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

Decision on the Application for Annulment of the Bolivarian Republic of Venezuela

Table of Selected Abbreviations / Defined Terms
Applicant or Venezuela The Bolivarian Republic of Venezuela
Application Application for Annulment and Stay of Enforcement of the Award filed on July 7, 2015
Arbitration Rules Rules of Procedure for Arbitration Proceedings of the International Centre for Settlement of Investment Disputes
Award Award rendered on March 10, 2015 in the arbitration proceeding between OI European Group B.V. and the Bolivarian Republic of Venezuela (ICSID Case No. ARB/11/25)
BIT or Treaty Agreement on the Encouragement and Reciprocal Protection of Investments between the Bolivarian Republic of Venezuela and the Kingdom of the Netherlands, which entered into force on November 1, 1993
CommitteeAd hoc Committee constituted on October 13, 2015
Companies Fábrica de Vidrios Los Andes, C.A. and Owens-Illinois de Venezuela, C.A.
Counter-Memorial on Annulment Respondent on Annulment’s Counter-Memorial on Annulment dated August 5, 2016
DCF Discounted Cash Flow
Favianca v. Venezuela Arbitration proceeding between Fabrica de Vidrios Los Andes C.A. and Owens-Illinois de Venezuela C.A. and the Bolivarian Republic of Venezuela (ICSID Case No. ARB/12/21)
First Econ One Report First Expert Report of Daniel Flores of Econ One Research, Inc. ("Econ One") submitted by Venezuela on April 7, 2016
First Navigant Report First Expert Report of Brent C. Kaczmarek and Matthew D. Shopp of Navigant Consulting, Inc.

("Navigant") submitted by OIEG on August 5, 2016
First Stay Decision Decision on Stay of Enforcement of the Award dated April 4, 2016
Hearing on Annulment Hearing on Annulment held on September 25 and 26, 2017
IBA Guidelines International Bar Association’s Guidelines on Conflicts of Interests in International Arbitration
ICSID 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 Settlement of Investment Disputes
Longreef v. Venezuela Arbitration proceeding between Longreef Investments A.V.V. and the Bolivarian Republic of Venezuela (ICSID Case No. ARB/11/5)
Memorial on Annulment Applicant’s Memorial on Annulment dated April 7, 2016
OI-[#] OIEG’s Exhibit
OIEG or Respondent on Annulment OI European Group B.V.
OILA-[#] OIEG’s Legal Authority
Parties OIEG and Venezuela
Plants or Investment OIEG’s investment in two of the largest glass production plants in Venezuela
Rejoinder on Annulment OIEG’s Rejoinder on Annulment dated May 25, 2017
Reply on Annulment Applicant’s Reply on Annulment dated September 24, 2016
Second Econ One Report Second Expert Report of Daniel Flores of Econ One submitted by Venezuela on September 24, 2016

Second Navigant Report Second Expert Report of Brent C. Kaczmarek and Matthew D. Shopp of Navigant submitted by OIEG on May 25, 2017
Second Stay Decision Second Decision on Stay of Enforcement of the Award dated September 24, 2018
Second Stay Request Second Request for Stay of Enforcement of the Award dated July 20, 2018
Tr. Day [#], [Speaker(s)], [page:line] Transcript of the Hearing on Annulment
Tribunal The Arbitral Tribunal in the arbitration proceeding between OI European Group B.V. and the Bolivarian Republic of Venezuela (ICSID Case No. ARB/11/25)
UNCITRAL Arbitration Rules Rules of Arbitration of the United Nations Commission on International Trade Law
Underlying Arbitration Arbitration proceeding between OI European Group B.V. and the Bolivarian Republic of Venezuela (ICSID Case No. ARB/11/25)
V-[#] Venezuela’s Exhibit
VCLT Vienna Convention on the Law of the Treaties
VLA-[#] Venezuela’s Legal Authority

I. INTRODUCTION AND OVERVIEW OF THE APPLICATION

1.
This case concerns an application for annulment (the "Application") of the award rendered on March 10, 2015 (the "Award") in the arbitration proceeding between OI European Group B.V. and the Bolivarian Republic of Venezuela, ICSID Case No. ARB/11/25 (the "Underlying Arbitration").
2.
The Award decided a dispute submitted to the International Centre for Settlement of Investment Disputes ("ICSID" or the "Centre") on the basis of the Agreement on the Encouragement and Reciprocal Protection of Investments between the Bolivarian Republic of Venezuela and the Kingdom of the Netherlands, which entered into force on November 1, 1993 (the "BIT" or "Treaty"), and the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, which entered into force on October 14,1966 (the "ICSID Convention" or the "Convention").
3.
The Application was filed by the Bolivarian Republic of Venezuela (the "Applicant" or "Venezuela"). The respondent on annulment is OI European Group B.V. ("OIEG" or the "Respondent on Annulment"). The Applicant and the Respondent on Annulment are collectively referred to as the "Parties." The Parties’ representatives and their addresses are listed above on page (i).
4.
OIEG initiated the Underlying Arbitration claiming that the Applicant had violated several substantive provisions of the BIT and was liable for its internationally wrongful conduct in relation to OIEG’s investment in two of the largest glass production plants in Venezuela (the "Plants" or the "Investment"). This Investment was held by OIEG through its equity interest in two Venezuelan companies, Fábrica de Vidrios Los Andes, C.A. and Owens-Illinois de Venezuela, C.A. (the "Companies").
5.
In the Award, the Tribunal unanimously held that it had jurisdiction to hear the dispute and that the Applicant had violated a number of substantive standards contained in the BIT, namely, (i) that the Applicant had illegally expropriated the Investment in violation of Article 6 of the BIT; and (ii) that the Applicant had violated the fair and equitable treatment standard within the meaning of Article 3(1) of the BIT as well as (iii) its duty to observe obligations entered into with regard to OIEG’s Investment under Article 3(4) of the BIT. As a result of these breaches, the Tribunal ordered the Applicant to pay OIEG US$372,461,982 in compensation, as well as compound interest on the principal sum using a LIBOR interest rate for one-year deposits in US dollars, plus a margin of 4 percent. The Tribunal also ordered the Applicant to pay OIEG US$5,750,000 in costs and expenses, with the same compound interest rate.1
6.
The Applicant seeks the annulment of the Award on four of the five grounds for annulment set forth in Article 52(1) of the ICSID Convention: (i) the Tribunal was not properly constituted (Article 52(1)(a)); (ii) the Tribunal manifestly exceeded its powers (Article 52(1)(b)); (iii) there was a serious departure from a fundamental rule of procedure (Article 52(1)(d)); and (iv) the Award fails to state the reasons on which it is based (Article 52(1)(e)).

II. PROCEDURAL HISTORY

7.
On July 7, 2015, the Applicant filed the Application with the Secretary-General of ICSID. The Application was filed in accordance with Article 52 of the ICSID Convention and Rule 50 of the ICSID Rules of Procedure for Arbitration Proceedings (the "Arbitration Rules"), within 120 days after the date of the Award.
8.
The Application included a request under ICSID Convention Article 52(5) for a stay of enforcement of the Award, pending a decision by the ad hoc Committee (the "Committee").
9.
On July 17, 2015, the Secretary-General of ICSID registered the Application and at the same time notified the Parties that enforcement of the Award was provisionally stayed, pursuant to Arbitration Rule 54(2).
10.
By letter of October 13,2015, the Secretary-General notified the Parties that the Committee had been constituted, in accordance with ICSID Convention Article 52(3), and that the annulment proceeding was deemed to have begun on that date. The Committee was composed of Dr. Alvaro Castellanos Howell (Guatemalan), President, designated to the ICSID Panel of Arbitrators by the Republic of Guatemala; Prof. Piero Bernardini (Italian), designated to the ICSID Panel of Arbitrators by the Italian Republic, and Mr. David Pawlak (American and Irish), designated to the ICSID Panel of Arbitrators by the Slovak Republic; all members were appointed by the Chairman of ICSID’s Administrative Council. Ms. Sara Marzal Yetano, ICSID Legal Counsel, was designated to serve as Secretary of the Committee.
11.
On October 14, 2015, OIEG sent a letter noting that the Applicant bears the burden of specifying the circumstances that require the continuation of the stay of enforcement and that it had failed to provide any type of justification for its request in its Application. On this basis, the Respondent on Annulment argued that the stay of enforcement should be discontinued or allowed to terminate automatically within 30 days of the constitution of the Committee.
12.
On the same day, October 14, 2015, the ICSID Secretariat sent a letter to the Parties requesting an initial advance on costs of US$200,000 from the Applicant, in accordance with Regulation 14(3)(e) of the Administrative and Financial Regulations.
13.
On October 26, 2015, pursuant to the schedule determined by the Committee, as subsequently amended by the Parties, the Applicant filed a first submission in support of its request to maintain the stay of enforcement; on November 12, 2015, the Respondent on Annulment filed observations on the Applicant’s first submission; on November 25, 2015, the Applicant filed a second submission on the stay of enforcement of the Award; and on December 8, 2015, the Respondent on Annulment filed its rejoinder.
14.
By letter dated October 27,2015, the Committee notified the Parties that, as contemplated by Arbitration Rule 54(2), the Committee decided to maintain the provisional stay on the enforcement of the Award until it had an opportunity to review the Parties’ submissions and to issue a further decision on the matter.
15.
On December 9, 2015, the Committee held its first session. Given that the Parties had not agreed to hold the first session on any of the dates proposed by the Committee within the 60-day period envisaged in Arbitration Rule 13, and had not agreed to extend such period, the Committee held its first session without the Parties by teleconference as permitted by Arbitration Rule 13.
16.
Following the first session, on December 15, 2015, the Committee issued Procedural Order No. 1 recording the agreement of the Parties on procedural matters, as previously submitted in writing, and the decision of the Committee on disputed issues.
17.
On December 20, 2015, the Committee notified the Parties that it deemed that the two rounds of written submissions had provided ample opportunity for the Parties to present their observations on the issue of the stay of enforcement, and declined the Applicant’s November 25, 2015 request for a round of oral submissions.
18.
On March 2, 2016, the Committee informed the Parties by e-mail that, in accordance with Section 16.5 of Procedural Order No. 1, it had decided not to consider the Respondent on Annulment’s letter of February 26, 2016, and requested the Parties to abstain from presenting further unsolicited submissions, consistent with the Committee’s direction in its letter of October 27,2015.
19.
On April 1, 2016, the ICSID Secretariat received a wire transfer in the amount of US$121,000 from the Applicant as partial payment of the funds requested in accordance with Regulation 14(3)(e) of the Administrative and Financial Regulations to cover the costs associated with the annulment proceedings. After an additional amount of US$73,767.29 was received, the ICSID Secretariat sent a letter to the Parties on April 7, 2016, confirming that it had received a total of US$194,767.29 in connection with these proceedings.
20.
On April 4, 2016, the Committee issued a decision rejecting the Applicant’s request to continue the stay of enforcement (the "First Stay Decision"). The Committee declared the provisional stay terminated.
21.
Pursuant to the pleadings schedule established in Procedural Order No. 1: (i) on April 7, 2016, Venezuela filed its Memorial on Annulment ("Memorial on Annulment"); (ii) on August 5, 2016, OIEG filed its Counter-Memorial on Annulment ("Counter-Memorial on Annulment"); and (iii) on September 24, 2016, Venezuela filed its Reply on Annulment ("Reply on Annulment").
22.
On July 11, 2016, the ICSID Secretariat requested that the Applicant make a second advance payment of US$200,000 to cover administrative costs and expenditures for the next three to six months. As explained in the ICSID Secretariat’s letter, this advance payment was to be paid no later than August 10, 2016. On July 25, 2016, the Applicant sent a letter in response, requesting that the ICSID Secretariat review and confirm its projected costs. The ICSID Secretariat reviewed and confirmed its projections with respect to these proceedings. In a letter dated July 30, 2016, the ICSID Secretariat reiterated its request for US$200,000.
23.
On September 7, 2016, the ICSID Secretariat sent a letter to the Parties informing them that no funds had been received. The ICSID Secretariat invited either Party to make the requested payment as soon as possible and no later than September 22,2016. No payment was made, however, by the stipulated date.
24.
By letter of September 28, 2016, the Secretary-General moved that the Committee stay the proceeding for non-payment of the required advances in accordance with ICSID Administrative and Financial Regulation 14(3)(d) and (e).
25.
On October 3, 2016, the Committee informed the Parties that it had decided to extend the deadline for payment until October 14, 2016. Pursuant to the terms of the Committee’s decision, the annulment proceeding would be stayed automatically if payment were not received by this extended deadline. No payment was made by this extended deadline.
26.
By letter of October 17, 2016, in accordance with its letter of October 3, 2016, the Committee stayed the proceedings for non-payment of the required advances, effective as of October 14,2016.
27.
On April 4, 2017, the Committee confirmed receipt of full payment of the required advances and, after a stay of nearly six months, the Committee resumed the proceedings.
28.
On May 25, 2017, the Respondent on Annulment filed its Rejoinder on Annulment ("Rejoinder on Annulment").
29.
On September 12,2017, the Committee issued Procedural Order No. 2 in which it ruled on certain pending procedural matters related to the organization of the hearing on annulment.
30.
A hearing on annulment was held at the seat of the Centre in Washington, D.C. on September 26 and 27,2017 (the "Hearing on Annulment"). In addition to the Committee and its Secretary, present at the Hearing on Annulment were:

For the Applicant:

Mr. Diego B. Gosis Guglielmino & Asociados, Of Counsel

Ms. Verónica Lavista Guglielmino & Asociados, Of Counsel

Ms. Mariana Lozza Guglielmino & Asociados

Mr. Guillermo Moro Guglielmino & Asociados

Mr. Pablo Parrilla Guglielmino & Asociados

Mr. Patricio Grané Riera Guglielmino & Asociados

Ms. Katherine Sanoja Special Counsel

Mr. Henry Rodríguez Procuraduría General de la República Bolivariana de

Facchinetti Venezuela

Ms. Thayrin Patricia Diaz Diaz Procuraduría General de la República Bolivariana de Venezuela

Mr. Daniel Flores Econ One Research, Inc.

Mr. Ettore Comi Econ One Research, Inc.

Mr. Jordan Heim Econ One Research, Inc.

For the Respondent on Annulment:

Mr. Robert Volterra Volterra Fietta

Mr. Giorgio Mandelli Volterra Fietta

Mr. Alvaro Nistal Volterra Fietta

Mr. Roberto Lupini Volterra Fietta

Mr. José Antonio Muci Muci-Abraham & Asociados

Ms. MaryBeth Wilkinson OI European Group B.V.

Mr. Brent Kaczmarek Navigant Consulting, Inc.

Mr. Matthew Shopp Versant Partners (formerly of Navigant Consulting, Inc.)

Court Reporters:

Ms. Dawn K. Larson B&B Reporters

Mr. Leandro Iezzi DR Esteno

Ms. Marta Rinaldi DR Esteno

Interpreters:

Ms. Silvia Colla

Mr. Daniel Giglio

Mr. Charles H. Roberts

31.
During the Hearing on Annulment, the following persons were examined:

On behalf of the Applicant:

Mr. Daniel Flores Econ One Research, Inc.

On behalf of the Respondent on Annulment:

Mr. Brent Kaczmarek Navigant Consulting, Inc.

Mr. Matthew Shopp Versant Partners (formerly of Navigant Consulting, Inc.)

32.
On October 30, 2017, the ICSID Secretariat sent a letter to the Parties requesting that the Applicant make a third advance payment of US$200,000 to cover administrative costs and expenditures for the next three to six months no later than November 29, 2017.
33.
On December 1, 2017, the ICSID Secretariat sent a letter to the Parties informing them that no funds had been received. The ICSID Secretariat invited either Party to make the requested payment as soon as possible and no later than December 18, 2017. On December 13, 2017, the Applicant informed the ICSID Secretariat that the payment was "in process" and that it anticipated that the payment would be made in "the coming days."
34.
On December 11, 2017, the Parties filed their respective submissions on costs.
35.
On December 13, 2017, the Applicant proposed the disqualification of Dr. Castellanos (the "Proposal for Disqualification").
36.
On December 14, 2017, the Secretary of the Committee confirmed that, in accordance with Arbitration Rules 53 and 9(6), the proceeding was suspended until a decision was taken with respect to the Proposal for Disqualification.
37.
On December 18, 2017, Prof. Bernardini and Mr. Pawlak (the "Two Members") set a timetable for the Parties’ submissions and Dr. Castellanos’ explanations. In accordance with such timetable, the Respondent on Annulment filed a submission on December 26, 2017 and Dr. Castellanos furnished his explanations on January 2, 2018.
38.
On January 9, 2018, both Parties submitted additional observations on the Proposal for Disqualification.
39.
By email of January 11, 2018, the ICSID Secretariat asked the Applicant to provide an update regarding the pending payment. By email of the same day, the Applicant informed the ICSID Secretariat that the payment was "en route" and that completion of the payment would occur in "the coming days." On February 8, 2018, the ICSID Secretariat informed the Parties that it had not yet received the Applicant’s payment. On March 8, 2018, the ICSID Secretariat confirmed receipt of the funds from the Respondent on Annulment.
40.
On March 9, 2018 the Two Members issued their decision rejecting the Proposal for Disqualification and the proceeding resumed pursuant to Arbitration Rules 53 and 9(6).
41.
On June 6, 2018, the ICSID Secretariat requested that the Applicant make a fourth advance payment of US$180,000 no later than July 6, 2018 to cover administrative costs and expenditures until the end of the proceedings.
42.
On July 10, 2018, the ICSID Secretariat sent a letter to the Parties informing them that no funds had been received. The ICSID Secretariat invited either Party to make the requested payment as soon as possible and no later than July 25, 2018. On July 16, 2018, OIEG sent a letter informing the ICSID Secretariat that it planned to make the payment of US$180,000. On July 25, 2018, the ICSID Secretariat informed the Parties that US$179,970 had been received from the Respondent on Annulment.
43.
On July 20, 2018, the Applicant submitted a Second Request for Stay of Enforcement of the Award (the "Second Stay Request"), in response to which the Respondent on Annulment submitted its Observations on July 31, 2018.
44.
On September 7, 2018, further to the Committee’s invitation, each Party submitted its statement of costs associated with the Second Stay Request.
45.
On September 24, 2018, the Committee issued a decision rejecting the Applicant’s Second Stay Request (the "Second Stay Decision").
46.
The annulment proceeding was declared closed on September 25, 2018.

III. THE PARTIES’ POSITIONS AND THE ANALYSIS OF THE COMMITTEE

47.
As noted above, the Applicant seeks the annulment of the Award on four of the five grounds for annulment set forth in Article 52(1) of the ICSID Convention: (i) the Tribunal was not properly constituted; (ii) the Tribunal manifestly exceeded its powers; (iii) there was a serious departure from a fundamental rule of procedure; and (iv) the Award fails to state the reasons on which it is based.2
48.
Below is a summary of the Parties’ arguments and the Committee’s analysis on each of the grounds of annulment invoked by the Applicant, preceded by a short discussion on the nature and scope of the annulment mechanism.

A. Nature and Scope of the Annulment Mechanism

(1) Applicant’s Position

49.
The Applicant disagrees with OIEG’s "excessively restrictive interpretation of the provisions contained in the ICSID Convention on the annulment of awards."3 According to Venezuela, if ICSID’s annulment mechanism had "the features described by OIEG, then the function of the Committee would be virtually non-existent and this proceeding would be devoid of any sense."4
50.
In response to OIEG’s argument that the Application is "nothing but an appeal disguised as annulment,"5 Venezuela contends that its arguments in support of the Application "do not refer to reasonable disagreements in terms of the interpretation of the facts and the law, but are limited to certain defects contained in the Award which are so serious that they fit the specific list included in Article 52(1) of the ICSID Convention as grounds for annulment of the Award."6
51.

Opposing OIEG’s "mistaken" invocation of a "duty to interpret the grounds for annulment [...] in a restrictive manner,"7 the Applicant maintains that, when examining the grounds for annulment set out in Article 52 of the ICSID Convention, the Committee should not adopt "an extensive or narrow interpretation."8 In support of this position, the Applicant relies on the decisions in Mitchell v. Congo,9 Wena Hotels v. Egypt,10 and Consortium R.F.C.C. v. Morocco.11 The Applicant also cites the annulment decision in Soufraki v. UAE,12 according to which:

Article 52 of the ICSID Convention must be read in accordance with the principles of treaty interpretation forming part of general international law, which principles insist on neither restrictive nor extensive interpretation, but rather on interpretation in accordance with the object and purpose of the treaty.13

52.
Finally, the Applicant objects to OIEG’s argument "that, even if there were reasons to annul the Award, the Committee has the discretion not to do so."14 The Applicant contends that "[t]he limited discretion of annulment committees under the ICSID Convention has to do with the evaluation of the arguments and documents submitted to it by the parties for consideration."15
53.
The Applicant accepts that committees must carefully assess the circumstances in each case and make sure that they do not annul awards in cases where the defects in the award "might prove not to be such after a more thorough analysis" or "are not a determining factor in the final outcome of the dispute."16 However, citing the decision in Amco v. Indonesia, the Applicant also argues that this measure of prudence "does not mean that an annulment committee has the discretion not to annul an award where it has defects listed by the ICSID Convention as grounds for annulment and those defects have been determining factors in the final outcome of the dispute between the parties."17

(2) Respondent on Annulment’s Position

54.
OIEG argues that the Applicant has abused "the narrow and exceptional recourse of annulment by submitting claims and arguments that are, at best, an appeal disguised as an application for annulment."18 This exceptional and narrow nature "is a corollary of the fundamental and well-established principle of finality of ICSID awards" embodied in Article 53 of the ICSID Convention.19
55.
In this sense, OIEG stresses that annulment under the ICSID Convention is not an appeal and therefore is not concerned with the substantive correctness of an award.20 The purpose of the annulment mechanism is limited to "policing the integrity and fairness of the process leading to the award."21 Further, the role of annulment committees is confined strictly to the grounds for annulment defined in Article 52(1) of the ICSID Convention.22
56.

Finally, OIEG maintains that, even when there are grounds for annulment, ad hoc committees have discretion not to annul an award in appropriate cases.23 This is confirmed, not only by the language of Article 52(3) of the ICSID Convention, but also by previous annulment committees and authoritative commentators.24

57.
While OIEG acknowledges that this discretion is not unlimited,25 it invokes previous annulment decisions26 to argue that "an award should not be annulled where the relevant breach had little significance to the rights of the parties or no meaningful effect on the award."27 In this sense, OIEG contends that, even if the Committee in the present case finds that any or all of the grounds invoked by the Applicant meet the threshold (quod non), they had no effect on the Tribunal’s decision and, therefore, the Committee should not annul the Award.28

(3) The Committee’s Analysis

58.
As is well known, the permissible challenges to an ICSID award must be brought within the framework of the Convention, and pursuant to its terms. The procedure for the annulment of an award rendered under the ICSID Convention is self-contained, and autonomous from domestic law. The annulment remedy is governed, in particular, by Article 52 of the ICSID Convention, and Arbitration Rules 50, 52, 53, 54 and 55.
59.
In accordance with Soufraki v. UAE, as invoked by the Applicant in paragraph 51 above, among other annulment decisions, this Committee agrees that Article 52 of the ICSID Convention should be interpreted neither restrictively nor extensively, but rather in accordance with the object and purpose of the ICSID Convention. As contended by the Respondent on Annulment,29 one such important purpose - indeed, "a fundamental goal for the ICSID system" - is "assuring the finality of ICSID arbitration awards."30
60.
Additionally, according to the Updated Background Paper on Annulment for the Administrative Council of ICSID ("2016 ICSID Paper"),

[t]he function of an ad hoc Committee is either to reject the application for annulment or to annul the award or a part thereof on the basis of the grounds enumerated in Article 52. Its function is not to rule on the merits of the parties’ dispute if it decides to annul, which would be the task of a new Tribunal should either party resubmit the dispute following annulment of the award.31

61.
Thus, even if an ad hoc annulment committee reaches a decision to annul, partially or totally, an ICSID award, that committee does not have the mandate to revisit the merits of the case in which the annulled award was rendered. The above passage of the 2016 ICSID Paper is directly relevant in the case at hand, given that the Parties have presented, for example, expert testimonies during the Hearing on Annulment.
62.
It is true that nothing in the ICSID Convention, nor in the Rules, expressly prohibits an ad hoc committee from stating its opinion on any issues addressed by an ICSID tribunal in its award. However, this Committee agrees with the proposition stated in various decisions that an ad hoc committee should not pronounce upon aspects of the award that are not essential to its decision.32
63.
As a corollary of the above, this Committee endorses several of the principles established by prior ad hoc committees, as expressed in the 2016 ICSID Paper:

(1) the grounds listed in Article 52(1) are the only grounds on which an award may be annulled;

(2) annulment is an exceptional and narrowly circumscribed remedy and the role of an ad hoc Committee is limited;

(3) ad hoc Committees are not courts of appeal, annulment is not a remedy against an incorrect decision, and an ad hoc Committee cannot substitute the Tribunal’s determination on the merits for its own;

(4) ad hoc Committees should exercise their discretion not to defeat the object and purpose of the remedy or erode the binding force and finality of awards;

(5) Article 52 should be interpreted in accordance with its object and purpose, neither narrowly nor broadly; and

(6) an ad hoc Committee’s authority to annul is circumscribed by the Article 52 grounds specified in the application for annulment, but an ad hoc Committee has discretion with respect to the extent of an annulment, i.e., either partial or full.33

64.
It is within the framework for the Committee’s analysis described in paragraphs 58 et seq. above that the Committee will examine OIEG’s argument that this Application is "at best, an appeal disguised as an application for annulment,"34 and the Applicant’s position that its arguments in support of the Application "do not refer to reasonable disagreements in terms of the interpretation of the facts and the law, but are limited to certain defects contained in the Award which are so serious that they fit the specific list included in Article 52(1) of the ICSID Convention as grounds for annulment of the Award."35
65.
Thus, in the sections of this Decision that follow, with an understanding that the Parties are in agreement that annulment is not an appeal, but an exceptional remedy, the Committee will address the alleged defects in the Award from this cardinal point of view.

B. The Tribunal Was Not Properly Constituted

(1) Legal Standard

a. Applicant’s Position

66.
In seeking annulment under Article 52(1)(a) relating to the improper constitution of the Tribunal, Venezuela complains that prior to the Award’s issuance Mr. Mourre lost the requisite qualities of impartiality and independence under the Convention given that he had entered into negotiations regarding a consultancy with Dechert LLP ("Dechert"), a law firm which, the Applicant maintains, was adverse to it in several international and domestic disputes.36 Further, the Applicant complains that the timing of (i) the revelation of Mr. Mourre’s professional contacts with Dechert and (ii) the closing of the proceedings in the Underlying Arbitration "precluded the Republic from exercising its right to [...] eventually propose [his] disqualification pursuant to the ICSID Convention."37
67.
Accordingly, on the basis of Articles 52(1), 14, 40(2) and 57 of the ICSID Convention, the Applicant argues that "if a member of a tribunal may not be relied upon to exercise independent judgment, the tribunal is not properly constituted and, therefore, a potential award rendered by it will not be valid."38 The Applicant relies on the annulment decisions in Vivendi v. Argentina II39 and EDF v. Argentina40 which held that an arbitrator’s lack of the qualities set forth in Article 14(1) of the ICSID Convention constitutes a ground for annulment pursuant to Article 52(1) of the ICSID Convention.41
68.
The Applicant points out that the ability to exercise independent and impartial judgment is continuous in nature. In this regard, when considering whether a tribunal has been properly constituted, the requirements in Article 14 of the ICSID Convention "must not only be satisfied at the time when the tribunal is actually constituted but must also continue to be met at all times,"42 that is, until the date of the award. Therefore, there may be cases in which a tribunal is properly constituted "but-due to a change in circumstances-it subsequently ceased to be properly constituted," giving rise to a ground for annulment.43
69.
The Applicant also argues that the ability to reach a decision in an independent and impartial manner must not be assessed in an abstract or general way, but must be judged in a concrete and specific manner, on a case by case basis.44
70.
Relying again on Vivendi v. Argentina II and EDF v. Argentina, the Applicant further contends that a party is entitled to seek disqualification during the annulment proceeding if the circumstances prevented it from doing so during the pendency of the arbitration proceeding.45 In such case, the Applicant argues, the annulment committee must conduct a de novo review of the disqualification proposal.46 The Applicant asserts that this is the only avenue for its challenge to be heard, and further that the purported conflict and denial of the right to be heard regarding same are also grounds for annulment under Article 52(1)(d).47
71.
Regarding the standard applicable to disqualification requests, the Applicant relies on the disqualification decision issued by the Chairman of the ICSID Administrative Council in Blue Bank v. Venezuela, which is based on the "objective perspective of an impartial and sufficiently informed third party:"48

The applicable legal standard is an objective standard based on a reasonable evaluation of the evidence by a third party. As a consequence, the subjective belief of the party requesting the disqualification is not enough to satisfy the requirements of the Convention.49

72.
In this same regard, the Applicant also cites the EDF v. Argentina annulment committee, which held that:

[T]he standard applied under Article 14(1) is whether a reasonable third party, with knowledge of all the facts, would consider that there were reasonable grounds for doubting that an arbitrator possessed the requisite qualities of independence and impartiality.50

73.
On this basis, the Applicant highlights that proof of actual dependence or bias is not required, "it is sufficient to establish the appearance of dependence or bias."51 This principle of the "avoidance of appearance of impropriety" is generally applied in both domestic and international law, and reflected in the International Bar Association’s Guidelines on Conflicts of Interest in International Arbitration (the "IBA Guidelines"):

Doubts are justifiable if a reasonable third person, having knowledge of the relevant facts and circumstances, would reach the conclusion that there is a likelihood that the arbitrator may be influenced by factors other than the merits of the case as presented by the parties in reaching his or her decision.52

74.
In support of its Application, the Applicant cites several cases in which a party sought the disqualification of an arbitrator:

• In Blue Bank v. Venezuela,53 arbitrator José Maria Alonso was disqualified given that he was a member of a law firm in Madrid, whose New York and Caracas offices were handling an international arbitration against Venezuela addressing similar issues.54

• In Burlington v. Ecuador,55 the Chairman of the ICSID Administrative Council found that a sentence in one of the explanations provided by arbitrator Francisco Orrego Vicuña concerning the alleged conflict would lead a third party making a reasonable evaluation to manifestly perceive an appearance of lack of impartiality.56

• In Perenco v. Ecuador,57 the Secretary-General of the Permanent Court of Arbitration considered that Judge Brower’s words in a journalistic interview created an unfavorable opinion against Ecuador, thus giving a reasonable third party justifiable doubts about his impartiality.58

• In Caratube v. Kazakhstan,59 the other members of the tribunal found that a reasonable third party would find it very likely that, in view of arbitrator Bruno Boesch’s work in a prior case that involved similar parties and facts, his objectivity and open-mindedness regarding the facts and issues to be decided upon would be tainted.60

• In Vito Gallo v. Canada,61 it was established that the conflict of interest created by a professional relationship between an arbitrator and a firm with an interest in the outcome of the dispute could not be side-stepped by the mere fact that this work was not substantial or current.62

• In Alpha Projekt v. Ukraine,63 it was established that failure to disclose the relationship between an arbitrator and a third party with an interest in the dispute could constitute evidence of bias, if the relationship was recent and professional.64

75.
Finally, relying on EDF v. Argentina, the Applicant states that the party seeking annulment is not required to prove that a lack of impartiality or independence did in fact have a material effect on the award, but merely that it could have done so.65 In this regard, the Applicant explains that the fact that an award is unanimous, as in the present case, cannot in itself "constitute an indicator that the award cannot be annulled."66 For Venezuela, "[i]t is sufficient for one of the members of the tribunal to fail to meet the requirements in Article 14 of the Convention for the tribunal to be deemed improperly constituted."67

b. Respondent on Annulment’s Position

76.
OIEG argues that the threshold for annulling an award on the basis of Article 52(1)(a) of the ICSID Convention is exceptionally high, as illustrated by the fact that this provision has only been invoked in three cases and none of them resulted in annulment.68
77.
The Respondent on Annulment further contends that (i) annulment is not the proper means to seek the disqualification of an arbitrator;69 (ii) even under the Applicant’s interpretation of Article 52(1)(a), it must establish a manifest lack of impartiality or independence as required under Articles 14 and 57; which (iii) should lead to annulment only if it would have altered the outcome of the award.

(i) Annulment is not the proper means to seek the disqualification of an arbitrator

78.
For OIEG, Article 52(1)(a) should be interpreted in accordance with the customary international law rule enshrined in Article 31(1) of the Vienna Convention on the Law of Treaties (the "VCLT").70 Thus, "the Committee’s starting point should be to discern the ordinary meaning of the terms ‘that the Tribunal was not properly constituted’" and such interpretation must lead to the conclusion that Article 52(1)(a) only covers breaches of the rules governing the process of constitution of tribunals, i.e., Section 2 of Chapter IV of the ICSID Convention, Articles 37 to 40, entitled the "Constitution of the Tribunal."71
79.
OIEG further argues that, even if the Committee were to resort to the "supplementary means of interpretation" referred to in Article 32 of the VCLT, the end result would be the same, since the drafting history of the ICSID Convention confirms the Respondent on Annulment’s interpretation of Article 52(1)(a).72 In this regard, OIEG explains that

"[d]uring the drafting of the ICSID Convention a proposal similar to what the Applicant is now advancing was rejected."73

80.
OIEG finds additional support in the decision of the committee in Azurix v. Argentina. There, the committee explained that the role of an annulment committee in relation to arbitrator challenges brought under Articles 57 and 58 of the ICSID Convention is limited to examining under Article 52(1)(d) whether or not there was a serious departure from a fundamental rule of procedure in the way in which the challenge was addressed; and that a challenge to an arbitrator brought for the first time on annulment is inadmissible under Article 52(1)(a).74 For OIEG, the legal authorities on which the Applicant relies - EDF v. Argentina and Vivendi v. Argentina II - are unpersuasive on this particular issue and the Committee should adhere to the more judicious and reasoned view expressed by Azurix v. Argentina.75
81.
OIEG objects to the Applicant’s assertion that the only possibility to challenge arbitrators in relation to facts discovered after the closure of the Underlying Arbitration is to request the annulment of the award under Article 52(1)(a) or (d).76 First, if a party discovers any such facts between the closure of a proceeding and the issuance of the award, it can request that the proceeding be reopened pursuant to Arbitration Rule 38.77 Second, if the grounds for disqualification only become known after the award is rendered, the relevant party can request the revision of the award under Article 51 of the ICSID Convention.78
82.
OIEG cites Mr. Broches, who stated that "if the grounds for disqualification only became known after the award was rendered, this would be a new fact which would enable a revision of the award."79 Similarly, OIEG notes, the Azurix v. Argentina committee stated that:

In the event that the party only became aware of the grounds for disqualification of the arbitrator after the award was rendered, this newly discovered fact may provide a basis for revision of the award under Article 51 [...] but [...] such a newly discovered fact would not provide a ground of annulment under Article 52(1)(a).80

83.
In sum, the Respondent on Annulment states that the Applicant’s reliance on Article 52(1)(a) to raise its alleged concerns regarding Mr. Mourre’s impartiality and independence is contrary to the proper interpretation of that Article.81

(ii) Under the Applicant’s interpretation of Article 52(1)(a), it must establish a manifest lack of impartiality or independence as required under Articles 14 and 57

84.
OIEG argues that, even if the Committee were to accept the Applicant’s interpretation of Article 52(1)(a), the Applicant would still have the burden to prove that Mr. Mourre manifestly lacked the independence and impartiality required under Articles 14(1) and 57.82
85.
OIEG contends that, contrary to the Applicant’s assertion, the applicable standard under Article 57 requires the applicant to adduce direct evidence of a "manifest" lack of the qualities required by Article 14(1).83 This standard must not be confused with the "reasonable doubts" standard applicable under the UNCITRAL Arbitration Rules or the IBA Guidelines,84 which standard was expressly rejected in Nations Energy v. Panama, Universal Compression v. Venezuela, and OPIC v. Venezuela, among others.85
86.
OIEG states that the relevant standard under Article 57 of the ICSID Convention is an objective one and imposes a high burden of proof on the Applicant.86 As succinctly stated in ConocoPhillips v. Venezuela:87

The standard to be applied [...] is whether a reasonable third person, with knowledge of all the facts, would conclude, on an objective basis, that the challenged arbitrator is manifestly lacking in the ability to act impartially (Article 14 read with Article 57 of the ICSID Convention).88

87.
Also relying on ConocoPhillips v. Venezuela, OIEG argues that under this standard it is not enough for the applicant to show that the challenged arbitrator may harbour a proclivity of bias in general. Rather, "it must establish facts indicating that [Mr. Mourre] would have a manifest bias in relation to the outcome of the present case."89 The Respondent on Annulment cites the following passage from the ConocoPhillips Decision on Disqualification II:

The allegation that serves as the basis for the challenge, assuming it can be established, must be capable of being related to the present case, that is, that the particular facts must give rise to a manifest lack of independence and impartiality in this case.90

88.
With respect to the requirement of "manifest," OIEG maintains that, as confirmed by "ICSID jurisprudence" and commentary, "manifest" means "evident" or "obvious" and related to the "ease with which the alleged lack of the qualities can be perceived."91 According to OIEG, this high standard has been applied in Blue Bank v. Venezuela, Burlington Resources v. Ecuador, Caratube v. Kazakhstan, Abaclat v. Argentina, and ConocoPhillips v. Venezuela.92
89.
OIEG contends that the Applicant’s reliance on the disqualification decisions it cites in support of its Application is misplaced:

• In Blue Bank v. Venezuela,93 the facts are "starkly different from those in the OIEG Arbitration."94 In contrast with the situation of Mr. Mourre:

(a) Arbitrator Alonso was a partner in Baker McKenzie Madrid; (b) Baker McKenzie New York and Baker McKenzie Caracas represented the claimant in a parallel and similar ICSID proceeding against Venezuela (i.e., in Longreef v. Venezuela)', (c) Arbitrator Alonso likely would have had to decide issues in Blue Bank v. Venezuela relevant to Longreef v. Venezuela', (d) Arbitrator Alonso was a member of Baker McKenzie’s International Arbitration Steering Committee; and (e) Arbitrator Alonso stated that the result in Longreef v. Venezuela could have an effect on his remuneration [...].95

• In Burlington v. Ecuador,96 the Chairman of the ICSID Administrative Council based his decision on the fact that, in the context of a disqualification proceeding, arbitrator Francisco Orrego Vicuña "made ‘allegations about the ethics of counsel for the Republic of Ecuador’ that ‘[did] not serve any purpose in addressing the proposal for disqualification or explaining circumstances relevant to the allegations that the arbitrator manifestly lacks independence or impartiality.’"97 In this case, the Applicant has never argued that Mr. Mourre made those sorts of allegations.98

• In Perenco v. Ecuador,99 the conclusion of the Secretary-General of the Permanent Court of Arbitration was based on a statement made by Judge Brower that expressed unfavorable views on Ecuador and prejudged a fundamental issue of the case. Again, the Applicant has never argued that Mr. Mourre made similar comments. Additionally, in that case the parties had agreed that the challenge would be resolved applying the IBA Guidelines, which set a different standard than the one applicable to this case.100

• In Caratube v. Kazakhstan,101 Mr. Bruno Boesch was disqualified for having acted as arbitrator in prior proceedings that involved similar parties and facts. The Applicant has failed to explain how this decision could support its arguments regarding the effects of Mr. Mourre’s conversations and future relationship with Dechert.102

• In Vito Gallo v. Canada,103 the standard applicable was different since it was a case governed by the UNCITRAL Arbitration Rules. Additionally, there is no factual correlation between the facts in that case and the facts in the present one.104

• In Alpha Projekt v. Ukraine,105 and contrary to the Applicant’s misrepresentation of the decisions and the facts of that case, the deciding arbitrators made clear that nondisclosure cannot make an arbitrator partial or lacking independence, but only the facts or circumstances that were not disclosed. Further, they cited with approval Prof. Schreuer’s statement that even professional contacts between an arbitrator and legal counsel representing one of the parties are not, as a rule, an obstacle to the exercise of independent judgement.106

90.
Lastly, OIEG maintains that "[m]ere professional contacts cannot by themselves constitute grounds for disqualification."107 In this regard, OIEG points out that in SGS v. Pakistan, when deciding on the challenge of Mr. Thomas (an arbitrator) due to his contacts with Mr. Paulsson (Counsel for Pakistan) in another arbitration, the deciding arbitrators made clear that an applicant must show "dependency" or "reciprocal partisanship."108 Similarly, OIEG notes that Prof. Schreuer states that "[p]rofessional contacts between an arbitrator and legal counsel representing one of the parties are not, as a rule, an obstacle to the exercise of independent judgment."109

(iii) An alleged lack of impartiality or independence of the arbitrator may lead to annulment under Article 52(1)(a) only if it would have altered the outcome of the award

91.
OIEG contends that, even if the Applicant persuades the Committee that a manifest lack of impartiality or independence can be inferred, this may only lead to annulment if the Committee is also persuaded that it would have altered the outcome of the Award.110 OIEG points out that "all committees considering this ground of annulment have paid close attention to the capacity of the invoked circumstances to alter the outcome of the award" and ultimately each has decided not to annul the award.111
92.
In this regard, OIEG maintains that the Applicant must demonstrate that the lack of impartiality or independence must have arisen prior to the rendering of the award,112 and cites the annulment decision in EDF v. Argentina, according to which "if an arbitrator ceased to be independent or impartial only after the award has been finalised, his lack of the requisite qualities could not have affected the award and would not, therefore, constitute a ground for annulment."113
93.
Finally, and contrary to what the Applicant asserts, OIEG contends that the fact that an award is unanimous "is a relevant factor for whether an alleged lack of impartiality or independence was capable of affecting the outcome of the case."114

c. The Committee’s Analysis

94.
As recorded above, the Parties have debated at length whether an arbitrator’s loss of his or her ability to act in an impartial and independent manner, as required under Articles 14(1) and 57 of the ICSID Convention, may properly constitute a ground for annulment under Article 52(1)(a).
95.

As a starting point, the Committee undertakes to discern the intent of the Contracting States when agreeing to the specific wording of Article 52(1)(a) stating that "the tribunal was not properly constituted." To that end, the Committee recalls Articles 31 and 32 of the VCLT.115 As is known, Article 31(1) provides that "[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." In accordance with Article 32, interpretation of a treaty also includes recourse to supplementary means of interpretation, "including the preparatory work of the treaty and the circumstances of its conclusion, in order to confirm the meaning resulting from the application of article 31 [...]."

97.
The Committee further interprets the term "properly constituted" in the context of the ICSID Convention and Arbitration Rules. Namely, Chapter IV, Section 2, of the Convention, entitled "Constitution of the Tribunal" and comprising Articles 37-40, lists the conditions to be met for a "properly constituted" tribunal, which must be satisfied at the time of the tribunal’s initial formation. Such conditions include, for example, the number of arbitrators and the method of their appointment, applicable timeframes, nationality requirements, and, under Article 40(2), the condition that arbitrators "shall possess the qualities stated in paragraph (1) of Article 14," including the ability to "exercise independent judgment."
98.
The foregoing interpretation also is supported by reference to the Arbitration Rules. Specifically, Chapter I (Rules 1 through 12), entitled "Establishment of the Tribunal," in its very first provision refers to ICSID Convention Chapter IV, Section 2 ("Constitution of the Tribunal"),117 indicating a connection between the terms "establishment" and "constitution."
99.
Accordingly, if the conditions under Articles 37-40 of the ICSID Convention for the proper constitution of the tribunal are not satisfied at the time of such constitution, then as a general matter either party may request the annulment of the award under Article 52(1)(a) on the ground that "the tribunal was not properly constituted."118 However, in the case of the lack or loss of qualities listed in Article 14(1), the disqualification provisions of Articles 57 and 58 apply (together with Arbitration Rule 9), which regulate the disqualification of an arbitrator in case of a manifest lack of the qualities required by Article 14(1).119 Contrary to the Applicant’s contention,120 Article 52(1)(a) is not the proper means to address the disqualification of an arbitrator.
100.
As OIEG has maintained,121 the intent of the drafters of the ICSID Convention was to distinguish annulment under Article 52(1)(a) from disqualification under Article 57. The latter provision provides:

A party may propose to a Commission or Tribunal the disqualification of any of its members on account of any fact indicating a manifest lack of the qualities required by paragraph (1) of Article 14. A party to arbitration proceedings may, in addition, propose the disqualification of an arbitrator on the ground that he was ineligible for appointment to the Tribunal under Section 2 of Chapter IV.

101.
The last sentence of Article 57 appears to confirm OIEG’s interpretation in that it provides that a party "may" in addition (i.e., to disqualification for manifest lack of the qualities required by Article 14(1)) propose disqualification as a remedy also in a case in which the arbitrator "was ineligible for appointment to the Tribunal under Section 2 of Chapter IV."122 Notably, Section 2 includes Article 40(2), which requires that "[a]rbitrators appointed from outside the Panel of Arbitrators shall possess the qualities stated in paragraph (1) of Article 14." Thus, even in the case of an arbitrator’s lack of qualities required for the proper constitution of the Tribunal, the remedy expressly identified in the ICSID Convention is not annulment under Article 52(1)(a) but disqualification under Article 57. If this is so at the time of constitution of the tribunal, there is no evident basis to draw the opposite conclusion where a condition of dependence or partiality arises due to a change of circumstances at a later point in the proceeding. Thus, the distinction in the ICSID system between annulment and disqualification means that Article 57 regulating disqualification is to the exclusion of Article 52(1)(a) regulating annulment.
102.
As supplementary means of interpretation under Article 32 of the VCLT, the drafting history of the ICSID Convention confirms the Committee’s conclusions.123 During the drafting, a proposal similar to the interpretation now advanced by the Applicant was rejected when the States did not agree to add a provision "which would allow annulment of the award where disqualification could have been possible had it been made before the award was rendered."124 In the context of that discussion, Mr. Broches observed, "if the grounds for disqualification only became known after the award was rendered, this would be a new fact which would enable a revision of the award."125
103.
Similarly, the 2016 ICSID Paper observes that:

the drafting history of the ICSID Convention indicates that the ground of improper constitution of the Tribunal was intended to cover situations such as a departure from the parties’ agreement on the method of constituting the Tribunal or an arbitrator’s failure to meet the nationality or other requirements for becoming a member of the Tribunal.126

104.
In addition to the above VCLT analysis, the Committee considers in chronological order the three cases that the Parties have presented in addressing this issue. The first is Azurix v. Argentina, in which the committee considered whether a challenge addressed in the underlying proceeding pursuant to ICSID Convention Articles 57 and 58, could be reviewed on annulment under Article 52(1)(a).127 In answering the question in the negative, the Azurix committee reasoned that:

Article 52 does not state that "any fact indicating a manifest lack of the qualities required by paragraph (1) of Article 14" will constitute a ground of annulment. Rather, the ground of annulment in Article 52(1)(a) is that the tribunal was "not properly constituted". The procedure for constituting the tribunal, including the procedure for challenging arbitrators on grounds of a manifest lack of the qualities required by Article 14(1), is established by other provisions of the ICSID Convention. If [such] procedures have been properly complied with, the Committee considers that the tribunal will be properly constituted for the purposes of Article 52(1)(a).128

105.
The Azurix committee thus found that the review of a decision on disqualification would amount to an improper "de novo opportunity to challenge members of the tribunal after the tribunal has already given its award."129 As recorded by OIEG, the Azurix committee -consistent with Mr. Broches’ observations set forth above - further stated,

[i]n the event that the party only became aware of the grounds for disqualification of the arbitrator after the award was rendered, this newly discovered fact may provide a basis for revision of the award under Article 51 of the ICSID Convention but, in the Committee’s view, such a newly discovered fact would not provide a ground of annulment under Article 52(1)(a). If no proposal for disqualification is made by a party under Article 57, there will be no decision under Article 58, and in such a case there can [...] be no basis for contending that the tribunal was not properly constituted by reason of any failure to comply with Article 57 or Article 58.130

106.
The second case is Vivendi v. Argentina II, in which the committee considered Argentina’s argument that the tribunal was not properly constituted under Article 52(1)(a), because of an arbitrator’s purported conflict of interest during the proceedings, which was discovered only after the issuance of the Award in question.131 According to the Vivendi II committee, this was a question that could be reviewed on annulment.132
107.
Similarly, in EDF v. Argentina (the third case addressed by the Parties), at issue was Argentina’s challenge to an arbitrator based on a purported conflict that was discovered between the time the proceedings had closed and the time of the Award.133 According to the EDF committee, a challenge based on Article 14(1) was "a ground on which an award might be annulled under Article 52(1)(a)."134 The EDF committee observed the holdings of Azurix and Vivendi II as follows:

The Committee has taken careful note of the views of the Azurix Committee [...] that [...] the issue should be raised in proceedings for revision under Article 51 and not for annulment but it respectfully disagrees and prefers the approach of the Vivendi II Committee [...].135

108.
For the above-stated reasons concerning the ordinary meaning of Article 52(1)(a), and its context within the ICSID Convention and Rules, as confirmed by the Convention negotiating history, this Committee is respectfully unable to share the holding and conclusion of the committees in Vivendi II and EDF, and instead prefers those of the Azurix committee. This interpretation maintains the distinction between the rules and standards concerning tribunal formation, arbitrator challenges and annulment, thus facilitating the operation of the Convention and Rules, as the drafters intended.136
109.
Accordingly, the Committee finds that the Applicant’s claims of partiality and dependence are inadmissible as grounds for annulment under Article 52(1)(a) of the ICSID Convention.

(2) Application of the Legal Standard to the Present Case

a. Factual Background

110.
The Applicant invokes this ground for annulment based on the following factual background.
111.
On March 4, 2015, in Fábrica de Vidrios Los Andes, C.A. and Owens-Illinois de Venezuela, C.A. v. the Bolivarian Republic of Venezuela (ICSID Case No. ARB/12/21) ("Favianca v. Venezuela"), Mr. Mourre, then a member of the tribunal in that case, informed the parties that in May 2015 he would enter into a consultancy agreement with Dechert with the title of Special Counsel. The letter to the parties in Favianca v. Venezuela stated as follows:

As from May 2015, I will leave Castaldi Mourre & Partners to establish my own individual arbitrator practice. I will also as from then have a consultancy agreement with the law firm of Dechert LLP with the title of Special Counsel. At Dechert, I will only work on specific matters on which Dechert will ask me to participate, and I will have no access whatsoever to databases for matters other than those on which I will work directly. I will have a fixed compensation from Dechert and will not share in its profits or costs. My arbitrator’s work will therefore be completely separate from Dechert. As a consequence, I do not consider me a Dechert lawyer for conflict purposes and I do not see Dechert’s activities, except for the Dechert cases I work on, to be such as to cast any doubt on my independence and impartiality.

I am however informing the parties, for the sake of transparency, that Dechert has within the past year been adverse to the Bolivarian Republic of Venezuela and/or Petroleos de Venezuela in six litigation matters that are entirely unrelated to the present arbitration. I have no additional information on these cases and, for the avoidance of doubt, I of course confirm that I will not participate in any manner in any work of Dechert with respect to the Bolivarian Republic of Venezuela, Petroleos de Venezuela or any other entity related to the Republic of Venezuela.137

112.
Mr. Mourre did not send such a letter to the Parties in the Underlying Arbitration.
113.
On that same date, March 4,2015, the Tribunal notified the Parties that the proceeding was declared closed in accordance with Arbitration Rule 38(1).138
114.
On March 9, 2015, Venezuela replied to Mr. Mourre’s communication in Favianca v. Venezuela alleging that the information received raised doubts about his ability to act as an independent and impartial arbitrator in the cases in which Venezuela was a party and seeking additional information.139 In particular, Venezuela requested:

• The date of commencement of the negotiations or talks between Mr. Mourre and Dechert LLP that led to the decision to join the law firm under the terms disclosed on 4 March 2015.

• The date on which those negotiations or talks concluded through the agreement disclosed on 4 March 2015.

• The identity of the persons who conducted those negotiations or talks between Mr. Mourre and Dechert LLP and the place or places where they were held.

• A list of the cases in which Dechert LLP acts as attorney or counsel in—domestic or international—arbitration or court proceedings against Latin American States or their instrumentalities, including details on the stage of the proceedings, industry, subject matter, claimant and—in the case of arbitration proceedings—institution conducting the proceedings and names of the members of the tribunal.

• A list of the duties to be performed by Mr. Mourre as from May 2015 in his capacity as ‘Special Counsel’ for Dechert LLP.

• A list of the team of in-house attorneys and external advisors with which Mr. Mourre will work as legal consultant within Dechert LLP, including the organizational chart on the basis of which he will receive his work requests and/or instructions.

• In the event that it has already been discussed in the negotiations with Dechert LLP or thereafter, a list of the cases in which Mr. Mourre will participate, including the industries and subject matters involved.140

115.
On March 10, 2015, the Award was dispatched to the Parties in the present case. The dates of signature of the Award are as follows: Mr. Mourre signed on February 20, 2015; Mr. Orrego Vicuña on February 26, 2015; and the President, Prof. Fernández-Armesto, on March 4, 2015.
116.
In response to Venezuela’s additional information request in Favianca v. Venezuela, on March 11, 2015, Mr. Mourre sent a letter to the parties in the following terms:

Dear Ms. Planells-Valero,

I acknowledge receipt of a communication dated March 9, 2015 from counsel for the Bolivarian Republic of Venezuela in this case. In this communication, the Bolivarian Republic of Venezuela requests additional information regarding my communication to the parties dated March 4, 2015, stating however that my future professional relationship with Dechert LLP "is such as to generate conflicts of interest that are not compatible with the requirements that an arbitrator must meet under the ICSID Convention" (arbitrator’s translation). In this regard, I can only confirm that my professional relationship with this law firm - which will only start on May 1st [sic] - is not such as to generate any conflict since, (i) my arbitrator’s work (including in this case) will be totally separated from Dechert, (ii) I will not be a partner in Dechert and I will have no access whatsoever to their databases, (iii) my relationship with Dechert will be limited to specific matters on which Dechert will ask me to participate, and (iv) I will not have any involvement (and information on) in the cases on which Dechert may act against the Bolivarian Republic of Venezuela or related entities. Therefore, I am unable to provide any information relating to cases in which Dechert may be acting against the Republic or related governmental entities, since I don’t have that information and I don’t have access to it. I can only add that the conversations that led to the establishment of this professional relationship were informally conducted with Dr. Eduardo Silva Romero, with whom I have a longstanding friendship, and were concluded shortly before I made my declaration. Based on this, I can only confirm my total independence and impartiality. I however understand and respect the position of the Bolivarian Republic of Venezuela. In view of the importance attached to all arbitrators having the full confidence of the parties, if the Republic still believes that my statement is not compatible with my duties of independence and impartiality, I will have no choice but to resign as arbitrator in this case.

Sincerely yours,

Alexis Mourre141

117.
On March 13, 2015, Venezuela filed a proposal for the disqualification of arbitrators Alexis Mourre and Yves Fortier in Favianca v. Venezuela.142
118.
On March 16, 2015, Mr. Mourre resigned as an arbitrator in Favianca v. Venezuela143 and on March 18, 2015 he also resigned his position in Longreef Investments A.V.V. v. Bolivarian Republic of Venezuela (ICSID Case No. ARB/11/5) ("Longreef v. Venezuela").144
119.
In Longreef v. Venezuela, the resignation of Mr. Mourre was accepted by the other two members of the tribunal,145 and in Favianca v. Venezuela, the Chairman of the Administrative Council of ICSID held that, in light of Mr. Mourre’s resignation, it was "no longer necessary to address the proposal for his disqualification, which is accordingly dismissed."146
120.
Both Parties appear to acknowledge that the consultancy arrangement between Mr. Mourre and Dechert never materialized.147

b. Applicant’s Position

121.
The Applicant argues that the contractual or professional relationship established between Mr. Mourre and Dechert - in addition to his personal friendship with one of its main partners - "severely and irretrievably affected his impartiality and independent judgment."148 This is so because the decisions and opinions expressed by Mr. Mourre in cases in which Venezuela is a party "would have been of great importance for the other cases" in which Dechert acts against Venezuela or its government-owned company Petróleos de Venezuela, S.A. ("PDVSA").149 As an example, the Applicant refers to Convial v. Peru150 in which Dechert acted for the claimants and offered an interpretation of the content of the fair and equitable treatment standard under international law "which is radically different from the position adopted by" Venezuela in this proceeding.151
122.
The Applicant further claims that Mr. Mourre should have disclosed this relationship in the present proceeding and his failure to do so precluded Venezuela from exercising its right to request explanations and to eventually propose his disqualification.152 In this regard, the Applicant adds that the situation is analogous to that of Vivendi v. Argentina II and EDF v. Argentina, since the party seeking the annulment did not have access to the relevant information before the proceeding was closed and thus it is "the annulment committee that must resolve the issue for the first time."153
123.
However, the Applicant points out that the situation in this case differs from Vivendi v. Argentina II, because in such case this ground for annulment was rejected on the basis of the explanations given by the challenged arbitrator, Prof. Kaufmann-Kohler, who objected to the challenge.154 Instead, in Favianca v. Venezuela and Longreef v. Venezuela, Mr. Mourre - unlike what happened with Prof. Kaufmann-Kohler - "did not challenge the proposal for disqualification but expressly stated that the Republic’s position as to the incompatibility between his situation and the duties of independence and impartiality left him with no choice but to resign."155
124.
The Applicant concludes that, in the instant case, given the similar circumstances as in Favianca v. Venezuela and Longreef v. Venezuela,

there is no alternative but to assume that, if Mr. Mourre had also disclosed in this proceeding that he had been hired by the law firm Dechert LLP (as he should have done), then he would have resigned from his position as arbitrator by virtue of his conflicts of interest and, therefore, the Award that is now sought to be annulled would not have been rendered.156

125.
The Applicant states that at the time the Award was signed and the proceeding declared closed, Mr. Mourre "knew that he was affected by a conflict of interest [of] which he believed" the parties had to be informed in Favianca v. Venezuela.157 Further, for the Applicant, (i) on the one hand, the fact that the Award was rendered when the conflict of interest was already present "precludes any possibility of validating [Mr. Mourre’s] acts,"158 and (ii) on the other hand, the fact that the Award was unanimous does not preclude annulment on the basis of this ground.159 The Applicant argues that it "cannot be truly known, nor assumed to be true [...] that Mr. Mourre had no effect on the shaping of the Tribunal’s opinion in any of the points decided upon."160
126.
The Applicant adds that the improper constitution of the Tribunal is "aggravated and confirmed" by the following circumstances. Even though the Award was dispatched on March 10, 2015, the Award "was issued" on March 4, 2015, the same date of the closure of the proceeding.161 What is more, the other two arbitrators, Mr. Mourre and Mr. Orrego Vicuña, signed before the closure of the proceeding, on February 20, 2015 and February 26, 2015, respectively, and "[t]his irregularity in itself constitutes a departure from a fundamental rule of procedure which warrants the annulment of the award."162
127.
The Applicant contends that the conflict of interest "does not arise upon initiation of Mr. Mourre’s actual work as Special Counsel for Dechert LLP, but with the incompatible professional negotiations that ended up giving rise to that contract" and that necessarily predated the closure of the proceedings and the issuance of the Award.163
128.
For the Applicant, the facts that have been proven are "sufficient to establish the lack of an appearance of impartiality of Mr. Mourre" and, in any event, the lack of any additional evidence that could be deemed necessary cannot be attributed to Venezuela, but to Mr. Mourre’s "refusal" to provide it.164 Furthermore, the Applicant asserts that Mr. Mourre’s refusal to provide the information requested "does not reduce but rather ratifies the need to proceed with the annulment."165

c. Respondent on Annulment’s Position

129.
As mentioned above, OIEG argues that the Applicant’s arguments on this ground for annulment fail as a matter of law and as a matter of fact. The Applicant’s request fails as a matter of law because the annulment ground under Article 52(1)(a) is not the proper procedural avenue to challenge the lack of impartiality or independence of Mr. Mourre. OIEG states that, on this basis alone, the Committee should reject this ground for annulment.
130.
OIEG further argues that the Applicant’s Application on the basis of this ground fails as a matter of fact because, even under the Applicant’s own "misinterpretation" of the applicable legal standard, the Applicant has failed to discharge its burden of proving (i) the existence of facts indicating that Mr. Mourre manifestly lacked impartiality or independence in the Underlying Arbitration; and (ii) that Mr. Mourre’s alleged loss of those qualities could have had a material effect on the Award.

(i) Article 52(1)(a) is not the proper procedural avenue to challenge the lack of impartiality or independence of Mr. Mourre

131.
This argument from the Respondent on Annulment has already been summarized above. Notably, OIEG adds that the Applicant had "at least two alternative procedural avenues available to it to raise its concerns regarding the impartiality or independence of Arbitrator Mourre, requesting: (a) that the Tribunal reopen the proceeding; or (b) revision of the Award."166 Additionally, for OIEG:

Both procedural avenues presented significant advantages over the course of action the Applicant decided to follow. Not only would pursuit of each avenue have been consistent with the ICSID Convention, but also it would have allowed the issue to be decided by the appropriate adjudicators. If the Applicant had requested either the reopening of the proceeding or the revision of the Award and then submitted a disqualification proposal, that proposal would have been decided by Arbitrators Fernández-Armesto and Orrego Vicuña, as mandated by the provisions of the ICSID Convention that govern the disqualification of arbitrators. Unlike this Committee, those arbitrators would have had access to the entire record of [the] OIEG Arbitration and, by definition, would have been in a better position to assess the potential effect of Arbitrator Mourre’s contacts with Dechert on his ability to exercise independent or impartial judgment in that arbitration.167

132.
Further, OIEG points out that, in accordance with Arbitration Rule 9(4), if the Applicant had sought either to reopen the proceeding or to request the revision of the Award, and then submitted a disqualification proposal, Mr. Mourre would have been able to furnish explanations.168 By choosing to raise its concerns only in the annulment proceeding, however, "the Applicant necessarily deprived him of that right and now seeks to have the Committee engage in a level of speculation regarding Arbitrator Mourre’s actions that is not only artificial, but also simply contrary to the legal standard applicable to the disqualification of arbitrators under the ICSID Convention."169
133.
Finally, OIEG asserts that, if the Applicant had opted for requesting the reopening of the proceeding "immediately after Arbitrator Mourre’s 4 March 2015 disclosure, with a view to moving for his disqualification, any disqualification proposal would have complied with the temporal requirement of ICSID Arbitration Rule 9(1)"170(i.e., to submit the disqualification proposal "promptly" after the discovery of the relevant facts). Instead, the Applicant chose to raise its concerns for the first time in this annulment proceeding, that is, more than four months after Mr. Mourre’s disclosure. Such period of time, as confirmed by "ICSID jurisprudence," cannot possibly meet the "promptly" requirement.171

(ii) Even under its own misinterpretation of Article 52(1)(a), the Applicant has failed to discharge its burden of proof

134.
OIEG argues that, even under the Applicant’s interpretation of Article 52(1)(a), the Applicant has the burden to prove: (a) the existence of facts that would indicate that Mr. Mourre manifestly lacked independence or impartiality at end of the Underlying Arbitration; and (b) that Mr. Mourre’s loss of those qualities at that stage of the proceeding could have had a material effect on the Award.172 OIEG contends that the Applicant has "manifestly failed to discharge its burden of proof for both requirements."173

• The Applicant has failed to prove the existence of facts indicating Mr. Mourre’s manifest lack of impartiality or independence

135.
OIEG first argues that there is no evidence on the record suggesting a dependency relationship between Mr. Mourre and Dechert.174
136.
Second, OIEG states that the Applicant has failed to prove that Dechert had an interest in the outcome of the Underlying Arbitration.175 OIEG explains that, while it appears that Dechert has represented claimants against the Applicant in a number of proceedings, "the Applicant has not provided any evidence to suggest that those proceedings were related in even the most remote way to the [Underlying] Arbitration."176
137.
Third, even assuming that Dechert had an interest in the outcome of the Underlying Arbitration, "the Applicant has failed to prove that this could have an effect on Arbitrator Mourre’s impartiality or independence."177 In this regard, OIEG points out that the Applicant has not provided any evidence that Mr. Mourre "was privy to any information regarding the arguments made by Dechert on behalf of its clients" in such proceedings.178 On the contrary, Mr. Mourre’s letter of March 11, 2015 made clear that he did not have access to such information.179 Further, the Applicant has failed to prove that Mr. Mourre would have benefited "in a material way from Dechert’s success" in those other cases.180 As Mr. Mourre explained, he would be neither a "Partner" nor a "Dechert lawyer" and he would "have a fixed compensation from Dechert and [would] not share in its profits or costs."181
138.
OIEG further objects to the Applicant’s suggestion that Mr. Mourre’s alleged "refusal" to provide additional information should lead the Committee to conclude that a conflict of interest existed, or that he lacked independence or impartiality. In this regard, first, OIEG states that it is the Applicant, not the arbitrator, who bears the burden of proving the existence of facts indicating the manifest lack of impartiality or independence.182 Second, OIEG adds that Mr. Mourre did not "refuse" to provide the information requested by the Applicant. As it "is clear from his 11 March 2015 communication, he responded to those of the Applicant’s demands to which he was able to respond and considered reasonable."183 Third, "Arbitrator Mourre explicitly and repeatedly ‘confirm[ed] [his] total independence and impartiality’. He cannot be expected to provide evidence proving the opposite of what he firmly believed."184
139.
OIEG also rejects the Applicant’s argument that Mr. Mourre lacked impartiality and independence because he failed to disclose his professional relationship with Dechert in the Underlying Arbitration, while disclosing it in Favianca v. Venezuela.185 For OIEG this argument fails as a matter of law because a non-disclosure does not in itself result in disqualification - it is only the facts and circumstances that were not disclosed that can do so.186 Additionally, according to OIEG the argument must fail as a matter of fact, since there are differences between the two proceedings that "could justify Arbitrator Mourre’s decision to make his disclosure in Favianca and OldV v. Venezuela but not in the OIEG Arbitration."187 In this regard, OIEG points out that Mr. Mourre’s professional relationship with Dechert was to start from May 2015, at which point the Favianca v. Venezuela case would still be active, while the Underlying Arbitration would have concluded.188
140.
OIEG further objects to the Applicant’s claim that Mr. Mourre’s letter of March 11, 2015 in Favianca v. Venezuela is an implicit admission that his future relationship with Dechert constituted a conflict of interest in such case, as well as in the Underlying Arbitration.189
141.
First, OIEG states that Mr. Mourre did not admit to any conflict of interest in Favianca v. Venezuela. On the contrary, Mr. Mourre made clear that "his resignation was not based on the existence of a conflict of interest, stating unequivocally that it was based on the Applicant’s ‘belie[fs]’ regarding his ‘duties of independence and impartiality’ and on the importance he attached to ‘having the full confidence of the parties.’"190
142.
Second, even assuming that this communication constituted an admission of a conflict of interest in Favianca v. Venezuela, "that would not mean that the same conflict existed in the OIEG Arbitration or that Arbitrator Mourre would have resigned in that case, too."191 As mentioned before, while Mr. Mourre’s relationship with Dechert "would have overlapped in time with the proceedings in Favianca and OldV v. Venezuela and in Longreef v. Venezuela, it could not have overlapped with the OIEG Arbitration."192
143.
Additionally, OIEG rejects the Applicant’s argument that "the dates of the closure and signature [of the Award] were manipulated and distorted to preclude the exercise of [a] fundamental right of the Republic."193 In this regard, OIEG contends that:

In addition to being serious and lamentable, this accusation by the Applicant is completely devoid of factual support or merit. The Applicant has not offered even the semblance of evidence that there was manipulation, alteration or distortion of the dates of the signing of the Award, much less with the malicious intent of depriving the Applicant of its rights under the Convention.194

• The Applicant has also failed to prove that Mr. Mourre’s alleged loss of impartiality or independence at the end of the proceeding could have had a material effect on the Award

144.
OIEG argues that there are a number of facts that show that any loss of impartiality or independence by Mr. Mourre resulting from his conversations with a member of Dechert could not have had a material effect on the Award.195
145.
First, OIEG points out that (i) Mr. Mourre expressly confirmed that his conversations with Dechert were conducted shortly before he made his March 4, 2015 declaration;196 (ii) by that date all three members of the Tribunal had signed the Award, in fact, Mr. Mourre had signed it almost two weeks before; and (iii) six days later, on March 10, 2015, the Award was dispatched to the Parties.197 According to OIEG, "[t]hese facts, by themselves, militate strongly in favour of a conclusion that the Award had been finalised by the time Arbitrator Mourre reached any consultancy agreement with Dechert."198
146.
OIEG rejects the Applicant’s counter-argument that the conflict of interest began earlier, when Mr. Mourre began his negotiations with Dechert.199 OIEG explains that, as confirmed by EDF v. Argentina, the burden of proving that the conversations with Dechert could have had a material impact on the Award lies on the Applicant.200 OIEG contends that if, as the Applicant has expressly recognized, "it is impossible to determine whether the deliberations of the Tribunal were ongoing at the time the conversations took place, then, by definition the Applicant has failed to show that those conversations could have had a material effect on the Award."201 OIEG notes that, in any event, the Secretary of the Tribunal sent a letter to the Parties on December 8, 2014 stating that at that time the Tribunal was reviewing "a complete draft of the Award,"202 which again would be a strong suggestion that Mr. Mourre’s conversations with Dechert took place after deliberations had finished.203
147.
Second, OIEG argues that, contrary to the Applicant’s arguments, the fact that the Award was unanimous "firmly indicates that Arbitrator Mourre’s alleged loss of impartiality or independence could not have had a material effect on the Award."204
148.
Third, OIEG contends that the fact that "at any relevant time, Arbitrator Mourre did not have any knowledge of the details of the cases in which Dechert is (or was) involved (or of any other circumstance that could generate a conflict of interest) constitutes yet another factor that strongly indicates that his [relationship with Dechert] could not have had a material effect on the Award."205 OIEG relies on Vivendi v. Argentina II, where the committee decided not to annul the award, among other reasons, because Prof. Kaufmann-Kohler maintained that she had found out about the connection between UBS (the bank for which she was appointed to the board of directors, and which held shares of one of the claimants) and the claimants only after the issuance of the award.206

d. The Committee’s Analysis

149.
As set forth above in Section III.B(1)c, the Committee disagrees with the Applicant’s position that in the circumstances of the present case the only available remedy was the annulment of the Award. Instead, in the Committee’s view, and as argued by OIEG,207 in the case of discovery of relevant new facts after the Tribunal has already closed the proceedings under Arbitration Rule 38(1) but before the issuance of the Award, the Applicant could have requested that the Tribunal reopen the proceedings under Arbitration Rule 38(2).208 If the Tribunal had already issued the Award, the Applicant could have requested the revision of the Award under Article 51.209 It appears based on the chronology that both avenues were available to the Applicant.210
150.
As regards Mr. Mourre’s March 4, 2015 conununication in Favianca, the Applicant could have requested the Tribunal prior to the issuance of its Award on March 10, 2015 to reopen the proceeding under Arbitration Rule 38(2) to entertain Mr. Mourre’s disqualification in view of concerns expressed by the Applicant in its letter to the Favianca tribunal dated March 9, 2015.211
151.
Alternatively, the Applicant could have requested a revision of the Award on the basis of either (i) Mr. Mourre’s communication of March 11, 2015 in Favianca as regards his "undisclosed prior negotiations" with Dechert which, according to the Applicant, "embody the elements that show Mr. Mourre’s loss of impartiality"212 or (ii) Mr. Mourre’s resignation in Favianca and Longreef on March 16 and March 18, 2015 respectively, both of which represent the "discovery" of the "fact" of Mr. Mourre’s purported lack of independence and impartiality.213 Since both events post-date the issuance of the Award in the Underlying Arbitration, the condition under Article 51 for requesting revision would have been met.
152.
If the Applicant had raised the issue in the Underlying Arbitration under one of these other mechanisms, Mr. Mourre would have been requested to give his explanations in the context of the OIEG Arbitration which, under the scenario that in fact unfolded, were not provided. Such explanations likely would have been different than those he provided in Favianca in view of the timeline of that case, as compared to the OEIG Arbitration, and the timing of his never-consummated agreement with Dechert.214 The advantage of either a reopening or revision would have been to allow the possibility for the members of the original tribunal to consider the Applicant’s request.215 Such an outcome would have been consistent with the letter and the spirit of the ICSID Convention and Arbitration Rules, as set forth and interpreted herein by the Committee.
153.
For these reasons and those detailed above in Section III.B(1)c, this Committee has found that the Applicant’s charge of Mr. Mourre’s lack of impartiality is inadmissible as a ground for annulment under Article 52(1)(a). Indeed, this Committee has concluded that the ICSID Convention provides other mechanisms for a party to seek redress in circumstances like those present in the Underlying Arbitration.
154.
Even if it were otherwise, the Committee has concluded in Section III.D(2)c below (addressing the grounds for annulment under Article 52(1)(d)) that the Applicant has failed to make a factual showing of a lack of impartiality. Further, even if the Applicant had established Mr. Mourre’s partiality or appearance thereof, the Applicant has failed to establish, especially given the timeline of the allegations, that the alleged partiality had, or even could have had, an impact on the outcome of the unanimous Award. Rather, as elaborated in Section III.D(2)c below, the evidence strongly supports a conclusion that the Tribunal had already prepared "a complete draft of the Award"216 even prior to the start of any negotiations between Mr. Mourre and Dechert. Not only does the alleged relationship fail to satisfy the disqualification standard, but also there has been no showing that the impugned relationship overlapped in time with the Tribunal’s substantive deliberations.
155.
In this regard, as noted above, both Parties have invoked and addressed at length the decision of the committee in EDF v. Argentina.217 As also noted above, contrary to this Committee’s finding, the EDF committee held that a lack of the qualities "required under Article 14(1) [...] is [] a ground on which an award might be annulled under Article 52(1)(a)."218 However, the EDF committee also concluded that:

in a case in which an application for annulment is made on the basis that there were reasonable grounds to doubt the independence or impartiality of one of the arbitrators and no proposal for disqualification had been made before the proceedings were declared closed, the role of an ad hoc committee is to decide the following questions :-

(a) was the right to raise this matter waived because the party concerned had not raised it sufficiently promptly ?

(b) if not, has the party seeking annulment established facts the existence of which would cause a reasonable person, with knowledge of all the facts, to consider that there were reasonable grounds for doubting that an arbitrator possessed the requisite qualities of independence and impartiality ? and

(c) if so, could the lack of impartiality or independence on the part of that arbitrator - assuming for this purpose that the doubts were well-founded - have had a material effect on the award ?219

156.
The Applicant has failed to establish either prong (b) or (c), as detailed below in Section III.D(2)c. Thus, applying even this test, this Committee’s decision to reject the application for annulment under Article 52(1)(a) would remain undisturbed.

C. The Tribunal Has Manifestly Exceeded Its Powers

(1) Legal Standard

a. Applicant’s Position

157.
In advancing its view that the Tribunal manifestly exceeded its powers, the Applicant argues that the Committee should adopt the two-step approach of the most recent and representative annulment decisions, first "determining whether there was an excess of powers and, if so, whether that excess was manifest."220 The Applicant acknowledges that "[i]t is a dual requirement."221
158.
As for the ways in which a tribunal may exceed its powers, the Applicant contends that the excess may arise when a tribunal: (i) inappropriately exercises jurisdiction (or fails to exercise jurisdiction); or (ii) fails to apply the proper law.222
159.
With regard to (i) the "jurisdictional" excess of powers, the Applicant points out that multiple annulment committees have explained that awards can be annulled if tribunals (a) assume powers to which they are not entitled; or (b) do not use the powers that have been vested upon the tribunal by the parties.223
160.
Furthermore, the Applicant argues that in MHS v. Malaysia224 the "committee noted that the analysis to be made by it with a view to determining whether there was actually a manifest excess of powers in asserting jurisdiction over a given issue must consist in a de novo review."225
161.
Regarding item (ii) above,226 the Applicant explains that a "substantive" excess of powers happens when a tribunal "fail[s] to apply the proper law, since it would also be disregarding the powers granted to it by the parties."227
162.
As for the second requirement in the two-step approach, citing the annulment committees in Sempra v. Argentina228 and Soufraki v. UAE,229 the Applicant states that "manifest" means "clear," "plain," "obvious" or "evident" or easily understood or recognized by the mind.230
163.

However, the Applicant further argues that "the need for such excess to be clear does not mean that the committee must not analyze the arguments raised by the parties."231 In this regard, the Applicant relies on the statement of the Pey Casado v. Chile committee that "extensive argumentation and analysis do not exclude the possibility of concluding that there is a manifest excess of power, as long as it is sufficiently clear and serious."232 In similar words, the Caratube v. Kazakhstan233 and Occidental v. Ecuador234 committees also reiterated that the manifest requirement does not prevent that in some cases extensive argumentation and analysis may be required to prove that such a manifest excess of power has in fact occurred.

164.
Additionally, the Applicant cites Philippe Pinsolle,235 who explains that:

Manifest means obvious, but this adjective relates only to the excess of powers itself. Establishing the existence of an excess of powers, as distinct from assessing its degree, may not be obvious. If the word "manifest" relates to degree in which the tribunal exceeded its powers, it does not necessarily imply that the error (in our case, the excess of powers) must be detected easily.

In other words, "manifest excess of powers" is not synonymous with "prima facie excess of powers".

Prima facie review would mean that the excess of powers should be apparent on the face of the award, thereby limiting considerably the extent of review. If the review was a prima facie test only, competent drafting of the award would in all likelihood render it immune from subsequent challenge. This cannot be so, especially when jurisdictional issues are concerned. This never was, in any event, the practice of ad hoc committees.236

165.
The Applicant further contends that the EDF v. Argentina committee confirmed that a tribunal’s damages calculation may result in annulment if "in assessing damages, [it] manifestly exceeds its power by failing to apply (as opposed to arguably misapplying) the applicable law."237
166.
In opposing OIEG’s statement of the standard as biased and incorrect, the Applicant contends that OIEG "confuses the difference between an annulment proceeding and an appeal with the lack of an effective annulment proceeding."238 As regards OIEG’s invocation of Kompetenz-Kompetenz to assert that "the Committee cannot replace the tribunal’s decision on jurisdiction with its own decision,"239 the Applicant responds that it "does not and could not disregard the validity of [this] principle."240 However, this does not mean that the tribunal’s decision on its own jurisdiction cannot be reviewed by an annulment committee.241
167.
The Applicant rejects OIEG’s interpretation of the MHS v. Malaysia decision "in support of its unduly restrictive version of the grounds for annulment for manifest excess of powers."242 In fact, according to the Applicant, the MHS v. Malaysia committee "firmly rejects OIEG’s biased and restrictive approach, as it does not limit its review to the application or nominal invocation of certain legal rules, but it also analyzes the manner in which these rules were applied, and it is pursuant to this substantial analysis that it makes its decision" to annul the award on the grounds of manifest excess of powers.243
168.
For the Applicant, in addressing whether the applicable law was indeed applied or whether it was invoked in a way that lacked a real normative effect, it is not necessary that the Committee replace the Tribunal’s judgment.244 In fact, OIEG states that when a tribunal’s decision on its jurisdiction is "reasonable or tenable," a committee must not substitute the tribunal’s decision with its own and, "by saying this, OIEG recognizes that if the decision is unreasonable and untenable, a committee must replace such tribunal’s decision on jurisdiction with its own."245 According to the Applicant, "[t]he only way to determine whether the decision was ‘reasonable or tenable’ is to assess its content in relation to the applicable legal rules, the positions of the parties and the evidence in the file."246
169.
In this regard, the Applicant also notes that the Occidental v. Ecuador247 committee, while affirming the difference between annulment proceedings and appeals, nevertheless performed "a detailed analysis of the content of the decision in view of the applicable laws and proven facts of the case, which led it to partially annul the award."248

b. Respondent on Annulment’s Position

170.
The Respondent on Annulment agrees with the Applicant that, to establish this ground for annulment, the Applicant must prove that (a) the Tribunal exceeded its powers and (b) the excess was manifest.249
171.
With regard to the ways in which a tribunal may exceed its powers, OIEG also agrees that this may be done in two ways: (a) by inappropriately exercising jurisdiction (or failing to exercise its jurisdiction), and/or (b) by failing to apply the proper law.250
172.
However, OIEG disagrees with the Applicant’s position as to the scope of review that a committee may undertake to determine whether a tribunal manifestly exceeded its powers.251
173.
As for a jurisdictional excess of powers and the standard of review of a tribunal’s decision on its competence, OIEG first recalls that Article 41 of the ICSID Convention embraces the general legal principle of Kompetenz-Kompetenz and argues that a committee may only annul an award if the tribunal’s decision on jurisdiction is manifestly wrong or untenable.252
174.
In this regard, OIEG cites the annulment decision in Soufraki v. UAE, according to which "the requirement that an excess of power must be ‘manifest’ applies equally if the question is one of jurisdiction."253 OIEG notes that the explanation in Soufraki v. UAE has been confirmed and adopted by several other committees including Azurix v. Argentina, Enron v. Argentina and Total v. Argentina.254
175.
Contrary to what the Applicant argues, OIEG states that the analysis of the committee must not consist of a de novo review and contends that the Applicant has misinterpreted the annulment decision in MHS v. Malaysia on which it relies.255 OIEG further argues that committees "consistently have refused to annul awards in which a tribunal’s assumption of jurisdiction was sensible or defensible"256 and quotes the decision in Rumeli v. Kazakhstan, which observed:

An ad hoc committee is not a court of appeal and cannot therefore enter, within the bounds of its limited mission, into an analysis of the probative value of the evidence produced by the parties.... Indeed, this is why the Award can only be annulled for a manifest excess of powers. Such lack of jurisdiction should have been evident on the face of the award and should not require the Committee to reconsider the evidence put before the Tribunal.

[...]

[a]n ad hoc committee will not annul an award if the tribunal’s approach is reasonable or tenable, even if the committee might have taken a different view on a debatable point of law.257

176.

With respect to a substantive excess of powers, OIEG objects to the Applicant’s claim that a committee should investigate the "manner" in which the proper law was applied and determine whether it was applied "effectively."258 On the contrary, OIEG asserts that "it is well established in ICSID jurisprudence that only the complete failure to identify and apply the correct body of law" - and not an error in the application of law - "can constitute annullable error" under Article 52(1)(b).259

177.
The Respondent on Annulment further notes that, given that an annulment proceeding is not concerned with the substantive correctness of the award, the annulment committee is not empowered to correct an error of law "no matter how egregious."260 Rather, citing the annulment decision in MTD v. Chile, OIEG contends that the committee’s inquiry should be limited to a "determination of whether or not the Tribunal endeavoured to apply" the applicable law.261
178.
In relation to the second requirement that the excess be "manifest," the Respondent on Annulment agrees with the Applicant that a tribunal’s excess of powers must be "clear," "plain," "obvious" or "evident."262 However, in response to the Applicant’s argument that this requirement does not preclude an assessment of extensive argumentation or analysis in certain cases, OIEG points out that "even if this position were accepted, it would not relax in any way the fundamental requirement that the excess of powers must be ‘manifest.’"263
179.

Finally, citing the annulment decision in Soufraki v. UAE, OIEG contends that to qualify as manifest the excess of powers must be both "textually obvious and substantively serious."264 Moreover, relying on the decisions in Sempra v. Argentina and Patrick Mitchell v. Congo, OIEG asserts that in order to find a manifest excess of powers, a committee must do so with "certainty and immediacy, without it being necessary to engage in elaborate analyses of the award."265

c. The Committee’s Analysis

181.
The Committee concurs with the Parties and confirms that a manifest excess of powers may arise as regards a jurisdictional determination, where a tribunal either fails to exercise jurisdiction when it should have or exercises jurisdiction when it should not have.
182.
In determining whether a tribunal exceeded its powers in the jurisdictional sphere, two principles, which are deeply engrained in the Convention and have been confirmed in numerous proceedings, are paramount: (i) Kompetenz-Kompetenz and (ii) an annulment is not an appeal.
183.
Although the principle of Kompetez-Kompetez does not shield the Tribunal’s decision on its own competence from scrutiny, the principle favors a presumption of deference to the Tribunal as regards its decision. Taken together with the fact that this process must not be treated as an appeal, it is clear that the Committee cannot conduct a de novo analysis of the reasoning underlying the Tribunal’s jurisdictional decision. On the contrary, and in line with the ICSID Convention’s use of the word "manifest" in setting forth this ground for annulment, it is only where the Tribunal’s jurisdictional decision is untenable or unreasonable, that the Committee may annul the award, if it is to preserve the above-cited principles of the ICSID Convention.
184.
Despite their agreement that a manifest excess of power may be of a substantive nature, the Parties fail to agree on how a Tribunal might exceed its powers regarding the application of the law. Whereas the Applicant maintains that a committee should investigate the "manner" in which the proper law was applied and determine whether it was applied "effectively,"267 OIEG contends that "it is well established" that "only the complete failure to identify and apply the correct body of law" "can constitute annullable error."268 Thus, OIEG urges this Committee to find that an error in the application of law, even if serious, is insufficient to give rise to annulment for manifest excess of powers.269
185.
Consistent with OIEG’s position270 and that adopted by several other committees in cases such as Enron v. Argentina, MTD v. Chile, and CMS v. Argentina,271 this Committee finds that an excess of powers of substantive nature may arise only from a complete failure to apply the correct body of law. As is clear from the drafting history of the ICSID Convention, the intention underlying this specific ground for annulment was to exclude the possibility of annulling an award based on an erroneous application of the law:

Chairman Broches confirmed during the meetings that failure to apply the proper law could amount to an excess of power if the parties had agreed on an applicable law. One proposal suggested adding the "manifestly incorrect application of the law" by the Tribunal as a ground of annulment, but it was defeated by a vote of 17 to 8.272

186.
Moreover, if this Committee were to delve into how the Tribunal applied the law in the Underlying Arbitration and base its decision on that assessment, the Committee would improperly transform this procedure into one that is in the nature of an appeal. Instead, the Committee’s role in evaluating an application for annulment for manifest excess of powers is limited, as follows:

in determining whether a tribunal has committed a manifest excess of powers, an annulment committee is not empowered to verify whether a tribunal’s jurisdictional analysis or a tribunal’s application of the law was correct, but only whether it was tenable as a matter of law. Even if a committee might have a different view on a debatable issue, it is simply not within its powers to correct a tribunal’s interpretation of the law or assessment of the facts.273

187.
Lastly, as previously suggested, this Committee believes "manifest" to mean "obvious," "evident," or "plain," as the Parties’ themselves appear to have agreed.274 This approach, by its nature, excludes the possibility of a "manifest" excess of powers which cannot be detected relatively easily. Therefore, for an excess of power to be considered manifest, while some degree of inquiry and analysis may be required, it must not require a deep and complex analysis to be perceived. On the contrary, the excess must be evident to the Committee without difficulty.

(2) Application of the Legal Standard to the Present Case

a. Applicant’s Position

188.
According to the Applicant, the Tribunal manifestly exceeded its powers by (i) asserting jurisdiction without deciding on Venezuela’s objections and (ii) failing to apply the proper law in calculating the compensation.

(i) The Tribunal manifestly exceeded its powers in asserting jurisdiction without deciding on Venezuela’s objections

189.
The Applicant asserts that the Tribunal manifestly exceeded its powers in asserting jurisdiction in three aspects.
190.
The first aspect in which the Tribunal manifestly exceeded its powers refers to the Tribunal’s rejection of Venezuela’s objection based on the lack of investment. The Tribunal acknowledged that, according to the applicable law, the alleged investment must not only meet the characteristics specified in the BIT but also the objective concept of investment set forth in Article 25(1) of the ICSID Convention, which requires the identification of a contribution by the investor.275
191.
In this regard, the Applicant explains that the Tribunal identified two contributions. The first was undistributed reserves, that is, OIEG’s decision not to withdraw its share of the Companies’ profits and instead keep that share as undistributed reserves. However, the Applicant argues that in the Award "[t]here is no explanation as to how the creation of a reserve [...] may constitute a contribution to the Companies, [...] since the reserves are created from funds of those Companies and no transfer of funds from [OIEG] to the Companies [...] may be identified."276
192.
For the Applicant, "the Tribunal’s decision on this matter is not supported by any applicable rule or legal authority allowing us to claim that the lack of active cash contribution -at least at the beginning of the alleged investment, in the Tribunal’s own terms- can be replaced with a potential - and passive - withdrawal of funds at a later time."277 On the contrary, "compensating for the lack of real contributions using alleged contributions consisting in the lack of transfer of dividends would otherwise lead to the fact that merely nominal changes in equity securities could be sufficient to assume the status of protected international investor."278
193.
The Applicant notes that the Tribunal found that OIEG also contributed by managing the companies, indirectly, since 2002, and directly, since 2005.279 This contribution was made by participating and voting in shareholders’ meetings, and appointing directors and managers of the Companies.280 However, the Applicant contends that the Tribunal failed "to make any specific reference to the alleged appointments of directors and managers to which it refers or to how those appointments may have actually impacted on the performance of the companies."281
194.
For the Applicant, these defects "manifestly" arise from a reading of the Award282 and are key to the determination of the rights of the Parties to the Underlying Arbitration.283
195.
The second aspect in which the Tribunal is alleged to have manifestly exceeded its jurisdiction refers to the Tribunal’s finding that OIEG "suffered losses in the Brazilian market without first addressing the objection put forward by the Republic."284 That objection was based on the fact that the alleged damages related to assets that do not belong to OIEG, since they were owned by another company of the Owens-Illinois group of companies (the "OI Group") that was not a party to the Underlying Arbitration.
196.
The Applicant explains that the Tribunal stated that this objection could not be separated from the substance of the dispute and that the claim would be addressed once the existence of an expropriation is found and in the context of the determination of the compensation due. However, the Tribunal later failed to make any observation on the objection.285
197.
The third and last aspect with respect to which the Applicant alleges a manifest excess of powers is related to the parallel proceeding in Favianca v. Venezuela. Given that the BIT at issue and the object of that proceeding and the Underlying Arbitration "are exactly the same," Venezuela requested that the Favianca v. Venezuela proceeding be stayed.286 However, in the Award "the Tribunal refused to come to a decision on the existence of this parallel proceeding and attempted instead to hold that the Republic did not make any claim in this regard."287 In this sense, the Tribunal failed to decide on the objection raised by Venezuela, "which was clearly within its jurisdiction, which entails the serious risk that [Venezuela] be held liable twice for the same act."288

(ii) The Tribunal exceeded its powers by failing to apply the proper law in calculating the compensation

198.
The Applicant argues that, in calculating the damages, the Tribunal disregarded "the basic principle establishing that the discount rate to be considered must reflect the time value of money."289 For the Applicant, the rate applied by the Tribunal results in a negative discount rate for the first four years and, as explained by the expert Daniel Flores, a negative discount rate "runs afoul of the fundamental economic principle of the time value of money."290
199.
In addition, the Applicant states that, "even though the Tribunal maintains that it is carrying out a valuation based on the ‘market value’, that is not the standard actually applied. Thus, the Tribunal failed to apply the standard suggested by it and exceeded its powers."291
200.
Finally, in response to OIEG’s attempt to attack the credibility of the expert Daniel Flores on the basis that he has been retained on various occasions as an expert by Venezuela, the Applicant reaffirms Mr. Flores’ independence and points out that (i) Econ One bills the time spent by its staff in this and all other international arbitrations involving Venezuela and PDVSA according to pre-set hourly rates and, therefore, its compensation is not linked to the outcome of the proceedings; and (ii) matters involving Venezuela and PDVSA represent a very small fraction of Econ One’s billings.292

b. Respondent on Annulment’s Position

(i) The Tribunal did not manifestly exceed its powers in asserting jurisdiction

• The Tribunal did not manifestly exceed its powers in holding that OIEG had a covered investment under the BIT and the ICSID Convention

201.
According to OIEG, the Tribunal’s decision that OIEG’s assets qualified as investments under both the BIT and the ICSID Convention "is eminently reasonable:"

[T]here can be no doubt that the Tribunal "correctly identified the applicable law, and strove to apply it to the facts that it established". In paragraphs 196 to 206 of the Award, the Tribunal established the relevant "proven facts". In paragraphs 207 to 211, it correctly identified the "applicable law". In paragraphs 212 to 232, it methodically and logically analysed the "the concept of investment" and applied its findings on the law to the facts of the case. There is, therefore, "no room for annulment".293

202.
OIEG argues that "it is disingenuous for the Applicant to suggest that the Tribunal considered the requirement that the investor bringing a claim must have made a contribution to the investment to be an essential component of the applicable law."294 On the contrary, OIEG asserts that the Tribunal made clear that that requirement was a secondary, peripheral issue and only analyzed it after having already concluded that the assets qualified as an investment both under the BIT and the ICSID Convention.295
203.

OIEG points out that the Applicant’s arguments regarding the lack of contribution refer to the Tribunal’s failure to refer to specific evidence on the record.296 In this regard, OIEG contends that these arguments from the Applicant "make abundantly clear that its true complaint relates to the Tribunal’s assessment and identification of the evidence on the record."297 Yet, previous annulment committees have confirmed that "neither disagreement with a tribunal’s assessment of the evidence nor an alleged failure to specify the evidence on which a specific finding is based can possibly constitute a manifest excess of powers under Article 52(1)(b) of the ICSID Convention."298

204.
Furthermore, OIEG argues that the Applicant’s arguments also fail as a matter of fact, since the Tribunal reached its conclusion regarding the existence of two contributions (OIEG’s decision not to withdraw its share of the Companies’ profits and instead to keep that share as undistributed reserves; and OIEG’s management of the Companies) on the basis of specific evidence before the Tribunal.299

• The Tribunal did not manifestly exceed its powers by exercising its jurisdiction in relation to the issue of the consequential losses in the Brazilian market

205.
OIEG rejects the Applicant’s contention that the Tribunal failed to address or decide on the jurisdictional objection regarding Venvidrio’s entrance into the Brazilian market.300 OIEG explains that the Tribunal found that OIEG’s claim for additional damages resulting from Venvidrio’s exports was intrinsically linked to the existence of a breach and, as a result, decided that it would address the Applicant’s objection in the context of the determination of the compensation due.301 OIEG points out that the Tribunal expressly "reject[ed] the two jurisdictional defences raised by Venezuela, and rule[d] that the Centre has jurisdiction and the Tribunal itself has jurisdiction."302 In accordance with this decision, in the section of the Award devoted to "Additional Damages," the Tribunal reverted to the objection raised by the Applicant303 and rejected OIEG’s claim:

In summary, the Tribunal considers that the effect of the exports that Venvidrio has begun is already duly included in the DCF model and that Claimant has not been able to demonstrate the existence of any additional damage for this reason. The burden of proof being on OIEG, the Tribunal rejects the claim.304

206.
OIEG further argues that, even if the Tribunal had not ruled on the Applicant’s jurisdictional objection (quod non), "the Tribunal’s finding on the merits rendered moot the Applicant’s jurisdictional objection"305 and that, in any event, the Applicant has failed "to ident[ify] any manifest excess of powers in the Tribunal’s ruling on the Respondent on Annulment’s claim for additional damages resulting from the exports by Venvidrio to Brazil."306

• The Tribunal did not manifestly exceed its powers by not staying the proceedings

207.
OIEG argues that the Applicant’s arguments in this regard "[are] based on a misrepresentation of the facts with respect to both the OIEG Arbitration and the Favianca and OldV v. Venezuela arbitration."307
208.
According to OIEG, the Tribunal’s actions in this regard were entirely proper and cannot lead to the annulment of the Award given that: (i) in the Underlying Arbitration, the Applicant made only one objection with respect to the Favianca v. Venezuela arbitration on November 27, 2012, requesting that the Tribunal suspend the proceedings for no less than three months due to its initiation;308 and (ii) upon the Tribunal’s rejection of this suspension request the Applicant stated that it reserved all its rights in this regard, after which the Applicant never raised the Favianca v. Venezuela arbitration again, whether to object to the Tribunal’s jurisdiction or for any other reason.309

(ii) The Applicant has failed to demonstrate that the Tribunal manifestly exceeded its powers when determining the amount of compensation

209.
OIEG contends that the Applicant’s arguments in this respect have no basis in law or fact.310
210.
First, OIEG points out that "[w]hile the Applicant may disagree with the end result of the methodology that the Tribunal adopted with respect to the calculation of damages, that does not mean that the Tribunal failed to identify and apply the correct body of law."311 In fact, the Tribunal duly identified and applied the proper law (the compensation standard in Article 6(c) of the BIT) when determining the compensation.312 OIEG further notes that, even though the Applicant invokes ‘"basic economic principles’ and argues that they constitute the ‘correct body of law’, but it does not even attempt to explain, much less prove, how such ‘basic economic principles’ constitute a ‘body of law.’"313
211.
In any event, OIEG contends that the Applicant’s arguments also fail as a matter of fact. OIEG states that "[t]o the extent that ‘basic principles of economic and financial calculation’ are even an applicable body of law (quod non), the Applicant’s position, aided and abetted by Dr Flores, betrays a fundamental misunderstanding of both those principles and what the Tribunal did in its Award."314
212.
In this regard, OIEG argues that the Tribunal’s calculation of damages pursuant to Article 6(c) of the BIT was in all respects in full compliance with basic economic principles315 and notes that the Tribunal adopted the methodology advocated by the Applicant’s own expert to determine the fair market value of OIEG’s Investment, that is, the DFC methodology.316
213.
OIEG further explains that in applying this DCF methodology, the Tribunal discussed in detail the discount rate that it applied,317 which, for OIEG, "took account of the time value of money."318
214.
In response to the Applicant’s argument that the discount rate used to value a company cannot be negative, since that would run afoul of the fundamental economic principle of the time value of money, OIEG states the following:

As Messrs Kaczmarek and Shopp explain in the Navigant Report: (a) the discount rate method employed by the Tribunal is wholly consistent with basic economic principles; (b) Dr Flores miscalculated the difference between his preferred discount rate method and the discount rate method employed by the Tribunal; and (c) Dr Flores’s discount rate is inconsistent with the conclusions of both Parties’ experts in the OIEG Arbitration.319

215.
Finally, OIEG contends that no credence should be given to Econ One’s expert reports given the "dependency of both Dr Flores and his firm [on] the Applicant."320

c. The Committee’s Analysis

216.
The Committee will address, under the ground set forth in Article 52(1)(b) of the ICSID Convention: (i) if the Tribunal manifestly exceeded its powers in asserting jurisdiction without deciding on certain of Venezuela’s objections; and then, (ii) if the Tribunal manifestly exceeded its powers by failing to apply the proper law in calculating the compensation.

(i) The Applicant has failed to establish that the Tribunal manifestly exceeded its powers in asserting jurisdiction

217.
Even if this Committee were to find attractive the line of argument as regards whether the Tribunal did or did not address the jurisdictional objections posed by the Applicant in the Underlying Arbitration, a review of the Award in its relevant sections makes plain that no ground for annulment can be sustained on this basis, particularly in view of the fact that the Parties themselves concur that this Annulment is not an appeal.
218.
With respect to the question of the existence of an investment under the BIT and ICSID Convention, Respondent on Annulment asserts that

there can be no doubt that the Tribunal "correctly identified the applicable law, and strove to apply it to the facts that it established". In paragraphs 196 to 206 of the Award, the Tribunal established the relevant "proven facts". In paragraphs 207 to 211, it correctly identified the "applicable law". In paragraphs 212 to 232, it methodically and logically analysed the "the concept of investment" and applied its findings on the law to the facts of the case.321

219.
The Committee agrees. It has undertaken an independent analysis of the above-referenced paragraphs of the Award, as well as, for example, paragraphs 245 and 246 identifying OIEG’s specific contributions, and paragraphs 238 and 241 setting forth the rationale for the Tribunal’s finding on OIEG’s contributions. On this basis, the Committee cannot conclude other than that the Tribunal did, in fact, conduct a reasonable analysis as regards what constitutes an investment under both the BIT and ICSID Convention, regardless as to whether the Committee agrees, or not, with such analysis.
220.
Further, this Committee subscribes to the position, as posited by the Respondent on Annulment citing several prior committee decisions,322 that neither disagreement with a tribunal’s assessment of the evidence, nor a failure to specify the evidence on which a specific finding is based, constitutes a manifest excess of powers under Article 52(1)(b) of the ICSID Convention.
221.
In regard to the allegation that the Tribunal found that OIEG suffered losses in the Brazilian market without first addressing the Republic’s objection as regards such claims, this Committee considers that the Tribunal did address the Applicant’s jurisdictional objection when it expressly rejected such objection in paragraph 268 of the Award. Further, the Tribunal decided, as summarized in paragraph 893 of the Award, that the effect of Venvidrio’s exports was already included in the DCF model and that the Claimant had not been able to demonstrate the existence of any additional damage, adding even that the burden of proof was on OIEG, and consequently, the Tribunal rejected the corresponding claim.
222.
Finally, the Committee does not find convincing the argument that the Tribunal’s failure to stay the proceedings, notwithstanding the "parallel" Favianca v. Venezuela proceeding, constituted a manifest excess of powers. As argued by the Respondent on Annulment, and as is evident from a reading of the pertinent sections of the Award, especially its Section V concerning jurisdictional objections, the Tribunal rejected the requested suspension, and the Applicant reserved all its rights with respect to the "initiation of the parallel proceeding and its impact on the present dispute,"323 after which the Applicant never again raised the Favianca v. Venezuela arbitration, neither as a basis on which to object to the Tribunal’s jurisdiction or for any other reason.324
223.
These circumstances are set out and addressed in paragraph 175 of the Award, and there is no evidence in the file of the Underlying Arbitration that could lead this Committee to conclude that the Tribunal’s evaluation and statement of the circumstances is not true to the facts.
224.
Consequently, for the above reasons, including in particular that this Committee does not serve as an appeal body that is authorized to consider the correctness of the Tribunal’s reasoning, this Committee rejects the Applicant’s above-reviewed arguments that the Tribunal manifestly exceeded its powers in asserting jurisdiction without deciding on certain of the Applicant’s objections.

(ii) The Applicant has failed to establish that the Tribunal manifestly exceeded its powers by failing to apply the proper law in determining the amount of compensation

225.
As summarized above, the Applicant also argues that the Tribunal manifestly exceeded its powers in calculating the damages, because the Tribunal disregarded basic or fundamental economic principles, especially those that reflect the economic principle of the time value of money. The Applicant adds that such principles were part of the applicable law, which the Tribunal ultimately did not apply.325
226.
Additionally, according to the Applicant, the Tribunal stated that it was carrying out its valuation based on market value, but ultimately that was not the standard that the Tribunal in fact applied.326
227.
This Committee finds no support for these allegations, even after having heard and considered the presentations of the experts during the Hearing on Annulment, including the Applicant’s appointed expert, Mr. Flores, of Econ One.327
228.
The Committee, to the contrary, is of the view that the Tribunal undertook a thorough analysis of the economic principles invoked by the Parties during the original proceeding. The Committee has taken particular note of the Respondent on Annulment’s point that the Tribunal duly identified and applied the body of law, that is, the compensation standard in Article 6(c) of the BIT.328 Indeed, upon the Committee’s independent analysis of the Award, it is evident that the Tribunal, for example (i) analyzed the compensation standard under Article 6(c) of the BIT;329 (ii) determined an appropriate methodology for calculating the market value of the expropriated companies, namely the DCF method;330 (iii) examined in detail and decided points of contention between the Parties’ experts in the application of the methodology;331 (iv) examined the experts’ models and calculated and applied an appropriate discount rate;332 and (v) confirmed its conclusions using alternative methodologies.333
229.
In these circumstances, even if, as the Applicant maintains, the Tribunal should have adopted the views advanced by Venezuela and its experts in the Underlying Arbitration as regards the application of certain economic principles (and the Committee expresses no position in this regard), it cannot be maintained that such an error would justify annulment of the Award. As the TECO ad hoc committee stated, "an annulment committee is not empowered to verify whether [...] a tribunal’s application of the law was correct, but only whether it was tenable as a matter of law. Even if a committee might have a different view on a debatable issue, it is simply not within its powers to correct a tribunal’s interpretation of the law or assessment of the facts."334
230.
Thus, whether the Tribunal made a correct application of the relevant standard and methodology in calculating the damages in Section VII of the Award is a matter outside the scope of this Committee’s mandate, as has been stated in the recitation of the standards applicable, in general, to an annulment proceeding, and in particular under Article 52(1)(b) of the ICSID Convention.
231.
As addressed in paragraph 185 above, according to the 2016 ICSID Paper, the drafting history of the ICSID Convention confirms that a tribunal’s failure to apply the proper law could constitute a manifest excess of powers, but that an erroneous application of the law, even if it is serious, could not amount to an annullable error.335 As stated above and as has been expressly recognized by many other ad hoc committees, an incorrect tribunal decision is no basis for annulment.336
232.
Notably, in setting forth its own position on the nature and scope of an annulment, the Applicant accepted that the mechanism is not intended to address "reasonable disagreements in terms of the interpretation of the facts and the law," but rather is intended to serve as a check against "certain defects contained in the Award which are so serious that they fit the specific list included in Article 52(1) of the ICSID Convention as grounds for annulment."337 This Committee has carefully reviewed the Award, and heard arguments and expert oral testimony from both Parties during the Hearing on Annulment. Applying the standards of Article 52(1)(b) as reviewed above, this Committee cannot conclude that the Award has a serious defect in regard to the damages determination. Reaching the opposite conclusion, on the grounds called for by the Applicant, would constitute a denaturalization of the mechanism of annulment.

D. Serious Departure from a Fundamental Rule of Procedure

(1) Legal Standard

a. Applicant’s Position

233.
The Applicant states that this ground for annulment is subject to a double requirement: (i) the departure must occur in relation to a fundamental rule of procedure, and (ii) that departure must be serious.338
234.
With regard to the notion of a "fundamental rule of procedure," the Applicant explains that in the travaux préparatoires of the ICSID Convention, "Mr. Broches established a connection between the fundamental rule of procedure and the principles of natural justice."339 Additionally, the Applicant notes that in Fraport v. Philippines340 the committee stated that the general principles of law are fundamental rules of procedure, and in Wena Hotels v. Egypt the committee construed fundamental rules of procedure to mean the "minimal standards of procedure to be respected as a matter of international law."341 Furthermore, the Applicant explains that the Impregilo v. Argentina committee summarized the views of prior committees and identified the following fundamental rules of procedure: "the equal treatment of the parties, the right to be heard, an independent and impartial tribunal, the treatment of evidence and burden of proof, and deliberations among members of the Tribunal."342
235.
As to the second requirement that the departure be "serious," the Applicant contends that the assessment is very fact specific and should be done on a case by case basis.343
236.
For the Applicant, the "serious departure" requirement should not be understood to mean that the applicant is required to demonstrate that such departure has led to a different outcome. As explained by the Kilic v. Turkmenistan committee, it is sufficient for the departure to have a potential material effect on the award.344
237.
Relying on the annulment decision in Victor Pey Casado v. Chile,345 the Applicant adds that, once a serious departure from a fundamental rule of procedure is established, the award must necessarily be annulled and "any speculation without evidentiary support about the possible impact that the violation of the rule could effectively have on the parties and the decision cannot prevent the Award from being annulled."346
238.
Finally, the Applicant observes that, according to the EDF v. Argentina committee, the lack of independence and impartiality of an arbitrator may, by itself, constitute grounds for annulment under Article 52(1)(d) of the ICSID Convention:347

It is difficult to imagine a rule of procedure more fundamental than the rule that a case must be heard by an independent and impartial tribunal. The Committee accordingly considers that, in principle, an ad hoc committee can examine under Article 52(1)(d) [...] allegations that the lack of independence and impartiality of an arbitrator meant that there was a serious departure from a fundamental rule of procedure in the arbitration as a whole.348

b. Respondent on Annulment’s Position

239.
OIEG states that to annul an award under Article 52(1)(d), the Applicant must: (a) identify the applicable rule of procedure; (b) demonstrate that this rule is fundamental; (c) show that the Tribunal departed from the rule; and (d) prove that this departure was serious.349
240.
OIEG maintains that, as recognized by the Applicant, not all rules of procedure qualify as "fundamental rules of procedure."350 Rather, they "are those that set the minimal standards of procedure, are essential to a fair hearing and necessary to ensure the integrity and fairness of the arbitral process."351 Further, relying on the 2016 ICSID Paper, OIEG asserts that the principle enshrined in Article 52(1)(d) "excludes the Tribunal’s failure to observe ordinary arbitration rules,"352 no matter how serious.353
241.
OIEG agrees with the Applicant that those "minimal standards of procedure" include the right to be heard.354 However, it points out that this right is "not a catch-all principle that the Applicant can use to circumvent the requirement that the departure concern a ‘fundamental’ rule."355 According to OIEG, the right to be heard "is generally understood as the ‘full and equal opportunity of the parties to present their case’" and all of the previous annulment decisions that have found a violation of this right are based on "situations where the relevant award was based either on evidence that the parties never had a chance to address or on arguments that the parties had not made."356
242.
OIEG further claims that the Applicant must be able to explain how the conduct of which it complains negatively affects the interest protected by the rule in question.357 Citing El Paso v. Argentina, MINE v. Guinea, Continental v. Argentina and Impregilo v. Argentina,358 among others, OIEG explains that annulment committees have repeatedly confirmed that a departure from a fundamental rule of procedure may only lead to annulment if it is "such as to deprive a party of the benefit or protection which the rule was intended to provide."359 For OIEG, the Applicant "has not disputed these basic, self-evident principles."360
243.
OIEG posits that the main point of disagreement between the Parties is in relation to the meaning and consequences of the requirement that the departure be "serious."361 OIEG asserts that such departure cannot be regarded as "serious" where it is insubstantial or has no material impact on the outcome.362 Citing the annulment decisions in El Paso v. Argentina,363 Wena Hotels v. Egypt364 and Daimler v. Argentina,365 OIEG asserts that the departure must have "caused the Tribunal to reach a result substantially different from what it would have awarded had such a rule been observed."366 OIEG adds that numerous additional annulment committees have confirmed this interpretation, including Total v. Argentina,367 CDC v. Seychelles,368 Continental Casualty Company v. Argentina,369 Malicorp Limited v. Egypt,370 Alapli v. Turkey371 and, recently, Adem Dogan v. Turkmenistan.372
244.
In this regard, OIEG objects to the Applicant’s claim that it is sufficient for the departure to have a "potential" material effect on the award. Even if a minority of annulment committees have followed this approach, OIEG contends that the better approach is the one followed by the majority of the annulment committees explained above.373

c. The Committee’s Analysis

245.
Article 52(1)(d) contemplates the possibility of annulling the award based on the existence of a serious departure from a fundamental rule of procedure. This ground necessarily imposes on the Applicant two obligations, first, to identify the rule of procedure the Tribunal purportedly departed from, and second, to satisfy its burden of proof regarding three points: (i) the "fundamental" nature of said rule; (ii) the departure by the Tribunal from said rule; and lastly (iii) whether the departure was serious.
246.
The drafting history of the ICSID Convention sheds light upon the "fundamental" nature of certain rules. According to the drafters, the phrase "fundamental rules of procedure" was a direct reference to certain principles, including those of natural justice, and necessarily excluding ordinary rules which are not concerned with the integrity and fairness of the arbitral process.374 As stated above, the burden of proof regarding the departure and its seriousness must be met by the Applicant.
247.
As for the departure, the Committee considers that it requires a showing, based on specific factual circumstances, that such departure was so substantial that the tribunal effectively deprived the parties of the benefits or protection which the rule was intended to provide.375
248.
Finally, as for the seriousness requirement set forth in Article 52(1)(d), this Committee is aware that some committees have previously adopted an approach under which the requirement is met upon a showing of a potential material effect on the award.376 Although not decisive in this case, this Committee takes note of the position of OIEG and the holdings of prior committees that "seriousness" should be interpreted as requiring a showing that the violation did in fact materially change the outcome of the award.377 Annulling an award based on a lesser showing would amount to excessive formalism, speculation and second-guessing of decisions taken in the original arbitration in a manner that is improper for an annulment proceeding, thus frustrating the purpose of the arbitration.
249.
Therefore, the Committee finds that in the circumstances of the instant case it does not suffice that the alleged departure could potentially have affected the Award; the departure must be shown effectively to have caused the Tribunal to reach a substantially different result from what it would have reached, if the relevant rule had been observed. Notably, however, as explained below in Section III.D(2)c, the Applicant has failed to meet its burden to make the necessary showing under either interpretation of the "seriousness" requirement.

(2) Application of the Legal Standard to the Present Case

a. Applicant’s Position

250.
The Applicant contends that the Award should be annulled on the basis of Article 52(1)(d) in connection with two circumstances: (i) the allegedly partial and biased conduct of Mr. Mourre, including his failure to disclose his relationship with Dechert in a timely manner; and (ii) the Tribunal’s treatment of evidence in finding that there was an expropriation in violation of the Treaty.

(i) Mr. Mourre’s conduct

251.
The Applicant argues that a fundamental rule of procedure was seriously departed from as a result of both Mr. Mourre’s lack of impartiality, and the fact that Venezuela was deprived of its right to be heard on the matter.378
252.
First, as explained above, the Applicant maintains that Mr. Mourre’s "lack of impartiality is in itself, a paradigmatic case of a serious departure from a fundamental rule of procedure," and an Award rendered with Mr. Mourre’s participation "must be annulled."379
253.
The Applicant objects to OIEG’s argument that Venezuela has failed to explain how Mr. Mourre’s lack of impartiality materially impacted the outcome of the Award. The Applicant contends that it is incorrect to impose this burden on Venezuela since "neither the Republic nor OIEG can provide documentary evidence proving such aspects."380 Furthermore, OIEG errs in assuming that the lack of impartiality of Mr. Mourre occurred only when his negotiations with Dechert concluded "shortly before" the issuance of the Award,381 since, as noted above, the conflict was purportedly present "during the ongoing full deliberation stage to issue the Award."382
254.
Second, the Applicant argues that Venezuela was deprived of its right of defence given that Mr. Mourre’s alleged conflict of interest became known on the same day when the arbitration proceeding was declared closed and hence, the "Republic was not allowed to activate the mechanism set forth in Articles 57 and 58 of the ICSID Convention and submit a proposal for disqualification."383
255.
For the Applicant, "[t]his problem is even more serious" when considering that Mr. Mourre’s signature is dated February 20, 2015 and Mr. Orrego Vicuña’s signature is dated February 26, 2015, that is, before the proceeding was declared closed.384 These circumstances are in conflict with Arbitration Rule 46, which requires arbitrators to sign the Award after the closure of the proceeding.385 The Applicant adds that those signature dates are inconsistent with the procedural history of the Award, which refers to later-in-time events,386 and concludes that:

This alteration to and distortion of the dates shows not only that the Republic was unable to challenge arbitrator Mourre due to the fact that the proceeding was closed and the Award was signed, but also that the dates of closure and signature were manipulated and distorted to preclude the exercise of the fundamental right of the Republic referred to above, which warrants the annulment of the Award.387

256.
Additionally, Arbitration Rule 46 is a fundamental rule of procedure since it is "a special case of the general rule that provides that parties have the right to be heard."388 In this sense, the Applicant explains that "[i]f the arbitrators could sign an award before the closure of the proceeding, the parties would have their right to petition the arbitral tribunal curtailed."389

(ii) Evidence concerning expropriation

257.
The Applicant also argues that the Tribunal seriously departed from a fundamental rule of procedure when it found that Venezuela had unlawfully expropriated OIEG’s investment. This is so "because the Tribunal did not specify the evidence on which it relied in finding that the failure to make the payment without delay, i.e., in a timely fashion, is attributable to the Republic."390
258.
The Applicant states that the only evidence on which the Tribunal relies is a statement made by Venezuela’s expert during the hearing, which the Tribunal distorted to mean that the Companies’ failure to participate in the local expropriation proceedings would not delay the payment of compensation.391 The Tribunal improperly concluded, according to the Applicant, that Venezuela had failed to offer a plausible explanation to justify the delay in the payment of compensation, effectively reversing "the burden of proof since it is [OIEG] that, in alleging the expropriation, must demonstrate that there was a delay in the payment of compensation and that such delay is attributable to the Republic."392

b. Respondent on Annulment’s Position

259.
The Respondent on Annulment contends that the Applicant has failed to show that any of the following constitutes a serious departure from a fundamental rule of procedure: (i) Mr. Mourre’s alleged lack of impartiality or independence; (ii) Mr. Mourre’s decision not to disclose his conversations with Dechert in the Underlying Arbitration; (iii) the timing of the signature of the Award by arbitrators Mourre and Orrego Vicuña; and (iv) the Tribunal’s treatment of the evidence.

(i) Mr. Mourre’s alleged lack of impartiality or independence

260.
The Respondent on Annulment refers to its position regarding the Applicant’s arguments on Article 52(1)(a) and states that "[m]utatis mutandis, the reasons provided in that section apply with equal force to the Applicant’s arguments regarding 52(1)(d)."393 OIEG recalls in that regard that the annulment mechanism is not the appropriate procedural avenue to challenge the impartiality or independence of an arbitrator394 and that the Applicant had avenues at its disposal to raise its concerns regarding Mr. Mourre that it chose not to use.395 On this basis alone, OIEG contends that the Committee should reject this ground for annulment.396
261.
OIEG further contends that the Applicant’s arguments fail for two additional reasons.397 First, as previously set forth, "the Applicant has manifestly failed to prove the existence of facts indicating that Arbitrator Mourre lacked impartiality or independence."398
262.
Second, even if the Applicant had met this burden of proof (quod non), it has failed to prove that this alleged departure from a fundamental rule of procedure is "serious,"399 in that the Applicant has failed to show that Mr. Mourre’s "alleged loss of impartiality or independence, at the absolute tail end of the proceeding, could have had a material effect on the Award."400

(ii) Mr. Mourre’s decision not to disclose his conversations with Dechert in the Underlying Arbitration

263.
First, OIEG notes that Arbitration Rule 6(2) sets out the disclosure obligations of arbitrators and argues that the Applicant has failed to prove how this rule required Mr. Mourre to disclose his conversations with Dechert in the Underlying Arbitration.401 Indeed, as set forth above,402 OIEG contends that Mr. Mourre was under no obligation to disclose such conversations since they did not question "his reliability for independent judgment."403 OIEG also contends that there could be no deprivation of the right to be heard in the case of facts that Mr. Mourre was not obligated to disclose.404
264.
OIEG points out again that the Applicant had at least two procedural avenues at its disposal through which to raise its alleged concerns in the Underlying Arbitration.405
265.
Second, OIEG argues that "even assuming that Arbitrator Mourre’s failure to disclose his contacts with Dechert in the OIEG Arbitration amounted to a departure from a rule of procedure, the Applicant has failed to prove that such departure could be considered ‘serious’ under Article 52(1)(d) of the ICSID Convention."406 In this regard, OIEG maintains that "[e]ven in the impossible scenario that Arbitrator Mourre would have been disqualified in the OIEG Arbitration on the basis of the disclosure of those facts, the Applicant has not even tried to explain, let alone demonstrate, how that would have caused the Tribunal ‘to reach a result substantially different’ from what it decided, unanimously, in the Award."407

(iii) The timing of the signature of the Award by arbitrators Mourre and Orrego Vicuña

266.
OIEG argues that Arbitration Rule 46 is not a fundamental rule of procedure, since it "neither seeks to protect ‘natural justice’ nor concerns ‘the essential fairness of the proceeding.’"408 Rather, "it merely seeks to avoid excessive delays in the preparation of ICSID awards after the closure of the proceedings."409
267.
Further, OIEG contends that, even assuming that Arbitration Rule 46 were a fundamental rule and that Mr. Mourre and Prof. Orrego Vicuna had departed from that rule by signing the Award before the closure of the proceedings, such departure could not be considered "serious" under Article 52(1)(d).410 Indeed, as argued by the Respondent on Annulment, "the Applicant has failed to explain how Arbitrators Mourre and Orrego Vicuna signing the Award after (instead of before) the closure of the proceeding would have ‘had the potential of causing the tribunal to render an award substantially different from what it actually decided.’"411

(iv) The Tribunal’s treatment of the evidence

268.
According to OIEG, the Applicant’s arguments regarding the Tribunal’s alleged treatment of the evidence as grounds for annulment under Article 52(1)(d) have no basis in law or fact. First, the Applicant has failed to identify a fundamental rule of procedure from which the Tribunal allegedly departed, since previous "committees have confirmed consistently that the tribunals are not required procedurally to specify or itemise the evidence on which their findings are based."412
269.
Second, the Applicant’s argument also fails as a matter of fact since "the Tribunal did analyse and specify the evidence on which it relied to find that the Applicant had failed to comply with its obligation to provide compensation to the Respondent on Annulment ‘without undue delay.’"413
270.
OIEG objects to the Applicant’s argument that the Tribunal incorrectly interpreted the testimony given by the Applicant’s legal expert in relation to the effects of the Companies’ non-participation in the local expropriation proceeding. First, OIEG points out that this argument from the Applicant "merely confirms that the real basis of its claim is that it disagrees with the Tribunal’s assessment of the testimony of its legal expert," which can not constitute, by itself, a ground for annulment,414 as confirmed by several annulment committees and scholars.415 Second, OIEG also contends that the Applicant’s argument is without merit as a matter of fact, since the Tribunal did not rely exclusively on the expert’s testimony, but "on a wealth of evidence and on thorough analysis."416

c. The Committee’s Analysis

(i) Purported conflict of Mr. Mourre

271.
At the outset, this Committee observes that whether or not an arbitrator’s purported lack of impartiality or independence is reviewable under Article 52(1)(d) has been a matter of some debate among the Parties and in view of prior committee decisions. Thus for example, in Vivendi II and EDF, the committees accepted that such challenges could be heard under Article 52(1)(d) (in addition to Article 52(1)(a)), although, as noted above, neither committee annulled on that basis.417 By contrast, in Azurix, the committee rejected the admissibility of the challenge under Article 52(1)(d) for the same reasons set forth in its analysis under Article 52(1)(a).418
272.
In this case, it appears that the Applicant is making two main arguments with respect to arbitrator conflict under Article 52(1)(d): first, that - procedurally - Mr. Mourre’s failure to timely disclose facts that could have led to his disqualification deprived the Applicant of its right to be heard by an impartial tribunal; and second - substantively - that Mr. Mourre actually lacked the requisite impartiality and independence, which also led to a deprivation of that right419 This Committee has already held (see supra Section III.B(1)c) that the second argument is inadmissible as a ground for annulment.420 Like the committee in Azurix, this Committee holds that this conclusion applies to both Articles 52(1)(a) and (d).421
273.
The Applicant’s first argument appears to be strictly a matter of procedure and concerns Mr. Mourre’s purported failure to timely disclose his relationship with Dechert (which relationship is said to have given rise to his lack of impartiality and independence). This Committee finds that objection to be admissible under Article 52(1)(d), which by its terms is designed to ensure the availability of procedural protections for the parties. However, for the reasons stated below, the Committee does not consider that the Applicant’s claims regarding the timing and manner of such disclosure support a finding that a fundamental rule of procedure was breached in this case.
274.
More specifically, in addition to lack of impartiality "in itself,"422 as set forth above the Applicant has alleged in connection with Mr. Mourre’s purported conflict a serious departure from (i) the right to timely disclosures under Arbitration Rule 6(2)423 and (ii) the right to be heard, positing that Arbitration Rule 46 is a specific case of the latter right.424 The Applicant specifies that because there are "overlaps" in these alleged departures "that makes it twice as serious."425
275.
Before addressing each of the Applicant’s specific allegations in turn, and in particular because of the Applicant’s asserted "overlaps," the Committee first scrutinizes the Applicant’s allegations of lack of impartiality, which are the focal point of and ultimately underpin each of the above-noted Applicant’s arguments in support of annulment under Article 52(1)(d). Indeed, as the Applicant itself has acknowledged, it would make no sense to contend that the [T]ribunal has departed from a fundamental rule of procedure demonstrated by the lack of impartiality [...] if the [Applicant] did not claim and prove, at the same time, that said lack of impartiality occurred.426
276.
As a starting point in the chronology of relevant events, the Respondent on Annulment has argued, and the Applicant has not contested, that ICSID sent a letter to the Parties on December 8, 2014, stating that at that time the Tribunal was reviewing "a complete draft of the Award."427 According to the facts of the case, including Mr. Mourre’s declaration regarding the timing of the conclusion of his conversations with Dechert, this ICSID letter is a strong suggestion that Mr. Mourre’s conversations with Dechert took place after deliberations had finished.428 Taken together with the final part of the procedural history contained in Section II of the Award, it is reasonable for this Committee to conclude that deliberations took place substantially, if not entirely, during the year of 2014, which according to the evidence before the Committee was before Mr. Mourre even began negotiations with Dechert.
277.
Moreover, as observed by OIEG,429 the fact that Mr. Mourre made his March 4, 2015 disclosure in the Favianca arbitration, as opposed to the Underlying Arbitration, is reasonable in light of the timing of the facts concerned. Namely, whereas Mr. Mourre’s professional relationship with Dechert was to begin from May 2015, the Underlying Arbitration would have been already concluded (as opposed to the Favianca Arbitration, which would have been ongoing at that time).430 Indeed, as noted above, Mr. Mourre had already signed the Award on February 20, 2015.
278.
The Committee recalls in this context the applicable holdings of the annulment decisions in Vivendi II and EDF. In Vivendi II, in rejecting the application for annulment, the committee found relevant the fact that Prof. Kaufmann-Kohler was not aware of the potential for conflict resulting from her role on the board of directors of the bank concerned, at a time when such role could have affected tribunal deliberations. In EDF, the committee found that the "drafting of the Award had been completed several weeks before" the purported conflict arose, based in part on the Award’s complexity and the fact that it was to be rendered in two languages.431
279.
So too in this case, the Committee finds that, even if a conflict could have arisen due to Mr. Mourre’s relationship with Dechert, that alleged conflict could not have affected the Award based on the timeline of the facts concerned, and on that basis the seriousness requirement of Article 52(1)(d) is not met. As previously set forth in Section III.B(2)d above, if the Applicant nevertheless had reason to be concerned about such a possible conflict - arising as it did at such a late stage of the proceedings - it could have pursued a reopening of the case or revision under Article 51 of the ICSID Convention.
280.
In any event, and for the same reasons as outlined above, the Committee finds that there is no showing on the record of any lack of independence or impartiality on the part of Mr. Mourre. The threshold commonly used to make such a determination is whether an independent third party could, based on the facts of the case, reasonably conclude that the arbitrator obviously was, or appeared to be, influenced by external forces. This standard has been used recently in the Blue Bank v. Venezuela case, which was cited by both the Applicant and OIEG.432
281.
Based on the facts of the case, Mr. Mourre did not have any occasion to influence his co-arbitrators during the deliberations leading to the decision since, at the relevant time, the evidence strongly suggests that he had not yet even initiated negotiations with Dechert, and therefore, could not have been influenced by that fact. Indeed, Mr. Mourre’s alleged conflict is to be excluded on the basis of the fact that when he informed the Parties in Favianca by letter of March 4, 2015 that "[a]s from May 2015" he would have a consultancy agreement with Dechert he had already signed the Award in the present case on February 20, 2015.433
282.
Furthermore, even if Mr. Mourre hypothetically had already begun negotiations with Dechert during the Tribunal deliberations period, there has been no showing that his impartiality or independence would have been, or even appeared to have been, compromised, given the explanations that Mr. Mourre provided in the letters delivered in Favianca v. Venezuela. The Committee recalls that Mr. Mourre represented - in the Favianca arbitration - that the relationship with Dechert would not provide him with access to relevant information concerning cases involving Venezuela or related entities.434 This Committee has no reason to doubt the reliability of that statement, and the Applicant has raised none.435 Moreover, on the evidence, the reality is that the allegations of possible conflict are all the weaker in the present case, given that for all practical purposes deliberations appear to have been completed before the time of any negotiations with Dechert. In brief, the Applicant has made no showing of any "dependency" or "reciprocal partisanship"436 between Mr. Mourre and Dechert, which would have affected the Underlying Arbitration.
283.
In view of the above review of the Applicant’s allegations, the Committee addresses each of the Applicant’s specific alleged rule violations in light of the applicable legal analytical framework. The Committee’s recalls (see Section III.D(1)c above) that to succeed on annulment under Article 52(1)(d) the Applicant must satisfy its burden of proof regarding: (a) the "fundamental" nature of the rule; (b) the departure by the Tribunal from said rule; and lastly (c) whether the departure was serious.
284.
First, as the Committee made clear was the case in its analysis under Article 52(1)(a),437 as a factual matter the Applicant has failed to establish the partiality of Mr. Mourre or the appearance thereof, and even if the Applicant had done so, given the timeline of the allegations, there has been no showing that such alleged partiality even could have had an outcome-determinative effect on the Award. Thus, even assuming such a charge were deemed admissible under Article 52(1)(d), the Committee’s ultimate decision rejecting the Application on this basis would remain undisturbed.
285.
Second, as for the right to timely disclosures under Arbitration Rule 6(2), the Applicant’s arguments must be rejected for similar reasons. Notably, Arbitration Rule 6(2) requires disclosure of information that an arbitrator "reasonably believes [...] would reasonably cause his or her reliability for independent judgment to be questioned by a reasonable person."438 In view of the Committee’s findings above, there was no obligation on the part of Mr. Mourre to disclose his relationship with Dechert in the Underlying Arbitration. While his disclosure may have been temporally relevant in Favianca v. Venezuela, the anticipated commencement date of the Dechert relationship was well after the anticipated issuance of the Award. Indeed, Mr. Mourre had signed the Award on February 20, 2015. Further, the evidence strongly suggests that the Tribunal had substantially completed its deliberations already in December 2014, even before any negotiations between Mr. Mourre and Dechert. Accordingly, the absence of a disclosure in the Underlying Arbitration does not constitute a departure from Arbitration Rule 6(2).
286.
Additionally, the absence of a disclosure did not result in a breach of the right to be heard. There is no right to be heard about facts that Mr. Mourre was not obligated to disclose. Further, upon learning of Mr. Mourre’s relationship with Dechert through the disclosure in Favianca, the Applicant could have, notwithstanding the timing of the closing, pursued (i) reopening under Arbitration Rule 38(2) as a means of having its concerns heard in the Underlying Arbitration, or (ii) revision under Article 51 of the ICSID Convention.
287.
As a final point as regards Arbitration Rule 6(2), even assuming Mr. Mourre’s decision not to disclose was a departure from that rule, the Committee finds that the Applicant has not established the requirement of seriousness in terms of Article 52(1)(d). The Applicant has not shown that the disclosure of the information would have (or even could have) resulted in a substantially different outcome in the Award. Among other reasons, the Committee’s findings above make clear that such information would not have resulted in Mr. Mourre’s removal from the Tribunal in the Underlying Arbitration, especially given that it was on a different temporal footing than, for example, Favianca v. Venezuela. Even if such a disclosure would have resulted in Mr. Mourre’s disqualification, the December 8, 2014 ICSID letter reported that the Tribunal was reviewing "a complete draft of the Award"439 and thus the Underlying Arbitration was at a very late stage. While the Committee acknowledges that under Arbitration Rule 12 a newly-appointed committee member may require that the oral procedure be recommenced, even in such case it is unlikely that a reconstituted Tribunal, including Prof. Fernández-Armesto and Prof. Orrego Vicuña as members, would have reached a substantially different conclusion.
288.
Third, and finally, as for the Applicant’s allegations of a right to be heard, this Committee has found immediately above that Mr. Mourre’s decision not to disclose the Dechert relationship in the Underlying Arbitration did not deprive the Applicant of the general right to be heard.
289.
As noted above, the Applicant also cites Arbitration Rule 46 as a specific case of the right to be heard.440 It provides,

The award (including any individual or dissenting opinion) shall be drawn up and signed within 120 days after closure of the proceeding. The Tribunal may, however, extend this period by a further 60 days if it would otherwise be unable to draw up the award.

290.
By way of background, this Committee observes that the proceedings in the Underlying Arbitration were in fact closed on the same date that the President of the Tribunal signed the Award (March 4, 2015), whereas both co-arbitrators signed the Award some days before the proceedings were closed.441
291.
Based on the Award’s procedural history, it can be inferred that there were some administrative issues arising towards the end of the case.442 Once a new Secretary to the Tribunal was appointed, the proceedings were declared closed as the President was ready to sign the Award, which his co-arbitrators had already signed. Consequently, while there may have been an administrative imperfection on the part of the Tribunal in its approach to declaring the closure of the proceedings, the closing was necessary, even if it might have been done at an earlier stage.
292.
More importantly for present purposes, to the extent that the sequence of events can be said to have conflicted with Arbitration Rule 46, this Committee cannot conclude that that Rule (stating that the signature should take place after the closure) is "fundamental"443 or that any such departure was "serious" within the meaning of Article 52(1)(d).444
293.
For the foregoing reasons, the Committee finds that there was no departure from a fundamental rule of procedure and that even if there had been such a departure, it could not have been so substantial as to deprive the Applicant of the protection which the rules in question were intended to provide.445 Nor has the Applicant established that such alleged violations had a material impact on the outcome of the Award.446
294.
Accordingly, this Committee rejects the Applicant’s request for annulment on the basis of its partiality-related arguments under Article 52(1)(d).

(ii) The Tribunal’s treatment of evidence concerning expropriation

295.
Finally, in regard to Article 52(1)(d), the Applicant argues that the Tribunal seriously departed from a fundamental rule of procedure in finding that there was an expropriation in violation of the Treaty.
296.
The Applicant rests this allegation principally on its view that the Tribunal did not specify the evidence on which it relied in finding that the failure to make payment without delay, i.e., in a timely fashion, is attributable to the Republic. The Applicant adds that the only possible evidence on which the Tribunal relied was the statement made by Venezuela’s expert during the hearing, which the Tribunal misinterpreted to mean that the Companies’ failure to participate in the local expropriation proceedings would not delay the payment of compensation.447
297.
OIEG maintains that the Applicant’s arguments are without merit as a matter of fact, because the Tribunal did not rely exclusively on the expert’s testimony, but "on a wealth of evidence and on thorough analysis."448
298.
Even assuming that the Applicant’s arguments in this regard were borne out by the record (a matter about which the Committee draws no conclusion one way or another), it is even more evident than in the case of the Applicant’s other causes for annulment that these arguments invite this Committee to evaluate not only the Tribunal’s criteria for assessing which evidence was pertinent or not, but also, and moreover, the interpretation of the evidence, and which facts have been proven or not.
299.
As this Committee has already made clear above, entering into such an analysis is clearly outside the boundaries of an annulment proceeding. The ICSID Convention and the Arbitration Rules constrain this Committee from relying on any such disagreements with the Tribunal’s assessment of the evidence as a valid cause for partial or total annulment of the Award. These circumstances alone are sufficient to reject the Applicant’s position in this instance.
300.
Accordingly, the Committee dismisses this second line of argument in favor of annulment under Article 52(1)(d).

E. The Award Failed to State the Reasons on Which It Is Based

(1) Legal Standard

a. Applicant’s Position

301.
The Applicant argues that Article 52(1)(e) of the ICSID Convention cannot be interpreted separately from Article 48(3) of the ICSID Convention.449 When these two provisions are read in conjunction, it is clear that "arbitral tribunals are under a fundamental obligation to provide a reasoned award"450 and that the tribunal’s failure to provide "coherent and adequate reasoning" renders the award of no effect.451
302.
The Applicant states that the purpose of these provisions is to guarantee that the parties "may understand the decisions rendered by the tribunals and the reasons leading to those decisions, so as to ensure respect for due process and the right of defence."452 Citing Libananco v. Turkey,453 in its Memorial on Annulment the Applicant contends that this duty to provide reasons "applies to any argument and claim expressly made before the Tribunal."454 However, in its Reply on Annulment, the Applicant specifies that it "does not challenge [that] the Tribunal [does not have an] obligation under Articles 48(3) and 52(1)(e) to provide a detailed answer to each and every argument of the parties."455
303.
The Applicant points out that the ICSID Convention "does not impose any condition upon the failure to state reasons which may give rise to a restrictive interpretation," since there is no requirement that the failure be "manifest" or "serious."456 The Applicant posits that the only option available under the ICSID Convention in case of a failure to state reasons is the annulment of the award.457
304.
With regards to the impact that the failure to state reasons should have in order to render the award annullable, the Applicant contends that the criterion established by the committee in TECO v. Guatemala should be followed.458 According to such decision:

The Committee wishes to point out that it cannot determine whether the evidence that was ignored by the Tribunal would have had an impact on the Award or not. What can be ascertained at the annulment stage is that the Tribunal failed to observe evidence which at least had the potential to be relevant to the final outcome of the case.459

305.
The Applicant further notes that, since a total absence of reasons in a tribunal’s decision is almost unconceivable, annulment committees "have stated that the provision of contradictory reasons and/or inadequate or insufficient reasons equally amounts to ‘failure to state reasons.’"460 Thus, as explained in the decision on annulment in Iberdrola v. Guatemala, "there Eire three possible issues relating to the statement of reasons for the Award: (i) absence of reasons; (ii) insufficient reasons and (iii) contradictory reasons."461
306.
Regarding contradictory reasons, those are reasons that are "mutually inconsistent and thus cancel each other out."462 As set forth by several annulment committees under the ICSID Convention, contradictory reasons are tantamount to a failure to state reasons.463
307.
As for inadequate or insufficient reasons, the Applicant points out that these reasons are those "which do not logically lead to the conclusion reached."464 As explained by the MINE v. Guinea committee, "[t]he requirement to state reasons is satisfied as long as the award enables one to follow how the tribunal proceeded from Point A to Point B and eventually to its conclusion[…]"465 According to the Applicant, this means that "the mere statement of some ‘reason’ by an arbitral tribunal in alleged support of a decision is not enough to comply with the duty to state reasons under international law. These ‘reasons’ must be coherent and adequate."466
308.
The Applicant contends that OIEG is wrong in asserting that "the ad hoc committee should not determine whether the reasons stated by the tribunal are ‘adequate.’"467 For the Applicant, OIEG is confusing the "‘adequacy’ requirement applicable to the reasons provided by a tribunal with the review of the ‘merits’ of these reasons."468 In this regard, the Applicant clarifies that "Venezuela is not holding that the Committee should review the adequacy or merits of the reasons presented by the Tribunal in terms of factual or legal correctness."469
309.
Relying on the annulment decision in TECO v. Guatemala,470 the Applicant further argues that "the failure to state reasons may also arise where the tribunal ignores the evidence before it."471 According to the Applicant, in that case the committee gave high importance "to the fact that the tribunal’s reasoning with respect to damages was unclear and hard to follow [and that this] defect was not compensated for by the mere reference made to elements that were not actually considered at the time of adopting the decision."472
310.
Finally, the Applicant also contends that annulment committees should not "create the reasons justifying the conclusion reached by a tribunal."473

b. Respondent on Annulment’s Position

311.
First, OIEG asserts that, as pointed out by previous annulment committees, the scope of review under Article 52(1)(e) is very narrow and the threshold for annulment very high.474 For OIEG, the standard to be applied is whether the Tribunal has failed to satisfy the "minimum requirement" to state reasons sufficient "to explain to the parties the motives that have induced the tribunal to adopt its decision."475 As long as "an ‘informed reader’ would understand the reasons, discern no material contradiction in them, and the reasons are ‘sufficiently clear and sufficiently displayed’, annulment under Article 52(1)(e) must be refused."476 In other words, "[f]or annulment under Article 52(1)(e) of the ICSID Convention to be justified: (a) the failure to state reasons must leave the decision on a particular point essentially lacking in any expressed rationale; and (b) that point must itself be necessary to the tribunal’s decision."477
312.
Second, OIEG argues that a tribunal is not required to address each argument or sub-issue raised by the parties but only such questions as it considers determinative to resolve the dispute.478 Citing the annulment decision in Alapli v. Turkey,479 OIEG points out that tribunals have a broad discretion in the exercise of their decision-making power. "They are not required to address each and every argument or sub-issue. Rather, tribunals are required to: (a) deal with each of the parties’ heads of claim more broadly; and (b) decide questions raised by the parties that are determinative to resolve the dispute between them."480
313.
OIEG further contends that an award should be construed so as to eliminate contradictory reasoning insofar as is possible.481 Citing Amco v. Indonesia and Rumeli v. Kazakhstan, OIEG argues that "[n]ot every gap or ambiguity in reasoning [] constitutes a failure to state reasons"482 under Article 52(1)(e) and "[c]ontradictory reasons do not constitute a failure to state reasons ‘unless they completely cancel each other out and therefore amount to a total absence of reasons.’"483 For OIEG, "jurisprudence confirms that committees should always attempt to construe the language of an award in a way that results in consistency," as opposed to its inner contradictions.484
314.
Finally, OIEG maintains that failure to state reasons can only lead to annulment when it concerns a decision that had an impact on the outcome of the dispute.485 As the committee in Alapli v. Turkey made clear, the tribunal’s lack of reasoning must refer to "a point that was essential to the outcome of the case."486

c. The Committee’s Analysis

315.

Article 52(1)(e) of the ICSID Convention provides that an award may be annulled if it has "failed to state the reasons on which it is based." ICSID ad hoc committees have considered that annulment under this ground requires a failure by the tribunal to comply with its duty of rendering an award that allows an informed reader to comprehend and follow its reasoning.487

316.
The 2016 ICSID Paper, quoting decisions of other ad hoc committees, similarly confirms that "the requirement to state reasons is intended to ensure that parties can understand the reasoning of the Tribunal, meaning the reader can understand the facts and law applied by the Tribunal in coming to its conclusion. The correctness of the reasoning or whether it is convincing is not relevant."488 As this Committee has already expressed in Section III.A(3), addressing the "Nature and Scope of the Annulment Mechanism," annulment under the ICSID Convention is not in any form an appeal of an award.
317.
The Applicant agrees that this Committee should not review the adequacy of the merits of the reasons presented by the Tribunal in terms of factual or legal correctness.489 The Respondent on Annulment maintains the same principle, adding that, despite the Applicant’s statements to the contrary, most of the Applicant’s arguments are directed at showing the Tribunal’s findings on the facts and the law are incorrect.490
318.
As stated by the ad hoc Committee in MINE v. Guinea, "the requirement to state reasons is satisfied as long as the award enables one to follow how the tribunal proceeded from Point A to Point B, and eventually to its conclusion, even if it made an error of fact or of law."491
319.
This Committee considers relevant and appropriate that in analyzing if this ground on annulment has been established, or not, the Committee should generally seek to construe the language of the Award in a way that results in consistency, as opposed to finding its possible inner contradictions.492
320.
Prior annulment committees have recalled that the standard under Article 52(1)(e) is a minimum standard, which is intended to ensure that a reasonable reader may understand the award.493 Thus, this Committee concurs in the view that, as in the case of the other annulment grounds, the scope of review under Article 52(1)(e) is strict and the threshold for annulment is high.494
321.
Article 52(1)(e), therefore, does not allow a committee to evaluate or assess the correctness or adequacy of the reasoning in the award, even less, inquire into or raise questions regarding the quality of the reasons. Rather, as specified by the ad hoc committee in Alapli, "the Applicant bears the burden of proving that the Tribunal’s reasoning on a point which is essential to the outcome of the case was either unintelligible or contradictory or frivolous or absent."495

(2) Application of the Legal Standard to the Present Case

a. Applicant’s Position

322.
The Applicant states that the Tribunal failed to state reasons (i) in deciding that there was an expropriation in violation of the BIT and (ii) in calculating the amount of damages.

(i) The Tribunal failed to state reasons in deciding that there was an expropriation in violation of the BIT

323.
The Applicant explains that the Tribunal concluded that Venezuela violated Article 6 of the BIT "by purportedly failing to appropriately identify the property subject to expropriation," which led the Tribunal to conclude that Venezuela violated the due process of law.496 However, the Applicant notes that the property expropriated is identified in the Award itself, "which confirms that such property was always identified and known to OIEG."497 On this basis, the Applicant argues that the Tribunal’s Award includes a contradiction that is equivalent to a failure to state reasons.498
324.
Further, the Applicant contends that the "Tribunal includes no discussion, explanation, or indication as regards the international law decisions or doctrines that allegedly support the idea that the clear identification of the property subject to expropriation ‘constitutes a basic guarantee of due process required by international [l]aw.’"499 This failure makes it impossible for Venezuela to understand the decision adopted by the Tribunal in this respect,500 particularly since:

it is not possible to identify any international law rule stating that "due process" may be affected by an alleged defect in an administrative act within the framework of an expropriation, without evidence having been submitted that there were no judicial remedies for the purportedly affected party to complain about such defect or that such party actually attempted—at least—to make use of such remedies or demonstrated that any attempt to do so would have been futile.501

325.
In this regard, the Applicant points out that there is "an incurable contradiction in the Tribunal’s arguments" in this respect given that:

it is a proven fact that the Claimant did not resort to any of the judicial remedies that were available with the aim of challenging any potential defect that it deemed to exist in any of the administrative acts of the Republic relating to the expropriation and because the general definition of the guarantee of due process provided by the Tribunal in the Award refers to the "minimum regulatory standard commonly accepted" in relation to the availability of appropriate judicial proceedings to protect any right that a person might deem to be affected by a State act.502

326.
Moreover, the Applicant claims that, when analyzing the measures from the perspective of the fair and equitable treatment standard, the Tribunal reaches the opposite conclusion: "that the Republic did not violate international law because [OEEG] did not resort, attempt to resort, or demonstrate the futility of resorting, to the judicial remedies that [...] were available to it."503 For the Applicant, this "flagrant logical inconsistency, which is equivalent to the total absence of reason, is confirmed upon verifying that the Tribunal uses the same concept of ‘due process’ as it is understood in international law to analyze the matter of expropriation and the issue of fair and equitable treatment, as expressly stated by the Tribunal."504

(ii) The Tribunal failed to state reasons in calculating the amount of damages

327.
The Applicant claims that the Tribunal applied a discount rate that "is in conflict with the premises established in the Award." As explained by expert Daniel Flores:

The Award stated that the DCF valuation it calculated was "confirmed" by two "sanity checks": (i) pricing multiples and (ii) the Companies’ share of the OI Group (the parent of the Companies). In fact, the Award’s "sanity checks" are contradicted by its own reasoning elsewhere in the Award. Had the "sanity checks" been properly performed, they would have shown that the Award’s DCF valuation of the Companies was overstated.505

328.
In this regard, the Applicant contends that the Tribunal’s multiples calculation did not apply a country risk adjustment that it recognized was necessary in the DCF valuation.506 Similarly, with regard to the second "sanity check" (the Companies’ share of the OI Group), the Applicant states that it is impossible to assign the Companies an intrinsic value as a percentage of the entire group without taking into account "the ‘risk premium’ which weighs the circumstances to which each of the assets of this ‘group as a whole’ are exposed."507
329.
Additionally, the Applicant claims that the Tribunal contradicted itself in fixing the value of Bolivars in US dollars terms.508 As explained by expert Daniel Flores:

[...] the Award found that OIEG was not entitled to unfettered access to the official exchange rate and therefore could not claim damages for not being able to exchange bolivars at that rate.

However, the Award took a different position with respect to the U.S. dollar value of bolivar denominated "excess cash balances" that the Companies held on the valuation date. For those cash balances, [...] the Award assumed that OIEG would have been able to convert its excess cash from bolivars into U.S. dollars using the official exchange rate, which is inconsistent with the Award’s earlier determination that OIEG was not entitled and had not been able to do so in the past. The Award did not state any reason for this inconsistent treatment of the value of bolivars.509

330.
Lastly, the Applicant argues that the Tribunal failed to state the reasons based on which it assigned a unified value to both Plants and then calculated the 72,983% equity interest, "which led to an artificial increase in the value of the [C]ompanies."510 According to the Applicant, the Tribunal’s "mistake is glaring, since it is an undisputed fact that [OIEG] had different levels of participation in the [C]ompanies. [...] In this context, the calculation of damages recognized by the Tribunal not only does not reflect those circumstances—which were established in the proceedings—but is actually inconsistent with them."511

b. Respondent on Annulment’s Position

331.
Contrary to the Applicant’s arguments, the Respondent on Annulment contends that: (i) the Tribunal’s finding that the Applicant’s expropriation of the Respondent on Annulment’s investments was not carried out in accordance with due process, and (ii) the Tribunal’s valuation of the expropriated investments are both based on sufficient, adequate and coherent reasons.

(i) The Tribunal’s finding that the expropriation was not carried out in accordance with due process is based on adequate, sufficient and coherent reasons

332.
Contrary to the Applicant’s arguments, OIEG claims that there is no contradiction between the Tribunal’s conclusion "that the Expropriation Decree did not clearly identify the assets that were to be expropriated and the fact that, once the effects of the expropriation materialised fully, the Tribunal and some experts were able to assess the value of the assets that had been expropriated."512
333.
In this regard, the Respondent on Annulment explains that the Tribunal found that, at the time the Expropriation Decree was issued, OIEG could not know precisely which assets would be expropriated513 and on this basis concluded that the expropriation was not carried out in accordance with the "due process of law" requirement in Article 6(a) of the BIT.514 However, by the time the Tribunal started its deliberations and issued its Award, "the effects of the expropriation had materialized fully" and OIEG "knew which assets had been taken from it by the Applicant," and thus the Tribunal was able to determine the amount of compensation owed by that the Applicant.515
334.
Further, OIEG also objects to the Applicant’s argument that there is a contradiction between: (a) the Tribunal’s finding that the Applicant’s failure to identify clearly the assets that would be expropriated constitutes a breach of the BIT’s "due process of law" requirement; and (b) the Tribunal’s finding that the Applicant had not violated due process as part of the protection against unfair and inequitable treatment under the BIT.516 According to OIEG, this argument "lacks any merit because it is based on a blatant misrepresentation of the Award."517
335.
First, OIEG argues that the premise that the Tribunal found that the Applicant had not violated due process as part of the protection against unfair and inequitable treatment under the BIT is false. Instead, "[t]he Tribunal actually concluded that the Applicant violated due process as part of the protection against unfair and inequitable treatment under the BIT in several ways."518 OIEG cites as examples paragraphs 560 and 557 of the Award.519
336.
Second, OIEG claims that "the Tribunal never stated that a finding of [a] violation of due process in the context of the fair and equitable treatment standard requires that the injured party use avenues available to it to challenge the flaws of the relevant administrative acts."520

(ii) The Tribunal’s valuation of the expropriated investments is based on sufficient, adequate and coherent reasons

337.
OIEG claims that the Applicant’s argument that the Tribunal contradicted itself by not applying a country risk adjustment to its EBITDA multiples "sanity check" must fail. OIEG contends that "[w]hen undertaking an EV/EBITDA multiples analysis, it is wrong to apply country risk because one of the steps of that analysis involves identifying comparable companies" and therefore, as explained by the Second Navigant Report, "[b]y definition, that step takes into account a level of country risk in which those comparable companies operate."521
338.
OIEG further notes that, indeed, on the basis of the evidence before it, the Tribunal determined that two companies, Argentina-based Rigolleau and Brazil-based CIV, were truly comparable companies for the purposes of the sanity check and that the Applicant’s own expert in the Underlying Arbitration accepted as much.522 Accordingly, for the Respondent on Annulment, "the Tribunal’s approach and its reasoning was consistent with economic principles and with the positions of both Parties and their experts in the OIEG Arbitration."523
339.
OIEG also objects to the Applicant’s argument regarding the alleged contradiction concerning the conversion of the excess cash balance from Bolivars into US dollars and the Bolivar-denominated DCF valuation. In this regard, OIEG contends that the Tribunal did not find that access to the official exchange rate had not been available for OIEG or the Companies, but that the BIT did not guarantee such access. In fact, the Tribunal rejected the Respondent on Annulment’s repatriation claim not because OIEG or the Companies were unable to access the official market, but because the Companies chose not to and opted instead for the "parallel market."524
340.
On this basis, OIEG claims that the Tribunal did not contradict itself by finding that the official exchange rate was the appropriate rate to use to otherwise convert the value of the Respondent on Annulment’s investment into US dollars. "To the contrary, as explained by Messrs Kaczmarek and Shopp in the First and Second Navigant Reports, ‘the [Tribunal’s] use of the official exchange rate aligns with fundamental economic principles’ and ‘is consistent with the practice of financial and economic experts.’"525
341.
Finally, OIEG contends that the Applicant’s argument that the Tribunal failed to state the reasons based on which it assigned a unified value to both Plants and then calculated the 72,983% equity interest, which led to an artificial increase in the value of the Companies, is entirely unsubstantiated by the evidence.526
342.
OIEG explains that the Tribunal "valued the Respondent on Annulment’s shareholding in both [Companies] on a combined basis" and then allocated a portion of this combined value to the Respondent on Annulment in accordance with its equity interest.527 OIEG notes that this approach "was necessary due to the consolidated nature of the [C]ompanies’ financial result and their shared management"528 which is confirmed by the fact that "both Parties’ experts valued the [C]ompanies as a combined entity throughout the [Underlying] Arbitration."529

c. The Committee’s Analysis

343.
As set forth above, the Applicant advances two main arguments or grounds in support of the alleged failure to state the reasons on which the Award is based (Article 52(1)(e)), as follows: (i) that the Tribunal failed to state its reasons in deciding that there was an expropriation in violation of the BIT; and (ii) that the Tribunal failed to state its reasons in calculating the quantum of the damages awarded.
344.
At the outset, this Committee confirms as part of this final Section of its analysis that it holds the view that the Award, in general, is well motivated.530 Consequently, the Committee has strained to comprehend the position of the Applicant, particularly in view of the very basic point already stated throughout this Decision that annulment is an extraordinary recourse, and not a mechanism of appeal by virtue of which an ad hoc committee can revisit the correctness or incorrectness of the Tribunal’s reasons for its Award.
345.
As for the finding of expropriation more specifically, the Award sets out detailed reasoning leading to its findings concerning compliance with each of the various requirements for a lawful expropriation under Article 6 of the BIT.531 After analyzing the applicable law and the facts, the Tribunal specifically concluded that the expropriation was carried out in the public interest and was not discriminatory, but also determined that there had been a lack of due process as well as an "excessive and unjustified delay in the payment" of compensation.532
346.
This Committee considers, as the Respondent on Annulment maintains,533 that the Tribunal’s determination that the Applicant’s expropriation of OIEG’s investments was not carried out in accordance with due process was sufficiently reasoned, including the Tribunal’s finding that a failure to identify clearly the expropriated assets affects due process. The Committee recalls that the due process requirement, which the Tribunal applied, is contained in the BIT’s expropriation provision (Article 6(a)),534 and that it is for the Tribunal to interpret the BIT as part of its findings on the merits.
347.
In the Committee’s view, the Tribunal adopted a clear three-step rationale (i) defining due process of law within the meaning of Article 6 of the BIT,535 (ii) explaining why the failure to identify clearly the expropriated property is incompatible with due process,536 and (iii) showing that the expropriation measure in dispute failed to comply with the due process requirement of Article 6(a) of the BIT.537
348.
The Tribunal reviewed the provisions of the Expropriation Decree so as to demonstrate that "[t]he imprecise language of the Decree prevented the Claimant from knowing precisely which of its assets would be expropriated, and as such, violated its right to due process";538 the Tribunal then showed how the "uncertainty regarding exactly which property was being expropriated persisted throughout the expropriation process."539 In view of the "significant weaknesses"540 the Tribunal had identified, the Tribunal concluded that it was "a proven fact that in the Expropriation Decree and the subsequent legal action, the Respondent failed to clearly identify the property subject to expropriation, the definition of which constitutes a basic guarantee of due process required by international Law."541 This in turn amounted to a violation of due process under Article 6(a) of the BIT.
349.
The fact that the Tribunal’s reasoning does not contain references to cases or scholarly comments does not mean that that its reasoning is absent or contradictory. On the contrary, as shown above, the Tribunal’s reasoning can easily be followed from point A to point B, as required under Article 52(1)(e) of the ICSID Convention. That is not to say, of course, that this Committee agrees or not with the Tribunal’s reasoning or that it considers such reasoning correct or incorrect. The Committee has been able to understand how the Tribunal reached its conclusions, regardless of whether the Committee agrees or disagrees with those conclusions.
350.
In addition, this Committee is persuaded by the point made by the Respondent on Annulment that there is no contradiction between the Tribunal’s conclusion "that the Expropriation Decree did not clearly identify the assets that were to be expropriated and the fact that, once the effects of the expropriation had materialised fully, the Tribunal and some experts were able to assess the value of the assets that had been expropriated."542
351.
Similarly, the Committee cannot agree with the Applicant’s contention that there is a contradiction amounting to a failure to state reasons based on the Tribunal’s findings that (a) the Applicant violated the BIT’s "due process of law" requirement upon failing to identify precisely the assets to be expropriated; and (b) the Applicant had not violated due process as part of the protection against unfair and inequitable treatment under the BIT.
352.
The Award is clear that, in fact, the Tribunal found that the Applicant had violated due process in breach of the BIT’s fair and equitable treatment obligation.543 Indeed, in applying the fair and equitable treatment standard to the facts, the Tribunal began by recalling its conclusion of an unlawful expropriation due to the Applicant’s failure to follow due process as well as "an excessive and unjustified delay in payment of the due compensation."544 In such case, the Tribunal concluded, "the Republic must have also breached the guarantee of FET."545
353.
Additionally, even assuming that the Applicant could establish the asserted contradiction as regards the Tribunal’s findings on due process, as noted the Tribunal also based its finding of unlawful expropriation on "an excessive and unjustified delay" in the payment of compensation. Thus, the Applicant has not sustained its burden of proving that the Tribunal’s reasoning on "a point which is essential to the outcome of the case" was absent or contradictory.546 Accordingly, there is no annullable error for failure to state reasons as regards the Tribunal’s determination that the Applicant violated the due process requirement under Article 6 of the BIT.
354.
The second asserted basis for annulment under Article 52(1)(e) (failure to state reasons) relates to the calculation of the amount of damages. The Applicant’s principal argument is that there are serious contradictions in the Tribunal’s Award.
355.
The debate circles around various topics, including contentions that the Tribunal contradicted itself by (i) not applying a country risk adjustment to its EBITDA multiples "sanity check";547 (ii) determining that two companies were truly comparable for the purpose of the sanity check;548 and finally (iii) using the official exchange rate from Bolivars to US dollars to convert the excess cash balance and a Bolivar-denominated DCF valuation.549
356.
As regards these and other similar arguments raised by the Applicant as a basis for this ground for annulment, and the counter arguments of the Respondent on Annulment, this Committee confirms what was stated at the outset, at paragraph 344 above: it finds that the Award is abundant in its reasoning as regards matters related to the calculation of damages and, as addressed above, the prior determination that there was an expropriation in violation of the BIT.
357.
Specifically as regards the calculation of damages, the Tribunal’s findings are set forth in detail, and accompanied by ample reasoning.550 The Applicant’s principal contentions to the contrary are addressed in turn. The first and second contentions are considered together. Namely, the Applicant maintains that the Tribunal failed to state its reasons in undertaking sanity checks by not applying a country risk adjustment to its EBITDA multiples analysis (after having done so in its DCF analysis), and by determining that two companies were comparable.
358.
The Committee rejects these grounds. The expert evidence supports a view that because the EBITDA multiples analysis involves identifying comparable companies, "[b]y definition, that step takes into account a level of country risk in which those comparable companies operate."551 Furthermore, in determining the appropriate comparable companies, the Tribunal methodically reviewed the positions of each Party’s expert in the Underlying Arbitration.552 Indeed, the Award records a measure of agreement on the part of Venezuela’s appointed expert with this aspect of the Tribunal’s determination.553 In the circumstances, the Applicant has not sustained its burden to show the asserted contradiction.
359.
The Applicant’s third contention concerns the Bolivar-US dollar exchange rate used by the Tribunal in the conversion of (i) the excess cash balance and in (ii) a Bolivar-denominated DCF valuation. The Applicant complains that the Award assumes that the conversion could have been undertaken at the official ("privileged") exchange rate, whereas according to the Applicant the Tribunal found in a prior section of the Award that such rate was not available to OIEG.554 However, the Tribunal’s prior finding, which pertains to OIEG’s claim under the BIT transfers provision, was in fact that OIEG, "had the option of resorting to the official market or the parallel market" for currency conversion.555 "By opting for the parallel market," the Tribunal explained, "it is inappropriate for Claimant to complain" about decisions to reject the transfer requests.556 Thus, the Tribunal rejected the transfers claim based on a finding that OIEG had opted to forego the official market, not that OIEG was not entitled to the official rate or had not been able to obtain that rate in the past. Again, the Applicant has not established the alleged contradiction.557
360.
Finally, the Committee briefly addresses the Applicant’s further contention that "the Tribunal failed to state the reasons based on which it assigned a unified value to both Plants and then calculated the 72,983% equity interest, which led to an artificial increase in the value of the [C]ompanies."558 The Committee notes that the Applicant has elected not to expand on this argument.559 Nor has it provided a response to the Respondent on Annulment’s arguments on this point,560 neither in the Applicant’s Reply on Annulment nor at the Hearing on Annulment. The Committee further notes the statement in the First Navigant Report that, in the Underlying Arbitration, "[...] both Parties’ experts only ever valued the companies as a combined entity."561 In the circumstances, the Committee finds no basis for annulling the Award on this ground.
361.
In summary, after a careful review of the Award, the Committee does not discern any of the contradictions alleged by the Applicant, even less, contradictions of such nature that they could be considered mutually inconsistent and thus cancelling each other out.562 Rather, the Committee is able "to follow how the tribunal proceeded from Point A to Point B and eventually to its conclusions."563
362.
Accordingly, this Committee is not satisfied that there is a showing by the Applicant of the existence or materialization of a ground for annulment under Article 52(1)(e) of the ICSID Convention.

F. Costs