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Memorandum of the Claimant Filed Pursuant to the Sole Arbitrator's Request of 19 December 1973


On 23 November 1973, in a letter addressed to the Deputy Secretary of the Tribunal the Claimant indicated that it sought a hearing in order to apply to the Tribunal for a re-opening or continuation of the first stage of the proceedings on the ground of partial invalidity of the Award by reason of substantive and procedural errors (including the failure of the Tribunal to accord the Claimant a fair hearing on all questions considered by the Tribunal in its Award) affecting, in essential respects, the refusal by the Tribunal of the Claimant's requests for Declarations Nos. 2 to 6.
By a letter received by the Agent of the Claimant on 19 December 1973, the Sole Arbitrator stated:

I have carefully studied your letter and would kindly ask you to indicate and substantiate in writing (i) the authorities (including statutes, cases and literature) which would permit the Tribunal to decide on 'a re-opening or continuation of the first stage of the proceedings', (ii) the alleged 'substantive and procedural errors', and (iii) how and to what extent such errors affect the conclusions of the Award. Pending receipt of your answer, which I expect to obtain as soon as possible, no date can be set for the requested hearing.

The purpose of the present Memorandum is to give to the Tribunal the indication which it has requested of the grounds upon which the Applicant will rely when making its oral application to the Tribunal to reopen and continue the first stage of the proceedings in this arbitration.
In a sentence, the Claimant's contention is that in relation to requested Declarations Nos. 2-6 the Tribunal has erred in law and in procedure to such a degree that the Tribunal's conclusions on those Declarations are null and void; accordingly, it is necessary for the Tribunal to reopen and continue the first stage of the proceedings in this arbitration in order to deal with the requests made by the Claimant for Declarations Nos. 2-6 and thereby complete its Award.
A summary indication of the Claimant's position must start from the recollection that in the first stage of the present proceedings the Claimant sought from the Tribunal seven declarations of right. The first was that the Libyan Government had by the enactment and implementation of its Nationalization Law of 7 December 1971 broken its agreement with the Claimant. The remainder were all related to the consequences of this breach. Of these six requests only the last, to the effect that the Claimant is entitled to damages for the Respondent's breach of contract, was granted. The other five requests were refused. The present application arises out of the circumstances and manner in which this refusal took place.
The Claimant contends that in refusing these requests the Tribunal made a fundamental error of law. This error is so substantial that it amounts to a failure by the Tribunal to apply the law; and for that reason, in the first place, the relevant part of the Award is invalid.
What is this error? The Tribunal has held, in relation to requested declaration No. 2, that "the BP Nationalization Law was effective to terminate the BP Concession, except in the sense that the BP Concession forms the basis of the jurisdiction of the Tribunal and of the right of the Claimant to claim damages from the Respondent before the Tribunal". As will Presently be indicated, the Claimant sees this conclusion as affected by more than one error. But the feature which the Claimant submits is the most erroneous in law and the most significant in its consequences is the proposition, implicit in the conclusion, that a party to a contract can by its own breach put an end to the contract; or, to put the point in different but more specific terms, that a Government may, by breaking a concession governed by a law other than its own, put an end to its legal commitment. This conclusion runs contrary to every legal system connected with the Concession, whether the principles of Libyan law, the principles of international law or general principles of law.
This error of substance is not the only basis on which the Claimant is obliged to challenge the validity of the Award. The manner in which the Tribunal reached its conclusions on Requested Declarations Nos. 2-6 is such as to render the relevant part of the Award procedurally defective and, for that reason, void. This procedural defect lies in the failure of the Tribunal to apply a fundamental principle of natural justice— the principle of ensuring that each party to proceedings knows, and is given an adequate opportunity to answer, the case which it has to meet.
In the present arbitration the Respondent has at all material times known the case against it. It has had the opportunity to reply. It has voluntarily chosen not to use it. The same is not true of the Claimant. The Tribunal has clearly stated that "the conclusions in the Award... are based on a broader consideration of the issues than that permitted by the format of the Claimant's argument in support of its claims". It is in fact manifest from a perusal of the Award that the Tribunal has developed a whole line of argument against the Claimant's request for Declarations Nos. 2-6 of which the Claimant was totally unaware and to which it was given no opportunity to reply. The elaboration by the Tribunal of this line of argument, and the manner of its doing so, goes far beyond the permissible limits of any such maxim as jura novit curia. This procedural error is exacerbated by the fact that it has come about notwithstanding the repeated invitation by the Claimant to the Tribunal to raise with the Claimant any points relating to the Claimant's argument about which the Tribunal might feel any doubt.
The procedure to be followed by a dissatisfied party in circumstances such as these must be found within the framework of the law governing the arbitration. Article 28(4) of the Concession states that the decision of the Sole Arbitrator shall be final. This, however, assumes, of course, that the decision is intra vires and valid, which, in the Claimant's submission, the Award is not. Consequently, the statement of finality is inapplicable here.
Article 28(5) empowers the Sole Arbitrator to determine "the procedure to be followed in the Arbitration". In addition, Article 28(6) empowers the Sole Arbitrator to determine "the place of arbitration". In the Minutes of the Meeting of 4 October 1972 the Tribunal ordered the place of arbitration to be Copenhagen, Denmark; and in the Award itself the Tribunal has held that the consequence of this is that "the procedural law of the arbitration is Danish". (Award, p. 16). The Tribunal expressly deemed the Award to be Danish and stated that "the proceedings have been conducted in a manner designed to be consistent with this view and intent."
With this in mind, the Claimant has sought an assessment of the position in Danish law and, in particular, under the Arbitration Act of 1972. An opinion has therefore been sought from two distinguished Danish lawyers, Professor Isi Foighel and Professor Allan Philip. The full text of this Opinion is appended to this Memorandum as Annex l. It appears from the Opinion that an arbitration award may be void, wholly or in part, as the case may be, on the ground that the hearing of the case has not safeguarded the parties, or that there has been a deviation from the rules prescribed for the arbitration tribunal which has had a major bearing upon the decision, or that the tribunal has acted ultra vires or that the award violates fundamental principles of law. These grounds are fully discussed in the Opinion, which, as will be seen, concludes that the Award rendered on 10 October 1973 is partially void.
In Part III of the Opinion, consideration is given to the power of the Tribunal to reopen, review or reconsider the Award. The Opinion points out that the proper first step is for the aggrieved party to turn to the arbitrator himself. The Opinion establishes that the arbitrator may re-open or continue the proceedings in appropriate circumstances. The Opinion then concludes that in a case where the validity of all or part of an award is called in question, there is an obligation upon the arbitrator to reopen and continue the proceedings for the purpose of curing the award of its invalidity. Otherwise, the arbitrator would be in breach of his obligation to grant a valid award.
The position in Danish law accords generally with the precedents in international arbitrations relating to the revision of arbitral awards on the grounds of defects of procedure or essential errors of substance. It will suffice at this stage to refer generally to the conclusions reached by Carlston, The Process of International Arbitration (1946), which contains a full review of the authorities. On the competence of a tribunal to reopen a decision he said (at p. 224):

Until the tribunal has finally adjourned, it is not lacking in jurisdiction to re-examine and correct its decision upon a proper showing by a party. While the error should be clear, substantial and of prejudice in order for it so to act, it should not dismiss any petition for rehearing upon the ground of lack of authority and res adjudicata.

As regards procedural requirements Carlston said (at p. 36):

The tribunal must respect the law governing its creation and defining its powers as laid down in the compromis, and it must likewise observe certain other established rules of a fundamental character which inherently, under the generally accepted rules of law and justice, regulate the conduct of any judicial body. By creating the tribunal and presenting their controversy to it for decision States do not renounce these rights as a consequence of the rule that the award shall be final.

And later he states (at pp. 38-9):

The question is rather: Does the departure constitute a deprivation of a fundamental right so as to cause the arbitration and the resulting award to lose its judicial character? Unless its effect is to prejudice materially the interests of a party, the charge of nullity should not be open to a party. Thus, the denial of a fair hearing, of an adequate opportunity to present its case, will justify a party in taking the position that the ensuing award is void.

And again (at p. 40):

One of the most elementary procedural rights is the right of a party to be heard, to present its arguments and proofs. A number of writers are in agreement that if that be denied the award may be considered null.

On the effect of substantive error Carlston concluded:

A decision which manifestly fails properly to apply a rule for decision laid down in the compromis or an applicable rule of international law having a material bearing upon the outcome of the case involves an excess of jurisdiction and is therefore void. (op. cit., p. 140).

Accordingly, the purpose of the application which the Claimant proposes to make orally is to seek from the Sole Arbitrator an order for the re-opening of the arbitration proceedings in relation to that part of the Award which deals with Requested Declarations Nos. 2-6 with a view to completing the Award on those points.
The present memorandum is concerned only with the application for a reopening or continuation of the first stage of the arbitration. If this application is granted it will then become necessary to develop in detail the nature of the error by which the Claimant alleges that the validity of the Award is affected. At this stage, however, the Claimant considers it valuable to give some further indication of the nature of the error.
The remainder of this Memorandum will, therefore, be devoted to this indication of the nature of the substantive and procedural errors made by the Tribunal.


Requested Declarations Nos 2-6 were formulated at page 69 and 70 of the Memorial in the following terms:

(2) The said breaches were and are ineffective to terminate the Concession Agreement, which remains in law valid and subsisting;

(3) The Claimant is entitled to elect, at any time so long as the Respondent's breach continues, to treat the Concession Agreement as at an end;

(4) The Claimant is entitled to be restored to the full enjoyment of its rights under the Concession Agreement;

(5) The Claimant is the owner of its share of any crude oil extracted from the area of the Concession Agreement after as well as before 7 December 1971 and of all installations and other physical assets, and the Libyan Government has no right to any such oil, installations or physical assets, which it can enjoy or transfer to any third party;

(6) Performance of the Claimant's obligations under the Concession Agreement is suspended for so long as the Libyan Government remains in breach thereof.

These Requested Declarations (Nos. 2-6) form a group which, in the Claimant's understanding, could properly be sought so as to give expression to the consequences flowing from Declaration No. 1, namely (as found by the Tribunal at p. 51 of the Award) that

the BP Nationalization Law, and the actions taken thereunder by the Respondent, do constitute a fundamental breach of the BP Concession as they amount to a total repudiation of the agreement and the obligations of the Respondent thereunder.

But the fact that Requested Declarations Nos. 2-6 form a group does not exclude the existence of a logical progression in the order in which they are presented to the Tribunal. Thus Requested Declaration No. 2 stands logically prior to Declarations Nos. 3, 4, 5 and 6. Indeed, this is twice recognised by the Tribunal. First, at p. 52 of the Award, the Tribunal says:

All the Declarations requested by the Claimant to be made by the Tribunal turn upon the issue of the effect of the breach of contract which, as determined earlier, has been committed by the Respondent.

Second, in its Conclusions, the Tribunal expressly states (Award, pp. 99-100) that the rejections of Requested Declarations Nos. 3 and 6 are a consequence of the decision on Requested Declaration No. 2 and impliedly finds that the rejection of the major part of Requested Declaration No. 5 is a consequence of the same decision.

It necessarily follows, therefore, that Requested Declaration No. 2 should have been considered prior to Requested Declarations 3-6. As stated, this is logically necessary and was perfectly possible. It would, in fact, have been unavoidable if the Claimants had, as they could have, limited their Requested Declarations to Nos. 1, 2 and 7. In that case, the Award could not have brought into the discussion the arguments associated with Requested Declaration No. 4.
However, the only separate and specific treatment given to Requested Declaration No. 2 is to be found at p. 53 of the Award. There, under the heading (i), the question is posed "Did the BP Concession survive the nationalization?" The only point then mentioned in this connection is, in one sentence, the fact that the Claimant's argument "is not qualified by reference to the time element" (an observation which, incidentally, fails to take into account paragraph 8 of the request for declarations formulated in the Claimant's Memorandum of 8 August 1972—see paragraphs 47 and 65 below). Reference is made elsewhere in this Memorandum to the procedural implications of the presumption then made by the Tribunal.
In fact what the Tribunal does is to bring forward its discussion of Requested Declaration No. 4 and deal with it as if it controlled Requested Declaration No. 2. This, as the Claimant sees it, contributes greatly to the Tribunal's major error.
In section 1 of Chapter V of the Memorial the Claimant developed the proposition that "the Concession remains in force until the Claimant elects to treat it as terminated" (paragraphs 165-172). The Claimant invoked in support of its proposition the Vienna Convention on the Law of Treaties, Article 60(1), the Advisory Opinion of the International Court of Justice on the Legal Consequences for States of the Continued Presence of South Africe in Namibia, the recognition of the principle in the Hague Convention relating to a Uniform Law on the International Sale of Goods and the municipal law of Libya, France, Germany, Scandinavia, England and the United States.
The Tribunal, however, did not examine these authorities directly and exclusively by reference to the proposition in support of which they were introduced.
Instead, the Tribunal restated the issue in such a way as to make it something quite different from that put forward by the Claimant and then, in passing, indicated the inadequacy of the Claimant's cited authorities to support a proposition which formed no part of the Claimant's case.
This suppositious proposition was formulated by the Tribunal at p. 53. It there posed the question: "Are specific performance and restitutio in integrum remedies available to the Claimant?" This, however, was never a question raised by the Claimant. The references by the Claimant to specific performance appeared in two contexts. The first was amongst the authorities demonstrating the continuity of a contract despite breach by one party. The other was in connection with the contention (at paragraphs 173-179 of the Memorial) that "the Claimant is entitled to restitution". Nowhere did the Claimant ever seek specific performance or restitutio in integrum.
There is a world of difference between seeking an acknowledgment that the primary remedy for a breach of contract is restitutio in integrum and actually seeking an order for restitution. Requested Declarations Nos. 3, 4, 5 and 6, although all logically dependent upon Requested Declaration No. 2 are not mutually interdependent. And the rejection of Requested Declaration No. 4 would not affect the other requested Declarations. Yet the Tribunal made its whole consideration of Declaration No. 2 depend upon its discussion of its own reformulation of Requested Declaration No. 4.
The Tribunal even recognised that its formulation of the issue did not correspond with what the Claimant had sought. At pp. 53-54 of the Award the Tribunal said:

It may be argued that the Claimant does not in fact ask for an order of restitutio in integrum, but merely for a declaratory statement as to its legal position under the BP Concession and with respect to certain property and that the issue of whether restitution in kind is an available remedy therefore is not presented. Such a distinction, subtle though it is, may be relevant for a proper understanding of the decisions of international tribunals (see further below). The Tribunal holds, however, that no such distinction should be made. If it is found that the Claimant is entitled to be restored to the full enjoyment of its rights under the BP Concession, and is the owner of the oil and assets referred to, then the Claimant is entitled to an order for specific performance, or alternatively, a declaratory award of entitlement to specific performance. The question arising for decision therefore should be formulated as set forth in the first sentence under this paragraph (ii).

This paragraph represents the initial step in the error which, so the Claimant respectfully submits, fundamentally affects the Tribunal's decision on, at any rate, Requested Declarations Nos. 2, 3, 5 and 6.
The Claimant submits that there is no good reason for setting aside the clear distinction between a declaration that a contract is not brought to an end by unilateral breach and an order for restitutio in integrum or specific performance. Restitutio in integrum and specific performance are remedies; the question of whether they are to be awarded is wholly separate from the substantive issue of the survival of the contract after breach. (On the limitation of the first stage of the case to declarations of the rights of the Claimant, see Part III below, on "Procedural Defects".)
There is a clear distinction—existent in so many systems of law that its generality as a principle of law cannot be denied—to be drawn between a declaratory judgment and an order for specific performance. Perusal of Professor Edwin Borchard's magisterial study on Declaratory Judgments (2nd ed. 1941) demonstrates the widespread and fundamental character of this distinction. As he says (at p. 110) in the section devoted to a comparative study of the subject: "In many countries, whether or not they formally admit the procedure for a declaratory judgment as such, numerous actions are permitted which look exclusively to a judgment declaring the existence or non-existence of legal relations, a judgment embodying no executory decree". Nowhere is the totally separate character of a request for a declaration and one for an enforceable order, such as specific performance, more compellingly demonstrated than in the chapter dealing with "Contracts", especially in the section headed "Substitutes for Specific Performance". A copy of the relevant pages from this volume are appended hereto as Annex 2.
As can readily be seen there are many cases in which a contract is broken and survives, but the remedy of specific performance or restitutio in integrum is declined by the court. In English law, to give an example, the highest Court, the House of Lords, has recognised that in appropriate cases it has the power to grant a declaration that a wrongful dismissal is invalid, even though no order for specific performance could be made against the employer. It was said in a dissenting judgment in the Court of Appeal, which was subsequently approved on appeal by the House of Lords: "why should he (the injured party) not be entitled to have his rights vindicated and made known to the world by a declaration?" (Vine v. National Dock Labour Board [1956] 1 Q.B. 658 at 675). This view was approved by Lord Morton [1957] A.C. at 504): "the declaration was properly made in my view, so as to make it clear to all the world what was the plaintiff's position in the eyes of the law".
The same distinction between a declaration of right and an order for specific performance is reflected in the terms of the Crown Proceedings Act, 1947—the statute which for the first time in English law rendered the Crown amenable to suit in tort and extended the possibility of proceedings against it in contract. Section 21 contains the following provision:

... where in any proceedings against the Crown any such relief is sought as might in proceedings between subjects be granted by way of injunction or specific performance, the court shall not grant an injunction or make an order for specific performance, but may in lieu thereof make an order declaratory of the rights of the parties.

The Tribunal, while recognizing the distinction, nonetheless at several places in the Award confuses the two points. Thus at p. 83 the Tribunal concedes

that it is arguable that when an international contractual obligation is unlawfully abrogated by one party, the other party may regard the agreement as still existing.

It then proceeds to observe that "the stated principle of the continuing validity of the agreement rests only on a basis of extreme generality"—a remark which would appear to be inappropriate in an award which must resort to "general principles of law". The Tribunal then goes on to repeat the error by saying that "the important question is what remedies would be available to the party claiming the continuance of the agreement."

The important question is quite different. It is: what are the consequences in law of the continuity of the agreement? If the distinction between a declaration of legal consequences and the successful implementation of a specific remedy were not a valid one, the International Court of Justice would never have been able to give its Advisory Opinion on the Legal Consequences for States of the Continued Presence of South Africa in Namibia.
The reconstruction or reformulation by the Tribunal of the issues in a sense quite alien to the Claimant's intention is to be perceived again at the bottom of p. 90 of the Award where the Tribunal says:

The first question is whether the BP Nationalization Law put an end to the BP Concession for all practical purposes or whether the agreement continues in effect, and entitles the Claimant to call for specific performance of it...

The same confusion appears at p. 92 of the Award:—

The issue of the continuing validity of the BP Concession, examined in the light of the general principles of law, also turns largely upon the question whether and to what extent under the commercial laws of representative nations specific performance is a remedy available to the innocent party at its option.

And the same fusion of ideas is to be found in the first paragraph on p. 93.

The Claimant cannot find anywhere in the Award any authority or other reasoned consideration to support the first part (emphasised below) of the critical conclusion stated in the second paragraph on p. 93 in the following terms:

Hence it is clear even from a brief examination of the few legal systems considered in the foregoing that there does not exist a uniform general principle of law that an agreement continues in effect after having been repudiated by one party but not by the other, and no uniform general principle of law pursuant to which specific performance is a remedy available at the option of an innocent party, especially not a private party acting under contract with a Government.

The second part of the conclusion refers, as already stated, to a proposition not raised by the Claimant and irrelevant to Requested Declaration No. 2.

Indeed, it must be questioned whether it is even correct to speak in the context of "general principles of law", as the law governing an agreement, of "uniform" general principles. By way of example reference may be made in this connection to the consideration by the late C. W. Jenks of general principles of law in his study of "The Universality of International Law" in The Common Law of Mankind (1958), p. 120 et seq., where he demonstrates that the lack of uniformity in the various legal systems does not exclude the identification of general principles applicable in the international legal system. (See especially the discussion of "discharge of treaties by default or frustration", at pp. 148-152.)
The statement at the top of p. 95 of the Award that

the real issues of substance which require a resolution by the Tribunal are novel in character and scope in that they have not previously been scrutinised judicially

represents a complete misconception of the Claimant's case. There is nothing novel about it. Criticism of this part of the award stems from the manner in which the Tribunal has sought to test the legal continuity of a contract by whether or not an order for specific performance should be made.

The end result of the approach used by the Tribunal is a conclusion which conflicts with every authority, international and municipal, which the Claimant has been able to find, regarding the effect of breach upon a contract. It has been impossible to discover any authoritative statement contrary to the view that a treaty or a contract survives breach by one party unless the innocent party elects to treat the breach as terminating the agreement. This fundamental legal doctrine, to a restatement of which in the context of the present case Requested Declaration No. 2 was directed, is entirely unaffected by the possibility that a tribunal may decline to award specific performance as a remedy (if requested—which it was not in this case) or that in fact the wrongdoer may fail to comply with his obligations under the judgment. If it is true that States do not reinstate unlawfully nationalized enterprises, it is no less true that States on many occasions fail to meet their pecuniary obligations arising out of wrongs committed by them. If this latter consideration were to be regarded as a justification for saying that the legal obligations do not exist, then the doctrine that "fact makes law" would have been carried to the point of the destruction of legal commitment. The Tribunal will recall its observation that

the parties to an agreement, even if one of them is a State, must, however, be presumed to have intended to create an effective remedy.

(Award, p. 16.)

There is a distinct measure of contradiction between this statement and the subsequent conclusion that one party to the contract may by its own conduct, and by virtue of its character as a State, deny to the Claimant all legal remedies except recourse to a claim for damages (which, as the Tribunal fails to point out, may itself be frustrated by a refusal of the defendant State to honour the Tribunal's award).

It remains necessary to point, finally, to another feature of the Award. At pp. 5152, it clearly and unequivocally holds that "the taking by the Respondent of the property, rights and interests of the Claimant clearly violates public international law." The Claimant has contended that the Tribunal may not attribute to an internationally illegal act any valid legal consequences. (See Memorial, paragraphs 190199). In particular, the Claimant has referred to the public policy of Denmark which requires the non-application of any foreign law that is inconsistent with international law. Thus the Tribunal has arrived at a conclusion which conflicts with the public policy of the State in which the Award is rendered, whose national character the Tribunal has deemed the Award to possess and subject to whose procedural law the proceedings were conducted. (See paragraphs 31-36 of the Opinion on Danish Law, Annex I below.) The procedural implications of this situation are examined in Part III below. For the moment it is sufficient to identify the point as one of substantive error.


The Tribunal will recall that in paragraph 55 of Part Two of the Memorial the Claimant particularly emphasized the difficulties which might flow from the absence of the Respondent. The Claimant said:

... the Claimant ventures to suggest that in view of the Respondent's default of appearance it is particularly desirable and perhaps even necessary that the Sole Arbitrator should seek from the Claimant clarification of any uncertainty, obscurity or doubt by which he may be troubled. The Claimant would therefore respectfully urge the Sole Arbitrator to put to the Claimant, either orally or in writing, any points on which he may desire further information, evidence or argument. The present economy of the Claimant's argument stems from its view that this is a relatively simple and straightforward case which should not be burdened with argument or material not directed to the essential issues.

The Claimant is bound to draw to the attention of the Tribunal the fact that the grounds adopted by the Tribunal for the rejection of Requested Declarations Nos. 2-6 have completely taken the Claimant by surprise. Not the slightest hint was given to the Claimant at any time during the proceedings that the Tribunal was experiencing difficulty with the Claimant's argument on these points.
The net effect of the Tribunal's approach to the requests for Declarations Nos. 2-6 is to convert the Claimant's Memorial in the first stage of the proceedings from one related to the determination of legal rights into one concerned with the grant of remedies. Yet it should be apparent, as much from the procedural steps leading up to the Memorial, as from the Memorial itself, that this was neither the Claimant's intention nor the Tribunal's expectation.
It is necessary to recall the fact that on 8 August 1972 the Claimant filed a document with the Tribunal containing, inter alia, a request for the division of the arbitration proceedings into two parts: "—in broad terms, the first part to be concerned with the merits of the case, the second part to be concerned with the assessment of damages". This document then went on to consider "the character of the division" in the following terms:

If the Sole Arbitrator were to make an order for the division of the case into two parts, the Claimant would-propose in general terms to limit its Memorial in the first part to a statement of facts coupled with legal argument directed to supporting a request for a declaration covering the following matters:.

(2) The Libyan Nationalization Law of 9th December, 1971 was a breach of the Libyan Government's obligation under the Concession Agreement;

(3) The said breach was ineffective to terminate the agreement, which remains in law valid and subsisting;

(4) The said breach entitled the Claimant to reparation in the form either of:—

(a) Restitutio in integrum together with damages; or

(b) Damages;....

(7) As a breach of international law, the action was a nullity to which recognition must not be accorded by the organs of any State;

(8) Any crude oil extracted from the area of the Claimant's Concession, and any products thereof, are the property of the Claimant to which, until such time as reparation is duly completed, the Claimant is entitled to lay claim. The value of any crude oil or products recovered by the Claimant prior to the completion of reparation shall be brought into the final accounting with the Government.

As can be seen, the Claimant refers in items (4) and (6) to its entitlement to damages. It would not be the intention of the Claimant in the first stage of the proceedings to do more than seek from the Sole Arbitrator a declaration in general terms approximating to those set out in items (4) and (6).

As the Sole Arbitrator will appreciate, the statement above of the declarations which will be sought by the Claimant cannot at this stage represent the Claimant's final views on this matter; and accordingly the Claimant reserves its right to amend the content of these declarations, though always respecting the general division suggested above.

On 4 October 1972 the Tribunal made an order in which it said (inter alia):

(2) The Arbitration proceedings shall be divided into two parts, the first dealing with the merits of the Claim and the second with the assessment of possible damages.

(4) The Memorial shall contain....

(ii) the Claimant's request for an Interim Award in respect of the merits of the claim, divided, as the case may be, into alternative submissions and containing a full statement of the relevant facts and law.

It can thus be seen that in August/October 1972 it was understood both by the Claimant and the Tribunal that the first stage of the arbitration proceedings was concerned exclusively with the determination of the rights of the parties. It was no part of the Claimant's case to seek relief by way of specific performance. The Claimant gave the Tribunal a clear indication of the kind of declaration which it was going to seek; and the Tribunal gave no indication that it read that kind of declaration, and particularly those numbered (3), (4), (7) and (8) in the document of 8 August 1972, as moving beyond the sphere of declarations of law into that of an application for specific remedies. Indeed, if the Claimant had in its Memorial of 28 March 1973 actually included a clear request for an order of specific performance the Tribunal should have held that such an application was inappropriate as being outside the terms of the Tribunal's Order of 4 October 1972.
However, notwithstanding all this the Tribunal itself reformulated the Claimant's requested Declarations Nos. 2 and 4 into a request for specific performance; and this was done without any indication being given to the Claimant of what the Tribunal had in mind. The Claimant contends that the failure of the Tribunal to give the Claimant an opportunity to comment upon the Tribunal's reconstruction and amalgamation of Requested Declarations Nos. 2 and 4 amounted in all the circumstances to a breach of the rules of natural justice depriving the relevant parts of the Award of their validity.
In addition, the Award on its face reveals certain inconsistencies in the approach of the Tribunal. Thus, on p. 21, in a passage with which the Claimant respectfully agrees, the Tribunal said:

The jurisdiction of the Tribunal, as defined in Clause 28, and the law applicable to the proceedings necessarily confine its task to a consideration of the claims and submissions formulated by the Claimant, and the Award therefore rules exclusively on them.

However, as already stated, the Tribunal has not limited its task to a consideration of claims formulated by the Claimant, but has reformulated them in such a way as quite fundamentally to alter them. To the extent, therefore, that the Tribunal has examined submissions not formulated by the Claimant it has, on its own statement of its jurisdiction exceeded its competence; and its Award is in those respects ultra vires and consequently void.

But the key passage which reveals the departure of the Tribunal from the standards of natural justice which the Tribunal is bound to apply is to be found at p. 22 of the Award. Here the Tribunal said:

With respect to the analysis of facts and their legal implications the Tribunal has had the benefit of argument presented by the Claimant alone. However, the Tribunal has felt both entitled and compelled to undertake an independent examination of the legal issues deemed relevant by it, and to engage in considerable legal research going beyond the confines of the materials relied upon by the Claimant. The conclusions in the Award, therefore, are based on a broader consideration of the issues than that permitted by the format of the Claimant's argument in support of its claims. Thus, the Tribunal to the greatest extent possible has endeavoured to eliminate any inherent adverse effects for the Repondent of its decision not to appear as a party in the proceedings.

The Claimant, while not accepting that the Tribunal was under any obligation to set so high the standard of its concern for the protection of the Respondent from the consequences of its wrongful non-participation in the proceedings, does not at the present juncture make an issue of that point.
The matter of which the Claimant complains is that it was not given any indication of the broader considerations being taken into account by the Tribunal. Hence the Claimant was not informed of the case which it was being required in the mind of the Tribunal to meet. This is, effectively, a violation of the principle audi alteram partem.
The practical effect here was as if the Tribunal had given the Respondent the opportunity to make communications to it of which the Claimant was kept in ignorance, or, in other words, had precluded the Claimant from knowing the case put on behalf of the Respondent.
This was not the case in other arbitrations in which respondent Governments did not appear. It was not the case in the Lena Goldfields arbitration (5 Annual Digest, pp. 3 and 426), or in the case of Société Européenne v. Yugoslavia (24 International Law Reports, p. 760) or in the Sapphire arbitration (35 International Law Reports, p. 136). On the contrary, in the last mentioned case, Judge Cavin said (at p. 170): "the default of one party and the omission of a procedural step simply means that the case proceeds without the step which has been omitted".
The fact that, unknown to the Claimant, the Tribunal endeavours to eliminate adverse effects for a defaulting respondent and, so to speak, prepares and argues the latter's case, involves the infringement of a fundamental principle of law, namely, the maxim audi alteram partem (on which see generally Cheng, General Principles of Law, Chapter 14). The Claimant has been unable to find any case in which a tribunal has endeavoured to eliminate adverse effects "for the respondent", who had not appeared and was in default. If the result of such endeavours is not made available to the Claimant for comment, then obviously the Claimant is at a very grave disadvantage and in fact has been deprived of the "equality of arms" to which he is entitled. A number of cases in which the principle of equality of arms fell to be considered have come before the European Commission on Human Rights. At the present stage it will be sufficient to quote the views of J. E. S. Fawcett, The Application of the European Convention on Human Rights (Oxford, 1969) who, on page 137, summarises the law as follows:

Equality of arms. The principle of the equality of arms (I'égalité des armes; Waffengleichheit) is an expression of the rule audi alteram partem, and implies that each party to the proceedings before a tribunal must be given a full opportunity to present his case, both on facts and in law. This opportunity must be equal between the parties and limited only by the duty of the tribunal to prevent in any form an undue prolongation or delay of the proceedings.

It will perhaps also be helpful to refer to the book by Professor Partsch, Die Rechte und Freiheiten der europaischen Menschenrechtskonvention, where the development of the law is described on pp. 151 ff. and where it is made very clear that the principle applies both to criminal and civil proceedings.

The practice of the Commission has been approved by the European Court of Human Rights by its judgment in the case of Neumeister of the 27th June 1968 where the Court said (41 International Law Reports, at 357):

The Applicant has stated, and it has not been disputed by the Austrian Government, that the decisions relating to his detention on remand were given after the prosecuting authority had been heard in the absence of the Applicant or his legal representative on the written request made by them. The Court is inclined to take the view that such a procedure is contrary to the principle of 'equality of arms' which the Commission, in several decisions and opinions, has rightly stated to be included in the notion of fair trial (procès équitable) mentioned in Article 6(1). The Court does not consider however that this principle is applicable to the examination of requests for provisional release.

Perhaps it is worth adding that in the case of Flegenheimer the Italian/United States Conciliation Commission consisting of Messrs. Sauser-Hall, Matturri and Sorrentino (25 International Law Reports 91, at 98) spoke of "the principle, undenied in matters of arbitration, that complete equality must be enjoyed by both parties to an international dispute."
The practical consequences of the Tribunal's failure to give due consideration to the arguments presented by the Claimant and the Tribunal's examination of an argument which was no part of the Claimant's case appear in two forms.
First, as is more fully shown in tabular form in Annex 3, the Tribunal cited no less than 23 authorities which were not referred to by the Claimant and a further 13 authorities which, though mentioned in the Memorial, were referred to in a different connection. Conversely, many authorities were cited in the Memorial for the propositions advanced by the Claimant, but these authorities were ignored by the Tribunal. It is not necessary to refer to these numerous authorities at this stage, but it may be helpful to point out that this omission is particularly striking in relation to the findings of the Tribunal on the important section of the Memorial (paragraphs 190—199) in which the Claimant put forward the proposition that the Libyan Government had no right to the oil which it could enjoy or transfer to any third party. That section dealt with fundamental questions of Danish public policy and International Law, and cited fourteen court decisions and twenty-one publicists, to none of which does the Tribunal refer in this connection. These figures alone serve to confirm the Claimant's contention that a substantial segment of the Award was unrelated to the Claimant's case.
Secondly, even as regards the line of approach pursued, and the authorities invoked, by the Tribunal, it must be said that if the Claimant had been made aware of the Tribunal's thoughts in the course of the proceedings it would have reacted to them most vigorously. The Claimant would, first of all, have insisted on the basic irrelevance of the argument concerned with the non-existence of a remedy of specific performance in international law; and it would, secondly have suggested in any event that a wrong interpretation was being put upon the authorities cited, especially the judgment in the Chorzow Factory Case, which appears generally to have been understood by States, as well as by the most highly qualified publicists, in a sense opposite to that expressed by the Tribunal.
In addition to this fundamental defect in the procedure pursued by the Tribunal, there are a number of specific items in the Award in respect of which the Tribunal's uncertainty about the position of the Claimant is evident and should have been cured by the posing of appropriate questions.
Thus at p. 53 the Tribunal mentions the fact that the Claimant did not qualify its contention that the Respondent's breach could not put an end to the contract"by reference to the time element". The Tribunal then continued:

... presumably the innocent party would retain his altered rights indefinitely.

The presumption is wrong as reference to head (8) of the Claimant's Memorandum of 8 August 1972, quoted in paragraph 47 above, will show. But for present purposes the important point is that there was no need for the Tribunal to make any such presumption. The Memorial of the Claimant was delivered on 26 March 1973. Nearly seven months elapsed before the delivery of the Award. There was ample time for the Tribunal to have raised its doubt with the Claimant. It did not do so.
Again, at the top of p. 56, the Tribunal raises a question as to the principles of Libyan Law "on the questions of the continuity of the BP Concession, specific performance and restitutio in integrum". In fact, for the reasons set out earlier, the second and third questions did not fall within the scope of the Claimant's argument. Yet the Tribunal followed this question with these words:

The Tribunal has not been in a position to form an opinion in this respect except on the basis of the argument presented by the Claimant which appears less than exhaustive.

The Claimant's argument on this point was less than exhaustive—not surprisingly, considering the irrelevance in its view of the second and third questions. But if the Tribunal thought the Claimant's arguments inadequate, it was the duty of the Tribunal so to say. Instead it concluded (at p. 57) that "no certain conclusions as to the position of Libyan law can be drawn on the material available".

Further, at p. 64 the Tribunal places some reliance upon the current practice of States as having some bearing on the question of an injured party's rights. In fact, this point is misconceived—at any rate in the framework of the Claimant's claim. But the point that matters is that the relevant statement of practice is introduced by the words: "it is believed that the current practices of States If the facts were material, and they were so treated by the Tribunal, then the Tribunal should have put to the Claimant a question on this point. But this was not done.
Lastly, in terms of the procedural aspects of the case, the Claimant is bound to draw attention to two sentences at the end of the first paragraph on p. 95 of the Award:

While certain trends in the law are discernible, there are no precise and clear rules that provide an obvious answer to any of the issues. The facts must be appraised and the law interpreted and applied in a balanced consideration of the intrinsic merits of the case and the de facto position of the parties.

The Claimant is uncertain as to the meaning of this passage, but in so far as it appears to be attaching weight and significance to the de facto position of the parties, it must be seen as introducing a novel, subjective and extralegal element into the case of which the Claimant should have had notice. Or, to put the point another way, it appears to be departing from the stated applicable law of the Award in favour of a decision ex aequo et bono and is accordingly ultra vires.


The contents of the present Memorandum may be summarised as follows:

(i) The Claimant contends that the Award rendered on 10 October 1972 is incomplete and that, in consequence, the proceedings must be re-opened and continued in order to enable the Sole Arbitrator to complete his Award.

(ii) The incompleteness of the Award arises from the fact that it is partially void in that the Tribunal's conclusions upon requested Declarations Nos. 2-6 are invalid.

(iii) This invalidity is the consequence of

(a) certain substantive and fundamental errors of law affecting the abovementioned parts of the Award; and

(b) certain grave defects in the procedure followed by the Sole Arbitrator in connection with those parts of the Award.

(iv) As to (a), the fundamental errors of law were: first, the treatment of the requests for Declarations Nos. 2 and 4 as if they were the equivalent of a request for an order of specific performance; second, the holding that a party violating its obligations under a contract may by its breach bring the contract to an end; and, third, the refusal to deny legal effects to a measure rightly held to amount to a violation of international law.

(v) As to (b), the grave defects in procedure were: first, the treatment of the Claimant's requests for Declarations 2 and 4 as if they were an application for an order of specific performance; and, second, the failure of the Sole Arbitrator to adhere to the principles of natural justice in the hearing of the case by reason of his consideration, to the detriment of the Claimant, of a whole line of argument and of authorities of which the Claimant was not informed and to which the Claimant was given no opportunity to reply.

(vi) The duties and powers of the Sole Arbitrator in relation to a request for the reopening and continuation of the proceedings in the present case are governed by Danish Law—the law to which the Sole Arbitrator, by his choice of Copenhagen as the seat of the arbitration, expressly subjected the arbitral proceedings.

(vii) The position in Danish law is set out in the annexed opinion of Professor Foighel and Professor Philip. This Opinion makes it clear that in Danish law

(a) an award suffering from the substantive errors and procedural faults of the present Award would be regarded as partially void;

(b) the dissatisfied party should, in the first place, turn to the arbitrator to seek a re-opening of the proceedings and the completion of the award; and

(c) it would be the duty of the arbitrator, in the circumstances of the present case, to grant the application for a re-opening and continuation of the proceedings and to complete the Award by eliminating the causes of its partial invalidity.

Accordingly, the Claimant now requests that as contemplated in the letter from the Sole Arbitrator referred to in paragraph 2 above, a date should be fixed for the oral hearing of the Claimant's application for a reopening and continuation of the proceedings in relation to requested Declarations Nos. 2-6 inclusive.
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