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FREQUENTLY USED ABBREVIATIONS AND ACRONYMS
Arbitration Rules or ICSID Arbitration Rules ICSID Rules of Procedure for Arbitration Proceedings
BIT or Treaty Agreement between the Government of the Republic of France and the Government of the Republic of Moldova on the Reciprocal Promotion and Protection of Investments dated September 8, 1997
ICSID Convention or Convention Convention on the Settlement of Investment Disputes Between States and Nationals of Other States dated March 18, 1965
ICSID or the Centre International Centre for the Settlement of Investment Disputes

I. INTRODUCTION AND PARTIES

1.
This case concerns a dispute submitted to the Centre on the basis of the BIT, which entered into force on November 9, 1999, and the ICSID Convention. The dispute relates to the delayed or prevented opening of several duty free stores, and to the breach of an exclusivity undertaking.
2.
Claimant is Mr. Franck Charles Arif and is hereinafter referred to as "Mr. Arif" or the "Claimant."
3.
Claimant is a natural person having the nationality of the French Republic.
4.
Respondent is the Republic of Moldova and is hereinafter referred to as "Moldova" or the "Respondent."
5.
Claimant and Respondent are hereinafter collectively referred to as the "Parties." The Parties' respective representatives and their addresses are listed above on page (i).

II. PROCEDURAL HISTORY

6.
On August 3, 2011, ICSID received a Request for Arbitration dated July 29, 2011 from Mr. Arif against Moldova (the "Request").
7.
On August 23, 2011, the Secretary-General of ICSID registered the Request in accordance with Article 36(3) of the ICSID Convention and notified the Parties of the registration. In the Notice of Registration, the Secretary-General invited the Parties to proceed to constitute an Arbitral Tribunal as soon as possible in accordance with Rule 7(d) of the Centre's Rules of Procedure for the Institution of Conciliation and Arbitration Proceedings ("Institution Rules").
8.
In the absence of an agreement between the Parties, Claimant elected to submit the arbitration to a Tribunal constituted of three arbitrators, as provided in Article 37(2)(b) of the ICSID Convention.
9.
The Tribunal is composed of Dr. Bernardo M. Cremades, a national of the Kingdom of Spain, President, appointed by agreement of the Parties; Prof. Bernard Hanotiau, a national of the Kingdom of Belgium, appointed by Claimant; and Prof. Dr. Rolf Knieper, a national of the Federal Republic of Germany, appointed by Respondent.
10.
On December 2, 2011, the Secretary-General, in accordance with Rule 6(1) of the ICSID Rules of Procedure for Arbitration Proceedings ("Arbitration Rules" or "ICSID Arbitration Rules") notified the Parties that all three arbitrators had accepted their appointments and that the Tribunal was therefore deemed to have been constituted and the proceeding to have begun on that date. Ms. Alicia Martín Blanco, ICSID Legal Counsel, was designated to serve as Secretary of the Tribunal.
11.
The Tribunal held a first session with the Parties by telephone conference on January 31, 2012. The Parties confirmed that each Member of the Tribunal had been validly appointed in accordance with the ICSID Convention and Arbitration Rules. It was agreed inter alia that the applicable Arbitration Rules would be those in effect from April 10, 2006, that the procedural language would be English and that the place of proceedings would be Paris, France. The Parties agreed on a schedule for the proceedings, which was embodied in Procedural Order No. 1, signed by the President and the Secretary of the Tribunal and circulated to the Parties.
12.
As agreed at the first session, Claimant submitted his Memorial on February 15, 2012. On February 27, 2012, Claimant submitted correctly numbered electronic copies of exhibits C-89 to C-95.
13.
During the first session, Respondent indicated that it would appoint counsel by February 15, 2012. On March 6, 2012, Claimant noted that Moldova had officially selected counsel in February 2012, and requested that counsel for Respondent be introduced into the record. On the same day Respondent indicated that it would soon be retaining counsel and noted that this delay would have an impact on the schedule agreed at the first session. On March 7, 2012, Claimant stated that a delay by Respondent in appointing counsel should not affect Claimant, given that the schedule had been agreed with the understanding that any extension of time would be justified by exceptional circumstances only.
14.
On March 20, 2012, Respondent requested that the time limit to file its CounterMemorial, due on March 21, 2012, be postponed or extended on the basis of parallel proceedings before the European Court of Human Rights, the resolution of which might affect the present proceeding. On March 21, 2012, Claimant requested the Tribunal to reject Respondent's request and order it to submit its Counter-Memorial immediately, and to consider it otherwise in default pursuant to Rule 42 of the ICSID Arbitration Rules. On March 28, 2012, the Tribunal decided to reject Respondent's request, and ordered Respondent to submit its Counter-Memorial immediately. In its decision, the Tribunal (i) indicated that it was not persuaded that the proceedings before the European Court of Human Rights qualify as a circumstance of exceptional nature that would reasonably justify an extension or postponement under paragraph 13.4 of Procedural Order No. 1; (ii) noted that requesting a postponement of the ICSID proceedings was in contradiction with the position taken by Respondent before the European Court of Human Rights, where Respondent had raised an objection to admissibility in favour of the ICSID proceedings; and (iii) indicated that it was not persuaded that the proceedings before the European Court of Human Rights were substantially similar to the ICSID proceeding, given that they relate to different claimants, different scope of claims and different relief. Finally, the Tribunal informed the Parties that it would have to entertain Claimant's alternative request that Moldova be considered in default as envisaged by ICSID Arbitration Rule 42 should Respondent fail to do as instructed.
15.
On March 29, 2012, Respondent informed that it expected to sign an agreement with DLA Piper UK LLP by March 30, 2012 and that, as soon as counsel had been retained, it would instruct them to contact the Tribunal in order to address the procedural timetable. Respondent noted that the timetable was put in place at a time when it had no legal representation and no experience of arbitral proceedings pursuant to the ICSID Arbitration Rules. On March 30, 2012, Respondent indicated that Mr. Michael Ostrove and Mr. Théobald Naud of DLA Piper UK LLP, and Mr. Igor Odobescu of ACI Partners, had been retained as counsel as of that day. Regarding the procedural timetable, Respondent indicated that it expected to have jurisdictional objections, and announced that it would try to reach an agreement with Claimant to modify the timetable.
16.
On April 2, 2012, Claimant submitted that any jurisdictional objection by Respondent would be time-barred under Rule 41(1) of the ICSID Arbitration Rules, and requested the Tribunal to reiterate its order for the immediate submission by Respondent of its Counter-Memorial, and to otherwise hold Respondent in default under ICSID Arbitration Rule 42. On the same day, Respondent submitted a proposal to amend the schedule in accordance with section 13(4) of Procedural Order No. 1. On April 5, 2012, the Tribunal decided that, in light of the circumstances, an extension of time for the filing of the Counter-Memorial was justified under section 13(4) of Procedural Order No. 1 and granted Respondent 8 weeks from the date of its decision, with the subsequent amendment of the schedule contained in paragraph 13(2)(2) of Procedural Order No. 1. In addition, the Tribunal considered that it was necessary to hold a conference call with the Parties in order to discuss the procedural timetable to follow.
17.
On April 6, 2012, Claimant informed the Tribunal that Mr. Ion Paduraru no longer represented Claimant as a result of his nomination as General Secretary of the Administration of the President of Moldova.
18.
The Tribunal held a telephone conference with the Parties on April 17, 2012. During the conference call, the Parties discussed the schedule of submissions following the Tribunal's decision of April 5, 2012. On April 20, 2012, the Tribunal confirmed the 8 week extension granted to Respondent for the submission of its Counter-Memorial and decided to maintain the schedule set out in sections 13(2)(3) and 13(2)(4) of Procedural Order No. 1.
19.
On April 17, 2012, Respondent submitted a power of attorney authorizing DLA Piper UK LLP and ACI PARTNERS to represent Moldova in the present proceeding.
20.
On May 31, 2012, Respondent filed its Counter-Memorial on Jurisdiction, Merits and Quantum.
21.
On June 20, 2012, the Tribunal, after consultation with the Parties, confirmed that the Hearing would take place in Paris from November 6 to 9, 2012.
22.
On June 22, 2012, Claimant requested a five-week extension to file his Reply until August 9, 2012. On June 26, 2012, Respondent indicated that even a one-week extension at this stage would cause significant hardship for Respondent, having organized its work around the current schedule, and requested the Tribunal to maintain it. On June 27, 2012, the Tribunal decided to grant Claimant a two-week extension to file his Reply, provided that the Hearing dates were maintained.
23.
On July 2, 2012, Respondent requested that its Rejoinder be due on October 5, 2012 in light of the Tribunal's decision to grant Claimant a two-week extension to file his Reply. On the same day, Claimant stated that he had no objection to Respondent receiving additional time to file its Rejoinder, provided that Claimant was allowed to file his Reply on August 2, 2012. On the same day, Respondent noted that Claimant's request that the Tribunal reconsider its decision and grant an additional extension to Claimant was improper. On July 5, 2012, the Tribunal decided to grant Respondent's request to submit its Rejoinder on October 5 as well as Claimant's request to submit his Reply on August 2, 2012. The Tribunal indicated that these extensions should give the Parties sufficient time to organize their respective schedules without having to postpone the Hearing dates.
24.
On July 9, 2012, Respondent objected to the Tribunal's revision of the procedural schedule and requested that it be reconsidered as soon as possible. On July 10, 2012, Claimant objected to Respondent's letter and requested the Tribunal to reject Respondent's request and maintain the schedule set forth in the Tribunal's letter of July 5, 2012. On July 11, 2012, the Tribunal referred to the Parties' requests and noted that the Tribunal had each time thoroughly considered the Parties' allegations on the extensions requested and granted the extensions it considered fair and reasonable under the circumstances. The Tribunal stated that it had reconsidered its decision in light of Respondent's latest request and was satisfied that there was no procedural inequality justifying revision of its earlier decision. However, the Tribunal decided to grant Respondent an additional two weeks until October 19, 2012 for the submission of its Rejoinder in light of Respondent's difficulties to reorganize its schedule. On July 17, 2012, Claimant observed that the latest two-week extension granted to Respondent placed Claimant in a difficult position to prepare for the Hearing, and reserved Claimant's right to request corrective measures if and when needed.
25.
On July 16, 2012 Claimant requested that the Tribunal order Respondent to produce a number of documents referred to by Respondent's quantum expert, Mr. Timothy Hart. On July 18, 2012, Respondent requested the Tribunal to deny Claimant's request on the basis that it was improperly extensive, not relevant and material, unduly burdensome and pertaining to confidential information. On July 18, 2012, the Tribunal rejected Claimant's request for production of documents because it considered that it was directed towards potentially confidential information of one of Claimant's competitors, which was not a party to these proceedings. In addition, the Tribunal considered the request to be unduly burdensome.
26.
On August 3, 2012, Claimant filed his Reply.
27.
On September 7, 2012, Respondent requested the disclosure of certain documents in Claimant's possession. On September 10, 2012, the Tribunal requested Claimant to disclose the requested documents or state the reasons for objecting within the next seven days. On September 17, 2012, Claimant responded producing some of the documents requested and rejecting the disclosure of other documents on the basis that they were not relevant and material to the outcome of the proceedings, that each party had the burden of proving its own factual allegations, that the request was unduly belated or that they were already in Respondent's possession. On September 20, 2012, the Tribunal (i) ordered the production, within the next seven days, of certain documents referred to by Claimant's quantum expert but not produced in the arbitration, and (ii) rejected the production of other documents on the grounds that the request was unduly burdensome and lacked sufficient relevance to the case. On September 21, 2012, Claimant produced some documents. On September 27, 2012, Claimant submitted the documents the production of which had been ordered by the Tribunal.
28.
On September 6, 2012, the Tribunal circulated a draft agenda for the Hearing and invited the Parties to submit a joint proposal by September 27, 2012. On September 26, 2012, the Parties requested an extension to file their joint proposal regarding the Hearing agenda. On October 5, 2012, Claimant submitted a joint procedural agreement, which was confirmed by Respondent on the same day. The joint procedural agreement envisaged a first Hearing day devoted to oral submissions, a second Hearing day for examination of experts, and a third Hearing day for oral submissions. It was apparent in the proposal that the Parties would only require 3 days for the Hearing. Accordingly, on October 11, 2012, the Tribunal proposed that the Hearing dates be November 6 to 8, 2012. On October 12, 2012, the Parties agreed with the Tribunal's proposal that the Hearing be held from November 6 to 8, 2012.
29.
On October 3, 2012, Claimant submitted a second request for document production relating to documents relied on by Respondent's quantum expert. In the alternative, Claimant requested that Respondent and its quantum expert be prohibited from using data that Claimant considered to have been obtained illegally. On October 9, 2012, Respondent requested the Tribunal to deny Claimant's request on the basis that the documents requested were confidential and that the request was unduly burdensome, and to deny Claimant's alternative request. On October 11, 2012, the Tribunal decided to reject Claimant's document production request and to exclude from the record the information contained in exhibit RQE-3 as well as any evidence based on it. The Tribunal (i) noted that the information requested by Claimant was much broader than the information that had been used by Respondent's expert, and included extensive source date from a competitor in the duty free sector, which was not a party to the arbitration; (ii) indicated that it was not persuaded that the information requested by Claimant was directly relevant for the quantification of Claimant's damages or material to the outcome of the case; and (iii) indicated that it was not persuaded that the information relied upon by Respondent's expert did not affect potentially confidential information, and therefore rejected any evidence based on this information.
30.
On October 19, Respondent filed its Rejoinder.
31.
On October 23, 2012, the Tribunal proposed to the Parties that the experts be heard together at the Hearing, and that they give a brief didactic presentation of their respective reports.
32.
On October 30, 2012, the President held a pre-hearing telephone conference call with the Parties on behalf of the Tribunal. During the pre-hearing conference call the Parties confirmed their procedural agreements as contained in Claimant's letter of October 5, 2012, and the President of the Tribunal proposed a sequence of examination of the experts. It was agreed that Respondent would submit the dispositive part of the decision of the Supreme Court of Moldova dated October 17, 2012, to which Respondent refers in its Rejoinder. On the same day, the Secretary of the Tribunal circulated the minutes of the pre-hearing conference call in electronic format, and transmitted to the Parties the Tribunal's request that the Parties revert to the Tribunal on the President's proposal for the sequence of examination of the experts by November 5, 2012. The Tribunal also requested the Parties to use their best efforts to locate and produce the entire decision of the Supreme Court of Moldova dated October 17, 2012 by November 5, 2012, and Respondent to produce the dispositive part of the decision of the Supreme Court of Moldova dated October 17, 2012 by November 1, 2012.
33.
On October 30, 2012, Respondent submitted the dispositive part of the decision of the Supreme Court of Moldova dated October 17, 2012.
34.
On November 2, 2012, Claimant submitted an amended version of Exhibit C-212 to be put on record as Exhibit C-221, and requested that all references to Exhibit C-212 be read as references to Exhibit C-221.
35.
The Hearing took place on November 6 through 8, 2012 at the World Bank Conference Centre and the ICC Hearing Centre in Paris. The following representatives of Claimant were present at the Hearing: Dr. Hamid Gharavi, Ms. Mélanie van Leeuwen, Ms. Nada Sader, Mr. Andrian Berengoi, Mr. Franck Charles Arif and Ms. Irina Chirilescu. The following representatives of Respondent were present at the Hearing: Mr. Michael Ostrove, Ms. Kiera Gans, Mr. Théobald Naud, Mr. Jonathan Chevry, Mr. Igor Odobescu, Ms. Carolina Parcalab, Mr. Vladimir Grosu and Mr. Lilian Apostol.
36.
Claimant's quantum expert, Mr. John Ellison, and Respondent's quantum expert, Mr. Timothy Hart, were examined at the Hearing. At the beginning of Mr. Hart's examination, Claimant's counsel indicated that they had only learned upon seeing Mr. Hart at the Hearing that Claimant had previously approached Mr. Hart when seeking to engage a quantum expert, and that eventually Claimant had rejected Mr. Hart's offer for his services. According to Claimant, this situation created a conflict. After Respondent had the opportunity to reply to Claimant's statement, the Tribunal decided to give the Parties the opportunity to put some questions to Mr. Hart before asking Claimant to decide whether to make a formal application in this regard. After questioning him, Claimant decided to wave any possible conflict with regard to Mr. Hart.
37.
At the end of the Hearing, the Parties stated that they had no objections to the manner in which the Hearing had been conducted. Respondent indicated that it withdrew any objections it may have had based on the timetable and with respect to the amounts of time that had been given to Moldova to present its case.
38.
On November 16, 2012, the Tribunal referred to certain statements made during the Hearing, and requested Claimant to confirm whether he had amended his claim for relief to include restitution as an alternative to damages. If so, the Tribunal invited Claimant to formulate this amendment in a precise manner and in writing on or before December 3, 2012. The Tribunal further invited Respondent to make any comments it may have in relation to the issue of restitution in light of Claimant's statements at the Hearing, including any consequential amendment to Respondent's claim for relief (and in particular paragraph 490(e) of the Rejoinder) on or before December 3, 2012. The Parties submitted their comments on restitution on December 3, 2012. On December 4, 2012, the Tribunal requested the Parties' comments on each other's submissions on restitution by December 11, 2012. The Parties submitted their comments on December 11, 2012.
39.
On December 3, 2012, the Parties requested an extension to submit their costs submissions until December 14, 2012. This request was granted by the Tribunal on December 4, 2012. The Parties submitted their costs submissions on December 14, 2012. The Parties indicated that they had no comments on each other's costs submissions on December 21, 2012.
40.
On March 15, 2013 the Secretary of the Tribunal informed the Parties that the proceedings were declared closed as of that date in accordance with Rule 38(1) of the ICSID Arbitration Rules.

III. FACTUAL BACKGROUND

A. The Tender

41.
On February 18, 2008, the Government of Moldova issued Decision No. 172 by which it resolved to organise and conduct a tender for the creation of a network of duty free stores at the border with Romania (the "Tender")1. The Ministry of Economy and Commerce issued Announcement No. 47-48 on conducting the public tender for the creation of a network of duty free stores at the border with Romania on March 7, 2008.2
42.

Paragraph 2.8 of the Technical Specifications of the Tender documentation required "a proof of experience in this field of activity at least 5 years".3

43.
ICS "Le Bridge Corporation Limited", SRL (hereinafter "Le Bridge"), a Moldovan company 100% owned and controlled by Claimant,4 submitted its tender offer to the Tender Commission on April 9, 20085 and on May 20, 2008 the Chair of the Tender Commission informed Le Bridge that it had won the Tender.6
44.
Le Bridge and the Customs Service of the Republic of Moldova formalised the Tender results in the "Agreement on location of duty-free store network at the state border crossing points" dated July 1, 2008 (the "July 1, 2008 Agreement").7 Accordingly, the investor was authorised to build and manage the duty-free store network at the following pre-established state border crossing points: Costesti-Stinca, Cahul-Oancea, Leuseni-Albita, Sculeni, and Ungheni-Cristesti custom station (hereinafter "Costesti", "Cahul", "Leuseni", Sculeni", and "Ungheni").8
45.
Clause 2.1 of the July 1, 2008 Agreement provides that: "The objectives of this Agreement consist in granting to the investor the right to create, operate and administrate the duty-free store network at the state border crossing points within the entire term of this Agreement, aiming at the same time at the realization of these goals in the most appropriate, efficient, reasonable and quick manner adaptable to the customers' needs."
46.
Clause 4.1 of the July 1, 2008 Agreement provides : "Under this Agreement, the Authority grants to the Investor that accepts according to the provisions of this Agreement an exclusive right as is defined in the p.1.1 to create and manage the duty-free stores within the area of activity", whereas p.1.1 defined the exclusive rights as follows: "exclusive rights of the Investor to manage and administrate the duty-free store network at the state border crossing points is established by the Government Decision No. 172 of 18 February 2008 at the exclusive managerial risk of the Investor according to the provisions of this Agreement. The exclusive rights of the Investor shall not be opposable any longer to the Authority when, following the organization, according to the legislation, of a public tender, a third party shall obtain the right to build and open duty-free stores at the state border crossing points."
47.
Clause 7.2 further provides that: "According to the provisions of the business plan, the parties agreed on the need to consider the possibility of granting the right to open a duty free store to the Investor at the Chisinau International Airport and at the Giurgiulesti state border crossing point in the conditions foreseen by the effective law."
48.
Clause 19.1 reads: "In order to locate the duty-free stores at the state border crossing points, the Investor shall conclude agreements of location with each customs office in which area the state border crossing points exist foreseen in the Government Decision no. 172 of 18 February 200(8)".

B. The Dispute in Relation to Claimant's Border Duty Free Stores

49.
Lease agreements between Le Bridge and each of the local customs offices were executed on July 23, 2008 with Cahul,9 on July 24, 2008 with Leuseni,10 on July 25, 2008 with Sculeni11 and on July 31, 2008 with Costesti.12 No duty free store was ever opened at Ungheni.13
50.
On September 3, 2008 Le Bridge obtained License No. 029662 issued by the Licensing Chamber of the Government of Moldova authorising it to operate duty free stores.14 License No. 029662 was updated to include the four bordercrossing stations at Cahul, Leuseni, Sculeni and Costesti on October 19, 2009.15
51.
By November 2009 the Leuseni, Cahul and Sculeni duty free stores were ready to open.16 On November 23, 2009 the Leuseni duty free store opened.17
52.
On November 27, 2009 the fire inspection authorities informed the national Customs Service of Moldova that Le Bridge had failed to comply with mandatory fire safety regulations and on that ground requested that the opening of Claimant's duty free stores be blocked until Le Bridge complied with the regulations.18
53.
On the same date, the customs office in Leuseni informed Le Bridge that the duty free store had to close on the grounds of an alleged failure to comply with mandatory fire safety regulations based on a letter of the fire inspection authorities received by the Customs Service of Moldova.19
54.
Le Bridge closed its duty free store in Leuseni on November 30, 2009.20
55.
On December 4, 2009, Le Bridge received from the fire inspection authorities Prescription No. 178, detailing alleged irregularities which had to be corrected before the Leuseni store could open.21
56.
On December 15, 2009 Le Bridge received from Respondent Prescription No. 72, alleging that the Sculeni store did not comply with mandatory fire safety regulations and that until compliance was achieved the store could not open.22
57.
On December 21, 2009, Le Bridge received from Respondent Prescription No. 835, alleging that the Cahul store did not comply with mandatory fire safety regulations and that until compliance was ensured, the store could not open.23
58.
On December 30, 2009, Le Bridge obtained confirmation from the fire inspection authorities that the duty free store in Leuseni was compliant with the fire safety regulations.24 This store subsequently reopened on December 31, 2009.25
59.
On the same day, Le Bridge's competitor in the duty free business - Dufremol -initiated proceedings against Le Bridge, the Ministry of Economy and Commerce and the national Customs Service before the Economic Circuit Court, seeking to cancel the Tender results and the four lease agreements signed with the customs offices of Leuseni, Cahul, Sculeni and Costesti and requesting the suspension of the Tender results pending a decision on the merits.26
60.
On January 2, 2010, the Leuseni customs office informed Le Bridge that the store had to close.27 On January 4, 2010, Leuseni customs officers prevented Le Bridge's employees from entering the store.28 The duty free store in Leuseni reopened on January 16, 2010.29
61.
The Cahul duty free store opened on January 18, 201030 and the Sculeni duty free store on January 22, 2010.31
62.
On January 29, 2010, the Economic Circuit Court issued an interim order suspending the Tender results pending a decision on the merits in Dufremol's claim of December 31, 2009.32
63.
On March 22, 2010, the Economic Court of Appeal affirmed the Economic Circuit Court's decision of January 29, 2010 and clarified that the Tender results had been suspended only in relation to duty free stores that had not yet opened.33
65.
On June 24, 2010 Le Bridge appealed the decision of the Economic Circuit Court of May 28, 2010.35
66.
On June 30, 2010, The Ministry of Economy and Commerce confirmed to Claimant that the Tender results were in conformity with the applicable law.36 On July 1, 2010 the Ministry filed an appeal against the Economic Circuit Court's decision of May 28, 2010.37
67.
On July 28, 2010, Dufremol filed a petition before the National Agency for Competition Protection ("NACP"), challenging the legality of the exclusivity allegedly granted to Le Bridge in the July 1, 2008 Agreement.38
68.
On September 7, 2010, the Economic Court of Appeal affirmed the decision of the Economic Circuit Court dated May 28, 2010, and declared that Dufremol had won the Tender.39
69.
On September 8, 2010, Le Bridge wrote to the NACP to protest against Dufremol's actions.40
70.
On November 9, 2010, the NACP issued its decision in Dufremol's July 28, 2010 application concerning the legality of the July 1, 2008 Agreement's exclusivity clause finding that the clause violated Moldovan competition Law.41
71.
On November 24, 2010 the Supreme Court of Justice affirmed the decision of the Economic Court of Appeal of September 7, 2010. This decision definitively invalidated the Tender results and the July 1, 2008 Agreement, but did not address the cancellation of the lease agreements with the local customs offices.42
72.
On December 15, 2010, the customs office of Leuseni signed a lease agreement with Dufremol.43
73.
On December 19, 2010, Mr. Arif left Moldova.44
74.
On December 22, 2010, the NACP informed Claimant of its decision to suspend the exclusivity clause included in the July 1, 2008 Agreement, pursuant to Dufremol's petition.45
75.
On December 26, 2010, the duty free store in Costesti opened.46
76.
On January 1, 2011, Dufremol opened a duty free store in Leuseni.47
77.
On January 18, 2011, the customs office of Cahul signed a lease agreement with Dufremol.48
78.
On April 27, 2011, Dufremol initiated a new set of legal proceedings before the Economic Circuit Court, seeking to cancel Le Bridge's four lease agreements with the Customs Services of Leuseni, Cahul, Costesti and Sculeni.49
79.
On May 20, 2011, Dufremol filed an additional claim before the Economic Circuit Court, requesting the closure of Le Bridge's four border stores.50
80.
On July 8, 2011, Dufremol opened a duty free store in Cahul.51
81.
On July 29, 2011, the Economic Circuit Court granted Dufremol's claim of April 27, 2011, thereby cancelling all four agreements between Le Bridge and the local customs offices and ordering Le Bridge to close its border stores.52 Claimant filed his Request for Arbitration to ICSID on the same date.
82.
On August 19, 2011, Le Bridge lodged an appeal with the Economic Court of Appeal against the decision of the Economic Circuit Court dated July 29, 2011, which had cancelled all four lease agreements between Le Bridge and the local customs service offices.53
83.
On August 22, 2011, Le Bridge was granted the right to open a duty free store in Mirnoe and, on August 28, 2011, Le Bridge was granted the right to open a duty free store in Soroca. On September 22, 2011, Le Bridge opened a new border store in Giurgiulesti.54
84.
On December 28, 2011, the Court of Appeal of Chisinau rejected Le Bridge's appeal of August 19, 2011 and confirmed the Economic Circuit Court's decision of July 29, 2011.55
85.
On March 6, 2012, Le Bridge filed an appeal to the Supreme Court of Justice, against the Chisinau Court of Appeal's decision of December 28, 2011.56
86.
On October 17, 2012, the Supreme Court of Justice overturned the decision of the Chisinau Court of Appeal of December 28, 2011, sending the case back to the lower courts for further proceedings.57

C. The Dispute in Relation to Claimant's Airport Duty Free Store

87.
Le Bridge signed Lease Agreement No. 446/08-AI with State Enterprise Chisinau International Airport (the "Airport State Enterprise") on July 28, 2008 ("Lease Agreement" or "Airport Lease Agreement").58
88.

The Lease Agreement provides in its Clause 1.1 that: "The Landholder undertakes to provide to the Tenant for temporary use the premises indicated in p.1.2 of this Agreement, and the Tenant undertakes to pay the rent in the amount and the terms indicated in the p.2 of this Agreement."

89.

Clause 8.1 of the Lease Agreement provides: "The Location agreement and the amendments to it are effective only upon their approval by the State Administration on Civil Aviation of the (R)epublic of Moldova."

90.
The Lease Agreement was approved by the State Administration of Civil Aviation ("SACA") on August 5, 2008.59
91.
On August 13, 2008, the Lease Agreement was approved by the Board of Directors of the Airport State Enterprise. This approval was recorded in the Minutes No. 9 of the same date.60
92.
On October 16, 2008, License No. 029662 of September 3, 2008, issued by the Licensing Chamber of the Government of Moldova and authorising Le Bridge to operate duty free stores, was updated to include the airport.61
93.
On November 10, 2009, Dufremol initiated proceedings against the Airport State Enterprise and Le Bridge before the Economic Circuit Court, seeking to cancel the Lease Agreement and requesting its suspension pending a decision on the merits.62 On the same day, through an ex parte judgement the Economic Circuit Court suspended the Lease Agreement pending a decision on the merits in Dufremol's claim.63 That very day, the Director-General of the Airport State Enterprise informed Le Bridge of the suspension of the Lease Agreement and restricted access of its personnel to airport premises.64
94.
The following day, Le Bridge filed an appeal against the Economic Circuit Court's decision of November 10, 2009.65
95.
The 12th of November 2009 was the day scheduled for the opening of the airport duty free store.66
96.
In his November 19, 2009 letter to the Chairman of the Supreme Court of Justice, the French Ambassador to Moldova objected to the measures taken by Moldova's judiciary.67
97.
On December 17, 2009, the Special Transport Prosecutor, an officer under the responsibility of the Attorney General of Moldova, wrote to Claimant confirming that the Airport State Enterprise had allocated premises to Le Bridge in conformity with the applicable legislation.68
98.
On December 18, 2009, the Economic Court of Appeal affirmed the Economic Circuit Court's decision of November 10, 2009 suspending the Lease Agreement pending a decision on the merits.69
99.
On February 2, 2010, Le Bridge filed before the Economic Court of Appeal a petition for a review of the court's decision of December 18, 2009.70
100.
On May 7, 2010, Dufremol wrote to the Ministry of Economy and Commerce, requesting the cancellation of Minutes No. 9 of August 13, 2008.71
101.
On May 12, 2010, in the proceedings initiated by competitor Moldclassica against Le Bridge, the Airport State Enterprise and the Ministry of Economy and Commerce, the Economic Circuit Court suspended the Lease Agreement through an ex parte order.72
102.
On May 13, 2010, the Airport State Enterprise suspended the Lease Agreement.73 On the same date, the Economic Court of Appeal overturned its decision of December 18, 2009, as well as the decision of the Economic Circuit Court of November 10, 2009.74 Also at this time, the Minister of Economy and Commerce rejected Dufremol's request to cancel Minutes No. 9 of August 13, 2008.75 That very day, Dufremol brought an action before the Court of Appeal of Chisinau for the cancellation of Minutes No. 9 of August 13, 2008 and their suspension pending a decision on the merits.76
103.
The next day, the Court of Appeal of Chisinau suspended the Minutes No. 9 pending a decision on the merits in Dufremol's claim of May 13, 2010.77
104.
On the same date, Claimant sent a letter to the Government of Moldova aimed at amicably solving the investment dispute between Moldova and Mr. Arif.78
105.
On May 17, 2010, the Airport State Enterprise appealed the decision of the Chisinau Court of Appeal of May 14, 2010.79
106.
On June 28, 2010, Le Bridge lodged an appeal against the decision of the Chisinau Court of Appeal of May 14, 2010, with the Supreme Court of Justice.80
107.
On September 1st, 2010, the Supreme Court quashed part of the Court of Appeal of Chisinau's decision of May 14, 2010.81
108.
On September 8, 2010, Le Bridge wrote to the NACP to protest against Dufremol's actions.82
109.
On September 9, 2010, competitor Trivoli-com obtained an order of the Economic Circuit Court suspending the Lease Agreement.83
110.
On October 21, 2010, the Economic Court of Appeal overturned the decision of the Economic Circuit Court of September 9, 2010.84
111.

On November 8, 2010, the Economic Court of Appeal overturned the decision of the Economic Circuit Court of May 12, 2010. The Court noted "that suspension of the Lease Contract that had been executed for approximately two years is a disproportionate and unjustified provisional remedy".85

112.
On November 11, 2010, the Airport State Enterprise issued Order No. 268, suspending the Lease Agreement based on the Economic Circuit Court's decision of September 9, 2010.86
113.
On November 12, 2010, competitor Ghermivali obtained from the Economic Circuit Court an order suspending the Lease Agreement.87
114.
On November 15, 2010, the Airport State Enterprise suspended the Lease Agreement based on the Economic Circuit Court's decision of November 12, 2010.88
115.
On November 16, 2010, the Economic Circuit Court ruled on the merits in Dufremol's claim of November 10, 2009 and cancelled the Lease Agreement.89
116.
On December 14, 2010, the Economic Court of Appeal overturned the decision of the Economic Circuit Court of November 12, 2010 ordering provisional measures.90
117.
On December 22, 2010, Le Bridge obtained from the Airport State Enterprise the authorisation to access its airport duty free store.91
118.
On the same date, the Economic Court of Appeal rendered a decision granting Dufremol's request to prevent Le Bridge from accessing its airport duty free store on the grounds that the Lease Agreement had been cancelled by decision of the Economic Circuit Court of November 16, 2010.92
119.
On December 25, 2010, airport security service personnel prevented Le Bridge from opening its airport duty free store.93 On December 27, 2010, a court-appointed bailiff was dispatched by the Economic Court of Appeal to seal the doors of the airport store.94
120.
On February 28, 2011, the Economic Court of Appeal affirmed the Economic Circuit Court's decision of November 16, 2010 invalidating the Lease Agreement.95
121.
On March 30, 2011, the Supreme Court of Justice cancelled Minutes No. 9 of August 13, 2008.96
122.
On April 28, 2011, the Supreme Court of Justice affirmed the Economic Court of Appeal's decision of December 22, 2010, ordering provisional measures.97 On June 10, 2011, the Supreme Court of Justice dismissed as inadmissible Le Bridge's appeal on cassation against the Economic Court of Appeal's decision of February 28, 2011.98 As a result, the decision of the Economic Court of Appeal invalidating the Lease Agreement became final and binding.
123.
On July 12, 2011, Claimant sent a letter to Respondent granting it two weeks in order to resolve the dispute amicably.99
124.
On September 19, 2011, the Airport State Enterprise initiated legal proceedings for the eviction of the airport store.100 On October 25, 2011, an order of eviction was obtained.101 On November 17, 2011, Le Bridge appealed the order to the Chisinau Court of Appeal.102 On November 25, 2011, Claimant was granted access to the airport store in order to retrieve his goods.103 On February 23, 2012, the Chisinau Court of Appeal confirmed the order of eviction.104

D. Investigations conducted over Le Bridge

125.
Le Bridge was subject to several tax inspections such as the ones taking place on October 18, 2010 and November 12, 2010.105 Le Bridge was also subject to an inspection conducted by the customer protection authorities on November 18, 2010106and to an investigation from the Centre for Combating Economic Crimes and Corruption ("CCECC") that commenced on December 17, 2010107 and lasted until August 2011.108

IV. SUMMARY OF THE PARTIES' CLAIMS AND RELIEFS.-

A. Jurisdiction

1. Respondent's Counter-Memorial

a) Amicable Settlement

126.
Firstly, Respondent claims that, under Article 7 of the BIT, an investor's right to submit a dispute to arbitration arises only if it was impossible to reach amicable settlement with the State within six months from the moment the dispute was first notified. Respondent alleges that Mr. Arif has failed to abide by this mandatory negotiation provision that conditions Respondent's consent to arbitrate.
127.
The two letters sent by Claimant to Respondent on May 14, 2010, and July 12, 2011, do not meet the requirements of the six-month amicable discussions period. Indeed, no dispute could have materialised when Mr. Arif sent his first notice to Respondent on May 14, 2010. This letter sought to give notice to the State of three decisions of first instance courts, the actions of which cannot be deemed to engage the State's responsibility and, therefore, cannot amount to Treaty disputes. Even if this letter is considered a valid notice of a dispute, Mr. Arif did not pursue in good faith the negotiations he started. In any case, the majority of the claims presented by Mr. Arif to the Tribunal today are based on decisions of the judiciary and/or conduct of the State that intervened after May 14, 2010; moreover, the nature and scope of the claims raised in that letter are entirely different from the claims at stake in this arbitration.
128.
Claimant's letter of July 12, 2011 does contain a description of the dispute now before the Tribunal. However, Claimant filed his Request for Arbitration a mere two weeks after sending his letter of July 12, 2011, thereby depriving Respondent of its right to address the dispute referred to by Claimant within six months, as per Article 7 of the BIT.

b) Many of the claims raised are not disputes ripe for arbitration

129.
Respondent further notes that several of Mr. Arif's claims relate to alleged mistreatment by the Moldovan judiciary, therefore these claims cannot be raised at the international level until the highest court in the State has had a chance to act. More specifically, Mr. Arif asserts claims of complete expropriation and breach of specific undertakings with regard to the border duty free stores, this, in spite of the fact that the stores continue to operate, even as proceedings on the validity of the four lease agreements between Le Bridge and the local Customs Services are on-going. Not having exhausted local remedies in respect of the four border stores, Claimant's claims cannot stand, as they are yet not ripe for arbitration.
130.
It is an agreed principle of international law that a fundamental pre-requisite for a claim of breach by judicial action is exhaustion of local remedies. A concern that Le Bridge might likely lose on the merits in the local proceedings is not a basis for filing an international claim prior to a final decision of the national judiciary. Therefore, to the extent that Mr. Arif's claims for the violation of the BIT and international obligations relate to the border stores, this Tribunal does not have jurisdiction.

c) Nationality

131.
Respondent alleges that, for the purposes of international jurisdiction, a determination of a person's nationality turns on an analysis of the law of the State the nationality of which it is being claimed.
132.
Claimant has not carried his burden of proving that he obtained French nationality in conformity with French law. In other words, Claimant has not proved that he acquired French nationality by naturalisation.
133.
In any event Claimant shares no real and effective link with France and therefore cannot seek protection under the BIT.

d) Claimant has no investment subject to Treaty protection

134.
Firstly, Respondent alleges that a review of every investment listed in the Request for Arbitration shows that (i) most of these alleged rights are not actually the subject of any claim in this proceeding, and (ii) many of these alleged rights do not fit the BIT definition of an investment because they are not assets of any kind under Moldovan law.
135.
Secondly, Respondent submits that the rights claimed to have been expropriated in Claimant's Memorial (i.e. the right to exclusivity under the July 1, 2008 Agreement, the right to create and develop a duty free network at the border stores under the Tender and the July 1, 2008 Agreement, and the lease of the airport store with the Airport State Enterprise under the Lease Agreement) are patently invalid as a matter of Moldovan law, and therefore are not capable of founding the Tribunal's jurisdiction. It is a well-established rule that an asset can benefit from international protection only if it was validly acquired under local law. In confirmation of this general principle, the BIT includes in the definition of "investment" in Article 1(1) a condition that the investment be made in conformity with local law. Therefore, because they are not assets and were not invested in accordance with Moldovan law Mr. Arif's alleged investments are not subject to Treaty protection.
136.
Thirdly, Respondent claims that the alleged investments belong to Le Bridge, a Moldovan company, and not to Mr. Arif. However, the alleged rights could be subject to Treaty protection only if they were owned by a national of the contracting Party who invoked their protection. The assets of a company and those of its shareholders are necessarily distinct, at least as corporate formalities have been respected and the applicable law recognizes the separate legal personality of these entities. It is a settled proposition in international law that shareholders may not seek protection against injuries suffered by the companies they own.
137.
Le Bridge would have had standing in this arbitration if France and Moldova had agreed that, for purposes of Article 25(2)(b) of the ICSID Convention, a legal person having the nationality of the State party to the arbitration should be treated as a national of the other State due to foreign control. Because no language to this effect was included in the BIT, Le Bridge cannot bring an ICSID arbitration against Moldova. That limitation, however, is not a basis for granting jurisdiction over claims by Le Bridge's shareholders, where it otherwise does not exist.
138.
Fourthly, Respondent alleges that, for the purposes of the BIT and the ICSID Convention, Mr. Arif's "investment" fails to qualify as such due to the absence of any transfer of capital or technology from France to Moldova, a key objective of the BIT.

e) The BIT contains no "specific undertakings" clause and such claims would be inadmissible

139.
Respondent submits that the Tribunal should refuse to exercise jurisdiction over Mr. Arif's claims for the violation of a "specific commitment", because the BIT contains no such obligation. Moreover, the Most Favoured Nation Clause ("MFN clause") included in Article 4 of the BIT cannot properly be invoked to import such an obligation. Finally, even if such an obligation could be invoked under the BIT, Claimant's claim would still be inadmissible.
140.
Firstly, the BIT contains no "umbrella" clause. Claimant improperly reads Articles 5 and 9 of the BIT as containing an independent international obligation to honour specific commitments made towards Claimant.
141.
Article 9 of the BIT permits States to offer more favourable investment conditions in order to promote foreign direct investment in particular sectors of the economy. It does not act as an "umbrella" clause providing a procedure to sanction a mere contractual breach as a violation of the BIT itself.
142.
Article 5(2) of the BIT contains a similarly narrow "specific undertakings" provision. This "specific undertakings" clause only applies if a state party entices a foreign national or company to invest in a regulated industry by providing specific incentives.
143.
Secondly, Claimant also improperly turns to the BIT's MFN clause to import an "umbrella" clause from either the Moldova-UK or the Moldova-USA BIT. Claimant tries to take domestic rights that are subject to separate dispute resolution provisions established by contract and to subject them to ICSID arbitration. "Specific undertakings" clauses are procedural in nature, in that they give an international remedy for a separate undertaking, rather than any particular undertaking. MFN clauses can only import substantive obligations that are similar in kind to the obligations that are the subject of the BIT. This principle prohibits the expansive use of MFN clauses to bring in commitments of any kind and subject them to BIT protection.
144.
Thirdly, with regard to the contractual arguments made by Claimant pursuant to the July 1, 2008 Agreement, Mr. Arif should not be permitted to bring such claims for the breach of the specific commitments unless and until (i) Le Bridge has exercised its right to litigate or arbitrate these alleged breaches pursuant clause 20.10 of the July 1, 2008 Agreement and (ii) the Customs Services is shown to have failed to abide by the award rendered by the competent arbitral tribunal. Only under these circumstances would a claim for the violation of these specific commitments be admissible.

2. Claimant's Reply

145.
Claimant asserts that Respondent's objections to the Tribunal's jurisdiction are inadmissible because Respondent has committed two violations of Rule 41(1) of the ICSID Arbitration Rules. First, Respondent failed to file its objections to jurisdiction as soon as possible after receipt of the Request for Arbitration. Second, Respondent failed to submit its jurisdictional objections before the expiration of the time limit fixed for the filing of the Counter-Memorial. While the Tribunal may have the power to extend the time limit for the submission of the Counter-Memorial after the expiry of the originally agreed-upon time limit, which it did, it does not have the power to extend the deadline established by the ICSID Rules for the submission of jurisdictional objections.

a) Amicable settlement

146.
Firstly, Claimant argues that he complied with the waiting period set forth in Article 7 of the BIT. Mr. Arif confirms that a dispute did exist at the time the letter of May 14, 2010 was sent. First instance court decisions can be wrongful acts under the BIT and can crystallize into BIT disputes because, under international law, there is no requirement to exhaust local remedies for a treaty claim to exist, unless such claim is for denial of justice.
147.
Secondly, ripeness cannot constitute a pre-requisite to the initiation of amicable settlement discussions, because requiring that local remedies be exhausted before attempting to amicably settle a dispute would deprive any investor of the possibility of preventing a State from aggravating an already existing dispute.
148.
Thirdly, the notice letter of May 14, 2010, which summarised the dispute, fully complied with the "amicable settlement" requirements laid out in Article 7 of the BIT. It is well settled that the notice of a dispute need not be detailed or exhaustive.
149.
Fourthly, Respondent was granted an opportunity to settle the dispute amicably but refused to do so. Compliance with the "amicable settlement" requirement is a mostly fact-driven question, namely whether the State was given a fair opportunity to negotiate and failed to do so.
150.
Claimant submits that in any case compliance with this waiting period is not a pre-requisite to this Tribunal's jurisdiction. Further, it is well settled that compliance with a waiting period is not mandatory if there are no prospects of reaching a settlement, or if the Parties do not show a willingness to enter into negotiations.

b) The claims raised are ripe for arbitration

151.
Claimant notes that Respondent does not raise its objection to jurisdiction on the basis of Article 26 of the ICSID Convention. Nor can it do so because the BIT does not contain any specific obligation for the investor to exhaust local remedies before resorting to ICSID arbitration. Claimant alleges that his claims in relation to the border duty free stores are ripe for arbitration. It is a well settled rule under international law that the "exhaustion of local remedies" requirement relates to the merits of a dispute, and not to the Arbitral Tribunal's jurisdiction or to the admissibility of the claims.
152.
In any case, the principle of exhaustion of local remedies does not apply to Mr. Arif's claim of complete expropriation of his border stores, or to his claim that Moldova breached its specific commitments by completely depriving Claimant of his investment in the border stores. It is a well established rule in international arbitration that the exhaustion of local remedies does not constitute a substantive requirement of a finding of expropriation by a court.
153.
Assuming for the sake of argument that the exhaustion of local remedies does constitute a pre-requisite for the finding of a breach by Moldova of its international obligations, it is deemed to be waived if the remedies left are obviously futile.
154.
Claimant further submits that local remedies have in fact been exhausted in relation to the border stores. This occurred on November 24, 2010, when the Supreme Court irrevocably cancelled the Tender results and the July 1, 2008 Agreement formalising them, and declared that Dufremol had won the Tender. The cancellation of the four lease agreements with the local customs offices is thus inevitable and has already been declared by the first and second instance courts, in their decisions.

c) Nationality

155.
Firstly, Claimant alleges that Mr. Arif has acquired French nationality in conformity with French law.
156.
Claimant submits that the Arbitral Tribunal does not have the power to check whether Mr. Arif obtained French naturalization in accordance with French law because neither the ICSID Convention, nor the BIT, nor even international law, grant it such powers. Respondent cannot contest that Mr. Arif held French nationality on the relevant dates for purposes of the ICSID Convention (i.e. the date of the consent to arbitrate and the date of registration of the Request for Arbitration). Claimant further submits that, contrary to Respondent's allegation, while it is a well settled principle of international law that international tribunals have to review the validity of nationality in State to State disputes, this principle does not apply in investor-State disputes, because preventing abusive practices of diplomatic protection is not needed in this latter context.
157.
There is no requirement under the ICSID Convention that nationality be granted in accordance with the law of the State granting nationality. Nor is there such a requirement in the BIT either. The principle applicable to the circumstances at hand is the general principle that every State has the power to grant nationality to individuals in accordance with its laws. France granted Mr. Arif French nationality by Decree dated March 10, 2005.109 Therefore, Respondent's objection to jurisdiction on the grounds that Claimant did not prove that he acquired French nationality in accordance with French law must be rejected.
158.
In any case, Respondent has not discharged its burden of proof that Mr. Arif is not a French national pursuant to French law, as it did not prove that Mr. Arif acquired French nationality by fraud or as a result of a material error. In any event, Mr. Arif satisfied the residency requirements of French law for naturalization.
159.
Secondly, Claimant alleges that there is no requirement of "effective nationality" in ICSID arbitration. The only requirement in Article 25 of the ICSID Convention is the investor not having the nationality of the host State. The text of the BIT leaves no room for the application of the effective nationality principle. Respondent's argument that Mr. Arif's French nationality must be effective finds no support in ICSID case law. In any event, Mr. Arif has genuine links with France.

d) Claimant's investments are subject to BIT protection

160.
Firstly, Claimant alleges that his investment is valid.
161.
In Claimant's view, Respondent confuses the issues of the existence of an investment with that of the validity of the same. Claimant argues the following: (i) relying on domestic law for purposes of qualifying an "investment" within the meaning of the BIT is not a practice under international law. Domestic law requirements only come into play to determine whether an existing investment within the meaning of the BIT must be protected, i.e. whether or not it was made in violation of fundamental principles of law; (ii) Respondent's allegation that an "asset" within the meaning of Article 1(1) of the BIT must be determined by reference to domestic laws is contrary to customary international law and ICSID case law; (iii) in any event Respondent cannot contest that Claimant's investments, consisting of the exclusive right to create and develop a duty free network at the border stores on a long term basis and the right to open a flagship store at the airport on a long term basis are assets according to Moldovan law, that they fall within the definition of "investment" contained in Article 1(1) of the BIT, and that they are investments within the meaning of Article 25 of the ICSID Convention. It is well settled that, pursuant to the principle of the "general unity of an investment operation", the definition of an investment does not turn on the ownership of specific assets, but rather on the combination of rights that are necessary for the economic activity at issue. Therefore, even if each of the separate investments made by Mr. Arif were to be considered outside the scope of Article 1(1) of the BIT (which they are not), the Tribunal would still have jurisdiction over this dispute, as all the rights and assets comprising the investment should be analyzed collectively, not individually.
162.
With regard to the legality of the investment, Claimant has shown that the investments were not made in violation of Moldovan law. Assuming that the Tribunal found a violation of local law, such violation only affects the validity of the investment under international law if it relates to the host State's investment law. In any case, not any violation of the host State's laws affects the validity of the investment under international law. The breach must have a certain degree of gravity and a connection to the investment. In any event, a State cannot preclude an investor from seeking protection under the BIT when its own actions are illegal under its own laws.
163.
Further, the BIT's definition of investment in its Article 1(1) includes indirect investments. This is confirmed by a good faith reading of the BIT. The fact that neither indirect nor direct investments are expressly mentioned in the definition can only mean that both are included. Respondent's interpretation of the BIT is therefore contrary to the express wording of the definition of "investment" contained in Article 1(1)(b).
164.
Finally, Claimant alleges that the origin of the capital is irrelevant to the jurisdiction of the Tribunal. Indeed, there is no requirement, neither under the ICSID Convention nor in the BIT, that there be a transfer of capital from France to Moldova for the Tribunal to have jurisdiction.

e) Claimant's claims on the basis of a breach by Moldova of its specific undertakings are admissible

165.
Claimant first submits that Article 9 of the BIT imposes on Moldova the obligation to honour its specific obligations towards foreign investors. Adopting Respondent's interpretation of Article 9 would turn it into a tautology (a specific commitment is regulated by its provisions) and would thus deprive Article 9 of any real effect. A good faith interpretation of Article 9 of the BIT, pursuant to Article 31 of the Vienna Convention, cannot be one which leads to an absurd result. This could not have been the Parties' intention. The purpose of Article 9 is to include within the scope of BIT protection Moldova's specific commitments in favour of foreign investors, including provisions that are more favourable to the foreign investor than those contained in the BIT.
166.
Moldova's obligation to honour its specific commitments is also set forth in Article 5(2) of the BIT. In Claimant's view, Respondent's interpretation distorts this Article's clear wording, by reading into the text limitations which it does not include, such as a limitation on its applicability to circumstances where a State Party encourages a foreign national to invest in a regulated industry. Respondent's interpretation is also contradicted by the case law.
167.
Secondly, Claimant notes that Respondent does not contest that a MFN clause can import an "umbrella" clause in relation to the claim for breaches by Moldova of its specific commitments contained in the Lease Agreement. Respondent only disagrees with this possibility with regard to the commitments contained in the July 1, 2008 Agreement and the Tender.
168.
Claimant's claims based on the breach by Moldova of its specific undertakings contained in the July 1, 2008 Agreement and in the Tender are not contractual claims, but rather Treaty claims. Mr Arif is not asking the Tribunal to decide his claims under the July 1, 2008 Agreement for breach of contract.
169.
It is well settled that "umbrella" clauses are substantive in nature, not procedural. Respondent's allegation pursuant to which MFN clauses can only import substantive obligations that are similar in kind to the obligations that are the subject matter of the BIT is unsupported. To the contrary, the principle that "umbrella" clauses can be imported via an MFN clause is well accepted.
170.
Finally, Respondent's allegation with regard to the mandatory application of the dispute resolution provision in the July 1, 2008 Agreement is unsubstantiated. The forum selection clause contained in the July 1, 2008 Agreement cannot divest the Tribunal of jurisdiction because Claimant has advanced no claims under that agreement, but rather has asserted BIT breaches. Dismissing claims raised via "umbrella" clauses on the ground that forum selection clauses exist in contracts would be, in effect, to read an implied waiver of BIT rights into every investment agreement that specifies a dispute resolution mechanism other than investment arbitration. The remedies provided under the BIT and the July 1, 2008 Agreement are not mutually exclusive, but complementary. The BIT's dispute resolution clause is not limited in its terms to breaches of the BIT itself, but rather extends to any disputes related to investments, which encompasses contract disputes. The subject of the dispute resolution clause contained in the July 1, 2008 Agreement has already been the subject of litigation in Moldova, Respondent's judiciary having annulled the Agreement. It would therefore be impossible for Claimant to initiate a dispute against the Customs Services on the basis of the July 1, 2008 Agreement.

3. Respondent's Rejoinder

171.
Respondent contends that its jurisdictional objections are admissible. Respondent complied with Rule 41(1) of the Arbitration Rules. Respondent filed its jurisdictional objections with its Counter-Memorial. Respondent in good faith submitted its jurisdictional objections as early as possible in light of the procedural calendar established by the Tribunal. Even if the Tribunal were to consider that Respondent's jurisdictional objections were filed after the deadline for the filing of the Counter-Memorial, such a belated submission would not in any event prevent the Tribunal from examining Respondent's objections.

a) Amicable settlement

172.
Respondent alleges that ripeness does constitute a pre-requisite to the initiation of amicable settlement discussions, because a lack of ripeness means that there is yet no dispute, and in the absence of a dispute there is nothing to settle.
173.
In relation to the letter of May 14, 2010, Respondent further alleges that Le Bridge applied for a Security Certificate for the airport store only on February 4, 2010 and obtained it on June 18, 2010; therefore, no dispute could have existed in May 2010, as Le Bridge had no right to open the airport store.
174.
In addition, Respondent alleges that it never had a fair opportunity to engage in settlement discussions at any time after the dispute had actually ripened. Respondent further notes that Moldova did not ratify the ICSID Convention until May 2011, and that, at the time of Mr. Arif's letter in 2010, the Government could not have imagined that any arbitral procedure would be forthcoming. Claimant therefore cannot be excused for failing to satisfy the condition precedent to arbitration. Moreover, Respondent alleges that Claimant's first attempt at settlement discussions occurred on July 12, 2012, 17 days before the Request for Arbitration. Nevertheless, the settlement discussion obligation is a mandatory pre-requisite to this Tribunal's jurisdiction. Finally, Respondent submits that Claimant fails to demonstrate that any settlement discussions would have been futile.

b) Many of the claims raised are not ripe for arbitration

175.
Respondent further argues that Mr. Arif's claims of a judicial expropriation of his investment in the duty free stores are not ripe for arbitration. These claims are directed at decisions of the lower courts of Moldova. On October 17, 2012, the Supreme Court of Justice overturned the decision of the Chisinau Court of Appeal of December 28, 2011. The case was sent back to the lower courts for further proceedings. As a result thereof, Le Bridge can continue to operate the border stores.

c) Nationality

176.
Firstly, Respondent submits that international tribunals are competent (and indeed obliged) to make their own assessment of a claimant's nationality when it is challenged. In Respondent's view, Claimant can offer no support for his assertion that, in investor-State disputes, unlike State-to-State disputes, this principle does not apply. Once a claimant's nationality is challenged, it becomes a jurisdictional fact in dispute to be decided by the tribunal. There can be no doubt that the Tribunal is authorised to verify and must be satisfied of Mr. Arif's nationality before proceeding to adjudicate this dispute.
177.
Secondly, a party bears the burden of proving its allegations. Only after that party has actually carried this burden does it shift to the opposing party. Mr. Arif has decided not to produce a certificate of French nationality as proof of his nationality in the present case. A decree of naturalization in and of itself is no proof of nationality as a matter of French law. Having failed to disclose a certificate of nationality, it is clear that even as a matter of French law the burden of proof still lies with Mr. Arif to establish that he is a genuine French national. In any event, Mr. Arif has not met the requirements for acquiring French nationality.
178.
Thirdly, Claimant confuses dominant nationality and effective nationality. Mr. Arif cannot benefit from protection under the Treaty because he shows no real and effective link with France.

d) Claimant has no investment subject to Treaty protection

179.
Firstly, Claimant confuses the question of the law applicable to the qualification of a right as an "investment" under the BIT with that of the law relevant to identifying whether a right exists in the first instance. Claimant has not demonstrated that all of the alleged "investments" actually exist under Moldovan law, their existence being a matter of domestic law. One cannot rely on an abstract principle of the unity of an investment operation to avoid demonstrating why any alleged "right" actually exists, and in order to obtain protection for that right.
180.

Regarding the three core investment rights that are actually alleged to be subject to an investment dispute (i.e. the alleged rights under the Tender, the alleged exclusivity right under the July 1, 2008 Agreement, and the Lease Agreement on the airport store), they were invalid pursuant to Moldovan law. The ordinary meaning of Article 1 of the BIT, "in accordance with the legislation of the Contracting Party", does not limit legal compliance to specific investment legislation. It is a fundamental governing principle of international law that investments made in violation of the law of the host country cannot be afforded protection.

181.
Secondly, the ordinary meaning of the wording of Article 1.1(b) of the BIT is that, if an investor proves a shareholding in a company, then that shareholding is a category of investment protected by the Treaty. The default position in international law is that, absent a clear language to that effect, the corporate form is recognised as legally independent from the shareholders and confers only on the corporate entity the right to assert claims for damages suffered with regard to its assets. Contrary to Claimant's assertion, therefore, the absence of an express reference to "indirect investments" is of important significance.

e) The BIT contains no "specific undertakings" clause and such claims would be inadmissible

182.
Respondent further submits that the MFN clause in the BIT cannot, under any circumstances, import an "umbrella" clause. This applies in relation to all claims for breach of specific commitments made by Claimant: in relation to the Lease Agreement, the July 1, 2008 Agreement and the Tender.
183.
Claimant seeks to rely on the MFN clause in order to secure rights that do not exist in the BIT, rather than to extend more favourable standards of protection than those set out in the BIT, as intended by Article 4. This type of manipulation of the MFN clause should be rejected.
184.
Respondent does not allege that there is a waiver of the BIT's dispute resolution clause, but rather that it is premature to invoke it in support of a claim for the breach of a specific undertaking until after the agreed forum has reviewed the question. Claimant's argument that the July 1, 2008 Agreement has been annulled and that it would therefore be impossible for him to initiate a dispute under its terms ignores the fundamental principle of the separability of arbitration clauses.

B. Merits

185.
In addition to the factual and legal arguments of the Parties stated below regarding Claimant's claims on the merits, the Parties have also developed further legal argument which has been closely analysed, and expressly addressed by the Tribunal where appropriate in the relevant parts of the Award.

1. Claimant's Request for Arbitration and Memorial

186.
In his Request for Arbitration and his Memorial, Claimant alleges that Respondent has breached its obligations under the BIT and international law through the acts and omissions of its organs including: the judiciary, the Customs Service, the Airport State Enterprise, the Ministry of Internal Affairs, the NACP, the Attorney General, the Ministry of Finance (including the tax inspection authorities), and the CCECC.

a) Alleged Breaches

(i) Expropriation of Claimant's investment: Article 5 of the BIT

187.
Claimant submits that his investment was taken not on the basis of any alleged wrongdoing attributable to him, but on the basis of the alleged misapplication of Moldovan laws by the organs of the State that granted him these rights. It is a well established principle of international law that a State cannot rely on its internal law to invalidate its own obligations. Article 5 of the BIT expressly provides that an expropriation by the State cannot be contrary to a specific commitment of that State towards the investor.
188.
The initial expropriatory act with regard to the airport store was the Economic Circuit Court's decision of November 10, 2009 suspending the Lease Agreement. The Lease Agreement was subsequently cancelled by the Economic Circuit Court on November 16, 2010. This decision was later confirmed by the Economic Court of Appeal on February 28, 2011 and affirmed by the Supreme Court on June 10, 2011.
189.
With regard to the border stores, Respondent's expropriation of Claimant's exclusivity right, attributed through the Tender and recorded in the July 1, 2008 Agreement, occurred on January 1, 2011 for Leuseni, and July 8, 2011 for Cahul, when the Customs Service authorised Dufremol to open duty free stores at these locations. Respondent's complete expropriation of Claimant's investment in the border stores took place on November 24, 2010, when the Supreme Court of Justice irrevocably cancelled the Tender results and the July 1, 2008 Agreement. The only reason Claimant is still able to operate his stores is based on a mere technicality, i.e. the local lease agreements have not been finally cancelled yet.

(ii) Breach of the "specific commitments" obligation: Articles 9, 5 and 4 of the BIT

190.
With regard to the airport store, Claimant alleges that, on June 10, 2011, Respondent's judiciary irrevocably cancelled the Lease Agreement entered into by Le Bridge and the Airport State Enterprise. This was in breach of the specific commitment which Respondent had undertaken by the signature of the Lease Agreement on July 28, 2008.
191.
With regard to the border stores, Claimant alleges that Respondent failed to allocate land and/or premises that would have made the opening of a duty free store in Ungheni possible. This was in breach of Respondent's specific commitments contained in the Tender and the July 1, 2008 Agreement.
192.
Respondent's specific commitments regarding the exclusivity right contained in the July 1, 2008 Agreement and implied in the Tender were also breached via the suspension of the exclusivity clause by the NACP, as well as by the Customs Service's decision to permit Dufremol to open border stores in Leuseni and Cahul.
193.
Regarding the entire investment in relation to the border stores, on November 24, 2010, Respondent's judiciary irrevocably cancelled the Tender results and the July 1, 2008 Agreement, in breach of the specific commitments made through these instruments.

(iii) Breach of Fair and Equitable Treatment ("FET"): Article 3 of the BIT

194.
The long-term rights granted by State organs in relation to the airport and border stores induced Claimant to make substantial investments. In spite of Moldova's specific commitments, its organs took away Claimant's rights via multiple acts and omissions which were in breach of Respondent's obligation to act consistently towards the investor. Respondent's acts and omissions constitute a breach of Claimant's legitimate expectation that Moldova would honour its specific commitments to him. Moldova's acts and omissions are in breach of the well-settled international law rule that a State cannot rely on its domestic laws to breach its international obligations.
195.
Firstly, Respondent and its organs unfairly and inequitably harassed Claimant and his companies and attempted to intimidate him.
196.
Secondly, with regard to the airport store, Claimant makes the following arguments. On June 10, 2011, Respondent's judiciary irrevocably cancelled the Lease Agreement, thus breaching Claimant's legitimate expectations and Respondent's consistency and good faith obligations. The grounds for the cancellations were never established.
197.
The Airport State Enterprise unfairly and inequitably seized Claimant's goods at the airport on December 25, 2010. Moreover, it prevented Claimant from accessing the store until November 25, 2011.
198.
The Attorney General failed to pursue disciplinary proceedings against Judge Namasco, despite the express admission that there were grounds to discipline him for his decision of November 10, 2009. This was in breach of Claimant's legitimate expectations and Respondent's good faith obligations.
199.
Thirdly, with regard to the border stores, Claimant submits the following. The Customs Service failed to allocate land and/or premises to Claimant in order to open a duty free store in Ungheni. This was in breach of Claimant's legitimate expectations and Respondent's consistency and good faith obligations pursuant to the Tender and the July 1, 2008 Agreement.
200.
The fire inspection authorities unfairly and inequitably delayed the opening of the duty free stores in Leuseni, Cahul and Sculeni for two months, alleging noncompliance with safety regulations. This was in breach of Claimant's legitimate expectations and Respondent's consistency and good faith obligations as Le Bridge had already obtained the required certifications.
201.
The NACP unfairly and inequitably suspended the July 1, 2008 Agreement's exclusivity clause. This was in breach of Claimant's legitimate expectations and Respondent's consistency and good faith obligations pursuant to the Tender and the July 1, 2008 Agreement.
202.
The customs offices of Leuseni and Cahul unfairly and inequitably entered into lease agreements with Dufremol. This was in breach of Claimant's legitimate expectations and Respondent's consistency and good faith obligations pursuant to the Tender and the July 1, 2008 Agreement.
203.
The customs offices of Leuseni and Cahul unfairly and inequitably attributed better locations to Dufremol for its border stores than they did to Le Bridge. This was in breach of Claimant's legitimate expectations and Respondent's consistency and good faith obligations.
204.
On November 24, 2010, the Supreme Court irrevocably cancelled the Tender results and the July 1, 2008 Agreement in breach of Claimant's legitimate expectations and Respondent's consistency and good faith obligations.

(iv) Arbitrary and unreasonable measures: Article 4 of the BIT

206.
Claimant further alleges that all of Moldova's acts and omissions in breach of the FET standard also constitute breaches of Moldova's obligation not to impose unreasonable/arbitrary measures.

(v) Full Protection and Security: Article 5 of the BIT

207.
Claimant alleges that Respondent is under an obligation to provide him with FPS, pursuant to both the BIT's Article 5 and customary international law.
208.
Claimant further argues that all of Moldova's acts and omissions in breach of the FET standard also constitute breaches of Moldova's obligation to grant full protection and security.

(vi) Discriminatory measures: Article 4 of the BIT

209.
Respondent's obligation not to discriminate is set forth in Article 4. Moreover, Article 4 is an MFN clause that imports the obligation not to impose discriminatory measures from the UK-Moldova BIT and the USA-Moldova BIT.
210.
All of Moldova's acts and omissions in breach of FET also constitute breaches of Moldova's obligation not to impose discriminatory measures.
211.
In particular, Respondent cancelled Le Bridge's Lease Agreement on the pretext that it had not been obtained via a tender, despite the fact that Respondent authorised Dufremol to lease premises at the airport without such a tender. Respondent granted Le Bridge the exclusive right to operate border duty free stores after winning a tender and then authorised Dufremol to open stores at Leuseni and Cahul without a tender.
212.
The national Customs Service and the customs offices of Leuseni and Cahul discriminated in favour of Dufremol by attributing better locations to Dufremol for its border stores in Cahul and Leuseni, by preventing customers from shopping at Le Bridge, and erecting a fence in front of Le Bridge's store in Leuseni.

(vii) Denial of Justice

213.
As an alternative claim to the claims presented in detail above, Claimant submits that Respondent's judiciary, through its acts and omissions, breached Moldova's obligation not to deny justice. In this respect Claimant refers to two sets of decisions. The first concerns the airport store, and was rendered at the request of Dufremol and other companies that it owns and/or is connected to. These decisions resulted in the cancellation of the Lease Agreement on the grounds that the Airport State Enterprise had unlawfully attributed the premises to Le Bridge and that the Lease Agreement had not been preliminarily approved by the SACA. A second set of decisions concerns the border stores and was also rendered at the request of Dufremol. These decisions resulted in the cancellation of the Tender results and the July 1, 2008 Agreement on the grounds that the Tender Commission had unlawfully awarded the Tender to Le Bridge, despite it not having the requisite commercial experience.

(a) Procedural denial of justice

(i) Collusion

214.
Claimant argues that there was collusion between the local parties in interest (i.e. Le Bridge's local competitors in the duty free business: Dufremol, Moldclassica, Trivoli-Com and Ghermivali), and Moldova's judiciary, as well as a close coordination between the different instances within Moldova's judiciary. The ultimate goal of these actors' conduct was to permanently prevent the opening of Claimant's airport duty free store.
215.
Claimant asserts procedural denial of justice. He alleges that the Economic Circuit Court, the Economic Court of Appeal and Le Bridge's interconnected competitors that brought an action have acted in collusion to prevent the execution of the valid Lease Agreement and the opening of the airport shop. This was done by ordering provisional measures without any legal basis in the Moldovan Civil Procedure Code. The different applications for interim measures were made in connection with an action by Le Bridge's competitors for the invalidation of the Lease Agreement.

(ii) Lack of jurisdiction

216.
In its decision of May 28, 2010, the Economic Circuit Court ruled that it had jurisdiction over Dufremol's claim to cancel the Tender results and the July 1, 2008 Agreement. However, in Claimant's view, the court patently did not have such jurisdiction given the administrative nature of the contested acts. Moreover, the Economic Court of Appeal and the Supreme Court of Justice failed to exercise their duty to verify the procedural and material legality of the decisions rendered by the lower instances.

(iii) Failure to abide by the mandatory preliminary application procedure

217.
Claimant argues that on May 28, 2010, the Economic Circuit Court ruled in favour of Dufremol without taking into consideration that it had not complied with the mandatory preliminary application procedure that is a pre-condition for initiating legal proceedings to challenge administrative acts. In the same proceedings, Dufremol also produced a false preliminary application that it had purportedly filed with the Ministry of Economy on December 5, 2009. Claimant further notes that the Economic Court of Appeal and the Supreme Court of Justice should have remedied these defects of the Economic Circuit Court's decision on their own motion, by quashing it. Instead, Claimant argues, the Supreme Court of Justice unlawfully shifted the burden of proof on Le Bridge, holding that it should have demonstrated that Dufremol had not complied with the preliminary application procedure.

(iv) Failure to abide by the mandatory limitation period

218.
On May 28, 2010, the Economic Circuit Court ruled in favour of Dufremol disregarding that it had failed to institute legal proceedings within the statutory 30-day limitation period applicable to actions seeking the cancellation of administrative acts. The Economic Court of Appeal also disregarded the expiry of the applicable limitation period, while the Supreme Court of Justice failed to justify why Dufremol would not be barred from instituting legal action after the limitation period had lapsed.

(v) Violations of due process

219.
During the hearing of May 28, 2010, the Economic Circuit Court admitted irregular changes to Dufremol's claim (which was orally amended), while simultaneously refusing to afford the defendant (i.e. Le Bridge) any opportunity to present its case in respect of such amended claim. In Claimant's view, the Economic Court of Appeal ignored these procedural irregularities, and the Supreme Court of Justice refused to admit Le Bridge's appeal on cassation, while overstepping its authority and examining the substance of the matter in detail.

(b) Substantive denial of justice

220.
Claimant argues that Moldova's judiciary, on several occasions and in relation to both the airport and the border store proceedings, misapplied the law so blatantly, arbitrarily and unjustly that the resulting decisions also qualify as a substantive denial of justice.

(i) Cancellation of the Lease Agreement

221.
On November 16, 2010, the Economic Circuit Court cancelled the Lease Agreement on the grounds that the premises allotted to Le Bridge should have been granted through a tender and that the Lease Agreement had not been preliminarily approved by the SACA. The Economic Court of Appeal affirmed this decision on February 28, 2011, as did the Supreme Court of Justice on June 10, 2011, both courts thereby failing to correct the grave misapplications of the law.

(ii) Cancellation of the Tender results and of the July 1, 2008 Agreement

222.
On May 28, 2010, the Economic Circuit Court cancelled the Tender results and the July 1, 2008 Agreement on the grounds that Le Bridge did not have the requisite experience in the field of duty free to have won the Tender, thus reformulating the original Tender requirements. The Economic Court of Appeal, on September 7, 2010, and the Supreme Court of Justice, on November 24, 2010, both confirmed the Economic Circuit Court's decision, equally ignoring the clear and unambiguous language of the Tender.

(iii)Ultra petita decisions

223.
On May 28, 2010, the Economic Circuit Court ordered the national Customs Service to withdraw its acceptance of the lease agreements entered into by the local customs offices and Le Bridge, despite the fact that Dufremol had never requested such relief. On September 7, 2010, the Economic Court of Appeal ruled that Dufremol was the winner of the Tender, again despite the fact that Dufremol had never requested such relief. The Supreme Court of Justice failed to address and remedy these violations in its decision of November 24, 2010.

(iv) Compensation

224.
In the further alternative, Claimant notes that, even assuming that the acts and omissions of Respondent and its organs were not committed in breach of the BIT and international law, and further assuming that the decisions of the judiciary do not constitute a denial of justice, it remains undisputed that a taking of his investment in the duty free sector took place. For this he is owed compensation. Respondent's compliance with international law requirements in relation to expropriation would only make the taking lawful, but would still leave Claimant uncompensated, in breach of the BIT and international law.

2. Respondent's Counter-Memorial

a) Alleged Breaches

(i) Expropriation of Claimant's investment: Article 5 of the BIT

225.
Even if the Tribunal were inclined to define "investment" in a broader way than Respondent submits is possible under the Treaty, and thus to find that it has jurisdiction to hear this dispute, the expropriation claim nevertheless fails on the merits.
226.
Firstly, the specific wording of Article 5 of the BIT limits expropriation claims to losses of directly-owned investments. Only Le Bridge had a possessory interest in the rights at issue and thus only Le Bridge would be protected against being dispossessed of that interest.
227.
Secondly, the application of existing law of general application to rights arising in areas concerning the lease of State property, the organisation of State tenders and regulation of competition is classically understood to be at the core of a State's police power. The application of such laws leading to the loss of property is consistently understood to amount to a non-compensable regulatory measure and not a compensable taking. In most cases, these regulatory measures were applied not as a result of any interference by the State, but rather as a result of the actions of private competitors who disliked the fact that Le Bridge had obtained all of its rights unlawfully. All of Mr. Arif's alleged "deprivations" in fact result from the application of the generally applicable regulatory power of Moldova.
228.
The fundamental flaw in Claimant's position with regard to the airport duty free store and the alleged exclusivity right pursuant to the Tender and the July 1, 2008 Agreement, is that he seeks to be excused from complying with local legislation regarding his investment. If the law applicable to a property right properly calls for the annulment of that right, then the mere effect of that existing law cannot be expropriatory because the investor has no legitimate right to protect.
229.
With regard to the exclusivity right, the application of existing rules regulating competition, which were in force at the time an investor made his investment, cannot support a claim for expropriation under international law.
230.
With regard to the border stores, the Supreme Court's decision of November 24, 2010 cancelled the results of the Tender and the July 1, 2008 Agreement because of violations of mandatory tender requirements, but that decision did not cancel the individual leases for the border stores. Le Bridge continues to operate the border duty free stores in Moldova and to derive substantial revenue from them. Moreover, Mr. Arif has not lost his title in his shares of Le Bridge and Le Bridge maintains an active profitable duty free business, such that Mr. Arif has not been deprived of the use and benefit of his investment. Under these circumstances, it is not possible to find an expropriation under international law.

(ii) Breach of the "specific commitments" obligation: Articles 9, 5 and 4 of the BIT

231.
Respondent cannot have violated a "specific undertakings" obligation under the Treaty because the Treaty neither contains nor imports any such obligation. In any event Respondent did not breach any commitments to Claimant.
232.
With regard to the Lease Agreement, the essence of Claimant's argument is that rights created by a contractual "undertaking" were taken by judicial action. The claim as stated is indistinguishable from the expropriation claim and the Tribunal is referred to Respondent's analysis with regard to expropriation.
233.
With regard to the July 1, 2008 Agreement, all of the undertakings included in it are subject to Moldovan law. However, the entire Agreement is a nullity under Moldovan law because (i) the exclusivity clause was in flagrant violation of Moldovan law and (ii) the exclusivity clause being a sine qua non for the entry into the Agreement, the nullity of that clause leads to the nullity of the entire agreement. Because the July 1, 2008 Agreement is a nullity under Moldovan law, Respondent cannot have breached any of its provisions.
234.
In relation to the alleged exclusivity rights, the NACP's review of the July 1, 2008 Agreement to see if it complies with mandatory legislation cannot possibly amount to a breach of that same contract merely because another State entity was a party. The NACP simply performed its regulatory function. Respondent never made any undertaking to Claimant that he or Le Bridge would be exempt from Moldovan competition law.
235.
Claimant has argued that Respondent breached its specific commitments when the Supreme Court decided on November 24, 2010, to cancel the Tender results and the July 1, 2008 Agreement. Respondent replies that a court's review of the legality of a Tender or a contract and its subsequent decision to annul them cannot possibly amount to a breach of the Tender or contract obligations merely because the State was a party.
236.
Even if the July 1, 2008 Agreement were valid, it is patently false to allege that the Customs Service did not allocate appropriate premises to Le Bridge for the duty free store in Ungheni.

(iii) Breach of FET: Article 3 of the BIT

237.
With respect to FET, Respondent contends that Claimant could not legitimately expect that he could acquire rights in violation of local law or that the local authorities and courts would not apply it. It is incontrovertible that, pursuant to the Treaty, investors must make their investments in compliance with local legislation. Absent any specific and explicit State assurance that the investor was for some proper reason exempt from these generally applicable provisions, the investor cannot make out a violation of international law merely because he found himself properly subjected to the domestic law governing his actions.
238.
In particular, with regard to the airport store, the Lease Agreement was signed in contravention of the applicable laws on the lease of state property; therefore, no legitimate expectations could be derived from it. It was entirely illegitimate to consider that Le Bridge could negotiate directly with the airport based on the Tender because the Tender simply did not relate to the airport. The tender offer created no legitimate expectation of obtaining the Lease Agreement. Legitimate expectations must be based on explicit representations by the authorities that are competent to make those statements as an inducement to invest.
239.
Regarding the seizure of the goods at the airport store, because the duty free premises are in a restricted zone of the airport, the authorities could not permit Le Bridge to access the area when the lease was suspended by a court order. Le Bridge ultimately recovered its goods once the litigation was finished.
240.
Regarding the disciplinary proceedings against Judge Namasco, this matter could not affect an investment and did not relate to the decision to invest. Therefore, Respondent could not have breached any Treaty obligation in this respect.
241.
With regard to the border stores, Respondent makes the following arguments. In relation to Ungheni, Respondent claims that the Customs Service did in fact offer the exact the location that Claimant had expected to have since the Tender began.
242.
A contractual commitment is not the type of specific assurance that can create legitimate expectations for an investor. The insertion into a State contract does not, without more, provide the type of specific representation to promote investments that can found a FET claim.
243.
Neither Mr. Arif, nor Le Bridge had any legitimate expectation that Le Bridge would not be required to make changes in order for the stores to comply with fire safety regulations. Mr. Arif's claim that the fire inspection authorities acted improperly is inconsistent with the facts. Investors have a due diligence obligation; they must be aware of and comply with local regulations. The application of such regulations in the interest of public safety cannot amount to a violation of the FET standard or of any other international law obligation.
244.
The fact that Le Bridge was allowed to open additional duty free stores at other border crossing points is evidence that it and Mr. Arif were treated fairly and equitably.
245.
Regarding the NACP, Claimant provides no analysis of how he could possibly have legitimately expected that he would be exempt from mandatory Moldovan law protecting consumers from anti-competitive measures. There was never any promise of exclusivity in the Tender. And with respect to the July 1, 2008 Agreement, the insertion of a right into a State contract does not, without more, provide the type of specific representation to promote investments that can found a FET claim.
246.
Regarding the alleged better locations granted to Dufremol, the State never promised that competitors would not receive more favourable positions at the border crossings. Even if he had any basis for such a legitimate expectation, Mr. Arif fails to demonstrate that the Customs Services in fact gave better locations to Dufremol or did so for improper motives.
247.
In relation to the cancellation of the Tender by the Supreme Court on November 24, 2010, the Supreme Court accurately described the legal requirements of the Tender and the illegality of the Tender award.
248.
With regard to the alleged harassment of Claimant due to the tax investigation, Respondent alleges that it commenced an investigation for tax violations by Mr. Arif and Le Bridge because it had very serious concerns that Le Bridge was illegally selling cigarettes and using its duty free business as a cover to avoid tax payments. The CCECC raid that Mr. Arif considers harassment was carried out pursuant to a warrant in furtherance of this investigation.

(iv) Arbitrary and unreasonable measures: Article 4 of the BIT

249.
The Treaty does not contain an express obligation not to impose unreasonable or arbitrary measures. Accepting Claimant's logic that this standard is applicable via the MFN clause and that it does not differ from the FET standard, (i) unreasonable and arbitrary measures protections are the same as FET protections, (ii) unreasonable and arbitrary measures protections are therefore by definition not more favourable than the protections already afforded in the treaty, and (iii) such protections therefore cannot be imported as an independent treaty standard via the MFN clause in Article 4, which requires application of other provisions only if they are more favourable.
250.
Claimant's arguments in favour of a violation of this obligation are indistinguishable from his arguments with respect to FET.

(v) Full Protection and Security: Article 5 of the BIT

251.
The text and context of Article 5(1) clearly indicate that the FPS obligation is to be understood in the classic sense of offering a level of due diligence on the part of the State to ensure the physical safety and integrity of protected investments.
252.
In any case, because Claimant relies entirely on an alleged violation of FET to establish a breach of FPS, Respondent's defences to the former are a full defence to the latter. Respondent reserves its right to address this issue further if Claimant seeks to present an independent basis for this claim.

(vi) Discriminatory measures: Article 4 of the BIT

253.
To the extent that Claimant seeks to import a "no discriminatory measures" obligation from other Moldovan BITs via the MFN clause in Article 4, his claim for the breach of that obligation should be dismissed for the same reasons as those pertaining to the claim over arbitrary and unreasonable measures.
254.
In the alternative, Claimant appears to equate the national treatment standard in Article 4 with a no discriminatory measure standard and to argue that Respondent has breached Article 4. Respondent alleges that there was no discrimination on the facts for the reasons stated below.
255.
With regard to the annulment of the Lease Agreement, the courts did not decide that Le Bridge's lease was invalid because no tender was held, but because the SACA had not given its prior approval either to a direct lease arrangement, after considering whether a tender should or should not be held, or to the terms of the Agreement itself. Mr. Arif cannot prove discrimination unless he can show that other lessees have been treated more favourably than Le Bridge under the same legal framework; or that the other airport tenant's leases were challenged in court and not cancelled.
256.
With regard to Dufremol's authorization to open border duty free stores, nothing in the Moldovan Customs Code requires the holding of a tender to grant a license to operate a duty free store. Moreover, the tender process held in 2008 nowhere indicated that the winner would have exclusive rights to operate border duty free stores.
257.
With regard to Dufremol's and Le Bridge's respective locations at Leuseni and Cahul, it was Le Bridge who selected its locations in both cases. The fence in front of Le Bridge's store in Leuseni was a legitimate measure meant to prevent admittedly illegal duty free shopping from occurring at Le Bridge's premises. And with regard to Claimant's argument that customers were prevented from shopping at Cahul, Respondent alleges that this incident is trivial and that a single incident in October 2011 can hardly show a pattern of discriminatory treatment by the Cahul Customs Service against Le Bridge.

(vii) Denial of Justice

258.
With respect to denial of justice, Respondent first notes that it refers to the treatment of litigants, not to the treatment of investments. Mr. Arif was not a party to any litigation in Moldovan courts and therefore he cannot demonstrate that Respondent administered justice to him in a fundamentally unfair way.
259.
Secondly, there is no evidence of corruption. In the absence of any proof of corruption or collusion with regard to any decision taken after November 2009 and thus in particular with respect to any decision of the Supreme Court of Justice, Respondent requests that these allegations be withdrawn by Mr. Arif and if not withdrawn, rejected by the Tribunal.

(a) No substantive denial of justice

260.
An international tribunal hearing a claim of substantive denial of justice is not authorised to act as an ultimate appellate court, reviewing decisions of domestic supreme courts for correctness. The only way a State judiciary's substantive decisions can amount to a violation of international legal standards is if they reach such a level of arbitrariness and egregiousness that they could not possibly have been rendered in good faith.
261.
The decisions rendered by the Moldovan Supreme Court in relation to the invalidity of the Lease Agreement and the Tender award are correct as a matter of substance. With regard to the Lease Agreement, at the time it was concluded there was no prior approval by the SACA (which chooses the lessee) and no authorization by the SACA to conclude the contract without prior tender (i.e. by direct negotiation), although this was required by law. With regard to the Tender, Respondent alleges that it was awarded to Claimant in breach of the requirement of experience of at least five years in the duty free sector.
262.
Claimant's allegation that the courts rendered ultra petita decisions by granting relief not requested by Dufremol - obliging the Customs Services to withdraw their consent to the border lease agreements and declaring Dufremol the winner of the Tender - does not withstand scrutiny. In neither of these cases did the Moldovan judiciary order relief that was anything more than the obvious consequence of the courts' legal findings based on the plaintiff's submission. In any case, Claimant has not even alleged that the ultra petita rulings themselves caused any prejudice relevant to this case. Even if they were considered ultra petita, the analysis by which the lower courts arrived at their decisions and the Supreme Court affirmed them is by no means so arbitrary or egregious to allow a finding of a substantive denial of justice.

(b) No procedural denial of justice

263.
With regard to the allegation of collusion, there is no evidence that the Moldovan judiciary colluded in any way with Le Bridge's competitors. The primary decisions regarding which Mr. Arif alleges collusion (the Economic Circuit Court's decisions ordering provisional measures at the airport) were consistently overturned by the Economic Court of Appeal in favour of Le Bridge. Given that only final decisions of the judiciary can be the basis for the international responsibility of a State, it follows that the decisions of the Economic Circuit Court do not engage the international responsibility of Moldova. Mr. Arif's allegation regarding the provisional measures issued by the Court of Appeal is presented in incredibly misleading terms.
264.
With regard to the lack of jurisdiction, Respondent notes that the boundaries between the civil and the administrative law courts are often blurred on issues of jurisdiction in cases involving conflicting private interests and the grant by state entities of leases and other typical private law instruments. The question of jurisdiction was not so simple that the mistake could be explained only by arbitrariness and egregious bad faith.
265.
With regard to the mandatory preliminary application procedure even though Dufremol was not able to produce the proof of registration of the application with the Ministry of Justice, it did provide proof of its preliminary application letter, which was accepted by the courts. And, with regard to the 30-day limitation period, the Supreme Court relieved Dufremol of this procedural bar after devoting an extensive analysis to the question and finding that Dufremol could not have had access to Le Bridge's Tender application, and thus to the necessary facts, within the statutory limit. Both issues were therefore thoroughly and thoughtfully debated by the courts. In any case, the analysis of the courts was not so arbitrary or egregiously wrong that the good faith of the Moldovan Supreme Court can be put into question.
266.
The allegation of a due process violation following the admission of an irregular oral amendment to Dufremol's claim during the hearing on the merits of May 28, 2010, is unfounded. Indeed, the amendment was in fact properly made and Le Bridge was provided with an opportunity to respond.

(viii) Compensation

267.
Claimant's alleged investment was not expropriated so no compensation is due.

b) Reparation

268.
Respondent cannot be required to make reparations unless Claimant has established a causal link between the alleged wrongful act and the alleged loss. No acts attributable to Respondent could have caused any loss to Claimant, even if those acts are determined to be internationally wrongful, because the rights that Claimant allegedly acquired were in fact unlawful by reason of conduct attributable to Claimant himself and Le Bridge.
269.
Restitution is the primary form of reparation for an internationally wrongful act. Although Claimant does not seek restitution, Respondent reserves the right to request that restitution be the relief ordered, if any, to the extent it is possible and lawful under the circumstances and in light of the particular obligation the Tribunal may determine that Respondent has breached.
270.
In the event that the Tribunal finds that it has jurisdiction and that there has been a denial of justice, but it also finds that Mr. Arif's alleged investments were invalid under Moldovan law, and therefore not subject to substantive protection, then Mr. Arif would be entitled to satisfaction in the form of a simple declaration of the wrongfulness of the State's actions. He would not be entitled to restitution or compensation.
271.
Should the Tribunal determine that damages are warranted, Respondent submits that the amount of compensation Claimant requests is grossly inflated. Moreover, Claimant is not entitled to moral damages.

3. Claimant's Reply

a) Alleged Breaches

(i) Expropriation: Article 5 of the BIT

272.
In his Reply, Claimant further makes the following submissions. Claimant's case of expropriation is not about "expropriation by denial of justice". Claimant does not need to show that he was denied justice for his claim of expropriation to prevail. It suffices, for a finding of unlawful expropriation, that the State has deprived Claimant of his investment (i) without a public purpose, and/or (ii) in a discriminatory manner; and/or (iii) contrary to a specific commitment; there is no need to show that Respondent denied justice to Claimant. This is a case of a taking by a State organ, namely the judiciary, whose acts can constitute an expropriation under international law.
273.
Respondent contends that Mr. Arif never "possessed" the rights that have allegedly been expropriated and therefore cannot be deprived of any investment. Claimant replies that Article 5 of the BIT protects investments indirectly owned by investors. Had the Parties intended to limit the protection against expropriation to investments directly belonging to an investor, they easily could have done so expressly. The fact that the BIT does not differentiate between direct or indirect investments can only mean that both are included.
274.
Respondent alleges that Mr. Arif's deprivation of his investments resulted from the application of the regulatory power of Moldova. Respondent does not allege, let alone prove, that its acts and omissions that led to the loss of Claimant's investment were aimed at the general welfare, or were required to protect the population. It is well settled that the exercise by the State of its "police powers" cannot excuse the State from complying with its specific commitments. In any event, in order not to entail compensation, a regulatory measure should be exercised legitimately, i.e. in a non-discriminatory manner, in good faith and for the sake of general welfare.
275.
With regard to the Lease Agreement and the exclusivity right, Claimant alleges that, assuming for the sake of argument that they were invalid pursuant to Moldovan law, Moldova is estopped from invoking their invalidity because it was Moldova itself that granted him these rights. Moreover, under international law, a State cannot rely on its internal law to invalidate its own obligations.
276.
Claimant further alleges that, by irrevocably cancelling the Tender results and the July 1, 2008 Agreement, Respondent took away his right to operate the duty free stores at the borders -the very basis of his investment. Although he still operates these stores on the basis of a mere technicality in order to mitigate his damages Claimant's investment has lost its value.

(ii) Breach of the "specific commitments" obligation: Article 9, 5 and 4 of the BIT

277.
Claimant makes several additional submissions. With regard to the airport duty free store, all of Respondent's defences in relation to expropriation which fail, for the reasons set forth regarding expropriation, are also misplaced in relation to Respondent's breach of its specific commitments. Irrespective of whether the Tribunal finds that Claimant's investment was expropriated, be it unlawfully or lawfully, the Tribunal can find that Respondent breached its specific undertakings towards Claimant, and award Claimant compensation for this reason alone.
278.
With regard to the border stores, the July 1, 2008 Agreement is valid pursuant to Moldovan law, irrespective of the validity of the exclusivity provision. In any event, the exclusivity clause is valid. Irrespective of the validity and/or legality of the July 1, 2008 Agreement, the deprivation by Respondent still violates its specific undertaking.
279.
Respondent's argument with regard to Ungheni fails on the facts. Moreover, whether the NACP acted within the scope of its competence when it considered the validity of the exclusivity clause, or whether the NACP's decision was legal is irrelevant for a finding that Respondent breached its specific commitments. In any event, the NACP's decision was illegal.

(iii) Breach of FET: Article 3 of the BIT

280.
Claimant submits that Respondent does not dispute that it breached its good faith obligations by ignoring its specific commitments. Even if the Tribunal found that Respondent did not breach Claimant's legitimate expectations, it would still have to find that Respondent breached the FET standard as it has breached its obligations of good faith and consistency.
281.
Claimant argues that the invalidity of rights under municipal law, if they created expectations to the investor, cannot be invoked against him to allege that those expectations were not legitimate. Claimant does not allege a breach of his legitimate expectations because Respondent failed to perform a contractual agreement, but because the State declared that agreement invalid after having agreed to it. The State cannot assert the invalidity of a contract which it drafted and concluded.
282.
With regard to the airport store, Mr. Arif was certain that Moldova fully approved and supported his investment. The legality of the Lease Agreement is irrelevant for purposes of Mr. Arif's legitimate expectations. There is no reason why Le Bridge could have reasonably known that, by putting its goods at the airport, it would never be able to have access to them before they became outdated and/or expired.
283.
Claimant's legitimate expectation that he would finally be allowed to open his flagship store at the airport arises out of the express admission of the Attorney General that there were grounds to discipline Judge Namasco for his decision of November 10, 2009, which prevented Mr. Arif from opening the store. Claimant was left hanging in limbo and was eventually told that the disciplinary proceedings had been terminated, without any further explanation.
284.
With regard to the border stores, Claimant further alleges the following. In relation to Ungheni, the Customs Service did not offer to Le Bridge the location that Claimant expected to have since the Tender began. Le Bridge's legitimate expectation to open a duty free store in Ungheni arose out of both the Tender, and the July 1, 2008 Agreement.
285.
The fire inspection authorities interfered just before the opening of Claimant's stores, despite Claimant's legitimate expectation to be able to open his stores after having received all necessary certificates.
286.
Regarding the intervention of the NACP, Claimant's legitimate expectations for exclusivity do not arise out of purely contractual rights. They arise out of the fact that different organs of Moldova promised him exclusivity. Claimant is not claiming a breach by Moldova of the July 1, 2008 Agreement but a breach of international law. Claimant legitimately expected that the State would act with consistency and transparency, and that his exclusivity right, granted by various organs of Moldova, would not be taken away by other organs, namely the NACP and subsequently the local Customs Services.
287.
Regarding the locations granted to Dufremol in Leuseni and Cahul, Claimant legitimately expected to be granted exclusivity on the border crossings. Claimant also legitimately expected that the State would act in good faith towards his investment and himself.
288.
Regarding the cancellation of the Tender and the July 1, 2008 Agreement by the Supreme Court's decision of November 24, 2010, the judiciary, an organ of the State, took away from Claimant what other organs had granted him and what he believed in good faith to be valid. Irrespective of the correctness of the court's decision, it has resulted in a breach of Claimant's legitimate expectations. Indeed, Claimant legitimately expected to be treated with consistency by the State, and that the State would act in good faith in relation to his investment.
289.
With regard to Claimant's harassment, Claimant did also have legitimate expectations that the State would act in good faith in relation to his investment. He could not have legitimately expected that he would be subject to tax evasion allegations without any justification, having been one of the most reliable Moldovan taxpayers over the years, and without allegations of wrongdoing having ever been raised against him.

(iv) Arbitrary and unreasonable measures: Article 4 of the BIT

290.
Claimant maintains by way of precaution that he is entitled to be protected against such measures pursuant to the MFN clause of the BIT, in case the Tribunal should find that the standard differs from that of the FET standard.

(v) Full Protection and Security: Article 5 of the BIT

291.
Claimant further argues that a treatment that is unfair and inequitable automatically entails the absence of full protection and security, and that the FPS standard is related to the FET standard of the BIT.
292.
If the Parties had intended to limit the State's obligation of FPS to physical interferences, they would have expressly stated so in the BIT, but they did not. Consistent ICSID case law confirms that the FPS standard encompasses the legal security in which an investment operates.

(vi) Discriminatory measures: Article 4 of the BIT

293.
Claimant had an exclusive right to operate duty free stores at the Romanian borders. This right arose from both the Tender and the July 1, 2008 Agreement. Indeed, the July 1, 2008 Agreement specifically indicated that the only way a competitor would be able to open a duty free store at the border crossings was by winning a public tender organized to this effect after the expiry of the Agreement. This notwithstanding, Dufremol was granted the right to open duty free stores at Leuseni and Cahul via a directly negotiated lease contract and before the expiry of the July 1, 2008 Agreement.
294.
Mr. Arif points out that Respondent does not dispute that Article 4 of the BIT encompasses protection against discriminatory measures. Claimant adds that this protection also stems from the MFN clause of the BIT.

(vii) Denial of Justice

295.
Claimant further alleges in his Reply that, if a judicial system is unable, incapable or unwilling to correct the actions of individual judges who patently disregarded fundamental procedural rules, then the State which is responsible for the administration of justice cannot be excused from the international delict that stems from that failure of the judiciary. The State therefore has full responsibility for the damage that the foreigner suffered as a result of the judiciary's delict.
296.
Mr. Arif has not made any specific claims of corruption against the Moldovan judiciary, other than noting the content of reports published by international organizations.
297.
Denial of justice is a breach of FET. As such, there is no need for Mr. Arif to have been denied justice personally, as alleged by Respondent. Rather, it is sufficient for a denial of justice to have taken place which deprived Mr. Arif of his investment; this in turn, constitutes a breach by Moldova of its obligations to accord FET to Claimant's investments. Given that the BIT protects indirect investments, it is undisputable that Mr. Arif in his capacity as an indirect investor, has standing before this Tribunal to bring a claim against Moldova for breaches of its obligations under the BIT and international law.
298.
Claimant reiterates his position that he was the victim of both a procedural and a substantive denial of justice. With regard to the latter Moldova egregiously misapplied the law by unlawfully cancelling the Lease Agreement, the Tender results and the July 1, 2008 Agreement.
299.

Claimant alleges that the Airport State Enterprise sent to the SACA for approval the Airport Lease Agreement, which is virtually identical to the sample lease agreement contained in Regulation No. 483. The Airport Lease Agreement itself makes clear, at Articles 3.1 and 8.1, that it is effective only once it has been approved by the SACA. The lessee selection procedure, i.e. direct negotiations as opposed to a tender, is also implicitly indicated in the Airport Lease Agreement, as there is no reference to a tender, but rather a preamble stating that the Airport State Enterprise and Le Bridge "have concluded the following Agreement." On August 5, 2008, the SACA approved the Airport Lease Agreement including, implicitly, the lessee selection procedure, and returned it to the Airport State Enterprise. The Board of Directors of the Airport State Enterprise then officially endorsed the Airport Lease Agreement by way of Minutes No. 9, dated August 13, 2008.

300.
With regard to the Tender, Claimant reiterates that the Moldovan courts dishonestly reformulated one technical specification in the Tender documents, by requiring 5 years of experience in the duty free sector rather than in commercial activity in general.

(viii) Compensation

301.
Respondent's non-payment of compensation for the expropriation of Claimant's investment constitutes a further breach of its obligations under the BIT and international law.

b) Reparation

302.
With regard to causation, neither Le Bridge's successful participation in the Tender nor the July 1, 2008 Agreement nor the Lease Agreement are invalid pursuant to Moldovan law. The Tender, the July 1, 2008 Agreement, and the Lease Agreement are State acts that were fully endorsed by Moldova, and it is on this basis that Mr. Arif made his investment in the duty free sector. In any event, any invalidity under Moldovan law would be inapposite to Mr. Arif under international law.
303.
With regard to restitution, the Tribunal should either deny Moldova's reservation of rights or accept such reservation and acknowledge the corollary of a request for restitution, namely that Mr. Arif's rights cannot be illegal under Moldovan law.
304.
With regard to satisfaction, Mr. Arif reiterates that his denial of justice claim is an alternative claim and further reiterates that the Tender results, the July 1, 2008 Agreement and the Lease Agreement were all carried out in accordance with Moldovan law. In any event, Respondent's contention that satisfaction is the appropriate remedy is unsupported by ICSID case law, as it applies solely to State-to-State disputes.

c) Claim for Relief

305.

Claimant respectfully requests the Arbitral Tribunal, without prejudice to any other/further claims Claimant might be entitled to in this Arbitration, to:

a) Dismiss Respondent's objections to the Tribunal's jurisdiction in their entirety;

b) Find that it has jurisdiction over Mr. Arif's claims and find Claimant's claims are admissible;

c) Declare that Respondent has breached its obligations toward Claimant under the BIT and international law;

d) Order Respondent to pay Claimant damages in the amount of €27,962,700 for Respondent's breaches of its obligations under the BIT and international law, which resulted in delays to the opening of all four border duty free stores, in the loss of exclusivity at two stores, and the taking of his investment, as set forth at paragraph 701 of Claimant's Reply;

d.1) Alternatively, order Respondent to pay Claimant damages in the amount of €23,326,700, as set forth at paragraph 702 of Claimant's Reply;

d.2) As a second alternative, order Respondent to pay Claimant damages in the amount of €19,149,800, as set forth at paragraph 703 of Claimant's Reply;

d.3) As a third alternative, order Respondent to pay Claimant damages in the amount of €16,120,800 as set forth at paragraph 704 of Claimant's Reply.

e) Order Respondent to pay Claimant damages in the amount of €5,407,600 for Respondent's breaches of its obligations under the BIT and international law, which prevented Claimant from ever opening his airport duty free store, and resulted in the cancellation of the Airport Lease Agreement;

e.1) Alternatively, order Respondent to pay Claimant the sunk costs associated with the airport store, which amount to €2,455,110;

f) Order Respondent to compensate Claimant in the amount of EUR 5,000,000 for the damages Claimant suffered, including harassment, intimidation, humiliation, shame, shock, stress, degradation, loss of personal reputation as well as loss of corporate credit affecting his broader business activities;

g) Order Respondent to pay Claimant the costs of this arbitration, including all expenses that he has incurred, and including all of the fees and expenses of the arbitrators, ICSID, legal counsel, experts and consultants, as well as Claimant's expenses in pursuing this arbitration;

h) Order Respondent to pay Claimant compound interest at a rate of LIBOR +2 compounded semi-annually, to be established on the above amounts as of the date these amounts are determined to have been due to Claimant;

i) Order Respondent to pay the above amounts outside of the Republic of Moldova without any right of set-off; and

j) Order any other and further relief as the Arbitral Tribunal shall deem appropriate.

306.

In his letter of December 3, 2012 to ICSID, Claimant amended his claim for relief in the following terms:

"In closing, Claimant reiterates his amended relief sought as follows:

12. Claimant's request for relief remains for compensation of damages arising out of Moldova's breaches of the BIT and/or international law, which resulted in (i) the delayed opening of the four duty free border stores, (ii) the loss of exclusivity at two stores, (iii) the taking of his investment in respect of the four border stores, (iv) the taking of his investment in relation to the Airport, and (v) moral damages, namely, as set forth at paragraph 812 of the Reply:

12.1. Dismiss Respondent's objections to the Tribunal's jurisdiction in their entirety;

12.2. Find that it has jurisdiction over Mr. Arif's claims and find Claimant's claims are admissible;

12.3. Declare that Respondent has breached its obligations toward Claimant under the BIT and international law;

12.4. Order Respondent to pay Claimant damages in the amount of €27,962,700 for Respondent's breaches of its obligations under the BIT and international law, which resulted in delays to the opening of all four border duty free stores, in the loss of exclusivity at two stores, and the taking of his investment in respect of the border stores, broken down, as also set forth in the Reply at paragraph 701, as follows:

€554,791 for the delays,

€22,765,500for the loss of exclusivity,

€4,636,010 for the taking of his investment in respect of the four border stores.

12.4.1. In the alternative, if the Tribunal believes that the dispute in relation to the taking of Claimant's investment in respect of the border stores is not ripe, Claimant's claim is for damages in the amount of €23,326,700, as set forth at paragraph 702 of the Reply, comprising of €554,791 for the delays, and €22,765,500 for the loss of exclusivity, together with the amended request for declaratory relief set forth below at paragraph 13.

12.4.2. As a second alternative, if the Tribunal were to determine that the dispute in relation to the border stores is ripe, and in case it deems that Claimant would only have benefited from the limited period from November 2009 until August 1, 2023, and that the border stores would be definitively closed by 2013, Claimant's claim is for damages in the amount of €19,149,800, broken down, as set forth at paragraph 703 of the Reply, as follows:

€542,037 for the delays,

€15,572,400 for the loss of exclusivity,

€3,029,030 for the taking of his investment in respect of the four border stores.

12.4.3. As a third alternative, if the Tribunal believes that the dispute in relation to the taking of Claimant's investment in the border stores is not ripe, and in case it deems that Claimant would only have benefited from the limited period from November 2009 until August 1, 2023, Claimant's claim is for damages in the amount of €16,120,800, as set forth at paragraph 704 of the Reply, comprised of €542,037 for the delays, and €15,572,400 for the loss of exclusivity, together with the amended request for declaratory relief set forth below at paragraph 13 below.

12.5. Order Respondent to pay Claimant damages in the amount of €5,407,600 for Respondent's breaches of its obligations under the BIT and international law, which prevented Claimant from ever opening his Airport duty free store, and resulted in the cancellation of the Airport Lease Agreement;

12.5.1. Alternatively, order Respondent to pay Claimant the sunk costs associated with the Airport store, which amount to €2,455,110.

12.6. Order Respondent to compensate Claimant in the amount of EUR 5,000,000 for the damages Claimant suffered, including harassment, intimidation, humiliation, shame, shock, stress, degradation, loss of personal reputation as well as loss of corporate credit affecting his broader business activities;

12.7. Order Respondent to pay Claimant the costs of this arbitration, including all expenses that he has incurred, and including all of the fees and expenses of the arbitrators, ICSID, legal counsel, experts and consultants, as well as Claimant's expenses in pursuing this arbitration;

12.8. Order Respondent to pay Claimant compound interest at a rate of LIBOR +2 compounded semi-annually, to be established on the above amounts as of the date these amounts are determined to have been due to Claimant;

12.9. Order Respondent to pay the above amounts outside of the Republic of Moldova without any right of set-off; and

12.10. Order any other and further relief as the Arbitral Tribunal shall deem appropriate.

13. As an alternative to Claimant's claim for damages arising out of the taking of the border stores, in case the Tribunal were to find that the dispute is not ripe in respect of the taking of Claimant's investment in the border stores, Claimant requests a declaratory relief to the effect that Claimant has an entitlement under international law to continue operating the four border stores, reinforced by an order against Respondent to pay a sum of 10,000 USD per store, per day of interruption, throughout the duration of the four border lease agreements, plus the renewal period, i.e. until August 1, 2038, in case Respondent or one of its organs, authorities or agencies were to prevent the operation of the four border stores save for any fundamental breach under international law by Claimant of its obligations in relation to the lease agreements.

14. In such case, the claims for damages as a result of the breach of the BIT in relation to the delays and the loss of exclusivity will remain unchanged, namely in the amount of €23,326,700, as set forth at paragraph 12.4.1. above."

4. Respondent's Rejoinder

a) Alleged Breaches

(i) Expropriation: Article 5 of the BIT

307.
Respondent reiterates its arguments and further alleges the following. Claimant must demonstrate that the "investment" allegedly expropriated actually "belonged" to him, as required by Article 5 of the BIT. All of Respondent's measures were aimed at the "general welfare" and fall squarely within the scope of police powers. Claimant cannot identify any specific commitment of the State in the Tender, the July 1, 2008 Agreement or the Lease Agreement to the effect that the State would have exempted Le Bridge and Mr. Arif from the application of Moldovan law as a special inducement for the investment. With regard to the airport store, Respondent submits that the cancellation of the Lease Agreement does not constitute an expropriation within the meaning of Article 5 of the BIT because it resulted from the application of Moldovan law on the lease of unused State Property to a lease that had been entered into in violation of those laws. Respondent also alleges that successive arbitral awards have held that expropriation by court decisions requires a finding of a denial of justice, whether procedural or substantive. The Moldovan law on the lease of unused State assets is not contrary to Moldova's international obligations, Respondent argues. Therefore, the application of that law does not put Moldova in contradiction with its international obligations.
308.
With regard to the exclusivity right, Respondent notes that the list of state monopolies excluded from the scope of the Law on Protection of Competition does not include the duty-free business, fact which Claimant himself recognized in a letter to the Ministry of Economy. With regard to the border stores, Respondent submits that, on October 17, 2012, the Supreme Court of Justice overturned the decision of the Chisinau Court of Appeal of December 28, 2011 invalidating the local lease contracts and, as a result thereof, Le Bridge continues to operate the border stores.

(ii) Breach of the "specific commitments" obligation: Articles 9, 5 and 4 of the BIT

309.
Respondent further alleges in relation to the July 1, 2008 Agreement that Le Bridge and a State organ simply entered into a contract that was subject to Moldovan law. Rather than providing any guarantee that the entire Agreement was valid or not subject to local law, the Agreement (i) was explicitly subject to Moldovan law and (ii) specifically contemplated the potential invalidity of provisions by including a severability clause in Clause 20.5. Neither the NACP nor the Moldovan Courts, which were undeniably competent to apply the law, can be accused of having purported to accept the validity the July 1, 2008 Agreement, only to reverse that position at a later date.

(iii) Breach of FET: Article 3 of the BIT

310.
This is not a case of a State reneging on its own promises, but rather of the normal operation of State regulation - moreover instigated by claims of a private competitor, and not the government - to verify whether a private actor behaved in conformity with the law.
311.
Le Bridge itself committed acts in violation of Moldovan law in order to lay claim to a number of "investment" rights. Claimant cannot now rely on these rights to argue that these created legitimate expectations. Le Bridge entered into those contracts with full knowledge of the risk it was taking. No State actor ever made any representations to Mr. Arif to make him believe that he had complied with the law.
312.
With regard to the cancellation of the Tender by the Supreme Court on November 24, 2010, Respondent further argues that it is entirely consistent with the proper administration of the State that the judiciary should review and cancel contractual arrangements when those have been entered into by reason of a misrepresentation made by the investor, as that is the only guarantee of fair and open competition.

(iv) Arbitrary and unreasonable measures: Article 4 of the BIT

313.
Given that Claimant has refused to withdraw this improper claim, despite admitting to its flaws, Respondent requests that the Tribunal dismiss it.

(v) Full Protection and Security: Article 5 of the BIT

314.
Claimant has failed entirely to make an independent claim of violation of the full protection and security obligation. The BIT addresses FPS and FET in two separate articles.

(vi) Discriminatory measures: Article 4 of the BIT

315.
Respondent further alleges that it does not accept that non-discrimination is a stand-alone standard of the Treaty, as opposed to an element of FET.

(vii) Denial of Justice

316.
Respondent further submits that all of Claimant's arguments relating to the court proceedings are at their heart merely requests that this Tribunal review and reconsider decisions of the Moldovan judiciary as if they were before it on appeal.

(viii) Compensation

317.
Respondent has already refuted Mr. Arif's claim that he should be compensated even if no illegal expropriation is established.

b) Reparation

318.
With regard to causation, should the Tribunal find that Mr. Arif and Le Bridge did act illegally, but agree with Claimant that this is irrelevant, then, even if Respondent's judicial and competition authorities violated international legal norms when they reacted to that illegality, it remains the case that, but for Mr. Arif's and Le Bridge's unlawful acts, Claimant would have suffered no harm.
319.
With regard to restitution, should the Tribunal find that it has jurisdiction in this case and that Moldova has committed one or more internationally wrongful acts, Respondent requests that it should be granted the right to determine within 60 days, in light of each of the breaches thus found, if restitution appears materially possible and, in that case, to provide restitution as an alternative to any damages the Tribunal may award. Such a remedy would put Claimant exactly in the position he would have been in had there not been any violation of the BIT. Such a remedy would avoid giving Claimant windfall profits for the exclusivity that he seeks to obtain by an order of damages.
320.
With regard to satisfaction, should the Tribunal find that the Moldovan judiciary engaged in egregious conduct amounting to a procedural denial of justice, but that Mr. Arif's investments were in any event unlawful, then a declaration of wrongfulness and an apology for the conduct of the courts would be the appropriate remedy.

c) Claim for Relief

321.
For the foregoing reasons, Respondent respectfully requests the Tribunal to:

a) Declare that it does not have jurisdiction over Claimant's claims;

b) To the extent it decides it has jurisdiction over Claimant's claims for a breach of a "specific undertaking," declare that such claims are inadmissible;

c) To the extent it decides it has jurisdiction over Claimant's claims, and that they are admissible, declare that Respondent has not breached any of its obligations toward Claimant;

d) To the extent it decides that Respondent committed an internationally wrongful act through a denial of justice, declare that satisfaction by way of a declaration of wrongfulness is the appropriate form of reparation;

e) To the extent it declares Respondent responsible for any internationally wrongful acts towards Claimant for which compensation is required, decide that Respondent's duty of reparation shall be in the form of either restitution, to be provided at Respondent's option within 60 days of receipt of the final award, or payment in amounts not to exceed those indicated in paragraphs 826/827 of the Counter-Memorial;

f) To the extent it declares Respondent liable to pay damages for the expropriation of any investment, to order Claimant to transfer all rights and interests in such investments to Respondent upon payment of the ordered damages; and

g) Order Claimant to pay Respondent's expenses (including legal and expert fees and disbursements) and the other costs of the arbitration, pursuant to Article 61(2) of the ICSID Convention and Article 47(1)(j) of the ICSID Arbitration Rules.

322.

In its letter of December 3, 2012 to ICSID Respondent stated that: "Respondent indicated at the hearing, restitution of exclusivity rights would in the event not be possible to implement, as such rights would violate the mandatory rules of Moldovan law on the protection of competition... Respondent does not consider it necessary to amend the relief requested at paragraph 490(E) of the Rejoinder, as set out above, except as clarified in this letter with respect to exclusivity."

V. JURISDICTION

A. Provisions Applicable to the Tribunal's Jurisdiction

323.
The provisions applicable to the Tribunal's jurisdiction are Article 25 of the ICSID Convention and Articles 1 and 7 of the BIT.
324.

Article 25 of the ICSID Convention reads in its relevant part:

"(1) The jurisdiction of the Centre shall extend to any legal dispute arising directly out of an investment, between a Contracting State (or any constituent subdivision or agency of a Contracting State designated to the Centre by that State) and a national of another Contracting State, which the parties to the dispute consent in writing to submit to the Centre. When the parties have given their consent, no party may withdraw its consent unilaterally.

(2) "National of another Contracting State" means:

(a) any natural person who had the nationality of a Contracting State other than the State party to the dispute on the date on which the parties consented to submit such dispute to conciliation or arbitration as well as on the date on which the request was registered pursuant to paragraph (3) of Article 28 or paragraph (3) of Article 36, but does not include any person who on either date also had the nationality of the Contracting State party to the dispute..."

325.

Article 7 of the BIT is entitled "Settlement of disputes between an investor and a Contracting Party" and reads:

"Any disputes relating to investments between one of the Contracting Parties and a national or a company of the other Contracting Party will be settled amicably between the two parties involved.

If such dispute cannot be settled within six month following a party to the disputes' raising of it, it will be submitted, at the request of one of these parties, to the arbitration of the International Centre for the Settlement of Investment Disputes (ICSID), created by the Convention on the Settlement of Investment Disputes between States and nationals of Other States, signed in Washington, on March 18, 1965."

B. Analysis

1. Admissibility of Respondent's Objections to Jurisdiction

327.

Rule 41(1) of the ICSID Arbitration Rules states: "Any objection that the dispute or any ancillary claim is not within the jurisdiction of the Centre or, for other reasons, is not within the competence of the Tribunal shall be made as early as possible. A party shall file the objection with the Secretary-General no later than the expiration of the time limit fixed for the filing of the counter-memorial, or, if the objection relates to an ancillary claim, for the filing of the rejoinder-unless the facts on which the objection is based are unknown to the party at that time."

328.
Respondent requested an extension for the filing of its Counter-Memorial by letter of April 2, 2012. Under the authority granted to the Tribunal by the Parties, pursuant to Sections 10.2 and 13.3 of the Minutes of the First Session, by letter of the Secretariat to the Parties on behalf of the Tribunal of April 5, 2012,110 the Tribunal amended the calendar of the proceedings granting to Respondent an extension for the filing of its Counter-Memorial on jurisdiction, merits, and quantum until May 31, 2012.
329.
Respondent filed its jurisdictional objections with its Counter-Memorial within the time limit fixed in the amended calendar, in compliance with Article 41(1) of the Arbitration Rules. Moreover, the Tribunal is satisfied that Respondent filed its jurisdictional objections in good faith as early as possible in light of the amended procedural calendar. Claimant's argument that the Tribunal has authority to amend time limits for the filing of the Counter-Memorial but not for the filing of jurisdictional objections finds no support in the ICSID Arbitration Rules and is based in an improper reading of Article 41(1) of the Arbitration Rules. Therefore it is rejected by this Tribunal.
330.
Accordingly, Claimant's objections to the admissibility of Respondent's objections to jurisdiction are rejected.

2. Amicable Settlement

331.

Article 7 of the BIT provides:

"Any disputes relating to investments between one of the Contracting Parties and a national or company of the other Contracting Party will be settled amicably between the two parties involved.

If such dispute cannot be settled within six month following a party to the disputes' raising of it, it will be submitted, at the request of one of these parties, to the arbitration of the International Centre for Settlement of Investment Disputes (ICSID), created by the Convention on the Settlement of Investment Disputes between States and nationals of Other States, signed in Washington, on March 18, 1965."

332.

Article 26 of the ICSID Convention provides that: "Consent of the parties to arbitration under this Convention shall, unless otherwise stated, be deemed consent to such arbitration to the exclusion of any other remedy. A Contracting State may require the exhaustion of local administrative or judicial remedies as a condition of its consent to arbitration under this Convention."

335.
Therefore, the Tribunal rejects Respondent's argument that no dispute existed when Mr. Arif sent his notice on May 14, 2010 because first instance court decisions cannot be deemed to engage the State's responsibility and the dispute was not ripe for this reason.
336.

The Tribunal further notes that in the letter of May 14, 2010112 to Respondent, Claimant refers not only to wrongful acts by the judiciary, but also to "abusive acts of the authorities of the Republic of Moldova" and the "lack of adequate actions of the authorized central public authorities." Claimant is therefore alleging wrongful acts not only of the Moldovan judiciary, but also of other organs of Moldova.

337.

Secondly, in his letter of May 14, 2010, Claimant expressly states that: "This note is being sent under Article 7 of the Agreement on Mutual Encouragement and Protection of Investments as of 08.09.1997 entered into by the Government of the Republic of Moldova and the Government of the French Republic (Bilateral Agreement) and is aimed at amiably solving the investment dispute that arose between the Republic of Moldova and the foreign investor Arif Franck Charles, citizen of the French Republic." Claimant makes it clear that he considers this letter to be a notice for purposes of compliance with the "cooling off" period in Article 7 of the BIT. Claimant identifies therein three possible breaches of the BIT: a breach for unlawful expropriation, a breach of the Full Protection and Security standard ("FPS") and a breach of the Fair and Equitable Treatment standard ("FET"). Finally, Claimant states that: "The foreign investor Arif Franck Charles, citizen of the French Republic has declared to be open for any constructive suggestion aimed at amicable and effective settlement of appeared disagreements by means of elimination of illegal and destructive actions related to investments of the undersigned."

338.

On July 12, 2011, Claimant sent a second letter seeking to settle the dispute amicably.113 Although by July 2011 the dispute had significantly aggravated, the Tribunal finds that Claimant's allegations in the above letter, which Respondent admits does contain a description of the dispute now at stake before the Tribunal,114 are essentially the same as those contained in his letter of May 14, 2010: a breach for unlawful expropriation, a breach of FET and a breach of FPS115 due to wrongful acts of both the judiciary and of other organs of the Republic of Moldova. Therefore, even if the letter under consideration further develops the allegations made by Claimant in his letter of May 14, 2010, mainly in light of the aggravation of the dispute, the essence of Claimant's complaints is the same in both letters. The Tribunal therefore rejects Respondent's argument that the nature and scope of the claims raised in the letter of May 14, 2010 are entirely different from the claims at stake in this arbitration. In this letter, Claimant reiterated his desire to settle the dispute amicably.116

340.
The Tribunal further notes that the fact that by May 14, 2010 the Republic of Moldova had not yet ratified the ICSID Convention119 is irrelevant for a finding of a dispute under the BIT and for the assessment of Moldova's opportunity to engage in settlement discussions with Claimant. Claimant sent two formal letters to Respondent giving notice of the existence of a dispute and expressing his willingness to find an amicable solution with Respondent. In light of the record, the Tribunal rejects Respondent's arguments that it never had a fair opportunity to engage in settlement discussions at any time after the dispute had actually ripened and that Mr. Arif did not pursue in good faith the negotiations he had started.
341.
The Tribunal therefore finds that Claimant's letter of May 14, 2010 is a valid notice of a dispute for the purposes of Article 7 of the BIT. The Request for Arbitration was filed on July 29, 2011, i.e. more than 14 months after the first notice of a dispute. Consequently, the Tribunal decides that the "cooling off" period of six months provided for in Article 7 has been amply complied with by Claimant.
342.
Given the finding that Claimant complied with the "cooling off" period in Article 7, the Tribunal need not address the remaining arguments of the Parties regarding this objection. For the above reasons, Respondent's objection to jurisdiction on the grounds of a failure by Claimant to comply with the amicable settlement provision in Article 7 is dismissed.

3. Ripeness of the Claims

343.
The Tribunal notes that Respondent does not raise its objection to jurisdiction on the basis of Article 26 of the ICSID Convention. It already noted above that the BIT contains no requirement to exhaust local remedies before commencing arbitration.
344.

According to Article 4 of the ILC Articles on State Responsibility: "The conduct of any State organ shall be considered an act of that State under international law, whether the organ exercises legislative, executive, judicial or any other function..."120

345.
The ICSID system is not intended to be a subsidiary system of dispute settlement in case the host State's legal system fails, but rather it is set up as an alternative to the host State's remedies in case of an investment dispute. As already mentioned above, there is no general requirement to exhaust local remedies for a treaty claim to exist, unless such a claim is for denial of justice. In a claim for denial of justice, the conduct of the whole judicial system is relevant, while in a claim for expropriation, it is the individual action of an organ of the State that is decisive.121
346.

Even for claims for denial of justice, the exhaustion of local remedies is a question to be addressed with the merits of the dispute. It is a substantive standard, rather than a procedural bar.122 Moreover, according to ICSID case law, no such substantive requirement applies in principle to expropriation claims.123

347.
In light of the above, the Tribunal finds that, as a matter of principle, in accordance with Article 4 of the ILC Articles on State Responsibility, court decisions can engage a State's responsibility, including for unlawful expropriation, without there being any requirement to exhaust local remedies (unless claims for denial of justice have been made). Respondent's argument that there can be no international wrongful act or Treaty dispute arising from a court decision until the entire justice system has heard the case is therefore rejected. The Tribunal notes that to develop this argument Respondent has only relied on cases where a denial of justice claim was under consideration.
348.
In other words, the Tribunal finds that Mr. Arif's claims for complete expropriation and breach of specific undertakings regarding the border duty free stores are jurisdictionally ripe for arbitration, notwithstanding the fact that the Supreme Court of Justice's decision of October 17, 2012 overturned the decision of the Chisinau Court of Appeal of December 28, 2011 regarding the validity of the local lease agreements, and that the case was sent back to the lower courts for further proceedings.
349.
The decision of the Supreme Court of Justice of October 17, 2012 and its potential effects, if any, over the alleged claims under the BIT, is a question to be addressed with the merits.
350.
In light of the Tribunal's finding that the claims are jurisdictionally ripe for arbitration, notwithstanding the decision of the Supreme Court of October 17, 2012, there is no need to address the remaining arguments made by the Parties regarding this objection.
351.
For the above reasons, Respondent's objection to jurisdiction with regard to the claims in relation to the creation and opening of the border duty free stores (i.e.: claim for complete expropriation and for breach of specific undertakings regarding the border stores) based on the lack of ripeness of these claims, is dismissed.

4. Nationality

352.

Article 1(2) of the BIT provides that: "The term "nationals" means any natural person having the nationality of one of the Contracting Parties."

353.

And Article 25(2)(a) of the ICSID Convention provides that "national of another Contracting State" means "...any natural person who had the nationality of a Contracting State other than the State party to the dispute on the date on which the parties consented to submit such dispute to conciliation or arbitration as well as on the date on which the request was registered pursuant to paragraph (3) of Article 28 or paragraph (3) of Article 36, but does not include any person who on either date also had the nationality of the Contracting State party to the dispute."

354.

The Tribunal notes that both Parties agree that it is an established principle of international law that a State is sovereign in establishing the legal conditions which must be fulfilled by an individual in order to be considered to be vested with its nationality. In other words, nationality is within the domestic jurisdiction of the State.124 The Tribunal finds that it has the authority to review the nationality of Claimant at the relevant dates as per Article 25(2)(a) of the ICSID Convention.125

358.
This Tribunal is therefore satisfied of Claimant's French nationality for the purposes of requesting international arbitration protection. It further notes that neither the BIT nor the Convention include an express requirement that nationality has to be acquired in conformity with the national law of the host State. Had this been the case, it might have opened the door for the Tribunal's investigation of Claimant's file pursuant to which he was granted nationality by the French authorities.
359.

Respondent further alleges that even if Claimant is deemed to have acquired French nationality legally, he has not established effective links with France. The Tribunal notes that neither Article 25 of the ICSID Convention, nor the BIT require the application of the effective nationality principle. The Tribunal moreover notes that the effective nationality test has little support in ICSID proceedings and that there is a clear reluctance to apply the test where only one nationality is at issue.129 This is the case here130 and therefore the Tribunal is not persuaded that an effective nationality test is applicable.

360.
In light of the above, it is not necessary to address the additional arguments of the Parties regarding the issue of nationality. The Tribunal dismisses Respondent's objection to jurisdiction ratione personae based on Mr. Arif's lack of French nationality for the reasons stated above.

5. Investment

362.
The ICSID Convention contains no definition of "investment".
363.
Firstly, the Tribunal considers that it is important to clarify what is exactly the "investment" the protection of which is alleged to have been breached in this case.
364.

Claimant in his Reply defines his investment as follows:

"331.1. The rights arising out of the Tender and State Agreements, namely:

331.1.1The exclusive right to create and develop a duty free network at five border stores, granted by the State tender and corresponding State Agreements entered into with the Customs Service of Moldova on a long term basis, namely 15 years with a priority right of renewal;

331.1.2The right to open a flagship store at the Airport, granted by the Lease Agreement entered into with the Airport State Enterprise on a long term basis, namely a seven year and five months period with a priority right of renewal.

331.2. Claimant's shareholding in Le Bridge;

331.3. The creation of Le Bridge's duty free division, Le Bridge Travel Retail, with its own departments and premises;

331.4. The renovations of the premises where the Airport store would be located;

331.5. The construction offour duty free stores at the Romanian border;

331.6. Securing luxury goods and the support of luxury brands;

331.7. The development of the "Le Bridge Duty Free" brand and trademark at the international level, through the sale of luxurious products, including inter alia, items from Chopard, Guerlain, Bulgari and La Prairie, events and national advertising campaigns on billboards, the internet, television and in newspapers and magazines and Mr. Arif's know-how contributions;

331.8. Hiring of qualified management and staff;

331.9. The launch of Le Bridge Travel Retail; and

331.10. The application and attribution of all required authorizations and licences to build duty free stores and operate the duty free business, and the right to use the premises as per the Agreements with the Customs Service and the Airport State Enterprise."

365.

The Parties agree that paragraph 331.1 of the Reply defines the 'core' rights in dispute in this arbitration.131 Claimant further argues that even if some elements of this list "do not qualify as an investment pursuant to the BIT, the operation as a whole would still qualify as an investment."132 Claimant also argues that if the rights arising from the Tender and State Agreements fall within the definition of investment, then Mr. Arif's further steps in furtherance of these rights, as set out in paragraphs 331.2 to 331.10 of the Reply, are also investments.133

366.

Respondent does not accept Claimant's theory of the unity of the investment. It states that Claimant has not demonstrated that many of the alleged elements of the investments exist as rights under Moldovan law, which is the law applicable to the definition of the rights.134 As to the 'core' rights referred to in paragraph 331.1, they "were acquired by Mr. Arif in violation of Moldovan law and are by operation of that law, invalid."135

367.
Claimant concentrates on specific rights arising from his agreements with Respondent, and particularly the right of exclusivity allegedly confirmed by the Tender and the July 1, 2008 Agreement. The Tribunal considers that this approach confuses the "investment" with the individual rights of particular value. Where multiple contracts are entered into by an investor, then it is sufficient that the contracts and their good faith performance as a whole satisfy the definition of an investment, and Claimant does not need to go further and justify individual rights in the contracts.
368.
The question as to whether a particular right granted by an agreement is valid or invalid may affect liability or the valuation of damages, but is not a question of jurisdiction.
370.
The dispute in this arbitration arises from these agreements and the beginning of their performance, and Claimant seeks damages arising from the alleged loss of these agreements, the rights derived from them, and his good faith belief that they were valid. The Tribunal can consider events preceding these agreements, such as the Tender, and the steps taken by Claimant in execution of the rights they conferred without needing to individually consider whether preliminary or subsequent steps satisfy the definition of investment. These agreements constituted an investment within the meaning of Article 1 of the BIT. This is sufficient to confer jurisdiction on this Tribunal over a dispute relating to Respondent's treatment of such agreements and the steps taken by Claimant on the basis thereof.
371.

Respondent has a further argument that the alleged rights under the Tender, the July 1, 2008 Agreement, and the Airport Lease Agreement are invalid under Moldovan law, and therefore "even if they could have fulfilled the Treaty's definition (under international law) of 'investments' if they validly existed, they are in any event not capable of grounding the Tribunal's jurisdiction."136

372.
This argument relies on the part of the definition of "investment" in Article 1(1) that states that: "It is understood that the mentioned assets must be or have been invested in accordance with the legislation of the Contracting Party."
373.
The investments in dispute in the present case have been declared invalid by the Moldovan judiciary, including by the Supreme Court, except for the local lease agreements which are still under consideration by the Moldovan courts. In particular the July 1, 2008 Agreement and the Tender were declared invalid by decisions of the Economic Circuit Court of May 28, 2010,137 the Economic Court of Appeal of September 7, 2010,138 and the Supreme Court of Justice of November 24, 2010.139 The Lease Agreement was invalidated by decisions of the Economic Circuit Court of November 16, 2010,140 the Economic Court of Appeal of February 28, 2011,141 and the Supreme Court of Justice of June 10, 2011.142
374.
Respondent's argument based on the invalidity of the Lease Agreement and the July 1, 2008 Agreement is formalistic in that it relies on a judicially declared invalidity that applies retrospectively to the date of the investment. The reality was that at the time the investment was made, and for many months thereafter, both Parties believed and were allowed to trust that the July 1, 2008 Agreement and the Lease Agreement were valid, and that the investment had been made in accordance with the legislation of Moldova. Both Parties acted in good faith on this basis.
375.
In fact, the process by which the Lease Agreement and the July 1, 2008 Agreement were declared invalid, and the actions in furtherance thereof, are the basis of Claimant's claims pursuant to the BIT in this arbitration. Respondent seeks to rely on its own law and decisions of its own courts to deny juridical existence to agreements that existed in fact, and were relied upon by both Parties.
377.
Respondent also alleges that it is a settled proposition in international law that a shareholder may not seek protection for injuries to companies it owns.143 Respondent further alleges that only direct investments are protected under the BIT.144
378.

The Tribunal notes that the BIT does not define the term "investor". Article 7 refers to "Any disputes relating to investments between one of the Contracting Parties and a national or a company of the other Contracting party..." The term national is defined in Article 1(2) of the BIT as "any natural person having the nationality of one of the contracting Parties..." The term "investment" is defined in a broad and non-exhaustive manner in Article 1(1) of the BIT.

379.

The BIT does not limit or restrict the protection granted to direct investments. In fact, under Article 1(1)(b), which refers to "Shares, share premiums and other forms of participation, even minor or indirect, in companies established in the territory of one of the Contracting Parties", indirect investments are expressly included within the definition of investment. Therefore, Respondent's argument to the contrary is rejected.

381.
Finally, Respondent alleges that Claimant's "investment" further fails to qualify as such for the purposes of the BIT and the ICSID Convention because of the absence of any transfer of capital or technology from France to Moldova.146
382.

The fact that the preamble of the BIT provides that "Persuaded that the encouragement and protection of such investments will stimulate the transfer of capital and technology between the two States, in the interest of their economic development", cannot be read as a requirement of the term "investment", which is expressly defined in Article 1(1) and which clearly makes no mention of any such requirement.

384.
In light of the above, the Tribunal finds that the July 1, 2008 Agreement, the Lease Agreement and the local lease agreements qualify as an "investment", both under the BIT and the ICSID Convention, and rejects Respondent's arguments to the contrary. Respondent's objection to jurisdiction based on Claimant not having an investment subject to Treaty protection is therefore dismissed.

6. Specific Undertakings

385.

Article 9 of the BIT is entitled "Specific Commitments" and provides that: "Investments having been the subject of a particular [the] specific commitment of one of the Contracting Parties towards the nationals and companies of the other Contracting Party, are regulated, without prejudice to the dispositions of the present Agreement, by the provisions of such commitment as far as it contains more favourable provisions than those provided for in the present Agreement."

386.

Article 5(2) of the BIT provides with regard to expropriation that: "The Contracting Parties shall not take any measures of expropriation... save for a public purpose and on the condition that such measures not be discriminatory or contrary to a specific commitment."

387.

The interpretation of the BIT as a public international law instrument is subject to the Vienna Convention on the Law of Treaties. According to its Article 31(1): "[a] treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose."

388.
Firstly, the ordinary meaning of these Articles within their context and in light of the BIT's object and purpose makes the Tribunal find that Article 9 (and Article 5(2) to the extent that it refers to "a specific commitment") has its own specific meaning and purpose, separate from that of an "umbrella" clause, and agrees with Respondent in this regard. According to the ordinary meaning of the text, the specific purpose of these clauses is not to guarantee the observation of obligations assumed by the host State vis-à-vis the investor, but rather to provide investors with the right to claim the application of any rule of law more favourable than the provisions of the BIT. The doctrine refers to such clauses as preservation of rights clauses.148
389.
This type of clause, in its usual wording, simply says that in applying or enforcing the existing protections offered by the BIT, attention should be paid to any more favourable provisions contained in domestic law or specific agreements. It therefore confirms that the investor may benefit from more favourable treatment, but does not add a new, specific or distinct, treaty obligation to respect commitments made.149
390.
The position of Article 9 within the BIT further confirms the Tribunal's finding. Article 9 is included at the end of the BIT and after the BIT's dispute resolution clause (Article 7), instead of with the rest of the BIT's substantive standards of protection (Articles 2 to 6).
391.
The interpretation of these Articles as preservation of rights clauses in any event does not deprive them of their effet utile, which is precisely to ensure that the investment enjoys the most favourable legal regime. They have their own legitimate function within the BIT, which relates to the specific issue of what is the law applicable to the investment. The Tribunal does not accept that the interpretation of these Articles as preservation of rights clauses would turn them into a tautology, leading to an absurd result not intended by the Parties.
392.
Therefore, the Tribunal does not find that these Articles are "umbrella" clauses, but rather preservation of rights clauses, even though it does not completely agree with Respondent's reading of them either.
393.
Secondly, Claimant alleges that, even if the Tribunal could not find that Articles 9 and 5 are "umbrella" clauses, in any case an "umbrella" clause would be imported into the BIT via the MFN clause contained in its Article 4.
394.

Article 4 of the BIT provides in its relevant part as follows: "Each Contracting Party shall extend, in its territory and in its maritime area, to nationals and companies of the other Contracting Party, regarding their investments and activities connected with these investments, treatment not less favourable than that granted to its nationals or companies, or treatment granted to the nationals and companies of the most favoured nation, if the latter is more favourable..."

395.

The Tribunal agrees with Claimant that "umbrella" clauses are substantive in nature. A breach of specific undertakings covered by an "umbrella" clause will give rise to a substantive breach of the BIT.150 In this sense, the Tribunal rejects Respondent's argument that "umbrella" clauses are procedural in nature and cannot be imported through an MFN clause because they give a means of protection for contractual and other undertakings, rather than a unique standard of behaviour.151

397.
The Tribunal moreover notes that the whole debate of whether there is an "umbrella" clause in the BIT, be it directly through Articles 5 and 9, be it indirectly via Article 4, is not a jurisdictional matter, even though the Parties have chosen to argue it as such. The issue in dispute between the Parties is whether a specific substantive standard of treatment is included in the BIT and this is a merits issue, which in any case confirms the Tribunals' jurisdiction over this claim.
399.
In light of the above, the Tribunal need not address the Parties' further arguments regarding the admissibility of Claimant's claim for specific commitments.
400.
The Tribunal finds that it has jurisdiction under Article 25 of the ICSID Convention and Articles 1 and 7 of the BIT to decide the merits of the dispute. It further finds that Claimant's claim for breach of specific undertakings is inadmissible.

VI. LIABILITY

A. Applicable Law

401.

Article 42 of the ICSID Convention provides in its relevant part:

"(1) The Tribunal shall decide a dispute in accordance with such rules of law as may be agreed by the parties. In the absence of such agreement, 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."

402.
The BIT does not contain any specific provision regarding the applicable law to the dispute.

B. Analysis

1. Expropriation

403.

Article 5(2) of the BIT provides:

"The Contracting Parties shall not make any measures of expropriation or nationalization or any other measure that has the effect of dispossessing, directly or indirectly, the nationals and companies of the other Contracting Party of their investments, on their territory and on their maritime area, save for a public purpose and on the condition that such measures not be discriminatory or contrary to a specific commitment.

Any measures of dispossession that could be taken have to result in the payment of a prompt and adequate compensation, an amount equal to the real value of the concerned investments, which shall be valued in relation to a normal economical situation, prior to any threat of dispossession.

This compensation, its amount and payment methods are established on the date of dispossession at the latest. This compensation shall be effectively encashable, paid without delay and freely transferable. It shall produce, until the date of payment, interest calculated according to the appropriate market rates."

404.
As established above the dispute in this arbitration arises from an investment comprised of the July 1, 2008 Agreement, the subsequent agreements with individual customs offices and the Lease Agreement.
405.

The July 1, 2008 Agreement formalised the results of the Tender. According to Decision No. 172, the "General characteristics of the object of the contest" included:

"1.1 identification of participants in creation of a network of duty-free stores at state border crossing stations (legal persons of the Republic of Moldova, except for provided for in the legislation in force), except public administration authorities, state-owned and municipal companies, institutions funded from the budget of state or local budgets.

1.2 Construction of one duty-free store in each of the state border crossing stations: Costesti-Stinca customs stations; Cahul-Oancea customs stations, Leuseni-Albita customs station; Sculeni customs station; Ungheni-Cristesti customs station....."154

406.

The July 1, 2008 Agreement established in its "Whereas" No. 3 and 4 that:

"3.... the investor was authorised with the right to build and manage the duty-free store network at the following pre-established state border crossing points: the Costesti-Stinca, Cahul-Oancea, Lesueni-Albita, Sculeni, Ungheni-Cristesti customs station;

"4. The Authority grants, as it is foreseen in p.1.1, to the Investor the exclusive right to manage and administrate the duty-free store network on the pre-established territories, at the exclusive managerial risk of the Investor, according to the provisions of this Agreement. The parties acknowledge that the creation and operation of this store network shall need a substantial investment from the part of the Investor in order to assure the realization of business plan provisions accepted by the organization commission..."

407.
Clause 2.1 of the July 1, 2008 Agreement stipulates that:

"The objectives of this Agreement consist in granting to the investor the right to create, operate and administrate the duty- free store network at the state border crossing points within the entire term this Agreement, aiming at the same time at the realization of these goals in the most appropriate, efficient, reasonable and quick manner adaptable to the customers' needs."

408.

And Clause 4 provides that:

"4.1 Under this Agreement, the Authority grants to the Investor that accepts according to the provisions of this Agreement an exclusive right as it is defined in the p.1.1 to create and manage the duty-free stores within the area of activity;

4.2 Granting this right, the Authority assures as its integral and compulsory part, the possibility to use without impediments the area necessary to create and serve the duty-free store network;

4.3 The authority shall not conclude any agreement of any nature with third parties that could affect substantially and negatively those rights granted to or obligations imposed to the Investor."

409.

Clause 1 ("p.1.1" as referred to in Clause 4 of the Agreement) of the July 1, 2008 Agreement defines "Exclusive rights" in the following manner: "exclusive right of the Investor to manage and administrate the duty-free store network at the state border crossing points is established by the Government Decision no. 172 of 18 February 2008 at the exclusive managerial risk of the Investor according to the provisions of this Agreement. The exclusive rights of the Investor shall not be opposable any longer to the Authority when, following the organization, according to the legislation, of a public tender, a third party shall obtain the right to build and open duty-free-stores at the state border crossing points."

410.

Clause 6 of the Agreement provides that:

"6.1 According to the provisions foreseen in the clause 3, the present Agreement is concluded for a term of 15 (fifteen) years and shall become effective from the date of its signing.

6.2 The Agreement shall be automatically ceased upon expiration of the term foreseen in p.6.1 except for:

6.1.1 it is terminated according to its provisions; or

6.1.2 it is renewed according to the provisions of the clause 6.2.

6.2 The Agreement term can be extended with the written consent of the parties. The Investor has the priority right to extend the Agreement term or to conclude a new one if he duly fulfilled his obligations undertook under the previous agreement. This clause does not operate if the conditions of the new Agreement are essentially different from those of this Agreement."

411.

Finally, Clause 19.1 of the Agreement states that: "In order to locate the dutyfree stores at the state border crossing points, the Investor shall conclude agreements of location with each customs office in which area the state border crossing points exist foreseen in the Government Decision no. 172 of 18 February 200(8)..."

412.
And Clause 7.2 provides that: "According to the provisions of the business plan, the parties agreed on the need to consider the possibility of granting the right to open a duty free store to the Investor at the Chisinau International Airport and at the Giurgiulesti state border crossing point in the conditions foreseen by the effective law."
413.

The Lease Agreement provides in its Clause 1.1 that: "The Landholder undertakes to provide to the Tenant for temporary use the premises indicated in p.1.2 of this Agreement, and the Tenant undertakes to pay the rent in the amount and the terms indicated in the p.2 of this Agreement."

414.

Clause 1.5 states that: "The respective premises shall be used in order to locate the duty-free store." Clause 1.6 provides: "The Agreem(e)nt is concluded for a period till 31 December 2015." And Clause 1.7 reads: "The Tenant has the preferential right to extend the agreement for a new term."

418.
Moreover, with regard to the border stores, they continue to operate and generate considerable revenues to the investor. Claimant has even opened several more stores.158 Claimant alleges that the fact that the local lease agreements are still in force and the border stores are still operating159 is irrelevant for Claimant's expropriation claim, because Claimant has irrevocably lost the right to operate his border stores160 and he is only able to operate them based on a mere technicality (the local leas