TABLE OF ABBREVIATIONS
|AGMK||Almalik Mining Metallurgy Combinate|
|BIT / Treaty||Bilateral Investment Treaty; specifically "Agreement Between the Government of the State of Israel and the Government of the Republic of Uzbekistan for the Promotion and Reciprocal Protection of Investments" of 4 July 1994|
|C-CB 1||Metal-Tech's Costs Brief of 1 August 2012|
|C-CB 2||Metal-Tech's Reply Costs Brief of 22 August 2012|
|C-Mem. M.||Uzbekistan's Counter-Memorial on Merits and Reply on Jurisdiction and Admissibility of 2 June 2011|
|C-PHB 1||Metal-Tech's First Post-Hearing Brief of 18 June 2012|
|C-PHB 2||Metal-Tech's Reply Post-Hearing Brief of 2 August 2012|
|Exh. C-||Metal-Tech's Exhibits|
|Exh. CL-||Metal-Tech's Legal Exhibits|
|Exh. R-||Uzbekistan's Exhibits|
|Exh. RL-||Uzbekistan's Legal Exhibits|
|ICSID||International Centre for Settlement of Investment Disputes|
|ICSID Convention||Convention on the Settlement of Investment Disputes between States and Nationals of other States|
|January Hearing||Hearing Conducted between 23-28 January 2012|
|Lacey International||Lacey International Corp.|
|May Hearing||Hearing Conducted on 29 May 2012|
|Mem. J.||Uzbekistan's Memorial on Jurisdiction, Admissibility, and Bifurcation of 11 November 2010|
|Mem. M.||Metal-Tech's Statement of Claim and Counter-Memorial on Jurisdiction and Bifurcation of 14 February 2011|
|MPC||MPC International Investments and Consultants GmbH|
|MPC Companies||MPC and MPC-Tashkent|
|PO 1||Procedural Order No. 1 dated 8 March 2011|
|PO 2||Procedural Order No. 2 dated 14 July 2011|
|PO 3||Procedural Order No. 3 dated 13 December 2011|
|PO 4||Procedural Order No. 4 dated 22 December 2011|
|PO 5||Procedural Order No. 5 dated 13 January 2012|
|PO 6||Procedural Order No. 6 dated 15 January 2012|
|PO 7||Procedural Order No. 7 dated 10 February 2012|
|PO 8||Procedural Order No. 8 dated 13 March 2012|
|PO 9||Procedural Order No. 9 dated 2 April 2012|
|PO 10||Procedural Order No. 10 dated 17 April 2012|
|PO 11||Procedural Order No. 11 dated 22 May 2012|
|PO 12||Procedural Order No. 12 dated 12 July 2012|
|R-CB 2||Uzbekistan's Reply Costs Brief of 22 August 2012|
|R-PHB 1||Uzbekistan's Post-Hearing Brief of 18 June 2012|
|R-PHB 2||Uzbekistan's Post-Hearing Brief of 2 August 2012|
|RA or Request||Metal-Tech's Request for Arbitration dated 26 January 2010|
|Rej. M.||Uzbekistan's Rejoinder on the Merits of 23 November 2011|
|Reply M.||Metal-Tech's Reply on Merits and Rejoinder on Jurisdiction of 9 September 2011|
|Tr. [page:line]||Transcript of the hearing|
|VCLT / Vienna Convention||Vienna Convention on the Law of Treaties|
• Covington & Burling LLP Mr. O. Thomas Johnson, Jr. (until 6 April 2012)
Ms. Marney Cheek
Mr. Eugene D. Gulland (from 18 April 2012)
Mr. Jonathan Gimblett Mr. John F. Scanlon
Mr. Alexander Berengaut
Washington, D.C. 20004-2401
United States of America Tel: +1 202 662 6000 Fax: +1 202 662 6291 Email: firstname.lastname@example.org
Ms. Carmen Martínez López
London WC2R 1BH
Tel:+44 20 7067 2000 Fax:+44 20 7067 2222 Email: email@example.com
• Ms. Maayan Bar, Adv Metal-Tech Ltd.
Sea & Sun, Suite 4410 8, Herzl Rosenblum Street Tel Aviv, 69379
• White & Case LLP Ms. Carolyn B. Lamm Ms. Andrea J. Menaker Mr. William Currier Mr. Frank Panopoulos Mr. Lee A. Steven Mr. Brody K. Greenwald Ms. Kristen M. Young 701 13th Street, N.W.
Washington, DC 20005 United States of America Tel: + 1 202 626 3605
Fax: + 1 202 639 9355
• Ministry of Justice of the Republic of Uzbekistan
Mr. Muzraf Ikramov (First Deputy Minister of Justice)
Mr. Davronbek Akhmedov 5 Sayilgoh Street Tashkent 100047 Republic of Uzbekistan Tel/Fax: + 998 71 233 35 98 Email: firstname.lastname@example.org
"- organization of manufacture for processing of molybdenum industrial product on OAO "Almalik GMK" and introduction of modern technology for manufacturing of molybdenum production on UZKTJM;
- maintenance of UZKTJM with clean molybdenum raw material from OAO «ALMALIK GMK» and loading of a part of its capacities;
- expansion of commercial and public connections between the State of Israel and Republic of Uzbekistan."
"Claimant requests that an ICSID tribunal be appointed to hear the claims set forth in this Request for Arbitration, and that the tribunal render an award in favor of Claimant:
(i) Declaring that Respondent has breached its obligations under Article 9 of the Law on Foreign Investments by failing to accord to Claimant and its investment fair and equitable treatment in accordance with the norms and standards of international law;
(ii) Declaring that Respondent has breached its obligations under Article 9 of the Law on Foreign Investments by failing to accord to Claimant and its investment full and constant protection and security;
(iii) Declaring that the Respondent has breached Article 19 of the Law on Foreign Investments through its breach and repudiation of the Joint Venture Agreement and Uzmetal Charter;
(iv) Declaring that the Respondent has breached Article 3 of the Law on Guarantees and Measures for the Protection of Rights of Foreign Investors by failing to ensure that legislative acts do not have retroactive effect prejudicing a foreign investor and its investments;
(v) Declaring that the Respondent has breached Article 5 of the Law on Guarantees and Measures for the Protection of Rights of Foreign Investors and Article 10 of the Law on Foreign Investments by expropriating Claimant's property without due process of law and without payment of prompt, adequate, and effective compensation;
(vi) Declaring that the Respondent has breached the investor guarantees set forth in Appendix 1 of Resolution No. 548;
(vii) Declaring that Respondent has breached its obligations under Article 2.2 of the Israel-Uzbekistan Bilateral Investment Treaty by failing to accord Claimant's investment fair and equitable treatment; (viii) Declaring that Respondent has breached its obligations under Article 2.2 of the Israel-Uzbekistan Bilateral Investment Treaty by failing to accord to Claimant's investment full and constant protection and security;
(ix) Declaring that Respondent has breached its obligations under Article 2.2 of the Israel-Uzbekistan Bilateral Investment Treaty by taking unreasonable and discriminatory measures that impair the management, use, enjoyment, and disposal of Claimant's investment;
(x) Declaring that Respondent has breached Article 5 of the Israel-Uzbekistan Bilateral Investment Treaty by expropriating Claimant's investment without complying with the requirements of the Treaty relating to due process and payment of prompt, adequate and effective compensation;
(xi) Declaring that Respondent has violated its obligations under customary international law by breaching the international minimum standard of treatment of foreign investors and by expropriating Claimant's investment without either due process or prompt, adequate, and effective compensation;
(xii) Ordering the Respondent to pay to the Claimant full compensation in accordance with the Israel-Uzbekistan Bilateral Investment Treaty and customary international law including, without limitation, compensation for damages in an amount to be established in the proceeding, plus interest thereon in accordance with applicable law;
(xiii) Ordering the Respondent to pay all costs and expenses of this arbitration, including the fees and expenses of the tribunal and the cost of legal representation, plus interest thereon in accordance with applicable law; and
(xiv) Such other or additional relief as may be appropriate under the applicable law or may otherwise be just and proper."66
a) Where payments were made to companies (i.e., MPC Companies or Lacey International):
• For which individual Consultant were these payments meant?
• What was the amount paid to each individual Consultant?
• What service was the payment intended to remunerate?
• When was this service rendered?
b) Where payments were made to individual Consultants:
• What service was the payment intended to remunerate (beyond mere reference to the contracts under which the service was rendered)?
• When was this service rendered?
i. The justifications advanced by Uzbekistan for Resolution No. 141, namely that Uzmetal had failed to perform a number of the tasks set forth in Resolution No. 15 and in the founding documents (i.e. Uzmetal's Charter and the Constituent Contract), are without merit. Uzmetal had the right to decide for itself what products to manufacture and in what volumes. Based on this right and on market realities during the relevant period, Uzmetal took the business decision to focus on production and sale of pure molybdenum oxide, to which neither UzKTJM nor AGMK objected. Thus, Uzbekistan's actions were illegitimate and designed to seize Uzmetal's assets. The government, together with AGMK and UzKTJM, worked in league with the shared objective of depriving the Claimant of its investment;67
ii. In any event, even if Resolution No. 15 required Uzmetal to produce fabricated products, Uzmetal's non-compliance would not have justified revocation of the guarantees forming the basis of the Claimant's investment. Further, the Respondent's new allegations in respect of Resolution No. 15 and the founding documents did not form the basis of Resolution No. 141 at the time, and should not be entertained by the Tribunal now. In any case, the Respondent's allegations are baseless as neither the Claimant nor Uzmetal violated the founding documents or Resolution No. 15. For instance, pursuant to Appendix 2 of Resolution No. 15, the Claimant could contribute either USD 500,000 or 60,500,000 Soum. Therefore, Uzbekistan's assertion that the Claimant could only contribute USD 500,000 is wrong;68
iii. In reliance on Resolution No. 141, AGMK stopped supplying molybdenum to Uzmetal. As a result, Uzmetal was forced to cease operations, as there was no feasible alternative source of supply. On the other hand, UzKTJM immediately benefited from Resolution No. 141 as all of AGMK's raw material went to UzKTJM;69
iv. Uzbekistan breached its obligations under the Agreement between the Government of the State of Israel and the Government of the Republic of Uzbekistan for the Promotion and Reciprocal Protection of Investments of 4 July 1994 (the "Treaty" or the "BIT") and Uzbek Law. First, by enacting Resolution No. 141, which deprived Metal-Tech of the expected economic benefits of its investment, Uzbekistan expropriated Metal-Tech's investment without compensation in violation of Article 5 of the BIT.70 The deprivation inflicted by Resolution No. 141 was compounded by the decision of the Economic Court of the Tashkent Region to void Uzmetal's supply contract with AGMK.71 It was then completed by the illegitimate bankruptcy proceedings against Uzmetal, which were designed to transfer all of Uzmetal's assets to AGMK and UzKTJM. Additionally, the expropriation was unlawful because Uzbekistan discriminated against Metal-Tech on the grounds of its nationality;72
v. Second, by issuing Resolution No. 141, Uzbekistan violated its obligation to accord Israeli investments fair and equitable treatment pursuant to Article 2(2) of the BIT, namely its obligation not to frustrate the legitimate expectations engendered by the representations and commitments which it made and on which the Claimant relied in making its investment;73
vi. Third, by adopting Resolution No. 141 and thereby revoking its commitments made to and relied on by Metal-Tech, Uzbekistan subjected Metal-Tech's investment to unreasonable and discriminatory measures in violation of Article 3 of the BIT. Uzbekistan's measures against Uzmetal were taken in wilful disregard of due process and proper procedure. Further, Metal-Tech was singled out for arbitrary treatment as part of the Government's reaction to criticism from Western democracies;74
vii. Fourth, Uzbekistan violated its obligation to provide full protection and security to Metal-Tech's investment in violation of Article 2(2) of the BIT. In particular, by revoking the legal guarantees set forth in Resolution No. 15, the Respondent violated its obligation to provide Metal-Tech with a secure commercial and legal environment. Moreover, by not intervening when UzKTJM denied Uzmetal access to its facilities in Chirchik, Uzbekistan violated its obligation to provide Claimant's investment with physical security;75
viii. Finally, even if Uzbekistan did not violate the standards of treatment set forth in the BIT, it is still liable for violating several of its own foreign investments laws, which standards of treatment are incorporated into the BIT through Article 11 of the BIT. Uzbekistan has also consented to ICSID arbitration of claims arising under its foreign investments laws in the foreign investment laws themselves.76 For instance, the Respondent has violated the stabilization clause contained in Article 3 of the Law on Guarantees by adopting and immediately applying Resolution No. 141 to Metal-Tech's investment only six-and-a-half years after the date of the initial investment;77
ix. Uzbekistan's wrongful measures resulted in the total deprivation of Metal-Tech's 50% interest in Uzmetal and its exclusive right to export molybdenum oxide without compensation.78 Metal-Tech is thus entitled to reparation in accordance with the standards prescribed by international law for wrongful acts;79
x. Contrary to the Respondent's allegations, the Tribunal has jurisdiction over the present dispute. The legality requirement in the BIT must be interpreted as a bar to jurisdiction only where the establishment of the investment was tainted by illegality. It does not apply where the unlawful act is committed in the course of the operation of the investment.80 Further, in application of the most favoured nation provision in Article 3(2) of the BIT, the Tribunal must assert jurisdiction on the basis of the more favorable definition of investment under Article 1(1) of the Greece-Uzbekistan BIT, which includes no legality requirement.81 In the event that the Tribunal were to deny the MFN claim, Metal-Tech still has not violated Uzbek law: Uzmetal was constituted and operated in accordance with Uzbek law;82 and,
xi. Again contrary to the Respondent's allegations, the counterclaims are not directly concerned with the subject matter of this dispute, which involves Uzbekistan's violations of international law with respect to the Claimant's investment. Hence, Article 8 (1) of the BIT is not sufficiently broad to include counterclaims. Finally, even assuming that the Tribunal has jurisdiction, Uzbekistan's counterclaims should be dismissed because they are insufficiently pled.83
"323. For the reasons set forth above, Claimant respectfully requests that the Tribunal:
o exercise jurisdiction under Article 8 of the Israel-Uzbekistan BIT over Metal-Tech's claims described in its Request for Arbitration, Part IV of its Statement of Claim, and Part I of its Reply on Merits;
o deny Respondent's objections to jurisdiction described in Uzbekistan's Memorial and Reply on Jurisdiction;
324. Claimant further requests that the Tribunal:
o find that Respondent has violated its obligations under the BIT by:
a) unlawfully expropriating Metal-Tech's investment in Uzbekistan without paying prompt, adequate and effective compensation;
b) failed to accord fair and equitable treatment to Metal-Tech's investment;
c) subjected Metal-Tech's investment to unreasonable and discriminatory measures; and
d) failed to accord full protection and security to Metal-Tech's investment.
o find that Respondent has violated its obligations under its own Foreign Investment Laws by:
a) violating the stabilization clause contained in Article 3 of the Law on Guarantees; and
b) violating Article 18 of the Law on Foreign Investments by failing to reorganize or liquidate Metal-Tech's investment in accordance with the law and by denying Metal-Tech the right to recover its share of the investment in the event that it is liquidated;
o deny Respondent's defenses on the merits described in Sections III.G to III.L. of Respondent's Counter-Memorial on Merits.
325. Claimant further requests that the Tribunal decline to exercise jurisdiction over Respondent's counterclaims, to which it fleetingly refers in Section III.N of its Counter-Memorial on Merits. In the alternative, Claimant requests that the Tribunal dismiss Respondent's counterclaims for the reasons set forth in Section II of Metal-Tech's Reply on Merits.
326. Claimant further requests that the Tribunal order further proceedings on the issue of quantum and eventually order Respondent to pay compensation to the Claimant in the amount of $173,962,625.
327. Finally, Claimant requests that the Tribunal order Respondent to pay interest on the above amount at a reasonable commercial rate, compounded from 18 July 2006 until full payment has been made; and to order Respondent to pay Claimant's costs in this arbitration, including all attorney's and expert-witness fees, and to bear sole responsibility for compensating the Tribunal and the International Centre for the Settlement of Investment Disputes."84
"For the reasons set forth above, Metal-Tech renews its request for relief as presented in its written memorials and its oral arguments at the hearing. The Tribunal should find for Metal-Tech on all claims, reject Respondent's jurisdictional objections, defenses, and counterclaims, and order Respondent to pay the costs of this proceeding."85
i. The Tribunal lacks jurisdiction over this dispute because the Claimant's investment was "implemented", i.e. made and operated, in violation of Uzbek law.86 In particular, the Claimant engaged in corruption and made fraudulent and material misrepresentations to gain approval for its investment.87 It also implemented its investment unlawfully by unjustly enriching itself and defrauding the JV, the Uzbek partners and the State. Contrary to the Claimant's allegations, in the absence of clear and unambiguous language to that effect, Article 1(1) of the BIT cannot be expanded to cover investments that are unlawfully implemented via the most favoured nation clause in the BIT. In any case, the jurisdiction of the Tribunal cannot be based on the Greece-Uzbekistan BIT via the MFN clause because the Claimant's investment was not only operated, but also made in violation of Uzbekistan's laws. The requirement that investments must be made in accordance with the host State's law is implied in BITs, including the Greece-Uzbekistan BIT, irrespective whether they contain a legality clause or not;88
ii. The Tribunal also lacks jurisdiction over claims for violation of Uzbek and customary international law because Uzbekistan has not agreed to arbitrate these claims. In particular, Articles 8 and 11 of the BIT do not provide any foundation for claims based on national and customary international law;89
iii. Alternatively, the claims should be dismissed because they are inadmissible on account of the Claimant's unlawful conduct. Under the "clean hands" doctrine, the Claimant should not be allowed to pursue its claims because it has engaged in significant misconduct directly related to its investment;90
iv. Uzbekistan has not breached any of its obligations under the Israeli-Uzbekistan BIT. First, Resolution No. 141 did not expropriate the Claimant's investment because it did not have the effect of a "taking". It did not deprive Metal-Tech of all or substantially all of its investment, but merely voided Article 3 of Resolution No. 15 which granted Uzmetal the privilege to purchase all of AGMK's molybdenum middlings.91 The Resolution did not prohibit AGMK from continuing to supply molybdenum middlings to Uzmetal and did not prevent Uzmetal from purchasing molybdenum raw material from other sources.92 In any event, the Resolution is not expropriatory because it was legitimately enacted in response to the Claimant's wrongdoing.93 Further, none of the actions taken in the bankruptcy proceedings by the judicial receiver who served as interim and later liquidation manager of Uzmetal are attributable to the Respondent and the acts of the Uzbek courts in Uzmetal's bankruptcy proceedings did not expropriate the Claimant's investment as the courts acted in conformity with Uzbek law.94 Finally, the transfer of Uzmetal's assets to AGMK and UzKTJM was lawful and even if it was not, AGMK's and UzKTJM's acts are not attributable to the State;95
v. Second, the Claimant could not have legitimately expected that its investment would remain entitled to the benefits granted under Resolution No. 15 despite its failure to comply with its obligations under that Resolution and its efforts to unjustly enrich itself to the detriment of the joint venture, the Uzbek parties and Uzbekistan. Resolution No. 141 was legitimately enacted in direct response to the Claimant's unlawful conduct and failure to fulfill its obligations under Resolution No. 15;96
vi. Third, Resolution No. 141 was legitimately enacted and therefore does not constitute unreasonable treatment in violation of the BIT. The investment would not have been approved, and the exclusive supply arrangement would not have been granted, but for Metal-Tech's representations that Uzmetal would comply with the obligations specified in Resolution No. 15.97 Since Uzmetal did not comply with its obligations, it was reasonable to expect that the Respondent would revoke the benefits granted in return for these obligations. Further, in light of the multiple notifications that Uzmetal was not performing and the warnings by the Government that there would be "serious consequences" if Uzmetal did not fulfill its obligations set forth in the approved Feasibility Study and Resolution No. 15, the Claimant cannot assert that it was surprised by the enactment of Resolution No. 141 or that it had not been given any prior notice.98 Moreover, the bankruptcy proceedings were reasonable and conducted in conformity with Uzbek law. In any event, UzKTJM's actions in the bankruptcy proceedings cannot be attributed to Uzbekistan. Finally, Resolution No. 141 was based on the Claimant's failure to deliver on its promises and did not discriminate against the Claimant on the basis of its nationality;99
vii. Fourth, Uzbekistan did not cause any physical damage to Metal-Tech's investment in Uzbekistan. Therefore, Uzbekistan did not violate the full protection and security clause in Article 2 of the BIT. The Claimant is wrong in contending that the obligation to afford full protection and security extends beyond physical protection to legal security. The BITs full protection and security clause does not operate as a legal stabilization agreement that guarantees the absolute stability of Resolution No. 15 irrespective of Claimant's actions;100
viii. Finally, even if the Tribunal were to find that it has jurisdiction over claims for violation of Uzbek law, the Respondent has not breached any of its laws. In particular, the so-called stability clause in Article 3 of the Law of Guarantees is inapplicable as Resolution No. 141 does not fall within the types of "legislation" to which the protections of Article 3 apply. Further, even if Resolution No. 141 was covered by Article 3, the Claimant has not given notice that the change in legislation worsened its investment conditions, which notice was required to trigger the application of Article 3;101 and,
ix. The Respondent is entitled to bring counterclaims to recover for damages sustained as a direct result of the Claimant's unlawful conduct. These counterclaims fall within the ICSID's jurisdiction and the Parties' consent to arbitration provided in Article 8(1) of the BIT. They also arise directly out of the subject matter of the dispute pursuant to Article 46 of the ICSID Convention and Article 40 (1) of the ICSID Arbitration Rules.102
"For all of the reasons set forth in Respondents submission to the Tribunal, at the Hearing and above, Respondent respectfully requests that the Tribunal:
(1) Dismiss Metal-Tech's claims in their entirety for lack of jurisdiction, inadmissibility, or on the merits;
(2) enter a decision in favor of Respondent in respect of all of its counterclaims;
(3) if the Tribunal reaches the merits the Tribunal should decide:
(A) Respondent has not breached the fair and equitable treatment standard under the treaty;
(B) Respondent has not impaired by unreasonable and discriminatory measures Metal-Tech's management, maintenance, use enjoyment or disposal of its investment;
(C) Respondent has not failed to provide full protection and security to Metal- Tech's investment;
(D) Respondent has not expropriated Metal-Tech's investment without just compensation; and,
(E) Respondent has not violated the foreign investment laws of Uzbekistan.
(4) award all costs and expenses associated with defending against Claimants claims."104
"The jurisdiction of the Centre shall extend to any legal dispute arising directly out of an investment between a Contracting State (or any constituent subdivision or agency of a Contracting State designated to the Centre by that State) and a national of another Contracting State, which the parties to the dispute consent in writing to submit to the Centre. When the parties have given their consent, no party may withdraw its consent unilaterally."
• Article 12, which deals with the BITs temporal scope of application:
"The provisions of this Agreement shall apply to investments made on or before the entry into force of this Agreement."114
• Article 8, which provides for dispute settlement as follows:
"1. Each Contracting Party hereby consents to submit to the International Centre for the Settlement of Investment Disputes (hereinafter: the "Centre") for settlement by conciliation or arbitration under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States opened for signature at Washington on 18 March 1965 any legal dispute arising between that Contracting Party and a national or company of the other Contracting Party concerning an investment of the latter in the territory of the former.
3. If any such dispute should arise and cannot be resolved, amicably or otherwise, within three (3) months from written notification of the existence of the dispute, then the investor affected may institute conciliation or arbitration proceedings by addressing a request to that effect to the Secretary-General of the Centre, as provided in Article 28 or 36 respectively of the Convention. The Contracting Party which is a party to the dispute shall not raise as an objection at any stage of the proceedings or enforcement of an award the fact that the investor which is the other party to the dispute has received, in pursuance of an insurance contract, an indemnity in respect of some or all of his or its losses.
4. Neither Contracting Party shall pursue, through the diplomatic channel, any dispute referred to the Centre, unless:
(a) the Secretary-General of the Centre or a conciliation commission or an arbitral tribunal constituted by it decides that the dispute is not within the jurisdiction of the Centre; or
(b) the other: Contracting Party should fail to abide by or to comply with any award rendered by an arbitral tribunal".
• Article 1(1), which defines "investments" as follows:
"The term 'investments' shall comprise any kind of assets, implemented in accordance with the laws and regulations of the Contracting P a rty in whose territory the investment is made, including, but not limited to:
a) movable and immovable property, as well as any other rights in rem, in respect of every kind of asset;
b) rights derived from shares, bonds and other kinds of interests in companies;
c) claims to money, goodwill and other assets and to any performance having an economic value;
d) rights in the field of intellectual property, technical processes and know-how;
e) business concessions conferred by law or under contract, including concessions to search for, cultivate, extract or exploit natural resources."
• And Article 1(3), which defines "investors" as follows:
"The term "investor" shall comprise:
With respect to investments made in the Republic of Uzbekistan:
a) Natural persons who are nationals of the State of Israel who are not also nationals of the Republic of Uzbekistan; or
b) Companies including corporations, firms or associations incorporated or constituted in accordance with the law of the State of Israel, which are not directly or indirectly controlled by nationals or permanent residents of the Republic of Uzbekistan."
"1. Neither Contracting Party shall, in its territory, subject investments or returns or investors of the other Contracting Party to treatment less favorable than that which it accords to investments or returns of investors of any third state.
2. Neither Contracting Party shall, in its territory, subject investors of the other Contracting Party, as regards their management, maintenance, use, enjoyment or disposal of their investments, to treatment less favorable than that which it accords to... investors of any third state."
The provisions of this Agreement relative to the grant of treatment not less favourable than that accorded to the investors of either Contracting Party or of any third state shall not be construed so as to oblige one Contracting Party to extend to the investors of the other the benefit of any treatment, preference or privilege resulting from:
(a) any international agreement or arrangement relating wholly or mainly to taxation or any domestic legislation relating wholly or mainly to taxation;
(b) any existing or future customs union, free trade area agreement or similar international agreement to which either Contracting Party is or may become a party;
(c) the definitions of "investment" (Article 1, paragraph 1) and "reinvestment" (Article 1, paragraph 2) and the provisions of Article 6 contained in Agreements entered into by the State of Israel prior to January 1, 1992.
"Taking into consideration the provisions of Article 6 [the repatriation provision] of the Agreements for the Promotion and Reciprocal Protection of Investments entered into by the Government of the State of Israel with the Governments of Poland, Hungary and Romania in 1991;
The provisions of Article 3 [the MFN provision] shall not be construed so as to oblige the State of Israel to extend to investors of the Republic of Moldova the benefits of any treatment, preference or privilege resulting from the definitions of ‘investment' or ‘reinvestment' and the provisions of Article 6 contained in the [BITs] entered into by the Government of the State of Israel with the Governments of Poland, Hungary and Romania in 1991."141
"In the latter part of 1991 the State of Israel entered into Agreement for the Reciprocal Promotion and Protection of Investments with Poland, Hungary and Romania.
Since 1991, a process of liberalisation has modified the regulations to the point where the language of those three agreements no longer reflect the current right of repatriation provided in the regulations.
That being the case and in order to avoid the need to constantly revisit and modify these agreements, the State of Israel has undertaken negotiations to modify those three agreements by replacing the language of Article 6 therein with the current Article 6.
The Government of the State of Israel shall notify the Government of the Kingdom of Thailand when the said agreements will be (modified) amended so as to render Article 7(d) unnecessary. Upon such notification, Article 7(d) shall become null and void."143
"When execut[ing] investment activity on the territory of the Republic of Uzbekistan, the foreign investor [is obligated] to observe the current legislation of the Republic of Uzbekistan [and] to pay taxes and effect other payments in accordance with the legislation of the Republic of Uzbekistan."155
"Q. How much money have you paid these gentlemen, and over what period of time?
A. We paid about $4 million in the span from 2001 until 2007."167 [...]
"PRESIDENT KAUFMANN-KOHLER: You mentioned, if I took my notes correctly, that you paid them 4 million from 2001 to 2007. Is that correct? Can you confirm that?
THE WITNESS: Yes, I can confirm that."168
"2.1 MPC has taken and will take the following obligations:
2.1.1 MPC and its management will negotiate and coordinate all matters related to Uzbekistan Government and/or official bodies.
2.1.2 To perform marketing investigations in the Republic of Uzbekistan in the interest of Metek and to provide Metek with all information concerning prices as received by the Uzbek Partner from competitors, supporting assistance during all negotiations which have resulted in the optimal conditions for 'the contract' as well as local action to secure timely and full financial settlement of 'the Contract' and other contracts related thereto.
2.1.3 MPC has fully participated in the preparation of the Feasibility Studies which form an integral basis for 'the contract' and other agreements related thereto.
2.1.4 To keep providing Metek with all relevant information on the legal and economical implication of 'the contract' and agreements related thereto, in accordance with Uzbek legislation.
2.1.5 To inform Metek full details of any payment made by the Uzbek Partner under 'the contract' within 2 days after any transfer made by the Uzbek Partner.
2.1.6 To advise of any change of regulations and/or activities, which may jeopardize Uzmetal's and/or Metek's interest in Uzbekistan.224
Further in the alternative, the Respondent relies on AAPL v. Sri Lanka, to conclude that international tribunals are "not bound to adhere to strict judicial rules of evidence", but rather have "free evaluation of evidence." It also refers to Oostergetel v. The Slovak Republic, where it was held that, regardless of the standard of proof, corruption may be proved by circumstantial evidence.261
"(3) The Parties shall cooperate with the Tribunal in the production of evidence [...]. The Tribunal shall take formal note of the failure of a party to comply with its obligations under this paragraph and of any reasons given for such failure" (emphasis added).
"(a) The February 2005 Consulting Agreement, as well as any earlier agreements whether formal or informal among (i) Metal-Tech, Ltd. and/or any affiliate of Metal-Tech, Ltd. and (ii) the Consultants, any MPC company, and/or any other person who may have been the recipient of payments forming part of the U.S.$4,000,000 [paid to the Consultants];
(b) A schedule listing all of the payments made to the Consultants, any MPC company, and/or any person who may have been the recipient of payments forming part of the U.S.$4,000,000 [paid to the Consultants];
(c) Any invoices that exist with respect to [the payments of U.S.$4,000,000 to the Consultants]; and
(d) Any other documents supporting the information in the schedule referred to [...] above."
"i. Unredacted copies of any consulting contracts with MPC;
ii. Copies of any consulting contracts with specific individuals, with the names of individuals redacted. Mr. Daly would confirm that the redactions cover only the names of Consultants (as defined in Procedural Order No. 7); and
iii. A schedule of payments, with the names of individuals and their banking information redacted, and all other information being produced."
"34. In the Tribunal's view, insofar as it is not meant to be exclusive, Claimant's proposed production of unredacted copies of consulting contracts with MPC, accords with the terms of Procedural Order No. 7. Accordingly, the Tribunal is not required to make any determination in that respect.
35. Claimant's proposal regarding the copies of consulting contracts with specific individuals with the names of the individuals redacted, however, merits further consideration. It is clear from the Parties' submissions that different people were involved in the Claimant's investment at different times. So far, it appears that all of Mr. Ibragimov, Mr. Sultanov, Mr. Chijenok, and Mr. Mikhailov may have played a role. In the Tribunal's view, in order for the Respondent to sustain its corruption defence, it would be necessary for the Respondent to match the individuals that were "consulted" with the services that they provided. Each of these individuals may have provided different services at different points in time. Therefore, each case may require a specific, tailor-made defence, for which the Respondent would need all of the necessary details of the relevant payments. Merely providing the contracts (while redacting the names of the individuals) would not enable the Respondent to develop its corruption defence. Accordingly, the Tribunal rejects Claimant's proposal with respect to this item.
37. In the view of the Tribunal, for the purposes of the present production, the Claimant may be allowed to redact from the schedule of payments, information regarding "the bank account sending and the bank account receiving the money." For the purposes of this arbitration, the Tribunal believes that it would be sufficient to know (a) the date on which the payments were made; (b) the amount paid; and (c) who paid whom. Per se, the bank account numbers would not further the resolution of the relevant issues in this case. The Tribunal is sensitive to the Respondent's submission that the Claimant's consultants may have worked as conduits to transmit payments to others. However, even if this were to be true, the Tribunal does not see how the disclosure of bank account numbers would aid the Respondent's case. The Respondent may have an interest in ascertaining the bank account numbers (such as for their possible use in criminal proceedings), but this cannot be grounds for disclosure in the present proceeding. The Tribunal is also aware that in Procedural Orders Nos. 3 and 5, it directed disclosure of banking details, including bank account information. However, disclosure there was in respect of Mr. Ibragimov, who, inter alia, was the Claimant's representative and Uzmetal's General Director for a period of two years from January 2000 to January 2002. None of Messrs Sultanov, Chijenok, or Mikhailov, whose banking details are now requested to be disclosed, have any similarly close connection with the Claimant (Mr. Sultanov was the brother of the former Prime Minister of Uzbekistan, Mr. Chijenok was a former official in the Uzbek administration, and Mr. Mikhailov was the Deputy General Director for Government Relations of Uzmetal).
38. In light of the Tribunal's determination above, and for the sake of clarity, the Tribunal directs the Claimant by Friday, 16 March, 2012, to provide the schedule contemplated in Procedural Order No. 7 containing the following information: (i) the payments made to each of the Consultants; (ii) the dates on which payments were made; and (c) who paid whom."
"71. As regards...documents reflecting the amount paid to each Consultant through the MPC companies and Lacey International, the Tribunal believes that it would benefit from knowing the amounts paid to (as well as the services rendered by (see below)) each Consultant. As regards the MPC Companies, the contracts signed by them with the Claimant have been disclosed. The Respondent is thus aware of the services which were to be provided by these companies and the total cost of these services. However, the amounts paid to each individual Consultant have not been disclosed. A similar position exists in respect of payments made to Lacey International. The Tribunal believes that knowledge of the amounts received by each individual Consultant may aid the Tribunal in coming to a conclusion about the Respondent's corruption defence (for example, if substantial payments have been made to one Consultant, then the services rendered by that Consultant, the period at which those services were rendered, etc., would deserve greater scrutiny). The Tribunal notes the Claimant's submission that it does not have possession, custody, or control of MPC's documents or Lacey International's documents. While the Tribunal has, for this reason, not confined its request for further information to documents, the Tribunal finds it difficult to understand how this would affect the Claimant's ability to make the additional disclosure contemplated by this Order. Payments may have been made to the MPC Companies or Lacey International, but the Claimant should have some record or knowledge of the services rendered by each individual Consultant and the payment made (to these entities on behalf of that Consultant) in consideration for that service.
73. Nonetheless, the Tribunal believes that it would benefit from knowing (a) the nature of the service provided, (b) which Consultant provided the service, and (c) when the service was provided. As the Tribunal recognised in Procedural Order No. 8 above (albeit in a different context), different individuals may have been involved at different times in providing different services. The Claimant, which received these services and paid for them, should be aware of the individuals who provided them. The Claimant's submission that it does not have possession, custody, or control of MPC's documents or Lacey International's documents is beside the point, for the reasons explained in [ 71 above. Details of the nature of the services rendered, by whom, and when should be within the knowledge of the Claimant. The Tribunal does not request production of documents from these companies; rather it directs the Claimant to specify the nature of the services rendered, by whom, and when.
74. Additionally, the Tribunal believes that it would be prudent to invite the Claimant to substantiate its submission that services were rendered by the Consultants. The Claimant has disclosed that payments of US$ 3,532,689.40 were made for services, but the Claimant has neither substantiated the nature of the services nor that these services were actually rendered. The Tribunal notes that several contracts produced by the Claimant themselves require the concerned entity "immediately to inform ‘M-T' about the work and services executed in its interests" and also require the Claimant "to instruct regularly [the entity concerned] about the required works and services" (see, e.g., Ex. CE-223, 11 2.5, 3.1; Ex. CE-224, 11 2.5, 3.1; Ex. CE-225, 11 2.5, 3.1; Ex. CE-226, 11 2.1.6, 2.2.1). Relevant contemporaneous documents (including those contemplated by the contracts as described above) substantiating the Claimant's submission that services were rendered by the Consultants would assist the Tribunal in reaching a conclusion regarding the Respondent's corruption defence" (emphasis added).
• "Article 210. Bribe-taking
"Bribe-taking, e.g. obviously illegal obtaining by an official, personally or through an intermediary, of valuables or the extraction of wealth or property benefit for the performance or non-performance in the interest of giving a bribe a specific action that the official must have committed or could have committed using his official position, -
shall be punished by a fine of fifty to one hundred minimum monthly wages or imprisonment up to five years with deprivation of certain right.
• "Article 211. Bribe-giving
Bribe-giving, that is, knowingly illegal provision of tangible valuables to an official, personally or through an intermediate person, or of pecuniary benefit for performance or non-performance of certain action, which the official must or could have officially performed, in the interests of the person giving a bribe -
shall be punished with fine up to fifty minimum monthly wages, or correctional labor up to three years, or arrest up to six months, or imprisonment up to three years.
• Article 212. Intermediation in Bribery
"Intermediation in bribery, that is, activity carried out to arrive at an agreement about acceptance of or giving a bribe as well as immediate delivery of a bribe upon instructions of the persons concerned -
shall be punished with fine up to fifty minimum monthly wages, or correctional labor up to three years, or arrest up to six months, or imprisonment up to three years.
"[R]esponsibility for bribery occurs regardless of when a bribe was given -either before or after the performance of an act or the omission of an act, and without regard to whether a bribe was stipulated in advance or whether any actions were actually performed in the interests of the briber."331
"When an official did not possess the powers to perform an action in the interests of the briber but owing to the official position was able to take steps towards the performance of such an action by other officials, the act should also be qualified as bribetaking."332
"The way of bribetaking and the form thereof do not matter regarding criminal liability. [A bribe] can be ] overt corruption or disguised by such apparently lawful actions as a gift, sale for nothing, the conclusion of sham employment contracts and payment as per these to the bribetaker, his/her relatives or other authorized representatives for jobs ostensibly made by him/her, ostensibly rendered technical support, etc. The object of bribery can be handed (transferred) either directly to an official who is the bribetaker or with his/her permission to the members of his/her family and other people related to him/her....".333
i. In his direct examination at the January Hearing, in relation to the 28 February 2005 Agreement among Messrs. Sultanov, Chijenok, and Mikhailov, Mr. Rosenberg testified that he "was introduced to them by a business associate, a business customer, a Dutch company" in 1998;342
ii. Further, when asked what he had believed those three individuals could do for the Claimant when he met them in 1998,343 Mr. Rosenberg testified that:
"...This Mr. Sultanov and his associates were very active in sales and business activities in molybdenum in Uzbekistan during this time. They had connection both to Almalik and to UzKTJM, and they have been exporting — buying, exporting, and doing different — of molybdenum, and they actually proposed that rather than Metal-Tech would be doing the recovering of different metals from the tailings, that we'll concentrate first on the production of molybdenum from the low-grade raw material of Almalik and implementing a project which is to build high-purity molybdenum oxide from the low-grade raw material. So, it means to help — they knew all the challenges and the problem in doing the business, and they help us in or identify to us the new possibilities in order to solve it."344
According to the Respondent, Mr. Rosenberg's references to "they" refer back to Mr. Rosenberg's statement regarding "Mr. Sultanov and his associates"-Messrs Chijenok and Mikhailov. The Respondent asserts that Mr. Rosenberg's testimony confirms that Mr. Chijenok was "involved from the beginning, when the consultants allegedly came up with the idea for the Claimant to focus on molybdenum, rather than the copper tailings";345
iii. Similarly, when asked whether the Claimant had agreements with the Consultants since the beginning, Mr. Rosenberg testified that:
"Q. And you had these agreements in place with these three individuals from the very beginning of the project; is that right? I think that's what your testimony was.
A. Yeah, I think - yes."346
According to the Respondent, Mr. Rosenberg's response specifically applies to "three individuals," i.e., to Messrs Sultanov, Chijenok, and Mikhailov, and confirms that from the very beginning, the Claimant had entered into agreements with the Consultants, including Mr. Chijenok. Again, when asked where the Consultants were working before the Claimant hired them, Mr. Rosenberg testified that he met all three consultants at the same time:
"Q. Where were these individuals working before they began working under this Consultancy Agreement with you?
A. There were three individuals that we grouped together as one unit operating in Kazakhstan [ recte Uzbekistan]; and, as I said, that they had been introduced to me by a Dutch company, and they have been dealing in pharmaceuticals and later on I learned that they had been dealing with — in other things. But the main thing that was my interest was the fact that they have been dealing in the molybdenum prior to the operation of Uzmetal. They had been buying and selling from Almalik the low grade concentrate, and they had been buying from Uzmetal — UzKTJM, sorry, the finished product, whatever it was, and they exported it, so they had vast experience in this field."347
To the Respondent, Mr. Rosenberg's testimony is clear in that "he met 'three individuals‘ - Messrs. Sultanov, Chijenok, and Mikhailov - through a Dutch company (CPH), and that the Claimant grouped these three individuals together from the beginning as one operating unit."348 The Respondent submits that Mr. Rosenberg himself confirmed this position first when he stated that he could not recall if the Consultants bought and sold molybdenum under "their name, under different names, but it was their - they were the people that did it"349 and again when he stated that although he did not mention any of the consultants in either of his witness statements, "[t]hey were a substantial part in putting the deal together."350
The Respondent also points out that, in his subsequent testimony at the January Hearing, Mr. Rosenberg did not downplay Mr. Chijenok's role or suggest that he became involved later than Messrs Sultanov and Mikhailov;351
iv. When asked by the President of the Tribunal to confirm that Messrs Chijenok, Sultanov and Mikhailov "were a team," and that "each one had special capabilities and on which [he] could rely,"352 Mr. Rosenberg agreed.353 When asked further exactly what Messrs Chijenok, Sultanov and Mikhailov, did for the Claimant to be paid USD 4 million,354 Mr. Rosenberg replied as follows:
"The way that I have been operating in those countries since I'm not a citizen of those countries — I don't know the country. I don't know who is who, and who is my enemy, who is my friend, who is doing what and how to do? I had to have somebody that will assist me at the site. We assumed that since they were actually the businessmen that were dealing in molybdenum, they knew everything. They had been in this business. They actually once we said Uzmetal we actually replaced them, so they could either be our enemies or they could assist us and join us and be our associate.
And so this was one thing and by having all their experience in doing the Feasibility Study and arranging - helping us going through...."355
He further testified that: "[the Consultants] had been assisting - they would have been part of the project from, as I said, '98 until - or '99, until the end.
The Respondent argues that, throughout his examination, Mr. Rosenberg repeatedly tied all three consultants back to the initiation of the Claimant's investment in 1998 either by referring to "three individuals" or "three people," or by using collective terms such as "they," "them, "this group of people."357
"Q. So, you have testified both in your statement, particularly in Paragraph 3, but also just now, that you, Mr. Sultanov, and Mr. Chijenok were introduced to Mr. Rosenberg through friends at CPH; is that correct?
A. Absolutely correct.
Q. And Mr. Rosenberg has testified that he did not meet Mr. Chijenok until the year 2003. Are you certain that you meant, you, along with Mr. Chijenok and Mr. Sultanov, that the three of you met Mr. Rosenberg all together in 1998?
A. I'm absolutely sure of that; and, as far as I know, Mr. Chijenok does not object to that either. That is really what happened."359
"Examination at leadership's request of business and other qualities of the applicants for vacancies being on the list of the Organisation and Personnel Policy Service; making of personal data files for newly appointed personnel; checking of subordinate employees' (personal assistants) performance, including checking of Inventory Division statisticians employment duties."378
"Q. And you had these agreements in place with these three individuals from the very beginning of the project; is that right?
A. Yeah, I think - yes."394
i. When asked whether Mr. Sultanov had specific expertise to render the services Mr. Rosenberg mentioned in his witness statement, Mr. Rosenberg testified that he did not recall Mr. Sultanov's "education" or "university qualification," but that "Mr. Sultanov was a very high appreciated person" and "a businessman."421 In fact, the Respondent submits, Mr. Sultanov had not worked in any capacity since April 1992. Prior to that he was a police investigator, who had retired with the rank of Police Colonel;422
ii. While he asserted that Mr. Sultanov had business experience in molybdenum, Mr. Rosenberg testified that he knew about this through hearsay and never himself saw evidence of this experience. Further, witnesses in the molybdenum industry had never heard of Mr. Sultanov being involved in the industry;423
iii. Mr. Rosenberg asserted that the Claimant hired its consultants to assist "on the ground".424 However, from at least 2003 to 2009, i.e. during the time that he allegedly acted as consultant, Mr. Sultanov lived in Germany, which Mr. Mikhailov confirmed. Mr. Rosenberg himself testified that he would travel to Germany "to meet with Mr. Sultanov, who resided there";425
iv. When asked in this context how Mr. Sultanov could have rendered services during the period when he resided abroad, Mr. Rosenberg testified that "[h]e had the connections which were required," and also "was traveling quite often." Thus, the Respondent submits "even though Mr. Sultanov could not and did not perform independent services for Claimant, Claimant paid Mr. Sultanov for his required connections to his brother, the Prime Minister, who was the designated official in charge of monitoring the implementation of Metal-Tech's investment."426
"A. This Mr. Sultanov and his associates were very active in sales and business activities in molybdenum in Uzbekistan during this time. They had connection both to Almalik and to UzKTJM, and they have been exporting--buying, exporting, and doing different--of molybdenum..."446
"Q. Did they have relationships with officials of the Uzbek Government that you thought would be useful?
A. Certainly. One of the main figure in this group of people were Mr. Sultanov...They have been doing business in this, in the molybdenum."447
"The fact that [the Consultants] have been dealing in the molybdenum prior to the operation of Uzmetal. They had been buying and selling from Almalik the low grade concentrate, and they had been buying from Uzmetal - UzKTJM, sorry, the finished product, whatever it was, and they exported it, so they had vast experience in this field."448
"Q. What about Mr. Sultanov? What benefits did he provide to the company, to Metal-Tech, as opposed to Uzmetal?
A. First it was a group of these three individuals, Mr. Sultanov was, as I said before, was very knowledgeable in the molybdenum trading prior to the establishment of Uzmetal, which actually Uzmetal took--replaced his--their trading with molybdenum...."449
"I said three individuals, but as a matter of fact, and the same one I was asked about the molybdenum project, I said three individuals, but then I actually indicated there was one. It was Mr. Sultanov that was dealing it."450
"... compensation for [the Consultants] losing the--their past operation in the molybdenum. We will replace them. In that way, Uzmetal replaced them."451
"[Y]ou would compensate them for the fact that you were taking the molybdenum business away from them? Is that what you're saying?
THE WITNESS: This is what I said."452
" One of the main figure in this group of people were Mr. Sultanov, who at the time was the brother of the Prime Minister "475
"Q. What about Mr. Sultanov? What benefits did he provide to the company, to Metal-Tech, as opposed to Uzmetal?
... he had very good connection with different Government bodies. His brother was the Prime Minister at the time, so it really was one of the persons that could facilitate closing red tapes when the Company was initiated."476
"We didn't have any connection to the Government authorities [and] needed somebody that will take us by our hand and show us and pass us all these red tapes, institutes"477
" Needless to say, it was helpful to Metal-Tech that Mr. Sultanov, as the brother of the Prime Minister and a former Ministry of the Interior official, had a direct relationship to many government officials and could open many doors for us."478
(iv) there is no meaningful documentary evidence of any services rendered; and (v) the odds turned against the Claimant shortly after Deputy Prime Minister Sultanov left the Government. These facts impose the conclusion that Mr. Sultanov was paid to use his family relationship to facilitate the establishment of Metal-Tech's investment in Uzbekistan. This conclusion leads to the further conclusion that the Claimant acted in breach of Articles 210-212 of the Uzbek Criminal Code. According to the commentaries of these provisions, it is sufficient that the Claimant paid Mr. Sultanov to use his family relations to further the Claimant's investment.