|List of Abbreviations|
|BIT or Treaty||Agreement on encouragement and reciprocal protection of investments between the Kingdom of the Netherlands and Czech and|
|Claimants||Slovak Federal Republic of 29 April 1991 Mr. [REDACTED] and Mrs. [REDACTED]|
|CBJ||Claimants’ Brief on Jurisdiction (19 June 2009)|
|CNotice||Claimants' Notice of Arbitration (28 March 2006)|
|CPHB||Claimants' Post-Hearing Brief (18 March 2011)|
|CRep.||Claimants' Reply to Respondent s Statement of Defence (13 November 2008)|
|CSDT||Claimants' Submission on the Deed of Transfer (1 June 2011)|
|CSJ||Claimants' Submission on Jurisdiction (26 October 2009)|
|CSM||Claimants' Submission on the Merits (31 August 2010)|
|ECJ||European Court of Justice|
|Exh. C||Claimants’ Exhibit|
|Exh. CL||Claimants' Legal Authorities|
|Exh. R||Respondent’s Exhibit|
|Exh. RL||Respondent's Legal Authorities|
|Exp Rep.||Expert Report|
|FET||Fair and Equitable Treatment|
|FPS||Full Protection and Security|
|ICJ||International Court of Justice|
|ICSID||International Centre for Settlement of Investment Disputes|
|NAFTA||North American Free Trade Agreement|
|Netherlands||The Kingdom of the Netherlands|
|Parties||Claimants and Respondent|
|PILA||Swiss Private International Law Act (18 December 1987)|
|PO. 1||Procedural Order No. 1 (27 February 2007)|
|PO 14||Procedural Order No. 14 (11 May 2009)|
|PO. 15||Procedural Order No. 15 (19 October 2009)|
|PO. 16||Procedural Order No. 16 (6 July 2010)|
|P.O. 17||Procedural Order No. 17 (4 December 2010)|
|PO. 18||Procedural Order No. 18 (19 January 2011)|
|Respondent||The Slovak Republic|
|RPHB||Respondent's Post Hearing Brief (20 May 2011)|
|RRej.||Respondent’s Rejoinder to the Reply of the Claimants (7 April 2009)|
|RReply||Respondent’s Reply to the Brief on Jurisdiction (28 July 2009)|
|RSDT||Respondent Submission on the Deed of Transfer (9 June 2011)|
|RSJ||Respondent's Submission on Jurisdiction (4 November 2009)|
|RSM||Respondent's Submission on the Merits (1 November 2010)|
|Slovakia||The Slovak Republic|
|SoC||Statement of Claim (6 November 2007)|
|SoD||Statement of Defence (29 May 2008)|
|Dec.Jur.||The Arbitral Tribunal’s Decision on Jurisdiction (30 April 2010)|
|Dec. Corr. Jur.||The Arbitral Tribunal's Decision on Correction of Decision on Jurisdiction (12 July 2010)|
|Tr. J. [page:line]||Transcript of the Hearing on Jurisdiction (17 November 2009)|
|Tr. M. [page line]||Transcript of the Hearing on the Merits (11-13 January 2011)|
|UNCITRAL Rules||Arbitration Rules of the United Nations Commission on International Trade Law of 1976|
|Vienna Convention||Vienna Convention on the Law of Treaties of 23 May 1969 (entered into force on 27 January 1980)|
• Mr. [REDACTED] and Ms. [REDACTED] Ministry of Finance of the Slovak Republic, Stefanovicova 5, 81782 Bratislava 15, Slovak Republic; and
• Messrs Martin Maisner, Ludovit Micinskÿ, Milos Olik and Jiri Zeman of ROWAN Legal s.r.o, Námestie Slobody 11, 811 06 Bratislava, Slovak Republic.
• the Presiding Arbitrator :
Initially. Dr. Robert Briner, [REDACTED] Dr. Briner resigned on 28 July 2009 From 7 September 2009, Professor Gabrielle Kaufmann-Kohler, Lévy Kaufmann-Kohler,
• the Arbitrator appointed by the Claimants:
Professor Mikhail Wladimiroff, [REDACTED]
• the Arbitrator appointed by the Respondent:
Dr. Vojtéch Trapl, [REDACTED]
(i) For the Claimants:
• Mr. [REDACTED] The Netherlands
• Mr. [REDACTED] (Claimant 1)
• Mrs. [REDACTED] (Claimant 2)
• Mr. [REDACTED] (Claimants' representative)
(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
In the post-hearing brief, the Claimants requested the following relief:
"All the above urges [REDACTED] to request the arbitrators to decide already by interlocutory decree:
1. That the state has violated the BIT-regulations on the basis of which the state is obliged to compensate [REDACTED]"s damage [sic]
2. Which damage also by the elements of the claims taken up by [REDACTED] in his Submission on the Merits are reasonably in connection with the violations
3. To sentence the state to a compensation of the damage that has already been established now, as far as this, according to the judgement [sic] of the arbitrators is in connection with the violation, consisting of:
a. the loss of the repayment on loans ad SKK 405,600,592.84.
b. the value of the immovable property that was lost by the bankruptcy, as calculated by Mr [REDACTED] ad SKK 555,000,000,—
c. the value of the damage from the sale of [REDACTED] GM [REDACTED] SKK 383,699,841 SKK c.q. SKK 15,000,000.
4. To sentence the state to the payment of a delay interest on the amounts under 3 from the date of the bankruptcy (i.e. 14-04-2003) until the day of the complete payment to be established on 8 % per year on the basis of compound interest.
5. To sentence the state in the costs of the trial, including the costs made by [REDACTED] for judicial costs and advances.
Further to judge that the remaining items of loss must be estimated by an accountant and a state agent, specialised in industrial immovable property to be appointed by the arbitrators, with the instruction to establish in dialogue the suffered damage with regard to the items in [REDACTED] 's claim, about which the arbitrators have established the causal link by interlocutory decree.
In that case, before publishing their report, the experts will have to hear all parties and after this hearing they will send a concept report for comment to each of the parties within a period that will be established by the arbitrators, whereafter the final report will be deposited at the arbitrators.'
[CPHB, ¶190; emphasis in original]
Previously, in the Statement of Claim, the Claimants had sought the following relief-
"1. To declare for justice, that the Republic Slovakia [sic] the agreement between Slovakia and the Netherlands has been violated concerning the mutual protection 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, p. 57-58]
The Respondent also argues that the Claimants have not properly quantified their alleged damages in this arbitration proceeding. The damages are stated in a range of up to EUR 130 million (Notice of Arbitration), from approximately SKK 7.5 billion plus EUR 18 million (SoC, ¶2) to approximately SKK 8 billion plus EUR 31 million (CSM, p. 63). The Respondent points out that the Claimants’ post-hearing submission lacks a summary quantification of the alleged damages, referring to clustered calculations, where a vast majority of the numbers are not verifiable Without prejudice to the fact that the Respondent is not responsible for any alleged damages, the Respondent considers that the Claimants' calculations are wholly unsubstantiated. In the view of the Respondent, the Claimants' alleged damages are frivolous, speculative and entirely made up, and they exceed the Claimants" investment into the shares of BCT more than 100 times.
In its post-hearing brief, the Respondent requested the Tribunal to grant the following relief;
"a) The Claimants' proposal to issue the interlocutory decree and continue the proceedings is rejected.
b) The Respondent did not breach any of its duties according to the BIT i.e. Articles 3(1), 3(2) and 5 as claimed by the Claimants.
c) The Claimants' claims are rejected in full.
d) The Respondent shall be awarded the costs of the arbitration and its legal representation."
Previously, in its Submission on the Merits, the Respondent had requested the following relief:
"227. It follows from the presented arguments in this Respondent’s Submission on Merits, Respondent’s records as well as expert statements that the Claimants' alleged claims shall be rejected in their entirety. The Respondent has not breached any of its obligations ansing from the BIT:
(a) The Claimants have not proven the alleged breaches of the BIT, damage caused either sufficient link with respect to each claim as requested in paragraph 1.2 of Procedural Order No 16.
(b) Any breaches alleged by the Claimants caused by the private entities or preliminary/bankruptcy trustees are not attributable to the Respondent.
(c) The Respondent has not breached any of its obligations arising from the BIT, i.e. articles 3(1). 3(2) and 5 as claimed by the Claimants.
(d) The Respondent's organs have acted within in the circumstances within their competences and in compliance with the law.
(e) Any alleged damage caused to the Claimants was result of their own business activities and thus cannot be attributed to the Respondent
(f) The Claimants’ claim shall be rejected as speculative and frivolous and the Respondent shall be awarded costs of the arbitration and its legal representation.
228. Based on the foregoing the Respondent requests the Tribunal to dismiss all of the Claimants’ claims and to decide in favour of the Respondent’s proposals as presented In Part F of its Statement of Defence, dated 29 May 2008. "
In the Statement of Defense referred above, the Respondent requested the following relief:
"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 ii 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
(g) 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.
In the Decision on Jurisdiction, the Tribunal affirmed its jurisdiction in the following terms:
"190. For the reasons set forth above, the Tribunal makes the following decision:
(i) The Respondent's jurisdictional objections are denied;
(ii) The Tribunal has jurisdiction over the dispute submitted to it in this arbitration;
(iii) The decision regarding the costs of arbitration is deferred to the second phase of the arbitration on the merits. "
While it accepted that the Claimants had made an investment under the terms of the BIT and therefore had the status of investors,3 the Tribunal noted in the Decision on Jurisdiction that the record was unclear with respect to the investment made through companies owned by the Claimants4 Considering that this did not impact jurisdiction, which was established, it deferred these matters to be determined at the merits phase, if necessary5 These matters would indeed have influenced the quantification of damages. Yet, in light of the conclusion on liability, their resolution is without relevance for the outcome of this case. The Tribunal thus dispenses with addressing them any further. The same holds true with respect to the Issue of the validity of the deed dated 5 October 2006 (Exh C-322bis).6
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."
Therefore, the Tribunal dismisses Claimants' argument that the responsibility for the acts of the trustees themselves can be attributed to the Slovak State. It will thus disregard the actions of the trustees when examining the treaty breaches alleged by the Claimants As the Plama tribunal put it. "the acts of the syndics, if they were wrongful — and the Tribunal makes no finding in this respect — are not attributable to Respondent."22 This view is not contradicted by the conclusion of the tribunal in Tradex, on which the Claimants rely, where attribution could not be established23 As regards the contention that the Slovak Courts did not properly supervise the trustees' activity, it addresses the acts or omissions of a State organ and will thus be reviewed with the alleged treaty breaches.
The Claimants describe conduct of [REDACTED] akin to extortion, in particular a failed attempt to agree with BCT - prior to the latter's bankruptcy - on a commitment by A S to cease buying BCT receivables against payment from BCT This was followed by an allegedly successful attempt to actually ruin BCT through the bankruptcy proceedings with the alleged assistance of state officials. Further, the Claimants suggest the existence of personal links between [REDACTED] and [REDACTED] (SoC, ¶¶2-5).
The Respondent’s view is that the Claimants have not demonstrated that [REDACTED] was interested in BCT shares and in gaining control over BCT. and that any connection between [REDACTED] and [REDACTED] is irrelevant for this dispute. [REDACTED] by contrast, was a BCT shareholder since 2001 and thus had an interest in the company (SoD, ¶290). The Respondent argues that [REDACTED] actions concerning the adjudication of bankruptcy of BCT are within its competence as a private company. BCT’s actions as a petitioner in the bankruptcy proceedings are unrelated to those of [REDACTED]24 This is demonstrated by the fact that ultimately the original bankruptcy petitions were rejected by the Regional Court, after which proceedings continued on the basis of the petition of the Tax Authority of Bratislava II. Finally, the Respondent concludes that it has no responsibility for any action of private entities not related to the State (RRej,, ¶100).
The prayer for relief contained in the Claimants’ post-hearing brief reads as follows
All the above urges [REDACTED] to request the arbitrators to decide already by interlocutory decree;
1. That the state has violated the BIT-regulations on the basis of which the state is obliged to compensate [REDACTED] damage [sic]
2. Which damage also by the elements of the claims taken up by [REDACTED] i n his Submission on the Merits are reasonably in connection with the violations
3. To sentence the state to a compensation of the damage that has already been established now, as far as this, according to the judgement of the arbitrators is in connection with the violation, consisting of:
a. the loss of the repayment on loans ad SKK 405,600,592.84.
b. the value of the immovable property that was lost by the bankruptcy, as calculated by Mr [REDACTED] ad SKK 555,000,000, [REDACTED]
c. the value of the damage from the sale of [REDACTED] G M ad SKK 383,699,841 SKK c.q. SKK 15,000.0004.
4. To sentence the state to the payment of a delay interest on the amounts under 3 from the date of the bankruptcy (i.e 14-04-2003) until the day of the complete payment to be established on 8 % per year on the basis of compound interest.
5. To sentence the state in the costs of the trial, including the costs made by [REDACTED] for judicial costs and advances.
Further to judge that the remaining items of loss must be estimated by an accountant and a state agent, specialised in industrial immovable property to be appointed by the arbitrators, with the instruction to establish in dialogue the suffered damage with regard to the items in [REDACTED] claim, about which the arbitrators have established the causal link by interlocutory decree.
In that case, before publishing their report, the experts will have to hear all parties and after this hearing they will send a concept report for comment to each of the parties within a period that will be established by the arbitrators, whereafter the final report will be deposited at the arbitrators.*
"187. Therefore it is proposed to appoint a new internationally orientated accountant, who has no connection with the Slovak and Czech Republics, who has directly or indirectly no residence in one of these states and who is prepared to be supported with his report by a state agent specialized in industrial immovable property, of whom the same qualifications are requested as of the accounted [sic] as far as his connections with the Slovak and Czech Republics are concerned.
188. He will be instructed to establish, in dialogue with the state (sic] agent, what value the immovable properties had in the economic traffic in free sale at the time of the bankruptcy adjudication, without prescribing him which valuation methodology he has to follow and the ROCS-methodology mustn't be excluded; consequently which value was missed by [REDACTED] due to the los (sic] of the value increase Finally the accountant shall give an evaluation of the other items of loss, as far as it was not adjudged by an interlocutory decree More about this below.
Before the publication of his report the accountant shall hear the parties and consequently he shall send a concept report to each of the parties within a term that will be established by the arbitrators. Then the final report will be deposited at the arbitrators."
(a) to issue an interlocutory award on the liability of the Respondent under the BIT;
(b) to declare that the Respondent must compensate the damage already established; and
(c) to appoint two independent experts in order to assess the remaining damages: an accounting expert as well as an expert in industrial real estate.25
The Respondent's position is that the requests submitted by the Claimants are unwarranted. It asks the Tribunal to reject the request for an interim award and continuation of the proceedings, emphasising that the BIT has not been breached. With regard to the request for tribunal-appointed experts, it submits that although pursuant to Article 27(1) of the UNCITRAL Rules the Tribunal may indeed appoint experts when specific expertise is required to make a decision, this rule should be interpreted in conjunction with Article 24(1) of the same Rules, according to which each party must prove the facts on which t relies.27 Over the course of the five-year long proceedings, the Claimants had the chance to retain an expert, and well as the opportunity to duly cross-examine the Respondent's quantum expert at the evidentiary hearing The Respondent strongly rejects the accusation of bias and incompetence made against its expert
The Claimants' fundamental complaint is that the bankruptcy case against BCT is explained by A S s wish to deprive the Claimants of their real estate; that the State officials involved in the bankruptcy procedure (tax authorities, ministers, judges and trustees) supported and actively cooperated with [REDACTED] in achieving the latter's aim, possibly due to corruption;35 and thus that the purpose of the bankruptcy petition submitted by the Slovak authorities and the declaration of bankruptcy upheld by the Slovak Judiciary was not the collection of claims but the service of A S 's interest.36 Excluding the alleged actions of the trustees from the analysis37, the Claimants' general claim can be subdivided into two types of allegations:
- those concerning the filing of a bankruptcy petition by State organs against BCT (i.e. acts of the Finance Minister and the Tax Authority), and
- those concerning the conduct of the bankruptcy proceedings (i.e acts of Slovak Judiciary)
- The Finance Minister changed an established policy of leniency and chose to submit an unnecessary bankruptcy petition via the tax authorities; and
- The petition was not withdrawn although the Slovak Republic had committed to do so in agreements concluded with BCT representatives.
The Claimants sum up their arguments concerning this first type of allegations in the following conclusions:
115. The conclusion is that the tax authorities acted ambiguous, that her attitude preceding the petition in bankruptcy was incorrect by starting a relation with A S, that they treated BCT uniquely through the petition in bankruptcy, that this was an aberration to earlier flexible attitudes, no deadline was ever set and BCT never put on one on themselves, while there were better options for the petition in bankruptcy, that there were absolutely no causes provable for the sudden change in attitude and in spite of an attitude of considerateness they didn't switch to a withdrawal after the petition in bankruptcy. Frequently said is that the tax authorities became the third link in the chain of evil by everything they are blamed for with a bankruptcy and total loss as a consequence.
132. The conclusion of the above has to be that [REDACTED] took a totally irresponsible decision. He did not know the file, he did not study any business plans or BTs (sic] financial situation, he did not know about the existence of securities, he just took his decision after a visit, which had a social character, while he did not keep the promises he had made there and he just followed the incorrect information by the Tax Office, which took a point of view that was the same as [REDACTED] in a much too short period of time. Without further announcement and unfoundedly he totally deviated of his own fellow party-members' points of view and decided to bankruptcy in contradiction with the customs of the moment. By his actions and neglect he became the fourth link in the chain of Evil.’
[CPHB, ¶¶115, 132]
Regarding the acts of the Finance Minister, the Claimants cite Article 3 1 (on fair and equitable treatment) and 3.2 of the BIT (on full protection and security) as the relevant treaty provision40 Reliance on these provisions is in line with the content of prior submissions, and explained by the content of the relevant section of the posthearing brief, which concludes with the following description of the alleged breach;
"a. failing to give guarantees for a fair and honest handling of the [REDACTED] investments' to be specified in more detail below (article 3, par. 1)
b. hampering the operation, management, maintenance, use, enjoyment and disposal of investments through unreasonable and/or discriminatory measures (article 3 par. 1)
c. not granting full security and protection to the investments (article 3 par. 2)"
[CPHB, ¶133; emphasis in original]
- conducting the bankruptcy proceedings in an illegitimate manner from the outset,
- illegally continuing the proceedings on the basis of the bankruptcy petition filed by the Tax Authority despite the withdrawal of the original petitions of private creditors; and
- authorizing the sale of BCT assets at a price much lower than the real value by a trustee who cooperated with A S.
The Claimants sum up their arguments concerning this second type of allegations with the following conclusions:
"Conclusions about the judge
64. All the above-mentioned in combination makes that it has been conclusively proved that, in this case, it can be believed that, in all probability, the judge can not only be blamed for the fact that, by her actions, there was no fair trial, that it is a matter of undue delay and that she did not comply with the law, but also that she conspired with [REDACTED] and [REDACTED]
[CPHB, ¶64; emphasis in original)
"a. failing to give guarantees for a fair and honest handling of the [REDACTED] investments' to be specified in more detail below (article 3, par. 1)
b. hampering the operation, management, maintenance, use, enjoyment and disposal of investments through unreasonable and/or discriminatory measures (article 3 par. 1)
c. not granting full security and protection to the investments (article 3 par. 2)"
[CPHB ¶68; emphasis in original]
- Articles 3.1 (FET) and 3 2 (FPS) of the BIT, with an emphasis on a breach of the fair and equitable treatment standard and the notion of denial of justice, with respect to the actions or omissions of the Judiciary and of the Finance Minister; and
- Article 5 of the BIT. with respect to the actions or omissions of the Judiciary, the Finance Minister and the Tax Authority of Bratislava II.
The Tribunal will thus examine if the standards of fair and equitable treatment and full protection and security contained in Article 3 of the BIT have been breached by alleged acts and omissions of the Slovak Judiciary and executive officials (including the Finance Ministry and the Tax Authority)45
According to the Claimants, they did not benefit from a fair trial during the BCT bankruptcy proceedings46 The judge in charge of the file was partial to the so-called "financial mafia’ that wanted to deprive BCT of its assets, which explains the passivity with which the file was handled.47 The bankruptcy proceedings were not stopped immediately after the withdrawal of the petition by [REDACTED] and the second and third petitions (the ones by [REDACTED] and [REDACTED] respectively) were not dismissed in due time.48 There were considerable delays in the proceedings due to the lack of responsiveness of the judge.49 These procedural irregularities were confirmed by the report that the Minister of Justice of the Slovak Republic issued at the request of the Claimants (Exh. C-48).50
The judge in charge of BCTs bankruptcy file committed a series of "faults"51, including the following: appointing a pre-determined preliminary trustee who was partial to A S and was not remunerated in accordance with the law;52 not informing BCT of the filing of bankruptcy petitions within the statutory ten-day period;53 not providing adequate access to the file; appointing a bankruptcy trustee who was closely connected with [REDACTED]54 allowing [REDACTED] to abuse its rights and buy claims in order to secure the bankruptcy;55 encouraging the Tax Authority to file a bankruptcy petition;56 improperly authorizing the joinder of the Tax Authority's petition to the original petitions which had already been dismissed;57 consenting to the sale of BCT assets at rock-bottom prices,58 not including in the file transmitted to the Supreme Court59 the letter from the Tax Authority which expressed the latter’s wish to withdraw the bankruptcy petition.
The Claimants argue that they invested in BCT, a company affected by four decades of mismanagement by the State,61 with the aim of revitalizing and modernizing it They set to achieve these goals by transforming BCT's corporate structure, buying new machinery, and maintaining a cooperative attitude towards the Slovak authorities regarding the payment of tax arrears They assert that BCT was managed competently,62 and that the company’s good relationship with the Slovak authorities was reflected in the agreements for the payments of debts that the parties concluded over the years. Thus, the attitude of the State organs gave Claimants the impression that the existence of debts would not lead to their forced collection63
In February 2002, Minister [REDACTED] visited the BCT factory. During the visit he verbally committed to continue the long-standing policy of tolerance concerning old tax arrears adopted by his predecessors However, unexpectedly after that visit, the Minister changed his mind about the promise he had made,64 and instructed the Tax Authority to join the original bankruptcy petitions against BCT.65
It is the Claimants' case that the penalties imposed on the Claimants were exorbitant, even fraudulent.66 The Claimants believe that no other tax subject was treated in the same way and that the only reason why the Tax Authority imposed penalties on BCT between 1995 and 1997 was because Claimant 1 had become a majority shareholder The Claimants never accepted these penalties and thus requested payment schedules.
The agreements providing for tax relief and payment schedules that BCT concluded in the period between 1996-2001 and the positive relationship established with the tax authorities raised the expectations of the Claimants that they would be a lowed further relief and payment schedules, especially since the agreements with the authorities did not impose "fatal" deadlines for payment67 Accordingly, Claimant 1 has never been declared In default.68 The meeting of BCT with Minister [REDACTED] on 28 March 2009, in particular, raised the Claimants' expectations of further payment schedules, and even of a complete remission of fines and interests69
The dismissal of the then director of the Tax Authority (Mr. [REDACTED]) suggests that he acted beyond his authority when, on the order of Minister [REDACTED] he filed a petition for bankruptcy of BCT.74 The new director, Ms. [REDACTED] attempted to correct this error. Her letter to the Regional Court states that the Tax Authority did not intend to be the sole petitioner for the bankruptcy of BCT once the original petitions were dismissed (Exh C-315. the [REDACTED] letter"). This letter is in line with the policy of the previous Finance Minister.
The report of the Minister of Justice does not warrant the conclusion that there was a breach of statutory duties on the part of any judge or that there was a violation of the right to a fair trial.77 In particular, the report does not suggest that proceedings should have stopped immediately upon the withdrawal of the petition of [REDACTED]78 Bankruptcy proceedings can only be terminated when, after the bankruptcy, all the claims have been paid Since this condition was not met, the judge acted properly in continuing the bankruptcy proceedings. Above all, a procedural error cannot by itself constitute a breach of the BIT In any case, the liability of the Respondent for such alleged damage has not been demonstrated
There was no sudden change of policy of the Finance Ministry or the Tax Authority concerning the enforcement of the tax debt. Whether during the time of Minister [REDACTED] or Minister [REDACTED] the intention of the Slovak State was clearly to collect its receivables.82 The negotiations with Minister [REDACTED] were attempts to this effect The approach of the Slovak State developed over time in accordance with relevant legislation and the attitude of the Claimants, who ultimately did not meet their obligations towards the State despite maintaining communication with State organs.83
Minister [REDACTED] visit to BCT on 22 February 2002 was a mere courtesy visit during which he made no commitments of any kind to the Claimants.84 He did not take the decision that the Tax Authority would join the original bankruptcy petitions85 Prior to his visit to the BCT factory, the Tax Authority had already decided to join the bankruptcy proceedings, as is evident from the Tax Authority's response to the request for involvement in the proposal for the bankruptcy, which [REDACTED] had submitted as one of the original petitioners and the Regional Court had transmitted to the Tax Authority (Exh C-88). This response, in which the Tax Authority states that it joins A S ; original bankruptcy petition is dated 1 February 2002, i.e. three weeks prior to the ministerial visit86
Under the Claimant's management, penalties were imposed on BCT regardless of the controlling shareholder (Exh. R-112),88 as it is done with any tax payer. The tax penalties were incorporated in the legislation prior to the Claimants' investment and the Claimants and BCT were under an obligation to respect them. The Claimants, in particular, never filed any recourse against the imposition of penalties and only applied for tax relief.89
The Respondent asserts that, despite the imposition of penalties, the Claimants were treated better than the standard tax payer. They received substantial tax relief (approximately SKK 55 million in the years 1996-2001) and payment schedules, which meant that penalties were not charged.90 Deadlines for the payment of the taxes, which are stipulated by law, were included in the payment schedules granted upon BCT’s request.91 At meetings with the authorities, BCT repeatedly committed itself to pay its liabilities. However, the Claimants did not comply with the repayments provided in the schedules. Between 1994 and 2001, when the first petition of bankruptcy was submitted, the amount of tax arrears doubled (Exh. R- 43) Because the Claimants did not fulfil their promises concerning payment of the arrears, they could not expect that they would be allowed further concessions because this was prohibited by law.92
The bankruptcy proceedings that the Tax Authority joined were the consequence of the Claimants' own doing. They decreased its equity to a negative value over their nine years of management. No substantial investments were made in BCT either in the thread business or in its real estate. BCT's infrastructure was dismantled. Through the creation of artificial claims against BCT. and the subsequent swap of these claims for BCT's property, its assets were passed onto other companies controlled by Claimant 1 without adequate consideration. Entities under the control of the Claimants, but not part of the BCT group, gained ownership over assets of the group through obscure debt rescheduling transactions.94 Claimant 1 constantly borrowed funds for his companies and secured these loans by pledges of BCT’s real property. When the companies failed to repay the leans, the pledges were attached to the real property owned by BCT95
Since the bankruptcy was the result of their own mismanagement, the Claimants' suggestion of a malicious intent on the part of the Tax Authority in coordination with the Judiciary, the Finance Minister and [REDACTED] is absurd96 The Tax Authority joined the petitions for bankruptcy because BCT nad not fulfilled its obligations towards its creditors for a long time, because it became evident that it would not do so, and because new payment schedules could not be offered in accordance with the law. The letter of 28 January 2002 in which [REDACTED] requested the Tax Authority to join the petition was a simple matter of coordination among creditors concerning next steps in the bankruptcy proceedings97
Moreover, the fact that the Tax Authority joined the bankruptcy petitions was not a discriminatory act. The Tax Authority always had the option of submitting bankruptcy petitions. From 2004 onwards, it was required by law to file a petition when a debt exceeded a certain amount.98 Before the BCT case, the Tax Authority had submitted approximately thirty such petitions against other companies.99
The Tribunal observes that the Claimants did not elaborate on the content of the FET standard. The Respondent, for its part, addresses two aspects of the standard: legitimate expectations and denial of justice. First, relying on cases, it states that legitimate expectations must be assessed at the time of the investment, adding that the investor’s due diligence about the conditions of the given investment is a prerequisite for reasonable and legitimate expectations102 Second, the Respondent argues that a State is internationally liable for denial of justice only if justice is administered "in a seriously inadequate way,* resulting in "manifest injustice in the sense of a lack of due process leading to an outcome which offends a sense of judicial propriety" or a "clearly improper and discreditable" procedure.103 The Respondent also claims that procedural delays do not constitute a denial of justice if they are justified in light of the circumstances of the case, particularly its complexity and the conduct of the party allegedly affected by the delays.104 Finally, the Respondent emphasizes that protection under this standard requires the exhaustion of local remedies.105
More specifically with respect to legitimate expectations, as the Tecmed tribunal stated, the purpose of the FET guarantee is "to provide to international investments treatment that does not affect the basic expectations that were taken into account by the foreign investor to make the investment".112 The notion of the investor's legitimate expectations is closely related to stability.113
Recently, the tribunal in El Paso underlined that, since "economic and legal life is by nature evolutionary", the notion of stability of the legal framework and business environment as an element of FET cannot be equated to an absolute obligation of immutability of the regulatory framework.114 For the El Paso tribunal, the State should not modify the legal framework unreasonably or contrary to a specific commitment.115
Concerning the possible link between due process and procedural propriety and the standard of full protection and security, the Tribunal agrees, in principle, with the opinion of the Frontier tribunal that almost all of the decisions dealing with procedural propriety and due process in the context of FET concerned proceedings involving disputes with the host State or with State entities. This may suggest that "complaints about lack of due process in disputes with private parties are better dealt with in the context of full protection and security standards".123 In the present case, however, given that the BIT introduces full protection and security as a specific application of FET, the distinction between the two types of complaints seems to lack relevance
"Each Contracting Party shall ensure fair and equitable treatment to the investment of the investors of the other Contracting Party and shall not impair, by unreasonable or discriminatory measures, the operation, management, maintenance, use, enjoyment or disposal thereof by those investors".
"The Government of the Kingdom of the Netherlands and the Government of the Czech and Slovak Federal Republic, (hereinafter referred to as the Contracting Parties")
Desiring to extend and intensify the economic relations between them particularly with respect to investments by the investors of one Contracting Party in the territory of the other Contracting Party.
Recognizing that agreement upon the treatment to be accorded to such investments will stimulate the flow of capital and technology and the economic development of the Contracting Parties and that fair and equitable treatment is desirable"
[Exh. C-245 : emphasis added ]
a. Were the Claimants' reasonable expectations frustrated?
b. Did the Claimants experience a denial of justice?
c. Have the State organs acted in bad faith?
d. Do all of the acts of the Respondent taken together violate Article 3.1 of the BIT?
The Tribunal is aware that it is generally considered that expectations must be assessed at the time of the investment In this case, this would be the time of privatization. As the Claimants have invoked their expectations throughout all three points in time, the Tribunal, to assure the Claimants their arguments have been heard (even if they have not succeeded), will not limit its inquiry to the first point in time.
"BCT at the moment of the transfer of shares in 1995 was formally in a state of bankruptcy, as this was the case with almost all State-owned enterprises’.
Similarly, Claimant 1 testified that BCT's financial condition at the time of the investment was a "disaster".127 It is not disputed either (and corroborated by evidence), that the Claimants were aware of such "disaster" and accepted that they would have to deal with it. In their Submission on the Merits, the Claimants note that "[t]he Republic further states that BCT at the moment of the purchase of the shares, knew about the existence of tax arrears and the amount of it. [REDACTED] fails to see the importance of this correct observation [...]" In addition, a letter from BCT to the National Property Fund of the Slovak Republic, dated 16 November 1995 states as follows:
"As of 16 January 1995, Mr. [REDACTED] received from the National Property Fund 232,452 pieces of shares equalling to 40.3% interest in BCT, a.s. He as a predominant shareholder (however; not yet a majority one) accepted the responsibility to deal with;
a) financial situation of BCT
b) development of new EU markets."128
"We understand the rightful requirements of the State but we would like to appeal for its patience. The BCT does not take any unfair steps to back out of the duty towards the State. But it needs time to be able to create the space to start the aforementioned activities. The solutions through the executor which for example the VsZP or the Customs Authorities chose mean only the pointless increasing of the expenses; they do not help to the BCT and in the final consequence to the State which is interested in the development of the production".
[Exh. R-47, p.2]
"Mrs. Minister shared the presented proposal of Mr [REDACTED] for solution of claim of KBB, s.p.u towards BCT, a.s. and the suggested repayment schedule of the principal She conditioned the forgiving the interests on the fact.
1. that the principal will be repaid,
2 that there will be carried out investment into BCT, a.s. at least in the amount of forgiven interests
3. that there will be settled the obligations of BCT. a.s. towards the Tax Office.
Mrs. Minister noted that in case that these conditions are not observed, the interests may not be forgiven and in addition to it she proposed to embed the increasing of rate of interest in such case in the agreement"
[Exh. C-82, p.2: Exh R-104, p.2]
"Conclusions of negotiation.
1. The company BCT [REDACTED] shall pay as a lump sum to the Tax Office Bratislava II the whole due amount of the tax arrears from the proceeds from sale of real estate of the subsidiary [REDACTED]. This promise is guaranteed by the management of the company and Mr. [REDACTED].
2. The minister of finance recommended to the management of the Tax Office Bratislava II to solve the application of company BCT a. s. for forgiving the penalization after payment of due principal at the level of the Tax Office Bratislava The forgiven penalties shall be provable [sic] invested into recovery and development of textile industry in Slovakia."
[Exh. C-84, p.3 ; Exh. R-46, p.3]
"[T]he letter addressed to me by one of the Claimants, it stated in the letter that I have made certain promises and we have concluded some conclusions, while at that time I knew, now I can only remember that vaguely, back then I knew that I did not make any promises and did not take upon myself any obligations"
"I am prepared to pay the whole principal in taxes by the end of March. Furthermore I am ready for additional investment into BCT a. s. and other companies in the Slovakia [sic] in the amount that much exceeds the tax penalties from late payments and I expect that we manage to reach an agreement on forgiving all penalties."
[Exh. C-91. p. 2. emphasis added]
"[S]ubsequently my impressions and the information that I have obtained at the visit I had discussed with the General Director of the Tax Office at a meeting which was held regularly once every week. It was not a long discussion but the Director of the Tax Office likewise expressed certain doubts and he informed me about the problems which they had with the taxpayer and since I was politically responsible so to say and given the situation my feeling of responsibility was even stronger. I had pointed out to the Director that it is his duty to secure the claim which the Tax Office had to the company and, in that sense, I made a decision which was, in fact, an instruction and I decided that I did not find it correct to continue accepting more and more promises and that it is necessary to secure the repayment of the tax debt and this is what subsequently happened."
"I accepted with great bitterness the information that the Tax Directorate through the Tax Office Bratislava II filed on March 6th the petition for bankruptcy as for our company BCT - [REDACTED] that is recorded at the District Court Bratislava under the reference 6K 22/02. Though I admit the competence of the Tax Office to act in this way so that they will ensure the debt recovery I am unpleasantly surprised that there was not chosen the other way than bankruptcy that is the instrument leading to liquidation of business entity. At the same time I remark that the Tax Office has all its claims covered by the pledge of good financial standing on lucrative real estates of BCT [REDACTED] that it as early as in August of last year extended so that all its claims will be covered. Therefore. 1 expected that in case that there would be an application of "resolute" actions towards BCT [REDACTED] there should have been rather the realization of pledge that would be more advantageous for state and not the bankruptcy.
In connection with our negotiation on 22 February 2002 I did not expect anything like this at least by 31st March. 2002".
[Exh C-94, Exh. R-49, p. 1 ; emphasis added]
"[T]he very existence of such petition significantly complicates commercial negotiations and business activities in general. Moreover, if we assume that the Tax Office joined the petition in bankruptcy with the aim to speed up the performance of debtor's tax obligations (and not to dissolve the company), this action is disserviceable."
[Exh. C-102, p.1]
"As the Republic states in its rejoinder sub D.2.1 neither the State nor the Ministers have acted formally illegally, as the Republic indicates in its rejoinder sub 52. But the Republic passes over the fact that in can still act in contravention of the BIT anyway, by not taking actual action where it was its obligation according to the stipulations in the articles 3 and 5. These actual measures could have been expected from both the Republic and its Ministries, with regard to its own citizens' properties as well. Furthermore the Tax Office should have withheld an actual petition in bankruptcy, even if this was its legal right."
[CSM, ¶¶95; emphasis added]
"We are turning to you. in this situation, with a conviction that the dispute regarding the submission for bankruptcy will be resolved to the advantage of BCT [REDACTED] and BCT [REDACTED] [sic], be it thanks to the help of the main shareholder or from other sources, will in principle settle its obligations towards the Board of Revenue by the end of the year 2001, as it promised.
We would like to believe that you will keep your favor and your trust in BCT and we would appreciate your position that even though you are one of the biggest creditors, you are against the submission for bankruptcy against BCT.
Thank you for your previous support"
[Exh, C-85.1. p.2]
"These are the arrears of the sanction character which resulted before the privatization of the company and they are a result of the non-payment of mostly old kinds of taxes
- In the case of the tax subject the investment of the foreign capital into the Slovak Republic was realized to the year 1996 when no tax allowances by the reason of the foreign capital investment existed in our country.
- The debtor paid partially the arrears of the principals of the taxes and after several discussions with the tax subject the precondition that the arrears shall be paid under the condition of further investment of the foreign capital exists.
- The tax administrator does not want to choose the way of liquidation of the company also by the reason that the tax subject is a part of the history of Bratislava.
[Exh. R-48, p. 5]
"1 confirmation on deposition of the part of principal for the purpose of payment the tax arrear [sic]
2. purchase contract for the real estate in question - 2 days after its conclusion
3. expert opinion for the real estate in question." [Exh. C-98, p. 1]
"It can not be stated without a doubt, that the standard of Court proceeding corresponds with these legal duties of a judge [i.e. to act impartially, fairly without unnecessary delays and only on the basis of determined facts in accordance with the law], and that the rule of right for fair trial was preserved".
[Exh. C-48, p.11]
"- the court does not proceed with the documents and evidence submitted by the participants in the proceedings on the part of the petitioners, as well as of the debtor;
- it does not investigate if the conditions for the continuing in proceedings remain in existence;
- even though it results from the filed documents that before the appointment of the preliminary trustee the claims of the petitioners lapsed, the court in proceeding appointed the preliminary trustee in order to ascertain the debtor’s property."
[Exh. C-48, p.1]
In the course of this arbitration, the Claimant made the following statements:
"Justice was administered according to the law’s standards, but contrary to what the Republic supposes, this does not mean that the BIT was not violated."
[CSM, ¶29; emphasis added]
"(t]he State, the ministers, the judges, the tax authorities have acted formally correct Once again: [REDACTED] does not dispute broadly that formally has been acted according to the sound law in development, with the exception of, amongst others, the Act of Judge [REDACTED]"
[Opening Statement, Tr M., 14-15; emphasis added)
The Claimants are aware that this type of allegation is difficult to prove. Consequently, they attempt to shift the burden of proof by suggesting a general presumption of corruption in the Slovak Republic
"Already from the very beginning of the hearings to [REDACTED] the state asked if he had concretely observed any bribes. That it is at least very plausible that this has happened, appears from all the mentioned proofs Direct proof of the payment of bribes can never be given in these cases, but as has already been considered in previous ICSID decisions: one may not feel too strongly about proof in such a case.
It sufficiently appears from the combined evidence above, how difficult it was for [REDACTED] at the beginning of the hearings to react to the question whether there were concrete indications of the judge's misconduct. It cannot possibly be expressed orally."
[CPHB, ¶¶65. 66]
"[REDACTED] of course realizes that he has to carry the onus of proof for his statements. Hereby the note that he doesn't have to prove evil intent in case of Denial of Justice, which is the case here [REDACTED] realizes that he probably cannot substantiate the conspiracy theory with solid evidence, but that is not necessary in this case, the more because [REDACTED] intentions were generally known (also see [REDACTED]). This generally known reputation must have reached judge 7, the head of the Tax Office and the trustees (also [REDACTED] lawyer) which means that any support of it. whether it was in conformity with the law or not, implies evil intent."
[CSM, ¶92; emphasis added]
More particularly, each Contracting Party shall accord to such investments full security and protection which in any case shall not be less that that accorded either to the investments of its own investors or to investments of investors of any third State, whichever is more favourable to the investor concerned."
"Neither Contracting Party shall take any measures depriving, directly or indirectly, investors of the other Contracting Party of their investments unless the following conditions are complied with:
(a) the measures are taken in the public interest and under due process of law;
(b) the measures are not discriminatory;
(c) the measures are accompanied by provision for the payment of just compensation.
Such compensation shall represent the genuine value of the investments affected and shall, in order to be effective for the claimants, be paid and made transferable, without undue delay, to the country designated by the claimants concerned and in any freely convertible currency accepted by the claimants."
For instance, as part of their conclusions on the section of their Submission on the Merits devoted to the concept of denial of justice, the Claimants make the following statements:
"In concreto, denial of justice means: violation of the BIT articles 3 part 1 and 2 and article 5. So, there is a lack of protection and the investments are not treated fairly and just It is a matter of expropriation."
[J]udge 7 deprived (as an 'organ' her act is attributed to the Contracting Party) [REDACTED] as the first link in a chain, of his properties and she also directly violated article 5 of the BIT."
In this procedure the question is repeatedly asked, which violations of the BIT are to be attributed to which losses
It was repeatedly remarked above, that it is a matter of direct, but also of creeping expropriation, which cannot be considered apart from the Denial of Justice and the discriminatory acts by the organs, and that the mutual connections exist in an unbroken period of time. Expropriation is a violation of the BIT, which has caused a total loss and thus makes a separation pointless."
[CSM, ¶117; emphasis added]
This idiosyncratic interpretation of the word "expropriation’ is confirmed by the fact that the Claimants do not offer a rationalization or explanation on how the acts about which they complain constitute an expropriation. For example, when referring to the acts of the Tax Authority in their post-hearing submission, the Claimants limit themselves to asserting that the tax authorities ‘collaborated with an act of expropriation (Article 5 of the BIT) via an unnecessary bankruptcy, an act which caused all the damage, which made the Tax Office the 3rd link in the chain of Evil’ The Claimants do not explain this assertion, neither do they include this concept in the conclusions of the section. The word "expropriation" is mentioned only on two other occasions in the brief:
"107. Apart from the unique character, there was consequently no good reason for the tax authorities to request bankruptcy at that moment, so there’s talk of an act of expropriation by doing this nevertheless.’
"135. We refer to what was remarked by [REDACTED] in previous records with regard to the creeping expropriation, but also to the Lauder case, published on the internet http://www.mfcr.cz/cps/rde/xbcr/mfcr/PartijAward_pdf.pdf, Stockholm 3rd September 2001 in paragraph 583."
[CPHB, ¶107, 135; emphasis added]151
Prior submissions by the Claimants do not contain clear and specific allegations of expropriation regarding the acts of the Tax Authority For example, in their Submission on the Merits, the Claimants make the following claim, in relation to the Director of Tax Authority of Bratislava II for the period of 1 June 1999 - 20 May 2002. Mr. [REDACTED]:
"Direct violation of the articles 3, par. 1 and 2 and article 5 of the BIT
78. The unlawful attitude of the Tax Office was elaborately dealt with above. She, [REDACTED] anyhow, knew exactly about the bad intentions of A S and helped [REDACTED] with the realization of them.
Apart from the general knowledge about [REDACTED] intention, we refer to the fact that the Tax Office was informed via the letter of BCT on 11th July 2001 to [REDACTED] in which the entire background of the petitions in bankruptcy from the side of [REDACTED] was depicted and help in the procedure was asked for in vain, because the tax authorities of Bratislava II were always mentioned as support requirer.
[REDACTED] should, informed [sic] about the abuse of law by [REDACTED] never have supported its unlawful actions. By doing so, the Tax Office acts unlawfully and in violation of the BIT, articles 3 and 5 [sic].
[CSM, ¶78; emphasis In original]
The expression "creeping expropriation’ in particular, does not appear in previous submissions by the Claimants, except for their Submission on the Merits which quotes Tecmed v. Mexico and makes the following comments:
"91. [T]he Republic is responsible [...] also for its Ministers, who cause a similar creeping expropriation by remaining silent, where protection was needed.
The state is to blame [...] because it did not actively intervene in this creeping expropriation process".
117. It was repeatedly remarked above, that it is a matter of direct, but also of creeping expropriation, which cannot be considered apart from the Denial of Justice and the discriminatory acts by the organs, and that the mutual connections exist in an unbroken period of time. Expropriation is a violation of the BIT, which has caused a total loss and thus makes a separation pointless."
[CSM, ¶¶91,177; emphasis added]
In their post-hearing brief, after characterizing the acts of the Judiciary as a violation of Article 3 of the BIT, the Claimants add that "[f]urthermore the judge's actions come down to wrongful expropriation of a public body".152 Other than this phrase and a quote of Article 5 of the BIT. the Claimants limit their claim of expropriation concerning the acts and omissions of the Judiciary to the following phrase:
"69. By her way of acting the judge has caused the total damage, casu quo formed the first link in the chain of Evil by her actions, she was a part of the creeping expropriation with as a consequence, a total damage as formulated in the records, so that a discussion about the direct damage does not have much sense"
Finally, in relation to the actions of the Finance Minister, the Claimants make in their post-hearing brief the allegation that ’the actions of the Minister constitute a violation of art. 3 of the BIT... but also of art. 5 of the BIT" after which the text of the provision is transcribed, followed by the phrase '[b]y this the Minister has caused the total-damage".153 The allegation that the acts of the Finance Minister violated Article 5 of the BIT had not been made in earlier submissions.
In a non-legal manner of speaking, the liberal use of the term "expropriation" or the expression "creeping expropriation’ may help an ordinary person with no knowledge of the law to convey the feeling of having suffered an extraordinarily unjust behaviour However, in a legal brief, a rationalization is necessary if acts that have been previously characterized as undue delay, unfair trial, discriminatory treatment, or denial of justice156 - even as a human rights violation157 - are to be considered also as an "expropriation" in the technical sense of the word. The random "sprinkling" throughout the pleadings of a strong term with a well defined legal meaning such as "expropriation" or "creeping expropriation" does not transform that term by itself into an allegation of facts founding a treaty violation.158 In other words, the Claimants have not discharged the burden of allegation of a treaty breach involving expropriation.159
Activities by GLDK-lawyers. starting in January 2006, consisting of
contact Asser Institute
contact with Czech and Slovak lawyers
trip with client to Bratislava Ministry for consultation and arrangement attempt at the invitation of the Ministry
correspondence with the arbitrators
composition and study of the records
consultation of accountant, notary public
legislation study, jurisprudence Oxford University
Total € 1,461 855.00
Claimant's external costs (see attached specification) € 237,606,76
Advance payment to Arbitrators € 400,000,00"
"The costs of the Respondent in these arbitration proceedings representing the total amount of EUR 12,839,240,48 (twelve millions eight hundred thirty nine thousands and two hundred and forty Euros and 48 cents).
The total amount of the Respondent's costs has been calculated as follows:
a. Advance payments paid to the Arbitral Tribunal EUR 400,000,00;
b. Respondent* costs of the arbitration EUR 12,439,240,48
Please find attached Statement of Respondent's costs prepared by the Ministry of Finance of the Slovak Republic with the more detailed description of particular costs.
With regard to the Article 293(d) of the Respondent's Post-hearing Brief dated 20 May 2011 (and Respondent's previous submissions), the Respondent proposes the Claimants are ordered to pay these Respondent's costs of the arbitration proceedings in amount of EUR 12,839,240,48 within 30 days from delivery of the award."
(2) which, in relevant part, read as follows:
"Except as provided in paragraph 2. the costs of arbitration shall in principle be borne by the unsuccessful party. However, the arbitral tribunal may apportion each of such costs between the parties if it determines that apportionment is reasonable, taking into account the circumstances of the case.
With respect to the costs of legal representation and assistance referred to in article 38, paragraph (e), the arbitral tribunal, taking into account the circumstances of the case, shall be free to determine which party shall bear such costs or may apportion such costs between the parties if it determines that apportionment is reasonable."
(i) The Claimants' requests for an "interlocutory decree" on liability and continuation of the proceedings and for the appointment of tribunal-appointed quantum experts are denied,
(ii) The Respondent has not breached the fair and equitable treatment standard of Article 3.1 of the Treaty;
(iii) The Respondent has not breached the full security and protection standard of Article 3.2 of the Treaty;
(iv) The Respondent has not breached the prohibition of expropriation of Article 5 of the Treaty;
(v) The Claimants shall bear the arbitration costs, which amount to EUR 796'528.93, and related VAT of EUR 69'985.50. Considering the return of the excess funds by the Tribunal to the Respondent and the Claimants’ own advances, the Claimants shall pay to the Respondent EUR 384’628.93 and related VAT expenses in the amount of EUR 34'992.75 within 30 days of the notification of this award;
(vi) The Claimants shall pay EUR 2’000'000 to the Respondent as contribution to its legal and other costs incurred in connection with this arbitration within 30 days of notification of this award; and
(vii) All other claims are dismissed.
Already registered ?