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Kim and others v. Uzbekistan

Vladislav Kim and others v. Republic of Uzbekistan, ICSID Case No. ARB/13/6
Nature of the proceedings:
International
Type of case:
Investor-State
Economic sector:
Manufacturing
Manufacture of other non-metallic mineral products
Date of introduction:
22 Mar 2013
Status of the case:
Settled
Claimant’s country of origin:
Kazakhstan
Respondent:
Uzbekistan
Institution:
ICSID (International Centre for Settlement of Investment Disputes)
Rules of arbitration:
Applicable treaties:
Kazakhstan - Uzbekistan B...

Documents of the case

profile picture Pierre Mayer Appointed by the State
profile picture Toby Landau Appointed by the State
profile picture L. Yves Fortier Appointed by the investor
profile picture David D. Caron President

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

Decision on Jurisdiction

FREQUENTLY USED ABBREVIATIONS AND ACRONYMS
Anonymous Expert I First Author of Anonymous Experts' Report I or Exchange Report I
Anonymous Expert II Second Author of Anonymous Experts' Report I or Exchange Report I
Arbitration Rules ICSID Rules of Procedure for Arbitration Proceedings
BC JSC Bekabadcement
BIT or Treaty Agreement between the Government of the Republic of Kazakhstan and the Government of the Republic of Uzbekistan on Promotion and Reciprocal Protection of Investments, signed in Almaty, Kazakhstan, on 2 June 1997 and entered into force on 8 September 1997
Black Expert Report of Professor Bernard Black dated 2 March 2015
Born Expert Report Expert Report of Mr. Gary Born dated 25 February 2015
Butler I Expert Report of Professor William Butler dated 17 April 2014
Butler II Second Expert Report of Professor William Butler dated 9 May 2015
Citizenship Law Law of the Republic of Kazakhstan on Citizenship of the Republic of Kazakhstan dated 20 December 1991 (RL-0119)
Civil Code Civil Code of the Republic of Uzbekistan (CL-0370)
Criminal Code Criminal Code of the Republic of Uzbekistan (R-0027)
English SPAs English Share Purchase Agreements
Hart I Expert Report of Mr. Timothy Hart dated 31 July 2014
Hearing (Part I) Hearing on Preliminary Objections, Washington, D.C., 28 July to 1 August 2015
Hearing (Part II) Second Hearing on Preliminary Objections, The Hague, 10 to 12 November 2015
ICSID Convention Convention on the Settlement of Investment Disputes between States and Nationals of Other States, which entered into force on 14 October 1966
Kaden Kaden Invest Ltd.
Kazakh Constitution Constitution of the Republic of Kazakhstan (CL-0013)
KC JSC Kuvasaycement
Kim I Witness Statement of Mr. Vladislav Kim dated 24 April 2014
Kim II Second Witness Statement of Mr. Vladislav Kim dated 8 December 2014
Kim III Third Witness Statement of Mr. Vladislav Kim dated 13 May 2015
Knyazev Expert Report of Mr. Valery Knyazev dated 18 May 2015
Mamatov I Expert Report of Mr. Shavkat Mamatov dated 31 July 2014
Mamatov II Second Expert Report of Mr. Shavkat Mamatov dated 17 February 2015
McGlinchey Expert Report of Professor Eric McGlinchey dated 7 April 2014
Nabolena Nabolena Ltd.
Navigant II Second Expert Report of Navigant Consulting dated 13 May 2015
Nurmakhanova Witness Statement of Ms. Aigul Nurmakhanova dated 15 May 2015
NDA Non-Disclosure Agreement
Pak I First Witness Statement of Mr. Dmitry Pak dated 29 July 2014
Pak II Second Witness Statement of Mr. Dmitry Pak dated 26 February 2015
Ray Companies Raycross Limited, Raybird Limited, and Rayblock Limited
Raybird Raybird Limited
Rayblock Rayblock Limited
Raycross Raycross Limited
Request or RFA Request for Arbitration by Claimants dated 22 March 2013
required dates Dates upon which Claimants' must hold Kazakh nationality for the Tribunal to have jurisdiction ratione personae
Resolution No. 12 Resolution of the Constitution Council of the Republic of Kazakhstan No. 12 dated 12 January 2003 (CL-0401)
Sauer Witness Statement of Mr. Michael Sauer dated 15 May 2015
Tashkent SPAs Tashkent Share Purchase Agreements
TSE Tashkent Stock Exchange
UCG United Cement Group Plc.
Working Group Claimants' informal sub-committee to oversee the potential acquisition of BC and KC, established Spring 2005
Zaitbekova Witness Statement of Ms. Gulzhamash Zaitbekova dated 15 May 2015

I. INTRODUCTION AND SUMMARY OF DECISION

A. The Dispute

1.
This case concerns a dispute submitted to the International Centre for Settlement of Investment Disputes ("ICSID" or the "Centre") on the basis of the Agreement between the Government of the Republic of Kazakhstan and the Government of the Republic of Uzbekistan on Promotion and Reciprocal Protection of Investments (the "BIT" or "Treaty"), which was signed on 2 June 1997 and entered into force on 8 September 1997, and the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, which entered into force on 14 October 1966 (the "ICSID Convention").
2.
Claimants in this arbitration are 12 of 13 partners in Visor, a private equity investment group established in 2001 and headquartered in Kazakhstan. The twelve partners and claimants are Vladislav Kim, Pavel Borissov, Aibar Burkitbayev, Almas Chukin, Lyazzat Daurenbekova, Adal Issabekov, Damir Karassayev, Aidan Karibzhanov, Aigul Nurmakhanova, Kairat Omarov, Nikolay Varenko and Gulzhamash Zaitbekova ("Claimants"). The Respondent is the Republic of Uzbekistan ("Uzbekistan" or "Respondent"). The Claimants and the Respondent are hereinafter collectively referred to as the "Parties".
3.
The dispute relates to Claimants' interest in two cement plants located in Uzbekistan, JSC Bekabadcement ("BC") and JSC Kuvasaycement ("KC"), that are held through a Cypriot holding company, United Cement Group Plc. ("UCG").

B. Summary of the Decision

4.
Claimants seek arbitration before ICSID on the basis of the BIT and the ICSID Convention. In this Decision, the Tribunal addresses and denies four preliminary objections, each multifaceted, to the Tribunal's jurisdiction and to the admissibility of Claimants' case. This section provides a summary of the Tribunal's Decision, with references to the full reasoning within. This summary is to be understood in terms of the exposition in the Decision.

(1) The First Jurisdictional Objection – Nationality

5.
Respondent's first objection is that the Tribunal lacks jurisdiction because of the nationality of Claimants. Under the terms of the BIT, Claimants must be Khazakh nationals to make their claim. Respondent argues that two of Claimants, Messrs. Almas Chukin and Nikolay Varenko, failed to establish their Kazakh nationality, and that Claimants' evidence as regards the ten other Claimants is insufficient to establish their Kazakh nationality.1
6.
The Tribunal finds that Mr. Chukin's passport and citizenship certificate constitute evidence on their face establishing his possession of Kazakh citizenship on the required dates and that evidence as regards Mr. Chukin's previous possession of Kyrgyz citizenship does not call into question the probity of this evidence. The Tribunal considers that the termination of Mr. Varenko's Kazakh citizenship on 11 July 2014 demonstrates that, on that date, circumstances existed under Kazakh law to merit such termination. However, given the absence of any evidence of a prior termination of Kazakh citizenship, and given the evidence that Mr. Varenko did possess Kazakh citizenship on the required dates, the Tribunal concludes that the fact of the later termination of Mr. Varenko's citizenship does not call into question his possession of citizenship on the required dates. The Tribunal finds that the passports submitted with the Request for Arbitration are sufficient to satisfy the Tribunal of the Kazakh citizenship of the ten Claimants other than Messrs. Varenko and Chukin on the required dates.

(2) The Second Jurisdictional Objection – That Claimants are not "Investors" who made an "Investment"

7.
By its second objection, Respondent asserts that Claimants are neither "investors" nor persons who made an "investment" as those terms are defined in the BIT and therefore their claim is beyond the Tribunal's jurisdiction.2
8.
Respondent argues that Claimants fail to establish their status as "investors" under the BIT. In particular Respondent argues that (1) Claimants have not established the necessary link between themselves and the alleged investment, that is their ownership of shares in BC and KC prior to the alleged breach; (2) Claimants' role in relation to BC and KC is "passive" rather than "active" and therefore Claimants are not "investors"; and (3) Claimants are too remote from the "investment" and therefore Claimants are not "investors".
9.
The Tribunal concludes that Claimants have proven their ownership of shares in BC and KC through the ownership holding structure set out in the Request for Arbitration at the required times.
10.
The Tribunal holds that the BIT in this case does not contain a distinction between active and passive investors so as to require investors are "active". Furthermore, even if there were such a requirement, Claimants had an active role in the management of the BC and KC plants.
11.
The Tribunal concludes that there is no basis – in the BIT or in the authorities to which the Parties make reference – to read a "remoteness" test into the definition of "investor". The Tribunal does not accept that Claimants were unaware of their investment. The Tribunal also does not consider Claimants' complex corporate structure to be sufficient, of itself, to render the BIT inapplicable. Furthermore, the Tribunal does not consider the fact that certain aspects of the ownership holding structure entail a beneficial, rather than a legal, ownership, to be material to the jurisdictional issue.
12.
The second aspect that Respondent raises relates to whether Claimants can be said to have made an "investment" under the terms of the BIT. In particular, (1) that the investment did not involve a capital contribution; (2) that the investment was short term in nature; and (3) that the investment was made without the awareness of the Uzbek Government.
13.
The Tribunal holds that there is nothing in the BIT, nor in the ICSID Convention, to provide any foundation for Respondent's argument that investment arrangements dependent on credit facilities for their financing are not "investments".
14.
The Tribunal holds that there is nothing in the BIT, nor in the ICSID Convention, to provide a foundation for Respondent's argument that investments made with some measure of intent to dispose, or possibly to dispose, of them in the short, rather than long, term do not gain the protection of the BIT as "investments".
15.
The Tribunal does not find any support in the BIT or in the ICSID Convention for the argument that there exists an "awareness requirement" for an investment to benefit from the protection of the BIT. Rather, the BIT constitutes consent to arbitration for "investors" who make "investments" in accordance with the general terms of the BIT. Specific cooperation with, or awareness of, investors' activity by the Host State government is not necessary.

(3) The Third Jurisdictional Objection – Legality of the Investment

16.
Respondent's third objection is that Claimants' investment was not made in compliance with Uzbek legislation and that therefore such investment does not attract protection under the BIT.3
17.
The language of Article 12 limits the "application" of the BIT to investments made in compliance with the legislation of Uzbekistan. This legality requirement is limited to the time at which the investment is made.
18.
The term "legislation" in Article 12 of the BIT encompasses those actions regarded as "law" by the Host State's legal system which, on the basis of the record in this case, is defined by the normative-legal acts set out in Article 5 of the Uzbekistan Law on Normative-Legal Acts.
19.
In the Tribunal's view, there has been little satisfactory analysis as to the types of acts of noncompliance that are encompassed within the legality requirement. The ordinary meaning of the phrase "made in compliance with legislation" is inclusive and without explicit substantive limitations. However, it is striking that no authority appears to argue that the "legality requirement" is entirely without limits. The limitations on the substantive scope of the terms in Article 12 become apparent when the ordinary meaning of the terms is considered in their context and in light of the object and purpose of the Treaty.
20.
In the Tribunal's view, the interpretive task is guided by the principle of proportionality. The Tribunal must balance the object of promoting economic relations by providing a stable investment framework with the harsh consequence of entirely denying the application of the BIT when the investment is not made in compliance with legislation. The denial of the protections of the BIT is a harsh consequence that is a proportional response only when its application is triggered by noncompliance with a law that results in a compromise of a correspondingly significant interest of the Host State.
21.
The Tribunal, by majority, finds that Respondent either has failed to establish that Claimants were not in compliance with various laws or that such acts of noncompliance do not result in a compromise of an interest that justifies, as a proportionate response, the harshness of denying application of the BIT. The Tribunal also finds one alleged act of noncompliance does not involve noncompliance with "legislation" as that term is defined in Article 12.

(4) The Fourth Jurisdictional Objection – Corruption

22.
Respondent's fourth objection is that Claimants procured their investment through corruption and that the claim arising from an investment so procured is not, as a consequence, admissible.4
23.
Respondent first argues that an overpayment to Ms. Karimova of approximately US$8 million by Claimants disguised within the price for their acquisition of shares in KC and BC constituted a bribe in violation of Article 211 of the Criminal Code.
24.
The Tribunal concludes that it is difficult to assess whether or not any overpayment was made because there is uncertainty in valuing the shares themselves. Moreover, even if there were some overpayment, the mere fact of such an overpayment would not in and of itself establish that the overpayment should be regarded as a bribe. Given the failure of Respondent to establish the other elements of bribe-giving, the Tribunal need not decide whether an overpayment was made or whether any such overpayment constitutes a bribe. In particular, the Tribunal holds (1) Respondent has not substantiated its assertion that Ms. Karimova was a government official during the relevant period so as to satisfy the requirements of the Article 211 and (2) Respondent has not identified what, if any, action that Ms. Karimova took or could have taken as a result of any Government position she may have held, so as to advantage Claimants and thereby establish that the terms of Article 211 of the Criminal Code have been met.
25.
Respondent, second, argues that the factual case put forward as regards Article 211 of the Criminal Code is also such as to violate international public policy and thereby render the claim inadmissible. The Tribunal concludes, on the basis of the record, that international public policy, as applicable to this dispute, is in concordance with Article 211 of the Uzbek Criminal Code and takes the bribery and corruption of government officials as its focus. As noted above, Respondent did not establish that Ms. Karimova is a government official and that, even if Ms. Karimova were a government official, Respondent failed to establish that there was any advantage improperly sought by, or provided to, Claimants. Given these findings, the Tribunal denies Respondent's objection that a payment by Claimants to Ms. Karimova was contrary to international public policy.
26.
Respondent's third allegation of corruption rests upon a payment of US$3 million to Mr. Bizakov as a part of the complex and convoluted purchase transactions. Respondent argues that this alleged bribe renders the claim inadmissible by virtue of the international public policy against corruption. Respondent offers no evidence that Mr. Bizakov had or has any relationship to the Government of Uzbekistan, or indeed had any contact with the Government of Uzbekistan. Respondent solely points to Mr. Bizakov's role as a conduit between Claimants and Ms. Karimova (or her representative). Respondent likewise has offered no evidence of any attempt by Mr. Bizakov to secure any advantage from the Government of Uzbekistan by way of a bribe. The Tribunal does not find, on the basis of its examination, any evidence of corruption so as to merit a conclusion that the transaction was illegal or contrary to public policy.

(5) Costs

27.
As to allocation of the costs of proceedings thus far, and in particular with respect to the Anonymous Experts, it is the Tribunal's view that Respondent's Counsel failed to adopt adequate procedures to ensure the integrity of the confidential information entrusted to it. The Tribunal holds that Respondent is to bear the costs associated with the Anonymous Experts in these proceedings. As to the conduct of Mr. Kim, a Claimant, during the July 2015 Hearing, the Tribunal is deeply troubled. This unacceptable conduct will be a factor in the Tribunal's final allocation of costs at a later stage in this proceeding.5

II. PROCEDURAL HISTORY

A. Registration of the Request for Arbitration

28.
On 25 March 2013, ICSID received a hard copy of the Request for Arbitration dated 22 March 2013 submitted by Vladislav Kim, Pavel Borissov, Aibar Burkitbayev, Almas Chukin, Lyazzat Daurenbekova, Adal Issabekov, Damir Karassayev, Aidan Karibzhanov, Aigul Nurmakhanova, Kairat Omarov, Nikolay Varenko and Gulzhamash Zaitbekova against the Republic of Uzbekistan with Factual Exhibits C-0001 to C-0022 and Legal Authorities CL-0001 to CL-0002 (the "Request" or "RFA").
29.
On 24 April 2013, the Secretary-General of ICSID registered the Request, as supplemented by Claimants' letter of 10 April 2013, 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 the Centre's Rules of Procedure for the Institution of Conciliation and Arbitration Proceedings.

B. Establishment of the Tribunal

30.
The Parties agreed to constitute the Tribunal in accordance with Article 37(2)(a) of the ICSID Convention and that the Tribunal would consist of three arbitrators: one to be appointed by each Party, and the third arbitrator and President of the Tribunal to be appointed by agreement of the Parties.
31.
On 17 October 2013, the Secretary-General, in accordance with Rule 6(1) of the ICSID Rules of Procedure for Arbitration Proceedings (the "Arbitration Rules"), notified the Parties that all three arbitrators had accepted their appointments and the Tribunal was constituted on that date. The Tribunal is composed of: Professor David D. Caron, a U.S. national, President, appointed by agreement of the Parties; The Honourable L. Yves Fortier PC, CC, OQ, QC, a Canadian, appointed by Claimant; and Mr. Toby Landau QC, a British national, appointed by Respondent. That same day, Ms. Geraldine R. Fischer, ICSID Legal Counsel, was designated to serve as Secretary of the Tribunal. On 13 April 2015, the Parties agreed to the appointment of Ms. Natalia Mikolajcyk as the Assistant to the Tribunal. On 8 July 2016, the Parties agreed to the appointment of Dr. Cian C. Murphy to replace Ms. Mikolajcyk as the Assistant to the Tribunal.

C. First Session

32.
On 18 December 2013, the Tribunal held a first session with the Parties by video conference. The Parties confirmed that the Members of the Tribunal had been validly appointed. It was agreed, inter alia, that the applicable Arbitration Rules are those in effect from 10 April 2006 and the procedural language is English. The Parties' agreement on procedural matters was memorialized in Procedural Order No. 1, which was issued on 6 January 2014.

D. Written and Oral Procedure

33.
On 25 April 2014, Claimants filed a Memorial on the Merits, in accordance with the approved modified procedural schedule, with the following supporting documents:

• Witness Statement of Mr. Poul Bech dated 24 April 2014;

• Witness Statement of Mr. Sergei Deneschuk dated 24 April 2014;

• Witness Statement of Mr. Vladislav Kim dated 24 April 2014 ("Kim I");

• Witness Statement of Mr. Alexander Korobeinikov dated 24 April 2014;

• Witness Statement of Mr. Andrei Yorsh dated 24 April 2014;

• Expert Report of Professor Eric McGlinchey dated 7 April 2014 ("McGlinchey");

• Expert Report of Professor William Butler dated 17 April 2014 ("Butler I");

• Expert Report of Navigant Consulting dated 25 April 2014;

• Factual Exhibits C-0023 to C-0363; and

• Legal Authorities CL-0003 to CL-0338.

34.
On 22 May 2014, the Tribunal issued Procedural Order No. 2 adopting the Parties' amended procedural timetable.
35.
On 1 August 2014, Respondent filed a Memorial on Preliminary Objections and Request for Bifurcation with the following supporting documents:

• Witness Statement of Mr. Mukhtasarkhon Matkarimova dated 29 July 2014;

• Witness Statement of Mr. Dmitry Pak dated 29 July 2014 ("Pak I") ;

• Witness Statement of Mr. Mukhtar Mukhamedov dated 31 July 2014;

• Witness Statement of Mr. Usmonali Ortikov dated 31 July 2014;

• Expert Report of Mr. Shavkat Mamatov dated 31 July 2014 ("Mamatov I");

• Expert Report of Mr. Timothy Hart dated 31 July 2014 ("Hart I");

• Factual Exhibits R-0001 to R-0124; and • Legal Authorities RL-0001 to RL-0062.

36.
On 22 August 2014, Claimants filed their observations on Respondent's Request for Bifurcation with four enclosures. The Parties subsequently exchanged further correspondence on whether the Tribunal should grant Claimants' request that the Tribunal defer its decision on bifurcation until after Claimants submitted their Counter-Memorial.
37.
On 21 September 2014, the Tribunal issued Procedural Order No. 3 granting Respondent's Request for Bifurcation in respect of its first four (of five) objections to jurisdiction, namely whether (1) Claimants are nationals of Kazakhstan, (2) whether Claimants made an investment under the ICSID Convention and Article 1.2 of the BIT and (3) whether the acquisition of BC and KC involved acts of corruption, and (4) whether the acquisition of BC and KC involved fraud or other violations of Uzbekistan law. The fifth objection raised by Respondent, that senior managers of BC have consistently bribed Uzbek Government officials, was joined to the merits.
38.
On 11 December 2014, Claimants filed a Counter-Memorial on Preliminary Objections with the following supporting documents:

• Second Witness Statement of Mr. Sergei Deneschuk dated 5 December 2014;

• Second Witness Statement of Mr. Vladislav Kim dated 8 December 2014 ("Kim II");

• Unnamed Expert Report dated 9 December 2014;

• Factual Exhibits C-0364 to C-0521; and

• Legal Authorities CL-0339 to CL-0369.

39.
On 30 December 2014, the Tribunal issued Procedural Order No. 4 concerning Respondent's 15 December 2014 motion to: "(1) exclude from the record the anonymous expert report of Claimants' ‘unnamed' alleged expert; and (2) direct Claimants to resubmit their Counter-Memorial on Jurisdiction without any reference to that report". The Tribunal denied the Respondent's request, finding that "several reports submitted [by Claimants] pointing to political conditions within Uzbekistan as well as the citations to the alleged treatment of other interested parties in this dispute prima facie […] support Claimants' assertion of a substantial risk to the expert assuming the identity of the expert is disclosed". The Tribunal confirmed that it would revisit the admissibility and probative value of the Anonymous Expert Report as part of its deliberations on preliminary objections and invited the Parties to make further submissions on these issues as part of their subsequent scheduled pleadings.
40.
On 2 March 2015, Respondent filed a Reply on Preliminary Objections with the following supporting documents:

• Witness Statement of Mr. Akmaljon Valijonov dated 16 February 2015;

• Second Witness Statement of Mr. Usmonali Ortikov dated 25 February 2015;

• Witness Statement of Mr. Murat Khudayberganov dated 26 February 2015;

• Witness Statement of Mukhtasarkhon Matkarimova dated 26 February 2015;

• Second Witness Statement of Mr. Dmitry Pak dated 26 February 2015 ("Pak II");

• Witness Statement of Mr. Abdunabi Matkholikov dated 27 February 2015;

• Witness Statement of Mr. Pazlillo Tishabev dated 27 February 2015;

• Witness Statement of Mr. Shavkat Egamberdiev dated 28 February 2015;

• Witness Statement of Mr. Nodir Foziljonov dated 28 February 2015;

• Witness Statement of Ms. Gulchekhra Mamurova dated 28 February 2015;

• Witness Statement of Mr. Aliya Tshmatova dated 28 February 2015;

• Witness Statement of Mr. Rustam Yuldashev dated 28 February 2015;

• Second Expert Report of Mr. Shavkat Mamatov dated 17 February 2015 ("Mamatov II");

• Expert Report of Mr. Gary Born dated 25 February 2015 ("Born Expert Report");

• Expert Report of Professor Bernard Black dated 2 March 2015 ("Black");

• Second Expert Report of Mr. Timothy Hart dated 2 March 2015;

• Expert Report of Mr. Daniel Nardello dated 2 March 2015;

• Factual Exhibits R-0125 to R-0263; and

• Legal Authorities RL-0063 to RL-0136.

41.
On 18 May 2015, Claimants filed a Rejoinder on Preliminary Objections with the following supporting documents:

• Third Witness Statement of Mr. Sergei Deneschuk dated 13 May 2015;

• Third Witness Statement of Mr. Vladislav Kim dated 13 May 2015 ("Kim III");

• Witness Statement of Ms. Aigul Nurmakhanova dated 15 May 2015 ("Nurmakhanova");

• Witness Statement of Mr. Michael Sauer dated 15 May 2015 ("Sauer");

• Witness Statement of Ms. Gulzhamash Zaitbekova dated 15 May 2015 ("Zaitbekova");

• Expert Report of Professor Craig Lewis dated 8 May 2015;

• Second Expert Report of Professor William Butler dated 9 May 2015 ("Butler II");

• Second Expert Report of Professor Eric McGlinchey dated 10 May 2015;

• Second Expert Report of Navigant Consulting dated 13 May 2015 ("Navigant II");

• Second Anonymous Expert Report dated 18 May 2015;

• Expert Report of Valery Knyazev dated 18 May 2015 ("Knyazev");

• Expert Report of Mr. Robert Strahota dated 18 May 2015;

• Factual Exhibits C-0522 to C-0740; and

• Legal Authorities CL-0370 to CL-0447.

42.
On 11 June 2015, Respondent submitted a letter requesting that Claimants' Exhibit C-0719 be excluded from the record, as it is an expert opinion and not contemporaneous factual evidence. Alternatively, Respondent asked to be given an opportunity to submit rebuttal evidence and to cross-examine Mr. Demetriades.
43.
During the pre-Hearing conference call on 30 June 2015, the Tribunal allowed Respondent to file a rebuttal submission limited to the specific point raised in Exhibit C-0719 by 14 July 2015.
44.
On 14 July 2015, Respondent submitted its rebuttal submission, including the Opinion of Menelaos Kyprianou, Managing Partner of Michael Kyprianou & Co. LLC in Nicosia, Cyprus, and relevant Cypriot and English law.
45.
On 15 July 2015, Claimants, in a letter to the Tribunal, observed that Respondent's rebuttal submission went beyond the Tribunal's directions and raised points not addressed in Exhibit C-0719, namely the validity of the unwritten trust arrangements between Claimants. Claimants asked the Tribunal to strike Respondent's rebuttal submission from the record. Alternatively, Claimants asked the Tribunal that any rebuttal submission by Respondent be entered into the record as an exhibit.
46.
On 16 July 2015, the Tribunal requested Respondent's comments by 17 July 2015. On 17 July 2015, Respondent, in a letter to the Tribunal, asked for the rebuttal submission to be entered into the record as an expert opinion arguing that points raised in the rebuttal submission, i.e. the validity of an oral trust agreement under Cyprus law, would have been raised in the cross-examination of Mr. Demetriades.
47.
After due consideration, the Tribunal concluded that Respondent's rebuttal submission goes beyond the Tribunal's directions expressed during the pre-Hearing conference call. Consequently, the Tribunal, in Procedural Order No. 8 (see paragraph 52 below) ordered Respondent to file a rebuttal submission strictly limited to the one issue raised in the Claimants' exhibit and excluded Respondent's rebuttal submission of 14 July 2015 from the record.
48.
On 21 June 2015, following several exchanges between the Parties, the Tribunal issued Procedural Order No. 5 concerning various procedural matters regarding the Hearing and document production matters. Therein, the Tribunal also decided that it would issue a separate Order regarding Respondent's renewed request to exclude the Anonymous Expert Reports.
49.
On 30 June 2015, the Tribunal held a pre-Hearing organizational meeting with the Parties and the Secretary of the Tribunal by telephone conference.
50.
On 1 July 2015, the Tribunal issued Procedural Order No. 6, concerning Respondent's renewed request to exclude from the record Claimants' Anonymous Expert Reports. The Tribunal decided to pursue a phased approached for the examination of the Anonymous Experts during the oral proceedings. In the initial phase, the two Anonymous Experts would be permitted to testify in an "attorney's eyes only" manner to allow the Tribunal to assess fully the risks and consequences of revealing the Anonymous Experts' identities. During this initial phase, the identities of the Anonymous Experts would be disclosed only to certain counsel upon signing a Non-Disclosure Agreement ("NDA"), and the Anonymous Experts would be permitted to testify via video-link with representatives from both Parties and the ICSID Secretariat present in the room.
51.
On 15 July 2015, the Tribunal issued Procedural Order No. 7 ordering the sequestration and separate examination of the Anonymous Experts at the upcoming oral proceeding, deciding on the time allocation as well as permitting the submission of certain documents while remaining seized of all other document production and submission requests to be considered as necessary during the upcoming Hearing.
52.
On 20 July 2015, the Tribunal issued Procedural Order No. 8, related to the evidence provided by Mr. Demetriades and marked as Claimants' Exhibit C-0719.
53.

A Hearing on Preliminary Objections took place in Washington, D.C. from 28 July to 1 August 2015 ("Hearing (Part I)"). In addition to the Members of the Tribunal, the Secretary of the Tribunal and the Assistant to the Tribunal, present at the Hearing were:

For Claimants :

Counsel  
- Mr. Michael Swainston, QC Brick Court Chambers
- Mr. Baiju S. Vasani Jones Day
- Ms. Melissa S. Gorsline Jones Day
- Ms. Tatiana Minaeva Jones Day
- Mr. Charles T. Kotuby Jr. Jones Day
- Ms. Sylvia Tonova Jones Day
- Mr. James Egerton-Vernon Jones Day
- Mr. Denis Olarou Jones Day
- Ms. Anastasiya Ugale Jones Day
- Ms. Lindsay Reimschussel Jones Day
- Ms. Maria I. Pradilla Picas Jones Day
- Ms. Allison Prevatt Jones Day
- Mr. Janai Orina Jones Day
- Mr. Tendai Mukau Jones Day
- Ms. Angela Dunay Jones Day
- Mr. Matthew Brewer Jones Day
   
Claimants' Representatives  
- Ms. Aigul Nurmakhanova Claimant
- Mr. Almas Chukin Claimant
- Mr. Michael McNicholas Claimants' Agent
   
Fact Witnesses  
- Mr. Vladislav Kim Claimant
- Ms. Gulzhamash Zaitbekova Claimant
- Mr. Michael Sauer Visor Holding
- Mr. Poul Bech Chimpharm OJS, CFO
   
Experts  
- Mr. Valery Knyazev Haberman Ilett LLP
- Ms. Anastasia Mikhalitsyna Haberman Ilett LLP
- Mr. Robert D. Strahota Strahota Capital Markets
- Mr. Brent C. Kaczmarek Navigant Consulting, Inc
- Mr. Kiran P. Sequeira Navigant Consulting, Inc
   
For Respondent:  
   
Counsel  
- Ms. Carolyn Lamm White & Case LLP
- Ms. Andrea Menaker White & Case LLP
- Mr. William Currier White & Case LLP
- Mr. Adams Lee White & Case LLP
- Mr. Frank Schweitzer White & Case LLP
- Mr. Brody Greenwald White & Case LLP
- Mr. Jared Hubbard White & Case LLP
- Mr. Chauncey Bratt White & Case LLP
- Ms. Larissa Eltsefon White & Case LLP
- Ms. Jennifer Ivers White & Case LLP
- Mr. Anthony Bestafka-Cruz White & Case LLP
- Mr. Jeffrey Stellhorn White & Case LLP
- Mr. Darien Salehy White & Case LLP
- Ms. Erin Vaccaro White & Case LLP
- Ms. Luca Winer White & Case LLP
- Ms. Kate Stillman White & Case LLP
- Ms. Stephanie Isaia White & Case LLP
- Ms. Hannelore Sklar White & Case LLP
- Ms. Galina Duckworth White & Case LLP
- Mr. Dmitry Savransky White & Case LLP
- Mr. Alex Tararin White & Case LLP
   
Respondent's Representatives
- Minister Muzraf Ikramov Ministry of Justice of Uzbekistan
- Mr. Davronbek Akhmedov Ministry of Justice of Uzbekistan
- Mr. Sanjar Kasimov Law Department of Cabinet of Ministers
- Mr. Jurabek Akhmedov State Committee for Privatization, Demonopolization, and the Development of Competition
- Mr. Yunusali Shakirov Ferghana Securities Department
- Mr. Mukhtor Mukhamedov Tashkent Regional Prosecutor's Office
- Mr. Usmonali Ortikov Kuvasaycement OJSC
- Mr. Kamol Muhtarov Embassy of the Republic of Uzbekistan to the United States
   
Fact Witnesses  
- Mr. Dmitry Pak Full Stock Group LLC
   
Experts  
- Professor Bernard Black Northwestern University Law School and Kellogg School of Management
- Mr. Timothy Hart Credibility International
- Mr. Shavkat Mamatov Management Board of the Republican Stock Exchange Tashkent
- Mr. David Meilstrup Credibility International

  

54.

The following Fact Witnesses and Experts testified at the Hearing (Part I):

For Claimants

- Mr. Vladislav Kim (Claimants' Fact Witness)
- Mr. Michael Sauer (Claimants' Fact Witness)
- Ms. Gulzhamash Zaitbekova (Claimants' Fact Witness)
- Mr. Poul Bech (Claimants' Fact Witness)
- Mr. Valery Knyazek (Claimants' Expert)
- Mr. Brent Kaczmarek (Claimants' Expert)

For Respondent

- Mr. Dmitry Pak (Respondent's Fact Witness)
- Mr. Timothy Hart (Respondent's Expert)

55.
During the Hearing (Part I), special arrangements were made for the Anonymous Experts to testify via video-conference from an unidentified location with counsel from both sides and a representative of the ICSID Secretariat present. Due to multiple disclosures by Respondent's counsel, the Anonymous Experts feared they would be identified and declined to testify. As a result, the Tribunal decided that the Anonymous Experts would testify at a later time.
56.
In the course of the Hearing (Part I), counsel for Respondent became aware of a discussion on social media in which one of Claimants had published on the same platform a photograph surreptitiously taken of the Hearing and negative remarks about Respondent's Counsel.
57.
The Claimant in question sent an apology for his behaviour. The Tribunal made clear to participants that the Hearing was to continue in both strict confidentiality and with courtesy towards all participants. The participants undertook to maintain appropriate professional behavior thereafter.
58.
Audio and video recordings were prepared of the Hearing (Part I) and the proceedings in English and Russian were transcribed verbatim. The recordings and transcripts were later distributed by the Centre to the Parties and the Members of the Tribunal.
59.
On 7 August 2015, the Tribunal issued Procedural Order No. 9 concerning Respondent's request to introduce additional documents into the record and request Claimants to produce additional documents.
60.
On 5 October 2015, the President of the Tribunal, the Parties and the Secretary of the Tribunal held a second pre-Hearing organizational meeting with the Parties by telephone conference.
61.
On 13 October 2015, the Tribunal issued Procedural Order No. 10 concerning Respondent's request to introduce new evidence into the record and require Claimants to produce documents, as well as whether Claimants' rebuttal evidence should be allowed into the record.
62.
On 19 October 2015, the Tribunal issued Procedural Order No. 11, which was subject to the confidential "attorney's eyes only" designation, concerning matters related to the examination of the Anonymous Experts.
63.
On 7 November 2015, the Tribunal issued Procedural Order No. 12, which was subject to the confidential "attorney's eyes only" designation, regarding the Anonymous Experts' examination.
64.

A second Hearing on Preliminary Objections took place in The Hague from 10 to 12 November 2015 ("Hearing (Part II)"). In addition to the Members of the Tribunal, the Secretary of the Tribunal and the Assistant to the Tribunal, present at the hearing were:

 

For Claimants:
 
Counsel
- Mr. Michael Swainston QC Brick Court Chambers
- Mr. Baiju S. Vasani Jones Day
- Ms. Melissa S. Gorsline Jones Day
- Ms. Tatiana Minaeva Jones Day
- Mr. Denis Olarou Jones Day
- Ms. Lindsay Reimschussel Jones Day
- Ms. Maria I. Pradilla Picas Jones Day
- Mr. Firoz Ehsan Jones Day
 
Claimants' Representatives
- Ms. Aigul Nurmakhanova Claimant
- Mr. Almas Chukin Claimant
- Mr. Michael McNicholas Claimants' Agent
- Mr. Michael Sauer Visor Holding
 
Experts
- Mr. Robert D. Strahota Strahota Capital Markets
 
For Respondent:  
 
Counsel
- Ms. Carolyn Lamm White & Case LLP
- Ms. Andrea Menaker White & Case LLP
- Mr. William Currier White & Case LLP
- Mr. Brody Greenwald White & Case LLP
- Mr. Jared Hubbard White & Case LLP
- Mr. Chauncey Bratt White & Case LLP
- Ms. Larissa Eltsefon White & Case LLP
- Ms. Jennifer Ivers White & Case LLP
- Mr. Anthony Bestafka-Cruz White & Case LLP
- Mr. Jeffrey Stellhorn White & Case LLP
- Ms. Erin Vaccaro White & Case LLP
 
Respondent's Representatives  
- Minister Muzraf Ikramov Ministry of Justice of Uzbekistan
- Mr. Davronbek Akhmedov Ministry of Justice of Uzbekistan
- Mr. Jurabek Akhmedov State Committee for Privatization, Demonopolization, and the Development of Competition
- Ms. Malika Pulatova Respondent's Interpreter
- Mr. Alisher Khoshimov Experts Respondent's Interpreter
- Professor Bernard Black Northwestern University Law School and Kellogg School of Management
- Mr. Shavkat Mamatov Management Board of the Republican Stock Exchange Tashkent
65.

The following Experts testified at the Hearing (Part II):

For Claimants

- Mr. Robert D. Strahota (Claimants' Expert)

For Respondent

- Professor Bernard Black (Respondent's Expert)
- Mr. Shavkat Mamatov (Respondent's Expert)

66.
On 11 November 2015, the Tribunal issued Procedural Order No. 13, which was subject to the confidential "attorney's eyes only" designation, regarding the Anonymous Experts' Reports.
67.
Audio and video recordings were prepared of the Hearing (Part II) and the proceedings in English and Russian were transcribed verbatim. The recordings and transcripts were later distributed by the Centre to the Parties and the Members of the Tribunal.
68.
Although originally scheduled to testify in a phased approach at a separate session from the Hearings, Claimants' counsel subsequently notified the Tribunal that the Anonymous Experts withdrew their Reports after certain confidential information that could compromise their anonymity was again disclosed.

E. Post-Hearing Procedure

69.
On 21 December 2015, the Parties filed simultaneous Post-Hearing Briefs.
70.
On 22 December 2015, the Parties submitted their Submissions on Costs.

F. Procedural History as to Anonymous Experts

71.
A particular and unusual aspect of the procedural history merits separate examination from the chronology set out in the preceding sections. Together with their Counter-Memorial on Preliminary Objections dated 11 December 2014, Claimants submitted Exchange Report I prepared by an anonymous individual ("Anonymous Expert I").
72.
In this report, the Anonymous Expert I provided reasons for the non-disclosure of his/her name or other personal details. These reasons, in essence, were that the Anonymous Expert I, and companies at which he/she is employed, might face greater scrutiny from the Uzbek state, to the detriment of their business activities.6
73.
On 30 December 2014, the Tribunal issued Procedural Order No. 4, dealing with Respondent's request, made by letter dated 15 December 2014, to exclude the Exchange Report I from the record. In this Order, the Tribunal denied Respondent's request for the time being, indicating, however, that such decision is strictly without prejudice to a full consideration of the evidence and the probative value the Tribunal may give to the statements in the Report.
74.
In principle, the Tribunal agreed with Respondent that an expert opinion must be signed and dated by the expert where the report contains the full name and address of the expert as well as a description of the background, qualifications, training and experience of the expert. The Tribunal also agreed that the burden of proving that the Tribunal should depart from this principle is on the party proffering the anonymous expert report. However, the Tribunal concluded that, prima facie, Claimants have submitted sufficient evidence not to exclude the Anonymous Expert Report at this stage of the proceedings.
75.
Further, in Procedural Order No. 4, the Tribunal invited Claimants to investigate and suggest other effective ways to secure the Anonymous Expert I's safety, while making her/him available for examination during the Hearing. The Tribunal also noted that it would revisit its decision not to exclude Exchange Report I (its admissibility and its probative value) as a part of its deliberations on the preliminary objections.
76.
In its Reply on Preliminary Objections to Jurisdiction and Admissibility dated 2 March 2015, Respondent again requested for the anonymous expert testimony to be excluded from the record. Alternatively, if the Tribunal decided to admit Exchange Report I, Respondent argued that a more proportionate remedy would be to reveal Anonymous Expert I's identity, background and qualifications to Respondent's counsel, with no such disclosure being made to any of the client representatives.
77.
Respondent argued that it must have the opportunity to challenge Anonymous Expert I's evidence by attacking her or his credibility through cross-examination. It further contended that Claimants' allegations regarding Respondent's political and legal system are generalized and Claimants had failed to meet their burden of proving that Anonymous Expert I would be in danger if the identity were revealed. According to Respondent, Claimants failed to establish that, the only way in which Claimants could produce testimony in response to Respondent's preliminary objection and simultaneously protect the safety and security of the author of that testimony, was through an anonymous expert report.
78.
Additionally, together with the Reply on Preliminary Objections to Jurisdiction and Admissibility, Respondent submitted an Expert Report of Mr. Gary Born dated 25 February 2015 ("Born Expert Report"). In his report, Mr. Born raised the following principal issues that must be considered with regard to anonymous expert testimony in investment arbitration: first, procedural fairness; second, party's right to challenge evidence; third, challenging expert evidence through cross-examination; and fourth, generally admitting anonymous expert evidence in the context of procedural fairness.
79.
In sum, the Born Expert Report argues that there are two elements of procedural fairness: the right to be heard and the right to equal treatment. The right to challenge evidence submitted by the opposing party forms part of the fundamental right to be heard (rebuttal evidence or cross-examination). Thus, a tribunal before whom evidence is proffered that cannot be tested by the opposing party should refuse to take that evidence into account. In Mr. Born's view, an award of a tribunal that refuses to allow cross-examination, but nevertheless takes the contested evidence into account, is subject to annulment.
80.
The Born Expert Report points out that, as a rule, expert evidence must be authenticated in order for the other party to be able to test it (e.g., IBA Rules Article 5.2(a)). Therefore, if a tribunal is to receive, consider, and rely upon the statements of an individual, it is essential to allow the opposing party and the tribunal to know who that person is, to have that person's attestation of truth and to understand the basis for a purported expert's expertise. In the absence of this information, it is impossible for the opposing party to properly test the veracity, competence and integrity of the expert's evidence.
81.
The Born Expert Report thus concludes that the threshold for admitting anonymous expert evidence in an investment arbitration is very high. In other words, the tribunal should only interfere with a party's right to procedural fairness, if the evidence before it demonstrates a clear and compelling risk of significant negative consequences for the witness (e.g., protecting a life of the witness, state security issues involved).
82.
To offer a solution, Mr. Born looks to the principle of proportionality. He argues that, if specific threats to the witness's security exist, proportionality and non-discrimination principles require consideration of other/less intrusive means to achieve a party's goal to submit the relevant evidence. For instance: (a) Claimants to find an expert from a country with a similar stock exchange system; (b) expertise from an individual who worked at the Uzbek stock market in the past, but now lives outside of the country; or (c) a hybrid of options (a) and (b).
83.
Bearing in mind the above, the Born Expert Report suggests two solutions for the Tribunal to consider: (1) disclosure only to Respondent's counsel meaning disclosure of the unnamed expert's identity, background and qualifications supported by Respondent's undertaking not to disclose the identity of the expert witness (procedure similar to situations where highly confidential commercial information is revealed); or (2) disclosure to both Respondent's counsel and Respondent's expert (meaning disclosure of the unnamed expert's identity, background and qualifications supported by a strict confidentiality agreement).
84.
In response to Respondent's solutions offered in its Reply to Preliminary Objections on Jurisdiction and Admissibility, Claimants indicated in their Rejoinder on Preliminary Objections dated 18 May 2015 that the Anonymous Experts I and II would be willing to disclose their identities and testify in person, provided that: (1) they present their testimony in the "attorneys' eyes only"; (2) Respondent's counsel sign an NDA to keep the experts' identity and credentials confidential from (i) Respondent; (ii) Respondent's witnesses who are Uzbek citizens or reside in Uzbekistan; (iii) any other person who possesses Uzbek citizenship or currently resides in Uzbekistan; and (iv) any person outside this arbitration process; (3) Respondent's counsel indemnify the experts should either of them suffer any adverse effects as a result of a breach of the NDA; (4) Claimants seek separate agreements with the court reporters and translators; (5) the Tribunal issues an order confirming the NDA and the arrangements for the testimony and confirming that the Tribunal will maintain confidentiality of the information; (6) the experts be allowed to testify either (i) in person in Moscow or Almaty, or (ii) via Skype from an undisclosed location; and (7) any confidential information be redacted and not disclosed to Prohibited Persons as defined under the NDA.
85.
However, with the same Rejoinder, Claimants further submitted Exchange Report II, in which it was disclosed that Exchange Report I was in fact co-authored by two anonymous individuals (Anonymous Expert I and Anonymous Expert II, together the "Anonymous Experts").7
86.
In reaction to this disclosure, Respondent in its letter of 3 June 2015 argued that Claimants and their counsel acted in bad faith and with lack of candor. Respondent again asked the Tribunal to exclude Exchange Reports I and II or, alternatively, requested to be provided with the identities and curricula vitae of the Anonymous Experts.
87.
In response, Claimants in their letter dated 11 June 2015 indicated that they were truly unable to present their arguments without the anonymous testimony and asked the Tribunal to wait until after the Hearing, or at least until there was no possibility of testimony by the Anonymous Experts, before the Tribunal determines whether the reports are actually ‘unauthenticated'. Claimants also submitted that the Tribunal should allow for the "attorney's eyes only" solution suggested by Mr. Born and outlined in detail in Claimants' Rejoinder on Preliminary Objections.
88.
After due consideration of the Parties' arguments and the unique circumstances of the case, the Tribunal issued Procedural Order No. 6 on 1 July 2015, in which the Tribunal agreed with the Parties at the outset that procedural fairness and equal treatment of the parties constitute fundamental principles underlying arbitration proceedings. The Tribunal further agreed that one party's right to challenge evidence (either by rebuttal evidence or crossexamination) submitted by the opposing party is inherent in that party's right to be heard. The Tribunal similarly agreed that any departure from these principles is subject to the highest scrutiny and must be balanced against the ability of both parties to present their case in full and any danger to the potential witness that may be involved.
89.
Favoring a solution to be mutually agreed by the Parties, the Tribunal decided in its Procedural Order No. 6 to approach the issue in a phased manner and as an initial matter to adopt an "attorney's eyes only" solution as follows:

i. Claimants were to provide Respondent with a draft NDA. The Tribunal also observed that it did not see the necessity to include in the NDA the indemnity clause requested by Claimants. The Tribunal was of the view that Respondent's counsel undertaking not to disclose the identity of Anonymous Expert I and Anonymous Expert II should constitute a sufficient measure of protection.

ii. Claimants were to provide Respondent's counsel with a confidentiality agreement to be signed by the court reporters and the translators.

iii. The Tribunal directed the Parties to provide it with a signed draft of the NDA at the earliest convenience.

iv. The Tribunal directed Claimants to provide Respondent and the Tribunal with complete curricula vitae of Anonymous Expert I and Anonymous Expert II, including (but not limited to) their identities and qualifications, upon the conclusion of the NDA.

90.
At this initial stage, the Tribunal confirmed that both Anonymous Expert I and Anonymous Expert II were to be made available to give testimony at the Preliminary Hearing via a video link. To ensure procedural fairness, the Tribunal confirmed that Respondent must be given the opportunity to have its representative present in the room, from which the two Anonymous Experts would be testifying.
91.
Finally, the Tribunal underlined that, its initial willingness to allow the Anonymous Experts to testify in the "attorney's eyes only" approach as described above, did not in any way impede the Tribunal's discretion to exclude this evidence from the record, should the Tribunal decide this was justified under the circumstances.
92.
On 15 July 2015, the Parties signed the NDA, identifying "confidential information" and setting out the Parties' obligations with regard to the handling of such confidential information in the course of the arbitration.
93.
On 15 July 2015, taking into account the Parties' arguments with respect to the sequestration of the Anonymous Experts,8 the Tribunal issued Procedural Order No. 7. Given the unusual circumstances surrounding the examination of the Anonymous Experts, the Tribunal ordered that they be presented and examined separately, and be accompanied by the necessary sequestration arrangements.
94.
However, during the Hearing (Part I), two (both accepted-as-inadvertent) disclosures of confidential information by Respondent's Counsel, as proscribed by the Confidentiality Agreement, occurred. In light of this, and after numerous discussions with both Parties' counsels, it was decided that the Anonymous Experts would give their testimony at a later stage.
95.
Subsequently, on 5 October 2015, the President of the Tribunal, the Secretary of the Tribunal, and the Parties held a conference call, during which counsel for Respondent indicated that it intended to use publicly available documents, not on the record of this arbitration, during its cross-examination of the Anonymous Experts in Phase I. Claimants' Counsel requested to be provided with the documents reasonably in advance and a discussion ensued. The President of the Tribunal requested the Parties to submit their brief written commentary on the issue by 9 October 2015.
96.
On 6 October 2015, Respondent submitted its request to use publicly available documents, not on the record, during its Phase I cross-examination of the Anonymous Experts. Respondent indicated in its letter that Respondent had located these documents only after the limited information regarding the Anonymous Experts was revealed to them and that they concerned "the bona fides of the Anonymous Experts as independent experts and their alleged reasons for requesting anonymity".
97.
On 9 October 2015, Claimants submitted their objection to Respondent's request. Claimants indicated that there were no exceptional circumstances allowing for such a late introduction of the said documents on the record and that allowing Respondent to "impeach" Claimants' experts by surprise would be a violation of Claimants' due process rights in these proceedings. Thus, Claimants asked the Tribunal to either (1) deny Respondent's request to cross examine the Anonymous Experts with the proposed impeachment documents or any other materials not in the record; or (2) order Respondent to immediately produce the proposed impeachment documents, along with any other documents or evidentiary materials that it planned to use during the upcoming Hearing, while providing Claimants with an opportunity for rebuttal.
98.
Consequently, on 19 October 2015 the Tribunal issued Procedural Order No. 11, in which it granted Respondent's request to add the impeachment documents to the record and to order Respondent to produce the said documents at its earliest convenience. The Tribunal also granted Claimants' request to submit rebuttal evidence and ordered Claimants to produce such rebuttal documents at its earliest convenience.
99.
After reviewing the new documents submitted by Respondent, in their letter of 30 October 2015, Claimants raised a number of points in order to argue that there was no good reason for Respondent to introduce at such a late stage new documents to be used for the crossexamination of the Anonymous Experts. Claimants further indicated that given the inability to predict the line of Respondent's argumentation during their cross, Claimants were unable to fully respond with their rebuttal evidence. Thus, Claimants asked the Tribunal to be allowed to produce further rebuttal evidence, if necessary, with their Post-Hearing Briefs.
100.
In response, in a letter of 3 November 2015, Respondent indicated that Claimants' characterization of the "impeachment evidence" and the manner in which Respondent introduced this into the record contained a number of misrepresentations. Specifically, Respondent focused on Claimants' contentions regarding the documents used for the crossexamination of Mr. Knyazev. Respondent also objected to Claimants' request to submit further rebuttal evidence with Post-Hearing Briefs. Respondent indicated that it would be impermissible to require it to set out in advance its arguments and that submission of further rebuttal evidence with Claimants' Post-Hearing Brief would be impractical and not warranted under the circumstances.
101.
On 2 November 2015, in a letter to the Tribunal, this time Claimants brought to the Tribunal's attention that on 23 October 2015 at 8:31 PM, Respondent's Counsel had sent an email to the Tribunal – which also copied an Uzbek Government official – attaching edited transcripts and including confidential information regarding the Anonymous Experts.
102.
As a consequence, Claimants informed the Tribunal that the Anonymous Experts had informed Claimants' Counsel that they were no longer willing to testify in this arbitration under any circumstances. As explained by Claimants' Counsel, the Anonymous Experts believed that Respondent's Counsel could not be trusted to preserve their anonymity and further, they were concerned that if they testified, they would be exposed to extreme danger – a concern which Claimants' Counsel submitted was fully justified.
103.
In response, in its letter of 4 November 2015, Respondent informed the Tribunal that its client had deleted the email without reading it or opening its attachments. Respondent's Counsel also contended that the transcripts at issue did not, in fact, contain any information that was not previously disclosed or that could be used to identify the Anonymous Experts, their whereabouts, or the location of the Hearing (Part I).
104.
Therefore, Respondent asked the Tribunal to: (1) order the Anonymous Experts to testify in person at the scheduled Hearing (Part I); (2) alternatively, order the Anonymous Experts to testify by video-link, but only in the event that the Tribunal concluded that there were valid grounds for the Anonymous Experts to refuse to testify in person as scheduled; and (3) if the Anonymous Experts refused to testify at the Hearing (Part I) as ordered by the Tribunal, exclude their reports from the record or accord them no weight, and allocate Hearing time for Respondent to present its impeachment evidence and arguments.
105.
In their letter of 5 November 2015, Claimants' Counsel firmly denied the various allegations regarding the alleged underlying reasons for the Anonymous Experts' refusal to give testimony at the upcoming hearing. Claimants' Counsel further confirmed that the Anonymous Experts were not willing to testify due to their safety concerns and again asked the Tribunal that, nonetheless, the Anonymous Experts' written evidence be kept on the record and given full weight.
106.
On 7 November 2015, the Tribunal issued Procedural Order No. 12 rejecting Respondent's first request that the Tribunal order the Anonymous Experts to appear for cross-examination at the designated Hearing (Part I) location as initially scheduled. At the same time, the Tribunal invited the Parties, and Claimants' Counsel in particular, to explore the possibility of video-link testimony by the Anonymous Experts.
107.
By way of Claimants' email of 7 November 2015, the Tribunal and Respondent were informed that the Anonymous Experts were not willing to further testify in this arbitration under any circumstances. Claimants' Counsel conveyed two overriding concerns that were presented by the Anonymous Experts. First, the Anonymous Experts were concerned that Respondent already knew their identity. Second, even if Respondent was to be taken at its word that the email containing confidential information had been deleted without review, the Anonymous Experts no longer had any confidence that the existing arrangements that had been put in place to protect their identities would effectively serve their purpose going forward.
108.
In an email of 7 November 2015, Respondent's Counsel advised the Tribunal that it did not acquiesce to the alleged facts underlying the Anonymous Experts' decision.
109.
The Claimants contacted the Anonymous Experts to ascertain whether they were willing to appear by video link as an alternative. The Anonymous Experts declined to appear by video link for the same reasons, as explained above.
110.
During the Hearing (Part II), the Tribunal noted that the Anonymous Experts had not withdrawn their expert reports from the record, despite their refusal to testify in these proceedings. The Tribunal thus asked Counsel for Claimants whether the Anonymous Experts, in declining to appear, appreciated that they could also withdraw their reports. Counsel for Claimants indicated that the Anonymous Experts appreciated that the Tribunal might exclude their reports or not give them any weight as a consequence of their nonappearance.
111.
On November 11, 2015, the Tribunal issued Procedural Order No. 13, which directed Claimants' Counsel to contact expeditiously the Anonymous Experts to reiterate that their expert reports remained a part of the record in this proceeding at the present time and, putting aside possible contract issues between the experts and Claimants, to ask whether they wished the expert reports to be withdrawn, assuming that the anonymity they requested was allowed.
112.
The Tribunal took into account the fact that the Anonymous Experts had expressed a fear of retaliation as a possible consequence of the expert opinions they had submitted to the Tribunal, and that thereafter they had not agreed to appear for examination because of the fear expressed. The Tribunal was also concerned that it had a responsibility to ensure the good order and fairness of these proceedings.
113.
On 12 November 2015, Claimants' Counsel informed the Tribunal that the Anonymous Experts wanted to withdraw their reports, even if the Tribunal would provide them anonymity, because of the reasons previously stated.9 Notwithstanding this request by the Anonymous Experts, Claimants' Counsel asked that these reports remain part of the record in this arbitration.10
114.
After a break for deliberations, on the same day, the Tribunal informed the Parties of its decision to withdraw Exchange Report I and Exchange Report II from the record in their entirety, including the exhibits that were part of those Expert Reports.11 Upon Claimants' request, the Tribunal gave permission to Claimants to make a motion to add to the record certain exhibits relied upon by Anonymous Expert I and Anonymous Expert II as Claimants' exhibits.12
115.
On 17 November 2015, in a letter to the Tribunal, Claimants, inter alia, requested to have a number of documents, previously cited in Exchange Reports I and II, readmitted into the record. Claimants argue that the majority of the exhibits cited were also extensively cited in the Parties' pleadings and in other expert reports. Further, Claimants contended that the readmission of the exhibits to the record would not result in any prejudice to Respondent.
116.
In a letter to the Tribunal of 25 November 2015, Respondent confirmed that it did not object to Claimants' request that the Tribunal readmit to the record the exhibits referenced in the Anonymous Experts' reports.
117.
In its decision regarding the exclusion of the Anonymous Experts' reports from the record, the Tribunal took into account the following considerations.
118.
First, the Tribunal considered the Anonymous Experts' request for the reports to be withdrawn from the record, even if the Experts' anonymity was to be preserved. The Tribunal also noted that the Experts wished Respondent to be informed of the fact that their reports have been withdrawn.
119.
Second, the Tribunal considered Claimants' request for the reports to remain on the record, notwithstanding the Experts' request described above. Claimants' position is that they have obtained the Anonymous Expert evidence in good faith and that it thus should benefit from the appropriate weight and stay on the record.
120.
The Tribunal also considered Respondent's position set out earlier during the Hearing regarding the Experts' anonymity as well as the overall circumstances leading to the Experts' request to have their reports withdrawn.
121.
As noted in Procedural Order No. 13, the Tribunal may not ignore the continuing representations of fears of professional or personal retaliation held by the Anonymous Experts. Further, as recalled in that same Order, the Tribunal holds that it has a responsibility to ensure the good order and fairness of these proceedings.
122.
In light of the above circumstances, the Tribunal finds it difficult to reconcile Claimants' request that the Anonymous Experts' reports be retained as part of the record with the Experts asking to have them withdrawn. The Tribunal also appreciates the difficulty in which the Respondent's Counsel would find itself towards its client should the reports be given weight by the Tribunal even though the Anonymous Experts asked for Respondent to be informed about their decision to withdraw the reports. Consequently, and on balance, as communicated to the Parties during the Hearing, the Tribunal decides to exclude the Anonymous Experts' reports from the record.
123.
In turn, the Tribunal appreciated the duties of candor and professionalism that Claimants' Counsel owes to its clients. The Tribunal also notes the difficult circumstances that led to the withdrawal of their reports by the Anonymous Experts. The Tribunal thus grants Claimants' request for the exhibits listed in the Annex A to remain as part of the record in this arbitration. The Tribunal notes in this respect that the said exhibits already are designated as Claimants' factual or legal exhibits and were referred to and/or relied upon by both Parties in the course of these proceedings. Therefore, the Tribunal believes that should these exhibits remain on the record, they will not cause any prejudice to Respondent.
124.
The issue of the allocation of costs associated with the Anonymous Experts is addressed infra in Part XI of this Decision.

III. FACTUAL BACKGROUND

125.
The factual background differs in considerable respects as between Claimants' and Respondent's representations. This section provides a summary of those representations insofar as they relate to Claimant's acquisition of the BC and KC plants in Uzbekistan and Respondent's objections to this Tribunal's jurisdiction. The different representations of the factual background pervade the arguments on jurisdiction throughout this award. An additional exposition of the factual background as it relates to the merits of this claim will be necessary in the award on the merits.

A. Claimants' Representation of the Factual Background

126.
Claimants' position describes a good faith investment in the Uzbek cement industry that led to a campaign of harassment by the Uzbek Government against Claimants' business interests. The campaign involved arrests, the seizure of company documents and assets, and the bringing of criminal and civil proceedings against Claimants' companies and certain of the managers of those companies.
127.
Claimants maintain that they hold a portfolio of cement manufacturing assets, including BC and KC, cement plants, and related assets, in Kazakhstan, Kyrgystan, and Russia. These assets are held through a Cypriot holding company, UCG, and, in the case of BC and KC, its Cypriot subsidiaries – Raycross Limited ("Raycross"), Raybird Limited ("Raybird"), and Rayblock Limited ("Rayblock") (Raycross, Raybird, and Rayblock, together: the "Ray Companies").
128.
In 2005, Claimants were in the process of growing the cement sector of their investment portfolios.13 In Spring of that year, they learned from Mr. Nurlan Bizakov, a prominent businessman, that there may be an opportunity to complement their growing cement holding with the BC and KC plants in Uzbekistan.14
129.
Claimants set up an informal sub-committee to oversee the potential acquisition of BC and KC (the "Working Group") and negotiations commenced via the intermediation of Mr. Bizakov.
130.
The price of US$33.98 million for BC and KC together was deemed a reasonable price by both Claimants and Sellers.15
131.
Following from Claimant's perceived limitations of the Tashkent Stock Exchange ("TSE"), relating to spread limits and investment protection, Claimants and Sellers entered into two complementary agreements:

• The Tashkent Share Purchase Agreements executed by the brokers to record title transfer in the shares on the TSE ("Tashkent SPAs"); and

• The English Share Purchase Agreements negotiated by the parties and containing the additional protections required by the Claimants ("English SPAs").16

132.
Mr. Kim, acting on behalf of the Claimants' subsidiaries, Kaden Invest Ltd. ("Kaden") and Nabolena Ltd. ("Nabolena"), was introduced to a broker at the TSE, Mr. Pak, whose only colleague at the brokerage firm Tenet Invest, Mr. Allakverdyan, represented Sellers.17
133.
On 16 January 2006, Mr. Kim signed the Agency Agreements, whereby brokers were able to complete the transaction by "matching" buyers' and sellers' terms on the stock exchange. On the basis of that matched transaction, the brokers filled out the transaction card, executed the Tashkent SPAs, and informed Mr. Kim and Sellers of the completed deal report.
134.
When the deal was done, Claimants also contracted to pay Mr. Bizakov his commission of US$3 million for introducing them to the opportunity.18
135.
Between the spring of 2006 and 2007, Claimants proceeded to increase their majority stakes in BC and KC by acquiring minority shareholdings.19 After further acquisitions of cement plants in 2006 and 2007, Claimants restructured their cement holdings under the umbrella of UCG in 2008.20
136.
Between 2006 and 2010 Claimants invested "over US$127 million in the modernization and improvement of BC's and KC's production facilities".21 This led to an increase in production capacity and profitability of the plants. On foot of this increase in production capacity Claimants secured debt financing "in excess of US$320 million from Kazkommertsbank (the largest bank in Kazakhstan)".22
137.
Claimants began to prepare for an initial public offering ("IPO") of UCG. As part of these preparations Claimants had to produce audited accounts of UCG. At that point, Claimants had to make a choice between maintaining the complete confidentiality of the BC and KC acquisitions, as insisted upon by Sellers, and providing auditors with financial information on the transactions for the purposes of the UCG accounts. Claimants provided UCG's auditors with the Tashkent SPAs, rather than the English SPAs, as part of this process.23
138.
From early in 2010, Claimants' business interests were subject to a campaign of harassment by Respondent. The harassment took place under the guise of official and lawful action by offices and agencies of the Uzbek Government but was done in violation of national law and in violation of Respondent's obligations under the BIT.
139.
Claimants' BC cement production facilities were subject to criminal and regulatory investigations. These investigations led to the arrest and detention of employees at Claimants' cement production facilities, disruption of business activities, and confiscation of company property. In June 2011, BC and four of its managers were found guilty of criminal charges by an Uzbek criminal court. Furthermore, the court held that a 51% shareholding in BC was to be given over to the Uzbek Government. This expropriation of Claimants' investment in BC was done without substantive or procedural due process. Claimants' attempts to achieve redress through the Uzbek courts were unsuccessful. As a result of these actions by the Uzbek Government, Claimants have lost their majority shareholding in BC and, as a consequence of further Uzbek Government actions, consider their minority shareholding to have lost all value.
140.
Claimants' KC cement production facilities were, in the course of the legal proceedings involving BC, subject to a similar campaign of criminal and regulatory investigations. Uzbek prosecutors ordered the seizure of currency in KC's accounts. The Uzbek Government brought a civil claim to seek the transfer of 12% of Claimants' shares in KC to over 1,400 individuals that the Uzbek Government claims were deceived or coerced into selling their shares. After a final hearing that was conducted without substantive or procedural due process, a judge found for the Government-supported individuals. As a result of these actions, Claimants have lost a significant proportion of the shareholding in KC.
141.
In sum, as a result of Respondent's actions, Claimants have suffered losses in their interests in BC and KC. They have also been made liable to debt repayments to Kazkommertsbank for the debt financing that may be enforced against Claimants' other interests. Claimants therefore seek damages that they anticipate to be "no less than US$500 million" from Respondent.24

B. Respondent's Representation of the Factual Background

142.
Respondent denies Claimants' representation of the factual background. Respondent counters with a narrative of a sham investment involving corruption and fraud by Claimants in violation of Uzbek law and to the detriment of existing shareholders in BC and KC.
143.
Respondent argues that there is no evidence that Claimants held shares in BC or KC or that they were in control of the various companies in the complex corporate structure that Claimants purport to use to manage their investments in the cement industry in Uzbekistan and other markets.
144.
Insofar as Claimants purport to control the investment vehicles known as Kaden and Nabolena, Claimants made false disclosure as regards the agreed purchase price of the BC and KC shares, and therefore violated Uzbek law and committed securities fraud. This was done by Claimants to evade taxes, fees to the stock exchange, and to improperly improve the prospects of the IPO that Claimants sought for UCG.25
145.
The false disclosures to the TSE also enabled Claimants to use UGC to obtain a large bank loan from Kazkommertsbank and thereby to pay distributions to its shareholders.26
146.
Claimants subsequently coerced minority shareholders of BC and KC stock to sell their shares at prices far below what Claimants had paid for the majority shares. Mr. Deneschuk, then General Manager at KC, threatened employees with the loss of their jobs if they refused to sell to Claimants at the price Claimants had set.27
147.
Claimants also made an off-the-books, offshore payment of US$33.98 million to Ambassador Gulnara Karimova, in exchange for a relationship of trust and her influence on her father, the then-President of Uzbekistan.28
148.
Claimants' alleged subsidiary, Caspian Resources, coordinated BC's systematic bribing of numerous Uzbek Government officials. To do so, Caspian Resources organized a secret "black cash" fund, which BC funded through fraudulent payments to consulting companies controlled by Caspian Resources.29
149.
In light of the illegal activities by BC and KC, the Uzbek Government brought criminal proceedings against the managers of BC and against the Uzbek Government officials who participated in Claimants' bribery scheme.30
150.
Claimants' Request for Arbitration lacks merit and, furthermore, is an improper invocation of the BIT for the reasons set out at paragraphs 167-172 of this decision.

C. Tribunal's Preliminary Comment on the Factual Background

151.
While much of the factual background to the dispute is contested by the Parties, there is a degree of congruence between the accounts as regards certain aspects.
152.
First, Claimants and Respondent agree that acquisitions of shares in BC and KC took place by certain undertakings.
153.
Second, Claimants and Respondent agree that there were two sets of agreements (the Tashkent SPAs and the English SPAs) used to effect these acquisitions of shares.
154.
Third, Claimants and Respondent also agree that a substantial time after the acquisitions the Uzbek Government has taken certain actions against BC and KC as a result of regulatory and criminal investigations.
155.
However, there are significant differences in the representations as regards the motivations and intentions of both Claimants and Respondent in respect of these and other actions taken by the Parties.
156.
The differences in the Parties' accounts go directly to the resolution of Respondent's preliminary objections. The Tribunal resolves these disputes as regards the factual background in its consideration, below, of four of Respondent's five preliminary objections. The fifth preliminary objection, that senior managers of BC have consistently bribed Uzbek Government officials, is joined to the merits.
157.
The Tribunal will return to the factual background in its consideration of the merits.

IV. SUMMARY OF THE PARTIES' CLAIMS AND REQUEST FOR RELIEF

158.
In its Memorial on Preliminary Objections, Respondent requests that the Tribunal

[I]ssue a Decision on Jurisdiction on Admissibility dismissing all of Claimants' claims, and awarding Respondent its full costs and expenses associated with defending against Claimants' claims.31

159.
In their Counter-Memorial on Preliminary Objections, Claimants ask the Tribunal to:

(a) Dismiss each of Respondent's four preliminary objections to jurisdiction;

(b) Award Claimants all of their legal fees and all of their costs and expenses incurred in the jurisdictional stage of these proceedings; and

(c) Grant such other relief as the Tribunal considers appropriate.32

V. THE JURISDICTION OF THE TRIBUNAL

160.
This Tribunal is constituted under the ICSID Convention. Both Kazakhstan and Uzbekistan are State Parties to the Convention.33 The Convention provides, at Article 25(1), as follows:

The jurisdiction of the Centre shall extend to any legal dispute arising directly out of an investment, between a Contracting State (or any constituent subdivision or agency of a Contracting State designated to the Centre by that State) and a national of another Contracting State, which the parties to the dispute consent in writing to submit to the Centre. When the parties have given their consent, no party may withdraw its consent unilaterally.

161.
It is for Claimants to establish the basis of jurisdiction of an ICSID Tribunal. Consent by the Parties may be found in a variety of written instruments. The offer to arbitrate may be in one written instrument and the acceptance in another.
162.
Claimants base the jurisdiction of the Tribunal on the BIT and the ICSID Convention.34 The two State Parties to the Treaty – Kazakhstan and Uzbekistan – provide their consent to arbitration in the Treaty. This consent is contained in the form of an offer to arbitrate claims made by investors of one State Party as regards treaty breaches by the agents of the other State Party.35 Claimants accepted Uzbekistan's offer to arbitrate by submitting their Request to ICSID.36
163.
Article 41(1) of the Arbitration Rules states that objections to a Tribunal's jurisdiction "shall be made as early as possible". Respondent timely filed its Memorial on Preliminary Objections and Request for Bifurcation on 1 August 2014.

A. Claimant's Assertion as to Jurisdiction

164.

Claimants seek arbitration before ICSID on the basis of the BIT and the ICSID Convention. Article 10 of the BIT states:

Each Contracting Party hereby consents to the referral of any legal dispute between one Contracting Party and an investor from the other Contracting Party' s State in respect of investments made by it within the territory of the former Contracting Party to one of the following institutions:

[…]

c) the International Centre for Development [sic: Settlement] of Investment Disputes, if both Contracting Parties shall be members of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, opened for signature on 18 March 1965 in Washington, DC.37

165.
Claimants assert that have met the BIT's jurisdictional requirements as they are qualified "investors" from Kazakhstan who have made an "investment" in Uzbekistan through their acquisition and development of the BC and KC cement plants in the Host State. Claimants therefore contend that arbitration before ICSID is available to them for the resolution of their dispute with Uzbekistan.38
166.
Claimants contend that they have met the jurisdictional requirements established in Article 25 of the ICSID Conventions as:

• Uzbekistan is a Contracting State to the ICSID Convention and Claimants are nationals of Kazakhstan, another Contracting State to the ICSID Convention;39

• Claimants and Respondent have a "legal dispute" regarding Claimants' legal rights under the Treaty, relevant Uzbekistan and international laws, and violation of such rights by Respondent;40

• The dispute arises directly out of Claimants' investment in BC and KC, because of actions taken by Respondent. Claimants underscore that although there is not definition of the term "investment" under the ICSID Convention, the term is widely accepted to have a broad meaning, which Claimants meet. According to Claimants, they "have continuously invested in Uzbekistan since 2006 and have poured over US$139.8 million into BC and KC[, including] invest[ing] heavily in the improvement of the efficiency and productivity of the cement plants, turning them into highly profitable enterprises employing hundreds of local Uzbek workers and supplying cement in the country for construction of important infrastructure";41 and

• The Parties have consented to ICSID arbitration in writing when the Claimants accepted Uzbekistan's offer of arbitration, contained in Article 10 of the Treaty, by requesting registration of its Request with ICSID in March 2013.42

B. Respondent's Jurisdictional Objections

167.
As noted at paragraph 35 above, Respondent initially raised five preliminary objections to the Tribunal's jurisdiction and the admissibility of the claims. In Procedural Order No. 3, the Tribunal decided to deal with the Respondent's first four objections to jurisdiction as a preliminary matter.
168.
In addition, in its Reply on Preliminary Objections, Respondent raised further objections with regard to Claimants' nationality. The essence of all of the objections is summarized below.
169.
First, Respondent argues that Claimants have failed to meet their burden of proving that they own – and have owned since the first alleged Treaty breach in March 2010 – the shares of BC and KC.43
170.
Second, Respondent contends that it has consented under the BIT to arbitrating legal disputes concerning investments that were actively made by investors, but did not consent to arbitrating legal disputes concerning indirect shareholders that are remotely and passively held. Thus, Respondent argues that, even assuming arguendo that the Claimants indirectly have owned shares in BC and KC since the first alleged Treaty breach, they did not make an investment in Uzbekistan under the BIT or the ICSID Convention.44
171.
Third, Respondent further contends that it has consented under the BIT to arbitrating legal disputes arising out of investments that were made in compliance with it laws, but did not consent to arbitrating legal disputes arising out of unlawful investments. In this context, Respondent argues that Claimants made their investment in violation of Uzbek laws, through fraud and deceit, and that consequently the Tribunal lacks jurisdiction and/or the Claimants' claims are inadmissible under the BIT, the ICSID Convention and principles of international public policy.45
172.
Fourth, Respondent alleges that Claimants made their investments through an off-the-books payment of US$33.98 million to bank accounts in Latvia and that these payments were corrupt payments to a relative of a Government official, namely Ms. Gulnara Karimova. Consequently, Respondent argues that the Tribunal lacks jurisdiction and/or the claims are inadmissible under the BIT, the ICSID Convention and principles of international public policy.46
173.
The Tribunal will first consider the nationality argument and then will discuss each of the remaining objections in turn, dealing with any factual disputes so far as necessary in order to dispose of them.
174.
The Tribunal has had the benefit of extensive submissions and evidence from the Parties in this case. Many issues and sub-issues have been raised in the course of the proceedings. The Tribunal has carefully considered all submissions, all evidence, and all issues but for the sake of procedural economy has only discussed in this Decision those it considers necessary.

VI. THE APPLICABLE LAW

175.
Article 42(1) of the ICSID Convention provides that "The Tribunal shall decide a dispute in accordance with such rules of law as may be agreed by the parties. In the absence of such agreement, the Tribunal shall apply the law of the Contracting State party to the dispute (including its rules on the conflict of laws) and such rules of international law as may be applicable."
176.
The principal international law applicable to the dispute is the BIT. The Treaty entered into force between Kazakhstan and Uzbekistan on 8 September 1997.
177.
Insofar as Article 10 of the BIT entails consent to arbitration by an ICSID tribunal, jurisdiction under the BIT is limited by the jurisdictional provisions of the ICSID Convention.
178.
The applicable law for interpretation of the BIT is found in the Vienna Convention on the Law of Treaties ("VCLT"), to which both Kazakhstan and Uzbekistan have acceded.47
179.
The Tribunal observes that Article 14 of the BIT indicates that the text was drawn up in Kazakh, Uzbek and Russian languages, with all texts having equal legal force although the "Russian text is used for the purposes of interpretation of this Agreement". The Tribunal has been provided by the Parties with an English text of the BIT. The Parties have not disputed the accuracy of this translation of the Russian text. The Tribunal therefore in its analysis refers solely to the language of the English translation as provided.
180.
As regards the burden of proof, it is for Claimants to establish that they have made an investment in accordance with the BIT and the ICSID Convention. Furthermore, it is for Respondent to bear the burden of proof for objections that it raises to Claimants' assertion that they have made an investment that attracts the protection of the BIT. The Tribunal addresses specific questions of burden of proof in its examination of the objections in this Decision.

VIl. THE FIRST JURISDICTIONAL OBJECTION - NATIONALITY

A. Introduction

181.
Respondent's first objection is that the Tribunal lacks jurisdiction ratione personae. Respondent argues that two of Claimants, Messrs. Almas Chukin and Nikolay Varenko, failed to establish their Kazakh nationality, and that Claimants' evidence as regards the ten other Claimants is insufficient to establish their Kazakh nationality.48
182.
Claimants counter that all Claimants are Kazakh nationals for the purposes of this arbitration, including Messrs. Chukin and Varenko, as each Claimant has provided a copy of their passport and thus satisfied prima facie the nationality requirement.49 Claimants argue that the burden of proof as regards the nationality requirement at that point shifts to Respondent, who Claimants argue has failed to rebut the presumption raised by the prima facie evidence.50
183.
The Tribunal in the following sections first sets out the nationality requirement in international and applicable national law and then applies that requirement to Mr. Chukin, Mr. Varenko, and the ten other Claimants.

B. The Nationality Requirement in International and National Law

184.

The applicable international law on the nationality requirement is found in Article 1(1) and 1(5) of the BIT and Article 25(2) of the ICSID Convention. The applicable international law in part refers to national law, and the applicable national law is found in the Law of the Republic of Kazakhstan on Citizenship of the Republic of Kazakhstan ("Citizenship Law").51 The Constitution of the Republic of Kazakhstan ("Kazakh Constitution") and Resolution of the Constitution Council of the Republic of Kazakhstan No. 12 of 12 January 2003 ("Resolution No. 12") are also pertinent to this objection.52

185.
Article 1(1) of the BIT sets out a definition of "investor". The term includes "legal entities of the Contracting Parties' States". It also includes "citizens, associations of citizens, and stateless persons of the Contracting Parties' States".53
186.
Article 1(5) of the BIT provides that the term "citizens" refers to "persons holding citizenship and legal capacity under the laws of one Contracting Party's State, permanently residing in its territory or abroad, and making investments within the territory of the other Contracting Party's State".54
187.
Article 25 of the ICSID Convention provides that the Centre's jurisdiction extends to claims brought by a "National of another Contracting State".
188.
Article 25(2)(a) of the ICSID Convention states that a "National of another Contracting State" includes "any natural person who had the nationality of a Contracting State other than the State party to the dispute on the date on which the parties consented to submit such dispute to conciliation or arbitration as well as on the date on which the request was registered pursuant to paragraph (3) of Article 28 or paragraph (3) of Article 36, but does not include any person who on either date also had the nationality of the Contracting State party to the dispute".55
189.
The Article 25 of the ICSID Convention requirement entails a positive nationality requirement (that Claimants had the nationality of a Contracting State other than the State party to the dispute) and a negative nationality requirement (that Claimants did not have the nationality of the Contracting State party in the dispute).56 The negative nationality requirement is not put in issue by the Parties in this case.
190.
It is not in dispute that, under the terms of the BIT and the ICSID Convention, it is necessary for Claimants to demonstrate that they were Kazakh nationals on three dates relevant as regards this requirement ("required dates").57
191.
The required dates are:

(i) the date of the alleged breach: 1 March 2010;58

(ii) the date the claim was submitted to ICSID: 22 March 2013; and

(iii) the date the claim was registered by ICSID: 24 April 2013.59

192.
It is also not in dispute that the attribution of Kazakh nationality is a matter of Kazakh law. The principal applicable national laws are the Constitution of Kazakhstan, the Citizenship Law, and Resolution 12.60
193.
Although the Parties are in agreement that the Citizenship Law is one of the applicable national laws, there is significant disagreement about the interpretation of that law, and about its application to Mr. Chukin, Mr. Varenko, and the other ten Claimants.
194.
The Parties agree that passports and certificates of nationality constitute prima facie evidence of a claimant's nationality.61 However, Respondent argues that the Tribunal should nonetheless look beyond the prima facie evidence and consider "counterindications" that, Respondent argues, should rebut the presumption raised by the prima facie evidence.62
195.
Respondent argues that the Kazakh Constitution strictly prohibits dual citizenship. In particular, Respondent argues, Article 10(3) of the Constitution establishes the principle that "a citizen of the Republic shall not be recognized as a citizen of a different state".63
196.
Therefore, a central contention of Respondent's submission is that the Citizenship Law can result in the immediate and automatic loss of Kazakh citizenship under certain circumstances.64
197.
Respondent draws the Tribunal's attention to the award in Soufraki which, Respondent contends, is an analogous case.65 The tribunal in Soufraki held that an Italian citizen had lost his Italian citizenship upon acquisition of Canadian citizenship when he did not take the necessary steps under Italian law to reacquire Italian citizenship. Respondent relies upon an analogy with Soufraki to inform its interpretation of the Citizenship Law in this case.
198.
Article 19 of the Citizenship Law provides that Kazakh citizenship "shall be terminated" as a result of either renunciation of Kazakh citizenship or as a result of the "loss of Citizenship".66 Article 21 further provides that Kazakh citizenship "shall be lost," among other reasons, "as a result of joining the […] State government bodies and other administrative bodies of another state", or "in the event that a person has obtained Citizenship of a different state".67
199.
Respondent argues, therefore, that in certain circumstances a Kazakh citizen may lose their citizenship by operation of law if, for example, they acquire the citizenship of a foreign state or serve in the government of a foreign state.
200.
Claimants dispute Respondent's analogy with Soufraki because, Claimants argue, under the Italian law applicable in Soufraki no governmental act was required to terminate the citizenship. Rather, the Italian citizenship was automatically terminated as soon as the Italian national acquired another citizenship.68
201.
Claimants furthermore contest Respondent's interpretation of Articles 19 and 21 of the Citizenship Law, insofar as Respondent asserts citizenship is automatically and immediately lost "by operation of law".69 Claimants argue that "[i]f anything, those two articles read together suggest that losing citizenship is not automatic or immediate because termination of citizenship (Article 19) and loss of citizenship (Article 21) are evidently two separate stages".70
202.
Claimants submit that there are additional relevant provisions of national law that make clear that an individual remains a Kazakh citizen until his citizenship is terminated by the Kazakh government: Resolution No. 12 and Articles 30 and 37 of the Citizenship Law.
203.
Resolution No. 12, according to Claimants, provides that if a citizen of another state who acquires Kazakh citizenship fails to renounce the other state's citizenship, that person's Kazakh citizenship "shall be deemed invalid".71 Claimants argue that the term "deemed invalid" must be interpreted in light of Articles 30 and 37 of the Citizenship Law.
204.
Article 30 of the Citizenship Law provides that the Office of Internal Affairs is the only authority empowered to determine the "existence of citizenship of the Republic of Kazakhstan, or lack thereof" of persons permanently residing in Kazakhstan.72 Article 37 provides that citizenship is only officially terminated the day "of registration of its loss by the Government".73
205.
Consequently, Claimants contend, only the Office of Internal Affairs is empowered to determine the existence of Kazakh citizenship of persons residing in Kazakhstan.74 Further, Claimants argue that Kazakh citizenship is terminated only on the day of registration of its loss by the Government.75
206.
The Tribunal finds the citizenship law at issue in Soufraki is sufficiently distinct to that before the Tribunal in the instant case such that the reasoning in Soufraki is not applicable. The Soufraki tribunal found that the terms of the Italian law were "clear and leave no room for interpretation".76 The Kazakh Citizenship Law, however, is not clear. Moreover, when the Kazakh Citizenship Law is read in the context of the Kazakh Constitution and Resolution No. 12, the Tribunal finds strength to Claimants' argument that there is a distinction between the invalidity or loss of entitlement to citizenship (under Article 21 of the Citizenship Law) and the termination of that citizenship (under Article 19 of the Citizenship Law).
207.
The existence of such a distinction indicates that an individual may be susceptible to the termination of citizenship but may retain such citizenship until a decision is taken by the Office of Internal Affairs. In contrast, in the Italian law applicable in Soufraki, an individual's Italian citizenship was lost by operation of law unless the individual themselves took action to reaffirm that citizenship.
208.
The Tribunal finds therefore, that a claim that an individual does not hold Kazakh citizenship requires evidence not just that they have either made a renunciation of citizenship or that they meet the criteria for "loss of citizenship" under Article 21 of the Citizenship Law, but also that they have been subject to "termination of citizenship" under Article 19 of the Citizenship Law. Such a conclusion is consistent with the presumption against statelessness that is a general principle of public international law – as an automatic loss of citizenship increases the risk of an individual being rendered stateless by operation of law.

C. Application of the Nationality Requirement

209.
The Tribunal is in agreement with the Parties that passports and certificates of nationality constitute prima facie evidence of citizenship that raise a presumption in favour of such citizenship.77 In the event that Claimants provide such prima facie evidence, it would be for Respondent to rebut the presumption that such evidence raises.
210.
The Tribunal's finding is in concordance with the conclusions of other arbitral tribunals to which the Parties have made reference. The Micula tribunal held that "there exists a presumption in favour of the validity of a State's conferment of nationality. The threshold to overcome such presumption is high […] It is for Respondent to make such a showing. For this purpose, casting doubt is not sufficient".78
211.
The award of the Micula tribunal was relied on by the Arif tribunal, which held that it would only be inclined to disregard the national authority's decision on citizenship if "there was convincing and decisive evidence" that the acquisition of nationality "was fraudulent or at least resulted from a material error".79 Further, in Tza Yap Sum, the tribunal held that the burden on respondents to overcome the presumption in this regard is "onerous".80
212.
All Claimants have provided Kazakh passports as prima facie evidence of their Kazakh nationality.81 The question before the Tribunal in the determination of Respondent's first objection is therefore whether this prima facie evidence has been subject to rebuttal in relation to (1) Mr. Chukin, (2) Mr. Varenko, and (3) all other Claimants.

(1) Mr. Chukin

213.
Mr. Chukin has provided a copy of his Kazakh passport issued on 25 September 2009 as prima facie evidence of his citizenship on the required dates: 1 March 2010; 22 March 2013; 24 April 2013.82 Mr. Chukin has also provided a copy of a certificate attesting to his Kazakh nationality issued on 15 May 2015 as further such evidence.83
214.
Respondent notes that Mr. Chukin served as the Head of the Department of Industry for Kyrgyzstan's Ministry of Economy and Finance from 1990 until 1992 and as the chargé d'affaires of Kyrgyzstan's Embassy to the United States from 1992 until 1996.84 Mr. Chukin was a Deputy Chairman of the State Property Fund in Kyrgyzstan between 1996 and 1997.
215.
Respondent argues that in accordance with the Citizenship Law, Articles 19 and 21, Mr. Chukin lost his Kazakh citizenship while he was a government official of the Government of Kyrgyzstan.85 Respondent further submits that Claimants have failed to provide additional information to establish Mr. Chukin as a Kazakh citizen on the required dates.86
216.
Claimants argue that Mr. Chukin surrendered his Kyrgyz citizenship at the same time as gaining his Kazakh citizenship. Claimants also argue that even if Mr. Chukin did not surrender his Kyrgyz citizenship, or even if his renunciation was not effective for whatever reason, Kazakh citizenship is only terminated upon official governmental action.87 Claimants further submit that they have provided a copy of Mr. Chukin's Kazakhstan passport and his citizenship certificate to establish Mr. Chukin as a Kazakh citizen on the required dates.88
217.
The Tribunal finds that Mr. Chukin's passport and citizenship certificate constitute prima facie evidence of his possession of Kazakh citizenship on the required dates. The Tribunal finds that the evidence as regards Mr. Chukin's previous possession of Kyrgyz citizenship does not call into question the probity of this prima facie evidence.
218.
Therefore, on the basis of the evidence in the record, the Tribunal rejects the argument that it does not have jurisdiction ratione personae over the claim insofar as it relates to Mr. Chukin.

(2) Mr. Varenko

219.
Mr. Varenko has provided a copy of his Kazakh passport issued on 1 October 2009 as prima facie evidence of his citizenship on the required dates: 1 March 2010; 22 March 2013; 24 April 2013.89
220.
On 11 July 2014, as a result of Mr. Varenko's acquisition of Russian citizenship, the Government of Kazakhstan registered a decision to terminate Mr. Varenko's Kazakh citizenship.
221.
Claimants submit that Mr. Varenko's citizenship terminated on 11 July 2014, when the Office of Internal Affairs issued and registered a decision in this regard.90 Claimants contend that the termination does not call into question Mr. Varenko's citizenship on the required dates. Respondent, in contrast, contends that the loss of Mr. Varenko's Kazakh citizenship at that time does call into question his possession of Kazakh citizenship on the required dates.
222.
The Tribunal considers that the termination of Mr. Varenko's Kazakh citizenship on 11 July 2014 demonstrates that, on that date, circumstances existed under Kazakh law to merit such termination. It is a reasonable inference that, if such circumstances also existed prior to 11 July 2014, Mr. Varenko may have been susceptible to a termination of citizenship at an earlier date.
223.
However, given the absence of any evidence of a prior termination of Kazakh citizenship, and given the prima facie evidence that Mr. Varenko did possess Kazakh citizenship on the required dates, the Tribunal concludes that the fact of the later termination of Mr. Varenko's citizenship does not call into question his possession of citizenship on the required dates.
224.
The Tribunal considers that the very act of termination of Mr. Varenko's citizenship on 11 July 2014 strengthens the conclusions as regards the distinction between the "loss" of Kazakh citizenship and its "termination" by the state of Kazakhstan.
225.
Therefore, on the basis of the evidence in the record, the Tribunal rejects the argument that it does not have jurisdiction ratione personae over the claim insofar as it relates to Mr. Varenko.

(3) All Other Claimants

226.
All other Claimants have provided copies of their passports as prima facie evidence of their Kazakh citizenship on the required dates: 1 March 2010; 22 March 2013; 24 April 2013.91
227.
Respondent argues that "in light of the issues raised with respect to Messrs Chukin and Varenko, Claimants passports do not conclusively establish that they were Kazakh nationals […] [on the required dates]".92 Claimants, in contrast, argue that Claimants' passports constitute prima facie evidence of nationality that Respondent is required to rebut and that Respondent has failed to rebut.93
228.

Claimants state in the Request for Arbitration that Claimants are all "lifelong citizens of the Republic of Kazakhstan". Such statement may be called into question – for example by Respondent's evidence as regards Mr. Chukin's service in the Government of Kyrgyzstan.94 However, the Tribunal's jurisdiction is not dependent on Claimants being "lifelong citizens" of Kazakhstan, but rather its jurisdiction is only dependent on Claimants having citizenship of Kazakhstan on the required dates. The Tribunal therefore draws no inferences from the statement by Claimants as regards "lifelong citizenship" or from Respondent's attempts to rebut that statement.

229.
Respondent requested an attestation of citizenship by Claimants that they "have not held and do not hold any other nationality and were Kazakh nationals on each of the required dates".95 No attestation was made by Claimants. The Tribunal also notes Claimants' argument that, despite Respondent's calls for such attestation by Claimants, Respondent did not ask any question on this point during their cross-examination of Mr. Kim or Ms. Zaitbekova.96 In addition, Respondent did not make any additional arguments on the law or on the facts in relation to this first objection on jurisdiction in its Post-Hearing Brief. The Tribunal therefore draws no inferences from the presence or absence of attestations of citizenship beyond what is in the record.
230.
It is not in dispute that the ten Claimants' passports serve as prima facie evidence of the existence of the ten Claimants' Kazakh citizenship.97 For nine of the ten additional Claimants those passports were issued between 2007 and 2009 and were valid for a period of ten years that includes the required dates.98
231.
For the tenth additional Claimant, Ms. Aigul Nurmakanova, the passport was issued on 1 September 2011.99 This falls after the first required date, the date of breach, on 1 March 2010. However, there has been no evidence adduced to suggest that Ms. Nurmakanova did not hold Kazakh citizenship on the first required date. Indeed, Ms. Nurmakanova was born, according to her passport, in Kazakhstan, and therefore in accordance with Article 3 of the Citizenship Law is likely to have been a Kazakh citizen from birth.
232.
The Tribunal recalls the Micula tribunal's finding that the "casting of doubt" is not sufficient to rebut a presumption raised by prima facie evidence and the Tza Yap Sum tribunal's finding that the burden on Respondent is an "onerous" one.100
233.
In the absence of specific evidence to call into question the Kazakh nationality of Ms. Nurmakanova, or any of the ten Claimants other than Messrs. Chukin and Varenko, the Tribunal must base its finding on the evidence that is in the record, i.e. on the passports that Claimants have provided. The Tribunal finds that those passports, submitted with the Request for Arbitration, are sufficient to satisfy the Tribunal of the Kazakh citizenship of the ten Claimants other than Messrs. Varenko and Chukin on the required dates. As in Ambiente Ufficio, "due to the lack of relevant concrete submissions and documentation from the Respondent's side, no problems as to the jurisdiction of the Centre […] arise".101
234.
Therefore, on the basis of the evidence in the record, the Tribunal rejects the argument that it does not have jurisdiction ratione personae over the claim insofar as it relates to the ten Claimants other than Messrs. Chukin and Varenko.

D. The Tribunal's Conclusion

235.
In the course of its arguments Respondent conducted a very detailed forensic examination of the evidence with which it was presented and advanced a range of arguments to challenge Claimants' case on this point. In the Tribunal's view, none of these arguments have been sufficient to displace the prima facie evidence set out above.
236.
For the reasons set out above, and on the basis of the evidence in the record, the Tribunal finds that it has jurisdiction ratione personae over the dispute and therefore dismisses Respondent's first objection.

VIII. THE SECOND JURISDICTIONAL OBJECTION – THAT CLAIMANTS ARE NOT "INVESTORS" WHO MADE AN "INVESTMENT"

A. Introduction

237.
By its second objection, Respondent asserts that Claimants are neither "investors" nor persons who made an "investment" as those terms are defined in the BIT.102
238.
To address this jurisdictional objection, the Tribunal first sets out the applicable law from the ICSID Convention and the BIT. The Tribunal then goes on to group Respondent's specific objections under two categories: those relating to Claimants' status as "investors"; and those relating to the characterization of Claimants' business affairs as an "investment".

B. The Law Applicable to the Objection

239.
The law applicable to this objection is contained in Article 25 of the ICSID Convention and Article 1(1) of the BIT. Article 25 of the ICSID Convention provides that the Centre's jurisdiction shall "extend to any legal dispute arising directly out of an investment, between a Contracting State (or any constituent subdivision or agency of a Contracting State designated to the Centre by that State) and a national of another Contracting State, which the parties to the dispute consent in writing to submit to the Centre".103 The ICSID Convention does not offer a definition of "investment".
240.
Article 1(1) of the BIT defines "investors" in relevant part as "(a) legal entities of the Contracting Parties' States; (b) citizens, associations of citizens, and stateless persons of the Contracting Parties' States".104
241.
Article 1(2) of the BIT defines "investments" as "any kind of asset and the rights thereto, as well as intellectual property rights, invested by the investors of one Contracting Party within the territory of the other Contracting Party's State for profit (income) and includes, in particular, but not exclusively: […]".105 Article 1(2)(a)-(e) then sets out a non-exhaustive list of types of investment. Of particular relevance to this dispute are "movable and immovable property and related property rights; […]"106 and "cash, shares, stocks and other securities and any forms of participation in enterprises, joint stock companies, business partnerships, associations and other legal entities registered in accordance with the laws of each of the Contracting Parties; […]".107
242.
For jurisdiction to be established, the claim must pass both through the institutional jurisdictional keyhole set forth in Article 25 as well as the specific jurisdictional keyhole defined in the BIT. The drafters of Article 25 in constructing that keyhole were cognizant that the parties to a particular BIT may construct a more specific jurisdictional keyhole in their instrument. Both Article 25 of the ICSID Convention and Article 1 of the BIT are to be interpreted in accordance with the VCLT.108
243.
Respondent's various specific objections to this Tribunal's jurisdiction under Respondent's second argument fall into two broad categories: one category that disputes Claimants' status as "investors" under the BIT and the ICSID Convention and another category that disputes Claimants' interests as an "investment" under the BIT and the ICSID Convention. The Tribunal addresses each in turn.109
244.
Before it turns to these objections, the Tribunal takes note of Claimants' citation of the award of the Micula tribunal in which it held that it need not resolve the precise scope of the investment at the jurisdictional stage, but rather need only establish, as a threshold matter, that there is an investment.110 The Tribunal agrees that the precise scope of the investment may become more clear at the merits stage of these proceedings, and that – to resolve this objection – it need only establish at this stage that Claimants are "investors" who made an "investment" in accordance with the BIT and the ICSID Convention.

C. Objections that Claimants are not "Investors"

245.
Respondent argues that Claimants fail to establish their status as "investors" under the BIT.111 In particular, Respondent argues that (1) Claimants have not established the necessary link between themselves and the alleged investment, that is their ownership of shares in BC and KC prior to the alleged breach; (2) Claimants' role in relation to BC and KC is "passive" rather than "active" and therefore Claimants are not "investors"; (3) Claimants are too remote from the "investment" and therefore Claimants are not "investors".

(1) Claimants Have Not Proven their Ownership of Shares in BC and KC

246.
Both Respondent and Claimants have made extensive representations as to the ownership of BC and KC and the structure of holding companies and trusts through which Claimants purport to own BC and KC. This structure is complex. The particulars of Claimants' ownership of shares in BC and KC became more detailed during the course of the proceedings, with Claimants making available further information about the holding structure in the face of challenges from Respondent.
247.
Claimants provided an outline of their ownership holding structure of BC and KC as of 30 April 2008 in their Request for Arbitration.112 This alleged ownership holding structure was included in graphic format by Respondent in its Memorial on Preliminary Objections and Request for Bifurcation as follows:113
248.
Claimants agree with this representation and argue that this structure has been unchanged since 30 April 2008.114 Claimants further state that they have held their shares in BC and KC through this holding structure to be in the best possible position to take advantage of market opportunities and to restructure their interests after any further acquisitions.115
249.
Respondent argues that Claimants "have not substantiated this alleged holding structure".116 In particular, Respondent alleges that Claimants have failed to provide sufficient evidence that they made investments in Uzbekistan – such as originals or copies of share certificates of each Claimants' ownership in the investment's holding structure.117 Respondent further argues that Claimants do not offer testimony as to their ownership,118 and that the available share exchange agreements do not indicate the shareholders of parties to the transactions.119 Respondent also raises a series of objections, set out below at paragraph 255, to Claimants' statement of their ownership holding structure.
250.
The Tribunal must assess claims about the ownership holding structure only insofar as such claims relate to its jurisdiction over this dispute. The Parties agree that "an investor seeking access to international jurisdiction pursuant to an investment treaty must prove that it was an investor at the relevant time".120 It is for Claimant to substantiate its ownership of shares in BC and KC to demonstrate that Claimants' Request for Arbitration falls within the Tribunal's jurisdiction, in accordance with the BIT and the ICSID Convention.
251.
Claimants emphasize that such ownership needs to be established at the time of the alleged breaches of the BIT.121 The Tribunal agrees that it is well settled law that the relevant time for Claimants to demonstrate their ownership is the time of the breach.
252.
For Claimants, "the relevant times for the purposes of jurisdiction are: the date this arbitration was instituted on 22 March 2013, the dates on which Claimants' investments in BC and KC were expropriated by the Uzbek state on 5 June 2012 and 10 June 2013 respectively, and, to the extent relevant to other claims, the dates on which the Uzbek state first took unlawful action against their investments in BC and KC on 2 March 2010 and 16 April 2012 respectively".122 Claimants also allege further breaches of the BIT when their investments in BC and KC were expropriated by the Uzbek state on 5 June 2012 and 10 June 2013 respectively. The Tribunal concludes that Claimants must therefore demonstrate their ownership of the investment on these dates.
253.
Claimants argue that it is "undisputed" that they have owned the shares in BC and KC "at the very latest since 20 February 2009 and continuing through the time of the breach".123 Claimants therefore argue that it is not necessary for the Tribunal to examine this issue any further.
254.
Respondent, however, raises five assertions in order to dispute such ownership.
255.
Respondent argues variously that (a) Claimants have not proven their ownership of the upper levels of their holding structure; (b) Claimants have not proven their ownership of Kaden and Nabolena, their majority share acquisition vehicles; (c) Claimants have not proven their ownership of Carsoco, Clipco, Fasinco, Karuteco, Robianco, and Vernico, their minority share acquisition vehicles; (d) Claimants have not proven their ownership of the Ray Companies (Raybird, Rayblock, and Raycross); and (e) the oral trusts, based in Cyprus, through which Claimants hold and have held their business interests, are invalid under Cypriot Law.
256.
These arguments – if substantiated – would only be sufficient to deny jurisdiction if they led to a failure by Claimants to demonstrate their ownership at the time of the alleged breach. Despite the many claims that Respondent makes about Claimants' ownership structure, for the purposes of jurisdiction, it is only necessary for Claimants to meet this test. The Tribunal nevertheless takes each of the claims in turn in the sub-sections that follow.

a. Ownership of the top levels of Holding Structure: Visor Partners Limited, Visor Cement Companies Limited, Inter Investment Consolidation Group Limited, and Telsat Limited

257.
Respondent disputes Claimants' ownership of the top levels of the holding structure. On Claimants' account, they hold shares in BC and KC via a holding structure that has as its upper tiers Visor Partners Limited, Visor Cement Companies Limited, Inter Investment Consolidation Group Limited ("IICG"), Telsat Limited, and UCG. The Tribunal deals with Claimants' ownership of each of these entities in turn.

(i) Visor Partners Limited

258.
Claimants state that Visor Partners Limited was incorporated on 31 July 2007 and that since incorporation the company has been owned by various Claimants (and Mr. Michael Sauer).124 Claimants also state that Visor Cement Companies Limited was incorporated on 31 July 2007 and that since incorporation the company has been owned by Visor Partners Limited.125 Claimants evidence these aspects of its holding structure by means of various documents including certificates of incumbency, registers of members, resolutions, and share certificates.126 Respondent does not offer evidence to call these documents into question. The Tribunal, on the basis of the evidence before it, concludes that Claimants (with Mr. Michael Sauer) have been owners of Visor Partners Limited and Visor Cement Companies Limited since 31 July 2007 and therefore at all times relevant to jurisdiction.

(ii) IICG

259.
Claimants state that IICG was incorporated on 31 July 2007 with Visor Cement as its sole shareholder.127 Claimants evidence this ownership with a certificate of incumbency, share certificate, and company resolution. Respondent does not offer evidence to call these documents into question. The Tribunal, on the basis of the evidence before it, concludes that Claimants (with Mr. Michael Sauer) have been owners of IICG since 31 July 2007 and therefore at all times relevant to jurisdiction.128

(iii) Telsat

260.
Claimants state that Telsat was incorporated on 31 July 2007 at which time its sole shareholder was Veller Investment Group Limited – a company owned by Claimants (except Claimant Borissov). Since 5 September 2007, Telsat has been owned in its entirety by Visor Cement Companies Limited.129 Claimants evidence this ownership with a Certificate of Incumbency, registers of members, and company resolutions.130 Respondent does not offer evidence to call these documents into question. The Tribunal concludes, on the basis of the evidence before it, that Claimants (with Mr. Michael Sauer) have been owners of Telsat since 31 July 2007 and therefore at all times relevant to jurisdiction.

(iv) Starwheel Limited (later UCG)

261.
Claimants state that Starwheel Limited was incorporated on 3 April 2007 with Abacus (Cyprus) Limited as its sole shareholder.131 Ownership was transferred to "United Cement Group Ltd.", a company in the Isle of Man, on 8 October 2007, and thereafter to Telsat and IICG on 14 November 2007. Claimants evidence this ownership with certificates of incorporation and name change, registers of members and share ledgers, lists of shareholders, and declarations of trust.132 The Tribunal concludes, on the basis of the evidence before it, that Claimants (with Mr. Michael Sauer) have been owners of UCG since 31 July 2007 and at all times relevant to jurisdiction.
262.
Thus, having carefully considered all the arguments and evidence available to it, the Tribunal concludes that Claimants have demonstrated their ownership of Visor Partners Limited, Visor Cement Companies Limited, IICG, Telsat Limited; and UCG.
263.
The Tribunal turns, in Section VIII.C(1)d below, to the transfer by Claimants of shares in BC and KC from various share acquisition vehicles to the three companies known as the Ray Companies, and thereby into its ownership holding structure. First, however, it is necessary to examine Respondents' claims as regards the ownership of the majority share acquisition vehicles (Kaden and Nabolena) and the minority share acquisition vehicles (Carsoco, Clipco, Fasinco, Karuteco, Robianco, and Vernico).

b. Ownership of Acquisition Vehicles for Majority Shares in BC and KC

264.
Claimants state that they acquired their majority share interests in BC and KC in January 2006 through Kaden and Nabolena and then transferred those interests from the share acquisition vehicles into their holding structure. Respondent argues that Claimants have not proven their ownership of the acquisition vehicles, namely Kaden and Nabolena, used to purchase the majority shares in BC and KC.133
265.
Claimants state that Nabolena was incorporated on 20 April 2005 with Dema Nominees and Dema Trustees as its sole shareholders.134 These companies made trust declarations in favour of Claimant Kim on 11 May 2005.135 Claimants further state that Mr. Kim held his shares in Nabolena in trust for Claimants as a whole (except Claimant Borissov).136 This ownership, Claimants state, covers all relevant times – from 27 January 2006 (the date of KC share acquisition by Nabolena) to 29 April 2008 (the date of transfer of KC shares to the Ray Companies and therefore into Claimants' holding structure).137
266.
Respondent argues that Claimants have not proven the continuity of ownership of Nabolena. In particular, Respondent refers to the transfer of shares in Nabolena from Dema Nominees and Dema Trustees to a variety of other entities in the months prior to the transfer by Nabolena of its KC shares into Claimants' holding structure.138 Respondent therefore disputes Claimants' ownership of the KC shares in the time between their acquisition by Nabolena and their transfer to the Ray Companies and therefore into Claimants' ownership structure.
267.
The Tribunal notes that Claimants have demonstrated their ownership of Nabolena at the time of its acquisition of the KC shares. Further noted is that Claimants do not address in full all points that Respondent raises as regards their ownership of Nabolena, in particular the transfer of ownership of Nabolena.139 However, the Tribunal does not find the question of continuity of ownership, assuming there were a break, relevant. Critically, Respondent does not set out how any breach in continuity of ownership, in particular between the date of acquisition of KC shares by Nabolena and the date of transfer of those shares into Claimants' holding structure, may impact upon jurisdiction.
268.
The burden on Claimants is to demonstrate its ownership at the time of the alleged breach. It is possible for Claimants to do so without a demonstration of continuity of ownership at all times from the first acquisition of KC shares by Nabolena. Therefore, subject to Claimants' satisfactory demonstration of ownership – i.e. through its holding structure – at the time of the alleged breach, its failure to demonstrate continuity of ownership at all times from the date of first acquisition will not impact upon jurisdiction.
269.
Claimants state that Kaden was incorporated on 7 October 2005. On 27 October 2005, its shareholder was Visor Investment Services Ltd. Visor Investment Services Ltd was owned by three Claimants from its date of incorporation, 10 January 2005, and was owned by Weimar Properties Limited from 5 December 2005. Weimar was owned by Berrimor Associates Ltd. which was, in turn, owned by Claimant Kim.140
270.
Claimants acknowledge that they cannot locate a document to demonstrate their ownership on 27 January 2006 – i.e. on the date of acquisition of BC shares by Kaden. Rather, they provide documents to evidence their ownership on dates both prior to, and after, that date. There is, Claimants note, "a gap of four months between 5 December 2005 and 20 April 2006 in respect of which there are no documents that directly support Claimants' case [of ownership of Kaden]".141
271.
As with Nabolena, Claimants do not entirely substantiate continuity of ownership of Kaden. In contrast with Nabolena, the gap in evidence as regards Kaden relates to the date of acquisition of a majority of shares in BC. Claimants argue that they owned Kaden at the date of acquisition. The Tribunal holds that, if it were necessary to conclude whether Claimants were owners of Kaden at the date of acquisition, it would find that the preponderance of evidence indicates that Claimants owned Kaden at the date of acquisition.
272.
However, the Tribunal reiterates that the burden on Claimants is to demonstrate its ownership at the time of the alleged breach of the BIT. The Tribunal further reiterates that it is possible for Claimants to do so without a demonstration of continuity of ownership at all times from the first acquisition of shares. Therefore, subject to Claimants' satisfactory demonstration of ownership – i.e. through its holding structure – at the time of the alleged breach, its failure to demonstrate continuity of ownership at all times from the date of first acquisition will not impact upon jurisdiction.
273.
On the basis of all materials before it, the Tribunal concludes that Claimants have demonstrated their ownership of the majority share acquisition vehicles at various times prior to the transfer by Nabolena and Kaden of shares in KC and BC to the Ray Companies and therefore into Claimants' holding structure.
274.
The Tribunal next considers Respondent's claims as regards the ownership of the minority share acquisition vehicles (Carsoco, Clipco, Fasinco, Karuteco, Robianco, and Vernico).

c. Ownership of Acquisition Vehicles for Minority Shares in BC and KC

275.
The acquisition of further shares in BC and KC by Claimants' companies is also in dispute. Respondent argues that Claimants have not proven their ownership of the various share acquisition vehicles that Claimants purport to have used to acquire further shares in BC and KC. There are six such share acquisition vehicles in dispute: Carsoco, Clipco, Fasinco, Karuteco, Robianco, and Vernico.142
276.
Claimants argue that it is sufficient for this Tribunal to find that Claimants had a majority shareholding in BC and KC so as to resolve the jurisdictional question.143 However, they also state that they have sufficiently demonstrated the ownership of the acquisition vehicles for the further shares in BC and KC, as follows.
277.
In the case of the BC share acquisition vehicles, Carsoco,144 Vernico,145 and Karuteco,146 Claimants state that each share acquisition vehicle was held by a Cypriot trustee in bare trust for Claimant Varenko who, in turn, held all shares in trust for Claimants generally (except Claimant Borrisov). Claimants have provided share exchange agreements, sale and purchase of shares agreements, company registers, and trust deeds to this effect.
278.
In a similar vein, in the case of the KC share acquisition vehicles, Clipco,147 Fasinco,148 and Robianco,149 Claimants state that each share acquisition vehicle was held by a Cypriot trustee in bare trust for Claimant Varenko who, in turn, held all shares in trust for Claimants generally (except Claimant Borrisov). Claimants have provided share exchange agreements, sale and purchase of shares agreements, company registers, and trust deeds to this effect.
279.
Claimants evidence their ownership of the share acquisition vehicles using factual exhibits that include corporate registers, tables of Tashkent Stock Exchange transactions, and trust deeds. Aside from its objection to the validity of the Cypriot trusts, Respondent does not offer any evidence to contradiction Claimants' factual exhibits.
280.
Having carefully considered all arguments and evidence available to it, and subject to the Tribunal's consideration of the validity of the oral trusts in Claimants' holding structure, the Tribunal concludes that Claimants have demonstrated their ownership of the minority share acquisition vehicles.
281.
The Tribunal next turns to Respondent's objection to a series of transactions through which the various share acquisition vehicles transferred ownership of shares in BC and KC to the Ray Companies and thereby into the holding structure Claimants set out in the Request for Arbitration.

d. Transfer of BC and KC Shares to UCG via the Ray Companies

282.
Claimants state that, in 2008, they sought to consolidate and restructure their holding structure for KC and BC to prepare for an IPO.150 Central to this consolidation was the transfer of shares from the KC contributor companies (Nabolena, Clipco, Fasinco, and Robianco) and from the BC contributor companies (Kaden, Carsoco, Vernico, and Karuteco) into Claimants' new holding structure.
283.
Claimants state that between 26 March and 10 April 2008 the KC contributor companies (Nabolena, Clipco, Fasinco, and Robianco) each transferred their shares in KC to the Ray Companies in exchange for shares in the Ray Companies.151 The KC contributor companies then, on 29 April 2008, transferred their shares in the Ray Companies to Starwheel (later UCG).152 As a result of these transactions Starwheel (later UCG) came to own a majority shareholding in KC by 30 April 2008.153
284.
Claimants also state, in a similar vein, that between 9 April and 10 April 2008 the BC contributor companies (Kaden, Carsoco, Vernico, and Karuteco) each transferred their shares in BC to the Ray Companies in exchange for shares in the Ray Companies.154 The BC contributor companies then also, on 29 April 2008, transferred their shares in the Ray Companies to Starwheel (later UCG).155 As a result of these transactions Starwheel (later UCG) came to own a majority shareholding in BC by 30 April 2008.156
285.
On Claimants' account, therefore, from 30 April 2008 until the time of the alleged breaches of the BIT, UCG owned, via its whole ownership of the Ray Companies, a majority holding in KC and in BC. The structure has been unchanged ever since that date.157
286.
Respondent, however, disputes Claimants' ownership of the Ray Companies (Raybird, Rayblock, and Raycross) which received shares as detailed above in 2008.158
287.
Claimants state that the Ray Companies were incorporated in December 2007 under the ownership of Abacus (Cyprus) Limited. Claimants evidence these incorporations with certificates of incorporation.159 On 10 March 2008, Abacus transferred its shares in the Ray Companies to the majority share acquisition vehicles (Kaden and Nabolena) and the minority share acquisition vehicles (Carsoco, Clipco, Fasinco, Karuteco, Robianco, and Vernico).160 Respondent has provided no argument or evidence to call these transactions into question.
288.
In light of the foregoing, and having carefully considered all materials available to it, the Tribunal concludes that, subject to the validity of the oral trust, Claimants have proven their ownership of shares in BC and KC.

e. Claimants' Ownership Relies on an Invalid Oral Trust

289.
Respondent argues that the oral trusts, based in Cyprus, through which Claimants hold and have held their business interests, are invalid under Cypriot Law.
290.
Respondent notes that the trust declarations of Dema Trustees and Dema Nominees as regards their shares in Nabolena are not notarized.161 Respondent further notes that Claimants' trust declarations pre-date the acquisition of shares in BC and KC and argues that this fact calls into question Claimants' ownership of the share acquisition vehicles.
291.
Respondent argues that Claimant relies upon testimony from Mr. Kim as regards the ownership of Nabolena which has proven to be changeable during the course of proceedings. For example, neither the Request for Arbitration nor Mr. Kim's first witness statement make reference to the role of Dema Trustees and Dema Nominees and their trust declarations in the ownership of Nabolena.162 Respondent also cites a report, by Global Witness, that states that it is not possible to determine the ultimate beneficiaries of Dema Nominees and Dema Trustees.163
292.
Claimants argue that the oral trusts are valid under Cypriot Law and deny that there is anything suspicious about their use of the oral trusts in their holding structure.164
293.
Claimants argue that, under the applicable Cypriot Law, it is not necessary for a trust declaration to be notarized in order for such a declaration to be authentic.165 Claimants further argue that, contrary to Respondent's arguments, it is not salient that the Trust Declarations pre-date the acquisition of shares in BC and KC by several months in each case.166 Rather, Claimants state that it would be entirely unusual to execute the trusts over and over in anticipation of future litigation or arbitration.
294.
Claimants do not accept Respondent's position as regards the evidence of Mr. Kim and state that they have offered additional details as regards their holding structure in reply to Respondent's challenges to the validity of that holding structure. Claimants further argue that the Global Witness report is unpersuasive, insofar as the Tribunal itself may come to a conclusion on this matter, as the Tribunal is in possession of more information than were the authors of the Global Witness report.167
295.
In this regard, Claimants cite a letter from Mr. Lellos Demetriades, a lawyer in Cyprus.168 Mr. Demetriades states, after review of the Dema Trustees and Dema Nominees Trust Declarations, "that under Cypriot law the absence of notarisation or witnesses does not affect their validity". Mr. Demetriades then offers the general observation that "under Cyprus law a trust relating to the abovementioned trust declarations does not have to be in writing and thus the need for notarisation or witnessing does not arise".169
296.
Claimants submit that, in the absence of rebuttal evidence from Respondents, there is prima facie evidence that the oral trusts were valid under Cypriot law.
297.
The Tribunal must base its decision on the validity of the oral trusts in Cypriot law on the preponderance of evidence available to it. Thus, the Tribunal considers neither the testimony of Mr. Kim, nor the Global Witness report, to be determinative of the matter.
298.
The Tribunal further notes that, although Claimants did not, at the outset of these proceedings, offer all of the information as regards its holding structure that is now available to the Tribunal, the ongoing clarification of Claimants' holding structure does not, of itself, call into question the veracity of the information now available to the Tribunal.
299.
The Tribunal notes in particular the letter from Mr. Demetriades.170 Mr. Demetriades has evident expertise in Cypriot Law and is clear and unequivocal in his statements as regards the validity of the oral trusts in that legal system. The Tribunal considers that this letter is strong evidence as regards the applicable Cypriot Law in general and the validity of the Dema Trustees and Dema Nominees oral trusts in particular.
300.
In the absence of further argument or evidence from Respondent on this point, and on the basis of all the materials available to it, the Tribunal concludes that the oral trusts were valid in Cypriot Law. This conclusion applies to the oral trusts as regards Dema Trustees and Dema Nominees and to oral trusts found elsewhere in Claimants' holding structure.

f. Conclusions on Ownership

301.
The Tribunal notes once more that the precise scope of the "investment" may be the subject of further discussion in any award on the merits of the dispute, as necessary.