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Table of Selected Abbreviations and Defined Terms
2000 Addendum 2000 Addendum to the CHEJVA dated 4 March 2000
2002 BM Rules Mineral Rules enacted by Balochistan in 2002 to implement the National Mineral Policy, dated September 1995
2006 Novation Agreement Agreement pursuant to which Claimant became a party to the CHEJVA (replacing BHP) dated 1 April 2006
2012 Provisional Measures Request Claimant's Request for Provisional Measures dated 23 July 2012
2018 Provisional Measures Request Claimant's Request for Provisional Measures dated 15 February 2018
Anderson Expert Report of Dr. Corby G. Anderson, dated 16 April 2018
Antofagasta Antofagasta plc
Application Mining lease application submitted by TCCP to the Licensing Authority on 15 February 2011
Application for a Ruling in Limine Respondent's Application for a Ruling in Limine and for Spoliations Sanctions dated 7 February 2018
Arbitration Rules ICSID Rules of Procedure for Arbitration Proceedings 2006
Ault Potential Impacts to Pakistan's Marine Fisheries & Ecosystem from Reko Diq, prepared by Dr. Jerald S. Ault, dated 27 March 2018
Australia-Pakistan BIT Agreement between Australia and the Islamic Republic of Pakistan on the Promotion and Protection of Investments, signed on 7 February 1998 and entered into force on 14 October 1998
Balochistan Province of Balochistan
Barrick Barrick Gold Corporation
BHP BHP Minerals International Exploration, Inc.
BIT Agreement between Australia and the Islamic Republic of Pakistan on the Promotion and Protection of Investments, signed on 7 February 1998 and entered into force on 14 October 1998
Boggs I Witness Statement of Ms. Catherine ("Cassie") Boggs, dated 1 February 2013
Boggs V Fifth Witness Statement of Ms. Catherine ("Cassie") Boggs, dated 21 March 2017
Brailovsky/Wells I Expert Report of Mr. Vladimir Brailovsky and Professor Louis T. Wells, dated 20 September 2017
Brailovsky/Wells II Second Expert Report of Mr. Vladimir Brailovsky and Professor Louis T. Wells, dated 27 March 2018
Burrows I Expert Report of Dr. James C. Burrows, dated 19 September 2017
Burrows II Rejoinder Report of Dr. James C. Burrows, dated 29 March 2018
CA-[#] Claimant's Legal Authority
CHEJVA Chagai Hills Exploration Joint Venture Agreement dated 29 July 1993
CE-[#] Claimant's Exhibit
Cessford Expert Report of Ms. Fiona Cessford-Le Roux, dated 13 December 2017
Claimant's Memorial on Liability Claimant's Memorial dated 1 February 2013
Claimant's Quantum Memorial Claimant's Memorial on Damages dated 22 March 2017
Claimant's Quantum Post-Hearing Brief Claimant's Quantum Post-Hearing Brief dated 31 August 2018
Claimant's Quantum Reply Reply Memorial on Quantum of Damages dated 13 December 2017
Claimant's Submission on Costs Claimant's Submission on Costs dated 28 September 2018
Claimant's Supplemental Quantum Reply Claimant's Supplemental Quantum Reply Memorial dated 9 April 2018
Connor Expert Opinion of Dr. Kerry M. Connor on Potential for TCC to Acquire and Maintain a Social License to Operate, dated 23 March 2018
Dagdelen/Owen I Expert Report of Professor Kadri Dagdelen and Mr. Terry Owen, dated 19 September 2017
Dagdelen/Owen II Rejoinder Report of Professor Kadri Dagdelen and Mr. Terry Owen, dated 29 March 2018
Davies I The Security Risk Context for the Reko Diq Project, prepared by Mr. Julian Davies, dated 19 September 2017
Davies II Reko Diq S-RM Expert Report (2nd), prepared by Mr. Julian Davies, dated 24 March 2018
Davis I Quantum of Damages Analysis prepared by Professor Graham A. Davis, dated 22 March 2017
Davis II Quantum of Damages Reply Report prepared by Professor Graham A. Davis, dated 13 December 2017
Decision on Jurisdiction and Liability Tribunal's Decision on Jurisdiction and Liability dated 10 November 2017
Decision on Respondent's Application to Dismiss the Claims (with reasons) Tribunal's Decision on Respondent's Application to Dismiss the Claims (with reasons) dated 10 November 2017
Decision on Respondent's Reconsideration Request Tribunal's Decision on Respondent's Request for Reconsideration of the Tribunal's Decision on Jurisdiction and Liability dated 28 February 2018
Disqualification Proposal Respondent's Request for Disqualification of the Tribunal dated 25 November 2017
Disqualification Request Respondent's Request for Disqualification of Dr. Stanimir Alexandrov dated 7 July 2017
Drury Expert Report of Dr. Leonard Drury, dated 13 December 2017
EL-5 Exploration License designated EL-5, issued 18 May 2002, with retroactive effect as of 21 February 2002, for a period of three years
EPZ Export Processing Zone
ER Expert Report
ESIA Environmental and Social Impact Assessment for the Reko Diq Project dated November 2010
Expansion Pre-Feasibility Study Expansion Pre-Feasibility Study completed by Claimant in July 2010
Feasibility Study Initial Mine Development Feasibility Study submitted by TCCA to the Government of Balochistan on 26 August 2010
Filas I Independent Review of the Environmental and Social Documentation for the Reko Diq Copper-Gold Project Chagai District, Balochistan, Pakistan, prepared by Ms. Barbara A. Filas, dated 19 September 2017
Filas II Second Expert Report of Filas Engineering and Environmental Services LLC, prepared by Mr. Barbara A. Filas, dated 29 March 2018
FET Fair and Equitable Treatment
GOB The Government of Balochistan
GOP The Government of Pakistan
H-14 / H-15 Principal copper-gold orebodies at the Western Porphyries, Reko Diq
H-4 Tanjeel copper orebody, Reko Diq
Haq I Expert Report of Dr. Ikramul Haq, dated 18 September 2017
Haq II Second Expert Report of Dr. Ikramul Haq, dated 25 March 201[8]
Hearing on Jurisdiction and Liability Hearing on Jurisdiction, Liability and the Counter-Claims held from 6 to 17 October 2014 in Paris, France
Hearing on Quantum Hearing on Quantum held from 14 to 24 May 2018 in London, United Kingdom
Henry/Howden I Expert Report of Mr. David Henry and Mr. Leonidas Howden, dated 18 September 2017
Henry/Howden II Expert Report of Mr. David Henry and Mr. Leonidas Howden rebutting Claimant's reply, dated 26 March 2018
ICSID Convention Convention on the Settlement of Investment Disputes Between States and Nationals of Other States dated March 18, 1965
ICSID International Centre for Settlement of Investment Disputes
ILC Articles International Law Commission, Articles on State Responsibility of States for Internationally Wrongful Acts, 2001
Joint Venture Unincorporated contractual joint venture between the BDA [Balochistan] and TCCA, governed by the CHEJVA
Jones Expert Report of Mr. Michael Jones, dated 13 December 2017
Khokhar II Second Witness Statement of Mr. Irshad Ali Khokhar, dated 25 August 2014
Khokhar III Third Witness Statement of Mr. Irshad Ali Khokhar, dated 19 September 2017
Khokhar IV Fourth Witness Statement of Mr. Irshad Ali Khokhar, dated 29 March 2018
Licensing Authority Director General of the Mines & Mineral Development Department of Balochistan, decided on the Mining Lease Application
Livesey IV Fourth Witness Statement of Mr. Timothy Livesey, dated 1 February 2013
Livesey V Fifth Witness Statement of Mr. Timothy Livesey, dated 23 April 2013
Livesey IX Ninth Witness Statement of Mr. Timothy Livesey, dated 13 December 2017
Luksic I Witness Statement of Mr. Jean-Paul Luksic, dated 23 April 2014
Luksic II Second Witness Statement of Mr. Jean-Paul Luksic, dated 22 March 2017
Mayer I Expert Report of Mr. Anton Mayer, dated 13 December 2017
Mayer II Second Expert Report of Mr. Anton Mayer, dated 16 April 2018
MCC China Metallurgical Group Corporation
Mincor Mincor Resources NL
Mineral Agreement Agreement between mining venture and Federal and Provincial Governments, contemplated by 2002 BM Rules and 1995 NMP
Mining Lease Application Mining lease application submitted by TCCP to the Licensing Authority on 15 February 2011
Mubarakmand I Witness Statement of Dr. Samar Mubarakmand, dated 21 September 2012
NAFTA North American Free Trade Agreement entered into between Canada, Mexico and the United States, entered into force on 1 January 1994
Nanni Second Expert Report of Dr. Marcella Nanni, dated 29 March 2018
Neville Expert Report of Mr. Christopher J. Neville, dated 28 March 2018
NPI Net profit interest
NOC No-Objection Certificate
Notice of Intent to Reject Licensing Authority's notice of its intent to reject the Mining Lease Application dated 21 September 2011
Pakistan The Islamic Republic of Pakistan
Pingle Expert Report of Mr. Rex E. Pingle, dated 13 December 2017
PO Procedural Order
Rahman I Expert Report of Mr. Zaki Rahman, dated 19 September 2017
Rahman II Second Expert Report of Mr. Zaki Rahman, dated 29 March 2018
Rais Expert Report of Professor Rasul Bakhsh Rais, dated 18 September 2017
RE-[#] Respondent's Exhibit
Request Request for Arbitration dated 28 November 2011
Respondent's Application to Dismiss the Claims Respondent's Application to Dismiss the Claims dated 2 September 2015
Respondent's Counter-Memorial on Quantum Respondent's Counter-Memorial on Quantum dated 20 September 2017
Respondent's Post-Hearing Brief on Quantum Respondent's Post Hearing Brief dated 31 August 2018
Respondent's Reconsideration Request Request for Reconsideration of the Draft Decision on Jurisdiction and Liability dated 6 November 2017
Respondent's Rejoinder on Quantum Respondent's Rejoinder on Quantum dated 29 March 2018
Respondent's Submission on Costs Respondent's Submission on Costs dated 28 September 2018
Ridley Expert Report of Mr. Tony Ridley, dated 13 December 2017
Ripinsky I Expert opinion of Dr. Sergey Ripinsky, dated 18 September 2017
Ripinsky II Supplementary expert opinion of Dr. Sergey Ripinsky, dated 2 March 2018
RLA-[#] Respondent's Legal Authority
Rossi Expert Report of Mr. Mario E. Rossi, dated 13 December 2017
Secretariat ICSID Secretariat
Secretary-General Secretary-General of ICSID
Sepúlveda Witness Statement of Mr. Carlos Sepúlveda, dated 21 March 2017
Site Visit Report Site Visit Report by Professor Kadri Dagdelen dated 26 February 2018
Spiller I Report on Results of Comparative Metallurgical Flotation Testing, prepared by Professor D. Erik Spiller, dated 20 March 2018
Spiller II Report on Adequacy of Sampling for Process Metallurgy in Feasibility Study, prepared by Professor D. Erik Spiller, dated 29 March 2018
Spiller III Follow-up Report to Expert Report of Dr. Corby G. Anderson (16 April 2018), prepared by Professor D. Erik Spiller, dated 30 April 2018
Steering Committee Steering Committee for the Development of Reko Diq Copper–Gold Project [Pakistan-Balochistan] established by the Pakistani Prime Minister on 3 September 2007
TCC Reference to TCCA and TCCP collectively
TCCA Tethyan Copper Company Pty Limited, Claimant in this arbitration
TCCP Tethyan Copper Company Pakistan (Private) Limited
Transcript Hearing on Jurisdiction and Liability (Day [#]), p. [#] line [#] Transcript of the Hearing on Jurisdiction and Liability
Transcript Hearing on Quantum (Day [#]), p. [#] line [#] Transcript of the Hearing on Quantum
Treaty Agreement between Australia and the Islamic Republic of Pakistan on the Promotion and Protection of Investments, signed on 7 February 1998 and entered into force on 14 October 1998
Tribunal Arbitral Tribunal re-constituted on 10 September 2012
ul Haque Witness Statement of Mr. Noor ul Haque, dated 18 September 2017
WRA Water Resource Associates
WRA Report Review of Hydrogeological, Water Governance and Transboundary Risks, Associated with the Proposed Water Supply Source, prepared by Mr. Paul A. C. Holmes and Dr. Marcella Nanni, dated September 2017
WS Witness Statement

I. INTRODUCTION AND PARTIES

1.
This arbitration concerns a legal dispute between TCCA and Pakistan arising out of TCCA's investments in Pakistan submitted to the International Centre for Settlement of Investment Disputes ("ICSID" or the "Centre") on the basis of the Agreement between Australia and the Islamic Republic of Pakistan on the Promotion and Protection of Investments, which was signed on 7 February 1998 and entered into force on 14 October 1998 (the "Australia-Pakistan BIT", the "Treaty" or the "BIT")1 and the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, dated October 14, 1966 (the "ICSID Convention").
2.
In its Decision on Jurisdiction and Liability dated 10 November 2017 (the "Decision on Jurisdiction and Liability"), the Tribunal found that, for the reasons set out therein: (i) it has jurisdiction to hear Claimant's claims and that the claims are admissible;2 and (ii) by its denial of a mining lease to Claimant's wholly-owned subsidiary, Tethyan Copper Company Pakistan (Private) Limited ("TCCP"), in order to allow the Government of Balochistan ("GOB") to implement its own project instead, Respondent has breached its obligation to accord Claimant fair and equitable treatment under Article 3(2) of the Treaty, carried out a measure having effect equivalent to expropriation that did not comply with the requirements for a lawful expropriation under Article 7(1) of the Treaty, and impaired the use of Claimant's investment in violation of Article 3(3) of the Treaty.3
3.
This Award addresses the question whether as a result of Respondent's breaches, Claimant has suffered damage for which it must be compensated by Respondent and, if so, determines the amount of such compensation.
4.
The Decision on Jurisdiction and Liability as well as the Tribunal's Decision on Respondent's Application to Dismiss the Claims (with reasons) also dated 10 November 2017 are hereby incorporated by reference into this Award.

A. Claimant

5.
Tethyan Copper Company Pty Limited, a company constituted and registered under the laws of Australia and owned (through Atacama Copper Pty Limited) in equal shares by Antofagasta plc, a company incorporated in the United Kingdom with its headquarters in Chile, and Barrick Gold Corporation, a company incorporated in Canada, hereinafter referred to as "Claimant" or "TCCA".

B. Respondent

6.
Islamic Republic of Pakistan, hereinafter referred to as "Respondent" or "Pakistan".
7.
Claimant and Respondent are hereinafter referred to individually as a "Party" and collectively as the "Parties".

II. THE ARBITRAL TRIBUNAL

8.
The Arbitral Tribunal ("Tribunal") has been constituted as follows:

(i) Dr. Stanimir A. Alexandrov
(appointed by Claimant)
c/o Stanimir A. Alexandrov PLLC
1501 K Street, N.W.
Suite C-072
Washington, D.C. 20005
U.S.A.

(ii) Rt. Hon. Lord Leonard Hoffmann
(appointed by Respondent)
Brick Court Chambers
7-8 Essex Street
London WC2R 3LD
United Kingdom

(iii) Professor Dr. Klaus Sachs
(appointed by the Parties)
CMS Hasche Sigle
Nymphenburger Strasse 12
80335 München
Germany

III. SUMMARY OF THE PROCEDURAL HISTORY

A. Registration of the Request for Arbitration

9.
On 28 November 2011, Claimant filed a Request for Arbitration with the Secretary-General of ICSID (the "Secretary-General") pursuant to Article 36 of the ICSID Convention"4 (the "Request"). Article 36 of the ICSID Convention provides:

"(1) Any Contracting State or any national of a Contracting State wishing to institute arbitration proceedings shall address a request to that effect in writing to the Secretary-General who shall send a copy of the request to the other party.

(2) The request shall contain information concerning the issues in dispute, the identity of the parties and their consent to arbitration in accordance with the rules of procedure for the institution of conciliation and arbitration proceedings.

(3) The Secretary-General shall register the request unless he finds, on the basis of the information contained in the request, that the dispute is manifestly outside the jurisdiction of the Centre. He shall forthwith notify the parties of registration or refusal to register."

10.
On 12 January 2012, the Secretary-General registered the Request in accordance with Article 36(3) of the ICSID Convention and notified the Parties of the registration. In the Notice of Registration, the Secretary-General invited the Parties to proceed to constitute an arbitral tribunal as soon as possible in accordance with Rule 7(d) of ICSID's Rules of Procedure for the Institution of Conciliation and Arbitration Proceedings.

B. Constitution of the Tribunal

11.
On 12 July 2012, the Tribunal was constituted in accordance with Article 37(2)(b) of the ICSID Convention. The Tribunal was composed of Professor Dr. Klaus Sachs, a national of Germany, President, appointed by agreement of the parties; Mr. John Beechey, a national of Great Britain, appointed by the Claimant; and Rt. Hon. Lord Leonard Hoffmann, a British national, appointed by the Respondent. Mrs. Mercedes Cordido-Freytes de Kurowski, ICSID Legal Counsel, was designated to serve as Secretary to the Tribunal.
12.
Following the resignation of Mr. John Beechey, Claimant appointed Dr. Stanimir Alexandrov, a national of Bulgaria and the Tribunal was reconstituted on 10 September 2012.

C. Procedural Background Previous to the Quantum Phase

13.
As reflected in Section 14 of Procedural Order No. 1 dated 3 December 2012, it was agreed between the Parties and the Tribunal that the Parties would in a first phase file submissions on jurisdiction and liability and that the need for a second phase of the proceeding, on the quantum of damages, would be determined based on the Tribunal's decision in the first phase or the intervening course of events in Pakistan.
14.
On 27 October 2015, in the context of discussions on a time schedule to address certain new issues raised in Respondent's Application to Dismiss the Claims dated 2 September 2015, the Tribunal, inter alia, informed the Parties of the following:

"The Tribunal would like to inform the Parties that it has almost concluded its deliberations on the case and that the draft of its Decision on Jurisdiction and Liability is in a very advanced stage. In light of the circumstances, the Tribunal will finalize, and provide the Parties with, a draft of the Decision that it would have rendered but for the issues raised in Respondent's Application. The Tribunal notes that, while this approach is not provided for by ICSID, it is common practice in the WTO and also provided for in Article 10.20(9) lit. a of the CAFTA. By analogy to the latter provision, the Parties may submit their comments on the draft Decision on Jurisdiction and Liability within 60 days of its transmission by the Tribunal. Any such comments will be duly considered by the Tribunal in its ultimate Decision on Jurisdiction and Liability."

15.
On 3 February 2016 and having given advance notice to the Parties of its intention to do so on 27 October 2015, the Tribunal provided the Parties with its Draft Decision on Jurisdiction and Liability and invited them to provide comments on errors of fact, misprints, etc. within 60 days of the decision's transmission to the Parties.
16.
On 4 April 2016, the Parties submitted their respective comments on the Tribunal's Draft Decision on Jurisdiction and Liability.
17.
On 20 March 2017, the Tribunal issued its Decision on Respondent's Application to Dismiss the Claims (with reasons to follow).
18.
On 6 November 2017, Respondent submitted a Request for Reconsideration of the Draft Decision on Jurisdiction and Liability ("Respondent's Reconsideration Request").
19.
On 10 November 2017, the Tribunal issued its Decision on Jurisdiction and Liability, which is hereby incorporated by reference into this Award. The submissions on jurisdiction and the merits were summarized in that Decision. For a summary of the procedural history leading up to the Decision on Jurisdiction and Liability, see paragraphs 5 to 215 of that Decision.
20.
In its Decision on Jurisdiction and Liability, the Tribunal for the reasons set out therein (see paragraphs 564 to 1374 with respect to Claimant's claims; and paragraphs 1407 to 1446 with respect to Respondent's counterclaims) decided as follows:

I. The Tribunal has jurisdiction to hear the claims submitted to it by Claimant.

II. Claimant's claims are admissible.

III. By denying TCCP's Mining Lease Application, Respondent has breached Articles 3(2), 7(1) and 3(3) of the Treaty.

IV. Claimant is entitled to be compensated for all damages and losses resulting from Respondent's breaches of the Treaty, in an amount to be determined in a later phase of this proceeding.

V. The Tribunal has jurisdiction to hear Respondent's counterclaim based on the alleged violation of Article 1(1)(a) of the Treaty. The Tribunal does not have jurisdiction to hear Respondent's further counterclaims.

VI. Respondent's counterclaim based on the alleged violation of Article 1(1)(a) of the Treaty is dismissed.

VII. The Tribunal's decision on the costs of this phase of the proceeding is reserved for the Award.

21.
Also, on 10 November 2017, the Tribunal issued its Decision on Respondent's Application to Dismiss the Claims (with reasons) ("Decision on Respondent's Application to Dismiss the Claims (with reasons)"), which is hereby incorporated by reference into this Award, concerning an Application to Dismiss the Claims filed by Respondent on 2 September 2015. For a summary of the procedural history leading up to the Decision on Respondent's Application to Dismiss the Claims (with reasons), see paragraphs 6 to 182 of that Decision.
22.
After carefully reviewing all of the arguments and evidence presented by the Parties in the course of that phase of the proceedings concerning Respondent's allegations of corruption as well as, to the extent relevant in that context, the arguments and evidence adduced in the previous phase on jurisdiction and liability, the Tribunal for the reasons set out in paragraphs 209 to 1496 of its Decision on Respondent's Application to Dismiss the Claims (with reasons), decided as follows:

I. The evidence submitted by Respondent as well as the counter-evidence submitted by Claimant in the present phase of the proceeding are admitted into the record.

II. Respondent's Application to Dismiss the Claims dated 2 September 2015 is dismissed in its entirety.

III. Respondent has not established any of its individual allegations of corruption that would be attributable to Claimant and that could have become relevant as potential contributory fault in the quantum phase that is now to follow.

IV. The Tribunal's decision on the costs of this phase of the proceeding is reserved for the Award.

D. PROCEDURAL BACKGROUND - QUANTUM PHASE

23.
On 22 March 2017, Claimant filed a Memorial on Damages, together with: (i) Exhibits CE-890 to CE-1197; (ii) Legal Authorities CA-356 to CA-385; (iii) updated indices of exhibits and authorities; (iv) four witness statements ("WS"): WS of Carlos Sepúlveda, Second WS of Jean-Paul Luksic, Fifth WS of Cassie Boggs and Eighth WS of Timothy Livesey; and (v) the Expert Report ("ER") of Prof. Graham Davis ("Claimant's Quantum Memorial").
24.
Prof. Davis advised in paragraph 9 of his Report that he was retained as a testifying witness in another matter by a team at Sidley Austin LLP that included Dr. Stanimir Alexandrov, and that such engagement was concluded at the time of the Report.
25.
On 7 July 2017, Respondent filed a Request for Disqualification of Dr. Stanimir Alexandrov (the "Disqualification Request"). By letter of 8 July 2017, the Secretariat confirmed receipt of the Disqualification Request on behalf of the Secretary-General and informed the Parties that, pursuant to Rule 9(6) of the ICSID Arbitration Rules, the proceeding was suspended until a decision on the Disqualification Request had been taken.
26.
On 17 July 2017, Claimant filed its Opposition to Respondent's Request for Disqualification of Dr. Stanimir Alexandrov.
27.
On 18 July 2017, pursuant to Rule 9(3) of the ICSID Arbitration Rules, Dr. Alexandrov furnished explanations in response to the Disqualification Request, which were transmitted to the Parties on the same day.
28.
On 26 July 2017, the Secretariat circulated the Parties' simultaneous further observations on the Disqualification Request that were received from Claimant on 21 July 2017 and from Respondent on 25 July 2017.
29.
On 5 September 2017, the Unchallenged Members of the Tribunal rendered a Decision on Respondent's Request for Disqualification of Dr. Stanimir Alexandrov in which they rejected Respondent's Disqualification Request. For a summary of the procedural history leading up to the Decision on Respondent's Disqualification Request, see paragraphs 5 to 70 of that Decision.
30.
On 20 September 2017, Respondent filed a Counter-Memorial on Quantum, together with the following documentation: (i) Exhibits RE-554 to RE-612; (ii) Legal Authorities RLA-375 to RLA-383; (iii) two witness statements: WS Noor ul Haque and WS Ishad Ali Khokhar; (iv) eleven expert reports: ER of Vladimir Brailovsky and Prof. Louis T. Wells, together with Exhibits 1-62; ER of Dr. James C. Burrows, together with Exhibits 1-26, ER of Prof. Kadri Dagdelen and Terry Owen, together with Exhibits 1-41; ER of Barbara Filas, together with Exhibits 1-18; ER of Dr. Ikramul Haq, together with Exhibits 1-2; ER of David Henry and Leonidas Howden, together with Exhibits 1-7; ER of Prof. Rasul Bakhsh Rais, together with Exhibits 1-91; ER of Dr. Sergey Ripinksy; ER of Julian Davies (S-RM), together with Exhibits 1-66; ER of Zaki Rahman, together with Exhibits 1-5; and ER of Paul A. Holmes and Dr. Marcella Nanni (Water Resource Associates or "WRA"), together with Exhibits 1-36 ("Respondent's Counter-Memorial on Quantum")
31.
On 25 November 2017, Respondent filed a proposal for disqualification of the entire Tribunal (the "Disqualification Proposal"). On the same date, the ICSID Secretariat (the "Secretariat") informed the Parties that, pursuant to Rule 9(6) of the Rules of Procedure for Arbitration Proceedings ("ICSID Arbitration Rules"), the proceeding was suspended until a decision on the Disqualification Proposal had been taken.
32.
On 1 December 2017, Claimant submitted a reply to the Disqualification Proposal.
33.
On 6 December 2017, pursuant to Rule 9(3) of the ICSID Arbitration Rules, Dr. Alexandrov furnished explanations in response to the Disqualification Proposal. Professor Dr. Sachs and Rt. Hon. Lord Hoffmann did not provide explanations.
34.
While the proceeding was suspended, Claimant filed its Reply Memorial on Quantum of Damages on 13 December 2017, together with: (i) Exhibits CE-1205 to CE-1527; (ii) Legal Authorities CA-429 to CA-449; (iii) updated indices of exhibits and authorities; (iv) one witness statement: Ninth WS of Timothy Livesey; (v) nine Expert Reports: Second ER of Prof. Graham Davis, ER of Fiona Cessford-Le Roux, ER of Neil Cusworth, ER of Dr. Leonard Drury, ER of Michael Jones, ER of Anton Mayer, ER of Rex E. Pingle, ER of Tony Ridley and ER of Mario Rossi. In addition, in response to the WS of Ali Rahim of 10 November 2017, Claimant submitted with the Tribunal's authorization two Witness Statements: WS of Neil Cusworth and WS of Tony Ridley ("Claimant's Quantum Reply").
35.
On 15 December 2017, each Party filed further observations on the Disqualification Proposal.
36.
On 5 February 2018, the Chairman of the Administrative Council issued its decision, declining Respondent's Proposal to Disqualify the entire Tribunal. The proceeding was resumed pursuant to ICSID Arbitration Rule 9(6).
37.
On 6 February 2018, Claimant filed a proposal concerning pending matters ("Pending Matters Proposal"). On 7 February 2018, the Tribunal invited Respondent to comment by 8 February 2018. Following a request from Respondent of 8 February 2018, the deadline was extended by one day until 9 February 2018. On 9 February 2018, Respondent commented on Claimant's Pending Matters Proposal. The Tribunal rendered its decision on these matters in its Procedural Order No. 22 of 21 February 2018.
38.
On 7 February 2018, Respondent filed a request for leave to comment on Claimant's Pending Matters Proposal, where Respondent also submitted that Claimant had been copying submissions to the Tribunal and that Respondent was not privy to the Tribunal's emails. On the same date the Tribunal invited Claimant to comment by 8 February 2018. On 8 February 2018, Claimant filed a response to Respondent's message of 7 February 2018. On 9 February 2018, Respondent requested further clarifications from Claimant. On 10 February 2018, the Tribunal invited Claimant to comment, which it did on 12 February 2018.
39.
On 7 February 2018, Respondent filed a request for the exclusion of evidence (of Mr. Craig's witness statement) and spoliation sanctions, (Application for a Ruling in Limine and for Spoliations Sanctions) ("Application for a Ruling in Limine"). At the Claimant's request, on 10 February 2018, the Tribunal granted Claimant leave to file its opposition to Respondent's Application for a Ruling in Limine until 23 February 2018. On 23 February 2018, Claimant filed an Opposition to Respondent's Application for a Ruling in Limine, requesting the Tribunal to dismiss the Spoliation Application or, in the alternative, defer any decision on matters raised by Respondent's Application until the hearing, together with Mr. Craig's Third Witness Statement. On 26 February 2018, the Tribunal invited Respondent to comment on Claimant's Opposition by 2 March 2018, and Claimant to submit, if it so wished, additional comments by 9 March 2018. On 28 February 2018, Respondent filed a request for the extension of the deadline to file a reply regarding exclusion of evidence until 5 March 2018, which was granted on 1 March 2018. On 5 March 2018, Respondent filed a Reply in support of Respondent's Application for a Ruling in Limine, together with (i) Ali Zahid Rahim's Second Witness Statement and (ii) an index of exhibits and legal authorities. On 13 March 2018, Claimant filed a Rejoinder on Respondent's Application for a Ruling in Limine. On 16 March 2018, the Tribunal issued Procedural Order No. 24 concerning Respondent's Application for a Ruling in Limine.
40.
On 7 February 2018, Respondent filed a Request for the Tribunal to order Claimant to produce the Tanjeel Feasibility Study in its entirety (the "Tanjeel Feasibility Study Request"). On the same date, the Tribunal invited Claimant to comment by 9 February 2018. On 9 February 2018, Claimant objected to Respondent's Tanjeel Feasibility Study Request. On 12 February 2018, the Tribunal issued Procedural Order No. 21, rejecting Respondent's Tanjeel Feasibility Study Request as untimely and not sufficiently relevant to the case or material to its outcome. The Tribunal further set a procedural calendar for the remainder of the arbitration.
41.
On 15 February 2018, Claimant filed a Request for Provisional Measures (the "2018 Provisional Measures Request"), requesting the Tribunal to: (i) order Pakistan to take steps to ensure that Balochistan withdraws the IHC (Islamabad High Court) Application and terminates the IHC Proceeding; (ii) order Pakistan to take steps to ensure that Balochistan seeks an adjournment of the hearing scheduled for 21 Feb 2018 as a temporary measure pending disposition of the request; (iii) establish an expedited briefing schedule and a videoconference for oral argument of this Request; and, alternatively (iv) not admit any supposed new evidence obtained through the Islamabad High Court proceedings. Paragraph 72 of Claimant's Provisional Measures Request included a temporary measure request "that the Tribunal order Pakistan to take steps to ensure that Balochistan seeks an adjournment of the hearing currently scheduled for 21 February 2018 as a temporary measure pending disposition of this Request, and establish an expedited briefing schedule and a videoconference for oral argument on this Request" (the "Temporary Measure Request"). On 15 February 2018, the Tribunal invited Respondent to comment on Claimant's Temporary Measure Request by 19 February 2018. On the same date, Respondent filed an extension request until 21 February 2018. On 16 February 2018, the Tribunal invited Claimant to comment on Respondent's extension request, which it did on the same date. Subsequently, also on 16 February 2018, Respondent reiterated its extension request. On 17 February 2018, the Tribunal rejected Respondent's extension request, noting that Respondent had not yet been asked to comment on Claimant's Provisional Measures Request in its entirety but only on the Temporary Measure Request of adjourning the hearing that was scheduled before the Islamabad High Court on 21 February 2018. In particular, Respondent was invited to explain on what basis it considered that "the jurisdictional issue will not be resolved at the next hearing before the IHC." On 19 February 2018, Respondent filed its comments on Claimant's Temporary Measure Request. On 20 February 2018, the Tribunal informed the Parties that the Tribunal denied Claimant's Temporary Measure Request and fixed a briefing schedule for written submissions on Claimant's Provisional Measures Request.
42.
On 16 February 2018, Respondent filed an application requesting the Tribunal to clarify and reconsider Procedural Order No. 21 ("Requests concerning PO-21"). On 20 February 2018, at the Tribunal's invitation, Claimant filed observations on Respondent's Requests concerning PO-21 by 20 February 2018. On 21 February 2018, the Tribunal issued Procedural Order No. 22 regarding Respondent's Requests concerning PO-21 and other procedural matters.
43.
On 23 February 2018, Respondent filed a full response to Claimant's Provisional Measures Request. On 2 March 2018, Claimant filed a Reply on Claimant's Provisional Measures Request. On 5 March 2018, the Tribunal confirmed that Respondent was invited to submit its Rejoinder on Claimant's Provisional Measures Request by 9 March 2018 and noted that the Tribunal would render a decision on Claimant's Request for Provisional Measures only if and when it had been provided with notice to do so from the Parties. On 9 March 2018, Respondent filed a Rejoinder on Claimant's Provisional Measures Request together with Exhibit RE-635.
44.
On 26 February 2018, Respondent filed a Site Visit Report by Prof. Kadri Dagdelen with supporting documentation (the "Site Visit Report"). On 4 March 2018, Claimant filed observations on the Site Visit Report. On 5 March 2018, the Tribunal acknowledged receipt of Claimant's letter dated 4 March 2018 regarding Prof. Dagdelen's Site Visit Report, the interim results of the metallurgical testing and the process used to extract and transport water samples from the Fan Sediments, and invited Respondent to comment by 7 March 2018. On 7 March 2018, Respondent filed a response to the Claimant's observations on the Site Visit Report. On 8 March 2018, the Tribunal; (i) provided directions to the Parties on the Site Visit Report related matters, ordering Respondent to submit "documentary evidence and/or witness testimony to establish the process used to extract and transport water samples from the Fan Sediments, including a report from any vendor Pakistan employed"; and (ii) directed the Parties to refrain from filing further applications and requests in order to allow the Parties and the Tribunal to prepare for the Hearing on Quantum. On 9 March 2018, Respondent filed an extension request, which was followed by objections from Claimant, and, subsequently, by a message from Respondent reiterating its extension request and attaching copy of a letter to Claimant's counsel regarding Lab Costs. On 20 March 2018, Respondent filed a submission concerning the Site Visit and the extraction and transportation of water, together with supporting documents on water collection and a witness statement of Mr. Javaid Ahmed. On the same date, Respondent filed an Expert Report by Prof. Erik Spiller regarding Metallurgical Testing, along with 5 appendices.
45.
On 28 February 2018, the Tribunal issued its Decision on Respondent's Request for Reconsideration of the Tribunal's Decision on Jurisdiction and Liability, which had been provided to the Parties as a draft on 3 February 2016 and was rendered in final form on 10 November 2017 ("Decision on Respondent's Reconsideration Request"). For the reasons indicated therein, Respondent's Request dated 6 November 2017 for Reconsideration of the Tribunal's Decision on Jurisdiction and Liability was rejected, and the decision on the costs incurred in relation to Respondent's Reconsideration Request was reserved for the Final Award. For a summary of the procedural history leading up to the Decision on Respondent's Reconsideration Request, see paragraphs 2 to 13 of that Decision.
46.
Also, on 28 February 2018, Claimant filed a renewed request for certain orders from the Tribunal regarding Respondent's allegedly deficient production of documents pursuant to Procedural Order No. 20 ("Claimant's Document Production Request"). On 1 March 2018, the Tribunal invited Respondent to comment. On 7 March 2018, Respondent filed observations on the Claimant's Document Production Request with a Redfern Schedule and attachments. On 12 March 2018, the Tribunal issued Procedural Order No. 23 concerning Claimant's Document Production Request, where it allowed Claimant to file, if it so wished, a supplemental reply on quantum.
47.
On 19 March 2018, Respondent filed a request for the Tribunal to reconsider certain aspects to the Procedural Order No. 23, particularly, the timing fixed for Claimant's supplemental reply on quantum; noting that such supplemental reply on quantum should be filed simultaneously with Respondent's Rejoinder on Quantum. ("Reconsideration Request concerning PO-23"). On the same date, the Tribunal invited Claimant to comment by 22 March 2018. On 21 March 2018, Claimant objected to Respondent's request of 19 March 2018 regarding the Tribunal's authorization for Claimant to file a supplemental reply on quantum. On 22 March 2018, the Tribunal decided on Respondent's Reconsideration Request concerning PO-23. For the reasons indicated therein, the Tribunal did not consider it necessary to make any further orders on the scope of the supplemental reply on quantum.
48.
On 29 March 2018, Respondent filed a Rejoinder on Quantum, together with: (i) Exhibits RE-576-3.12 to RE-768; (ii) Legal Authorities RLA-398 to RLA-422; (iii) four (4) Witness Statements of: WS of Ghulam Nabi, WS of Haji Arz Muhammad Badaich, WS of Irshad Khokhar and WS of Rehmat Baloch; and (iv) fifteen (15) Expert Reports: ER of Dr. Jerald S. Ault, ER of Vladimir Brailovsky and Prof. Louis T. Wells, ER of Dr. Kerry M. Connor, ER of Dr. James C. Burrows, ER of Prof. Kadri Dagdelen and Terry Owen, ER of Barbara Filas LLC, ER of Dr. Ikramul Haq, ER of David Henry and Leonidas Howden, ER of Dr. Marcella Nanni, ER of Zaki Rahman, ER of Dr. Sergey Ripinsky, ER of Prof. Donald Erik Spiller, ER of Julian Davies, ER of Christopher J. Neville, and ER of Terry Owen ("Respondent's Rejoinder on Quantum").
49.
On 29 March 2018, Claimant filed a letter concerning Respondent's alleged failure to comply with the disclosure orders in Procedural Order 23, requesting the Tribunal to: (i) make adverse inferences in the Award; or, in the alternative (ii) to be taken into account by the Tribunal when assessing Respondent's arguments, the testimony of its witnesses, and whether it had met its burden on substantiating its assertions. Following the Tribunal's invitation, on 5 April 2018, Respondent filed comments on Claimant's letter of 29 March 2018. On 9 April 2018, the Tribunal decided on Claimant's request of 29 March 2018.
50.
On 9 April 2018, Claimant filed a Supplemental Quantum Reply Memorial, together with Exhibits CE-1635 to CE-1664 ("Claimant's Supplemental Quantum Reply").
51.
On 13 April 2018, in preparation for the Pre-Hearing Organizational Meeting, the Tribunal provided directions to the Parties, together with a Draft Agenda, inviting the Parties to provide the agreements and/or respective positions by 27 April 2018.
52.
On 16 April 2018, Claimant filed a Response to Respondent's Site Visit Reports, together with the Second Expert Report of Anton Mayer, the Expert Report of Dr. Corby G. Anderson, accompanying exhibits, and an updated index. On 30 April 2018, Respondent submitted its reply concerning the Site Visit Reports and the Water Collection Methods ("Reply on the Site Visit Report"), along with three accompanying expert reports: (i) Prof. Kadri Dagdelen's Rebuttal Report; (ii) Prof. Donald Erik Spiller's Follow-up Report to Expert Report of Dr. Corby G. Anderson (16 April 2018); and (iii) Expert Report of Dr. Keir Soderberg in response to critiques on water collection, together with a Second Witness Statement of Mr. Javaid Ahmed.
53.
On 18 April 2018, the Parties filed simultaneous letters regarding their agreements and respective positions concerning the organization of the Hearing.
54.
On 23 April 2018, the Tribunal provided the Parties with the directions regarding the organization of the Hearing.
55.
On the same date, Claimant filed a request to exclude certain evidence submitted by Respondent with its Rejoinder on Quantum, namely the: (i) witness statements of Messrs. Baloch, Badaich, and Nabi; (ii) Expert Reports of Dr. Connor, Dr. Ault, and Mr. Neville, the Second Expert Report of Prof. Spiller, arguing that Respondent failed to comply with the requirements of Procedural Order No. 1; and (iii) the Expert Report of Water Resources Associates (WRA) in light of the termination of Mr. Holmes' engagement ("Exclusion of Evidence Request"). On 26 April 2018, Respondent filed observations on Claimant's Exclusion of Evidence Request of 23 April 2018. On 27 April 2018, the Tribunal invited Claimant to provide further comments. On 30 April 2018, the Tribunal decided on Claimant's request of 23 April 2018: (i) denying the request to strike Expert Reports of Dr. Connor, Dr. Ault, Mr. Neville and Second Expert Report of Prof. Spiller; (ii) granting the request to strike witness statements of Messrs. Baloch, Badaich and Nabi; and (iii) noting that the decision regarding the Expert Report of WRA would follow, once Claimant had provided its comments due on 30 April 2018. On 30 April 2018, Claimant filed a letter in response to Respondent's letter of 26 April 2018. On 1 May 2018, Respondent filed further observations on the Exclusion of Evidence Request.
56.
On 23 April 2018, each Party filed a list with the names of the witnesses and experts that it intended to cross-examine during the Hearing. On 26 April 2018, Claimant filed a letter objecting to Respondent's request to cross-examine Mr. Cory Williams and Mr. David Moore during the Quantum Hearing. At the Tribunal's invitation, on 27 April 2018, Respondent filed comments on Claimant's letter of 26 April 2018. At the Tribunal's invitation, on 1 May 2018, Claimant filed a letter concerning the cross-examination of Mr. Williams and Mr. Moore.
57.
On 27 April 2018, each Party filed its comments on the Draft Agenda for the Pre-Hearing Organizational Meeting.
58.
On 27 April 2018, Claimant filed a further request for Production of Documents and for the Exclusion of Evidence ("Further Document Production and Exclusion of Evidence Request"). On 1 May 2018, Respondent filed observations on Claimant's Further Document Production and Exclusion of Evidence Request, with attachments.
59.
On 1 May 2018, each Party filed a request for the Tribunal to decide on the admissibility of additional evidence ("Admissibility of Additional Evidence Requests"). On 2 May 2018, the Tribunal invited the Parties to comment on each other's requests. On 3 May 2018, Respondent filed a letter with comments (objections) to Claimant's Admissibility of Additional Evidence Request. On 4 May 2018, Claimant requested leave to respond to Respondent's letter of 3 May 2018 by 5 May 2018. Claimant's request was granted by the Tribunal, and the Tribunal also invited Respondent to file a response, if it so wished, by 7 May 2018. On 6 May 2018, Claimant filed a letter dated 5 May 2018 in response to Respondent's objections of 3 May 2018.
60.
Also, on 1 May 2018, Claimant filed a request for the Tribunal to strike the Expert Report of Dr. Keir Soderberg, filed by Respondent on 30 April 2018 ("Request to Strike"). On 2 May 2018, Respondent filed observations on Claimant's Request to Strike.
61.
On 2 May 2018, the Tribunal decided on the outstanding issues concerning (i) the cross examination of Mr. Moore and Mr. Williams, and (ii) the request to strike portions of Dr. Burrows' Rejoinder Report and to produce certain documents relied on in other experts' rejoinder reports or Respondent's Counter-Memorial.
62.
On 3 May 2018, the Tribunal decided on the issue concerning Claimant's Request to Strike Dr. Soderberg's Expert Report filed together with Respondent's Reply on the Site Visit.
63.
On 4 May 2018, the President of the Tribunal held a Pre-Hearing Organizational Meeting with the Parties by telephone conference to discuss procedural and logistical matters relating to the organization of the Hearing.
64.
Also, on 4 May 2018, Respondent filed a letter with clarifications on its position on the examination of multiple experts, which was followed by a brief response from Claimant.
65.
On the same date, Respondent filed a request for the Tribunal to order the sequestration of Claimant's water experts (Mr. Anton Mayer, Mr. Michael Jones, and Dr. Leonard Drury) ("Sequestration of Water Experts Request"). On 5 May 2018, the Tribunal invited Claimant to comment on Respondent's Sequestration of Water Experts Request. On 7 May 2018, Claimant filed a letter objecting to Respondent's Sequestration of Water Experts Request.
66.
On 7 May 2018, the finalized Agenda of the Pre-Hearing Organizational Meeting held by telephone conference on 4 May 2018 between the President of the Tribunal and the Parties, was transmitted to the Parties on instructions of the President.
67.
On 8 May 2018, the Tribunal decided on the Parties' respective Admissibility of Additional Evidence Requests and on the Sequestration of Water Experts Request.
68.
On 11 May 2018, pursuant to the Tribunal's directions of 8 May 2018, Respondent filed rebuttal evidence and an index. On 12 May 2018, Claimant filed a letter regarding Respondent's new proposed exhibits. On 13 May 2018, the Tribunal invited Respondent to comment in writing on Claimant's letter of 12 May 2018. On 14 May 2018, Respondent filed a letter in response to Claimant's objections to Respondent's rebuttal exhibits. On the same date, Claimant filed a letter in response to Respondent's letter of 12 May 2018.
69.
A hearing on Quantum was held in London from 14 to 24 May 2018 (the "Hearing on Quantum"). The following persons were present at the Hearing on Quantum:

TRIBUNAL
Prof. Dr. Klaus M. Sachs President
Dr. Stanimir A. Alexandrov Co-Arbitrator
Lord Hoffmann Co-Arbitrator

ICSID SECRETARIAT
Ms. Mercedes Cordido-Freytes de Kurowski Secretary of the Tribunal

ASSISTANT TO TRIBUNAL
Ms. Susanne Schwalb Assistant to the Tribunal

CLAIMANT
Mr./Ms. First Name/ Last NameAffiliation
Counsel
Mr. Donald Francis Donovan Debevoise & Plimpton LLP
Mr. Mark W. Friedman Debevoise & Plimpton LLP
Dr. Dietmar W. Prager Debevoise & Plimpton LLP
Ms. Natalie L. Reid Debevoise & Plimpton LLP
Mr. Carl Riehl Debevoise & Plimpton LLP
Mr. Feisal Naqvi HaidermotaBNR & Co
Ms. Berglind Halldorsdottir Birkland Debevoise & Plimpton LLP
Ms. Elizabeth Nielsen Debevoise & Plimpton LLP
Ms. Fiona Poon Debevoise & Plimpton LLP
Mr. Guilherme Recena Costa Debevoise & Plimpton LLP
Mr. Romain Zamour Debevoise & Plimpton LLP
Mr. Adam Moss Debevoise & Plimpton LLP
Mr. Gabriel Herscovici Junqueira Debevoise & Plimpton LLP
Mr. William Mattessich Debevoise & Plimpton LLP
Ms. Jennifer Wagner Debevoise & Plimpton LLP

Parties
Mr. William Hayes Tethyan Copper Company Pty Limited
Mr. Ramón Jara Tethyan Copper Company Pty Limited
Mr. Julian Anderson Antofagasta plc
Mr. Jonathan Drimmer Barrick Gold Corporation
Fact Witnesses
Mr. Timothy Livesey Witness
Ms. Cassie Boggs Witness
Mr. Carlos Sepúlveda Witness
Mr. Andrew Craig Witness
Mr. Jean-Paul Luksic Witness
Experts
Mr. Mario Rossi Expert
Dr. Corby G. Anderson Expert
Mr. Michael Jones Expert
Dr. Leonard Drury Expert
Mr. Anton Mayer Expert
Mr. Tony Ridley Expert
Mr. Neil Cusworth Expert
Ms. Fiona Cessford-LeRoux Expert
Mr. Rex E. Pingle Expert
Prof. Graham Davis Expert
Dr. Florin Dorobantu The Brattle Group
Observers
Ms. Andrea Ahrens
Ms. Tara Goalen Law student

RESPONDENT
Mr./Ms. First Name/ Last NameAffiliation
Counsel
Mr. Ignacio Torterola GST LLP
Mr. Diego Brian Gosis GST LLP
Mr. Quinn Smith GST LLP
Ms. Mariana Lozza GST LLP
Ms. Katherine Sanoja GST LLP
Mr. Gary Shaw GST LLP
Mr. J. Derek Womack GST LLP
Mr. Pablo Parrilla GST LLP

Mr. Nicolas Bianchi GST LLP
Mr. Patricio Grané Riera GST LLP
Mr. Joaquin Coronel GST LLP
Mr. Ali Zahid Rahim Axis Law Chambers
Mr. Hassan Ali Axis Law Chambers
Mr. Muhammad Abdullah Tariq Gulzar Axis Law Chambers
Ms. Neshmiya Adnan Khan Axis Law Chambers
Mr. Usman Raza Jamil RJT Litigators
Mr. Mehdi Tirmiz RJT Litigators
Parties
Mr. Ashtar Ausaf Ali Attorney General for Pakistan
Mr. Ahmad Irfan Aslam Head, International Disputes Unit, Office of the Attorney-General for Pakistan
Mr. Mian Shaoor Ahmad Office of the Attorney-General for Pakistan
Mr. Danish Aftab Office of the Attorney-General for Pakistan
Mr. Khuzaema Gauhar Siddiqui Office of the Attorney-General for Pakistan
Mr. Azzam Ahmad Cheema Office of the Attorney-General for Pakistan
Mr. Abdul Quddus Bizenjo Chief Minister, Government of Balochistan
Mr. Aurangzeb Haque Chief Secretary, Government of Balochistan
Mr. Hafiz Abdul Basit Principal Secretary to the Chief Minister, Government of Balochistan
Mr. Babar Khan Yaseenzai Additional Secretary to the Chief Minister, Government of Balochistan
Mr. Akbar Askani Minister for Mines and Mineral Development, Government of Balochistan
Mr. Saleh Muhammad Baloch Secretary, Mines and Mineral Development Department, Government of Balochistan
Mr. Ahmed Sharif Chaudhry Deputy Secretary, Law and Parliamentary Affairs Department, Government of Balochistan
Mr. Durra Baloch Additional Secretary, Mines and Mineral Development Department, Government of Balochistan
Mr. Sikandar Sultan Raja Secretary Petroleum, Ministry of Energy (Petroleum Division)
Mr. Mukhtiar Additional Secretary, Ministry of Energy (Petroleum Division)
Witness(es)
Mr. Irshad Ali Khokhar Witness
Expert(s)
Dr. Keir Soderberg Expert
Prof. Rasul Bakhsh Rais Expert
Mr. Zaki Rahman Expert
Prof. Kadri Dagdelen Expert

Mr. Terry Owen Expert
Mr. David Henry Expert
Dr. Leonidas Howden Expert
Mr. Vladmir Brailovsky Expert
Prof. Louis T. Wells Expert
Dr. James C. Burrows Expert
Dr. Marcella Nanni Expert
Ms. Barbara A. Filas Expert
Dr. Kerry M. Connor Expert
Prof. D. Erik Spiller Expert
Mr. Julian Davies Expert
Mr. Christopher J. Neville Expert
Mr. Tiago Duarte-Silva Expert's Assistant
Observer(s)
Mr. Muhammad Umar Ali Axis Law Chambers

COURT REPORTER
Mr./Ms. First Name/ Last NameAffiliation
Ms. Dawn K. Larson English-Language Court Reporter

INTERPRETERS
Mr./Ms. First Name/ Last NameAffiliation
Ms. Shahida Sharif Urdu-English Interpreter
Mr. Gul Ifat Urdu-English Interpreter

70.
On 21 May 2018, Claimant filed corrected copies of Exhibits CE-1556, CE-1778, and CE-1779, along with errata to Prof. Graham A. Davis' Quantum of Damages Reply Report. Also, on 21 May 2018, Respondent filed documents to address and respond to the corrected spreadsheets disclosed by Claimant on behalf of Prof. Davis. On 22 May 2018, Claimant objected to Respondent's rebuttal evidence filed on 21 May 2018.
71.
On 20 August 2018, Respondent filed a letter with allegations of unauthorized disclosure in the Eiser v Spain annulment proceeding of the decision on the challenge to Dr. Alexandrov in the present case. At the Tribunal's invitation, on 28 August 2018, Claimant filed a letter with attachments, concerning Respondent's letter of 20 August 2018. On 30 August 2018, the Tribunal addressed a letter to the Parties on this issue.
72.
On 31 August 2018, the Parties filed simultaneous post-hearing briefs ("Claimant's Quantum Post-Hearing Brief"; "Respondent's Post-Hearing Brief on Quantum").
73.
On 28 September 2018, each Party filed a Submission on Costs ("Claimant's Submission on Costs"; "Respondent's Submission on Costs").
74.
On 15 November 2018, Respondent filed a letter requesting the Tribunal to decide on the admissibility of new evidence regarding a merger between Barrick Gold Corp and Randgold Resources Ltd, together with five documents identified as Exhibits RE-783 to RE-787.
75.
On 16 November of 2018, the Tribunal invited Claimant to comment on Respondent's request of 15 November 2018, by 30 November 2018.
76.
On 30 November 2018, Claimant requested an extension of the deadline to comment on Respondent's request of 15 November 2018, until 4 December 2018. The extension was granted. On 4 December 2018, Claimant requested a further extension of the deadline until 10 December 2018, which was granted by the Tribunal on 5 December 2018.
77.
On 11 December 2018, Claimant filed a letter dated 10 December 2018, in response to Respondent's request of 15 November 2018 and included 8 Exhibits (CE-1815 to CE-1822).
78.
On 12 December 2018, the Tribunal decided on Respondent's request of 15 November 2018 for the admissibility of new evidence.
79.
On 12 February 2019, Respondent requested the Tribunal to admit into the record a recent decision regarding the Rusoro award. On 13 February 2019, the Tribunal invited Claimant to comment on Respondent's request of 12 February 2019. On 20 February 2019, Claimant filed a letter submitting (i) that it did not object to Respondent's request to introduce as new legal authority (RLA-423)—the 29 January 2019 decision of the Paris Court of Appeal partially setting aside the Rusoro award; (ii) that such decision is not relevant to the Tribunal's task in this case; and (iii) its request the Tribunal to close the proceeding.
80.
By letter of 22 February 2019, the Tribunal informed the Parties that in light of the fact that Claimant did not object to the new legal authority which Respondent was seeking to introduce into the record, the Tribunal admitted the new legal authority dated 29 January 2019 into the record. The Tribunal noted that it had taken note of the Parties' positions regarding the relevance of this legal authority and asked the Parties to refrain from making any further submissions unless specifically requested by the Tribunal.
81.
On 18 March 2019, Respondent requested the Tribunal to admit into the record a recently rendered new legal authority (RLA-424). On 19 March 2019, the Tribunal invited Claimant to comment on Respondent's request of 18 March 2019. On 26 March 2019, Claimant filed a letter submitting that it did not object to the addition of the new legal authority to the record but considered that it had no relevance to the Tribunal's decision.
82.
By letter of 27 March 2019, the Tribunal informed the Parties that as Claimant did not object to its admission, the Tribunal admitted the new legal authority into the record.
83.
By letter of the same date, the Tribunal further declared the proceedings closed in accordance with Rule 38(1) of the ICSID Arbitration Rules.

IV. FACTUAL BACKGROUND

84.
For a detailed summary of the factual background to the dispute between the Parties, the Tribunal makes reference to Section IV of its Decision on Jurisdiction and Liability.
85.
The Tribunal further notes that in the present phase of the proceeding, it has been presented with certain additional facts, supplementing the chronology of events as set out in the Decision on Jurisdiction and Liability, which are either undisputed between the Parties or are otherwise established by the evidence submitted in these proceedings to the satisfaction of the Tribunal. These will be addressed as part of the Tribunal's reasoning on the consequences flowing from Respondent's breaches.

V. POSITIONS OF THE PARTIES

A. Summary of Claimant's Contentions

86.
Claimant submits that it should be awarded compensation in the amount of USD 8.5 billion plus interest, reflecting the damage that it has incurred as a result of Respondent's wrongful denial of the mining lease application submitted by TCCP to the Director General of the Mines & Mineral Development Department of Balochistan (the "Licensing Authority") on 15 February 2011 (the "Mining Lease Application" or the "Application"), which deprived it of the opportunity to build and operate the mine at Reko Diq.5

1. On the Legal Standards Governing Claimant's Claim for Compensation

87.
Claimant submits that the Tribunal must award compensation equal to the "market value" of Claimant's investment as of 15 November 2011 and, in assessing that value, it must disregard all of the unlawful acts that Respondent has committed prior to that valuation date.6 In Claimant's view, the Australia-Pakistan BIT does not specify the remedies for Respondent's breaches of the Treaty and the Tribunal must therefore apply the standard of full reparation under customary international law, as established in Chorzów Factory, i.e., the award "must, as far as possible, wipe out all the consequences of the illegal act and reestablish the situation which would, in all probability, have existed if that acted had not been committed."7
88.
Claimant accepts that it must show that Respondent's Treaty breaches caused its loss but considers that the causal relationship has already been determined by the Tribunal in its Decision on Jurisdiction and Liability and all that remains is for that loss to be quantified.8
89.
Claimant further accepts that it has the burden of proof as to its loss. As to the standard of proof, Claimant submits that once it has been shown that a loss has been incurred, damages should be awarded even if the specific amount cannot be assessed with certainty.9
90.
Claimant submits that the amount of its loss should be quantified based on the DCF valuation method, more specifically the "practical, industry-informed application of well-established principles" used in the modern DCF model applied by its valuation expert Prof. Davis which it considers to be "the best method to value a development-stage mining project like Reko Diq."10
91.
In Claimant's view, neither a comparables valuation approach nor a cost-based method could capture the value of its investment as it puts the investor in the position as if the investment had never occurred – rather than the position as if the breaches had not occurred as required by the principle of full reparation. In Claimant's view, the same applies to the valuation method applied by Respondent's valuation expert Dr. Burrows because it is also a backword-looking method and has in any event not been correctly applied.11

2. On the Terms of the Mineral Agreement and the Risks and Issues Raised by Respondent

92.
Claimant takes the position that if the Governments had continued to negotiate in good faith, the parties would have entered into a "mutually beneficial and commercially reasonable" mineral agreement, as contemplated by the 2002 BM Rules and the 1995 National Mineral Policy (the "Mineral Agreement"), and the question remained only on what terms. According to Claimant, the fiscal terms that Prof. Davis used in his model were the terms on which the Governments and TCC would likely have agreed but for the Governments' takeover and abandonment of negotiations: (i) a 2% provincial royalty; (ii) Export Processing Zone ("EPZ") status for the first 15 years followed by the normal tax regime; (iii) extension of TCCP's mining lease for the life of the mine; and (iv) participation by Balochistan through a 25% Net Profit Interest.12
93.
Claimant further argues that neither of Respondent's criticisms on geology and metallurgy affects the value of the project because they are factually incorrect and "reveal a profound lack of understanding about mining practices in general and the Reko Diq project in particular." Claimant maintains that its resource estimate is "highly reliable" and submits that: (i) its metallurgical sampling adequately represented the material to be processed by the mine; and (ii) its metallurgical testing validated "consistently high recoveries of copper and gold at marketable concentrate grades."13
94.
Claimant submits that it was committed to building the mine at Reko Diq and had developed the necessary plans to do so. According to Claimant, "TCC's Feasibility Study covered all the technical aspects required to build a project of this scale, as well as the capital and operating costs required to engineer, construct, and eventually operate both the initial mine and the planned expansion case."14
95.
According to Claimant, Respondent's arguments on water ignore the Tribunal's findings in its Decision on Jurisdiction and Liability. Claimant also notes that it had identified: (i) an aquifer that was "not only an abundant source of water but which could be utilized without any significant effect on surrounding communities"; (ii) three backup sources; and (iii) the possibility to build a sea water pipeline. Claimant further claims that any residual risk that remained as of November 2011 has been accounted for by Prof. Davis.15
96.
Claimant contends that it "fully recognized and addressed the relevant security risks, including those associated with transporting the slurry concentrate by pipeline to the port of Gwadar." Claimant refers to the chapters on security and risk included in both the Initial Mine Development Feasibility Study submitted by Claimant to the Government of Balochistan on 26 August 2010 (the "Feasibility Study") and the Expansion Pre-Feasibility Study completed in July 2010 (the "Expansion Pre-Feasibility Study") as well as the "comprehensive Risk Register in which risks were catalogued, assigned a mitigation strategy, and tracked with respect to progress." According to Claimant, the costs associated with the security plans were accounted for in the operating and capital cost estimates, with "significant contingencies totaling more than half a billion dollars" built into the capital expense estimates.16 In any event, Claimant claims that Prof. Davis' model "fully accounts for any security costs." In particular, Claimant refers to Prof. Davis' inclusion of a 0.5% annual likelihood of permanent pre-mature mine shut-down of Reko Diq due to acts of extreme political violence, which, according to Prof. Davis, "reduces the value of the investment by US$ 1.4 billion, or 14% relative to a scenario where this risk would be absent."17
97.
Claimant submits that its approach to identifying, assessing and managing potential environmental and social risks of the project was consistent with international best practices and in line with what lenders and regulators would have expected for the Reko Diq project at this stage. Claimant considers that none of the criticisms raised by Respondent are material enough to have an effect on the quality of the Environmental and Social Impact Assessment for the Reko Diq Project dated November 2010 ("ESIA"). It further argues that the ESIA process reflected a dynamic collaboration between Claimant, its owners and third-party consultants and maintains that the final ESIA ensured compliance with the most stringent standards in the industry.18
98.
Claimant submits that none of the allegations raised by Respondent with regard to permitting established an impact on the valuation of the project beyond the delays that Prof. Davis has already incorporated into his valuation model. Claimant contends that: (i) it did not experience significant problems securing approvals, licenses or permits for the project; (ii) it took appropriate steps to address future permitting needs; and (iii) in any event, Prof. Davis incorporated longer delays into his model than any of the delays posited by Respondent.19
99.
Finally, Claimant asserts that in the absence of Respondent's breaches, the Reko Diq project would have attracted the necessary financing, as it had the full support of its sponsors, Antofagasta and Barrick. According to Claimant, this is confirmed by the fact they the sponsors had invested hundreds of millions of US dollars in the Feasibility Study and were willing to contribute 60% of the project costs. It argues that lenders "would have given great weight not only to the sponsors' financial capacity but also to their managerial, technical, and operating expertise."20

3. On Prof. Davis' Adjustments for Systematic and Asymmetric Risks

100.
Claimant submits that Prof. Davis appropriately discounted the project's future cash flows for both systematic and asymmetric risks as well as for the time value of money. Claimant explains that Prof. Davis applied risk-adjusted cash flows derived from futures and forward prices which are already discounted for systematic risk. It specifically rejects Respondent's allegation that the cash flows and specifically the revenues in Prof. Davis' model are the same as in the DCF model of the Expansion Pre-Feasibility Study.21
101.
Claimant further rejects the allegation that Prof. Davis' model implies a 4.2% discount rate, which would be only 1.2 percentage points above the risk-free rate. According to Claimant, this implied rate does not fully capture the significant asymmetric risk adjustments made by Prof. Davis but most importantly does not capture the discount for systematic risk. Claimant further emphasizes that Prof. Davis increased the cost estimates in the Expansion Pre-Feasibility study by a total of 58%.22
102.
According to Claimant, Prof. Davis has also fully accounted for asymmetric risks, including the country risk affecting the project because of its location in Pakistan and in particular Balochistan. Claimant notes that according to Respondent, the most prominent risks associated with the project's location are political violence and security risks and argues that Prof. Davis took these into account in three ways: (i) he incorporated an annual 0.5% probability of a complete and permanent project shutdown; (ii) he included "substantial premiums for insurance that would protect against the effects of political violence, terrorist attacks, and other security threats"; and (iii) he adjusted various costs and production quantities to reflect the residual risk of various security threats. In addition to country risk, Claimant asserts that Prof. Davis also accounted for further asymmetric risk by incorporating the potential effects of project delays, which reduced the value of Claimant's investment by USD 1.3 billion.23
103.
According to Claimant, Respondent has failed to present any credible valuation which could have been compared with Prof. Davis' modern DCF valuation; it only submitted "Dr. Burrows's odd and unconvincing 'prior transaction' approach" which concluded that the project was worth even less than in 2006. Claimant contends that Dr. Burrows' prior transaction analysis is "irredeemably flawed" because the 2006 transaction is "simply not 'comparable'" to the 2011 project, as confirmed by the "massive adjustments" made by Dr. Burrows in his analysis. More importantly, Claimant argues that Dr. Burrows' analysis contradicts the "foundational principle" of the value curve according to which "project value increases exponentially as sponsors' certainty about the underlying mineral resources and about the feasibility of the mine plan increases."24
104.
Claimant further emphasizes that Respondent's valuation experts Mr. Brailovsky and Prof. Wells did not present any DCF valuation of the project but only stated that the project either had no value, a negative value or the value estimated by Dr. Burrows, without proving actual calculations or supporting evidence for their assertions. According to Claimant, the IRR reported in the Expansion Pre-Feasibility Study, on which they relied, is "not a particularly useful indicator of the value of the Project" given that it is "by definition, a conservative analytical tool" which was "the result of conservative assumptions" and did not reflect the actual rate of return expected for the project. Claimant adds that the IRRs and NPVs are evaluations rather than valuations as they are intended to test the project and determine that it can break even but not to calculate how profitable it can be.25
105.
Claimant further emphasizes that "[d]espite all of this deliberate conservatism," the Expansion Pre-Feasibility Study confirmed the robustness of the project, yielding a net present value of USD 1,206 billion at a 10% discount rate. It adds that Prof. Davis' update of the calculation to the valuation date yielded a net present value of USD 4.0 billion; Claimant's 75% share of that NPV would have been USD 3.0 billion.26

4. On Pre-Award and Post-Award Interest

106.
Finally, Claimant submits that the principle of full reparation requires that it be awarded pre-award and post-award compound interest to be calculated at either: (i) Respondent's short-term, unsecured, dollar-denominated borrowing rate, which corresponds to an annualized compound rate of 4%; or (ii) "another conservative rate" such as the US prime rate plus two percentage points, which corresponds to an annualized compound rate of 5.6%.27

B. Summary of Respondent's Contentions

107.
Respondent submits that the Tribunal should award no damages to Claimant because it has failed to prove the necessary elements of its claim, including the technical and economic feasibility of the project, and has relied on a valuation method that produces artificially inflated results. In Respondent's view, the real value of the project is speculative; in any event, it does not exceed USD 149.2 million as of the valuation date.28

1. On the Legal Standards Governing Claimant's Claim for Compensation

108.
Respondent accepts that "the proper measure of quantum is the market value of TCC on November 15, 2011." According to Respondent, "market value" is captured by the compensation standard agreed by the parties to the Treaty, i.e., Article 7, which excludes the application of a lex generalis taken from customary international law. Respondent notes that Article 7(2) of the Treaty requires the Tribunal to assess whether the fair market value of Claimant's investment is "readily ascertainable" and considers that the valuation presented by Claimant "is as far as a method could be from rendering a 'readily ascertainable' result." Consequently, Respondent argues that pursuant to Article 7(2) of the Treaty, the Tribunal must determine a value "in accordance with generally recognized principles of valuation and equitable principles taking into account the capital invested, depreciation, capital already repatriated, replacement value, and other relevant factors."29
109.
Respondent submits that Claimant bears the burden of proving that the damages it alleges are a direct consequence of the Treaty breaches and that, in order to establish causation, it must prove that: (i) the alleged injury was caused by the wrongful act as a matter of fact; and (ii) the loss is not too remote and speculative. Respondent argues that the Tribunal's finding on the existence of a Treaty breach does not discharge Claimant's burden of proof on causation and maintains that Claimant has failed to prove that the amount of compensation is a direct consequence of the rejection of the Mining Lease Application.30
110.
Respondent further submits that Claimant also has the burden of proof on the existence and quantum of the damages it is seeking. It relies on its legal expert Dr. Ripinsky who states that a "claimant must prove the losses it has incurred with reasonable, or sufficient, certainty." In Respondent's view, Claimant failed to provide reasonably and sufficiently certain information and therefore failed to discharge its burden of proof; Reko Diq "faced key challenges that would have prevented it from becoming profitable, which requires the Tribunal to dismiss the compensation claims."31
111.
Respondent contends that the valuation method applied by Claimant's valuation expert, which it describes as "a rather unique variation of a discounted cash flow ('DCF' ) valuation, which has not been adopted by the mining industry or investment tribunals," cannot help in determining the fair market value of Claimant's investment as of the valuation date. According to Respondent, the "modern DCF" method does not meet the standard for a "readily ascertainable" market value but has been fabricated by Claimant and its expert to "provide a designer, bespoke methodology allowing TCC to offer the appearance of pseudo-scientific support for its predetermined outlandish valuation."32 More generally, Respondent claims that "the weight of authority clearly indicates that, as a general rule, the DCF method is not appropriate for investment projects that have not demonstrated their capacity to generate profits by a track record of performance."33
112.
Respondent submits that where the market value is not "readily ascertainable," the Tribunal should look to a backward-looking approach. Respondent contends that its expert Dr. Burrows derived the best approximation to the fair market value of Claimant's investment by using the prior transaction by which Antofagasta and Barrick acquired the shares in Claimant in 2006.34

2. On the Terms of the Mineral Agrement and the Risks and Issues Affecting the Project

113.
Respondent emphasizes that the Tribunal has not made any finding that Claimant had a legitimate expectation to conclude a Mineral Agreement and argues that there was no specific commitment to this effect nor were the Governments under a legal obligation to conclude a Mineral Agreement. Respondent further takes the position that "[g]iven the lengthy history or stalled negotiations and distant positions, the most likely outcome would be that no mineral agreement would have been agreed whatsoever." At the same time, Respondent contends that the absence of a finding that a Mineral Agreement would have been concluded would render the value of Claimant's plan to mine Reko Diq speculative.35 As for the fiscal terms put forward by Claimant, Respondent submits that: (i) Pakistan would not have agreed to a royalty rate below the minimum of 5% required by law; (ii) Pakistan never agreed to grant EPZ status and Claimant abandoned this request during negotiations; (iii) the parties "were nowhere close to agreeing to the overall fiscal regime"; and (iv) the Governments "roundly rejected" a provision providing for an automatic renewal of the 30-year mining lease.36
114.
Respondent further submits that in order to determine the value of the copper and gold beneath the surface at Reko Diq, Claimant must achieve a level of certainty that it would be able and that it would be economically feasible to turn the rock into recoverable metal. Respondent emphasizes that if any of the issues that might arise poses a cost that is too high for the mineral to be economically extracted, the resources cannot be classified as anything more than inferred and do not have any economic value; they can never become reserves.37
115.
According to Respondent, Claimant has failed to show that its resource model is trustworthy given that: (i) it has not provided an independent analysis that admitted flaws were fixed; (ii) it did not rebut the findings of Respondent's mining expert regarding the flaws in the database underlying the resource model; and (iii) the method of Claimant's mining expert and its application are "completely unreliable."38
116.
Respondent further maintains that Claimant has not "completely sampled and tested the deposits from a metallurgical perspective," as the deposit is variable and not sufficiently consistent to rely on the "limited sampling and testing" conducted by Claimant. In particular, Respondent contends that Claimant did not sufficiently test the deposit at depths below 450 meters and claims that Claimant's metallurgical testing program was insufficient to prove that the ore below that depth was metallurgically consistent with the ore from shallower depths. In its view, "the reasonable position is to assume metallurgical variability," as a buyer would have done in light of the lack of testing for the deposits.39
117.
Respondent submits that, according to Claimant, Reko Diq is a "mega project" which would have cost almost USD 3.3 billion in capital expenditures in order to get the mine operational. Respondent claims, however, that the Feasibility Study and Expansion Pre-Feasibility Study "failed to quantify sizable costs, adopted an overly aggressive construction schedule that did not prepare for the requirements of building a mine in Pakistan, and adhered to overly optimistic assumptions in its construction plan and cost estimates." According to Respondent, the Feasibility Study was "a blueprint for another Mega Project failure."40
118.
Respondent argues that "[w]ater was a big concern for TCC" and emphasizes that the quantities of water needed for the construction and operation of the project would be equal to the level of daily water consumption of approximately 500,000 people. Respondent also points to the additional risks identified in Claimant's Risk Register, which confirms in its view that Claimant was aware that "the availability of and right to use water could doom the entire project."41 According to Respondent, Claimant "fell far short of proving the size of the aquifer, its plans for mitigation, and the effects of its plans on surrounding areas and countries." Respondent considers it confirmed that the Fan Sediments would likely not have provided sufficient water for the project and contends that there was no feasibility assessment and no cost estimates on transporting the water from other water sources to Reko Diq. Respondent also submits that the solution to pump seawater to Reko Diq was not mentioned in the Feasibility Study and adds that, in any event, this water pipeline would have faced the same risks as the slurry pipeline to Port Gwadar.42
119.
Respondent considers it undisputed that Claimant was planning to build a mine in "one of the most dangerous places in the world" and that the security situation in Balochistan has worsened from 2006 to 2011 and continuing thereafter. However, Respondent contends that Claimant "made little to no effort to identify and address the security risks that the Reko Diq project faced, largely ignored the threat of sabotage on the pipeline, and completely understated the costs to adequately secure the mine's operations."43 Respondent argues that in light of the security risks, a third-party buyer "would likely have refrained from going forward"; however, if it had decided to proceed, it could not have relied on Prof. Davis' valuation model which, according to Respondent, "does not account for the cumulative effect of attacks, the impact of security costs on the financials of the project as management saw it in 2010-2011, and a realistic view of the insurance market."44
120.
Respondent also claims that Claimant: "(1) had no comprehensive plan to mitigate the public's concerns and provide benefits; (2) failed to understand the socio-political conditions in the area and the Resource's role in exacerbating already existing tensions; (3) failed to sufficiently engage the affected communities or involve them in strategic decision making during the consultation process; and (4) underestimated what it would take to obtain a social license and maintain it." Respondent further contends that Claimant's ESIA failed to conform to the IFC Performance Standards and Equator Principles as well as to its own Environmental Design Criteria (EDC) in various areas, as a result of which it would not have been able to seek funding and would not have been able to obtain political risk insurance.45
121.
According to Respondent, Claimant would further have been required to show that it had the necessary permits. By contrast, Respondent claims that "TCC did not even know all of the permits it needed, did not appreciate the practical difficulties of operating in Balochistan, and failed to account for the specific difficulties of getting permits for the project."46
122.
Finally, Respondent asserts that the Reko Diq project would not have been financially feasible from a bankability perspective because there was "no financing appetite" in the market for the Reko Diq project given the "significant flaws in the standards underlying the IMD FS and an array of other problems that made the project not bankable." In addition, Respondent argues that any decision by Claimant's owners to fund the development of the project on an equity basis would have required them to break their internal policies and risk their market reputation.47

3. On Prof. Davis' Adjustments for Systematic and Asymmetric Risks

123.
Respondent takes the view that Prof. Davis has not adequately accounted for the systematic risks in his valuation model because he has used "inordinately speculative" projections of futures prices and even called his projections "certainty-equivalent." Respondent considers it "simply untenable" that a buyer would be convinced by Prof. Davis' explanation of "certainty-equivalent" cash flows and accept the "ridiculously low rate return" in order to invest in a non-diversified, non-operational mining project in Balochistan instead of purchasing the same amout in US Treasury bonds.48
124.
Respondent contends that "[w]hen properly analyzed," Prof. Davis' valuation is equivalent to applying a discount rate of merely 1.2% above the risk-free rate. According to Respondent, Claimant has thereby ignored over 90% of the risk impact perceived by financial markets and institutions. Respondent also refers to the discount rates of 10% to 12% used by SNC Lavalin in the Expansion Pre-Feasibility Study, which led to a value of the project near zero. Respondent alleges that the revenues and costs projected by Prof. Davis are very similar to those in the financial model of the Expansion Pre-Feasibility Study, which makes it apparent that Prof. Davis made "only minor adjustments to the cash flows" and that these cash flows are therefore no more "certainty-equivalent" than those of SNC Lavalin. As a result, Respondent claims that there can be no justification for the application of a risk-free discount rate to the cash flows in Prof. Davis' model.49
125.
In Respondent's view, the implied discount rate of 4.2% in Prof. Davis' model cannot be an adequate expression of all the risks to which the project's cash flows would have been exposed, in particular the country risk, which has led other tribunals to apply risk premiums between 10% and 20% as part of the discount rate, which would render the net present value of the cash flows estimated by Claimant negative.50
126.
Respondent submits that the only proper determination of the fair market value of Claimant's interest in Reko Diq has been provided by Dr. Burrows who, "following best practices and his long forensic experience, … identified the existence of a prior transaction that, with some adjustments, would be the best approximation to that fair market value," i.e., the acquisition by Barrick of 50% in Claimant in September 2006 for a value of USD 246 million.51 Respondent rejects the argument that Dr. Burrows failed to account for changes in the reported resources of the property, operating costs and mining technology between 2006 and 2011. In Respondent's view, a comparison with Antofagasta's expectations as of 2006 demonstrates that "the parties had an accurate understanding of the total mineralization of the Reko Diq project" but that "additional development after 2006 needed to design the mine led to negative surprises about recovery costs." According to Respondent, there was therefore no need for an adjustment in Dr. Burrows' calculation to account for an increased size of the deposit or economies of scale.52
127.
Respondent submits that Dr. Burrows made the necessary adjustments to account for: (i) changes in expectations about metals prices; (ii) inflation of production costs in the global mining industry; (iii) changes in the general cost of capital for metals mines; and (iv) changes in country risk for Pakistan, which results in a fair market value not exceeding USD 149.2 million as of the valuation date. According to Respondent, this valuation shows that Claimant has "artificially inflated its claim by billions of dollars, or over 98.2% of the value claimed of USD 8.5 billion."53

4. On Pre-Award and Post-Award Interest

128.
Respondent submits that under the applicable rules of international law, any interest awarded should be simple and accrue at a risk-free rate such as the one-month US Treasury bills. According to Respondent, any higher rate would reward Claimant for risks to which the assets being valued were not exposed after the valuation date or "simply contradict the applicable law."54

VI. THE PARTIES' REQUESTS FOR RELIEF

A. Claimant's Request for Relief

129.
In its Quantum Post-Hearing Brief dated 31 August 2018, Claimant requests that the Tribunal issue an award:55

(i) Ordering Pakistan to pay monetary damages in an amount that would wipe out all the consequences of Respondent's illegal acts, valued at USD 8.5 billion as of 15 November 2011;

(ii) Ordering Pakistan to pay pre-award compound interest on the above amount for the period from 15 November 2011 through the date of the award at a rate equal to Respondent's short-term cost of borrowing, valued at USD 2.42 billion as of 30 April 2018,56 and subject to updating closer to the date of the award;

(iii) Ordering Pakistan to pay all the costs of the arbitration and all of TCCA's professional fees and expenses on a full indemnity basis, in an amount to be specified in TCCA's application for costs with respect to the entire arbitration, to be filed on 28 September 2018 pursuant to the Tribunal's oral order on the last day of the hearing;

(iv) Ordering Pakistan to pay post-award interest on all of the above amounts until full payment of those amounts is made, at an annually compounding rate equal to Respondent's annualized short-term cost of borrowing, calculated as the sum of: (i) the annualized market yield on one-month U.S. Treasury bills on the date of the award; and (ii) the market one-year credit default swap spread on Pakistan's sovereign debt on that same date;

(v) Ordering Pakistan to pay the full amount due, in U.S. dollars, outside of Pakistan, without any reduction, claim, or offset whatsoever for taxes, any other fiscal obligation, or any other reason; and

(vi) Ordering any such further relief as the Tribunal may deem appropriate.

B. Respondent's Request for Relief

130.
In its Post-Hearing Brief on Quantum dated 31 August 2018, Respondent requests that the Tribunal decide as follows:57

(i) TCC has not shown it has any basis to receive compensation;

(ii) There is no basis to award damages with a DCF methodology;

(iii) Any damages should be no more than the 2006 transaction updated to the Valuation Date;

(iv) Any interest should be simple and calculated on the one-month U.S. Treasury bill; and

(v) Pakistan should receive its full costs and attorneys’ fees, update with interest.

VII. THE TRIBUNAL’S REASONING

131.
At the outset of its reasoning, the Tribunal wishes to emphasize that it has carefully reviewed all of the arguments and evidence presented by the Parties in the course of the present phase of the proceedings concerning the consequences flowing from Respondent’s breaches of the Treaty as well as, to the extent relevant in the present context, the arguments and evidence adduced in the previous phases on jurisdiction and liability and on Respondent’s Application to Dismiss the Claims. Although the Tribunal may not address all such arguments and evidence in full detail in its reasoning below, the Tribunal has nevertheless considered and taken them into account in arriving at its decision.
132.
The Tribunal’s reasoning is structured as follows:

• First, the Tribunal will recall the main findings it has made in the Decision on Jurisdiction and Liability which it deems relevant to its assessment of the Parties’ arguments raised in this last phase of the proceedings. The Tribunal will also refer to the findings it has made in its Decision on Respondent’s Reconsideration Request and make certain general remarks on the development of Respondent’s position regarding the feasibility of Claimant’s project at Reko Diq.

• Second, the Tribunal will determine the relevant legal standards governing Claimant’s claim for compensation. As part of this assessment, the Tribunal will address: (i) the applicable standard of compensation; (ii) the requirement of causation between Respondent’s Treaty breaches and the damages alleged by Claimant; (iii) the standard and burden of proof that apply to ascertaining the feasibility of the project and the value of Claimant’s investment; and (iv) the appropriate valuation method to determine the value of Claimant’s investment and the corresponding compensation to which Claimant is entitled. In the context of (iv), the Tribunal will address the different valuation methods used by the Parties’ valuation experts and examine whether Claimant has established, in principle, that it is appropriate to determine the damages it has incurred based on the valuation method relied on by its valuation expert, Prof. Davis.

• Third, once the Tribunal has determined the relevant legal standards, it will assess whether Claimant has established that it would have concluded a Mineral Agreement with the Federal and Provincial Governments and, if so, the terms on which such an agreement would likely have been concluded. The Tribunal will further examine whether Claimant has established the feasibility of the project and address the various risks and issues raised by Respondent in this last phase of the arbitration proceedings. Provided that the Tribunal decides, in principle, to follow the valuation method relied on by Prof. Davis, it will also assess whether Prof. Davis has appropriately accounted for each of these risks in his valuation of the project.

• Fourth, and again provided that the Tribunal decides, in principle, to follow the valuation method relied on by Prof. Davis, the Tribunal will assess whether he has appropriately accounted for all relevant systematic and asymmetric risks affecting the project.

• Fifth, the Tribunal will verify whether the conclusion it has reached on the amount of damages incurred based on the valuation method relied on by Prof. Davis is reconcilable with the results yielded by other valuation or evaluation methods relied on by Respondent’s experts in this arbitration or contemporaneously applied by TCCA.

• Finally, the Tribunal will address Claimant’s request for an award of pre-award and post-award interest on the amount of compensation owed to it by Respondent.

A. Relevant Findings Made by the Tribunal in the Decision on Jurisdiction and Liability and the Decision on Respondent’s Reconsideration Request

133.
At the outset of its analysis, the Tribunal will: (i) recall the main findings it has made in the Decision on Jurisdiction and Liability which it deems relevant to its assessment of the Parties’ arguments raised in this last phase of the proceedings; (ii) refer to the findings it has made in its Decision on Respondent’s Reconsideration Request; and (iii) make certain general remarks on the development of Respondent’s position regarding the feasibility of Claimant’s project at Reko Diq.

1. Findings Made in the Tribunal’s Decision on Jurisdiction and Liability

134.
As part of its analysis of Respondent’s jurisdictional objections, the Tribunal held that Claimant had an "investment" within the meaning of Article 1(1)(a) of the Treaty, which consisted of the following:

"Claimant's activities in Pakistan were primarily based on two pillars: (i) TCCA's own direct 75% interest in the CHEJVA and the Joint Venture that was thereby established; and (ii) its 100% interest in its Pakistani subsidiary TCCP, which was established for the exclusive purpose of carrying out Claimant's activities in Pakistan. Through TCCP, Claimant indirectly held all further rights in the Reko Diq Project that were not held by the Joint Venture."58

135.
The Tribunal held that these two pillars constitute "assets," which were "owned or controlled" by TCCA and were "admitted by [Pakistan] subject to its law and investment policies" applicable at the time the investment was made.59
136.
On that basis, the Tribunal made the following findings on liability.

a. Respondent Has Breached Article 3(2) of the Treaty

137.
First, the Tribunal found that Respondent has failed to accord Claimant fair and equitable treatment in violation of its obligation under Article 3(2) of the Treaty.
138.
The Tribunal held that the protection of an investor's legitimate expectations is an important element of the FET standard under Article 3(2) of the Treaty.60 Based on a thorough analysis of the Parties' submissions and the evidence in the record, the Tribunal concluded with regard to the scope of legitimate expectations created by Respondent:

"In conclusion, the Tribunal finds that by means of both the contractual and the regulatory framework of Claimant's investment as well as the conduct of the GOB and the GOP during the time period in which Claimant explored the area at Reko Diq, Respondent created the legitimate expectation that Claimant would be entitled to a mining lease upon submission of an application that met the routine requirements as set out in rule 48(3)(a) of the 2002 BM Rules. Even though these requirements contained certain discretionary elements, the Governments created the impression that such discretion had either already been exercised or that it would be exercised in Claimant's favor because they recognized the general principle that, after having invested millions of dollars into the exploration of the area, Claimant should also be the one that would later reap the benefit of its exploitation together with its Joint Venture partner. Finally, both the GOB and the GOP repeatedly assured Claimant that they would support and facilitate Claimant's investment."61

139.
Specifically, with regard to the role assumed by the GOB in this context, the Tribunal held:

"Pursuant to these provisions [i.e., Clauses 7.2a), 5.7.1, 5.7.2, 24.6.2 and 24.6.3 of the CHEJVA], the GOB was under an obligation to provide administrative support in procuring the required licenses and permits and to perform all reasonable acts to give effect to the purposes of the CHEJVA and the interests of the Joint Venture as a whole, i.e., to the exploration and exploitation of the mineral resources at Reko Diq. It is undisputed between the Parties that the GOB did provide such support for, and thus facilitated, Claimant's investment over a period of many years, including the time period in which the 2006 Novation Agreement was signed."62

140.
The Tribunal then examined whether Respondent breached the legitimate expectations it had created and, based on a thorough analysis of the evidentiary record regarding, in particular, the GOB project at Reko Diq, found that there "is sufficient evidence that mining activities formed part of the GOB's project and that the GOB thus did not intend to implement a complementary processing project, but rather a competing mining and processing project (albeit at a smaller scale) that was not compatible with Claimant's project."63 The press coverage in 2010 reinforced the Tribunal's conclusion that "that the GOB had decided to take over the project and, accordingly, to deny TCCP's Mining Lease Application."64
141.
This conclusion was not, however, sufficient for a finding that Respondent breached its FET obligation because there might have been, at the same time, legitimate reasons for denying the Mining Lease Application submitted by TCCP to the Licensing Authority on 15 February 2011.65 Consequently, the Tribunal examined each of the ten grounds stated in the Licensing Authority's notice of its intent to reject the Mining Lease Application dated 21 September 2011 (the "Notice of Intent to Reject").66 The Parties had grouped those grounds into three sets of grounds, i.e.: (i) that TCCP was not the proper applicant; (ii) that the Feasibility Study, which formed part of the Mining Lease Application, did not provide for processing, smelting and refining of the ore; and (iii) that TCCP failed to submit a proper/complete feasibility study on the discovered deposits in the exploration area. For the reasons set out in detail in the Decision on Jurisdiction and Liability, the Tribunal concluded that "none of the reasons given in the Notice of Intent to Reject could have justified the denial of the Mining Lease Application."67
142.
In the first phase of the arbitration proceedings, Respondent further raised four additional grounds which, in its view, justified the Licensing Authority's denial of the Mining Lease Application, i.e.: (i) that TCCP failed to prove that the mine could be profitably developed and operated; (ii) that TCCP failed to establish that it had or could obtain the resources to carry out the mining operations effectively; (iii) that TCCP failed to adequately address the security risks of the pipeline; and (iv) that TCCP failed to fully assess the water source for the project.68
143.
With regard to these reasons, the Tribunal first held:

"Respondent should not be allowed to rely on reasons additional to those invoked in the Notice of Intent to Reject because Respondent would thereby be allowed to ignore the procedural requirements set out in rule 48(4) and (5) of the 2002 BM Rules and, more generally, this would violate Claimant's right to be heard both during the procedure before the Licensing Authority and the appeal before the Secretary of the MMDD."69

144.
In any event, the Tribunal considered that "none of the additional reasons invoked by Respondent would justify the denial of the Mining Lease Application in the present case."70
145.
As certain findings made by the Tribunal in the context of these additional grounds are particularly relevant to the arguments raised by Respondent in this last phase of the proceedings, the Tribunal considers it worth recalling these reasons in more detail at this point.

i. Respondent's Allegation That TCCP Failed to Prove that the Mine Could Be Profitably Developed and Operated

146.
In the context of the first additional ground, i.e., that Claimant failed to demonstrate in the Feasibility Study "that the mine can be profitably developed and operated" as required under rule 48(3)(a)(i) of the Mineral Rules enacted by Balochistan in 2002 to implement the National Mineral Policy ("2002 BM Rules"),71 the Tribunal recalled, inter alia, the oral testimony of Antofagasta's chairman Mr. Luksic who explained that "[e]ven if you have a start that is tight, your expansions are going to be extremely, extremely profitable"72 and held:

"In light of this undisputed testimony and further taking into account the fact that two of the world's largest mining companies were willing to invest large amounts of equity into this project, the Tribunal considers it sufficiently established that the mining project as envisaged by Claimant, i.e., consisting of the initial mine development set out in the Feasibility Study and the expansions set out in the Pre-Feasibility Expansion Study, could be 'profitably developed and operated' as required under rule 48(3)(a)(i) of the 2002 BM Rules."73

147.
While taking note of the fact that the Expansion Pre-Feasibility Study did not form part of the Mining Lease Application and thus was not among the documents considered by the Licensing Authority, the Tribunal added:

"In any event, the Tribunal is not convinced by Respondent's argument that the initial mine development as presented in the Feasibility Study would have been unprofitable. While Respondent focused its argument primarily on the allegation that Claimant made wrong assumptions with regard to the tax and royalty regime, Claimant's witness Mr. Livesey explained during the Hearing that the profitability was much more sensitive to the prices of fuel and metals, in particular copper, and further stated that in light of the subsequent rise of the copper prices after the completion of the Feasibility Study, the profitability had increased 'into high teens to twenties IRR even in the normal tax regime.' This is reflected in the sensitivity analysis on metal prices conducted in Chapters 28.3.1 and 28.3.2 of the Feasibility Study, which further includes the statement that a 'conservative base copper price' was selected for this analysis."74

148.
Finally, the Tribunal considered Respondent's argument that Claimant had made wrong assumptions regarding the tax and royalty regime:

"[T]he Tribunal notes that the applicable tax and royalty rates were still subject to the Mineral Agreement negotiations. While such negotiations had apparently stalled before the Mining Lease Application was filed, the parties may well have decided to revive them after the grant of the mining lease, given that Claimant would then have been the only one allowed to conduct mining operations in the area. There would thus have been a mutual interest to achieve agreement on the remaining issues. In the Tribunal's view, Claimant would have been in a far better bargaining position as holder of the mining lease over the area than it was before, in particular once it became clear that the Governments considered that Claimant did not have a right to convert its exploration license into a mining lease. Therefore, the Tribunal is not convinced that Claimant made unrealistic assumptions in the absence of which the project would have been unprofitable without any future expansions."75

ii. Respondent's Allegation That TCCP Failed to Establish That It Had or Could Obtain the Resources to Carry Out the Mining Operations Effectively

149.
As to the second additional reason that Respondent invoked for the first time in these arbitration proceedings, i.e., that TCCP failed to demonstrate that it had or could obtain the "technical and financial resources and experience to carry out mining operations effectively" as required under rule 48(3)(a)(iii) of the 2002 BM Rules,76 the Tribunal again referred, inter alia, to Mr. Luksic's testimony that Claimant's shareholders had had meetings with the World Bank but "you need to have a fully approved project before you get the financing."He also stated that "the World Bank seemed very committed. … [T]hey were very committed to Pakistan developing mining. It had a special man in charge of a mining program, and they were very committed."77 The Tribunal then held:

"In light of this testimony and again taking into account that Antofagasta and Barrick Gold as two of the world's largest mining companies were willing to contribute large amounts of equity to the project, it appears improbable that they would not have been able to obtain third-party financing from financial institutions, such as the World Bank and/or the Asian Development Bank. In the Tribunal's view, the absence of a Mineral Agreement might have made such financing more challenging, but there was no indication that it would have been impossible."78

iii. Respondent's Allegation That TCCP Failed to Adequately Address the Security Risks of the Pipeline

150.
With regard to the third additional reason, i.e., that TCCP failed to adequately address the security risks associated with transporting the concentrate via pipeline to the Port of Gwadar, the Tribunal referred to Mr. Livesey's testimony on the issue as well as the fact that "the Feasibility Study contained separate sections on both security and risk, which identified certain issues and set out the strategies to address them."79 The Tribunal took note of the fact that "it is also stated in the chapter on asset evaluation that certain 'residual risks,' including security risks, were identified the value of which was not included in the economic evaluation of the project," but the Tribunal did "not agree with Respondent that TCCP therefore failed to adequately address security risks."80 It held:

"The same section cited by Respondent states that such risks 'will require further mitigation attention during the subsequent stages.' In the Tribunal's view, it is plausible that not all risks can be fully assessed and quantified at such an early stage of the project and that the risk mitigation strategy evolves over time and the further development of the project. Therefore, the Tribunal sees no reason to assume a failure on the part of TCCP to adequately address security risks in the Feasibility Study."81

151.
The Tribunal further noted that, as emphasized by Mr. Livesey, "at no point until the rejection of the Mining Lease Application did the GOB raise any concerns and that, in fact, the pipeline was not even mentioned in the Notice of Intent to Reject. He concluded that 'I don't see why this is all of a sudden become a significant issue.'"82 The Tribunal added:

"[T]he GOB had known about the option to transport the concentrate by means of a slurry pipeline since December 2007 when Claimant presented the transport options as part of its Mineral Agreement Proposals to the Governments in Dubai. While the GOB did express its interest in having built a road to Gwadar in order to improve the infrastructure of the region, there is no indication in the record that it ever raised any security concerns with regard to the pipeline option. Respondent's witness Mr. Yaqoob confirmed during the Hearing that 'there was no official discussion with the Government of Balochistan on security issues' and further that, to his knowledge, there was also no internal discussion between the Licensing Authority and the GOB.

Further taking into account the fact that the pipeline as such, let alone the allegedly ignored security risks, were not mentioned in the Notice of Intent to Reject, the Tribunal is therefore not convinced that this additional reason invoked by Respondent in this arbitration played any role in the decision-making process of the Licensing Authority at the relevant time."83

iv. Respondent's Allegation That TCCP Failed to Fully Assess the Water Source for its Project

152.
Finally, the Tribunal turned to the fourth additional reason invoked by Respondent, i.e., that TCCP failed to assess the water source that it intended to use for its project to full feasibility level. Based on the evidence in the record, it appeared to the Tribunal that, "as far as the Pakistani side of the acquifer is concerned, it is undisputed that Claimant did make a full feasibility assessment of the groundwater source that it intended to use for the project, i.e., the Baghicha Bore Field."84 The Tribunal further relied on Mr. Livesey's witness testimony regarding the flow of water from Pakistan into Afghanistan as well as the fact that Claimant maintained licenses to the other areas with potential water sources and also noted that the GOB had chosen the same water source for its own mining project.85 It concluded:

"Based on this record, the Tribunal is convinced that Claimant did in fact make an adequate assessment of the groundwater source it intended to use for its project so that Respondent's fourth additional reason also does not present a justifiable basis for denying TCCP's Mining Lease Application."86

v. Conclusion on Respondent's Breach of Article 3(2) of the Treaty

153.
In its overall conclusion on its assessment of whether Respondent breached Article 3(2) of the Treaty, the Tribunal summarized its findings as follows:

"In conclusion, the Tribunal finds that none of the reasons invoked in the Notice of Intent to Reject and/or in this arbitration justified the Licensing Authority's decision to deny TCCP's Mining Lease Application. The Tribunal is convinced that the real motive for the denial was the fact that the GOB had decided to develop and implement its own mining project rather than to collaborate with Claimant pursuant to the CHEJVA and that the grounds invoked by the Licensing Authority served only as a pretext to conceal this motive. The Tribunal recalls that Respondent had created legitimate expectations on Claimant's part that it would be entitled to convert its exploration license into a mining lease 'subject only to compliance with routine Government requirements.' Given that Claimant in fact fulfilled all of the requirements under rule 48 of the 2002 BM Rules in its Mining Lease Application, Respondent's denial, motivated by its desire to mine the area on its own, violated Claimant's legitimate expectations and thereby breached the FET obligation under Article 3(2) of the Treaty."87

154.
As a result of this finding, the Tribunal did not have to express an opinion as to whether the Governments' conduct in the Mineral Agreement negotiations amounted to a breach of the FET standard.88

b. Respondent Has Breached Article 7(1) of the Treaty

155.
Second, the Tribunal found that Respondent has carried out a measure having effect equivalent to expropriation that did not comply with the requirements for a lawful expropriation under Article 7(1) of the Treaty.
156.
The Tribunal first noted that there had been no direct taking of Claimant's 75% interest in the Chagai Hills Exploration Joint Venture Agreement dated 29 July 1993 ("CHEJVA") and the unincorporated contractual joint venture established under the CHEJVA ("Joint Venture") or its 100% interest in TCCP and thus no direct expropriation.89 However, the Tribunal held:

"[T]he sole purpose of the Joint Venture under the CHEJVA and, likewise, of TCCP was to carry out the exploration and eventual mining operations at Reko Diq. After Claimant had spent more than US$ 240 million on its exploration work and had completed its Feasibility Study on the Initial Mine Development of the area, TCCP filed an application for a mining lease, which would have allowed Claimant to amortize the expenditures it had incurred during the exploration period. By denying TCCP's Mining Lease Application, however, the Licensing Authority rendered it impossible for Claimant to make use of the information and data it had collected and thereby also rendered Claimant's interest in both the CHEJVA and in TCCP useless. Without a mining lease, neither of them could any longer fulfill their exclusive purpose, after the exploration had been completed; thus, following the denial of TCCP's Application, the value of both the CHEJVA and TCCP was effectively neutralized.

Consequently, the Tribunal finds that the denial of TCCP's Mining Lease Application was a measure having an effect equivalent to expropriation."90

157.
The Tribunal considered that the GOB's motivation, i.e., to deny the Mining Lease Application because it had decided to implement its own project rather than to continue its collaboration with Claimant, also excluded the classification of the denial as a bona fide regulatory measure.91
158.
In terms of legality of the expropriatory measure, the Tribunal considered it common ground that the expropriation was not accompanied by the payment of "prompt, adequate and effective" compensation.92 Given the GOB's desire to implement its own project rather than to continue collaborating with Claimant, it further held:

"Apart from the fact that this finding renders it questionable whether the expropriatory measure served a public purpose, the Tribunal in any event considers that the denial was discriminatory because it favored the GOB's local project over the project of a foreign company."93

159.
It concluded that "Respondent has not complied with (at least) two out of four Treaty requirements and therefore breached Article 7(1) of the Treaty."94

c. Respondent Has Breached Article 3(3) of the Treaty

160.
Third, the Tribunal found that Respondent has impaired the use of Claimant's investment in violation of Article 3(3) of the Treaty.
161.
In addition to the conduct leading the Tribunal's finding on a breach of the FET standard, Claimant invoked several additional actions of Balochistan which, in its view, had also impaired its investment.95 The Tribunal did not consider it necessary to assess each of these actions by themselves but held:

"[I]f considered together with the denial of the Mining Lease Application, Respondent's conduct clearly impaired, if not prevented altogether, the use of Claimant's investment. By denying TCCP's Mining Lease Application, Respondent prevented Claimant from making any use of its exploration work and of any possibility to amortize its expenditures – much less to realize the benefit of its investment. Given that both the Joint Venture in which Claimant had a 75% interest and Claimant's subsidiary TCCP were established for the sole purpose of carrying out the exploration and, ultimately, the mining operations at Reko Diq, Claimant's investment was rendered useless when the Mining Lease Application was denied."96

162.
The Tribunal held that several of the additional actions invoked by Claimant, i.e.: (i) Balochistan's change of position in the Supreme Court proceedings in early 2011; (ii) the GOB's decision to start denying administrative clearances for TCC's expatriate staff, three days after its own project had been approved and on the same day that the Mines & Mineral Development Department took over as the GOB's representative on the Operating Committee; (iii) Balochistan's use of Claimant's exploration data for its own project; and (iv) the decision of the Balochistan Cabinet on 24 December 2009 "not to go ahead with the proposed Mineral and Shareholder agreements with TCCP,"97 together with the Tribunal's impression from the record that no actual negotiations took place after this decision, supported its previous findings.98 It concluded:

"[A]s confirmed by the above mentioned actions, the denial of the Mining Lease Application impaired the use of Claimant's investment. The Tribunal is further convinced that Respondent's measures were motivated by the desire to implement its own project – without having a justified ground for denying the Mining Lease Application. Therefore, the measures were also 'arbitrary, unreasonable and discriminatory' and thus fulfill even the stricter standard of protection that has been advanced by Respondent."99

d. Final Remark on Causation

163.
As a final remark on Respondent's argument on causation, the Tribunal held:

"While the Tribunal is aware that Respondent has further raised the argument that Claimant's claim must fail in limine because it has failed to address causation, the Tribunal considers it sufficient to state at this point that Respondent's conduct deprived Claimant of the value of its investment and thereby directly caused a loss that is to be quantified at a later stage of the proceedings. In the Tribunal's view, any specific questions on whether Respondent's conduct was causal for individual parts of Claimant's – yet unquantified – claim cannot be dealt with in the abstract but will be addressed as part of the quantum phase of the proceedings."100

2. Findings Made in the Tribunal's Decision on Respondent's Reconsideration Request

164.
The Tribunal further recalls that in the course of this last phase of the proceedings, i.e., on 6 November 2017, Respondent filed a request for reconsideration of the Tribunal's findings in its Decision on Jurisdiction and Liability. Specifically, Respondent argued that it had recently discovered evidence that, in its view, undermined Claimant's claims regarding the results of the drilling for water and the metallurgical drilling. It requested that the Tribunal reconsider its (Draft) Decision on Jurisdiction and Liability and find that there was "insufficient water and significant uncertainties regarding mineral recoverabilities that prohibit any award finding that TCCA should have received a mining lease."101
165.
In its Decision on Respondent's Reconsideration Request, the Tribunal found that it had the power to reconsider the Decision on Jurisdiction and Liability within a certain scope and limits, in particular taking guidance from the requirements of Article 51 of the ICSID Convention.102 On that basis, the decisive question for the Tribunal to determine was whether the allegedly newly discovered facts presented by Respondent were "of such a nature as decisively to affect the pre-award decision."103
166.
In its Reconsideration Request, Respondent argued that certain findings made by the Tribunal in the context of the ground invoked by the Licensing Authority that TCCP failed to submit a proper/complete Feasibility Study on the discovered deposits in the Exploration Area (referred to as the third set of grounds) as well as in the context of the additional grounds invoked by Respondent in these proceedings, i.e., that TCCP failed to prove that the mine could be profitably developed and operated, and that TCCP failed to assess the water source that it intended to use for its project to full feasibility level.104 Respondent presented two sets of allegedly new facts: (i) the results of studies performed by Claimant's water consultant SMEC, which, according to Respondent and its experts Mr. Holmes and Dr. Nanni, do not support the conclusion drawn by Claimant in the Feasibility Study regarding the size of the Fan Sediments aquifer and the amount of water available; and (ii) the metallurgical sampling and testing performed by Claimant's consultant Ammtec, which, according to Respondent and its experts Prof. Dagdelen and Mr. Owen, was done improperly and yielded compromised results.105
167.
The Tribunal analyzed both sets of allegedly new facts.

a. Respondent's Allegation That the Results of the Drilling for Water Merit Reconsideration

168.
The Tribunal first assessed Respondent's allegation that the results of the drilling for water merit reconsideration because it had allegedly identified an error in the Feasibility Study regarding the storage coefficient of the water source chosen by Claimant. It held that, even if this allegation were to be proven through further written submissions on the merits, it could not have a decisive, or outcome-determinative, impact on the Decision on Jurisdiction and Liability.106 The Tribunal noted:

"Respondent does not allege that the alleged error it has identified in the Feasibility Study was known to the Licensing Authority at the time it rejected TCCP's Mining Lease Application and/or that it formed part of either of the ten grounds invoked in the Notice of Intent to Reject. It rather argues that '[r]egardless of the text of the reasons to deny the mining lease application, a fatally flawed IMD FS cannot create a mining lease application.'"107

169.
Recalling its finding in the Decision on Jurisdiction and Liability that "Respondent should not be allowed to rely on reasons additional to those invoked in the Notice of Intent to Reject," the Tribunal concluded that "a potential error in the Feasibility Study that was not known to the Licensing Authority in November 2011 cannot decisively affect the Tribunal's conclusion that the denial of the Mining Lease Application was not justified by any of the reasons that the Licensing Authority invoked and that 'the real motive for the denial was the fact that the GOB had decided to develop and implement its own mining project rather than to collaborate with Claimant pursuant to the CHEJVA and that the grounds invoked by the Licensing Authority served only as a pretext to conceal this motive.'"108
170.
The Tribunal then emphasized the following:

"[C]ontrary to what Respondent's submission appears to suggest, it did not make a finding that the Feasibility Study was complete and/or that all assumptions and conclusions presented in the Study were fully accurate. What the Tribunal did find was that none of the reasons invoked by the Licensing Authority and, albeit it would not have been strictly necessary for its liability finding, none of the additional reasons invoked by Respondent in the liability phase, justified a denial of the Mining Lease Application. The question whether the assumptions made in the Feasibility Study were adequate and realistic will become relevant in the present quantum phase for the purposes of assessing the amount of damages to which Claimant is entitled as a result of Respondent's Treaty breach. However, the error alleged by Respondent, even if true, will not affect the Tribunal's finding that there was such a Treaty breach, i.e., that the grounds invoked by the Licensing Authority at the time served only as a pretext to conceal the GOB's real motive to take over Reko Diq and develop its own project instead of collaborating with Claimant."109

171.
As to the alleged errors identified by Respondent, the Tribunal noted that neither Party had presented any opinions from independent experts in the liability phase and that "[a]s Respondent's reference to its experts Mr. Holmes and [Dr.] Nanni shows, it was apparently only through their review of the relevant data that the alleged errors were detected. Consequently, the Tribunal will assess the arguments presented by Respondent with regard to the water issue in its analysis on quantum once the Parties have completed their written submissions and the Tribunal has heard the fact and expert witnesses during the hearing on quantum on this issue."110

b. Respondent's Allegation That the Results of the Metallurgical Drilling Merit Reconsideration

172.
The Tribunal then analyzed Respondent's allegation that the results of the metallurgical drilling merits reconsideration because Claimant allegedly failed to adequately sample rock from below 450 meters in depth and because the testing was allegedly done improperly and yielded poor recoverability results. Similarly to its analysis of the first allegation, the Tribunal again noted that "Respondent does not argue that the alleged absence of proper metallurgy sampling and testing was known to the Licensing Authority at the time it rejected the Mining Lease Application. As a result, the Tribunal's finding that Respondent should not be allowed to rely on any additional reasons in this arbitration in order to avoid liability under the Treaty applies with equal force."111
173.
The Tribunal further did not agree that Respondent's allegation regarding metallurgical sampling and testing affected its findings on liability. It emphasized that it had not yet made any findings on metallurgical sampling or testing and/or whether the assumptions made in the Expansion Pre-Feasibility Study were realistic and reflected the true value of the Reko Diq project at the time.112 It concluded:

"Similarly to the water issue, neither of the Parties presented any opinions from independent experts on metallurgy in the liability phase as they have now done in the quantum phase. Respondent again primarily refers to the testimony of its experts, in this case Prof. Dagdelen and Mr. Owen, who reviewed the relevant data and detected the alleged errors. Once the Parties have completed their written submissions and the Tribunal has heard the fact and expert witnesses during the hearing on quantum, the Tribunal will make a finding on this issue if and to the extent it becomes relevant to determine the amount of damages to which Claimant is entitled as aresult of Respondent's Treaty breach that the Tribunal has determined in its Decision on Jurisdiction and Liability."113

c. Final Remark on the Scope of Its Decision

174.
As a final remark, the Tribunal emphasized:

"[I]n line with the scope of the present decision, its findings on the alleged facts presented by Respondent are limited to the relevance, or rather the lack of relevance, of these alleged facts to the Tribunal's findings on jurisdiction and liability. The present decision is therefore without prejudice to any future findings that the Tribunal may make in relation to the issues raised by Respondent in the course of the quantum phase of this arbitration for the purposes of determining the amount of damages to which Claimant is entitled as a result of Respondent's breach of the Treaty."114

3. Remarks on the Development of Respondent's Position Regarding the Feasibility of Claimant's Project

175.
As a further preliminary point to be made regarding Respondent's allegation that the risks and issues to which it has pointed in this last phase of the proceedings render the project unfeasible, the Tribunal notes that this allegation stands in rather stark contrast to the position its officers expressed during the time period in which the GOB was still collaborating with Claimant on the project and the position taken by Respondent and the evidence on which it relied at the beginning of this arbitration.
176.
In fact, Respondent stated in its submissions on Claimant's Request for Provisional Measures, which concerned the Reko Diq Copper & Gold Project initiated by the GOB, that "Claimant is right to categorise the RekoDiq deposits as of huge economic importance"115 and that "Claimant's conduct can be interpreted as a deliberate attempt to conceal the extent of the mineral deposits in the Reko Diq Mining Area."116 According to Respondent, "Claimant was actively downplaying its economics before the Governments" when referring to the project being "relatively skinny in economic terms, pointing out the estimated 13% IRR, too low for any Pakistani business house to invest in the project."117
177.
In these submissions, Respondent placed particular reliance on the first witness statement from Dr. Samar Mubarakmand, who served as member (Science & Technology) of the Planning Commission and prepared, inter alia, a technical feasibility of the GOB's Reko Diq project in the Planning Commission.118 Dr. Mubarakmand stated that he had received a copy of the Feasibility Study before he had to make a statement before the Supreme Court of Pakistan.119 During the Hearing on Claimant's Request for Provisional Measures, he confirmed that he "looked at all the relevant parts in detail" and that he "had a good look at" the Feasibility Study before making that statement.120
178.
In his statement before the Supreme Court, Dr. Mubarakmand noted that the value of the deposit H-15 which Claimant planned to develop was reported in the Feasibility Study to be USD 104 billion and added that most of the copper was in other deposits such as H-14, H-13, H-8 and H-27, which he referred to "huge deposits of high concentration Copper Ore." In his view, it was "likely that the real deposits in EL-5 area are much more than the value of $104 billion as indicated by TCC's Feasibility Study." As for gold, Dr. Mubarakmand similarly stated that "[h]ere again the total deposits of Gold in EL-5 have not been revealed in TCC's Feasibility Study."121
179.
Dr. Mubarakmand then referred to the GOB's own Reko Diq project, which was intended to start with process 15,000 tons per day "but as the mine grows wider and deeper with time, more ore is expected per day and therefore every 5-6 years the size of the plant is enhanced." Assuming a processing of 110,000 tons of ore per day, for comparison with Claimant's project, Dr. Mubarakmand estimated a profit of USD 2,354 million per year or a total of USD 131,824 billion over the life of the mine.122 According to Dr. Mubarakman, "the Feasibility Study submitted by TCC is just the tip of the ice berg in the EL-5 area."123
180.
In his first witness statement, Dr. Mubarakmand confirmed his opinion that "the value of the gold and copper in the exploration area was vastly greater than the value in area H-15."124 He further explained that he decided to develop the GOB's project on H-4, inter alia, because "at the outset H-4 was a better place to mine for technical reasons. H-14 and H-15 have an overburden of 140 metres of rock, which means that rock to this depth has to be removed before mining of the copper mineral can begin. The overburden of H-4 on the other hand is 40 metres, which means it is easier to get to the copper mineral underneath. Further, the mineral at H-14 and H-15 is copper sulphide ore, whereas the mineral at H-4 is copper oxide ore. The refining process for copper sulphide ore takes longer and is more expensive than the refining process for copper oxide ore, which is simpler and less energy intensive."125
181.
The Tribunal notes that Dr. Mubarakmand did not express any doubts, neither in his statement before the Supreme Court nor in his witness testimony before this Tribunal, that the project envisaged by Claimant was technically and economically feasible. To the contrary, he believed that a mining project at Reko Diq could be commercially much more attractive than reported by Claimant. During the Hearing on Claimant's Request for Provisional Measures, Dr. Mubarakmand affirmed that it was his testimony that the Feasibility Study was part of a "ruse in order to defraud the Government of Balochistan from the real extent of minerals that TCC had presented on its website in 2006."126 Respondent also alleged that Claimant was "conceal[ing] the extent of the mineral deposits in the Reko Diq Mining Area" and "actively downplaying its economics before the Governments."127
182.
The Tribunal further recalls that while Respondent now points to numerous allegedly critical issues that rendered the project unfeasible, neither of these issues was raised by the Licensing Authority in its Notice of Intent to Reject. Based on the record of these proceedings, the Tribunal is also not aware that any other agency or official of the GOB or the GOP raised these issues during the time period in which the joint venture partners were still collaborating or even when the GOB had decided to to take over the project and deny TCCP's Mining Lease Application in violation of Respondent's obligations under the Treaty. As the Tribunal found in its Decision on Jurisdiction and Liability, it was only during these arbitration proceedings that Respondent started to invoke additional grounds such as an alleged failure to establish the profitability of the planned mine and the ability to obtain financing, security risks regarding the pipeline, and a failure to fully assess the water source.
183.
In this last phase of the proceedings, Respondent has further raised the argument that Claimant's shareholders, Antofagasta and Barrick, "did not have the relevant experience, track record, and personnel to make the project successful" and that their participation on this project would therefore have been "more of a liability than benefit."128
184.
In this regard, the Tribunal notes that the GOB itself stated in its submission to the Balochistan High Court in 2007 that "Antofagasta of Chile, one of the largest copper producers in the world and Barrick Gold Corporation of Canada, the number one gold producer in the world" purchased Claimant's shares in 2006 and that "[b]oth the Federal and Provincial Governments have appreciated and welcomed two big giants from mining industry in Pakistan."129 The GOB further stated:

"It is specifically denied that any company has been associated with the project with 'zero mining experience and zero financial standing'. It is submitted that the worlds largest copper and gold mining companies have been brought forward to fund the project which is excellent news and will expedite exploration and extraction enabling the Province of Balochistan to make windfall profits."130

185.
In a memorandum to the Balochistan's Chief Secretary dated 31 December 2009, the Secretary of the Mines & Mineral Development Department commented that "[m]ining is one of the most difficult activities to be carried out requiring huge amount of investment, rich expertise and skills, and very careful planning and proper management to make it a success." He further commented that TCCP had "done tremendous efforts in discovering and explring the Reko-Diq Copper & Gold prospects" and that "[t]he way of working and performance reflect that their attitude is serious and they are committed to develop the project. They appear professional businessmen with the required will, resources and rich expertise in developing such kind of resources."131
186.
Against this background, it strongly appears to the Tribunal that Respondent's allegation that Barrick and Antofagasta lacked the relevant experience to build and operate the mine at Reko Diq132 has been created post-hoc for these arbitration proceedings. While Respondent may have correctly pointed out that Antofagasta had never operated a mine outside of Chile and that Barrick was not operating copper mines itself as of 2006,133 it is apparent that both companies decided in 2006 to become 50% (indirect) shareholders in TCCA and to combine their respective experience in the mining sector. Whereas Antofagasta brought experience in building and operating copper mines, Barrick contributed experience in operating gold mines in several countries with difficult conditions across the globe. Accordingly, contemporaneous statements of the GOB clearly indicate that the participation of Antofagasta and Barrick was considered a significant benefit to the project.
187.
The Tribunal further cannot follow Respondent's criticism that Mr. Livesey, who was leading the preparation of the Feasibility Study, had not managed a feasibility study before. Mr. Livesey explained that before he became Project Director in late 2006, he had worked in the Tethyan belt for four years and before that on the Zambian copper belt for two years and on polymetallic nickel-copper belts in South Africa.134 In addition, Mr. Livesey testified that his team consisted not only of Tethyan staff who were seconded or recruited into Tethyan but "for each main discipline [had] oversight from both owners, Barrick and Antofagasta." He further explained that he reported to a technical committee which consisted of representatives from both Barrick and Antofagasta with the chairmanship alternating between the two.135
188.
For the avoidance of doubt, the Tribunal will certainly not brush off any of the concerns and issues raised by Respondent but will nevertheless assess each of them in detail and determine whether they have an impact on the feasibility of the project and/or the value of Claimant's investment. However, the Tribunal considers that it must also be taken into account in this assessment that neither of these issues was raised by the Governments at the time and that it therefore cannot help the impression that some of these allegedly critical issues were invoked only as a defense in these arbitration proceedings.

B. Legal Standards Governing Claimant's Claim for Compensation

189.
The Tribunal will now determine the relevant legal standards governing Claimant's claim for compensation. As pointed out by Claimant,136 the Parties are in disagreement on four issues, which the Tribunal will address in turn: (i) the applicable standard of compensation; (ii) the requirement of causation between Respondent's Treaty breaches and the damages alleged by Claimant; (iii) the standard and burden of proof that apply to ascertaining the feasibility of the project and the value of Claimant's investment; and (iv) the appropriate valuation method to determine the value of Claimant's investment and the corresponding compensation to which Claimant is entitled. In the context of (iv), the Tribunal will address the different valuation methods used by the Parties' valuation experts and determine whether Claimant has established, in principle, that it is appropriate to determine the damages it has incurred based on the valuation method relied on by its valuation expert, Prof. Davis.

1. Summary of Claimant's Position

a. Standard of Compensation

190.
Claimant submits that there is common ground between the Parties that the Tribunal must award compensation equal to the "market value" of Claimant's investment as of 15 November 2011 and that in assessing that value, it must disregard all of the unlawful acts that Respondent has committed prior to that valuation date.137
191.
Claimant argues that the Australia-Pakistan BIT does not specify the remedies for Respondent's breaches of the Treaty. In Claimant's view, the Tribunal must therefore apply the standard of full reparation under customary international law, as established in Chorzów Factory : the award "must, as far as possible, wipe out all the consequences of the illegal act and reestablish the situation which would, in all probability, have existed if that acted had not been committed."138
192.
Claimant submits that the Chorzów Factory standard is widely understood as the prevailing compensation standard for breaches of international law and is also reflected in the ILC Articles on State Responsibility of States for Internationally Wrongful Acts ("ILC Articles"), which impose an obligation on States to "make full reparation" for injuries caused by internationally wrongful acts.139
193.
In Claimant's view, this standard is particularly appropriate in this case as Respondent rejected Claimant's initial request for specific performance and thereby rendered restitution in kind impossible. Claimant contends that the Tribunal must therefore award "a sum corresponding to the value which [such] restitution in kind would bear."140
194.
Claimant rejects Respondent's argument that the Tribunal should apply what Claimant refers to as "the compensation condition" in Article 7 of the Treaty. According to Claimant, "the payment of prompt, adequate and effective compensation" is only one of the "conditions" for a lawful expropriation and the second and third paragraphs of Article 7 specify how that compensation is to be "computed" and "paid" but neither of these provisions intends to specify remedies for Respondent's breaches of Articles 3 and 7.141 Claimant specifically rejects the argument that as Article 7 also refers to indirect expropriations which, according to Respondent, would always be unlawful, it must also apply to unlawful expropriations. It maintains that Article 7 only determines liability; it does not determine what damages are due for the breach.142
195.
Claimant further notes that any "standard" in Article 7 would concern only expropriations but could not be applied to determine the remedies for Respondent's breaches of Articles 3(2) and 3(3) of the Treaty.143 Claimant refers to the tribunal in Crystallex v. Venezuela, which held:

"[T]he Article VII(1) 'standard' is only concerned with expropriation, and not breaches of other BIT standards. Because the Tribunal has found breaches of FET (in addition to an expropriation), the Tribunal considers that the 'full reparation' principle under customary international law must be applied as a consequence of its decision on liability. In other words, given the cumulative nature of the breaches that the Tribunal must compensate, and especially in view of its findings on FET that the Respondent's conduct caused all the investments made by Crystallex to become worthless, the Tribunal will apply the full reparation standard according to customary international law."144

196.
Claimant rejects the argument that there is a consistent practice that tribunals would calculate damages for Treaty breaches under the standard of compensation set out in the expropriation provision and claims that "the overwhelming weight of authority" rather confirms that the customary international law standard of full reparation applies and none of the cases cited by Respondent actually supports its argument. In Claimant's view, this is also confirmed by Respondent's legal expert Dr. Ripinsky, who states in his treatise that "[a]n award of compensation for unlawful expropriation is governed by customary international law."145
197.
In any event, Claimant notes that even if Article 7 were to be applied to determine the remedies for Respondent's breaches, the first sentence of Article 7(2) provides for compensation equal to the "market value of the investment immediately prior to the expropriation." According to Claimant, this sentence is consistent with the full reparation standard and, where neither the valuation date nor the use of the fair market value standard is in dispute, can be seen as satisfying the Chorzów Factory standard.146 Claimant adds: "Here too, payment of fair market value immediately before the expropriation would satisfy the Chorzów Factory standard, so long as all consequences of Pakistan's other unlawful conduct before the expropriation date are also excluded from the valuation."147
198.
Claimant notes that Respondent, however, relies on the second sentence of Article 7(2), which applies "[w]here that value cannot be readily ascertained." Claimant argues that Respondent has failed to explain why that would be the case and the alternative compensation calculation in Article 7(2) should apply.148
199.
Finally, Claimant argues that even if Article 7(2) were to have any relevance, the standard of compensation for a lawful expropriation could only serve as a floor for any damages award for Respondent's willful breaches of the Treaty and it would not support Respondent's proposed alternative valuation methods.149
200.
In response to Respondent's argument that the Tribunal's determination of compensation "must be equitable," proportionate and avoid disparity between the amount invested by Claimant and the compensation awarded, Claimant argues that awarding full reparation in the form of damages equal to the fair market value of Claimant's investment as of 15 November 2011 is also "the just result" of Respondent's Treaty breaches which have given Respondent "total control of the immensely valuable asset it took from TCCA."150
201.
Claimant contends that Respondent overstates the role of equitable considerations which, according to Dr. Ripinsky, could "be applied only within the boundaries of judicial discretion left by legal rules."151 In Claimant's view, such discretion is eliminated by the clear customary international law legal principle of full reparation, which "militates against under-compensation as well as against over-compensation." Claimant emphasizes, however, that the Tribunal must take into account all relevant circumstances of the case and "exercise[] its judgment in a reasoned manner," to "make the best estimate that it can of the amount of the loss."152
202.
In addition, Claimant argues that equitable considerations would in any event weigh in favor of TCCA because the compensation must account for the egregiousness of Respondent's breaches which included a secret plan to oust TCCA while repeatedly misrepresenting Respondent's intentions until the feasibility work was complete. Claimant adds that any uncertainty about the fair market value of its investment has been caused by Respondent's Treaty breaches.153
203.
As for Respondent's reliance on the principle of proportionality, Claimant argues that this principle is already incorporated in the principle of full reparation because, as noted in the commentary on the ILC Articles, "[c]ompensation is limited to damage actually suffered as a result of the internationally wrongful act, and excludes damage which is indirect or remote."154 In addition, Claimant claims that awarding anything less than fair market value would unjustly enrich Respondent because it now has exclusive control over the asset that it took from TCCA and the fair market value of TCCA's investment represents only 44% of the total value of the resource as of the valuation date.155
204.
Finally, Claimant rejects Respondent's argument regarding a "disparity" between the amount invested and the fair market value of the investment as of the valuation date and refers to the treatise of Dr. Ripinsky where he stated that "[t]here are numerous examples of businesses being sold for a price much higher than the amount originally invested, particularly if the business proves successful" and that when an investor "develops its business 'from scratch'," any "connection between the invested amount and the value of the investment appears to be much weaker."156 Claimant further quotes:

"By the very nature of the entrepreneurial activity, the sum total of investments is normally lower than the value of a business created as a result. To create a business, in addition to money, an investor usually contributes other ingredients such as management skills, know-how and technology, which add value of the investment and are of particular importance in areas such as energy, infrastructure or construction, frequently featuring in investor-State arbitrations. It is not abnormal for a business's FMV to exceed the invested amount several times over."157

205.
Claimant also refers to Irmgard Marboe, who considers in her work on damages in investment law that "[g]reat care must … be taken not to link the amount of compensation or damages closely to the investment actually undertaken, if the investment has good future propsects" because the State could otherwise be motivated to expropriate or impair it.158
206.
Claimant further notes that there is a correlation between the risk of the investment and the returns an investor would expect, arguing that "when a very risky investment succeeds, there should be an especially significant 'disparity' between the amount invested and the value of the investment." Claimant submits that is precisely the business model of the global mining industry and notes that there is common ground between the Parties that only 1 in every 10,000 exploration projects results in a productive mine. According to Claimant, the Governments knew when they decided to take over the project that Reko Diq is that 1-in-10,000 discovery – knowledge that was established through the efforts of Claimant and its owners to de-risk every aspect of the project; accordingly, the fair market value must necessary constitute a very high multiple of the amount invested.159

b. Requirement of Causation

207.
Claimant accepts that it must show that Respondent's Treaty breaches caused its loss. It notes, however, that the Tribunal has already found that Respondent's conduct in taking over Reko Diq "deprived Claimant of the value of its investment and thereby directly caused a loss." In Claimant's view, the causal relationship has thereby been determined and all that remains is for that loss to be quantified.160
208.
In particular, Claimant contends that Respondent cannot rely on the absence of a Mineral Agreement because the Tribunal has already found that the Governments abandoned the negotiations in bad faith pursuant to Balochistan's unlawful decision to take over the project. Similarly, Claimant considers that Respondent cannot benefit from the absence of third-party financing commitments or specific permits, which could not have been pursued without the mining lease that Balochistan unlawfully denied.161
209.
More generally, Claimant submits that the Tribunal must establish fair market value in a hypothetical context where Respondent would have fully respected its obligations under the Treaty and must correct for any negative effect that the conduct of the Governments has had on the value of Claimant's investment. Claimant claims that its damages may also not be reduced by the risk of future Treaty violations against which the Treaty is meant to protect.162
210.
Claimant concludes:

"Thus, the Tribunal must assume that Balochistan would have honored (instead of repudiated) all of its obligations under the CHEJVA, including the obligation to be 'just and faithful' to TCC and 'not do or omit to be done anything whereby the interests of the Joint Venture... are prejudiced.' The Tribunal must also assume that both Governments would have acted consistently with TCCA's legitimate expectation— arising directly from the Governments' own representations—that the Governments would support and facilitate TCCA's investment."163

c. Standard and Burden of Proof

211.
Claimant accepts that it has the burden of proof as to its loss.164
212.
As to the standard of proof, Claimant submits that once it has been shown that a loss has been incurred, damages should be awarded even if the specific amount cannot be assessed with certainty. Claimant quotes from the Crystallex tribunal, which held that "once the fact of future profitability is established and is not essentially of speculative nature, the amount of such profits need not be proven with the same degree of certainty."165
213.
Claimant contends that while the fact of the loss is subject to the normal balance-of-probabilities standard, the quantum of the loss can be proven by providing a "reasonable basis" for the tribunal's assessment.166 On the basis of the record before it, the Tribunal must then "make the best estimate that it can of the amount of the loss."167 Quoting from the tribunal in Gemplus v. Mexico, Claimant argues that it "would be wrong in principle" to deprive it of the value of its investment on "lack of evidentiary grounds when that lack of evidence is directly attributable to the Respondent's own wrongs."168
214.
According to Claimant, the "absolute certainty" standard advanced by Respondent is not supported by any case and could never be satisfied.169 Claimant submits that the authorities on which Respondent relies in support of its alleged "heightened requirement" for proof of damages support only "the undisputed proposition that a 'possibility of damages' is not enough to establish the fact of the loss, and the tautological proposition that what is sufficient is 'a sufficiently certain damages case.'"170
215.
Claimant maintains that not only is there no heightened standard of proof but, to the contrary, tribunals have repeatedly held that "less certainty is required in proof of the actual amount of damages." In light of the Tribunal's findings in its Decision on Jurisdiction and Liability, Claimant argues that there can be no doubt that it has suffered a loss and therefore considers it sufficient to provide a reasonable basis to quantify that loss.171 In Claimant's view, the fact of the loss is in any event incontestable as Respondent itself called Claimant's investment "a profitable project or national importance" and estimated that the Reko Diq deposits were worth more than a hundred billion US dollars.172

d. Appropriate Valuation Method

216.
Claimant submits that the amount of its loss should be quantified based on the DCF valuation method, more specifically the "practical, industry-informed application of well-established principles" used in the modern DCF model applied by its expert Prof. Davis which it considers to be "the best method to value a development-stage mining project like Reko Diq."173
217.
Claimant contends that the DCF method is employed by tribunals "whenever the claimant has established the fact of future profitability." According to Claimant, the DCF approach is appropriate in the present case for the following reasons: (i) it would have been used by actual buyers and sellers if Reko Diq had been sold in November 2011; (ii) it is endorsed by internationally-recognized standards in the mining industry such as the standards of the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) and the VALMIN Committee established to provide standards for mineral property valuation in Australia; (iii) TCCA has provided ample evidence for the DCF inputs in this arbitration, including the Feasibility Study which proved "decades of profitability even under unfavorable market conditions" and the Expansion Pre-Feasibility Study which proved Reko Diq's enormous reserves; and (iv) recent ICSID cases featuring similar facts affirmed the suitability of income-based methodologies for valuing projects like Reko Diq.174 In this regard, Claimant points out, inter alia, that the tribunal in Gold Reserve v. Venezuela concluded that "a DCF method can be reliably used in the instant case because of the commodity nature of the product and detailed mining cash flow analysis previously performed" and that the Crystallex tribunal concluded that "predicting future income from ascertained [gold] reserves to be extracted by the use of traditional mining techniques could be done with a significant degree of certainty, even without a record of past production."175
218.
Claimant maintains that the tribunals' findings in Crystallex and Gold Reserve, as well as in Rusoro v. Venezuela and even Khan v. Mongolia support the application of the DCF method in this case.176 Claimant argues that contrary to Respondent's submission, the respondent State in Gold Reserve did raise the argument that the investment was not yet operational but did not succeed on this argument and that the tribunal specifically rejected alternative valuation methods by the claimant's experts, preferring "to use the DCF model only."177 Claimant further contends that the Crystallex tribunal endorsed forward-looking methodologies and while the claimaint did not advance a DCF valuation, applied another income-based approach which as Dr. Ripinsky agreed "resembles" DCF.178 As for the Khan tribunal's rejection of the DCF method, Claimant argues that it was based on the uncertainties associated with projects run by junior companies and explicitly held to be incomparable to "large, producing multi-project comanpies."179 Finally, Claimant notes that in Copper Mesa, the claimant itself cited the CIMVal standards "to note that income-based approaches are not suitable for properties at an exploration stage" and was facing violent local opposition.180 According to Claimant, the latter also applied to the project in Bear Creek where the tribunal concluded that the project could not "be considered to be viable" in the short term due to "widespread social unrest."181
219.
Claimant argues that the appropriate valuation method is a question of fact to be assessed on a case-by-case basis and not as a matter of law. It rejects what it refers to as Respondent's "bright-line rule" that non-operational ventures cannot be valued using a DCF method.182 Claimant quotes from the Crystallex tribunal which held that "there is no one methodology best suited for determining the fair market value of the investment lost in every situation" and that "whether a particular method is appropriate to utilize is based on the circumstances of each individual case."183
220.
In Claimant's view, Respondent's "bright-line rule" is not supported by any of the authorities it cites and not even by its own legal expert Dr. Ripinsky who merely states that a record of profitability is "treated … as the best evidence to support the application of the DCF method" and quotes the Vivendi tribunal for the proposition that "the absence of a history of demonstrated profitability does not absolutely preclude the use of DCF valuation methodology."184 Claimant also refers to Dr. Ripinsky's treatise in which he states:

"Consider a situation where an investor obtains a concession for the exploration and exploitation of oil: the investor will carry a risk of not discovering oil and thus losing the totality of its investment. At the same time, once the exploration campaign proves successful, the major risk of the investment is gone, and one should be able to predict with reasonable certainty the range of revenues that the concession will generate, even without a prior record of profitable operations. Perhaps with such situations in mind, it has been suggested that lost profits should be awarded where they can be proven with reasonable certainty and calculated on a 'rational basis,' even if the claimant is a new business … This argument makes sense; however, it remains for a tribunal in each particular case to decide whether the evidence on the record is sufficient."185

221.
Claimant claims that DCF valuation is particularly suited to value development-stage mining projects. Claimant considers that this is confirmed by Respondent's valuation experts who in its view support a forward-looking analysis of the project's future profitability and by Dr. Ripinsky who notes in his expert report that "in some respects, the mining sector may be more amenable to application of the DCF methods."186 Claimant also refers to its own expert Prof. Davis who explains that "compared with valuing assets in other sectors," in the mining industry, "many aspects of the projected cash flows are readily known" or ascertainable.187
222.
Claimant further argues that neither a comparables valuation approach nor a cost-based method could capture the value of its investment. It refers to Dr. Ripinsky who states that awarding sunk costs is "generally considered to be a conceptually weak method of estimating the fair market value of start-up projects (as opposed to acquisitions of existing, operational enterprises)" and puts the investor in the position as if the investment had never occurred – rather than the position as if the breaches had not occurred as required by the principle of full reparation. Quoting from Dr. Ripinsky, Claimant argues that the costs approach "generally does not meet the legal requirement to make the award equivalent to the investment's fair market value."188 In Claimant's view, the same applies to the valuation method applied by Dr. Burrows because it is also a backword-looking method and has in any event not been correctly applied.189
223.
Finally, Claimant rejects the argument that Prof. Davis' "modern DCF" model has never been applied in investment arbitration, emphasizing that it is "simply a form of the widely adopted DCF method" and properly reflects economic reality in this case.190 According to Claimant, it is in fact the only method capable of accurately valuing a project like Reko Diq.191
224.
Claimant submits that "[t]he modern DCF method more accurately discounts future cash flows for both systematic and asymmetric risks, incorporates market information, and incorporates management's flexibility to choose different options in reponse to evolving circumstances" which makes it "particularly well-suited for the valuation of a long-life mine like Reko Diq."192 Claimant adds that the modern DCF approach has been observed to be "particularly useful for valuing mines and other natural resources assets because of the volatility of natural resources prices and the existence of well-developed forward markets that provide reliable market information about risk-adjusted price expectations."193
225.
Claimant further submits that by contrast to treating risk as a constant, annually compounding factor as is done in the traditional DCF model, modern DCF can take into account that "the risk associated with late-stage cash flows is more or less constant over time for copper and gold mines." In addition, Claimant argues that modern DCF can separately account for the two types of risk, i.e.: (i) systematic risks which are addressed by using risk-adjusted price projections of future prices from markets in forward contracts; and (ii) asymmetric risks for which modern DCF makes individual appropriate adjustments to account for the average effect of each risk on cost and production quantities. As risks are thereby priced at source, the cash flows can then be discounted at the risk-free rate.194
226.
Claimant submits that the modern DCF method further uses simulation of a large number of scenarios in order to account for the uncertainty regarding, e.g., the fluctutation of copper prices in the future, and permit the incorporation of active management such as the choice whether to expand the mine depending on the development of prices. Claimant refers to its witness Mr. Luksic who explained that the flexibility to adapt productivity to price cycles "is immensely valuable."195 Claimant further notes that while the traditional DCF method gives relatively little value to expected cash flows after the first two decades of mine life, Mr. Luksic explained that "this flexibility is what makes long-life mines so attractive: they help you manage the volatility of commodity prices. … Copper prices go through cycles of highs and lows and when you have a long life of mine you can ride those cycles in a way that maximizes value."196
227.
According to Claimant, the modern DCF valuation method is rooted in "decades-old work of Nobel Prize-winning economists" and is "widely taught in business schools and routinely applied in the mining industry." Therefore, even if this method were to be considered "new" to international arbitration, this would be due to an unsurprising lag of incorporating existing industry practice into arbitral adjudication. In Claimant's view, the same applied to the use of the DCF method in general, which was widely used in the industry before it became established in arbitration.197

2. Summary of Respondent's Position

a. Standard of Compensation

228.
Respondent accepts that "the proper measure of quantum is the market value of TCC on November 15, 2011."198
229.
According to Respondent, the only issue in dispute between the Parties in this regard is whether "market value" refers to the standard of compensation in the Treaty or the Chorzów Factory standard. According to Respondent, "market value" is captured by the compensation standard agreed by the parties to the Treaty.199 Respondent adds that there is a "growing trend" to apply the BIT compensation standard regarding expropriation to all Treaty breaches and refers to the tribunal in Occidental v. Ecuador, which found that the claimant's investment had not been accorded fair and equitable treatment and was expropriated and then determined "as mandated by Article III of the Treaty, the fair market value of this investment."200 Respondent submits that the BIT standard for expropriation was also applied by the tribunals in OIEG v. Venezuela, CME v. Czech Republic and Flughafen v. Venezuela.201
230.
Respondent argues that the compensation standard to be applied to the quantification of damages for all breaches in this case is therefore the standard set out in Article 7 of the Treaty, which applies to direct and indirect, and thus any form of, expropriation. Respondent further argues that if the category of unlawful expropriations existed, all indirect expropriation would fall within that category; as a result, Article 7 would also apply to any expropriations, including unlawful expropriations, and exclude the application of a lex generalis taken from customary international law.202
231.
Respondent further disagrees with Claimant's reference to Chorzów Factory as reflecting customary international law and adds that, in any event, Claimant agrees that Article 7 of the Treaty is "consistent" with what it considers to the customary international law standard.203
232.
Respondent agrees with Claimant that the fair market value standard requires to identify "the cash-equivalent amount a willing buyer would pay a willing seller to purchase the asset at the Valuation Date, both with reasonable knowledge of the facts and circumstances surrounding the asset and neither being under any compulsion to transact."204 In Respondent's view, this eliminates any use of "speculative, feeble or financially or technically unsound bases" to determine the fair market value of Claimant's investment.205
233.
Respondent contends that the wording of Article 7(2) of the Treaty, which can be found in 17 of 23 BITs signed by Australia, is "not typical of international investment treaties" and should therefore be given special consideration by the Tribunal.206
234.
Respondent notes that Article 7(2) of the Treaty requires the Tribunal to assess whether the fair market value of Claimant's investment is "readily ascertainable" and considers that the valuation presented by Claimant "is as far as a method could be from rendering a 'readily ascertainable' result."207 According to Respondent, Claimant has conceded as much when stating that "a claimant in TCCA's position has wrongfully been deprived of the opportunity to prove quantum with certainty."208
235.
Respondent rejects the argument that the uncertainty is a result of Pakistan's breaches of the Treaty and claims that it rather "derives from the infancy of TCCA's project in Pakistan coupled with the multiple hurdles that it faced going forward." Respondent claims that, by contrast, in the Gemplus case relied on by Claimant, the lack of evidence was directly attributable to the respondent as the claimants were owning a concession agreement with an operational track record behind it. Respondent further argues that if Claimant's argument were followed, this would apply in all cases in which damages for an unlawful expropriation or other supposed breaches of the treaty are calculated based on the BIT compensation standard.209
236.
Consequently, Respondent argues that pursuant to Article 7(2) of the Treaty, the Tribunal must determine a value "in accordance with generally recognized principles of valuation and equitable principles taking into account the capital invested, depreciation, capital already repatriated, replacement value, and other relevant factors."210
237.
Respondent refers to the separate opinion of Judge Bhandari in Maritime Delimitation in the Caribbean Sea and the Pacific Ocean (Costa Rica v. Nicaragua) who considered that "[i]n a case such as this, in which the evidence presented to the Court is inadequate to precisely quantify the compensation to be awarded to an injured party, … the most appropriate decision is to award the injured State a lump sum amount of compensation based on equitable considerations."211
238.
According to Respondent, the only amount factually supported with "sufficient certainty" would be the sunk costs of Claimant's investment.212

b. Requirement of Causation

239.
Respondent submits that Claimant bears the burden of proving that the damages it alleges are a direct consequence of the Treaty breaches and that, in order to establish causation, it must prove that: (i) the alleged injury was caused by the wrongful act as a matter of fact; and (ii) the loss is not too remote and speculative. Respondent refers to the tribunal in Biwater Gauff v. Tanzania according to which there must be a "sufficient link between the wrongful act and the damage in question" and there is "a threshold beyond which damage, albeit linked to the wrongful act, is considered too indirect or remote."213
240.
Respondent submits that under customary international law, Claimant must show that its losses were caused by the Treaty breaches as a matter of fact. Respondent refers to Article 31 of the ILC Articles as well as the Gemplus tribunal, which held that there must be "a sufficient causal link between the treaty breach by the state and the loss sustained by the claimant."214 Respondent considers that Claimant has failed to establish factual causation and points in particular to the absence of a Mineral Agreement which left "key commercial terms" uncertain. Respondent emphasizes that the Tribunal did not find that the non-conclusion of the Mineral Agreement constitutes a breach of the Treaty.215
241.
Respondent further submits that Claimant must show that its losses were caused by the Treaty breaches as a matter of law. Respondent points to the Biwater Gauff tribunal, which held that there was a "lack of linkage between each of the wrongful acts of the Republic, and each of the actual, specific heads of loss and damage" and concluded that the damage was "attributable to other factors."216 Quoting from the Commentary to the ILC Articles, Respondent submits that the test of legal causality is whether damages are directly linked to the breach and not "too indirect, remote and uncertained to be appraised."217
242.
According to Respondent, Claimant has failed to prove that Respondent directly caused the damages it is seeking and that its alleged losses are not too remote or speculative. Respondent considers that "the speculative nature of the damages forms one of the key conclusions" reached by its experts Mr. Brailovsky and Prof. Wells.218
243.
Respondent emphasizes that the Tribunal's finding on the existence of a Treaty breach does not discharge Claimant's burden of proof on causation and maintains that Claimant has failed to prove that the amount of compensation is a direct consequence of the rejection of the Mining Lease Application.219

c. Standard and Burden of Proof

244.
Respondent submits that Claimant has the burden of proof on the existence and quantum of the damages it is seeking.220 Respondent adds that a claimant must also provide evidence of the damages it alleges and refers to the tribunal in AES v. Kazakhstan, which did not award damages because "Claimants failed to duly establish their damage," and the tribunal in Rompetrol v. Romania, which declined to award damages under a certain head due to a "failure by the claimant to produce any reliably concrete evidence of actual losses under this head."221
245.
Respondent further relies on its legal expert Dr. Ripinsky who states that a "claimant must prove the losses it has incurred with reasonable, or sufficient, certainty."222 Respondent further quotes from Dr. Ripinsky's first expert report:

"Claimant bears the burden of proving the losses it has incurred and the amount of damages that is commensurate with these losses. In international investment law, claimant must prove damages with reasonable, or sufficient, certainty. This standard applies to both past as well as future losses. For obvious reasons, the task of meeting this standard is more challenging in relation to future losses and valuation methods based on future projections."223

246.
Specifically with regard to Claimant's reliance on a "modern DCF" method, Respondent quotes from Dr. Ripinsky's report:

"[T]he standard of proof requires the claimant to demonstrate with sufficient certainty that the validity of these assumptions and the critical parameters ('fundamentals' ) underlying the DCF analysis are – individually and taken together – established with sufficient certainty.224

247.
Respondent considers that Claimant failed to provide reasonably and sufficiently certain information and therefore failed to discharge its burden of proof. In Respondent's view, Reko Diq "faced key challenges that would have prevented it from becoming profitable, which requires the Tribunal to dismiss the compensation claims." It refers to Dr. Ripinsky who states that "[i]n some investor-State disputes, tribunals have refused to grant compensation, despite finding a treaty breach, where the claimant had failed to prove that it had suffered a loss as a result of the respondent State's unlawful conduct or to provide a reasonable basis for the estimation of damages."225
248.
In Respondent's view, the rule that a claimant, who cannot prove having incurred specific given amounts and the causal link between these amounts and the proven internationally wrongful act, cannot recover these amounts was confirmed by the ICJ in Maritime Delimitation in the Caribbean Sea and the Pacific Ocean (Costa Rica v. Nicaragua).226 In Respondent's view, Claimant has explicitly admitted that it cannot prove quantum with certainty and it cannot shift its evidentiary shortcomings on Pakistan.227 Respondent again refers to Dr. Ripinsky who explains:

"The point is sometimes made that where a State is to blame for a project's interruption, the claimant should be given the benefit of doubt in respect of any uncertainty in determining what exactly would have happened in the absence of a breach. This position does not seem to be methodologically correct from the point of view of the burden and standard of proof, nor does it respect the task of determining the FMV as of a certain date (i.e. on the basis of facts available as of that date)."228

249.
Respondent rejects Claimant's argument regarding the standard of proof and notes that even the tribunal in Lemire v. Ukraine on which Claimant relies endorsed "the requirement that speculative losses be excluded from the calculation" and ultimately rejected the claimant's future quantum scenario as "too uncertain."229
250.
Respondent argues that the "Modern DCF" methodology applied by Prof. Davis requires "a high level of certainty"; by opting for that "fragile model," Claimant opted for the requisite standard of proof.230 Quoting from ADM v. Mexico, Respondent argues that "lost profits are allowable insofar as the Claimants prove that the alleged damage is not speculative or uncertain – i.e., that the profits anticipated were probable or reasonably anticipated and not merely possible."231 The tribunal in Vivendi v. Argentina stated that "compensation is generally awarded only where future profitability can be established (the fact of profitability as opposed to the amount) with some level of certainty."232

d. Appropriate Valuation Method

251.
Respondent contends that the valuation method applied by Claimant's valuation expert, which it describes as "a rather unique variation of a discounted cash flow ('DCF' ) valuation, which has not been adopted by the mining industry or investment tribunals," cannot help in determining the fair market value of Claimant's investment as of the valuation date.233
252.
In Respondent's view, the "modern DCF" method does not meet the standard for a "readily ascertainable" market value.234 Respondent claims that Prof. Davis only selectively uses market information such as commodity forward rates and interest rates but otherwise uses his own assumptions about long-term price projections, capital and operating costs as well as asymmetric risks. Respondent therefore rejects the argument that this is a "true market-based approach."235
253.
According to Respondent, the "Modern DCF" method has been fabricated by Claimant and its expert to "provide a designer, bespoke methodology allowing TCC to offer the appearance of pseudo-scientific support for its predetermined outlandish valuation." Respondents considers that Prof. Davis expressly admitted during the Hearing on Quantum that his method was a way to reach a predetermined value that would not be validated by actual valuation methods.236
254.
Respondent emphasizes that there is no arbitration case in which the "Modern DCF" approach would have been applied and points out that in the only case in which it was raised, Bear Creek, it was dismissed by the tribunal as inappropriate in the circumstances of valuing the mining assets.237 Respondent further notes that Prof. Davis was able to point to only one transaction in the mining industry in which it was applied – which was described in the press as "the worst mining deal ever." Respondent adds that neither Claimant nor its shareholders used "Modern DCF" in their transactions on mining assets.238 Respondent contends that CIMVal also describes the method as "[n]ot widely used and not widely understood," which confirms, in Respondent's view that the method cannot reflect "generally recognized principles of valuation" as required by Article 7(2) of the Treaty.239
255.
Respondent refers to its experts Mr. Brailovsky and Prof. Wells who consider:

"In sum, the 'modern' part of the approach used in the Brattle Report boils down mainly to the application of a risk-free discount rate to a project that is extremely risky. The Report does not adjust projected cash flows to account for these risks. This is amply demonstrated when the result is compared to the results obtained in the SNC-Lavalin studies, which are praised by TCC and use methods typical of those applied by real buyers and sellers to value such an asset. … Similarly, the result in the Brattle Report is grossly out of line with the arm's length purchase price of the identical asset five years earlier."240

256.
More generally, Respondent claims that, quoting from the expert report of Dr. Ripinsky, "the weight of authority clearly indicates that, as a general rule, the DCF method is not appropriate for investment projects that have not demonstrated their capacity to generate profits by a track record of performance."241 Respondent submits that, inter alia, the World Bank Guidelines on Treatment of Foreign Direct Investment and the Commentary to the ILC Articles support DCF valuations only for going concerns.242 Respondent also refers to a large number of investment treaty cases in which the application of a DCF method was denied due to a lack of a sufficient operational track record and/or proven profitability.243
257.
Respondent argues that an exception to this general rule requires "several important fundamentals to be in place as at the date of valuation, such as inter alia the existence of confirmed financing necessary for the project as well as clarity about the commercial terms of operation and a detailed (independently verified) business plan." Respondent adds that further "fundamental uncertainties" that generally preclude reliance on DCF "may include technological, logistical, infrastructure, regulatory and other risks."244
258.
In this regard, Respondent notes that only 1 in every 10,000 exploration projects results in a productive mine and argues that even on the basis of a well-prepared feasibility study, the risk of failure is still substantial, i.e., within 10-15%.245 It refers to the tribunal in Mesa v. Ecuador, which rejected the methodologies before it to value a copper mining project that had not yet begun production except for a cost-based approach because it considered them "too uncertain, subjective and dependent upon contingencies, which cannot be fairly assessed by the Tribunal."246 Respondent also relies on the tribunal in Khan v. Mongolia, which rejected the DCF method as "too speculative" because it considered it "far from certain" whether the mine would have reached production, on what terms the parties would have participated in the venture and whether theclaimants would have been involved.247
259.
According to Respondent, this excludes any form of DCF, let alone the "Modern DCF" method crafted by Prof. Davis, as confirmed by the submissions of Peru in Bear Creek where the State pointed out that the project "has no history of profitable operation and is subject to serious uncertainties, including difficult-to quantify social license risk. For this reason, investment treaty tribunals routinely reject the use of DCF valuation for non-producting assets."248
260.

Respondent further refers to the tribunal in Metalclad v. Mexico, which held: "W [h]ere the enterprise has not operated for a sufficiently long time to establish a performance record or where it has failed to make a profit, future profits cannot be used to determine going concern or fair market value. The Tribunal agrees with Mexico that a discounted cash flow analysis is inappropriate in the present case because the landfill was never operative and any award based on future profits would be wholly speculative."249

261.
In Respondent's view, the same is confirmed by the Crystallex tribunal on which Claimant relies because it found that only "once the fact of future profitability is established and is not essentially of a speculative nature, the amount of such profits need not be proven with the same degree of certainty."250
262.
Respondent further argues that while uncertainties may be accepted in valuations for commercial purposes, this does not apply to legal proceedings where valuation serves to measure damages and tribunals should therefore "be strict about evidentiary certainty of claims for damages."251
263.
In response to Claimant's argument that there is no "bright-line" rule excluding the application of DCF "as a matter of law," Respondent agrees that the applicability of DCF is decided on the facts of each case but maintains that it is inappropriate to apply DCF where the facts show no proof of profitability or sufficient certainty of the viability of the project in the future. Respondent considers it decisive that Claimant relies on only three cases in support of its argument that DCF should be applied and argues that none of these cases supports Claimant's case.252
264.
Respondent notes that only the Gold Reserve tribunal applied a DCF method, based on an agreement between the parties, and in all cases the damages awarded by the tribunals were "roughly equal to the amounts claimed as investments made in the project."253 Respondent further argues that the facts in Gold Reserve and Crystallex were substantially different from the facts in the present case, in particular as regards the stage of the project, investments made and, in Gold Reserve, an agreement on the valuation method, whereas the Crystallex tribunal rejected DCF as "inappropriate for a gold project."254 The Rusoro tribunal also considered a DCF methodology "inappropriate" given the "lack of a proven record of financial performance" and set out criteria for its application which, according to Respondent, are not present in Claimant's project.255
265.
Respondent also refers to the Khan tribunal which rejected DCF as too speculative for the project and rejects the argument that this was due to the "junior" character of the company.256 Finally, Respondent relies on Bear Creek in which the tribunal, despite the fact that "Bear Creek was better positioned and more advanced than TCCA," took into account that the claimant had not received many of the required governmental approvals and concluded that the project remained too speculative and uncertain to rely on the DCF method. Most importantly, Respondent emphasizes that the Bear Creek tribunal did not apply "Modern DCF."257 Quoting from Dr. Ripinsky, Respondent argues that the tribunal thereby followed "the consistent line of earlier decisions that deemed the DCF method to be generally inappropriate for valuing investment projects without a performance track record."258
266.
Respondent emphasizes its position that Dr. Ripinsky's statements in his expert reports submitted in this arbitration are consistent with his public writings. It draws the Tribunal's attention to the fact that in the quotes relied on by Claimant, Dr. Ripinsky stated that DCF may be considered "if the business proves successful" and referred to "established businesses."259 As for the cost approach, Dr. Ripinsky clarified that "if the evidence on the record does not allow for the use of an income-based or market-based method, the historic cost approach may be the only remaining option."260
267.
Respondent submits that where the market value is not "readily ascertainable," the Tribunal should look to a backward-looking approach.261 Respondent contends that its expert Dr. Burrows derived the best approximation to the fair market value of Claimant's investment by using the prior transaction by which Antofagasta and Barrick acquired the shares in Claimant in 2006. Respondent emphasizes that "[t]o clarify, the valuation submitted by Pakistan through the independent expert Dr. Burrows intends to challenge, and not to cure, the procedural and scientific defects of TCC's case on quantum, which under applicable law should be dismissed by the Tribunal."262
268.
Respondent maintains that the fair market value would be most accurately determined by Dr. Burrows' reference to the set of prior transactions involving the acquisition of Claimant, including a number of adjustments to account for changes that occurred until the valuation date, i.e., changes in metal prices and country risk as well as "subsequent efficient, proven investments."263 According to Respondent, neither of the remaining approaches proposed by Claimant nor "an uninformed, exaggerated guess on the size of the mineral deposits actually available for mining," whether made by Prof. Davis or Dr. Mubarakmand, would have been taken into account by a willing buyer in determining the fair market value.264 In light of the remaining uncertainties associated with the project, Respondent concludes that no prospective transaction would have been concluded based on a forecast of future profits of the mine as of the valuation date.265
269.
Respondent further argues that if the Tribunal were to find that Dr. Burrows' valuation does not reflect the fair market value of Claimant's investment, "the only other valuation that could validly be performed under the Treaty is one based on actual, efficient, proven investments made, adjusted for principles of equity." Respondent adds that not all investments made would be compensable and claims that the Treaty would "call for further reductions due to the inefficiencies in TCC's exploration work."266
270.
In this context, Respondent notes that Article 7(2) of the Treaty also refers to "equitable principles" and relies on the Commentary to the ILC Articles to argue that the quantification of damages should reach "an equitable and acceptable outcome." Respondent also refers to the principle of proportionality and points to the disparity between the amount claimed and the amount that Claimant allegedly invested, which Respondent considers to be "completely disproportionate and inequitable."267

3. Tribunal's Analysis

271.
The Tribunal will address the four issues discussed by the Parties, i.e: (i) the applicable standard of compensation; (ii) the requirement of causation; (iii) the applicable standard and burden of proof; and (iv) the valuation method to be applied to determine Claimant's damages, in turn.

a. Standard of Compensation

272.
At the outset, the Tribunal notes that there is common ground between the Parties regarding the date as of which the losses that Claimant claims to have incurred have to be quantified. Respondent explicitly "accepts, that the proper measure of quantum is the market value of TCC on November 15, 2011."268 The Parties' agreement regarding the date of valuation is based on the Tribunal's finding in its Decision on Jurisdiction and Liability that Respondent has breached its obligations under Articles 3(2), 7(1) and 3(3) of the Treaty by denying TCCP's Mining Lease Application in order to allow the GOB to implement its own project instead.269 The denial was notified to TCCP by the Licensing Authority's letter dated 15 November 2011.270 The Tribunal therefore agrees with the Parties that Claimant's alleged losses have to be quantified as of that date.
273.
The Parties further agree that in order to quantify Claimant's losses, the Tribunal must determine the "market value" of TCC or, more precisely, the market value of Claimant's investment in the Reko Diq project as of 15 November 2011. The Tribunal has found in its Decision on Jurisdiction and Liability that following the denial of TCCP's Mining Lease Application, the value of the CHEJVA and TCCP, and thus of Claimant's investment, was effectively neutralized.271 The Tribunal therefore agrees with the Parties that Claimant's losses are equivalent to the (entire) value that its investment would have had if TCCP's Mining Lease Application has not been denied in violation of Respondent's obligations under the Treaty.
274.
The Tribunal further agrees with the Parties that the value to be determined is the "market value" which, as defined by Claimant's valuation expert Prof. Davis and quoted with approval by Respondent,272 represents "the cash-equivalent amount a willing buyer would pay a willing seller to purchase the asset at the Valuation Date, both with reasonable knowledge of the facts and circumstances surrounding the asset and neither being under any compulsion to transact."273
275.
There is also common ground that the value has to be determined "but for" the Treaty breaches that the Tribunal has determined in its Decision on Jurisdiction and Liability. While the Parties are in disagreement as to the extent to which but-for assumptions have to be made, in particular regarding the conclusion and terms of a Mineral Agreement, the general principle of performing a but-for valuation is undisputed and can be derived from both standards of compensation on which the Parties rely. In fact, this aspect relates to the requirement of causation between Respondent's breaches and the losses incurred by Claimant and will be addressed in more detail below.
276.
As for the standard of compensation, the Parties disagree as to whether the Tribunal should calculate compensation based on Article 7(2) of the Treaty, as alleged by Respondent, or based on the standard of full reparation under customary international law, as alleged by Claimant. Article 7(1) and (2) of the Treaty provides as follows:

"1. Neither Party shall nationalise, expropriate or subject to measures having effect equivalent to nationalisation or expropriation (hereinafter referred to as 'expropriation' ) the investments of investors of the other Party unless the following conditions are complied with:

(a) the expropriation is for a public purpose related to the internal needs of that Party and under due process of law;

(b) the expropriation is non-discriminatory; and

(c) the expropriation is accompanied by the payment of prompt, adequate and effective compensation.

2. The compensation referred to in paragraph 1(c) of this Article shall be computed on the basis of the market value of the investment immediately before the expropriation or impending expropriation became public knowledge. Where that value cannot be readily ascertained, the compensation shall be determined in accordance with generally recognised principles of valuation and equitable principles taking into account the capital invested, depreciation, capital already repatriated, replacement value, and other relevant factors."274

277.
The Tribunal agrees with Claimant that the wording of Article 7(2) ("The compensation referred to in paragraph 1(c)…") indicates that the provision is, at least primarily, intended to clarify how the compensation must be calculated in order for an expropriation to comply with the legality requirements set out in Article 7(1). The Tribunal is aware that both Parties have relied on case law supporting their respective arguments regarding the question whether or not the provision should further apply to calculate the compensation for an expropriation carried out in violation of the legality requirements in Article 7(1) and/or compensation for Treaty breaches other than an expropriation.
278.
In the Tribunal's view, it is not necessary to express an opinion on this point in the abstract. While Claimant takes the position that the Tribunal should apply the compensation standard set out in Chorzów Factory which it considers to be the relevant standard under customary international law, it also argues that this approach is consistent with Article 7 of the Treaty, in particular the first sentence in Article 7(2) pursuant to which compensation "shall be computed on the basis of the market value of the investment immediately before the expropriation or impending expropriation became public knowledge."275
279.
The dispute between the Parties concerns the second sentence in Article 7(2), which sets out criteria for determining compensation "[w]here [market] value cannot be readily ascertained." Respondent argues that the valuation method presented by Claimant to determine the market value of its investment does not produce a "readily ascertainable" result and therefore leads to the application of the criteria in the second sentence. Claimant, on the other hand, maintains that the market value of its investment can be ascertained based on the valuation performed by its valuation expert Prof. Davis.
280.
Consequently, if the Tribunal reaches the conclusion that the market value of Claimant's investment can be "readily ascertained" based on the evidence and valuation methods before it, there is no need to decide whether this result is based on the compensation provision in Article 7(2) of the Treaty or a compensation standard under customary international law.
281.
As will be out in more detail below, the Tribunal is convinced that in the specific circumstances of this individual case, the valuation method relied on by Claimant and its valuation expert Prof. Davis is the most appropriate measure to value Claimant's investment in Reko Diq. While it will therefore not be strictly necessary to resort to the additional criteria set out in the second sentence of Article 7(2), the Tribunal will in any event give due consideration to generally recognized principles of valuation and verify whether the result it has reached based on Prof. Davis' method is reconcilable with the amount of capital invested by Claimant in order to ensure that Claimant will be awarded compensation in the amount that truly reflects the damages it has incurred as a result of Respondent's breaches of the Treaty.

b. Requirement of Causation

282.
There is common ground between the Parties and Claimant explicitly accepts that "it must show that Pakistan's breaches of the Treaty caused TCCA's loss."276 According to Claimant, however, the causal relationship between Respondent's breaches and its damage has already been determined because the Tribunal has found in its Decision on Jurisdiction and Liability that "Respondent's conduct deprived Claimant of the value of its investment and thereby directly caused a loss that is to be quantified at a later stage of the proceedings."277
283.
The Tribunal recalls that its finding was made as part of its conclusion on Claimant's claims, which may be quoted again at this point:

"In conclusion, the Tribunal finds that, by denying TCCP's Mining Lease Application in order to allow the GOB to implement its own project instead, Respondent breached its obligation to accord Claimant fair and equitable treatment under Article 3(2) of the Treaty, carried out a measure having effect equivalent to expropriation that did not comply with the requirements for a lawful expropriation under Article 7(1) of the Treaty, and impaired the use of Claimant's investment in violation of Article 3(3) of the Treaty.

While the Tribunal is aware that Respondent has further raised the argument that Claimant's claim must fail in limine because it has failed to address causation, the Tribunal considers it sufficient to state at this point that Respondent's conduct deprived Claimant of the value of its investment and thereby directly caused a loss that is to be quantified at a later stage of the proceedings. In the Tribunal's view, any specific questions on whether Respondent's conduct was causal for individual parts of Claimant's – yet unquantified – claim cannot be dealt with in the abstract but will be addressed as part of the quantum phase of the proceedings."278

284.
The Tribunal affirms its previous finding that Respondent's conduct has deprived Claimant of the value of its investment and has thereby caused a loss that is equal to the value that Claimant's investment would have had if Respondent had not denied TCCP's Mining Lease Application in violation of its obligations under the Treaty. The Tribunal has not, however, made a finding as to specific aspects of causation. In particular, the Tribunal has not yet made a definitive finding as to whether the Reko Diq project would have succeeded in the manner presented by Claimant and/or whether the assumptions made by Claimant and its valuation expert Prof. Davis reflect the true value of the Reko Diq project. As for the assumptions made in the Feasibility Study and Expansion Pre-Feasibility Study, this was explicitly emphasized by the Tribunal in its Decision on Respondent's Reconsideration Request.279
285.
Specifically with regard to the negotiations of the Mineral Agreement, Respondent is correct in pointing out that the Tribunal has not made a finding that the non-conclusion of a Mineral Agreement by the Governments amounts to a breach of Respondent's obligations under the Treaty. Consequently, the Tribunal agrees with Respondent that a but-for valuation cannot assume that a Mineral Agreement would have existed as of the date of valuation. On the other hand, the Tribunal recalls its findings that in the absence of Respondent's breaches, once Claimant would have received a mining lease, there would have been a mutual interest to achieve agreement on the remaining issues in the Mineral Agreement negotiations.280 The question whether a Mineral Agreement would have been concluded after the valuation date and, if so, on what terms, will be addressed in more detail below.
286.
At this point, i.e., in the context of causation, the Tribunal considers it sufficient to recall the Parties' agreement that Claimant must show that Respondent's breaches caused its losses. In other words, Claimant is entitled to compensation in the amount of the value that its investment would have had but for Respondent's breaches. If and to the extent the Tribunal is not convinced that a specific risk or downside affecting Claimant's investment would not have existed in the but-for scenario, it will make the appropriate deduction in order to determine those, and only those, losses that were caused by Respondent's breaches of the Treaty.

c. Standard and Burden of Proof

287.
There is no dispute between the Parties and Claimant specifically accepts that "TCCA has the burden of proof as to its loss."281
288.
The Parties are in dispute, however, as to the standard of proof that applies to the quantification of Claimant's loss. Claimant distinguishes between the fact of the loss, which it considers to be subject to "the normal standard of balance of the probabilities," and the quantum of the loss in respect of which it considers it sufficient to provide a "reasonable basis" for the Tribunal's assessment. Respondent, on the other hand, takes the position that Claimant must prove its losses, including the quantum, "with reasonable, or sufficient, certainty."
289.
While Respondent repeatedly uses the term "absolute certainty" in its Post-Hearing Brief, it is not entirely clear to the Tribunal whether it thereby suggests that this is the standard that Claimant has to meet or rather a standard that Claimant purports to meet.282 In its Rejoinder, Respondent contends that the "modern" DCF method used by Prof. Davis "requires absolute certainty"283 or "a high level of certainty" because it is "such a fragile model."284 In its Post-Hearing Brief, however, it reiterates its references to Dr. Ripinsky who supports a standard of "reasonable, or sufficient, certainty."285
290.
In any event, the Tribunal is not convinced that a standard of "absolute certainty" could or should be applied to the quantification of Claimant's damages. Respondent does not cite any authority in this respect and its own legal expert does not support such a strict standard of proof. As pointed out by Claimant, a standard of "absolute certainty" would mean that damages would – almost certainly – never be awarded. There can hardly be absolute proof for a hypothetical situation.
291.
In the Tribunal's view, the application of the modern DCF method, if considered appropriate by the Tribunal, would not warrant a different standard of proof. As the Tribunal will discuss in more detail below, the term "certainty-equivalent cash flows" does not mean that cash flows have to be proven with "absolute certainty" but rather that existing uncertainties have been quantified and incorporated into these cash flows. Whether or not this has been done in a sufficient manner will form part of the assessment whether Claimant has in fact met its burden of proof. It does not justify raising the threshold of what has to be proven.
292.
Respondent's legal expert Dr. Ripinsky states with regard to the standard of proof in his expert report:

"Claimant bears the burden of proving the losses it has incurred and the amount of damages that is commensurate with these losses. In international investment law, claimant must prove damages with reasonable, or sufficient, certainty. This standard applies to both past as well as future losses. For obvious reasons, the task of meeting this standard is more challenging in relation to future losses and valuation methods based on future projections.

In a number of cases, arbitral tribunals have held that future losses must be proved with 'sufficient (degree of) certainty', 'sufficient degree of probability', 'some level of certainty', 'comparative likelihood' and that they must be 'probable and not merely possible'. The Commentaries to the ILC Articles on State Responsibility refer to 'sufficient certainty' as a requirement for the anticipated income stream to become a legally protected interest. In the context of the United Nations Compensation Commission, 'reasonable certainty' served as the standard of proof."286

293.
Claimant does not specifically dispute Dr. Ripinsky's opinion but relies on the tribunal's findings in Crystallex v. Venezuela in support of its argument that once the fact of the loss has been proven, the standard of proof for the quantum of damage does not require the same degree of certainty. The Tribunal notes that in its assessment which standard of proof it should apply to lost profits, the Crystallex tribunal considered several of the authorities quoted by Dr. Ripinsky and drew the following conclusions:

"The ILC Articles recognize that in certain cases compensation for loss of profits may be appropriate. Indeed, Article 36(2) of the ILC Articles provides that '[t]he compensation shall cover any financially assessable damage including loss of profits insofar as it is established'. The commentary to the ILC Articles further notes that '[t]tribunals have been reluctant to provide compensation for claims with inherently speculative elements' and '[i]n cases where lost future profits have been awarded, it has been where an anticipated income stream has attained sufficient attributes to be considered a legally protected interest of sufficient certainty to be compensable. This has normally been achieved by virtue of contractual arrangements or, in some cases, a well-established history of dealings'.

Furthermore, according to an oft-cited authority, 'in order to be allowable, prospective profits must not be too speculative, contingent, uncertain, and the like. There must be proof that they were reasonably anticipated; and that the profits anticipated were probable and not merely possible'. The same idea was expressed by the tribunal in ADM v. Mexico which held that 'lost profits are allowable insofar as the Claimants prove that the alleged damage is not speculative or uncertain – i.e., that the profits anticipated were probable or reasonably anticipated and not merely possible'.

Furthermore, the Vivendi v. Argentina tribunal noted that 'compensation for lost profits is generally awarded only where future profitability can be established (the fact of profitability as opposed to the amount) with some level of certainty'.

In the Tribunal's view, all these authorities show that, once the fact of future profitability is established and is not essentially of speculative nature, the amount of such profits need not be proven with the same degree of certainty. In other words, the Claimant must prove that it has been deprived of profits that would have actually been earned. This requires proving that there is sufficient certainty that it had engaged or would have engaged in a profitmaking activity but for the Respondent's wrongful act, and that such activity would have indeed been profitable.

With those principles in mind, the question thus is whether in this case (i) it is sufficiently certain that the Claimant would have made profits; and (ii) if yes, whether the Claimant has provided the Tribunal with a reasonable basis to assess such loss of profits. The two questions will be addressed in turn."287

294.
Claimant also relies on the tribunal in Lemire v. Ukraine, which held:

"The Tribunal agrees that it is a commonly accepted standard for awarding forward looking compensation that damages must not be speculative or uncertain, but proved with reasonable certainty; the level of certainty is unlikely, however, to be the same with respect to the conclusion that damages have been caused, and the precise quantification of such damages. Once causation has been established, and it has been proven that the in bonis party has indeed suffered a loss, less certainty is required in proof of the actual amount of damages; for this latter determination Claimant only needs to provide a basis upon which the Tribunal can, with reasonable confidence, estimate the extent of the loss.

While the existence of damage is certain, calculating the precise amount of the compensation is fraught with much more difficulty, inherent in the very nature of the 'but for' hypothesis. Valuation is not an exact science. The Tribunal has no crystal ball and cannot claim to know what would have happened under a hypothesis of no breach; the best any tribunal can do is to make an informed and conscientious evaluation, taking into account all the relevant circumstances of the case, not unlike that made by anyone who assesses the value of a business on the basis of its likely future earnings."288

295.
The Crystallex tribunal also quoted the first of these paragraphs and added:

"The tribunal is of the view that the emphasis should be put on the phrase 'with reasonable confidence' which seems to strike a wholesome and pragmatic approach, prone to satisfy common law and civil law minds.

Other tribunals have come to similar conclusions. In SPP v. Egypt, for example, the tribunal noted that 'it is well-settled that the fact that damages cannot be assessed with certainty is no reason not to award damages when a loss had been incurred'. And in Tecmed, the tribunal observed that 'any difficulty in determining the compensation does not prevent the assessment of such compensation where the existence of damage is certain'.

Thus, an impossibility or even a considerable difficulty that would make it unconscionable to prove the amount (rather than the existence) of damages with absolute precision does not bar their recovery altogether. Arbitral tribunals have been prepared to award compensation on the basis of a reasonable approximation of the loss, where they felt confident about the fact of the loss itself. In the Tribunal's view, this approach may be particularly warranted if the uncertainty in determining what exactly would have happened is the result of the other party's wrongdoing."289

296.
On that basis, it appears to the Tribunal that the standards invoked by the Parties are in fact not too far apart. In fact, Dr. Ripinsky acknowledges this jurisprudence and draws the following conclusion from it:

"A number of investment tribunals have suggested that once the fact of the damage has been established, a claimant should not be required to prove the actual amount of damages with the same degree of certainty. In the DCF context, I take this to mean that uncertainties remain inherent in any DCF analysis, and the method can still be used despite the impossibility of producing a 'scientifically precise' result. After all, value established for a hypothetical transaction is not a fact, but rather an informed opinion of how much an asset is worth. However, for the DCF method to be accepted, the claimant must get over the 'hump' of demonstrating its appropriateness and reliability in the specific circumstances of the case."290

297.
There appears to be no dispute regarding the accuracy of Dr. Ripinsky's conclusion and the Tribunal agrees with it. Whether Claimant has demonstrated the appropriateness of the DCF method, and specifically of the modern DCF method, in the present case will be addressed in more detail below. At this point, it suffices to find that the standard of proof cannot be such as to exclude a valuation because the Tribunal is not "certain" that the result it produces is correct in terms of "scientifically precise." On the other hand, the Tribunal must be convinced that the valuation is appropriate in that it will produce a sufficiently reliable result.
298.
Respondent points out that Dr. Ripinsky also noted in his expert report that "[i]n some investor-State disputes, tribunals have refused to grant compensation, despite finding a treaty breach, where the claimant had failed to prove that it had suffered a loss as a result of the respondent State's unlawful conduct or to provide a reasonable basis for the estimation of damages."291 In the Tribunal's view, there is no dispute between the Parties that Claimant has to prove that it suffered a loss and that it has to provide a reasonable basis for the estimation of damages. The dispute therefore appears to concern not so much the standard of proof but rather whether the valuation method used by Claimant and its expert yields results that are not "too speculative" or "too uncertain" but rather enable the Tribunal to assess Claimant's damages "with reasonable confidence" and reach a "reliable" conclusion.
299.
There is a dispute, however, as to whether the Tribunal may or even should take into account the extent to which any uncertainties in the valuation result from Respondent's breaches – because these breaches have prevented the project from going forward and eliminating uncertainties such as the terms of the Mineral Agreement and the terms of third-party financing. The Crystallex tribunal indicated that this might be a consideration to be taken into account. The tribunal in Gemplus v. Mexico even went further and explicitly held:

"[T]he fact that this exercise is difficult is due directly to the Respondent‟s breaches of the two BITs which have made it almost impossible for the Claimants to show how the Concessionaire could or would have made use of that lost opportunity. As already decided by the Tribunal above, it would be wrong in principle to deprive or diminish the Claimants of the monetary value of that lost opportunity on lack of evidential grounds when that lack of evidence is directly attributable to the Respondent's own wrongs. This is not therefore a case where the burden of proof lay exclusively on the Claimants: and, in the Tribunal's view, it was also for the Respondent to prove the contrary. It did not do so."292

300.
Dr. Ripinsky, on the other hand, states in his expert report:

"[F]undamental uncertainties existing at the date of valuation cannot be resolved by a tribunal by predicting 'how things would have evolved in the absence of the breach.' Rather, the task of ascertaining the fair market value at a given date of valuation requires arbitrators to view these uncertainties as the part of the factual matrix existing as of that date. If these fundamental uncertainties cannot be resolved in favour of the claimant on the basis of the applicable standard of proof, this should preclude reliance on the DCF method.

[Note 48] The point is sometimes made that where a State is to blame for a project's interruption, the claimant should be given the benefit of doubt in respect of any uncertainty in determining what exactly would have happened in the absence of a breach. This position does not seem to be methodologically correct from the point of view of the burden and standard of proof, nor does it respect the task of determining the FMV as of a certain date (i.e. on the basis of facts available as of that date)."293

301.
In the Tribunal's view, it is not sensible to discuss this point in the abstract. For the reasons set out below, the Tribunal considers that, in principle, the information and evidence presented by Claimant provide a reasonable and sufficient basis to determine the value of Claimant's investment using an income-based valuation method. In other words, the Tribunal does not consider that there are "fundamental uncertainties" that would preclude the application of a DCF method or, more precisely, the application of the modern DCF method used by Prof. Davis. This does not yet mean that the Tribunal agrees with each of the individual assumptions and risk estimates made by Prof. Davis in the course of his valuation. Should the Tribunal reach the conclusion that certain risks or uncertainties have not been sufficiently accounted for, it will also assess whether, in that specific context, there is an evidentiary uncertainty which has been caused by Respondent and might therefore justify alleviating Claimant's burden of proof.
302.
In general, however, the Tribunal finds that these considerations may not serve to reverse the fundamental principle that Claimant bears the burden of proving its damage, including the quantum of its damage, and therefore also bears the consequences if and to the extent it is not able to meet this burden of proof.

d. Appropriate Valuation Method

303.
Having set out the applicable legal standards in general, the Tribunal will now turn to the valuation methods presented by the Parties and assess whether it is appropriate to rely on any of these methods in the circumstances of the present case.
304.
Claimant has presented a valuation from its expert Prof. Davis, which has been referred to throughout these proceedings as the "modern DCF" method – a term that the Tribunal will therefore adopt in the following analysis. Respondent has relied on two sets of valuation experts: (i) Mr. Brailovsky and Prof. Wells who were instructed to discuss the appropriateness of a DCF valuation in general and the valuation presented by Prof. Davis in particular but did not present a valuation of their own of the Reko Diq project; and (ii) Dr. Burrows who valued the Reko Diq project based on the past transactions through which Antofagasta and Barrick acquired their (indirect) shares in Claimant in 2006.
305.
Consequently, the Tribunal has two valuations before it, i.e., the income-based modern DCF valuation performed by Prof. Davis and the past-transactions-based valuation performed by Dr. Burrows. The Tribunal further takes note of Respondent's statement that "the valuation submitted by Pakistan through the independent expert Dr. Burrows intends to challenge, and not to cure, the procedural and scientific defects of TCC's case on quantum, which under applicable law should be dismissed by the Tribunal."294
306.
On that basis, the Tribunal will first and foremost assess whether Claimant has established that it is appropriate to use a modern DCF valuation in the circumstances of the present case. If and to the extent the Tribunal follows Claimant and its expert on this point, it will further assess, once the Tribunal has drawn its own conclusion on the value of the Reko Diq project based on that method, whether there are reasonable grounds for any remaining deviation to the result produced by Dr. Burrows' method.
307.
As for the modern DCF method applied by Prof. Davis, there are two main aspects in dispute between the Parties: (i) whether it is appropriate in general to use an income-based DCF valuation for a development-stage mining project in the circumstances of Reko Diq; and (ii) whether it is appropriate to use the modern DCF method, which is in principle also a DCF valuation but, as explained by Prof. Davis, uses at-source pricing of risk and simulates certain project variables to incorporate managerial flexibility while then discounting cash flows at a risk-free rate.295
308.
The Tribunal will address these two aspects in turn.

i. Whether It Is Appropriate to Value the Reko Diq Project Based on a Projection of Future Cash Flows

309.
At the outset of its analysis regarding the appropriateness of using a DCF valuation in this case, the Tribunal notes that there is agreement between the Parties that this question cannot be answered in the abstract, i.e., for any given development-stage project at a certain defined stage. In response to Claimant's denial of a "bright-line rule" that Respondent allegedly invoked,296 Respondent agreed with the "truism" that "the applicability of DCF methodology is decided on the facts of each case" but argued that Claimant had failed to establish the facts leading to the applicability of a DCF analysis, i.e., facts proving "profitability or sufficient certainty of the viability of the project into the future."297
310.
The Tribunal agrees with the Parties that the analysis which valuation method is appropriate to value a project can only be made on a case-by-case basis, taking into account all relevant circumstances of the case and the evidence that the Parties have brought before this Tribunal. As stated by the Crystallex tribunal:

"[T]here is no one methodology best suited for determining the fair market value of the investment lost in every situation. Tribunals may consider any techniques or methods of valuation that are generally acceptable in the financial community, and whether a particular method is appropriate to utilize is based on the circumstances of each individual case. A tribunal will thus select the appropriate method basing its decision on the circumstances of each individual case, mainly because a value is less an actual fact than the expression of an opinion based on the set of facts before the expert, the appraiser or the tribunal."298

311.
The Tribunal agrees with this statement and can therefore assess no more and no less than whether it is appropriate to determine the value of the Reko Diq project as of 15 November 2011 based on a projection of the project's future cash flows. At the same time, the Tribunal still considers it useful to take guidance from the findings made by other tribunals faced with the question how to value a non-operational mining project. In their submissions, the Parties relied, inter alia, on four recent cases concerning non-operational mining projects which, as assessed by Dr. Ripinsky, "are to some extent comparable to the Tethyan case in terms of their factual background" as they were "stopped due to government intervention before entering the exploitation stage or shortly thereafter."299
312.
Claimant relies in particular on the findings made by the tribunals in Gold Reserve v. Venezuela and Crystallex v. Venezuela. In Gold Reserve, the tribunal held:

"Although the Brisas Project was never a functioning mine and therefore did not have a history of cashflow which would lend itself to the DCF model, the Tribunal accepts the explanation of both Dr Burrows (CRA) and Mr Kaczmarek (Navigant) that a DCF method can be reliably used in the instant case because of the commodity nature of the product and detailed mining cashflow analysis previously performed. The Tribunal also notes that the experts agreed on the DCF model used, and it is only the inputs that are contested."300

313.
In that case, the claimant had also presented a comparables valuation which was contested by the respondent. In that context, the Gold Reserve tribunal added:

"The Tribunal notes that the DCF method is a preferred method of valuation where sufficient data is available. This conclusion is supported by the CIMVal Guidelines … to which both experts referred. In the present cases, many of the arguments in favour of a DCF approach (a commodity product for which data such as reserves and price are easily calculated) mitigates against introducing other methods such as comparable transactions or market capitalization, unless close comparables can be found. On several occasions in this Award, the Tribunal has rejected a comparable with other mines on the basis that many variables are specific to each mine (such as climatic and geological conditions) all of which have an impact on value. … Although the Tribunal appreciates Claimant's concern that the DCF model can be over-sensitive to changes in inputs, the Tribunal is not convinced that the comparables offered are sufficiently similar to enable then [sic] to be used in a weighted valuation calculation. Because of this uncertainty, the Tribunal prefers to use the DCF model only."301

314.
The tribunal did not, however, decide to ignore the comparables approach but used it as "a cross-reference as to the reasonableness of the DCF valuation." It noted that "the comparables were in a close range, suggesting the DCF value was reasonably accurate" and also referred to other valuations from independent analysists, which it considered "useful references to ensure that the compensation awarded is reasonable."302
315.
Dr. Burrows, who had also appeared as the respondent's expert in Gold Reserve, had presented a negative valuation of the project. The Gold Reserve tribunal did not consider this valuation convincing because "[t]his would essentially mean that the mine was completely uneconomic to operate – a highly unlikely proposition given the effort and expense to which Gold Reserve had committed to get the mine operational. The detailed feasibility study and various impact studies all demonstrated that the level of analysis that had gone into the mine was significant." The tribunal further noted that the claimant's valuation was consistent with other indendent valuations and bore "reasonably proximity to the comparables methodologies." The tribunal also considered it unlikely that the claimant would have proceded with the venture if it had become uneconomic. In addition, it took note of the fact that financing had been arranged for the project, "indicating that a convincing business case had been made to obtain the debt."303 On that basis, the tribunal decided to generally prefer the methodology and evidence advanced by the claimant's expert.
316.
In Crystallex, the tribunal found that the claimant had "established the fact of future profitability, as it had completed the exploration phase, the size of the deposits had been established, the value can be determined based on market prices, and the costs are well known in the industry and can be estimated with a sufficient degree of certainty." The tribunal made reference to the feasibility studies produced by the claimant and noted that it saw "no reason to cast into doubt the accuracy of the studies that those well-known consultants prepared contemporaneously for the Claimant throughout the years." It further held that "gold, unlike most consumer products or even other commodities, is less subject to ordinary supply-demand dynamics or market fluctuations, and, especially in the case of open pit gold mining as in Las Cristinas, is an asset whose costs and future profits can be estimated with greater certainty." The tribunal therefore accepted that "predicting future income from ascertained reserves to be extracted by the use of traditional mining techniques—as is the case of Las Cristinas—can be done with a significant degree of certainty, even without a record of past production."304
317.
In a second step, the Crystallex tribunal assessed whether the claimant had provided it with a reasonable basis to assess the loss of profits and noted that the claimant had presented several forward-looking methodologies whereas the respondent had presented a backward-looking cost approach. It then held:

"The Tribunal considers that in this case only forward-looking methodologies aimed at calculating lost profits are appropriate in order to determine the fair market value of Crystallex's investment. By contrast, a backward-looking methodology such as the cost approach, while susceptible of being utilized in certain instances where there is no record of profitability and other methodologies would lead to excessively speculative and uncertain results, cannot be resorted to in this case. The cost approach method would not reflect the fair market value of the investment, as by definition it only assesses what has been expended into the project rather than what the market value of the investment is at the relevant time."305

318.
The Crystallex tribunal considered that "[t]he appropriateness of choosing, at least for a case like this one, a method which aims at determining lost profits and, by contrast, of discarding methods that are purely based on the computation of sunk costs," was confirmed by the "Standards and Guidelines for Valuation of Mineral Properties" issued by the Canadian Institute of Mining, Metallurgy and Petroleum (CIMVal), which it described as "important standards in the industry." The tribunal referred to the definition of "development property" in the CIMVal Guidelines and noted that for these properties, the CIMVal Guidelines "advise in favor of the application of income- and market-based methodologies, and against the use of cost-based methodologies."306 On that basis, the tribunal decided to consider the four methodologies presented by the claimant and decided to rely on a stock-market approach and a market multiples approach while discarding the other two valuation methodologies – none of which was a DCF methodology.307
319.
Claimant further relied on the tribunal in Rusoro v. Venezuela, which noted that "[v]aluations based on the DCF method have become usual in investment arbitrations, whenever the fair market value of an enterprise must be established." It agreed that "where the circumstances for its use are appropriate, forward looking DCF has advantages over other, more backwards looking valuation methods" and held that "DCF works properly if all, or at least a significant part, of the following criteria are met":308 "- The enterprise has an established historical record of financial performance;

- There are reliable projections of its future cash flow, ideally in the form of a detailed business plan adopted in tempore insuspecto, prepared by the company's officers and verified by an impartial expert;

- The price at which the enterprise will be able to sell its products or services can be determined with reasonable certainty;

- The business plan can be financed with self-generated cash, or, if additional cash is required, there must be no uncertainty regarding the availability of financing;

- It is possible to calculate a meaningful WACC, including a reasonable country risk premium, which fairly represents the political risk in the host country;

- The enterprise is active in a sector with low regulatory pressure, or, if the regulatory pressure is high, its scope and effects must be predictable: it should be possible to establish the impact of regulation on future cash flows with a minimum of certainty."309

320.
The Rusoro tribunal emphasized that DCF did not work in all circumstances and noted that "[i]f the estimation of those parameters is incorrect, the results will not represent the actual fair market value of the enterprise. Small adjustments in the estimation can yield significant divergences in the results." It therefore considered it necessary that DCF valuations "be subjected to a 'sanity check' against other valuation methodologies."310
321.
The Rusoro tribunal considered that neither of the parties' experts had in fact presented a "real DCF valuation" and considered the absence of such a DCF valuation "not an oversight, but rather the result of the very special characteristics surrounding Rusoro, which make the use of DCF approach inappropriate."311 The tribunal referred to the following circumstances: (i) the claimant lacked a proven record of financial performance; (ii) the price of gold was very volatile and the expropriation occurred when gold was of its two historic peaks, which made it difficult to recreate market expectations on the expropriation date; (iii) there was no certainty whether the claimant would have been able to secure the financing for the required investment projected in its business plan; (iv) the country risk advocated by the claimant's expert was "clearly too low" and the WACC proposed by the respondent's expert was considered too high; (v) the Venezuelan gold sector had suffered increasing regulatory pressure which made it impossible to predict "with any certainty" the impact on future cash flows; and (vi) the claimant's mining rights had a definite term and while the DCF model assumed renewal, the tribunal had "significant doubts" whether that would be the case "given the uncertainty surrounding Venezuela."312
322.
The Rusoro tribunal therefore concluded that the DCF valuation was "not an appropriate basis for calculating the 'genuine value' of Rusoro."313
323.
In Khan Resources v. Mongolia, the tribunal was presented with three different methodologies by the parties' experts, including a DCF valuation advocated by the claimants. The tribunal first agreed with the claimants that "in the case of a mine with proven reserves, the DCF method is often considered an appropriate methodology for calculating fair market value" but then held that "a number of additional factors and uncertainties" made the use of the DCF method "unattractive and speculative" in the case before it.314 The Khan Resources tribunal then specified that these "uncertainties" included: (i) how the project would have been financed; (ii) whether a strategic partner would have been brought in or whether the claimant would have been able to bring the project into production by itself; (iii) whether the claimant would have taken the project to production or sold it; (iv) when and how certain additional property would have been merged into the joint venture; and (v) the signing of various agreement such as an investment agreement and a new joint venture agreement "to finalise the commercial terms" of the project.315
324.
The Khan Resources tribunal did not agree with the respondent that these factors rendered the project worthless in the claimant's hands but held that "[t]he combination of these factors … does mean that the level of certainty required for the DCF method to be used has not been attained." In particular, the tribunal considered it "far from certain: (i) whether the mine would actually have reached production; (ii) if it did, on what terms the parties would have participated in the venture; and (iii) whether the Claimants would still have been involved in the Dornod Project at all." It therefore concluded that "the DCF method is inappropriate and that any damages calculated through it would be too speculative."316
325.
The Khan Resources tribunal did not adopt any of the three methodologies presented by the parties' experts but considered that "the true value of Khan's investment is better reflected by the offers made for the mine or for Khan Canada's shares in and around the relevant period than by the more traditional methodologies advanced by the Parties."317
326.
The Tribunal notes that the Parties also made repeated reference to the award rendered in Bear Creek v. Peru. In that case, the claimant had also presented a valuation calculated by the DCF method and the tribunal assessed whether "having regard to the factual circumstances of this case, a willing buyer might have been found who would have paid a price calculated by the DCF method, as Claimant alleges." It answered this question in the negative, stating:

"The Tribunal is not persuaded that Claimant has provided sufficient evidence in support of its claim that a hypothetical purchaser of the Santa Ana Project would have been able to obtain the necessary social license to be able to proceed with the Project, if it had been provided an opportunity to invest the necessary time and resources. Given the extent of the opposition, and the reasons for it, the Tribunal doubts that the Project could, in the short term at least, be considered to be viable by the time Supreme Decree 032 [i.e., the measure which the tribunal found to be in violation of the respondent's obligations under the treaty] was adopted.

The Tribunal notes that the Santa Ana Project was still at an early stage and that it had not received many of the government approvals and environmental permits it needed to proceed. On the basis of the evidence before it, the Tribunal concludes that there was little prospect for the Project to obtain the necessary social license to allow it to proceed to operation, even assuming it had received all necessary environmental and other permits. The Tribunal notes that no similar projects operated in the same area, and there was no evidence to support a track record of successful operation or profitability in the future."318

327.
The Bear Creek tribunal also made reference to the tribunal in Vivendi v. Argentina, which held:

"In the Tribunal's view, the likelihood of lost profits must be sufficiently established by Claimants in order to be the basis of compensable damages. The Tribunal also recognises that in an appropriate case, a claimant might be able to establish the likelihood of lost profits with sufficient certainty even in the absence of a genuine going concern. For example, a claimant might be able to establish clearly that an investment, such as a concession, would have been profitable by presenting sufficient evidence of its expertise and proven record of profitability of concessions it (or indeed others) had operated in similar circumstances."319

328.
The Vivendi tribunal found that the claimant had failed to establish "with a sufficient degree of certainty" that the concession in question would have been profitable because the claimant had "never made a profit whilst it had operational control of the concession." It again noted that "the absence of a history of demonstrated profitability does not absolutely preclude the use of DCF valuation methodology. But to overcome the hurdle of its absence, a claimant must lead convincing evidence of its ability to produce profits in the particular circumstances it faced."320 It concluded that the evidence adduced by the claimants in this regard was deficient because in the absence of a record of demonstrated profitability of the project itself, the claimants would have been required "to present a thoroughly prepared record of its (or others) successes, based on first hand experience (its own or that of qualified experts) or corporate records which establish on the balance of the probabilities it would have produced profits from the concession in question in the face of the particular risks involved, other than those of Treaty violation."321
329.
Respondent's expert Dr. Ripinsky stated in his expert report that while, as a general rule, a DCF calculation requires a proven track record of performance, it "appears to be acceptable where … the claimant is able to establish with sufficient certainty the principal assumptions and parameters in its DCF model despite the absence of a track record."322 He concluded from his review of recent awards concerning mining ventures that "the application of the DCF method to a mining project at an early stage requires several important fundamentals to be in place as at the date of valuation, such as inter alia the existence of confirmed financing necessary for the project as well as clarity about the commercial terms of operation and a detailed (independently-verified) business plan." In addition, Dr. Ripinsky considered that "technological, logistical, infrastructure, regulatory and other risks" could also constitute "fundamental uncertainties" which generally preclude reliance on the DCF method.323
330.
In the Tribunal's view, a review of recent case law, including but not limited to the cases set out in more detail above, confirms that the question whether a DCF method (or a similar income-based valuation methodology) can be applied to value a project which has not yet become operational depends strongly on the circumstances of the individual case. The first key question is whether, based on the evidence before it, the Tribunal is convinced that in the absence of Respondent's breaches, the project would have become operational and would also have become profitable. The second key question is whether the Tribunal is convinced that it can, with reasonable confidence, determine the amount of these profits based on the inputs provided by the Parties' experts for this calculation. If the Tribunal reaches the conclusion that there are "fundamental uncertainties" due to which it is not convinced that the project would have reached the operational stage and would have been able to generate profits, it cannot apply the DCF method. If it reaches the conclusion that no such "fundamental uncertainties" preclude reliance on the DCF method but is not convinced by the inputs provided by the Parties' experts, it may conclude that it cannot apply the DCF method or it may conclude that certain deductions have to be made to account for additional risks or uncertainties faced by the project.
331.
As for the first question, the Tribunal considers that for the reasons to be set out in more detail below, Claimant has established that if Respondent had not denied TCCP's Mining Lease Application in violation of Respondent's obligation under the Treaty, the Reko Diq project would have gone forward and become operational and profitable in due course. More specifically, the Tribunal is convinced that based on the Feasibility Study that Claimant delivered to the GOB on 26 August 2010 and the commitment shown by Claimant as well as its two owners, Antofagasta and Barrick, Claimant would have been able to obtain the necessary funds and would also have brought the necessary experience to successfully execute the project in Balochistan.
332.
In particular, the Tribunal cannot follow Respondent's allegation that the Feasibility Study "was a blueprint for another Mega Project failure."324 In the Tribunal's view, the fact that the Feasibility Study was produced at a time when Claimant and its owners were determined to proceed with the project and the fact that its owners combined their impressive experience in operating copper mines and in operating gold mines across the globe, had been sponsoring and overseeing the project during its exploration stage, and were willing to contribute large further amounts of equity into the project, are very strong indications that they believed that this project would become operational and profitable. The Feasibility Study itself was the result of several years of intensive work on the ground, which was overseen by both of Claimant's owners and in which numerous outside consultants and companies participated. To suggest that the team conducting the exploration work and compiling the Feasibility Study had no idea what they were doing is not credible, in particular considering that Antofagasta and Barrick were investing large amounts of equity as well as seconding their own personnel for the project.
333.
This does not mean that the Tribunal intends to brush off the risks and issues pointed out by Respondent, in particular the risks associated with water, security and a social license to operate, or that the Tribunal necessarily follows each assumption made by Claimant and its expert on the costs associated with these risks. The Tribunal also takes note of a remaining uncertainty whether and, if so on what terms, Claimant would have concluded a Mineral Agreement with the Governments. However, the Tribunal considers it established that neither of these risks or uncertainties constitutes a "fundamental uncertainty" that would have stopped the project or rendered it unprofitable.
334.
Consequently, the second question is whether the inputs for a DCF calculation presented by the Parties' experts provide the Tribunal with a reasonable basis to determine the future cash flows of Claimant's investment with a reasonable amount of confidence. In this regard, the Tribunal notes that while Respondent's experts have criticized numerous assumptions and inputs used by Prof. Davis, they have in most cases not provided the Tribunal with what they would consider adequate inputs and they have not performed their own DCF calculation. While they purported to convert Prof. Davis' analysis to a traditional DCF to demonstrate that the internal rate of return would be too low for an investor,325 the Tribunal is not convinced that this was an adequate conversion and could be used for comparison purposes.
335.
As will be set out in more detail below, the Tribunal considers that certain adjustments have to be made to the inputs used by Prof. Davis in his calculation. In the Tribunal's view, however, none of these adjustments warrants the conclusion that the DCF method cannot produce a sufficiently reliable result. To the contrary, the Tribunal is convinced that in the particular circumstances of this case, it is appropriate to assume that Claimant's investment would have become profitable and to determine these future profits by using a DCF method.

ii. Whether It Is Appropriate to Value the Reko Diq Project Based on the Modern DCF Method Presented by Claimant

336.
Having reached a conclusion on the appropriateness to determine the value of Claimant's investment by using a forward-looking DCF methodology, the Tribunal will now assess whether Claimant has also established that the Tribunal should use the modern DCF approach used by its expert Prof. Davis.
337.
At the outset, the Tribunal notes that neither Party has presented a valuation based on a traditional DCF analysis conducted for the purposes of this arbitration with inputs as of the valuation date. Mr. Brailovsky and Prof. Wells merely referred to the "conventional DCF calculations of the SNC-Lavalin analyses" completed in 2010 and, without updating them to the valuation date, concluded on their basis that "the project would not attract a rational private investor and therefore has a Fair Market Value of zero."326 In the Tribunal's view, the conclusion that the project did not have any value is simply not credible. The Feasibility Study and Expansion Pre-Feasibility Study had confirmed that Reko Diq contained enormous mineral resources and had further demonstrated how these could be extracted and processed to be sold on the metals markets. Contemporaneous statements made by Government officials as well as by Dr. Mubarakmand who led the GOB's own project demonstrate that the Governments shared the belief at the time that the mine was going to be very lucrative and attractive commercially. Based on the results of the Feasibility and Pre-Feasibility Studies, Claimant and its owners were willing to commit substantial financial and personnel resources in order to bring this project into operation.
338.
In the Tribunal's view, the only reliable indication of the result that a traditional DCF analysis might have produced if it had been performed is Prof. Davis' update of the calculation included in the Expansion Pre-Feasibility. According to Prof. Davis, his update of prices and costs to reflect conditions as of the valuation date yielded a net present value of USD 3.02 billion for Claimant's share of the project.327 By contrast, the modern DCF method he applied resulted in a net present value of USD 8.5 billion.328
339.
The Tribunal does not consider it established that a traditional DCF calculation conducted for this arbitration would have necessarily produced the same result as the updated calculation from the Expansion Pre-Feasibility Study, which was performed for a different purpose and did not aim at calculating the fair market value of the project. However, given that the Tribunal has not been provided with a traditional DCF calculation, or any other income-based calculation for that matter, it will bear the result of this calculation in mind when verifying whether its conclusion on the value of Claimant's investment is reasonable and reconcilable with other indications of value at the time.
340.
As for the modern DCF valuation presented by Claimant, the Tribunal takes note of Prof. Davis' explanation as to why he considers that the modern DCF method is superior to the traditional DCF method specifically for long-life projects in the mining sector. In his view, there are "four main shortcomings of the traditional DCF method when applied to to calculating the fair market valuation of mining projects": (i) there is no market-based information for the main price and cost drivers of the project for 50 years or more into the future; (ii) there is no reasonable way of knowing how the market would discount the risk in each cash flow for a specific mining project but the standard approach uses market signals from the industry as a whole and uses a constant risk-adjusted discount rate which compounds over the years even though the risk of long-life mining projects is more or less constant over time; (iii) the method underestimates the project's tax cash flows and therefore overestimates net cash flows; and (iv) there is no simulation accounting for the possibility of the project's managers to respond to changing conditions by making appropriate operational decisions.329
341.
In particular with regard to the second alleged shortcoming, Prof. Davis illustrated the effect of using a risk-adjusted, compounding discount rate for a project that expects to receive cash flows over 50 years into the future as follows:
342.
Prof. Davis then explained the advantages of the modern DCF method as follows:

"The modern DCF method overcomes these limitations in cash flow estimation and cash flow risk discounting through two innovations. First, it uses forward market transactions as a signal of market participants’ expectations about future mining prices and costs along with their risk preferences over the uncertainty in those prices and costs. Second, it simulates over a wide range of possible cash flow outcomes in order to correctly capture the varying impacts of taxes and managerial actions on the project’s expected net cash flows. The use of forward markets to assess project cash flow risk is the most profound change, doing away with the overall, exogenously imposed and often highly contentious project level discount rate. In this sense it is a true market-based approach that provides a market asset valuation, exactly what is desired for a FMV."330

343.
In short, Prof. Davis stated that he applied at-source pricing of risk using forward markets, thereby avoiding the use of a constant risk-adjusted discount rate, and simulated key project variables to capture the impact of taxes and of active management decisions on cash flows and thereby project value. As he considers to have included all relevant risks in the cash flows themselves, he discounts the cash flows at the risk-free rate.331
344.
Respondent's experts Mr. Brailovsky and Prof. Wells recognized that "there are elements of the model that are useful, like the probability distributions of several key indicators." In their view, however, the model conceals the "fragility" of the project because it uses an average of all simulations and ignores, for example, the significant probability of a negative NPV.332 They also question whether the model actually performs a risk adjustment at source and deny that the projections made by Prof. Davis based on futures prices actually result in risk-adjusted prices and argue that these are in fact higher than non-adjusted price forecasts made by Consensus Economics. On that basis, they also consider it inappropriate to discount the calculated cash flows based on a risk-free rate.333 In their view, the lack of adequate risk adjustments is confirmed by a comparison to the studies conducted by SNC Lavalin, in particular the Expansion Pre-Feasibility Study, which undisputedly does not contain at-source risk adjustments.334 Following further explanation, Mr. Brailovsky and Prof. Wells conclude that "the valuation presented by Claimant as 'modern' is really very little more than the traditional DCF approach with an inflated price of output and a discount rate equal to the risk-free rate."335
345.
It appears to the Tribunal that the main issue in dispute between the Parties' experts is whether the modern DCF method accurately accounts for all the risks associated with a project and whether it is therefore reasonable to discount the risk-adjusted cash flows only for the time value of money, i.e., by using a risk-free rate.
346.
Prof. Davis explained that the modern DCF model permits to distinguish between: (i) systematic risks, such as production quantities and copper, gold and oil prices which may go up but may also go down; and (ii) asymmetric risks, such as a terrorist attack on the project which may affect the project without any upside potential. According to Prof. Davis, the modern DCF method accounts for asymmetric risks by adjusting the cash flow components affected by these risks such that they reflect the statistically expected outcome, e.g., a certain probability that a terrorist attack will occur. As for systematic risk, he explained that production quantities in mines generally do not require an adjustment for uncertainty and that for copper and gold prices, the modern DCF can resort to "very good market signals as to how the market values such risks."336
347.
In response to Respondent's argument that the modern DCF method is not used in the mining industry, Prof. Davis referred to a letter sent by the Special Committee of the Canadian Institute of Mining, Metallurgy and Petroleum on Valuation of Mineral Properties (CIMVal) to the International Valuation Standards Council in response to certain questions the latter had raised in a discussion paper in 2012.337 The Tribunal considers it common ground that CIMVal, which is comprised of experts in mineral project valuation, and that the Standards and Guidelines it issues, reflect international best practices.
348.
The Tribunal attaches importance to the CIMVal opinion because it is good evidence of the valuation methodology likely in practice to have been used by an actual buyer in the limited market for large-scale mining enterprises at the relevant time. The Tribunal would observe that it is not engaged in applying rules of valuation claimed to be derived from decisions in other cases. Nor is it concerned with what an expert, however eminent, considers would have been the best method of valuation. Its task is to make the best estimation of what, on the assumption that Respondent had honored its Treaty obligations, would actually have happened if Reko Diq had been offered for sale in the open market. If in practice a buyer was most likely to have adopted the methodology recommended in the CIMVal opinion, it is irrelevant that an expert considers that some other methodology would have been better. The Tribunal therefore considers it worth reviewing the CIMVal opinion on the modern DCF approach in more detail.
349.
As for general valuation methods to be used, CIMVal confirmed that for "Reserves undergoing development," it most commonly uses or encounters the income approach. For "Reserves and resources subject to exploration", it distinguished between early stage exploration properties and more advanced stage exploration properties "where there is at least a preliminary information on mine design, technical feasibility, and geological information on structure, material amount and metal concentration of the deposit."338 In the Tribunal's view, the Reko Diq project would satisfy at least the definition of an advanced stage exploration property, for which CIMVal most commonly uses or encounters market or income approaches.
350.
CIMVal then described two types of income-based approaches: (i) a "standard" DCF approach; and (ii) a "Certainty-Equivalent" DCF approach, which corresponds to what Prof. Davis has labelled the "modern DCF" approach:

"We generally use the income approach where there is sufficient information available to estimate future cash flows generated by a metals-related investment. …

An income-based valuation framework is applied across all of these asset-types in a manner that conforms to generally accepted valuation principles and, depending on the situation, is consistent with valuation principles in accounting guidelines such as IFRS. The Discounted Cash Flow ('DCF') method is used to adjust cash flow for risk and timing. However, these adjustments may be applied in one of two means. The first follows a standard DCF adjustment where net cash flow is adjusted for risk and time through a discounting process that relies on an aggregate discount rate. The second is a Certainty Equivalent ('CeQ DCF') approach where a risk-adjusted net cash flow is calculated by applying a targeted risk adjustment to particular cash flow component (e.g., a pure copper risk adjustment applied to a copper based revenue stream). This risk-adjusted net cash flow is then adjusted for the time value of money and possibly a residual risk adjustment for uncertainties not explicitly accounted in the cash flow model. … We may then augment our cash flow model by modelling metal price and other uncertainties with a numerical technique (e.g., lattice techniques or simulation) to correct for biases created in a cash flow estimate by contingent cash flow structures the result of risk management, management flexibility, financing and taxation considerations.

We note that the CeQ DCF approach was not discussed in the Exposure Draft of the IVSC Technical Information Paper titled 'The Discounted Cash Flow (DCF) Method - Real Property and Business Valuations' even though this method is a recognized DCF method for fair value estimates under accounting guidelines and well supported in valuation and finance theory literature. CeQ DCF is one of the approaches described in IFRS 13. We would highlight that the structure of the CeQ DCF approach is comparable to derivative valuation methods used to value many financial assets and is used for select types of real assets such as natural resource projects."339

351.
Following a description of other approaches, CIMVal concluded:

"Our experience has been that all of these methods provide valuation results that are supportable when applied with professionalism and discipline. We generally do not use a particular method in isolation and generally confirm the results from one approach with the results from a second approach.

We commonly use DCF and comparable transactions (market approach) for producing reserves, reserves undergoing development and for reserves subject to exploration (whatever that means). For resources, we generally use comparable transactions and for exploration properties without reserves or resources, we use comparable transactions and the cost approach. As a valuator, these methods make the most sense and provide reasonable valuations that seem to reflect the market."340

352.
In the context of a more detailed description of its practice in using inputs for a DCF calculation, CIMVal noted that "[v]ery long-life base metal asset may require that long-term cash flows be explicitly modeled with a CeQ DCF approach because of price reversion in base metal prices (i.e. the tendency of metal price to revert to a long-term equilibrium level). This approach may be used if in the particular situation a standard DCF model with aggregate risk adjustments to the net cash flow has difficulty recognizing the explicit risk characteristics of a cash flow stream."341