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TABLE OF ABBREVIATIONS
Abbreviation Description
¶/¶¶ Paragraph/paragraphs
2006 Agreement Letter of Intent between the National State and Argentine Airlines S.A. and Interinvest S.A. signed on 21 June 2006
2006 Addendum Addendum to Letter of Intent between the National State and Argentine Airlines S.A. and Interinvest S.A. signed on 21 June 2006
AASE Aerolineas Argentinas Sociedad del Estado
ACCP Argentina’s Code of Criminal Procedure
AFIP The Argentine tax authority, Administration Federal de Ingresos Piiblicos
APTA Association of Aeronautics Technical Personnel
Air Comet  
Arbitration Rules ICSID Rules of Procedure for Arbitration Proceedings [2006]
ARSA Aerolineas Argentinas S.A.
Assignment Agreement Credit Assignment Agreement among Teinver, Transportes de Cercanias and Autobuses Urbanos as the assignors and Air Comet as the assignee, dated 18 January 2010
AUSA Austral-Cielos del Sur S.A.
C-[#] Claimants’ Exhibits and Legal Authorities
Cl. Mem. Claimants’ Memorial on the Merits, 29 September 2010
Cl. Reply Claimants’ Reply on the Merits, 10 August 2013
Cl. CC.Rej. Claimants’ Rejoinder on the Counterclaim, 13 January 2014
Cl. PHB Claimants’ Post-Hearing Brief, 30 June 2014
Cl. Rej. on Juris. Claimants’ Rejoinder on Jurisdiction, 27 April 2011
Cl. Skeleton Claimants’ Pre-Hearing Skeleton Submission, 17 February 2014
Decision on Jurisdiction Tribunal’s Decision on Jurisdiction, 21 December, 2012
FET Fair and equitable treatment standard
Funding Agreement Funding Agreement made between Claimants and Burford Capital Limited, effective as of 14 April 2010
ICSID Convention Convention on the Settlement of Investment Disputes between States and Nationals of other States, Washington D.C., 1965
ICSID or the Centre International Centre for Settlement of Investment Disputes
Interinvest Interinvest S.A.
JMM Juzgado Mercantil de Madrid
July 2008 Agreement Agreement between the Government of Argentina and Intervest of 17 July 2008
LA AR Respondent’s Legal Authorities
May 2008 Agreement Framework Agreement between the Government of Argentina and the shareholders of the Air Comet/Interinvest Group and the Airlines of 15 May 2008
MFN clause Most-Favored Nation clause
PROCELAC Office of the Prosecutor for Economic Crimes and Money Laundering, La Procuraduria de Criminalidad Economica y Lavado de Activo
RFA Claimants’ Request for Arbitration, filed on 11 December 2008
RA-[#] Respondent(s)’s Exhibit
Resp. CM Respondent’s Counter-Memorial and Counterclaim, 6 May 2013
Resp. PHB Respondent’s Post-Hearing Brief, 30 June 2014
Resp. Rej. Respondent’s Rejoinder on the Merits and Reply on the Counterclaim, 4 November 2013
Resp. Mem. on Juris. Respondent’s Memorial on Jurisdiction, 6 December 2010
Retainer Agreement Retainer Agreement between King & Spalding and Claimants of June 2011
Representation Agreement Representation Agreement between Claimants and Burford of 24 April 2010
SEPI Sociedad Estatal de Participaciones Industriales
Side Agreement List of non-contractual arrangements attached to the July 2008 Agreement, Listado de Acuerdos Extracontractuales
SPA Share Purchase Agreement between SEPI and Air Comet S.A.
TER Economically reasonable airfares (tarifa economica retributiva)
the Airlines Aerolineas Argentinas S.A. ("ARSA") and Austral-Cielos del Sur S.A. ("AUSA") and their subsidiaries
Treaty Agreement between the Argentine Republic and the Kingdom of Spain on the Reciprocal Promotion and Protection of Investments of 3 October 1991
TTN Tribunal de Tasaciones de la Nation
US-Argentina BIT Agreement between the United States of America and the Argentine Republic Concerning the Reciprocal Encouragement and Protection of Investment of 1991, which entered into force on October 20, 1994
Vienna Convention Vienna Convention on the Law of Treaties, 1969
W.S. Witness Statement

I. INTRODUCTION AND PARTIES

1.
This case concerns a dispute submitted to the International Centre for Settlement of Investment Disputes ("ICSID" or the "Centre") on the basis of the Agreement between the Argentine Republic and the Kingdom of Spain on the Promotion and Protection of Investments dated October 3, 1991 (the "Treaty"), which entered into force on September 28, 1992, and the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, which entered into force on October 14, 1966 (the "ICSID Convention"). The dispute relates to Claimants’ allegations that Respondent has violated the Treaty, international law, and Argentine law, as well as commitments and representations made by Respondent to Claimants, by unlawfully re-nationalizing and taking other measures regarding Claimants’ investments in two Argentine airlines: Aerolineas Argentinas S.A. ("ARSA") and Austral-Cielos del Sur S.A. ("AUSA") (collectively, the "Airlines" or the "Argentine Airlines") and their subsidiaries. Respondent also makes a Counterclaim.
2.
Claimants are Teinver S.A. ("Teinver"), Transportes de Cercanias S.A. ("Transportes de Cercanias") and Autobuses Urbanos del Sur S.A. ("Autobuses Urbanos") (collectively, "Claimants").
3.
Claimants are companies incorporated under the laws of the Kingdom of Spain.
4.
Respondent is the Argentine Republic and is hereinafter also referred to as "Argentina" or the "Respondent."
5.
Claimants and Respondent are hereinafter collectively referred to as the "Parties." The Parties’ respective representatives and their addresses are listed above on page (i).

II. PROCEDURAL HISTORY

A. Registration of the Request for Arbitration

6.
On December 12, 2008, ICSID received a request for arbitration dated December 11, 2008 from Claimants against Respondent (the "Request" or "RFA").
7.
The RFA invoked Respondent’s advance consent to ICSID arbitration contained in the Treaty, and by way of a most-favored-nation ("MFN") clause in the Treaty, the dispute settlement provisions in the 1991 Treaty between the United States of America and the Argentine Republic Concerning the Reciprocal Encouragement and Protection of Investment (the "US-Argentina BIT"), which entered into force on October 20, 1994.
8.
On January 30, 2009, the Acting 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 Acting Secretary-General invited the Parties to proceed to constitute an Arbitral Tribunal as soon as possible in accordance with Rule 7(d) of the Centre’s Rules of Procedure for the Institution of Conciliation and Arbitration Proceedings.

B. Constitution of the Tribunal

9.
By letter dated April 3, 2009, Claimants informed the Centre that they had selected the method envisaged in Article 37(2)(b) of the ICSID Convention for the constitution of the Tribunal (i.e. the Tribunal would consist of three arbitrators, one arbitrator appointed by each party and the third, who would be the president of the Tribunal, to be appointed by agreement of the Parties).
10.
On April 27, 2009, Claimants informed the Centre of their appointment of Mr. Henri C. Alvarez Q.C., a Canadian national, as an arbitrator. Mr. Alvarez accepted his appointment on May 4, 2009.
11.
On May 12, 2009, Claimants requested ICSID to appoint the arbitrators not yet appointed and to designate an arbitrator to be the President of the Tribunal in this case, pursuant to Article 38 of the ICSID Convention and Rule 4(1 of the ICSID Rules of Procedure for Arbitration Proceedings ("Arbitration Rules").
12.
On June 1, 2009, Respondent appointed Dr. Kamal Hossain, a Bangladeshi national, as an arbitrator. Dr. Hossain accepted his appointment on June 6, 2009.
13.
By letters of June 15, 2009, August 3, 2009, September 29, 2009, and November 2, 2009, the Centre consulted with the Parties in connection with the appointment of the arbitrator not yet appointed, as envisaged in Article 38 of the ICSID Convention and ICSID Arbitration Rule 4.
14.
By letter of December 14, 2009, the Centre informed the Parties that, pursuant to Article 38 of the ICSID Convention and ICSID Arbitration Rule 4, ICSID was to propose to the Chairman of the ICSID Administrative Council the appointment of Judge Thomas Buergenthal, a U.S. national, as the President of the Tribunal.
15.
On December 21, 2009, both Parties informed ICSID that they did not have any observations on the proposed appointment of Judge Thomas Buergenthal as President of the Tribunal.
16.
On December 28, 2009, the Chairman of the ICSID Administrative Council appointed Judge Thomas Buergenthal as President of the Tribunal. Judge Buergenthal accepted his appointment on December 30, 2009.
17.
The Tribunal is composed of Thomas Buergenthal (U.S.), President, appointed by the Chairman of the Administrative Council in accordance with Article 38 of the ICSID Convention; Henri C. Alvarez (Canadian), appointed by Claimants; and Kamal Hossain (Bangladeshi), appointed by Respondent.
18.
On January 4, 2010, the Secretary-General, in accordance with ICSID Arbitration Rule 6(1, 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. Mr. Sergio Puig, ICSID Legal Counsel, was designated to serve as Secretary of the Tribunal.

C. Written and Oral Phases of the Proceeding

19.
The Tribunal held a first session with the Parties on March 22, 2010 at the World Bank Conference Center in Paris. The Parties confirmed that the Tribunal had been properly constituted and reached agreements on several procedural matters, inter alia, that the applicable Arbitration Rules would be those in effect from April 10, 2006, and that the procedural languages would be English and Spanish. It was also agreed that the place of proceeding would be Washington, D.C. The agreement of the Parties was embodied in Minutes of the First Session of the Arbitral Tribunal signed by the President and the Secretary of the Tribunal and circulated to the Parties.
20.
On September 17, 2010, Claimants requested a one-week extension for the filing of their Memorial on the Merits. On September 20, 2010, Respondent informed that it had no objection to the extension requested by Claimants. As a result, Claimants filed a Memorial on the Merits, with accompanying documentation, on September 29, 2010. The accompanying documentation included the witness statements of Messrs. Gerardo Diaz Ferran, Gonzalo Pascual Arias, Carlos Bastos; and the Expert Report of Pablo Spiller and Manuel Abdala from LECG.
21.
By letter of November 10, 2010, the Parties were informed that Mrs. Mercedes Cordido-Freytes de Kurowski, ICSID Counsel, would replace Mr. Sergio Puig as Secretary of the Tribunal.
22.
Respondent filed a Memorial on Jurisdiction on December 6, 2010, following the Tribunal’s agreement to Respondent’s extension request of November 24, 2010. The accompanying documentation included the witness statements of Messrs. Juan de Dios Cincunegui and Rafael Llorens; and the Expert Reports of Dr. Ismael Mata, and Professor Agusto Nissen.
23.
Claimants’ Counter-Memorial on Jurisdiction was subsequently filed on January 24, 2011, which included the Witness Statement of Vicente Munoz Perez.
24.
On February 4, 2011, the Tribunal issued Procedural Order No. 1, ruling that Respondent’s jurisdictional objections would be dealt with as a preliminary question, and that the proceeding on the merits was accordingly suspended. The Tribunal also decided that a second round of pleadings on jurisdiction would be filed.
25.
On February 9, 2011, Respondent filed a request for production of documents. This was followed by Claimants’ observations of February 14, 2011, Respondent’s response of February 21, 2011, and Claimants’ reply of February 28, 2011. On March 1, 2011, the Tribunal issued a decision on production of documents.
26.
On March 10, 2011, Respondent filed its Reply on Jurisdiction with the second witness statements of Messrs. Juan de Dios Cincunegui and Rafael Llorens; and the second Expert Report of Dr. Ismael Mata and the Expert Report of Mr. Virgilio Ivan Hernandez Urraburu.
27.
On April 12, 2011, Claimants filed an application for Provisional Measures (the "Application for Provisional Measures" or "the Application"), including a request for an emergency temporary order, prohibiting the Argentine Republic from adopting certain tax measures until the Tribunal decided on the Request.
28.
On April 13, 2011, the Tribunal invited Respondent’s comments on Claimants’ request for an emergency temporary order by April 20, 2011. The Tribunal also invited: (i) Respondent to file observations on Claimants’ Request by April 27, 2011; (ii) Claimants to file observations in reply by May 4, 2011; and (iii) Respondent to file observations by way of rejoinder by May 11, 2011. The deadlines for the filings concerning the Request were later extended on April 27, 2011.
29.
On April 20, 2011, Respondent submitted its Response to Claimants’ Request for Urgent Provisional Measures, requesting that it should be dismissed for the reasons stated in that submission.
30.
On April 27, 2011, Claimants filed their Rejoinder on Jurisdiction, along with the second Witness Statement of Vicente Munoz Perez and the Expert Legal Opinion of Judge Stephen M. Schwebel.
31.
On April 29, 2011, the Tribunal issued Procedural Order No. 2, concerning Claimants’ request for provisional measures. In its Procedural Order No. 2, "[t]he Tribunal, after careful consideration, unanimously decided as follows:

a) The Claimants’ request for an emergency temporary order is denied. Having heard from both parties, the Tribunal is not persuaded, given in particular the Respondent’s assertions in paragraphs 6 through 8 of its submission of April 20, 2011, that there is an urgency that would warrant such an order.

b) The Tribunal notes that a hearing is scheduled to be held on May 27-31, 2011, during which, the parties will have the opportunity to fully present their arguments on this matter. The Tribunal will decide on the Claimants Application shortly thereafter.

c) The parties are invited to refrain from aggravating or extending the dispute; and

d) Either party may bring to the Tribunal's attention, any new, relevant, facts that may emerge fundamentally changing the current circumstances.

32.
Also on April 29, 2011, Claimants renewed their request for an emergency, temporary order. In their request, Claimants submitted that their Argentine subsidiary and holder of the title to the Airlines’ shares, Interinvest S.A. ("Interinvest"), had been served on April 28, 2011 with a notice for immediate payment of approximately USD 663,944.25 (ARS 2,706,236.90) due to the Argentine tax authority ("AFIP"). Claimants further indicated that such notice constituted the very subject matter of Claimants’ application for an emergency temporary order and for provisional measures in this arbitration.
33.
On April 29, 2011, Respondent filed its Response to Claimants’ Request for Provisional Measures. This was followed by a response on May 4, 2011 to Claimants’ letter of April 29, 2011. On May 6, 2011, Claimants filed Claimants’ Reply in Support of their Request for Provisional Measures. Respondent subsequently filed on May 13, 2011, its Rejoinder on Claimants’ Request for Provisional Measures.
34.
On May 13, 2011, the Tribunal decided on Claimants’ request for an Emergency Temporary Order of April 29, 2011, as follows:

After careful consideration, and in light of the proximity of the hearing to be held on May 27-31, 2011, the Tribunal has determined that at this time there is no imminent, or no sufficiently imminent, threat between now and the hearing. Accordingly, the Tribunal has denied Claimants’ request for an Emergency Temporary Order of April 29, 2011.

The Tribunal would like to once again invite the parties to (i) refrain from aggravating or extending the dispute, and (ii) bring to the Tribunal’s attention, any new, relevant, facts that may emerge fundamentally changing the current circumstances.

35.
A hearing on Jurisdiction and Provisional Measures was held at the seat of the Centre in Washington, D.C. from May 27-31, 2011. In attendance were the three members of the Tribunal, Judge Thomas Buergenthal, Mr. Henri C. Alvarez and Dr. Kamal Hossain. In the absence of Ms. Cordido-Freytes de Kurowski, Mr. Gonzalo Flores, and Ms. A. Catherine Kettlewell, Counsel, ICSID, were in attendance for the ICSID Secretariat.
36.
Present at the hearing were:

For Claimants:
Mr. R. Doak Bishop King & Spalding
Mr. Roberto Aguirre Luzi King & Spalding
Mr. Craig S. Miles King & Spalding
Ms. Margrete Stevens King & Spalding
Mr. Guillermo Aguilar-Alvarez King & Spalding
Ms. Silvia Marchili King & Spalding
Mr. Esteban Leccese King & Spalding
Ms. Lorraine de Germiny King & Spalding
Prof. Joost Pauwely King & Spalding
Ms. Valeria Dentoni King & Spalding
Mr. Esteban Sanchez King & Spalding
Ms. Ashley Grubor King & Spalding
Mr. Diego Fargosi Estudio Fargosi & Asociados
Mr. Hector Alonso Estudio Fargosi & Asociados
Mr. Ivan Losada Claimants’ Representative
For Respondent:
Dra. Angelina M.E. Abbona Procuradora del Tesoro de la Nacion
Mr. Horacio Pedro Diez Subprocurador del Tesoro de la Nacion
Mr. Eduardo Barcesat Procuracion del Tesoro de la Nacion
Mr. Gabriel Bottini Procuracion del Tesoro de la Nacion
Ms. Adriana Busto Procuracion del Tesoro de la Nacion
Ms. Gisela Makowski Procuracion del Tesoro de la Nacion
Mr. Tomas Braceras Procuracion del Tesoro de la Nacion
Ms. Alejandra Mackluf Procuracion del Tesoro de la Nacion
Mr. Javier Pargament Procuracion del Tesoro de la Nacion
Ms. Mariana Lozza Procuracion del Tesoro de la Nacion
Mr. Ignacio Torterola Procuracion del Tesoro de la Nacion
Mr. Nicolas Duhalde Procuracion del Tesoro de la Nacion
Mr. Julian Negro Procuracion del Tesoro de la Nacion
Ms. Magdalena Gasparini Procuracion del Tesoro de la Nacion
Mr. Pablo Ceriani Aerolineas Argentinas

37.
The following persons were examined:

On behalf of Claimants:

Mr. Gerardo Diaz Ferran Claimants’ Witness

Mr. Gonzalo Pascual Arias Claimants’ Witness

Judge Stephen M. Schwebel Claimants’ Expert

On behalf of Respondent:

Mr. Juan de Dios Cincunegui Respondent’s Witness

Mr. Rafael Llorens Respondent’s Witness

Mr. Vicente Munoz Perez Respondent’s Expert

38.
On June 8, 2011, the Tribunal issued Procedural Order No. 3, posing questions to the Parties after the Hearing. The Parties filed their answers subsequently, Claimants on June 16.2011, and Respondent on June 23, 2011. On June 30, 2011 and July 5, 2011, Claimants filed further submissions to complement their answers.
39.
On August 26, 2011, Ms. Annalise Nelson was appointed Assistant to the President of the Tribunal with the agreement of the Parties.
40.
By letter of August 30, 2011, Claimants informed the Tribunal of the conclusion of Aerolineas Argentinas’ reorganization proceedings in Argentina. Claimants further brought to the Tribunal’s attention two recent ICSID decisions, which they deemed relevant to the present arbitration: the Decision on Jurisdiction and Admissibility issued on August 4, 2011 in the Abaclat and others v. Argentina (case formerly known as Giovanna a Beccara and others) (ICSID Case No. ARB/07/5); and an Order Taking Note of the Discontinuance of the Proceeding issued on July 11, 2011 in the ATA Construction, Industrial and Trading Company v. Jordan (ICSID Case No. ARB/08/2).
41.
On October 26, 2011, Respondent filed a communication in response to Claimants’ letter of August 30, 2011, including an expert report of Mr. Juan Antonio Cabezudo Alvarez.
42.
On November 8, 2011, Claimants provided their comments to Respondent’s submission of October 26, 2011, requesting the Tribunal to disregard Argentina’s new arguments and expert reports, and to affirm jurisdiction over Claimants’ claims.
43.
By letter of December 15, 2011, the Tribunal informed the Parties:

The Tribunal, having reviewed Respondent’s letter of October 26, 2011 and Claimants’ letter of November 8, 2011, has taken note of the arguments made therein as they relate to the pleadings on Jurisdiction, with the exception of the expert report of the Spanish attorney, Mr. Juan Antonio Cabezudo Alvarez, attached to Respondent’s letter, and Respondent’s arguments based thereon. The Tribunal has made this determination without prejudice to the excluded material being resubmitted to the Tribunal by Respondent at a later stage of these proceedings, if any.

44.
By letter December 15, 2011, Respondent requested leave from the Tribunal to file the dissenting opinions issued by Prof. Brigitte Stern, Mr. J. Christopher Thomas, Q.C. and Prof. Georges Abi-Saab in Impregilo v. Argentina, Hochtief v. Argentina, and Abaclat v. Argentina, respectively. Respondent argued that Claimants had not filed such opinions when they filed the Impregilo award, and the Decisions on Jurisdiction in Hochtief and in Abaclat. On December 20, 2011, considering that Claimants had informed the Tribunal that they had no comments on Respondent’s request of December 15, 2011, the Tribunal granted Respondent’s request. Respondent subsequently filed the dissenting opinions on December 22, 2011.
45.
On February 17, 2012, Respondent requested leave from the Tribunal to introduce into the record the recently adopted decision of the United States Court of Appeals for the District of Columbia Circuit in the case of Republic of Argentina v. BG Group pic of January 17, 2012, and in the ICS v. Argentine Republic case1. The request was granted on February 22, 2012, and the Tribunal provided Claimants with the opportunity to make a submission in response of the same length as Respondent’s request. Claimants filed their response on February 28, 2012.
46.
On March 22, 2012, the Tribunal advised the Parties that the Tribunal did not require, nor would it accept, further submissions unless specifically requested by the Tribunal.
47.
On March 26, 2012, Respondent filed a request for the admissibility of new evidence relating to criminal proceedings pending in Spain. According to Respondent, such proceedings directly involved Messrs. Gonzalo Pascual Arias, Gerardo Diaz Ferran - who had stated at the hearing on jurisdiction that they were the owners of 100% of Claimants, Ivan Losada, who was present at the hearing and addressed the Tribunal in his capacity as Claimants’ representative, and Vicente Munoz Perez, a witness produced by Claimants who testified at the hearing.
48.
Also on March 26, 2012, Claimants filed a Second Application for Provisional Measures. In their Second Application, Claimants requested that the Tribunal issue the following measures:

Order Argentina to stop any procedures aimed at approving any formal or material changes to the financial statements of the Argentine Airlines for any year prior to 2008;

Order Argentina to stop any procedures aimed at approving the 2008 Amended Financial Statements;

Make available to Claimants’ representatives in Interinvest, in their capacity as shareholders of the Argentine Airlines, all information available and subject to discussion and vote in the shareholders meeting to be scheduled in this respect; and

Authorize Claimants’ representatives in Interinvest to attend, participate and/or exercise their voting rights in the shareholders meeting that will presumably be scheduled in connection with the alleged "adjustments" to the Argentine Airlines financial statements, and in all cases free of any coercion, or physical or legal threat.

49.
In their Application of March 26, 2012, Claimants further requested that the Tribunal or its President immediately issue an emergency, temporary order to preserve the status quo (i.e., the situation that exists at this date) with respect to all the financial statements, until such time as it rules on this Request for provisional measures.
50.
By letter of March 27, 2012, the Tribunal invited Respondent to comment on Claimants’ Application of March 26, 2012, for an emergency temporary order, on or before April 4, 2012. Additionally, with reference to Claimants’ Second Application for Provisional Measures, and in accordance with ICSID Arbitration Rule 39(4), the Tribunal fixed the time limits for the Parties to present their observations.
51.
On March 28, 2012, the Tribunal invited Claimants to comment on Respondent’s submission of March 26, 2012, by April 4, 2012.
52.
On March 28, 2012, Respondent requested an extension of the deadlines fixed by the Tribunal on March 27, 2012. On March 29, 2012, the Tribunal invited Claimant to comment on Respondent’s request; submitted to the Parties’ consideration a schedule for the further submissions on Claimants’ Second Application for Provisional Measures, and invited the Parties to consider the possibility of providing the translations of their respective subsequent submissions on the next day of their filing. Each Party filed its observations on the same date. Respondent submitted a further letter on the matter on March 30, 2012.
53.
In accordance with the revised procedural schedule fixed by the Tribunal on April 1, 2012, the Parties filed their respective observations and responses concerning Claimants’ Second Application for Provisional Measures (Respondent’s observations of April 11, 2012, Claimants’ response of April 23, 2012, and Respondent’s rejoinder of May 4, 2012).
54.
On April 4, 2012, Claimants filed observations on Respondent’s request of March 26, 2012 for the admissibility of new evidence relating to criminal proceedings pending in Spain
55.
On May 24, 2012, Respondent filed a submission concerning Claimants’ Second Application for Provisional Measures of March 26, 2012, and the Fourth Objection to Jurisdiction submitted by Respondent in this proceeding. Respondent also requested leave to introduce new evidence relating to the court proceedings in Spain.
56.
On June 1, 2012, Claimants filed a response to Respondent’s request of May 24, 2012.
57.
By letter of June 5, 2012, Claimants informed the Tribunal that on June 1, 2012, Respondent, through Aerolineas Argentinas S.A., Austral-Cielos del Sur S.A., and their subsidiaries, allegedly approved the Airlines’ 2008 Amended Financial Statements. Claimants noted that the pending approval of those Statements had been the subject of Claimants’ Second Request for Provisional Measures. On June 7, 2012, Respondent filed its observations on Claimants’ letter of June 5, 2012.
58.
On September 28, 2012, Respondent submitted a letter, requesting leave from the Tribunal to introduce additional evidence into the record: (i) the award rendered on August 22, 2012 in Daimler Financial Services AG v. Argentine Republic (ICSID Case No. ARB/05/¶; (ii) a decision rendered by a Swedish court on November 9, 2011 concerning the award rendered on October 1, 2007 in the case captioned Roslnvest Co ¶¶ Ltd. v. The Russian Federation, SCC Case No. V079/2005; and (iii) a submission in the Thai-Lao Lignite (Thailand) Co., Ltd & Hongsa Lignite (Lao PDR) Co., Ltd v. Government of the Lao People’s Democratic Republic before the U. S. Court of Appeals for the Second Circuit.
59.
On October 3, 2012, the Tribunal issued Procedural Order No. 4, concerning Claimants’ First Application for Provisional Measures of April 12, 2011. In its Procedural Order No. 4, the Tribunal decided as follows:

a) The Tribunal rejects Claimants’ Application for Provisional Measures in its entirety.

b) The Tribunal reminds the Parties that they are obligated to refrain from aggravating the dispute.

c) The Tribunal reserves its decision on the costs of the procedure relating to the Application for Provisional Measures to a later stage of this arbitration.

60.
Also on October 3, 2012, the Tribunal issued Procedural Order No. 5, concerning Claimants’ Second Application for Provisional Measures of March 26, 2012. In its Procedural Order No. 5, the Tribunal decided as follows:

a) Having been rendered moot by the approval of the 2008 Financial Statements on June 1, 2012, the Claimants’ Second Application for Provisional Measures, including its request for an emergency temporary order, is denied.

b) The Tribunal notes that it had explicitly instructed both Parties on April 1.2012 to take no actions or steps to aggravate the dispute or render Claimants’ Second Application moot during the Tribunal’s consideration of it. Therefore, the Tribunal reserves any further consideration of the approval of the 2008 Financial Statements for another appropriate stage of these proceedings.

c) Notwithstanding that the 2008 Financial Statements may be available by request through the Inspeccion General de Justicia, the Tribunal orders Respondent to produce the 2008 Financial Statements of Aerolineas Argentinas S. A., Austral Lineas Aereas - Cielos del Sur S. A., Jet Paq S.A., and Aerohandling S.A., production should be made promptly, and in any event, by October 17, 2012. This Order should not be understood to prejudge any issue on the merits.

d) The Tribunal reminds both Parties of the requirement that they preserve all relevant documents and information in their possession, custody or control, including all documents and information relating to the Financial Statements of the Argentine Airlines for the period of 2002 to date.

e) The Tribunal reserves its decision on the costs of the procedure relating to the Claimants’ Second Application for Provisional Measures to a later stage of this arbitration.

61.
On October 9, 2012, following the Tribunal’s invitation of October 2, 2012, Claimants’ responded to Respondent’s letter of September 28, 2012.
62.
On December 6, 2012, Respondent filed a further request for the admissibility of new evidence, press reports from Spanish newspapers, referring to arrest warrants issued by a Spanish court against Claimants’ representatives and/or witnesses, which in in Respondent’s view could be material for the determination by the Tribunal of Respondent’s Fourth Objection on Jurisdiction concerning the legality of Claimants’ Investment.
63.
On December 7, 2012, Claimants filed a letter requesting that Respondent’s submission be dismissed because in Claimants’ view it was untimely, violated Tribunal orders and was irrelevant to the jurisdictional phase of this case as it was based on facts alleged to have occurred after Argentina’s expropriation of Claimants’ investment, and was unrelated to the Airlines, Argentina or Argentine law.
64.
By letter of December 17, 2012, the Tribunal reminded the Parties that by letter of March 22, 2012, they were advised that the Tribunal did not require, nor would accept, further submissions unless specifically requested by the Tribunal. As a result, the Tribunal did not admit Respondent’s submission of December 6, 2012 at that stage, noting that if Respondent wished to raise those matters as part of its counter-memorial on the merits, it might do so in that filing as might be relevant.
65.
On December 21, 2012, the Arbitral Tribunal issued its Decision on Jurisdiction. Attached to the Decision was a separate opinion by arbitrator Dr. Kamal Hossain. The Tribunal rejected the objections to jurisdiction and joined the determination of Respondent’s responsibility for the acts of non-state entities to the merits of the case. Copies of the Decision on Jurisdiction and of the separate opinion are attached to this Award, and form an integral part of it.
66.
On February 8, 2013, Respondent filed a request for the production of documents. This was followed by Claimants’ observations of February 19, 2013 and Respondent’s response of May 12, 2013.
67.
On March 8, 2013, Claimants filed a request for the production of documents. Subsequently, Respondent filed its observations on March 12, 2013, and supplemented them on March 26, 2013.
68.
On March 28, 2013, Claimants filed a response to Respondent’s observations of March 26, 2013, and ratified their document production request of March 8, 2013.
69.
On April 4, 2013, Respondent revised its request for production of documents of February 8, 2013, and on April 8, 2013, Claimants filed observations on Respondent’s revised request.
70.
On April 17, 2013, the Tribunal decided on the Parties’ respective document production requests.
71.
On April 24, 2013, Respondent requested the Tribunal revisit its decision of April 17, 2013, with regard to the time frame given to Respondent to produce documents. Claimants filed observations on April 29, 2013.
72.
On May 3, 2013, the Tribunal decided on Respondent’s request of April 24, 2013, and revised the procedural calendar in relation to the Parties’ subsequent submissions.
73.
On May 6, 2013, Respondent filed its Counter-Memorial on the Merits, including a Counterclaim (the "Counterclaim"). Together with its pleading, Respondent submitted seven (7) expert reports of Cigarran Abogados, Angela Marina Donato, Barry Eichengreen, Saul N. Keifman, Benedict Kingsbury, Ismael Mata, and KPMG; and eight (8) witness statements of Rafael Llorens, Carlos Albarracin, Norberto Adrian Caneto, Carlos Sergio Cipolla, Rafael Martinez, Mario Massolo, Leandro Serino, and Daniel Eduardo Martin.
74.
On May 24, 2013, after considering Respondent’s observations of May 13, 2013, and Claimants’ response of May 17, 2013, the Tribunal decided on Claimants’ request for production of documents.
75.
On May 31, 2013, in connection with the disclosure of certain documents, Respondent requested that the Tribunal issue a confidentiality order, or, in the alternative, ensure that Claimants, their experts and any other person who would have access to such information in the course of these proceedings, sign a confidentiality agreement. This was followed by Claimants’ observations of June 3, 2013.
76.
On June 5, 2013, the Tribunal issued Procedural Order No. 6 concerning the confidentiality of evidence.
77.
On June 15, 2013, Claimants called the Tribunal’s attention to Respondent’s failure to produce certain documents and requested an order to produce certain documents.
78.
On June 24, 2013, the Tribunal decided on Claimants’ further request for production of documents.
79.
On July 17, 2013, Claimants requested an extension of the deadline for the filing of their Reply on the Merits and Counter-Memorial on the Counterclaim. Respondent stated it had no objection, provided that it was afforded a similar extension. As a result, on July 19, 2013, the Tribunal granted the requested extension and adjusted the procedural calendar accordingly.
80.
On August 10, 2013, Claimants filed a Reply on the Merits, including observations on Respondent’s Counterclaim. The accompanying documentation included three witness statements of Nathalie Fernandez, Vicente Munoz Perez and Ignacio Pascual de Riva and four expert reports of Alberto B. Bianchi, Manuel A. Abdala and Pablo T. Spiller of Compass Lexecon, Aurora Martinez Florez and Andres Ricover.
81.
On September 13, 2013, Respondent filed a request for the production of documents. This was followed by Claimants’ observations of September 23, 2013, and Respondent’s response of October 1, 2013.
82.
On October 10, 2013, the Tribunal decided on Respondent’s request for production of documents.
83.
Following exchanges between the parties with regard to the procedural calendar, on October 21, 2013, the Tribunal granted Respondent’s request for an extension, allowing an extension similar to that granted to Claimants for the filing of their Reply on the Merits.
84.
On November 4, 2013, Respondent filed a Rejoinder on the Merits and a Reply on the Counterclaim, with supporting documents, including five (5) witness statements of Rafael Llorens, Norberto Adrian Caneto, Daniel Eduardo Martin, Rafael Martinez and Silva Tamayo, and six (6) expert reports of Oliver Wyman, KPMG, Saul N. Keifman, Ismael Mata, Cigarran Abogados, and Angela Marina Donato.
85.
On December 17, 2013, Claimants filed a request for the production of documents. Subsequently, Respondent filed observations on January 3, 2014.
86.
On January 13, 2014, Claimants filed a Rejoinder on the Counterclaim with accompanying documentation, which included three (3) expert reports of Alberto B. Bianchi, Manuel A. Abdala and Pablo T. Spiller of Compass Lexecon, and Andres Ricover.
87.
On January 15.2014, Claimants filed a request for the production of documents concerning information missing from expert reports filed with Respondent’s Rejoinder on the Merits and reply on the Counterclaim. This was followed by Respondent’s observations of January 23, 2014.
88.
On January 30, 2014, at the request of Dr. Hossain, and following consultation with the other members of the Tribunal, the Secretary of the Tribunal asked the Parties whether they would have any objection to the attendance of one of Dr. Hossain’s associates, Mr. Moin Ghani, at the forthcoming hearing as his assistant. On January 31, 2014, both Parties gave their consent to Mr. Ghani’s attendance.
89.
On February 4, 2014, Claimants renewed their request of March 8, 2013 for production of certain documents. Claimants submitted that in light of newly-discovered information, it was then apparent that Respondent had withheld documents responsive to the requests at issue.
90.
On February 6, 17, and 22, 2014, the Tribunal decided on the Parties’ pending requests concerning production of documents.
91.
On February 17, 2014, each Party filed a Pre-Hearing Skeleton Submission.
92.
A hearing on the Merits and Counterclaim took place at the World Bank Headquarters in Washington, D.C. from March 4-13, 2014. In addition to the Members of the Tribunal; Judge Thomas Buergenthal, Mr. Henri C. Alvarez, Q.C. and Dr. Kamal Hossain; the Assistants to the President, Ms. Annalise Nelson and to Dr. Hossain, Mr. Moin Ghani; and the Secretary of the Tribunal, Ms. Mercedes Cordido-Freytes de Kurowski, present at the hearing were:
93.
The following persons were examined:
94.
On June 23, 2014, Respondent requested leave from the Tribunal to file new evidence, three orders issued by Spanish Courts in April-May, 2014, relating to criminal proceedings in Spain. On June 24, 2014, the Tribunal invited Claimants to comment by July 2, 2014.
95.
By letter of June 26, 2014, Claimants informed the Tribunal of the Parties’ agreement to request an extension of the deadline to submit their submissions on costs from June 30, 2014, until July 7, 2014. By letter of June 30, 2014, Respondent confirmed this agreement. On the same date, the Tribunal granted the requested extension.
96.
The Parties filed simultaneous Post-Hearing Briefs on June 30, 2014.
97.
On July 2, 2014, Claimants filed observations on Respondent’s request of June 23, 2014, concerning admissibility of new evidence.
98.
On July 7, 2014, the Tribunal decided on the admissibility of new evidence and admitted certain documents relating to criminal proceedings in Spain without taking any position on their ultimate relevance to the outcome of the arbitration.
99.
Also, on July 7, 2014, the Parties filed their statements of costs.
100.
On December 15, 2014, Respondent filed a further request for the Tribunal to admit new evidence concerning further developments related to the Spanish court proceedings. In its request, Respondent referred to (i) an exchange of communications between the Trustees in in Insolvency of Air Comet and the funder Burford Capital Ltd.; (ii) the classification of the insolvency proceedings of the Marsans Group’s companies as culpable; and (iii) developments in the criminal proceedings pending in Spain for fraudulent concealment of assets.
101.
On January 7, 2015, Claimants submitted their response to Respondent’s communication of December 15, 2014.
102.
On January 15, 2015, the Tribunal decided on the admissibility of new evidence and authorized Respondent to submit the documents mentioned in its December 15, 2014 letter.
103.

On March 3, 2015, Respondent requested leave from the Tribunal to submit into the record a copy of the criminal complaint filed by the Treasury Attorney-General of the Argentine Republic with the Argentine Public Prosecutor’s office (Procuracion General de la Nacion) on February 23, 2015. This complaint named as respondents, among others, Burford Capital, Teinver, Air Comet, Autobuses Urbanos del Sur and Transporte de Cercanias. On March 17, 2015, Claimants submitted their observations on Respondent’s request of March 15, 2015.

104.
On March 18, 2015, noting that Claimants did not oppose Respondent’s submission of the additional document in question (subject to the comments set out in their letter of March 17, 2015, and for reasons of expediency), the Tribunal authorized Respondent to submit a copy of the criminal complaint.
105.
On May 4, 2015, Respondent filed the Criminal Complaint as Exhibit RA 686.
106.
On June 4, 2015, Respondent filed a letter relating to certain information set out in the Report from the Administrators of Air Comet’s insolvency concerning the status of this arbitration proceeding. On June 24, 2015, at the invitation of the Tribunal, Claimants submitted their response to Respondent’s letter of June 4, 2015. On June 29, 2015, the Tribunal informed the Parties that it had taken note of the Parties’ respective positions, and would not require any further submissions from the Parties on that matter.
107.
On July 29, 2015, Claimants submitted a Third Application for Provisional Measures in respect of criminal complaints made by entities of Respondent against Claimants and their subsidiary, Air Comet, S.A. ("Air Comet"), the legal representatives of these companies and their Spanish court-appointed receivers, Claimants’ counsel in these proceedings, as well as Claimants’ third-party funder; and a criminal investigation commenced by the Office of the Public Prosecutor of Argentina on the basis of these complaints.
108.
On July 30, 2015, the Tribunal acknowledged receipt of Claimants’ Application and invited Respondent to comment on it within eight business days from its receipt of the electronic version of the Spanish translation of this document. The Spanish translation was received from Claimants on July 31, 2015.
109.
In accordance with the Tribunal’s directions, the deadline for the filing of Respondent’s response to Claimants’ Application was scheduled for August 12, 2015.
110.
On August 12, 2015, Respondent filed its Response to Claimants’ Application. In its prayer for relief, Respondent requested that the Tribunal dismiss Claimants’ Application and requested leave to submit a decision of the Argentine Federal Court of Appeals and a report filed in the criminal proceedings in Spain against one of Claimants’ ultimate shareholders.
111.
On September 8, 2015, the Tribunal invited Claimants to (i) file observations on Respondent’s request of August 12, 2015, concerning the admissibility of new evidence; and (ii) if they so wished, to submit a reply to Respondent’s Response, both by September 15, 2015.
112.
On September 15, 2015, Claimants submitted a letter informing the Tribunal of the filing by the Argentine Attorney General of the Treasury (the "Treasury Attorney General") and the head of the Office of the Prosecutor for Economic Crimes and Money Laundering (the "PROCELAC") of a criminal complaint against Claimants, Burford Capital, Ltd. ("Burford"), Air Comet, King & Spalding LLP ("King & Spalding"), and Fargosi & Asociados (the "PROCELAC Complaint"), together with a number of supporting documents.
113.
In light of the above, Claimants requested that the Tribunal: (i) grant a 10-day extension of the deadline for the filing of their reply to Respondent’s Response and Respondent’s request for admissibility of new evidence; (ii) order that Respondent immediately produce a copy of the PROCELAC Complaint (the "Production Request", incorporated into Claimants’ Application); and (iii) schedule a hearing on Claimants’ Application.
114.
On September 16, 2015, the Tribunal informed the Parties that the deadline for the filing of Claimants’ response to Respondent’s letter of August 12, 2015 was suspended until the Tribunal issued directions on Claimants’ Production Request. The Tribunal also requested that Respondent advise the Tribunal by September 18, 2015 whether and how quickly it could provide a copy of the PROCELAC Complaint to Claimants.
115.
Also on September 16, 2015, Respondent informed the Tribunal that the Tribunal’s request had been transmitted to the PROCELAC, given that the Argentine Treasury Attorney General’s Office was not in possession of a copy of the PROCELAC Complaint.
116.
On September 23, 2015, the Tribunal invited (i) Respondent to inform the Tribunal by September 25, 2015, whether it had received any response from the PROCELAC on the Tribunal’s request for a copy of the PROCELAC Complaint; and (ii) Claimants to provide a response by September 29, 2015. The Tribunal also confirmed its availability to hold a hearing in Washington, D.C. on November 3 and/or 4, 2015. It further invited the Parties to confirm their availability by September 28, 2015, should the Tribunal determine that a hearing on Claimants’ Application was required.
117.
On September 24, 2015, Respondent submitted PROCELAC’s response on the Tribunal’s request for a copy of the PROCELAC Complaint dated September 18, 2015. In its response, the head of PROCELAC indicated that because the PROCELAC Complaint had been filed with the court, pursuant to Article 204 of Argentina’s Code of Criminal Procedure (the "ACCP"), no copy of such complaint could be provided.
118.
On that same date, both Parties confirmed their availability to hold a hearing on Claimants’ Application during November 3 and/or 4, 2015, in Washington, D.C.
119.
On September 29, 2015, Claimants submitted their response to Respondent’s communication of September 24, 2015.
120.
On October 2, 2015, the Tribunal acknowledged receipt of the Parties’ respective submissions of September 24 and 29, 2015, and took note that the Parties had confirmed their availability on the proposed hearing dates. It further requested: (i) that Respondent produce a copy of the PROCELAC Complaint; (ii) Claimants to confirm whether their letter of September 29, 2015 constituted their Reply in Claimants’ Application or whether they still wished to submit a full Reply; and (iii) Claimants to respond to Respondent’s request for the admission of the two new documents set out in paragraph 81(c) of Respondent’s Response.
121.
On October 6, 2015, Claimants submitted their reply to the Tribunal’s letter of October 2, 2015, noting that they wished to submit a full Reply and, for reasons of expediency, did not oppose the incorporation into the arbitral record of the two new documents set out in paragraph 81(c) of Respondent’s Response of August 12, 2015.
122.
On that same date, Respondent submitted its reply to the Tribunal’s letter of October 2, 2015, reiterating its inability to produce the PROCELAC Complaint and providing details permitting identification of the relevant domestic court to which the PROCELAC Complaint had been submitted.
123.
By letter of October 8, 2015, the Tribunal acknowledged receipt of the Parties’ respective letters of October 6, 2015. It further acknowledged receipt on October 6, 2015, of the Spanish translation of Claimants’ letter of September 29, 2015, and on October 7, 2015, of the English translation of Respondent’s letter of October 6, 2015.
124.
In the same letter, the Tribunal, among other things: (i) set deadlines for a second round of written submissions, (ii) scheduled a hearing on Claimants’ Application for November 3, 2015, at the seat of the International Centre for Settlement of Investment Disputes in Washington, D.C. (the "PM Hearing"), and (iii) provided the Hearing schedule and related logistics information.
125.
In accordance with the procedural schedule, on October 14, 2015, Claimants filed their Reply to Claimants’ Application. On October 15, 2015, Claimants filed a corrected version of their Reply to Claimants’ Application ("Claimants’ PM Reply"), together with a complete version of the PROCELAC Complaint and related file materials, which they had been able to obtain from the court.
126.
On October 16, 2015, both Parties submitted their respective lists of participants for the PM Hearing.
127.
On October 22, 2015, Claimants submitted a letter to the Tribunal attaching three public deeds executed by Claimants’ court-appointed receivers in Spain, as a new exhibit, Exhibit C-1200.
128.
On October 23, 2015, the President of the Tribunal invited Respondent to submit any observations that it might have on Claimants’ letter of October 22, 2015, and Exhibit C-1200 attached to it, within two business days from its receipt of the Spanish translation of said letter. Respondent would then have one business day to provide the English translation of its observations.
129.
On that same date, the President of the Tribunal supplemented the Tribunal’s directions of October 8, 2015, by providing further logistical instructions to the Parties in preparation for the PM Hearing.
130.
Also on October 23, 2015, Respondent filed its Rejoinder to Claimants’ Application ("Respondent’s PM Rejoinder") and Claimants provided a Spanish translation of their letter of October 22, 2015.
131.
On October 26, 2015, Claimants provided an English translation of the relevant parts of their Exhibit C-1200, filed with their letter of October 22, 2015.
132.
On October 27, 2015, Respondent provided an English translation of its PM Rejoinder. On that same date, Respondent submitted to the Tribunal a letter with its observations on Claimants’ letter of October 22, 2015 and Exhibit C-1200.
133.
On October 28, 2015, Respondent provided an English translation of its letter of October 27, 2015.
134.
On November 3, 2015, the Tribunal held the PM Hearing on Claimants’ Application in Washington, D.C. In addition to the Members of the Tribunal and the Secretary of the Tribunal, present at the hearing were:

For Claimants:
In person
Mr. Guillermo Aguilar Alvarez King & Spalding
Mr. Roberto Aguirre Luzi King & Spalding
Mr. R. Doak Bishop King & Spalding
Ms. Ashley Grubor King & Spalding
Ms. Silvia Marchili King & Spalding
Mr. Craig S. Miles King & Spalding
Ms. Margrete Stevens King & Spalding
Mr. Diego Fargosi Estudio Fargosi & Asociados
Mr. Luis Arqued Alsina Teinver
Mr. Christopher Bogart Burford Capital
Mr. Mariano Hernandez Air Comet
Mr. Alvaro Martinez Air Comet
Via video conference from Madrid, Spain
Mr. Esteban Leccese King & Spalding
Mr. Jesus Verdes Lezana Transportes de Cercanias
Mr. Miguel Vilella Barrachina Transportes de Cercanias
Mr. Edorta Etxarandio Teinver
Mr. Jose Carlos Gonzalez Vazquez Autobuses Urbanos del Sur
Mr. Ramon Soler Amaro Autobuses Urbanos del Sur
For Respondent:
Dr. Angelina Abbona Procuradora del Tesoro
Mr. Horacio Diez Procuracion del Tesoro de la Nacion
Mr. Carlos Mihanovich Procuracion del Tesoro de la Nacion
Ms. Mariana Lozza Procuracion del Tesoro de la Nacion
Mr. Sebastian Green Procuracion del Tesoro de la Nacion
Ms. Soledad Romero Procuracion del Tesoro de la Nacion
Ms. Magdalena Gasparini Procuracion del Tesoro de la Nacion
Mr. Nicolas Duhalde Procuracion del Tesoro de la Nacion
Mr. Manuel Dominguez Deluchi Procuracion del Tesoro de la Nacion
Mr. Eduardo Barcesat Asesor
Mr. Gabriel Bottini Asesor

Mr. Nicolas Sykes Aerolineas Argentinas S.A.

135.
By letter of November 18, 2015, the President of the Tribunal informed the Parties that, due to personal commitments, his Assistant, Ms. Annalise Nelson, would be replaced by Ms. Jill Goldenziel. Ms. Goldenziel’s curriculum vitae was attached, and the Parties were invited to inform the Tribunal by November 20, 2015, if they had any objection.
136.
On November 20, 2015, both Parties expressed having no objections to the appointment of Ms. Goldenziel as Assistant to the President. As a result, by letter of November 23, 2015, the Parties were informed of Ms. Goldenziel’s appointment.
137.
By letter of December 1, 2015, Claimants informed the Tribunal that they had recently learned that ARSA’s CEO had called for a shareholders’ meeting on December 9, 2015, in order to consider, among other issues, the transfer of the shares to the National State. In their letter, Claimants noted that, as already explained, the expropriation proceeding in Argentina had not ended, because Interinvest had not been notified of the alleged rejection of its pending appeal before the Supreme Court. Accordingly, in Claimants’ view, Interinvest continued to hold and should continue to hold title to the shares of both ARSA and AUSA.
138.
On December 2, 2015, the Tribunal invited Respondent to comment on Claimants’ communication of December 1, 2015 by December 7, 2015.
139.
On December 4, 2015, Respondent responded to Claimants’ communication of December 1, 2015.
140.
On December 9, 2015, the Parties were informed that the Tribunal was in receipt of both Claimants’ communication of December 1, 2015, and Respondent’s response of December 4, 2015, and had taken note of their contents.
141.
On January 4, 2016, the Secretary of the Tribunal transmitted to the Parties and to the Tribunal Members a copy of a letter from the Secretary-General of ICSID dated December 23, 2015, acknowledging receipt of a letter from the Argentine Republic of December 22, 2015, informing of the appointment of Dr. Carlos Francisco Balbin as Argentina’s Treasury Attorney General, following the resignation of Dra. Angelina Maria Esther Abbona. In its communication, Argentina additionally informed that Dr. Horacio Pedro Diez and Dr. Javier Pargament Mariasch had also submitted their resignations from their positions as Deputy Treasury Attorney General.
142.
On February 25, 2016, the Secretary of the Tribunal, on instructions of the President, informed the Parties that the Tribunal’s Decision on Claimants’ Third Request for Provisional Measures was ready in its English version, which had been sent for its translation into Spanish. It was further indicated that, unless the Parties requested otherwise, the Tribunal would issue its Decision in both languages simultaneously.
143.
On February 26, 2016, Claimants requested that the English version of the Tribunal’s Decision on Claimants’ Third Request for Provisional Measures be sent first, without waiting for the Spanish version. On the same date, Respondent requested that the Decision be issued simultaneously in both languages.
144.
By letter of March 8, 2016, Claimants brought to the Tribunal’s attention a new development, the signing by the Argentina’s President of Decree 294/2016 of February 2, 2016, derogating the cap on domestic airfares (that is, the maximum airfare), requesting the Tribunal to take this new development into account when rendering the award and in allocating the costs of this arbitration.
145.
On March 9, 2016, the Tribunal invited Respondent to comment on Claimants’ letter of March 8, 2016 by March 16, 2016.
146.
Also, on March 9, 2016, Respondent requested an extension of the deadline to comment on Claimants’ letter of March 8, 2016, until March 21, 2016, in light of a number of submissions that it needed to make in other cases. On the same date, the Tribunal granted the extension.
147.
On March 21, 2016, Respondent submitted its response to Claimants’ correspondence of March 8, 2016.
148.
On March 29, 2016, the Tribunal informed the Parties that it was in receipt of the Parties’ recent correspondence concerning the derogation of the cap on domestic airfares in Argentina, and had taken note of their contents.
149.
On April 8, 2016, the Tribunal issued its Decision of Claimants’ Third Application for Provisional Measures ("Decision on Provisional Measures of April 8, 2016"). In its Decision, the Tribunal held the following:

The Tribunal:

a) orders that Respondent refrain from publicizing the Complaints or the criminal investigation and any relation they may have to this arbitration, whether by communications to the press or otherwise;

b) defers its decision in respect of Claimants’ Application for Provisional Measures as it relates to the suspension of the criminal proceedings in regard of counsel for Claimants and Claimants’ court-appointed receivers, with liberty to Claimants to bring this Application back before the Tribunal in this respect should it become necessary;

c) reminds the Parties that they are obligated to refrain from aggravating the dispute;

d) denies the remaining aspects of Claimants’ Application for Provisional Measures; and

e) reserves its decision on the costs of the procedure relating to Claimants’ Application for Provisional Measures to the final award.

150.
Attached to the Tribunal’s Decision of April 8, 2016, was a Dissenting Opinion by Dr. Kamal Hossain. In his Dissent, Dr. Hossain expressed his disagreement around setting out of contentious factual positions, which he considered were not necessary for the order made and conveyed the erroneous impression that those issues might be treated as settled. His objections also related to some issues, which he categorized as preliminary, fundamental and unresolved, which in his view had to be dealt with in the award on the merits upon consideration of the evidence on record.
151.
By letter of September 29, 2016, the Secretary of the Tribunal, on instructions of the President of the Tribunal, informed the Parties on the status of the Award:

An advanced draft of the Tribunal’s Award has been under discussion. The Tribunal Members have deliberated in person and by other means, and have exchanged several thorough notes expressing their particular, and sometimes opposed views on several key issues. The Tribunal is aware that the Parties have been waiting for a long period of time for the Tribunal’s Award. The Tribunal is also fully aware how important this case is for the Parties. It therefore regrets the delay very much. As the Parties know, however, this is a complicated case that requires the Tribunal to consider a vast factual background, extensive submissions, massive volume of documents and very complex legal issues in dispute.

The Tribunal wishes to assure the Parties that it is doing its very best to finalize the Award as soon as possible.

152.
By letter of October 4, 2016, Claimants requested that the proceeding be closed pursuant to ICSID Arbitration Rule 38(1.
153.
On October 17, 2016, Respondent filed a letter requesting leave from the Tribunal to file a document relating to the Public Prosecutor’s classification of the insolvency proceedings of Transporte de Cercanias, S.A. as "culpable".
154.
On October 19, 2016, the Tribunal invited Claimants to comment on Respondent’s request of October 17, 2016, for the Tribunal to decide on admissibility of new evidence.
155.
On October 24, 2016, Claimants filed observations of Respondent’s request of October 17, 2016.
156.
On October 26, 2016, Respondent requested leave from the Tribunal to respond to Claimants’ letter of October 24, 2016. The Tribunal granted this request on October 27, 2016, and Respondent submitted its response on November 1, 2016.
157.
On November 4, 2016, Claimants filed a response to Respondent’s letter of November 1, 2016.
158.
By letter of November 11, 2016, the Tribunal provided directions to the Parties and fixed a procedural schedule for the submission by Respondent of the document in which the Public Prosecutor classifies the nature of the insolvency proceedings of Transportes de Cercanias, S.A., and for subsequent comments by Claimants. The Tribunal also acknowledged receipt of Claimants’ letter of October 4, 2016, requesting that the proceeding be closed pursuant to ICSID Arbitration Rule 38(1, a request that Claimants had ratified in their letters of October 24, 2016 and November 4, 2016. The Tribunal indicated that it would communicate separately the closure of the proceeding once it had determined Respondent’s request of October 17, 2016 for the admissibility of new evidence.
159.
By letter of November 16, 2016, Claimants informed the Tribunal that they had no further comments on Respondent’s request and repeated their request for the Tribunal to declare the proceeding closed. This was followed by Respondent’s letter of November 17, 2016, informing the Tribunal that it would transmit an English translation of the document from the Public Prosecutor’s Office in the next few days. The translation was filed on November 21, 2016.
160.
On November 29, 2016, the Tribunal acknowledged receipt of a document dated February 29, 2016, issued by the Provincial Prosecutor’s Office of Madrid concerning the insolvency proceedings of Transportes de Cercanias, S.A. Having considered the document in question, and the Parties’ positions on the matter, the Tribunal, informed the Parties that after due deliberation, it had decided to admit the document into the record on the basis that its relevance and weight would be assessed by the Tribunal together with all of the evidence submitted.
161.
In its letter of November 29, 2016, the Tribunal also invited the Parties to advise whether they wished to submit updated statements of cost, and if so, to submit them simultaneously by December 16, 2016.
162.
On December 6, 2016, both Parties expressed their wish to submit updated statements of costs. On December 16, 2016, as scheduled, each Party submitted an updated statement of costs.
163.
On January 25, 2017, the Tribunal declared the proceeding closed in accordance with ICSID Arbitration Rule 38(1. ICSID Arbitration Rule 46 provides that "[t]he award (including any individual or dissenting opinion) shall be drawn up and signed within 120 days after closure of the proceeding. The Tribunal may, however, extend this period by a further 60 days if it would otherwise be unable to draw up the award." On May 8, 2017, in accordance with Arbitration Rule 46, the Tribunal extended the period to draw up and sign the Award for a further 60 days (i.e., until July 24, 2017).

D. General overview of the Claim and Counterclaim

1. Claimants’ Claim and Prayer for Relief

164.
This claim is brought by Teinver, Transportes de Cercanias and Autobuses Urbanos, all companies incorporated in the Kingdom of Spain, against the Respondent, under the Treaty. Claimants are members of a group of companies known collectively as the "Marsans Group".
165.
As discussed in detail below,2 in late 2001, Claimants Transportes de Cercanias and Autobuses Urbanos, together with two other Marsans Group entities, acquired control of ARSA and AUSA, which they purchased indirectly through their subsidiary Air Comet, a Spanish company that in turn owned Interinvest, the Argentine holding company for the Airlines. In 2006, Claimant Teinver acquired the 30% shareholding in Air Comet previously held by the other two Marsans Group entities. The Claimants collectively owned 100% of the shares of Air Comet at the time of filing of their claim.
166.
Claimants’ claim in this arbitration can be divided into two components. First, Claimants assert that Respondent unlawfully expropriated their investment in the Airlines at the end of 2008 through executive action and legislation that confiscated their shares in the Airlines. It is not contested by either Party that Respondent paid a symbolic ARS 1 in compensation for Claimants’ shares in the Airlines. Claimants assert that Respondent’s expropriation of the Airlines constitutes a violation of Article V of the Treaty.
167.
Second, Claimants assert that before the formal expropriation of the Airlines took place in 2008, Respondent engaged in a series of acts that together constituted a creeping expropriation under Article V of the Treaty. Claimants allege, in particular, that Respondent maintained airfares at artificially low levels and prevented the Airlines from charging sufficient rates for airfares, resulting in a financial squeeze that damaged both Claimants’ investment and the value of the Airlines. This was done, according to Claimants, in order to force a distressed sale of the Airlines. Claimants point to other alleged acts that they claim were part of a process of "re-Argentinization" of the Airlines—acts designed to pressure Claimants into relinquishing their control of the Airlines. These acts include the following:

The maintenance in office, despite a serious conflict of interest, of an Undersecretary of Air Transportation who had formerly served as the head of a powerful air transportation union in Argentina

Acts taken by the "government-supported" air transportation unions

Respondent’s failure to comply with a number of agreements it entered with Claimants’ subsidiaries between 2006 and 2008, including a memorandum of agreement for the sale of Claimants’ shares in the Airlines to the Govermnent of Argentina

168.

Claimants allege that these and other acts constituted both creeping expropriation in violation of Article V of the Treaty and constituted violations of the fair and equitable treatment standard under Article IV(1 of the Treaty. Claimants also allege that Respondent failed to protect their investment in Argentina, in violation of Article III(1) of the Treaty; that Respondent took unjustified and/or discriminatory measures against Claimants, in violation of Article III(1) of the Treaty; and that Respondent’s conduct amounts to a breach of the umbrella clause, invoked through the MFN clause contained in Article IV(2) of the Treaty.3

169.
In the prayer for relief in their June 30, 2014 Post-Hearing Brief, Claimants request the following:

A declaration that Argentina has violated the BIT;

A declaration that Argentina’s actions and omissions at issue and those of its instrumentalities for which it is internationally responsible are unlawful, arbitrary, discriminatory, unfair and inequitable, constitute an expropriation or measures tantamount to expropriation without appropriate and timely compensation, and that the GOA [Govermnent of Argentina] failed to protect Claimants’ investment and failed to fulfill obligations assumed with respect to the treatment of Claimants’ investments;

A declaration that the necessity defense does not apply;

An award to Claimants of restitution or the monetary equivalent of all damages caused to its investments, including historical and consequential damages;

Pre-and-post award compound interest until the effective date of payment; and

An award to Claimants for all costs of these proceedings, including attorneys’ fees.

170.
In this same prayer for relief, Claimants request compensation based on the unlawful formal expropriation of their investment, as well as on the Treaty breaches that occurred prior to formal expropriation. Claimants request a total amount of USD 1.59 billion for both Airlines combined, calculated with interest through July 31, 2013.4
171.
Respondent’s final prayer for relief contains, with respect to Claimants’ claim, a request for the Tribunal:

(a) to declare that King & Spalding lacks the necessary legal capacity to represent Claimants in this arbitration, which would result in the annulment of all actions taken, as well as to declare the forfeiture of Claimants’ right to file an action;

(b) to reject all of the claims put forward by Claimants;

(d) to order Claimants to pay for all costs and expenses arising from this arbitration proceeding.

2. Respondent’s Counterclaim and Prayer for Relief

172.
On May 6, 2013, Respondent submitted, along with its Counter-Memorial on Claimants’ claim, a Counterclaim against Claimants. This Counterclaim is based on the damage Respondent alleges it has suffered due to Claimants’ administration of the Airlines between 2001 and 2008, and the state of such companies as a consequence of such administration. Respondent asserts that the Airlines were in a "state of almost total destruction and paralysation, after the stripping of assets by the Marsans Group, which made the State comptrollership necessary to make the operations of the flag carrier viable."5
173.
In the final prayer for relief in its Post-Hearing Brief, Respondent requests this Tribunal:

(c) to sustain the Counterclaim filed by the Argentine Republic, to award damages—plus pre-and post-Award interest from the moment the Argentine Republic suffered the damage—as well as to grant the Argentine Republic such further relief as the Tribunal may deem appropriate;

174.
The Argentine Republic requests damages in the amount of USD 1,636,600.000, based on its claims regarding the Airlines’ non-operating liabilities at the time of expropriation, necessary investments made by Argentina to ensure operation of the Airlines and extraordinary losses following expropriation due to inoperability.6 These damages are calculated as of December 31, 2008.
175.
In their final prayer for relief, Claimants request from the Tribunal a declaration rejecting Argentina’s Counterclaim in its entirety.7

III. PRELIMINARY ISSUES RELATED TO THE IDENTITY OF CLAIMANTS

A. Claimants’ Ownership of the Airlines

176.
In 2001, the Airlines were owned by Sociedad Estatal de Participaciones Industriales ("SEPI"), a holding company for all companies fully or partially owned by the Spanish government. SEPI owned the Airlines through an Argentine intermediary company called Interinvest. SEPI owned 99.2% of Interinvest, and Interinvest in turn held 92.1% of ARSA’s shares and 90% of AUSA’s shares.8 On October 2, 2001, SEPI entered into a Share Purchase Agreement ("SPA") with the Spanish company, Air Comet, through which Air Comet acquired SEPI’s full 99.2% interest in Interinvest.9 It appears that Air Comet’s 99.2% interest in Interinvest, once acquired, did not change during the period between its acquisition of Interinvest in 2001 and the expropriation of Interinvest’s shares in the two Airlines by Argentina at the end of 2008.10
177.
When the SPA was signed in October 2001, Air Comet was directly owned by two of the three Claimants, Autobuses Urbanos (35%) and Transportes de Cercanias (35%), as well as by two other Spanish companies, Proturin S.A. (29.8%) and Segetur S.A. (0.2%).11 Three of these four companies signed the SPA as shareholders of Air Comet and expressly assumed the obligations of Air Comet under the SPA.12 Another Spanish company, Viajes Marsans S.A., was named in the SPA as guarantor of certain of Air Comet’s obligations under the SPA and signed the SPA in that capacity.13
178.
Claimant Teinver became a shareholder of Air Comet on July 20, 2006, when it purchased Proturin’s and Segetur’s entire shareholdings in Air Comet.14 At this point, Air Comet was owned entirely by the three Claimants, as follows: Autobuses Urbanos (35%), Transportes de Cercanias (35%), and Teinver (30%).
179.
From July 20, 2006 until the initiation of this arbitration, the three Claimants together owned 100% of Air Comet, although the distribution of shares during this period changed several times. On October 2, 2007, Teinver became Air Comet’s majority shareholder, with the following distribution of shares: Teinver (56%), Autobuses Urbanos (22%) and Transportes de Cercanias (22%). Teinver purchased additional shares from Transportes de Cercanias on December 31, 2007, with the following distribution of shares: Teinver (66.67%), Autobuses Urbanos (22%) and Transportes de Cercanias (11.33%). On February 8, 2008, Claimants’ respective participations shifted substantially: Teinver (96.77%), Autobuses Urbanos (2.13%) and Transportes de Cercanias (1.1%).15 This was the ownership structure in place at the time Claimants instituted this arbitration (December 11, 2008) and the Acting Secretary-General of the Centre registered the Request and notified the Parties thereof (January 30, 2009).
180.
On December 10, 2009, about one year after the initiation of this arbitration, Transportes de Cercanias and Autobuses Urbanos sold their remaining shareholdings in Air Comet to Teinver, leaving Teinver as the sole shareholder of Air Comet.
181.
Between 2001 and 2008, when Air Comet owned and controlled the Airlines, each of the three Claimants Teinver, Transportes de Cercanias and Autobuses Urbanos was "part of the Marsans Group"16, a Spanish consortium that was formerly owned by two Spanish nationals, the late Mr. Gonzalo Pascual Arias and Mr. Gerardo Diaz Ferran. Claimants do not spell out the ownership structure of the Marsans Group in great detail.17 Claimants depicted their share ownership in Air Comet and, indirectly, Interinvest in the following manner:
182.
From the various insolvency proceedings before the Spanish courts, the chain of ownership of what was loosely referred to as the Marsans Group appears to be as set out below:
183.
It appears that the assets of the Marsans Group, including the shares of Teinver, were sold by Messrs. Diaz Ferran and Pascual Arias to a Spanish company called Posibilitum Business S.L. in or about June 2010.19 Mr. Pascual Arias died on June 21, 2012. Mr. Diaz Ferran was provisionally detained on December 5, 2012 in connection with the Operacion Crucero criminal investigation conducted in Spain, where he currently remains in detention (described below).20

[Image]18

B. Claimants’ Insolvency and Current Status

184.
All three Claimants and Air Comet initiated voluntary insolvency proceedings after this arbitration was commenced in late 2008.
185.
In the case of Air Comet, the Spanish Commercial Court No. 8 issued an order declaring the initiation of Air Comet’s voluntary reorganization proceeding on April 20, 2010.21 The order specified that Air Comet’s powers of administration and disposition of its assets were henceforth subject to the authorization or agreement of the court-appointed reorganization administrators. On December 22, 2010, this same court ordered the suspension of Air Comet’s powers of administration and disposition.22
186.
As for Claimants, Teinver initiated voluntary reorganization on December 23, 2010,23 Transportes de Cercanias on February 16, 2011,24 and Autobuses Urbanos on January 28, 2011.25 Transportes de Cercanias’ reorganization proceedings entered the liquidation phase on April 23, 2013.26 Teinver likewise entered the liquidation phase of proceedings on April 26, 2013.27 At this point, the powers of both companies to administer and dispose of their assets were suspended.28 It appears that Autobuses Urbanos has not entered the liquidation phase at present, but its powers of administration and disposition of assets were suspended by court order on April 10, 2013.29
187.
The bankruptcy of Air Comet and of all three Claimants is related to certain factual and legal disputes in this case. First, Respondent has asserted that Claimants’ bankruptcy terminated King & Spalding’s power of attorney to represent Claimants in this case. The Parties’ arguments with respect to this issue are addressed below in Section IV of this Award. Second, the Parties disagree on the causes of Claimants’ and Air Comet’s bankruptcy. Claimants, through Mr. Diaz Ferran, assert that the bankruptcies were the direct result of Respondent’s unlawful acts and policies towards the Airlines.30 Respondent argues that the bankruptcies were due to reasons wholly unconnected to Respondent’s actions, including Claimants’ poor business management, lack of liquidity and failure to make payments.31 With respect to Air Comet’s bankruptcy, Respondent argues that the company was in a state of bankruptcy as early as April 2008, predating the expropriation of the Airlines later in 20 08.32 These arguments with respect to the causation of Claimants’ insolvencies are relevant to both Claimants’ claims and Respondent’s Counterclaim.

C. Evidentiary Issues Related to Claimants

188.
Respondent asserts that "the main witnesses produced by Claimants have openly admitted to having a financial interest in the outcome of the arbitration proceedings, which causes their testimonies to lose value."33 Respondent notes, in particular, that Claimants’ witness, Mr. Vicente Munoz Perez, would benefit from the right to receive a percentage from the total amount that Claimants might collect from any award in this proceeding.34 During the hearing, Mr. Munoz Perez conceded this interest, asserting that it constitutes remuneration for the work he has done.35
189.
Likewise, Respondent notes that Claimants’ witness, Mr. Ignacio Pascual de Riva, recognized during the hearing that Air Comet owed him one million Euros that he had previously lent to Air Comet from his personal contributions.36
190.
Finally, Respondent makes the following argument in its Post-Hearing Brief:

It should be noted that all of these individuals that have been found guilty in criminal and civil courts have testified throughout these proceedings, so that this Tribunal cannot hold the Argentine Republic liable based on the statements of those who are suspected and/or have been convicted of having caused their own bankruptcy, concealed information and who have been prosecuted for serious crimes, [emphasis added]37

191.
Respondent notes, in particular, that Messrs. Diaz Ferran and Antonio Mata Ramayo38 were convicted of crimes against the Treasury Department and sentenced to imprisonment, fines and disqualifications.39 Respondent also asserts that Claimants have attempted to conceal documents that would demonstrate the Marsans Group’s engagement in asset-stripping, particularly with respect to the "Operacion Crucero" criminal case.40
192.
It is the Tribunal’s view that neither the domestic criminal and/or civil liability of any witness in this proceeding, nor the existence of pending criminal or civil suits against any witness in this proceeding, may constitute a bar on the witness’s ability to testify in this arbitration proceeding. Likewise, the existence of legal liability or potential legal liability on the part of any witness in this case may not, on its own, serve as a basis on which to preclude the Argentine Republic’s liability under the Treaty. The Tribunal must weigh the relevance and the relative weight of all the evidence produced in this case. The Tribunal has reviewed and addressed each of Respondent’s assertions with respect to Spanish and Argentine domestic legal proceedings in Section IV.E, below.

IV. ISSUES OF ADMISSIBILITY AND STANDING NOT ADDRESSED IN THE DECISION ON JURISDICTION

A. King & Spalding’s Power of Attorney to appear in this dispute

1. The Parties’ Arguments

193.
Respondent asserts, as an affirmative defense to this case, that the power of attorney granted by Claimants to King & Spalding became invalid "after the commencement of the proceedings as a result of the insolvency of the Claimants".]41 According to Respondent, King & Spalding’s alleged lack of power of attorney "constitutes fraud on the court" and "cannot be made right by any subsequent measure,"42 and these proceedings before ICSID must therefore be closed.43
194.
In support of its arguments, Respondent points to Article 48(3) of Spain’s Bankruptcy Law, which provides that "any power of attorney existing at the time of the initiation of the insolvency proceedings shall be affected by the suspension or control of financial and property-related powers."44 As such, it argues that Claimants’ insolvency resulted in King & Spalding’s "loss of procedural capacity."45 Respondent also cites to Spanish Civil Code Article 1732(3) which, according to Respondent, "expressly sets forth that the declaration of bankruptcy of the principal is one of the grounds for termination of the power of attorney."46
195.
For its part, Respondent disagrees with the view by Claimants’ expert witness, Professor Aurora Martinez Florez, that the relationship between Claimants and King & Spalding is one of a service contract.47 Respondent argues that regardless of how the contract is classified, the fact remains that King & Spalding’s power of attorney to act before this Tribunal ceased to exist under Spanish law.48
196.
Moreover, Respondent argues that King & Spalding’s attempts to "ratify" its power of attorney fail.49 While Claimants have produced letters50 written by the trustees in insolvency for each of the Claimants that purport to ratify the power of attorney, Respondent asserts that these letters are flawed. It notes that the letters are not addressed directly to ICSID but rather to the King & Spalding attorneys representing Claimants. It also notes that the letters are undated,51 and that they do not appear to have been notarized.52 Finally, Respondent notes that the letters appear to have been executed unilaterally by the trustees, and do not appear to be the result of an order from a commercial court of Madrid.53 According to Respondent, the trustees lack the right to ratify the acts taken by King & Spalding and to authorize the firm to carry on its activities.54 Respondent asserts that "every lawyer is aware that, in order for a power of attorney to be renewed within the context of an insolvency proceeding, there must be a court order authorizing such renewal."55
197.
Finally, Respondent argues that the financing agreement signed between Claimants and third-party funder Burford on July 14, 2010 required Claimants to use the King & Spalding attorneys.56 Respondent asserts that it is because of this requirement that Claimants have not produced a new Power of Attorney between the receivers and King & Spalding as they should have.57
198.
Claimants submit that neither their individual declarations of insolvency nor the commencement of their liquidation phases has any effect on the Power of Attorney signed between King & Spalding and Claimants.58
199.
First, Claimants assert that under Spanish Bankruptcy Law Article 52, neither the liquidation phase nor the suspension of powers to administer or dispose of assets has any effect on the continuation of this arbitral proceeding.59 They note that upon the suspension of Claimants’ powers of administration and disposition of assets, the Reorganization Administrators replace the companies’ regular organs in the pending arbitration proceedings.60 In other words, upon suspension, the legal standing to sue in arbitration is held by the trustees, and Claimants are to be replaced in the arbitration by their respective boards of trustees.61 However, Claimants argue that the reorganization administrators "are not required to seek authorization from the courts hearing Claimants’ reorganization proceedings," noting that "[i]n accordance with Article 51(2) of the Spanish Bankruptcy Law, the court’s authorization would only be required ‘in order to withdraw, to accept a claim, in whole or in part, and to settle disputes.’"62
200.
With respect to the power of attorney granted to King & Spalding, Claimants’ expert witness, Professor Martinez Florez, asserts that after the suspension of powers, the board of trustees directly steps into the shoes of the debtor in the agreements and powers of attorney granted by the debtor before the declaration of bankruptcy.63 She states that the trustees may terminate agreements with the attorneys and hire other representatives it chooses, but that to the extent the trustees do not do this, "the attorneys-in-fact existing at the time of the suspension will continue performing the duties entrusted to them to avoid business interruption."64
201.
With respect to Article 48(3) of the Bankruptcy Law, which provides that "any power of attorney existing at the time of the initiation of the insolvency proceedings shall be affected by the suspension or control of financial and property-related powers," Professor Martinez Florez opines that the "affected" language does not mean that powers of attorney are terminated.65 She explains that Article 51(2) of the Bankruptcy Law provides that while upon suspension the trustees replace the debtor in ongoing proceedings, this replacement "does not prevent the debtor from retaining separate representation and defense through its own attorney and trial attorney."66 She takes the view, therefore, that if a debtor did in fact retain separate representation and defense, this indicates that ¶ the trustees had cancelled the power of attorney, since if they had not, the debtor’s power of attorney would combine with that of the trustee, and 2) that such power of attorney held by the debtor did not terminate upon suspension.67
202.
With respect to the undated letters of ratification drafted by the reorganization administrators, Professor Martinez Florez asserts that each letter is "an unnecessary document because the Power of Attorney that the lawyers had is still in full force."68 According to her, there is therefore no need to ratify any power of attorney or grant a new power of attorney.69

2. The Tribunal’s Analysis

The Application of Spanish law

203.
Respondent bases its arguments regarding the validity of the power of attorney granted to King & Spalding on Spanish law. The Tribunal agrees that, since Claimants are Spanish nationals, issues related to their capacity, including the validity of powers of attorney granted by those entities, should be determined based on the domestic law of Spain. Respondent challenges the validity of King & Spalding’s power of attorney in these proceedings and submits that continuing to act without a valid power of attorney is, in essence, a formal irregularity that constitutes "fraud" on this Tribunal. However, Respondent (correctly) does not take the position that this present arbitration cannot continue simply by virtue of the fact that Claimants entered voluntary insolvency proceedings after the initiation of the arbitration. Spanish Bankruptcy Law Article 52 is clear on this subject:

Arbitration proceedings that are pending at the time of the reorganization proceeding declaration shall continue until the award becomes final, and the rules contained in paragraphs 2 and 3 of the preceding article shall apply, [emphasis added]70

204.
In turn, Article 51(2), that "preceding article," applies with respect to companies in a state of suspension (as each of the Claimants currently is) as follows:

In case of suspension of the debtor’s powers of administration and disposition, the reorganization administrators shall, within the scope of their powers, replace the debtor in the pending legal proceedings. To that effect, the law clerk shall grant the reorganization administrators a period of five days to get acquainted with the proceedings. The reorganization administrators shall need the bankruptcy judge’s authorization to withdraw, to accept the claim, in whole or in part, and to settle disputes. In every case, the law clerk shall give notice to the debtor and to those intervening parties that the judge considers should be heard on the subject.71

205.
As applied in this case, Article 51(2) requires that Claimants’ reorganization administrators replace Claimants themselves in the present proceedings. Article 51(2) also provides that Claimants’ administrators do not need to seek court authorization to take on or maintain this role; court authorization is only required if they withdraw or otherwise settle this dispute.
206.
The issue for this Tribunal to determine is whether King & Spalding has power of attorney at the present stage of this arbitration, now that each of Claimants’ administrative powers have been suspended (in April 2013). Claimants submit that the power of attorney is still valid and that Claimants’ reorganization administrators are simply "stepping into the shoes" of Claimants for purposes of the continuation of this arbitration. Respondent argues, to the contrary, that Claimants’ power of attorney was extinguished by the bankruptcy, that a new power of attorney is needed, and that a valid new power of attorney has not yet been granted to King & Spalding or anyone else.
207.
Respondent argues that there is no possibility to cure this defect, and that this arbitration must be dismissed.72 In its final prayer for relief in its Post-Hearing Brief, Respondent requests the Tribunal "to declare that King & Spalding lacks the necessary legal capacity to represent Claimants in this arbitration, which would result in the annulment of all actions taken, as well as to declare the forfeiture of Claimants’ right to file an action."
208.
Ordered chronologically, the relevant facts related to this issue placed in the context of the procedure of the arbitration are as follow:

• November 14, 2008: Original Representation Contract between Claimants and King & Spalding.73

• November 21, 2008: Each of the three Claimants, Teinver, Autobuses Urbanos and Transportes de Cercanias granted broad Powers of Attorney to King & Spalding and other lawyers to represent them in negotiations with the government and to file and pursue arbitration proceedings against them before ICSID.

• December 9, 2008: Powers of Attorney were issued by the Boards of Directors and were subsequently notarized.

• December 11, 2008: Claimants’ Request for Arbitration is submitted by King & Spalding with a number of exhibits, including the Powers of Attorney, as required by Rule 2(2) of the ICSID Rules.

• January 30, 2009: ICSID registered the Request for Arbitration.

• January 18, 2010: Assignment Agreement between Claimants and Air Comet ("Assignment Agreement").74

• April 14, 2010: Funding Agreement between Claimants and Burford ("Funding Agreement").75

• April 20, 2010: Air Comet commences voluntary re-organization procedure.

• April 24, 2010: Representation Agreement between Claimants and King & Spalding ("Representation Agreement").76

• June 21, 2010: Agreement between Air Comet and its re-organization administrators, Messrs. Mariano Hernandez, Luis Arqued and Luis Sierra.77 In this agreement, Air Comet’s re-organization administrators state that they have been informed of the claim by Teinver, Autobuses Urbanos and Transportes de Cercanias at ICSID and that on January 18, 2010 these Claimants signed an agreement with Air Comet by which they assigned the net benefit which they might recover in the arbitration to Air Comet. The agreement also records that Air Comet’s re-organization administrators are familiar with the funding arrangement with Burford and that they expressly agree to the provisions of the Funding Agreement and undertake to abide by the provisions of that agreement regarding the amounts provided for therein.

• December 22, 2010: The Spanish court (the Juzgcido Mercantil de Madrid, "JMM" No. 8) in the Air Comet re-organization proceedings approves the terms of the Funding Agreement and authorizes Air Comet’s re-organization administrators to consent to it. In its reasons, the court reviews the terms of the Funding Agreement which, in the circumstances, it concludes are justified.

• December 22, 2010: JMM No. 8 suspended Air Comet’s powers of administration and disposition of assets and appointed Air Comet’s re-organization administrators to exercise the powers of Air Comet.78

• December 23, 2010: Teinver requests voluntary re-organization proceedings before the Spanish court (JMM No. 7 of Madrid). In its record, the court records that the debtor (Teinver) conserves its faculties of administration and disposition of its assets, subject to the intervention of its re-organization administrators, Messrs. Edorta Etxarandio Herrera and Luis Arqued Alsina.79

• January 28, 2011: Autobuses Urbanos requests voluntary re-organization in terms similar to those of Teinver.

• February 16, 2011: Transportes de Cercanias requests voluntary re-organization which is recorded by the Spanish court (JMM No. 9 of Madrid) in terms similar to those in the case of Teinver.

• May 27-31, 2011: Hearing on Jurisdiction in Washington, D.C.

• June 16, 2011: Letter from Claimants responding to the Tribunal’s requests set out in Procedural Order No. 3. As part of their response, Claimants supply letters from the re-organization administrators for each of the Claimants: Teinver,80 Autobuses Urbanos,81 and Transportes de Cercanias.82 In their letters, the three sets of reorganization administrators state that they are responding to the inquiry by the Tribunal to confirm that the Request for Arbitration was submitted approximately two years before the commencement of the voluntary re-organization procedures and that the decision to commence the arbitration was validly taken by the companies in question. The letters state that Spanish law does not require the ratification of the commencement of the arbitration by the re-organization administrators. With respect to the continuation of the arbitration, the letters advise that the powers of administration of the officers of the companies have not been suspended and that no further authorization is required by the re-organization administrators or the judges responsible for the respective re-organization proceedings. They also point out that Spanish law provides that pursuant to the Spanish Bankruptcy Law, arbitration proceedings commenced prior to reorganization proceedings are to continue through to the issuance of an award. The administrators advise that they have reviewed the evolution of the arbitration and confirm that they are fully aware of these proceedings and have discussed them with counsel and are in full agreement that the arbitration proceedings continue. They also add that King & Spalding are fully authorized to continue the arbitral proceedings pursuant to the Powers of Attorney previously granted to them and which remain in full force and effect. Each of these letters was dated and signed by the relevant re-organization administrators.

• August 30, 2011: Claimants provide a copy of the decision of the Buenos Aires Commercial Court (of June 17, 2011) terminating the re-organization proceedings of ARSA commenced on June 22, 2001.

• December 21, 2012: The Tribunal issues its Decision on Jurisdiction.

• April 10, 2013: Order of JMM No. 7 suspending the powers of administration and disposition of assets of Autobuses Urbanos and granting these to the re-organization administrators.83

• April 23, 2013: Commencement of the liquidation proceedings of Transportes de Cercanias by JMM No. 7. The court’s order states that the relevant terms of Title 3 of the Bankruptcy Law, including the suspension of the exercise by the company’s officers of its powers of administration and disposal of assets, applies.84

• April 26, 2013: Commencement of the liquidation proceedings of Teinver by JMM No. 7. The court’s order goes on to state that the relevant terms of Title 3 of the Bankruptcy Law, including the suspension of the exercise by the company’s officers of its powers of administration and disposal of assets, applies.85

• August 10, 2013: With their Reply, Claimants submit three letters, one from each of the sets of re-organization administrators for Teinver, Autobuses Urbanos and Transportes de Cercanias.86 The letters are not dated, but are signed by each of the re-organization administrators. In the letters, the administrators give their names and say they are making an appearance before the Tribunal and make certain declarations, including express ratification of the powers of attorney and all acts performed on behalf of Claimants since the beginning of the arbitration.

• March 4, 2014: the hearing on the merits was attended by Mr. Arqued, one of the court appointed administrators/receivers in the Teinver and the Air Comet re-organization/insolvency proceedings (for a number of days). The daily transcript of the hearing also lists Mr. Hernandez, one of the re-organization administrators of Air Comet, and Mr. Alvaro Martinez Domingo as attending the hearing as "Claimants’ Representative".

• October 22, 2015: in the course of their Third Application for Provisional Measures, Claimants submitted three public deeds executed in Spain by the court-appointed receivers acting on behalf of Claimants in the various insolvency proceedings in Spain, all before notaries public in which, among other things, they confirmed their identity and powers to act on behalf of the respective Claimant in their capacity as court-appointed receivers, and attached evidence of their appointment.87

• November 3, 2015: the hearing concerning Claimants’ Third Application for Provisional Measures was attended by Messrs. Arqued, Hernandez and Martinez, court appointed administrators/receivers in the various re-organization and insolvency proceedings, as well as a number of other representatives of Claimants.88

209.
Respondent's argument that the powers of attorney granted in favor of King & Spalding became invalid is based on Article 48(3) of Spain’s Bankruptcy Law which provides as follows:

The administrators or liquidators of the insolvent legal person shall continue to represent it within the context of the insolvency proceedings. In the event of suspension, the management and disposition powers of the administrator or liquidators shall be transferred to the trustees in insolvency. In the event of controllership, those powers shall continue to be exercised by the administrators or liquidators, under the supervision of the trustees in insolvency, who will be in charge of authorizing or validating all acts of management or disposition. Any power of attorney existing at the time of the initiation of the insolvency proceedings shall be affected by the suspension or control of financial and property-related powers.

210.
Respondent says that "affected" means that the power of attorney was extinguished or was terminated by operation of law. As a result, King & Spalding lost their procedural capacity to represent Claimants.
211.
Respondent also points to Article 1732(3) of the Spanish Civil Code which, according to it, provides that the declaration of bankruptcy of the principal is one of the grounds for termination of a power of attorney. Article 1732(3) of the Spanish Civil Code provides as follows:

El mandato se acaba: 1° Por su revocation. 2.° Por renuncia o incapacitation del mandatario. 3.° Por muerte, declaracion de prodigalidad o por concurso o insolvencia del mandante o del mandatario. / El mandato se extinguira, tambien, por la incapacitation sobrevenida del mandante a no ser que en el mismo se hubiera dispuesto su continuacion o el mandato se hubiera dado para el caso de incapacidad del mandante apreciada conforme a lo dispuesto por este. En estos casos, el mandato podra terminar por resolucion judicial dictada al constituirse el organismo tutelar o posteriormente a instancia del tutor.

212.
In addition, Respondent argues that the attempts to ratify or cure the defects in the Power of Attorney must fail. In this regard, it says that the letters produced by Claimants with their Reply are defective because they are not in a notarial instrument, which it says is required when the original power of attorney was granted by way of a notarized public document. Further, it says that the letters from the re-organization administrators are undated and are not addressed directly to ICSID or the Tribunal but, rather, to King & Spalding. Finally, Respondent says that the letters were required to have been authorized or ordered by the court and cannot simply be issued unilaterally by the trustees under their own authority.
213.
The Tribunal finds that Respondent's objections as to the lack of standing due to the termination or extinguishment of King & Spalding's power of attorney are not persuasive for a number of reasons.
214.
First, it would seem appropriate to rely primarily on the provisions of the Spanish Bankruptcy Law as lex specialis rather than Article 1732 of the Spanish Civil Code.89 The Spanish Bankruptcy Law is more closely focused on what occurs with respect to the ongoing conduct of proceedings when insolvency occurs.
215.
In this regard, Article 52(2) of the Spanish Bankruptcy Law provides that arbitration proceedings underway at the time re-organization proceedings are declared shall continue until the issuance of the award. It also provides that Articles 51(2) and (3) shall apply. It is worth noting that the Spanish Bankruptcy Law distinguishes between court/judicial proceedings and arbitral proceedings, except to the extent that it incorporates certain provisions, such as Article 51(2) and (3), in the treatment of arbitral proceedings. The latter provide that in the event of suspension of the debtor's powers of administration and disposal (which comes with the commencement of the liquidation phase), the insolvency administrators (within the scope of their competency) are substituted for the debtor. They must appear in the proceedings and then they are accorded time to become informed of the proceedings to date. In addition, Article 51(2) provides that the authorization of the judge presiding over the bankruptcy will be required for the insolvency administrators to withdraw, accept or settle claims. It does not require court authorization for any other actions taken by the insolvency administrators. In addition, Article 51(2) of the Spanish Bankruptcy Law provides that the debtor may retain/maintain separate legal representation of his own provided that the debtor provides sufficient guarantees to the court regarding payment of that representation and as to costs.
216.
As set out above, King & Spalding's representation of Claimants was implemented by way of a power of attorney issued by each of the boards of Claimants, as well as a separate Retainer Agreement (the "Retainer Agreement"). These were submitted with Claimants’ Request for Arbitration in accordance with Rule 2(2) of the ICSID Rules. There is no dispute that the original power of attorney and Retainer Agreement were valid and retained their full force and effect until the commencement of the liquidation phase/suspension of the powers of administration and disposition of assets of the debtor companies in April 2013. At the Tribunal's request, each of the sets of re-organization administrators confirmed the validity and effect of the original power of attorney and Retainer Agreement in June 2011. Further, after the commencement of the liquidation proceedings/suspension of Claimants' powers of administration and disposition of assets occurred in April 2013, each of the sets of re-organization administrators wrote to the Tribunal to confirm their appearance in the arbitral proceedings and to ratify and approve the actions taken by King & Spalding on behalf of Claimants.
217.
While Respondent raises formal objections relating to the letters from the re-organization administrators, for the reasons discussed below these are not convincing. Each of these sets of administrators were appointed by the court in charge of the insolvency proceedings, were fully aware of the history of the arbitration, including the Funding Agreement (and the Assignment Agreement) and have twice confirmed their agreement with the continuation of the arbitration and representation by King & Spalding. The Spanish Bankruptcy Law does not require any particular form in which the re-organization administrators must appear in arbitral proceedings or ratify the conduct of the proceedings. The only specific instances in which court authorization is required are for the withdrawal, acceptance or settlement of claims against the debtor.
218.
Pursuant to the Spanish Bankruptcy Law, it appears that the re-organization administrators step into the shoes of the debtor upon the commencement of liquidation proceedings/suspension of powers of administration and disposition of assets. In this regard, except where specifically provided for by the Spanish Bankruptcy Law (i.e., withdrawal, acceptance or settlement of claims against the debtor), it does not appear that any special court authorization is required for the reorganization administrators to perform their task. Article 61(2) of the Spanish Bankruptcy Law provides that bilateral contracts to which the debtor is a party remain in effect despite the commencement of re-organization proceedings and their validity is not affected. Further, Article 61(2) provides that the debtor (in the case of intervention) or the re-organization administrators (in the case of suspension) may request from the court the termination of a contract if this is deemed in the interests of the insolvency proceedings. If such a request is made, the court must hear the parties before deciding whether the contract shall be terminated. In this case, the re-organization administrators have not requested the termination of the Retainer Agreement between Claimants and King & Spalding. In fact, the opposite has occurred and each set of re-organization administrators have reaffirmed King & Spalding's powers of representation and ratified the actions taken by that firm on behalf of Claimants.
219.
Further, the Tribunal is persuaded by Professor Martinez Florez’s opinion that Article 1732(3) of the Spanish Civil Code does not apply to contracts like the Representation Agreement.90 It would seem that the "Contract of Representation" between Claimants and King & Spalding is a bilateral service agreement and is different from the power of attorney, which was granted separately.
220.
With respect to the powers of attorney granted by Claimants to King & Spalding, Article 48(3) of the Spanish Bankruptcy Law states that such powers in existence at the time of the declaration of re-organization/insolvency proceedings shall be "afectados" (affected) by the suspension or intervention of the powers of the debtor. The article does not say that the powers of attorney shall be terminated or extinguished. Elsewhere, in Article 61(2), the Spanish Bankruptcy Law refers to the termination (resolution) of contracts (and also states that the declaration of insolvency proceedings, in itself, shall not affect the validity of contracts). Article 1732 of the Spanish Civil Code provides that agency agreements shall terminate as a result of death, insolvency or re-organization proceedings of the agent. It also states that the agency agreement shall be "extinguished" in certain circumstances. By contrast, Article 48(3) of the Spanish Bankruptcy Law states only that powers of attorney shall be "affected" by intervention or suspension. With the commencement of insolvency proceedings, whether by way of the voluntary or obligatory proceedings, the powers of attorney are affected in that (in the case of intervention) the actions of the debtor through its counsel/authorized representative are subject to the approval of the reorganization administrators. In the case of suspension, all actions within the scope of authority of the re-organization administrators are undertaken by them (and not the debtor itself) on behalf of the debtor. In this respect, it seems reasonable that the power of attorney is affected or limited by the exercise of the relevant powers of the re-organization administrators. However, the power of attorney is not terminated or extinguished by the commencement of insolvency proceedings. Further, the separate Contract of Representation remains in force, unless terminated by the debtor or the re-organization administrators.
221.
In the Tribunal’s view, Respondent’s objections to the ratification of the representation of Claimants by King & Spalding are highly formal and somewhat arbitrary. The three different sets of re-organization administrators have been appointed by the court and are all active in the courts’ various public proceedings. In their letters, presented with Claimants’ Reply in August 2013, the various sets of re-organization administrators state that they ratify all of the actions performed by Claimants in the course of the arbitration, both from its institution and after the commencement of the liquidation proceedings/suspension in April 2013 in the bankruptcy re-organization proceedings before the court.91 As they have been appointed by the court and regularly appeared before it, it is reasonable to assume that they are not likely to engage in unauthorized action, particularly with respect to the pursuance of this arbitration, which is known to the court. Further, Mr. Arqued approved the Assignment Agreement by way of the agreement between Air Comet and its re-organization trustees92 and requested and obtained the approval of the court (JMM No. 8) of the Funding Agreement. Mr. Arqued is also a re-organization trustee in the Teinver proceedings. Further, there does not appear to have been any objection by ARSA in the various re-organization proceedings - to which it is a party93 - that the re-organization administrators are pursuing the arbitration without authorization due to invalid powers of attorney.
222.
Finally, in the circumstances of an international arbitration which has been ongoing for a number of years, one must question whether the strict application of the formalities of granting powers of attorney at Spanish law appropriately apply. The arbitration was, by all accounts, commenced on behalf of Claimants by properly authorized legal representatives. Almost five years after the commencement of the arbitration, due to the commencement of liquidation proceedings/suspension of powers of administration/disposition of assets, Respondent raises the validity of counsel's power of attorney and authorization to represent Claimants. In response, the re-organization administrators wrote to the Tribunal to confirm that they ratify the actions taken by counsel for Claimants and confirm their authorization to proceed with the arbitration. Although the letters are undated and not notarized or specifically ordered to be produced by the Spanish court, it would not seem appropriate to disregard these unless there is a valid reason to suspect that they are part of an effort to improperly create standing for the continuation of the claim. There is no evidence supporting this conclusion. Further, it should be noted that Mr. Arqued, a reorganization administrator in both the Air Comet and the Teinver insolvency proceedings, attended the hearing for some time, as did Mr. Hernandez, another re-organization administrator in the Air Comet proceedings.
223.
For the foregoing reasons, the Tribunal finds that the powers of attorney granted to King & Spalding were initially, and have continued throughout these proceedings to be, valid. Claimants have proved that there was no obligation at Spanish law to produce a new power of attorney in the circumstances of this case. The Tribunal also notes that, as a factual matter, it is satisfied that the re-organization administrators of each Claimant and the relevant Spanish courts are aware of the powers of attorney and, further, have ratified the actions taken by the attorney in this arbitration. Consequently, the Tribunal declines Respondent’s request to find that King & Spalding’s (alleged) lack of power of attorney "constitutes fraud on the court" and dismisses Respondent’s request that these proceedings before ICSID be closed on the basis that the powers of attorney were invalid.

The Relevance of the Burford Funding Agreement

224.
At the merits hearing, Respondent advanced an additional argument concerning King & Spalding’s power of attorney. Specifically, Respondent argued that the Burford Funding Agreement requires Claimants to use King & Spalding as their counsel, and that a "conspiracy" between Claimants and Burford explains why they did not seek a proper new power of attorney. Specifically, Respondent argues that Clause 6(3) of the Funding Agreement entitles Burford to terminate the funding agreement if King & Spalding’s power of attorney is modified or terminated, as well as to receive substantial compensation under Clause 10.1 of the Agreement.
225.
The "Funding Agreement" is an April 14, 2010 funding agreement made between Claimants and Burford,94 an investment company headquartered in Guernsey, which concerned the financing of Claimants’ litigation expenses in this arbitration. Respondent argued during the jurisdictional phase of this proceeding—and continues to argue—that Burford is a "vulture fund" that will be the primary beneficiary of any ICSID award in this case.95
226.
Clause 6.3 of the Funding Agreement provides:

The Claimant undertakes to grant to the Nominated Lawyers a full power of attorney (or local law equivalent) in the Funder’s usual fonn to cause and allow any and all Award proceeds to be paid forthwith as set out above. The Parties acknowledge and agree that such power of attorney (or local law equivalent) is of the essence of this Agreement and is a condition thereof and that any variation or tennination of such power of attorney shall entitle the Funder to tenninate this Agreement pursuant to Clause 10.1.96

227.
As such, Clause 6.3 concerns a specific "power of attorney" to disburse payments from the Award. Schedule 3, Definitions of the Funding Agreement, in turn defines "Nominated Lawyers" as "the lawyers conducting the Claim on behalf of the Claimant being specified as such in Schedule 1 or a substitute firm selected by the Claimant with the Funder’s approval (which shall not be unreasonably withheld)."97
228.
In this regard, Respondent submitted as follows:

If the full powers of attorney granted to K&S in the year 2008 were affected by a declaration of bankruptcy against their clients, then the effectiveness of the Funding Agreement would come to an end and, therefore, the whole scheme would fall apart, because if K&S were granted a new power of attorney, this time by the trustees in insolvency, such power of attorney would force K&S to report to the trustees of insolvency and the respective groups of creditors in the insolvency proceedings resulting in a declaration of bankruptcy and, as a result, the private and confidential Funding Agreement would cease to have legal effect.

229.
Respondent says that a "conspiracy" between Claimants and Burford explains why Claimants did not seek to obtain a new, proper power of attorney.98
230.
The Tribunal has found that the powers of attorney are valid and that there was no obligation to seek a new power of attorney. In light of this finding, it is not necessary to make findings in respect of Respondent’s "conspiracy" argument relating to the powers of attorney. The Tribunal considers it important to note that Respondent provided no evidence to support this argument, which makes serious allegations not only about Claimants, but also their counsel and third-party funders. Respondent entirely failed to substantiate its "conspiracy" argument and it is inconsistent with the evidence.
231.
First, regarding the notion of conspiracy, although the Funding Agreement was originally a private agreement between Claimants and Burford, it was disclosed to the re-organization administrators for Air Comet who agreed with the Funding Agreement and requested its approval by the court,99 which approved the Funding Agreement.100 By way of its court approval, the Funding Agreement became public and must have been known by the re-organization administrators for Claimants (Mr. Arqued was a re-organization administrator for both Air Comet and for Teinver). In view of the close inter-relationship between the Air Comet insolvency proceedings and those of Claimants and the Assignment Agreement, it is reasonable to assume that the re-organization administrators for each of Claimants were fully aware of the Funding Agreement.
232.
Second, with respect to the argument that the Funding Agreement requires Claimants to retain King & Spalding as attorneys, and the fact that insolvency proceedings are a ground for termination of the Funding Agreement pursuant to Article 10.3, this argument makes little sense. Respondent's argument appears to be that if Claimants had requested a new power of attorney this would have alerted Burford to the insolvency proceedings and given the latter the right to terminate the Funding Agreement. However, it is highly unlikely that Burford was not already fully aware of Claimants’ financial status and continued to monitor it closely, given its financial interest in doing so. In any event, there is no indication that Burford ever treated the insolvency of Claimants as a basis for terminating the Funding Agreement (it appears that their financial interests are well protected in that agreement). Further, the relevance of the relationship between Claimants and Burford as far as a potential termination of the Funding Agreement is concerned is unclear. The re-organization administrators were, and are, clearly aware of the Funding Agreement and have confirmed King & Spalding's authorization to represent Claimants in this arbitration because, it is logical to assume, this is in the interests of Claimants’ creditors.
233.
Accordingly, the Tribunal would not vary its finding on the validity of the powers of attorney based on Respondent’s additional "conspiracy" argument.

B. Claimants’ Alleged Lack of Standing

234.
Respondent additionally argues that Claimants do not have standing in this arbitration because they assigned their litigation rights to Air Comet.101
235.
The Assignment Agreement among Teinver, Transportes de Cercanias and Autobuses Urbanos as the assignors and Air Comet as the assignee, was executed on January 18, 2010.102 The Agreement concerned the assignment to Air Comet of the proceeds of a potential award in this arbitration, and was addressed in some detail by this Tribunal’s Decision on Jurisdiction in 2012. In that Decision, the Tribunal determined that the Assignment Agreement post-dated the filing of the arbitration, and did not affect Claimants’ standing to bring this arbitration.103 The Tribunal noted that its conclusions were "without prejudice to further submissions by the Parties in respect of Respondent’s allegations in so far as they affect the merits of Claimants’ claims, as appropriate, during the merits stage."104
236.
Respondent now asserts that the Assignment Agreement constitutes a "fraud against the creditors in the insolvency proceedings of Teinver S.A., Autobuses Urbanos del Sur S.A. and Transportes de Cercanias S.A., since it was made at a date that is curiously close to the date Air Comet S.A.U. initiated its insolvency proceedings[…]"105 Respondent also asserts that the assignment is "a confession of the fact that the filing of this claim before the ICSID Tribunal by the three shareholder companies—in the full knowledge that the claim, if any, belonged to Air Comet—was a guise and that the only reason why they devised all of this scheme was to facilitate the distribution of the slices that the various parties and participants will receive if the tribunal rules in favor of Claimants."106
237.
Respondent also argues that the agreement is an assignment of contentious claims from Claimants to Air Comet, and not simply of the rights to the proceeds from any potential award.107 Respondent argues that "once the assignment is made, the assignor is replaced in the proceedings by the assignee, which has not been the case in this arbitration proceeding."108 In other words, Respondent argues, Air Comet should have appeared in this proceeding. Moreover, Respondent argues that Argentina as the potential debtor should have been given prior notice of the assignment of its debt.109
238.
For their part, Claimants argue that the Assignment Agreement did not transfer Claimants’ rights under the Treaty, but rather transferred to Air Comet only the right to net proceeds from Argentina’s payment of a potential award of damages.110 Claimants assert that there is no applicable legal standard that would prevent this Tribunal from issuing an award of damages in Claimants’ favor due to the assignment agreement.111 Claimants argue moreover that the assignment to Air Comet is a perfectly valid transaction, and that at the time of the assignment neither Claimants nor Air Comet were undergoing any type of reorganization proceedings under Spanish law.112 Finally, Claimants note that Air Comet is not entitled to seek payment directly from Argentina of any damage award or recovery in connection with this arbitration; Air Comet is only entitled to receive from Claimants, not Argentina, the net proceeds of any eventual payment from Argentina to Claimants.113
239.
The terms of the assignment agreement provide as follows:

1) Assignors hereby expressly agree to assign to AIR COMET S.A.U. any and all collection rights that may arise out of the claim filed with the ICSID...

2) Parties hereto agree that the final amount to be assigned to AIR COMET S.A.U. shall be equal to the amount the ICSID may possibly award to the Assignors after deducting all necessary and relevant costs, as well as any and all payments due to the ICSID Tribunal. All fees and expenses related to legal advisers, consultants, expert witnesses, witnesses, experts, reports, assessments, as well the interests or commissions due to any and all institutions, companies or offices contributing to the funding of the claim shall also be deducted from the amount to be assigned. Finally, in order to fix the final amount of the collection rights to be assigned to AIR COMET S.A.U., success fees agreed upon in contract in favor of those intervening during the proceedings before the ICSID Tribunal shall be deducted as well, whether they are due for tasks performed prior to the filing of the formal claim, during the relevant proceedings, or during any appeal or during the enforcement thereof.114

240.
The text of the agreement does not appear to assign Claimants’ contentious claims in this dispute; rather, the text appears to be limited to assigning to Air Comet the proceeds from any award issued. Furthermore, the agreement contemplates that Air Comet would receive the award proceeds only after Claimants have paid the costs and fees described in item 2. As such, it does not appear that Air Comet has the right to receive payment directly from Argentina in the event of the award.
241.
It should also be noted that the Assignment Agreement, which was signed on January 18, 2010, predated by three months the initiation of Air Comet’s voluntary reorganization proceeding on April 20, 2010.115 It also predated the initiation of the three Claimants’ voluntary reorganization proceedings by about a year. Air Comet and its insolvency administrators executed an agreement on June 21, 2010 wherein the administrators acknowledged the existence of this dispute and the Assignment Agreement.116 The Assignment Agreement was filed with the Spanish court overseeing Air Comet’s reorganization.
242.
The Tribunal finds that Claimants did not assign their claims through the Assignment Agreement and, accordingly, that agreement can have no impact on the standing of Claimants in this proceeding.

C. Other Issues of Admissibility

243.
In the Decision on Jurisdiction, the Tribunal left open certain additional issues of admissibility that were not necessary to address at that stage of the proceedings, as it had determined that the claims were admissible and that Claimants had standing, and that required further factual inquiries in order to be properly determined. At this stage, the Tribunal will return to the issues of Respondent’s objections, on policy grounds, to Claimants’ standing because it would allegedly upset the hierarchy of claims against the Airlines. The Tribunal will also address the question of whether, in addition to their respective indirect shareholdings in Interinvest, Claimants made other investments in Argentina that are protected by the Treaty.
244.
Respondent notes in its Post-Hearing Brief that this Tribunal "postponed the analysis of certain irregularities regarding the admissibility of the submission and claims filed by Claimants for final consideration at the time of rendering the award on the merits of the case."117 Respondent cites to paragraph 234 of the Decision on Jurisdiction, in which the Tribunal addressed certain arguments made by Respondent with respect to the indirect nature of Claimants’ shareholding in the Airlines, which were held by Claimants through two layers of subsidiaries, the Spanish Air Comet and the Argentine holding company, Interinvest.
245.
As the Tribunal noted,

... Respondent has advanced a number of policy arguments against Claimants’ standing in this dispute. According to Respondent, the Claimants are upsetting the hierarchy of creditor claims against the Argentine Airlines and Interinvest, and it is inappropriate to award damages to a shareholder rather than to the company that has actually suffered injury. Respondent also expresses its concern that this suit could increase the risk that Respondent could be subjected to double-payment, because Interinvest could recover through the Argentine Courts in addition to any recovery by the Claimants under the Treaty.118

246.
The Tribunal then determined that

Respondent’s assertions could have relevance in the merits proceeding of this case, but Respondent fails to demonstrate why these assertions are relevant at the jurisdictional stage. Moreover, Respondent lias failed to articulate why these policy issues, as specifically applied to the facts at hand, should affect the outcome of this jurisdictional objection. Respondent lias not attempted to demonstrate the extenuating nature of the facts here, or to differentiate the facts in this case from the large number of other ICSID cases in which claimant shareholders were found to have standing.119

247.
With respect to Respondent’s allegation, during the jurisdictional phase of this proceeding, that Claimants’ recovery would upset the hierarchy of creditor claims against the Airlines and/or Interinvest, Respondent has not placed any evidence on the record in either the jurisdictional or the merits phase to support this contention. Indeed, it is not clear that there is, in fact, any "list" of creditor claims against the Airlines, which are not currently in insolvency, or against Interinvest (the current status of which has not been addressed over the course of these proceedings).120 To be sure, Respondent has addressed the "hierarchy" of beneficiaries with respect to any proceeds from this Tribunal’s award. However, that is a different issue than the one raised during the jurisdictional phase of this arbitration in connection with Claimants’ "indirect" interest in the Airlines.
248.
For this reason, the Tribunal finds that there is no evidence to support Respondent’s position that Claimants’ standing is affected by policy reasons related to the hierarchy of creditors.
249.
With respect to the question of whether Claimants had other investments in Argentina, at paragraphs 207 through 238 of the Decision on Jurisdiction, the Tribunal found that Claimants' indirect shareholdings constitute an investment and that Claimants have standing to bring their claims. The Tribunal's finding of jurisdiction on the basis of the ownership of shares is sufficient to found jurisdiction and is a final decision.
250.
At paragraph 238 of the Decision on Jurisdiction, the Tribunal deferred consideration of Claimants' other investments to the merits stage of the proceedings. Now that the evidentiary part of that stage of the proceedings is complete, the Tribunal concludes that, in addition to shares in Interinvest, certain other investments identified by Claimants were also made.
251.
Through their wholly-owned subsidiary, Air Comet, Claimants entered into the SPA by which they acquired the shareholdings in Interinvest, ARSA and AUSA and also undertook a number of other commitments which required the investment of funds for the benefit of Interinvest and the Airlines. Two of the three Claimants were shareholders of Air Comet and signatories to the SPA (Transportes de Cercanias and Autobuses Urbanos) and the third (Teinver) purchased all the remaining shares of Air Comet in 2006. As shareholders and signatories, Transportes de Cercanias and Autobuses Urbanos approved the SPA and unconditionally assumed all of Air Comet's obligations under the SPA and, in particular, the several terms of the Industrial Plan set out in Article 7 of the SPA.
252.
While the nominal purchase price under the SPA was USD 1.00, this was a much more complex agreement pursuant to which Air Comet (and Claimants) undertook several obligations, including the following:

• Assumption of the assets and liabilities of ARSA and AUSA (including responsibility for all liabilities going forward from the relevant financial statements for ARSA May 31, 2001 and for AUSA fiscal year 2000);

• Leading the negotiation of the Creditors Agreement/re-organization proceedings of ARSA and negotiations with the creditors of AUSA;

• Commitment to maintaining the headcount of the various airlines and companies;

• Maintenance and expansion of flight routes and of the fleet of the airlines; and

• Contribution of capital.

253.
The SPA and the other agreements related to it represent a complex transaction.121 The nominal purchase price does not reflect the complexity of the transaction. A nominal purchase price is not unusual where there are other interests and risks associated with the transaction. In this regard, see, for example, Societe Generate v The Dominican Republic122 and Bayindir v. Pakistan where the funds invested in the construction project were the funds paid by the State under the relevant contract. Here, it is clear that Air Comet and its shareholders, Claimants, were undertaking significant responsibilities and risks in assuming the debts and liabilities of the Airlines going forward and the undertaking to maintain and expand the operations of the Airlines.
254.

Further, pursuant to the obligations under the SPA, SEPI transferred funds to Interinvest and Air Comet in Argentina and Spain. In turn, these funds were invested in the Airlines. While the origin of the funds in question was SEPI and not Claimants, this is irrelevant, as the funds were contributed as a result of the obligations undertaken by Air Comet and Claimants under the SPA. This is consistent with other cases where tribunals have found that the actual source of the funds is irrelevant provided that these were contributed by the investor.123 While there may be some dispute as to the precise amounts contributed, there seems no doubt that a number of sums were contributed to Interinvest and the Airlines by Air Comet:

• USD 300 million to acquire ARSA's liabilities as of October 2001;124

• USD 248 million in accordance with the SPA - to operate and modernize the Airlines;125

• USD 13.5 million in Interinvest;126

• USD 8 million (ARS 6.05 million) in ARSA;127 and

• USD 0.8 million in AUSA.128

255.
In addition, through Air Comet and Interinvest, Claimants invested in the concessions to operate the Airlines. The evidence indicates that Claimants clearly contributed to the improvement of the Airlines’ fleets through leasing contracts and the Airbus orders and a USD 5 million Boeing 737 flight simulator.
256.
Finally, Claimants also provided technical, logistical and marketing support. The evidence indicates that after the execution of the SPA and takeover by Air Comet and Claimants, the performance of the Airlines improved dramatically (until 2004/2005, when cost increases accelerated sharply and other events affected the Airlines’ performance).
257.
The Tribunal notes that Respondent does not seriously challenge that these additional investments were made or that Claimants operated the Airlines. Instead, Respondent’s arguments focus on their dissatisfaction with how these investments were managed by Claimants. These arguments will be discussed in the context of the analysis of the merits, beginning in the following section.

D. Claimants’ Investment in the Airlines, 2001 - 2008

258.
As a defense to the claims and in support of its Counterclaim, Respondent submits that "Claimants’ acquisition of the Airlines was opportunistic in order to appropriate the funds provided by the SEPI to Claimants and to the clear detriment of the Airlines."129 Respondent submits that the state of the Airlines at the time of expropriation was the result of the Marsans Group’s behavior. As Respondent has made these submissions in support of both its jurisdictional objections130 and its position on the merits,131 the Tribunal considers it convenient to address these arguments at this point in the award, as it relates to any remaining issues of admissibility and standing and to return to these arguments, as necessary, in the determination of the merits.

1. Claimants’ Investment in the Airlines

History of the Airlines, the 2001 Auction of Interinvest and the Share Purchase Agreement

259.
The precursor companies to ARSA had been owned by the Argentine state since the 1950s. They were privatized and purchased by a group of investors led by Spanish state-owned airline Iberia Lineas Aereas de Espana S.A. ("Iberia") in 1990. The precursor companies to AUSA were acquired by Iberia in 1991. Iberia incorporated a fully-owned Argentine subsidiary, Interinvest S.A., in 1994 to serve as the holding company for the Spanish investments in the Argentine airline industry. In 1995, the Spanish government constituted SEPI to operate as the holding company for all companies owned partially or fully by the Spanish Government, and SEPI acquired Iberia’s holdings in Interinvest.132
260.
By mid-2001, the Airlines were facing severe financial and operational difficulties. At the time, only 10% of international flights and 30% of domestic flight routes were being operated; there were delays in paying employee salaries; and there were significant labor conflicts.133 ARSA filed for bankruptcy reorganization in June 2001. That same month, SEPI announced its intention to sell its share of Interinvest in order to end contributions of Spanish public capital into the Airlines, which had been necessary over the previous decade.134 The Argentine Government followed the sale process closely, although it was not interested in aiding ARSA through any allocation of government funds.135
261.
SEPI received nine offers from potential buyers, and ultimately selected Air Comet’s offer. At the time, after assessing all of the offers, SEPI determined that Air Comet’s offer had several advantages over other offers.136 In particular, SEPI noted that a sale to Air Comet would permit SEPI to address the principal problems currently before the companies, including the reestablishment of routes, punctual payment of salaries and maintenance of the workforce and updating the outdated and limited fleet. Air Comet’s offer included financial guarantees from members of the Marsans Group, a superior business plan, and "valuable synergies" from the Marsans Group network of air transport and tourism.137 It is not disputed that at the time SEPI sold its share of Interinvest to Air Comet, the Airlines were in dire financial condition and required significant investment in terms of both capital and operational commitment.
262.
The SPA was signed on October 2, 2001 between Air Comet and SEPI.138 Air Comet acquired SEPI’s 99.2% share in Interinvest, and Interinvest in turn held 92.1% of ARSA and 90% of AUSA. Air Comet paid a symbolic price of USD 1 and undertook the following commitments: ¶ to assume Interinvest’s, ARSA’s and AUSA’s liabilities, and to lead the negotiation of the reorganization for ARSA, 2) retain the Airlines’ personnel for two years, 3) maintain a majority interest in the Airlines for two years, 4) restart flights on existing routes and develop new routes, 5) make USD 50 million capital contribution, and 6) modernize and expand the Airlines’ fleet.139 It is not disputed that Air Comet assumed the Airlines’ liabilities and led the reorganization for ARSA; retained personnel for two years; maintained a majority interest in the Airlines beyond two years; and restarted flights on existing routes and developed new routes. Air Comet’s fulfillment of the obligations to make capital contributions and modernize and expand the Airlines’ fleet will be described in the following subsection.

Air Comet’s Performance under the Share Purchase Agreement

263.
Respondent repeatedly asserts that under the Share Purchase Agreement, Claimants purchased the Airlines for only one US dollar.140 Respondent also asserts that Claimants failed to contribute "even one peso" into the Airlines.141
264.
Moreover, Respondent argues that Claimants did not comply with the terms of the SPA, to the detriment of the Airlines as well as of the Government of Argentina’s own shareholding in the Airlines.142 In particular, Respondent argues that Air Comet diverted the funds it received from SEPI from their intended purposes under the SPA, and asserts that Claimants’ goal "was not the efficient management of the Airlines, but to appropriate [t]he sum of USD 753 million that SEPI had given them."143
265.
The SPA contemplates that SEPI would make three sets of payments to Air Comet to be used for the following purposes:

To pay off liabilities of the Airlines up to USD 300 million, in accordance with a list of liabilities to be determined by SEPI. (SPA Article 9)

To pay for economic commitments resulting from the execution or implementation of the Industrial Plan, in an amount of up to USD 248 million. (SPA Article 9)

To pay for "any deviations in the [Airlines’] assets and liabilities between July 31, 2001 and the closing." (SPA Article 11) The amount to be paid by SEPI was not specified at the time of the SPA, although Respondent puts the final amount at USD 205 million.144

266.
The SPA also contemplates that Air Comet would make a financial contribution of its own, in the amount of USD 50 million, to be paid within nine months of the closing of the SPA.145
267.
It is worth first considering the general relevance of these commitments and their alleged breach to this arbitration. The Tribunal determined in its Decision on Jurisdiction that to the extent any of the alleged breaches of the SPA did occur, they could not affect jurisdiction because they would have only occurred subsequent to Claimants’ acquisition of the investment.146 For the avoidance of doubt, the Tribunal considers that any acts or contributions made by Air Comet to the Airlines are acts or contributions made by Claimants. This follows from the fact that Claimants have demonstrated that they have collectively maintained majority ownership of Air Comet from the time that the Airlines were purchased from SEPI through to the commencement of the arbitration, albeit in varying proportions.147 The Tribunal notes that this is consistent with the approach taken by Respondent in its submissions and throughout the proceedings of referring to Claimants as part of the Marsans Group.
268.
With respect to the relevance of these alleged breaches on the merits, Respondent now argues that the diversion of the funds from SEPI "translates into clear and obvious breaches of both domestic and international law."148 Specifically, Respondent asserts that the Marsans Group’s conduct was contrary to the principle of good faith that is part of Argentine, Spanish and international law.149 Respondent also argues that the alleged diversion of funds "marks the beginning of a pattern that the Group would follow regarding the Airlines through its management" and that consists of "absorb[ng] as much liquidity as possible, both from SEPI’s funds and from the Airlines’ administration[…]"150
269.
In response, Claimants assert that Air Comet complied with the terms of the SPA. Claimants request that the Tribunal dismiss Argentina’s arguments that Claimants did not invest in the Airlines and that Claimants’ investment was inadequate or unlawful. Claimants further request the Tribunal to find that Argentina’s false allegations are irrelevant to either a finding of liability or the determination of quantum in this arbitration.151 Each of these individual allegations, as they relate to admissibility and standing, will be discussed in the following sections.

SEPI’s Payment of USD 300 million for the Cancellation of Debts

270.
Respondent’s allegations regarding Claimants’ misuse of the SEPI funds focuses most intensely on the use of the USD 300 million SEPI provided to cancel ARSA’s debts. The Parties largely agree that Air Comet used the majority of these designated funds to buy or subrogate ARSA’s existing debts from its current debt holders.152 ARSA’s liabilities were then transferred from Air Comet to Interinvest, which turned them into capital contributions that accordingly increased Interinvest’s stockholdings in ARSA.153
271.
Respondent argues that these actions violated the terms of the SPA, Article 8, which earmarked those funds for paying off the Airlines’ liabilities.154 According to Respondent, the subrogation benefited Air Comet to the detriment of both ARSA and the Government of Argentina, which held shares in ARSA.
272.
With respect to ARSA, Respondent argues that "it is reasonable to suppose that the financial evolution (and other aspects) of the Airlines would have been different if the funds in question contributed by SEPI had been applied to the cancellation of debts, as stated in the Share Purchase Agreement. However, through the Marsans Group’s manoeuvre [sic], after the funds have been contributed by SEPI, the Airlines still owed said debts, but to a new creditor: by chance, the Marsans Group (which in turn acquired the claims without paying anything, due to the diversion of SEPI’s funds)."155
273.
With respect to the Government of Argentina’s own shares in ARSA, Respondent argues that since said claims were ultimately contributed to ARSA’s capital, Air Comet obtained the additional benefit of holding a higher proportional interest in ARSA’s capital, with the other shareholders’ interests being reduced accordingly.156 Respondent asserts the Argentine Republic’s interest was reduced from 5.34% to 1.34% by this measure.157 Respondent notes that since the government retained less than 2% of the share capital required by the Argentine Corporations Law No. 19,550 to request information and to have reports filed with the Audit Committee investigated, it was reduced to the role of "a passive shareholder at the mercy of the Marsans Group’s shareholders."158
274.
Claimants concede that Air Comet subrogated ARSA’s creditors’ claims rather than paying off the debt directly. In their Rejoinder on Jurisdiction, they described precisely how these transactions were structured, based on the SPA and two subsequent agreements dated October 15, 2001159 and December 3, 2001:160

These agreements provided as follows: (i) Air Comet would acquire credits against ARSA directly from ARSA’s creditors; (ii) Air Comet would lead the renegotiation with ARSA’s creditors and reorganization proceeding; (iii) Air Comet would subrogate in ARSA’s creditors’ rights to facilitate ARSA’s negotiation with its creditors in the reorganization proceedings, and (iv) Air Comet would then transfer those credits to Interinvest, which would make a capital increase in ARSA, and consequently, increase Interinvest’s stockholdings in that airline.161

275.
Claimants submit that Air Comet’s subrogation to ARSA’s creditors’ rights was done with SEPI’s consent. ARSA’s liabilities were ultimately transferred to Interinvest and contributed to ARSA’s capital, thereby increasing Interinvest’s stockholdings and reducing ARSA’s debt.162 Claimants assert that "[t]his subrogation was done in accordance with the SPA, Spanish and Argentine law, and with the approval of SEPI, and it is specifically provided for in the December 2001 Agreement" concluded subsequent to the SPA.163 While Claimants concede that the Argentine Republic’s shareholdings in ARSA decreased, Claimants argue that the alleged "dilution" was not detrimental to ARSA itself, and that Respondent was presented with the opportunity to match Interinvest’s capital contribution, but opted not to do so.164
276.
Moreover, Claimants point to their success in settling ARSA’s liabilities, noting that they were able to reach a Settlement Agreement with ARSA’s creditors that was later approved by the Argentine bankruptcy court. They note that only three years after their acquisition of the Airlines, 97 percent of ARSA’s Settlement Agreement had already been paid.165
277.
The Tribunal has carefully reviewed the evidence and concludes that, despite Respondent’s allegations, Air Comet’s use of the USD 300 million did not violate any of its agreements, nor did Respondent prove that it violated any laws.
278.
Pursuant to Article 9 of the SPA, SEPI assumed responsibility for debts and liabilities pre-July 2001. To meet that obligation, in part, SEPI undertook to transfer USD 300 million, which were to be allocated to the payment of the liabilities/debts of Interinvest or the Airlines. The money was to be transferred at closing (formalizacion) pursuant to certain instructions and priorities set out in Article 9. The article also says that the parties will agree to the procedure for delivery of the funds prior to closing.166
279.
Interinvest and SEPI entered into a subsequent agreement,167 in which Interinvest stated that it had the intention of purchasing outstanding credits owed by it, ARSA and AUSA to a list of creditors listed in its Annex A. It goes on to state that in order to do so, Interinvest has requested from SEPI the contribution of funds. In turn, SEPI states that it intends to contribute the funds subject to their return if the acquisition of the debts does not proceed. The agreement then goes on to record that SEPI gives to Interinvest USD 300 million for the purpose of purchasing debts owed by Interinvest and the Airlines in the amount of USD 319.51 million. The creditors listed from whom the debts were to be purchased included ABN Bank, SEPI itself, and Repsol. The agreement is signed by both parties and the copy in evidence bears a stamp showing it has been produced from a central archive.
280.
The evidentiary record also contains a further agreement relating to the acquisition of certain debts of ARSA, specifically debts owed to ABN Bank, SEPI, Indra and Repsol. This agreement dated December 3, 2001 is between Air Comet and Transportes de Cercanias, Busursa (Autobuses), Segetur and Viajes Marsans (the "December 3, 2001 Agreement").168 This agreement records that Air Comet is obliged to use the credits/debts purchased as its own funds in order to contribute irrevocably as capital or contributions to ARSA in the manner which is most fiscally convenient to it. This obligation was to be realized within six months of the approval of the agreement of the creditors to ARSA’s re-organization proceedings (Point II). In the event the credits purchased were not used as agreed, the signatories to the contract conferred to SEPI the irrevocable right to demand from any of them payment of the amounts at issue (approximately USD 300 million) (Point III).
281.
Point IV of that agreement records that Air Comet, as the shareholder of Interinvest, which was the controlling shareholder of ARSA, was obliged to send to SEPI a copy of the certificates issued by the auditors of ARSA recording the destination of the credits purchased by Air Comet (pursuant to Point II). The parties also declared that a copy of the contract would be notified formally by a notary to SEPI for its knowledge, approval and acceptance of the rights accorded to it under the contract. It appears that on the same date, December 3, 2001, this contract was "elevated" to public status before a notary who also confirmed that he had been requested to officially notify a copy to SEPI. The notary goes on to state that a copy was notified to SEPI. The record indicates that on December 5, 2001, another notary attended at the offices of SEPI and met with the Secretary General of that company who declared before the notary that he was familiar with the contract being "elevated" to public status and that he accepted expressly the rights conferred upon SEPI in the contract and that he reviewed the documents and approved and signed them. Thus, the Tribunal notes that although SEPI is not a signatory to this agreement, it does appear that SEPI was familiar with it and formally agreed to it; the contract bears a number of stamps and seals, notably an apostille dated July 1, 2003.
282.
The record also indicates that the Spanish Tribunal de Cuentas, which reviews on an annual basis various activities of public sector enterprises, audited these particular agreements and transactions. There are a number of audit reports in evidence that disclose an ongoing review of this, and other, investments. Report No. 705 sets out in considerable detail the lengthy history of the Spanish government’s/public sector’s involvement in the Argentine airlines and how SEPI came to purchase the actions it held in Interinvest.169 The court reviewed in some detail the various provisions of the SPA and the contracts described above. It reviewed the transfer of the USD 300 million from SEPI to Air Comet170 and noted that USD 27 million were transferred from Interinvest’s blocked account (into which USD 300 million had been transferred) to pay a shortterm loan owed to ABN Bank.171 It also reviews the irrevocable contribution agreement of October 15, 2001 and the agreement between Air Comet and its shareholders of December 3, 2001 (described above). The court then examined the purchase of the debts from the various creditors rather than their payment. In reviewing what occurred, the Tribunal de Cuentas set out in detail SEPI’s explanations: SEPI believed that the purchase (and subrogation right) as opposed to payment of the debts was permitted by the SPA. The report also makes it plain that SEPI was fully aware of the contract and approved it.
283.
In its conclusions to Report No. 705, the Tribunal de Cuentas stated the following:

SEPI contributed USD 300 million to Interinvest which pursuant to the contract had to be used to pay debts. From this amount, USD 273 million were used by Air Comet to purchase those debts, leaving it subrogated in the position of the creditors against ARSA in order for it to intervene in the re-organization proceedings of ARSA. All of this was with the consent of SEPI which even sold to Air Comet one of its own credits owed to it by ARSA. Air Comet undertook to capitalize ARSA’s credits within six months from the date on which the Argentine judicial authority approved the rearrangement plan. That deadline elapsed on 26 June 2003 and to date it is unknown whether the contributions to ARSA’s capital were made.172

284.
In its recommendations, the Tribunal de Cuentas states that SEPI’s conduct should comply with the concrete terms of the privatization authorization and comply with the formal procedures for any modifications. It also recommended that SEPI should require strict compliance with the obligations assumed by Air Comet which remained outstanding at the time, taking into account, in any event, the protection of the economic interests of the public sector. Finally, it also recommended that as a general matter in privatization processes where obligations are to be performed after the closing of the transfer contract, the privatization consultative committee be involved until all obligations have been performed in their entirety. However, the Tribunal de Cuentas did not recommend challenging the contract or invalidating it or any of the steps taken by SEPI.
285.
Claimants’ investment was also the subject of further review by the Tribunal de Cuentas. In Report No. 765 dated July 19, 2007, the court again addressed the transfer of the USD 300 million and the various other post-closing obligations contained in the SPA.173 In its conclusion, the court noted that SEPI had submitted a number of other documents, which did not fully demonstrate that the debts had been finally contributed to ARSA. This appears to have lead the court to again address this subject in its next report (No. 811), discussed below. The court did note that SEPI had submitted documentation demonstrating that other requirements under the SPA, such as Air Comet’s capital contribution of USD 50 million to ARSA, had been performed.174
286.
A further report dated October 30, 2008 (Report No. 811) also addressed these issues. Report No. 811 again referred to the agreements related to Claimants’ investment recording that Interinvest and SEPI entered into the agreement of October 15, 2001 in which it was agreed that Interinvest would purchase the liabilities (of Interinvest and the Airlines), rather than pay the liabilities as provided for in the SPA.175 It also records that, subsequently, on December 3, 2001, Air Comet and its shareholders signed an agreement pursuant to which Air Comet undertook to acquire ARSA’s credits and that Air Comet would become the creditor of Interinvest/the Airlines. Report No. 811 also recorded, as described above, that the agreement of October 15, 2001 was recorded with a notary public and notified to SEPI for its knowledge and consent. It went on to find that Air Comet then proceeded to purchase the credit/liabilities in December 2001 and June 2002.
287.
Report No. 811 also discussed the delays in SEPI providing the court with documentation reflecting the use of the funds provided by SEPI.176 The report states that in view of the documentation eventually received, one could understand that the commitment undertaken by Air Comet in the December 3, 2001 Agreement to contribute all acquired credits to ARSA’s own funds had been accomplished, albeit more than four years late on November 21, 2007. The court mentions that Air Comet obtained the additional benefit of receiving a larger pro rata share in ARSA’s capital, which resulted in a reduction in the other shareholders’ interests.177 As a result, the report states that the money contributed, in principle, by SEPI to assist the Argentine company could be seen as giving rise to a benefit for the purchasers (Air Comet/Claimants). The court stated that, although this could be justified by the modifications introduced in the December 3, 2001 Agreement (the irrevocable contributions agreement, which had been notarized), this had not been provided for in the SPA, as the latter had been authorized by the Council of Ministers.178
288.
In its conclusion, Report No. 811 states as follows:

2. SEPI contributed USD 300 million to Interinvest that, under the Agreement, should have been allocated to the payment of liabilities of the Argentine group. From that amount Air Comet used 273 million with SEPI’s consent, to purchase those liabilities and undertook to capitalize the credits in ARSA by June 26, 2003. The documents finally furnished by SEPI with its allegations evidence that the liabilities were ultimately contributed to ARSA’s capital, although with more than four years’ delay.179

289.
Although Respondent argues that the purchase of ARSA’s debt and subrogation to ARSA’s creditor’s claims was not in compliance with the terms of the SPA,180 the references above indicate that SEPI was, indeed, aware of the purchase of the debt and subrogation by Air Comet and consented, as found by the Spanish audit court. In these circumstances, it appears that while the acquisition and subrogation may not have been in accordance with the SPA as originally contemplated, the parties subsequently agreed to a different handling of the USD 300 million contributed by SEPI. There is no indication that SEPI ever complained of this or that it sought to annul the SPA on this basis. In fact, SEPI’s position before the Tribunal de Cuentas was that this was permitted by the SPA. In these circumstances, the Tribunal finds that there is no basis to conclude that the alleged non-compliance with the terms of the SPA has been made out nor that any deviation from the original terms of the SPA would provide a basis for finding that the transaction was illegal or would justify declining jurisdiction on the basis that the investment was not made "in accordance with [Argentina’s] legislation".181
290.
Respondent also alleges that the acquisition of ARSA’s debt and subrogation by Air Comet was in breach of Argentine law.182 The Tribunal notes that these arguments were not very well developed. Despite this, the Tribunal has considered these arguments and notes that the Argentine courts reviewed the handling of ARSA’s re-organization proceedings and approved of the various steps throughout.
291.
The re-organization proceedings of ARSA were finally concluded by the Argentine courts in June 2011.183 The Tribunal agrees with Claimants’ submission that the ARSA re-organization proceedings were the proper place to raise any alleged illegality or impropriety related to the investment and the record appears to indicate that Respondent did not do so at the time. The Tribunal has taken into account Respondent’s assertion that the termination of ARSA’s reorganization proceedings in the Argentine courts in no way prejudges the legality of Claimants’ actions during the reorganization proceedings.184 However, Respondent has failed to establish in this arbitration any basis on which the Tribunal could find that the acquisition of ARSA’s debt and subrogation by Air Comet in and of itself was in breach of Argentine law.
292.
Respondent’s arguments regarding the effect of the Spanish criminal court proceedings relating to the tax treatment of Air Comet’s acquisition of ARSA’s liabilities will be addressed below.185
293.
Respondent further argues that Air Comet’s acquisition of ARSA’s debt and subrogation and Interinvest’s subsequent capitalization of the credits contributed by Air Comet unduly diluted its holdings in ARSA and AUSA.186 As noted above at paragraph 273, Respondent asserts the Argentine Republic’s interest was reduced from 5.34% to 1.34%, which it says resulted in it being reduced to a "passive shareholder". Respondent has not explained how this effect of the treatment of ARSA’s debt was improper. Claimants admit that the capitalization of credits resulted in the reduction in Respondent’s shareholding and note that Respondent was offered the opportunity to make capital contributions at the time, which would have avoided the dilution in its shareholding, and declined to do so. The dilution of Respondent’s shareholding was the consequence of the capitalization and Respondent could have avoided that consequence by making its own capital contribution. Having determined that the capitalization was not improper, it follows that the resulting capital contribution and dilution of Respondent’s shareholding was also not improper. Respondent has failed to demonstrate how simply reducing its proportionate shareholding was contrary to any law or harmful to ARSA itself.

SEPI’s Payment of USD 248 million for Air Comet’s Industrial Plan

294.
Respondent argues that Air Comet did not properly use the USD 248 million in funds from SEPI to enact its Industrial Plan. Respondent argues that these funds were to be used for "a) optimizing the network and routes by improving the fleet, b) improving business management efficiency, and c) rationalizing the costs and processes through initiatives not involving payroll reduction."187 Respondent argues that the certifications Air Comet obtained to prove the use of the funds only support the bank fund movements, not the destination of the funds for specific purposes.188 Instead, relying on its expert, KPMG, Respondent argues that these funds were used to pay for daily operations of the Airlines.189 Respondent’s primary issue appears to be whether these funds were properly contributed to "executing, or for the purpose of implementing the Industrial Plan" of the Airlines, as well as salaries.190 In this regard, it relies on KPMG’s analysis that approximately 80% (USD 203 million) was earmarked for operating expenses.
295.
Claimants argue that they applied the USD 248 million SEPI funds in accordance with the SPA. According to Claimants, SEPI, Air Comet and Interinvest agreed that these moneys would be transferred to Interinvest as follows: (i) USD 128 million in October 2001 after the SPA notarization, and (ii) once Interinvest had spent and certified the use of the first USD 100 million, SEPI would transfer to Interinvest four contributions of USD 30 million each, thus totaling the USD 248 million committed in the SPA. SEPI would release each transfer only after receiving from PricewaterhouseCoopers (PwC) a certification confirming that the previous transfer was spent in accordance with the SPA.191 Claimants state that Interinvest then transferred most of these amounts directly to the Airlines to be used to pay for, inter alia, their leasing installments, fuel, salaries, repairs, airport fees, advances on purchases and taxes.192 For each of these payments, PwC issued a certificate justifying the use of the funds.193
296.
For the reasons that follow, the Tribunal concludes that Respondent has not proved that Claimants’ use of the USD 248 million was improper or illegal and, in any event, what effect any improper or illegal use of funds would have on the Tribunal’s jurisdiction.
297.
The Tribunal notes that Article 9 of the SPA provides:

BUYER may allocate the amount of USD D 248,000,000 to the payments or investments to be made by the CORPORATIONS or the COMPANY in favor of the CORPORATIONS executing, or for the purpose of implementing, the INDUSTRIAL PLAN.

If the auditor’s certificate shows that amounts were used other than for making payments or investments to be made by the CORPORATIONS or the COMPANY in favor of the CORPORATIONS executing, or for the purpose of implementing, the INDUSTRIAL PLAN, BUYER shall reimburse such amounts, although SELLER may offset them against pending payment obligations. No reimbursed amounts may be requested again by BUYER; therefore, it will be deemed that SELLER’S primary obligation lias been reduced accordingly.194

298.
Like the use of funds to acquire ARSA’s debts, the issues related to the use of the USD 248 million was also the subject of investigation by the Tribunal de Cuentas. The Tribunal de Cuentas found that the USD 248 million were contributed to Interinvest and the Airlines, although the SPA contemplated their contribution to the Industrial Plan, including the expansion of the Airlines’ fleet and development of new routes. In its Report No. 705, the Tribunal de Cuentas reviewed the use of these funds and found that the majority of the funds were contributed to meet operating expenses.195 It noted that in response to inquiries from SEPI, Air Comet responded that if it had not acted to invest the funds in operating expenses it would have been impossible to avoid the bankruptcy since a number of the planes would have been unable to fly and salaries had to be paid. All of this would have had a very negative effect on the implementation of the Industrial Plan.196 The Tribunal de Cuentas also reviewed the various responses provided by SEPI, which while continuing to follow up and obtain further information from Air Comet, defended the use of the funds by Air Comet and continued to advance funds until the full USD 248 million had been transferred to Air Comet.197
299.
In its Report No. 765, the Tribunal de Cuentas concluded that Air Comet had demonstrated the contribution of 22 of the 23 additional planes which it had undertaken to supply in the SPA.198 Further, the Tribunal de Cuentas noted that SEPI penalized Air Comet in the amount of USD 86,957 for not supplying the last plane, as contemplated in Article 9 of the SPA set out above. Article 7 of the SPA refers to certain specific undertakings contained within the "Plan Industrial", which include the maintenance of the employee headcount, contribution of USD 50 million to capital, maintenance of a majority interest in airlines, the expansion of the routes of the Airlines and the expansion of the fleet by a total of 23 airplanes.
300.
As in the case of USD 300 million, the evidence indicates that SEPI was aware of how Air Comet was using the USD 248 million intended for the execution or implementation of the Industrial Plan. Apart from applying a penalty of USD 86,957 for failure to supply one airplane, SEPI does not appear to have invoked any contractual remedies against Air Comet for the possible failures to comply with the terms of the SPA. Nor did SEPI or the Spanish government seek to revoke the agreement on the basis of possible non-compliance by Air Comet. As a result, there is no basis for the Tribunal to find that Claimants’ use of the USD 248 million was illegal or improper.

Claimants’ own USD 50 million Capital Contribution

301.
Under Article 7(c) of the SPA, Air Comet was obligated to contribute USD 50 million as follows:

By means of a timely increase of capital, BUYER shall admit new institutional partners within a term of NINE MONTHS since the CLOSING, and undertakes to make such a capital increase during that term of at least USD 50,000,000 (or its equivalent in Pesos argentinos). BUYER undertakes that at least 15% of the new partners shall be Argentine eligible investors. Such capital increase could be made as a one-time contribution or by installments during the above mentioned period. Compliance with this capital increase is guaranteed by a penalty clause of THREE MILLION (3,000,000) United States Dollars (USD) to be paid by BUYER to SELLER, upon SELLER’S mere demand, without BUYER’S right to claim any exception, as soon as it is proved that BUYER lias defaulted in its obligation and such default is not cured within a term of 4 months.

302.
Respondent asserts that Air Comet did not comply with its contribution requirement, arguing that Air Comet only paid USD 13.5 million of the total required amount and that it did so seven months later than the time period set forth in Article 7(c) of the SPA.199
303.
For their part, Claimants submit that, through Air Comet, they made a total cash contribution of USD 24.2 million over the course of their management of the Airlines.200 This amount includes cash contributions of USD 13.5 million to Interinvest,201 USD 9.9 million to ARSA202 and USD 0.8 million to AUSA.203 Claimants do not assert that they paid in full the USD 50 million amount required by Article 7(c).
304.
The Tribunal notes that neither Party indicates that Air Comet was ever found to be in default of its obligation to make the USD 50 million investment, nor that SEPI took any steps under the SPA or otherwise in this regard. The obligation to contribute USD 50 million to capital was also the subject of review by the Tribunal de Cuentas. In its Report No. 765, the Spanish Audit Court concluded that Air Comet had complied with its obligation to increase the capital of ARSA by USD 50 million (albeit somewhat late).204 The Tribunal de Cuentas determined that Air Comet paid in cash approximately 25% of the amount on February 19, 2003 and the balance by February 11, 2005.205
305.
Accordingly, the Tribunal finds that Respondent has failed to demonstrate the alleged breach of the SPA and that Claimants made additional capital contributions to the Airlines after their initial investment.

2. Subsequent Investments made by Claimants

306.
In response to Respondent’s claims that Claimants did not invest even one peso in the Airlines, Claimants assert that in addition to the cash contributions they made (described above), they also reinvested into the Airlines the USD 106 million in profits that the Airlines made during 2002, 2003 and 2004.206 As discussed further below, Claimants point to two key aspects of their investment in the Airlines. First, they assert that Air Comet and the other companies of the Marsans Group brought significant "synergies" to the Airlines. Second, they point to their improvement of the Airlines’ fleet and their "massive" order of additional aircraft.

"Synergies" Contributed by the Marsans Group

307.
Claimants assert that under their control, the Airlines became "part of a larger network of companies specializing in air transportation and tourism, and comprising over 11,000 employees."207 Claimants describe these synergies:

As any well-managed entities within an integrated group of companies, ARSA and AU S A were able to benefit from the other companies’ activities (including sales of Viajes Marsans—the largest Spanish travel group—or Astra’s negotiating) and resources (Air Comet’s Madrid hub to Emope, Viajes Marsans’ access to Amadeus and IATA, to cite a few). Claimants’ management allowed the Argentine Airlines to double-down on their strengths (in the maintenance area, for instance) and to mitigate their liabilities (in part by sending aircraft to Air Comet).208

308.
Claimants point in particular to the following benefits received by the Airlines: the channeling of Marsans Group sales towards ARSA and AUSA; negotiating discounted rates for Marsans Group companies; unified booking, airfare clearing and revenue management systems; unified flight operations; unified aircraft maintenance; intercompany aircraft leasing and reassignment and chartering; and unified aircraft purchasing.209 Claimants assert that the Marsans Group gave the Airlines preferential treatment among the Marsans companies, including the rebooking of passengers from other Marsans Group airlines onto ARSA’s Madrid-Buenos Aires flights, the conclusion of an agreement to use Air Comet’s fleet, the provision of free managerial advice and assistance, and the use by other Marsans Group airlines of ARSA’s maintenance facilities in order to generate additional revenue for ARSA.210
309.
Respondent discounts Claimants’ so-called synergies. First, Respondent asserts that Claimants have submitted no evidence of the alleged discounts received by the Airline through its connection to the Marsans Group.211 And to the contrary, the Report of Respondent’s expert, Oliver Wyman, emphasizes the negative impact of the "synergies." The Wyman Report notes in particular the relatively high marketing and sales costs due to reliance on indirect sales channels, which meant higher agency commissions, increased booking fees and a costly web booking engine.212
310.
Second, Respondent argues that Claimants’ alleged "synergies" amounted to no less than asset-stripping by the Marsans Group. Arguing that "Claimants had nothing to offer the Airlines,"213 Respondent asserts that "[i]n general, what Claimants describe as ‘benefits’ for the Airlines were basically benefits for the Marsans Group (for example, the use of the hotels of the latter by the crew of the Airlines, etc.).... [I]n reality, the Marsans Group acted as a parasite of the Airlines, taking advantage of them, extracting all it could from them, and leaving them in appalling conditions and at the doors of bankruptcy."214

Acquisition of Aircraft

311.
Claimants point to Interinvest’s expansion of the Airlines’ fleet of airplanes during their control of the Airlines. They assert that the Airlines "added" 50 airplanes between the end of 2001 and the end of 2008, although it is not entirely clear from this whether all of these planes were purchased or leased.215 Claimants note in particular that ARSA signed a USD 557.8 million leasing contract for Boeing aircraft in 2004, "which enabled the airline to operate more long-distance flights and to increase its passenger capacity on domestic and international routes."216 In 2006, Marsans Group concluded a Memorandum of Understanding with Pratt & Whitney to equip part of the Airlines’ fleet with new engines and provide maintenance services.217 Claimants also purchased a Boeing 737 flight simulator that they assert provided significant advantages to the Airlines.218
312.
Claimants point to a number of important aircraft purchases made during their management of the Airlines, for a total of 73 new aircraft.219 First, they point to a framework agreement the Marsans Group (through an Irish subsidiary, Astra) entered with Airbus in July 2006 for twelve Airbus A330-200s, six of which would go to ARSA.220 Claimants also point to subsequent agreements concluded between Astra and Airbus to purchase the following:221 ¶ five additional Airbus A330-200s,222 2) 42 Airbus A320-200s to be delivered from July 2010 to 2014 (Claimants assert that "[t]his order was specifically intended for ARSA and AUSA’s fleets"),223 3) ten Airbus A350-900s to be delivered in 2014 (Claimants assert that "[t]his order was intended to supplement the previously ordered A330-200s"),224 and 4) four Airbus A380-800s to be delivered in 2011 and 2012 (jumbo planes that were "ideally suited to the Buenos Aires-Madrid route").225
313.
Respondent argues that the fleet added by Claimants "was old, with low indexes of dispatch reliability and high fuselage deformation indexes and performance penalty."226 Respondent also argues that the planes were not "acquired" but were received under leasing contracts, and as such should not be considered as "acquisitions" that became the property of the Airlines.227 Finally, Respondent argues that Claimants failed to add the types and number of aircraft designated by the 2001 Share Purchase Agreement, within the timeline contemplated by the SPA.228 Respondent’s expert, KPMG, argues that

[O]ut of the 248 million dollars destined to the Industrial Plan, AIR COMET only allocated a reduced portion to investments, although the Plan established the need for investments to expand the fleet. The Marsans Group incorporated old aircrafts and models different than those typified in the purchase agreement. If it had incorporated the models established in that contract in 2001, by 2004 the airlines would have had 12 Airbus 320/321, seven Airbus 340-200/300 and another four aircrafts of other types, a fleet that would have meant a completely different operating situation for the airlines.229

314.
In the Tribunal’s view, it is unnecessary to decide whether these additional investments actually qualify as investments for the purposes of founding jurisdiction. As determined in the Decision on Jurisdiction, Claimants have met the threshold of proving an investment. The Tribunal does not find that any of the additional evidence led by Respondent on the merits affects this conclusion. If anything, the Tribunal has been provided with more detailed proof that, as outlined above, qualifying investments were made.
315.
The Tribunal notes that, in any event, when Air Comet took over the operation of the Airlines, they had all but completely stopped operations and were on the verge of bankruptcies. But for Claimants’ investment, that would have been the end of the Airlines. Rather than completely ceasing operations (or being taken over by Respondent and operated by it), the evidence indicates that the Airlines went back into operation and performed quite well for a number of years. The evidence indicates that Air Comet did, in fact, invest in the Airlines by reinvesting profits, expanding the fleet and giving the Airlines access to various benefits through the Marsans Group’s sales and booking systems, management systems and aircraft leasing and purchasing. The Tribunal finds that Claimants also made additional investments in the Airlines. In the Tribunal’s view, Respondent’s arguments in response to these items really go to the value of the Airlines and what compensation, if any, is due for their expropriation. Accordingly, the question of whether or not Claimants reinvested profits and contributed synergies are relevant to the value of Claimants’ investment and not its existence and will be discussed, as necessary, in the discussion of the merits, below. For the sake of good order, the Tribunal notes that Respondent has failed to prove its contention that Claimants’ investment was entirely opportunistic in the sense that the investment was made in order to misappropriate the funds provided by SEPI; the evidence clearly demonstrates that Claimants operated the Airlines for a number of years and contributed funds provided by SEPI, as well as its own funds, to retire the debt owed to the Airlines’ creditors at the time of investment and to the Airlines’ ongoing operations thereafter.

E. Court Proceedings Involving the Marsans Group

316.
Respondent has briefed in its pleadings a number of legal proceedings involving Claimants and the Marsans Group in Spain and Argentina. Respondent addressed most of these cases at the jurisdictional stage of these proceedings, arguing that Claimants’ investment was therefore illegal. In its Decision on Jurisdiction, this Tribunal rejected Respondent’s objection on the grounds that these alleged illegalities occurred after the investment was made,230 although the Tribunal noted that "certain of the allegations raised under this objection may affect the merits of the claim" and that "it will be open to the Parties to make further submissions in respect of these allegations as appropriate during the merits stage of the Arbitration."231
317.
Respondent has referred to at least seven different proceedings and investigations taking place within the Spanish courts and at least three different proceedings pending before Argentine courts. A brief description of each proceeding, as characterized by the Parties, is set out below.

1. Spanish Legal Proceedings

Proceedings before Central Court for Investigative Proceedings No. 6

318.
In its objections to jurisdiction, Respondent asserted that under the terms of the 2001 Share Purchase Agreement, SEPI was to provide funds to Air Comet, a portion of which was to be used to cancel ARSA’s debts. According to Respondent, instead of complying with the terms of the SPA, Air Comet used these SEPI funds to purchase the outstanding debt from the existing creditors, thereby subrogating the claims.232 For Claimants’ part, they have asserted that Air Comet’s acquisition of liabilities, the subsequent transfer of the credits to Interinvest, and the capital increase in ARSA were all lawfully conducted.233
319.
These allegations concerning the allocation of SEPI funds have been the subject of a preliminary criminal investigation before the Central Court for Investigative Proceedings No. 6, against Messrs. Diaz Ferran, Pascual Arias and Mata Ramayo. The Parties agree that these allegations were dismissed on September 7, 2011, with the exception of one remaining allegation.234 As described by Claimants, the allegations that were dismissed include the following: crimes of falsification of Air Comet’s financial statements or books, unlawful exaction of money, procedural fraud, and misappropriation of public funds.235 The remaining claim concerned a crime against the Spanish Public Treasury on the basis of Air Comet’s non-payment of corporate tax, committed with the participation or involvement of Messrs. Diaz Ferran, Pascual Arias and Mata Ramayo.236
320.
On December 9, 2013, Criminal Central Court No. 1 of Madrid found Messrs. Diaz Ferran and Mata Ramayo guilty of corporate tax evasion with respect to Air Comet’s failure to report the benefit it received from the subrogation of ARSA’s debt.237 Messrs. Diaz Ferran and Mata Ramayo were each sentenced to two years and two months of prison and a euro 99 million fine (which reflected the amount of tax payable by Air Comet). On May 23, 2014, the Central Court of Criminal Matters of the National Court of Spain dismissed the appeal of this judgment and issued an order enforcing the sentences of Messrs. Diaz Ferran and Mata Ramayo.238

Proceedings before Central Court in Charge of Preliminary Investigations No. 1 of Madrid

321.
This criminal proceeding concerns allegations of embezzlement by Messrs. Diaz Ferran and Pascual Arias as administrators of Viajes Marsans S.A., and Mr. Ivan Losada as administrator of Teinver.239 For their part, Claimants argue that this event is totally unrelated to both the jurisdiction of this Tribunal and the subject matter of this arbitration.240 Claimants also note that the court’s order of February 2, 2012 was to conduct a preliminary investigation against the named individuals.241 Neither Party gave any additional information about the nature of the investigation, the timing of the alleged embezzlement, or the nature of Claimants’ involvement in the allegations.242

Investigation before the Audiencia National Espanola for "Possible Procedural Fraud"

322.
Respondent makes a brief reference to an investigation in which Messrs. Diaz Ferran and Pascual Arias are suspected of "possible procedural fraud," namely, providing the court with false documents.243 Claimants deny the relevance of the alleged preliminary investigation as well as the validity of the alleged claims and the related press reports.244 Neither Party describes the nature or the timing of this dispute, nor does either Party illustrate clearly the connection of this investigation to the three Claimants.

Proceedings before the Court in Charge of Preliminary Investigations No. 8

323.
This case appears to have been brought by a creditor of the Marsans Group against Messrs. Diaz Ferran and Pascual Arias, Losada and Angel de Cabo Sanz and concerns alleged illegal acts of Mr. de Cabo’s company, Posibilitum Business S.L., with respect to former Marsans Group companies in the course of Air Comet’s insolvency proceedings.245 Claimants characterize this proceeding as a preliminary investigation.246 Neither Party articulates a clear connection between these proceedings and any of the three Claimants.

Proceedings before the Court in Charge of Preliminary Investigations No. 35 of Madrid

324.
As characterized by Respondent, these proceedings concern charges of procedural fraud against Dr. Mata Ramayo, a former partner of Messrs. Diaz Ferran and Pascual Arias, and Executive Vice Chairman of the Board of Directors of ARSA during the Marsans Group’s administration.247 According to Respondent, on May 17, 2013, in an order deciding to continue preliminary proceedings, the Spanish criminal judge found that a false document had been irregularly and belatedly included in the record of ARSA’s insolvency proceedings in Argentina. Respondent argues that the false document relates to Dr. Mata Ramayo’s attempt to mislead the Spanish criminal judge into concluding that Royal Romana Playa had only acted on behalf of Air Comet, and not as the assignee of Air Comet’s creditors against ARSA.248
325.
Claimants assert that this preliminary investigation is irrelevant because it is a Spanish proceeding under Spanish law, and the validity of the document at issue has already been decided in Argentine courts during ARSA’s reorganization proceedings, which are now final.249

Investigation before the Central Court in Charge of Preliminary Investigations No. 6 -"Operacion Crucero"

326.
As characterized by Respondent, this criminal proceeding involved Messrs. Diaz Ferran, Pascual Arias, de Cabo and a number of others who are being investigated on suspicion of illegally concealing or disposing of their assets in order to avoid the claims of their creditors.250 The timeline of the allegedly illegal activities is not entirely clear, although Respondent refers to personal guarantees made by Messrs. Diaz Ferran and Pascual Arias starting in 2008, and it appears that the allegedly illegal activities may have extended after the purchase of the Marsans Group companies by Posibilitum Business S.L. in 2010.251 Mr. Diaz Ferran was provisionally detained in connection with this investigation on December 5, 2012, with a bail set at 30 million euros.252 On April 29, 2014, the Court set the various charges for oral trial proceedings against Mr. Diaz Ferran and others before the Criminal Division of the National Court of Spain.253
327.
As characterized by Claimants, these proceedings are irrelevant to the subject matter of this arbitration, and concern a number of specific events that allegedly occurred well after Argentina’s expropriation of the Airlines.254 Further, Claimants say that the proceedings do not directly involve them nor the beneficiaries of any recovery the Tribunal may award.255

Insolvency Proceedings of Viajes Marsans S.A. and related companies before Commercial Court No. 12

328.
As characterized by Respondent, a Spanish prosecutor alleged that companies of the Marsans Group committed serious irregularities in connection with their insolvency proceedings.256 Specifically, the prosecutor requests that Messrs. Diaz Ferran and Pascual Arias, and Posibilitum Business S.L. be found liable in connection with their acts as the reorganization administrators of Viajes Marsans S.A., Viajes Crisol S.A.U., Rural Tours S.A.U., and Tiempo Libre S.A.U.257 According to Respondent, on June 13, 2013, the Spanish judge characterized the insolvency proceedings of Viajes Marsans, S.A. as culpable.258 In its judgment, the court concluded that Viajes Marsans, S.A. had committed accounting irregularities, in particular by failing to make provision for debit balances of Teinver and Air Comet, and that "... substantial sums of money were withdrawn from the insolvent debtor VIAJES MARSANS, S.A., mainly to be transferred to TEINVER, S.E’s account, which led to the lack of liquidity that caused the insolvency situation."259 The court decided that Mr. Diaz Ferran, the estate of Mr. Pascual Arias and Posibilitum Business, S.L. were covered by the declaration of culpable insolvency. In that regard, Mr. Diaz Ferran was prohibited from administering third party assets or third party entities for 15 years, his rights as a creditor were forfeited and he was found to be jointly and severally liable for the debts and liabilities of Viajes Marsans, S.A. not covered by the liquidation proceedings.
329.
As characterized by Claimants, this dispute is not a criminal proceeding, but rather was a matter before a commercial court.260 Claimants also note that the parties to this proceeding are not parties to the present arbitration.261 Further, Claimants maintained that were the Tribunal to consider the merits of the court’s decision and Respondent’s submissions, these show that Claimants’ bookkeeping was properly maintained during the life-span of Claimants’ investment. Claimants say that the role of Air Comet in the acquisition of the liabilities of the Airlines, the subsequent transfer of the credits to Interinvest and the capital increase in ARSA were all lawfully conducted as confirmed by the decision of the Spanish Central Court for Investigative Proceedings No. 6.262
330.
On September 24, 2014, Commercial Court No. 12 issued a judgment classifying the insolvency proceedings of Tiempo Libre S.A.U. as culpable.263 In its judgment, the court concluded that Tiempo Libre S.A.U.’s insolvency should be classified as culpable on the basis, inter alia, of: serious accounting irregularities, including the failure to provide for debit balances owed to Tiempo Libre S.A.U. by Air Comet, Viajes Marsans S.A. and Teinver; improper use of the Marsans Group’s cash pooling system to provide funds to Viajes Marsans S.A., Teinver and other affiliates; a culpable delay in filing insolvency proceedings; and failure to cooperate with the trustees in bankruptcy. The court held that Mr. Diaz Ferran, the estate of Mr. Pascual Arias and Posibilitum Business S.L. were affected by the classification of the insolvency proceedings as culpable. The court went on to disqualify Mr. Diaz Ferran and Posibilitum Business S.L. from administering third party assets or any third parties for a period of 15 years and forfeited any rights and interests held by them as creditors of Tiempo Libre S.A.U. Further, the court held that Mr. Diaz Ferran, the estate of Mr. Pascual Arias and Posibilitum Business S.L. were jointly and severally liable to pay for the liabilities of, and all claims against, the insolvency estate of Tiempo Libre S.A.U.264
331.
Respondent says that this decision, together with the several other decisions of Spanish courts in the record, are consistent with the irregular and illegal conduct which it alleges against Claimants in this case.265 Claimants say that Tiempo Libre S.A.U. is not a claimant in these proceedings and its insolvency proceedings are unrelated to the facts underlying Claimants’ claims in this arbitration. They argue that Respondent cannot prove its allegations in these proceedings by reference to the court’s judgment in the Tiempo Libre S.A.U. insolvency proceedings and that Respondent has not explained why or how the findings of the Spanish court in that matter have any bearing on the claims in this arbitration.266

Insolvency Proceedings of Transportes de Cercanias S.A.

332.
In February 2016, the Provincial Prosecutor’s office of Madrid submitted a request to Commercial Court No. 7 for Madrid to have the insolvency proceedings of Transportes de Cercanias S.A. declared culpable.267 The basis for the Provincial Prosecutor’s application appears to be the transfer of funds received for the sale of the concession owned by Transportes de Cercanias S.A. on or about January 29, 2010 to other companies alleged to be managed by Messrs. Diaz Ferran and Pascual Arias (including Teinver and Viajes Marsans S.A.), leaving debts of Transportes de Cercanias S.A. unpaid. In addition, there is an allegation that Transportes de Cercanias S.A. had not produced accounting books and audits since the last fiscal report for 2008. Respondent says that the Provincial Prosecutor’s classification of the insolvency proceedings as culpable updates reports of one of its witnesses, Dr. Cigarran, and is relevant.
333.
Claimants argue that the Provincial Prosecutor’s allegation refers to facts and allegations unrelated and immaterial to the merits of this arbitration. They say that the events referred to in the Provincial Prosecutor’s application all occurred after the expropriation of the Airlines and are irrelevant to the issues before the Tribunal. Further, Claimants argue that they have been in court-supervised insolvency proceedings for several years and have been managed only by the receivers appointed by the competent Spanish courts. Neither the founders of the Marsans Group, nor those who later acquired the companies of the Marsans Group, have had any involvement in the management of Claimants’ business or the arbitration for a number of years.268 Claimants say that what the Spanish prosecutors may be considering in regard of the former executives of the Marsans Group is irrelevant to the matters in dispute in this arbitration.269 No order or decision of Commercial Court No. 7 in charge of the insolvency proceedings of Transportes de Cercanias S.A. was submitted in evidence.

Insolvency proceedings of Seguros Mercurio, S.A.

334.
Respondent reports that the Court of Commercial Matters No. 9 of Madrid found Messrs. Diaz Ferran and Pascual Arias "guilty" of the bankruptcy of Seguros Mercurio, S.A., a Marsans Group company, in May of 2012.270 It also noted that other companies of the Marsans Group, including Teinver, were liable as accomplices to the bankruptcy.271
335.
Claimants argue that Respondent has failed to demonstrate how these proceedings are remotely related to or how they affect Claimants’ claim in this arbitration. They note that Seguros Mercurio, S.A. was a Spanish insurance company owned by the Marsans Group, and that it had no connection with Claimants’ investment in Argentina.272 They also note that the substance of the court’s May 11, 2012 decision covers a time period after the expropriation of Claimants’ investment.273

2. Argentine Legal Proceedings

Mata Ramayo v otros s/ Defraudacion por Administracion Fraudulenta - Criminal and Correctional Court No. 27

336.
Respondent refers to this ongoing criminal investigation, which concerns the alleged fraudulent diversion of funds provided by SEPI to Air Comet, pursuant to the SPA in October 2001, the approval of the Airlines’ 2001 balance sheet containing allegedly "bogus" entries, and the alleged misuse of monies contributed by a third party.274 This investigation was commenced in February 2002 and the court’s decision is still pending.
337.
In response, Claimants refer to their submissions on the acquisition of the investment in the Airlines and say that ¶ the transfer of funds from SEPI to Air Comet to settle the Airlines’ liabilities was done in accordance with the law and relevant agreements; 2) the 2001 balance sheet was discussed and approved at the October 18, 2002 shareholders meeting and was independently audited by PricewaterhouseCoopers; and 3) that there is no evidence of any such alleged transaction concerning transfers of funds to third parties and any issue concerning the settlement agreement in ARSA’s reorganization proceedings in 2002 has been finally settled and the reorganization proceedings were finally closed on June 17, 2011.275

Marsans Group, Aerolineas Argentinas v otros s/ Defraudacion por Administracion Fraudulenta - Criminal and Correctional Court No. 3

338.
According to Respondent, this investigation concerns the alleged overbooking of tickets by the Airlines in July 2008.276 Respondent asserts that ARSA and AUSA purposefully permitted overbooking with the full knowledge that they would not be able to meet their commitments. Respondent says that according to the complainant the alleged overbooking would have led to substantial operating loss.277 According to Respondent, the investigation proceedings are pending before the Federal Criminal and Correctional Court No. 3.
339.
Claimants say that this is an Argentine court proceeding applying Argentine law and is therefore irrelevant. In any event, Claimants assert that Respondent’s allegations, as well as the proceedings themselves, are groundless. Further, they state that the proceedings are still in a preliminary stage.278
340.
The investigation in this matter appears to have been requested in November 2008 and appears to be still pending.279

Criminal Case Concerning Document Forgery before Criminal Court No. 27

341.
According to Respondent, this criminal investigation pending before Criminal Court No. 27 concerns allegations that a forged document was inserted into the record of the 2001 ARSA reorganization proceeding.280 Respondent asserts that the Court has established that this document, which concerned the nature of the relationship between Air Comet and Royal Romana Playa, was introduced fraudulently.281 Respondent notes that the matter is also pending before the Spanish Court of Preliminary Investigations No. 3 5.282
342.
Claimants assert that ARSA’s reorganization proceedings have concluded with finality, and that to the extent this allegation remains at issue in the investigation in the Court of Preliminary Investigations No. 35 proceeding in Spain referenced above, it is res judicata and Spanish courts cannot in good faith revive a claim that has been finally settled in another jurisdiction.283

3. Tribunal’s Analysis: Relevance of these Domestic Court Proceedings to the Present Arbitration

343.
In the Decision on Jurisdiction, the Tribunal dismissed Respondent’s objection to jurisdiction that Claimants’ investment was not protected by the Treaty because of alleged illegalities connected to that investment.284 In the Decision on Jurisdiction, the Tribunal found that the relevant time at which to consider the alleged illegality of an investment under the Treaty is the time of the entry into the investment: in this case, primarily the acquisition of the shares of Interinvest through Air Comet in October 2001.285 The Tribunal also found that the relevant law is the law of the state receiving the investment: in this case, the law of Argentina.286 The Tribunal went on to find that Respondent had failed to discharge the onus of demonstrating, as a factual matter, that Claimants had committed illegalities in acquiring their investment in the Airlines. In this regard, the Tribunal found that a number of Respondent’s allegations were based on Spanish law, while others related to performance of the terms of the SPA or other events which occurred after the execution of the SPA by which Claimants acquired their investment.287 The Tribunal reached a similar conclusion with respect to Respondent’s allegation that Claimants had breached principles of good faith when Air Comet subrogated ARSA’s creditors’ claims and when it failed to declare this subrogation to the responsible Spanish tax authorities.288
344.
The Tribunal’s review of Respondent’s additional submissions and the various court decisions and documents submitted in this merits phase of the arbitration, together with Claimants’ responses, confirms the conclusions it reached in the Decision on Jurisdiction. In this regard, Respondent’s allegations, for the most part, continue to refer to either proceedings under Spanish law or events which occurred after Claimants’ acquisition of their investment in the Airlines and do not affect the Tribunal’s jurisdiction on the basis that the relevant investments were not made in accordance with Argentine law. The Tribunal comments on the various proceedings referred to by Respondent in the following paragraphs.

Spanish Legal Proceedings

345.
As described above, for the purpose of Respondent’s objection to jurisdiction in this arbitration, the relevant law is the law of Argentina. Accordingly, Spanish law and Spanish law proceedings are of limited, if any, relevance. Further, many of the proceedings raised by Respondent do not address the legality of the acquisition of Claimants’ investment at the time it was made, but, rather, subsequent [unrelated] events.

Proceeding before Central Court for Investigative Proceedings No. 6

346.
As noted above, Messrs. Diaz Ferran and Mata Ramayo have been found guilty of corporate tax evasion with respect to Air Comet’s failure to report the benefit it received from the subrogation of ARSA’s debt. This conviction relates to the treatment under Spanish corporate tax law of the benefit Air Comet received from the subrogation of ARSA’s debt after the execution of the SPA and the transfer of funds from SEPI to Air Comet. In the Tribunal’s view, this does not affect the legality of Claimants’ investment under Argentine law.
347.
Further, as discussed above, the legality of the SPA and the various related agreements has not been challenged in the Spanish courts, or elsewhere. As also described previously, SEPI was aware of and consented to the subrogation of ARSA’s debt and the agreements concluded in that regard. In addition, the Spanish Tribunal de Cuentas audited these particular agreements and transactions and did not recommend challenging the SPA or invalidating it or any of the steps taken to implement it.289
348.
Finally, the Tribunal notes that all of the other allegations submitted to preliminary criminal investigation in this matter against Mr. Diaz Ferran and others were dismissed.

Proceedings before Central Court in Charge of Preliminary Investigations No. 1 of Madrid

349.
As discussed previously, very limited evidence relating to these proceedings were submitted in evidence. It appears that the alleged illegal conduct occurred well after Claimants’ investment and, indeed, after the expropriation of Claimants’ investment in 2008.

Investigations before the Audiencia Nacional Espanola and the Court in Charge of Preliminary Investigations No. 8 of Madrid

350.
Each of these matters appears to consist of preliminary investigations relating to alleged events occurring during the course of insolvency proceedings after Claimants made their investment. Neither Party described the nature or the timing of these investigations nor the connection of the investigations to Claimants.

Proceeding before the Court in Charge of Preliminary Investigations No. 35 of Madrid

351.
This proceeding relates to an allegation that Dr. Mata Ramayo, a former Officer and Executive Vice Chairman of the Board of Directors of ARSA, sought to improperly introduce a false document into the record of ARSA’s insolvency proceedings in Argentina. Respondent alleges that the document in question relates to an aspect of an investigation before the Argentine courts, discussed below.290 In both cases, the investigations appear to be ongoing and there was no evidence of a final decision in either case.
352.
In addition, the Tribunal notes that the proceedings in ARSA’s bankruptcy were concluded and declared terminated in June and August 2011.291
353.
In these circumstances, the Tribunal is unable to reach any firm conclusion on the status of the allegations being investigated in the Spanish and Argentine courts. Further, on the basis of the Parties’ submissions, the Tribunal is unable to determine what effect, if any, the allegations in question would have on the insolvency proceedings of ARSA or the legality of Claimants’ investment in this dispute.

Investigation before the Central Court in Charge of Preliminary Investigations No. 6 of Madrid - "Operacion Crucero"

354.
This matter concerns an investigation which has been set for trial in respect of charges relating to illegal concealment or disposal of assets in order to avoid the claims of creditors. The claims are brought against Messrs. Diaz Ferran, Pascual Arias, de Cabo, Losada and a number of others. The investigation appears to have been commenced in 2012 and was set for trial by way of an order dated April 29, 2014.292 The timeframe during which the alleged crimes were committed is not clear from the evidence presented, although it appears that the relevant events occurred in 2010 when Messrs. Diaz Ferran and Pascual Arias are alleged to have created a plan to remove and hide their personal assets as well as those of various companies under their control with the assistance of Mr. de Cabo.293 From this, it appears that the events giving rise to the charges occurred well after Claimants’ investments were made and were expropriated in 2008.
355.
Although Mr. Diaz Ferran was provisionally detained in connection with these proceedings, there does not appear to have been any conviction or final decision rendered in this matter.

Insolvency Proceedings of Viajes Marsans, S.A. and Related Companies before Commercial Court No. 12

356.
As described above, these proceedings involve the insolvencies of Viajes Marsans, S.A. and Tiempo Libre, S.A.U., both of which have been declared culpable and affect Mr. Diaz Ferran, the estate of Mr. Pascual Arias and Posibilitum Business, S.L. The Tribunal was not made aware of any appeals from these decisions or relevant developments other than those described above.294
357.
It appears that the relevant events giving rise to the declaration of a culpable insolvency commenced with what the court classified as "serious accounting irregularities" which reflected a false view of the solvency of Viajes Marsans, S.A. in the company’s annual accounts for 2008/2009, approved on December 30, 2009. This indicates that the conduct at issue commenced approximately one year after the formal expropriation of the shares in the Airlines. Further, the proceedings do not involve as parties any of the Claimants. As a result, the classification of the insolvency of Viajes Marsans, S.A. cannot have affected the legality of Claimants’ investment in the shares of the Airlines. The same is true with respect to the insolvency of Tiempo Libre, S.A.U.295
358.
The Tribunal reaches the same conclusion with respect to the Provincial Prosecutor’s request to have the insolvency proceedings of Transportes de Cercanias declared culpable.296 As described above, the basis for this request appears to be the sale of Transportes de Cercanias’ concession to a third party on or about January 29, 2010. By that time, Transportes de Cercanias had sold all its remaining shares in Air Comet to Teinver (which occurred on December 10, 2009). Again, it also appears that the events in question occurred after the making of Claimants’ investment and after its expropriation. Finally, there does not appear to have been any decision made by Commercial Court No. 7 of Madrid in respect of the request to have the insolvency proceedings of Transportes de Cercanias declared culpable.
359.
Accordingly, these proceedings are also irrelevant to the question of the legality of Claimants’ investment in the Airlines.297

Argentine Legal Proceedings

Mata Ramayo y otros s/Defraudacion por Administracion Fraudulenta

360.
As described above, this matter involves an ongoing criminal investigation which concerns the alleged fraudulent diversion of funds provided by SEPI to Air Comet, in breach of the SPA, the approval of the Airlines’ 2001 balance sheet containing allegedly false entries and the alleged misuse of monies contributed by a third party in the case of claims held by two creditors against ARSA and which are said to be assigned to Royal Romana Playa.298 The relevant underlying facts are disputed by the Parties.
361.
The Tribunal notes that the investigation in this matter was commenced in February 2002 and is still pending. It appears that investigative interviews or depositions were taken from several witnesses in 2010.299 However, no decision of the court appears to have been rendered and no further materials in respect of this proceeding were submitted in evidence.
362.
In the Tribunal’s view, the fact that an investigation has been ongoing before an Argentine court since 2002, and the materials submitted in evidence, are of little assistance in determining whether Claimants’ investment was made in accordance with Argentine law and, consequently, entitled to protection under the Treaty. As indicated previously, where a prima facie showing of the legality of an investment is made, the onus is on the respondent to demonstrate that the investment was not made in accordance with the legislation of the state receiving the investment. As the Tribunal found in the Decision on Jurisdiction, Respondent has not discharged this burden.
363.
As the Tribunal also found in the Decision on Jurisdiction, the SPA and other agreements between Air Comet and SEPI were governed by Spanish law and there has been no finding of breach or invalidity of those agreements by the Spanish courts, or otherwise. In these proceedings, as described above in Section D, the Tribunal has found that Claimants did, in fact, make various investments and has found these sufficient to ground its jurisdiction. In addition, also as pointed out in the Decision on Jurisdiction, non-compliance with performance requirements under the SPA, which arise after the Agreement was executed, may affect certain aspects of the merits of the dispute, provided they are adequately demonstrated. However, they do not retroactively invalidate or render illegal the binding nature of the SPA, nor the investment it conveyed.

Marsans Group, Aerolineas Argentinas y otros s/Defraudacion por Administracion Fraudulenta

364.
This investigation concerns alleged overbooking of tickets by the Airlines in July 2008. For the reasons described previously, any finding that the alleged offences had occured would not affect Claimants’ acquisition of their investment. Rather, if proved, the alleged overbooking of tickets could be relevant to the financial position of ARSA and AUSA and affect the merits of Claimants’ claim in so far as it was shown to affect compensation or some other relevant aspect of the claim on its merits.
365.
Further, and in any event, each Party must prove the facts upon which it relies in these proceedings. While evidence of domestic court proceedings, including criminal proceedings, may be of some relevance or assistance in proving a fact, it is common ground that the decision of domestic courts are not binding on this Tribunal. In any event, the Tribunal notes that these proceedings have been pending since November 2008 and no decision has been rendered or submitted in these proceedings. Accordingly, the Tribunal will consider Respondent’s allegation that the Airlines engaged in overbooking of tickets, to the extent it is relevant, later in this Award.

Criminal Case Concerning Document Forgery before Criminal Court No. 27

366.
The Tribunal has addressed this issue above at paragraphs 341 and 342. As the Tribunal has noted, this is an ongoing investigation which appears to not have been concluded. Further, in light of the termination of ARSA’s reorganization proceedings in 2011, the Tribunal is not pursuaded that this investigation is relevant to the question of the legality of Claimants’ investment.

Tribunal’s Conclusion on the Various Court Proceedings

367.
Having carefully reviewed all of the voluminous materials relating to the various court proceedings in Spain and Argentina, the Tribunal concludes that none of these proceedings proves any illegality of Claimants’ investments at the time they were made or that they were not made in accordance with the legislation of Argentina such that they should be denied protection under the Treaty pursuant to Article 11(2), or otherwise.
368.
Finally, the Tribunal addresses another aspect of the court proceedings set out above upon which Respondent relies. In this regard, Respondent says that "the events in Spain constitute the same manoeuvres performed at the Airlines" and that "criminal and insolvency proceedings in Spain prove that fraudulent concealment or disposal of assets have been usual practice, a modus operandi, of the business group to which the Claimants belong."300 Respondent suggests that this conduct demonstrates that the same conduct occurred in the facts of this case. In the Tribunal’s view, this is not correct. It would be inappropriate to attribute to Claimants evidence of "similar fact" based on findings of courts in other proceedings, involving different parties, facts and circumstances. This is particularly the case where the various criminal allegations relate to events alleged to have occured well after the relevant period of Claimants’ investment in Argentina. Each Party must prove the facts it alleges before this Tribunal and the findings of other courts or tribunals will only be of limited, if any, assistance in that regard.
369.
The Tribunal now turns to address the merits of the Parties’ claims.

V. FACTUAL BACKGROUND

370.
In 1990, the Government of Argentina conducted an international privatization of Argentina’s official, state-owned carrier, Aerolineas Argentinas Sociedad del Estado ("AASE"), whose assets were transferred for that purpose to a newly formed company named Aerolineas Argentinas S.A. ("ARSA"). The winning bidder was a group of investors led by the Spanish state-owned airlines, Iberia Lineas Aereas de Espana S.A..301 By way of Decree 2,201 of October 19, 1990 and the General Transfer Contract authorized by that Decree, all of AASE’s assets, concessions and permits were sold and transferred to ARSA.302 At approximately the same time, the investor group led by Iberia acquired 85% of the shares in ARSA with Iberia itself controlling 20% of the shares.303 By 1996, Iberia had increased its holdings in ARSA to 84%.304 By 2001, that shareholding had further increased to approximately 92.1%.
371.
In 1994, Iberia incorporated a fully-owned Argentine subsidiary, Interinvest, to serve as the holding company for Iberia’s investments in the Airlines. As of that time, Interinvest became the controlling shareholder in the Airlines. Subsequently, in 1995, the Spanish government constituted SEPI to hold corporate shares owned by the Spanish government and, as a result, SEPI acquired Iberia’s shareholding in Interinvest. In June 2001, SEPI owned 99.2% of Interinvest which, in turn, held 92.1% of ARSA’s shares and 90% of AUSA’s shares.
372.
Austral-Cielos del Sur S.A. ("AUSA") was formed by two private companies which merged in 1971 to form Austral Lineas Aereas, S.A. ("AUSTRAL"). It was subsequently nationalized in 1980 and then privatized in 1985 when it was purchased by Cielos del Sur, S.A.305 In 1991, Iberia acquired AUSA.306 As a result, by 1991, the Spanish government, through Iberia was a significant shareholder in the Airlines.
373.
By June 2001, both Airlines were in serious financial difficulties. ARSA was under reorganization proceedings, had liabilities exceeding USD 1 billion and forecasted operating losses for the current year in excess of USD 350 million. It had also suspended flights to all but one international destination. AUSA was also in difficult financial circumstances.307
374.
In June 2001, SEPI announced its intention to sell its shares in Interinvest. After conducting preliminary discussions with various potential purchasers and a preliminary evaluation of initial offers, SEPI preselected four bidders and ultimately selected the offer made by Air Comet.308
375.
The Government of Argentina appears to have monitored the sale process of SEPI’s participation in Interinvest. The then Argentine Minister of Infrastructure, Mr. Carlos Bastos, was responsible for various areas of activity, including the Subsecretariat of Commercial Air Transportation. In that capacity, he was charged with overseeing the problems arising from ARSA’s insolvency. He held several meetings with representatives of SEPI as well as with representatives of the Spanish government from May to September 2001. At those meetings, Minister Bastos explained the Argentine government’s position that it was interested in keeping the Airlines in operation but that the Argentine government was not, in any event, willing to assist the Airlines with an allocation of public funds. Minister Bastos also met with representatives of the Marsans Group, including Messrs. Diaz Ferran and Pascual Arias.309
376.
On October 2, 2001, SEPI and Air Comet entered into the SPA, pursuant to which Air Comet acquired 99.2% of the shares of Interinvest which, in turn, held 92.1% of ARSA’s shares and 90% of AUSA’s shares.310 At that time, the Government of Argentina held approximately 5.34% of ARSA’s shares.
377.
Pursuant to the terms of the SPA, Air Comet paid a purchase price of USD 1 for the shares of Interinvest.311 Under the SPA, Air Comet agreed, in accordance with the industrial plan it created for the Airlines, to assume the assets and liabilities of the Airlines, to retain airline employees for two years, to make a USD 50 million capital increase, to maintain its majority interest in the corporations, to service specified flight routes, and to expand aircraft fleets.312 For its part, SEPI agreed to assume the Airlines’ liabilities up to USD 300 million, and to assume commitments resulting from the implementation of the industrial plan up to USD 248 million.313 SEPI later agreed to contribute an additional USD 205 million to cover the operational losses suffered by the Airlines between July and October 2001.314