Rasia v. Armenia, Award, 20 Jan 2023

Aabar	Aabar Investments PJSC
Aabar Term Sheet or Term Sheet	A term sheet prepared by Mr. Tappendorf for Aabar's purchase of 100% of the shares of Rasia, dated 18 December 2014
ADB	Asian Development Bank
April Hearing	Second part of the Hearing on Jurisdiction and the Merits, held 26-27 April 2021 by video conference
April Tr. Day [#] [Speaker(s)] [page:line]	Transcript of the April hearing
Arabtec	Arabtec Holding PJSC, a subsidiary of Aabar
Arbitration Rules	ICSID Rules of Procedure for Arbitration Proceedings 2006
BIT	Treaty Between the United States of America and the Republic of Armenia Concerning the Reciprocal Encouragement and Protection of Investment, signed on 23 September 1992 and entered into force on 29 March 1996
C-[#]	Claimants' Exhibit
CCCC	China Communications Construction Company Ltd.
CCECC	China Civil Engineering Construction Corporation Ltd.
China EximBank	Export-Import Bank of China
CL-[#]	Claimants' Legal Authority
Claimants	Rasia FZE and Mr. Joseph K. Borkowski
Cl. First PHB	Claimants' First Post-Hearing Brief, 19 April 2021
Cl. Mem. or Memorial	Claimants' Memorial on the Merits, 7 June 2019
Cl. Second PHB	Claimants' Second Post-Hearing Brief, 28 June 2021
Cl. Reply or Reply	Claimants' Reply on the Merits, 24 July 2020
Concessions or Concession Agreements	2012 Railway and Road Concessions
CSCEC	China State Construction Engineering Corporation Ltd.
EDB	European Development Bank
EPC	Engineering, Procurement and Construction
February Hearing	First part of the Hearing on Jurisdiction and the Merits, held 16-20 February 2021 by video conference
February Tr. Day [#] [Speaker(s)] [page:line]	Transcript of the February hearing
FIL	Law of the Republic of Armenia on Foreign Investments of 31 July 1994
ICSID Convention	Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, 18 March 1965
ICSID or the Centre	International Centre for Settlement of Investment Disputes
Memorial	Claimants' Memorial on the Merits, 7 June 2019
NSRC	The North-South Armenian Road Corridor
R-[#]	Respondent's Exhibit
Railway Concession	2012 Southern Armenia Railway Concession Agreement, 28 July 2012
Rasia-CCCC Framework Agreement	Framework Agreement between Rasia and China Communications Construction Company Ltd., dated 30 September 2012
Resp. Counter-Mem. or Counter-Memorial	Respondent's Counter-Memorial on the Merits, 9 December 2019
Resp. Rej. or Rejoinder	Respondent's Rejoinder on the Merits, 28 December 2020
Resp. First PHB	Respondent's First Post-Hearing Brief, 19 April 2021
Resp. Second PHB	Respondent's Second Post-Hearing Brief, 28 June 2021
RL-[#]	Respondent's Legal Authority
Road Concession	2012 Southern Armenia High Speed Road Concession Agreement, 28 July 2012
SCR	South Caucasus Railway Closed Joint-Stock Company
Tribunal	Arbitral tribunal constituted on 23 January 2019
VCLT	Vienna Convention on the Law of Treaties (1969)

1.

This case concerns a dispute submitted to the International Centre for Settlement of Investment Disputes ("ICSID" or the "Centre") on the basis of:

(i) the 2012 Southern Armenia Railway Concession Agreement, 28 July 2012 (the "Railway Concession");¹

(ii) the 2012 Southern Armenia High Speed Road Concession Agreement, 28 July 2012 (the "Road Concession");²

(iii) the Treaty Between the United States of America and the Republic of Armenia Concerning the Reciprocal Encouragement and Protection of Investment, which was signed on 23 September 1992 and entered into force on 29 March 1996 (the "BIT");³ and

(iv) the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, which entered into force on 14 October 1966 (the "ICSID Convention").

2.

The Claimants are Rasia FZE ("Rasia"), a company incorporated in the United Arab Emirates, and Mr. Joseph Borkowski ("Mr. Borkowski"), a natural person having the nationality of the United States of America (together, the "Claimants").

3.

The Respondent is the Republic of Armenia ("Armenia" or the "Respondent").

4.

The Claimants and the Respondent are collectively referred to as the "Parties." The Parties' representatives and their addresses are listed above on page (i).

5.

Rasia submits a dispute with Armenia under the Railway Concession and Road Concession (together the "Concessions"), which contain the following identical provisions at Article XVII, Section 66:

66.1 The Parties shall first attempt amicably to settle all disputes arising out of or relating to this Agreement.

66.2 Should the Parties not be able to do so within 30 (thirty) days of the declaration of a dispute, then they shall refer the matter for resolution to the Minister of Transportation and Communication of the Republic of Armenia and Chief Executive Officer of the Concessionaire.

66.3 Should the Minister of Transportation and Communications of the Republic of Armenia and the Chief Executive Officer of the Concessionaire not be able to resolve the dispute within 30 (thirty) days, the Government and the Concessionaire stipulate that the transaction to which this Agreement relates is an investment and hereby consent to submit to the International Centre for Settlement of Investment Disputes ("ICSID") any dispute arising out of or relating to this Agreement, including any question regarding its existence, validity or termination, for settlement by arbitration pursuant to the Convention on the Settlement of Investment Disputes between States and Nationals of Other States ("ICSID Arbitration") ....⁴

6.

Mr. Borkowski submits a dispute with Armenia under Art. VII of the BIT, which provides as follows:

1. For purposes of this Article, an investment dispute is a dispute between a Party and a national or company of the other Party arising out of or relating to (a) an investment agreement between that Party and such national or company; (b) an investment authorization granted by that Party's foreign investment authority to such national or company; or (c) an alleged breach of any right conferred or created by this Treaty with respect to an investment.

2. In the event of an investment dispute, the parties to the dispute should initially seek a resolution through consultation and negotiation. If the dispute cannot be settled amicably, the national or company concerned may choose to submit the dispute for resolution:

(a) to the courts or administrative tribunals of the Party that in a Party to the dispute; or

(b) in accordance with any applicable, previously agreed dispute-settlement procedures; or

(c) in accordance with the terms of paragraph 3.

3. (a) Provided that the national or company concerned has not submitted the dispute for resolution under paragraph 2 (a) or (b) and that six months have elapsed from the date on which the dispute arose, the national or company concerned may choose to consent in writing to the submission of the dispute for settlement by binding arbitration:

(i) to the International Centre for the Settlement of Investment Disputes (Centre) established by the Convention on the Settlement of Investment Disputes between States and Nationals of other States, done at Washington, March 18, 1965 (ICSID Convention), provided that the Party is a Party to such Convention; or

(ii) to the Additional Facility of the Center, if the Center is not available; or

(iii) in accordance with the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL); or (iv) to any other arbitration institution, or in accordance with any other arbitration rules, as may be mutually agreed between the parties to the dispute.

(b) once the national or company concerned has so consented, either Party to the dispute may initiate arbitration in accordance with the choice so specified in the consent.

4. Each Party hereby consents to the submission of any investment dispute for settlement by binding arbitration in accordance with the choice specified in the written consent of the national or company under paragraph 3. Such consent, together with the written consent of the national or company when given under paragraph 3 shall satisfy the requirement for:

(a) written consent of the parties to the dispute for purposes of Chapter II of the ICSID Convention (Jurisdiction of the Centre) and for purposes of the Additional Facility Rules; and

(b) an "agreement in writing" for purposes of Article II of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York, June 10, 1958 ("New York Convention").

7.

On 24 July 2018, ICSID received a request for arbitration dated 19 July 2018 from Rasia and Mr. Borkowski against Armenia (the "Request for Arbitration"), along with exhibits C-1 through C-60 and legal authority CL-1.

8.

On 3 August 2018, the Secretary-General of ICSID registered the Request in accordance with Article 36(3) of the ICSID Convention and notified the Parties of the registration. In the Notice of Registration, the Secretary-General invited the Parties to proceed to constitute an arbitral tribunal as soon as possible in accordance with Rule 7(d) of ICSID's Rules of Procedure for the Institution of Conciliation and Arbitration Proceedings.

9.

By letters of 31 July 2018 (Claimants), 28 August 2018 (Respondent), 6 September 2018 (Claimants), 13 September 2018 (Respondent), 24 September 2018 (Respondent) and 25 September 2018 (Claimants), in accordance with Article 37(2)(a) of the ICSID Convention, the Parties agreed that Tribunal would consist of three arbitrators, to be appointed as follows:

The Claimants shall appoint an arbitrator as soon as possible and notify the Respondent of the appointment.

The Respondent shall appoint its arbitrator and notify the Claimants of the appointment within 45 calendar days of the Claimants notifying the Respondent of the appointment of their arbitrator. In the event the Respondent fails to appoint an arbitrator within 45 calendar days of receipt of [ICSID's letter of September 20, 2018], the Claimants may request the Chairman of the Administrative Council of ICSID to make an appointment on the Respondent's behalf. The Claimants will entertain any reasonable request for an extension of time before making such a request.

Within 30 calendar days of the appointment of the Respondent's arbitrator, the two party-appointed arbitrators shall attempt to agree on the appointment of a third arbitrator to serve as the President of the Tribunal, with each party-appointed arbitrator consulting with the party having made the appointment; and

In the absence of agreement between the two party-appointed arbitrators within 30 calendar days as described in paragraph (3) above (or such other period agreed by the parties), the parties shall, through the Secretary-General, jointly request in writing that the Chairman of the Administrative Council designate an arbitrator to be the President of the Tribunal.

10.

By letter of 6 September 2018, the Claimants appointed Mr. John Beechey CBE, a British national, as arbitrator. On 28 September 2018, after the Parties had confirmed their agreement on the method of constitution of the Tribunal, ICSID sought the acceptance of Mr. Beechey's appointment. By letter of 12 October 2018, ICSID informed the Parties that Mr. Beechey had accepted his appointment.

11.

By letter of 18 October 2018 (received by the ICSID Secretariat on 22 October 2018), the Respondent requested an extension of time to appoint its arbitrator. By letter of 22 October 2018, ICSID invited the Parties to communicate any agreement on such extension made pursuant to paragraph (2) of the Parties' agreement on the method of constitution of the Tribunal. The Parties did not revert regarding any agreement, however, the Claimants did not object to an extension.

12.

By letter of 5 November 2018, the Respondent appointed Mr. J. Christopher Thomas KC, a national of Canada, as arbitrator. By letter of 12 November 2018, ICSID informed the Parties that Mr. Thomas had accepted his appointment and that, in accordance with the Parties' agreed method, the co-arbitrators would proceed with the appointment of the President of the Tribunal.

13.

By email of 26 December 2018, Armenia informed ICSID that it was revoking the power of attorney previously granted to Cleary Gottlieb Steen & Hamilton LLP and appointing Baker & McKenzie LLP as counsel. An updated power of attorney was provided.

14.

By email of 20 January 2019, the co-arbitrators informed the Parties of their appointment of Ms. Jean E. Kalicki, a national of the United States, as President of the Tribunal. On 22 January 2019, ICSID sought Ms. Kalicki's acceptance of her appointment.

15.

On 23 January 2019, in accordance with Rule 6(1) of the ICSID Rules of Procedure for Arbitration Proceedings (the "Arbitration Rules"), the Secretary-General of ICSID notified the Parties that all three arbitrators had accepted their appointments and that the Tribunal was therefore deemed to have been constituted on that date. Ms. Milanka Kostadinova, ICSID Senior Legal Adviser, was designated to serve as Secretary of the Tribunal.

16.

The Tribunal is thus composed of Ms. Jean E. Kalicki, President, appointed by her co-arbitrators; Mr. John Beechey, appointed by the Claimants; and Mr. J. Christopher Thomas, appointed by the Respondent.

17.

In accordance with ICSID Arbitration Rule 13(1), the Tribunal held a first session with the Parties on 4 March 2019, by teleconference.

18.

Following the first session, on 13 March 2019, the Tribunal issued Procedural Order No. 1 recording the agreement of the Parties on procedural matters. Procedural Order No. 1 provides, inter alia, that the applicable Arbitration Rules are those in effect from 10 April 2006, that the procedural language is English, and that the place of proceeding is Frankfurt, Germany. Procedural Order No. 1 also set out the agreed schedule for the proceedings.

19.

In accordance with the agreed procedural calendar, on 7 June 2019, the Claimants filed their Memorial on the Merits (the "Memorial") with the expert report of Kiran Sequeira, including appendices A through E and exhibits KS-1 through KS-189; the witness statement of Andrew Thornber; the witness statement of Chad Tappendorf with exhibits CT-1 through CT-10; the witness statement of Joseph Borkowski with exhibits JB-1 through JB-4; exhibits C-61 through C-222; and legal authorities CL-2 through CL-70.

20.

The procedural calendar contemplated that the Respondent file any request for the bifurcation of the proceeding relating to issues of jurisdiction and admissibility by 15 July 2019. On 15 July 2019, the Respondent confirmed that it would not submit such a request.

21.

By letter of 2 December 2019, the Claimants informed the Tribunal that Quinn Emanuel Urquhart & Sullivan LLP would replace Sherman & Sterling LLP as counsel of record. By letter of 9 December 2019, ICSID transmitted additional disclosures from Ms. Kalicki and Mr. Beechey based on the Claimants' notification of new counsel.

22.

On 9 December 2019, the Respondent filed its Counter-Memorial on the Merits (the "Resp. Counter-Mem.") with the expert report of John H Winner with appendices 1 through 4 and exhibits JW-1 through JW-59; the witness statement of Artur Arakelyan with exhibits AA-1 through AA-7; exhibits R-1 through R-63; and legal authorities RL-1 through RL-58.

23.

By letter of 13 January 2020, the Tribunal asked the Parties to confirm, by 21 January 2020, if they would consent to the appointment of Dr. Joel Dahlquist as Assistant to the Tribunal. The Parties confirmed their agreement to the appointment of Dr. Dahlquist by emails of 24 January 2020 (Claimants) and 25 January 2020 (Respondent). By email of January 28, 2020, ICSID transmitted Dr. Dahlquist's signed declaration.

24.

Following exchanges between the Parties concerning their respective requests for production of documents, the Parties' completed schedules were transmitted to the Tribunal on 17 February 2020.

25.

On 26 February 2020, the Tribunal issued Procedural Order No. 2 concerning the production of documents. Annex A to the Order set out the Tribunal's decisions on the Claimants' requests and Annex B set out the decisions on the Respondent's requests.

26.

By letter of 31 March 2020, the Parties informed the Tribunal that, due to the COVID-19 pandemic, they had agreed to extend the time limits for document production and their remaining submissions. Additionally, the Claimants requested the Tribunal to (i) order the Respondent to comply with Procedural Order No. 2 with regard to the organization of document production; and (ii) approve the Claimants' appointment of Dr. Aram Orbelyan, a former Deputy Minister of Justice of the Republic of Armenia, as co-counsel.

27.

By letter of 1 April 2020, the Tribunal approved the revised calendar and invited the Respondent's observations on the Claimants' two applications by 8 April 2020.

28.

By letter of 8 April 2020, the Respondent filed its observations, objecting to the Claimants' applications. In response to the Tribunal's invitation, on 16 April 2020, the Claimants submitted their reply. On 17 April 2020, the Respondent sought the Tribunal's permission to submit to the Tribunal only an allegedly privileged document relevant to the application concerning Dr. Orbelyan. By email of 20 April 2020, the Claimants stated that they were content for the Tribunal to review the document proposed by the Respondent to determine its relevance to the case and whether it properly was subject to privilege.

29.

Based on the Claimants' consent, by letter of 21 April 2020, the Tribunal invited the Respondent to provide the proposed document to the Tribunal for in camera review in connection with its privilege claims. On 22 April 2020, the Respondent provided the document, a 29 December 2011 email from Dr. Orbelyan, in English and Armenian, and indicated the portions that it contended were subject to privilege.

30.

By letter of 23 April 2020, the Tribunal upheld the claim to privilege on certain portions of the document and directed the Respondent to produce it (redacted for the privileged portions) to the Claimants. The redacted document was produced to the Claimants on the same date.

31.

On 27 April 2020, the Tribunal issued Procedural Order No. 3, denying the Claimants' two applications of 16 April 2020 and deferring to a later stage in the proceeding the Respondent's request for a decision on costs concerning the Claimants' applications.

32.

By letter of 19 May 2020, the Claimants requested that the Tribunal order the Respondent to produce a further limited category of documents. By letter of 22 May 2020, the Respondent objected to the Claimants' request. On 2 June 2020, the Tribunal ordered the Respondent to produce, by no later than 12 June 2020, three of the categories of documents requested by the Claimants. The remainder of the Claimants' requests were denied.

33.

By letter of 25 June 2020, the Claimants requested that the Tribunal (i) invite the Respondent to call Messrs. Gagik Grigoryan and Gagik Beglaryan as witnesses or, should the Respondent decline to do so, compel their testimony as non-party witnesses; and (ii) direct the Respondent to explain whether it had searched the files of Messrs. Grigoryan and Beglaryan to identify documents responsive to the Tribunal's order of 2 June 2020 for the production of documents.

34.

By letter of 1 July 2020, the Respondent asked the Tribunal to deny the Claimants' requests of 25 June 2020 and requested the Tribunal to order the Claimants to provide information with respect to their own document searches. After seeking leave to do so, the Claimants filed further observations on these matters by letter of 7 July 2020.

35.

On 10 July 2020, the Tribunal issued Procedural Order No. 4 in which it (i) denied the Claimants' request concerning Mr. Beglaryan; (ii) called upon the Respondent to locate Mr. Grigoryan, but deferred its decision on whether he should be called to provide testimony until after completion of the written phase of the proceedings; (iii) denied both Parties' requests for further document production orders or regarding compliance with previous orders; and (iv) deferred until a later stage in the proceedings both Parties' requests that costs be awarded in connection with these matters. In accordance with the Tribunal's directions, the Respondent subsequently informed the Tribunal that Mr. Grigoryan was residing in Yerevan, Armenia.

36.

On 13 July 2020, the Respondent filed a Request for Security for Costs with exhibits R-64 through R-66 and legal authorities RL-59 through RL-64. The Tribunal invited the Claimants' comments on the Request for Security for Costs by 30 July 2020.

37.

By letter of 19 July 2020, the Claimants informed the Tribunal that the Parties had agreed to a three-day extension for the filing of the Reply and Rejoinder on Jurisdiction and the Merits until 23 July 2020 and 24 December 2020, respectively. The Tribunal approved the extension on 20 July 2020.

38.

On 24 July 2020, the Claimants filed their Reply on Jurisdiction and the Merits (the "Reply") with the expert report of Thomas Harrison with exhibits TH-1 through TH-83; the second expert report of Kiran Sequeira with appendices F through I and exhibits KS-190 through KS-245; the second witness statement of Andrew Thornber with exhibits AT-1 through AT-8; the second witness statement of Chad Tappendorf with exhibits CT-11 through CT-13; the second witness statement of Joseph Borkowski with exhibit JB-5; exhibits C-223 through C-318; and legal authorities CL-71 through CL-132.

39.

On 30 July 2020, the Claimants filed their Response on Security for Costs with legal authorities CL-133 through CL-137.

40.

Following leave granted by the Tribunal, on 6 August 2020, the Respondent filed a Reply on Security for Costs with the witness statement of Van Krikorian with exhibit VK-1, and legal authority RL-61.

41.

The Claimants were also granted leave to file a Rejoinder on Security for Costs and submitted it on 13 August 2020, together with the third witness statement of Joseph Borkowski with exhibits JB-6 through JB-19; exhibit C-319; and legal authority CL-138.

42.

After considering a request from the Respondent to file further comments on security for costs and the Claimants' objection to the request, the Tribunal granted a final, short round of submissions on security for costs.

43.

On 19 August 2020, the Respondent filed its Further Comments in Support of Respondent's Request for Security for Costs with the second witness statement of Van Krikorian with exhibits VK-2 and VK-3; exhibits R-67 through R-69; and legal authorities RL-65 and RL-66.

44.

By email of 21 August 2020, on the date due for its further comments on security for costs, the Claimants stated that they were awaiting a final piece of evidence and asked the Tribunal for an extension until 25 August 2020. The Tribunal granted the Claimants' request.

45.

On 26 August 2020, the Claimants filed their Further Comments in Response to the Respondent's Request for Security for Costs with the fourth witness statement of Joseph Borkowski with exhibits JB-20 through JB-33; exhibits C-320 and C-321; and legal authorities CL-139 through CL-145.

46.

By email of 14 September 2020, the Tribunal asked the Parties to provide their comments on the possibility of holding the hearing on jurisdiction and the merits by remote video conference technology, in light of "ongoing developments in relation to COVID-19, including both health and safety developments and various governmental and other restrictions on movement and gatherings that have been put in place in the various countries in which counsel for the Parties and members of the Tribunal reside." The Tribunal offered additional days should a hearing by video conference prove necessary.

47.

On 14 September 2020, the Tribunal issued Procedural Order No. 5 with its Decision on the Respondent's Request for Security for Costs. The Tribunal denied the Respondent's request and deferred the question of costs for a later stage in the proceedings.

48.

By joint email of 7 October 2020, the Parties confirmed their availability for a remote hearing and asked that the Tribunal add 16, 20 and 27 February 2021 as possible hearing dates. The Parties asked that ICSID nevertheless proceed with arrangements for an in-person hearing in Frankfurt in case travel restrictions were lifted by February 2021.

49.

By email of 8 October 2020, the Tribunal confirmed that, in accordance with the Parties' agreement, it had reserved the additional hearing dates and instructed ICSID to proceed with in-person arrangements in Frankfurt. It expected to make a final decision on the format of the hearing by late November 2020.

50.

By email of 23 November 2020, the Tribunal informed the Parties that due to ongoing travel restrictions and the Frankfurt International Arbitration Centre's inability to host a hearing in compliance with local health regulations, it would proceed with plans for a remote hearing.

51.

By email of 18 December 2020, the Tribunal circulated a draft Procedural Order No. 6 to facilitate the Parties' discussions on the organization of the hearing and invited the Parties to file comments by 8 January 2021.

52.

By email of 24 December 2020, the Respondent requested an extension to file its Rejoinder until 28 December 2020 and stated that the Claimants had agreed to this request. By email of the same date, the Tribunal granted the extension.

53.

On 28 December 2020, the Respondent filed its Rejoinder on the Merits (the "Rejoinder") with the second expert report of John H. Winner with appendices 7 and 8 and exhibits JW-60 through JW-81; the witness statement of Gagik Grigoryan with exhibits GG-1 through GG-7; the second witness statement of Artur Arakelyan with exhibits AA-8 through AA-10; exhibits R-70 through R-150; and legal authorities RL-67 through RL-91.

54.

On 11 January 2021, the Parties notified the Tribunal of the witnesses they intended to call for cross-examination at the hearing.

55.

By joint email of 15 January 2021, following an extension granted by the Tribunal, the Parties submitted their points of agreement and disagreement on draft Procedural Order No. 6.

56.

On 20 January 2021, the Tribunal held a pre-hearing organizational meeting with the Parties by video conference. Following the meeting, on the same date, the Tribunal issued directions concerning the hearing and invited the Parties to confer and revise draft Procedural Order No. 6 considering the discussions at the meeting and the Tribunal's directions.

57.

By letter of 27 January 2021, the Claimants requested (i) the deferral of the testimony of Mr. Thomas Harrison and Mr. John Winner to April 2021; (ii) leave to submit additional documents into the record, and (iii) that the Tribunal order the Respondent to stop using confidential information submitted in the arbitration to conduct discovery against the Claimants. The Tribunal invited the Respondent's comments on the Claimants' 27 January 2021 letter by 1 February 2021.

58.

By letter of 28 January 2021, the Secretary-General of ICSID informed the Parties that due to Ms. Milanka Kostadinova's upcoming retirement from the Centre, Ms. Martina Polasek, ICSID Deputy Secretary-General, would take over as Secretary of the Tribunal in this case.

59.

By email of 29 January 2021, the Parties submitted a revised draft Procedural Order No. 6, with a point of disagreement concerning the order of witnesses who would testify at the hearing.

60.

By email of 30 January 2021, the Tribunal directed the Parties on the order of the witnesses, noting that each side was free to determine the order of its witnesses and experts.

61.

By letter of 1 February 2021, the Respondent objected to the Claimants' application of 27 January 2021 and requested the Tribunal to order Mr. Borkowski to permit KPMG to respond to a request for information made by the Respondent.

62.

By email of 2 February 2021, the Claimants requested permission to respond to the Respondent's letter of 1 February 2021. The Tribunal granted the Claimants until noon ET on 3 February 2021 to provide their comments.

63.

By email of 2 February 2021, ICSID asked the Parties to provide further details about the organization of the hearing, including their agreement regarding the use of a 360-degree camera and their availabilities for a Zoom test call.

64.

On 2 February 2021, the Tribunal issued Procedural Order No. 6 concerning the organization of the hearing.

65.

By letter of 3 February 2021, the Claimants provided their comments on the Respondent's letter of 1 February 2021. On the same date, the Respondent sought permission to respond to the Claimants' letter. The Tribunal granted the Respondent until noon ET on 5 February 2021 to submit its comments. The Respondent filed its comments accordingly.

66.

On 6 February 2021, the Tribunal issued Procedural Order No. 7: (i) admitting certain documents proposed by the Claimants into the record; (ii) admitting one item subject to the fulfillment of certain conditions (including the filing of a witness statement by Mr. Weixin and making him available for cross-examination), to be accepted by the Claimants by 9 February 2021; and (iii) granting the Respondent's request to have KPMG confirm the authenticity of exhibit JB-17.

67.

On 8 February 2021, ICSID, FTI, the court reporter, interpreters and the Parties held a test video conference on Zoom.

68.

On 8 February 2021, the Claimants submitted documents responsive to paragraph 34(b) of Procedural Order No. 7 and stated they would revert as soon as possible on paragraphs 34(a) and (d). By email of 9 February 2021, the Claimants asked for an extension until 10 February 2021 to file these documents. The Tribunal granted the extension.

69.

On 10 February 2021, the Claimants filed their documents responsive to paragraphs 34(a) and (d) of Procedural Order No. 7. On the same date, the Respondent noted that the Claimants had indicated that they would not submit a witness statement or make available for cross-examination Mr. Weixin, contrary to the condition for admitting certain of the documents. The Respondent therefore requested that the Tribunal not admit into evidence exhibits C-344 through C-362. The Claimants responded to the Respondent's objections on the following day.

70.

On 11 February 2021, the Tribunal issued Procedural Order No. 8, in which it (i) admitted exhibits C-344 through C-346, exhibits C-350 through C-360, and exhibit C-362 into the record; (ii) invited the Respondent to file any responsive evidence to these exhibits by 11 March 2021; (iii) invited the Parties to confirm their availability for an additional Hearing Day on 29 April 2021 to allow additional time for the examination of Mr. Borkowski on Exhibit C-231 and the evidence in paragraph 21 of the Order, as well as any potential testimony by Mr. Weixin and the evidence in paragraph 19 of the Order; (iv) requested the Claimants to provide the ICSID Secretariat with Mr. Weixin's contact details immediately upon receipt of the Order to enable the Secretary of the Tribunal to invite Mr. Weixin to testify as the Tribunal's witness; and (v) directed Mr. Borkowski to refrain from any contact with Mr. Weixin until Mr. Weixin had either declined to testify or concluded his testimony at the April Hearing.

71.

By email of 12 February 2021, the Respondent informed the Tribunal that it was not available for an additional hearing day on 29 April 2021. The Respondent requested permission to cross-examine Mr. Borkowski on the newly admitted documents in February rather than April.

72.

By email of 12 February 2021, the Tribunal took note that the additional hearing day in April would not be necessary.

73.

A hearing on jurisdiction and the merits was held by video conference in two parts, the first from 16-26 February 2021 (the "February Hearing") and the second on 26 and 27 April 2021 (the "April Hearing"), see paragraphs 88 and 89 below. The following persons were present at the February Hearing:

Tribunal:

Ms. Jean E. Kalicki President
Mr. John Beechey CBE Arbitrator
Mr. J. Christopher Thomas KC Arbitrator

ICSID Secretariat:

Ms. Martina Polasek Secretary of the Tribunal
Ms. Elizabeth Starkey Paralegal
Mr. Oscar Figueroa ICSID Intern

Assistant to the Tribunal:

Dr. Joel Dahlquist Assistant to the Tribunal

For the Claimants:

Mr. Mark McNeill Quinn Emanuel
Ms. Hanna Roos Quinn Emanuel
Ms. Laila Hamzi Quinn Emanuel
Ms. Ashley Hammett Quinn Emanuel
Ms. Athina Manoli Quinn Emanuel
Mr. James Phillips Quinn Emanuel
Mr. Varoujan Avedikian TK & Partners
Mr. Martin Stepanyan TK & Partners
Ms. Larisa Gevorgyan TK & Partners

For the Respondent:

Mr. Grant Hanessian Hanessian ADR, LLC
Ms. Kristina Fridman Baker & McKenzie LLP
Ms. Marlena Harutyunyan Baker & McKenzie LLP
Mr. Victor Dumler Dumler & Partners
Mr. Hayk Pogosyan HAP LLC
Mr. Hayk Hovhannisyan HAP LLC
Mr. Yeghishe Kirakosyan Party Representative
Mr. Liparit Drmeyan Party Representative
Ms. Kristine Khanazadyan Party Representative
Ms. Mariam Tarverdyan Party Representative
Ms. Parandzem Mikayelyan Party Representative
Mr. Alan Grigorian Party Representative

Court Reporter:

Ms. Laurie Carlisle Hendrex Court Reporter (February 16, 2021)
Ms. Diana Burden Court Reporter (February 17-26, 2021)
Ms. Ann Lloyd Assistant to the Court Reporter

Interpreters:

Ms. Elena Edwards Interpreter
Ms. Helena Bayliss Interpreter

FTI Hearing Coordinators:

Mr. Jamey Johnson FTI
Mr. David Brodsky FTI

74.

During the February Hearing, the following persons were examined:

On behalf of the Claimants:

Mr. Joseph K. Borkowski Party and Witness
Mr. Andrew J. Thornber Witness
Mr. Chad L. Tappendorf Witness
Mr. Kiran Sequeira Expert
Mr. Thomas Harrison Expert

On behalf of the Respondent:

Mr. Artur Arakelyan Witness
Mr. Gagik Grigoryan Witness
Mr. John H. Winner Expert
Mr. Pamy J. S. Arora Expert

75.

By email of 15 March 2021, the Parties informed the Tribunal that the Parties had agreed to a schedule for post-hearing submissions.

76.

By email of 1 April 2021, the Parties informed the Tribunal of their agreement on certain adjustments to the post-hearing submission deadlines. By email of the same date, the Tribunal agreed to the Parties' modifications.

77.

By emails of 9 April 2021, the Parties transmitted their respective demonstrative exhibits.

78.

By further email of 9 April 2021, the Claimants, on behalf of the Parties, submitted the Parties' agreed and disputed corrections to the transcripts.

79.

By email of 13 April 2021, the Claimants informed the Tribunal that the Parties had agreed to postpone the deadline for their first post-hearing briefs until 19 April 2021 and sought the Tribunal's approval of the adjustment. By email of the same date, the Tribunal confirmed its agreement.

80.

By email of 18 April 2021, the Claimants submitted legal authorities CL-147 through CL-150, as well as a revised version of legal authority CL-5.

81.

On 19 April 2021, the Tribunal issued Procedural Order No. 9 concerning the Parties' disputed transcript corrections.

82.

On 19 April 2021, the Parties submitted their First Post-Hearing Briefs ("Cl. First PHB" and "Resp. First PHB").

83.

By email of 20 April 2021, ICSID requested the Parties' comments on the organization of the remainder of the hearing including, inter alia, a revised schedule.

84.

By emails of 22 April 2021 (from the Respondent) and 23 April 2021 (from the Claimants), the Parties provided their responses to ICSID's 20 April 2021 email.

85.

On 24 April 2021, the Claimants filed a request for the Tribunal to decide on the admissibility of new evidence. By email of the same date, the Tribunal requested the Respondent's comments by 3 pm EST on 25 April 2021. By email of the same date, the Respondent objected to the Claimants' request. By email of 25 April 2021, the Respondent provided further comments on the Claimants' request.

86.

By email of 25 April 2021, the Claimants responded to the Respondent's emails of 24 and 25 April 2021 and reiterated their request to submit new evidence.

87.

On 25 April 2021, the Tribunal issued Procedural Order No. 10 denying the Claimants' 24 April 2021 application.

88.

The April Hearing, the second part of the hearing on jurisdiction and the merits, was held on 26-27 April 2021 by video conference. The following persons were present at the April Hearing:

Tribunal:

Ms. Jean Kalicki President
Mr. John Beechey CBE Arbitrator
Mr. J. Christopher Thomas KC Arbitrator

ICSID Secretariat:

Ms. Martina Polasek Secretary of the Tribunal
Ms. Elizabeth Starkey Paralegal

Assistant to the Tribunal:

Dr. Joel Dahlquist Assistant to the Tribunal

For the Claimants:

Mr. Mark McNeill Quinn Emanuel
Ms. Hanna Roos Quinn Emanuel
Ms. Laila Hamzi Quinn Emanuel
Ms. Ashley Hammett Quinn Emanuel
Ms. Athina Manoli Quinn Emanuel
Mr. James Phillips Quinn Emanuel
Mr. Varoujan Avedikian TK & Partners
Mr. Martin Stepanyan TK & Partners
Ms. Larisa Gevorgyan TK & Partners
Mr. Joseph K. Borkowski Party Representative

For the Respondent:

Mr. Grant Hanessian Hanessian ADR, LLC
Ms. Kristina Fridman Baker & McKenzie LLP
Ms. Marlena Harutyunyan Baker & McKenzie LLP
Mr. Victor Dumler Dumler & Partners
Mr. Hayk Pogosyan HAP LLC
Mr. Hayk Hovhannisyan HAP LLC
Mr. Yeghishe Kirakosyan Party Representative
Mr. Liparit Drmeyan Party Representative
Ms. Kristine Khanazadyan Party Representative
Ms. Mariam Tarverdyan Party Representative
Ms. Parandzem Mikayelyan Party Representative
Mr. Alan Grigorian Party Representative

Court Reporter:

Ms. Diana Burden Court Reporter
Ms. Ann Lloyd Assistant to the Court Reporter

Interpreters:

Ms. Elena Edwards Interpreter
Ms. Helena Bayliss Interpreter

FTI Hearing Coordinators:

Mr. Jamey Johnson FTI
Mr. Jeff Herzka FTI

89.

During the April Hearing, the following persons were examined:

On behalf of the Claimants:

Mr. Chad L. Tappendorf Witness
Mr. Andrew J. Thornber Witness
Mr. Thomas Harrison Expert
Ms. Frances Hale Expert
Mr. Kiran Sequeira Expert
Ms. Yelena Aleksandrovich Expert
Ms. Caroline Wilczynski Expert
Mr. Greg Johnson Expert

On behalf of the Respondent:

Mr. John H. Winner Expert
Mr. Pamy J. S. Arora Expert

90.

By email of 17 May 2021, the Parties submitted their agreed corrections to the transcripts.

91.

By email of 20 May 2021, the Parties informed the Tribunal that they had agreed to a 25,000-word limit for their second post-hearing briefs, to be submitted on 18 June 2021, and a 2 July 2021 deadline for their costs submissions. By email of the same date, the Tribunal confirmed its approval.

92.

By email of 13 June 2021, the Claimants informed the Tribunal that the Parties had agreed to an extension until 28 June 2021 for the filing of their second post-hearing briefs and until 12 July 2021 for the filing of their costs submissions. By email of 14 July 2021, the Tribunal confirmed its agreement to the extensions.

93.

By email of 27 June 2021, the Claimants sought to add Article 289 of the Armenian Civil Code onto the record as legal authority CL-151. By email of 28 June 2021, the Respondent confirmed its agreement. On 29 June 2021, the Tribunal confirmed its approval of the Parties' agreement.

94.

On 28 June 2021, the Parties filed their Second Post-Hearing Briefs ("Cl. Second PHB" and "Resp. Second PHB").

95.

By email of 8 July 2021, the Respondent informed the Tribunal that the Parties had agreed to a one- week extension for the filing of their costs submissions. By email of the same date, the Tribunal confirmed its agreement.

96.

The Parties filed their submissions on costs on 19 July 2021.

97.

The proceeding was closed on 18 January 2023.

98.

The following is a summary of the facts as pleaded by the Parties or established by the evidence, without prejudice to any legal conclusions by the Tribunal, which will be addressed in later sections. The summary is not intended to be exhaustive, and the absence of reference to particular facts or assertions, or to the evidence supporting any particular fact or assertion, should not be taken as an indication that the Tribunal did not consider those matters. The Tribunal has carefully considered all evidence submitted to it in the course of these proceedings.

99.

The present dispute concerns two separate projects, one for road construction in southern Armenia (the "Road Project") and the other for a railway in the same part of the country (the "Railway Project"). These two projects are collectively referred to as the "Projects" in this Award.

100.

Well prior to Armenia's discussions with Rasia, the Government of Armenia had been exploring ways of developing better transport routes to link the north of the country (which borders Georgia) and the south (which borders Iran). As a result of international conflicts, Armenia's borders to the east (with Azerbaijan) and the west (with Turkey) have been closed since the early 1990s. As a result, the only borders open to Armenia are with Georgia and Iran.⁵

101.

The southern region of Armenia has been particularly affected by these events. Although the border with Iran remains open to road traffic, there is no current rail access to Iran; the railway network in the rest of Armenia, which is operated by the South Caucasus Railway Closed Joint-Stock Company ("SCR"), a subsidiary of Russian Railways OJSC, does not extend to the Iranian border. As for road traffic, the existing road from the capital Yerevan to Meghri at the Iranian border (about 385 km) is not suitable for high speed traffic. For these reasons, Armenia has long aspired to build both a north-south railway and a modern high speed road connecting the north and south of the country.⁶

102.

With respect to road development, well before the events at issue in this case, Armenia was in discussion with international development banks about the "North-South Road Corridor" ("NSRC"), an ambitious road development project for which Armenia required outside funding. In 2009, Armenia obtained multi-tranche facility financing of up to USD 500 million from the Asian Development Bank ("ADB").⁷ The NSRC was to be carried out in different tranches, of which the southern portion (Tranche 4) was considered to be the most difficult.⁸ In 2009, the ADB approved a loan of $60 million for Tranche 1, and a feasibility study for subsequent tranches.⁹ In May 2010, PADECO Co. Ltd ("PADECO") prepared a report for ADB in which, among other things, it proposed a private-partnership model to finance Tranche 4 in a manner that would limit Armenia's financial exposure and its need to borrow from ADB and/or other development banks.¹⁰ This possibility of involving the private sector in the financing of the southernmost portion of the NSRC provides background to the discussions that ultimately progressed between Armenia and Rasia in connection with the Road Project.

103.

The initial steps towards the Projects were taken in 2011. On 3 October 2011, Rasia signed a confidentiality agreement with Armenia, represented by the then-Minister of Transport and Communication (hereafter the "Minister/Ministry of Transport"), Mr. Manuk Vardanyan. The confidentiality agreement was signed "[i]n connection with the pursuit of the development and financing of a road and railway in Armenia."¹¹ Later that same month, Mr. Borkowski and Minister Vardanyan met in Armenia, together with then-Prime Minister Mr. Tigran Sargsyan, to discuss the Projects.¹²

104.

Also in late October 2011, Mr. Borkowski approached Mr. Chad Tappendorf and Mr. Brandt Mowry, representatives of the United Arab Emirates sovereign wealth fund, Aabar Investments PJS ("Aabar"), about potentially involving Aabar as an investor in the Projects. Aabar and Rasia had previously collaborated on a number of potential investment opportunities, including proposed deals to acquire an NBA basketball team and a Formula One racetrack in New Jersey (neither of which came to fruition), and the restructuring of Gobi Coal, a portfolio company with interests in a coal mining venture in Mongolia.¹³

105.

Armenia and Rasia entered into a framework agreement on 30 December 2011 (the "Framework Agreement"),¹⁴ in which Rasia was defined as the "Sponsor" and Mr. Borkowski was identified as Rasia's CEO.¹⁵ Under the Framework Agreement, each Party undertook to "negotiate in good faith with the other on an exclusive basis" with respect to the Projects, with the goal of developing a concession agreement, with associated engineering, financial and environmental feasibility studies, all of which "must be bankable."¹⁶

106.

With respect to the Road Project, the Framework Agreement recited that Armenia "wishes to grant a concession to design, build, finance, operate and maintain … a new high speed road from Sisian to Megrhi."¹⁷ The Framework Agreement stated that the terms of a future concession agreement for this new high speed road "may include (i) road availability payments from the Ministry of Transport and Communications, and/or (ii) tolls," with the concession agreement accordingly also addressing "the Sponsor's right to freely fix … tolls, in reasonable profit margins considering Project circumstances."¹⁸

107.

With respect to the Railway Project, the Framework Agreement referred to a potential concession "to design, build, finance, operate and maintain a new railway link between the existing operating railway system in central Armenia and the Southern Armenia border near Meghri."¹⁹ The terms of a future concession agreement for the railway would have to address "the Sponsor's right to freely fix … freight rates … in reasonable profit margins considering Project circumstances," as well as "the terms applicable to … passenger rail transportation, if any," which "may include cost sharing payments" from the Ministry of Transport.²⁰

108.

Mr. Borkowski and the Government of Armenia (the "Government") then engaged in negotiations during the first half of 2012 over the terms for two concessions for the Projects. During these negotiations, Armenia's lead representative was Minister Manuk Vardanyan, while Rasia, in addition to Mr. Borkowski, was assisted by several law firms, as well as by representatives from Aabar. Rasia contends that during this period, the Government requested an official letter of support from Aabar that would confirm Aabar's interest in investing in the Projects, and it performed national security checks on Aabar.²¹

109.

On 21 May 2012, Mr. Chad Tappendorf of Aabar wrote directly to Minister Vardanyan.²² Mr. Tappendorf was then an Investment Associate at Aabar, responsible for "analyzing business proposals, building presentations and supporting" Mr. Brandt Mowry, then Aabar's Chief Financial Officer ("CFO") and Chief Investment Officer ("CIO"), in connection with "deal execution and balance sheet restructuring initiatives."²³ Mr. Tappendorf's letter to Minister Vardanyan stated that "[t]his letter serves as a reference of support for Rasia." He referred to past Aabar dealings with Rasia, stated Aabar's awareness of Rasia's "investments … into and outside of Armenia, specifically in the infrastructure and mining industries," and added that "we provide our support with Rasia wherever projects are economically appealing."²⁴

110.

In June 2012, Minister Vardanyan was replaced as Minister of Transport by Mr. Gagik Beglaryan, the former mayor of Yerevan. According to Rasia, Mr. Beglaryan requested a second letter of support from Aabar.²⁵ Mr. Tappendorf provided the second letter on 26 June 2012, describing Aabar's history of "working closely" with Rasia on "investment and co-investment opportunities worldwide," and noting Aabar's awareness of Rasia's discussions with Armenia about the potential Projects. Mr. Tappendorf then stated as follows: "I aim to review the railway and road development projects with a focus on economic feasibility and investment and either directly or through our affiliates consider equity investments and/or lending." Mr. Tappendorf also stated that "either directly or through our affiliates, I will be focused on considering substantial investments … in ancillary industries such as agriculture, mining and real estate development."²⁶

111.

Mr. Borkowski testified that in his view, the "essence of [the] bargain" he thereafter struck with Armenia was that "Aabar was to be the anchor equity investor in the Projects once their feasibility had been established."²⁷ Mr. Tappendorf notes that in July 2012, around the time of the Concession Agreements, Mr. Borkowski appointed him to Rasia's Investment Advisory Board, in which role he "provided guidance on the projects on behalf of Aabar."²⁸

112.

Armenia observes, however, that neither of Mr. Tappendorf's 2012 letters actually reflected any commitment on the part of Aabar to invest in the Projects,²⁹ much less "remotely suggest[ed]" or "could possibly be said to put Armenia on notice" that Aabar intended to buy Rasia from Mr. Borkowski.³⁰ This debate becomes relevant to the case for reasons discussed further below.

113.

As also will be shown below, from the Armenian side, Mr. Beglaryan (the new Minister of Transport) was to be a significant actor in the lead-up to the present dispute.

114.

On 28 July 2012, Armenia and Rasia signed two concessions (collectively, the "Concession Agreements" or the "Concessions") – one for the Road Project (the "Road Concession") and one for the Railway Project (the "Railway Concession"). The Concessions were signed for Armenia by Minister Beglaryan, and for Rasia (defined as the "Concessionaire"), by Mr. Borkowski, who was identified as Rasia's CEO and "Sole Shareholder." The Concession Agreements provided the framework for the development of the Projects.

115.

The Concession Agreements are at the heart of this dispute, and the relevance of various provisions is discussed further below. For present purposes, and without prejudice to the Tribunal's legal analysis, the Tribunal sets out here the provisions that have been discussed in this Arbitration. Some of these are worded identically or very similarly in both Concessions, while others are specific to either the Railway Concession or the Road Concession.

116.

The Preamble of both Concessions stated that the Government "deems it advantageous to have private sector participation in the improvement of its transportation infrastructure so as to benefit from private sector know-how, business connections and capital."³¹ For this purpose, the Government has asked Rasia to implement a project for "financing, designing, building, rehabilitating, possessing, commissioning, operating and maintaining," respectively, (a) a "new high speed road" between Sisian and Meghri and/or Armenia's southern border near Meghri (the "High Speed Road"),³² and (b) a "new railway" between the existing operating central railway system and Armenia's southern border near Meghri (the "Railway").³³

117.

The Preamble of the Concessions also stated that based on preliminary estimates, the budget for constructing the "new high speed road" will be "no less than USD 1.1 billion,"³⁴ and for the new railway will be "no less than USD 1.7 billion."³⁵ The Concessions acknowledge that "in addition to any equity investment that Rasia FZE is willing to arrange," the Projects implied at least 75% debt financing through secured lending, "without which implementation of the project may not be feasible" for Rasia. Successfully attracting such debt financing would substantially depend on Rasia's ability to grant "legally reliable" security interests, "as well as on the availability of a favorable and stable legal framework."³⁶

118.

With respect to the Road Project, Section 3 of the Road Concession (entitled "Grant of Concession") provided in relevant part, and defined collectively as "the Project," the following:

The Concessionaire shall have the right and obligation at its own cost and risk:

(a) to finance and carry out the Feasibility Study from its own funds;

(b) to implement from its own funds and attracted Project Financing, the following:

(i) finance, design, build, rehabilitate, possess, commission, operate and maintain the Southern Armenia High Speed Road;

(ii) finance, design, rehabilitate, possess, commission, operate and maintain as part of the Southern Armenia High Speed Road any and all infrastructures and facilities in the Concession Territory³⁷ currently or formerly used in the operation of any road …; and

(iii) finance, design, build, rehabilitate, possess, commission, operate and maintain all utilities required or advisable for building, operating and maintaining the Southern Armenia High Speed Road, …;

(c) to do all such other things and carry out all such other businesses as may be necessary or reasonably advisable for any of the above;

(d) to pay to the Government a variable concession fee pursuant to Article 4 [Concession Fee];

(e) to rehabilitate and hand over to the Government the existing toll free road between Sisian and Meghri as reflected in Schedule B within the budget of USD 80 millions (eighty million US dollars); and

(f) to rehabilitate and hand over the Southern Armenia High Speed Road in good working order to the Government at expiration or termination of the Concession ….³⁸

119.

As discussed further herein, the Parties dispute whether, and to what extent, Section 3(b) of the Road Concession required Rasia to work to deliver two separate roads with separate routes (a new High Speed Road as well as the existing road, rehabilitated), or, alternatively, only one road (with some stretches of new construction on new routes, and other stretches simply connecting with the existing road, rehabilitated). The Tribunal returns to this debate in due course.

120.

As for the corresponding Railway Concession, Section 3 of that agreement provided in relevant part, and defined collectively as "the Project," the following:

The Concessionaire shall have the right and obligation at its own cost and risk:

(a) to finance and carry out the Feasibility Study from its own funds;

(b) to implement from its own funds and attracted Project Financing, the following:

(i) finance, design, build, rehabilitate, possess, commission, operate and maintain the Southern Armenia Railway;

(ii) finance, design, rehabilitate, possess, commission, operate and maintain as part of the Southern Armenia Railway any and all infrastructures and facilities in the Concession Territory currently or formerly used in the operation of a railway …;

(iii) finance, design, build, rehabilitate, possess, commission, operate and maintain all utilities required or advisable for building, operating and maintaining the Southern Armenia Railway, …; and

(iv) acquire, lease or otherwise arrange the Rolling Stock necessary or advisable for the operation of the Southern Armenia Railway;

(c) to haul freight on the Southern Armenia Railway …;

(d) to carry passengers on the Southern Armenia Railway …;

(e) to do all such other things and carry out all such other businesses as may be necessary or reasonably advisable for any of the above;

(f) to pay to the Government a variable concession fee pursuant to Article 4 [Concession Fee]; and

(g) to rehabilitate and hand over the Southern Armenia Railway in good working order to the Government at expiration or termination of the Concession ….³⁹

121.

Pursuant to Section 3(f) of each Concession Agreement, it was anticipated that Rasia would pay concession fees to the Government with respect to each Project. Section 4 of the Concession Agreements described this as a "fixed concession fee" of 100,000 Armenian Drams per year for the first 10 years of operation of each Project, followed by a "variable concession fee" based on a percentage of the "annual gross revenue earned" from the operation of the "Southern Armenia High Speed Road" and the "Southern Armenia Railway" respectively. The percentage of annual gross revenue would start at 0.1% in year 11 and would increase by 0.1% in each ensuing year, until it reached a maximum of 2% per year, at which point, it would "remain unchanged thereafter."⁴⁰

122.

The duration of the Concessions (identical in both cases) was set out in Section 12 of the Concessions. Essentially, the duration was an aggregate of four periods: (a) a "Feasibility Study Period," running from the date of the Concession Agreements "until final acceptance of the Feasibility Study by [Rasia] and confirmation of the Corridor by the Government" (both points addressed further below); (b) a "Project Financing Period," running from the end of the Feasibility Study Period and until Rasia received its first project financing disbursement; (c) a "Construction Period," running from the end of the Project Financing Period and until commissioning of, and grant of permission to operate, the High Speed Road and the Railway, respectively; and (d) an "Operations Period," which would run for 30 years, with an option for Rasia to extend for an additional 20 years (i.e., 50 years in total). If Rasia exercised the extension option, the Parties were to "negotiate in good faith with respect to making amendments to this Agreement, which are necessary or desirable in the view of any of the Parties."⁴¹

123.

Both Concessions stated certain conditions precedent – both to construction (in Section 9) and to operation (in Section 10). Certain of the Section 9 conditions precedent are of particular relevance to this dispute.

124.

In the Road Concession, the "Conditions Precedent to Construction" included, inter alia, the following:

Construction of the Southern Armenia High Speed Road shall commence when each of the following conditions has been satisfied or waived:

(a) …;

(b) Agreement between the Government and the Concessionaire regarding the payment of availability payments by the Government to the Concessionaire (such availability payments when combined with tolls charged by the Concessionaire must, among other things, be sufficient to enable the Concessionaire (i) to repay debt and interest incurred to design and build the Southern Armenian High Speed Road, (ii) to pay for the operation, maintenance and rehabilitation of the Southern Armenian High Speed Road, and (iii) to generate a rate of return on equity sufficient to attract equity investors);

(c) …;

(d) Feasibility studies prepared by one or more first-class specialized firms confirming the technical, commercial, financial, environmental and social feasibility of the Project (collectively, the "Feasibility Study") and final acceptance thereof by the Concessionaire. The Feasibility Study shall, inter alia, (i) reflect the territory (the "Corridor"), in respect of which the Concessionaire shall have free preferred right-of-way or free preferred right of use, (ii) include working designs, as well as (iii) reflect the construction and commissioning milestones for the Southern Armenia High Speed Road and (iv) analyze the benefit of using the existing North-South Road for certain categories of traffic.;

(e) Confirmation of the Corridor by the Government;

(f) Grant by the Government to the Concessionaire the rights to the Corridor, as provide at Section 22.2 [Corridor Acquisition and Grant];

(g) …;

(h) …;

(i) Execution of the financing agreements for the implementation of the Project sufficient for Concessionaire, among other things, (i) to carry out its obligations under the Construction Agreements, and (ii) to operate and maintain the Southern Armenia High Speed Road until such time as it generates income sufficient to meet its obligations as they become due (Project Financing); and

(j) …..⁴²

125.

As discussed below, several of these conditions precedent proved central to the dispute, including the approach to funding the Road Project (the relationship between potential self-funding through tolls paid by users and Government funding through "availability payments"); the expectations of the feasibility study, including regarding working designs and the proposed "Corridor" for the Road; and the provisions for project financing in support of Rasia's obligations for construction and initial operation of the High Speed Road.

126.

In a section of the Road Concession entitled "Benefit of Conditions Precedent" (Section 11), these various conditions precedent were classified into one of three categories, and provision was made for the possibility of waiver of one or more of the conditions:

11.1 Each condition precedent shall be classified into one of the following categories:

(a) Conditions for the benefit of both Parties;

(b) Conditions for the exclusive benefit of the Government; or

(c) Conditions for the exclusive benefit of the Concessionaire.

11.2 A Party who benefits from a condition may waive such condition. Conditions for the benefit of both Parties may be waived only mutually.

11.3 Conditions precedent provided at Sections 9(d), 9(h), 9(i), 10(a) and 10(b) are for the benefit of both Parties.

11.4 Conditions precedent provided at Sections 9(a), 9(b), 9(c), 9(e), 9(f) and 9(g) are for the benefit of the Concessionaire.

11.5 In case the Parties mutually agree on other conditions precedent in accordance with Sections 9(j) and 10(c), the Parties will indicate, for the avoidance of doubt, the benefit of such conditions precedent.⁴³

The interpretation of these waiver provisions is also a subject of dispute.

127.

The Railway Concession followed a similar approach, so far as the conditions precedent were concerned. Section 9 of the Railway Concession included, inter alia, the following conditions precedent to construction:

Construction of the Southern Armenia Railway shall commence when each of the following conditions has been satisfied or waived:

(a) Agreement between "South-Caucasian Railway" closed joint stock company and the Concessionaire regarding rail linkages between their respective railways …;

(b) Agreement(s) between the Concessionaire and railway operators from bordering countries, as agreed between the Concessionaire and the Government, regarding rail linkages between their railways … ;

(c) … ;

(d) …;

(e) Feasibility studies prepared by one or more first-class specialized firms confirming the technical, commercial, financial, environmental and social feasibility of the Project (collectively, the "Feasibility Study") and final acceptance thereof by the Concessionaire. The Feasibility Study shall, inter alia, (i) reflect the territory (the "Corridor"), in respect of which the Concessionaire shall have free preferred right-of-way or free preferred right of use, (ii) include working designs, as well as (iii) reflect the construction and commissioning milestones for the Southern Armenia Railway;

(f) Confirmation of the Corridor by the Government;

(g) Grant by the Government to the Concessionaire the rights to the Corridor, as provided at Section 22.2 [Corridor Acquisition and Grant];

(h) …;

(i) …;

(j) Execution of the financing agreements for the implementation of the Project sufficient for Concessionaire, among other things, (i) to carry out its obligations under the Construction Agreements, and (ii) to operate and maintain the Southern Armenia Railway until such time as it generates income sufficient to meet its obligations as they become due (Project Financing); and

(k) ….⁴⁴

128.

In turn, Section 11 of the Railway Construction provided the following, with respect to the "Benefit of Conditions Precedent":

11.1 Each condition precedent shall be classified into one of the following categories:

(a) Conditions for the benefit of both Parties;

(b) Conditions for the exclusive benefit of the Government; or

(c) Conditions for the exclusive benefit of the Concessionaire.

11.2 A Party who benefits from a condition may waive such condition. Conditions for the benefit of both Parties may be waived only mutually.

11.3 Conditions precedent provided at Sections 9(e), 9(i), 9(j), 10(a) and 10(b) are for the benefit of both Parties.

11.4 Conditions precedent provided at Sections 9(a), 9(b), 9(c), 9(d), 9(f), 9(g) and 9(h) are for the benefit of the Concessionaire.

11.5 In case the Parties mutually agree on other conditions precedent in accordance with Sections 9(k) and 10(c), the Parties will indicate, for the avoidance of doubt, the benefit of such conditions precedent.⁴⁵

129.

As noted above, one of the key conditions precedent to the Projects moving ahead was the preparation of feasibility studies "confirming the technical, commercial, financial, environmental and social feasibility of the Project," and the "final acceptance thereof" by Rasia.⁴⁶

130.

Sections 17-20 of both Concessions provided more detail about the preparation and acceptance of these "Feasibility Studies." Section 17 addressed the timing within which Rasia was to commence the Feasibility Studies.⁴⁷ Section 18 required that such studies were to be prepared taking into account, inter alia, the project parameters defined in an attached schedule; Armenian legislation; World Bank environmental, health and safety guidelines for "toll roads" and railways respectively; the practices, methods and standards of care and safety that would both reasonably be expected of a "prudent, skilled and experienced foreign investor" and consistent with "good industry practices"; and the "terms of reference" for conducting the feasibility studies.⁴⁸

131.

Section 19 of both Concessions in turn described the requirements for the "Terms of Reference" for the Feasibility Studies, including both their required content and the process by which the Terms of Reference would be proposed by the Government and either commented on or deemed accepted by Rasia.⁴⁹

132.

With respect to the acceptance of the Feasibility Studies themselves, both Concessions provided as follows in Section 20:

20.1 The Feasibility Study shall be completed within 18 (eighteen) months from its commencement, and in case of being preliminarily acceptable for the Concessionaire, it shall be submitted to the Government in English together with an Armenian translation.

20.2 Within 30 (thirty) days from the date of receiving the Feasibility Study, the Government shall submit its reasoned comments, objections and suggestions, which should be considered by the Concessionaire prior to the final acceptance of the Feasibility Study. Those comments of the Government, which are not attributed to legal, technical or environmental unfeasibility, shall not be obligatory for the Concessionaire.

20.3 If the Government does not submit comments within the aforementioned period, the Feasibility Study shall be deemed finally accepted by the Concessionaire.

20.4 If the Feasibility Study proves the Project unfeasible from technical, commercial, financial, environmental and social standpoint (including in view of the Government's obligatory comments), then upon the Concessionaire's written request made within 15 (fifteen) days the Parties shall undertake negotiations in good faith on such reasonable measures, which may make the Project feasible.⁵⁰

133.

The timing of the presentation and acceptance of the Feasibility Studies was important for various other provisions of the Concessions. As discussed above in connection with Section 12, "final acceptance" of the Feasibility Studies by Rasia was a trigger for the ensuing "Project Financing Period" and subsequent periods for construction and operation. In addition, Section 36.2 of the Concessions provided strict deadlines within which Rasia was to present construction designs to the Government, running from "the end of the Feasibility Study." In the case of the Road Concession, Rasia was required to submit construction designs with 6 months; for the Railway Concession, Rasia was required to submit construction designs within one year.⁵¹

134.

A further condition precedent listed in Section 9 of the Concessions related to the "Corridor," which was defined in that Section as the territory over which Rasia would have a preferred right-of-way for the Road and Railway, respectively. As noted above, Section 9(d) listed two conditions precedent to construction, with respect to the Corridor: (a) the Feasibility Studies were to "reflect" the proposed Corridor, and (b) the Government was to "confirm[]" that Corridor.⁵²

135.

The definitions section of the Road Concession (Section 1) defined "Corridor" to have "the meaning ascribed thereto in Section 9(d) [Conditions Precedent to Construction]." It also cross-referenced a map attached as Schedule B, stating that "[a]s indicatively shown on the map presented in Schedule B, it is envisaged that the Corridor shall start at the city of Sisian."⁵³ The map in Schedule B was cross-referenced in two other places in the Road Concession: (a) Section 3(e), which set out Rasia's obligation to "rehabilitate … the existing toll free road between Sisian and Meghri as reflected in Schedule B," in addition to its separate obligations in Section 3(b) with respect to a new high speed road, and (b) Section 15, which confirmed, "[f]or the avoidance of doubt," that the existing road between Sisian and Mehri "as reflected in Schedule B shall continue to be in use and toll free."⁵⁴

136.

The "indicative[]" map in Section B of the Road Concession is reproduced below⁵⁵:

137.

For greater clarity, the Tribunal also reproduces below a more readable, color illustration drawn from the Respondent's Counter-Memorial, which shows both the existing toll-free roads that were reflected in Schedule B of the Road Concession (in yellow), and the proposed route of the new High Speed Road that was reflected in the same Schedule B (in red)⁵⁶:

Figure 5: The Proposed vs Existing and Required Routes¹³⁸

138.

The Concessions contained more detail about the process of confirmation, acquisition and grant of the Corridors. Section 21 of both Concessions provided that if, first, the Feasibility Study for each Project confirmed that the High Speed Road or the Railway (respectively) was "technically, commercially, financially, environmentally and socially feasible," and, second, if the Feasibility Studies were "finally accepted" by Rasia, then Rasia "shall request the Government to confirm the Corridor recommended by the Feasibility Study." If the recommended Corridor complied with the requirements of Section 18 (described above), then the Government "within 90 (ninety) days of its receipt of the Feasibility Study, as finally accepted by [Rasia], shall confirm the Corridor and shall recognize the exclusive prevailing public interest in respect of the lands and immovables in the Corridor."⁵⁷

139.

Section 22 of the Concessions in turn addressed the Government's duty to acquire the Corridor lands for purposes of construction. It provided, inter alia, that "[o]nce the Corridor is confirmed by the Government," it shall "within a reasonably short period" acquire at its costs all lands and immovables in the Corridor, "on a timely basis so as not to delay the commencement of construction."⁵⁸ Having acquired these properties, the Government would then grant Rasia rights of access, occupation and use to implement the Project, for the entire period of the Concession.⁵⁹

140.

Sections 5 of both Concessions provided, with similar wording, that "for the purpose of implementing the Project [Rasia] may adopt a consortium approach," under which it "will likely attract investors, international financial institutions, institutional and other lenders," as well as "first-class specialized developers" for building and operating the Road and Railway. Nonetheless, while Rasia may be "called upon to closely cooperate" with these various entities, Rasia alone "shall always remain fully liable before the Government for the performance of obligations under this Agreement."⁶⁰

141.

Both Concessions also contained similar provisions on the use of external finance providers. Section 31 provided that once the Feasibility Study has "confirmed that the Project is technically, commercially, financially, environmentally and socially feasible and the Concessionaire has finally accepted the Feasibility Study," then Rasia shall have up to 12 months to obtain the requisite project financing.⁶¹

142.

However, Section 33 of both Concessions provided the following deadlines for the presentation of letters of interest from potential finance providers:

33.1 The Concessionaire undertakes to present to the Government not later than within [Railway Concession: "12 (twelve)"] [Road Concession: "6 (six)"] months from the date of final approval of the Feasibility Study, letters of interest from one or more credible and reputable potential investors, Financing Parties and other finance providers as described in Section 31.2, according to which such potential investors, Financing Parties and other finance providers are prepared to make investments in the equity or quasi-equity of the Concessionaire and provide debt financing in the aggregate amount not less than the total financing envisaged by the Feasibility Study.

33.2 The Government may within 30 (thirty) days of the receipt of such letters of interest present its written objections to the Concessionaire based on criteria set forth in Section 8 [Control of Concessionaire]. If the Government does not provide its written objections within the mentioned period of time, the candidacies of investors shall be deemed approved, which does not limit, however, the Concessionaire's rights to attract other further parties not objectionable to the Government as per the above procedure.

33.3 In case of any objections from the Government, the Concessionaire may present additional letters of interest within additional [Railway Concession: "6 (six)"] [Road Concession: "3 (three)"] months.

143.

Sections 8 of each Concession regulated any potential "alienation" of Rasia, the direct or indirect shareholding interest in Rasia, and Rasia's "rights and assets related to the Project." Any such alienation was subject to various conditions, including the acceptability of the acquiror to the Government on grounds of national security, and confirmation that the acquiror would be able to provide continuity and proper progress on the Project.⁶² In addition, Section 8.2(e) of both Concessions provided the Government with certain rights of first refusal, as follows:

(e) the Government shall enjoy rights of first refusal in acquiring shareholding interest in the Concessionaire, including in case of increase of the equity capital, except for any acquisition of the shareholding interest through open auction or any other public tender process.⁶³

A material breach of these rights of first refusal, or of any of Rasia's obligations related to transfer of control of it or its shares, would provide the Government with a right of early termination of the Concession.⁶⁴

144.

The Road Concession contained a provision – a similar version of which was included also in the Railway Concession – included under the heading "Competing Transportation Systems":

15 NO GRANT

In order to induce the Concessionaire to enter into this Agreement and to assume substantial financial and commercial risks in connection with the implementation of the Project, the Government shall not at any time grant to any person, including any State Authority, any concession or other right or privilege to finance, design, construct, possess, commission, rehabilitate, operate and/or maintain any road at the southern border of Armenia or connecting with Meghri or territories adjacent to the southern border of Armenia, including any road not in service on the date of signing this Agreement. For the avoidance of doubt, the existing road between Sisian and Meghri which is in service on the date of signing this Agreement as reflected in Schedule B shall continue to be in use and toll free.

145.

Finally, both Concessions contained similarly worded clauses on early termination based on negative results from a Feasibility Study:

59.1 If the Concessionaire has not accepted the Feasibility Study by the [Railway Concession: "third (3rd)"] [Road Concession: "second (2nd)"] anniversary of the commencement of the Concession, then the Government may terminate this Agreement with a notice issued within 5 (five) working days following the second (2nd) anniversary of the commencement of the Concession or within 5 (five) working days following any consecutive [Railway Concession: "two-month"] [Road Concession: "one-month"] period thereafter (provided that the Government is not notified by then about the Feasibility Study being finally accepted by the Concessionaire).

59.2 If the Agreement is terminated due to the Feasibility Study not being finally accepted by the Concessionaire or, prior to the completion of the construction designs, due to the Concessionaire Event of Default, then the Concessionaire shall promptly transfer to the Government free-of-charge the Feasibility Study and all results of the design works, and the Government shall have the right to freely dispose of those at its own discretion.

59.3 Unless the Concession is effectively terminated by the Government's notice, the Feasibility Study works may continue and the Feasibility Study may be accepted by the Concessionaire at any time with a notice to the Government.

146.

On 31 July 2012, three days after the Concession Agreements were signed, Rasia sent a letter to the Government, stating that it had met Aabar to discuss "the prospects of equity investments" in connection with the Railway Project. Rasia also mentioned calls with several entities "to discuss turnkey solutions for railway and road development," requests for "competing feasibility study proposals from two prominent multinational companies," and an aim to "engage world class contractors … to develop the engineering designs in parallel with the feasibility study," rather than addressing engineering "separately from and after completing the feasibility study," which "could substantially alter project costing, corridor location, and other primary project attributes." Rasia requested the Government to begin developing the "terms of references (sic) for feasibility studies."⁶⁵

147.

Starting in August and September 2012, Rasia sought to identify a Chinese firm to assist with engineering, procurement and construction ("EPC") works. It ultimately concluded a Framework Agreement on 30 September 2012 with China Communications Construction Company Ltd. ("CCCC" and the "Rasia-CCCC Framework Agreement," respectively).⁶⁶ The decision to involve a Chinese EPC firm was made on advice from Aabar's Mr. Tappendorf, who had authored the May and June 2012 letters to the Government about Rasia discussed in Section III.B above, and by his then-superior Mr. Brandt Mowry, who was Aabar's CFO and CIO until he retired from the firm in December 2012. Rasia appointed these two individuals to its Advisory Board in September 2012.⁶⁷

148.

The Rasia-CCCC Framework Agreement stated that Rasia "ha[d] decided in favor of appointing CCCC as its exclusive transportation infrastructure development company and as the lead member of its Consortium to carry out the Feasibility Studies and the subsequent design, procurement, construction, and completion of the Projects."⁶⁸ The Rasia-CCCC Framework agreement also referenced various deadlines in the Concession Agreements with respect to the Feasibility Studies;⁶⁹ noted the advantage of beginning discussions about potential project financing with "such China financial institutions as China Development Bank and The Export-Import Bank of China" ("China EximBank"); and agreed that Rasia and CCCC would work together to propose to the Government of Armenia "selected favorable changes to the Concession Agreements in order for the Projects to remain bankable or to enhance their bankability."⁷⁰

149.

As discussed further below, the Parties dispute whether Rasia and CCCC ever obtained any commitments from Chinese banks for debt financing for the Projects. Rasia maintains that CCCC proceeded, during the second half of 2013, to secure financing commitments from China Development Bank and China EximBank.⁷¹ Armenia disputes that the evidence demonstrates that any such commitments were obtained from Chinese banks.⁷²

150.

Shortly after CCCC concluded its Framework Agreement with Rasia, it began to organize its investigation of the Road Project, focusing on the work required to complete the feasibility study required by the Road Concession. Its preliminary steps included a trip to Dubai from 3-5 November 2012 to meet with Mr. Borkowski of Rasia and Mr. Tappendorf, who was employed at the time by Aabar, but whom CCCC evidently understood to be a "senior director" of Rasia.⁷³ The group then flew to Armenia for a "working conference" on 7 November 2012 with officials and engineers from the "Road Authority" of the Ministry of Transport, followed by a three-day field investigation of the proposed Road Project from 8-10 November 2012.⁷⁴

151.

On 10 November 2012, at the conclusion of the Road Project site visit, Rasia and the Republic of Armenia (represented by its Minister of Transport, Mr. Beglaryan) agreed on the "Terms of Reference for Feasibility Study of the Southern Armenia High Speed Road" (the "Road Terms of Reference").⁷⁵ In the Road Terms of Reference, the Road Project was described "[a]s defined in Section 3 […] of the [Road Concession]," which, as recounted above, provided for a new "High Speed Road" and the rehabilitation of an existing toll-free road between Sisian and Meghri.⁷⁶ The objective of the Road Terms of Reference was stated to be to "specify the Feasibility Study requirements; reflect main value of the Feasibility Study and the Project, their technical and economic requirements, quality standards, paperwork composition and guidelines on milestones as well as other special terms and conditions" and to "reflect the Project limitations including the Corridor limitations on environmental, natural resources use, national security and strategic grounds."⁷⁷

152.

The Road Terms of Reference also set out the purpose of the Road Feasibility Study:

As defined in Section 9(e) [Conditions Precedent to Construction] of the Southern Armenia High Speed Road Concession Agreement ... confirming the technical, commercial, financial, environmental and social feasibility of the Project (collectively, the 'Feasibility Study') and final acceptance thereof by the Concessionaire. The Feasibility Study shall, inter alia, (i) reflect the territory (the 'Corridor'), in respect of which the Concessionaire shall have free preferred right-of-way or free preferred right of use, (ii) include working designs, as well as (iii) reflect the construction and commissioning milestones for the Southern Armenia High Speed Road. Working designs are preliminary designs that are normally required for establishing project feasibility.⁷⁸

153.

Among other things, the Road Terms of Reference also specified that the Road Project would involve "New construction,"⁷⁹ and that while the Corridor for the Road Project was as "indicatively shown on the map" in Schedule B of the Road Concession, Rasia could consider variations in the Corridor during the Feasibility Study Period defined in Section 12(a) of the Concession, including certain specified variations.⁸⁰ The Road Terms of Reference also provided that the road "should meet the requirements" for a Class II category road as defined in Armenia's Construction Norms. They listed certain "selected technical parameters … in order to provide flexibility to [Rasia] in determining the optimal technical parameters during the Feasibility Study."⁸¹ The technical parameters that were singled out were the following:

A maximum vertical/longitudinal gradient of 40‰ (per mil)

A minimum radius of 600 meters for horizontal curves, 8,000 meters for vertical convex curves, and 4500 meters for vertical incurved curves.

Design speed to be determined under the Feasibility Study.⁸²

154.

The Road Terms of Reference also set out certain requirements for the "structure and contents" of the Road Feasibility Study to be delivered by Rasia,⁸³ as well as a provision stipulating that "[t]he estimated cost of construction shall be carried out in accordance with international best practices."⁸⁴ The Road Feasibility Study was also to estimate "investment efficiency in accordance with international best practices," including calculations of net present value, internal rate of return, and payback period.⁸⁵

155.

As will be explained further below, the Parties disagree as to whether the Road Feasibility Study that Rasia delivered to Armenia met these requirements.

156.

Meanwhile, following the conclusion of its site visit on 10 November 2012, CCCC wrote up a report of its site visit, which made no reference to the Road Terms of Reference that Rasia signed on that date. The CCCC site visit report described its understanding that the project was expected to involve the "upgrading" of an existing 110 km highway, but with certain bypasses to improve travel, including a bridge or viaduct over the Tatev valley, a detour around the city of Kapan (involving a new 7 km stretch of highway) and a possible tunnel through a mountain in Kajaran. CCCC indicated that it had proposed a "preliminary alignment" for the project on the basis that "[i]t is mainly an existing road reconstruction and improvement project," with "new-build part[s]" only in these three sections. CCCC opined that "most of the sections" can reach a "Class II highway" construction standard, restrained by terrain conditions in certain areas.⁸⁶ The CCCC report did not specify which Class II standard it had in mind, although as noted above, the Road Terms of Reference signed on 10 November 2012 specified that the relevant reference should be to Armenian standards.⁸⁷ The difference between Armenian and Chinese Class II highway construction standards becomes relevant later in this case.

157.

On 10 December 2012, Rasia and CCCC concluded a "Commercial Agreement for Feasibility Study" for the Road Project (the "CCCC Road Commercial Agreement"), which they agreed would become an "integral part" of the Rasia-CCCC Framework Agreement they had completed on 30 September 2012. The CCCC Road Commercial Agreement was signed by Mr. Borkowski for Rasia, and witnessed by Mr. Mowry, formerly Aabar's CEO but now identified as "Vice Chairman" of Rasia.⁸⁸ According to this Agreement, CCCC was to prepare a feasibility study to "serve the very purpose of obtaining Project financing," and as a prelude to a "subsequent EPC contract" with CCCC.⁸⁹ CCCC's work on the feasibility study was to be divided into two stages: (a) a "Stage One" delivery of a "Pre-Feasibility Study" focused on establishing the economic model and base technical requirements for the High Speed Road Project and the selection of the desired road corridor," and (b) a "Stage Two focused on completing the Feasibility Study to a bankable status based on the outcome of Stage One."⁹⁰ CCCC would front all the costs associated with both stages, but Rasia undertook to pay CCCC a "Services Fee" of $5 million over time, according to a gradual payment schedule which envisioned only $500,000 being paid (in two tranches) in connection with "Stage One" (the "Pre-Feasibility Study"), with the rest of the fee deferred until work on and delivery of the "Stage Two" Feasibility Study.⁹¹ CCCC would retain ownership of, and all intellectual property rights in, both studies, with these rights gradually transferred to Rasia in percentages reflecting the actual payments made to CCCC. In this fashion, "any CCCC work that has been completed, but not paid for, will remain its property."⁹²

158.

On 10 November 2012, the same day Rasia and Armenia signed the Road Terms of Reference, they also executed a "Terms of Reference for Feasibility Study" for the Railway Project (the "Railway Terms of Reference," and collectively with the Road Terms of Reference, the "Terms of Reference").⁹³

159.

The two Terms of Reference documents were structured in similar ways. The Railway Terms of Reference also described the Railway Project with reference to the Railway Concession,⁹⁴ and contained a provision describing the objective of the Terms of Reference identical to that contained in the Road Terms of Reference.⁹⁵ The provisions defining the purpose of the Feasibility Studies – Section 4 in both Terms of Reference – were also identical for both Terms of Reference, save for the project names.

160.

On 10 December 2012, Rasia and CCCC concluded a "Commercial Agreement for Feasibility Study" for the Railway Project (the "CCCC Railway Commercial Agreement"),⁹⁶ which was substantively similar to the CCCC Road Commercial Agreement. In particular, CCCC's work was to be divided into two stages, the first a "Pre-Feasibility Study" focusing on the economic model, base technical requirements, and the "selection of the desired railway corridor," and the second on "completing the Feasibility Study to a bankable status."⁹⁷ CCCC would again front all the costs, with Rasia undertaking to pay a "Services Fee" of $10 million, most of it after the second stage of work.⁹⁸ Again, CCCC would retain ownership of (and intellectual property rights in) its work until Rasia paid its fee.⁹⁹

161.

On 21 December 2012, Rasia notified Armenia that it had selected CCCC to prepare the feasibility studies for both Projects.¹⁰⁰ Rasia emphasized not only CCCC's design and construction experience, but also its "favorable financing allocations for overseas railway and road projects" from China Development Bank and China EximBank, with which CCCC had already begun discussions. Rasia explained that "[t]he China government is the only feasible source of major loan financing for the [Railway Project] in particular," and that "[n]o other government, private or international financing institution either alone or jointly" would be able and willing to finance the Railway Project without most of the financing coming from Chinese government banks. Accordingly, Rasia explained, "[w]orking with a China contractor, such as CCCC, is a mandatory prerequisite for seeking the required China government financing."¹⁰¹

162.

The Parties jointly announced the Projects at a media event on 18 January 2013.¹⁰² Both Mr. Borkowski and Mr. Beglaryan spoke at the event; Mr. Tappendorf also attended.

163.

During the event, a trilateral Memorandum of Understanding (the "SCR Trilateral MoU") was signed by Rasia, the Armenian Ministry of Transport and the SCR, which was the operator of the existing railway network in Armenia and, as noted at paragraph 101 above, a subsidiary of Russian Railways OJSC.¹⁰³ The Trilateral MoU set out the broader context of the Railway Concession, essentially as follows:

• In 2009 and 2010, the Ministries of Transport of Armenia, Russia and Iran discussed the importance of coordinating development of a direct railway line to connect Armenia's existing rail network and Iran's existing rail network, which would mean covering 316 km in Armenia and 60 km in Iran;¹⁰⁴

• They also discussed the importance of integrating this new railway connection into existing international corridors, which would involve coordinating technical parameters, including the width of railroad gauge;¹⁰⁵

• "In order to ensure the implementation of the Armenian Segment" of the new railway, Armenia had granted Rasia a concession "to implement the feasibility study and to design, finance, construct and operate the Armenian Segment";¹⁰⁶

• The SCR Trilateral MoU was a "non-binding agreement solely intended to outline the framework of understanding" regarding development of the Project.¹⁰⁷

164.

In the SCR Trilateral MoU, the three signatories agreed to "cooperate in the sharing of technical, trade, economic, social, environmental, and other feasibility and design related information so as to enable [Rasia] to deliver complete feasibility studies for the Southern Armenia Railway in accordance with the Concession Agreement."¹⁰⁸ Construction was intended to start from Armenia's border with Iran (hopefully in parallel with work on the "Iranian Segment") to "allow for the earliest possible commencement of commercial operation," even prior to connecting the new "Armenian Segment" to the existing Armenian railway network operated by SCR.¹⁰⁹ However, in exchange for SCR's cooperation, it would be provided a first preference right for future operation, management and maintenance of the Southern Armenia Railway, including prior to the connection of that new railway to the existing Armenian rail network.¹¹⁰

165.

The feasibility studies that Rasia eventually delivered to Armenia for the Road and Railway Projects (respectively, the "Road Feasibility Study" and the "Railway Feasibility Study," and collectively, the "Feasibility Studies") form a crucial part of this case. Before delving into their delivery and content, however, it is important to identify one threshold factual dispute, which becomes relevant to some of the Parties' legal contentions discussed further herein.

166.

As discussed above, each of the CCCC Road Commercial Agreement and the CCCC Railway Commercial Agreement provided that CCCC would fund the development of both a "Stage One" "Pre-Feasibility Study" and a subsequent "Stage Two" "Feasibility Study," but that Rasia would pay CCCC for its work over time. Once all such payments had been made, Rasia would become the owner of the Feasibility Studies, with a right to all the intellectual property reflected therein. Although Mr. Borkowski submitted a witness statement in which he maintained that "Rasia had commissioned and paid for" the Feasibility Studies,¹¹¹ he conceded at the Hearing that Rasia had yet to pay CCCC anything.¹¹² The extent to which Rasia remains indebted to CCCC for its Feasibility Study work is disputed in this Arbitration. The evidence on that issue is discussed further in Sections III.I and V.A.3, including in connection with the Parties' dispute over whether Claimants have demonstrated a cognizable investment for purposes of the ICSID Convention.

167.

Mr. Borkowski informed the Ministry of Transport on 17 June 2013 that CCCC had completed the "Stage One feasibility studies" for both Projects on 7 June 2013,¹¹³ but that the documents were available only in Chinese, and were awaiting translation into English. Mr. Borkowski stated that Rasia would provide comments on the English-language versions, once received, and then "officially submit and present the final Stage One feasibility studies for Rail and Road to the Ministry."¹¹⁴

168.

On 27 August 2013, Mr. Borkowski requested to "briefly meet" with Mr. Grigoryan to provide a "brief summary of findings" from the Feasibility Studies.¹¹⁵ The following day, 28 August 2013, Mr. Borkowski met with officials from the Ministry of Transport, including Mr. Grigoryan.¹¹⁶ The Parties describe the discussions differently. According to Mr. Borkowski, he presented a summary of the findings reflected in the draft Road Feasibility Study and made clear that they revealed that it would not be feasible to proceed with a toll road. Mr. Borkowski stated that Mr. Grigoryan was not surprised to hear that a toll road was not a feasible proposition and that, instead, he encouraged Mr. Borkowski to proceed with the Road Project on the basis of so-called "availability payments."¹¹⁷

169.

Mr. Grigoryan's recollection of the 28 August meeting differs from Mr. Borkowski's. According to Mr. Grigoryan, Mr. Borkowski "may have stopped by" in August 2013, but there was no "formal presentation" or "extensive discussion" of any preliminary results. Mr. Grigoryan also denies having authorized Mr. Borkowski to finalize the Road Feasibility Study on the basis solely of availability payments.¹¹⁸ However, Armenia has not expressly disputed that Mr. Borkowski informed the Government, at this meeting, that he no longer considered a toll road to be feasible.¹¹⁹

170.

When, soon after the meeting, Mr. Borkowski forwarded an English-version executive summary of the Railway Feasibility Study, he wrote in the accompanying email that an executive summary of the Road Feasibility Study would follow two days later, "in print and by email as well."¹²⁰ It is not clear if this was ever sent. However, on 3 September 2013, Mr. Borkowski invited Minister Beglaryan and Armenia's Prime Minister to visit CCCC's headquarters for a "briefing of the railway and road feasibility study results," together with a "presentation and summary of the alignment along with a positive announcement that the railway is feasible and the road will be a free road."¹²¹

171.

Mr. Borkowski, CCCC representatives and Armenian representatives, including Prime Minister Sargsyan, then met in Dalian, China on 10 September 2013 (the "Dalian Meeting(s)").¹²² At the meeting(s), the Prime Minister was briefed on the preliminary results of both Feasibility Studies and provided with estimated future financing steps and timeline. With respect to the Road Project, a slide from Mr. Borkowski's presentation at the meeting indicated as a "key result" that the Road Project was "not feasible as Toll Road; Feasible as Free Road w/Government."¹²³ Another slide reflected, as "Key Needs Remaining" for the fourth quarter of 2013, the need, first, to translate the final feasibility studies into English and formally to submit them to the Government, and, second, to begin "pre-construction fundraising of $100 million," including initiating talks with the Eurasian Development Bank ("EDB") and the government of China, for which an "Armenian Guaranty" would be "[r]equired." The slide also anticipated, as "Key Needs" for the first quarter of 2014, obtaining "Concession Amendments" regarding a "Corridor extension," having the Government "review and confirm corridor for railway and road," and having the Government "assemble and transfer land to Southern Armenia Railway for use."¹²⁴

172.

Roughly a week later, on 19 September 2013, Mr. Borkowski followed up with a letter to Armenia's Prime Minister Sargsyan and Transport Minister Beglaryan, in which he reiterated that a "toll road structure is not feasible" for the Road Project, so financing and construction would have to be either "on a government-to-government basis with long-term, low cost financing from China and the construction handled by CCCC," or "[a]lternatively, Rasia can proceed forward with the road project using availability payments from the Armenian government." With respect to the Railway Project, Rasia stated that, having ascertained that it was feasible, it would soon "move into the financing stage" after it had submitted the "final translated versions of the feasibility studies and the recommended alignment for review" by the Ministry of Transport. Rasia requested Armenia to "instruct the [EDB] to begin reviewing" the project.¹²⁵

173.

While Mr. Borkowski was communicating these points to Armenia, Rasia also wrote to Aabar. On 13 September 2013, Mr. Borkowski emailed Aabar's CEO, Mr. Mohamed al-Husseiny (with Mr. Tappendorf in copy), describing the Railway Project as a "government-to-government project with very high level support from China, Armenia, Russia, and Iran." He requested "pre-construction funding of $35 million to take me through the next 3 years building a team and working to complete the project financing from the regional governments and China." Mr. Borkowski stated that "[c]onstruction will ultimately be government-government funded when [it] begins in 2016," but "Rasia requires pre-capex funding of $35 million to fund a development team and complete the project level financing over the next 3 years," for which he considered it would be "possible to get Armenia government guaranty."¹²⁶

174.

In a subsequent email six weeks later, on 28 October 2013, Mr. Borkowski wrote to Mr. al-Husseiny about the Railway Project, again with Mr. Tappendorf copied. He claimed that Rasia had already had "many discussions with the [ADB], EBRD, [and the] Eurasian Development Bank"; that "both the Russian and the Chinese govt's will likely be debt partners and operators"; and that he "would like to now find an equity partner that could help drive this forward with some preliminary funding."¹²⁷ When questioned at the Hearing, Mr. Borkowski said that the "preliminary funding" he sought through these emails did not refer to the Railway Project as such, but rather to potential ancillary mining and agricultural ventures along the route of the railway.¹²⁸

175.

On 29 October 2013, Mr. Borkowski sent a proposal to Aabar's CEO outlining a transaction that would enable Aabar's subsidiary, Arabtec Holding PJSC ("Arabtec"), to "own and control [this] strategic railway by issuing shares" to Rasia. The proposal described this as an opportunity for Arabtec to become "Master Developer, Contractor [and] Railway Owner," controlling "100% of [the] Project," which Mr. Borkowski described as a "Massive project ($3.2bn EPC)" for which Rasia had been awarded a "public-private project[] from Armenian Gov't with monopoly rights and unregulated tariffs for 50 years." Mr. Borkowski further identified the benefits to Arabtec as enabling it to "own and control a … major energy transport corridor railway" and to "[a]dd an exclusive $3.2 billion EPC railway project to its pipeline with the ability to partner with China company," all with "minimal to no cash investment from Arabtec," because "[s]ignificant financing can come from 3rd parties (up to 85% [C]hina banks and 15% ADFD and Eurasian Development Bank)."¹²⁹ The proposal to Aabar made no mention of Rasia's prior agreement with CCCC to appoint it (CCCC) "as the lead member of its Consortium and exclusive EPC for developing" the Railway Project.¹³⁰

176.

The Claimants say that at some point in late October 2013, the Aabar CEO confirmed his interest in investing in both Projects, which was communicated to Mr. Borkowski through Mr. Tappendorf.¹³¹

177.

Mr. Borkowski met again with Armenian Government representatives, including Minister Beglaryan and Mr. Grigoryan, on 7 October 2013, this time in Yerevan. A few hours before this meeting, Mr. Borkowski submitted a letter to Minister Beglaryan, stating that he would deliver at the meeting certain "key feasibility study materials" for both Projects. For the Railway Project, this included an English-language final Railway Feasibility Study, as well as engineering drawings and a "profile for the recommended alignment" of the Railway. Mr. Borkowski requested feedback on these documents and "confirmation of the Corridor." He also asked Armenia to "urgently enter[] into" a trilateral Memorandum of Understanding with Rasia and the Government of Iran, "that is essential for the success of the Southern Armenia Railway project."¹³² The Tribunal returns to the Iran issue later below.

178.

Mr. Borkowski's 7 October 2013 letter did not promise to deliver a final Road Feasibility Study at the meeting that day. Instead, the letter referred only to submitting certain drawings showing recommended routes, on which Mr. Borkowski requested feedback and "confirmation of the Corridor." In the meantime, Mr. Borkowski requested as follows with respect to financing of the Road Project:

Considering that a toll road structure is not feasible for the Southern Armenia High Speed Road project, feedback on whether the Government will prefer to proceed with guaranteed availability payments for the Financing of the Project or to work on a Government-to-Government basis for the Financing and Construction periods with CCCC – this feedback is required in order to complete and submit the final Southern Armenia High Speed Road feasibility study.¹³³

179.

Whereas there seems to be no dispute that the Railway Feasibility Study was submitted to the Government (first the English version on 7 October 2013, and then an Armenian translation on 31 December 2013¹³⁴), the Parties have different versions of the chain of events by which Rasia made the Government aware of the results of the Road Feasibility Study, including what was discussed in Yerevan on 7 October 2013.

180.

The use of so-called availability payments as a funding model for the Road Project was discussed at the meeting. Mr. Borkowski recalled that he explained to Minister Beglaryan that "Armenia had agreed to the availability payments provision under the road concession, and knew from our negotiations of the concessions that the road could not be financed based on tolling alone"; he said that Minister Beglaryan was upset over this arrangement, to the extent that he threatened to terminate the Road Concession if the Government had to make any availability payments to fund it. Mr. Borkowski says that Minister Beglaryan and Mr. Grigorian did not suggest that Mr. Borkowski's proposal contradicted the Road Concession, nor that a toll element was required under the concession.¹³⁵

181.

Mr. Grigoryan has presented a different account, saying that he does not "know what Mr. Borkowski is talking about." According to his recollection, Mr. Borkowski did not – at the 7 October 2013 meeting or thereafter – submit any details about how his proposed availability payment funding scheme would work. Instead, it became clear around this time that Mr. Borkowski's idea of the future of the Road Project differed from the Government's.¹³⁶ In particular, Mr. Grigorian says he told Mr. Borkowski that "Armenia is not interested in spending its limited budget funds to finance the Road Project as presented by Rasia." He stated that his perception at the time was that Mr. Borkowski understood that Rasia's proposal for the Road Project was "unworkable and unacceptable on its face."¹³⁷ Mr. Grigorian testified that he and Minister Beglaryan explained during the October 2013 meeting that progressing without a tolling element was not possible: "We discussed his proposals, and we said that this option was not acceptable for the project which was the subject of the Concession which he had signed."¹³⁸

182.

Following a telephone call on 25 October 2013, Mr. Borkowski sent Mr. Grigoryan certain revised pages of a PowerPoint presentation he had used at the earlier October 2013 meetings. This presentation emphasized again that while Rasia considered the Railway Feasibility Study to be "preliminarily acceptable" to it, a "Toll Road Structure" for the Road Project "is not [e]conomical," whereas a "[f]ree [r]oad w/ Government Availability Payments is Feasible" from Rasia's perspective. The presentation stated that the "Objective" for the Road Project therefore was "to adopt feasibility studies and route by end of 2013 and to complete negotiation of agreement on availability payments to implement project."¹³⁹

183.

Mr. Borkowski ultimately submitted the Road Feasibility Study to the Government on 24 January 2014.¹⁴⁰ In the accompanying email, Mr. Borkowski wrote that "[g]iven the low traffic volume forecasts, this version assumes for now that there is no tolling on the Project (i.e. that this is a free road). Instead, following the adoption of the recommended corridor and the feasibility study, Rasia FZE will rely on availability payments from the government as provided in the concession agreement." He added that Rasia nonetheless would explore "potential tolling and levy strategies for the entire North-South Road Corridor and the Armenian road network to offset the cost of the availability payments" required to fund the Southern Armenia High Speed Road project.¹⁴¹ This reference to the "entire North-South Road Corridor" must be taken to mean the broader NSRC road development project that Armenia had been exploring for years with international development banks. From this document, it appears that Mr. Borkowski's proposal at this point was that tolling should not be attempted on the southern Road Project for which Rasia had the Road Concession, but, rather that tolling should be explored on other portions of the NSRC, and other Armenian roads for which Rasia had no concession rights, in order to help the Government fund the full costs of construction for the Road Project.

184.

As will be developed further below, this issue of how the Road Project would be financed became a critical stumbling block in that Project's moving forward. The Respondent says that the Road Feasibility Study submitted by Rasia did not comply with the Road Concession because it proposed that all costs be borne by the government through availability payments,¹⁴² as opposed to at least in part by tolls, which the Respondent says was required by the Road Concession.¹⁴³ Rasia disagrees with this reading of the Road Concession; it contends that it permitted, but did not require, the use of tolls.

185.

Separate from the issue of financing, the Parties also dispute whether the Road Feasibility Study complied with various other requirements of the Road Concession and the Road Terms of Reference. For example, the Parties dispute whether there was an agreement to merge the "two-road" Project set out in the Road Concession into a "single road" project later described in the Road Feasibility Study. They also dispute whether the Road Feasibility Study met some of the technical standards that had been agreed between the Parties in the Road Terms of Reference.¹⁴⁴ These disputes are discussed further below.

186.

Neither the Road Project nor the Railway Project ultimately came to fruition. The reasons and timelines for the failure of the two Projects differ. In this section, the two Projects are discussed separately, beginning with the Road Project.

187.

A running theme in this Arbitration is the Claimants' contention that the Respondent engaged in a campaign to undermine the Road Project by seeking to develop a competing southern road in violation of Rasia's exclusive rights under the Road Concession – a characterization which the Respondent denies. The Parties also dispute what was agreed between them with respect to the type of road(s) to be built, how this relates to the broader NSRC project, and how the Road Project was to be financed. The facts underlying these disputes are briefly outlined below.

188.

On the Claimants' case, the Respondent's parallel campaign to develop a competing southern road had begun already in November 2012, when Armenia requested additional financing from the ADB.¹⁴⁵ As discussed above, the ADB had agreed in 2009 to provide a multi-tranche financing facility for various NSRC projects.¹⁴⁶ On 22 November 2012, Armenia submitted a periodic financing request to the ADB,¹⁴⁷ for which the ADB approved certain financing in an "Advance Contracting Notice" issued on 16 January 2013. The financing approved in this notice was for roadwork on Tranche 3 of the NSRC, but also to enable Armenia to "undertake feasibility and detailed design of Tranche 4," the southernmost portion of the NSRC.¹⁴⁸ On 18 June 2013, Armenia notified the ADB that it would require less funding from the ADB than previously discussed, because it had successfully obtained alternative financing from the European Investment Bank for part of the Tranche 3 work. However, Armenia stated that:

as part of preparing the Tranche 4 of the ADB [Multilateral Financing Facility], we intend to request the ADB to take over the construction of approximately 55-60km of Category 1 road from Artashat to the southern direction …. Meantime, by doing the feasibility study of the whole of the southern part of the North South Road, we increase the chances for the Government to attract additional co-financing, or parallel financing, from such potentially interested lending agencies as the Eurasian Development Bank (EBD), JICA, etc.¹⁴⁹

189.

Armenia and the ADB ultimately concluded a $100 million loan agreement on 11 March 2014, Schedule 1 of which describes the loan as covering, inter alia, the "preparation of feasibility study for Artashat-Qajaran section (304 km) of the North-South corridor."¹⁵⁰

190.

The Claimants say they were not aware at the time of the Respondent's dealings with the ADB about the southern road, which they claim was part of the territory for which Rasia held exclusive rights under the Road Concession. Mr. Borkowski and Mr. Tappendorf say that they first learned about Armenia's funding request when they met with ADB themselves on 12 July 2013.¹⁵¹

191.

When Mr. Grigoryan and Minister Beglaryan met with Mr. Borkowski in Yerevan to discuss the preliminary results of the Feasibility Studies in October 2013, Mr. Borkowski also recalls asking whether Armenia was seeking separate ABD funding for the Road Project, which he says Mr. Grigoryan and Minister Beglaryan denied. Mr. Grigoryan does not agree with this version of events, and says that no attempts were made to hide from Rasia the Government's work with the ADB.¹⁵²

192.

However, according to the Respondent, the road stretch for which it sought ADB financing does not overlap in any event with the Concession Territory covered by Rasia's exclusive rights under the Road Concession. The request for ADB financing was triggered by the completion of preparatory works on Tranche 3, a different part of the NSRC, to which the "overwhelming majority" of the funds related, the Respondent says. The references to Tranche 4 are explained by the fact that Tranche 4 of the NSRC is longer than the Concession Territory,¹⁵³ and a small part of the work for which Armenia also sought financing covered a part of Tranche 4 which did not overlap with Rasia's rights. In any event, the Respondent observes, it is undisputed that the ADB loan agreement was not signed until 11 March 2014, by which time (on the Respondent's version of events), Rasia already had defaulted on its Road Project obligations.¹⁵⁴

193.

As explained at paragraph 118 above, Section 3 of the Road Concession defined as the Road "Project" work on two separate roads. Rasia was "to implement from its own funds and attracted Project Financing" the design and build of a new "high speed road" (Section 3(b)) and was also "to rehabilitate and hand over to the Government the existing toll free road between Sisian and Meghri … within the budget of USD 80 millions" (Section 3(e)).¹⁵⁵

194.

It is undisputed that instead of the two roads contemplated by the Road Concession, Rasia proposed a single road project, financed by so-called "availability payments" from the Government instead of any tolls, on the basis that traffic volumes would be too low to sustain a toll road as a commercial undertaking. However, the Parties are in dispute as to the timing and implications of these developments, in particular, with respect to what was to be built instead of the toll road and how it was to be financed.

195.

According to the Claimants, the Parties agreed to a one-road solution in November 2012, during the CCCC site visit to Armenia, a contention which the Respondent disputes.¹⁵⁶ The Claimants observe that the map contained in the site visit report reflects only one road.¹⁵⁷ The Claimants also contend that the Road Terms of Reference, signed on 10 November 2012, also consistently refer to a single road.¹⁵⁸ At the same time, the Respondent notes, Article 2 of the Road Terms of Reference describes the Road Project "[a]s defined in Section 3 […] of the [Road Concession]," which, as recounted above, provided for two roads.¹⁵⁹

196.

It appears undisputed that when Mr. Borkowski presented the preliminary findings of the Road Feasibility Study to the Armenian Government in August 2013, he told the government representatives that a new toll road was not feasible.¹⁶⁰ As mentioned above, Mr. Borkowski also wrote a letter to the Prime Minister on 19 September 2013 to the same effect.¹⁶¹ The Road Feasibility Study dated 2013 and submitted to the Government on 24 January 2014 states as follows regarding projected financing for the Road Project:

It is currently anticipated that that the Project Costs including the Administrative, Operation and Maintenance Costs; the Principal and Interest costs from the debt financing; and the required Equity Return to equity investors, if applicable, will be borne by the government of the Republic of Armenia through the provision of availability payments. Based on the availability payments, it is anticipated that the Project should be able to secure loans from the Export-Import Bank of China or China Development Bank for approximately 60-85% of the Project investment requirement …. The remaining 15-40% of the funds are anticipated to be loans from an active international financial institution in Armenia with a history of financing or interest in financing the North-South Road Corridor program. It is not anticipated that equity investment will be required for the Project financing other than the equity invested for the feasibility study and other related works leading up to completion of the Project financing.¹⁶²

197.

A separate dispute between the Parties involves the Road Feasibility Study's compliance with the agreement in the Road Terms of Reference that the design "should meet the requirements" for a Class II category road as defined in Armenia's Construction Norms.¹⁶³ The Road Feasibility Study makes reference to "the Armenian requirements for the technical standards of the Project," but also refers to "the highway class selection" in a publication that describes the Chinese highway standards.¹⁶⁴ The distinction becomes important, because the Road Feasibility Study proposed design speeds of 60 and 40 km/hour based on terrain (which is consistent with the Chinese Class II standard), whereas the Armenian Class II standard involves higher design speeds of 90-100 km/hour.¹⁶⁵ As will be discussed further, Armenia raised questions in mid-2014 about the design speed reflected in the Road Feasibility Study.

198.

On 2 October 2013, the Armenian Government issued a tender for "construction supervision of Tranche 3 and feasibility study, preliminary design and about 60km detailed design of Tranche 4" of the NSRC, to be financed by the ADB as discussed above. The tender described the Tranche 4 feasibility and design work as covering the "Artashat-Qajaran road section … of southern part of North-South road."¹⁶⁶ The tender was won by a joint venture between Spea Ingegneria Europea S.p.A. and IRD Engineering SrL,¹⁶⁷ which later, on 30 March 2015, signed a contract with the Government for a feasibility study and design works for the Artashat to Kajaran road section of Tranche 4.¹⁶⁸ The feasibility study work was completed on 2 May 2016.¹⁶⁹

199.

Separately, on 5 February 2014, Armenia's Ministry of Transport signed an agreement with the French company Egis International ("Egis"), which had been providing consultancy services to the Ministry on other aspects of the NSRC project under a Consultancy Services Contract concluded on 24 September 2010. The 5 February 2014 document, entitled "Agreement No. 8," was said to be based on an "agreement of [ADB] issued on 16.10.2013," and assigned to Egis "the performance of the following new tasks," including preparation of a "[c]omprehensive [f]easibility [s]tudy of Qajaran-Agarak 50km southern section" of the NSRC, based on "Category 1 highway standards."¹⁷⁰ Egis commenced work for the studies on 17 February 2014, carried out a site visit from 21-23 February 2014 and issued the final version of its feasibility study on 15 May 2014.¹⁷¹

200.

The Claimants contend that the work performed by the Spea/IRD joint venture and by Egis was done in respect of territory covered by the Road Concession. The Respondent says it was clear to the Government that the Road Project had failed, and that Rasia was in "default," before this work was commissioned.¹⁷²

201.

It is undisputed that, in contrast with the Railway Feasibility Study, Rasia never formally accepted the Road Feasibility Study.¹⁷³ The Claimants maintain that the Road Feasibility Study was automatically accepted under Section 20 of the Road Concession in March 2014, following the expiry of the commenting period provided by that provision.¹⁷⁴

202.

It is also undisputed that Armenia did not establish an inter-agency Working Group to study the Road Feasibility Study,¹⁷⁵ in the way that it did with the Railway Feasibility Study. In the Claimants' submission, the Government "ignored" the Road Feasibility Study,¹⁷⁶ a contention which the Respondent rejects, primarily with reference to a series of meetings in February 2014.

203.

These meetings took place in Yerevan between Mr. Borkowski, government officials and representatives from both CCCC and China EximBank, between 6-24 February 2014 (the "February 2014 Yerevan Meetings"). These Meetings have been the subject of extensive pleadings by the Parties. Among other things, they disagree as to whether the Road Project was discussed at all during the meetings (see Section III.H.2 for relevance to the Railway Project).

204.

According to the Respondent, the Parties discussed the Road Feasibility Study during the February 2014 Yerevan Meetings. Both Mr. Arakelyan and Mr. Grigoryan have recalled that government representatives made clear to Mr. Borkowski that the Road Project, as proposed by Rasia in the Road Feasibility Study, was unworkable. Both men had the impression – and the Respondent has argued – that Mr. Borkowski understood at the Meetings that the Road Project would not proceed.¹⁷⁷ In fact, at the February Hearing, Mr. Arakelyan went so far as to say that it was his understanding that the Parties mutually agreed to terminate the Road Concession during these meetings.¹⁷⁸ By contrast, Mr. Borkowski says that his repeated attempts to present the results of the Road Feasibility Study were cut off.¹⁷⁹

205.

During the February 2014 Yerevan Meetings, Mr. Borkowski says he also suggested that the Road Project be financed by CCCC, either by a loan against availability payments or on a government-to-government basis, and that he presented a draft Memorandum of Understanding (MOU) for the purposes of negotiating Chinese financing for the Road Project on either of these two bases.¹⁸⁰ By Mr. Borkowski's account, Minister Beglaryan was "non-responsive," but Mr. Arakelyan has said that he told Mr. Borkowski that a loan from a Chinese bank was not an option.¹⁸¹

206.

Mr. Borkowski alleges that Minister Beglaryan solicited a bribe during the February 2014 Yerevan Meetings, by suggesting that the payment of a personal contribution to the Minister would secure his support for the Projects. According to Mr. Borkowski, Minister Beglaryan raised the subject at a separate meeting in his private office on 17 February 2014, which was also attended by Mr. Grigoryan acting as English-Armenian translator. During this meeting, Minister Beglaryan allegedly insisted that Mr. Borkowski drop the Road Project, and threatened that Rasia would also lose the Railway Project if Mr. Borkowski persisted with pursuing the Road Project. According to Mr. Borkowski, Mr. Grigoryan then said that "the Minister wants to know what's under the paper," and further explained that "he wants to know what's in it for him."¹⁸² Both Mr. Arakelyan (who Mr. Borkowski says "with 100% certainty" did not attend the meeting in question¹⁸³) and Mr. Grigoryan have denied Mr. Borkowski's account. Mr. Arakelyan says that no discussion of the kind Mr. Borkowski describes took place, while Mr. Grigoryan, who denies having been present at the alleged meeting, says there was "absolutely nothing," either during the February 2014 Yerevan Meetings or afterwards, that would support Mr. Borkowski's allegations in this respect.¹⁸⁴

207.

Two days after the alleged bribery request, Mr. Borkowski reported to Mr. Tappendorf about the February 2014 Yerevan Meetings. In his report, while he was "in middle of war on [the] road," he expected "a victory on that soon," and in the meantime had scored a "[b]ig win" with respect to the Railway Project, in the sense that Armenian officials had been impressed with his detailed presentation.¹⁸⁵ Mr. Borkowski admits that he never told Aabar about the bribery request he now alleges took place at this time.¹⁸⁶

208.

Be that as it may, immediately after the February 2014 Yerevan Meetings, Mr. Borkowski wrote to ADB. He did so, because he says that he had been told at those Meetings that Rasia might be able to participate in the broader ADB-financed NSRC road program, involving a Category 1 road (which the Respondent denies).¹⁸⁷ In a 20 February 2014 email to Mr. David Dole of the ADB, Mr. Borkowski submitted what he described as a "request for approval from [ADB] to continue our activities."¹⁸⁸ The attached letter stated as follows:

Following our presentation of the Southern Armenia Railway, the Prime Minister requested that Rasia and CCCC contact [ADB] to seek [ADB] approval in order to participate in the North South Road Corridor program.

Pursuant to this instruction, we are pleased to submit our formal request for Rasia and CCCC, together and individually, to continue existing works on the Southern Armenia High Speed Road project as well as to consider additional new works regarding feasibility, design, financing and construction proposals between CCCC, the China Banks such as China Export Import Bank and China Development Bank, and the Government of the Republic of Armenia potentially extending from Ararat to Agarak. In all cases, we aim to coordinate closely with [ADB] and request your approval by letter to the Minister of Transport and Communication, Mr. Gagik Beglaryan, to work directly with the Government of the Republic of Armenia.

Kindly advise of any questions or required clarifications to this letter and we hope to secure your approval/consent to continue our road related works soon.¹⁸⁹

209.

On 3 March 2014, Mr. Borkowski reported to Mr. Weixin of CCCC that ADB was finalizing a letter to Minister Beglaryan "that would enable CCCC to move forward on the road project MoU," integrating the CCCC Road Project into the broader NSRC.¹⁹⁰

210.

On 18 March 2014, however, ADB responded without making any commitments. The transmittal email to Mr. Borkowski said the ADB was "requesting the govt's advice on how they would like us to work with Rasia…. [w]e are kicking this back to the govt."¹⁹¹ The attached ADB letter stated that while ADB "is interested in cooperating with all potential partners on Armenia's North-South Road Corridor Investment Program, and is glad to hear of Rasia's interest in the southern sections of the North-South road … [a]ll work on the North-South road, involving ADB or others … is coordinated by" the Armenian Ministry of Transport. ADB instructed Rasia to "coordinate directly" with Armenian officials "to discuss Rasia's interest in financing the North-South road …."¹⁹²

211.

On 19 March 2014, Mr. Weixin of CCCC expressed confusion about ADB's role in the "upcoming sections of North-South Corridor project," because "[i]t seems that ADB still wants to be the leading party." Mr. Borkowski explained that "[w]e are submitting a formal letter to the Armenia government today requesting the Minister to enter into the MoU directly with CCCC." Mr. Borkowski's explanation was that "if China is providing 70-85% of the funding, the other 15-30% has to come from the government of Armenia, which means ADB or Eurasian Development Bank."¹⁹³

212.

The next day, on 20 March 2014, Mr. Borkowski sent a letter to Minister Beglaryan, in which he professed to have "received a positive response letter" from ADB regarding "mutual cooperation with the Government of the Republic of Armenia for the North-South Road including [the Road Project]." The letter also attached the same draft CCCC MoU Mr. Borkowski allegedly raised with Armenia at the February 2014 Yerevan Meetings, pursuant to which Armenia and CCCC would seek to integrate the proposed road into the NSRC initiative and begin negotiating Chinese financing. Mr. Borkowski proposed in his letter to Minister Beglaryan that "CCCC and Rasia FZE, at our own cost, […] modify the existing feasibility study and the recommended alignment of the road project to the standards of the North-South Road Corridor."¹⁹⁴

213.

Several days later, on 24 March 2014, Mr. Borkowski reported to ADB that in a meeting with Mr. Grigorian of the Ministry of Transport, he was told that "the Armenian government has agreed to borrow funds from ADB that also covers a feasibility study from Arthashat to Kajaran." Mr. Borkowski queried why "the government is paying for another FS when we have already paid CCCC" for one. Nonetheless, he said, "[w]e are waiting to modify our FS from the road directorate technical input/standards to the NSRC technical standards."¹⁹⁵ The next day, ADB confirmed that it "has about $170 million left to lend for the NS road, and will prefer to continue from Artashat to however far south we can" with that sum, but it required instructions from the Government regarding Rasia's participation. ADB did report "good news for you," which was that "[t]he final version of the govt's development strategy mentions your railway and road projects." Mr. Borkowski welcomed the news and stated that "[h]opefully I can sort out the road matter and CCCC can continue their work."¹⁹⁶

214.

Mr. Borkowski's optimism was misplaced, however. One week later, on 1 April 2014, Mr. Beglaryan informed the ADB that the Road Feasibility Study submitted by Rasia "is inefficient and does not comply with the overall strategy, and therefore it cannot be considered" within the broader NRSC project. Specifically, he complained as follows:

[I]n the feasibility study represented by Rasia is proposed a reconstruction of the existing road option by providing Category II road where the design speed is 60 km/h and 40 km/h and the carriageway is 2 lanes as well as is intended horizontal curves with small radius and large longitudinal slopes. Taking into account the main conditions of North-South road corridor now feasibility study is being carried out for about 5 alternatives, where approval is expected to be given to the construction of the Category I road where the speed will be mostly 80km/h and carriageway will be 4 lanes, as well as the new road construction will give an opportunity to shorten the existing about 50km road section. At the same time for intending carriageway with 2 lanes for upstream and downstream it's necessary to have additional lanes for traffic, otherwise problems may arise in the presence of large trucks. On the Qajaran to Agarak section … [i]t should also be noted that the radiuses of horizonal curves, longitudinal slopes and other technical parameters are more secure and creates favorable conditions for traffic.

Mr. Beglaryan added, however, that while Rasia's Road Feasibility Study could not be considered within the NSRC project, "Rasia, if [it wishes], can be involved into the implementation" of any road construction resulting from alternative feasibility studies developed by the ADB in future.¹⁹⁷

215.

On 4 April 2014, Mr. Dole of the ADB informed Mr. Borkowski that he believed the Government did not understand that "the govt and any financier can do a separate deal themselves and ADB does not have to be involved" in all financing for the North-South road. Mr. Borkowski agreed that "in my discussions with the [Ministry of Transport], the key aspect the[y] have not been understanding is the 'separate deal' part."¹⁹⁸ Mr. Borkowski had tried to explain to the Government that Rasia wished to continue "with our project," and to work with ADB on co-financing "only where we meet the necessary standards/requirements, but we also want to be able to explore all financing alternatives (Exim, China Development Bank, etc) that may also not involve ADB in the financing .… I think they are learning as things go but they seem to have good intentions." ADB replied that "[o]ne part of the govt's argument makes sense – they want to follow one set of rules for the whole road."¹⁹⁹

216.

Roughly five weeks later, on 12 May 2014, Mr. Borkowski sent a follow-up email to Mr. Grigoryan at the Ministry of Transport. He stated that "CCCC … asked about the road project and would love to be able to sign the MoU," so that Rasia could "get the Chinese banks working with the Minister of Finance on very special loan packages."²⁰⁰ It is undisputed that Armenia never signed a Memorandum of Understanding with CCCC.²⁰¹

217.

On 23 May 2014, Armenia requested a US$150 million loan from the EDB.²⁰² The EDB approved the loan on 2 July 2014,²⁰³ and the final loan agreement was executed on or about 14 April 2015.²⁰⁴ The Claimants argue that the road stretch for which the loan was sought overlaps with the exclusive territory in the Road Concession, a contention which the Respondent disputes.²⁰⁵ The Claimants also argue that while the formal request for the EDB loan took place in May 2014, Armenia took several earlier steps, beginning with a preliminary application in December 2012, to seek this financing.²⁰⁶ According to the Respondent, the precise section of the road for which the government sought EDB construction financing had not been defined in December 2012. In any event, the Respondent says, first, that the stretch for which it sought EDB financing did not overlap with the road envisioned by the Road Concession, and, second, the loan agreement with EDB was not executed until 14 April 2015,²⁰⁷ long after Rasia had defaulted on the Road Project (and over a year after the ADB loan discussed above).²⁰⁸

218.

On 16 June 2014, Deputy Minister Arakelyan wrote a letter to Mr. Borkowski which emphasized technical differences between the two projects, along the same lines as Mr. Beglaryan's 1 April 2014 letter to the ADB. The letter noted, for example, that Rasia had submitted a Road Feasibility Study which provided for "reconstruction of the existing road option by providing Category II road where the design speed is 60 km/h and 40km/h and carriageway is 2 lanes as well as is intended horizontal curves with small radius and large longitudinal slopes." This proposal was contrasted with the "main conditions" of the NSRC feasibility study now being carried out with ADB assistance, "where approval is expected to be given to the construction of the Category I road where "the speed will be mostly 80km/h and carriageway will be 4 lanes," with "radiuses of horizontal curves, longitudinal slopes and other technical parameters [that] are more secure and create[] favorable conditions for traffic." Mr. Arakelyan invited Rasia to be involved in the future "implementation of the Project," subject to ADB approval.²⁰⁹

219.

The Parties dispute whether the Road Concession was ever effectively terminated. While the Respondent has suggested that the Concession was orally terminated at the February 2014 Yerevan Meetings, it has conceded that the formal termination was delayed.²¹⁰ The Ministry of Transport prepared a draft decision authorizing Minister Beglaryan to rescind the Road Concession. It was submitted to the Ministry of Justice for legal review, and on 5 December 2014 also submitted to the Chief of the Staff of the Government for consideration.²¹¹ However, the formal termination decision was not sent to Rasia "solely for bureaucratic reasons," the Respondent says.²¹² Instead, Mr. Borkowski says, he was informed by Mr. Grigoryan in a phone call "on or around 29 December 2014" of the Government's decision to terminate the Road Concession.²¹³

220.

On 31 December 2014, Mr. Borkowski wrote to Minister Beglaryan that Rasia was "still waiting for confirmation that the Southern Armenia High Speed Road Concession Agreement has been terminated."²¹⁴ The letter expressed disappointment about this outcome, but it did not allege any breach of contract or other wrongdoing on the part of Armenia.

221.

After this letter, the record contains no further written correspondence between the Parties about the Road Project for the next 18 months, until the Claimants' Notice of a Dispute under the BIT on 25 June 2016.²¹⁵

222.

In the meantime, the Claimants say, Armenia took steps to develop the Road Project with entities other than Rasia. Specifically, the Claimants say that Armenia signed an MoU on Tranche 4 of the NSRC with China Civil Engineering Construction Corporation Ltd. ("CCECC") on 23 December 2014. This alleged MoU (the "Alleged CCECC MoU") has not been produced as evidence in this Arbitration, but the Claimants contend that its existence is evident from a briefing prepared for the Armenian President, before his visit to China in March 2015.²¹⁶ The Respondent says this reflects a mistake in making reference to a December 2014 MoU.²¹⁷ An MoU undisputedly was signed on 31 January 2015 between the Armenian Ministry of Transport and the CCECC, but this was for the design and construction of just a 22 kilometer road section south of Kajaran, including a 4.7 km tunnel, and not any broader stretch of Tranche 4 (the "CCECC MoU").²¹⁸

223.

Following the CCECC MoU, a CCECC delegation visited Armenia in January and February 2015 to investigate the road, as well as the Southern Railway Project (railway issues discussed separately below). The resulting site visit report has not been produced as evidence in this Arbitration, but the Claimants again contend that the site visit is evident from the same March 2015 briefing prepared for the Armenian President. In the absence of the site visit report, the precise stretch of the road investigated by CCECC is not clear.²¹⁹

224.

In 2015 and 2016, the Claimants say that the Armenian Government took further actions to develop the Road Project with entities other than Rasia.²²⁰ Those steps included:

(i) an announcement, by President Sargsyan on 11 December 2015, that Armenia would soon issue an invitation for bids for the construction of the Kajaran-Agarak section of the NSRC;²²¹

(ii) Armenia's signing on 18 July 2016 of a Memorandum of Understanding with Sinohydro, a large Chinese engineering and construction company, for the completion of the entirety of Tranche 4 of the NSRC;²²²

(iii) a meeting hosted by Minister Beglaryan in Yerevan on 25 July 2016 in order to provide information about the tender for the design and construction of the Kajaran-Agarak section of Tranche 4;²²³

(iv) an August 2016 tender for the Kajaran-Agarak road section;²²⁴ and

(v) a May 2020 announcement that an Italian company would begin work on the Kajaran-Agarak road section of Tranche 4.²²⁵

225.

On 13 December 2013, Armenian Prime Minister Sargsyan issued a decree creating an "interagency working group" to "examine the feasibility study on the proposed draft project of the Armenian South Railroad" (the "Working Group").²²⁶ Officials from nine different agencies participated in the Working Group with Mr. Beglaryan as one of its two heads.²²⁷

226.

As noted in Section III.G.3 above, Rasia then submitted the Armenian version of the Railway Feasibility Study on 31 December 2013. It appears undisputed that the Armenian Government did not provide written comments to Rasia on the Railway Feasibility Study. The Respondent argues (as discussed further herein) that, pursuant to Sections 20.2-20.3 of the Railway Concession, this means that the Railway Feasibility Study was deemed to have been "finally accepted" on 30 January 2014, thirty days from the date of the Government's receipt,²²⁸ with the result that the time periods for Rasia's obligations under the Railway Concession with respect to further phases of the Project began running from then.

227.

Notwithstanding the absence of written comments provided to Rasia, the Railway Feasibility Study was the subject of study and discussion within the Armenian Government. On 17 February 2014, the governmental Working Group sent a summary of its recommendations to the Ministry of Transport. One recurring concern mentioned by several ministries was that the project cost calculated at $3.2 billion did not include the acquisition cost of lands required for construction. Working Group members also wished to learn more about the projected loan terms for the 60% of the project that was to be debt financed, and about the "procurement sources" of the other 40% of the project cost.²²⁹ In this regard, the Railway Feasibility Study had stated only as follows:

The Project allows for loans from the Export-Import Bank of China (interim) of at least 60% with a bank loan APR of 3.5% as well as self-raised funds of 40% with the participation of regional governments benefiting substantially from the development of the Project.²³⁰

228.

The Railway Project was then discussed extensively at the February 2014 Yerevan Meetings, when Mr. Borkowski, together with a CCCC team, presented the results of the Railway Feasibility Study in more detail to representatives from the Working Group.²³¹ Rasia's PowerPoint presentation reported that financing would be "[h]ighly dependent on China bank negotiations and Armenia involvement during 2-year Project Financing period," but stated that Rasia's "[p]reliminary discussions with China banks assumed" they would finance 60% of the estimated $3.2 billion Project cost at a fixed rate of 3.5%, with the "[r]emaining 40% likely to be sourced from traffic volume Origin and Destination countries along Corridor," from whom regional freight volume guarantees might be sought.²³²

229.

The Minutes of the governmental Working Group meeting on 19 February 2014, attended by Rasia, reflect that the Working Group recommended the Government approve a draft decision which in turn would approve the "preliminary alignment of Southern Armenia Railway construction … and the draft feasibility study (technical and economic rationale) and submit it to the Prime Minister of the Republic of Armenia."²³³ The reference to the proposed alignment as being only "preliminary" at this stage is explained further below.

230.

After the February 2014 Yerevan Meetings, the Parties corresponded about next steps for the Railway Project. On 3 March 2014, apparently in response to the Government's request,²³⁴ Mr. Borkowski provided Armenia with a two-year "Roadmap to Construction," which among other things calculated a "Feasibility Study Deadline" of 30 June 2014, based on a "Feasibility Study Start[]" date of 31 December 2012. The Rasia roadmap also referred to "Year 1 (2014-2015)" steps as including a "Government Decree – Feasibility Study/Alignment" and a "Land Acquisition Plan for Project Areas." The land acquisition plan was to be developed in Year 1 before the detailed engineering work, with the acquisition of lands slated to take place in Year 2.²³⁵

231.

On 13 March 2014, the Government promulgated a Decree approving an action plan for 2014-2017 measures implementing national road transportation security. This action plan anticipated, inter alia, that the Railway Feasibility Study would be jointly approved by the Government and Rasia in the second quarter of 2014.²³⁶

232.

On 21 March 2014, Mr. Borkowski wrote to the Ministry of Transport, stating that Rasia was looking forward to receiving copies of the Government decrees "reflecting the adoption of the feasibility study and recommended alignment so that we can begin the financing period" under the Railway Concession.²³⁷

233.

As discussed in Sections III.C.6 and III.C.7 above, the Railway Concession had provided that the Feasibility Studies were to "reflect" the proposed land corridor on which construction would take place, and that the Government was to "confirm the Corridor recommended by the Feasibility Study" within 90 days of Rasia's final acceptance of the Feasibility Study. The Government's confirmation of the corridor would in turn constitute its recognition of "the exclusive prevailing public interest in respect of the lands and immovables in the Corridor," and would trigger its duty to acquire the Corridor these lands and immovables "within a reasonably short period," so as not to delay the start of construction.²³⁸

234.

Respondent claims that in early April 2014, Mr. Grigoryan wrote to Rasia noting that the company had not provided sufficiently detailed information regarding the corridor to allow the Government to begin taking the steps required for it to acquire all lands and immovables in the Corridor, as required by the Railway Concession.²³⁹ While this particular communication does not appear to be in the record, it does seem clear from other correspondence that the Government raised the issue of detailed coordinates with Rasia in early April 2014. On 13 April 2014, Mr. Borkowski asked Mr. Weixin of CCCC for "[a]ny news on the … railway GPS or other coordinates," advising him that "[w]e need responses as quickly as possible to avoid dragging this project timeline out."²⁴⁰ Mr. Weixin responded on 14 April 2014 that "absolute coordinates," as opposed to the "relative coordinates" already in place, would be necessary for further design work for the Railway Project," a response that Mr. Borkowski interpreted as meaning that the more detailed coordinates could not be provided until the engineering stage.²⁴¹

235.

On 21 April 2014, Mr. Borkowski reported to the Ministry of Transport that he had met with CCCC and "spoke extensively about the alignment" question the Ministry had raised. Specifically, "[r]egarding your request for coordinates," he attached the coordinates he had, but advised that "[a]s is standard in railway engineering design and construction, these coordinates are considered relative (versus absolute) at this stage since they may be varied as the route scheme is optimized ... during the design and construction stage." Mr. Borkowski added that "the variation may be controlled in a few hundred meters in either direction," and suggested that "[t]his process is iterative and becomes more specific as the project progresses." Mr. Borkowski requested the Government proceed to provide its decrees approving the Railway Feasibility Study and the "macro alignment adoption" for the railway corridor.²⁴²

236.

Mr. Grigoryan responded on 30 April 2014 that the coordinate data Rasia had supplied "cannot be processed by the State Committee of the Real Estate Cadastre," which required submission of information in the "WGS-84 coordinates system," for it to identify "all the necessary data on the adjacent area to the alignment." On 5 May 2014, Mr. Grigoryan wrote again to Mr. Borkowski, expressing concern that "the coordinates already provided might not be correct as the unofficial viewing showed deviations varying from a few meters to several kilometers." Given these significant discrepancies, he again requested submission of coordinates in "the WGS-84 coordinates system," and expressed the hope that "they will be completely correct."²⁴³ Mr. Borkowski replied the same day, repasting his 21 April 2014 response and insisting that only "relative coordinates" could be provided at this point, and that "[t]he government must adopt the FS and macro alignment for us to move forward …. [T]he government should not begin allocating land now." He also emphasized that "we should make amendments to the concession agreement based on the actual developments we experience together over time which can never match the anticipated steps in the concession agreement."²⁴⁴

237.

On 23 May 2014, Mr. Borkowski wrote again, emphasizing that the coordinates provided were "relative coordinates" (although already in a WGS format), and reiterating CCCC's view that "we do not recommend that the government use these coordinates to immediately transfer the land at this stage because the route scheme and therefore the coordinates are expected to be optimized during the EPC … stage." He advised that "[t]he land cadastre should not take any further actions" until Rasia provided further information at a later stage. Mr. Borkowski proposed that once the Government had "confirm[ed] the feasibility study and macro alignment" based on the information provided, "we can simultaneously agree to various concession agreement modifications including that the land assemblage will take place later following the start of the EPC works."²⁴⁵

238.

On 31 May 2014, Mr. Borkowski contacted his ADB correspondent, Mr. Dole (with whom Rasia was already in touch about the Road Project), to suggest that ADB might be able to assist Armenia with "the financial support (i.e. soft loans) and expertise to fulfill the GoA obligations related to the … railway (such as identifying the exact parcels of land most suitable for the project, assisting with the land assemblage, and developing social and environmental analyses not currently required under the concession agreements)."²⁴⁶ Mr. Borkowski expressed concern that "[a]t the moment, the GoA … wants me to tell them the exact parcels of land required for the project now so that they can assemble and transfer them to the project; something that CCCC and I communicated would not be necessary until post engineering survey and pre-construction rather than now."²⁴⁷

239.

On 16 July 2014 the Chairman of Armenia's State Committee of the Real Estate Cadastre informed Mr. Beglaryan that the Cadastre could not agree to the proposed draft Government decision approving the "initial right-of-way of construction" of the Railway Project. The Cadastre advised that once it received appropriate "measurement data," it would be possible for the Cadastre to provide information on "the surfaces, designated purpose and ownership entities of the land parcels located on the adjacent territories of the right of way."²⁴⁸

240.

Rasia maintains that it formally accepted the Railway Feasibility Study in a letter to Minister Beglaryan several days later, on 20 July 2014. That letter stated that "[b]y this Notice, … we finally accept" the study, and "look forward to receiving the government decrees … that will officially adopt both the … feasibility study as well as the recommended railway alignment so that we may begin our Project Financing period."²⁴⁹ As noted in para. 226 above, the Respondent maintains, by contrast, that Rasia should be deemed to have accepted the Railway Feasibility Study automatically almost six months earlier, on 30 January 2014, through application of Section 20 of the Railway Concession.²⁵⁰

241.

Be that as it may, on 7 August 2014, Armenia promulgated Protocol No. 33-26, "on Approving the Preliminary Alignment and the Feasibility Study of the Southern Armenia Railway Construction" (the "7 August 2014 Protocol"). This Protocol accommodated Rasia by replicating its proposed language approving the "preliminary alignment" of the Railway, but it went on to make clear that the Government intended to act with dispatch in performing its side of the Concession Agreement's terms on land assemblage. In particular, the 7 August 2014 Protocol instructed the Cadastre to provide information on the purpose and value of lands that would be impacted by the Railway, two months after receiving the coordinate measurement date from Rasia, and within a few months thereafter, the Government was to consider any proposed changes to the preliminary alignment and prepare a list of actions needed to move forward to a final alignment and land acquisition mechanisms.²⁵¹

242.

The following day, 8 August 2014, Mr. Borkowski requested the Government to issue a formal notice approving the Railway Feasibility Study and the preliminary alignment, based on the understanding that detailed coordinates would be provided later. He stated that he needed this document to move to the next stage on financing arrangements,²⁵² even though he had previously written that the Concession Agreements provide for "automatic adoption" of Feasibility Studies, in the absence of Government comment.²⁵³

243.

Following another request from Mr. Borkowski on 15 August 2014,²⁵⁴ Minister Beglaryan formally communicated the Government's decision to approve the Railway Feasibility Study in a letter to Mr. Borkowski on 19 August 2014. It stated as follows: "[t]he preliminary alignment … has also been approved …. Rasia may now proceed to the Project Financing Period under the [Railway Concession] while also determining the final detailed coordinates for the recommended alignment of the Southern Railway."²⁵⁵

244.

The issue of coordinates was not resolved by these communications. Before addressing disputes that subsequently arose, the Tribunal summarizes below a separate issue connected to the Railway Project, involving uncertainties about railway connections at the Iranian border and the relationship between such connections and the availability of potential project financing.

245.

As discussed above, the existing railway network in Armenia did not extend south to the Iranian border. Nor, for that matter, did the existing Iranian railway network extend north to the Armenian border. For the two networks to connect, new track would have to be laid on both sides of the border. Armenia and Iran had discussed the need for improved transport connectivity between the two countries for several years prior to the initiation of the Railway Project.²⁵⁶

246.

The establishment of a connection to the Iranian railway system was a critical factor for the feasibility of the Railway Project, since the Project was expected eventually to generate revenue from freight traffic, and more than half of the eventual traffic projected by the Railway Feasibility Study consisted of oil shipments to the Black Sea.²⁵⁷ Mr. Borkowski himself was acutely aware of the importance of the Iranian connection. A year before he delivered the Railway Feasibility Study to Armenia,²⁵⁸ Mr. Borkowski advised Minister Beglaryan that CCCC and the China Development Bank had "requested with great emphasis to demonstrate strong regional cooperation with Russia and Iran regarding the railway development by signing a tripartite memoranda of understanding." With respect to Iran, Mr. Borkowski emphasized that in order "to successfully develop the railway, it is mandatory … that Rasia has an initial commitment from … Iranian party regarding the 60 km railway development on its territory …."²⁵⁹

247.

On 19 April 2013, Mr. Borkowski wrote to Minister Beglaryan, again highlighting the need for Iranian cooperation:

Our work on the feasibility studies requires the immediate technical cooperation of the Islamic Republic of Iran Railways (IRI Railways). We kindly ask the Ministry of Transport and Communication to send a letter to IRI Railways requesting a technical team meeting with CCCC and Rasia in Beijing, Yerevan or Teheran.

We also need to sign the Memorandum of Understanding (MoU) with Iran to demonstrate the important political support and cooperation with Iran for the project.²⁶⁰

248.

The viability of an Iranian extension of the Railway was threatened by the fact that another cross-border railway link was already under construction in Azerbaijan, with Iranian support, constituting a competitive threat to Rasia's Railway Project. Mr. Borkowski identified this threat as an "exceptionally important matter" in a letter to Minister Beglaryan on 27 November 2013, expressing concern that "[t]he Azeri railway would ruin the South Armenia Railway as a private project and only the Armenian government will be able to develop it if the Azeri's [sic] develop their project." Mr. Borkowski added:

We must secure the previously desired exclusivity/monopoly from Iran for the north-south railway through Armenia for 20-30 years. Only Russian leadership (Putin or Yakunin) can persuade Iran not to build the Qazvin-Astara link [through Azerbaijan]. I see that President Putin is coming to Armenia on December 2nd. It is absolutely essential for the Southern Armenia Railway that President Sargsyan request that President Putin and/or Vladimir Yakunin give a clear and public political signal to Iran that the north-south railway must be built through Armenia and not Azerbaijan […]²⁶¹

249.

In a separate letter two days later, Mr. Borkowski re-emphasized the importance of having President Sargsyan try to persuade Russia to signal to Iran that the link be built through Armenia and not Azerbaijan, because "the north-south railway through Azerbaijan would ruin the feasibility of the Southern Railway as a private project. The Southern Armenia Railway requires up to 30 years of exclusivity from Iran for the north-south transport traffic through Armenia and therefore no development of the [Azerbaijan] link."²⁶² President Sargsyan did meet with Russia's President Putin on 2 December 2013, during which plans to "build a [rail] transport link-up through Iran" were discussed.²⁶³ However, Iran ultimately did not agree to abandon the Azerbaijan link, which remained a threat to the feasibility of the Railway Project.

250.

The issue of Azerbaijan continued to worry Mr. Borkowski, who asked Mr. Grigoryan on 23 January 2014 to try persuade Iran – in the context of an Iran-Armenia-Rasia trilateral memorandum of understanding that was then under discussion – "to include the same No Grant provision (monopoly rights) to the Iran section as in the Armenia concession to Rasia." Mr. Borkowski explained that this was important "considering that Iran's construction of an alternative competing railway to Astera will cause the Iran-Armenia railway to be unable to attract financing and fail."²⁶⁴ On 27 April 2014, Mr. Borkowski bemoaned an "announcement from the Iran president regarding railway communication with Georgia through Azerbaijan," stating that "[I]ran is not helping our project with these types of pro-Azeri announcements."²⁶⁵

251.

The connection between a viable Iranian railway link and Rasia's ability to obtain outside financing for the Railway Project within Armenia was clear from the beginning. Mr. Borkowski candidly admitted during the Hearing that without the link to an Iranian rail segment to enable cross-border freight traffic, the proposed Armenian track sections would become a proverbial "railway to nowhere."²⁶⁶ This was consistent with Mr. Borkowski's contemporaneous statements to the Ministry of Transport, such as his statement in February 2014 that there was a "[t]erminal risk to Project from Iran railway section" (either because of "no construction or competing construction to Astara"),²⁶⁷ and his October 2014 that "the Iran cooperation is absolutely critical for any further progress to be made."²⁶⁸

252.

Yet just as Iran proved unwilling to forswear a potential future railway link through Azerbaijan, it also proved unwilling to commit to construction of a railway segment connecting to Armenia, until there first was meaningful progress in constructing the corresponding Armenian sections. Mr. Borkowski had predicted just such a problem in late May 2014, when he expressed concern to the ADB that "I believe Iran will only undertake to construct its 80km railway link … when it sees construction activities on the Armenia side of the border."²⁶⁹ His instinct proved correct: this predicate condition was expressly reflected in the final Memorandum of Understanding that Iran, Armenia and Rasia signed on 10 November 2014 (the "Iranian Trilateral MoU"), in which Iran "expressed its readiness to undertake construction of … Iran segment of the railways when [the Railway Project] progress by value achieves 30% in the Republic of Armenia territory."²⁷⁰

253.

Mr. Borkowski sought to persuade Iran to consider a private funding model for a future Iranian segment of the railway. Iran alluded in the Iranian Trilateral MoU to the possibility that "[i]n its sole discretion, [it] could choose Rasia as an alternative … in the form of finance, build, lease and transfer," but made no commitments in that regard.²⁷¹

254.

Nonetheless, soon after the Iranian Trilateral MoU, Mr. Borkowski began to focus on efforts to obtain outside financing for possible EPC work on the Iranian side. On 24 November 2014, he approached China Poly Group ("China Poly"), a Chinese firm with which Mr. Borkowski had previous connections, explaining that "[t]he objective is to bring Poly into the project exclusively on the Iranian side," in the first instance to prepare a "bankable feasibility study and designs for the Iran section." He explained that Iran might be willing to provide "various sovereign and resource guarantees and payments" to support the eventual railway construction, whereas "Armenia is too poor to provide a sovereign guaranty or payments" for the work on its side of the border. Nonetheless, Mr. Borkowski referred to the possibility of future amendments to the Railway Concession with Armenia, "such that the project involves a government guaranteed lease payment to service debt and pay a profit" to outside financers.²⁷²

255.

Further correspondence followed in December 2014, with China Poly expressing preliminary interest "if the Iran side can provide a proper guarantee" and a solution to current sanctions issues could be found.²⁷³ China Poly continued to ask various questions, to which Mr. Borkowski provided answers in January 2015. Among his statements to China Poly was the boast that "Rasia can ensure Poly gets exclusivity [on the Iranian side] because Rasia is the concessionaire on the Armenia side and controlling the entire Armenia-Iran railway cooperation between the Armenia and Iran governments." He acknowledged the challenge that "[t]he Iran government wants to see the Armenia side constructed at the same time," but stated that "it is our decision to determine the best way by the completion of the FS and preliminary design works."²⁷⁴

256.

In January and February 2015, Mr. Borkowski continued to engage with China Poly and to seek possible support from Iranian government agencies for Rasia and China Poly involvement on the Iranian segment of the railway. One such agency, Iran's Construction and Development of Transportation Infrastructures Company (CDTIC), cautioned that "[a]ll of our projects have the government and Central Bank of Iran guarantees."²⁷⁵

257.

In July 2015, Mr. Borkowski arranged for China Poly representatives to meet with officials in Tehran.²⁷⁶ On 10 August 2015, China Poly told Mr. Borkowski that Iranian officials "are very concerned about the feasibility of railway in Armenia," and had "made it clear that 30% of the railway or investment in Armenia has to be done to activate the project in Iran. … The question is how the Armenia side would like to finance their project …." China Poly's inquiry about Armenian financing of the Railway Project is curious, given that Mr. Borkowski had already informed China Poly some eight months previously that "Armenia is too poor to provide a sovereign guaranty …."²⁷⁷ In any event China Poly further reported that it had asked Iranian officials if Iran might provide a guarantee for the Armenian railway, to which Iranian officials responded that any such request would have to come officially from the Armenian government. China Poly made no commitment of its own in this communication.²⁷⁸ Following another meeting in September 2015 (which Mr. Thornber of Aabar apparently attended), Rasia promised to send China Poly a "draft non-binding framework agreement giving Poly exclusivity and conditional on conversion of the Rasia agreements into G2G cooperation in Iran and Armenia."²⁷⁹

Rasia v. Armenia

Documents of the case

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

Award

Table of Selected Abbreviations/Defined Terms

I. INTRODUCTION AND PARTIES

II. PROCEDURAL HISTORY

III. FACTUAL BACKGROUND

A. Country Context – The Importance of Improved North-South Transport

B. The Background to the Concession Agreements (2011-2012)

C. The 2012 Concession Agreements

(1) Purpose of Concessions

(2) Subject of Concessions

(3) Concession Fees

(4) Duration of Concessions

(5) Conditions Precedent and Waiver Thereof

(6) Feasibility Studies and Acceptance Thereof

(7) Corridor Confirmation, Acquisition and Grant

(8) Consortium Approach and Project Financing

(9) Control of Rasia

(10) Exclusivity of Concession

(11) Early Termination

D. Rasia's 2012 Discussions with Aabar and Framework Agreement with CCCC

E. The Road Project (Late 2012): CCCC's Site Visit, the Terms of Reference, and the CCCC Road Commercial Agreement

F. The Railway Project (Late 2012-Early 2013): The Terms of Reference, CCCC Rail Commercial Agreement, and SCR Trilateral MoU

G. The Feasibility Studies (2013-Early 2014)

(1) Payment for the Feasibility Studies

(2) Rasia's Summaries of the Feasibility Studies to Armenia and Aabar

(3) Rasia's Delivery of the Feasibility Studies

H. The Failure of the Projects

(1) The Road Project

a. Exclusivity and the NSRC project

b. Type(s) of road(s) and the financing thereof

c. Further NSRC developments in the south

d. The status of the Road Project in 2014

e. Alleged Road Project arrangements with CCECC and other entities

(2) The Railway Project

a. February-August 2014 correspondence about corridor alignment

b. The Iranian connections

J. Christopher Thomas	Appointed by the State
John Beechey	Appointed by the investor
Jean E. Kalicki	President