von Pezold and others v. Zimbabwe

22.1 Case Bernhard von Pezold & Ors v The Republic of Zimbabwe ICSID Case No. ARB/10/15, and case Border Timbers Limited & Ors v The Republic of Zimbabwe ICSID Case No. ARB/10/25 shall be heard together (but not formally consolidated).

22.2 The Claimants will submit joint pleadings, but will separately address those issues within a pleading where circumstances distinct to particular Claimants and/or case necessitate separate treatment.

22.3 Each witness statement and expert report shall state whether it applies to one case or the other case.

22.4 The Tribunal shall issue separate awards in relation to each case but may nevertheless discuss these arbitrations in any award or procedural order as a single set of proceedings, except where circumstances distinct to particular Claimants necessitate separate treatment.

Indeed, the issue of separate awards is not only a right in circumstances where there are separate proceedings, but also an imperative in these cases in order to protect the rights of the von Pezold Claimants, i.e. the claimants in ICSID Case No. ARB/10/15. The imperative arises because in the event of a single award, during the enforcement phase cooperation between all of the Claimants would be necessary. Such cooperation is likely to be impossible in the event that the Respondent takes control of the Border Company Claimants, which it may do in order to jeopardise the enforcement of a single award or for other reasons.

The discussion has taken place in a unified manner, without any clear distinction in issues, briefing or oral argument. Even the Exhibits were unified and not distinguished as between cases. The matters are so intertwined that it is appropriate to resolve all issues as a single award.

Mr. Heinrich von Pezold

Mr. Bernhard (Rüdiger) von Pezold

Mrs. Elisabeth von Pezold

Mr. Matthew Coleman, Steptoe & Johnson

Mr. Kevin Williams, Steptoe & Johnson

Mr. Anthony Rapa, Steptoe & Johnson

Ms. Helen Aldridge, Steptoe & Johnson

Mr. Charles Verrill, Jr., Wiley Rein

Mr. Thomas Innes, Steptoe & Johnson

Ms. June Booth, Steptoe & Johnson

Mr. Kenneth Schofield, Border Timbers Limited

Mr. Gideon Theron, Commercial Farmers’ Union

Mr. Simon van derLingen, Border Timbers Limited

Mr. George Bottger, Border Timbers Limited

Mr. Anthony Levitt, RGL Forensics

Mr. Richard Jenks, RGL Forensics

Ms. Helen Swain, RGL Forensics

Professor Stephen Chan, SOAS University

Mr. Alan Stephenson, Mills Fitchett

Mr. Paul Christopher Paul, Wintertons

Ms. Amanda von Pezold

Ms. Elba Schofield

Attending on behalf of the Respondent were:

The Honourable Douglas T. Mombeshora, Minister of Lands and Rural Resettlement

Mr. Wellington Mvura, Aid to Minister Mombeshora

Ms. Sophia Christina Tsvakwi, Permanent Secretary, Ministry of Lands and Rural Resettlement

Ms. Elizabeth Sumowah, Legal Advisor, Ministry of Lands and Rural Resettlement

Prince Machaya, Deputy Attorney General, Civil Division Attorney General’s Office

Ms. Fortune Chimbaru, Chief Law Officer, Civil Division Attorney General’s Office

Ms. Fatima Maxwell, Judge, Labour Court

Mr. Philip Kimbrough, Kimbrough & Associés

Mr. Tristan Moreau, Kimbrough & Associés

Minister Didymus Mutasa, Minister of State in the Office of the President and Cabinet

Mr. Onias C. Masiiwa, Chief Inspector Exchange Control

Mr. Grasiano Nyaguse, Director, Policy, Planning and Coordination, Ministry of Economic Planning and Development

Mr. Sifelani Moyo, Director, Ministry of Local Government, Public Works and National Housing

Dr. Joseph Kanyekanye, Group CEO, Allied Timbers

H.E. Ambassador Mapuranga Machivenyika, Embassy of the Republic of Zimbabwe in Washington, D.C.

Mr. Whatmore Goora, Embassy of the Republic of Zimbabwe in Washington, D.C.

Mr. Richard Chibuwe, Embassy of the Republic of Zimbabwe in Washington, D.C.

Settlement of Investment Disputes between a Contracting Party and an investor of the Other Contracting Party

(1) Disputes between a Contracting Party and a national or company of the other Contracting Party concerning an investment of such national or company in the territory of the former Contracting Party shall as far as possible be settled amicably between the parties concerned.

(2) If the dispute is not settled within six months of the date when it is raised by one of the parties in dispute, it shall, at the request of the national or company concerned, be submitted for arbitration. Each Contracting Party hereby consents to submit the dispute to arbitration. Unless the parties indispute agree otherwise, the dispute shall be submitted for arbitration under the Convention on the Settlement of Investment Disputes between States and Nationals of other States of 18th March, 1965. The arbitral tribunal constituted pursuant to the said Convention shall reach its decisions on the basis of this Agreement, any treaties in force between the Contracting Parties, such rules of general international law as may be applicable, and the domestic law of the Contracting Party in the territory of which the Investment inquestion is situated.

(3) The award shall be binding on the parties and shall not be subject to any appeal or remedy other than that provided for in the said Convention. The award shall be enforced in accordance with the domestic law of the Contracting Party in the territory of which the investment in question is situated.

(4) During arbitration proceedings or proceedings for the enforcement of an award, the Contracting Party involved in the dispute shall not raise the objection that the national or company concerned has received compensation under an Insurance contract in respect of all or part of his or its damage or losses.

Disputes between a Contracting Party and an investor of the other Contracting Party

(1) For the purpose of solving disputes with respect to investments between a Contracting Party and an investor of the other Contracting Party and without prejudice to Article 11 of this Agreement (Disputes between Contracting Parties), consultations will take place between the parties concerned.

(2) If these consultations do not result in a solution within six months and if the investor concerned gives written consent, the dispute shall be submitted to the arbitration of the international Centre for Settlement of Investment Disputes instituted by the Convention of Washington of March 18, 1965, for the settlement of disputes regarding Investments between States and nationals of other States.

Each party may start the procedure by addressing a request to that effect to the Secretary-General of the Centre as foreseen by Article 28 and 36 of the above-mentioned Convention. Should the parties disagree on whether conciliation or arbitration is the most appropriate procedure, the investor concerned shall have the final decision.

(3) The arbitral tribunal shall decide on the basis of the present Agreement and other relevant agreements between the Contracting Parties; the terms of any particular agreement that has been concluded with respect to the Investment; the law of the Contracting State party to the dispute, including its rules on the conflict of laws; such rules of International law as may be applicable.

(4) The Contracting Party which is a party to the dispute shall not at any time during the procedures assert as a defence its Immunity or the fact that the investor has received compensation under an Insurance contract covering the whole or part of the incurred damage or loss.

(5) Neither Contracting Party shall pursue through diplomatic channels a dispute submitted to the arbitration of the Centre unless the other Contracting Party does not abide by and comply with the award rendered by the arbitral tribunal.

(6) The arbitral award shall be final and binding for the parties involved in the dispute and shall be enforceable inaccordance with the laws of the Contracting Party in which the Investment inquestion is located.

Declaratory Relief - Jurisdiction

8.1 In relation to the von Pezold Claimants, a declaration that:

8.1.1 the German BIT provisionally applied from 18 September 1996;

8.1.2 the Tribunals have jurisdiction over their claims;

8.1.3 the Respondent is estopped from denying that the German BIT applies to their investments;

8.1.4 further or alternatively to the relief requested in para 8.1.3 above, the Respondent is estopped from denying that their investments were specifically approved by the Respondent’s competent authorities at the time of their admission, or denying any other facts (whether true or not) that may prevent the German BIT from being applicable to their investments;"

Declaratory Relief - Respondent’s defences

8.2 In relation to the von Pezold Claimants, a declaration that all of the Respondent’s defences are denied and dismissed.

Declaratory Relief - MFN

8.3 In relation to the Claimant Rüdiger, a declaration that he may invoke the German MFN Clauses to:

8.3.1 rely on Article 6(1) of the Swiss BIT, to the extent that Article accords more favourable treatment than Article 4(2) of the German BIT (non-discrimination and expropriation);

8.3.2 rely on Article 5(5) of the Danish BIT, to the extent that Article accords more favourable treatment than Ad Article 4 of the German Protocol (impairment of shares);

8.3.3 rely on Articles 5(1) and 5(2) of the Danish BIT, to the extent those articles accord more favourable treatment than Article 4(2) of the German BIT (compensation at fair market value for lawful expropriation);

8.3.4 be accorded restitution in kind, which is the more favourable treatment that has been granted to other foreign investors, and which has not been granted to him;

8.4 In relation to the Swiss Family Claimants, a declaration that they may invoke the MFN Clauses to:

8.4.1 rely on Article 5(5) of the Danish BIT, to the extent that Article accords more favourable treatment than Ad Article 4 of the German Protocol, and Article 6(2) of the Swiss BIT (impairment of shares);

8.4.2 rely on Articles 5(1) and 5(2) of the Danish BIT, to the extent those Articles accord more favourable treatment than Article 4(2) of the German BIT, and Article 6(1) of the Swiss BIT (compensation at fair market value for lawful expropriation);

8.4.3 be accorded restitution in kind, which is the more favourable treatment that has been granted to other foreign investors, and which has not been granted to them.

Declaratory Relief - Breaches of the BITs

8.5 In relation to the von Pezold Claimants, a declaration that the Respondent has breached the following Articles of the German BIT:

8.5.1 Article 4(2) by unlawfully expropriating the von Pezold Claimants’ investments and returns in that it has not observed the Conditions Permitting Expropriation;

8.5.2 Alternatively, Article 4(2) by expropriating the von Pezold Claimants’ investments and returns in that it has not observed the Conditions Permitting Expropriation;

8.5.3 Article 2(1) by failing to accord fair and equitable treatment to the von Pezold Claimants, their investments and their returns;

8.5.4 Article 2(2) by taking unreasonable, arbitrary and discriminatory measures that Impaired the management, maintenance use, enjoyment and disposal of the von Pezold Claimants’ Investments and their returns;

8.5.5 Article 4(1) by falling to accord the von Pezold Claimants, their investments and their returns full protection and security;

8.5.6 Article 5, 6(1) & (2) by falling to allow the free transfer of payments in connection with the von Pezold Claimants’ Investments; and

8.6 In relation to the von Pezold Claimants, a declaration that the Respondent has breached Article 5(5) of the Danish BIT (as applicable through the operation of the MFN Clauses) by Impairing or diminishing the fair market value of the von Pezold Claimants’ shares in the Forrester Companies, the Border Company Claimants and the Makandi Companies without the payment of prompt, adequate and effective compensation;

8.7 In relation to the Swiss Family Claimants, a declaration that the Respondent has breached the following Articles of the Swiss BIT:

8.7.1 Article 6(1) by unlawfully expropriating the Swiss Family Claimants’ Investments and returns in that it has not observed the Conditions Permitting Expropriation;

8.7.2 Alternatively, Article 6(1) by expropriating the Swiss Family Claimants’ Investments and returns in that it has not observed the Conditions Permitting Expropriation;

8.7.3 Article 4(1) falling to accord fair and equitable treatment to the Swiss Family Claimants, their investments, and their returns;

8.7.4 Article 4(1) by taking unreasonable and discriminatory measures that Impaired the management, maintenance, use, enjoyment, extension, and disposal of the Swiss Family Claimants’ Investments and returns;

8.7.5 Article 4(1) by falling to accord the Swiss Family Claimants, their investments and returns full protection and security;

8.7.6 Article 5 by falling to allow the free transfer of payments relating to the Swiss Family Claimants’ Investments; and

Declaratory Relief - Breaches of International Law

8.8 In relation to the von Pezold Claimants, a declaration that the Respondent:

8.8.1 Inapplying the Land Reform and Resettlement Programme to the von Pezold Claimants has grossly and/or systematically failed to fulfil its obligation arising under a peremptory norm of general International law, namely not to discriminate against people based on race or colour, and the consequences as stated in Article 41 of the ILC Articles apply;

8.8.2 has breached customary International law by expropriating the von Pezold Claimants’ Investments without the observance of the principles that expropriation under customary International law must be for a public purpose, be non-dlscrlmlnatory, observe due process of law, and be accompanied by payment of prompt, adequate and effective compensation.

Declaratory Relief - Breaches of Zimbabwean Law

8.9 In relation to the von Pezold Claimants, a declaration that the Respondent in applying the Land Reform Programme to the von Pezold Claimants has breached s. 18(1) and s. 23 of the Constitution.

Declaratory Relief - As to Election

8.10 In relation to the von Pezold Claimants, a declaration that they may elect to be awarded Heads of Loss 1, 2, 5, 9, 10, 14, and 15 in Corrected Annex 1 in the amounts as assessed on the date of breach or on the current date, whichever may be higher after Interest has been applied. All other Heads of Loss in Corrected Annex 1, in so far as they relate to the von Pezold Claimants, shall be assessed on the date of breach.

Declaratory Relief - Damage Caused by Respondent

8.11 In relation to the von Pezold Claimants, a declaration that the breaches of the BITs, international law and Zimbabwean law as pleaded in paragraphs 8.5 to 8.9 above have damaged the productive capacity and infrastructure of the Forrester Estate, the Border Estate and the Makandi Estate and thereby caused losses to the von Pezold Claimants, entitling the von Pezold Claimants, through restitution and compensation, to be put into the position that they would have been inhad those breaches not occurred.

Restitution in kind and compensation, or compensation alone

(a) Restitution in kind and compensation

8.12 In relation to the von Pezold Claimants, in regard to the Forrester, Border and Makandi Estates, ordering the Respondent:

8.12.1 to reinstate the companies listed in Table 1, Table 6 and Table 10 in the Memorial (as amended, "The Tables"), within 45 days of the dispatch of the Tribunal’s award ("the Restitution Window"), with the full legal title (unencumbered) (or alternatively to issue equivalent new legal title (unencumbered)), and the exclusive control, to each of the properties that they respectively owned (as listed in the Tables) before they were expropriated by the Respondent pursuant to the Constitutional Amendment, together with the Water Rights and the Permits listed respectively in Table 1 and Table 3 of the Reply (this relief is hereafter referred to as "the Restitution"), and, in addition, within 60 days of the dispatch of the Tribunal’s award, to pay those of the von Pezold Claimants, as specified below, compensation in the following sums:

Concerning the Forrester Estate

8.12.1.1 US$37,372,172 divided equally between the Parent Claimants or in such other manner of allocation that they may prefer;

8.12.1.2 US$7,186,302 or alternatively, US$8,697,776 to Elisabeth or in such other manner of allocation as Elisabeth may prefer;

Concerning the Border Estate

8.12.1.3 US$42,222,481 divided as follows-44% to each of the Parent Claimants, 12% divided equally between the Adult Children Claimants, or in such other manner of allocation that they may prefer; or

In the alternative, compensation alone

8.12.2 in the alternative to the relief requested in para . 8.12.1 above, or If the Restitution is not made infull within the Restitution Window, to pay, within 60 days of the dispatch of the Tribunal’s award, the von Pezold Claimants compensation in the following sums:

8.12.2.1 In relation to the Forrester Estate, US$61,874,400, divided equally between the Parent Claimants or insuch other manner of allocation that they may prefer;

8.12.2.2 In relation to the Forrester Estate, US$7,186,302 or alternatively, US$8,697,776, to Elisabeth or insuch other manner of allocation as Elisabeth may prefer;

8.12.2.3 In relation to the Border Estate, US$130,848,074, divided as follows -44% to each of the Parent Claimants, 12% divided equally between the Adult Children Claimants, or insuch other manner of allocation that they may prefer;

8.12.2.4 In relation to the Makandi Estate, compensation in the sum of US$13,930,012, divided equally between the Parent Claimants or insuch other manner of allocation that they may prefer.

Moral damages

8.13 In relation to the von Pezold Claimants, ordering the Respondent to pay them moral damages of US$13,000,000, allocated as US$5,000,000 to Heinrich and US$1,000,000 to each of the other von Pezold Claimants;

Interest

8.14 In relation to the von Pezold Claimants, ordering the Respondent to pay them compound Interest on any damages, save for moral damages, at the rate of 21.5%, compounded every six months, from the dates as stated in the Second Levitt Report, and as Indicated in Corrected Annex 1, until the date of payment, or alternatively at an Interest rate of 9.8%, or alternatively at an Interest rate of LIBOR plus 4%, compounded at the same Intervals, payable over the same periods;

Costs and further or additional relief

8.15 In relation to the von Pezold Claimants, ordering the Respondent to pay them (in the currency Incurred) all costs and expenses of this arbitration, including the fees and expenses of the Tribunal, experts and the cost of legal representation, plus Interest thereon until the date of payment; and

8.16 Further or additional relief as may be appropriate under the applicable law. [cltatlons/footnotes and Annex omitted]

Declaratory Relief - Jurisdiction

9.1 In relation to the Border Company Claimants, a declaration that:

9.1.1 the Tribunals have jurisdiction over their claims;

Declaratory Relief - Respondent’s defences

9.2 In relation to the Border Company Claimants, a declaration that all of the Respondent’s defences are denied and dismissed;

Declaratory Relief - MFN

9.3 A declaration that the Border Company Claimants may invoke the Swiss MFN Clauses to:

9.3.1 rely on Article 5(5) of the Danish BIT, to the extent that Article accords more favourable treatment than Article 6(2) of the Swiss BIT (impairment of shares);

9.3.2 rely on Article 6 of the German BIT, to the extent that Article accords more favourable treatment than Article 5 of the Swiss BIT (free transfer of payments);

9.3.3 rely on Articles 5(1) and 5(2) of the Danish BIT, to the extent those Articles are more favourable than Article 6(1) of the Swiss BIT (compensation at fair market value for lawful expropriation);

9.3.4 be accorded restitution in kind, which is the more favourable treatment that has been granted to other foreign investors, and which has not been granted to them.

Declaratory Relief - Breaches of the BITs

9.4 In relation to the Border Company Claimants a declaration that the Respondent has breached the following Articles of the Swiss BIT:

9.4.1 Article 6(1) by unlawfully expropriating the Border Company Claimants’ investments and returns in that it has not observed the Conditions Permitting Expropriation;

9.4.2 Alternatively, Article 6(1) by expropriating the Border Company Claimants’ investments and returns in that it has not observed the Conditions Permitting Expropriation;

9.4.3 Article 4(1) by failing to accord fair and equitable treatment to the Border Company Claimants, their investments, and their returns;

9.4.4 Article 4(1) by taking unreasonable and discriminatory measures that Impaired the management, maintenance, use, enjoyment, extension, and disposal of the Border Company Claimants’ investments and their returns;

9.4.5 Article 4(1) by failing to accord the Border Company Claimants, their investments and returns full protection and security;

9.4.6 Article 5 by falling to allow the free transfer of payments relating to the Border Company Claimants’ investments.

9.5 in relation to Border, a declaration that the Respondent has breached Article 5(5) of the Danish BIT (as applicable through the operation of the Swiss MFN Clauses) by impairing or diminishing the fair market value of Border’s shares in Hangani and Border International without the payment of prompt, adequate and effective compensation.

Declaratory Relief - Breaches of International Law

9.6 In relation to the Border Company Claimants, a declaration that the Respondent:

9.6.1 Inapplying the Land Reform and Resettlement Programme to the Border Company Claimants has grossly and/or systematically failed to fulfil its obligation arising under a peremptory norm of general International law, namely not to discriminate against people based on race or colour, and the consequences as stated in Article 41 of the ILC Articles apply;

9.6.2 has breached International law by expropriating the Border Company Claimants’ Investments without the observance of the principles that expropriation under customary International law must be for a public purpose, be non-dlscrlmlnatory, observe due process of law, and be accompanied by payment of prompt, adequate and effective compensation.

Declaratory Relief - Breaches of Zimbabwean Law

9.7 In relation to the Border Company Claimants, a declaration that the Respondent in applying the Land Reform Programme to the Border Company Claimants has breached s18(1)57 and s2358 of the Constitution.

Declaratory Relief - As to Election

9.8 In relation to the Border Company Claimants, a declaration that they may elect to be awarded Heads of Loss 9 and 10 in Corrected Annex 1 in the amounts as assessed on the date of breach or on the current date, whichever may be higher after Interest has been applied. All other Heads of Loss in Corrected Annex 1, in so far as they relate to the Border Company Claimants, shall be assessed on the date of breach.

Declaratory Relief - Damage Caused by Respondent

9.9 In relation to the Border Company Claimants, a declaration that the breaches of the BITs, International law and Zimbabwean law as pleaded in paras 9.4 to 9.7 above have damaged the productive capacity and Infrastructure of the Border Estate and thereby caused losses to the Border Company Claimants, entitling the Border Company Claimants, through restitution and compensation, to be put Into the position that they would have been in had those breaches not occurred.

Restitution in kind and compensation, or compensation alone

(a) Restitution in kind and compensation

9.10 In relation to the Border Company Claimants, ordering the Respondent:

9.10.1 to reinstate Border Timbers Limited and Hangani Development Co. (Private) Limited, within 45 days of the dispatch of the Tribunal’s award ("the Restitution Window"), with the full legal title (unencumbered) (or in the alternative to issue equivalent new legal title (unencumbered)) and the exclusive control, to each of the properties that they respectively owned (as listed in Table 6 in the Memorial, as amended) before they were expropriated by the Respondent pursuant to the Constitutional Amendment (this relief is hereafter referred to as "the Restitution"), and, in addition, within 60 days of the dispatch of the Tribunal’s award, to pay compensation of US$48,817,76160 allocated to Border Timbers Limited or insuch manner of allocation that the Border Company Claimants may prefer; or

(b) in the alternative, compensation alone

9.10.2 in the alternative to the relief requested in paragraph 9.10.1 above, or if the Restitution is not made in full within the Restitution Window, to pay, within 60 days of the dispatch of the Tribunal’s award, the Border Company Claimants compensation of US$151,286,939 61 allocated to Border Timbers Limited or in such manner of allocation that the Border Company Claimants may prefer.

Moral damages

9.11 Ordering the Respondent to pay the Border Company Claimants moral damages of US$5,000,000, allocated to Border Timbers Limited or in such manner of allocation that the Border Company Claimants may prefer;

Interest

9.12 Ordering the Respondent to pay the Border Company Claimants compound interest on any damages, save for moral damages, at the rate of 21.5%, compounded every six months, from the dates as stated in the Second Levitt Report, and as Indicated in Corrected Annex 1, until the date of payment, or alternatively at an interest rate of 9.8%, or alternatively at an interest rate of LIBOR plus 4%, compounded at the same intervals, payable over the same periods;

Costs and further or additional relief

9.13 Ordering the Respondent to pay the Border Company Claimants (in the currency incurred) all costs and expenses of this arbitration, including the fees and expenses of the Tribunal, and experts, and the cost of legal representation, plus interest thereon until the date of payment; and

9.14 Further or additional relief as may be appropriate under the applicable law. [citations/footnotes and Annex omitted]

RESPONDENT RESPECTFULLY REQUESTS THE ARBITRAL TRIBUNAL TO DECLARE:

1 THAT THE FOLLOWING FACTS RELEVANT TO JURISDICTION ARE ON THE RECORD

1.1 that consent is the cornerstone of ICSID jurisdiction and must be in writing

1.2 that consent of the parties to ICSID jurisdiction takes the form of the provisions of the Swiss BIT and the German BIT

1.2.1 that Article 9 of the German BIT applies in its entirety

1.2.2 that Article 2 of the Swiss BIT applies

1.3 that Respondent had in place at all relevant times

1.3.1 FIC / ZIC / ZIA Foreign Investment approval procedures

1.3.2 Stock Exchange Rules

1.3.3 Exchange Control Regulations

1.4 that Claimants did not comply with Local Law procedures, in particular Foreign Investment Regulations, Stock Exchange Rules and Exchange Control Regulations, to confer 'foreign investor" status on their acquisitions of holdings

1.5 that Claimants have not produced any writing which proves their respect of the provisions of Article 9 a) of the German BIT, as regards Foreign Investment Regulations, Stock Exchange Rules and Exchange Control Regulations

1.6 that Claimants have not produced any writing which proves their respect of the provisions of Article 9 b), as regards Foreign Investment Regulations

1.7 that Claimants have not produced any writing which proves their respect of the provisions of Article 2 of the Swiss BIT, as regards in particular Foreign Investment Regulations, Stock Exchange Rules and Exchange Control Regulations

1.8 that Claimants have not proven any valid approval — whether prior to their confidential acquisitions or thereafter, such as subsequent to entry into force of the Swiss BIT or the German BIT

1.9 that the provisions of the Swiss BIT and the German BIT that are to be upheld — by both the party claiming protected investor status and the Host State — include all of the terms of the BIT particularly Article 9 a) and Article 9 b) of the German BIT and Article 2 of the Swiss BIT

1.10 that Claimants have not proven any waiver of the provisions of the German and the Swiss BITs, binding on the State of Zimbabwe

1.11 that Claimants have not proven that the State of Zimbabwe solicited these investments

1.12 that Claimants have not proven estoppel

1.13 that Illegality vitiates consent

2 THAT AS TO JURISDICTION THERE ARE SIX LEGALLY-DISTINCT REASONS THESE ARBITRAL TRIBUNALS HAVE NO JURISDICTION

2.1 that Claimants' acquisitions do not meet the "in accordance with the laws of the Host State" condition to Respondent's consent under Article 2 of the Swiss BIT, as Claimants did not comply with local laws, rules and regulations that existed at all relevant times:

2.1.1 Cap on holdings under Zimbabwe Stock Exchange Regulations

2.1.2 Zimbabwe Exchange Control Regulations

2.1.3 Zimbabwe Foreign Investment Regulations

2.2 that Claimants' acquisitions do not meet the "in accordance with the laws of the Host State" condition to Respondent's consent under Article 9a of the German BIT, as Claimants did not comply with:

2.2.1 Local laws, rules and regulations that existed at all relevant times:

2.2.1.1 Cap on holdings under Zimbabwe Stock Exchange Regulations

2.2.1.2 Zimbabwe Exchange Control Regulation

2.2.1.3 Zimbabwe Foreign Investment Regulations

2.2.2 The "specific approval" requirement of Article 9b) of the German BIT for an ition to constitute a "foreign investment" incorporated into Local Law by means of the treaty being ratified and thus also applicable under Article 9a) of the German BIT

2.3 that Claimants' acquisitions are not a protected investment but a mere "holding" of a "portfolio"

2.4 that Claimants' acquisitions do not meet the "Specific approval" condition to Respondent's consent under Article 9 b) of the German BIT

2.5 that there is no consent by Respondent to ICSID protection for Claimants' acquisitions as per the ICISD Convention and as per ICSID case law

2.6 that the dispute does not arise out of an "investment" within the meaning of the ICISD Convention

2.6.1 that Claimants have not made any "new" investment as foreseen by the State Parties at the time of entering into the BITs

2.6.2 that Claimants have not proven any contribution to the economy of the Host State and drained off the riches of the Host State into a nebulous maze of tax havens, thereby weakening the economy of the Host State

2.6.3 that Claimants' confidential holdings are merely commercial interests in the nature of a portfolio, not a protected investment

2.6.4 that Claimants' own argument shows that their acquisitions did not involve risk, so not a protected investment

2.6.5 that Claimants' indirect claims are not within ICSID jurisdiction

3 THAT, EVEN IF JURISDICTION, THE SIX REASONS SET FORTH IN SECTIONS 2.1 THROUGH 2.6 ABOVE ALSO CAUSE CLAIMANTS' CONFIDENTIAL ACQUISITIONS NOT TO BE PROTECTED INVESTMENTS AS TO THE MERITS

3.1 that Claimants did serious due diligence

3.2 that Claimants did not seek or have any guarantee other than local law

4 THAT EVEN IF JURISDICTION, THERE ARE THREE LEGALLY-DISTINCT FOUNDATIONS UPON WHICH ZIMBABWE LAND REFORM MEASURES CONSTITUTE NON-PRECLUDED MEASURES

4.1 that Zimbabwe Land Reform is a Non-Precluded Measure as « force majeure » under ILC draft Article 23

4.1.1 that the massive-popular-uprisings-all-across-Zimbabwe were spontaneous, contrary to Government plans and are part of the overwhelming and ineluctable March of History

4.1.2 that the Zimbabwean Government was not in favor of the massive-popular-spontaneous-ineluctable-uprisings-all-across-Zimbabwe

4.1.3 that no one - including Claimants and the members of these Arbitral Tribunals — can be sure in their deepest conscience that had they been in a position in the Zimbabwean Government and had they ordered police - including CFU reserve police troops — to suppress the massive-popular-spontaneous-ineluctable-uprisings-all-across-Zimbabwe that an Egypt or Syria style Internal massacre would not have occurred

4.1.4 that the State of Zimbabwe was correct in not ordering its police to fire on the population of Zimbabwe

4.1.5 that President Mugabe and the Government, faced with the circumstances Imposed upon them by the massive-popular-spontaneous-ineluctable- uprisings-all-across-Zimbabwe managed a difficult situation as best they could and have worked for the good of the Zimbabwean People

4.1.6 that the Zimbabwean Government was cautious and reasonable towards the masses of land-hungry Zimbabweans who marched with sticks and stones

4.1.7 that War veterans are neither "thugs," nor "rubber stamps" nor are they "the State"

4.1.8 that War veterans' and the land-hungry masses' hostility to the Government's slow pace of land reform forced the Government to embark on Fast Track Land Reform,

4.1.9 that the Zimbabwean Government was cautious and reasonable towards European Landed Gentry

4.1.10 that in particular, the Zimbabwean State acted cautiously and reasonably as concerns Claimants, as Respondent's granted Claimants eight years of substantially unencumbered use of the Forrester Estate, the Border Estate and the Makandi Estate

4.1.11 that the massive-popular-spontaneous-ineluctable-uprisings-all-across- Zimbabwe were for Respondent an Irresistible force

4.2 that Zimbabwe Land Reform is a Non-Precluded Measure as « distress» under ILC draft Article 24 as Respondent's recognition of the overwhelming force of the masses saved countless lives of persons entrusted to the Host State's care

4.3 that Zimbabwe Land Reform is a Non-Precluded Measure as «necessity» under ILC draft Article 25 as it avoided grave danger to the essential interests of the State

4.3.1 that such emergency crisis threats were sufficiently grave to trigger application of the State of Necessity defence

4.3.2 that the events of massive-popular-spontaneous-lneluctable-uprisings-all- across-Zimbabwe in their historic context were an emergency or crisis out of the ordinary day-to-day functioning of the State from 16 February 2000 through 16 March 2013 through 16 March 2013

4.3.3 that the massive-popular-spontaneous-ineluctable-uprisings-all-across-Zimbabwe ongoingness of the State of Zimbabwe

5 THAT EVEN IF JURISDICTION, ZIMBABWE LAND REFORM IS A NON-PRECLUDED MEASURE AS "PUBLIC ORDER" UNDER GERMAN BIT

5.1 that the German BIT excludes from BIT protection for the investor decisions made by the Host State in order to maintain "public order"

5.2 that "public order" properly has the broad German definition and not the narrow North American definition

5.3 that the massive-popular-spontaneous-ineluctable-uprisings-all-across-Zimbabwe constituted an emergency or crisis, with threats sufficiently grave to trigger application of the BIT "public order" exception

6 THAT IN THE EVENT THE ARBITRAL TRIBUNALS FIND EITHER

CLAIMANTS' FAILURE TO RESPECT ARTICLE 2B) "SPECIFIC APPROVAL" REQUIREMENT OR THAT ZIMBABWE LAND REFORM IS A NON-PRECLUDED MEASURE AS PER THE "PUBLIC ORDER" PROVISION OF THE GERMAN BIT, NO APPLICATION OF THE SWISS BIT IS POSSIBLE

6.1 that Claimant Rudiger cannot benefit from any protection under the Swiss BIT

6.2 that Claimants have not proven the percentage holdings owned directly, indirectly, beneficially or which are "controlled" or "handled" by Claimant Rudiger, so no accurate determination of damages is sufficiently certain under the Swiss BIT

6.3 that there is insufficient proof upon which any award might be granted

1 THAT THE FACTS AND LAW PRECLUDE WRONGFULNESS UNDER

THE SWISS BIT, THE GERMAN BIT AND INTERNATIONAL LAW

7.1 that as the uprisings of the Zimbabwean people were, massive, popular, spontaneous and ineluctable, Zimbabwe Land Reform is a "Public Purpose" which excludes "wrongfulness"

7.1.1 that Zimbabwe Land Reform increased well-being of Zimbabweans and has been successful

7.1.1.1 that the interests of the Zimbabwean people have been and are being served by the Land Reform Programme

7.1.1.2 that the interests of the Zimbabwean women have been and are being served by the Land Reform Programme

7.1.1.3 that the future holds promise in part thanks to Zimbabwe Land Reform

7.1.1.4 that a successful revolution begets its own legality and the Zimbabwean Revolution has succeeded

7.1.1.5 that Fast Track Land Reform has attenuated history of violence in Zimbabwe

7.2 that Claimants' negative arguments to cancel public purpose are not sound

7.2.1 that publicity is not the basis of law

7.2.2 that Respondent did not discriminate against people based on race or colour

7.2.3 that Zimbabwe Land Reform has advanced Human rights for Zimbabweans

7.2.4 that human rights treaties recognize limitations on otherwise protected rights for specified, overarching public policy reasons, such as security and public order

7.2.5 that the popular uprisings are not attributable to the State of Zimbabwe

7.2.6 that controlling squatters has never been successful, whomever attempts to evict the locals from their ancestors' land

7.2.7 that Claimants' other arguments that Zimbabwe's Fast Track Land Reform violated BIT protections must fall as to:

7.2.7.1 Fair and Equitable Treatment

7.2.7.2 Full protection and Security

7.2.7.3 Compensation: the Zimbabwean State granted Claimants eight years of substantially unencumbered use of the Forrester Estate, the Border Estate and the Makandi Estate, which meets the requirement of prompt, adequate and effective compensation

7.2.7.4 Zimbabweans are not either subsistence farmers or corrupt elite

7.3 that Claimants' position as to its legitimate expectations is unfounded and any legitimate expectations Claimants might have do not contradict

7.3.1 the lack of "wrongfulness" of the taking

7.3.2 "Public Order"

7.3.3 "Essential Interests" Interpretations

7.4 that Claimants' anachronistic model cannot be propulsed into the future

7.5 that the Respondent did not breach any terms of the B/Ts that apply to it

7.6 that the taking was lawful

8 THAT NO INDEMNITIES, COMPENSATION, DAMAGES OR INTEREST IS DUE FOR REASON:

8.1 that Claimants' acquisitions do not meet the "in accordance with the laws of the Host State" condition to Respondent's consent under Article 2 of the Swiss BIT

8.2 that Claimants' acquisitions do not meet the "in accordance with the laws of the Host State" condition to Respondent's consent under Article 9a of the German BIT

8.3 that Claimants' acquisitions do not meet the "Specific approval" condition to Respondent's consent under Article 9 b) of the German BIT

8.4 that Claimants' acquisitions are not a protected investment but a mere "holding" of a "portfolio"

8.5 that there is no consent by Respondent to ICSID protection for Claimants' acquisitions as per the ICISD Convention and ICSID case law

8.6 that the dispute does not arise out of an "investment" within the meaning of the ICISD Convention

8.7 that a legitimate public purpose suffices to qualify the measure, the Land Reform Programme and the ensuring police power decisions in the case at hand, as being a normal exercise of police powers and hence non compensable, irrespective of the magnitude of its effects on the investment

9 THAT FROM 16 FEBRUARY 2000 THROUGH 16 MARCH 2013 ANY INDEMNITIES, COMPENSATION, DAMAGES OR INTEREST THAT MIGHT OTHER WISE BE AWARDED ARE SUSPENDED AND ANY CALCULATIONS ONLY COMMENCE AS FROM 17 MARCH 2013

9.1 that a state of emergency began in Zimbabwe on 16 February 2000, continued thereafter, and ended on 16 March 2013

9.2 that any amounts that might otherwise be due or payable during this period are excused during that period of suspension

10 AS TO CLAIMANTS' REQUEST FOR INDEMNITIES, COMPENSATION AND DAMAGES

10.1 that Claimants' monetary claims are not properly founded for the legal reasons discussed above, are ill-advised as to evaluation and should be denied:

10.1.1 that Dr Kanyekanye has demonstrated that Claimants' forestry assumptions on which their claims are based are incorrect

10.1.2 that Dr Kanyekanye has determined the value of the Border Estate

10.1.3 that Mr. Moyo has determined the maximum valuations of the Forrester, Makandi and Border Estates

10.2 that subsidiarily, were the Arbitral Tribunals to find that any portion of Claimants'claims were protected, the following amounts are the maximum amount of indemnities, compensation and damages

10.2.1 that Mr Moyo's final corrected expert valuations prove that the maximum valuation:

10.2.1.1 of the Forrester Estate is:

Land: $ 5 123 436

Equipment and Infrastructure: $12 062 898

10.2.1.2 of the Makandi Estate is:

Land: $ 1 115 000

Equipment and Infrastructure: $ 9 269 308

10.2.2 that the shareholding valuation of Border is the only quoted price value

10.2.2.1 Dr Kanyekanye established the Border share valuation at $6 763 044, the quoted price value

10.2.2.2 Mr Moyo corrected his valuation opinion to state that the share valuation figure established by Dr Kanyekanye should prevail $6 763 044, the quoted price value

10.2.3 provided, however, that should be deducted from these maximum amounts, the valuations included in those maximum totals the following properties that were not taken:

10.2.3.1 Paulington $ 3 193 678,80

10.2.3.2 BIT Factory $ 3 045 993,00

10.2.3.3 Pole Treatment Plant $ 358 134,00

10.2.3.4 Border Timbers Head Office Complex $ 3 423 030,60

10.2.3.5 For the avoidance of doubt, the total valuations regarding properties not taken is $10 020 836,40

10.2.4 that for the avoidance of doubt, that the maximum total for Forrester, Makandi and Border combined is thus $34 333 686

10.3that subsidiarily, should the Arbitral Tribuanl not accept the quoted price value of Border shares, Mr Moyo and Respondent stand by Mr Moyo's asset valualtion of the Border Estate set out in paragraph 13 of R-80:

10.3.1.1 land: $6 011 685

10.3.1.2 equipment and Infrastructure: $22 386 761

10.4 that according to their damage presentation Claimants failed to mitigate damages other than by profiting from use of the Properties for eight years after September 2005

10.5 that as to Claimant's request for restitution in kind and compensation, or in the alternative, compensation

10.5.1 that Respondent is unable to reinstate the companies as requested

10.5.2 that restitution is not possible and the end of the State of Emergency on 16 March 2013 cannot give rise to measures which would re-create the State of Emergency such as restitution or additional compensation to Claimants

10.6 that there is no justification for the award of any moral damages

10.7 As to the rate of interest on any amounts that might be due:

10.7.1 that 21.5% Interest is unconscionable and must be denied

10.7.2 that 9.8% Interest is unconscionable and must be denied

10.7.3 that LIBOR plus 4% Interest is unconscionable and must be denied

10.7.4 that LIBOR plus 2% is the highest rate that can be applied

10.8 As to compounding of interest on any amounts that might be due:

10.8.1 that no compounding is appropriate in this case

10.8.2 that were Interest to be compounded, it should not be compounded more than annually

10.8.3 that were the Arbitral Tribunals nevertheless to find any Indemnities, compensation, damages or Interest to be due, the Arbitral Tribunals should consider Respondent's grant to Claimants of eight years of quasi unencumbered use of the Forrester Estate, the Border Estate and the Makandi Estate, properties belonging to the State of Zimbabwe since 2005 to constitute:

10.8.4 compensation for the taking

10.8.5 payment of any interest or other amounts due

10.9 that each party shall bear its own costs both as to its attorneys' fees and as to ICSID costs and fees

11 THAT EACH OF THE DECLARATIONS SOUGHT BY THE CLAIMANTS ARE WITHOUT MERIT AND MUST BE DENIED

[footnotes omitted]

... [O]ur existence in our own country, on our own land in the days before liberation, was a very sad existence indeed. Our land was taken away, our friends, who were talking about farms, are talking about farms which didn't come from heaven for them, but farms which they expropriated from our forefathers, from our ancestors, many not so long ago, where many of us were already living. They did not expect us to sit back and smile and enjoy what they were doing, and indeed, we did not sit back and enjoy. We had to mount a liberation struggle, and I am happy to say that I am one of those who participated in the liberation struggle.

(9b) Nothing in this section shall affect or derogate from—

(a) any obligation assumed by the State; or

(b) any right or Interest conferred upon any person;

in relation to the protection of property and the payment and determination of compensation inrespect of the acquisition of property. Interms of any convention, treaty or agreement acceded to, concluded or executed by or under the authority of the President with one or more foreign states or governments or International organisations.

[Subsection inserted by section 7 of Act No. 14 of 1996 - Amendment No. 14]

[emphasis added]

In February 2000, a new draft Constitution was put in a referendum to the people of Zimbabwe, which would have permitted the Government to compulsorily acquire land without compensation. The draft Constitution was rejected. The timing of the referendum on the Constitution coincided with the emergence of a new political party in Zimbabwe, the Movement for Democratic Change ("MDC"), formed by a broad coalition of civil society groups inopposition to President Mugabe’s Zimbabwe African National Union - Patriotic Front ("ZANU-PF") party. Following the rejection of the draft Constitution, the first "Invasions" of white-owned farms began in Masvlngo Province, near the capital of Harare, and gradually spread across the country (see below Section IV.C.).

16A Agricultural land acquired for resettlement

(1) In regard to the compulsory acquisition of agricultural land for the resettlement of people inaccordance with a programme of land reform, the following factors shall be regarded as of ultimate and overriding Importance -

(a) under colonial domination the people of Zimbabwe were unjustifiably dispossessed of their land and other resources without compensation;

(b) the people consequently took up arms in order to regain their land and political sovereignty, and this ultimately resulted in the independence of Zimbabwe in 1980;

(c) the people of Zimbabwe must be enabled to reassert their rights and regain ownership of their land;

and accordingly—

(i) the former colonial power has an obligation to pay compensation for agricultural land compulsorily acquired for resettlement, through an adequate fund established for the purpose : and

(ii) If the former colonial power falls to pay compensation through such a fund, the Government of Zimbabwe has no obligation to pay compensation for agricultural land compulsorily acquired for resettlement.

(2) In view of the overriding considerations set out insubsection (1), where agricultural land is acquired compulsorily for the resettlement of people in accordance with a programme of land reform, the following factors shall be taken into account in the assessment of any compensation that may be payable —

(a) the history of the ownership, use and occupation of the land;

(b) the price paid for the land when it was last acquired;

(c) the cost or value of improvements on the land :

(d) the current use to which the land and any improvements on it are being put;

(e) any investment which the State or the acquiring authority may have made which Improved or enhanced the value of the land and any improvements on it;

(f) the resources available to the acquiring authority in Implementing the programme of land reform;

(g) any financial constraints that necessitate the payment of compensation in instalments over a period of time; and

(h) any other relevant factor that may be specified in an Act of Parliament.

[Section inserted by section 3 of Act 5 of 2000 - Amendment No. 16] [emphasis added]

(a) the Invasions of predominantly white-owned commercial farms began in the Province of Masvlngo on 16 February 2000, and quickly spread to other parts of Zimbabwe;

(b) the Invasions were a response to political events, such as the failed draft Constitution proposed by the Mugabe Government in February 2000, and the slow pace of land reform;

(c) the Invasions were not anticipated and, at the beginning, were disorganized and "inchoate", by which the Tribunal understands that the Invasions at this stage were incipient;

(d) the Invasions were accompanied by a racial rhetoric that was overwhelmingly anti-white;

(e) as the Invasions continued and expanded across Zimbabwe, logistical support and supplies appear to have been provided by organs of the Zimbabwean Government to persons coming onto private land (i.e., the "Settlers/War Veterans").

Several judgments by the Zimbabwean courts also record that, during 2000, the police took little or no action inrespect of the acts of the Invaders, despite multiple court orders declaring the Invasions to be unlawful and directing the police to ensure that the Invaders vacated the farms. Moreover, ZANU-PF officials, public servants, the CIO and the Army were found to have actively supported, encouraged, transported and financed the Settlers/War Veterans. In CFU v. Minister of Lands & Ors, 2000 (2) ZLR 469(5), the Zimbabwean High Court held that, as a result of the Invasions, farmers and their employees had been denied protection of the law under s. 18 of the Constitution²² and discriminated against on the basis of affiliation with or support for an opposition political party (i.e., the MDC). The Court summarized the Invasions in early 2000 as follows (see CFU v. Minister of Lands & Ors, 2000 (2) ZLR 469(5), p. 477, CLEX-76):

In February 2000, a referendum was held on a proposed new Constitution for Zimbabwe. The defeat of that proposal was followed "within a matter of days by the beginning of a series of land Invasions. Although these began as a supposedly peaceful demonstration they quickly gathered such momentum that it became obvious that the exercise was actually being driven by or had been taken over by Government" (Hasluck).

The story of these demonstratlons/invasions is set out ingraphic detail in the CFU’s papers, more particularly in Mr Hasluck’s affidavits. Murders (in the early stages), serious assaults, trespass, arson, stock-theft, poaching and malicious Injury to property became rife throughout the commercial farming areas. The reaction of the police was either nil or negligible, with Isolated exceptions. War veterans, landless peasant farmers and unemployed youths moved onto farms, ferried insome cases in Government vehicles, encouraged by party politicians. Some were aggressive, forcing the farmers to flee, burning down workers’ houses, forbidding the reaping or planting of crops. Others cut fences and cut down trees to make temporary shelters. Others again were more passive, simply making temporary shelters for themselves and leaving when the subsidy they were given ran out. The situation throughout the commercial farming areas remained, and remains, tense and volatile. The harassment continues and inmany cases has Intensified.

16B Agricultural land acquired for resettlement and other purposes

(1) in this section -

(a) all agricultural land —

(i) that was Identified on or before the 8th July, 2005, in the Gazette or Gazette Extraordinary under section 5(1) of the Land Acquisition Act [Chapter 20:101, and which is Itemised in Schedule 7, being agricultural land required for resettlement purposes : or

(ii) that is Identified after the 8th July, 2005, but before the appointed day,

in the Gazette or Gazette Extraordinary under section 5(1) of the Land Acquisition Act [Chapter 20:10], being agricultural land required for resettlement purposes; or

(iii) that is Identified interms of this section by the acquiring authority after the appointed day in the Gazette or Gazette Extraordinary for whatever purpose, including, but not limited to —

A. settlement for agricultural or other purposes; or

B. the purposes of land reorganisation, forestry, environmental conservation or the utilisation of wild life or other natural resources; or

C. the relocation of persons dispossessed inconsequence of the utilisation of land for a purpose referred to insubparagraph A or B;

is acquired by and vested in the State with full title therein with effect from the appointed day or, in the case of land referred to insubparagraph (iii), with effect from the date it is Identified in the manner specified in that paragraph; and

(b) no compensation shall be payable for land referred to inparagraph (a) except for any improvements effected on such land before it was acquired.

(3) The provisions of any law referred to insection 16(1) regulating the compulsory acquisition of land that is inforce on the appointed day, and the provisions of section 18(1) and (9), shall not apply in relation to land referred to insubsection (2)(a) except for the purpose of determining any question related to the payment of compensation referred to insubsection (2)(b), that is to say, a person having any right or Interest in the land -

(a) shall not apply to a court to challenge the acquisition of the land by the State, and no court shall entertain any such challenge :

(b) may, inaccordance with the provisions of any law referred to insection 16(1) regulating the compulsory acquisition of land that is inforce on the appointed day, challenge the amount of compensation payable for any improvements effected on the land before it was acquired.

(4) As soon as practicable after the appointed day, or after the date when the land is Identified in the manner specified insubsection (2)(a)(lll), as the case may be, the person responsible under any law providing for the registration of title over land shall, without further notice, effect the necessary endorsements upon any title deed and entries in any register kept interms of that law for the purpose of formally cancelling the title deed and registering in the State title over the land.

(5) Any Inconsistency between anything contained in-

(a) a noticed itemised in Schedule 7; or

(b) a notice relating to land referred to insubsection (2)(a)(ii) or (iii);

and the title deed to which It refers or is Intended to refer, and any error whatsoever contained insuch notice, shall not affect the operation of subsection (2)(a) or Invalidate the vesting of title in the State interms of that provision.

(6) An Act of Parliament may make it a criminal offence for any person, without lawful authority, to possess or occupy land referred to in this section or other State land.

(7) This section applies without prejudice to the obligation of the former colonial power to pay compensation for land referred to in this section that was acquired for resettlement purposes.

[Section inserted by section 2 of Act 5 of 2005 - Amendment No. 17.] [emphasis added]

Section 5 Notices were issued pursuanttothe Land Acquisition Act in respect of 21 of the 28 Border Properties. Section 8 Orders were also issued in relation to a number of the Border Properties, all of which were either withdrawn by the Respondent or annulled by the local courts.

In summary, as a result of the 2005 Constitutional Amendment, all ten of the Forrester Properties (see Table 1 of the Claimants’ Memorial), 21 of the 28 Border Properties, two of which contain a sawmill (see Table 6 of the Claimants’ Memorial corrected by the Claimants in their Reply) and six of the nine Makandi Properties (see Table 10 of the Claimants’ Reply) were acquired by the Respondent. These properties are collectively referred to by the Tribunal as the "Zimbabwean Properties".

16.8 Compensation for acquisition of previously-acquired agricultural land

(1) Any indigenous Zimbabwean whose agricultural land was acquired by the State before the effective date is entitled to compensation from the State for the land and any improvements that were on the land when it was acquired.

(2) Any persons whose agricultural land was acquired by the State before the effective date and whose property rights at that time were guaranteed or protected by an agreement concluded by the Government of Zimbabwe with the government of another country, is entitled to compensation from the State for the land and any improvements in accordance with that agreement.

(3) Any person, other than a person referred to in subsection (1) or (2), whose agricultural land was acquired by the State before the effective date is entitled to compensation from the State only for improvements that were on the land when it was acquired.

A. Jurisdiction: The issue of jurisdiction is comprised of at least the following questions:

(1) Does the Tribunal have jurisdiction underthe ICSID Convention?

(2) Does the Tribunal have jurisdiction over the von Pezold Claimants’ claims (save for those of Rüdiger) under the Swiss BIT?

(3) Does the Tribunal have jurisdiction over the von Pezold Claimants’ claims under the German BIT?

B. Admissibility: The issue of admissibility is comprised of the following questions:

(1) The Approvals Objection:

(a) Is the Approvals Objection an admissibility or jurisdictional issue?

(b) What is the effect of Ad Article 2(a) of the German Protocol on Article 9(b) of the German BIT?

(c) Does the Contracting Parties’ subsequent practice Inform the meaning of Article 9(b)?

(d) If approval was required, (i) what constitutes "approval" by Zimbabwe’s "competent authorities"? (ii) has such approval been given? (iii) can the von Pezold Claimants utilise the German MFN clauses to rely on the more favourable provisions of the Swiss and Danish BITs? (iv) is the Respondent estopped from denying that approval has been given?

(2) The Illegality Objection:

(a) What breaches come within the scope of the so-called "Legality Articles"?

(b) Have the Claimants committed such breaches?

(c) In any event, is the Respondent estopped from denying that the Investments were made inaccordance with applicable laws?

C. Attribution: The issue of attribution is comprised of the following questions:

(1) Are the acts of the Settlers/War Veterans attributable to the Respondent pursuant to Article 8 or Article 11 of the ILC Articles?

(2) Are the "declarations, political speeches and similar acts of communication" of government officials and the President of the Respondent attributable to the Respondent?

(3) Are "only the official acts by the State’s officials" attributable to the Respondent?

D. Proportionality, Regulation and Margin of Appreciation: The issues of proportionality, regulation and margin of appreciation are comprised of the following questions:

(1) Is the proportionality principle applicable? If so, has the Respondent acted proportionally?

(2) Is it relevant that a measure was regulatory?

(3) Is the principle of margin of appreciation applicable?

E. Expropriation: The issue of expropriation is comprised of the following questions:

(1) What is the test for direct expropriation?

(2) What is the test for Indirect expropriation?

(3) Were the following expropriated, either directly or Indirectly:

• the Water Rights (Forrester Estate)

• the Zimbabwean Properties³⁶

• Residual Properties³⁷, [Including] the factories, the pole treatment plant and the Sheba sawmill (Border and Makandi Estates)

• Shares and Other investments

• the Loans

• Forrester’s tobacco and its proceeds of sale

• Forrester Estate’s US Dollar bank deposits from tobacco sales

• Border Estate’s US Dollar export proceeds

• US Dollars from Border’s account

• Makandi Acquisition Rights

(4) Were any of the expropriations carried out for (a) a public purpose, (b) in a non-discriminatory manner; and (c) with due process?

F. Fair and Equitable Treatment: The issue of Fair and Equitable Treatment ("FET") gives rise to the following questions:

(1) Is the FET standard in the German and Swiss BITs equivalent to the customary international law minimum standard of treatment?

(2) What is the content of the FET standard in (a) the German BIT; and (b) the Swiss BIT?

(3) Does Ad Article 3(a) of the German Protocol (CLEX-3) exclude certain conduct from the FET standard?

(4) Has the FET standard been breached in regard to the application of:

• new legislation to the Forrester Water Rights?

• the LRP to the Zimbabwean Properties³⁸ and shares in the Zimbabwean Companies?

• the foreign exchange policy to the loans?

• the foreign exchange policy to the proceeds of the sales?

(5) To what extent are legitimate expectations relevant to the Claimants’ causes of action?

(6) What is the relationship between legitimate expectations, business risk and political risk?

(7) What were the Respondent’s assurances and the legitimate expectations they engendered?

(8) Is a balancing required between the Claimants’ legitimate expectations and the "Common Interest of the Zimbabwean People"? If so, what is the relevance and result of this balancing exercise to the Claimants’ causes of action?

G. Non-Impairment: The issue of non-impairment gives rise to the following questions:

(1) What amounts to unreasonable, discriminatory or arbitrary measures under the non-impairment standard in the German and Swiss BIT respectively?

(2) Have such measures from the Respondent Impaired the management, maintenance, use, enjoyment or disposal of the Claimants’ Investments?

H. Full Protection and Security: The issue of Full Protection and Security ("FPS") gives rise to the following questions:

(1) What is the scope of the FPS standard in(a) the German BIT; and (b) the Swiss BIT?

(2) Is the Respondent inbreach of either FPS standard?

(3) Are there circumstances which curtail the Respondent’s obligations pursuant to the FPS standards?

(4) What is the Respondent’s obligation under section 18 of the Constitution?

I. Free Transfer of Payments: The issue of Free Transfer of Payments ("FTS") gives rise to the following questions:

(1) What is the scope of the free transfer standard in (a) the German BIT; and (b) the Swiss BIT?

(2) Has the Respondent breached either standard?

J. Necessity: The issue of necessity gives rise to the following questions:

(1) Was the LRP a Non-Precluded Measure because of necessity?

(2) If so, what is the effect of this defence if successfully invoked?

K. Causation: The issue of causation gives rise to the following question:

(1) in the event the Claimants suffered a loss as a result of any of the above alleged treaty breaches, did the Respondent cause the Claimants’ losses?

L. Remedies: The issue of remedies (if liability and causation are decided in favour of the Claimants) is comprised of the following questions:

(1) Restitution

• Under what circumstances will restitution be ordered?

• Is restitution mandatory because of the special circumstances of these cases?

• Would an award of restitution give rise to a (or the return of a) state of emergency in-Zimbabwe?

• If so, should restitution be awarded?

(2) Compensation

• What is the standard of compensation and date of assessment for:

• lawful expropriation; and

• unlawful expropriation and non-exproprlatory breaches

• What is the most appropriate valuation method to be applied?

• Has the method been applied accurately?

• What matters are to be disregarded when assessing compensation?

• Did the Respondent’s breaches cause the Claimants’ losses?

• Are moral damages due?

• What amount of compensation is due?

• Is the Respondent’s ability to pay damages relevant?

• Is the Claimants’ alleged failure to mitigate their losses relevant?

• When is compensation due?

M. Interest: The issue of Interest is comprised of the following questions:

(1) What rate of Interest is due on any sums determined to be payable?

(2) Is Interest to be compound or simple?

(3) Over what period is Interest payable?

N. Declaratory Relief: The issue of declaratory relief requires the Tribunal to consider whether the Claimants are entitled to the declarations set out in their Corrected Request for Relief, dated 10 May 2013; and

O. Costs: Finally, the issue of costs requires the Tribunal to consider the reasonableness of the costs claimed and the appropriate allocation (If any) of the costs of these arbitration proceedings as between the Parties.

(1) The Tribunal shall decide a dispute in accordance with such rules of law as may be agreed by the parties. In the absence of such agreement, the Tribunal shall apply the law of the Contracting State party to the dispute (including its rules on the conflict of laws) and such rules of international law as may be applicable.

Article 25

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

(2) "National of another Contracting State" means:

(a) any natural person who had the nationality of a Contracting State other than the State party to the dispute on the date on which the parties consented to submit such dispute to conciliation or arbitration as well as on the date on which the request was registered pursuant to paragraph (3) of Article 28 or paragraph (3) of Article 36, but does not include any person who on either date also had the nationality of the Contracting State party to the dispute; and

(b) any juridical person which had the nationality of a Contracting State other than the State party to the dispute on the date on which the parties consented to submit such dispute to conciliation or arbitration and any juridical person which had the nationality of the Contracting State party to the dispute on that date and which, because of foreign control, the parties have agreed should be treated as a national of another Contracting State for the purposes of this Convention.

• A legal dispute;

• Arising directly out of an Investment;

• Between a Contracting State and a national of another Contracting State; and

• Consent in writing to submit the dispute to the Centre.

The Land Reform Programme was and remains a genuine exercise for the redistribution of land and the resettlement of the landless majority. As will be observed from the afore going land to be redistributed was owned by white people and it is from them that it had to be taken for redistribution to the landless blacks.

The Impatience of the landless masses reached boiling point In 2000 resulting in Invasions which coincided with the rejection of the Draft Constitution. The invasions were never a policy nor were they an integral part of the Land Reform and Resettlement Programme as alleged by the Claimants in paragraphs 550 and 554 of the Memorial, but were a spontaneous reaction by the landless people. The Draft Constitution contained provisions relating to the acquisition of land for resettlement and placed the onus for providing compensation for the acquired farms on the former colonial power. The Government of Zimbabwe would now pay for infrastructural improvements on the land but not for the land itself.

When the Constitution was rejected it was yet another blow to the expectations of those who had sacrificed their lives for the return of land to the black people, the Liberation War Veterans (War Vets). It was now 20 years after gaining independence and there was little to show in terms of access to land for the majority of Zimbabweans.

The reasons for the rejection of the Draft Constitution were more political than anything else. They were not a rejection of the need for redistribution of land. The Fast Track Programme was accordingly launched on the 15th of July 2000. The acquisition of land and the resettlement of people was now to be undertaken in an accelerated manner with reliance on domestic resources.

The purpose of the Fast Track was to:

• Speed up the identification of land for compulsory acquisition. The target was not less than 5 million hectares of land for resettlement

• Accelerate the planning and demarcation of acquired land for resettlement

• Provide basic infrastructure (boreholes, dip tanks and access roads) and farmer support services (tillage and agricultural inputs)

• Simultaneously resettle people in all provinces to ensure that the reform programme was comprehensive and evenly implemented

• Provide secondary infrastructure such as schools, clinics and rural service centres.

During this Phase, land was acquired on a compulsory basis in accordance with the Land Acquisition Act [Chapter 20:10] as amended....

Initially, Government laid down a framework under which farms once gazetted for acquisition could be de-listed for valid reasons, for example, if the farms were plantation farms in the large scale production of tea, coffee, timber, citrus, sugar cane etc. Also included were agro- industrial properties involved in integrated production, farms in Export Processing Zones, farms belonging to church or mission organizations, conservancies and farms belonging to foreign nationals who are protected by BIPPAs.

Despite this goodwill on the part of Government some farm owners abused the delisting framework in a bid to frustrate the land reform process. Some farmers deliberately changed land use to avoid compulsory acquisition of their farms. For example some farmers shared their dairy cattle in order to be exempted. Others introduced wildlife onto agricultural land.

Former farm owners also made the process of land acquisition long and cumbersome. Because the Land Acquisition Act required the serving of notices to the owner and confirmation of acquisition through the Administrative Court, the former owners mounted all sorts of legal challenges including wrong citation of their names or companies to frustrate the acquisition.

These challenges slowed down the acquisition and resettlement process to a snail’s pace. The court processes were now blocking meaningful progress in the Land Reform Programme. It became necessary to promulgate a law that promoted the goals and purposes of land reform in the Republic, a historical mandate (paragraph 552 Memorial). The Constitutional Amendment No 17 of 2005 was enacted to meet this need. It provided for compulsory acquisition of agricultural land without recourse to the courts save for Issues of compensation for Improvements.

…

The acquisition of nearly 11 million hectares from the previous 3, 5 million (by 2000) can be attributed to this change in the law. Overall over 14 million hectares have been acquired for resettlement to date and 145 775 A1 and 18 289 A2 beneficiaries resettled thereon. The most Important goal of redressing the thorny reality of historical Inequities inland ownership has been substantially achieved.

2. Zimbabwe’s War of Independence ended in 1980. The Government subsequently encouraged reconciliation and foreign Investment, including Investment from the Claimants. During the period 1980 to 2000, 70% of all farms that existed at Independence had been bought and sold in the open market or purchased by the Respondent at the fair market value.

…

5. After Independence, land reform was a low priority for the Government. The Government’s stated policy under the Land Reform Programme ("LRP") was to acquire no more than 8.3 million ha of the 15.5 million ha of commercial farm land (the great majority of which was owned by white Zimbabweans). As at 2000, it had acquired only 3.66 million ha. The post 2000 phases of the LRP are collectively referred to as the "aggressive phases".

6. From 2000 onward, the LRP had the aim of removing every white farmer from his or her land. In simple terms it was racist, breaching the prohibition against discrimination on grounds of race or colour - a peremptory norm of general International law. It also had the aim of allocating farms that had been expropriated to senior members of the government, ZANU-PF and the military and civil services. In particular, in-February 2000, after losing a referendum (blamed on the white vote), the Respondent Instigated the Invasion of commercial farms. If It did not Instigate them then shortly after they commenced, it took control of them and encouraged them. The Invasions became an Integral part of the LRP. In July 2000, the Respondent commenced Phase II, Fast Track of the LRP. Pursuant to this phase, the Respondent Issued thousands of s5 Notices Identifying properties for expropriation. However, the courts held that many of the s5 Notices were Invalid. On 14 September 2005, the Respondent enacted s16B of the Constitution ("the Constitutional Amendment"). The effect of the Constitutional Amendment was to expropriate the farms of nearly every white farmer in-Zimbabwe (of the 4,500 white farmers farming in 2000, today there are less than 200 whose farms have not been expropriated). Most of the Claimants’ properties have been expropriated pursuant to the Constitutional Amendment.

7. The economic decline caused by the aggressive phases of the LRP led the Respondent to introduce a perverse foreign exchange policy, which has caused the Claimants significant losses. The Respondent’s own courts have stated that the foreign exchange obtained through this policy was used by the Government for illegal purposes.

8. In parallel with the LRP, and indeed during it, the Respondent ratified a number of BITs, including the German BIT on 14 April 2000 (provisional entry into force was 18 September 1996) and the Swiss BIT on 9 February 2001. Property and compensation rights protected by BITs were given a special status under Zimbabwean law when s16(9b) of the Constitution was enacted in 1996. Further, the Government’s LRP policy expressly excluded from expropriation properties covered by BITs, together with tea, coffee, timber and citrus plantations. On numerous occasions the Respondent acknowledged that the Claimants’ investments were covered by the BITs, and stated that they would not be subjected to the LRP. Nevertheless, despite the Respondent stating in 2005, by way of a Note Verbale, that the Constitutional Amendment had not expropriated the Claimants’ investments (and thereby confirming prior assurances), in 2007 the Respondent stated that they had been expropriated by the Constitutional Amendment. The Claimants accept that they have been expropriated.

Under the Water Act 1976, and its predecessors, the right to use "public water" for agricultural purposes, attached to the majority of the Forrester Properties and vested in the von Pezold Claimants. These rights to use public water are referred to as "Water Rights". No charge was levied by the Respondent on the holders of Water Rights for the consumption of water, and once granted in their final form they were not to expire.

However, upon the commencement in January 2000 of the Water Act 1998 and the Zimbabwe National Water Authority Act 1998 (the "ZNWA Act"), the regulatory regime for the use of water changed significantly.

Pursuant to the Water Act 1998, Water Rights have been converted into "permits" ("Permits"). Permits to use water only last for a period of twenty years. Moreover, pursuant to the ZNWA Act, the Respondent is empowered to, and does in fact, charge significant amounts for water consumed for agricultural purposes.

At the time that the Parent Claimants acquired their contractual and beneficial rights in the Makandi Estate in May 2005, the Water Rights that previously existed in relation to the Makandi Estate had already (in 2000) been converted into Permits.... Therefore the Claimants do not make any claims in relation to those prior Water Rights.

However,..., the Parent Claimants in seeking the restitution of the Makandi Properties also seek the restitution of the final Permits attaching to them. Without access to water through the Permits, the Parent Claimants will incur significant losses.

The Tribunal finds that this first element of Article 25 is satisfied in respect of both the von Pezold and Border Claimants.

• the date on which the parties in Case No. ARB/10/15 consented to submit their dispute to ICSID arbitration is 30 November 2009 (17 March 2010 for Adam) at the earliest, or as of the date of filing of the Request for Arbitration (i.e., 10 June 2010) at the latest (see Request for Arbitration, 10 June 2010, para. 108); and

• the date on which the parties in Case No. ARB/10/25 consented to submit their dispute to ICSID arbitration is 3 December 2010, the date on which the Border Claimants filed their Request for Arbitration (see Request for Arbitration, 3 December 2010, para. 96).

Article 11 of the German BIT

(1) Disputes between a Contracting Party and a national or company of the other Contracting Party concerning an investment of such national or company in the territory of the former Contracting Party shall as far as possible be settled amicably between the parties concerned.

(2) If the dispute is not settled within six months of the date when it is raised by one of the parties in dispute, it shall, at the request of the national or company concerned, be submitted for arbitration. Each Contracting Party hereby consents to submit the dispute to arbitration. Unless the parties in dispute agree otherwise, the dispute shall be submitted for arbitration under the Convention on the Settlement of Investment Disputes between States and Nationals of other States of 18th March, 1965. The arbitral tribunal constituted pursuant to the said Convention shall reach its decisions on the basis of this Agreement, any treaties to force between the Contracting parties, such rules of general international law as may be applicable, and the domestic law of the Contracting Party in the territory of which the investment in question is situated.

(3) The award shall be binding on the parties and shall not be subject to any appeal or remedy other than that provided for in the said Convention. The award shall be enforced in accordance with the domestic law of the Contracting Party in the territory of which the investment in question is situated.

(4) During arbitration proceedings or proceedings for the enforcement of an award, the Contracting Party involved in the dispute shall not raise the objection that the national or company concerned has received compensation under an insurance contract in respect of all or part of his or its damage or losses.

Article 10 of the Swiss BIT

(1) For the purpose of solving disputes with respect to investments between a Contracting Party and an investor of the other Contracting Party and without prejudice to Article 11 of this Agreement (Disputes between Contracting Parties), consultations will take place between the parties concerned.

(2) If these consultations do not result in a solution within six months and if the investor concerned gives written consent, the dispute shall be submitted to the arbitration of the International Centre for Settlement of investment Disputes, instituted by the Convention of Washington of March 18, 1965, for the settlement of disputes regarding investments between States and nationals of other States.

Each party may start the procedure by addressing a request to that effect to the Secretary-General of the Centre as foreseen by Article 28 and 36 of the above-mentioned Convention. Should the parties disagree on whether conciliation or arbitration is the most appropriate procedure, the investor concerned shall have the final decision.

(3) The arbitral tribunal shall decide on the basis of the present Agreement and other relevant agreements between the Contracting Parties; the terms of any particular agreement that has been concluded with respect to the investment; the law of the Contracting State party to the dispute, including its rules on the conflict of laws; such rules of international law as may be applicable.

(4) The Contracting Party which is a party to the dispute shall not at any time during the procedures assert as a defence its immunity or the fact that the investor has received compensation under an insurance contract covering the whole or part of the incurred damage or loss.

(5) Neither Contracting Party shall pursue through diplomatic channels a dispute submitted to the arbitration of the Centre unless the other Contracting party does not abide by and comply with the award rendered by the arbitral tribunal.

(6) The arbitral award shall be final and binding for the parties involved in the dispute and shall be enforceable in accordance with the laws of the Contracting Party in which the investment in question is located.

2) "National of another Contracting State" means:

(a) any natural person who had the nationality of a Contracting State other than the State party to the dispute on the date on which the parties consented to submit such dispute to conciliation or arbitration as well as on the date on which the request was registered pursuant to paragraph (3) of Article 28 or paragraph (3) of Article 36, but does not Include any person who on either date also had the nationality of the Contracting State party to the dispute; and

(b) any juridical person which had the nationality of a Contracting State other than the State party to the dispute on the date on which the parties consented to submit such dispute to conciliation or arbitration and any juridical person which had the nationality of the Contracting State party to the dispute on that date and which, because of foreign control, the parties have agreed should be treated as a national of another Contracting State for the purposes of this Convention.

In its Counter-Memorial, the Respondent admitted that all of the von Pezold Claimants, save for Rüdiger, are nationals of both Germany and Switzerland and that Rüdiger is a national of Germany. The Respondent also stated, however, that documents filed with Company House in-Zimbabwe Indicated that Heinrich von Pezold ("Heinrich") and Rüdiger were Zimbabwean citizens (see CM, para. 5).

The Respondent relies on the decisions in AMCO Asia Corporation & Others v. Indonesia ("Amco Asia") (see ICSID Reports 389, Decision on Jurisdiction, 25 September 1983, CLEX-392) and Tradex Hellas SA v. Republic of Albania (Tradex) (see ICSID Case No. ARB/94/2, Award, 29 April 1999, RLEX-11) for the proposition that indirect control does not constitute foreign control for the purposes of the Centre’s jurisdiction (see Rejoinder, paras. 937-938). The Respondent notes that in AMCO Asia there were five degrees of intermediate control as between the putative foreign investor and the local entity, and here the "Claimants need even more than ten organograms to try to prove their control of the local companies" (see Rejoinder, para. 938). The Respondent also refers to the following passage in the Tradex award, a case which the Respondent contends presented a similar situation to the one in these cases (see Rejoinder, para. 939; Resp. Skel., para. 55, quoting Tradex, para. 118, RLEX-11):

In its summary of the Investments it claims to have made (particularly in T III p. 7 seq.), Tradex mentions a number of Investments not in Albania, but in other countries allegedly in favour of the Joint Venture. In this context, the Tribunal notes that, according to Art. 1(3) of the 1993 Law, only those Investments qualify to be covered by that Law that are made ‘in the territory of the Republic of Albania’. In principle, therefore, Investments made by Tradex outside Albania do not qualify.

The cases decided under Article 25(2)(b) establish that the "foreign control" referred to in the second clause of Article 25(2)(b) means foreign control by nationals of a Contracting State party to the Convention. Moreover, such "foreign control" must meet an objective standard (Vacuum Salt Products Ltd. v. Government of the Republic of Ghana (Case No. ARB/92/1) Award of February 16, 1994, 4 ICSID Reports 165 (1994), Ven. Auth. 9). As a result, an arbitral tribunal must take into account the true control relationship (Banro American Resources, Inc. and Société Aurifère du Kivu et du Maniema, SARL v. the Democratic Republic of Congo (Case No. ARB/98/7), Award Declining Jurisdiction of September 1, 2000, Ven. Auth. 2; LETCO, Ven Auth. 6; SOABI, Ven Auth. 8, Christopher Schreuer, Commentary on the ICSID Convention, 12 ICSID Review -FILJ 59 (1997) (Second Installment of Commentaries Discussing Article 25), 560, 562-563, Ven. Auth. 11).

The Respondent also referred to the tribunal’s discussion of control in Vacuum Salt Products Ltd. v. Republic of Ghana ("Vacuum Salt") (see ICSID Case No. ARB/92/1, Award, 16 February 1994, CLEX-177) as follows (see Rebutter, para. 225, quoting Vacuum Salt)-.

The Tribunal notes, and itself confirms, that "foreign control" within the meaning of the second clause of Article 25(2)(b) does not require, or imply, any particular percentage of share ownership. Each case arising under that clause must be viewed in its own particular context, on the basis of all of the facts and circumstances. There is no "formula." It stands to reason, of course, that 100 percent foreign ownership almost certainly would result inforeign control, by whatever standard, and that a total absence of foreign shareholding would virtually preclude the existence of such control. How much is "enough," however, cannot be determined abstractly. Thus, in the course of the drafting of the Convention, it was said variously that "Interests sufficiently Important to be able to block major changes in the company" could amount to a "controlling Interest" (Convention History, Vol. 11, 447); that "control could in fact be acquired by persons holding only 25 percent of' a company's capital (id., 447-48); and even that "51% of the shares might not be controlling" while for some purposes "15% was sufficient" (Id., 538).

The Claimants submit that control requires consideration of all facts and circumstances, relying on Vacuum Salt⁴², and that Indirect control may be control for the purpose of Article 25(2)(b) of the ICSID Convention (see Cl. Skel., para. 13; Cl. PHB, para. 14). The Claimants rely on Socíété Ouest Africaine des Bétons Industriéis (SOABI) v. Republic of Senegal (SOABI) (see 2 ICSID Reports 165, Decision on Jurisdiction, 1 August 1984, CLEX-393) and Mobil Corporation, Venezuela Holdings, B.V. and others v. Bolivarian Republic of Venezuela ("Mobil") (see ICSID Case No. ARB/7/27, Decision on Jurisdiction, 10 June 2010, CLEX-410) in support of their latter point that indirect control is sufficient for the purpose of Article 25(2)(b) of the ICSID Convention. The following quote from SOABI is emphasized by the Claimants (seeSOABI, paras. 35-37, CLEX-393):

The nationality of this company, which held in 1975 all of SOABI’s subscribed capital shares, could only be determinative of the nationality of the foreign Interests if the Convention were concerned only with direct control of the company. However, the Tribunal cannot accept such an Interpretation, which would be contrary to the purpose of Article 25(2)(b) infine. This purpose, it is hardly necessary to observe, is to reconcile, on the one hand, the desire of States hosting foreign Investments to see those Investments managed by companies established under local law and, on the other hand, their desire to give those companies standing in ICSID proceedings.

SOABI is a perfect example of this, being a company established under Senegalese law to which the capacities of a national of another Contracting State have been granted.

It is obvious that, just as a host State may prefer that Investments be channelled through a company Incorporated under domestic law, Investors may be led for reasons of their own to Invest their funds through Intermediary entitles while retaining the same degree of control over the national company as they would have exercised as direct shareholders of the latter.

The Tribunal observes that Venezuela Holdings (Netherlands) owns 100 % of its US and Bahamian subsidiaries. Those subsidiaries are thus controlled directly or indirectly by a ‘legal person constituted under the law’ of the Netherlands. Accordingly they must be deemed to be Dutch nationals under article 1 (b) (iii) of the BIT.

…

The Respondent submits however, that this article is Incompatible with Article 25 (2) (b) of the ICSID Convention which, according to Venezuela, excludes the use of the control test for the determination of a corporation’s nationality.

However Article 25(2)(b)(l) does not Impose any particular criteria of nationality (whether place of Incorporation, siege social or control) in the case of juridical persons not having the nationality of the Host State. Thus the parties to the Dutch-Venezuela BIT were free to consider as nationals both the legal persons constituted under the law of one of the Parties and those constituted under another law, but controlled by such legal persons. The BIT is thus compatible with Article 25 of the ICSID Convention.

The Tribunal is satisfied on its review of the evidence, and in particular that of Elisabeth and Heinrich, that the Border Claimants satisfy the criteria of Article 25(2)(b) on the basis of foreign control. The Tribunal rejects the Respondent’s suggestion that the "chain of control" is broken in this case because of the presence of intermediary companies through which the von Pezolds’ interest in the Border Claimants is held. The evidence clearly demonstrates that Elisabeth exercises overall control of the Border Companies and that Rüdiger, the Adult Children Claimants and Adam abide by Elisabeth’s exercise of ultimate control over those companies. Accordingly, the Tribunal finds that the requirements of Article 25(2)(b) of the ICSID Convention have been met and that it has jurisdiction ratione personae over the Border Claimants under the ICSID Convention.

To the extent that Claimants have hidden behind their nebulous, complex, obscure, holding structures, and abstained from proving the exact holder and amount of each stakeholder and given the fact that Rüdiger is among the key beneficiaries, trustees and ultimate decision-makers, the entirety of the von Pezold and Border Estate claims should be dismissed as no proof of each Investment has been submitted and one of the Parent Claimants does not have any legal basis for his Claims and consequently there is no certain amount to be considered under the Swiss BIT.

In light of the above, not only must all Claimants’ claims be dismissed under the German BIT but also under the Swiss BIT as Claimants have failed to prove the Identity and holding that might otherwise benefit from consideration of hypothetical protection under the Swiss BIT.

As set out in Paragraph 986 of Respondent’s Rejoinder, there is no determinable amount of claims to be considered under the Swiss BIT as Claimant Rüdiger is not Swiss and the intermingled holdings, control, beneficiaries (named and unnamed), trustee and ultimate decision-makers are not determinable, so Claimants’ demands under the Swiss BIT must be rejected.

The working capital of their investments may be a mix of their own money, finance from other Investors, commercial banks and government owned development finance Institutions that are mandated to Invest indeveloping markets.

... Factual control arose because Elisabeth is the source of the family’s wealth, and because the family acknowledges that she is inoverall control. Further, Heinrich (Swiss), since 1998, has managed the Border Company Claimants, subject to Elisabeth’s overall control. Legal control arose because the Swiss Family members vote their 48.36% Interest in Border as a block led by Elisabeth. This gives negative control as it permits the blocking of special resolutions, which require 75% of the vote. Further, Rüdiger (German) always voted his 38.13% in Border in the same manner as the Swiss Family Members. This gave the Swiss Family Members positive control with 86.49% of the issued share capital of Border. The legal control has existed since 1992, when Elisabeth and Rüdiger acquired 25.65% of Border. Mr Schofield confirmed that it was further supplemented in 2000 when the von Pezolds were granted joint management of Border by its then majority shareholder, which required their consent for all management decisions. The management agreement fell away in 2003, when the von Pezolds Increased their shareholding to 86%. [citations omitted]

The Respondent submits that ICSID tribunals, such as those in Fedax N.V. v. Republic of Venezuela ("Fedax") (see ICSID Case No. ARB/96/3, Decision of the Tribunal on Objections to Jurisdiction, 11 July 1997, CLEX-397), Salini Costruttori S.p.A. and italstrade S.p.A. v. Hashemite Kingdom of Jordan ("Salini")(see ICSID Case No. ARB/02/13, Decision of the Tribunal on Jurisdiction, November 29, 2004, CLEX-438), Joy Mining Machinery Limited v. Arab Republic of Egypt ("Joy Mining") (see ICSID Case No. ARB/03/11, Award on Jurisdiction, 6 August 2004, CLEX-212), Phoenix Action, Ltd. v. Czech Republic ("Phoenix Action")(see ICSID Case No. ARB/06/5, Award, 15 April 2009, CLEX-240) and Standard Chartered Bank v. United Republic of Tanzania ("Standard Chartered") (see ICSID Case No. ARB/10/12, Award, 2 November 2012, RLEX-19), all agree on certain characteristics of investment and have, through their awards, clarified the definition of investment in the ICSID Convention (see Resp. Skel., para. 58).

A central tenet of their business philosophy is to ensure that preservation of their investments for the next generation - as stated, they have lost investments to regime before and they did not wish it to happen again. Before investing they undertake due diligence. Their due diligence includes understanding the economy and local politics, and meeting with government officials in order to understand the host State’s attitude to investors.

Therefore when the von Pezold Claimants have made investments - including in the Republic - they have always carried out significant due diligence in order to ensure that their wealth is protected;

…

However, they wished to ensure the preservation of their wealth.

32. Claimants never contributed anything to Zimbabwe. They drained our land of its resources to increase their family wealth which was already considerable

…

33. Claimants were here to reap profits for themselves only. They did not create anything useful for Zimbabwe. Their only concern was to maximise their individual family’s financial gain. As they never contributed anything positive to our country, in that sense they did not make an investment which merits benefiting from the protections of a BIT in this arbitration...

We told them ‘you are no longer wanted here.’

... They have exploited us, contributing nothing to our country, and drained us of our country’s wealth...

We do not like the greedy ones in any race or culture, those who are selfish, those who contribute nothing to our country but who only thing of taking. We like good people, be they white or otherwise, all good people are accepted and all bad people are not.