Veteran Petroleum v. Russia

in case I

- the summons of 10 November 2014 served on VPL, with Exhibits RF-1 up to and including RF-95;

- the court documents in the interim proceedings for the consolidation of the proceedings, initiated by the Russian Federation, resulting in the decision on the procedural issue of 11 March 2015, in which the court joined this case with the cases II and III;

in case II

- the summons of 10 November 2014 served on YUL, with Exhibits RF-1 up to and including RF-95;

- the court documents in the interim proceedings for the consolidation of the proceedings, initiated by the Russian Federation, resulting in the decision on the procedural issue of 11 March 2015, in which the court joined this case with the cases I and III;

in case III

- the summons of 10 November 2014 served on Hulley, with Exhibits RF-1 up to and including RF-95;

- the court documents in the interim proceedings for the consolidation of the proceedings, initiated by the Russian Federation, resulting in the decision on the procedural issue of 11 March 2015, in which the court joined this case with the cases I and II;

in all cases

- the defendants' joint statement of defence of 20 May 2015, with Annexes numbered 1-7, of which Annex 1 comprises Exhibits HVY-1 up to and including HVY-107;

- the court's letter to the parties of 22 June 2015 containing the correspondence of the parties sent to the court (the letters of 18 and 25 May 2015 and 2 June 2015 from the Russian Federation and the letters of 21 May 2015 and 3 June 2015 from the defendants) concerning the subsequent course of the proceedings;

- the letter of 2 July 2015 from the Russian Federation, stating the dates on which the party is unable to appear as well as the terms for the reply and rejoinder;

- the interim judgment of 8 July 2015, in which the court referred the case to the 9 February 2016 hearing of a three-judge panel for the closing arguments;

- the e-mail message of 8 July 2015 from the registrar of the court to the lawyers, with the dates for presenting the replies and rejoinders;

- the joint reply of 16 September 2015 of the Russian Federation, with Exhibits RF- 96 up to and including RF-198;

- the letter of 16 November 2015 from the Russian Federation, concerning some of the facilities available in the court room;

- the letter of 30 November 2015 from the Russian Federation, with Exhibit RF-199;

- the letter of 10 December 2015 from the registrar of the court to the parties, with a response to the letter of 16 November 2015;

- the letter of 15 December 2015 from the Russian Federation, with Annex 1, a translation into the Dutch language of the Interim Awards and the Final Awards, Annex 2, an overview of the folder structure on the USB flash drive submitted alongside the letter, and Annex 3, a USB flash drive containing all court documents and all documents previously submitted by the parties;

- the joint rejoinder of the defendants dated 15 December 2015, with Exhibits HVY-108 up to and including HVY-126;

- the letter of 11 January 2016 from the Russian Federation, regarding the course of action during the hearing (speaking time and audio recording);

- the letter of 13 January 2016 from the defendants, with a response to the letter of 11 January 2016;

- the letter of 19 January 2016 from the registrar of the court to the parties' lawyers, with the court's decisions on the procedural questions in the letters of 11 and 13 January 2016;

- the letter from the Russian Federation of 22 January 2016 with the document containing Exhibits RF-200 up to and including RF-222 of the same date;

- the letter from the Russian Federation of 25 January 2016 with the additional document containing Exhibits RF-223 up to and including RF-225, dated 25 January 2016;

- the letter of 26 January 2016 from the lawyer of the Russian Federation, listing the persons who would attend the hearing on the part of the Russian Federation;

- the letter of 26 January 2016 from the lawyer of the defendants, listing the persons who would attend the hearing on the part of the defendants;

- the letter of 27 January 2016 from the lawyer of the Russian Federation, with the additional document containing Exhibit RF-226 as well as a USB flash drive with Annexes to the previously submitted Exhibits RF-200 up to and including RF-202 and, again, Exhibit RF-225, dated 27 January 2016;

- the letter of 27 January 2016 from the Russian Federation, with Exhibit R-282 in hard copy (previously submitted on a USB flash drive);

- the letter of 28 January 2016 from the lawyer of the defendants, with an objection to the additional Exhibits of the Russian Federation;

- the official report of the hearing of 9 February 2016, for the closing arguments in this case, as well as the statements of case and other documents of the lawyer of the Russian Federation handling the case, Prof. mr. A.J. van den Berg, and of the defendants' lawyer and his colleague mr. M. Ynzonides;

- the dispatch on 16 February 2016 of this official report to the lawyers, with the notification that any remarks about the official report can be communicated to the court within two weeks of receipt;

- the letter of 22 February 2016 from the lawyer of the Russian Federation handling the case, with a response to the official report;

- the letter of 26 February 2016 from the lawyer of the defendants with a response to the official report and to the letter of 22 February 2016 from the lawyer of the Russian Federation;

- the letter of 1 March 2016 from the registrar of the court to the lawyers, containing the confirmation of receipt of the above-mentioned letters of 22 and 26 February 2016.

b) Tribunal's Decision

(...)

264. In sum, the ordinary meaning to be given to the terms of Articles 45(1) and 45(2), when read together, demonstrates to the satisfaction of the Tribunal that the declaration which is referred to in Article 45(2) is a declaration which is not necessarily linked to the Limitation Clause of Article 45(1).

(...)

284. The Tribunal therefore concludes, based on the ordinary meaning of Article 45(1) in its context, and subject to considerations of estoppel (addressed below), that the Russian Federation may, even after years of stalwart and unqualified support for provisional application and, until this arbitration, without ever invoking the Limitation Clause, claim an inconsistency between the provisional application of the ECT and its internal laws in order to seek to avoid the application of Part V of the ECT.

(...)

4. What Effect Should Be Given to the Limitation Clause in Article 45(1)?

a) All-or-Nothing vs. "Piecemeal" Approach

290. The Tribunal has concluded that Respondent may rely on the Limitation Clause of Article 45(1) even though it has neither made a declaration under Article 45(2) nor served any prior notice under Article 45(1). Thus, the Tribunal must determine what effect should be given to the Limitation Clause itself and it now turns its attention to that issue.

(...)

292. (...) According to Respondent, the clause requires a "piecemeal" approach which calls for the analysis of the consistency of each provision of the ECT with the Constitution, laws and regulations of the Russian Federation. According to Claimant, the inquiry is an "all-or-nothing" exercise which requires an analysis and determination of whether the principle of provisional application per se is inconsistent with the Constitution, laws or regulations of the Russian Federation.

(ii) Tribunal's Decision

(…)

303. The Tribunal finds that neither party has properly parsed the Limitation Clause of Article 45(1). While each party has provided a starting point for the analysis, neither has carried it through to its conclusion: considering Respondent's argument first, the Tribunal agrees that the phrase "to the extent that" is often the language used when drafters of a clause in a treaty or a statute wish to make clear that a provision is to be applied only insofar as what then follows is the case. Far from being determinative of the meaning of the Limitation Clause, however, the use of the introductory words "to the extent that" requires the Tribunal to examine carefully the words that follow, namely "that such provisional application is not inconsistent with [each signatory's] constitution, laws or regulations."

• Turning to Claimant's argument about the meaning of these words, the Tribunal finds that Claimant does not provide sufficient support for its interpretation of the phrase "such provisional application" as necessarily referring to the principle of provisional application. Article 45(1) does not refer anywhere to the principle of provisional application, but rather to "[e]ach signatory agree[ing] to apply this Treaty provisionally..."

304. For the Tribunal, the key to the interpretation of the Limitation Clause rests in the use of the adjective "such" in the phrase "such provisional application" "Such," according to Black's Law Dictionary (Seventh Edition), means "that or those; having just been mentioned." The Merriam-Webster Collegiate Dictionary (Tenth Edition) defines "such" as "of the character, quality, or extent previously indicated or implied." The phrase "such provisional application," as used in Article 45(1), therefore refers to the provisional application previously mentioned in that Article, namely the provisional application of "this Treaty."

305. The Tribunal concludes, therefore, that the meaning of the phrase "such provisional application" is context-specific, in that its meaning is derived from the particular use of provisional application to which it refers. In Article 45(1), the particular use of provisional application to which it refers is provisional application of "this Treaty." Accordingly, Article 45(1) can therefore be read as follows:

(1) Each signatory agrees to apply this Treaty provisionally pending its entry into force for such signatory in accordance with Article 44, to the extent that the provisional application of this Treaty is not inconsistent with its constitution, laws or regulations.
[emphasis added]

306. By contrast, the Tribunal refers to the Limitation Clause in Article 45(2)(c), which reads:

(c) Notwithstanding subparagraph (a), any signatory making a declaration referred to in subparagraph (a) shall apply Part VII provisionally pending the entry into force of the Treaty for such signatory in accordance with Article 44, to the extent that such provisional application is not inconsistent with its laws or regulations.
[emphasis added]

In this context, the phrase "such provisional application" necessarily has a different meaning, referring to the provisional application of only Part VII of the Treaty.

(...)

308. There are two possible interpretations of the phrase "the provisional application of this Treaty": it can mean either "the provisional application of the entire Treaty" or "the provisional application of some parts of the Treaty." The Tribunal finds that, in context, the former interpretation accords better with the ordinary meaning that should be given to the terms, as required by Article 31(1) of the VCLT. Indeed, without any further qualification, it is to be presumed that a reference to "this Treaty" is meant to refer to the Treaty as a whole, and not only part of the Treaty.

309. The Tribunal notes that its finding on the scope of provisional application in Article 45(1) is entirely consistent with the decision on jurisdiction rendered in the Kardassopoulos case. (…)

311. In the Tribunal's opinion, there is no basis to conclude that the signatories would have assumed an obligation to apply only part of the Treaty provisionally, without making such partial provisional application explicit. The Tribunal therefore concludes that the Limitation Clause in Article 45(1) contains an "all-or-nothing" proposition: either the entire Treaty is applied provisionally, or it is not applied provisionally at all.

312. Furthermore, the Tribunal concludes that the determination of this "all-or-nothing" question depends on the consistency of the principle of provisional application with a signatory's domestic law. The alternative—that the question hinges on whether, in fact, each and every provision of the Treaty is consistent with a signatory's domestic legal regime—would run squarely against the object and purpose of the Treaty, and indeed against the grain of international law.

313. Under the pacta sunt servanda rule and Article 27 of the VCLT, a State is prohibited from invoking its internal legislation as a justification for failure to perform a treaty. In the Tribunal's opinion, this cardinal principle of international law strongly militates against an interpretation of Article 45(1) that would open the door to a signatory, whose domestic regime recognizes the concept of provisional application, to avoid the provisional application of a treaty (to which it has agreed) on the basis that one or more provisions of the treaty is contrary to its internal law. Such an interpretation would undermine the fundamental reason why States agree to apply a treaty provisionally. They do so in order to assume obligations immediately pending the completion of various internal procedures necessary to have the treaty enter into force.

314. Allowing a State to modulate (or, as the case may be, eliminate) the obligation of provisional application, depending on the content of its internal law in relation to the specific provisions found in the Treaty, would undermine the principle that provisional application of a treaty creates binding obligations.

315. Provisional application as a treaty mechanism is a question of public international law. International law and domestic law should not be allowed to combine, through the deployment of an "inconsistency" or "limitation" clause, to form a hybrid in which the content of domestic law directly controls the content of an international legal obligation. This would create unacceptable uncertainty in international affairs. Specifically, it would allow a State to make fluctuating, uncertain and unnotified assertions about the content of its domestic law, after a dispute has already arisen. Such a State, as Claimant argues, "would be bound by nothing but its own whims and would make a mockery of the international legal agreement to which it chose to subject itself." A treaty should not be interpreted so as to allow such a situation unless the language of the treaty is clear and admits no other interpretation. That is not the case with Article 45(1) of the ECT.

320. The Tribunal reiterates that its interpretation of the Limitation Clause of Article 45(1) is based on its specific language in its context. The Tribunal recognizes, as do Claimant's experts, Professors Crawford and Reisman, that parties negotiating a treaty enjoy drafting freedom and could (using clear and unambiguous language) overcome the "strong presumption of the separation of international from national law." Indeed, parties to a treaty are free to agree to any particular regime. This would include a regime where each signatory could modulate (or eliminate) its obligation of provisional application based on consistency of each provision of the treaty in question with its domestic law. For the reasons set out above, however, agreement to such a regime would need to be clearly and unambiguously expressed, a standard which Article 45(1) does not meet.

321. The Tribunal's interpretation of Article 45(1) is also supported by State practice. As already noted in an earlier section, six States (Austria, Luxembourg, Italy, Romania, Portugal and Turkey) relied expressly on the Limitation Clause in Article 45(1). An analysis of the statements or declarations made by these States confirms that each one of them relied on Article 45(1)—sometimes alone and sometimes in conjunction with Article 45(2))—for the non-application of the entire Treaty under the provisional application regime. Respondent itself has described these six signatories as States who "consider themselves unable to apply and have not applied any provision of the Treaty on a provisional basis." Not one of these six States, in other words, relied on the Limitation Clause in Article 45(1) for the interpretation now posited by Respondent, namely the selective or partial provisional application of the ECT based on the non-application of only those individual provisions that are claimed to be inconsistent with a signatory's domestic law.

322. Similarly, in the lists it maintained to keep track of the intentions of the signatories, the ECT Secretariat identified the States that intended to rely on Article 45(1) as intending to do so in order to avoid provisional application of the Treaty altogether. Thus, the preliminary list of signatories prepared by the ECT Secretariat, dated 19 December 1994, described signatories intending to rely on Article 45(1) as States "which will not apply the Treaty provisionally in accordance with Article 45(1)"[emphasis added]. This preliminary list identified Austria, Italy, Portugal, Romania and Turkey. The updated list prepared by the ECT Secretariat, dated 1 March 1995, described the same category of signatories in exactly the same way, as States "which will not apply the Treaty provisionally in accordance with Article 45(1)" [emphasis added]. In addition to the countries already identified on the list dated 19 December 1994, this list included Hungary61 and Luxembourg.

329. The Tribunal therefore concludes that Article 45(1) requires an analysis and determination of whether the principle of provisional application per se is inconsistent with the Constitution, laws or regulations of the Russian Federation. If it is not inconsistent, then this Tribunal has jurisdiction to hear Claimant's claims under Article 26 of the Treaty, which would apply provisionally in the Russian Federation in accordance with Article 45(1). It is to that issue that the Tribunal now turns.

b) Is the Principle of Provisional Application Inconsistent with Russian Law?

330. There is no significant debate between the Parties on the issue of whether the principle of provisional application per se is inconsistent with the Constitution, law or regulations of the Russian Federation. Claimant asserts that the principle is not inconsistent with Russian law, citing ample legislative and doctrinal authorities in support of its submission, and concludes on that basis that the Limitation Clause in Article 45(1) is unavailable to the Russian Federation. Respondent does not seriously challenge the authorities cited by Claimant on this point. Respondent's principal argument against provisional application of the ECT, as seen earlier, is based on the interpretation of Article 45(1), not on the assertion that provisional application per se is unknown or unrecognized by Russian law.

(…)

338. The Tribunal therefore has no difficulty in concluding that the principle of provisional application is perfectly consistent with the Constitution, laws and regulations of the Russian Federation. Accordingly, the Tribunal finds that the whole of the ECT applied provisionally in the Russian Federation until such provisional application was terminated, in accordance with the notification that the Russian Federation made on 20 August 2009, pursuant to Article 45(3)(a) of the Treaty, of its intention not to become a Contracting Party to the Treaty.(…)

343. The Tribunal is of the view that the determination as to whether or not the principle of provisional application is consistent with the constitution, the laws or the regulations of the host State in which the Investment is made must be made in the light of the constitution, laws and regulations at the time of signature of the ECT. (…)

c) Are the Provisions of the ECT Relating to Dispute Resolution Inconsistent with Russian Law?

346. In view of the Tribunal's conclusion with respect to the interpretation of Article 45(1), there is no need, in principle, to address Respondent's submission that the provisions of the ECT relating to dispute resolution are themselves inconsistent with Russian law.

347. However, since both sides made extensive submissions to the Tribunal with respect to the so-called "piecemeal" approach and because, as will be seen, the Tribunal's analysis and findings with respect to the consistency with Russian laws and Constitution of these provisions of the ECT relating to dispute resolution lead the Tribunal to the same conclusion, the Tribunal has nevertheless decided to set out its analysis under this alternative approach.

(…)

(ii) Tribunal's Decision

370. After having considered the totality of the Parties' submissions and having deliberated, the Tribunal concludes that Article 26 of the ECT is not inconsistent with the Constitution, laws or regulations of the Russian Federation. The terms of the Russian Federation's Law on Foreign Investment (both the 1991 and 1999 versions) are crystal clear. Investor-State disputes such as the present one are arbitrable under Russian law. The Tribunal recalls the key provisions of the law which inform its conclusion. (…)

371. Furthermore, the definitions of "foreign investor" and "foreign investment" in both the 1991 and 1999 versions of the Law on Foreign Investment are consistent with the definitions of "Investor" and "Investment" in Article 1 of the ECT. (…)

372. On the issue of standing, the Tribunal concludes that Claimant is claiming for violation of its own rights under the ECT, not the rights of Yukos. The Tribunal agrees with Claimant's characterization of its claim, which is not a derivative action, but an action for the direct loss by Claimant of its shares and their value.

374. The Tribunal's conclusions are confirmed by the representations of the Government of the Russian Federation in the Explanatory Note which it submitted to the State Duma of the Federal Assembly of the Russian Federation when the ECT was submitted for ratification. The following extracts from the Note are particularly relevant:

Prior to the entry into force of the ECT, the majority of the Contracting Parties agreed to apply the treaty on a provisional basis. In this respect, it was decided that such provisional application of the ECT would be implemented to the extent that it would not be inconsistent with the constitution, laws and regulations of the country in question. At the time for the signing of the ECT, its provisions on provisional application were in conformity with the Russian legal acts. For that reason, the Russian side did not make declarations as to its inability to accept provisional application (such declarations were made by 12 of the 49 ECT signatories).

[...]

The provisions of the ECT are consistent with Russian legislation.

[...]

The legal regime of foreign investments envisaged under the ECT is consistent with the provisions of the existing Law of the RSFSR on Foreign Investments in the RSFSR, as well as with the amended version of the Law currently being discussed in the State Duma, and does not require the acknowledgement of any concessions or the adoption of any amendments to the abovementioned Law. The ECT is also consistent with the provisions of Russian bilateral international treaties on the promotion and protection of investment.
[emphasis added]

375. During his cross-examination, Professor Avakiyan, one of Respondent's expert witnesses, confirmed that he agreed with the contents of the Explanatory Note cited in the previous paragraph. The Tribunal's conclusion on the consistency of Article 26 of the ECT with Russian law is also supported by the writings of Professor Yershov, who was a member of the Russian delegation to the ECT negotiations.

During parliamentary hearings concerning the ECT, Professor Yershov submitted a paper in which he noted the following:

From the standpoint of Russian interests, the compromise achieved in developing the ECT language guarantees Russia a solution to a critical foreign trade problem: receipt and codification of a liberal nondiscriminatory trade policy regime for an EMP exporter otherwise unattainable in such a short time. In exchange for this, under the ECT, Russia grants foreign investors an energy investment regime acceptable to them that does not require any concessions on Russia's part beyond the framework of current law.
[emphasis added]

376. As to the BIT practice of the Russian Federation, in the Tribunal's opinion, it is of little assistance to either Party. On the one hand, Claimant refers to the many BITs entered into by the Russian Federation that provide for investor-State arbitration, inviting the conclusion that investor-State arbitration is not inconsistent with Russian law. As Respondent has pointed out, however, the BITs in force in the Russian Federation have all been ratified, thus eliminating any concern with provisions in the BITs that might be different from the underlying Russian legislation. The ratified BITs therefore do little to advance Claimant's position.

377. On the other hand, Respondent seeks support for its position by pointing out that some of the explanatory notes submitted to the Duma in connection with the ratification of BITs have made it explicit that the BIT in question is subject to ratification because it contains a provision for the settlement of investor-State disputes through international arbitration. As Claimant points out, however, none of the BITs in question contains a provisional application regime such as that found in Article 45(1) of the ECT. Ratification by the State Duma is thus required in order for the Russian Federation to express its consent to arbitration.

378. At this point, the Tribunal recalls again its fundamental finding on the meaning and interpretation of Article 45(1): irrespective of any inconsistencies that might exist between Article 26 of the ECT and Russian law, Article 26 of the ECT, as well as other provisions of the Treaty, apply provisionally and the Russian Federation has therefore consented to international arbitration.

379. Pursuing nevertheless its detailed analysis of Article 26, in particular, through the prism of the FLIT, the Tribunal will now seek to answer the question whether the signature of a treaty which contains a provisional application clause is sufficient to establish the consent of the Russian Federation to international arbitration of disputes arising under the Treaty.

382. These provisions [this refers to Articles 2 and 6, added by the court] of the FLIT are very clear. There is no room for ambiguity. The Tribunal therefore concludes that the Russian Federation has consented to be bound — albeit provisionally — by Article 26 of the ECT by its signature of the ECT. Article 45(1) of the ECT establishes beyond the shadow of a doubt, and notwithstanding Article 39 of the ECT, that the Russian Federation and other signatories agreed that their signature of the Treaty would have the effect of expressing the consent of the Russian Federation (and each other signatory) to be provisionally bound by its terms.

383. The Tribunal notes that Article 11 of the FLIT provides that the decision to sign a treaty is a decision which rests with the Executive: (…)

Moreover, as we saw earlier, Article 23(1) of the FLIT makes it clear that provisional application is permissible under the legislation of the Russian Federation. Therefore, the obligation assumed by the Russian Federation to be bound, prior to ratification, by the dispute settlement provisions (including international arbitration) of a provisionally applied treaty such as the ECT, and the consent expressed therein, are not inconsistent with the Constitution, laws or regulations of the Russian Federation, and the Tribunal so finds.

384. Respondent argues that a treaty must be ratified by the Russian Federation, and therefore be in force, in order to establish the consent of the Russian Federation to an arbitration provision of the treaty. As shown above, however, under the FLIT, ratification is not the only means by which the Russian Federation can express its consent to the terms of a treaty: signature can express consent where the treaty, such as the ECT, so provides, as it does by specifying in Article 45 the obligations not of a party to the treaty but of a "signatory."

385. That there is a distinction between consenting to be bound provisionally by the treaty and, on the other hand, the treaty being "in force" for a State is also clear from the definition of "Contracting Party" in Article 1(2) of the ECT. As used in the ECT, "Contracting Party" means "a state or Regional Economic Integration Organization which has consented to be bound by this Treaty and for which the Treaty is in force." [emphasis added] The use of the conjunction "and" between the clauses "which has consented to be bound by this Treaty" and "for which the Treaty is in force" means that there must be circumstances, in the eyes of the parties to the ECT, including the Russian Federation, where a State for which the ECT is not "in force," has nevertheless consented to be bound by its terms.

386. There is one last argument of Respondent which the Tribunal finds important to address. Article 23(2) of the FLIT requires that a treaty subject to provisional application must be submitted to and ratified by the State Duma within six months from its signature and the start of its provisional application. It is common ground between the Parties that the ECT which was signed on 17 December 1994 has never been ratified by the State Duma. Respondent submits that since the six-month period had long expired, any continued provisional application of the ECT would have been inconsistent with Russian law.

387. In the view of the Tribunal, the six-month limit is merely an internal requirement; failure to respect that procedure does not in and of itself automatically terminate provisional application. (…)

392. The Tribunal's analysis leads it to conclude that Article 26 of the ECT is not inconsistent with the Constitution, laws or regulations of the Russian Federation. Although, as noted at the outset of this section, this analysis was not essential in view of the Tribunal's dispositive interpretation of Article 45(1), it does sustain the Tribunal's decision.

5. Conclusion

(…)

394. In this chapter, the Tribunal has found that:

d) The regimes of provisional application in Article 45(1) and 45(2) are separate, and the Russian Federation can benefit from the Limitation Clause in Article 45(1) even though it made no declaration under Article 45(2);

e) The Russian Federation can invoke the Limitation Clause in Article 45(1) even though it made no prior declaration nor gave any prior notice to other signatories that it intended to rely on Article 45(1) to exclude provisional application;

f) The Limitation Clause of Article 45(1) negates provisional application of the Treaty only where the principle of provisional application is itself inconsistent with the constitution, laws or regulations of the signatory State; and

g) In the Russian Federation, there is no inconsistency between the provisional application of treaties and its Constitution, laws or regulations.

395. Accordingly, the Tribunal has concluded that the ECT in its entirety applied provisionally in the Russian Federation until 19 October 2009, and that Parts III and V of the Treaty (including Article 26 thereof) remain in force until 19 October 2029 for any investments made prior to 19 October 2009. Respondent is thus bound by the investor-State arbitration provision invoked by Claimant.

396. The Tribunal is comforted in its decision by its further finding that, had it been an essential consideration under the Limitation Clause of Article 45(1)—which it is not— Article 26 of the ECT itself, as well as Articles 1(6) and 1(7), are consistent with Respondent's Constitution, laws and regulations.

(…)

IX. DECISION

612. For the reasons set forth above, the Tribunal:

(a) DISMISSES the objections to jurisdiction and/or admissibility based on Article 1(6) and 1(7), Article 17, Article 26(3)(b)(i) and Article 45 of the ECT (…).

Articles 1, 2, 10, 13, 26, 39, 44 and 45 ECT read as follows:

Article 1. Definitions

As used in this Treaty:

1. "Charter" means the European Energy Charter adopted in the Concluding Document of the Hague Conference on the European Energy Charter signed at The Hague on 17 December 1991; signature of the Concluding Document is considered to be signature of the Charter.

2. "Contracting Party" means a state or Regional Economic Integration Organization which has consented to be bound by this Treaty and for which the Treaty is in force.

6. "Investment" means every kind of asset, owned or controlled directly or indirectly by an Investor (…)

7. "Investor" means:

a) with respect to a Contracting Party:

(i) a natural person having the citizenship or nationality of or who is permanently residing in that Contracting Party in accordance with its applicable law;

(ii) company or other organization organized in accordance with the law applicable in that Contracting Party;

b) with respect to a "third state", a natural person, company or other organization which fulfils, mutatis mutandis, the conditions specified in subparagraph a) for a Contracting Party.

Article 2. Purpose of the Treaty

This Treaty establishes a legal framework in order to promote long-term cooperation in the energy field, based on complementarities and mutual benefits, in accordance with the objectives and principles of the Charter.

Article 10. Promotion, protection and treatment of investments

1. Each Contracting Party shall, in accordance with the provisions of this Treaty, encourage and create stable, equitable, favourable and transparent conditions for Investors of other Contracting Parties to Make Investments in its Area. Such conditions shall include a commitment to accord at all times to Investments of Investors of other Contracting Parties fair and equitable treatment. Such Investments shall also enjoy the most constant protection and security and no Contracting Party shall in any way impair by unreasonable or discriminatory measures their management, maintenance, use, enjoyment or disposal. In no case shall such Investments be accorded treatment less favourable than that required by international law, including treaty obligations. Each Contracting Party shall observe any obligations it has entered into with an Investor or an Investment of an Investor of any other Contracting Party

3. For the purposes of this Article, "Treatment" means treatment accorded by a Contracting Party which is no less favourable than that which it accords to its own Investors or to Investors of any other Contracting Party or any third state, whichever is the most favourable.

7. Each Contracting Party shall accord to Investments in its Area of Investors of other Contracting Parties, and their related activities including management, maintenance, use, enjoyment or disposal, treatment no less favourable than that which it accords to Investments of its own Investors or of the Investors of any other Contracting Party or any third state and their related activities including management, maintenance, use, enjoyment or disposal, whichever is the most

12. Each Contracting Party shall ensure that its domestic law provides effective means for the assertion of claims and the enforcement of rights with respect to Investments, investment agreements, and investment authorizations.

Article 13. Expropriation

1. Investments of Investors of a Contracting Party in the Area of any other Contracting Party shall not be nationalized, expropriated or subjected to a measure or measures having effect equivalent to nationalization or expropriation (hereinafter referred to as "Expropriation") except where such Expropriation is:

a) for a purpose which is in the public interest;

b) not discriminatory;

c) carried out under due process of law; and

d) accompanied by the payment of prompt, adequate and effective compensation.

Such compensation shall amount to the fair market value of the Investment expropriated at the time immediately before the Expropriation or impending Expropriation became known in such a way as to affect the value of the Investment (hereinafter referred to as the "Valuation Date"). (…)

2. The Investor affected shall have a right to prompt review, under the law of the Contracting Party making the Expropriation, by a judicial or other competent and independent authority of that Contracting Party, of its case, of the valuation of its Investment, and of the payment of compensation, in accordance with the principles set out in paragraph 1.

3. For the avoidance of doubt, Expropriation shall include situations where a Contracting Party expropriates the assets of a company or enterprise in its Area in which an Investor of any other Cotracting Party has an Investment, including through the ownership of shares.

Article 21. Taxation

1. Except as otherwise provided in this Article, nothing in this Treaty shall create rights or impose obligations with respect to Taxation Measures of the Contracting Parties. In the event of any inconsistency between this Article and any other provision of the Treaty, this Article shall prevail to the extent of the inconsistency.

(…)

5. a) Article 13 shall apply to taxes.

Article 26. Settlement of disputes between an Investor and a Contracting Party

1. Disputes between a Contracting Party and an Investor of another Contracting Party relating to an Investment of the latter in the Area of the former, which concern an alleged breach of an obligation of the former under Part III shall, if possible, be settled amicably.

2. If such disputes cannot be settled according to the provisions of paragraph 1 within a period of three months from the date on which either party to the dispute requested amicable settlement, the Investor party to the dispute may choose to submit it for resolution:

a) to the courts or administrative tribunals of the Contracting Party party to the dispute;

b) in accordance with any applicable, previously agreed dispute settlement procedure; or

c) in accordance with the following paragraphs of this Article.

3. a) Subject only to subparagraphs b) and c), each Contracting Party hereby gives its unconditional consent to the submission of a dispute to international arbitration or conciliation in accordance with the provisions of this Article.

b)

(i) The Contracting Parties listed in Annex ID do not give such unconditional consent where the Investor has previously submitted the dispute under subparagraph 2a) or b).

(ii) For the sake of transparency, each Contracting Party that is listed in Annex ID shall provide a written statement of its policies, practices and conditions in this regard to the Secretariat no later than the date of the deposit of its instrument of ratification, acceptance or approval in accordance with Article 39 or the deposit of its instrument of accession in accordance with Article 41.

c) A Contracting Party listed in Annex IA does not give such unconditional consent with respect to a dispute arising under the last sentence of Article 10(1).

4. In the event that an Investor chooses to submit the dispute for resolution under subparagraph 2 c), the Investor shall further provide its consent in writing for the dispute to be submitted to:

a)

(i) The International Centre for Settlement of Investment Disputes, established pursuant to the Convention on the Settlement of Investment Disputes between States and Nationals of other States opened for signature at Washington, 18 March 1965 (hereinafter referred to as the "ICSID Convention"), if the Contracting Party of the Investor and the Contracting Party party to the dispute are both parties to the ICSID Convention; or

(ii) The International Centre for Settlement of Investment Disputes, established pursuant to the Convention referred to in subparagraph a)(i), under the rules governing the Additional Facility for the Administration of Proceedings by the Secretariat of the Centre (hereinafter referred to as the "Additional Facility Rules"), if the Contracting Party of the Investor or the Contracting Party party to the dispute, but not both, is a party to the ICSID Convention;

b) a sole arbitrator or ad hoc arbitration tribunal established under the Arbitration Rules of the United Nations Commission on International Trade Law (hereinafter referred to as "UNCITRAL"); or

c) an arbitral proceeding under the Arbitration Institute of the Stockholm Chamber of Commerce.

5.

a) The consent given in paragraph 3 together with the written consent of the Investor given pursuant to paragraph 4 shall be considered to satisfy the requirement for:

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

(ii) an "agreement in writing" for purposes of article II of the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York, 10 June 1958 (hereinafter referred to as the "New York Convention"); and

(iii) "the parties to a contract [to] have agreed in writing" for the purposes of article 1 of the UNCITRAL Arbitration Rules.

b) Any arbitration under this Article shall at the request of any party to the dispute be held in a state that is a party to the New York Convention. Claims submitted to arbitration hereunder shall be considered to arise out of a commercial relationship or transaction for the purposes of article I of that Convention.

6. A tribunal established under paragraph 4 shall decide the issues in dispute in accordance with this Treaty and applicable rules and principles of international law.

7. An Investor other than a natural person which has the nationality of a Contracting Party party to the dispute on the date of the consent in writing referred to in paragraph 4 and which, before a dispute between it and that Contracting Party arises, is controlled by Investors of another Contracting Party, shall for the purpose of article 25(2)(b) of the ICSID Convention be treated as a "national of another

Contracting State" and shall for the purpose of article 1(6) of the Additional Facility Rules be treated as a "national of another State".

8. The awards of arbitration, which may include an award of interest, shall be final and binding upon the parties to the dispute. An award of arbitration concerning a measure of a sub-national government or authority of the disputing Contracting Party shall provide that the Contracting Party may pay monetary damages in lieu of any other remedy granted. Each Contracting Party shall carry out without delay any such award and shall make provision for the effective enforcement in its Area of such awards.

Article 39. Ratification, acceptance or approval

This Treaty shall be subject to ratification, acceptance or approval by signatories. Instruments of ratification, acceptance or approval shall be deposited with the Depositary.

Article 44. Entry into force

1. This Treaty shall enter into force on the ninetieth day after the date of deposit of the thirtieth instrument of ratification, acceptance or approval thereof, or of accession thereto, by a state or Regional Economic Integration Organization which is a signatory to the Charter as of 16 June 1995.

2. For each state or Regional Economic Integration Organization which ratifies, accepts or approves this Treaty or accedes thereto after the deposit of the thirtieth instrument of ratification, acceptance or approval, it shall enter into force on the ninetieth day after the date of deposit by such state or Regional Economic Integration Organization of its instrument of ratification, acceptance, approval or accession.

3. For the purposes of paragraph 1, any instrument deposited by a Regional Economic Integration Organization shall not be counted as additional to those deposited by member states of such Organization.

Article 45. Provisional application

1. Each signatory agrees to apply this Treaty provisionally pending its entry into force for such signatory in accordance with Article 44, to the extent that such provisional application is not inconsistent with its constitution, laws or regulations.

2.

a) Notwithstanding paragraph 1 any signatory may, when signing, deliver to the Depositary a declaration that it is not able to accept provisional application. The obligation contained in paragraph 1 shall not apply to a signatory making such a declaration. Any such signatory may at any time withdraw that declaration by written notification to the Depositary.

b) Neither a signatory which makes a declaration in accordance with subparagraph a nor Investors of that signatory may claim the benefits of provisional application under paragraph 1.

c) Notwithstanding subparagraph a), any signatory making a declaration referred to in subparagraph a shall apply Part VII provisionally pending the entry into force of the Treaty for such signatory in accordance with Article 44, to the extent that such provisional application is not inconsistent with its laws or regulations.

3.

a) Any signatory may terminate its provisional application of this Treaty by written notification to the Depositary of its intention not to become a Contracting Party to the Treaty. Termination of provisional application for any signatory shall take effect upon the expiration of 60 days from the date on which such signatory's written notification is received by the Depositary.

b) In the event that a signatory terminates provisional application under subparagraph a, the obligation of the signatory under paragraph 1 to apply Parts III and V with respect to any Investments made in its Area during such provisional application by Investors of other signatories shall nevertheless remain in effect with respect to those Investments for twenty years following the effective date of termination, except as otherwise provided in subparagraph c).

c) Subparagraph b) shall not apply to any signatory listed in Annex PA. A signatory shall be removed from the list in Annex PA effective upon delivery to the Depositary of its request therefor.

Article 11. Means of expressing consent to be bound by a treaty

The consent of a State to be bound by a treaty may be expressed by signature, exchange of instruments constituting a treaty, ratification, acceptance, approval or accession, or by any other means if so agreed.

Article 12. Consent to be bound by a treaty expressed by signature

1. The consent of a State to be bound by a treaty is expressed by the signature of its representative when:

(a) the treaty provides that signature shall have that effect;

(b) it is otherwise established that the negotiating States were agreed that signature should have that effect; or

(c) the intention of the State to give that effect to the signature appears from the full powers of its representative or was expressed during the negotiation.

2. For the purposes of paragraph 1:

(a) the initialling of a text constitutes a signature of the treaty when it is established that the negotiating States so agreed;

(b) the signature ad referendum of a treaty by a representative, if confirmed by his State, constitutes a full signature of the treaty.

Article 14. Consent to be bound by a treaty expressed by ratification, acceptance or approval

1. The consent of a State to be bound by a treaty is expressed by ratification when:

(a) the treaty provides for such consent to be expressed by means of ratification;

(b) it is otherwise established that the negotiating States were agreed that ratification should be required;

(c) the representative of the State has signed the treaty subject to ratification; or

(d) the intention of the State to sign the treaty subject to ratification appears from the full powers of its representative or was expressed during the negotiation.

2. The consent of a State to be bound by a treaty is expressed by acceptance or approval under conditions similar to those which apply to ratification.

Article 25. Provisional application

1. A treaty or a part of a treaty is applied provisionally pending its entry into force if: (a) the treaty itself so provides; or (b) the negotiating States have in some other manner so agreed.

2. Unless the treaty otherwise provides or the negotiating States have otherwise agreed, the provisional application of a treaty or a part of a treaty with respect to a State shall be terminated if that State notifies the other States between which the treaty is being applied provisionally of its intention not to become a party to the treaty.

Article 27. Internal law and observance of treaties

A party may not invoke the provisions of its internal law as justification for its failure to perform a treaty. This rule is without prejudice to article 46.

Article 31. General rule of interpretation

1. A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.

2. The context for the purpose of the interpretation of a treaty shall comprise, in addition to the text, including its preamble and annexes:

(a) any agreement relating to the treaty which was made between all the parties in connexion with the conclusion of the treaty;

(b) any instrument which was made by one or more parties in connexion with the conclusion of the treaty and accepted by the other parties as an instrument related to the treaty.

3. There shall be taken into account, together with the context:

(a) any subsequent agreement between the parties regarding the interpretation of the treaty or the application of its provisions;

(b) any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation;

(c) any relevant rules of international law applicable in the relations between the parties.

4. A special meaning shall be given to a term if it is established that the parties so intended.

Article 32. Supplementary means of interpretation

Recourse may be had to supplementary means of interpretation, including the preparatory work of the treaty and the circumstances of its conclusion, in order to confirm the meaning resulting from the application of article 31, or to determine the meaning when the interpretation according to article 31:

(a) leaves the meaning ambiguous or obscure; or

(b) leads to a result which is manifestly absurd or unreasonable.

Article 10

State power in the Russian Federation shall be exercised on the basis of its division into legislative, executive and judicial. The legislative, executive and judicial authorities shall be independent.

Article 15

1 . The Constitution of the Russian Federation shall have the supreme juridical force, direct application and shall be used on the whole territory of the Russian Federation. Laws and other legal acts adopted in the Russian Federation shall not contradict the Constitution of the Russian Federation.

2. The bodies of state authority, bodies of local self-government, officials, private citizens and their associations shall be obliged to observe the Constitution of the Russian Federation and laws.

3. Laws shall be officially published. Unpublished laws shall not be used. Normative legal acts concerning human rights, freedoms and duties of man and citizen may not be used, if they are not officially published for general knowledge.

4. The universally-recognised norms of international law and international treaties and agreements of the Russian Federation shall be a component part of its legal system. If an international treaty or agreement of the Russian Federation establishes other rules than those envisaged by law, the rules of the international agreement shall be applied.

Article 86

The President of the Russian Federation shall

a) Govern the foreign policy of the Russian Federation,

b) Hold negotiations and sign international treaties and agreements of the Russian Federation,

c) Sign ratification instruments (...)

Article 94

The Federal Assembly - the parliament of the Russian Federation - shall be the representative and legislative body of the Russian Federation.

Article 95

1. The Federal Assembly consists of two chambers - the Council of the Federation and the State Duma (…)

Article 105

1. Federal laws shall be adopted by the State Duma. (…)

Article 106

Federal laws adopted by the State Duma on the following issues shall be the liable to obligatory consideration by the Council of the Federation

a) federal budget;

b) federal taxes and dues;

c) financial, currency, credit, customs regulation, and money issue;

d) ratification and denunciation of international treaties and agreements of the Russian Federation;

e) the status and protection of the state border of the Russian Federation;

f) peace and war.

Article 2 Use of terms

For the purposes of this Federal Law:

[...]

b) "ratification," "approval," "acceptance," and "accession" mean in each case a form whereby the Russian Federation expresses its consent to be bound by an international treaty;

c) "signature" means either a stage in the conclusion of a treaty, or a form of expressing consent of the Russian Federation to be bound by an international treaty, if the treaty provides that signature shall have that effect, or it is otherwise established that the Russian Federation and the other negotiating States were agreed that signature should have that effect, or the intention of the Russian Federation to give that effect to the signature appears from the full powers of its representative or was expressed during the negotiation;

d) "conclusion" means the expression of consent of the Russian Federation to be bound by an international treaty;

Article 6 Expression of consent of the Russian Federation to be bound by an international treaty

1. Consent of the Russian Federation to be bound by an international treaty may be expressed by means of: signature of the treaty; exchange of the documents constituting the treaty; ratification of the treaty; approval of the treaty; acceptance of the treaty; accession to the treaty; orany other means of expressing consent agreed by the contracting parties.

2. Decisions to grant consent for the Russian Federation to be bound by international treaties shall be made by state bodies of the Russian Federation in accordance with their competence as established by the Constitution of the Russian Federation, this Federal Law and other legislative acts of the Russian Federation.

Article 11

1. Decisions to negotiate and to sign international treaties of the Russian Federation shall be made:

a) with respect to treaties to be concluded on behalf of the Russian Federation, by the President of the Russian Federation, but with respect to treaties to be concluded on behalf of the Russian Federation on matters under the jurisdiction of the Government of the Russian Federation, by the Government of the Russian Federation;

b) with respect to treaties to be concluded on behalf of the Government of the Russian Federation, by the Government of the Russian Federation.

2. Decisions to negotiate and to sign international treaties of the Russian Federation on matters under the jurisdiction of the Government of the Russian Federation shall be made by the President of the Russian Federation if circumstances so require.

Article 14 Ratification of international treaties of the Russian Federation

In accordance with the Constitution of the Russian Federation the ratification of international treaties of the Russian Federation shall be effected through the enactment of federal law.

Article 15 International treaties of the Russian Federation subject to ratification

1. The following international treaties of the Russian Federation shall be subject to ratification:

a) international treaties whose implementation requires amendment of existing legislation or enactment of new federal laws, or that set out rules different from those provided for by a law;

b) international treaties whose subject is basic rights and freedoms of the person and the citizen;

c) international treaties concerning the territorial demarcation of the Russian Federation with other States, including international treaties on the State Border of the Russian Federation, as well as international treaties concerning the demarcation of the exclusive economic zone or continental shelf of the Russian Federation;

d) international treaties concerning the basis of inter-State relations, concerning issues affecting the defense capability of the Russian Federation, concerning disarmament and international arms control, and international peace and security, as well as peace treaties and collective security treaties;

e) international treaties concerning the participation of the Russian Federation in inter-State unions, international organizations, and other inter-State associations, if such treaties require the Russian Federation to transfer certain powers to them or establish that decisions of their bodies are binding upon the Russian Federation.

2. An international treaty shall likewise be subject to ratification if the parties have agreed to subsequent ratification when concluding the international treaty.

Article 23 Provisional application of international treaties by the Russian Federation

1. An international treaty or a part of a treaty may, prior to its entry into force, be applied by the Russian Federation provisionally if the treaty itself so provides or if an agreement to that effect has been reached with the parties that have signed the treaty.

2. Decisions on the provisional application of a treaty or a part thereof by the Russian Federation shall be made by the body that has taken the decision to sign the international treaty according to the procedure set out in Article 11 of this Federal Law.

If an international treaty - the decision on the consent to the binding character of which for the Russian Federation is, under this Federal Law, to be taken in the form of a Federal Law - provides for the provisional application of the treaty or a part thereof, or if an agreement to that effect was reached among the parties in some other manner, then this treaty shall be submitted to the State Duma within six months from the start of its provisional application. The term of provisional application may be prolonged by way of a decision taken in the form of a federal law according to the procedure set out in Article 17 of this Federal Law for the ratification of international treaties.

3. Unless the international treaty provides otherwise, or the respective States otherwise agree, the provisional application by the Russian Federation of a treaty or a part thereof shall be terminated upon notification to the other States that apply the treaty provisionally of the intention of the Russian Federation not to become a party to the treaty.

Article 1

Legislation on Foreign Investments of the USSR and republics Relations in connection with foreign investments in the territory of the USSR shall be regulated by the legislation of the USSR and republics, except where these Fundamentals and other legislation of the USSR and the republics on foreign investments provide otherwise. The laws of the republics shall regulate in accordance with these Fundamentals the relations arising in connection with foreign investments in the republics' territories, subject to specific features of their economic operations and investment policy, except to the extent that regulation of the relations is referred to the jurisdiction of the Union, and the relations that must be regulated by the Union pursuant to the USSR international treaties.

Article 43

Disputes between foreign investors and the State are subject to consideration in the USSR in courts, unless otherwise provided by international treaties of the USSR.

Disputes of foreign investors and enterprises with foreign investments with Soviet State bodies acting as a party to relationships regulated by civil legislation, enterprises, social organizations and other Soviet legal entities, disputes between participants of the enterprise with foreign investments and the enterprise itself are subject to consideration in the USSR in courts or, upon agreement of the parties, in arbitration proceedings, inter alia, abroad, and in cases provided by legislative acts of the Union of SSR and the republics - in arbitrazh courts, economic courts and others.

Article 2. Foreign investments

Foreign investments are all types of material assets and intellectual property injected by foreign investors into objects of entrepreneurial and other types of activity with the aim of obtaining profit (income).

Article 7. Guarantees Against Expropriation and Unlawful Actions of State Bodies and Their Officials

Foreign investments in the RSFSR may not be subject to nationalization, requisition or confiscation, except in cases provided by legislative acts, when such measures are taken in public interest. In cases of nationalization or requisition prompt, adequate and effective compensation is paid to the foreign investor.

Decisions on nationalization are made by the Supreme Council of the RSFSR.

Decisions on requisition and confiscation are made under the procedure prescribed by the legislation in effect in the territory of the RSFSR.

Decisions of governmental bodies on expropriation of foreign investments may be contested in the RSFSR courts.

Foreign investors are entitled to compensation of damages, including lost profit, incurred as a result of compliance with the instructions of State bodies of the RSFSR and their officials that are inconsistent with the legislation in effect in the territory of the RSFSR, and as a result of improper discharge by such bodies and their officials of statutory obligations owed to the foreign investor or an enterprise with foreign investments.

Article 9. Dispute Resolution

Investment disputes, including disputes over the amount, conditions and procedure of the payment of compensation, shall be resolved by the Supreme Court of the RSFSR or the Supreme Arbitrazh Court of the RSFSR, unless another procedure is established by an international treaty in force in the territory of the RSFSR.

Disputes of foreign investors and enterprises with foreign investments against RSFSR State bodies, disputes between investors and enterprises with foreign investments involving matters relating to their operations, as well as disputes between participants of an enterprise with foreign investments and the enterprise itself shall be resolved by the RSFSR courts, or, upon agreement of the parties, by an arbitral tribunal, or, in cases specified by the laws, by authorities authorized to consider economic disputes.

International treaties in force in the territory of the RSFSR may provide for recourse to international means of resolution of disputes arising in connection with foreign investments in the territory of the RSFSR.

Article 2. The Basic Terms Used in the Present Federal Law

The following basic terms are used for the purposes of the present Federal Law:

(...)

foreign investment - the injection of foreign capital in objects of entrepreneurial activity in the territory of the Russian Federation in the form of objects of civil law rights belonging to a foreign investor, unless such objects are excluded from the realm of civil law relations or are restricted in the Russian Federation pursuant to federal laws, including money, securities (denominated in a foreign currency and the currency of the Russian Federation), other property, property rights which can be evaluated in a monetary form, exclusive rights to the results of intellectual activities (intellectual property), as well as services and information.

Article 10. Guarantees of Due Resolution of Disputes Arising in Connection with

Investments and Business of a Foreign Investor in the Territory of the Russian Federation

A dispute of a foreign investor arising in connection with its investments and business activity conducted in the territory of the Russian Federation shall be resolved in accordance with international treaties of the Russian Federation and federal laws in courts, arbitrazh courts or through international arbitration (arbitral tribunal).

(1) a (absence of valid arbitration agreement), in connection with which the Tribunal was not competent to take cognizance of and given an award on the defendant's claims;

(2) c (the Tribunal overstepped its remit);

(3) b (there were irregularities in the Tribunal's composition), particularly because assistant Valasek evidently played a significant substantive role in assessing the evidence, in the deliberations of the Tribunal and in preparing the Final Awards;

(4) d (the Yukos Awards lack substantiation in several critical aspects);

(5) e (the Yukos Awards are contrary to Dutch to public policy and public morality, including in this case the fundamental right of the Russian Federation to a fair trial), since the Awards show the Tribunal's partiality and biases.

- The phrase "to the extent" is often used as a formulation when drafters of a provision in a treaty or act want to express that a particular provision should only be applied to the extent to which the subsequent words are complied with. (303)

- However, the key to the interpretation of the Limitation Clause in this case is to be found in the word "such". The phrase "such provisional application" refers to the provisional application stated earlier in the paragraph, namely the provisional application of "this Treaty". The meaning of the phrase "such provisional application" is therefore context-specific: the meaning is derived from the specific use of the provisional application referred to in this phrase. (304 and 305)

- In the context of Article 45 paragraph 2 under c ECT, the phrase "such provisional application" necessarily has another meaning. It refers to the provisional application of only Part VII of the Treaty. (306)

- There are two possible interpretations of the phrase concerning the provisional application of this treaty. The passage could provide for the provisional application of the entire treaty or several parts of the treaty. Considering the context, the first interpretation corresponds better with the ordinary meaning that must be ascribed to the terms. (308)

- This conclusion fully agrees with the decision the tribunal took regarding its jurisdiction in the Kardassopoulos case. (309)

- The alternative to the Tribunal's "all or nothing" approach is that the provisional application depends on the answer to the question whether one specific provision of the Treaty can be reconciled with the national legislation regime of a Signatory. This would be diametrically opposed to the object and purpose of the Treaty, and even to the nature of international law. And it would also be incompatible with the pacta sunt servanda principle and Article 27 of the Vienna Convention on the Law of Treaties (VCLT). (312-319)

- The chosen interpretation of Article 45 paragraph 1 ECT is also supported by state practice. Six states expressly invoked the Limitation Clause of Article 45 paragraph 1. Similarly, in the lists the Secretariat of the ECT kept of signatories' intentions, it designated the states that planned to invoke Article 45 paragraph 1 as intending to completely avoid provisional application of the Treaty. (321 and 322)

- In view of the conclusion of the Tribunal on the interpretation of Article 45 paragraph 1, it is unnecessary to take the travaux preparatoires into account. (329)

- The provisional application principle is not contrary to Russian laws. (330 et seq.)

"the effect is to suggest that relatively minor impediments in the form of regulations, no matter how insignificant they may be, can be the occasion for failing to apply the Treaty provisionally when in fact those regulations could be brought into conformity without serious effort."

"The following kinds of disputes shall be submitted for international commercial arbitration by agreement between the parties: disputes arising from contractual and other civil law relationships arising from the maintenance of foreign trade and other international economic relations, if the commercial enterprise of at least one of the parties is located abroad (...)".

A quotation from the manual "International Commercial Arbitration" written by Prof. V.A. Musin and Prof. O.Yu. Skvortsov in 2012 (expert's report Asoskov, note 16) states the following, among other things, about this provision:

"Therefore, if relations between the parties are of a public law nature, then a dispute arising out of such relations cannot be referred to international commercial arbitration."

"Damages caused to an individual or a legal entity as a result of unlawful actions (or failure to act) by State bodies, bodies of local self-government, or officials of these bodies, including the adoption of an act by a State body of local selfgovernment that is inconsistent with a law or other regulatory act, shall be compensated by the Russian Federation, the respective Russian Federation subject, or the municipal formation."

Paragraph 1: "Disputes between foreign investors and the State are subject to consideration in the USSR in courts, unless otherwise provided by international treaties of the USSR."

Paragraph 2: "Disputes of foreign investors and enterprises with foreign investments with Soviet State bodies acting as a party to relationships regulated by civil legislation, enterprises, social organizations and other Soviet legal entities, disputes between participants of the enterprise with foreign investments and the enterprise itself are subject to consideration in the USSR in courts or, upon agreement of the parties, in arbitration proceedings, inter alia, abroad, and in cases provided by legislative acts of the Union of SSR and the republics - in arbitrazh courts, economic courts and others."

Paragraph 1 stipulates: "Investment disputes, including disputes over the amount, conditions and procedure of the payment of compensation, shall be resolved by the Supreme Court of the RSFSR or the Supreme Arbitrazh Court of the RSFSR, unless another procedure is established by an international treaty in force in the territory of the RSFSR."

Paragraph 2 stipulates: "Disputes of foreign investors and enterprises with foreign investments against RSFSR State bodies, disputes between investors and enterprises with foreign investments involving matters relating to their operations, as well as disputes between participants of an enterprise with foreign investments and the enterprise itself shall be resolved by the RSFSR courts, or, upon agreement of the parties, by an arbitral tribunal, or, in cases specified by the laws, by authorities authorized to consider economic disputes."

"[Article 9] of the Law on Foreign Investments in the RSFSR divided disputes with the participation of foreign investors into two groups. One group comprised investment disputes as such, including the disputes on the issue of the amount, terms and procedure of payment of compensation in case of nationalization or confiscation. (...) The other group comprised disputes related to economic activity of the enterprises with foreign investments."

"In treaties for the protection of investments that the USSR concludes with foreign States, the USSR gives its consent to the consideration [of investment disputes] in international arbitral tribunals. The scope of such disputes is limited to civil law issues only (primarily, determination of the amount of compensation and the procedure for its payment in the event of nationalization of investments and transfer of profits and other payments due to the investor)."

"A dispute of a foreign investor arising in connection with its investments and business activity conducted in the territory of the Russian Federation shall be resolved in accordance with international treaties of the Russian Federation and federal laws in courts, arbitrazh courts or through international arbitration (arbitral tribunal)."

"Elements of a legal provision can be set out using three techniques: direct, referential, and blanket. Depending on the above, legal provisions can be distinguished accordingly: direct, referential and blanket. In the case of a direct provision, all elements of the provision are directly set out in an article of the regulatory act. In the case of a referential provision, certain elements of the provision are not set out directly in the article; the article itself provides a reference to another provision containing the required instructions. This technique is used to establish connections between parts of a particular set of rules, and in order to avoid repetitions. In the case of a blanket provision, certain elements of the provision are not set out directly, and its missing elements are not compensated for by some clearly referenced provision, but rather by rules of a certain kind that can evolve with time. In other words, the provision contains an 'empty blank,' a reference to a certain type of rule."

"However, unfortunately, many of its provisions [provisions of the 1999 law] are of a declaratory or blanket nature only and do not add anything to the regulatory treatment of foreign investments. Instead of provisions that are empty in substance, the Law should include rules that would provide efficient protection for foreign investments" (expert's report Asoskov, 91).

"The provisions of the ECT are consistent with Russian legislation. "

"The legal regime of foreign investments envisaged under the ECT is consistent with the provisions of the existing Law [...] on Foreign Investment in [Russia], as well as with the amended version of the Law currently being discussed in the State Duma".

[The regime of the ECT for foreign investments] "does not require the acknowledgement of any concessions or the adoption of any amendments to the abovementioned Law".

"Considering that the Agreement contains provisions different from those provided by the Russian legislation, it is subject to ratification in accordance with clause 1a, 15 of the Federal Law (…) 'on International Treaties of the Russian Federation'."

"The key issues by virtue of which the above Agreement is subject to ratification are as follows (…)"

"the settlement in an international arbitration court of investment disputes between one Party and an investor of the Other Party, as well as disputes between the Parties concerning the interpretation and application of the Agreement (…)"

"the Federal Law No. 1545-1 of July 4, 1991 'On Foreign Investment in the RSFRS' does not provide for a mechanism of settlement of such type of dispute by international arbitration". (explanatory note of 25 October 1999)

"The present Federal Law determines the procedure for the conclusion, fulfillment, and termination of international treaties of the Russian Federation. International treaties of the Russian Federation shall be concluded, fulfilled, and terminated in accordance with generally-recognized principles and norms of international law, the provisions of the treaty itself, the Constitution of the Russian Federation, and the present Federal Law."

Article 2 Use of terms

For the purposes of this Federal Law:

[...]

b) "ratification," "approval," "acceptance," and "accession" mean in each case a form whereby the Russian Federation expresses its consent to be bound by an international treaty;

c) "signature" means either a stage in the conclusion of a treaty, or a form of expressing consent of the Russian Federation to be bound by an international treaty, if the treaty provides that signature shall have that effect, or it is otherwise established that the Russian Federation and the other negotiating States were agreed that signature should have that effect, or the intention of the Russian Federation to give that effect to the signature appears from the full powers of its representative or was expressed during the negotiation;

(...)

Article 6 Expression of consent of the Russian Federation to be bound by an international treaty

1. Consent of the Russian Federation to be bound by an international treaty may be expressed by means of: signature of the treaty; exchange of the documents constituting the treaty; ratification of the treaty; approval of the treaty; acceptance of the treaty; accession to the treaty; or any other means of expressing consent agreed by the contracting parties.

2. Decisions to grant consent for the Russian Federation to be bound by international treaties shall be made by state bodies of the Russian Federation in accordance with their competence as established by the Constitution of the Russian Federation, this Federal Law and other legislative acts of the Russian Federation.

"State power in the Russian Federation shall be exercised on the basis of its division into legislative, executive and judicial. The legislative, executive and judicial authorities shall be independent."

"The Constitution of the Russian Federation shall have the supreme juridical force, direct application (...) Laws and other legal acts adopted in the Russian Federation shall not contradict the Constitution of the Russian Federation."

"The universally-recognised norms of international law and international treaties and agreements of the Russian Federation shall be a component part of its legal system. If an international treaty or agreement of the Russian Federation establishes other rules than those envisaged by law, the rules of the international agreement shall be applied."

- Dr Marat V. Baglay, designated as Doctor of law, Professor of constitutional law and former judge at the Constitutional Court of the Russian Federation (Expert Opinion On Provisional Application of International Treaties according to the Constitution of the Russian Federation, 26 February 2006);

- Prof. Suren A. Avakiyan, designated as Doctor of Law, Head of the Department of Constitutional and Municipal Law of the Faculty of Law of the Moscow State University of M.V. Lomonosov (Expert Opinion on the constitutional legal aspects of the conclusion and application of international treaties of the Russian Federation, 21 February 2006 and Expert Opinion of 29 June 2006);

- A. Nussberger, Professor at the University of Cologne and Director of the Institute of Eastern Law (Opinion Concerning the Provisional Application of the Energy Charter Treaty by the Russian Federation of 17 January 2007).

The defendants' main expert's report is the 29 June 2006 opinion of V. Gladyshev, lawyer in Moscow and former employee of the Russian Ministry of Foreign Affairs. Since none of the other experts' reports submitted by the defendants have specific relevance to Russian constitutional law, the court will disregard these opinions.

"The Russian Parliament is the only body possessing legislative power in the Russian Federation, no other federal state body is entitled to adopt laws or other statutory acts having the force of law. Ratification of international treaties of the Russian Federation also falls within the exclusive competence of the Parliament. The Constitution does not authorize other branches of power to give consent in the name of the Russian Federation to be bound by an international treaty, if the treaty is subject to ratification." (Baglay opinion, page 3)

"The principle of separation of powers as it applies to international treaties means the following: some bodies of state power, in accordance with the interest of the state, are vested with the authority to conduct negotiations and to sign treaties, while other bodies of state power, in accordance with the interest of the state, are vested with the authority to assess the signed treaties and to put them in effect on the basis of constitutional requirements. Any treaty that annuls, modifies or adds any provisions to the Russian legislation must, under the principle of separation of powers, undergo the process of ratification in order to become effective." (Avakiyan opinion, page 4)

Article 86 of the Constitution determines that the president of the Russian Federation is authorised to conduct negotiations and sign international treaties. Avakiyan holds that the Russian government also has this authority, under Article 114 of the Constitution, in so far as that authrority is laid down in a federal law. Avakiyan has made the following comment about this:

"However, neither the President of het Russian Federation, nor the Government of the Russian Federation has the right to make a final determination in respect of an international treaty of a legislative nature. The process with respect to such treaties also involves the legislative power of the Russian Federation - The Federal Assembly".

He refers to the ratification procedure under Articles 105 and 106 of the Constitution (Avakiyan opinion, page 6).

"the roles of the Duma and the Council of the Federation, however, remain essential to international treaties requiring ratification. The Duma adopts a law on the ratification of a treaty if ratification is necessary." (Nussberger opinion, page 18)

"(…) the consent of the Russian Federation to be bound by an international treaty containing rules different from those provided for by law may be expressed only in the form of a federal law. This rule serves as a guarantee of the normal functioning of the separation of powers principle, because neither the President of the Russian Federation, nor the Government of the Russian Federation, much less a federal agency, is authorizes to take a decision on the consent of the Russian Federation to be bound by an international treaty establishing rules different from those provided for by law, or implementation of which requires amendment to existing or adaptation of new federal laws."

"It follows that international treaties can be an integral part of the Russian legal system and have priority over federal laws only after duly becoming effective. International treaties that are not subject to ratification shall have no priority over the federal law. Otherwise in case of a conflict an international treaty not approved by the Parliament would have had priority over federal laws." (Baglay opinion, page 2)

"The rules referred to above are important because they contain a profound constitutional logic: if international treaties become an integral part of Russia's legal system (Article 15.4 of the Constitution), it is essential to protect the integrity of this system, and to achieve this, it is necessary to ensure that it is amended and supplemented by the joint integral will of all bodies of the state within the system of separation of powers in the Russian Federation." (Avakiyan opinion, page 7)

"All treaties which are internationally binding on the Russian Federation enjoy, by virtue of Article 15(4) of the Russian Constitution, absolute and unconditional precedence over domestic Russian laws." (Gladyshev opinion, page 6)

(...)

"Importantly, contemporary Russian authors clearly have taken the position that Article 15(4) of the Russian Constitution extends not only to ratified treaties, but to all other treaties applied by the Russian Federation." (Gladyshev opinion, page 17)

"The majority of Russian legal scholars argue that only international treaties ratified on the basis of a parliamentary law can take precedence over other parliamentary laws." (Nussberger opinion, page 29; underlining added by the court)