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Lawyers and other representatives

    Decision on Jurisdiction

    1.
    On August 24, 1984, the International Centre for Settlement of Investment Disputes (hereinafter called "the Centre" or "ICSID") received a Request for Arbitration from Southern Pacific Properties (Middle East) Limited (hereinafter called "SPP(ME)" or "the Claimant"), a Hong Kong corporation. The Request stated that SPP(ME) wished to institute arbitration proceedings under the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (hereinafter called "the Washington Convention" or "the Convention") against the Arab Republic of Egypt (hereinafter called "ARE," "Egypt," or "the Respondent"), and asked for the following relief:

    SPP(ME) respectfully requests ICSID to establish an arbitral tribunal to:

    1. determine that the ARE has undertaken obligations and incurred duties in respect to SPP(ME) both according to the terms of Law No. 43 and according to the Heads of Agreement of September 1974 specifically entered into by a Member of its Government, as well as by a Supplemental Agreement "approved, agreed and ratified" by the same Member of its Government.

    2. determine that the ARE violated its obligations thereunder,

    3. adopt and incorporate as its own the pertinent findings of fact made by the ICC Arbitral Tribunal concerning SPP(ME)'s performance of its obligations under its agreements, the dismissal of EGOTH's counterclaim therein, and the acts bringing about termination of the investment project,

    4. determine the liability of the ARE to compensate SPP(ME) for the termination of its investment agreements and to award the full measure of indemnification to SPP(ME) on account of the destruction of its investment, increased by the additional costs, including all direct and indirect costs of the present proceedings, occasioned by ARE's wrongful refusal to honor the ICC award of February 16, 1983, or otherwise compensate SPP(ME), as well as interest at commercial rates.

    2.
    On August 28, 1984, the Secretary-General of ICSID sent an acknowledgement of the Request to SPP (ME) and transmitted a copy of the Request to Egypt. On the same day, the Secretary-General registered the Request in the Arbitration Register and notified the Parties accordingly.
    3.
    On August 29, 1984, the Secretary-General notified the Parties by telex that:

    ... THE ARABIC TEXT OF ARTICLE 8 OF LAW NO. 43 OF 1974 REFERS TO THE SETTLEMENT OF DISPUTES WITHIN THE FRAMEWORK OF THE ICSID CONVENTION IN THE CASES WHERE IT (I.E., THE CONVENTION) APPLIES, AND NOT, AS ERRONEOUSLY MENTIONED IN THE ENGLISH TRANSLATION, WHERE LAW NO. 90 OF 1971 RATIFYING THE CONVENTION APPLIES. I HAVE, THUS, REGISTERED THE REQUEST OF SPP WITHOUT PREJUDICE TO THE QUESTION WHETHER SAID ARTICLE EIGHT CONSTITUTES CONSENT FOR THE PURPOSES OF THE ICSID CONVENTION OR MERELY INCLUDES A REFERENCE TO THIS CONVENTION IN THE CASES WHERE CONSENT FOR ICSID JURISDICTION IS ISSUED SEPARATELY. THIS MATTER, IF RAISED, WILL BE FOR THE ARBITRAL TRIBUNAL TO DECIDE.

    4.
    On August 29, 1984, the Centre received from SPP (ME) a proposal that a sole arbitrator be appointed pursuant to Arbitration Rule 2(1)(a), or, alternatively, that the Parties jointly nominate an individual as President of the Tribunal.
    5.
    In a communication received by the Centre on November 12, 1984, Egypt stated that it contested the Centre's competence with respect to the present dispute, and that no action undertaken in proceedings concerning SPP(ME)'s request could be deemed a renunciation of such jurisdictional objections. Egypt rejected SPP(ME)'s proposals for the constitution of the Tribunal, and proposed as an alternative a Tribunal consisting of three members, with Dr. Eduardo JIMENEZ DE ARECHAGA serving as President of - the Tribunal.
    6.
    In accordance with Arbitration Rule 4, the Parties agreed on November 26, 1984, to extend to December 3, 1984, the period for nominating their respective arbitrators and for agreement on the President of the Tribunal.
    7.
    On November 26, 1984, Egypt designated Dr. Mohamed Amin EL MAHDI, an Egyptian national, as an arbitrator pursuant to Arbitration Rule 3. SPP(ME) informed the Centre on November 30, 1984, that it did not object to the nationality of the arbitrator named by Egypt, as it might have done under Arbitration Rule 3(1)(a)(i), and that it was designating Mr. Robert F. PIETROWSKI, Jr., a U.S. national, as an arbitrator. Further, SPP(ME) informed the Centre that it consented to Egypt’s proposal that Dr. JIMENEZ DE ARECHAGA be appointed President of the Tribunal. Dr. JIMENEZ DE ARECHAGA accepted his appointment on December 5, 1984, and Mr, PIETROWSKI accepted his appointment on December 7, 1984.
    8.
    On December 18, 1984, the Centre received notice that Dr. EL MAHDI accepted his appointment as an arbitrator, and the Secretary-General informed the Parties that the Tribunal was constituted and that the proceedings were deemed to have begun in accordance with Arbitration Rule 6(1).
    9.
    On February 8, 1985, the Tribunal conducted a preliminary meeting with the Parties at the Permanent Court of Arbitration in the Hague. The Parties placed on record their agreement to the effect that:

    ... the Tribunal has been properly constituted in accordance with Section 2 of the ICSID Convention and Chapter 1 of the Arbitration Rules.

    In accordance with Arbitration Rule 20 it was decided that the Arbitration Rules in effect up to September 26, 1984, would apply; that the procedural languages would be English and French; and that the seat of the arbitration would be Washington.

    10.
    The Tribunal decided at the preliminary meeting to suspend the proceedings on the merits pending a decision on Egypt's jurisdictional objections, and that the proceedings on jurisdiction would consist of written pleadings and oral argument. The following schedule was set for the filing of the written pleadings on jurisdiction:

    (a) Egypt's observations to be filed by May 8, 1985; and

    (b) SPP(ME)'s observations to be filed by June 19, 1985.

    11.
    The observations of both Parties were filed within the prescribed time limits.

    Egypt, in its observations, submitted that the Tribunal should :

    ... for all of the grounds explained above... declare itself incompetent to hear the claims presented by SPP(ME).

    The observations of SPP(ME) submitted that the Tribunal should ;

    ... reject Respondent's objections to the Centre's jurisdiction over this dispute between SPP(ME) and the Government of Egypt regarding the State's failure to compensate this foreign investor for the losses it suffered as a result of the State's cancellation of the Pyramids Oasis Project.

    12.
    On 8 July 1985, the Centre received from Egypt a document responding to certain arguments set forth in SPP(ME)'s observations concerning interpretation of Egypt's Law No. 4 3 Concerning the Investment of Arab and Foreign Funds and the free Zones.
    13.
    Oral argument on the question of jurisdiction was held at the Permanent Court of Arbitration in the Hague on July 10 and 11, 1985. The hearings were recorded in the form of a verbatim transcript in the English and French languages. At the end of the oral proceedings, the Tribunal requested that the Parties submit certain additional materials concerning Egypt's Law No. 43.
    14.
    On July 23, 1985, the Parties advised the Centre that Southern Pacific Properties Limited (hereinafter called "SPP" or "Claimant"), the parent company of SPP(ME) and also a Hong Kong corporation, had been joined as a claimant in the proceedings subject to Egypt's reservation of jurisdictional defenses.
    15.
    In response to the request made by the Tribunal at the end of the oral proceedings, the Claimants and the Respondent filed supplemental materials concerning Law No. 43 on August 21 and August 27, 1985.
    16.
    On November 27, 1985, the Tribunal rendered a decision by which it unanimously rejected certain of Egypt's objections concerning jurisdiction and stayed the proceedings on Egypt's remaining jurisdictional objections pending final disposition by the French courts of certain concurrent proceedings involving the same dispute. The operative part of the Tribunal's decision provided:

    THE TRIBUNAL UNANIMOUSLY DECIDES:

    A. To reject the objections to its jurisdiction raised by the Respondent alleging that Article 26 of the ICSID Convention, as well as the pursuit by the Claimants of alternative remedies, bar the claim in the present case;

    B. To reject the objection to its jurisdiction raised by the Respondent alleging the withdrawal from the Claimant of the benefits of Law No. 43;

    C. To reject the objection to its jurisdiction raised by the Respondent contending that the provisions of Article 8 of Law No. 43 do not apply to this investment dispute; and

    D. To stay the present proceedings on the Respondent’s remaining objections to the Centre’s jurisdiction until the proceedings in the French Courts have finally resolved the question of whether the parties agreed to submit their dispute to the jurisdiction of the International Chamber of Commerce.

    17.
    On January 6, 1987, the French Court of Cassation issued a decision the effect of which was to finally determine that Egypt had not consented to submit the present dispute to the jurisdiction of the International Chamber of Commerce.
    18.
    On January 29, 1987, the Claimants filed a request with the Tribunal asking that the present proceedings be resumed in view of the Court of Cassation’s decision of January 6, 1987,
    19.
    On March 24, 1987, at the request of Egypt, the Tribunal invited the Parties to file further written pleadings and supporting materials.
    20.
    Egypt filed a "Mémoire" dated April 30, 1987, and requested further hearings on the remaining jurisdictional issues. The Claimants then filed "Observations on Respondent's Jurisdictional Memorandum" dated May 20, 1987.
    21.
    The Tribunal met in London on May 25-27, 1987. After reviewing the new materials filed by the Parties, and in consideration of its Decision of November 27, 1985, and the decision of the French Court of Cassation of January 6, 1987, the Tribunal unanimously decided to accede to Egypt’s request for a further hearing on the question of the Centre's jurisdiction. It notified the Parties that a final hearing on the jurisdictional issues would be held in Paris in September of 1987, and that the Parties' final submissions concerning jurisdiction, together with an enumeration of the arguments relied upon to support those submissions, were to be filed following the hearing.
    22.
    The final hearing on the question of jurisdiction was held in Paris on September 8, 1987. At the conclusion of the hearing, the Tribunal instructed the Parties to present in writing their final submissions on the jurisdictional issues, together with an enumeration of the arguments relied on to support those submissions, by September 25, 1987.
    23.
    The "Claimant's Final Submission on Jurisdiction" dated September 25, 1987, submitted that the Tribunal should :

    ... determine in favor of the Claimants the remaining jurisdictional issue, to rule that the Arab Republic of Egypt ("A.R.E.") has consented to ICSID arbitration in conformity with the requirement of Article 25(1) of the ICSID Convention, and to take jurisdiction over the investment dispute between the parties.

    24.
    The Respondent's "Mémoire en Réplique" dated September 25, 1987, did not contain formal submissions as such, but reiterated certain points made by counsel for Egypt at the hearing held in Paris on September 8, 1987, and responded to arguments made by counsel for the Claimants at that hearing.
    25.
    The Tribunal conducted its final deliberations on the question of jurisdiction in Washington on December 7-12, 1987.
    26.
    The facts which have given rise to the present dispute are as follows:

    On September 23, 1974, a contract entitled "Heads of Agreement" was entered into by the Government of Egypt (represented by the Minister of Tourism), the Egyptian General Organization for Tourism and Hotels (hereinafter called "EGOTH"), and SPP, a company engaged in the development of tourist and resort facilities. EGOTH was at the time a public sector enterprise under the Minister of Tourism, organized under Egyptian Law No. 60 of 1971.

    27.
    The Heads of Agreement by its terms was entered into in accordance with certain Egyptian laws, including Law No. 43 of 1974 Concerning the Investment of Arab and Foreign Funds and the Free Zones. In the Heads of Agreement, EGOTH and SPP undertook to incorporate an Egyptian joint venture company to develop tourist complexes at the Pyramids Oasis site near Cairo and at Ras El Hekma on the Mediterranean coast. These projects were to be developed according to detailed master plans prepared by SPP and approved by EGOTH. The Ministry of Tourism agreed to secure the title to property and the possession of land necessary for the development of the proposed projects. The Ministry of Tourism and EGOTH undertook to transfer the right of usufruct for such property to the joint stock company as part of the capital investment. The Minister of Tourism and EGOTH undertook to assist in obtaining all local approvals for the execution of the projects in accordance with the plans to be submitted by SPP and approved by EGOTH. SPP for its part agreed to obtain the necessary financing for the projects, and to provide or arrange for all technical expertise required for designing, constructing, managing, and marketing the projects.
    28.
    The Preamble of the Heads of Agreement, which was expressly made part of the agreement by Article 1, provided: Whereas the Ministry of Tourism approved :

    Whereas the Ministry of Tourism approved granting both 2nd and 3rd party [i.e. EGOTH and SPP] the right to develop the areas as shown in the attached maps in the Pyramid's area and Pas El Hekma Zone.

    This agreement is issued in accordance with laws No. 1 for the year 197 3 relating to Hotels Installations and Tourism, and law No. 2 for the year 1973 relating to the supervision by the Ministry of Tourism on touristic sites and the development of such areas, and law 43 for the year 1974 relating to Arab and foreign funds invested in the A.R.E. with particular reference to government guarantees, long term tax holidays, exemptions from import custom duties, etc.

    Article 2 of the Heads of Agreement provided:

    Both 2nd and 3rd parties undertake to incorporate promptly an Egyptian joint venture company of which 40 percent would be subscribed by E.G.O.T.H. and 60 percent by S.P.P. (for the Pyramid area) and 30 percent by E.G.O.T.H. and 70 percent by S.P.P. (for Ras El Hekma).

    Article 4 provided:

    FIRST Party will secure the title of property and possession of land and both First and second party undertake to transfer the right of usufruct to the joint company as its part of the capital investment. Both M.T. and E.G.O.T.H. undertake to transfer such right to the joint company immediately upon incorporation, any balance being transferred not later than 90 days thereafter.

    29.
    On December 12, 1974, a contract entitled "Agreement for the Development of Two International Tourist Projects in Egypt" (hereinafter called "the December Agreement") was concluded between EGOTH and SPP concerning the projects at the Pyramids Oasis and Ras El Hekma sites. The Preamble of the December Agreement referred to the Heads of Agreement saying that:

    Following execution of the Heads of Agreement dated 23rd September, 1974,... and subsequent negotiations between the above parties, the following are agreed....

    Article 1 of the December Agreement then provided that a joint venture company with registered shares would be incorporated in Egypt for a renewable period of fifty years. This company, called the "Egyptian Tourist Development Company" (hereinafter referred to as "ETDC"), was to be responsible for the development and operation of the projects. The nominal capital of ETDC was initially set at two million United States dollars, to be increased to ten million dollars at the end of the fifth year. Sixty percent of this capital was to be subscribed by SPP, and the remaining forty percent by EGOTH. On the fiftieth anniversary of the incorporation of ETDC, EGOTH was to be entitled to increase its shareholding at no cost to fifty percent of the total capital. The participation of EGOTH in the capital of ETDC was represented by the rights of usufruct referred to in Articles 5 and 6 of the agreement. Article 5 of the December Agreement stipulated that EGOTH would:

    ... use its best efforts to secure all the necessary Government approvals to enable ETDC the immediate possession of the land in both sites, and to ensure the transfer of the rights of usufruct to ETDC for its duration....

    30.
    The December Agreement also provided that SPP would incorporate a holding company to own its shareholding in the joint venture. Article 17 of the December Agreement provided:

    It is understood that SPP will be incorporating a holding company to own its shareholding in ETDC and it is agreed that SPP shall have the right to assign its rights, privileges, duties and obligations under this Agreement to this company in which SPP will have a controlling, but not necessarily majority, interest and in which it controls and directs management, provided the company satisfies EGOTH.

    Such an assignment was subsequently made to SPP(ME), a wholly-owned subsidiary of SPP formed in 1974 to undertake the execution of the projects at the Pyramids Oasis and Ras El Hekma sites.

    31.
    The December Agreement was expressly concluded in accordance with certain Egyptian laws, including Law No. 43. It contained an arbitration clause which provided that any disputes relating to the agreement would be submitted to the International Chamber of Commerce (hereinafter called "the ICC") in Paris for arbitration.
    32.
    On the final page of the December Agreement, following the signatures of the representatives of EGOTH and SPP, there appeared the typewritten statement, "Approved, agreed and ratified by the Minister of Tourism, His Excellency, Mr. Ibrahim Naguib, on the Twelfth day of December, 1974." Next to this statement the signature of the Minister and an official stamp were affixed.
    33.
    On the same date that the December Agreement was signed, the representatives of EGOTH and SPP also signed a "statement" which provided:

    It is understood between contracting parties (EGOTH) and (S.P.P.) in concern of the agreement signed on the 12th of December 197 4, that obligations which lie on EGOTH are subject to the approval of the competent governmental authorities and that the feasibility study proves the profitability of the projects.

    34.
    By a letter dated April Ï2, 1975, the Board of Directors of the General Organization for Investment of Arab Capital and Tax-Free Zones approved the application for the establishment of a combined tourist company by EGOTH and SPP for the development of the tourist areas at the Pyramids and Ras El Hekma sites. This approval was conditioned upon the presentation by the joint venture company to the Board of Directors of a complete economic feasibility study. The decision provided that the beneficial rights would be for a period of 50 years and then would revert to the State. This period was subsequently extended to 99 years, subject to compliance with certain Egyptian laws.
    35.
    On May 22, 1975, the President of Egypt issued Decree No. 475 of 1975 "(t)o specify the use of the lands on Pyramids Site and Ras El Hekma Site... for tourist purposes." The Decree provided that EGOTH "will either alone or with one of the Companies in which it is a partner develop and use these two sites."
    36.
    On October 19, 1975, EGOTH, as sole owner of the sites mentioned in Presidential Decree No. 475, irrevocably transferred its right of usufruct for the sites "without restriction of any kind" to the joint venture ETDC. This right of usufruct was transferred for the life of ETDC.
    37.
    On November 23, 1975, a contract between EGOTH and SPP(ME) for the incorporation of a joint venture was concluded in conformity with Law No. 1 of 1973 Concerning Tourist Establishments and Law No. 43 of 1974. The incorporation was authorized by Ministerial Decree No. 212 of 1975. This Decree referred in its preamble to the Decrees of the Prime Minister, No. 91 of 1975 Promulgating the Executive Regulations of Law No. 43 of 1974, and No. 92 of 1975 Concerning the Pattern of Contract and Statutes Covering the Projects Created Under the Provisions of Law No. 43.
    40.
    On June 1, 1977, Ministerial Decree No. 96 of 1977 was issued. Article 1 of this Decree provided:

    The Ministry of Tourism approves the master planning for the tourist Pyramids Plateau Area, as well as the detailed planning of the first phase regarding the implementation of villages nos. 1, 3 and 21 of the project of exploiting the tourist Giza Pyramids Plateau....

    41.
    In July of 1977, Claimants commenced construction at the Pyramids Oasis site. Work was begun on roads, sewage systems, water reservoir facilities, artificial lakes and a golf course.
    42.
    In late 1977, the Pyramids Oasis project began to encounter political opposition in Egypt, and it became the subject of a parliamentary inquiry. Opponents of the project claimed that it posed a threat to undiscovered antiquities.
    43.
    In a decree issued on May 27, 1978, the Ministry of Culture declared "the land surrounding the Pyramids" to be public property. This decree was issued upon the recommendation of the Egyptian Antiquities Authority, which confirmed the presence of antiquities in the western part of the Al Giza Pyramids region.
    44.
    On May 28, 1978, the General Organization for Investments, by Resolution 1/51-78, "decided to drop its former issued agreement...concerning the Pyramids Plateau...."
    45.
    On June 19, 1978, Presidential Decree No. 267 cancelled Presidential Decree No. 475, which had designated "the lands on the Pyramids plateau in Giza for touristic exploitation." On July 11, 1978, the Prime Minister of Egypt issued a decree declaring these same lands d'utilité publique.
    46.
    At the request of EGOTH, ETDC was put under judicial trusteeship by a judgment of the Giza Court for Urgent Matters rendered on June 19, 1978. The court appointed trustees who were put in charge of the management of the company's assets until a general meeting of the shareholders could take place.
    47.
    On December 7, 1978, SPP and SPP(ME) filed a request for arbitration with the Court of Arbitration of the ICC in Paris against Egypt and EGOTH under the arbitration clause in the December Agreement. Egypt objected to the jurisdiction of the ICC tribunal. In the acte de mission, Egypt and EGOTH stated:

    The FIRST and SECOND DEFENDANTS wish to make it clear that their submission of an ANSWER and COUNTER-CLAIM does not constitute in any way an acceptance of the initiation of this arbitration proceedings. Their refusal of the arbitration proceedings is to remain firm until the Arbitrators render their final decision on the matter of jurisdiction. In case the Arbitrators affirm their jurisdiction over the subject matter at issue, the COUNTER-CLAIM shall be comprised within the said jurisdiction.

    48.
    The ICC tribunal, in an award rendered on February 16, 1983, held inter alia :

    1. That the first Defendant, the Arab Republic of Egypt, pay to the First Claimant, Southern Pacific Properties (Middle East), Limited the sum of US$12,500,000 (twelve million five hundred thousand) together with interest thereof at the rate of 5% per annum from the date in which the request for arbitration was received by the Secretary of the ICC Court of Arbitration (i.e. 1st December 1978) until payment.

    2. That the claim by both Claimants against the second Defendant, the Egyptian General Company for Tourism and Hotels, be dismissed.

    3. That the counterclaim by the said second Defendant against the Claimants be dismissed.

    In dismissing the claim against EGOTH, the ICC tribunal added :

    Different considerations might well apply if the Government had not been a party to the December, 1974 Agreement,

    49.
    On March 28, 1983, Egypt appealed the ICC award to the Paris Court of Appeals.
    50.
    By a letter dated August 15, 1983, SPP (ME) notified the Minister of Tourism that in its view the ICC award "is binding between the parties and finally dispositive of our dispute," on the basis of Article 24 of the ICC Rules which provides that:

    By submitting the dispute to arbitration by the International Chamber of Commerce, the parties shall be deemed to have undertaken to carry out the resulting award without delay and to have waived their right to any form of appeal insofar as such waiver can validly be made.

    At the same time, SPP(ME) added in its letter of August 15, 1983, that:

    ...recognizing that your Government has taken the position that the ICC award was rendered without a jurisdictional basis, we hereby notify you that we accept and reserve the opportunity of availing ourselves of the uncontestable jurisdiction of the International Centre for the Settlement of Investment Disputes, under the auspices of the World Bank, which is open to us as a result of Law no. 43 of 1974, Article 8 of which provides that investment disputes may be settled by ICSID arbitration.

    SPP(ME) also affirmed that:

    ...This notification does not affect our reliance on the ICC Award, nor does it constitute a waiver of any rights to have the ICC Award immediately recognized and enforced by judicial procedure.

    51.
    On July 12, 1984, prior to the institution of the present proceedings, the Paris Court of Appeals annulled the ICC award on the ground that Egypt was not a party to the December Agreement and therefore was not bound by the ICC arbitration clause therein.
    52.
    On November 28, 1984, the Claimants referred the decision of the Paris Court of Appeals to the French Court of Cassation (Pourvoi N° 84/17-274), requesting that the decision be set aside. This request was rejected by the French Court of Cassation on January 6, 1987. '
    53.

    The Tribunal will now proceed to the consideration of Egypt's remaining objections to the Centre's jurisdiction with respect to the present dispute. According to Article 25, paragraph 1, of the Washington Convention, the jurisdiction of the Centre, and hence the competence of the Tribunal, extends to:

    ...any legal dispute arising directly out of an investment, between a Contracting State (or any constituent subdivision or agency of a Contracting State designated to the Centre by that State) and a national of another Contracting State, which the parties to the dispute consent in writing to submit to the Centre....

    The Claimants contend that Egypt's Law No. 43 Concerning the Investment of Arab and Foreign Funds and the Free Zones, enacted in 1974, and specifically Article 8 thereof, constitutes consent to the Centre's jurisdiction in the circumstances of the present case. Egypt, on the other hand, maintains that it has not consented to submit its dispute with the Claimants to the jurisdiction of the Centre, and that the reference to the Washington Convention in Article 8 of Law No. 43 was intended only to inform potential investors that ICSID arbitration is one of a variety of dispute settlement methods that investors may seek to negotiate with Egyptian authorities in appropriate circumstances.

    55.
    Before considering the text of Article 8 of Law No. 43 and its legal effect in relation to the Washington Convention, the Tribunal will deal with several preliminary matters that have been raised by the Parties. The first of these concerns the applicable law. Egypt maintains that the jurisdictional issues in this case are governed by Egyptian law, either as the law expressly chosen by the Parties (since the Claimants themselves have invoked Law No. 43 to establish Egypt's consent to the Centre's jurisdiction) or by virtue of Article 42(1) of the Convention, which provides in relevant part:

    The Tribunal shall decide a dispute in accordance with such rules of law as may be agreed by the parties. In the absence of such agreement, the Tribunal shall apply the law of the Contracting State party to the dispute (including its rules on the conflict of laws) and such rules of international law as may be applicable.

    On the basis of Article 2 of Law No. 43, which provides that any matter not dealt with specifically by that law "is governed by the laws and regulations in force," Egypt argues that the validity of any compromissory clause, as well as the arbitral competence deriving from it, are governed by sections 501 and 502 of the Egyptian Code of Civil Procedure which require a specific and independent compromis or special agreement defining the object of the dispute and naming the arbitrators.

    56.
    The Claimants, on the other hand, argue that Article 42 of the Washington Convention applies only to the substance of the dispute and that jurisdictional issues which involve interpretation of the Washington Convention must be resolved by the application of international law. According to the Claimants, the fact that Egypt's consent is alleged to have taken the form of a legislative provision does not transform the question of whether there has been consent into one of Egyptian law. The Claimants maintain that, from the perspective of international law, municipal law is treated like any other element of factual conduct. In support of this contention, they cite the statement of the Permanent Court of International Justice in the case concerning German Interests in Polish Upper Silesia that:

    From the standpoint of International Law and of the Court which is its organ, municipal laws are merely facts which express the will and constitute the activities of States, in the same manner as to legal decisions or administrative measures. (P.C.I.J., Series A, No. 7, p.19 (1926).)

    The Claimants also contend that, because the issue in this case is whether Article 8 of Law No. 43 constitutes "consent in writing" within the meaning of the Washington Convention -- an international treaty -- Article 8 must be considered in international terms rather than vice versa. On this basis, the Claimants argue that Article 8 should be construed using the rules of interpretation that have been codified in the Vienna Convention on the Law of Treaties.

    57.
    With respect to the law applicable to the jurisdictional issues in this case, the Tribunal finds that it cannot accept the contentions of either Party, at least in the particular form they have taken. Egypt is correct in its assertion that Law No. 43 is "applicable" to the jurisdictional issues in the present case in the sense that Article 8 of Law No. 43 is alleged by the Claimants to constitute Egypt's consent to the Centre's jurisdiction. However, this does not mean that Article 2 of Law No. 43 makes other provisions of Egyptian law -- particularly sections 501 and 502 of the Code of Civil Procedure -- applicable to the jurisdictional issues in the case. Article 2 of Law No. 43 provides for the application of other Egyptian laws in force to "(a)ny question or matter not provided for by a special provision in the present law..." If, as contended by the Claimants, Article 8 requires that the present dispute be resolved by the procedures set forth in the Washington Convention, Article 2 by its terms is not applicable and sections 501 and 502 of the Egyptian Code of Civil Procedure, which require inter alia a compromis or special agreement for domestic arbitrations (a requirement that does not appear in the Washington Convention), are irrelevant.
    58.
    As to Article 8 itself, the Claimant's contention that this provision of municipal law should be treated as a "fact" is not helpful. The Parties are in fundamental disagreement as to what Article 8 means and the Tribunal therefore must interpret Article 8 and determine its legal effect in relation to the Washington Convention.
    59.
    Nor can the Tribunal accept the Claimants’ contention that Article 8 should be interpreted by application of rules of treaty interpretation. Unlike a treaty, Law No. 43 is not the result of negotiations between two or more States, but rather the result of a unilateral act by a single State.
    62.
    A second preliminary matter involves the question of whether jurisdictional instruments must be interpreted restrictively. It has been repeatedly emphasized on behalf of Egypt in these proceedings that an international tribunal cannot exercise jurisdiction over a sovereign State without its consent. This of course is an uncontroverted principle of general international law. Such consent is expressly required by Article 25 of the Washington Convention and is described as the "cornerstone of the jurisdiction of the Centre" in the Report of the Executive Directors that accompanied the Convention when it was submitted to the governments of member States of the International Bank for Reconstruction and Development. The Preamble of the Convention makes clear that mere ratification of or accession to the Convention is not sufficient to establish consent to the Centre's jurisdiction. Article 25(4) provides that a State's notification to the Centre of the kinds of disputes that it would consider submitting to the Centre's jurisdiction shall not constitute the consent required to confer such jurisdiction. Thus, the consent of the parties to the jurisdiction of the Centre is an indispensable prerequisite to the competence of any ICSID tribunal.
    64.
    A final preliminary matter involves the effect on the present case of the French court judgments which annulled the ICC award of February 16, 1983. According to Egypt, these judgments establish that (1) Article 8 of Law No. 43 is not mandatory but merely offers various possible means of dispute settlement to the Parties; (2) there is no hierarchic ranking among the three means of dispute settlement mentioned in the first paragraph of Article 8; and (3) no presumption of a waiver of sovereign immunity from jurisdiction can be inferred from Law No. 43, a fact that proves Article 8 cannot constitute consent to arbitration since such consent would ipso facto entail a waiver of immunity.
    65.
    While the Tribunal is the judge of its own competence under Article 41(1) of the Washington Convention, it should nevertheless give due consideration to the pronouncements of other courts and tribunals which involve the same parties and subject matter as the present dispute. The Tribunal finds, however, that it cannot infer from the French court decisions the particular consequences alleged by Egypt.
    66.

    The issue before the Paris Court of Appeals was not whether Article 8. of Law No. 43 is mandatory or hierarchic, but whether the ICC arbitration clause in the December Agreement between EGOTH and SPP was binding upon Egypt. The possibility of ICSID arbitration had not even been raised at the time. While the court made a passing reference to the Washington Convention, it did not purport to interpret the provision in Article 8 of Law No, 43 concerning the jurisdiction of the Centre. Indeed, what the court said was:

    Que l'article 8 de cette loi prévoit en effet C.I.R.D.I., centre de règlement créé par la convention de Washington de 1965; que l'article 8, alinéa 2, aménage en outre une procédure facultative d'arbitrage interne dans laquelle la désignation du tiers arbitre est confiée aux instances judiciaires égyptiennes...

    This statement hardly suggests that Article 8 is not mandatory or that the sequence of dispute resolution procedures set forth therein is not hierarchic.

    67.

    As to the court's observations concerning sovereign immunity, these were made in the course of a discussion of the Heads of Agreement, which did not contain an arbitration clause, and with specific reference to the December Agreement between SPP and EGOTH, to which Egypt was not a party. The court said:

    Qu'il ne peut donc s'en déduire une quelconque présomption de la renonciation de l'Etat égyptien à son immunité de juridiction et de son acceptation de se soumettre à la clause compromissoire insérée dans le contrat passé entre la société S.P.P. et EGOTH...

    Thus, no conclusion as to the effect of Law No. 43 on the Centre's jurisdiction can be reasonably inferred from the the judgment of the Paris Court of Appeals.

    68.
    Nor can any such inference be drawn from the decision of the Court of Cassation. That decision rejected the Claimants' appeal from the Court of Appeals’ judgment without discussion of Article 8 or any of the points which Egypt would have the Tribunal infer from the lower court judgment.
    119.
    The Claimants have invoked as subsidiary and alternative grounds upon which to found the jurisdiction of the Centre in this case (1) certain treaties entered into between Egypt and the United Kingdom containing most favored nation clauses; (2) an allegation that the Heads of Agreement of September 13, 1974, constitutes an additional expression of consent to the Centre's jurisdiction; and (3) the contention that acceptance of Egypt's refusal to arbitrate would constitute an international denial of justice. The Tribunal’s conclusion that Article 8 of Law No. 43 is sufficient to establish the jurisdiction of the Centre with respect to the Parties' dispute makes it unnecessary for the Tribunal to pronounce upon these other alleged jurisdictional grounds.
    120.
    Having found that Article 8 of Law No. 43 in the circumstances of the present case constitutes "consent in writing" to the Centre’s jurisdiction within the meaning of Article 25(1) of the Washington Convention, the Tribunal must now address the Claimant’s submission that the Tribunal :

    ...adopt and incorporate as its own the pertinent findings of fact made by the ICC Arbitral Tribunal concerning SPP(ME)'s performance of its obligations under its agreements, the dismissal of EGOTH's counterclaim therein, and the acts bringing about termination of the investment project.

    The Tribunal finds this submission to be unacceptable, both in principle and under the Centre’s Arbitration Rules. In effect, the submission asks the Tribunal to abdicate its fact finding function and adopt as its own the findings of a tribunal that has been held to have acted in excess of the powers conferred upon it by the arbitration clause. Such an approach is hardly consistent with the basic function of evidence in the judicial process, which is to enable the tribunal to determine the truth concerning the conflicting claims of the parties before it.

    121.
    Moreover, Rule 47 of the ICSID Arbitration Rules requires that ICSID tribunals make their own findings of fact :

    (1) The award shall be in writing and shall contain :

    (g) a statement of the facts as found by the Tribunal... (Emphasis added.)

    Accordingly, the Tribunal will proceed to make its own determination of the facts necessary to render an award in the present case.

    For these reasons

    THE TRIBUNAL DECIDES

    (A) To reject the objection to its jurisdiction raised by the Respondent alleging that Article 8 of Law No. 43 does not suffice to establish Egypt’s consent to the Centre’s jurisdiction;

    (B) To reject the submission of the Claimants that the Tribunal adopt and incorporate as its own the pertinent findings- of fact made by the ICC tribunal; and

    (C) Consequently, and in accordance with Rules 25 and 41, to instruct the President to fix the time limits for further proceedings on the merits in consultation with the Parties.

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