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Ballantine v. Dominican Republic

Michael Ballantine and Lisa Ballantine v. The Dominican Republic, PCA Case No. 2016-17
Nature of the proceedings:
International
Type of case:
Investor-State
Economic sector:
Real estate activities
Real estate activities
Date of introduction:
11 Sept 2014
Status of the case:
Decided in favor of State
Claimant’s country of origin:
United States
Respondent:
Dominican Republic
Institution:
PCA (Permanent Court of Arbitration)
Rules of arbitration:
Seat of arbitration:
Washington D.C.
Applicable treaties:
CAFTA - DR - USA (2004)

Documents of the case

profile picture Ricardo Ramírez-Hernández President
profile picture Marney L. Cheek Appointed by the investor
profile picture Raúl E. Vinuesa Appointed by the State
Source(s) of the individual document(s):
Reproduced with the permission of the Permanent Court of Arbitration :
Link1 (EN) Official source ,
Link2 (ES) Official source

Lawyers, other representatives, expert(s), tribunal’s secretary

Final Award

GLOSSARY OF TERMS

Amended Statement of Claim The Claimants' Amended Statement of Claim, dated January 4, 2017
Claimants Mr. Michael Ballantine and Ms. Lisa Ballantine
Claimants' Costs Submission The Claimants' Submission on Costs, dated April 19, 2019
Contracting Parties The Contracting Parties to DR-CAFTA
DCF Discounted cash flow
DR-CAFTA Dominican Republic-Central America-United States Free Trade Agreement, signed on August 5, 2004
EC Report The environmental compliance report that must be submitted to the MMA every six months following the issuance of an environmental permit
Enterprises Jamaca de Dios S.R.L. and Aroma de la Montaña, E.I.R.L.
Environmental Impact Statement The environmental impact statement to be submitted to the MMA when requesting an environmental permit
Environmental Law General Law on the Environment and Natural Resources (Law No. 64- 00) of the Dominican Republic
FET Fair and equitable treatment
Hearing Hearing on jurisdiction, admissibility and merits conducted from September 3 to September 7, 2018, in Washington, D.C., United States of America
ICJ International Court of Justice
ILC International Law Commission
Management Plan The Baiguate National Park's management plan
MFN Most favorable nation
MMA Ministry of the Environment and Natural Resources of the Dominican Republic
MST Minimum standard of treatment
NAFTA North American Free Trade Agreement, signed on December 17, 1992
National Park The Baiguate National Park created by the National Park Decree
National Park Decree Presidential Decree No. 571-09, published on August 7, 2009
Notice of Arbitration The Claimants' Notice of Arbitration and Statement of Claim, dated September 11, 2014
Notice of Intent The Claimants' Notice of Intent to Submit a Claim to Arbitration, dated June 12, 2014
Objection to Admissibility The Respondent's Objection to Admissibility, dated November 8, 2017
Parties The Claimants and the Respondent
PCA Permanent Court of Arbitration
Phase 1 Phase 1 of Jamaca de Dios, comprising the development of the lower portion of the project, as defined by the Claimants
Phase 2 Phase 2 of Jamaca de Dios, comprising the development of the upper portion of the project, as defined by the Claimants
Project(s) Each of the projects within the Jamaca de Dios development, as defined by the Respondent
Rejoinder on Jurisdiction and Admissibility The Claimants' Rejoinder on Jurisdiction and Admissibility, dated May 21, 2018
Rejoinder on Jurisdiction and Merits The Respondent's Rejoinder on Jurisdiction and Merits, dated March 19, 2018
Reply Memorial The Claimants' Reply Memorial, dated November 9, 2017
Reply on Bifurcation The Respondent's Reply on Bifurcation, dated March 8, 2017
Reply to the Notice of Arbitration The Respondent's Reply to the Notice of Arbitration, dated October 13, 2014
Request for Bifurcation The Respondent's Notice of Intended Preliminary Objection and Request for Bifurcation, dated February 17, 2017
Respondent The Dominican Republic
Respondent's Costs Submission The Respondent's Submission on Costs, dated April 19, 2019
Respondent's Amended Costs Submission The Respondent's Amended Submission on Costs, dated May 15, 2019
Response to the Objection to Admissibility The Claimants' Response to the Objection to Admissibility, dated November 17, 2017
Response to the Request for Bifurcation The Claimants' Response to the Notice of Intended Preliminary Objection and Request for Bifurcation, dated March 6, 2017
SENPA The Dominican Republic's National Service for Environmental Protection
Statement of Defense The Respondent's Statement of Defense, dated May 25, 2017
Submission of Costa Rica Non-Disputing Party Submission by Costa Rica, dated July 6, 2018
Submission of the United States Non-Disputing Party Submission by the United States of America, dated July 6, 2018
Surreply on Bifurcation The Claimants' Surreply of Bifurcation, dated March 10, 2017
Technical Evaluation Committee The technical evaluation committee belonging to the MMA in charge of reviewing Environmental Impact Statements
UNCITRAL Rules Arbitration Rules of the United Nations Commission on International Trade Law, as adopted in 2013
VCLT Vienna Convention on the Law of Treaties, signed on May 23, 1969

I. INTRODUCTION

A. PARTIES TO THE ARBITRATION

1.
The Claimants in these arbitration proceedings are Mr. Michael Ballantine and Ms. Lisa Ballantine (the "Claimants" or the "Ballantines"), two U.S. citizens whose stated domicile is at 951 Grissom Trail, Elk Grove Village, Illinois, 60007, United States of America. The Claimants own and control Jamaca de Dios S.R.L. and Aroma de la Montaña, E.I.R.L., two enterprises organized under the laws of the Dominican Republic (the "Enterprises"). In the present proceedings, the Claimants are represented by:

Mr. Matthew G. Allison
Baker & McKenzie LLP
300 East Randolph Street
Chicago, IL, 60601
United States of America

Mr. Teddy Baldwin
Baker & McKenzie LLP
815 Connecticut Avenue, N. W.
Washington, DC, 20006
United States of America

2.
The Respondent in these arbitration proceedings is the Dominican Republic (the "Respondent", and together with the Claimants, the "Parties"). The Respondent is represented in these proceedings by:

Ms. Yahaira Sosa
(Vice-Minister of Foreign Commerce)
Mr. Marcelo Salazar
(Director of Foreign Commerce)
Ms. Leidylin Contreras
(Deputy Director of Foreign Commerce)
Ms. Raquel de la Rosa
(Legal Analyst, Investment Dispute Prevention and Resolution)
Lic. Maria Amalia Lorenzo
(Legal Analyst, Investment Dispute Prevention and Resolution)
Ministry of Industry and Commerce
Av. 27 de febrero No. 209,
Ensanche Naco,
Santo Domingo, 10121
Dominican Republic

Ms. Patricia Abreu
(Vice-Minister of Cooperation and Foreign Affairs)
Ms. Rosa Otero
(Director of Commerce and Environment)
Ms. Claudia Adames
(Attorney of Trade and Environment)
Ms. Johanna Montero
(Attorney of Trade and Environment )
Ministry of the Environment and Natural Resources
Av. Cayetano Germosén, Esq. Gregorio Luperón,
Sector El Pedregal,
Santo Domingo, 02487
Dominican Republic

Mr. Flavio Darío Espinal
(Counsel to the President)

Mr. Paolo Di Rosa
Mr. Raúl R. Herrera
Ms. Mallory Silberman
Ms. Claudia Taveras
Ms. Cristina Arizmendi
Arnold & Porter Kaye Scholer LLP
555 Twelfth Street N.W.
Washington, D.C. 20004
United States of America

B. OVERVIEW OF THE DISPUTE

3.
From 2005 onwards, the Claimants began developing Jamaca de Dios, a luxury residential housing project located in Jarabacoa, Dominican Republic. The present dispute arose after the Claimants encountered certain difficulties when carrying out their activities in Jamaca de Dios. In particular, the Claimants allege that certain environmental regulations established by the Respondent, and its corresponding enforcement, violated the Claimants' rights under DR-CAFTA.

II. PROCEDURAL HISTORY

A. INITIATION OF THE DISPUTE

4.

On June 12, 2014, the Claimants notified the Respondent of their intent to submit a claim to arbitration (the "Notice of Intent"), in accordance with Article 10.16.1(b) of the Dominican Republic-Central America-United States Free Trade Agreement (the "DR-CAFTA"), signed on August 5, 2004 and entered into force on March 1, 2007 between its Contracting Parties (the "Contracting Parties").

5.
On September 11, 2014, the Claimants submitted, on their own behalf and on behalf of their Enterprises, their Notice of Arbitration and Statement of Claim (the "Notice of Arbitration"), pursuant to Articles 3 and 20 of the Arbitration Rules of the United Nations Commission on International Trade Law (the "UNCITRAL Rules"), as adopted in 2013, and Articles 10.16.1(a), 10.16.1(b), and 10.16.3(c) of the DR-CAFTA.

B. CONSTITUTION OF THE ARBITRAL TRIBUNAL

6.
On September 11, 2014, on the occasion of serving on the Respondent the Notice of Arbitration, the Claimants appointed Mr. Henry Burnett, a national of the United States, as the first arbitrator.
7.
By letter dated October 8, 2014, the Claimants informed that Mr. Henry Burnett had withdrawn his acceptance to act as arbitrator. In replacement, the Claimants appointed Ms. Marney Cheek, a national of the United States, as the first arbitrator.
8.
On January 25, 2016, the Respondent appointed Prof. Raúl Vinuesa, a national of Argentina and Spain, as the second arbitrator.
9.
On May 27, 2016, the Secretary-General of ICSID informed the Parties that pursuant to the Parties' Joint Protocol for ICSID Appointment, Mr. Ricardo Ramírez Hernández, a national of Mexico, had been appointed as Presiding Arbitrator.
10.
By letter dated June 3, 2016, Mr. Ricardo Ramírez accepted his appointment as Presiding Arbitrator. On the same day, the Arbitral Tribunal was fully constituted.
11.

On August 10, 2016, the Parties and the Tribunal signed a document entitled Terms of Appointment. Among other things, the Parties confirmed that all members of the Tribunal had been validly appointed in accordance with the Treaty and the UNCITRAL Rules. Additionally, each member of the Tribunal confirmed that they were and shall remain impartial and independent of the Parties and that they had disclosed, to the best of their knowledge, all current circumstances likely to give rise to justifiable doubts as to their independence and impartiality, and that they would disclose without delay any such circumstance that may arise in the future.

C. THE ARBITRATION AGREEMENT

12.

This Arbitration has been initiated pursuant to Articles 10.15 and 10.16 of DR-CAFTA:

Article 10.16: Submission of a Claim to Arbitration

1. In the event that a disputing party considers that an investment dispute cannot be settled by consultation and negotiation:

(a) the claimant, on its own behalf, may submit to arbitration under this Section a claim

(i) that the respondent has breached

(A) an obligation under Section A,

[…]

and

(ii) that the claimant has incurred loss or damage by reason of, or arising out of, that breach; and

(b) the claimant, on behalf of an enterprise of the respondent that is a juridical person that the claimant owns or controls directly or indirectly, may submit to arbitration under this Section a claim

(i) that the respondent has breached

(A) an obligation under Section A,

[…]

and

(ii) that the enterprise has incurred loss or damage by reason of, or arising out of, that breach.

2. At least 90 days before submitting any claim to arbitration under this Section, a claimant shall deliver to the respondent a written notice of its intention to submit the claim to arbitration ("notice of intent"). The notice shall specify:

(a) the name and address of the claimant and, where a claim is submitted on behalf of an enterprise, the name, address, and place of incorporation of the enterprise;

(b) for each claim, the provision of this Agreement, investment authorization, or investment agreement alleged to have been breached and any other relevant provisions;

(c) the legal and factual basis for each claim; and

(d) the relief sought and the approximate amount of damages claimed.

3. Provided that six months have elapsed since the events giving rise to the claim, a claimant may submit a claim referred to in paragraph 1:

[…]

(c) under the UNCITRAL Arbitration Rules.

4. A claim shall be deemed submitted to arbitration under this Section when the claimant's notice of or request for arbitration ("notice of arbitration"):

[…]

(c) referred to in Article 3 of the UNCITRAL Arbitration Rules, together with the statement of claim referred to in Article 18 of the UNCITRAL Arbitration Rules, are received by the respondent.

A claim asserted for the first time after such notice of arbitration is submitted shall be deemed submitted to arbitration under this Section on the date of its receipt under the applicable arbitral rules.

5. The arbitration rules applicable under paragraph 3, and in effect on the date the claim or claims were submitted to arbitration under this Section, shall govern the arbitration except to the extent modified by this Agreement.

6. The claimant shall provide with the notice of arbitration:

(a) the name of the arbitrator that the claimant appoints; or

(b) the claimant's written consent for the Secretary-General to appoint such arbitrator.

Article 10.17: Consent of Each Party to Arbitration

1. Each Party consents to the submission of a claim to arbitration under this Section in accordance with this Agreement.

2. The consent under paragraph 1 and the submission of a claim to arbitration under this Section shall satisfy the requirements of:

[…]

(b) Article II of the New York Convention for an "agreement in writing;" and

(c) Article I of the Inter-American Convention for an "agreement."

D. LANGUAGE AND PLACE OF ARBITRATION

13.
Pursuant to Procedural Order No. 1, the languages of the arbitration are English and Spanish. In cases of differences of interpretation between the English and Spanish versions of the Tribunal's awards, decisions and procedural orders, the English text shall prevail.1
14.
By agreement of the Parties, and as reflected in Procedural Order No. 1, the place of arbitration is Washington, D.C., United States of America.2

E. REGISTRY

15.
On June 16, 2016, the Parties agreed on the Permanent Court of Arbitration (the "PCA") as the registry and as administering institution. They also agreed that, in consultation with the Tribunal, the Secretary-General of the PCA would designate a legal officer of the PCA's International Bureau to act as Secretary to the Tribunal.

F. TRANSPARENCY OF THE PROCEEDINGS

16.
In accordance with Article 10.21 of DR-CAFTA, section 10 of Procedural Order No. 1 provides that:

10. Transparency

10.1 The arbitration shall be conducted in accordance with the procedure set forth in Article 10.21 of the CAFTA-DR. The PCA shall make available to the public, on its website, the information and documents listed in Article 10.21(1) of the CAFTA-DR, unless the Tribunal decides otherwise in accordance with the provisions of that Article.

10.2 Pursuant to Article 10.21(2) of the CAFTA-DR, hearings shall be conducted open to the public and the PCA shall determine, in consultation with the Parties and the Tribunal, the appropriate logistical arrangements. If any of the Parties intends to use information designated as protected information in a hearing, it shall so advise the Tribunal, who shall make appropriate arrangements to protect the information from disclosure.

G. DEVELOPMENT OF THE PROCEEDINGS

17.
On July 11, 2016, the Tribunal circulated to the Parties for comments the drafts of the Terms of Appointment and the Procedural Order No. 1.
18.
On August 10, 2016, the Parties and the Tribunal executed the Terms of Appointment.
19.
On October 13, 2014, the Respondent submitted its Reply to the Notice of Arbitration (the "Reply to the Notice of Arbitration").
20.
On September 28, 2016, the Parties and the Tribunal held the first procedural meeting through a conference call, to discuss certain procedural issues.
21.
By letter dated October 5, 2016, the Claimants requested the Tribunal that they be given an opportunity to present – should the Respondent raise any jurisdictional objections – a rejoinder on those jurisdictional issues – once the Parties had submitted two memorials each.
22.
By letter dated October 12, 2016, the Respondent requested the Tribunal that the Claimants not be granted the request detailed in their letter dated October 5, 2016.
23.

On October 21, 2016, the Tribunal issued Procedural Order No. 1, which, inter alia, addressed the points raised by the Claimants' letter dated October 5, 2016, and the Respondent's letter dated October 12, 2016.

24.
On January 9, 2017, the Claimants submitted their Amended Statement of Claim, dated January 4, 2018 (the "Amended Statement of Claim"). On February 3, 2017, the Claimants submitted a Spanish version thereof.
25.
On February 18, 2017, the Respondent submitted its Notice of Intended Preliminary Objection and Request for Bifurcation, dated February 17, 2017 (the "Request for Bifurcation"). A Spanish version thereof was submitted on March 6, 2017.
26.
On March 7, 2017, the Claimants submitted their Response to the Notice of Intended Preliminary Objection and Request for Bifurcation, dated March 6, 2017 (the "Response to the Request for Bifurcation"). The Spanish version thereof was submitted on March 22, 2017.
27.
On March 8, 2017, the Respondent submitted its Reply to the Claimants' Response to the Request for Bifurcation (the "Reply on Bifurcation"). The Spanish version thereof was submitted on March 23, 2017.
28.
On March 10, 2017, the Claimants submitted their Surreply to the Respondent's Reply on Bifurcation (the "Surreply on Bifurcation"). The Spanish version thereof was submitted on March 22, 2017.
29.
On March 29, 2017, the Tribunal informed the Parties that the bifurcation request had been denied but a reasoned decision would be issued later.
30.

On April 21, 2017, the Tribunal issued Procedural Order No 2, whereby the majority of the Tribunal rejected the bifurcation request and decided to hear the jurisdictional objection together with the merits of the Claimants' claim.

31.
On May 26, 2017, the Respondent submitted its Statement of Defense and Objections to Jurisdiction, dated May 25, 2017 (the "Statement of Defense"). The Spanish version thereof was submitted on June 10, 2017.
32.
On July 3, 2017, the Respondent submitted the Respondent's Application for an Order on Production of Documents to the Claimants, attaching the Redfern Schedule of the Respondent.
33.
On July 4, 2017, the Claimants submitted their Document Production Requests in the form of a Redfern Schedule.
34.

On July 17, 2017, the Tribunal issued Procedural Order No. 5, deciding on the Parties' requests for document production.

35.
On November 9, 2017, the Respondent submitted its Objection to Admissibility, dated November 8, 2017 (the "Objection to Admissibility"), a submission which was not contemplated within the procedural calendar, but which the Respondent justified on the basis of new evidence resulting from the Document Production Phase of the Arbitration. The Spanish version thereof was submitted on December 1, 2017.
36.
On the same day, the Claimants requested leave from the Tribunal to file a reply to the Respondent's Objection to Admissibility, which was granted by the Tribunal.
37.
Later on the same day, the Claimants submitted their Reply to the Respondent's Statement of Defense (the "Reply Memorial"). The Spanish version thereof was submitted on December 5, 2017.
38.
On November 18, 2017, the Claimants submitted their Response to the Respondent's Admissibility Objection, dated November 17, 2017 (the "Response to the Objection to Admissibility"). The Spanish version thereof was submitted on December 5, 2017.
39.

On December 22, 2017, the Tribunal issued Procedural Order No. 7, deciding to postpone the decision on both the admissibility and merits of the Respondent's Objection to Admissibility until a later stage of the proceedings. The Respondent was invited to answer to the Claimants' Response in its Rejoinder, and in turn, the Claimants were invited to submit their surreply in their Rejoinder on Jurisdiction.

40.

As a result of certain issues that arose between the Parties in December 2017 when the Respondent intended to visit Jamaca de Dios, several exchanges of correspondence ensued between the Parties and the Tribunal. Consequently, Procedural Orders Nos. 8, 9, 10 and 13 were issued by the Tribunal on March 4, April 20, May 14, and August 30, 2018, respectively.3

41.
On March 20, 2018, the Respondent submitted its Rejoinder on Jurisdiction and Merits, dated March 19, 2018 (the "Rejoinder on Jurisdiction and Merits"). The Spanish version thereof was submitted on April 7, 2018.
42.
On May 22, 2018, the Claimants submitted their Rejoinder on Jurisdiction and Admissibility dated May 21, 2018 (the "Rejoinder on Jurisdiction and Admissibility"). The Spanish version thereof was submitted on August 27, 2018,
43.
By e-mail dated July 6, 2018, the Republic of Costa Rica filed its non-disputing party submission ("Submission of Costa Rica").
44.
By e-mail dated July 7, 2018, the United States filed its non-disputing party submission, dated July 6, 2018 ("Submission of the United States").
45.
On August 24, 2018, the Tribunal issued Procedural Order No. 12, establishing the details regarding the hearing to be held in Washington, D.C., United States of America, between September 3 and September 7, 2018 (the "Hearing").

H. THE HEARING

46.
From September 3 to September 7, 2018, the Parties and the Tribunal held the Hearing, in the World Bank facilities in Washington, D.C., United States of America. In accordance with the transparency provisions under DR-CAFTA, the Hearing was broadcasted live, and the Hearing transcripts were later published in the PCA's website, along with all the Parties' submissions and the Tribunal's Procedural Orders.4
47.
The following persons were present at the Hearing:

Arbitral Tribunal
Prof. Ricardo Ramírez Hernández (Presiding Arbitrator)
Ms. Marney L. Cheek
Prof. Raúl Emilio Vinuesa

Claimants
Mr. Michael Ballantine
Ms. Lisa Ballantine
Mr. Edward "Teddy" Baldwin, Baker & McKenzie LLP
Mr. Matthew Allison, Baker & McKenzie LLP
Ms. Larissa Diaz, Baker & McKenzie LLP
Ms. Shaila Urmi, Baker & McKenzie LLP
Mr. Eric Kay, Kay Associates
Mr. James Farrell, Berkeley Research Group
Ms. Drew Lehmann, Berkeley Research Group
Mr. Graviel Peña
Ms. Jayne Baldwin
Ms. Leslie Gil Peña

Respondent
Mr. Marcelo Salazar, Ministry of Industry and Commerce
Ms. Leidylin Contreras, Ministry of Industry and Commerce
Ms. Raquel De La Rosa, Ministry of Industry and Commerce
Ms. Patricia Abreu, Ministry of Environment and Natural Resources
Mr. Enmanuel Rosario, Ministry of Environment and Natural Resources
Ms. Rosa Otero, Ministry of Environment and Natural Resources
Ms. Johanna Montero, Ministry of Environment and Natural Resources
Ms. Claudia Adames, Ministry of Environment and Natural Resources
Mr. Paolo Di Rosa, Arnold & Porter
Mr. Raúl Herrera, Arnold & Porter
Ms. Mallory Silberman, Arnold & Porter
Ms. Claudia Taveras, Arnold & Porter
Ms. Cristina Arizmendi, Arnold & Porter
Mr. Kelby Ballena, Arnold & Porter
Ms. Claudia Boscan, Arnold & Porter
Ms. Kaila Millett, Arnold & Porter
Mr. Jose Antonio Rivas
Mr. Zacarías Navarro
Prof. Eleuterio Martinez
Mr. Jose Roberto Hernández
Mr. Peter W. Deming, Mueser Rutledge Consulting Engineers (MRCE)
Mr. Pieter N. Booth, Ramboll
Mr. Timothy H. Hart, Credibility International
Ms. Laura Connor Smith, Credibility International
Ms. Tyler Smith Khoury, Credibility International

Registry: Permanent Court of Arbitration
Mr. Julián Bordaçahar, PCA Legal Counsel and Secretary to the Tribunal

Interpreters
Ms. Silva Colla
Mr. Daniel Giglio

Court Reporters
Ms. Margie Dauster, Dauster|Murphy
Mr. Virgilio Dante Rinaldi, D-R Esteno
Mr. Dionisio Rinaldi, D-R Esteno

48.
The following witnesses and experts were examined at the Hearing:

Witnesses
Mr. Michael Ballantine
Mr. Zacarías Navarro
Mr. Jaime David Fernández Mirabal5
Prof. Eleuterio Martinez
Mr. José Roberto Hernández

Experts
Mr. Graviel Peña
Mr. Eric Kay, Kay Associates
Mr. James Farrell, Berkeley Research Group
Mr. Timothy H. Hart, Credibility International
Mr. Peter W. Deming, Mueser Rutledge Consulting Engineers (MRCE)
Mr. Pieter N. Booth, Ramboll

49.
During the Hearing, information emerged regarding the funding of the Claimants' legal costs by a third party.6 The Tribunal then heard the Parties' submissions on the relevance and consequences arising from the fact that the Claimants' claims were being funded by a third party. After reflecting on the Parties' positions, the Tribunal ordered the Claimants to disclose only to the Tribunal and the PCA the agreement that the Claimants had concluded with the third-party funder.
50.
After reviewing the agreement, and at the Respondent's request, the Tribunal ordered the Claimants to disclose to the Respondent the identity of the third-party funder, and the date of the agreement, to discard any conflicts of interest. On October 2, 2018, the Tribunal issued Procedural Order No. 16 to address the issue of the third-party funder. Among other things, the Tribunal informed the Parties that, to the best of its knowledge, the third-party's involvement in the arbitration did not raise conflicts of interest for any of the Tribunal's members.
51.
At the end of the Hearing, the Tribunal asked the Parties several questions, which were replied orally by the Parties' counsel. Additionally, the Tribunal made the Parties aware that the submission of post-hearing briefs would not be expected.

I. POST-HEARING DEVELOPMENTS

52.
On April 19, 2019, the Parties filed their respective submissions on costs (the "Claimants' Costs Submission" and the "Respondent's Costs Submission").
53.
On May 15, 2019, the Respondent amended its Costs Submission, reflecting newly acquired information (the "Respondent's Amended Costs Submission").
54.
On July 17, 2019, after having duly consulted the Parties, the Tribunal declared the closure of hearings pursuant to Article 31(1) of the UNCITRAL Rules.

III. FACTUAL BACKGROUND

A. INTRODUCTION

55.
In 2000, Michael Ballantine, Lisa Ballantine and their children travelled to the Dominican Republic to work as Christian missionaries and to undertake humanitarian work, including the distribution of water filters through a non-profit entity created by Lisa Ballantine.7 While they returned to Chicago in 2001, they continued their work in the Dominican Republic, "visiting the country each year to further support the communities they had begun to serve".8
56.
In the early 2000s, the Claimants noticed that in the mountains around Jarabacoa there was no successful luxury real estate development with shared infrastructure and amenities, even though they considered it an ideal place for such a project.9
57.
Thus, the Claimants began purchasing mountain property in the area of Palo Blanco in Jarabacoa. The Claimants distinguish two phases in the development of Jamaca de Dios,10 phase 1 – which focused on the lower portion of the property and was commenced in 200511 – ("Phase 1"), and phase 2 – which was intended to expand the project towards the upper part of the mountain and was commenced in 2009 ("Phase 2").12
58.
In 2003, the Claimants bought their first tract, 218,552 square meters, from Francisco Sanchís. Between 2004 and 2008, they bought additional land rights, primarily from the family of Carlos Manuel Duran. By 2009, all of the land in Phase 1 of Jamaca de Dios was titled to the Claimants' name, as well as, 140,835 square meters of Phase 2. By September 2010, the Claimants owned 194,500 of the 283,000 square meters of Phase 2.13 On January 7, 2011, 45,036.40 square meters were purchased from Ramón Amable Rodríguez.14 On January 14, 2011, 9,905.78 square meters were acquired from María Consuelo Rodríguez.15 On February 9, 2011, 15,130 square meters were bought from Miguel Serrata Rodríguez.16 Lastly, on March 29, 2011, 18,582.99 square meters were purchased from Ana Lidia Rodríguez Serrata.17 Until the initial denial of their expansion request in 2011 they continued to acquire lands for Phase 2.18
59.
The Claimants hold that it was their plan to create a community where private individuals could purchase land and build luxury mountain homes, and where domestic and international tourists could stay in a boutique spa hotel high on the mountain, while enjoying recreational and other activities, such as hiking trails, organic gardens, parks and common areas. The Ballantines intended that homeowners and local citizens could also enjoy first-class dining with striking views of the valley.19
60.
Jamaca de Dios was intended to have at least two development phases. In Phase 1, the lower portion of the property would be developed to create the infrastructure necessary to develop the entire mountain and more than 90 individual parcels would be sold to private buyers to build luxury homes and a restaurant, which would be "a focal point of the complex".20
61.
In Phase 2, the Project would be expanded by extending the road further up the mountain and by subdividing the upper portion of the property.21 The Claimants also planned for the construction of a luxury hotel and spa with a second restaurant, mountain-lodge style apartments, and a larger apartment complex closer to the base of the property.22
62.
By the summer of 2009, after Phase 1 was approved and more than 90 individual luxury parcels were subdivided, the Claimants owned "more than 162,000 square meters of titled property further up the mountain" and were in the process of acquiring an additional 220,000 square meters for further development.23
63.
The Baiguate National Park was created by Presidential Decree No. 571-09, published on August 7, 2009 (the "National Park Decree"), to protect the Salto Baiguate or Baiguate waterfall, the endangered walnut trees and the forests along the river (the "National Park"). By the time the National Park Decree was published, less than half of the land associated with Phase 2 had been purchased by the Claimants.24
64.
The enactment of the National Park Decree was the culmination of a nation-wide environmental protection initiative which began in October 2004.25 From August 2008 to August 2009, Prof. Eleuterio Martínez led a team of government officials, scientists and cartographers in identifying new areas for environmental protection, by relying on existing information and comparing it with information obtained from field visits, to see whether the area should be recommended for protection to a high-level advisory panel. The National Park Decree established 32 new protected areas, including the National Park.26
65.
The Respondent explains that the area where the National Park is located was important for two reasons. First, because it has a sensitive and highly-fragile flora and fauna biodiversity. Second, "for the preservation of ecosystemic services, especially in relation to the production and protection of water in order to avoid potential landslides, given the intense annual dry and rainy seasons".27 Additionally, the Baiguate waterfall was also protected for being a bathing site and holding special rituals, known to the native Taino culture. For the same reasons, the river source and tributaries were included within the National Park's boundaries. According to Prof. Martínez, protecting the river source and tributaries would not only protect the Baiguate waterfall but also the biodiversity in the neighboring Mogote mountain system.28 During that time, the team did not consider who owned the land or what they intended to do with it.29
66.
In addition, the Respondent does not agree with the distinction proposed by the Claimants, since the Phase 1/Phase 2 dichotomy both confounds and oversimplifies the issues at stake.30 According to the Respondent, the Phase 1/Phase 2 contrast is sometimes used by the Claimants to make a geographic distinction, while at other times it is used to make a temporal one.31 Thus, the Respondent rejects the Claimants' proposed nomenclature, and instead identifies five projects (each, a "Project"), distinguishable according to where the Projects are located and at what time they were pursued.32
67.
According to the Respondent, Project 1 was supposedly a reforestation project, for which permission was sought on December 28, 2004, to build an access road.33 Project 2 was the construction of the restaurant Aroma de la Montaña, a housing development on the lower portion of Jamaca de Dios.34 Project 3 included plans to extend Project 1's road, expand Jamaca de Dios further up the mountain, sell at least 70 additional lots for luxury private homes, and the construction of a boutique hotel. However, when the Claimants sought permission from the Ministry of Environment and Natural Resources (the "MMA") for the project, it was described as the construction of 10 cabins and 19 villas.35 This is the project that the Claimants twice sought reconsideration for, and, as a result, they received three denials.36 In the last of these denials, the MMA finally referred to the existence of the Baiguate National Park.37 Project 4 is the mountain lodge that the Claimants sought to build above the restaurant Aroma de la Montaña.38 Lastly, Project 5 refers to an apartment complex for which the Claimants never sought permission.39

B. SEEKING APPROVAL FROM THE MINISTRY OF THE ENVIRONMENT AND NATURAL RESOURCES FOR THE DEVELOPMENT OF PHASE 1

68.
The Claimants sought to acquire the approval from the MMA for the Project. However, before that, in October 2004, the Claimants signed an agreement with PROCARYN, a German non-profit, to plant 50,000 trees across the property to stabilize the environment and create a "more enticing setting for the home sites they intended to create".40 In this sense, the Claimants sought permission from the MMA's Forestry Department to build a road to facilitate the reforestation plan. It was the Claimants' opinion that the road was critical for the Project, and they attempted to build one never before done by a private enterprise in the Dominican Republic.41
69.
On December 28, 2004, the Claimants wrote to the MMA seeking permission to build an access road for the reforestation plan.42
70.
On January 18, 2005, the MMA granted permission to cut a road and plant the trees.43 The MMA added that it had no objection as long as no trees were cut, removed and/or transplanted, nor any sand or gravel was extracted or transported.44 The road was completely built within the Claimants' development to be a service entrance for Jamaca de Dios. The Claimants allowed the landowners to the west of Jamaca de Dios to use this road until 2011, as it was much safer and more convenient than the historic pathway, which did not allow the passage of vehicles.45
71.
During the road construction, the Claimants spent significant sums of money on heavy equipment, fuel and earth moving, which involved finding "large deposits of rock and road grade material in varying place[s] throughout the mountain" and then using "[t]his material […] for backfill, engineered support structures, road base, and drainage channels".46 According to the Respondent, these kind of actions were in violation of the conditions set out in the permit.47
72.
The Claimants sough the permit from the MMA in accordance with the procedure established in the Ley General sobre Medio Ambiente y Recursos Naturales (Ley No. 64-00) (the "Environmental Law"). To this effect, the Claimants hired Antilia Environmental Consultants, a Dominican environmental company, to assist them with the permit request.48
73.
In short, the procedure to request an environmental permits is divided into six steps. First, the applicant must obtain a "no objection" letter from the municipal government where the proposed project is to be located. Second, this letter must be provided to the MMA, and the MMA would provide "terms of reference" for the submission of a Declaración de Impacto Ambiental (the "Environmental Impact Statement"). The Environmental Law does not contain a comprehensive list of all the factors that must be taken into account for the Environmental Impact Statement.49 Third, to provide the terms of reference, the MMA must conduct a technical visit to the site of the proposed project. Fourth, the applicant must draft and submit the Environmental Impact Statement. Fifth, the MMA reviews the Environmental Impact Statement and prepares a technical report on the proposed project through its Comité Técnico de Evaluación (the "Technical Evaluation Committee"). Lastly, based on the technical report, the Environmental Impact Statement, and any stakeholder or public comments, the MMA issues a decision granting or denying the permit for the proposed project.50
74.
Thus, the Claimants requested a "no objection" letter from the City Council of the Municipality of Jarabacoa. On February 7, 2005, the "no objection" letter was later provided to the MMA, and the Claimants requested the terms of reference for the Environmental Impact Statement.51 The MMA conducted a technical visit to Jamaca de Dios and some MMA technicians observed, inter alia, the irregular topography of the land, with steep slopes increasing land erosion, and the fact that a road was under construction. The last issue was investigated and flagged for further review. The technicians recommended that the Environmental Impact Statement should focus on the topographic survey of the access road.52
75.
On August 18, 2006, the MMA issued the terms of reference for the Claimants and invited them to submit the Environmental Impact Statement within a year.53 The Claimants submitted the Environmental Impact Statement with the MMA in mid-February, 2007, for 82 home sites and a restaurant.54 After being reviewed by the MMA, it was considered to be deficient, missing many important details. In June 2007, the MMA asked the Claimants to redo it, and for which Antilia Environmental Consultants committed to develop a more thorough study.55
76.
In August 2007, the Claimants submitted a revised study. The Technical Evaluation Committee completed its technical report of the proposed Project. On December 7, 2007, the MMA issued the permit No. 0649-07 for the development of the lower portion of the Project. The permit included an obligation to submit an environmental compliance report every six months (each, an "EC Report") and the assumption of liability for any penalties due to causing any environmental harm. The permit also stated that a new Environmental Impact Statement would be required for any substantial modification or addition, or for any construction site.56 At the time, the Claimants were living in the United States and managing the process from there.57
77.
During this process, the Claimants allege that the MMA did not indicate that the slope in the mountain of the Ballantine's property was an issue of concern, "or that any portion of the land in Phase 1 could not be developed because it exceeded the slope limitations set forth"58 in the Environmental Law. The Claimants and the MMA had a "constructive relationship" during the establishment and initial development of Jamaca de Dios.59
78.
After the approval of Phase 1, the MMA conducted annual inspections on Jamaca de Dios to ensure environmental compliance, reviewed the semi-annual reports submitted by Jamaca de Dios in accordance with Dominican law, and exchanged communications on several topics.60

C. THE CLAIMANTS' ALLEGED COMMERCIAL SUCCESS OF PHASE 1 OF THE PROJECT

79.
The Claimants developed the infrastructure necessary to support Phase 1 and the future Phase 2: networks to supply electricity, high-speed Internet, and potable water throughout the property; they hired 24-hour security and maintenance; created recreational and other common areas.61 The Claimants invested in designing and building a "high-quality, environmentally sound road throughout the complex".62
80.
The Claimants explain that mountain roads are difficult to build and maintain. Since the Claimants understood the importance of a quality road for Jamaca de Dios, they invested time and money to create "the finest private mountain road in the Dominican Republic".63 They cleared and fully surveyed the mountain, analyzing potential routes with physical and computer modelling. Their claimed intention was to build a road that would avoid significant steepness, while still gaining altitude and allowing "exploitation of the flattest areas of the mountain for the development of premier home sites".64 The Claimants argue that they were "well-situated to make a simple extension of the road into Phase 2".65 They contend that much of the machinery necessary to build the road had been purchased and they also had in the mountain the raw material necessary for the road bed.66
81.
According to the Claimants, despite the MMA's refusal to allow the expansion based on the slopes, the slopes in Phase 2 are more gradual than in Phase 1, thus, "the engineering necessary to duplicate the quality of the Phase 1 road would be less intensive".67
82.
After having established the necessary infrastructure during Phase 1, the Claimants subdivided the property into individual lots and began selling them to private purchasers through a standard sales contract. The landowners had the right to construct their own homes, subject to certain limitations imposed by Jamaca de Dios. The private purchasers were required to start constructing within two years of purchase and to finish in the following two years.68
83.
The Claimants also developed their restaurant, Aroma de la Montaña. Since its establishment in May 2007, the Claimants state that Aroma de la Montaña has increased in popularity as a dining destination for the residents of Jarabacoa and visitors from elsewhere.69
84.
According to the Claimants, in less than five years, Jamaca de Dios became "the most popular and prosperous mountain tourism and residential project in the Dominican Republic", selling 75 lots between 2007 and 2011. By the time of the Statement of Claim, all of the lots had been sold and "the small remaining inventory consists of reacquisitions by Jamaca".70 The Claimants hold that more than 300 people were directly or indirectly employed in Jamaca de Dios, making it the largest development company in Jarabacoa.71

D. THE CLAIMANTS' PLANS FOR PHASE 2 OF THE PROJECT

85.
In 2009, the Claimants commenced Phase 2 of their investment. Their intention was to sell at least 70 lots on the upper portion of Jamaca de Dios, which would have been more valuable that the properties in Phase 1 because of, inter alia, the views, the temperature, the enhanced privacy. Phase 2 would be accessed through an extension of the road that ended at the top of Phase 1. The Claimants also intended to build luxury homes in Phase 2.72
86.
At the beginning of 2011, the Claimants conducted an expansion of Aroma de la Montaña, from 90 to 225 available seats. They also installed a rotating floor in the main dining room, something unique in the Caribbean. The Claimants allege that the expansion was undertaken solely because they anticipated an increasing number of owners and visitors which Phase 2 would attract.73 The Respondent argues the expansion was in 2012 and that it was unauthorized, violating the terms of the Project 2 permit. The only license the Claimants had received for Aroma de la Montaña was a restaurant operating license, granted in May 2014 by the Ministry of Tourism. This license still obliged the Claimants to seek the other permits, licenses and authorizations.74
87.
The Claimants claim that they also intended to construct a boutique hotel in Phase 2. They engaged an architect to design it and a Taino Indian expert to ensure the cultural appropriateness of the hotel design and decoration.75 Additionally, they also planned to construct a mountain lodge at the top of Phase 1. ProHotel, one of the Claimants' consultants, undertook an analysis of the strengths, weaknesses, opportunities and threats of the project. Among the threats, they identified the disruption of the flora and fauna and to the environment. ProHotel recommended to first obtain financing and the permits for the mountain lodge. Only then would a marketing and sales plan be developed, a construction company be hired, and advertising be conducted.76 Instead – the Respondent points out – the Claimants hired a Dominican architect to design the lodge, began a marketing campaign, and even took client deposits for units at the mountain lodge.77
88.
The Claimants explain that they also planned to build an apartment building to host larger families, near the base of the complex. As a result, they had established a management company to oversee rental programs for these apartments.78

E. ISSUES WITH THE ROAD

89.
By 2011, at the end of the road the Claimants added gates for their property. Immediately after the gates' construction, the Claimants offered the Rodríguez family, the ones using the road built in 2005, to instead drive through the main Jamaca road.79 According to the Claimants, the Rodríguez family was not happy with being unable to keep using the road that the Claimants built in 2005. Thus, the Rodríguez requested the District Attorney to have the gates opened.80 However, the Respondent asserts that the Claimants built the gates at the end of a historic, public, unpaved road that had been used by the Palo Blanco townspeople for more than 80 years. In August 2011, the Palo Blanco townspeople requested the local District Attorney to have the gates to the historical road opened.81
90.
In September 2011, the District Attorney rejected the request to demolish the gates.82 The Respondent alleges that the District Attorney decided in favor of the Claimants because they offered the townspeople to use their road to access their land.83 Despite this ruling, the Claimants continued allowing residents to use the main Jamaca road but requiring them to register the first time they entered the development. The Claimants state that night-time traffic was dissuaded for security reasons, but with advanced permission evening access was allowed.84
91.
On April 17, 2013, the townspeople raised a complaint at a Municipality of Jarabacoa town hall meeting, which was also attended by Jamaca de Dios' representatives. At the end of the meeting, another meeting was proposed for the next day to be held at the site of the gates before the historical road. However, Jamaca de Dios' representatives were not present.85
92.
On April 22, 2013, the Municipality of Jarabacoa decided to ask the Claimants to open the gates and have the Commission of Public Works and the Prosecutor's Office work with Jamaca de Dios' representatives, and the area's dwellers and landowners.86 On the same day, the Municipality of Jarabacoa passed a resolution granting public access to a private road to Jamaca de Dios and authorizing to tear down the Jamaca de Dios' gates.87 The Claimant's contend that the resolution was passed only for Jamaca de Dios, and that they were not informed of it.88 The Municipality had been previously informed that passing the resolution would be unlawful because it is the federal Lands Tribunal which has authority over real property disputes.89
93.
On June 17, 2013, a group of local people, led by the former Director of Maintenance in Jarabacoa, stormed into Jamaca de Dios and tried to forcibly tear down the three gates.90 According to the Claimants, a city truck was used to transport the local people and the police only dispersed the crowd after the Claimants' lawyer arrived at La Vega.91
94.
On the same day, according to the Respondent, the Claimants sought the immediate closure of the historical road before Jarabacoa's Lands Tribunal. The townspeople contested the petition, yet the historical road was closed pending the petition's resolution.92
95.
On July 31, 2013, the Claimants managed to obtain a preliminary injunction from the Lands Tribunal, prohibiting the Municipality of Jarabacoa from entering the Claimants' property and ordering to rebuild the gates.93 When the Claimants began the judicial process, the Claimants state that the crowd returned, tore down the provisional gates and made death threats against Mr. Ballantine. Although the police was called, it allegedly refused to come without authorization from the City of Jarabacoa.94 Despite the injunction, Dominican court officials have declared the Claimants' road to be public.95
96.
On October 1, 2013, the Claimants requested from the Municipality of Jarabacoa a "no objection" letter for the mountain lodge in Phase 1. The Claimants state that that Municipality of Jarabacoa has refused to act on this request.96
97.
On October 5, 2015, a new judge assigned to the case ruled against the Claimants, without holding any hearings on the matter.97 As a result, public access has been granted to the Claimants' private Jamaca road.98 However, the Respondent states that the Dominican Government never declared Project 1 road to be a public road.99
98.
The Claimants also denounce the fact that the Jarabacoa City Council officials acted against them because they expected local businesses to pay the taxes directly to the councilors. The Claimants refused to do so, and instead paid their taxes to the Municipality of Jarabacoa.100 The Claimants add that the City of Jarabacoa has refused to pay for the streetlights within Jamaca de Dios, even though the federal Government reimburses the City of Jarabacoa for such costs, and it pays for the streetlights in Dominican-owned projects. Likewise, since 2005, the City of Jarabacoa has refused to provide any maintenance on the public road that leads to Jamaca de Dios.101

F. THE CLAIMANTS' REQUEST TO THE MINISTRY OF THE ENVIRONMENT AND NATURAL RESOURCES FOR A PERMIT FOR PHASE 2

1. The First Phase 2 Inspection by the MMA

99.
On May 22, 2009, MMA officials conducted an environmental inspection at Jamaca de Dios, including men carrying weapons. The Claimants state that they and their employees were treated in a harassing and hostile manner.102 Mr. Ballantine was allegedly threatened with criminal action for allegedly violating environmental laws. The MMA officials contended that by creating access to Jamaca de Dios, flattening a small space on three lots and removing several small trees, environmental regulations had been violated.103 Mr. Ballantine recalls that Ms. Francis Santana, the then-MMA local director, said that this type of unannounced, militaristic inspection was unprecedented and unique. Also, Mr. Ballantine claims that Ms. Santana told him that she had no knowledge of any complaint having been lodged against Jamaca de Dios. According to Mr. Ballantine, Ms. Santana stated that the inspection had been ordered by the Minister of the MMA, Mr. Jaime David Mirabal.104
100.
While the Respondent confirms the inspection occurred, it explains that the visit was not unannounced because the Project 2 license gave the MMA the right to sanction any violations thereof. Thus, it contends that the MMA also had the power to monitor the license's compliance. Several weeks before the inspection, the Claimants were invited to the MMA's office in Jarabacoa to discuss unauthorized work conducted in connection with Project 2. During the meeting, the Claimants stated that they intended to comply with the principles of environmental protection and not to violate the Environmental Law.105 The Respondent does not consider the visit to be unprecedented because it characterizes the evidence as purely hearsay, denied by Ms. Santana herself, and the Environmental Law obliges permit-holders to allow the monitoring by the relevant authorities.106 Nor does the Respondent consider the inspection to have been militaristic because it is common for the National Service for Environmental Protection ("SENPA") to accompany MMA officials during their site visits. They wear distinctive green uniforms and carry non-automatic weapons. Although the Respondent cannot confirm whether the SENPA officials were present during the inspection, it does not consider it surprising if they were.107
101.
In the inspections conducted on May 22, 2009, it was discovered that the Claimants (i) had failed to submit the EC Reports, (ii) had cut certain tree species without authorization, (iii) had engaged in unauthorized ground excavations which interfered with the waterways, and (iv) had divided the lots in a manner different to the development plans the MMA had authorized.108

2. Imposition of the Fine and Meetings between the Parties

102.
On November 19, 2009, on the basis of this inspection, the MMA imposed a fine of almost one million Dominican Pesos on Jamaca de Dios.109 According to the Claimants, this has been the largest fine the MMA has ever imposed in the region to a property owner, and local MMA officials allegedly confessed to them that they considered it "excessive and arbitrary".110 The Respondent denies this. According to the Respondent, the fine was imposed within the scope of the MMA's authority since the Project 2 permit reserved the MMA the right to impose fines for breaches of the permit.111 The MMA also required that the Claimants comply with environmental regulations, undo the environmental damage, suspend work on Project 2 until the fine had been paid, and submit reports proving their compliance every six months.112
103.
The Respondent explains that the quantity of a fine can be up to 3,000 times the minimum wage applicable at the time of the violation.113 The Respondent notes that the fine, even before it was reduced by 50%, was not the largest one imposed in the region. In 2013, Aloma Mountain, for example, received a fine of 1.7 million Dominican Pesos.114
104.
The fine also included an order to complete an EC Report twice every year, which the MMA asserted to be required by law. The Claimants contend that they have submitted the EC Reports for all 15 semi-annual periods but that no Dominican-owned project has been required to do so.115 The Claimants allege that the only EC Reports submitted to the Respondent – other than those submitted by the Claimants – were three from Paso Alto between 2008 and 2009, and one from Quintas del Bosque in 2014.116 The Respondent states that the obligation to submit EC Reports can also be found in environmental permits granted to other entities, and that fines have been imposed on other developments for not submitting the required EC Reports.117
105.
The Claimants contend that they immediately requested a meeting with the MMA Minister Jaime David Mirabal to discuss the fine. However, the MMA did not respond to the meeting request and refused to discuss or reconsider the fine.118 The Claimants refused to pay it and kept requesting a meeting.119
106.
In August 2010, before seeking permission, the Claimants applied for tax-free status for Phase 1 and 2, in accordance with CONFOTUR Law No. 158-01, which intends to promote tourism in the Dominican Republic. On November 10, 2010, the Respondent approved the provisional tax-exemption request.120 The Claimants point out that this approval was signed by the Dominican Ministries of Tourism, Culture, and Tax, and the MMA, the latter without mentioning the slope restrictions or the establishment of the National Park.121 The Respondent explains that this process has nothing to do with the environmental permit process and CONFOTUR informed so to the Claimants in the approval.122
107.
On September 22, 2010, the environmental consultant working with the Claimants on the planned expansion told them that some of their land was within the National Park, a category II protected area.123 Mr. Ballantine asked what that would mean for their expansion plans. The consultant confirmed that Dominican law allowed projects of low-impact tourism, such as nature tourism or ecotourism, within the protected areas, and specifically referred to the Claimants' project as one of those allowed. While the consultant recognized that the issue of the roads and the management of sewage and waste would have to be discussed, she recommended the Claimants request the terms of reference for their expansion and allow the MMA to visit the development to provide an opinion on technical and legal matters and on the projects' viability. Although – in the opinion of the consultant – the project was considered a permitted activity within a category II protected area, the consultant clarified that MMA would still decide which project would or would not be allowed.124 The Respondent emphasizes that neither Project 3, nor any part of Jamaca de Dios has been recognized as ecotourism by the MMA.125
108.
On October 7, 2010, Minister Mirabal allowed for the fine to be reduced by a 50%.126
109.
On November 30, 2010, the Claimants request permission for the so-called Project 3.127
110.
On December 13, 2010, the Claimants received a "no objection" letter from the City Council of Jarabacoa, regarding the expansion plans for the hotel and the subdivision of lots. There was no mention of the slope restrictions or the National Park.128 At the same time, the Claimants requested the MMA to provide the "terms of reference" for the expansion.129
111.
On December 21, 2010, the Claimants received approval from CONFOTUR for their request for certain tax benefits for Jamaca de Dios. The approval included a signature and seal from the MMA, which made no reference to any slopes in Phase 2.130 The Respondent points out that CONFOTUR's granting of the tax benefit is unrelated to the Claimants' compliance with environmental regulation.131 The resolution granting the tax benefits states that it "does not authorize the commencement of construction of the JAMACA DE DIOS project".132
112.
On January 26, 2011, the Claimants' request for an environmental permit was lodged at the MMA.133 At the same time, the Claimants continued to purchase land and made plans to buy excavators.134
113.
On February 1, 2011, the Claimants decided to pay the fine, since the MMA previously stated that it would not provide the requested terms of reference until the fine was paid.135

3. First Reconsideration by the MMA at the Claimants' Request

114.
On February 14, 2011, the Claimants were granted a meeting with the MMA Minister, Mr. Jaime David Mirabal, the Vice Minister of Protected Areas, Mr. Bernabé Mañón, and the Management Director of Protected Areas, Mr. Ekers Raposa.136 In the meeting, Mr. Ballantine expressed his opinion that the fine was unjustified but he still was looking forward to working with the MMA regarding Phase 2.137 According to the Claimants, Minister Mirabal promised to send another inspection team to Jamaca de Dios to investigate the issue and provide a response on the requested expansion. However, there was no mention of the planned expansion being within the boundaries of the National Park.138 Mr. Omar Rodríguez was also present at the meeting.139
115.
According to the Claimants, on mid-February, 2011, an inspection team from the MMA visited Jamaca de Dios. The team was welcomed by Mr. Ballantine and Mr. Eric Kay, the expert who helped design and construct the road of Phase 1 and the development of Phase 2. The Claimants contend that the team was "overwhelmingly positive about the prospects of expansion, never mentioning any issue about slopes or the fact that Phase 2 purportedly" was inside the National Park.140 The lead inspector of the MMA team, Mr. César Sena, allegedly recommended seeking permission to expand the road into Phase 2.141
116.
According to the Respondent, during the February, 2011, site visit the MMA officials took contemporaneous notes that the land was over 40% steep, that the earth movements that would be carried out were major, and that the area provided for the disposal of removed materials was "[i]nadequate/harmful to the environment". The MMA officials further noted there were risks that (i) the project would significantly contaminate the soil and subsoil, (ii) during the construction phase the primary or secondary forest would be cleared, (iii) the project would have "a very strong adverse visual impact on the landscape", and (iv) a slope greater than 60% had been observed.142 The Respondent relies on Mr. Zacarías Navarro to explain that the construction of the road was dangerous and complicated, as it was planned to be done at an area located between 900 to 1200 meters above sea level, in the northern face of the Cordillera Central mountain range, where the precipitation levels exceed 1,600 millimeters per year. Also, there would have been a significant "risk of periodic and irrecoverable environmental harm".143 The MMA, its inspectors, and the Claimants agreed that because the Claimants' intention was to develop towards the top of the mountain and "it is virtually impossible to make the subdivision map without first cutting the road", the Claimants should first request permission for the construction of the road.144
117.
On February 24, 2011, the Claimants wrote a letter to the Vice Minister of the MMA, Ernesto Reyna, seeking permission to begin the expansion of the road immediately.145
118.
On March 18, 2011, there was an inspection on Jamaca de Dios, conducted by an MMA official, Mr. Sócrates Nivar, who purportedly drafted a report dated March 21, 2011.146 The MMA officials recommended declaring the project "not viable" because of the "environmental fragility of the area and natural risk, the land topography and slope, which is over 60% in much of the area, …natural run-offs, the characteristics of the buildings being built in the Project area, and a possible violation of Art. 122, Law 64-00".147 According to the Claimants, a copy of the report was never provided to them until the Respondent's Response to the Notice of Arbitration.148
119.
On April 21, 2011, the Claimants wrote to the MMA regarding the terms of reference. According to the Claimants, they did not receive an answer.149
120.
On May 18, 2011, the recommendation by the MMA official in the March 21, 2011, report was accepted by the MMA's Technical Evaluation Committee.150 According to the Claimants, local MMA Director Mr. Graviel Peña was not invited to the committee meeting, contravening MMA policy standards.151
121.
On May 27, 2011, Mr. Peña wrote to his regional supervisor reporting on non-authorized development in Aloma Mountain. The Claimants contend that his letter was ignored and that the development in Aloma Mountain was not affected.152
122.
On June 9 and 10, 2011, Mr. Kay reached conclusions similar to those reached by the MMA official during his site visit to Jamaca de Dios on March 18, 2011. He was also concerned about the "soft soil conditions" and the water running at the outside edge of the road, increasing water saturation in the soil. He also recognized the existence of a problem with the steep slope areas.153
123.
On July 15, 2011, the Claimants wrote to the MMA again regarding the status of the report. Once more, they received no response, even though the MMA was visited by Jamaca de Dios' workers and by the environmental company Empaca Redes.154
124.
On August 22, 2011, Mr. Ernesto Reyna replaced Mr. Jaime David Mirabal as MMA Minister.
125.
On September 1, 2011, the Claimants sent a letter to Minister Reyna, personally congratulating him on his new position, inviting him to Jamaca de Dios, and seeking a response to the expansion request.155
126.
On September 12, 2011, the MMA rejected the expansion request on the grounds that the slopes on the upper portion of the property exceeded the 60% permitted under Article 122 of the Environmental Law and because it was considered an environmentally fragile area, creating a natural risk. Yet, the MMA was willing to assess the viability of any other areas that the Claimants would provide for Project 3.156 The Respondent points out that the Claimants failed to propose an alternative site.157 The Claimants point out that slope restrictions had never been mentioned by the MMA, even though the land approved in Phase 1 had slopes in excess of 60%.158
127.
Nevertheless, after this rejection, the permit for Jarabacoa Mountain Garden and Mirador del Pino were approved, even though both developments would have slopes in excess of 60%.159 The Claimants contend that in those two projects the MMA worked with the owners "to modify their plans to ensure compliance with regulatory requirements".160 The Respondent explains that the Claimants oversimplify the issue when solely comparing the slopes of the properties. Other factors must be taken into account such as concentration, altitude and environmental impact. The other projects are located in lower altitudes, the access to exploitable land is much easier there and the concentration is much lower than in Project 3.161

4. Subsequent Reconsiderations by the MMA of Jamaca de Dios' Environmental Permit Request

128.
As a result of the first denial, the Claimants ceased purchasing land and negotiations on the purchase of Paso Alto.162
129.
The Claimants state that they acquired the MMA's own maps for Phase 2 in a public meeting held in Jarabacoa in December 2014. The map would show that the proposed development area does not have any slopes exceeding the 60% limit, revealing the denial's lack of substantive scientific support.163 However, the Respondent denies this, as five different site visits were conducted for the Project 3's permit, and measuring tools were used to analyze the slopes.164 By applying these factors, even Project 2 and 3 are different, albeit both have slopes exceeding 60%. The former is at a lower altitude and thus, there is lower risk of massive landslides.165
130.
On November 2, 2011, the Claimants requested the MMA to reconsider its decision, stating that no slope in Phase 2 of any area designated for home construction would exceed the 60 degree limit, and asking for another inspection team to visit the project. According to the Claimants, MMA did not provide any reports, findings or technical data supporting its rejection and no further inspection of the project was conducted.166 The Respondent points out that Mr. Ballantine's letter states that no slope would exceed 60 degrees, while acknowledging that the slope where the road would be constructed would be equivalent to 34 degrees.167
131.
In contrast to the Claimants' allegation that no further site visit was performed, the Respondent contends that on January 23, 2012, the MMA's officials conducted another site visit.168 On February 22, 2012, the MMA organized a Technical Evaluation Committee meeting to support the rejection. Mr. Graviel Peña attended the meeting and stated that no technical issues were not discussed, instead only Zacarias Navarro's opinion was requested.169
132.
On March 8, 2012, the Claimants' request for reconsideration was rejected.170 The MMA explained that the project was located in lots with slopes between 20 and 37 degrees, which would in turn mean slopes of 36% and 75%, respectively. The Environmental Law prescribes a maximum slope of 60%, not 60 degrees.171 Also, the MMA asserted that the project would modify the area's natural runoff and the local hydrological and the micro basin's condition, affecting the mountain's ecosystem. Additionally, the type of soil found on the site could only be used for certain purposes. The MMA had considered the Claimants' initial proposal improper, however it became concerned after finding out that their plan was even more ambitious and large than before. Thus, the MMA informed the Claimants that their application file had been closed.172
133.
On March 3, 2012, Mr. Peña wrote to Mr. Reyna, informing of non-permitted development in Aloma Mountain. The Claimants contend that his letter was ignored and that the development in Aloma Mountain was not affected.173
134.
On August 3, 2012, the Claimants again asked the MMA to reconsider its decision, based on the fact that the extension of the project at that time was located at an area with a pitch of 32 degrees.174
135.
On December 18, 2012, the MMA rejected the Claimants' second reconsideration request by letter, with the same content as the letter dated March 8, 2012.175
136.
In May 2013, Mr. Victor Pacheco, the then-Director of the Export and Investment Center, organized and attended a meeting with Mr. Ballantine and Mr. Jean-Alain Rodríguez, the Executive Director of the Export and Investment Center of the Dominican Republic. The Respondent argues that Mr. Ballantine's letter to Jean-Alain Rodriguez was misleading and mischaracterized the issue because it stated that the Claimants had complied with the relevant provisions of the Environmental Law related to the construction of the road.176
137.
In June 2013, the Claimants sent a letter to the MMA acknowledging the reasons for rejecting the permit but requesting a reconsideration.177 On the same month, Project 2's permit was renewed for five years.178 The Respondent points out that during that time the Claimants launched a marketing campaign for Phase 2, with misleading messages, such as the approval of their project and its environmental friendliness. An open house was held in September 2014.179
138.
In June 2013, Ms. Nuria Piera investigated the situation around Jamaca de Dios. In her report, she highlighted the differential treatment between Jamaca de Dios and Aloma Mountain, and the alleged political connections between Mr. Domínguez and the MMA.180
139.
On July 1, 2013, Mr. Victor Pacheco, wrote a letter to the Director of the MMA, Mr. Bautista Gómez Rojas, after having been informed by Mr. Ballantine of the situation in Jamaca de Dios.181 The next month, Mr. Ballantine received an e-mail from Mr. Pacheco, informing him that Mr. Domínguez was "neck deep" in the MMA's mistreatment of Jamaca de Dios.182
140.
On July 4, 2013, Empaca Redes submitted to the MMA an extensive engineering and geological report, showing that the slopes in Phase 2 complied with all applicable slope restrictions and other environmental requirements.183 As alleged by the Claimants, the MMA ignored the report and has not answered to the factual contentions included in it.
141.
On July 18, 2013, the Claimants met officials from the U.S. Embassy in Santo Domingo.184
142.
On July 30, 2013, the U.S. Embassy officials met with Ms. Zoila González from the MMA. By letter dated August 22, 2013, they expressed their concerns regarding the MMA's treatment of the Claimants.185
143.
On August 28, 2013, the MMA sent another inspection team to Jamaca de Dios. Mr. Ballantine gave them a tour around Phase 2 and showed them the slope maps, part of the Empaca Redes report, and satellite images showing the unpermitted development of Aloma Mountain. Mr. Ballantine expressed his concern that Jamaca de Dios was being treated unfairly.186
144.
On September 13, 2013, Mr. Ballantine, his lawyer Mr. Mario Pujols, Ms. Miriam Arcia from Empaca Redes, and Ms. Leslie Gil Peña, the administrator of Jamaca de Dios, met with Mr. Zacarías Navarro, the MMA's Director of the Environmental Evaluation.187 Mr. Navarro informed Mr. Ballantine that the planned expansion was within the boundaries of the National Park. According to the Claimants, this was the first time the National Park had ever been mentioned by the MMA, in a written or oral communication.188
145.
On September 23, 2013, Mr. Navarro visited Jamaca de Dios as part of the reconsideration appeal. He explained to the Claimants that even setting aside the slope and earth movement issues, the area for Phase 2 was within the National Park limits, and so the Project could not move forward.189
146.
On October 1, 2013, Mr. Ballantine sought redress from President Danilo's office. His requests for assistance were rejected.190 The Claimants note that an appeal made by Jarabacoa Mountain Garden to the President's office was treated differently: the Presidency directly intervened in the permitting process and the approval was granted for the entire process.191 However, the Respondent explains that the Presidency reviewed and forwarded the letter to the MMA on October 10, 2013.192
147.
Two weeks later, the office of the President informed Mr. Ballantine that the letter had been forwarded and that officials from the MMA would be in contact with him in the following days.193 Regarding the assertion that the President intervened in favor of Jarabacoa Mountain Garden, the Respondent considers it purely hearsay and thus, with no evidentiary value.194
148.
In October 2013, the Claimants wrote to the Municipality of Jarabacoa to request a "no objection" letter for the construction of the Mountain Lodge.195
149.
On January 15, 2014, the MMA provided its fourth and final rejection, giving the same reasons as set out before.196 According to the Claimants, there was no response to the submission provided by the Claimants through Empaca Redes.197 The letter stated that the Claimants could not develop Phase 2 because it was located within the National Park, which had been designated as a protected area. The Claimants point out that the designation took place in August 2009 by the National Park Decree,198 yet the letter of January 2014 was the first one relying upon the existence of the National Park to deny Phase 2. Between 2009 and 2014, the Claimants and the MMA exchanged many written and oral communications, in which the National Park was never mentioned. In fact, the Claimants point out that the MMA extended the duration of the permit in Phase 1, despite the fact that a significant portion of it was inside the National Park.199 The Respondent explains that the final rejection was not based on the creation of the National Park, but rather that the National Park was an additional reason. The application had already been formally rejected on September 12, 2011 and the file was formally closed on March 8, 2012, when the Claimants opted to contest the decision rather than to choose an alternative location.200 The letter also reminded the Claimants that pursuant to Article 40 of the Environmental Law and to the environmental authorization regulations, any construction, extension, and/or renovation activities of a project cannot be performed if the corresponding environmental authorization has not been granted.201
150.
The Claimants responded to the MMA's letter, dated January 15, 2014, asking the MMA the reasoning behind the National Park's boundaries, as there did not seem to be "any coherent environmental, geological, geographic, or altitude-related reason for it to have located the park lines through the middle of their development".202 They also asked the MMA to explain the reasons why the National Park Decree was now being applied to reject the Claimants' expansion permit, after being in force for more than four years.203
151.
In November 2014, the Claimants met with Ms. Katrina Naut, Foreign Trade Director, and Ms. Patricia Abreu, Vice Minister for International Cooperation, to discuss the possibility of suspending the current proceeding.204
152.
On December 4, 2014, a community meeting was held to discuss the existence of the National Park and the creation of its management plan (the "Management Plan").205
153.
On December 11, 2014, a meeting was held with the City of Jarabacoa. The City Council officials explained that they knew that the MMA was concerned about Jamaca de Dios' expansion and thus, they had asked the MMA for further information. The moment they received it, they would contact the Claimants to inform them of the City Council's position.206 During the meeting, the Respondent asserts that Ms. Leslie Gil Peña, a representative of the Claimants, verbally withdrew their request for a "no objection" letter, stating that it was unsuitable.207 The Claimants deny this, relying on the minutes of the meeting. According to the Claimants, Ms. Gil Peña explained that they were seeking first a conditional "no objection" letter, in order to continue pursuing the rest of the necessary permissions for the Mountain Lodge, and later they would request the definitive "no objection" letter.208
154.
On December 19, 2014, the MMA's Coordinator for Public Areas, Mr. Pedro Arias, acknowledged the local communities' frustration at finding out that their property was within the boundaries of the National Park.209 A draft map provided by the MMA at the community meeting explicitly shows that Jamaca de Dios and Aloma Mountain had been designated as ecotourism areas.210
155.
On February 16, 2015, the City Council informed the Claimants that if they secured confirmation from the MMA that Project 4 would not give rise to environmental concerns, then the City Council would provide a "no objection" letter. According to the Respondent, the Claimants did not pursue Project 4 any further.211
156.
The Management Plan was created before the Respondent submitted its Statement of Defense. In the Management Plan, while ecotourism is allowed, the standard for what constitutes ecotourism has not been fully defined.212 The Respondent faults any delay in the drafting and issuance of the Management Plan on the limited resources the Dominican Republic has at its disposal to conduct the necessary studies to produce each Management Plan.213 In any event, the Respondent explains that under Law No. 202-04 on Protected Areas, in a land included under category II, like the National Park, ecotourism is allowed.214

IV. RELIEF SOUGHT

A. THE CLAIMANTS' RELIEF

157.
In their Notice of Arbitration and Statement of Claim, the Claimants request that the Tribunal grant the following relief:

(1) declare that Respondent has breached its obligations under the [DR-CAFTA] and international law;

(2) award Claimants monetary damages of not less than US$20 million (twenty million U.S. dollars) in compensation for losses sustained as a result of Respondent's breaches of its obligations under the CAFTA-DR and international law, including, inter alia, reasonable lost profits, direct and indirect losses (including, without limitation, loss of reputation and goodwill), losses of all tangible and intangible property, and moral damages;

(3) award all costs (including, without limitation, attorneys' fees and all other professional fees) associated with any and all proceedings undertaken in connection with this arbitration, including all such costs undertaken to investigate this matter and prepare this Notice of Arbitration and Statement of Claim, and all such costs expended by Claimants in attempting to resolve this matter amicably with Respondent before serving this Notice of Arbitration and Statement of Claim;

(4) award pre- and post-judgment interest at a rate to be fixed by the Tribunal;

and

(5) grant such other relief as counsel may advise or the Tribunal may deem appropriate.215

158.
In their Amended Statement of Claim, the Claimants increased the monetary damages to USD 37.5 million deemed as direct damages, and added USD 4 million for moral damages.216 For their Reply Memorial, the Claimants' monetary damages, as calculated by their expert, Mr. Farrell, were re-assessed to total approximately USD 35.5 million.217
159.
In their Admissibility Response, the Claimants request the Tribunal to grant the following relief: "dismiss the Respondent's admissibility and jurisdictional objection. The Tribunal should also order Respondent to pay the Ballantines' costs of defending against this Submission".218

B. THE RESPONDENT'S RELIEF

160.
In its Statement of Defense and its Rejoinder, the Respondent requests that the Tribunal grants the following relief:

a. That the Tribunal dismiss all of the Ballantines' claims, on the basis of lack of jurisdiction, inadmissibility, and/or lack of merit;

b. That, in the event that it were to decide that one or more claims are meritorious, the Tribunal decline to grant any damages to the Ballantines, on the basis that their damages calculations are unreliable, erroneous, and/or speculative;

c. That the Tribunal grant to the Dominican Republic all of the costs of the proceeding, as well as the full amount of the Dominican Republic's legal fees and expenses; and

d. That the Tribunal award to the Dominican Republic such other relief as may deem just and proper.219

V. THE PARTIES' ARGUMENTS ON JURISDICTION

A. THE RESPONDENT'S ARGUMENTS

1. The Dominican Republic's Consent

161.
The Respondent argues that the Claimants bear the burden of establishing the jurisdictional ground for their claims, including the Dominican Republic's consent.220 Its scope is defined in Article 10.17 of DR-CAFTA, which states that each Contracting Party "consents to the submission of a claim to arbitration under this Section [B] in accordance with this Agreement".
162.

Article 10.16 explains which types of claims can be submitted to arbitration, by whom, and how. It provides that

(a) the claimant, on its own behalf, may submit to arbitration under this Section a claim

(i) that the respondent has breached

(A) an obligation under Section A,

(B) an investment authorization, or

(C) an investment agreement; and

(ii) that the claimant has incurred loss or damage by reason of, or arising out of, that breach; and

(b) the claimant, on behalf of an enterprise of the respondent that is a juridical person that the claimant owns or controls directly or indirectly, may submit to arbitration under this Section a claim

(i) that the respondent has breached

(A) an obligation under Section A,

(B) an investment authorization, or

(C) an investment agreement; and

(ii) that the enterprise has incurred loss or damage by reason of, or arising out of, that breach.221

163.

The Respondent focuses on two aspects. First, that only a claimant, as defined by DR-CAFTA Article 10.28 has the right to submit a claim to arbitration under Chapter 10, Section B. Second, that the only type of claim that can be submitted by a claimant is one according to which a respondent has breached an obligation under Articles 10.1 to 10.14. Accordingly, there is no consent if either the party submitting a claim to arbitration is not a "claimant" as defined by DR-CAFTA, or the claims asserted are not connected to the obligations set out in Articles 10.1 to 10.14. The Respondent argues that in this case neither the Ballantines are "claimants" under the purposes of the DR-CAFTA, nor do their claims involve any obligations under Articles 10.1 to 10.14, due to the fact that neither at the time they submitted their Notice of Arbitration, nor at the time of the alleged violations, their dominant and effective nationality was that of the U.S.222

2. The Ballantines Do Not Qualify as "Claimants" Under DR-CAFTA

164.
The Respondent contends that the Claimants must demonstrate that at the time of the submission of their Notice of Arbitration and Statement of Claim, on September 11, 2004, they qualified as "claimants" under the DR-CAFTA.223
165.
Under Chapter 10 of the DR-CAFTA, "claimant" is understood as "an investor of a Party that is a party to an investment dispute with another Party".224 Therefore, in this case, the claimant must be an investor of a Contracting Party other than the Dominican Republic. An "investor of a Party":

means a Party or state enterprise thereof, or a national or an enterprise of a Party, that attempts to make, is making, or has made an investment in the territory of another Party; provided, however, that a natural person who is a dual national shall be deemed to be exclusively a national of the State of his or her dominant and effective nationality.225

166.
The Respondent points out that the Claimants acknowledge that they have to comply with the definition of "claimant" under the DR-CAFTA, that the issue of whether they are "claimants" is connected to the question of their dominant and effective nationality, and they did not contest that September 11, 2014 was the day on which their claims were submitted to arbitration.226 However, the Claimants do question whether the date of submission is relevant in the first place.227
167.

The Respondent emphasizes the importance of the date of submission.228 First, it argues that should DR-CAFTA be silent on the relevant timing for the question of nationality, the Tribunal would be required to decide the issue on the basis of international law, in accordance with Article 10.22. Under international law, one of the relevant dates for purposes of jurisdiction is the date on which "the moving party avails itself of a remedy".229 Accordingly, jurisdiction must exist at the time the claim was filed, and at the time of the alleged treaty breach, and a State cannot be subject to claims raised by its own dominant and effective nationals before an international forum.230

168.
Second, it contends that in fact DR-CAFTA is not silent on this issue, but rather that it is connected to the issue of consent. The question is whether the Claimants were allowed to submit their claim at the time they did so. Thus, one would examine the state of affairs on the date of submission.231
169.

Third, the Respondent rejects the Claimants' assertion232 that the issue of dominant and effective nationality only becomes relevant if the investor holds dual nationality at the time of making the investment in the host State. The definition of "claimant" in Article 10.28 would support the position that the relevant time period cannot be earlier than the time when the investment dispute arose.233

170.

Fourth, the Respondent alleges that even if the Tribunal were to focus on DR-CAFTA's definition of "investor of a Party", it would not find any support for the Claimants' claim that the question on the nationality refers to the date the investment was made. Article 10.28's definition of "investor of a Party" has two cumulative requirements: (i) there must be a "national of a Party"; and, (ii) the national must attempt to make, is making or has made an investment in the territory of another Party. The notion of dominant and effective nationality is only related to the first requirement. The Respondent does not contest that the second requirement is disjunctive, since it allows for three different options to define someone as an investor.234 However, if one would follow the Claimants' arguments not all the options would be relevant. Therefore, the Claimants' assertion must be rejected.235

171.
Fifth, the Respondent considers the Claimants' assertion that the "Tribunal should not merely take a snapshot in time and, at any specific date, attempt to weigh [as of that date] the Ballantines' connections to the US against their connections to the DR",236 (Emphasis added by the Respondent) is misguided. Further, it points out that the Iran-U.S. Claims Tribunal's Malek decision the Claimants are relying on does not support such a contention.237
172.
The Respondent contends that because the Claimants held dual nationality at the time of the submission of their claims to arbitration, on September 11, 2014, the question is which nationality was the dominant and effective one at that time.238 The effective nationality refers to whether there is a genuine connection between the person and the State.239 The Respondent does not dispute the genuine connection between the Claimants and the United States, nor between them and the Dominican Republic. The dominant nationality refers to which nationality is stronger.240
173.

Since the DR-CAFTA does not include any standard for determining it, the Respondent proposes to approach the question applying international law. The Respondent relies on case law from the International Court of Justice (the "ICJ"), the Italian-United States Conciliation Commission and the Iran-U.S. Claims Tribunal to argue that the adjudicator must take into account several factors, such as the State of habitual residence, the circumstances in which the second nationality was acquired, the subject's personal attachment for the country, and the center of a person's economic, social and family life.241 The Respondent notes that in Procedural Order No. 2 the Tribunal recognized these factors.242

174.
The Claimants argue that other factors should also be included, inter alia, the country of residence of their immediate family, where the Claimants went to college, where their children were born, the primary language spoken at home or, their religious faith and practice.243 The Respondent states that no jurisprudential, doctrinal or logical support has been offered for the consideration of these factors.244
175.
When it comes to their immediate family, the Claimants point out that their children went for college to the United States.245 However, the Respondent argues that the fact that the Claimants chose to stay in the Dominican Republic shows a greater commitment and allegiance to the Dominican Republic.246 The Respondent considers it irrelevant that the Claimants went to college in the United States before they visited the Dominican Republic for the first time. However, the fact that Ms. Lisa Ballantine went back to Northern Illinois University after she had visited Jarabacoa is relevant, mainly for the studies she decided to undertake.247 Ms. Lisa Ballantine decided to study ceramic filter manufacturing and the Dominican Republic's history to "create a social entrepreneurial startup that would focus on clear water" in Jarabacoa.248 Instead of indicating a connection with the United States, this fact points to the Dominican Republic.249
176.
The Respondent considers it entirely irrelevant where the children were born, because the youngest one was born six years before they visited the Dominican Republic for the first time. Regarding the language being spoken at home, the Respondent considers it irrelevant that it was English, because the Claimants do not provide any authority to support their conclusion. In fact, the same can be said of their religious faith and practice.250
177.
The Claimants also raise two additional factors, the laws regarding dual nationality in the United States and the Dominican Republic, and how both States viewed the Claimants.251 Yet, the Respondent argues that these factors do not support their position.252 Regarding their first factor, the Claimants supposedly argued that the Dominicans laws do not matter because Dominican authorities do not respect Dominican citizens and in any case, their Dominican naturalization only represented a "tenuous" connection since their citizenship could be taken away.253 The Respondent rejects these arguments stating that the laws apply irrespective of the private citizens' perceptions of them and their connection was anything but tenuous, thus the circumstances under which naturalization can be taken away are irrelevant here.254 Regarding the second factor, the Respondent argues that each State's opinion on which nationality was considered dominant is irrelevant, since neither of the two States had any knowledge that the Claimants had dual nationality.255
178.
Accordingly, and considering the factors mentioned by the Claimants, the Respondent concludes that the Claimants' dominant and effective nationality was Dominican at the relevant times.256 The Claimants held their habitual residence in the Dominican Republic, they voluntarily applied for the Dominican citizenship, they had a deep personal attachment with the country and it was the center of their economic, social and family lives.257
179.
As mentioned above, Mr. Michael Ballantine and Ms. Lisa Ballantine were born in the United States and lived there until 2000, when they moved to the Dominican Republic for a year to work as missionaries.258 In 2001, they returned to Chicago but they continued to visit the Dominican Republic every year.259 In 2005, Mr. Ballantine announced to Ms. Ballantine his intention to sell his business in the U.S. and to invest all of their life savings to develop a tropical mountain in the Dominican Republic. The following year, they sold their home and many of their possessions and they moved to the Dominican Republic.260 On the same year, the Claimants acquired the "permanent resident" status, which was renewed in June 2008.261
180.
To be perceived as Dominicans by the Dominican government and their clients, the Claimants voluntarily decided to live in Jamaca de Dios and to become Dominican citizens.262 While the Claimants downplay this fact to a simple pledge to uphold the Dominican laws and constitution,263 the Respondent emphasizes their obligation to be faithful to the Dominican Republic. The Respondent argues that when a person voluntarily decides to acquire a second nationality, it is in itself an indication that the voluntarily acquired nationality has become the dominant one.264 As the ICJ in Nottebohm held

[n]aturalization is not a matter to be taken lightly. To seek and to obtain it is not something that happens frequently in the life of a human being. It involves his breaking a bond of allegiance and his establishment of a new bond of allegiance.265

181.
The Claimants applied for Dominican citizenship in September 2009.266 They had to submit several documents, such as a sworn statement that their domicile was in the city of Jarabacoa and a declaration from their attorney stating that the Claimants "identify closely with Dominican sentiment and customs given their long standing respect for, and period living in, our country, for which reason they would be happy to confirm, legally, their Dominican sentiment".267 They also had to pass an assessment on their written and oral proficiency in Spanish, on their knowledge of Dominican history and culture, and a standard naturalization interview.268
182.
On December 30, 2009, their applications were approved and thus, the Claimants became naturalized Dominican citizens in 2010. Thereupon, the Claimants exercised their newly acquired nationality in various ways, such as: for travelling,269 for exercising their right to vote,270 for filing claims in Dominican courts, or for legal documents, such as contracts or powers of attorney.271 They also attended church in the Dominican Republic and sent their children to school there.272 They even used their Dominican nationality in 2010 to request the Dominican nationality for their youngest children.273 Although their children moved back to the United States for college, the Respondent relies on Ms. Tobi Ballantine's social media postings to show that she had a stronger connection with the Dominican Republic, than to the United States.274 Accordingly, the Respondent rejects the Claimants' contention that they never acted, felt or were ever perceived as Dominicans or that they were never politically, culturally or socially connected to the Dominican Republic.275
183.
The Claimants argue that their U.S. bank accounts kept more funds than their Dominican ones. Yet, this reflects activity in the Dominican Republic and the United States. Moreover, they had a separate U.S. bank account for Jamaca de Dios.276 The Respondent points out that the Claimants assert that they had invested all of their money in the Dominican Republic.277 Although the Claimants had opened a U.S. retirement and college savings accounts, the accounts were barely used.278 Furthermore, other sources confirmed that from 2006 onward, their assets were primarily located in the Dominican Republic.279 Their non-profit organizations, "Jesus for All Nations" and "Filter Pure", mainly operated in the Dominican Republic.280 Their U.S. tax returns stated the Claimants did not have a salary or earn wages during the relevant time period. If they earned income at that time, 70% came from their activity in the Dominican Republic, like interest payments from Jamaca de Dios.281 Thus, the Respondent states that the center of their economic life was the Dominican Republic.
184.
At the time of September 11, 2014, the Claimants had lived for eight years in the Dominican Republic, their permanent residence in law and spirit. They had their own community there, which they designed to promote their vision of social life.282 At some point, they came to consider themselves as Dominican.283 In fact, when the Claimants moved back to the United States in the summer of 2015, they stated that they "have been gone for so long that I feel out of touch with american [sic] society. The culture is so different than when I left 10 years ago. I feel such a culture shock coming back".284 Indeed, the Claimants ended up claiming moral damages to the Dominican Republic in this arbitration for allegedly forcing them to sell their home and leave their friends and colleagues.285
185.
According to the Respondent, U.S. law, case law and doctrine support a similar conclusion: that the Claimants' dominant and effective nationality at paramount times was the Dominican. In the Sadat v. Mertes case, the court held that the plaintiff's voluntary naturalization indicated that his dominant nationality was the one he acquired. Additionally, the fact that the plaintiff did not take all reasonable steps to avoid or quit his status as a U.S. national, was sufficient evidence of his continued, voluntary association with the U.S. and his intention to remain there.286 The U.S. State Department embraced the Sadat decision in the U.S. Digest on International Law (1991-1999).287
186.
The state of habitual residence is considered one of the most important factors in the analysis.288 According to the Respondent, although the Claimants were born and lived most of their lives in the United States, their connection to the United States did not remain unbroken for the entirety of the Claimants' lives.289 As Ms. Lisa Ballantine confessed in June 2015, she had spent almost one third of her life in the Dominican Republic.290 Even their travel records between 2010 and 2014 show that the Dominican Republic was their home base.291
187.
Although the Claimants argue in their Notice of Arbitration and Statement of Claim that the United States was the State of their dominant and effective nationality,292 the Respondent alleges that the evidence provided does not match with the latter statement.293 The Claimants state that they have always maintained one or two residences in the United States and they provide a list of five different addresses.294 They even contend that their contact details are the following "Michael and Lisa Ballantine[,] 951 Grissom Trail[,] Elk Grove Village, [Illinois, USA] 60007".295 Nevertheless, the Respondent states that there was no evidence that the Claimants lived on any of those five locations, since they acquired their Dominican nationality and until they submitted their claims to arbitration.296 Since 2006, their permanent residence was in the Dominican Republic.297 Furthermore, the house at 951 Grissom Trail, belongs to Mr. Michael Ballantine's mother and her husband.298
188.
Accordingly, the Respondent considers it irrelevant whether the Claimants were born in the United States and kept their U.S. nationality when they decided to acquire the Dominican nationality.299 The relevant question is which nationality has been indicated for their residence and other voluntary associations,300 which in the case of the Claimants is Dominican.301

3. The Ballantines' Claims Do Not Involve Obligations Under Articles 10.1 to 10.14 of DR-CAFTA

189.

The Respondent contends that the second takeaway from Article 10.16 of the DR-CAFTA is that an arbitration is only permissible under the DR-CAFTA if the claim refers to obligations breached under Articles 10.1 to 10.14.302 The Claimants contend that the Respondent has breached its obligations under Articles 10.3 (National Treatment); 10.4 (Most-Favored-Nation Treatment); 10.5 (Minimum Standard of Treatment); 10.7 (Expropriation and Compensation); and 10.18 (Transparency).303

190.

As a threshold matter, the Respondent points out that Article 10.18 is titled "Conditions and Limitations on Consent of Each Party" – not "Transparency". The Respondent presumes that the Claimants refer to Article 18 but in that case, the claim exceeds the scope of the Respondent's consent to arbitration.304 The Claimants have amended their claims and state that it actually refers to a violation of Article 10.5 with Chapter 18 as a guide.305 The Respondent argues that the contents of Chapter 18 cannot be imported to Chapter 10 if the Contracting Parties did not provide for it. To do so would be going against the interpretative principle expressio unius est exclusio alterius.306

191.

According to the Respondent, almost all of the claims are based on alleged State actions that supposedly took place between November 30, 2010 – when the Claimants requested permission from the MMA to expand Jamaca de Dios –, and March 11, 2014 – six months after the events giving rise to the claim occurred.307 These claims exceed the scope of the Dominican Republic's consent because (i) its consent only applies to claims that hold that the Respondent breached an obligation under Articles 10.1 to 10.14; (ii) a State action can only be deemed to have breached an international obligation if the State is bound by it at the time the breach occurred; and (iii) at the time of the acts alleged by the Claimants, the Dominican Republic was not bound by the obligations invoked by the Claimants.308

192.

All the DR-CAFTA provisions invoked by the Claimants apply only to "covered investments" and "investors of another Party".309 The term "covered investment" is defined in Article 2.1 as an investment in the territory of one of the Contracting Party owned by an investor of another Contracting Party.310 In the present case, "the investor of another Party" is a person attempting to make, making or who has made an investment in the Dominican Republic and whose dominant and effective nationality is the U.S. nationality. Therefore, the Claimants have to demonstrate that their U.S. nationality was their dominant and effective nationality at the time the alleged illegal State conduct took place, in order to establish the Dominican Republic's consent to arbitration.311

193.
The Respondent contends that the Claimants' dominant and effective nationality through the relevant time period was Dominican. As a result, they cannot be considered U.S. investors; their investment does not comply with the definition of "covered investments"; the obligations invoked by the Claimants do not apply; and, therefore the Tribunal lacks jurisdiction.312
194.

Again, the Claimants argue that the Tribunal must look at the nationality the Claimants held at the time they made their investment in the Dominican Republic.313 The Respondent rejects this allegation on the basis of the same arguments raised in the previous section.314 Previous investment arbitration tribunals have concluded that the date of an alleged treaty violation is a fundamental jurisdictional requirement.315 In Pac Rim, the tribunal held that under DR-CAFTA the nationality requirements must be fulfilled at the time of the alleged breach.316 Furthermore, Article 44 of the Articles on State Responsibility states that "[t]he responsibility of a State may not be invoked if: (a) the claim is not brought in accordance with any applicable rule relating to the nationality of claims".317

B. THE CLAIMANTS' ARGUMENTS

1. The Claims Were Submitted in Accordance With DR-CAFTA

195.
The Claimants do not debate the Respondents' arguments on the DR-CAFTA framework and "its foundation upon consent of the parties".318 They acknowledge that they have to comply with the DR-CAFTA definition of "claimant" in order to pursue relief for their claims.319
196.

Their claims were submitted (i) on their behalf under DR-CAFTA Article10.16(1)(a); and (ii) on behalf of their enterprises incorporated in the Dominican Republic, directly or indirectly owned or controlled by the Claimants under DR-CAFTA Article 10.16(1)(b). The Claimants own or control several Dominican enterprises such as Jamaca de Dios SRL, Aroma de la Montana, E.I.R.L., Pino Cipres Investments SRL, Pina Aroma Investments SRL, and Upper Dreams Investments SRL but they also have other ownerships and concessions.320 These investments qualify as such under Article 10.28.321

2. The Ballantines Qualify as "Claimants" Under the DR-CAFTA

197.
The Claimants argue that they have always been dominantly and effectively U.S. citizens.322 As mentioned above,323 they acknowledge that they have to comply with the DR-CAFTA definition of "claimant". As a result, they have to be investors of a Contracting Party, other than the Dominican Republic, attempting to make, making or who have made an investment in the Dominican Republic. The Claimants consider this a disjunctive definition and so, any of the three tenses can be used to determine who can be defined as a claimant.324
198.
Accordingly, the Claimants argue that the Tribunal should only look at the nationality of the Claimants "as of the time that they made their investment in the Dominican Republic".325 (Emphasis omitted) According to the Claimants, the reference to "dominant and effective nationality" only becomes relevant if the investor has dual nationality at the time the investment was made. Since a great part of the land at issue in this arbitration was acquired by the Claimants well before they became Dominican citizens, they conclude that they have the explicit right under the DR-CAFTA to make their claims. Thus, these jurisdictional objections should fail.326
199.
Even if they have to establish that they were dominantly U.S. citizens at the time of submission of their Notice of Arbitration, the Claimants argue that they still would not be required to demonstrate that they were dominantly U.S. citizens during the time their claims arose. This would not be specifically required by DR-CAFTA and the provisions on dual nationality would be silent on the time frame of the evaluation. In any case, the Claimants consider it unnecessary to decide on the appropriate time frame for the evaluation of the dominant nationality, since the Claimants at all times have been dominantly and effectively U.S. citizens.327
200.

The Claimants agree with the Respondent that for the purposes of Article 10.28 there is no test to decide which of the two nationalities should be considered dominant. DR-CAFTA Article 10.28 simply sets out a non-exhaustive list of qualified investments. The Claimants claim that their investments are listed in Article 10.28.328 By contrast, to determine which of the two nationalities should be considered dominant the Tribunal should resort to international law.329

201.
The Claimants hold that the Iran-U.S. Claims Tribunal's decisions the Respondent relies upon relate to entirely different circumstances and arise under an entirely different treaty. Thus, although they can provide guidance on the factors that should be considered in order to decide on the dominant nationality, they should not serve as precedents.330 The Claimants contend that the Respondent's interpretation of the factors is incomplete and too narrow in their timespan. In Malek v. Islamic Republic of Iran, the tribunal interpreted the A/18 decision as requiring it to look at "the entire life of the [c]laimant, from birth, and all the factors which, during this span of time, evidence the reality and sincerity of the choice of national allegiance."331 (emphasis added by the Claimants) Accordingly, the Claimants argue that the tribunal "need not merely take a snapshot in time and, at any specific date, attempt to weigh the Ballantines' connections to the US against their connections to the DR".332 The Tribunal should not only look at the time period between 2010 and 2014 – i.e. after the Claimants acquired the Dominican citizenship –, but their entire life to determine whether they are more closely aligned with the United States or the Dominican Republic.333
202.
The Claimants recognize334 that the Tribunal held in Procedural Order No. 2 the relevance of certain factors such as, "the State of habitual residence, the circumstances in which the second nationality was acquired, the individual's personal attachment for a particular country, and the center of the person's economic, social and family life."335 Additionally, the Tribunal should consider other factors, inter alia : (i) the country of residence of the Claimants' entire family; (ii) where the Claimants went to college; (iii) where their children were born; (iv) the primary language spoken at home; (v) their religious faith and practice.336 In their Reply Memorial, the Claimants state additional factors: (i) the Claimants' motivation to become dual nationals, (ii) their entire life; which includes but is not limited to the facts at the relevant times; (iii) how they viewed themselves; (iv) how the United States and the Dominican Republic and their nationals viewed the Claimants; and (v) the laws regarding nationality in the two states.337
203.
The Claimants argue that this is not a treaty-shopping situation. The Claimants have always been U.S citizens, yet they acquired Dominican citizenship six years after they made their investment because they realized how Dominican officials treated foreigners. They maintained a residence in the Dominican Republic to supervise and develop their investment. However, they moved back permanently to the United States when they suffered the treaty violations by the Respondent.338 Since the Tribunal acknowledged, "that the same facts would necessarily have a bearing or would be relevant for both the procedural and the substantive determination",339 (emphasis added by the Claimants) the Claimants contend that the differential treatment received by the Claimants, compared to the treatment received by other Dominican investors, should be relied on when deciding whether they are dominantly U.S. or Dominican citizens.340
204.
The Claimants reject the Respondent's approach to determine which nationality is the dominant and effective one. According to them, the Respondent's approach is legally and factually unsubstantiated. The Nottebohm opinion concerned the issue of diplomatic protection and whether one could rely upon a nationality which had been granted "in exceptional circumstances of speed and accommodation" and without a substantial bond, or the nationality with which it had a long-standing and close connection. The Respondent's reliance341 on the U.S. State Department report would also be incorrect because the case cited by the report supports the Claimants' position.342 The applicant in that case was found to be a U.S. national – despite residing in Egypt – because of his continued, voluntary association with the United States and his wish to remain a U.S. citizen.343 Yet, in this case the Claimants argue that there is no doubt about the Claimants' genuine and lifetime U.S. citizenship.344
205.
According to the Claimants, the Sadat v. Mertes case was relied on by the Respondent to contend that the Claimants' voluntary naturalization in the Dominican Republic is proof of the dominant nationality by itself.345 However, the Sadat case is inapplicable because in that case the subject renounced any allegiance to foreign states when acquiring U.S. citizenship. In the Claimants' case, there was no such requirement to become Dominican citizens. Even if they did swear faith to the Dominican Republic, they did not renounce their U.S. citizenship.346
206.
The Claimants obtained Dominican citizenship six years after making their initial land purchase in Jarabacoa in July 2004. Although at the beginning they intended to manage their investment from Chicago, later it became apparent that they needed to be present and they started to reside in the Dominican Republic from August 2006 onwards.347 For the Claimants, their choice to apply for the Dominican nationality was a business decision made as a result of the discriminatory treatment given by Dominican officials to foreigners, because of Jamaca de Dios' market conditions and to demonstrate their commitment to their investment.348
207.
The Claimants state that the Respondent attempts to equate residency with dominant nationality. However, the Claimants contend that this is not the test. While the Claimants lived in the Dominican Republic, they always maintained at least one residence, or even two, in the United States:

a) From March 1, 1994 through August 18, 2011, the Ballantines owned a residence at 33w231 Brewster Creek Circle in Wayne, Illinois;

b) On October 1, 2010 through December 31, 2011, the Ballantines rented a home at 1163 Westminster Avenue in Elk Grove Village, Illinois;

c) On December 2, 2011, the Ballantines purchased a home at 850 Wellington Avenue, Unit 206, in Elk Grove Village, Illinois, and sold this home in November of 2015;

d) on April 19, 2012, the Ballantines purchased a home at 3831 SW 49th Street, in Hollywood, Florida, and sold that home on March 28, 2014;

e) on July 15, 2015, the Ballantines rented a home at 505 N. Lake Shore Drive, Unit 4009, in Chicago, Illinois.349

208.
The Claimants disagree with the Respondent's use of the word "permanent" to describe the Claimants' move to the Dominican Republic.350 The jurisdictional attestation in the Notice of Intent plainly stated that the Claimants maintained their permanent residence in Chicago.351 The mail-forwarding facility was established to ensure the arrival of important mail to a single location.352 Also, the Claimants informed Mr. Ballantine's parents' address for the purposes of this arbitration because they were unsure where to live and they wanted to ensure they would be notified of any procedural events in these arbitration proceedings.353
209.
The personal attachment of an individual for a particular country is one of the factors to be considered by the Tribunal. The Claimants emphasize their deep connection to U.S. culture and society,354 while they were only connected with the Dominican Republic for commercial reasons.355
210.
The Claimants allege that only initially was all their capital was invested in Jamaca de Dios. The funds for the investment originated from Mr. Michael Ballantine's work in the United States and their financial life remained always there.356 The Claimants have since 2004 filed individual federal income tax returns in the United States, while they did not do so in the Dominican Republic.357 They also maintained their U.S. checking bank account since 1996, a retirement account since 2009, U.S. health insurance cover since 2010 and separate credit cards issued in 1992 for Mr. Michael Ballantine and in 2012 for Ms. Lisa Ballantine.358 Additionally, they established college savings accounts for their children's college education.359 Regarding their U.S. non-profit organizations, the Claimants explain that "Filter Pure" was created in February 2008 and was directed by Ms. Lisa Ballantine until 2015.360 In contrast, the "Jesus for All Nations" was managed by them while they were Dominican nationals and they raised money and filed U.S. tax returns since at least 2010.361
211.
While the Claimants recognize that they used the Dominican nationality as the Respondent states, the Claimants conclude that they were still at all times dominantly U.S. citizens.362 Between 2010 and 2014, the Claimants were in the United States 30 different times. Moreover, the Claimants assert that they solely used their Dominican passports when entering the Dominican Republic but they used their U.S. passports to enter elsewhere.363 The Claimants reject the Respondent's count of how much time the Claimants spent in the Dominican Republic and in the United States between 2010 and 2014. The amount of days in the Dominican Republic does not compare to the Claimants' personal, cultural, familiar, and social attachment to the United States.364
212.
The Claimants recognize that they built a house to promote their development and they lived there while they were in the Dominican Republic. However, the Claimants decided to put their home for sale in September 2012, to reduce the amount of time they were spending in the Dominican Republic.365