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Dissenting Opinion of Andreas Bucher

I. Introduction


My welcome as a member of the Tribunal freshly reconstituted on August 10, 2015 was marked by the filing, the very same day, of Respondent’s Application for Reconsideration of the Tribunal’s Decision on Respondent’s [first] Request for Reconsideration of March 10, 2014 (the "Majority Reconsideration Decision"). This Second Application caused Claimants to respond in their letter of August 12, 2015, followed by comments contained in Respondent’s letter of the same day, which was addressed in turn by Claimants’ response by letter of August 13, 2015, again answered by Respondent through its email of August 14, 2015. It is common knowledge that Respondent’s initial and renewed requests relate to the Tribunal’s Decision on Jurisdiction and the Merits dated September 3, 2013 (the "Majority Merits Decision"). My learned Colleagues on the Tribunal’s bench have decided to maintain their initial position taken in the "Majority Reconsideration Decision", well aware (in light of my notes submitted on August 18 and September 9, 2015) that it will again remain a majority ruling, associated to a new dissent as stated below, which adds support to Professor Abi-Saab’s Dissenting Opinion of March 10, 2014. The refined thoughts contained in a recent article1, on which the Parties have filed comments on January 22, 2016, did not have the effect of changing my Colleagues’ categorical position, resulting in the Majority’s Decision on Respondent’s Request for Reconsideration of the Tribunal’s Decision of 10 March 2014, dated February 9, 2016 (the "Second Majority Reconsideration Decision", or the "Renewed Version").

II. Scope of Opinion

As I understand from the Respondent’s Application for Reconsideration dated August 10, 2015, the Tribunal is seized, and has been seized through the earlier Respondent’s Request for Reconsideration of September 8, 2013 with a factual pattern that allegedly points to "certain obvious factual, legal and logical errors" in the Majority Merits Decision of September 3, 2013, "the correction of any one of which would require a change in the majority’s conclusion on the issue of good faith negotiation" (Respondent’s Application, page 2).
When it was seized with the matter in September 2013, the Tribunal came to the conclusion that "it does not have the power to reconsider the Decision of 3 September 2013" The conclusion thus reached in the Majority Reconsideration Decision means that the Tribunal did not enter into any examination of the relief Respondent was seeking through its September 8, 2013 Request.
I understand that Respondent’s objective expressed in its August 10 Application is limited to request the Tribunal to accept that its Decision of March 10, 2014 may be revisited. The Tribunal is only asked to declare being capable of revisiting the Majority Merits Decision of September 3, 2013 on the basis of Respondent’s allegations contained in its two requests for reconsideration, these allegations being subject of further development once a ruling is made that such proceeding is opened.
When considering the here relevant part of the Majority Merits Decision of September 3, 2013 that the Majority places beyond its power of judgment any further, I would suggest to examine the matter from two different perspectives: (1) the content and effects of the decision (III, paras. 6-22) and (2) its purported binding effect (IV-VII, paras. 24-80).

III. The Tribunal’s Decision


It is worth recalling the precise terms of the dispositif of the Tribunal’s Decision on Jurisdiction and the Merits:

"404. For the foregoing reasons, the Tribunal decides as follows:

a. It does not have jurisdiction under Article 22 of the Investment Law and accordingly the claims by ConocoPhillips Company are dismissed; and

b. It has jurisdiction under Article 9 of the Bilateral Investment Treaty over:

i. the claims brought by ConocoPhillips Petrozuata BV, ConocoPhilips Hamaca BV and ConocoPhillips Gulf of Paria BV in respect of (1) the increase in the income tax rate which came into effect on 1 January 2007 and (2) the expropriation or migration; and

ii. the claims brought by ConocoPhillips Petrozuata BV and ConocoPhillips Gulf of Paria BV in respect of the increase in the extraction tax in effect from 24 May 2006.

c. All claims based on a breach of Article 3 of the BIT are rejected.

d. The Respondent breached its obligation to negotiate in good faith for compensation for its taking of the ConocoPhillips assets in the three projects on the basis of market value as required by Article 6(c) of the BIT.

e. The date of valuation of the ConocoPhillips assets is the date of the Award.

f. All other claims based on a breach of Article 6(c) of the BIT are rejected.

g. All other questions, including those concerning the costs and expenses of the Tribunal and the costs of the parties’ determination are reserved for future determination."

Under letter b), the decision is grounding its jurisdiction on claims made by Claimants on the basis of the BIT only.
For present purposes, the claims related to increases in taxes as referred to under letter a (i) and (ii) are not to be considered, as they are unrelated to Article 6 of the BIT and particularly to Article 6(c). The claim to be looked at is what the Tribunal identified as the "claims brought by ConocoPhillips Petrozuata BV, ConocoPhillips Hamaca BV and ConocoPhillips Gulf of Paria BV in respect of [(1)... and] (2) the expropriation or migration".
Claimants’ Request for relief raised in this latter respect reads, in relevant part, as follows:

"(a) DECLARE that Venezuela has breached:

(i) Article 11 of the Foreign Investment Law and Article 6 of the Treaty by unlawfully expropriating and/or taking measures equivalent to expropriation with respect to ConocoPhillips’ investments in Venezuela;


(b) ORDER Venezuela to pay damages to ConocoPhillips for its breaches of the Foreign Investment Law and the Treaty in an amount to be determined at a later stage in these proceedings, including by payment of compound interest at such a rate and for such period as the Tribunal considers just and appropriate;

(c) AWARD such other relief as the Tribunal considers appropriate;


In light of these references, Claimants’ claims that are to be retained for present purposes are the claim for a declaration on a breach of Article 6 of the BIT in matters of expropriation and migration, followed by a claim to pay damages for Respondent’s violation of the Treaty, i.e. Article 6 of the BIT.
The Tribunal’s Decision on the Merits has affirmed Respondent’s breach of its obligation to negotiate in good faith for compensation based on the market value as required by Article 6(c) of the BIT. It can be easily verified that no such claim was contained in Claimants’ Request for Relief. It is my understanding that no such claim has ever been made by Claimants elsewhere in the course of this proceeding.2
Such claim is not contained either in the relief requesting the Tribunal to "Award such other relief as the Tribunal considers appropriate". In any event, even if this would be the case, such relief is not included in the claims over which the Tribunal asserted its jurisdiction.
It may also be noted that in its Procedural Order No. 3 of June 12, 2010, the Tribunal did not consider the matter relevant for being dealt with as an issue to be added to the "claims" not dismissed for lack of jurisdiction. This addition was made in paragraph 334 of the Decision at the Tribunal’s own initiative, and it was identified as nothing more than one of "four issues" to be dealt with as part of "several issues" arising out of Article 6 of the BIT. Such "issue" did not represent or reflect a dispute dividing the Parties and calling for a legal determination.
If these observations are taken as the basis for the analysis of the conclusion under letter d) of the dispositif it appears that the Tribunal had no jurisdiction and no mission to make any such ruling. Indeed, the Tribunal’s dispositif on the scope of its jurisdiction is based directly, in relevant part, on the claims raised by the three ConcocoPhillips Parties in respect of "expropriation or migration". A decision in respect of Respondent’s purported obligation to negotiate in good faith has not been included in the Tribunal’s jurisdiction and has therefore been rendered ultra vires. If the topic is shifted from its jurisdictional character to the merits, the Tribunal acted ultra petita given the fact that none of the Parties asked the Tribunal to render such a decision. If this latter fact would be taken for what it means, it would appear that any discussion about res judicata - as argued by Claimants and acknowledged in the Majority Reconsideration Decision - is devoid of any substance because there was no res judicatum anyhow, the Tribunal having affirmed a decision on a question that it was not asked to rule upon.
The Parties’ briefs on quantum were designed to draw the consequences in respect of damages based on the Tribunal’s Decision on Jurisdiction and the Merits. The Tribunal, when ordering the Parties to submit such briefs in its Decision on Respondent’s Request for Reconsideration of March 10, 2014, did not determine or qualify the violation of the legal obligation in relation to which the damages are to be quantified. There can hardly be an assessment of damages without reference to the underlying liability and the causal link required between both of them.
Given the fact that the Decision on Jurisdiction and the Merits identifies only one breach of a nature to allow consequential damage requests, the quantum to be determined must relate to the violation of an obligation to negotiate in good faith. This would mean as a matter of principle that the assessment of damages must have as its goal to wipe out the economic consequences of the breach of such an obligation.
This is not, however, what the Parties understand and take as the very basis of their statements on quantum'.
Claimant’s position is as follows:

"In its September 2013 Decision, the Tribunal’s ultimate and unassailable conclusion was that Venezuela acted unlawfully in expropriating the three Projects. That breach of international law requires Venezuela to make full reparation to the Claimants for the investment taken, which is the matter now before the Tribunal."3

When reading Respondent’s explanations, it is easy to understand that it is opposing Claimants’ presentation. It joins however Claimants’ view in as much as it understands that the Tribunal’s Majority Decision contains a "finding of unlawful nationalization"4.

When the view is, as it should be, that the assessment of damages must be connected to the breach as it was identified in the dispositif of the Decision on Jurisdiction and the Merits (letter d), these both positions are not correct. On the other hand, however, they are perfectly correct when the liability to be considered is based on Article 6 of the BIT as this had been claimed by Claimants.5 However, this is precisely the breach of the BIT that is not affirmed in the dispositif of the Decision.6 The Majority of the Tribunal decided to proceed (exclusively) with the examination of damages without ruling about the underlying liability.7

The interim assessment is therefore that the issue relating to the nature and legality of the disputed nationalization has not yet been ruled upon. In this respect, the ruling made under letter d) of the Decision on Jurisdiction and the Merits has no impact. Indeed, no "obligation to negotiate in good faith" is contained in Article 6 of the BIT or more particularly in its letter c) and the Tribunal does not mention any. This letter states that "the measures are taken against just compensation" that shall represent the market value. The requirement for compensation is one of three conditions to be complied with in order to authorize a Contracting Party to take any measure to expropriate or nationalize, as stated in the introductory part of Article 6. Therefore, the third condition stated in letter c) has as its objective to permit expropriation or nationalization if the two other conditions under letters a) and b) are met. This means that the "just compensation" is one of the conditions for avoiding a breach under Article 6 of the BIT to occur. It is neither a condition stated in that provision, nor is it, more importantly, stated as a Contracting Party’s obligation under the BIT. Article 6 of the BIT is on breach for expropriation or nationalization. It is not on any other potential ancillary obligation as the conduct of negotiation based on good faith. Such obligation is just not there.8

Given that the Tribunal has not decided upon the alleged breach of Article 6, the presentation of submissions of the Parties as to the factual allegations to be made in that respect remains open. This is all the more so as the Tribunal has not declared the proceeding closed according to Arbitration Rule 38(1). This further means that the factual assessment underlying the ruling on the matter of good faith negotiation, while decisive in this latter respect, is not precluding Respondent from arguing and submitting evidence as a defence to presently outstanding claims on liability and damages, if any. Even when considering such ruling as binding in any way, such effect does not extend to the underlying reasons, which are subject to reexamination in respect of any other issue on the merits, for which such reasons or facts may be relevant.9 Claimants seem to share this view when stating that the Tribunal "may therefore wish to address this matter as part of its quantum determination".10 In light of such an assessment, it would appear to me that consideration of Respondent’s Application for Reconsideration could be deferred at a later stage when the issue of an alleged breach of the BIT is dealt with in terms encompassing all of the elements pertinent under Article 6 of the BIT.11 In this respect, I am respectfully dissenting from my Colleagues’ majority position that the matter shall now be decided.

I will then turn to the question that represents the focus of Respondent’s Request for Reconsideration and of the Majority’s Denial of Power for Review.

IV. Applicable Rules on the Binding Effect of ICSID Decisions

V. The Conclusion of the Majority’s Reconsideration Decision and of its Renewed Version

VI. The Majority’s First Reason

VII. The Majority’s Second Reason

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