1. In case of any dispute between either Contracting Party and the investor of the other Contracting Party, which may arise in connection with the investments, including disputes, which concern the amount, terms of and procedure for payment of compensation provided for in Article 5 hereof or with the procedure for effecting a transfer of payments provided for in Article 7 hereof, a notification in writing shall be handed in, accompanied with detailed comments which the investor shall forward to the Contracting Party involved in the dispute. The parties to the dispute shall exert their best efforts to settle that dispute by way of negotiations.
2. In the event the dispute cannot be resolved through negotiations within six months as of the date of the written notification as mentioned in Item 1 hereof above, then the dispute shall be passed over for consideration to:
[...]
(c) an "ad hoc" arbitration tribunal, in conformity with the Arbitration Regulations of the United Nations Commission for International Trade Law (UNCITRAL).5
Tribunal:
Professor Francisco Orrego Vicuña
Professor Rudolph Dolzer
The Honorable Marc Lalonde, P.C., O.C., Q.C.
For Claimant:
Mr. William B. McGurn III
Ms. Claudia Annacker
Mr. Lorenzo Melchionda
Mr. Vasily Mozgovoi
Mr. Milo Molfa
Mr. Peter Gloushkov
For Respondent:
Mr. Eric Schwartz
Ms. Sabine Konrad
Mr. Alain Farhad
Mr. Dmitri Grischenko
Permanent Court of Arbitration:
Paul-Jean Le Cannu
1. The Tribunal notes that document production is primarily designed to assist the Parties in the preparation of their written pleadings, rather than their oral pleadings. In addition, the arguments raised in the Claimant’s Rejoinder have long been known to the Respondent. Any document request from the Respondent should have been filed following the submission in June 2009 of the Claimant’s Answer to the Respondent’s Objections to Jurisdiction and Admissibility, in which the Claimant’s arguments were originally submitted. In view of the foregoing and the long-established schedule of this case, the Request has been submitted at too late a stage to be accepted by this Tribunal.
2. As the Parties may recall, the Tribunal granted in August 2009 the one-month extension of time requested by the Respondent to file its Reply, on the understanding that this extension would not jeopardize the hearing dates that were being considered at the time, namely March 29-31, 2010. Later that month, the Tribunal also granted the extension of time that the Claimant requested to file its Rejoinder, and expressly confirmed that the hearing would be held on the above-mentioned dates. Due to the tardiness of the Request, it would be very difficult, if not impossible, to accommodate it without disrupting the hearing, a step which the Tribunal is not prepared to take.
3. For the reasons set out above, the Request is denied. Without prejudice to the Tribunal’s decision on jurisdiction, the Parties are further advised that if the Tribunal were to decide to join some jurisdictional issues to the merits, it would again assess whether the documentary evidence before it is sufficient. The Tribunal would have the opportunity to request the production of additional evidence relevant to these issues in the second phase of the proceedings. So would the Parties in their written pleadings on the merits.
Tribunal:
Professor Francisco Orrego Vicuña
The Honorable Charles N. Brower
The Honorable Marc Lalonde, P.C., O.C., Q.C.
For Claimant:
Mr. William B. McGurn III
Ms. Claudia Annacker
Mr. Cameron Murphy
Mr. Lorenzo Melchionda
Ms. Laurie Achtouk-Spivak
Ms. Alexandra Karaganova
Ms. Natalia Bourobina
Mr. Peter Gloushkov
Mr. Igor Nazarchuk
For Respondent:
Mr. Eric Schwartz
Mr. James Castello
Mr. Alain Farhad
Ms. Lorraine de Germiny
Mr. Dmitri Grischenko
Ms. Iryna Telychko
Permanent Court of Arbitration:
Daniel Drabkin
Paul-Jean Le Cannu
Court reporter:
Mr. Trevor McGowan
[...] took place contrary to a court ruling prohibiting [Ukrtatnafta’s] supervisory board from holding any meetings to appoint and recall the chairman and members of its supervisory board, because the latter’s members were aware of that proscription at the time of their meeting in question, because the supervisory board there dealt with an issue which was reserved under applicable legislation exclusively for the company’s general meeting, and because during its termination of the claimant as chairman of the company’s management board, the supervisory board was governed by such provision of the employment contract as was at odds with Ukrainian employment legislation and was void.100
Disputed issues arising between business entities of the Parties in the execution of the agreements negotiated on the basis of the present Treaty shall, by agreement of the Parties, be subject to review by state arbitrage courts, provided no mutually acceptable solution was found theretofore.
Issues arising out of interpretation or application of the provisions of this Treaty shall be settled through negotiation and consultation in accordance with the rules of international law.127
The Tribunal is also mindful that the Parties have invoked various decisions of international courts or tribunals in support of their arguments. It should be noted in this respect that, in all the pertinent cases, the Permanent Court of International Justice ("PCIJ")—which was instrumental in clarifying the issues associated with concurrent jurisdiction under treaties between two parties—decided in favor of its jurisdiction in spite of requests to decline in favor of some other jurisdiction. So was done in the Mavrommatis case,161 although only in respect of a preliminary issue, as was done in the Chorzow Factory case162 and in the Rights of Minorities case.163
‘Investor of a Contracting Party’ shall imply: a) any natural person, who is a citizen of the state of a Contracting Party, and who is legally capable under its respective legislation to carry out investments on the territory of the other Contracting Party; b) any legal entity, set up or instituted in conformity with the legislation prevailing on the territory of the given Contracting Party, under the condition that the said legal entity is legally capable, under the legislation of its respective Contracting Party, to carry out investments on the territory of the other Contracting Party."238
In light of the Tribunal’s findings about Tatneft not meeting the structural or the functional test for establishing de jure or de facto government control, or for establishing that it carries out government functions, the Tribunal must conclude that business-related aspects predominate in Tatneft’s operations and that it is thus entitled to claim as a private investor under the Russia-Ukraine BIT. The record of profits obtained by Tatneft between 2005 and 2008, which Claimant explained at the hearing,254 is not insignificant and confirms the predominant business orientation of the company.
Either Contracting Party shall guarantee, in conformity with its legislation, the complete and unconditional legal protection of investments of investors of the other Contracting Party.448
Each Contracting Party shall provide on its respective territory a regime for the investments made by investors of the other Contracting Party, and also with respect to the activity involved in making such investments which regime shall be no less favorable than the one granted to its own investors or investors of any third state, precluding the use of discriminatory measures, which could interfere with the management and disposal of those investments.451
a) Respondent’s objections to jurisdiction and admissibility are dismissed;
b) all questions concerning costs are reserved for subsequent determination.
The Tribunal invites the Parties to confer and agree on a procedural calendar for the merits phase of this arbitration, and to report to the Tribunal thereon within 60 days of the issuance of this Partial Award.
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