an investment in the present case. However, considering that in their discussion of the existence of an investment both Parties have relied on Salini v. Morocco32 (R’s Reply, para 186 et seq, Tr. J,, p 43 et seq). the Tribunal will verify that this test is fulfilled as well.
As is well known, the tribunal in Salini held that the notion of investment presupposes: (a) a contribution, (b) a certain duration over which the project is implemented, (c) an element of risk, and (d) a contribution to the host State's development, being understood that these elements may be closely Interrelated, should be examined in their totality, and will normally depend on the circumstances of each case33.
Before examining whether the Salini test has been met in the present case, the Tribunal wishes to make two observations. First, it is important to note that the Salini test was developed in the context of Article 25 of the ICSID Convention, while this Tribunal has been constituted under the UNCITRAL Rules.
Second, as emphasized by the Claimants at the hearing, the Salini test has recently come under a fair amount of scrutiny both in the doctrine and the jurisprudence (Tr, J., p. 43-48) For example, in Biwater v Tanzania34 the tribunal explicitly noted that:
In the Tribunal's view, there is no basis for a rote or overly strict, application of the five Salini criteria in every case. These criteria are not fixed or mandatory as a matter of taw. They do not appear in the ICSID Convention. (at para. 312, emphasis added)
The tribunal went on to conclude that
Given that the Convention was not drafted with a strict, objective, definition of "investment", it is doubtful that arbitral tribunals sitting in individual cases
First, an investment presupposes a contribution on the side of the investor. In the case at hand, the Tribunal is persuaded that the purchase of shares by the Claimants, especially given the purpose consisting in revitalizing BCT, represents a contribution of money and assets of economic value.
This said, there is a disagreement between the Parties regarding the timing of Mr.[REDACTED] acquisition of BCT shares (R’s Reply, para. 248), in particular with respect to investments made through [REDACTED] and [REDACTED] (R's Reply, para, 264 et seq). The Respondent has argued that the Claimants have failed to produce evidence proving their ownership of [REDACTED] at the decisive period of time", and that the Claimants' acquisition of BCT shares was not made in good faith, since at the time of acquisition BCT was already over-indebted (R’s S on J, para. 38; R's Reply, para. 268). The Respondent has also raised some concerns regarding Mr. [REDACTED] ownership interest in [REDACTED] at different times (R's Reply, para 264)
The third requirement, namely the fact that the project in question involves an element of risk, has not been seriously contested by the Respondent. Indeed, the fact that the purchase price of the BCT shares paid by the Claimants may have been lower than the actual value of the shares does not preclude the fact that the Claimants' investment involved a degree of risk. As observed by the tribunal in Société Générale35:
(t)he purchase of property for a nominal price is a normal kind of transaction the world over when there are other interests and risks entailed in the business, (at para. 36)
Finally, the Respondent argues that the Claimants have failed to demonstrate any contribution to the Slovak Republic's development through their investment. According to the Respondent, the Claimants' decision to invest in BCT was guided by pure self-interest, especially considering the allegedly low price paid for the shares.
For all the foregoing reasons, the Tribunal concludes that the Claimants made an investment within the definition of Article 1(a) of the BIT. Because the Parties have also referred to the Salini test, the Tribunal further notes that this test is met as well. Accordingly, the Slovak Republic’s jurisdictional challenge that there is no investment fails.
2. An investment made in accordance with the host State's laws
It is the Respondent's position that besides the four conditions outlined above under the Salini formula, there is a yet another condition, "ensuing from international law and the established practises in investment disputes" that foreign investors have to observe (R's Reply, para. 188 et sect.).
Each Contracting Party shall in its territory promote investments by investors of the other Contracting Party and shall admit such investments in accordance with its provisions of law. (emphasis added)
in this respect, the Respondent further relies on Plama v Bulgaria36 and Inceysa v El Salvador37 in support of its argument that "[Investments, which have been made contrary to the laws of the host State, naturally cannot enjoy any legal protection" (R’s Reply, para. 191). From a general point of view, the Respondent’s affirmation is correct. However, the arbitral awards invoked by the Respondent in support of its position contain significant differences to the present case.
Lastly, the Tribunal should address Phoenix v Czech Republic40, a case in which the tribunal applied what might be considered as a sixth Salini test requirement, i.e., the obligation that the investment be made in good faith. The requirement to act in good faith is a general principle of law that applies in all circumstances.41 it is not an element of the definition of investment. This said, there are no indications in the record that may lead one to doubt the bona fide nature of the Claimant's investment.
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