• The questions of jurisdiction, admissibility, control and waivers;
• the rejection of the expropriation (NAFTA Art. 1110) claim;
• the rejection of the "denial of administrative justice" claim;
• the rejection of the NAFTA governments' position that pursuant to Article 1102 Claimant needs to prove that the government had a direct Intention to harm the foreign investor because It is foreign is required for Art. 1102 and needs to be proven by claimant;
• the general view that the principle of legitimate expectation forms part, i.e. a subcategory, of the duty to afford fair and equitable treatment under Art. 1105 of the NAFTA. We also seem to concur on the general conditions for this claim - an expectation of the investor to be caused by and attributed to the government, backed-up by Investment relying on such expectation, requiring the legitimacy of the expectation In terms of the competency of the officials responsible for It and the procedure for Issuing It and the reasonableness of the Investor In relying on the expectation. I do, however, not concur with the application of this standard to the specific factual situation In light of the purpose, specific content and precedents of the legitimate expectations standard as It should be applied under Investment protection treaties based on recent relevant jurisprudence.
Art. 102 NAFTA: Highlights the purpose to "facilitate cross-border movement of..services", transparency, promotion of fair competition, increasing substantially investment opportunities4;
Art. 1115: To assure "equal treatment among Investors of the parties"
"To place one decision In a long tradition of similar decisions give the entire tradition of consistency,an "Integrity" that is a central feature of law as such"11.
• First: The letter " oficio" or "criterio" of August 2000, to be read in conjunction with the following: (I) the request ("solicitud") by claimant; (¡i) the prior, prolonged, Informal and preparatory discussions with the competent government officials who later commended the Investor's "cooperative" approach In contrast to the Mexican competitors'confrontational approach and who encouraged Thunderbird to pursue this cooperative approach; and (III) the subsequent legal advice by its legal adviser In September 2000 (I do not concur with the majority's reasoning: paras. 158-163);
• Second: The accepting conduct of SEGOB subsequent to the issuance of the "oficio " in August 2000 which did not raise any questions, did not require any further Information, did not inspect or review the operations and which tolerated and did not interfere in Thunderbird's operation until a new (more antigambling minded) government and a new SEGOB director (on the uncontested facts available in the record more anti-Thunderbird-minded) came into office about six months later;
• Third: The conduct of SEGOB under its new director which targeted less the long-established slot machine operations at various locations of Mr Guardia, and certainly had no success (if there was a serious effort) in factually preventing them from operating but which targeted with priority and soonest after taking office Thunderbird's operation, though (or perhaps because) Thunderbird had gone the legal way and obtained an "interpretative assurance" which did give green light to Thunderbird, or at least seemed to them to give such green light. (The majority award - paras 174-179 - has no problem with both the relative enforcement intensity and its ultimate success against claimant but not against the Mexican competitor and does not deal with the question If the issuing of the "oficio" has anything to do with the later enforcement and closure)18.
"Representations.. may be made expressly or Impliedly where, upon a reasonable construction of a party's conduct, the conduct presupposed a certain state of act to exist. Assuming that another party to whom the statement is made acts to its detriment in reliance upon that statement or from that statement the party making the statement secures some advantage, the principle of good faith requires that the party adhere to its statement whether It be true or not. It is possible to construe the estoppel as resting upon a responsibility Incurred by the party making the statement for having created an appearance of act, or as a necessary assumption of the risk of another party acting upon the statement"
"An expectation is then legitimate and ought to be protected If "taking a new and different course will amount to an abuse of power" - "Once the legitimacy of the expectation is established, the courts will balance the requirements of fairness against any overriding interest relied upon for the change of policy".37
While this brief survey of general International, International economic (Including EU), comparative contract and comparative administrative law does not specify exactly the contours of this principle, it suggests that under developed systems of administrative law, a citizen - even more so an Investor - should be protected against unexpected and detrimental changes of policy if the Investor has carried out significant Investment with a reasonable, public-authority initiated assurance in the stability of such policy. Assurance on a particular Interpretation of often open-ended statute against an unexpected detrimental change of such Interpretation is in this context particularly relevant48. Such protection is, however, not un-conditional and ever-lasting. It leads to a balancing process between the needs for flexible public policy and the legitimate reliance on In particular Investment-backed expectations. The consulted authorities are Indicative of contemporary state practice and the minimum standards of comparative national and international law. The "fair and equitable standard" can not be derived from subjective personal or cultural sentiments; it must be anchored in objective rules and principles reflecting, In an authoritative and universal or at least widespread way, the contemporary attitude of modern national and International economic law. The wide acceptance of the "legitimate expectations" principle therefore supports the concept that it is indeed part of "fair and equitable treatment" as owed by governments to foreign Investors under modern Investment treaties and under Art. 1105 of the NAFTA. It is before this International and comparative law background that one needs to make sense out of several recent Investment treaty awards which have applied the legitimate expectations principle, both under Art. 1105 of the NAFTA and the equivalent provisions of applicable bilateral Investment treaties. These awards - Metalclad v Mexico, Teemed v. Mexico, Occidental v. Ecuador, Waste Management v Mexico II49 and MTD v. Chile50 - may not have explained the doctrinal background of the principle, its scope and contours specifically, but these authoritative precedents have contributed towards establishing the "legitimate expectation" as a sub-category of "fair and equitable treatment" in the for this dispute here most pertinent Investment treaties (Including NAFTA Chapter XI's Art. 1105)51.
Mairal, op. cit. 140, 150 ff. ; Schonberg, op. cit. p. 109 with reference to HTV v Price Commission, 1976 ICR 1970, 1985: "a public authority which had led traders to rely on one interpretation of a statutory provision could only adopt another interpretation if there was an overriding public interest in doing so".
Award published in 43 ILM 967 (2004)
I understand there is an annulment request with respect to the MTD v Chile award.
F Orrego Vicuna, Regulatory authority and legitimate expectations, Intl Law Forum, Vol. 5, 2003, 188-197; C Schreuer, Fair and equitable treatment in arbitral practice, in: J. World Investment, 2005, at p. 374; B. Sabahi, Protections of Legitimate Expectations, TDM 2005 (www.transnational-dispute-management.com - forthcoming).
"He will naturally be at a disadvantage In litigation against citizens of the country. He is less familiar than they with the laws, the ways of doing business, the habits of thought and action, the method of procedure, the local customs and prejudices."64
And recently Jan Paulsson:
"Whatever the rosy rhetoric about the equality of treatment of nationals and foreigners, the very fact of being foreign creates an inequality. The foreigner's obvious handicap - his lack of citizenship - isusually compounded by vulnerabilities with respect to many types of Influence: political, social, cultural."65
"Can firms rely on them, with confidence, when making their Investment decisions?"
"Governments and firms can both benefit. Governments benefit from a commitment device that can address concerns from Investors, and thus help them attract more Investment at lower cost, and also reduce the risk of any later dispute becoming politicized. Firms benefit from reduced risks and a more reliable mechanism for protecting their rights if the relationship with the host government deteriorates."
"that all relevant legal requirements for the purpose of initiating, completing and successfully operating investments made, or intended to be made, under the Agreement should be capable of being readily known to all affected Investors.. There should be no room for doubt or uncertainty on such matters. Once the authorities of the central government., become aware of any scope of misunderstanding or confusion in this connection, It is their duty to ensure that the correct position is promptly determined and clearly stated so that investors can proceed with all appropriate expedition In the confident belief that they are acting In accordance with all relevant laws".
The tribunal held that the Investor was entitled to rely on the representations of the federal officials (para 89) and the The Respondent " failed to ensure a transparent and predictable framework for Metalclad's business planning and Investment. The totality of these circumstances demonstrate a lack of orderly process., in relation to an Investor., acting In the expectation that it would be treated fairly and justly". The duty in Metalclad (as in the later MTD v Chile case) is not just a passive duty to ambiguous messages, but to pro-actively take clarificatory action when the government agency knows or should know that the Investor has misunderstood the relevant signalling from the government.
"Part of these expectations is the foreign Investor's assumption that the state receiving the Investment will act consistently, without any ambiguities, and transparently with the foreign Investor so that the Investor may know In advance (and thus plan its activities..) not only the rules or regulations., but also the policies pursued by such rules... and the administrative practices or guidelines that are relevant. "The foreign investor also expects the host state not to act in a contradictory manner; this means.. that the state will not arbitrarily reverse prior or pre-existing state-made decisions or approvals upon which the investor relied and on the strength of which it took on its commitments and planned and set in motion its.. operation". And it referred to the standard of a " reasonable and impartial man ".
"wholly unsatisfactory and thoroughly vague answer"
and it considered that the "legal and business framework" did not meet the "requirement of stability and predictability" (paras 190-191).
"a complete lack of transparency and candour In an administrative process. In applying this standard it is relevant that the treatment is in breach of representations made by the host state which were reasonably relied on by the claimant".73
"This provision of the Agreement, in light of the good faith principle established by International law, requires the Contracting Parties to provide to International Investments treatment that does not affect the basic expectations that were taken Into account by the foreign investor to make the Investment"
and determines that the "discriminatory conduct by the Polish Government is blunt violation of the expectations of the Parties in concluding the SPA.." (at para. 242)76
"According to the case-law, moreover, Community legislation must be certain and its application foreseeable by Individuals. The principle of legal certainty requires that every measure of the institutions having legal effects must be clear and precise and must be brought to the notice of the person concerned in such a way that he can ascertain exactly the time at which the measure comes into being and starts to have legal effects. That requirement of legal certainty must be observed all the more strictly in the case of a measure liable to have financial consequences in order that those concerned may know precisely the extent of the obligations which It imposes on them"77
"The daily negotiations and property of merchants ought not to depend upon subtleties and niceties, but upon rules easily learned79"
"With regard to the principle of legal certainty, this requires in particular that rules Involving negative consequences for Individuals should be clear and precise and their application predictable for those subject to them (see, to this effect, Case 325/85 Ireland v Commission  ECR. 5041, Case C-143/93 Van Es Douane Agenten  ECR 1-431, paragraph 27; and Case C-63/93 Duff and Others  ECR 1-569, paragraph 20)"
"This interpretation suggests that where an Investment treaty does not expressly provide for transparency, but does for fair and equitable treatment, then transparency is Implicitly included in the treaty (UNCTAD, 1999a, p. 34). Secondly, where a foreign Investor wishes to establish whether or not a particular State action is fair and equitable, as a practical matter, the Investor will need to ascertain the pertinent rules concerning the State action; the degree of transparency in the regulatory environment will therefore affect the ability of the Investor to assess whether or not fair and equitable treatment has been made available in any given case."
"A wise Investor would not have paid full price up-front for land valued on the assumption of the realization of the project" (para 242),
"Chile has an obligation to act coherently and apply its policies consistently independent of how diligent an Investor is" (paras 165-166)
"There was a great movement right before President Fox was elected" ( i.e. in 2000, the year the "Oficio" was issued).
".. the Inclination of an International tribunal to infer that a unilateral act has given rise to a binding obligation will probably be reinforced if the state making the declaration expects to receive clear benefits on the basis of the declaration"100.
"The second, element (sc. in gambling law), chance has caused the most problems in the courts. Part of the problem is that if every human activity is mixed skill and chance, the question is simply where you draw the line"107. And: "In England, any skill at all takes a game out of the prohibited lottery category. California outlaws slot machines if any chance enters into the payoff, but then states that devices that are predominantly skill are legal".
Question: "Did counsel for Mexico indicate that they had it in their ability to provide a machine for your review If you could work out the logistics? Answer Rose: "I don't think we ever really got to that stage".
The Mexican approach throughout this case - be it SEGOB at the Oficio-stage, newly directed SEGOB In the prohibition phase or Mexico in the defense stage - has been that the functionality of the machine was self-evident, and no need for In-depth Inspection and examination was necessary117. If, after all the controversy on skill and chance, Mexico still felt it was not necessary to let their principal expert examine the machines physically and directly, then the conclusion to be drawn is that at no time was there any doubt with SEGOB about how the machines functioned and what legal issues they raised. The "lack of disclosure" by Thunderbird argument hence can go nowhere: Re-examining the machines in August 2000 - as during the subsequent NAFTA arbitration from 2002 to 2005 - would have been to "bring coal to Newcastle" or "owls to Athens". SEGOB and Mexico's counsel never thought it was necessary to examine the machines in detail - and the tribunal, I suggest, should not theorise on SEGOB's Ignorance as SEGOB and Mexico's counsel, then and now, act in a way that indicates that they have a perfect understanding of the machines at issue.
To sum up: Since I view the Solicitud as a proposal for a legal qualification of the machines as not being covered by the Mexican gambling law, I can not view the claimant's Solicitud as lacking In required disclosure of the technical nature of the machines. There can be no deception of SEGOB If SEGOB was or must have been aware of the nature of the machines, the legal issues raised, the precedential litigation and if the Solicitud in essence was conceived as and understood as a legal advocacy. The facts were evident and knowledge of them was shared by both parties; what was at issue was the legal qualification. Even Mexico's chief expert describes the moment in time when the Oficio was issued as " a great movement right before President Fox was elected " for liberalisation of the gambling law. And he equally provided the explanation for the subsequent reversal of SEGOB's position under the new PAN government:
"then some sort of scandal or political issue hit, and the government had to back away".
"There is the difference between whether It is a game of skill or a game of chance, so if it's predominantly skill, It is not gambling. If It is predominantly chance, then It is gambling".121
Question by President: "But does it address also the question predominantly, now the reverse, predominantly skilled?.. It says one thing, but does it also say the other thing.
Answer: You might interpret it as predominantly ability and skill and not betting
Question: So, you would say you can Interpret this?
Answer: Yes, sir
"devices that are predominantly skill are legal"
A dispassionate expert or a tribunal careful weighing up facts ex-post and after Intensive litigation may come to a more nuanced conclusion. That what is relevant for Interpreting the conveyed meaning and message by SEGOB to Thunderbird is not what a dispassionate expert or a meticulous tribunal would or should understand, but what the addressee of the message - the Thunderbird gambling industry investors and promoters -could reasonably understand at the time the message was conveyed.
"Surprising departures from settled patterns of reasoning or outcomes... must be viewed with the greatest scepticism If their effect is to disadvantage the foreigner"157.
"The tribunal is not averse to trying to "connect the dots" as a way of testing Methanex's hypothesis", and: "Inference is an appropriate mode of decision In circumstances in which firmer evidence is not available" (Part III, B, para. 57)
"If they have closed one down and don't close down a competitor who is very public, then there is the possibility, very strong possibility of bribes".
"therefore, to establish undue Influence, Methanex would, at least, have to be in a position to allege if not also to demonstrate that a legal violation took place" (part III, Chapter B, para 22)
The Methanex tribunal was not impressed with the claim for Improper behaviour on the part of the regulating state, though the assertions and facts in Methanex were stronger than the hints and Innuendo in Thunderbird. As in Methanex, there was a reasonable explanation for the context and underlying policy of SEGOB under the earlier government to test and marginally expand the boundaries of the gambling law embodied in the Oficio. As a result, the Thunderbird allegations should deserve even less consideration than similar, but factually much more substantiated, allegations in the Methanex case.
M. Buehler, In a survey that is focused on International commercial arbitration - not Investment arbitration - concludes that in "mixed arbitration (meaning Investor-state), too, the loser-pavs rule seems to be the exception rather than the rule ". "In most cases, the tribunals simply ordered each party to bear half of the procedural costs and left the parties' costs where they fell." "Waste Management v. Mexico seems to be the only case where the private party was ordered to bear the procedural costs because it lost its case (nonetheless, legal costs were not allocated"178. - The survey of N. Rubins179 focusing on Investment arbitration notes that :
"awards of costs or legal fees against unsuccessful claimants In Investment arbitration cases appear to be exceedingly rare " and that "Investment arbitration tribunals have examined the issue on a case-by-case basis, more often than not dividing the arbitration costs equally between the parties, and, more frequently yet, ordering each party to bear its own legal fees".
The most recent and exhaustive survey by Professor Gotanda finds that:
"One trend that has developed is the tribunals' hesitation In awarding attorneys fees against a private party under the ICSID rules. Where there is case law awarding attorneys' fees against a losing government party, there is a noticeable lack of cases where tribunals order a losing private party to bear the winning party's cost of representation. Even where the private party's claim or defense fails in its entirety tribunals have opted not to award attorneys' fees and split the costs of the proceeding between the two parties"180.
A most recent survey on "ICSID Arbitration Awards and Cost"181 finds, on a survey of 14 awards:
"The fourteen arbitration decisions reviewed indicate that, with few exceptions, the tribunals generally allocate one half of the arbitration costs to each party. In addition, the tribunals generally hold each party responsible for their own representation costs".
And it concludes that only "reckless" or "bad faith" claims have led to claimant responsibility for respondent's representation costs:182
"Unless there is a significant error, Inconvenience of unreasonable action on the part of one party, it is most likely that each party will bear half of the arbitration costs and their own respective representation cost".
"Some arbitral tribunals are reluctant to order the losing party to pay the winner's representation costs, unless the winner has prevailed over a manifestly spurious or unmeritorious position taken by the loser", (para. 33)
"The Claimant's written presentation of its case has also been convoluted, repetitive, and legally Incoherent. It has obliged the Respondent and the Tribunal to examine a myriad of factual issues which have ultimately been revealed as irrelevant to any conceivable legal theory of jurisdiction, liability or recovery. its characterisation of evidence has been unacceptably slanted, and has required the Respondent and the Tribunal to verify every allegation with suspicion", (para 24/2_; - "The Claimant's position has also been notably inconsistent." (para 24.3) - Moreover, the Claimant's presentation of its damages claim has reposed on the flimsiest foundation, (para. 24.4) - The Claimant's presentation has lacked the intellectual rigour and discipline one would expect of a party seeking to establish a cause of action before an International tribunal. This lack of discipline has needlessly complicated the examination of the claim, (para 24.6) ". "The claimants submissions.. have been seriously flawed due to the absence of a coherent analysis" (para. 20.26)
The "contribution" of 22200 US $ to the respondent's attorney costs in the Link Trading case (under Uncitral rules) could prlma vista be seen as supporting, marginally, the cost decision In this award. There is, however, no review of precedent and only a very general reference to Art. 40 of the Uncitral rules in the award. But the tribunal also expressed, in its cost decision, dissatisfaction with the litigation conduct of claimant. It noted that the costs significantly exceeded what the tribunal estimated for the security deposit: "due principally to the unsolicited further submission of Claimant" (para. 96). This reference suggests that the 22200 US $ contribution reflected an unnecessary increase of the arbitration cost due to unreasonable litigation conduct by claimant. The case, therefore, rather supports the principle that attorney costs of prevailing respondent can only be allocated to the unsuccessful claimant if there was in the tribunal's judgment evidence of unreasonable, cost-enhancing, conduct. E contrarlo, the Link Trading award therefore follows the rule that Art. 40 (2) of the Uncitral rules has to be applied in Investment disputes so that the losing claimant does not have to pay the respondent's costs of legal representation. Since there is no such evidence or Indication In the Thunderbird award of any professional cost-inflating or otherwise "bad faith" misconduct, the Link Trading case provides another example of a "jurisprudence constante": Each party, in particular respondent, have to bear their own attorney costs.
"Certain tribunals are reluctant to order the unsuccessful party to pay the costs of the successful party's legal representation unless the successful party has prevailed over a manifestly spurious position taken by the unsuccessful party."
"The tribunal decided that this documentation was procured by Methanex unlawfully... in violation of a general duty of good faith Imposed by Uncitral rules and, indeed, Incumbent on all who participate in international arbitration"201.
- established NAFTA and BIT/ICSID jurisprudence on cost allocation can only be seen as foreclosing access to this type of justice for smaller companies. But that is not the objective of the NAFTA treaty which, to promote trade, new employment opportunities (note the Preamble of the NAFTA), Increase Investment opportunities and eliminate barriers to trade in, and facilitate cross-border movement of goods and services (Art. 102) is not intended to provide access to Investment arbitration only to major US and Canadian multinational companies. The approach to costs in this award suggests that Investment arbitration is only for the very large companies, leaving out entrepreneurs with Initiative, willingness to take (sometimes perhaps recklessly) risk and who may not have the same "International corporate style" appeal of the "men In dark suits". But there is no indication that this was the Intention of the negotiators of such treaties. The highly unusual cost award thus casts a "chill" over attempts by junior companies to rely on the NAFTA's Investment protection regime and makes that recourse - very high-risk anyway206
- doubly prohibitive because of the now added cost risk. In effect and in practice, it makes recourse to independent justice for smaller companies prohibitive.
"It observed that the dispute raised "a set of novel and complex issues not previously addressed in International arbitral precedent....... Moreover, Argentina was entitled to take the position it took, which Itself raised a difficult and novel question of public importance concerning ICSID and the operation of Investment protection agreements on the model of the BIT."
In the light of the importance of the arguments advanced by the parties in connection with this case, the Committee considers it appropriate that each party bear its own expenses Incurred..."
|Case||Decision on cost|
|1. Noble Ventures,||The Tribunal dismissed the claims. The tribunal decided that each|
|Inc.||v. Romania,||party shall bear the expenses incurred by it in connection with the|
|ICSID||Case No.||arbitration and that the arbitration costs, including the fees of the|
|ARB/01/11||members of the Tribunal, shall be home by the parties in equal shares.|
|(US/Romania BIT)- Final Award, 12 October 2005, § 230 et seq.||The tribunal said that "233. Provisions regarding the Tribunal's decision in the matter of costs are to be found in Art. 61(2) of the ICSID Convention and Arts. 28 and 47 (j) of the ICSID Arbitration Rules. Noting that none of these provisions mentions specific criteria|
|for the decision on costs, the Tribunal takes into account the following particular considerations:|
|234. On one hand, it is a principle common to both national laws and international law that a party injured by a breach must be compensated for its losses and damages, which include arbitration costs. On the other hand, the "loser pays" principle is not common to all national laws or international law, and in particular is stated in neither the ICSID Convention nor the ICSID Arbitration Rules.|
|235. On the issue of costs the Tribunal has taken into consideration all the circumstances of this case. In particular, it notes that, although all the claims ultimately failed, the Claimant succeeded on certain issues, notably the fundamental legal issue of the umbrella clause contained in|
|Article II(2)(c) of the BIT as a basis for liability under the BIT in this case and the factual issue with regard to the diligence exercised by SOF after the execution of the SPA, albeit without causal significance. The Tribunal also has in mind that the basic flaws in the SPA are to be attributed to both SOF and the Claimant.|
|236. Therefore, using the discretion that it has under the ICSID Convention and the ICSID Arbitration Rules, the Arbitral Tribunal deems it fair and reasonable that the cost burden be shared equally between the parties, each bearing its own legal and other expenses and 50 % of the arbitration costs"|
|2. Methanex||The Tribunal dismissed the claims. The tribunal applied UNCITRAL|
|Corporation v.||Rules. The Tribunal observed that it has a broad discretion in relation|
|United States of||to its award in respect of costs under Articles 38 and 40 of the|
|America UNCITRAL||UNCITRAL Rules.|
|(NAFTA)- Final Award. 3 Auaust 2005, Part V.||The Tribunal determines that there is no compelling reason not to apply the general approach required by the first sentence of Article 40(1) of the UNCITRAL Rules. Although over the last five years, Methanex has prevailed on certain arguments and other issues against the USA, Methanex is the unsuccessful party both as to jurisdiction and the merits of its Claim. There is no case here for any apportionment under Article 40(1) of the Rules or other departure from this general principle. Accordingly, the Tribunal decides that Methanex as the unsuccessful party shall bear the costs of the arbitration.|
|With regard to disputing party legal costs, the Tribunal observed that the practices of international tribunals vary widely. Certain tribunals are reluctant to order the unsuccessful party to pay the costs of the successful party’s legal representation unless the successful party has prevailed over a manifestly spurious position taken by the unsuccessful party. Other arbitral tribunals consider that the successful party should not normally be left out of pocket in respect of the legal costs|
|reasonably incurred in enforcing or defending its legal rights. In the present case, the Tribunal favours the approach taken by the Disputing Parties themselves, namely that as a general principle the successful party should be paid its reasonable legal costs by the unsuccessful party. In this case, the USA has emerged as the successful party, as regards both jurisdiction and the merits. The Tribunal has borne in mind that, at the time of the Partial Award, it could have been argued that the USA had lost several important arguments on the admissibility issues; but over time the Partial Award does not affect the end-result of the dispute overall, as decided by this Final Award. Uikewise, the issues on which the USA did not prevail in this Award were of minor significance. The Tribunal does not consider any apportionment appropriate under Article 40(2) of the UNCITRAL Rules. Accordingly, the Tribunal decides that Methanex shall pay to the USA the amount of its legal costs reasonably incurred in these arbitration proceedings.212|
|3. Empresas Lucchetti, S.A. and Lucchetti Peru, S.A. v. Peru, ICSID Case No. AR.B/03/4 (Peru/Chile BIT), Decision on Jurisdiction, 7 February 2005. p. 25 et seq.||The Tribunal holds that it has no jurisdiction to hear the merits of the present claim. The Tribunal decides that each Party shall pay one half of the arbitration costs and bear its own legal costs|
|4. Consortium Groupement L.E.S.I.- DIPENTA v. Algeria, ICSID Case No. ARB/03/08 (Algeria/Italy BIT) - Decision on Jurisdiction, 10 January||Le Tribunal arbitral n’est pas compétent pour connaître du litige entre le Consortium L.E.S.I. - Dipenta et la République algérienne démocratique et populaire. Chaque Partie supporte la moitié des frais de l’arbitrage et supporte ses propres frais de représentation|
|2005 (French'). 5 43 et seq.|
|5. Garni Investments, Inc. v. Mexico, UNCITRAL (NAFTA), Final Award, 15 November 2004, § 134 et seq.||The tribunal declared that it has jurisdiction over the claims but it dismissed them in their entirety. The tribunal nevertheless finds equitable that each side bears its costs. The Tribunal said that "There are two reasons for not giving Mexico any recovery in this respect. The first is that Mexico raised an unsuccessful jurisdictional objection which became a major feature of the proceedings. The costs associated with that special hearing were significant. The second is that GAMI grievance must be considered as serious. It raised disquieting questions with respect to regulatory act and omission. The Tribunal said that UNCITRAL rules accorded the arbitrators broad discretion with allocation|
|of cost. It concluded that each party bears its own expenditures. The amount paid to the Tribunal is divided equally".|
|6. Loewen Group, Inc. and Raymond L. Loewen v. United States (II), ICSID Case No. ARB(AF)/98/3 (NAFTA). -Decision on Respondent's Request for a Supplementary, 6 September 2004, § 23 et seq.||The Tribunal rejected the Respondent's Request. The Tribunal ordered that each party shall bear its own cost and shall bear equally the expenses of the Tribunal and the secretariat.|
|7. Joy Mining Machinery Limited v. Egypt, ICSID Case No. ARB/03/11 (United Kingdom/Egypt BIT) - Decision on Jurisdiction, 30 July 2004, p. 25 et seq.||The tribunal decided that the Tribunal lacks competence to consider the claims made by the Company. Each Party shall pay one half of the arbitration costs. Each Party shall bear Its own legal costs.|
|8. Soufraki v. United Arab Emirates, ICSID Case No. ARB/02/7 (Italy/United Arab Emirates BIT).- Decision on Jurisdiction, 7 July 2004, § 85 et seq.||The Tribunal decided that the dispute falls outside its jurisdiction under Article 25(1) and (2)(a) of the ICSID Convention and Article 1(3) of the BIT. Taking Into account the circumstances of the case and the Respondent's success with Its jurisdictional objection, the Tribunal concludes that It Is appropriate that the costs of the proceeding, including the fees and expenses|
|of the Tribunal and the ICSID Secretariat, be borne two- thirds by Claimant and one-third by Respondent, but that each party bears its own legal costs and expenses in connection with the proceeding.|
|9. Waste Management, Inc. v. United Mexican States (II), ICSID Case No. ARB(AF)/00/3 (NAFTA) -Final Award, 30 Aprii 2004, § 179 et seq.||The Tribunal decided that (a) the claim is admissible under Chapter 11 of NAFTA; (b) That the conduct of the Respondent which is the subject of the claim did not involve any breach of Article 1105 or 1110 of NAFTA; (c) That Waste Management's claim is accordingly dismissed In its entirety; (d) That each Party shall bear its own costs and half of the costs and expenses of these proceedings.|
|10. Consortium R.F.C.C. v. Kingdom of Morocco, ICSID Case No. ARB/00/6 (Italy/Morocco BIT)- Final Award, 22 December 2003 (French), § 112 et seq.||Le Tribunal rejette les demandes du Consortium RFCC; met les frais d'arbitrage à parts égales à la charge du Consortium RFCC et du Royaume du Maroc; dit que chaque partie supportera ses propres frais et honoraires de conseils et de représentation engagés dans la présente procédure.|
|11. Generation Ukraine, Inc. v. Ukraine, ICSID Case No. ARB/00/9 (United States/Ukraine BIT)- Final Award, 16 September 2003, § 24.1 et seq.||The claim falls In Its entirety. The tribunal considered whether there are any reasons to attenuate the general rule than an unsuccessful litigant In International arbitration should bear the reasonable costs of Its opponent. Counsel for the Claimant has suggested that "there's more documentation in this particular ICSID reference than has ever been in any previous ICSID reference." The Tribunal Is not certain that such an affirmation is verifiable; It Is certainly true that the written evidence and submissions In this case have been voluminous. But the Claimant's written presentation of Its case has also|
|been convoluted, repetitive, and legally incoherent. It has obliged the Respondent and the Tribunal to examine a myriad of factual issues which have ultimately been revealed as irrelevant to any conceivable legal theory of jurisdiction, liability or recovery. Its characterisation of evidence has been unacceptably slanted, and has required the Respondent and the Tribunal to verify every allegation with suspicion. The Claimant’s position has also been notably inconsistent. Moreover, the Claimant’s presentation of its damages claim has reposed on the flimsiest foundation. The Claimant's presentation has lacked the intellectual rigour and discipline one would expect of a party seeking to establish a cause of action before a International tribunal. This lack of discipline has needlessly complicated the examination of the claim. Even at the stage of final oral submissions in March 2003, counsel for the Claimant relied on two ICSID awards without mentioning that they had been partially annulled. While the Tribunal was fortunately aware of that limitation on the pertinence of those awards, this was due to the happenstance of the arbitrators'personal knowledge. The Tribunal assumes In counsel's favour that he was unaware of the annulments; that is bad enough, and does no credit to the Claimant. The Respondent has claimed costs of USD 739,309.80, representing "contract payments of lawyers [sic] and experts services and expenses for business trips". The Tribunal is unsatisfied with these uncorroborated costs submissions, and considers them vastly overstated. It awards all costs the Respondent has paid into ICSID, or USD 265,000 as well as a contribution of USD 100,000 to the Respondent's legal fees.|
|12. Loewen v. United States (I), ICSID Case No. ARB (AF)/98/3 (NAFTA) - Final Award, 26 June 2003, §240 et seq.||In regard to the question of costs the Tribunal Is of the view that the dispute raised difficult and novel questions of far-reaching importance for each party, and the Tribunal therefore ordered that each party shall bear its own costs, and shall bear equally the expenses of the Tribunal and the Secretariat.|
|13. Yaung Chi Oo Trading PTE Ltd. v. Government of the Union of Myanmar ASEAN Investment Agreement, I.D. Case No. ARB/01/1 -Final Award, 31 March, 2003, § 87 et seq.||The Tribunal unanimously holds that It lacks jurisdiction In the case. As to the question of costs, the Tribunal notes that neither party sought costs at the end of the oral proceedings. For its own part, the Tribunal concludes that no order should be made In relation to the costs of the parties or the fees and expenses of the Tribunal. Each party has succeeded In part In terms of the Issues which were argued before the Tribunal, even if in the result the Claimant falls on grounds essentially unrelated to the merits of Its underlying claim. The tribunal concluded that each party shall bear its own costs, and shall bear equally the fees, costs and expenses of the Tribunal and the Secretariat.|
|14. ADF Group Inc. v. United States, ICSID Case No. ARB (AF)/00/1 (NAFTA). - Final Award, 9 January 2003, § 200.||In its Counter-Memorial, the Respondent asked the Tribunal for an order requiring the Investor to bear the costs of this proceeding, including the fees and expenses of the Members of the Tribunal, the expenses and charges of the Secretariat and the expenses incurred by the United States by reason of this proceeding. Having regard to the circumstances of this case, Including the nature and complexity of the questions raised by the disputing parties, the Tribunal believes that the costs of this proceeding should be shared on a fifty-fifty basis by the disputing parties, including the fees and expenses of the Members of the Tribunal and the expenses and charges of the Secretariat. Each party shall bear its own expenses incurred in connection with this proceeding.|
|15. Mondev International Ltd. v United States of America, ICSID Case No. ARB(AF)/99/2 (NAFTA)- Final Award, 11 October 2002, § 158 et seq.||The Tribunal dismisses Mondev's claims In their entirety. As to the question of costs and expenses, the United States sought orders that Mondev pay the Tribunal's costs and the legal expenses of the United States on the basis that Its claim was unmeritorious and should never have been brought. The Tribunal said that " NAFTA tribunals have not yet established a uniform practice in respect of the award of costs and expenses. In the present case the Tribunal does not think it appropriate to make any order for costs or expenses, for several reasons. First, the United States has succeeded on the merits, but It has by no means succeeded on all of the many arguments it has advanced, including a number of arguments on which significant time and costs were expended. Secondly, In these early days of NAFTA arbitration the scope and meaning of the various provisions of Chapter 11 is a matter both of uncertainty and of legitimate public Interest. Thirdly, the Tribunal has some sympathy for Mondev's situation, even if the bulk of Its claims related to pre- 1994 events. It Is Implicit In the jury's verdict that there was a campaign by Boston (both the City and BRA) to avoid contractual commitments freely entered Into. In the end, the City and BRA succeeded, but only on rather technical grounds. An appreciation of these matters can fairly be taken into account In exercising the Tribunal's discretion in terms of costs and expenses. The Tribunal concluded that each party shall bear its own costs, and shall bear equally the expenses of the Tribunal and the Secretariat.|
|16. W. Nagel v. Czech Republic, SCC Case 49/2002||The Arbitral Tribunal has reached the conclusion that Mr Nagel's claims are to be dismissed In their entirety. This should normally have as a consequence that Mr Nagel|
|(UK/Czech||Republic||should bear his own costs and also be ordered to pay|
|BIT), Decision on||the Czech Republic's costs and be ultimately responsible|
|Jurisdiction||9||for the costs and expenses of the Arbitral Tribunal and|
|September||2002, p.||the administrative fee of the SCC Institute.|
|166 et||seq. (SAR|
|version).||However, the Arbitral Tribunal considers that some costs and expenses must be considered to relate to specific objections raised by the Czech Republic which were rejected by the Arbitral Tribunal. The Arbitral Tribunal considers it justified to take these circumstances into account when making an order about costs and expenses. Thus, while Mr Nagel should be responsible for his own costs in their entirety, he should be obliged to reimburse only 80 % of Czech Republic's costs.|
|Mr. Nagel has contested the reasonableness of Czech the Republic's cost claims. He has argued that the number of more than 3,267 hours indicated by the Republic as having been devoted to the case by lawyers and other timekeepers is excessive since there have been (a) no preliminary hearings or appearances of any kind, (b) no disclosures of documents, (c) only three days of evidentiary hearings in which the Republic cross-examined only one witness and produced the testimony of only four witnesses, and (d) only three written submissions from each side, none of unusual length. Mr. Nagel also argued that the claim of USD 118,041 for experts was excessive and unreasonable and pointed out that the testimony of one of the experts (...) had relevance, if at all, only to damages and that his costs should therefore be disallowed at this stage of the proceedings.|
|The Arbitral Tribunal first notes that there is a very considerable difference between the amounts claimed by the two parties as compensation for costs.|
|In view of the outcome of the arbitration, the Arbitral Tribunal finds that the parties should be ultimately responsible, [Mr Nagel for 90 % and the Czech Republic for 10 % of these costs and expenses|
|In relation to the arbitrators and the Arbitration Institute, the parties shall be responsible, jointly and severally, for the payment of the amounts due to the arbitrators and the Arbitration Institute. As between the parties, Mr Nagel shall be responsible for 90 % and the Czech Republic for 10 % of the amounts due In this arbitration to the arbitrators and the Arbitration Institute.|
|17. Link-Trading||The tribunal said that according to article 38 of|
|Joint Stock Company||UNCITRAL rules, the cost of arbitration including fees for|
|v. Moldova, UNCITRAL||legal representation and assistance shall In principle be|
|(US/Moldova BIT) -||borne by the unsuccessful party, although the tribunal|
|Final Award, 18 April||may apportion such costs among the parties If It|
|2002, § 83 et seq.||determines that this would be reasonable under the circumstances of the case. The Tribunal holds that the Claimant has failed to prove its claim of violation of the BIT by the respondent and the reasonable costs of arbitration shall be awarded to respondent. The respondent made a submission as to Its cost (counsel fees and experts) for a total USD 144, 422, 80. The tribunal considered that It would be reasonable to award the respondent an amount of USD 22,200. As for the cost of arbitrators and secretariat, The tribunal said that these expenditures shall be beard by the claimant.|
|18. Genin, Eastern Credit Limited, Inc. and A.S. Baltoil v Estonia (II), ICSID Case No. ARB/99/2. (United State s/Estonia BIT)- Decision on Request for Supplementary Decisions and Rectification, 4 April 2002, § 19 et seq.||Claimants' Request for Supplemental Decisions and Rectification is denied. The Tribunal said that "19. The Claimants had their "day in court". In fact, they had their week before the Tribunal. Not content with the result, they initiated further proceedings, as was their right, making the Request which the Tribunal hereby denies. 20. In the present instance, the Tribunal has no hesitation in ordering that the costs associated with Claimants’ Request shall follow the result. Specifically, and in accordance with Article 61 of the ICSID Convention and Arbitration Rule 47(l)(g), the Tribunal orders that the costs of the present proceeding - that is, the expenses incurred by the parties as well as the fees and expenses of the members of the Tribunal associated with the Request - shall be paid in full by Claimants. 21. In this regard, the Tribunal assesses the expenses incurred by the Respondent in connection with the present proceeding in the amount of US$26,485.43, in accordance with the Respondent’s Statement on Costs submitted on March 11, 2002, and assesses the fees and expenses of the members of the Tribunal associated with the Request in the amount of US$14,769.15, in accordance with the Secretariat’s communication of March 14, 2002. Accordingly, the Tribunal orders Claimants to reimburse Respondent the total amount of US$41,254.58 within 15 days of the date on which the present decision is dispatched to the parties"|
|19. Mihaly International Corporation v Sri Lanka, Award, ICSID Case No. ARB/00/2 (United States/Sri||The costs of the proceedings Including the fees and expenses of the Arbitrators and the Secretariat shall be shared by the Parties In equal portion; and that (b) Each Party shall bear Its own costs and expenses In respect of legal fees for counsels and their respective costs for the preparation of the written and the oral proceedings|
|Lanka BIT)- Decision on Jurisdiction, 15 March 2002, § 63.|
|20. Lauder v. Czech Republic, UNCITRAL. (United States/Czech Republic BIT)- Final Award, 3 September 2001, § 315 et seq.||According to Article 40 of the UNCITRAL Rules, the costs of arbitration shall in principle be borne by the unsuccessful party. However, the Arbitral Tribunal may apportion such costs between the Parties If It determines that apportionment Is reasonable, taking into account the circumstances of the case. The same applies according to Article 40(2) with respect to the costs of legal representation and assistance. The Arbitral Tribunal can take into account the circumstances of the case and is free to determine which Party shall bear such costs or may apportioned such costs between the Parties if it determines that apportionment is reasonable. 318. Among the circumstances the Tribunal has taken into account is its finding that the Respondent, at the very beginning of the Investment by the Claimant in the Czech Republic, breached its obligations not to subject the Investment to discriminatory and arbitrary measures when It reneged on Its original approval of a capital Investment in the licence holder and insisted on the creation of a joint venture. Furthermore, various steps were taken by the Media Council, especially, but not only, the 15 March 1999 letter to CET 21. Although the Arbitral Tribunal came to the conclusion that such acts did not constitute a violation of the Treaty obligations of the Respondent, the Claimant bona fide could nevertheless feel that he had to commence these arbitration proceedings. Furthermore, the behaviour of|
|the Respondent regarding the discovery of documents, which the Claimant could rightly feel might shed more light on the acts of the Respondent, needs to be mentioned In this context. 319. Taking all these circumstances of the case Into account, the Arbitral Tribunal comes to the decision that each Party shall pay one half of the fees and expenses of the Arbitral Tribunal and the hearing cost and bear its own costs for legal representation and assistance and the costs of Its witnesses.|
|21. Olguin v Paraguay, ICSID Case No. ARB/98/5. (Peru/Paraguay BIT), Final Award, 26 July 2001, § 85 et seq.||Although this Tribunal is rejecting all of Mr. Olguin’s claims, it does not feel that it is fair to make him pay the costs for these proceedings. In the first place, the Respondent’s questioning of this Tribunal’s jurisdiction was flatly rejected, on the grounds expressed earlier. In the second place, as already stated various times in this Award, while the oversight exercised by the Paraguayan State through its bodies did not rise to a level of negligence that created liability to pay the losses suffered by the Claimant, it is also true that it cannot be considered to have been exemplary. Moreover, the conduct of the Republic of Paraguay needlessly prolonged these proceedings by repeatedly failing to meet the deadlines set by the Tribunal, in particular, the obligations imposed by the ICSID Administrative and Financial Regulations. For the above reasons, this Tribunal feels that it is fair that the parties each contribute part of the expenses arising from these proceedings, dividing the procedural costs in equal shares, and each assuming the costs for their legal representation.|
|22. Genin, Eastern||The Tribunal dismissed the claims. Two factors, in particular, have shaped the Tribunal's determination of the allocation of the costs of the arbitration. Both|
|Credit Limited, Inc. and A.S. Baitoii v Estonia (I), ICSID Case No. ARB/99/2, (United States/Estonia BIT)- Final Award, 25 June 2001, § 379 et seq.||of those factors relate to the conduct of the parties as demonstrated by the written and oral evidence adduced by them. 380. First, the Tribunal cannot but decry Mr. Genin's failure to cooperate with the Estonian banking authorities during the period In which the salient facts underlying the dispute took place. His concealment, right up until his cross-examination by Respondent's counsel during the hearing, of his ownership of the companies in question was an element of both substantive and procedural significance, with effect on the conduct of the arbitration. Claimants themselves concede, In their Post-Hearing Memorial, that Mr. Genin's conduct could be considered to have affected the case and that It Is thus appropriate for the Tribunal to take this conduct Into account when considering the allocation of costs. The Tribunal cannot but concur with both parts of that statement. 381. On the other hand, as mentioned above, the awkward manner by which the Bank of Estonia revoked EIB's license, and In particular the lack of prior notice of its intention to revoke EIB's license and of any means for EIB or its shareholders to challenge that decision prior to Its being formalized, cannot escape censure. 382. Either of these factors, alone, might have Impelled an award of costs against the offending party. 383. Accordingly, and taking into consideration the circumstances of the case, the Tribunal determines that each party shall bear all of the expenses incurred by It in connection with the arbitration. The costs of the arbitration, including the fees and expenses of the|
|members of the Tribunal and the charges for the use of the facilities of the ICSID, shall be borne by the parties in equal shares. The tribunal concluded that All of Claimants' claims are dismissed; (6) Respondent's counterclaim Is dismissed; and (7) Each party shall bear all of its own costs and expenses Incurred in connection with the proceedings, and the costs of the arbitration shall be borne by Claimants and Respondent, respectively, in equal shares.|
|23. Gruslin v Malaysia, ICSID Case No. ARB/99/3, (Belgo- Luxembourg/Malaysia BIT)- Decision on Jurisdiction, 27 November 2000, § 27.4 et seq.||The tribunal rejects the claimant's submission that the respondent should be ordered to pay any of the claimant's cost of his unsuccessful claim now dismissed for want of jurisdiction. The Tribunal Invoked some considerations that militate against the claimant being award to pay the respondent's cost. Among these considerations the inequality if the position of the parties: the tribunal remarked that the claimant conducted the proceedings in person and with particular tenacity and was not assisted as the state was by counsellors. Second consideration: the fact that the respondent did not raise the approved project argument until the second round of pleadings. The tribunal concluded that each party shall bear all of its own costs and expenses Incurred in connection with the proceedings, and the costs of the arbitration shall be borne by Claimants and Respondent, respectively, in equal shares.|
|24.||Waste||The majority said that the tribunal has no jurisdiction to hear the case because the claimant's breach of one of the requisites laid down by NAFTA|
|Management, Inc. v.||Article 1121(2)(b) (waive their right to initiate or continue before any|
|Mexico||(I), ICSID||administrative tribunal or court under the law of any NAFTA Party, or other|
|Case||No.||dispute settlement procedures, any proceedings.|
|(NAFTA)-||Decision on||The majority orders the Claimant to pay the costs of the present|
|Jurisdiction, 2 June||arbitration proceedings, and each of the disputing parties to defray the|
|2000, p.||240, ICSID||respective costs occasioned by its own defence.|
|The arbitral award has been adopted by a majority of the Arbitral|
|25.||Azinian,||The claim has failed in its entirety. The Respondent has|
|Davitian,||& Baca v.||been put to considerable inconvenience. In ordinary|
|Mexico,||ICSID Case||circumstances it is common in International arbitral|
|No. ARB||(AF)/97/2,||proceedings that a losing claimant is ordered to bear the|
|(NAFTA)-||Final Award,||costs of the arbitration, as well as to contribute to the|
|1 November 1999, §||prevailing respondent's reasonable costs of|
|125 et seq||representation. This practice serves the dual function of reparation and dissuasion.|
|The Tribunal said that "126. In this case, however, four factors militate against an award of costs. First, this is a new and novel mechanism for the resolution of international investment disputes. Although the Claimants have failed to make their case under NAFTA, the Arbitral Tribunal accepts, by way of limitation, that the legal constraints on such causes of action were unfamiliar.|
|Secondly, the Claimants presented their case in an efficient and professional manner. Thirdly, the Arbitral Tribunal considers that by raising Issues of defective performance (as opposed to voidness ab initio) without|
|regard to the notice provisions of the Concession Contract, the Naucalpan Ayuntamiento may be said to some extent to have invited litigation. Fourthly, it appears that the persons most accountable for the Claimants' wrongful behaviour would be the least likely to be affected by an award of costs; Mr. Goldenstein Is beyond this Arbitral Tribunal's jurisdiction, while Ms. Baca - who might as a practical matter be the most solvent of the Claimants - had no active role at any stage.|
|127. Accordingly the Arbitral Tribunal makes no award of costs, with the result that each side bears its own expenditures, and the amounts paid to ICSID are allocated equally"|
|26. Tradex Hellas||For its decision regarding the costs of the proceeding, the Tribunal first takes|
|S.A. v. Albania, ICSID||into account that Tradex prevailed in the procedure concluded by the Decision on Jurisdiction of 24 December 1996, and that now, Albania prevailed on the|
|Case No. AR.B/94/2||merits. Furthermore, though, taking the dispute as a whole, Tradex failed in|
|(Jurisdiction based on foreign investment law not BIT) - Final Award,||its claim, it may be taken into account that, by no means, this claim can be considered as frivolous In view of the many difficult aspects of fact and law involved and dealt with in this Award.|
|29 April 1999, § 206 et||herefore, the Tribunal concludes that, in view of all the|
|seq.||circumstances of this dispute, each Party should bear its own expenses and the costs of its own legal representation, and that the costs of the arbitration, covered by equal advance deposits by both Parties, should be borne by the Parties equally in shares of 50 %.|