In accordance with such agreement, the Claimant appointed as an arbitrator in this proceeding Professor Piero Bernardini. The Respondent appointed Professor Don Wallace, Jr. Thereafter, ICSID was notified by Professor Bernardini and Professor Wallace that they had agreed to appoint Professor Dr. Karl-Heinz Bockstiegel as the President of the Tribunal. Pursuant to ICSID Arbitration Rule 5(2), the three arbitrators accepted the appointment.
By letter of February 15, 2000, ICSID informed the Parties that the Tribunal had endeavored to re-schedule the date of the First Session to the end of March but had found that impossible due to unavailability of the members of the Tribunal in late March and in April 2000. Under these circumstances, the Tribunal maintained the date of February 24, 2000 for the First Session in Washington, D.C. In this context the Tribunal reminded the Parties that this First Session was limited to preliminary procedural matters listed in the provisional agenda circulated to them. If a represen-tative felt he could not decide on any issue, the respective Party could submit its comments in writing after the meeting. The Session should not last more than half a day. The Tribunal therefore expressed the hope that the Respondent could make the necessary arrangements to send at least one representative to the Session either from staff it had available in Washington, D.C. or from its other staff available for such a short and limited meeting in Washington, D.C.
By letter of February 20, 2000, the Respondent requested to postpone the First Session, but by letter of February 20, 2000 the Tribunal Informed the Parties that it did not consider it appropriate to cancel the First Session of February 24, 2000 at this late stage, as this would result in a delay of several months. In view of the difficulties Indicated by Respondent's Counsellor Osama Mahmoud to attend the Session, the Tribunal Indicated that it did not consider these to give sufficient cause to have to cancel the Session. The Tribunal reiterated its Indication that, in view of the limited procedural purpose of the First Session, another representative, either from Cairo or from the staff available in Washington, D.C., could attend the session and that that representative could be assisted by a direct telephone link to Cairo during the Session and, as the Items of the agenda had already been communicated to the Parties on February 7, 2000, written comments on these Items could be sent to the Tribunal before the Session, and written instructions could be given to the representative attending the Session.
"The Arbitral Tribunal has reviewed the Respondent's letter of July 3, 2000.
The Arbitral Tribunal wishes to remind the parties that it was agreed at the first session, held on February 24, 2000, that the hearing on the objections to jurisdiction would take place in Pahs on July 12 and 13, 2000. This was recorded in paragraph 14 of the Minutes of the First Session. The draft Minutes, as well as the sound recording made of the First Session, were sent to the parties on March 6, 2000. Certified copies of the signed Minutes of the First Session were sent to the parties, by courier, on April 12, 2000.
Under these circumstances, the Arbitral Tribunal feels that it must maintain the dates of July 12 and 13, 2000 for the hearing on the objections to jurisdiction in Pahs. Therefore, the hearing shall take place as indicated in the earlier communications, particularly in our letter of June 26, 2000. The Tribunal hopes that the Arab Republic of Egypt could make the necessary arrangements to send at least one representative to the session."
In a further letter of July 6, 2000, ICSID offered its help to get a visa for the representatives of the Respondent and also, if a representative of the Respondent was not able to attend the Hearing in Pahs, to hold a video conference between the Paris office of the World Bank and an appropriate facility in Cairo.
The Hearing on jurisdiction was started on Wednesday July 12, 2000 at the announced time and place, i.e., the offices of the World Bank in Paris. The Claimant was represented in person by its three representatives. The Respondent was not represented. The Tribunal was assisted by Mr. Alejandro Escobar as Acting Secretary of the Tribunal. As announced before, a sound recording and a verbatim transcript of the Hearing was made. After the Hearing was started at 9.30 hrs. In the morning, it was suspended for five minutes and resumed at 9.35 hrs. at which time the President indicated that the Tribunal had decided that the Hearing would now proceed in the absence of representatives from the Respondent. After the President had put on record relevant procedural details, the Claimant made a presentation on the issues of jurisdiction and the arbitrators asked questions in this respect which were answered by the Claimant. At the end of the Hearing, later the same morning, the President indicated that the transcript of the Hearing would be sent to the Parties to give them an opportunity to submit comments on this transcript by August 15, 2000.
The Decision, dated November 27, 2000, was issued and certified by ICSID on November 28, 2000. Its operative part reads:
1. The Tribunal has jurisdiction over the present dispute on the basis of the 1993 Bilateral Investment Treaty between Egypt and Greece.
2. After consultation with both Parties, a Procedural Order will be Issued regarding the further procedure."
The Hearing on the Merits was held in Pahs on July 17 and 18, 2001. It included, in particular, two Rounds of Presentations by both Parties, discussion of certain procedural objections raised by Respondent, questions by the Arbitrators to the Parties, and Rulings given by the Tribunal regarding the further Procedure. For the details of the Hearing, reference is made to the Minutes signed by the Chairman and the Secretary of the Tribunal and issued to the Parties on July 31.2001.
1. A total payment of US$ 42,240,000.00.
2. Compound Interest from the time of taking of the Investment.
3. Any other relief as the Tribunal may deem appropriate.
4. Reimbursement of all costs and expenses Incurred by Claimant in connection with these proceedings.
1. Rejection of all claims raised by Claimant.
2. Reimbursement of its full cost of this arbitration.
The Claimant alleges the basic facts of its claim as follows in its Request for Arbitration of March 29, 1999 (Cl 2 to 5):
"...2. By virtue of the Resolution No. 512/82 of July 4th, 1982 of the Egyptian General Authority for Investment and Free Zones (Exh. 3), a Branch of the Claimant under the name of "Badr Cement Terminar was established in Suez, for the import and storage of bulk cement in depot ship, docked at the Quay close to Adabiyea port in Suez, at Badr dock, and for packing and dispatch of same within Egypt to both the private and public sectors. The above resolution mentioned at para. 5 that, for the above purpose, an investment in US Dollars would be made. Further, at para. 9 the decision mentioned that the duration of the project was for a period not exceeding 10 years.
3. In harmony with the above resolution as well as with Egyptian law No. 43 of 1974 as amended by law No. 32 of 1977, and with the decree No. 375 of 1977 of the Egyptian Minister of Economy and Economic Cooperation, and following consent by the Minister of Investment and International Cooperation dated 11th Dec. 1982, the decree No. 13 of 1983 was promulgated on 19th January 1983, and published in the Egyptian Government Gazette (Exh. 4). By virtue of same, the "Branch of the Middle East Cement Co. Greek Company", was licensed to exercise the activity described above, at the Badr Anchorage at kilometer 17 of the Suez - Adabia (Adabiyea) Road, with boundaries specified in the decree, which also comprises all the details concerning the operation and activities of "Badr Cement Terminal", the Claimant's Branch. Article 9 of the decree precised that the investment was protected for a duration guaranteed for ten (10) years i.e. till 19th January 1993. To the Claimant's request for extension of the investment duration, the Egyptian General Authority for Investment and Free Zones answered, by its letter No. 427 of 25th Jan. 1993, that the project duration was ten years (Exh. 5a). That was the final and unambiguous confirmation by the Egyptian authorities of the ten-year duration of our investment.
4. As a result of the above Egyptian decree No. 13 of 1983, and with the firm belief that Claimant was thus granted the protection of Egyptian law and Egyptian Government Claimant proceeded with an investment as follows:
a) On shore installations: US $ 6,784,429
b) Floating silo: Us (sic) $ 6,532,049
With the approval of the General Authority for Investment and Free Zones, and in accordance with the investment law 43 of the year 1974, the M/v Poseidon was time-chartered by Claimant to its Egyptian branch to serve the investment exclusively.
5. The Claimant had been operating, through its branch in Egypt, import, storage of bulk cement at the floating silo (depot ship), docking, packing, and dispatching cement within Egypt, to both the private and public sectors, when, suddenly, on 25th May 1989 i.e. three (3) years and eight (8) months before the end of the duration of the guarantee and privileges granted to our investment, the Ministry of Construction of the Arab Republic of Egypt issued Decree No. 195 of 1989 (Exh.5) prohibiting import of all kinds of Portland Cement either through the Public or Government sector, or through the private sector, with the exception of cement imports under Egypt's Border Agreement and those covered by existing contracts of the Egyptian Cement Office, thus condemning Claimant's Egyptian branch to paralysis as, according to that decree, Claimant was not allowed to continue the steady flow of its sales to the Egyptian market and to properly honour its commitments both to its suppliers and to its customers. What is worse, the approval to re-export Claimant's (remaining) assets was withheld until December 1995, in spite of explicit provisions of Egyptian investment law.
6. At that time (December 1995), Claimant had exerted all efforts to re-export its remaining assets, including the floating silo. However, the local authohties had opposed the re-export of assets, by mere administrative meas ures and not by Court orders, thus violating all express provisions of the applicable Investment Law. Till this date (March 1999), this dispute in relation to re-exporting the remaining assets is still pending. Consequently, Claimant's investment is still pending due not only to Decree No. 195 of 1989 but also from problems continuously created by the Egyptian Authorities far beyond 6th April 1995, date of entry into force of the actual bilateral Investment Agreement between Egypt and Greece.
7. It is worth noting that the cement import prohibition decree has been revoked in 1992 and the Free Zone Authority had then informed us about that (Exh.6). The revocation shows how arbitrary and unjustified was the prohibition Decree No. 195 of 1989. But the damage Claimant had sustained was a mortal blow to its investment. Furthermore Claimant could not start again from the beginning, as it felt it was not sure that a new prohibitive intervention would not take place again.
8. The damage Claimant sustained, as a result of that premature intervention, is US $ 12,946,137.-; its breaking down will follow at the end of this request."
The Respondent, in its Post-Hearing Brief of October 2, 2001 (RV 22) summarizes its conclusions as follows:
"Claimant is an investor who conducted its investment in Egypt in an unprofessional and irresponsible manner, with clear disdain for the Egyptian law and for third parties rights, including State authorities such as the Red Sea Ports Authority and the Suez Canal Authority. Such irresponsible and unprofessional attitude of Claimant led to the auction of his ship, whose price remained insufficient to pay all Claimant's debts.
The total volume of Claimant's investment did not exceed, at best, US$ 4 million. When the prohibition to import grey Portland cement was decided in 1989, the remaining period of Claimant's investment license did not exceed 4 months. Claimant's invocation of Halkis's contract with the ECO dated 1.8.85 is of no help to Claimant because it is a Halkis contract governed by a different arbitration than ICSID and also because the performance of that contract should have been completed already in 1986. Instead, only 25% of the contractual quantity under that contract has been delivered, and that was followed since 1989 by big and prolonged disputes, which led to the repeated extension of Halkis's performance bond only because of those disputes. It makes no doubt that Claimant's investment license came to its contractual end in September 1989 since there was no supply of cement to the public sector after that date.
For the remaining four months of the license's period, Claimant's losses according to Claimant's own figures, did not exceed US$ 30,000. Quite irresponsibly, the Claimant claims more than 40 million Dollars, without any basis for any such claims.
Claimant was not discriminated against by any Egyptian authority in any way or form. Claimant declined to resume its activity when that was offered to it. Only because of Claimant's poor and irresponsible management, its ship was duly attached by court order up to 1996 and thereafter was subjected to administrative attachment and auction in 1989. Claimant's strategy throughout was to exert its best efforts to build a case with a view to extort as much money as possible from the Arab Republic of Egypt."
The above citations may suffice to identify the core of the dispute between the Parties. In their other submissions on the merits (Cl to CV and Rl to RV), and by reference to a great number of documents filed with these submissions, the Parties have provided many further details regarding facts, which are partly uncontested and partly contested, as well as legal evaluations and arguments. To avoid repetition in this Award, such details will be taken up by the Tribunal, insofar as considered relevant, later in this Award when the respective issues are considered and decided.
In doing so, the Tribunal shall decide in accordance with Art. 42 of the ICSID Convention. The first sentence of Art. 42 (1) requires the application of rules of law agreed by the Parties. The above-mentioned Art. 11 of the BIT provides such an agreement and thus has to be respected. While that provision requires the application of additional provisions of the national law if more favorable for the investor -which the Tribunal does not find to exist in this case -, by argumentum a contrario it does not permit application of provisions of national law limiting any claims found by the Tribunal to exist under the BIT. As expressly mentioned in the beginning of the 2nd sentence of Art. 42 (1) of the ICSID Convention, only "in the absence of such an agreement" regarding the rules of law to be applied, that 2nd sentence provides that "the Tribunal shall apply the law of the Contracting State party to the dispute (Including its rules on the conflict of laws) and such rules of International law as may be applicable." While, thus, this Tribunal takes Into account the law of Egypt where appropriate, consistent with its decision to consider and accept only claims under the BIT, the Tribunal shall apply the substantive provisions of the BIT for all matters regulated by the Treaty and cannot apply any provisions of national Egyptian law limiting claims found to exist under the BIT. Thus, Egyptian law will be taken Into account by the Tribunal when it is not overridden by the application of provisions of the BIT. On the other hand, both according to the 1st sentence of Art. 42 (1) as the rules of law chosen by the Parties in Art. 11 of the BIT and according to the 2nd sentence of Art. 42 (1) of the ICSID Convention as "rules of International law as may be applicable," the reference to and application of the BIT Implies that the Tribunal may have recourse to the rules of general International law to supplement those of the BIT. (See: Parra, Antonio R., Applicable Substantive Law in ICSID Arbitrations Initiated Under Investment Treaties, News from ICSID 17 (2000) No. 2, p. 8).
It is undisputed that the ship Poseidon was subjected to an administrative seizure by the Red Sea Port Authority on October 13, 1999 and then auctioned on November 28, 1999 for a price, paid by one of the two bidders, of Egyptian Pounds (EP) 301,000.00 as recorded in the auction minutes (C60). The Claimant alleges that the seizure and auction were illegal, it was not notified thereof, and that the price paid in the auction was for scrap value of the Poseidon while the actual value of the ship was at least US$ 5 million (CN 21). The Respondent considers the auction as valid.
In support of the alleged value of US$ 5 million of the Poseidon, Claimant has submitted the insurance certificate for the ship of December 13, 1989 giving a "Sum Insured = US$ 5,000,000.00," and its renewal for 1992 (both C48). Claimant also has submitted evidence showing negotiations, correspondence and draft contracts with both Mubarak Shipping Co. and Transbulk Shipping S.A. (C49 to C58) though a sale of the Poseidon was not finalized because, as Claimant alleges, GAFI blocked the sale (CN 21 et seq. and C56). The Memorandum of Agreement of June 26, 1990 (C54) shows that Transbulk had agreed to pay a price of US$ 1,324,000.00 for the ship (as a net price after deduction of anticipated costs for the repair of one of the two cranes on board), and respective payments were actually made to the Claimant (C55), though they were later returned. On that basis, Claimant seeks in this arbitration (Cl I 23) US$ 1,324,000.00 plus US$27,000.00 which Transbulk had been ready to pay for additional expenses (C54 Appendix p.4).
In its Post-Hearing Brief (CV 5), Claimant additionally has pointed out that the Poseidon had a certified weight of 6175 tons (C50) and that the scrap price for bulkers as published by the Lloyd's Shipping Economist, January 2000 edition, was US$ 140 per ton which would lead to a scrap value of the Poseidon, without the value of cranes and equipment, of US$ 864,500.00
" 1. Damages due to the Employment Contracts.
2. El Menia Shipping Agency Account.
3. Monetary violation.
4. Contribution to the Housing Fund."
Claimant raises a further claim under the heading "Illegal Confiscation of the Letter of Guarantee" (CN 2, 30; CHI 19; CV 4). It alleges that the Ministry of Housing (MOH) should have returned a Letter of Guarantee provided as a performance bond by the Claimant in view of undelivered portions of a supply contract and not have liqui-dated the Letter of Guarantee (C81). Respondent again objects to this claim (Rll 32, Rill 27).
Again, the test of the Tribunal must be whether a claim based on the BIT has been shown. The Tribunal notes that, prima vista, the liquidation of a Letter of Guarantee is a commercial matter. The Ministry, in its letter of December 14, 2000 to the Claimant (C82), provided a justification for the liquidation and suggested to Claimant to revert to judicial means if it considered the liquidation as unjustified. The Tribunal does not have to enter into the examination of this justification under local Egyptian law. In any case, it does not find that Claimant has fulfilled its burden of proof to show that the conduct of the Ministry was a measure the effects of which were tantamount to expropriation or were discriminatory.
Respondent alleges that Claimant could have continued the supply of cement insofar as it was not prohibited by Decree No. 195. In this regard, the Tribunal accepts the Claimant's explanation that both the supplying of Thermal and White Portland cement in Egypt and the exportation of cement from Egypt to other countries, for both of which no evidence has been presented by the Respondent or can be found in the file, were not economically feasible alternatives to the supply of Grey Portland cement barred by the Decree.
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